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