The consolidated balance sheet date is 31 December, which corresponds to the effective date of the annual financial statement of the parent Company and the subsidiaries.
Consolidation group
The financial statements of the Company and of the companies controlled by the Company (its subsidiaries) are included in the consolidated financial statement as at 31 December of each year. The term control applies when the Company has the ability to determine the financial and business policy of a Company, thereby deriving economic benefit.
All included financial statements of CGM Group are prepared according to uniform accounting and valuation methods. Holdings in associated companies on which the Company exercises a decisive influence (generally accompanied by a share of voting rights ranging from 20 to 50 percent) are accounted according to the equity method. For the year ended 31 December 2012, there were six equity holdings in associated companies that are reported according to the equity method.
The consolidated financial statement is prepared at the level of CompuGroup Medical AG, Koblenz (parent Company). The following changes have occurred within the consolidation Group, as compared with the previous year:
01.01.2012 Additions Disposals 31.12.2012
Domestic Foreign Total Domestic Foreign Total Domestic Foreign Total Domestic Foreign Total
Subsidiaries 18 43 61 2 8 10 4 5 9 16 46 62
An overview of company acquisitions in the reporting period is given in the notes to the consolidated financial statements (see table ‘Company acquisitions in the financial years 2011 to 2013’).
Acquisition of Microbais Group, Netherlands
Effective from 1 January 2012, CompuGroup Medical concluded an agreement for the acquisition of 100 percent of the shares in Microbais Werkmaatschappij B.V. (‘Microbais’). Microbais is one of the leaders in the Dutch market for ambulatory and pharmacy information systems. The purchase price for 100 percent of the shares was EUR 15.0 million. Revenue in 2011 was approximately EUR 11.2 million and EBITDA approximately EUR 2.5 million. Microbais has around 90 employees and headquarters in Amsterdam. The company‘s customer base includes approximately 475 pharmacies and 150 physicians’ offices. This corresponds to a market share of around 25 percent for pharmacies and 4 percent for physicians in private practice in the Netherlands. The acquisition of Microbais included five associated companies.
The preliminary goodwill of EUR 4.0 million mainly relates to synergies that arise from the expansion of the customer base and from this a stronger market position in the Dutch market as well as cost saving potentials within the Group. Further value drivers arise from the intangible assets acquired in the form of brands and trademarks, customer contracts, deferred taxes as well as the employees in the areas of research and development, finance and accounting and technical support with related know-how. The valuation of goodwill is preliminary in particular because of the valuation of the customer contracts and the use of a valuation model where the parameters still can differ significantly from the real values. The Company does not anticipate that the estimated goodwill will be deductible for income tax purposes.
Based on the purchase price allocation within the scope of initial consolidation as of 1 January 2012, the fair value of trade receivables and other receivables is EUR 1.8 million; the fair value of trade receivables accounts for EUR 0.7 million of this amount. The gross amount of due trade receivables came to EUR 1.2 million, of which EUR 0.5 million is expected to be bad debts. The fair value of intangible assets (including goodwill) according to the purchase price allocation within the scope of initial consolidation as of 1 January 2012 totals EUR 11.5 million.
Microbais contributed EUR 10.7 million in revenue to consolidated revenue since 1 January 2012. The share of profits (before step-up depreciation) for the same period was EUR -0.6 million.
Acquisition of Effepieffe S.r.l., Italy
In January 2012, CompuGroup Medical signed a purchase agreement for the acquisition of all shares in Effepieffe S.r.l. (‘Effepieffe’) via its subsidiary CompuGroup Medical Italia S.p.A. The purchase price for 100 percent of the shares amounts to EUR 4.4 million. As at 31.12.2012 a total of EUR 210 thousand was still not paid out and this amount is balanced under purchase price liabilities. Effepieffe‘s revenue in 2011 came to around EUR 1.2 million and EBITDA to approximately EUR 0.5 million. The company counts approximately 8,000 general practitioners among its customers and is the third-largest ambulatory information system provider in Italy.
The preliminary goodwill of EUR 0.6 million mainly relates to synergies that arise in the Italian market from a better coverage and stronger market position in North Italy and from additional advertising revenue based on the larger customer base. Further value drivers arise from the deferred taxes as well as the employees with related know-how. The valuation of goodwill is preliminary in particular because of the valuation of the customer contracts and the use of a valuation model where the parameters still can differ significantly from the real values. The Company does not anticipate that the estimated goodwill will be deductible for income tax purposes.
