Directors’ report
The directors have pleasure in submitting their Annual Report for the year ended 30 June 2009.
Annual General Meeting
The AGM will be held at The Institution of Engineering and Technology, Savoy Place, London WC2R 0BL at 2.30pm on Wednesday, 14 October 2009.
Dividends
Diageo paid an interim dividend of 13.9 pence per share on 6 April 2009. The directors recommend a final dividend of 22.2 pence per share. Subject to approval by shareholders, the final dividend will be paid on 19 October 2009 to shareholders on the register on 11 September 2009. Payment to US ADR holders will be made on 23 October 2009. A dividend reinvestment plan, which enables ordinary shareholders to invest their dividends in ordinary shares, is available in respect of the final dividend and the plan notice date is 28 September 2009.
Directors
The directors of the company who served during the year are shown in the section ‘Board of directors and executive committee’ above.
LM Danon, Lord Hollick and PS Walsh retire by rotation at the AGM in accordance with the articles and, being eligible, offer themselves for re-election. M Lilja will retire immediately after the AGM and will therefore not seek re-election. PB Bruzelius, who was appointed since the last AGM, retires in accordance with the articles and, being eligible, offers herself for election at the AGM. The non-executive directors proposed for election and re-election do not have service contracts.
Further details of directors’ contracts, remuneration and their interests in the shares of the company at 30 June 2009 are given in the directors’ remuneration report above.
Auditor
The auditor, KPMG Audit Plc, is willing to continue in office and a resolution for its re-appointment as auditor of the company will be submitted to the AGM.
Disclosure of information to the auditor
The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each aware, there is no relevant audit information of which the company’s auditor is unaware and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company’s auditor is aware of that information.
Purchases of own shares
At the 2008 AGM, shareholders gave the company renewed authority to purchase a maximum of 252 million ordinary shares. During the year ended 30 June 2009, the company purchased 44 million ordinary shares (nominal value £13 million), representing approximately 1.6% of the issued ordinary share capital (excluding treasury shares) at 10 August 2009, for a consideration including expenses of £417 million. Of the shares purchased, 38 million were purchased and subsequently cancelled and 6 million were held as treasury shares for the hedging of grants made under employee share plans.
Business review
The review of the business of the company and the description of the principal risks and uncertainties facing the company, prepared in accordance with the Companies Act 2006, comprises the following sections of the Annual Report: the Chief executive’s review, the Business description and the Business review.
Corporate governance statement
The corporate governance statement, prepared in accordance with rule 7.2 of the FSA’s Disclosure and Transparency Rules, comprises the following sections of the Annual Report: the Corporate governance report and the Additional information for shareholders.
Significant agreements – change of control
The following significant agreements contain certain termination and other rights for Diageo’s counterparties upon a change of control of the company.
Under the agreement governing the company’s 34% investment in Moët Hennessy SNC (‘MH’) and Moët Hennessy International SAS (‘MHI’), if a competitor (as defined therein) directly or indirectly takes control of the company (which, for these purposes, would occur if such competitor acquired more than 34% of the voting rights or equity interests in the company), LVMH Moët Hennessy – Louis Vuitton SA (‘LVMH’) may require the company to sell its shares in MH and MHI to LVMH.
The master agreement governing the operation of the group’s regional joint ventures with LVMH states that upon a change of control of the company (being, for these purposes, the acquisition by a third party of 30% or more of the issued share capital having voting rights in the company), LVMH may either appoint and remove the chairman of each joint venture entity governed by such master agreement, who shall be given a casting vote, or require each joint venture entity to be wound up.
Agreements for the distribution of the José Cuervo tequila brands allow Casa Cuervo SA de CV (‘Cuervo’) the right to terminate such agreements upon a change of control of the company, if Cuervo’s advance written consent to the change of control is not obtained.
Other information
Other information relevant to the directors’ report may be found in the following sections of the Annual Report:
| Information | Location in Annual Report |
|---|---|
| Amendment of memorandum and articles of association | Additional information for shareholders – Memorandum and articles of association |
| Charitable and political donations | Corporate governance report |
| Corporate citizenship | Corporate governance report |
| Directors – appointment and powers | Additional information for shareholders – Memorandum and articles of association |
| Directors’ indemnities and compensation for loss of office | Directors’ remuneration report |
| Employment policies | Business description – Premium drinks – Employees |
| Events since 30 June 2009 | Financial statements – note 33 Post balance sheet events |
| Future developments | Business review – Trend information |
| Purchase of own shares | Business review – Liquidity and capital resources and Financial statements – note 26 Total equity |
| Research and development | Business description – Premium drinks – Research and development |
| Share capital – structure, voting and other rights | Additional information for shareholders – Share capital and Memorandum and articles of association |
| Share capital – employee share plan voting rights | Financial statements – note 32 Employee share compensation |
| Shareholdings in the company | Additional information for shareholders – Share capital |
| Supplier payment policies and performance | Corporate governance report |
The directors’ report of Diageo plc for the year ended 30 June 2009 comprises these pages and the sections of the Annual Report referred to under ‘Directors’, ‘Business review’, ‘Corporate governance statement’ and ‘Other information’ above, which are incorporated into the directors’ report by reference.
The directors’ report was approved by a duly appointed and authorised committee of the board of directors on 26 August 2009 and signed on its behalf by PD Tunnacliffe, the company secretary.