190 / 280
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
188
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
26.
BUSINESS COMBINATIONS (continued)
26.1 Acquisition of subsidiary (continued)
TicketPros Proprietary Limited was acquired with the objective of acquiring a platform in order for Group
companies to expand their product offering to existing TicketPros customers.
In most business acquisitions, there is a part of the cost that is not capable of being attributed in accounting
terms to identifiable assets and liabilities acquired and is therefore recognised as goodwill. In the case of the
acquisition of TicketPros Proprietary Limited, this goodwill is underpinned by a number of elements, which
individually cannot be quantified. Most significant among these is management’s experience and the
relationships held by management.
Blue Label Engage Proprietary Limited was purchased with the objective of entering into the loyalty and
customer engagement markets which meets the Group’s objective of providing a holistic customer
engagement strategy for potential customers and expands the Group’s revenue streams.
In most business acquisitions, there is a part of the cost that is not capable of being attributed in accounting
terms to identifiable assets and liabilities acquired and is therefore recognised as goodwill. In the case of the
acquisition of Blue Label Engage Proprietary Limited, this goodwill is underpinned by a number of elements,
which individually cannot be quantified. Most significant among these is management’s experience and the
relationships held by management.
The contingent consideration arrangement requires BLT to pay in cash the former owners of Blue Label
Engage Proprietary Limited an additional amount arrived at by multiplying the amount by which the headline
earnings of Blue Label Engage Proprietary Limited in its 2013 financial year exceeds R600 000 by four,
capped at a maximum of an additional R2.6 million. The potential undiscounted amount of all future
payments that the Group could be required to make under this arrangement is between zero and
R2.6 million.
The fair value of the contingent consideration arrangement of R0.3 million was estimated by applying the
income approach. The fair value estimates are based on a discount rate of 18.46% and assumed probability-
adjusted profit in Blue Label Engage Proprietary Limited of R0.4 million.
Panacea Mobile Proprietary Limited was purchased with the objective of utilising their software system to
grow and expand the Group’s operations and revenues within the messaging market in South Africa and
Africa. A large portion of the purchase price in this transaction was allocated to the internally generated
software system which had not been capitalised separately within the Company.