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Notes to the accounts

for the year ended 31 December 2007

40. Acquisitions

On 28 February 2007, the Group acquired 99.7 per cent. of the issued share capital of Aareal Asset Management GmbH (‘AAM') for a consideration of £27.7 million. This transaction has been accounted for using the purchase method of accounting.

The net assets acquired in the transaction, and the goodwill arising, are as follows:

	Carrying value immediately prior to acquisition £mn	Fair value adjustments £mn	Provisional fair value £mn
Net assets acquired:
Goodwill	4.9	(4.9)	-
Intangible assets	0.3	-	0.3
Property, plant and equipment	0.3	-	0.3
Deferred tax	0.1	1.6	1.7
Current financial assets	16.1	-	16.1
Cash at bank	6.2	-	6.2
Trade and other receivables	4.5	-	4.5
Current financial liabilities	(12.4)	-	(12.4)
Trade and other payables	(2.1)	-	(2.1)
Taxation	(0.4)	-	(0.4)
Less: Minority interests	(0.1)	-	(0.1)
	17.4	(3.3)	14.1
Goodwill			11.0
Intangible assets			2.6
			27.7
Satisfied by:
Cash			27.7
Total consideration			27.7

The goodwill arising on the acquisition of AAM is attributable to the anticipated profitability of the property fund business acquired. The intangible assets represent values attributed to existing contractual arrangements between AAM and the funds it manages (see note 11).

The result contributed by AAM and its subsidiaries in the period between the date of acquisition and the balance sheet date was a loss of £0.5 million before tax.

If the acquisition had been completed on 1 January 2007, an aggregation of the Group's gross profit for the year and that of the acquiree would have been £960.6 million, and the profit before tax for the year on the same basis would have been unchanged at £392.5 million. These figures include a deduction for the additional amortisation charge of £0.1 million that would have arisen had the acquisition taken place at that date.