Registration Document - Pernod Ricard

4 Notes
82
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
to the annual consolidated fi nancial statements
The data and assumptions used for the impairment test applied to goodwill and intangible assets with indefinite useful lives of Cash Generating
Units (CGUs) are as follows:
PERNOD RICARD
Method used
to determine
the recoverable
amount
Carrying amount
of goodwill
at 30.06.2009
Carrying amount
of brands and other
intangible assets
at 30.06.2009
Value in use
Perpetual
growth rate
France
237 584
Discount rate
7.33% From (1)% to +2.5%
Europe
Americas
Value in use based
on the discounted
cash flow method
1,603
2,262
3,111
5,803
8.35%
8.39%
From (1)% to +2.5%
From (1)% to +2.5%
Asia/Rest of the World 787 1,813 8.57% From (1)% to +2.5%
A 0.5 percentage point increase in the discount rate would generate
no additional impairment to the value of indefinite intangible assets
and goodwill.
Provisions for pensions and other post-employment benefits –
As indicated in Note 1.18, the Group participates in defined benefit
and defined contribution pension plans. In addition, provisions are
also recognised in virtue of certain other post-employment benefits
such as life assurance and medical care (mainly in the United States
and the United Kingdom). The carrying amount of these provisions at
the balance sheet date is set out in Note 16.
These benefit obligations are based on a number of assumptions such
as discount rates, expected returns on plan assets, average future
salary increases, rate of employee turnover and life expectancy.
These assumptions are generally updated annually. Assumptions
used in the preparation of the financial statements for the year
ended 30 June 2009 and their methods of determination are set out
in Note 16. The Group considers that the actuarial assumptions used
are appropriate and justified, however, changes that could be made to
such actuarial assumptions in the future may have a material impact
on the amount of the Group’s benefit obligations and on its results.
A 25 basis point reduction in the discount rate at 30 June 2009
would have an impact of around €132 million on the amount of the
benefit obligation under the Group’s main benefit plans, which are
in the UK and North America. A change of one point in the rate of
increase of medical and healthcare expenses would have an impact of
approximately €9 million on the amount of the benefit obligation in
respect of post-employment medical and healthcare coverage.
Deferred tax – As indicated in Note 1.21, the deferred tax assets
recognised result mainly from tax loss carryforwards and from
timing differences between the tax and book values of assets and
liabilities. Deferred tax assets in respect of tax losses are recognised
if it is probable that the Group will have future taxable profits against
which such losses will be used. Assessment of the Group’s ability to
use these tax loss carryforwards involves a significant degree of
judgment. Analyses are carried out to conclude whether or not these
tax loss carryforwards are likely to be usable in the future. At 30 June
2009, the amount of deferred tax assets is €1,186 million and is set
out in detail in Note 8.
Provisions – As indicated in Note 16, the Group is involved in some
litigation and claims arising in the ordinary course of its business. In
some cases, the amounts requested by the claimants are significant
and the legal proceedings can take several years. In this context,
provisions are calculated on the basis of the Group’s best estimate of
the amount that will be payable based on the information available
(notably that provided by the Group’s legal advisors). Any change
to assumptions can have a significant effect on the amount of the
provision recognised. The carrying amount of these provisions at the
balance sheet date is set out in Note 16.
Judg ments – In the absence of standards or interpretations applicable
to a specific transaction, Group Management uses its judgment to
define and apply those accounting policies that will provide relevant
and reliable information in the context of the preparation of the
financial statements.
6. Business combinations
Business combinations completed as from 1 July 2004 are recognised
according to the purchase accounting method, in application of IFRS 3
(Business combinations). Identifiable assets, liabilities and contingent
liabilities of the acquired entity are recognised at fair value at the date
of acquisition, after an allocation period of a maximum duration of
twelve months from the date of acquisition. Cost of acquisition is
measured at the fair value of assets given, equity instruments issued
and liabilities incurred or assumed at the date of acquisition, plus any
costs directly attributable to the acquisition. The excess of the cost of
acquisition over the Group’s share in the fair value of the identifiable
assets, liabilities and contingent liabilities is recognised as goodwill
and is subject to impairment tests, at least once a year and as soon
as there is an indication that it may be impaired. Goodwill relating
to the acquisition of foreign entities is denominated in the functional
currency of the acquired activity .
7. Goodwill and intangible assets
Goodwill – Goodwill is subject to an impairment test at least once
a year and as soon as there is an indication that its value may have
been impaired. To perform these tests, goodwill is allocated by
geographical area on the basis of asset groupings at the date of each
business combination. These asset groupings correspond to groups of
assets which jointly generate identifiable cash flows that are largely
independent. The methods and assumptions used for impairment
tests in respect of these asset groupings are set out in Note 1.9. If
impairment is identified, an impairment loss is recognised in profit
and loss for the financial year.
Intangible assets – Intangible assets are measured at cost on initial
recognition. With the exception of assets with indefinite useful
lives, they are amortised on a straight-line basis over their period
of use, which is generally less than five years, and are written down
when their recoverable amount is less than their carrying amount.
Amortisation of intangible assets is recognised within operating
profit in the income statement.
I REFERENCE DOCUMENT 2008/2009 I