XP : Demonstrações Financeiras Consolidadas Condensadas para 1T24

XP Inc. Unaudited interim condensed consolidated financial statements for the three months period ended March 31, 2024

XP Inc. and its subsidiaries

Unaudited interim condensed consolidated balance sheets

As of March 31, 2024 and December 31, 2023

In thousands of Brazilian Reais

	Assets		Note			March 31,				December 31,
				2024				2023
						March 31,2024
Cash					3,938,578			3,943,307
Financial assets					257,761,295			229,197,214
Fair value through profit or loss					144,887,279			127,015,678
Securities	4			112,185,069			103,282,212
Derivative financial instruments	5			32,702,210			23,733,466
Fair value through other comprehensive income					40,310,404			44,062,950
Securities	4			40,310,404			44,062,950
Evaluated at amortized cost					72,563,612			58,118,586
Securities	4			4,458,663			6,855,421
Securities purchased under resale agreements	3			30,291,271			14,888,978
Securities trading and intermediation	9			2,512,056			2,932,319
Accounts receivable					639,142			681,190
Loan operations	7			29,541,800			28,551,935
Other financial assets	15			5,120,680			4,208,743
Other assets					9,005,592			7,811,962
Recoverable taxes					436,769			245,214
Rights-of-use assets	12			250,711			281,804
Prepaid expenses	8			4,476,586			4,418,263
Other					3,841,526			2,866,681
Deferred tax assets	17			2,183,746			2,104,128
Investments in associates and joint ventures	11			3,114,918			3,108,660
Property and equipment	12			394,788			373,362
Goodwill and Intangible assets	12			2,522,723			2,502,045
Total assets					278,921,640			249,040,678

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

XP Inc. and its subsidiaries

Unaudited interim condensed consolidated balance sheets

As of March 31, 2024 and December 31, 2023

In thousands of Brazilian Reais

	Liabilities and equity		Note			March 31,					December 31,
				2024					2023
Financial liabilities					198,443,725				171,237,146
Fair value through profit or loss					51,916,928				45,208,490
Securities	4			17,528,172		20,423,074
Derivative financial instruments	5			34,388,756		24,785,416
Evaluated at amortized cost					146,526,797				126,028,656
Securities sold under repurchase agreements	3			49,054,325		33,340,511
Securities trading and intermediation	9			16,394,818		16,943,539
Financing instruments payable	13			63,037,172		60,365,590
Accounts payables					954,009		948,218
Borrowings	14			2,266,614		2,199,422
Other financial liabilities	15			14,819,859		12,231,376
Other liabilities					59,934,949				58,266,331
Social and statutory obligations					625,433		1,146,127
Taxes and social security obligations					500,996		559,647
Retirement plans and insurance liabilities	16			58,654,362		56,409,075
Provisions and contingent liabilities	20			101,493		97,678
Other					52,665		53,804
Deferred tax liabilities	17			118,193		86,357
Total liabilities					258,496,867				229,589,834
Equity attributable to owners of the Parent company	18			20,421,216				19,449,352
Issued capital					26		26
Capital reserve					19,332,457		19,189,994
Other comprehensive income					186,171		376,449
Treasury shares					(127,454)		(117,117)
Retained earnings					1,030,016		-
Non-controlling interest					3,557		1,492
Total equity					20,424,773				19,450,844
Total liabilities and equity					278,921,640		249,040,678

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

XP Inc. and its subsidiaries

Unaudited interim condensed consolidated statements of income and of comprehensive income

For the three months period ended March 31, 2024 and 2023 In thousands of Brazilian Reais, except earnings per share

Net revenue from services rendered

Net income/(loss) from financial instruments at amortized cost and at fair value through other comprehensive income

Net income/(loss) from financial instruments at fair value through profit or loss

			Three months period ended
						March 31,
Note			2024			2023
21			1,623,851			1,345,984
21			227,251		502,113
21			2,201,754		1,285,892

