REG - Spectris PLC - Final Results <Origin Href="QuoteRef">SXS.L</Origin> - Part 4
16/02/2016 07:10
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(millions) 119.0 118.8
Adjusted earnings per share (pence) 114.3 124.4
Adjusted diluted earnings per share (pence) 2015 2014
Diluted weighted average number of shares outstanding (millions) 119.3 119.1
Adjusted diluted earnings per share (pence) 114.1 124.1
Basic and diluted earnings per share in accordance with IAS 33 'Earning Per Share' are disclosed in Note 7.
2015 2014
Analysis of net debt for management purposes £m £m
Bank overdrafts 1.7 2.5
Bank loans - unsecured 155.1 157.9
Total borrowings 156.8 160.4
Cash balances (58.2) (34.8)
Net debt 98.6 125.6
3. Operating segments
The Group has four reportable segments, as described below, which are the Group's strategic business units. These units
offer different applications, assist companies at various stages of the production cycle and are focussed towards specific
industries. These segments reflect the internal reporting provided to the Chief Operating Decision Maker (considered to be
the Board) on a regular basis to assist in making decisions on capital allocated to each segment and to assess performance.
The segment results include an allocation of head office expenses. The following summary describes the operations in each
of the Group's reportable segments:
■ Materials Analysis provides products and services that enable customers to determine structure, composition, quantity and
quality of particles and materials during their research and product development processes, when assessing materials before
production, or during the manufacturing process. The operating companies in this segment are Malvern Instruments,
PANalytical and Particle Measuring Systems.
■ Test and Measurement supplies test, measurement and analysis equipment, software and services for product design
optimisation, manufacturing control, microseismic monitoring and environmental noise monitoring. The operating companies in
this segment are Brüel & Kjær Sound & Vibration, ESG Solutions and HBM.
■ In-line Instrumentation provides process analytical measurement, asset monitoring and on-line controls as well as
associated consumables and services for both primary processing and the converting industries. The operating companies in
this segment are Brüel & Kjær Vibro, BTG, NDC Technologies and Servomex.
■ Industrial Controls provides products and solutions that measure, monitor, control, inform, track and trace during the
production process. The operating companies in this segment are Microscan, Omega Engineering and Red Lion Controls.
Materials Test and In-line Industrial 2015
Analysis Measurement Instrumentation Controls Total
Information about reportable segments £m £m £m £m £m
Segment revenue 363.7 351.5 255.0 219.6 1,189.8
Inter-segment revenue 0.7 (0.2) - (0.3) 0.2
External revenue 364.4 351.3 255.0 219.3 1,190.0
Reportable segment profit for continuing operations 53.7 55.3 36.8 35.3 181.1
Net acquisition-related costs and fair value adjustments (0.2) (1.5) (0.1) (1.1) (2.9)
Amortisation and impairment of acquisition-related intangible assets (10.9) (10.2) (2.5) (11.0) (34.6)
Operating profit 42.6 43.6 34.2 23.2 143.6
Financial income* 3.3
Finance costs* (5.3)
Profit before tax 141.6
Tax* (27.8)
Profit after tax 113.8
Materials Test and In-line Industrial 2014
Analysis Measurement Instrumentation Controls Total
£m £m £m £m £m
Segment revenue 348.7 343.1 261.7 220.8 1,174.3
Inter-segment revenue 0.1 (0.2) (0.3) (0.2) (0.6)
External revenue 348.8 342.9 261.4 220.6 1,173.7
Reportable segment profit for continuing operations 53.3 52.2 48.0 44.6 198.1
Net acquisition-related costs and fair value adjustments 2.3 (0.9) - (5.3) (3.9)
Amortisation and impairment of acquisition-related intangible assets (7.6) (5.6) (2.4) (10.3) (25.9)
Operating profit 48.0 45.7 45.6 29.0 168.3
Profit on disposal of businesses* 2.4
Financial income* 6.3
Finance costs* (5.9)
Profit before tax 171.1
Tax* (36.0)
Profit after tax 135.1
* Not allocated to reportable segments.