Based on the purchase price allocation within the scope of initial consolidation as of 1 January 2012, the fair value of trade receivables and other receivables is EUR 0.1 million; the fair value of trade receivables accounts for EUR 0.1 million of this amount. The gross amount of due trade receivables came to EUR 0.1 million. The fair value of intangible assets (including goodwill) according to the purchase price allocation within the scope of initial consolidation as of 1 January 2012 totals EUR 5.9 million.
Effepieffe contributed EUR 1.5 million in revenue to consolidated revenue since 1 January 2012. The share of profits (before step-up depreciation) for the same period was EUR 0.4 million.
Acquisition of business area from DS Medica srl., Italy
On 8 November 2012 CompuGroup Medical acquired the assets of the Italian company DS Medica srl. through its subsidiary CompuGroup Medical Italia S.p.A. The assets make up the business area ‘Cartella Clinica Basic’ (Ambulatory Information Systems). The purchase price amounts to EUR 1.9 million plus a variable component amounting to maximum EUR 0.5 million. Through the acquisition of the ‘Cartella Clinica Basic’ business area, the customer base in Italy increase with approximately 2,300 doctors which drives further growth opportunities in the Italian market.
The preliminary goodwill of EUR 134 thousand recognized as of 8 November 2012 mainly relates to synergies that arise in the Italian market. Further value drivers arise from the intangible assets acquired in the form of customer contracts. The Company does not anticipate that the estimated goodwill will be deductible for income tax purposes.
Acquisition of assets from MECO medizinische Computersysteme GmbH, Germany
On 1 December 2012 CompuGroup Medical acquired the assets of MECO medizinische Computersysteme GmbH (‘MECO’) located in Duisburg, Germany. The preliminary goodwill of EUR 152 thousand recognized as of 1 December 2012 mainly relates to synergies that arise in the Group. Further value drivers arise from the intangible assets acquired in the form of customer contracts. The company does not anticipate that the estimated goodwill will be deductible for income tax purposes.
Establishment of LAUER-FISCHER ApothekenService GmbH, Germany
The company trades in LAUER-FISCHER brand software for pharmacies and associated hardware, and also provides advisory and technical services in the healthcare sector with a focus on pharmacies. The company also performs sales activities for the LAUER-FISCHER Group.
Establishment of Privadis GmbH, Germany
Privadis GmbH was established in April 2012 by shareholder agreement together with the partner OptaData-Gruppe in Essen. The company’s purpose is to sell and provide invoicing and debt collection services for physicians and dentists. A 50 percent shareholding plus one share is held by CompuGroup Medical Deutschland AG and Privadis GmbH could already in 2012 record its first operating revenue.
Establishment of CompuGroup Medical Nederland Software and Services B.V., Netherlands
The Company was established on 1 October 2012 as a holding company and provides management services for the Dutch operations. Establishment of CompuGroup Medical Life Denmark ApS, Denmark
The Company mainly focuses on developing and selling technology-based products such as web applications and associated activities. Merger of CompuGROUP France SAS, France
CompuGROUP France SAS was merged with CompuGroup Medical France SAS effective 30 March 2012. Merger of CompuGroup Medical Stockholm AB, Sweden
CompuGroup Medical Stockholm AB was merged with CompuGroup Medical Sweden AB on 9 May 2012. Merger of Tepe International Saglık Bilgi Sistemleri A.S., Turkey
Tepe International Saglık Bilgi Sistemleri A.S. was merged with CompuGroup Medical Bilgi Sistemleri A.S., Turkey, on 13 June 2012. Merger of CompuGroup Medical Link AB, Sweden
CompuGroup Medical Link AB was merged with CompuGroup Medical Sweden AB on 4 September 2012. Merger of MEDISTAR Praxiscomputer GmbH, Germany
The Company was merged with CompuGroup Medical Deutschland AG on 27 August 2012. Merger of TurboMed EDV GmbH, Germany
The Company was merged with CompuGroup Medical Deutschland AG on 27 August 2012. Merger of Degama GmbH Apotheken- und Marketing-Beratung, Germany
The Company was merged with LAUER-FISCHER GmbH on 25 September 2012. Merger of CGM SYSTEMA Kliniksoftware GmbH, Germany
With effect from 1 January 2012 the company was merged with CGM SYSTEMA Deutschland GmbH. Name change from systema Deutschland GmbH to CGM Systema Deutschland GmbH, Germany
With effect from September 2012 the name of the company systema Deutschland GmbH, located in Oberessendorf, was changed to CGM SYSTEMA Deutschland GmbH. The location of the company is unchanged.