Total revenue and income		4,052,856	3,133,989
Operating costs	22	(1,218,816)	(1,016,525)
Selling expenses	23	(32,054)	(14,942)
Administrative expenses	23	(1,451,651)	(1,093,939)
Other operating income (expenses), net	24	9,221	18,881
Expected credit losses	10	(96,870)	(67,634)
Interest expense on debt		(181,337)	(162,828)
Share of profit (loss) in joint ventures and associates	11	7,104	19,146
Income before income tax		1,088,453		816,148
Income tax credit (expense)	17	(58,898)	(20,203)

Net income for the period

Other comprehensive income

Items that can be subsequently reclassified to income

Foreign exchange variation of investees located abroad Gains (losses) on net investment hedge

Changes in the fair value of financial assets at fair value through other comprehensive income

1,029,555795,945

14,796(17,996)

(12,561)20,871

(171,480)80,384

Other comprehensive income (loss) for the period, net of tax			(169,245)		83,259
Total comprehensive income for the period			860,310		879,204
Net income attributable to:
Owners of the parent company			1,030,016		795,020
Non-controlling interest			(461)		925
Total comprehensive income attributable to:
Owners of the parent company			860,771		878,279
Non-controlling interest			(461)		925
Earnings per share from total income attributable to the
ordinary equity holders of the company			1.8781		1.4847
Basic earnings per share	26
Diluted earnings per share	26		1.8503		1.4823

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

XP Inc. and its subsidiaries

Unaudited interim condensed consolidated statements of changes in equity

For the three months period ended March 31, 2024 and 2023

In thousands of Brazilian Reais

	Unaudited interim condensed consolidated statements of changes in equity
												Attributable to owners of the parent
								Capital reserve				Other
								Additional								comprehensive								Non-
		Notes		Issued				paid-in				Other				income and			Retained		Treasury			Controlling			Total
				Capital				capital				Reserves				Other			Earnings		Shares		Total	interest			Equity
Balances as of December 31, 2022			24		6,986,447			12,169,935			(133,909)	-	(1,986,762)	17,035,735	6,475	17,042,210
Comprehensive income for the period
Net income for the period			-		-				-			-	795,020	-	795,020	925	795,945
Other comprehensive income, net			-		-				-			83,259	-	-	83,259	-		83,259
Transactions with shareholders -
contributions and distributions
Share based plan	25		-		-				38,156			-	-	-	38,156	-		38,156
Other changes in equity, net			-		-				-			2,339	-	-	2,339	119	2,458
Treasury shares	18c	-		-				-			-	-	(915,859)	(915,859)	-		(915,859)
Allocations of the net income for the
period
Dividends distributed			-			-			-			-		-		-		-	(306)		(306)
Balances as of March 31, 2023			24		6,986,447			12,208,091			(48,311)	795,020	(2,902,621)	17,038,650	7,213	17,045,863
Balances as of December 31, 2023			26			6,417,115				12,772,879				376,449			-		(117,117)		19,449,352	1,492			19,450,844
Comprehensive income for the period
Net income for the period			-			-				-				-			1,030,016		-		1,030,016	(461)			1,029,555
Other comprehensive income, net			-			-				-				(169,245)			-		-		(169,245)	-			(169,245)
Transactions with shareholders -
contributions and distributions
Share based plan	25		-			59				142,404				-			-		-		142,463	2,637			145,100
Other changes in equity, net			-			-				-				(21,033)			-		-		(21,033)	-			(21,033)
Treasury shares	18c		-			-				-				-			-		(10,337)		(10,337)	-			(10,337)
Allocations of the net income for the
period
Dividends distributed			-			-				-				-			-		-		-	(111)			(111)
Balances as of March 31, 2024			26				6,417,174				12,915,283				186,171			1,030,016		(127,454)		20,421,216	3,557			20,424,773

