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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 20-F

|o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------------------

or

|ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended 31 August 2002

or

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

ALLIED DOMECQ PLC(Exact name of registrant as specified in its charter)

England and Wales(Jurisdiction of incorporation or organization)

The Pavilions, Bridgwater Road, Bedminster Down, Bristol, BS13 8AR, England(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

|Title of each class                                                                                                                    |  | Name of each exchange on which registered       
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------
|Ordinary Shares, nominal value £0.25 each ("ordinary shares")
American Depositary Shares, each representing 4 ordinary shares ("ADSs") |  | New York Stock Exchange*
New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:None

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*        Not for trading, but only in connection with the registration of the ADSs pursuant to the requirements of
the Securities and Exchange Commission.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:1,106,570,314 ordinary
shares

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Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

Indicate
by check mark which financial statement item the registrant has elected to follow.
Item 17 o                                    Item
18 ý

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TABLE OF CONTENTS



|                                                           |  |                                                                             
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------
|Introduction                                              
|Currency and Currency Translation                         
|Industry Data                                             
|Trademarks                                                
|Presentation of Financial Information                     
|Cautionary Statement Regarding Forward-Looking Information
|PART I                                                    
|Item 1.                                                    |  | Identity of Directors, Senior Management and Advisors                       
|Item 2.                                                    |  | Offer Statistics and Expected Timetable                                     
|Item 3.                                                    |  | Key Information                                                             
|Item 4.                                                    |  | Information on the Company                                                  
|Item 5.                                                    |  | Operating and Financial Review and Prospects                                
|Item 6.                                                    |  | Directors, Senior Management and Employees                                  
|Item 7.                                                    |  | Major Shareholders and Related Party Transactions                           
|Item 8.                                                    |  | Financial Information                                                       
|Item 9.                                                    |  | The Offer and Listing                                                       
|Item 10.                                                   |  | Additional Information                                                      
|Item 11.                                                   |  | Quantitative and Qualitative Disclosures about Market Risk                  
|Item 12.                                                   |  | Description of Securities other than Equity Securities                      
|PART II                                                   
|Item 13.                                                   |  | Defaults, Dividend Arrearages and Delinquencies                             
|Item 14.                                                   |  | Material Modifications to the Rights of Security Holders and Use of Proceeds
|Item 15.                                                   |  | Controls and Procedures                                                     
|Item 16.                                                   |  | [Reserved]                                                                  
|PART III                                                  
|Item 17.                                                   |  | Financial Statements                                                        
|Item 18.                                                   |  | Financial Statements                                                        
|Item 19.                                                   |  | Exhibits                                                                    

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Introduction

We
are incorporated under the name of Allied Domecq PLC as a public limited company under the laws of England and Wales. We operate pursuant to our Memorandum and Articles of Association, the UK
Companies Act 1985, other legislation and regulations in England and Wales and, where applicable, local legislation. Our principal executive office is located at The Pavilions, Bridgwater Road,
Bedminster Down, Bristol, BS13 8AR, England, and the telephone number at that office is +44 117 978 5000.

The
Group's authorised representative in the United States is the General Counsel of Allied Domecq Spirits & Wine North America and its agent for service of process is Allied Domecq North America
Corporation, both of 355 Riverside Avenue, Westport, CT 06880 (telephone: 203-221-5400).

In
this annual report, except as otherwise indicated or as the context otherwise requires, the "Company", "Group", "Allied Domecq", "we", "us" and "our" refers to Allied Domecq PLC and its
subsidiaries.

You
should rely only on the information contained in this annual report. We have not authorized anyone to provide you with information that is different. The information in this annual report may only
be accurate on the date of this annual report or on or as at any other date provided with respect to specific information.

Currency and Currency Translation

Unless
we otherwise indicate in this annual report, references to "Pound Sterling", "Pounds Sterling", "£", "pence" or "p" are to the lawful currency of the United Kingdom, all references
to "US Dollar", "US Dollars", "Dollars", "$", "cents" or "¢" are to the lawful currency of the United States.

Solely
for your convenience, we have translated some Pound Sterling amounts contained in this annual report into US Dollars. The rate used to translate such amounts was £1.00 to $1.5476,
which was the noon-buying rate for cable transfers in Pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York on 30 August 2002, known as the
"noon-buying rate", unless the context otherwise requires or implies. We provide the US Dollar equivalent information in this annual report solely for the convenience of the readers of
this annual report, and you should not construe it as implying that the Pound Sterling amounts represent, or could have been or could be converted into, US Dollars at such rates or at any rate.
See the section entitled "Item 3Key InformationExchange Rate Information" for more detailed information regarding the translation of Pounds Sterling into US Dollars.

Industry Data

In
this annual report, we refer to information regarding the premium distilled spirits market segments from Impact International, an international drinks magazine that is independent from industry
participants. Impact International collects information on the premium distilled spirits market from a variety of sources, including brand owners, import and export enterprises, trade associations and
governmental agencies such as the US Commerce Department.

Data
provided by Impact International may differ from data we have compiled with respect to our products. We believe that all of the information in this annual report that is based on statements from
Impact International is reliable.

Trademarks

This
annual report includes names of our products, which constitute trademarks or trade names which we own or which others own and license to us for our use. This annual report also contains other

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brand names, trade names, trademarks or service marks of other companies, and these brand names, trade names, trademarks or service marks are the property of those other companies.

Presentation of Financial Information

Unless
otherwise noted, the financial data that we present in this annual report has been prepared in accordance with generally accepted accounting principles in the United Kingdom, or UK GAAP.
UK GAAP differs in some respects from generally accepted accounting principles in the United States, or US GAAP. For a summary of the main differences between US GAAP and UK GAAP as they relate
to us, see Note 33 to our Audited Consolidated Financial Statements.

Cautionary Statement Regarding Forward-Looking Information

Some
statements in this annual report represent our expectations for our business and the industries in which we operate, and involve risks and uncertainties. We principally make these forward-looking
statements in the sections entitled "Item 4Information on the Company" and "Item 5Operating and Financial Review and Prospects". You can identify these statements by the use
of words such as "believes", "expects", "may", "will", "should", "intends", "plans", "anticipates", "estimates" or other similar words. We have based these forward-looking statements on our current
expectations and projections about future events. We believe that our expectations and assumptions with respect to these forward-looking statements are reasonable. However, because these
forward-looking statements include risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking
statements, including the factors discussed in the section entitled "Item 3Key InformationRisk Factors".

We
undertake no obligation publicly to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Given these considerations, you should not
place undue reliance on such forward-looking statements.

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PART I

Item 1. Identity of Directors, Senior Management and Advisors

Directors and Senior Management

Not
Applicable.

Item 2. Offer Statistics and Expected Timetable

Not
applicable.

Item 3. Key Information

You
should read the following selected historical consolidated financial data in conjunction with the section entitled "Item 5Operating and Financial Review and Prospects", our Audited
Consolidated Financial Statements and the related Notes appearing elsewhere in this annual report.

In
September 1999, we restructured our business to focus on our spirits and wine business, which we refer to as our Spirits & Wine business, and our quick service restaurants business,
which we refer to as our QSR business, by disposing of our managed and leased pub business and our 50% interest in a liquor store joint venture, which we collectively refer to as our UK Retail
business, to Punch Taverns Group Limited. Accordingly, we treat the UK Retail business, which represented 38% of our total turnover during the year ended 31 August 1999, the last full financial
year prior to its disposal, as a discontinued business.

Our
selected historical consolidated financial data for the three years ended 31 August 2002 have been derived from our Audited Consolidated Financial Statements and the Notes thereto appearing
elsewhere in this annual report.

We
have implemented Financial Reporting Standard No. 19Deferred Tax in the year ended 31 August 2002. As a result, our Audited Consolidated Financial Statements as at
31 August 2001, and for the two year period ended 31 August 2001 have been restated.

Our
consolidated financial statements have been prepared in accordance with UK GAAP, which differs in certain respects from generally accepted accounting principles in the United States, or
US GAAP. See Note 33 to our Audited Consolidated Financial Statements for a summary of the main differences between UK GAAP and US GAAP as they relate to us.

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UK GAAP Information

|                                                                          |                                                                        | Year ended 31 August                                                    |      
|------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ----------------------------------------------------------------------- | -----
|
|
|
|Turnover:                                                                 |                                                                        |                                                                         |      
|                                                                          | Continuing activities                                                  |                                                                         | 5,160
|                                                                          | Discontinued activities(3)                                             |                                                                         |     
|                                                                          |                                                                        |                                                                         |      
|                                                                          |                                                                        | Total turnover(4)                                                       |      
|Trading profit:                                                           |                                                                        |                                                                         |      
|                                                                          | Continuing activities                                                  |                                                                         | 944  
|                                                                          | Discontinued activities                                                |                                                                         |     
|                                                                          |                                                                        |                                                                         |      
|                                                                          |                                                                        | Total trading profit before goodwill amortization and exceptional items |      
|Finance charges                                                           |                                                                        | (201                                                                    | )    
|                                                                          |                                                                        |                                                                         |      
|                                                                          | Profit on ordinary activities before taxation and the following items: |                                                                         | 743  
|                                                                          | Goodwill amortization                                                  |                                                                         | (59  
|                                                                          | Mexican excise rebate(5)                                               |                                                                         | 330  
|                                                                          | Exceptional operating costs                                            |                                                                         | (130 
|                                                                          | Profits/(losses) on sales of businesses and fixed assets               |                                                                         |     
|                                                                          | Debenture/loan stock repayment premia                                  |                                                                         |     
|                                                                          |                                                                        |                                                                         |      
|Profit on ordinary activities before taxation                             |                                                                        | 884                                                                     |      
|Taxation                                                                  |                                                                        | (257                                                                    | )    
|Minority interests and preference dividends                               |                                                                        | (20                                                                     | )    
|                                                                          |                                                                        |                                                                         |      
|Profit earned for ordinary shareholders                                   |                                                                        | 607                                                                     |      
|                                                                          |                                                                        |                                                                         |      
|Earnings and dividends                                                    |                                                                        |                                                                         |      
|                                                                          | Earnings per ordinary share:                                           |                                                                         |      
|                                                                          |                                                                        | Basic                                                                   |      
|                                                                          |                                                                        | Diluted                                                                 |      
|                                                                          | Earnings per ordinary share before goodwill                            |                                                                         |      
|                                                                          | amortization, exceptional items and                                    |                                                                         |      
|                                                                          | discontinued activities:                                               |                                                                         |      
|                                                                          |                                                                        | Basic(6)                                                                |      
|                                                                          |                                                                        | Diluted(6)                                                              |      
|                                                                          | Dividends per ordinary share                                           |                                                                         | 20.1¢
|Weighted average ordinary shares used in earnings per share calculations: |                                                                        |                                                                         |      
|                                                                          |                                                                        | Basic                                                                   |      
|                                                                          |                                                                        | Diluted                                                                 |      

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|                                            |  | As at 31 August |  
|------------------------------------------- |  | --------------- | -
|
|
|
|Fixed assets                                |  | 3,699           |  
|Net current assets excluding net borrowings |  | 2,086           |  
|Creditors over one year and provisions      |  | (579            | )
|                                            |  |                 |  
|Total assets                                |  | 5,206           |  
|Short-term borrowings less cash             |  | (1,241          | )
|Loan capital                                |  | (2,749          | )
|                                            |  |                 |  
|Net assets                                  |  | 1,216           |  
|                                            |  |                 |  

US GAAP Information

|                                          |                          | Year ended 31 August |     
|----------------------------------------- | ------------------------ | -------------------- | ----
|
|
|
|
|Turnover(7)                               |                          | 4,923                |     
|Trading profit                            |                          | 963                  |     
|Net income:                               |                          |                      |     
|                                          | Continuing activities(8) |                      | 628 
|                                          | Discontinued activities  |                      |    
|                                          |                          |                      |     
|Net income(8)                             |                          | 628                  |     
|                                          |                          |                      |     
|Basic and diluted net earnings per share: |                          |                      |     
|                                          | Continuing activities(8) |                      | 58.8
|                                          | Discontinued activities  |                      |    
|                                          |                          |                      |     
|Total(8)                                  |                          | 58.8                 | ¢   
|                                          |                          |                      |     

|                                   |  | Year ended 31 August
|---------------------------------- |  | --------------------
|
|
|
|
|Total assets                       |  | 9,354               
|Shareholders' funds and minorities |  | 2,509               

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| |                                                                      |  | Year ended 31 August (restated) |  
| | -------------------------------------------------------------------- |  | ------------------------------- | -
|
|
|
| | Profit earned for ordinary shareholdersas originally reported       |  | 344                             |  
| | Adoption of FRS No. 19Deferred Tax                                  |  |                                |  
| |                                                                      |  |                                 |  
| | Profit earned for ordinary shareholdersrestated                     |  | 344                             |  
| |                                                                      |  |                                 |  
| | Earnings per ordinary sharebasic and diluted as originally reported |  | 32.6                            | p
| | Adoption of FRS No. 19Deferred Tax                                  |  |                                |  
| |                                                                      |  |                                 |  
| | Earnings per ordinary sharebasic and diluted restated               |  | 32.6                            | p
| |                                                                      |  |                                 |  

Dividends

Our Board of Directors normally declares an interim dividend in respect of each fiscal year in April for payment in July. The final dividend in respect of each fiscal year is
normally recommended by our Board of Directors in October and paid in February following approval by our shareholders.

The
following table sets out the dividends paid on our ordinary shares and American Depositary Shares, or ADSs, in respect of each of the five years ended 31 August 2002. In July 2002,
we entered into an amended and restated deposit agreement, which we refer to as the Deposit Agreement, among ourselves, JPMorgan Chase Bank, as depositary of our ADSs, and the holders from time to
time of our American Depositary Receipts, or ADRs. The amended and restated Deposit Agreement, among other things, amended the terms of our ADSs so that each ADS represents a beneficial interest in
four

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ordinary shares. Payments of dividends per ADS shown in the table below represent payments on the four ordinary shares underlying that ADS.

In September 1999,
we restructured our business and disposed of our UK Retail business. In connection with the disposal, we returned the value of our UK Retail business, approximately
£2.6 billion, to our
shareholders. Accordingly, our Board of Directors did not declare a final dividend with respect to the year ended 31 August 1999. Since that time, interim and final dividends have reflected our
restructured business.

|                   |  | Year ended 31 August |  
|------------------ |  | -------------------- | -
|
|per ordinary share |  |                      |  
|Interim            |  | 4.90                 | p
|Final              |  | 8.10                 | p
|                   |  |                      |  
|Total              |  | 13.00                | p
|                   |  |                      |  
|per ADS(1)         |  |                      |  
|Interim            |  | 30.88                | ¢
|Final              |  | 52.63                | ¢
|                   |  |                      |  
|Total              |  | 83.51                | ¢
|                   |  |                      |  

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Our dividends are payable in Pounds Sterling. Dividends paid by the depositary in respect of ADSs are paid in US Dollars based on market rates of
exchange that may differ from the noon-buying rate on the payment day.

Our
Board of Directors has concluded that the appropriate level of dividend cover, earnings per share divided by dividend per share, should be approximately 2.5 and that our dividends should grow in
line with growth in underlying earnings. This supports our strategic objective to optimize the efficiency of our capital structure while maintaining prudent financial ratios. We believe that this
policy will enable us to retain sufficient cash flow to finance both investment in brands and future capital expenditure. We measure the returns on such expenditure against the benefits of returning
capital to shareholders. Nevertheless, our future dividends depend upon our earnings, financial condition and other factors, and as a result, we cannot assure you that the interim and final dividends
that we paid in the past are indicative of future interim or final dividends.

A
revised income tax convention between the United States and the United Kingdom is currently being ratified. This may affect the US Federal income tax consequences of owning our ordinary
shares or ADSs, including the taxation of dividend payments. For a more detailed discussion of those and other tax consequences of owning our ordinary shares or ADSs, see the section entitled
"Item 10Additional InformationTaxation".

Exchange Rate Information

The following tables set out the low, high, average and period-end exchange rates for the years indicated and the low and high exchange rates for the past six
months. These rates, expressed in US Dollars per Pound Sterling, are based on the noon-buying rates for cable transfers in Pounds Sterling as certificated for customs purposes by
the Federal Reserve Bank of New York. The average rates reflect the average of the noon-buying rates on the last business day of each month during the relevant year. We have provided these
rates for your convenience. They are not the rates we have used

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in this annual report for currency translations or, where applicable, in the preparation of the financial statements included in this annual report.

|           |  | Annual exchange rates of US Dollars per £1.00
for the year ended 31 August
|---------- |  | --------------------------------------------------------------------------
|
|Low        |  | 1.4095                                                                    
|High       |  | 1.5800                                                                    
|Average    |  | 1.4624                                                                    
|Period-End |  | 1.5476                                                                    

|     |  | February
2003(1) |  | January
2003 |  | December
2002 |  | November
2002 |  | October
2002 |  | September
2002 |  | August
2002
|---- |  | ---------------- |  | ------------ |  | ------------- |  | ------------- |  | ------------ |  | -------------- |  | -----------
|Low  |  | 1.5860           |  | 1.5975       |  | 1.5555        |  | 1.5440        |  | 1.5418       |  | 1.5343         |  | 1.5192     
|High |  | 1.6480           |  | 1.6482       |  | 1.6095        |  | 1.5915        |  | 1.5708       |  | 1.5700         |  | 1.5709     

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On 24 February 2003, the noon-buying rate was £1.00=$1.5860.

Exchange Controls and Other Limitations Affecting Security Holders

There are currently no UK foreign exchange control restrictions on our operations or affecting the remittance of dividends. Any dividends we pay to holders of our ADSs may be
subject to UK or other taxation. You should read the information in the section entitled "Item 10Additional
InformationTaxation" for a more detailed discussion of the tax consequences of investing in our ADSs. There are no restrictions under our Memorandum and Articles of Association or under
the laws of England and Wales that limit the right of non-resident or foreign holders to hold or exercise voting rights in connection with our ordinary shares.

Risk Factors

Investors, holders and prospective purchasers of our ADSs and ordinary shares should, in addition to paying due regard to the Cautionary Statement Regarding Forward-Looking
Information noted above, also carefully consider all of the information set out in this annual report. In particular, you should consider the special features applicable to an investment in us,
including those set out below.

Contamination or other circumstances could harm the brand integrity or customer support for our brands and adversely affect the sales of those products.

The success of our brands depends upon the positive image that consumers have of those brands, and contamination, whether arising accidentally or as a consequence of deliberate
third-party action, or other events that harm the brand integrity or consumer support for those brands, could adversely affect their sales. We purchase most of the raw materials for the production of
our spirits and wine from third-party producers or on the open market. Contaminants in those raw materials or defects in the distillation or fermentation process could lead to low beverage quality as
well as illness among, or injury to, our consumers and may result in reduced sales of the affected brand or all of our brands. Also, to the extent that third parties sell products which are either
counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain
from purchasing our brands in the future and in turn could impair brand equity and adversely affect our sales and operations.

In
addition, we have entered into agreements with third parties to produce ready-to-drink and other products that carry our brands and trademarks. If these third parties
contaminate or cause a decrease

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in the quality of these products, they could tarnish the overall reputation of the relevant brands and this could result in reduced sales of the affected brand or brands.

Sales from our portfolio of premium branded spirits and wine may be disproportionately affected relative to non-premium branded drinks products by an economic
downturn, recession, acts or threats of terrorism, acts or the threat of war or other adverse political developments in our key markets.

We believe that during times of economic uncertainty or hardship consumers may choose to purchase lower value consumer goods as opposed to higher value consumer goods, which
include our premium branded spirits and wine. Reduced sales by our Spirits & Wine business as a result of an economic downturn or recession in certain key markets, particularly the United
States, Mexico, South Korea, Spain and the United Kingdom, may have an adverse effect on the results of operations of our Spirits & Wine business. Because turnover of our Spirits & Wine
business represented 91% of our total turnover during the year ended 31 August 2002, a reduction in sales of our premium branded spirits and wine in those key markets could have an adverse
effect on our results of operations and business prospects as a whole. In the same way, acts of terrorism or the outbreak of war, consumer concern over threats of terrorism or the threat of war or
other adverse political developments may have a depressing effect on consumers' propensity to purchase higher value goods in our key markets. In particular, we believe that terrorist acts, threats of
further terrorist acts or the outbreak of war, may reduce consumers' inclination to travel, thereby adversely affecting sales of our spirits and wine in the duty free market. In addition, we also
believe that other adverse political developments affecting some of our key markets could lead to an economic down turn or recession in those markets.

Regulatory decisions and changes in the legal and regulatory environment in the countries in which we operate could limit our business activities or increase our operating
costs.

As a leading international branded drinks and retailing group, our business is subject to extensive regulatory requirements regarding production, distribution, marketing,
advertising and labeling in the countries in which we operate. In addition, our products are subject to differing import and excise duties in the countries in which we operate. Regulatory decisions or
changes in the legal and regulatory requirements in these areas may have the following effect on our business:



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We depend upon our trademarks and proprietary rights, and any failure to protect our intellectual property rights or any claims that we are infringing upon the rights of others
may adversely affect our competitive position.

Our success depends, in large part, on our ability to protect our current and future brands and products and to defend our intellectual property rights. We have been issued
numerous trademarks covering our brands and products and have filed, and expect to continue to file, trademark applications seeking to protect newly-developed brands and products. We cannot be sure
that trademarks will be issued with respect to any of our pending trademark applications or that our competitors will not challenge, invalidate or circumvent any existing or future trademarks issued
to, or licensed by, us.

If we do not successfully anticipate changes in consumer preferences and tastes, sales of our products could be adversely affected.

Our portfolio includes a range of premium branded spirits and wine and food products. Maintaining our competitive position depends on our continued ability to offer products
that have a strong appeal to consumers. Consumer preferences may shift due to a variety of factors, including changes in demographic and social trends or changes in travel, vacation or leisure
activity patterns. Any significant shift in consumer preferences coupled with our failure to anticipate and react to such changes could reduce the demand for certain products in our portfolio
resulting in reduced sales or harm to the image of our brands.

A substantial decrease in our ability to supply our consumers with our products could adversely affect the results of our operations.

An interruption or substantial decrease in our ability to supply customers of our brands could damage our sales and image as well as our relationships with customers and
consumers. Problems which might constrain supply or lead to increased costs include:



We have entered into arrangements with third parties in various key markets, and the termination of our relationship with those third parties for any reason may adversely
affect our results of operations in those key markets and our results of operations and business prospects as a whole.

We have relationships with third parties throughout our business. The breakdown of some of these relationships could immediately limit our access to customers and, as a result,
damage short- and long-term performance. These relationships include:



8

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Failure to successfully integrate and manage acquired businesses and brands could adversely impact current and future business performance and potentially impact our ability to
meet our increased debt obligations.

We have acquired a number of businesses and brands in the last three years and have incurred an amount of additional debt to finance them. As at 31 August 2002, our net
debt was £2,578 million, an increase of £724 million from 31 August 2001. The ability of these acquired businesses to make a positive contribution to our
business depends on our ability to integrate them successfully into our existing operations and optimize the benefit that comes from the synergies arising throughout our various businesses. If we do
not achieve successful integration of our new businesses, we may not achieve the financial and operational benefits we currently anticipate and as a result, may not be able adequately to service our
increased debt obligations. In addition, the successful integration of newly acquired businesses may require greater amounts of management time and resources than we anticipate and thereby have an
adverse effect on the conduct of our business, financial condition and results of operations.

Litigation and publicity concerning product quality, health and other issues may cause consumers to avoid our products and may result in liabilities.

Litigation and complaints from consumers or government authorities resulting from beverage and food quality, illness, injury and other health concerns or other issues stemming
from one product or a limited number of products, including ready-to-drink and other products produced by licensees or franchisees may affect our industry. More specifically,
we may be the subject of class action or other litigation relating to these allegations. Any litigation or adverse publicity surrounding any of these allegations may negatively affect us and our
licensees, regardless of whether the allegations are true, by
discouraging consumers from buying our products. In addition, litigation could result in a judgment for significant damages against us. We could also incur significant litigation costs and the
diversion of management time as a result of a lawsuit or claim regardless of the result.

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Our operations are conducted in many countries and, as a result, fluctuations between the Pound Sterling and other major currencies may affect our financial results.

We conduct our operations in many countries, and accordingly, a substantial portion of our sales and production costs are denominated in currencies other than Pounds Sterling.
As a result, fluctuations between the Pound Sterling and other major currencies, including the US Dollar and the Euro, may affect our financial results. In particular, we believe that, due to the fact
that North America accounts for a substantial proportion of our total sales volumes, a substantial decline in the rate of exchange between the US Dollar and Pound Sterling has had and may continue to
have a material adverse effect on our financial results. We cannot assure you that further volatility in the rate of exchange between Pounds Sterling and other currencies will not have or continue to
have a material adverse effect on our financial results.

The cost of providing pension and post-retirement healthcare benefits to eligible former employees is subject to changes in pension fund values and changing
demographics, and may have a material adverse effect on our financial results.

We operate a number of pension and post-retirement healthcare plans throughout the world which provide defined benefits. While the majority of these plans are
closed to new employees, the cost of providing these benefits to eligible former employees is subject to changes in pension fund values and changing demographics, including longer life expectancy of
beneficiaries. We believe that sustained declines in equity markets and reductions in bond yields have and may continue to have a material adverse effect on the value of our pension funds. In
addition, any shift to a sustained lower level of UK price inflation would increase pension liabilities as the relevant fund rules require that a minimum annual increase be applied to UK pensions. In
these circumstances we may be required to recognize a charge to our profit and loss account to the extent that the pension fund values are less than the total anticipated liability under the plans. We
cannot assure you that such charges will not have an adverse effect on our financial results.

10

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Item 4. Information on the Company

Overview

We are a leading international branded drinks and retailing group. Our business comprises one of the world's largest international spirits and wine groups, which we refer to as
our Spirits & Wine business, and a leading international quick service restaurants group, which we refer to as our QSR business. During the year ended 31 August 2002, our turnover was
£3,334 million and trading profit was £610 million.

Our
Spirits & Wine business manufactures, markets and sells a portfolio of premium branded spirits, which Impact International estimates included 14 of the top 100 premium distilled spirit
brands by volume in 2001, and a growing portfolio of premium branded wines. Our Spirits & Wine business operates through a global distribution network in over 50 countries and generates
approximately 33% of its trading profit in North America and 31% in Europe. During the year ended 31 August 2002, turnover of our Spirits & Wine business was
£3,018 million and trading profit was £516 million. Turnover and trading profit of our Spirits & Wine business represented approximately 91% and 85% of our
total turnover and trading profit in that year respectively.

Our
QSR business operates an international franchise business, which comprises over 10,000 outlets. Our QSR business is comprised of Dunkin' Donuts®, one of the world's leading coffee and
baked goods chains; Baskin-Robbins®, one of the world's leading ice cream franchises; and Togo's®, a sandwich chain operating principally on the West coast of the United
States. During the year ended 31 August 2002, turnover of our QSR business was £316 million and trading profit was £78 million. Turnover and trading profit
of our QSR business represented approximately 9% and 13% of our total turnover and trading profit in that year respectively.

We
also hold a 25%, less one share, interest in Britannia Soft Drinks Limited, a UK company engaged in the manufacture and sale of soft drinks.

The
following table sets out for each of the three years ended 31 August 2002 our turnover and trading profit by business segment and as a percentage of total turnover and trading profit for each
business segment.

|                  |       | Year ended 31 August
|----------------- | ----- | --------------------
|
|
|
|Turnover(1)       |       |                     
|Spirits & Wine    |       | 3,018               
|QSR               |       | 316                 
|                  |       |                     
|                  | Total |                     
|                  |       |                     
|Trading Profit(2) |       |                     
|Spirits & Wine    |       | 516                 
|QSR               |       | 78                  
|Britannia         |       | 16                  
|                  |       |                     
|                  | Total |                     
|                  |       |                     

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Notes:

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The following table sets out for each of the three years ended 31 August 2002 our turnover by geographic market and as a percentage of total turnover.

|                      |       | Year ended 31 August
|--------------------- | ----- | --------------------
|
|
|
|Geographical analysis |       |                     
|Turnover              |       |                     
|Europe                |       | 1,213               
|Americas              |       | 1,599               
|Rest of World         |       | 522                 
|                      |       |                     
|                      | Total |                     
|                      |       |                     

History and Development

The Company was established in 1961 by the merger of three UK brewing and pub retailing companies. Since then, we have grown to become a leading international branded drinks
and retailing company with operations in the spirits and wine industry, the quick service restaurants industry and, until recently, the retail pub industry.

Spirits & Wine Business

The key events in the growth of our Spirits & Wine business were:



We
have recently increased the scope of our premium wine portfolio through a series of acquisitions, namely:



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QSR Business

We entered the quick service restaurants business in 1978 with our acquisition of J. Lyons & Company Limited, owner of Baskin-Robbins. In 1989, we acquired Dunkin'
Donuts, and in 1997 we acquired Togo's.

Discontinued Activities

In 1999, we decided to focus our activities on our Spirits & Wine and our QSR businesses. Accordingly, in January 1999, we disposed of Cantrell & Cochrane,
which was primarily a cider and soft drinks company based in Ireland. In September 1999, we disposed of our UK Retail business, which consisted of our managed and leased pub business and our
50% interest in a liquor store joint venture with Whitbread PLC, to Punch Taverns Group Limited.

Business Description and Strategy

Spirits & Wine Description

We are one of the largest international spirits producers, and we have a global distribution network dedicated to distributing our brands and brands owned by third parties. Our
Spirits & Wine business oversees and operates these production and distribution operations. Turnover of our Spirits & Wine business for the year ended 31 August 2002 was
£3,018 million and trading profit, excluding goodwill amortization and exceptional items was £516 million.

Our
spirits portfolio consists principally of "premium" brands, those that generally retail at a global price greater than $10 per 750 ml bottle and have a US retail price of greater than $12
per 750 ml bottle. We divide our spirits and wine portfolio into:



Our
core brands, Ballantine's Scotch whisky, Kahlúa liqueur, Malibu coconut-flavored rum-based spirit, Beefeater gin, Canadian Club whisky, Sauza® tequila,
Courvoisier cognac, Tia Maria® liqueur and Maker's Mark® bourbon, collectively accounted for sales of approximately 17.9 million nine liter equivalent cases, or 28% of
our spirits and wine portfolio by volume, in the year ended 31 August 2002. We acquired the Malibu brand in May of 2002, and as a result, the sales volume for our core brands in the year ended
31 August 2002 does not include a complete year of sales for Malibu. Our local market leaders, which include Presidente® brandy, Don Pedro® brandy and
Imperial® whisky, accounted for approximately 12.4 million cases, or 20% of our spirits and wine portfolio by volume, in the year ended 31 August 2002. Other spirits brands
accounted for sales of approximately 13.2 million cases, or 21% of our spirits and wine portfolio by volume, during the same period.

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Our
wine portfolio consists primarily of premium branded wines that generally retail at a global price of greater than $7 per bottle, including table wine, sparkling wine and champagne. During the
year
ended 31 August 2002, our Spirits & Wine business sold approximately 12.9 million cases of premium branded wines, or 20% of our spirits and wine portfolio by volume. Approximately
14.2 million cases were produced by our wineries. Other wine brands accounted for sales of approximately 7.0 million cases, or 11% of our spirits and wine portfolio by volume.

Spirits & Wine Strategy

The objective of our Spirits & Wine business is to create shareholder value through the profitable growth of the business. We believe that we are building a strong
platform for sustainable future growth using a combination of focused investment in our core business to drive organic growth, being trading before acquisitions, and through acquisitions.







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Spirits & Wine Portfolio

Core Brands

Our core brands typically have a strong position in more than one market with potential for global scale. Impact International estimates that in 2001 seven of our core brands
were in the top 100 premium distilled spirit brands by volume. A description of our core brands follows:

|LOGO |  | Ballantine's.The Ballantine's range includes Ballantine's Finest and Ballantine's Premium aged whiskies ranging from 12 to 30 years old. Impact International
estimated that Ballantine's was one of the top ten premium distilled spirit brands by volume in 2001. We sold approximately 5.7 million cases of Ballantine's in the year ended 31 August 2002. Ballantine's is our largest selling brand in Europe
with Spain, its largest market, accounting for approximately 1.9 million cases during the year ended 31 August 2002.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Kahlúa.Kahlúa is a coffee-flavored liqueur. Impact International estimated that Kahlúa was one of the top 20 premium distilled spirit brands by volume in
2001. We sold approximately 3.1 million cases of Kahlúa during the year ended 31 August 2002 with the United States, its largest market, accounting for approximately 2.0 million cases. We also sell a range of ready-to-drink Kahlúa
cocktails under the tradename of "Kahlúa to Go®".                                                                                    
|LOGO |  | Malibu.Malibu is a coconut-flavored rum-based spirit that was first produced in 1980. Impact International estimated that Malibu was one of the top 35 premium distilled
spirit brands by volume in 2001. Impact International estimates that 2.4 million cases of Malibu were sold in 2001. We purchased the Malibu brand from Diageo plc in May 2002. In the period from our purchase of Malibu to 31 August 2002, we sold
approximately 0.5 million cases of Malibu.                                                               

|LOGO |  | Beefeater.Impact International estimated that Beefeater gin was one of the top 35 premium distilled spirit brands by volume in 2001. We sold approximately 2.3 million
cases of Beefeater during the year ended 31 August 2002 with Spain, its largest market, accounting for 0.9 million cases.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|LOGO |  | Canadian Club.Impact International estimated that Canadian Club whisky was one of the top 40 premium distilled spirit brands by volume in 2001. We sold approximately 2.2
million cases of Canadian Club during the year ended 31 August 2002 with the United States, its largest market, accounting for approximately 1.2 million cases.                    
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Sauza.Impact International estimated that Sauza tequila was one of the top 55 premium distilled spirit brands by volume in 2001. We sold approximately 1.9 million cases of
Sauza during the year ended 31 August 2002 with the United States and Mexico, its largest markets, accounting for 0.9 million and 0.6 million cases, respectively.               
|LOGO |  | Courvoisier.Impact International estimated that Courvoisier cognac was one of the top 100 premium distilled spirit brands by volume in 2001. We sold approximately 1.0 million
cases during the year ended 31 August 2002 with the United States and the United Kingdom, its largest markets, accounting for 0.5 million and 0.3 million cases, respectively.
|LOGO |  | Tia Maria.Tia Maria is a premium, medium-strength Jamaican coffee-flavored liqueur. During the year ended 31 August 2002, we sold approximately 0.8 million cases of Tia
Maria with its principal market being the United Kingdom. We launched a sister brand, Tia Lusso, a new light cream liqueur, in May 2002.                                            
|LOGO |  | Maker's Mark.Maker's Mark is a niche Kentucky bourbon that we produce in batches of less than 19 barrels with every bottle sealed by being hand dipped into its signature red
wax. During the year ended 31 August 2002, we sold approximately 0.4 million cases, principally in the United States.                                                          

Local Market Leaders

In addition to our core brands, we have identified brands that occupy a strong position in key markets and are capable of delivering critical mass in those markets or which
present opportunities for growth. We refer to these brands as local market leaders. Impact International estimated that seven of our local market leaders were in the top 100 premium distilled spirit
brands by volume in 2001. Our most important local market leaders are:

|LOGO |  | Presidente.Presidente is a brandy distilled and primarily consumed in Mexico. Impact International estimates that Presidente was one of the top 30 premium distilled
spirit brands by volume in 2001. We sold approximately 2.4 million cases of Presidente during the year ended 31 August 2002.         
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Whisky DYC.Whisky DYC® is a whisky distilled and primarily consumed in Spain. Impact International estimated that Whisky DYC was one of the top 40 premium distilled
spirit brands by volume in 2001. We sold approximately 1.9 million cases of Whisky DYC in Spain during the year ended 31 August 2002.
|     |  |                                                                                                                                                                                                                                                                                                           

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|LOGO |  | Stolichnaya.Stolichnaya is a Russian vodka for which we have acquired the distribution rights for various countries, including the United States. We sold approximately 1.5
million cases of Stolichnaya during the year ended 31 August 2002, primarily in the United States.               
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Don Pedro.Don Pedro is a brandy distilled and primarily consumed in Mexico. Impact International estimated that Don Pedro was one of the top 65 premium distilled spirit
brands by volume in 2001. We sold approximately 1.3 million cases of Don Pedro during the year ended 31 August 2002.
|LOGO |  | Imperial.Imperial is a Scotch whisky primarily consumed in South Korea. We sold approximately 1.0 million cases of Imperial whisky during the year ended 31 August
2002.                                                                                                                     
|LOGO |  | Hiram Walker liqueurs.The Hiram Walker® liqueur range offers a wide range of flavored liqueurs. We sold approximately 0.9 million cases of Hiram Walker liqueurs during
the year ended 31 August 2002, primarily in the United States.                                                       
|LOGO |  | Centenario.Centenario® is a brandy produced and primarily consumed in Spain. We sold approximately 0.8 million cases of Centenario in Spain during the year ended
31 August 2002.                                                                                                            
|LOGO |  | Teacher's.Teacher's® is a Scotch whisky whose largest market is the United Kingdom. We sold approximately 0.7 million cases of Teacher's during the year ended
31 August 2002.                                                                                                               

Other Spirits

Other spirits brands are managed in their respective markets, and we expect to utilize their cash and profit generation to maximize their return for shareholders.

Wine Brands

Since January 2001, we have substantially increased our wine portfolio through a series of acquisitions. These acquisitions now provide us with a branded premium wine
business of global scale with production interests in New Zealand, the United States, France, Spain, Argentina, Mexico and Portugal. Our most important wine brands are:

|LOGO |  | Mumm.Mumm® is one of the leading worldwide champagne brands with its principal markets in France and the United States. During the year ended 31 August 2002,
we sold approximately 0.5 million cases.                                                                           
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Perrier Jouët.The flagship of this champagne range is Perrier Jouët® Belle Époque, distinguished by the hand painted flower design on its bottle.
Perrier Jouët's key market is the United States. During the year ended 31 August 2002, we sold approximately 0.2 million cases.

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|LOGO |  | Montana.Based in New Zealand, Montana® produced approximately 5 million cases of bottled premium wine in 2001. During the year ended 31 August 2002, we sold
approximately 5.5 million cases.                                                                                                         
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Clos du Bois.Clos du Bois® is one of the leading super-premium Californian wine brands. During the year ended 31 August 2002, we sold approximately 1.4 million cases,
 primarily in the United States.                                                                                               
|LOGO |  | Campo Viejo.Campo Viejo®, produced by Bodegas y Bebidas, is a leading brand from the Rioja region of Spain. Campo Viejo is sold throughout Europe, and during the year
ended 31 August 2002, approximately 0.7 million cases of Campo Viejo were sold. We acquired Bodegas y Bebidas in December 2001.
|LOGO |  | Graffigna.Graffigna® is based in the San Juan region of Argentina. During the year ended 31 August 2002, we sold approximately 0.8 million cases.                                                                                                                                                     

Spirits & Wine Production

Properties, Plants and Equipment

We own or lease land and buildings throughout the world. Our properties primarily consist of a variety of manufacturing, distilling, maturing, bottling and administration
operating sites spread across our operations, as well as vineyards in New Zealand, the United States, France, Spain and Argentina. As at 31 August 2002, our properties had a net book
value of £468 million. Seven principal Allied Domecq operating units account for approximately 76% of the total net book value of £468 million, namely Montana
(vineyards), Allied Domecq Wines USA (vineyards), Allied Distillers Limited (distilling), Mumm and Perrier Jouët (vineyards), Hiram Walker & Sons Limited (distilling), our
Spanish production facilities (distilling and vineyards) and Domecq Mexico (distilling and agave cultivation).

These
operating units each have several manufacturing facilities. The locations, principal products, production capacity and production volume in the year ended 31 August 2002 of these
principal operating units is set out in the following table:

|Operating unit    |  | Location                 |  | Principal products                     |  | Production capacity |  | Production volume in 2002
|----------------- |  | ------------------------ |  | -------------------------------------- |  | ------------------- |  | -------------------------
|
|Allied Distillers |  | Scotland                 |  | Scotch whisky, gin, liqueurs and other |  | 25,000              |  | 11,796                   
|Domecq            |  | Mexico                   |  | Brandy and tequila                     |  | 26,000              |  | 9,600                    
|Hiram Walker      |  | United States and Canada |  | Canadian whisky, liqueurs and other    |  | 14,000              |  | 9,411                    
|Domecq            |  | Spain                    |  | Brandy, whisky, sherry and wine        |  | 7,700               |  | 6,453                    
|Courvoisier       |  | France                   |  | Brandy                                 |  | 1,600               |  | 1,077                    

|                        |  |               |  |           |  | (Tons)(1)
|----------------------- |  | ------------- |  | --------- |  | ---------
|Montana                 |  | New Zealand   |  | Wines     |  | 57,500   
|Bodegas y Bebidas(2)    |  | Spain         |  | Wines     |  | 52,000   
|Allied Domecq Wines USA |  | United States |  | Wines     |  | 41,000   
|Mumm and Perrier Jouët  |  | France        |  | Champagne |  | 21,688   

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Notes:

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No individual tangible fixed asset has a net book value in excess of 5% of the aggregate net book value. We own approximately 96% of our properties by value and hold approximately 3% of our properties
by value under leases running for 50 years or longer. Some of our production locations are sited in areas prone to earthquakes. Although we have previously bought insurance to cover earthquake
damage, we have recently discontinued this practice and now self-insure.

Raw Materials

Most of the raw materials required for the production of our spirits and wine are agricultural commodities that we grow or purchase from third-party producers or on the open
market. The raw materials that are the most volatile in supply are grapes and agave.

In
the year ended 31 August 2002, we secured approximately 22% of our grapes for wine production, through our ownership and cultivation of vineyards. We also secured a substantial
portion of our grapes through long-term supply contracts with a wide variety of local growers throughout the world. Those grapes that we do not grow or purchase through
long-term supply contracts, we purchase on the open market.

