31 Acquisitions

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 consolidated 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 year are included in the consolidated results up to the date of disposal or the date of gaining control.

Global Index Advisors Inc.

On 19 May 2014, the group acquired the trade and assets of Global Index Advisors Inc., an asset management advisory company based in Atlanta, US. The acquisition provides the group with opportunities to accelerate growth into the US Defined Contribution market.

 

2014
£m

Total cash and deferred contingent consideration for 100% acquisition

24

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

 

Intangibles

38

Deferred tax liabilities

(14)

Net assets attributable to equity holders of the Company

24

Deferred contingent consideration represents amounts payable for the trade and assets of Global Index Advisors Inc. contingent on meeting certain financial performance targets over a 1 to 2 year period. The range of undiscounted amounts the company could pay under the contingent consideration arrangements is between £nil and £6.9m.

In addition, the group acquired Kitco, a supplier of manpower, training, accommodation and procurement services, in July 2014 for £7m. A further investment was made in December 2014 in Butcombe Brewery, a brewery and chain of pubs, for £14m. These two acquisitions gave rise to the increase in the group’s goodwill of £6m. Both investments were made on behalf of the with-profits part of the LGAS long term fund.