4. Discontinued operations
On 30 March 2023 Galenica announced the combination of the business activities of the specialty pharmacy Mediservice Ltd. (including Curarex swiss Ltd.) and the online pharmacy shop-apotheke.ch in a strategic partnership with Redcare Pharmacy N.V. The closing of the transaction occurred on 16 May 2023.
Through the transaction, Galenica sold 51% of the shares of Mediservice Ltd. to Redcare Pharmacy N.V. The total purchase consideration amounted to CHF 215.5 million, consisting of a 6.1% investment in the listed company Redcare Pharmacy N.V., Netherlands with a fair value of CHF 109.5 million and the retained 49% participation in Mediservice Ltd. (including the online pharmacy shop-apotheke.ch) with a fair value of CHF 106.0 million. The 49% participation in Mediservice Ltd. will be accounted for as an investment in an associate.
The purchase consideration is reduced by an estimated amount of CHF 10.6 million which is contingent on net working capital developments as well as certain market developments and will become due between 2023 and 2026. The transaction resulted in a gain on sale of CHF 111.8 million. As the purchase considerations received are non-cash items, the net cash flow from the disposal amounted to minus CHF 2.1 million which includes CHF 1.3 million cash disposed and CHF 0.8 million transaction costs and is shown as net cash flow form sale of subsidiaries in the consolidated statement of cash flows.
With the transaction Galenica lost control over Mediservice Ltd. (including Curarex swiss Ltd.) and therefore deconsolidated the assets and liabilities of the business unit. The business of Mediservice Ltd. (including Curarex swiss Ltd.) represented a separate major line of business for Galenica and was therefore classified as discontinued operations and the prior period was adjusted accordingly.
Gain on sale of discontinued operations
|
in thousand CHF |
16.5.2023 |
|
Fair value of received equity instruments |
109,456 |
|
Fair value of retained at equity investment in former subsidiary |
106,011 |
|
Contingent considerations |
–10,594 |
|
Total considerations received / interest retained |
204,873 |
|
|
|
|
Carrying amount of net assets disposed |
–86,776 |
|
Transaction costs |
–755 |
|
Income taxes related to the sale of the discontinued operations |
–5,515 |
|
|
|
|
Gain on sale of discontinued operations |
111,827 |
The table below shows the financial performance of the discontinued operations.
Statement of income of discontinued operations
|
in thousand CHF |
1.1.– 16.5.2023 |
1.1.– 30.6.2022 |
|
Net sales |
164,487 |
215,250 |
|
Other income |
18 |
21 |
|
Expenses |
–163,238 |
–210,316 |
|
Earnings before tax (EBT) from discontinued operations |
1,266 |
4,954 |
|
|
|
|
|
Income taxes |
–251 |
–828 |
|
|
|
|
|
Net profit from discontinued operations |
1,015 |
4,127 |
The table below shows the financial position of Mediservice Ltd. (including Curarex swiss Ltd.) at the date of disposal.
Financial position of the discontinued operation at the time of disposal
|
in thousand CHF |
16.5.2023 |
|
Cash and cash equivalents |
1,330 |
|
Trade and other receivables |
49,444 |
|
Inventories |
18,168 |
|
Other current assets |
2,583 |
|
Current Assets |
71,525 |
|
|
|
|
Property, plant and equipment |
681 |
|
Right-of-use assets |
4,025 |
|
Intangible assets |
67,517 |
|
Financial assets |
50 |
|
Other non-current assets |
43 |
|
Non-current assets |
72,316 |
|
|
|
|
Total disposed assets |
143,841 |
|
|
|
|
Financial liabilities |
24,143 |
|
Lease liabilities |
647 |
|
Trade and other payables |
24,817 |
|
Other liabilities |
1,999 |
|
Current liabilities |
51,607 |
|
|
|
|
Lease liabilities |
3,581 |
|
Deferred tax liabilities |
1,637 |
|
Employee benefit liabilities |
240 |
|
Non-current liabilities |
5,458 |
|
|
|
|
Total disposed liabilities |
57,065 |
|
|
|
|
Disposed net assets |
86,776 |