Acquisitions made during the year
as at 29 February 2020
The following table sets out the assessment of the fair value of assets and liabilities acquired in the acquisitions made by the Group during the period.
| US$'000 | Audited Year ended February 2020 |
|
|---|---|---|
| ACQUISITIONS MADE IN FY20 | ||
| Assets acquired | ||
| Non-current assets | 6 194 | |
| Current assets | 9 560 | |
| Non-current liabilities | (2 807) | |
| Current liabilities | (14 523) | |
| Net assets acquired | (1 576) | |
| Intangible assets | 3 864 | |
| Capitalised development expenditure and software | 75 | |
| Goodwill | 13 016 | |
| Non-controlling interests | (710) | |
| Fair value of acquisitions | 14 669 | |
| Purchase consideration | ||
| Subsidiary shares issued | 728 | |
| Cash | 9 755 | |
| Deferred purchase consideration | 4 186 | |
| Total consideration | 14 669 | |
| Cash outflow for acquisitions | ||
| Cash and cash equivalents acquired | (455) | |
| Cash consideration paid | 9 755 | |
| Net cash outflow for acquisitions | 9 300 | |
| Reconciliation of goodwill | ||
| Opening balance‡ | 234 551 | |
| Acquisitions | 13 016 | |
| Translation and other movements | (6 198) | |
| Closing balance‡ | 241 369 |
| ‡ | The opening and closing balance of goodwill reflects the gross carrying amount of goodwill. There were no accumulated impairments carried forward. |
On 1 March 2019, Analysys Mason Limited acquired 100% of the issued share capital Stelacon Holding AB ("Stelacon"), a Swedish consulting company for US$2.6 million (including a deferred purchase consideration of US$1.2 million). This was an important further step in building a pan-Scandinavian presence, after Analysys Mason's successful expansion into Norway. Stelacon brings experience in areas including smart cities, regional development, digital services, policy and regulation, and telecoms and digital communications.
Effective 30 June 2019, Logicalis SA (Pty) Ltd, acquired 100% of the issued share capital of Mars Investment Holdings (Pty) Ltd ("Mars Technologies"), a South African IT services business, with offices in Cape Town, Johannesburg, Port Elizabeth, Durban and East London for US$0.4 million (including a deferred purchase consideration of US$0.1 million). With this acquisition, the Logicalis South African operation strengthens and expands its managed services offering to better serve its corporate customers and deliver new services to existing customers from both companies.
Logicalis Group purchased a 70% interest in Cilnet on 2 September 2019, a Cisco systems integrator and managed services business in Portugal for US$8.8 million (including US$2.3 million deferred purchase consideration and US$0.7 million non-controlling interest). The acquisition increases Logicalis' Cisco technical expertise in the Iberian region and complements the existing Spanish operation with data centre, collaboration, networking, infrastructure and managed services capabilities, expanding the offering to the region. The company designs and integrates networking, data centre and contact centre solutions, complemented with security, managed services and application development skills.
In addition, Logicalis also acquired 100% of Orange Networks on 2 September 2019, a Microsoft services business focused on Microsoft cloud and managed services, with Germany-wide presence including Hamburg, Munich, Offenbach and Düsseldorf. The purchase price was US$2.9 million (including US$0.6 million deferred purchase consideration). This acquisition advances Logicalis Germany to Microsoft Gold-Certified Partner status and enhances its hybrid cloud offering.
As a result of these acquisitions, goodwill and other intangible assets increased by US$13.0 million and US$3.9 million respectively. None of the goodwill recognised is expected to be deductible for income tax purposes. All trade receivables acquired are measured at amortised cost. The carrying value of trade receivables balances approximates their fair value, therefore no fair value disclosures are provided. All identifiable intangible assets have been recognised and accounted for at fair value.
The revenue and EBITDA included from these acquisitions in FY20 were US$23.3 million and US$2.6 million respectively; profit after tax included from these acquisitions was US$1.7 million. Had the acquisition date been 1 March 2019, the revenue and EBITDA would have been approximately US$42.8 million and US$4.9 million respectively. It is not practical to establish profit after tax that would have been contributed to the Group if they had been included for the entire year. The fair value assessment of assets and liabilities acquired and the amounts recognised as goodwill and intangible assets have been finalised by year end.