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CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes to the balance sheet Note 4 Intangible assets and goodwill Note 4.1 Intangible assets are measured at cost on initial recognition. With the exception of assets with indefinite useful lives, they are amortised on a straight-line basis over their period of use, which is generally less than five years, and are written down when their recoverable amount is less than their net carrying amount. Amortisation of intangible assets is recognised within operating profit in the income statement.

In the context of the Group’s activities, and in accordance with IAS 38 (Intangible assets), research and development costs are recognised as expenses in the financial year during which they are incurred, except for certain development costs which meet the capitalisation criteria described by the standard.

Movements in the year

Foreign currency gains and losses

Other movements 30.06.2017

30.06.2016 Acquisitions Allowances Disposals

€ million

Goodwill

5,624

8

- - - - -

(5)

(91)

0 0 7 7 0

5,535

Brands

13,247

13 32 53

(61)

(262)

12,937

Other intangible assets

356

(8)

(6)

382

GROSS VALUE

19,227

(75)

(359)

18,854

Goodwill

(137)

- - - -

-

(1) 30

(138)

Brands

(1,272)

(73) (33)

21

0 (1,294)

Other intangible assets

(246)

7

4

(2) (2)

(270)

AMORTISATION/IMPAIRMENT

(1,655) 17,572

(105) (105)

28

33

(1,702) 17,152

INTANGIBLE ASSETS, NET

53

(47)

(325)

5

Movements in the year

Foreign currency gains and losses

Other movements 30.06.2018

30.06.2017 Acquisitions Allowances Disposals

€ million

Goodwill

5,535

17 33 33 82

- - - - -

(1) (3) (1) (5)

(94)

0 0 2 3 0

5,456

Brands

12,937

(209)

12,757

Other intangible assets

382

(10)

407

GROSS VALUE

18,854

(314)

18,620

Goodwill

(138)

- - - -

-

1

(137)

Brands

(1,294)

(71) (1)

1 1 2

31

0 (1,334)

Other intangible assets

(270)

(29)

7

0

(291)

AMORTISATION/IMPAIRMENT

(1,702) 17,152

(101) (101)

39

0 (1,762)

INTANGIBLE ASSETS, NET

82

(3)

(274)

2

16,858

See Note 3.1 – Other operating income and expenses. (1)

Goodwill Goodwill is subject to an impairment test at least once a year and business combination. These asset groupings correspond to groups whenever there is an indication that its value may have been of assets which jointly generate identifiable cash flows that are impaired. To perform these tests, goodwill is allocated by largely independent. If impairment is identified, an impairment loss geographical area on the basis of asset groupings at the date of each is recognised in profit and loss for the financial year.

Goodwill mainly stems from the acquisitions of Allied Domecq in July 2005 and Vin&Sprit in July 2008.

Brands

The fair value of identifiable acquired brands is determined using an to an impairment test at least once a year or whenever there is an actuarial calculation of estimated future profits or using the royalty indication that their value may have been impaired. Brands acquired method and corresponds to the fair value of the brands at the date as part of acquisitions of foreign entities are denominated in the of acquisition. As the Group’s brands are intangible assets with functional currency of the business acquired. indefinite useful lives, they are not amortised but are rather subject

The main brands recorded on the balance sheet are: Absolut, Ballantine’s, Beefeater, Chivas Regal, Kahlúa, Malibu, Martell and Brancott Estate. Most of these were recognised at the time of the acquisitions of Seagram, Allied Domecq and Vin&Sprit.

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