29 Business combinations and disposals of consolidated companies
In addition to the new Bekaert Textiles division, Haniel acquired control over 4 further companies or groups of companies in the CWS-boco and TAKKT divisions during the financial year. In total, 29 individual firms were acquired. A 100 per cent interest was acquired in each of these companies.
Of the companies or groups of companies acquired, the acquisition of the Bekaert Textiles group as at 8 June 2015 classifies as material from the Haniel Group’s perspective. The acquisition of the world’s leading specialist for mattress textiles, with its registered office in Waregem, Belgium, serves to enrich Haniel’s portfolio.
The total assets and liabilities acquired through business combinations in the financial year are comprised as follows:
|EUR million||Bekaert Textiles||Other acquisitions||Total|
|Property, plant and equipment||70||70|
|Cash and cash equivalents||24||8||32|
|Trade payables and similar liabilities||20||3||23|
|Income tax liabilities||4||1||5|
The gross contractual amount of the acquired trade receivables is EUR 29 million. Taking into account the expectation that EUR 3 million in receivables will not be recoverable, the Fair value of the acquired trade receivables amounts to EUR 26 million.
The consideration transferred for the business combinations and the resulting Goodwill are presented in the table below:
|EUR million||Bekaert Textiles||Other|
|Other non-cash consideration||2||2|
|Cash and cash equivalents acquired||24||8||32|
|Net assets acquired||148||21||169|
The reported goodwill essentially represents the Future prospects accompanying the business combinations and the expertise of the workforce acquired. EUR 17 million of the recognised goodwill is tax deductible.
The transaction costs incurred in the context of the business combinations totalled EUR 2 million and are included in other operating expenses. EUR 1 million of that amount relates to the Bekaert Textiles acquisition.
In some instances, contingent consideration was agreed as part of the business combinations. At the respective acquisition dates, this contingent consideration was recognised as a liability with a fair value totalling EUR 12 million. The future development of the contingent consideration depends on the realisation of certain revenue and earnings targets by the acquired companies or groups of companies.
The companies or groups of companies acquired contributed EUR 170 million to revenue and EUR 12 million to profit after taxes during the financial year. Of those amounts, EUR 139 million and EUR 12 million, respectively, were attributable to Bekaert Textiles. If each of the entities had been acquired with effect from the beginning of the financial year, they would have contributed EUR 286 million to revenue and EUR 17 million to profit after taxes. Bekaert Textiles would have contributed EUR 237 million to revenue and EUR 17 million to profit after taxes.
Contingent consideration recognised as a liability from business combinations developed as follows in the financial year:
|As at 1 Jan.||0|
|Foreign exchange rate adjustments|
|As at 31 Dec.||12|
The fair value of the contingent consideration is determined on the basis of revenue and earnings targets, taking into account long-term business planning. There were no material changes in this figure during the financial year. The possible payments, translated at closing rates, for the contingent consideration as at the reporting date range between EUR 0 million and EUR 20 million. The measurement of contingent consideration at fair value resulted in the recognition of EUR 1 million in unrealised losses as interest expenses during the financial year. The value of the consideration is determined on a regular basis by qualified employees of the relevant units and discussed with the responsible decision maker.
Business combinations after the reporting date, but prior to authorisation of the consolidated financial statements
With effect from 29 February 2016, the Bekaert Textiles division acquired all shares in the DesleeClama Group, which is domiciled in Zonnebeke, Belgium. DesleeClama is a leading and established company for the development and manufacturing of mattress textiles. The purchase price amounted to EUR 92 million. No company shares will be issued to settle the consideration transferred. In financial year 2015, DesleeClama generated more than EUR 100 million in revenue. Given the short amount of time between the acquisition date and the preparation of the consolidated financial statements, no conclusive information was available as to the future inclusion of the company in the consolidated financial statements.
During the financial year, 6 companies of the TAKKT division were disposed of and deconsolidated. These companies are part of the Plant Equipment Group, which were reported as held for sale as at 31 December 2014 and sold to Global Industrial with effect from 30 January 2015. The assets and liabilities disposed of are comprised as follows:
|Property, plant and equipment|
|Cash and cash equivalents||1|
|Other current liabilities||4|
The consideration received for the disposal was EUR 23 million. Taking into account the cash and cash equivalents of EUR 1 million in the disposed units, and the paid transaction costs of EUR 4 million and other non-cash components of EUR 2 million for the financial year, the total cash amount for the disposal was EUR 16 million. Taking into account EUR 3 million in transaction costs incurred during the financial year and the other comprehensive income of EUR -3 million to be reclassified to profit or loss, the net result from the disposal amounts to EUR 3 million in total, and is included in other operating income.