2. GROUP COMPOSITION
2.1 Investments in and loans to associates and joint ventures

The Group holds the following investments in and loans to associates and joint ventures:

Cost and share
of reserves
  Loans   Total
investments
and loans
 
2020
R’000
  2019
R’000
  2020
R’000
  2019
R’000
  2020
R’000
  2019
R’000
 
Blue Label Mexico S.A. de C.V. 138 234   136 460       138 234   136 460  
Other associates 34 103   31 325   7 609   3 635   41 712   34 960  
Other joint ventures 25 118   24 797   1 879   22 625   26 997   47 422  
197 455   192 582   9 488   26 260   206 943   218 842  
Disclosed as:
— Non-current assets 197 455   192 582     26 260   197 455   218 842  
— Current assets     9 488     9 488    

Loans to associates and joint ventures

    Total loans   Current   Non-current  
Interest
rate
  2020
R’000
  2019
R’000
  2020
R’000
  2019
R’000
  2020
R’000
  2019
R’000
 
SupaPesa South Africa Proprietary Limited* 11%     5 650         5 650  
United Call Centre Solutions Proprietary Limited 0%   1 879   16 976   1 879       16 976  
T3 Telecoms SA Proprietary Limited 0%   7 609   3 634   7 609       3 634  
9 488   26 260   9 488       26 260  
* SupaPesa South Africa Proprietary Limited, a joint venture of Viamedia, was disposed of as part of the VAS operations sale transaction. Refer to note 11.

The loans as at 31 May 2020 are neither past due nor impaired with a low risk of default. The carrying amount of the loans approximates their fair value.

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

Joint venture     Associate     Associate  Associate      Joint venture     
Blue Label                               
Company Mexico S.A. de C.V.     Cell C Limited     Oxigen 
Services 
Private 
Limited 
Oxigen Online
Services
Private
Limited  
   2DFine Group1   
Principal activity Distributor of terminals to
vend e-tokens of value 
   Network provider     Airtime and 
payment 
solutions 
provider 
   Online 
payment 
solutions 
provider 
  Investment 
holding 
company 
  
Country of incorporation Mexico     South Africa     India     India    India    
2020 
R’000 
   2019 
R’000 
   2020 
R’000 
   2019 
R’000 
   2019 
R’000 
2019 
R’000 
   2019 
R’000 
  
Cost and share of reserves at the beginning of the year   136 460     136 801     —     6 095 459     207 188  —     —    
Adjustment on the initial application of IFRS 9 and IFRS 15  —     —     —     35 189     (627) —     —    
Cost and share of reserves at the beginning of the year — restated for change in accounting standards  136 460     136 801     —     6 130 648     206 561  —     (55 762)   
Acquisition of associates and joint ventures  —     —     —     —     —  —    
Financial guarantee contracts raised (refer to note 3.6.3) —     —     —     —     —  —     40 631    
Share of (losses)/profits from associates and joint ventures  (5 806)    (24 096)    —     (3 609 496)    (109 572) —     22 935    
Share of results after tax  (4 087)    (22 461)    —     (3 599 120)    (109 090) —     22 935    
Amortisation of intangible assets  (2 387)    (2 271)    —     (14 411)    (669) —     —    
Deferred tax on intangible assets amortisation  668     636     —     4 035     187  —     —    
Foreign currency translation reserve  7 580     23 755     —     —     21 423  —     (7 804)   
Dividends received  —     —     —     —     —  —     —    
Impairment  —     —     —     (2 521 152)    (118 412) —     —    
Disposed of  —     —     —     —     — 
Conversion of associate to subsidiary  —     —     —     —     —  —     —    
Cost and share of reserves at the end of the year  138 234     136 460     —     —     —  —     —    
Loans to associates and joint ventures 
Loans at the beginning of the year  —     —     —     1 029 626     34 017  —     100 837    
Adjustment on the initial application of IFRS 9  —     —     —     —     (16 704) —     (8 606)   
Loans at the beginning of the year – restated  —     —     —     1 029 626     17 313  —     92 231    
Loans granted to associates and joint ventures  —     —     —     106 133     7 467  —     9 934    
Loans repaid by associates and joint ventures  —     —     —     (1 135 759)    —  —     —    
Impairment of loans**  —     —     —     —     (30 511) —     (130 718)   
Disposed of  —     —     —     —     —  —     —    
Unrealised foreign exchange profit on loans to associates and joint ventures  —     —     —     —     5 731  —     28 553    
Loans at the end of the year  —     —     —     —     —  —     —    
Closing net book value  138 234     136 460     —     —     —  —     —    
Share of (losses)/profits from associates and joint ventures  (5 806)    (24 096)    —     (3 609 496)    (109 572) —     22 935    
— From continuing operations  (5 806)    (24 096)    —     (3 609 496)    (109 572) —     22 935    
— From discontinuing operations  —     —     —     —     —  —     —    

