Note 26
26. Acquisitions of Businesses
On 31 May 2005 the Group acquired the business and assets of Kata International Limited and Kata Professional (Kimchi and Tishler) Limited (‘Kata’), the designer and manufacturer of premium protective carrying bags for cameras and accessories in the photographic and broadcast markets. The net cash consideration (after taking account of £0.1 million cash in the business at acquisition date and including acquisition expenses) amounted to US$8.3 million (£4.6 million) and there is an estimated contingent consideration of US$4.6 million (£2.5 million) conditional upon future sales and profitability targets. Based on an assessment of the fair values of the tangible and intangible assets, goodwill of £5.4 million arose on acquisition.
As part of the fair value exercise, intangible fixed assets comprising sales order backlog (£0.1 million), brand name (£0.3 million) and customer relationships (£1.0 million) were identified.
The acquisition was funded from existing cash resources and contingent consideration, and has been accounted for using the acquisition method of accounting.
|
Book
value
£m |
Fair value
adjustments
£m |
As
adjusted
£m |
| Net Assets acquired |
|
|
|
| Intangible assets |
- |
1.4 |
1.4 |
| Deferred tax on intangible assets |
- |
(0.3) |
(0.3) |
| Property, plant and equipment |
0.1 |
- |
0.1 |
| Inventories |
0.4 |
0.2 |
0.6 |
| Trade and other receivables |
0.7 |
- |
0.7 |
| Cash and cash equivalents |
0.1 |
- |
0.1 |
| Trade and other payables |
(0.8) |
- |
(0.8) |
|
0.5 |
1.3 |
1.8 |
| Purchased goodwill |
|
|
5.4 |
| Total purchase consideration, including expenses |
|
|
7.2 |
|
|
|
|
| Net outflow of cash in respect of acquisitions |
|
|
|
|
|
|
|
| Total purchase consideration, including expenses |
|
|
7.2 |
| Contingent consideration |
|
|
(2.5) |
| Cash paid for acquisition, including expenses |
|
|
4.7 |
| Net cash acquired |
|
|
(0.1) |
| Total outflow of cash from Group |
|
|
4.6 |
|
|
|
|
| The results of Kata for the seven months ending 31 December 2005 have been included in the Photographic division and comprise: |
|
|
£m |
| External revenue |
|
|
1.7 |
| Inter-segment revenue |
|
|
0.9 |
| Total revenue |
|
|
2.6 |
| Cost of sales |
|
|
(1.6) |
| Operating expenses |
|
|
(1.0)(1) |
| Operating profit |
|
|
- |
Management has taken the option under IFRS 3 not to disclose the full year results because of the complexity of the pre-acquisition structure of the business.
(1) Operating expenses includes £0.2 million of amortisation of intangible assets.
On 30 March 2004 the Group acquired the operating assets and certain liabilities of Charter Broadcast North America Inc., a provider of broadcast rental equipment in the United States and Canada, for a nominal sum which, with transaction costs, brought the total acquisition cost to US$0.1 million cash (£0.1 million). Based on an assessment of fair values, negative goodwill of £0.6 million arose on acquisition.
The acquisition was funded from existing cash resources and was accounted for using the acquisition method of accounting.
|
Book
value
£m |
Policy
alignment
£m |
Fair value
adjustments
£m |
As
adjusted
£m |
| Net Assets acquired |
|
|
|
|
| Intangible fixed assets |
- |
- |
- |
- |
| Tangible fixed assets |
0.8 |
- |
0.1 |
0.9 |
| Stocks |
- |
- |
- |
- |
| Debtors |
- |
- |
- |
- |
| Creditors |
- |
- |
(0.2) |
(0.2) |
|
0.8 |
- |
(0.1) |
0.7 |
| Negative goodwill |
|
|
|
(0.6) |
| Total cost of acquisition, including expenses, satisfied by cash |
|
|
|
0.1 |
|
£m |
| Net outflow of cash in respect of acquisitions |
|
| Total cost of acquisitions including expenses |
0.1 |
| Net cash acquired |
- |
| Total outflow of cash from Group |
0.1 |
|
|
| The results of Charter Broadcast North America Inc. were included in the Broadcast Services division and comprise: |
|
|
£m |
| Turnover |
1.8 |
| Cost of sales |
(1.0) |
| Operating expenses |
(0.2) |
| Operating profit |
0.6 |
The fair value adjustments represent an increase in book value of rental assets following an appraisal exercise and a recognition of liabilities in respect of refurbishment costs.
On 8 January 2004 the Group acquired the domestic distribution activity of Multiblitz (Dr. Ing. D.A. Mannesmann GmbH & Co KG), a distributor of the Group’s Manfrotto products in Germany, for c2.0 million cash (£1.4 million). Based on an assessment of fair values, goodwill of £1.0 million arose on acquisition.
The acquisition was funded from existing cash resources and was accounted for using the acquisition method of accounting.
|
Book
value
£m |
Policy
alignment
£m |
Fair value
adjustments
£m |
As
adjusted
£m |
| Net Assets acquired |
|
|
|
|
| Intangible fixed assets |
- |
- |
- |
- |
| Tangible fixed assets |
- |
- |
- |
- |
| Stocks |
0.3 |
- |
- |
0.3 |
| Debtors |
0.2 |
- |
- |
0.2 |
| Creditors |
(0.1) |
- |
- |
(0.1) |
|
0.4 |
- |
- |
0.4 |
| Purchased goodwill |
|
|
|
1.0 |
| Total cost of acquisition, including expenses, satisfied by cash |
|
|
|
1.4 |
|
£m |
| Net outflow of cash in respect of acquisitions |
|
| Total cost of acquisitions including expenses |
1.4 |
| Net cash acquired |
- |
| Total outflow of cash from Group |
1.4 |
|
|
| The results of Multiblitz were included in the Photographic division and comprise: |
|
|
£m |
| Turnover |
3.5 |
| Cost of sales |
(2.4) |
| Operating expenses |
(1.0) |
| Operating profit |
0.1 |
Information correct at 03/05/2006