Notes to the accounts

29 Acquisitions

During the period ended 31 July 2008, the Group made a number of acquisitions: Sartorius Bearing Technology (15 October 2007), a controlling interest over an associate John Crane Japan Limited (21 December 2007), Indufil BV (28 April 2008) and Fiber Composite Company Inc. (“Fiberod”) (2 May 2008), all on behalf of John Crane, Fast Heat (4 February 2008), Allrizon Tongguang (7 May 2008) and Triasx Pty. Ltd. (1 July 2008) on behalf of Specialty – Other.

From the date of acquisition to 31 July 2008, the acquisitions contributed £38.1m to revenue, £5.9m to headline profit before taxation and £1.4m to profit before taxation. If Smiths had acquired the businesses at the beginning of the financial period, the acquisitions would have contributed £92.4m to revenue and £13.8m to headline profit before tax.

The fair value adjustments in respect of intangible assets are due to the recognition of £43.7m in respect of customer relationships, £18.8m in respect of technology and £12.0m in respect of patents, licenses and trademarks. 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.

The values set out below are provisional pending finalisation of the fair values attributable, and will be finalised in the year ending 31 July 2009. 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 and changes in the estimated value of contingent considerations. Accordingly, goodwill has increased by £0.5m on one transaction and reduced by £2.2m on another.

The minority interest and assets accounted for using the equity method adjustment represents assets not acquired by Smiths Group plc when a controlling interest in an associate was acquired. The asset revaluation surplus represents fair value gains and losses on the associate’s net assets.

	Indufil BV			Other acquisitions			Total
	Book value £m	Fair value adjustments £m	Provisional fair value £m	Book value £m	Fair value adjustments £m	Provisional fair value £m	Provisional fair value £m
Non-current assets
– intangible assets	0.2	31.2	31.4	0.5	43.3	43.8	75.2
– property, plant and equipment	1.3		1.3	6.8	(0.2)	6.6	7.9
Current assets
– cash and cash equivalents				4.0		4.0	4.0
– other current assets	14.5		14.5	29.0	(0.6)	28.4	42.9
Non-current liabilities
– other liabilities		(8.1)	(8.1)	0.1	(5.5)	(5.4)	(13.5)
Current liabilities
– overdrafts	(2.5)		(2.5)				(2.5)
– other current liabilities	(4.5)		(4.5)	(20.4)	(0.8)	(21.2)	(25.7)
Minority interest and assets accounted for using the equity method					(5.1)	(5.1)	(5.1)
Net assets acquired	9.0	23.1	32.1	20.0	31.1	51.1	83.2
Asset revaluation surplus						(0.4)	(0.4)
Goodwill on current year acquisitions			38.7			48.3	87.0
Goodwill adjustments on prior year acquisitions						(1.7)	(1.7)
Total consideration			70.8			97.3	168.1
Cash paid during the period – current year acquisitions			70.5			76.8	147.3
Direct costs relating to current year acquisitions			0.3			2.5	2.8
Deferred consideration accrued on current year acquisitions						19.7	19.7
Deferred consideration and costs paid/(released) on prior year acquisitions						(1.7)	(1.7)
Total consideration			70.8			97.3	168.1

Smiths Group divisions:
Smiths Detection, Smiths Medical, John Crane, Smiths Interconnect, Flex-Tek