82
McPHERSON’S LIMITED
ANNUAL REPORT 2015
NOTE 31. ACQUISITIONS (CONTINUED)
(B) PRIOR PERIOD (CONTINUED)
(iii) Dr. LeWinn’s and Revitanail
On 31 October 2013, the Group’s Australian consumer products business acquired the brandnames and associated assets of iconic skincare brand
Dr. LeWinn’s and beauty treatment brand Revitanail.
Details of the purchase consideration and net assets acquired are as follows:
$’000
Purchase consideration
Cash paid
15,489
Contingent consideration
4,140
Total purchase consideration
19,629
The assets and liabilities acquired were as follows:
Inventories
2,932
Brandnames
16,723
Deferred tax assets
13
Employee entitlements
(39)
Net assets acquired
19,629
Purchase consideration – cash outflow
Total consideration for acquisition accounting purposes
19,629
Less: Contingent consideration
(4,140)
Outflow of cash to acquire business assets – investing activities
15,489
Contingent consideration
The Dr. LeWinn’s / Revitanail acquisition agreement includes a contingent consideration arrangement. Under this arrangement the Group may be
required to pay the former owner a potential additional cash payment depending on the level of sales and adjusted net contribution generated by
these brands over the twelve month period from acquisition date to 31 October 2014. The expected range of the potential additional payment that
the Group may be required to make under this arrangement is between $0 and $13,500,000.
Where an acquisition agreement includes a contingent consideration arrangement, the Group is required to estimate, at acquisition date, the
amount of contingent consideration expected to be paid. This amount then forms part of the consideration amount used for acquisition accounting
purposes. Based on the facts, circumstances and forecasts that existed at acquisition date, the Group estimated that the contingent consideration
payment expected to be paid was $4,140,000. Refer to Note 31(A)(ii) for an update on this arrangement as at 30 June 2015.
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS CONTINUED