3. | INVESTMENTS IN SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in subsidiaries are carried at cost less any accumulated impairment losses in BLT's 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 BLT has control. BLT controls an entity when BLT 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.
All subsidiaries listed above are incorporated in South Africa.
The Prepaid Company Proprietary Limited An impairment indicator was identified in the current year for the investment in 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:
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. BLT's target debt-to-equity ratio is applied in the calculation of the weighted average cost of capital. 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 LimitedBLT'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. |
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