5. Acquisitions of Subsidiaries, Associates and Non-Controlling Interests

Acquisitions in 2014

Rayner, United Kingdom
On 1 February 2014 the Group acquired 65 stores from the Rayner & Keeler group in the United Kingdom. The total consideration paid was €13,245 (GBP 10,750). The goodwill amount of €5,531 represents future synergies with the existing customer base and future growth in profitability of the business.

MultiOpticas, Colombia
On 28 February 2014 the Group acquired 100% of the stores in MultiOpticas, Colombia. The Company paid €11,024 (COP 29,012,632) directly in cash and €1,059 (COP 2,787,714) is recognized as a contingent consideration which the Group is required to pay in cash to the former owners on 1 February 2017. The goodwill amount of €8,827 represents future synergies with the existing customer base and future growth in profitability of the business.

Topsa, Peru
On 29 August 2014 the Group acquired 62% of the shares, including a call and written put option for the remaining 38%, in the Peruvian optical retail chain Topsa Holding SA. The option to increase the shareholding to 100% is initially valued at €7,153 depending on the performance of Topsa and can be exercised after five years. As the likelihood of the option being exercised by one of the parties is almost certain it is accounted for as contingent consideration and included in non-current liabilities. The Company paid €20,468 and recognized €15,329 as goodwill, which represents the future synergies and growth of the business. The Group obtained control in this transaction and therefore the results are fully consolidated as of the date of control. The purchase price allocation has not yet been finalized.

Randazzo, Italy
On 23 December 2014 the Group acquired 100% of the shares in Angelo Randazzo S.r.l. Randazzo operates 101 optical retail stores under the name ‘Optissimo’ and has 89 points of sale in supermarkets. The total consideration paid is €88,804, an amount of €3,434 is expected to be paid in the first half year of 2015. Based on the initial purchase price allocation an amount of €116,570 is identified as goodwill and represents future synergies and future growth in profitability of the business. The purchase price allocation has not yet been finalized.

Other store acquisitions
Furthermore, the Group acquired 69 stores mainly in G4 and Other Europe. These acquisitions were recognized using the acquisition method. After the initial allocation of the consideration transferred for the acquisitions of the assets, liabilities and contingent liabilities, an amount of €11,982 was identified as goodwill. The goodwill is attributable to the high profitability of the acquired business and the expected synergies following the integration of the acquired business into our existing organization. The goodwill mainly comprises the acquired customer base, the skilled employees and the locations of the acquired stores, which cannot be recognized as separately identifiable assets.

The fair value of the net assets arising from the acquisitions in 2014 at acquisition date is as follows:

in thousands of EUR

Notes

Randazzo

Topsa

MultiOpticas

Rayner

Other stores

Total

Property, plant and equipment

7,241

4,796

888

384

1,456

14,765

Other intangible assets

29,568

15,565

3,601

7,229

10,485

66,448

Deferred income tax assets

3,365

53

-

-

-

3,418

Other non-current assets

959

159

-

-

11

1,129

Inventories

16,133

3,644

636

-

995

21,408

Trade and other receivables

6,892

4,947

-

307

256

12,402

Current income tax receivables

86

317

-

-

46

449

Cash and cash equivalents

11,768

234

-

-

630

12,632

Borrowings

-

- 1,007

-

-

-

- 1,007

Post-employment benefits

- 4,190

-

-

-

-

- 4,190

Deferred income tax liabilities

- 10,599

- 4,795

- 1,188

-

- 165

- 16,747

Provisions (non-current)

- 558

-

-

-

-

- 558

Other non-current liabilities

-

- 26

-

-

-

- 26

Current income tax liabilities

- 1,012

-

-

-

- 112

- 1,124

Provisions (current)

-

-

-

-

- 41

- 41

Trade and other payables

- 44,799

- 6,284

- 246

- 206

- 1,205

- 52,740

Current borrowings (excluding bank overdrafts)

- 37,244

- 5,311

- 435

-

- 189

- 43,179

Bank overdrafts

- 1,942

-

-

-

- 63

- 2,005

- 24,332

12,292

3,256

7,714

12,104

11,034

Consideration paid in cash and cash equivalents

88,804

20,468

11,024

13,245

23,372

156,913

Consideration to be transferred

3,434

7,153

1,059

-

714

12,360

Total consideration transferred or to be transferred

92,238

27,621

12,083

13,245

24,086

169,273

Consideration paid and to be paid in cash and cash equivalents

92,238

27,621

12,083

13,245

24,086

169,273

Cash and cash equivalents and bank overdrafts at acquired subsidiary

9,826

234

-

-

566

10,627

Outflow of cash and cash equivalents

82,412

27,387

12,083

13,245

23,519

158,646

Consideration transferred

92,238

27,621

12,083

13,245

24,086

169,273

Fair value of acquired net assets and liabilities

24,332

- 12,292

- 3,256

- 7,714

- 12,104

11,034

Goodwill

14

116,570

15,329

8,827

5,531

11,982

158,239

The goodwill amortization is tax-deductible in the United Kingdom and Colombia. In Italy it is largely tax-deductible.

The acquisitions contributed the following in revenue and net result for the Group:

in thousands of EUR

Randazzo

Topsa

MultiOpticas

Rayner

Other stores

Total

Revenue

-

9,629

7,489

12,910

13,383

43,411

Net result

-

- 827

- 3,591

380

965

- 3,073

Had the acquisitions been consolidated for the full year, revenue and net result would be:

in thousands of EUR

Randazzo

Topsa

MultiOpticas

Rayner

Other stores

Total

Revenue

105,598

28,367

8,987

14,162

34,269

191,383

Net result

- 4,214

- 3,023

- 4,178

396

3,258

- 7,761

Acquisition costs for the above acquisitions amount to €1,180 and are included in the general and administrative costs in the Income Statement.

HAL Optical Turkey and HAL Asia
On 30 September 2014 the Group acquired 100% of the shares in HAL Optical Turkey BV and HAL Investments Asia BV. HAL Optical Turkey BV owns 100% of the Turkish optical retail chain Atasun. HAL Investments Asia BV owns 100% of the shares in GrandVision Shanghai Co. Ltd and 78% of the shares in Shanghai Red Star Optical Co. Ltd. The Group acquired this from the parent company (HAL Holding) and therefore the predecessor accounting method is applied. The difference between the consideration transferred (€88,164) (refer to note 34.2) and the net assets (€32,670) of € 55,494 is recognized in retained earnings. See the table below for more details on the items relevant for other disclosure notes; remaining assets and liabilities are aggregated.

in thousands of EUR

Property, plant and equipment

4,650

Other intangible assets

705

Goodwill

5,783

Non-controlling interest

- 999

Other assets and liabilities

22,531

Total net assets

32,670

Consideration paid in cash

88,164

Cash and cash equivalents and bank overdrafts at acquired subsidiary

- 1,281

Outflow of cash and cash equivalents as a result of acquisition

86,883

Recognized in Retained Earnings

55,494