Notes on the Accounts

for the year ended 31st March 2013

39 Acquisitions

If all the acquisitions in the year had been completed on 1st April 2012 the revenue for the group would have been £10,814.4 million and its profit for the year £277.4 million.

On 21st August 2012 the group acquired 100% of Shanghai Changyin Electronic Material Science and Technology Co., Ltd. Changyin is based in Shanghai, China and manufactures silver paste. The acquisition of Changyin should provide a route to the growing market for silver paste for photovoltaic cell applications. The goodwill arising is attributable to synergies and future opportunities expected as Changyin provides a production base for the group’s Colour Technologies business to supply silver paste to the photovoltaic industry and the Chinese automotive product sector currently being served from the Netherlands and Korea.

On 19th October 2012 the group acquired 100% of AG Holding Limited and its subsidiaries (Axeon). Axeon is a specialist in the design, development and manufacture of integrated battery modules and systems for customers in the automotive industry and in high performance non-automotive applications. The acquisition of Axeon brings applications engineering expertise for battery systems which will complement the group’s materials science and research and development expertise, providing the base for further expansion in battery materials and technology. The goodwill arising is attributable to: the synergies expected from the deeper understanding of the fundamentals of cell electrochemistry and materials that the combining of these respective areas of expertise will bring; the probable geographical expansion of Axeon’s markets which the group’s global footprint should enable; and the assembled workforce.

On 27th March 2013 the group acquired 100% of Formox AB, its Chinese subsidiary and its business in USA. Formox is based in Sweden and is a leading global provider of catalysts, plant designs and licences for the manufacture of formaldehyde. Its technologies complement the group’s existing strengths in process catalysts and in plant design and licensing. Formox provides opportunities to integrate and expand the group’s technology and catalysts into a broader range of chemical processes and grow its position in the global petrochemicals market. The goodwill arising is attributable to these significant opportunities and synergies plus the assembled workforce.

The fair value of the net assets acquired, consideration paid, goodwill arising on these transactions, acquisition-related expenses and contribution to the group’s results since acquisition were:

  Changyin
£ million
Axeon
£ million
Formox
£ million
Net assets acquired      
Property, plant and equipment 0.1 1.0 5.2
Intangible assets 0.3 30.4 73.3
Inventories 0.4 4.2 9.1
Trade and other receivables 0.9 4.3 8.6
Cash and cash equivalents 0.2 1.6 5.6
Current other borrowings (0.5)
Trade and other payables (0.9) (7.2) (23.1)
Current income tax (liabilities) / assets (0.4) 0.6
Deferred income tax liabilities (0.1) (5.8) (10.5)
Provisions (2.5)
Total net assets acquired 0.4 25.6 68.8
Goodwill on acquisition 1.6 15.0 43.4
  2.0 40.6 112.2
Satisfied by      
Purchase consideration – cash 2.0 40.6 113.7
Purchase consideration – to be refunded (1.5)
  2.0 40.6 112.2
Acquisition-related costs charged to administrative expenses 0.2 1.0 0.8
Revenue since acquisition 3.4 30.7
Profit / (loss) since acquisition (0.2) (1.6)
Trade and other receivables – gross contractual amounts receivable 0.9 4.4 8.6
Trade and other receivables – estimate of amounts not expected to be collected 0.1

None of the goodwill arising on acquisition is expected to be deductible for tax purposes.

For the acquisition of Formox, the fair value of the consideration and the fair value of the net assets acquired are provisional as the completion accounts have yet to be agreed with the vendor.

On 23rd October 2012 the group acquired the 50% of Tracerco Asia Sdn. Bhd. it did not already own for £1.2 million and the non-controlling interest at this date was £1.2 million. This has been accounted for as an equity transaction.

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