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

XP Inc. and its subsidiaries

Unaudited interim condensed consolidated statements of cash flows

For the three months period ended March 31, 2024 and 2023

In thousands of Brazilian Reais

						Three months ended
						March 31,
		Note		2024		2023
	Operating activities
	Income before income tax			1,088,453		816,148
	Adjustments to reconcile income before income taxes
	Depreciation of property, equipment and right-of-use assets	12		28,918		26,516
	Amortization of intangible assets	12		39,142		21,326
	Loss on write-off of right of use assets, property, equipment and intangible assets	12		15,813		5,325
	and lease, net
	Share of profit or (loss) in joint ventures and associates	11		(7,104)		(19,146)
	Income from share in the net income of associates measured at fair value	11		15		-
	Expected credit losses on financial assets			96,870		33,881
	Provision for contingencies, net	20		(11,572)		34,660
	Net foreign exchange differences			159,575		(210,419)
	Share based plan	25		145,100		38,156
	Interest accrued			182,512		154,183
	(Gain) / Loss on the disposal of investments			-		14,083
	Changes in assets and liabilities
	Securities (assets and liabilities)			(8,709,462)		4,112,334
	Derivative financial instruments (assets and liabilities)			622,005		701,030
	Securities trading and intermediation (assets and liabilities)			(135,724)		(135,413)
	Securities purchased (sold) under resale (repurchase) agreements			1,314,890		(5,969,509)
	Accounts receivable			37,352		(8,431)
	Loan operations			(1,045,877)		(911,295)
	Prepaid expenses			(58,323)		(10,151)
	Other assets and other financial assets			(4,256,116)		334,362
	Accounts payable			5,210		(32,002)
	Financing instruments payable			2,450,655		2,690,874
	Social and statutory obligations			(520,694)		(464,824)
	Tax and social security obligations			30,481		(13,087)
	Retirement plans liabilities			2,245,287		2,072,434
	Other liabilities and other financial liabilities			3,214,432		312,033

Cash (used in)/from operations			(3,068,162)	3,593,068
Income tax paid			(268,007)		(157,926)
Contingencies paid	20		(12)		(199)
Interest paid			(10,064)			(6,883)
Net cash flows (used in)/from operating activities			(3,346,245)		3,428,060
Investing activities
Acquisition of property and equipment	12		(32,965)		(1,929)
Acquisition of intangible assets	12		(13,775)		(8,348)
Disposal of investments	11		-		19,338
Acquisition of associates	30(ii)		(670,464)			-
Net cash flows (used in)/from investing activities			(717,204)		9,061
Financing activities
Acquisition of treasury shares	18		(10,337)		(915,859)
Issuance of debt securities	30		-		134,598
Payments of borrowings and lease liabilities	30		(53,441)		(27,477)
Transactions with non-controlling interests			-		119
Dividends paid to non-controlling interests			(111)			(306)
Net cash flows (used in) financing activities			(63,889)			(808,925)
Net increase in cash and cash equivalents			(4,127,338)		2,628,196
Cash and cash equivalents at the beginning of the period			9,210,482		4,967,480
Effects of exchange rate changes on cash and cash equivalents			9,484			(14,005)
Cash and cash equivalents at the end of the period			5,092,628			7,581,671
Cash			3,938,578		3,088,840
Securities purchased under agreements to resell	3		1,005,478		4,126,706
Bank deposit certificates	4		58,572		236,125
Other deposits at Brazilian Central Bank			90,000		130,000
s

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

XP Inc. and its subsidiaries

Notes to unaudited interim condensed consolidated financial statements

As of March 31, 2024

In thousands of Brazilian Reais, unless otherwise stated

1. Operations

XP Inc. (the "Company") is a Cayman Island exempted company with limited liability, incorporated on August 29, 2019. The registered office of the Company is 20, Genesis Close, in George Town, Grand Cayman.

XP Inc. is currently the entity which is registered with the U.S. Securities and Exchange Commission ("SEC"). The common shares are trading on the Nasdaq Global Select Market ("NASDAQ-GS") under the symbol "XP".

