Company: KARO
Filing Date: 2025-06-09
Form Type: 20-F
Source: 0001213900-25-052372
Chunk: 194

Company: Karooooo Ltd.
Filing Date: 2025-06-09
Form: 20-F
Item: Item 19
Chunk 194
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 cash flows will include cash flows from
the sale of collateral held or other credit enhancements that are integral to the contractual terms.

F-15

ECLs are recognized in two stages.
For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for
credit losses that result from default events that are possible within the next 12-months (a “12-month ECL”). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized for
credit losses expected over the remaining life of the exposure, irrespective of timing of the default (a “lifetime ECL”).

For trade receivables, the Group applies
a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance
based on lifetime ECLs at each reporting date. The Group has established a provision matrix based on its historical credit loss experience,
adjusted for forward- looking factors specific to the debtors and the economic environment which could affect debtor’s ability to
pay.

The Group considers a financial asset
in default when contractual payments are 360 days past due. This reflects the point at which there is no reasonable expectation of recovery
and aligns with historical loss experience and collection efforts. However, in certain cases, the Group may also consider a financial
asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no
reasonable expectation of recovering the contractual cash flows.

f)
Property, plant and equipment

i.
Recognition and measurement

All items of property, plant and equipment
are initially recorded at cost. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation
and any accumulated impairment losses.

The cost of telematic devices is capitalized as property,
plant and equipment.

In-vehicle capitalized telematics devices
are installed in customers’ vehicles as part of a subscription contract. The telematics device and directly related installation
costs are capitalized and depreciated over the expected useful life of the average contract. The related depreciation expense is recorded
as part of cost of revenue in the consolidated statement of profit and loss. If a subscriber contract with a customer is cancelled prior
to the end of its useful life, the unamortized