Agenda

1. Daniel Powell 06012190Laurie Rowbottom 07012612Alanna Shingirai Muza 06037229Pierre Izydorczyk 07048588Maria Park 0701694622nd March 2010

2. Agenda • Introduction • Diageo 2005-2009 • Annual Report Analysis • ‘Impression Management’ • OFR Provisions • ‘Greenwash Guide’ • Conclusion

3. Introduction - Diageo • Company established 1997 1 • Premium drinks industry2 • Global Leader2 • 180 markets 2 • 20,000 employees 2 • 80 countries2

4. Introduction – Brands Spirits4 Beers 5 & Wines 6 Guinness Red Stripe Kilkenny Blossom Hill Rosenblum Sterling Vineyards Piat d'Or Acacia • Smirnoff • J&B Whiskey • Gordon’s Gin • Pimm’s • Baileys • Captain Morgan • Johnnie Walker • Bells

5. 5 Year Review

6. Annual Report 2006 7 • General Mills plant sold ⇩ moved to St Patricks Dublin • Katrina hit North America • £1.97b in operating profit • £3m employee shares • 6% ↑ in net sales • 5% ↑ in dividends • 3% ↓ in Guinness sales • ↓ in ready to drink sales

7. Annual Report vs Media Coverage

8. ‘Impression Management’15 • Voluntary disclosures → PR practiced • Glossy overlay → statutory messages • Management • Conformity to normative rules • Linguistic construction • Symbols → particular outcomes • Distorted graphs

9. ‘The OFR should include a description of the business and the external environment in which it operates as context for the directors’ discussion and analysis of performance and financial position.’ Diageo→ OFR Provision 1 7

10. OFR Provision 2 7 ‘The OFR should discuss the objectives of the business to generate or preserve value over the longer-term.’ Diageo→

11. OFR Provision 3 7 ‘The OFR should set out the directors’ strategies for achieving the objectives of the business.’ Diageo→

12. OFR Provision 4 7 ‘The OFR should include a description of the principal risks and uncertainties facing the entity, together with a commentary on the directors’ approach to them.’ Diageo→

13. OFR Risk Factors 7 • Diageo faces competition that may reduce its market share and margins • Diageo may not be able to derive the expected benefits from its strategy • Systems change programmes may not deliver the benefits intended • Regulatory decisions and changes • Changes in consumer preferences and tastes • Social acceptability of Diageo’s products may decline

14. OFR Risk Factors 7 • Increased costs or shortages of raw materials/labour • Unfavourable economic or political conditions • Failure to renegotiate distribution and manufacturing agreements • Diageo may not be able to protect its intellectual property rights • IFRS may introduce greater volatility into Diageo’s financial statements

15. ‘Greenwash Guide’16

16. ‘Greenwash Guide’7 Correct Adherence Poor Adherence 1) Diageo business interests ⇩ ‘Innovative responsible drinking support’ ⇩ Fluffy Language 1) Diageo corporate citizenship ⇩ a. Hurricane Katrina b. Water of Life c. Skills for Life ⇩ Irrelevant Claims

17. ‘Greenwash Guide’7 Correct Adherence Poor Adherence 2) Diageo & World Health Org. ⇩ a. An important role b. Alcohol and responsibility ⇩ Best in class? & Just not credible 2) Diageo & Thalidomide Trust ⇩ a. A further agreement b. Long-term care ⇩ Out-right lying

18. Conclusion • Global leader in the premium drinks industry • Financial underperformance in 2006 • Media coverage differed • Impression Management used • OFL provisions very good • Diageo corporate citizenship & Diageo + Thalidomide Trust  • Diageo business interests & Diageo + World Health Org. 

19. Thank you for listening! Any questions?

20. References • 1 Diageo – History [Www] diageo.com/ourbusiness/Pages/History.aspx (11.03.2010) • 2 Diageo – About Us [Www] diageo.com/ourbusiness/aboutus/Pages/default.aspx (11.03.2010) • 3 Diageo - Diageo Global Supply [Www] diageo.com/ourbusiness/Pages/DiageoGlobalSupply.aspx (11.03.2010) • 4 Diageo – Spirits [Www] diageo.com/ourbrands/categories/spirits/Pages/default.aspx (11.03.2010) • 5 Diageo – Beers [Www] diageo.com/ourbrands/categories/Pages/Beers.aspx (11.03.2010) • 6 Diageo – Wines [Www] diageo.com/ourbrands/categories/Pages/Wines.aspx (11.03.2010) • 7 Diageo – 2006 Annual Report [Www] diageo.com/NewsMedia/pages/resource.aspx?ID=450 (11.03.2010) • 8 Diageo – 2007 preliminary results (30 August 2007); Preliminary results presentation script [Www]diageo.com/investor/Pages/Financial-Results.aspx#2007 (11.03.2010) • 9 Diageo – Annual Report 2008 [Www]diageo.com/NewsMedia/pages/resource.aspx?ID=552 (11.03.2010) • 10 Diageo – Annual Report 2009 [Www] diageo.com/NewsMedia/pages/resource.aspx?ID=214 (11.03.2010) • 11 Telegraph - Diageo warns US hurricanes will affect results: Caroline Muspratt Published; 15th November 2005 [Www] telegraph.co.uk/finance/2926028/Diageo-warns-US-hurricanes-will-affect-results.html (15.03.2010) • 12 Forbes - Possible First Half Hangover for Walsh's Diageo; 15th of November 2005 [Www] forbes.com/fdc/welcome_mjx.shtml (15.03.2010 • 13 BBC News - Diageo to keep pouring Guinness Thursday; 31st August 2006 [Http://] news.bbc.co.uk/1/hi/business/5301102.stm (15.03.2010) • 14 Guardian - Diageo disappointment leads FTSE slide; 31st of August 2006 [Www] guardian.co.uk/business/2006/aug/31/ftse.marketforces(15.03.2010) • 15 Stanton, P. et al, Impressions of an Annual Report – an experimental study, Corporate Communications, 9 (1), pp 57 – 69 • 16 Futerra.co.uk – Greenwash Guide [Www] Futerra.co.uk/downloads/Greenwash_Guide.pdf (15.03.2010)