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Negative Points: Diageo is faced with sluggish growth in recession-hit southern European economies that led to a decline in sales of 19%. With considerable business conducted overseas, foreign exchange movements can work against the company. Like other brewers, the cost of raw materials such as wheat and barley remain a concern in the background. Stricter alcohol regulation could impact Diageo's businesses.

Financial Highlights: Diageo posted net sales growth to £6.04 billion in the six months ended 31st December. The board declared a 9% increase in the interim dividend payment.

Interim results: Diageo reported steady sales growth in the last six months of 2012, driven by price rises and growth in its United States premium brands of Ketel One vodka and Bulleit bourbon. The world's largest spirit company saw a 5% rise in sales growth to £6.04 billion, just shy of analyst expectations. Underlying sales in North America, which accounts for around a third of group sales, grew by 5%, supported by price increases and double-digit growth of premium brands. European sales, which make up about 28% of Diageo's total, fell by 2% as fast-growing Turkey, Russia and eastern Europe helped compensate for a fall of 19% in southern Europe. Faced with sluggish growth in recession hit European economies, Diageo has been expanding its reach as it looks to emerging middle classes consumers in Africa, Asia and Latin America, where it aims to make around half of its turnover by 2015

Positive Points: Following a change of management, a review of the group's strategy and targets is expected in March (2013). The group is increasingly focused on Emerging Markets. Revenues in the Emerging Markets rose by 6% in the fourth quarter, with good growth in China, Saudi Arabia and Russia highlighted. The group's drug pipeline now includes 84 projects, of which 71 are in the clinical phase of development and 13 are either approved, launched or filed. In July (2012), AstraZeneca entered into a collaboration deal to jointly develop and sell five biotech drugs currently in Amgen's developmental pipeline. Amgen is the world's largest biotechnology company. Since 2007, AstraZeneca has undertaken significant efforts to restructure and reshape its business to improve long-term competitiveness. Total annual benefits of $1.9 billion are to be delivered by the end of 2014 following a previous review of its Research and Development function, of which $1.5 billion have been achieved by the end of 2012. A review of the supply chain is now under way. Despite suspending the share buy-back programme, management highlighted that occasional programmes may be implemented going forward. The current dividend yield (over 5.5% as of 31Jan13 - not guaranteed) remains attractive in the current low interest rate environment. The board has recommended a second interim dividend of $1.90 (120.5 pence, 12.08 SEK). This brings the full year dividend to $2.80 (178.6 pence, 18.34 SEK), although unchanged on the previous year.

Negative Points: The company highlighted the loss of patents and subsequent generic competition on several brands, along with business disposals as underwriting the decline in group revenues. The group continues to face the loss of patents for a number of its products. AstraZeneca's second-best-selling drug, Seroquel for schizophrenia, lost its US patent protection in March (2012). Accompanying management financial forecasts for the current 2013 financial year provided little comfort. The board expects a mid-to-high single digit percentage decline in revenue on a currency adjusted basis. Furthermore, given slightly higher costs than in 2012, core Earnings Per Share are expected to decline significantly more than revenue. Management noted that "for 2013, challenging market conditions will persist." The newly appointed CEO previously suspended the group's share buyback programme in order to increase financial flexibility as the group undergoes a strategy review. Such a programme provides some downside support to the company's share price. In addition to patent expiries, the company has been hit by government measures to curb healthcare spending. The negative impact of US healthcare reform on fourth quarter revenue and costs was approximately $250 million. AstraZeneca is a pure pharmaceuticals group, without the cushion of alternative revenue streams found at more diversified rivals, increasing its need to find new prescription drugs. As of 31st December 2012, outstanding gross debt (interest-bearing loans and borrowings) was $10.31 billion up from $9.32 billion as of 31 December 2011.

Financial Highlights: Revenue for the full year declined by 15% on a currency adjusted basis Core or adjusted Earnings Per Share (EPS), after adjusting for currency movements, declined by 9% Management expects a mid-to-high single digit percentage decline in revenue on a currency adjusted basis for 2013. With Core operating costs expected to be slightly higher than 2012, Core EPS will decline significantly more than revenue. The dividend payment over the full year compared to the prior year was left unchanged.

