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Measurement basis for 20% non-controlling interest
Is the 20% NCI measured at fair value or at its proportionate share of Vela's net identifiable assets?
This entity's election
Aurelia elected fair value for this combination
[ 1 ]
.Elect the option recorded for this transaction. The choice is made afresh for each transaction, so an election on an earlier one would not bind it.
Recommended
NCI at acquisition-date fair value
NCI is recognised at £9.00m
[ 2 ]
; goodwill includes the NCI's share of goodwill (full goodwill), and any future impairment of Vela goodwill is shared between owners and NCI.This is the election Aurelia has already made
[ 1 ]
and the valuation has been prepared on that basis at Aurelia's request [ 2 ]
.NCI at proportionate share of net assets
NCI would be recognised at 20% of the net identifiable assets at fair value
[ 3 ]
; goodwill would be correspondingly lower (partial goodwill) and the £9.00m valuation would be unused.IFRS 3 19
IFRS 3 B64
IFRS 13 9
NCI at fair value
£9,000,000
Goodwill
£23,550,000
Election
Measurement basis for 20% non-controlling interest
Is the 20% NCI measured at fair value or at its proportionate share of Vela's net identifiable assets?
This entity's election
Aurelia elected fair value for this combination
[ 1 ]
.Elect the option recorded for this transaction. The choice is made afresh for each transaction, so an election on an earlier one would not bind it.
Recommended
NCI at acquisition-date fair value
NCI is recognised at £9.00m
[ 2 ]
; goodwill includes the NCI's share of goodwill (full goodwill), and any future impairment of Vela goodwill is shared between owners and NCI.This is the election Aurelia has already made
[ 1 ]
and the valuation has been prepared on that basis at Aurelia's request [ 2 ]
.NCI at proportionate share of net assets
NCI would be recognised at 20% of the net identifiable assets at fair value
[ 3 ]
; goodwill would be correspondingly lower (partial goodwill) and the £9.00m valuation would be unused.IFRS 3 19
IFRS 3 B64
IFRS 13 9
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MemoApproved
Goodwill recognised is £23.55m,
allocated to the Vela cash-generating unit.
Judgement
Measurement basis for the 20% non-controlling interest
NCI at acquisition-date fair value
NCI at proportionate share of net assets
Allocation of Vela goodwill to cash-generating units
Allocate all goodwill to Vela
Allocate across Vela and existing Aurelia units
Facts
£28.00mCashScenario
+£5.20mContingentPPA report
+£9.00mNCIPPA report
+£6.00mPrior 15%PPA report
−£24.65mNet assetsPPA report
=£23.55mGoodwill
Vela is a discrete business, with its own revenue and profit for 1 July to 31 December 2027.
£8.4mRevenueYour answers
£3.0mProfit after taxYour answers
Evidence
Northstar Valuation Partners · PPA report, page 5
At Aurelia’s request, we estimated the fair value of the 20% non-controlling interest on a full fair-value basis. Our concluded acquisition-date fair value is £9.0m.
Clarifying answer · engagement team
What were Vela’s results from 1 July to 31 December 2027?
Revenue £8.4m; profit after tax £3.0m.
StandardIFRS 3.32IAS 36.80
Goodwill is the consideration, plus the non-controlling interest and any previously held interest, less the net identifiable assets acquired.
Goodwill is allocated to the units expected to benefit from the combination’s synergies, at the lowest level at which management monitors it.
From the contract to the memo, in one record.
Contracts
Each term cited to its clause and read against the side letters.
IFRS 15
The Agreement states a five-year Initial Term with no termination for convenience, but the side letter signed with it gives Northmere a penalty-free right to terminate with effect from 1 July 2029, so the enforceable contract term for IFRS 15 is 18 months, not five years. The arrangement combines a fixed implementation fee, a fixed annual platform and support fee and usage-based fees. The core judgements at initial recognition are the enforceable contract term, identifying distinct performance obligations, allocating the transaction price including variable and SLA-adjusted amounts, and confirming the arrangement does not convey a lease of an identified asset (IFRS 16) given shared infrastructure and unrestricted substitution rights.
Performance obligations
Two or more performance obligations: (1) implementation services producing an exportable Implementation Deliverable, and (2) hosted platform access with support (a series of daily service, with usage processing likely part of that series or a distinct usage-based promise).
