Acquisitions and disposals of investments
Changes in ownership interest in subsidiaries as a result of non-controlling interest transactions
The Group had increases and decreases in its shareholdings in a number of its subsidiary companies due to transactions with minority shareholders. The individual transactions are immaterial.
The Group acquired the business of the Bohes Trust on 1 October 2016 for a total consideration of R9 million (including a contingent consideration of R1.8 million). The trust had no significant contingent liabilities at the acquisition date.
Alliance Medical Group Limited (Alliance Medical) acquired 100% of Albaro, incorporated in Italy, on 30 December 2016 for a total consideration of R102 million (EUR7 million). The company had no significant contingent liabilities at the acquisition date.
1. Acquisition of Alliance Medical
On 21 November 2016, the Group acquired 93.78% of the issued share capital of Alliance Medical, incorporated in the United Kingdom. This is accounted for as a 100% subsidiary in terms of International Financial Reporting Standards (IFRS). The exchange rate as at 21 November 2016 and 31 March 2017 was GBP1:R17.88 and GBP1:R16.84 respectively. The acquisition has been provisionally accounted for in terms of IFRS 3 “Business combinations”.
The following presents the impact on the consolidated information of the Group for the period 21 November 2016 to 31 March 2017, converted at an average rate of GBP1:R16.72:
|Depreciation and amortisation||(269)|
|Fair value adjustment of contingent consideration||(18)|
|Impact on consolidated information if the business combination took place on 1 October 2016, converted at an average rate of GBP1:R16.72:|
|Details of the net assets acquired and goodwill are as follows:|
|Total purchase consideration||(10 832)|
|Cash portion||9 884|
|B share liability assumed2||590|
|Provisional fair value of net assets acquired||1 198|
|Fair value of net assets acquired||1 198|
|Provisional goodwill arising on acquisition3||(9 634)|
|As at 31 March 2017, the provisional contingent consideration was calculated as GBP21 million (R354 million). This is due to the positive performance of Alliance Medical and the signing of six community diagnostic centre (CDC) contracts. The adjustment to the fair value of the contingent consideration of GBP1 million (R18 million) was recognised through profit and loss.|
|The maximum contingent consideration of GBP40 million was paid into escrow and is treated as restricted cash.|
The provisional fair values of the assets and liabilities arising from the acquisition are as follows:
The fair values identified on acquisition will remain provisional and are subject to further review.
The increase in intangible assets at 31 March 2017 mainly relates to the goodwill recognised of R9.6 billion and fair value uplift of intangible assets of R3.5 billion related to the Alliance Medical acquisition.
2. Interest-bearing borrowings
|Total borrowings at 30 September 2016||6 781|
|Bridge facility for Alliance Medical acquisition||10 579|
|Bridge facility for repayment of Alliance Medical existing debt||4 022|
|Net borrowings arising on acquisition of Alliance Medical||906|
|Additional loans raised||1 592|
|Repayment of existing loans||(1 617)|
|Total borrowings at 31 March 2017||21 976|
The net proceeds of R8.8 billion received from the rights offer during April 2017 have been used to repay a portion of the bridge facility drawn down for the Alliance Medical acquisition.
Basis of presentation and accounting policies
The condensed consolidated interim financial statements contained in the interim report are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports, and the requirements of the Companies Act of South Africa applicable to summary financial statements, and are consistent with those applied in the previous consolidated annual financial statements. The Listings Requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and the South African Institute of Chartered Accountants (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".
These interim financial results have been prepared under the supervision of PP van der Westhuizen (CA(SA)), the Group Chief Financial Officer.
The results for the period ended 31 March 2017 have not been reviewed or audited by the Group’s auditors. The directors take full responsibility for the preparation of the interim report.