The goodwill of £40.3m for Marsh & Parsons comprises certain intangible assets that cannot be individually separated and reliably measured from
the acquiree due to their nature. These items include the high quality, dynamic and experienced management team with an outstanding record of
delivering strong and profitable growth against the backdrop of challenging market conditions, the expected value of synergies and the potential to
significantly grow the business.
In addition to the consideration of £55.9m, management of Marsh & Parsons were issued ‘Growth Shares’ which entitle them to require LSL to buy
their Growth Shares at any time between 31st March 2016 and 1st April 2020, at their discretion, at a price determined by a multiple of EBITDA in the
previous financial year. In the current year £1,802,000 (2011: £66,000) has been expensed in the income statement.
b. Lettings acquisition by LSLi
During the prior year LSLi (through its subsidiaries) acquired a number of lettings businesses for an aggregate consideration of £755,000 in cash.
• Assets of the lettings business of Reynolds (Wimbledon) Ltd acquired on 1st March 2011 for a cash consideration of £160,000;
• Assets of the lettings business of Goddard Management Ltd trading as A120 Lettings acquired on 30th September 2011 for a cash consideration
of £188,250;
• Lettings business of Front Door Property Management Ltd for a cash consideration of £207,000 in September 2011; and
• Lettings business of Warners Letting Agency Ltd for a cash consideration of £200,000 in December 2011.
The combined fair values of the identifiable assets and liabilities as at the date of acquisition of the above acquisitions were:
Fair value
recognised on
acquisition
£’000
Property, plant and equipment 25
total identifiable net assets acquired 25
Purchase consideration (discharged by cash) 755
Goodwill arising on acquisition 730
The goodwill of £0.7m for the above acquisitions comprises certain intangible assets that cannot be individually separated and reliably measured
from the acquiree due to their nature. These items include the expected value of synergies and the potential to grow the business.
c. Lettings acquisition by your Move and Reeds Rains
During the year, Your Move and Reeds Rains acquired the following lettings businesses of Wilsons, Letexpress, Destination London and a franchisee
of Reeds Rains for a total cash consideration of £423,000. There were no separately identifiable net assets and all the consideration was towards
goodwill.
Financial Statements
From the date of acquisition to 31st December 2011, the acquisitions in aggregate have contributed to £3.1m of revenue and £0.5m profit before tax
of the Group. If all of these combinations had taken place at the beginning of the year, the consolidated revenue would have been higher by £24.6m
and the consolidated profit before tax would have been higher by £6.0m.
Of the total goodwill arising on all acquisitions, an amount of £349,000 is expected to be deductible for tax purposes.
28. client monies
As at 31st December 2012, client monies held by subsidiaries in separate bank accounts amounted to £65,501,000 (2011: £55,647,000). Neither this
amount, nor the matching liabilities to the clients concerned are included in the Group balance sheet, as the Group is not entitled to the benefit from
the use of the amount held in these accounts.
29. Financial instruments – risk management
The Group’s principal financial instruments comprise bank loans and other loans. The main purpose of these financial instruments is to raise finance
for the Group’s operations and to fund acquisitions. The Group has various financial assets and liabilities such as trade receivables, cash and short-
term deposits and trade payables, which arise directly from its operations.
The Group has entered into derivative transactions, relating to the purchase of interest rate swaps. The purpose is to manage the interest cost arising
from the Group’s operations and its sources of finance.
It is the Group’s policy that trading in derivatives shall not be undertaken, apart from the interest rate swap agreements mentioned above.
97