Business combinations

Subsidiaries and businesses acquired    Nature of
business 
Operating
segment 
Date acquired  Interest
acquired
(%)
Purchase
price
R’000 
Fleet Hire Holdings Limited (Fleet Hire)   Fleet management SG Fleet 4 August 2016 100  (367 458)
Western Cape Dealerships    Dealerships Dealerships SA 1 September 2016 100  (899 301)
ABF Legend Logistics Proprietary Limited (Legend)   Logistics Supply Chain Africa 30 September 2016 75  (110 547)
Motiva Group Limited (Motiva)   Fleet management SG Fleet 30 November 2016 100  (249 004)
Essex Auto Group Limited (EAG)   Dealerships Dealerships UK 1 March 2017 100  (406 988)
Purchase price  (2 033 298)
Net cost on acquisition of businesses  Fleet Hire
R’000 
Western Cape
Dealerships
R’000 
Legend
R’000 
Motiva
R’000 
EAG
R’000 
Total
R’000 
Fair value of assets acquired and liabilities assumed at date of acquisition:             
Assets             
Property, plant and equipment  (4 845) (211 615) (96 531) (1 165) (254 663) (568 819)
Intangible assets  (82 802) –  (12 364) (64 086) –  (159 252)
Full maintenance lease assets  (124 552) –  –  (439 711) –  (564 263)
Goodwill  (335 509) (399 794) (56 244) (180 678) (201 681) (1 173 906)
Deferred tax asset  –  (2 966) –  –  –  (2 966)
Inventories  (9 681) (618 693) (2 189) (7 098) (688 668) (1 326 329)
Trade and other receivables  (82 160) (4 504) (51 472) (63 071) (1 001) (202 208)
Provision for impairment of trade receivables  2 852  –  3 469  –  –  6 321 
Taxation receivable  (309) –  –  (983) –  (1 292)
Cash and cash equivalents  (19 455) –  (18 277) (53 890) (58 382) (150 004)
  (656 461) (1 237 572) (233 608) (810 682) (1 204 395) (4 142 718)
Liabilities             
Fund reserves  45 141  –  –  26 407  –  71 548 
Interest-bearing borrowings  –  –  45 650  –  56 687  102 337 
Full maintenance lease borrowings  124 202  –  –  425 337  –  549 539 
Deferred tax liabilities  12 784  –  13 841  15 209  16 635  58 469 
Trade and other payables  103 887  335 563  41 498  91 708  724 085  1 296 741 
Income tax payable  –  –  3 803  –  –  3 803 
Provisions  2 989  2 708  168  3 017  –  8 882 
  289 003  338 271  104 960  561 678  797 407  2 091 319 
Fair value of net assets acquired  (367 458) (899 301) (128 648) (249 004) (406 988) (2 051 399)
Less: Non-controlling interest  –  –  18 101  –  –  18 101 
Purchase price  (367 458) (899 301) (110 547) (249 004) (406 988) (2 033 298)
Deferred contingent purchase consideration  –  –  35 547  –  –  35 547 
Equity shares of SG Fleet transferred  32 295  –  –  16 587  –  48 882 
Cash consideration transferred  (335 163) (899 301) (75 000) (232 417) (406 988) (1 948 869)
Cash acquired  19 455  –  18 277  53 890  58 382  150 004 
Cash outflow  (315 708) (899 301) (56 723) (178 527) (348 606) (1 798 865)

The acquisition of Fleet Hire and Motiva will bolster the United Kingdom SG Fleet division. The Group performed a purchase price allocation exercise on Fleet Hire and Motiva whereby intangible assets acquired were separately valued. The valuation, using projected financial information, led to the recognition of customer contracts and relationships of R82.8 million and R62.0 million for Fleet Hire and Motiva respectively.

The acquisition of the Western Cape dealerships will allow the Group to expand its Mercedes-Benz dealerships footprint.

The acquisition of Legend will bolster the Supply Chain Africa division. The Group performed a purchase price allocation exercise on Legend whereby intangible assets acquired were separately valued. The valuation, using projected financial information, led to the recognition of R12.4 million in respect of customer contracts.

The acquisition of EAG will expand the Group’s dealership footprint in the United Kingdom.

The non-controlling interests have been calculated using the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets.

Goodwill has been recognised on the acquisition of Fleet Hire, Western Cape dealerships, Legend, Motiva and EAG amounting to R335.5 million, R399.8 million, R56.2 million, R180.7 million and R201.7 million respectively.

Goodwill is attributable mainly to the skills and technical talent of the workforce and synergies expected to be achieved from integrating the acquired businesses into the Group’s various operations. None of the goodwill is expected to be deductible for tax purposes.

The acquisition related costs of R42.0 million relating to these acquisitions are included in the Consolidated Statement of Comprehensive Income.

The values identified in relation to the acquisitions are provisional as at 30 June 2017.

Impact of the acquisitions
on the results of the Group 
Fleet Hire
R’000 
Western Cape
Dealerships
R’000 
Legend
R’000 
Motiva
R’000 
EAG
R’000 
Total
R’000 
From the dates of acquisition, the acquired businesses contributed:             
Revenue  2 541 507  375 426  169 361  1 186 727  4 273 021 
Profit after tax and amortisation of PPA intangibles (excluding acquisition related costs) 20 910  43 641  12 079  21 455  98 085 
Attributable profit to equity holders of Super Group1  20 910  32 731  6 326  21 455  81 422 

Notes:

Profit after tax, after non-controlling interest (excluding acquisition-related costs). 
Due to the significant integration activities it is not practical to derive a meaningful revenue and profit contribution. 
Impact of the acquisitions
on the results of the Group – had they occurred on 1 July 2016 
Fleet Hire
R’000 
Western Cape
Dealerships
R’000 
Legend
R’000 
Motiva
R’000 
EAG
R’000 
Total
R’000 
From 1 July 2016 the businesses would have contributed:             
Revenue  3 028 121  480 803  292 463  2 461 199  6 262 586 
Profit after tax and amortisation of PPA intangibles (excluding acquisition related costs) 24 039  56 421  15 736  36 284  132 480 
Attributable profit to equity holders of Super Group1  24 039  42 316  8 241  36 284  110 880 

Notes:

Profit after tax, after non-controlling interest (excluding acquisition-related costs).
Due to the significant integration activities it is not practical to derive a meaningful revenue and profit contribution.
Net proceeds on disposal of business            Dealerships
SA
R’000 
Fair value of assets and liabilities disposed were:             
Property, plant and equipment            255 
Inventories            10 061 
Trade and other payables            (5 486)
Provisions            (22)
Cash inflow  4 808 

The Group disposed of Nissan and Renault the Glen effective 1 March 2017 for R4.8 million.

Net costs on increase in existing shareholding in subsidiaries  SG Fleet
R’000 
SG Coal
R’000 
Total
R’000 
Non-controlling interest  (9 657) (225 476) (235 133)
Effect of transactions between equity partners on equity  (32 738) 58 171  25 433 
Purchase price  (42 395) (167 305) (209 700)
Reduction of SG Coal receivable  –  114 626  114 626 
Cash outflow  (42 395) (52 679) (95 074)

During the year the Group purchased an additional 0.42% in SG Fleet for R42.4 million and the NCI of 49.17% in SG Coal for R167.3 million.

Net proceeds on decrease in existing shareholding in SG Fleet  Fleet Hire
R’000 
Motiva
R’000 
Total
R’000 
Non-controlling interest  18 817  10 128  28 945 
Effect of transactions between equity partners on equity  13 478  6 459  19 937 
  32 295  16 587  48 882 
Equity shares of SG Fleet transferred on purchase of Fleet Hire  (32 295) (32 295)
Equity shares of SG Fleet transferred on purchase of Motiva  (16 587) (16 587)
Cash inflow 

SG Fleet issued 1 23 043 shares to the sellers of Fleet Hire and Motiva as part payment for the acquisitions, resulting in a dilution of 0.25% of the Group’s shareholding.