Note 17. Goodwill and step-up values – acquisition of businesses
The allocation of step-up values to tangible and intangible assets and the residual goodwill in effect means that all acquisitions are valued at market. In order to separate out this valuation effect Alfa Laval focuses on EBITA, where any amortisation of step-up values is excluded. The development of these step-up values and any goodwill is shown in the table below.
| Movement schedule | ||||||
| Consolidated |
|
| ||||
| SEK millions | Opening balance 2023 | Acquisitions | Adjustment of last year’s purchase price allocation | Planned | Translation | Closing balance 2023 |
| Buildings | 160 | – | – | -38 | 3 | 125 |
| Land and land improvements | -54 | – | – | – | 12 | -42 |
| Patents and unpatented know-how | 2,528 | 268 | – | -399 | -207 | 2,190 |
| Trademarks | 1,972 | 9 | – | -527 | -36 | 1,418 |
| Other | 2 | – | – | -1 | 0 | 1 |
| Subtotal step-up values | 4,608 | 277 | – | -965 | -228 | 3,692 |
|
|
|
|
|
|
| |
| Goodwill | 26,258 | 52 | -42 | – | -1,199 | 25,069 |
|
|
|
|
|
|
| |
| Total | 30,866 | 329 | -42 | -965 | -1,427 | 28,761 |
During 2023 the Group has not recorded any impairment losses related to goodwill and step-up values.
There is no deferred tax liability calculated on the goodwill. The deferred tax liability on the other step-up values is SEK 861 (983) million.
For assets sold, net gains or losses are recognised on the cost basis including any related step-up value.
The next table shows each acquisition separately. Any later adjustments to the allocations are referred to the original year of the acquisition. The figures for the allocations are based on the prevailing rates at the time the transactions took place and any change in exchange rates until December 31, 2023 is shown as a translation difference. The corresponding presentation by asset type is found in Notes 18 and 19.
| Acquisition of businesses since 2000 | ||||||||||
| Consolidated | ||||||||||
| SEK millions Year |
| Buildings | Land and land improvements | Inventory | Patents and unpatented know-how | Trademarks | Other | Total step-up values | Goodwill | Total |
| 2000 | Alfa Laval Holding | 1,058 | -228 | 340 | 1,280 | 461 | 1,112 | 4,023 | 3,683 | 7,706 |
| 2002 | Danish Separation Systems | – | – | – | – | – | – | – | 118 | 118 |
| 2003 | Toftejorg | 1 | – | – | – | – | – | 1 | 35 | 36 |
| 2005 | Packinox | – | – | 6 | 99 | 183 | – | 288 | 253 | 541 |
| 2006 | Tranter | 17 | – | 6 | 180 | 265 | – | 468 | 530 | 998 |
| 2007 | AGC Engineering | – | – | – | – | 12 | – | 12 | 20 | 32 |
| Helpman | 9 | 8 | – | 36 | – | – | 53 | 4 | 57 | |
| Public offer Alfa Laval (India) | – | – | – | – | – | – | – | 441 | 441 | |
| DSO Fluid Handling | – | – | – | – | 39 | – | 39 | 42 | 81 | |
|
| Fincoil | – | – | – | 233 | – | – | 233 | 241 | 474 |
| 2008 | Høyer Promix A/S | – | – | – | – | – | – | – | 16 | 16 |
| Nitrile India Pvt Ltd | – | – | – | – | – | – | – | 6 | 6 | |
| Standard Refrigeration | – | – | 5 | 166 | – | – | 171 | 152 | 323 | |
| Pressko AG | – | – | 1 | – | – | – | 1 | 69 | 70 | |
| Hutchison Hayes Separation | – | – | 1 | 95 | 49 | – | 145 | 46 | 191 | |
| P&D’s Plattvärmeväxlarservice | – | – | – | – | – | – | – | 10 | 10 | |
