Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
American Depositary Shares | DEO | New York Stock Exchange | ||||||
Ordinary shares of 28101/108 pence each | New York Stock Exchange(i) | |||||||
Large Accelerated Filer | þ | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ | Emerging growth company | ☐ |
† | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
U.S. GAAP ¨ | International Financial Reporting Standards | Other ¨ | ||||||||||||
as issued by the International Accounting Standards Board | ☑ |
5 | Cross reference to Form 20-F | |||||||
7 | Introduction | |||||||
10 | Strategic report | |||||||
14 | ||||||||
15 | Our brands | |||||||
17 | ||||||||
Chief | ||||||||
22 | ||||||||
32 | ||||||||
Operating results 2023 compared with 2022 | ||||||||
69 | Operating results 2022 compared with 2021 | |||||||
Liquidity and capital resources | ||||||||
75 | ||||||||
111 | Cautionary statement concerning forward-looking statement | |||||||
113 | Risk factors | |||||||
Non-financial and sustainability information statement | ||||||||
125 | Governance | |||||||
Letter from the Chairman | ||||||||
127 | Board of Directors | |||||||
Executive Committee | ||||||||
Corporate | ||||||||
Audit Committee report | ||||||||
Nomination Committee report | ||||||||
Directors’ remuneration report | ||||||||
Directors’ report |
Financial statements | |||||||||||
Report of Independent Registered Public Accounting Firm - PCAOB ID 876 | |||||||||||
Consolidated income statement | |||||||||||
Consolidated statement of comprehensive income | |||||||||||
Consolidated balance sheet | |||||||||||
Consolidated statement of changes in equity | |||||||||||
Consolidated statement of cash flows | |||||||||||
Notes to the consolidated financial statements | |||||||||||
Accounting information and policies | |||||||||||
Results for the year | |||||||||||
Operating assets and liabilities | |||||||||||
Risk management and capital structure | |||||||||||
Other financial statements disclosure | |||||||||||
Unaudited financial information | |||||||||||
Reporting boundaries and methodology | |||||||||||
316 | Additional disclosures | ||||||||||
322 | Additional information for shareholders | ||||||||||
Exhibits | |||||||||||
Signature | |||||||||||
Glossary of terms and US equivalents |
Item | Required item in Form 20-F | Page(s) | ||||||||||||
Part I | ||||||||||||||
1. | Identity of directors, senior management and advisers | Not applicable | ||||||||||||
2. | Offer statistics and expected timetable | Not applicable | ||||||||||||
3. | Key information | |||||||||||||
A. [Reserved] | — | |||||||||||||
B. Capitalisation and indebtedness | Not applicable | |||||||||||||
C. Reason for the offer and use of proceeds | Not applicable | |||||||||||||
D. Risk factors | ||||||||||||||
4. | Information on the company | |||||||||||||
A. History and development of the company | ||||||||||||||
B. Business overview | ||||||||||||||
C. Organisational structure | ||||||||||||||
D. Property, plant and equipment | ||||||||||||||
4A. | Unresolved staff comments | Not applicable | ||||||||||||
5. | Operating and financial review and prospects | |||||||||||||
A. Operating results | ||||||||||||||
B. Liquidity and capital resources | ||||||||||||||
C. Research and development, patents and licenses, etc. | ||||||||||||||
D. Trend information | ||||||||||||||
E. Critical Accounting Estimates | Not applicable | |||||||||||||
6. | Directors, senior management and employees | |||||||||||||
A. Directors and senior management | ||||||||||||||
B. Compensation | ||||||||||||||
C. Board practices | ||||||||||||||
D. Employees | ||||||||||||||
E. Share ownership | ||||||||||||||
F. Disclosure of a registrant’s action to recover erroneously awarded compensation | Not applicable | |||||||||||||
7. | Major shareholders and related party transactions | |||||||||||||
A. Major shareholders | ||||||||||||||
B. Related party transactions | ||||||||||||||
C. Interests of experts and counsel | Not applicable | |||||||||||||
8. | Financial information | |||||||||||||
A. Consolidated statements and other financial information | ||||||||||||||
B. Significant changes | ||||||||||||||
9. | The offer and listing | |||||||||||||
A. Offer and listing details | 1, | |||||||||||||
B. Plan of distribution | Not applicable | |||||||||||||
C. Markets | ||||||||||||||
D. Selling shareholders | Not applicable | |||||||||||||
E. Dilution | Not applicable | |||||||||||||
F. Expenses of the issue | Not applicable |
Item | Required item in Form 20-F | Page(s) | ||||||
10. | Additional information | |||||||
A. Share capital | Not applicable | |||||||
B. Memorandum and articles of association | ||||||||
C. Material contracts | ||||||||
D. Exchange controls | ||||||||
E. Taxation | ||||||||
F. Dividends and paying agents | Not applicable | |||||||
G. Statement by experts | Not applicable | |||||||
H. Documents on display | ||||||||
I. Subsidiary information | Not applicable | |||||||
11. | Quantitative and qualitative disclosures about market risk | |||||||
12. | Description of securities other than equity securities | |||||||
A. Debt securities | Not applicable | |||||||
B. Warrants and rights | Not applicable | |||||||
C. Other securities | Not applicable | |||||||
D. American depositary shares | ||||||||
Part II | ||||||||
13. | Defaults, dividend arrearages and delinquencies | Not applicable | ||||||
14. | Material modifications to the rights of security holders and use of proceeds | Not applicable | ||||||
15. | Controls and procedures | |||||||
A. Disclosure controls and procedures | ||||||||
B. Management’s report on internal control over financial reporting | ||||||||
C. Attestation report of the registered public accounting firm | ||||||||
D. Changes in internal control over financial reporting | ||||||||
16A. | Audit committee financial expert | |||||||
16B. | Code of ethics | |||||||
16C. | Principal accountant fees and services | |||||||
16D. | Exemptions from the listing standards for audit committees | Not applicable | ||||||
16E. | Purchases of equity securities by the issuer and affiliated purchasers | |||||||
16F. | Change in registrant’s certifying accountant | Not applicable | ||||||
16G. | Corporate governance | |||||||
16H. | Mine safety disclosure | Not applicable | ||||||
16I. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | Not applicable | ||||||
16J. | Insider trading policies | Not applicable | ||||||
Part III | ||||||||
17. | Financial statements | Not applicable | ||||||
18. | Financial statements | See Item 8 | ||||||
19. | Exhibits | |||||||
Additional information | ||||||||
Glossary of terms and US equivalents |
Volume (equivalent units) | Net sales(2) | Operating profit | |||||||||||||||||||||||||||||||||||||||
EU243.4m | £17,113m | £4,632m | |||||||||||||||||||||||||||||||||||||||
(2022: EU263.0m) | (2022: £15,452m) | (2022: £4,409m) | |||||||||||||||||||||||||||||||||||||||
Reported movement | (7) | % | ↓ | Reported movement | 11 | % | ↑ | Reported movement | 5 | % | ↑ | ||||||||||||||||||||||||||||||
Organic movement(1) | (1) | % | ↓ | Organic movement(1) | 6 | % | ↑ | Organic movement(1) | 7 | % | ↑ | ||||||||||||||||||||||||||||||
Net cash from operating activities | Earnings per share (eps) | Total recommended dividend per share(3) | |||||||||||||||||||||||||||||||||||||||
£3,024m | 164.9p | 80.00p | |||||||||||||||||||||||||||||||||||||||
(2022: £3,935m) | (2022: 140.2p) | (2022: 76.18p) | |||||||||||||||||||||||||||||||||||||||
2023 free cash flow(1) | £1,800m | Reported movement | 18 | % | ↑ | 5 | % | ↑ | |||||||||||||||||||||||||||||||||
2022 free cash flow(1) | £2,783m | Eps before exceptional items movement(1) | 8 | % | ↑ | ||||||||||||||||||||||||||||||||||||
Positive drinking | Inclusion and diversity | Water efficiency(4) | Carbon emissions(4) | |||||||||||||||||||||||||||||||||||||||||||||||
1,985,817 | 44% | 4.14l/l | 401 | |||||||||||||||||||||||||||||||||||||||||||||||
(2022: 607,374) | (2022: 44%) | (2022: 4.09l/l) | (2022: 424) | |||||||||||||||||||||||||||||||||||||||||||||||
Number of people educated on the dangers of underage drinking through a Diageo supported education programme | Percentage of female leaders globally | Water use efficiency per litre of product packaged (litres/litre) | Total direct and indirect carbon emissions by weight (market/net based) (1,000 tonnes CO2e) | |||||||||||||||||||||||||||||||||||||||||||||||
43% | ||||||||||||||||||||||||||||||||||||||||||||||||||
(2022: 41%) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of ethnically diverse leaders globally | ||||||||||||||||||||||||||||||||||||||||||||||||||
Statement on Section 172 of the Companies Act 2006 | ||
Section 172 of the Companies Act 2006 requires the Directors to promote the success of the company for the benefit of the members as a whole, having regard to the interests of stakeholders in their decision-making. In making decisions, the Directors consider what is most likely to promote the success of the company for its shareholders in the | ||
Read about: –How stakeholders were taken into account in decision-making on pages |
Reported volume movement | 2023: (0.8)% ↓ 2022: 10.3% | ||||
Reported net sales movement 2023: 10.7% ↑ 2022: 21.4% | 2023: 6.5% ↑ 2022: 21.4% | ||||
Reported operating profit movement 2023: 5.1% ↑ 2022: 18.2% | 2023: 7.0% ↑ 2022: 26.3% |
Average number of employees by region by gender3 | |||||||||||||||||||||||
Region5 | Men | % | Women | % | Not declared4 | % | Total | ||||||||||||||||
North America | 1,719 | 59% | 1,150 | 40% | 28 | 1% | 2,897 | ||||||||||||||||
Europe | 5,487 | 58% | 3,914 | 41% | 59 | 1% | 9,460 | ||||||||||||||||
Asia Pacific | 5,634 | 69% | 2,481 | 30% | 89 | 1% | 8,204 | ||||||||||||||||
Africa | 2,445 | 67% | 1,185 | 32% | 18 | 0% | 3,647 | ||||||||||||||||
Latin America and Caribbean | 2,349 | 62% | 1,398 | 37% | 32 | 1% | 3,779 | ||||||||||||||||
Total | 17,634 | 63% | 10,127 | 36% | 226 | 1% | 27,987 |
Average number of employees by role by gender3 | |||||||||||||||||||||||
Role | Men | % | Women | % | Not declared4 | % | Total | ||||||||||||||||
Executive | 8 | 62 | % | 5 | 38 | % | 0 | 0 | % | 13 | |||||||||||||
Senior manager6 | 304 | 56 | % | 239 | 44 | % | 1 | 0 | % | 544 | |||||||||||||
Line manager7 | 2,299 | 66 | % | 1,155 | 33 | % | 11 | 0 | % | 3,465 | |||||||||||||
Supervised employee8 | 15,022 | 63 | % | 8,729 | 36 | % | 213 | 1 | % | 23,965 | |||||||||||||
Diageo (total) | 17,634 | 63 | % | 10,127 | 36 | % | 226 | 1 | % | 27,987 |
Country | Body | Industry complaints upheld | Complaints about Diageo brands upheld | Brand | ||||||||||
Australia | ABAC Scheme | 48 | 1 | UDL | ||||||||||
Ireland | Advertising Standards Authority for Ireland (ASAI) | 0 | 0 | |||||||||||
United Kingdom | Advertising Standards Authority | 7 | 0 | |||||||||||
Portman Group | 8 | 0 | ||||||||||||
United States | Distilled Spirits Council of the United States (DISCUS) | 1 | 0 |
Role | Men | % | Women | % | Total | ||||||||||||
Leadership population2 | 312 | 56 | 244 | 44 | % | 556 3 | |||||||||||
Role | Ethnically diverse | % | Non-ethnically diverse | % | Decline to self-identify | % | Not disclosed | % | Total | ||||||||||||||||||||
Leadership population2 | 231 | 41 | % | 291 | 52 | % | 14 | 3 | % | 21 | 4 | % | 557 |
SDG alignment: 3.4; 3.5; 17.16 | Reported net sales growth 10.7% | £3,024m | ||||||||||||||||||
Organic net sales growth(1) 6.5% | Free cash flow(1) £1,800m | |||||||||||||||||||
Reported operating profit growth 5.1% | Return on closing invested capital 40.5% | |||||||||||||||||||
Organic operating profit growth(1) 7.0% | Return on average invested capital(1) 16.3% | |||||||||||||||||||
Basic earnings per share 164.9 pence | (2)% | |||||||||||||||||||
SDG alignment: 3.5; 17.16 | ||||||||||||||||||||
SDG alignment: 3.5; 3.6; 17.16 | ||||||||||||||||||||
SDG alignment: 3.5; 17.16 | promoted our 0.0 non-alcoholic spirits to travellers across our Global Travel Channel with activations of our 0.0 non-alcoholic spirits. We’ll use insights from our research into perceptions of non-alcoholic products to inform how we reach our 2030 goals to promote moderation. | |||||||||||||||||||
SDG alignment: 5.5; 10.2; 10.4 | ||||||||||||||||||||
SDG alignment: 10.2; 10.4 | ||||||||||||||||||||
SDG alignment: 5.5; 5B; 10.2; 10.4 | ||||||||||||||||||||
global reach | ||||||||||||||||||||
SDG alignment:5.5; 5B;10.2;10.4 | ||||||||||||||||||||
SDG alignment: 4.4; 8.1; 8.6; 10.2; 17.16 | ||||||||||||||||||||
SDG alignment: 5.5; 5A | L4L is gender inclusive by design, which means we put in place measures that reduce barriers to women accessing the skills, resources and opportunities we provide. For example, we offer training at times of the day that don’t clash with childcare responsibilities, and also make it available online and on-demand. This year we conducted research to understand the barriers to ethnic minorities in hospitality, which led us to update L4L. The programme is also partnering with the Diageo Bar Academy to tackle barriers through training, communications and customer partnerships – helping to create an inclusive and thriving hospitality industry that works for all. | |||||||||||||||||||
SDG alignment: 6.4; 17.16 | stressed areas | and, cumulatively, water-use rates have improved by 10.8% versus our 2020 baseline.In water-stressed areas, water efficiency improved by 7.8% and 14.9% versus our 2020 baseline. In addition, the volume of water we recycled or reused in our own production ancillary processes was 1,132,367m3, representing 6.5% of total water withdrawals. Our Africa region’s water stewardship work has been particularly impressive. Alongside three existing facilities in Kenya and Uganda, we began delivering water efficiency improvements at our site in Lagos, Nigeria through a water recovery and recycling facility. This year we used 21,896m3 of water for agricultural purposes on land under our operational control. We report this separately from water used in our direct operations and do not include it in our water efficiency calculations. | ||||||||||||||||||
company | ||||||||||||||||||||
SDG alignment: 6.1; 6.2; 6.6;6B; 15.1 | ||||||||||||||||||||
Fiscal 23 | North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | ||||||||||||
Volume (EUm) | 52.4 | 51.3 | 80.8 | 26.2 | 32.7 | ||||||||||||
Reported net sales(1) (£ million) | 6,758 | 3,569 | 3,200 | 1,799 | 1,699 | ||||||||||||
Reported operating profit(2) (£ million) | 2,592 | 1,097 | 432 | 661 | 176 | ||||||||||||
Operating profit before exceptional items(3) (£ million) | 2,689 | 1,105 | 905 | 661 | 220 | ||||||||||||
Water efficiency (litres per litre of product packaged) | 5.11 | 4.98 | 2.91 | 4.15 | 3.19 | ||||||||||||
Total direct and indirect carbon emissions by weight (market/net based) (1,000 tonnes CO2e) | 83 | 194 | 9 | 26 | 89 | ||||||||||||
Average number of employees(4) | 3,115 | 10,062 | 9,000 | 4,325 | 3,735 |
SDG alignment: 6.1; 6.2; 6.6; 6A; 6B; 15.1; 17.16 | In total, 135,800 people benefitted from these WASH projects this year. We have now implemented WASH projects in eight of the nine water-stressed markets (countries) where access to clean drinking water and sanitation is a risk. | |||||||||||||||||||
SDG alignment: 6.1; 6.2; 6.5; 6.6; 6A; 6B; 15.1; 17.16 | ||||||||||||||||||||
SDG alignment: 7.2; 7.3; 12.6; 13.3 | ||||||||||||||||||||
carbon emissions by 50%2,3 SDG alignment: 7.2; 7.3; 7A; 12.6; 13.3; 17.16 | zero value chain by 2050 or sooner led to a comprehensive review of our total value chain footprint and associated emissions last year. We reset our baseline, incorporating additional categories of upstream and downstream Scope 3 emissions.6 This year, our Scope 3 emissions increased by 4.7%. This was mainly due to increased production and the associated increased use of raw materials, packaging, third-party operations and neutral-spirit sourcing. We recognise that this target is challenging given the complexities of enabling impactful change up and down the value chain, and that we will not meet our target unless we work closely with suppliers, peers and others. | |||||||||||||||||||
SDG alignment: 7.2; 7A; 17.16 | ||||||||||||||||||||
SDG alignment: 12.5; 12.6 | total waste to landfill in our direct operations (tonnes) | tonnes (fiscal 21: 46 tonnes) – equivalent to 0.02% of all waste, co-products and by-products generated in our operations. At one of our facilities in Australia, waste material was incorrectly diverted to landfill by a third-party contractor. This issue was the principal cause of the year-on-year increase, and we are now working to address it with the contractor. Despite the increase, our performance remains within the de minimis threshold for zero waste and represents a 90.6% reduction on waste diverted to landfill since our fiscal 20 baseline. We continue to focus on and work hard to maintain zero waste to landfill1 at all our supply and office sites through ongoing segregation of materials and close collaboration with our partners. Turning to our supply chain, we also launched a global point-of-sale (POS) request for proposal this year, focused on delivering our 2030 objectives and making a shift in the industry. This should reduce the POS material we create and deliver a step change in how we reduce the potential for landfill in our supply chain. | ||||||||||||||||||
total packaging and increase recycled content in our packaging (delivering a 10% reduction in packaging weight and increasing the percentage recycled content of our packaging to 60%) SDG alignment: 12.5; 12.6 | ||||||||||||||||||||
recycled content is down 2.6ppt to 40.2% because of a lack of available post-consumer materials. Global material recovery rates and recycling centres have not yet returned to their pre-Covid-19 operating levels, which has affected how much recycled content is available to our supply chain. We have a number of projects in the pipeline for fiscal 23 to help us address this issue. | ||||||||||||||||||||
SDG alignment: 12.2; 12.6 | ||||||||||||||||||||
100% by 2030)2 SDG alignment: 12.5; 12.6 | ||||||||||||||||||||
is designed to be widely recyclable (or reusable/ compostable) by 20252 SDG alignment: 12.5; 12.6 | which is an increase of 5.2ppt on last year. This is primarily due to the discontinuation of single-use plastics in certain markets, and an increase in the use of widely recyclable plastics versus other plastic types. In Ghana, we partnered with local authorities, investing in plastic buyback centres. Five centres were established this year, helping to build a local circular economy for plastic recycling – and they have already helped to recover 46 tonnes of plastic. | |||||||||||||||||||
sourcing communities with agricultural skills and resources, building economic and environmental resilience (supporting 150,000 smallholder farmers) SDG alignment: 2.3; 2.4; 8.3; 12.2; 12.3 | smallholder farmers through our programme, which focuses on improving their economic, environmental and social resilience. We do this by offering agricultural training and providing farming essentials, such as fertilisers and certified high-quality seeds. Where low yields and issues with quality significantly affect a smallholder farmer’s income, we work with our suppliers, technical partners and research organisations to build more resilient local supply chains. In Kenya and Ghana, for example, we’re conducting on-farm trials to develop more climate-resilient and higher yielding sorghum varieties adapted to Kenya and Ghana, as well as investing in more research and development. | |||||||||||||||||||
SDG alignment: 15.2; 15.3; 15.5; 15A; 17.16 | ||||||||||||||||||||
Region | Employee LTA rate | Employee TRA rate | Independent contractor LTAs1 | Employee LTAs | Fatalities2 | ||||||||||||
North America | 1.85 | 4.33 | 1 | 5 | 0 | ||||||||||||
Europe | 1.09 | 2.89 | 12 | 11 | 0 | ||||||||||||
Asia Pacific | 0.59 | 1.17 | 2 | 7 | 0 | ||||||||||||
Africa | 1.01 | 1.75 | 8 | 8 | 0 | ||||||||||||
Latin America and Caribbean | 0.61 | 3.44 | 4 | 2 | 0 | ||||||||||||
Diageo (total) | 0.92 | 2.18 | 27 | 33 | 0 |
– Employee Alcohol Global Policy – Position papers | – Performing against our 2030 targets | 50-53 | ||||||||||||
Our people | – 2021 Gender Pay Gap Report – Human Rights Global Policy | – Our people – Performing against our 2030 targets | 41-43 50-53 | |||||||||||
– Sustainable Agriculture Guidelines – Sustainable Packaging Commitments – Partnering with Suppliers Standard – Deforestation Guidelines | – Performing against our 2030 targets – Responding | 50-53 58-65 | ||||||||||||
– Modern Slavery Statement – Global Brand Promoter Standard | ||||||||||||||
Policy | ||||||||||||||
distilling, bottling, warehousing | tequila | |||||||||||||
beer, rum, vodka, gin, whisky, brandy, liqueur | ||||||||||||||
Nigeria | distilling, brewing, bottling, packaging | beer, rum, vodka, gin | ||||||||||||
South Africa | distilling, bottling, warehousing | rum, vodka, gin | ||||||||||||
ARM | distilling, brewing, bottling, warehousing | beer, vodka, gin | ||||||||||||
India | distilling, bottling, warehousing | rum, vodka, Indian-Made Foreign Liquor (IMFL), whisky, scotch, gin | ||||||||||||
Australia | distilling, bottling, warehousing | rum, vodka, gin, ready to drink |
Region | Diageo and key TPO assets (detailed assessments) | Agricultural commodities | Supplier assets | Ports2 | ||||||||||
North America | 12 (4) | 8 | 86 | 6 | ||||||||||
Scotland | 47 (5) | 16 | 103 | 15 | ||||||||||
Africa | 48 (5) | 6 | 256 | 14 | ||||||||||
India | 46 (7) | 4 | 59 | 1 | ||||||||||
Mexico | 16 (4) | 1 | 68 | 2 | ||||||||||
Turkey | 9 (4) | 4 | 64 | 5 | ||||||||||
Total | 178 (29) | n/a1 | 636 | 43 |
Carbon emissions (Scopes 1 and 2) by region by year (1,000 tonnes CO2e)3,4,5 | |||||||||||
Region | 2020 (baseline) | 2021 | 2022 | ||||||||
North America | 128 | 127 | 100 | ||||||||
Europe | 153 | 130 | 145 | ||||||||
Asia Pacific | 37 | 15 | 14 | ||||||||
Africa | 151 | 172 | 150 | ||||||||
Latin America and Caribbean | 23 | 28 | 38 | ||||||||
Diageo (total) | 492 | 472 | 447 | ||||||||
United Kingdom | 87 | 71 | 84 | ||||||||
Water efficiency (litres per litre packaged) by region by year1,2 | |||||||||||
Region | 2020 (baseline) | 2021 | 2022 | ||||||||
North America | 5.33 | 4.91 | 5.06 | ||||||||
Europe | 5.10 | 5.13 | 4.87 | ||||||||
Asia Pacific | 3.95 | 3.58 | 3.57 | ||||||||
Africa | 4.11 | 3.53 | 3.29 | ||||||||
Latin America and Caribbean | 4.93 | 5.07 | 4.86 | ||||||||
Diageo (total) | 4.63 | 4.29 | 4.13 |
business in North America and Scotland (high value markets), and in India, Africa, Mexico and Turkey (geographies most exposed to physical risk), as well as the impact of those risks and opportunities on our strategy. We have modelled the resilience of our strategy under three climate-related scenarios. We intend to extend this analysis to our remaining markets over the next two years, and include a quantitative analysis of the impact in our disclosure. | |||||
P12 | 2023 | 2022 | Organic growth % | Reported growth % | |||||||||||||||||||
Volume | EUm | 243.4 | 263.0 | (1) | (7) | ||||||||||||||||||
Net sales | £ million | 17,113 | 15,452 | 6 | 11 | ||||||||||||||||||
Marketing | £ million | 3,051 | 2,721 | 6 | 12 | ||||||||||||||||||
Operating profit before exceptional items | £ million | 5,254 | 4,797 | 7 | 10 | ||||||||||||||||||
Exceptional operating items(1) | £ million | (622) | (388) | ||||||||||||||||||||
Operating profit | £ million | 4,632 | 4,409 | 5 | |||||||||||||||||||
Share of associate and joint venture profit after tax | £ million | 370 | 417 | (11) | |||||||||||||||||||
Non-operating exceptional items(1) | £ million | 328 | (17) | ||||||||||||||||||||
Net finance charges | £ million | (594) | (422) | ||||||||||||||||||||
Exceptional taxation credit(1) | £ million | 186 | 31 | ||||||||||||||||||||
Tax rate including exceptional items | % | 20.5 | 23.9 | (14) | |||||||||||||||||||
Tax rate before exceptional items | % | 23.0 | 22.5 | 2 | |||||||||||||||||||
Profit attributable to parent company’s shareholders | £ million | 3,734 | 3,249 | 15 | |||||||||||||||||||
Basic earnings per share | pence | 164.9 | 140.2 | 18 | |||||||||||||||||||
Basic earnings per share before exceptional items | pence | 163.5 | 151.9 | 8 | |||||||||||||||||||
Recommended full year dividend | pence | 80.00 | 76.18 | 5 | |||||||||||||||||||
Volume | Net sales | Marketing | Operating profit before exceptional items | Operating profit | ||||||||||||||||||||||||||||
% | EUm | % | £ million | % | £ million | % | £ million | % | £ million | |||||||||||||||||||||||
North America | (4) | (2.4) | 11 | 663 | 13 | 160 | 10 | 235 | 6 | 139 | ||||||||||||||||||||||
Europe | — | 0.1 | 11 | 357 | 10 | 58 | 9 | 88 | 26 | 226 | ||||||||||||||||||||||
Asia Pacific | (14) | (13.4) | 11 | 316 | 11 | 56 | 27 | 194 | (8) | (38) | ||||||||||||||||||||||
Latin America and Caribbean | (3) | (0.9) | 18 | 274 | 22 | 53 | 23 | 123 | 23 | 123 | ||||||||||||||||||||||
Africa | (8) | (3.0) | 1 | 17 | (2) | (4) | (30) | (95) | (44) | (139) | ||||||||||||||||||||||
Corporate | — | — | 63 | 34 | 58 | 7 | (37) | (88) | (37) | (88) | ||||||||||||||||||||||
Diageo | (7) | (19.6) | 11 | 1,661 | 12 | 330 | 10 | 457 | 5 | 223 |
Summary financial information | 2022 | 2021 | |||||||||
Volume | EUm | 263.0 | 238.4 | ||||||||
Net sales | £ million | 15,452 | 12,733 | ||||||||
Marketing | £ million | 2,721 | 2,163 | ||||||||
Operating profit before exceptional items | £ million | 4,797 | 3,746 | ||||||||
Exceptional operating items(1) | £ million | (388) | (15) | ||||||||
Operating profit | £ million | 4,409 | 3,731 | ||||||||
Share of associate and joint venture profit after tax | £ million | 417 | 334 | ||||||||
Non-operating exceptional items(1) | £ million | (17) | 14 | ||||||||
Net finance charges | £ million | (422) | (373) | ||||||||
Exceptional taxation credit/(charge)(1) | £ million | 31 | (84) | ||||||||
Tax rate including exceptional items | % | 23.9 | 24.5 | ||||||||
Tax rate before exceptional items | % | 22.5 | 22.2 | ||||||||
Profit attributable to parent company’s shareholders | £ million | 3,249 | 2,660 | ||||||||
Basic earnings per share | pence | 140.2 | 113.8 | ||||||||
Basic earnings per share before exceptional items | pence | 151.9 | 117.5 | ||||||||
Recommended full year dividend | pence | 76.18 | 72.55 |
Reported growth by region | Volume % | Net sales % | Marketing % | Operating profit before exceptional items % | Operating profit1 % | |||||||||||||||
North America | 3 | 17 | 28 | 10 | 10 | |||||||||||||||
Europe | 20 | 26 | 22 | 60 | 40 | |||||||||||||||
Asia Pacific | 8 | 16 | 17 | 17 | (23) | |||||||||||||||
Africa | 12 | 19 | 18 | 84 | 84 | |||||||||||||||
Latin America and Caribbean | 17 | 46 | 51 | 78 | 78 | |||||||||||||||
Diageo - reported growth by region1 | 10 | 21 | 26 | 28 | 18 | |||||||||||||||
Organic growth by region | Volume % | Net sales % | Marketing % | Operating profit before exceptional items % | ||||||||||||||||
North America | 3 | 14 | 24 | 7 | ||||||||||||||||
Europe | 20 | 30 | 26 | 64 | ||||||||||||||||
Asia Pacific | 13 | 16 | 16 | 16 | ||||||||||||||||
Africa | 17 | 22 | 22 | 79 | ||||||||||||||||
Latin America and Caribbean | 8 | 43 | 49 | 70 | ||||||||||||||||
Diageo - organic growth by region1 | 10 | 21 | 25 | 26 | ||||||||||||||||
Volume | Net sales | Marketing | Operating profit before exceptional items | |||||||||||||||||||||||||||||
% | EUm | % | £ million | % | £ million | % | £ million | |||||||||||||||||||||||||
North America | (5) | (2.5) | — | 11 | 2 | 22 | (2) | (57) | ||||||||||||||||||||||||
Europe | — | 0.1 | 11 | 347 | 7 | 42 | 11 | 103 | ||||||||||||||||||||||||
Asia Pacific | 5 | 3.9 | 13 | 353 | 9 | 46 | 29 | 200 | ||||||||||||||||||||||||
Latin America and Caribbean | (3) | (0.9) | 9 | 142 | 14 | 34 | 12 | 62 | ||||||||||||||||||||||||
Africa | (7) | (2.4) | 5 | 83 | 2 | 4 | 12 | 37 | ||||||||||||||||||||||||
Corporate | — | — | 61 | 33 | 36 | 4 | (9) | (24) | ||||||||||||||||||||||||
Diageo | (1) | (1.8) | 6 | 969 | 6 | 152 | 7 | 321 |
Fiscal 19 to fiscal 23 growth | |||||||||||||||||
Reported net sales growth %(1) | Net sales growth on a constant basis %(1) | Organic volume CAGR %(2) | Organic net sales CAGR %(2) | ||||||||||||||
North America | 52 | 41 | 2 | 9 | |||||||||||||
Europe | 21 | 30 | 3 | 7 | |||||||||||||
Asia Pacific | 19 | 24 | 1 | 6 | |||||||||||||
Latin America and Caribbean | 59 | 62 | 4 | 15 | |||||||||||||
Africa | 6 | 30 | 2 | 8 | |||||||||||||
Corporate | 66 | 62 | — | 14 | |||||||||||||
Diageo | 33 | 35 | 2 | 8 | |||||||||||||
30 June 2021 £ million | Exchange (a) £ million | Acquisitions and disposals (b) £ million | Organic movement(1) £ million | Fair value remeasurement (d) £ million | Hyperinflation(1) £ million | 30 June 2022 £ million | ||||||||||||||||||||
Sales | 19,153 | (838) | 38 | 3,567 | — | 528 | 22,448 | |||||||||||||||||||
Excise duties | (6,420) | 617 | (3) | (851) | — | (339) | (6,996) | |||||||||||||||||||
Net sales | 12,733 | (221) | 35 | 2,716 | — | 189 | 15,452 | |||||||||||||||||||
Cost of sales | (5,038) | 127 | (22) | (901) | (5) | (134) | (5,973) | |||||||||||||||||||
Gross profit | 7,695 | (94) | 13 | 1,815 | (5) | 55 | 9,479 | |||||||||||||||||||
Marketing | (2,163) | 15 | (25) | (532) | 1 | (17) | (2,721) | |||||||||||||||||||
Other operating items | (1,786) | 47 | (4) | (288) | 98 | (28) | (1,961) | |||||||||||||||||||
Operating profit before exceptional items | 3,746 | (32) | (16) | 995 | 94 | 10 | 4,797 | |||||||||||||||||||
Exceptional operating items (c) | (15) | (388) | ||||||||||||||||||||||||
Operating profit | 3,731 | 4,409 | ||||||||||||||||||||||||
Non-operating items (c) | 14 | (17) | ||||||||||||||||||||||||
Net finance charges | (373) | (422) | ||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | 334 | 417 | ||||||||||||||||||||||||
Profit before taxation | 3,706 | 4,387 | ||||||||||||||||||||||||
Taxation (e) | (907) | (1,049) | ||||||||||||||||||||||||
Profit for the year | 2,799 | 3,338 |
(losses) £ million | |||||
Year ended 30 June 2022 | Year ended 30 June 2021 | |||||||
Exchange rates | ||||||||
Translation £1 = | $1.33 | $1.35 | ||||||
Transaction £1 = | $1.29 | $1.34 | ||||||
Translation £1 = | €1.18 | €1.13 | ||||||
Transaction £1 = | €1.15 | €1.14 |
Movements in net borrowings | 2022 £ million | 2021 £ million | ||||||
Net borrowings at the beginning of the year | (12,109) | (13,246) | ||||||
Free cash flow (a) | 2,783 | 3,037 | ||||||
Acquisitions (b) | (271) | (488) | ||||||
Sale of businesses and brands | 82 | 14 | ||||||
Share buyback programme (c) | (2,284) | (109) | ||||||
Net sale of own shares for share schemes (d) | 18 | 49 | ||||||
Purchase of treasury shares in respect of subsidiaries | (15) | — | ||||||
Dividend paid to non-controlling interests | (81) | (77) | ||||||
Net movements in bonds (e) | 742 | (216) | ||||||
Purchase of shares of non-controlling interests (f) | — | (42) | ||||||
Net movements in other borrowings (g) | 79 | (753) | ||||||
Equity dividend paid | (1,718) | (1,646) | ||||||
Net decrease in cash and cash equivalents | (665) | (231) | ||||||
Net (increase)/decrease in bonds and other borrowings | (825) | 967 | ||||||
Exchange differences (h) | (334) | 598 | ||||||
Other non-cash items (i) | (204) | (197) | ||||||
Net borrowings at the end of the year | (14,137) | (12,109) |
Movements in equity | 2022 £ million | 2021 £ million | ||||||
Equity at the beginning of the year | 8,431 | 8,440 | ||||||
Adjustment to 2021 closing equity in respect of hyperinflation in Turkey (a) | 251 | — | ||||||
Adjusted equity at the beginning of the year | 8,682 | 8,440 | ||||||
Profit for the year | 3,338 | 2,799 | ||||||
Exchange adjustments (b) | 799 | (836) | ||||||
Remeasurement of post employment plans net of taxation | 497 | (27) | ||||||
Purchase of shares of non-controlling interests (c) | — | (42) | ||||||
Hyperinflation adjustments net of taxation (a) | 291 | (12) | ||||||
Associates' transactions with non-controlling interest | — | (91) | ||||||
Dividend to non-controlling interests | (72) | (72) | ||||||
Equity dividend paid | (1,718) | (1,646) | ||||||
Share buyback programme (d) | (2,310) | (200) | ||||||
Other reserve movements | 7 | 118 | ||||||
Equity at the end of the year | 9,514 | 8,431 |
2021 | Exchange | Acquisitions and disposals | Organic movement | Other3 | 2022 | Reported movement | |||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | % | |||||||||||||||||
Net sales | 5,209 | 98 | 34 | 754 | — | 6,095 | 17 | ||||||||||||||||
Marketing | 936 | 19 | 24 | 222 | (1) | 1,200 | 28 | ||||||||||||||||
Operating profit before exceptional items | 2,237 | 49 | (19) | 148 | 39 | 2,454 | 10 | ||||||||||||||||
Exceptional operating items2 | — | (1) | |||||||||||||||||||||
Operating profit | 2,237 | 2,453 | 10 |
Organic volume movement | Reported volume movement | Organic net sales movement | Reported net sales movement | |||||||||||
Markets and categories | % | % | % | % | ||||||||||
North America | 3 | 3 | 14 | 17 | ||||||||||
US Spirits | 4 | 4 | 17 | 19 | ||||||||||
DBC USA(4),(5) | (2) | — | 2 | 6 | ||||||||||
Canada | (2) | (2) | 3 | 6 | ||||||||||
Spirits | 3 | 3 | 16 | 18 | ||||||||||
Beer | (4) | (4) | 1 | 2 | ||||||||||
Ready to drink(4) | 15 | 40 | 21 | 49 | ||||||||||
Global giants, local stars and reserve(6) | Organic volume movement(7) % | Organic net sales movement % | Reported net sales movement % | |||||||||||
Crown Royal | 2 | 6 | 8 | |||||||||||
Don Julio | 30 | 36 | 38 | |||||||||||
Casamigos | 81 | 88 | 91 | |||||||||||
Johnnie Walker | 9 | 26 | 28 | |||||||||||
Smirnoff | (4) | (3) | (2) | |||||||||||
Captain Morgan | (3) | (5) | (3) | |||||||||||
Ketel One(8) | 7 | 12 | 13 | |||||||||||
Baileys | (10) | (8) | (6) | |||||||||||
Guinness | 5 | 7 | 9 | |||||||||||
Bulleit | 10 | 14 | 16 | |||||||||||
Cîroc vodka | (4) | — | 1 |
2022 | Exchange | Acquisitions and disposals | Organic movement | Other(1) | 2023 | Reported movement | |||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | % | |||||||||||||||||
Net sales | 6,095 | 632 | 20 | 11 | — | 6,758 | 11 | ||||||||||||||||
Marketing | 1,200 | 122 | 15 | 22 | 1 | 1,360 | 13 | ||||||||||||||||
Operating profit before exceptional items | 2,454 | 249 | (12) | (57) | 55 | 2,689 | 10 | ||||||||||||||||
Exceptional operating items(2) | (1) | (97) | |||||||||||||||||||||
Operating profit | 2,453 | 2,592 | 6 |
Organic volume movement | Reported volume movement | Organic net sales movement | Reported net sales movement | |||||||||||
Markets and categories: | % | % | % | % | ||||||||||
North America(3) | (5) | (4) | — | 11 | ||||||||||
US Spirits(3) | (6) | (6) | (1) | 10 | ||||||||||
DBC USA(4) | (3) | (3) | 1 | 12 | ||||||||||
Canada | (2) | (2) | 4 | 8 | ||||||||||
Spirits(3) | (5) | (4) | — | 11 | ||||||||||
Beer | (2) | (2) | 2 | 12 | ||||||||||
Ready to drink | (11) | (11) | (16) | (10) | ||||||||||
Global giants, local stars and reserve(5) | Organic volume movement(6) % | Organic net sales movement % | Reported net sales movement % | |||||||||||
Crown Royal | (12) | (10) | — | |||||||||||
Don Julio | 8 | 13 | 25 | |||||||||||
Casamigos(7) | 6 | 13 | 26 | |||||||||||
Johnnie Walker | (5) | (10) | (1) | |||||||||||
Smirnoff | (1) | 4 | 14 | |||||||||||
Captain Morgan | (5) | (1) | 9 | |||||||||||
Ketel One | (3) | — | 11 | |||||||||||
Guinness | 4 | 9 | 20 | |||||||||||
Baileys | (4) | 1 | 11 | |||||||||||
Bulleit whiskey(8) | (8) | (6) | 4 | |||||||||||
Buchanan's | — | 9 | 21 |
North America contributed | North America organic net sales were flat in fiscal 23 | |||||||
39% of Diageo reported net sales in fiscal 23 |
Reported net sales by market (%) |
Reported net sales by category (%) |
2021 | Exchange | Acquisitions and disposals | Organic movement | Other(1) | Hyperinflation(2) | 2022 | Reported movement | 2022 | Exchange | Acquisitions and disposals | Organic movement | Other(2) | Hyperinflation(1) | 2023 | Reported movement | |||||||||||||||||||||||||||||||||||||
£ million | £ million | £ million | % | £ million | £ million | £ million | % | |||||||||||||||||||||||||||||||||||||||||||||
Net sales | Net sales | 2,558 | (304) | 3 | 766 | — | 189 | 3,212 | 26 | Net sales | 3,212 | (85) | (9) | 347 | — | 104 | 3,569 | 11 | ||||||||||||||||||||||||||||||||||
Marketing | Marketing | 473 | (35) | — | 122 | — | 17 | 577 | 22 | Marketing | 577 | 3 | 2 | 42 | — | 11 | 635 | 10 | ||||||||||||||||||||||||||||||||||
Operating profit before exceptional items | Operating profit before exceptional items | 635 | (110) | 1 | 418 | 63 | 10 | 1,017 | 60 | Operating profit before exceptional items | 1,017 | 5 | (31) | 103 | (11) | 22 | 1,105 | 9 | ||||||||||||||||||||||||||||||||||
Exceptional operating items(3) | Exceptional operating items(3) | (15) | (146) | Exceptional operating items(3) | (146) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | Operating profit | 620 | 871 | 40 | Operating profit | 871 | 1,097 | 26 |
Markets and categories | Organic volume movement % | Reported volume movement % | Organic net sales movement % | Reported net sales movement % | ||||||||||
Europe | 20 | 20 | 30 | 26 | ||||||||||
Great Britain | 15 | 15 | 20 | 20 | ||||||||||
Northern Europe | 16 | 16 | 15 | 10 | ||||||||||
Southern Europe | 30 | 27 | 33 | 26 | ||||||||||
Ireland | 35 | 35 | 71 | 65 | ||||||||||
Eastern Europe | 7 | 8 | 18 | 18 | ||||||||||
Turkey | 18 | 18 | 49 | 25 | ||||||||||
Spirits | 18 | 18 | 24 | 19 | ||||||||||
Beer | 36 | 36 | 63 | 60 | ||||||||||
Ready to drink | 23 | 23 | 23 | 22 | ||||||||||
Global giants and local stars(4) | Organic volume movement(5) % | Organic net sales movement % | Reported net sales movement % | |||||||||||
Guinness | 42 | 65 | 62 | |||||||||||
Johnnie Walker | 22 | 35 | 31 | |||||||||||
Baileys | 20 | 19 | 16 | |||||||||||
Smirnoff | 35 | 38 | 35 | |||||||||||
Captain Morgan | 11 | 12 | 9 | |||||||||||
Tanqueray | 36 | 37 | 33 | |||||||||||
Yenì Raki | 9 | 15 | 14 | |||||||||||
JεB | 19 | 26 | 17 |
Markets and categories | Organic volume movement % | Reported volume movement % | Organic net sales movement % | Reported net sales movement % | ||||||||||
Europe(1) | — | — | 11 | 11 | ||||||||||
Great Britain(1) | (8) | (8) | 7 | 6 | ||||||||||
Southern Europe(1) | 4 | 5 | 12 | 13 | ||||||||||
Northern Europe(1) | 8 | 6 | 11 | 12 | ||||||||||
Ireland(1) | 3 | 3 | 16 | 18 | ||||||||||
Eastern Europe(1) | (15) | (15) | (3) | — | ||||||||||
Turkey(1) | 9 | 9 | 38 | 10 | ||||||||||
Spirits(1) | — | — | 10 | 10 | ||||||||||
Beer | 5 | 5 | 18 | 20 | ||||||||||
Ready to drink(1) | (2) | (2) | 10 | 12 | ||||||||||
Global giants and local stars(2) | Organic volume movement(3) % | Organic net sales movement % | Reported net sales movement % | |||||||||||
Guinness | 6 | 20 | 21 | |||||||||||
Johnnie Walker | 18 | 29 | 25 | |||||||||||
Baileys | (3) | (1) | 1 | |||||||||||
Smirnoff | (1) | 14 | 16 | |||||||||||
Captain Morgan | — | 9 | 10 | |||||||||||
Tanqueray | — | 6 | 7 | |||||||||||
JεB | (7) | (1) | 2 | |||||||||||
Yenì Raki | — | 7 | (10) |
Europe contributed | Europe organic net sales grew | |||||||
21% of Diageo reported net sales in fiscal 23 | 11% in fiscal 23 |
Reported net sales by market (%) |
Reported net sales by category (%) |
2021 | Exchange | Acquisitions and disposals | Organic movement | 2022 | Reported movement | 2022 | Exchange | Acquisitions and disposals | Organic movement | 2023 | Reported movement | |||||||||||||||||||||||||||||||||||||||||
£ million | £ million | % | £ million | £ million | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net sales | Net sales | 2,488 | (6) | — | 402 | 2,884 | 16 | Net sales | 2,884 | 65 | (102) | 353 | 3,200 | 11 | ||||||||||||||||||||||||||||||||||||||
Marketing | Marketing | 418 | 4 | — | 68 | 490 | 17 | Marketing | 490 | 10 | — | 46 | 546 | 11 | ||||||||||||||||||||||||||||||||||||||
Operating profit before exceptional items | Operating profit before exceptional items | 608 | 5 | — | 98 | 711 | 17 | Operating profit before exceptional items | 711 | 15 | (21) | 200 | 905 | 27 | ||||||||||||||||||||||||||||||||||||||
Exceptional operating items | Exceptional operating items | — | (241) | Exceptional operating items | (241) | (473) | ||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | Operating profit | 608 | 470 | (23) | Operating profit | 470 | 432 | (8) |
Markets and categories | Organic volume movement % | Reported volume movement % | Organic net sales movement % | Reported net sales movement % | |||||||||||||
Asia Pacific | 8 | 8 | 16 | 16 | |||||||||||||
India | 7 | 7 | 17 | 16 | |||||||||||||
Greater China | 6 | 6 | 13 | 17 | |||||||||||||
Australia | 2 | 2 | — | (2) | |||||||||||||
South East Asia | 14 | 14 | 20 | 19 | |||||||||||||
North Asia | (5) | (5) | 12 | 6 | |||||||||||||
Travel Retail Asia and Middle East | 135 | 125 | 178 | 184 | |||||||||||||
Spirits | 8 | 8 | 17 | 18 | |||||||||||||
Beer | 4 | 4 | 9 | 7 | |||||||||||||
Ready to drink | 3 | 3 | 2 | (1) | |||||||||||||
Global giants and local stars(2) | Organic volume movement(3) % | Organic net sales movement % | Reported net sales movement % | ||||||||||||||
Johnnie Walker | 24 | 28 | 28 | ||||||||||||||
Shui Jing Fang(4) | 16 | 19 | 24 | ||||||||||||||
McDowell's | 5 | 6 | 4 | ||||||||||||||
Guinness | 5 | 9 | 7 | ||||||||||||||
The Singleton | 11 | 16 | 18 | ||||||||||||||
Smirnoff | 13 | 14 | 14 | ||||||||||||||
Baileys | 12 | 13 | 12 | ||||||||||||||
Windsor | 1 | (9) | (13) |
Markets and categories | Organic volume movement % | Reported volume movement % | Organic net sales movement % | Reported net sales movement % | |||||||||||||
Asia Pacific(1) | 5 | (14) | 13 | 11 | |||||||||||||
India(1) | 6 | (18) | 17 | 7 | |||||||||||||
