Effect of business disposals - Bekaert.com

Effect of business disposals

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Effect of business disposals

Integration of Bekaert’s formerly wholly-owned subsidiary in Sumaré (Brazil) into the BMB partnership
On 21 June 2017 Bekaert and ArcelorMittal closed the transaction to integrate Bekaert’s formerly wholly-owned subsidiary in Sumaré (Brazil) into the BMB (Belgo Mineira Bekaert Artefatos de Arame Ltda) partnership. In line with the shareholding structure of the BMB joint venture, ArcelorMittal has become the majority shareholder (55.5%) of the steel cord entity in Sumaré and Bekaert retains the remaining shares (44.5%). With this transaction, Bekaert and ArcelorMittal extend their partnership in Brazil with the purpose to leverage the operational scale and technological competences of the steel cord business in the country, for the beneft of the customers.
The Sumaré plant accounted for € 41 million in consolidated revenue over the frst half of 2017, representing € 6 million in net result. As of 1 July 2017, the entity - renamed ArcelorMittal Bekaert Sumaré Ltda – is accounted for by Bekaert under the equity method: 44.5% of the net result of the entity is represented as ‘share in the results of joint ventures and associates’. Under IFRS, the transaction is accounted for in two stages: (1) the disposal of Bekaert’s full interests (100% of the shares) in Bekaert Sumaré Ltda; and (2) the acquisition of 44.5% of the shares in the disposed company at their fair value. The second stage requires a fair valuation of the net assets acquired in order to determine any goodwill arising on the transaction. The transaction resulted in the recognition of a goodwill amounting to € 2.7 million (see note 6.2. ‘Goodwill’). This amount is presented as part of investments in joint ventures and associates. Technically, the net assets and liabilities of Sumaré had been reclassifed  to assets held for sale at year-end 2016 and were still classifed as such at the moment of their disposal. However, for analytical purposes, they were reclassifed from held for sale to their original balance sheet caption in the opening balance of 2017 and, adjusted for all subsequent movements until the disposal date, presented as ‘deconsolidations’ translated at average exchange rates in the applicable
notes under 6. ‘Balance sheet items’.

in thousands of €  Total disposals 
Intangible assets  870
Property, plant and equipment  32 751
Other non-current assets   5 393
Deferred tax assets  2 003
Inventories  9 544
Trade receivables  28 501
Advances paid  278
Other receivables  6 861
Cash and cash equivalents  14 014
Other current assets  150
Non-current employee benefit obligations  -85
Non-current provisions -6 097
Non-current interest-bearing debt  -503
Deferred tax liabilities   -6 926 
Current interest-bearing debt -306
Trade payables  -9 750
Current employee benefit obligations  -2 057
Income taxes payable    -4 373
Other current liabilities -1 689
Total net assets disposed  68 579
Gain on business disposals (portion sold)  18 148
Gain on business disposals (portion retained)   14 552
Fair value of remaining interest retained -45 069
Cash disposed  -14 014
Deferred proceeds  -4 600
Proceeds from disposals of investments 37 596