Fast-growing print and marketing company IVE Group has attributed $20 million of deferred consideration quietly disclosed in its interim results to funds assigned for working capital purposes.
In February, IVE's first-half results detailed $20 million of additional costs tied to its purchase of catalogue printing businesses in December, being Franklin and AIW, making it a top-two player in the competitive large-format web-offset sector led by PMP.
That figure was not disclosed to shareholders when the company raised $40 million of capital to help fund the acquisitions late last year.
However, in its statement to the ASX on Tuesday, IVE chief financial officer Darren Dunkley said investors were told in the offer documents and acquisition materials that the purchase price excluded any adjustments for working capital.
"For clarification, the stated acquisition price for Franklin and AIW at the time of the capital raise of $116 million is correct," the CFO said.
The $116 million is composed of $95.7 million in cash and $4.3 million in stock for Franklin, and $16 million in stock for AIW.
The February accounts show a further $14.9 million allocated to Franklin and $4.4 million to AIW as deferred consideration, or $135.3 million in total.
The difference between the $116 million and the revised figures noted in the first-half accounts "relates to standard working capital and balance date adjustments".
"The likelihood of these adjustments was disclosed," Mr Dunkley said, referring to its market announcement of December 5, 2016. "These are adjustments made in the ordinary course of a transaction to reflect the differences between normalised expectations around balance sheet items at the time of signing and actual balances on transaction completion."
Working capital was not the only adjustment at the time; IVE also upgraded its capex to $30 million from $18 million, citing its winning of the contract for Coles catalogue production effective July 1, 2017.
Shares of IVE declined 6¢ to $2.17 on Tuesday. The private equity-backed group floated at $2 a share in 2015.
