Business combinations
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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:
Business acquired | Nature of business | Operating segment | Effective date | Interest acquired % |
Purchase consideration transferred Rm |
|
F&G Holdings Group and F&G Commercial | The Group comprises four DAF dealerships along with a commercial body-building operation as well as a vehicle repair centre | Retail and Rental | July 2019 | 100 | 278 | |
Other various individually immaterial acquisitions | 41 | |||||
319 |
---|
F&G Holdings Group and F&G Commercial Rm |
Individually immaterial acquisitions Rm |
Total Motus Rm |
|||
Fair value of assets acquired and liabilities assumed at date of acquisition | |||||
ASSETS | |||||
Property, plant and equipment | 232 | 5 | 237 | ||
Inventories | 295 | 31 | 326 | ||
Trade and other receivables | 27 | – | 27 | ||
Cash resources | 69 | – | 69 | ||
623 | 36 | 659 | |||
LIABILITIES | |||||
Trade and other payables | 359 | 3 | 362 | ||
Provisions | 2 | – | 2 | ||
Deferred tax liability | 12 | – | 12 | ||
Income tax payable | 4 | – | 4 | ||
Interest-bearing debt | 102 | – | 102 | ||
479 | 3 | 482 | |||
Net assets acquired | 144 | 33 | 177 | ||
Purchase consideration transferred | 278 | 41 | 319 | ||
Goodwill | 134 | 8 | 142 |
Due to the recent nature of these acquisitions, all numbers are treated as provisional.
Process involved with obtaining control
The material acquisitions related to the purchase of the legal entities, which were then 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 and structures and create synergies supporting the recognition of goodwill.
Acquisition costs
Acquisition costs for business acquisitions concluded during the year amounted to R1 million (2018: R4 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 businesses acquired during the period contributed revenue of R694 million and after tax profit of R4 million including the after tax funding costs. Had all the acquisitions been consolidated from 1 July 2019, they would have contributed revenue of R794 million and an after tax profit of R5 million (including the after tax impact of funding costs). The Group's total revenue would have been R42 054 million and an after tax profit of R900 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 rights cannot be sold, transferred, licensed or rented/exchanged separately.
Other details
Trade and other receivables had a gross contractual amount of R28 million and allowance for expected credit losses of R1 million.
Non-controlling interests have been calculated based on the proportionate share of the fair value of the acquiree's net assets.
BUSINESS COMBINATIONS AFTER REPORTING PERIOD
On 1 February 2020, Motus acquired the underlying assets and liabilities of eight dealerships for between R380 million and R420 million. These operations are located in the city of Ballarat in Victoria, Australia. Due to the recent nature of this acquisition, the amounts are still provisional.
2020 Rm |
||
Fair value of assets acquired and liabilities assumed at date of acquisition | ||
ASSETS | ||
Property, plant and equipment | 56 | |
Inventories | 193 | |
Trade and other receivables | 29 | |
Cash resources | 2 | |
280 | ||
LIABILITIES | ||
Trade and other payables | 40 | |
Interest-bearing debt | 179 | |
219 | ||
Net assets acquired | 61 | |
Purchase consideration transferred (purchase range R380 million to R420 million) | 400 | |
Goodwill based on maximum purchase price | 339 | |