Full year/fourth quarter results: As largely expected, investors will have to wait for the real news - a full strategic update from the new Chief Executive - expected in March (2013). 2012 will be remembered for drug patent losses, whilst guidance for 2013 provided little comfort - the share price declined by over 6% in early morning trading. Unlike rivals, Astra does not enjoy the cushion of alternative revenue streams such as consumer healthcare, with the group currently providing a major play on scientific development and innovation. Austerity and government efforts to curb health spending are not helping, whilst the general lack of optimism surrounding its developmental pipeline and already reduced cost structure potentially dampen its attractiveness as a takeover target. On the upside, the new CEO has worked much of his career in Asia, dovetailing with the group's increasing focus on Emerging Markets. The drug pipeline is already being tackled from both the angle of partnerships and smaller acquisitions, whilst an initiative to switch suitable drugs such as its heartburn remedies from prescription to marketed over-the-counter offerings looks to extend material sales life. In all, the new CEO faces a tough challenge. Past management has already taken significant action, whilst the current Chairman appears previously to have hinted towards a policy of evolution as opposed to revolution

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Chief Executive Alison Cooper said: "The growth momentum in key markets in Africa and the Middle East and Asia-Pacific is being offset by the current adverse market dynamics in Europe, with increasing levels of illicit trade. "This reinforces the importance of our two focus areas for 2013: further investing behind our key total tobacco assets and geographies; and accelerating our cost optimisation programme, providing funds for investment and mitigation for the full year given the current European environment."

Imperial gives gloomy outlook In a separate trading update for the first quarter, Imperial said that the macro environment continues to be challenging: "towards the end of the first quarter and into January, market trends have worsened in a number of key markets including in the EU and Russia." The company said that due to its ongoing investment and European market pressures, first-half adjusted operating profit would be down year-on-year, though full-year guidance still remains unchanged, with profits weighted to the second half. Meanwhile, the firm also said that its performance in the EU was hit be further declines in the legal market size as illicit trade continues to rise. For the first quarter, the company reported that stick equivalent volumes had fallen 1.0%. Net revenue had risen over 2.0%, with a price-mix improvement of 3.5% in the three months to December 31st, as "positive momentum" in key markets in the Rest of World division offset by declines in EU volumes, the company said.

Imperial Tobacco announced on Wednesday that its Finance Director is to step down from the company, as it revealed operating profits would decline in the first half. The cigarette and tobacco manufacturer said that long-running Finance Director Bob Dyrbus is to retire from the board until the company can find a replacement. He has been working for the company for 25 years as a senior executive and has held his position as the head of finance since the company listed in 1996. Chairman Iain Napier commented: "On behalf of the board and our employees I would like to thank Bob for the huge contribution he's made to our success. As well as taking overall responsibility for the effective financial management and control of the group for many years, Bob's played a key role in expanding our international operations through acquisitions that have created significant value for our shareholders." The firm also announced that it has appointed Non-Executive Director Mark Williamson, who has been on the board since 2007, as Deputy Chairman.

It had to be shut down in late December and currently operated at 60% of capacity, the firm said. Annual gold production was 589 Koz, up 33% year-on-year driven mainly by the successful ramp-up at Omolon and Albazino. Annual silver production was 26.5 Moz, up 33% year-on-year as a result of higher grades and recoveries at Dukat, successful processing of high-grade Sopka ore at Omolon, and increased silver grades at Khakanja. The firm said that given current macroeconomic environment and a recent significant appreciation of the Russian rouble against the US Dollar, it expected total cash costs in 2013 to be around $700-725/GE oz and capital expenditures (inclusive of exploration) of around $300m.

Polymetal said gold production had topped expectations in 2012 but warned there was a moderate chance it would miss this year's target. Its full year production results showed total gold equivalent production of 1,063 Koz, up 31% compared to 2011 and exceeding the original guidance of 1 Moz by 6%. This was driven by stable performance at all its mature mines, with a notable improvement achieved at Dukat, and successful ramp-up at Omolon and Albazino. In the fourth quarter total sales were up by 5% to $571m, driven by a 9% rise in silver sales, offsetting a 5% fall in gold and a 33% fall in copper sales. While the company confirmed its 2013 production guidance of 1.2 Moz of gold equivalent, it added that delays in ramping its POX facility meant it could miss this by up to 5%. The plant has suffered from unexpectedly high chlorine concentrations in process water and certain design weaknesses

An interim dividend of 11.33p will be offered compared to 10.3p last year.

Precision tool maker Renishaw carved out a sharp increase in half yearly earnings, after it was boosted by a string of large consumer electronics orders in China, but cautioned it faces tough financial comparators in the second half. Adjusted pre-tax profit rose to £43.3m in the six months to December 31st from £31.2m the same time a year earlier. Revenue for the period was up 18% to £174.2m. "In the first quarter the group benefited from a number of large orders in China in the consumer electronics market. Such irregular orders produce a distorting effect when comparisons are made between periods." Rensiahw said it was difficult to predict with certainty the size and timing of forthcoming orders and added that it faces tough financial comparators during the second half, particularly after its strong fourth quarter last year. The group therefore currently expect that revenue in the second half will be around the level in the second half of last year.

As previously announced, Roger Canham will take over from current Chairman Neil Johnson who will retire at the start of February 2013. Nick Stone will be appointed Finance Director after Andrew Morris leaves in February. Hornby said it continues to operate within its banking covenants, which were revised to provide more operational flexibility in December 2012. Net debt as at December 31st 2012 was 3m, down from 5.5m last year.