Mexican
regulations require that tequila is produced exclusively with blue agave from a specific region. As the result of the shortage of this material over the last few years, we have undertaken our
own agave cultivation, and as at 31 August 2002, we had approximately 13,000 hectares under cultivation of proprietary and contracted plantations. As we have recently begun our agave
cultivation and as agave should grow for between seven and ten years prior to harvest and use, we currently rely on long-term agave supply contracts and the open market for all of our
agave needs. The agave shortage has not yet been overcome, but our investment in new cultivation techniques is benefiting the local farmers.

When
purchasing other raw material supplies such as closures, bottles and labels, we take advantage of our scale as a global drinks business. We attempt to use a balanced roster of preferred suppliers
to strike a favorable balance between consistent quality and low cost.

Spirits & Wine Distribution

We own or control the distribution of approximately 90% of the sales of our Spirits & Wine business by volume through subsidiaries and operations in over 50 countries.
The balance is carried out on our behalf by third parties with whom we usually have long-term distribution contracts. Of our total sales volume during the year ended
31 August 2002, Europe accounted for approximately 31%, North America for approximately 24%, Latin America for approximately 17%, Asia Pacific for approximately 6%, the Wine region for
approximately 20% and Other, which includes bulk sales of spirits and wine as well as stand-alone Duty Free operations for approximately 2% of our sales by volume.

Generally,
we distribute our products via wholesalers directly to specialist stores, supermarkets, convenience stores and owners of on-premise outlets. However, our distribution
arrangements vary depending upon the particular markets with important regional differences outlined below.



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Spirits & Wine Seasonality

Demand for our premium branded spirits and wine traditionally experiences seasonal fluctuations in sales volume. This is particularly true for products, like champagne and
sparkling wine, that are associated with end of the year holiday events in some key markets. Seasonal fluctuations mean that our turnover may be highest in the first half of our fiscal year.

Spirits & Wine Competitors

Our Spirits & Wine business competes with other producers and distributors of spirits and wine on a local and international basis. At a local level, the spirits and wine
industry is heavily fragmented. Internationally, we compete with an array of global companies. We list below our principal international competitors and a summary, to the best of our knowledge, of
their main activities in relation to the spirits and wine industry:



The
world wine market is extremely fragmented with the top five corporate producers accounting for just 3.5% of the global wine market. Competition is specific to particular niche price points and
country of origin and there is no single producer with a similar business profile to us. Well known premium wine brand producers include LVMH, Remy Cointreau, BRL Hardy, Southcorp, and the Fosters
Group's wine division Beringer Blass.

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Spirits & Wine Regulation and Taxes

The production of spirits and wine in Europe is subject to various regulations, including the testing of raw materials used and the standards maintained in production
processing, storage, labeling and distribution. In the United States, the spirits and wine business is subject to strict Federal and State government regulations covering virtually every aspect of its
operations, including production, marketing, pricing, labeling, packaging and advertising.

Spirits
and wine are subject to national import and excise duties in many markets around the world. Most countries impose excise duties on distilled spirits, although the form of such taxation varies
significantly from a simple application on units of alcohol by volume to intricate systems based on the imported or wholesale value of the product. Several countries impose additional import duty on
distilled spirits, often discriminating between categories, like Scotch whisky or bourbon, in the rate of such tariffs. Within the European Union, such products are subject to different rates of
excise duty in each country, but within an overall European Union framework that imposes minimum rates of excise duties.

Import
and excise duties can have a significant effect on our sales, both through reducing the overall consumption of alcohol and through encouraging consumer switching into lower-taxed categories of
alcohol. We devote resources to encouraging the equitable taxation treatment of all alcoholic drink categories and to reducing government-imposed barriers to fair trading.

The
advertising, marketing and sale of alcoholic beverages are subject to various restrictions in markets around the world. These range from a complete prohibition of the marketing of alcohol in some
countries to restrictions on the advertising style, media and messages used. A number of countries prohibit or discourage televised advertising for spirits brands, either through regulation or a
voluntary code of practice, while other countries permit televised advertising for spirits brands, but only under careful regulation.

Spirits
and wine are also regulated in distribution. Many countries only permit the sale of alcohol through licensed outlets, both on and off premise. This may vary from government or State operated
monopoly outlets to licensed on premise outlets, such as bars and restaurants, which prevail in much of the western world.

Labeling
of alcoholic drinks is also regulated in many markets, varying from health warning labels to importer identification, alcoholic strength and other consumer information. All alcoholic
beverages sold in the United States must contain warning statements related to the risks of drinking alcoholic beverages. Further requirements for warning statements and any prohibitions on
advertising and marketing could have an adverse impact on our sales.

International
compliance with environmental requirements has not had a material adverse effect on our results of operations, capital expenditures or competitive position.

QSR Description

Our QSR business comprises our US and international food franchising business. The core trading market for the business is the United States with over 6,600 distribution points
nationwide, while the international business operates more than 3,900 additional distribution points. The system is almost exclusively franchised, limiting our required capital investment. Turnover
for the year ended 31 August 2002 was £316 million, principally related to franchise income on total retail sales by our franchisees of £2,869 million, and
trading profit was £78 million.

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The
brands included in our QSR business are:

|LOGO |  | Dunkin' Donuts.    Dunkin' Donuts is one of the world's leading coffee and baked goods chains. During the year ended 31 August 2002, it generated 92% of its total retail
sales from US markets. As at 31 August 2002, Dunkin' Donuts had 5,438 distribution points, of which 3,836 were located in the United States.                
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Baskin-Robbins.    Baskin-Robbins is one of the world's largest ice-cream franchises. During the year ended 31 August 2002, it generated slightly more than half of
its total retail sales from US markets. As at 31 August 2002, Baskin-Robbins had 4,704 distribution points, of which approximately half were in the United States.
|LOGO |  | Togo's.    The Togo's brand was historically a West Coast sandwich chain. As at 31 August 2002, Togo's had 425 distribution points, substantially all of which were
in the United States.                                                                                                                                             

QSR Strategy

The objective of our QSR business is to be a global leader in its industry, known for the quality of its brands, retail offerings and staff. To achieve this objective, we
intend to continue to pursue the following six key strategies:



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QSR Raw Materials

In the United States, a franchisee-owned cooperative manages the purchase, supply and distribution of raw materials and finished products for the Dunkin' Donuts brand. For
Baskin-Robbins, we have a
long-term, cost-plus arrangement with Dean Foods for the supply and distribution of ice cream and related products. International Multi-Foods supplies the Togo's brand.

Internationally,
Dunkin' Donuts is managed through the US system, with some local supply of product where it makes sense either from a financial or a regulatory standpoint. Outside the United States,
Baskin-Robbins is supplied primarily out of our manufacturing plant in Peterborough, Canada, although some local procurement exists, including relationships in Japan and South Korea.

QSR Competitors

The quick service restaurant industry is highly competitive. We believe that the combination of overcapacity and rising real estate and labor costs means that unit economics
have begun to decline.

We
believe our QSR business is strongly positioned to compete in the industry. Currently, we view our key competition as Starbucks, McDonald's, Tricon (which owns Taco Bell, KFC and Pizza Hut), Texas
Pacific Group, Bain Capital Partners and Goldman Sachs Capital Partners (who collectively own Burger King), Wendy's, Subway, Krispy Kreme, Quizno's and Panera Bread.

QSR Regulation

In the United States, we are subject to various Federal, State and local laws affecting our QSR business. Each quick service restaurant must comply with licensing and
regulation by a number of governmental authorities, which include health, sanitation, safety and fire agencies in the State or municipality in which the restaurant is located. In addition, each
operating company must comply with various State laws that regulate the franchisor/franchisee relationship. To date, we have not been significantly affected by any difficulty, delay or failure to
obtain required licenses or approvals.

In
the United States, we are also subject to Federal and State laws governing such matters as employment and pay practices, overtime and working conditions. The QSR restaurants pay the bulk of their
employees on an hourly basis at rates related to the Federal minimum wage. The QSR restaurants are also subject to Federal and State child labor laws which, among other things, prohibit the use of

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certain "hazardous equipment" by employees 18 years of age or younger. We have not to date been materially adversely affected by such laws.

Outside
the United States, the QSR restaurants are subject to national and local laws and regulations which are similar to those affecting the restaurants in the United States, including laws and
regulations concerning labor, health, sanitation and safety. These restaurants are also subject to tariffs and regulations on imported commodities and equipment and laws regulating foreign investment.
International compliance with environmental requirements has not had a material adverse effect on our results of operations, capital expenditures or competitive position.

QSR Property

We own production facilities as well as own or lease buildings for our franchise stores throughout the United States and internationally. The largest of our production
facilities produces Baskin-Robbins branded ice cream and is located in Peterborough, Canada. In the year ended 31 August 2002, it produced 4.1 million gallons of ice cream, and it
has an annual production capacity of 4.5 million gallons. As at 31 August 2002, our properties related to our QSR business had a net book value of £85 million.

Group Environmental Policy

We seek to adopt operating procedures with minimal environmental impact, to prevent or control pollution of the environment and to conserve energy and other natural resources
used in our operations. As a means of achieving these environmental goals, we are implementing ISO 14001, the environmental management standard of the International Organization for Standardization.
The International Organization for Standardization has certified that we have ISO 14001 compliant operating sites in Brazil, Canada, France, Portugal, Spain, the United Kingdom and the United States,
and we intend to increase the number of our ISO 14001 certified operating sites.

Of
the environmental issues that are under our control, the most relevant to us are energy use, water use, emissions to air from processing, discharges to water, solid waste and packaging. Except as
described elsewhere in this annual report, we are not currently aware of any environmental problems or issues that could materially adversely affect our business or results of operations.

Third-Party Ventures

On 15 February 2000, we purchased a 70% interest in two South Korean companies, Jinro Ballantines Company Limited and Jinro Ballantines Import Company Limited, for
£103 million. Jinro Limited, one of South Korea's largest spirits distributors, holds the remaining 30% interest. The first of these companies bottles and distributes the acquired
Imperial whisky brand while the second company imports and distributes brands from our international spirits portfolio.

On
18 January 2002, we entered into a commercial partnership with the Miller Brewing Company to introduce two new flavored malt-based beverages based on our Stolichnaya vodka and
Sauza tequila brands. These new drinks, Stolichnaya Citrona and Sauza Diablo were launched in the Spring of 2002, with the object of reaching a significant number of US
consumers through retail outlets serviced by Miller's nationwide distributor network. Since that time, however, we believe that the results achieved by these beverages have been disappointing to both
parties. To date, the positive impact on our business which we had anticipated would occur as a result of our investment in the development, launch activity and marketing of these beverages has not
occurred. Nonetheless, we currently intend to maintain our presence in the flavored malt beverage market in the US.

We
have entered into a series of arrangements with Suntory Limited, one of Japan's leading producers and distributors of spirits. We have a 50% interest in a Japanese company, Suntory Allied Limited,

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which has the principal rights to distribute our spirit products in Japan for a period up to and including 2029. Suntory Allied Limited is under the management control of Suntory Limited.

Organizational Structure

Allied Domecq PLC is the holding company of the Group. We have over 500 subsidiaries incorporated in over 50 countries. We have a 100% equity interest in all of our significant
subsidiaries. We list those significant subsidiaries as at 31 August 2002 below together with their jurisdiction of incorporation.

|Name                                       |  | Jurisdiction of
incorporation
|------------------------------------------ |  | -----------------------------
|Allied Domecq (Holdings) PLC               |  | England and Wales            
|Allied Domecq Spirits & Wine Holdings PLC  |  | England and Wales            
|Allied Domecq Spirits & Wine Limited       |  | England and Wales            
|Allied Domecq Financial Services PLC       |  | England and Wales            
|Allied Domecq Overseas Limited             |  | England and Wales            
|Allied Domecq Overseas (Canada) Limited    |  | England and Wales            
|Allied Domecq Overseas Holdings Limited    |  | Cayman Islands               
|Allied Domecq Overseas (Europe) Limited    |  | England and Wales            
|Allied Domecq International Holdings B.V.  |  | Netherlands                  
|Allied Domecq Netherlands B.V.             |  | Netherlands                  
|Allied Domecq Luxembourg Holdings S.a.r.l  |  | Luxembourg                   
|Allied Domecq Luxembourg S.a.r.l           |  | Luxembourg                   
|Allied Domecq Canada Limited               |  | Canada                       
|Hiram Walker-Gooderham & Worts Limited     |  | Canada                       
|Allied Domecq North America Corp           |  | United States                
|Allied Domecq Spirits & Wine Americas Inc. |  | United States                
|Allied Domecq Spirits & Wine USA, Inc.     |  | United States                

25

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Item 5. Operating and Financial Review and Prospects

You should read the following commentary together with our selected historical consolidated financial data and our Audited Consolidated Financial Statements and the related
notes contained elsewhere in this annual report. This discussion contains forward-looking statements. Our actual results could differ materially from historical results or those contemplated in the
forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, and include trend information and other factors that could cause actual results to differ
materially, including, but not limited to, those identified in this annual report under the section entitled "Item 3Key InformationRisk Factors".

General

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our Audited Consolidated Financial Statements and
the related Notes appearing elsewhere in this annual report. Our Audited Consolidated Financial Statements have been prepared in accordance with UK GAAP, which differs in certain significant respects
from US GAAP. For a discussion of the principal differences between UK GAAP and US GAAP as they relate to us, and a reconciliation of profit and loss and equity shareholders' funds to US GAAP, see
Note 33 to our Audited Consolidated Financial Statements.

We
are a leading international branded drinks and retailing group. Our business comprises one of the world's largest international spirits and wine groups, our Spirits & Wine business, and a
leading international quick service restaurants group, our QSR business. Our objective is to create shareholder value through the profitable growth of the business. In 1999, we disposed of our UK
Retail business, and since that time we have been strengthening our brand portfolio through acquisitions of spirits and wine producers and brands.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with UK GAAP, which requires us to make certain estimates and assumptions. We believe that, of our significant
accounting policies, the following may involve a higher degree of judgment and complexity:



26

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Factors Affecting Results of Operations

For the period under review, our consolidated results of operations should be considered in light of the following specific factors.

Effect of Recent Acquisitions

Since the disposal of our UK Retail business in 1999, we have completed a number of acquisitions in order to diversify our portfolio and bring other specific benefits to our
business, including building critical mass in key markets and extending our geographic reach into markets with growth potential. We have financed these acquisitions primarily from new bank facilities
and capital market fund raising activities during the period. During the year ended 31 August 2002, our net debt increased by £724 million primarily as a result of
acquisitions.

Since
31 August 2001, we have acquired Kuemmerling GmbH, one of Germany's largest spirit brands, for a cash consideration of £124 million and Bodegas y Bebidas, a leading
Spanish wine producer, for a cash consideration of £164 million. In addition, we made a deferred payment of £231 million associated with our acquisition of
Montana.

On
22 May 2002, we acquired the Malibu brand, a coconut-flavored rum-based spirit, Mumm Cuvée Napa, a Californian sparkling wine business, and associated assets from
Diageo plc. The cash consideration of the acquisition was £586 million on a debt free basis, subject to a working capital adjustment. On 4 March 2002, we completed a private
placement of 39 million new ordinary shares for gross proceeds of approximately £152 million to partially fund the acquisition. We funded the remainder of the acquisition
price through the issuance of EUR600 million bonds due 2009 and £250 million bonds due 2014.

Mexican Excise Rebate

In September 2000, the Mexican Supreme Court ruled in favor of a complaint, brought by a number of spirits companies in Mexico challenging the excise duty regime
applicable to their Mexican operations during 1998 and 1999. The Mexican Supreme Court ruled that the excise tax, which only applied to large companies, was inequitable, and awarded damages to certain
plaintiffs, including us. The Mexican Supreme Court awarded compensation which, by agreement with the Mexican tax authorities in October 2001, is principally received by offset against current and
future duties and taxes.

A
total of £260 million has been received to date (2002: £213 million, 2001: £47 million) and was subject to applicable corporation tax at 35%.
It is anticipated that the remaining recovery will be in the

27

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region of £30 million to £50 million comprising excise duty rebate and related interest and inflation adjustments and will be fully recovered by 31
August 2003. Due to the significant increase in the size of the rebate during the year ended 31 August 2002 and the acceleration in its collection, the rebate was treated as an
exceptional item. As a result, for comparative purposes, the £47 million benefit during the year ended 31 August 2001 was reclassified as an exceptional item.

Pensions

In line with other companies, market and demographic dynamics over recent years have increased the cost of providing pensions. We have absorbed an increased pension profit and
loss charge of £16 million in the year ended 31 August 2002. Whilst many of our pension funds have been able to absorb a significant proportion of recent equity market
underperformance, we anticipate some increase to pension fund charge in the year ending 31 August 2003 and this will be dependent upon the outcome of the triennial valuation of our largest
pension funds by our actuaries to be completed prior to the fiscal year-end. See the section entitled "Risk FactorsThe cost of providing pension and
post-retirement healthcare benefits to eligible former employees is subject to changes in pension fund values and changing demographics, and may have a material adverse effect on our
financial results" and the subsection entitled "Trend InformationNon-operating Items".

Seasonality

We experience some seasonal fluctuations in demand. Retail demand for certain spirits, sparkling wines and champagne, for example, is highest during end of the year holiday
events in certain key markets.

Exchange Rate Fluctuations

We conduct our operations in many countries, and accordingly, a substantial portion of our sales and production costs are denominated in currencies other than Pounds Sterling.
As a result, fluctuations between the Pound Sterling and other major currencies, including the US Dollar and the Euro, may affect our operating results. We have a partial natural hedge against the
impact of foreign exchange fluctuations associated with transactions denominated in Euro.

During
the year ended 31 August 2002, the impact of foreign exchange movements on the translation of profits was adverse compared to the prior year, resulting principally from the depreciation
of the US Dollar in the last two months of the fiscal year. This was partially offset by the strengthening of the
Euro. Since the periods under review, the US Dollar has continued to weaken substantially in comparison with Pounds Sterling and the Euro. We believe that these fluctuations in exchange rates have had
and may continue to have a material adverse effect on our results of operations for the year ended 31 August 2003. For a further discussion of the likely impact on our business of the weakening
of the US Dollar against Pounds Sterling and the Euro, see the section entitled "Risk FactorsOur operations are conducted in many countries and, as a result, fluctuations between the
Pound Sterling and other major currencies may affect our financial results" and the subsection entitled "Trend InformationNon-operating Items".

Our
balance sheet can be significantly affected by currency translation movements. Our policy is to match foreign currency debt in proportion to foreign currency earnings so as to provide a natural
hedge of part of the translation exposure. While we currently hedge certain of these exposures through financial instruments in the form of forward contracts and currency swaps, there can be no
assurance that exchange rate fluctuations in the future will not have a material adverse effect on our results of operations.

28

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Results of Operations

Except where stated, the following discussion on our volume, turnover, gross profit, advertising and promotion and trading profit is based on our continuing activities before
goodwill amortization and exceptional items.

Year ended 31 August 2002 compared with the year ended 31 August 2001

Operating results



Turnover.Turnover was £3,334 million during the year ended 31 August 2002, an increase of
£455 million, or 16%, from the year ended 31 August 2001. This increase reflects increased turnover of our Spirits & Wine business through organic growth and
acquisitions.

Trading profit.Trading profit was £610 million for the year ended 31 August 2002, an increase of
£67 million, or 12%, from the year ended 31 August 2001. As a result of the Mexican excise rebate being treated as an exceptional item during the year ended 31
August 2002, the figures for the year ended 31 August 2001 were reclassified to provide a comparison. The increase in trading profit reflects a 13% increase in our Spirits & Wine
business and an 8% increase in our QSR business. Excluding acquisitions, trading profit increased by 6% as compared to the prior year.



We are an international business and, as a result, fluctuations between the Pound Sterling and other major currencies, particularly the US Dollar and
the Euro, have a substantial impact on our results of operations. In order to provide investors and potential purchasers of our ordinary shares and ADSs with a meaningful discussion of the changes and
trends in our results of operations, we translate the results of the prior period at the weighted average exchange rates of the most recent period. We refer to this translation as "at constant
exchange rates".



The following table sets out financial data from the results of operations of our Spirits & Wine business for the year ended 31 August 2002, and financial data
from the results of operations of our Spirits & Wine business during the year ended 31 August 2001 translated into Pounds Sterling at 2002 constant exchange rates.

|                  |  | Year ended
31 August 2002 |   | Year ended
31 August 2001
at 2002 constant
exchange rates |  
|----------------- |  | ------------------------- | - | --------------------------------------------------------- | -
|
|
|Turnover(1)       |  | 3,018                     |   | 2,504                                                     |  
|Duty              |  | (638                      | ) | (601                                                      | )
|                  |  |                           |   |                                                           |  
|Net turnover      |  | 2,380                     |   | 1,903                                                     |  
|Gross margin      |  | 1,425                     |   | 1,129                                                     |  
|Trading profit(2) |  | 516                       |   | 450                                                       |  

---

Notes:

29

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Volume, turnover and gross margin.We sold 63.5 million nine liter equivalent cases of spirits and
wine during the year ended 31 August 2002 as compared with 50.4 million cases in the prior period, an increase of 26%. This increase principally reflects the impact of recent
acquisitions, primarily Montana and Bodegas y Bebidas. Before acquisitions, year on year volume growth was flat reflecting growth of 2% in our core brands, offset by volume declines in the local
market leaders and other spirits. Our wine region grew volumes by 7% before recent acquisitions.

Net
turnover, excluding excise duty paid by customers on our spirits and wine products, was £2,380 million during the year ended 31 August 2002, an increase of
£477 million, or 25%, as compared with net turnover during the prior period at 2002 constant exchange rates. The increase in net turnover principally reflects acquired businesses'
turnover. Excluding acquisitions, net turnover grew by 7% as a result of pricing and mix improvements.

Gross
margin was £1,425 million during the year ended 31 August 2002, an increase of £296 million, or 26%, as compared with the prior period at 2002
constant exchange rates. This increase principally reflects acquired businesses' and brand gross margin of £152 million including the contribution of Montana, Kuemmerling, Bodegas y
Bebidas and Malibu. Excluding acquisitions, gross margin grew by £144 million, or 13%. Of this £144 million increase, volume increases of
£43 million, primarily in Asia Pacific and Europe, were partially offset by the supply chain re-engineering in the United States, where shipments were below the level of
depletions from our distributors, representing a volume de-stock of £19 million in the supply chain. Price increases, particularly in Latin America, accounted for
£25 million of
gross margin increase. We also benefited from enhanced mix improvements of £86 million in premium wines and champagne, in Asia Pacific and North America, and cost benefits of
£9 million.

Advertising and Promotion.Advertising and promotion investment in our brands for the year ended 31 August 2002 was
£443 million, an increase of 35% as compared to the prior period at 2002 constant exchange rates. Advertising and promotion of our core brands, including Malibu, which represented
28% of our Spirits & Wine portfolio by volume, accounted for 55% of the total expenditure. In particular, there was focused investment in Ballantine's in over 50 markets, Mumm and Perrier
Jouët in the US and UK, Stolichnaya in the US, Imperial whisky in South Korea and the launch of Tia Lusso in nine markets.

Trading profit.Trading profit was £516 million during the year ended 31 August 2002, an increase
of £66 million, or 15%, as compared to the prior period at 2002 constant exchange rates. The increase in trading profit principally reflects the impact of acquisitions during the
period. Excluding acquisitions, trading profit increased by 3%, reflecting increased pricing and enhanced mix, partially offset by lower sales volumes in Latin America.

Trading profit by sales region.Our Spirits & Wine business is a marketing-led business where resource
allocation decisions with respect to brands are made on a global basis. However, as these decisions are executed within key markets, we believe it is appropriate to additionally disclose the trading
profit of our Spirits & Wine business on a regional basis. During the year ended 31 August 2002, we have presented our premium wine business separately within the regional review. Our
Wine region includes Bodegas y Bebidas, Montana, Mumm and Perrier Jouët champagnes and our enlarged US wine business, including Buena Vista® and Mumm Cuvée
Napa. The following table sets out for each of our sales regions the trading profit of our Spirits & Wine for the year ended 31 August 2002,

30

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and trading profit of our Spirits & Wine business during the year ended 31 August 2001 at 2002 constant exchange rates.

|              |       | Year ended
31 August 2002 |     | Year ended
31 August 2001
at 2002 constant
exchange rates(1)
|------------- | ----- | ------------------------- | --- | ------------------------------------------------------------
|
|
|Europe        |       | 160                       |     | 152                                                         
|North America |       | 169                       |     | 158                                                         
|Latin America |       | 61                        |     | 43                                                          
|Asia Pacific  |       | 66                        |     | 55                                                          
|Wine region   |       | 68                        |     | 26                                                          
|Other(2)      |       | (8                        | )   | 16                                                          
|              |       |                           |     |                                                             
|              | Total |                           | 516 |                                                             
|              |       |                           |     |                                                             

---

Notes:

Europe.Trading profit in Europe was £160 million during the year ended 31
August 2002, an increase of £8 million, or 5%, as compared with the prior period at 2002 constant exchange rates. Trading profit
before acquisitions decreased by 4% as a result of an 11% increase in advertising and promotion costs on a 6% increase in net turnover. This increased advertising and promotion investment principally
reflects the "Go play" campaign for Ballantine's and the launch of Tia Lusso. Spain achieved further market share gains for Ballantine's and Beefeater,
which grew volumes by 3% and 9% respectively. Centenario consolidated its position as category leader with a 12% increase in volumes and a 14% increase in net turnover. Advertising and promotion was
increased in Spain behind Ballantine's, Beefeater, Whisky DYC and Malibu. The increase in excise duty in Spain in January slowed first half volume growth with core brands up 3%, which recovered to 8%
growth in the second half. The UK business benefited from a good Christmas and strong performances for Teacher's, Courvoisier and Tia Maria. Courvoisier gained market share to become the number one
selling cognac brand in the UK.

North America.Trading profit in North America was £169 million during the year ended 31 August
2002, an increase of £11 million, or 7%, as compared with the prior period at 2002 constant exchange rates. The increase was driven primarily by the contribution from our
acquisitions, including a full year contribution from Stolichnaya, and mix improvements. Before acquisitions, net turnover grew by 4% on volume increases of 1% leading to an increase in trading profit
of 1%. The supply chain re-engineering project that we announced in October 2001 reduced wholesaler and retailer inventories in the US with a negative impact on trading profit of
£19 million in the total US business, of which £2 million related to the Wine region. Excluding the impact of this destock, organic trading profit grew 12%. The
destock resulted in a reduction in shipments compared with depletions of 0.5 million cases and primarily affected Kahlúa, Beefeater, Canadian Club, Hiram Walker Liqueurs and
Californian wine. Courvoisier, Maker's Mark and Sauza all grew market share during the year, whilst Kahlúa, Canadian Club and Beefeater were held back by the impact of the US destock
and by the slower trading experienced at the beginning of the fiscal year. We have also refined pricing by brand and by State, improved communications within the business, reviewed our deployment of
our sales forces and

31

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re-aligned our advertising and promotion spend to improve its effectiveness. This has been achieved as part of our implementation of a new five-year country strategy.
Significant management changes were made including the appointment of a new regional president.

Latin America.Trading profit in Latin America was £61 million during the year ended 31 August
2002, an increase of £18 million, or 42%, as compared with the prior period at 2002 constant exchange rates. This improvement was driven by reduced production costs and the success
of the "Yo brandy" promotion for our Mexican brandies that helped to grow their net turnover by 7% and net brand contribution by 34% in spite of falling
volumes. Sauza volumes in the region grew 14%, benefiting from our ongoing careful management of the supply of the key raw material, agave, and the production of tequila. The region also benefited
from cost savings in production during the period. Advertising and promotion for the region increased by 27% particularly behind Sauza, Ballantine's and the introduction of a high energy
ready-to-drink product, "Spirit®".

Asia Pacific.Trading profit in Asia Pacific was £66 million during the year ended 31 August 2002,
an increase of £11 million, or 20%, as compared with the prior period at 2002 constant exchange rates. The profit growth was driven by good performances across the region,
particularly in South Korea, and was achieved after a 57% increase in advertising and promotion investment principally behind Ballantine's and Imperial. Our South Korean business, Jinro Ballantines,
continues to show strong growth. Imperial, South Korea's number one premium whisky, and Ballantine's have been the key drivers of this growth
in the region with volumes up 19% and 23% respectively. Fundador® continued to perform well in the Philippines with volumes up 15% and net turnover growth of 12%, helped particularly by
Fundador Solera®. Australia and New Zealand also reported strong results particularly with Kahlúa and RTDs.

Wine region.Trading profit of our Wine region was £68 million on premium wine volumes of
12.9 million cases, which was in line with our plans. This includes the adverse impact of the US destock of £2 million. Montana's trading profit grew by 35% in spite of a
year of significant change and a poor New Zealand North Island harvest in 2001. This growth was achieved from both domestic and export sales. Bodegas y Bebidas continued its mix shift towards premium
wine with a 7% growth in net brand contribution on volumes down 10%. Including the impact of the destock, our US premium wine business is holding volumes in a tougher market as it benefits from the
strength of well recognised brands like Clos du Bois. Mumm Cuvée Napa was added to our US business in May 2002. Mumm and Perrier Jouët champagnes showed
significant growth during the year growing share in key markets. We addressed the excess stocks following the millennium whilst maintaining premium price positions.

Other.The sale of bulk spirits and wine, stand-alone Duty Free operations and central items not allocated to sales regions
resulted in a trading loss of £8 million, a £24 million adverse year-on-year movement at 2002 constant exchange rates. This reflects
increased pension costs, where we have absorbed a profit and loss account charge of £16 million in the current year, and higher levels of investment in central advertising and
promotion in areas such as consumer segmentation research and new product development including Stolichnaya Citrona and Sauza Diablo.



Turnover on our QSR business was £316 million during the year ended 31 August 2002, an increase of £15 million, or 5%, as compared
with turnover during the prior period at 2002 constant exchange rates. Trading profit was £78 million during the year ended 31 August 2002, an increase of
£8 million, or 11%, as compared to the prior period at 2002 constant exchange rates. Profit growth in our QSR business was driven by growth in same store sales and the contribution
from new stores. Stores that are included in the comparison of "same store sales" include those that had been open and operating for at least two fiscal years during all of the two years being
compared. Dunkin' Donuts delivered another good year of growth with systemwide sales up by 10% and same store sales up 6% in the US. The

32

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brand also achieved a 4% increase in distribution points. The restructuring of the Baskin-Robbins franchise arrangements continued to grow systemwide sales by 6% and US same store sales by 2%. Togo's
successfully increased the number of distribution points by 10% to grow systemwide sales by 1%. Our strategy of multibranded combination stores continued to be a driver of growth in new store
openings. Combination stores grew by 31% during the year to over 800 at the year end.



Finance charges during the year ended 31 August 2002 increased by £40 million to £130 million relating principally to the
corresponding increase in borrowings from £1,854 million to £2,578 million to finance our acquisitions.



Goodwill amortization totaled £38 million during the year ended 31 August 2002, an increase of £26 million compared with the prior
period, primarily reflecting the acquisitions of Mumm and Perrier Jouët champagnes and Montana. Exceptional items during the year included a receipt of £213 million
relating to the Mexican excise award, which due to its size has been treated as exceptional operating income. In response to the receipt of this cash, we have undertaken to invest approximately
£11 million on social and community projects in Mexico. Other exceptional costs included £14 million associated with the closure of the Dumbarton distillery
resulting from our review of distillery strategy; £23 million for the costs associated with the planned termination of a land lease in California; and £36 million
for our acquisition integration program.



Profit before taxation, goodwill and exceptional items during the year ended 31 August 2002 increased by £27 million, or 6%, as compared with the
prior period.



Excluding tax on goodwill and exceptional items, the effective tax rate for the year has remained in line with last year's rate of 25%. Financial Reporting Standard
No. 19Deferred Tax was adopted during the year ended 31 August 2002 resulting in a £53 million balance sheet adjustment at both 31 August 2001 and
31 August 2000. The overall tax rate for the year ended 31 August 2001 did not change as a result of the adoption of this standard. The tax charge for the year ended 31
August 2002 contains a credit of £10 million due to an adjustment to the estimated recoverable amount of a deferred tax asset in respect of tax losses arising in prior
periods.

Year ended 31 August 2001 compared with the year ended 31 August 2000

Operating Results



Turnover.Turnover was £2,879 million during the year ended 31 August 2001, an increase of
£277 million, or 11%, from the year ended 31 August 2000. This increase reflects increased turnover of our Spirits & Wine business, principally driven by acquisitions
during the period, as well as the favorable effects of currency exchange rates, principally the strength of the US Dollar during the period.

Trading profit.Trading profit was £543 million for the year ended 31 August 2001, an increase of
£56 million, or 11%, from the year ended 31 August 2000. Excluding acquisitions, trading profit increased by 6% as compared to the prior period. This increase reflects a 4%
increase in trading profit

33

---

on our Spirits & Wine business, where pricing gains were partially offset by volume declines, particularly in Latin America, and a 6% increase in trading profit on our QSR business.



We are an international business, and, as a result, fluctuations between the Pound Sterling and other major currencies, particularly the US Dollar and
Euro, can have a substantial impact on our results of operations. In order to provide investors and potential purchasers of our ordinary shares and ADSs with a meaningful discussion of the changes and
trends in our results of operations, we translate the results of the prior period at the weighted average rates of the most recent period. We refer to this translation as "at constant exchange
rates".



The following table sets out financial data from the results of operations of our Spirits & Wine business for the year ended 31 August 2001, and financial data
from the results of operations of our Spirits & Wine business during the year ended 31 August 2000 translated into Pound Sterling at 2001 constant exchange rates.

|                  |  | Year ended
31 August 2001 |   | Year ended
31 August 2000
at 2001 constant
exchange rates |  
|----------------- |  | ------------------------- | - | --------------------------------------------------------- | -
|
|
|Turnover(1)       |  | 2,571                     |   | 2,372                                                     |  
|Duty              |  | (605                      | ) | (558                                                      | )
|                  |  |                           |   |                                                           |  
|Net turnover      |  | 1,966                     |   | 1,814                                                     |  
|Gross margin      |  | 1,146                     |   | 1,068                                                     |  
|Trading profit(2) |  | 458                       |   | 423                                                       |  

---

Notes:

Volume, turnover and gross margin.We sold 50.4 million nine liter equivalent cases of spirits and
wine during the year ended 31 August 2001 as compared with 50.8 million cases in the prior period, a decrease of 1%. This decrease was principally the result of higher excise duty levels
in Mexico, which particularly affected sales of brandies. Sales of Sauza were held back by the industry shortage of agave, the main ingredient in tequila. In addition, the implementation of price
increases and the withdrawal of unprofitable promotional activity in the United States slowed volume growth of certain brands.

Net
turnover, excluding excise duty paid by customers on our spirits and wine products, was £1,966 million during the year ended 31 August 2001, an increase of
£152 million, or 8%, as compared with net turnover during the prior period at 2001 constant exchange rates.

Gross
margin was £1,146 million during the year ended 31 August 2001, an increase of £78 million, or 7%, as compared with the prior period at 2001 constant
exchange rates. This increase principally reflects acquired businesses' gross margin of £59 million including the contribution of Stolichnaya vodka, Mumm champagne and Imperial
whisky. Excluding acquisitions, gross margin grew by £19 million, or 2%. Of this £19 million increase, price increases of £41 million, or 4%,
were partially offset by cost increases of £11 million and volume declines of £11 million. The impact on gross margin due to volume and cost arose largely as a
result of the continued industry-wide shortage of the raw

34

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material agave, the impact of higher excise duties in Mexico and the supply chain re-engineering in the United States, where shipments were below the level of depletions from our
distributors, representing a volume de-stock of £5 million in the supply chain.

Advertising and Promotion.Advertising and promotion investment in our brands for the year ended 31 August 2001 was
£330 million, an increase of 7% as compared to the prior period at 2001 constant exchange rates. Advertising and promotion of our core brands, which represented 34% of our
Spirits & Wine portfolio by volume, accounted for 61% of the total expenditure. In particular, advertising and promotional expenditure focused on the promotion of Beefeater, Courvoisier, Whisky
DYC and Maker's Mark, along with investment behind acquired brands, notably the acquisition of the Stolichnaya distribution rights in the United States.

Trading Profit.Trading profit was £458 million during the year ended 31 August 2001, an increase
of £35 million, or 8%, as compared to the prior period at 2001 constant exchange rates.

Trading profit by sales region.Our Spirits & Wine business is a marketing-led business where resource
allocation decisions with respect to brands are made on a global basis. However, as these decisions are
executed within key markets, we believe it is appropriate to additionally disclose the trading profit of our Spirits & Wine business on a regional basis. The following table sets out for each
of our sales regions the trading profit of our Spirits & Wine for the year ended 31 August 2001, and trading profit of our Spirits & Wine business during the year ended
31 August 2000 at 2001 constant exchange rates.

|              |       | Year ended
31 August 2001 |     | Year ended
31 August 2000
at 2001 constant
exchange rates
|------------- | ----- | ------------------------- | --- | ---------------------------------------------------------
|
|
|Europe        |       | 142                       |     | 125                                                      
|North America |       | 185                       |     | 163                                                      
|Latin America |       | 46                        |     | 66                                                       
|Asia Pacific  |       | 59                        |     | 33                                                       
|Other(1)      |       | 26                        |     | 36                                                       
|              |       |                           |     |                                                          
|              | Total |                           | 458 |                                                          
|              |       |                           |     |                                                          

---

Note:

Europe.Trading profit in Europe was £142 million during the year ended
31 August 2001, an increase of £17 million, or 14%, as compared with the prior period at 2001 constant exchange rates. The increase of trading profit principally
reflects increased profits in Spain, where volumes of Ballantine's and Beefeater continued to grow partially offset by a decline of volumes of Whisky DYC.

North America.Trading profit in North America was £185 million during the year ended 31 August
2001, an increase of £22 million, or 14%, as compared with the prior period at 2001 constant exchange rates. The increase reflects profit growth in both the US and Canadian
businesses. We achieved the US growth by price and mix improvements within our portfolio of core brands, particularly Kahlúa, Maker's Mark and Sauza along with a strong initial
performance from the Stolichnaya brand, partially offset by the impact of a full year of increased agave costs on Sauza tequila as a result of continued shortages of that crop. Advertising and
promotion in North America increased by 6% in the period.

35

---

Latin America.Trading profit in Latin America was £46 million during the year ended 31 August
2001, a decline of £20 million, or 30%, as compared with the prior period at 2001 constant exchange rates. The decrease in trading profit reflects a decline in the volumes of
Mexican brandies which suffered volume declines as a result of increases in excise duty while Sauza suffered volume declines as a result of the shortage of agave.

Asia Pacific.Trading profit in Asia Pacific was £59 million during the year ended
31 August 2001, an increase of £26 million, or 79%, as compared with the prior period at 2001 constant exchange rates. This increase principally reflects the success
of our Jinro Ballantines venture. Imperial whisky, one of South Korea's leading whiskies, and Ballantine's have both grown strongly in the year supported by increased advertising and promotion. The
increase in trading profit is also supported by Duty Free sales, reflecting improved results of Ballantine's super-premium aged range in this channel of sale. Japan has also benefited from growth of
aged Ballantine's in Duty Free, improved net pricing and from the launch of Kahlúa and Beefeater ready-to-drink formats. Good growth in the Philippines and
Taiwan was driven by a 12% volume growth in Fundador brandy and improved advertising and promotion effectiveness in Taiwan.

Other.Trading profit on the sale of bulk spirits and wine, stand-alone Duty Free operations and central items not allocated
to sales regions resulted in a £10 million year-on-year movement at 2001 constant exchange rates. Other also includes a net pension credit of
£26 million in the year ended 31 August 2001 compared with a net credit of £10 million for the year ended 31 August 2000. The net pension
credit is recorded as part of staff costs within the profit and loss account. Under UK GAAP the pension prepayment is compared with the actuarial pension surplus each year and the difference is
amortized over the expected lifetime of the relevant employees. The increase in the net pension credit between 2000 and 2001 reflected the change in the valuation of the pension schemes between the
two periods.



Turnover on our QSR business was £308 million during the year ended 31 August 2001, a decrease of £24 million, or 7%, as
compared with turnover during the prior period at 2001 constant exchange rates. This decrease principally reflected the change in the results of Baskin-Robbins as it moved from generating revenue and
margin from the manufacture of ice cream to generating revenue from franchise royalties. Trading profit was £72 million during the year ended 31 August 2001, an
increase of £4 million, or 6%, as compared to the prior period at 2001 constant exchange rates. This increase resulted from growth in same store sales, profit growth from the
international business and the contribution from new stores, which was partially offset by the re-positioning of Baskin-Robbins where new franchise royalties did not exceed the loss of
margins on ice cream manufacture and a reduction in Baskin-Robbins profits as a result of additional raw material cost. Stores that are included in the comparison of "same store sales" include those
that had been open and operating for at least two fiscal years during all of the two years being compared.



Finance charges during the year ended 31 August 2001 increased by £7 million to £90 million relating principally to the
corresponding increase in borrowings from £1,252 million to £1,854 million to finance our acquisitions.



Goodwill amortization totaled £12 million during the year ended 31 August 2001, an increase of £9 million compared with the
prior period, reflecting further acquisitions during the period. Exceptional items during the year ended 31 August 2001 totaled a credit of £44 million; being aborted
acquisition

36

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costs (£4 million), the provision for surplus properties (£4 million) and costs associated with the introduction of the Euro (£1 million),
offset by profit on disposal of businesses (£6 million) and the exceptional benefit from the Mexican excise rebate (£47 million).



Profit before taxation, goodwill and exceptional items during the year ended 31 August 2001 increased by £36 million, or 9%, as compared with
the prior period.



