Acquisitions of subsidiaries in 2009
The group has early adopted IFRS 3 Business Combinations (2008) and IAS 27 Consolidation and Separate Financial Statements (2008) for all business combinations occurring in the financial year starting 1 January 2009. The change in accounting policy is applied prospectively, see note 2 Basis for preparation.
Wirth GmbH (renamed to Aker Wirth GmbH)
In 2007 Aker Solutions acquired 50 percent of the shares in the company Wirth GmbH. The company is a German provider of drilling machines and pumps, and Aker Solutions had cooperated with the company for more than 20 years. In January 2009, an agreement was reached for Aker Solutions to acquire the 50 percent outstanding shares in Wirth GmbH over a five-year period. The acquisition will enable Aker Solutions to accelerate and further strengthen the ability to realise the synergies between the companies, and gives greater flexibility to execute Aker Solutions growth strategy for the drilling equipment market.
Aker Solutions has included a liability of EUR 55 million as deferred consideration for the outstanding 50 percent of the shares, payable over the period 2009-2013. The consideration represents the fair value at the acquisition date, and includes EUR 4 million which is contingent on profit before tax for the period 2009-2013.
Aker Wirth is consolidated in Aker Solutions financial statements from 1 January 2009. The investment was previously proportionally consolidated. A gain of NOK 170 million has been recognised in other income in the Products & Technologies business area relating to remeasurement of the previously held interest in the company to fair value. The gain includes NOK 27 million revaluation of inventories that has been expensed in the period. Goodwill resulting from the transaction is mainly attributable to the expected synergies and the value of the assembled workforce.
Aker Oilfield Services AS
In April 2009 Aker Solutions increased the ownership in Aker Oilfield Services from 32.3 percent to 100 percent. The shares were purchased from Aker Capital AS (46 percent) and DOF Oilfield Services AS (21 percent). The acquisition is part of a strategy to give Aker Solutions a leading role in subsea well intervention through an integrated model for service delivery.
The consideration amounts to NOK 868 million, which was paid in full as of 31 December 2009.
Aker Oilfield Services has been consolidated in Aker Solutions’ financial statements from 1 April 2009. The investment was previously recognised as an associated company. A gain of NOK 159 million has been recognised in other income in the Subsea business area relating to remeasurement of the previously held interest in the company to fair value. Transaction costs of NOK 24 million related to the acquisition have been expensed in the period. Goodwill resulting from the transaction is mainly attributable to the expected synergies and the value of the assembled workforce. The current analysis and allocation of fair value is provisional.
Midsund Bruk AS
In April 2009, Aker Solutions acquired a 100 percent stake in Midsund Bruk to facilitate a closer collaboration and to expand Aker Solutions’ technology and product portefolio. The shares were purchased from Aker Capital AS.
The consideration transferred to the selling shareholders was NOK 89 million, which was paid in full as of 31 December 2009.
The company has been consolidated in Aker Solutions’ financial statements from 1 April 2009. Goodwill resulting from the transaction is mainly attributable to the expected synergies and the value of the assembled workforce. The current analysis and allocation of fair value is provisional. Fornebu Gate 2 AS
Aker Solutions acquired in December 2009 the company Fornebu Gate 2 for NOK 127 million. In January 2010, Aker Solutions entered into a contract with the construction company HENT to build a new combined office and hotel building at the K2 site at Fornebu. The contracting party is Fornebu Gate 2, the owner of the property at Fornebu.
Our performance
Notes to the accounts
Values at time of acquisition
Amounts in NOK million Wirth Aker Aker Oilfield Services Midsund Bruk FornebuGate 2 Total
Property, plant and equipment 57 515 68 288 928
Intangible assets 96 115 9 - 220
Other non-current assets 28 87 1 - 116
Current operating assets 1 253 22 61 5 1 341
Cash and cash equivalents 273 155 19 - 447
Other non-current liabilities (126) (27) (10) (45) (208)
Borrowings (154) (297) (31) (122) (604)
Current operating liabilities (819) (37) (56) - (912)
Net assets acquired at fair value 608 533 61 126 1 328
Goodwill on acquisition 484 749 27 - 1 260
Fair value acquired 1 092 1 282 88 126 2 588
Percentage acquired 50% 68% 100% 100%
Total consideration 546 868 88 126 1 628
Deferred and contingent consideration (364) (334) - (23) (721)
Cash paid1 182 534 88 103 907
Cash and cash equivalents acquired (136)2 (155) (19) - (310)
Net cash paid 46 379 69 103 597
Gain on remeasurement of previously held interests 170 159 - - 329
Operating revenue in acquired subsidiaries3 1 782 2 91 - 1 875
Profit for the period in acquired subsidiaries3 222 (27) 9 - 204
1) Cash paid during the quarter the acquisitions took place. In addition, NOK 334 million was paid in 2009 in quarters after the acquisitions took place and NOK 186 million was paid in 2009 relating to earlier acquisitions.
