Table of contents

fair value of the non-controlling interest in the acquiree
over the consideration transferred. A bargain purchase
represents a gain on the acquisition of the acquiree and
this resulting gain is recognised in profit and loss.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to
those cash-generating units or group of cash-generating
units that are expected to benefit from the business
combination in which the goodwill arose identified
according to operating segment. Goodwill impairment
reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential
impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use
and the fair value less cost of disposal. Any impairment
is recognised immediately in profit or loss and is not
subsequently reversed.
1.6 Other intangible assets
An intangible asset is recognised when:
»»
it is probable that the expected future economic
benefits that are attributable to the asset will flow to
the entity; and
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the cost of the asset can be measured reliably.
Other intangible assets are initially recognised at cost.
Costs associated with maintaining computer software
programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the
design and testing of identifiable and unique software
products controlled by the group are recognised as
intangible assets when the following criteria are met:
»»
it is technically feasible to complete the software
product so that it will be available for use;
»»
management intends to complete the software
product and use or sell it;
»»
there is an ability to use or sell the software product;
»»
it can be demonstrated how the software product will
generate probable future economic benefits;
»»
adequate technical, financial and other resources
to complete the development software product are
available; and
»»
the expenditure attributable to the software product
during its development can be reliably measured.
Directly attributable costs that are capitalised as part of
the software product include the software development
employee costs and an appropriate portion of relevant
overheads.
Other development expenditures that do not meet
these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense
are not recognised as an asset in a subsequent period.
Computer software development costs recognised as
assets are amortised over their estimated useful lives,
which does not exceed five years.
The customer relationship relates to the fair value
adjustment of the loan book on the acquisitions. They are
amortised over their estimated useful lives (3-10 years).
The customer relationship in South Africa relates to the fair
value adjustments of the purchase of a deduction at source
lending loan book. The group provides loans to gainfully
employed individuals that are employed by employers
that are vetted by the group and that have concluded
an agreement with the company. In terms of these
agreements the employer deducts the loan instalments
from the customers salary and disburses these funds to the
group.
Other intangible assets are carried at cost less any
accumulated amortisation and any impairment losses.
Amortisation is provided to write down the other intangible
assets, on a straight line basis, to their residual values
as follows:
Item
System development software —
internally generated
Intellectual property legal guard
Customer relationships
Useful life
5 years
3 years
3 years — Africa
Group
10 years — South
Africa Group
1.7 Impairment of non-financial
assets
The company assesses at each end of the reporting
period whether there is any indication that an asset may
be impaired. If any such indication exists, the company
estimates the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the
recoverable amount is estimated for the individual asset.
If it is not possible to estimate the recoverable amount of
the individual asset, the recoverable amount of the cashgenerating
unit or group of cash generating units to which
the asset belongs is determined. The recoverable amount
of an asset or a cash-generating unit is the higher of its fair
value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its
carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. That reduction is an
impairment loss.
An impairment loss of assets carried at cost less any
accumulated depreciation or amortisation is recognised
immediately in profit or loss.
Goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the cash-generating
units, or company's of cash-generating units, that are
expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the
acquiree are assigned to those units or company's of units.
1.8 Financial instruments
Classification
The company classifies financial assets and financial
liabilities into the following categories:
»»
Financial assets at fair value through profit or loss —
held for trading
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Loans and receivables
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Available-for-sale financial assets
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Financial liabilities at fair value through profit or loss
»»
Financial liabilities measured at amortised cost
Classification depends on the purpose for which the
financial instruments were obtained/incurred and
characteristics of those instruments. Management
determines the classification of its financial assets/liabilities
at initial recognition.
(a) Financial assets/liabilities at fair value through profit or loss
Financial assets/liabilities at fair value through profit
or loss are financial assets/liabilities held for trading.
A financial asset/liability is classified in this category if
acquired principally for the purpose of selling in the short
term. Derivatives are also categorised as held for trading
unless they are designated as hedges. Assets/liabilities in
this category are classified as current assets/liabilities if
expected to be settled within 12 months, otherwise they
are classified as non-current.
(b) Loans and receivables/financial liabilities measured at
amortised cost
Loans and receivables/financial liabilities measured at
amortised cost are non-derivative financial assets/liabilities
with fixed or determinable payments that are not quoted
in an active market. They are included in current assets/
liabilities, except for maturities greater than 12 months
after the end of the reporting period. These are classified
as non-current assets/liabilities. The group’s loans and
receivables/financial liabilities measured at amortised cost
comprise 'loans to/(from) related parties', 'other financial
assets', 'loans to/(from) shareholders', ‘loan book’, 'other
receivables', 'cash and cash equivalents’, 'other financial
borrowings', 'finance lease liabilities' and 'trade and other
payables' in the Consolidated Combined Statement of
Financial Position.
Initial recognition and measurement
Financial instruments are recognised initially when the
group becomes a party to the contractual provisions of
the instruments. The group classifies financial instruments,
or their component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument
in accordance with the substance of the contractual
arrangement.
Financial instruments are initially recognised at fair value
plus transaction costs for all financial assets/liabilities not
carried at fair value through profit or loss. Financial assets/
liabilities carried at fair value through profit or loss are
initially recognised at fair value, and transaction costs are
expensed in the Consolidated Combined Statement of
Profit and Loss and Comprehensive Income. Available-forsale
financial assets and financial assets/liabilities at fair
value through profit or loss are subsequently carried at fair
value. Loans and receivables/financial liabilities measured
at amortised cost are subsequently carried at amortised
cost using the effective interest method.
Gains or losses arising from changes in the fair value of
the financial assets/liabilities at fair value through profit or
loss category are presented in the Consolidated Combined
Statement of Profit and Loss and Comprehensive Income
within ‘Other income’ and 'Operating expenses' in the
period in which they arise. Dividend income from financial
assets at fair value through profit or loss is recognised in
the Consolidated Combined Statement of Profit and Loss
and Comprehensive Income as part of other income when
the group’s right to receive payments is established.
Derecognition
Financial assets are derecognised when the rights to
receive cash flows from the investments have expired
or have been transferred and the group has transferred
substantially all risks and rewards of ownership. Financial
liabilities are derecognised when the obligation for cash
outflows has been settled or has expired.
Fair value determination
The fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
IFRS 13 requires an entity to classify fair values measured
and/or disclosed according to a hierarchy that reflects the
significance of observable market inputs. The three levels of
the fair value hierarchy are defined as follows:
Quoted market prices – Level 1:
Quoted prices (unadjusted) in active markets for identical
assets or liabilities
Valuation technique using observable inputs – Level 2:
Inputs other that quoted prices included in Level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices)
Valuation technique using significant unobservable inputs –
Level 3:
Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs)
Fair value measurement and
valuation processes
The MyBucks Group has applied valuation techniques
in order to establish the fair value of its financial assets
and financial liabilities. The valuation of a number of the
instruments has required judgemental inputs. This is the
case where no reference can be made to a quoted market
price for a similar instrument, and where assumptions are
made in respect of unobservable inputs.
Offsetting financial assets and financial
liabilities
Financial assets/liabilities are offset and the net amount
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MyBucks Annual Report 2016 84
85 MyBucks Annual Report 2016