Notes to the Interim report (unaudited)
9 Acquisitions
On 10 November 2008 the Medical division acquired the entire share capital of Zhejiang Zheda Medical Instrument Co. Ltd a manufacturer of medical instruments based in Hangzhou, China. The acquisition will trade as Smiths Medical Zhejiang.
The values set out below are provisional pending finalisation of the fair values attributable, and will be finalised in subsequent periods.
|
|
Book value |
Fair value adjustments |
Provisional fair value |
Non-current assets |
|
|
|
|
– Intangible assets |
|
|
19.1 |
19.1 |
– Property, plant and equipment |
|
0.6 |
|
0.6 |
Current assets |
|
|
|
|
– Cash and cash equivalents |
|
6.6 |
|
6.6 |
– Other current assets |
|
2.0 |
(0.1) |
1.9 |
Current liabilities |
|
|
|
|
– Other current liabilities |
|
(2.1) |
|
(2.1) |
Net assets acquired |
|
7.1 |
19.0 |
26.1 |
Goodwill on current year acquisitions |
|
|
|
18.3 |
Goodwill adjustment on prior year acquisitions |
|
|
|
(0.4) |
|
|
|
|
44.0 |
|
|
|
|
|
Cash paid during the period – current year acquisitions |
|
|
|
43.6 |
Direct costs relating to current year acquisitions |
|
|
|
0.8 |
Deferred consideration adjustments on prior year acquisitions |
|
|
|
(0.4) |
Total consideration |
|
|
|
44.0 |
The fair value adjustments in respect of intangible assets are due to the recognition of £15.2m in respect of customer relationships and £3.9m in respect of technology. The fair value adjustments are provisional, based on management’s best estimates.
The goodwill is attributable to the future growth opportunities which can be generated through Smiths Medical’s global sales network.
From the date of acquisition to 31 January 2009 the acquisitions contributed £2.0m to revenue, £1.2m to headline profit before taxation and £1.2m to profit before taxation. If Smiths had acquired the assets at 1 August 2008, the acquisitions would have contributed £3.9m to revenue and £2.4m to profit for the period.