As explained within the Accounting Policies section of our Audited Consolidated Financial Statements, we adopted Financial Reporting Standard No. 19Deferred
Tax in the year ended 31 August 2002, which resulted in the restatement of the financial statements of prior periods. Prior to this restatement, excluding tax on goodwill and exceptional
items, the effective tax rate decreased from 26% to 25% in the year to 31 August 2001. After restatement, the effective tax rates were 22.8% for the year to 31 August 2000
and 25% for the year to 31 August 2001.

Liquidity and Capital Resources

Cash Flow

The primary sources of our liquidity over the last three years ended 31 August 2002 have been cash generated from operations. Our results of operations are
subject to risks and uncertainties. The following discussion should be read in conjunction with "Item 3Key InformationRisk Factors". A portion of these funds has been used to
fund acquisitions and to pay interest, dividends and taxes.

Year ended 31 August 2002 compared with the year ended 31 August 2001

Net cash inflow from operating activities was £760 million during the year ended 31 August 2002, an increase of
£337 million, or 80%, as compared with the prior period. This increase reflects increased operating profit, net of non-cash items and is partially offset by an increase of
£22 million in stocks as a result of acquisitions during the year, as well as an increase in exceptional operating costs resulting from our acquisition integration program,
termination of a land lease, asset write downs and spend on social and community projects in Mexico. We benefited from the receipt of £213 million, resulting from the Mexican excise
rebate, which is included within the operating profit of £686 million.

Cash
outflow before use of liquid resources and financing was £971 million during the year ended 31 August 2002 as compared with £594 million during the
prior period. The increases in cash outflow included cash paid for acquisitions as well as the amount of interest and taxation paid. In the year ended 31 August 2002, we spent
£586 million in cash for acquisitions, of which £550 million related to the purchase of those businesses and £36 million related to debt
acquired with the businesses. The £586 million is comprised of £125 million for Kuemmerling, £199 million for Bodegas y Bebidas,
£31 million for Mumm Cuvée Napa and £231 million for Montana being the deferred purchase consideration, which was paid in September 2001.
Capital expenditure net of asset disposal proceeds and financial investment in the year ended 31 August 2002 was £712 million compared to
£118 million in the prior period, principally because we paid £556 million in relation to the purchase of intangible fixed assets, of which
£555 million was for the Malibu brand, during the year ended 31 August 2002. In the year ended 31 August 2002, we paid £133 million in
ordinary dividends, being the final dividend for the year ended 31 August 2001 and the interim dividend for the year ended 31 August 2002. This is compared to our dividend payments of
£163 million in the year ended 31 August 2001, being the interim and final dividends for the year ended 31 August 2000 and the interim dividend for the year ended 31
August 2001. We paid £178 million in taxes during the year ended 31 August 2002, an

37

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increase of £144 million from the year ended 31 August 2001, of which £75 million related to corporation tax paid in respect of the Mexican excise
rebate.

Year ended 31 August 2001 compared with the year ended 31 August 2000

Net cash inflow from operating activities was £423 million during the year ended 31 August 2001, an increase of £51 million
as compared with the prior period. This increase reflects increased operating profit, net of non-cash items and is partially offset by an increase of £29 million in stocks as a
result of acquisitions during the year, as well as a decrease in payments to creditors of £43 million. We benefited from the receipt of £47 million, resulting
from the Mexican excise rebate, which is included within the operating profit of £547 million.

Cash
outflow before use of liquid resources and financing was £594 million during the year ended 31 August 2001 as compared with a cash inflow of
£92 million during the prior period. The primary causes of this cash outflow were increases in cash paid for acquisitions as well as the amount of dividends and taxes paid. In the
year ended 31 August 2001, we spent £635 million in cash for acquisitions of which £442 million related to the purchase of those businesses and
£193 million related to debt acquired with the businesses. The £635 million is comprised of £364 million for Mumm and Perrier
Jouët champagnes, £180 million for Montana wines (with the balance of the total price being paid in September 2001) and £91 million for
Graffigna, Sainte Sylvie® and Buena Vista wines. Capital expenditure net of asset disposal proceeds and financial investment in the year ended 31 August 2001 was
£118 million compared to £11 million in the prior period. The net capital expenditure in the year ended 31 August 2000 reflected receipt of
£115 million in relation to tangible fixed assets, which included surplus properties of £94 million. In addition, we paid £23 million in
relation to the purchase of intangible fixed assets during the year ended 31 August 2001. In the year ended 31 August 2001, we paid £163 million in ordinary
dividends, as compared to the payment of no ordinary dividends in the year ended 31 August 2000. We paid £34 million in taxes during the year ended
31 August 2001, an increase of £55 million from the year ended
31 August 2000. The primary cause of this increase was the receipt in the year ended 31 August 2000 of a £78 million advance corporation tax refund.

Borrowings

We target a minimum headroom cover, being committed facilities above anticipated peak debt requirements, of at least £300 million. Where possible, we spread
our borrowing facilities over a number of years to minimize the risks and disruption associated with renegotiating maturing facilities. In addition, it is our policy to maintain backup facilities with
relationship banks to support commercial paper obligations.

At
31 August 2002, our borrowings of £2,747 million were comprised of £1,031 million of short-term debt and
£1,716 million of long-term debt. Net of cash of £169 million, our net debt was £2,578 million as at 31 August 2002.
Of this net debt, 46% was denominated in US Dollars, 14% in Pounds Sterling, 28% in Euros and 12% in other currencies. The effective interest rate payable for the year ended 31 August 2002,
based on average net debt was 5.6%. On 29 May 2002, we issued EUR600 million (£384 million) bonds due 2009 and £250 million bonds due 2014 to
finance our acquisition of the Malibu brand and Mumm Cuvée Napa from Diageo plc.

At
31 August 2001, our borrowings of £1,965 million were comprised of £825 million of short-term debt and
£1,140 million of long-term debt. Net of cash of £111 million, our net debt was £1,854 million as at 31 August 2001.
Of this net debt, 43% was denominated in US Dollars, 7% in Pounds Sterling, 31% in Euros and 19% in other currencies. The effective interest rate payable for the year ended 31 August 2001,
based on average net debt, was 5.4%.

At
31 August 2000, our borrowings of £1,364 million were comprised of £1,206 million of short-term debt and
£158 million of long-term debt. Net of cash of £112 million, our net debt was £1,252 million

38

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as at 31 August 2000. Of this net debt, 37% was denominated in US Dollars, 3% in Pounds Sterling, 44% in Euros and 16% in other currencies. The effective interest rate payable for the
year ended 31 August 2000, based on average net debt, was 5.0%.

Of
the total borrowings at 31 August 2002, £1,069 million were due after five years and £971 million were due within one year.

The
£724 million increase in net borrowings in the year ended 31 August 2002 primarily reflects the acquisitions of Kuemmerling, Bodegas y Bebidas and the Malibu
brand. The £602 million increase in net
borrowings to 31 August 2001 from 31 August 2000 primarily reflects the acquisitions of Mumm Perrier Jouët champagnes, Buena Vista, Graffigna and Sainte
Sylvie wines.

In
March 2001, we increased the existing $2 billion Global Medium-Term Note Program to $3 billion. Amounts drawn down under the program as at
31 August 2002 were £1,734 million.

At
31 August 2002, we had available undrawn committed bank facilities of £1,606 million, as compared with £1,358 million at 31 August 2001
and £1,215 million at 31 August 2000. Of the facilities, £580 million expire in the period up to 31 August 2003 and
£1,026 million expire in the period up to 31 August 2006.

Commitment
fees are paid on the undrawn portion of these facilities. Borrowings under these facilities are at prevailing LIBOR rates plus an agreed margin, which is dependent on the period of
draw-down. We can use these facilities for general corporate purposes and, together with cash and cash equivalents, support our commercial paper programs. Most of the committed bank
facilities are subject to a minimum interest cover ratio (defined as the ratio of UK GAAP trading profit to net interest; trading profit being the profit on ordinary activities before taking into
account exceptional items charged to operating profit and profits on the sale of property and net interest) of 3 times and a leverage ratio of 4 times, which we define as borrowings over EBITDA
(earnings before interest, tax, depreciation and amortization). Where this ratio exceeds 4, but is less than 4.75, a temporary pricing grid will come into force for up to two consecutive reporting
dates, including half-year reports. There are other financial covenants under the NZ Dollar 225 million revolving credit facility that is secured by the assets of Montana Group (NZ)
Limited.

We
believe our existing cash balances and our undrawn committed bank facilities will be sufficient to meet our cash requirements as they fall due. Our future capital requirements will depend on many
factors, including the timing of any acquisitions we might make, the cost of raw materials and the rate at which our turnover and associated working capital requirements grow. We cannot assure you
that additional equity or debt financing will be available to us on acceptable terms or at all. In addition, we are subject to certain debt covenants on borrowings including compliance with leverage
ratio and interest coverage ratio requirements. Although we believe that we comply with all covenants and will continue to do so, we cannot assure you that this will be the case.

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Contractual commitments

The following table sets out our contractual obligations as at 31 August 2002.

|                                      |  | Payments due by period |  
|------------------------------------- |  | ---------------------- | -
|
|
|
|Borrowings                            |  | 2,747                  |  
|Operating leases                      |  | 313                    |  
|Other contractual obligations(1)      |  | 50                     |  
|                                      |  |                        |  
|Gross contractual obligations         |  | 3,110                  |  
|Sublease income from operating leases |  | (231                   | )
|                                      |  |                        |  
|Net contractual obligations           |  | 2,879                  |  
|                                      |  |                        |  

---

Note:

We also have contracted various suppliers to supply to us in the future certain raw materials, principally grapes, grain, coffee and glass. This enables us to
guarantee a portion of our future raw material requirements and more accurately predict our longer term costs. We expect our future operating cash flows will be sufficient to meet these contractual
commitments, none of which are unconditional.

Going Concern

Our Board of Directors, having made appropriate inquiries, consider that we have adequate resources to continue in operational existence for the foreseeable future, and that,
as a result, it is appropriate to adopt the going concern basis in preparing the Audited Consolidated Financial Statements.

Research and Development, Patents and Licenses, etc.

The overall nature of our business does not demand substantial expenditure on research and development. We do not hold any material licenses to use third-party trademarks. As
discussed in the section entitled "Item 4Information on the Company", we hold the Stolichnaya trademark in the United States.

Inflation

Inflation had no material impact on our operations during the three years ended 31 August 2002.

Trend Information

The Group issued the following trading statement on 4 February 2003:

"At
its Annual General Meeting in London, Allied Domecq PLC announced that the company continues to make good progress. This has been achieved through the implementation of its consistent strategy to
deliver growth of its core brands and earnings at constant foreign exchange rates.

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Allied
Domecq has delivered consistent earnings growth over the last six half years. The significant improvements in trading performance will result in the maintenance of full year earnings in line
with last year, despite the significant impact of pensions and foreign exchange translation.

Operating Performance

On a geographical basis, the US spirits business experienced broad growth across its brand portfolio building on the progress made last year. Latin America and Asia Pacific
both maintained a strong momentum. The strong growth in these regions was in part offset by Europe, which fell short of plan due to a destock of inventories by Spanish wholesalers in the last quarter
of 2002 that has impacted the whole industry. We currently estimate that this destock will lower profits in Spain by some £25 million and believe that the impact will be reflected
in the results of the first half year. Despite this destock the underlying business in Spain continues to perform well and Allied Domecq has increased its market share of the important whisky and gin
categories in a market that continues to grow. Our leading whisky brand, Ballantine's, gained market share in the critical Christmas period in Spain, France, Italy, Germany and Portugal.

Despite
a more challenging trading environment in some markets, our global premium wine business is on plan and making strong progress towards its targeted growth and returns. The Allied Domecq Quick
Service Restaurant business is maintaining good sales and profit growth and is on plan to maintain the momentum of 2002.

Non-operating Items

Trading at constant exchange rates for the first four months has been in line with expectations. At the time of our final results in October 2002 we announced that
foreign exchange movements would have an estimated negative impact on the translation of overseas earnings of approximately £20 million. Adverse movements in foreign exchange rates
since then, driven primarily by the weakness of the US dollar, suggest a full year impact of £40 million. We also estimated in October that there would be a further profit
and loss accounting charge of at least £16 million for fiscal year 2003 relating to pensions. Since that time, there has been a further significant decline in equity markets. The
scheduled SSAP24 triennial valuation of our largest pension funds will be complete prior to our year end and will determine the actual charge to our profit and loss account. Given current market
conditions, the forecast profit and loss accounting charge would be approximately £40 million, compared with a credit of £3 million in 2002. These current
assumptions are dependent on the movement of capital and foreign exchange markets during the coming months."

Commenting,
Philip Bowman Chief Executive of Allied Domecq PLC, said:

"The
business is performing well, in spite of challenging conditions, and is meeting our expectations. Stronger than anticipated growth in the US, Asia Pacific and Latin America has offset the
industry destock in Spain. Our underlying European business remains strong, with increases in market share in critical categories. Our premium wine and quick service restaurant businesses are on plan
in delivering good growth. We are absorbing the impact of significant external factors affecting pensions and the translation of overseas earnings and continue to deliver strong underlying growth in
earnings."

Recent Accounting Standards

The UK Accounting Standards Board has issued recent Financial Reporting Standards. We comply with these standards to the extent detailed below



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Reconciliation to US GAAP

Our Audited Consolidated Financial Statements have been prepared in accordance with UK GAAP, which differs in certain respects from US GAAP. The significant differences between
UK GAAP and US GAAP as they relate to our net income are summarized below.

|                                                 |  | Year ended 31 August |  
|------------------------------------------------ |  | -------------------- | -
|
|
|
|Net income in accordance with UK GAAP            |  | 392                  |  
|Adjustments to conform to US GAAP:               |  |                      |  
|Brands                                           |  |                     |  
|Goodwill                                         |  | 38                   |  
|Other intangible assets                          |  | (4                   | )
|Stock                                            |  | (66                  | )
|Disposal of UK Retail business                   |  |                     |  
|Restructuring costs                              |  | 4                    |  
|Pension costs and other post retirement benefits |  | 28                   |  
|Share compensation                               |  |                     |  
|Derivative instruments                           |  | 90                   |  
|Mexican excise rebate                            |  | (54                  | )
|Franchise income                                 |  | (9                   | )
|Deferred taxation                                |  | (12                  | )
|Other                                            |  | (1                   | )
|                                                 |  |                      |  
|Net income in accordance with US GAAP            |  | 406                  |  
|                                                 |  |                      |  
|Continuing operations                            |  | 406                  |  
|Discontinued operations                          |  |                     |  

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Brands, goodwill and other intangible assets

Under UK GAAP, goodwill arising on acquisitions of a business since 1 September 1998 is capitalized and amortized by equal installments over its anticipated
useful life, but not exceeding 20 years. Goodwill arising on acquisitions prior to 1 September 1998 was charged directly to reserves. On disposal of a business, any attributable
goodwill previously eliminated against reserves is included in the calculation of any gain or loss. Other purchased intangible assets are capitalized and amortized over their estimated useful economic
lives on a straight-line basis. Where purchased intangible assets, such as brands, are regarded as having indefinite useful economic lives, they are not amortized but are subject to annual impairment
reviews.

Under
US GAAP, prior to the adoption of Statement of Financial Accounting Standards (SFAS) No. 141Business Combinations and SFAS No. 142Goodwill and Other
Intangible Assets, goodwill and
other intangible assets arising on acquisition were capitalized and amortized over their estimated useful economic lives, but not exceeding 40 years. Consistent with the effective dates
specified in the standards, we adopted the provisions of SFAS No. 141 as at 1 July 2001, and SFAS No. 142 as at 1 September 2002. Goodwill and intangible
assets determined to have an indefinite useful life acquired in a purchase business combination are no longer amortized and are subjected to annual impairment testing. Upon adoption of SFAS
No. 142 the accumulated amortization for brands and goodwill was £356 million and £180 million respectively. Accordingly, net income no longer includes
amortization of brands, and goodwill amortization recognized under UK GAAP is reversed.

The
amount of goodwill under UK GAAP differs to that under US GAAP due to the fair values allocated under US GAAP to intangible assets (including significant brands), stock and the exclusion
from the purchase price consideration of certain costs.

Stocks

The principal difference between UK GAAP and US GAAP relates to the fair valuation of stock acquired in a business combination. The fair value of acquired stock under UK GAAP
is determined as the lower of replacement cost and net realizable value whereas under US GAAP, acquired stock is determined as the selling price less costs to complete, costs of disposal and a
reasonable element of profit for the selling effort by the acquiring company. A significant proportion of the GAAP difference relates to maturing stock, which will be released over a number of years
when it is sold to third parties.

Disposal of UK Retail business

On 6 September 1999, we disposed of our UK Retail business. Under UK GAAP, this disposal was accounted for as a reduction of shareholders' funds as a direct distribution
to our shareholders.

Under
US GAAP, this transaction is accounted for as the sale of a business to a third party with an immediate distribution of proceeds to our shareholders. Accordingly, under US GAAP, this transaction
results in a gain on sale followed by a dividend of proceeds.

The
amount of the gain on disposal under US GAAP is based on the US GAAP net assets of the UK Retail business at the disposal date. The principal differences between UK GAAP and US GAAP net assets
relate to the revaluation of land and buildings under UK GAAP which would not be permissible under US GAAP (£958 million), depreciation of assets under US GAAP that were carried at
fair value under UK GAAP (£7 million) and a US GAAP adjustment to record deferred taxes (£24 million).

Restructuring costs

Under UK GAAP, provisions are made for restructuring costs once a detailed formal plan is in place and valid expectations have been raised in those affected that the
restructuring will be carried out. Provision is made for voluntary redundancy payments to the extent that it is expected that volunteers

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will come forward. US GAAP requires a number of specific criteria to be met before restructuring costs can be recognized as an expense. Also, to the extent restructuring costs are related to the
activities of an acquired company, US GAAP allows them to be recognized as a liability upon acquisition provided certain specific criteria are met whereas UK GAAP does not. Accordingly, timing
differences arise between UK GAAP and US GAAP recognition of restructuring costs.

Pension and other post retirement benefits

In accordance with SSAP No. 24 pension costs are charged to the profit and loss account on a systematic basis over the estimated service lives of employees using the
projected unit credit method and a set of long term actuarial assumptions.

Under
US GAAP, pension costs and liabilities are calculated in accordance with SFAS No. 87Employers' Accounting for Pensions. This standard requires the use of the projected unit
credit method and prescribes, in particular, the use of a market-related discount rate. This is not the same as the long term approach used under SSAP No. 24.

Share compensation

Under UK GAAP, the cost of share option plans are amortized based on the cost of the shares acquired by the employee trusts to fulfill the plan, less the amount contributed by
the employee. Under US GAAP, compensation for fixed plan awards is determined at the date of grant, based on the cost of the fair value of the shares subject to the award, less the option exercise or
purchase price, if any, except for allowable discounts with respect to certain qualified plans where the discount is no greater than 15% of the fair value of the shares at date of grant. Compensation
costs for variable plan awards is estimated at the end of each period from the date of grant to the date final compensation costs are determinable based on the difference between the fair value of the
shares subject to the award and the option exercise or purchase price. Such cost is allocated to compensation expense over the vesting period and, if performance criteria are applicable to the award,
based on actual performance attained.

Derivative instruments

Our foreign currency, interest rate and commodity contracts that hedge against forecast exposures do not meet the US GAAP hedge accounting criteria. Under US GAAP, these
contracts are marked to market at the balance sheet date and gains and losses arising are included in net income. Under UK GAAP, these gains and losses can be deferred until the hedged transactions
actually occur.

We
may enter into foreign currency contracts to hedge the purchase price consideration on certain acquisitions. Under UK GAAP, the gains and losses arising on these foreign currency contracts are
recognized in the purchase price consideration. Under US GAAP, the gains and losses arising on these foreign currency contracts are recognized within net income.

Mexican excise rebate

Under UK GAAP, the amount for the Mexican excise tax rebate is being recognized principally when offset against future excise duty and other taxes payable. Under US GAAP, the
Mexican excise rebate was recognized upon the issuance of a favorable court judgment and additional interest and inflation adjustments are recognized as they accrue.

Franchise income

We have entered into agreements to sell the right to develop multiple stores within a specified territory, which entitles us to non-refundable franchise fees. Under
UK GAAP, these franchise fees are

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recognized upon signing of the agreement. Under US GAAP, the revenue recognition is based on store openings or until the rights to develop the territory have been
forfeited.

Deferred taxation

We adopted FRS No. 19Deferred Tax in the year ended 31 August 2002. Consequently, the consolidated financial statements as at
31 August 2001, and the two year period ended 31 August 2001 have been restated and disclosures have been modified to reflect retroactively the impact of the adoption of
FRS No. 19 on such financial statements as required by UK GAAP. FRS No. 19 brings accounting for deferred tax under UK GAAP conceptually closer to US GAAP, although some differences
remain. Following our restatement under FRS No. 19, and other than the tax effect of other UK to US GAAP differences, there is only one material difference between UK GAAP and US GAAP.
This difference
relates to the recognition criteria for recording deferred tax assets under US GAAP and UK GAAP. Under US GAAP, the calculation of current and deferred tax assets is based on the
probable tax treatment of the tax position taken. Once it is determined that there is a probable deferred tax asset, it is then reduced by a valuation allowance to the extent it is deemed more likely
than not (a likelihood of more than 50%) that some portion or all of the deferred tax asset will not be realized. Under UK GAAP, both the existence of the asset and the probability of its
recoverability are considered in combination, and a deferred tax asset is recognized only to the extent that its existence and recoverability are more likely than not.

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Item 6. Directors, Senior Management and Employees

Our
Board of Directors and Executive Officers oversee our administration. Our Board of Directors is comprised of between 3 and 20 members who provide our overall direction, strategy, performance and
management. Our Board of Directors generally meets six times a year and focuses on strategic issues and financial performance. Directors are elected at our annual shareholders' meetings by holders of
our ordinary shares for a maximum three-year term. Our Board of Directors has established four committees, the Audit Committee, the Remuneration Committee, the Executive Committee and the
Financing Committee to assist in its duties and as a measure of internal control. Our Board of Directors delegates day-to-day management to our Executive Officers, which
includes all of our Executive Directors. Our Board of Directors appointed our current Executive Directors for a two-year rolling term and our other Executive Officers for a
one-year rolling term.

Directors and Executive Officers

The following table sets out information with respect to our Directors and Executive Officers as at 31 January 2003.

|Name                      |  | Age |  | Position                                     |  | Director since
|------------------------- |  | --- |  | -------------------------------------------- |  | --------------
|Directors:                |  |     |  |                                              |  |               
|Gerry Robinson            |  | 54  |  | Non-Executive Chairman                       |  | 2002          
|Philip Bowman             |  | 50  |  | Chief Executive                              |  | 1998          
|Graham Hetherington       |  | 43  |  | Group Finance Director                       |  | 1999          
|David Scotland            |  | 54  |  | President, Allied Domecq World Wines         |  | 1995          
|Richard Turner            |  | 53  |  | President, Global Operations, Spirits & Wine |  | 1999          
|Donald Brydon             |  | 57  |  | Non-Executive Director                       |  | 1997          
|Sir Ross Buckland         |  | 60  |  | Non-Executive Director                       |  | 1998          
|Peter Jacobs              |  | 59  |  | Non-Executive Director                       |  | 1998          
|David Malpas              |  | 63  |  | Non-Executive Director                       |  | 1997          
|Other Executive Officers: |  |     |  |                                              |  |               
|Tom Brown                 |  | 48  |  | Group Human Resources Director               |  | N/a           
|Diana Houghton            |  | 39  |  | Director of Corporate Development            |  | N/a           
|Kim Manley                |  | 40  |  | Chief Marketing Officer, Spirits & Wine      |  | N/a           
|Leonard Quaranto          |  | 55  |  | General Counsel & Company Secretary          |  | N/a           

The
business address of each of the above Directors and Executive Officers is The Pavilions, Bridgwater Road, Bedminster Down, Bristol BS13 8AR, England.

The
following are brief biographies of each of our Directors and Executive Officers:

Gerry Robinson, Non-Executive Chairman.Mr. Robinson joined us as a Non-Executive Director in
February 2002 and became Non-Executive Chairman on 1 April 2002. He was Chairman of Granada PLC until February 2001, and he remains a Non-Executive
Director of that company. He is currently also Chairman of the Arts Council of England and was previously Chairman of British Sky Broadcasting Group and ITN.

Philip Bowman, Chief Executive.Mr. Bowman joined us as Group Finance Director in 1998 and was appointed our Chief
Executive in August 1999. He previously held senior management roles in Bass PLC following an extensive career in accountancy and venture development in Iran, Australia and the United States
and was Chairman of Liberty. He is also a Non-Executive Director of British Sky Broadcasting Group and Burberry Group and a member of the UK Industrial Advisory Board of Alchemy Partners.

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Graham Hetherington, Group Finance Director.Mr. Hetherington was appointed a Director in June 1999 and Group
Finance Director in August 1999, having been Finance Director of the Spirits & Wine business since 1998 and previously Senior Vice-President of Finance for the Americas and
Finance Director, Global Operations.

David Scotland, President, Allied Domecq World Wines.Mr. Scotland has been a Director of our Spirits & Wine
business since 1992 and one of our Directors since 1995. Mr. Scotland became President of Allied Domecq World Wines in January 2002. He is also a Non-Executive Director of
Photo-Me International and Brixton.

Richard Turner, President, Global Operations, Spirits & Wine.Mr. Turner has been President, Global Operations,
of our Spirits & Wine business since 1995. He joined our Board of Directors in June 1999 and is responsible for the business' global production and supply chain.

Donald Brydon, Non-Executive Director.Mr. Brydon joined us as a Non-Executive Director in
1997 and is chairman of Allied Domecq pension trusts. He is the Senior Non-Executive Director. He is a Non-Executive Director of Amersham and also Chairman of AXA Investment
Managers.

Sir Ross Buckland, Non-Executive Director.Sir Ross Buckland joined us as a Non-Executive Director in
1998. He was Chief Executive of Uniq (formerly Unigate) until March 2001 and is a Director of the Mayne Group, Goodman Fielder and Clayton Utz.

Peter Jacobs, Non-Executive Director.Mr. Jacobs joined us as a Non-Executive Director in
1998. He retired as Chief Executive of BUPA in 1998 and as Chairman of Hillsdown Holdings in July 1999. He is also Chairman of LA Fitness and WT (Holdings) and a Non-Executive
Director of Bank Leumi (UK) and Health Quality Services.

David Malpas, Non-Executive Director.Mr. Malpas joined us as a Non-Executive Director in
1997. He retired as Managing Director of Tesco in 1997. He is Chairman of Dresdner Income Growth Investment Trust and a Non-Executive Director of Wincanton.

Tom Brown, Group Human Resources Director.Mr. Brown joined us in March 2002. Previously, he held senior human
resources positions with BHP Billiton and Mobil Oil Corporation covering Australia, Europe, Africa and the United States.

Diana Houghton, Director of Corporate Development.Ms. Houghton joined us in October 1999 and is responsible
for group business strategy, advising ongoing business and implementing acquisitions, disposals and joint ventures. She has a management consultancy background and previously held senior strategic
planning positions with Bass.

Kim Manley, Chief Marketing Officer, Spirits & Wine.Mr. Manley joined us in September 2000 to lead our
marketing and brand building initiatives. Prior to joining us, he was President and Global brand director for Smirnoff following an FMCG career.

Leonard Quaranto, General Counsel & Company Secretary.Mr. Quaranto joined us in August 2001 following
more than 20 years experience as international counsel in global consumer goods businesses.

Committees of Our Board of Directors

Remuneration Committee

The Remuneration Committee determines the remuneration policy as well as the terms and conditions of service and the cessation of service of the Executive Directors. It also
reviews external appointments offered to Group executives. The Remuneration Committee generally meets at least three times per year. Its members are not eligible for any share options, bonuses or
pension entitlements. The

47

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committee has access to the services of independent advisors as it requires. The committee is comprised of the five Non-Executive Directors, with David Malpas as Chairman.

Audit Committee

The Audit Committee monitors and reviews our system of financial and operational controls. The Audit Committee oversees the objectivity and effectiveness of the independent
auditors, and considers our compliance with the Principles of Good Governance and Code of Best Practice, which together comprise the Combined Code appended to the Listing Rules of the UK Financial
Services Authority. The Audit Committee can request our independent auditors, Executive Directors and Executive Officers and any other officers of the Group to attend its meetings. Additionally, our
internal and independent auditors have direct access to the committee to raise any matters of concern. The Audit Committee must meet at least twice a year and met three times during the year ended
31 August 2002. The Audit Committee receives periodic reports summarizing audit issues noted and corrective actions planned as well as reports from the internal audit function, the independent
auditors and management. The Audit Committee also reviews our annual financial statements before their submission to the Board of Directors. The committee is comprised of the five
Non-Executive Directors with Peter Jacobs as Chairman.

Executive Committee

Our Board of Directors delegates authority to the Executive Committee to:



The
committee is comprised of the Executive Directors and certain Executive Officers.

Financing Committee

The Financing Committee exercises power related to the financing of approved acquisitions and the refinancing of debt. The committee is comprised of the Chairman, Executive
Directors and other members of senior management.

Compensation of Directors and Executive Officers

The aggregate compensation that we paid to our Directors and Executive Officers as a group for the year ended 31 August 2002 for services in all capacities
amounted to £7.352 million, including contingent or deferred compensation accrued during the year, even if payable at a later date. Such amount includes the aggregate compensation
paid to our Executive Officers as employees during the year ended 31 August 2002 even though they were not all classified as Executive Officers for the full year.

48

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The
table below sets out the remuneration that we paid to our Executive Directors during the year ended 31 August 2002:

|                                              |  | Salaries/fees |  | Performance-
related bonuses |  | Benefits |  | Total
|--------------------------------------------- |  | ------------- |  | ---------------------------- |  | -------- |  | -----
|
|
|Philip Bowman(1)(2)                           |  | 610           |  | 738                          |  | 279      |  | 1,627
|Graham Hetherington(1)(2)                     |  | 298           |  | 366                          |  | 83       |  | 747  
|Todd Martin (resigned 30 November 2001)(2)(3) |  | 80            |  | 75                           |  | 63       |  | 218  
|David Scotland(1)(2)                          |  | 330           |  | 333                          |  | 96       |  | 759  
|Richard Turner(1)                             |  | 288           |  | 357                          |  | 21       |  | 666  

---

Notes:

| |                     |  | Deferred amount |  | Matching investment |  | Total  
| | ------------------- |  | --------------- |  | ------------------- |  | -------
|
| | Philip Bowman       |  | 246,000         |  | 246,000             |  | 492,000
| | Graham Hetherington |  | 122,000         |  | 122,000             |  | 244,000
| | David Scotland      |  | 66,600          |  | 66,600              |  | 133,200
| | Richard Turner      |  | 61,400          |  | 61,400              |  | 122,800

The table below sets out fees we paid to our Non-Executive Directors during the year ended 31 August 2002:

|                                             |  | Salaries/fees
|-------------------------------------------- |  | -------------
|
|Donald Brydon(1)                             |  | 43           
|Sir Ross Buckland                            |  | 28           
|Sir Christopher Hogg (retired 31 March 2002) |  | 117          
|Peter Jacobs                                 |  | 33           
|David Malpas                                 |  | 33           
|Gerry Robinson (appointed 1 February 2002)   |  | 88           

---

Note:

Under our Deferred Bonus Plan, we pay Executive Directors, Executive Officers and certain senior executives bonuses based on earnings per share growth and
completion of key management objectives. Under the plan, between a minimum of 25% and a maximum of 50% of the bonus award is deferred into our ordinary shares or ADSs. After three years and subject to
the executive remaining our employee, we will match that portion of the bonus that is deferred into our ordinary shares on a one for one basis. If a participant's employment with us terminates prior
to three years, the participant is only entitled to receive those ordinary shares that comprise his deferred bonus award.

49

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The
following Executive Directors are entitled to receive the following matching ordinary shares under the Deferred Bonus Plan. The deferred bonus shares, which are forfeitable in specific
circumstances, are beneficially owned by our Directors and are included in the share ownership table set out in the section entitled "Director and Executive Officer Share Ownership"
below.

|Deferred Bonus Plan |  | Award in respect of fiscal year |  | Ordinary shares |  | Matching award date
|------------------- |  | ------------------------------- |  | --------------- |  | -------------------
|Philip Bowman       |  | 2000                            |  | 24,276          |  | 1 September 2003   
|                    |  | 2001                            |  | 67,873          |  | 1 September 2004   
|                    |  | 2002                            |  | 62,579          |  | 1 September 2005   
|Graham Hetherington |  | 2000                            |  | 23,343          |  | 1 September 2003   
|                    |  | 2001                            |  | 32,239          |  | 1 September 2004   
|                    |  | 2002                            |  | 31,035          |  | 1 September 2005   
|David Scotland      |  | 2000                            |  | 14,472          |  | 1 September 2003   
|                    |  | 2001                            |  | 18,267          |  | 1 September 2004   
|                    |  | 2002                            |  | 16,942          |  | 1 September 2005   
|Richard Turner      |  | 2000                            |  | 24,276          |  | 1 September 2003   
|                    |  | 2001                            |  | 15,837          |  | 1 September 2004   
|                    |  | 2002                            |  | 15,619          |  | 1 September 2005   

Under
the Service Agreements entered into with Philip Bowman, Graham Hetherington, David Scotland and Richard Turner, if we terminate the Service Agreements without cause on less than
24 months' notice, we will be liable to the relevant director for up to two years of compensation. Under the Letters of Appointment with Gerry Robinson and Diana Houghton and the Service
Agreements entered into with Tom Brown, Kim Manley and Leonard Quaranto, if we terminate the Appointments or the Service Agreements without cause and on less than 12 months' notice, we will be
liable to the relevant Director or Executive Officer for up to one year of compensation. In addition, if after six months of a change of control Kim Manley terminates his Service Agreement with
reasonable notice, we will be liable to him for up to one year of compensation.

Options to Purchase Our Securities

The following table provides summary information for each of our Directors who hold options or other rights to acquire our ordinary shares as at 31 January 2003. As at
31 January 2003, our Directors and Executive Officers as a group held options or other rights to acquire 6,187,583 of our ordinary shares

50

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excluding those matching ordinary shares received as compensation under the Deferred Bonus Plan referred to above in the section entitled "Compensation of Directors and Executive
Officers".

|                                                           |  | Fiscal
year of
grant |  | Number of
ordinary
shares
subject
to
option |  | Exercise
price of
ordinary share
in pence |  | Earliest exercise
date |  | Expiry date    
|---------------------------------------------------------- |  | -------------------- |  | ------------------------------------------- |  | ----------------------------------------- |  | ---------------------- |  | ---------------
|SAYE Scheme 1999                                           |  |                      |  |                                             |  |                                           |  |                        |  |                
|Graham Hetherington                                        |  | 2000                 |  | 6,440                                       |  | 262                                       |  | 1 January 2005         |  | 30 June 2005   
|Inland Revenue Approved Executive Share Option Scheme 1999 |  |                      |  |                                             |  |                                           |  |                        |  |                
|Philip Bowman                                              |  | 2003                 |  | 7,853                                       |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|Graham Hetherington                                        |  | 2003                 |  | 7,853                                       |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|David Scotland                                             |  | 2003                 |  | 7,853                                       |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|Richard Turner                                             |  | 2003                 |  | 7,853                                       |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|Executive Share Option Scheme 1999                         |  |                      |  |                                             |  |                                           |  |                        |  |                
|Philip Bowman                                              |  | 2000                 |  | 608,187                                     |  | 342                                       |  | 1 November 2002        |  | 31 October 2009
|                                                           |  | 2003                 |  | 434,882                                     |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|Graham Hetherington                                        |  | 2000                 |  | 263,157                                     |  | 342                                       |  | 1 November 2002        |  | 31 October 2009
|                                                           |  | 2003                 |  | 131,872                                     |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|David Scotland                                             |  | 2000                 |  | 350,877                                     |  | 342                                       |  | 1 November 2002        |  | 31 October 2009
|                                                           |  | 2003                 |  | 144,699                                     |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|Richard Turner                                             |  | 2000                 |  | 304,093                                     |  | 342                                       |  | 1 November 2002        |  | 31 October 2009
|                                                           |  | 2003                 |  | 132,788                                     |  | 382                                       |  | 1 November 2005        |  | 31 October 2012
|Long Term Incentive Scheme 1999                            |  |                      |  |                                             |  |                                           |  |                        |  |                
|Philip Bowman                                              |  | 2001                 |  | 441,176                                     |  | 0.1                                       |  | 8 May 2004             |  | 7 May 2011     
|                                                           |  | 2002                 |  | 512,091                                     |  | 0.1                                       |  | 2 November 2004        |  | 1 November 2011
|                                                           |  | 2003                 |  | 321,989                                     |  | 0.1                                       |  | 1 November 2005        |  | 31 October 2012
|Graham Hetherington                                        |  | 2001                 |  | 104,779                                     |  | 0.1                                       |  | 8 May 2004             |  | 7 May 2011     
|                                                           |  | 2002                 |  | 121,621                                     |  | 0.1                                       |  | 2 November 2004        |  | 1 November 2011
|                                                           |  | 2003                 |  | 79,842                                      |  | 0.1                                       |  | 1 November 2005        |  | 31 October 2012
|David Scotland                                             |  | 2001                 |  | 119,485                                     |  | 0.1                                       |  | 8 May 2004             |  | 7 May 2011     
|                                                           |  | 2002                 |  | 138,691                                     |  | 0.1                                       |  | 2 November 2004        |  | 1 November 2011
|                                                           |  | 2003                 |  | 87,172                                      |  | 0.1                                       |  | 1 November 2005        |  | 31 October 2012
|Richard Turner                                             |  | 2001                 |  | 102,941                                     |  | 0.1                                       |  | 8 May 2004             |  | 7 May 2011     
|                                                           |  | 2002                 |  | 119,487                                     |  | 0.1                                       |  | 2 November 2004        |  | 1 November 2011
|                                                           |  | 2003                 |  | 80,366                                      |  | 0.1                                       |  | 1 November 2005        |  | 31 October 2012

We
have adopted nine employee share plans to incentivize participants to promote the long-term success of the business. Our plans include (1) our SAYE Scheme 1999, (2) our
International SAYE Scheme 1999, (3) our United States Share Purchase Plan, (4) our Inland Revenue Approved Executive Share Option Scheme 1999, (5) our Executive Share Option
Scheme 1999 (incorporating a US Schedule), (6) our Share Appreciation Rights Plan 1999, (7) our Long Term Incentive Scheme 1999, (8) our Deferred Bonus Plan and (9) our
Share Partnership Plan.

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SAYE Scheme 1999

We have established a "save as you earn" plan, our SAYE Scheme 1999, which was approved by the UK Inland Revenue on 10 November 1999. Under this plan, we may grant all
of our Executive Directors, Executive Officers and employees who are subject to certain taxes in the United Kingdom options to purchase our ordinary shares at a price that is not less than 80% of the
market value of the shares on the date of grant. The options may vest in three or five years time, with each participant being able to pay for his or her options utilizing the proceeds of a savings
contract under which he or she agrees to save a regular monthly amount within set limits. When the option vests, the participant will receive his or her savings back plus a tax-free bonus,
which may be used, at the employee's discretion, to exercise the option. Except in limited circumstances, options that are not exercised will lapse if the participant is no longer an employee or after
six months from the end of the savings contract. In addition, in the event of a change of control of our company, options may be exercised
within six months of the change of control and will thereafter lapse. Options may be adjusted to reflect variations in our share capital. The SAYE Scheme 1999 has been replaced by the Share
Partnership Plan described below.

International SAYE Scheme 1999

We established an international "save as you earn" plan, our International SAYE Scheme 1999, on 25 October 1999. Under this plan, we may grant our Executive Directors,
Executive Officers and employees options to purchase our ordinary shares at a price that is not less than 80% of the market value of the shares on the date of grant. The options may vest in eighteen
months, three years time or five years time, with each participant being able to pay for his or her options by utilizing the proceeds of a savings contract under which he or she agrees to save a
regular monthly amount within set limits. When the option vests, the participant will receive his or her savings back plus interest, which may be used, at the employee's discretion, to exercise the
option. Except in limited circumstances, options that are not exercised will lapse if the participant is no longer an employee or after six months after the end of the savings contract. The plan is
operated in certain jurisdictions outside of the United Kingdom. Options may be adjusted to reflect variations in our share capital.

United States Share Purchase Plan

Under this employee stock purchase plan, employees may be granted options to purchase ordinary shares at an exercise price of not less than 85% of the market value of the
shares at the grant date. Eligible employees are those who have worked for us for over two years or any other employees determined to be eligible by our Board of Directors. The plan qualifies as an
employee stock purchase plan under Section 423 of the Internal Revenue Code, which will provide the participants in the plan with certain tax benefits upon their subsequent sale or other
disposition of our ordinary shares that they will purchase under the terms of the plan. We offer participants in the plan the opportunity to elect to have up to a certain amount of their salaries
deducted from their paychecks over a period of eighteen months and to use that money plus interest to purchase our ordinary shares. In no event may a participant purchase more than $25,000 worth of
our ordinary shares under this plan in any given calendar year. Options may be adjusted to reflect variations in our share capital. The plan is not currently operating.

Inland Revenue Approved Executive Share Option Scheme 1999 and Executive Share Option Scheme 1999 (incorporating US Schedule)

These are discretionary share option plans, one of which has been approved by the UK Inland Revenue on 10 November 1999 and the other of which we established on 25
October 1999. The terms of these two plans are similar, except where we indicate to the contrary. Under these plans, our Board of

52

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Directors may grant options at its discretion to any of our full time employees, except within two years of their retirement.