|
| Ageratec | – | – | – | – | – | – | – | 44 | 44 |
| 2009 | Two providers of parts & service | – | – | – | – | 291 | – | 291 | 210 | 501 |
| Onnuri Industrial Machinery | – | – | – | 40 | 39 | – | 79 | 48 | 127 | |
| HES Heat Exchanger Systems | – | – | – | 83 | – | – | 83 | 59 | 142 | |
| Public offer Alfa Laval (India) | – | – | – | – | – | – | – | 311 | 311 | |
| Termatrans | – | – | – | – | 7 | – | 7 | 6 | 13 | |
| Tranter acquisitions in Latin America | – | – | – | – | 20 | – | 20 | 16 | 36 | |
| ISO Mix | – | – | – | 22 | – | – | 22 | – | 22 | |
|
| LHE | – | – | – | 298 | 297 | – | 595 | 344 | 939 |
| 2010 | Champ Products | – | – | – | 15 | 14 | – | 29 | 2 | 31 |
| A leading U.S. service provider | – | – | – | – | 134 | – | 134 | 82 | 216 | |
| G.S Anderson | – | – | – | 35 | – | – | 35 | 23 | 58 | |
| Astepo | – | – | – | 24 | 15 | – | 39 | 8 | 47 | |
| Si Fang Stainless Steel Products | – | – | – | 27 | 16 | – | 43 | 42 | 85 | |
| Definox | – | – | – | 4 | 5 | – | 9 | 2 | 11 | |
|
| Olmi | – | – | 37 | 58 | 32 | – | 127 | – | 127 |
| 2011 | Service company in the U.S. | – | – | – | – | 150 | – | 150 | 126 | 276 |
|
| Aalborg Industries | 248 | – | – | 430 | 860 | – | 1,538 | 3,630 | 5,168 |
| 2012 | Vortex Systems | – | – | – | 148 | – | – | 148 | 225 | 373 |
| Ashbrook Simon-Hartley | – | – | – | 86 | – | – | 86 | 55 | 141 | |
| Gamajet Cleaning Systems | – | – | – | 47 | – | – | 47 | 37 | 84 | |
|
| Air Cooled Exchangers (ACE) | – | – | – | 585 | – | – | 585 | 346 | 931 |
| 2013 | Niagara Blower Company | – | – | – | 202 | – | – | 202 | 203 | 405 |
| 2014 | Frank Mohn AS | – | – | 38 | 1,160 | 3,793 | – | 4,991 | 9,831 | 14,822 |
|
| CorHex Corp | – | – | – | 15 | – | – | 15 | – | 15 |
| 2015 | Aftermarket company (separation) | – | – | – | – | 32 | – | 32 | 24 | 56 |
|
| K-Bar Parts LLC | – | – | – | – | 16 | – | 16 | – | 16 |
| 2019 | Airec | – | – | – | 60 | – | – | 60 | 22 | 82 |
| 2020 | WCR Benelux | – | – | – | – | 10 | – | 10 | 3 | 13 |
|
| Sandymount | – | – | – | 41 | – | – | 41 | 15 | 56 |
| 2021 | StormGeo | – | – | – | 1,397 | – | – | 1,397 | 2,245 | 3,642 |
|
| LiftUP | – | – | – | 106 | – | – | 106 | 109 | 215 |
| 2022 | Desmet | – | – | – | 681 | 1,330 | – | 2,011 | 2,079 | 4,090 |
|
| Scanjet | – | – | – | 130 | – | – | 130 | 108 | 238 |
|
| Bunker Metric | – | – | – | 9 | – | 2 | 11 | 8 | 19 |
| 2023 | MPS | – | – | – | 211 | – | – | 211 | 0 | 211 |
|
| Header–coil | – | – | – | 11 | – | – | 11 | 7 | 18 |
|
| European service provider | – | – | – | 46 | 9 | – | 55 | 45 | 100 |
| Accumulated during the period |
|
|
|
|
|
|
|
|
| |
| Realised | -542 | 122 | -435 | – | – | -123 | -978 | -50 | -1,028 | |
| Write down | -6 | -9 | – | -89 | -5 | – | -109 | -941 | -1,050 | |
| Planned depreciation/amortisation | -671 | – | – | -6,156 | -6,612 | -994 | -14,433 | -612 | -15,045 | |
| Translation difference | 11 | 65 | 1 | 375 | -44 | 4 | 412 | 691 | 1,103 | |
| Closing balance | 125 | -42 | – | 2,190 | 1,418 | 1 | 3 ,692 | 25,069 | 28,761 | |
The acquisition of the Alfa Laval Holding AB group in connection with the acquisition by Industri Kapital of the Alfa Laval Group from Tetra Laval on August 24, 2000 is shown on the first row.
