Subsequent events
On 30 June 2018, TPC subscribed for 48% of Glocell Distribution Proprietary Limited ("Glocell Distribution"), a newly formed company that acquired the business operations of Glocell Proprietary Limited ("Glocell"). The business operations include the vending of airtime and other value-added services to a long-established client base. The cost of subscription for the shares amounted to R173.4 million by way of capitalising debt owing by Glocell to TPC.
On 2 August 2018, Cell C procured R1.4 billion of funding from a consortium of financial institutions for a tenure of 12 months, secured by airtime to the value of R1.75 billion. In the event of default, TPC has undertaken to purchase such inventory from the consortium on a piecemeal basis over a specified period that has been agreed upon. Any shortfall of this purchase would be in lieu of purchases made from Cell C within that period. The payment terms as between TPC and Cell C on the normal Cell C trading account would be extended by 120 days, ensuring that TPC will not be at any risk of having to purchase airtime in excess of its monthly requirements.
On 1 August 2018, BLT acquired 60% of the issued share capital of AV Technology Limited for a purchase consideration of USD6.4 million (R84.2 million). The purchase agreement contains an option arrangement which may result in BLT acquiring the remaining 40% of the entity.
Shares in the following subsidiaries were acquired subsequent to year-end:
| Effective date of acquisition | % acquired |
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| Subsidiaries | ||||
| Glocell Distribution Proprietary Limited | 30 June 2018 | 48 | ||
| Distributor of airtime, starter packs and mobile phones through its retail outlets and to wholesale customers in South Africa, including post-paid and pre-paid contracts | ||||
| AV Technology Limited | 1 August 2018 | 60 | ||
| Owner of system that offers Mobile Network Operators the ability to advance airtime, data and mobile money to subscribers in Africa | ||||
| Lornanox Proprietary Limited | 31 July 2018 | 100 | ||
| Owner of retail stores trading in cellular handsets, tablets and related accessories, as well as SIM cards, post-paid and pre-paid contracts |
Details of the provisional net assets acquired through acquisition are as follows:
| Glocell Distribution Proprietary Limited R'000 |
AV Technology Limited R'000 |
Lornanox Proprietary Limited R'000 |
||||
| Total purchase consideration | 173 400 | 84 187 | 5 000 | |||
| Provisional fair value of net assets acquired | 25 487 | 8 122 | (66 993) | |||
| Goodwill | 147 913 | 76 065 | 71 993 |
The provisional assets and liabilities acquired through acquisition are as follows:
| Glocell Distribution Proprietary Limited |
AV Technology Limited | Lornanox Proprietary Limited |
||||||||||
| Provisional fair value at acquisition date R'000 |
Acquirer's provisional carrying amount on acquisition date R'000 |
Provisional fair value at acquisition date R'000 |
Acquirer's provisional carrying amount on acquisition date R'000 |
Provisional fair value at acquisition date R'000 |
Acquirer's provisional carrying amount on acquisition date R'000 |
|||||||
| Cash and cash equivalents | 5 978 | 5 978 | 65 442 | 65 442 | 10 605 | 10 605 | ||||||
| Property, plant and equipment | 6 023 | 6 023 | 440 | 440 | 39 251 | 39 251 | ||||||
| Intangible assets | 80 685 | 28 665 | 15 596 | – | 2 000 | – | ||||||
| Goodwill | 147 913 | – | 76 065 | – | 71 993 | – | ||||||
| Inventories | 7 267 | 7 267 | – | – | 34 255 | 34 255 | ||||||
| Receivables | 14 677 | 14 677 | 10 085 | 10 085 | 23 611 | 23 611 | ||||||
| Deferred tax | (14 566) | – | (4 367) | – | (11 648) | – | ||||||
| Borrowings | (39 787) | (39 787) | – | – | (104 880) | (144 480) | ||||||
| Payables | (7 179) | (7 179) | (73 658) | (73 658) | (60 187) | (60 186) | ||||||
| Provisional value of subsidiaries acquired | 201 011 | 15 644 | 89 603 | 2 309 | 5 000 | (96 944) | ||||||
| Non-controlling interest | (27 611) | (5 415) | – | |||||||||
| Provisional value of net assets acquired | (11 967) | (3 106 | (96 944) | |||||||||
| Total purchase consideration | 173 400 | 84 187 | 5 000 | |||||||||
Glocell Distribution was purchased with the objective of affording the Group access to new channels for the supply and distribution of airtime, mobile devices and contracts.
In most business acquisitions, there is a part of the cost that is not capable of being attributed in accounting terms to identifiable assets and liabilities acquired and is therefore recognised as goodwill. In the case of the acquisition of Glocell, this goodwill is underpinned by a number of elements, which individually cannot be quantified. Most significant among these is the opportunity that the distribution network affords the Group.
AV Technology Limited ("AV Technology") was purchased with the objective of affording the Group the ability to advance airtime, data and mobile money services to mobile network subscribers in Africa.
In most business acquisitions, there is a part of the cost that is not capable of being attributed in accounting terms to identifiable assets and liabilities acquired and is therefore recognised as goodwill. In the case of the acquisition of AV Technology, this goodwill is underpinned by a number of elements, which individually cannot be quantified. Most significant among these is the opportunity that the pre-paid airtime advance system affords the Group.
Lornanox Proprietary Limited ("Lornanox") was purchased with the objective of affording the Group access to new channels for the supply and distribution of airtime, mobile devices and contracts.
In most business acquisitions, there is a part of the cost that is not capable of being attributed in accounting terms to identifiable assets and liabilities acquired and is therefore recognised as goodwill. In the case of the acquisition of Lornanox, this goodwill is underpinned by a number of elements, which individually cannot be quantified. Most significant among these is the opportunity that the distribution network affords the Group.