The breakdown of bonds and other non-current liabilities is as follows.
Non-current liabilities 31 December 2011 31 December 2010
€ million € million
Parent Company bond (US$) issued in 2003 235.5 226.9
Parent Company bond (Eurobond) issued in 2009 360.8 352.0
Private placement issued in 2002 - 83.3
Private placement issued in 2009 191.4 184.2
Total bonds and private placements 787.8 846.3
-
Payables and loans due to banks 0.1 0.4
Property leases 1.4 4.4
Derivatives on Parent Company bond (US$) 23.9 26.3
Payables for put options and earn-outs 3.8 2.4
Other debt 0.5 0.7
Non-current financial liabilities 29.8 34.3
Other non-financial liabilities 7.3 -
Other non-current liabilities 37.1 34.3
Bonds
The item bonds includes two bond issues placed by the Parent Company.
The first, with a nominal value of US$ 300 million, was placed in the US institutional market in 2003.
The transaction was structured in two tranches of US$ 100 million and US$ 200 million, maturing in 2015 and 2018 respectively, with a bullet repayment at maturity and interest paid six-monthly at a fixed rate of between 4.33% and 4.63%.
The second issue (Eurobond) was launched on the European market in October 2009, and was aimed at institutional investors, with most of the bonds being placed with investors in Italy, the UK, France, Germany and Switzerland. The nominal value of this issue is € 350 million; it matures on 14 October 2016 and was placed at an agreed price of 99.431%. The coupons are paid annually at a fixed rate of 5.375%. The gross return on the bond is therefore 5.475%. With regard to both these issues, the Parent Company has put in place various instruments to hedge the exchange rate and interest rate risks.
On the first, a cross currency swap hedging instrument has been used to neutralise the risks related to fluctuations in the US dollar and movements in interest rates, and the US dollar-based fixed interest rate was changed to a variable euro rate (6-month Euribor + 60 basis points).
In addition, various interest rate swaps were put in place involving the payment of an average fixed rate of 4.25% (rates from 4.03% to 4.37%) on total underlyings of US$ 50 million (maturing in 2015) and US$ 150 million (maturing in 2018).
For the second bond issue, carried out in 2009, an interest rate swap is in place that involves the payment of a variable rate (6-month Euribor + 210 basis points) on an underlying of € 200 million.
The changes in the item in 2011 relate to:
- in relation to the 2003 issue (US$), the valuation of existing hedging instruments (which have a positive effect of € 7.6 million on the fair value hedge and a negative impact of € 5.2 million on the cash flow hedge) and the effects on the bonds of the hedges and the amortised cost (negative to the tune of € 8.7 million);
- in relation to the 2009 issue (Eurobond), the valuation of hedging instruments (positive effect of € 9.5 million), the effect on the bonds being hedged and the amortised cost (negative impact of € 8.9 million).
Private placements
The private placements represent two bonds placed by Redfire, Inc. in the US institutional market in 2002 and 2009. The 2002 issue, net of redemptions of principal portions already carried out, has a residual nominal value of US$ 108.3 million (the original value was US$ 170 million).
The 2002 transaction was structured in three tranches of US$ 20 million, US$ 50 million and US$ 100 million.
The first tranche has already been fully repaid, while the final portion of the second tranche and the third tranche will be repaid in July 2012.
The six-monthly coupons are based on fixed rates of 6.17% and 6.49%. The entire residual amount therefore matures within 12 months. The issue placed in June 2009 has a nominal value of US$ 250 million.
This transaction is also structured in three tranches, of US$ 40 million, US$ 100 million and US$ 110 million respectively, with bullet maturities in 2014, 2016 and 2019.
The six-monthly coupons are based on fixed rates of 6.83%, 7.50% and 7.99%. The changes in the item during the year relate to:
- the portion redeemed in 2011 relating to the second tranche of the 2002 private placement (US$ 8.3 million); - the release of the effects of the amortised cost of the 2002 private placement, previously adjusted due to fair value
hedges no longer in existence; this effect is equivalent to financial income of US$ 2.1 million (€ 1.6 million);
- the revaluation of the US dollar, the functional currency of the subsidiary, which led to an increase in debt of around € 8.7 million.
Payables to banks
At 31 December 2011, the non-current portion of payables to banks includes € 0.1 million relating to a loan obtained by Sella & Mosca S.p.A., secured by mortgages on land and buildings and liens on plant and machinery and maturing in December 2014.
Leasing
Non-current leasing payables refer to the finance lease entered into by subsidiary CJSC Odessa Sparkling Wine Company.
Payable for put options and earn-outs
At 31 December 2011, payables for put options and earn-outs, both short- and long-term, include the best estimate of the disbursement for the put option on Vasco (CIS) OOO, as well as earn-outs on Cabo Wabo LLC, Campari Mexico S.A. de C.V. (formerly Destiladora San Nicolas, S.A. de C.V.), Campari Argentina S.A. (formerly Sabia S.A.) and Sagatiba Brasil S.A.
The changes in the payable compared with 2010 relate to:
- the acquisition of Vasco (CIS) OOO, which included a put option of 20% of the residual portion of the capital, valued at € 1.8 million and categorised as a short-term payable;
- the acquisition of Sagatiba Brasil S.A., which included an earn-out valued at € 3.7 million, payable within eight years after closing;
- the payment of the Cabo Wabo LLC earn-out for € 0.5 million;
- the payment of the earn-out on Campari Mexico S.A. de C.V. (formerly Destiladora San Nicolas S.A. de C.V.) for € 0.1 million;
- adjustments to the estimates of the value of these future payables, which entailed non-recurring income of € 0.5 million for the year;
- exchange rate and discounting effects, for an insignificant net amount. Other debt
Campari Group – 2011 Consolidated financial statements 93 Furthermore, the values of hedged liabilities are shown here net of the value of the related derivative, whether it is an asset or liability.
Effective interest rate Maturity 31 December 2011 31 December 2010
at 31 December 2011 € million € million
Payables and loans due to banks 2.05% on €, 1.5% on US$ 2012 145.0 38.8
Parent Company bonds
- issued in 2003 (US$)
fixed rate from 4.03% to 4.37%
(1) 2015-2018 259.5 253.2
6 month € LIBOR + 60 basis points(2)
- issued in 2009 (Eurobond) fixed rate 5.375% 2016 347.7 348.3
6-month € LIBOR + 210 basis points(3) Private placement: - issued in 2002 fixed 6.17%-6.49% 2012 83.7 89.5 - issued in 2009 fixed 6.83%, 7.50%, 7.99% 2014-2019 191.4 184.1 Property leases
3-month € LIBOR + 60 basis
points/12% 2012-2025 4.4 7.8
Other debt 0.90% 2012-2015 0.7 0.9
(1) Rate applied to the portion of the bond hedged by an interest rate swap, corresponding to a nominal value of € 172 million.
(2) Rate applied to the portion of the bond hedged by an interest rate swap, corresponding to a nominal value of € 85.9 million.
(3)
Rate applied to the portion of the bond hedged by an interest rate swap, corresponding to a nominal value of € 200 million.
Other non-financial liabilities
Other non-financial liabilities, totalling € 7.3 million at 31 December 2011, refer to Parent Company tax payables relating to payments in instalments under agreements reached with the tax authorities regarding direct tax claimed following inspections in previous years, which for the Parent Company related to the tax years 2004-2006, and for subsidiary Campari Italia S.p.A., incorporated in 2010, to 2004 only.
Pursuant to tax agreements established by the Company, tax payables were made payable in instalments as permitted under legislation on such tax agreements. The balance includes fines and interest and the payments have been deferred until 2014.