Name change from Fischer Software GmbH to CGM Mobile Services GmbH, Germany
With effect from September 2012 the name of the company Fischer Software GmbH, located in Stuttgart, was changed to CGM Mobile Services GmbH. The location of the company is unchanged.
Liquidation of Tipdata Bilgi islem Sistemleri Danismanlik ve Ticaret Limited iSirketi, Turkey
Tipdata was liquidated in the financial year after transferring its business activities to CompuGroup Medical Bilgi Sistemleri A.S. Acquisition of LAUER-FISCHER GmbH in 2011
The purchase price allocation for the acquisition of LAUER-FISCHER GmbH in 2011 was preliminary at the time of the publication of the consolidated financial statements for the Group as at 31 December 2011. The purchase price allocation was subsequently finalized during the financial year 2012. Comparative information for periods prior to the preparation of the final accounting of the acquisition is according IFRS 3.49 to be retroactively adjusted as if the purchase price allocation was already finalized at the time of acquisition. The following table gives an overview of the changes to the acquisition in financial year 2011. An adjustment of prior year figures was not done as it is deemed as not being of a material nature. All effects from these changes were recognized in the financial year 2012.
Preliminary allocation from 30.06.2011 EUR '000 Earnings effect before finalization 2011 EUR '000 Book value as of 31.12.2011 EUR '000 Goodwill 30,709 0 30,709 Software 10,153 -508 9,645 Customer relationship 15,883 -318 15,565 Brand 3,555 -71 3,484 Order backlog 6,763 -845 5,918 Building step-up 1,000 -17 983 Deferred taxes -11,075 512 -10,563 56,988 -1,247 55,741 Book value as of 01.01.2012 EUR '000 Adjustments from finalization 30.06.2012 EUR '000 Additional earnings effect (effects from 2011) 2012 EUR '000 Earnings effect after finalization 2012 EUR '000 Book value as of 31.12.2012 EUR '000 Goodwill 30,709 104 0 0 30,813 Software 9,645 787 -39 -1,095 9,298 Customer relationship 15,565 50 -1 -637 14,977 Brand 3,484 242 -12 -486 3,228 Order backlog 5,918 408 -51 -2,690 3,585 Building step-up 983 -244 3 4 746 Deferred taxes -10,563 -368 30 1,088 -9,814 55,741 977 -70 -3,816 52,832
The effects from finalization of purchase price allocations can be found in the Notes table ‘Changes in company acquisitions during financial year 2012 (IFRS 3.49).
Acquisition of Meditec GmbH, Germany
In January 2013, CompuGroup Medical AG acquired a 70 percent share of Meditec GmbH via its fully-owned subsidiary CompuGroup Medical Deutschland AG. Call and put options were also arranged for the remaining 30 percent. The purchase price amounts to EUR 1.4 million. For 2012, Meditec expects revenue of EUR 0.93 million, 80 percent of which is recurring revenue. Its EBITDA for 2012 is anticipated to be EUR 0.2 million. The preliminary goodwill is estimated to be EUR 134 thousand. The valuation of goodwill is preliminary in particular because of the valuation of the customer contracts and the use of a valuation model where the parameters still can differ significantly from the real values.
Acquisition of assets from GCD Gesellschaft für Computer und Datentechnik mbH, Germany
On 1 January 2013 CompuGroup Medical acquired through its subsidiary CGM Systema Deutschland GmbH the assets of the GCD Gesellschaft für Computer und Datentechnik mbH, Germany, from its insolvency estate. The purchase price amounts to EUR 70 thousand. The assets acquired are mainly order backlog, customer contracts and software.
Associated companies
Please refer to the report on equity investments attached to these consolidated notes. Business combinations (IFRS 3) and capital consolidation
In corporate takeovers, the assets and debts of the relevant subsidiaries are valued at the fair values at the time of acquisition. If the acquisition costs of the corporate takeover exceed the fair values of the acquired, identifiable assets and debts, the difference is reported as goodwill (new valuation method). Acquisition costs are shown in the balance sheet if they are incurred.
