Holiday Inn 2015 Annual Report Download - page 114
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Notes to the Group Financial Statements continued
10. Acquisition of business
On 16 January 2015, the Group acquired a 100% ownership interest in Kimpton Hotel & Restaurant Group, LLC (Kimpton), an unlisted company
based in the US. Kimpton is the world’s largest independent boutique hotel operator and the acquisition makes IHG the market leader in the
boutique segment.
The fair values of the identifiable assets and liabilities of Kimpton at the date of acquisition were as follows:
$m
Identifiable intangible assets:
Brands 193
Management contracts 71
Software 2
Property, plant and equipment 3
Other financial assets 10
Trade and other receivables 29
Cash and cash equivalents 3
Trade and other payables (27)
Non-current liabilities (10)
Net identifiable assets acquired 274
Goodwill 167
Total purchase consideration 441
Net cash outflow arising on acquisition:
$m
Cash consideration, including working capital payment of $11m 441
Less: cash and cash equivalents acquired (3)
438
The goodwill is mainly attributable to the growth opportunities identified for the acquired business, both in the US and globally, plus cost
synergies expected to arise. The amount of goodwill that is expected to be deductible for income tax purposes is $164m.
Included in trade and other receivables are trade receivables with a gross contractual value of $26m, which are expected to be collectable in full.
The fair value of trade receivables approximates the book value of $26m.
No contingent liabilities were recognised as a result of the acquisition.
Kimpton contributed revenue of $59m and operating profit of $18m for the period between the date of acquisition and the balance sheet date.
The results of Kimpton are included in the Americas managed business segment.
If the acquisition had taken place at 1 January 2015, there would have been no material difference to reported Group revenue and operating profit
for the year ended 31 December 2015.
Integration costs of $10m were charged to exceptional administrative expenses in the year ended 31 December 2015. Acquisition transaction
costs of $7m were charged to exceptional administrative expenses in the year ended 31 December 2014.
112 IHG Annual Report and Form 20-F 2015