Notes to the Financial Statements
for the year ended 31 December 2004
17 Acquisitions And Disposals
17(a) Acquisitions
Mutual & Federal Insurance Company Limited
During the period the Group acquired an additional 37.0% of the equity share capital of its general insurance subsidiary, Mutual & Federal Insurance Company Limited, bringing its total holding to 87.6%. Cash consideration of £102 million (R1,343 million) was paid. At the year end the Group held 87.0% of the equity share capital.
The table below shows the fair value of the assets and liabilities acquired.
| Rm | |||
| Book value on acquisition |
Fair value adjustments |
Provisional fair value to Group |
|
| Goodwill | 10 |
(10) |
- |
| Investments | 304 |
- |
4,214 |
| Technical assets | 73 |
- |
1,006 |
| Insurance debtors | 28 |
- |
394 |
| Other assets | 115 |
- |
1,589 |
| Minority interests | (3) |
- |
(38) |
| Technical provisions | (266) |
- |
(3,692) |
| Insurance creditors | (12) |
- |
(173) |
| Provisions | (11) |
- |
(155) |
| Other liabilities | (25) |
- |
(363) |
| Total net assets of Mutual & Federal Insurance Company Limited | 213 |
(10) |
2,782 |
| Additional share of net assets acquired by the Group | 1,029 |
||
| Cash consideration paid | 1,343 |
||
| Goodwill arising on acquisition | 314 |
In addition the Group’s banking business made a number of smaller acquisitions giving rise to a goodwill amount of £17 million (R205 million).
Fair value adjustments
In accordance with Financial Reporting Standard 7 “Fair Values in Acquisition Accounting”, the book value of goodwill has been deducted in
determining the fair value of the net assets acquired as it is not a separately identifiable asset. There were no other fair value adjustments.
17(b) Disposals (non-operating items)
The following gains and losses on the disposal of business operations have been disclosed as non-operating:
| Rm | ||
| Year to 31 December 2004 |
Year to 31 December 2003 |
|
| United States - asset management affiliates | (59) |
(194) |
| South Africa - banking subsidiaries | (64) |
- |
| South Africa - banking associates | (153) |
- |
| United Kingdom - asset management subsidiaries | (142) |
(210) |
| Loss on disposal before tax | (418) |
(404) |
| Tax on non-operating items | - |
- |
| Loss on disposal after tax | (418) |
(404) |
| Minority interests - South Africa banking subsidiaries and associates | 106 |
- |
| Loss on disposal after tax and minority interests | (312) |
(404) |
United States – asset management affiliates
During December, the Group discontinued the operations of Sirach Capital Management Inc. incurring a loss of £8 million (R94 million) including
goodwill disposed of £6 million (R71 million). In addition, credits totalling £3 million (R35 million) were booked in respect of provisions for contingent
payments on prior year disposals no longer required.
South Africa – banking subsidiaries
During the period the Group disposed of various non-core subsidiaries for cash consideration of £29 million (R343 million). The profit on disposal
was £5 million (R64 million) after charging goodwill of £14 million (R164 million). No tax was payable and the minority interest attributable was
£2 million (R31 million).
South Africa – banking associates
The non-operating charge for the period includes £13 million (R153 million) in respect of Group adjustments following disposals of certain banking
associates. The minority interest attributable was £7 million (R75 million).
United Kingdom – asset management subsidiaries
During 2004 additional costs relating to onerous lease provisions were incurred in connection with the sale of Gerrard Management Services Ltd
and other disposals made in prior years.