“Other” relates to step-up values from 2000 for “Machinery” of SEK 548 million and “Equipment” of SEK 452 million that have been fully depreciated or realised, for “Research and development” of SEK 54 million and “Capital gain (Industrial Flow)” of SEK 42 million that have been fully realised and for “Construction in process” of SEK 16 million that has been transferred to “Machinery”.
Acquisition of businesses
During 2023
On March 2, 2023, Alfa Laval acquired an additional 38.7 percent of StormGeo’s subsidiary Climatempo in Brazil from the minority owners. Alfa Laval’s ownership thereby increased from 51 percent to 89.7 percent. The purchase price is SEK 118 million, out of which all has been paid in cash. The transaction is reported as a change within the equity.
In 2021, Alfa Laval acquired a minority stake of 16.5 percent in the Netherland-based company Marine Performance Systems (MPS) with an option to acquire the remaining part later. Now Alfa Laval has executed that option and completed the acquisition to own 100 percent of MPS. The closing date for the acquisition was March 21, 2023. MPS’ innovative technology significantly reduces the friction from vessels when sailing, resulting in fuel savings. Friction between the hull and the water when sailing is the most significant driver of a vessel’s fuel consumption, and the cost of fuel represents up to 60 percent of a vessel’s operating costs. Fuel consumption has a direct impact on greenhouse gas emissions, as reducing 1 ton of fossil fuel consumption equals the reduction of approximately 3 tonnes of CO2 emissions. Marine Performance Systems’ air lubrication technology generates micro bubbles under a ship’s hull, reducing friction between the vessel and the water by 50-70 percent and enabling substantial fuel cost savings and improvement in overall ship efficiency, during normal service speed. The technology was first tested on a sea-going vessel in 2020 and the fuel savings have been confirmed by the shipowner based on several months of operation. The patented solution can be installed on vessels of any size or fuel type at point of building or retrofitted on already operating vessels. Since the acquisition Alfa Laval has launched the Alfa Laval OceanGlide product that creates an even layer of micro air bubbles across the vessel’s flat bottom area, which reduces drag by up to 75 percent. Since Alfa Laval OceanGlide needs few compressors and no large hull penetrations it can be easily installed. The purchase price is SEK 141 million, out of which SEK 24 million has been paid in cash and SEK 117 million is retained for a period of 3 years. The retained part of the purchase price is contingent on that certain profitability and liquidity goals are fulfilled. The outcome can be as low as SEK 0 million, but the probable outcome is SEK 117 million, which is also the fair value since the contingent consideration is to be paid in cash. The costs directly linked to the acquisition (fees to lawyers, due diligence and assisting counsel) come in addition to this and have amounted to SEK 0 million, which is reported as other operating costs. The impact on the cash flow is thus SEK -24 million. Out of the difference between the purchase price paid and the net assets acquired SEK 211 million has been allocated to patents and un-patented know-how, while the residual SEK 0 million has been allocated to goodwill. The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the company’s ability to over time recreate its intangible assets. The value of the goodwill is still preliminary. The step-up value for patents and un-patented know-how is amortised over 10 years. From the date of the acquisition the company has added SEK 15 million in orders received, SEK 43 million in invoicing and SEK -27 million in adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 2023 the corresponding figures would have been SEK 100 million, SEK 86 million and SEK -5 million respectively. At the end of December 2023, the number of employees was 21.