 

Other associates*          Other joint ventures*          Total         
                                   
Company                                    
Principal activity                                    
Country of incorporation                                    
2020 
R’000 
   2019 
R’000 
   2020 
R’000 
   2019 
R’000 
   2020 
R’000 
   2019 
R’000 
  
Cost and share of reserves at the beginning of the year   31 325     87 975     24 797     40 245     192 582     6 511 906    
Adjustment on the initial application of IFRS 9 and IFRS 15  —     (312)    —     (86)    —     34 164    
Cost and share of reserves at the beginning of the year – restated for change in accounting standards  31 325     87 663     24 797     40 159     192 582     6 546 070    
Acquisition of associates and joint ventures  —     562     —     —     —     562    
Financial guarantee contracts raised (refer to note 3.6.3) —     —     —     —     —     40 631    
Share of (losses)/profits from associates and joint ventures  1 582     (5 192)    19 224     24 011     15 000     (3 701 410)   
Share of results after tax  2 720     (4 156)    19 224     24 011     17 857     (3 687 881)   
Amortisation of intangible assets  (1 580)    (1 439)    —     —     (3 967)    (18 790)   
Deferred tax on intangible assets amortisation  442     403     —     —     1 110     5 261    
Foreign currency translation reserve  2 041     2 355     1 177     6 139     10 798     45 868    
Dividends received  —     (1 992)    (6 100)    (16 000)    (6 100)    (17 992)   
Impairment  —     —     —     (29 512)    —     (2 669 076)   
Disposed of  (845)    —     (13 980)    —     (14 825)    —    
Conversion of associate to subsidiary  —     (52 071)    —     —     —     (52 071)   
Cost and share of reserves at the end of the year  34 103     31 325     25 118     24 797     197 455     192 582    
Loans to associates and joint ventures 
Loans at the beginning of the year  3 635     —     22 625     37 825     26 260     1 202 305    
Adjustment on the initial application of IFRS 9  —     —     —     (13 521)    —     (38 831)   
Loans at the beginning of the year – restated  3 635     —     22 625     24 304     26 260     1 163 474    
Loans granted to associates and joint ventures  5 369     3 685     —     —     5 369     127 219    
Loans repaid by associates and joint ventures  —     —     (17 311)    (1 411)    (17 311)    (1 137 170)   
Impairment of loans**  (10 570)    (50)    (40 058)    (268)    (50 628)    (161 547)   
Disposed of  —     —     (5 765)    —     (5 765)    —    
Unrealised foreign exchange profit on loans to associates and joint ventures  9 175     —     42 388     —     51 563     34 284    
Loans at the end of the year  7 609     3 635     1 879     22 625     9 488     26 260    
Closing net book value  41 712     34 960     26 997     47 422     206 943     218 842    
Share of (losses)/profits from associates and joint ventures  1 582     (5 192)    19 224     24 011     15 000     (3 701 410)   
— From continuing operations  1 582     1 122     20 822     25 676     16 598     (3 693 431)   
— From discontinuing operations  —     (6 314)    (1 598)    (1 665)    (1 598)    (7 979)   
1 2DFine Group consists of 2DFine Holdings Mauritius and 2DFine Investments Mauritius.
* The Group also has interests in a number of individually immaterial associates and joint ventures that are accounted for using the equity method which are aggregated under “Other associates” and “Other joint ventures”. In the current year, Oxigen Services Private Limited, Oxigen Online Services Private Limited and the 2DFine Group are all included in this category. The reason for the change from prior year is that they are not deemed by the directors to be of significance to the Groups’ future strategy and operational efforts.
** The impairments on loans in the current year arise mainly on the foreign exchange gains on loans that are fully provided for.
Joint venture    Associate    Associate    Associate    Joint 
venture
 
 
Company Blue Label
Mexico S.A. de C.V.
 
