XML 193 R9.htm IDEA: XBRL DOCUMENT v3.19.2
Operating costs
 12 Months Ended
Jun. 30, 2019
Analysis of income and expense [abstract]  
Operating costs
3. Operating costs
 
 
2019
£ million

 
2018
£ million

 
2017
£ million

Excise duties
 
6,427

 
6,269

 
6,064

Cost of sales
 
4,866

 
4,634

 
4,680

Marketing
 
2,042

 
1,882

 
1,798

Other operating expenses
 
1,917

 
1,956

 
2,013


 
15,252

 
14,741

 
14,555

Comprising:
 

 

 

Excise duties – Great Britain
 
898

 
853

 
774

– United States
 
587

 
548

 
558

– India
 
2,202

 
2,094

 
2,073

– Other
 
2,740

 
2,774

 
2,659

Increase in inventories
 
(446
)
 
(296
)
 
(146
)
Raw materials and consumables
 
3,007

 
3,052

 
2,813

Marketing
 
2,042

 
1,882

 
1,798

Other external charges
 
2,285

 
1,849

 
2,124

Staff costs
 
1,580

 
1,509

 
1,583

Depreciation, amortisation and impairment
 
374

 
493

 
361

Gains on disposal of properties
 
(5
)
 
(9
)
 
(7
)
Net foreign exchange (gains)/losses
 
(7
)
 
6

 
(16
)
Other operating income
 
(5
)
 
(14
)
 
(19
)
 
 
15,252

 
14,741

 
14,555

(a) Other external charges

Other external charges include operating lease rentals for plant and equipment of £19 million (2018 – £21 million; 2017 – £20 million), other operating lease rentals (mainly properties) of £101 million (2018 – £87 million; 2017 – £96 million), research and development expenditure in respect of new drinks products and package design in the year leading up to product launch of £35 million (2018 – £36 million; 2017 – £33 million) and maintenance and repairs of £103 million (2018 – £117 million; 2017 – £100 million).
(b) Auditor fees

Other external charges include the fees of the principal auditor of the group, PricewaterhouseCoopers LLP and its affiliates (PwC) are analysed below.
 
 
2019
£ million

 
2018
£ million

 
2017
£ million

Audit of these financial statements
 
3.8

 
3.3

 
3.1

Audit of financial statements of subsidiaries
 
3.4

 
3.3

 
3.4

Audit related assurance services(i)
 
1.6

 
1.6

 
1.6

Total audit fees (Audit fees)
 
8.8

 
8.2

 
8.1

Other services relevant to taxation (Tax fees)
 
—

 
0.1

 
0.3

Other assurance services (Audit related fees)(ii)
 
0.7

 
0.6

 
0.5

All other non-audit fees (All other fees)
 
0.2

 
1.0

 
0.9

 
 
9.7

 
9.9

 
9.8


(i)
Audit related assurance services are principally in respect of reporting under section 404 of the US Sarbanes-Oxley Act and the review of the interim financial information.
(ii)
Other assurance services comprise the aggregate fees for assurance and related services that are in respect of the performance of the audit or review of the financial statements and are not reported under ‘total audit fees’.

(1)
Disclosure requirements for auditor fees in the United States are different from those required in the United Kingdom. The terminology by category required in the United States is disclosed in brackets in the above table. All figures are the same for the disclosures in the United Kingdom and the United States apart from £0.4 million (2018 – £0.4 million; 2017 – £0.3 million) of the cost in respect of the review of the interim financial information which would be included in audit related fees in the United States rather than audit fees.

Audit services provided by firms other than PwC for the year ended 30 June 2019 were £0.1 million (2018 – £0.1 million; 2017 – £0.5 million). PwC fees for audit services in respect of employee pension plans were £0.3 million for the year ended 30 June 2019 (2018 – £0.3 million; 2017 – £0.3 million).
(c) Staff costs and average number of employees
 
 
2019
£ million

 
2018
£ million

 
2017
£ million

Aggregate remuneration
 
 
 
 
 
 
Wages and salaries
 
1,344

 
1,272

 
1,330

Share-based incentive plans
 
50

 
40

 
34

Employer’s social security
 
96

 
95

 
93

Employer’s pension
 
 
 
 
 
 
– defined benefit plans
 
61

 
73

 
95

– defined contribution plans
 
19

 
18

 
17

Other post employment plans
 
10

 
11

 
14

 
 
1,580

 
1,509

 
1,583



The average number of employees on a full time equivalent basis (excluding employees of associates and joint ventures) was as follows:
 
 
2019

 
2018

 
2017

North America
 
2,410

 
2,406

 
2,251

Europe and Turkey
 
3,609

 
3,747

 
4,074

Africa
 
4,338

 
4,625

 
4,898

Latin America and Caribbean(i)
 
1,610

 
2,536

 
2,573

Asia Pacific
 
7,038

 
8,008

 
8,690

ISC(i)
 
4,919

 
4,227

 
4,244

Corporate and other
 
4,496

 
4,368

 
3,703

 
 
28,420

 
29,917

 
30,433


(i)
The increase in the ISC in the year ended 30 June 2019 is primarily due to the transfer of supply employees in Mexico to ISC. Comparative figures have not been restated.

At 30 June 2019 the group had, on a full time equivalent basis, 28,150 (2018 – 29,362; 2017 – 30,051) employees. The average number of employees of the group, including part time employees, for the year was 29,402 (2018 – 30,761; 2017 – 31,472).
(d) Exceptional operating items

Included in other operating costs are the following exceptional charges:
 
 
2019
£ million

 
2018
£ million

 
2017
£ million

Staff costs
 


 


 


– Guaranteed minimum pension equalisation charge
 
21

 
—

 
—

Other external charges
 
53

 
—

 
42

Decrease in inventories
 
—

 
3

 
—

Depreciation, amortisation and impairment
 
 
 
 
 
 
– Brand, goodwill and tangible asset impairment
 
—

 
125

 
—

Total exceptional operating costs (note 4)
 
74

 
128

 
42