Azenta, Inc 8-K/A, filed Dec 15, 2022
Azenta, Inc. (AZTA)
About this 8-K/A
Azenta, Inc filed this 8-K/A on December 15, 2022, reporting on events of October 3, 2022.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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EXPLANATORY NOTE
As previously reported, on October 3, 2022, Azenta, Inc. (the “Company”) completed its previously announced acquisition of B Medical Systems S.á r.l., a private limited liability incorporated in the Grand Duchy of Luxembourg (“B Medical”). This Current Report on Form 8-K/A amends the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on October 7, 2022 to include the financial statements of the business acquired and the pro forma information required by Items 9.01(a) and 9.01(b) of From 8-K, respectively.
B Medical Systems Holding S.A. was the parent holding company of B Medical, B Medical represented substantially all of the assets of B Medical Systems Holding S.A. and the consolidated financial statements of B Medical Systems Holding S.A. represent the entirety of the business, results of operations and financial condition of B Medical. Accordingly, the consolidated financial statements and pro forma financial information included in this Current Report on Form 8-K/A are those of B Medical Systems Holding S.A.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of business or funds acquired.
The audited consolidated financial statements of B Medical Systems Holding S.A. as of and for the years ended December 31, 2021 and 2020, together with the accompanying Report of Independent Auditors, are set forth in Exhibit 99.1.
The unaudited consolidated financial statements of B Medical Systems Holding S.A. as of and for the six months ended June 30, 2022 are set forth in Exhibit 99.2.
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information of the Company and B Medical Systems Holding S.A. as of and for the year ended September 30, 2022 are set forth in Exhibit 99.3.
(d) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K/A.
EXHIBIT |
| DESCRIPTION |
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23.1 | | |
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99.1 | | |
| | |
99.2 | | |
| | |
99.3 | | |
| | |
104 | | Cover Page Interactive Data File (embedded within the iXBRL (Inline eXtensible Business Reporting Language) document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AZENTA, INC. | |
| |
/s/ Jason W. Joseph | |
Date: December 15, 2022 | Jason W. Joseph |
Senior Vice President, General Counsel and Secretary |
Exhibit 23.1
Consent of Independent Auditors
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-252725, 333-202005, 333-216312, 333-221826, 333-123242 and 333-142873) of Azenta, Inc. of our report dated 8 December 2022, relating to the consolidated financial statements of B Medical Systems Holding S.A. (in liquidation), which appears in this Current Report on Form 8-K/A.
/s/ David Schmidt | |
| |
PricewaterhouseCoopers, Société coopérative | |
Luxembourg, Grand Duchy of Luxembourg | |
15 December 2022 | |
Exhibit 99.1
B Medical Systems Holding S.A. (in liquidation)
Consolidated annual accounts for the years ended 31 December 2021 and 2020
Op der Hei, 17
L-9809 Hosingen
Luxembourg
R.C.S. Luxembourg : B 94593
Share capital: EUR 31,000
Contents |
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Consolidated profit and loss account 1 January - 31 December | | 6 |
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Report of Independent Auditors
To the Liquidator of B Medical Systems Holding S.A. (in liquidation)
Opinion
We have audited the accompanying consolidated financial statements of B Medical Systems Holding S.A. (in liquidation) and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of 31 December 2021 and 2020, and the related consolidated profit and loss accounts for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”) which, as described in Note 3.1 to the consolidated financial statements, have been prepared on the basis of accounting principles generally accepted in Luxembourg.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2021 and 2020, and the results of its operations for the years then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the consolidated financial statements.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis of Accounting
As discussed in Note 3.1 to the consolidated financial statements, the Company prepares its consolidated financial statements on the basis of accounting principles generally accepted in Luxembourg, which differs from accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Emphasis of Matter
We draw attention to Note 3.1 to the consolidated financial statements, which refers to the Extraordinary Meeting of the sole Shareholder of B Medical Systems Holding S.A. (in liquidation) held on 4 October 2022, during which it was decided to voluntarily put B Medical Systems Holding S.A. (in liquidation) into liquidation. As further described in Note 3.1, these consolidated financial statements have still been prepared using a going concern basis of accounting. Our audit report is not modified in respect of this matter.
PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg T : +352 494848 1, F : +352 494848 2900, www.pwc.lu
Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)
R.C.S. Luxembourg B 65 477 - TVA LU25482518
1
Responsibilities of the Liquidator of B Medical Systems Holding S.A. (in liquidation) for the consolidated financial statements
The Liquidator of B Medical Systems Holding S.A. (in liquidation) (the “Liquidator”) is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the consolidated financial statements, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Liquidator is responsible for assessing the Company’s ability to continue as a going concern for at least, but not limited to, twelve months from the end of the reporting period, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Liquidator either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditors’ Responsibility for the Audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with US GAAS, we:
| ● | exercise professional judgment and maintain professional skepticism throughout the audit; |
| ● | identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements; |
| ● | obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed; |
| ● | evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by the Liquidator, as well as evaluate the overall presentation of the consolidated financial statements; |
| ● | conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
2
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
PricewaterhouseCoopers, Société coopérative | Luxembourg, 8 December 2022 |
Represented by | |
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David Schmidt | |
3
B Medical Systems Holding S.A. (in liquidation)
Consolidated balance sheet at 31 December
|
| Note(s) |
| 2021 |
| 2020 |
|
(in EUR thousands) | | | | | | | |
| | | | | | | |
ASSETS | | | | | | | |
| | | | | | | |
Fixed assets | | | | | | | |
| | | | | | | |
Intangible assets | | 4 | | 16,380 | | 15,046 | |
- Costs of development | | | | 8,662 | | 5,994 | |
- Concessions, patents, licenses, trademarks and similar rights and assets | | | | 755 | | 843 | |
- Payments on accounts and intangible assets under development | | | | 6,963 | | 8,209 | |
| | | | | | | |
Tangible assets | | 5 | | 30,511 | | 12,311 | |
- Land and buildings | | | | 7,092 | | 2,889 | |
- Plant and machinery | | | | 11,554 | | 5,795 | |
- Other fixtures and fittings, tools and equipment | | | | 4,354 | | 2,070 | |
- Payments on account and tangible assets under development | | | | 7,551 | | 1,557 | |
| | | | | | | |
Financial assets | | | | 4,040 | | 4,040 | |
Loans to affiliated undertakings | | 6 | | 4,040 | | 4,040 | |
| | | | | | | |
Current assets | | | | | | | |
| | | | | | | |
Stocks | | 7 | | 37,935 | | 23,194 | |
Raw materials and consumables | | | | 18,745 | | 10,402 | |
- Work in progress | | | | 378 | | 84 | |
- Finished goods and goods for resale | | | | 17,973 | | 12,188 | |
- Payments on account | | | | 839 | | 520 | |
| | | | | | | |
Debtors | | | | 36,651 | | 26,322 | |
Trade debtors | | | | | | | |
- becoming due and payable within one year | | 8 | | 25,909 | | 21,238 | |
Amounts owed by affiliated undertakings | | 9 | | | | | |
- becoming due and payable within one year | | | | 1,918 | | 1,765 | |
Other debtors | | | | | | | |
- becoming due and payable within one year | | 13 | | 8,824 | | 3,319 | |
| | | | | | | |
Cash at bank and cash in hand | | | | 8,204 | | 8,250 | |
| | | | | | | |
Prepayments | | | | 2,191 | | 746 | |
| | | | | | | |
Total ASSETS | | | | 135,952 | | 89,909 | |
The accompanying notes form an integral part of the consolidated annual accounts.
4
B Medical Systems Holding S.A. (in liquidation)
Consolidated balance sheet at 31 December
|
| Note(s) |
| 2021 |
| 2020 |
|
(in EUR thousands) | | | | | | | |
| | | | | | | |
CAPITAL, RESERVES AND LIABILITIES | | | | | | | |
| | | | | | | |
Capital and reserves | | | | 24,208 | | 4,466 | |
Subscribed capital | | 10, 12 | | 31 | | 31 | |
Share premium account | | 11, 12 | | 10,326 | | 6,386 | |
Reserves | | | | | | | |
- Other reserves | | 12 | | 400 | | 731 | |
- Currency translation adjustment | | | | 300 | | 1 | |
- Consolidated reserves | | | | (2,349) | | (2,769) | |
Consolidated profit for the financial year | | 12 | | 10,156 | | 86 | |
Capital investment subsidies | | 13 | | 5,344 | | — | |
| | | | | | | |
Provisions | | | | 3,383 | | 2,063 | |
Other provisions | | 14 | | 3,383 | | 2,063 | |
| | | | | | | |
Creditors | | | | 108,361 | | 83,380 | |
Amounts owed to credit institutions | | | | | | | |
-becoming due and payable within one year | | 15 | | 15,420 | | 4,695 | |
-becoming due and payable after more than one year | | | | 2,883 | | — | |
| | | | | | | |
Payments received on account of orders in so far as they are shown separately as deductions from stocks | | | | | | | |
- becoming due and payable within one year | | | | 74 | | 121 | |
| | | | | | | |
Trade creditors | | | | | | | |
- becoming due and payable within one year | | | | 16,508 | | 9,317 | |
| | | | | | | |
Amounts owed to affiliated undertakings | | 16 | | | | | |
- becoming due and payable within one year | | | | 28,662 | | 30,250 | |
- becoming due and payable after more than one year | | | | 35,910 | | 35,910 | |
| | | | | | | |
Other creditors | | | | | | | |
- Tax authorities | | 17 | | 4,886 | | 598 | |
- Social security authorities | | | | 573 | | 423 | |
- Other creditors | | | | | | | |
- becoming due and payable within one year | | | | 3,445 | | 2,066 | |
| | | | | | | |
Total CAPITAL, RESERVES AND LIABILITIES | | | | 135,952 | | 89,909 | |
The accompanying notes form an integral part of the consolidated annual accounts.
5
B Medical Systems Holding S.A. (in liquidation)
Consolidated profit and loss 1 January - 31 December
|
| Note(s) |
| 2021 |
| 2020 | |
(in EUR thousands) | | | | | | | |
| | | | | | | |
PROFIT AND LOSS ACCOUNT | | | | | | | |
| | | | | | | |
Net turnover | | 18 | | 111,831 | | 61,887 |
|
Variation in stocks of finished goods and in work in progress | | | | 4,063 | | 3,552 | |
Work performed by the undertaking for its own purposes and capitalised | | | | 5,700 | | 3,680 | |
Other operating income | | | | 899 | | 549 | |
Raw materials and consumables and other external expenses | | | | (73,294) | | (44,964) | |
- Raw materials and consumables | | | | (45,872) | | (31,214) | |
- Other external expenses | | 19 | | (27,422) | | (13,750) | |
Staff costs | | 20 | | (18,829) | | (14,987) | |
- Wages and salaries | | | | (16,407) | | (13,206) | |
- Social security costs | | | | | | | |
- relating to pensions | | | | (114) | | (91) | |
- other social security costs | | | | (2,281) | | (1,676) | |
- Other staff costs | | | | (28) | | (14) | |
Value adjustments | | | | (10,114) | | (7,623) | |
- in respect of formation expenses and on tangible and intangible fixed assets | | 4, 5 | | (7,763) | | (7,420) | |
- in respect of current assets | | 21 | | (2,351) | | (203) | |
Other operating expenses | | | | (490) | | (584) | |
Income from other investments and loans forming part of the fixed assets | | | | 162 | | 222 | |
- derived from affiliated undertakings | | | | 162 | | 162 | |
- other income not derived from affiliated undertakings | | | | — | | 60 | |
Interest payable and similar expenses | | | | (5,178) | | (1,290) | |
- derived from affiliated undertakings | | 16 | | (5,028) | | (888) | |
- other interest and similar expenses | | | | (150) | | (402) | |
Tax on profit or (loss) | | | | (4,594) | | (355) | |
Profit or (loss) after taxation | | | | 10,157 | | 87 | |
Other taxes | | | | (1) | | (1) | |
Consolidated profit for the financial year | | | | 10,156 | | 86 | |
- attributable to the Group | | | | 10,156 | | 86 | |
The accompanying notes form an integral part of the consolidated annual accounts.
6
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
B Medical Systems Holding S.A. (in liquidation) (hereafter the “Company”) was incorporated on 3 July 2001, for an unlimited period under the name Erusiel S.à r.l. The Company changed its legal name on 1st September 2015. The Company and its subsidiaries form the B Medical Group (the “Group”).
The registered office of the Company is established at 17, Op der Hei, L-9809 Hosingen, Luxembourg.
The Company’s financial year starts on 1 January and ends on 31 December of each year.
The main activity of the Group is to acquire, manufacture and sell technical apparatus, predominantly refrigerators and plastic products and to acquire and process the raw and auxiliary materials required for the manufacture of these products and equipment.
The consolidated annual accounts of the Company are included in the consolidated accounts of Asclepius Holding Ltd, the ultimate parent company of B Medical Systems Holding S.A. (in liquidation) Asclepius Holding Ltd is a company incorporated in the British Virgin Islands whose registered office is established at Flemming House, Wickhams Cay, P.O. Box 662, Road Town, Tortola, British Virgin Islands. Consolidated annual accounts of Asclepius Holding Ltd may be obtained at its registered office.
Note 2 - Consolidation Principles
2.1Consolidation criteria
The consolidated annual accounts of the Company as at 31 December 2021 include its stand-alone Annual accounts and those of all directly or indirectly owned subsidiaries. Subsidiaries are all entities over which the Company exercises control through direct or indirect shareholding of more than one half of the voting rights. Subsidiaries are consolidated using the full consolidation method from the date on which control is transferred to the Group. They are no longer consolidated from the date that control ceases. The figures in the profit and loss account for the acquired companies are reflected on a pro-rata based on their acquisition date in order to reflect only the result since the acquisition date. All intercompany-balances and intercompany transactions have been eliminated.
The accounts of the Group entities have been adjusted when necessary in order to comply with the Group’s accounting policies.
Entities included in the scope of consolidation are listed below:
|
| Share in |
| |
| |
|
| | issued | | | | Consolidation | |
Name | | capital (%) | | Country | | Method | |
B Medical Systems S.à r.l. | | 100 | | Luxembourg | | Fully consolidated | |
B Medical Systems Holding S.A. (in liquidation) | | 100 | | Luxembourg | | Parent Company | |
B Medical Systems North America LLC (1) | | 100 | | USA | | Fully consolidated | |
B Medical Systems India Private Limited (2) | | 99.99 | | India | | Fully consolidated | |
During the year, the Group acquired B Medical Systems India Private Limited.
7
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 3 - Summary of significant accounting policies
3.1Basis of preparation
The consolidated annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention and going concern assumption, which assumes the realisation of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
The decision to voluntarily put the Company into liquidation on 4 October 2022, as further described in note 25, has not impacted the basis of preparation of these consolidated annual accounts. The liquidation is only attributable to the Company, which at the liquidation date has transferred its sole subsidiary (the group B Medical), to another company, which continues to exist as of today.
Accounting policies and valuation rules are, besides the ones laid down by the Law of 19 December 2002, as amended, determined and applied by the Management.
