Final Results - Part 2

Diageo PLC 7 September 2000 PART 2 DIAGEO CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 June 2000 Year ended 30 June 1999 Before Before Goodwill Goodwill goodwill Goodwill and and ex- and and ex- exceptional ceptional exceptional ceptional items items Total items items Total £ £ £ £ £ £ million million million million million million Turnover 11,870 - 11,870 11,795 - 11,795 Operating (9,890) (198) (10,088) (9,892) (386) (10,278) costs Operating 1,980 (198) 1,782 1,903 (386) 1,517 profit Share of 198 (3) 195 188 (8) 180 profits of associates Trading 2,178 (201) 1,977 2,091 (394) 1,697 profit Disposal - 5 5 - (10) (10) of fixed assets Sale of - (168) (168) - 104 104 businesses Interest (363) - (363) (324) - (324) payable (net) Profit 1,815 (364) 1,451 1,767 (300) 1,467 before taxation Taxation (476) 75 (401) (463) 23 (440) Profit 1,339 (289) 1,050 1,304 (277) 1,027 after taxation Minority interests Equity (37) - (37) (49) - (49) Non-equity (37) - (37) (36) - (36) Profit 1,265 (289) 976 1,219 (277) 942 for the year Dividends (713) - (713) (674) - (674) Transferred 552 (289) 263 545 (277) 268 to reserves Pence per share Basic 37.3p (8.5)p 28.8p 34.5p (7.8)p 26.7p earnings Diluted 37.2p (8.5)p 28.7p 34.3p (7.8)p 26.5p earnings Dividends 21.0p 19.5p Average 3,393m 3,533m shares DIAGEO CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended Year ended 30 June 30 June 2000 1999 £ million £ million Profit for the year - group 858 837 - associates 118 105 976 942 Exchange adjustments 25 78 Tax (charge)/relief on exchange in (7) 15 reserves Total recognised gains and losses 994 1,035 DIAGEO CONSOLIDATED BALANCE SHEET 30 June 2000 30 June 1999 £ million £ million £ million £ million Fixed assets Intangible assets 5,289 5,188 Tangible assets 3,078 3,178 Investments 1,496 1,354 9,863 9,720 Current assets Stocks 2,139 2,202 Debtors - due 1,845 1,931 within one year Debtors - due 1,187 1,290 after one year Debtors subject to 39 38 financing arrangements Cash at bank and 1,063 1,097 in hand 6,273 6,558 Creditors - due within one year Borrowings (3,066) (3,905) Other creditors (3,275) (3,532) (6,341) (7,437) Net current (68) (879) liabilities Total assets less 9,795 8,841 current liabilities Creditors - due after one year Borrowings (3,716) (3,395) Other creditors (100) (100) (3,816) (3,495) Provisions for (694) (753) liabilities and charges 5,285 4,593 Capital and reserves Called up share 990 992 capital Reserves 3,721 3,034 Shareholders' 4,711 4,026 funds Minority interests Equity 169 179 Non-equity 405 388 574 567 5,285 4,593 DIAGEO CONSOLIDATED CASH FLOW STATEMENT Year ended Year ended 30 June 2000 30 June 1999 £ million £ million £ million £ million Net cash inflow from 2,043 1,966 operating activities Dividends received 64 58 from associates Interest paid (net) (405) (432) Dividends paid to (27) (34) equity minority interests Returns on investments (432) (466) and servicing of finance Taxation (285) (566) Purchase of tangible (547) (534) fixed assets Purchase of own shares (38) (175) (net) Sale of fixed assets 59 90 Capital expenditure (526) (619) and financial investment Free cash flow 864 373 Purchase of (151) (380) subsidiaries Sale of subsidiaries, 638 501 associates and businesses Acquisitions and 487 121 disposals Equity dividends paid (683) (668) Cash flow before 668 (174) liquid resources and financing Management of liquid (219) 2,195 resources Issue of share capital 12 50 Own shares purchased (54) (1,211) for cancellation Decrease in loans (544) (716) Financing (586) (1,877) (Decrease)/increase in (137) 144 cash in the year MOVEMENTS IN NET BORROWINGS Year ended Year ended 30 June 2000 30 June 1999 £ million £ million (Decrease)/increase in cash in the year (137) 144 544 716 Change in liquid resources 219 (2,195) Change in net borrowings from cash flows 626 (1,335) Exchange adjustments (119) (208) Non-cash items 4 (5) Decrease/(increase) in net borrowings 511 (1,548) Net borrowings at beginning of the year (6,056) (4,508) Net borrowings at end of the year (5,545) (6,056) NOTES Segmental analysis 2000 1999 Operating Net Operating Net Turnover profit assets Turnover profit assets £ £ £ £ £ £ million million million million million million Class of business Spirits and 4,971 1,002 4,221 4,929 967 4,432 Wine Beer 2,146 284 751 2,234 273 882 Packaged 3,812 492 3,734 3,757 478 3,391 Food Quick 941 202 1,356 875 185 1,226 Service Restaurants 11,870 1,980 10,062 11,795 1,903 9,931 Associates 768 718 