The Group made a number of acquisitions in 2008 which are shown in aggregate. The book and fair values of the assets acquired are disclosed in the table below:
Included within the table above are net assets of IBS OPENSystems Limited of £21.5m, including recognised intangible assets of £13.1m. The cash consideration paid was £74.9m with resulting goodwill of £53.4m. Intangible valuations relating to this acquisition have been performed on a provisional basis and the exercise will be completed in the subsequent year.
During the year deferred consideration of £9.1m was settled in respect of acquisitions made in prior years, £7.8m was paid in cash and the remainder of £1.3m through the issue of loan notes, of which £9.4m had been previously provided; the impact of this was to reduce goodwill by £0.3m.
As required by IAS 12 deferred taxation is calculated on intangible assets recognised as a result of an acquisition, the impact of this was to increase goodwill in 2008 by £11.4m and to create a deferred tax liability of the same amount.
As a result of the above total goodwill of £134.7m was recognised in the year.
Acquisitions in the year included IBS OPENSystems plc (now known as IBS OPENSystems Limited), ComputerLand UK PLC (now known as ComputerLand UK Limited), Lancaster Insurance Services Limited, Nieuwenhuis Services BV (now known as Capita Fiduciary BV), and ABS Network Solutions Limited. For all acquisitions in the year the Group acquired 100% of the issued share capital of the acquired company.
Within goodwill are certain intangibles that were not separable from the acquirees and could not be measured reliably. These items include customer loyalty and the assembled workforce.
The Group’s acquisition of IBS OPENSystems Limited is the subject of a referral by the Office of Fair Trading (OFT) to the Competition Commission under section 22(1) of the Enterprise Act 2002. The decision to refer this acquisition was made by the OFT on 19 November 2008, with the decision of the Competition Commission being anticipated in the first half of 2009.
The Group made a number of acquisitions in 2007, of which only 2, the acquisition of Harry Weeks and CMGL Group are considered material and thus disclosed separately, the remainder are shown in aggregate. The book and fair values of the assets acquired are disclosed in the tables below:
Harry Weeks includes Harry Weeks Travel & Leisure Group Limited, a business travel software provider via its Evolvi and Travelpackonline software products.
The Group acquired 100% of the ordinary share capital of Harry Weeks on 2 February 2007. From the date of acquisition to the comparative year end, Harry Weeks contributed £0.6m to the net profit after tax of the Group. Had the combination taken place at the beginning of 2007, the profit after tax of the Group in the comparative year would have been £166.1m and the revenue from continuing operations would have been £2,079.4m.
CMGL Group is a leading provider of outsourced claims and insurance management services to FTSE quoted companies, general insurers, Lloyd’s underwriters and London Market companies.
The Group acquired 100% of the ordinary share capital of CMGL on 31 March 2007. From the date of acquisition to the comparative year end, CMGL contributed £1.43m to the net profit after tax of the Group. Had the combination taken place at the beginning of 2007, the profit after tax of the Group in the comparative year would have been £163.7m and the revenue from continuing operations would have been £2,107.6m.
During 2007 deferred consideration of £5.2m was paid in respect of acquisitions made in prior years, of which £4.5m had been previously provided. The impact of this was to increase goodwill by £0.7m.
Deferred consideration which is expected to be paid has been accrued in respect of acquisitions made in 2007 amounting to £7.8m. The impact of this is to increase goodwill by the same amount.
As required by IAS 12 deferred taxation is calculated on intangible assets recognised as a result of an acquisition. The impact of this was to increase goodwill in 2007 by £4.3m and to create a deferred tax liability of the same amount.
As a result of the above, total goodwill of £105.8m was recognised in the year.
Other acquisitions in the year included Aspen (Actuaries & Pension Consultants) Limited (now known as Capita Hartshead (Actuaries & Pension Consultants) Limited), Higham Dunnet Shaw Plc (now known as Capita Hartshead Solutions Limited), Global Fund Administration Limited (now known as Capita Financial Administrators (Gibraltar) Limited, M.V.R.A. Limited, Eagle Management Services Limited and CPFR Solutions Limited.
The performance of these acquisitions post their inclusion in the Group cannot be ascertained as they have been fully integrated within existing offerings.
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