Business combinations

Subsidiaries and businesses acquired Nature of 
business 
Operating 
segment 
Date 
acquired 
Interest 
acquired 
(%) 
Purchase 
price 
R’000 
Servicios Empresariales Ader, SL (Ader) Logistics  Supply Chain Europe  4 July 2017  89.5  (173 752)
Bestodeck Limited (SMC) Dealerships  Dealerships UK  4 July 2017  100  (414 344)
MDS Group (MDS) Logistics  Supply Chain Africa  1 October 2017  90  (59 045)
Purchase price  (647 141)
Net cost on acquisition of businesses  Ader
R’000 
SMC
R’000 
MDS
R’000 
Other
R’000 
Total
R’000 
Fair value of assets acquired and liabilities assumed at date of acquisition 
Assets 
Property, plant and equipment  (17 801) (255 675) (10 455) (3 278) (287 209)
Intangible assets  (123 782) –  (17 633) –  (141 415)
Goodwill  (62 815) (143 583) (28 584) (12 872) (247 854)
Inventories  –  (515 394) (318) –  (515 712)
Trade and other receivables  (187 294) (4 017) (21 847) –  (213 158)
Provision for impairment of trade receivables  –  –  315  –  315 
Taxation receivable  –  –  (44) –  (44)
Cash and cash equivalents  (9 024) (183 744) (3 507) –  (196 275)
  (400 716) (1 102 413) (82 073) (16 150) (1 601 352)
Liabilities 
Interest-bearing borrowings  –  –  1 901  –  1 901 
Deferred tax liabilities  20 957  15 479  4 429  –  40 865 
Trade and other payables  188 695  668 906  12 913  –  870 514 
Income tax payable  3 003  3 684  –  –  6 687 
Provisions  1 906  –  400  16 150  18 456 
  214 561   688 069  19 643   16 150   938 423 
Fair value of net assets acquired  (186 155) (414 344) (62 430) –  (662 929)
Less: Non-controlling interest  12 403  –  3 385  –  15 788 
Purchase price  (173 752) (414 344) (59 045) –   (647 141)
Cash acquired  9 024  183 744  3 507  –  196 275 
Cash outflow  (164 728) (230 600) (55 538) –   (450 866)

The acquisition of Ader through inTime Holdings GmbH (inTime) will bolster the Supply Chain Europe division and increase the Group’s footprint in the Eurozone. The Group performed a PPA exercise on Ader whereby intangible assets acquired were separately valued. The valuation, using projected financial information, led to the recognition of a trade name, software, customer contracts and relationships of R88.8 million, R11.0 million and R24.0 million respectively.

The acquisition of SMC will expand the Group’s dealership footprint in the United Kingdom. The Group performed a PPA exercise which resulted in no additional intangible assets recognised.

The acquisition of the MDS Group, consisting of MDS Collivery Proprietary Limited, MDS Outsourcing Proprietary Limited, Messenger and Delivery Services Technologies Proprietary Limited, MDS VISAPAK Proprietary Limited and MDS Vehicle Management Proprietary Limited, will bolster the Supply Chain Africa division. The Group performed a PPA exercise on MDS whereby intangible assets acquired were separately valued. The valuation, using projected financial information, led to the recognition of a trade name, software, customer contracts and relationships of R4.7 million, R9.0 million and R3.4 million respectively.

The other acquisition relates to adjustments made to the fair value of assets and liabilities for an acquisition that was concluded in the prior financial year.

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.

The values identified in relation to the acquisitions are provisional as at 30 June 2018.

Goodwill has been recognised on the acquisition of Ader, SMC, MDS and other amounting to R62.8 million, R143.6 million, R28.6 million and R12.9 million respectively.

The above 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 R8.6 million in respect of these acquisitions are included in profit or loss in the consolidated statement of comprehensive income.

Impact of the acquisitions on the results of the Group  Ader
R’000 
SMC
R’000 
MDS
R’000 
Total
R’000 
From the dates of acquisition, the acquired businesses contributed: 
Revenue  793 431  2 349 884  84 834  3 228 149 
Profit after tax and amortisation of PPA intangibles1  18 342  29 255  8 594  56 191 
Attributable profit to equity holders of Super Group1  12 209  29 255  7 735  49 199 

1  Excluding acquisition-related costs.

Impact of the acquisitions on the results of the Group  Ader
R’000 
SMC
R’000 
MDS
R’000 
Total
R’000 
From 1 July 2017 the businesses would have contributed: 
Revenue  793 431  2 349 884  111 970  3 255 285 
Profit after tax and amortisation of PPA intangibles1  18 342  29 255  11 151  58 748 
Attributable profit to equity holders of Super Group1  12 209  29 255  10 037  51 501 

1  Excluding acquisition-related costs.

Net proceeds on disposal of businesses  Tommy 
Martin 
R’000 
Other 
R’000 
Total 
R’000 
Fair value of assets and liabilities disposed were: 
Assets 
Property, plant and equipment  539  –  539 
Inventories  10 805  –  10 805 
Trade and other receivables  –  254  254 
Cash and cash equivalents  –  8 809  8 809 
  11 344  9 063  20 407 
Liabilities 
Trade and other payables  (7 274) (6 410) (13 684)
Provisions  (296) (30) (326)
  (7 570) (6 440) (14 010)
Fair value of net assets disposed  3 774  2 623  6 397 
Loss on sale of business  –  (2 623) (2 623)
Selling price  3 774  –  3 774 
Cash disposed  –  (8 809) (8 809)
Cash inflow/(outflow) 3 774  (8 809) (5 035)
Net costs on increase in existing shareholding in subsidiaries  SG Fleet
R’000 
Digistics R’000  Legend
R’000 
Ader
R’000 
Total
R’000 
Non-controlling interest  (132 258) (68 760) (18 285) 984  (218 319)
Effect of transactions between equity partners on equity  (419 407) (33 905) (81 415) (984) (535 711)
Cash outflow  (551 665) (102 665) (99 700) –  (754 030)

During the year, the Group purchased an additional 14 186 914 shares in SG Fleet for R551.7 million, the remaining 45% of Digistics for R102.7 million and an additional 15% in Legend for R99.7 million. In December, the Group increased its investment in Ader via a purchase of shares, this transaction did not change the Group’s profit share arrangement.

Net proceeds on decrease in existing shareholding in subsidiaries  SG Fleet
R’000 
Ader
R’000 
SG Coal
R’000 
Total
R’000 
Non-controlling interest  30 505  2 038  99 225  131 768 
Effect of transactions between equity partners on equity  (9 917) 553  5 775  (3 589)
  20 588  2 591  105 000  128 179 
Equity shares of SG Fleet transferred  (20 588) –  –  (20 588)
Long-term receivable  –  –  (105 000) (105 000)
Cash inflow  –  2 591  –  2 591 

During the year, SG Fleet issued 4 327 277 shares for the fulfilment of the vesting of SG Fleet’s share options. The Group’s closing shareholding is 57%.

In December, inTime disposed of 1.5% of Ader for R2.6 million.

In April, the Group disposed of 15% of SG Coal for R105.0 million.