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05
Group financial statements
Notes to the condensed consolidated
annual financial statements
– continued
for the year ended 31 March 2017
15 Acquisitions and disposals
- continued
15.1 Acquisitions
- continued
15.1.3 Relational Database Consulting Proprietary Limited (RDC)
- continued
The acquisition has been accounted for using the acquisition method. The date of acquisition is
1 April 2016 and the financial statements include the RDC results for the twelve months ended 31 March 2017.
The fair value of the identifiable assets and liabilities at acquisition date were determined as follows:
2017
Rm
Assets
Trade and other receivables
5
Cash and cash equivalents
17
Total assets
22
Liabilities
Non-current debt
(3)
Trade and other payables
(13)
Total liabilities
(16)
Total identifiable net assets at fair value
6
Goodwill arising at acquisition
24
Purchase consideration transferred
30
Analysis of cash flows at acquisition:
Net cash acquired with the subsidiary (included in cash flows from investing activities)
Cash paid
16
Cash acquired at acquisition
17
Net cash inflow on acquisition
1
To the extent that RDC’s profit after tax exceeds the warranted profit, the seller will earn additional consideration amounting to R14 million,
payable in the 2019 and 2020 financial years.
At the date of the acquisition, the fair value of the trade receivables approximated its carrying value. The gross amount of trade receivables
is R5.2 million.
From the date of acquisition, RDC has contributed R89.4 million of revenue and R13.5 million to the net profit before tax from the
continuing operations of the BCX group.
The goodwill recognised is primarily attributed to the expected synergies and other benefits from combining the assets and activities of
RDC 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.
March 2016
15.1.4
Business Connexion group (BCX)
On 25 August 2015,Telkom acquired the entire issued ordinary share capital and the entire issued “A“ordinary shares of BCX. The total
purchase consideration of R2.7 billion was funded throughTelkom’s own cash resources.
BCX 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.
15.1.5
Anco IT Proprietary Limited (Anco)
On 1 November 2015 BCX acquired the entire issued ordinary share capital of Anco. The total purchase consideration of R41 million was in
the form of cash, earn-out payments, a loan to BCX and deferred consideration.
Anco 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.
15.1.6
UCS Solutions Proprietary Limited (UCS) minority interest
On 31 December 2015 theTelkomgroup, through BCX, acquired the remaining 15% of the UCS (and its holding in Integr8 IT Proprietary
Limited), based on the vested put option agreement with shareholders. UCS and Integr8 are now wholly owned subsidiaries of the BCX
group. This transaction was accounted for as an equity transaction.