The notes and five-year income statement extracts from the financial statements of an alcoholic drinks group are shown below.

Notes:
■ The group sells alcohol-based products to consumers and operates in nearly every major country
throughout the world.
■ Local and global competition is intense in many markets.
■ Brands have been sold during the fi ve years.
■ New products are invariably variants on the group’s basic products of beers, wines and spirits.
■ The group share price had been relatively static due to the maturity of the market and the pattern
of profi ts.
■ Other investment income shown in the fi ve-year analysis related to an investment in a French luxury
goods group.
■ Soon after year six the group merged with another international food and drinks business, which
also had an extensive portfolio of own and purchased brands.
■ After the merger several brands were sold to competitors.
■ After the merger many of the directors left the group’s management team.
■ Exchange rates over the fi ve-year period in several of the group’s markets were quite volatile.
■ The group had £1.4 billion of brands in its balance sheet.

You are required to use these to carry out an appropriate analysis and provide a report on the likely explanations of differences in performance over the five years.

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Five-year income statement Year 5 Year 4 Year 3 Year 2 Year 1 m m m m m Sales revenue 4,730 4,681 4,690 4,663 4,363 Gross profit 961 943 956 938 1,023 Other investment income 113 47 89 (48) (24) Operating profit 1,074 990 1,045 890 999 Finance cost (99) (114) (130) (188) (204) Profit before tax 975 876 915 702 795 Income tax expense (259) (251) (243) (247) (242) Profit after tax 716 625 672 455 553 Minority interests (31) (30) (31) (22) (29) Profit for the year 685 595 641 433 524 Dividends (295) (302) (279) (258) (237)