Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;
Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date; and
Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interest’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. 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 the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.
Acquisitions during the year
As of May 1, 2021 the group has acquired 100% of the issued shares of IP Consultancy Holding B.V. (Iperion) obtaining control of IP Consultancy Holding B.V. IP Consultancy Holding B.V. and its subsidiary IP-CON B.V. comprises management consulting in the area of life sciences. A team of around 40 consultants joined the group and qualifies as a business as defined in IFRS 3. IP Consultancy Holding B.V. was acquired as an investment to extend the group's life sciences regulatory practice, where Iperion is an expert in the market.
Acquisition related costs of €155 were expensed in the current year, this relates to internal hours. Assets and liabilities acquired have been recognised at fair value as at the acquisition date. The fair values were book values in most cases, the main exceptions intangible assets which have been adjusted up by €2.221 to their fair value.
Intangible assets relate primarily to customer relationships of €2.193. These were valued using the multi-period excess earning method with assumptions made in respect of future revenues and profitability, discount rates and remaining useful lives. A different assessment of these matters may have resulted in a different value being ascribed to these assets.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below.
In € thousands
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Other current liabilities
Total identifiable assets acquired and liabilities assumed
In € thousands
Contingent consideration arrangement
Net cash outflow arising on acquisition:
In € thousands
Less: cash and cash equivalent balances acquired
Total consideration transferred
The acquisition agreement includes contingent payments focussed on the retention of the sellers. These payments are employee benefits and are not part of the consideration. These are recognised over time. The expenditure of this consideration will be incurred in 2021/2022 and 2022/2023. The potential undiscounted amount of all future payments that the Group could be required to make in respect of this contingent payment is estimated to be between €1.4 and €2 million.
The goodwill and the acquired client relations of total €5 million are not deductible for income tax purposes as the acquisition was a share acquisition. In the purchase price allocation the growth rate of the business was set at 20%. The applied discount rate is 11.5%.
IP Consultancy Holding B.V. contributed €0.3 million revenue and a loss of €0.07 million to the Group’s profit for the period between the date of acquisition and the reporting date. If the acquisition of IP Consultancy Holding B.V. had been completed on the first day of the financial year, Group revenues for the year would have been €4.4 million and Group profit would have been €0.5 million.