6. Acquisition of business

On 31 March 2012 the Group acquired the trade and assets of the heat treatment business of Curtiss-Wright Corporation for a cash consideration of £32.6m. The primary reason of the acquisition is to provide additional capacity and a broader customer base in key regions of North America.

The transaction has been accounted for by the purchase method of accounting and is summarised below.

31 March 2012
Fair value of net assets acquired:
Intangible assets 11.9
Property, plant and equipment 8.5
Inventories 0.1
Trade and other receivables 3.6
Trade and other payables (0.6)


Goodwill 9.1
Total consideration 32.6
Satisfied by:
Net cash outflow arising on acquisition:
Cash consideration 32.0
Accrued consideration 0.6


The accrued consideration remains unpaid until the purchase price adjustment, based on a review of working capital, is finalised.

The carrying value of inventories, trade and other receivables and trade and other payables approximates their fair value. The fair value of the acquired identifiable tangible and intangible assets is provisional, pending completion of the final valuation.

The gross contractual value of the trade and other receivables was £3.8m. The best estimate at the acquisition date of the contractual cash flows not expected to be collected was £0.2m.

The goodwill arising on the acquisition is attributable to the anticipated profitability of the distribution of the Group's services in new markets and the anticipated future operating synergies from the combination.

Acquisition-related costs (included in exceptional items) amount to £1.2m.

The acquired business contributed £6.5m revenue and £1.6m to the Group's operating profit for the period between the date of acquisition and the balance sheet date.

If the acquisition of the business had been completed on the first day of the financial period, Group revenues for continuing operations for the period would have been £307.8m and Group operating profit would have been £47.2m.

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