RNS Number:1227G
Diageo PLC
24 February 2000
PART 2
DIAGEO CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months ended Six months ended
31 December 1999 31 December 1998
Before Before Good-
goodwill Goodwill goodwill will
and and ex- and and ex-
except- cept- except- cept-
ional ional ional ional
items items Total items items Total
# # # # # #
million million million million million million
Turnover 6,596 - 6,596 6,267 - 6,267
Operating costs (5,445) (86) (5,531) (5,168) (198) (5,366)
Operating profit 1,151 (86) 1,065 1,099 (198) 901
Share of profits of 121 - 121 111 - 111
associates
Trading profit 1,272 (86) 1,186 1,210 (198) 1,012
Disposal of fixed - (2) (2) - (8) (8)
assets
Sale of businesses - (244) (244) - 127 127
Interest payable (185) - (185) (159) - (159)
(net)
Profit before 1,087 (332) 755 1,051 (79) 972
taxation
Taxation (285) 6 (279) (275) 6 (269)
Profit after taxation 802 (326) 476 776 (73) 703
Minority interests
Equity (18) - (18) (25) - (25)
Non-equity (18) - (18) (18) - (18)
Profit for the period 766 (326) 440 733 (73) 660
Interim dividend (285) - (285) (276) - (276)
Transferred to 481 (326) 155 457 (73) 384
reserves
Pence per share
Basic earnings 22.6p (9.6)p 13.0p 20.5p (2.0)p 18.5p
Diluted earnings 22.5p (9.6)p 12.9p 20.4p (2.0)p 18.4p
Interim dividend 8.4p - 8.4p 7.8p - 7.8p
Average shares 3,394m 3,577m
DIAGEO CONSOLIDATED STATEMENT OF
TOTAL RECOGNISED GAINS AND LOSSES
Six months ended Six months ended
31 December 1999 31 December 1998
# million # million
Profit for the period
- group 370 593
- associates 70 67
440 660
Exchange adjustments (21) 85
Tax (charge)/relief on (4) 10
exchange in reserves
Total recognised gains and 415 755
losses
DIAGEO CONSOLIDATED BALANCE SHEET
31 December 1999 30 June 1999 31 December 1998
# # # # # #
million million million million million million
Fixed assets
Intangible assets 4,975 5,188 4,852
Tangible assets 3,100 3,178 3,058
Investments 1,442 1,354 1,390
9,517 9,720 9,300
Current assets
Stocks 2,153 2,202 2,298
Debtors 3,732 3,259 3,613
Investments - - 167
Cash at bank and in 1,732 1,097 1,385
hand
7,617 6,558 7,463
Creditors - due within
one year
Borrowings (4,095) (3,905) (3,909)
Other creditors (3,758) (3,532) (3,362)
(7,853) (7,437) (7,271)
Net current (236) (879) 192
(liabilities)/assets
Total assets less current 9,281 8,841 9,492
liabilities
Creditors - due after
one year
Borrowings (3,553) (3,395) (2,850)
Other creditors (150) (100) (245)
(3,703) (3,495) (3,095)
Provisions for liabilities and (695) (753) (747)
charges
4,883 4,593 5,650
Capital and reserves
Called up share capital 989 992 1,036
Reserves 3,341 3,034 4,066
Shareholders' funds 4,330 4,026 5,102
Minority interests
Equity 175 179 180
Non-equity 378 388 368
553 567 548
4,883 4,593 5,650
DIAGEO CONSOLIDATED CASH FLOW STATEMENT
Six months ended Six months ended
31 December 1999 31 December 1998
# # # #
million million million million
Net cash inflow from operating activities 929 753
Dividends received from associates 40 5
Interest paid (net) (182) (239)
Dividends paid to equity minority (16) (13)
interests
Returns on investments and servicing of (198) (252)
finance
Taxation (78) (361)
Purchase of tangible fixed assets (252) (214)
Purchase of own shares (net) (40) (54)
Sale of fixed assets 15 50
Capital expenditure and financial (277) (218)
investment
Free cash flow 416 (73)
Purchase of subsidiaries (56) (117)
Sale of subsidiaries and associates 240 137
Acquisitions and disposals 184 20
Equity dividends paid (398) (388)
Cash flow before liquid resources and 202 (441)
financing
Management of liquid resources (244) 1,481
Issue of share capital 6 26
Own shares purchased for cancellation (54) (74)
Increase/(decrease) in loans 333 (1,081)
Financing 285 (1,129)
Increase/(decrease) in cash in the period 243 (89)
MOVEMENTS IN NET BORROWINGS
Six months ended Six months ended
31 December 1999 31 December 1998
# million # million
Increase/decrease) in cash in the 243 (89)
period
Cash flow from change in loans (333) 1,081
Change in liquid resources 244 (1,481)
Change in net borrowings from cash 154 (489)
flows
Exchange adjustments 175 (95)
Non-cash items (14) (5)
Decrease/(increase) in net borrowings 315 (589)
Net borrowings at beginning of the (6,056) (4,508)
period
Net borrowings at end of the period (5,741) (5,097)
NOTES
1. Segmental analysis
Six months ended Six months ended
31 December 1999 31 December 1998
Operating Operating
Turnover profit Turnover profit
# million # million # million # million
Class of business:
Spirits and Wine 2,877 614 2,732 589
Packaged Food 2,056 271 1,926 263
Beer 1,195 161 1,166 149
Quick Service Restaurants 468 105 443 98
6,596 1,151 6,267 1,099
Geographical area by
destination:
Europe 2,533 385 2,343 371
North America 3,000 539 2,873 515
Asia Pacific 449 80 407 74
Latin America 381 89 427 90
Rest of World 233 58 217 49
6,596 1,151 6,267 1,099
31 December 1999 31 December 1998
# million # million
Net assets:
Spirits and Wine 4,311 4,827
Packaged Food 3,415 3,031
Beer 874 935
Quick Service Restaurants 1,194 1,171
9,794 9,964
Investments in associates 1,170 1,200
Tax, dividends and other (340) (417)
corporate items
Net borrowings (5,741) (5,097)
4,883 5,650
Europe 3,753 4,370
North America 5,301 4,839
Asia Pacific 283 325
Latin America 285 249
Rest of World 172 181
9,794 9,964
The above analysis of operating profit is before goodwill amortisation and
exceptional items. The geographical analysis is based on the location of the
third party customers.
