2. Summary of material accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. We have consistently applied these policies during the period, unless stated otherwise.

2.1 Basis of preparation

The consolidated financial statements of TMF Group Holding B.V. (further "TMF Group") have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

We have prepared the consolidated financial statements on the historical cost basis, except for the revaluation of certain financial assets and liabilities (including derivative financial instruments) measured at fair value and retirement benefit obligations of which the plan assets are measured at fair value.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying TMF Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are material to the historical financial information, are disclosed in Note 3 Material accounting judgements, estimates and assumptions.

The consolidated financial statements are prepared on a going concern basis.

The consolidated financial statements are presented in euros and all values are rounded to the nearest hundred thousand (€000,000), except when otherwise indicated.

2.1.1 First-time adoption of IFRS

These consolidated financial statements are the first consolidated financial statements prepared by TMF Group in accordance with IFRS. Hence TMF Group is a first-time adopter of IFRS and applied IFRS 1 First-time Adoption of International Financial Reporting Standards.

The Group has prepared these consolidated financial statements that comply with IFRS applicable as at 31 December 2023, together with the comparative period data for the year ended 31 December 2022, as described in the summary of material accounting policies. In preparing the financial statements, TMF Group's opening statement of financial position was prepared as at 13 June 2022, that is deemed to be TMF Group's date of transition to IFRS.

Previously, TMF Group did not prepare any consolidated financial statements, as permitted by Article 407, paragraph 1 Sub b, Book 2 of the Dutch Civil Code. Therefore, there is no reconciliation to previous GAAP consolidated financial information to be disclosed.

2.1.2 Changes in accounting policies and disclosures

We have applied the accounting policies set out below consistently to all periods presented in these consolidated financial statements. These policies have been applied consistently by all TMF Group entities. There have been no material changes compared to the prior year, which has ended 31 December 2022.

New and revised IFRS standards in issue but not yet effective

A number of new standards are effective for annual periods beginning after 1 January 2024 and earlier application is permitted, however, TMF Group has not early adopted the new or amended standards in preparing these consolidated financial statements.

The following amended standards and interpretations, which have been endorsed are not expected to have a material impact on TMF Group's consolidated statements:

  • IFRS 17 Insurance Contracts

New standards and interpretations issued and effective from 1 January 2023

From 1 January 2023 and to the extent relevant, TMF Group has adopted all IFRS standards and interpretations including amendments that were in issue and effective from 1 January 2023.

  • Definition of Accounting Estimates (Amendments to IAS 8)

  • Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

  • International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12) — Application of the exception and disclosure of that fact

2.2 Consolidation and equity accounting

Subsidiaries

Subsidiaries are all entities over which TMF Group Holding B.V. (further "TMF Group") has control. TMF Group controls an entity when TMF Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are fully consolidated from the date when control is transferred to TMF Group. They are ­de‑consolidated from the date that control ceases.

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 assets transferred by TMF Group, liabilities incurred by TMF Group to the former owners of the acquiree and the equity interest issued by TMF in exchange for control of the acquiree. For each business combination, TMF 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 related costs are expensed as incurred and included in the statement of comprehensive income as financial statement caption. Identifiable assets acquired and liabilities and contingent liabilities assumed in the business combination are measured initially at their fair value at the acquisition date. On an acquisition by acquisition basis, TMF Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

Any contingent consideration to be transferred by TMF Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability are recognised in the income statement. When TMF 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.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired and liabilities assumed are recorded as goodwill. If the total of the consideration transferred, non‑controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

Inter-company transactions, balances, income and expenses on transactions between TMF Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Amounts reported by subsidiaries are based on the policies adopted by TMF Group.

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interest that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity and attributed to the owners of TMF Group.

Disposal of subsidiaries

When TMF Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in the income statement. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income (“OCI”) in respect of that entity are accounted for as if TMF Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in OCI are reclassified to the income statement.

2.3 Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of TMF Group's entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Euros (“€”), which is TMF Group's presentation currency and all values are rounded to the nearest hundred thousand (€000,000), unless otherwise indicated.

Transactions and balances

Foreign currency transactions are translated into the presentation currency of TMF Group using the exchange rates prevailing at the dates of the transactions. All foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognised in the income statement.

TMF Group companies

The results and financial position of all TMF Group entities that have a functional currency different from the Euro are translated into Euro as follows:

  • Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; and

  • Income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions).

  • All resulting exchange differences shall be recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations and currency effects on loans receivable which are part of the net investment are taken to other comprehensive income. When a foreign operation is disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

TMF Group has assessed and accounted for the impact of hyperinflation in hyper-inflationary economies where it operates. Reference is made to Note 4.3 of these Financial statements. 

All amounts have been rounded to millions, unless otherwise indicated.

2.4 Fair value estimation with respect to financial instruments

There are three valuation methods to determine the fair value of financial instruments. The different levels have been defined as follows:

  • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

  • Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)

  • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

During the reporting period TMF Group has financial assets and financial liabilities that are accounted for at fair value through income statement. For other financial instruments only fair value disclosures are presented. The fair value calculations take place on either Level 1, Level 2 or Level 3 methods.