The preparation of the consolidated annual accounts requires the use of certain critical accounting estimates. It also requires the Management to exercise its judgement in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the consolidated annual accounts in the period in which the assumptions changed. Management believes that the underlying assumptions are appropriate and that the consolidated annual accounts therefore present the consolidated financial position and results fairly.
The Management makes estimates and assumptions that may affect the reported amounts of assets and liabilities in the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
3.2Significant accounting policies
The main valuation rules applied by the Company are the following:
3.2.1Intangible assets
Intangible assets are valued at purchase price including the expenses incidental thereto or at production cost, less cumulated depreciation, amounts written off and value adjustments. Where the Group considers that an intangible asset has suffered from a durable depreciation in value, an additional write-down is recorded to reflect this loss. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
Costs of development
Costs of development are amortised on a straight-line basis over their estimated useful lives, which is 3 years.
Concessions, patents, licences, trademarks and similar rights and assets
All such items are amortised on a straight-line basis over their estimated useful lives, which is as follows:
Licences |
| 4 years |
|
Trademarks | | 10 years | |
Test products | | 3 years | |
8
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
3.2.1Intangible assets (cont.)
Payments on account and intangible assets under development
Amounts related to the development of projects and other related expenses are included in the balance sheet when incurred. Development expenditures are capitalised when their future recoverability can be regarded as assured. The expenditure is transferred through "Work performed by the undertaking for its own purposes and capitalised" to assets in use and depreciation commences when the assets are put into operation.
3.2.2Tangible assets
Tangible assets are valued at purchase price including the expenses incidental thereto or at production cost. Tangible assets are depreciated over their estimated useful economic lives.
The depreciation rates and methods applied are as follows:
|
| Rate of depreciation |
| Depreciation method |
|
Buildings | | 4% - 10 | % | straight-line | |
Plant and machinery | | 10% - 25 | % | straight-line | |
Office fixtures and fittings, tools and equipment | | 10% - 33.33 | % | straight-line | |
Leased other fixtures and fittings, tools and equipment | | 33 | % | straight-line | |
Land is not depreciated.
Where the Group considers that a tangible asset has suffered from a durable depreciation in value, an additional write-down is recorded to reflect this loss. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
Payments on accounts and tangible assets under development
Amounts related to leasehold improvement and other related expenses, are included in the balance sheet when incurred. The expenditure are transferred to assets in use and depreciation commences when the assets are put into operation.
3.2.3Financial assets
Loans held as fixed assets are valued at nominal value including the expenses incidental thereto.
In case of a durable depreciation in value according to the opinion of the Management, value adjustments are made in respect of fixed assets, so that they are valued at the lower figure to be attributed to them at the balance sheet date. These values adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.4Stocks of raw materials and consumables
Stocks of raw materials and consumables are valued at standard cost or purchase price or standard cost.
Value adjustments are recorded where the market value is lower than the purchase price or standard cost. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
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B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
3.2.5Work in progress
Work in progress are valued at standard cost or production cost.
Value adjustments are recorded for as a deduction to standard cost or production cost to reflect the decrease in the value of stocks. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.6Stocks of finished goods and goods for resale
Stocks of finished goods and goods for resale are valued at standard cost or production cost.
Value adjustments are recorded for as a deduction to standard cost or production cost to reflect the decrease in the value of stocks. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.7Stocks – Payments on account
Payments on account represent advance payments on stock and are recorded at their nominal value. They are subject to value adjustments when their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.8Debtors
Debtors are valued at their nominal value. They are subject to value adjustments where their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.9Prepayments
This asset item includes expenditure incurred during the financial period but relating to a subsequent financial year.
3.2.10Capital investment subsidies
Subsidies received from the Luxembourg government related to the financing of investments are recorded under “Capital and reserves” at their initial value. They are written off using the same method and over the same period as the assets to which they relate.
3.2.11Provisions
Provisions are intended to cover losses or debts the nature of which is clearly defined and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise.
Provisions may also be created to cover charges which originate in the financial year, the nature of which is clearly defined and which at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date on which they will arise.
3.2.12Creditors
Debts are recorded at their reimbursement value. Where the amount repayable on account is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt based on a linear method.
10
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
3.2.13Net turnover
The net turnover comprises the amounts derived from the sale of products and the provision of services falling within the Group’s ordinary activities, after deductions of sales rebates and of value added tax and other taxes directly linked to the turnover.
The net turnover includes revenue from lease operations. The revenue is recognized over the contract duration.
3.2.14Foreign currency translation
The Company maintains its accounts in euros (EUR) and the consolidated annual accounts are expressed in this currency.
Transactions expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction.
Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss account of the year.
Long-term assets expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historic exchange rates.
Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historic exchange rate or the value determined on the basis of the exchange rates effective at the balance sheet date. Solely the unrealised exchange losses are recorded in the profit and loss account. The realised exchange gains are recorded in the profit and loss account at the moment of their realisation.
Assets and liabilities of the annual accounts of foreign subsidiaries are converted at the exchange rate effective at the balance sheet date and the profit and loss statements of these companies are converted at the average exchange rate of the financial period.
Differences arising from the translation of opening shareholders’ equity in accordance with the year-end exchange rate are recorded in consolidated equity under “currency translation reserve” and do not impact the profit or loss account.
3.2.15Statement of Cash Flows
The consolidated statement of cash flows has been prepared using the indirect method in which the net cash flow from operating activities is determined by adjusting profit or loss for the effects of changes in certain items in the consolidated balance sheet, non-cash items and items that relate to financing and investing cash flows.
11
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 4 - Intangible assets
The movements of 2021 are presented as follows:
|
| |
| Concessions, |
| Payments on |
| |
|
| | | | patents, licenses, | | account and | | | |
| | | | trademarks and | | intangible | | | |
| | Costs of | | similar rights | | assets under | | | |
| | development | | and assets | | development | | Total | |
In EUR thousands | | | | | | | | | |
Gross book value – 1 January 2021 | | 14,854 | | 1,731 | | 8,209 | | 24,794 | |
Additions for the year | | — | | 160 | | 5,700 | | 5,860 | |
Transfers for the year | | 6,946 | | — | | (6,946) | | — | |
Gross book value – 31 December 2021 | | 21,800 | | 1,891 | | 6,963 | | 30,654 | |
Accumulated value adjustments – 1 January 2021 | | (8,860) | | (888) | | — | | (9,748) | |
Amortizations for the year | | (4,278) | | (248) | | — | | (4,526) | |
Accumulated value adjustments – 31 December 2021 | | (13,138) | | (1,136) | | — | | (14,274) | |
Net book value – 31 December 2021 | | 8,662 | | 755 | | 6,963 | | 16,380 | |
Net book value – 1 January 2021 | | 5,994 | | 843 | | 8,209 | | 15,046 | |
Additions for the year mainly relate to development projects in relation to new products to be launched in the coming months.
In 2020, the movements were as follows:
|
| |
| Concessions, |
| Payments on |
| |
|
| | | | patents, licenses, | | account and | | | |
| | | | trademarks and | | intangible | | | |
| | Costs of | | similar rights | | assets under | | | |
| | development | | and assets | | development | | Total | |
In EUR thousands | | | | | | | | | |
Gross book value – 1 January 2020 | | 12,058 | | 1,564 | | 7,325 | | 20,947 | |
Additions for the year | | — | | 167 | | 3,680 | | 3,847 | |
Transfers for the year | | 2,796 | | — | | (2,796) | | — | |
Gross book value – 31 December 2020 | | 14,854 | | 1,731 | | 8,209 | | 24,794 | |
Accumulated value adjustments – 1 January 2020 | | (4,488) | | (687) | | — | | (5,175) | |
Amortizations for the year | | (4,372) | | (201) | | — | | (4,573) | |
Accumulated value adjustments – 31 December 2020 | | (8,860) | | (888) | | — | | (9,748) | |
Net book value – 31 December 2020 | | 5,994 | | 843 | | 8,209 | | 15,046 | |
Net book value – 1 January 2020 | | 7,570 | | 877 | | 7,325 | | 15,772 | |
Additions for the year mainly related to development projects in relation to new products to be launched in the coming months.
12
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 5 - Tangible assets
The movements of 2021 are as follows:
| | | | | | | | Payments on | | |
|
| | | | | | | | accounts and | | | |
| | | | | | Other fixtures | | tangible fixed | | | |
| | | | | | and fittings, | | assets in the | | | |
| | Land and | | Plant and | | tools and | | course of | | | |
|
| buildings |
| machinery |
| equipment |
| construction |
| Total | |
In EUR thousands | | | | | | | | | | | |
Gross book value - 1 January 2021 | | 8,657 | | 13,117 | | 11,273 | | 1,557 | | 34,604 | |
Additions for the year | | 4,414 | | 6,517 | | 3,783 | | 7,263 | | 21,977 | |
Disposals for the year | | — | | (8) | | (753) | | — | | (761) | |
Transfers for the year | | 257 | | 603 | | 409 | | (1,269) | | — | |
Gross book value - 31 December 2021 | | 13,328 | | 20,229 | | 14,712 | | 7,551 | | 55,820 | |
Depreciation - 1 January 2021 | | (5,768) | | (7,322) | | (9,203) | | — | | (22,293) | |
Depreciations for the year | | (468) | | (1,361) | | (1,408) | | — | | (3,237) | |
Reversals for the year | | — | | 8 | | 253 | | — | | 261 | |
Depreciation -31 December 2021 | | (6,236) | | (8,675) | | (10,358) | | — | | (25,269) | |
Net book value - 31 December 2021 | | 7,092 | | 11,554 | | 4,354 | | 7,551 | | 30,551 | |
Net book value - 1 January 2021 | | 2,889 | | 5,795 | | 2,070 | | 1,557 | | 12,311 | |
Additions for the year mainly relate to capacity expansion, including additional manufacturing, testing capacity, and warehouse space.
In 2020, the movements were as follows:
| | | | | | | | Payments on | | |
|
| | | | | | | | accounts and | | | |
| | | | | | Other fixtures | | tangible fixed | | | |
| | | | | | and fittings, | | assets in the | | | |
| | Land and | | Plant and | | tools and | | course of | | | |
|
| buildings |
| machinery |
| equipment |
| construction |
| Total | |
In EUR thousands | | | | | | | | | | | |
Gross book value - 1 January 2020 | | 8,647 | | 13,106 | | 11,382 | | 37 | | 33,172 | |
Additions for the year | | 91 | | 267 | | 193 | | 1,557 | | 2,108 | |
Disposals for the year | | (81) | | (289) | | (306) | | — | | (676) | |
Transfers for the year | | — | | 33 | | 4 | | (37) | | — | |
Gross book value - 31 December 2020 | | 8,657 | | 13,117 | | 11,273 | | 1,557 | | 34,604 | |
Depreciation - 1 January 2020 | | (5,350) | | (6,488) | | (8,062) | | — | | (19,900) | |
Depreciations for the year | | (418) | | (985) | | (1,444) | | — | | (2,847) | |
Reversals for the year | | — | | 151 | | 303 | | — | | 454 | |
Depreciation - 31 December 2020 | | (5,768) | | (7,322) | | (9,203) | | — | | (22,293) | |
Net book value - 31 December 2020 | | 2,889 | | 5,795 | | 2,070 | | 1,557 | | 12,311 | |
Net book value - 1 January 2020 | | 3,297 | | 6,618 | | 3,320 | | 37 | | 13,272 | |
Note 6 - Loans to affiliated undertakings
On 28 June 2016, the Company granted a loan to Asclepius Holding Limited for an amount of EUR 4,039,860 with an effective date on 19 February 2016. This loan matured on 19 February 2019 and bore a fixed interest of 4%. The maturity of this loan was extended to 19 February 2023.
13
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 6 - Loans to affiliated undertakings (cont.)
As at 31 December 2021, this loan amounts to EUR 4,039,860 (2020: EUR 4,039,860) and accrued interest amounts to EUR 947,933 (2020: EUR 786,339) and the total interest income of the year amounts to EUR 161,594 (2020: EUR 162,037).
Note 7 - Stocks
As at 31 December 2021 and 2020 stocks mainly comprise finished products such as material used for apparatus, predominantly refrigerators and plastic products and raw material and consumables required for the manufacture of apparatus and equipment.
Note 8 – Trade debtors
Trade debtors are composed of:
In EUR thousands | | 31 December | | 31 December |
|
|
| 2021 |
| 2020 | |
Trade debtors | | 26,012 | | 21,317 | |
Value adjustment for doubtful debtors | | (103) | | (79) | |
| | 25,909 | | 21,238 | |
Note 9 - Amounts owed by affiliated undertakings
The amounts owed by affiliated undertakings becoming due and payable within one year are as follows:
In EUR thousands | | 31 December | | 31 December |
|
|
| 2021 |
| 2020 | |
Receivable from Asclepius Holding Limited | | 1,829 | | 1,668 | |
Overpayment following the MRPS repurchase | | 89 | | 89 | |
Other receivables | | — | | 8 | |
| | 1,918 | | 1,765 | |
Note 10 - Subscribed capital
The subscribed capital, as at 31 December 2021 and 2020, amounts to EUR 31,000 divided into 30,000 ordinary shares fully paid up without nominal value.
Note 11 - Share premium account
The Share premium account amounts to:
In EUR thousands |
| Ordinary share premium |
| Total |
|
Share premium – opening balance | | 6,386 | | 6,386 | |
| | | | | |
Addition of the year | | 3,940 | | 3,940 | |
| | | | | |
Share premium – Closing balance | | 10,326 | | 10,326 | |
During 2021, the loan between Asclepius Capital Limited and B Medical Systems S.à r.l. was contributed down the chain of entities of the group. As a result the share premium of B Medical Systems Holding S.A. (in liquidation) has been increased for an amount of EUR 3,940,000.
14
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 12 - Movements for the year on the reserves and profit/loss items
The movements for 2021 are as follows:
| | | | | | | | | | | | Consolidated |
|
| | | | Share | | | | Currency | | | | profit for the | |
| | Subscribed | | premium | | Other | | translation | | Consolidated | | financial | |
|
| capital |
| account |
| reserves |
| reserves |
| reserves |
| year | |
In EUR thousands | | | | | | | | | | | | | |
As at 1 January 2021 | | 31 | | 6,386 | | 731 | | 1 | | (2,769) | | 86 | |
Movements for the year: | | | | | | | | | | | | | |
Allocation of previous year’s profit or loss | | — | | — | | (331) | | 299 | | 118 | | (86) | |
Share premium increase | | — | | 3,940 | | — | | — | | — | | — | |
Other movements | | — | | — | | — | | — | | 302 | | | |
Profit or loss for the financial year | | — | | — | | — | | — | | — | | 10,156 | |
As at 31 December 2021 | | 31 | | 10,326 | | 400 | | 300 | | (2,349) | | 10,156 | |
Other reserves comprise a reserve constituted for Luxembourg net wealth tax.
