Acquisitions and disposals of investments

Changes in ownership interest in subsidiaries as a result of non-controlling interest transactions

The Group had marginal increases and decreases in its shareholdings in some of its subsidiary companies due to transactions with minority shareholders.

Increase in investment in Max Healthcare Institute Limited

The Group invested R320 million in Max Healthcare Institute Limited (Max Healthcare) in November 2015, as its contribution to Max Healthcare’s acquisition of Saket City, renamed Max Smart Super Speciality Hospital (Max Smart).

Business combinations

Scanmed S.A. (Scanmed) acquired 100% of both Gastromed REM and Multimedycyna in October 2015 and November 2015 respectively, for a total consideration of R31 million. These companies are incorporated in Poland and had no significant contingent liabilities at the acquisition date.

On 31 October 2015, Scanmed acquired 100% of the Polska Grupa Medyczna Group (PGM), incorporated in Poland. The Company had no significant contingent liabilities at the acquisition date.

The following presents the impact of the PGM acquisition on the consolidated information of the Group for the period: R’m  
   Revenue 173  
   Net profit 37  
Details of the net assets acquired and goodwill are as follows:    
Total purchase consideration (685)  
   Cash portion (614)  
   Contingent consideration (71)  
   Fair value of net assets acquired 223  
Goodwill arising on acquisition (462)  

The contingent consideration is dependent on the business gaining additional contracts in the next 12 – 36 months.
The contingent consideration is calculated by applying the same EBITDA multiple used on the acquisition date.

The fair value of the assets and liabilities arising from the acquisition were as follows:
Acquiree
fair value
R’m
 
   Inventories 12  
   Trade and other receivables 56  
   Trade and other payables (44)  
   Cash and cash equivalents 54  
   Interest-bearing borrowings (47)  
   Property, plant and equipment 96  
   Intangible assets 134  
   Deferred tax (28)  
   Non-controlling interest (10)  
  223  
Since the initial acquisition, PGM increased its shareholding in one of its subsidiaries, PGM RCM, from 75% to 100%.    
Increase in ownership interest as follows:    
Total purchase consideration (24)  
   Cash portion (24)  
   Fair value of non-controlling interest recognised 11  
Increase in ownership interest in subsidiaries (13)  

Basis of presentation and accounting policies

The condensed consolidated interim financial statements contained in the interim report are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports, and the requirements of the Companies Act of South Africa applicable to summary financial statements, and are consistent with those applied in the previous consolidated annual financial statements. The Listings Requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

These interim financial results have been prepared under the supervision of PP van der Westhuizen (CA(SA)), the Chief Financial Officer of the Group.

Unaudited results

The results for the period ended 31 March 2016 have not been reviewed or audited by the Group’s auditors.

The directors take full responsibility for the preparation of the interim report.