G4S Annual Report and Accounts 2011

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Overview Strategic review Performance Notes to the consolidated financial statements continued 17 Acquisitions continued Adjustments made to identifiable assets and liabilities on acquisition are to reflect their fair value. These include the recognition of customer-related intangible assets amounting to £65m. The fair values of net assets acquired are provisional and represent estimates following a preliminary valuation exercise. These estimates may be adjusted to reflect any development in the issues to which they relate. The goodwill arising on acquisitions can be ascribed to the existence of a skilled, active workforce, developed expertise and processes and the opportunities to obtain new contracts and develop the business. None of these meet the criteria for recognition as intangible assets separable from goodwill. From their respective dates of acquisition, the acquired businesses’ contribution to the results of the group for the period was as follows: Contribution from acquired businesses Revenue PBITA Profit £m £m £m The Cotswold Group Limited 9 1 1 Brazil facilities services 2 1 1 Munt Centrale Holland 5 – – Guidance Group 4 1 – Others 8 1 – Total contribution from acquired businesses 28 4 2 If all the acquisitions had occurred on 1 January 2011 the results of the group for the period would have been as follows: Group’s results if all acquisitions had occurred on 1 January 2011 Revenue PBITA Profit £m £m £m Group results for the period 7,522 531 198 Impact of backdating acquisitions to 1 January 2011 The Cotswold Group Limited (unaudited) 3 – – Brazil facilities services (unaudited) 56 6 2 Guidance Group (unaudited) 3 1 – Others (unaudited) 10 – – Group result for the period if all acquisitions had occurred on 1 January 2011 (unaudited) 7,594 538 200 Prior year acquisitions Principal acquisitions in subsidiary undertakings in the prior year included the purchase of the entire share capital of SSE Do Brasil Ltda, the parent company of Instalarme Soluções Eletrônica Ltda (“Instalarme”), an electronic software and hardware integration company in Brazil; a controlling interest in Plantech Engenharia e Sistemas Ltda (“Plantech”), a leading integrator in the Brazilian security systems market; and the entire share capital of Skycom (Pty) Ltd (“Skycom”), a market leader in the South African security systems market. The group also increased its holding in an Argentinian business. 94 G4S plc Annual Report and Accounts 2011
Governance Financial statements Shareholder information 17 Acquisitions continued At 31 December 2010, the fair value adjustments made against net assets acquired were provisional. The initial accounting in respect of acquisitions made during 2010 has since been finalised. The net assets acquired and goodwill arising in respect of all acquisitions made in the year are as follows: Fair value £m Intangible assets 13 Property, plant and equipment 1 Inventories 3 Trade and other receivables 9 Cash and cash equivalents 6 Trade and other payables (10) Current tax liabilities (1) Provisions (7) Borrowings (4) Deferred tax liabilities (3) Net assets acquired of subsidiary undertakings 7 Goodwill 58 Total purchase consideration 65 Satisfied by: Cash 42 Contingent consideration 23 Total purchase consideration 65 Summary of prior year acquisition activities Goodwill recognised on prior year acquisitions 58 Goodwill recognised in the prior year relating to acquisitions completed in previous years 12 Total goodwill recognised in the prior year 70 Adjustments made to identifiable assets and liabilities on acquisition are to reflect their fair value. These include the recognition of customer-related intangible assets amounting to £12m. On completion of the fair value exercise during 2011, adjustments made to the provisional calculation of identifiable assets and liabilities amounted to £12m, with an equivalent increase in the reported value of goodwill. The comparative consolidated statement of financial position at 31 December 2010 has been restated accordingly. The goodwill arising on acquisitions can be ascribed to the existence of a skilled, active workforce and the opportunities to obtain new contracts and develop the business. Neither of these meet the criteria for recognition as intangible assets separable from goodwill. In the year of acquisition, in aggregate, the acquired businesses contributed £23m to revenues, £2m to PBITA and £1m to profit for the part year they were under the group’s ownership. If all acquisitions had occurred on 1 January 2010, group revenue would have been £7,293m, PBITA would have been £535m and profit for the year would have been £249m. Post balance sheet acquisitions No significant acquisitions have been effected between the balance sheet date and the date that the financial statements were authorised for issue. G4S plc Annual Report and Accounts 2011 95
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