3 Change in the scope of consolidation
Acquisitions in 2022
The fair values of the identifiable assets and liabilities as of the date of acquisition were:
|
in CHF 1,000 |
Predica |
Others |
Total |
|
|
|
|
|
|
Cash and cash equivalents |
3,097 |
235 |
3,332 |
|
Trade receivables |
5,943 |
82 |
6,025 |
|
Other current assets |
3,150 |
50 |
3,200 |
|
Indemnification assets |
560 |
– |
560 |
|
Tangible assets |
83 |
99 |
182 |
|
Intangible assets (excluding goodwill) |
11,323 |
– |
11,323 |
|
Deferred tax assets |
493 |
– |
493 |
|
Other non-current assets |
19 |
– |
19 |
|
|
|
|
|
|
Total assets |
24,668 |
466 |
25,134 |
|
|
|
|
|
|
Trade payables |
1,737 |
20 |
1,757 |
|
Accrued expenses and contract liabilities |
1,991 |
69 |
2,060 |
|
Other current liabilities |
3,656 |
26 |
3,682 |
|
Contingent liabilities |
560 |
– |
560 |
|
Contingent consideration liabilities |
937 |
– |
937 |
|
Financial liabilities |
593 |
– |
593 |
|
Deferred tax liabilities |
2,060 |
– |
2,060 |
|
|
|
|
|
|
Net assets acquired at fair value |
13,134 |
351 |
13,485 |
Acquisition of Predica
On 2 February 2022, SoftwareOne acquired 100% of Predica Sp zoo, Poland (‘Predica’), a cloud-native provider of industry-leading Azure cloud professional and managed services with subsidiaries in Europe and the Middle East and the US. As an acclaimed Microsoft Gold partner with 15 Gold competencies and Azure Expert Managed Service Provider, the company specialises in applications & DevOps, cloud infrastructure, security, and data analytics in order to drive digital transformation with clients.
A contingent consideration arrangement was agreed that could result in additional cash payments to the previous shareholders of Predica. The calculation depends on certain KPIs of the years 2022 to 2024 and the retention of three key employees, which is reduced proportionately in the event of termination. The contingent consideration for the performance year 2022 is based on revenue, revenue growth and new customers. The calculation for the performance years 2023 and 2024 is primarily based on chargeability of delivery resources and new customers. The earn-out amount in the maximum amount of TCHF 26,250 contingent on continuing employment of the selling shareholders is recognised as a personnel expense over the service period of three years and thus not part of the purchase price. The fair value of the contingent consideration of TCHF 8,750 payable to selling shareholders without continuing employment is part of the purchase price and recognised as a financial liability. Cash outflows for both earn-outs are expected on a yearly basis until 2025.
The goodwill recognised is primarily attributed to the workforce and the expected synergies and other benefits from combining the activities of Predica with those of the group. The goodwill is not deductible for income tax purposes. Transaction costs of TCHF 1,082 are related to this acquisition.
From the date of acquisition, Predica has contributed TCHF 30,493 of revenue and TCHF 1,501 to the profit for the period.
Other acquisitions
On 4 February 2022, SoftwareOne acquired 100% of Satzmedia GmbH, Germany (‘Satzmedia’), a provider of digital experience, eCommerce and CMS (Content Management) solutions. The purchase price paid for the acquisition of Satzmedia relates mainly to the skilled workforce and, therefore, represents goodwill.
If all acquisitions had taken place at the beginning of the year, total revenue of SoftwareOne would have been TCHF 1,006,501 and net loss for the period would have been TCHF –58,377.
The purchase price allocation for all business combinations made in 2022 is finalised as of 31 December 2022.
Purchase considerations and goodwill
Details of the purchase considerations recognised at acquisition and the derivation of goodwill are as follows:
|
in CHF 1,000 |
Predica |
Others |
Total |
|
|
|
|
|
|
Cash paid |
73,549 |
1,803 |
75,352 |
|
Contingent consideration liabilities |
8,750 |
– |
8,750 |
|
|
|
|
|
|
Total purchase consideration |
82,299 |
1,803 |
84,102 |
|
Less net assets acquired at fair value |
13,134 |
351 |
13,485 |
|
|
|
|
|
|
Goodwill |
69,165 |
1,452 |
70,617 |
The cash flow on acquisitions
|
in CHF 1,000 |
Predica |
Others |
Total |
|
|
|
|
|
|
Cash consideration |
–73,549 |
–1,803 |
–75,352 |
|
Net cash acquired |
3,097 |
235 |
3,332 |
|
Cash consideration for current period acquisitions |
–70,452 |
–1,568 |
–72,020 |
|
Cash consideration for prior period acquisitions |
– |
–6,412 |
–6,412 |
|
|
|
|
|
|
Net outflow of cash – investing activities |
–70,452 |
–7,980 |
–78,432 |
Acquisitions in 2021
In 2022, the group finalised the purchase accounting of the acquisitions made in 2021:
- 29 September 2021: Dino Newco Ltd, UK, a leading certified SAP services partner, with subsidiaries, in particular Centiq Ltd in the UK.