Reportable segment profit is consistent with that presented to the Chief Operating Decision Maker. Inter-segment revenue
reflects the movements in internal cash flow hedges with inter-segment pricing on an arm's length basis. Segments are
presented on the basis of actual inter-segment charges made.
Carrying amount ofsegment assets Carrying amount ofsegment liabilities
2015 2014 2015 2014
£m £m £m £m
Materials Analysis 355.5 357.7 (93.6) (90.9)
Test and Measurement 378.9 363.5 (85.8) (84.9)
In-line Instrumentation 218.4 217.5 (41.5) (40.8)
Industrial Controls 430.2 410.0 (24.5) (23.7)
Total segment assets and liabilities 1,383.0 1,348.7 (245.4) (240.3)
Cash and borrowings 58.2 34.8 (156.8) (160.4)
Derivative financial instruments - - (0.4) (0.3)
Retirement benefit assets/(liabilities) - 3.6 (22.1) (17.6)
Taxation 17.9 19.4 (68.4) (71.9)
Consolidated total assets and liabilities 1,459.1 1,406.5 (493.1) (490.5)
Segment assets comprise: goodwill, other intangible assets, property, plant and equipment, inventories, trade and other
receivables. Segment liabilities comprise: trade and other payables provisions and other payables, which can be reasonably
attributed to the reportable operating segments. Unallocated items represent current and deferred taxation balances,
defined benefit scheme assets and liabilities, derivative financial instruments and all components of net debt.
Additions to non-current assets Depreciation,amortisation and impairment
2015 2014 2015 2014
£m £m £m £m
Materials Analysis 8.8 59.7 16.9 13.1
Test and Measurement 42.7 57.3 18.5 13.2
In-line Instrumentation 7.2 6.7 8.0 7.6
Industrial Controls 8.6 6.9 15.6 13.7
67.3 130.6 59.0 47.6
Geographical segments
The Group's operating segments are each located in several geographical locations and sell to external customers in all
parts of the world.
No individual country amounts to more than 3% of revenue by location of customer, other than those noted below.
The following is an analysis of revenue by geographical destination:
2015
MaterialsAnalysis Test andMeasurement In-lineInstrumentation IndustrialControls Total
£m £m £m £m £m
UK 16.8 14.0 6.9 7.1 44.8
Germany 19.5 56.9 19.5 9.9 105.8
France 12.6 17.6 6.3 2.3 38.8
Rest of Europe 55.4 62.3 45.0 9.3 172.0
USA 80.2 81.7 67.1 144.6 373.6
Rest of North America 13.2 7.9 9.0 12.6 42.7
Japan 23.2 22.0 11.1 2.0 58.3
China 51.8 44.8 43.4 13.8 153.8
South Korea 13.6 10.6 5.5 4.1 33.8
Rest of Asia 46.3 18.9 25.6 9.8 100.6
Rest of the World 31.8 14.6 15.6 3.8 65.8
364.4 351.3 255.0 219.3 1,190.0
2014
MaterialsAnalysis Test andMeasurement In-lineInstrumentation IndustrialControls Total
£m £m £m £m £m
UK 14.9 14.0 8.1 7.4 44.4
Germany 22.1 60.2 24.4 10.0 116.7
France 11.9 19.0 7.0 2.0 39.9
Rest of Europe 55.3 61.9 44.7 9.6 171.5
USA 67.7 65.4 64.2 146.9 344.2
Rest of North America 10.7 4.6 7.6 14.6 37.5
Japan 23.7 22.8 11.3 1.6 59.4
China 53.1 42.7 45.1 12.8 153.7
South Korea 11.9 11.9 6.3 3.5 33.6
Rest of Asia 41.5 21.0 25.4 8.7 96.6
Rest of the World 36.0 19.4 17.3 3.5 76.2
348.8 342.9 261.4 220.6 1,173.7
The following is an analysis of the carrying amount of non-current segment assets, analysed by the geographical area in
which the assets are located.
