Notes to the consolidated financial statements – Note 11

    2015
R’000		     2014
R’000		  
11. Acquisition of businesses, subsidiaries and associates          
  Property, plant and equipment (379 671)     (673 623)  
  Deferred taxation 96 586     85 955  
  Interest in associates (1 078 107)     (3 898 277)  
  Investments and advances (6 998)     (18 442)  
  Inventories (435 401)     (523 327)  
  Trade and other receivables (1 604 162)     (1 561 790)  
  Cash and cash equivalents (265 445)     (461 935)  
  Post-retirement obligations 12 314     1 776  
  Borrowings 364 632     495 166  
  Trade and other payables and provisions 1 043 659     1 776 095  
  Taxation 41 683     69 858  
  Net fair value of assets (2 210 910)     (4 708 544)  
  Goodwill (1 910 777)     (1 731 787)  
  Gain on a bargain purchase –     24 338  
  Intangible assets (552 629)     (572 825)  
  Non-controlling interest 935 197     (5 196)  
  Total value of acquisitions (3 739 119)     (6 994 014)  
  Less: Cash and cash equivalents acquired 265 445     461 935  
  Vendors for acquisition at beginning of year (482 937)     (113 971)  
  Vendors for acquisition at end of year 573 271     482 937  
  Fair value of existing interests 319 298     591 220  
  Costs incurred in respect of acquisitions (74 241)     (74 044)  
  Exchange rate adjustments 31 523     –  
  Net amounts paid (3 106 760)     (5 645 937)  

 

The Group acquired 60% of the issued share capital of Gruppo DAC (DAC) for a consideration of EUR75 million, and the entire issued share capital of PCL 24/7 Transport Limited (PCL), for a consideration of £52 million, with effect from July 1 2014. These acquisitions form part of the Group’s strategic expansion plans in the international foodservice industry.

As part of the agreement to acquire the shares in DAC, the Group entered into a put agreement to acquire the remaining shares in DAC at a contractually determined future date and value. A puttable non-controlling interest liability has been raised in the statement of financial position in this regard (refer note 30).

In February 2015 the Group made an offer to the shareholders of Adcock Ingram Holdings Limited (Adcock) to acquire up to 100% of the shares in Adcock at a price of R52,00 per share. As a result of this offer, and the acquisition of shares in the market at this time, the Group acquired a further 8,4% of the net issued capital in Adcock for a consideration of R737 million.

The Group also undertook a number of other smaller acquisitions during the year.

Goodwill arose on the acquisitions as the anticipated value of future cash flows that were taken into account in determining the purchase consideration exceeded the net assets acquired at fair value. The acquisitions have enabled the Group to expand its range of complementary products and services and, as a consequence, has broadened the Group’s base in the market place.

Trade receivables acquired above are stated net of impairment allowances of R58,9 million. There were no significant contingent liabilities identified in the businesses acquired.

    Adcock
R’000		   DAC
R’000		   PCL
R’000		   Other
smaller
acquisitions
R’000		   Total
R’000		  
  The impact of these acquisitions on the Group’s results can be                    
  summarised as follows:                    
  Identifiable assets acquired and liabilities acquired                    
  Property, plant and equipment     65 705   220 660   93 306   379 671  
  Deferred taxation     10 904   (113 779)   6 289   (96 586)  
  Interest in associates 737 357   27 503   –   313 247   1 078 107  
  Investments and advances     6 948   –   50   6 998  
  Inventories     343 047   –   92 354   435 401  
  Trade and other receivables     1 165 459   209 447   229 256   1 604 162  
  Cash and cash equivalents     76 023   115 893   73 529   265 445  
  Borrowings     (211 633)   (94 164)   (58 835)   (364 632)  
  Trade and other payables and provisions     (604 561)   (245 759)   (205 653)   (1 055 973)  
  Taxation     (24 545)   (12 873)   (4 265)   (41 683)  
  Intangible assets     –   540 861   11 768   552 629  
  Total net identifiable assets 737 357   854 850   620 286   551 046   2 763 539  
  Contribution to results for the year                    
  Revenue     3 805 634   1 261 327   1 277 304   6 344 265  
  Operating profit before acquisition costs     212 853   177 962   40 388   431 203  
  Contribution to results for the year if the acquisitions had been effective on July 1 2014                    
  Revenue     3 805 634   1 261 327   1 680 824   6 747 785  
  Operating profit before acquisition costs     212 853   177 962   65 196   456 011  

Notes to the consolidated financial statements – Note 11