Rangatira Annual Report 2023 - Flipbook - Page 73
Ra n g a t i ra An n u a l Re p ort 2023
Rangatira Group
Notes to the Consolidated
Financial Statements (continued)
For the year ended 31 March 2023
Note 27 Business Combinations
Accounting policy
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the business combination
is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under NZ IFRS 3 Business Combinations are recognised at their fair values at the
acquisition date.
If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
exceeds the cost of the business combination, the excess will be recognised in profit or loss.
Where the valuation of the acquired business has not been completed before the completion of the consolidated financial statements,
the amounts reported are provisional. Once the valuation of assets and liabilities identified as part of this process are finalised
following completion of the financial statements, then the accounting for the acquisition will be revised (if required).
2023 ACQUISITIONS
(a) Acquisition of Mrs Higgins (2004) Limited
Effective 31 May 2022, Rangatira owns 100% of Mrs Higgins (2004) Limited (‘Mrs Higgins’). Before 31 May 2022, Rangatira held
a 50% ownership and acquired the remaining 50% through a share purchase agreement with the previous shareholder. Because
Rangatira owned 50% of Mrs Higgins before the agreement, this is accounted for as a business combination achieved in stages (a
‘stepped acquisition’).
The fair value of Mrs Higgins on the date of acquisition was determined by the Group following an independent valuation completed in
November 2022. The following table sets out the loss on deemed sale of the previously held 50%, the consideration paid and the fair
value of the tangible assets acquired and liabilities assumed at acquisition date.
The intangible assets identified in Mrs Higgins were trade names and trademarks. The measurement of fair values of trade names
used the relief-from-royalty method. The relief from royalty estimates fair value based on the present value of future forgone royalty
payments over the life of the asset not required to be paid by virtue of owning the asset.
$000
Purchase price
Cash paid on completion date
2,325
Deferred cash payment - 18 months from completion
1,237
Fair value of 50% of Mrs Higgins as at 31 May 2022
3,562
Total purchase price
7,124
*the carrying value of Rangatira’s investment in Mrs Higgins on the date of acquisition was $4.17m. As part of the stepped acquisition accounting, that
investment was derecognised which includes a deemed loss on sale of $0.612m.
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