Notes forming part of the financial statements
10. BUSINESS COMBINATIONS AND NON-CONTROLLING INTERESTS
Year ended 29 February 2020
In the current financial year, the Group disposed of its investment and non-controlling interest in Peppermint Events Limited which it acquired in the prior financial year as part of the acquisition of Matthew Clark (Holdings) Limited and Bibendum PLB (Topco) Limited and their subsidiaries as outlined in further detail below (together “Matthew Clark and Bibendum”). A loss of €1.7m was incurred on disposal (note 5).
On disposal of Peppermint Events Limited the Group reversed the adjustment to Goodwill amounting to €0.6m for non-controlling interest.
Year ended 28 February 2019
On 4 April 2018, the Group acquired the entire share capital of Matthew Clark (Holdings) Limited and Bibendum PLB (Topco) Limited and their subsidiary businesses, Catalyst, Peppermint (61% holding), Elastic and Walker & Wodehouse (together “Matthew Clark and Bibendum”) for cash consideration of £1. Matthew Clark is the largest independent distributor to the UK on-trade drinks sector. It offers a range of over 13,000 products, including beers, wines, spirits, cider and soft drinks. Matthew Clark also has a number of exclusive distribution agreements for third party products (mainly wines) into the UK market and also has a limited range of own brand wines. It has a nationwide distribution network serving the independent free trade and national accounts. Bibendum is one of the largest wine, spirits and craft beer distributors and wholesalers to the UK on-trade and off-trade, with a particular focus on wine.
The Group had a non-controlling interest with respect to Peppermint, in which it had a 61% holding.
As outlined in the table below, the Group has recognised the non-controlling interest’s proportionate share of net assets acquired, in which the carrying value approximates fair value.
Matthew Clark and Bibendum
The identifiable net assets acquired, including adjustments to final fair values were as follows:
Initial value assigned €m | Adjustment to initial fair value €m | Revised final fair value €m | |
|---|---|---|---|
ASSETS | |||
Non-current assets | |||
Goodwill (note 12) | - | 103.5* | 103.5 |
Property, plant & equipment (note 11) | 4.3 | - | 4.3 |
Brands (note 12) | - | 16.9 | 16.9 |
Intangible assets (note 12) | 2.2 | 8.1 | 10.3 |
Deferred tax assets (note 21) | 2.3 | - | 2.3 |
Total non-current assets | 8.8 | 128.5 | 137.3 |
Current assets | |||
Cash | - | - | - |
Inventories | 61.2 | - | 61.2 |
Trade & other receivables | 196.2 | - | 196.2 |
Current income tax asset | 6.3 | - | 6.3 |
Current assets | 263.7 | - | 263.7 |
LIABILITIES | |||
Trade & other payables | (274.3) | - | (274.3) |
Borrowings | (116.5) | - | (116.5) |
Provisions | (5.9) | - | (5.9) |
Deferred tax liabilities (note 21) | - | (4.3) | (4.3) |
Total liabilities | (396.7) | (4.3) | (401.0) |
Net identifiable (liabilities)/assets acquired | (124.2) | 124.2 | - |
Non-controlling interest/adjustment to goodwill | 0.6 | (0.6)* | - |
Equity holder of the parent (liabilities)/assets acquired | (124.8) | 124.8 | - |
Total | (124.2) | 124.2 | - |
Satisfied by: | |||
Cash consideration | - | - | - |
Analysis of cash flows on acquisition | |||
Transaction costs of the acquisition (included in cash flows from operating activities in the prior year) | 0.8 |
*Total goodwill attributable to the equity holders of the parent on acquisition was €102.9m (€103.5m gross less non-controlling interest €0.6m).
The principle factor contributing to the recognition of goodwill on acquisition entered into by the Group is the realisation of cost savings and other synergies with existing entities in the Group, which do not qualify for separate recognition as intangible assets. The acquired brands, were valued at fair value on the date of acquisition in accordance with IFRS 3 Business Combinations by independent professional valuers. The brands identified as part of the acquisition were predominately the Matthew Clark and Bibendum brands. The deferred tax adjustment is recognised with respect to these intangible assets.
Post-acquisition impact
The post-acquisition impact of acquisitions completed during the prior financial year on Group’s prior year results was as follows:
2019 | |
|---|---|
€m | |
Revenue | 1,156.6 |
Operating profit | 15.7 |
The acquisition was completed on 4 April 2018, Operating profit of the Group for the financial year ended 28 February 2019 determined in accordance with IFRS as though the acquisition effected during the period had been at the beginning of the period would not have been materially different. The revenue of the Group for the financial year ended 28 February 2019 determined in accordance with IFRS as though the acquisition effected during the period had been at the beginning of the period would have been as follows:
FY2019 acquisitions | C&C Group excluding FY2019 acquisitions | Pro-forma consolidated Group | |
|---|---|---|---|
€m | €m | €m | |
Revenue | 1,287.2 | 840.7 | 2,127.9 |
The gross contractual value of trade and other receivables as at the date of acquisition amounted to €196.2m. The fair value of these receivables is €196.2m, all of which is expected to be recoverable.
Acquisition of equity accounted investments
Details of the Group’s equity accounted investments in the current and prior financial year are outlined in note 13.