24 Acquisitions
On 27 July 2007 the Group acquired 100% of the share capital of Amec Developments Limited and certain assets and business carried on by Amec Investments Limited and the assets, liabilities and contracts relating to the Design and Project Services (‘DPS’) division of Amec plc, save for certain excluded assets and liabilities.
Details of the net liabilities acquired and goodwill arising are as follows:
| £m | |
| Purchase consideration: | |
| Cash paid | 23.7 |
| Costs directly attributable to the acquisition | 1.8 |
| Total purchase consideration | 25.5 |
| Net liabilities acquired | (85.1) |
| Goodwill (note 10) | 110.6 |
The goodwill is attributable to the workforce of the acquired businesses’ expertise and the anticipated operating synergies expected to arise after the acquisition.
On page 76 of the 2007 annual report and accounts, the provisional fair value of the net assets and goodwill acquired were reported. The Group has since completed the fair value exercise as announced in the interim management statement on 4 August 2008. This led to further adjustments to 2007 comparatives of £60.5m. The final fair values are as follows:
| Provisional fair value adjustments made 31 December 2007 £m |
||||
|---|---|---|---|---|
| Acquiree’s carrying amount £m |
Final fair value adjustments £m |
|||
| Final fair value £m |
||||
| Cash and cash equivalents | 14.2 | – | – | 14.2 |
| Intangible fixed assets: | ||||
| Secured customer contracts | – | 3.1 | 1.1 | 4.2 |
| Other contracts and related relationships | – | 30.7 | (3.8) | 26.9 |
| Software | – | 0.9 | – | 0.9 |
| Non-compete agreement | – | 5.0 | – | 5.0 |
| Tangible fixed assets | 2.0 | 0.2 | (0.2) | 2.0 |
| Investments in joint ventures and associates | 28.7 | (4.2) | – | 24.5 |
| Working capital | (68.2) | (35.0) | (57.6) | (160.8) |
| Provisions | – | (2.0) | – | (2.0) |
| Net liabilities acquired | (23.3) | (1.3) | (60.5) | (85.1) |
| Purchase consideration settled in cash | 23.7 | |||
| Directly attributable acquisition costs | 1.8 | |||
| Cash and cash equivalents acquired | (14.2) | |||
| Cash outflow on acquisition | 11.3 |
Fair value adjustments arose from a reassessment of the outcome of a small number of construction contracts acquired from Amec in July 2007. Adjustments to customer contracts and relationships arose from a re-assessment of the discounted value of the cash flows expected to be generated from secure work with, or work expected to be obtained from, a number of clients.