192 / 280
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
190
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
26.
BUSINESS COMBINATIONS (continued)
26.2 Acquisition of non-controlling interest’s shareholding (continued)
Panacea
Proprietary
Limited
R’000
TicketPros
Proprietary
Limited
R’000
Africa
Prepaid
Services
Proprietary
Limited
R’000
Total
R’000
Non-controlling interests
4 752
3 249
(11 761)
(3 760)
Fair value of net assets acquired
4 752
3 249
(11 761)
(3 760)
Amounts transferred to transaction with
non-controlling interest reserve
12 893
1 451
11 761
26 105
Total purchase consideration
17 645
4 700
*
22 345
Contingent consideration
(6 155)
—
—
(6 155)
Settled in cash
11 490
4 700
*
16 190
Cash flow on acquisition
11 490
4 700
*
16 190
* Less than R1 000.
On 1 June 2014, Blue Label Telecoms Limited acquired 24.5% of Panacea Proprietary Limited (Panacea) from
both Stefano Sessa and Donald Duke Jackson respectively.
The contingent consideration arrangement requires BLT to pay in cash the former owners of Panacea an
additional two amounts of R1.5 million and R6.6 million based on gross profits and net profits after tax
arising from a certain customer contract. The R1.5 million payment is payable in 10 biannual tranches,
capped at R150 000 each. The first of these payments was made in March 2014. The R6.6 million payment is
payable in five annual tranches with the first payment being due in August 2014.
The potential undiscounted amount of all future payments that the Group could be required to make under
this arrangement is between R150 000 and R8.1 million.
The fair value of the contingent consideration arrangement of R6.2 million was estimated by applying the
income approach. The fair value estimates are based on a discount rate of 9%. Management has assumed a
probability of 100% for all profit targets. Refer to note 14.
On 31 January 2014, BLT acquired 18% of the issued share capital of Africa Prepaid Services Proprietary
Limited from Imphandze Holdings Proprietary Limited for R270.