Our
Board of Directors may grant options that are subject to performance conditions being fulfilled before a participant can exercise his or her option. Participants may only exercise their options
between the third and tenth anniversaries of their date of grant, provided that the performance conditions have been fulfilled. Except in limited circumstances, options that are not exercised will
lapse if the holder is no longer an employee. In addition, in the event of a change of control of our company, options may be exercised within six months of the change of control and will thereafter
lapse. The exercise price may not be less than the market value of an ordinary share or ADS, as appropriate, on the date of grant. Options may be adjusted to reflect variations in our share capital.

In
the case of the Inland Revenue Approved Share Option Scheme, we may not grant further options to an individual if as a result the aggregate market value of ordinary shares issued to that individual
under the plan would exceed £30,000.

Our
Board of Directors and shareholders have approved a new US Schedule to the Executive Share Option Scheme 1999 under which options may be granted to US executives that may qualify as "Incentive
Stock Options" for the purposes of Section 422 of the Internal Revenue Code of 1986 (as amended), and qualify for favorable tax treatment.

Share Appreciation Rights Plan 1999

To incentivize employees in jurisdictions where securities or tax laws prevent or restrict the use of the executive share option plans, we adopted our Share Appreciation Rights
Plan 1999 on 25 October 1999. Under this plan we may grant our employees share appreciation rights, or SARs, which provide the employee with an opportunity to receive a cash payment from us
that is linked to an increase in the market value of our ordinary shares or ADSs. Our Board of Directors may grant SARs that are subject to performance conditions being fulfilled before the SARs can
be exercised. Participants may only exercise SARs between the third and tenth anniversaries of their date of grant, provided that the performance conditions have been fulfilled. Except in limited
circumstances, SARs that are not exercised will lapse if the holder is no longer an employee. In addition, in the event of a change of control of our company, SARs may be exercised within six months
of the change of control and will thereafter lapse. Our Board of Directors decides whether and to whom it will grant SARs under this plan. The SAR price may not be less than the market value of an
ordinary share or ADS, as appropriate, on the date of grant. SARs may be adjusted to reflect variations in our share capital.

Long Term Incentive Scheme 1999

We established our Long Term Incentive Scheme 1999 on 25 October 1999. Pursuant to this plan, our Board of Directors may grant options at a nominal exercise price to any
of our full-time employees except within two years of their retirement. Our Board of Directors decides whether and to whom it will grant options under this plan as well as any limits that
may be placed on the grant of options. Our Board of Directors may grant options under this plan that are subject to performance conditions being fulfilled before the option can be exercised.
Participants may only exercise options between the third and tenth anniversaries of their date of grant, provided that any performance conditions have been fulfilled. Except in limited circumstances,
options that are not exercised will lapse if the holder is no longer an employee. In addition, in the event of a change of control of our company, options may be exercised to the extent any
performance conditions have been fulfilled within six months of the change of control and will thereafter lapse. Options may be adjusted to reflect variations in our share capital.

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Share Partnership Plan

Our Share Partnership Plan is a UK Inland Revenue approved share incentive plan that we have initially introduced in the United Kingdom as a replacement for our SAYE Scheme
1999.

Our
Share Partnership Plan allows us to offer incentives to our Executive Directors, Executive Officers and employees in the form of free shares, partnership shares, matching shares and dividend
shares.

The
Share Partnership Plan allows for the appropriation of free shares to employees with a market value of up to £3,000 per employee each year. The shares must generally be offered to all
participants on terms varied by reference to remuneration, length of service or hours worked. The Share Partnership Plan, however, may contain a performance measure making the award of free shares
subject to performance targets, as long as the measures for determining the performance targets are fair and objective, not less than 20% of the pool of available free shares must be awarded to every
eligible employee on similar terms and the highest performance related award does exceed four times the highest non-performance related award. Free shares must generally be held in trust
for a minimum of three and a maximum of five years. We do not currently offer free shares to our Executive Directors, Executive Officers and employees.

Under
this plan, we offer participants the opportunity to purchase shares from their pre-tax salary of up to £125 (or 10% of salary, whichever is lower) every month.
Partnership shares are purchased on behalf of the participants using their compensation. Partnership shares may be withdrawn from the Share Partnership Plan by the participant at any time, although
there are tax advantages if the shares are retained in the Share Partnership Plan for at least three years.

The
Share Partnership Plan provides that where employees buy partnership shares, they may be awarded additional shares on a matching basis, up to a maximum of two matching shares for each partnership
share. Matching shares must be offered on the same basis to each employee purchasing partnership shares. Matching shares must generally be held in trust for a minimum of three and a maximum of five
years.

The
Share Partnership Plan provides for the acquisition of shares by the reinvestment of cash dividends in respect of our ordinary shares acquired under this plan up to a limit of £1,500
in any single tax year.

Deferred Bonus Plan

In addition to those plans described above, we operate a remuneration and incentive plan called the Deferred Bonus Plan described in the section entitled
"Compensation of Directors and Executive Officers" above.

Director and Executive Officer Share Ownership

As at 31 January 2003, our Directors and Executive Officers as a group held 690,260 of our ordinary shares (including ADSs each representing four ordinary shares)
including the deferred bonus shares received as compensation under the Deferred Bonus Plan. In addition, the Executive Directors and Executive Officers were treated as interested in the 33,845,403
shares (made up of both ordinary and ADSs) held by our employee trusts in their capacity as potential beneficiaries. The following table

54

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shows the amount of our ordinary shares held by our Directors, none of whom beneficially owned more than 1% of our ordinary shares, as at 31 January 2003.

|Name                |  | Amount of
ordinary shares
beneficially owned
|------------------- |  | --------------------------------------------
|Gerry Robinson      |  |                                            
|Philip Bowman       |  | 284,207                                     
|Graham Hetherington |  | 103,103                                     
|David Scotland      |  | 63,294                                      
|Richard Turner      |  | 95,096                                      
|Donald Brydon       |  | 11,500                                      
|Sir Ross Buckland   |  | 1,000                                       
|Peter Jacobs        |  | 6,300                                       
|David Malpas        |  | 9,921                                       

Employees

The following table shows the average number of our full-time equivalent employees for the three years ended 31 August 2002 in relation to our
continuing business:

|                        |  | Year ended 31 August
|----------------------- |  | --------------------
|
|Spirits & Wine business |  | 10,940              
|QSR business            |  | 1,173               
|                        |  |                     
|Total                   |  | 12,113              
|                        |  |                     

We
believe that we maintain good relations with our employees. During the past three years, we have not had any strikes or lockouts that have interfered in any material way with our business. Over 37%
of our employees are covered by collective bargaining agreements with various trade unions and labor organizations. The principal countries where our employees are represented by unions are Mexico,
Spain, France and Scotland where approximately 1,900, 600, 500 and 500 employees are respectively represented by unions. The three unions which represent the largest number of our employees are the
Sindicato de Trabajadores en Ranchos,Granjas,Huertas y del Campo en General en el Estado de Jaliscoin
Mexico, theSindicato Nacional de la Industria Vinícola Similares y Conexas de la República Méxicanain
Mexico and theGMBin Scotland.

55

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Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

As at 31 January 2003, to our knowledge as based upon relevant filings made by such shareholders, the following persons had an interest, directly or indirectly, in 3% or
more of the issued share capital of Allied Domecq PLC. The following holders hold ordinary shares and have the voting rights of ordinary shareholders.

|Shareholder                                    |  | Ordinary shares |  | Percentage of total outstanding ordinary shares
|---------------------------------------------- |  | --------------- |  | -----------------------------------------------
|Scottish Widows Investment Partnership Limited |  | 33,268,490      |  | 3.006%                                         
|AXA S.A.                                       |  | 34,317,392      |  | 3.10%                                          
|Suntory Limited                                |  | 37,834,591      |  | 3.42%                                          

Related-Party Transactions

Other than disclosed in this annual report, no Director had any interest, beneficial or non-beneficial, in our share capital. The Register of Directors' Interests,
which is open to shareholders' inspection, contains full details of Directors' share interests. Save as disclosed above, no Director has or has had any interest in any transaction which is or was
unusual in its nature, or which is or was significant to the business of the Group and which was effected by any member of the Group during the year ended 31 August 2002, or which having
been effected during an earlier financial year, remains in any respect outstanding or unperformed.

No
Director or Executive Officer or their respective immediate families or associates has had any indebtedness to the Company or any subsidiary or associated company or had any indebtedness subject to
a guarantee, support agreement or letter of credit or other similar arrangement or understanding provided by the Company or any subsidiary or associated company which has been outstanding at any time
since 1 June 2002.

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Item 8. Financial Information

For
our financial information, please see the section entitled "Item 18Financial Statements".

Litigation

We are not currently involved in any legal or arbitration proceedings, including any proceedings which are threatened or pending of which we are aware, which may have a
material effect on our financial position, results of operation or liquidity.

57

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Item 9. The Offer and Listing

Trading Market for Our Ordinary Shares

The principal trading market for our ordinary shares is the London Stock Exchange. We initially established a sponsored ADR facility in the United States in 1986 and our ADSs
were listed on the New York Stock Exchange on 31 July 2002. JPMorgan Chase Bank, as depositary for our ADRs, issues ADSs, each of which represent four ordinary shares. Our ADSs are traded under
the symbol "AED".

Our
ordinary shares are a constituent element of the FTSE 100, an index of the largest 100 UK companies by full-market value that are listed on the London Stock Exchange.

In
September 1999, we restructured our business by disposing of our UK Retail business as part of our strategy of focusing our resources on our Spirits & Wine and QSR businesses. We
returned the value of this disposal, approximately £2.6 billion, to our shareholders. The UK Retail business represented a significant portion of our trading profit, total turnover
and assets and, as a result of this disposal, our market quotations on the London Stock Exchange declined. The following tables show, for the periods indicated, the reported high and low middle market
quotations (which represent an average of bid and ask prices) for the ordinary shares on the London Stock Exchange, taken from the Daily Official List of the UK Listing Authority and the market prices
of our ADSs on the NYSE since they were listed on 31 July 2002.

|                            |                | Ordinary shares
|--------------------------- | -------------- | ---------------
|
|Year ended 31 August        |                |                
|1998                        |                | 634.0p         
|1999                        |                | 626.5p         
|2000                        |                | 377.3p         
|2001                        |                | 454.0p         
|2002                        |                | 468.5p         
|Year ended 31 August 2001:  |                |                
|                            | First quarter  |                
|                            | Second quarter |                
|                            | Third quarter  |                
|                            | Fourth quarter |                
|Year ended 31 August 2002:  |                |                
|                            | First quarter  |                
|                            | Second quarter |                
|                            | Third quarter  |                
|                            | Fourth quarter |                
|Year ending 31 August 2003: |                |                
|                            | First quarter  |                

|             |                   | High |        | Low
|------------ | ----------------- | ---- | ------ | ---
|Month ended: |                   |      |        |    
|             | 31 August 2002    |      | 409.0p |    
|             | 30 September 2002 |      | 418.8p |    
|             | 31 October 2002   |      | 409.0p |    
|             | 30 November 2002  |      | 407.5p |    
|             | 31 December 2002  |      | 401.8p |    
|             | 31 January 2003   |      | 414.0p |    

58

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|                     |                   | ADSs
|-------------------- | ----------------- | ----
|
|Year ended 31 August |                   |     
|2002*                |                   | $   
|2002:                |                   |     
|                     | Fourth quarter*   |     
|2003:                |                   |     
|                     | First quarter     |     
|Month ended:         |                   |     
|                     | 31 August 2002    |     
|                     | 30 September 2002 |     
|                     | 31 October 2002   |     
|                     | 30 November 2002  |     
|                     | 31 December 2002  |     
|                     | 31 January 2003   |     

---

At close of business on 31 January 2003, the market price for our ordinary shares and ADSs was 339.0p and $22.60, respectively.

On
31 January 2003, there were 108 registered holders of 135,170 of our ordinary shares with addresses in the United States. On 31 January 2003 there were 61 registered holders of
1,145,832 of our ADSs
with addresses in the United States. The combined holdings of these shareholders constituted less than one percent of the total number of our outstanding ordinary shares. As certain of our ordinary
shares and ADSs are held by brokers and other nominees, these numbers may not represent the actual number of beneficial owners in the United States or the number of ordinary shares beneficially held
by US persons.

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Item 10. Additional Information

Memorandum and Articles of Association

We incorporate by reference a description of our Memorandum and Articles of Association as set forth in our registration statement on Form 20-F, File
No. 001-31413, filed with the SEC on 26 July 2002. You may read and copy our registration statement, as well as other periodic reports, at the SEC's public reference rooms
located in Washington DC, New York and Chicago, Illinois. In addition, copies may be obtained electronically on www.sec.gov.

Material contracts

Stolichnaya

On 15 November 2000, our subsidiaries Allied Domecq International Holdings B.V. and Allied Domecq Spirits & Wine USA, Inc. entered into a Trademark,
Supply and Distribution Agreement with Spirits International NV and S.P.I. Spirits (Cyprus) Limited, which together we refer to as SPI. Under the agreement, SPI designated us as exclusive
distributor in the United States of its various vodka products, which are distributed under the brand names Stolichnaya, Stoli® and Priviet®. The agreement also provides that
SPI cause the assignment of the trademark rights to the Stolichnaya brand name in the United States from PepsiCo, Inc. to us. We have agreed to purchase a minimum number of cases over the term
of the agreement and to undertake a significant investment in the marketing, sale and distribution of SPI's vodka products. In addition, SPI has granted us a right of first refusal over distribution
rights for its brands in other markets as they become available. To date, we have exercised
those rights and entered into distribution agreements with SPI for Canada, the Nordic countries and Mexico.

The
initial term of the agreement is until 31 December 2010, and either of us may terminate the agreement with notice prior to that date if there is a material adverse breach of the contract
that cannot be cured within a determined time or if either party enters into bankruptcy, is insolvent or is being liquidated.

Jinro

On 15 February 2000, we entered into an agreement to purchase a 70% interest in two South Korean companies held by Jinro Limited for £103 million. As
part of this arrangement, we agreed to make bulk purchases of aged Scotch whisky from a third party for use in Imperial whisky.

Suntory

In 1988, we entered into a series of arrangements with Suntory Limited, one of Japan's leading producers and distributors of spirits. One element of these arrangements was the
purchase of a 50% interest in a Japanese company, Suntory Allied Limited, and the grant to it of the principal rights to distribute our spirit products in Japan for a period up to and including 2029.
Suntory Allied Limited is under the management control of Suntory Limited.

Corby

In 1991, we purchased a 46.3% equity interest and a 51.6% voting interest in Corby Distilleries Limited, or CDL, a leading Canadian manufacturer and marketer of spirits and
wine. We have various arrangements with CDL under which we blend and bottle CDL's requirements for some spirits and provide administrative services to it and CDL represents our products in the
Canadian market.

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Exchange Controls

There are currently no UK foreign exchange control restrictions on the payment of dividends to US persons on our ordinary shares or preferred securities or on the conduct of
our operations.

There
are no restrictions under our Memorandum and Articles of Association or under the laws of England and Wales that limit the right of non-resident or foreign owners to hold or vote our
ordinary shares.

Taxation

The following discussion describes the material US Federal income tax and UK tax consequences of the purchase, ownership and disposition of our shares or ADSs (evidenced by
ADRs) for beneficial owners:



The
statements of US federal income tax and UK tax laws set out below:



No
assurance can be given that taxing authorities or the courts will agree with this analysis.

This discussion does not address all aspects of US and UK taxation that may be relevant to you and is not intended to reflect the individual tax position of any beneficial
owner, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of investors or that are generally assumed to be known by investors.The portions of this summary
relating to US Federal taxation are based upon the US Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, existing and
proposed US Treasury regulations promulgated thereunder, published rulings by the US Internal Revenue Service ("IRS"), and court decisions, all in effect as at the date hereof, all of which
authorities are subject to change or differing interpretations, which changes or differing interpretations could apply retroactively. This summary is limited to investors who hold our shares or ADSs
as capital assets within the meaning of Section 1221 of the Code, generally property held for investment, and this summary does not purport to deal with the US Federal or UK taxation
consequences for investors in special tax situations, such as dealers in securities or currencies, persons whose functional currency is not the US Dollar, life insurance companies, tax exempt
entities, financial institutions, traders in securities that elect to use a "mark-to-market" method of accounting for their securities holdings, regulated investment companies,
persons holding our shares or ADSs as part of a hedging, integrated, conversion or constructive sale transaction or straddle or persons subject to the alternative minimum tax, who may be subject to
special rules not discussed below. In particular, the following summary does not address the adverse tax treatment to you that would follow if you own,

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directly or by attribution, 10% or more of our outstanding voting share capital and we are classified as a "controlled foreign corporation" for US Federal tax purposes.

As
used herein, the term "US holder" means a beneficial owner of our shares or ADSs who or which is:



If
a partnership (or an entity that is treated as a partnership for US Federal income tax purposes) holds our shares or ADSs, the tax treatment of a partner will generally depend upon the status of
the partner and the activities of the partnership. If you are a partner of a partnership holding our shares or ADSs, you should consult your tax advisors.

The summary does not include any description of the tax laws of any State or local government or of any jurisdictions other than the United States and the United Kingdom that
may be applicable to the ownership of our shares or ADSs. You are urged to consult your own tax advisor regarding the US Federal, State, and local tax consequences to you of the ownership of our
shares or ADSs, as well as the tax consequences to you in the United Kingdom and any other jurisdictions.

For
the purposes of the Conventions and the Code, you will be treated as the owner of our shares represented by the ADSs evidenced by the ADRs.

New Income Tax Convention

The United States and the United Kingdom have recently concluded a new income tax convention (the "New Income Tax Convention"). The New Income Tax Convention is not effective
until it has been ratified by the competent authorities in both countries. As at the date of this annual report, the New Income Tax Convention is still in the ratification process and we are not
certain whether, and if so when, it will be ratified and put into effect. If and when it becomes effective, the New Income Tax Convention will put in place new rules that modify the current treatment
of US holders who own shares or ADSs of a UK corporation in several aspects. Throughout the following discussions, we have included specific references to the new rules under the New Income Tax
Convention as appropriate. Such references assume that the New Income Tax Convention will be ratified in its current form (as at the date hereof) without material amendment. You should consult your
own tax advisors as to how the
New Income Tax Convention would affect you regarding the effect of the New Income Tax Convention on your ownership of our shares or ADSs.

Taxation of Dividends

United Kingdom

No withholding tax is charged or due when a UK incorporated company pays dividends.

An
individual shareholder resident in the United Kingdom will generally be entitled to a tax credit in respect of any dividend received. The amount of the tax credit is equal to one-ninth
of the cash dividend or 10% of the aggregate of the cash dividend and the associated tax credit.

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Although
under the terms of the Income Tax Convention you, as a US holder, may be entitled to receive a payment by way of tax credit at the current level of credit for UK individuals, in practice no
such payment will be available. The Income Tax Convention provides that a US holder may receive, from the UK Inland Revenue, in respect of a cash dividend, a payment equal to the amount of the tax
credit to which an individual resident in the United Kingdom for tax purposes would have been entitled had such resident received the dividend, reduced by an amount to be withheld from such payment
not to exceed 15% of the sum of the dividend and the tax credit amount. At the current levels of the tax credit, however, and as a result of the amount so withheld, which withholding shall not exceed
the amount of the tax credit, you would not be entitled to receive any payment in respect of the tax credit for dividends paid by us. For example, if you receive a dividend (solely for illustrative
purposes) of £90, you would be entitled to a tax credit of £10 (i.e. one-ninth of £90). However, since the amount withheld (here limited to 10%) equals
the amount of the tax credit, no actual treaty payment would be made and you would receive only the cash dividend, which in this case would be £90. For US Federal income tax purposes, if
you elect the application of the Income Tax Convention with respect to dividends (as discussed below) you would include in your gross income as dividends an amount equal to the actual dividend plus
the tax credit, which under this illustration would be £100, and you would be treated as having paid UK tax equal to the amount of the tax credit, which in this case would be
£10 (the "UK Withholding Tax"). For a description of taxation of dividends in the United States, see the section entitled "United States" below.

Certain
US corporations which own directly or indirectly, at least 10% of our voting stock may be entitled to a treaty payment under the terms of the Income Tax Convention. The position of such US
holders is not generally dealt with in this summary and such US holders should consult their own tax advisors with respect to the detailed application of the Income Tax Convention to their own
particular circumstances and on the procedure for obtaining any payment to which they may be entitled.

You
should consult your own tax advisors as to whether you will be considered to have received any income with respect to the tax amount and whether we will be considered to have paid UK Withholding
Tax.

The
ratification of the New Income Tax Convention will not materially alter the UK taxation consequences described above except that there will no longer be any entitlement to receive from the UK
Inland Revenue any repayment of amounts representing the credit for UK tax to which a UK resident individual would have been entitled. This will only have a practical impact on certain US corporations
if they own or acquire, directly or indirectly, at least 10% of our voting stock (such corporations should consult their own tax advisors). The New Income Tax Convention will affect the US Federal
income tax consequences of owning our shares or ADSs. For a description of taxation of dividends in the United States, see the section entitled "United States" immediately below.

United States

Subject to the Passive Foreign Investment Company discussion below, if you are eligible for benefits under, and elect the application of, the Income Tax Convention to
distributions you receive in respect of our shares or ADSs, the gross amount of an actual distribution plus the UK tax credit amount considered received and unreduced by the UK Withholding Tax will be
included as a dividend in your gross income on the day actually or constructively received by you, in the case of our shares, or by the depositary, in the case of our ADSs to the extent paid out of
our current or accumulated earnings and profits as determined for US Federal income tax purposes, and such dividend will be treated as foreign source dividend income. You elect the application of the
Income Tax Convention by filing a timely and duly completed Form 8833 with your income tax return for the relevant year. Distributions in excess of our current and accumulated earnings and
profits will first be treated, for US Federal income tax purposes, as a non-taxable return on capital to the extent of your basis in the ADSs and then as gain from the sale or exchange of
a capital asset. Dividends paid by us will not be eligible for the corporate

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dividends received deduction that is applicable in certain cases to US corporations. Under the New Income Tax Convention, the amount of dividends to be included in your gross income will no longer
include the amount of any UK tax credit amount described above. Therefore, the amount of dividends that you will be treated as receiving from us will be the amount of dividends you actually receive
from us. We urge you to consult your own tax advisors as to your eligibility for benefits, if any, under the Income Tax Convention.

The
amount of any dividend paid in Pounds Sterling will equal the US Dollar value of the Pounds Sterling received calculated by reference to the exchange rate in effect on the date the dividend is
received by you, in the case of shares, or by the depositary, in the case of ADSs, regardless of whether
the Pounds Sterling are converted into US Dollars. If you do not convert the Pounds Sterling received as a dividend into US Dollars on the date of receipt, you will have a basis in the Pounds Sterling
equal to their US Dollar value on the date of receipt. Generally, any gain or loss realized on your subsequent conversion or other disposition of the Pounds Sterling will be treated as ordinary income
or loss.

Subject
to certain conditions and limitations, the UK Withholding Tax withheld from dividends will be treated as a foreign income tax that may be deducted from taxable income or credited against your
US Federal income tax liability. However, the UK Withholding Tax may be deducted only if you do not claim a credit for any foreign taxes paid or accrued in that year. In addition, you will not be
entitled to a deduction or foreign tax credit with respect to the UK Withholding Tax that may be refunded to you pursuant to the Income Tax Convention or UK law. Further, in certain circumstances, if
you (1) have held our shares or ADSs for less than a specified minimum period during which you are not protected from risk of loss, (2) are obligated to make payments related to the
dividends or (3) hold our shares or ADSs in arrangements in which your expected economic profit, after non-US taxes, is insubstantial, you will not be allowed a foreign tax credit
for foreign taxes imposed on dividends paid on shares or ADSs. For the purposes of computing the foreign tax credit, dividends paid on our shares or ADSs will be treated as income from sources outside
the United States, but generally will be grouped separately, together with other items of "passive" or "financial services" income. The rules governing the foreign tax credit are complex. We urge you
to consult your own tax advisors regarding the availability of the foreign tax credit in your particular circumstances.

The
New Income Tax Convention repeals the sections of the current Income Tax Convention giving an entitlement to receive repayment of tax credits to which a UK individual would have been entitled.
Therefore, if and when the New Income Tax Convention comes into effect, you will no longer be eligible for foreign tax credit or deductions in respect of the UK Withholding Tax.

Taxation of Capital Gains

United Kingdom

If you are not resident or ordinarily resident in the United Kingdom for UK tax purposes, you will not be liable for UK tax on capital gains realized or accrued on the sale or
other disposition of shares or ADSs unless the shares or ADSs are held in connection with your trade or business (which for this purpose includes a profession or a vocation) carried on in the United
Kingdom through a branch or agency and the shares or ADSs are or have been used, held or acquired for the purposes of such trade or business or such branch or agency.

A
US holder who is an individual who has on or after 17 March 1998 ceased to be resident or ordinarily resident in the United Kingdom in the preceding five years and who disposes of shares or
ADSs during that period may also be liable for UK tax on capital gains notwithstanding that the person may not be resident in the United Kingdom at the time of the disposal.

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United States

Subject to the Passive Foreign Investment Company discussion below, gain or loss realized by you on the sale or other disposition of the shares or ADSs will be subject to US
Federal income tax as capital gain or loss in an amount equal to the difference between your tax basis in the shares or ADSs and the amount realized on the disposition. The capital gain or loss will
be long-term capital gain or loss if the US holder has held the shares or ADSs for more than one year at the time of the sale or exchange. A gain or loss realized by you generally will be
treated as US source gain or loss for US foreign tax credit purposes.

Passive Foreign Investment Company Considerations

Generally, for US Federal income tax purposes, we will be a "passive foreign investment company", or a "PFIC", for any taxable year if either (1) 75% or more of our
gross income is "passive" income or (2) 50% or more of the value of our assets, determined on the basis of a quarterly average, is attributable to assets that produce or are held for the
production of passive income. Passive income generally includes dividends, interest, royalties and rents not arising from the active conduct of a trade or business, and gains from the sale of assets
that produce such income. If we are a PFIC in any taxable year that you own our shares or ADSs, you may be subject to tax at the highest ordinary income rates applicable to you and pay interest on
such tax based on your holding period in the shares of ADSs, on (1) a portion of any gain recognized on the sale of our shares or ADSs and (2) any "excess distribution" paid on our
shares or ADSs (generally, a distribution in excess of 125% of the average annual distributions paid by us in the three preceding taxable years).

Based
on our current activities and assets, we do not believe that we are a PFIC, and we do not expect to become a PFIC in the foreseeable future for US Federal income tax purposes. Our belief that we
are not a PFIC and our expectation that we will not become a PFIC in the future are based on our current and planned activities, and may change in the future. The determination of whether we are a
PFIC is made annually. Accordingly, it may be possible that we will become a PFIC in the current or any future year due to changes in our asset or income composition.

UK Inheritance and Gift Tax

If you are an individual domiciled in the United States and are not a national of the United Kingdom for the purposes of the Estate and Gift Tax Convention, any share or ADS
beneficially owned by you will not be subject to UK inheritance tax on your death or on a gift made by you during your lifetime, provided that any applicable US Federal gift or estate tax liability is
paid, except where the share or ADS is part of the business property of your UK permanent establishment or pertains to your UK fixed base used for the performance of independent personal services. The
Estate and Gift Tax Convention generally provides for tax paid in the United Kingdom to be credited against tax payable in the United States, based on priority rules set out in that Convention, in the
exceptional case where a share or ADS is subject to both UK inheritance tax and US Federal gift or estate tax. Where the shares or ADSs have been placed in trust by a settlor who, at the time of the
settlement, was a US holder, the shares or ADSs will generally not be subject to UK inheritance tax if the settlor, at the time of the settlement, was domiciled in the United States for the purposes
of the Estate and Gift Tax Convention and was not a national of the United Kingdom.

US Gift and Estates Taxes

If you are an individual US holder, you will be subject to US gift and estate taxes with respect to the shares or ADSs in the same manner and to the same extent as with respect
to other types of personal property.

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UK Stamp Duty and Stamp Duty Reserve Tax

Subject to certain exemptions, stamp duty will be charged at the rate of 1.5% rounded up to the nearest £5, or there will be a charge to the stamp duty reserve tax
at the rate of 1.5% on the amount or value of the consideration paid, or in some circumstances the issue price or open market value, on a transfer or issue of shares (1) to, or to a nominee
for, a person whose business is or includes the provision of clearance services, or (2) to, or to a nominee for, a person whose business is or includes the issuing of depositary receipts. It is
understood that the UK Inland Revenue Stamp Office considers the depositary to fall within one or the other of the above two categories. The stamp duty reserve tax on the deposit of ordinary shares
with the depositary will be payable by the person depositing those shares. Where stamp duty reserve tax is charged on a transfer of shares and ad valorem stamp duty is chargeable on the instrument
effecting the transfer, the amount of the stamp duty reserve tax charged is an amount equal to the excess, if any, of the stamp duty reserve tax charge due on the transfer after the deduction of the
stamp duty paid.

You
will not be entitled to a foreign tax credit with respect to any UK stamp duty or stamp duty reserve tax, but may be entitled to a deduction subject to applicable limitations under the Code. You
are urged to consult your own tax advisors regarding the availability of a deduction under their particular circumstances.

Transfers of ADRs

No UK stamp duty will be payable on an instrument transferring an ADR or on a written agreement to transfer an ADR provided that the instrument of transfer or the agreement to
transfer is executed and remains at all times outside the United Kingdom. Where these conditions are not met, the transfer of, or agreement to transfer an ADR could, depending on the circumstances,
attract a charge to ad valorem stamp duty at the rate of 0.5% of the value of the consideration (rounded up to the nearest £5) plus interest and penalties if not stamped within
30 days of execution.

No
stamp duty reserve tax will be payable in respect of an agreement to transfer an ADR, whether made in or outside the United Kingdom.

Where
no sale is involved and no transfer of beneficial ownership has occurred, a transfer of shares by the depositary or its nominee to the holder of an ADR upon cancellation of the ADR is subject to
UK stamp duty of £5 per instrument of transfer.

Issue and Transfer of Ordinary Shares in Registered Form

Except in relation to persons whose business is or includes the issue of depositary receipts of the provision of clearance services or their nominees, the allotment and issue
of shares by us will not normally give rise to a charge to UK stamp duty or stamp duty reserve tax.

Transfers
of shares, as opposed to ADSs, will attract ad valorem stamp duty normally at the rate of 0.5% of the value of the consideration (rounded up to the nearest £5). A charge to stamp
duty reserve tax, normally at the rate of 0.5% of the consideration, arises, in the case of an unconditional agreement to transfer shares, on the date of the agreement, and in the case of a
conditional agreement the date on which the agreement becomes unconditional. In the case of transfers effected through the CREST system, the stamp duty reserve tax is collected through the system. In
other cases, the stamp duty reserve tax is payable on the seventh day of the month following the month in which the charge arises. Where an instrument of transfer is executed and duly stamped before
the expiry of a period of six years beginning with the date of that agreement, any stamp duty reserve tax that has not been paid ceases to be payable, and if any stamp duty reserve tax has been paid a
claim may be made for its repayment.

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Information Reporting and Backup Withholding

Payments that relate to the ordinary shares or ADSs that are made in the United States or by a US related financial intermediary will be subject to information reporting.
Information reporting generally will require each paying agent making payments, which relate to a share or ADS, to provide the IRS with information, including the beneficial owner's name, address,
taxpayer identification number, and the aggregate amount of dividends paid to such beneficial owner during the calendar year. These reporting requirements, however, do not apply to all beneficial
owners. Specifically, corporations, securities broker-dealers, other financial institutions, tax-exempt organizations, qualified pension and profit sharing trusts and individual retirement
accounts are all excluded from reporting requirements.

If
you are a depositary participant or indirect participant holding shares or ADSs on behalf of a beneficial owner, or paying agent making payments for a share or ADS, you may be required to backup
withhold, as a backup against the beneficial owner's US Federal income tax liability, a portion of each payment of dividends on our shares or ADSs in the event that the beneficial owner of a share or
ADS:



This
backup withholding tax is not an additional tax and may be credited against your US Federal income tax liability if the required information is furnished to the IRS.

Documents on Display

We are subject to the filing requirements of the Securities Exchange Act of 1934 and file periodic reports with the Securities and Exchange Commission, commonly referred to as
the SEC. You may read and copy any documents that we have filed with the SEC at the SEC's Public Reference Room located at 450 Fifth Street, NW Washington, DC 20549. You may also call
the SEC at 1-800-SEC-0330 for further information about the Public Reference Room. Some of our SEC filings and submissions are available on the SEC's internet site
at www.sec.gov.

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Item 11. Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Our treasury operates as a centralized service managing interest rate and foreign exchange risk and financing. Our Board of Directors agrees and reviews policies and financial
instruments for risk management. We utilize different derivative financial instruments to enhance our ability to manage risk, including interest rate and foreign currency price risk. We enter into
derivative instruments for periods consistent with related underlying exposures, and they do not constitute positions independent of those exposures. We do not enter into derivative contracts for
speculative purposes.

Currency Risk

We publish our financial statements in Pounds Sterling and conduct our business in many foreign currencies. As a result, we are subject to foreign currency exchange risk due to
exchange rate movements. We are exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of some of our subsidiaries and the translation
of the results and underlying net assets of our foreign subsidiaries.

Gains
and losses on foreign currency debt and foreign exchange contracts held for the purposes of hedging balance sheet translation exposures are taken to reserves. We manage our translation exposure
on a net asset basis, including an appropriate amount of goodwill that has been written-off to reserves. This aims to align the hedging contracts with the intangible by market and
currency. We hedge our
translation exposure by holding offsetting liabilities. Where debt held does not match the underlying exposure we utilize forward purchase and sale contracts and foreign exchange swaps in order to
better align our earnings with our liabilities. Contracts typically have maturities of less than one year. Principal currencies include the Euro, US Dollar, Canadian Dollar and Japanese Yen.

We
have revenues and expenses denominated in foreign currencies and, as a result, are exposed to foreign currency exchange rate risk. To manage exchange rate risk of transaction exposures, we net our
future estimated foreign currency revenues and expenses, to the extent practicable, to take advantage of natural offsets. We use foreign currency option, swap and forward contracts with maturities of
up to 18 months to manage the estimated remaining net exposure. It is our policy to hedge each currency forward a minimum of 12 months at 8090% of the net exposure. Based on
our average annual net foreign currency positions during 2001, a 10% adverse change in average annual foreign currency exchange rates would not be material to our financial position or results of
operations.

Interest Rate Risk

We use fixed and variable-rate (LIBOR) debt to finance our operations. In particular, we have issued fixed-rate bonds and commercial paper. These debt
obligations expose us to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest
expense also decreases. We believe it is prudent to limit the variability of a portion of our interest payments. We manage our variable rate interest rate exposure in proportions and limits approved
by our Board of Directors.

We
manage exposures to interest rate fluctuations on borrowings and deposits by using interest rate swaps and swaptions. It is our policy to maintain between 50% and 70% of our net debt at fixed rates
of interest with a target of 60%.

Liquidity Risk

Our liquidity risk policy aims to ensure that we have sufficient cash or committed credit facilities at all times to meet all current and forecast liabilities as they fall due,
while minimizing our borrowing costs

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within approved funding parameters (i.e. taking account of our risk profile, ability to access different debt markets and our desire to increase market visibility by accessing different debt
markets).

We
target minimum headroom cover, being committed facilities above anticipated peak debt requirements, of at least £300 million. Where possible, we will spread our borrowing
facilities over a number of years to minimize the risks and disruption associated with renegotiating maturing facilities.

Credit Risk

We may only make investments in money market fixed-term deposits, certificates of deposit or commercial paper. Maximum maturities for such instruments are six
months. We may only make investments in certificates of deposit or commercial paper in paper with an A-1/P-1 short-term credit rating. We are not allowed to exceed
maximum exposure limit to any counterparty of £100 million. We do not permit investment in counterparties rated below A3, unless there is no alternative in a particular location in
which we operate.

Commodity Price Risk

We hedge some of our expected commodity purchases based on internal forecast requirements. A confidence rating is applied to forecast purchases, and we will hedge up to, but
not exceed, a predetermined confidence ratio. We do not consider that our open commodity future contracts outstanding at 31 August 2002 and associated gains or losses on those contracts
are material.

Employee Share Plans

Awards and option grants vesting under the various employee share plans are generally satisfied by the transfer of existing ordinary shares or ADSs. These awards and option
grants are generally hedged through the purchase of ordinary shares or ADSs.

Sensitivity Analysis

For financial instruments held, we use a sensitivity analysis technique that measures the changes in the fair value of our financial instruments from hypothetical changes in
the market rates.

The
sensitivity to the interest rates model used measures changes in the net present value of all future cashflows for net borrowings based on hypothetical parallel shifts in local interest rates of
100 basis points. The model relies on the evolution of the entire yield curve, meaning both the reference short-term rate, as well as every point on the curve fluctuate by the same amount.
The timing of the change is instantaneous. Total fixed rate borrowings are made up of bonds outstanding. Fixed to floating rate swaps are then used to achieve the desired debt structure. The
£57 million amount for fixed rate sensitivity reflects only those portions for which fixed rate debt was not swapped into a floating rate. All other sensitivity to interest rates in
the amount of £27 million occurs from short-term borrowings, commercial paper, short-term loans and the floating rate element of interest rate swaps.

The
foreign exchange sensitivity model measures changes in the fair values of all foreign exchange derivatives used for transaction and translation hedging based on a 10% fluctuation in Pounds
Sterling. Also reported is the additional foreign exchange exposure that arises as a result of foreign denominated borrowings. In all cases, the effect of co-movements between currency
pairs is not considered, meaning the impact of currency fluctuations is taken in isolation of all other currency pairs. Disclosure numbers are based on the largest potential loss resulting from
instantaneous exchange rates movements. In cases where both appreciation and depreciation of a particular exchange rate adversely impact the portfolio, the larger of the two impacts is considered and
reported.

The
amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market conditions occur. Actual results in the future may differ materially

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from those projected results due to developments in the global financial markets which may cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the
table below, which therefore should not be considered a projection of likely future events and losses.

The
estimated changes in the fair values of borrowings and derivative financial instruments at 31 August 2002 are set out in the table below. Such analysis is for information purposes only. In
practice, market rates rarely change in isolation.

|                           |                    | 31 August 2002   |      
|-------------------------- | ------------------ | ---------------- | -----
|
|
|
|
|Borrowing:                 |                    |                  |      
|                           | Floating rate debt |                  | 977  
|                           | Fixed rate debt    |                  | 1,616
|Foreign Exchange Contract: |                    |                  |      
|                           | Transaction:       |                  |      
|                           |                    | US Dollar        |      
|                           |                    | South Korean Won |      
|                           |                    | NZ Dollar        |      
|                           |                    | Other            |      
|                           | Translation        |                  | 1    
|                           |                    |                  |      
|Total                      |                    | 2,793            |      
|                           |                    |                  |      

Item 12. Description of Securities other than Equity Securities

Not
applicable.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

Our
Chief Executive, Philip Bowman, and Group Finance Director, Graham Hetherington, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined
in the Securities and Exchange Act of 1934 Rule 13a-14(c)) as of a date within 90 days of the filing date of this annual report. Based on that evaluation, the Chief Executive and Group Finance
Director have concluded that our disclosure controls and procedures are effective to ensure that material information relating to us is made known to such officers by others within the Group in order
to allow timely decisions regarding required disclosure. There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

The
Group's disclosure controls and procedures are underpinned by its internal control and risk management procedures. The Board of Directors has received and reviewed regular reports during the
fiscal year on internal control and risk and has reviewed the effectiveness of the Group's systems of internal control.

The
Board of Directors has final responsibility for the system of internal control maintained by the Group. The responsibility for establishing and operating detailed control procedures within each
operating business lies with the operating Board and local management. The approach to internal control is risk based, with risk management processes including an evaluation of the likelihood and
impact of risks. This system provides reasonable, but not absolute, assurance against material loss and includes the safeguarding of assets, the maintenance of proper accounting records, the
reliability of financial information, compliance with appropriate legislation, regulation and best practice, and the identification and mitigation of business risks.

Group
and local management are responsible for the identification and evaluation of key applicable business, operational, compliance and financial risks. These risks are assessed on a continual basis,
taking into account the overall risk environment, and may be associated with a variety of internal or external sources including control breakdowns, disruption in information systems, competition,
natural catastrophe and regulatory requirements.

Group
businesses participate in regular periodic strategic reviews which include consideration of long term financial projections, business risks and the evaluation of business alternatives. Operating
units prepare annual budgets; performance against budget is actively monitored both at the level of the Board of Allied Domecq Spirits & Wine Limited and the Quick Service Restaurants executive
and the Board of Directors, supported by regular forecasts.

A
process of annual control self-assessment and hierarchical reporting provides for a documented and auditable trail of accountability from the local business unit to regional management
to executive management. This process includes an internal control questionnaire which is completed for all business units and reviewed by regional management. The questionnaire is tailored by region
to reflect the potential risks and the control environment of the region and each region has appointed a business risk champion to challenge, validate and collate the responses into regionally owned
reports. These

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self-assessment tools provide for successive assurances at increasingly higher levels of management and, finally, to the Board of Directors.

The
process and the supporting documentation are reviewed by the Group's internal auditors for completeness and accuracy of compliance with UK corporate governance practice. Planned corrective
actions, where applicable, are independently monitored for timely completion. Through these mechanics, risk assessment and reporting, internal controls and disclosure controls have been embedded in
ongoing operations. Business performance is continually monitored and reviewed, risks identified in a timely manner, their financial implications assessed, control procedures re-evaluated
and corrective actions agreed and implemented.

In
addition the Group's disclosure committee is responsible for considering the materiality of information to be included in this annual report as well as determining the Group's disclosure
obligations on a timely basis. The disclosure committee reports to our Chief Executive and Group Finance Director.

Internal controls

There have not been any significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of the most recent
evaluation of such controls.