Recognition pattern
Implementation recognised at a point in time on written Acceptance (scheduled for 31 March 2028), separately from the hosted service; platform and support recognised evenly over the enforceable term to 30 June 2029, then over each further period Northmere continues; usage fees recognised as diagnostic studies are completed.
Timing
Hosted service from 1 Jan 2028. The enforceable term ends 30 Jun 2029, although the Agreement runs to 31 Dec 2032 unless Northmere terminates. Billing (annual in advance, milestone, monthly in arrears) drives contract asset/liability positions, not timing of revenue.
IFRS 15
The Agreement states a five-year Initial Term with no termination for convenience, but the side letter signed with it gives Northmere a penalty-free right to terminate with effect from 1 July 2029, so the enforceable contract term for IFRS 15 is 18 months, not five years. The arrangement combines a fixed implementation fee, a fixed annual platform and support fee and usage-based fees. The core judgements at initial recognition are the enforceable contract term, identifying distinct performance obligations, allocating the transaction price including variable and SLA-adjusted amounts, and confirming the arrangement does not convey a lease of an identified asset (IFRS 16) given shared infrastructure and unrestricted substitution rights.
Performance obligations
Two or more performance obligations: (1) implementation services producing an exportable Implementation Deliverable, and (2) hosted platform access with support (a series of daily service, with usage processing likely part of that series or a distinct usage-based promise).
Recognition pattern
Implementation recognised at a point in time on written Acceptance (scheduled for 31 March 2028), separately from the hosted service; platform and support recognised evenly over the enforceable term to 30 June 2029, then over each further period Northmere continues; usage fees recognised as diagnostic studies are completed.
Timing
Hosted service from 1 Jan 2028. The enforceable term ends 30 Jun 2029, although the Agreement runs to 31 Dec 2032 unless Northmere terminates. Billing (annual in advance, milestone, monthly in arrears) drives contract asset/liability positions, not timing of revenue.
VelaAI Enterprise Diagnostics Platform Agreement
“This Agreement states that neither party may terminate the Initial Term for convenience.”
Read against the side letter: the enforceable term under IFRS 15 is 18 months, not five years.
Contracts
Contracts
Each term cited to its clause and read against the side letters.
Treatment and journals
Each amount calculated once and referenced wherever it appears, so the figures agree.
app.getalit.ai
Initial recognition10
Subsequent measurement4
Derecognition3
Consideration transferred
£33,200,000
Net identifiable assets
£24,650,000
Goodwill
£23,550,000
Remeasurement gain
£1,200,000
C1
Control and acquisition date
Aurelia is the acquirer and obtains control on 1 July 2027; the prior 15% was a passive financial asset, not an associate.
C2
Previously held interest
✓Journal
The 15% is remeasured to fair value with the gain in profit or loss; its fair value enters goodwill.
£1,200,000
remeasurement gain
£6,000,000
fair value of 15%
C3
Consideration transferred
✓Journal
Consideration is cash plus the revenue-based earn-out at fair value, a financial liability remeasured through profit or loss.
£33,200,000
consideration transferred
£5,500,000
contingent liability at year end
C4
Founder retention payment
✓Journal
The retention payment is post-combination remuneration accrued over twelve months, not consideration for Vela.
£1,000,000
2027 retention charge
C5
Acquisition costs
✓Journal
Advisory fees are expensed in 2027 and excluded from consideration and goodwill.
£1,100,000
acquisition costs expensed
C6
Non-controlling interest
✓Journal
NCI is measured at acquisition-date fair value, so goodwill is recognised on a full basis.
£9,000,000
NCI at fair value
C7
Net identifiable assets
✓Journal
Technology, customer relationships, trade name and the PPE uplift are recognised at fair value with deferred tax; the workforce is not.
£24,650,000
net identifiable assets
£4,750,000
deferred tax liability
C8
Goodwill
✓Journal
Goodwill is recognised on a full basis, not amortised, and allocated wholly to Vela as a single CGU.
£23,550,000
goodwill
£24,650,000
net identifiable assets
C9
Amortisation of uplifts
✓Journal
Management estimate
The uplifts are amortised straight-line over management-confirmed lives from 1 July 2027, with the deferred tax liability unwinding at 25%.
£1,450,000
H2 2027 amortisation and depreciation
£362,500
deferred tax unwind
C10
Consolidation and NCI share
✓Journal
Management estimate
Vela's second-half results are consolidated after acquisition-accounting adjustments, with 20% of adjusted profit attributed to NCI.