and other items Net (5,545) (6,056) borrowings 5,285 4,593 Geographical area Europe 4,181 585 3,804 4,230 594 4,003 North 5,639 956 5,696 5,656 936 5,266 America Asia 886 170 183 777 131 248 Pacific Latin 697 165 252 716 155 258 America Rest of 467 104 127 416 87 156 World 11,870 1,980 10,062 11,795 1,903 9,931 The above analysis of operating profit is before goodwill amortisation and exceptional items. The geographical analysis of turnover and operating profit is based on the location of the third party customers. Weighted average exchange rates used in the translation of profit and loss accounts were US dollar - £1 = $1.60 (1999 - £1 = $1.64) and euro - £1 = 1.59 (1999 - £1 = 1.48). Exchange rates used to translate assets and liabilities at the balance sheet date were US dollar - £1 = $1.52 (1999 - £1 = $1.58) and euro - £1 = 1.58 (1999 - £1 = 1.52). 2. Goodwill and exceptional items 2000 1999 £ £ £ £ million million million million Charged to: Operating Goodwill (17) (4) costs amortisation Merger (83) (262) integration Packaged Food (43) (77) restructuring Burger King (55) - items Sharesave - (43) scheme (198) (386) Associates Share of (3) (8) reorganisation costs Disposal of Profit/(loss) 5 (10) fixed assets on sales Sale of Spirits and (247) 29 businesses Wine brands Cruzcampo 82 - Packaged Food (3) (38) brands Interests in - 113 associates (168) 104 (364) (300) 3. Taxation The £401 million total taxation charge for the year ended 30 June 2000 comprises UK tax of £78 million, foreign tax of £251 million and tax on associates of £72 million. 4. Note of consolidated historical cost profits and losses There is no material difference between the reported profit shown in the consolidated profit and loss account and the profit restated on an historical cost basis. 5. Movements in consolidated shareholders' funds 2000 1999 £ million £ million Profit for the year 976 942 Dividends (713) (674) 263 268 Exchange adjustments 25 78 Tax (charge)/relief on exchange in reserves (7) 15 New share capital issued 12 52 Provision for share issues - 8 Purchase of own shares for cancellation (54) (1,211) Goodwill on disposals of businesses 446 187 Net movement in shareholders' funds 685 (603) Shareholders' funds at beginning of the year 4,026 4,629 Shareholders' funds at end of the year 4,711 4,026 6. Net borrowings 2000 1999 £ million £ million Debt due within one year and overdrafts (3,066) (3,905) Debt due after one year (3,716) (3,395) Net obligations under finance leases (39) (38) (6,821) (7,338) 1,063 1,097 Interest rate and foreign currency swaps 213 185 Net borrowings (5,545) (6,056) 7. Net cash inflow from operating activities 2000 1999 £ million £ million Operating profit 1,782 1,517 Exceptional operating costs 181 382 Restructuring and integration payments (198) (301) Depreciation and amortisation charge 365 339 (Increase)/decrease in working capital (62) 47 Other items (25) (18) Net cash inflow from operating activities 2,043 1,966 8. Statutory accounts The financial statements of Diageo plc for the year ended 30 June 2000 and this preliminary statement were approved by a duly appointed and authorised committee of the board of directors on 6 September 2000. This statement does not comprise the statutory accounts of the group but is derived from those accounts. The statutory accounts of Diageo plc for the year ended 30 June 1999 have been filed with the registrar of companies. KPMG Audit Plc has reported on those accounts and on the statutory accounts for the year ended 30 June 2000. Both the audit reports were unqualified and did not contain any statement under section 237 of the Companies Act 1985. 9. Compliance with new accounting standards The financial statements comply with the following Financial Reporting Standards issued by the UK Accounting Standards Board. FRS 15 - Tangible Fixed Assets. This standard addresses the measurement, valuation and depreciation of tangible fixed assets. The group has adopted the transitional arrangements of the standard and has retained the book amounts of certain tangible assets which were previously revalued. It is expected that no further valuations will be carried out. FRS 16 - Current Tax. This standard specifies how current tax, in particular withholding tax and tax credits, should be reflected in financial statements. Compliance with the above new standards has not given rise to any restatement of figures reported for prior periods.

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