Section image

oil on canvas
22 x 20 in

Penny Machines
oil on canvas
23¾ x 29¾ in

Stack of Books
oil on canvas
30 x 24 in

Seven Suckers
oil on canvas
19 x 23 in

Twin Jackpots
oil on canvas
30 x 46 in

oil on canvas
20 x 26 in

Cake Slices
oil on canvas
20 x 16 in

Notes 26-31

For the year ended 31 December 2010

28. Acquisitions

The Group accounts for acquisitions in accordance with IFRS 3 (revised) Business Combinations. IFRS 3 (revised) requires the acquiree’s identifiable assets, liabilities and contingent liabilities (other than non-current assets or disposal groups held for sale) to be recognised at fair value at acquisition date. In assessing fair value at acquisition date, management make their best estimate of the likely outcome where the fair value of an asset or liability may be contingent on a future event. In certain instances, the underlying transaction giving rise to an estimate may not be resolved until some years after the acquisition date. IFRS 3 (revised) requires the release to profit of any acquisition reserves which subsequently become excess in the same way as any excess costs over those provided at acquisition date are charged to profit. At each period end management assess provisions and other balances established in respect of acquisitions for their continued probability of occurrence and amend the relevant value accordingly through the consolidated income statement or as an adjustment to goodwill as appropriate under IFRS 3 (revised).

The Group acquired a number of subsidiaries in the year. The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group. The fair value adjustments for certain acquisitions have been determined provisionally at the balance sheet date.

  Book value at
Fair value
Fair value to
Intangible assets 0.7 25.5 26.2
Property, plant and equipment 9.1 9.1
Cash 57.0 57.0
Trade receivables due within one year 161.7 161.7
Other current assets 56.2 56.2
Total assets 284.7 25.5 310.2
Current liabilities (259.1) (259.1)
Trade and other payables due after one year (1.1) (3.4) (4.5)
Deferred tax liabilities (0.1) (9.3) (9.4)
Provisions (0.5) (0.7) (1.2)
Total liabilities (260.8) (13.4) (274.2)
Net assets 23.9 12.1 36.0
Non-controlling interests     (0.5)
Fair value of equity stake in associate undertakings before acquisitions of controlling interest
Goodwill     161.1
Consideration     164.0
Consideration satisfied by:      
Cash     131.2
Payments due to vendors (note 19)     32.8

Goodwill arising from acquisitions represents the value of synergies with our existing portfolio of businesses and skilled staff to deliver services to our clients. Goodwill expected to be deductible for tax purposes is £14.3 million.

Non-controlling interests in acquired companies are measured at the non-controlling interest’s proportionate share of the acquirees’ identifiable net assets.

The contribution to revenue and operating profit of acquisitions completed in the year was not material. There were no material acquisitions completed between 31 December 2010 and the date the financial statements have been authorised for issue.