Experian 2008 Annual Report Download - page 122

120 Experian Annual Report 2008
34. Acquisitions
On 28 June 2007, the Group acquired an initial 65% stake in Serasa, the market-leading credit bureau in Brazil, from a consortium of
Brazilian banks for US$1.2bn inclusive of transaction costs and net of cash and cash equivalents held by that business. Under the
terms of the purchase agreement a further 5% of Serasa has been acquired since the date of the acquisition and, at 31 March 2008,
the Group’s interest in Serasa was 70%. There are put and call options associated with the shares held by the remaining principal
shareholders of Serasa and these are exercisable for a period of five years from June 2012. As indicated in note 2, the net present
value of the put option has been recognised as a non-current financial liability. At 31 March 2008 this liability was US$583m.
In addition the Group acquired the whole of the issued share capital of Hitwise, a leading internet market intelligence company,
for US$260m on 8 June 2007 and made a number of other acquisitions, none of which is considered individually material. The
other acquisitions comprise the purchase of an additional interest in an entity previously classified as an associate together with
purchases of 100% interests in a number of other entities.
In aggregate, the acquired businesses contributed revenues of US$411m to the Group, consisting of revenues from Serasa
US$305m, Hitwise US$45m and other acquisitions US$61m, from the date of their acquisition to 31 March 2008. The acquisitions
contributed aggregate profit after tax of US$54m to the Group, consisting of the profit after tax of Serasa US$44m, Hitwise US$4m
and other acquisitions US$6m, for the periods from their respective acquisition dates to 31 March 2008. If these acquisitions had
been completed on 1 April 2007, further revenues of US$132m would have been reported. It has been impracticable to estimate
the impact on Group profit after tax had the acquired entities been owned from 1 April 2007, due to the acquired entities having
different accounting policies prior to acquisition, previously reporting to different period ends and, in the case of certain of the
individually immaterial acquisitions, preparing financial information on a cash basis prior to acquisition.
Details of the net assets acquired at provisional fair values are as follows:
Serasa Hitwise Other acquisitions To t a l
Book value Fair value Book value Fair value Book value Fair value Book value Fair value
US$m US$m US$m US$m US$m US$m US$m US$m
Intangible assets 96 531 4 76 - 79 100 686
Property, plant and equipment 61 64 2 2 3 3 66 69
Deferred tax assets 8 25 – 3 1 1 9 29
Trade and other receivables 57 53 12 9 38 38 107 100
Cash and cash equivalents 22 22 21 21 17 17 60 60
Trade and other payables (66) (65) (34) (34) (25) (26) (125) (125)
Provisions (5) (54) – – – – (5) (54)
Current tax liabilities (3) (3) – – – – (3) (3)
Deferred tax liabilities (32) (79) – (16) – (24) (32) (119)
138 494 5 61 34 88 177 643
Goodwill 911 201 169 1,281
1,405 262 257 1,924
Satisfied by:
Cash 1,231 260 181 1,672
Acquisition expenses 46 2 6 54
Deferred consideration (19) – 52 33
Acquisition of controlling stake in associate – – 10 10
Recognition of minority interest 147 – 8 155
1,405 262 257 1,924
The book values above are the carrying amounts of each class of asset and liability, determined in accordance with IFRS,
immediately before the acquisition.
The fair values set out above contain certain provisional amounts which will be finalised no later than one year after the date
of acquisition. Provisional amounts have been included at 31 March 2008 as a consequence of the timing and complexity of the
acquisitions. Fair value adjustments in respect of acquisitions made during the year resulted in an increase in book value of
US$466m and arose principally in respect of acquisition intangibles. Goodwill represents the synergies, assembled workforce
and future growth potential of the businesses acquired.
Deferred consideration is primarily payable in cash up to three years after the date of acquisition and in some cases is
contingent on the businesses acquired achieving revenue and profit targets. The deferred consideration settled during the
year on acquisitions made in previous years was US$53m.
There have been no material gains, losses, error corrections or other adjustments recognised in the year ended 31 March
2008, that relate to acquisitions that were effected in the current or previous years.
Notes to the Group financial statements continued