UNBOUNCE - EXAMPLE PAGE-REPORT-ENTERPRISE DOCUMENT-KINGSPAN - Flipbook - Page 157
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021 (continued)
18 Deferred Consideration (continued)
For each acquisition for which deferred contingent consideration has been provided, an annual review takes place to evaluate if the
payment conditions are likely to be met. For the purposes of the fair value assessments all of the put option liabilities are valued using
the option price formula in the shareholder’s agreement and the most recent financial projections. These are classified as unobservable
inputs. The significant unobservable inputs used in the fair value measurements and the quantitative sensitivity analysis are shown in the
table below:
Type
Valuation technique
Significant
unobservable inputs
Sensitivity of the input to the fair value
Deferred
contingent
consideration
Discounted cashflow method
The net present value of the expected
payment is calculated by using a risk
adjusted discount rate. The expected
payments are valued using the earn
out formula in the shareholder’s
agreement and the most recent
financial projections.
g Risk adjusted
discount rates of
between 0.0%
and 1.5%.
g EBITDA multiples
of between 2.8
and 8.1.
g A 10% decrease in the risk adjusted
discount rate would result in an
increase in the fair value of the deferred
contingent consideration of €0.1m.
g A 5% increase in the assumed
profitability of the acquired entities
would result in an increase in the
fair value of the deferred contingent
consideration of €0.5m.
Put option
liabilities
Discounted cashflow method
The net present value of the expected
payment is calculated by using a risk
adjusted discount rate. The expected
payments are valued using the option
price formula in the shareholder’s
agreement and the most recent
financial projections.
g Risk adjusted
discount rates of
between 0.6%
and 6.1%.
g EBITDA multiples
of between 6.5
and 8.57.
g A 10% decrease in the risk adjusted
discount rate would result in an increase
in the fair value of the put option
liabilities of €0.9m.
g A 5% increase in the assumed
profitability of the acquirees would
result in an increase in the fair value of
the put option liabilities of €8.8m.
The deferred contingent consideration arising on acquisitions relates to the acquisition of Bromyros and Dome Solar.
The amount of the deferred contingent consideration and put liability that have been recognised are arrived at by the application of a
range of outcomes and associated probabilities in order to determine the carrying amounts.
Liabilities in the range of €nil (2020: €nil) to €24.1m (2020: €10.3m) could arise with respect to potential deferred contingent
consideration obligations and €nil (2020: €nil) to €178.2m (2020: €117.3m) with respect to potential put option obligations.
The put option in the shareholders’ agreement with non-controlling shareholders of Isoeste is exercisable from 2023. The undiscounted
expected cash outflow is estimated to be €134.8m (2020: €88.7m).
The put option in the shareholders’ agreement with non-controlling shareholders of PanelMET is exercisable from 2022. The undiscounted
expected cash outflow is estimated to be €6.1m (2020: €3.5m).
The put option in the shareholders’ agreement with non-controlling shareholders of Kingspan Jindal is exercisable from 2022. The
undiscounted expected cash outflow is estimated to be €14.0m (2020: €9.8m).
The put option in the shareholders’ agreement with non-controlling shareholders of Group Bacacier is exercisable from 2022. The
undiscounted expected cash outflow is estimated to be €33.1m (2020: €25.3m).
For the purposes of the fair value assessments all of the put option liabilities are valued using the option price formula in the shareholder’s
agreement and the most recent financial projections. These are classified as unobservable inputs.
In the case of Isoeste, PanelMET, Kingspan Jindal and Group Bacacier SAS call options rest over the remaining shareholding held by noncontrolling interests, which are exercisable by the Group in a very limited range of circumstances. No value has been attributed to these
call options.
Kingspan Group plc Annual Report & Financial Statements 2021
Financial Statements
