Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
31 December 2012
Business combinations and goodwill
A business combination is the bringing together of separate entities or businesses into one reporting entity as a result one
entity, the acquirer, obtaining control of one or more other businesses. The acquisition method of accounting is used to
account for business combinations. 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 non-controlling interests in the acquiree. Under this method,
the Group recognises, separately from goodwill, identifiable assets acquired, liabilities assumed and any non-controlling
interests in the acquiree at the acquisition date. For each business combination, the Group elects to measure the non-
controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition costs incurred are expensed and included in other 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, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be
recognised in accordance with IAS 39 either in consolidated statement of income or as a change to other comprehensive
income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted
for within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured
in accordance with the appropriate IFRS.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interest over the Group’s net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference 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 forms part of a cash-generating unit (group of cash generating units) and part of the operations within
that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Financial assets and liabilities
Initial recognition and measurement
Financial assets and liabilities within the scope of IAS 39 are classified as “loans and receivables”, “available for sale
investments” and “financial liabilities other than at fair value through profit or loss”. The Group determines the appropriate
classification of each instrument at initial recognition.
Regular way purchases or sales of financial assets are recognised using trade date accounting. Financial liabilities are not
recognised unless the Group becomes a party to the contractual provisions of the instrument.
Financial assets and liabilities are measured initially at fair value (transaction price) plus, in case of a financial asset or
financial liability not classified as at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities
at fair value through profit or loss are expensed immediately.
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