Greater China | (2) | (2) | (4) | (1) | |||||||||||||
Australia | (10) | (10) | 2 | 5 | |||||||||||||
South East Asia(1) | 20 | 20 | 33 | 36 | |||||||||||||
North Asia | 6 | 6 | 15 | 14 | |||||||||||||
Travel Retail Asia and Middle East | 38 | 38 | 67 | 65 | |||||||||||||
Spirits(1)(2) | 6 | (15) | 14 | 11 | |||||||||||||
Beer | 5 | 5 | 10 | 12 | |||||||||||||
Ready to drink | (8) | (8) | 1 | 4 | |||||||||||||
Global giants and local stars(2) | Organic volume movement(3) % | Organic net sales movement % | Reported net sales movement % | ||||||||||||||
Johnnie Walker | 13 | 29 | 30 | ||||||||||||||
Shui Jing Fang(4) | (15) | (14) | (12) | ||||||||||||||
McDowell's | (1) | 4 | 7 | ||||||||||||||
Guinness | 4 | 10 | 13 | ||||||||||||||
The Singleton | 26 | 26 | 31 | ||||||||||||||
Smirnoff | 8 | 15 | 19 | ||||||||||||||
Windsor | 29 | 41 | 42 | ||||||||||||||
Black & White | 28 | 36 | 39 |
Asia Pacific contributed | Asia Pacific organic net sales grew | |||||||
19% of Diageo reported net sales in fiscal 23 | 13% in fiscal 23 |
Reported net sales by market (%) |
Reported net sales by category (%) |
2021 | Exchange | Acquisitions and disposals | Organic movement | 2022 | Reported movement | |||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | % | |||||||||||||||||||||
Net sales | 1,412 | (33) | (5) | 308 | 1,682 | 19 | ||||||||||||||||||||
Marketing | 168 | (5) | — | 36 | 199 | 18 | ||||||||||||||||||||
Operating profit | 171 | (10) | 2 | 152 | 315 | 84 | ||||||||||||||||||||
Organic volume movement | Reported volume movement | Organic net sales movement | Reported net sales movement | |||||||||||
Markets and categories | % | % | % | % | ||||||||||
Africa(1) | 13 | 12 | 22 | 19 | ||||||||||
East Africa | 22 | 22 | 25 | 24 | ||||||||||
Africa Regional Markets(1) | 9 | 7 | 14 | 9 | ||||||||||
Nigeria | 1 | 1 | 30 | 26 | ||||||||||
South Africa(1) | 6 | 4 | 12 | 10 | ||||||||||
Spirits | 12 | 12 | 21 | 20 | ||||||||||
Beer(1) | 14 | 13 | 22 | 19 | ||||||||||
Ready to drink(1) | 11 | 5 | 28 | 20 | ||||||||||
Organic volume movement(3) | Organic net sales movement | Reported net sales movement | ||||||||||||
Global giants and local stars(2) | % | % | % | |||||||||||
Guinness | 4 | 17 | 13 | |||||||||||
Johnnie Walker | 16 | 22 | 22 | |||||||||||
Smirnoff | 9 | 21 | 21 | |||||||||||
Other beer: | ||||||||||||||
Malta Guinness(1) | 30 | 53 | 40 | |||||||||||
Senator | 38 | 36 | 33 | |||||||||||
Tusker | 14 | 27 | 26 | |||||||||||
Serengeti | 9 | 9 | 10 |
2021 | Exchange | Acquisitions and disposals | Organic movement | Other(1) | 2022 | Reported movement | ||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | % | ||||||||||||||||||||
Net sales | 1,046 | 25 | 3 | 451 | — | 1,525 | 46 | |||||||||||||||||||
Marketing | 161 | 2 | 1 | 79 | — | 243 | 51 | |||||||||||||||||||
Operating profit | 303 | 25 | — | 218 | (8) | 538 | 78 | |||||||||||||||||||
Markets and categories | Organic volume movement % | Reported volume movement % | Organic net sales movement % | Reported net sales movement % | ||||||||||
Latin America and Caribbean | 17 | 17 | 43 | 46 | ||||||||||
PUB | 12 | 12 | 36 | 41 | ||||||||||
Mexico | 6 | 7 | 24 | 28 | ||||||||||
CCA | 34 | 34 | 56 | 61 | ||||||||||
Andean | 18 | 18 | 45 | 38 | ||||||||||
PEBAC | 31 | 31 | 64 | 62 | ||||||||||
Spirits | 17 | 17 | 45 | 48 | ||||||||||
Beer | 2 | 2 | 6 | 2 | ||||||||||
Ready to drink | 36 | 36 | 42 | 45 | ||||||||||
Global giants and local stars(2) | Organic volume movement(3) % | Organic net sales movement % | Reported net sales movement % | |||||||||||
Johnnie Walker | 42 | 59 | 63 | |||||||||||
Buchanan’s | 48 | 59 | 60 | |||||||||||
Don Julio | 9 | 34 | 37 | |||||||||||
Old Parr | 47 | 61 | 62 | |||||||||||
Smirnoff | 22 | 17 | 18 | |||||||||||
Black & White | (3) | 9 | 10 | |||||||||||
Baileys | 20 | 31 | 32 | |||||||||||
Tanqueray | 37 | 41 | 45 |
2022 | Exchange | Acquisitions and disposals | Organic movement | Other(1) | 2023 | Reported movement | ||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | % | ||||||||||||||||||||
Net sales | 1,525 | 129 | 3 | 142 | — | 1,799 | 18 | |||||||||||||||||||
Marketing | 243 | 18 | 1 | 34 | — | 296 | 22 | |||||||||||||||||||
Operating profit | 538 | 52 | — | 62 | 9 | 661 | 23 | |||||||||||||||||||
Markets and categories | Organic volume movement % | Reported volume movement % | Organic net sales movement % | Reported net sales movement % | ||||||||||
Latin America and Caribbean(1) | (3) | (3) | 9 | 18 | ||||||||||
Brazil(2) | (1) | 3 | 8 | 29 | ||||||||||
Mexico(1) | (4) | (3) | 9 | 30 | ||||||||||
CCA | 1 | 1 | 14 | 21 | ||||||||||
South LAC(2) | (3) | (11) | 21 | — | ||||||||||
Andean(1) | (24) | (24) | (7) | (13) | ||||||||||
Spirits(1) | (3) | (3) | 11 | 19 | ||||||||||
Beer | 9 | 9 | 16 | 25 | ||||||||||
Ready to drink | (13) | (13) | (7) | — | ||||||||||
Global giants and local stars(3) | Organic volume movement(4) % | Organic net sales movement % | Reported net sales movement % | |||||||||||
Johnnie Walker | 4 | 16 | 23 | |||||||||||
Buchanan’s | (5) | 6 | 11 | |||||||||||
Don Julio | 6 | 22 | 40 | |||||||||||
Old Parr | 10 | 20 | 26 | |||||||||||
Smirnoff | 3 | 18 | 24 | |||||||||||
Black & White | (7) | 13 | 26 | |||||||||||
Tanqueray | — | — | 5 | |||||||||||
Baileys | (18) | (5) | 1 |
Latin America and Caribbean contributed | Latin America and Caribbean organic net sales grew | |||||||
11% of Diageo reported net sales in fiscal 23 | 9% in fiscal 23 |
Reported net sales by market (%) |
Reported net sales by category (%) |
2022 | Exchange | Acquisitions and disposals | Organic movement | 2023 | Reported movement | |||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | % | |||||||||||||||||||||
Net sales | 1,682 | (40) | (26) | 83 | 1,699 | 1 | ||||||||||||||||||||
Marketing | 199 | (3) | (5) | 4 | 195 | (2) | ||||||||||||||||||||
Operating profit before exceptional items | 315 | (141) | 9 | 37 | 220 | (30) | ||||||||||||||||||||
Exceptional operating items(1) | — | (44) | ||||||||||||||||||||||||
Operating profit | 315 | 176 | (44) | |||||||||||||||||||||||
Organic volume movement | Reported volume movement | Organic net sales movement | Reported net sales movement | |||||||||||
Markets and categories | % | % | % | % | ||||||||||
Africa(1) | (7) | (8) | 5 | 1 | ||||||||||
East Africa | (7) | (7) | (2) | — | ||||||||||
Nigeria | (4) | (4) | 11 | 12 | ||||||||||
Africa Regional Markets(1) | (1) | (9) | 22 | (5) | ||||||||||
South Africa | (18) | (18) | 1 | (3) | ||||||||||
Spirits(1) | (2) | (2) | 8 | 7 | ||||||||||
Beer(1) | (13) | (14) | 3 | (3) | ||||||||||
Ready to drink(1) | — | (4) | 11 | 5 | ||||||||||
Organic volume movement(3) | Organic net sales movement | Reported net sales movement | ||||||||||||
Global giants and local stars(2) | % | % | % | |||||||||||
Guinness | (8) | 7 | 1 | |||||||||||
Johnnie Walker | 5 | 11 | 8 | |||||||||||
Smirnoff | (23) | (6) | (9) | |||||||||||
Other beer: | ||||||||||||||
Malta Guinness | (7) | 22 | 2 | |||||||||||
Senator | (17) | (4) | (4) | |||||||||||
Tusker | (8) | (5) | (4) | |||||||||||
Serengeti | (7) | (1) | 8 |
Africa contributed | Africa organic net sales grew | |||||||
10% of Diageo reported net sales in fiscal 23 | 5% in fiscal 23 |
Reported net sales by market (%) |
Reported net sales by category (%) |
Key categories | Key categories | Organic volume movement(1) % | Organic net sales movement % | Reported net sales movement % | Key categories | Organic volume movement(1) % | Organic net sales movement % | Reported net sales movement % | Reported net sales by category % | ||||||||||||||||
Spirits(2) | Spirits(2) | 10 | 21 | 21 | Spirits(2) | — | 6 | 12 | 79 | ||||||||||||||||
Scotch | Scotch | 18 | 29 | 29 | Scotch | 2 | 12 | 16 | 25 | ||||||||||||||||
Tequila | Tequila | 47 | 55 | 57 | Tequila | 10 | 19 | 32 | 12 | ||||||||||||||||
Vodka(3)(4) | Vodka(3)(4) | 12 | 11 | 11 | Vodka(3)(4) | (3) | 1 | 7 | 9 | ||||||||||||||||
Canadian whisky | Canadian whisky | (1) | 6 | 7 | Canadian whisky | (10) | (9) | — | 6 | ||||||||||||||||
Rum | Rum | 5 | 6 | 6 | Rum | (7) | 2 | 9 | 5 | ||||||||||||||||
Liqueurs | Liqueurs | 11 | 10 | 8 | Liqueurs | (4) | (1) | 3 | 5 | ||||||||||||||||
Gin | Gin | 16 | 18 | 18 | Gin | — | 5 | 8 | 5 | ||||||||||||||||
Indian-Made Foreign Liquor (IMFL) whisky | 5 | 7 | 5 | ||||||||||||||||||||||
US whiskey | 5 | 14 | 16 | ||||||||||||||||||||||
IMFL whisky(5) | IMFL whisky(5) | 8 | 15 | — | 4 | ||||||||||||||||||||
Chinese white spirits(5) | Chinese white spirits(5) | (15) | (14) | (12) | 3 | ||||||||||||||||||||
US whiskey(5) | US whiskey(5) | (8) | (4) | 7 | 2 | ||||||||||||||||||||
Beer | Beer | 14 | 25 | 22 | Beer | (7) | 9 | 9 | 15 | ||||||||||||||||
Ready to drink | Ready to drink | 14 | 18 | 21 | Ready to drink | (6) | — | 3 | 4 |
Reported volume by category | Reported net sales by category | Reported marketing spend by category |
n | Scotch | n | Vodka | n | US whiskey | n | Canadian whisky | n | Rum | n | IMFL whisky | ||||||||||||||||||||||||
n | Liqueurs | n | Gin | n | Tequila | n | Beer | n | Ready to drink | n | Other |
Global giants, local stars and reserve(i): | Organic volume movement(2) % | Organic net sales movement % | Reported net sales movement % | |||||||||||||||||||
Global giants, local stars and reserve(1): | Global giants, local stars and reserve(1): | Organic volume movement(2) % | Organic net sales movement % | Reported net sales movement % | ||||||||||||||||||
Global giants | Global giants | Global giants | ||||||||||||||||||||
Johnnie Walker | Johnnie Walker | 25 | 34 | 35 | Johnnie Walker | 9 | 15 | 19 | ||||||||||||||
Guinness | Guinness | 16 | 32 | 30 | Guinness | 1 | 16 | 17 | ||||||||||||||
Smirnoff | Smirnoff | 11 | 11 | 11 | Smirnoff | (2) | 8 | 14 | ||||||||||||||
Baileys | Baileys | 10 | 9 | 8 | Baileys | (5) | — | 5 | ||||||||||||||
Captain Morgan | Captain Morgan | 3 | 2 | 2 | Captain Morgan | (2) | 5 | 11 | ||||||||||||||
Tanqueray | Tanqueray | 18 | 20 | 20 | Tanqueray | (4) | 1 | 6 | ||||||||||||||
Local stars | Local stars | Local stars | ||||||||||||||||||||
Crown Royal | Crown Royal | 1 | 6 | 8 | Crown Royal | (12) | (10) | — | ||||||||||||||
Buchanan’s | Buchanan’s | (3) | 7 | 15 | ||||||||||||||||||
McDowell's | McDowell's | (1) | 4 | 6 | ||||||||||||||||||
Shui Jing Fang(3) | Shui Jing Fang(3) | 16 | 19 | 24 | Shui Jing Fang(3) | (15) | (14) | (12) | ||||||||||||||
McDowell's | 5 | 5 | 4 | |||||||||||||||||||
Buchanan’s | 36 | 39 | 40 | |||||||||||||||||||
JεB | 17 | 22 | 16 | |||||||||||||||||||
Old Parr | Old Parr | 47 | 59 | 59 | Old Parr | 9 | 18 | 24 | ||||||||||||||
Black & White | Black & White | 7 | 20 | 20 | Black & White | 2 | 20 | 28 | ||||||||||||||
JεB | JεB | (9) | (3) | — | ||||||||||||||||||
Yenì Raki | Yenì Raki | 9 | 15 | 14 | Yenì Raki | — | 8 | (10) | ||||||||||||||
Windsor | Windsor | 1 | (9) | (13) | Windsor | 29 | 41 | 42 | ||||||||||||||
Bundaberg | Bundaberg | 1 | (4) | (6) | Bundaberg | — | 18 | 21 | ||||||||||||||
Ypióca | Ypióca | (9) | 8 | 12 | Ypióca | (9) | 7 | 21 | ||||||||||||||
Reserve | Reserve | Reserve | ||||||||||||||||||||
Don Julio | Don Julio | 24 | 36 | 38 | Don Julio | 11 | 20 | 32 | ||||||||||||||
Casamigos | Casamigos | 83 | 90 | 93 | Casamigos | 7 | 15 | 27 | ||||||||||||||
Scotch malts | Scotch malts | 14 | 17 | 16 | Scotch malts | 3 | 16 | 19 | ||||||||||||||
Ketel One(5) | Ketel One(5) | (3) | 1 | 11 | ||||||||||||||||||
Bulleit whiskey(6) | Bulleit whiskey(6) | (9) | (6) | 4 | ||||||||||||||||||
Cîroc vodka | Cîroc vodka | 4 | 6 | 7 | Cîroc vodka | (23) | (23) | (17) | ||||||||||||||
Ketel One(4) | 12 | 12 | 14 | |||||||||||||||||||
Bulleit | 12 | 16 | 17 |
30 June 2022 £ million | Exchange (a) £ million | Acquisitions and disposals (b) £ million | Organic movement(1) £ million | Fair value remeasurement (d) £ million | Hyperinflation(1) £ million | 30 June 2023 £ million | ||||||||||||||||||||
Sales | 22,448 | 588 | (683) | 1,091 | — | 71 | 23,515 | |||||||||||||||||||
Excise duties | (6,996) | 114 | 569 | (122) | — | 33 | (6,402) | |||||||||||||||||||
Net sales | 15,452 | 702 | (114) | 969 | — | 104 | 17,113 | |||||||||||||||||||
Cost of sales | (5,973) | (363) | 84 | (522) | 5 | (63) | (6,832) | |||||||||||||||||||
Gross profit | 9,479 | 339 | (30) | 447 | 5 | 41 | 10,281 | |||||||||||||||||||
Marketing | (2,721) | (151) | (15) | (152) | (1) | (11) | (3,051) | |||||||||||||||||||
Other operating items | (1,961) | (66) | (16) | 26 | 49 | (8) | (1,976) | |||||||||||||||||||
Operating profit before exceptional items | 4,797 | 122 | (61) | 321 | 53 | 22 | 5,254 | |||||||||||||||||||
Exceptional operating items (c) | (388) | (622) | ||||||||||||||||||||||||
Operating profit | 4,409 | 4,632 | ||||||||||||||||||||||||
Non-operating items (c) | (17) | 328 | ||||||||||||||||||||||||
Net finance charges | (422) | (594) | ||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | 417 | 370 | ||||||||||||||||||||||||
Profit before taxation | 4,387 | 4,736 | ||||||||||||||||||||||||
Taxation (e) | (1,049) | (970) | ||||||||||||||||||||||||
Profit for the year | 3,338 | 3,766 |
Gains/ (losses) £ million | |||||
Translation impact | 246 | ||||
Transaction impact | (124) | ||||
Operating profit before exceptional items | 122 | ||||
Net finance charges – translation impact | (32) | ||||
Net finance charges – transaction impact | 6 | ||||
Net finance charges | (26) | ||||
Associates – translation impact | 8 | ||||
Profit before exceptional items and taxation | 104 |
Year ended 30 June 2023 | Year ended 30 June 2022 | |||||||
Exchange rates | ||||||||
Translation £1 = | $1.20 | $1.33 | ||||||
Transaction £1 = | $1.30 | $1.29 | ||||||
Translation £1 = | €1.15 | €1.18 | ||||||
Transaction £1 = | €1.16 | €1.15 |
Movements in net borrowings | 2023 £ million | 2022 £ million | ||||||
Net borrowings at the beginning of the year | (14,137) | (12,109) | ||||||
Free cash flow (1) | 1,800 | 2,783 | ||||||
Acquisitions (2) | (342) | (206) | ||||||
Investment in associates (2) | (93) | (65) | ||||||
Sale of businesses and brands (3) | 462 | 82 | ||||||
Share buyback programme (d) | (1,381) | (2,284) | ||||||
Net sale of own shares for share schemes (5) | 29 | 18 | ||||||
Purchase of treasury shares in respect of subsidiaries | — | (15) | ||||||
Dividends paid to non-controlling interests | (97) | (81) | ||||||
Net movements in bonds (6) | 889 | 742 | ||||||
Purchase of shares of non-controlling interests (7) | (146) | — | ||||||
Net movements in other borrowings (8) | 59 | 79 | ||||||
Equity dividend paid | (1,761) | (1,718) | ||||||
Net decrease in cash and cash equivalents | (581) | (665) | ||||||
Net increase in bonds and other borrowings | (950) | (825) | ||||||
Exchange differences (9) | 159 | (334) | ||||||
Other non-cash items (10) | (32) | (204) | ||||||
Net borrowings at the end of the year | (15,541) | (14,137) |
Movements in equity | 2023 £ million | 2022 £ million | ||||||
Equity at the beginning of the year | 9,514 | 8,431 | ||||||
Adjustment to 2021 closing equity in respect of hyperinflation in Turkey (1) | — | 251 | ||||||
Adjusted equity at the beginning of the year | 9,514 | 8,682 | ||||||
Profit for the year | 3,766 | 3,338 | ||||||
Exchange adjustments (2) | (686) | 799 | ||||||
Remeasurement of post employment benefit plans net of taxation | (469) | 497 | ||||||
Purchase of shares of non-controlling interests (3) | (146) | — | ||||||
Hyperinflation adjustments net of taxation (1) | 143 | 291 | ||||||
Associates' transactions with non-controlling interests | (7) | — | ||||||
Dividend to non-controlling interests | (97) | (72) | ||||||
Equity dividend paid | (1,762) | (1,718) | ||||||
Share buyback programme (4) | (1,273) | (2,310) | ||||||
Other reserve movements | 309 | 7 | ||||||
Equity at the end of the year | 9,292 | 9,514 |
30 June 2022 | 30 June 2021 | 30 June 2023 | 30 June 2022 | |||||||||||||
£ million | £ million | |||||||||||||||
Expiring within one year | Expiring within one year | 793 | 540 | Expiring within one year | 99 | 793 | ||||||||||
Expiring between one and two years | Expiring between one and two years | 103 | 691 | Expiring between one and two years | 496 | 103 | ||||||||||
Expiring after two years | Expiring after two years | 1,893 | 1,287 | Expiring after two years | 2,083 | 1,893 | ||||||||||
2,789 | 2,518 | 2,678 | 2,789 |
30 June 2022 | 30 June 2021 | 30 June 2023 | 30 June 2022 | |||||||||||||
£ million | £ million | |||||||||||||||
Net cash inflow from operating activities | Net cash inflow from operating activities | 3,935 | 3,654 | Net cash inflow from operating activities | 3,024 | 3,935 | ||||||||||
Net cash outflow from investing activities | Net cash outflow from investing activities | (1,341) | (1,091) | Net cash outflow from investing activities | (1,197) | (1,341) | ||||||||||
Net cash outflow from financing activities | Net cash outflow from financing activities | (3,259) | (2,794) | Net cash outflow from financing activities | (2,408) | (3,259) | ||||||||||
Net decrease in net cash and cash equivalents | Net decrease in net cash and cash equivalents | (665) | (231) | Net decrease in net cash and cash equivalents | (581) | (665) | ||||||||||
Exchange difference | Exchange difference | 239 | (285) | Exchange difference | (227) | 239 | ||||||||||
Net cash and cash equivalents at beginning of period | Net cash and cash equivalents at beginning of period | 2,637 | 3,153 | Net cash and cash equivalents at beginning of period | 2,211 | 2,637 | ||||||||||
Net cash and cash equivalents at end of period | Net cash and cash equivalents at end of period | 2,211 | 2,637 | Net cash and cash equivalents at end of period | 1,403 | 2,211 |
30 June 2022 £ million | 30 June 2021 £ million | 30 June 2023 £ million | 30 June 2022 £ million | |||||||||||||
Overdrafts | Overdrafts | (74) | (112) | Overdrafts | (36) | (74) | ||||||||||
Other borrowings due within one year | Other borrowings due within one year | (1,448) | (1,750) | Other borrowings due within one year | (1,665) | (1,448) | ||||||||||
Borrowings due within one year | Borrowings due within one year | (1,522) | (1,862) | Borrowings due within one year | (1,701) | (1,522) | ||||||||||
Borrowings due between one and three years | Borrowings due between one and three years | (2,817) | (2,623) | Borrowings due between one and three years | (3,522) | (2,817) | ||||||||||
Borrowings due between three and five years | Borrowings due between three and five years | (2,625) | (2,788) | Borrowings due between three and five years | (2,874) | (2,625) | ||||||||||
Borrowings due after five years | Borrowings due after five years | (9,056) | (7,454) | Borrowings due after five years | (8,405) | (9,056) | ||||||||||
Fair value of foreign currency forwards and swaps | Fair value of foreign currency forwards and swaps | 356 | 169 | Fair value of foreign currency forwards and swaps | 347 | 356 | ||||||||||
Fair value of interest rate hedging instruments | Fair value of interest rate hedging instruments | (283) | 63 | Fair value of interest rate hedging instruments | (377) | (283) | ||||||||||
Lease liabilities | Lease liabilities | (475) | (363) | Lease liabilities | (448) | (475) | ||||||||||
Gross borrowings | Gross borrowings | (16,422) | (14,858) | Gross borrowings | (16,980) | (16,422) | ||||||||||
Offset by: | Offset by: | Offset by: | ||||||||||||||
Cash and cash equivalents | Cash and cash equivalents | 2,285 | 2,749 | Cash and cash equivalents | 1,439 | 2,285 | ||||||||||
Net borrowings | Net borrowings | (14,137) | (12,109) | Net borrowings | (15,541) | (14,137) |
Total | US dollar % | Sterling % | Euro % | Indian rupee % | Chinese yuan % | Nigerian naira % | Kenyan shilling % | Other % | Total | US dollar % | Sterling % | Euro % | Indian Rupee % | Chinese Yuan % | Nigerian Naira % | South Korean won | Other % | |||||||||||||||||||||||||||||||||||||||||
Gross borrowings | Gross borrowings | (16,422) | 20.00 | % | 56.00 | % | 18.00 | % | — | % | — | % | — | % | 2.00 | % | 4.00 | % | Gross borrowings | (16,980) | 34.00 | % | 37.00 | % | 23.00 | % | — | % | — | % | — | % | — | % | 6.00 | % | ||||||||||||||||||||||
Cash and cash equivalents | Cash and cash equivalents | 2,285 | 58.00 | % | 3.00 | % | 3.00 | % | 1.00 | % | 12.00 | % | 6.00 | % | 2.00 | % | 15.00 | % | Cash and cash equivalents | 1,439 | 38.00 | % | 3.00 | % | 3.00 | % | 9.00 | % | 14.00 | % | 6.00 | % | 3.00 | % | 24.00 | % |
30 June 2022 | 30 June 2021 | 30 June 2023 | 30 June 2022 | |||||||||||||
£ million | £ million | |||||||||||||||
Issued | Issued | Issued | ||||||||||||||
€ denominated | € denominated | 1,371 | 636 | € denominated | 441 | 1,371 | ||||||||||
£ denominated | £ denominated | 892 | 395 | £ denominated | — | 892 | ||||||||||
$ denominated | $ denominated | 1,788 | — | |||||||||||||
Repaid | Repaid | Repaid | ||||||||||||||
€ denominated | € denominated | (769) | (696) | € denominated | — | (769) | ||||||||||
$ denominated | $ denominated | (752) | (551) | $ denominated | (1,340) | (752) | ||||||||||
742 | (216) | 889 | 742 |
Payments due by period | |||||||||||||||||
As at 30 June 2022 | Less than 1 year £ million | 1-3 years £ million | 3-5 years £ million | More than 5 years £ million | Total £ million | ||||||||||||
Long-term debt obligations | 1,469 | 2,842 | 2,738 | 9,276 | 16,325 | ||||||||||||
Interest obligations | 427 | 626 | 560 | 1,622 | 3,235 | ||||||||||||
Credit support obligations | 19 | — | — | — | 19 | ||||||||||||
Purchase obligations | 2,352 | 792 | 427 | 75 | 3,646 | ||||||||||||
Commitments for short-term leases and leases of low-value assets | 12 | 1 | — | — | 13 | ||||||||||||
Post employment benefits(1) | 23 | 19 | 9 | — | 51 | ||||||||||||
Provisions and other non-current payables | 159 | 183 | 178 | 276 | 796 | ||||||||||||
Lease obligations | 98 | 127 | 77 | 266 | 568 | ||||||||||||
Capital commitments | 360 | 39 | — | — | 399 | ||||||||||||
Other financial liabilities | 216 | — | — | — | 216 | ||||||||||||
Total | 5,135 | 4,629 | 3,989 | 11,515 | 25,268 |
Payments due by period | |||||||||||||||||
As at 30 June 2023 | Less than 1 year £ million | 1-3 years £ million | 3-5 years £ million | More than 5 years £ million | Total £ million | ||||||||||||
Long-term debt obligations | 1,459 | 3,614 | 2,982 | 8,651 | 16,706 | ||||||||||||
Interest obligations | 541 | 750 | 623 | 1,503 | 3,417 | ||||||||||||
Credit support obligations | 15 | — | — | — | 15 | ||||||||||||
Purchase obligations | 1,904 | 736 | 291 | 71 | 3,002 | ||||||||||||
Commitments for short-term leases and leases of low-value assets | 32 | 3 | 1 | — | 36 | ||||||||||||
Provisions and other non-current payables | 125 | 240 | 157 | 213 | 735 | ||||||||||||
Lease obligations | 93 | 131 | 88 | 239 | 551 | ||||||||||||
Capital commitments | 596 | 3 | — | — | 599 | ||||||||||||
Other financial liabilities | 218 | — | — | — | 218 | ||||||||||||
Total | 4,983 | 5,477 | 4,142 | 10,677 | 25,279 |
North America million | Europe million | Asia Pacific million | Africa million | Latin America and Caribbean million | Corporate million | Total million | |||||||||||||||||
Volume (equivalent units) | |||||||||||||||||||||||
2019 reported | 49.4 | 45.4 | 95.1 | 33.6 | 22.4 | — | 245.9 | ||||||||||||||||
Disposals | (2.1) | (0.1) | — | (2.7) | — | — | (4.9) | ||||||||||||||||
2019 adjusted | 47.3 | 45.3 | 95.1 | 30.9 | 22.4 | — | 241.0 | ||||||||||||||||
Organic movement (2020) | 0.1 | (5.2) | (14.5) | (4.0) | (3.4) | — | (27.0) | ||||||||||||||||
Organic movement (2021) | 5.1 | 2.9 | 7.0 | 4.8 | 4.1 | — | 23.9 | ||||||||||||||||
2020 and 2021 movement on a constant basis | 5.2 | (2.3) | (7.5) | 0.8 | 0.7 | — | (3.1) | ||||||||||||||||
Volume (equivalent units) | |||||||||||||||||||||||
2020 reported | 53.2 | 42.7 | 87.6 | 31.8 | 23.1 | — | 238.4 | ||||||||||||||||
Disposals(2) | — | (0.7) | — | (0.4) | — | — | (1.1) | ||||||||||||||||
2021 adjusted | 53.2 | 42.0 | 87.6 | 31.4 | 23.1 | — | 237.3 | ||||||||||||||||
Organic movement | 1.4 | 8.5 | 6.6 | 4.0 | 4.0 | — | 24.5 | ||||||||||||||||
Acquisitions and disposals(2) | 0.2 | 0.7 | — | 0.3 | — | — | 1.2 | ||||||||||||||||
2022 reported | 54.8 | 51.2 | 94.2 | 35.7 | 27.1 | — | 263.0 | ||||||||||||||||
Organic movement % | 3 | 20 | 8 | 13 | 17 | — | 10 | ||||||||||||||||
2019 to 2022 reported growth % | 11 | 13 | (1) | 6 | 21 | — | 7 | ||||||||||||||||
2019 to 2022 growth on a constant basis % | 13 | 15 | (1) | 16 | 21 | — | 9 |
North America £ million | Europe £ million | Asia Pacific £ million | Africa £ million | Latin America and Caribbean £ million | Corporate £ million | Total £ million | |||||||||||||||||
Sales | |||||||||||||||||||||||
2021 reported | 5,803 | 4,795 | 5,146 | 2,020 | 1,369 | 20 | 19,153 | ||||||||||||||||
Exchange | 1 | (1) | (8) | 2 | 3 | — | (3) | ||||||||||||||||
Disposals(2) | — | (21) | — | (30) | — | — | (51) | ||||||||||||||||
2021 adjusted | 5,804 | 4,773 | 5,138 | 1,992 | 1,372 | 20 | 19,099 | ||||||||||||||||
Organic movement | 735 | 1,298 | 525 | 433 | 541 | 35 | 3,567 | ||||||||||||||||
Acquisitions and disposals(2) | 38 | 26 | — | 20 | 5 | — | 89 | ||||||||||||||||
Exchange | 105 | (885) | (39) | (42) | 27 | (1) | (835) | ||||||||||||||||
Hyperinflation | — | 528 | — | — | — | — | 528 | ||||||||||||||||
2022 reported | 6,682 | 5,740 | 5,624 | 2,403 | 1,945 | 54 | 22,448 | ||||||||||||||||
Organic movement % | 13 | 27 | 10 | 22 | 39 | 175 | 19 | ||||||||||||||||
'Society 2030: Spirit of Progress' – putting positive societal impact at the heart of our business strategy We are a successful global business, building and nurturing some of the world’s most recognised brands. A fundamental part of our success is being responsible. That is about making sure we are inclusive and sustainable, and acknowledging that our impact and influence extend beyond our own operations. It is also about being accountable and transparent – which is why we report our non-financial performance in this section. |
North America £ million | Europe £ million | Asia Pacific £ million | Africa £ million | Latin America and Caribbean £ million | Corporate £ million | Total £ million | |||||||||||||||||
Net sales | |||||||||||||||||||||||
2019 reported | 4,460 | 2,939 | 2,688 | 1,597 | 1,130 | 53 | 12,867 | ||||||||||||||||
Exchange | (34) | (19) | 1 | (2) | 4 | 2 | (48) | ||||||||||||||||
Reclassification | — | — | — | — | (10) | — | (10) | ||||||||||||||||
Disposals | (75) | (1) | (1) | (91) | (1) | — | (169) | ||||||||||||||||
2019 adjusted | 4,351 | 2,919 | 2,688 | 1,504 | 1,123 | 55 | 12,640 | ||||||||||||||||
Organic movement (2020) | 105 | (358) | (423) | (200) | (169) | (16) | (1,061) | ||||||||||||||||
Organic movement (2021) | 929 | 108 | 308 | 258 | 275 | (18) | 1,860 | ||||||||||||||||
2020 and 2021 movement on a constant basis | 1,034 | (250) | (115) | 58 | 106 | (34) | 799 | ||||||||||||||||
Net sales | |||||||||||||||||||||||
2021 reported | 5,209 | 2,558 | 2,488 | 1,412 | 1,046 | 20 | 12,733 | ||||||||||||||||
Exchange(1) | 1 | — | (2) | 2 | 1 | — | 2 | ||||||||||||||||
Disposals(2) | — | (20) | — | (20) | — | — | (40) | ||||||||||||||||
2021 adjusted | 5,210 | 2,538 | 2,486 | 1,394 | 1,047 | 20 | 12,695 | ||||||||||||||||
Organic movement | 754 | 766 | 402 | 308 | 451 | 35 | 2,716 | ||||||||||||||||
Acquisitions and disposals(2) | 34 | 23 | — | 15 | 3 | — | 75 | ||||||||||||||||
Exchange(1) | 97 | (304) | (4) | (35) | 24 | (1) | (223) | ||||||||||||||||
Hyperinflation | — | 189 | — | — | — | — | 189 | ||||||||||||||||
2022 reported | 6,095 | 3,212 | 2,884 | 1,682 | 1,525 | 54 | 15,452 | ||||||||||||||||
Organic movement % | 14 | 30 | 16 | 22 | 43 | 175 | 21 | ||||||||||||||||
2019 to 2022 reported growth % | 37 | 9 | 7 | 5 | 35 | 2 | 20 | ||||||||||||||||
2019 to 2022 growth on a constant basis % | 41 | 18 | 11 | 24 | 50 | 2 | 28 | ||||||||||||||||
North America £ million | Europe £ million | Asia Pacific £ million | Africa £ million | Latin America and Caribbean £ million | Corporate £ million | Total £ million | |||||||||||||||||
Marketing | |||||||||||||||||||||||
2021 reported | 936 | 473 | 418 | 168 | 161 | 7 | 2,163 | ||||||||||||||||
Exchange | — | (1) | 1 | (3) | — | (1) | (4) | ||||||||||||||||
Disposals(2) | — | (1) | — | (2) | — | — | (3) | ||||||||||||||||
2021 adjusted | 936 | 471 | 419 | 163 | 161 | 6 | 2,156 | ||||||||||||||||
Organic movement | 222 | 122 | 68 | 36 | 79 | 5 | 532 | ||||||||||||||||
Acquisitions and disposals(2) | 24 | 1 | — | 2 | 1 | — | 28 | ||||||||||||||||
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | (1) | — | — | — | — | — | (1) | ||||||||||||||||
Exchange | 19 | (34) | 3 | (2) | 2 | 1 | (11) | ||||||||||||||||
Hyperinflation | — | 17 | — | — | — | — | 17 | ||||||||||||||||
2022 reported | 1,200 | 577 | 490 | 199 | 243 | 12 | 2,721 | ||||||||||||||||
Organic movement % | 24 | 26 | 16 | 22 | 49 | 83 | 25 | ||||||||||||||||
Operating profit before exceptional items | North America £ million | Europe £ million | Asia Pacific £ million | Africa £ million | Latin America and Caribbean £ million | Corporate £ million | Total £ million | |||||||||||||||||||
2019 reported | 4,116 | |||||||||||||||||||||||||
Exchange | — | |||||||||||||||||||||||||
Disposal | (29) | |||||||||||||||||||||||||
2019 adjusted | 4,087 | |||||||||||||||||||||||||
Organic movement (2020) | (589) | |||||||||||||||||||||||||
Organic movement (2021) | 627 | |||||||||||||||||||||||||
2020 and 2021 movement on a constant basis | 38 | |||||||||||||||||||||||||
Operating profit before exceptional items | ||||||||||||||||||||||||||
2021 reported | 2,237 | 635 | 608 | 171 | 303 | (208) | 3,746 | |||||||||||||||||||
Exchange(1) | (14) | (2) | (5) | 10 | 7 | (9) | (13) | |||||||||||||||||||
Fair value remeasurement of contingent considerations and equity option | 7 | 27 | — | — | — | — | 34 | |||||||||||||||||||
Fair value remeasurement of biological assets | — | — | — | — | — | — | — | |||||||||||||||||||
Acquisitions and disposals(2) | 9 | (10) | — | 12 | — | — | 11 | |||||||||||||||||||
2021 adjusted | 2,239 | 650 | 603 | 193 | 310 | (217) | 3,778 | |||||||||||||||||||
Organic movement | 148 | 418 | 98 | 152 | 218 | (39) | 995 | |||||||||||||||||||
Acquisitions and disposals(2) | (28) | 11 | — | (10) | — | — | (27) | |||||||||||||||||||
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 32 | 36 | — | — | (3) | — | 65 | |||||||||||||||||||
Fair value remeasurement of biological assets | — | — | — | — | (5) | — | (5) | |||||||||||||||||||
Exchange(1) | 63 | (108) | 10 | (20) | 18 | 18 | (19) | |||||||||||||||||||
Hyperinflation | — | 10 | — | — | — | — | 10 | |||||||||||||||||||
2022 reported | 2,454 | 1,017 | 711 | 315 | 538 | (238) | 4,797 | |||||||||||||||||||
Organic movement % | 7 | 64 | 16 | 79 | 70 | (18) | 26 | |||||||||||||||||||
Organic operating margin % (3) | ||||||||||||||||||||||||||
2022 | 40.0 | 32.3 | 24.3 | 20.3 | 35.2 | n/a | 31.0 | |||||||||||||||||||
2021 | 43.0 | 25.6 | 24.3 | 13.8 | 29.6 | n/a | 29.8 | |||||||||||||||||||
Margin movement (bps) | (295) | 671 | 2 | 643 | 564 | n/a | 121 | |||||||||||||||||||
2019 to 2021 reported growth % | 123 | 66 | 74 | 106 | 112 | (198) | 17 | |||||||||||||||||||
2019 to 2022 growth on a constant basis % | 35 | 48 | 18 | 92 | 84 | (75) | 25 | |||||||||||||||||||
Promote positive drinking As a responsible business, we want to change the way people drink – for the better. This is why we promote moderate drinking and invest in education programmes to discourage the harmful use of alcohol. |
Target by 2030 Champion health literacy and tackle harm through DRINKiQ in every market where we live, work, source and sell | |||||
Number of markets that have launched DRINKiQ | 21 |
Target by 2030 Scale up our SMASHED partnership and educate 10 million young people, parents and teachers on the dangers of underage drinking | |||||
Number of people educated on the dangers of underage drinking through a Diageo-supported education programme in fiscal 23 | 1,985,817 |
Volume equ. units million | Sales £ million | Net sales £ million | Marketing £ million | Operating profit £ million | |||||||||||||
Year ended 30 June 2021 | |||||||||||||||||
Acquisitions | |||||||||||||||||
Aviation Gin and Davos Brands | — | — | — | — | 9 | ||||||||||||
Chase Distillery | — | — | — | — | 2 | ||||||||||||
Lone River Ranch Water | — | — | — | — | — | ||||||||||||
Loyal 9 Cocktails | — | — | — | — | — | ||||||||||||
— | — | — | — | 11 | |||||||||||||
Disposals | |||||||||||||||||
South African ready to drink | — | (8) | (4) | — | — | ||||||||||||
Meta Abo Brewery | (0.4) | (22) | (16) | (2) | 12 | ||||||||||||
Picon | (0.7) | (21) | (20) | (1) | (12) | ||||||||||||
(1.1) | (51) | (40) | (3) | — | |||||||||||||
Acquisitions and disposals | (1.1) | (51) | (40) | (3) | 11 | ||||||||||||
Year ended 30 June 2022 | |||||||||||||||||
Acquisitions | |||||||||||||||||
Aviation Gin and Davos Brands | — | 6 | 5 | (4) | (11) | ||||||||||||
Chase Distillery | — | 5 | 3 | (1) | (2) | ||||||||||||
Lone River Ranch Water | 0.1 | 14 | 13 | (13) | (13) | ||||||||||||
Loyal 9 Cocktails | — | 14 | 11 | (5) | (2) | ||||||||||||
Mezcal Unión | 0.1 | 6 | 5 | (1) | 1 | ||||||||||||
21Seeds | — | 3 | 3 | (2) | (2) | ||||||||||||
0.2 | 48 | 40 | (26) | (29) | |||||||||||||
Disposal | |||||||||||||||||
Meta Abo Brewery | 0.3 | 20 | 15 | (2) | (10) | ||||||||||||
Picon | 0.7 | 21 | 20 | — | 12 | ||||||||||||
1.0 | 41 | 35 | (2) | 2 | |||||||||||||
Acquisitions and disposals | 1.2 | 89 | 75 | (28) | (27) |
Target by 2030 Extend our UNITAR partnership and promote changes in attitudes to drink driving, reaching five million people | |||||
Number of people educated about the dangers of drink driving in fiscal 23 | 706k |
Target by 2030 Leverage Diageo marketing and innovation to make moderation the norm – reaching 1 billion people with dedicated responsible drinking messages | |||||
Number of people reached with responsible drinking messages from our brands in fiscal 23 | 645m |
2022 £ million | 2021 £ million | |||||||
Profit attributable to equity shareholders of the parent company | 3,249 | 2,660 | ||||||
Exceptional operating and non-operating items | 405 | 1 | ||||||
Exceptional tax charges | — | 88 | ||||||
Tax in respect of exceptional operating and non-operating items | (31) | (4) | ||||||
Exceptional items attributable to non-controlling interests | (103) | 1 | ||||||
3,520 | 2,746 | |||||||
Weighted average number of shares | million | million | ||||||
Shares in issue excluding own shares | 2,318 | 2,337 | ||||||
Dilutive potential ordinary shares | 7 | 8 | ||||||
2,325 | 2,345 | |||||||
pence | pence | |||||||
Basic earnings per share before exceptional items | 151.9 | 117.5 | ||||||
Diluted earnings per share before exceptional items | 151.4 | 117.1 |
2022 £ million | 2021 £ million | |||||||
Net cash inflow from operating activities | 3,935 | 3,654 | ||||||
Disposal of property, plant and equipment and computer software | 17 | 13 | ||||||
Purchase of property, plant and equipment and computer software | (1,097) | (626) | ||||||
Movements in loans and other investments | (72) | (4) | ||||||
Free cash flow | 2,783 | 3,037 |
2022 £ million | 2021 £ million | |||||||
Profit for the year | 3,338 | 2,799 | ||||||
Taxation | 1,049 | 907 | ||||||
Share of after tax results of associates and joint ventures | (417) | (334) | ||||||
Net finance charges | 422 | 373 | ||||||
Non-operating items | 17 | (14) | ||||||
Operating profit | 4,409 | 3,731 | ||||||
Exceptional operating items | 388 | 15 | ||||||
Fair value remeasurement | (60) | 36 | ||||||
Depreciation, amortisation and impairment(1) | 489 | 447 | ||||||
Hyperinflation adjustment | (10) | — | ||||||
Retranslation to budgeted exchange rates | 27 | 375 | ||||||
5,243 | 4,604 | |||||||
Cash generated from operations | 5,212 | 4,857 | ||||||
Net exceptional cash paid/(received)(2) | 15 | (49) | ||||||
Post employment payments less amounts included in operating profit(1) | 89 | 35 | ||||||
Net movement in maturing inventories(3) | 360 | 174 | ||||||
Provision movement | 58 | 60 | ||||||
Dividends received from associates | (190) | (290) | ||||||
Other items(1) | (53) | (88) | ||||||
Hyperinflation adjustment | (22) | — | ||||||
Retranslation to budgeted exchange rates | 42 | 387 | ||||||
5,511 | 5,086 | |||||||
Operating cash conversion | 105.1 | % | 110.5 | % |
2022 £ million | 2021 £ million | |||||||
Operating profit | 4,409 | 3,731 | ||||||
Exceptional operating items | 388 | 15 | ||||||
Profit before exceptional operating items attributable to non-controlling interests | (192) | (138) | ||||||
Share of after tax results of associates and joint ventures | 417 | 334 | ||||||
Tax at the tax rate before exceptional items of 22.5% (2021 – 22.2%) | (1,173) | (906) | ||||||
3,849 | 3,036 | |||||||
Average net assets (excluding net post employment benefit assets/liabilities) | 8,428 | 8,146 | ||||||
Average non-controlling interests | (1,641) | (1,587) | ||||||
Average net borrowings | 12,859 | 12,672 | ||||||
Average integration and restructuring costs (net of tax) | 1,639 | 1,639 | ||||||
Goodwill at 1 July 2004 | 1,562 | 1,562 | ||||||
Average invested capital | 22,847 | 22,432 | ||||||
Return on average invested capital | 16.8% | 13.5% |
Incidents of non-compliance concerning marketing communications – FY23(1) | |||||||||||
Country | Body | Industry complaints upheld | Complaints about Diageo brands upheld | ||||||||
United States | Distilled Spirits Council of the United States | 0 | 0 | ||||||||
Australia | ABAC Scheme | 27 | 0 | ||||||||
United Kingdom | Advertising Standards Authority | 17 | 0 | ||||||||
Portman Group | 9 | 0 | |||||||||
Republic of Ireland | Advertising Standards Authority for Ireland | 3 | 0 |
Doing business the right way We want to do business in the right way every day, everywhere. This is about making sure our people and suppliers demonstrating integrity, living our values, and behaving in an ethical way that underpins our Code of Business Conduct. We expect everyone who works for us and alongside us to uphold human rights and stand up for what is right. |
Brand promoter training website in 18 languages |
Our people and culture: the key to our success Our talented and diverse workforce, together with our brands and inclusive culture, continue to be a competitive advantage for our business, enabling us to perform at our best. |
Region(2) | Men | % | Women | % | Not declared(3) | % | Total | ||||||||||||||||
North America | 1,839 | 59 | % | 1,258 | 40 | % | 18 | 0.6 | % | 3,115 | |||||||||||||
Europe | 5,836 | 58 | % | 4,211 | 42 | % | 15 | 0.1 | % | 10,062 | |||||||||||||
Asia Pacific | 5,957 | 66 | % | 3,042 | 34 | % | 1 | — | % | 9,000 | |||||||||||||
Latin America and Caribbean | 2,733 | 63 | % | 1,592 | 37 | % | 0 | — | % | 4,325 | |||||||||||||
Africa | 2,488 | 67 | % | 1,244 | 33 | % | 3 | 0.1 | % | 3,735 | |||||||||||||
Total | 18,853 | 62 | % | 11,347 | 38 | % | 37 | 0.1 | % | 30,237 |
Role | Men | % | Women | % | Not declared(3) | % | Total | ||||||||||||||||
Executive(4) | 7 | 50 | % | 7 | 50 | % | 0 | — | % | 14 | |||||||||||||
Senior manager(5) | 311 | 56 | % | 248 | 44 | % | 1 | 0.2 | % | 560 | |||||||||||||
Line manager(6) | 2,274 | 65 | % | 1,198 | 34 | % | 6 | 0.2 | % | 3,478 | |||||||||||||
Supervised employee(7) | 16,261 | 62 | % | 9,894 | 38 | % | 30 | 0.1 | % | 26,185 | |||||||||||||
Diageo (total) | 18,853 | 62 | % | 11,347 | 38 | % | 37 | 0.1 | % | 30,237 |
Health and safety It is our ambition to create a world-class health and safety culture to make sure we protect our people across our business. |
Champion inclusion and diversity Championing inclusion and diversity is at the heart of what we do, and is crucial to our purpose of ‘celebrating life, every day, everywhere’. |
Empowering women | |||||
Ambition by 2030 Champion gender diversity, with an ambition to achieve 50% representation of women in leadership roles by 2030 | |||||
Percentage of female leaders globally | 44 | % |
2022 £ million | 2021 £ million | |||||||
Borrowings due within one year | 1,522 | 1,862 | ||||||
Borrowings due after one year | 14,498 | 12,865 | ||||||
Fair value of foreign currency derivatives and interest rate hedging instruments | (73) | (232) | ||||||
Lease liabilities | 475 | 363 | ||||||
Less: Cash and cash equivalents | (2,285) | (2,749) | ||||||
Net borrowings | 14,137 | 12,109 | ||||||
Post employment benefit liabilities before tax | 402 | 574 | ||||||
Adjusted net borrowings | 14,539 | 12,683 | ||||||
Profit for the year | 3,338 | 2,799 | ||||||
Taxation | 1,049 | 907 | ||||||
Net finance charges | 422 | 373 | ||||||
Depreciation, amortisation and impairment (excluding exceptional intangible impairment) | 492 | 447 | ||||||
Exceptional intangible impairment | 336 | — | ||||||
EBITDA | 5,637 | 4,526 | ||||||
Exceptional operating items (excluding impairment) | 49 | 15 | ||||||
Non-operating items | 17 | (14) | ||||||
Adjusted EBITDA | 5,703 | 4,527 | ||||||
Adjusted net borrowings to adjusted EBITDA | 2.5 | 2.8 |
Championing ethnic diversity | |||||
Ambition by 2030 Champion ethnic diversity, with an ambition to increase representation of leaders from ethnically diverse backgrounds to 45% by 2030 | |||||
Percentage of ethnically diverse leaders globally | 43 | % |
Gender representation of our leadership(1), (4) | |||||||||||||||||
Role | Men | % | Women | % | Total | ||||||||||||
Leadership population(2) | 319 | 56 | % | 254 | 44 | % | 573(3) |
Ethnic representation of our leadership(1), (4) | |||||||||||||||||||||||||||||
Role | Ethnically diverse | % | Non-ethnically diverse | % | Decline to self-identify | % | Not disclosed | % | Total | ||||||||||||||||||||
Leadership population(2) | 249 | 43 | % | 289 | 50 | % | 19 | 3 | % | 17 | 3 | % | 574 |
Marketing in progressive ways | ||