Item 16. [Reserved]

72

---

PART III

Item 17. Financial Statements

Not
applicable.

73

---

Item 18. Financial Statements

See
pages F-1 through F-70.

74

---

Item 19. Exhibits

INDEX TO EXHIBITS

|Exhibit |  | Description                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1     |  | Memorandum and Articles of Association of Allied Domecq PLC, as amended, dated 31 January 2002*                                                                                                         
|2.1     |  | Form of ADS Deposit Agreement, dated as of 24 June 2002, as amended on 15 July 2002, by and among Allied Domecq PLC and JPMorgan Chase Bank, as depositary, and Holders of American Depositary Receipts*
|2.2     |  | Form of Ordinary Share Certificate*                                                                                                                                                                     
|2.3     |  | Form of American Depositary Receipt*                                                                                                                                                                    
|6.1     |  | For a statement explaining how earnings per share information was calculated, see Note 10 to our Audited Consolidated Financial Statements                                                              
|8.1     |  | For a list of Allied Domecq PLC's subsidiaries, see "Item 4Information on the CompanyOrganizational Structure"                                                                                        

---

75

---



INDEX TO FINANCIAL STATEMENTS

Allied Domecq PLC: Audited Consolidated Financial Statements



|Independent Auditor's Report to the Shareholders and Board of Allied Domecq PLC                         
|--------------------------------------------------------------------------------------------------------
|Consolidated Profit and Loss Account for the three years ended 31 August 2002                           
|Consolidated Statement of Total Recognized Gains and Losses for the three years ended 31 August 2002    
|Note of Consolidated Historical Cost Profits and Losses for the three years ended 31 August 2002        
|Consolidated Balance Sheet as at 31 August 2002 and 2001                                                
|Consolidated Reconciliation of Movements in Shareholders' Funds for the three years ended 31 August 2002
|Consolidated Cash Flow Statement for the three years ended 31 August 2002                               
|Accounting Policies                                                                                     
|Notes to the Consolidated Financial Statements                                                          

F-1

---



INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS AND  BOARD OF ALLIED DOMECQ PLC

We have audited the accompanying consolidated balance sheet of Allied Domecq PLC and subsidiaries (the "Group") as at 31 August 2002 and 2001, and the related
consolidated profit and loss account, consolidated statement of total recognized gains and losses, note of consolidated historical cost profits and losses, consolidated reconciliation of movements in
shareholders' funds and consolidated cash flow statement for each of the years in the three-year period ended 31 August 2002 presented on pages F-3
to F-70. These consolidated financial statements are the responsibility of the Directors of Allied Domecq PLC. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We
conducted our audits in accordance with generally accepted auditing standards in the United Kingdom and United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the aforementioned consolidated financial statements present fairly, in all material respects, the financial position of Allied Domecq PLC and subsidiaries as at
31 August 2002 and 2001 and the results of their operations and their cash flows for each of the years in the three-year period ended 31 August 2002, in conformity
with generally accepted accounting principles in the United Kingdom.

As
more fully described in the "FRS No. 19 Deferred Tax" paragraph of the Accounting Policies note to the consolidated financial statements, the Group has adopted FRS No. 19 Deferred Tax
in the year ended 31 August 2002. Consequently, the Group's consolidated financial statements as at 31 August 2001, and for the two year period ended 31 August 2001 referred to
above have been restated.

Generally
accepted accounting principles in the United Kingdom vary in certain significant respects from generally accepted accounting principles in the United States. Application of generally
accepted accounting principles in the United States would have affected net income for the three years ended
31 August 2002 and shareholders' equity as at 31 August 2002 and 2001, to the extent summarized in note 33 to the consolidated financial statements. As discussed in
note 33 to the consolidated financial statements, effective 1 September 2001, the Group fully adopted the provisions of Statement of Financial Accounting Standards ("SFAS")
No. 142, "Goodwill and Other Intangible Assets".

KPMG Audit Plc

Chartered
Accountants
Registered Auditor
London, England

28
October 2002

F-2

---



ALLIED DOMECQ PLC    CONSOLIDATED PROFIT AND LOSS ACCOUNT

|                                                                             |                          |     |    | Year ended 31 August 2002 |        | Year ended 31 August 2001 (restated) |      | Year ended 31 August 2000 (restated) |       
|---------------------------------------------------------------------------- | ------------------------ | --- | -- | ------------------------- | ------ | ------------------------------------ | ---- | ------------------------------------ | ------
|
|
|
|Continuing activities                                                        |                          |     |    | 3,184                     |        |                                     |      | 3,184                                |       
|Acquired activities                                                          |                          |     |    | 150                       |        |                                     |      | 150                                  |       
|Discontinued activities                                                      |                          |     |    |                          |        |                                     |      |                                     |       
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Group turnover and share of turnover of joint venture undertaking            |                          | 2   |    | 3,334                     |        |                                     |      | 3,334                                |       
|Less: share of turnover of joint venture                                     |                          |     |    |                           |        |                                      |      |                                      |       
|                                                                             | discontinued activities |     |    |                           |       |                                      |     |                                      |      
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Turnover                                                                     |                          |     |    | 3,334                     |        |                                     |      | 3,334                                |       
|Operating costs                                                              |                          |     |    |                           |        |                                      |      |                                      |       
|                                                                             | goodwill amortization   |     | 6  |                           |       |                                      | (38  | )                                    | (38   
|                                                                             | Mexican excise rebate   |     | 6  |                           |       |                                      | 213  |                                      | 213   
|                                                                             | other                   |     | 6  |                           | (2,739 | )                                    | (84  | )                                    | (2,823
|Continuing activities                                                        |                          |     |    | 567                       |        | 125                                  |      | 692                                  |       
|Acquired activities                                                          |                          |     |    | 28                        |        | (34                                  | )    | (6                                   | )     
|Discontinued activities                                                      |                          |     |    |                          |        |                                     |      |                                     |       
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Operating profit                                                             |                          |     |    | 595                       |        | 91                                   |      | 686                                  |       
|Share of profits of associated undertakings                                  |                          |     |    |                           |        |                                      |      |                                      |       
|                                                                             | continuing activities   |     | 15 |                           | 15     |                                      |     |                                      | 15    
|                                                                             | discontinued activities |     |    |                           |       |                                      |     |                                      |      
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Trading profit                                                               |                          | 2   |    | 610                       |        | 91                                   |      | 701                                  |       
|Profit on sale of businesses in continuing and discontinued activities       |                          | 7   |    |                          |        |                                     |      |                                     |       
|Profit on disposal of fixed assets in continuing and discontinued activities |                          | 7   |    |                          |        |                                     |      |                                     |       
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Profit on ordinary activities before finance charges                         |                          |     |    | 610                       |        | 91                                   |      | 701                                  |       
|Finance charges                                                              |                          | 8   |    | (130                      | )      |                                     |      | (130                                 | )     
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Profit on ordinary activities before taxation                                |                          |     |    | 480                       |        | 91                                   |      | 571                                  |       
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Taxation                                                                     |                          | 7,9 |    | (120                      | )      | (46                                  | )    | (166                                 | )     
|Profit on ordinary activities after taxation                                 |                          |     |    | 360                       |        | 45                                   |      | 405                                  |       
|Minority interests                                                           |                          |     |    |                           |        |                                      |      |                                      |       
|                                                                             | equity and non-equity   |     | 24 |                           | (13    | )                                    |     |                                      | (13   
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Profit earned for ordinary shareholders for the year                         |                          |     |    | 347                       |        | 45                                   |      | 392                                  |       
|Ordinary dividends                                                           |                          | 11  |    | (141                      | )      |                                     |      | (141                                 | )     
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Retained profit                                                              |                          | 23  |    | 206                       |        | 45                                   |      | 251                                  |       
|                                                                             |                          |     |    |                           |        |                                      |      |                                      |       
|Earnings per ordinary share:                                                 |                          |     |    |                           |        |                                      |      |                                      |       
|                                                                             | basic                   |     | 10 |                           | 32.6p  |                                      | 4.2p |                                      | 36.8p 
|                                                                             | diluted                 |     | 10 |                           | 32.5p  |                                      | 4.2p |                                      | 36.7p 

The accompanying notes are an integral part of these consolidated financial statements.

F-3

---



ALLIED DOMECQ PLC    CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES

|                                                                     |  | Year ended 31 August |  
|-------------------------------------------------------------------- |  | -------------------- | -
|
|
|
|Profit earned for ordinary shareholders for the year                 |  | 392                  |  
|Currency translation differences on foreign currency net investments |  | (23                  | )
|Deferred taxationorigination and reversal of timing differences     |  | (12                  | )
|                                                                     |  |                      |  
|Total recognized gains and losses for the year                       |  | 357                  |  
|                                                                     |  |                      |  

NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES

|                                                              |  | Year ended 31 August
|------------------------------------------------------------- |  | --------------------
|
|
|
|Profit on ordinary activities before taxation                 |  | 571                 
|Realization of property revaluation gains of prior years      |  |                    
|                                                              |  |                     
|Historical cost profit on ordinary activities before taxation |  | 571                 
|                                                              |  |                     
|Historical cost retained profit                               |  | 251                 
|                                                              |  |                     

The
accompanying notes are an integral part of these consolidated financial statements.

F-4

---



ALLIED DOMECQ PLC    CONSOLIDATED BALANCE SHEET

|                                             |  |    |  | 31 August |  
|-------------------------------------------- |  | -- |  | --------- | -
|
|
|
|Fixed assets                                 |  |    |  |           |  
|Intangible assets                            |  | 12 |  | 1,316     |  
|Tangible assets                              |  | 13 |  | 877       |  
|Investments and loans                        |  | 14 |  | 126       |  
|Associated undertakings                      |  | 15 |  | 71        |  
|                                             |  |    |  |           |  
|Total fixed assets                           |  |    |  | 2,390     |  
|                                             |  |    |  |           |  
|Current assets                               |  |    |  |           |  
|Stocks                                       |  | 16 |  | 1,302     |  
|Debtors due within one year                  |  | 17 |  | 736       |  
|Debtors due after more than one year         |  | 17 |  | 332       |  
|Cash at bank and in hand                     |  |    |  | 169       |  
|                                             |  |    |  |           |  
|Total current assets                         |  |    |  | 2,539     |  
|                                             |  |    |  |           |  
|Creditors (due within one year)              |  |    |  |           |  
|Short term borrowings                        |  | 20 |  | (971      | )
|Other creditors                              |  | 18 |  | (1,022    | )
|                                             |  |    |  |           |  
|Total current liabilities                    |  |    |  | (1,993    | )
|                                             |  |    |  |           |  
|Net current assets                           |  |    |  | 546       |  
|                                             |  |    |  |           |  
|Total assets less current liabilities        |  |    |  | 2,936     |  
|Creditors (due after more than one year)     |  |    |  |           |  
|Loan capital                                 |  | 20 |  | (1,776    | )
|Other creditors                              |  | 18 |  | (90       | )
|                                             |  |    |  |           |  
|Total creditors due after more than one year |  |    |  | (1,866    | )
|                                             |  |    |  |           |  
|Provisions for liabilities and charges       |  | 19 |  | (284      | )
|                                             |  |    |  |           |  
|Net assets                                   |  |    |  | 786       |  
|                                             |  |    |  |           |  
|Capital and reserves                         |  |    |  |           |  
|Called up share capital                      |  | 22 |  | 277       |  
|Share premium account                        |  | 23 |  | 165       |  
|Merger reserve                               |  | 23 |  | (823      | )
|Profit and loss account                      |  | 23 |  | 1,087     |  
|                                             |  |    |  |           |  
|Shareholders' fundsequity                   |  |    |  | 706       |  
|Minority interestsequity and non-equity     |  | 24 |  | 80        |  
|                                             |  |    |  |           |  
|                                             |  |    |  | 786       |  
|                                             |  |    |  |           |  

The accompanying notes are an integral part of these consolidated financial statements.

F-5

---



ALLIED DOMECQ PLC    CONSOLIDATED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

|                                                        |  | Year ended 31 August |  
|------------------------------------------------------- |  | -------------------- | -
|
|
|
|Shareholders' funds at the beginning of the year        |  | 341                  |  
|                                                        |  |                      |  
|Total recognized gains and losses for the year          |  | 357                  |  
|Ordinary dividends                                      |  | (141                 | )
|Ordinary share capital issued (net of costs)            |  | 149                  |  
|Capital reduction due to disposal of UK Retail business |  |                     |  
|Reversal of notional UK Retail FRS No. 19 deferred tax  |  |                     |  
|Goodwill written back on disposals                      |  |                     |  
|                                                        |  |                      |  
|Net movement in shareholders' funds                     |  | 365                  |  
|                                                        |  |                      |  
|Shareholders' funds at the end of the year              |  | 706                  |  
|                                                        |  |                      |  

The
accompanying notes are an integral part of these consolidated financial statements.

F-6

---



ALLIED DOMECQ PLC    CONSOLIDATED CASH FLOW STATEMENT

|                                                                                |  |    |  | Year ended 31 August |  
|------------------------------------------------------------------------------- |  | -- |  | -------------------- | -
|
|
|
|Reconciliation of operating profit to net cash inflow from
operating activities |  |    |  |                      |  
|Operating profit                                                                |  |    |  | 686                  |  
|Goodwill amortization                                                           |  |    |  | 38                   |  
|Exceptional operating costs                                                     |  |    |  | 64                   |  
|Depreciation                                                                    |  |    |  | 75                   |  
|Increase in stocks                                                              |  |    |  | (94                  | )
|Increase in debtors                                                             |  |    |  | (22                  | )
|Increase/(decrease) in creditors                                                |  |    |  | 71                   |  
|Expenditure against provisions for reorganization and restructuring costs       |  |    |  | (36                  | )
|Other items                                                                     |  |    |  | (22                  | )
|                                                                                |  |    |  |                      |  
|Net cash inflow from operating activities                                       |  |    |  | 760                  |  
|                                                                                |  |    |  |                      |  
|Consolidated cash flow statement                                                |  |    |  |                      |  
|Net cash inflow from operating activities                                       |  |    |  | 760                  |  
|Dividends received from associated undertakings                                 |  |    |  | 11                   |  
|Returns on investments and servicing of finance                                 |  | 26 |  | (133                 | )
|Taxation (paid)/refunded                                                        |  | 26 |  | (178                 | )
|Capital expenditure and financial investment                                    |  | 26 |  | (712                 | )
|Acquisitions and disposals                                                      |  | 26 |  | (586                 | )
|Equity dividends paid                                                           |  |    |  | (133                 | )
|                                                                                |  |    |  |                      |  
|Cash (outflow)/inflow before use of liquid resources and financing              |  |    |  | (971                 | )
|Management of liquid resources                                                  |  |    |  | (21                  | )
|Financing                                                                       |  | 26 |  | 798                  |  
|                                                                                |  |    |  |                      |  
|(Decrease)/increase in cash in the year                                         |  |    |  | (194                 | )
|                                                                                |  |    |  |                      |  
|Reconciliation of net cash flow to movement in net debt                         |  |    |  |                      |  
|(Decrease)/increase in cash in the year                                         |  |    |  | (194                 | )
|Increase/(decrease) in liquid resources                                         |  |    |  | 21                   |  
|(Increase)/decrease in loan capital                                             |  |    |  | (649                 | )
|                                                                                |  |    |  |                      |  
|Movement in net debt resulting from cash flows                                  |  |    |  | (822                 | )
|Exchange adjustments                                                            |  |    |  | 98                   |  
|                                                                                |  |    |  |                      |  
|Movement in net debt during the year                                            |  |    |  | (724                 | )
|Opening net debt                                                                |  |    |  | (1,854               | )
|                                                                                |  |    |  |                      |  
|Closing net debt                                                                |  | 28 |  | (2,578               | )
|                                                                                |  |    |  |                      |  

The
accompanying notes are an integral part of these consolidated financial statements.

F-7

---

ALLIED DOMECQ PLC

ACCOUNTING POLICIES

Basis of accounting

The accounts are prepared under the historical cost convention and comply with accounting policies generally accepted in the United Kingdom ("UK GAAP"). The accounts adopt
Financial Reporting Standard ("FRS") No. 17 Retirement Benefits in line with the transitional timetable laid down by the standard. FRS No. 19 Deferred Tax has been adopted in full and
required a restatement of prior years results.

Note 33
describes the significant differences between UK GAAP and US generally accepted accounting principles ("US GAAP") and presents a reconciliation of net income and shareholders' equity
from UK GAAP to US GAAP as a result of such differences.

Basis of consolidation

Allied Domecq PLC (the "Group" or "Company") accounts consolidate the accounts of the Company and its interests in subsidiary undertakings. Interests in associated
undertakings, where the Group has the ability to exercise significant influence over the associate, which is usually evidenced by an ownership interest of 20% or greater, are included using the equity
method of accounting. Under the equity method of accounting, the Group's share of profits less losses from associates are included in the Group profit and loss account. The holding value of associates
in the Group balance sheet is calculated by reference to the Group's equity in the net assets of such undertakings. The results of businesses acquired or disposed of during the year are consolidated
for the period from, or up to, the date control passes.

Acquisitions

On the acquisition of a business, or an interest in an associate, fair values, reflecting conditions at the date of the acquisition, are attributed to the net assets acquired.
Adjustments are also made to bring accounting policies in line with those of the Group.

Intangible fixed assets

Goodwill arising on acquisitions of a business since 1 September 1998 is capitalized and amortized by equal installments over its anticipated useful life, but not
exceeding 20 years. Goodwill arising on acquisitions prior to 1 September 1998 was charged directly to reserves. On disposal of a business, any attributable goodwill previously
eliminated against reserves is included in the calculation of any gain or loss. Other purchased intangible assets are also capitalized and amortized over their estimated useful economic lives on a
straight-line basis. Where purchased intangible assets, such as brands, are regarded as having indefinite useful economic lives, they are not amortized but are subject to annual impairment reviews.

Impairment
reviews are performed where there is an indication of potential impairment. If the carrying value of an intangible asset exceeds its estimated recoverable amount, any impairment is charged
to the profit and loss account. The estimated recoverable amount of such assets is determined based on discounted projected future operating cash flows from the asset.

Tangible fixed assets

Tangible fixed assets are capitalized at cost. Depreciation is provided to write off the cost less the estimated residual value of assets by equal installments over their
estimated useful economic lives as

F-8

---

follows: Land and buildingsthe shorter of 50 years or the length of the lease; distilling, maturing and storage equipment20 to 30 years; other plant and
equipment and fixtures and fittings5 to 10 years; and computer software4 years. No depreciation is provided on freehold land.

Impairment
reviews are performed where there is an indication of potential impairment. If the carrying amount of an asset exceeds its discounted estimated future cash flows, the impairment is charged
to the profit and loss account. Such impairment is determined in the same manner as intangible assets.

Fixed asset investments

Fixed asset investments are stated at cost, less provision for any permanent diminution in value.

Turnover

Turnover represents sales to external customers (including excise duties and shipping and handling but excluding sales taxes) and franchise income. The Group recognizes
turnover when products are delivered to customers consistent with sales terms. Initial non-refundable franchise fees paid by franchisees are recognized upon substantial completion of the
services required by the license agreement. Continuing franchise fees and royalty income are based on a percentage of gross sales and are recognized as turnover on an accrual basis as earned.

Shipping and handling costs

Shipping and handling costs are included in the consolidated profit and loss within other operating costs.

Advertising

Advertising production costs are charged to the profit and loss account the first time the advertising is made public. In addition to media advertising, other types of
advertising and promotional costs are charged directly to operating costs as incurred.

Cash

Cash includes all cash balances and short term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of
cash.

Leases

Operating lease rentals are charged to the profit and loss account on a straight line basis over the respective terms of the leases.

Stocks

Stocks are valued at the lower of cost and net realizable value. Cost comprises purchase price or direct production cost, together with duties and manufacturing overheads. The
cost of spirits and wine stocks is determined by the weighted average cost method.

Stocks
are included in current assets, although a portion of such stocks may be held for periods longer than one year.

F-9

---

Deferred tax and restatement of financial statements to reflect the adoption of FRS No. 19

FRS No. 19 requires full provision to be made for deferred tax assets and liabilities arising from timing differences between the recognition of gains and losses in the
consolidated financial statements and their recognition in a tax computation. It also requires deferred tax assets to be recognized to the extent that they are regarded as recoverable. Prior to the
adoption of FRS No. 19, deferred tax was only provided on a partial provision basis. The new standard was implemented for the year ending 31 August 2002 and has been applied by
retroactively restating all periods. Compliance with this standard resulted in a reduction in the share of reserves of associated undertakings of £7 million and an increase in the
deferred tax position of £46 million at 31 August 2001. As a result of the FRS No. 19 restatement the overall tax charge for the year ended
31 August 2001 did not change.

Following
the adoption of FRS No. 19 the opening deferred taxation liability of £111 million, included within Provisions for liabilities and charges, has been grossed up to
reflect deferred tax assets of £10 million which are now included within debtors.

Financial instruments

The Group uses derivative financial instruments to manage exposures to movements in interest and exchange rates. Transactions involving financial instruments are accounted for
as follows:



Foreign currencies

Monetary
assets and liabilities arising from transactions in foreign currencies are translated to Pounds Sterling at the rate of exchange prevailing at the date of transaction. Subsequent movements in
exchange rates are included in the Group profit and loss account.

The
results of undertakings outside the UK are translated to Pounds Sterling at weighted average exchange rates each month. The closing balance sheets of undertakings outside the UK are translated
at year end rates. Exchange rate differences arising from the translation of foreign currency denominated balance sheets to closing rates are dealt with through reserves.

F-10

---

Pension and post retirement medical benefits

Pension and post retirement medical benefit costs are charged to the profit and loss account on a systematic basis over the estimated service lives of employees using the
projected unit credit method and a set of long term actuarial assumptions.

Exceptional Items

Exceptional items are material charges or gains that are associated with the ordinary activities of the Group that the Board of Directors determine, individually or in
aggregate, would have a material impact on the true and fair view of specific line items in the consolidated financial statements. Such items are included within the profit and loss account heading
and disclosed in the notes to the consolidated financial statements.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year's presentation.

New accounting standards in the United Kingdom

The consolidated financial statements comply, to the extent detailed below, with the following new Financial Reporting Standards issued by the UK Accounting Standards Board.

FRS No. 17 Retirement Benefits

This standard replaces the use of actuarial values for assets in a pension plan in favor of a market-based approach. In order to cope with the volatility inherent in this
measurement basis, the standard requires that the profit and loss account shows the relatively stable ongoing service cost, interest cost and expected return on assets. Fluctuations in market values
are reflected in the statement of total recognized gains and losses. In order to allow companies to comply, the following transitional arrangements apply: (i) for accounting periods ending on
or after 22 June 2001, closing balance sheet information (no comparatives required) is to be given in the notes only; (ii) for accounting periods ending on or after 22 June 2002,
opening and closing balance sheet information and performance statement information (both profit and loss account and statement of total recognized gains and losses) for the period (no comparatives
required) is to be given in the notes only. The date this standard becomes fully effective has been extended from accounting periods ending on or after 22 June 2003 to accounting periods
beginning on or after 1 January 2005. The Group has complied with the transitional disclosure requirements of this standard.

F-11

---



ALLIED DOMECQ PLC        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.    Adoption of Financial Reporting Standard No. 19 Deferred Tax

As explained within the Accounting Policies section of our Audited Consolidated Financial Statements we adopted FRS No. 19 Deferred Tax in the year ended
31 August 2002 which resulted in the restatement of the financial statements of prior periods. The following table provides a reconciliation between profit earned for ordinary shareholders and
earnings per ordinary share as originally reported and after adoption of FRS No. 19 for the two years ended 31 August 2001 and 2000.

|                                                                     |  | Year ended
31 August
|-------------------------------------------------------------------- |  | --------------------
|
|
|
|Profit earned for ordinary shareholdersas originally reported       |  | 344                 
|Adoption of FRS No. 19 Deferred Tax                                  |  |                    
|                                                                     |  |                     
|Profit earned for ordinary shareholdersrestated                     |  | 344                 
|                                                                     |  |                     
|Earnings per ordinary sharebasic and diluted as originally reported |  | 32.6                
|Adoption of FRS No. 19 Deferred Tax                                  |  |                    
|                                                                     |  |                     
|Earnings per ordinary sharebasic and diluted restated               |  | 32.6                
|                                                                     |  |                     

2.    Segmental and geographical analysis

The Group operates in two reportable segments, Spirits & Wine and Quick Service Restaurants (QSR).

Each
operating segment is individually managed and has separate results that are reviewed by the Group's chief operating decision maker for the purposes of allocating resources. The income statement
for each segment excludes interest and other debt expense and the provision for taxes that are centrally managed at the corporate level and, accordingly, such items are not presented by segment.

The
Spirits & Wine business owns and distributes a portfolio of premium branded spirits and wines. Premium distilled brands include Ballantine's Scotch whisky, Kahlúa liqueur,
Malibu coconut-flavored rum-based spirit, Beefeater gin, Canadian Club whisky, Sauza tequila, Courvoisier cognac, Tia Maria liqueur and Maker's Mark bourbon.

The
QSR business operates an international quick service restaurants franchise business that is comprised of over 10,000 distribution points in the US and internationally. The QSR business is
comprised of Dunkin' Donuts (coffee and baked goods), Togo's (sandwiches), and Baskin-Robbins (ice cream).

The
Group also has a 25% investment in Britannia Soft Drinks, which is reported separately. The share of profits from Britannia Soft Drinks was £16 million in 2002 (2001:
£13 million, 2000: £9 million), and share of net assets was £46 million in 2002 (2001: £43 million, 2000:
£36 million).

F-12

---

a)    Segmental activity by class of business

|                                                     |  | Continuing |   |       |  |    | 
|---------------------------------------------------- |  | ---------- | - | ----- |  | -- | 
|
|
|
|Year ended 31 August 2002                            |  |            |   |       |  |    | 
|Turnover                                             |  | 3,018      |   | 316   |  |   | 
|                                                     |  |            |   |       |  |    | 
|Trading profit before exceptional items and goodwill |  | 516        |   | 78    |  | 16 | 
|Goodwill amortization (Note a)                       |  | (38        | ) |      |  |   | 
|Exceptional items (Note b)                           |  | 129        |   |      |  |   | 
|                                                     |  |            |   |       |  |    | 
|Trading profit after exceptional items               |  | 607        |   | 78    |  | 16 | 
|Profit on sale of businesses                         |  |           |   |      |  |   | 
|                                                     |  |            |   |       |  |    | 
|Profit before finance charges                        |  | 607        |   | 78    |  | 16 | 
|                                                     |  |            |   |       |  |    | 
|Finance charges                                      |  |            |   |       |  |    | 
|                                                     |  |            |   |       |  |    | 
|Profit on ordinary activities before taxation        |  |            |   |       |  |    | 
|                                                     |  |            |   |       |  |    | 
|Depreciation                                         |  | 65         |   | 10    |  |   | 
|Capital expenditure                                  |  | 99         |   | 34    |  |   | 
|Assets employed (Note c)                             |  | 3,620      |   | 120   |  | 46 | 
|Average numbers employed                             |  | 10,940     |   | 1,173 |  |   | 
|Year ended 31 August 2001                            |  |            |   |       |  |    | 
|Turnover                                             |  | 2,571      |   | 308   |  |   | 
|                                                     |  |            |   |       |  |    | 
|Trading profit before exceptional items and goodwill |  | 458        |   | 72    |  | 13 | 
|Goodwill amortization (Note a)                       |  | (12        | ) |      |  |   | 
|Exceptional items (Note b)                           |  | 38         |   |      |  |   | 
|                                                     |  |            |   |       |  |    | 
|Trading profit after exceptional items               |  | 484        |   | 72    |  | 13 | 
|Profit on sale of businesses                         |  | 2          |   |      |  |   | 
|                                                     |  |            |   |       |  |    | 
|Profit before finance charges                        |  | 486        |   | 72    |  | 13 | 
|                                                     |  |            |   |       |  |    | 
|Finance charges                                      |  |            |   |       |  |    | 
|                                                     |  |            |   |       |  |    | 
|Profit on ordinary activities before taxation        |  |            |   |       |  |    | 
|                                                     |  |            |   |       |  |    | 
|Depreciation                                         |  | 46         |   | 10    |  |   | 
|Capital expenditure                                  |  | 70         |   | 27    |  |   | 
|Assets employed (Note c)                             |  | 2,536      |   | 114   |  | 43 | 
|Average numbers employed                             |  | 8,403      |   | 1,382 |  |   | 

F-13

---

|Year ended 31 August 2000                            |  |       |   |       |   |    |  |        |   |    |  |        |  
|---------------------------------------------------- |  | ----- | - | ----- | - | -- |  | ------ | - | -- |  | ------ | -
|Turnover                                             |  | 2,297 |   | 305   |   |   |  | 2,602  |   | 30 |  | 2,632  |  
|                                                     |  |       |   |       |   |    |  |        |   |    |  |        |  
|Trading profit before exceptional items and goodwill |  | 414   |   | 64    |   | 9  |  | 487    |   | 13 |  | 500    |  
|Goodwill amortization (Note a)                       |  | (3    | ) |      |   |   |  | (3     | ) |   |  | (3     | )
|Exceptional items (Note b)                           |  | (47   | ) | (7    | ) |   |  | (54    | ) |   |  | (54    | )
|                                                     |  |       |   |       |   |    |  |        |   |    |  |        |  
|Trading profit after exceptional items               |  | 364   |   | 57    |   | 9  |  | 430    |   | 13 |  | 443    |  
|Profit on sale of businesses                         |  |      |   |      |   |   |  |       |   | 13 |  | 13     |  
|Profit/(loss) on disposal of fixed assets            |  | 55    |   | (9    | ) |   |  | 46     |   |   |  | 46     |  
|                                                     |  |       |   |       |   |    |  |        |   |    |  |        |  
|Profit before finance charges                        |  | 419   |   | 48    |   | 9  |  | 476    |   | 26 |  | 502    |  
|                                                     |  |       |   |       |   |    |  |        |   |    |  |        |  
|Finance charges                                      |  |       |   |       |   |    |  |        |   |    |  | (83    | )
|                                                     |  |       |   |       |   |    |  |        |   |    |  |        |  
|Profit on ordinary activities before taxation        |  |       |   |       |   |    |  |        |   |    |  | 419    |  
|                                                     |  |       |   |       |   |    |  |        |   |    |  |        |  
|Depreciation                                         |  | 41    |   | 10    |   |   |  | 51     |   |   |  | 51     |  
|Capital expenditure                                  |  | 64    |   | 23    |   |   |  | 87     |   |   |  | 87     |  
|Assets employed (Note c)                             |  | 1,705 |   | 94    |   | 36 |  | 1,835  |   |   |  | 1,835  |  
|Average numbers employed                             |  | 8,609 |   | 2,323 |   |   |  | 10,932 |   |   |  | 10,932 |  

---

F-14

---



b)    Geographical analysis

|                                                                                    |                                                 | Europe |       | Americas |       | Rest of
World |     | Total |      
|----------------------------------------------------------------------------------- | ----------------------------------------------- | ------ | ----- | -------- | ----- | ------------- | --- | ----- | -----
|
|
|By country of operation                                                             |                                                 |        |       |          |       |               |     |       |      
|Year ended 31 August 2002                                                           |                                                 |        |       |          |       |               |     |       |      
|Turnover                                                                            |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | continuing activities                          |        | 1,892 |          | 1,836 |               | 419 |       | 4,147
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | to Group companies                             |        |       |          |       |               |     |       | (813 
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | external                                       |        |       |          |       |               |     |       | 3,334
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Trading profit                                                                      |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | continuing activities                          |        | 252   |          | 312   |               | 46  |       | 610  
|                                                                                    | goodwill amortization in continuing activities |        | (19   | )        | (1    | )             | (18 | )     | (38  
|                                                                                    | exceptional items in continuing activities     |        | (32   | )        | 161   |               |    |       | 129  
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Profit before finance charges                                                       |                                                 | 201    |       | 472      |       | 28            |     | 701   |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Assets employed                                                                     |                                                 | 1,650  |       | 1,376    |       | 760           |     | 3,786 |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Year ended 31 August 2001                                                           |                                                 |        |       |          |       |               |     |       |      
|Turnover                                                                            |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | continuing activities                          |        | 1,543 |          | 1,785 |               | 254 |       | 3,582
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | to Group companies                             |        |       |          |       |               |     |       | (703 
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | external                                       |        |       |          |       |               |     |       | 2,879
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Trading profit                                                                      |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | continuing activities                          |        | 212   |          | 298   |               | 33  |       | 543  
|                                                                                    | goodwill amortization                          |        | (6    | )        |      |               | (6  | )     | (12  
|                                                                                    | exceptional items in continuing activities     |        | (9    | )        | 47    |               |    |       | 38   
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    |                                                 | 197    |       | 345      |       | 27            |     | 569   |      
|Profit on sale of businesses in continuing and discontinued activities              |                                                 | 5      |       | 1        |       |              |     | 6     |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Profit before finance charges                                                       |                                                 | 202    |       | 346      |       | 27            |     | 575   |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Assets employed                                                                     |                                                 | 1,341  |       | 939      |       | 413           |     | 2,693 |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Year ended 31 August 2000                                                           |                                                 |        |       |          |       |               |     |       |      
|Turnover                                                                            |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | continuing activities                          |        | 1,484 |          | 1,568 |               | 147 |       | 3,199
|                                                                                    | discontinued activities                        |        | 30    |          |      |               |    |       | 30   
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    |                                                 | 1,514  |       | 1,568    |       | 147           |     | 3,229 |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | to Group companies                             |        |       |          |       |               |     |       | (597 
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | external                                       |        |       |          |       |               |     |       | 2,632
|Trading profit                                                                      |                                                 |        |       |          |       |               |     |       |      
|                                                                                    | continuing activities                          |        | 199   |          | 271   |               | 17  |       | 487  
|                                                                                    | goodwill amortization                          |        |      |          |      |               | (3  | )     | (3   
|                                                                                    | exceptional items in continuing activities     |        | (39   | )        | (15   | )             |    |       | (54  
|                                                                                    | discontinued activities                        |        | 13    |          |      |               |    |       | 13   
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|                                                                                    |                                                 | 173    |       | 256      |       | 14            |     | 443   |      
|Profit on sale of businesses in discontinued activities                             |                                                 | 13     |       |         |       |              |     | 13    |      
|Profit/(loss) on disposal of fixed assets in continuing and discontinued activities |                                                 | 55     |       | (9       | )     |              |     | 46    |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Profit before finance charges                                                       |                                                 | 241    |       | 247      |       | 14            |     | 502   |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      
|Assets employed                                                                     |                                                 | 930    |       | 739      |       | 166           |     | 1,835 |      
|                                                                                    |                                                 |        |       |          |       |               |     |       |      

F-15

---

Export sales from the United Kingdom were £448 million (2001: £454 million, 2000: £604 million)
including £336 million (2001: £348 million, 2000: £482 million) sales to Group companies.

|                          |                                                 | Europe |       | Americas |       | Rest of
World |     | Total |      
|------------------------- | ----------------------------------------------- | ------ | ----- | -------- | ----- | ------------- | --- | ----- | -----
|
|
|By country of destination |                                                 |        |       |          |       |               |     |       |      
|Year ended 31 August 2002 |                                                 |        |       |          |       |               |     |       |      
|Turnover                  |                                                 |        |       |          |       |               |     |       |      
|                          | continuing activities                          |        | 1,213 |          | 1,599 |               | 522 |       | 3,334
|                          |                                                 |        |       |          |       |               |     |       |      
|Trading profit            |                                                 |        |       |          |       |               |     |       |      
|                          | continuing activities                          |        | 209   |          | 311   |               | 90  |       | 610  
|                          | goodwill amortization in continuing activities |        | (19   | )        | (1    | )             | (18 | )     | (38  
|                          | exceptional items in continuing activities     |        | (32   | )        | 161   |               |    |       | 129  
|                          |                                                 |        |       |          |       |               |     |       |      
|                          |                                                 | 158    |       | 471      |       | 72            |     | 701   |      
|                          |                                                 |        |       |          |       |               |     |       |      
|Year ended 31 August 2001 |                                                 |        |       |          |       |               |     |       |      
|Turnover                  |                                                 | 982    |       | 1,542    |       | 355           |     | 2,879 |      
|                          |                                                 |        |       |          |       |               |     |       |      
|Trading profit            |                                                 |        |       |          |       |               |     |       |      
|                          | continuing activities                          |        | 186   |          | 289   |               | 68  |       | 543  
|                          | goodwill amortization                          |        | (6    | )        |      |               | (6  | )     | (12  
|                          | exceptional items in continuing activities     |        | (9    | )        | 47    |               |    |       | 38   
|                          |                                                 |        |       |          |       |               |     |       |      
|                          |                                                 | 171    |       | 336      |       | 62            |     | 569   |      
|                          |                                                 |        |       |          |       |               |     |       |      
|Year ended 31 August 2000 |                                                 |        |       |          |       |               |     |       |      
|Turnover                  |                                                 |        |       |          |       |               |     |       |      
|                          | continuing activities                          |        | 968   |          | 1,392 |               | 242 |       | 2,602
|                          | discontinued activities                        |        | 30    |          |      |               |    |       | 30   
|                          |                                                 |        |       |          |       |               |     |       |      
|                          |                                                 | 998    |       | 1,392    |       | 242           |     | 2,632 |      
|                          |                                                 |        |       |          |       |               |     |       |      
|Trading profit            |                                                 |        |       |          |       |               |     |       |      
|                          | continuing activities                          |        | 193   |          | 251   |               | 43  |       | 487  
|                          | goodwill amortization                          |        |      |          |      |               | (3  | )     | (3   
|                          | exceptional items in continuing activities     |        | (39   | )        | (15   | )             |    |       | (54  
|                          | discontinued activities                        |        | 13    |          |      |               |    |       | 13   
|                          |                                                 |        |       |          |       |               |     |       |      
|                          |                                                 | 167    |       | 236      |       | 40            |     | 443   |      
|                          |                                                 |        |       |          |       |               |     |       |      

F-16

---

The
following table includes external turnover (by country of origin and destination) and long lived assets by significant geographical territory. Long lived assets include intangible and tangible
assets, investments and loans, associated and joint venture undertakings.

|                          |  | UK  |  | Spain |  | USA   |  | Mexico |  | Others |  | Total
|------------------------- |  | --- |  | ----- |  | ----- |  | ------ |  | ------ |  | -----
|
|
|By country of operation   |  |     |  |       |  |       |  |        |  |        |  |      
|Year ended 31 August 2002 |  |     |  |       |  |       |  |        |  |        |  |      
|Turnover by origin        |  | 388 |  | 411   |  | 1,122 |  | 330    |  | 1,083  |  | 3,334
|Turnover by destination   |  | 299 |  | 385   |  | 1,101 |  | 330    |  | 1,219  |  | 3,334
|Long lived assets         |  | 294 |  | 88    |  | 829   |  | 53     |  | 1,126  |  | 2,390
|Year ended 31 August 2001 |  |     |  |       |  |       |  |        |  |        |  |      
|Turnover by origin        |  | 348 |  | 322   |  | 1,041 |  | 349    |  | 819    |  | 2,879
|Turnover by destination   |  | 248 |  | 322   |  | 1,024 |  | 349    |  | 936    |  | 2,879
|Long lived assets         |  | 264 |  | 34    |  | 266   |  | 52     |  | 931    |  | 1,547
|Year ended 31 August 2000 |  |     |  |       |  |       |  |        |  |        |  |      
|Turnover by origin        |  | 403 |  | 318   |  | 883   |  | 359    |  | 669    |  | 2,632
|Turnover by destination   |  | 283 |  | 316   |  | 874   |  | 360    |  | 799    |  | 2,632
|Long lived assets         |  | 234 |  | 35    |  | 172   |  | 49     |  | 272    |  | 762  

3.    Exchange rates

|             |  | Average rate for the year |  | Closing rate 31 August
|------------ |  | ------------------------- |  | ----------------------
|
|
|US Dollar    |  | 1.46                      |  | 1.44                  
|Mexican Peso |  | 13.70                     |  | 13.51                 
|Euro         |  | 1.60                      |  | 1.63                  

F-17

---

4.    Staff costs

|                                        |           |       |    |       |    |     |   |       |   | Year ended 31 August |   
|--------------------------------------- | --------- | ----- | -- | ----- | -- | --- | - | ----- | - | -------------------- | --
|
|
|
|
|
|Remuneration                            |           | 69    |    | 274   |    | 3   |   | 11    |   | 357                  |   
|Social security                         |           | 8     |    | 33    |    |    |   | 1     |   | 42                   |   
|Pension plans                           |           |       |    |       |    |     |   |       |   |                      |   
|                                        | UK       |       | (9 | )     |   |     |  |       |  |                      | (9
|                                        | overseas |       |   |       | (1 | )   |  |       |  |                      | (1
|Post retirement medical benefits (PRMB) |           | 1     |    | 6     |    |    |   |      |   | 7                    |   
|                                        |           |       |    |       |    |     |   |       |   |                      |   
|                                        |           | 69    |    | 312   |    | 3   |   | 12    |   | 396                  |   
|                                        |           |       |    |       |    |     |   |       |   |                      |   
|Average numbers employed                |           |       |    |       |    |     |   |       |   |                      |   
|2002Continuing activities              |           | 1,563 |    | 8,465 |    | 146 |   | 1,347 |   | 11,521               |   
|2002Acquired activities                |           |      |    | 569   |    |    |   | 23    |   | 592                  |   
|                                        |           |       |    |       |    |     |   |       |   |                      |   
|2002Total                              |           | 1,563 |    | 9,034 |    | 146 |   | 1,370 |   | 12,113               |   
|                                        |           |       |    |       |    |     |   |       |   |                      |   
|2001Continuing operations              |           | 1,547 |    | 7,531 |    | 106 |   | 601   |   |                      |   
|2000Continuing operations              |           | 1,745 |    | 8,104 |    | 90  |   | 993   |   |                      |   

5.    Pension plans

The Group operates a number of pension and post retirement healthcare plans throughout the world. The major pension plans, which cover the majority of Group employees, are of
the defined benefit type
and the assets of the plans are largely held in separate trustee administered funds. The UK defined benefit plans are now closed to new members. Prepaid costs of £302 million (2001:
£295 million, 2000: £247 million) are included in debtors (note 17). The Group has continued to account for pensions in accordance with SSAP No. 24
and the disclosures given in a) are those required by the standard. FRS No. 17 Retirement Benefits was issued in November 2000, but will not be mandatory for the Group
until the year ended 31 August 2006. Additional information required under the transitional arrangements of FRS No. 17, to the extent not given in a) are set out in
b) below.

a)    Allied Domecq pension plans

United
Kingdom

The
assets and liabilities of the UK plans are reviewed regularly by an independent actuary. A full assessment is undertaken every three years with a further limited review each year for reporting
purposes. The latest triennial assessment was carried out in April 2000 and the latest review was at April 2002. The actuarial assessments consider assets and liabilities at the date of
calculation and forecast assets and liabilities in the future according to a set of assumptions, the most important of which are the rate of return on the assets, the rates of increase in
remuneration, pensions and dividends and the average future terms on which assets would be sold to meet liabilities.

