Final acquisition analysis for ComeOn!

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The Board of Directors of Cherry AB has resolved to approve the final acquisition analysis for ComeOn!. A preliminary acquisition analysis was prepared in connection with the consolidation process in the fourth quarter 2016. In the final acquisition analysis the appreciation in the value of shares, amounting to SEK 510 million, is annulled. This has had no effect on the results for the year, however goodwill and equity were reduced.  

In the third quarter of 2017, Cherry AB adjusted the purchase price for the acquisition of ComeOn! following a reassessment of the fair value of the 49 percent share previously held. The adjustment entails the revaluation of the previously held shares by SEK 510 million, reported in the fourth quarter of 2016, being reversed and a corresponding adjustment of goodwill being recognised. The adjustment has had no effect on cash flow nor the results for 2017 but goodwill against equity was reduced. The equity ratio was 36 percent as per 30 June 2017.

The purchase price was paid in two settlements, with an initial part-payment of EUR 80 million being paid in July 2016 and a second part-payment of EUR 209 million being paid in May 2017. In August and September 2016, Come On! was reported as associated company. As of 1 October 2016, Cherry was considered to hold a controlling interest and ComeOn! was consolidated as a subsidiary. In connection with this, the estimated market value of the initially acquired 49-percent holding was revalued by SEK 510 million.

In accordance with IFRS 3, the comparative figures in the income statement and balance sheet for the 2016 full year have been recalculated. The adjusted and thus final acquisition calculation for the acquisition is presented below.

Final acquisition analysis for ComeOn!                        SEK million                     

Purchase price 

Cash and cash equivalents and equity instruments             2,753
Conditional additional purchase price                                       43
Estimated purchase price to be paid                                   2,796

Recognised identifiable acquired assets and liabilities

Intangible assets                                                                     543
Property, plant and equipment                                                    6
Current receivables                                                                 138
Cash and bank balances                                                        130
Deferred tax                                                                             -28
Loans                                                                                          0
Current liabilities                                                                    -167
Identified net assets                                                                622

Goodwill                                                                               2,174

Below are the consolidated income statement and balance sheet, applying the final acquisition analysis.

FINANCIAL KEY RATIOS, Cherry Group                                Preliminary analysis                            Final analysis
SEK million                                                                              Q4 2016           2016                       Q4 2016         2016

Revenues                                                                                   519               1,102                         519               1,102
EBITDA                                                                                      106                  174                         106                  174
Adjusted EBIT                                                                              70                  115                           70                  115
Profit                                                                                           580                  625                          70                   115

EBITDA-margin, %                                                                    20.5                 15.8                        20.5                 15.8
Adjusted EBIT margin, %                                                          13.5                 10.4                        13.5                 10.4
EBIT margin, %                                                                       111.8                 56.7                        13.5                 10.4

Earnings per share before dilution, SEK                                 3.62*                39.30                        3.62                 6.38
Earnings per share after dilution, SEK                                    3.57*                38.99                        3.57                 6.33

Earnings per share before dilution and split, SEK                    —                        —                       0.72**              1.28**
Earnings per share after dilution and split, SEK                       —                        —                       0.71**              1.27**

Total assets                                                                         3,932                   3,932                      3,422               3,422
Equity                                                                                     988                       988                         478                 478
Equity/assets ratio, %***                                                          25                         25                          14                    14

*     Earnings per share are reported excluding the effects of the SEK 510 million
**    Split implemented in June 2017
***  Due to the fact that 100 percent of the acquisition was due but not paid in the 2016 year end report, the reported equity was low. As the acquisition was partly regulated by shares, the equity ratio increased according to plan and amounted to 36 percent on 30 June 2017 (after final adjustment of the acquisition analysis as above)

For further information, please contact: Anders Holmgren, CEO, +46 708 607 534, anders.holmgren@cherry.se Christine Rankin, CFO, +46 76 539 94 92, christine.rankin@cherry.se

This information is information that Cherry AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above on 21 September 2017.

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