On July 31, 2023 Alfa Laval acquired 100 percent of a European service provider. The company will operate under its own name as an independent channel. The purchase price is SEK 199 million, out of which all has been paid in cash. At the acquisition cash of SEK 40 million has been taken over. The costs directly linked to the acquisition (fees to lawyers, due diligence and assisting counsel) come in addition to this and have amounted to SEK 4 million, which is reported as other operating costs. The impact on the cash flow is thus SEK -163 million. Out of the difference between the purchase price paid and the net assets acquired SEK 46 million has been allocated to patents and un-patented know-how and SEK 9 million to the trademark, while the residual SEK 45 million has been allocated to goodwill. The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the company’s ability to over time recreate its intangible assets. The value of the goodwill is still preliminary. The step-up values for patents and un-patented know-how and the trademark are amortised over 10 years. From the date of the acquisition the company has added SEK 31 million in orders received, SEK 31 million in invoicing and SEK 5 million in adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 2023 the corresponding figures would have been SEK 87 million, SEK 87 million and SEK 21 million respectively. At the end of December 2023, the number of employees was 55.
On July 31, 2023 Alfa Laval acquired 51 percent of the Danish company Header-coil Company A/S that develops and manufactures heat exchangers and steam generation system equipment components based on its header-coil design for the concentrated solar power (CSP) industry, thermal energy storage etc. The purchase price is SEK 47 million, out of which all has been paid in cash. At the acquisition cash of SEK 0 million has been taken over. The costs directly linked to the acquisition (fees to lawyers, due diligence and assisting counsel) come in addition to this and have amounted to SEK 2 million, which is reported as other operating costs. The impact on the cash flow is thus SEK -49 million. Out of the difference between the purchase price paid and the net assets acquired SEK 11 million has been allocated to patents and un-patented know-how, while the residual SEK 7 million has been allocated to goodwill. The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the company’s ability to over time recreate its intangible assets. The value of the goodwill is still preliminary. The step-up value for patents and un-patented know-how is amortised over 10 years. From the date of the acquisition the company has added SEK 1 million in orders received, SEK 1 million in invoicing and SEK -7 million in adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 2023 the corresponding figures would have been SEK 3 million, SEK 3 million and SEK -15 million respectively. At the end of December 2023, the number of employees was 4.
The acquisitions during 2023 are summarized in the following table. The larger acquisitions of MPS and the European service provider are shown separately, whereas the acquisitions of the other companies are shown on a single line as other minor acquisitions. All acquired assets and liabilities were reported according to IFRS at the time of the acquisitions.
| Acquisitions 2023 | |||||||
| MPS | European service provider | Total | |||||
| SEK millions | Book value | Adjustment to fair value | Fair value | Book value | Adjustment to fair value | Fair value | Fair value |
| Property, plant and equipment | 1 | – | 1 | 44 | – | 44 | 45 |
| Patents and unpatented know-how 1) | 0 | 211 | 211 | – | 46 | 46 | 257 |
| Trademarks 1) | – | – | – | 18 | 9 | 27 | 27 |
| Inventory | 4 | – | 4 | 14 | – | 14 | 18 |
| Accounts receivable | 1 | – | 1 | – | – | – | 1 |
| Other receivables | 37 | – | 37 | 15 | – | 15 | 52 |
| Liquid assets | – | – | – | 40 | – | 40 | 40 |
| Accounts payable | -11 | – | -11 | – | – | – | -11 |
| Advance payments | -14 | – | -14 | – | – | – | -14 |
| Other liabilities | -7 | – | -7 | -17 | – | -17 | -24 |
| Deferred tax | – | -55 | -55 | – | -15 | -15 | -70 |
| Acquired net assets | 11 | 156 | 167 | 114 | 40 | 154 | 321 |
| Goodwill 2) |
|
| 0 |
|
| 45 | 45 |
| Equity attributable to owners of parent |
|
| 26 |
|
| – | 26 |
| Purchase price |
|
| -141 |
|
| -199 | -340 |
| Costs directly linked to the acquisitions 3) |
|
| 0 |
|
| -4 | -4 |
| Retained part of purchase price 4) |
|
| 117 |
|
| – | 117 |
| Liquid assets in the acquired businesses |
|
| 0 |
|
| 40 | 40 |
| Other minor acquisitions current year |
|
|
|
|
|
| -167 |
| Payment of amounts retained in prior years |
|
|
|
|
|
| 17 |
| Effect on the Group’s liquid assets |
|
| -24 |
|
| -163 | -337 |
1) The step up values for patents and un-patented know-how as well as trademarks are amortised over 10 years. The purchase price allocation is still preliminary so the allocated step up values may be subject to change.
