2.1.3 Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as
the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any noncontrolling
interests in the acquiree. For each business combination, the group elects whether to measure the noncontrolling
interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred and included in administrative expenses.
When the group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition
date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of
goodwill.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9
Financial Instruments, is measured at fair value with changes in fair value recognised in profit or loss. If the contingent
consideration is not within the scope of IFRS 9, it is measured in accordance with the appropriate IFRS. Contingent
consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and
liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred,
the group reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and
reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain
is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each
of the group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed
of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when
determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative
values of the disposed operation and the portion of the cash-generating unit retained.
Transactions under common control
A business combination involving entities or businesses under common control is a business combination in which all
of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the
business combination, and that control is not transitory.
Where a business is obtained through common control, the assets and liabilities will be reflected at their carrying
amount on acquisition date and not at fair value. No ‘new’ goodwill is recognised as a result of the common control
transaction, except for existing goodwill relating to either of the combining entities. Any difference between the
consideration paid/transferred and the equity ‘acquired’ is reflected within equity.
2.1.4 Fair value measurements
The group measures financial instruments, such as derivatives and certain inventory, such as grain commodity at fair
value at each statement of financial position date. Also, fair values of financial instruments measured at amortised cost
are disclosed in note 7.1.2, 7.2.1, 7.2.2, 7.2.3 and 7.2.5.
Fair value is 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. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
l In the principal market for the asset or liability, or
l In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the
most advantageous market must be accessible to the group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 88