Stock Analysis on Net
Stock Analysis on Net

Diageo PLC (NYSE:DEO)

This company has been moved to the archive! The financial data has not been updated since August 12, 2014.

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Goodwill and Intangible Asset Disclosure

Diageo PLC, balance sheet: goodwill and intangible assets

US$ in millions, translated from GBP £

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
Brands 9,862 10,658 10,202 7,585 7,704 7,471
Other intangibles 1,893 2,080 1,984 1,843 1,950 1,867
Computer software 833 791 690 580 466 401
Intangible assets, excluding goodwill, cost 12,587 13,528 12,875 10,008 10,120 9,740
Amortisation and impairment loss (1,289) (815) (664) (488) (383) (278)
Intangible assets, excluding goodwill, carrying amount 11,299 12,713 12,212 9,520 9,737 9,462
Goodwill 2,028 2,282 2,134 649 616 587
Intangible assets 13,327 14,995 14,345 10,169 10,352 10,049

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

Item Description The company
Intangible assets, excluding goodwill, carrying amount Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Diageo PLC intangible assets, excluding goodwill, carrying amount increased from 2012 to 2013 but then decreased significantly from 2013 to 2014.
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Diageo PLC goodwill increased from 2012 to 2013 but then decreased significantly from 2013 to 2014.
Intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Diageo PLC intangible assets increased from 2012 to 2013 but then decreased significantly from 2013 to 2014.

Adjustments to Financial Statements: Removal of Goodwill

Diageo PLC, adjustments to financial statements

US$ in millions, translated from GBP £

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
Adjustment to Total Assets
Total assets (as reported) 38,784 41,559 36,347 30,729 29,943 29,258
Less: Goodwill 2,028 2,282 2,134 649 616 587
Total assets (adjusted) 36,756 39,277 34,214 30,079 29,327 28,671
Adjustment to Equity Attributable To Equity Shareholders Of The Parent Company
Equity attributable to equity shareholders of the parent company (as reported) 11,523 11,661 9,088 8,149 6,167 5,208
Less: Goodwill 2,028 2,282 2,134 649 616 587
Equity attributable to equity shareholders of the parent company (adjusted) 9,495 9,379 6,954 7,500 5,552 4,621

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

Diageo PLC, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Diageo PLC, adjusted financial ratios

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
Total Asset Turnover
Reported total asset turnover 0.61 0.62 0.65 0.67 0.67 0.68
Adjusted total asset turnover 0.64 0.65 0.69 0.68 0.68 0.69
Financial Leverage
Reported financial leverage 3.37 3.56 4.00 3.77 4.86 5.62
Adjusted financial leverage 3.87 4.19 4.92 4.01 5.28 6.20
Return on Equity (ROE)
Reported ROE 32.95% 35.32% 34.75% 36.22% 40.65% 50.33%
Adjusted ROE 39.99% 43.91% 45.42% 39.36% 45.16% 56.72%
Return on Assets (ROA)
Reported ROA 9.79% 9.91% 8.69% 9.61% 8.37% 8.96%
Adjusted ROA 10.33% 10.49% 9.23% 9.81% 8.55% 9.14%

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Diageo PLC adjusted total asset turnover ratio deteriorated from 2012 to 2013 and from 2013 to 2014.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Diageo PLC adjusted financial leverage ratio decreased from 2012 to 2013 and from 2013 to 2014.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Diageo PLC adjusted ROE deteriorated from 2012 to 2013 and from 2013 to 2014.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Diageo PLC adjusted ROA improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

Diageo PLC, Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
As Reported
Selected Financial Data (US$ in millions, translated from GBP £)
Sales 23,611 25,666 23,734 20,559 19,945 19,859
Total assets 38,784 41,559 36,347 30,729 29,943 29,258
Activity Ratio
Total asset turnover1 0.61 0.62 0.65 0.67 0.67 0.68
Adjusted for Goodwill
Selected Financial Data (US$ in millions, translated from GBP £)
Sales 23,611 25,666 23,734 20,559 19,945 19,859
Adjusted total assets 36,756 39,277 34,214 30,079 29,327 28,671
Activity Ratio
Adjusted total asset turnover2 0.64 0.65 0.69 0.68 0.68 0.69

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

2014 Calculations

1 Total asset turnover = Sales ÷ Total assets
= 23,611 ÷ 38,784 = 0.61

2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 23,611 ÷ 36,756 = 0.64

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Diageo PLC adjusted total asset turnover ratio deteriorated from 2012 to 2013 and from 2013 to 2014.