The
actuarial reviews as at April 2002 were carried out on the basis of assumed future investment returns of 7.0% (2001 and 2000: 7.75%) per annum, remuneration increases of 4.75% (2001: 4.75%,
2000: 5.25%) per annum, pension increases of 3.5% (2001: 3.5%, 2000: 3.0%) per annum and a long-term net yield on UK equities of 2.68% (2001: 2.68% and 2000: 3.23%) per annum.

F-18

---



The market value of the assets of the Main Fund was £1,397 million and the funding level was 106%. The market value of the Executive Fund was
£379 million and the funding level was 83%.

Overseas

The
Group operates defined benefit pension plans and post retirement medical benefit plans in several countries overseas, with the most significant being in the US and Canada. The latest actuarial
reviews of these plans were carried out as at 31 August 2001 by independent actuaries for the purpose of calculating pension costs for the fiscal year ended 31 August 2002.

The
actuarial reviews of the US plans showed that the combined market value of the pension plan assets was £186 million at 31 August 2001 (2000:
£254 million). This represents approximately 144% (2000: 202%) of the value of benefits that had accrued to pensioners, deferred pensioners and members at that date. The
principal assumptions used to calculate the liabilities at 31 August 2001 were assumed future investment returns of 7.25% (2000: 7.75%) per annum and earnings increases of 5% (2000: 5%)
per annum.

The
actuarial reviews of the Canadian plans showed that the combined market value of the pension plan assets was £132 million at 31 August 2001
(2000: £171 million). This represents approximately 108% (2000: 140%) of the value of benefits that had accrued to pensioners, deferred pensioners and members at that
date. The principal assumptions used to calculate the liabilities at 31 August 2001 were assumed future investment returns of 6.94% (2000: 6.97%) per annum and earnings increases of 4.98%
(2000: 4.98%) per annum.

b)    FRS No. 17 Retirement Benefits

|                                                                                      |  | 31 August 2002 |  | 31 August 2001
|------------------------------------------------------------------------------------- |  | -------------- |  | --------------
|
|
|
|Rate of general increase in salaries                                                  |  | 4.1            |  | 4.8           
|Rate of increase to benefit increases                                                 |  | 3.1            |  | 2.1           
|Discount rate for plan liabilities                                                    |  | 6.0            |  | 6.5           
|Inflation                                                                             |  | 2.3            |  | 2.1           
|The expected long term rate of returns and market values of the significant plans is: |  |                |  |               
|Equities                                                                              |  | 8.5            |  | 8.7           
|Bonds                                                                                 |  | 5.0            |  | 6.1           
|Property and other                                                                    |  | 5.2            |  | 4.4           

F-19

---

Net pension and post retirement medical benefits liability

|                                  |  | 31 August 2002 |   | 31 August 2001 |  
|--------------------------------- |  | -------------- | - | -------------- | -
|
|
|
|Equities                          |  | 896            |   | 206            |  
|Bonds                             |  | 458            |   | 115            |  
|Property and other                |  | 197            |   | 6              |  
|                                  |  |                |   |                |  
|Total market value of assets      |  | 1,551          |   | 327            |  
|Present value of plan liabilities |  | (1,941         | ) | (417           | )
|                                  |  |                |   |                |  
|Deficit in the plans              |  | (390           | ) | (90            | )
|Related deferred tax asset        |  | 117            |   | 27             |  
|                                  |  |                |   |                |  
|Net pension liability             |  | (273           | ) | (63            | )
|                                  |  |                |   |                |  

The
disclosures for 31 August 2001 have been amended to include the Mexican and Dutch pension plans; the original disclosures related to the main US and Canadian pension and post retirement
medical benefit plans only.

The
amounts charged to profit and loss account under FRS No. 17 would have been:

|                                |  | 31 August 2002 |   | 31 August 2001 |  
|------------------------------- |  | -------------- | - | -------------- | -
|
|
|
|Regular service cost            |  | 6              |   | 9              |  
|Past service cost               |  |               |   | 7              |  
|Interest cost                   |  | 110            |   | 28             |  
|Expected return on assets       |  | (130           | ) | (32            | )
|                                |  |                |   |                |  
|Profit and loss (credit)/charge |  | (14            | ) | 12             |  
|                                |  |                |   |                |  

F-20

---

Analysis
of amount that would have been included within the Group statement of recognized gains and losses under FRS No. 17:

|                                                                                             |  | 31 August 2002 |  
|-------------------------------------------------------------------------------------------- |  | -------------- | -
|
|
|
|Actual return less expected return on pension plan assets                                    |  | (320           | )
|Experience gains and losses arising on the plan liabilities                                  |  | (62            | )
|Changes in assumptions underlying the present value of the plan liabilities                  |  | (19            | )
|                                                                                             |  |                |  
|Actuarial loss recognized in Group statement of total recognized gains and losses            |  | (401           | )
|Deferred tax movement                                                                        |  | 120            |  
|                                                                                             |  |                |  
|Actuarial loss recognized in Group statement of total recognized gains and lossesnet of tax |  | (281           | )
|                                                                                             |  |                |  

The
movement in deficit during the year under FRS No. 17 would have been:

|                                                           |  | 31 August 2002 |  
|---------------------------------------------------------- |  | -------------- | -
|
|
|
|Deficit in plan at beginning of year net of deferred tax   |  | (22            | )
|Movement in year:                                          |  |                |  
|Current service cost                                       |  | (6             | )
|Past service cost                                          |  |               |  
|Contributions                                              |  | 16             |  
|Other finance income                                       |  | 20             |  
|Currency translation adjustment                            |  |               |  
|Deferred tax movement on actuarial loss                    |  | 120            |  
|Actuarial loss                                             |  | (401           | )
|                                                           |  |                |  
|Deficit in plan at the end of the year net of deferred tax |  | (273           | )
|                                                           |  |                |  

F-21

---

6.    Operating costs

|                                                        |                        |    |  |     |       |    |     |     | Year ended 31 August |    
|------------------------------------------------------- | ---------------------- | -- |  | --- | ----- | -- | --- | --- | -------------------- | ---
|
|
|
|Change in stocks of finished goods and work in progress |                        |    |  | (88 | )     | (6 | )   | (94 | )                    | (72
|Raw materials and consumables                           |                        |    |  | 785 |       | 55 |     | 840 |                      | 714
|Customs and excise duty paid                            | ongoing               |    |  |     | 619   |    | 19  |     | 638                  |    
|                                                        | Mexican excise rebate |    |  |     | (213  | )  |    |     | (213                 | )  
|Staff costs                                             |                        | 4  |  | 388 |       | 8  |     | 396 |                      | 325
|Depreciation                                            |                        | 13 |  | 71  |       | 4  |     | 75  |                      | 56 
|Goodwill amortization                                   |                        |    |  | 30  |       | 8  |     | 38  |                      | 12 
|Other operating charges including exceptional items     |                        |    |  | 835 |       | 68 |     | 903 |                      | 678
|Operating leases                                        |                        |    |  |     |       |    |     |     |                      |    
|                                                        | hire of equipment     |    |  |     | 11    |    |    |     | 11                   |    
|                                                        | property rents        |    |  |     | 48    |    |    |     | 48                   |    
|Payments to auditor                                     |                        |    |  |     |       |    |     |     |                      |    
|                                                        | fees for audit        |    |  |     | 6     |    |    |     | 6                    |    
|                                                        |                        |    |  |     |       |    |     |     |                      |    
|                                                        |                        |    |  |     | 2,492 |    | 156 |     | 2,648                |    
|                                                        |                        |    |  |     |       |    |     |     |                      |    

Other
operating charges include advertising and promotion of £443 million (2001: £330 million, 2000: £301 million), shipping and
handling costs of £70 million (2001: £55 million, 2000: £40 million) and foreign currency transaction losses of
£7 million (2001: £5 million, 2000: £7 million).

2002
operating costs include nil in respect of discontinued operations (2001: nil, 2000: £14 million). The parent company audit fee was nil (2001 and
2000: nil). Other payments to the auditor were £4 million (2001: £4 million, 2000: £1 million), which primarily relate to
due diligence and taxation services.

Mexican excise rebate

The Mexican Supreme Court ruled in September 2000 in favor of an action, brought by a number of spirits companies challenging the excise duty regime applicable to their Mexican
operations during 1999 and 1998. Its ruling determined that the tax was inequitable because it was applied only to large companies.

The
Mexican Supreme Court awarded compensation which, by agreement with the Mexican tax authorities in October 2001, is principally received by offset against current and future duties and taxes. At
31 August 2002, £260 million has been received and has been subject to applicable corporation tax at 35%. It is anticipated that the remaining recovery will be in the region
of £30 million to £50 million comprising excise duty rebate and related interest and inflation adjustments and will be fully recovered by 31 August 2003.

Due
to the size of the 2002 rebate it has been treated as an exceptional item and for comparative purposes the 2001 benefit has been reclassified from trading profit to exceptional items.

F-22

---

7.    Goodwill amortization and exceptional items

|                                                            |  | Year ended 31 August |  
|----------------------------------------------------------- |  | -------------------- | -
|
|
|
|Goodwill amortization                                       |  | (38                  | )
|                                                            |  |                      |  
|Exceptional items                                           |  |                      |  
|Mexican excise rebate                                       |  | 213                  |  
|Mexican social projects                                     |  | (11                  | )
|Acquisition integration costs                               |  | (36                  | )
|Termination of land lease                                   |  | (23                  | )
|Asset write-downs                                           |  | (14                  | )
|Year 2000 and EMU costs                                     |  |                     |  
|Aborted acquisition costs                                   |  |                     |  
|Surplus property provisions                                 |  |                     |  
|Restructuring and other costs                               |  |                     |  
|                                                            |  |                      |  
|Operating costs                                             |  | 129                  |  
|Profit on sale of businesses                                |  |                     |  
|Profit on disposal of fixed assets                          |  |                     |  
|                                                            |  |                      |  
|Total exceptional items                                     |  | 129                  |  
|                                                            |  |                      |  
|Goodwill amortization and exceptional items before taxation |  | 91                   |  
|Taxation                                                    |  | (46                  | )
|                                                            |  |                      |  
|Goodwill amortization and exceptional items after taxation  |  | 45                   |  
|                                                            |  |                      |  

Trading
profit for the year ended 31 August 2001 has been reclassified to treat the rebate of Mexican excise as an exceptional item.

The
cost of the Mexican social projects relate to the establishment of a trust fund for social and community projects.

The
Group's costs in relation to the acquisition integration program principally relate to redundancies, distribution realignment, office reorganizations and related legal and professional costs.

Termination
of land lease relates to costs associated with the planned termination of a land lease in California.

Asset
write downs during 2002 relate to the closure of the Dumbarton Distillery resulting from the Group's review of its distillery strategy. In 2000, the asset write downs related to obsolete
computer systems primarily in relation to production systems.

Year
2000 and EMU costs represented computer system and administration costs incurred in relation to the preparation for year 2000 and the Euro conversion. Aborted acquisition costs consisted of
external advisory fees. Surplus property provisions represented discounted lease commitments net of estimated sub-lease income on property not utilized by the Group.

Profit
on disposal of fixed assets during 2000 principally related to the sale of surplus UK properties in which the consideration received exceeded the carrying value.

F-23

---

8.    Finance charges

|                                                   |  | Year ended 31 August |  
|-------------------------------------------------- |  | -------------------- | -
|
|
|
|Interest on bank loans, overdrafts and other loans |  | 138                  |  
|Less: deposit and other interest receivable        |  | (8                   | )
|                                                   |  |                      |  
|Total                                              |  | 130                  |  
|                                                   |  |                      |  

9.    Taxation

The Group has adopted FRS No. 19 Deferred Tax during the year ended 31 August 2002. Consequently, the Group's consolidated financial statements for the two year
period ended 31 August 2001 have been restated.

|                                                                 |  | Year ended 31 August | 
|---------------------------------------------------------------- |  | -------------------- | 
|
|
|
|
|Taxation on profit on ordinary activities as previously reported |  | 128                  | 
|Effect of FRS No. 19 adoption                                    |  |                     | 
|                                                                 |  |                      | 
|As restated                                                      |  | 128                  | 
|                                                                 |  |                      | 

F-24

---

|                                                                             |                                                                              | Year ended 31 August |    
|---------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | -------------------- | ---
|
|
|
|
|The charge for taxation on the profit for the period comprises:              |                                                                              |                      |    
|Continuing operations                                                        |                                                                              |                      |    
|Current tax                                                                  |                                                                              |                      |    
|United Kingdom taxation                                                      |                                                                              |                      |    
|                                                                             | Corporation tax at 30% (2001: 30%, 2000: 30%)                                |                      | 18 
|                                                                             | Adjustment in respect of prior periods                                       |                      | (3 
|                                                                             | Double taxation relief                                                       |                      | (3 
|                                                                             |                                                                              |                      |    
|                                                                             |                                                                              | 12                   |    
|Overseas taxation                                                            |                                                                              |                      |    
|                                                                             | Corporation tax                                                              |                      | 188
|                                                                             | Adjustment in respect of prior periods                                       |                      | (26
|                                                                             |                                                                              |                      |    
|                                                                             |                                                                              | 162                  |    
|Taxation on attributable profit of associated and joint venture undertakings |                                                                              | 7                    |    
|                                                                             |                                                                              |                      |    
|Total current tax                                                            |                                                                              | 181                  |    
|Deferred tax                                                                 |                                                                              |                      |    
|                                                                             | Origination and reversal of timing differences                               |                      | (5 
|                                                                             | Recognition of deferred tax assets arising in prior periods                  |                      | (10
|                                                                             |                                                                              |                      |    
|                                                                             |                                                                              | 166                  |    
|Discontinued operations                                                      |                                                                              |                      |    
|                                                                             | United Kingdom taxation, corporation tax at 30% (2001: 30%, 2000: 30%)       |                      |   
|                                                                             | Taxation on attributable profit of associated and joint venture undertakings |                      |   
|                                                                             |                                                                              |                      |    
|                                                                             |                                                                              | 166                  |    
|                                                                             |                                                                              |                      |    

F-25

---

After adjusting for the tax charge on exceptional items and goodwill amortization of £46 million (2001: £15 million charge,
2000: £15 million credit), the taxation charge is £120 million (2001: £113 million, 2000: £95 million).

|                                                                      |                | Year ended 31 August
|--------------------------------------------------------------------- | -------------- | --------------------
|
|
|
|Profit on ordinary activities before taxation is analyzed as follows: |                |                     
|                                                                      | United Kingdom |                     
|                                                                      | Overseas       |                     
|                                                                      | Associates     |                     
|                                                                      |                |                     
|                                                                      |                | 571                 
|                                                                      |                |                     

A
reconciliation of the tax charge at the UK corporation tax rate of 30% (2001 and 2000: 30%) to the Group's tax on profit on ordinary continuing activities is shown below:

|                                                                    |  | Year ended 31 August |  
|------------------------------------------------------------------- |  | -------------------- | -
|
|
|
|
|Profit on ordinary activities before taxationcontinuing activities |  | 571                  |  
|                                                                    |  |                      |  
|Tax charge at UK corporation tax rate                               |  | 171                  |  
|Differences in overseas tax rates                                   |  | 18                   |  
|Adjustments to prior period tax charges                             |  | 2                    |  
|Movement on provisions                                              |  | (12                  | )
|Taxable intra-group dividend income                                 |  | 14                   |  
|Tax relief for repayment of debenture premia                        |  | (31                  | )
|Current year losses not recognized/prior year losses recognized     |  | (7                   | )
|Non deductible losses and expenditure                               |  | 22                   |  
|Non taxable income and gains                                        |  | (10                  | )
|Other                                                               |  | (1                   | )
|                                                                    |  |                      |  
|Taxation on profit on ordinary activitiescontinuing activities     |  | 166                  |  
|                                                                    |  |                      |  

10.  Earnings per share

Basic earnings per share of 36.8p (2001: 32.6p, 2000: 31.2p) has been calculated on earnings of £392 million (2001: £344 million, 2000:
£330 million) divided by the average number of shares of 1,066 million (2001: 1,054 million, 2000: 1,059 million).

Diluted
earnings per share of 36.7p (2001: 32.6p, 2000: 31.2p) has been calculated on earnings of £392 million (2001: £344 million, 2000:
£330 million) divided by the average number of shares and potentially dilutive ordinary shares of 1,069 million (2001: 1,055 million, 2000: 1,059 million). The
additional shares included in the dilutive earnings per share calculation for 2002 and 2001 result from the potential dilutive effect of ordinary shares held by the Group's employee trusts relating to
those employee share plans where the conditions for exercise would have been satisfied if 31 August 2002 and 31 August 2001 were the vesting dates of those plans.

F-26

---

|                                                                              |  | Year ended 31 August |  
|----------------------------------------------------------------------------- |  | -------------------- | -
|
|
|
|Average number of shares                                                      |  |                      |  
|Weighted average ordinary shares in issue during the year                     |  | 1,087                |  
|Weighted average ordinary shares owned by the Allied Domecq employee trusts   |  | (21                  | )
|                                                                              |  |                      |  
|Weighted average ordinary shares used in basic earnings per share calculation |  | 1,066                |  
|                                                                              |  |                      |  

11.  Ordinary dividends

|        |  | Total |  | Per Share
|------- |  | ----- |  | ---------
|
|
|
|
|Interim |  | 53    |  | 47       
|Final   |  | 88    |  | 80       
|        |  |       |  |          
|        |  | 141   |  | 127      
|        |  |       |  |          

12.  Intangible assets

|                                   |  |     |   |     |  |    |   | 31 August |  
|---------------------------------- |  | --- | - | --- |  | -- | - | --------- | -
|
|
|
|Cost                               |  |     |   |     |  |    |   |           |  
|At the beginning of the year       |  | 601 |   |    |  | 34 |   | 635       |  
|Currency translation adjustment    |  |    |   |    |  |   |   |          |  
|Additions                          |  | 184 |   | 555 |  | 1  |   | 740       |  
|                                   |  |     |   |     |  |    |   |           |  
|At the end of the year             |  | 785 |   | 555 |  | 35 |   | 1,375     |  
|                                   |  |     |   |     |  |    |   |           |  
|Amortization                       |  |     |   |     |  |    |   |           |  
|At the beginning of the year       |  | (15 | ) |    |  | (2 | ) | (17       | )
|Currency translation adjustment    |  |    |   |    |  |   |   |          |  
|Charged in the year                |  | (38 | ) |    |  | (4 | ) | (42       | )
|                                   |  |     |   |     |  |    |   |           |  
|At the end of the year             |  | (53 | ) |    |  | (6 | ) | (59       | )
|                                   |  |     |   |     |  |    |   |           |  
|Net balance at the end of the year |  | 732 |   | 555 |  | 29 |   | 1,316     |  
|                                   |  |     |   |     |  |    |   |           |  

Goodwill
purchased during the year ended 31 August 2002 principally relates to the acquisitions of Kuemmerling GmbH, Bodegas y Bebidas S.A. and Mumm Cuvée Napa (see
note 25) and is being amortized over twenty years. All goodwill relates to the Spirits & Wine segment.

Brands
purchased during the year relates to the acquisition of Malibu, a coconut-flavored rum-based spirit, on 22 May 2002, for a net cash consideration of
£555 million. The Group paid an additional £

F-27

---

5 million for stock held by the seller at the date of purchase. The primary reason for the purchase was the strategic acquisition of a global spirits brand. The results of operations of Malibu
have been included in the Group's Spirits & Wine segment from the date of purchase. The acquired brand intangible asset is determined to have an indefinite useful economic life. An impairment
review was carried out at the balance sheet date and the Board of Directors are satisfied that the brand has not suffered any loss in value.

Other
intangibles, which comprise distribution rights, are being amortized over ten years. The estimated amortization expense is estimated to be £3 million per year over the next
five years.

13.  Tangible assets

|                                 |  | Land and buildings |   | Plant and equipment |   | Total |  
|-------------------------------- |  | ------------------ | - | ------------------- | - | ----- | -
|
|
|Cost                             |  |                    |   |                     |   |       |  
|At 31 August 2001                |  | 617                |   | 644                 |   | 1,261 |  
|Currency translation adjustment  |  | (9                 | ) | (35                 | ) | (44   | )
|                                 |  |                    |   |                     |   |       |  
|                                 |  | 608                |   | 609                 |   | 1,217 |  
|Additionsacquisitions           |  | 66                 |   | 41                  |   | 107   |  
|capital expenditure             |  | 51                 |   | 82                  |   | 133   |  
|Disposals                        |  | (27                | ) | (55                 | ) | (82   | )
|                                 |  |                    |   |                     |   |       |  
|At 31 August 2002                |  | 698                |   | 677                 |   | 1,375 |  
|                                 |  |                    |   |                     |   |       |  
|Depreciation                     |  |                    |   |                     |   |       |  
|At 31 August 2001                |  | (149               | ) | (345                | ) | (494  | )
|Currency translation adjustment  |  | (4                 | ) | 12                  |   | 8     |  
|                                 |  |                    |   |                     |   |       |  
|                                 |  | (153               | ) | (333                | ) | (486  | )
|Disposals                        |  | 18                 |   | 45                  |   | 63    |  
|Charge for the year              |  | (10                | ) | (65                 | ) | (75   | )
|                                 |  |                    |   |                     |   |       |  
|At 31 August 2002                |  | (145               | ) | (353                | ) | (498  | )
|                                 |  |                    |   |                     |   |       |  
|Net book value at 31 August 2002 |  | 553                |   | 324                 |   | 877   |  
|                                 |  |                    |   |                     |   |       |  
|Net book value at 31 August 2001 |  | 468                |   | 299                 |   | 767   |  
|                                 |  |                    |   |                     |   |       |  

F-28

---

|                               |  | 31 August 2002 |  | 31 August 2001
|------------------------------ |  | -------------- |  | --------------
|
|
|
|Freehold land and buildings    |  | 630            |  | 511           
|Long lease land and buildings  |  | 14             |  | 13            
|Short lease land and buildings |  | 54             |  | 29            
|                               |  |                |  |               
|Total land and buildings       |  | 698            |  | 553           
|                               |  |                |  |               

The
carrying value of land not depreciated is £204 million (2001: £160 million).

14.  Investments and loans

|                                 |  | Investments |   |    |   |    |  
|-------------------------------- |  | ----------- | - | -- | - | -- | -
|
|
|
|
|At 31 August 2001                |  | 63          |   | 14 |   | 10 |  
|Currency translation adjustments |  |            |   |   |   | (1 | )
|Additions                        |  | 40          |   | 4  |   | 3  |  
|Disposals and transfers          |  | (1          | ) | (2 | ) | (4 | )
|                                 |  |             |   |    |   |    |  
|At 31 August 2002                |  | 102         |   | 16 |   | 8  |  
|                                 |  |             |   |    |   |    |  

Included
within listed investments is £93 million (2001: £61 million) in respect of a holding of 24,514,993 (2001: 17,221,999) ordinary shares of 25p each of the
Company, purchased by the Company and held by the trustees of the Group's employee trusts. The market value of these shares was £100 million (2001: £70 million)
at 31 August 2002.

The
unlisted investments include a holding of 1% in Suntory Limited, incorporated in Japan.

15.  Associated undertakings

|                                      |  | Cost |   | Unlisted companies share of reserves
(restated) |   | Listed companies share of reserves |   | Loans |  | Total
(restated) |  
|------------------------------------- |  | ---- | - | ----------------------------------------------- | - | ---------------------------------- | - | ----- |  | ---------------- | -
|
|
|At 31 August 2001                     |  | 44   |   | 15                                              |   | 14                                 |   | 2     |  | 75               |  
|Currency translation adjustment       |  | (1   | ) |                                                |   | (1                                 | ) |      |  | (2               | )
|Share of retained profit for the year |  |     |   | (3                                              | ) | 1                                  |   |      |  | (2               | )
|                                      |  |      |   |                                                 |   |                                    |   |       |  |                  |  
|At 31 August 2002                     |  | 43   |   | 12                                              |   | 14                                 |   | 2     |  | 71               |  
|                                      |  |      |   |                                                 |   |                                    |   |       |  |                  |  

The
share of profits before taxation was £15 million (2001: £22 million) and dividends received were £11 million (2001:
£9 million).

F-29

---

The
principal associate is a 25% equity interest in Britannia Soft Drinks Limited, a company engaged in the manufacture and sale of soft drinks.

Other
associates include Baskin-Robbins Japan (44% equity interest) and Baskin-Robbins Korea (33% equity interest) and the Group's interest in the Miller ready-to-drink
commercial partnership. Baskin-Robbins Japan and Baskin-Robbins Korea are both engaged in the development and operation of franchise stores, including the manufacture of products for franchise shops.
The Group granted Miller a license to use several trademarks, including Sauza and Stolichnaya, in connection with the manufacturing, marketing, promotion, distribution and sale of branded
ready-to-drink products.

Baskin-Robbins
Japan is the only listed associate and the market value of these shares was £18 million at 31 August 2002 (2001: £18 million).

Investments
in associates comprise the cost of shares, less goodwill written off on acquisitions prior to 1 September 1998 of £37 million (2001:
£37 million), the Group's share of reserves of £26 million (2001: £29 million), and loans to associates of £2 million (2001:
£2 million).

16.  Stocks

|                              |  | 31 August
|----------------------------- |  | ---------
|
|
|
|Raw materials and consumables |  | 52       
|Maturing inventory            |  | 953      
|Finished products             |  | 281      
|Bottles, cases and pallets    |  | 16       
|                              |  |          
|                              |  | 1,302    
|                              |  |          

17.  Debtors

|                                                                |  | 31 August
|--------------------------------------------------------------- |  | ---------
|
|
|
|Amounts due within one year                                     |  |          
|Trade debtors                                                   |  | 537      
|Advance corporation tax recoverable on foreign income dividends |  |         
|Deferred tax assets (note 19)                                   |  | 36       
|Other debtors                                                   |  | 111      
|Prepayments and accrued income                                  |  | 52       
|                                                                |  |          
|                                                                |  | 736      
|                                                                |  |          
|Amounts due after more than one year                            |  |          
|Pension prepayments (note 5)                                    |  | 302      
|Other debtors                                                   |  | 15       
|Prepayments and accrued income                                  |  | 15       
|                                                                |  |          
|                                                                |  | 332      
|                                                                |  |          

F-30

---

18.  Creditors

|                                     |  | 31 August
|------------------------------------ |  | ---------
|
|
|
|Amounts due within one year          |  |          
|Trade creditors                      |  | 175      
|Bills payable                        |  | 15       
|Other creditors                      |  | 286      
|Social security                      |  | 9        
|Taxation                             |  | 226      
|Accruals and deferred income         |  | 223      
|Deferred purchase consideration      |  |         
|Proposed dividend (note 11)          |  | 88       
|                                     |  |          
|                                     |  | 1,022    
|                                     |  |          
|Amounts due after more than one year |  |          
|Other creditors                      |  | 45       
|Accruals and deferred income         |  | 45       
|                                     |  |          
|                                     |  | 90       
|                                     |  |          

19.  Provisions for liabilities and charges

|                                                                   |  | Post retirement medical benefits |   | Reorganization and restructuring |   | Surplus properties |   | Deferred taxation (restated) |   | Total
(restated) |  
|------------------------------------------------------------------ |  | -------------------------------- | - | -------------------------------- | - | ------------------ | - | ---------------------------- | - | ---------------- | -
|
|
|At 31 August 2001                                                  |  | 103                              |   | 15                               |   | 16                 |   | 121                          |   | 255              |  
|Currency translation adjustment                                    |  | (6                               | ) |                                 |   |                   |   | (2                           | ) | (8               | )
|Timing differences within statement of recognized gains and losses |  |                                 |   |                                 |   |                   |   | 12                           |   | 12               |  
|Acquisition of businesses                                          |  |                                 |   |                                 |   |                   |   | 6                            |   | 6                |  
|Reclassification to pension prepayments (note 17)                  |  | (20                              | ) |                                 |   |                   |   |                             |   | (20              | )
|Utilized during the year                                           |  | (5                               | ) | (30                              | ) | (6                 | ) |                             |   | (41              | )
|Charged during the year                                            |  | 9                                |   | 64                               |   |                   |   | 7                            |   | 80               |  
|                                                                   |  |                                  |   |                                  |   |                    |   |                              |   |                  |  
|At 31 August 2002                                                  |  | 81                               |   | 49                               |   | 10                 |   | 144                          |   | 284              |  
|                                                                   |  |                                  |   |                                  |   |                    |   |                              |   |                  |  

The
future cost of the post retirement benefits is assessed in accordance with independent actuarial advice. Of the balance reported in August 2001, £20 million has been
reclassified as pension prepayments following a review of overseas pension and post retirement benefits.

The
provision for surplus properties will be utilized over the terms of the leases. The current value of the contractual obligation is £10 million (2001 and 2000:
£16 million).

F-31

---

Following
the adoption of FRS No. 19 Deferred Tax the opening deferred liability of £111 million has been grossed up to reflect deferred tax assets of
£10 million which are now included within debtors.

The
following table provides an analysis of the movement in reorganization and restructuring provisions from 31 August 2000 to 31 August 2002:

|                         |  | Employee costs |   | Other |   | Total |  
|------------------------ |  | -------------- | - | ----- | - | ----- | -
|
|
|At 31 August 2000        |  | 28             |   | 21    |   | 49    |  
|Utilized during the year |  | (21            | ) | (13   | ) | (34   | )
|                         |  |                |   |       |   |       |  
|At 31 August 2001        |  | 7              |   | 8     |   | 15    |  
|Utilized during the year |  | (10            | ) | (20   | ) | (30   | )
|Charged during the year  |  | 15             |   | 49    |   | 64    |  
|                         |  |                |   |       |   |       |  
|At 31 August 2002        |  | 12             |   | 37    |   | 49    |  
|                         |  |                |   |       |   |       |  

All
reorganization and restructuring charges are classified as exceptional items in the consolidated profit and loss account.

During
the year ended 31 August 2001, £21 million was spent on plans across the business to reduce approximately 550 global sales unit staff and central marketing personnel.
The remaining £13 million non-headcount related costs was spent primarily on ice cream manufacturing exit costs, IT systems and related costs and the disposal of surplus
properties.

At
31 August 2001, the £15 reorganization and restructuring provisions comprised of £7 million in employee costs and £8 million in other costs.
During the year ended 31 August 2002, the total provision of £7 million was spent to reduce approximately 200 global sales unit staff and central marketing personnel as part
of the restructuring programs across the business. In addition, approximately £7 million of non-headcount related costs was utilized on exiting ice-cream
manufacturing, remodeling QSR stores and tangible asset disposals.

During
the year ended 31 August 2002, reorganization and restructuring provisions charged in the year included £33 million created as part of an acquisition integration
program, £15 million of which relates to the reduction of approximately 380 production, sales and central office staff. The remaining non-headcount provision of
£18 million principally relates to distribution realignment, office reorganizations and legal and professional fees. During the year ended 31 August 2002, approximately 130
production staff were made redundant under this program at a cost of approximately £3 million. A further £11 million of this provision was utilized during the
year principally on office reorganizations and legal and professional fees. It is expected that the acquisition integration program will be completed during the year ended 31 August 2003.
Further provisions charged during the year related to £18 million for a lease termination penalty related to a land lease in California, £11 million for
investments in social and community projects in Mexico, of which £2 million has been utilized during 2002, and £2 million for the closure of the Dumbarton
Distillery.

F-32

---

As more fully described in the "Deferred tax and restatement of financial statements to reflect the adoption of FRS No. 19" paragraph of the Accounting Policies note, the Group has adopted FRS
No. 19 Deferred Tax during the year ended 31 August 2002. Consequently, the Group's consolidated financial statements for the two years ended 31 August 2001 have been restated.

Components of deferred tax were:

|                                                                   |                                         | 31 August |    
|------------------------------------------------------------------ | --------------------------------------- | --------- | ---
|
|
|
|Deferred taxation liabilities                                      |                                         |           |    
|                                                                   | Accelerated capital allowances          |           | 28 
|                                                                   | Provisions                              |           |   
|                                                                   | Write down of investments               |           | 44 
|                                                                   | Pension prepayments                     |           | 97 
|                                                                   | Stock                                   |           | 55 
|                                                                   | Unrealized foreign exchange differences |           | 35 
|                                                                   | Intangibles                             |           | 26 
|                                                                   | Others                                  |           | 1  
|                                                                   |                                         |           |    
|                                                                   |                                         | 286       |    
|                                                                   |                                         |           |    
|Deferred taxation assets                                           |                                         |           |    
|                                                                   | Operating losses and tax credits        |           | (78
|                                                                   | Debenture premia                        |           | (19
|                                                                   | Provisions for post retirement benefits |           | (25
|                                                                   | Inter-company stock transfers           |           | (28
|                                                                   | Provisions                              |           | (50
|                                                                   | Others                                  |           | (27
|                                                                   |                                         |           |    
|                                                                   |                                         | (227      | )  
|                                                                   | Less amounts not recognized             |           | 49 
|                                                                   |                                         |           |    
|                                                                   |                                         | (178      | )  
|                                                                   |                                         |           |    
|Deferred taxation liability                                        |                                         | 108       |    
|                                                                   |                                         |           |    
|Comprising:                                                        |                                         |           |    
|Deferred tax asset (note 17)                                       |                                         | (36       | )  
|Deferred tax liability                                             |                                         | 144       |    
|                                                                   |                                         |           |    
|                                                                   |                                         | 108       |    
|                                                                   |                                         |           |    
|At 31 August 2001                                                  |                                         | 111       |    
|Currency translation adjustment                                    |                                         | (3        | )  
|Timing differences within statement of recognized gains and losses |                                         | 12        |    
|Acquisition of businesses                                          |                                         | 3         |    
|Charged during the year                                            |                                         | (15       | )  
|                                                                   |                                         |           |    
|At 31 August 2002                                                  |                                         | 108       |    
|                                                                   |                                         |           |    

F-33

---

|Analyzed as: |                                         |     |     |     |    
|------------ | --------------------------------------- | --- | --- | --- | ---
|             | Current:            Deferred tax assets |     | (95 | )   | (79
|             | Deferred tax liabilities                |     | 71  |     | 83 
|             | Non-current:    Deferred tax assets     |     |    |     |   
|             | Deferred tax liabilities                |     | 132 |     | 107
|             |                                         |     |     |     |    
|             |                                         | 108 |     | 111 |    
|             |                                         |     |     |     |    

Deferred
tax assets of £49 million at 31 August 2002 (2001: £85 million) have not been recognized due to the degree of uncertainty over the
utilization of the underlying tax losses and deductions in certain tax jurisdictions.

Deferred
tax has not been provided for liabilities which might arise on the distribution of unappropriated profits of subsidiaries and associates where such amounts are considered permanently
reinvested. Determination of the tax liability that would arise on repatriation of these profits is not practical. The cumulative amount of unappropriated profits of overseas subsidiaries and
associates totaled approximately £1,799 million at 31 August 2002 (2001: £1,477 million).

Operating
losses of £154 million and tax credits of £23 million are carried forward at 31 August 2002 and are available to reduce future taxable income of
certain subsidiaries. £59 million of these operating losses have expiration dates through to 31 August 2016 and £95 million can be carried forward
indefinitely. The tax credits expire in the year ending 31 August 2011.

F-34

---

20.  Net debt

|                                           |  |         |  | 31 August |  
|------------------------------------------ |  | ------- |  | --------- | -
|
|
|
|
|Unsecured loans                            |  |         |  |           |  
|GBP250 million Bond (6.625%)*              |  | 2014    |  | 246       |  
|EUR600 million Bond (5.875%)*              |  | 2009    |  | 376       |  
|GBP450 million Bond (6.25%)*               |  | 2011    |  | 447       |  
|EUR800 million Bond (5.5%)*                |  | 2006    |  | 504       |  
|NZD125 million Capital Notes (9.3%)        |  | 2006    |  | 38        |  
|DEM500 million Notes (4.75%)*              |  | 2005    |  | 161       |  
|NZD500 million Revolving Credit Facility*  |  | 2002    |  | 115       |  
|Other loans                                |  |        |  | 16        |  
|Foreign currency swaps                     |  | Various |  | (59       | )
|Secured loans                              |  |         |  |           |  
|NZD225 million Revolving Credit Facility** |  | 2003    |  | 60        |  
|                                           |  |         |  |           |  
|Total                                      |  |         |  | 1,904     |  
|Less amounts repayable within one year     |  |         |  | (128      | )
|                                           |  |         |  |           |  
|Loan capital                               |  |         |  | 1,776     |  
|Short term borrowings                      |  |         |  | 971       |  
|Cash at bank and in hand                   |  |         |  | (169      | )
|                                           |  |         |  |           |  
|Net debt                                   |  |         |  | 2,578     |  
|                                           |  |         |  |           |  

The
short term borrowings are comprised of £749 million in commercial papers and £222 million due to banks.

---

The
Euro and GBP Bonds have been partially swapped into floating rate US Dollars.

|                                |  | 31 August
|------------------------------- |  | ---------
|
|
|
|Repayment schedule              |  |          
|More than five years            |  | 1,069    
|Between four and five years     |  |         
|Between three and four years    |  | 647      
|Between two and three years     |  |         
|Between one and two years       |  | 60       
|                                |  |          
|Loan capital due after one year |  | 1,776    
|Due within one year             |  | 971      
|                                |  |          
|Total borrowings                |  | 2,747    
|                                |  |          

F-35

---

The
funding policy of the Group is to maintain a broad portfolio of debt, diversified by source and maturity and to maintain minimum headroom cover of at least £300 million. At 31
August 2002, the Group had available undrawn committed bank facilities of £1,606 million (2001: £1,358 million) of which £580 million
(2001: £331 million) mature in less than one year and £1,026 million (2001: £1,027 million) between two and five years. The Group's committed
facilities (predominately the £1 billion Syndicated facility) are all subject to a minimum interest cover ratio (defined as the ratio of UK GAAP trading profit to net interest;
trading profit being the profit on ordinary activities before taking into account exceptional items charged to operating profit and profits on the sale of property and net interest) of 3 times and a
leverage ratio of 4 times, which we define as borrowings over EBITDA (earnings before interest, tax, depreciation and amortization). Where this ratio exceeds 4, but is less than 4.75, a temporary
pricing grid will come into force for up to two consecutive reporting dates, including half-year reports. The Group is in compliance with all of its debt covenants. In the event of
default, the borrowings are payable upon demand. There are cross default provisions on all major facilities.

21.  Financial instruments

The Group treasury operates as a centralized service managing interest rate and foreign exchange risk and financing. The Board of Directors agrees and reviews policies and
financial instruments for risk management. The Group utilizes certain derivative financial instruments to enhance its ability to manage risk, including interest rate and foreign currency price risk.
Derivative instruments are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Group does not enter into contracts
for speculative purposes.

Set
out below is a year end comparison of the current and book values of the Group's financial instruments by category excluding short term debtors and creditors. Where available, market rates have
been used to determine current values. Where market values are not available, current values have been calculated by discounting cash flows at prevailing interest and exchange rates.

|                                                              |  | 31 August 2002 |   | 31 August 2001 |  
|------------------------------------------------------------- |  | -------------- | - | -------------- | -
|
|
|
|Cash at bank and in hand                                      |  | 169            |   | 169            |  
|Short term debt (including current portion of long term debt) |  | (971           | ) | (971           | )
|Long term debt                                                |  | (1,776         | ) | (1,829         | )
|                                                              |  |                |   |                |  
|Total net debt                                                |  | (2,578         | ) | (2,631         | )
|                                                              |  |                |   |                |  

Interest rate risk management

The Group uses fixed and variable-rate (LIBOR) debt to finance its operations. In particular, it has issued fixed-rate bonds and commercial paper (CP).
These debt obligations expose the Group to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates
decrease, interest expense also decreases. Management

F-36

---

believes it is prudent to limit the variability of a portion of its interest payments. The Group manages its variable rate interest rate exposure in proportions and limits approved by the Board of
Directors.

Exposures
to interest rate fluctuations on borrowings and deposits are managed by using interest rate swaps and swaptions. It is the policy of the Group to hedge between 50% and 70% of net debt at
fixed rates of interest with a target of 60%.

At
31 August 2002, taking account of swaps, 61% (2001: 60%) of net debt was at fixed rates of interest. At 31 August 2002, the weighted average maturity of net debt was approximately
4.9 years (2001: 4.3 years).

|                     |  | 31 August 2002 |  | 31 August 2001 |  
|-------------------- |  | -------------- |  | -------------- | -
|
|
|
|Interest rate swaps  |  |               |  | (43            | )
|Cross currency swaps |  | 8              |  | 16             |  
|                     |  |                |  |                |  
|                     |  | 8              |  | (27            | )
|                     |  |                |  |                |  

There
is a deferred loss in respect of interest rate swaps, being the net of the current value less book value, of which £11 million (2001: £1 million) relates to
the financial year ending 31 August 2003 and £32 million (2001: £4 million) thereafter.