XP Inc. is a holding company controlled by XP Control LLC, which holds 66.5% of voting rights and is controlled by a group of individuals.

XP Inc. and its subsidiaries (collectively, "Group" or "XP Group") is a leading, technology-driven financial services platform and a trusted provider of low-fee financial products and services in Brazil. XP Group are principally engaged in providing its customers, represented by individuals and legal entities in Brazil and abroad, various financial products, services, digital content and financial advisory services, mainly acting as broker-dealer, including securities brokerage, private pension plans, commercial and investment banking products such as loan operations, transactions in the foreign exchange markets and deposits, through our brands that reach clients directly and through network of Independent Financial Advisers ("IFAs").

These unaudited interim condensed consolidated financial statements as of March 31, 2024, were approved by the Board of Director's meeting on May 13, 2024 and updated by subsequent events through May 21, 2024 as approved by the executive management.

1.1 Share buy-back program

In May 2022, the Board of Directors approved a share buy-back program. Under the program, XP may repurchase up to the amount in dollars equivalent to R$1.0 billion of its outstanding Class A common shares over a period beginning on May 12, 2022, continuing until the earlier of the completion of the repurchase or May 12, 2023, depending upon market conditions.

On November 4, 2022, the Board of Directors approved an amendment to the share buy-back program. Under the amended program, XP Inc may repurchase up to the amount in dollars equivalent to R$2.0 billion of its outstanding Class A common shares (therefore, an increase of the maximum amount of R$1.0 billion compared to the original program). The program period has not been amended, continuing until the earlier of the completion of the repurchase or May 12, 2023, depending upon market conditions.

The repurchase limit of R$ 2.0 billion was reached on March 31, 2023, and, therefore, the share buy-back program terminated. At the end of the share buy-back program, the Company repurchased 25,037,192 shares (equivalent to R$ 2,059 million or US$ 394 million), which were acquired at an average price of US$ 15.76 per share, with prices ranging from US$ 10.69 to US$ 24.85.

On February 20, 2024, the Board of Directors approved a new share repurchase program, which aims to neutralize future shareholder dilution due to the vesting of Restricted Stock Units (RSUs) from the Company´s long-term incentive plan. The Company proposes to undertake a share repurchase program pursuant to which the Board can annually, in each calendar year, approve the repurchase by the Company of a number of Class A common shares equal to the number of RSUs that have vested or will vest during the current calendar year.

Under the approved repurchase program for 2024, XP may repurchase up to 2,500,000 Class A common shares within the period started on February 28, 2024, and ending on December 27, 2024. As of March 31, 2024, the company repurchased 81,250 shares (equivalent to R$ 10 million or US$ 2 million), which were acquired at an average price of US$ 25.48 per share, with prices ranging from US$ 25.04 to US$ 26.11.

1.2 Cancellation of treasury shares

On April 5, 2023, the Company´s Board of Directors approved the cancellation of 31,267,095 Class A shares, totaling an amount of R$ 2,785,504 (5.6% of total issued shares, on this date) held by the Company in treasury. Total issued shares count, on April 5, 2023, went from 560,534,012 to 529,266,917 after cancellation.

1.3 Termination of shareholders agreement between XP Control LLC, General Atlantic (XP) Bermuda, Iupar Group, ITB Holding Ltd. and Itaú Unibanco Holding S.A.

On July 10, 2023, XP Inc. announced the termination of its shareholders agreement executed between XP Control LLC, General Atlantic (XP) Bermuda, Iupar Group, ITB Holding Ltd., and Itaú Unibanco Holding S.A., originally expected to continue until October 2026. As a result of the termination, Iupar Group will no longer have the right to nominate members to XP Inc´s board of directors, which was reduced from 11 to 9 members.

