Strategic Report
Governance Report
Financial Statements
Company Financial Statements
14. Business combinations continued
14(a) Net assets acquired through business combinations
All three acquisitions were primarily funded through the Group’s existing financial resources with a small portion of the purchase consideration settled via the issuance of ordinary shares. The acquisitions align with the Group’s strategy to expand its client reach and accelerate growth in financial planning. The acquired businesses have been integrated into the Group’s financial planning business and will enhance its existing financial planning capability. They bring a strong presence in geographical areas where there is opportunity to grow and complement those previously and newly acquired businesses. The acquisitions have been accounted for using the acquisition method and details of the purchase consideration are as follows:
CST £’000
Lucas Fettes £’000
LIFT £’000
Total £’000
–
29
53
82
Tangible fixed assets
463
1,635
177
2,275 4,378
Trade and other receivables
1,299
894
2,185
Cash at bank
(10)
(568)
(488) (375)
(1,066)
Trade and other payables
–
–
(375)
Provisions
Corporation tax (payable)/ receivable
(158)
180
(422)
(400)
Total net assets recognised by acquired companies Fair value adjustments: Client relationship contracts
1,594
2,170
1,130
4,894
CST £’000 1,250
Lucas Fettes £’000
LIFT £’000 30,131
Total £’000
Notes
1,764
5,512
15,701 (3,925) 12,906 26,124
22,977 (5,744) 22,127 31,666
4,294
35,675
Initial cash consideration Initial share consideration Cash consideration for excess net assets Deferred contingent consideration at fair value
(441)
(1,378) 6,304 3,859 10,163
Deferred tax liabilities Net identifiable assets
500
206
–
706
i
2,917 1,683 4,600
Goodwill
1,472
1,382
–
2,854
ii
Total purchase consideration
39,030
53,793
1,378
4,281
8,899
14,558
iii
The trade and other receivables were recognised at their fair value, being the gross contractual amounts, deemed fully recoverable. Client relationship intangible assets of £22,977,000 were recognised on acquisition in respect of the expected cash inflows and economic benefit from the acquired business. An associated deferred tax liability of £5,744,000 was recognised in relation to the expected cash inflows on the acquired client relationship intangible asset. Goodwill of £31,666,000 was recognised on acquisition in respect of the expected growth in the acquired businesses and associated cash inflows. The fair value of the assets acquired were the gross contractual amounts and were all considered to be fully recoverable. The fair value of the identifiable assets and liabilities acquired, at the dates of acquisition, are detailed above.
Total purchase consideration
4,600
10,163
39,030
53,793
i. The Group issued 42,673 ordinary shares to the previous shareholders at a price of £16.41 and £16.61 per share. The number of shares issued was based on the average 5-day mid-market share price at the completion date to provide the equivalent consideration value of £706,000. ii. In accordance with the relevant sales purchase agreement (“SPA”), the Group was required to pay the difference between the available capital and the required regulatory capital. iii. The total estimated fair value of deferred contingent cash consideration at the respective acquisition dates was £14,558,000, with deferred payments due to be made at either one or two years post-acquisition contingent on targets relating to client attrition and the underlying profitability of the acquired businesses. The maximum undiscounted deferred contingent consideration payable is £21,250,000.
Brooks Macdonald Group plc Annual Report and Accounts 2025
133
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