  Cell C Limited    Oxigen 
Services 
Private 
Limited
 
  Oxigen 
Online 
Services 
Private 
Limited
 
  2DFine 
Group1
 
Principal activity Distributor of terminals
to vend e-tokens of value
 
  Mobile network    Airtime 
and 
payment 
solutions 
provider
 
  Online 
payment 
solutions 
provider
 
  Investment 
holding 
company
 
 
Country of incorporation Mexico    South Africa    India    India    Mauritius   
Financial year-end* 31 December    31 December    31 March    31 March    31 March   
31 May 
2020 
R’000 
  31 May 
2019 
R’000 
  31 May 
2020 
R’000 
  31 May 
2019 
R’000 
  31 May 
2019 
R’000 
  31 May 
2019 
R’000 
  31 May 
2019 
R’000 
 
Statement of financial position                                     
Non-current assets  72 172    38 293    10 674 432    19 865 013    591 159    23 033    173 183   
Current assets  197 566    258 835    4 966 723    6 249 195    237 566    6 699    3 282   
Cash and cash equivalents  62 616    97 014    686   
Other current assets  134 950    161 821    2 596   
   269 738    297 128    15 641 155    26 114 208    828 725    29 732    176 465   
Total equity  5 107    16 883    (8 012 705)   2 674 170    (87 607)   (57 421)   (53 819)  
Non-current liabilities  1 093    2 412    4 844 963    5 415 378    120 636    35 168    —   
Current liabilities  263 538    277 833    18 808 897    18 024 660    795 696    51 985    230 284   
Trade and other payables  236 832    277 833    2 330   
Other current liabilities  26 706    —    227 954   
   269 738    297 128    15 641 155    26 114 208    828 725    29 732    176 465   
Effective percentage held  47.56    47.56    45    45    58.85    58.82    50   
Net assets  5 107    16 883    (8 012 705)   2 674 170    (87 607)   (57 421)   (53 819)  
Company net assets  2 297    10 683    (15 312 635)   (4 625 760)   (96 056)   (57 421)   (53 819)  
Carrying value of purchase price allocations net of deferred taxation  2 810    6 200    7 299 930    7 299 930    8 449    —    —   
Interest in associate and joint ventures  2 429    8 030    (3 605 717)   1 203 376    (55 093)   (33 777)   (26 910)  
Goodwill  135 805    128 430    1 317 776    1 317 776    173 505    —    —   
Accumulated impairment   —    —    (2 521 152)   (2 521 152)   (118 412)   —    —   
Losses not guaranteed  —    —    4 809 093    —    —    33 777    26 910   
Balance at the end of the year  138 234    136 460    —    —    —    —    —   
1 2DFine Group consists of 2DFine Holdings Mauritius and 2DFine Investments Mauritius.
* Where the financial year differs from the Group’s year-end of 31 May, special purpose accounts are prepared to coincide with the Group’s reporting period. These special purpose accounts are adjusted for the Group’s equity-accounted adjustments.

 

   Joint venture Associate Associate  Associate  Joint 
venture 
Company  Blue Label
Mexico S.A. de C.V.
Cell C Limited Oxigen 
Services 
Private 
Limited 
Oxigen 
Online 
Services 
Private
Limited 
2DFine 
Group1
Principal activity  Distributor of terminals
to vend e-tokens of value
Mobile network Airtime 
and 
payment 
solutions 
provider 
Online 
payment 
solutions 
provider 
Investment  
holding 
company 
Country of incorporation  Mexico South Africa India  India  Mauritius 
Financial year*  1 June 
2019 to 
31 May 
2020 
1 June 
2018 to 
31 May 
2019 
1 June 
2019 to 
31 May 
2020 
1 June
2018 to 
31 May 
2019 
1 June 
2018 to 
31 May 
2019 
1 June 
2018 to 
31 May 
2019 
1 June 
2018 to 
31 May 
2019 
Statement of comprehensive income for the year ended 
Revenue   3 190 290     3 641 314     14 593 152     15 404 539  1 066 278     1 798     —    
Operating profit before depreciation, amortisation and impairment charges   8 333     (23 044)    79 833    
Depreciation, amortisation and impairment   (26 275)    (33 837)    —    
Finance costs   —     —     (7 011)   
Finance income   4 554     5 628     44    
Net (loss)/profit before taxation   (13 388)    (51 253)    (10 686 875)    (3 852 965) (188 882)    (80 027)    72 866    
Taxation   1 181     590     —     (4 168 134) 1 121     —     —    
Net (loss)/profit after taxation   (12 207)    (50 663)    (10 686 875)    (8 021 099) (187 761)    (80 027)    72 866    
Other comprehensive income/(loss) 431     8 491     —     —  3 542     —     (15 609)   
Losses not guaranteed   —     —     10 686 875     —  —     80 027     —    
Total comprehensive (loss)/income   (11 776)    (42 172)    —     (8 021 099) (184 219)    —     57 257    
Effective percentage held   47.56     47.56     45     45  58.85     58.82      50    
Share of total comprehensive (loss)/income   (5 601)    (20 057)    —     (3 609 495) (108 639)    —     28 629    
1 2DFine Group consists of 2DFine Holdings Mauritius and 2DFine Investments Mauritius.
* Where the financial year differs from the Group’s year-end of 31 May, special purpose accounts are prepared to coincide with the Group’s reporting period.

