Notes to the accounts
for the year ended 31 December 2007
41. Acquisitions and disposals of consolidated funds
As described in note 1(b), the Group is in a position whereby it could control a number of its own funds in which it has seed capital investments. These funds are consolidated unless they are designated as being held for sale. During the year, a number of funds fell under the control of the Group and were consolidated as acquisitions. Similarly, a number of funds ceased to be controlled by the Group in the year and were deconsolidated as they were either deemed to be disposals as a result of the dilution of the Group's existing holdings or the investments were sold.
Net assets acquired on the acquisition of a controlled fund impact on the Group's balance sheet to the extent that the Group consolidates the net assets of the minority interests and records a non-equity minority interest creditor equal to this value. The net assets acquired in the table below therefore represent those assets acquired attributable to minority interests.
Net assets disposed of when a previously consolidated fund ceases to be controlled by the Group represent either the disposal for cash of an existing investment or the deemed disposal through dilution of those net assets formerly attributable to minority interests of the Group.
Details of such assets and liabilities acquired and disposed of during the year are as follows:
| Acquisitions £mn |
Disposals £mn |
Net £mn |
|
|---|---|---|---|
| Cash | 2.8 | (0.9) | 1.9 |
| Debt securities | 6.9 | (1.9) | 5.0 |
| Equities | 28.7 | (16.6) | 12.1 |
| Non-equity minority interests (see note 34) | 38.4 | (19.4) | 19.0 |
The acquisitions give rise to an initial cash outflow representing the purchase of the investments. Such cash flows are recorded within net purchases of/proceeds from current asset investments for the purposes of the Group's consolidated cash flow statement. Disposals only have a related cash flow effect where the Group sells its investment in a fund. Such cash flows are recorded within net purchases of/proceeds from current asset investments. In the majority of cases, there will be a deemed disposal: the Group will not sell its investment, but will cease to have control of a fund as a result of other investors' holdings exceeding that of the Group.
Details of cash flows in the year arising from the acquisition and disposal of controlled funds are as follows:
| £mn | |
|---|---|
| Acquisitions of controlled funds | 45.4 |
| Disposals of controlled funds | (1.2) |
| Net purchase of controlled funds | 44.2 |
The effect on the income statement of disposals of controlled funds is £nil in respect of retained profits.