Company acquisitions

As at 3 April 2018, LLB acquired 100 percent of LB(Swiss) Investment AG (LB(Swiss)). The acquisition was made within the scope of a share deal with the previous sole owner, the Frankfurter Bankgesellschaft (Switzerland) AG. LB(Swiss) offers efficient, made-to-measure investment fund management, compliance and risk management services.

With this acquisition LLB accomplishes its planned strategic market entry in Switzerland. The expertise of LB(Swiss) makes it possible for the LLB Group to offer classical investment fund services (51 funds with a gross fund volume of CHF 4.7 billion as at 31 March 2018), to act as representatives for foreign funds and to provide consulting services in the fields of compliance and risk management. LB(Swiss) is to be renamed “LLB Swiss Investment AG” and shall continue to operate in Switzerland as an independent company.

The purchase price for LB(Swiss) amounted to CHF 32.9 million as at 3 April 2018. This sum includes an earn-out obligation totalling CHF 1.9 million as well as a deferred purchase price payment of CHF 6.1 million due on 3 October 2019.

The valuation of assets and liabilities has not yet been completed. This is based on preliminary information and measurements, and is therefore reported only on a provisional basis for the moment.

The purchase price is composed of a cash payment on the acquisition date and a final payment on the earn-out closing date, 18 months after the completion date. The final payment includes a deferred purchase price payment resulting from the provisional goodwill compensation (30 % of the provisional goodwill compensation as at 3 April 2018) and earn-out components. The scope of the earn-out components depends on the development of assets under administration up to the earn-out closing date.

The individual factors comprising the measured goodwill include, in particular, the employees taken over, the available know-how, the strategic market entry in Switzerland and the growth associated with this, as well as synergy effects. On the earnings side, significant synergy effects will result from a more robust growth of net new assets. Goodwill and amortisation of goodwill are not tax deductible.

70 percent of goodwill is assigned to the CGU LLB Swiss Investment AG and 30 percent to the CGU LLB AG.

The costs relating to the acquisition amounting to CHF 0.8 million were recognised directly in the income statement under general and administrative expenses.

Measurement methods and input factors relating to the market value measurement of intangible assets, as well as sensitivity of input factors

The intangible assets were measured using the following methods and input factors:

• Client relationships: Measured using the multi-period excess earnings method. Sensitive input factors are the planned cash flows, the shrinkage rate with existing clients and the discount rate.
• Software: Measured using the cost approach. The sensitive input factor is the number of work days required to replicate the software.
• Licenses and permits: Measured using the cost approach. Sensitive input factors are the duration of the application procedure and the scope of the underlying cost components.

The “intangible assets” position encompasses the fair values of client relationships (CHF 13.6 million), software (CHF 1.9 million) and permits (CHF 0.3 million).

Since 3 April 2018, LLB Swiss Investment AG contributed CHF 0.3 million to Group net profit and CHF 1.7 million to total operating income as at 30 June 2018. If the business combination had occurred as at 1 January 2018, LLB Swiss would have contributed CHF 0.8 million to Group net profit and CHF 3.3 million to total operating income.