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Group financial statements
Notes to the condensed consolidated
annual financial statements
– continued
for the year ended 31 March 2017
Non-controlling interest at proportional share of net assets
–
Goodwill arising on acquisition (provisional)
7
Purchase consideration transferred
13
Analysis of cash flows at acquisition:
Net cash outflow on acquisition of the subsidiary (included in cash flows from investing activities)
Cash paid
8
Cash acquired
(2)
Net cash outflow on acquisition
6
At the date of the acquisition, the fair value of the trade receivables approximated its carrying value. The gross amount of trade receivables
is R13.9 million.
From the date of acquisition, Taropa has contributed R9.3 million of revenue and R0.33 million to the net profit before tax from the
continuing operations of the BCX group. If the acquisition had taken place at the beginning of the year, BCX revenue from continuing
operations would have been R14 079 million and the BCX group profit from continuing operations for the period would have been
R1 068 million.
The goodwill recognised is primarily attributed to the expected synergies and other benefits from combining the assets and activities of
Taropa with those of the BCX group. The goodwill is not deductible for income tax purposes.
Transaction costs of less than R1 million, which includes issue costs, have been expensed since the inception of the acquisition.
These expenses were recognised in service fees.
The fair value of intangible assets and goodwill has been measured on a provisional basis pending the completion of an independent
valuation.
If new information is obtained within one year of the acquisition date on facts and circumstances that existed at the acquisition date, the
above amounts will be revised.
15 Acquisitions and disposals
15.1 Acquisitions
15.1.1 Taropa Technologies Proprietary Limited (Taropa)
On 1 March 2017 BCX acquired the entire issued ordinary share capital of Taropa.
The total purchase consideration was R13 million. The consideration is made up of R8 million cash and R5 million deferred consideration.
To the extent that Taropa’s profit after tax exceeds the warranted profit, the seller will earn additional consideration amounting up to
R5 million, payable in the 2019 and 2020 financial years.
Taropa provides innovative business solutions based on information and communication technology and runs ICT systems and manages
products, services and solutions for a wide range of customers.
The merger will enable BCX to expand its existing offerings while, at the same time, providing scale in IT services, which will help reinforce
Telkom’s core connectivity business and enhance BCX’s strategy.
The acquisition has been accounted for using the acquisition method. The date of acquisition is 1 March 2017 and the financial statements
include the Taropa results for the one month ended 31 March 2017.
The fair value of the identifiable assets and liabilities at acquisition date were determined as follows:
2017
Rm
Assets
Property, plant and equipment
1
Trade and other receivables
15
Inventories
18
Cash and cash equivalents
2
Total assets
36
Liabilities
Trade and other payables
29
Income tax payable
1
Total liabilities
30
Total identifiable net assets at fair value
6