24. Acquisition of businesses and subsidiaries

The Group made a number of acquisitions in the year, the most significant of which were as follows:

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 £32.4m. The acquisition was made to provide additional capacity and a broader customer base in key regions of North America. The acquisition gives the Group a major presence in the strategically important aerospace industry hub in Wichita, Kansas; Louisiana provides access to the oil & gas market, and the northern plants fit well with the Group's automotive and general industrial network, enhancing service to existing customers and extending the geographic coverage.

On 16 October 2012 the Group acquired the trade and assets of Carolina Commercial Heat Treating, together with an additional facility in Southern Indiana, for a cash consideration of £41.4m. This acquisition was completed to develop a footprint in the south eastern USA, which continues to be amongst the highest recipients of inward investment in North America, with many domestic and overseas corporations establishing businesses and supply chains in the area.

All transactions have been accounted for by the purchase method of accounting and are summarised below.

business of
Trade &
assets of
Heat Treating
Fair value of net assets acquired:
Intangible fixed assets10.413.83.527.7
Property, plant and equipment8.59.83.722.0
Deferred tax asset0.20.2
Trade and other receivables3.
Trade and other payables(0.6)(1.6)(0.5)(2.7)
Total consideration32.441.410.984.7
Satisfied by:
Cash consideration32.441.410.984.7
Net cash outflow arising on acquisition:
Cash consideration32.441.410.984.7

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

The gross contractual value of trade and other receivables was £8.0m. The best estimate at the acquisition dates of the contractual cash flows not expected to be collected was £0.2m.

The goodwill arising on the acquisitions is attributable to the anticipated profitability of the Group's services in new markets and the anticipated future operating synergies from the combination with the Group of each of the acquired businesses.

Acquisition-related costs (reported in exceptional items) amounted to £2.5m.

The acquired businesses contributed £22.4m revenue and £5.1m to the Group's operating profit for the period between their dates of acquisition and the balance sheet date.

If the acquisition of all the businesses had been completed on the first day of the financial year, Group revenue for the year would have been £620.9m and Group operating profit would have been £98.7m.