Financial statements N otes to the consolidated financial statements continued The total consideration for the above three transactions is expected to be approximately £18.1 million. These acquisitions contributed £2.7 million revenue and £0.1 million profit. At the end of the reporting period the purchase price allocations for Destined and Maverick have not been fully finalised and therefore the assets and liabilities remain provisional. Once the opening balance sheet is finalised the purchase price allocation can be concluded and therefore the calculated goodwill is provisional. During the measurement period in 2022, S4Capital Group will obtain the information necessary to identify and measure the assets and liabilities and retrospectively adjust the provisional amounts recognised at the acquisition date. Technology Services practice Zemoga On 17 September 2021, S4Capital plc announced (completed and control passed on 15 September 2021) the combination of Media.Monks with Zemoga, a US-based leading digital transformation services firm specialising in providing product design, engineering and delivery services to enterprise clients across multiple verticals, for a total consideration of £63.9 million. Since the acquisition date, Zemoga contributed £7.8 million to the Group’s revenue and £2.4 million into the Group’s profit for the year ended 31 December 2021. Once the opening balance sheet is finalised the purchase price allocation can be concluded and therefore the calculated goodwill is provisional. During the measurement period in 2022, S4Capital Group will obtain the information necessary to identify and measure the assets and liabilities and retrospectively adjust the provisional amounts recognised at the acquisition date. Goodwill and other disclosures The goodwill represents the potential growth opportunities and synergy effects from the acquisitions. The goodwill is not deductible for tax purposes. Trade receivables, net of expected credit losses, acquired are considered to be fair value and are expected to be collectable in full. The gross contractual amounts receivable of the acquired companies at the acquisition date are £14.7 million and the best estimate at the acquisition date of the contractual cash flows not expected to be collected is £0.4 million. Contingent consideration arising from business combinations is fair valued, with key inputs including the probability of success of the combinations achieving target, consideration of potential delays and the expected levels of future revenues. The contingent consideration is contingent on the acquired companies achieving their 2021 results and, in some cases their 2022 and 2023 results, as forecasted upon acquiring the subsidiary. The contingent considerations are included for the maximum amount of the consideration expected to be paid which is in line with management’s estimate of expected pay-out. In 2021, the contingent consideration arising from business combinations is £57.8 million. The contingent consideration can be materially lower in case the acquired companies do not reach their forecasted results. Contingent consideration classified as a liability is subject to remeasurement at each reporting date until its ultimate settlement date. Any change in the fair value of the liability due to events that occur after the acquisition date would be recognized in the profit or loss. Deferred considerations are commonly expected to be paid on the second-year anniversary of the acquisition date. Holdbacks as part of the purchase consideration are in some cases held in escrow accounts and are expected to be released within two years of the acquisition date. The contingent consideration and holdback liabilities of £118.1 million as at 31 December 2021 includes £67.9 million of employment linked consideration and £16.8 million of holdbacks. During 2021, an amount of £25.2 million of contingent consideration and holdback have been paid. The total acquisition costs of £8.1 million (2020: £10.8 million) have been recognised under acquisition and set-up related expenses in the statement of profit or loss. If the acquisitions had occurred on 1 January 2021, the Group’s revenue would have been £740.2 million and the Group’s loss for the year would have been £98.1 million. 126 S4Capital Annual Report and Accounts 2021