Allied Domecq's profits are made from two businesses: Spirits & Wine, accounting for 60 per cent of the total, and Retailing.

Spirits & Wine is international in scope. Most of its profits come from the mature markets of Europe and North America but there is a growing business in developing markets and Allied Domecq is particularly strong in Mexico and eastern Europe.

Retailing makes 70 per cent of its profit from UK pubs and is now the largest independent pub operator. It owns Victoria Wine stores. It also is a leading food franchiser owning Dunkin' Donuts and Baskin-Robbins, US based businesses which are expanding internationally.

In the year under review, Allied Domecq took major steps in concentrating on and developing these two businesses. Both have been reorganised to make them more market led and to cut the cost base. Other interests, notably in brewing and food, have been sold.

Retailing increased profits, with pub brands achieving good growth, but spirits profits were affected by the deliberate reduction of stocks in the trade. The decline in spirits profits and dilution from previous disposals contributed to a 13 per cent fall in earnings per share. Despite lower profits, free cash flow increased to £207 million.

The group's overriding priority is to build long term shareholder value. It aims to do this by capitalising on its brand strengths and by greater efficiency in operation.

Summary of Results YEAR TO 31 AUGUST 1996
	1996	1995	Change
	£m	£m	%
Trading profit	729	815	(11)
Profit before tax	575	645	(11)
Earnings per share	33.1p	38.2p	(13)
Free cash flow	207	112
Trading profit, profit before tax and earnings per share are on a normalised basis.