Ahead of its full-year results later in this week, Coca-Cola Amatil has written down the value of its SPC canned fruit and vegetable operations to zero, reflecting the small sale price it expects to receive if it manages to sell the troubled business.
CCA said in August last year it was reviewing the future of the business and in November confirmed it would seek to sell SPC, which it expects to run as a $10 million loss this year, despite a $100 million co-investment with the Victorian government over four years to improve its viability.
Yesterday CCA said it had received several non-binding indicative offers for SPC from both Australian and overseas bidders.
However, the company said that due to the “size and structure” of the bids, and the “inherent uncertainty of the financial outcome of the sale process”, it was slashing the value SPC in its accounts by $147 million – to zero.
“We have received strong interest in SPC,” the company said in a statement. “The strong interest reflects the many opportunities for growth in SPC, including new products and markets, further efficiency improvements, and leveraging technology and intellectual property.”
CCA said the non-cash impairment does not impact the underlying performance of the business or the Group’s ability to pay dividends.
“Furthermore, as a result of the divestment process proceeding, SPC’s assets and liabilities to be sold will be classified as held for sale in the consolidated balance sheet and the business’s loss will be classified as discontinued operations in the consolidated income statement from a financial reporting perspective in the FY18 results,” the company said yesterday.
“Consequently, SPC’s result will not be included in the “Corporate, Food & Services” segment for FY18, and the segment renamed “Corporate & Services” in the 2018 results to be released later this week.
“As a result of the non-cash impairment of SPC and the trading loss for the year, the reported loss in “Discontinued Operation” will be a total loss of approximately $120 million after tax. This does not impact our underlying result but will be reflected in our statutory result,” the company said.
The shares eased 0.8% to $8.34.