15. Business combinations
General
Alongside TMF Group's strategies for organic growth, it is TMF Group's intention, where appropriate, to continue to make acquisitions that provide additional scale to the business, enhance a specific service offering, assist in consolidating fragmented markets or address relevant geographical gaps. TMF Group applies a disciplined and rigorous approach to all acquisition evaluations.
TMF Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
Acquisitions 2024
For the financial statements disclosure, acquisitions below are not individually considered material for TMF Group.
Saudi Arabia - On 10 January 2024, TMF Group acquired ARABIAN COMPANY FOR BUSINESS SUPPORT SERVICES, the Business Process Outsourcing (BPO), corporate services, corporate immigration and visa services divisions of PROVEN, a leading business outsourcing organisation in the Middle East. Considerations at completion amounted to €8.0 million. No contingent liabilities were acquired in this business combination. The acquisition represents a significant step in TMF Group’s expansion as the Saudi Arabian economy is the largest in the Middle East and the eighteenth largest in the world. The business is expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
India - On 11 April 2024, TMF Group acquired full interest 100% in Seamless Global, the India-based administration business of Sannam S4 Group, providing accounting, tax, payroll and incorporation services. Consideration at completion amounted to €4.9 million. €0.6 million contingent liabilities were acquired in this business combination. The business is expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
Mexico - On 30 June 2024, TMF Group acquired full interest 100% in two Mexican based companies Grupo KMC Campos y Campos, S.C. and Matas Lorenzo, S.C.. Through these acquisitions, TMF Group will expand its capabilities in fund, accounting and tax, and payroll services in Mexico. Consideration at completion amounted to €33.2 million. €8.0 million contingent liabilities were acquired in these business combinations. These businesses are expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
Australia - On 1 July 2024, TMF Group acquired full interest 100% in Vasco Trustees group of companies, one of Australia’s largest corporate trustees providing fund administration services to a wide range of wholesale and retail fund managers. Consideration at completion amounted to €11.3 million. €1.2 million contingent liabilities were acquired in this business combination. The business is expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
Uruguay - On 12 August 2024, TMF Group acquired full interest 100% in two Uruguayan based companies, Auren S.C. and DCA International S.A.. This acquisition will significantly increase TMF Group's footprint in Uruguay, while also providing access to a blue-chip client base. Considerations at completion amounted to €5.9 million. €1.8 million contingent liabilities were acquired in this business combination. The business is expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
South Africa - On 2 October 2024, TMF Group acquired full interest 100% in Stonehage Fleming Corporate Services Proprietary Limited and Stonehage Fleming Trustees Proprietary Limited. Stonehage Fleming Corporate Services is a South African provider of corporate fiduciary services, primarily providing services for Capital Markets transactions, as well as cosec, accounting and tax services. The acquisition will add substantial volume to TMF Group's existing Capital Markets footprint in South Africa. Considerations at completion amounted to €4.3 million. No contingent liabilities were acquired in this business combination. The business is expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
Japan - On 9 December 2024, TMF Group acquired full interest 100% in Japan Outsourcing Solutions KK and its parent, Hong Kong-based company Solid Business Solutions International Limited. Through the acquisition, TMF Group aims to increase scale and presence in the Japanese market, allowing TMF Group to capitalise on the market's strong organic growth. Considerations at completion amounted to €6.3 million. No contingent liabilities were acquired in this business combination. The business is expected to contribute to annualised revenue and TMF Group expects synergies in terms of client portfolio and using one global platform.
TMF Group's consolidated revenue for 2024 includes €18.4 million (2023: €12.4 million) related to acquisitions completed in 2024 as from the effective date. The full year impact were these acquired at 1 January 2024 would have been calculated at €29.7 million. The acquisitions contributed for €5.6 million to the operating result of 2024 and with a full year impact of €10.3 million.
Following table summarises fair values of the identifiable assets and liabilities of acquired companies in 2024 in aggregate.
|
In millions of Euro |
Note |
Matas Lorenzo S.C. and KMC Campos y Campos S.C. (Mexico) |
Vasco Trustees Group (Australia) |
Other |
Total fair value recognised on acquisition |
|---|---|---|---|---|---|
|
Tangible fixed assets |
17 |
- |
- |
0.3 |
0.3 |
|
Deferred tax assets |
13 |
- |
0.1 |
0.1 |
0.2 |
|
Trade receivables |
1.5 |
0.2 |
4.8 |
6.5 |
|
|
Other current receivables |
0.8 |
0.1 |
1.9 |
2.8 |
|
|
Allowance for expected credit losses |
21 |
- |
- |
(1.6) |
(1.6) |
|
Current income tax receivables |
- |
- |
0.4 |
0.4 |
|
|
Cash and cash equivalents |
6.1 |
1.0 |
1.5 |
8.6 |
|
|
Assets |
8.4 |
1.4 |
7.4 |
17.2 |
|
|
Current income tax liabilities |
- |
(0.3) |
(0.2) |
(0.5) |
|
|
Trade and other payables |
30 |
(0.3) |
(0.2) |
(2.7) |
(3.2) |
|
Loans and borrowings |
27 |
- |
- |
(0.9) |
(0.9) |
|
Provisions |
28 |
- |
- |
(0.8) |
(0.8) |
|
Liabilities |
(0.3) |
(0.5) |
(4.6) |
(5.4) |
|
|
Total identifiable net assets at fair value |
8.1 |
0.9 |
2.8 |
11.8 |
|
|
Goodwill arising on acquisition |
16 |
20.1 |
8.3 |
14.9 |
43.3 |
|
Customer lists arising on acquisition |
16 |
18.2 |
5.1 |
17.8 |
41.1 |
|
Deferred tax liability arising on acquisition |
13 |
(5.2) |
(1.8) |
(4.2) |
(11.2) |
|
Purchase consideration transferred |
41.2 |
12.5 |
31.3 |
85.0 |
|
|
Contingent liability arising on acquisition |
(8.0) |
(1.2) |
(2.4) |
(11.6) |
|
|
Net cash acquired with the subsidiary |
(6.1) |
(1.0) |
(1.5) |
(8.6) |
|
|
Net cash flow on acquistion |
27.1 |
10.3 |
27.4 |
64.8 |
Upon acquisition of the business during 2024, TMF Group recognised aggregated goodwill of €43.3 million (2023: €13.3 million) and other intangible assets such as client list and license of €41.1 million (2023: €15 million). Acquisition of subsidiaries, net of cash acquired is €66.6 million (2023: €38.3 million).