Any difference, on the liabilities side, between the acquisition costs of the corporate takeover and the acquired, identifiable assets and debts is recognized as part of net income in the period of the acquisition.
Acquisition costs also include the fair values of all reported assets or liabilities resulting from a contingent consideration agreement. Any contingent consideration is measured at fair value. Subsequent changes to the fair value of an asset or contingent consideration classified as liabilities are measured within the scope of IAS 39 and any resulting profit or loss is recognized in the income statement. Contingent consideration classified as equity is not remeasured and is recorded as equity.
The shares of minority shareholders are reported as no less than the share of the fair values of the documented assets and debts that corresponds to the minority share. The Group decides on whether the non-controlling interest in the acquired Company should be recognized either at fair value or at a pro-rata share of the identifiable net assets of the acquired Company on an individual basis for each company acquisition.
Liabilities from written put options from non-controlling interests are measured at fair value at initial recognition. As the initial recognition in equity of these liabilities has not been clearly defined up to now, it is ensured that the equity share of the non-controlling interests is impaired or written off, regardless of opportunities and risks arising from the possession of the respective shares being transferred.
The financial results of the subsidiaries acquired or sold in the course of the year are included in the consolidated income statement beginning on the actual date of acquisition or on the actual date of sale.
If necessary, the annual financial statements of the subsidiaries are adjusted so that their accounting and valuation methods match those applied to the Group.
Transactions with not fully controlled shares without change of control, i.e. acquisitions of minorities whereby the subsidiary has already been subject to full consolidation, are treated as transactions with owner of equity of the Group. The difference between the paid purchase price and the respective portion of the book value of net assets of the subsidiary resulting from the acquisition of not fully controlled shares is accounted in the equity.
For transactions with not fully controlled shares with change of control (transitional consolidation), the acquisition of shares leads to the possibility to control the Company. A capital gain or loss is recognized as income or expense. A gain or loss resulting from this transaction is calculated by a revaluation of the remaining shares relative to the fair value of the acquired shares at the time of the change of control.
Shares of associated companies are accounted for using the so-called equity method. The proportionate method of consolidation is not used. Unrealized gains from transactions between Group companies and associated companies are eliminated according to the Group’s interest in the associated company. Unrealized losses are also eliminated, unless the transaction hints at an impairment of the assigned asset. The accounting and measurement methods for associated companies were changed as necessary to guarantee uniform accounting principles throughout the Group.
Debt consolidation
Receivables, liabilities and reserves between the Companies included in the Consolidated Financial Statement were offset. Consolidation of results
Internal sales between the consolidated companies were offset against the expenditures attributable to them. Other earnings (including earnings from equity investments) were offset against the corresponding expenditures with the recipient of the services.
Interim profits from deliveries and services within the Group were eliminated. Foreign currency conversion
The functional currency is the respective national currency as the currency of the primary business environment. The reporting currency is the euro, the functional currency of the parent company.
Accordingly, the balance sheets of the foreign subsidiaries are converted on the basis of average rates on balance sheet date, the equity capital at the historic rate and the income statement on the basis of the annual average rates. Profits and losses that result from the conversion are included in equity, not affecting net income.
When disposing of a foreign business (such as the disposal of all of a company’s interest in a foreign business or a disposal which results in the loss of control of a subsidiary to which a foreign business belongs), the cumulated translation differences, cumulated in equity, are reclassified as profit or loss.
When disposing part of a subsidiary to which a foreign business belongs but which does not result in the loss of control, the corresponding cumulated translation differences, cumulated in equity, are assigned to the non-controlling interest in this foreign business and not reclassified as profit or loss. In any other partial disposal of a foreign operation (such as a reduction in the interest in an associated or jointly controlled entity that does not result in a loss in significant influence or joint control) the entity shall reclassify to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.
Foreign currency transactions are converted into the functional currency at the exchange rates in effect on the transaction date. Profits and losses resulting from the fulfillment of such transactions, as well as from the conversion, at the period-end exchange rate, of monetary assets and liabilities reported in the foreign currency, are included in the statement of the total comprehensive income.