2) The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the companies’ ability to over time recreate its intangible assets. The purchase price allocation is still preliminary so the value of the goodwill may be subject to change.
3) Refers to fees to lawyers, due diligence and assisting counsel. Has been expensed as other operating costs.
4) Contingent on certain warranties in the contract not being triggered or that certain profitability goals are fulfilled. The probable outcome has been calculated.
During 2022
On September 13, 2022 Alfa Laval announced that it had acquired BunkerMetric, a Scandinavian software company that develops advanced decision support tools for marine bunker vessels. The acquisition was part of Alfa Laval’s strategy to expand its digital marine service offering and will be part of the recently acquired StormGeo, a global leader in weather intelligence software and decision support services. BunkerMetric, headquartered in Denmark, supports ship operators in finding the best bunker procurement plan and improving voyage margins by using sophisticated algorithms. The optimization tools, together with StormGeo’s advanced route services, will enable ship owners to streamline operations to help them improve their bottom line. BunkerMetric’s procurement optimization tool will become a subscription service within StormGeo’s existing offering. The purchase price was SEK 13 million, out of which all was paid in cash. At the acquisition cash of SEK 1 million was taken over. The costs directly linked to the acquisition (fees to lawyers, due diligence and assisting counsel) came in addition to this and amounted to SEK 1 million, which was reported as other operating costs. The impact on the cash flow was thus SEK -13 million. Out of the difference between the purchase price paid and the net assets acquired SEK 9 million was allocated to patents and un-patented know-how and SEK 2 million to other intangible assets (non-competition clause), while the residual SEK 8 million was allocated to goodwill. The goodwill was relating to estimated synergies in procurement, logistics and corporate overheads and the company’s ability to over time recreate its intangible assets. The value of the goodwill has been finalised in 2023. The step-up value for patents and un-patented know-how is amortised over 10 years while the step-up value of the non-competition clause is amortised over 2 years. From the date of the acquisition the company added SEK 1 million in orders received, SEK 1 million in invoicing and SEK 0 million in adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 2022 the corresponding figures would have been SEK 3 million, SEK 3 million and SEK 0 million respectively. At the end of December 2022, the number of employees was 1.
On August 31, 2022 Alfa Laval announced that it had closed the acquisition of Scanjet, a leading global supplier of tank cleaning equipment and solutions for marine, offshore and industrial applications. The acquisition will extend Alfa Laval’s broad tanker offering, creating a more comprehensive product portfolio for cargo tanks. Scanjet’s intelligent tank management solutions will be a valuable complement to Alfa Laval’s sustainable marine offering as they reduce the water usage and energy consumption connected with tank cleaning. Adding Scanjet to Alfa Laval’s portfolio will support customer efficiency at every stage of cargo handling. Scanjet has global presence with factories in Sweden, Poland and Indonesia. The purchase price was SEK 314 million, out of which SEK 268 was paid in cash and SEK 46 million is retained for a period of 12 to 18 months. At the acquisition cash of SEK 40 million was taken over. The costs directly linked to the acquisition (fees to lawyers, due diligence and assisting counsel) came in addition to this and amounted to SEK 9 million, which was reported as other operating costs. The impact on the cash flow was thus SEK -237 million. Out of the difference between the purchase price paid and the net assets acquired SEK 130 million was allocated to patents and un-patented know-how, while the residual SEK 108 million was allocated to goodwill. The goodwill was relating to estimated synergies in procurement, logistics and corporate overheads and the company’s ability to over time recreate its intangible assets. The value of the goodwill has been finalised in 2023. The step-up value for patents and un-patented know-how is amortised over 10 years. From the date of the acquisition the company added SEK 121 million in orders received, SEK 94 million in invoicing and SEK 17 million in adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 2022 the corresponding figures would have been SEK 346 million, SEK 281 million and SEK 41 million respectively. At the end of December 2022, the number of employees was 153.