Non-current assets
2015 2014
£m £m
UK 85.1 88.6
Germany 25.2 25.9
France 0.1 0.1
Rest of Europe* 269.0 279.8
USA 487.0 443.3
Rest of North America 41.0 57.8
Japan 0.6 0.4
China 4.3 4.1
South Korea 4.4 5.6
Rest of Asia 27.9 31.2
Rest of the World 2.8 3.6
947.4 940.4
Retirement benefit assets ** - 3.6
Deferred taxation ** 17.2 18.3
Total non-current assets 964.6 962.3
* Principally in Denmark and Switzerland.
** Not allocated to a reportable geographical area in reporting to the Chief Operating Decision Maker.
4. Financial income and finance costs
2015 2014
Financial income £m £m
Interest receivable 0.3 0.3
Net gain on retranslation of short-term inter-company loan balances 3.0 6.0
3.3 6.3
2015 2014
Finance costs £m £m
Interest payable on loans and overdrafts 4.9 5.7
Unwinding of discount factor on deferred and contingent consideration 0.2 -
Net interest cost on pension scheme liabilities 0.1 0.1
Other finance costs 0.1 0.1
5.3 5.9
Net interest costs of £4.6m (2014: £5.4m) for the purposes of the calculation of interest cover comprise bank interest
receivable of £0.3m (2014: £0.3m) and interest payable on loans and overdrafts of £4.9m (2014: £5.7m).
5. Taxation
2015 2014
UK Overseas Total UK Overseas Total
£m £m £m £m £m £m
Current tax charge 2.7 32.8 35.5 5.3 37.9 43.2
Adjustments in respect of current tax of prior years (1.0) (1.5) (2.5) (1.8) (1.5) (3.3)
Deferred tax - origination and reversal of temporary differences (0.4) (4.8) (5.2) (1.5) (2.4) (3.9)
1.3 26.5 27.8 2.0 34.0 36.0
The standard rate of corporation tax for the year, based on the weighted average of tax rates applied to the Group's
profits, is 25.4% (2014: 28.1%). The tax charge for the year is lower than the standard rate of corporation tax for the
reasons set out in the following reconciliation:
2015 2014
£m £m
Profit before taxation 141.6 171.1
Corporation tax at standard rate of 25.4% (2014: 28.1%) 36.0 48.1
Non-taxable income and gains (3.6) (6.0)
Non-deductible expenditure 1.3 0.3
Movements on unrecognised deferred tax assets 0.5 0.1
Research and development tax incentives (5.0) (4.4)
Change in tax rates - 0.1
Adjustments to prior year current and deferred tax charges (1.4) (2.2)
Total taxation 27.8 36.0
Factors that may affect the future tax charge
The Group's tax charge in future years is likely to be affected by the proportion of profits arising, and the effective tax
rates, in the various territories in which the Group operates.
2015 2014
Tax on items recognised directly in the Consolidated Statement of Comprehensive Income £m £m
Tax on net loss on effective portion of changes in fair value of forward exchange contracts - (0.5)
Tax on re-measurement of net defined benefit liability, net of foreign exchange (1.7) (1.5)
Aggregate current and deferred tax credit relating to items recognised directly in the Consolidated Statement of Comprehensive Income (1.7) (2.0)
2015 2014
Tax on items recognised directly in the Consolidated Statement of Changes in Equity £m £m
Tax (credit)/charge in relation to share-based payments (0.1) 1.0
Aggregate current and deferred tax (credit)/charge on items recognised directly in the Consolidated Statement of Changes in Equity (0.1) 1.0
The following tax (credits)/charges relate to items of income and expense that are excluded from the Group's adjusted performance measures.
