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Acquisitions that resulted in business combinations
Cork Community Imaging Limited (Cork)
The Group, through Alliance Medical, acquired 100% of Cork on 25 May 2019 for a total consideration of R4 million.
Goodwill of R3 million was recognised. No significant contingent liabilities existed at the acquisition date.
European Scanning Centre Limited (ESC)
| Acquirer |
|
Alliance Medical |
| Country of incorporation |
|
United Kingdom |
| Acquisition date |
|
21 December 2018 |
| Percentage voting equity interest acquired |
|
100% |
| Primary reasons for business combination |
|
In line with Life Healthcare’s strategy to establish a
sizeable international business, and complements the
Group’s existing diagnostic services segment |
| Qualitative factors that make up goodwill recognised |
|
Attributable to future earnings potential and synergies
relating to property consolidation, reduction in
administrative costs and improved procurement |
| Contingent liabilities at acquisition |
|
None |
None of the goodwill recognised is expected to be deductible for income tax purposes.
Details of the fair value of net assets acquired and goodwill are as follows:
| |
| Total purchase consideration |
|
(211) |
|
|
| Cash portion |
|
(195) |
|
|
| Contingent consideration1 |
|
(16) |
|
|
| Fair value of net assets acquired |
|
80 |
|
|
| Property, plant and equipment |
|
40 |
|
|
| Customer relationships |
|
71 |
|
|
| Brand name |
|
15 |
|
|
| Trade and other receivables |
|
12 |
|
|
| Cash and cash equivalents |
|
8 |
|
|
| Interest-bearing borrowings |
|
(4) |
|
|
| Deferred tax liabilities |
|
(15) |
|
|
| Trade and other payables |
|
(46) |
|
|
| Income tax payable |
|
(1) |
|
|
|
|
|
|
|
| Goodwill |
|
(131) |
|
|
| Cash outflow to acquire business, net of cash acquired |
|
|
|
|
| Initial cash consideration |
|
195 |
|
|
| Less: Cash at acquisition |
|
(8) |
|
|
| |
|
187 |
|
|
| Impact on consolidated information from date of acquisition |
|
|
|
|
| Revenue |
|
54 |
|
|
| Net loss |
|
(7) |
|
|
| Impact on consolidated information if business combination took place on 1 October 2018 |
|
|
|
|
| Revenue |
|
76 |
|
|
| Net loss |
|
(16) |
|
|
|
|
|
|
|
1 Contingent consideration is based on performance and is expected to become payable between six and 12 months from the date of acquisition.
Changes to fair values of previously acquired business
During the prior year, the Group acquired the business of Piramal Imaging (renamed Life Molecular Imaging (LMI)). The
fair values identified on acquisition were treated as provisional and have now been finalised. The following adjustments
were made during the current year:
| |
| Increase in intellectual property |
|
93 |
|
|
| Decrease in goodwill |
|
(92) |
|
|
| Decrease in trade and other receivables |
|
(24) |
|
|
| Increase in trade and other payables |
|
(23) |
|
|
|
|
|
|
|
| |
2018
R’m |
|
|
| Contingent consideration liabilities |
|
|
|
|
|
| Balance at 1 October |
534 |
|
116 |
|
|
| Arising on acquisition of subsidiaries |
16 |
|
413 |
|
|
| Paid during the year |
(79) |
|
(33) |
|
|
| Fair value adjustment recognised in profit or loss |
(2) |
|
18 |
|
|
| Unwinding of contingent consideration |
44 |
|
– |
|
|
| Effect of foreign currency movement |
30 |
|
20 |
|
|
| Balance at 30 September |
543 |
|
534 |
|
|
| Included under non-current liabilities |
506 |
|
463 |
|
|
| Included under current liabilities |
37 |
|
71 |
|
|
| |
543 |
|
534 |
|
|
|
|
|
|
|
|
Disposal of investment in subsidiary – Life Piet Retief Hospital Proprietary Limited
On 31 May 2019, the Group disposed of its 62.28% interest in Life Piet Retief Hospital Limited (incorporated in
South Africa):
| |
| Proceeds from disposal |
48 |
|
| Carrying amount of net assets sold |
(55) |
|
| Non-controlling interest |
18 |
|
| Profit on disposal |
11 |
|
| Disposal of investment in joint venture – Max |
|
|
| On 21 June 2019, the Group disposed of its 49.7% equity shareholding in Max (incorporated in India): |
|
|
| Proceeds from disposal |
4 347 |
|
| Investment in joint venture |
(2 846) |
|
| Profit on disposal |
1 501 |
|
| Transaction costs relating to disposal |
(118) |
|
| Withholding tax |
(94) |
|
| Profit on disposal after transaction costs and withholding tax |
1 289 |
|
|
|
|
The net cash proceeds of R3.8 billion (after payment of withholding tax and costs) were utilised to repay interest-bearing
borrowings.
Transactions with non-controlling interests
Increase and decrease in ownership interest in southern Africa and Polish subsidiaries
During the current and previous financial year, the Group had increases in its percentage shareholdings in some of its
subsidiary companies.
The largest impact on the Group cash flows was the acquisition of additional shares in Border Hospitals Proprietary
Limited (2018: Metropol Hospitals Proprietary Limited and Border Hospitals Proprietary Limited).
| |
2018
R’m |
|
| Total purchase consideration |
|
(125) |
|
(484) |
|
| Cash portion |
|
(125) |
|
(484) |
|
| Carrying amount of non-controlling interest recognised |
|
57 |
|
10 |
|
| Carrying amount of non-controlling interest acquired |
|
57 |
|
10 |
|
|
|
|
|
|
|
| Excess of consideration paid recognised in the transactions with non-controlling interests reserve within equity |
|
68 |
|
474 |
|
| During the current and previous financial year, the Group disposed of marginal percentages of its holdings in subsidiary companies to non-controlling interest. |
|
|
|
|
|
| The Group still maintained control over the subsidiary entities after the decrease in ownership interest. |
|
|
|
|
|
| Total value of decrease in carrying amount of non-controlling interest |
|
(13) |
|
(29) |
|
| Transactions with non-controlling interest reserve |
|
(8) |
|
– |
|
| Proceeds on disposal of investments |
|
21 |
|
29 |
|
|
|
|
|
|
|
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