| Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are classified as current liabilities if payment is due within the normal
operating cycle of the business. If not, they are presented as non-current liabilities. |
| |
|
|
|
|
|
| |
2017
R’000 |
|
|
2016
R’000 |
|
| Trade payables |
3 167 171 |
|
|
2 235 245 |
|
| Accruals |
138 428 |
|
|
116 240 |
|
| Employee benefits |
71 458 |
|
|
70 142 |
|
| Sundry creditors |
88 189 |
|
|
103 194 |
|
| Deferred revenue |
2 786 |
|
|
2 044 |
|
| Contingent consideration |
32 974 |
|
|
83 563 |
|
| VAT |
19 332 |
|
|
9 048 |
|
| Payables to related parties (refer to note 8) |
3 609 |
|
|
23 144 |
|
| |
3 523 947 |
|
|
2 642 620 |
|
| Less: Amounts included in current portion of trade and other payables |
(3 517 673) |
|
|
(2 601 807) |
|
| |
6 274 |
|
|
40 813 |
|
Trade payables are discounted at a discount rate of 10.5% per annum (2016: 10.5% per annum) based on average
creditors’ days outstanding. The effect of discounting of the trade payables balance amounts to R21.0 million
(2016: R13.6 million).
Fair value estimation
| Fair value measurement hierarchy: |
| Level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2: fair value based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or |
| Level 3: fair value based on inputs for the asset or liability that are not based on observable market data (that is, observable inputs). |
Contingent consideration
Changes in level 3 instruments are as follows:
| |
|
|
|
|
|
| |
2017
R’000 |
|
|
2016
R’000 |
|
| Opening balance |
83 563 |
|
|
123 902 |
|
| Acquisition of Reware Proprietary Limited |
1 150 |
|
|
— |
|
| Acquisition of Utilities World Proprietary Limited |
4 516 |
|
|
— |
|
| Settlements |
(50 666) |
|
|
(1 931) |
|
| Gains or losses recognised in profit or loss |
(5 589) |
|
|
(38 408) |
|
| Closing balance |
32 974 |
|
|
83 563 |
|
| Total gains or losses for the period included in profit or loss for liabilities held at the end of the reporting period, under: |
|
|
|
|
|
| Other income |
(10 210) |
|
|
(48 120) |
|
| Interest paid |
4 621 |
|
|
9 712 |
|
| Unrealised gains or losses recognised in profit or loss for liabilities held at the end of the reporting period |
5 304 |
|
|
9 127 |
|
The closing balance includes R5.6 million relating to SupaPesa Africa Limited, R18.3 million relating to Viamedia
Proprietary Limited, R4 million to Utilities World Proprietary Limited and R5 million to other contingent considerations.
Acquisition of SupaPesa Africa Limited
The fair value of the contingent consideration arrangement of R29.9 million was originally estimated by applying the
income approach. The fair value estimates are based on a discount rate of 9.25%. For all profit targets management
has assumed a probability of 100% initially. In determining these probabilities management has assessed the cash
flow projections based on financial budgets for the forthcoming three years which are based on assumptions of the
business, industry and economic growth.
In the prior year management reassessed the cash flows taking into account the profit targets and the probability of
meeting these as well as the forecast financial budget. The probabilities have been adjusted downwards from 100% to
between 32% and 55%. This resulted in a release of R17.2 million into the income statement, included in other income.
In the current year management reassessed the cash flows taking into account the profit targets and the probability
of meeting these as well as the forecast financial budget. The probabilities have been adjusted downwards from
between 32% and 55% to between 13% and 28%. This resulted in a release of R5.5 million into the income
statement, included in other income.
Acquisition of Viamedia Proprietary Limited (Viamedia)
The contingent consideration arrangement requires Blue Label Telecoms Limited to pay in cash the former owner
of Viamedia, an additional amount of R215.6 million if certain profit warranties are achieved. The first three amounts
of R24.1 million are based on the profits of Viamedia for the year ended 31 May 2015 and 31 May 2016, and ending
31 May 2017. The fourth and fifth amounts of R30.9 million and R112.5 million are based on the profits of Viamedia
for the three years ending 31 May 2017.
Originally the fair value of the contingent consideration arrangement of R84.8 million was estimated by applying the
income approach. The fair value estimates were based on a discount rate of 9%. For the first, second, third and
fourth profit targets management had assumed a probability of 100%. For the fifth profit target management had
assumed a probability of 0%. In determining these probabilities management had assessed the cash flow projections
based on financial budgets for the forthcoming three years which were based on assumptions of the business,
industry and economic growth.
In the prior year management reassessed the cash flows taking into account the profit targets and the probability
of meeting these as well as the forecast financial budget. For the first, second and third profit targets, the probabilities
were adjusted downwards from 100% to between 84% and 100%. For the fourth profit target management had
assumed a probability of 0%. This resulted in a release of R30.8 million into the income statement in the prior year,
included in other income.
In the current year management reassessed the cash flows taking into account the profit targets and the probability
of meeting these as well as the forecast financial budget. For the third profit targets the probability has been adjusted
downwards from 100% to 77%. This has resulted in a release of R6.8 million into the income statement, included in
other income.
Acquisition of Reware Proprietary Limited
The contingent consideration arrangement requires Blue Label Telecoms Limited to pay in cash the former owner
of Reware an additional amount, totalling 10% of Reware’s net profit for the year ended May 2017 and 5% of
Reware’s net profit for the year ended May 2018, if certain profit warranties are achieved. The fair value of the
contingent consideration arrangement of R1.1 million was estimated by applying the income approach. The fair value
estimates are based on a discount rate of 10.5%.
Management assessed the cash flows taking into account the forecast financial budget, profit targets and the
probability of meeting these. The probability of Reware reaching the May 2017 target and May 2018 target was
assessed at 0% and 100% respectively. At year-end management reassessed the probability of Reware reaching the
May 2018 target based on new forecast financial budgets and adjusted it downwards from 100% to 0%. This has
resulted in a release of R1.3 million into the income statement, included in other income.
Acquisition of Utilities World Proprietary Limited
The contingent consideration arrangement required Blue Label Telecoms Limited to pay in cash the former owner of
Utilities World Proprietary Limited (Utilities World) an additional amount of R5 million if certain profit warranties were
achieved for the 12 months ended 28 February 2017. The fair value of the contingent consideration arrangement of
R4.5 million was estimated by applying the income approach. The fair value estimates were based on a discount rate
of 10.5%.
Management assessed the cash flows taking into account the forecast financial budget, profit targets and the probability
of meeting these. The probability of Utilities World reaching its target was initially assessed at 100%. While this target
was not met, Utilities World did reach a secondary target, requiring management to pay the former owners R4 million
post-year end. |