Registration Document - Pernod Ricard

4 Notes
94
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
to the annual consolidated fi nancial statements
Goodwill – Goodwill mainly comprises goodwill from the acquisitions
of Allied Domecq in July 2005 and Vin&Sprit in July 2008.
PERNOD RICARD
On 23 July 2008, Pernod Ricard completed the acquisition of Vin&Sprit
group, whose entities are fully consolidated as of that date. This gave
rise to a €1,585 million goodwill at the acquisition date, determined
as shown below.
In euro million 23.07.2008
Cost of business combination 5,432
Fair value of net assets acquired (3,847)
Goodwill 1,585
The cost of the business combination was equivalent to €5,432 million,
including €106 million in expenses directly attributable to the
acquisition. This represents the price paid to the Swedish state for
the V&S shares, including compensation for V&S’s operating cash
flows between 1 January 2008 and the date the acquisition contract
The net assets acquired with V&S are shown below:
In euro million
23.07.2008
was signed, and excluding €85 million in dividends paid by V&S to the
Swedish state in May 2008.
The Group also paid V&S a further €521 million to cancel a receivable
towards owed to the Swedish state.
Carrying amount
before acquisition
Fair value of net
assets acquired
Intangible assets 404 4,103
Other non-current assets 419 346
Non-current assets 823 4,449
Current assets 954 934
Assets held for sale 19 153
TOTAL ASSETS 1,796 5,535
Non-current provisions 73 99
Deferred tax liabilities 198 152
Non-current financial liabilities 567 1,050
Current liabilities 290 387
TOTAL LIABILITIES 1,128 1,688
NET ASSETS ACQUIRED 668 3,847
The process of allocating the acquisition price led to the following
principal adjustments:
◆ the writing off of €403 million in brands and historical intangible
assets and the valuation of V&S’s main brands at €4,101 million;
◆ the recognition of €20 million in deferred taxes on V&S’s brands.
The brands were appraised by an independent appraiser using
generally accepted appraisal techniques. Some of the brands
acquired are eligible for future tax benefits based on their
depreciation for tax purposes. The advantages, which may benefit
a later buyer, are included in the fair value of these brands. A
deferred tax liability is recognised where the tax and book values
of brands are different;
◆ the recognition of indemnities related to the winding up of the
joint venture Future Brands and the end of distribution through
Maxxium.
In the United States, V&S distributed its brand portfolio via the
Future Brands joint venture owned 49/51 by V&S and Fortune
Brands respectively. The agreement under which Future Brands
distributed V&S brands was due to expire in February 2012.
In most other markets, distribution was provided by Maxxium,
a company owned jointly by V&S (25%), Fortune Brands (25%),
Rémy Cointreau (25% – this holding was withdrawn in 2009) and
the Edrington Group (25%).
◆
Both joint venture agreements included a clause governing changes
of shareholder among the partners, which allowed them to force
V&S to withdraw from its contracts:
f on predefined indemnification terms stated in the Maxxium
contract,
f on terms to be decided in the case of the Future Brands
contract.
In light of these agreements, the near-certainty that the contracts
will be broken and the advanced stage of negotiations about the
amount of indemnities, the Group recorded, at the acquisition
date, a liability equal to the indemnity to be paid.
Shares in the joint ventures have been recognised at their fair
value;
the recognition at fair value of inventories of finished products
acquired totalling €29 million.
As part of the acquisition of V&S, inventories of finished products
acquired were restated at their fair value as of 23 July 2008. The
impact of the acquisition on inventories of finished products was
recognised in full in other operating expenses on 30 June 2009,
when the inventories concerned were considered to have been
sold.
I REFERENCE DOCUMENT 2008/2009 I