2015 2014 Tax on items of income and expense that are excluded from the Group's adjusted profit before tax £m £m Tax credit on amortisation and impairment of acquisition-related intangible assets (11.2) (8.4) Tax credit on net acquisition-related costs and fair value adjustments (0.6) (0.9) Tax credit on retranslation of short-term inter-company loan balances (0.5) (0.2) Tax credit on unwinding of discount factor on deferred and contingent consideration (0.1) - Tax charge on profit on disposal of
businesses - 0.8 Total tax credit (12.4) (8.7)
The effective adjusted tax rate for the year was 22.8% (2014: 23.2%) as set out in the reconciliation below.
2015 2014 Reconciliation of total tax charge on adopted IFRS basis to adjusted tax charge £m £m Total tax charge on adopted IFRS basis 27.8 36.0 Tax credit on items of income and expense that are excluded from the Group's adjusted profit before tax 12.4 8.7 Adjusted tax charge 40.2 44.7
6. Dividends
2015 2014 Amounts recognised and paid as distributions to owners of the Parent Company in the year £m £m Final dividend for the year ended 31 December 2014 of 30.5p (2013: 28.0p) per share 36.3 33.3 Interim dividend for the year ended 31 December 2015 of 17.3p (2014: 16.0p) per share 20.6 19.0 56.9 52.3
2015 2014 Amounts arising in respect of the year £m £m Interim dividend for the year ended 31 December 2015 of 17.3p (2014: 16.0p) per share 20.6 19.0 Proposed final dividend for the year ended 31 December 2015 of 32.2p (2014: 30.5p) per share 38.4 36.3 59.0 55.3
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 20 May 2016 and has not been included as a liability in these Financial Statements.
(11.2)
(8.4)
Tax credit on net acquisition-related costs and fair value adjustments
(0.6)
(0.9)
Tax credit on retranslation of short-term inter-company loan balances
(0.5)
(0.2)
Tax credit on unwinding of discount factor on deferred and contingent consideration
(0.1)
-
Tax charge on profit on disposal of businesses
-
0.8
Total tax credit
(12.4)
(8.7)
The effective adjusted tax rate for the year was 22.8% (2014: 23.2%) as set out in the reconciliation below.
2015 2014
Reconciliation of total tax charge on adopted IFRS basis to adjusted tax charge £m £m
Total tax charge on adopted IFRS basis 27.8 36.0
Tax credit on items of income and expense that are excluded from the Group's adjusted profit before tax 12.4 8.7
Adjusted tax charge 40.2 44.7
6. Dividends
2015 2014
Amounts recognised and paid as distributions to owners of the Parent Company in the year £m £m
Final dividend for the year ended 31 December 2014 of 30.5p (2013: 28.0p) per share 36.3 33.3
Interim dividend for the year ended 31 December 2015 of 17.3p (2014: 16.0p) per share 20.6 19.0
56.9 52.3
2015 2014
Amounts arising in respect of the year £m £m
Interim dividend for the year ended 31 December 2015 of 17.3p (2014: 16.0p) per share 20.6 19.0
Proposed final dividend for the year ended 31 December 2015 of 32.2p (2014: 30.5p) per share 38.4 36.3
59.0 55.3
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 20 May 2016 and has not
been included as a liability in these Financial Statements.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (excluding treasury shares).
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year but adjusted for the effects of dilutive options.