On August 2, 2022 Alfa Laval announced that it had closed the acquisition of Desmet, part of the Desmet Ballestra Group, a world leader in engineering and supplying processing plants and technologies for edible oils and biofuel sectors. The acquisition will strengthen Alfa Laval’s position in the renewable energy arena and complement its offering within edible oils. Headquartered in Brussels, Belgium, Desmet employs around 1,000 people in Europe, India, Southeast Asia, North America and Latin America. The acquired business was a part of the Desmet Ballestra Group and had a turnover of approximately EUR 300 million in 2021. The operational units and brands of Rosedowns and Stolz were included in the transaction. The Desmet Ballestra Group was owned by Financière DSBG and ultimately controlled by Kartesia and Farallon. The acquisition will operate as a stand-alone entity within the Food & Water Division of Alfa Laval. It strengthens Alfa Laval’s position in the markets for edible oils, biofuels, and plant- and animal-based proteins for food and feed. The acquisition will have a positive impact on earnings per share and be marginally decretive to Alfa Laval’s EBITA margin. “The acquisition will be an excellent fit for our offering of specialized processing equipment designed to increase both yield and quality of customers’ end products,” says Tom Erixon, President and CEO of Alfa Laval. “It will add know-how and expertise to accelerate future innovations within food, feed and biofuels – and strengthen our ability to support the transformation towards renewable fuels.” The purchase price was SEK 3,632 million, out of which all was paid in cash. At the acquisition cash of SEK 238 million was taken over. The costs directly linked to the acquisition (fees to lawyers, due diligence and assisting counsel) came in addition to this and amounted to SEK 37 million, which was reported as other operating costs. The impact on the cash flow was thus SEK -3,431 million. Out of the difference between the purchase price paid and the net assets acquired SEK 681 million was allocated to patents and un-patented know-how and SEK 1,330 to the trademark Desmet, while the residual SEK 2,201 million was allocated to goodwill. The goodwill was relating to estimated synergies in procurement, logistics and corporate overheads and the company’s ability to over time recreate its intangible assets. In 2023 the purchase price has been reduced by SEK 42 million, which has reduced the goodwill correspondingly. The value of the goodwill has been finalised in 2023. The step-up value for patents and un-patented know-how and the step-up value for the trademark Desmet are both amortised over 10 years. From the date of the acquisition the company added SEK 1,374 million in orders received, SEK 2,474 million in invoicing and SEK 314 million in adjusted EBITA to Alfa Laval. If the company had been acquired at January 1, 2022 the corresponding figures would have been SEK 4,288 million, SEK 4,861 million and SEK 444 million respectively. At the end of December 2022, the number of employees was 1,071.
The acquisitions during 2022 are summarized in the following table. The larger acquisitions of Desmet and Scanjet are shown separately, whereas the acquisition of BunkerMetric is shown on a single line as other minor acquisitions. All acquired assets and liabilities were reported according to IFRS at the time of the acquisitions.
| Acquisitions 2022 | |||||||
| Desmet | Scanjet | Total | |||||
| SEK millions | Book value | Adjustment to fair value | Fair value | Book value | Adjustment to fair value | Fair value | Fair value |
| Property, plant and equipment | 113 | – | 113 | 28 | – | 28 | 141 |
| Right-of-use assets | 93 | – | 93 | – | – | – | 93 |
| Patents and unpatented know-how 1) | 22 | 681 | 703 | – | 130 | 130 | 833 |
| Trademarks 1) | – | 1,330 | 1,330 | – | – | – | 1,330 |
| Capitalised development costs | – | – | – | 5 | – | 5 | 5 |
| Other non-current assets | 34 | – | 34 | 6 | – | 6 | 40 |
| Inventory | 212 | – | 212 | 85 | – | 85 | 297 |
| Accounts receivable | 1,032 | – | 1,032 | 31 | – | 31 | 1,063 |
| Other receivables | 810 | – | 810 | 6 | – | 6 | 816 |
| Liquid assets | 238 | – | 238 | 40 | – | 40 | 278 |
| Provisions for pensions and similar commitments | -27 | – | -27 | – | – | – | -27 |
| Other provisions | -17 | – | -17 | -1 | – | -1 | -18 |
| Equity attributable to non-controlling interests | 0 | – | 0 | – | – | – | 0 |
