Peachtree 2015 Annual Report Download - page 154

The Sage Group plc | Annual Report & Accounts 2015
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Other notes
15 Acquisitions and disposals
The following note outlines acquisitions and disposals during the year and the accompanying accounting policies. Each acquisition
or disposal during the year is discussed in detail and the effects on the results of the Group are highlighted.
Accounting policy
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate
of the fair values at the date of exchange, of assets acquired, liabilities incurred or assumed and equity instruments issued by the Group
in exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions
for recognition under IFRS 3 (Revised), “Business Combinations” are recognised at their fair values at the acquisition date.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in the income statement.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Goodwill represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s total identifiable net assets
acquired. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination, the difference is recognised directly in the Consolidated income statement.
Any subsequent adjustment to reflect changes in consideration arising from contingent consideration amendments is recognised
in the Consolidated income statement.
On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquiree’s net assets.
Acquisition-related items such as legal or professional fees are expensed to the income statement as incurred.
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. The difference between
fair value of any consideration paid and the relevant shares acquired of the carrying value of net assets of the subsidiary is recorded
in equity.
Where the Group enters into put and call arrangements over shares held by a non-controlling interest, the Group continues to recognise
the non-controlling interest until the ownership risks and rewards of those shares transfer to the Group.
15.1 Acquisitions made during the year
Acquisition of PayChoice
On 16 October 2014 the Group acquired 100% of the share capital of PAI Group, Inc. (“PayChoice”), a provider of payroll and HR services
for small and medium sized businesses in North America, for a cash consideration of £75.2m. On the date of acquisition, the external debt
acquired from PayChoice was settled for £22.2m. The acquisition strengthens Sage’s position in the large and growing US payroll market.
The allocation of the consideration has been subject to a purchase price allocation exercise during the period. The excess of consideration
over the net assets acquired has been allocated accordingly across asset and liability categories.
PayChoice’s product portfolio provides easy to use online payroll solutions to small and medium sized businesses (SMBs), and strengthens
the Sage value proposition to customers with a more robust and comprehensive offering. The combined portfolio provides attractive growth
opportunities, particularly through new customer acquisition and cross-sell to the combined customer base.
Summary of acquisitions £m
Purchase consideration 75.2
Fair value of net identifiable assets (15.6)
Goodwill 59.6