Pernod Ricard NZ posts small loss as write downs slow

Fabian Partigliani, managing director of Pernod Ricard New Zealand. Photo / Richard Robinson

Pernod Ricard's New Zealand unit posted its smallest annual loss since 2009 after ending three years of substantial writedowns.

The New Zealand holding company, Millstream Equities, narrowed its loss to $9.6 million in the 12 months ended June 30, from $182.3 million, making it the smallest deficit in four years. The Pernod Ricard unit wrote off about $270 million of goodwill and wore a $99 million loss on the sale of local brands in the past three years, and has racked up retained losses of $879 million.

The global parent, the world's second-largest liquor distiller, injected $715.4 million of new capital last year, almost doubling the shares on issue, and the holding company had equity of $682.2 million as at June 30.

The statements noted a deficiency in working capital of $22.9 million, and the directors continued to assume the company is a going concern after the immediate parent confirmed an intention to extend a current loan for a further 12 months from June 15, 2013. The parent was owed almost $22.8 million at the June 30 balance date.

Pernod's local gross profit jumped 51 per cent to $59.3 million due to the liquor group reaping a $16.7 million gain in the fair value of its agricultural produce, helping offset a 3.5 per cent slide in sales to $227.7 million.

The company's takeover of Allied Domecq in 2005 gave it New Zealand assets including the Montana wine business. It rationalised them with the sale of a Gisborne winery, five vineyards and 12 wine brands, including sparkling wine Lindauer, to Lion and partner Indevin Group for $88.3 million in 2010.

That deal ended up in court after Lion claimed Pernod had breached warranties by not disclosing certain margin agreements with the Woolworths-owned Countdown supermarkets. Last month the Court of Appeal upheld a ruling against Lion's claim for damages of between $6.25 million and $8.96 million.

The judgment hadn't been released at the date of the Pernod statements being lodged.

The Pernod unit took provisions of some $25.3 million to cover the cost of legal claims recognised by the directors, chiefly its involvement in the tax department's investigation into interest deductions on mandatory convertible notes.

Inland Revenue alleges the securities, which let companies juggle debt and equity to provide a tax advantage, were used simply as a means to minimise tax.

"The company and group will continue to dispute the proposed adjustments," the statements said.