Let's take a look at an example in more detail. You can see here, this is the notes to the accounts, and they're quite small, but you can see that they're talking here that the deferred consideration is based on a present value, if you read that in detail. So what's happened is that they have estimated the fair value at the acquisition date by projecting out the cash flows, probability weighting them, and then present valuing them back to the current time. And then that will sit on the balance sheet as a liability. So you can see here, the consideration, in this case, we had 40 million and then a deferred non-contingent consideration which is 71.4 million, and then a contingent royalty consideration there as well. So the total purchase price was 151 million in this case, and this is in sterling. So you can see here, they're talking about the estimates in relation to the contingent royalty consideration. So in this case, the deferred non-con contingent consideration is definitely going to be paid the 71.4 million. But the contingent royalty consideration is obviously based on the underlying performance. So they're talking about the assessment of the estimate of that payment that they expect to make on the royalty consideration, and that's how they have come up with the balance sheet number at the date. So you can see they've used a discounted cash flow methodology to do that, and then they've used some estimates of the sales value volume and growth rates into the future, and they have done that for 16 years, and they've used a pretty high discount rate of 20.5%, really related to the risk of those. Now you can see on the balance sheet here, we have got the non-contingent consideration. So we know that that's definitely going to be made, but because it's still going to be at a present value, you've got the unwinding the discount rate. So they're adding 2.7 to the balance each year. Now, this is in a foreign subsidiary, so you've also got an FX effect, which is negative. So the overall liability has gone down, but if we didn't have the FX effect, the liability would've increased. Now, in this case, in our second case, we have got a situation where the contingent consideration, the change in fair value, which will include the effect of the present value unwinding, but also the change in estimates. We can see, that they've actually reduced their estimated liability, probably because the estimates have gone down, which has outweighed the unwinding of the discount rate, and we have the foreign exchange movement too. So this is a more detailed situation, where you have two elements of the contingent consideration. One, which is a guaranteed payment, and the other, which is a contingent payment.
