7th Dec 2016 12:53
LONDON (Alliance News) - Alcoholic drinks giant Diageo PLC on Wednesday said it has agreed to increase the financial support provided to a charitable organisation that represents individuals who suffered as a result of the thalidomide distributed by the Distillers group from 1958 to 1961.
The Distillers group of companies, which now form part of Diageo, was found to have distributed thalidomide throughout the UK under licence through its pharmaceutical subsidiary over the three years to 1961, when it was withdrawn after the side effects for pregnant women were discovered.
Thalidomide, marketed under different brand names in numerous countries, was being prescribed to treat a variety of illnesses, including morning sickness, before it was discovered that pregnant women using the drug were giving birth to babies suffering from limb defects and other side affects, deemed to be caused by the drug.
Today, thalidomide is used for more severe conditions, mostly to treat cancer.
In 1973, the Thalidomide Trust was established to provide health and financial support to those affected by the drug, and Distillers Co had an agreement to make financial contributions to help the organisation assists its members.
Diageo was created in 1997 after Grand Metropolitan and Guinness merged. Prior to that, Guinness had acquired the Distillers group of companies in 1986 and taken over the financial obligations to the Thalidomide Trust, which in turn now falls at the feet of Diageo.
On Wednesday, Diageo said it has agreed to increase its financial support for the trust by GBP45.0 million.
"We have a long track record of working with, and supporting, the Thalidomide Trust in their efforts to ensure that long-term care and financial support for people injured by thalidomide is secure. This has always been important for Diageo and we remain committed to our ongoing relationship with the Thalidomide Trust," said Diageo Chairman Franz Humer.
Under the agreement, Diageo said it will make a one-off payment of GBP27.0 million to help the trust cover capital costs associated with "their changing health needs" and said it has improved the trust's financial security and ensured the new funding meets the trust's changing investment returns and interest rates.
Diageo said it has also reaffirmed its long term support for all beneficiaries of the trust, including the eight new members accepted between 2012 and 2016. Diageo said funding has also been provided to employ more staff to further support the "ongoing and increasing health and well-being needs" of those affected.
The charge, net of tax, in the six months to the end of 2016 will be GBP60.0 million, Diageo said, which includes the additional GBP45.0 million of funding revealed Wednesday and takes into account the changes to the discount rate and inflation rate applied to the existing thalidomide provision.
Cash payments made to the UK Thalidomide Trust in the six months to the end of June 2017 is expected to be about GBP40.0 million, which will include the scheduled annual payment made to the trust by Diageo.
Diageo shares were up 1.0% to 1,976.0 pence per share on Wednesday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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