C&C writes down value of brands by €30m

Drink and snacks group Cantrell & Cochrane (C&C) wrote down the value of its brands by €30 million in a one-off move last year, because of a downturn in its business which affected the carrying value of certain of its brands.

The writedown followed a bad summer where its main brand, Bulmers cider, recorded a drop in sale volumes for the first time in a number of years.

The excise duty on cider was doubled in the 2001 budget.

The company's accounts for the 18 months to end February, 2003 also show that a surplus in the company's pension fund of €35.8 million was eliminated because of the downturn in the global stock markets.

A third factor, an impairment of goodwill and amortisation of €48.8 million, contributed towards an overall loss after tax for the period of €45.9 million.

In June the company reported pre-tax profits for the period of €87.5 million, excluding goodwill amortisation.

The inclusion of the goodwill amortisation changes the figure into a loss.

A spokesman said the amortisation of goodwill over a 20-year period was best accountancy practice and had to be seen in the context of overall goodwill arising from acquisitions of €500 million.

The C&C accounts for the 18 months to end February 2003 have now been filed in the Companies Office.

The group's turnover for the period was €1.2 billion.

The notes to the accounts show that a pension surplus of €35.8 million was "almost entirely eroded" during the period and that "in the opinion of the directors it is now prudent to write down the pension asset to its estimated recoverable amount of nil". An amount of €8.5 million arose from the costs of preparing for the initial public offering the company prepared for in 2002 but which it did not proceed with.

Directors' emoluments for the period were €4.1 million, compared to €1.9 million for the year ended August 31st, 2001.

Some of this increase was attributable to work done on the failed flotation.

The notes record that a review of goodwill led to an exceptional charge of €30 million in respect of goodwill impairment.

A spokesman for the company said this was due to a downturn in the business over the period that affected the carrying value of the group's brands.

The group's main brands include cider drinks Bulmers, Magners, Stag and Strongbow. Bulmers is the group's biggest brand and experienced an 11 per cent decline in the year to February 2003.

Other C&C brands include Club soft drinks, Cidona, Tayto crisps and King crisps.

A spokesman said the goodwill writedown of €48.8 million was an ongoing figure paid each year. He said the goodwill on acquired brands for C&C stands at €500 million.

During the period the company donated €5,000 to Fianna Fail and a similar figure to the Progressive Democrats, according to the accounts.