3 Scope of consolidation
3.1 INFORMATION ON ACQUISITION IN PREVIOUS YEAR – ACQUISITION OF DCPM/PMAS
The Group acquired 100% of the voting rights of a long-term supplier on May 31, 2019.The initial accounting for the acquisition of DCPM/PMAS was based on the assumption that the Group would take the election pursuant to section 338(h)(10) of the US tax law, under which a legal share deal is treated as an asset deal for tax purposes. Consequently, no deferred tax liabilities were recognized for the US entity DCPM in the interim report 2019.
However, after a detailed analysis, it was concluded that the election would not be advantageous for the Group. Accordingly, the opening balance of DCPM/PMAS was adjusted for deferred tax liabilities of CHF 2.1 million in the second half of 2019. The purchase price allocation is considered as completed.
The adjusted fair value of the identifiable assets and liabilities and the net cash outflow at the date of acquisition were:
| 31.05.2019 DCPM/PMAS |
CHF 1,000 |
|
Cash and cash equivalents | 297 |
Trade accounts receivable (gross contractual value) | 1,106 |
Inventories | 3,225 |
Other current asset | 427 |
Property, plant and equipment | 4,670 |
Right-of-use assets | 2,961 |
Intangible assets | 5,599 |
Deferred tax assets | 53 |
|
|
Assets | 18,338 |
|
|
Current financial liabilities | (448) |
Trade and other accounts payable | (2,799) |
Income tax payable | (10) |
Accrued expenses and current provisions | (850) |
Non-current financial liabilities | (2,513) |
Deferred tax liabilities | (2,096) |
|
|
Liabilities | (8,716) |
|
|
Total identifiable net assets at fair value | 9,622 |
|
|
Goodwill arising on acquisition | 11,521 |
|
|
Consideration transferred for the business combination | 21,143 |
|
|
Cash acquired | (297) |
Deferred closing adjustment (receivable) | 380 |
|
|
Net cash outflow (including holdback) | 21,226 |
The holdback of USD 3.0 million that was paid into an escrow account upon acquisition, was released to the seller beginning of June 2020 without any deductions.
3.2 DISPOSAL GROUP HELD FOR SALE 'UNQUOTED EQUITY INSTRUMENT'
Towards the end of 2019 the management started sales negotiations for the unquoted equity instrument. Therefore, the financial asset of CHF 3.0 million was classified as held for sale at year-end 2019. The Group continued to measure the investment at fair value through other comprehensive income (FVOCI) in accordance with IFRS 9 using the discounted cash flow method with level 3 inputs of the fair value hierarchy.
In January 2020, the Group signed a final share purchase agreement with a total estimated consideration of CHF 4.6 million. The gain from this transaction of CHF 1.6 million was recognized in other comprehensive income of 2020.
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