38 Acquisitions of private equity investment vehicles.

Business combinations are accounted for using the purchase method, under which the acquirer recognises the acquiree’s fair value of the identifiable assets, liabilities and contingent liabilities at the acquisition date. Purchased goodwill is recognised as an asset on the balance sheet and is carried at cost less any accumulated impairment losses in accordance with IAS 36, ‘Impairment of Assets’.

Private equity investment vehicles classified as subsidiaries are those entities over which the Group directly or indirectly has the power to govern the operating and financial policies in order to gain economic benefits. Profits or losses of subsidiary undertakings sold or acquired during the period are included in the consolidated results up to the date of disposal or the date of gaining control.

On 5 October 2012, the Group acquired 55% of the ordinary share capital and £32m of loan notes issued by intermediate holding companies investing in Air Energi Holdings Limited, a provider of specialist services to the oil and gas industry. No goodwill has arisen in respect of this transaction. Since 5 October 2012, Air Energi Holdings Limited has contributed £(3)m to Group consolidated profit before tax, before the offsetting change in the unallocated divisible surplus (UDS), due to the company being owned by the UK with-profits fund. Air Energi Holdings Limited would have contributed £4m to Group consolidated profit before tax (excluding the impact on UDS) if the acquisition had occurred on 1 January 2012.

In 2011, the Group acquired ABI (UK) Group Limited, with no goodwill arising on acquisition. Investment property acquired is stated at fair value on the acquisition date.

Acquisition related costs of £5m (2011: £3m) have been recognised within Other expenses in the Consolidated Income Statement.

(XLS:) Acquisitions by private equity investment vehicles

 

2012
£m

2011
£m

Consideration at date of acquisition

 

 

Cash

33

15

Total consideration

33

15

Consideration attributable to purchase of debt instruments

32

14

Consideration attributable to net assets

1

1

 

33

15

 

 

 

Recognised amounts of identifiable assets transferred and liabilities assumed at fair value

 

 

Intangibles – brand value

54

19

Property, plant and equipment

1

Investment property

3

Other assets

64

26

Cash and cash equivalents

6

4

Other liabilities

(31)

(14)

Senior borrowings

(44)

(16)

Other long term liabilities

(17)

(7)

Total identifiable net assets

33

15

Debt instruments issued to consolidated investment vehicles

(32)

(14)

Net assets attributable to equity holders of the Company

1

1