There
is a deferred gain in respect of cross currency swaps, being the net of the current value less book value, of which £1 million (2001: nil) relates to the financial year ending
31 August 2003 and £7 million (2001: £2 million) thereafter.

After
taking into account cross currency and interest rate swaps, the currency and interest rate exposure of net debt as at 31 August 2002 was:

|                |  | 31 August 2002 |   | 31 August 2001
|--------------- |  | -------------- | - | --------------
|
|
|
|
|Sterling        |  | 350            |   | 166           
|Canadian Dollar |  | 68             |   | 6             
|US Dollar       |  | 1,194          |   | 297           
|Euro            |  | 719            |   | 332           
|NZ Dollar       |  | 252            |   | 214           
|Japanese Yen    |  | 68             |   | 32            
|Other           |  | (73            | ) | (73           
|                |  |                |   |               
|Net debt        |  | 2,578          |   | 974           
|                |  |                |   |               

Some of the interest rate swaps included in the above table are cancelable at the option of the banks at various dates between 2002 and 2006.

F-37

---

The
floating rate debt includes bank debt bearing interest at rates based on the relevant inter bank rate and on commercial paper rates in the UK, US, Canada and France. These rates are fixed in
advance for periods up to six months. The weighted average interest rate on floating net debt as at 31 August 2002 was approximately 3.6% (2001: 4.0%).

Foreign exchange

The Group financial statements are published in Pounds Sterling and the Group conducts business in many foreign currencies. As a result it is subject to foreign currency
exchange risk due to exchange rate movements. The Group is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain
subsidiaries and translation of the results and underlying net assets of its foreign subsidiaries.

Gains
and losses on foreign currency debt and foreign exchange contracts held for the purposes of hedging balance sheet translation exposures are taken to reserves. The Group manages its translation
exposure on a net asset basis, including an appropriate amount of goodwill that has been written-off to reserves. This aims to align the hedging contracts with the intangible by market and
currency. The Group hedges its translation exposure by holding offsetting liabilities. Where debt held does not match
the underlying exposure, it utilizes forward purchase and sale contracts and foreign exchange swaps in order to better align its earnings with its liabilities. Contracts typically have maturities of
less than one year. Principal currencies include the Euro, US Dollar, Canadian Dollar, and Japanese Yen.

The
Group has revenues and expenses denominated in foreign currencies and, as a result, is exposed to foreign currency exchange rate risk. To manage exchange rate risk of transaction exposures, the
Group nets foreign currency revenues and expenses, to the extent practicable, to take advantage of natural offsets. The Group uses foreign currency option, swap and forward contracts with maturities
of up to 18 months to manage the remaining net exposure. It is the Group's policy to hedge each currency forward a minimum of 12 months at 80% to 90% of the net exposure. Based on our
average annual net foreign currency positions during 2001, a 10% adverse change in average annual foreign currency exchange rates would not be material to the Consolidated Financial Statements.

At
31 August 2002, 86% (2001: 90%) of such currency exposures for the following 12 months had been hedged and 0% (2001: 19%) had been hedged between 12 and 18 months.

The
estimated current value of the foreign exchange cover forward contracts and options entered into to hedge future transaction flows is set out below based on quoted market prices where available
and option pricing models.

F-38

---

|                                        |              | 31 August 2002 |     | 31 August 2001 |  
|--------------------------------------- | ------------ | -------------- | --- | -------------- | -
|
|
|
|Foreign exchange forward rate contracts |              |                |     |                |  
|                                        | assets      |                | 128 |                | 
|                                        | liabilities |                | 97  |                | 
|Options                                 |              |                |     |                |  
|                                        | liabilities |                | 6   |                | 
|                                        |              |                |     |                |  
|                                        |              | 231            |     |               |  
|                                        |              |                |     |                |  

A
net gain of £9 million was recognized on all foreign exchange forward contracts and options maturing in the year to 31 August 2002 (2001: £11 million
loss).

At
31 August 2002 and 31 August 2001, there were no material monetary assets or liabilities in currencies other than the functional currencies of Group companies, having taken into
account the effect of derivative financial instruments that have been used to hedge foreign currency exposure.

Liquidity risk

The Group's liquidity risk policy aims to ensure that the Group has sufficient cash or committed credit facilities at all times to meet all current and forecast liabilities as
they fall due, whilst minimizing the Group's borrowing costs within approved funding parameters (i.e. taking account of the Group's risk profile, ability to access different debt markets and the
desire to increase visibility by accessing different debt markets).

The
Group targets minimum headroom cover of at least £300 million. Where possible the Group's borrowing facilities will be spread over a number of years to minimize the risks and
disruption associated with renegotiating maturing facilities.

Credit risk

The Group restricts its investments to money market fixed term deposits, certificates of deposit or commercial paper. Maximum maturities for such instruments are
6 months. Deposits must be made with relationship banks. Investments in certificates of deposit or commercial paper are only made in paper
with an A-1/P-1 short-term credit rating. Maximum exposure limit to any counterparty is limited to £100 million. Counterparties rated below A3
are not authorized unless there is no alternative in a particular location in which the Group operates.

Commodity price risk

The Group hedges expected commodity purchases based on internal forecast requirements. A confidence rating is applied to forecast purchases and the Group will hedge up to, but
not exceed, a predetermined confidence ratio. Open commodity future contracts outstanding at 31 August 2002, and associated unrecognized gains or losses on those contracts are not considered
material.

F-39

---

22.  Share capital

|                       |  | Authorized |  | Allotted, called up and fully paid
|---------------------- |  | ---------- |  | ----------------------------------
|
|
|
|
|Equity                 |  |            |  |                                   
|Ordinary shares of 25p |  | 400        |  | 300                               

|                 |  | Authorized |  | Issued
|---------------- |  | ---------- |  | ------
|
|Number of shares |  | 1,600      |  | 1,200 

At
the Annual General Meeting of the Company held on 31 January 2002, the authorized share capital was increased to £400 million by the creation of an additional
400 million ordinary shares of 25p each.

On
27 February 2002 the Group announced that it had placed 39 million New Ordinary Shares (the "New Ordinary Shares") at a price of 390p per New Ordinary Share. The New Ordinary Shares
represented 3.7% of Allied Domecq's existing issued share capital. The New Ordinary Shares were admitted to the Official List of the UK Listing Authority and began trading on the London Stock Exchange
on 4 March 2002.

The
gross proceeds receivable by the Group were £152 million which was used towards the financing of the acquisitions of the Malibu brand and Mumm Cuvée Napa. Net
proceeds after issue costs were £149 million.

Share option plans

All the share plans listed below (except the Share Partnership Plan) were established during the year ended 31 August 2000. The plans allow share options to be
exercisable early under certain circumstances, for example, if an employee is made redundant. These plans are categorized as either "fixed plans" or "variable plans". Fixed plans are plans involving
share based compensation awards to employees where both the number of shares each award recipient is entitled to receive and the option exercise or purchase price are known at the date of grant.
Variable plans are plans involving share based compensation awards where either or both of the number of shares each award recipient is entitled to receive and the option exercise or purchase price
are not known until some time after the grant date.

Savings plans

All fixed plans

This
plan is based on a three or five year savings contract and is open to all UK employees. Options are granted at an exercise price of not less than 80% of the market value.

F-40

---

This
plan is based on an 18 month, three year or five year savings contract and is open to all employees in certain jurisdictions. Options are granted at an exercise price of not less than 80%
of the market value.

This
plan is based on an 18 month savings contract and is open to employees in the USA. Options are granted at an exercise price of not less than 85% of the market value. This plan is not
currently operating.

Share partnership plan

This
fixed plan is an Inland Revenue approved share incentive plan, which was introduced during the year ended 31 August 2002 in the UK as a replacement for the SAYE Scheme 1999. Eligible
employees are invited to purchase shares on a monthly basis from gross pay and the Group matches the employees' investments on a one for four basis.

Executive plans

All variable plans

Discretionary
options up to a value of £30,000 per participant may be granted at an exercise price not less than market value and under normal circumstances remain exercisable between the
third and tenth anniversaries of the date of grant.

Discretionary
options are granted at an exercise price not less than market value and under normal circumstances remain exercisable between the third and tenth anniversaries of the date of grant
(though shorter life options may be granted).

This
alternative to a share option plan is operated in countries where securities or tax laws prevent or restrict the use of the executive share option plans. Discretionary Share Appreciation Rights
(SARs)
are granted at an exercise price not less than market value and under normal circumstances remain exercisable between the third and tenth anniversaries of the date of grant (though shorter life SARs
may be granted). Upon exercise of a SAR, the holder is paid, in cash, the excess of the market price of the number of underlying shares, at the exercise date, over the fair value represented by such
shares as at the original grant date.

The
Remuneration Committee sets performance conditions for participation in the discretionary option and SAR plans, as described below. For 1999 and 2000 grants, options will only become exercisable
if the Total Shareholder Return (change in value of the shares plus gross dividends paid, treated as re-invested) on Allied Domecq PLC ordinary shares equals or exceeds that of the median
Total Shareholder Return achieved by the constituents of the FTSE 100 Index over any consecutive

F-41

---

three-year period between the dates of grant and exercise. Following the 2001 Annual General Meeting, however, the underpinning performance conditions of the plans will be linked to
sustainable earnings growth measured over three years. If the performance condition is not satisfied it may be proportionately increased over extended periods of four and five years. If the
performance condition is not satisfied after five years the option will lapse. Where larger grants are made, and where appropriate, it is the intention of the Remuneration Committee to attach
supplemental performance conditions to such awards. These plans are subject to performance conditions and, in the case of SARs, are payable in cash. Accordingly, as such these plans are all accounted
for as variable plans and result in the recognition of compensation expense.

Awards
under the long term incentive plan are made through the grant of options at a nominal cost, which will vest subject to performance conditions set by the Remuneration Committee at the award
date.

The
first awards under this plan were made to Executive Directors and certain other senior executives in fiscal 2001 and will vest subject to Total Shareholder Return performance over a
three-year period relative to a comparator group of companies. Total Shareholder Return performance at the median of the comparator group will vest 40% of an award, increasing on a
straight-line basis to 100% vesting for performance at upper quartile or above. For performance below the median level awards will not vest.

Compensation
expense is accrued based on the Group's estimate of the extent to which the performance criteria are expected to be met. The accrual is based upon the cost of the shares purchased by the
trust, and is amortized over the vesting period of the underlying options.

Other

The
Group offered a deferred bonus plan in the year ended 31 August 2002, 2001 and 2000 for Executive Directors and certain other senior executives. Bonuses were based on earnings per share
growth and completion of key management objectives. The bonus payable to participants in respect of fiscal 2002 was the equivalent of 14% of their annual basic salary for every 1% of real growth in
the Group's earnings per share. The maximum bonus receivable based upon earnings per share growth was 70% of basic salary. An additional discretionary bonus of up to 10% of salary was available under
the plan on the achievement of certain key management objectives.

Under
the deferred bonus plan 25% of the award will be automatically deferred into Allied Domecq PLC ordinary shares. It will be matched one for one by the Group after three years, subject to the
executive remaining an employee of the Group. Up to an additional 25% of the award may be voluntarily deferred for three years into shares, with the Group providing a matching investment on the same
terms.

Compensation
expense is recognized for the full cost of deferred bonuses (including matching shares) in the year to which the performance conditions relate.

Performance
targets and key management objectives are set by the Remuneration Committee annually.

F-42

---

Share options and awards outstanding as at 31 August 2002 and 2001 were as follows:

|                                            |  |       |  | Options outstanding at
31 August 2002 |  | Options outstanding at
31 August 2001
|------------------------------------------- |  | ----- |  | ------------------------------------- |  | -------------------------------------
|
|SAYE Scheme 1999                            |  | 262.0 |  | 558,566                               |  | 3                                    
|                                            |  | 262.0 |  | 680,779                               |  | 27                                   
|International SAYE Scheme 1999              |  | 265.0 |  | 708,977                               |  | 9                                    
|                                            |  | 265.0 |  | 145,863                               |  | 33                                   
|                                            |  | 282.0 |  |                                      |  |                                     
|                                            |  | 282.0 |  | 505,432                               |  | 26                                   
|                                            |  | 282.0 |  | 67,779                                |  | 50                                   
|United States Share Purchase Plan           |  | 282.0 |  |                                      |  |                                     
|Approved Executive Share Option Scheme 1999 |  | 331.0 |  | 54,378                                |  | 92                                   
|                                            |  | 408.0 |  | 1,139,560                             |  | 104                                  
|                                            |  | 351.5 |  | 320,942                               |  | 110                                  
|                                            |  | 438.0 |  | 41,094                                |  | 116                                  
|Executive Share Option Scheme 1999          |  | 342.0 |  | 5,620,745                             |  | 86                                   
|                                            |  | 331.5 |  | 1,724,639                             |  | 86                                   
|                                            |  | 331.0 |  | 174,073                               |  | 92                                   
|                                            |  | 408.0 |  | 3,562,194                             |  | 104                                  
|                                            |  | 351.5 |  | 5,158,849                             |  | 110                                  
|                                            |  | 438.0 |  | 221,853                               |  | 116                                  
|Long Term Incentive Scheme 1999             |  | 0.1   |  | 1,263,666                             |  | 104                                  
|                                            |  | 0.1   |  | 1,563,889                             |  | 110                                  
|                                            |  | 0.1   |  | 77,054                                |  | 116                                  
|Share Appreciation Rights Plan 1999         |  | 331.5 |  | 757,500                               |  | 86                                   
|                                            |  | 331.0 |  | 52,500                                |  | 92                                   
|                                            |  | 408.0 |  | 1,347,500                             |  | 104                                  
|                                            |  | 331.5 |  | 1,959,842                             |  | 110                                  
|                                            |  | 438.0 |  | 47,500                                |  | 116                                  
|Deferred Bonus Plan                         |  | 0.0   |  | 320,380                               |  | 12                                   
|                                            |  | 0.0   |  | 696,430                               |  | 24                                   
|                                            |  |       |  |                                       |  |                                      
|                                            |  |       |  | 28,771,984                            |  |                                      
|                                            |  |       |  |                                       |  |                                      

F-43

---

The movement on share option plans for the year ended 31 August 2001 and 2002 was as follows:

|                                            |  | Exercise
Price
(pence) |  | Outstanding at 31 August 2000 |  | Granted   |  | Exercised |   | Cancelled |   | Outstanding at 31 August 2001 |  | Granted    |  | Exercised |   | Cancelled  |   | Outstanding at 31 August 2002
|------------------------------------------- |  | ---------------------- |  | ----------------------------- |  | --------- |  | --------- | - | --------- | - | ----------------------------- |  | ---------- |  | --------- | - | ---------- | - | -----------------------------
|SAYE Scheme 1999                            |  | 262.0                  |  | 828,518                       |  |          |  | (21,169   | ) | (156,340  | ) | 651,009                       |  |           |  | (35,224   | ) | (57,219    | ) | 558,566                      
|                                            |  | 262.0                  |  | 882,266                       |  |          |  | (17,676   | ) | (113,954  | ) | 750,636                       |  |           |  | (5,866    | ) | (63,991    | ) | 680,779                      
|International SAYE Scheme 1999              |  | 265.0                  |  | 1,096,586                     |  |          |  | (6,753    | ) | (199,471  | ) | 890,362                       |  |           |  | (1,814    | ) | (179,571   | ) | 708,977                      
|                                            |  | 265.0                  |  | 165,297                       |  |          |  |          |   | (10,967   | ) | 154,330                       |  |           |  |           |   | (8,467     | ) | 145,863                      
|                                            |  | 282.0                  |  | 81,443                        |  |          |  | (2,441    | ) | (9,425    | ) | 69,577                        |  |           |  | (69,577   | ) |           |   |                             
|                                            |  | 282.0                  |  |                              |  |          |  |          |   |          |   |                              |  | 516,058    |  |          |   | (10,626    | ) | 505,432                      
|                                            |  | 282.0                  |  |                              |  |          |  |          |   |          |   |                              |  | 67,779     |  |          |   |           |   | 67,779                       
|United States Share Purchase Plan           |  | 282.0                  |  | 456,048                       |  |          |  | (2,753    | ) | (90,405   | ) | 362,890                       |  |           |  | (318,347  | ) | (44,543    | ) |                             
|Approved Executive Share Option Scheme 1999 |  | 331.0                  |  | 63,441                        |  |          |  |          |   |          |   | 63,441                        |  |           |  |          |   | (9,063     | ) | 54,378                       
|                                            |  | 408.0                  |  |                              |  | 1,154,264 |  |          |   |          |   | 1,154,264                     |  |           |  |          |   | (14,704    | ) | 1,139,560                    
|                                            |  | 351.5                  |  |                              |  |          |  |          |   |          |   |                              |  | 320,942    |  |          |   |           |   | 320,942                      
|                                            |  | 438.0                  |  |                              |  |          |  |          |   |          |   |                              |  | 41,094     |  |          |   |           |   | 41,094                       
|Executive Share Option Scheme 1999          |  | 342.0                  |  | 6,539,121                     |  |          |  | (300,000  | ) | (67,500   | ) | 6,171,621                     |  |           |  | (244,166  | ) | (306,710   | ) | 5,620,745                    
|                                            |  | 331.5                  |  | 2,245,526                     |  |          |  | (370,887  | ) | (40,000   | ) | 1,834,639                     |  |           |  | (80,000   | ) | (30,000    | ) | 1,724,639                    
|                                            |  | 331.0                  |  | 482,384                       |  |          |  |          |   |          |   | 482,384                       |  |           |  |          |   | (308,311   | ) | 174,073                      
|                                            |  | 408.0                  |  |                              |  | 3,622,490 |  |          |   |          |   | 3,622,490                     |  |           |  | (7,500    | ) | (52,796    | ) | 3,562,194                    
|                                            |  | 351.5                  |  |                              |  |          |  |          |   |          |   |                              |  | 5,164,099  |  |          |   | (5,250     | ) | 5,158,849                    
|                                            |  | 438.0                  |  |                              |  |          |  |          |   |          |   |                              |  | 221,853    |  |          |   |           |   | 221,853                      
|Long Term Incentive Scheme 1999             |  | 0.1                    |  |                              |  | 1,383,230 |  |          |   |          |   | 1,383,230                     |  |           |  |          |   | (119,564   | ) | 1,263,666                    
|                                            |  | 0.1                    |  |                              |  |          |  |          |   |          |   |                              |  | 1,701,265  |  |          |   | (137,376   | ) | 1,563,889                    
|                                            |  | 0.1                    |  |                              |  |          |  |          |   |          |   |                              |  | 77,054     |  |          |   |           |   | 77,054                       
|Share Appreciation Rights Plan 1999         |  | 331.5                  |  | 915,000                       |  |          |  | (37,500   | ) | (37,500   | ) | 840,000                       |  |           |  | (45,000   | ) | (37,500    | ) | 757,500                      
|                                            |  | 331.0                  |  | 60,000                        |  |          |  |          |   | (7,500    | ) | 52,500                        |  |           |  |          |   |           |   | 52,500                       
|                                            |  | 408.0                  |  |                              |  | 1,432,500 |  |          |   | (7,500    | ) | 1,425,000                     |  |           |  | (7,500    | ) | (70,000    | ) | 1,347,500                    
|                                            |  | 331.5                  |  |                              |  |          |  |          |   |          |   |                              |  | 2,037,342  |  |          |   | (77,500    | ) | 1,959,842                    
|                                            |  | 438.0                  |  |                              |  |          |  |          |   |          |   |                              |  | 47,500     |  |          |   |           |   | 47,500                       
|Deferred Bonus Plan                         |  | 0.0                    |  |                              |  | 388,760   |  |          |   |          |   | 388,760                       |  |           |  |          |   | (68,380    | ) | 320,380                      
|                                            |  | 0.0                    |  |                              |  |          |  |          |   |          |   |                              |  | 768,268    |  |          |   | (71,838    | ) | 696,430                      
|                                            |  |                        |  |                               |  |           |  |           |   |           |   |                               |  |            |  |           |   |            |   |                              
|                                            |  |                        |  | 13,815,630                    |  | 7,981,244 |  | (759,179  | ) | (740,562  | ) | 20,297,133                    |  | 10,963,254 |  | (814,994  | ) | (1,673,409 | ) | 28,771,984                   
|                                            |  |                        |  |                               |  |           |  |           |   |           |   |                               |  |            |  |           |   |            |   |                              

Total compensation cost charged against income was £6 million in 2002 (2001: £4 million, 2000:
£2 million).

The
Group currently satisfies the exercise of options using existing shares that are purchased in the market by the Group's employee trusts. Compensation expense under the option plans, with the
exception of the SAR plan, is determined based upon the excess of the shares purchased by the trust
over the exercise price of the underlying options and is amortized over the vesting period of the underlying options.

F-44

---



The SARs are settled in cash. Accordingly, compensation expense under the SAR plan is determined based upon the market price of the underlying shares at the date of exercise as
discussed in note 22(e).

As
at 31 August 2002, the Group's employee trusts held 24,514,993 unallocated shares in the Group all of which were the subject of awards described above, as well as additional shares to fund
certain SAR obligations. The trustees are obliged to waive the dividends on these shares. The options exercised during the year were all satisfied by the transfer of shares to participants by the
employee trusts.

23.  Capital and reserves

|                                                                     |  | Share capital |   | Share premium account |  | Merger reserve |   | Revaluation
reserve |   | Profit and loss account (restated) |   | Total (restated) |  
|-------------------------------------------------------------------- |  | ------------- | - | --------------------- |  | -------------- | - | ------------------- | - | ---------------------------------- | - | ---------------- | -
|
|
|At 31 August 1999                                                    |  | 3,470         |   | 26                    |  | (2,586         | ) | 960                 |   | 323                                |   | 2,193            |  
|Capital reduction due to disposal of UK Retail business (Note 25)    |  | (3,203        | ) |                      |  | 1,763          |   | (958                | ) | 104                                |   | (2,294           | )
|Reversal of notional UK Retail FRS No. 19 deferred tax               |  |              |   |                      |  |               |   |                    |   | 25                                 |   | 25               |  
|Profit earned for shareholders for the year                          |  |              |   |                      |  |               |   |                    |   | 330                                |   | 330              |  
|Revaluation reserve realized                                         |  |              |   |                      |  |               |   | (2                  | ) | 2                                  |   |                 |  
|Currency translation differences on foreign currency net investments |  |              |   |                      |  |               |   |                    |   | 10                                 |   | 10               |  
|Deferred taxationorigination and reversal of timing differences     |  |              |   |                      |  |               |   |                    |   | (14                                | ) | (14              | )
|Ordinary dividends                                                   |  |              |   |                      |  |               |   |                    |   | (116                               | ) | (116             | )
|Goodwill written back on disposals                                   |  |              |   |                      |  |               |   |                    |   | 3                                  |   | 3                |  
|At 31 August 2000                                                    |  | 267           |   | 26                    |  | (823           | ) |                    |   | 667                                |   | 137              |  
|Profit earned for shareholders for the year                          |  |              |   |                      |  |               |   |                    |   | 344                                |   | 344              |  
|Currency translation differences on foreign currency net investments |  |              |   |                      |  |               |   |                    |   | (18                                | ) | (18              | )
|Deferred taxationorigination and reversal of timing differences     |  |              |   |                      |  |               |   |                    |   | 2                                  |   | 2                |  
|Ordinary dividends                                                   |  |              |   |                      |  |               |   |                    |   | (127                               | ) | (127             | )
|Goodwill written back on disposals                                   |  |              |   |                      |  |               |   |                    |   | 3                                  |   | 3                |  
|At 31 August 2001                                                    |  | 267           |   | 26                    |  | (823           | ) |                    |   | 871                                |   | 341              |  
|Issue of ordinary share capital                                      |  | 10            |   | 139                   |  |               |   |                    |   |                                   |   | 149              |  
|Profit earned for shareholders for the year                          |  |              |   |                      |  |               |   |                    |   | 392                                |   | 392              |  
|Currency translation differences on foreign currency net investments |  |              |   |                      |  |               |   |                    |   | (23                                | ) | (23              | )
|Deferred taxationorigination and reversal of timing differences     |  |              |   |                      |  |               |   |                    |   | (12                                | ) | (12              | )
|Ordinary dividends                                                   |  |              |   |                      |  |               |   |                    |   | (141                               | ) | (141             | )
|                                                                     |  |               |   |                       |  |                |   |                     |   |                                    |   |                  |  
|At 31 August 2002                                                    |  | 277           |   | 165                   |  | (823           | ) |                    |   | 1,087                              |   | 706              |  
|                                                                     |  |               |   |                       |  |                |   |                     |   |                                    |   |                  |  

Goodwill (at historic exchange rates) of £2,284 million has been written off to reserves.

F-45

---

The
Group adopted FRS No. 19 Deferred Tax during the year ended 31 August 2002. Consequently, the Group's consolidated financial statements for the two year period ended 31 August
2001 have been restated.

24.  Minority interests

|                                            |  | Equity |   | Non-equity |  | Total |  
|------------------------------------------- |  | ------ | - | ---------- |  | ----- | -
|
|
|At 31 August 2001                           |  | 65     |   | 3          |  | 68    |  
|Currency translation adjustment             |  | (1     | ) |           |  | (1    | )
|Share of profits of subsidiary undertakings |  | 12     |   | 1          |  | 13    |  
|Dividends declared                          |  | (4     | ) |           |  | (4    | )
|Additions                                   |  | 4      |   |           |  | 4     |  
|                                            |  |        |   |            |  |       |  
|At 31 August 2002                           |  | 76     |   | 4          |  | 80    |  
|                                            |  |        |   |            |  |       |  

25.  Acquisitions and disposals

Year ended 31 August 2002

During the year, the Group made the following acquisitions which were accounted for using the purchase method of accounting. Goodwill will be amortised over a 20 year
period on a straight line
basis. The results of operations of the businesses have been consolidated into the Group's Spirits & Wine segment from the date of acquisition:

|                            |  | Year ended 31 August 2002 |  
|--------------------------- |  | ------------------------- | -
|
|
|
|Tangible fixed assets       |  | 2                         |  
|Stocks                      |  | 2                         |  
|Debtors                     |  | 8                         |  
|Borrowings                  |  | (1                        | )
|Creditors                   |  | (7                        | )
|Taxation                    |  | (1                        | )
|                            |  |                           |  
|Net assets acquired         |  | 3                         |  
|                            |  |                           |  
|Goodwill                    |  |                           |  
|                            |  |                           |  
|Purchase considerationcash |  |                           |  
|                            |  |                           |  

On
4 September 2001, the Group completed the acquisition of all the outstanding share capital of Kuemmerling GmbH. Kuemmerling is Germany's fourth largest spirits brand and the second largest
in the bitters category. This acquisition strengthens the Group's global spirits business. The goodwill arising on this acquisition principally relates to the purchase of an established spirits brand.
None of the goodwill is deductible for tax purposes.

F-46

---



|b) Bodegas y Bebidas S.A.   |  | Book values |   | Accounting
policy
adjustments |   | Fair value
adjustments |   | Total |  
|--------------------------- |  | ----------- | - | ----------------------------- | - | ---------------------- | - | ----- | -
|
|
|Tangible fixed assets       |  | 74          |   |                              |   | 12                     |   | 86    |  
|Investments                 |  | 4           |   | (4                            | ) |                       |   |      |  
|Stocks                      |  | 49          |   | 3                             |   |                       |   | 52    |  
|Debtors                     |  | 62          |   |                              |   |                       |   | 62    |  
|Borrowings                  |  | (35         | ) |                              |   |                       |   | (35   | )
|Creditors                   |  | (43         | ) |                              |   |                       |   | (43   | )
|Taxation                    |  | (3          | ) |                              |   | (4                     | ) | (7    | )
|Other provisions            |  | (5          | ) |                              |   | 3                      |   | (2    | )
|Minority interests          |  | (4          | ) |                              |   |                       |   | (4    | )
|                            |  |             |   |                               |   |                        |   |       |  
|Net assets acquired         |  | 99          |   | (1                            | ) | 11                     |   | 109   |  
|                            |  |             |   |                               |   |                        |   |       |  
|Goodwill                    |  |             |   |                               |   |                        |   | 55    |  
|                            |  |             |   |                               |   |                        |   |       |  
|Purchase considerationcash |  |             |   |                               |   |                        |   | 164   |  
|                            |  |             |   |                               |   |                        |   |       |  

On 7 September 2001, the Group filed with the Spanish Stock Exchange Commission (the "CNMV") a recommended cash offer for the entire share capital of
Bodegas y Bebidas S.A., a market leading Spanish wine producer. The offer valued the equity of Bodegas y Bebidas S.A. at EUR 279 million. The offer was cleared by CNMV and the Group completed
the acquisition of 98% of the outstanding share capital of Bodegas y Bebidas on 27 December 2001. The acquisition expands the Group's global wine business. The goodwill arising on the
acquisition principally relates to the purchase of established premium wine brands. We anticipate that the goodwill arising may be deductible for tax purposes, although the amount is yet to be
determined. The goodwill and other amounts arising may be subject to adjustment as fair values are finalized.

|c) Mumm Cuvée Napa     |  | Book Values |   | Accounting policy adjustments |  | Fair value adjustments |   | Total |  
|---------------------- |  | ----------- | - | ----------------------------- |  | ---------------------- | - | ----- | -
|
|
|Tangible fixed assets  |  | 11          |   |                              |  | 3                      |   | 14    |  
|Stocks                 |  | 16          |   |                              |  | (7                     | ) | 9     |  
|Creditors              |  | (4          | ) |                              |  |                       |   | (4    | )
|Taxation               |  |            |   |                              |  | 4                      |   | 4     |  
|                       |  |             |   |                               |  |                        |   |       |  
|Net assets acquired    |  | 23          |   |                              |  |                       |   | 23    |  
|                       |  |             |   |                               |  |                        |   |       |  
|Goodwill               |  |             |   |                               |  |                        |   | 8     |  
|                       |  |             |   |                               |  |                        |   |       |  
|Purchase consideration |  |             |   |                               |  |                        |   | 31    |  
|                       |  |             |   |                               |  |                        |   |       |  

On
22 May 2002, the Group acquired Mumm Cuvée Napa, a premium Californian sparkling wine for cash consideration of £31 million. This acquisition of a premium
wine further develops the Group's global wine business. The goodwill arising on the acquisition principally relates to the purchase of established premium wine brands. We anticipate that the goodwill
arising may be deductible for tax

F-47

---

purposes, although the amount is yet to be determined. The goodwill and other amounts arising may be subject to adjustment as fair values are finalized.

d)    Montana

The Group completed the acquisition of Montana on 31 August 2001 and published a provisional table of book values of the assets acquired. During the year ended 31
August 2002 the Group completed this valuation which did not result in any material change to the individual numbers previously disclosed. The net increase in goodwill amounted to
£5 million. During September 2001 the Group paid £231 million deferred purchase consideration to the shareholders of Montana.

Unaudited pro-forma information

The following represents the Group's unaudited pro-forma results of operations as though the Bodegas y Bebidas, Kuemmerling and Mumm Cuvée Napa
acquisitions and the Malibu brand purchase had occurred at the beginning of the year ended 31 August 2002 and 31 August 2001 and as though the Montana, Mumm and Perrier
Jouët and other wine acquisitions completed during the year ended 31 August 2001 had occurred at the beginning of the year ended 31 August 2001. The unaudited
pro-forma information is presented for comparative purposes only and is not necessarily indicative of the results that would have resulted had the acquisitions occurred at the beginning of
the periods presented, nor is it necessarily indicative of future results.

|                                 |  | Year ended
31 August
2002 |  | Year ended
31 August
2001
|-------------------------------- |  | ------------------------- |  | -------------------------
|
|
|
|Revenues                         |  | 3,473                     |  | 3,345                    
|Net income                       |  | 417                       |  | 336                      
|Earnings per sharebasicpence   |  | 39.1p                     |  | 31.9p                    
|Earnings per sharedilutedpence |  | 39.0p                     |  | 31.9p                    

Disposal of UK Retail business

On 6 September 1999, the Group completed the disposal of its UK Retail business to Punch. The ultimate consideration for the disposal was cash, with a loan note
alternative, from Punch and newly issued Bass PLC shares, all passing directly to the Group's shareholders. On 5 October 1999, the total consideration was paid amounting to
£2,591 million (based on Bass PLC share price on the London Stock Exchange).

Additionally,
£75 million was paid to Punch on 6 September 1999, representing the value of the Group's investment in Britannia which has been retained by the Group as it did
not form part of the disposal as was originally intended. £54 million has been paid since 6 September 1999 representing the

F-48

---

net movements on the UK Retail business inter-company accounts between 6 February and 6 September 1999.

|                                       |                           | Book Values |       | Accounting policy adjustments |   | Fair value adjustments |   | Total |      
|-------------------------------------- | ------------------------- | ----------- | ----- | ----------------------------- | - | ---------------------- | - | ----- | -----
|
|
|The following assets were disposed of: |                           |             |       |                               |   |                        |   |       |      
|                                       | Tangible fixed assets     |             | 2,131 |                               |  |                        |  |       | 2,131
|                                       | Investments               |             | 1     |                               |  |                        |  |       | 1    
|                                       | Joint venture undertaking |             | 131   |                               |  |                        |  |       | 131  
|                                       | Stocks                    |             | 13    |                               |  |                        |  |       | 13   
|                                       | Debtors                   |             | 73    |                               |  |                        |  |       | 73   
|                                       | Creditors                 |             | (177  | )                             |  |                        |  |       | (177 
|                                       | Taxation                  |             | (32   | )                             |  |                        |  |       | (32  
|                                       | Net borrowings less cash  |             | 25    |                               |  |                        |  |       | 25   
|                                       | Payments to Punch         |             | 129   |                               |  |                        |  |       | 129  
|                                       |                           |             |       |                               |   |                        |   |       |      
|                                       |                           | 2,294       |       |                              |   |                       |   | 2,294 |      
|                                       |                           |             |       |                               |   |                        |   |       |      

Other disposals

In March 2000, the Group completed the sale of an associated undertaking, Panrico, a non-core biscuit business in Spain for consideration of
£72 million. Profit on the disposal of this business was £13 million.

In
January 2000, the Group completed the sale of various QSR companies in Russia, which were predominantly ice cream producers, for consideration of £1 million. There was no
profit or loss on the disposal of this business.

F-49

---

26.  Detailed analysis of gross cash flows

|                                                             |  | Year ended 31 August |  
|------------------------------------------------------------ |  | -------------------- | -
|
|
|
|Returns on investments and servicing of finance              |  |                      |  
|Interest received                                            |  | 8                    |  
|Interest paid                                                |  | (137                 | )
|Dividends paid to minority shareholders                      |  | (4                   | )
|                                                             |  |                      |  
|                                                             |  | (133                 | )
|                                                             |  |                      |  
|Taxation (paid)/refunded                                     |  |                      |  
|UK taxation                                                  |  | (1                   | )
|Overseas taxation                                            |  | (177                 | )
|                                                             |  |                      |  
|                                                             |  | (178                 | )
|                                                             |  |                      |  
|Capital expenditure and financial investment                 |  |                      |  
|Purchase of tangible fixed assets                            |  | (133                 | )
|Sale of tangible fixed assets                                |  | 17                   |  
|Purchase of intangible fixed assets                          |  | (556                 | )
|Purchase of trade investments                                |  | (13                  | )
|Net decrease in trade investments                            |  | 7                    |  
|Purchase of ordinary share capital for employee trusts       |  | (34                  | )
|                                                             |  |                      |  
|                                                             |  | (712                 | )
|                                                             |  |                      |  
|Acquisitions and disposals                                   |  |                      |  
|Purchase of subsidiary undertakings                          |  | (550                 | )
|Borrowings acquired with subsidiary undertakings             |  | (36                  | )
|Disposal of UK Retail businesspayments to Punch             |  |                     |  
|Disposal of UK Retail businesscosts                         |  |                     |  
|Cash and overdrafts disposed of with subsidiary undertakings |  |                     |  
|Sale of associated undertakings                              |  |                     |  
|                                                             |  |                      |  
|                                                             |  | (586                 | )
|                                                             |  |                      |  
|Financing                                                    |  |                      |  
|Issue of ordinary share capital                              |  | 149                  |  
|Redemption of debt                                           |  |                     |  
|Bonds issued during the year                                 |  | 622                  |  
|Increase/(decrease) in other borrowings                      |  | 27                   |  
|                                                             |  |                      |  
|                                                             |  | 798                  |  
|                                                             |  |                      |  

F-50

---

Supplemental schedule of non-cash investing and financing activities

During the year ended 31 August 2002, the Group acquired companies for a total consideration of £319 million (2001: £673 million,
2000: £103 million). In conjunction with the acquisitions, liabilities were assumed as follows:

|                              |  | Year ended 31 August |  
|----------------------------- |  | -------------------- | -
|
|
|
|Fair value of assets acquired |  | 423                  |  
|Cash paid for acquisitions    |  | (319                 | )
|                              |  |                      |  
|Liabilities assumed           |  | 104                  |  
|                              |  |                      |  

During
2000, the Group disposed of the UK Retail business with the proceeds being distributed directly to the shareholders. See note 25 for discussion on the disposal of the UK Retail business
and related book values.

27.  Reconciliation of net cash inflow from operating activities to free cash flow

|                                                   |  | Year ended 31 August |  
|-------------------------------------------------- |  | -------------------- | -
|
|
|
|Net cash inflow from operating activities          |  | 760                  |  
|Capital expenditure net of sale of tangible assets |  | (116                 | )
|Dividends received from associated undertakings    |  | 11                   |  
|                                                   |  |                      |  
|Operating cash net of fixed assets                 |  | 655                  |  
|Taxation paid                                      |  | (178                 | )
|Net interest paid                                  |  | (129                 | )
|Dividends paidordinary shareholders               |  | (133                 | )
|minorities                                        |  | (4                   | )
|                                                   |  |                      |  
|Free cash flow                                     |  | 211                  |  
|                                                   |  |                      |  

F-51

---

28.  Net debt

|                                        |  |     |   |      |   |      |   |        |   | Year ended 31 August |  
|--------------------------------------- |  | --- | - | ---- | - | ---- | - | ------ | - | -------------------- | -
|
|
|
|
|At the beginning of the year            |  | 111 |   | (660 | ) | (110 | ) | (1,195 | ) | (1,854               | )
|Increase/(decrease) in cash             |  | 39  |   | (233 | ) |     |   |       |   | (194                 | )
|Increase/(decrease) in liquid resources |  | 21  |   |     |   |     |   |       |   | 21                   |  
|(Increase)/decrease in loan capital     |  |    |   |     |   | (19  | ) | (630   | ) | (649                 | )
|Exchange adjustments                    |  | (2  | ) | 50   |   | 1    |   | 49     |   | 98                   |  
|                                        |  |     |   |      |   |      |   |        |   |                      |  
|At the end of the year                  |  | 169 |   | (843 | ) | (128 | ) | (1,776 | ) | (2,578               | )
|                                        |  |     |   |      |   |      |   |        |   |                      |  

Liquid
resources comprise short-term deposits which have maturity dates of less than three months.

29.  Capital commitments

|                                                |  | 31 August
|----------------------------------------------- |  | ---------
|
|
|
|Contracted for but not provided in the accounts |  | 1        
|                                                |  |          

30.  Leasing commitments

|                                                                                                       |  | 31 August 2002 |  | 31 August 2001
|------------------------------------------------------------------------------------------------------ |  | -------------- |  | --------------
|
|
|
|The minimum operating lease payments to be made in the year ending 31 August 2003 for leases expiring: |  |                |  |               
|Within one year                                                                                        |  | 3              |  | 1             
|Within two to five years                                                                               |  | 15             |  | 7             
|After five years                                                                                       |  | 26             |  | 1             
|                                                                                                       |  |                |  |               
|                                                                                                       |  | 44             |  | 9             
|                                                                                                       |  |                |  |               

F-52

---

The
future minimum lease payments to be paid and received by the Group as at 31 August 2002 were as follows:

|                             |  | Operating leases
|---------------------------- |  | ----------------
|
|
|
|Within one year              |  | 53              
|Between one and two years    |  | 40              
|Between two and three years  |  | 35              
|Between three and four years |  | 32              
|Between four and five years  |  | 30              
|After five years             |  | 123             
|                             |  |                 
|                             |  | 313             
|                             |  |                 

Various
subsidiaries of the Company lease plant, equipment, warehouse and office space, and retail store locations. Substantially all of the store locations are subleased. Subleases generally provide
for payments identical to or in excess of those under the prime lease. The subleases have no purchase or renewal options.

Operating
lease expense charges as disclosed in Note 6 consist of:

|                   |  | Year ended 31 August
|------------------ |  | --------------------
|
|
|
|Minimum rentals    |  | 57                  
|Contingent rentals |  | 2                   
|                   |  |                     
|                   |  | 59                  
|                   |  |                     

Rental
income earned from store franchisees is £47 million (2001: £47 million, 2000: £40 million) and is included in net sales. Rental income
from all other sources is £5 million (2001 and 2000: £4 million) and is netted against operating lease expense.

The
Group has not entered into any significant finance leases.

31.  Contingent liabilities

In the normal course of business, the Group has a number of legal claims or potential claims against it, none of which are expected to give rise to material loss. We are not
currently involved in any legal or arbitration proceedings, including any proceedings which are threatened or pending of which we are aware, which may have a material effect on our financial position,
results of operations or liquidity.

