Business Combination

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Business Combination

29. Business combination

Summary of acquisition

On November 4, 2015 (the “Xcira Acquisition Date”), the Company acquired 75% of the issued and outstanding shares of Xcira LLC (“Xcira”) for cash consideration of $12,359,000. The remaining 25% interests remain with the two founders of Xcira. Xcira is a Florida-based company, incorporated in the United States and its principal activity is the provision of software and technology solutions to auction companies. By acquiring Xcira, the Company acquired information technology capability and platform to build on its strong online bidding customer experience, and further differentiate itself from other industrial auction companies.

The Company has the option to buy out the remaining interest of the Xcira sellers subject to the terms of the Xcira Purchase Agreement.  The acquisition was accounted for in accordance with ASC 805. The assets acquired, liabilities assumed, and the non-controlling interest were recorded at their estimated fair values at the Xcira Acquisition Date. Full goodwill of $10,659,000 was calculated as the fair value of consideration over the estimated fair value of the net assets acquired.

29.  Business combination (continued)

Xcira provisional purchase price allocation

(Amounts in thousands)		November 4, 2015
Purchase price	$	12,359
Non-controlling interest		4,119
Total fair value at Xcira acquisition date		16,478
Assets acquired:
Cash and cash equivalents	$	252
Trade and other receivables		1,382
Prepaid expenses		62
Property, plant and equipment		314
Other non-current assets		11
Intangible assets ~		4,300
Liabilities assumed:
Trade and other payables		502
Fair value of identifiable net assets acquired		5,819
Goodwill acquired on acquisition	$	10,659

~Consists of existing technology and customer relationships with an amortization life of five and 20 years, respectively

The amounts included in the Xcira provisional purchase price allocation table represent the preliminary allocation of the purchase price and are subject to revision during the measurement period, a period not to exceed 12 months from the Xcira Acquisition Date. Adjustments to the preliminary values during the measurement period will be pushed back to the date of acquisition.  Comparative information for periods after acquisition but before the period in which the adjustments were identified will be adjusted to reflect the effects of the adjustments as if they were taken into account as of the acquisition date. Changes to the amounts recorded as assets and liabilities will result in a corresponding adjustment to goodwill.

There was no contingent consideration under the terms of the acquisition, and as such no acquisition provisions were created.

Assets acquired and liabilities assumed

At the date of acquisition, the carrying values of the assets and liabilities acquired approximated their fair values, except   intangible assets, whose fair values were determined using appropriate valuation techniques.

Goodwill

Goodwill has been allocated entirely to the Company’s Core Auction segment and based on an analysis of the fair value of assets acquired. The main drivers generating goodwill are the Company’s ability to utilize Xcira’s experience to differentiate the Company’s online bidding service from other industrial auction companies, as well as to secure Xcira’s bidding technology. Online bidding represents a significant and growing portion of all bidding conducted at the Company’s auctions.

29.  Business combination (continued)

Non-controlling interests

The fair value of the 25% non-controlling interest in Xcira is estimated to be $4,119,000.

Contributed revenue and net loss

The results of Xcira’s operations are included in these consolidated financial statements from the date of acquisition. Xcira’s contribution to the Company’s revenues and net income for the period from November 4, 2015 to December 31, 2015 was $871,000of revenues and a $270,000 net loss.  Pro forma results of operations have not been presented as such pro forma financial information would not be materially different from historical results.

Transactions recognized separately from the acquisition of assets and assumptions of liabilities

Acquisition-related costs

Expenses totalling $410,000 for legal and other acquisition-related costs are included in the consolidated income statements for the year ended December 31, 2015.

Future development of internally-generated software

The Company may pay an additional amount not exceeding $2,700,000 over a two-year period upon achievement of certain conditions related to the delivery of an upgrade to its existing technology.  

Employee compensation in exchange for continued services

The Company may pay an additional amount not exceeding $2,000,000 over a three-year period based on the Founder’s continuing employment with Xcira .  

Assets and Liabilities at December 31, 2015

As a result of the Company’s involvement with Xcira, the Company is exposed to risks of the recovery of the net assets of Xcira.