The movements for 2020 were as follows:
| | | | | | | | | | | | Consolidated |
|
| | | | Share | | | | Currency | | | | profit for the | |
| | Subscribed | | premium | | Other | | translation | | Consolidated | | financial | |
|
| capital |
| account |
| reserves |
| reserves |
| reserves |
| year | |
In EUR thousands | | | | | | | | | | | | | |
As at 1 January 2020 | | 31 | | 6,386 | | 812 | | 0 | | (4,626) | | 1,777 | |
Movements for the year: | | | | | | | | | | | | | |
Allocation of previous year’s profit or loss | | — | | — | | (81) | | 1 | | 1,857 | | (1,777) | |
Profit or loss for the financial year | | — | | — | | — | | — | | — | | 86 | |
As at 31 December 2020 | | 31 | | 6,386 | | 731 | | 1 | | (2,769) | | 86 | |
Other reserves comprised a reserve constituted for Luxembourg net wealth tax.
Note 13 - Capital investment subsidies
The capital investment subsidies recognized in capital and reserves are related to the following assets:
In EUR thousands | | | | | | | | |
|
| | Gross book | | Depreciation | | Net book value | | Net book value | |
| | value 2021 | | 2021 | | 2021 | | 2020 | |
|
| (EUR) |
| (EUR) |
| (EUR) |
| (EUR) | |
Land and building | | 1,018 | | (10) | | 1,008 | | — | |
Other fixtures and fittings, tools and equipment | | 4,685 | | (349) | | 4,336 | | — | |
Total | | 5,703 | | (359) | | 5,344 | | — | |
The payment of the Capital investment subsidies has not been received as at 31 December 2021 and the amount to be received is recognized in Other Debtors.
15
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 14 - Provisions for liabilities and charges
Other provisions are composed by warranties, provision for quality issues and provisions for telecommunication for worldwide products of EUR 3,383,000 (2020: EUR 2,063,241).
Note 15 – Amounts owed to credit institutions
Amounts owed to credit institutions are composed by:
| ● | a loan agreement contracted during the year 2021 for an amount of EUR 4,000,000 granted by Société Nationale de Crédit et d’Investissement. This loan matures on 31 December 2026 and bears a fixed interest of 1,625%. As at 31 December 2021, the loan amounts to EUR 3,604,000, out of which EUR 720,800 is repayable in 2022. The accrued interest amounts to nil and the total interest charge of the year amounts to EUR 27,109. |
| ● | credit facilities amounting to EUR 14,699,363 (2020: EUR 4,695,212). |
Note 16 - Amounts owed to affiliated undertakings
Amounts owed to affiliated undertakings are mainly composed by:
| ● | a loan agreement contracted on 19 February 2016 for an amount of EUR 35,909,866 granted by Asclepius Holdings Ltd. This loan matures on 19 February 2026 and bears a fixed interest of 1% plus a variable. As at 31 December 2021, accrued interest amounts to EUR 28,660,069.95 (2020: EUR 26,432,084) and the total interest charge of the year amounts to EUR 4,905,826.37 (2020: EUR 360,083). |
| ● | a loan agreement contracted on 9 October 2019 with a retroactive effect on 4 September 2019 for an amount of EUR 10,000,000 granted by Asclepius Capital Ltd. As at 31 December 2020, the loan amounted to EUR 3,000,000. This loan matured 18 months after the date of the first drawdown and bore a fixed interest of 15%. The loan and the related accrued interest have been fully converted to Share premium during the year for EUR 3,940,000. The total interest charge of the year amounts to EUR 122,191. |
Note 17 - Provisions for taxation
The Group is subject to tax in the countries listed in the Note 2. The income tax provision is computed by applying the applicable tax rates to the results of the operations, taking into account permanent differences between pre-taxable results for accounting purposes and those for tax purposes.
B Medical Systems Holding S.A. (in liquidation) and B Medical Systems S.à r.l. form a fiscal unity. The corporate income tax and the municipal business tax liabilities on income are recorded in the accounts of the parent company B Medical Systems Holding S.A. (in liquidation), the expense is allocated to the profit generating company.
16
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 18- Net turnover
The net turnover is broken down by geographical markets as follows:
In EUR thousands |
| 2021 |
| 2020 |
|
Geographical markets: | | | | | |
| | | | | |
Africa | | 44,368 | | 35,105 | |
Americas | | 12,614 | | 7,556 | |
Asia | | 24,629 | | 9,088 | |
Europe | | 12,398 | | 8,569 | |
Middle East – North Africa (MENA) | | 17,822 | | 1,569 | |
| | | | | |
Total | | 111,831 | | 61,887 | |
| | | | | |
Category of activity: | | | | | |
| | | | | |
Medical | | 111,831 | | 61,887 | |
| | | | | |
Total | | 111,831 | | 61,887 | |
Note 19 - Other external expenses
In 2021, other external expenses amounted to EUR 27,422 (2020: EUR 13,750) mainly relate to general and administration services fees.
Note 20 - Staff
The Group employed an average of 288 persons during the financial year broken down by category as follows:
|
| 2021 |
| 2020 |
|
Employees | | 136 | | 91 | |
Workers | | 152 | | 124 | |
| | | | | |
Total | | 288 | | 215 | |
Note 21 - Value adjustments on current assets
Value adjustments on current assets are made up as follows:
In EUR thousands |
| 2021 |
| 2020 |
|
Value adjustments on inventories | | (48) | | (421) | |
Value adjustments on trade receivables | | (24) | | — | |
Value adjustment on other receivables | | (2,279) | | — | |
Reversal of value adjustments on trade receivables | | — | | 218 | |
Total | | (2,351) | | (203) | |
17
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 22 - Advances and loans granted to the members of the administrative, managerial and supervisory bodies
Respectively in 2019 and 2021, one affiliated undertaking granted loans to two senior members of the Management of the Company. The loans have a short-term maturity and bear interest.
Note 23 - Emoluments granted to the members of the administrative, managerial and supervisory bodies and commitments in respect of retirement pensions for former members of those bodies
No emoluments were granted during the financial period to the members of the administrative managerial and supervisory bodies in that capacity.
Note 24 - Auditor’s fees
The total fees expensed by the Group for the financial year to the auditor amounted to EUR 136,500 (2020: EUR 111,500).
Note 25 - Off balance sheet commitments
The financial commitments are as follows:
In EUR thousands |
| 2021 |
| 2020 |
|
Commitment Received | | | | | |
Bank guarantees | | 101 | | 127 | |
| | | | | |
Commitment Given | | | | | |
Leasing | | 462 | | 466 | |
Luxembourg warehouse agreement | | 1,832 | | — | |
Mundra manufacturing facility | | 3,040 | | — | |
Mumbai office | | 340 | | — | |
India warehouse agreement | | 113 | | — | |
US warehouse lease | | 98 | | — | |
Note 26 - Subsequent events
Since February 2022, a number of countries (including amongst others the US, UK and EU) imposed sanctions against certain entities and individuals in Russia as a result of the official recognition of the Donetsk People Republic and Lugansk People Republic by the Russian Federation.
The situation, together with growing turmoil from fluctuations in commodity prices and foreign exchange rates, and the impact to global economies, has driven a sharp increase in volatility across markets. The Liquidator of the Company regard these events for the Group as non-adjusting events after the reporting period.
Although neither the Group’s performance and going concern nor operations, at the date of the approval of these accounts, have been significantly impacted by the above, Management continues to monitor the evolving situation and its impact on the financial position and operations of the Group and has evaluated subsequent events until the date the accounts were available to be issued, and concluded no additional disclosures are required.
18
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated annual accounts
Note 26 - Subsequent events (cont.)
On 3 October 2022, Azenta, Inc. and its affiliates (“Azenta”) acquired B Medical Systems S.à r.l. and its subsidiaries (“B Medical”). Azenta is a leading provider of life sciences solutions worldwide. Azenta paid a total initial cash purchase price at closing of EUR 389 million, as adjusted for cash acquired and other items, as well as the payment of EUR 43 million of outstanding debt held at B Medical and its parent entities. B Medical is eligible to earn up to approximately EUR 50 million in contingent consideration based upon achievement of certain financial metrics.
Both the HSBC / BIL and SNCI loans were repaid in full in September 2022.
Following this transaction, it has been decided to voluntarily put the Company into liquidation during the Extraordinary Meeting of the Sole Shareholder of the Company held on 4 October 2022, as its sole investment has been transferred to Azenta. Asclepius Holding Ltd. has been appointed as Liquidator of the Company.
Note 27 – COVID-19 Pandemic
During March 2020, The World Health Organization characterized the outbreak of coronavirus disease 2019, or COVID-19, as a pandemic. In response to the spread of COVID-19, certain government agencies have mandated various measures and recommended others, in each to protect the public, which have disrupted certain areas of business.
Despite the pandemic, the activity of the Group has been successful during the years ended 31 December 2020 and 31 December 2021.
Note 28 - Consolidated statement of cash flows for the years ended 31 December 2021 and 2020
(in EUR thousands) |
| 2021 |
| 2020 |
|
STATEMENT OF CASHFLOWS | | | | | |
Profit/(loss) | | 10,156 | | 86 | |
Interest Expense/ (Interest Income) | | 5,016 | | 1,128 | |
Other Non-Cash Adjustment | | | | | |
Depreciation/Amortization | | 7,763 | | 7,420 | |
Income Taxes Accrued/(Credit) | | 4,595 | | 356 | |
Other Non-Cash Items | | 2,350 | | 202 | |
Changes in Operating Assets & Liabilities | | (13,065) | | (4,423) | |
Income Taxes Paid | | (308) | | (2,133) | |
Cash Flows from Operating Activities | | 16,507 | | 2,636 | |
| | | | | |
Acquisitions of Tangible and Intangible Assets, net of disposals | | (27,336) | | (5,733) | |
Cash Flows from Investing Activities | | (27,336) | | (5,733) | |
| | | | | |
Interest Paid | | (2,825) | | (4,156) | |
Proceeds from loans and credit facilities | | 13,608 | | 2 | |
Cash Flows from Financing Activities | | 10,783 | | (4,154) | |
| | | | | |
Net Cash Flows | | (46) | | (7,251) | |
| | | | | |
Beginning Cash | | 8,250 | | 15,501 | |
Ending Cash | | 8,204 | | 8,250 | |
19
Exhibit 99.2
B Medical Systems Holding S.A. (in liquidation)
Consolidated interim accounts for the six months ended 30 June 2022
Op der Hei, 17
L-9809 Hosingen
Luxembourg
R.C.S. Luxembourg : B 94593
Share capital: EUR 31,000
Exhibit 99.2
Page(s) | |
| |
1 | |
| |
Consolidated profit and loss account for the six months ended 30 June 2022 (unaudited) | 3 |
| |
Notes to the consolidated interim accounts as at 30 June 2022 (unaudited) | 4 |
B Medical Systems Holding S.A. (in liquidation)
Consolidated balance sheet as at 30 June 2022 (unaudited)
|
| Note(s) |
| 30 June 2022 |
| 31 December 2021 |
|
(in EUR thousands) | | | | | | | |
| | | | | | | |
ASSETS | | | | | | | |
| | | | | | | |
Fixed assets | | | | | | | |
| | | | | | | |
Intangible assets | | 4 | | 16,094 | | 16,380 | |
- Costs of development | | | | 6,966 | | 8,662 | |
- Concessions, patents, licenses, trademarks and similar rights and assets | | | | 644 | | 755 | |
- Payments on accounts and intangible assets under development | | | | 8,484 | | 6,963 | |
| | | | | | | |
Tangible assets | | 5 | | 31,178 | | 30,551 | |
- Land and buildings | | | | 9,286 | | 7,092 | |
- Plant and machinery | | | | 11,637 | | 11,554 | |
- Other fixtures and fittings, tools and equipment | | | | 4,597 | | 7,551 | |
- Payments on account and tangible assets under development | | | | 5,658 | | 4,354 | |
| | | | | | | |
| | | | | | | |
Financial assets | | | | 4,040 | | 4,040 | |
Loans to affiliated undertakings | | 6 | | 4,040 | | 4,040 | |
| | | | | | | |
Current assets | | | | | | | |
| | | | | | | |
Stocks | | 7 | | 46,547 | | 37,935 | |
Raw materials and consumables | | | | 20,205 | | 18,745 | |
- Work in progress | | | | 69 | | 378 | |
- Finished goods and goods for resale | | | | 23,505 | | 17,973 | |
- Payments on account | | | | 2,768 | | 839 | |
| | | | | | | |
Debtors | | | | 20,239 | | 36,651 | |
Trade debtors | | | | | | | |
- becoming due and payable within one year | | 8 | | 15,037 | | 25,909 | |
Amounts owed by affiliated undertakings | | 9 | | | | | |
- becoming due and payable within one year | | | | 1,999 | | 1,918 | |
Other debtors | | | | | | | |
- becoming due and payable within one year | | | | 3,203 | | 8,824 | |
| | | | | | | |
Cash at bank and cash in hand | | | | 11,063 | | 8,204 | |
| | | | | | | |
Prepayments | | | | 1,867 | | 2,191 | |
| | | | | | | |
Total ASSETS | | | | 131,028 | | 135,952 | |
The accompanying notes form an integral part of the consolidated interim accounts.
1
B Medical Systems Holding S.A. (in liquidation)
Consolidated balance sheet as at 30 June 2022 (unaudited)
|
| Note(s) |
| 30 June 2022 |
| 31 December 2021 |
|
(in EUR thousands) | | | | | | | |
| | | | | | | |
CAPITAL, RESERVES AND LIABILITIES | | | | | | | |
| | | | | | | |
Capital and reserves | | | | 23,701 | | 24,208 | |
| | | | | | | |
Subscribed capital | | 10, 11 | | 31 | | 31 | |
| | | | | | | |
Share premium account | | 11 | | 10,326 | | 10,326 | |
| | | | | | | |
Reserves | | 11 | | | | | |
- Other reserves | | | | 400 | | 400 | |
- Currency translation adjustment | | | | 363 | | 300 | |
- Consolidated reserves | | | | 7,996 | | (2,349) | |
| | | | | | | |
Consolidated profit/(loss) for the period | | 11 | | (270) | | 10,156 | |
| | | | | | | |
Capital investment subsidies | | 12 | | 4,855 | | 5,344 | |
| | | | | | | |
Provisions | | | | 3,678 | | 3,383 | |
| | | | | | | |
Other provisions | | 13 | | 3,678 | | 3,383 | |
| | | | | | | |
Creditors | | | | 103,649 | | 108,361 | |
| | | | | | | |
Amounts owed to credit institutions | | 14 | | | | | |
-becoming due and payable within one year | | | | 17,933 | | 15,420 | |
-becoming due and payable after more than one year | | | | — | | 2,883 | |
| | | | | | | |
Payments received on account of orders in so far as they are shown separately as deductions from stocks | | | | | | | |
- becoming due and payable within one year | | | | — | | 74 | |
Trade creditors | | | | | | | |
- becoming due and payable within one year | | | | 12,879 | | 16,508 | |
| | | | | | | |
Amounts owed to affiliated undertakings | | 15 | | | | | |
- becoming due and payable within one year | | | | 28,423 | | 28,662 | |
- becoming due and payable after more than one year | | | | 35,910 | | 35,910 | |
| | | | | | | |
Other creditors | | | | | | | |
- Tax authorities | | 16 | | 5,228 | | 4,886 | |
- Social security authorities | | | | 471 | | 573 | |
- Other creditors | | | | | | | |
- becoming due and payable within one year | | | | 2,805 | | 3,445 | |
| | | | | | | |
Total CAPITAL, RESERVES AND LIABILITIES | | | | 131,028 | | 135,952 | |
The accompanying notes form an integral part of the consolidated interim accounts.
