Financial Statements
Strategic Report
Governance Report
Other Information
10. Business combinations – prior year ended 30 June 2023 Integrity
Net assets acquired through business combination
£’000
On 31 October 2022, the Group acquired Integrity Wealth Bidco Limited and Integrity Wealth (Holdings) Limited, together with its subsidiary Integrity Wealth Solutions Limited (“IWS”), (collectively “Integrity”). The acquisition brings a successful and rapidly growing Independent Financial Adviser (“IFA”) business into the Group and brings scale to the Group’s Private Clients business, adding distinctive expertise in their specialist area. The acquisition consisted of acquiring 100% of the issued share capital of Integrity Wealth (Holdings) Limited and Integrity Wealth Bidco Limited (intermediate holding company), which was funded through existing financial resources. On 14 April 2023, the Group acquired an additional client book, which has been incorporated into the Integrity business and acquisition accounting. The acquisition was accounted for using the acquisition method and details of the purchase consideration are as follows: Note £’000 Initial cash consideration 4,246 Shares consideration i 1,000 Excess for net assets ii 601 Deferred contingent consideration at fair value iii 1,240 Total purchase consideration 7,087 ii The Group issued 52,084 ordinary shares to the previous shareholders of Integrity Wealth (Holdings) Limited and Integrity Wealth Bidco Limited at a price of £19.20 per share. The amount of shares issued was based on the share price at the completion date to provide the equivalent consideration value of £1,000,000. iii In accordance with the Sale and Purchase Agreement (“SPA”), the Group was required to pay the difference between the available capital and the required regulatory capital for Integrity. iv The total estimated cash deferred contingent consideration for the original Integrity acquisition was £1,505,000, payable in a period between one and three years following completion, based on revenue criteria and client attrition of the acquired business. As outlined in the SPA, the maximum cash deferred contingent consideration payable was up to £2,746,000 if certain revenue criteria are met. On 30 June 2023, the Group agreed to renegotiate the deferred contingent consideration, which resulted in the Group recognising a change in fair value of deferred contingent consideration of £173,000 on 30 June 2023. See Note 24 for further details. Client relationship intangible assets of £3,156,000 were recognised on acquisition in respect of the expected cash inflows and economic benefit from the acquired business. An associated deferred tax liability of £787,000 was recognised in relation to the expected cash inflows on the acquired client relationship intangible asset. Goodwill of £3,945,000 was recognised on acquisition in respect of the expected growth in the acquired business 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 date of acquisition, are detailed in the following table.
Trade and other receivables
268 804 (167) (132)
Cash at bank
Trade and other payables Corporation tax payable
Total net assets recognised by acquired companies
773
Fair value adjustments: – Client relationship contracts
3,156
– Deferred tax liabilities Net identifiable assets
(787)
2,369 3,945 7,087
Goodwill
Total purchase consideration
The trade and other receivables were recognised at their fair value, being the gross contractual amounts, which were deemed fully recoverable.
Brooks Macdonald Group plc Annual Report and Accounts 2024
129
Made with FlippingBook - professional solution for displaying marketing and sales documents online