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- Notes to the Consolidated Cash Flow Statement
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
13 ANALYSIS OF NET DEBT
Note | At beginning of year £m | Cash flow £m | Change in mark to market value £m | On acquisition of Metal Bulletin Note 15 £m | Issued on acquisition of subsidiaries Note 15 £m | Foreign exchange movements £m | Other non-cash movements £m | At end of year £m | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash and cash equivalents | 26 | 97.3 | (25.6) | – | – | – | (1.3) | – | 70.4 | |
| Bank overdrafts | (1.2) | (5.6) | – | – | – | 0.4 | – | (6.4) | ||
| Net cash and cash equivalents | 96.1 | (31.2) | – | – | – | (0.9) | – | 64.0 | ||
| Debt due within one year | (11.1) | 17.1 | – | (12.6) | (21.5) | (0.1) | (8.6) | (36.8) | ||
| Debt due after one year | ||||||||||
| Bonds | (653.9) | (188.4) | 3.0 | – | – | – | 0.8 | (838.5) | ||
| Bank loans | (178.1) | 40.4 | – | – | – | 3.4 | (9.9) | (144.2) | ||
| (843.1) | (130.9) | 3.0 | (12.6) | (21.5) | 3.3 | (17.7) | (1,019.5) | |||
| Effect of derivatives on bank debt | 8.8 | (0.7) | (3.0) | – | – | – | 5.1 | |||
| Net debt | (738.2) | (162.8) | – | (12.6) | (21.5) | 2.4 | (17.7) | (950.4) | ||
During the year the Group issued a new 20 year 6.375% £200 million bond and received proceeds amounting to £197.8 million after costs amounting to £2.2 million were deducted.
The Group also redeemed £9.4 million of its existing 10% 2021 bonds at a cost of £12.6 million, a premium of £2.6 million.
Other non-cash movements in respect of debt due within one year arose following the vendors’ decision to take a loan note alternative to satisfy the deferred consideration balance on certain prior year acquisitions (note 33).
Other non-cash movements in respect of bonds comprises the unwinding of premium of £1.1 million (2006 £1.0 million) offset by the amortisation of issue costs of £0.3 million (2006 £0.3 million).
Other non-cash movements in respect of bank loans comprises interest added to principle of £9.9 million (2006 £nil).
14 ANALYSIS OF MOVEMENTS IN CASH IN RESPECT OF ACQUISITIONS AND DISPOSALS
Note | 2007 £m | 2006 £m | |
|---|---|---|---|
| Acquisitions | |||
| Cash consideration including acquisition expenses of £2.4 million (2006 £3.9 million) | 15 | 295.8 | 260.8 |
| Cash paid in respect of consideration deferred from prior years | 33 | 29.6 | 36.5 |
| Cash and cash equivalents acquired with subsidiaries | 15 | (13.1) | (3.9) |
| 312.3 | 293.4 |
Cash paid in respect of consideration deferred from prior years was mainly in respect of the business information division.
During the year, the Group acquired businesses which had contributed £3.2 million to the Group’s net operating cash flows, received £15.4 million in respect of investing activities and paid £10.7 million in respect of financing activities.
Note | 2007 £m | 2006 £m | |
|---|---|---|---|
| Disposals | |||
| Cash consideration | 16 | 41.8 | 186.5 |
| Cash and cash equivalents disposed with subsidiaries | 16 | (4.8) | – |
| 37.0 | 186.5 |
During the year, the Group disposed of businesses which contributed £2.5 million to the Group’s net operating cashflows and paid £3.9 million in respect of financing activities.
15 SUMMARY OF THE EFFECTS OF ACQUISITIONS
On 6th October, 2006 the Group acquired 100% of the issued share capital of Metal Bulletin plc (Metal Bulletin) for a consideration of £239.6 million. Metal Bulletin is the parent company of a group of companies operating as a leading global information provider of must-have market sensitive data in niche, business to business markets. Its revenues are derived from a range of publications, electronic products and services, conferences, research and ancillary functions provided to customers. This acquisition has been accounted for using the purchase method of accounting.
The Directors have adjusted the consolidated balance sheet of Metal Bulletin at 6th October, 2006 for adjustments which they believe more accurately represent the fair value of the assets at acquisition. The fair values in the Group’s interim report were provisional and have been finalised during the second half of the year.
The intangibles acquired represent trade marks, subscriber relationships, advertiser relationships and databases for which amortisation of £12.9 million has been charged in the year. Goodwill is attributable to the deemed value of the workforce and anticipated future operating synergies. Non-current liabilities include primarily a deferred tax liability arising on the intangible assets.
The Metal Bulletin group contributed £54.5 million to the Group’s revenue, £21.0 million to the Group’s operating profit and £10.1 million to the Group’s profit before tax for the period between the date of acquisition and 30th September, 2007.