F-53

---



32.  Transactions with associated undertakings

All transactions with these undertakings arise in the normal course of the business.

|                                      |  | Year ended 31 August |  
|------------------------------------- |  | -------------------- | -
|
|
|
|Sales to associated undertakings      |  | 50                   |  
|Purchases of goods and other services |  | (13                  | )
|Marketing expenditure charged         |  | (8                   | )
|Dividends received                    |  | 11                   |  

|                                             |  | As at 31 August
|-------------------------------------------- |  | ---------------
|
|
|
|Loans to associated undertakings             |  | 2              
|Net amounts due from associated undertakings |  | 11             

33.  Differences between UK and US Generally Accepted Accounting Principles

The Group's consolidated financial statements are prepared in accordance with UK GAAP, which differ from those generally accepted in the United States
("US GAAP"). The significant differences between UK GAAP and US GAAP which affect the Group's net income and shareholders' equity are summarized below.

a)    Brands, goodwill and other intangible assets

Under UK GAAP, goodwill arising on acquisitions of a business since 1 September 1998 is capitalized and amortized by equal installments over its anticipated useful life,
but not exceeding 20 years. Goodwill
arising on acquisitions prior to 1 September 1998 was charged directly to reserves. On disposal of a business, any attributable goodwill previously eliminated against reserves is included in
the calculation of any gain or loss. Other purchased intangible assets are capitalized and amortized over their estimated useful economic lives on a straight-line basis. Where purchased intangible
assets, such as brands, are regarded as having indefinite useful economic lives, they are not amortized but are subject to annual impairment reviews.

Under
US GAAP, prior to the adoption of Statement of Financial Accounting Standards (SFAS) No. 141Business Combinations and SFAS No. 142Goodwill
and Other Intangible Assets, goodwill and other intangible assets arising on acquisition were capitalized and amortized over their estimated useful economic lives, but not exceeding 40 years.
Consistent with the effective dates specified in the standards, the Group adopted the provisions of SFAS No. 141 as at 1 July 2001, and SFAS No. 142 as at
1 September 2001. Goodwill and intangible assets determined to have an indefinite useful life acquired in a purchase business combination are no longer amortized and are subjected to annual
impairment testing. Upon adoption of SFAS No. 142 the Group's accumulated amortization for brands and goodwill was £356 million and £180 million
respectively. Accordingly, effective for fiscal year 2002, net income no longer includes amortization of brands, and goodwill amortization recognized under UK GAAP is reversed.

F-54

---

The
amount of goodwill under UK GAAP differs to that under US GAAP due to the fair values allocated under US GAAP to intangible assets (including significant brands), stock and the exclusion
from the purchase price consideration of certain costs.

b)    Associated undertakings

The principal difference between UK GAAP and US GAAP relates to the accounting treatment of goodwill which is discussed in note a).

c)    Stocks

The principal difference between UK GAAP and US GAAP relates to the fair valuation of stock acquired in a business combination. The fair value of acquired stock under
UK GAAP is determined as the lower of replacement cost and net realizable value whereas under US GAAP, acquired stock is determined as the estimated selling price less costs to complete,
costs of disposal and a reasonable element of profit for the selling effort by the acquiring company. A significant portion of the GAAP difference relates to maturing stock, which will be released
over a number of years when it is sold to third parties.

d)    Investments

Under UK GAAP, other investments include amounts in respect of ordinary shares held by the employee share trusts. Under US GAAP, these amounts are accounted for as
Treasury Stock and deducted from shareholders' funds.

e)    Disposal of UK Retail business

On 6 September 1999, the Group disposed of its UK Retail business (see Note 25). Under UK GAAP, this disposal was accounted for as a reduction of
shareholders' funds as a direct distribution to the Group's shareholders.

Under
US GAAP, this transaction is accounted for as the sale of a business to a third party with an immediate distribution of proceeds to the Group's shareholders. Accordingly, under US GAAP,
this transaction results in a gain on sale followed by a dividend of proceeds.

The
amount of the gain on disposal under US GAAP is based on the US GAAP net assets of the UK Retail business at the disposal date. The principal differences between UK GAAP and
US GAAP net assets relate to the revaluation of land and buildings under UK GAAP which would not be permissible under US GAAP (£958 million), depreciation of
assets under US GAAP that were carried at fair value under UK GAAP (£7 million) and a US GAAP adjustment to record deferred taxes
(£24 million).

f)    Restructuring costs

Under UK GAAP, provisions are made for restructuring costs once a detailed formal plan is in place and valid expectations have been raised in those affected that the
restructuring will be carried out. Provision is made for voluntary redundancy payments to the extent that it is expected that volunteers will come forward. US GAAP requires a number of specific
criteria to be met before restructuring costs can be recognized as an expense. Also, to the extent restructuring costs are related to the activities of an acquired company, US GAAP allows them
to be recognized as a liability upon

F-55

---

acquisition provided certain specific criteria are met whereas UK GAAP does not. Accordingly, timing differences arise between UK GAAP and US GAAP recognition of restructuring
costs.

g)    Pension and other post retirement benefits

Under the Group's accounting policy for post-employment benefits, in accordance with SSAP No. 24, pension costs are charged to the profit and loss account on
a systematic basis over the estimated service lives of employees and using the projected unit credit method and a set of long term actuarial assumptions.

Under
US GAAP, pension costs and liabilities are calculated in accordance with SFAS No. 87Employers' Accounting for Pensions. This standard requires the use of the projected
unit credit method and prescribes, in particular, the use of a market-related discount rate. This is not the same as the long term approach used under SSAP No. 24.

h)    Share compensation

Under UK GAAP, the cost of share option plans are amortized based on the cost of the shares acquired by the employee trusts to fulfill the plan, less the amount contributed by
the employee. Under US GAAP, compensation for fixed plan awards is determined at the date of grant, based on the cost of the fair value of the shares subject to the award, less the option
exercise or purchase price, if any, except for allowable discounts with respect to certain qualified plans where the discount is no greater than 15% of the fair value of the shares at date of grant.
Compensation costs for variable plan awards is estimated at the end of each period from the date of grant to the date final compensation costs are determinable based on the difference between the fair
value of the shares subject to the award and the option exercise or purchase price. Such cost is allocated to compensation expense over the vesting period and, if performance criteria are applicable
to the award, based on actual performance attained.

i)    Proposed dividends

Under UK GAAP, the proposed dividends on ordinary shares, as recommended by the Directors, are deducted from shareholders' equity and shown as a liability in the balance sheet
at the end of the period to which they relate, including proposed dividends which have been recommended but not yet approved by shareholders. Under US GAAP dividends are only deducted from
shareholders' equity at the date of declaration.

j)    Derivative instruments

The Group's foreign currency, interest rate and commodity contracts that hedge against forecast exposures do not meet the US GAAP hedge accounting criteria. Under
US GAAP, these contracts are
marked to market at the balance sheet date and gains and losses arising are included in net income. Under UK GAAP, these gains and losses can be deferred until the hedged transactions actually
occur.

The
Group may enter into foreign currency contracts to hedge the purchase price consideration on certain acquisitions. Under UK GAAP, the gains and losses arising on these foreign currency
contracts are recognized in the purchase price consideration. Under US GAAP, the gains and losses arising on these foreign currency contracts are recognized within net income.

F-56

---

k)    Deferred taxation

The Group adopted FRS No. 19 Deferred Tax in the year ended 31 August 2002. Consequently, the consolidated financial statements as at 31 August 2001, and
the two year period ended 31 August 2001 have been restated and disclosures have been modified to reflect retroactively the impact of the adoption of FRS No. 19 on such financial
statements as required by UK GAAP. FRS No. 19 brings accounting for deferred tax under UK GAAP conceptually closer to US GAAP, although some differences remain. Following
the Group's restatement under FRS No. 19, and other than the tax effect of other UK to US GAAP differences, there is only one material difference between UK GAAP and
US GAAP. This difference relates to the recognition criteria for recording deferred tax assets under US GAAP and UK GAAP. Under US GAAP, the calculation of current and
deferred tax assets is based on the probable tax treatment of the tax position taken. Once it is determined that there is a probable deferred tax asset, it is then reduced by a valuation allowance to
the extent it is deemed more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax asset will not be realized. Under UK GAAP, both the existence of the
asset and the probability of its recoverability are considered in combination, and a deferred tax asset is recognized only to the extent that its existence and recoverability are more likely than not.

l)    Exceptional items

Under UK GAAP, exceptional items are material charges or gains that are associated with the ordinary activities of the Group that the Board of Directors determine, individually
or in aggregate, would have a material impact on the true and fair view of specific line items in the consolidated financial statements. Such items are included within the profit and loss account
heading and disclosed in the notes to the consolidated financial statements. Under US GAAP, there is no such concept as exceptional items. Exceptional items would not be considered
extraordinary or non-operating items under US GAAP.

m)  Mexican excise rebate

Under UK GAAP the amount due for the Mexican excise tax rebate is being recognized principally when offset against future excise duty and other taxes payable. Under
US GAAP, the Mexican excise rebate was recognized upon the issuance of a favorable court judgment and additional interest and inflation adjustments are recognized as they accrue.

n)    Liabilities

The Group is contractually obligated to make a payment to a business venture partner upon termination of the venture which, unless renewed, is scheduled to terminate in 2029.
Under UK GAAP, the Group records the obligation at the present value of the payment obligation, discounted at a risk-adjusted rate to reflect the time value of money, and recognizes
interest expense each period such that the recorded obligation will equal the payment obligation at the currently best estimated scheduled maturity. Under US GAAP, the obligation is recorded at
the amount payable at maturity (i.e. undiscounted).

F-57

---

o)    Franchise income

The Group has entered into agreements to sell the right to develop multiple stores within a specified territory, which entitles the Group to non-refundable
franchise fees. Under UK GAAP, these franchise fees are recognized upon signing of the agreement. Under US GAAP, the revenue recognition is based on store openings or until the rights to
develop the territory have been forfeited.

p)    Earnings per share

Earnings per share computations (both basic and diluted) under US GAAP are determined by dividing net income in accordance with US GAAP by continuing and
discontinued operations by the same number of shares used in the earnings per share calculations under UK GAAP (see note 10).

F-58

---

The following statements provide a reconciliation between profit earned for ordinary shareholders under UK GAAP and net income under US GAAP, and a reconciliation between shareholders'
equity under UK GAAP and shareholders' equity under US GAAP.

|                                                                   |                                                  |  |   | Year ended 31 August |     
|------------------------------------------------------------------ | ------------------------------------------------ |  | - | -------------------- | ----
|
|
|
|Profit earned for ordinary shareholders in accordance with UK GAAP |                                                  |  |   | 392                  |     
|Adjustments to conform with US GAAP:                               |                                                  |  |   |                      |     
|                                                                   | Brands                                           |  | a | )                    |    
|                                                                   | Goodwill                                         |  | a | )                    | 38  
|                                                                   | Other intangible assets                          |  | a | )                    | (4  
|                                                                   | Stock                                            |  | c | )                    | (66 
|                                                                   | Disposal of UK Retail                            |  | e | )                    |    
|                                                                   | Restructuring costs                              |  | f | )                    | 4   
|                                                                   | Pension costs and other post retirement benefits |  | g | )                    | 28  
|                                                                   | Share compensation                               |  | h | )                    |    
|                                                                   | Derivative instruments                           |  | j | )                    | 90  
|                                                                   | Mexican excise rebate                            |  | m | )                    | (54 
|                                                                   | Franchise income                                 |  | o | )                    | (9  
|                                                                   | Other                                            |  |   |                      | (1  
|                                                                   | Deferred taxationOther                          |  | k | )                    | (40 
|                                                                   | Deferred taxationOn above US GAAP adjustments   |  | k | )                    | 28  
|                                                                   | Minority share of above adjustments              |  |   |                      |    
|                                                                   |                                                  |  |   |                      |     
|Net income in accordance with US GAAP                              |                                                  |  |   | 406                  |     
|                                                                   |                                                  |  |   |                      |     
|                                                                   | Continuing operations                            |  |   |                      | 406 
|                                                                   | Discontinued operations                          |  |   |                      |    
|                                                                   |                                                  |  |   |                      |     
|Net income in accordance with US GAAP                              |                                                  |  |   | 406                  |     
|                                                                   |                                                  |  |   |                      |     
|Other comprehensive income:                                        |                                                  |  |   |                      |     
|                                                                   | Minimum pension liability                        |  |   |                      | (203
|                                                                   | Currency translation differences                 |  |   |                      | (130
|                                                                   |                                                  |  |   |                      |     
|Comprehensive income in accordance with US GAAP                    |                                                  |  |   | 73                   |     
|                                                                   |                                                  |  |   |                      |     
|Basic net earnings per ordinary share                              |                                                  |  |   |                      |     
|                                                                   | Continuing operations                            |  |   |                      | 38.1
|                                                                   | Discontinued operations                          |  |   |                      |    
|                                                                   |                                                  |  |   |                      |     
|                                                                   |                                                  |  |   | 38.1                 | p   
|                                                                   |                                                  |  |   |                      |     
|Diluted net earnings per ordinary share                            |                                                  |  |   |                      |     
|                                                                   | Continuing operations                            |  |   |                      | 38.0
|                                                                   | Discontinued operations                          |  |   |                      |    
|                                                                   |                                                  |  |   |                      |     
|                                                                   |                                                  |  |   | 38.0                 | p   
|                                                                   |                                                  |  |   |                      |     
|Goodwill and other intangible assetsadoption of SFAS No. 142      |                                                  |  |   |                      |     
|Reported net income in accordance with US GAAP                     |                                                  |  |   | 406                  |     
|Add back: brand amortization                                       |                                                  |  |   |                     |     
|Add back: goodwill amortization                                    |                                                  |  |   |                     |     
|                                                                   |                                                  |  |   |                      |     
|Adjusted net income in accordance with US GAAP                     |                                                  |  |   | 406                  |     
|                                                                   |                                                  |  |   |                      |     

F-59

---

|                                                   |  | Year ended 31 August |  
|-------------------------------------------------- |  | -------------------- | -
|
|
|Basic earnings per sharecontinuing operations:    |  |                      |  
|Reported net income in accordance with US GAAP     |  | 38.1                 | p
|Brand amortization                                 |  |                     |  
|Goodwill amortization                              |  |                     |  
|                                                   |  |                      |  
|Adjusted net income in accordance with US GAAP     |  | 38.1                 | p
|                                                   |  |                      |  
|Dilutive earnings per sharecontinuing operations: |  |                      |  
|Reported net income in accordance with US GAAP     |  | 38.0                 | p
|Brand amortization                                 |  |                     |  
|Goodwill amortization                              |  |                     |  
|                                                   |  |                      |  
|Adjusted net income in accordance with US GAAP     |  | 38.0                 | p
|                                                   |  |                      |  

Shareholders' Equity

|                                                           |                                                  |  |   | Year ended 31 August |      
|---------------------------------------------------------- | ------------------------------------------------ |  | - | -------------------- | -----
|
|
|
|Shareholders' funds as reported in the Group balance sheet |                                                  |  |   | 706                  |      
|Adjustments to conform with US GAAP:                       |                                                  |  |   |                      |      
|                                                           | Brands                                           |  | a | )                    | 1,410
|                                                           | Goodwill                                         |  | a | )                    | 185  
|                                                           | Other intangible assetsCosts                    |  | a | )                    | 168  
|                                                           | Other intangible assetsAccumulated amortization |  | a | )                    | (144 
|                                                           | Associated undertakings                          |  | b | )                    | 57   
|                                                           | Stock                                            |  | c | )                    | 45   
|                                                           | Investments                                      |  | d | )                    | (93  
|                                                           | Restructuring costs                              |  | f | )                    | 8    
|                                                           | Pension and other post retirement benefits       |  | g | )                    | (555 
|                                                           | Share compensation                               |  | h | )                    | 1    
|                                                           | Proposed dividends                               |  | i | )                    | 88   
|                                                           | Derivative instruments                           |  | j | )                    | (26  
|                                                           | Mexican excise rebate                            |  | m | )                    | 40   
|                                                           | Liabilities                                      |  | n | )                    | (38  
|                                                           | Franchise income                                 |  | o | )                    | (9   
|                                                           | Other                                            |  |   |                      | 6    
|                                                           | Deferred taxationOther                          |  | k | )                    | 11   
|                                                           | Deferred taxationOn above US GAAP adjustments   |  | k | )                    | (319 
|                                                           | Minority share of above adjustments              |  |   |                      |     
|                                                           |                                                  |  |   |                      |      
|Shareholders' equity in accordance with US GAAP            |                                                  |  |   | 1,541                |      
|                                                           |                                                  |  |   |                      |      

F-60

---

The
effect of applying US GAAP to items other than those directly affecting net income or shareholders' equity is dealt with in other notes relating to the financial statements.

Consolidated statement of cash flows

The consolidated statement of cash flows prepared under UK GAAP presents substantially the same information as that required under US GAAP but may differ,
however, with regard to classification of items within the statements and as regards to the definition of cash under UK GAAP and cash and cash equivalents under US GAAP.

Under
US GAAP, cash and cash equivalents include short-term highly liquid investments but do not include bank overdrafts. Under UK GAAP, cash flows are presented separately for
operating activities, dividends received from associates, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions, equity dividends and
management of liquid resources and financing. US GAAP, however, requires only three categories of cash flow activity to be reported: operating, investing and financing. Cash flows from taxation
and returns on investments and servicing of finance shown under UK GAAP would, with the exception of dividends paid to minority shareholders, be included as operating activities under US GAAP.

The
payment of dividends would be included as a financing activity under US GAAP. Under UK GAAP, all interest is treated as part of returns on investments and servicing of finance. Under
US GAAP, capital expenditure and financial investment and acquisitions are reported within investing activities.

|                                                                 |  | Year ended 31 August |  
|---------------------------------------------------------------- |  | -------------------- | -
|
|
|
|Cash inflow from operating activities                            |  | 469                  |  
|Cash outflow from investing activities                           |  | (1,227               | )
|Cash inflow/(outflow) from financing activities                  |  | 818                  |  
|                                                                 |  |                      |  
|Increase/(decrease) in cash and cash equivalents                 |  | 60                   |  
|Effect of foreign exchange rate changes                          |  | (2                   | )
|Cash and cash equivalents at beginning of the year under US GAAP |  | 111                  |  
|                                                                 |  |                      |  
|Cash and cash equivalents at end of the year under US GAAP       |  | 169                  |  
|                                                                 |  |                      |  

New accounting standards

Effective 1 September 2001, the Group adopted Emerging Issues Task Force ("EITF") 01-9Accounting for Consideration Given by a Vendor to a
Customer or a Reseller of the Vendor's Products. EITF 01-9 requires that certain cash incentives in operating costs be recorded as a reduction of revenue. The Company enters into a wide
range of commercial arrangements with its customers which include:



F-61

---



Where
no identifiable benefit is sufficiently separable from such arrangements the costs are treated as a reduction from revenue and recognized as incurred on an accruals basis. These are measured at
the invoiced amount. The adoption of EITF 01-9 resulted in a US GAAP reclassification to reduce UK GAAP revenues and operating costs for the year ended
31 August 2002 by £143 million. Additionally, EITF 01-9 requires the reclassification of prior period financial statements presented for comparative
purposes. This resulted in a US GAAP reclassification to reduce UK GAAP revenues and operating costs for the year ended 31 August 2001 by £120 million (2000:
£100 million). The adoption of EITF 01-9 has no impact on profit earned for ordinary shareholders or basic and diluted earnings per share.

In
June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141Business Combinations and SFAS
No. 142Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations.
SFAS No. 141 specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported separately from goodwill. SFAS No. 142
requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of
SFAS No. 142.

The
Group adopted the provisions of SFAS No. 141 as at 1 July 2001, and SFAS No. 142 as at 1 September 2002. Goodwill and intangible assets determined to have
an indefinite useful life acquired in a purchase
business combination completed after 30 June 2001, are not amortized. Goodwill and indefinite useful life intangible assets acquired in business combinations completed before 1 July 2001
continued to be amortized through 31 August 2001. Amortization of such assets ceased on 1 September 2002 upon adoption of SFAS No. 142. Accordingly, the US GAAP
reconciliation of net income will no longer include amortization of brands with indefinite lives with a carrying amount of £1,203 million as at 1 September 2001 and goodwill
amortization recognized under UK GAAP will be reversed for the purposes of US GAAP.

Upon
adoption of SFAS No. 142, the Group evaluated its existing intangible assets and goodwill that were acquired in purchase business combinations, and reclassified certain intangible assets,
with a carrying value of £1 million into goodwill, in order to conform with the new classification criteria in SFAS No. 141 for recognition separate from goodwill. No
other reclassifications were required to be made by the Group. The Group reassessed the useful lives and residual values of all intangible assets acquired and was not required to make any amortization
period adjustments. For intangible assets identified as having indefinite useful lives, the Group tested those intangible assets for impairment in accordance with the provisions of
SFAS No. 142. Impairment was measured as the excess of carrying value over the fair value of an intangible asset with an indefinite life. The results of this analysis did not require the
Group to recognize an impairment loss.

In
connection with SFAS No. 142's transitional goodwill impairment evaluation, the Statement required the Group to perform an assessment of whether there was an indication that goodwill was
impaired as of the date of adoption. To accomplish this, the Group identified its reporting units and determined the carrying value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting units as of 1 September 2001. The Group also determined the fair value of each reporting unit and compared it to the
carrying amounts identified. The results of this impairment test, upon the adoption of SFAS No. 142, did not result in an impairment charge.

F-62

---

The
following new accounting standards have not yet been adopted in the UK to US GAAP reconciliations.

In
June 2001, SFAS No. 143Accounting for Asset Retirement Obligations, was issued. SFAS No. 143 requires the Group to record the fair value of asset retirement
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs in the period in which it is incurred, if a reasonable estimate of fair
value can be made. SFAS No. 143 will be adopted in the 2003 fiscal year. The Group has evaluated the impact of adoption of SFAS No. 143, and it does not expect that it will
have a material impact on its financial position or results of its operations.

In
August 2001, SFAS No. 144Accounting for the Impairment or Disposal of Long-Lived Assets, was issued. SFAS No. 144 establishes a single model for the
impairment of long-lived assets and broadens the
presentation of discontinued operations to include more disposal transactions. SFAS No. 144 will be adopted during the 2003 fiscal year. The Group has evaluated the impact of adoption of
SFAS No. 144, and it does not expect that it will have a material impact on its financial position or results of operations.

In
April 2002, the FASB issued SFAS No. 145Recission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 provides for the recission of several previously issued accounting standards, new accounting guidance for the accounting for certain lease modifications and various
technical corrections that are not substantive in nature to existing pronouncements. SFAS No. 145 will be adopted beginning 1 September 2002, except for the provisions relating to the
amendment of SFAS No. 13 which was adopted for transactions occurring subsequent to 15 May 2002. The Group has evaluated the impact of SFAS No. 145, and it does not expect
that it will have a material impact on its financial position or results of operations.

In
July 2002, the FASB issued SFAS No. 146Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 covers the recognition of liabilities
for costs associated with an exit or disposal activity and provides the accounting and reporting requirements for such obligations, and nullifies the guidance in Emerging Issues Task Force Issue
No. 94-3Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity. SFAS No. 146 is effective for plans initiated
after 31 December 2002. Since SFAS No. 146 applies to future activities, which may not yet have been envisaged, the future impact of the application of SFAS No. 146
cannot be determined.

In
November 2002, the FASB issued FASB Interpretation No. (FIN) 45Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others. FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees that it has issued. It also
clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the non-contingent obligation undertaken in issuing the guarantee, that is the
obligation to stand ready to perform in the event that specified triggering events or conditions occur. FIN 45 also incorporates without change, the guidance in
FIN 34Disclosure of Indirect Guarantees of Indebtedness of Others, which is being superseded. The disclosure requirements of FIN 45 will be adopted in the 2003 fiscal year.
The initial recognition and the initial measurement provisions of FIN 45 will be applied to guarantees issued or modified after 31 December 2002. While the Group has not completed its
evaluation of the impact of FIN 45, it does not expect the adoption of FIN 45 will have a significant effect on its financial position or results of operations.

F-63

---

In
December 2002, the FASB issued SFAS No. 148Accounting for Stock Based CompensationTransition and Disclosurean amendment of FASB Statement
No. 123. SFAS No. 148 permits two additional transition methods for entities that adopt the fair value based method of accounting for stock-based employee compensation. SFAS
No. 148 also requires new disclosures about the ramp-up effect of stock-based employee compensation on reported results. SFAS No. 148 also requires that those effects be
disclosed more prominently by specifying the form, content, and location of those disclosures. The
transition guidance and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after 15 December 2002, with earlier application permitted in certain
circumstances. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after 15 December 2002. The Group has not
decided yet if it will adopt either of the transition method alternatives of SFAS 148.

In
January 2003, the FASB issued FASB Interpretation No. (FIN) 46Consolidation of Variable Interest Entities, which interprets Accounting Research Bulletin (ARB)
No. 51Consolidated Financial Statements. FIN 46 clarifies the application of ARB No. 51 with respect to the consolidation of certain entities (variable interest
entities"VIE's") to which the usual condition for consolidation described in ARB No. 51 does not apply because the controlling financial interest in VIE's may be achieved through
arrangements that do not involve voting interests. In addition, FIN 46 requires the primary beneficiary of VIE's and the holder of a significant variable interest in VIE's to disclose certain
information relating to their involvement with the VIE's. The provisions of FIN 46 apply immediately to VIE's created after 31 January 2003, and to VIE's in which an enterprise obtains
an interest after that date. FIN 46 applies to the first fiscal year beginning after 15 June, 2003, to VIE's in which an enterprise holds a variable interest that it acquired before
1 February 2003. The Group does not expect the adoption of FIN 46 to have a significant impact on its financial statements.

Derivatives

Effective 1 September 2000, the Group adopted SFAS No. 133Accounting for Derivatives Instruments and Hedging Activities, as amended by SFAS
No. 137 and 138. SFAS No. 133 requires that all derivative instruments are recognized as assets or liabilities on the balance sheet and measured at fair value, regardless of the purpose
or intent for holding them. Changes in the fair value of derivative instruments are recognized periodically either in earnings or in earnings of stockholders' equity (as a component of other
comprehensive income), depending on whether the derivative is designated as a hedge of changes in fair value or cash flows. For derivatives designated as fair value hedges, changes in fair value of
the hedged item and the derivative are recognized currently in earnings. For derivatives designated as cash flow hedges, fair value changes of the effective portion of the hedging instrument are
recognized in accumulated other comprehensive income on the balance sheet until the hedged item is recognized in earnings. The ineffective portion of the fair value changes are recognized in earnings
immediately. Changes in the fair value of derivative instruments not designated as hedges are recognized currently in earnings.

Under
US GAAP, and prior to the adoption of SFAS No. 133, the Group's derivative instruments did not qualify for hedge accounting treatment. Under SFAS No. 133, the Group continues to
not qualify for hedge accounting treatment. As a result, the transition to SFAS No. 133 had no impact on the financial statements of the Group.

F-64

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Accumulated Other Comprehensive Income

|                          |  | Translation
differences |   | Minimum
pension
liability |   | Accumulated
other
comprehensive
income |  
|------------------------- |  | ----------------------- | - | ------------------------- | - | -------------------------------------- | -
|
|
|At 31 August 2000         |  | (435                    | ) |                          |   | (435                                   | )
|Net current period charge |  | (11                     | ) | (207                      | ) | (218                                   | )
|                          |  |                         |   |                           |   |                                        |  
|At 31 August 2001         |  | (446                    | ) | (207                      | ) | (653                                   | )
|Net current period charge |  | (130                    | ) | (203                      | ) | (333                                   | )
|                          |  |                         |   |                           |   |                                        |  
|At 31 August 2002         |  | (576                    | ) | (410                      | ) | (986                                   | )
|                          |  |                         |   |                           |   |                                        |  

The
net current period charge in 2002 is net of income taxes of £89 million (2001: £88 million) related to the minimum pension liability. The cumulative income
tax charge related to the minimum pension liability as at 31 August 2002 is £177 million (2001: £88 million).

Pension Plans and Post Retirement Medical Benefits (US GAAP)

For the purposes of disclosure in accordance with US GAAP, the pension cost of the Group's major retirement plans have been restated in the following tables in accordance with
the requirements of SFAS No. 87Employers' Accounting for Pensions. The Group's post retirement benefit obligations other than pensions have been restated in the tables below in
accordance with SFAS No. 106Employers' Accounting for Post Retirement Benefits Other than Pensions. The disclosures below are in accordance with SFAS
No. 132Employers' Disclosures about Pensions and Other Post Retirement Benefits.

The
Group did not apply SFAS No. 87 on the effective date specified in the standard for the pension plans in the Netherlands and the UK. SFAS No. 87 calculations were made for the first
time for these plans as at 1 September 1999. The amount of the asset that was recorded directly to equity in the opening balance sheet under US GAAP for these plans was
£152 million and the amortization period used for the transitional asset was 15 years.

The
Group did not apply SFAS No. 106 on the effective date specified in the standard for the post retirement medical plan in the UK. The initial SFAS No. 106 calculations were as at
1 September 1999 and resulted in £14 million liability being recorded directly to equity in the opening balance sheet. There is no transitional provision for this standard.

F-65

---

The funded status of the Group's major post retirement plans under SFAS No. 87 and No. 106 is as follows:

|                                                                              |                                        | Pension benefits |      | Post retirement benefits |     
|----------------------------------------------------------------------------- | -------------------------------------- | ---------------- | ---- | ------------------------ | ----
|
|
|
|
|Benefit obligation                                                            |                                        |                  |      |                          |     
|Benefit obligation at the beginning of the year                               |                                        | 2,320            |      | 2,052                    |     
|Service cost                                                                  |                                        | 18               |      | 11                       |     
|Interest cost                                                                 |                                        | 125              |      | 143                      |     
|Plan participants' contributions                                              |                                        | 2                |      | 4                        |     
|Plan amendments                                                               |                                        |                 |      | 8                        |     
|Acquisitions                                                                  |                                        |                 |      | 5                        |     
|Curtailments                                                                  |                                        |                 |      | (1                       | )   
|Special termination benefits                                                  |                                        |                 |      | 2                        |     
|Divestitures                                                                  |                                        | (19              | )    | (30                      | )   
|Actuarial loss/(gain)                                                         |                                        | (45              | )    | 263                      |     
|Benefits paid                                                                 |                                        | (128             | )    | (132                     | )   
|Exchange adjustment                                                           |                                        | (21              | )    | (5                       | )   
|                                                                              |                                        |                  |      |                          |     
|Benefit obligation at the end of the year                                     |                                        | 2,252            |      | 2,320                    |     
|                                                                              |                                        |                  |      |                          |     
|Plan assets                                                                   |                                        |                  |      |                          |     
|Fair value of the plan assets at the beginning of the year                    |                                        | 2,251            |      | 2,734                    |     
|Actual return on assets                                                       |                                        | (218             | )    | (333                     | )   
|Employer's contributions                                                      |                                        | 12               |      | 18                       |     
|Plan participants' contributions                                              |                                        | 2                |      | 4                        |     
|Divestitures                                                                  |                                        | (19              | )    | (30                      | )   
|Benefits paid                                                                 |                                        | (126             | )    | (132                     | )   
|Expenses paid                                                                 |                                        | (3               | )    | (3                       | )   
|Exchange adjustment                                                           |                                        | (21              | )    | (7                       | )   
|                                                                              |                                        |                  |      |                          |     
|Fair value of the plan assets at the end of the year                          |                                        | 1,878            |      | 2,251                    |     
|                                                                              |                                        |                  |      |                          |     
|Funded status                                                                 |                                        | (374             | )    | (69                      | )   
|Unrecognized prior service cost                                               |                                        | 19               |      | 23                       |     
|Unrecognized net loss/(gain)                                                  |                                        | 707              |      | 342                      |     
|Unrecognized transitional asset                                               |                                        | (9               | )    | (15                      | )   
|                                                                              |                                        |                  |      |                          |     
|Prepaid/(accrued) pension cost                                                |                                        | 343              |      | 281                      |     
|                                                                              |                                        |                  |      |                          |     
|The US GAAP amounts recognized in the consolidated financial statements were: |                                        |                  |      |                          |     
|                                                                              | Prepaid benefit cost                   |                  | 362  |                          | 307 
|                                                                              | Accrued benefit liability              |                  | (19  | )                        | (26 
|                                                                              | Additional liability                   |                  | (587 | )                        | (295
|                                                                              | Accumulated other comprehensive income |                  | 587  |                          | 295 
|                                                                              |                                        |                  |      |                          |     
|                                                                              |                                        | 343              |      | 281                      |     
|                                                                              |                                        |                  |      |                          |     

F-66

---

The
net periodic benefit cost for the major retirement SFAS No. 87 and in respect of other post-retirement benefits under SFAS No. 106 was:

|                                                |  | Pension benefits |   | Post retirement benefits |  
|----------------------------------------------- |  | ---------------- | - | ------------------------ | -
|
|
|
|
|Service cost                                    |  | 18               |   | 11                       |  
|Interest cost                                   |  | 125              |   | 143                      |  
|Expected return on assets                       |  | (178             | ) | (171                     | )
|Amortization of unrecognized transition amount  |  | (6               | ) | (6                       | )
|Amortization of unrecognized gain               |  |                 |   | (2                       | )
|Amortization of unrecognized prior service cost |  | 2                |   | 2                        |  
|Gain recognized on curtailment or settlement    |  |                 |   | (1                       | )
|                                                |  |                  |   |                          |  
|Net periodic benefit cost                       |  | (39              | ) | (24                      | )
|                                                |  |                  |   |                          |  

The
cost of business combinations was nil for the year ended 31 August 2002 (2001: £5 million, 2000: nil).

In
addition to the above, the costs of providing special or contractual termination benefits were nil for the year ended 31 August 2002 (2001: £2 million, 2000: nil).
The event that gave rise to the recognized cost in 2001 was the Early Retirement Window program for the Hiram Walker Corporate Plan as at 1 January 2001.

|                                                                                                                            |                                                                      | Year ended 31 August
|--------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------
|
|
|
|The aggregate funded status of pension plans can be analyzed as follows:                                                    |                                                                      |                     
|                                                                                                                            | For plans with Projected Benefit Obligation in excess of plan assets |                     
|                                                                                                                            | Aggregate Projected Benefit Obligation                               |                     
|                                                                                                                            | Aggregate fair value of plan assets                                  |                     
|The aggregate figures for plans in which the Accumulated Benefit Obligation exceeds plan assets can be analyzed as follows: |                                                                      |                     
|                                                                                                                            | Aggregate Accumulated Benefit Obligation                             |                     
|                                                                                                                            | Aggregate fair value of plan assets                                  |                     

The
following assumptions, on a weighted-average basis, were used in the accounting of the defined benefit pension plans:

|                                                 |  | 31 August 2002 |  | 31 August 2001 |  | 31 August 2000
|------------------------------------------------ |  | -------------- |  | -------------- |  | --------------
|
|
|Discount rate                                    |  | 5.8            |  | 6.8            |  | 5.8           
|Expected long-term rate of return on plan assets |  | 7.2            |  | 8.1            |  | 7.2           
|Rate of compensation increase                    |  | 4.3            |  | 4.6            |  | 4.3           

F-67

---

The
following assumptions, on a weighted-average basis, were used in the accounting of the post retirement medical plans:

|                                                  |  | 31 August 2002 |  | 31 August 2001 |  | 31 August 2000
|------------------------------------------------- |  | -------------- |  | -------------- |  | --------------
|
|
|For the net periodic post retirement benefit cost |  |                |  |                |  |               
|Discount rate                                     |  | 5.6            |  | 7.1            |  | 6.7           
|Healthcare cost trend rate (first year)           |  | 5.0            |  | 6.9            |  | 5.0           
|For the funded status                             |  |                |  |                |  |               
|Discount rate                                     |  | 5.8            |  | 6.5            |  | 5.6           
|Healthcare cost trend rate (first year)           |  | 4.8            |  | 8.4            |  | 5.0           

For
overseas plans, the healthcare cost is assumed to decrease gradually over the short to medium term culminating in an ultimate weighted average rate of 3% from 2007. The effect of a
one-percentage-point increase and the effect of a one-percentage-point decrease in the assumed healthcare cost trend rates on the service cost plus interest cost and the
accumulated post retirement medical benefit obligation are:

|                                                                                           |  | 31 August |  
|------------------------------------------------------------------------------------------ |  | --------- | -
|
|
|
|One-percentage-point increase effect on service cost plus interest cost                    |  | 1         |  
|One-percentage-point decrease effect on service cost plus interest cost                    |  |          |  
|One-percentage-point increase effect on the accumulated post retirement benefit obligation |  | 6         |  
|One-percentage-point decrease effect on the accumulated post retirement benefit obligation |  | (5        | )

The
costs recognized for defined contribution pension plans were £4 million for the year ended 31 August 2002 (2001: £3 million,
2000: £2 million). There were no significant changes in the rate of employer contributions compared to the prior year nor were there business combinations or divestitures in
the current year impacting on such plans.

Additional information required by US GAAP for share options

Employee share option plans

The Company applies APB Opinion No. 25 and related interpretations when accounting for its share option plans. Had compensation cost for the Company's share option plans
been determined based upon the fair value at the grant date for awards under these plans consistent with the alternative methodology set out in SFAS No. 123Accounting for
Stock-Based Compensation, net income and

F-68

---

earnings per ordinary share in accordance with US GAAP would be in the pro forma amounts indicated below:

|                                    |  | Year ended 31 August
|----------------------------------- |  | --------------------
|
|
|
|Net income                          |  |                     
|As reported                         |  | 406                 
|Pro forma                           |  | 405                 
|Earnings per ordinary share (pence) |  |                     
|As reported                         |  | 38.1                
|Pro forma                           |  | 38.0                

These
pro forma amounts may not be representative of future expenses as they are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined precisely.
Changes in assumptions could affect the estimates.

The
fair value of options which, in determining the pro forma impact is assumed to be amortized in the statement of income over the option vesting period, is estimated on the date of grant using the
Black-Scholes option-pricing model using the following weighted average assumptions:

|                                                                                                            |  | Year ended 31 August |  
|----------------------------------------------------------------------------------------------------------- |  | -------------------- | -
|
|Weighted average fair value of options whose exercise price equals the market price on the grant date       |  | 77                   | p
|Weighted average assumptions                                                                                |  |                      |  
|Risk free interest rate                                                                                     |  | 4.3                  | %
|Expected life (months)                                                                                      |  | 36                   |  
|Expected volatility                                                                                         |  | 34.6                 | %
|Dividend yield                                                                                              |  | 3.7                  | %
|Weighted average fair value of options whose exercise price is less than the market price on the grant date |  | 259                  | p
|Weighted average assumptions                                                                                |  |                      |  
|Risk free interest rate                                                                                     |  | 4.3                  | %
|Expected life (months)                                                                                      |  | 36                   |  
|Expected volatility                                                                                         |  | 34.7                 | %
|Dividend yield                                                                                              |  | 3.6                  | %

F-69

---

Valuation and qualifying accounts

|                          |                            | Balance at beginning of year |    | Profit and loss account movements |    | Other |    | Balance at end of year
|------------------------- | -------------------------- | ---------------------------- | -- | --------------------------------- | -- | ----- | -- | ----------------------
|
|
|Year ended 31 August 2002 |                            |                              |    |                                   |    |       |    |                       
|                          | Provisions against debtors |                              | 46 |                                   | 5  |       | (4 | )                     
|                          | Provisions against stock   |                              | 13 |                                   | 4  |       |   |                       
|Year ended 31 August 2001 |                            |                              |    |                                   |    |       |    |                       
|                          | Provisions against debtors |                              | 48 |                                   | (5 | )     | 3  |                       
|                          | Provisions against stock   |                              | 15 |                                   | (2 | )     |   |                       
|Year ended 31 August 2000 |                            |                              |    |                                   |    |       |    |                       
|                          | Provisions against debtors |                              | 44 |                                   | 1  |       | 3  |                       
|                          | Provisions against stock   |                              | 17 |                                   | (2 | )     |   |                       

34.  UK Companies Act 1985

These financial statements do not comprise the Group's "statutory accounts" within the meaning of section 240 of the UK Companies Act 1985. Statutory accounts for the
year ended 31 August 2002, 2001 and 2000 have been delivered to the Registrar of Companies for England and Wales. The auditors' reports on such accounts were unqualified.

F-70

---

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report
on its behalf.

|                       |  | ALLIED DOMECQ PLC
|---------------------- |  | -----------------
|Date: 28 February 2003 |  | By:              

II-1

---



Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I,
Philip Bowman, certify that:





|Date: 28 February 2003                                                                  
|----------------------------------------------------------------------------------------
|/s/PHILIP BOWMANName: Philip Bowman
Title: Chief Executive
(Principal Executive Officer)

II-2

---



Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I,
Graham Hetherington, certify that:





|Date: 28 February 2003                                                                                     
|-----------------------------------------------------------------------------------------------------------
|/s/GRAHAM HETHERINGTONName: Graham Hetherington
Title: Group Finance Director
(Principal Financial Officer)

II-3

---



INDEX TO EXHIBITS

|Exhibit |  | Description                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1     |  | Memorandum and Articles of Association of Allied Domecq PLC, as amended, dated 31 January 2002*                                                                                                         
|2.1     |  | Form of ADS Deposit Agreement, dated as of 24 June 2002, as amended on 15 July 2002, by and among Allied Domecq PLC and JPMorgan Chase Bank, as depositary, and Holders of American Depositary Receipts*
|2.2     |  | Form of Ordinary Share Certificate*                                                                                                                                                                     
|2.3     |  | Form of American Depositary Receipt*                                                                                                                                                                    
|6.1     |  | For a statement explaining how earnings per share information was calculated, see Note 10 to our Audited Consolidated Financial Statements                                                              
|8.1     |  | For a list of Allied Domecq PLC's subsidiaries, see "Item 4Information on the CompanyOrganizational Structure"                                                                                        

---

II-4

---