2
B Medical Systems Holding S.A. (in liquidation)
Consolidated profit and loss for the six months ended 30 June 2022 (unaudited)
|
| Note(s) |
| 2022 |
|
(in EUR thousands) | | | | | |
| | | | | |
PROFIT AND LOSS ACCOUNT | | | | | |
| | | | | |
Net turnover | | 17 | | 46,065 | |
| | | | | |
Variation in stocks of finished goods and in work in progress | | | | 5,224 | |
Work performed by the undertaking for its own purposes and capitalised | | | | 1,875 | |
| | | | | |
Other operating income | | | | 465 | |
| | | | | |
Raw materials and consumables and other external expenses | | | | (36,492) | |
- Raw materials and consumables | | | | (23,849) | |
- Other external expenses | | 18 | | (12,643) | |
| | | | | |
Staff costs | | 19 | | (11,478) | |
- Wages and salaries | | | | (10,146) | |
- Social security costs | | | | | |
- relating to pensions | | | | (156) | |
- other social security costs | | | | (1,172) | |
- Other staff costs | | | | (4) | |
| | | | | |
Value adjustments | | | | (4,917) | |
- in respect of formation expenses and on tangible and intangible fixed assets | | 4, 5 | | (4,615) | |
- in respect of current assets | | 20 | | (302) | |
| | | | | |
Other operating expenses | | | | (69) | |
| | | | | |
Income from other investments and loans forming part of the fixed assets | | | | 80 | |
- derived from affiliated undertakings | | | | 80 | |
- other income not derived from affiliated undertakings | | | | — | |
| | | | | |
Interest payable and similar expenses | | | | (286) | |
- derived from affiliated undertakings | | 15 | | (178) | |
- other interest and similar expenses | | | | (108) | |
| | | | | |
Tax on profit or (loss) | | | | (678) | |
| | | | | |
Profit or (loss) after taxation | | | | (211) | |
| | | | | |
Other taxes | | | | (59) | |
| | | | | |
Consolidated profit/(loss) for the period | | | | (270) | |
- attributable to the Group | | | | (270) | |
The accompanying notes form an integral part of the consolidated interim accounts.
3
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022 (unaudited)
B Medical Systems Holding S.A. (in liquidation) (hereafter the “Company”) was incorporated on 3 July 2001, for an unlimited period under the name Erusiel S.à r.l. The Company changed its legal name to on 1st September 2015. The Company and its subsidiaries form the B Medical Group (the “Group”).
The registered office of the Company is established at 17, Op der Hei, L-9809 Hosingen, Luxembourg.
The Company’s financial year starts on 1 January and ends on 31 December of each year.
The main activity of the Group is to acquire, manufacture and sell technical apparatus, predominantly refrigerators and plastic products and to acquire and process the raw and auxiliary materials required for the manufacture of these products and equipment.
Note 2 - Consolidation Principles
2.1 | Consolidation criteria |
The consolidated interim accounts of the Company as at 30 June 2022 include its stand-alone accounts and those of all directly or indirectly owned subsidiaries. Subsidiaries are all entities over which the Company exercises control through direct or indirect shareholding of more than one half of the voting rights. Subsidiaries are consolidated using the full consolidation method from the date on which control is transferred to the Group. They are no longer consolidated from the date that control ceases. The figures in the profit and loss account for the acquired companies are reflected on a pro-rata based on their acquisition date in order to reflect only the result since the acquisition date. All intercompany-balances and intercompany transactions have been eliminated.
The accounts of the Group entities have been adjusted when necessary in order to comply with the Group's accounting policies.
Entities included in the scope of consolidation are listed below:
|
| Share in |
| |
| |
|
| | Issued | | | | Consolidation | |
Name | | capital (%) | | Country | | Method | |
| | | | | | | |
B Medical Systems S.à r.l. | | 100 | | Luxembourg | | Fully consolidated | |
B Medical Systems Holding S.A. (in liquidation) | | 100 | | Luxembourg | | Parent Company | |
B Medical Systems North America LLC (1) | | 100 | | USA | | Fully consolidated | |
B Medical Systems India Private Limited (2) | | 99.99 | | India | | Fully consolidated | |
(1)B Medical Systems North America LLC was formed pursuant to the Limited Liability Company Act of State of Delaware without issuance of shares.
(2)One share is jointly owned by B Medical Systems S.à r.l. and Deputy CEO Jesal Doshi (Director of B Medical Systems India Private Limited).
4
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 3 - Summary of significant accounting policies
3.1 | Basis of preparation |
The consolidated interim accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention and going concern assumption, which assumes the realisation of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As a departure from art. 29 (2) of the Law of 19 December 2002, figures for the preceding financial period in respect of profit and loss account are not presented in the interim financial information.
The decision to voluntarily put the Company into liquidation on 4 October 2022, as further described in note 25, has not impacted the basis of preparation of these consolidated interim accounts. The liquidation is only attributable to the Company, which at the liquidation date has transferred its sole subsidiary (the group B Medical), to another company, which continues to exist as of today.
Accounting policies and valuation rules are, besides the ones laid down by the Law of 19 December 2002, as amended, determined and applied by the Management.
The preparation of the consolidated interim accounts requires the use of certain critical accounting estimates. It also requires the Management to exercise its judgement in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the consolidated interim accounts in the period in which the assumptions changed. Management believes that the underlying assumptions are appropriate and that the consolidated interim accounts therefore present the consolidated financial position and results fairly.
The Management makes estimates and assumptions that may affect the reported amounts of assets and liabilities in the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
3.2 | Significant accounting policies |
The main valuation rules applied by the Group are the following:
3.2.1Intangible assets
Intangible assets are valued at purchase price including the expenses incidental thereto or at production cost, less cumulated depreciation, amounts written off and value adjustments. Where the Group considers that an intangible asset has suffered from a durable depreciation in value, an additional write-down is recorded to reflect this loss. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
Costs of development
Costs of development are amortised on a straight-line basis over their estimated useful lives, which is 3 years.
Concessions, patents, licences, trademarks and similar rights and assets
All such items are amortised on a straight-line basis over their estimated useful lives, which is as follows:
Licences |
| 4 years |
|
Trademarks | | 10 years | |
Test products | | 3 years | |
5
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
3.2.1 | Intangible assets (cont.) |
Payments on account and intangible assets under development
Amounts related to the development of projects and other related expenses are included in the balance sheet when incurred. Development expenditures are capitalised when their future recoverability can be regarded as assured. The expenditure is transferred through "Work performed by the undertaking for its own purposes and capitalised" to assets in use and depreciation commences when the assets are put into operation.
3.2.2 | Tangible assets |
Tangible assets are valued at purchase price including the expenses incidental thereto or at production cost. Tangible assets are depreciated over their estimated useful economic lives.
The depreciation rates and methods applied are as follows:
|
| Rate of depreciation |
| Depreciation method |
|
| | | | | |
Buildings | | 4% - 10 | % | straight-line | |
Plant and machinery | | 10% - 25 | % | straight-line | |
Office fixtures and fittings, tools and equipment | | 10% - 33.33 | % | straight-line | |
Leased other fixtures and fittings, tools and equipment | | 33 | % | straight-line | |
Land is not depreciated.
Where the Group considers that a tangible asset has suffered from a durable depreciation in value, an additional write-down is recorded to reflect this loss. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
Payments on accounts and tangible assets under development
Amounts related to leasehold improvement and other related expenses, are included in the balance sheet when incurred. The expenditure are transferred to assets in use and depreciation commences when the assets are put into operation.
3.2.3 | Financial assets |
Loans held as fixed assets are valued at nominal value including the expenses incidental thereto.
In case of a durable depreciation in value according to the opinion of the Management, value adjustments are made in respect of fixed assets, so that they are valued at the lower figure to be attributed to them at the balance sheet date. These values adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.4 | Stocks of raw materials and consumables |
Stocks of raw materials and consumables are valued at standard cost or purchase price or standard cost.
Value adjustments are recorded where the market value is lower than the purchase price or standard cost. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
6
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
3.2.5 | Work in progress |
Work in progress are valued at standard cost or production cost.
Value adjustments are recorded for as a deduction to standard cost or production cost to reflect the decrease in the value of stocks. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.6 | Stocks of finished goods and goods for resale |
Stocks of finished goods and goods for resale are valued at standard cost or production cost.
Value adjustments are recorded for as a deduction to standard cost or production cost to reflect the decrease in the value of stocks. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.7 | Stocks – Payments on account |
Payments on account represent advance payments on stock and are recorded at their nominal value. They are subject to value adjustments when their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.8 | Debtors |
Debtors are valued at their nominal value. They are subject to value adjustments where their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.2.9 | Prepayments |
This asset item includes expenditure incurred during the financial period but relating to a subsequent financial year.
3.2.10 | Capital investment subsidies |
Subsidies received from the Luxembourg government related to the financing of investments are recorded under “Capital and reserves” at their initial value. They are written off using the same method and over the same period as the assets to which they relate.
3.2.11 | Provisions |
Provisions are intended to cover losses or debts the nature of which is clearly defined and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise.
Provisions may also be created to cover charges which originate in the financial year, the nature of which is clearly defined and which at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date on which they will arise.
7
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
3.2.12 | Creditors |
Debts are recorded at their reimbursement value. Where the amount repayable on account is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt based on a linear method.
3.2.13 | Net turnover |
The net turnover comprises the amounts derived from the sale of products and the provision of services falling within the Group’s ordinary activities, after deductions of sales rebates and of value added tax and other taxes directly linked to the turnover.
The net turnover includes revenue from lease operations. The revenue is recognized over the contract duration.
3.2.14 | Foreign currency translation |
The Company maintains its accounts in euros (EUR) and the consolidated interim accounts are expressed in this currency.
Transactions expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction.
Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss account of the year.
Long-term assets expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historic exchange rates.
Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historic exchange rate or the value determined on the basis of the exchange rates effective at the balance sheet date. Solely the unrealised exchange losses are recorded in the profit and loss account. The realised exchange gains are recorded in the profit and loss account at the moment of their realisation.
Assets and liabilities of the accounts of foreign subsidiaries are converted at the exchange rate effective at the balance sheet date and the profit and loss statements of these companies are converted at the average exchange rate of the financial period.
Differences arising from the translation of opening shareholders’ equity in accordance with the year- end exchange rate are recorded in consolidated equity under “currency translation reserve” and do not impact the profit or loss account.
3.2.15 | Statement of Cash Flows |
The consolidated statement of cash flows has been prepared using the indirect method in which the net cash flow from operating activities is determined by adjusting profit or loss for the effects of changes in certain items in the consolidated balance sheet, non-cash items and items that relate to financing and investing cash flows.
8
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 4 - Intangible assets
The movements of the period are presented as follows:
|
| |
| Concessions, |
| |
| |
|
| | | | patents, | | | | | |
| | | | licenses, | | Payments on | | | |
| | | | trademarks | | account and | | | |
| | | | and | | intangible | | | |
| | Costs of | | similar rights | | assets under | | | |
In EUR thousands | | development | | and assets | | development | | Total | |
| | | | | | | | | |
Gross book value - Opening balance | | 21,800 | | 1,891 | | 6,963 | | 30,654 | |
| | | | | | | | | |
Additions for the period | | — | | 24 | | 1,878 | | 1,902 | |
| | | | | | | | | |
Transfers for the period | | 357 | | — | | (357) | | — | |
| | | | | | | | | |
Gross book value - Closing balance | | 22,157 | | 1,915 | | 8,484 | | 32,556 | |
| | | | | | | | | |
Accumulated value adjustments -Opening balance | | (13,138) | | (1,136) | | — | | (14,274) | |
| | | | | | | | | |
Amortizations for the period | | (2,053) | | (135) | | — | | (2,188) | |
| | | | | | | | | |
Accumulated value adjustments - Closing balance | | (15,191) | | (1,271) | | — | | (16,462) | |
| | | | | | | | | |
Net book value - Closing balance | | 6,966 | | 644 | | 8,484 | | 16,094 | |
Net book value - Opening balance | | 8,662 | | 755 | | 6,963 | | 16,380 | |
Additions for the period mainly relate to development projects in relation to new products to be launched in the coming months.
9
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 5 - Tangible assets
The movements of the period are as follows:
|
|
|
|
|
|
|
| Payments on |
|
|
|
| | | | | | | | accounts and | | | |
| | | | | | Othe | | tangible | | | |
| | | | | | and fittings, | | fixed assets | | | |
| | Land and | | Plant and | | fixtures tools and | | in the course of | | | |
| | buildings | | machinery | | equipment | | construction | | Total | |
In EUR thousands | | | | | | | | | | | |
| | | | | | | | | | | |
Gross book value -Opening balance | | 13,328 | | 20,229 | | 14,712 | | 7,551 | | 55,820 | |
Additions for the period | | 717 | | 388 | | 1,168 | | 854 | | 3,127 | |
Disposals for the period | | — | | (66) | | (518) | | — | | (584) | |
Transfers for the period | | 1,816 | | 931 | | — | | (2,747) | | — | |
Gross book value -Closing balance | | 15,861 | | 21,482 | | 15,362 | | 5,658 | | 58,363 | |
| | | | | | | | | | | |
Depreciation - Opening balance | | (6,236) | | (8,675) | | (10,358) | | — | | (25,269) | |
Depreciations for the period | | (339) | | (1,236) | | (852) | | — | | (2,427) | |
Reversals for the period | | — | | 66 | | 445 | | — | | 511 | |
Depreciation - Closing balance | | (6,575) | | (9,845) | | (10,765) | | — | | (27,185) | |
| | | | | | | | | | | |
Net book value - Closing balance | | 9,286 | | 11,637 | | 4,597 | | 5,658 | | 31,178 | |
Net book value -Opening balance | | 7,092 | | 11,554 | | 4,354 | | 7,551 | | 30,551 | |
Additions for the period mainly relate to capacity expansion of warehouse space.
10
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 6 - Loans to affiliated undertakings
On 28 June 2016, the Company granted a loan to Asclepius Holding Limited for an amount of EUR 4,039,860 with an effective date on 19 February 2016. This loan matured on 19 February 2019 and bore a fixed interest of 4%. The maturity of this loan was extended to 19 February 2023.
As at 30 June 2022, this loan amounts to EUR 4,039,860 (31 December 2021: EUR 4,039,860) and accrued interest amounts to EUR 1,028,067 (31 December 2021: EUR 947,933) and the total interest income of the period amounts to EUR 80,133.
Note 7 - Stocks
As at 30 June 2022, stocks mainly comprise finished products such as refrigerators, freezers, vaccine storage units and raw material and consumables required for the manufacture of cold chain equipment and medical devices.
