NOTES TO THE FINANCIAL STATEMENTS l NOTE 33


33.

Business combinations
 
33.1 Subsidiary acquired
 

Hyprop acquired an 87% interest in African Land Investments Limited on 5 December 2013 for R768 million. Pre-acquisition dividend received amounted to R10 million.

The acquisition was in line with Hyprop’s strategy to expand its investments in prime-quality shopping centres to sub-Saharan Africa (excluding SA).
  2014 Principal activity Date of
acquisition		   Proportion of
voting equity
interest acquired		   Consideration
transferred		  
  African Land Investments Limited Acquiring income producing investment property in sub-Saharan Africa (excluding SA) 5 December 2013   87%   758 264  
33.2 Assets acquired and liabilities recognised at the date of acquisition(1)              
  Non-current assets              
  Investment property (refer to note 2.2)           1 557 394  
  Property, plant and equipment (refer to note 3.4)           35 447  
  Current assets              
  Trade and other receivables           4 149  
  Cash and cash equivalents           12 012  
  Non-current liabilities              
  Long-term loans           (601 008)  
  Current liabilities              
  Trade and other payables           (18 295)  
              989 699  
  (1) All amounts reflect 100% of acquisition values for African Land Investments Limited              
  Trade receivables acquired had a fair value and gross contractual amount of R8 million. The best estimate at acquisition date of the contractual cash flows not expected to be collected was
R4 million, resulting in net trade receivables of R4 million.		              
33.3 Non-controlling interests              
  The non-controlling interest recognised at the acquisition date was measured by reference to the agreements concluded with minority shareholders and amounted to       13%   128 540  
  The non-controlling interest is recognised at its proportionate interest in the subsidiary acquired.              
33.4 Gain on bargain purchase              
  Consideration transferred           758 264  
  Less: Fair value of identifiable net assets acquired           (861 159)  
  Gain on bargain purchase           (102 895)  
 

The gain on bargain purchase amounting to R102,9 million relates to Hyprop’s acquisition of African Land and was calculated in terms of IFRS 3 Business Combinations. The gain represents the amount by which the fair value of net assets acquired exceeds the consideration paid and has no impact on distributable earnings. The initial accounting for the business combination at 31 December 2013 was based on provisional amounts which resulted in a reported gain on bargain purchase of R64,8 million. The gain on bargain purchase at 30 June 2014 was adjusted retrospectively in accordance with IFRS 3.45.

The gain on bargain purchase arose as a consequence of the effective purchase price for Manda Hill (Lusaka, Zambia) being lower than the most recent fair valuation of the property.

33.5 Impact of acquisition on results of the group
  Revenue for the year includes R78 million attributable to revenue from African Land Investments Limited.

Included in profit for the year is R62,3 million representing profit from African Land Investments Limited.

Had the business combination been effected on 1 July 2013, the total Hyprop consolidated revenue would have been R2,6 billion and the total Hyprop consolidated profit would have been R1,9 billion.
      Consideration
transferred		  
  33.6 Net cash outflow on acquisition of African Land Investments Limited    
    Consideration transferred 758 264  
       Cash 747 769  
       Units issued 10 495  
    Less: Cash and cash equivalents acquired 12 012  
    Less: Units issued 10 495  
    Net cash outflow 735 757  


NOTES TO THE FINANCIAL STATEMENTS l NOTE 33