- 23 September 2021: HeleCloud Ltd, UK, a certified and independent Amazon Web Services (AWS) premier consulting partner, with subsidiaries in the Netherlands and Bulgaria.
- 13 September 2021: activities and assets of SE16N Sp zoo and SE16 Consulting Sp zoo, Poland, two leading SAP technology service providers and SAP S/4HANA specialists.
- 14 July 2021: ITST Consultoria em Informática Ltda, Brazil, a specialist for professional and managed SAP services.
- 29 April 2021: 70% in SynchroNet Corp, US, an AWS-focused cloud specialist in digital workplace solutions.
- 1 March 2021: VB Technology Group AG, Switzerland, an SAP specialist for S/4HANA transformations and public cloud migrations, with subsidiaries in Switzerland and India
There were no changes in the final fair values of acquired assets and liabilities compared to the provisional amounts disclosed in the Annual Report 2021.
Details of the purchase considerations recognised at acquisition and the derivation of goodwill were as follows:
|
in CHF 1,000 |
Centiq |
HeleCloud |
Others |
Total |
|
|
|
|
|
|
|
Cash paid |
35,089 |
37,786 |
22,222 |
95,097 |
|
Deferred purchase price |
5,013 |
– |
270 |
5,283 |
|
Offsetting of receivables of previous shareholders |
– |
954 |
– |
954 |
|
|
|
|
|
|
|
Total purchase consideration |
40,102 |
38,740 |
22,492 |
101,334 |
|
Less net assets acquired at fair value |
4,932 |
1,427 |
1,611 |
7,970 |
|
|
|
|
|
|
|
Goodwill |
35,170 |
37,313 |
20,881 |
93,364 |
|
in CHF 1,000 |
Centiq |
HeleCloud |
Others |
Total |
|
|
|
|
|
|
|
Cash consideration |
–35,089 |
–37,786 |
–22,222 |
–95,097 |
|
Net cash acquired |
1,102 |
754 |
646 |
2,502 |
|
Cash consideration for current period acquisitions |
–33,987 |
–37,032 |
–21,576 |
–92,595 |
|
Cash consideration for prior period acquisitions 1) |
– |
– |
–20,142 |
–20,142 |
|
|
|
|
|
|
|
Net outflow of cash – investing activities |
–33,987 |
–37,032 |
–41,718 |
–112,737 |
1) In January 2021, the purchase price for the acquisition of the remaining 60 % of the shares of InterGrupo (TCHF 20,142) was paid.
Acquisition of non-controlling interests
On 26 August 2022, the group acquired the remaining 30% of SynchroNet Corp, following its initial investment of 70% in 2021. The consideration for the 30% ownership interests was paid to an amount of TCHF 726 in cash and to an amount of TCHF 243 through a contingent consideration agreement.
On 7 October 2022, SoftwareOne acquired the remaining 0.08% of SoftwareOne Japan KK for a purchase price of TCHF 3.
Sale of subsidiaries in 2022
On 20 May 2022, SoftwareOne Russia was sold to a third-party. Sale proceeds consisted of RUB 1,000. During the sale, the recoverability of the group's existing receivables and loans against the company was reassessed and their fair value was estimated to be TCHF 2,021. The repayment is subject to the risk of potential sanctions which might prohibit the transfer of cash. At the end of the reporting period, there is no longer a claim for repayment, therefore the receivable was written off.
Upon closing of the sale, the group recognised a loss to an amount of TCHF 29,655, included in the line other operating expenses of the consolidated income statement. The composition of the loss on disposal is set forth below:
|
in CHF 1,000 |
Total |
|
|
|
|
Consideration received for the disposal |
– |
|
Fair value of receivables from the former subsidiary |
2,021 |
|
Carrying amount of net assets, excluding goodwill, derecognised |
–9,414 |
|
Carrying amount of goodwill allocated to the subsidiary derecognised |
–18,163 |
|
Reclassification of currency translation adjustments |
–4,099 |
|
|
|
|
Loss on disposal of subsidiaries |
–29,655 |
On 7 April 2022, ISP*D International Software Partners GmbH, Germany, was sold to a third-party. The sale proceeds consisted of TCHF 619 in cash. The group recognised a loss on disposal of TCHF 27, which is included in the line other operating expenses of the consolidated income statement.
|
in CHF 1,000 |
Total |
|
|
|
|
Cash received on disposal of subsidiaries |
619 |
|
Cash disposed |
–4,412 |
|
|
|
|
Sale of subsidiaries (net of cash disposed) |
–3,793 |