Basic earnings per share 2015 2014 Profit after tax (£m) 113.8 135.1 Weighted average number of shares outstanding (millions) 119.0 118.8 Basic earnings per share (pence) 95.6 113.7
Diluted earnings per share 2015 2014 Profit after tax (£m) 113.8 135.1 Basic weighted average number of shares outstanding (millions) 119.0 118.8 Weighted average number of dilutive 5p ordinary shares under option (millions) 0.6 0.7 Weighted average number of 5p ordinary shares that would have been issued at average market value from proceeds of dilutive share options (millions) (0.3) (0.4) Diluted weighted average number of shares outstanding (millions) 119.3 119.1 Diluted earnings per share (pence) 95.4
113.4
8. Acquisitions
On 22 January 2015 the Group acquired 100% of the share capital of ReliaSoft Corporation, a company based in the USA, for a total consideration of £30.4m (£28.3m net of cash acquired). The excess of the fair value of the consideration paid over the fair value of net tangible assets acquired is represented by the following intangible assets: contractual rights, customer related (customer relations), trade names, technology and goodwill of £0.4m, £2.8m, £1.0m, £11.0m and £17.0m respectively. The company is a
leading provider of reliability engineering software, education, consulting and related services to product manufacturers and maintenance organisations around the world. The goodwill arising is considered to represent the value of the acquired workforce, extension of the Group's product offering leveraging its stronger position in the reliability and durability markets, together with sharing capabilities and technologies in value added software solutions. Goodwill includes an amount of £4.0m representing
the requirement to recognise a deferred tax liability on the fair value adjustments. The business is being integrated into the Test and Measurement segment.
On 2 March 2015 the Group acquired the trade and certain assets of Sunway Scientific Corporation, a Taiwanese distributor, for a total consideration of £2.2m including £0.4m of contingent consideration, which is based on 10% of annual sales over a threshold over the following three years, subject to a total cap of £1.9m on the total deferred consideration payable. The excess of the fair value of the consideration paid over the fair value of net tangible assets acquired is represented by the following
intangible assets: customer related, contractual rights and goodwill of £1.3m, £0.3m and £0.9m respectively. The goodwill arising is attributable to opportunities expected from direct access to the Taiwanese market and benefits arising from improving the productivity of the combined sales and support channels. Goodwill includes an amount of £0.5m representing the requirement to recognise a deferred tax liability related to the fair value of the customer related and order book-related intangible assets. The
business is being integrated into the Materials Analysis segment.
On 24 August 2015 the Group acquired the trade and certain assets of Label Vision Systems, a US business, for a total consideration of £4.5m including £1.6m of contingent consideration which is based on 50% of annual sales over a threshold over the following three years. The excess of the fair value of the consideration paid over the fair value of net tangible assets acquired is represented by the following intangible assets: customer related, technology related and goodwill of £1.0m, £0.7m and £2.6m
respectively. The goodwill arising is attributable to opportunities expected from deepening the Group's product offering within the track, trace and control business and benefits arising from improving the productivity of the combined sales and support channels. The business is being integrated into the Industrial Controls segment.
On 13 October 2015 the Group acquired 96% of the share capital of Spectraseis AG, a company based in Switzerland with operations in the USA and Canada, for a total consideration of £5.2m (£5.0m net of cash acquired), including £0.1m of contingent consideration which is based on 10% of sales over a threshold over the following two years and a £0.3m working capital receivable. This extends the Group's capabilities in surface-based microseismic sensing equipment for hydraulic fracturing monitoring and induced
seismicity monitoring. The excess of the fair value of the consideration paid over the fair value of net tangible assets acquired is represented by the following intangible assets: customer related (customer relations), technology and goodwill of £1.2m, £2.6m and £2.1m respectively. The goodwill arising is attributable to the acquired workforce, opportunities expected from the extension of the Group's microseismic product offering and the leverage of the customer base to optimise the sales potential of
Spectraseis and Engineering Seismology Group's products. Goodwill includes an amount of £0.4m representing the requirement to recognise a deferred tax liability on the fair value adjustments. The business is being integrated into the Test and Measurement segment. The remaining 4% of share capital is currently in the process of being purchased. The non-controlling interest has not been disclosed as it is not significant.
On 18 November 2015 the Group acquired 100% of the share capital of Sound Answers Inc., a company based in the USA, for a total consideration of £2.7m (£2.3m net of cash acquired) including £0.9m of contingent consideration which is based upon incremental future revenues. Total contingent consideration is capped at £1.0m in aggregate. The excess of the fair value of the consideration paid over the fair value of net tangible assets acquired is represented by the following intangible assets: customer related
(customer relations), and goodwill of £0.7m and £1.4m respectively. The company is a provider of engineering services that specialises in noise, vibration and harshness design and simulation, primarily for the automotive market. The goodwill arising is considered to represent the value of the acquired workforce, broadening of the Group's product offering to the automotive market and the expansion of the Group's consulting and design services. The business is being integrated into the Test and Measurement
segment.
