MOTUS - Audited results for the year ended 30 August 2019

Business combinations

BUSINESS COMBINATIONS DURING THE YEAR

Acquisitions during the reporting period

A number of businesses were acquired during the year to complement existing businesses. An assessment of control was performed by Motus based on whether Motus has the practical ability to direct the relevant activities unilaterally. In making the judgement, the relative size and dispersion of other vote holders, potential voting rights held by them or others and rights from other contractual arrangements were considered. After the assessment, Motus concluded that it did have a dominant interest to direct the relevant activities of the subsidiaries acquired.

The fair value of assets acquired and liabilities assumed at the acquisition date were as follows.

					395
Business acquired	Nature of business	Operating segment	Effective date	Interest acquired (%)	Purchase consideration transferred Rm
Pentagon Ford	Three dealerships that primarily retail Ford motor vehicles in the United Kingdom	Vehicle Retail and Rental	December 2018	100%	266
Other various individually immaterial acquisitions					129

Fair value of assets acquired and liabilities assumed at date of acquisition:

	Pentagon Ford Rm	Individually immaterial acquisitions Rm	Total Motus Rm
Assets
Property, plant and equipment	103	14	117
Investments and other financial instruments	–	35	35
Deferred tax assets	–	27	27
Inventories	127	70	197
Trade and other receivables	1	4	5
Income tax assets	–	207	207
Cash resources	–	2	2
	231	359	590
Liabilities
Trade and other payables	–	114	114
Other non-current financial liabilities	–	3	3
Contract liability	–	42	42
Interest-bearing debt	15	118	133
	15	277	292
Acquiree’s fair value of net assets at acquisition	216	82	298
Non-controlling interests	–	(2)	(2)
Common control acquired	–	(12)	(12)
Net assets acquired	216	68	284
Total purchase consideration	266	129	395
Cash paid	266	103	369
Contingent consideration	–	26	26

Goodwill	50	61	111

Process involved with obtaining control

The acquisitions related to the purchase of the underlying assets and liabilities of the businesses, which were absorbed into Motus as operating divisions.

Reasons for the acquisitions

The acquisitions are strategically in line with the Group's objective of achieving economies of scale via selective bolt-on acquisitions in local and international markets that complement the Group's existing networks.

The acquisition of these businesses complement the Group's existing structures and create synergies supporting the recognition of goodwill.

Acquisition costs

Acquisition costs for business acquisitions concluded during the year amounted to R7 million and have been recognised as an expense in profit or loss in the "other non–operating items" line.

Impact of the acquisition on the results of the Group

From the dates of acquisition, the business's acquired during the period contributed revenue of R1 363 million and after tax loss of R14 million including the after tax funding costs. Had all the acquisitions been consolidated from 1 July 2018, they would have contributed revenue of R2 348 million and an after tax loss of R19 million (including the after tax impact of funding costs). The Group's total revenue would have been R80 696 million and an after tax profit of R1 891 million (also including the after tax impact of funding costs).

Separately identifiable intangible assets

The full excess purchase price is recognised as goodwill, as the distribution rights from the suppliers only transfer upon certain terms and conditions being met and do not automatically transfer as a part of the acquisition. These assets are not controlled resources that are separable in nature as the right cannot be sold, transferred, licensed or rented/exchanged separately.

Other details

Trade and other receivables had a gross contractual amount of R5 million.

Non-controlling interests have been calculated based on the proportionate share of the fair value acquiree's net assets.