Notes 1-5.

The International Accounting Standards Board has issued a number of other standards, amendments and interpretations which are not yet effective. The group has not yet applied these in preparing these financial statements although the application of these standards, amendments and interpretations would require further disclosures, but they are not expected to have a material impact on the group’s results. 

There have been no other changes in accounting policies in the year ended 30 June 2011, however certain comparatives have been restated to conform with the current year’s presentation.

During the 2011 year the group acquired subsidiaries for a total consideration of $1,106 million (2010: $nil). 

The major acquisition during the year was the purchase of Crane, acquired for total consideration of $1,050 million, following an off-market offer to the Crane shareholders. The effective acquisition date is 28 March 2011 being the date the group gained control of Crane. At that date 13 percent of Crane shares had not been acquired, representing a non-controlling interest (or minority shareholding) on acquisition. The group therefore recognised the net identifiable assets of Crane as well as the goodwill arising in relation to its proportionate share of Crane as at that date. As permitted by NZIFRS 3 the non-controlling interest has been valued at the proportionate share (13 percent) of Crane’s identifiable net assets. This means that the group excludes the goodwill of $62 million in respect of the non-controlling interest. Accordingly the value assigned to the non-controlling interest is lower than its fair value of $135 million. 

Subsequent to the acquisition date the remaining shares were acquired to give the group a 100 percent interest in Crane. The consideration paid for the non-controlling interest was $135 million. The excess of $62 million over the value of the non-controlling interest of $73 million has been charged to the group’s retained earnings, as a distribution to the Crane minority shareholders. 

Prior to the off-market offer, an initial pre-bid stake of 14.9 percent had been acquired for $143 million cash. The group recognised a gain of $13 million as a result of measuring at fair value its pre-bid stake of 14.9 percent, as required by NZIFRS 3. This is disclosed as an unusual item in the earnings statement. 

A formal fair value exercise of the assets and liabilities of Crane is underway, but will not be completed until the 2012 year. At present the difference between the book value at acquisition and the purchase price has been recognised as goodwill, representing the expected profitability and the synergies to be achieved. The goodwill arising is not expected to be deductible for tax purposes.

Crane

The cost of the Crane acquisition is as follows: