Acquisitions of companies

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

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:

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.