Weighted average exchange rates used in the translation of profit and loss
accounts were: US dollar - #1 = $1.62 (1998 - #1 = $1.66) and euro - #1 =
1.55 (1998 - #1 = 1.46). Exchange rates used to translate assets and
liabilities at the balance sheet date were: US dollar - #1 = $1.62 (1998 - #1
= $1.66) and euro - #1 = 1.60 (1998 - #1 = 1.42).
2. Goodwill and exceptional items
Six months ended Six months ended
31 December 1999 31 December 1998
Charged to: # # # #
million million million million
Operating costs
Goodwill amortisation (7) -
Merger integration (45) (156)
Burger King Australian litigation (34) -
Haagen-Dazs plant closure - (35)
Foodservice integration - (7)
(86) (198)
Disposal of fixed assets
Loss on sales (2) (8)
Sale of businesses
Spirits and Wine brands (244) (18)
Cantrell & Cochrane - 142
Other - 3
(244) 127
Total (332) (79)
3. Taxation
The #279 million total taxation charge for the six months ended 31 December
1999 comprises UK tax of #33 million, foreign tax of #197 million and tax on
associates of #49 million.
4. Note of consolidated historical cost profits and losses
There is no material difference between the reported profit shown in the
consolidated profit and loss account and the profit restated on an historical
cost basis.
5. Movements in consolidated shareholders' funds
Six months ended Six months ended
31 December 1999 31 December 1998
# million # million
Profit for the period 440 660
Dividends (285) (276)
155 384
Exchange adjustments (21) 85
Tax (charge)/relief on exchange in reserves (4) 10
New share capital issued 6 28
Provision for share issues - 6
Purchase of own shares for (54) (74)
cancellation
Goodwill on disposals of businesses 222 34
Net movement in shareholders' funds 304 473
Shareholders' funds at beginning of 4,026 4,629
the period
Shareholders' funds at end of the 4,330 5,102
period
6. Net borrowings
31 December 30 June 31 December
1999 1999 1998
# million # million # million
Debt due within one year and (4,095) (3,905) (3,909)
overdrafts
Debt due after one year (3,553) (3,395) (2,850)
Net obligations under finance leases (36) (38) (43)
(7,684) (7,338) (6,802)
Less: Cash at bank and in hand 1,732 1,097 1,385
Current asset investments - - 167
Interest rate and foreign currency 211 185 153
swaps
Net borrowings (5,741) (6,056) (5,097)
7. Net cash inflow from operating activities
Six months ended Six months ended
31 December 1999 31 December 1998
# million # million
Operating profit 1,065 901
Exceptional operating costs 79 198
Restructuring and integration payments (91) (117)
Depreciation and amortisation charge 177 159
Increase in working capital (319) (393)
Other items 18 5
Net cash inflow from operating 929 753
activities
8. Basis of preparation
The interim financial information has been prepared on the basis of
accounting policies consistent with those applied in the 1999 financial
statements, except for the accounting policy changes set out in the note
below. The information is unaudited but has been reviewed by the auditor,
KPMG Audit Plc, and their report is reproduced after these notes. The
information does not comprise the statutory accounts of the group. The
statutory accounts of Diageo plc for the year ended 30 June 1999 have been
filed with the registrar of companies. KPMG Audit Plc have reported on these
accounts; their report was unqualified and did not contain any statement
under section 237 of the Companies Act 1985.
9. Accounting policy changes
The interim financial information complies, where appropriate, with the
following Financial Reporting Standards issued by the UK Accounting Standards
Board.
FRS 15 - Tangible Fixed Assets. This standard addresses the measurement,
valuation and depreciation of tangible fixed assets. The group has adopted
the transitional arrangements of the standard and has retained the book
amounts of certain tangible assets which were previously revalued. It is
expected that no further valuations will be carried out.
FRS 16 - Current Tax. This standard was issued in December 1999. It
specifies how current tax, in particular withholding tax and tax credits,
should be reflected in financial statements. Compliance with this standard
has not given rise to any restatement of figures reported for prior periods.
INDEPENDENT REVIEW REPORT TO DIAGEO plc
Introduction
We have been instructed by the company to review the interim financial
information set out on pages 15 to 20 and we have read the other information
contained in the interim report and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing annual accounts except where they are to be changed in
the next annual accounts in which case any changes, and the reasons for them,
are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of Interim Financial Information issued by the Auditing
Practices Board. A review consists principally of making enquiries of group
management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an
audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 31 December 1999.
KPMG Audit Plc
Chartered Accountants
London, 23 February 2000
END
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