notes to the financial statements - Investor Relations

CWT Limited
122
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2011
40 ACqUISITION OF SUBSIDIARIES (CONT’D)
(b) Major acquisition
Acquisition of MRI Trading AG (“MRI”)
During the year, the Group obtained control of MRI Trading AG, a commodity trading (metals and minerals) company by
acquiring 73.81% of the shares and voting interests in MRI for a total consideration of $122,801,000 (US$96,761,000).
The Group also entered into put and call options agreements with the 26.19% non-controlling shareholders of MRI.
Pursuant to the put and call options agreements, the remaining shareholders are granted an option to put their shares
to MRI and concurrently, MRI is granted an option to acquire the shares from the non-controlling shareholders in five
tranches. The first option of 6.19% of MRI’s shares held by non-controlling shareholders has been exercised on 31
October 2011. The next four equal tranches will be due within four months after the year end from 2012 to 2014. As
at 31 December 2011, the percentage of MRI’s shares held by the Group was increased to 80%.
Notwithstanding that the remaining 20% of the MRI’s shares are still held by the remaining shareholders, the Group
has accounted for MRI as effectively a wholly owned subsidiary as it has the power to control all voting rights in the
subsidiary.
As the date of acquisition, the Group recognised a liability arising from the put and call options agreements at its fair
value of $50,630,000.
In the 6 months to 31 December 2011, MRI contributed revenue of $1,682,289,000 and profit of $14,672,000 to the
Group’s results. If the acquisition had occurred on 1 January 2011, management estimates that consolidated revenue
would have been $4,435,875,000, and the consolidated profit for the year would have been $85,849,000.
Equity instrument issued
The fair value of the ordinary shares issued was based on the listed share price of the Company at 30 June 2011 of
$1.2373 per share.
Deferred payment
Deferred payments consist of deferred and other amounts payable to the selling shareholders in three tranches from
2012 to 2014.
Contingent considerations
The Group agreed to pay to an additional consideration contingent on an agreed profit target to be achieved by MRI
from 1 July 2011 to 30 June 2014. The contingent consideration will be payable in 2015. The Group has recognised
$10,079,000 (US$7,706,000) as contingent consideration, which represents its fair value at the acquisition date,
based on a discount rate of 3.725%.