24 – Business combinations
Notes to the consolidated financial statements
Keepmoat . com 60
24 – Business combinations
On 10 January 2017 the Group completed the acquisition of M . C . I Developments Limited a provider of packaged developments of social housing projects for Registered Providers which operates in North West England . The fair value of consideration payable by the Group was £ 23,009,000 with initial consideration paid of £ 12,610,000 and the fair value of deferred consideration being £ 10,399,000 .
The following table summarises the fair value of the consideration for MCI Developments Limited :
Consideration |
£’ 000 |
Cash |
12,610 |
Fair value of deferred contingent consideration |
10,399 |
Total consideration |
23,009 |
The following table summarises the fair value of the assets acquired and liabilities assumed at the acquisition date :
Recognised amounts of identifiable assets acquired and liabilities assumed |
£’ 000 |
Cash and cash equivalents |
7,287 |
Contracted customer relationships ( note 9 ) |
6,366 |
Property , plant and equipment ( note 10 ) |
661 |
Inventories |
4,434 |
Trade and other receivables |
2,872 |
Trade and other payables Loans and borrowings Deferred tax ( note 6 )
( 5,010 ) ( 818 )
( 1,385 ) Total identifiable net liabilities 14,407 Goodwill ( note 9 ) 8,602 Total 23,009
During the year the Group recognised an increase in the fair value of the deferred consideration the fair values ascribed and resulting goodwill have been originally recognised on a provisional basis . The increase in fair value of deferred consideration recognised was £ 2,256,000 with a corresponding increase in Goodwill of the same amount .
Acquisition related costs of £ 83,000 ( 2017 : £ 353,000 ) have been charged to administrative expenses in the consolidated income statement for the year ended 31 March 2018 .
The consolidated income statement for the year ended 31 March 2017 includes revenue of £ 10,200,000 and profit before tax of £ 1,200,000 contributed by MCI Developments Limited since 10 January 2017 . Had the results of MCI Developments Limited been consolidated from the start of the reporting period , Group revenues for the year ended 31 March 2017 from continuing operations would have been £ 459,200,000 whilst the loss before tax from continuing operations would have been lower at £ 6,800,000 .
Goodwill represents the non-contractual customer relationships and land development rights that have not met the criteria for recognition as an intangible asset , in addition to the value of the company ’ s workforce .