Cash outflow with respect to property, plant and equipment was €8.4m (FY2020: €15.3m) due to an increase in closing capital accruals at 28 February 2021. No depreciation is charged on freehold land which had a book value of €16.2m at 28 February 2021.

Valuation of freehold land & buildings and plant & machinery - 28 February 2021

In the current financial year, the Group engaged the Real Estate & Capital Equipment Valuation team of PricewaterhouseCoopers LLP to value the Group’s freehold land & buildings and plant & machinery at the Group’s manufacturing facilities in Clonmel (Tipperary), Wellpark (Glasgow) and the Group’s facility in Castel Branco in Portugal. The valuers are members of the Royal Institution of Chartered Surveyors with experience of undertaking property, plant and equipment valuations on a global basis.

For specialised assets, comprising the production facilities at Clonmel, Wellpark Brewery and Portugal the Depreciated Replacement Cost approach has been applied to value land & buildings. The Depreciated Replacement Cost approach was also used to derive fair value for the plant & machinery at the Group’s manufacturing facilities given their specialised nature.

The result of these external valuations, as at 28 February 2021, was an increase in the value of freehold land & buildings of €3.2m of which €2.3m was credited to the Income Statement and €0.9m was credited to Other Comprehensive Income. The value of plant & machinery decreased by €3.5m which was expensed to the Income Statement as there was no previously recognised gain in the revaluation reserve against which to offset.

For all other items of land & buildings and plant & machinery the Group completed an internal assessment of the appropriateness of their carrying value. Assisted by a market overview provided by the valuation team from PricewaterhouseCoopers LLP, with respect to the geographic locations of the Group’s assets, the Group concluded that the carrying value was appropriate at 28 February 2021 and no adjustment was recorded in this regard.

Valuation of freehold land & buildings and plant & machinery - 29 February 2020

In the prior financial year, the Group also engaged the Real Estate & Capital Equipment Valuation team of PricewaterhouseCoopers LLP to value the Group’s freehold land & buildings and plant & machinery at the Group’s manufacturing facilities in Clonmel (Tipperary), Wellpark (Glasgow), and Vermont (USA) along with the Group’s depots in Ireland and the Group’s facility in Castel Branco in Portugal.

Two methodologies were also applied to value the land & buildings in the prior financial year depending upon the type of asset. For specialised assets, such as the production facilities at Clonmel, Wellpark Brewery, Vermont and Portugal the Depreciated Replacement Cost approach was applied. The distribution warehouses comprise standard distribution facilities with an active market and therefore they were valued using a market approach. The Depreciated Replacement Cost approach was also used to derive fair value for the plant & machinery at the Group’s manufacturing facilities given their specialised nature.

The result of these external valuations, as at 29 February 2020, was an increase in the value of freehold land & buildings of €2.2m of which €1.1m was credited to the Income Statement and €1.1m was credited to the revaluation reserve via Other Comprehensive Income. The value of plant & machinery decreased by €2.1m which was expensed to the Income Statement as there was no previously recognised gain in the revaluation reserve against which to offset.

Useful Lives

The following useful lives were attributed to the assets:

Fair value hierarchy

The valuations of freehold land & buildings and plant & machinery, excluding right-of-use assets, are derived using data from sources which are not widely available to the public and involve a degree of judgement. For these reasons, the valuations of the Group’s freehold land & buildings and plant & machinery are classified as ‘Level 3’ as defined by IFRS 13 Fair Value Measurement, and as illustrated below:

Measurement techniques

The Group used the following techniques to determine the fair value measurements categorised in Level 3:

1. The Group’s depots are valued using a market value approach. The market value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
2. The Group’s specialised assets such as the production facilities at Clonmel, Wellpark and Portugal are valued using the Depreciated Replacement Cost approach. Depreciated Replacement Cost is assessed, firstly, by the identification of the gross replacement cost for each class of asset at each of the Group’s plants. A depreciation factor derived from both the physical and functional obsolescence of each class of asset, taking into account estimated residual values at the end of the life of each class of asset, is then applied to the gross replacement cost to determine the net replacement cost. An economic obsolescence factor, which is derived based on current and anticipated capacity or utilisation of each plant and machinery asset, at each of the Group’s plants, as a function of total available production capacity, is applied to determine the Depreciated Replacement Cost.

Unobservable inputs

The significant unobservable inputs used in the market value measurement of land & buildings is as follows:

The significant unobservable inputs used in the Depreciated Replacement Cost measurement of freehold land & buildings and plant & machinery are as follows:

The carrying value of depot freehold land & buildings would increase/(decrease) by €0.7m if the comparable open market value increased/(decreased) by 5%.

The carrying value of freehold land & buildings which is valued on the Depreciated Replacement Cost basis, would increase/(decrease) by €2.2m if the economic obsolescence adjustment factor was (decreased)/increased by 5%. The estimated carrying value of the same land & buildings would increase/(decrease) by €0.9m if the gross replacement cost was increased/(decreased) by 2%.

The carrying value of plant & machinery in the Group which is valued on the Depreciated Replacement Cost basis, would increase by €2.9m if the economic obsolescence adjustment factor was decreased by 5%. If the economic obsolescence adjustment increased by 5% the value would increase by €3.2m. If the gross replacement cost was increased by 2% the carrying value of the Group’s plant & machinery would increase by €0.6m. If the gross replacement cost decreased by 2% the carrying value of the Group’s plant & machinery would decrease by €0.9m.

Company

The Company has no property, plant & equipment.