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Financial statements

25. Acquisitions and disposals

Acquisition 2019

On 25 April 2019, Corbion acquired 100% of the shares and voting interests in Granotec do Brazil, a leading specialist in functional blends for the Brazilian bakery industry. which consists of two legal entities. The company is headquartered in Araucaria, Paraná State, Brazil, employs around 120 staff, and operates a production facility and a development center.

Details of the purchase consideration, net assets acquired are as follows

Preliminary acquisition figures

 

Granotec do Brazil

Property, plant, and equipment

8.5

Intangible fixed assets

8.0

Inventories

4.2

Receivables

4.7

Cash

1.4

Borrowings

-3.4

Trade creditors

-3.0

Other liabilities

-0.1

Identifiable assets minus liabilities

20.3

Cash

29.9

Holdback amounts

8.8

Total consideration

38.7

Goodwill arising on acquisition

18.4

Goodwill arose on the acquisition of Granotec do Brazil as the consideration paid effectively included amounts for the benefits of expected synergies, revenue growth, and future market development. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. The goodwill is expected to be (partly) deductible for tax purposes.

The table below shows the pro-forma result of Corbion if the acquisition had been made as at 1 January 2019.

 

Corbion

Pro-forma adjustment full-year effect

Pro forma Corbion

Net sales

976.4

6.3

982.7

Result after taxes

25.8

-0.1

25.7

For the eight-month period ended 31 December 2019, the acquisition contributed € 15.4 million in revenue and € 0.9 million in profit to Corbion's results.

Acquisition 2018

On 4 June 2018, Corbion announced that it had completed the acquisition of Bunge Limited's 49.9% stake in the SB Renewable Oils joint venture. SB Renewable Oils operates a facility in Brazil, specializing in the production of algae ingredients, such as Omega 3 rich oil, for aquaculture and animal feed. Corbion now is 100% owner of the plant in Orindiúva, which employs around 170 staff.

Details of the purchase consideration, net assets acquired are as follows

Acquisition figures

 

Corbion

Pro-forma adjustment full-year effect

Pro forma Corbion

Net sales

897.2

3.8

901.0

Result after taxes

54.3

-7.4

46.9

Corbion recognized a gain of € 9.6 million as a result of measuring at fair value its 50.1% equity interest in SB Renewable Oils held before the business combination. The gain is included in the line Results from joint ventures and associates in the income statement.

Contingent consideration

A 5-year earn-out provision starting in 2021 has been agreed to. This earn-out is based on sales of AlgaPrime DHA, with a maximum amount payable of $ 55.0 million. The fair value of the contingent consideration arrangement of $ 20.0 million (€ 17.0 million) was estimated calculating the present value of the future expected cash flows. The estimates are based on a discount rate of 17.2%.

The table below shows the pro-forma result of Corbion if the acquisition had been made as at 1 January 2018.

 

SB Renewable Oils

Property, plant, and equipment

73.3

Intangible fixed assets

0.1

Inventories

6.0

Receivables

14.3

Cash and cash equivalents

0.5

Borrowings

-48.2

Other payables

-6.3

Identifiable assets minus liabilities

39.7

Remitted loan receivable

3.4

Contingent consideration

17.0

Valuation of previously held 50.1% stake in SB Renewable Oils

19.3

Total consideration

39.7

For the seven-month period ended 31 December 2018, the acquisition contributed € 5.5 million in revenue and € 4.5 million in loss to Corbion's results. The pro-forma calculation in the table above is based on the actual reported revenues by the joint venture before the acquisition in 2018 and includes an adjustment loss of € 5.5 million related to a write-down of inventory.