Adjusted Financial Leverage

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
As Reported
Selected Financial Data (US$ in millions, translated from GBP £)
Total assets 38,784 41,559 36,347 30,729 29,943 29,258
Equity attributable to equity shareholders of the parent company 11,523 11,661 9,088 8,149 6,167 5,208
Solvency Ratio
Financial leverage1 3.37 3.56 4.00 3.77 4.86 5.62
Adjusted for Goodwill
Selected Financial Data (US$ in millions, translated from GBP £)
Adjusted total assets 36,756 39,277 34,214 30,079 29,327 28,671
Adjusted equity attributable to equity shareholders of the parent company 9,495 9,379 6,954 7,500 5,552 4,621
Solvency Ratio
Adjusted financial leverage2 3.87 4.19 4.92 4.01 5.28 6.20

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

2014 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to equity shareholders of the parent company
= 38,784 ÷ 11,523 = 3.37

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to equity shareholders of the parent company
= 36,756 ÷ 9,495 = 3.87

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Diageo PLC adjusted financial leverage ratio decreased from 2012 to 2013 and from 2013 to 2014.

Adjusted Return on Equity (ROE)

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
As Reported
Selected Financial Data (US$ in millions, translated from GBP £)
Profit for the year attributable to equity shareholders of the parent company 3,797 4,118 3,158 2,952 2,507 2,621
Equity attributable to equity shareholders of the parent company 11,523 11,661 9,088 8,149 6,167 5,208
Profitability Ratio
ROE1 32.95% 35.32% 34.75% 36.22% 40.65% 50.33%
Adjusted for Goodwill
Selected Financial Data (US$ in millions, translated from GBP £)
Profit for the year attributable to equity shareholders of the parent company 3,797 4,118 3,158 2,952 2,507 2,621
Adjusted equity attributable to equity shareholders of the parent company 9,495 9,379 6,954 7,500 5,552 4,621
Profitability Ratio
Adjusted ROE2 39.99% 43.91% 45.42% 39.36% 45.16% 56.72%

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

2014 Calculations

1 ROE = 100 × Profit for the year attributable to equity shareholders of the parent company ÷ Equity attributable to equity shareholders of the parent company
= 100 × 3,797 ÷ 11,523 = 32.95%

2 Adjusted ROE = 100 × Profit for the year attributable to equity shareholders of the parent company ÷ Adjusted equity attributable to equity shareholders of the parent company
= 100 × 3,797 ÷ 9,495 = 39.99%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Diageo PLC adjusted ROE deteriorated from 2012 to 2013 and from 2013 to 2014.

Adjusted Return on Assets (ROA)

Microsoft Excel
Jun 30, 2014 Jun 30, 2013 Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009
As Reported
Selected Financial Data (US$ in millions, translated from GBP £)
Profit for the year attributable to equity shareholders of the parent company 3,797 4,118 3,158 2,952 2,507 2,621
Total assets 38,784 41,559 36,347 30,729 29,943 29,258
Profitability Ratio
ROA1 9.79% 9.91% 8.69% 9.61% 8.37% 8.96%
Adjusted for Goodwill
Selected Financial Data (US$ in millions, translated from GBP £)
Profit for the year attributable to equity shareholders of the parent company 3,797 4,118 3,158 2,952 2,507 2,621
Adjusted total assets 36,756 39,277 34,214 30,079 29,327 28,671
Profitability Ratio
Adjusted ROA2 10.33% 10.49% 9.23% 9.81% 8.55% 9.14%

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

2014 Calculations

1 ROA = 100 × Profit for the year attributable to equity shareholders of the parent company ÷ Total assets
= 100 × 3,797 ÷ 38,784 = 9.79%

2 Adjusted ROA = 100 × Profit for the year attributable to equity shareholders of the parent company ÷ Adjusted total assets
= 100 × 3,797 ÷ 36,756 = 10.33%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Diageo PLC adjusted ROA improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.