Trade and other payables
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. |
| |
2016
R’000 |
|
2015
R’000 |
|
| Trade payables |
2 322 408 |
|
2 671 779 |
|
| Accruals |
116 240 |
|
70 103 |
|
| Employee benefits |
70 142 |
|
61 740 |
|
| Sundry creditors |
16 031 |
|
20 974 |
|
| Deferred revenue |
2 044 |
|
1 221 |
|
| Contingent consideration |
83 563 |
|
123 902 |
|
| VAT |
9 048 |
|
16 675 |
|
| Payables to related parties (refer to note 8) |
23 144 |
|
7 828 |
|
| |
2 642 620 |
|
2 974 222 |
|
| Less: Amounts included in current portion of trade and other payables |
(2 601 807) |
|
(2 831 000) |
|
| |
40 813 |
|
143 222 |
|
Trade payables are discounted at a discount rate of 10.5% per annum (2015: 9.25% per annum) based on average creditors’ days outstanding. The effect of discounting of the trade payables balance amounts to R13.648 million (2015: R18.513 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, unobservable inputs). |
Contingent consideration
Changes in level 3 instruments are as follows:
| |
2016
R’000 |
|
2015
R’000 |
|
| Opening balance |
123 902 |
|
22 607 |
|
| Acquisition of Viamedia Proprietary Limited |
— |
|
84 783 |
|
| Acquisition of SupaPesa Africa Limited |
— |
|
29 851 |
|
| Acquisition of Supa Pesa South Africa Proprietary Limited |
— |
|
100 |
|
| Settlements |
(1 931) |
|
(19 515) |
|
| Gains or losses recognised in profit or loss |
(38 408) |
|
6 076 |
|
| Closing balance |
83 563 |
|
123 902 |
|
| 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 |
(48 120) |
|
(923) |
|
| Interest paid |
9 712 |
|
6 999 |
|
| Change in unrealised gains or losses for the period included in profit or loss for liabilities held at the end of the reporting period |
9 127 |
|
2 052 |
|
The closing balance includes R15.8 million relating to SupaPesa Africa Limited, R65.8 million relating to Viamedia Proprietary Limited and R2 million to other contingent consideration.
Acquisition of SupaPesa Africa Limited
In the prior year, 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 current year management reassessed the cash flows taking into account the profit targets and the probability of meeting these as well as the forecasted financial budget. The probabilities have been adjusted downwards from 100% to between 32% and 55%. This has resulted in a release of R17.2 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.
In the prior year, the fair value of the contingent consideration arrangement of R84.8 million was estimated by applying the income approach. The fair value estimates are based on a discount rate of 9%. For the first, second, third and fourth profit targets management has assumed a probability of 100%. For the fifth profit target management has assumed a probability of 0%. 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 current year management reassessed the cash flows taking into account the profit targets and the probability of meeting these as well as the forecasted financial budget. For the first, second and third profit targets, the probabilities have been adjusted downwards from 100% to between 84% and 100%. For the fourth profit target management has assumed a probability of 0%. This has resulted in a release of R30.8 million into the income statement, included in other income. |