Notes to the accounts
28. Acquisitions
During the period ended 31 July 2009, the Group acquired Zhejiang Zheda Medical Instrument Co. Ltd (10 November 2008) on behalf of Smiths Medical, Shenzen Dowin Lightning Technologies Co., Ltd (24 April 2009) on behalf of Smiths Interconnect and Orion Corporation (13 May 2009) on behalf of John Crane.
From the date of acquisition to 31 July 2009, the acquisitions contributed £16.3m to revenue, £4.8m to headline profit before taxation and £0.6m to profit before taxation. If Smiths had acquired the businesses at the beginning of the financial period, the acquisitions would have contributed £54.3m to revenue and £13.5m to headline profit before tax.
The fair value adjustments in respect of intangible assets are due to the recognition of £36.5m in respect of customer relationships and orders, £2.7m in respect of non-compete agreements, £5.8m in respect of technology and intellectual property. Goodwill represents the value of synergies arising from the acquisitions and future growth opportunities which can be generated through existing sales networks. 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 2010. 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 decreased by £0.7m.
|
Book value |
Fair value |
Provisional |
|
|---|---|---|---|---|
Non-current assets |
||||
– intangible assets |
|
45.0 |
45.0 |
|
– property, plant and equipment |
9.0 |
|
9.0 |
|
Current assets |
||||
– cash and cash equivalents |
7.7 |
|
7.7 |
|
– other current assets |
20.2 |
1.0 |
21.2 |
|
Non-current liabilities |
||||
– other liabilities |
|
(5.5) |
(5.5) |
|
Current liabilities |
||||
– other current liabilities |
(15.2) |
(0.3) |
(15.5) |
|
Net assets acquired |
21.7 |
40.2 |
61.9 |
|
Goodwill on current year acquisitions |
|
|
50.3 |
|
Goodwill adjustments on prior year acquisitions |
|
|
(0.7) |
|
Total consideration |
|
|
111.5 |
|
Cash paid during the period – current year acquisitions |
|
|
94.5 |
|
Direct costs relating to current year acquisitions |
|
|
1.9 |
|
Deferred consideration accrued on current year acquisitions |
|
|
15.8 |
|
Adjustments to deferred consideration on prior year acquisitions |
|
|
(0.7) |
|
Total consideration |
|
|
111.5 |
|