Ambition by 2030 Use our creative and media spend to support progressive voices, measuring and increasing spend year on year Measurement and evaluation framework under development | ||
2022 £ million | 2021 £ million | |||||||
Tax before exceptional items (a) | 1,080 | 823 | ||||||
Tax in respect of exceptional items | (31) | (4) | ||||||
Exceptional tax charge | — | 88 | ||||||
Taxation on profit (b) | 1,049 | 907 | ||||||
Profit before taxation and exceptional items (c) | 4,792 | 3,707 | ||||||
Non-operating items | (17) | 14 | ||||||
Exceptional operating items | (388) | (15) | ||||||
Profit before taxation (d) | 4,387 | 3,706 | ||||||
Tax rate before exceptional items (a/c) | 22.5 | % | 22.2 | % | ||||
Tax rate after exceptional items (b/d) | 23.9 | % | 24.5 | % |
Supporting diverse suppliers | |||||
Ambition by 2030 Increase spend with diverse-owned and disadvantaged businesses to 15% by 2030 | |||||
Percentage of spend with diverse-owned and disadvantaged businesses | 6.3% |
Building a thriving and inclusive hospitality industry | |||||
Ambition by 2030 Provide business and hospitality skills to 200,000 people, increasing employability and improving livelihoods through Learning for Life and our other skills programmes | |||||
Number of people reached through Learning for Life and other skills programmes in fiscal 23 | 31.6k |
Ambition by 2030 Through the Diageo Bar Academy (DBA) we will deliver 1.5 million training sessions, providing skills and resources to help build a thriving hospitality sector that works for all | |||||
Number of participations in training sessions delivered through Diageo Bar Academy in fiscal 23 | 236k |
Creating inclusive communities | |||||
Ambition by 2030 Ensure 50% of beneficiaries of our community programmes are women and that our community programmes are designed to enhance diversity and inclusion of under-represented groups | |||||
Percentage of beneficiaries of our community programmes who are women | 59 | % |
Managing climate risks and opportunities by pioneering grain-to-glass sustainability Our business depends on natural resources and we are directly affected by changes in climate and the related challenges of nature and biodiversity loss. While we already feel the effects of climate change in our global operations, there are also opportunities for companies that develop credible plans to adapt to changing circumstances. | ||||||||
Board oversight | Audit Committee | |||||||||||||||||||||||||
Executive Committee ownership | ||||||||||||||||||||||||||
Executive sponsors | ||||||||||||||||||||||||||
President, Global Supply Chain & Procurement and Chief Sustainability Officer | Global Corporate Relations Director | |||||||||||||||||||||||||
Cross-functional Climate Risk Steering Group | ||||||||||||||||||||||||||
Corporate relations | Supply | Strategy | ||||||||||||||||||||||||
Risk | Finance | Legal | Marketing | |||||||||||||||||||||||
Working groups assigned to address key risks and opportunities identified |
Fiscal year | 2021 | 2022 | 2023 | ||||||||
Markets/regions assessed for physical risks | Largest supply centres Scotland North America | Highest water risk Africa Mexico India Turkey | Remaining locations Asia Pacific Latin America and Caribbean Europe |
Region | Owned/key third-party sites assessed | Detailed assessments | Agricultural commodities | Supplier assets (factories, warehouses) | Ports | ||||||||||||
North America | 12 | 4 | 8 | 86 | 6 | ||||||||||||
Europe | 76 | 13 | 18 | 262 | 27 | ||||||||||||
Asia Pacific | 63 | 11 | 6 | 281 | 9 | ||||||||||||
Latin America and Caribbean | 46 | 6 | 2 | 251 | 13 | ||||||||||||
Africa | 48 | 5 | 6 | 366 | 14 | ||||||||||||
Total | 245 | 39 | n/a(1) | 1,246 | 69 |
Risks | ||||||||
Risk description | Water scarcity Increasing water scarcity and water stress affects our ability to continue to produce in water-stressed areas | Agricultural raw material availability Climate-related impacts on agricultural material availability cause scarcity or price increases | ||||||
Category | Physical – chronic | Physical – chronic | ||||||
Timeframe | Short-term (one to five years), medium-term (five to 10 years) and long-term (10 to 30 years) | Medium-, long-term | ||||||
Impact (if not mitigated) | Moderate(1) | Moderate(1) | ||||||
Response examples | Improvements in water use efficiency Water replenishment plans in 100% of water-stressed areas Collective action programme to improve water security in Diageo's ‘priority water basins’ | Regenerative agriculture adaptations Smallholder farmer support Development of drought-resistant crops Alternative sourcing locations Substitution with alternative crops Improved water management | ||||||
Risk description | Input costs Policy changes (carbon taxation, shift to renewables) cause increases in input costs | Consumer behaviour Consumers prioritise purchasing more sustainable products, rejecting those perceived to have a negative environmental impact | ||||||
Category | Transition – policy/legal | Transition – market | ||||||
Timeframe | Short-, medium- term | Short-, medium-, long-term | ||||||
Impact (if not mitigated) | Moderate(1) | Moderate(1) | ||||||
Response examples | Supply chain decarbonisation Engaging suppliers in low-carbon technology development for their operations Packaging weight reduction technologies | Packaging weight reduction Increased recycled content in packaging Developing circular (refill, reuse) product offerings | ||||||
Opportunities | ||||||||
Opportunity description | Supply chain decarbonisation Reducing our Scope 1, 2 and 3 emissions lowers our exposure to carbon taxes and related costs, and improves our reputation with customers and consumers | Innovation in sustainable products and packaging Developing more sustainable products (e.g. lighter-weight, higher-recycled content, more refillable and reusable containers) meets consumers increasing demands | ||||||
Category | Transition – policy/legal | Transition – market | ||||||
Timeframe | Shor-t, medium-term | Short-, medium-term | ||||||
Impact (if not realised) | Moderate(1) | Moderate(1) | ||||||
Response examples | Decarbonisation programme and capital investment Renewable energy and regenerative agriculture | Innovation to deliver more sustainable products (e.g. refillable and reusable packaging, alternative packaging materials) |
Water efficiency | |||||
Target by 2030 Reduce water use in our operations with a 40% improvement in water use efficiency in water-stressed areas and a 30% improvement across the company | |||||
Percentage improvement in litres of water used per litre of product packaged from the prior year – in water-stressed areas | 2.6% |
Percentage improvement in litres of water used per litre of product packaged from the prior year – across the company | (1.2) | % |
Water replenishment | |||||
Target by 2026 Replenish more water than we use for operations in water-stressed areas | |||||
Percentage of water replenished in water-stressed areas in fiscal 23 | 22% |
Water for communities | |||||
Target by 2030 Invest in improving access to clean water, sanitation and hygiene (WASH) in communities near our sites and local sourcing areas in all our water-stressed markets | |||||
Percentage of water-stressed markets with investment in WASH | 100 | % |
Water collective action | |||||
Target by 2030 Engage in collective action in all priority water basins to improve water accessibility, availability and quality and contribute to net positive water impact | |||||
Percentage of priority water basins with collective action participation | 50 | % |
Pathway to net zero(1) | ||||||||||||||||||||
2008 | 2015 | 2020 | 2021 | 2030 | 2050 or earlier | |||||||||||||||
Milestone | GHG targets set for 2015 | GHG targets set for 2020 | ‘Society 2030: Spirit of Progress‘ (SOP) targets set | Targets approved by the SBTi | ‘Society 2030: Spirit of Progress‘ targets due | Scope 3 net zero targets due | ||||||||||||||
Target | 2015 targets -50% Scopes 1 & 2 | 2020 targets -50% Scopes 1 & 2 -30% Scope 3 | Scope 1: net zero Scope 2: net zero Scope 3: -50% | Scope 1: net zero Scope 2: net zero Scope 3: net zero | ||||||||||||||||
Delivery | -33% Scopes 1 & 2 | -50.1% Scopes 1 & 2 -33.7% Scopes 1-3 | ||||||||||||||||||
Baseline = 2007 | Baseline = 2007 | Baseline = 2020 | ||||||||||||||||||
Pathway to delivery | ||||||||||||||||||||
Scope 1 | Decarbonisation of direct operations by embedding energy efficiency and energy recovery into our processes and working towards using 100% renewable fuel and heat. Exploring innovations, partnerships and renewable energy certification. | Continue to explore innovations, partnerships and carbon removals to maintain compliance with our SBTi-aligned net zero commitment. | ||||||||||||||||||
Scope 2 | Continue switch to renewable electricity. Create additional renewable energy capacity to power our sites through on-site developments and using power purchase agreements (PPA). | Once we have achieved 100% renewable electricity by 2030 we will focus on moving towards more on-site/near-site generation. | ||||||||||||||||||
Scope 3 | Packaging: For example: low-carbon glass and aluminium manufacturing; packaging reduction; innovative glass coatings that support light-weighting, and moving towards circular packaging solutions. Agriculture: Regenerative agriculture programmes scale-up to reduce the emissions associated with crop growth. Partnerships: Mobilising the value chain by engaging, inspiring and activating our supplier and customer network to jointly decarbonise e.g. through the development of renewable energy solutions and increased carbon emission understanding and transparency. Collaborating across the business: Cross-functional governance structure in place creating shared Scope 3 delivery responsibility. | |||||||||||||||||||
Focus on progress: We continually test our decarbonisation progress through reports that assess the sufficiency of our plans to deliver our in-year, 2030 and 2050 targets. Decarbonisation plans are in place across our site footprint and we monitor them through performance management and strategic business reviews. Through Diageo Sustainable Solutions (DSS) and supplier collaboration, we identify opportunities to partner and innovate, driving systems change within the beverage industry. We may need to use high-quality certified carbon offsets to neutralise hard-to-abate residual emissions, though we anticipate these being no more than 5-10% of our baseline. | ||||||||||||||||||||
(1) This is an estimate based on current management expectations; the underlying assumptions and future developments may change over time, which would cause changes to management expectations and this information. See pages 93-99 for more about the potential impact of climate change on Diageo and our current plans to manage and mitigate risks. |
Emissions from our direct operations | |||||
Target by 2030 Become net zero carbon in our direct operations (Scopes 1 and 2) | |||||
Percentage reduction in absolute carbon emissions (direct and indirect carbon emissions by weight (market/net based)) from the prior year | 5.4 | % |
Target by 2030 Use 100% renewable energy across all our direct operations by 2030 | |||||
Change in percentage of renewable energy across our direct operations in fiscal 23 | 1.9% |
Emissions from across our value chain | |||||
Target by 2030 Reduce our value chain (Scope 3) carbon emissions by 50% | |||||
Percentage reduction in absolute greenhouse gas emissions (ktCO2e) from the prior year | 1.2 | % |
Total direct and indirect carbon emissions by region by year | ||||||||||||||
Region | 2020 | 2021 | 2022 | 2023 | ||||||||||
North America | 127 | 125 | 100 | 83 | ||||||||||
Europe | 152 | 129 | 144 | 194 | ||||||||||
Asia Pacific | 32 | 10 | 10 | 9 | ||||||||||
Latin America and Caribbean | 22 | 27 | 38 | 26 | ||||||||||
Africa | 137 | 154 | 132 | 89 | ||||||||||
Diageo (total) | 470 | 445 | 424 | 401 |
Streamlined Energy and Carbon Reporting (SECR) | ||||||||||||||
2020 | 2021 | 2022 | 2023 | |||||||||||
Total Global energy consumption (MWh) | 3,310,388 | 3,392,923 | 3,557,760 | 3,507,733 | ||||||||||
Total market based (net) intensity ratio of GHG emissions (g CO2e per litre of packaged product) | 139 | 122 | 105 | 105 | ||||||||||
Total UK energy consumption (MWh) | 1,056,931 | 1,064,795 | 1,091,153 | 1,249,306 | ||||||||||
Direct (MWh) | 924,022 | 927,917 | 951,302 | 1,102,403 | ||||||||||
Indirect (MWh) | 132,910 | 136,878 | 139,851 | 146,903 | ||||||||||
Total UK direct and indirect carbon emissions (kt CO2e) | 86 | 71 | 84 | 136 | ||||||||||
Scope 1 | 86 | 71 | 84 | 136 | ||||||||||
Scope 2 | — | — | — | — |
Positive partnerships | |||||
Target by 2030 Develop regenerative agriculture pilot programmes in five key sourcing landscapes | |||||
Number of regenerative agriculture pilot programmes initiated | 1 |
Local sourcing | |||||
Target by 2030 Provide all local sourcing communities with agricultural skills and resources, building economic and environmental resilience (supporting 150,000 smallholders) | |||||
Number of smallholder farmers in our supply chain supported by our smallholder farmer programme in fiscal 23 | 12.9k |
Reducing packaging weight and increasing recycled content | |||||
Target by 2030 Continue our work to reduce total packaging and increase recycled content in our packaging (delivering a 10% reduction in packaging weight and increasing the percentage of recycled content in our packaging to 60%) | |||||
Percentage reduction of total packaging (by weight) in fiscal 23 | 4 | % |
Change in percentage of recycled content (by weight) in fiscal 23 | (1.2)% |
Target by 2030 Ensure 100% of our packaging is widely recyclable (or reusable/compostable) | |||||
Percentage of packaging recyclable (by weight) | 97.9 | % |
Recycled content and recyclability of plastic | |||||
Target by 2025 Ensure 100% of our plastics are designed to be widely recyclable or reusable/compostable | |||||
Percentage of recyclable (or reusable/ compostable) plastic used in fiscal 23 | 11.2 | % |
Target by 2030 Achieve 40% recycled content in our plastic bottles by 2025, and 100% by 2030 | |||||
Percentage of recycled content in our plastic bottles used | 7 | % |
Reducing waste to landfill | |||||
Target by 2030 Achieve zero waste in our direct operations and zero waste to landfill in our supply chain | |||||
Percentage reduction in total waste sent to landfill from the prior year | 35.5 | % |
TCFD recommendation | Compliance | ||||
GOVERNANCE See page 92 | |||||
a.Describe the board’s oversight of climate-related risks and opportunities. | Yes. See page 92. | ||||
b.Describe management’s role in assessing and managing climate-related risks and opportunities. | |||||
RISK MANAGEMENT See pages 93-99 | |||||
a.Describe the organisation’s processes for identifying and assessing climate-related risks. | Yes. See pages 93-99. Having completed comprehensive risk assessments our focus is now on ensuring appropriate adaptation plans are in place for all risks identified. | ||||
b.Describe the organisation’s processes for managing climate-related risks. | |||||
c.Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management. | |||||
STRATEGY See pages 100-109 | |||||
a.Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. | We have described risks and opportunities for our business in >95% of our operating locations, as well as the impact of those risks and opportunities on our strategy. We have modelled the resilience of our strategy under three climate-related scenarios. See pages 243-245. As a next step we are exploring the further development of our scenario analysis capability and associated tools. | ||||
b.Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning. | |||||
c.Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. | |||||
METRICS & TARGETS See pages 100-109 | |||||
a.Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. | Yes. See pages 100-109. | ||||
b.Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. | Yes for Scope 1 and 2. See page 104. We are working with global GHG accounting bodies and our suppliers to get more detailed Scope 3 data. As we refine our value chain data, we can be more specific about our GHG footprint, including refined categories of upstream and downstream Scope 3 emissions. | ||||
c.Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. | Yes. See pages 100-109. |
Annual Report Where we present our most material disclosures and describe how our strategy delivers value for our business and other stakeholders. The performance of non-financial KPIs are integrated into the relevant focus area sections. The document also includes detailed non-financial reporting boundaries and methodologies. | Diageo.com Where, through the ‘Society 2030: Spirit of Progress‘ section, we give more details of our approach and performance, with examples of our strategy in action. | ESG Reporting Index Where we give additional disclosures in line with the GRI Standards and the UNGC advanced reporting criteria index, plus our response to the Sustainability Accounting Standards Board (SASB). This document also includes detailed non-financial reporting boundaries and methodologies. |
Focus area | Relevant policies and standards | Read more in this report | Page | ||||||||
Description of Diageo’s business model | –Business model | 32-33 | |||||||||
Society 2030: Spirit of Progress' | –'Society 2030: Spirit of Progress' | 75 | |||||||||
Promote positive drinking | –Global Marketing and Digital Marketing Policy(1) –Global Employee Alcohol Policy(1) –Position papers(1) | –Promote positive drinking including performance of the relating metrics | 76-79 | ||||||||
Champion inclusion and diversity Our people and culture | –Code of Business Conduct(1) –Great Britain and Scotland Gender Pay Gap Report 2022 –Republic of Ireland Gender Pay Gap Report 2022 –Global Human Rights Policy(1) | –Champion inclusion and diversity including performance of the relating metrics –Our people and culture | 86-90 82-85 | ||||||||
Pioneer grain-to-glass sustainability | –Global Environment Policy(1) –Sustainable Agriculture Guidelines(1) –Sustainable Packaging Commitments(1) –Partnering with Suppliers Standard(1) –Deforestation Guidelines | –Pioneer grain-to-glass sustainability including managing climate risks and opportunities and performance of the related metrics –Our principal risks and risk management | 100-109 113-123 | ||||||||
Task Force on Climate-related Financial Disclosures | –Pioneer grain-to-glass sustainability including managing climate risks and opportunities and performance of the related metrics –Our principal risks and risk management | 100-109 113-123 | |||||||||
Human rights | –Global Human Rights Policy(1) –Modern Slavery Statement(2) –Global Brand Promoter Standard(1) | –Doing business the right way –Our principal risks and risk management | 80-81 113-123 | ||||||||
Health and safety | –Global Health, Safety and Wellbeing Policy(1) | –Health and Safety | 84-85 | ||||||||
Anti-bribery and corruption | –Code of Business Conduct(1) | –Doing business the right way –Our principal risks and risk management | 80-81 113-123 |
Board Leadership & Company Purpose | Composition, Succession and Evaluation | |||||||
–Section 172 statement - page 19 | –Leadership and experience - page 127 | |||||||
–Board of Directors - page 132 | –Performance evaluation - page 142 | |||||||
–2023 Governance at a Glance - page 126 | –Nomination Committee report - page 154 | |||||||
–Purpose, values and culture - page 143 | ||||||||
–Board activities - page 136 | ||||||||
Division of Responsibilities | Audit, Risk and Internal Controls | |||||||
–Corporate governance structure and division of responsibilities - page 131 | –Audit Committee report - page 146 | |||||||
–Board and committee attendance - page 135 | Remuneration | |||||||
–Director independence - page 133 | –Remuneration Committee report - page 166 |
Board composition | Non-executive director tenure | Board gender diversity | Board ethnic diversity |
ò | Chairman | ò | 0 – 3 years | ò | Male | ò | Directors of colour | |||||||||||||||||||||||||
ò | Executive director | ò | 3 – 6 years | ò | Female | ò | White European | |||||||||||||||||||||||||
ò | Non-executive director | ò | 6 – 9 years |
Annual General Meeting 2022 | Board (maximum 7) | Audit Committee (maximum 5) | Nomination Committee (maximum 6) | Remuneration Committee (maximum 7) | |||||||||||||
Javier Ferrán | ü | 7/7 | 5/5(1) | 6/6 | 7/7(1) | ||||||||||||
Debra Crew(2) | N/A | 0/0 | 0/0 | 0/0 | 1/1(1) | ||||||||||||
Lavanya Chandrashekar | ü | 6/6 | 5/5(1) | 0/0 | 1/1(1) | ||||||||||||
Susan Kilsby | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Melissa Bethell | ü | 7/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Karen Blackett | ü | 6/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Valérie Chapoulaud-Floquet | ü | 6/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Sir John Manzoni | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Lady Mendelsohn | ü | 7/7 | 5/5 | 6/6 | 6/7 | ||||||||||||
Alan Stewart | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Ireena Vittal | ü | 7/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Former Directors | |||||||||||||||||
Sir Ivan Menezes(3) | ü | 5/6 | 2/5(1) | 4/5(1) | 4/6(1) |
1.Javier Ferrán [N*] Chairman Nationality:Spanish Appointed:Chairman and Chairman of the Nomination Committee: January 2017 (Appointed Chairman Designate and Non-Executive Director: July 2016) Key strengths: Brings extensive board-level experience from the drinks and consumer products industry, including at chief executive level, and has a wealth of experience in consumer goods through his venture capital activities to draw from in his role as Chairman and leader of the Board Current external appointments: Chairman, International Consolidated Airlines Group, S.A.; Senior Advisor and chairman of investee company board, BlackRock Long Term Private Capital Previous relevant experience: Non-Executive Director and Senior Independent Director, Associated British Foods plc; Non-Executive Director, Coca-Cola European Partners plc; Member, Advisory Board of ESADE Business School; President and CEO, Bacardi Limited; Non-Executive Director, SABMiller plc | ||
2.Debra Crew [E*] Chief Executive Nationality: American Appointed: Chief Executive and Executive Director: June 2023 Key strengths: Has broad experience in various consumer products sectors at board, chief executive and management leadership levels, as well as over four years' experience in non-executive and executive roles at Diageo Current external appointments: Non-Executive Director, Stanley, Black & Decker, Inc. Previous Diageo roles: Chief Operating Officer; President, North America; Non-Executive Director, Diageo plc Previous relevant experience: Non-Executive Director, Newell Brands, Mondelēz International Inc.; President and CEO, Reynolds American, Inc; President, PepsiCo North America Nutrition, PepsiCo Americas Beverages, Western Europe Region; various positions with Kraft Foods, Nestlé, S.A., and Mars | ||
3.Lavanya Chandrashekar [E] Chief Financial Officer Nationality: American Appointed: Chief Financial Officer and Executive Director: July 2021 Key strengths: Brings broad financial expertise, commercial skills and strong consumer goods experience to manage the group’s affairs relating to financial controls, accounting, tax, treasury and investor relations Previous Diageo roles: Chief Financial Officer, Diageo North America and Global Head of Investor Relations Previous relevant experience: Vice President Finance, Global Cost Leadership and Supply Chain, Mondelēz International; VP Finance, North America, Mondelēz International; VP Finance, Eastern Europe, Middle East and Africa, Mondelēz International; various senior finance roles at Procter & Gamble |
4.Susan Kilsby [A] [N] [R*] Senior Independent Director Nationality: American/British Appointed: Senior Independent Director: October 2019 (Appointed Non-Executive Director: April 2018 and Chairman of the Remuneration Committee: January 2019) Key strengths: Brings wide-ranging corporate governance and board level experience across a number of industries, including a consumer goods sector focus, with particular expertise in mergers and acquisitions, corporate finance and transaction advisory work Current external appointments: Non-Executive Chair, Fortune Brands Innovations, Inc.; Non-Executive Director, Unilever PLC, NHS England; Member, the Takeover Panel Previous relevant experience: Senior Independent Director and Chair of Remuneration Committee, BHP Group Plc, BHP Group Limited; Senior Independent Director, BBA Aviation plc; Chairman, Shire plc; Chairman, Mergers and Acquisitions EMEA, Credit Suisse; Senior Advisor, Credit Suisse; Non-Executive Director, Goldman Sachs International, Keurig Green Mountain, L’Occitane International, Coca-Cola HBC | ||
5.Melissa Bethell [A] [N] [R] Non-Executive Director Nationality: American/British Appointed: Non-Executive Director: June 2020 Key strengths: Has extensive international corporate and financial experience, including in relation to private equity, financial sectors, strategic consultancy and advisory services, as well as having strong non-executive experience at board and committee levels across a range of industries, including retail, consumer goods and financial services Current external appointments: Non-Executive Director, Tesco PLC, Exor N.V.; Chair, Ocean Outdoor Limited; Senior Advisor, Atairos Previous relevant experience: Managing Director and Senior Advisor, Private Equity, Bain Capital; Non-Executive Director, Atento S.A., Worldpay plc, Samsonite S.A. | ||
6.Karen Blackett [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: June 2022 Key strengths: Brings expertise in marketing, media and the creative industries, as well as broad experience in public policy and strategic initiatives through a number of different government, industry and public bodies Current external appointments: UK President, WPP plc; Chancellor, University of Portsmouth; Founding Trustee, BEO (Black Equity Organisation); Non-Executive Director, Creative UK, Non-Executive Director, The Pipeline Previous relevant experience: UK Race Equality Business Champion, HM Government; Business Ambassador, Department for International Trade, HM Government; Chairwoman, MediaCom UK & Ireland; Chief Executive Officer, GroupM UK; Chief Executive Officer, MediaCom UK; Chief Operations Officer, MediaCom EMEA; Marketing Director, MediaCom; UK Country Manager, WPP plc |
7.Valérie Chapoulaud-Floquet [A] [N] [R] Non-Executive Director Nationality: French Appointed: Non-Executive Director: January 2021 Key strengths: Brings strong experience and expertise in the luxury consumer goods sector, having spent her career in the industry working in a number of international markets, including developed and emerging markets, and as a former CEO in the premium drinks industry Current external appointments: Non-Executive Director, Lead Independent Director and Chair of Governance Committee, Danone S.A.; Non-Executive Director, Acné Studios A.B., Agrolimen S.A., Nextstage S.C.A., Jacobs Holding AG; Vice Chairman, Sofisport Previous relevant experience: Chief Executive Officer, Rémy Cointreau S.A.; President and CEO for the Americas, Louis Vuitton, LVMH Group; President and CEO for North America, Louis Vuitton, LVMH Group; President South Europe, Louis Vuitton, LVMH Group; President and CEO, Louis Vuitton Taiwan, LVMH Group; President, Luxury Product Division for the USA, L’Oréal Group | ||
8.Sir John Manzoni [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: October 2020 Key strengths: Has strong commercial executive experience as a former CEO in the energy sector and non-executive board level experience, including in the alcoholic beverage industry, as well as more recent expertise in public policy and government affairs Current external appointments: Chairman, SSE plc; Chairman, Atomic Weapons Establishment; Non-Executive Director, KBR Inc. Previous relevant experience: Chief Executive of the Civil Service and Permanent Secretary of the Cabinet Office, HM Government; President and Chief Executive Officer, Talisman Energy; Chief Executive, Refining & Marketing, BP p.l.c.; Chief Executive, Gas & Power, BP p.l.c.; Non-Executive Director, SABMiller plc | ||
9.Lady Mendelsohn [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: September 2014 Key strengths: Has specialist knowledge and understanding of consumer-facing emerging technologies, privacy and data issues, as well as wide experience of board and committee level appointments across diverse commercial, governmental and charitable institutions, as well as advisory roles in advertising and production of consumer goods Current external appointments: Head of the Global Business Group, Meta Platforms Inc.; Co-President, Norwood; Member, Mayor’s Business Advisory Board; Chair, Follicular Lymphoma Foundation Previous relevant experience: Executive Chairman, Karmarama; Deputy Chairman, Grey London; Board Director, BBH, Fragrance Foundation; President, Institute of Practitioners in Advertising; Director, Women’s Prize for Fiction; Co-Chair, Creative Industries Council; Member, HMG Industrial Strategy Council; Board Member, CEW; Trustee, White Ribbon Alliance; Chair, Corporate Board, Women’s Aid |
10.Alan Stewart [A*] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: September 2014 (Appointed Chairman of the Audit Committee: January 2017) Key strengths: Has a strong background in financial, investment banking and commercial matters, with particular expertise in consumer retail industries, as well as board and committee level experience at industry institutions Current external appointments: Non-Executive Director and Chair of the Remuneration Committee, Reckitt Benckiser Group PLC; Non-Executive Director and Chair of Audit Committee, Burberry Group plc Previous relevant experience: Chief Financial Officer, Tesco PLC; Non-Executive Director, Tesco Bank; Chief Financial Officer, Marks & Spencer Group plc, AWAS; Non-Executive Director, Games Workshop plc; Group Finance Director, WH Smith PLC; Chief Executive, Thomas Cook UK | ||
11.Ireena Vittal [A] [N] [R] Non-Executive Director Nationality: Indian Appointed: Non-Executive Director: October 2020 Key strengths: Brings a wealth of FMCG experience from a career in executive consulting with a focus on consumer sectors and emerging markets, including India, as well as broad experience in non-executive board roles in the UK and India Current external appointments: Non-Executive Director, Compass Group PLC; Non-Executive and Lead Independent Director, Godrej Consumer Products Limited; Non-Executive Director, Asian Paints Limited Previous relevant experience: Head of Marketing and Sales, Hutchinson Max Telecom; Partner, McKinsey and Company; Non-Executive Director, Wipro Limited, Housing Development Finance Corporation Limited, Titan Company Limited, Tata Global Beverages Limited, Tata Industries, GlaxoSmithKline Consumer Healthcare |
1.Ewan Andrew President, Global Supply Chain & Procurement and Chief Sustainability Officer Nationality: British Appointed: September 2019 Previous Diageo roles: Supply Director, International Supply Centre; Senior Vice President, Supply Chain & Procurement, Latin America and Caribbean; Senior Vice President Manufacturing & Distilling, North America; various supply chain, operational management and procurement roles Current external appointments: Member, Scotch Whisky Association Council, Scottish Business Climate Collaboration Board, One Planet Business for Biodiversity Board | ||
2.Soraya Benchikh President, Europe Nationality: French Appointed: January 2023 Previous Diageo roles: Managing Director, Northern Europe Previous relevant experience: Brand CEO and Area Director, East and Southern Africa, President, France and Regional Finance Director, Europe, British American Tobacco | ||
3.Alvaro Cardenas President, Latin America and Caribbean Nationality: Colombian Appointed: January 2021 Previous Diageo roles: Managing Director, Andean Region; Director, End-to-End Global Commercial Processes; Finance Director, South East Asia Region, PUB (Paraguay, Uruguay and Brazil) Region, Andean Region, Colombia | ||
4.Cristina Diezhandino Chief Marketing Officer Nationality: Spanish Appointed: July 2020 Previous Diageo roles: Global Category Director, Scotch & Managing Director, Reserve Brands; Managing Director, Caribbean and Central America; Marketing & Innovation Director, Diageo Africa; Category Director, Scotch Portfolio & Gins; Global Brand Director, Johnnie Walker Previous relevant experience: Corporate Marketing Director, Allied Domecq Spain; marketing roles, Unilever HPC US, UK and Spain | ||
5.Daniel Mobley Global Corporate Relations Director Nationality: British Appointed: June 2017 Previous Diageo roles: Corporate Relations Director, Europe Previous relevant experience: Regional Head of Corporate Affairs, India & South Asia, Regional Head of Corporate Affairs, Africa, Group Head of Government Relations, Standard Chartered; extensive government experience including in HM Treasury and Foreign & Commonwealth Office |
6.Hina Nagarajan Managing Director and CEO of United Spirits Limited Nationality: Indian Appointed: July 2021 Previous Diageo roles: CEO-Designate, United Spirits Limited; Managing Director, Africa Regional Markets Previous relevant experience: Managing Director, China & SVP North Asia, Reckitt Benckiser; General Manager, Malaysia & Singapore, Reckitt Benckiser; CEO & MD Mary Kay India; senior marketing and general management roles, ICI Paints India and Nestlé India | ||
7.Dayalan Nayager President, Africa Nationality:South African/British Appointed: July 2022 Previous Diageo roles: Managing Director, Great Britain and Justerini & Brooks, Ireland and France, Global Travel; Regional Director, Global Travel Europe; Commercial Director, South Africa; Customer Marketing Director, South Africa; Key Account Director, South Africa Previous relevant experience: Various positions, Heinz, Mars and Pick n Pay Retailers | ||
8.John O'Keeffe President, Asia Pacific & Global Travel Nationality: Irish Appointed: July 2015 Previous Diageo roles: President, Africa & Beer; CEO and Managing Director, Guinness Nigeria; Global Head, Innovation; Global Head, Beer and Baileys; Managing Director, Russia and Eastern Europe; various management and marketing positions | ||
9.Louise Prashad Chief HR Officer Nationality: British Appointed: January 2022 Previous Diageo roles: Global Talent Director; Talent Director, Africa; HR Director, Europe, West Latin America and Caribbean, Global Functions Previous relevant experience: various HR roles, Stakis Group and Hilton Hotels | ||
10.Claudia Schubert President, North America Nationality: American Appointed: October 2022 Previous Diageo roles: President, US Spirits and Canada; General Manager, Continental Europe; President, US Controls States and Canada; President, Diageo Chateau & Estate Wines Previous relevant experience: Boston Consulting Group | ||
11.Tom Shropshire General Counsel & Company Secretary Nationality: American/British Appointed: July 2021 Current external appointments: Member of the Court (Non-Executive Director), The Bank of England; Trustee, New York University School of Law; Member of the Steering Committee, The Parker Review; Trustee, Charity Projects Limited (Comic Relief); Director, Comic Relief Limited Previous relevant experience: Partner & Global US Practice Head, Linklaters LLP |
Chief Executive Debra Crew Develops the group’s strategic direction for consideration and approval by the Board •Implements the strategy agreed by the Board •Leads the Executive Committee •Manages the company and the group •Along with the Chief Financial Officer, leads discussions with investors •Is supported in her role by the Executive Committee •Is supported by the Finance Committee and Filings Assurance Committee in the management of financial reporting of the company | Chairman Javier Ferrán Responsible for the operation, leadership and governance of the Board •Ensures all Directors are fully informed of matters and receives precise, timely and clear information sufficient to make informed judgements •Sets Board agendas and ensures sufficient time is allocated to ensure effective debate to support sound decision-making •Ensures the effectiveness of the Board •Engages in discussions with shareholders •Meets with the Non-Executive Directors independently of the Executive Directors | Chief Financial Officer Lavanya Chandrashekar Manages all aspects of the group's financial affairs •Responsible for the management of the capital structure of the company •Contributes to the management of the group's operations •Along with the Chief Executive, leads discussions with investors •Is supported by the Finance Committee and Filings Assurance Committee in the management of the financial affairs and reporting of the company •Is a member of the Executive Committee |
Further details on the Board Committees can be found in the separate reports from each committee on pages 117-153, and details of the Executive Committee can be found on pages 141. |
Areas of focus | Strategic priority | Strategic outcome | Stakeholders | |||||||||||
Strategic matters | Held a two-day Annual Strategy Conference (ASC) focussing on key strategic matters, including implementation of strategy across regions, convenience, China, ESG performance and supply chain strategy Regularly reviewed the group’s performance against the strategy Received reports on the financial performance of the group as against the annual plan Reviewed the group’s tax strategy and policy Received reports on the macro-economic environment, socio-political matters and emerging trends Carried out deep dives into key strategic topics including the group's scotch whisky portfolio and strategy, tequila strategy, consumer insights, Latin America and Caribbean region, culture and capabilities, China, health and wellness, and volatility scenario planning | |||||||||||||
Operational matters | Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements Reviewed the group's long-term demand forecasting processes, global business operations and shared service centre arrangements Regularly reviewed and approved the group’s M&A and business development activities, reorganisations and various other projects Reviewed the group's supply chain activities, including supply footprint Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors Initiated a global business transformation programme and systems upgrade Reviewed the company’s capital allocation, funding and liquidity positions, and those of its pension schemes, and approved interim and final dividends Reviewed and approved the company’s share buyback programme Approved the appointment of a new Chief Executive, including as an Executive Director Acting through the Nomination Committee, reviewed the company’s succession planning and talent strategy | |||||||||||||
ESG matters | Increased focus on ESG matters throughout the year, including conducting a deep dive in relation to the company's approach to ESG matters and its 'Society 2030: Spirit of Progress' programme at the ASC Reviewed approach and methodologies used in relation to non-financial targets Received reports on workforce engagement over the year Received regular investor reports Received regular updates on ESG matters and progress towards ‘Society 2030: Spirit of Progress‘ targets Completed actions identified following the previous evaluation of the Board's performance and carried out an internal evaluation of the Board’s performance Reviewed schedule of matters reserved for the Board and terms of reference of its Committees | |||||||||||||
Assurance and risk management | Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks On the recommendation of the Audit Committee, approved the company’s filings, financial and non-financial reporting including interim and preliminary results announcements, US filings and Annual Report |
Key | |||||||||||||||||
Strategic priorities | Strategic outcomes | Stakeholders | |||||||||||||||
Sustain quality growth | Efficient growth | People | |||||||||||||||
Embed everyday efficiency | Consistent value creation | Consumers | |||||||||||||||
Invest smartly | Credibility and trust | Customers | |||||||||||||||
Promote positive drinking | Engaged people | Suppliers | |||||||||||||||
Champion inclusion and diversity | Communities | ||||||||||||||||
Pioneer grain-to-glass sustainability | Investors | ||||||||||||||||
Governments and regulators |
Stakeholder and why we engage | ||||||||
Our people •People are at the core of our business •We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled •We want our people to be treated with dignity at work and their human rights respected | What we believe matters most to them •Prioritisation of health, safety and well-being •Learning and development opportunities •Purpose, culture and benefits •Contributing to the growth of our brands and performance •Promotion of inclusion and diversity •Sustainability and societal credentials How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme •Direct engagement through visits to offices, production and supply chain sites during the year •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, Your Voice and pulse surveys and townhall meetings | Reporting to the Board •Regular reports from workforce engagement activities •Feedback through employee surveys, including annual group-wide Your Voice survey •Culture and capabilities session at Board meeting led by Chief HR Officer Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems •Evolving workforce engagement programme | ||||||
