4 Acquisition of subsidiaries

Acquisitions in 2023

On July 5, 2023, the group acquired 70% of the issued share capital and voting interests in Guangdong Qiaoyi Plastic Co. Ltd. (“Qiaoyi”) for CHF 31.3 million. Qiaoyi employs nearly 400 people and is a beauty manufacturer serving in particular the Chinese and South East Asia cosmetics market with innovative products, located in Shantou (China). Qiaoyi operates as part of medmix' Beauty market segment.

As of July 5, 2024, the group will buy another 10% equity interest held by the non-controlling shareholders for a fixed price. The group recognized other current and accrued liabilities (note 25) based on the purchase price in the amount of CHF 4.7 million (December 31, 2023: CHF 4.4 million). Since the acquisition of additional 10% in Qiaoyi represents a fixed-price forward, the group recognized an economic interest of 80% and recorded 20% for the non-controlling interests. The non-controlling interests are measured at the non-controlling interest’s proportionate share of the recognized identifiable net assets.

At any time after July 5, 2027, the non-controlling shareholders have a put option to sell, and the group has a call option to purchase, the remaining 20% equity interest held by the non-controlling shareholders for a formula-based purchase price. The group recognized a redemption liability, recorded in other non-current liabilities (note 25), based on the discounted put exercise price in equity in the amount of CHF 10.0 million, which is accreted over the contract period in equity (December 31, 2023: CHF 9.8 million, put option liability).

The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition, including the resulting goodwill and the total consideration. If new information obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition identifies adjustments to the amounts recognized below, then the accounting for the acquisition will be revised.

Net assets acquired

The goodwill is attributable to synergies by leveraging the scale of the combined product portfolio, the geographical coverage and new channels to market.

According to the purchase agreement, the seller will reimburse the group for specific risks for which the group provided provisions. The group therefore recognized an indemnification asset in the amount of CHF 6.6 million, recorded as other current receivables and prepaid expenses (December 31, 2023: CHF 6.4 million, note 19). The indemnification asset is measured using the same measurement basis as for the provisions before reflecting management's assessment of collectability of the asset.

Transaction costs recognized in the income statement amount to CHF 0.1 million. Since the acquisition date, Qiaoyi contributed revenues of CHF 16.8 million and net income of CHF 2.0 million to the group. If the acquisition had occurred on January 1, 2023, the group estimates that consolidated revenue would have been CHF 503.4 million and consolidated net income would have been CHF 2.7 million. In determining these amounts, the group assumed that the fair value adjustments, determined previously, that arose on the date of acquisition would have been the same if the acquisition had occurred on January 1, 2023.

Cash flow from acquisitions of subsidiaries

Acquisitions in 2022

On October 24, 2022, the group acquired the entire plastics business of Universal de Suministros, S.L., Spain, (“Universal”) for CHF 14.7 million and the business was integrated into medmix Spain. The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition, including the resulting goodwill and the total consideration paid.

Net assets acquired