AFRICAN DAWN ANNUAL REPORT 2019 Notes to the Financial Statements continued Annual Financial Statements For the year ended 28 February 2019 Assumptions for terminal value 2018 Note YueDiligence Elite Compounded annual revenue increase % 6% 6% Compounded annual total operating costs increase % 6% 5% Pre-taxation discount rate (WACC Rate) 38.13% 19.7% 61 Testing for impairment The investments in subsidiaries are tested for impairment by analysing each investment's recoverable amount when there is an indication of impairment. The recoverable amount of the investments has been determined based on value-in-use calculations. These calculations use pre- tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. This growth rate does not exceed the long-term average growth rate in which the businesses operate in. The key assumptions, long term growth rates and discount rates used in the value-in-use calculations are as follows: Assumptions for terminal value 2019 Note YueDiligence Elite Compounded annual revenue increase % 6% 6% Compounded annual total operating costs increase % 6% 5% Pre-taxation discount rate (WACC Rate) 29.8% 17.9% Testing for impairment 2019 YueDiligence was impaired during 2018. The impairment raised in 2018 was sufficient and no further impairment was necessary. The recoverable amount of Elite was higher than the carrying value and therefore did not result in an impairment. 7. Deferred tax Asset/Deferred tax liability 2019 R’000 2018 R’000 2019 R’000 2018 R’000 Deferred tax liability - leave provision - (226) - - Deferred tax liability - operating lease liability - (18) Deferred tax liability - intangible assets - (42) Deferred tax assets - ECL provision - 312 Net deferred tax asset - 26 - - At beginning of year 26 (61) - - Assessed loss raised/(utilized) during the year against current income tax - 2 - - Deferred tax effect of amortisation of intangible asset raised on Knife Capital (refer to Note 5) - 191 - - Disposal of Knife Capital (refer to Note 10) - (111) Temporary difference trade debtors bad debt allowance - - - - Temporary difference on leave pay accrual 226 5 - - Temporary difference on intangible assets 42 - - - Temporary difference on operating lease liability 18 Temporary difference on ECL provision (312) - 26 - - Deferred tax assets amounting to 30,156,139 (2018: R27,569,715) for the group and R2,398,979 (2018: R1,085,938) for the company are not recognized above as the group and company does not expect to generate sufficient taxable profits against which the deferred tax asset can be utilised.
AFDAWN AR FINAL 2019
To see the actual publication please follow the link above