Acquisitions and disposals

12 Months Ended

Dec. 31, 2020

In 2020, the Company sold its 51% investment in Luxfer Uttam India Private Limited to our joint venture partner for INR 137.4 million ($1.8 million) cash. Allowing for legal costs, we generated a profit on disposal of less than $0.1 million. During the year we also incurred $0.4 million costs in relation to M&A exploration activities offset by deferred consideration adjustments and profit on previously written-down inventory.

In 2019, acquisition and disposal related costs of $1.4 million were incurred. The amount includes a $3.5 million charge in relation to the reimbursement of costs and $0.9 million of professional and legal fees incurred in connection with the terminated Neo acquisition, partially offset by a $2.9 million gain from the sale of Magnesium Elektron CZ s.r.o in the second quarter of 2019 and a $0.1 million credit on the remeasurement of the deferred contingent consideration.

The net gain on disposal of the Czech business is outlined below:


			In millions			2019
			Cash proceeds			5.9
			Less:
			Cash held in business			(1.3)
			Purchase price adjustment			(0.2)
			Net proceeds			4.4
			Net assets less cash			(3.6)
			Gain on disposal			0.8
			Disposal costs			(0.4)
			Realized translation gain on disposal			2.5
			Net gain on disposal			2.9

On December 28, 2018, Luxfer Holdings NA LLC (a 49% owned VIE joint venture) disposed of the assets and selected liabilities of Gas Transport Leasing LLC (its wholly-owned subsidiary) with the remaining 51% of Luxfer Holdings NA LLC simultaneously acquired by the Company. The disposal of the assets and selected liabilities to the JV partner was for consideration of $2.2 million. The Company acquired the residual 51% of Luxfer Holdings NA LLC, in return for the forgiveness of the JV partner's share on a loan from Luxfer Holdings PLC, being $2.1 million. The fair value of the net assets of Luxfer Holdings NA LLC at the acquisition date was assessed as $4.0 million, valuing the residual 51% stake at $2.1 million, resulting in no goodwill being recognized on the step acquisition.

3. Acquisitions and disposals (continued)

The principal assets acquired included cash of $2.7 million (including $2.2 million from the sale of the leasing business), inventory ($1.1 million), accounts and other receivables ($0.8 million), property, plant and equipment ($0.2 million), with accounts payable of $0.8 million. There were no identified intangibles. As a consequence of the transaction we fully impaired our equity investment (from a pre-acquisition fair value of $1.6 million) and partially impaired the loan to the equity investment; the combined effect resulting in a net charge of $2.4 million being recognized in the consolidated statement of income, within impairment charges. At December 31, 2018, Luxfer Holdings NA LLC is 100% owned by the Company, was no longer considered a VIE and is a fully consolidated subsidiary. As the acquisition occurred very close to the year end date, no revenue or earnings are recorded in the consolidated statement of income for the reporting period.

Deferred contingent consideration

The deferred contingent consideration was in relation to the acquisition of Truetech and Innotech (Luxfer Magtech) in 2015 and was linked to the future profitability of the entity. Where appropriate, this was payable annually from 2015 to 2020. The deferred contingent consideration totaled nil at December 31, 2020 (2019: $0.5 million), following the final payment in 2020.


	Years ended December 31,
In millions	2020		2019
Net cash flows on purchase of business:
Included in net cash flows from financing activities:
Deferred consideration paid	$	(0.4)	$	(0.5)
Net cash flows on purchase of business	$	(0.4)	$	(0.5)