The impact of the acquisition on business net assets was:
Note | Metal Bulletin book value £m | Accounting policy alignments £m | Fair value adjustments £m | Metal Bulletin at fair value £m | |
|---|---|---|---|---|---|
| Goodwill | 17 | 32.4 | – | 147.2 | 179.6 |
| Intangible assets | 18 | 6.6 | – | 133.0 | 139.6 |
| Property, plant and equipment | 19 | 3.1 | – | (1.4) | 1.7 |
| Assets held for resale | – | – | 6.8 | 6.8 | |
| Deferred tax assets | 34 | 0.4 | 0.4 | 0.5 | 1.3 |
| Current assets | 9.2 | – | (4.1) | 5.1 | |
| Cash and cash equivalents | 2.8 | – | – | 2.8 | |
| Trade creditors and other payables | (24.3) | – | (0.7) | (25.0) | |
| Other current liabilities | (6.0) | – | (0.1) | (6.1) | |
| Debt due within one year | 13 | (12.6) | – | – | (12.6) |
| Deferred tax liabilities | 34 | (0.3) | – | (43.3) | (43.6) |
| Post employment benefits | 32 | (2.4) | (1.6) | – | (4.0) |
| Other non-current liabilities | (6.0) | – | – | (6.0) | |
| Total net assets acquired | 2.9 | (1.2) | 237.9 | 239.6 | |
| Minority share of net assets acquired | (93.0) | ||||
| Group share of net assets acquired | 146.6 |
Cost of acquisition | Note | Non-cash £m | Cash paid in prior period £m | Cash paid in current period £m | Total £m |
|---|---|---|---|---|---|
| Reclassification of available-for-sale investment | 21 | – | 20.1 | 1.5 | 21.6 |
| Shares issued by Euromoney | 65.0 | – | – | 65.0 | |
| Loan notes | 13 | 12.7 | – | – | 12.7 |
| Cash | 14 | – | – | 134.9 | 134.9 |
| Consideration at fair value | 77.7 | 20.1 | 136.4 | 234.2 | |
| Directly attributable costs | 14 | – | – | 5.4 | 5.4 |
| Total cost of acquisition | 77.7 | 20.1 | 141.8 | 239.6 |
Other acquisitions | Note | Book value £m | Fair value adjustments £m | Provisional fair value £m |
|---|---|---|---|---|
| Goodwill | 17 | – | 97.7 | 97.7 |
| Intangible assets | 18 | – | 83.5 | 83.5 |
| Property, plant and equipment | 19 | 2.9 | (0.4) | 2.5 |
| Current assets | 21.5 | – | 21.5 | |
| Cash and cash equivalents | 10.3 | – | 10.3 | |
| Trade creditors and other payables | (6.5) | – | (6.5) | |
| Tax | (1.2) | – | (1.2) | |
| Deferred tax | 34 | (0.1) | (11.8) | (11.9) |
| Total net assets acquired | 26.9 | 169.0 | 195.9 | |
| Minority share of net assets acquired | 37 | (2.3) | ||
| Group share of net assets acquired | 193.6 |
Cost of other acquisitions | Note | Non-cash £m | Cash paid in current period £m | Total £m |
|---|---|---|---|---|
| Reclassification of investment in associate | 20 | 5.3 | – | 5.3 |
| Deferred consideration | 33 | 27.8 | – | 27.8 |
| Loan notes | 13 | 8.8 | – | 8.8 |
| Cash | 14 | – | 151.6 | 151.6 |
| Consideration at fair value | 41.9 | 151.6 | 193.5 | |
| Directly attributable costs | 14 | – | 2.4 | 2.4 |
| Total cost of acquisition | 41.9 | 154.0 | 195.9 |
The other notable acquisitions completed during the period, the percentage of voting rights acquired, the dates of acquisition and the goodwill arising were as follows:
Name of acquisition | % voting rights acquired | Date of acquisition | Business description | Consideration paid £m | Intangible fixed assets acquired £m | Goodwill acquired £m |
|---|---|---|---|---|---|---|
| Total Derivatives | 67% | October 2006 | Online derivatives information provider | 7.3 | 6.9 | 3.8 |
| Tau on line (Croatia) | 60% | March 2007 | Online recruitment | 10.3 | 4.7 | 5.6 |
| Quest | 100% | July 2007 | Property information software provider | 35.7 | 17.3 | 22.1 |
| Kent Regional Newspapers, East Surrey and Sussex Newspapers and Blackmore Vale Publishing | 100% | July 2007 | Regional Newspapers | 65.2 | 36.7 | 28.2 |
| Jobsgroup | 100% | August 2007 | Online recruitment | 15.2 | 6.5 | 8.4 |
| Apply Yourself (US) | 100% | September 2007 | Online college application provider | 13.2 | 6.3 | 10.0 |
If all acquisitions had been completed on the first day of the financial year, Group revenues for the year would have been £2,277.9 million and Group profit attributable to equity holders of the parent would have been £112.0 million. This information takes into account the amortisation of acquired intangible assets for a full year, together with related income tax effects but excludes any pre-acquisition finance costs and should not be viewed as indicative of the results of operations that would have occurred if the acquisitions had actually been completed on the first day of the financial year.
Total profit attributable to equity holders of the parent since the date of acquisition for companies acquired during the period amounted to £4.7 million.
The aggregate consideration for these and other businesses was £435.5 million, of which £295.8 million was paid in cash during the year, £25.4 million paid in cash in the prior period, £21.5 million issued in the form of loan notes, £65.0 million issued in the form of shares and an estimated amount of £27.8 million payable in the form of deferred consideration, depending upon trading results. This deferred consideration has been discounted back to current values in accordance with IFRS 3, Business Combinations. In each case, the Group has used acquisition accounting to account for the purchase.
16 SUMMARY OF THE EFFECTS OF DISPOSALS
The principal disposals completed during the year, the proceeds received and dates of disposal were as follows:
| Atalink | March 2007 | £2.7m |
| Raven Fox | March 2007 | £1.8m |
| EIC | April 2007 | £4.7m |
| Buy and Sell | July 2007 | £17.2m |
| Med Ad | August 2007 | £6.3m |
The impact of disposals of businesses on net assets was: