SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR APRIL 24, 2003
ALLIED DOMECQ PLC
(Exact name of Registrant as specified in its Charter)
ALLIED DOMECQ PLC
(Translation of Registrant's name into English)
The Pavilions
Bridgwater Road
Bedminster Down
Bristol BS13 8AR
England
(Address of Registrant's principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F
-------- --------
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes No x
-------- ----------
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82- _____
Exhibit Index
Exhibit No. Description
99.1 Press Release Dated April 24, 2003
with US Dollar comparative
99.2 Press Release Dated April 24, 2003
ALLIED DOMECQ 2003 INTERIM RESULTS - WITH US DOLLAR COMPARATIVE
DELIVERING STRONG BRAND GROWTH
Bristol, UK - April 24, 2003 - Allied Domecq PLC ("Allied Domecq") (NYSE: AED),
a leading international spirits, wine and quick service restaurant business,
today announced its interim results for the six months ended February 28, 2003.
FINANCIAL HIGHLIGHTS
Growth
at
As Reported constant
reported growth exchange
2003* 2003 2002 % %
- Turnover $2,835m GBP1,794m GBP1,704m 5 13
- Trading Profit $504m GBP319m GBP313m 2 7
- Profit before tax $404m GBP256m GBP251m 2 9
- Normalized earnings per share 17.4p 17.2p 1 9
- Dividend 5.3p 4.9p 8 8
- Marketing investments behind Spirits $360m GBP228m GBP204m 12 18
& Wine
- Spirits & Wine volumes (9L cases) GBP35.8m GBP30.8m 16 16
- Net cash flow from operating activities $503m GBP318m GBP267m 19 19
Profits and normalized earnings are stated before goodwill and exceptional items
unless otherwise stated. The pre-tax benefit of the Mexican excise rebate for
the six months to February 28, 2003 was GBP28m and has been treated as an
exceptional item. Cash flow from operating activities excludes the pre-tax
benefit of the Mexican excise rebate (2003: GBP24m; 2002: GBP115m).
OPERATIONAL HIGHLIGHTS
- Significant brand growth from increased participation in key growing
categories including vodka, rum, cream liqueurs and premium wine
- Seven of eight existing core brands recorded increases in net turnover, with
Tia Maria and Sauza recording increases in net turnover of 34% and 32%
respectively
- Malibu performing ahead of expectations
- Innovation behind the core brands supporting growth
- Premium wines capitalizing upon existing global distribution network and on
target to meet investment returns
- Continued strong performance from QSR driven by growth in same store sales and
contribution from new stores
- Excellent cash generation
*Dollar Conversion for readers' convenience only at February 28, 2003 rate of
GBP 1 = $1.58
Contact:
Peter Durman - Allied Domecq PLC
Tel: 011 44 117 978 5753
Andrew Saunders - Taylor Rafferty
Tel: 212 889 4350
-more -
24 April 2003
ALLIED DOMECQ DELIVERS STRONG BRAND GROWTH
Allied Domecq announces its interim results for the six months ended 28 February
2003.
FINANCIAL HIGHLIGHTS
Growth at
Reported constant
As reported growth exchange
2003 2002 % %
-Turnover GBP1,794m GBP1,704m 5 13
-Trading profit GBP319m GBP313m 2 7
-Profit before tax GBP256m GBP251m 2 9
-Normalised earnings per share 17.4p 17.2p 1 9
-Dividend 5.3p 4.9p 8 8
-Marketing investment behind GBP228m GBP204m 12 18
Spirits & Wine
-Spirits & Wine volumes 35.8m 30.8m 16 16
(9L cases)
-Net cash flow from operating GBP318m GBP267m 19 19
activities
Profits and normalised earnings are stated before goodwill and exceptional items
unless otherwise stated. The pre-tax benefit of the Mexican excise rebate for
the six months to 28 February 2003 was GBP28m and has been treated as an
exceptional item. Cash flow from operating activities excludes the pre-tax
benefit of the Mexican excise rebate (2003: GBP24m; 2002: GBP115m).
OPERATIONAL HIGHLIGHTS
-Significant brand growth from increased participation in key growing categories
including vodka, rum, cream liqueurs and premium wine
-Seven of eight existing core brands recorded increases in net turnover, with
Tia Maria and Sauza recording increases in net turnover of 34% and 32%
respectively
-Malibu performing ahead of expectations
-Innovation behind the core brands supporting growth
-Premium wines capitalising upon existing global distribution network and on
target to meet investment returns
-Continued strong performance from QSR driven by growth in same store sales and
contribution from new stores
-Excellent cash generation
Philip Bowman, Chief Executive, commenting on the results and outlook said,
"This was an excellent performance delivering brand growth at the high end of
our expectations. Strong trading in the US, Asia Pacific and Latin America has
enabled us to absorb the negative impact of those items we announced at our AGM
in February, namely increased pension costs, foreign exchange translation and
the changed buying patterns of wholesalers in Spain.
"The robust strength in the trading performance reflects the strategic choices
and investment made in the past three years. The brand portfolio is now better
oriented towards more rapidly growing categories such as vodka, rum, cream
liqueurs and premium wine. Our brand growth has been driven by our continued
commitment to enhance our marketing capabilities including cutting edge
innovation.
"Our acquisition strategy over the last three years has greatly enhanced the
growth profile of the business through acquisition and partnerships. The
integration of Jinro Ballantines in South Korea, Stolichnaya in the US and our
premium wine business has helped to grow organic volumes by 4%. Malibu is now
fully integrated and performing well ahead of expectations.
"There are significant challenges confronting all businesses operating in
today's uncertain environment. However, while there are uncertainties, we
believe we are on track to meet current market expectations."
FURTHER FINANCIAL HIGHLIGHTS
Comparative information here and in the Operating and Financial Review is based
on constant exchange rates.
Total growth in Spirits & Wine Strong organic growth in Spirits & Wine
- Volumes up 16% - Volumes up 4%
- Net turnover up 15% - Net turnover up 6%
- Marketing spend up 18% - Marketing spend up 10%
- Net brand contribution up 13% - Net brand contribution up 5%
- Trading profit up 6% - Trading profit down 6%
Driven by organic growth Good organic performance in premium wine
in core brands - Volumes up 5%
- Volumes up 9% - Net turnover up 7%
- Net turnover up 10% - Marketing spend up 6%
- Marketing spend up 7% - Trading profit up 12%
- Net brand contribution up 7%
Profit growth in Quick Service Restaurants
- System-wide sales up 7%
- Trading profit up 14%
- Distribution points up 4%
Improving cash generation
-Cash flow from operating activities up 19% to GBP318m (excluding excise rebate)
-Free cash flow improved by GBP62m to GBP91m (excluding excise rebate)
-Trade working capital as a % of net turnover improved by two percentage points
-Pre-tax cash benefit of Mexican excise rebate of GBP24m
For further information:
Internet:
Corporate information can be downloaded from the website at
www.allieddomecq.com.
An interview with Philip Bowman in video/audio and text will be available from
07.00 on 24 April 2003 at www.allieddomecq.com and at www.cantos.com.
Presentation material:
The results presentation will be available on the corporate website from 09.00
(UK time) on Thursday 24 April 2003.
Presentation webcast/audio broadcast:
A live webcast of the presentation to analysts will be available on the investor
relations section of the corporate website at 09.30 (UK time) on Thursday 24
April. A recording of the webcast will be available from around 14.00 (UK time).
A live audio broadcast of the presentation and question and answer session will
also be available. The presentation can be accessed by dialling:
UK/Europe: 0800 073 1341/+44 1452 569 394
US/Canada: +1 866 434 1098
An audio recording of the presentation will be available from 19.00 (UK time) on
24 April until 1 May 2003. Call the following numbers to listen to the
recording:
UK/Europe: 0845 245 5205/+44 1452 550 000 Passcode: 971534#
US/Canada: +1 866 247 4222 Passcode: 971534#
Conference call:
A conference call will be held for analysts and investors at 16.00 (UK time) on
Thursday 24 April. The call can be accessed by dialling:
UK/Europe: 0800 559 3282/+44 20 7984 7582
US/Canada: +1 913 981 5574
A recording of the conference call will be available from 19.00 (UK time) on 24
April until 1 May 2003. Call the following numbers to listen to the recording:
UK/Europe: 0800 559 3271/+44 20 7784 1024 Passcode: 643655#
US/Canada: +1 719 457 0820 Passcode: 643655#
Photography:
Original high resolution photographs prepared for the interim results are
available to the media free of charge at www.newscast.co.uk +44 20 7608 1000.
Investor enquiries:
Graham Hetherington, Chief Financial Officer +44 (0) 20 7009 3910
Peter Durman, Director of Investor Relations +44 (0) 7771 974817
Media enquiries:
Stephen Whitehead, Director of Corporate Affairs +44 (0) 7880 783532
+44 (0) 20 7009 3927
Anthony Cardew, CardewChancery +44 (0) 20 7930 0777
Cautionary statement regarding forward-looking information:
Some statements in this press release contain "forward-looking" statements as
defined in Section 21E of the United States Securities Exchange Act of 1934.
They represent our expectations for our business, and involve risks and
uncertainties. You can identify these statements by the use of words such as
"believes", "expects", "may", "will", "should", "intends", "plans",
"anticipates", "estimates" or other similar words. We have based these
forward-looking statements on our current expectations and projections about
future events. We believe that our expectations and assumptions with respect to
these forward-looking statements are reasonable. However, because these
forward-looking statements involve known and unknown risks, uncertainties and
other factors which are in some cases beyond our control, our actual results or
performance may differ materially from those expressed or implied by such
forward-looking statements.
Explanatory notes
Comparative information is based on constant exchange rates. Net turnover is
turnover excluding excise duty. Profit and normalised earnings are stated before
goodwill and exceptional items, which include the benefit of the Mexican excise
rebate. Organic growth comparisons exclude the contribution of acquisitions
until they have been incorporated in the business for one full calendar year
from the date of acquisition. Volumes are quoted in nine litre cases unless
otherwise specified.
OPERATING AND FINANCIAL REVIEW
Organic growth of our core spirits brands and strong performances from premium
wines and QSR were the highlights of the first six months of this financial
year. This resulted in double-digit trading profit growth from the North
America, Latin America and Asia Pacific regions.
We are progressively shifting the culture of the business towards being a
consumer-focused, marketing-led organisation. Our objective is to be more
responsive to markets and consumers, to share best practice globally and to
embrace initiatives that improve profitable brand growth. Allied Domecq has
delivered core brand and earnings growth over the last seven half years through
implementation of this strategy.
We continue to focus on three key areas in order to build a platform for future
sustainable growth:
-Further aggressive management of our existing asset base particularly through
increased and more targeted marketing;
-Consumer-led innovation; and
-Enhancing the growth profile of our portfolio through the successful
integration of our recent acquisitions in both spirits and wine.
Targeted, consumer-led marketing: The success of our brands depends on our
ability to effectively engage our target consumers through great marketing.
During the last year, this has included major new campaigns such as the launch
of Ballantine's "Go play" last Summer which has created a solid base to grow
consumption of the brand. We launched "Unleash it" in the US during the period,
the latest major marketing campaign for Kahlua which uses a wide range of media
from television and cinema to outdoor and radio. We also launched a new campaign
for Sauza under the tag-line "Get lost" which will be rolled out further this
Summer. In addition to these high profile campaigns, we have focused on
improving our marketing effectiveness and the in-market execution of our core
brand strategies.
Innovation: Our innovation programme is designed to enhance the growth profile
of the portfolio and has continued with the launch of Wet by Beefeater in the US
this Spring. The launch of Tia Lusso last Summer has exceeded our expectations,
achieving good distribution and helping to grow volumes of the Tia Maria brand
by 32%. Over the past two years, we have also launched a range of ready-to-drink
products across a number of our markets. During the period, we saw excellent
growth in Spirit by Terry in Mexico and Canadian Club ready-to-drink extensions
in Australia.
Value from integrating recent acquisitions: The growth profile of our spirits
portfolio has been improved through the acquisition of key brands in growing
categories and increasing our exposure to growing markets. Malibu, a leading
international spirits brand, has been integrated across the business and is
delivering strong market share gains. Our wine business was enhanced last year
through the addition of Bodegas y Bebidas and Mumm Cuvee Napa. The premium wine
business has delivered growth in all its key markets. We continue to benefit
from the addition of Stolichnaya in the US and the Jinro Ballantines joint
venture in Korea.
Summary
Reported turnover was up 5% to GBP1,794m and trading profit up 2% to GBP319m.
At constant exchange rates, turnover was up 13% in the period and trading profit
increased by 7%. Organic trading profit decreased by 3% to GBP287m. Normalised
profit before tax grew by 9% to GBP256m.
We have delivered these results through the growth of Spirits & Wine gross
margin and the continued improved performance of our Quick Service Restaurants
business. At the same time, we have increased advertising and promotion for
Spirits & Wine by 18% (10% for organic businesses) and absorbed a GBP20m
increase in pension costs. We have also absorbed the impact of changing buying
patterns by wholesalers in Spain at a pre-tax cost of GBP20m.
At constant exchange rates, we have grown earnings with a 9% improvement in
normalised earnings per share to 17.4 pence per share. The contribution from
businesses acquired during last fiscal year was 0.7 pence per share.
The directors have declared an interim dividend of 5.3 pence per share, an
increase of 8%.
Outlook
There are significant challenges confronting all businesses operating in today's
uncertain environment. However, while there are uncertainties, we believe we are
on track to meet current market expectations.
SPIRITS & WINE
Total Organic
2003 Growth 2003 Growth
------- ------ ------- -------
-Volume (9L cases) 35.8m 16% 32.0m 4%
-Net turnover GBP1,307m 15% GBP1,207m 6%
-Advertising and promotion GBP228m 18% GBP212m 10%
-Trading profit GBP289m 6% GBP257m (6)%
We have grown our Spirits & Wine business through organic growth and
acquisition. Total Spirits & Wine volumes and net turnover increased by 16% and
15% respectively.
Before acquisitions, gross profit increased by GBP42m driven by increased
volumes and mix. This has funded increased advertising and promotion (GBP19m)
and investment in improving our sales capabilities. Organic overheads have
increased by GBP38m and are driven primarily by higher pension costs (GBP20m); a
step change in sales force size particularly in the on-trade and investment in
new systems. Acquired businesses increased gross profit by GBP54m, advertising
and promotion investment by GBP16m and overheads by GBP6m.
Brand review
We have continued to invest strongly behind our brands with organic advertising
and promotion spend up 10% - ahead of net turnover in the first half - in order
to build the consumer franchise behind our core and local market leader brands
and invest behind new product launches. The main drivers for this increase are
the marketing campaigns for Tia Lusso across Europe, Kuemmerling in Germany and
Stolichnaya in the US. Our marketing spend behind acquired brands caused total
marketing spend to increase by 18%.
We manage our Spirits & Wine portfolio as four groups: core brands, local market
leaders, premium wine and other Spirits & Wine brands. Brand performance is
reviewed below under these groups.
Core brands: The volumes of our core brands, excluding Malibu, grew by 9% and
net turnover grew 10%, reflecting good growth across nearly all the brands.
Advertising and promotion behind the core brands was up 7% resulting in net
brand contribution also up 7%. We acquired Malibu in May 2002 and the brand is
now fully integrated as one of our core brands. The brand has performed well in
its core markets with market share growth in Spain, UK and US.
Ballantine's has achieved market share growth across its key markets in Europe
and Asia Pacific following our continued investment in the "Go play" campaign.
Beefeater has continued to show market share growth in Spain and the US. Despite
these gains, Ballantine's and Beefeater have recorded declines in overall
shipment volumes as a result of changing buying patterns by wholesalers in
Spain. Outside Spain, Ballantine's volumes grew by 11% and net turnover by 12%
and Beefeater grew volumes by 4% and net turnover by 9%.
Spirits & Wine volume and net turnover growth
Volume Volume Net turnover
million growth growth
cases % %
-------- -------- --------
Core brands
Ballantine's 2.8 (2) 2
Beefeater 1.0 (5) (3)
Canadian Club 1.2 20 10
Courvoisier 0.6 16 15
Kahlua 1.6 5 7
Maker's Mark 0.3 16 16
Sauza 1.2 39 32
Tia Maria 0.5 32 34
Organic core brands 9.2 9 10
Malibu 1.2 - -
Local market leaders 6.5 (4) (2)
Organic premium wine 5.6 5 7
Premium wine acquisitions 2.6 - -
Other Spirits & Wine brands
Other wine 3.0 19 9
Other spirits 7.7 1 9
Other Spirits & Wine Total 10.7 5 9
-------- -------- --------
Total (including acquisitions) 35.8 16 15
-------- -------- --------
Organic (excluding acquisitions) 32.0 4 6
-------- -------- --------
Canadian Club has maintained the strong momentum established towards the end of
last year with volumes up 20% and net turnover up 10% driven by a focus on its
key states in the US and by growth in ready-to-drink extensions in Australia.
Excluding the ready-to-drink extensions, the Canadian Club mother brand grew
volumes by 8% and net turnover by 9%. Continued consumer demand in the US and UK
has supported strong growth in volumes and net turnover for Courvoisier.
Kahlua has benefited from a focus on its core US states and from growth in Asia
Pacific, Latin America and Duty Free. This is an encouraging performance but we
recognise that this is compared against a slower trading period last year and we
have more to do to revitalise the sustainable growth of the brand. The growth of
Maker's Mark has continued with a 16% increase in volumes driven by good brand
PR and advertising. Sauza volumes grew 39%, supported by increased supplies of
the raw material, agave, and by benefiting from our investment in improved
tequila production. The successful launch of Tia Lusso, a new light cream
liqueur, has helped to drive volume and net turnover growth of the Tia Maria
brand by 32% and 34% respectively.
Local market leaders:
- The local market leader brands benefited from good growth in Stolichnaya
and Hiram Walker liqueurs in the US with volumes up 10% and 30% respectively.
Imperial in South Korea has grown well with volumes up 14%. The
combined impact of a decline in Whisky DYC volumes and slower shipments of
Centenario because of changing buying patterns by wholesalers in Spain has
caused overall local market leader brand volumes to decline by 4% and net
turnover to fall by 2%, with net brand contribution down 6%. Outside Spain,
the local market leader brand volumes grew by 4% and net turnover by 2%. The
performance of Mexican brandies has become more stable with the decline in
volumes reduced to 2% compared with a 17% decline in the same period last
year.
Premium wine:
- Our premium wine business benefited from the acquisition of
Bodegas y Bebidas in December 2001 and Mumm Cuvee Napa in May 2002. Before the
impact of acquisitions, our wine business grew volumes by 5% and net turnover
by 7%. A full review of the wine business is provided in the regional review
on page 12.
Other Spirits & Wine brands: The volumes for the rest of the Spirits & Wine
portfolio grew by 5% while net turnover increased by 9%, growing net brand
contribution by 13%.
Market review
The performance of our business is reviewed below.
Europe
Organic growth Total growth
-Volumes (9L cases) (8)% (2)%
-Net turnover (3)% 5%
-Advertising and promotion 26% 35%
-Trading profit (51)% (35)%
Reported net turnover grew 5% to GBP385m while trading profit declined by 35% to
GBP50m. On an organic basis, trading profit was down 51% reflecting advertising
and promotion up 26%, and net turnover down 3%. The slower performance in Europe
is a result of changing buying patterns by wholesalers in Spain as they reduced
inventories, slower economies in some key markets and increased marketing
investment. Outside Spain, our European volumes grew 11% and net turnover grew
18%. The additional marketing investment is principally behind Kuemmerling, the
"Go play" campaign for Ballantine's and the launch of Tia Lusso.
Our business in Spain continued to increase its volume share of the total
spirits market, which continues to grow - albeit at a slower rate than
previously. Overall consumer demand for spirits grew at 3% in the year to 31
January 2003. However, the change in buying patterns by Spanish wholesalers has
led to a decrease in shipment volumes of 24%. Over the same period, the overall
whisky category grew by 2% and Ballantine's grew share supported by the
successful "Go play" campaign. Centenario has further reinforced its leadership
of the brandy category with gains in market share. Advertising and promotion
was increased in Spain particularly behind Ballantine's and the successful
launch of Tia Lusso.
In spite of slower economies in a number of European markets, Ballantine's
performed well with volumes up 9% in Germany and up 6% in both France and Italy.
Over the past year, Ballantine's has grown its volume share of the European
standard whisky category by 0.6 percentage points to 11.4% and consolidated its
position as the number two whisky in Europe.
The UK business had a good Christmas with strong performances for Teacher's,
Courvoisier and Tia Maria. Over the period, Teacher's grew volumes by 4% and
gained share. Courvoisier grew volumes 10% and maintained its position as the
number one selling cognac brand in the UK. The Tia Maria brand benefited from
the successful launch of Tia Lusso.
North America
Organic growth Total growth
-Volumes (9L cases) 8% 14%
-Net turnover 12% 19%
-Advertising and promotion (9)% (2)%
-Trading profit 31% 47%
Reported net turnover grew 19% to GBP333m while trading profit grew 47% to
GBP100m, driven primarily by the contribution from volume improvements and
acquisitions. On an organic basis, net turnover grew 12% on volumes up 8%
leading to an increase in trading profit of 31%. Organic advertising and
promotion spend is down 9% while we realign advertising agencies on the
Stolichnaya and Malibu accounts.
During the period, we launched the new advertising campaign, "Unleash it" for
Kahlua. The campaign, which covers media, on-premise and retail marketing, is
still at an early stage of roll-out. Kahlua volumes grew 1% and net turnover was
up 7%, driven by positive mix benefit from growth in the core brand and a
decline in the ready-to-drink formats. Beefeater grew share of the declining
imported gin category; volumes were up 10% and net turnover up 14%. A premium
brand extension for Beefeater, Wet by Beefeater, was launched to the on-trade in
Florida in December and in New York in March. Sauza has benefited from an
increase in supply of agave to grow volumes 20% and has increased market share
strongly as a result. Maker's Mark grew both volumes and net turnover by 19%,
thereby taking greater market share. The consumption trends for Courvoisier have
remained strong which has helped to grow volumes by 21%. Canadian Club also saw
improving market share trends and grew volumes 8%. The North American business
also benefited from the performance of Malibu, which has continued to outpace
the category and competition.
The North American business has continued to demonstrate performance improvement
as a result of the positive actions that we took last year. We have implemented
the new organisational structure, which is allocating increased resource closer
to the market - particularly directed at brand building in the on-trade channel
and improving our market share in the Control States. This is supporting a
better understanding of customers and consumers and further strengthening our
relationships with distributors. Our objective is to work closely with our US
distributors through a programme where we are their 'partner of choice'. We are
focused on developing long-term partnerships, which are sustainable and mutually
beneficial.
During the period, we have chosen not to take any action in relation to our
plans to reduce the inventories held by US distributors as a result of the
potential threat to global supply chains posed by military conflict. We are
resuming this initiative in the second half and we anticipate an impact on
trading profit of around GBP10m to conclude this project this year. During the
last fiscal year, this planned destock had an adverse trading profit impact of
GBP19m, GBP8m of which was incurred in the first half of the year.
Latin America
Organic growth Total growth
-Volumes (9L cases) 16% 17%
-Net turnover 12% 13%
-Advertising and promotion (7)% (6)%
-Trading profit 36% 39%
Despite challenging trading conditions in many economies across the region,
reported net turnover was up 13% to GBP178m and trading profit was up 39% to
GBP46m (excluding the Mexican excise rebate). Improving agave supply and our
recent investment in research and development to improve yields has resulted in
reduced tequila production costs and, together with a successful series of
promotions, has helped to grow Sauza volumes in the region by 52%. Organic
advertising and promotion for the region decreased by 7% after a 27% increase
during last year. The Mexican brandies have shown signs of stabilising after
some years of decline. Volumes and net turnover of the Mexican brandies both
declined by only 2% as a result of better targeted advertising and promotion.
The region also benefited from the success of our ready-to-drink portfolio,
which contributed to the overall volume growth - driven by Spirit by Terry and
Caribe Cooler, a wine cooler. This performance has allowed us to consolidate our
position as category leaders.
During the first half of calendar 2002, the Argentine peso suffered a material
devaluation. For the purposes of constant exchange rate performance reporting,
last year's results have been held as they were reported in pounds sterling. If
last year's results had been restated at this year's post-devaluation exchange
rates, they would have increased by GBP1.5m and the growth in regional total
trading profit would be 33%.
During the period, the pre-tax profit of the Mexican excise rebate following the
Mexican Supreme Court ruling was GBP28m. This has been treated as an exceptional
item. The current estimate of excise duty rebate and related interest and
inflation to be received during the year to August 2003 is approximately GBP40m.
It is anticipated that this will be the final payment of a pre-tax total of
around GBP300m received over the last three fiscal years.
Asia Pacific
Organic growth Total growth
-Volumes (9L cases) 15% 17%
-Net turnover 9% 10%
-Advertising and promotion - 1%
-Trading profit 32% 36%
The business has continued to perform very strongly with net turnover growing
10% to GBP135m and trading profit growing 36% to GBP42m. On an organic basis, we
have achieved strong growth of 9% in net turnover and 32% in trading profit. The
profit growth is a reflection of good performances across the region,
particularly in South Korea. Organic advertising and promotion was flat
following a 57% increase in marketing investment last year, principally behind
Imperial and the range of aged Ballantine's whiskies (17-, 21- and 30-year old).
Across the region, Ballantine's grew volumes by 31%.
Our South Korean business, Jinro Ballantines, continues to show strong growth
and has increased market share by 2.1 percentage points over the last year.
Imperial and Ballantine's have both grown well in South Korea with volumes up
14% and 37% respectively. Imperial has continued to grow share, up 3.5
percentage points since last year, and is the clear leader in premium whisky and
the largest volume whisky brand in Korea. We launched a brand extension,
Ballantine's Masters, in December 2001 which has achieved a 12.6% share of the
deluxe premium whisky segment.
Fundador continues to perform well in the Philippines with volumes up 5% and net
turnover growth of 6%, helped particularly by Fundador Solera. Our business in
Australia has benefited from the success of Canadian Club ready-to-drinks
including CC Club and CC Cola.
Premium Wine
Organic growth Total growth
-Volumes (9L cases) 5% 54%
-Net turnover 7% 31%
-Advertising and promotion 6% 25%
-Trading profit 12% 38%
Our premium wine business is firmly on track with reported net turnover up 31%
to GBP233m and trading profit up 38% to GBP47m. On an organic basis, trading
profit grew 12% to GBP38m with volumes and net turnover up 5% and 7%
respectively. We are on track to achieve our targeted post-tax returns on
investment: 7.5% by August 2005 and 10% by August 2007.
We have seen a broad base of growth across our wine operations. Organic net
turnover in the US grew by 5%. Our focus core wine brands, which represent 87%
of the US wine gross profit, achieved volume growth of 11% and net turnover
growth of 12%. Our most important brand, Clos du Bois has made strong progress
in a highly competitive pricing environment. Grape oversupply and increased
competition has caused discounting in the US wine industry but our objective has
been to maintain our price points wherever possible. Montana, which we market in
the US under the name Brancott, has benefited from switching to our distribution
in the US with sales doubling in the US market. Mumm and Perrier Jouet
champagnes have also experienced strong growth in the US with volumes up 31%.
Our UK wine business has performed well in an environment where discounting has
become common. Montana in the UK has held volumes and turnover and the sales of
Mumm champagne have doubled in the period. During the period, Bodegas y Bebidas
switched to our own distribution, which will provide a solid platform for future
growth. Our Argentinian brand, Graffigna, has grown very well in the UK with
volumes increasing three-fold.
Montana has a 50% share of the New Zealand market by value. The volumes of
Montana's premium wine in New Zealand are up 21% while its super premium and
sparkling categories are both up 16%. A new sparkling wine brand, Lindauer
Fraise, is performing well since its launch.
Our Spanish wine business has been enhanced by the acquisition of Bodegas y
Bebidas in December 2001. Our existing Bodegas Domecq business, which includes
Marques de Arienzo, has been integrated with Bodegas y Bebidas. Marques de
Arienzo has continued to perform well with volumes up 13% and net turnover up
14%. Bodegas y Bebidas has continued its shift towards premium wines in order to
improve the mix profile of the Spanish business.
Our champagne business worldwide has grown both volumes and net turnover by 20%
with particularly strong performances in the UK, US, Italy and France.
Duty Free
Our Duty Free operations have shown robust organic growth against the same
period last year which had been affected by a slowdown in global travel post 11
September 2001. The Ballantine's aged portfolio in Asia Pacific has consolidated
its leadership position in super premium scotch with further market share gains.
The recent additions to our portfolio, Malibu, premium wines and champagnes,
have performed very well and are benefiting from our increased brand building in
this channel and the launch of Tia Lusso has also been well received by the
trade and consumers alike. The combined impact of the Iraq War and the SARS
health warnings has been affecting air travel and we have plans to mitigate
against any short-term slowdown.
QUICK SERVICE RESTAURANTS
-Trading profit up 14% to GBP25m
-System-wide sales growth of 7%
-Distribution points up 4%
-Number of combination stores up 26%
The strong profit growth in our Quick Service Restaurants business has been
driven by growth in same store sales and the contribution from new stores.
Dunkin' Donuts delivered a 9% growth in system-wide sales driven by a 4%
increase in US same store sales and a 4% increase in distribution points. Its
same store sales growth has continued to outpace the overall QSR industry.
During February and March, Dunkin' Donuts ran a new marketing campaign "Who
brought the donuts?", which is designed to drive sales of boxes containing six
or twelve donuts. In addition, Dunkin' Donuts has continued its successful
innovation programme with new offerings such as caramel iced coffee, lemonade
coolatta and an expanded rollout of its new scones offerings.
Baskin-Robbins achieved a 1% growth in system-wide sales and a 4% increase in
distribution points. Same store sales for Baskin-Robbins declined by 7% because
of poorer weather and a strong comparative performance in the same period last
year. Togo's has increased the number of distribution points by 7%. Togo's are
currently trialing a new toasted sandwich format in a quarter of its stores and
is also exploring the use of low fat sandwiches and salads.
Our strategy of multi-branded combination stores continues to be a driver of
growth in new store openings, with a 26% increase in the number of combination
stores to almost 900. This strategy is based on our brands' complementary
day-part offering and brings significant benefits to our franchisees through
improved scale and operating efficiencies, along with increased choices for
consumers.
BRITANNIA SOFT DRINKS
The Group's share of Britannia's profits for the period was GBP5m (2002: GBP3m).
TAXATION
The normalised tax rate has decreased from 25% to an anticipated 24% for the
current year, as we continue to manage our tax liabilities.
GOODWILL AND EXCEPTIONAL ITEMS
Goodwill amortisation totalled GBP20m (2002: GBP18m), the increase being
primarily due to the acquisition of Bodegas y Bebidas.
The exceptional items of GBP32m reflect the benefit of the Mexican excise
rebate: pre-tax GBP28m (2002: GBP115m); post-tax GBP18m (2002: GBP74m). It also
includes the release of provisions of GBP4m relating to the write-down of
distillery assets associated with the closure of the Dumbarton distillery.
CASH FLOW AND BORROWINGS
Net cash flow from operating activities was GBP342m (2002: GBP382m) and free
cash inflow increased to GBP114m (2002: GBP95m). Excluding the cash from the
Mexican excise rebate (net of tax) of GBP23m (2002: GBP66m), free cash flow
increased by GBP62m. This is partly due to a continued focus on working capital
which has resulted in a reduction in trade working capital as a percentage of
annualised net turnover from 63% to 61%.
Net debt decreased by GBP13m during the period from GBP2,578m to GBP2,565m which
includes an adverse currency translation impact on our borrowings of GBP64m
largely as a result of the strengthening Euro.
At 28 February 2003, EV gearing (net debt as percentage of market capitalisation
plus net debt) was 44%, compared with 35% at 28 February 2002. Interest cover
based on EBITDA was six times and cover based on EBIT was five times.
FOREIGN EXCHANGE
It is our policy not to hedge the impact of foreign exchange movements on the
translation of our overseas earnings. As a result, our prior year profits at
current exchange rates are reduced by GBP16m, primarily as a result of the
weakening US dollar and Mexican peso. We anticipate, based on current forward
exchange rates, that the full year restatement will be approximately GBP20m. In
addition, the current year earnings are being adversely affected by the
increased exposure to the translation of US dollar earnings and a reduced
exposure to the translation of Euro earnings, with the net result of a further
adverse impact on the current year earnings of GBP5m. Foreign exchange impacts
arising from the transaction costs of the net currency flows are substantially
hedged forward for up to 18 months. As a result, there is no transaction impact
on the profit for the current year.
PENSIONS
In line with other companies, market and demographic dynamics over recent years
have increased the cost of providing pensions and other post-retirement
benefits. We account for these costs under SSAP 24 and have absorbed an increase
of GBP20m in the current period. As we indicated in February, the year on year
impact of these increases in the full year to August 2003 is expected to be
around GBP45m.
We also provide information on post-retirement benefits through FRS 17
disclosures. At 28 February 2003, the post-tax deficit under this accounting
standard was GBP545m compared with GBP336m at 31 August 2002 reflecting further
deterioration in equity markets and a reduction in benchmark bond yields.
The UK pension funds represent the majority of pension obligations and full
assessments of the UK funds are undertaken every three years. These assessments
are currently underway and will be completed by the year end. The results will
be reflected in the full year accounts.
In 2002, we contributed GBP20m of cash to post-retirement benefits and
contributions have continued at this rate during the first half of 2003. Future
cash contributions for the UK funds will be agreed as part of the triennial
review. However, an additional GBP10m has already been committed which would
bring the total cash contribution in 2003 to at least GBP30m.
CONSTANT EXCHANGE RATE REPORTING
The following tables provide a reconciliation between the 2002 reported interim
results and those shown at constant exchange rates in the Operating and
Financial Review.
2002 2003
Growth
Reported Foreign At 2003 Reported at 2003
2002 Exchange Exchange 2003 exchange
GROUP GBPm GBPm GBPm GBPm %
----------------- -------- -------- -------- -------- --------
Turnover 1,704 (117) 1,587 1,794 13
================= ======== ======== ======== ======== ========
Trading profit 313 (16) 297 319 7
Finance charges (62) - (62) (63)
---------------- -------- -------- -------- -------- --------
Profit before tax 251 (16) 235 256 9
Taxation (63) 4 (59) (61)
Minority interests (8) - (8) (8)
---------------- -------- -------- --------- -------- --------
Earnings 180 (12) 168 187 11
================ ======== ======== ========= ======== ========
Weighted average 1,049 1,049 1,076
number of ordinary
shares (millions)
Earnings per share 17.2 16.0 17.4 9
(pence)
2002 2003
Growth
Reported Foreign At 2003 Reported at 2003
2002 Exchange Exchange 2003 exchange
SPIRITS & WINE GBPm GBPm GBPm GBPm %
----------------- -------- -------- -------- -------- --------
Turnover 1,571 (105) 1,466 1,667 14
Duty (353) 23 (330) (360) 9
----------------- -------- -------- -------- -------- --------
Net turnover 1,218 (82) 1,136 1,307 15
Profit before tax 204 (11) 193 228 18
---------------- -------- -------- --------- -------- --------
The foreign exchange adjustment restates prior year profits and sales at current
year average exchange rates. Where this would distort the reporting of
underlying performance following a material devaluation or under conditions of
hyperinflation, profits and sales are not restated and retain their original
value as reported in pounds sterling.
Geographical Analysis - Group trading profit
In line with previous statements, the trading profits of the regions shown in
this review are on a management reporting basis at constant exchange rates,
rather than on a statutory basis at each year's actual exchange rates, as shown
in note 2 to the accounts.
The premium wine business has been presented separately within the regional
analysis. The effect of the transfer of the wine businesses from the
geographical regions to premium wine and the shift of management responsibility
for Duty Free from Europe to "Others" is shown in the market transfers column.
"Others" includes Global Operations (including profit from the sale of bulk
whisky), stand-alone duty free operations and central costs not allocated to
marketing regions. The profit decline in "Others" reflects increased pension
costs (GBP20m) and our share of the loss arising from the sales of Stolichnaya
Citrona and Sauza Diablo through the joint venture with Miller Brewing in the
US.
2002 2003 2003
Total Organic
Growth Growth
Market Foreign At 2003 at 2003 at 2003
Reported 2002 transfers exchange exchange 2003 exchange 2003 exchange
GBPm GBPm GBPm GBPm GBPm % GBPm %
------- ------- ------- ------- ------ ------- ------ -------
Europe 94 (20) 3 77 50 (35) 38 (51)
North America 95 (17) (10) 68 100 47 89 31
Latin America 43 (1) (9) 33 46 39 45 36
Asia Pacific 45 (14) - 31 42 36 41 32
Premium wine - 35 (1) 34 47 38 38 12
Others 9 17 3 29 4 (86) 6 (79)
------- ------- ------- ------- ------ ------- ------ -------
Spirits & Wine 286 - (14) 272 289 6 257 (6)
------- ------- ------- ------- ------ ------- ------ -------
QSR 24 - (2) 22 25 14 25 14
------- ------- ------- ------- ------ ------- ------ -------
Britannia 3 - - 3 5 67 5 67
------- ------- ------- ------- ------ ------- ------ -------
TOTAL 313 - (16) 297 319 7 287 (3)
------- ------- ------- ------- ------ ------- ------ -------
Group profit and loss account
Six months to 28 February 2003
Six months to 28 February 2003
Before
Year to goodwill Goodwill Six months
31 August and and to 28 February
2002 exceptional exceptional 2002
Total items items Total Total
GBPm Note GBPm GBPm GBPm GBPm
------- ------- ---- ------- -------
3,334 Turnover 2 1,794 - 1,794 1,704
------- ------- ---- ------- -------
Operating costs
(38) - goodwill amortisation - (20) (20) (18)
213 - Mexican excise rebate - 28 28 115
(2,823) - other (1,480) 4 (1,476) (1,409)
------- ------- ---- ------- -------
686 Operating profit from 314 12 326 392
continuing activities
15 Share of profits of 5 - 5 5
associated undertakings
------- ------- ---- ----- --------
701 Trading profit 2 319 12 331 397
(130) Finance charges (63) - (63) (62)
------- ------- ---- ----- --------
571 * Profit on ordinary 256 12 268 335 *
activities before taxation
(166) Taxation 5 (61) (10) (71) (100)
------- ------- ---- ----- --------
405 Profit on ordinary 195 2 197 235
activities after taxation
(13) Minority interests - (8) - (8) (8)
equity and non-equity
------- ------- ---- ----- --------
392 Profit earned for ordinary 4 187 2 189 227
shareholders for the period
(141) Ordinary dividends 6 (57) (53)
------- ------- ---- ----- --------
251 Retained profit 132 174
------- ------- ---- ----- --------
Earnings per ordinary share:
36.8p - basic 4 17.6p 21.6p
36.7p - diluted 4 17.5p 21.6p
32.6p - normalised 4 17.4p 17.2p
The above figures comprise the unaudited results for the six months to 28
February 2003 and 28 February 2002 and the audited results for the year to 31
August 2002 all of which relate to continuing operations.
* For the year to 31 August 2002 and the six months to 28 February 2002, profit
on ordinary activities before taxation, excluding goodwill and exceptional
items, was GBP480m and GBP251m respectively.
Group balance sheet
At 28 February 2003
31 August 28 February 28 February
2002 2003 2002
GBPm Note GBPm GBPm
------- ------- -------
Fixed assets
1,316 Intangible assets 1,296 775
877 Tangible assets 919 844
126 Investments and loans 163 118
71 Associated undertakings 69 76
------- ------- -------
2,390 Total fixed assets 2,447 1,813
------- ------- -------
Current assets
1,302 Stocks 1,388 1,320
736 Debtors due within one year 729 724
332 Debtors due after more than 324 334
one year
169 Cash at bank and in hand 10 161 185
------- ------- -------
2,539 Total current assets 2,602 2,563
------- ------- -------
Creditors (due within one year)
(971) Short term borrowings 10 (988) (1,332)
(88) Dividends (57) (53)
(934) Other creditors (1,009) (913)
------- ------- -------
(1,993) Total current liabilities (2,054) (2,298)
------- ------- -------
546 Net current assets 548 265
------- ------- -------
2,936 Total assets less current 2,995 2,078
liabilities
Creditors (due after more than
one year)
(1,776) Loan capital 10 (1,738) (1,178)
(90) Other creditors (48) (54)
------- ------- -------
(1,866) Total creditors due after more (1,786) (1,232)
than one year
------- ------- -------
(284) Provisions for liabilities and (300) (276)
charges
------- ------- -------
786 Net assets 909 570
------- ------- -------
Capital and reserves
277 Called up share capital 277 267
165 Share premium account 165 26
(823) Merger reserve (823) (823)
1,087 Profit and loss account 1,222 1,025
------- ------- -------
706 Shareholders' funds - equity 7 841 495
80 Minority interests - equity 68 75
and non-equity
------- ------- -------
786 909 570
------- ------- -------
Group cash flow information
Six months to 28 February 2003
Year to Six months to Six months to
31 August Reconciliation of operating profit 28 February 28 February
2002 to net cash inflow from operating 2003 2002
GBPm activities GBPm GBPm
------- -------- --------
686 Operating profit 326 392
38 Goodwill amortisation 20 18
64 Exceptional operating costs 3 13
75 Depreciation 38 33
(94) Increase in stocks (62) (79)
(22) Decrease/(increase) in debtors 19 15
71 Increase/(decrease) in creditors 16 (2)
(36) Expenditure against provisions for (12) (15)
reorganisation and restructuring costs
(22) Other items (6) 7
------- -------- --------
760 * Net cash inflow from operating activities 342 * 382 *
------- -------- --------
* Net cash inflow from operating activities above includes the benefit of the
Mexican excise rebate which for the six months to 28 February 2003 is GBP24m
(2002: GBP115m).
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm Group cash flow statement GBPm GBPm
------- ------ ------
760 Net cash inflow from operating activities 342 382
11 Dividends received from associated 7 2
undertakings
(133) Returns on investments and servicing of 8 (74) (64)
finance
(178) Taxation paid 8 (21) (96)
(712) Capital expenditure and financial investment 8 (90) (63)
(586) Acquisitions and disposals 8 - (555)
(133) Equity dividends paid (87) (80)
------- ------ ------
(971) Cash inflow/(outflow) before use of liquid 77 (474)
resources and financing
(21) Management of liquid resources 27 (21)
798 Financing 8 (18) 98
------- ------ ------
(194) Increase/(decrease) in cash in the period 10 86 (397)
------- ------ ------
Reconciliation of net cash flow to movement
in net debt
------- ------- -------
(194) Increase/(decrease) in cash in the period 86 (397)
21 (Decrease)/increase in liquid resources (27) 21
(649) Decrease/(increase) in loan capital 18 (98)
------- ------- -------
(822) Movement in net debt resulting from cash flows 77 (474)
98 Exchange adjustments (64) 3
------- ------- -------
(724) Movement in net debt during the period 13 (471)
(1,854) Opening net debt (2,578) (1,854)
------- ------- -------
(2,578) Closing net debt 10 (2,565) (2,325)
------- ------- -------
Notes to the accounts
1. Basis of preparation
These interim statements, which are unaudited, comply with relevant accounting
standards. The accounting policies have been applied on a basis consistent with
those applied in the 2002 Annual Report and Accounts. The 2002 Annual Report and
Accounts were prepared in accordance with accounting principles generally
accepted in the United Kingdom (UK GAAP).
The periods to 28 February 2003 and 28 February 2002 are regarded as distinct
financial periods for accounting purposes with the exception of taxation where
the periods are allocated an appropriate proportion of the expected total annual
charge.
The figures for the year to 31 August 2002 are extracted from the Group's full
statutory financial statements which have been reported on by the Group's
auditor and filed with the Registrar of Companies. The report of the auditor was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985.
These interim financial statements were approved by the Board on 23 April 2003.
2. Activity analysis
Year to 31 August 2002 Six months to 28 February 2003 Six months to 28 February 2002
Trading Trading Trading
Turnover profit * Turnover profit * Turnover profit *
GBPm GBPm GBPm GBPm GBPm GBPm
----- --- ----- --- ----- ---
3,018 516 Spirits & Wine 1,667 289 1,571 286
316 78 QSR 127 25 133 24
- 16 Britannia - 5 - 3
----- --- ----- --- ----- ---
3,334 610 1,794 319 1,704 313
----- --- ----- --- ----- ---
* Trading profit above is before goodwill and exceptional items which for the
six months to 28 February 2003 is a profit of GBP12m (2002: profit GBP84m) and
relates wholly to Spirits & Wine activities for both periods.
3. Geographical analysis
Year to 31 August 2002 Six months to 28 February 2003 Six months to 28 February 2002
Trading Trading Trading
Turnover profit * By country of Turnover profit * Turnover profit *
GBPm GBPm destination GBPm GBPm GBPm GBPm
----- --- ----- --- ----- ---
1,213 209 Europe 716 84 630 105
1,599 311 Americas 792 181 818 158
522 90 Rest of World 286 54 256 50
----- --- ----- --- ----- ---
3,334 610 1,794 319 1,704 313
----- --- ----- --- ----- ---
* Trading profit above is before goodwill and exceptional items which for the
six months to 28 February 2003 relate to Europe (loss - GBP6m) (2002: loss -
GBP22m), Americas (profit - GBP27m) (2002: profit - GBP115m) and Rest of World
(loss - GBP9m) (2002: loss - GBP9m).
Year to 31 August 2002 Six months to 28 February 2003 Six months to 28 February 2002
Trading Trading Trading
Turnover profit * By country of Turnover profit * Turnover profit *
GBPm GBPm operation GBPm GBPm GBPm GBPm
------ --- ------ --- ----- ---
1,892 252 Europe 1,113 126 992 138
1,836 312 Americas 947 159 936 151
419 46 Rest of World 223 34 206 24
------ --- ------ --- ----- ---
4,147 610 2,283 319 2,134 313
(813) - Turnover with (489) - (430) -
Group companies
------ --- ------ --- ----- ---
3,334 610 1,794 319 1,704 313
------ --- ------ --- ----- ---
* Trading profit above is before goodwill and exceptional items which for the
six months to 28 February 2003 relate to Europe (loss - GBP6m) (2002: loss -
GBP22m), Americas (profit - GBP27m) (2002: profit - GBP115m) and Rest of World
(loss - GBP9m) (2002: loss - GBP9m).
4. Reconciliation to normalised earnings
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm GBPm GBPm
------ ------ ------
392 Earnings as reported 189 227
(81) Adjustments for exceptional items (21) (64)
net of tax
36 Adjustments for goodwill 19 17
amortisation net of tax
------ ------ ------
347 Normalised earnings 187 180
------ ------ ------
Millions Millions Millions
1,087 Weighted average ordinary shares in 1,107 1,068
issue during the period
(21) Weighted average ordinary shares (31) (19)
owned by the Allied Domecq employee
trusts*
------ ------ ------
1,066 Weighted average ordinary shares 1,076 1,049
used in earnings per share
calculation
------ ------ ------
32.6p Normalised earnings per ordinary share 17.4p 17.2p
------ ------ ------
* Includes American Depositary Shares representing underlying ordinary shares.
Basic earnings per share of 17.6p (2002: 21.6p) has been calculated on earnings
of GBP189m (2002: GBP227m) divided by the average number of shares of 1,076m
(2002: 1,049m).
Diluted earnings per share of 17.5p (2002: 21.6p) has been calculated on
earnings of GBP189m (2002: GBP227m) and, after including the effect of all
dilutive potential ordinary shares, the average number of shares of 1,077m
(2002: 1,050m).
5. Taxation
The GBP71m (2002: GBP100m) total taxation charge for the six months to 28
February 2003 comprises UK taxation of GBP4m (2002: credit - GBP1m), overseas
taxation of GBP65m (2002: GBP99m) and taxation on the profits of associated
undertakings of GBP2m (2002: GBP2m).
Deferred tax assets of GBP49m at 31 August 2002 have not been recognised due to
the degree of uncertainty over the utilisation of the underlying tax losses and
deductions in certain tax jurisdictions.
6. Ordinary dividends
The Board has declared an interim dividend of 5.3p per ordinary share (2002:
4.9p) payable on 25 July 2003. Dividends on American Depositary Shares are
payable on 1 August 2003.
7. Reconciliation of movements in shareholders' funds
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm GBPm GBPm
----- ---- ----
392 Profit earned for ordinary 189 227
shareholders in the period
(23) Currency translation differences (2) (17)
on foreign currency net investments
(12) Deferred taxation - origination 5 (3)
and reversal of timing differences
----- ---- ----
357 Total recognised gains and losses 192 207
in the period
(141) Ordinary dividends (57) (53)
149 Ordinary share capital issued - -
(net of costs)
----- ---- ----
365 Net movement in shareholders' funds 135 154
341 Shareholders' funds at the 706 341
beginning of the period
----- ---- ----
706 Shareholders' funds at the end of 841 495
the period
----- ---- ----
8. Detailed analysis of gross cash flows
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm GBPm GBPm
----- ---- -----
Returns on investments and
servicing of finance
8 Interest received 7 2
(137) Interest paid (62) (63)
(4) Dividends paid to minority (19) (3)
shareholders
----- ---- -----
(133) (74) (64)
----- ---- -----
Taxation paid
(1) UK taxation - (10)
(177) Overseas taxation (21) (86)
----- ---- -----
(178) (21) (96)
----- ---- -----
Capital expenditure and financial
investment
(133) Purchase of tangible fixed assets (58) (53)
17 Sale of tangible fixed assets 5 4
(556) Purchase of intangible fixed assets - -
(13) Purchase of trade investments (2) (6)
7 Disposal of trade investments 6 -
(34) Purchase of ordinary share (41) (8)
capital for employee trusts *
----- ---- -----
(712) (90) (63)
----- ---- -----
Acquisitions and disposals
(550) Purchase of subsidiary undertakings - (519)
(36) Borrowings acquired with - (36)
subsidiary undertakings
----- ---- -----
(586) - (555)
----- ---- -----
Financing
149 Issue of ordinary share capital - -
622 Bonds issued during the period - -
27 (Decrease)/increase in other (18) 98
borrowings
----- ---- -----
798 (18) 98
----- ---- -----
* Includes American Depositary Shares representing underlying ordinary shares.
9. Reconciliation of net cash inflow from operating activities to free cash flow
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm GBPm GBPm
----- ---- ----
760 Net cash inflow from 342 382
operating activities
(116) Capital expenditure net (53) (49)
of sale of tangible assets
11 Dividends received from 7 2
associated undertakings
----- ---- ----
655 Operating cash net of 296 335
fixed assets
(178) Taxation paid (21) (96)
(129) Net interest paid (55) (61)
Dividends paid
(133) - ordinary shareholders (87) (80)
(4) - minorities (19) (3)
----- ---- ----
211 * Free cash flow 114 * 95
----- ---- ----
* Free cash flow above includes the post tax benefit of the Mexican excise
rebate which for the six months to 28 February 2003 is GBP23m (2002: GBP66m).
10. Net debt
Other
Cash at borrowings Other loans Loan capital Six months to
bank and due within due within due after 28 February 28 February
in hand one year one year one year 2003 2002
GBPm GBPm GBPm GBPm GBPm GBPm
---- ----- ----- ------- ------- -------
At the beginning of the 169 (843) (128) (1,776) (2,578) (1,854)
period
Increase/(decrease) in 21 65 - - 86 (397)
cash
(Decrease)/increase in (27) - - - (27) 21
liquid resources
(Increase)/decrease in - - (54) 72 18 (98)
loan capital and other
loans
Exchange adjustments (2) (8) (20) (34) (64) 3
---- ----- ----- ------- ------- -------
At the end of the period 161 (786) (202) (1,738) (2,565) (2,325)
---- ----- ----- ------- ------- -------
11. Financial calendar
Ex dividend date for interim dividend 25 June 2003
Record date for interim dividend 27 June 2003
Interim dividend payable - ordinary shares 25 July 2003
Interim dividend payable - American Depositary Shares 1 August 2003
Final results announced (provisional) 21 October 2003
Report and Accounts issued November 2003
Independent review report by KPMG Audit Plc to Allied Domecq PLC
Introduction
We have been engaged by the Company to review the financial information set out
on pages 17 to 24 for the six months ended 28 February 2003 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.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding 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 for use in the United Kingdom. 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 28 February 2003.
KPMG Audit Plc
Chartered Accountants
London
23 April 2003
US GAAP reconciliation
The following statements provide a reconciliation between profit earned for
ordinary shareholders under UK GAAP and net income under US GAAP and a
reconciliation between shareholders' equity under UK GAAP and shareholders'
equity under US GAAP.
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm GBPm GBPm
----- ----- -----
392 Profit earned for ordinary 189 227
shareholders in accordance with UK GAAP
Adjustments to conform with US GAAP:
- Brands - -
38 Goodwill 21 19
(4) Other intangible assets (2) (2)
(66) Stock (11) (45)
4 Restructuring costs (7) (2)
28 Pension costs and other 8 6
post - retirement benefits
- Share compensation 8 -
90 Derivative instruments (27) (15)
(54) Mexican excise rebate (30) (51)
(9) Franchise income (4) -
(1) Other (2) 1
(12) Deferred taxation 16 26
- Minority share of above - -
adjustments
----- ----- -----
406 Net income in accordance with US 159 164
GAAP
----- ----- -----
Other comprehensive income:
(203) Minimum pension liability (174) (39)
(130) Currency translation differences 47 (20)
----- ----- -----
73 Comprehensive income in 32 105
accordance with US GAAP
----- ----- -----
Net earnings per ordinary share:
38.1p Basic 14.8p 15.6p
38.0p Diluted 14.8p 15.6p
----- ----- -----
Year to Six months to Six months to
31 August 28 February 28 February
2002 2003 2002
GBPm GBPm GBPm
------ ------ ------
706 Shareholders' funds as reported 841 495
in the Group balance sheet
Adjustments to conform with US GAAP:
1,410 Brands 1,408 1,388
185 Goodwill 206 204
24 Other intangible assets 22 29
57 Associated undertakings 57 57
45 Stocks 34 58
(93) Investments (134) (82)
8 Restructuring costs 1 2
(555) Pension and other post - retirement (792) (341)
benefits
1 Share compensation 9 1
88 Proposed dividends 57 53
(26) Derivative instruments (3) (24)
40 Mexican excise rebate 10 43
(38) Liabilities (42) (38)
(9) Franchise income (13) -
6 Other 10 (15)
(308) Deferred taxation (224) (343)
- Minority share of above adjustments - -
------ ------ ------
1,541 Shareholders' equity in 1,447 1,487
accordance with US GAAP
------ ------ ------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
April 24, 2003
ALLIED DOMECQ PLC
By: /s/ Charles Brown
---------------------------
--------------------------
Name: Charles Brown
Title: Director of Secretariat & Deputy
Company Secretary