XP Inc. and its subsidiaries

Notes to unaudited interim condensed consolidated financial statements

As of March 31, 2024

In thousands of Brazilian Reais, unless otherwise stated

1.4 Corporate reorganization

In order to improve corporate structure, Group´s capital and cash management, XP Inc is conducting entity reorganizations, as follows:

1. Inversion of financial institutions in Brazil. At the end of the reorganization XP CCTVM will become a wholly owned subsidiary of Banco XP. As of March 31, 2024, up to the date of these consolidated financial statements, the corporate reorganization is not fully concluded and is expected to be completed by the end of 2024.
2. Reorganization of international operations. The entities XP Holding International LLC, XP Advisory US and XP Holding UK Ltd, which are no longer wholly owned subsidiaries of XP Investimentos S.A., and are now directly owned by XP Inc. The transaction was completed on October 20, 2023.

No material impacts on Group's financial position and results of operations are expected due to the previously described corporate reorganization.

2. Basis of preparation and changes to the Group's accounting policies

1. Basis of preparation

The unaudited interim condensed consolidated balance sheet as of March 31, 2024, and the unaudited interim condensed consolidated statements of income and comprehensive income, changes in equity and cash flow for the three months period ended March 2024 and 2023 (the "financial statements") have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB").

The unaudited interim condensed consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value.

The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements as of December 31, 2023. The list of notes that were not presented in this unaudited interim condensed is described below:

	Note to financial statements of		Description
	December 31, 2023
3.		Summary of significant accounting policies
4.		Significant accounting judgements, estimates and assumptions
5.		Group structure
11.		Accounts receivable
12.		Recoverable taxes
21.		Social and Statutory obligations
22.		Tax and social security obligations
	26. (a)		Key-person management compensation

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the new accounting policies adopted for the current interim reporting period, see Note 2 (b).

The unaudited interim condensed consolidated financial statements are presented in Brazilian reais ("R$"), which is the Group's presentation currency and all amounts disclosed in the financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.

XP Inc. and its subsidiaries

Notes to unaudited interim condensed consolidated financial statements

As of March 31, 2024

In thousands of Brazilian Reais, unless otherwise stated

b) New standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2023.

IFRS 18 - Presentation and Disclosure of Financial Statements: The standard replaces "IAS 1 Presentations of Financial Statements", and also changes other standards such as "IAS 7 - Statement of Cash Flows", "IFRS 12 - Disclosures of Interests in Other Entities", "IAS 33 - Earnings per Share", "IAS 34 - Intermediate Statement", "IAS 8 - Accounting Policies, Estimate Changes and Error Rectification", and "IFRS 7 - Financial Instruments, Disclosure", aiming to improve the communication of information in the financial statements, with a special focus on income statements and notes. The mandatory initial adoption of this standard is scheduled for January 1, 2027.

Amendments to IAS 1 - Classification of liabilities as current or non-current: The changes aim to promote consistency in the application of the requirements, helping companies to determine whether, in the statement of financial position, debts and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current, being effective for annual years beginning on or after January 1, 2024.

Amendments to IAS 1 - Non-current Liabilities with Covenants: The amendment clarifies how the conditions that an entity must comply with within twelve months after the reporting period affect the classification of liabilities, being effective for annual reporting periods beginning on or after 1 January 2024.

Amendments to IAS 12 - International Tax Reform - Pillar Two Model Rules: The amendment provides a temporary exception from requirements for initial application relating to deferred tax assets and liabilities related to Pillar Two income tax for the interim consolidated financial statements, but is mandatory for annual reporting periods from January 1, 2023. The Group has assessed the impacts of applying these changes and concluded that there are no impacts on these unaudited interim condensed consolidated financial statements.

c) Basis of consolidation

There were no changes since December 31, 2023, in the accounting practices adopted for consolidation of the Company's direct and indirect interests in its subsidiaries for the purposes of these unaudited interim condensed consolidated financial statements.

1. Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of income and of comprehensive income, statement of changes in equity and balance sheet respectively.

