NOTES TO THE FINANCIAL STATEMENTS – NOTE 34

34. Business combinations and transactions with subsidiary
34.1 Subsidiary acquired

Hyprop acquired an 87% interest in African Land on 5 December 2013 for R768 million. Pre-acquisition dividend received amounted to R10 million. Effective 1 July 2014, Hyprop's interest in African Land increased to 100%. Refer to note 4.1.

The acquisition was in line with Hyprop’s strategy to expand its investments in prime-quality shopping centres in sub-Saharan Africa (excluding SA).
    Principal activity Date of
acquisition		 Proportion of
voting equity
interest acquired		   June 2014
Consideration
transferred		  
  African Land Acquiring income
producing investment
property in sub-
Saharan Africa
(excluding SA)		 5 December 2013 87%   758 264  
34.2 Assets acquired and liabilities recognised at the date of acquisition(1)            
  Non-current assets            
  Investment property (refer to note 2.2)         1 557 394  
  Building appurtenances and tenant installations (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
 

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.
34.3 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.            

    June 2014
Consideration
transferred		  
34.4 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.

34.5 Impact of acquisition on results of the group for June 2014
 

Revenue for the 2014 year includes R78 million attributable to revenue from African Land.

Included in profit for the 2014 year is R62,3 million of profit from African Land.

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.
34.6 Net cash outflow on acquisition of African Land
    Consideration transferred 758 264  
       Cash 747 769  
       Hyprop units issued 10 495  
    Less: Cash and cash equivalents acquired (12 012)  
    Less: Hyprop units issued (10 495)  
    Net cash outflow 735 757