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GRAN D METROPOLITAN AN N UAL REPORT 1984 TIWA 003704 -

Financial Highlights Results of the year 1984 1983 Trading Turnover £5,075.Om £4,468.8m Trading profit £443.9m £407.Om Profit before tax £334.3m £295.2m Ordinary shareholders Earnings per share 32.4p 27•8p Dividends per share 9• 2p 8.02p Dividend cover 3.5 times 3.5 times Net assets per share 237p 215p 1 TIWA 003706

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Contents Financial Highli-htti Our Customers around the World Chairman's Statement Analysis of Group Activities Directors' Report Trading Rex-iew 1=inancial Statements Source and Disposal nt Vaiuc Added Principal Subsidiary Companies Principal Related Companies Anah-sis of Shareholdings Five Year Record Notice of Meeting Proxy Form Grand %letropolitan PLC 11/12 Hanover Square, London 11'2A IDP TIWA 003705

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Analysis of Group Activities expressed as percentages 6 Capital Employed 23.7 19.0 Group total £2,895.1 million TIWA 003711

1 Unbranded agarettes, manufactured by Liggett & Myets, are a favourite choice in supermarkets. 2 Pepsi-Cola, for when you're having fun. , 3 Every year Alpo sponsors one of the leading sled dog races um the world, held at Saranac Lakes in New York State. 4 The flag of GrandMet USA fiutten in the bright autumn sunshine outside the company's headquarters in Montvale, New Jersey. 16 2 TIWA 003721

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Earnings per Share Q Dividends per Share ® In the United States, all our main businesses did well and the overall improvement in dollar earnings was further enhanced on translation to sterling by the latter's continuing weakness, although this benefit was partly offset by the cost of the group's dollar borrowings. In the International sector, Inter-Continental Hotels and International Distillers and Vintners had excellent years. A number of hotels were sold and several new hotel developments were begun. Our wines and spirits business continued to prosper and many of our brands to out-perform competition. The growth and success of the company could not have been achieved without the continued dedication of its employees, both in the UK and overseas. I would like to congratulate everyone concerned for their part in helping us achieve record profits not only this year, but over the past ten years of steady growth. Every company has a responsibility to the communities in which it operates. For several years I and my colleagues have been concerned with the problem of youth unemployment and in 1981 Grand Metropolitan Community Services was established to organise youth training schemes. Its success has been commended by the Manpower Services Commission and to date more than 1,000 youngsters have received training. A high proportion of those who have completed their training have obtained permanent employment. The level of our support will be increased in 1985 so that an even greater number of young people may take advantage of the training offered. A number of Board changes have taken place. Mr Clifford Smith retired in August and Mr Alex Dibbs and Mr Tony Good will retire at the conclusion of the Annual General Meeting. I would like to record the appreciation of the Board for their services and to thank them all personally for their valuable support over many years. Earnings and Dividends per Share Mr Walter D Scott, an American resident, has been appointed a Group Managing Director to take over responsibility for our US domestic operations and in December Mr Richard Giordano, Chairman and Chief Executive of The BOC Group, joined the Board as a non- executive Director, in order to maintain our complement of non-executive directors at three. During the year we have again reviewed all aspects of our business in order to reaffirm that the strategy of diversification outside the UK is providing the anticipated potential for long term growth. Despite the significant growth in our trade overseas, this has not been at the expense of the proper development of our UK activities, in which we have invested net capital of over £300m during the last four years. Further substantial funds will be allocated in 1985 to support the efficiency of our UK operations in order to enable the process of upgrading facilities and properties to be continued. Our Foods division should recover to more acceptable levels of profitability, but prospects for the UK economy generally remain unexciting. Subject to the current uncertainties in cigarette trading, our businesses in the US and International sectors are expected to do well. I remain convinced that the group is moving in the right direction. The spread of our activities in the UK, the US and other international markets makes us well placed to take advantage of opportunities for future growth. The breadth of our interests is a major asset and provides a flexible base from which to meet the new challenges of these difficult and rapidly changing times. 14th January, 1985 Chairman adjusted for the effects of rights and capitalisation issues 1980 1981 1982 1983 1984 TIWA 003710