Note 8 – Trade debtors
As at 30 June 2022, trade debtors are composed of:
In EUR thousands |
| 30 June 2022 |
| 31 December 2021 |
|
| | | | | |
Trade debtors | | 15,161 | | 26,012 | |
Value adjustment for doubtful debtors | | (124) | | (103) | |
| | | | | |
| | 15,037 | | 25,909 | |
Note 9 - Amounts owed by affiliated undertakings
As at 30 June 2022, the amounts owed by affiliated undertakings becoming due and payable within one year are as follows:
In EUR thousands |
| 30 June 2022 |
| 31 December 2021 |
|
| | | | | |
Receivable from Asclepius Holding Limited | | 1,909 | | 1,829 | |
Overpayment following the MRPS repurchase | | 90 | | 89 | |
| | 1,999 | | 1,918 | |
Note 10 - Subscribed capital
The subscribed capital, as at 30 June 2022, amounts to EUR 31,000 divided into 30,000 ordinary shares fully paid up without nominal value.
11
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 11 - Movements for the period on the reserves and profit/loss items
The movements for the period are as follows:
|
|
|
|
|
|
|
|
|
|
|
| Consolidated |
|
| | | | Share | | | | Currency | | | | profit/ (loss) | |
| | Subscribed | | premium | | Other | | translation | | Consolidated | | for the | |
| | capital | | account | | reserves | | reserves | | reserves | | period | |
In EUR thousands | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
As at 31 December 2021 | | 31 | | 10,326 | | 400 | | 300 | | (2,349) | | 10,156 | |
Movements for the period: | | | | | | | | | | | | | |
Allocation of previous year’s profit or loss | | — | | — | | — | | 65 | | 10,091 | | (10,156) | |
| | | | | | | | | | | | | |
Other movements | | | | | | | | (2) | | 254 | | — | |
| | | | | | | | | | | | | |
Profit or loss for the period | | — | | — | | — | | — | | — | | (270) | |
| | | | | | | | | | | | | |
As at 30 June 2022 | | 31 | | 10,326 | | 400 | | 363 | | 7,996 | | (270) | |
Other reserves amount to EUR 400 thousand and comprise a reserve constituted for Luxembourg net wealth tax and legal reserve.
12
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 12 - Capital investment subsidies
The capital investment subsidies recognized in capital and reserves are related to the following assets:
In EUR thousands | | | | | | | | |
|
|
| Gross book |
| Depreciation |
| Net book |
| Net book | |
| | value 2022 | | 2022 | | value 2022 | | value 2021 | |
| | | | | | | | | |
| | (EUR) | | (EUR) | | (EUR) | | (EUR) | |
| | | | | | | | | |
Land and buildings | | 1,018 | | (20) | | 987 | | 1,008 | |
Other fixtures and fittings, tools and equipment | | 4,685 | | (468) | | 3,868 | | 4,336 | |
| | | | | | | | | |
Total | | 5,703 | | (488) | | 4,855 | | 5,344 | |
The payment of the Capital investment subsidies amounting to EUR 5,702,647 has been received on 18 February 2022.
Note 13 - Provisions for liabilities and charges
Other provisions are composed by warranties and provisions for telecommunication for worldwide products of EUR 3,678,267 (31 December 2021: EUR 3,383,000).
Note 14 – Amounts owed to credit institutions
Amounts owed to credit institutions are composed by:
| ● | a loan agreement contracted during the year 2021 for an amount of EUR 4,000,000 granted by Société Nationale de Crédit et d’Investissement. This loan matures on 31 December 2026 and bears a fixed interest of 1,625%. As at 30 June 2022, the loan amounts to EUR 3,243,600. The accrued interest amounts to nil and the total interest charge of the 6 months ended 30 June 2022 amounts to EUR 28,705. |
| ● | credit facilities contracted with HSBC Bank PLC and Banque Internationale à Luxembourg (“BIL”) amounting to EUR 14,689,491 (31 December 2021: EUR 14,699,363). |
13
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 15 - Amounts owed to affiliated undertakings
Amounts owed to affiliated undertakings are mainly composed by:
| ● | a loan agreement contracted on 19 February 2016 for an amount of EUR 35,909,866 granted by Asclepius Holdings Ltd. This loan matures on 19 February 2026 and bears a fixed interest of 1% plus a variable. As at 30 June 2022, accrued interest amounts to EUR 28,422,754 (31 December 2021: EUR 28,660,069.95) and the total interest charge for the six months ended 30 June 2022 amounts to EUR 178,074. |
Note 16 - Provisions for taxation
The Group is subject to tax in the countries listed in the Note 2. The income tax provision is computed by applying the applicable tax rates to the results of the operations, taking into account permanent differences between pre-taxable results for accounting purposes and those for tax purposes.
B Medical Systems Holding S.A. (in liquidation) and B Medical Systems S.à r.l. formed a fiscal unity until December 31st 2021. The corporate income tax and the municipal business tax liabilities on income are recorded in the accounts of the parent company B Medical Systems Holding S.A. (in liquidation), the expense is allocated to the profit generating company.
Note 17- Net turnover
The net turnover is broken down by geographical markets as follows:
In EUR thousands |
| 30 June 2022 |
|
| | | |
Geographical markets: | | | |
| | | |
Africa | | 31,076 | |
Americas | | 3,525 | |
Asia | | 3,999 | |
Europe | | 3,515 | |
Middle East – North Africa (MENA) | | 3,950 | |
| | | |
Total | | 46,065 | |
| | | |
Category of activity: | | | |
| | | |
Medical | | 46,065 | |
| | | |
Total | | 46,065 | |
14
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 18 - Other external expenses
In the six months period ended 30 June 2022, other external expenses amounted to EUR 12,643,251 and mainly relate to general and administration services fees.
Note 19 - Staff
The Group employed an average of 341 persons during the six months ended 30 June 2022 broken down by category as follows:
|
| 30 June 2022 |
|
Employees | | 187 | |
Workers | | 154 | |
| | | |
Total | | 341 | |
Note 20 - Value adjustments on current assets
During the period, value adjustments on current assets amounting to EUR 302 thousand were recorded and are made up as follows:
In EUR thousands |
| 30 June 2022 |
|
Value adjustments on inventories | | (284) | |
Value adjustments on trade receivables | | (20) | |
Value adjustment on other receivables | | 2 | |
| | | |
Total | | (302) | |
Note 21 - Advances and loans granted to the members of the administrative, managerial and supervisory bodies
In 2019 and 2020, one affiliated undertaking granted loans to two senior members of the Management of the Company. The loans have a short-term maturity and bear interest.
Note 22 - Emoluments granted to the members of the administrative, managerial and supervisory bodies and commitments in respect of retirement pensions for former members of those bodies
No emoluments were granted during the financial period ended 30 June 2022 to the members of the administrative managerial and supervisory bodies in that capacity.
Note 23 - Auditor’s fees
The total fees expensed by the Group for the six months ended 30 June 2022 to the auditor amounted to EUR 80,250.
15
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 24 - Off balance sheet commitments
The financial commitments as at June 30 2022 and December 31 2021 are as follows:
In EUR thousands |
| 2022 |
| 2021 |
|
| | | | | |
Commitment Received | | | | | |
Bank guarantees | | 3 | | 101 | |
| | | | | |
Commitment Given | | | | | |
Luxembourg Leasing | | 471 | | 462 | |
Luxembourg warehouse agreement | | 1,588 | | 1,832 | |
India Leasing | | 3,648 | | 3,493 | |
US warehouse lease | | 78 | | 98 | |
Note 25 - Subsequent events
Since February 2022, a number of countries (including amongst others the US, UK and EU) imposed sanctions against certain entities and individuals in Russia as a result of the official recognition of the Donetsk People Republic and Lugansk People Republic by the Russian Federation.
The situation, together with growing turmoil from fluctuations in commodity prices and foreign exchange rates, and the impact to global economies, has driven a sharp increase in volatility across markets. The Liquidator of the Company regard these events for the Group as non-adjusting events after the reporting period.
Although neither the Group’s performance and going concern nor operations, at the date of the approval of these accounts, have been significantly impacted by the above, Management continues to monitor the evolving situation and its impact on the financial position and operations of the Group and has evaluated subsequent events until the date the accounts were available to be issued, and concluded no additional disclosures are required.
On 3 October 2022, Azenta, Inc. and its affiliates (“Azenta”) acquired B Medical Systems S.à r.l. and its subsidiaries (“B Medical”). Azenta is a leading provider of life sciences solutions worldwide. Azenta paid a total initial cash purchase price at closing of EUR 389 million, as adjusted for cash acquired and other items, as well as the payment of EUR 43 million of outstanding debt held at B Medical and its parent entities. B Medical is eligible to earn up to approximately EUR 50 million in contingent consideration based upon achievement of certain financial metrics.
Both the HSBC / BIL and SNCI loans were repaid in full in September 2022.
Following this transaction, it has been decided to voluntarily put the Company into liquidation during the Extraordinary Meeting of the Sole Shareholder of the Company held on 4 October 2022, as its sole investment has been transferred to Azenta. Asclepius Holding Ltd. has been appointed as Liquidator of the Company.
16
B Medical Systems Holding S.A. (in liquidation)
Notes to the consolidated interim accounts as at 30 June 2022
Note 26 - Consolidated statement of cash flows for the six months ended 30 June 2022 (unaudited)
(in EUR thousands) |
| |
|
| | | |
STATEMENT OF CASHFLOWS | | | |
Profit/(loss) | | (270) | |
Interest Expense/ (Interest Income) | | 206 | |
Other Non-Cash Adjustment | | | |
Depreciation/Amortization | | 4,615 | |
Income Taxes Accrued/(Credit) | | 736 | |
Other Non-Cash Items | | 302 | |
Changes in Operating Assets & Liabilities | | (1,890) | |
Income Taxes Paid | | (428) | |
Cash Flows from Operating Activities | | 3,271 | |
| | | |
Acquisitions of Tangible and Intangible Assets, net of disposals | | (4,956) | |
Cash Flows from Investing Activities | | (4,956) | |
| | | |
Interest Paid | | (788) | |
Repayment of amounts owed to credit institutions | | (370) | |
Grants received from Government | | 5,702 | |
Cash Flows from Financing Activities | | 4,544 | |
| | | |
Net Cash Flows | | 2,859 | |
| | | |
Beginning Cash | | 8,204 | |
Ending Cash | | 11,063 | |
17
Unaudited Pro Forma Condensed Combined Financial Information
On August 9, 2022, Azenta Inc. and its affiliates ("Azenta”) entered into a definitive agreement to acquire substantially all the assets of B Medical Systems Holding S.A. (“Holding”), which assets constituted B Medical Systems S.a.r.l. and its subsidiaries (“B Medical”). B Medical is a market leader in temperature-controlled storage and transportation solutions that enables the delivery of life-saving treatments across the globe. The preliminary cash purchase price paid at closing was approximately $424,103 (or €432,934). Additional cash consideration, up to approximately $49,017 (or €50,000), may be paid upon achievement of certain future performance milestones. The transaction closed on October 3, 2022.
B Medical was a subsidiary of Holding prior to the acquisition. Holding’s consolidated results are inclusive of the operating activity of B Medical.
The unaudited pro forma condensed combined balance sheet as of September 30, 2022 and the unaudited pro forma condensed combined income statement for the year ended September 30, 2022 are presented herein. The unaudited pro forma condensed combined balance sheet combines the audited consolidated balance sheet of Azenta as of September 30, 2022 and the unaudited consolidated balance sheet of Holding as of June 30, 2022 and gives effect to the transaction as if it had been completed on September 30, 2022. The unaudited pro forma condensed combined income statement combines the audited historical results of Azenta for the year ended September 30, 2022 and the unaudited historical results of Holding for the twelve months ended June 30, 2022 and gives effect to the transaction as if it occurred on October 1, 2021. These unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined income statement are collectively referred to as the pro forma financial information.
The following pro forma financial information of Azenta and B Medical is presented to illustrate the estimated effects of the transaction, which are referred to as adjustments or transaction accounting adjustments.
The pro forma financial information should be read in conjunction with the accompanying notes. In addition, the pro forma financial information is derived from and should be read in conjunction with the following historical consolidated financial statements and accompanying notes of Azenta and B Medical:
| ● | Audited consolidated financial statements of Azenta as of and for the year ended September 30, 2022 included in Azenta’s Annual Report on Form 10-K for the year ended September 30, 2022; |
| ● | Audited consolidated financial statements of Holding as of and for the year ended December 31, 2021; and |
| ● | Unaudited consolidated financial statements of Holding as of and for six months ended June 30, 2022. |
Additionally, the adjustments columns in the pro forma financial information below include adjustments and eliminations made to Holding historical financial information to reflect certain intercompany activities which are solely related to Holding and not B Medical’s operations.
The pro forma financial information has been prepared by Azenta in accordance with Regulation S-X Article 11, Pro Forma Financial Information, which is referred to herein as Article 11. The pro forma financial information is based on various adjustments and assumptions and is not necessarily indicative of what Azenta’s consolidated statements of operations or consolidated balance sheet actually would have been had the transaction been completed as of the dates indicated or will be for any future periods.
The pro forma financial information does not reflect adjustments for any other consummated or probable acquisitions by either Azenta or B Medical since such transactions were not significant in accordance with Regulation S-X Rule 3-05.
The transaction was accounted for using the acquisition method of accounting, and Azenta is treated as the accounting acquirer. In identifying Azenta as the acquiring entity for accounting purposes, Azenta and B Medical took into account a number of factors as of filing the Current Report on Form 8-K/A to which this pro forma financial information is included as an Exhibit, including the relative voting rights of all equity instruments in the combined company, the composition of senior management of the combined company and corporate governance structure of the combined company. No single factor was the sole determinant in the overall conclusion that Azenta is the acquirer for accounting purposes; rather all factors were considered in arriving at such conclusion.
Azenta’s financial statements were prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) while Holding’s financial statements were prepared in accordance with generally accepted accounting principles in Luxembourg (“Luxembourg GAAP”). The accounting policies used in the preparation of the pro forma financial information are those
1
set out in Azenta’s audited financial statements as of and for the year ended September 30, 2022. The conformation of Holding’s accounting policies along with Azenta’s accounting policies is described below in Note 3.
The transaction accounting adjustments are preliminary, based upon available information as of the date of filing the Current Report on Form 8-K/A to which this pro forma financial information is included as an Exhibit, and prepared solely for the purpose of this pro forma financial information. These adjustments are based on preliminary estimates and will be different from the adjustments that may be determined based on final acquisition accounting, and these differences could be material. The transaction accounting adjustments are based on the consideration paid for the transaction and the fair values of assets acquired and liabilities assumed. This assessment will not be completed until Azenta reports its results for the interim period ended December 31, 2022 and through the measurement period. The estimated fair values assigned in this pro forma financial information are preliminary and represent Azenta’s current best estimate of fair value and are subject to revision.
The pro forma financial information does not purport to project the future financial position or operating results of Azenta following the completion of the transaction. The pro forma financial information does not include adjustments to reflect any potential revenue, synergies or dis-synergies, or cost savings that may be achievable in connection with the transaction, or the associated costs that may be necessary to achieve such revenues, synergies or cost savings.
