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Acquisition of businesses (Tables) | 12 Months Ended
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Dec. 31, 2018
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Summary of Acquisition Date Fair Value of Each Major Class of Consideration Transferred | The following table summarises the acquisition date fair value of each major class of consideration transferred.
|  | $m |
Cash paid on acquisition |  |  | 13 |
Deferred considerationa |  |  | 22 |
Contingent considerationb |  |  | 53 |
Total purchase consideration |  |  | 88 |
a | Comprises the present value of $13m payable in 2021 and $13m payable in 2024.
b | Comprises the present value of the expected amounts payable on exercise of the put and call options, assuming $39m is paid in 2026 to acquire an additional 25% of RHW with the remaining 24% acquired in 2028 for $42m. The amount payable on exercise of the options is based on the annual trailing revenue of RHW, with a floor applied. The range of possible outcomes is $81m to $261m (undiscounted). The final put and call options are exercisable in 2033. The value of the contingent consideration is subject to periodic re-assessment as interest rates and RHW revenue expectations change.
The following table summarises the acquisition date fair value of each major class of consideration transferred.
|  | $m |
Cash paid on acquisition |  |  | 9 |
Working capital settlement duea |  |  | (3 | )
Contingent considerationb |  |  | 56 |
Total purchase consideration |  |  | 62 |
a | Subject to final agreement and receivable in early 2019.
b | Comprises the present value of the above-market element of the expected lease payments over the 25 year lives of the hotel lease agreements. The undiscounted amount is $217m. The value of the contingent consideration has been assessed with the assistance of professional third party advisors and is subject to periodic re-assessment as interest rates and expected lease payments change. The above market assessment has been determined by comparing the expected lease payments as a percentage of forecast hotel operating profit (before depreciation and rent) with market metrics, on a lease by lease basis. There is no floor to the amount payable and no maximum amount.
Summary of Fair Value of Identifiable Assets Acquired and Liabilities Assumed | The fair values of the identifiable assets and liabilities of Regent at the date of acquisition were as follows:
|  | $m |
Identifiable intangible assets: |  |  |  |
Brands |  |  | 57 |
Management contracts |  |  | 6 |
Property, plant and equipment |  |  | 1 |
Deferred tax liability |  |  | (11 | )
Net identifiable assets acquired |  |  | 53 |
Goodwill |  |  | 35 |
Total purchase consideration |  |  | 88 |
The fair values of the identifiable assets and liabilities of the UK portfolio at the date of acquisition were as follows:
|  | $m |
Identifiable intangible assets: Brands |  |  | 1 |
Property, plant and equipment |  |  | 25 |
Inventories |  |  | 1 |
Trade and other receivables |  |  | 11 |
Cash and cash equivalents |  |  | 2 |
Trade and other payables |  |  | (18 | )
Deferred revenue |  |  | (8 | )
Stamp duty liabilitya |  |  | (14 | )
Deferred tax asset |  |  | 14 |
Net identifiable assets acquired |  |  | 14 |
Goodwill |  |  | 48 |
Total purchase consideration |  |  | 62 |
a | The stamp duty liability was settled post-acquisition.
Summary of Cash Flows Relating to Acquisitions | Cash flows relating to acquisitions
|  | $m |
Regent |  |  |  |
Cash paid on acquisition |  |  | 13 |
UK portfolio |  |  |  |
Cash paid on acquisition |  |  | 9 |
Contingent consideration paid |  |  | 4 |
Settlement of stamp duty liability |  |  | 14 |
Less: cash and cash equivalents acquired |  |  | (2 | )
|  |  | 25 |
Net cash outflow arising on acquisitions |  |  | 38 |

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