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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