Imperial is a diversified, international group of companies involved in mobility. The consolidated financial statements include the accounts of Imperial Holdings Limited (the Company) and all of its subsidiaries at 30 June 2014.

The Group holds a majority voting rights in all of its subsidiaries. Non-controlling shareholders have significant interests in three of the Group’s subsidiaries. Material associates to the Group are MDS Logistics, MiX Telematics and Ukhamba Holdings. Details are provided below.

The following table show significant restrictions that apply to three of the Group’s subsidiaries. The amounts disclosed represents the carrying values of total assets and total liabilities in the consolidated statement of financial position net of inter-group eliminations.

Reasons for the acquisitions

The Group acquired an additional 11% shareholding in Renault South Africa (Pty) Ltd for R65 million, thereby increasing its shareholding from 49% to 60%. The acquisition grants Imperial control over the activities of Renault in South Africa and further diversifies the Group’s distribution portfolio. The remeasurement of the previously held equity interest in Renault SA had no impact on profit or loss and other comprehensive income for the year.

The Eco Health Limited acquisition is in line with the Group’s strategy to grow businesses into the rest of Africa, which is focused on the distribution of consumer goods and pharmaceutical products. The acquisition further complements the Imperial Health Sciences business and the 49% equity interest in MDS Logistics both of which have expertise in warehousing and logistics solutions in the pharmaceutical industry. Eco Health adds sales and marketing capabilities to Imperial’s services offering and will enable Imperial to offer an end-to-end capability to our customers in Nigeria’s fast-growing pharmaceutical sector.

The other businesses were acquired to complement and expand our distribution of motor vehicles parts in South Africa and the United Kingdom.

Acquisition cost

Acquisition cost for business acquisitions concluded during the year amounted to R17 million and has been recognised as an expense in profit or loss within the business acquisition costs line item.

Impact of the acquisition on the results of the Group

From the dates of acquisition the businesses acquired during the year contributed revenue of R2 894 million, operating profit of R73 million and a net loss of R19 million. The net after tax loss of R19 million includes the after tax impact of the funding cost of R9 million calculated on the cash consideration paid on acquisition, the fair value loss on the remeasurement of the put option liability of R16 million and the amortisation of intangible assets arising out of the business combinations of R27 million.

Had all the acquisitions been consolidated from 1 July 2013, they would have contributed additional revenue of R5 673 million, operating profit of R204 million and a net loss of R17 million. The Group’s total revenue would have increased to R106 346 million, operating profit increased to R6 316 million and net profit increased to R3 629 million. The net after tax loss of R17 million includes the after tax impact of the funding cost of R20 million calculated on the cash considerations paid on acquisitions, the amortisation of intangible assets arising out of the business combinations of R77 million and the loss on the remeasurement of the put option liability of R40 million.

Separate identifiable intangible assets

As at the acquisition date the fair value of the separate identifiable intangible assets was R949 million. This fair value, which is classified as level 3 in the fair value hierarchy, was determined using the Multi-period Excess Earnings Method (MEEM) valuation technique.

The significant unobservable valuation inputs were as follows:

The assumptions used in arriving at projected cash flows were based on past experience and adjusted for any expected changes.

Other details

Trade and other receivables had gross contractual amounts of R497 million of which R66 million was doubtful. Non-controlling interests have been calculated based on their proportionate share in the acquiree’s net assets. None of the goodwill is deductible for tax purposes.

Acquisition after the reporting period

The Group acquired 62,5% interest in Pharmed Pharmaceuticals (Pty) Ltd, a pharmaceutical wholesaler, for R148 million in July 2014. No disclosures for the acquisition date net asset fair values are provided as the initial accounting for the business combination was incomplete at the time that the financial statements were authorised for issue.

The following is summarised financial information for AMH, Midas and Eco Health, based on their respective consolidated financial statements prepared in accordance with IFRS, modified for fair value adjustments made at time of acquisition and differences in accounting policies. The information is before inter-company eliminations with other entities in the Group.

	AMH				Midas				Eco Health^
R million	2014	2013			2014	2013			2014	2013
Revenue	22 336	20 847			3 869	3 541			646
Net profit for the year	1 248	1 856			159	170			16
Net profit attributable to non-controlling interests	161	221			41	43			5
Other comprehensive income	(411)	12							(22)
Total comprehensive income	837	1 868			159	170			(6)
Total comprehensive income attributable to non-      controlling interests	120	222			41	43			(3)
Total assets	14 297	11 993			1 146	1 037			1 354
Total liabilities	9 394	7 141			602	542			813
Total equity	4 903	4 852			544	495			541
Equity attributable to non-controlling interests	606	575			140	129			173
Dividends paid to non-controlling interest	98	152			25	20			28