Consumers •Understanding our consumers is critical for our business’ long-term growth •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’ | What we believe matters most to them •Choice of brands for different occasions, including no- and lower-alcohol •Innovation in heritage brands and creation and nurturing of new brands •Responsible marketing •Great experiences •Product quality •Sustainability and societal credentials •Price How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference •Regular review of business development opportunities, including active brand portfolio management •Review of innovation pipeline as part of the Annual Strategy Conference | Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends •Papers prepared by strategy team on evolving consumer behaviours in advance of Annual Strategy Conference •Regular updates by Business Development and Innovation teams on organic and inorganic opportunities and portfolio choices Upcoming priorities •Ongoing review of portfolio and category participation opportunities •Developing pipeline of innovation informed by consumer insights •Enhancing marketing effectiveness through detailed understanding of consumer motivation |
Customers •Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences | What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences •Identification of opportunities that offer profitable growth •Insights into consumer behaviour and shopper trends •Trusted product quality •Innovation, promotional support and merchandising •Availability and reliable supply and stocking •Technical expertise •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points •Review of supply chain footprint to ensure efficient delivery of products to customers •Direct engagement with key customers during market visits | Reporting to the Board •Regular performance updates by the Chief Executive, including customer and route-to-consumer concerns •Deep dive reviews on key regions or markets, including for example during fiscal 23 in relation to Latin America and Caribbean, include consideration of customer relationships Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of key customers during market visits •Enhancing relationships between the company and its customers through engagement opportunities |
Stakeholder and why we engage | ||||||||
Suppliers •Our suppliers, service providers and agencies are experts in their fields •We rely on them to deliver high-quality products and market responsibly •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society | What we believe matters most to them •Strong, mutually beneficial partnerships •Strategic alignment and growth opportunities •Fair contract and payment terms •Collaboration to realise innovation •Consistent performance measures •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Periodic review of supply chain footprint in key markets to ensure resilience and flexibility, monitoring environmental impacts and efficiencies •Review and approval of material supply and procurement contracts including for critical raw materials •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with Diageo's 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals | Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board •Periodic updates provided to the Board in relation to supply chain agility programme rollout •Supply chain sustainability and other ESG data included in quarterly 'Society 2030: Spirit of Progress' reports provided to the Board Upcoming priorities •Continued focus on rollout of supply chain agility programme •Monitoring impact of supply chain disruption on operations, including through Audit Committee risk reviews •Supervision of initiatives to improve sustainability and supply chain resilience |
Communities •We aim to create long-term value for the communities in which we live, work, source and sell •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity | What we believe matters most to them •Impact of our operations on the local economy •Access to skills development, employment and supplier opportunities •Inclusion, diversity and tackling inequality in all forms •Responsible use of natural resources, biodiversity and sustainability •Transparency and engagement How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking, inclusion and diversity •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains | Reporting to the Board •Quarterly reports provided to Board on progress made in relation to 'Society 2030: Spirit of Progress' targets •Reports on macro-economic and socio-political events provided to Board by management Upcoming priorities •Monitoring progress in relation to positive drinking programmes, including SMASHED and similar initiatives •Supporting management in advocacy in relation to water stewardship ambitions | ||||||
Investors •We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it | What we believe matters most to them •Strategic priorities, opportunities and risks •Financial performance •Corporate governance •Leadership credentials, experience and succession •Executive remuneration policy •Shareholder returns •Environmental, inclusion and diversity, and social commitments and progress How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through Investor Relations programme of events •Participation in investor conferences such as the Consumer Analyst Group of New York meeting in February 2023 •Hosting investor events such as the Diageo Scotch day in June 2023 •Attendance at the Annual General Meeting in October 2022, including responding to questions from shareholders | Reporting to the Board •Monthly reports compiled by Investor Relations team provided to the Board, providing details on engagement sessions with investors and key trends •Biennial survey of investor sentiment carried out by external consultancy and report provided to the Board Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year •Preparing for the Annual General Meeting to be held in September 2023 •Engaging directly with investors through roadshow following announcement of fiscal 23 results |
Governments and Regulators •The regulatory environment is critical to the success of our business •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business | What we believe matters most to them •Compliance with applicable laws and regulations •Contribution to national and local economic development and public health priorities •International trade, excise, regulation and tackling illicit trade •Tackling harmful drinking and the impact of responsible drinking initiatives •Climate change and water sustainability agendas, including carbon reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities How the Board seeks to engage •Indirect engagement through periodic updates from Chief Executive and corporate relations executives •Review of macro-economic and geopolitical developments as part of strategy sessions •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy | Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board •Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management Upcoming priorities •Monitoring developments in regulation and best practice in respect of non-financial reporting requirements, corporate governance and audit regime •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking, inclusion and diversity |
Further details on the Board Committees can be found in the separate reports from each committee on pages 117-153, and details of the Executive Committee can be found on pages 141. |
Areas of focus | Strategic priority | Strategic outcome | Stakeholders | |||||||||||
Strategic matters | Held a two-day Annual Strategy Conference (ASC) focussing on key strategic matters, including implementation of strategy across regions, convenience, China, ESG performance and supply chain strategy Regularly reviewed the group’s performance against the strategy Received reports on the financial performance of the group as against the annual plan Reviewed the group’s tax strategy and policy Received reports on the macro-economic environment, socio-political matters and emerging trends Carried out deep dives into key strategic topics including the group's scotch whisky portfolio and strategy, tequila strategy, consumer insights, Latin America and Caribbean region, culture and capabilities, China, health and wellness, and volatility scenario planning | |||||||||||||
Operational matters | Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements Reviewed the group's long-term demand forecasting processes, global business operations and shared service centre arrangements Regularly reviewed and approved the group’s M&A and business development activities, reorganisations and various other projects Reviewed the group's supply chain activities, including supply footprint Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors Initiated a global business transformation programme and systems upgrade Reviewed the company’s capital allocation, funding and liquidity positions, and those of its pension schemes, and approved interim and final dividends Reviewed and approved the company’s share buyback programme Approved the appointment of a new Chief Executive, including as an Executive Director Acting through the Nomination Committee, reviewed the company’s succession planning and talent strategy | |||||||||||||
ESG matters | Increased focus on ESG matters throughout the year, including conducting a deep dive in relation to the company's approach to ESG matters and its 'Society 2030: Spirit of Progress' programme at the ASC Reviewed approach and methodologies used in relation to non-financial targets Received reports on workforce engagement over the year Received regular investor reports Received regular updates on ESG matters and progress towards ‘Society 2030: Spirit of Progress‘ targets Completed actions identified following the previous evaluation of the Board's performance and carried out an internal evaluation of the Board’s performance Reviewed schedule of matters reserved for the Board and terms of reference of its Committees | |||||||||||||
Assurance and risk management | Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks On the recommendation of the Audit Committee, approved the company’s filings, financial and non-financial reporting including interim and preliminary results announcements, US filings and Annual Report |
Key | |||||||||||||||||
Strategic priorities | Strategic outcomes | Stakeholders | |||||||||||||||
Sustain quality growth | Efficient growth | People | |||||||||||||||
Embed everyday efficiency | Consistent value creation | Consumers | |||||||||||||||
Invest smartly | Credibility and trust | Customers | |||||||||||||||
Promote positive drinking | Engaged people | Suppliers | |||||||||||||||
Champion inclusion and diversity | Communities | ||||||||||||||||
Pioneer grain-to-glass sustainability | Investors | ||||||||||||||||
Governments and regulators |
Stakeholder and why we engage | ||||||||
Our people •People are at the core of our business •We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled •We want our people to be treated with dignity at work and their human rights respected | What we believe matters most to them •Prioritisation of health, safety and well-being •Learning and development opportunities •Purpose, culture and benefits •Contributing to the growth of our brands and performance •Promotion of inclusion and diversity •Sustainability and societal credentials How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme •Direct engagement through visits to offices, production and supply chain sites during the year •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, Your Voice and pulse surveys and townhall meetings | Reporting to the Board •Regular reports from workforce engagement activities •Feedback through employee surveys, including annual group-wide Your Voice survey •Culture and capabilities session at Board meeting led by Chief HR Officer Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems •Evolving workforce engagement programme | ||||||
Consumers •Understanding our consumers is critical for our business’ long-term growth •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’ | What we believe matters most to them •Choice of brands for different occasions, including no- and lower-alcohol •Innovation in heritage brands and creation and nurturing of new brands •Responsible marketing •Great experiences •Product quality •Sustainability and societal credentials •Price How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference •Regular review of business development opportunities, including active brand portfolio management •Review of innovation pipeline as part of the Annual Strategy Conference | Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends •Papers prepared by strategy team on evolving consumer behaviours in advance of Annual Strategy Conference •Regular updates by Business Development and Innovation teams on organic and inorganic opportunities and portfolio choices Upcoming priorities •Ongoing review of portfolio and category participation opportunities •Developing pipeline of innovation informed by consumer insights •Enhancing marketing effectiveness through detailed understanding of consumer motivation |
Customers •Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences | What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences •Identification of opportunities that offer profitable growth •Insights into consumer behaviour and shopper trends •Trusted product quality •Innovation, promotional support and merchandising •Availability and reliable supply and stocking •Technical expertise •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points •Review of supply chain footprint to ensure efficient delivery of products to customers •Direct engagement with key customers during market visits | |||||||
Responsible for the management of the capital structure of the company Contributes Reporting to the Along with •Regular performance updates by the Chief Executive, Is supported by the Finance Committee •Deep dive reviews on key regions or markets, including for example during fiscal 23 in Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of Is a member of the Executive Committee | Constructively challenge the Executive Directors Develop proposals on strategy Scrutinise the performance of management Satisfy themselves on the integrity of the financial information, controls and systems of risk management Set the levels of remuneration for Executive Directors and senior management Make recommendations to the Board concerning appointments to the Board Devote such time as is necessary to the proper performance of their duties A summary of the terms and conditions of appointment of the Non-Executive Directors is available at https://www.diageo.com/en/our-business/corporate-governance. | |||||||
Implements the strategy agreed by the Board Leads the Executive Committee Manages Along with the Chief Financial Officer, leads discussions with investors Is supported in his role by the Executive Committee Is supported by the Finance Committee and Filings Assurance Committee in the management of financial reporting of the company |
Ensures all Directors are fully informed of matters and receives precise, timely and clear information sufficient to make informed judgements Sets Board agendas and ensures sufficient time is allocated to ensure effective debate to support sound decision making Ensures the effectiveness of the Board Engages in discussions with shareholders Meets with the Non-Executive Directors independently of the Executive Directors Acts as designated Non-Executive Director for workforce engagement | Together with the other Non- Executive Directors, leads the review of the performance of the Chairman, taking into account the views of the Executive Directors Available to shareholders if they have concerns where contact through the normal channels has failed | |||||||
• • •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society | What we believe matters most to them •Strong, mutually beneficial partnerships •Strategic alignment and growth opportunities •Fair contract and payment terms •Collaboration to realise innovation •Consistent performance measures •Joint risk assessment and mitigation •Sustainability and societal credentials How the •Periodic review of supply chain footprint in •Review and approval of material supply and procurement contracts including for critical raw materials •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with Diageo's 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals | Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board • • Upcoming priorities •Continued focus on rollout of supply chain agility programme •Monitoring impact of supply chain disruption on operations, including through Audit Committee risk reviews •Supervision of initiatives to improve sustainability and supply chain resilience |
Communities •We aim to create long-term value for the communities in which we live, work, source and sell •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity | What we believe matters most to them •Impact of our operations on the local economy •Access to skills development, employment and supplier opportunities •Inclusion, diversity and tackling inequality in all forms •Responsible use of natural resources, biodiversity and sustainability •Transparency and engagement How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking, inclusion and diversity •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains | Reporting to the Board •Quarterly reports provided to Board on progress made in relation to 'Society 2030: Spirit of Progress' targets •Reports on macro-economic and socio-political events provided to Board by management Upcoming priorities •Monitoring progress in relation to positive drinking programmes, including SMASHED and similar initiatives •Supporting management in advocacy in relation to water stewardship ambitions | ||||||
Investors •We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it | What we believe matters most to them •Strategic priorities, opportunities and risks •Financial performance •Corporate governance •Leadership credentials, experience and succession •Executive •Shareholder returns •Environmental, inclusion and diversity, and social commitments and progress How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through Investor Relations programme of events •Participation in investor conferences such as the Consumer Analyst Group of New York meeting in February 2023 •Hosting investor events such as the Diageo Scotch day in June 2023 •Attendance at the Annual General | Reporting to the Board •Monthly reports compiled by Investor Relations team provided to the Board, providing details on engagement sessions with investors and key trends •Biennial survey of investor sentiment carried out by external consultancy and report provided to the Board Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year •Preparing for the Annual General Meeting to be held in September 2023 •Engaging directly with investors through roadshow following announcement of fiscal 23 results |
Governments and Regulators •The regulatory environment is critical to the success of our business •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business | What we believe matters most to them •Compliance with applicable laws and regulations •Contribution to national and local economic development and public health priorities •International trade, excise, regulation and tackling illicit trade •Tackling harmful drinking and the impact of responsible drinking initiatives •Climate change and water sustainability agendas, including carbon reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities How the Board seeks to engage •Indirect engagement through periodic updates from Chief Executive and corporate relations executives •Review of macro-economic and geopolitical developments as part of strategy sessions •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy | Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board •Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management Upcoming priorities •Monitoring developments in regulation and best practice in respect of non-financial reporting requirements, corporate governance and audit regime •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking, inclusion and diversity |
(maximum 7) | |||||||||||||||||
Areas of focus | Strategic priority | Strategic outcome | Stakeholders | |||||||||||
Strategic matters | Held a two-day Annual Strategy Conference (ASC) focussing on key strategic matters, including Regularly reviewed the group’s performance against the strategy Received reports on the financial performance of the group as against the annual plan Reviewed the group’s tax strategy and policy Received | |||||||||||||
Operational matters | Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements Reviewed the Regularly reviewed and approved the group’s M&A and business development activities, reorganisations and various other projects Reviewed Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors Reviewed the company’s capital allocation, funding and liquidity positions, Reviewed and approved the Approved the appointment of a new Chief Executive, including as an Executive Director Acting through the Nomination Committee, reviewed the company’s succession planning and talent strategy | |||||||||||||
ESG matters | Reviewed approach and methodologies used in relation to Received reports on workforce engagement over the year Received regular investor reports Completed actions identified following the previous evaluation of the Board's performance and carried out an internal evaluation of the Board’s performance | |||||||||||||
Assurance and risk management | Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks On the recommendation of the Audit Committee, approved the company’s filings, financial and non-financial reporting including interim and preliminary results announcements, US filings and Annual Report |
Key | |||||||||||||||||
Strategic priorities | Strategic outcomes | Stakeholders | |||||||||||||||
Sustain quality growth | Efficient growth | People | |||||||||||||||
Embed everyday efficiency | Consistent value creation | Consumers | |||||||||||||||
Invest smartly | Credibility and trust | Customers | |||||||||||||||
Promote positive drinking | Engaged people | Suppliers | |||||||||||||||
Champion inclusion and diversity | Communities | ||||||||||||||||
Pioneer grain-to-glass sustainability | Investors | ||||||||||||||||
Governments and regulators |
Stakeholder and why we engage | ||||||||
Our people •People are at the core of our business •We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled •We want our people to be treated with dignity at work and their human rights respected | What we believe matters most to them •Prioritisation of health, safety and well-being •Learning and development opportunities •Purpose, culture and benefits •Contributing to the growth of our brands and performance •Promotion of inclusion and diversity •Sustainability and societal credentials How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme •Direct engagement through visits to offices, production and supply chain sites during the year •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, Your Voice and pulse surveys and townhall meetings | Reporting to the Board •Regular reports from workforce engagement activities •Feedback through employee surveys, including annual group-wide Your Voice survey •Culture and capabilities session at Board meeting led by Chief HR Officer Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems •Evolving workforce engagement programme | ||||||
Consumers •Understanding our consumers is critical for our business’ long-term growth •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’ | What we believe matters most to them •Choice of brands for different occasions, including no- and lower-alcohol •Innovation in heritage brands and creation and nurturing of new brands •Responsible marketing •Great experiences •Product quality •Sustainability and societal credentials •Price How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference •Regular review of business development opportunities, including active brand portfolio management •Review of innovation pipeline as part of the Annual Strategy Conference | Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends •Papers prepared by strategy team on evolving consumer behaviours in advance of Annual Strategy Conference •Regular updates by Business Development and Innovation teams on organic and inorganic opportunities and portfolio choices Upcoming priorities •Ongoing review of portfolio and category participation opportunities •Developing pipeline of innovation informed by consumer insights •Enhancing marketing effectiveness through detailed understanding of consumer motivation |
Customers •Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences | What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences •Identification of opportunities that offer profitable growth •Insights into consumer behaviour and shopper trends •Trusted product quality •Innovation, promotional support and merchandising •Availability and reliable supply and stocking •Technical expertise •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points •Review of supply chain footprint to ensure efficient delivery of products to customers •Direct engagement with key customers during market visits | Reporting to the Board •Regular performance updates by the Chief Executive, including customer and route-to-consumer concerns •Deep dive reviews on key regions or markets, including for example during fiscal 23 in relation to Latin America and Caribbean, include consideration of customer relationships Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of key customers during market visits •Enhancing relationships between the company and its customers through engagement opportunities |
Stakeholder and why we engage | ||||||||
Suppliers •Our suppliers, service providers and agencies are experts in their fields •We rely on them to deliver high-quality products and market responsibly •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society | What we believe matters most to them •Strong, mutually beneficial partnerships •Strategic alignment and growth opportunities •Fair contract and payment terms •Collaboration to realise innovation •Consistent performance measures •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Periodic review of supply chain footprint in key markets to ensure resilience and flexibility, monitoring environmental impacts and efficiencies •Review and approval of material supply and procurement contracts including for critical raw materials •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with Diageo's 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals | Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board •Periodic updates provided to the Board in relation to supply chain agility programme rollout •Supply chain sustainability and other ESG data included in quarterly 'Society 2030: Spirit of Progress' reports provided to the Board Upcoming priorities •Continued focus on rollout of supply chain agility programme •Monitoring impact of supply chain disruption on operations, including through Audit Committee risk reviews •Supervision of initiatives to improve sustainability and supply chain resilience |
Communities •We aim to create long-term value for the communities in which we live, work, source and sell •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity | What we believe matters most to them •Impact of our operations on the local economy •Access to skills development, employment and supplier opportunities •Inclusion, diversity and tackling inequality in all forms •Responsible use of natural resources, biodiversity and sustainability •Transparency and engagement How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking, inclusion and diversity •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains | Reporting to the Board •Quarterly reports provided to Board on progress made in relation to 'Society 2030: Spirit of Progress' targets •Reports on macro-economic and socio-political events provided to Board by management Upcoming priorities •Monitoring progress in relation to positive drinking programmes, including SMASHED and similar initiatives •Supporting management in advocacy in relation to water stewardship ambitions | ||||||
Investors •We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it | What we believe matters most to them •Strategic priorities, opportunities and risks •Financial performance •Corporate governance •Leadership credentials, experience and succession •Executive remuneration policy •Shareholder returns •Environmental, inclusion and diversity, and social commitments and progress How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through Investor Relations programme of events •Participation in investor conferences such as the Consumer Analyst Group of New York meeting in February 2023 •Hosting investor events such as the Diageo Scotch day in June 2023 •Attendance at the Annual General Meeting in October 2022, including responding to questions from shareholders | Reporting to the Board •Monthly reports compiled by Investor Relations team provided to the Board, providing details on engagement sessions with investors and key trends •Biennial survey of investor sentiment carried out by external consultancy and report provided to the Board Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year •Preparing for the Annual General Meeting to be held in September 2023 •Engaging directly with investors through roadshow following announcement of fiscal 23 results |
Governments and Regulators •The regulatory environment is critical to the success of our business •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business | What we believe matters most to them •Compliance with applicable laws and regulations •Contribution to national and local economic development and public health priorities •International trade, excise, regulation and tackling illicit trade •Tackling harmful drinking and the impact of responsible drinking initiatives •Climate change and water sustainability agendas, including carbon reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities How the Board seeks to engage •Indirect engagement through periodic updates from Chief Executive and corporate relations executives •Review of macro-economic and geopolitical developments as part of strategy sessions •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy | Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board •Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management Upcoming priorities •Monitoring developments in regulation and best practice in respect of non-financial reporting requirements, corporate governance and audit regime •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking, inclusion and diversity |
Main conclusions | Key actions for focus | |||||||
• | ||||||||
• •Performance of the Committees was felt to be strong and led well by the respective Chairs | •Continue to • | |||||||
Board composition | ||||||||
•Board members feel well integrated into the Board and company •Strong focus on succession planning, particularly over the short to mid term •Transition in Board composition will require continued focus on key areas of expertise and experience | •Continue focus on Board and management succession planning and on ensuring pipeline of high-quality, diverse talent •Identify key areas for additional expertise and focus recruitment and talent pipeline on these areas in particular | |||||||
Strategic focus | ||||||||
•Continued focus on medium and longer-term issues, including tracking •Regular discussions of culture and values are welcomed •Continued focus on ‘Society 2030: Spirit of Progress’ programme including approach to reporting in light of changing regulatory environment •Opportunities to enhance strategic focus of Board discussions, including in respect of emerging trends over the medium and long term •The workforce engagement process has been effective and beneficial | •Increase focus on key strategic matters, emerging trends and medium to long-term issues, ensuring appropriate allocation of time and •Schedule post-completion reviews of key strategic decisions •Identify alternative ways of reporting progress in relation to ongoing initiatives and projects | |||||||
Company secretarial support | ||||||||
•Broad recognition of an effective Company Secretarial function and the •Re-design of the Board induction process has been very positive •Pre-read materials have improved significantly; however, there is a desire for even greater focus on key issues | •Continue to find opportunities for Board to engage with workforce in different geographies and to visit production facilities, sites and offices •Continue to | |||||||
• | ||||||||
ò | Reported | ||||
ò | Reported through SpeakUp | ||||
ò | Sustantiated breaches | ||||
ò | Code-related leavers |
Areas of focus | Strategic priority | Strategic outcome | |||||||||
Corporate reporting | •Half and full year external reporting updates •Interim and preliminary results review and approval •Annual Report and consolidated financial statements, Form 20-F review and approval •Implications of group functional and presentation currency change on reporting | ||||||||||
Internal controls | •GAR updates •Business Integrity updates including breach and reporting update •Controls testing update and •Implications on controls environment of systems and process changes | ||||||||||
External audit and assurance | •Report on external audit at half and full year periods •Insights and observations on reporting review •Auditor independence and non-audit work reviews •Auditor independence policy review •Review of management representation letters •Appointment of auditor and review of terms of engagement and fees •Auditor performance and effectiveness review and assessment •Commencement of auditor tender process •Audit regime reform and approach to assurance, preparatory to drafting an audit and assurance policy | ||||||||||
Risk management | •Principal and emerging risk reviews and tracking •Risk updates, including group risk footprint and risk appetite review and approvals • |
Key | |||||||||||||||||||||||||||||
Strategic priorities | Strategic outcomes | ||||||||||||||||||||||||||||
Sustain quality growth | Invest smartly | Champion inclusion and diversity | Efficient growth | Credibility and trust | |||||||||||||||||||||||||
Embed everyday efficiency | Promote positive drinking | Pioneer grain-to-glass sustainability | Consistent value creation | Engaged people |
Matter considered | How the Audit Committee addressed the matter | |||||||
The nature and size of any one-off items impacting the quality of the earnings and cash flows. | The Audit Committee assessed whether the related presentation and disclosure of those items in the financial statements were appropriate based on management’s analysis, and concluded that they were. | |||||||
Items that were to be presented as exceptional. Refer to note 4 of the Financial Statements. | The Audit Committee assessed whether the reporting of those items as exceptional, was in line with the group’s accounting policy, and that sufficient disclosure was provided in the financial statements, and concluded that they were. | |||||||
Whether the carrying value of assets, in particular intangible assets, was supportable. Refer to notes 6, 9, 10 and | The Audit Committee reviewed the The Committee agreed with management’s judgements | |||||||
The group’s more significant tax exposures and the appropriateness of any related provisions and financial statement disclosures. Refer to page | The Audit Committee agreed that disclosure of tax risk appropriately addresses the significant change in the international tax environment, and that appropriate provisions and other disclosure with respect to uncertain tax positions were reflected in the financial statements. | |||||||
The appropriateness of the valuation of post employment liabilities, and the recognition of any surplus. Refer to note 14 of the Financial Statements. | The measurement of post employment liabilities is sensitive to changes in long-term interest | |||||||
Significant legal matters impacting the group. Refer to note 19 of the Financial Statements. | The Committee agreed that adequate provision and/or disclosure have been made for all material litigation and disputes, based on the current most likely outcomes, including the litigation summarised in note 19 of the Financial Statements. | |||||||
Accounting for business combinations. Refer to note 8 of the Financial Statements. | Diageo acquired | |||||||
Whether the Annual Report is fair, balanced and understandable. | The Audit Committee concluded that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy and that there is an appropriate balance between statutory (GAAP) and adjusted (non-GAAP) measures ensuring equal prominence. | |||||||
The impact of climate change on the group’s financial reporting and financial statements. Refer to pages | The Audit Committee agreed that the disclosures on pages |
Board Leadership & Company Purpose | Composition, Succession and Evaluation | |||||||
–Section 172 statement - page 19 | –Leadership and experience - page 127 | |||||||
–Board of Directors - page 132 | –Performance evaluation - page 142 | |||||||
–2023 Governance at a Glance - page 126 | –Nomination Committee report - page 154 | |||||||
–Purpose, values and culture - page 143 | ||||||||
–Board activities - page 136 | ||||||||
Division of Responsibilities | Audit, Risk and Internal Controls | |||||||
–Corporate governance structure and division of responsibilities - page 131 | –Audit Committee report - page 146 | |||||||
–Board and committee attendance - page 135 | Remuneration | |||||||
–Director independence - page 133 | –Remuneration Committee report - page 166 |
Board composition | Non-executive director tenure | Board gender diversity | Board ethnic diversity |
ò | Chairman | ò | 0 – 3 years | ò | Male | ò | Directors of colour | |||||||||||||||||||||||||
ò | Executive director | ò | 3 – 6 years | ò | Female | ò | White European | |||||||||||||||||||||||||
ò | Non-executive director | ò | 6 – 9 years |
Annual General Meeting 2022 | Board (maximum 7) | Audit Committee (maximum 5) | Nomination Committee (maximum 6) | Remuneration Committee (maximum 7) | |||||||||||||
Javier Ferrán | ü | 7/7 | 5/5(1) | 6/6 | 7/7(1) | ||||||||||||
Debra Crew(2) | N/A | 0/0 | 0/0 | 0/0 | 1/1(1) | ||||||||||||
Lavanya Chandrashekar | ü | 6/6 | 5/5(1) | 0/0 | 1/1(1) | ||||||||||||
Susan Kilsby | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Melissa Bethell | ü | 7/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Karen Blackett | ü | 6/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Valérie Chapoulaud-Floquet | ü | 6/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Sir John Manzoni | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Lady Mendelsohn | ü | 7/7 | 5/5 | 6/6 | 6/7 | ||||||||||||
Alan Stewart | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Ireena Vittal | ü | 7/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Former Directors | |||||||||||||||||
Sir Ivan Menezes(3) | ü | 5/6 | 2/5(1) | 4/5(1) | 4/6(1) |
1.Javier Ferrán [N*] Chairman Nationality:Spanish Appointed:Chairman and Chairman of the Nomination Committee: January 2017 (Appointed Chairman Designate and Non-Executive Director: July 2016) Key strengths: Brings extensive board-level experience from the drinks and consumer products industry, including at chief executive level, and has a wealth of experience in consumer goods through his venture capital activities to draw from in his role as Chairman and leader of the Board Current external appointments: Chairman, International Consolidated Airlines Group, S.A.; Senior Advisor and chairman of investee company board, BlackRock Long Term Private Capital Previous relevant experience: Non-Executive Director and Senior Independent Director, Associated British Foods plc; Non-Executive Director, Coca-Cola European Partners plc; Member, Advisory Board of ESADE Business School; President and CEO, Bacardi Limited; Non-Executive Director, SABMiller plc | ||
2.Debra Crew [E*] Chief Executive Nationality: American Appointed: Chief Executive and Executive Director: June 2023 Key strengths: Has broad experience in various consumer products sectors at board, chief executive and management leadership levels, as well as over four years' experience in non-executive and executive roles at Diageo Current external appointments: Non-Executive Director, Stanley, Black & Decker, Inc. Previous Diageo roles: Chief Operating Officer; President, North America; Non-Executive Director, Diageo plc Previous relevant experience: Non-Executive Director, Newell Brands, Mondelēz International Inc.; President and CEO, Reynolds American, Inc; President, PepsiCo North America Nutrition, PepsiCo Americas Beverages, Western Europe Region; various positions with Kraft Foods, Nestlé, S.A., and Mars | ||
