Diageo PLC, FCFF calculation

US$ in millions, translated from GBP £

12 months ended:	Jun 30, 2014	Jun 30, 2013	Jun 30, 2012	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009
Profit for the year attributable to equity shareholders of the parent company	3,797)	4,118)	3,158)	2,952)	2,507)	2,621)
Profit for the year attributable to non-controlling interests	(113)	181)	211)	182)	175)	168)
Net noncash charges	348)	12)	894)	463)	505)	398)
Net (increase) decrease in working capital	(1,008)	(916)	(860)	(174)	514)	(456)
Net cash from operating activities	3,023)	3,394)	3,404)	3,423)	3,702)	2,731)
Interest paid, net of tax¹	811)	767)	596)	696)	741)	661)
Disposal of property, plant and equipment and computer software	135)	65)	63)	73)	220)	23)
Purchase of property, plant and equipment and computer software	(1,084)	(1,066)	(787)	(651)	(576)	(529)
Free cash flow to the firm (FCFF)	2,885)	3,160)	3,276)	3,541)	4,087)	2,886)

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Diageo PLC suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Diageo PLC FCFF decreased from 2012 to 2013 and from 2013 to 2014.

Diageo PLC, interest paid, net of tax calculation

US$ in millions, translated from GBP £

12 months ended:	Jun 30, 2014	Jun 30, 2013	Jun 30, 2012	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009
Earnings before tax (EBT)
Profit for the year attributable to equity shareholders of the parent company	3,797)	4,118)	3,158)	2,952)	2,507)	2,621)
Add: Net income attributable to noncontrolling interest	(113)	181)	211)	182)	175)	168)
Less: Discontinued operations	(140)	—)	(18)	—)	(29)	3)
Add: Income tax expense	755)	877)	1,688)	533)	734)	472)
EBT	4,579)	5,176)	5,076)	3,667)	3,446)	3,258)
Effective Income Tax Rate (EITR)
EITR¹	16.49%	16.94%	33.26%	14.53%	21.30%	14.49%
Interest Paid, Net of Tax
Interest paid, before tax	971)	923)	893)	814)	942)	773)
Less: Interest paid, tax²	160)	156)	297)	118)	201)	112)
Interest paid, net of tax	811)	767)	596)	696)	741)	661)

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

¹ 2014 Calculation
EITR = 100 × Income tax expense ÷ EBT
= 100 × 755 ÷ 4,579 = 16.49%

² 2014 Calculation
Interest paid, tax = Interest paid × EITR
= 971 × 16.49% = 160

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Diageo PLC, current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions, translated from GBP £)
Enterprise value (EV)	96,539)
Free cash flow to the firm (FCFF)	2,885)
Valuation Ratio
EV/FCFF	33.46
Benchmarks
EV/FCFF, Competitors¹
Altria Group Inc.	9.79
Coca-Cola Co.	26.95
Mondelēz International Inc.	29.21
PepsiCo Inc.	29.81

Based on: 20-F (reporting date: 2014-06-30).

¹ Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Diageo PLC, historical EV/FCFF calculation, comparison to benchmarks

	Jun 30, 2014	Jun 30, 2013	Jun 30, 2012	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009
Selected Financial Data (US$ in millions, translated from GBP £)
Enterprise value (EV)¹	96,539)	104,432)	90,596)	63,844)	59,214)	57,902)
Free cash flow to the firm (FCFF)²	2,885)	3,160)	3,276)	3,541)	4,087)	2,886)
Valuation Ratio
EV/FCFF³	33.46	33.05	27.65	18.03	14.49	20.07
Benchmarks
EV/FCFF, Competitors⁴
Altria Group Inc.	—	—	—	—	—	—
Coca-Cola Co.	—	—	—	—	—	—
Mondelēz International Inc.	—	—	—	—	—	—
PepsiCo Inc.	—	—	—	—	—	—

Based on: 20-F (reporting date: 2014-06-30), 20-F (reporting date: 2013-06-30), 20-F (reporting date: 2012-06-30), 20-F (reporting date: 2011-06-30), 20-F (reporting date: 2010-06-30), 20-F (reporting date: 2009-06-30).

¹ See details »

² See details »

³ 2014 Calculation
EV/FCFF = EV ÷ FCFF
= 96,539 ÷ 2,885 = 33.46

⁴ Click competitor name to see calculations.

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Valuation ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Diageo PLC EV/FCFF ratio increased from 2012 to 2013 and from 2013 to 2014.

Diageo PLC (NYSE:DEO)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical