IMCD N.V. ANNUAL

Business / Consolidation

3.a Basis of consolidation Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. An exception on this are deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements which are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. Any contingent consideration payable is initially measured at fair value at the acquisition date. If contingent consideration is initially classified as equity, then the amount payable is not remeasured and the related settlement is accounted for as a change in equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss as finance income or costs. Upon exercising of any related call and put option, changes in the fair value are recognised as a change in equity. Written put options to acquire a non-controlling interest are accounted for by the anticipated-acquisition method. The fair value of the consideration payable is included in financial liabilities; future changes in the carrying value of the put option are recognised in profit or loss throughout the reporting periods. Any change in carrying value at settlement date compared to the previous reporting period is recognised within equity as transaction between equity holders. The Group measures goodwill at the acquisition date as: * the fair value of the consideration transferred * plus the recognised amount of any non-controlling interest in the acquiree * plus, if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree * less the net recognised amount (at fair value) of the identifiable assets acquired and liabilities assumed If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which th