Impairment of associates and joint ventures

The following investments were tested for impairment in line with IAS 36, by comparing the recoverable amount against the carrying value of the investments.

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

Blue Label Mexico S.A. de C.V. (Blue Label Mexico)

Blue Label Telecoms is currently in the process of concluding the disposal of its 47.56% interest in Blue Label Mexico, the structure of which is yet to be finalised. Once completed, shareholders will be notified accordingly. As such, the fair value less cost to sell approach has been applied in determining the recoverable amount of Blue Label Mexico. Based on this method, the recoverable amount is sufficient to support the carrying value of the investment as at 31 May 2020.

The investment in Mexico is not classified as held-for-sale at 31 May 2020 due to the sales negotiations taking place after year-end.

Cell C Limited

The key assumptions used for the value-in-use calculations of Cell C Limited are as follows:

  2020   2019  
  Average
EBITDA
margin%
Terminal
growth rate
%
Discount
rate
%
  Average
EBITDA
margin%
Terminal
growth rate
%
Discount
rate
%
 
Cell C Limited 22.6 4.0 19.6   22.5 5.0 16.6  

An independent third-party valuation specialist was appointed to determine the value of Cell C based on cash flow projections incorporated in the five-year Cell C business plan. Assumptions relating to the business, the industry and economic growth were applied. Cash flows beyond this point were then extrapolated, applying terminal growth rates that did not exceed the expected long-term economic growth rate for the markets in which Cell C operates. The discount rates used are pre-tax and reflect specific risks related to Cell C. The valuation does not take into account the effects of any planned future restructuring or recapitalisation.

The Prepaid Company’s equity share of the value as at 31 May 2020 remained at Rnil, attributable to the following:

A reduction of forecast EBITDA due to:

(a) Capital expenditure to be substituted with operational expenditure in line with the roaming agreement with MTN.
(b) A decline in the prepaid subscriber base from an average of 16.9 million subscribers at May 2019 to 12.8 million at May 2020.
(c) A decline in contract revenue cash flows.

The above cash flow reductions were offset in part by the following:

(a) A decrease in direct expenditure and operating costs congruent with servicing a reduced subscriber base as well as planned cost-optimisation initiatives.
(b) Lower lease payments due to the implementation of the MTN roaming agreement.

While the enterprise value calculated exceeded that of the prior year, the equity value declined by R0.84 billion due to higher debt levels and a lower probability assigned to the utilisation of tax losses at 31 May 2020.

Significant impairment of associates

Impairment of Cell C in the prior period

On 2 August 2017, Blue Label, through its wholly owned subsidiary, The Prepaid Company (TPC), acquired 45% of the issued share capital of Cell C for a purchase consideration of R5.5 billion.

For the year ended 31 May 2019, management appointed an independent third-party valuation specialist to determine the value-in-use based on cash flow projections incorporated in the five-year Cell C business plan. They applied assumptions relating to the business, the industry and economic growth. Cash flows beyond this point were then extrapolated, applying terminal growth rates that did not exceed the expected long-term economic growth rate.

