FINANCIAL REPORT (cont.) Notes to the Financial Statements (cont.)
20. INTANGIBLE ASSETS
2023 $’000
2022 $’000
Goodwill
Balance at beginning of financial year Additions through business combinations - PlantWeave Technologies
321
-
-
321
- Automation IT
3,657 3,978
-
Balance at end of financial year 321 On 30 July 2021, the Group acquired PlantWeave Technologies (PlantWeave), a specialist in industrial process automation and electrical solutions. The purchase was made with the Group’s cash reserves and resulted in recognition of intangible assets of $321 thousands. The nature of this amount is Goodwill arising from the acquisition of PlantWeave Technologies. Refer to Note 21 for details of the acquisition of Automation IT Pty Limited, effective from 1 April 2023, and detailed calculation of goodwill recognised in relation to the acquisition. Goodwill acquired through business combinations is allocated to the lowest level within the entity at which the goodwill is monitored, being the two cash generating units (or ‘CGU’s) – PlantWeave and Automation IT. The assessment of goodwill recoverable amounts was determined based on value-in-use calculations using cash flow projections, which are based on approved strategic plans or forecasts, and discounted to their present value. Based on the assessment as at 30 June 2023, no impairment of goodwill was identified in any of the Group’s CGU’s. 21. ACQUISITION OF SUBSIDIARIES Automation IT Pty Limited Saunders announced the acquisition of Automation IT Pty Limited (AIT) on 9 May 2023. Under the terms of the Share Purchase Agreement (SPA), 100% of the issued share capital and control of AIT was effectively acquired on 1 April 2023. AIT is a specialist automation and control systems engineering business operating in the energy, water, defence and mining industries. It qualifies as a business as defined in AASB3 Business Combinations. It was acquired to further expand and diversify Saunders capabilities across industrial automation and technology solutions following the 2021 acquisition of Saunders PlantWeave (formerly PlantWeave Technologies). The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below. 2023 $’000 Financial assets 1,798 Property, plant and equipment 195 Financial liabilities (1,449) Deferred tax assets / (liabilities) 199 Total identified assets acquired and liabilities assumed 743 Goodwill 3,657 Total Consideration¹ 4,400 Satisfied by: Cash 3,000 Equity 1,400 Total consideration transferred¹ 4,400 Net cash outflow arising on acquisition: Cash consideration 3,000 Less: cash and cash equivalent balances acquired (246) 2,754 ¹ There remains an element of deferred cash payments which may or may not be payable based on the Earn-Out consideration conditions within the SPA. Under the terms of the SPA, the final instalment will be a maximum of $1.10 million based on 4.00x AIT’s Earnings Before Interest and Tax (‘EBIT’) for the year ending 30 June 2024. If the earn-out consideration conditions are achieved, it will be payable in cash ($0.825m) and equity ($0.275m). Based on the total maximum price of $5.50 million, the consideration will be cash (70%) and equity (30%).
Annual Report 2023 87
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