3.Lavanya Chandrashekar [E] Chief Financial Officer Nationality: American Appointed: Chief Financial Officer and Executive Director: July 2021 Key strengths: Brings broad financial expertise, commercial skills and strong consumer goods experience to manage the group’s affairs relating to financial controls, accounting, tax, treasury and investor relations Previous Diageo roles: Chief Financial Officer, Diageo North America and Global Head of Investor Relations Previous relevant experience: Vice President Finance, Global Cost Leadership and Supply Chain, Mondelēz International; VP Finance, North America, Mondelēz International; VP Finance, Eastern Europe, Middle East and Africa, Mondelēz International; various senior finance roles at Procter & Gamble |
4.Susan Kilsby [A] [N] [R*] Senior Independent Director Nationality: American/British Appointed: Senior Independent Director: October 2019 (Appointed Non-Executive Director: April 2018 and Chairman of the Remuneration Committee: January 2019) Key strengths: Brings wide-ranging corporate governance and board level experience across a number of industries, including a consumer goods sector focus, with particular expertise in mergers and acquisitions, corporate finance and transaction advisory work Current external appointments: Non-Executive Chair, Fortune Brands Innovations, Inc.; Non-Executive Director, Unilever PLC, NHS England; Member, the Takeover Panel Previous relevant experience: Senior Independent Director and Chair of Remuneration Committee, BHP Group Plc, BHP Group Limited; Senior Independent Director, BBA Aviation plc; Chairman, Shire plc; Chairman, Mergers and Acquisitions EMEA, Credit Suisse; Senior Advisor, Credit Suisse; Non-Executive Director, Goldman Sachs International, Keurig Green Mountain, L’Occitane International, Coca-Cola HBC | ||
5.Melissa Bethell [A] [N] [R] Non-Executive Director Nationality: American/British Appointed: Non-Executive Director: June 2020 Key strengths: Has extensive international corporate and financial experience, including in relation to private equity, financial sectors, strategic consultancy and advisory services, as well as having strong non-executive experience at board and committee levels across a range of industries, including retail, consumer goods and financial services Current external appointments: Non-Executive Director, Tesco PLC, Exor N.V.; Chair, Ocean Outdoor Limited; Senior Advisor, Atairos Previous relevant experience: Managing Director and Senior Advisor, Private Equity, Bain Capital; Non-Executive Director, Atento S.A., Worldpay plc, Samsonite S.A. | ||
6.Karen Blackett [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: June 2022 Key strengths: Brings expertise in marketing, media and the creative industries, as well as broad experience in public policy and strategic initiatives through a number of different government, industry and public bodies Current external appointments: UK President, WPP plc; Chancellor, University of Portsmouth; Founding Trustee, BEO (Black Equity Organisation); Non-Executive Director, Creative UK, Non-Executive Director, The Pipeline Previous relevant experience: UK Race Equality Business Champion, HM Government; Business Ambassador, Department for International Trade, HM Government; Chairwoman, MediaCom UK & Ireland; Chief Executive Officer, GroupM UK; Chief Executive Officer, MediaCom UK; Chief Operations Officer, MediaCom EMEA; Marketing Director, MediaCom; UK Country Manager, WPP plc |
7.Valérie Chapoulaud-Floquet [A] [N] [R] Non-Executive Director Nationality: French Appointed: Non-Executive Director: January 2021 Key strengths: Brings strong experience and expertise in the luxury consumer goods sector, having spent her career in the industry working in a number of international markets, including developed and emerging markets, and as a former CEO in the premium drinks industry Current external appointments: Non-Executive Director, Lead Independent Director and Chair of Governance Committee, Danone S.A.; Non-Executive Director, Acné Studios A.B., Agrolimen S.A., Nextstage S.C.A., Jacobs Holding AG; Vice Chairman, Sofisport Previous relevant experience: Chief Executive Officer, Rémy Cointreau S.A.; President and CEO for the Americas, Louis Vuitton, LVMH Group; President and CEO for North America, Louis Vuitton, LVMH Group; President South Europe, Louis Vuitton, LVMH Group; President and CEO, Louis Vuitton Taiwan, LVMH Group; President, Luxury Product Division for the USA, L’Oréal Group | ||
8.Sir John Manzoni [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: October 2020 Key strengths: Has strong commercial executive experience as a former CEO in the energy sector and non-executive board level experience, including in the alcoholic beverage industry, as well as more recent expertise in public policy and government affairs Current external appointments: Chairman, SSE plc; Chairman, Atomic Weapons Establishment; Non-Executive Director, KBR Inc. Previous relevant experience: Chief Executive of the Civil Service and Permanent Secretary of the Cabinet Office, HM Government; President and Chief Executive Officer, Talisman Energy; Chief Executive, Refining & Marketing, BP p.l.c.; Chief Executive, Gas & Power, BP p.l.c.; Non-Executive Director, SABMiller plc | ||
9.Lady Mendelsohn [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: September 2014 Key strengths: Has specialist knowledge and understanding of consumer-facing emerging technologies, privacy and data issues, as well as wide experience of board and committee level appointments across diverse commercial, governmental and charitable institutions, as well as advisory roles in advertising and production of consumer goods Current external appointments: Head of the Global Business Group, Meta Platforms Inc.; Co-President, Norwood; Member, Mayor’s Business Advisory Board; Chair, Follicular Lymphoma Foundation Previous relevant experience: Executive Chairman, Karmarama; Deputy Chairman, Grey London; Board Director, BBH, Fragrance Foundation; President, Institute of Practitioners in Advertising; Director, Women’s Prize for Fiction; Co-Chair, Creative Industries Council; Member, HMG Industrial Strategy Council; Board Member, CEW; Trustee, White Ribbon Alliance; Chair, Corporate Board, Women’s Aid |
10.Alan Stewart [A*] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: September 2014 (Appointed Chairman of the Audit Committee: January 2017) Key strengths: Has a strong background in financial, investment banking and commercial matters, with particular expertise in consumer retail industries, as well as board and committee level experience at industry institutions Current external appointments: Non-Executive Director and Chair of the Remuneration Committee, Reckitt Benckiser Group PLC; Non-Executive Director and Chair of Audit Committee, Burberry Group plc Previous relevant experience: Chief Financial Officer, Tesco PLC; Non-Executive Director, Tesco Bank; Chief Financial Officer, Marks & Spencer Group plc, AWAS; Non-Executive Director, Games Workshop plc; Group Finance Director, WH Smith PLC; Chief Executive, Thomas Cook UK | ||
11.Ireena Vittal [A] [N] [R] Non-Executive Director Nationality: Indian Appointed: Non-Executive Director: October 2020 Key strengths: Brings a wealth of FMCG experience from a career in executive consulting with a focus on consumer sectors and emerging markets, including India, as well as broad experience in non-executive board roles in the UK and India Current external appointments: Non-Executive Director, Compass Group PLC; Non-Executive and Lead Independent Director, Godrej Consumer Products Limited; Non-Executive Director, Asian Paints Limited Previous relevant experience: Head of Marketing and Sales, Hutchinson Max Telecom; Partner, McKinsey and Company; Non-Executive Director, Wipro Limited, Housing Development Finance Corporation Limited, Titan Company Limited, Tata Global Beverages Limited, Tata Industries, GlaxoSmithKline Consumer Healthcare |
1.Ewan Andrew President, Global Supply Chain & Procurement and Chief Sustainability Officer Nationality: British Appointed: September 2019 Previous Diageo roles: Supply Director, International Supply Centre; Senior Vice President, Supply Chain & Procurement, Latin America and Caribbean; Senior Vice President Manufacturing & Distilling, North America; various supply chain, operational management and procurement roles Current external appointments: Member, Scotch Whisky Association Council, Scottish Business Climate Collaboration Board, One Planet Business for Biodiversity Board | ||
2.Soraya Benchikh President, Europe Nationality: French Appointed: January 2023 Previous Diageo roles: Managing Director, Northern Europe Previous relevant experience: Brand CEO and Area Director, East and Southern Africa, President, France and Regional Finance Director, Europe, British American Tobacco | ||
3.Alvaro Cardenas President, Latin America and Caribbean Nationality: Colombian Appointed: January 2021 Previous Diageo roles: Managing Director, Andean Region; Director, End-to-End Global Commercial Processes; Finance Director, South East Asia Region, PUB (Paraguay, Uruguay and Brazil) Region, Andean Region, Colombia | ||
4.Cristina Diezhandino Chief Marketing Officer Nationality: Spanish Appointed: July 2020 Previous Diageo roles: Global Category Director, Scotch & Managing Director, Reserve Brands; Managing Director, Caribbean and Central America; Marketing & Innovation Director, Diageo Africa; Category Director, Scotch Portfolio & Gins; Global Brand Director, Johnnie Walker Previous relevant experience: Corporate Marketing Director, Allied Domecq Spain; marketing roles, Unilever HPC US, UK and Spain | ||
5.Daniel Mobley Global Corporate Relations Director Nationality: British Appointed: June 2017 Previous Diageo roles: Corporate Relations Director, Europe Previous relevant experience: Regional Head of Corporate Affairs, India & South Asia, Regional Head of Corporate Affairs, Africa, Group Head of Government Relations, Standard Chartered; extensive government experience including in HM Treasury and Foreign & Commonwealth Office |
6.Hina Nagarajan Managing Director and CEO of United Spirits Limited Nationality: Indian Appointed: July 2021 Previous Diageo roles: CEO-Designate, United Spirits Limited; Managing Director, Africa Regional Markets Previous relevant experience: Managing Director, China & SVP North Asia, Reckitt Benckiser; General Manager, Malaysia & Singapore, Reckitt Benckiser; CEO & MD Mary Kay India; senior marketing and general management roles, ICI Paints India and Nestlé India | ||
7.Dayalan Nayager President, Africa Nationality:South African/British Appointed: July 2022 Previous Diageo roles: Managing Director, Great Britain and Justerini & Brooks, Ireland and France, Global Travel; Regional Director, Global Travel Europe; Commercial Director, South Africa; Customer Marketing Director, South Africa; Key Account Director, South Africa Previous relevant experience: Various positions, Heinz, Mars and Pick n Pay Retailers | ||
8.John O'Keeffe President, Asia Pacific & Global Travel Nationality: Irish Appointed: July 2015 Previous Diageo roles: President, Africa & Beer; CEO and Managing Director, Guinness Nigeria; Global Head, Innovation; Global Head, Beer and Baileys; Managing Director, Russia and Eastern Europe; various management and marketing positions | ||
9.Louise Prashad Chief HR Officer Nationality: British Appointed: January 2022 Previous Diageo roles: Global Talent Director; Talent Director, Africa; HR Director, Europe, West Latin America and Caribbean, Global Functions Previous relevant experience: various HR roles, Stakis Group and Hilton Hotels | ||
10.Claudia Schubert President, North America Nationality: American Appointed: October 2022 Previous Diageo roles: President, US Spirits and Canada; General Manager, Continental Europe; President, US Controls States and Canada; President, Diageo Chateau & Estate Wines Previous relevant experience: Boston Consulting Group | ||
11.Tom Shropshire General Counsel & Company Secretary Nationality: American/British Appointed: July 2021 Current external appointments: Member of the Court (Non-Executive Director), The Bank of England; Trustee, New York University School of Law; Member of the Steering Committee, The Parker Review; Trustee, Charity Projects Limited (Comic Relief); Director, Comic Relief Limited Previous relevant experience: Partner & Global US Practice Head, Linklaters LLP |
Chief Executive Debra Crew Develops the group’s strategic direction for consideration and approval by the Board •Implements the strategy agreed by the Board •Leads the Executive Committee •Manages the company and the group •Along with the Chief Financial Officer, leads discussions with investors •Is supported in her role by the Executive Committee •Is supported by the Finance Committee and Filings Assurance Committee in the management of financial reporting of the company | Chairman Javier Ferrán Responsible for the operation, leadership and governance of the Board •Ensures all Directors are fully informed of matters and receives precise, timely and clear information sufficient to make informed judgements •Sets Board agendas and ensures sufficient time is allocated to ensure effective debate to support sound decision-making •Ensures the effectiveness of the Board •Engages in discussions with shareholders •Meets with the Non-Executive Directors independently of the Executive Directors | Chief Financial Officer Lavanya Chandrashekar Manages all aspects of the group's financial affairs •Responsible for the management of the capital structure of the company •Contributes to the management of the group's operations •Along with the Chief Executive, leads discussions with investors •Is supported by the Finance Committee and Filings Assurance Committee in the management of the financial affairs and reporting of the company •Is a member of the Executive Committee |
Further details on the Board Committees can be found in the separate reports from each committee on pages 117-153, and details of the Executive Committee can be found on pages 141. |
Areas of focus | Strategic priority | Strategic outcome | Stakeholders | |||||||||||
Strategic matters | Held a two-day Annual Strategy Conference (ASC) focussing on key strategic matters, including implementation of strategy across regions, convenience, China, ESG performance and supply chain strategy Regularly reviewed the group’s performance against the strategy Received reports on the financial performance of the group as against the annual plan Reviewed the group’s tax strategy and policy Received reports on the macro-economic environment, socio-political matters and emerging trends Carried out deep dives into key strategic topics including the group's scotch whisky portfolio and strategy, tequila strategy, consumer insights, Latin America and Caribbean region, culture and capabilities, China, health and wellness, and volatility scenario planning | |||||||||||||
Operational matters | Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements Reviewed the group's long-term demand forecasting processes, global business operations and shared service centre arrangements Regularly reviewed and approved the group’s M&A and business development activities, reorganisations and various other projects Reviewed the group's supply chain activities, including supply footprint Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors Initiated a global business transformation programme and systems upgrade Reviewed the company’s capital allocation, funding and liquidity positions, and those of its pension schemes, and approved interim and final dividends Reviewed and approved the company’s share buyback programme Approved the appointment of a new Chief Executive, including as an Executive Director Acting through the Nomination Committee, reviewed the company’s succession planning and talent strategy | |||||||||||||
ESG matters | Increased focus on ESG matters throughout the year, including conducting a deep dive in relation to the company's approach to ESG matters and its 'Society 2030: Spirit of Progress' programme at the ASC Reviewed approach and methodologies used in relation to non-financial targets Received reports on workforce engagement over the year Received regular investor reports Received regular updates on ESG matters and progress towards ‘Society 2030: Spirit of Progress‘ targets Completed actions identified following the previous evaluation of the Board's performance and carried out an internal evaluation of the Board’s performance Reviewed schedule of matters reserved for the Board and terms of reference of its Committees | |||||||||||||
Assurance and risk management | Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks On the recommendation of the Audit Committee, approved the company’s filings, financial and non-financial reporting including interim and preliminary results announcements, US filings and Annual Report |
Key | |||||||||||||||||
Strategic priorities | Strategic outcomes | Stakeholders | |||||||||||||||
Sustain quality growth | Efficient growth | People | |||||||||||||||
Embed everyday efficiency | Consistent value creation | Consumers | |||||||||||||||
Invest smartly | Credibility and trust | Customers | |||||||||||||||
Promote positive drinking | Engaged people | Suppliers | |||||||||||||||
Champion inclusion and diversity | Communities | ||||||||||||||||
Pioneer grain-to-glass sustainability | Investors | ||||||||||||||||
Governments and regulators |
Stakeholder and why we engage | ||||||||
Our people •People are at the core of our business •We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled •We want our people to be treated with dignity at work and their human rights respected | What we believe matters most to them •Prioritisation of health, safety and well-being •Learning and development opportunities •Purpose, culture and benefits •Contributing to the growth of our brands and performance •Promotion of inclusion and diversity •Sustainability and societal credentials How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme •Direct engagement through visits to offices, production and supply chain sites during the year •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, Your Voice and pulse surveys and townhall meetings | Reporting to the Board •Regular reports from workforce engagement activities •Feedback through employee surveys, including annual group-wide Your Voice survey •Culture and capabilities session at Board meeting led by Chief HR Officer Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems •Evolving workforce engagement programme | ||||||
Consumers •Understanding our consumers is critical for our business’ long-term growth •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’ | What we believe matters most to them •Choice of brands for different occasions, including no- and lower-alcohol •Innovation in heritage brands and creation and nurturing of new brands •Responsible marketing •Great experiences •Product quality •Sustainability and societal credentials •Price How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference •Regular review of business development opportunities, including active brand portfolio management •Review of innovation pipeline as part of the Annual Strategy Conference | Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends •Papers prepared by strategy team on evolving consumer behaviours in advance of Annual Strategy Conference •Regular updates by Business Development and Innovation teams on organic and inorganic opportunities and portfolio choices Upcoming priorities •Ongoing review of portfolio and category participation opportunities •Developing pipeline of innovation informed by consumer insights •Enhancing marketing effectiveness through detailed understanding of consumer motivation |
Customers •Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences | What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences •Identification of opportunities that offer profitable growth •Insights into consumer behaviour and shopper trends •Trusted product quality •Innovation, promotional support and merchandising •Availability and reliable supply and stocking •Technical expertise •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points •Review of supply chain footprint to ensure efficient delivery of products to customers •Direct engagement with key customers during market visits | Reporting to the Board •Regular performance updates by the Chief Executive, including customer and route-to-consumer concerns •Deep dive reviews on key regions or markets, including for example during fiscal 23 in relation to Latin America and Caribbean, include consideration of customer relationships Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of key customers during market visits •Enhancing relationships between the company and its customers through engagement opportunities |
Stakeholder and why we engage | ||||||||
Suppliers •Our suppliers, service providers and agencies are experts in their fields •We rely on them to deliver high-quality products and market responsibly •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society | What we believe matters most to them •Strong, mutually beneficial partnerships •Strategic alignment and growth opportunities •Fair contract and payment terms •Collaboration to realise innovation •Consistent performance measures •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Periodic review of supply chain footprint in key markets to ensure resilience and flexibility, monitoring environmental impacts and efficiencies •Review and approval of material supply and procurement contracts including for critical raw materials •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with Diageo's 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals | Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board •Periodic updates provided to the Board in relation to supply chain agility programme rollout •Supply chain sustainability and other ESG data included in quarterly 'Society 2030: Spirit of Progress' reports provided to the Board Upcoming priorities •Continued focus on rollout of supply chain agility programme •Monitoring impact of supply chain disruption on operations, including through Audit Committee risk reviews •Supervision of initiatives to improve sustainability and supply chain resilience |
Communities •We aim to create long-term value for the communities in which we live, work, source and sell •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity | What we believe matters most to them •Impact of our operations on the local economy •Access to skills development, employment and supplier opportunities •Inclusion, diversity and tackling inequality in all forms •Responsible use of natural resources, biodiversity and sustainability •Transparency and engagement How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking, inclusion and diversity •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains | Reporting to the Board •Quarterly reports provided to Board on progress made in relation to 'Society 2030: Spirit of Progress' targets •Reports on macro-economic and socio-political events provided to Board by management Upcoming priorities •Monitoring progress in relation to positive drinking programmes, including SMASHED and similar initiatives •Supporting management in advocacy in relation to water stewardship ambitions | ||||||
Investors •We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it | What we believe matters most to them •Strategic priorities, opportunities and risks •Financial performance •Corporate governance •Leadership credentials, experience and succession •Executive remuneration policy •Shareholder returns •Environmental, inclusion and diversity, and social commitments and progress How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through Investor Relations programme of events •Participation in investor conferences such as the Consumer Analyst Group of New York meeting in February 2023 •Hosting investor events such as the Diageo Scotch day in June 2023 •Attendance at the Annual General Meeting in October 2022, including responding to questions from shareholders | Reporting to the Board •Monthly reports compiled by Investor Relations team provided to the Board, providing details on engagement sessions with investors and key trends •Biennial survey of investor sentiment carried out by external consultancy and report provided to the Board Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year •Preparing for the Annual General Meeting to be held in September 2023 •Engaging directly with investors through roadshow following announcement of fiscal 23 results |
Governments and Regulators •The regulatory environment is critical to the success of our business •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business | What we believe matters most to them •Compliance with applicable laws and regulations •Contribution to national and local economic development and public health priorities •International trade, excise, regulation and tackling illicit trade •Tackling harmful drinking and the impact of responsible drinking initiatives •Climate change and water sustainability agendas, including carbon reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities How the Board seeks to engage •Indirect engagement through periodic updates from Chief Executive and corporate relations executives •Review of macro-economic and geopolitical developments as part of strategy sessions •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy | Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board •Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management Upcoming priorities •Monitoring developments in regulation and best practice in respect of non-financial reporting requirements, corporate governance and audit regime •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking, inclusion and diversity |
Main conclusions | Key actions for focus | ||||
General feedback | |||||
•Broad satisfaction with the composition, expertise and performance of the Board and content of its meetings •Diversity, inclusivity and openness of the Board are strengths •Performance of the Committees was felt to be strong and led well by the respective Chairs | •Continue to encourage culture of open discussion amongst Board members and with Executive Committee members •There remain opportunities for improvement in the interactions between management and Board members | ||||
Board composition | |||||
•Board members feel well integrated into the Board and company •Strong focus on succession planning, particularly over the short to mid term •Transition in Board composition will require continued focus on key areas of expertise and experience | •Continue focus on Board and management succession planning and on ensuring pipeline of high-quality, diverse talent •Identify key areas for additional expertise and focus recruitment and talent pipeline on these areas in particular | ||||
Strategic focus | |||||
•Continued focus on medium and longer-term issues, including tracking of key strategic decisions and investments •Regular discussions of culture and values are welcomed •Continued focus on ‘Society 2030: Spirit of Progress’ programme including approach to reporting in light of changing regulatory environment •Opportunities to enhance strategic focus of Board discussions, including in respect of emerging trends over the medium and long term •The workforce engagement process has been effective and beneficial | •Increase focus on key strategic matters, emerging trends and medium to long-term issues, ensuring appropriate allocation of time and resources •Schedule post-completion reviews of key strategic decisions •Identify alternative ways of reporting progress in relation to ongoing initiatives and projects | ||||
Company secretarial support | |||||
•Broad recognition of an effective Company Secretarial function and the support provided to the Board •Re-design of the Board induction process has been very positive •Pre-read materials have improved significantly; however, there is a desire for even greater focus on key issues | •Continue to find opportunities for Board to engage with workforce in different geographies and to visit production facilities, sites and offices •Continue to develop and enhance induction process for new Directors •Continue focus on ensuring high-quality pre-read materials, action closure and time allocation | ||||
ò | Reported | ||||
ò | Reported through SpeakUp | ||||
ò | Sustantiated breaches | ||||
ò | Code-related leavers |
Areas of focus | Strategic priority | Strategic outcome | |||||||||
Corporate reporting | •Half and full year external reporting updates •Interim and preliminary results review and approval •Annual Report and consolidated financial statements, Form 20-F review and approval •Implications of group functional and presentation currency change on reporting | ||||||||||
Internal controls | •GAR updates •Business Integrity updates including breach and reporting update •Controls testing update and Section 404 assessment •Implications on controls environment of systems and process changes | ||||||||||
External audit and assurance | •Report on external audit at half and full year periods •Insights and observations on reporting review •Auditor independence and non-audit work reviews •Auditor independence policy review •Review of management representation letters •Appointment of auditor and review of terms of engagement and fees •Auditor performance and effectiveness review and assessment •Commencement of auditor tender process •Audit regime reform and approach to assurance, preparatory to drafting an audit and assurance policy | ||||||||||
Risk management | •Principal and emerging risk reviews and tracking •Risk updates, including group risk footprint and risk appetite review and approvals •Supply chain disruption, counterfeit, product quality, climate change and sustainability, energy, pandemics and business interruption, cyber and IT resilience, pension funding, business transformation and tax risk reviews |
Key | |||||||||||||||||||||||||||||
Strategic priorities | Strategic outcomes | ||||||||||||||||||||||||||||
Sustain quality growth | Invest smartly | Champion inclusion and diversity | Efficient growth | Credibility and trust | |||||||||||||||||||||||||
Embed everyday efficiency | Promote positive drinking | Pioneer grain-to-glass sustainability | Consistent value creation | Engaged people |
Matter considered | How the Audit Committee addressed the matter | |||||||
The nature and size of any one-off items impacting the quality of the earnings and cash flows. | The Audit Committee assessed whether the related presentation and disclosure of those items in the financial statements were appropriate based on management’s analysis, and concluded that they were. | |||||||
Items that were to be presented as exceptional. Refer to note 4 of the Financial Statements. | The Audit Committee assessed whether the reporting of those items as exceptional, was in line with the group’s accounting policy, and that sufficient disclosure was provided in the financial statements, and concluded that they were. | |||||||
Whether the carrying value of assets, in particular intangible assets, was supportable. Refer to notes 6, 9, 10 and 13 of the Financial Statements. | The Audit Committee reviewed the methodology applied in conducting impairment assessments and result of management's impairment assessments that were performed during the year. The Committee was provided with information about the carrying amounts and the key assumptions incorporated in management’s estimate of discounted cash flows of significant assets that are sensitive to key assumptions. The Committee reviewed the key assumptions used in the impairment testing, including management’s cash flow forecasts, growth rates and the discount rate used in value in use calculations and agreed they were appropriate. The Committee agreed with management’s judgements and conclusions, whereby McDowell’s, some smaller other brands and investments in associates and certain fixed assets have been impaired by £549 million in the year ended 30 June 2023, out of which £520 million was reported as exceptional operating charge. The Committee agreed that the recoverable amount of the company’s other assets was in excess of their carrying value and that appropriate disclosure was provided with respect to assets impaired, and whose value is more sensitive to changes in assumptions. | |||||||
The group’s more significant tax exposures and the appropriateness of any related provisions and financial statement disclosures. Refer to page 112 of 'Risk factors' and note 7 of the Financial Statements. | The Audit Committee agreed that disclosure of tax risk appropriately addresses the significant change in the international tax environment, and that appropriate provisions and other disclosure with respect to uncertain tax positions were reflected in the financial statements. | |||||||
The appropriateness of the valuation of post employment liabilities, and the recognition of any surplus. Refer to note 14 of the Financial Statements. | The measurement of post employment liabilities is sensitive to changes in long-term interest rates, inflation and mortality assumptions. Having reviewed management’s papers setting out key changes to actuarial assumptions, the Audit Committee agreed that the assumptions used in the valuation are appropriate. The Committee reviewed management’s assessment of the economic benefit available as a refund of the surplus or as a reduction of contribution and the key judgements made in respect of the surplus restriction and concluded that those judgements were appropriate. The Committee reviewed and concluded that sufficient disclosures were provided in the financial statements. | |||||||
Significant legal matters impacting the group. Refer to note 19 of the Financial Statements. | The Committee agreed that adequate provision and/or disclosure have been made for all material litigation and disputes, based on the current most likely outcomes, including the litigation summarised in note 19 of the Financial Statements. | |||||||
Accounting for business combinations. Refer to note 8 of the Financial Statements. | Diageo acquired Kanlaon Limited and Chat Noir Co. Inc. on 10 March 2023 and completed a number of other smaller acquisitions during the year ended 30 June 2023, for an aggregate consideration of £397 million. As at the completion date of these acquisitions, Diageo performed valuations of the identifiable assets and liabilities and the resulting goodwill. The purchase price allocation exercises are subject to management’s judgement and estimates, including forecast cash flows, buyer specific synergies and the applicable discount rates used in valuations. The Committee reviewed management’s purchase price allocations and the disclosures provided in the Financial Statements and concluded they were appropriate. | |||||||
Functional currency of Diageo plc and presentation currency of Diageo group. | The Audit Committee agreed that in line with reporting requirements the functional currency of Diageo plc has changed from sterling to US dollar which is applied prospectively from fiscal 24. This is because the group's share of net sales and expenses in the US and other countries whose currencies correlate closely with the US dollar has been increasing over the years, and that trend is expected to continue in line with the group's strategic focus. Diageo has also decided to change its presentation currency to US dollar with effect from 1 July 2023, applied retrospectively, as it believes that this change will provide better alignment of the reporting of performance with its business exposures. | |||||||
Whether the Annual Report is fair, balanced and understandable. | The Audit Committee concluded that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy and that there is an appropriate balance between statutory (GAAP) and adjusted (non-GAAP) measures ensuring equal prominence. | |||||||
The impact of climate change on the group’s financial reporting and financial statements. Refer to pages 91-110 of 'Pioneer grain-to-glass sustainability' and note 1 and note 9 of the Financial Statements. | The Audit Committee agreed that the disclosures on pages 91-110 made in response to the recommendations of the Task Force on Climate-related Financial Disclosures are appropriate and that the assumptions used in the financial statements are consistent with these disclosures. |
Composition, Succession and Evaluation | ||||||||
–Leadership and | ||||||||
–Board of | –Performance evaluation - page 142 | |||||||
–2023 Governance at a Glance - page 126 | –Nomination Committee report - page 154 | |||||||
–Purpose, values and | ||||||||
–Board activities - page 136 | ||||||||
Division of Responsibilities | Audit, Risk and | |||||||
–Audit Committee report - page 146 | ||||||||
–Board and committee attendance - page 135 | Remuneration | |||||||
Board composition | Non-executive director tenure | Board gender diversity | Board ethnic diversity |
ò | Chairman | ò | 0 – 3 years | ò | Male | ò | Directors of colour | |||||||||||||||||||||||||
ò | Executive director | ò | 3 – 6 years | ò | Female | ò | White European | |||||||||||||||||||||||||
ò | Non-executive director | ò | 6 – 9 years |
Annual General Meeting 2022 | Board (maximum 7) | Audit Committee (maximum 5) | Nomination Committee (maximum 6) | Remuneration Committee (maximum 7) | |||||||||||||
Javier Ferrán | ü | 7/7 | 5/5(1) | 6/6 | 7/7(1) | ||||||||||||
Debra Crew(2) | N/A | 0/0 | 0/0 | 0/0 | 1/1(1) | ||||||||||||
Lavanya Chandrashekar | ü | 6/6 | 5/5(1) | 0/0 | 1/1(1) | ||||||||||||
Susan Kilsby | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Melissa Bethell | ü | 7/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Karen Blackett | ü | 6/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Valérie Chapoulaud-Floquet | ü | 6/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Sir John Manzoni | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Lady Mendelsohn | ü | 7/7 | 5/5 | 6/6 | 6/7 | ||||||||||||
Alan Stewart | ü | 7/7 | 5/5 | 6/6 | 7/7 | ||||||||||||
Ireena Vittal | ü | 7/7 | 4/5 | 6/6 | 7/7 | ||||||||||||
Former Directors | |||||||||||||||||
Sir Ivan Menezes(3) | ü | 5/6 | 2/5(1) | 4/5(1) | 4/6(1) |
1.Javier Ferrán [N*] Chairman Nationality:Spanish Appointed:Chairman and Chairman of the Nomination Committee: January 2017 (Appointed Chairman Designate and Non-Executive Director: July 2016) Key strengths: Brings extensive board-level experience from the drinks and consumer products industry, including at chief executive level, and has a wealth of experience in consumer goods through his venture capital activities to draw from in his role as Chairman and leader of the Board Current external appointments: Chairman, International Consolidated Airlines Group, S.A.; Senior Advisor and chairman of investee company board, BlackRock Long Term Private Capital Previous relevant experience: Non-Executive Director and Senior Independent Director, Associated British Foods plc; Non-Executive Director, Coca-Cola European Partners plc; Member, Advisory Board of ESADE Business School; President and CEO, Bacardi Limited; Non-Executive Director, SABMiller plc | ||
2.Debra Crew [E*] Chief Executive Nationality: American Appointed: Chief Executive and Executive Director: June 2023 Key strengths: Has broad experience in various consumer products sectors at board, chief executive and management leadership levels, as well as over four years' experience in non-executive and executive roles at Diageo Current external appointments: Non-Executive Director, Stanley, Black & Decker, Inc. Previous Diageo roles: Chief Operating Officer; President, North America; Non-Executive Director, Diageo plc Previous relevant experience: Non-Executive Director, Newell Brands, Mondelēz International Inc.; President and CEO, Reynolds American, Inc; President, PepsiCo North America Nutrition, PepsiCo Americas Beverages, Western Europe Region; various positions with Kraft Foods, Nestlé, S.A., and Mars | ||
3.Lavanya Chandrashekar [E] Chief Financial Officer Nationality: American Appointed: Chief Financial Officer and Executive Director: July 2021 Key strengths: Brings broad financial expertise, commercial skills and strong consumer goods experience to manage the group’s affairs relating to financial controls, accounting, tax, treasury and investor relations Previous Diageo roles: Chief Financial Officer, Diageo North America and Global Head of Investor Relations Previous relevant experience: Vice President Finance, Global Cost Leadership and Supply Chain, Mondelēz International; VP Finance, North America, Mondelēz International; VP Finance, Eastern Europe, Middle East and Africa, Mondelēz International; various senior finance roles at Procter & Gamble |
4.Susan Kilsby [A] [N] [R*] Senior Independent Director Nationality: American/British Appointed: Senior Independent Director: October 2019 (Appointed Non-Executive Director: April 2018 and Chairman of the Remuneration Committee: January 2019) Key strengths: Brings wide-ranging corporate governance and board level experience across a number of industries, including a consumer goods sector focus, with particular expertise in mergers and acquisitions, corporate finance and transaction advisory work Current external appointments: Non-Executive Chair, Fortune Brands Innovations, Inc.; Non-Executive Director, Unilever PLC, NHS England; Member, the Takeover Panel Previous relevant experience: Senior Independent Director and Chair of Remuneration Committee, BHP Group Plc, BHP Group Limited; Senior Independent Director, BBA Aviation plc; Chairman, Shire plc; Chairman, Mergers and Acquisitions EMEA, Credit Suisse; Senior Advisor, Credit Suisse; Non-Executive Director, Goldman Sachs International, Keurig Green Mountain, L’Occitane International, Coca-Cola HBC | ||
