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Notes to the consolidated financial statements
Year ended 31 July 2007
31. Acquisitions
A list of businesses acquired during the year, and the month of acquisition, is set out in Acquisitions completed during the year. All these businesses are engaged in the distribution of construction materials. In all these acquisitions, the Group acquired 100 per cent of the issued share capital, and has accounted for the transaction by the purchase method of accounting.
The fair value adjustments shown above for the year ended 31 July 2007 are provisional figures, being the best estimates currently available. Further adjustments to goodwill may be necessary when additional information is available concerning some of the judgmental areas.
The goodwill arising on these acquisitions is attributable to the anticipated profitability of the new markets and product ranges to which the Group has gained access, and to additional profitability and operating efficiencies in respect of existing markets.
The acquisitions contributed £2,067 million to revenue, £132 million to trading profit and £80 million to the Group’s operating profit for the period between the date of acquisition and the balance sheet date. It is not practicable to disclose profit before tax, as the Group manages its borrowings as a portfolio and cannot attribute an effective borrowing rate to an individual acquisition. It is not practicable to disclose profit attributable to equity shareholders, as the complexity of the Group’s tax arrangements is such that it cannot attribute an effective tax rate to an individual acquisition.
If each acquisition had been completed on the first day of the financial year, Group revenue would have been £16,774 million and Group trading profit would have been £930 million. It is not practicable to disclose profit before tax or profit attributable to equity shareholders, as stated above. It is not practicable to disclose operating profit as the Group cannot estimate the amount of intangible assets that would have been acquired at a date other than the acquisition date.