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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes continued
for the 12 months to 31 December 2016
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
Acquisitions – UGL Limited
On 10 October 2016, CIMIC Group Investments No.2 Pty Limited (CGI2), a controlled entity within the Group, became a substantial
shareholder in UGL Limited (UGL), an entity formerly listed on the ASX, by acquiring an interest of 13.84% of shares on issue. On obtaining
the initial interest CIMIC announced a final unconditional offer for the remaining shares pursuant to a takeover at a price of $3.15 per
share.
On 24 November 2016, CGI2’s ownership interest in UGL increased to over 50% and thereby gained control. The results of UGL have been
consolidated from this date. CGI2 subsequently increased its ownership interest in UGL to more than 90% and exercised its right to
compulsorily acquire the remaining shares, which was completed on 20 January 2017. The shareholding at 31 December 2016 was 95%.
Cash consideration paid to 31 December 2016 to acquire the non-controlling interest was $248.5 million and a liability for $29.3 million is
recognised for the remaining shares.
Purchase consideration to 24 November 2016
$m
Cash paid to obtain control
262.1
The provisional value of assets and liabilities recognised as a result of the acquisition are as follows:
Provisional fair value
on acquisition
$m
Cash and cash equivalents
152.7
Trade and other receivables
259.6
Inventories: consumables
37.0
Other current assets
28.4
Investments accounted for using the equity method
39.6
Property, plant and equipment
72.7
Intangibles
70.6
Current and deferred tax
268.2
Trade and other payables
(972.3)
Provisions
(82.8)
Interest bearing liabilities
(315.3)
Net identifiable assets / (liabilities)
(441.6)
Less: non-controlling interests
223.0
Add: Goodwill
480.7
Net assets / (liabilities) acquired
262.1
The goodwill is attributable to the future profitability and expertise of UGL, as well as the synergies expected to be achieved from
integrating UGL with the pre-existing CIMIC cash generating units (CGUs) of CIMIC in the construction segment. An element of the acquired
goodwill has been provisionally allocated to this segment refer to Note 15:
Intangibles
. The values of assets and liabilities acquired have
not been finalised due to the proximity of the acquisition to the end of the period. No goodwill is deductible for tax purposes.
The acquisition has been accounted for under Accounting Standard AASB 3
Business Combinations
. Under AASB 3 the Group can elect, on
an acquisition by acquisition basis, to recognise non-controlling interests in an acquired entity either at fair value or at the non-controlling
interest’s share of the acquired entity’s net identifiable assets / (liabilities). For the acquisition of UGL, the CIMIC Group elected to
recognise the non-controlling interests at the non-controlling interest’s share of the acquired entity’s net identifiable liabilities.
The contribution by UGL to the Group from the acquisition date to the end of the period ended 31 December 2016 was $204.2 million
revenue and $5.3 million profit after tax after making adjustments for the acquisition in accordance with AASB 3. Had the acquisition
occurred on 1 January 2016, UGL’s contribution to the Group for the year ended 31 December 2016 would have been $1,983.3 million
revenue and $104.3 million of loss after tax. The loss includes $200.0 million of provisions recorded prior to acquisition on the Ichthys
Projects.
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