2
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2022
(US dollars in thousands)
|
| As of September 30, |
| As of June 30, |
| As of June 30, |
| As of June 30, |
| As of September 30, |
| As of September 30, | ||||||
| | 2022 | | 2022 | | 2022 | | 2022 | | 2022 | | 2022 | ||||||
| | | | B Medical | | B Medical | | | | Transaction | | | ||||||
| | | | Systems Holding S.A. | | Systems Holding S.A. | | GAAP | | Accounting | | | ||||||
| | | | (Luxembourg | | Elimination | | Conversion | | Adjustments | | | ||||||
| | | | GAAP) | | Adjustments | | Adjustments | | (See Note | | Pro Forma | ||||||
| | Azenta Inc. | | (See Note 5) | | (See Note 7) | | (See Note 6) | | 4 and 8) | | Combined | ||||||
ASSETS | | | | | | | | | | | | | ||||||
Current assets | | | | | | | | | | | | | ||||||
Cash and cash equivalents | | | 658,274 | | | 11,420 | | | (1) | | | — | | | (424,103) | 4 | | 245,590 |
Short-term marketable securities | | | 911,764 | | | — | | | — | | | — | | | — | | | 911,764 |
Accounts receivable, net | | | 163,759 | | | 18,708 | | | (1,172) | | | — | | | (1,018) | 8E | | 180,277 |
Inventories | | | 85,544 | | | 48,831 | | | — | | | (2,903) | 6E | | 14,728 | 8A | | 146,200 |
Derivative asset | | | 124,789 | | | — | | | — | | | — | | | — | | | 124,789 |
Short-term restricted cash | | | 382,596 | | | — | | | — | | | — | | | — | | | 382,596 |
Prepaid expenses and other current assets | | | 132,620 | | | 5,543 | | | 20,569 | | | 2,903 | 6E | | (22,114) | 8E | | 139,521 |
Total Current assets | | $ | 2,459,346 | | $ | 84,502 | | $ | 19,396 | | $ | — | | $ | (432,507) | | $ | 2,130,737 |
Non-current assets | | | | | | | | | | | | | ||||||
Property, plant and equipment, net | | | 154,470 | | | 32,903 | | | — | | | (169) | 6A | | 34,724 | 8B | | 221,928 |
Long-term marketable securities | | | 352,020 | | | — | | | — | | | — | | | — | | | 352,020 |
Long-term deferred tax assets | | | 1,169 | | | — | | | — | | | 5,895 | 6G | | (5,895) | 8G | | 1,169 |
Goodwill | | | 513,623 | | | — | | | — | | | — | | | 213,072 | 4A | | 726,695 |
Intangible assets, net | | | 178,401 | | | 16,687 | | | — | | | (16,173) | 6A | | 135,686 | 8C | | 314,601 |
Other assets | | | 57,093 | | | 4,675 | | | (4,238) | | | — | | | — | | | 57,530 |
Operating lease right-of-use assets | | | — | | | — | | | — | | | 3,802 | 6F | | — | | | 3,802 |
Total Non-current assets | | | 1,256,776 | | | 54,265 | | | (4,238) | | | (6,645) | | | 377,587 | | | 1,677,745 |
Total Assets | | $ | 3,716,122 | | $ | 138,767 | | $ | 15,158 | | $ | (6,645) | | $ | (54,920) | | $ | 3,808,482 |
LIABILITIES | | | | | | | | | | | | | ||||||
Current liabilities | | | | | | | | | | | | | ||||||
Current portion of long-term debt | | | — | | | 18,815 | | | 73,369 | | | — | | | (92,184) | 8E | | — |
Accounts payable | | | 38,654 | | | 43,086 | | | (29,868) | | | — | | | — | | | 51,872 |
Deferred revenue | | | 39,748 | | | — | | | — | | | 5,093 | 6D | | — | | | 44,841 |
Accrued warranty and retrofit costs | | | 2,890 | | | 1,429 | | | — | | | — | | | — | | | 4,319 |
Accrued compensation and benefits | | | 41,898 | | | 3,243 | | | — | | | — | | | — | | | 45,141 |
Accrued income taxes payable | | | 28,419 | | | 6,758 | | | (6,752) | | | — | | | — | | | 28,425 |
Accrued expenses and other current liabilities | | | 78,937 | | | 2,873 | | | (22) | | | — | | | 4,714 | 8D | | 86,502 |
Operating lease liabilities, current portion | | | — | | | — | | | — | | | 497 | 6F | | — | | | 497 |
Total Current liabilities | | $ | 230,546 | | $ | 76,204 | | $ | 36,727 | | $ | 5,590 | | $ | (87,470) | | $ | 261,597 |
Non Current liabilities | | | | | | | | | | | | | ||||||
Operating lease liabilities, net of current portion | | | — | | | — | | | — | | | 3,305 | 6F | | — | | | 3,305 |
Long-term debt | | | — | | | 37,672 | | | (37,672) | | | — | | | — | | | — |
Long-term tax reserves | | | 1,684 | | | — | | | — | | | — | | | — | | | 1,684 |
Long-term deferred tax liabilities | | | 64,555 | | | — | | | — | | | — | | | 45,018 | 8G | | 109,573 |
Long-term pension liabilities | | | 261 | | | — | | | — | | | — | | | — | | | 261 |
3
Unaudited Pro Forma Condensed Combined Balance Sheet (Cont.)
As of September 30, 2022
(US dollars in thousands)
|
| As of September 30, |
| As of June 30, |
| As of June 30, |
| As of June 30, |
| As of September 30, |
| As of September 30, | ||||||
| | 2022 | | 2022 | | 2022 | | 2022 | | 2022 | | 2022 | ||||||
| | | | | B Medical | | B Medical | | | | | Transaction | | | | |||
| | | | | Systems Holding S.A. | | Systems Holding S.A. | | GAAP | | Accounting | | | | ||||
| | | | | (Luxembourg | | Elimination | | Conversion | | Adjustments | | | | ||||
| | | | | GAAP) | | Adjustments | | Adjustments | | (See Note | | Pro Forma | |||||
| | Azenta Inc. | | (See Note 5) | | (See Note 7) | | (See Note 6) | | 4 and 8) | | Combined | ||||||
Long-term operating lease liabilities | | | 49,227 | | | — | | | — | | | — | | | — | | | 49,227 |
Other long-term liabilities | | | 6,463 | | | — | | | — | | | — | | | 17,700 | 4 | | 24,163 |
Total Non Current liabilities | | | 122,190 | | | 37,672 | | | (37,672) | | | 3,305 | | | 62,718 | | | 188,213 |
Total Liabilities | | $ | 352,736 | | $ | 113,876 | | $ | (945) | | $ | 8,895 | | $ | (24,752) | | $ | 449,810 |
EQUITY |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Stockholder's equity (deficit) |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Preferred stock, $0.01 par value - 1,000,000 shares authorized, no shares issued or outstanding |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
Common stock, $0.01 par value - 125,000,000 shares authorized, 88,482,125 shares issued and 75,020,256 shares outstanding at September 30, 2022 |
| | 885 |
| | — |
| | — |
| | — |
| | — |
| | 885 |
Additional paid-in capital |
| | 1,992,017 |
| | 16,759 |
| | (1,864) |
| | (5,093) | 6D | | (9,802) | 8F | | 1,992,017 |
Accumulated other comprehensive income |
| | (83,916) |
| | 27 |
| | — |
| | — |
| | (27) | 8F | | (83,916) |
Treasury stock at cost - 13,461,869 shares |
| | (200,956) |
| | — |
| | — |
| | — |
| | — | | | (200,956) |
Retained earnings (accumulated deficit) |
| | 1,655,356 |
| | 8,105 |
| | 17,967 |
| | (16,342) | 6A | | (4,714) | 8D | | 1,650,642 |
| | | | | | | | | |
| | 5,895 | 6G | | (15,625) | 8F | | |
Total Stockholder's equity (deficit) |
| | 3,363,386 |
| | 24,891 |
| | 16,103 |
| | (15,540) |
| | (30,168) |
| | 3,358,672 |
Total Equity |
| | 3,363,386 |
| | 24,891 |
| | 16,103 |
| | (15,540) |
| | (30,168) |
| | 3,358,672 |
Total Liability and Equity | | $ | 3,716,122 | | $ | 138,767 | | $ | 15,158 | | $ | (6,645) | | $ | (54,920) | | $ | 3,808,482 |
See accompanying notes to unaudited pro forma condensed combined financial information.
4
Unaudited Pro Forma Condensed Combined Income Statement
For the year ended September 30, 2022
(US dollars in thousands, except per share amounts)
|
| For the |
| For the twelve |
| For the twelve |
| For the twelve |
| For the |
| For the | ||||||
| | year ended | | months ended | | months ended | | months ended | | year ended | | year ended | ||||||
| | September 30, 2022 | | June 30, 2022 | | June 30, 2022 | | June 30, 2022 | | September 30, 2022 | | September 30, 2022 | ||||||
| | | | | B Medical | | B Medical | | | | | | | | | | ||
| | | | | Systems Holding | | Systems Holding | | GAAP | | Transaction | | | | ||||
| | | | | S.A. | | S.A. Elimination | | Conversion | | Accounting | | | | ||||
| | | | | (Luxembourg GAAP) | | Adjustments | | Adjustments | | Adjustments | | Pro Forma | |||||
| | Azenta Inc. | | (See Note 5) (#) | | (See Note 7) | | (See Note 6) | | (Note 8) | | Combined | ||||||
Revenue | | | | | | | | | | | | | | | | | | |
Revenue - Products | | $ | 180,950 | | $ | 122,492 | | $ | — | | $ | (508) | 6B | $ | — | | $ | 305,315 |
| | | | | | | | | | | | 2,381 | 6C | | — | | | |
Revenue - Services | | | 374,548 | | | — | | | — | | | — | | | — | | | 374,548 |
Total Revenue | | | 555,498 | | | 122,492 | | | — | | | 1,873 | | | — | | | 679,863 |
Cost of revenue | |
| | |
| | |
| | |
| | |
| | |
| |
Cost of revenue - Products |
| | 100,044 |
| | 75,519 |
| | 129 |
| | 182 | 6A | | 14,728 | 8A | | 197,387 |
| | | | | | | | | |
| | (508) | 6B | | 4,912 | 8C | | |
| | | | | | | | | |
| | 2,381 | 6C | | — | | | |
Cost of revenue - Services |
| | 199,870 |
| | — |
| | — |
| | — |
| | — |
| | 199,870 |
Total Cost of revenue |
| | 299,914 |
| | 75,519 |
| | 129 |
| | 2,055 |
| | 19,640 |
| | 397,257 |
Gross Profit |
| | 255,584 |
| | 46,973 |
| | (129) |
| | (182) |
| | (19,640) |
| | 282,606 |
Operating expenses |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Research and development |
| | 27,542 |
| | 187 |
| | — |
| | 3,355 | 6A | | — |
| | 31,084 |
Selling, general and administrative |
| | 252,065 |
| | 31,748 |
| | 78 |
| | (2,600) | 6A | | 555 | 8B | | 292,135 |
| | | | | | | | | |
| | — |
| | 5,575 | 8C | | |
| | | | | | | | | |
| | — |
| | 4,714 | 8D | | |
Restructuring charges |
| | 712 |
| | — |
| | — |
| | — |
| | — |
| | 712 |
Total Operating expenses |
| | 280,319 |
| | 31,935 |
| | 78 |
| | 755 |
| | 10,844 |
| | 323,931 |
Operating income (loss) |
| | (24,735) |
| | 15,038 |
| | (207) |
| | (937) |
| | (30,484) |
| | (41,325) |
Interest income |
| | 20,286 |
| | 191 |
| | (572) |
| | — |
| | (182) | 8E | | 19,723 |
Interest expense |
| | (4,589) |
| | (4,104) |
| | 18 |
| | — |
| | 4,104 | 8E | | (4,571) |
Loss on extinguishment of debt |
| | (632) |
| | — |
| | — |
| | — |
| | — |
| | (632) |
Other income (expenses), net |
| | (266) |
| | 306 |
| | — |
| | — |
| | — |
| | 40 |
Income (loss) before income taxes |
| | (9,936) |
| | 11,431 |
| | (761) |
| | (937) |
| | (26,562) |
| | (26,765) |
Income tax provision (benefit) |
| | 1,350 |
| | 4,180 |
| | (220) |
| | (258) | 6G | | (6,008) | 8H | | (956) |
Net (loss) income | | $ | (11,286) | | $ | 7,251 | | $ | (541) | | $ | (679) | | $ | (20,554) | | $ | (25,809) |
Earnings (loss) per share: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Basic | | $ | (0.15) | |
|
| |
|
| |
|
| |
|
| | $ | (0.34) |
Diluted | | $ | (0.15) | |
|
| |
|
| |
|
| |
|
| | $ | (0.34) |
Weighted average shares outstanding: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Basic | |
| 74,897 | |
|
| |
|
| |
|
| |
|
| |
| 74,897 |
Diluted | |
| 74,897 | |
|
| |
|
| |
|
| |
|
| |
| 74,897 |
(#)Derived from the audited consolidated statement of profit and loss of B Medical Systems Holding S.A. for the year ended December 31, 2021 adjusted to June 30, 2022 year ended by adding amounts from the unaudited consolidated statement of profit and loss for the six months ended June 30, 2022 and deducting amounts from the unaudited consolidated statement of profit and loss for the six months ended June 30, 2021.
See accompanying notes to unaudited pro forma condensed combined financial information.
5
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
Note 1. Description of the Transaction
On August 9, 2022, Azenta entered into a definitive agreement to acquire B Medical from Holding. B Medical is a market leader in temperature-controlled storage and transportation solutions that enables the delivery of life-saving treatments across the globe. The preliminary cash purchase price paid at closing was approximately $424,103 (or €432,934). Additional cash consideration, up to approximately $49,017 (or €50,000), may be paid upon achievement of certain future performance milestones. The transaction closed on October 3, 2022.
Note 2. Basis of Pro Forma Presentation
The accompanying pro forma financial information was prepared in accordance with Article 11. The pro forma condensed combined balance sheet was prepared using the historical balance sheets of Azenta as of September 30, 2022, and Holding as of June 30, 2022. Separately, Holding's statutory activities have been removed from the consolidated balance sheet and statement of profit and loss to present B Medical's financial statements solely. Azenta's fiscal year ends on September 30 and Holding's fiscal year ends on December 31. To comply with rules and regulations of the Securities and Exchange Commission for companies with different fiscal year ends, the pro forma financial information has been prepared utilizing periods that differ by one quarter. The unaudited pro forma condensed combined income statement was prepared using:
| ● | the historical audited consolidated statement of operations of Azenta for the year ended September 30, 2022; |
| ● | the historical audited consolidated statement of profit and loss of Holding for the year ended December 31, 2021; and |
| ● | the historical unaudited consolidated statement of profit and loss of Holding for the six months ended June 30, 2022. |
The historical consolidated statement of profit and loss of Holding for twelve months ended June 30, 2022, was derived from the audited consolidated statement of profit and loss of Holding for the year ended December 31, 2021 by adding amounts from the unaudited consolidated statement of profit and loss for the six months ended June 30, 2022 and deducting amounts from the profit and loss activity for the six months ended June 30, 2021.
