Notes to the Interim Report & Accounts
(unaudited)
10 Acquisitions
Acquisitions during the period include the acquisition of the entire issued share capital of Sartorius Bearing Technology on 15 October 2007 and acquisition of a controlling interest over an associate on 21 December 2007. Both companies have been included in the Specialty – John Crane business segment.
The values set out below are provisional pending finalisation of the fair values attributable, and will be finalised in subsequent periods.
|
|
|
|
Fair value |
Provisional |
|
Non-current assets |
|
|
|
|
|
– Intangible assets |
|
0.5 |
4.8 |
5.3 |
|
– Property, plant and equipment |
|
2.9 |
|
2.9 |
|
Current assets |
|
|
|
|
|
– Cash and cash equivalents |
|
3.1 |
|
3.1 |
|
– Other current assets |
|
13.3 |
0.4 |
13.7 |
|
Current liabilities |
|
|
|
|
|
– Overdrafts |
|
(1.1) |
|
(1.1) |
|
– Other current liabilities |
|
(8.1) |
(1.4) |
(9.5) |
|
Minority interest and assets accounted for using the equity method |
|
|
(5.0) |
(5.0) |
|
Net assets acquired |
|
10.6 |
(1.2) |
9.4 |
|
Asset revaluation surplus |
|
|
|
(0.2) |
|
Goodwill |
|
|
|
11.4 |
|
Consideration |
|
|
|
20.6 |
|
– cash paid during the period – current year acquisitions |
|
|
|
19.4 |
|
– direct costs relating to current year acquisitions |
|
|
|
0.7 |
|
– deferred consideration paid in respect of prior year acquisitions |
|
|
|
0.5 |
|
Total consideration satisfied by cash |
|
|
|
20.6 |
The fair value adjustments in respect of intangible assets are due to the recognition of £4.8m in respect of customer relationships. The adjustments to current assets and liabilities relate to valuation adjustments and are provisional, based on management’s best estimates.
The goodwill is attributable to synergies and intangibles which do not qualify for separate recognition. Included within goodwill above is £0.5m in respect of an additional payment relating to a prior year acquisition.
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 the associate was acquired. The asset revaluation surplus represents fair value gains and losses on the associate’s net assets.
From the date of acquisition to 2 February 2008 the acquisitions contributed £4.0m to revenue, £0.5m to headline profit before taxation and £0.9m to profit before taxation. If Smiths had acquired the assets at 1 August 2007, the acquisitions would have contributed £16.4m to revenue and £1.8m to profit for the period.