| Loans | -47 | – | -47 | -47 | – | -47 | -94 |
| Lease liability | -101 | – | -101 | – | – | – | -101 |
| Accounts payable | -534 | – | -534 | -21 | – | -21 | -555 |
| Advance payments | -469 | – | -469 | -7 | – | -7 | -476 |
| Other liabilities | -1,392 | – | -1,392 | -20 | – | -20 | -1,412 |
| Tax liabilities | -10 | – | -10 | – | – | – | -10 |
| Deferred tax | -19 | -438 | -457 | -2 | -27 | -29 | -486 |
| Acquired net assets | -62 | 1,573 | 1,511 | 103 | 103 | 206 | 1,717 |
| Goodwill 2) |
|
| 2,121 |
|
| 108 | 2,229 |
| Purchase price |
|
| -3,632 |
|
| -314 | -3,946 |
| Costs directly linked to the acquisitions 3) |
|
| -37 |
|
| -9 | -46 |
| Retained part of purchase price 4) |
|
| – |
|
| 46 | 46 |
| Liquid assets in the acquired businesses |
|
| 238 |
|
| 40 | 278 |
| Other minor acquisitions current year |
|
|
|
|
|
| -13 |
| Payment of amounts retained in prior years |
|
|
|
|
|
| -4 |
| Effect on the Group’s liquid assets |
|
| -3,431 |
|
| -237 | -3,685 |
1) The step up values for patents and un-patented know-how as well as trademarks are amortised over 10 years. The purchase price allocation was still preliminary so the allocated step up values may be subject to change.
2) The goodwill is relating to estimated synergies in procurement, logistics and corporate overheads and the companies’ ability to over time recreate its intangible assets. The purchase price allocation was still preliminary so the value of the goodwill may be subject to change.
3) Refers to fees to lawyers, due diligence and assisting counsel. Was expensed as other operating costs.
4) Contingent on certain warranties in the contract not being triggered or that certain profitability goals are fulfilled. The probable outcome was calculated.
Impairment testing
An impairment test has been performed at the end of 2023 indicating that there is not any need to write down the goodwill.
Three of Alfa Laval’s operating segments, the three business divisions “Energy”, “Food & Water” and ”Marine” have been identified as the cash-generating units within Alfa Laval. Technically a recently acquired business activity could be followed independently during an initial period, but acquired businesses are normally integrated into the divisions at a fast rate. This means that the independent traceability is lost fairly soon and then any independent measurement and testing becomes impracticable.
The recoverable amount of the cash-generating units is based on their value in use, which is established by calculating the net present value of future cash flows. The net present value is based on the projected EBITDA figures for the next five years, less projected investments and changes in operating capital during the same period and thereafter the perceived expected average industry growth rate.
This projection is based on the following components:
– The projection for 2024 is based on the Group’s normal 12 month revolving ”Forecast” reporting. This is based on a very large number of rather detailed assumptions throughout the organisation concerning the business cycle, volume growth, market initiatives, product mix, currency rates, cost development, cost structure, R&D etc.
– The projection for the years 2025 till 2028 is based on Management’s general assumptions concerning the business cycle, volume growth, market initiatives, product mix, currency rates, cost development, cost structure, R&D etc.
– The projection for the years 2029 and onwards is based on the perceived expected average industry growth rate of 2.25 (2.25) percent.
The assumptions used for the projections reflect past experiences or information from external sources.
The used discount rate is the pre-tax weighted average cost of capital (WACC) of 9.97 (9.86) percent.
There exists no reasonably possible change in a key assumption in the impairment test that would cause the carrying amount to exceed the recoverable amount. The reason is that the recoverable amounts with a very good margin exceed the carrying amounts. Due to this a sensitivity analysis is not presented.
Alfa Laval does not have any intangible assets with indefinite useful lives other than goodwill.
Goodwill has been allocated to the following cash-generating units:
| Goodwill | ||
| Consolidated | ||
| SEK millions | 2023 | 2022 |
| Energy | 3,347 | 3,431 |
| Food & Water | 4,885 | 5,017 |
| Marine | 16,837 | 17,810 |
| Total | 25,069 | 26,258 |