Notes to the accounts
29 Acquisitions
During the period ended 31 July 2007, the Company made a number of acquisitions, including the issued share capital of Tecnicas Medicas MAB, SA on behalf of Medical (1 December 2006) and the issued share capital of CDI Energy Services, Inc., together with the partnership interests of Global Energy Products LP (20 March 2007) on behalf of Specialty Engineering.
The values set out below are provisional pending finalisation of the fair values attributable, and will be finalised in the year ending 31 July 2008. All acquisitions are wholly owned. Goodwill and other net assets in respect of prior year acquisitions, as previously reported, have been adjusted as a result of finalising their attributable fair values. Accordingly, goodwill has increased by £0.8m. Additional goodwill of £1.0m has been created as the result of contingent consideration becoming payable relating to a prior year acquisition.
|
|
Book value |
Fair value |
Provisional |
|
Non-current assets |
|
|
|
|
– intangible assets |
|
12.1 |
12.1 |
|
– tangible assets |
1.9 |
0.1 |
2.0 |
|
Current assets |
|
|
|
|
– other current assets |
17.1 |
(0.3) |
16.8 |
|
Non-current liabilities |
|
|
|
|
– other liabilities |
|
(1.3) |
(1.3) |
|
Current liabilities |
|
|
|
|
– other current liabilities |
(12.0) |
(0.6) |
(12.6) |
|
Net assets acquired |
7.0 |
10.0 |
17.0 |
|
Goodwill |
|
|
16.8 |
|
Total consideration – current year acquisitions |
|
|
33.8 |
|
Consideration satisfied by cash – current year acquisitions |
|
|
33.8 |
|
Deferred consideration and costs paid on prior-year acquisitions |
|
|
1.1 |
|
Total consideration satisfied by cash |
|
|
34.9 |
The fair value adjustments in respect of intangible assets are due to the recognition of £3.6m in respect of trademarks and £8.5m in respect of customer relationships. Goodwill represents the value of synergies arising from the acquisitions and the acquirees’ assembled workforces. The adjustments to current assets and liabilities relate to valuation adjustments and are provisional, based on management’s best estimates.
From the date of acquisition to 31 July 2007, the acquisitions contributed £21.6m to revenue, £2.4m to headline profit before taxation and £1.3m to profit before taxation. If Smiths had acquired the assets at the beginning of the financial period, the acquisitions would have contributed £39.8m to revenue and £2.9m to headline profit.