5.Melissa Bethell [A] [N] [R] Non-Executive Director Nationality: American/British Appointed: Non-Executive Director: June 2020 Key strengths: Has extensive international corporate and financial experience, including in relation to private equity, financial sectors, strategic consultancy and advisory services, as well as having strong non-executive experience at board and committee levels across a range of industries, including retail, consumer goods and financial services Current external appointments: Non-Executive Director, Tesco PLC, Exor N.V.; Chair, Ocean Outdoor Limited; Senior Advisor, Atairos Previous relevant experience: Managing Director and Senior Advisor, Private Equity, Bain Capital; Non-Executive Director, Atento S.A., Worldpay plc, Samsonite S.A. | ||
6.Karen Blackett [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: June 2022 Key strengths: Brings expertise in marketing, media and the creative industries, as well as broad experience in public policy and strategic initiatives through a number of different government, industry and public bodies Current external appointments: UK President, WPP plc; Chancellor, University of Portsmouth; Founding Trustee, BEO (Black Equity Organisation); Non-Executive Director, Creative UK, Non-Executive Director, The Pipeline Previous relevant experience: UK Race Equality Business Champion, HM Government; Business Ambassador, Department for International Trade, HM Government; Chairwoman, MediaCom UK & Ireland; Chief Executive Officer, GroupM UK; Chief Executive Officer, MediaCom UK; Chief Operations Officer, MediaCom EMEA; Marketing Director, MediaCom; UK Country Manager, WPP plc |
7.Valérie Chapoulaud-Floquet [A] [N] [R] Non-Executive Director Nationality: French Appointed: Non-Executive Director: January 2021 Key strengths: Brings strong experience and expertise in the luxury consumer goods sector, having spent her career in the industry working in a number of international markets, including developed and emerging markets, and as a former CEO in the premium drinks industry Current external appointments: Non-Executive Director, Lead Independent Director and Chair of Governance Committee, Danone S.A.; Non-Executive Director, Acné Studios A.B., Agrolimen S.A., Nextstage S.C.A., Jacobs Holding AG; Vice Chairman, Sofisport Previous relevant experience: Chief Executive Officer, Rémy Cointreau S.A.; President and CEO for the Americas, Louis Vuitton, LVMH Group; President and CEO for North America, Louis Vuitton, LVMH Group; President South Europe, Louis Vuitton, LVMH Group; President and CEO, Louis Vuitton Taiwan, LVMH Group; President, Luxury Product Division for the USA, L’Oréal Group | ||
8.Sir John Manzoni [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: October 2020 Key strengths: Has strong commercial executive experience as a former CEO in the energy sector and non-executive board level experience, including in the alcoholic beverage industry, as well as more recent expertise in public policy and government affairs Current external appointments: Chairman, SSE plc; Chairman, Atomic Weapons Establishment; Non-Executive Director, KBR Inc. Previous relevant experience: Chief Executive of the Civil Service and Permanent Secretary of the Cabinet Office, HM Government; President and Chief Executive Officer, Talisman Energy; Chief Executive, Refining & Marketing, BP p.l.c.; Chief Executive, Gas & Power, BP p.l.c.; Non-Executive Director, SABMiller plc | ||
9.Lady Mendelsohn [A] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: September 2014 Key strengths: Has specialist knowledge and understanding of consumer-facing emerging technologies, privacy and data issues, as well as wide experience of board and committee level appointments across diverse commercial, governmental and charitable institutions, as well as advisory roles in advertising and production of consumer goods Current external appointments: Head of the Global Business Group, Meta Platforms Inc.; Co-President, Norwood; Member, Mayor’s Business Advisory Board; Chair, Follicular Lymphoma Foundation Previous relevant experience: Executive Chairman, Karmarama; Deputy Chairman, Grey London; Board Director, BBH, Fragrance Foundation; President, Institute of Practitioners in Advertising; Director, Women’s Prize for Fiction; Co-Chair, Creative Industries Council; Member, HMG Industrial Strategy Council; Board Member, CEW; Trustee, White Ribbon Alliance; Chair, Corporate Board, Women’s Aid |
10.Alan Stewart [A*] [N] [R] Non-Executive Director Nationality: British Appointed: Non-Executive Director: September 2014 (Appointed Chairman of the Audit Committee: January 2017) Key strengths: Has a strong background in financial, investment banking and commercial matters, with particular expertise in consumer retail industries, as well as board and committee level experience at industry institutions Current external appointments: Non-Executive Director and Chair of the Remuneration Committee, Reckitt Benckiser Group PLC; Non-Executive Director and Chair of Audit Committee, Burberry Group plc Previous relevant experience: Chief Financial Officer, Tesco PLC; Non-Executive Director, Tesco Bank; Chief Financial Officer, Marks & Spencer Group plc, AWAS; Non-Executive Director, Games Workshop plc; Group Finance Director, WH Smith PLC; Chief Executive, Thomas Cook UK | ||
11.Ireena Vittal [A] [N] [R] Non-Executive Director Nationality: Indian Appointed: Non-Executive Director: October 2020 Key strengths: Brings a wealth of FMCG experience from a career in executive consulting with a focus on consumer sectors and emerging markets, including India, as well as broad experience in non-executive board roles in the UK and India Current external appointments: Non-Executive Director, Compass Group PLC; Non-Executive and Lead Independent Director, Godrej Consumer Products Limited; Non-Executive Director, Asian Paints Limited Previous relevant experience: Head of Marketing and Sales, Hutchinson Max Telecom; Partner, McKinsey and Company; Non-Executive Director, Wipro Limited, Housing Development Finance Corporation Limited, Titan Company Limited, Tata Global Beverages Limited, Tata Industries, GlaxoSmithKline Consumer Healthcare |
1.Ewan Andrew President, Global Supply Chain & Procurement and Chief Sustainability Officer Nationality: British Appointed: September 2019 Previous Diageo roles: Supply Director, International Supply Centre; Senior Vice President, Supply Chain & Procurement, Latin America and Caribbean; Senior Vice President Manufacturing & Distilling, North America; various supply chain, operational management and procurement roles Current external appointments: Member, Scotch Whisky Association Council, Scottish Business Climate Collaboration Board, One Planet Business for Biodiversity Board | ||
2.Soraya Benchikh President, Europe Nationality: French Appointed: January 2023 Previous Diageo roles: Managing Director, Northern Europe Previous relevant experience: Brand CEO and Area Director, East and Southern Africa, President, France and Regional Finance Director, Europe, British American Tobacco | ||
3.Alvaro Cardenas President, Latin America and Caribbean Nationality: Colombian Appointed: January 2021 Previous Diageo roles: Managing Director, Andean Region; Director, End-to-End Global Commercial Processes; Finance Director, South East Asia Region, PUB (Paraguay, Uruguay and Brazil) Region, Andean Region, Colombia | ||
4.Cristina Diezhandino Chief Marketing Officer Nationality: Spanish Appointed: July 2020 Previous Diageo roles: Global Category Director, Scotch & Managing Director, Reserve Brands; Managing Director, Caribbean and Central America; Marketing & Innovation Director, Diageo Africa; Category Director, Scotch Portfolio & Gins; Global Brand Director, Johnnie Walker Previous relevant experience: Corporate Marketing Director, Allied Domecq Spain; marketing roles, Unilever HPC US, UK and Spain | ||
5.Daniel Mobley Global Corporate Relations Director Nationality: British Appointed: June 2017 Previous Diageo roles: Corporate Relations Director, Europe Previous relevant experience: Regional Head of Corporate Affairs, India & South Asia, Regional Head of Corporate Affairs, Africa, Group Head of Government Relations, Standard Chartered; extensive government experience including in HM Treasury and Foreign & Commonwealth Office |
6.Hina Nagarajan Managing Director and CEO of United Spirits Limited Nationality: Indian Appointed: July 2021 Previous Diageo roles: CEO-Designate, United Spirits Limited; Managing Director, Africa Regional Markets Previous relevant experience: Managing Director, China & SVP North Asia, Reckitt Benckiser; General Manager, Malaysia & Singapore, Reckitt Benckiser; CEO & MD Mary Kay India; senior marketing and general management roles, ICI Paints India and Nestlé India | ||
7.Dayalan Nayager President, Africa Nationality:South African/British Appointed: July 2022 Previous Diageo roles: Managing Director, Great Britain and Justerini & Brooks, Ireland and France, Global Travel; Regional Director, Global Travel Europe; Commercial Director, South Africa; Customer Marketing Director, South Africa; Key Account Director, South Africa Previous relevant experience: Various positions, Heinz, Mars and Pick n Pay Retailers | ||
8.John O'Keeffe President, Asia Pacific & Global Travel Nationality: Irish Appointed: July 2015 Previous Diageo roles: President, Africa & Beer; CEO and Managing Director, Guinness Nigeria; Global Head, Innovation; Global Head, Beer and Baileys; Managing Director, Russia and Eastern Europe; various management and marketing positions | ||
9.Louise Prashad Chief HR Officer Nationality: British Appointed: January 2022 Previous Diageo roles: Global Talent Director; Talent Director, Africa; HR Director, Europe, West Latin America and Caribbean, Global Functions Previous relevant experience: various HR roles, Stakis Group and Hilton Hotels | ||
10.Claudia Schubert President, North America Nationality: American Appointed: October 2022 Previous Diageo roles: President, US Spirits and Canada; General Manager, Continental Europe; President, US Controls States and Canada; President, Diageo Chateau & Estate Wines Previous relevant experience: Boston Consulting Group | ||
11.Tom Shropshire General Counsel & Company Secretary Nationality: American/British Appointed: July 2021 Current external appointments: Member of the Court (Non-Executive Director), The Bank of England; Trustee, New York University School of Law; Member of the Steering Committee, The Parker Review; Trustee, Charity Projects Limited (Comic Relief); Director, Comic Relief Limited Previous relevant experience: Partner & Global US Practice Head, Linklaters LLP |
Chief Executive Debra Crew Develops the group’s strategic direction for consideration and approval by the Board •Implements the strategy agreed by the Board •Leads the Executive Committee •Manages the company and the group •Along with the Chief Financial Officer, leads discussions with investors •Is supported in her role by the Executive Committee •Is supported by the Finance Committee and Filings Assurance Committee in the management of financial reporting of the company | Chairman Javier Ferrán Responsible for the operation, leadership and governance of the Board •Ensures all Directors are fully informed of matters and receives precise, timely and clear information sufficient to make informed judgements •Sets Board agendas and ensures sufficient time is allocated to ensure effective debate to support sound decision-making •Ensures the effectiveness of the Board •Engages in discussions with shareholders •Meets with the Non-Executive Directors independently of the Executive Directors | Chief Financial Officer Lavanya Chandrashekar Manages all aspects of the group's financial affairs •Responsible for the management of the capital structure of the company •Contributes to the management of the group's operations •Along with the Chief Executive, leads discussions with investors •Is supported by the Finance Committee and Filings Assurance Committee in the management of the financial affairs and reporting of the company •Is a member of the Executive Committee |
Further details on the Board Committees can be found in the separate reports from each committee on pages 117-153, and details of the Executive Committee can be found on pages 141. |
Areas of focus | Strategic priority | Strategic outcome | Stakeholders | |||||||||||
Strategic matters | Held a two-day Annual Strategy Conference (ASC) focussing on key strategic matters, including implementation of strategy across regions, convenience, China, ESG performance and supply chain strategy Regularly reviewed the group’s performance against the strategy Received reports on the financial performance of the group as against the annual plan Reviewed the group’s tax strategy and policy Received reports on the macro-economic environment, socio-political matters and emerging trends Carried out deep dives into key strategic topics including the group's scotch whisky portfolio and strategy, tequila strategy, consumer insights, Latin America and Caribbean region, culture and capabilities, China, health and wellness, and volatility scenario planning | |||||||||||||
Operational matters | Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements Reviewed the group's long-term demand forecasting processes, global business operations and shared service centre arrangements Regularly reviewed and approved the group’s M&A and business development activities, reorganisations and various other projects Reviewed the group's supply chain activities, including supply footprint Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors Initiated a global business transformation programme and systems upgrade Reviewed the company’s capital allocation, funding and liquidity positions, and those of its pension schemes, and approved interim and final dividends Reviewed and approved the company’s share buyback programme Approved the appointment of a new Chief Executive, including as an Executive Director Acting through the Nomination Committee, reviewed the company’s succession planning and talent strategy | |||||||||||||
ESG matters | Increased focus on ESG matters throughout the year, including conducting a deep dive in relation to the company's approach to ESG matters and its 'Society 2030: Spirit of Progress' programme at the ASC Reviewed approach and methodologies used in relation to non-financial targets Received reports on workforce engagement over the year Received regular investor reports Received regular updates on ESG matters and progress towards ‘Society 2030: Spirit of Progress‘ targets Completed actions identified following the previous evaluation of the Board's performance and carried out an internal evaluation of the Board’s performance Reviewed schedule of matters reserved for the Board and terms of reference of its Committees | |||||||||||||
Assurance and risk management | Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks On the recommendation of the Audit Committee, approved the company’s filings, financial and non-financial reporting including interim and preliminary results announcements, US filings and Annual Report |
Key | |||||||||||||||||
Strategic priorities | Strategic outcomes | Stakeholders | |||||||||||||||
Sustain quality growth | Efficient growth | People | |||||||||||||||
Embed everyday efficiency | Consistent value creation | Consumers | |||||||||||||||
Invest smartly | Credibility and trust | Customers | |||||||||||||||
Promote positive drinking | Engaged people | Suppliers | |||||||||||||||
Champion inclusion and diversity | Communities | ||||||||||||||||
Pioneer grain-to-glass sustainability | Investors | ||||||||||||||||
Governments and regulators |
Stakeholder and why we engage | ||||||||
Our people •People are at the core of our business •We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled •We want our people to be treated with dignity at work and their human rights respected | What we believe matters most to them •Prioritisation of health, safety and well-being •Learning and development opportunities •Purpose, culture and benefits •Contributing to the growth of our brands and performance •Promotion of inclusion and diversity •Sustainability and societal credentials How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme •Direct engagement through visits to offices, production and supply chain sites during the year •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, Your Voice and pulse surveys and townhall meetings | Reporting to the Board •Regular reports from workforce engagement activities •Feedback through employee surveys, including annual group-wide Your Voice survey •Culture and capabilities session at Board meeting led by Chief HR Officer Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems •Evolving workforce engagement programme | ||||||
Consumers •Understanding our consumers is critical for our business’ long-term growth •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’ | What we believe matters most to them •Choice of brands for different occasions, including no- and lower-alcohol •Innovation in heritage brands and creation and nurturing of new brands •Responsible marketing •Great experiences •Product quality •Sustainability and societal credentials •Price How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference •Regular review of business development opportunities, including active brand portfolio management •Review of innovation pipeline as part of the Annual Strategy Conference | Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends •Papers prepared by strategy team on evolving consumer behaviours in advance of Annual Strategy Conference •Regular updates by Business Development and Innovation teams on organic and inorganic opportunities and portfolio choices Upcoming priorities •Ongoing review of portfolio and category participation opportunities •Developing pipeline of innovation informed by consumer insights •Enhancing marketing effectiveness through detailed understanding of consumer motivation |
Customers •Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences | What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences •Identification of opportunities that offer profitable growth •Insights into consumer behaviour and shopper trends •Trusted product quality •Innovation, promotional support and merchandising •Availability and reliable supply and stocking •Technical expertise •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points •Review of supply chain footprint to ensure efficient delivery of products to customers •Direct engagement with key customers during market visits | Reporting to the Board •Regular performance updates by the Chief Executive, including customer and route-to-consumer concerns •Deep dive reviews on key regions or markets, including for example during fiscal 23 in relation to Latin America and Caribbean, include consideration of customer relationships Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of key customers during market visits •Enhancing relationships between the company and its customers through engagement opportunities |
Stakeholder and why we engage | ||||||||
Suppliers •Our suppliers, service providers and agencies are experts in their fields •We rely on them to deliver high-quality products and market responsibly •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society | What we believe matters most to them •Strong, mutually beneficial partnerships •Strategic alignment and growth opportunities •Fair contract and payment terms •Collaboration to realise innovation •Consistent performance measures •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Periodic review of supply chain footprint in key markets to ensure resilience and flexibility, monitoring environmental impacts and efficiencies •Review and approval of material supply and procurement contracts including for critical raw materials •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with Diageo's 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals | Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board •Periodic updates provided to the Board in relation to supply chain agility programme rollout •Supply chain sustainability and other ESG data included in quarterly 'Society 2030: Spirit of Progress' reports provided to the Board Upcoming priorities •Continued focus on rollout of supply chain agility programme •Monitoring impact of supply chain disruption on operations, including through Audit Committee risk reviews •Supervision of initiatives to improve sustainability and supply chain resilience |
Communities •We aim to create long-term value for the communities in which we live, work, source and sell •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity | What we believe matters most to them •Impact of our operations on the local economy •Access to skills development, employment and supplier opportunities •Inclusion, diversity and tackling inequality in all forms •Responsible use of natural resources, biodiversity and sustainability •Transparency and engagement How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking, inclusion and diversity •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains | Reporting to the Board •Quarterly reports provided to Board on progress made in relation to 'Society 2030: Spirit of Progress' targets •Reports on macro-economic and socio-political events provided to Board by management Upcoming priorities •Monitoring progress in relation to positive drinking programmes, including SMASHED and similar initiatives •Supporting management in advocacy in relation to water stewardship ambitions | ||||||
Investors •We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it | What we believe matters most to them •Strategic priorities, opportunities and risks •Financial performance •Corporate governance •Leadership credentials, experience and succession •Executive remuneration policy •Shareholder returns •Environmental, inclusion and diversity, and social commitments and progress How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through Investor Relations programme of events •Participation in investor conferences such as the Consumer Analyst Group of New York meeting in February 2023 •Hosting investor events such as the Diageo Scotch day in June 2023 •Attendance at the Annual General Meeting in October 2022, including responding to questions from shareholders | Reporting to the Board •Monthly reports compiled by Investor Relations team provided to the Board, providing details on engagement sessions with investors and key trends •Biennial survey of investor sentiment carried out by external consultancy and report provided to the Board Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year •Preparing for the Annual General Meeting to be held in September 2023 •Engaging directly with investors through roadshow following announcement of fiscal 23 results |
Governments and Regulators •The regulatory environment is critical to the success of our business •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business | What we believe matters most to them •Compliance with applicable laws and regulations •Contribution to national and local economic development and public health priorities •International trade, excise, regulation and tackling illicit trade •Tackling harmful drinking and the impact of responsible drinking initiatives •Climate change and water sustainability agendas, including carbon reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities How the Board seeks to engage •Indirect engagement through periodic updates from Chief Executive and corporate relations executives •Review of macro-economic and geopolitical developments as part of strategy sessions •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy | Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board •Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management Upcoming priorities •Monitoring developments in regulation and best practice in respect of non-financial reporting requirements, corporate governance and audit regime •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking, inclusion and diversity |
Main conclusions | Key actions for focus | ||||
General feedback | |||||
•Broad satisfaction with the composition, expertise and performance of the Board and content of its meetings •Diversity, inclusivity and openness of the Board are strengths •Performance of the Committees was felt to be strong and led well by the respective Chairs | •Continue to encourage culture of open discussion amongst Board members and with Executive Committee members •There remain opportunities for improvement in the interactions between management and Board members | ||||
Board composition | |||||
•Board members feel well integrated into the Board and company •Strong focus on succession planning, particularly over the short to mid term •Transition in Board composition will require continued focus on key areas of expertise and experience | •Continue focus on Board and management succession planning and on ensuring pipeline of high-quality, diverse talent •Identify key areas for additional expertise and focus recruitment and talent pipeline on these areas in particular | ||||
Strategic focus | |||||
•Continued focus on medium and longer-term issues, including tracking of key strategic decisions and investments •Regular discussions of culture and values are welcomed •Continued focus on ‘Society 2030: Spirit of Progress’ programme including approach to reporting in light of changing regulatory environment •Opportunities to enhance strategic focus of Board discussions, including in respect of emerging trends over the medium and long term •The workforce engagement process has been effective and beneficial | •Increase focus on key strategic matters, emerging trends and medium to long-term issues, ensuring appropriate allocation of time and resources •Schedule post-completion reviews of key strategic decisions •Identify alternative ways of reporting progress in relation to ongoing initiatives and projects | ||||
Company secretarial support | |||||
•Broad recognition of an effective Company Secretarial function and the support provided to the Board •Re-design of the Board induction process has been very positive •Pre-read materials have improved significantly; however, there is a desire for even greater focus on key issues | •Continue to find opportunities for Board to engage with workforce in different geographies and to visit production facilities, sites and offices •Continue to develop and enhance induction process for new Directors •Continue focus on ensuring high-quality pre-read materials, action closure and time allocation | ||||
ò | Reported | ||||
ò | Reported through SpeakUp | ||||
ò | Sustantiated breaches | ||||
ò | Code-related leavers |
Areas of focus | Strategic priority | Strategic outcome | |||||||||
Corporate reporting | •Half and full year external reporting updates •Interim and preliminary results review and approval •Annual Report and consolidated financial statements, Form 20-F review and approval •Implications of group functional and presentation currency change on reporting | ||||||||||
Internal controls | •GAR updates •Business Integrity updates including breach and reporting update •Controls testing update and Section 404 assessment •Implications on controls environment of systems and process changes | ||||||||||
External audit and assurance | •Report on external audit at half and full year periods •Insights and observations on reporting review •Auditor independence and non-audit work reviews •Auditor independence policy review •Review of management representation letters •Appointment of auditor and review of terms of engagement and fees •Auditor performance and effectiveness review and assessment •Commencement of auditor tender process •Audit regime reform and approach to assurance, preparatory to drafting an audit and assurance policy | ||||||||||
Risk management | •Principal and emerging risk reviews and tracking •Risk updates, including group risk footprint and risk appetite review and approvals •Supply chain disruption, counterfeit, product quality, climate change and sustainability, energy, pandemics and business interruption, cyber and IT resilience, pension funding, business transformation and tax risk reviews |
Key | |||||||||||||||||||||||||||||
Strategic priorities | Strategic outcomes | ||||||||||||||||||||||||||||
Sustain quality growth | Invest smartly | Champion inclusion and diversity | Efficient growth | Credibility and trust | |||||||||||||||||||||||||
Embed everyday efficiency | Promote positive drinking | Pioneer grain-to-glass sustainability | Consistent value creation | Engaged people |
Matter considered | How the Audit Committee addressed the matter | |||||||
The nature and size of any one-off items impacting the quality of the earnings and cash flows. | The Audit Committee assessed whether the related presentation and disclosure of those items in the financial statements were appropriate based on management’s analysis, and concluded that they were. | |||||||
Items that were to be presented as exceptional. Refer to note 4 of the Financial Statements. | The Audit Committee assessed whether the reporting of those items as exceptional, was in line with the group’s accounting policy, and that sufficient disclosure was provided in the financial statements, and concluded that they were. | |||||||
Whether the carrying value of assets, in particular intangible assets, was supportable. Refer to notes 6, 9, 10 and 13 of the Financial Statements. | The Audit Committee reviewed the methodology applied in conducting impairment assessments and result of management's impairment assessments that were performed during the year. The Committee was provided with information about the carrying amounts and the key assumptions incorporated in management’s estimate of discounted cash flows of significant assets that are sensitive to key assumptions. The Committee reviewed the key assumptions used in the impairment testing, including management’s cash flow forecasts, growth rates and the discount rate used in value in use calculations and agreed they were appropriate. The Committee agreed with management’s judgements and conclusions, whereby McDowell’s, some smaller other brands and investments in associates and certain fixed assets have been impaired by £549 million in the year ended 30 June 2023, out of which £520 million was reported as exceptional operating charge. The Committee agreed that the recoverable amount of the company’s other assets was in excess of their carrying value and that appropriate disclosure was provided with respect to assets impaired, and whose value is more sensitive to changes in assumptions. | |||||||
The group’s more significant tax exposures and the appropriateness of any related provisions and financial statement disclosures. Refer to page 112 of 'Risk factors' and note 7 of the Financial Statements. | The Audit Committee agreed that disclosure of tax risk appropriately addresses the significant change in the international tax environment, and that appropriate provisions and other disclosure with respect to uncertain tax positions were reflected in the financial statements. | |||||||
The appropriateness of the valuation of post employment liabilities, and the recognition of any surplus. Refer to note 14 of the Financial Statements. | The measurement of post employment liabilities is sensitive to changes in long-term interest rates, inflation and mortality assumptions. Having reviewed management’s papers setting out key changes to actuarial assumptions, the Audit Committee agreed that the assumptions used in the valuation are appropriate. The Committee reviewed management’s assessment of the economic benefit available as a refund of the surplus or as a reduction of contribution and the key judgements made in respect of the surplus restriction and concluded that those judgements were appropriate. The Committee reviewed and concluded that sufficient disclosures were provided in the financial statements. | |||||||
Significant legal matters impacting the group. Refer to note 19 of the Financial Statements. | The Committee agreed that adequate provision and/or disclosure have been made for all material litigation and disputes, based on the current most likely outcomes, including the litigation summarised in note 19 of the Financial Statements. | |||||||
Accounting for business combinations. Refer to note 8 of the Financial Statements. | Diageo acquired Kanlaon Limited and Chat Noir Co. Inc. on 10 March 2023 and completed a number of other smaller acquisitions during the year ended 30 June 2023, for an aggregate consideration of £397 million. As at the completion date of these acquisitions, Diageo performed valuations of the identifiable assets and liabilities and the resulting goodwill. The purchase price allocation exercises are subject to management’s judgement and estimates, including forecast cash flows, buyer specific synergies and the applicable discount rates used in valuations. The Committee reviewed management’s purchase price allocations and the disclosures provided in the Financial Statements and concluded they were appropriate. | |||||||
Functional currency of Diageo plc and presentation currency of Diageo group. | The Audit Committee agreed that in line with reporting requirements the functional currency of Diageo plc has changed from sterling to US dollar which is applied prospectively from fiscal 24. This is because the group's share of net sales and expenses in the US and other countries whose currencies correlate closely with the US dollar has been increasing over the years, and that trend is expected to continue in line with the group's strategic focus. Diageo has also decided to change its presentation currency to US dollar with effect from 1 July 2023, applied retrospectively, as it believes that this change will provide better alignment of the reporting of performance with its business exposures. | |||||||
Whether the Annual Report is fair, balanced and understandable. | The Audit Committee concluded that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy and that there is an appropriate balance between statutory (GAAP) and adjusted (non-GAAP) measures ensuring equal prominence. | |||||||
The impact of climate change on the group’s financial reporting and financial statements. Refer to pages 91-110 of 'Pioneer grain-to-glass sustainability' and note 1 and note 9 of the Financial Statements. | The Audit Committee agreed that the disclosures on pages 91-110 made in response to the recommendations of the Task Force on Climate-related Financial Disclosures are appropriate and that the assumptions used in the financial statements are consistent with these disclosures. |
Number of Board members | Percentage of the Board | Number of senior positions on the Board (CEO, CFO, SID and Chair) | Number in executive management | Percentage of executive management | |||||||||||||
Men | 3 | 27.3 | % | 1 | 7 | 50.0 | % | ||||||||||
Women | 8 | 72.7 | % | 3 | 7 | 50.0 | % | ||||||||||
Not specified/prefer not to say | — | — | — | — | — |
Number of Board members | Percentage of the Board | Number of senior positions on the Board (CEO, CFO, SID and Chair) | Number in executive management | Percentage of executive management | |||||||||||||
White British or other White (including minority-white groups) | 7 | 63.6 | % | 3 | 8 | 57.1 | % | ||||||||||
Mixed/Multiple Ethnic Groups | — | — | — | — | — | ||||||||||||
Asian/Asian British | 3 | 27.3 | % | 1 | 3 | 21.4 | % | ||||||||||
Black/African/Caribbean/Black British | 1 | 9.1 | % | — | 1 | 7.2 | % | ||||||||||
Other ethnic group, including Arab | — | — | — | 2 | 14.3 | % | |||||||||||
Not specified/prefer not to say | — | — | — | — | — |
Board composition | Non-Executive Director tenure | Board gender diversity | Board ethnic diversity |
ò | Chairman | ò | 0 – 3 years | ò | Male | ò | Directors of colour | |||||||||||||||||||||||||
ò | Executive director | ò | 3 – 6 years | ò | Female | ò | White European | |||||||||||||||||||||||||
ò | Non-executive director | ò | 6 – 9 years |
ò | British | ò | Indian | |||||||||||
ò | American | ò | Irish | |||||||||||
ò | American/British | ò | South African/British | |||||||||||
ò | Colombian | ò | Spanish | |||||||||||
ò | French |
Delivery of business strategy | |||||
Short and long-term incentive plans reward the delivery of our business strategy and Performance Ambition. Performance measures are reviewed regularly and stretching targets are set relative to the company’s growth plans and peer group forecasted performance. The Committee seeks to embed simplicity and transparency in the design and delivery of executive reward. | |||||
Creating sustainable, long-term performance | |||||
A significant proportion of remuneration is delivered in variable pay linked to business and individual performance, focussed on consistent and responsible drivers of long-term growth. Performance against targets is assessed in the context of underlying business performance and the ‘quality of earnings’. | |||||
Winning best talent | |||||
Well designed and market-competitive total remuneration, with an appropriate balance of fixed reward and upside opportunity, allows us to attract and retain the best talent from all over the world in a competitive talent market, which is critical to our continued business success. | |||||
Consideration of stakeholder interests | |||||
Executives are focussed on creating sustainable share price growth. The requirement to build significant personal shareholdings in Diageo, and to hold shares acquired from long-term incentive awards for two years post-vesting aligns executives and shareholders. Decisions on executive remuneration are made with consideration of the interests of the wider workforce and other stakeholders, as well as the external climate. |
Remuneration at a glance | |||||||||||||||||||||||
Salary | Allowances and benefits | Annual incentive | Long-term incentives | Shareholding requirement | |||||||||||||||||||
Purpose | |||||||||||||||||||||||
Key features of current policy & proposed key policy changes | Proposed policy change: Post-employment shareholding requirement for Executive Directors of 100% of in-employment requirement to be retained in full for two years after leaving the company | ||||||||||||||||||||||
Planned for year ending 30 June 2024 | 4% salary increase for the CFO, below the annual salary budgets for the wider workforce in the United Kingdom New CEO appointment from 5 June 2023. No salary increase in fiscal 24 | Allowances and benefits unchanged from prior year Company pension contributions 14% of salary | Size of annual incentive award opportunity is unchanged from prior year. For fiscal 24, measures are net sales growth, operating profit growth and operating cash conversion, 80% in total weighted equally, with remaining 20% on individual objectives | Performance measures are net sales growth, relative TSR, cumulative free cash flow, profit before exceptional items and tax and ‘Society 2030: Spirit of Progress‘ measures Size of long-term incentive award opportunity is unchanged from prior year | No change to in-employment shareholding requirement Post-employment shareholding of 100% of in-year shareholding for two years after leaving the company | ||||||||||||||||||
Implementation in year ended 30 June 2023 | – For Total payout of 37.25% of maximum for the prior CEO, 35.38% for the CEO and 36.0% for the CFO | Vesting of 2020 performance shares at 98.7% of maximum for Ivan Menezes, and 98.8% of maximum for Debra Crew and Lavanya Chandrashekar Vesting of 2020 share options at 77.5% of maximum for Ivan Menezes and Debra Crew. Lavanya Chandrashekar did not receive share options in 2020 | As at 30 June 2023, | – Size | As at 30 June 2023, Debra Crew's shareholding was 1% of salary (she has until 8 June 2028 to meet her requirement) As at 30 June 2023, Lavanya Chandrashekar's shareholding | ||||||||||||||||||
Implementation in year ended 30 June 2022 | – | – •As at 30 June 2022, | |||||||||||||||||||||
– Company pension contribution: – CEO 20% of salary – CFO 20% of salary | – Payout of 100% of maximum for the financial element of the plan – Total payout of 93.75% of maximum for the CEO and 91.3% of maximum for the CFO | – Vesting of 2018 share options at 10% of maximum |
For | Against | Total votes cast | Abstentions | For | Against | Total votes cast | Abstentions | |||||||||||||||||||||||||||
Directors’ remuneration policy1 | Total number of votes | 1,644,443,671 | 121,538,951 | 1,765,982,622 | 3,321,427 | |||||||||||||||||||||||||||||
Percentage of votes cast | 93.12 | % | 6.88 | % | 100 | % | n/a | |||||||||||||||||||||||||||
Directors' remuneration report (excluding the policy)2 | Total number of votes | 1,661,293,734 | 68,483,076 | 1,729,776,810 | 23,650,135 | |||||||||||||||||||||||||||||
Percentage of votes cast | 96.04 | % | 3.96 | % | 100 | % | n/a | |||||||||||||||||||||||||||
Directors’ remuneration policy(1) | Directors’ remuneration policy(1) | Total number of votes | 1,644,443,671 | 121,538,951 | 1,765,982,622 | 3,321,427 | ||||||||||||||||||||||||||||