The assets and liabilities acquired from the above acquisitions, together with the aggregate purchase consideration, are summarised in the table below. The revenue and operating profit contribution from the acquisitions in the year to the Group's results for the year were £12.0m and £2.5m respectively. Group revenue and operating profit would have been £1,197.7m and £143.2m (adjusted operating profit: £181.6m) respectively, had each of these acquisitions taken place on the first day of the financial year.
The following fair value table is provisional, reflecting the timing of the acquisitions, and is expected to be finalised within 12 months of the acquisition date:
2015 Book value Adjustments Fair value Net assets acquired under 2015 acquisitions £m £m £m Intangible fixed assets 0.8 22.2 23.0 Tangible fixed assets 1.3 0.1 1.4 Deferred tax assets 1.6 (1.6) - Inventories 0.4 (0.1) 0.3 Trade and other receivables 3.7 (0.3) 3.4 Trade and other payables (5.2) 0.5 (4.7) Provisions (0.1) (0.2) (0.3) Deferred tax liabilities - (4.8) (4.8) Cash 2.7 - 2.7 Net assets acquired 5.2 15.8 21.0 Goodwill 24.0 Total consideration in respect of 2015 acquisitions 45.0 Total consideration
45.0 Adjustment for cash acquired (2.7) Net consideration in respect of 2015 acquisitions 42.3 Analysis of cash outflow in Consolidated Statement of Cash Flows Total consideration in respect of 2015 acquisitions 45.0 Adjustment for net cash acquired on 2015 acquisitions (2.7) Deferred and contingent consideration on 2015 acquisitions to be paid in future years (3.0) Working capital adjustment receivable in future years 0.3 Cash paid in 2015 in respect of 2015 acquisitions 39.6 Acquisitions prior to 2015
Deferred and contingent consideration in relation to prior years' acquisitions: - accrued at 31 December 2014 0.5 Cash paid in 2015 in respect of prior years' acquisitions 0.5 Net cash outflow relating to acquisitions 40.1
Due to their contractual due dates, the fair value of receivables acquired approximates to the gross contractual amounts receivable. The amount of gross contractual receivables not expected to be recovered is immaterial.
£4.0m (2014: £22.0m) of the goodwill arising on acquisitions in the year is expected to be amortised and deductible for tax purposes.
There are no material contingent liabilities recognised in accordance with IFRS 3 (Revised).
The following presents the information related to 2014 acquisitions including the effect of the finalisation of acquisition fair values during 2015.
Amounts previously recognised at31 December 2014 2014 Book value Adjustments Fair value Net assets acquired under 2014 acquisitions £m £m £m Intangible fixed assets 1.2 46.3 47.5 Tangible fixed assets 7.1 0.1 7.2 Inventories 7.3 (0.2) 7.1 Trade and other receivables 4.9 (0.1) 4.8 Trade and other payables (6.2) 0.2 (6.0) Provisions - (0.6) (0.6) Retirement benefit obligation (0.1) - (0.1) Current tax (0.2) - (0.2) Deferred tax liabilities - (5.3) (5.3) Cash 0.9 - 0.9 Net assets acquired 14.9 40.4 55.3
Goodwill 41.4 Total consideration in respect of 2014 acquisitions 96.7 Total consideration 96.7 Adjustment for cash acquired (0.9) Net consideration in respect of 2014 acquisitions 95.8 Analysis of cash outflow in Consolidated Statement of Cash Flows Total consideration in respect of 2014 acquisitions 96.7 Adjustment for net cash acquired on 2014 acquisitions (0.9) Deferred and contingent consideration on 2014 acquisitions to be paid in future years (4.5) Cash paid in 2014 in respect of 2014 acquisitions
91.3 Acquisitions prior to 2014 Deferred and contingent consideration in relation to prior years' acquisitions: - accrued at 31 December 2013 0.3 Cash paid in 2014 in respect of prior years' acquisitions 0.3 2014 net cash outflow relating to acquisitions 91.6
In accordance with IFRS3 (Revised), the figures above have been amended from those published in the 2014 Annual Report to reflect the reduction in the deferred and contingent consideration, and goodwill, of £7.1m relating to the 2014 acquisitions of Affinity Biosensors LLC (£0.5m) and Engineering Seismology Group (£6.6m).
