2016 Annual Report For Web 7.3MB

Cash 56
Accounts receivable 3,604
Inventory 1,205
Prepaid expenses and other assets 35
Property, plant and equipment 492
Intangible assets
Distribution network 6,408
Brand name 3,627
Order backlog 741
Goodwill 11,039
Accounts payable and accrued liabilities (2,665)
Customer deposits (1,476)
Income taxes payable (327)
Deferred tax liability (2,915)
Purchase consideration 19,824
The goodwill of $11,039 comprises the value of the assembled
workforce and other expected synergies arising from the acquisition.
The fair value of the accounts receivable acquired is $3,604. This
consists of the gross contractural value of $3,654, less the estimated
amount not expected to be collected of $50.
During the measurement period, the Company identified certain
customer deposits with a corresponding accounts receivable. As a
result, both accounts receivable and customer deposits have been
reduced by $785. The Company recorded a $398 decrease in amounts
due from vendor with an offsetting increase to goodwill. As well, closing
cash of $56 has been added to assets acquired by the Company, and
a $74 liability was identified for third-party contract work that existed
at the date of acquisition, each with one offsetting change to goodwill.
There was an increase of $492 to deferred tax liabilities to reflect
the increased tax rate associated with recovery of indefinite lived
intangibles through use.
$
From the date of acquisition, NuVision contributed to the 2016 results
$16,217 of revenue and $1,074 of net income. If the acquisition had
taken place as at January 1, 2016, revenue from continuing operations
in 2016 would have increased by an additional $4,380 and profit from
continuing operations in 2016 would have increased by an additional
$280.
The impacts on the cash flows on the acquisition of NuVision are as
follows:
Cash paid 6,000
Fair value of equipment to be provided to vendor 6,000
Contingent consideration 8,166
Due from vendor (342)
Purchase consideration 19,824
The allocation of the purchase price to acquired assets and liabilities is
preliminary, utilizing information available at the time the consolidated
financial statements were prepared. The final allocation of the purchase
price and the working capital adjustment may change when more
information becomes available.
Transaction costs related to the NuVision acquisition in the year ended
December 31, 2016 were $105 [2015 – nil] and are included in selling,
general and administrative expenses.
The contingent consideration is based on NuVision’s earnings in 2016,
2017 and 2018. Payments totalling $14 million between 2017 through
2019 would be required if NuVision meets the targets. The Company
believes the likelihood of the maximum payment is moderate. The
present value of the contingent consideration was determined using a
5% discount rate. $1,348 was recorded in current liabilities and $6,818
was recorded in non-current liabilities as at the date of acquisition.
$
[F] MITCHELL MILL SYSTEMS CANADA LTD.
AND MITCHELL MILL SYSTEMS USA
Effective July 18, 2016, the Company acquired 100% of the outstanding
shares of Mitchell Mill Systems Canada Ltd., and its U.S. affiliate
Mitchell Mill Systems USA [collectively, “Mitchell”]. Based in Canada
with a second facility in the U.S., Mitchell manufactures handling
equipment for grain, fertilizer, animal feed, food processing and
industrial applications. The acquisition expands AGl’s commercial
business into eastern Canada and the U.S. and also provides an
expanded product offering.
The purchase has been accounted for by the acquisition method with
the results of Mitchell included in the Company’s net earnings from the
date of acquisition. The assets and liabilities of Mitchell on the date of
acquisition have been recorded in the consolidated financial statements
at their estimated fair values:
Accounts receivable 6,184
Inventory 3,319
Prepaid expenses and other assets 95
Property, plant and equipment 6,923
Intangible assets
Brand name 3,607
Distribution network 6,485
Order backlog 223
Goodwill 7,806
Accounts payable and accrued liabilities (2,077)
Customer deposits (1,340)
Income taxes payable (483)
Deferred tax liability (4,374)
Purchase consideration 26,368
The goodwill of $7,806 comprises the value of the assembled workforce
and other expected synergies arising from the acquisition.
$
The fair value of the accounts receivable acquired is $6,184. This
consists of the gross contractual value of $6,259, less the estimated
amount not expected to be collected of $75.
During the measurement period, a third-party valuation of the U.S.
land and building was completed, resulting in an increase to property,
plant and equipment of $610 with an offsetting decrease to goodwill.
In addition, the estimated fair values of distribution network and order
backlog were decreased by $99 and $997, respectively, based on a
detailed review of the order backlog as at the acquisition date with
offsetting increases to goodwill of $99 and $997, respectively. There
was an increase to deferred tax liability of $412 to reflect an increase in
the tax rate applied to indefinite lived intangibles.
From the date of acquisition, Mitchell contributed to the 2016 results
$9,382 of revenue and $176 of net loss. If the acquisition had taken
place as at January 1, 2016, revenue from continuing operations in
2016 would have increased by an additional $16,450 and profit from
continuing operations in 2016 would have decreased by an additional
$2,589.
The impacts on the cash flows on the acquisition of Mitchell are as
follows:
Cash paid 16,300
Due to vendor 500
Contingent consideration 9,091
Working capital adjustment payable 477
Purchase consideration 26,368
The allocation of the purchase price to acquired assets and liabilities is
preliminary, utilizing information available at the time the consolidated
financial statements were prepared. The final allocation of the purchase
price and the working capital adjustment may change when more
information becomes available.
Transaction costs related to the Mitchell acquisition in the year ended
December 31, 2016 were $182 [2015 – nil] and are included in selling,
general and administrative expenses.
$
103 CONSOLIDATED FINANCIAL STATEMENTS
FIELD TO CONSUMER
2016 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS 104