Annual report and accounts 2008

Notes contentsNotes to consolidated financial statements

30. Business combinations

On 2 January 2008 the Group acquired 100% of Money-Media, a US based company offering online news and commentary for the money management industry. On 30 January 2008 the Group completed its acquisition of 100% of Harcourt Assessment after receiving clearance from the US Department of Justice.

The provisional assets and liabilities arising from acquisitions are as follows:

All figures in £ millions					2008		2007
	Notes	Harcourt Assessment Fair value	Money-Media Fair value	Other Fair value	Total Fair value		Total Fair value
Property, plant and equipment	10	6	—	—	6		11
Intangible assets	11	174	10	36	220		197
Intangible assets — Pre-publication	20	27	—	—	27		18
Inventories		7	—	—	7		15
Trade and other receivables		48	2	4	54		28
Cash and cash equivalents		5	—	11	16		—
Trade and other liabilities		(40)	(4)	(8)	(52)		(38)
Financial liabilities — Borrowings		—	—	—	—		(1)
Current income tax liabilities		—	—	(3)	(3)		4
Net deferred income tax liabilities	13	—	—	(4)	(4)		(45)
Provisions for other liabilities and charges	23	(19)	—	(7)	(26)		(2)
Minority interest		—	—	(2)	(2)		—
Assets held for sale		3	—	—	3		—
Net assets acquired at fair value		211	8	27	246		187
Goodwill	11	113	25	15	153		304
Total		324	33	42	399		491
Satisfied by:
Cash		(321)	(33)	(40)	(394)		(468)
Deferred consideration		—	—	—	—		(12)
Net prior year adjustments		(3)	—	(2)	(5)		(11)
Total consideration		(324)	(33)	(42)	(399)		(491)
Carrying value of net assets/(liabilities) acquired		81	(2)	(1)	78		41
Fair value adjustments		130	10	28	168		146
Fair value		211	8	27	246		187

The goodwill arising on the acquisition of Harcourt Assessment and Money-Media results from substantial cost and revenue synergies and from benefits that cannot be separately recognised, such as the assembled workforce. The fair value adjustments relating to these acquisitions were finalised during 2008.

Harcourt Assessment

All figures in £ millions	Carrying value	Fair value adjs	Fair value
Property, plant and equipment	7	(1)	6
Intangible assets	10	164	174
Intangible assets — Pre-publication	35	(8)	27
Inventories	8	(1)	7
Trade and other receivables	50	(2)	48
Cash and cash equivalents	5	—	5
Trade and other liabilities	(39)	(1)	(40)
Provisions for other liabilities and charges	(3)	(16)	(19)
Assets held for sale	8	(5)	3
Net assets acquired at fair value	81	130	211
Goodwill			113
Total			324

Money-Media

All figures in £ millions	Carrying value	Fair value adjs	Fair value
Intangible assets	—	10	10
Trade and other receivables	2	—	2
Trade and other liabilities	(4)	—	(4)
Net assets acquired at fair value	(2)	10	8
Goodwill			25
Total			33

Net cash outflow on acquisition:

All figures in £ millions	2008	2007
Cash — Current year acquisitions	(394)	(468)
Cash — Acquisitions yet to complete	(12)	—
Deferred payments for prior year acquisitions and other items	(5)	(4)
Cash and cash equivalents acquired	16	—
Cash outflow on acquisition	(395)	(472)

Harcourt Assessment contributed £150m of sales and £25m to the Group’s profit before tax between the date of acquisition and the balance sheet date. Money-Media contributed £9m of sales and £4m to the Group’s profit before tax between the date of acquisition and the balance sheet date. Other businesses acquired contributed £2m to the Group’s sales and £1m to the Group’s profit before tax between the date of acquisition and the balance sheet date.

If the acquisitions had been completed on 1 January 2008, the Group estimates that sales for the period would have been £4,826m and profit before tax would have been £587m.