6.1 Acquisitions/disposals of subsidiaries
During the financial years 2024/25 and 2023/24, several small businesses were acquired in EMEA, Americas and Asia/Pacific. All of these companies acquired are in the business of distributing and servicing hearing instruments. Due to the size of these transactions, they had no material impact on the financial statements.
Assets and liabilities resulting from the acquisitions are as follows:
CHF million | 2024/25 | 2023/24 | ||
Total | Total | |||
Cash and cash equivalents | 2.7 | 5.5 | ||
Trade receivables | 1.3 | 3.8 | ||
Inventories | 0.8 | 1.1 | ||
Other current operating assets | 0.7 | 0.1 | ||
Total current assets | 5.5 | 10.4 | ||
Right-of-use assets | 1.3 | 6.0 | ||
Intangible assets | 23.4 | 31.5 | ||
Other non-current assets | 1.2 | 3.1 | ||
Deferred tax assets | 1.1 | 1.5 | ||
Total non-current assets | 27.0 | 42.1 | ||
Current financial liabilities | (0.0) | (0.4) | ||
Current lease liabilities | (0.4) | (1.6) | ||
Trade payables | (0.6) | (2.1) | ||
Short-term contract liabilities | (0.1) | (0.9) | ||
Other short-term operating liabilities | (2.7) | (10.3) | ||
Short-term provisions | (0.4) | (1.5) | ||
Total current liabilities | (4.2) | (16.7) | ||
Non-current financial liabilities | (0.1) | (0.2) | ||
Non-current lease liabilities | (0.9) | (4.4) | ||
Long-term provisions | (0.1) | (0.1) | ||
Other long-term operating liabilities | (0.1) | (0.1) | ||
Deferred tax liabilities | (5.2) | (6.2) | ||
Total non-current liabilities | (6.5) | (10.9) | ||
Net assets | 21.8 | 24.8 | ||
Goodwill | 52.0 | 73.8 | ||
Purchase consideration | 73.8 | 98.6 | ||
Liabilities for contingent considerations and deferred payments1) | (7.1) | (7.5) | ||
Cash and cash equivalents acquired | (2.7) | (5.5) | ||
Cash outflow for contingent considerations and deferred payments | 13.3 | 16.1 | ||
Cash consideration for acquisitions, net of cash acquired | 77.3 | 101.6 |
1)Contingent considerations (earn-out payments) are dependent on the future performance of the acquired companies as well as contractual conditions. The liability for contingent considerations is based on the latest estimate of the future performance.
The initial accounting for the acquisitions completed in the current financial year is provisional and the fair values assigned to the identifiable assets acquired and liabilities assumed are still subject to change. The finalization of the accounting from acquisitions in the prior year did not result in material fair value adjustments.
Liabilities for contingent considerations amount to CHF 5.2 million (previous year CHF 5.9 million) and deferred payments amount to CHF 1.8 million (previous year CHF 1.6 million). Contingent considerations are dependent on the future performance of the acquired companies as well as contractual obligations and milestone achievements. Goodwill is attributed mainly to economies of scale and expected synergies such as favorable sales growth potential, increase in share of Sonova products within acquired distribution companies and cost reductions in administrative and corporate functions as well as to the labor force. Recognized goodwill is not expected to be deductible for income tax purposes.
Acquisition-related intangible assets in the amount of CHF 23.2 million (previous year CHF 28.5 million) for the acquisitions in the current financial year relate to customer relationships. The assigned lifetime range is between 10 and 15 years. On these intangibles deferred taxes have been considered.
Acquisition-related transaction costs in the amount of CHF 2.1 million (previous year CHF 2.1 million) were expensed and are included in the line “General and administration”.
April 1 to March 31, CHF million | 2024/25 | 2023/24 | ||
Total | Total | |||
Contribution of acquired companies from date of acquisition | ||||
Sales | 25.8 | 15.8 | ||
Net income | 3.7 | 2.5 | ||
Contribution, if the acquisitions had occurred on April 1 | ||||
Sales | 32.9 | 32.8 | ||
Net income | 6.3 | 6.5 |
Accounting policies
Business combinations are accounted for using the acquisition method of accounting. The cost of a business combination is equal to the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Sonova Group, in exchange for control over the acquired company. Any difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities, and contingent liabilities recognized is treated as goodwill. Goodwill is not amortized, but is assessed for impairment annually, or more frequently if events or changes in circumstances indicate that its value might be impaired (Refer to Note 3.5). Acquisition-related costs are expensed. For each business combination, the Group recognizes the non-controlling interests in the acquiree at fair value or at the non-controlling interests proportionate share in the recognized amounts of the acquireeʼs identifiable net assets.
If a business combination is achieved in stages (control obtained over an associate), the previously held equity interest in an associate is remeasured to its acquisition date fair value and any resulting gain or loss is recognized in “financial income/expenses” in profit or loss.
Accounting judgements and estimates
In the course of recognizing assets and liabilities from business combinations, management judgments might be required for the following areas:
- Acquisition-related intangibles resulting from technology, customer relationships, client lists, or brand names.
- Contingent consideration arrangements (refer to Note 4.8)