Percentage of votes cast | 93.12 | % | 6.88 | % | 100 | % | n/a | |||||||||||||||||||||||||||
Directors' remuneration report (excluding the policy)(2) | Directors' remuneration report (excluding the policy)(2) | Total number of votes | 1,612,245,424 | 88,630,650 | 1,700,876,074 | 28,285,201 | ||||||||||||||||||||||||||||
Percentage of votes cast | 94.79 | % | 5.21 | % | 100 | % | n/a |
principles | |||||||||||
The annual incentive payout for employees below the Executive Committee also reflects strong holistic business performance, and their bonus is derived from the same measures that underpin the Executive | |||||||||||
l | Base salary | |||||||
Purpose and link to strategy | ||||||||
Supports the attraction and retention of the best global talent with the capability to deliver Diageo’s strategy and performance goals. | ||||||||
Operation | ||||||||
Opportunity | ||||||||
Salary increases will be made in the context of the broader employee pay environment, and will normally be in line with those made to other employees in the relevant markets in which Diageo operates, typically the United Kingdom and the United States, unless there is a change in role or responsibility or other exceptional circumstances. | ||||||||
l | Benefits | |||||||
Purpose and link to strategy | ||||||||
Provides market-competitive and cost-effective | ||||||||
Operation | ||||||||
Opportunity | ||||||||
l | Post-retirement provision | |||||||
Purpose and link to strategy | ||||||||
Provides | ||||||||
Operation | ||||||||
Opportunity | ||||||||
l | Annual Incentive Plan (AIP) | |||||||
Purpose and link to strategy | ||||||||
Incentivises delivery of Diageo’s annual financial | ||||||||
Operation | ||||||||
Opportunity | ||||||||
For threshold performance, up to 50% of salary may be earned, with up to 100% of salary earned for on-target performance and a maximum of 200% of salary payable for outstanding performance. The maximum includes the deferred share element but excludes dividend equivalents payable in respect of deferred share awards. | ||||||||
Performance conditions | ||||||||
Annual incentive plan awards are normally based 70%-100% on financial measures which may include, but are not limited to, measures of sales, profit and cash, and 0%-30% on broader objectives based on strategic goals and/or individual contribution. The Remuneration Committee has discretion to amend the performance measures in exceptional circumstances if it considers it appropriate to do so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and explained in the following year’s annual report on remuneration. | ||||||||
l | Diageo Long-Term Incentive Plan (DLTIP) | |||||||
Purpose and link to strategy | ||||||||
Provides | ||||||||
Operation | ||||||||
Opportunity | ||||||||
Performance conditions | ||||||||
Malus and Clawback | ||||||||
Under the AIP and DLTIP, the Remuneration Committee has discretion to apply malus and clawback in the circumstances specified in the applicable malus and clawback policy from time to time in place, for example: •Material misstatement of results or an error resulting in overpayment. •Risk failure resulting in material financial loss or any business area being the subject of a regulatory investigation or in breach of regulation. •Employee misconduct/disciplinary action. •Employee accountability for material reputational damage to the group which could have been avoided. •In respect of the application of malus, deterioration in the financial situation of the Group which limits the ability to fund incentive awards. •Any other matter which, in the reasonable opinion of the Remuneration Committee, is required to be considered to comply with prevailing legal and/or regulatory requirements. The malus and clawback provisions may be invoked for one year following an AIP cash payment and two years following a DLTIP vesting. Where the Remuneration Committee determines that malus and/or clawback will apply, the Remuneration Committee has discretion to determine the basis of application and the means by which malus and/or clawback will be implemented. The malus and clawback policy will be reviewed from time to time to ensure that the policy is compliant with any regulatory requirements, such as the NYSE listing rules. |
l | All-employee share plans | ||||
Purpose and link to strategy | |||||
To encourage broader employee share ownership through locally approved plans. | |||||
Operation | |||||
Opportunity | |||||
Performance conditions | |||||
l | Shareholding requirement | ||||
Purpose and link to strategy | |||||
Operation | |||||
•Executive Directors •The Executive Directors enter into a deed undertaking to | |||||
l | Chairman of the Board and Non-Executive | ||||
Purpose and link to strategy | |||||
Operation | |||||
Opportunity | |||||
Executive Director | Date of service contract | ||||
Lavanya Chandrashekar | 13 January 2021 | ||||
Notice period | The contracts provide for a period of six months’ notice by the Executive Director or 12 months’ notice by the company, the same as would apply for any newly-appointed Executive Director. A payment may be made in lieu of notice consisting of a sum equivalent to If, on the termination date, the Executive Director has exceeded | ||||
Mitigation | The Remuneration Committee requires (or may exercise its discretion to | ||||
Annual Incentive Plan (AIP) | Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, the Executive Director is usually entitled to an incentive payment pro-rated for the period of service during the performance period, which is typically payable at the usual payment | ||||
2020 Deferred Bonus Share Plan (DBSP) | Where the Executive Director leaves for any reason other than dismissal, they are entitled to retain any deferred bonus shares, which | ||||
Diageo | Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, awards continue in effect. Awards will vest on the original vesting date with the exception of death in service, when awards will vest on the date of death, in each case unless the Remuneration Committee decides The proportion of the award released depends on the extent to which the performance condition is met. The number of shares is reduced on a pro-rata basis reflecting the length of time the Executive Director was employed by the company during the performance period, unless the Remuneration Committee decides otherwise (for example, in the case of death in service). Where an Executive Director leaves within one month of the normal vesting date of the award, awards are not time pro-rated, unless the Remuneration Committee decides otherwise. On a takeover or other corporate event, awards vest subject to the extent to which the performance conditions are met and, unless the Remuneration Committee decides otherwise, the awards are time pro-rated. Otherwise the Committee, in agreement with the new company, may decide that awards should be swapped for awards over shares in the new | ||||
Repatriation/other | In cases where an Executive Director was recruited from outside the United Kingdom and has been relocated to the United Kingdom as part of their appointment, the company |
Non-Executive Directors | Date of appointment to the Board | Current letter of appointment expires | ||||||
Javier Ferrán | 22 July 2016 | AGM | ||||||
Susan Kilsby | 4 April 2018 | AGM 2024 | ||||||
Melissa Bethell | 30 June 2020 | AGM 2023 | ||||||
Valérie Chapoulaud-Floquet | 1 January 2021 | AGM 2024 | ||||||
Sir John Manzoni | 1 October 2020 | AGM 2023 | ||||||
Lady Mendelsohn | 1 September 2014 | AGM 2023 | ||||||
Alan Stewart | 1 September 2014 | AGM 2023 | ||||||
Ireena Vittal | 2 October 2020 | AGM 2023 | ||||||
Karen Blackett | 1 June 2022 | AGM 2025 |
Ivan Menezes1 | Lavanya Chandrashekar1 | |||||||||||||||||||||||||
2022 | 2022 | 2021 | 2021 | 2022 | 2022 | 2021 | 2021 | |||||||||||||||||||
£ '000 | $ '000 | £ 000 | $ 000 | £ '000 | $ '000 | '000 | '000 | |||||||||||||||||||
Salary | £1,277 | $1,699 | £1,231 | $1,661 | £733 | $975 | n/a | n/a | ||||||||||||||||||
Benefits2 | £133 | $177 | £82 | $111 | £429 | $571 | ||||||||||||||||||||
Pension3 | £209 | $278 | £306 | $413 | £103 | $138 | ||||||||||||||||||||
Total fixed pay6 | £1,619 | $2,153 | £1,619 | $2,185 | £1,265 | $1,684 | ||||||||||||||||||||
Performance related pay | ||||||||||||||||||||||||||
Annual incentive4 | £2,413 | $3,209 | £2,308 | $3,115 | £1,320 | $1,755 | ||||||||||||||||||||
Long-term incentives5 | £3,850 | $5,120 | £2,092 | $2,825 | £131 | $174 | ||||||||||||||||||||
Total variable pay6 | £6,262 | $8,329 | £4,400 | $5,940 | £1,450 | $1,929 | ||||||||||||||||||||
Total single figure of remuneration6 | £7,881 | $10,482 | £6,019 | $8,125 | £2,716 | $3,613 |
Ivan Menezes(1) (2) | Debra Crew(1) (2) | Lavanya Chandrashekar(1) | ||||||||||||||||||||||||||||||||||||
2023 | 2023 | 2022 | 2022 | 2023 | 2023 | 2022 | 2022 | 2023 | 2023 | 2022 | 2022 | |||||||||||||||||||||||||||
£ '000 | $ '000 | £ '000 | $ '000 | £ '000 | $ '000 | £ '000 | $ '000 | £ '000 | $ '000 | £ '000 | $ '000 | |||||||||||||||||||||||||||
Fixed pay | ||||||||||||||||||||||||||||||||||||||
Salary (3) | £1,403 | $1,683 | £1,277 | $1,699 | £105 | $126 | n/a | n/a | £831 | $997 | £733 | $975 | ||||||||||||||||||||||||||
Benefits (4) | £124 | $149 | £133 | $177 | £4 | $5 | n/a | n/a | £53 | $63 | £429 | $571 | ||||||||||||||||||||||||||
Pension(5) | £— | $— | £209 | $278 | £10 | $13 | n/a | n/a | £110 | $133 | £103 | $138 | ||||||||||||||||||||||||||
Total fixed pay(9) | £1,527 | $1,832 | £1,619 | $2,153 | £120 | $145 | n/a | n/a | £993 | $1,193 | £1,265 | $1,684 | ||||||||||||||||||||||||||
Performance related pay | ||||||||||||||||||||||||||||||||||||||
Annual incentive(6) | £1,019 | $1,223 | £2,413 | $3,209 | £79 | $95 | n/a | n/a | £603 | $723 | £1,320 | $1,755 | ||||||||||||||||||||||||||
Long-term incentives(7) | £8,036 | $9,643 | £3,312 | $4,405 | £204 | $245 | n/a | n/a | £286 | $343 | £121 | $161 | ||||||||||||||||||||||||||
Other incentives (8) | £0 | $0 | £0 | $0 | £0 | $0 | n/a | n/a | £3 | $4 | n/a | n/a | ||||||||||||||||||||||||||
Total variable pay(9) | £9,055 | $10,866 | £5,724 | $7,613 | £284 | $340 | n/a | n/a | £892 | $1,070 | £1,440 | $1,916 | ||||||||||||||||||||||||||
Total single figure of remuneration(9) | £10,582 | $12,698 | £7,343 | $9,767 | £403 | $485 | n/a | n/a | £1,885 | $2,263 | £2,706 | $3,599 |
Exchange rate | The amounts shown in US dollars are converted to sterling using the cumulative weighted average exchange rate for the respective financial year. For the year ended 30 June 2023, the exchange rate was £1 = $1.20 and for the year ended 30 June 2022, the exchange rate was £1 = | ||||||||||
CEO transition | Ivan Menezes' pay and benefits reflects time served in fiscal 2023 up to and including the date of his death-in-service, which was also his last day of employment (6 June 2023). Debra Crew's pay and benefits reflect the period 5 to 30 June 2023 only, following her appointment as interim CEO on 5 June 2023 and CEO and Executive Director on 8 June 2023. | ||||||||||
(3) | Salary | Ivan Menezes' salary figure includes an amount of £42k in respect of untaken annual leave. | |||||||||
(4) | Benefits | The | |||||||||
Pension | Pension benefits earned during the year | Page | |||||||||
Annual incentive | The performance In accordance with | Page | |||||||||
Long-term incentives | Long-term incentives represent the estimated gain (based on the average three-month ADR price to 30 June 2023 of $178.52) delivered through share options and performance shares where performance conditions have been met in the respective financial year. It also includes the value of additional shares earned in lieu of dividends on these vested performance shares. For Ivan Menezes, the 2023 long-term incentives amount comprises performance shares and share options awarded in 2020 and vesting at 98.7% and 77.5% of maximum respectively. For Debra Crew, the 2023 amount reflects the period 5 to 30 June (as a proportion of the three-year performance period). The 2020 performance shares and share options were granted before she became an Executive Director, and due to a slightly different vesting schedule for awards granted below the Board, vested at 98.8% and 77.5% of maximum respectively. Lavanya Chandrashekar's 2020 performance share award was also granted before she became an Executive Director and vested at 98.8% of maximum. Of the 2023 long-term incentive amounts shown in the table above, £2,954k for Ivan Menezes, £67k for Debra Crew and £72k for Lavanya Chandrashekar related to share price appreciation over the fiscal 21 to fiscal 23 performance period. For 2022, long-term incentives comprise performance shares and share options awarded in 2019 £642k of the value reported above for Ivan For 2021, long-term incentives comprise performance shares and share options awarded in 2018 that vested in September 2021 at 29.3% and 10% of maximum respectively, and dividend shares arising on | Page |
Other incentives | Other incentives include the grant face value of awards made under the all-employee share plans. Awards do not have performance conditions attached. | ||||||||||
(9) | Totals | Some figures and sub-totals add up to slightly different amounts than the totals due to rounding. |
Annual incentive plan (AIP) payouts for 2023 |
Group financial measures1 | ||||||||||||||||||||
Measure | Weighting | Threshold | Target6 | Maximum | Actual | Payout (% of total AIP opportunity) | ||||||||||||||
Payout opportunity (% maximum) | 25 | % | 50 | % | 100 | % | ||||||||||||||
Net sales (% growth)2 | 26.6 | % | 5.2 | % | 8.2 | % | 11.2 | % | 21.4 | % | 26.6 | % | ||||||||
Operating profit (% growth)2 | 26.6 | % | 8.0 | % | 14.0 | % | 20.0 | % | 26.3 | % | 26.6 | % | ||||||||
Operating cash conversion3 | 26.6 | % | 94.0 | % | 99.0 | % | 104.0 | % | 105.1 | % | 26.6 | % | ||||||||
Full year performance for 1 July 2021 - 30 June 2022 | 80.0 | % | 80.0 | % | ||||||||||||||||
Net sales (% growth)2 | 26.6 | % | 25.5 | % | 31.3 | % | 37.1 | % | 39.3 | % | 26.6 | % | ||||||||
Operating profit (% growth)2 | 26.6 | % | 38.1 | % | 53.1 | % | 68.0 | % | 69.7 | % | 26.6 | % | ||||||||
Operating cash conversion3 | 26.6 | % | 90.0 | % | 100.0 | % | 101.0 | % | 110.5 | % | 26.6 | % | ||||||||
Half-year performance for 1 January 2021 - 30 June 2021 | 80.0 | % | 80.0 | % | ||||||||||||||||
Actual | ||||||||||||||||||||
Full-year net sales (% growth)2 | 16.0 | % | ||||||||||||||||||
Full-year operating profit (% growth)2 | 17.7 | % | ||||||||||||||||||
Full-year operating cash conversion3 | 110.5 | % | ||||||||||||||||||
Group financial measures(1) | ||||||||||||||||||||
Measure | Weighting | Threshold | Target | Maximum | Actual | Payout (% of total AIP opportunity) | ||||||||||||||
Payout opportunity (% maximum) | 25 | % | 50 | % | 100 | % | ||||||||||||||
Net sales (% growth)(2) | 26.7 | % | 3.5 | % | 6.5 | % | 9.5 | % | 6.5 | % | 13.34 | % | ||||||||
Operating profit (% growth)(2) | 26.7 | % | 2.5 | % | 7.5 | % | 12.5 | % | 7.0 | % | 12.67 | % | ||||||||
Operating cash conversion(3) | 26.7 | % | 95.0 | % | 100.0 | % | 105.0 | % | 93.3 | % | — | |||||||||
Full year performance for 1 July 2022 - 30 June 2023 | 80.0 | % | 26.00 | % | ||||||||||||||||
Individual business objectives | Individual business objectives | Individual business objectives | ||||||||||||||||||||
Measure (IBOs equally weighted) and target | Measure (IBOs equally weighted) and target | Weighting | Result | Payout (% of total AIP opportunity) | Measure (IBOs equally weighted) and target | Weighting | Result | Payout (% of total AIP opportunity) | ||||||||||||||
Ivan Menezes Chief Executive | Ivan Menezes Chief Executive | 20 | % | 13.75 | % | Ivan Menezes Chief Executive | 20.00 | % | 11.25 | % | ||||||||||||
Global Market Share Performance - Grow or hold off-trade market share in 2/3rds of total net sales in measured markets. | We grew or held off-trade market share in over 85% of total net sales in measured markets.6 | 7.50 | % | |||||||||||||||||||
Positive drinking Achieve improvement in Positive Drinking in fiscal 22 Launch revamped DRINKiQ platform in 46 countries and ensure campaigns to amplify awareness running in all markets. Launch and amplify Wrong Side of the Road (WSOTR) Programme and educate 375,000 people on the dangers of drink driving. Reach 450 million consumers with a dedicated responsible drinking message from Diageo and our brands. | DRINKiQ (our responsible drinking tool) is now available in 73 countries in 23 languages, with amplification campaigns running around the world. This achievement means we have reached our 2030 target of launching DRINKiQ in all of our markets. WSOTR is a hard-hitting new programme to support changes in attitudes to drink driving globally. Despite the impacts from Covid-19 delaying and/or preventing campaign launches in multiple markets, the WSOTR Programme reached 500,415 people in 24 countries by the end of fiscal 22. By the end of fiscal 22, we reached 456 million people with messages of moderation. | 6.25 | % | |||||||||||||||||||
Global market share performance Grow or hold total trade market share in 2/3rds of total net sales in measured markets. | Global market share performance Grow or hold total trade market share in 2/3rds of total net sales in measured markets. | 10.00 | % | We gained or held total trade market share in markets that total 70% of our net sales in fiscal 23(6) | 5.00 | % | ||||||||||||||||
Positive drinking Continued improvement in Positive Drinking in fiscal 23 Educate 809,000 people on the dangers of underage drinking. Progress towards a cumulative total of 1 billion people with dedicated responsible drinking messaging by 2030. Help create a thriving hospitality sector post Covid-19 where responsible drinking is the norm by reaching 19,400 people by the end of fiscal 23 through skills building programmes. | Positive drinking Continued improvement in Positive Drinking in fiscal 23 Educate 809,000 people on the dangers of underage drinking. Progress towards a cumulative total of 1 billion people with dedicated responsible drinking messaging by 2030. Help create a thriving hospitality sector post Covid-19 where responsible drinking is the norm by reaching 19,400 people by the end of fiscal 23 through skills building programmes. | 10.00 | % | Positive drinking targets for fiscal 23 have been exceeded as set out below: By the end of fiscal 23, we had educated just under 2 million people on the dangers of underage drinking, far exceeding the target. The 2030 target of reaching 1 billion people with dedicated responsible drinking messaging has been met several years earlier than planned. Significant achievement with Diageo markets across the world reaching 31,600 people with business and hospitality skills training. | 6.25 | % | ||||||||||||||||
Lavanya Chandrashekar Chief Financial Officer | Lavanya Chandrashekar Chief Financial Officer | 20 | % | 10.00 | % | Lavanya Chandrashekar Chief Financial Officer | 20.00 | % | 10.00 | % | ||||||||||||
Global Operating Margin - Grow operating margin in line with overall AOP. | Achieved the overall financial performance of the company versus AOP in fiscal 22. | 5.00 | % | |||||||||||||||||||
Transformation of Global Business Operations Reduce time taken to set up customers and suppliers to increase speed to market and support growth. Reduction of 30% in manual journal entries. Improve Service Level Agreement (SLA) performance by resolving 80% of critical and high priority incidents within the specified SLA timeframe. | Significant progress made with the pilot market exceeding the target set and the global average time to set up customers substantially reduced from prior year. Technology solution designed to hit the target number of days to set up customers has been finalised and implementation was commenced in fiscal 22. Set up time for onboarding new suppliers has been reduced and the lead market has hit the supplier set up target in fiscal 22. Approximate reduction in manual journal entries of 75%, exceeding the target. Target exceeded, with 83% of combined critical and high priority incidents resolved within SLA timeframe in fiscal 22. | 5.00 | % | |||||||||||||||||||
Global operating margin Deliver Operating Margin in line with fiscal 23 Annual Operating Plan (AOP). | Global operating margin Deliver Operating Margin in line with fiscal 23 Annual Operating Plan (AOP). | 10.00 | % | Achieved a performance level just below AOP for fiscal 23. | 3.75 | % | ||||||||||||||||
Finance Transformation Reduce time taken to set up customers in specified markets, thereby increasing speed to market and supporting growth. Reduce finance organisation costs (people and indirect) by £10 million. Close 80% of audit management action plans on time. Improve Service Level Agreement(SLA) performance by resolving 80% of both critical and high priority incidents within the specified SLA timeframe. | Finance Transformation Reduce time taken to set up customers in specified markets, thereby increasing speed to market and supporting growth. Reduce finance organisation costs (people and indirect) by £10 million. Close 80% of audit management action plans on time. Improve Service Level Agreement(SLA) performance by resolving 80% of both critical and high priority incidents within the specified SLA timeframe. | 10.00 | % | There has been over delivery on the finance transformation milestones for fiscal 23 as follows: Delivered a new integrated customer account solution into six markets making customer set up time faster than the target of 10 business days. Delivered finance productivity savings of greater than £18m. Closure of 100% of all audit management actions, where these were required. SLA improvement target exceeded for high priority incidents and just under target for critical incidents. | 6.25 | % |
Payout | ||||||||||||||||||||
Group (weighted 80%) | IBO (weighted 20%) | Total (% max) | Total (% salary) | Total (’000)4 GBP | Total (’000) USD | |||||||||||||||
Ivan Menezes4,5 | 80.0 | % | 13.75 | % | 93.75 | % | 187.50 | % | £2,413 | $3,209 | ||||||||||
Lavanya Chandrashekar4,5 | 80.0 | % | 10.00 | % | 90.00 | % | 180.00 | % | £1,320 | $1,755 |
Payout | ||||||||||||||||||||
Group (weighted 80%) | IBO (weighted 20%) | Total (% max) | Total (% annual salary) | Total (’000)4 GBP | Total (’000) USD | |||||||||||||||
Ivan Menezes(4),(5) | 26.0 | % | 11.25 | % | 37.25 | % | 69.40 | % | £1,019 | $1,223 | ||||||||||
Debra Crew(4),(5) | 26.0 | % | 9.38 | % | 35.38 | % | 5.40 | % | £79 | $95 | ||||||||||
Lavanya Chandrashekar(4),(5) | 26.0 | % | 10.00 | % | 36.00 | % | 72.00 | % | £603 | $723 |
Long-term incentive plans (LTIPs) vesting in 2023 |
TSR ranking (out of 17) | Vesting (% max) | ||||
1st, 2nd or 3rd | 100 | ||||
4th | 95 | ||||
5th | 75 | ||||
6th | 65 | ||||
7th | 55 | ||||
8th | 45 | ||||
9th | 20 | ||||
10th or below | 0 |
TSR peer group (16 companies) | ||||||||
AB Inbev | Heineken | Pernod Ricard | ||||||
Brown-Forman | Kimberly-Clark | Procter & Gamble | ||||||
Carlsberg | L'Oréal | Reckitt Benckiser | ||||||
The Coca-Cola Company | Mondelēz International | Unilever | ||||||
Colgate-Palmolive | Nestlé | |||||||
Groupe Danone | PepsiCo | |||||||
Vesting of 2019 DLTIP5 | Weighting | Threshold | Midpoint | Maximum | Actual | Vesting (% maximum)5 | ||||||||||||||
Vesting if performance achieved (% maximum) | 20 | % | 60 | % | 100 | % | ||||||||||||||
Organic net sales growth (CAGR)1 | 33 | % | 3.75 | % | 4.875 | % | 6.0 | % | 8.9 | % | 33.3 | % | ||||||||
Adjusted profit before exceptional items and tax (CAGR)2 | 33 | % | 4.5 | % | 7.5 | % | 10.5 | % | 8.8 | % | 26.0 | % | ||||||||
Cumulative free cash flow3 | 33 | % | £8,600m | £9,100m | £9,600m | £8,271m | 0.0 | % | ||||||||||||
Vesting of performance shares (% maximum) | 59.3 | % | ||||||||||||||||||
Adjusted profit before exceptional items and tax (CAGR)2 | 50 | % | 4.5 | % | 7.5 | % | 10.5 | % | 8.8 | % | 39.0 | % | ||||||||
Relative total shareholder return4 | 50 | % | 9th | – | 3rd | 8th | 22.5 | % | ||||||||||||
Vesting of share options (% maximum) | 61.5 | % |
Vesting of 2020 DLTIP(5) | Weighting | Threshold | Midpoint | Maximum | Actual | Ivan Menezes vesting (% maximum)(5) | Debra Crew vesting (% maximum)(5)(6) | Lavanya Chandrashekar vesting (% maximum)(5)(6) | ||||||||||||||||||
Vesting if performance achieved (% maximum) | 20%/25% | 60%/62.5% | 100 | % | ||||||||||||||||||||||
Organic net sales growth (NSV)(1) | 40 | % | 4.00 | % | 6.000 | % | 8.0 | % | 14.5 | % | 40.0 | % | 40.0 | % | 40.0 | % | ||||||||||
Profit before exceptional items and tax (PBET) growth(2) | 40 | % | 4.5 | % | 8.3 | % | 12.0 | % | 16.5 | % | 40.0 | % | 40.0 | % | 40.0 | % | ||||||||||
Carbon reduction (ESG) | 5 | % | 0.063 | 0.103 | 0.143 | 0.147 | 5.0 | % | 5.0 | % | 5.0 | % | ||||||||||||||
Water efficiency (ESG) | 5 | % | 6 | % | 9 | % | 11 | % | 9 | % | 3.7 | % | 3.8 | % | 3.8 | % | ||||||||||
Positive drinking (ESG) | 5 | % | 0.75m | 1.0m | 1.25m | 2.2m | 5.0 | % | 5.0 | % | 5.0 | % | ||||||||||||||
Inclusion & diversity - % female leaders globally (ESG) | 3 | % | 41 | % | 42 | % | 43 | % | 44 | % | 2.5 | % | 2.5 | % | 2.5 | % | ||||||||||
Inclusion & diversity - % ethnically diverse leaders globally (ESG) | 3 | % | 38 | % | 39 | % | 40 | % | 43 | % | 2.5 | % | 2.5 | % | 2.5 | % | ||||||||||
Vesting of performance shares (% maximum) | 98.7 | % | 98.8 | % | 98.8 | % | ||||||||||||||||||||
Cumulative free cash flow (FCF)(3) | 50 | % | £6,200m | £7,200m | £8,200m | £8,404m | 50.0 | % | 50.0 | % | n/a | |||||||||||||||
Relative total shareholder return(4) | 50 | % | 9th | – | 3rd | 7th | 27.5 | % | 27.5 | % | n/a | |||||||||||||||
Vesting of share options (% maximum) | 77.5 | % | 77.5 | % | n/a |
Vesting of 2019 DLTIP4 | Weighting | Threshold | Midpoint | Maximum | Actual | Vesting (% maximum)4 | ||||||||||||||
Vesting if performance achieved (% maximum) | 25 | % | 62.5 | % | 100 | % | ||||||||||||||
Organic net sales growth (CAGR)1 | 33 | % | 3.75 | % | 4.875 | % | 6.0 | % | 8.9 | % | 33.3 | % | ||||||||
Adjusted profit before exceptional items and tax (CAGR)2 | 33 | % | 4.5 | % | 7.5 | % | 10.5 | % | 8.8 | % | 26.5 | % | ||||||||
Cumulative free cash flow3 | 33 | % | £8,600m | £9,100m | £9,600m | £8,271m | 0.0 | % | ||||||||||||
Vesting of performance shares (% maximum) | 59.8 | % |
Award | Award Date | Awarded (ADRs) | Vesting (% Max) | Vesting (ADRs) | Option price | ADR price | Dividend Equivalent share | Estimated Value ( (2) The value of performance share awards and options awarded and vesting included in the table above for Debra Crew are pro-rata amounts reflecting the period from 5 to 30 June as a proportion of the three-year performance period, as shown in the single figure of remuneration on page 174. The 1,176 pro-rata performance shares awarded comprises 714 performance shares granted under the DLTIP (total award of 30,076 ADRs) and 462 performance shares granted under the DESAP (total award of 19,494 ADRs), which was granted in recognition of equity which was forfeited on joining Diageo. The pro-rata share options number reflects 714 share options granted under the DLTIP (total award of 30,076 ADRs) In considering the vesting outcome of the 2020 DLTIP awards, the Remuneration Committee was especially cognisant of investor concerns around the potential risk of windfall gains following volatility in global stock markets at the time of grant as a result of the Covid-19 pandemic. The Committee considered a number of factors including share price movement over the performance period (up 26%), Diageo's underlying financial performance, historical award and vesting levels and absolute award value. The Committee noted that the 2020 DLTIP awards were made in September 2020 and, in line with usual Diageo practice, the number of awards granted was determined using a six-month average share price up to 30 June. This helps to smooth out share price volatility and, at $143.63 for the 2020 grants, the price used to calculate the awards was only around 10% lower than the prior year's price. The Committee considered Diageo’s overall business performance and value created for shareholders and other relevant factors over the period and determined that the outcomes were fair and appropriate and made no adjustment to the payouts. It also considered the level of difficulty of the targets set at a time of uncertainty and determined that the vesting outcome was consistent with Diageo's long-term performance and returns to shareholders. Diageo's compound annual growth in net sales and profit over this period have also been at the top end of the global peer group. Pensions and benefits in the year ended 30 June Benefits provisions for the Executive Directors are in accordance with the information set out in the Directors’ remuneration Pension arrangements Ivan Menezes The SERP is an unfunded, non-qualified supplemental retirement programme. Under the plan, accrued company contributions are subject to quarterly interest credits. Under the rules of the SERP, Ivan Menezes, Debra Crew and Lavanya Chandrashekar participated in the US Cash Balance Plan and the Benefit Supplemental Plan (BSP), until August 2012, 30 September 2022 and June 2021 respectively, and have accrued benefits under both plans. The Cash Balance Plan is a qualified funded pension arrangement. Employer contributions Ivan Menezes was also a member of the Diageo Pension Scheme (DPS) in the United Kingdom between 1 February 1997 and 30 November 1999. The accrual of pensionable service ceased in 1999 but the linkage to salary remained until January 2012. Upon death in service on 6 June 2023, a life insurance benefit of $3 million 183 Governance (continued) The table below shows the pension benefits accrued by each Executive Director as at year end (or to
(3) Lavanya Chandrashekar's US benefits are higher at 30 June 2023 than at 30 June 2022 by £111k. The breakdown of this relates to £122k of which is due to pension benefits earned over the year (£110k of which is over and above the increase due to inflation – as reported in the single figure of remuneration, see page 174), £7k of which is due to interest earned on her deferred US benefits over the year and a reduction of (£18k) of which is due to exchange rate movements over the year. The Normal Retirement Age applicable to each Director’s benefits depends on the pension scheme, as outlined below.
Long-term incentive awards made during the year ended 30 June On 3 September The performance measures and targets for awards made in September
1.The cumulative free cash flow (FCF) targets have been restated in USD following the change in reporting currency from fiscal 24 onwards (original GBP target range was £7,650m - £9,450m). More details can be found on page 41. 20% (25% for Ms Crew as the awards were made before she became an Executive Director) of DLTIP awards will vest at threshold, with vesting in a straight line up to 100% if the maximum level of performance is achieved. As explained in the remuneration policy,
184 Governance (continued)
The proportion of the awards outlined above that will vest is dependent on the achievement of performance conditions and continued employment, and the actual value received may be nil. The vesting outcomes will be disclosed in the In accordance with the plan rules, the number of performance shares and share options granted under the DLTIP was calculated by using the average closing ADR price for the last six months of the preceding financial year ($ Governance (continued) Outstanding share plan interests
6. Details of the performance conditions attached to DLTIP 186 Governance (continued) efficiency (5.8% 7. (6) Details of the performance conditions attached to DLTIP awards of performance shares and share options granted in 2021 are organic net sales growth (5%-9%), organic growth in profit before exceptional items and tax (6.5%-13.5%), reduction in greenhouse gas emissions (19.1%-27.1%), improvement in water efficiency (6.3% 8. (7) Details of the performance conditions attached to DLTIP awards of performance shares and share options granted in 2022 are organic net sales growth (4.5%-8.5%), organic growth in profit before exceptional items and tax (5.0%-12.0%), reduction in greenhouse gas emissions (10.7%-17.6%), improvement in water efficiency (6.3%-12.1%), changing attitudes on dangers of underage drinking (2.6m-4.0m), % of female leaders (45%-47%), % ethnically diverse leaders (42%-44%), cumulative free cash flow ($10,175m-$12,569m) and relative total shareholder return (median-upper quintile). (8) The performance shares awarded to Debra Crew in 2020 under the Diageo Exceptional Stock Award Plan (DESAP) were granted in recognition of equity which was forfeited on joining Diageo in 2020 and have the same performance measures and targets as the 2020 DLTIP performance shares (see footnote 5). Debra Crew was granted a number of performance shares and restricted stock units under the DESAP in March 2022 for incentive and retention purposes. The DESAP performance shares will vest based on a performance hurdle of winning or holding market share in at least 2/3rs of total NSV in measured markets over the respective three-year performance periods (F23-F25 for awards due to vest in September 2026, F24-F26 for awards due to vest in September 2027 and F25-F27 for awards due to vest in September 2028). The DESAP restricted stock units vest subject to continued employment up to the vesting date. (9) In accordance with the policy and plan rules treatment on death-in-service, the 2020, 2021 and 2022 awards for Ivan Menezes 9. (10) Lavanya Chandrashekar was granted a number of restricted stock units prior to her appointment as CFO and joining the Board. 10. On 14 September (11) The Free Cash Flow (FCF) performance targets for both the 2021 Governance (continued)
The beneficial interests of the Directors who held office during the year ended 30 June
Notes September 2023. Governance (continued) Relative importance of spend on pay The Distributions to shareholders Staff pay The graph below shows the total shareholder return for Diageo plc and the FTSE 100 Index since 30 June
189 Governance (continued) Alignment of Executive pay with the wider workforce There is clear alignment in the approach to pay for executives and the wider workforce in the way that remuneration principles are followed, as well as the mechanics of the salary review process and incentive plan design, which are broadly consistent throughout the organisation. There is a strong focus on performance-related pay, and the performance measures under the annual incentive plan and long-term incentive plan are the same for executives and other eligible employees. The reward package for Executive Directors is consistent with that of the senior management population, however, a much higher proportion of total remuneration for the Executive Directors is linked to business performance, compared to the rest of the employee population. The Chairman also explains the Directors' remuneration policy to employees and seeks their feedback as part of the workforce engagement sessions. The structure of During the year, the Chairman explained the directors' remuneration policy and alignment with wider workforce pay to employees as part of the workforce engagement sessions. Remuneration Committee review of wider workforce pay Each year, the Remuneration Committee has a detailed session reviewing wider workforce remuneration. In fiscal 23, the review focussed on the prior year’s annual reward cycle outcomes, including improvements made to base pay competitive positions, the level of differentiation across our reward programmes, gender pay equity analysis, how cost-of-living challenges were addressed and how we have used reward structures to attract talent in key skills areas. The all-employee reward priorities for the coming year were also reviewed by the Committee. Information on wider workforce reward is also provided as required throughout the year to enable the Committee to consider the broader employee context when making executive remuneration decisions, for example the annual salary increase budgets by country. Supporting our employees We continue to focus on all aspects of the wellbeing of our employees. Early in fiscal 2023, we made a one-time recognition payment of £1,000 gross (capped at 15% of local equivalent annual salary) to thank employees for their ongoing efforts and support them with the rising cost of living in many locations. Since then, the Executive Committee has continued to monitor the cost-of-living in all our geographies using a formal monitoring process and has implemented actions as required, for example off-cycle salary increases in 16 high-inflation geographies. We have also provided financial education to all employees to support them in managing their personal finances more effectively. Other reward based initiatives include the roll out of a new recognition platform into North America and the UK, with more regions planned for fiscal 24. We have deployed global support for menopause, including a global app for employees. We continue to innovate with market leading benefit policies that support and demonstrate our commitment to diversity and inclusion, including increasing the provision of fertility support and personal counselling. We have continued to evolve our flexible working policy, creating guidelines to empower employees and leaders to decide how, when and where they create their best work, making sure our people consider what works best for the individual's and team's success. The renewed focus on our employee assistance programmes continued with the deployment of a global mental health online tool in November 2022. This enables employees to proactively manage their mental health and covers key topics like sleep, diet, relationships and managing stress. To date the tool has been downloaded by over 4.7k employees, which is 19% of the global population. CEO pay ratio In accordance with The Companies (Miscellaneous Reporting) Regulations 2018, the table 190 Governance (continued)
Methodology Consistent with the approach for Diageo’s disclosure in previous years, the methodology used to identify the employees at each quartile for Total full-time equivalent remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant year and has, other than where noted below, been calculated in line with the methodology for the ‘single figure of remuneration’ for the Chief Executive (shown on page Points to note for the year ended 30 June 191 Governance (continued) Change in pay for Directors compared to wider workforce The table below shows the percentage change in Directors’ remuneration and average remuneration of employees on an annual basis. Given the small size of Diageo plc’s workforce, data for all employees of the group has also been included.
Payments to former Directors Payments for loss of office Sir Ivan’s unvested long-term incentive awards granted in 2020, 2021 and 2022 vested early on 2 August 2023 in accordance with the treatment under the plan rules on death-in-service, subject to an assessment against the performance measures and time pro-rating. The Committee exercised its discretion under the policy to slightly extend the time pro-rating from 6 to 30 June 2023 on compassionate grounds to reflect the full fiscal 23 year. The 2020 award vested based on actual performance measured over the full three-year period to 30 June 2023 as disclosed on pages 178 and 180. The 2021 and 2022 awards vested subject to an assessment by the Committee against the performance measures as at 30 June 2023. Sir Ivan was originally awarded 36,675 PSP and 36,675 SESOP options in 2021 which were each time pro-rated to 24,427 awards. 192 Governance (continued) exercisable for 24 months from the date of death (already vested options) and the date of vesting (options vesting early on 2 August 2023), the Committee having exercised discretion to extend from 12 months to give the estate sufficient time to exercise the options. The two-year post-vesting holding Sir Ivan’s 2006 employment contract provided for lifetime medical cover for Sir Ivan and his spouse on a Governance (continued)
Fee policy Javier Ferrán’s fee as non-executive Chairman was increased by 3% from
remuneration for Non-Executive Directors’
194 Governance (continued) Looking ahead to
The measures and targets for the annual incentive plan are reviewed annually by the Remuneration Committee and are carefully chosen to drive financial and individual business performance goals related to the company’s short-term strategic operational objectives. The plan design for Executive Directors –net sales (% growth) (26.67% weighting): a key performance measure of year-on-year top line growth; –operating profit (% growth) (26.67% weighting): stretching profit targets drive operational efficiency and influence the level of returns that can be delivered to shareholders through increases in share price and dividend income not including exceptional items or exchange; –operating cash conversion (26.67% weighting): ensures focus on efficient cash delivery by the end of the year; and –individual business objectives (20% weighting): measurable deliverables that are specific to the individual and are focussed on supporting the delivery of key strategic objectives. The Committee has discretion to adjust the payout to reflect underlying business performance and any other relevant factors. Details of the targets for the year ending 30 June The annual incentive opportunity for Executive Directors will remain consistent with prior years, equal to 100% of base salary at target, with a maximum opportunity of 200% of base salary.