9. Company information
The financial information included in the full year results announcement does not constitute statutory accounts of the Company for the years ended 31 December 2015 and 2014. Statutory accounts for the year ended 31 December 2014 have been reported on by the Company's auditor and delivered to the Registrar of Companies. Statutory accounts for the year ended 31 December 2015 have been audited and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The report of the
auditors for both years was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
10. Annual Report
The Annual Report will be made available to shareholders on 17 March 2016, either by post or online, and will be available to the general public on the Company's website at www.spectris.com or on written request to the registered office at Heritage House, Church Road, Egham, Surrey TW20 9QD.
Diluted weighted average number of shares outstanding (millions)
119.3
119.1
Diluted earnings per share (pence)
95.4
113.4
8. Acquisitions
On 22 January 2015 the Group acquired 100% of the share capital of ReliaSoft Corporation, a company based in the USA, for a
total consideration of £30.4m (£28.3m net of cash acquired). The excess of the fair value of the consideration paid over
the fair value of net tangible assets acquired is represented by the following intangible assets: contractual rights,
customer related (customer relations), trade names, technology and goodwill of £0.4m, £2.8m, £1.0m, £11.0m and £17.0m
respectively. The company is a leading provider of reliability engineering software, education, consulting and related
services to product manufacturers and maintenance organisations around the world. The goodwill arising is considered to
represent the value of the acquired workforce, extension of the Group's product offering leveraging its stronger position
in the reliability and durability markets, together with sharing capabilities and technologies in value added software
solutions. Goodwill includes an amount of £4.0m representing the requirement to recognise a deferred tax liability on the
fair value adjustments. The business is being integrated into the Test and Measurement segment.
On 2 March 2015 the Group acquired the trade and certain assets of Sunway Scientific Corporation, a Taiwanese distributor,
for a total consideration of £2.2m including £0.4m of contingent consideration, which is based on 10% of annual sales over
a threshold over the following three years, subject to a total cap of £1.9m on the total deferred consideration payable.
The excess of the fair value of the consideration paid over the fair value of net tangible assets acquired is represented
by the following intangible assets: customer related, contractual rights and goodwill of £1.3m, £0.3m and £0.9m
respectively. The goodwill arising is attributable to opportunities expected from direct access to the Taiwanese market and
benefits arising from improving the productivity of the combined sales and support channels. Goodwill includes an amount of
£0.5m representing the requirement to recognise a deferred tax liability related to the fair value of the customer related
and order book-related intangible assets. The business is being integrated into the Materials Analysis segment.
On 24 August 2015 the Group acquired the trade and certain assets of Label Vision Systems, a US business, for a total
consideration of £4.5m including £1.6m of contingent consideration which is based on 50% of annual sales over a threshold
over the following three years. The excess of the fair value of the consideration paid over the fair value of net tangible
assets acquired is represented by the following intangible assets: customer related, technology related and goodwill of
£1.0m, £0.7m and £2.6m respectively. The goodwill arising is attributable to opportunities expected from deepening the
Group's product offering within the track, trace and control business and benefits arising from improving the productivity
of the combined sales and support channels. The business is being integrated into the Industrial Controls segment.
On 13 October 2015 the Group acquired 96% of the share capital of Spectraseis AG, a company based in Switzerland with
operations in the USA and Canada, for a total consideration of £5.2m (£5.0m net of cash acquired), including £0.1m of
contingent consideration
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