Acquisitions and disposals of investments
Changes in ownership interest in subsidiaries as a result of non-controlling interest transactions.
The Group had marginal increases and decreases in its shareholdings in some of its subsidiary companies, due to transactions with minority shareholders. On 11 August 2016, the Group acquired an additional 30% shareholding in Flohoc Investments Proprietary Limited (Flohoc) for R306 million, resulting in Flohoc becoming a wholly owned subsidiary of the Group. During September 2016, the Group disposed of 17.3% of its shareholding in Flohoc for R110 million. The Group now owns 82.7%.
Increase in investment in Max Healthcare Institute Limited
The Group invested R320 million in Max Healthcare Institute Limited (Max) in November 2015, as its contribution to Max’s acquisition of 51% of Saket City, renamed Max Smart Super Speciality Hospital (Max Smart).
Scanmed Multimedis S.A. (Scanmed) acquired 100% of both Gastromed REM and Multimedycyna on 15 October 2015 and 12 November 2015 respectively, for a total of R31 million. These companies are incorporated in Poland and had no significant contingent liabilities at the acquisition date.
The following additional material acquisitions took place during the current financial year:
|Country of incorporation||Poland||Poland|
|Acquisition date||31 October 2015||1 April 2016|
|% voting equity interest acquired||100%||100%|
|Primary reasons for business combination||Diversification||Diversification|
|Qualitative factors that make up goodwill recognised||Synergies||Synergies|
|Contingent liabilities at acquisition||None||None|
Details of the fair value of net assets acquired and goodwill are as follows:
|Total purchase consideration||(629)||(158)|
|Fair value of equity interest held before the business combination||–||(55)|
|Fair value of net assets acquired||200||42|
|Trade and other receivables||58||44|
|Trade and other payables||(43)||(20)|
|Cash and cash equivalents||54||2|
|Property, plant and equipment||103||15|
The contingent consideration is dependent on the business gaining additional contracts in the next 12 – 24 months.
The contingent consideration is calculated by applying the same EBITDA multiple used on the acquisition date.
Impact on consolidated information if each business combination took place on 1 October 2015
Basis of presentation and accounting policies
The summarised consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements (Listings Requirements) for preliminary reports, and the requirements of the Companies Act applicable to summary financial statements. The Listings Requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the consolidated financial statements from which the summary consolidated financial statements were derived are in terms of IFRS, and are consistent with those applied in the previous consolidated annual financial statements, except for the adoption of the new and revised standards.
These financial results have been prepared under the supervision of PP van der Westhuizen CA(SA), the Group Chief Financial Officer.
Report of the independent auditor
This summarised report is extracted from audited information, but is not itself audited. The annual financial statements were audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The audited annual financial statements and the auditor’s report thereon are available for inspection at the Company’s registered office.
The directors take full responsibility for the preparation of the preliminary report and that the financial information has been correctly extracted from the underlying annual financial statements.