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Drinks company writes off $42m of goodwill

NZ NewswireNZ Newswire 20/06/2016 Jonathan Underhill
Some Phoenix products have been recalled © Phoenix website Some Phoenix products have been recalled

The Better Drinks Co, which includes New Zealand assets bought by Japanese brewer Asahi Group during an acquisition spree in 2011, has taken a $42.3 million impairment to write off all of its goodwill, resulting in an annual loss.

Better Drinks includes Charlie's Group, which Asahi acquired in 2011 for 44 cents a share, valuing the listed juice maker at $129m. The price amounted to a 57 per cent premium to Charlie's stock before the deal was announced that year.

The New Zealand company, whose brands include Charlie's, Phoenix, Juicy Lucy Ti Tonics, Real Iced Tea and Stash Tea, recorded sales of $31.3m in calendar 2015, down 0.5 per cent from 2014, its financial statements show. Gross profit fell 11 per cent to $12.8m but its operating result included the goodwill write-off, resulting in a net loss of $43m from a 2014 profit of $134,000.

While buying Charlie's in 2011, Asahi also agreed to buy Independent Liquor Group for $1.5 billion from shareholders. In a busy year for acquisitions, it also gained regulatory approval to buy Australia's P&N Beverages for about US$200m and agreed to acquire Malaysia's PepsiCo bottler Permanis Sdn for US$274m.

Within months, Asahi filed papers in the Federal Court of Australia over the $1.5b price tag, claiming Independent Liquor's earnings were "significantly" inflated. It received a $209m settlement, although that was more than offset by $255m of impairment charges.

Independent achieved a profit of $200,000 in 2015 as sales rose to $393m. That followed losses of $52.6m in 2014.

"In spite of the impairment loss, TBDC remains in good shape to meet the current and future challenges of the New Zealand beverage market," an Asahi Beverages spokeswoman said.

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