The pro forma financial information reflects transaction accounting adjustments that management believes are necessary to present fairly Azenta’s pro forma results of operations and financial position following the closing of the transaction as of and for the periods indicated. The transaction accounting adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report Azenta’s financial condition and results of operations as if the transaction was completed as of October 1, 2021 (as of September 30, 2022 for purposes of the unaudited pro forma condensed combined balance sheet).
The pro forma financial information has accounted for the transaction using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” which is referred to as ASC 805, and is derived from the audited and unaudited historical financial statements of Azenta and Holding.
The acquisition method of accounting uses the fair value concepts defined in ASC 820, “Fair Value Measurements and Disclosures,” which is referred to as ASC 820. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective and can involve a high degree of estimation.
The determination of the fair value of the identifiable assets of B Medical and the allocation of the estimated consideration to these identifiable assets and liabilities is preliminary and is pending finalization of various estimates, inputs and analyses. This assessment is in process and will not be completed until Azenta reports its results for the interim period ended December 31, 2022.
The initial allocation of the preliminary estimated consideration in this pro forma financial information is based upon the estimated value of the consideration as of the transaction date on October 3, 2022.
6
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
At this preliminary stage, the estimated identifiable finite lived intangible assets include customer relationships, trademarks, and developed technologies. Goodwill represents the excess of the estimated purchase price over the estimated fair value of B Medical’s identifiable assets and liabilities, including the fair value of the estimated identifiable finite assets and liabilities described above. Goodwill will not be amortized but will be subject to periodic impairment testing. The goodwill balance shown in the pro forma financial information is preliminary and subject to change as a result of the same factors affecting both the estimated consideration and the estimated fair value of identifiable assets and liabilities acquired. The goodwill balance represents the combined company’s expectations of the strategic opportunities available to it as a result of the transaction, as well as other synergies that may be derived from the transaction.
Upon completion of the final valuation, the estimated fair value of the acquired assets and liabilities will be updated, including the estimated fair value and useful lives of the identifiable intangible assets and allocation of the excess purchase price, if any, to goodwill. The calculation of goodwill and other identifiable intangible assets could be materially impacted by changing fair value measurements caused by the volatility in the current market environment. Under ASC 805, transaction costs related to the transaction are expensed in the period they are incurred. Total transaction related costs incurred by Azenta and B Medical in connection with the transaction are estimated to be approximately $4,714. The transaction costs incurred by B Medical are reflected as a reduction of B Medical’s assets acquired by Azenta. The remaining amounts are reflected as an adjustment of transaction cost paid in the unaudited pro forma condensed combined balance sheet as of September 30, 2022. The total amount not yet incurred is reflected as an expense in the unaudited condensed combined statement of income for the year ended September 30, 2022.
For purposes of preparing the pro forma financial information, the historical financial information of Holding and related pro forma adjustments was translated from Euros to US dollars using the following historical exchange rates:
Period of Exchange Rate |
| €/$ |
Closing exchange rate as of June 30, 2022 | | 1.0491 |
Average exchange rate for the twelve months ended June 30, 2022 | | 1.1268 |
These exchange rates may differ from future exchange rates which would have an impact on the pro forma financial information and would also impact purchase accounting.
Note 3. Significant Accounting Policies
Azenta's financial statements were prepared in accordance with US GAAP while Holding’s financial statements were prepared in accordance with Luxembourg GAAP. The accounting policies used in the preparation of the pro forma financial information are those set out in Azenta’s audited financial statements as of and for the year ended September 30, 2022.
Certain adjustments were made to conform the Luxembourg GAAP presentation to US GAAP presentation in alignment with Azenta’s presentation of US GAAP as specified in Note 5. Certain GAAP conversion adjustments are reflected in the unaudited pro forma condensed combined balance sheet and income statement as specified in Note 6. These adjustments and reclassifications have no effect on previously reported total assets, total liabilities and shareholders’ equity, or net income or loss of Azenta or Holding. Accounting policy differences and additional reclassification adjustments may be identified as Azenta completes its acquisition accounting in accordance with ASC 805.
At the time of filing the Current Report on Form 8-K/A to which this pro forma financial information is included as an Exhibit, except GAAP and reclassification adjustments specified in Note 5 related to certain balances presented in the historical financial statements of Holding, Azenta is not aware of any material differences between the accounting policies of the two entities that would continue to exist subsequent to the application of acquisition accounting. Management is in the process of a comprehensive review of the accounting policies between the two entities.
As a result, Azenta may identify additional differences between the accounting policies of the two entities that, when conformed, could have a material impact on this pro forma financial information.
Note 4. Estimated Purchase Price
The cash purchase price paid at closing was approximately $424,103 (or €432,934). The purchase consideration is converted from Euros to US dollars by using the spot rate as of the date the following components of the consideration were (or will be) paid for by Azenta.
7
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
Total purchase consideration consists of (1) initial purchase consideration of approximately $381,380 (or €389,026) paid as per the transaction agreement (2) payment of approximately $42,242 (or €43,409) redemption of B Medical’s outstanding debt (3) $481 (or €500) of warranty and indemnity insurance premium paid on behalf of Seller and (4) a potential cash payment up to approximately $49,017 (€50,000) with a calculated fair value of $17,700, based upon achievement of certain future performance milestones.
The fair value of the contingent consideration referred to clause (4) above will be remeasured quarterly until settlement, impacting the value of the contingent consideration liability and earnings. As such, the total consideration transferred in connection with the transaction reflected in the pro forma financial information does not purport to represent the actual total consideration to ultimately be transferred in connection with the transaction.
The preliminary purchase price is allocated to the assets to be acquired and liabilities to be assumed based on the estimated fair values, with any excess purchase price allocated to goodwill as follows:
|
| Amounts (US dollars | |
Estimated total purchase price | | $ | 441,803 |
| | | |
Cash and cash equivalents | | $ | 11,419 |
Accounts receivable, net | | $ | 16,518 |
Inventories | | $ | 60,656 |
Prepaid expenses and other current assets | | $ | 6,901 |
Property, plant and equipment, net | | $ | 67,458 |
Intangible assets, net | | $ | 136,200 |
Other non-current assets | | $ | 437 |
Operating lease right-of-use assets | | $ | 3,802 |
Accounts payable | | $ | (13,218) |
Deferred revenue | | $ | (5,093) |
Accrued warranty and retrofit costs | | $ | (1,429) |
Accrued compensation and benefits | | $ | (3,243) |
Accrued income taxes payable | | $ | (6) |
Accrued expenses and other current liabilities | | $ | (2,851) |
Operating lease liabilities, current portion | | $ | (497) |
Operating lease liabilities, net of current portion | | $ | (3,305) |
Long-term deferred tax liabilities | | $ | (45,018) |
Goodwill | | $ | 213,072 |
This preliminary purchase price allocation has been used to prepare pro forma adjustments in the pro forma financial information and is subject to adjustment as purchase accounting is finalized. The final purchase price allocation will be determined when Azenta has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include, but not be limited to: (1) changes in fair values of property, plant and equipment, (2) changes in allocations to intangible assets, (3) changes to inventory and (4) other changes to assets and liabilities.
8
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
Note 5. GAAP Reclassification Adjustments
Certain reclassifications were made to align Holding’s financial statement presentation with that of Azenta based on information available to date.
Unaudited pro forma condensed combined balance sheet as of June 30, 2022:
Presentation in B Medical Systems Holding S.A.'s Luxembourg GAAP |
| | |
| | |
| |
| Pro Forma | |
financial statements (Azenta Financial Statements) | | As of June 30, 2022 | | Reclassifications | | | | Presentation | |||
Intangible assets | | $ | 16,884 | | $ | (196) |
| (a) | | $ | 16,687 |
Tangible assets / Property, plant and equipment, net | |
| 32,707 | |
| 196 |
| (a) | |
| 32,903 |
Financial assets / Other assets | |
| 4,238 | |
| |
|
| |
| 4,238 |
Stocks / Inventories | |
| 48,831 | |
| |
|
| |
| 48,831 |
Trade debtors / Accounts receivable, net | |
| 15,775 | |
| 2,933 |
| (b), (c) | |
| 18,708 |
Amounts owed by affiliated undertakings | |
| 2,097 | |
| (2,097) |
| (b) | |
| — |
Other debtors | |
| 3,360 | |
| (3,360) |
| (c) | |
| — |
Cash at bank and in hand / Cash and cash equivalents | |
| 11,606 | |
| (186) |
| (f) | |
| 11,420 |
Prepayments / Prepaid expenses and other current assets | |
| 1,959 | |
| 3,584 |
| (c), (h) | |
| 5,543 |
Other assets | |
| — | |
| 437 |
| (c) | |
| 437 |
Total Assets | |
| 137,455 | |
| 1,312 |
| | |
| 138,767 |
Subscribed capital | |
| (33) | |
| 33 |
| (d) | |
| — |
Share premium account | |
| (10,833) | |
| 10,833 |
| (d) | |
| — |
Reserves | |
| (800) | |
| 800 |
| (d) | |
| — |
Additional paid-in capital | |
| | |
| (16,759) |
| (d) | |
| (16,759) |
Profit or loss brought forward / Accumulated deficit | |
| (8,105) | |
| |
|
| |
| (8,105) |
Capital investment subsidies | |
| (5,093) | |
| 5,093 |
| (d) | |
| — |
Provisions | |
| (3,859) | |
| 3,859 |
| (e) | |
| — |
Amounts owed to credit institutions / Current portion of long-term debt | |
| (18,813) | |
| (2) |
| (h) | |
| (18,815) |
Trade creditors | |
| (13,510) | |
| 13,510 |
| (f) | |
| — |
Amounts owed to affiliated undertakings | |
| (67,489) | |
| 67,489 |
| (g) | |
| — |
Other creditors | |
| (8,921) | |
| 8,921 |
| (h) | |
| — |
Accrued expenses and other current liabilities | |
| — | |
| (2,873) |
| (c), (e), (f), (h) | |
| (2,873) |
Accrued warranty and retrofit costs | |
| — | |
| (1,429) |
| (e) | |
| (1,429) |
Accounts payable | |
| — | |
| (43,086) |
| (f), (g) | |
| (43,086) |
Accumulated other comprehensive income | |
| — | |
| (27) |
| (f) | |
| (27) |
Long term-debt | |
| — | |
| (37,672) |
| (g) | |
| (37,672) |
Accrued compensation and benefits | |
| — | |
| (3,243) |
| (h) | |
| (3,243) |
Accrued income taxes payable | |
| — | |
| (6,758) |
| (h) | |
| (6,758) |
Total Capital, Reserves, and Liabilities | |
| (137,455) | |
| (1,312) |
| | |
| (138,767) |
Certain items presented by Holding under Luxembourg GAAP have been reclassified to align with the presentation used by Azenta under US GAAP. The following reclassifications were made to the unaudited pro forma condensed combined balance sheet presentation:
a) | Reclassification of $196 of software costs from Intangible assets to Property, plant, and equipment. |
b) | Reclassification of $2,097 of interest receivable owed by affiliated undertakings from Amounts owed by affiliated undertakings to Accounts receivable, net. |
c) | The following were reclassified from Other debtors: |
| ● | $2,080 of advance payment to suppliers to Prepaid expenses and other current assets |
| ● | $437 of security deposits to Other assets |
| ● | $836 of unbilled accounts receivable to Accounts receivable, net |
| ● | $6 of accrued sales tax to Accrued expenses and other current liabilities. |
9
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
d) | The following were reclassified to Additional paid-in capital: |
| ● | $33 of common stock from Subscribed capital |
| ● | $10,833 of capital contributions and share premium from Share premium account |
| ● | $800 of special reserves from Reserves |
| ● | $5,093 of government subsidies for capital investments from Capital investment subsidies. |
e) | Reclassifications from Provisions of $1,429 of warranty reserves to Accrued warranty and retrofit costs and $2,429 of expenses owed to external parties to Accrued expenses and other current liabilities. |
f) | The following were reclassified from Trade creditors: |
| ● | $13,269 of amounts due to trade vendors to Accounts payable |
| ● | $28 of accrued legal fees to Accrued expenses and other current liabilities |
| ● | $27 of unrealized foreign currency exchange to Accumulated other comprehensive income |
| ● | $186 of cash in transit to Cash and cash equivalents. |
g) | Reclassifications from Amounts owed to affiliated undertakings of $29,817 intercompany loan interest payable to Accounts payable and $37,672 intercompany loan to Long-term debt. |
h) | The following were reclassified from Other creditors: |
| ● | $1,503 of advances to suppliers to Prepaid expenses and other current assets |
| ● | $3,243 of accrued payroll costs to Accrued compensation and benefits |
| ● | $6,758 of income tax owed to Accrued income taxes payable |
| ● | $421 of accrued travel expenses, sales tax, and professional fees to Accrued expenses and other current liabilities |
| ● | $2 of loan interest to Current portion of long-term debt. |
Unaudited pro forma condensed combined income statement for the twelve months ended June 30, 2022:
Presentation in B Medical Systems Holding S.A.'s Luxembourg GAAP |
| For the twelve months |
| | |
| |
| Pro Forma | ||
financial statements (Azenta Financial Statements) | | ended June 30, 2022 | | Reclassifications | | | | Presentation | |||
Net turnover / Revenue - Products | | $ | 122,439 | | $ | 53 |
| (a) | | $ | 122,492 |
Variation in stocks of finished goods and in work in progress | |
| 5,022 | |
| (5,022) |
| (b) | |
| — |
Work performed by the undertaking for its own purposes and capitalised | |
| 5,938 | |
| (5,938) |
| (b), (c), (d) | |
| — |
Other operating income | |
| 1,309 | |
| (1,309) |
| (a), (b), (g) | |
| — |
Raw materials and consumables and other external expenses | |
| 85,675 | |
| (85,675) |
| (b), (c), (d), (g) | |
| — |
Staff costs | |
| 23,149 | |
| (23,149) |
| (b), (c), (d) | |
| — |
Value adjustments | |
| 10,142 | |
| (10,142) |
| (b), (d) | |
| — |
Other operating expenses | |
| 563 | |
| (563) |
| (b), (c), (d), (g) | |
| — |
Income from other investments and loans forming part of the fixed assets | |
| 182 | |
| (182) |
| (e) | |
| — |
Interest payable and similar expenses | |
| 3,930 | |
| (3,930) |
| (d), (e), (f), (g) | |
| — |
Tax on profit or loss / Income tax provision (benefit) | |
| 4,114 | |
| 66 |
| (h) | |
| 4,181 |
Other taxes not shown under items 1 to 16 | |
| 66 | |
| (66) |
| (h) | |
| — |
Cost of revenue - Products | |
| | | | 75,519 | | (b) | |
| 75,519 |
Research and development | |
| | | | 187 | | (c) | |
| 187 |
Selling, general and administrative | |
| | | | 31,748 | | (d) | |
| 31,748 |
Interest income | |
| | | | (191) | | (e) | |
| (191) |
Interest expense | |
| | | | 4,104 | | (f) | |
| 4,104 |
Other income (expenses), net | |
| | | | 306 | | (g) | |
| 306 |
Profit for the period | |
| 7,251 | |
| — |
| | |
| 7,251 |
10
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
Certain items presented by Holding under Luxembourg GAAP have been reclassified to align with the presentation used by Azenta under US GAAP. The following reclassifications were made to the unaudited pro forma condensed combined income statement presentation:
a) | Reclassification of $53 to Azenta Revenue - Products from: |
· | $53 from other operating income |
b) | Reclassification of $75,519 to Azenta Cost of revenue - Products from: |
· | $(5,022) from variation in stocks of finished goods and in work in progress |
· | $(178) from production costs to capitalize projects |
· | $(955) from other operating income due to reversals of investment subsidies |
· | $64,935 from raw materials, consumables and other external expenses related to production costs |
· | $11,802 from staff costs to assign costs to revenue generated projects |
· | $4,928 from value adjustments related to planned depreciation of assets related to production |
· | $9 from other operating expenses related to production. |
c) | Reclassification of $187 to Azenta Research and development from: |
· | $(3,517) from research and development costs to capitalize projects |
· | $1,767 from raw materials, consumables and other external expenses used for development projects |
· | $1,823 from staff costs to assign costs to development projects |
· | $114 from other operating expenses related to development projects. |
d) | Reclassification of $31,748 to Azenta Selling, general and administrative from: |
· | $(2,244) from all other costs required for the capitalization of B Medical projects |
· | $18,961 from all other materials, consumables, and other external expenses not related to production or development projects |
· | $9,524 from staff costs to assign costs to administrative functions |
· | $5,214 from value adjustments for tangible and intangible fixed assets and current assets |
· | $172 from all other operating expenses |
· | $121 from interest costs from banks. |
e) | Reclassification of $(191) to Azenta Interest income from: |
· | $(182) from interest income from investments and loans |
· | $(9) from other interest income. |
f) | Reclassification of $4,104 to Azenta Interest expense from interest expenses for loans and to others. |
g) | Reclassification of $(306) to Azenta Other income (expenses), net from: |
· | $(300) from other operating income outside of the ordinary course of business |
· | $12 from raw materials, consumables and other external expenses related to miscellaneous other selling expenses |
· | $268 from other operating expenses outside of the ordinary course of business |
· | $(286) from exchange differences and cash discounts. |
h) | Reclassification of $66 to Azenta Income tax provision (benefit) from other income taxes not included within tax on profit or loss. |
11
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
Note 6. GAAP Conversion Adjustments
The accompanying pro forma financial information reflect, what Azenta assumes would be the results and financial position on a US GAAP basis, of the combined financial statements of Holding prepared in accordance with Luxembourg GAAP. Azenta has performed a preliminary analysis and has identified differences between Luxembourg GAAP and US GAAP for the purposes of presenting the pro forma financial information. The pro forma financial information after considering the following GAAP and reclassifications adjustments conform Holding’s historical accounting presentation to Azenta’s accounting presentation and translation from Euros to US dollars based on Azenta’s accounting policies.
