Notes to the consolidated statement of cash flows

for the year ended 30 September

      2016   2015  
      Rm   Rm  
A.
Cash generated from operations is calculated as follows:
          
  Profit before taxation   2 813   2 355  
  Adjustments for:          
  Depreciation   2 426   2 355  
  Amortisation of intangible assets   113   129  
  Loss on disposal of plant and equipment and intangibles   69   42  
  Profit on disposal of properties and other assets   (10)   (35)  
  (Profit)/loss on disposal of subsidiaries and investments   (168)   4  
  Dividends received   (31)   (28)  
  Interest received   (113)   (67)  
  Finance costs   1 346   1 252  
  Fair value adjustments on financial instruments   223   192  
  Net impairment of assets and investments   58   37  
  IFRS 2 charge   (25)   331  
  Non-cash movement in provisions and valuation allowances   313   461  
  Other non-cash flow items   147   66  
  Operating cash flows before movements in working capital   7 161   7 094  
  Movement in working capital   2 119   (3 370)  
     Movement in inventories   2 668   (1 558)  
     Movement in receivables   797   (393)  
     Movement in payables   (1 346)   (1 419)  
  Cash generated from operations before investment in leasing and rental fleets   9 280   3 724  
B.
Taxation paid is reconciled to the amounts disclosed in the income statement as follows:
          
  Amounts unpaid less overpaid at beginning of year   42   (38)  
  Per the income statement (excluding deferred taxation)   (948)   (680)  
  Adjustments in respect of subsidiaries acquired and sold including translation adjustments   (24)   (10)  
  Amounts unpaid less overpaid at end of year   125   (42)  
  Cash amounts paid   (805)   (770)  
C.
Acquisition of subsidiaries, investments and intangibles:
          
  Inventories acquired   (154)   (21)  
  Receivables acquired   (183)   (41)  
  Payables, taxation and deferred taxation acquired   457   61  
  Borrowings net of cash   (34)   62  
  Property, plant and equipment, non-current assets, goodwill and non-controlling interest   (239)   (97)  
  Total net assets acquired   (153)   (36)  
  Goodwill arising on acquisitions   (290)   (92)  
  Intangibles arising on acquisition in terms of IFRS 3 Business Combinations   (196)   (34)  
  Total purchase consideration   (639)   (162)  
  Deemed disposal of associate at fair value on obtaining control   21   20  
  Net cash cost of subsidiaries acquired   (618)   (142)  
  Bank balances and cash in subsidiaries acquired   142   6  
  Investment and intangible assets acquired   (581)   (505)  
  Cash amounts paid to acquire subsidiaries, investments and intangibles   (1 057)   (641)  
 


During the current financial year the following acquisitions were included in the total per note C:

Toyota/Volkswagen Postmasburg
Automotive Northern Cape (Pty) Limited acquired the net assets of the Toyota and Volkswagen dealerships in Postmasburg, effective 31 October 2015 for R28 million. The primary reason for the acquisition was to extend the Motor Retail footprint in the Northern Cape.

Union Motors
NMI Durban South Motors (Pty) Limited acquired the net assets of Union Motors Lowveld and Union Motors South Coast, effective 29 February 2016. Rapiprop 174 (Pty) Limited, a wholly owned subsidiary of NMI Durban South Motors (Pty) Limited, acquired the fixed property from which these dealerships operate. The primary reason for the acquisition was to expand the Mercedes-Benz footprint into KwaZulu-Natal and Mpumalanga.

Salvage Management and Disposals
Barloworld South Africa (Pty) Limited acquired a 52% controlling interest in the Salvage Management and Disposals group, effective 1 May 2016. The primary reason for the acquisition was to invest in an asset light business involved in the broader Automotive value chain.

KLL Group (Pty) Limited
On 31 December 2015, through a sale of shares and subscription agreement, Barloworld Logistics Africa (Pty) Limited acquired 100% of the KLL Group (Pty) Limited’s share capital for a total consideration of R64.7 million. R20.6 million of the consideration has been deferred and is payable after financial years 2016, 2017 and 2018. The primary reason of the acquisition is to enable Barloworld Logistics to enter the multi-warehousing distribution market and give Barloworld Logistics refrigeration capability using a distribution network.

Aspen Logistic Services (Pty) Limited
On 1 January 2016, through a sale of shares agreement, Barloworld Transport (Pty) Limited acquired 51% of the shares in Aspen Logistic Services (Pty) Limited for a total cash consideration of R37.65 million. The primary reason of the acquisition is to enable Barloworld Logistics to enter the refrigerated transport market.

The purchase price allocation of all acquisitions have been finalised. The combined goodwill of R290 million arising from the acquisitions consists largely of the synergies and economies of scale expected from integrating these operations into the existing business. None of the goodwill recognised is expected to be deductible for income tax purposes.

The group included revenue of R2 061 million and net profit after tax of R53 million, in relation to all of the above acquisitions. It is estimated that if these acquisitions were part of the group since the beginning of the financial year, they would have added R3 389 million to revenue and a net profit after tax of R98 million.

      2016   2015  
      Rm   Rm  
D.
Proceeds on disposal of subsidiaries, investments and intangibles:
          
  Inventories disposed   39   147  
  Receivables disposed   22   71  
  Payables, taxation and deferred taxation balances disposed and settled   (46)   (55)  
  Borrowings net of cash   9   (1)  
  Property, plant and equipment, non-current assets, goodwill and intangibles   146   16  
  Net assets disposed   170   179  
  Receivable from subsidiary disposed   (22)      
  Less: Non-cash translation reserves realised on disposal of foreign subsidiaries   1   (127)  
  Profit on disposal   117   10  
  Net cash proceeds on disposal of subsidiaries   266   62  
  Bank balances and cash in subsidiaries disposed   (9)   (2)  
  Proceeds on disposal of investments and intangibles   1   1  
  Cash proceeds on disposal of subsidiaries, investments and intangibles   258   61  

  The net cash proceeds on disposal of subsidiaries includes the disposal of Barloworld Supply Chain Software for R176.5 million and the proceeds from the sale of the assets of the Agriculture Zambia business into a joint venture company with BayWa AG.