2) 50 percent of the cash and cash equivalents at acquisition date.
3) Amounts relate to the period after acquisition. Pro forma financial figures have not been prepared for Midsund Bruk, Aker Oilfield Services and Fornebu Gate 2 as the acquired subsidiaries are not considerered to be material based on historical results. Aker Wirth is consolidated from 1 January 2009.
Acquisition of non-controlling interest in 2009 Step Offshore AS
In December 2009, Aker Solutions acquired the remaining 49 percent of the shares and voting interests in Step Offshore to increase the group’s operational control. Step Offshore offer products and services related to drilling fluid management.
NOK 78 million cash was paid to the selling shareholders at the acquisition date. Up to NOK 130 million additional consideration will be due in 2016, based on the accumulated EBITDA for 2010 to 2015. Aker Solutions has included NOK 59 million as contingent consideration, which represents the fair value at the acquisition date.
The transaction resulted in a reduction of non-controlling interests of NOK 60 million. Acquisitions of subsidiaries in 2008
Qserv Ltd (renamed to Aker Qserv Ltd)
Aker Solutions acquired 100 percent of the shares in the company in July 2008. The company is a well service provider in Aberdeen, UK.
Aker Solutions paid GBP 99 million in cash for the shares. In addition, Aker Solutions have agreed to pay the selling shareholders additional consideration depending on accumulated EBITDA for the period of 2008-2010. Minimum deferred payment under to the agreement is GBP 15 million. Aker Solutions included GBP 51 million as contingent consideration in 2008, which represented the fair value at the acquisition date. During 2009 the estimate for deferred consideration was revised owing to adjusted EBITDA-expectations. The recognised consideration amounts to GBP 21 million as of 31 December 2010, representing its fair value. Goodwill has been changed accordingly.
Aker Qserv has been consolidated in Aker Solutions financial statements from 1 July 2008. Transaction costs amount to NOK 8 million. Goodwill resulting from the transaction is mainly attributable to the expected synergies and the value of the assembled workforce.
Other acquisitions in 2008
Aker Solutions acquired the following entities in 2008 that were not material for the group: First Interactive AS (60.2 percent), Aker Offshore Oy (74 percent, Aker Solutions holding 100 percent of the shares after the transaction), Aker Installation Floating Production AS (100 percent) and Aker Well Services Partners LLC (100 percent).
Our performance
Notes to the accounts
Total acquisition costs amount to NOK 1 629 million including acquisition of non-controlling interests and transaction costs of NOK 10 million Values at time of acquisition4
Amounts in NOK million Total
Plant and equipment 648
Intangible assets 95
Other non-current assets 7
Current operating assets 305
Cash and cash equivalents 46
Non-controlling interests (5)
Deferred tax liabilities (116)
Other non-current liabilities (84)
Borrowings (153)
Current operating liabilities (402)
Net assets acquired at fair value 341
Goodwill on acquisition 1 288
Fair value acquired 1 629
Total consideration 1 629
Deferred and contingent consideration (510)
Cash paid as of 31 December 2008 1 119
Cash and cash equivalents acquired (46)
Net cash paid 1 073
Operating revenue in acquired subsidiaries after acquisition 460
Profit for the period in acquired subsidiaries after acquisition 46
4) Values at time of acquisition relate mainly to the acquisition of Aker Qserv Ltd.
Acquisition of non-controlling interest in 2008 Aker Marine Contractors AS
Aker Solutions acquired an additional 30 percent of the shares in Aker Marine Contractors from Taubåtkompaniet AS in July 2008. In October 2008 an additional 10 percent of the shares were acquired. Aker Solutions now holds 100 percent of the shares in the company. The total price for the 40 percent acquired in 2008 was NOK 744 million (NOK 559 million and NOK 185 million respectively) including NOK 2 million in transaction costs. The transaction resulted in a reduction of non-controlling interests of NOK 75 million, and an increase of NOK 595 million in goodwill.