TPC’s share of the value-in-use as at 30 November 2018 amounted to 6.04 billion. The valuation declined to an Rnil value at 31 May 2019. This was primarily attributable to:

(a)

A significant downward revision of the mobile subscriber base. The valuation at November 2018 was based on the assumption the compound annual growth rate (CAGR) forecast would average 9.3% per annum over a five-year period. In May 2019, the CAGR forecast was revised to an average of 4.6% per annum. This resulted in an originally expected 23.4 million subscribers after five years declining to a revised expectation of 17.9 million.

  • Cell C previously anticipating gaining approximately 6% additional market share by accessing new territories. Instead, Cell C’s market share declined by approximately 2% from 16% at November 2018 to 14% at May 2019. This was in line with re-evaluating the inactive subscriber base and a loss of customers to competitors.
  • A deteriorating South African economy since November 2018, with an initial GDP forecast of 1.9% for the calendar year ended 2019 to a revised forecast contraction of 0.2%. Accordingly, the forecast GDP was adjusted downwards each year for the following four years. In addition, Business Monitor Intelligence revised its mobile subscriber growth in April 2019 from a CAGR of 2.2% for the period FY18 to FY23 to 1.8%.
  • Year-to-date trading being below budget.
(b)

A substantial decline in forecast other revenue. This is largely due to a significant decline in equipment, Mobile Virtual Network Operator and Business Service Provider revenues over the five-year period in comparison to the initial forecast. Cell C had previously forecast gaining market share from its competitors. This did not materialise.

(c)

Lower taxation benefit relating to capital allowances as a result of a revised forecast reduction in capital expenditure.

In determining the revised valuation, cognisance was taken of positive cash flow generation from:

(a) a decline in forecast direct expenditure on handset, SIM costs, ongoing commissions and discounts due to lower subscriber growth;
(b) a reduction in forecast payroll costs;
(c) a decline in capital expenditure due to cash flow constraints and lower subscriber base forecast; and
(d) a decrease in cash lease payments as a result of less network towers required due to the lower forecast of the subscriber base.

The impact of the transactions in progress relating to a national roaming agreement and the recapitalisation of Cell C were not in effect as at 31 May 2019 and as such were not accounted for in the valuation at that date.

As discussed under “Critical accounting judgements and assumptions”, for purposes of the Group’s annual financial statements, Cell C has been accounted for using the going concern assumption. The Group’s share of Cell C’s losses in the prior year has been recognised in “Equity losses through the share of (losses)/gains from associates and joint ventures” in the Group income statement. An impairment assessment was performed in the prior year on the Group’s investment in Cell C which resulted in an impairment being recognised. This is included in the “Impairments on associates and joint venture” in the prior year Group income statement. The result of this impairment is that the investment in Cell C was carried at a nil valuation.

If Cell C was not a going concern the “Equity losses through the share of (losses)/gains from associates and joint ventures” in the prior year would have been a greater loss. However, there would be an equal and opposite reversal of the “Impairments on associates and joint venture” in the prior year. Therefore, if the going concern assumption was incorrect, there would have been no effect in the prior year Group income statement.

The Group’s remaining exposure to Cell C is as follows:

  2020 
R’000 
  2019 
R’000 
 
Concentration of credit risk:        
Trade receivables 1 266 899    1 352 718   
Payables due to Cell C:        
Trade payables (488 917)   (1 212 392)  
Financial liabilities at fair value through profit or loss (350 410)   (301 716)  

Financial guarantee in respect of Cell C’s facility

On 2 August 2018, Cell C procured R1.4 billion of funding from a consortium of financial institutions for a tenure of 12 months, secured by airtime to the value of R1.75 billion. In the event of default, The Prepaid Company could have been required by the consortium to purchase such inventory from the consortium on a piecemeal basis over a specified period that has been agreed upon. These purchases would be made in lieu of purchases that would have been made from Cell C within that period.

An extension was concluded on 31 May 2020 with an agreed quantum of airtime purchases required to be made by The Prepaid Company on a monthly basis. This will result in the Cell C facility reducing to nil by 28 February 2021. As at 31 May 2020, the above funding had declined to R959 million (2019: R1.25 billion) as a result of BLT purchasing from the security airtime.

It is the intention of The Prepaid Company to accelerate payments to the banking consortium in order to distribute the vault stock in full if there is risk/indication that Cell C will not be able to meet its obligations to the banking consortium. The fair value of the financial guarantee issued in respect of Cell C’s facility was valued to be insignificant taking into account the inventory held as collateral.

Management has performed detailed assessments considering seasonality of trading and has determined that, based on current inventory holdings and anticipated sales cycles, should circumstances dictate the need to purchase the above mentioned inventory from the consortium, acceleration of such payments could result in the debt being expunged within two and a half months through its trading capabilities in the ordinary course of business at normal operating margins.

Critical accounting judgements and assumptions

Financial guarantee

As explained above under “Financial guarantee in respect of Cell C’s facility”, Cell C procured R1.4 billion of funding in August 2018 and utilised a portion of this funding to repay the R1.029 billion loan that was due to The Prepaid Company as at that date. Since the Group was a party to this new funding agreement, the Group considered whether it met the derecognition requirements of IFRS 9 for the loan receivable from Cell C. Specifically, the Group considered whether the loan receivable was extinguished and replaced with a new financial instrument, or whether this represented the continuation of the Group’s loan receivable from Cell C. The Group applied its judgement, and concluded that the R1.4 billion of funding represented a new financial instrument and therefore derecognised the loan receivable from Cell C. The qualitative factors that the Group considered in making this judgement included the fact that the original term of the loan receivable had come to an end and the new funding was for a different period of time compared to the initial term, an increase in the amount of the borrowing, a change in the interest rate from variable to fixed and changes to the repayment schedule from a bullet repayment schedule to an amortising repayment schedule.

Management is of the view that the purchasing of such inventory will not result in an onerous contract as this inventory is capable of being realised in the ordinary course of business without any negative impact being incurred by The Prepaid Company.

Impairment of Oxigen Services India and Oxigen Online in the prior year

Oxigen Services India and Oxigen Online were tested for impairment by comparing the recoverable amount against the carrying value of these investments. The recoverable amount is the higher of fair value less cost of disposal and the value-in-use. For Oxigen Services India and Oxigen Online the fair value less cost of disposal was higher than the value-in-use given the uncertainties around the future cash flow projections due to lack of funding. In order to calculate the fair values, the finance department of the Group includes a team that outsources the valuations to qualified independent third-party valuation specialists required for financial reporting purposes, including level 3 fair values. This team reports directly to the Financial Director (FD) and the Audit, Risk and Compliance Committee (ARCC).

For Oxigen Services India and Oxigen Online, the fair value less cost of disposal was calculated by utilising relevant information generated by similar market transactions that have been concluded by comparable businesses. The fair value was based on a multiple applied to gross revenue, based on the same principles adopted by similar business to that of the Oxigen Services Group, that was recently disposed of. This market approach provides the Group with more reliable evidence to support the valuation. The revenue multiple of 3.6 was applied in determining the fair value. The assumptions and inputs used in calculating the fair value less cost to sell were regarded as level 3 fair value estimates.

The fair value of the 2DFine Group is based on its share of the fair value of Oxigen Services India and Oxigen Online less the liabilities of the 2DFine Group.

The corporate transaction, referred to in the 30 November 2018 interim results, did not materialise, and the resultant lack of funding necessitated BLT to impair its full investment of R118 million in the Oxigen Group. The full value of loans to Oxigen Services India of R30 million and 2DFine Holdings Mauritius of R101 million, net of a surety asset raised, was impaired. In addition, the Group accounted for a R103 million liability relating to financial guarantee contracts as at 31 May 2019. A portion of this financial liability (R44.2 million) was called upon and paid out in the current financial year. The balance of the remaining financial guarantee contract after taking into account movements due to foreign exchange is R87.6 million as at 31 May 2020.

Although alternative negotiations are in progress with other potential investors, until such time as a transaction is completed, the lack of cash resources will inhibit its propensity for growth.

The recoverable amount was calculated to be Rnil. The following were the key inputs in determining the recoverable amount:

  • uncertainty of future funding;
  • adverse trading conditions; and
  • discontinuation of certain revenue streams.

Shares in associates converted to subsidiary in the prior year

    Date
disposed
Effective
percentage
 
WiConnect Proprietary Limited (previously called Lornanox Proprietary Limited) Associate 31 July 2018 40%  

On 31 July 2018, the Group acquired the remaining 60% in WiConnect Proprietary Limited (previously called Lornanox Proprietary Limited) for R5 million.

Contingent liabilities

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 (prorate to the respective parties’ shareholding in BLM) of any liability incurred by BLM in terms of its trade agreement with Telcel. 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.