A. | To adjust for certain development costs capitalized by B Medical. These costs totalled $16,173 in intangible assets, net, and $169 in property plant and equipment, net. B Medical internally develops its new products and capitalized all development costs under Luxembourg GAAP. Accordingly, B Medical capitalized the material costs, patent costs, staff costs, consultant fees, testing fees and scrap expenses at the closing of a project. Under US GAAP, only research and development costs that are proven to have alternative future use can be capitalized. As none of the costs incurred by B Medical have alternative future use, all such capitalized costs are adjusted. The impact on the adjustment on the unaudited pro forma condensed combined income statement is calculated as the reversal of all amortization recorded by B Medical during the twelve months ended June 30, 2022 and the recording of all costs incurred during the period as expense. The resulting adjustments to increase cost of revenue – Products totalling $182, research and development totalling $3,355, and selling, reversal of selling, general and administrative expenses totalling $2,600 are reflected in the unaudited pro forma condensed combined income statement. |
B. | To adjust vehicle revenue and cost of sales related to the amounts collected from customers and paid to vehicle suppliers under certain arrangements. B Medical partners with a vehicle manufacturer to outfit vehicles with refrigeration units for storage of medical equipment. The vehicles installed with refrigeration units are made-to-order, and the vehicle by itself is not purchased by B Medical prior to the sale of the vehicle. B Medical recognized the revenue for the sale of both the vehicle and refrigeration unit, and expenses related to both the cost of the vehicle and the refrigeration unit. While B Medical does take control of the vehicle being sold momentarily before the sale, it does not encumber any risks associated with the sale. As vehicles are made-to-order in association with the vehicle manufacturer, B Medical does not control the good or service before it obtained a contract with the customer. It was determined that B Medical acts as an agent of the transaction in this scenario and under US GAAP the amount of the revenue and cost associated with the vehicle was reduced by $508 to properly record net revenue and cost in the unaudited pro forma condensed combined income statement. |
C. | To adjust for $2,381 of freight reimbursed by B Medical clients, which was recorded by B Medical as Revenue and Cost of revenue. B Medical invoices shipping costs as a separate line item to its customers and recognizes it as a contra-expense account. As transportation is a component of the contracts/invoices promise, Management elected to reclass freight reimbursement. Under US GAAP this treatment is an election and the adjustment aligns with the historical treatment of Azenta’s elections under US GAAP. |
D. | To reclassify government subsidies given to B Medical by certain government agencies across Europe from Equity to Deferred revenue. B Medical received subsidies in order for governments to finance certain building and development initiatives in specific jurisdictions. B Medical recorded the subsidies as an adjustment to equity under Luxembourg GAAP and recorded the developed assets which were subsidized as a component of property, plant and equipment. As the subsidized assets were depreciated, the depreciation expense was recorded as an adjustment to equity. Under US GAAP, Azenta’s management determined that such subsidies (as received) are recorded as deferred revenue, and amortization of the related asset is recorded as an offset to the established payment. Accordingly, the adjustment to the unaudited pro forma condensed combined income statement records the $5,093 remaining amount of the unamortized subsidies in Deferred revenue. |
E. | To reclassify advance payments to both suppliers and distributors from Inventory to Prepaid accounts amounting to $2,903. |
F. | Represents an adjustment to reflect the estimated impact of adoption of ASC 842 “Leases”, which is referred to as ASC 842, as of July 1, 2021 for B Medical’s leases that were assumed as a part of the acquisition accounted for as leases as per ASC 840 “Leases”. The pro forma adoption of ASC 842 resulted in the recognition of a right-of-use operating lease asset totalling $3,802. The ASC 842 adoption also resulted in the recognition of an adjustment of $497 to operating lease liabilities, current portion, and a $3,305 adjustment to the long-term right-of-use operating lease liability to reflect the assumption of operating |
12
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
lease liabilities on July 1, 2021. The impact of straight lining of the lease expenses on the unaudited pro forma condensed combined income statement is immaterial.
G. | To adjust deferred tax assets amounted to $5,895, and tax expense $5,895 for the tax effects of adjustments reflected herein to align B Medical’s historical accounting policies in accordance with US GAAP (calculated at an estimated effective tax rate of 27.5%). The effective tax rate of the combined company could be significantly different than what is presented in the pro forma financial information depending on post-acquisition activities and the geographical mix of taxable income. The net impact on the statement of profit and loss for the twelve months ended June 30, 2022 resulted in an increase in the tax benefit of $258. |
Note 7. B Medical Systems Holdings S.A. Elimination Adjustments
Management has considered the historical consolidated financial information of Holding and eliminated Holding’s activities to derive consolidated financial information of Holding reflected as of June 30, 2022 and for the twelve months ended June 30, 2022. Eliminations done in the historical consolidated balance sheet are related to Holding’s investments in its subsidiaries and amounts owed by and to affiliated undertakings as on June 30, 2022. Eliminations done in the historical consolidated statement of income are related to Holding’s activities for the twelve months ended June 30, 2022 that includes interests related to intercompany balances.
Note 8. Transaction Accounting Adjustments
The following were the transaction accounting adjustments reflected in the unaudited pro forma condensed combined balance sheet and income statement:
A. | To adjust the estimated fair value of inventories acquired in the amount of $14,728. The preliminary fair value adjustment is based on the estimated selling price of the inventory considering a normalized profit margin. The preliminary fair value adjustment to inventory is amortized within one year and the full adjustment is reflected as an increase to Cost of Revenue – Product in the unaudited condensed combined consolidated income statement. |
B. | To reflect the estimated fair value of tangible assets acquired, excluding land and building, and the related depreciation expense for a one year period, as detailed in the table below: |
|
| |
| Weighted |
| Year ended |
| | | | Average Useful | | September 30, 2022 |
| | Fair Value | | Life (Years) | | Depreciation expense |
US dollars in thousands | | | | | | |
Land |
| 15,638 |
| NA |
| — |
Building |
| 19,438 |
| 25 |
| 778 |
Computer equipment and software |
| 560 |
| 3 |
| 187 |
Machinery and equipment |
| 19,543 |
| 10 |
| 1,954 |
Furniture and fixture |
| 5,166 |
| 3 |
| 1,722 |
Total |
| 60,345 |
| |
| 4,641 |
Less: Historical B Medical (as reclassified and GAAP adjusted) |
| (25,621) |
| |
| (4,086) |
Pro Forma Adjustment |
| 34,724 |
| |
| 555 |
13
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
C. | To reflect the estimated fair value of identified trademark, customer relationship and technology intangible assets acquired and the related amortization for a one year period, as detailed in the table below: |
|
| |
| |
| Year ended |
| | Fair Value | | Useful Life | | September 30, 2022 |
| | Step Up Adjustment | | (Years) | | Amortization expense |
US dollars in thousands | | | | | | |
Trademark - B Medical |
| 5,086 |
| 5 |
| 1,017 |
Existing Technology - Cold Chain |
| 90,600 |
| 10 |
| 4,762 |
Existing Technology - Medical |
| 1,500 |
| 10 |
| 150 |
Backlog |
| 600 |
| 1 |
| 600 |
Existing Customer Relationships |
| 37,900 |
| 16 |
| 3,957 |
Total |
| 135,686 | | |
| 10,487 |
The estimated fair value of Trademark – B Medical was determined based on the discounted cash flow forecast utilizing the relief from royalty method. The royalty rate was determined to be 1.0% based on the overall profitability of B Medical and a study of comparable royalty arrangements. Cash flows were discounted at a rate of 12%. The estimated fair value is expected to be amortized over 5 years on a straight-line basis, which is consistent with the pattern in which the economic benefits of the trademark are expected to be realized.
The estimated fair value of the acquired Existing Technologies (Cold Chain and Medical) was determined based on a discounted cash flow model, which incorporates estimates associated with growth rates and technology obsolescence. The model also included present value discounts to cash flows at a rate of 11% and 12% for Existing Technologies – Cold Chain and Existing Technologies – Medical, respectively. The Existing Technologies (Cold Chain and Medical) will both be amortized over their expected useful lives of 10 years based on the pattern in which the economic benefits are expected to be realized for the Existing Technology - Cold Chain and based on a straight-line basis for the Existing Technology – Medical.
The estimated fair value of Backlog was determined based on the discounted cash flow forecast utilizing the relief from royalty method. The royalty rate was determined to be 1.0% based on the overall profitability of B Medical and a study of comparable royalty arrangements. Cash flows were discounted at a rate of 9.5%. The estimated fair value is expected to be amortized over 1 year on a straight-line basis, which is consistent with the pattern in which the economic benefits of the trademark are expected to be realized.
The estimated fair value of the acquired Existing Customer Relationships was determined based on a discounted cash flow model, which incorporates estimates associated with customer attrition rates and existing customer growth rates. The model also included present value discounts to cash flows at a rate of 11%. The Existing Customer Relationships will be amortized over their expected useful life of 16 years based on the pattern in which the economic benefits are expected to be realized.
The acquired Cold Chain Technology and Customer Relationships will be amortized based on the pattern in which the economic benefits of the intangible assets are expected to be realized. Based on the deemed acquisition date of September 30, 2022, the expected impact on operating results for the five years following the acquisition is as follows:
|
| Year ended |
| Year ended |
| Year ended |
| Year ended |
| Year ended |
| | September 30, | | September 30, | | September 30, | | September 30, | | September 30, |
| | 2023 | | 2024 | | 2025 | | 2026 | | 2027 |
| | Amortization | | Amortization | | Amortization | | Amortization | | Amortization |
| | Expense | | Expense | | Expense | | Expense | | Expense |
US dollars in thousands | | | | | | | | | | |
Existing Technology - Cold Chain |
| 11,163 |
| 15,033 |
| 15,554 |
| 13,696 |
| 11,258 |
Existing Customer Relationships |
| 4,175 |
| 3,904 |
| 3,666 |
| 3,410 |
| 3,093 |
Total Amortization |
| 15,338 |
| 18,936 |
| 19,220 |
| 17,106 |
| 14,350 |
All other factors remaining constant, a hypothetical 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance of goodwill of $13,569 and amortization expense of approximately $1,049 for the twelve months ended June 30, 2022.
14
Notes To Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars thousands except for exchange rate and per share information)
D. | To record additional transaction costs of $4,714, such as legal, audit, advisory fees and transactional fees to complete the transaction and that were not already incurred in the historical financial statements of Azenta and B Medical as of September 30, 2022. Actual additional costs that will be incurred could be different from the estimates. |
E. | To eliminate $23,132 of interest and loan receivable and $92,184 of debt historically recorded in B Medical and which have been fully repaid or are not acquired as part of the transaction. Accordingly, $182 of interest income and $4,104 of interest expenses were eliminated. |
F. | To adjust B Medical’s historical financial statements to give pro forma effect to events in connection with the transaction that include the elimination of B Medicals’ historical additional paid-in-capital of $9,802, accumulated other comprehensive income of $27 and accumulated deficit balance of $15,625. |
G. | To adjust the deferred tax impact amounted to $50,913 associated with the incremental differences in the financial statement and the tax basis due to the preliminary purchase price allocation resulting from the step up in fair value of inventory, tangible assets, and other intangible assets. To reclass $5,895 of deferred tax asset related to the Conversion GAAP adjustments (Note 6G) to deferred tax liability for a net presentation of B Medical deferred tax position. |
H. | To record the tax impact amounted to $6,008 on the pro forma adjustments at the estimated effective tax rate of 27.5% for the year ended September 30, 2022. The effective tax rate of the combined company could be significantly different than what is presented in the pro forma financial information depending on post-acquisition activities and the geographical mix of taxable income. |
Note 9. Pro Forma Basic and Diluted Net (Loss) Income Per Share
The net loss per share for Azenta was calculated using the historical weighted average shares outstanding. No additional shares were issued in connection with the transaction and other related events.
|
| For the Year Ended | |
| | September 30, 2022 | |
(US dollars in thousands, except per share data) | | | |
Pro Forma Basic and Diluted Loss Per Share |
| |
|
Pro Forma net loss | | $ | (25,809) |
Pro forma weighted-average shares (basic and diluted) | |
| 74,897 |
Pro Forma Basic and Diluted Loss Per Share | | $ | (0.34) |
15