Annual Financial Statements
Notes to the financial statements
for the year ended 31 March 2013

37.  

Business combinations

Acquisitions during the year
      Group
    Figures in Rand million   2013   2012  
    Scaw Metals Group   752   –  
    Small Enterprise Finance Agency   (725)  –  
    Net cash outflow   27   –  
    Scaw Metals Group

On Friday, 23 November 2012 the Group Acquired 74% of the voting equity interest of Scaw Metals Group which resulted in the Group obtaining control over Scaw Metals Group. Scaw Metals Group is an international group manufacturing a diverse range of steel products. Its principal operations are located in South Africa, South America and Australia. Smaller operations are in Namibia, Zimbabwe and Zambia.

Scaw Metals Group consists of a number of companies in the steel sector, namely: 74% of Scaw South Africa (Pty) Ltd, 50% of Consolidated Wire Industries (Pty) Ltd, 100% of Haggie Reid (Pty) Ltd (Australia), 100% of African Wire Ropes (Pty) Ltd (Namibia), 100% of Haggie Rand Zimbabwe (Pty) Ltd, 100% of Scaw Metals (Pty) Ltd (Australia, 100% of Afrope Zambia (Pty) Ltd (Zambia) and 100% of Haggie North America Inc. (Canada).

IDC’s acquisition of the Scaw Metals Group will significantly benefit its steel strategy by trying to ensure competitively priced steel in the local economy and to promote the local beneficiation of the country’s natural resources.

      Group
    Figures in Rand million   2013   2012  
    Fair value of assets acquired and liabilities assumed      
    Property, plant and equipment   2 291   –  
    Intangible assets   30   –  
    Deferred tax   186   –  
    Inventories   1 055   –  
    Trade and other receivables   1 533   –  
    Cash and cash equivalents   163   –  
    Other financial liabilities   (4 292)  –  
    Retirement benefit obligation   (712)  –  
    Trade and other payables   (1 007)  –  
    Total identifiable net assets   (753)  –  
    Non-controlling interest   (162)  –  
      (915)  –  
    Non-controlling interest      
    Non-controlling interest is measured at the non-controlling interest proportionate share of the acquiree’s identifiable net assets.      
    Acquisition date fair value of consideration paid      
    Cash paid   915   –  
    Cash received   (163)  –  
      752   –  
    Receivables acquired      
    Receivables acquired per major class are as follows, as at acquisition date:      
         
    Group – 2013   Fair value   Gross  
contractual  
amounts  
Contractual  
amounts not  
expected to  
be recovered  
    Trade and other receivables   1 533   1 533   –  
    Acquisition-related costs

The acquisition-related costs amounted to R15 million. These costs have been expensed in the year of acquisition and are included in operating expenses in comprehensive income.

Revenue and profit or loss of Scaw Metals Group

Revenue of R2.197 million and loss of R78 million of Scaw Metals Group have been included in the Group’s results since the date of acquisition.

Small Enterprise Finance Agency

The Government of the Republic of South Africa made a decision to merge the activities of Khula Enterprise Finance (“Khula”) and the South African Micro Finance Apex Fund (“samaf”) into a new entity small enterprise finance agency (“sefa”). sefa was established on Sunday, 1 April 2012 as a wholly-owned subsidiary of IDC. The investments and loans of the Government in Khula and samaf were transferred to IDC for no consideration. The rationale for the formation of sefa as a subsidiary of IDC was to increase the scale and reach of lending activities to survivalist, micro and medium-sized enterprises, whilst also improving co-ordination and efficiencies among the entities being merged.

      Group
    Figures in Rand million   2013   2012  
    Fair value of assets acquired and liabilities assumed      
    Investment property   195   –  
    Property, plant and equipment   2   –  
    Intangible assets   2   –  
    Investments in subsidiaries   250   –  
    Joint ventures and partnerships   49   –  
    Investments in associates   576   –  
    Investments   48   –  
    Deferred tax   40   –  
    Trade and other receivables   24   –  
    Cash and cash equivalents   725   –  
    Other financial liabilities   (794)  –  
    Deferred tax   (13)  –  
    Other liabilities   (102)  –  
    Current tax payable   (6)  –  
    Trade and other payables   (133)  –  
      863   –  
    Receivables acquired      
    Receivables acquired per major class are as follows, as at acquisition date:  
           
    Group – 2013   Fair value   Gross  
contractual  
amounts  
Contractual  
amounts not  
expected to  
be recovered  
    Trade and other receivables   24   24   –  
    Revenue and profit or loss of sefa        
    Revenue of R116 million and loss of R64 million of sefa have been included in the Group’s results since the date of acquisition.