Home' Slater and Gordon Annual Report : Slater and Gordon AR 2016 Contents Notes to the Financial Statements
For the Year Ended 30 June 2016
Slater and Gordon Limited
Note 8: Subsequent Events
Subsequent to the end of the financial year there have been no matters or circumstances that have significantly affected,
or may significantly affect, the results reported in the financial statements.
Note 9: Business Combinations
9.1 Accounting Policies
Business combinations are accounted for by applying the acquisition method. The cost of an acquisition is measured as
the aggregate of the consideration transferred, which is measured at acquisition-date fair value, and the amount of any
non-controlling interests in the acquiree. Deferred consideration payable is measured at present value. Any contingent
consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Contingent consideration
classified as a liability that is a financial instrument and within the scope of AASB 139 is measured at fair value with
changes in fair value recognised in the statement of profit or loss and other comprehensive income. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or the
proportionate share of the acquiree identifiable net assets. Acquisition related costs are expensed as incurred.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests) and any previous interest held over the net identifiable assets acquired and
liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and
reviews the procedures used to measure the amounts recognised at the acquisition date. If the reassessment still results
in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is
recognised in profit or loss as a gain from bargain purchase.
In conjunction with the business combination transaction there may be a transfer of assets between controlled entities as
part of restructuring the acquired business. The parent accounts for such transfers through reallocation of the cost of the
investments in its statement of financial position.
Critical Accounting Estimates and Judgements
The fair value of customer relationships acquired in a business combination is determined using the multi-period excess
earnings method (“MEEM”) whilst the fair value of trademarks acquired in a business combination is based on a relief
from royalties approach. These methods require estimates by management of future income streams, applicable royalty
rates and discount rates
Provisional accounting is applied by the Group to account for business combinations when the initial accounting is
incomplete at the end of the reporting period. An entity has 12 months to finalise its provisional accounting. By its nature
provisional accounting involves estimates and judgements based on the information available to the Group at the end of
the reporting period, while it continues to seek information about facts and circumstances that existed as of the
9.2 Current Period Business Combinations
There were no business combinations during the year ended 30 June 2016.
9.3 Prior Period Business Combinations
9.3.1 Acquisition of business – All States Legal Co Pty Ltd trading as Nowicki Carbone
On 31 October 2014, the Group acquired the business of Nowicki Carbone, a personal injury law firm based in
The strategic rationale for this business acquisition was:
• to further expand the Group’s personal injury law practice;
• synergies expected to be achieved as a result of combining the acquired business with the rest of the Group; and
• to reaffirm the Group’s position as the leading law firm brand in the Australian consumer legal services market.
The initial accounting for this acquisition had previously been provisionally determined. The necessary fair valuation of
consideration and net assets acquired has now been finalised and is reflected in the amounts detailed below. This
revaluation has resulted in an increase in the work in progress of $5,805,000 and additional provisions raised of
$986,000 resulting in an increase in the gain from bargain purchase of $4,819,000.
90 Slater and Gordon Limited
Annual Report 2016
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