Business combinations
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Subsidiaries and businesses acquired |
Nature of business |
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Operational segment |
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Date acquired |
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Interest
acquired
(%)
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Purchase
consideration
exceptional
transferred
Rm |
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RTT Health Sciences |
Supply chain services |
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Logistics – Africa
(including South Africa) |
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January 2013 |
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100 |
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515 |
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Orwell Trucks Limited |
Vehicle sales and services |
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Automotive Retail |
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February 2013 |
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100 |
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118 |
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KWS Carriers (Pty) Limited |
Commodities transport |
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Logistics – Africa
(including South Africa) |
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April 2013 |
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60 |
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48 |
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Individually immaterial business
combinations |
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95 |
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Total purchase consideration
transferred |
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776 |
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Reason for the acquisitions
— |
RTT Health Sciences, one of Africa’s leading pharmaceutical and healthcare supply chain service providers was acquired to complement our
logistics business within South Africa to extend our footprint in Africa. |
— |
Orwell Trucks Limited was acquired to expand our Automotive Retail business in the United Kingdom and complement our truck franchise. |
— |
KWS Carriers was acquired to expand the commodity’s transportation business within our Logistics division in South Africa. |
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Fair value of assets acquired and liabilities assumed at date of acquisition: |
Total
Rm
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RTT Health
Sciences
Rm
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Orwell Trucks
Limited
Rm
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KWS Carriers
(Pty) Limited
Rm
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Individually
immaterial
acquisitions
Rm |
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Assets |
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Intangible assets |
323 |
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220 |
|
35 |
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41 |
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27 |
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Property, plant and equipment |
95 |
|
55 |
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14 |
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6 |
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20 |
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Transport fleet |
72 |
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53 |
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19 |
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Deferred tax assets |
1 |
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1 |
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Inventories |
151 |
|
14 |
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113 |
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1 |
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23 |
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Trade and other receivables |
442 |
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264 |
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51 |
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62 |
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65 |
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Cash resources |
49 |
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15 |
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27 |
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7 |
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1 133 |
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568 |
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240 |
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163 |
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162 |
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Liabilities |
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Deferred tax liabilities |
71 |
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36 |
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8 |
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15 |
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12 |
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Interest-bearing borrowings |
73 |
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22 |
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29 |
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22 |
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Non-current financial liabilities |
8 |
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8 |
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Trade and other payables and provisions |
510 |
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234 |
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137 |
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80 |
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59 |
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Current tax liabilities |
5 |
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1 |
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2 |
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2 |
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667 |
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271 |
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169 |
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124 |
|
103 |
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Acquirees’ carrying amount at acquisition |
466 |
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297 |
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71 |
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39 |
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59 |
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Less: Non-controlling interests |
(21) |
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(4) |
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(17) |
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Net assets acquired |
445 |
|
297 |
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71 |
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35 |
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42 |
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Purchase consideration transferred |
776 |
|
515 |
|
118 |
|
48 |
|
95 |
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– Cash |
700 |
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515 |
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110 |
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12 |
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63 |
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– Contingent consideration |
75 |
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8 |
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36 |
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31 |
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– Fair value of previously held interest |
1 |
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1 |
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Excess of purchase consideration over net assets
acquired |
331 |
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218 |
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47 |
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13 |
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53 |
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Trade and other receivables acquired had gross contractual amounts of R452 million of which R10 million was doubtful. None of the goodwill
is expected to be deductible for tax purposes. Non-controlling interests have been calculated based on their proportionate share.
Details of contingent consideration
The contingent consideration requires the group to pay the vendors an additional total amount of R75 million over three years if the acquired
businesses’ net profit exceeds certain earnings targets.
Acquisition costs
Acquisition costs for acquisitions concluded during the year amounted to R7 million and have been recognised as expenses in profit or loss
within business acquisition costs.
Impact of the acquisitions on the results of the group
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Impact of the acquisitions on the results of the group |
Total
Rm
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RTT Health
Sciences
Rm
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Orwell Trucks
Limited
Rm
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KWS Carriers
(Pty) Limited
Rm
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Individually
immaterial
acquisitions
Rm |
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From the dates of acquisition, the acquired businesses
contributed: |
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Revenue |
1 514 |
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697 |
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324 |
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324 |
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247 |
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Net profit as reported by entity |
67 |
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31 |
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6 |
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9 |
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21 |
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Funding costs and amortisation of intangible assets arising
on the business combinations |
(34) |
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(22) |
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(7) |
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(3) |
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(2) |
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Net profit |
33 |
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9 |
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(1) |
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6 |
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19 |
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Had all the acquisitions been consolidated from 1 July 2012 the group’s revenue and net profit would have been R94 240 million and
R3 710 million respectively, with the new acquisitions contributing additional revenue of R1 858 million and net profit of R24 million. The net
profit of R24 million has been reduced by the funding costs of R3 million on the cash consideration and by the amortisation of intangible assets
arising on the business combinations of R30 million.
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