Ivan M. Menezes - Chief Executive Officer and Executive Director Deirdre A. Mahlan - Chief Financial Officer and Executive Director

Good morning, everyone, and thank you for joining us for this webcast. As I'm sure you know, this is my first set of results as CEO, and it's a privilege to take on that role. Paul Walsh provided Diageo with exceptional leadership and shaped our strength and global position, and I want to take this opportunity to thank him on behalf of the entire Diageo team. As these results again demonstrate, Paul did make a strong business even stronger. I know that many of you will have already seen our results announcement, so I will merely recap on the key points and set the agenda for the presentation, which Deirdre and I will now make. We set out our performance ambition in 2011, and I think it would be useful to measure our achievements this year against that. As I said in our release this morning, we are on track to deliver that medium-term guidance. 5% net sales growth is a robust performance, reflecting the strength of our U.S. spirits business and continued double-digit growth in the emerging markets. It's slightly below our expectations for the year, the result of the weaker top line growth in Asia and the slowdown we've seen in Brazil. However, we don't see anything in these recent trends to change our confidence in the long-term growth of these markets. Our operating margin improvement of 76 basis points is in line with our expectations. Strong price/mix of 4 percentage points contributed to gross margin improvement as did procurement savings and the savings we achieved through our restructuring programs. The focus of our marketing investment continues to be on our strategic brands. Our marketing campaigns are a competitive advantage for us and this year, we've seen these campaigns extend the leadership of our brands in many markets.…

Thanks, Ivan, and good morning, everyone. In the last 2 years, I have spoken about the Diageo model for efficient growth. As Ivan often says, this is a simple business, and so is our efficient growth model. If we grow our strategic brands, execute on our leading position in North America and build scale in the emerging markets, we can drive the top line and improve margins. I'm pleased that I am presenting a set of results which reflects good top line growth, continued investment in our brands and market platforms and margin expansion. Our strategic brands have performed strongly this year, with net sales growth driven equally by volume and price/mix. With the exception of Windsor and J&B, where performance reflected macro challenges in their biggest markets. This good performance was consistent across the brands. In North America, net sales growth was driven equally by volume, price and mix. This expanded gross profit margin, which, together with tight control on overheads, improved operating margin by 120 basis points after a 10% increase in marketing. With another year of double-digit net sales growth, sales from our emerging markets have reached over GBP 4.5 billion, providing the scale from which we can leverage our marketing spend and overheads to drive margin improvement. The geographic breadth of our business means that again this year, we have delivered a robust performance despite individual challenges in certain markets. We've seen further weakness in Southern Europe, a tough traditional on-trade in Korea, and disappointing performance in our Asia duty free. In addition, Brazil and Nigeria were weak, although we did deliver net sales growth in both markets. Let me go into a bit more detail on each of these points. I'll start with our strategic brands. We delivered 1% volume growth in the year. This…

Thank you, Deirdre. What I want to do now is talk about what we did this year and what gives us the confidence that we're on track to deliver our guidance. As Deirdre said, I do think this is a simple business. Global premium drinks is an attractive industry. There are a growing number of consumers, and consumers are premiumizing. We have the brands and the global reach, and we are very clear how we drive value from that. First, by enhancing the leadership position we have in North America. The size of our North American business contributes balance between our developed and emerging markets businesses. Having a business which delivers consistent top line growth at high margins is a source of strength when we see periods of volatility in the emerging markets. Secondly, by enhancing our scale in the emerging markets to drive industry-leading growth. We have to have a cost focus in everything we do to drive efficient growth and we have to deliver this in a way which creates trust and respect from all stakeholders, gives leadership to our industry and contributes to the communities we are part of. Let me start with our brands. Many of you will know that I often use this slide and if I could only show one slide, this would be the one. Each year, we broaden our reach across categories. And broadening our reach is important as consumers and customers are at different stages of development in different markets. In the developed markets, we have a business which is balanced across all major beverage alcohol categories, with leading brands in each. It gives us the brand platforms we need to meet changing consumer and customer trends in both the short term and long term. In the emerging markets, our leading…

This is now concludes the first part of the call. [Operator Instructions] Once again, this is the first -- the end of the first part of our call. You may now disconnect your lines. Thank you.