Financial Statements
Notes to the Group financial statements
for the year ended 31 March 2006
11. Acquisitions, demerger of Burberry and disposals
(a) Acquisitions for the year ended 31 March 2006
On 5 May 2005 the Group acquired 100% of the issued share capital of LowerMyBills.com,
a leading online generator of mortgage and other loan application leads in
the US. On 14 December 2005 the Group acquired 100% of the issued share capital
of PriceGrabber.com, a leading provider of online comparison shopping services
in the US.
During the year ended 31 March 2006, the Group made several other acquisitions, none of which are considered individually material to the Group. Most of these were made by Experian, including three US-based affiliate credit bureaux, ClassesUSA, Baker Hill and Vente in North America, and ClarityBlue and FootFall in the UK. Also in the UK, Argos acquired 33 former Index stores and the Index brand from Littlewoods Limited.
In aggregate, it is estimated that these acquired businesses contributed revenues of £261m and profit after tax of £16m to the Group for the periods from their respective acquisition dates to 31 March 2006. If these acquisitions had been completed on 1 April 2005, Group revenues from the acquired businesses for the year have been estimated at £398m. Due to the acquired entities using different accounting policies prior to acquisition, previously reporting to different period ends and, in certain cases, preparing financial information on a cash basis prior to acquisition, it has been impracticable to estimate the impact on Group profit had they been owned from 1 April 2005.
Details of the net assets acquired and the provisional goodwill are as follows:
| LowerMyBills.com | PriceGrabber.com | Other acquisitions | Total | ||||||||
| Book value £m |
Fair value £m |
Book value £m |
Fair value £m |
Book value £m |
Fair value £m |
Book value £m |
Fair value £m |
||||
| Intangible assets | – | 44 | – | 81 | 1 | 95 | 1 | 220 | |||
| Property, plant and equipment | 1 | 1 | 1 | 1 | 6 | 6 | 8 | 8 | |||
| Deferred tax assets | 8 | – | – | – | 10 | – | 18 | – | |||
| Inventories | – | – | – | – | 1 | 2 | 1 | 2 | |||
| Trade and other receivables | 10 | 10 | 4 | 4 | 27 | 24 | 41 | 38 | |||
| Cash net of overdrafts | 4 | 4 | 1 | 1 | (5) | (5) | – | – | |||
| Other financial assets | 1 | 1 | 1 | 1 | 6 | 6 | 8 | 8 | |||
| Trade and other payables | (14) | (14) | (4) | (4) | (28) | (34) | (46) | (52) | |||
| Deferred tax liabilities | – | (10) | – | – | – | (12) | – | (22) | |||
| 10 | 36 | 3 | 84 | 18 | 82 | 31 | 202 | ||||
| Goodwill | 177 | 193 | 309 | 679 | |||||||
| 213 | 277 | 391 | 881 | ||||||||
| Satisfied by: | |||||||||||
| Cash | 181 | 276 | 355 | 812 | |||||||
| Acquisition expenses | 6 | 1 | 4 | 11 | |||||||
| Deferred consideration | 26 | – | 32 | 58 | |||||||
| 213 | 277 | 391 | 881 | ||||||||
In the Group cashflow statement £4m of acquisitions made by Burberry have been shown within the cash flows of discontinued operations.
The fair values set out above contain certain provisional amounts which will be finalised no later than one year after the date of acquisition. Goodwill represents the synergies, assembled workforce and future growth potential of the businesses acquired.
(b) Demerger of Burberry Group plcAt an Extraordinary General Meeting on 13 December 2005, the shareholders of GUS plc approved the demerger of the Group’s remaining interest 65% in Burberry Group plc. On demerger, the Company declared a dividend in specie, which was satisfied by the Group’s shares in Burberry Group plc. The dividend in specie represents the Group’s share of the net assets of Burberry Group plc.
The Group's share of the net assets of Burberry Group plc at the date of demerger was as follows:
| £m | |
| Intangible assets | 134 |
| Property, plant and equipment | 162 |
| Deferred tax assets | 16 |
| Inventories | 134 |
| Trade and other receivables | 110 |
| Other financial assets | 4 |
| Cash and cash equivalents | 97 |
| Trade and other payables | (176) |
| Current tax payable | (19) |
| Deferred tax liabilities | (18) |
| Equity minority interests | (157) |
| Group's share of net assets of Burberry Group plc on demerger | 287 |
The costs associated with the Burberry demerger of £5m were charged against discontinued operations in the Group income statement.
(c) Disposal of subsidiaries for the year ended 31 March 2006Details of the subsidiaries disposed of during the financial year are given in note 12. The net assets disposed of and the consideration received are as follows:
| Lewis Group £m |
Wehkamp £m |
Total £m |
|
| Intangible assets | – | 2 | 2 |
| Property, plant and equipment | 12 | 14 | 26 |
| Deferred tax assets | – | 6 | 6 |
| Inventories | 14 | 19 | 33 |
| Trade and other receivables | 168 | 378 | 546 |
| Other assets | 35 | 4 | 39 |
| Cash and cash equivalents | 14 | – | 14 |
| Trade and other payables | (20) | (172) | (192) |
| Retirement benefit obligations | (4) | (21) | (25) |
| Other financial liabilities | (15) | – | (15) |
| Current tax liabilities | (12) | – | (12) |
| Equity minority interests | (91) | – | (91) |
| Net assets disposed | 101 | 230 | 331 |
| Net proceeds received | 142 | 220 | 362 |
| Costs | (2) | (9) | (11) |
| Recycled cumulative exchange loss | (3) | – | (3) |
| Profit/(loss) on disposal | 36 | (19) | 17 |
| Cash flow from disposals | |||
| Proceeds received | 142 | 220 | 362 |
| Costs paid | (2) | (5) | (7) |
| Net cash inflow | 140 | 215 | 355 |
In the Group cash flow statement, £5m of proceeds in respect of the sale of Burberry shares (net of demerger costs) are included in the cash flows on disposal of subsidiaries.
