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70 | FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements


15. Acquisition of subsidiaries continued


• The second instalment varies according to the Run-rate EBITDA on an annualised basis as at 30 June 2012. This instalment becomes payable if the June 2012 Run-rate EBITDA exceeds £15.0m and the amount payable increases on a straight-line basis from zero to a maximum of £10.0m, which is payable if the June 2012 Run-rate EBITDA equals or exceeds £17.0m; and


• The conditional consideration payment, if payable, will be satisfied by the issue of a variable number of Ordinary Shares or, in certain limited circumstances, the issue of bank guaranteed loan notes by F&C.


F&C funded the cash consideration for the acquisition through a combination of the £14.2m net proceeds of a non-pre-emptive cash placing of F&C Ordinary Shares carried out on 28 April 2010, a £15m acquisition loan facility and existing cash resources.


In addition, as a condition of the acquisition, two new share-based payment agreements were established to retain and incentivise TRC Group employees: TRC Management Retention Plan and the TRC Management Incentive Plan. Details of these schemes are disclosed in notes 26(e) and (f).


The fair value of consideration paid by the Group for its 100% holding in Thames River Capital Group Limited was as follows: £m Initial consideration – cash


Estimated additional cash consideration payable as a result of TRC net assets exceeding target net assets Estimated fair value of first instalment of conditional consideration Estimated fair value of second instalment of conditional consideration


Fair value of consideration paid for 100%of TRC Group


33.6 7.5 5.0 2.5


48.6


FCAM also incurred £7.5m of acquisition expenses relating to the legal, accounting and other professional advisor fees associated with the transaction (£7.2m of these have been capitalised in the Company Financial Statements, as shown in note 4 on page 131). These expenses are treated as exceptional costs, as explained in note 6(a)(viii).


The provisional fair values of assets and liabilities acquired at Completion were as follows:


Provisional fair value to


Book value £m


Non-current assets: Property, plant and equipment


Intangible assets: – management contracts – software and licences Deferred acquisition costs Deferred tax assets


Current assets: Financial investments


Deferred acquisition costs Trade and other receivables* Cash and cash equivalents


Non-current liabilities: Provisions


Employee benefits Deferred income


Deferred tax liabilities


Current liabilities: Trade and other payables Employee benefits Deferred income Members’ liabilities Current tax payable


Estimated net assets acquired Goodwill


Total consideration * The gross contractual amounts receivable at Completion are £13.3m, which is also the estimate of contractual cash flows expected to be collected.


Accounting policy


alignment £m


the Group at acquisition, as at


Acquired


intangibles adjustments £m


Fair value 31 December 2010 £m


£m


1.7 ––– 1.7 –– 23.0


– 0.6 – 0.1


23.0


0.5 ––– 0.5 –


1.1 –– 0.8 –


0.1 –– 0.1 0.1


0.8 1.9 0.1 –– 0.1


13.3 ––– 13.3 27.2 ––– 27.2


(0.1) –– (0.1) –– (6.4) (17.6) (0.2)


(1.1) ––– (1.1) –


(0.4) –– (0.4) –


(6.4)


(6.3) —– 0.3 –


14.9 (0.5) 16.6 0.8


(0.1) –– (17.7) (6.0)


(3.4) ––– (3.4) (1.0) –– (0.3)


(0.3) –– (0.3) (1.3)


31.8 16.8


48.6


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