3 Changes in the scope of consolidation
Acquisitions in 2022
The provisional fair values of the identifiable assets and liabilities as at 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 |
|
Tangible assets |
83 |
99 |
182 |
|
Intangible assets (excluding goodwill) |
11,323 |
– |
11,323 |
|
Other non-current assets |
579 |
– |
579 |
|
Deferred tax assets |
493 |
– |
493 |
|
|
|
|
|
|
Total assets |
24,668 |
466 |
25,134 |
|
|
|
|
|
|
Trade payables |
1,737 |
20 |
1,757 |
|
Accrued expenses and contract liabilities |
3,656 |
26 |
3,682 |
|
Other current liabilities |
2,896 |
69 |
2,965 |
|
Financial liabilities |
593 |
– |
593 |
|
Other non-current liabilities |
560 |
– |
560 |
|
Deferred tax liabilities |
2,060 |
– |
2,060 |
|
|
|
|
|
|
Net assets acquired at fair value |
13,166 |
351 |
13,517 |
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 Middle East and the US. As an acclaimed Microsoft Gold partner with 15 Gold competencies and Azure Expert Managed Service Provider, the company specializes in applications & DevOps, cloud infrastructure, security and data analytics in order to drive digital transformation with customers.
A contingent consideration arrangement was agreed that could result in additional cash payments to the previous shareholders of Predica. The calculation is based on future revenue, revenue growth and other KPIs. The earn-out amount contingent on continuing employment of the selling shareholders is recognized 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 recognized as a financial liability. Cash outflows for both earn-outs are expected on a yearly basis.
The goodwill recognized 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 13,091 of revenue and TCHF 1,616 to the profit for the period.
If all acquisitions had taken place at the beginning of the year, total revenue of SoftwareONE would have been TCHF 516,939 and net loss for the period would have been TCHF -60,479.
The purchase price allocation for the business combinations is still provisional as at 30 June 2022.
Purchase considerations and goodwill
Details of the purchase considerations recognized at acquisition and the derivation of goodwill are as follows:
|
in CHF 1,000 |
Predica |
Others |
Total |
|
|
|
|
|
|
Cash paid |
72,398 |
1,803 |
74,201 |
|
Contingent consideration liabilities |
8,750 |
– |
8,750 |
|
|
|
|
|
|
Total purchase consideration |
81,148 |
1,803 |
82,951 |
|
Less net assets acquired at fair value |
13,166 |
351 |
13,517 |
|
|
|
|
|
|
Goodwill |
67,982 |
1,452 |
69,434 |
Cash flows on acquisitions
|
in CHF 1,000 |
Predica |
Others |
Total |
|
|
|
|
|
|
Cash consideration |
–72,398 |
–1,803 |
–74,201 |
|
Net cash acquired |
3,097 |
235 |
3,332 |
|
Cash consideration for current period acquisitions |
–69,301 |
–1,568 |
–70,869 |
|
Cash consideration for prior period acquisitions |
– |
–6,035 |
–6,035 |
|
|
|
|
|
|
Net outflow of cash – investing activities |
–69,301 |
–1,568 |
–76,904 |
Reconciliation of carrying amount of goodwill
The change in carrying values for goodwill from 1 January 2022 to 30 June 2022 is set forth below:
|
in CHF 1,000 |
2022 |
|
|
|
|
At 1 January |
435,658 |
|
Business acquisitions |
69,434 |
|
Goodwill related to disposal of subsidiary |
–18,163 |
|
Currency translation adjustments |
–13,130 |
|
|
|
|
As at 30 June |
473,799 |
Acquisitions in 2021
During the period to 30 June 2022, the group finalized 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 specialists 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. For more details, refer to Note 3 Changes in the scope of consolidation of the Consolidated Financial Statements 2021.
Sale of subsidiaries in 2022
On 20 May 2022, SoftwareONE LLC, Russia, was sold to a third-party. Sale proceeds consisted of RUB 1,000. In the course of 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.
Upon closing of the sale, the group recognized a loss in an amount of TCHF 29,655, included in the line other operating expenses of the interim condensed 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, derecognized |
–9,414 |
|
Carrying amount of goodwill allocated to the subsidiary derecognized |
–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 recognized a loss on disposal of TCHF 27, which is included in the line other operating expenses of the interim condensed consolidated income statement.
Cash flows on sale of subsidiaries
|
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 |