Acquisition of AST Farma and Le Vet
On 13 February 2018, Dechra acquired 100% of the share capital of AST Farma B.V. (AST Farma) and Le Vet Beheer B.V. (Le Vet), developers of generic, generic plus and niche animal pharmaceutical products predominately for companion animals. Both companies are based in the Netherlands. The Group paid £229.0 million (€257.5 million) consideration in cash and £82.7 million (€ 92.9 million) consideration in shares.
| Fair value £m |
|---|
| AST Farma B.V.A | Le Vet Beheer B.V. | Total
£m |
|---|
| Recognised amounts of identifiable assets acquired and liabilities assumed | | | |
| Identifiable assets | | | |
| Property, plant and equipment | 0.1 | — | 0.1 |
| Inventories | 9.9 | 2.3 | 12.2 |
| Trade and other receivables | 0.9 | 3.0 | 3.9 |
| Trade and other payables | (0.9) | (1.4) | (2.3) |
| Intangible assets | 62.7 | 197.7 | 260.4 |
| Deferred income | — | (0.2) | (0.2) |
| Cash and cash equivalents | 0.4 | 2.9 | 3.3 |
| Current tax liability | — | (2.5) | (2.5) |
| Net deferred tax liability | (17.4) | (49.2) | (66.6) |
| Net identifiable assets | 55.7 | 152.6 | 208.3 |
| Goodwill | | | 102.3 |
| Total consideration | | | 310.6 |
| Satisfied by: | | | |
| Cash | | | 229.0 |
| Settlement of balances with owners | | | (1.1) |
| Shares (note 25) | | | 82.7 |
| Total consideration transferred | | | 310.6 |
| Net cash outflow arising on acquisition | | | |
| Cash consideration | | | 229.0 |
| Less cash and cash equivalents | | | (3.3) |
| Net cash outflow arising on acquisition | | | 225.7 |
The fair values shown above are provisional and may be amended if information not currently available comes to light. The provisional fair value adjustments principally relate to harmonisation with Group IFRS accounting policies, including the application of fair values on acquisition, principally being the recognition of fair value uplift on acquired inventory and intangibles in accordance with IFRS 3.
The goodwill of £102.3 million arising from the acquisition consists of future sales growth expected to be achieved, continued geographical expansion in the Netherlands, and the technical expertise of the assembled workforce. None of the goodwill is expected to be deductible for income tax purposes.
Acquisition related costs (included in operating expenses) amounted to £2.8 million. AST Farma and Le Vet's results are reported within the EU Pharmaceuticals Segment.
AST Farma and Le Vet contributed £14.5 million revenue and an underlying operating profit of £7.4 million to the Group's pre-tax profit for the period between the date of acquisition and the balance sheet date. If the acquisition had been completed on the first date of the financial year, the contribution to Group revenues for the period would have been £44.9 million and the Group underlying operating profit would have been £17.3 million.
Acquisition of RxVet
On 13 December 2017, Dechra acquired 100% of the share capital of RxVet Limited (RxVet), a veterinary pharmaceuticals company based in New Zealand. The Group paid £0.3 million (NZ$0.6 million) consideration in cash, with a further NZ$0.04 million deferred payment.
| Fair value
£m |
|---|
| Recognised amounts of identifiable assets acquired and liabilities assumed | |
| Identifiable intangible assets | 0.3 |
| Inventories | 0.2 |
| Trade and other payables | (0.2) |
| Net identifiable assets | 0.3 |
| Goodwill | — |
| Total consideration | 0.3 |
| Satisfied by: | |
| Cash | 0.3 |
| Deferred consideration | — |
| Total consideration transferred | 0.3 |
| Net cash outflow arising on acquisition | |
| Cash consideration | 0.3 |
| 0.3 |
The fair values shown above are provisional and may be amended if information not currently available comes to light. The provisional fair value adjustments principally relate to harmonisation with Group IFRS accounting policies, including the application of fair values on acquisition, principally being the recognition of fair value uplift on acquired inventory and intangibles in accordance with IFRS 3.
Acquisition related costs (included in operating expenses) amounted to £25,000. RxVet's results are reported within the EU Pharmaceuticals Segment.
RxVet contributed £0.5 million revenue and underlying operating profit of £11,000 to the Group's pre-tax profit for the period between the date of acquisition and the balance sheet date. If the acquisition of RxVet had been completed on the first date of the financial year, the contribution to Group revenues for the period would have been £0.9 million and the Group underlying operating profit would have been £0.1 million.
Prior Year Acquisitions
Following the acquisition of Apex in October 2016, the disclosure of the final fair values of the assets and liabilities acquired has been included in the financial statements for the year ended 30 June 2017.