Note 29

Acquisitions of companies

Acquisitions completed as of the 2018/2019 financial year are distributed among the Group’s business areas as follows:

Acquisitions (disposals) Closing Net sales,
Number of employees* Business Area
Synthecs Group, Netherlands** April, 2018 145 50 Automation
Xi Instrument AB, Sweden April, 2018 13 2 Energy
KRV AS, Norway April, 2018 55 27 Industrial Process
Scanwill Fluid Power ApS, & Willtech ApS, Denmark April, 2018 15 4 Components
Duelco A/S, Denmark July, 2018 150 30 Energy
Prisma Teknik AB and Prisma Light AB, Sweden July, 2018 70 27 Energy
Fibersystem AB, Sweden** July, 2018 140 12 Automation
TLS Energimätning AB, Sweden July, 2018 50 9 Industrial Process
Diamond Point International (Europe) Ltd, Great Britain** July, 2018 40 9 Automation
Power Technic ApS, Denmark July, 2018 50 6 Power Solutions
(Solar Supply Sweden AB, Sweden) (August, 2018) (80) (5) (Power Solutions)
Nordautomation Oy, Finland September, 2018 155 85 Industrial Process
Wood Recycling Sweden AB, Sweden October, 2018 7 2 Industrial Process
Nylund Industrial Electronics (assets and liabilities), Finland January, 2019 35 3 Components
Birepo A/S, Denmark January, 2019 35 10 Components
Omni Ray AG, Switzerland April, 2019 330 65 Automation
Thurne Teknik AB, Sweden April, 2019 100 19 Industrial Process
AB N.O. Rönne, Sweden April, 2019 8 4 Industrial Process
Best Seating Systems Walter Tausch GmbH, Austria May, 2019 23 5 Power Solutions
Thiim A/S, Denmark June, 2019 70 15 Automation
Profelec Oy, Finland July, 2019 6 2 Energy
BKC Products Ltd., Great Britain August, 2019 12 5 Industrial Process
Promector Oy, Finland August, 2019 24 20 Automation
Wireco-NB Oy, Finland February, 2020 23 6 Energy
Caligo Industria Oy, Finland February, 2020 70 9 Industrial Process
DMC Digital Motor Control GmbH, Germany March, 2020 30 10 Power Solutions
Q-tronic B.V, Netherlands March, 2020 45 10 Power Solutions
Elkome Group Oy, Finland April, 2020 85 38 Automation
Peter Andersson AB, Sweden April, 2020 30 9 Energy
Valutec Group AB, Sweden April, 2020 350 45 Industrial Process

* Refers to assessed condition at the time of acquisition and disposal, respectively, on a full-year basis.
**Previous to April 1, 2019, the company belonged to the Components business area.

The value of assets and liabilities included in acquisitions from the 2018/2019 financial year have been determined conclusively. No significant adjustments have been made to the calculations. According to the preliminary acquisition analyses, the assets and liabilities included in the acquisitions for the year were as follows:

2019/2020 2018/2019
Carrying amount at acquisition date Adjustment to fair value Fair value Carrying amount at acquisition date Adjustment to fair value Fair value
Intangible non-current assets 2 214 216 10 327 337
Other non-current assets 13 13 61 2 63
Inventories 82 82 68 68
Other current assets 175 175 281 281
Deferred tax liability/tax asset 0 -36 -36 -6 -69 -75
Other liabilities -116 -52 -168 -222 -15 -237
Acquired net assets 156 126 282 192 245 437
Goodwill 211 306
Non-controlling interests -3
Consideration 1) 490 743
Less: cash and cash equivalents in acquired businesses -65 -96
Less: consideration not yet paid -73 -83
Effect on the Group’s cash and cash equivalents 352 564
1) The consideration is stated excluding acquisition expenses.

The combined consideration for the year’s acquisition was SEK 490 million, of which SEK 427 million, according to preliminary acquisition analyses, was allocated to goodwill and other intangible assets. Had the acquisitions been completed on 1 April 2019, their impact would have been an estimated SEK 750 million on consolidated net sales, about SEK 40 million on operating profit and about SEK 20 million on profit after tax.

Addtech uses an acquisition structure with a base purchase price and contingent consideration. The outcome of contingent considerations is dependent on future results achieved in the companies and has a set maximum level. Of contingent considerations for acquisitions during the financial year that are yet to be paid, the discounted value amounts to SEK 67 million. The contingent considerations fall due within three years and the outcome may not exceed SEK 94 million. If the conditions are not met, the outcome may be in the range of SEK 0-94 million.

For acquisitions that resulted in ownership transfer during the financial year, transaction costs totalled SEK 7 million (7) and are recognised in selling expenses.

Revaluations of contingent considerations had a net positive impact of SEK 52 million (8) on the financial year. The impact on profits is recognised in other operating income and other operating expenses, respectively. No material changes in acquisition analyses were made in the financial year with regard to acquisitions carried out in the year or in previous years.

Consolidated goodwill at the time of the acquisition, regarding the expected future sales trend and profitability, is the amount by which the acquisition value exceeds the fair value of net assets acquired. Goodwill is motivated by the anticipated future sales trend and profitability, as well as the personnel included in the acquired companies.As of 31 March 2020 non-taxable goodwill amounted to SEK 1,997 million, to be compared with SEK 1,767 million as of 31 March 2019. The change is attributable to acquisitions and exchange differences. Consolidated goodwill is assessed annually for impairment, and no needs for impairment have been identified.

The values allocated to intangible non-current assets, such as supplier relationships, customer relationships, technology and trademarks, were assessed at the discounted value of future cash flows. The amortisation period is determined by estimating the annual decrease in sales attributable to each asset. Supplier relationships are generally amortised over a period of 5-10 years customer relationships and technology are amortised over 10 years. Trademarks are not amortised but are tested annually in accordance with IAS 36. Annual calculated amortisation regarding intangible non-current assets for the year’s acquisitions amounts to about SEK 22 million.

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