XP Inc. and its subsidiaries

Notes to unaudited interim condensed consolidated financial statements

As of March 31, 2024

In thousands of Brazilian Reais, unless otherwise stated

1. Associates

Associates are companies in which the investor has a significant influence but does not hold control. Investments in these companies are initially recognized at cost of acquisition and subsequently accounted for using the equity method. Investments in associates include the goodwill identified upon acquisition, net of any cumulative impairment loss.

Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize the Group's share of the post-acquisition profits or losses of the investee in the Group's income statement, and the Group's share of movements in other comprehensive income of the investee in the Group's other comprehensive income. Dividends received or receivable from associates are recognized as a reduction in the carrying amount of the investment.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

If its interest in the associates decreases, but the Group retains significant influence or joint control, only the proportional amount of the previously recognized amounts in other comprehensive income is reclassified in income, when appropriate.

1. Interests in associates measured at fair value

The Group has investments in associates measured at fair value in accordance with item 18 of IAS 28 - Investments in Associates and Joint Ventures. These investments are held through XP FIP Managers and XP FIP Endor, which are venture capital organizations. In determining whether the funds meet the definition of venture capital organizations, management considers the investment portfolio features and objectives. The portfolio classified in this category has the objective to generate growth in the value of its investments in the medium term and have an exit strategy. Additionally, the performance of these portfolios is evaluated and managed considering a fair value basis of each investment.

1. Business combinations and other developments
2. 1. Business combinations
   2. 1. Banco Modal S.A. ("Banco Modal")

On January 6, 2022, XP Inc entered into a binding agreement to acquire up to 100% of Banco Modal's total shares, in a non-cash equity exchange transaction.

The transaction was approved by Administrative Council for Economic Defense (CADE) in July 2022 and by Brazilian Central Bank (BACEN) in June 2023. The closing occurred on July 1, 2023, the date on which the Group obtained control of 704,200,000 issued shares of Banco Modal S.A. Under the terms of this transaction, on the closing date, Banco Modal's former shareholders received 18,717,771 of newly issued XP Inc's BDRs at the price of R$ 112.05 per unit of BDRs, paid in consideration for the acquisition of 100% of Banco Modal's shares. This quantity of BDRs reflects the initial consideration of 19.5 million BDRs adjusted for the interest on equity amount of R$ 82,052, distributed by Banco Modal between the signing date of the binding agreement and the closing date of the transaction.

On the settlement date with Banco Modal's former shareholders, the transaction was recorded in accordance with Banco Modal's net assets fair value as of July 1, 2023, with an allocation of the purchase price between (i) the amount of fair value of the identifiable assets acquired and liabilities assumed and (ii) the goodwill arising at this date, corresponding to the difference between the total consideration transferred and the fair value of identifiable assets acquired and liabilities assumed. The total consideration transferred corresponds to the fair value of the 18,717,771 XP Inc BDR's at the closing date for an amount of R$ 2,097,326. As of March 31, 2024, the goodwill is R$ 1,278,596 and is attributable to the workforce and the high profitability of the acquired business.

1. Other developments

1. Minority stake acquisitions

On December 29, 2023, the Group entered into agreements, through its subsidiary XP Controle 5 Participações Ltda., to acquire minority interests in Monte Bravo JV S.A. ("Monte Bravo"), Blue3 S.A. ("Blue3"), and Ável Participações Ltda. ("Ável"). The total fair value consideration recorded for those acquisitions was R$ 834,743, including preliminary goodwill in a total amount of R$ 537,671. As of March 31, 2024, from the total consideration of R$ 834,743: (i) 45,000 was paid during 2023, (ii) 670,464 was paid during 2024 (including monetary correction on this amount), (iii) there is a remaining amount of R$ 72,163 payable (of which R$ 36,081 will be paid in January 2025 and R$ 36,082 will be paid in January 2026) recorded through accounts payable and (iv) there is an amount equal to R$ 50,000 recorded through contingent consideration (Note 15(b)).