£1,912,500
Vela adjusted profit consolidated
£382,500
NCI share of profit
Initial recognition10
Subsequent measurement4
Derecognition3
Consideration transferred
£33,200,000
Net identifiable assets
£24,650,000
Goodwill
£23,550,000
Remeasurement gain
£1,200,000
C1
Control and acquisition date
Aurelia is the acquirer and obtains control on 1 July 2027; the prior 15% was a passive financial asset, not an associate.
C2
Previously held interest
✓Journal
The 15% is remeasured to fair value with the gain in profit or loss; its fair value enters goodwill.
£1,200,000
remeasurement gain
£6,000,000
fair value of 15%
Treatment and journals
Each amount calculated once and referenced wherever it appears, so the figures agree.
app.getalit.ai
Contents
Executive Summary
Background
Accounting Analysis
Key Judgements, Estimates and Accounting Policy Elections
Journal Entries
Disclosures
Conclusion
Aurelia's step acquisition of 80% of Vela Diagnostics AI
Executive Summary
On 1 July 2027 Aurelia acquired a further 65% of Vela Diagnostics AI Ltd, increasing its holding to 80% and obtaining control. The acquisition method applies from that date. Consideration comprises cash of £28.0m and contingent consideration measured at fair value of £5.2m at acquisition, remeasured to £5.5m at 31 December 2027 with a £300,000 charge to profit or loss. The previously held 15% interest is remeasured to fair value of £6.0m, recognising a gain of £1.2m in profit or loss. Non-controlling interest is measured at acquisition-date fair value of £9.0m. Goodwill recognised is £23.55m, allocated to the Vela cash-generating unit. Net identifiable assets at fair value total £24.65m after a deferred tax liability of £4.75m. For the six months to 31 December 2027 Vela contributed revenue of £8.4m and adjusted profit of £1,912,500 to consolidated results after £1.45m of amortisation and depreciation on the acquisition-date fair-value uplifts and a £362,500 deferred tax credit. Non-controlling interest received £382,500 of profit and carries a balance of £9.4m at year end. Acquisition-related advisory costs of £1.1m are expensed. A founder retention payment of £2.0m is recognised as employee remuneration, with £1.0m accrued at 31 December 2027.
Background
On 1 July 2027 Aurelia acquired a further 65% of Vela Diagnostics AI Ltd, an AI-assisted diagnostic imaging developer, from 15% to 80%, obtaining control of the entity. Aurelia paid £28.0m in cash on completion. The sale agreement provides for contingent consideration of up to £8.0m to selling shareholders if Vela achieves specified revenue targets for the year ending 31 December 2028, expected to settle in cash on 31 March 2029. An independent acquisition-date valuation report, dated 18 July 2027 with valuation date 1 July 2027, valued the contingent consideration at £5.2m and the 20% non-controlling interest at £9.0m on a full fair-value basis, reflecting Aurelia's election to measure NCI at fair value.
Aurelia held a 15% interest in Vela from March 2026, carried at fair value through profit or loss under IFRS 9, with a carrying amount of £4.8m immediately before the acquisition. The report values this interest at acquisition-date fair value of £6.0m.
Aurelia's step acquisition of 80% of Vela Diagnostics AI
Executive Summary
On 1 July 2027 Aurelia acquired a further 65% of Vela Diagnostics AI Ltd, increasing its holding to 80% and obtaining control. The acquisition method applies from that date. Consideration comprises cash of £28.0m and contingent consideration measured at fair value of £5.2m at acquisition, remeasured to £5.5m at 31 December 2027 with a £300,000 charge to profit or loss. The previously held 15% interest is remeasured to fair value of £6.0m, recognising a gain of £1.2m in profit or loss. Non-controlling interest is measured at acquisition-date fair value of £9.0m. Goodwill recognised is £23.55m, allocated to the Vela cash-generating unit. Net identifiable assets at fair value total £24.65m after a deferred tax liability of £4.75m. For the six months to 31 December 2027 Vela contributed revenue of £8.4m and adjusted profit of £1,912,500 to consolidated results after £1.45m of amortisation and depreciation on the acquisition-date fair-value uplifts and a £362,500 deferred tax credit. Non-controlling interest received £382,500 of profit and carries a balance of £9.4m at year end. Acquisition-related advisory costs of £1.1m are expensed. A founder retention payment of £2.0m is recognised as employee remuneration, with £1.0m accrued at 31 December 2027.
Background
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