The performance share element of the DLTIP applies to the Executive Committee and the top level of senior leaders across the organisation worldwide, whilst the share option element is applicable to a much smaller population comprising only members of the Executive Committee. One market price performance-based option is valued at one-third of a performance share. The ESG •reduction in greenhouse gas •improvement in the water •number of people who •inclusion and diversity From fiscal 24, the water efficiency KPI under the 'Society 2023: Spirit of Progress' goals will use an index approach which links directly to the underlying water efficiency of the two production pillars of distillation and brewing & packaging. This methodology is described further on page 79 and the water efficiency component of the 2023 DLTIP awards reflects the updated 'Society 2030: Spirit of Progress' KPI. Awards are calculated on the basis of a six-month average share price for the period ending 30 June It is intended that a DLTIP award to the equivalent of 500% of base salary will be made to 195 Governance (continued) options. It is intended that a DLTIP award to the equivalent of 480% of salary will be made to Lavanya Chandrashekar in September The table below summarises the annual DLTIP awards to
Performance conditions for long-term incentive awards to be made in the year ending 30 June
(2) The cumulative free cash flow targets Governance (continued) Additional information
Key management personnel related party transactions Key management personnel of the group comprises the Executive and Non-Executive Directors, the members of the Executive Committee and the Company Secretary. Diageo plc has granted rolling indemnities to the Directors and the Company Secretary, uncapped in amount, in relation to certain losses and liabilities which they may incur in the course of acting as Directors or Company Secretary (as applicable) of Diageo plc or of one or more of its subsidiaries. These indemnities continue to be in place at 30 June Other than disclosed in this report, no Director had any interest, beneficial or non-beneficial, in the share capital of the company. 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 financial year, or which having been effected during an earlier financial year, remains in any respect outstanding or unperformed. There have been no material transactions during the last three years to which any Director or officer, or 3% or greater shareholder, or any spouse or dependent thereof, was a party. There is no significant outstanding indebtedness to the company from any Directors or officer or 3% or greater shareholder. Statutory and audit requirements This report was approved by a duly authorised Committee of the Board of Directors and was signed on its behalf on The Board has followed the principles of good governance as set out in the UK Corporate Governance Code and complied with the regulations contained in the Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules of the Financial Conduct Authority and the relevant schedules of the Companies Act 2006. The Companies Act 2006 and the Listing Rules require the company’s auditor to report on the audited information in their report and to state that this section has been properly prepared in accordance with these regulations. The Governance (continued) Directors’ report The Directors present the Directors’ report for the year ended 30 June Company status Diageo plc is a public limited liability company incorporated in England and Wales with registered number 23307 and registered office and principal place of business at 16 Great Marlborough Street, London W1F 7HS, United Kingdom. It is the ultimate holding company of the group, a full list of whose subsidiaries, partnerships, associates, joint ventures and joint arrangements is set out in Directors The Directors of the company who currently serve are shown in the section ‘Board of Directors’ on pages Auditor The auditor, PricewaterhouseCoopers LLP, is willing to continue in office and a resolution for its re-appointment as auditor of the company will be submitted to the AGM. Disclosure of information to the auditor In accordance with Corporate governance statement The corporate governance statement, prepared in accordance with rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, comprises the following sections of the Annual Report: the ‘Corporate governance report’, the ‘Audit Committee report’ and the ‘Additional information for shareholders’. Significant agreements – change of control The following significant agreements contain certain termination and other rights for Diageo’s counterparties upon a change of control of the company. Under the partners agreement governing the company’s 34% investment in Moët Hennessy SAS (MH) and Moët Hennessy International SAS (MHI), if a Competitor (as defined therein) directly or indirectly takes control of the company (which, for these purposes, would occur if such Competitor acquired more than 34% of the voting rights or equity interests in the company), LVMH Moët Hennessy – Louis Vuitton SA (LVMH) may require the company to sell its interests in MH and MHI to LVMH. The master agreement governing the operation of the group’s market-level distribution joint ventures with LVMH states that if any person acquires interests and rights in the company resulting in a Control Event (as defined) occurring in respect of the company, LVMH may within 12 months of the Control Event either appoint and remove the chairman of each joint venture entity governed by such master agreement, who shall be given a casting vote, or require each distribution joint venture entity to be wound up. Control Event for these purposes is defined as the acquisition by any person of more than 30% of the outstanding voting rights or equity interests in the company, provided that no other person or entity (or group of affiliated persons or entities) holds directly or indirectly more than 30% of the voting rights in the company. Governance (continued) Related party transactions Transactions with related parties are disclosed in note 21 to the consolidated financial statements. Major shareholders At 30 June
The company has not been notified of any other substantial interests in its securities since 30 June As at the close of business on Employment policies A key strategic imperative of the company is to attract, retain and grow a pool of diverse, talented employees. Diageo recognises that a diversity of skills and experiences in its workplace and communities will provide a competitive advantage. To enable this, the company has various global employment policies and standards, covering such issues as resourcing, data protection, human rights, dignity at work, health, safety and wellbeing. These policies and standards seek to ensure that the company treats current or prospective employees justly, solely according to their abilities to meet the requirements and standards of their role and in a fair and consistent way. This includes giving full and fair consideration to applications from prospective employees who are disabled, having regard to their aptitudes and abilities, and not discriminating against employees under any circumstances (including in relation to applications, training, career development and promotion) on the grounds of any disability. In the event that an employee, worker or contractor becomes disabled in the course of their employment or engagement, Diageo aims to ensure that reasonable steps are taken to accommodate their disability by making reasonable adjustments to their existing employment or engagement. Trading market for shares Diageo plc ordinary shares are listed on the London Stock Exchange (LSE) The Markets in Financial Instruments Directive (MiFID) allows for delayed publication of large trades with a sliding scale requirement based on qualifying minimum thresholds for the amount of consideration to be paid/the proportion of average daily turnover (ADT) of a stock represented by a trade. Provided that a trade/consideration equals or exceeds the qualifying minimum size, it will be eligible for deferred publication ranging from 60 minutes from time of trade to three trading days after time of trade. Fluctuations in the exchange rate between sterling and the US dollar will affect the US dollar equivalent of the sterling price of the ordinary shares on the LSE and, as a result, will affect the market price of the ADSs on the NYSE. In addition, such fluctuations will 199 Governance (continued) affect the US dollar amounts received by holders of ADSs on conversion of cash dividends paid in pounds sterling on the underlying ordinary shares. American depositary shares Fees and charges payable by ADR holders Citibank N.A. serves as the depositary (Depositary) for Diageo’s ADS programme. Pursuant to the deposit agreement dated 14 February 2013 between Diageo, the Depositary and owners and holders of ADSs (the Deposit Agreement), ADR holders may be required to pay various fees to the Depositary, and the Depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid. In particular, the Depositary, under the terms of the Deposit Agreement, shall charge a fee of up to $5.00 per 100 ADSs (or fraction thereof) relating to the issuance of ADSs; delivery of deposited securities against surrender of ADSs; distribution of cash dividends or other cash distributions (i.e. sale of rights and other entitlements); distribution of ADSs pursuant to stock dividends or other free stock distributions, or exercise of rights to purchase additional ADSs; distribution of securities other than ADSs or rights to purchase additional ADSs (i.e. spin-off shares); and depositary services. Citibank N.A. is located at 388 Greenwich Street, New York, New York, 10013, United States. In addition, ADR holders may be required under the Deposit Agreement to pay the Depositary (a) taxes (including applicable interest and penalties) and other governmental charges; (b) registration fees; (c) certain cable, telex, and facsimile transmission and delivery expenses; (d) the expenses and charges incurred by the Depositary in the conversion of foreign currency; (e) such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements; and (f) the fees and expenses incurred by the Depositary, the custodian, or any nominee in connection with the servicing or delivery of ADSs. The Depositary may (a) withhold dividends or other distributions or sell any or all of the shares underlying the ADSs in order to satisfy any tax or governmental charge and (b) deduct from any cash distribution the applicable fees and charges of, and expenses incurred by, the Depositary and any taxes, duties or other governmental charges on account. Direct and indirect payments by the Depositary The Depositary reimburses Diageo for certain expenses it incurs in connection with the ADR programme, subject to a ceiling set out in the Deposit Agreement pursuant to which the Depositary provides services to Diageo. The Depositary has also agreed to waive certain standard fees associated with the administration of the programme. Under the contractual arrangements with the Depositary, Diageo has received approximately Articles of association The company is incorporated under the name Diageo plc, and is registered in England and Wales under registered number 23307. The following description summarises certain provisions of Diageo’s articles of association (as adopted by special resolution at the Annual General Meeting on 28 September 2020) and applicable English law concerning companies (the Companies Acts), in each case as at Directors Diageo’s articles of association provide for a board of directors, consisting (unless otherwise determined by an ordinary resolution of shareholders) of not fewer than three directors and not more than 25 directors, in which all powers to manage the business and affairs of Diageo are vested. Directors may be elected by the members in a general meeting or appointed by the Board. At each annual general meeting, all the directors shall retire from office and may offer themselves for re-election by members. There is no age limit requirement in respect of directors. Directors may also be removed before the expiration of their term of office in accordance with the provisions of the Companies Acts. Voting rights Voting on any resolution at any general meeting of the company is by a show of hands unless a poll is duly demanded. On a show of hands, (a) every shareholder who is present in person at a general meeting, and every proxy appointed by any one shareholder and present at a general meeting, has/have one vote regardless of the number of shares held by the shareholder (or, subject to (b), represented by the proxy), and 200 (b) every proxy present at a general meeting who has been appointed by more than one shareholder has one vote regardless of the number of shareholders who have appointed On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder, but a shareholder or proxy entitled to more than one vote need not cast all A poll may be demanded by any of the following: •the chairman of the general meeting; •at least three shareholders entitled to vote on the relevant resolution and present in person or by proxy at the meeting; •any shareholder or shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote on the relevant resolution; or •any shareholder or shareholders present in person or by proxy and holding shares conferring a right to vote on the relevant resolution on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. Diageo’s articles of association and the Companies Acts provide for matters to be transacted at general meetings of Diageo by the proposing and passing of two kinds of resolutions: •ordinary resolutions, which include resolutions for the election, re-election and removal of directors, the declaration of final dividends, the appointment and re-appointment of the external auditor, the remuneration report and remuneration policy, the increase of authorised share capital and the grant of authority to allot shares; and •special resolutions, which include resolutions for the amendment of Diageo’s articles of association, resolutions relating to the disapplication of pre-emption rights, and resolutions modifying the rights of any class of Diageo’s shares at a meeting of the holders of such class. An ordinary resolution requires the affirmative vote of a simple majority of the votes cast by those entitled to vote at a meeting at which there is a quorum in order to be passed. Special resolutions require the affirmative vote of not less than three-quarters of the votes cast by those entitled to vote at a meeting at which there is a quorum in order to be passed. The necessary quorum for a meeting of Diageo is a minimum of two shareholders present in person or by proxy and entitled to vote. A shareholder is not entitled to vote at any general meeting or class meeting in respect of any share held by them if they have been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts. Pre-emption rights and new issues of shares While holders of ordinary shares have no pre-emptive rights under Diageo’s articles of association, the ability of the Directors to cause Diageo to issue shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share scheme, is restricted. Under the Companies Acts, the directors of a company are, with certain exceptions, unable to allot any equity securities without express authorisation, which may be contained in a company’s articles of association or given by its shareholders in a general meeting, but which in either event cannot last for more than five years. Under the Companies Acts, Diageo may also not allot shares for cash (otherwise than pursuant to an employee share scheme) without first making an offer to existing shareholders to allot such shares to them on the same or more favourable terms in proportion to their respective shareholdings, unless this requirement is waived by a special resolution of the shareholders. Repurchase of shares Subject to authorisation by special resolution, Diageo may purchase its own shares in accordance with the Companies Acts. Any shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the purchase, thereby reducing the amount of Diageo’s issued share capital. Restrictions on transfers of shares The Board may decline to register a transfer of a certificated Diageo share unless the instrument of transfer (a) is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty, and is accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require, (b) is in respect of only one class of share and (c) if to joint transferees, is in favour of not more than four such transferees. Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in Diageo’s articles of association) and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four. The Board may decline to register a transfer of any of Diageo’s certificated shares by a person with a 0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts, unless the transfer is shown to the Board to be pursuant to an arm’s-length sale (as defined in Diageo’s articles of association). 201 Other information Other information relevant to the Directors’ report may be found in the following sections of the Annual Report:
The Directors’ report of Diageo plc for the year ended 30 June In addition, certain disclosures required to be contained in the Directors’ report have been incorporated into the ‘Strategic report’ as set out in ‘Other information’ above. The Directors’ report, which has been approved by a duly appointed and authorised committee of the Board of Directors, was signed on its behalf by Tom Shropshire, the Company Secretary, on Report of Independent Registered Public Accounting Firm To theBoard of Directors and Shareholders of Diageo plc Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Diageo plc and its subsidiaries In our opinion, the consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 June Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Part II. 15.B. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 203 Financial statements Critical Audit Matters The critical audit matters communicated beloware mattersarising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to theconsolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Impairment As described in note 9 to the consolidated financial statements, the Company’s The principal considerations for our determination that performing procedures related to the impairment assessment Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s As described in Note 7 and Note 19 to the consolidated financial statements, current tax asset of £232 million and tax liability of £135 million includes £173 million of provisions for tax uncertainties. Tax treatments are not recognised unless it is probable that a tax authority will accept the treatment. Tax treatments are reviewed each year to assess whether a provision should be taken against full recognition of the treatment on the basis of potential settlement through negotiation and/or litigation with the relevant tax authorities. The Company operates in a large number of markets with complex tax and legislative regimes that are open to subjective interpretation, and for which can take several years to resolve. The Company has a number of ongoing tax audits worldwide for which provisions are recognised based on management’s best estimates and judgments concerning the ultimate The principal considerations for our determination that performing procedures related to 204 Financial statements (continued) Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the /s/ PricewaterhouseCoopers LLP London, United Kingdom We have served as the Company's auditor since 2015. Financial statements (continued) Consolidated income statement
The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Consolidated statement of comprehensive income
The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Consolidated balance sheet
The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements have been approved by a duly appointed and authorised committee of the Board of Directors and were signed on its behalf by Financial statements (continued) Consolidated statement of changes in equity
The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Consolidated statement of cash flows
(1) For the years ended 30 June The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Accounting information and policies Introduction This section describes the basis of preparation of the consolidated financial statements and the group’s accounting policies that are applicable to the financial statements as a whole. Accounting policies, critical accounting estimates and judgements specific to a note are included in the note to which they relate. Furthermore, the section details new accounting standards, amendments and interpretations, that the group has adopted in the current financial year or will adopt in subsequent years. 1. Accounting information and policies (a) Basis of preparation The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRSs) adopted by the UK The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. (b) Going concern Management (c) Consolidation The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. A subsidiary is an entity controlled by Diageo plc. The group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Where the group has the ability to exercise joint control over an entity but has rights to specified assets and obligations for liabilities of that entity, the entity is included on the basis of the group’s rights over those assets and liabilities. (d) Foreign currencies Items included in the financial statements of the group’s subsidiaries, associates and joint ventures are measured using the currency of the primary economic environment in which each entity operates (its functional currency). The consolidated financial statements are presented in sterling, which is the functional currency of the parent The income statements and cash flows of non-sterling entities are translated into sterling at weighted average rates of exchange, except for subsidiaries in hyperinflationary economies that are translated with the closing rate at the end of the Assets and liabilities are translated at closing rates. Exchange differences arising on the retranslation at closing rates of the opening balance sheets of overseas entities are taken to the exchange reserve, as are exchange differences arising on foreign currency borrowings and financial instruments designated as net investment hedges, to the extent that they are effective. Tax charges and credits arising on such items are also taken to the exchange reserve. Gains and losses accumulated in the exchange reserve are recycled to the 211 Financial statements (continued) income statement when the foreign operation is sold. Other exchange differences are taken to the income statement. Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. The principal foreign exchange rates used in the translation of financial statements for the three years ended 30 June
(1) Weighted average rates (2) Closing rates The group uses foreign exchange hedges to mitigate the effect of exchange rate movements. For further information, see note 16. (e) Critical accounting estimates and judgements Details of critical estimates and judgements which the Directors consider could have a significant impact –Exceptional items – management judgement whether exceptional or not – page –Taxation – management judgement –Brands, goodwill, –Post employment benefits – management judgement –Contingent liabilities and legal proceedings – management judgement in assessing the likelihood of whether a liability will arise and an estimate to quantify the possible range of any (f) Hyperinflationary accounting The group applied hyperinflationary accounting for its operations in Turkey, Venezuela and Lebanon. When applying IAS 29 on an ongoing basis, comparatives in stable currency are not restated and the effect of inflating opening The inflation rate used by the group is the official rate published by the Turkish Statistical Venezuela is a hyperinflationary economy where the government maintains a regime of strict currency controls with multiple foreign currency rate systems. The exchange rate used to translate the results of the group’s Venezuelan operations was VES/£ Financial statements (continued) The following table presents the contribution of the group’s Venezuelan operations to
Sterling amounts presented at the official reference exchange rate are results of simple mathematical conversion. The impact of hyperinflationary accounting for Lebanon was immaterial both in the current and comparative periods. (g) New accounting standards and interpretations The following –Amendments to IFRS –Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use –Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract –Amendments to Annual improvements 2018-2020 - IFRS 9 - Fees in the '10 per cent' Test, IFRS 16 - Lease incentives, IAS 41 - Taxation in Fair Value Measurements –Amendments to IAS 12 International Tax Reform – Pillar Two Model Rules The following IFRS 17 – Insurance contracts Based on a preliminary assessment, the group believes that the adoption of IFRS 17 will not have a significant impact on its consolidated results or financial position. There are a number of other amendments and clarifications to IFRSs, effective in future years, which are not expected to significantly impact the group’s consolidated results or financial position. (h) Climate change considerations The impact of climate change assessment and the net zero carbon emission target for Diageo's direct operations The climate change scenario analyses performed in The following considerations were made in respect of the financial statements: •The impact of climate change on factors (like residual values, useful lives and depreciation methods) that determine the carrying value of non-current assets. •The impact of climate change on forecasts of cash flows used (including •The impact of climate change on post-employment Financial statements (continued) Results for the year Introduction This section explains the results and performance of the group for the three years ended 30 June 2. Segmental information Accounting policies Sales comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the customer, which is determined by considering, among other factors, the delivery terms agreed with customers. For the sale of goods, the transfer of control occurs when the significant risks and rewards of ownership are passed to the customer. Based on the shipping terms agreed with customers, the transfer of control of goods occurs at the time of dispatch for the majority of sales. Where the transfer of control is subsequent to the dispatch of goods, the time between dispatch and receipt by the customer is generally less than five days. The group includes in sales the net consideration to which it expects to be entitled. Sales are recognised to the extent that it is highly probable that a significant reversal will not occur. Therefore, sales are stated net of expected price discounts, allowances for customer loyalty and certain promotional activities and similar items. Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing. Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries, excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duty are not always passed on to the customer and where a customer fails to pay for products received the group cannot reclaim the excise duty. The group therefore recognises excise duty, unless it regards itself as an agent of the regulatory authorities, as a cost to the group. Advertising costs, point of sale materials and sponsorship payments are charged to marketing in operating profit when the company has a right of access to the goods or services acquired. Diageo is an international manufacturer and distributor of premium drinks. Diageo also owns a number of investments in associates and joint ventures, as set out in note 6. The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating The Executive Committee considers the business principally from a geographical perspective based on the location of third-party sales and the business analysis is presented by geographical segment. In addition to these geographical selling segments, a further segment reviewed by the Executive Committee is the Supply Chain and Procurement (SC&P) segment, which manufactures products for other group companies and includes the production sites in the United Kingdom, Ireland, Italy, Guatemala and Mexico, as well as comprises the global procurement function. The group's operations also include the Corporate segment. Corporate Diageo uses shared services operations to deliver transaction processing activities for markets and operational entities. These centres are located in India, Hungary, Colombia and the Philippines. These captive business service centres also perform certain central finance activities, including elements of financial planning and reporting, treasury and HR services. The costs of shared services operations are recharged to the regions. For planning and management reporting purposes, Diageo uses budgeted exchange rates that are set at the prior year's weighted average exchange rate. In order to ensure a consistent basis on which performance is measured through the year, prior period results are also restated to the budgeted exchange rate. Segmental information for net sales and operating profit before exceptional items are reported on a consistent basis with management reporting. The adjustments required to retranslate the segmental information to actual exchange rates and to reconcile it to the group’s reported results are shown in the tables below. The comparative segmental information, prior to retranslation, has not been restated at the current year’s budgeted exchange rates but is presented at the budgeted rates for the respective year. In addition, for management reporting purposes, Diageo presents the result of acquisitions and disposals completed in the current and prior year separately from the results of the geographical segments. The impact of acquisitions and disposals on net sales and operating profit is disclosed under the appropriate geographical segments in the tables below at budgeted exchange rates. Financial statements (continued) (a) Segmental information for the consolidated income statement
Financial statements (continued)
Financial statements (continued)
(1) These items represent the IFRS 8 performance measures for the geographical and SC&P segments. (i) The net sales figures for SC&P reported to the Executive Committee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the SC&P segment to the other operating segments, inter-segmental sales are not material. (ii) The (iii) (b) Other segmental information
217 Financial statements (continued)
(c) Category and geographical analysis
(1) The geographical analysis of sales is based on the location of third-party (2) The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, investments in associates and joint ventures, other investments and non-current other receivables. (3) The management information provided to the chief operating 3. Operating costs
(a) Other external charges Other external charges include research and development expenditure in respect of new drinks products and package design of £53 million (2022 – £43 218 Financial statements (continued) (b) Auditors fees Other external charges include the fees of the principal auditors of the group, PricewaterhouseCoopers LLP and its affiliates (PwC) and are analysed below.
(1) Audit related assurance services are in respect of reporting under section 404 of the US Sarbanes-Oxley Act and the review of the interim financial information. (2) Other assurance services comprise the aggregate fees for assurance and related services that are not reported under ‘total audit fees’. (i) Disclosure requirements for auditors fees in the United States are different from those required in the United Kingdom. The terminology by category required in the United States is disclosed in brackets in the above table. Audit services provided by firms other than PwC for the year ended 30 June (c) Staff costs and average number of employees
The average number of employees on a
At 30 June 219 Financial statements (continued) (d) Exceptional operating items Included in
4. Exceptional items Accounting policies Critical accounting judgements Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included within the income statement caption to which they relate. Changes in estimates and reversals in relation to items previously recognised as exceptional are presented consistently as exceptional in the current year. Operating items Exceptional operating items are those that are considered to be material and unusual or non-recurring in nature and are part of the operating activities of the group, such as one-off global restructuring programmes which can be multi-year, impairment of intangible assets and fixed assets, indirect tax settlements, property disposals and changes in post employment plans. Non-operating items Gains and losses on the sale or directly attributable to a prospective sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non-recurring items, that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as exceptional non-operating Taxation items Exceptional current and deferred tax items
220 Financial statements (continued)
In the year ended 30 June 2022, an impairment charge of £336 million was recognised in exceptional operating items in respect of the McDowell's For further information, see note 9 (d). (3) In the year ended 30 June 2023, Diageo agreed with one of its distributors in Africa to terminate the distribution license of one of its spirits brands, in respect of which a (4) In the year ended 30 June 2023, Diageo released unutilised provisions of £20 million from the £50 million exceptional charge taken Financial statements (continued) (6) On 26 May 2023, Diageo announced the (7) On (8) On 30 September 2022, Diageo announced the completion of the sale of the Popular brands of its United Spirits Limited (USL) business. The transaction resulted in an exceptional gain of £4 million. (9) Certain subsidiaries of USL were sold in the year ended 30 June 2023. The sale of these subsidiaries resulted in an exceptional gain of £1 million (2022 – nil; 2021 – £3 million). (10) In the year ended 30 June 2023, Diageo sold its Tyku brand. The transaction resulted in an exceptional loss of (11) In May 2022, Diageo sold its Picon brand. The sale resulted in an exceptional non-operating gain of £91 million, net of disposal costs. (12) In the year ended 30 June 2022, a loss of £95 million was recognised as a non-operating item attributable to the sale (13) On 25 March 2022, Diageo agreed to the sale of its Windsor business in Korea. At 30 June 2022, assets and liabilities attributable to Windsor business were classified as held for sale and were measured at the lower of their cost and fair value less cost of disposal. In the year ended 30 June 2022, a loss of £19 million was recognised as a non-operating item, mainly in relation to transaction and other costs directly attributable to the prospective sale of the business. (14) On 29 September 2022, the group acquired the part of (15) Other exceptional non-operating items include subsequent gains and charges of items that were originally recognised as exceptional at inception. In the year ended 30 June 2023, other exceptional non-operating items resulted in a net gain of £4 million (2022 – £6 million; 2021 – £11 million), mainly driven by the deferred consideration received in respect of the sale of United National Breweries. For further information on acquisition and sale of businesses and brands, see 222 Financial statements (continued) Cash payments and receipts included in net cash inflow from operating activities in respect of exceptional items were as follows:
5. Finance income and charges Accounting policies Net interest includes interest income and charges in respect of financial instruments and the results of hedging transactions used to manage interest rate risk. Finance charges directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of that asset. Borrowing costs which are not capitalised are recognised in the income statement Net other finance charges include items in respect of post employment plans, the discount unwind of long-term obligations and hyperinflation charges. The results of operations in hyperinflationary economies are adjusted to reflect the changes in the purchasing power of the local currency of the entity before being translated to sterling. The impact of derivatives, excluding cash flow hedges that are in respect of commodity price risk management or those that are used to hedge the currency risk of highly probable future currency cash flows, is included in interest income or interest charge. Financial statements (continued)
(1) Includes Financial statements (continued) 6. Investments in associates and joint ventures Accounting policies An associate is an undertaking in which the group has a long-term equity interest and over which it has the power to exercise significant influence. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The group’s interest in the net assets of associates and joint ventures is reported in investments in the consolidated balance sheet and its interest in their results (net of tax) is included in the consolidated income statement below the group’s operating profit. Associates and joint ventures are initially recorded at cost including transaction costs. Investments in associates and joint ventures are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment review compares the net carrying value with the recoverable amount, where the recoverable amount is the higher of the value in use calculated as the present value of the group’s share of the associate’s future cash flows and its fair value less costs of disposal. Diageo’s principal associate is Moët Hennessy of which Diageo owns 34%. Moët Hennessy is the wines and spirits A number of joint distribution arrangements have been established with LVMH in Asia Pacific and France, principally covering distribution of Diageo’s Scotch whisky and gin premium brands and Moët Hennessy’s champagne and cognac premium brands. Diageo and LVMH have each undertaken not to engage in any champagne or cognac activities competing with those of Moët Hennessy. The arrangements also contain certain provisions for the protection of Diageo as a non-controlling shareholder in Moët Hennessy. (a) An analysis of the movement in the group’s investments in associates and joint ventures is as follows:
(i) Investment in associates (ii) If certain performance targets are met by associates in the Distill Ventures programme, an additional 225 Financial statements (continued) (b) Moët Hennessy prepares its financial statements under IFRS as endorsed by the EU in euros to 31 December each year. The results Income statement information for the three years ended 30 June
(i) Including acquisition fair value adjustments principally in respect of Moët Hennessy’s brands and translated at £1 = (c) Information on transactions between the group and its associates and joint ventures is disclosed in note 21. (d) Investments in associates and joint ventures comprise the cost of shares less goodwill written off on acquisitions prior to 1 July 1998 of (e) The associates and joint ventures have not reported any material contingent liabilities in their latest financial statements. 7. Taxation Accounting policies Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax Critical accounting estimates and judgements The group is required to estimate the corporate tax in each of the jurisdictions in which it operates. Management is required to estimate the amount that should be recognised as a tax liability or tax asset in many countries which are subject to tax audits which by their nature are often complex and can take several years to resolve; current tax balances are based on such estimations. Tax provisions are based on management’s judgement and interpretation of country specific tax law and the likelihood of settlement. However, the actual tax liabilities could differ from the provision and in such event the group would be required to make an adjustment in a subsequent period which could have a material impact on the group’s profit for the year. The evaluation of deferred tax asset recoverability requires estimates to be made regarding the availability of future taxable income. For brands with an indefinite life, management’s 226 Financial statements (continued) brands with an indefinite life have been impaired, management considers this to be an indication of recovery through use and in such a case deferred tax on the brand value is recognised using the appropriate country corporate income tax rate. (a) Analysis of taxation charge for the year
(b) Exceptional tax (credits)/charges The taxation charge includes the following exceptional items:
(1) In the year ended 30 June 2023, an exceptional tax credit of £124 million was recognised mainly in respect of the impairment of the McDowell's brand. In the year ended 30 June 2022, the exceptional tax credit of £55 million consists of tax impact on the impairment of the McDowell's and Bell's (2) In the year ended 30 June (3) In the year ended 30 June Financial statements (continued) (c) Taxation rate reconciliation and factors that may affect future tax charges
(1) The table above reconciles the notional taxation charge calculated at the UK tax rate, to the actual total tax charge. As a group operating in multiple countries, the actual tax rates applicable to profits in those countries are different from the UK tax rate. The impact is shown in the table above as differences in overseas tax rates. The group’s worldwide business leads to the consideration of a number of important factors which may affect future tax charges, such as the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms, acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities. Significant ongoing changes in the international tax environment and an increase in global tax audit activity means that tax uncertainties and associated risks have been gradually increasing. In the medium term, these risks could result in an increase in tax liabilities or adjustments to the carrying value of deferred tax assets and liabilities. See note 19 (f). The group has a number of ongoing tax audits worldwide for which provisions are recognised in line with the relevant accounting standard, taking into account best estimates and management’s judgements concerning the ultimate outcome of the tax The cash tax paid Financial statements (continued) (d) Deferred tax assets and liabilities Deferred tax recognised in the consolidated balance sheet comprise the following net deferred tax (liabilities)/assets:
(1) Deferred tax on other temporary differences includes hyperinflation, fair value movement on cross-currency swaps, interest and finance costs, share-based payments and intra-group sales of products. After offsetting deferred tax assets and liabilities
Deferred tax assets of (e) Unrecognised deferred tax assets The following table
Additionally, no deferred tax asset has been recognised in respect of certain temporary differences arising from brand valuations, as the group is not planning to sell those brands thus the benefit from the temporary differences is unlikely to be realised. Financial statements (continued) (f) Unrecognised deferred tax liabilities Relevant legislation largely exempts overseas dividends remitted from tax. A tax liability is more likely to arise in respect of withholding taxes levied by the overseas jurisdiction. Deferred tax is provided where there is an intention to distribute earnings, and a tax liability arises. It is impractical to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings. The aggregate amount of temporary differences in respect of investments in subsidiaries, branches, interests in associates and joint ventures for which deferred tax liabilities have not been recognised is approximately Financial statements (continued) Operating assets and liabilities Introduction This section describes the assets used in the group’s operations and the liabilities incurred. Liabilities relating to the group’s financing activities are included in section ‘Risk management and capital structure’ and balance sheet information in respect of associates, joint ventures and taxation are covered in section ‘Results for the year’. This section also provides detailed disclosures on the group’s recent acquisitions and disposals, performance and financial position of its defined benefit post employment plans. 8. Acquisition and sale of businesses and brands and purchase of non-controlling interests Accounting policies The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up to, the date that control passes. Business combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any contingent consideration. Among other factors, the group considers the nature of, and compensation for the selling shareholders' continuing employment to determine if any contingent payments are for post-combination employee services, which are excluded from consideration. On the acquisition of a business, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of acquisition, are attributed to the net assets, including identifiable intangible assets and contingent liabilities acquired. Directly attributable acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred. The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholder’s proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition. Where the group has issued a put option over shares held by a non-controlling interest, the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options. Movements in the estimated liability in respect of put options are recognised in retained earnings. Transactions with non-controlling interests are recorded directly in retained earnings. For all entities in which the company directly or indirectly owns equity, a judgement is made to determine whether it controls and therefore should fully consolidate the investee. An assessment is carried out to determine whether the group has the exposure or rights to the variable returns of the investee and has the ability to affect those returns through its power over the investee. To establish control, an analysis is carried out of the substantive and protective rights that the group and the other investors hold. This assessment is dependent on the activities and purpose of the investee and the rights of the other shareholders, such as which party controls the board, executive committee and material policies of the investee. Determining whether the rights that the group holds are substantive, requires management judgement. Where less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder or organised group of vote holders, this may be an indicator of de facto control. An assessment is needed to determine all the factors relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be consolidated as a subsidiary. Where voting power and returns from an investment are split equally between two entities then the arrangement is accounted for as a joint venture. On an acquisition, fair values are attributed to the assets and liabilities acquired. This may involve material judgement to determine these values. Financial statements (continued) (a) Acquisition of businesses Fair value of net assets acquired and cash consideration paid in respect of the acquisition of subsidiaries in the three years ended 30 June
Cash consideration paid in respect of the acquisition of businesses and purchase of shares of non-controlling interests in the three years ended 30 June
Financial statements (continued) Acquisitions in the year On 10 March 2023, Diageo completed the acquisition of Kanlaon Limited and Chat Noir Co. Inc., (the owner of Don Papa Rum) to support Diageo’s participation in the super-premium dark rum segment for upfront cash consideration of €246 million (£218 million), deferred consideration of €4 million (£4 million) and contingent consideration of up to €178 million (£158 million) through to 2028 subject to certain financial performance targets, reflecting the brand’s expected growth potential. The fair value of the contingent consideration of €82 million (£72 million) was estimated by calculating the present value of the future expected cash flows which is dependent on management’s estimates in respect of the forecasting of future cash flows and the discount rates applicable to the future cash flows. The goodwill arising on the acquisition of Don Papa Rum represents expected revenue synergies and the acquired workforce. Don Papa Rum contributed £10 million to net sales and £15 million operating loss to the period, out of which £15 million is related to acquisition transaction and integration costs in the year ended 30 June 2023. The fair value measurement of assets and liabilities acquired is in progress. The fair values of assets and liabilities acquired are provisional and will be finalised in the year ending 30 June 2024. Diageo completed further acquisitions in the year ended 30 June 2023: (i) on 29 September 2022, the acquisition of the remaining issued share capital of Mr Black Spirits Pty Ltd, owner of Mr Black, the Australian premium cold brew coffee liqueur, that it did not already own; and (ii) on 2 November 2022, the acquisition of the entire issued share capital of Balcones Distilling, a Texas craft distiller and one of the leading producers of American single malt whiskey in the United States. The aggregate up-front cash consideration paid on completion of these transactions in the year ended 30 June 2023 was £98 million. Prior year acquisitions On 31 March 2022, Diageo acquired 100% equity interest in 21Seeds, to support Diageo's participation in the super premium flavoured tequila segment, for a total consideration of £62 million upfront in cash and a contingent consideration of up to £61 million linked to performance targets. Diageo completed further acquisitions in the year ended 30 June 2022, including (i) on 27 January 2022, the acquisition of Casa UM, to expand Reserve portfolio with premium artisanal mezcal brand, Mezcal Unión and (ii) on 29 June 2022, the acquisition of Vivanda, owner of the technology behind 'What's your Whisky' platform and the Journey of Flavour experience at Johnnie Walker Princes Street, to support Diageo's ambition to provide customised brand experiences across all channels. The aggregate upfront cash consideration paid on completion of these transactions in the year ended 30 June 2022 was £26 million. In addition, these transactions included provision for further contingent consideration of up to £18 million in aggregate, linked to performance targets and a further deferred consideration of £4 million. On 30 September 2020, Diageo completed the acquisition of Aviation Gin LLC (Aviation Gin) and Davos Brands LLC (Davos Brands) to support Diageo's participation in the super-premium gin segment for a total consideration of $337 million (£263 million) upfront in cash and contingent consideration of up to $275 million (£214 million) linked to performance targets. Diageo also completed a number of additional acquisitions in the year ended 30 June 2021, comprising: (i) Purchase of shares of non-controlling interests On 24 March 2023, Diageo completed the purchase of 14.97% of the share capital of EABL for an aggregate consideration of KES 22,732 million (£142 million) in cash and transaction costs of £4 million. This took Diageo’s shareholding in EABL from 50.03% to 65%. EABL was already controlled and therefore consolidated prior to this transaction. In the All transactions were recognised in retained earnings. Financial statements (continued) (b) Sale of businesses and brands Cash consideration received and net assets disposed of in respect of sale of businesses and brands in the three years ended 30 June
On 26 May 2023, Diageo completed the sale of Guinness Cameroun S.A., its brewery in Cameroon. The aggregate consideration for the disposal was £384 million, the disposed net asset of £63 million mainly included property, plant and equipment and trade and other payables. The transaction resulted in a non-operating exceptional gain of £310 million. The disposed Cameroon operations contributed net sales of £101 million (2022 – £124 million; 2021 – £113 million), operating profit of £26 million (2022– £27 million; 2021– £22 million) in the year ended 30 June 2023. On 30 September 2022, Diageo completed the sale of the Popular brands of its USL business. The aggregate consideration for the disposal was £87 million, the disposed net assets included net working capital of £31 million and brands of £22 million, and £16 million goodwill was derecognised. The transaction resulted in a non-operating exceptional gain of £4 million. Popular brands contributed net sales of £34 million (2022– £139 million; 2021 – £148 million), operating profit of £5 million (2022– £26 million; 2021– £30 million) in the year ended 30 June 2023. On 25 April 2022, Diageo sold its Ethiopian subsidiary, Meta Abo Brewery Share Company. A loss of £95 million was recognised as a non-operating item attributable to the sale, including cumulative translation losses in the amount of £63 million recycled to the income statement. On 10 May 2022, Diageo completed the sale of the Picon brand for an upfront consideration of €117 million (£100 million). The gain of £91 million, net of disposal cost, was recognised as a non-operating item in the income statement. In the year ended 30 June 2022, Prior year disposals further included the sale of certain Financial statements (continued) (c) Assets and liabilities held for sale
In March 2022, Financial statements (continued) 9. Intangible assets Accounting policies Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses. Acquired brands and other intangible assets are initially recognised at fair value if they are controlled through contractual or other legal rights, or are separable from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having indefinite useful economic lives, they are not amortised. Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets. Goodwill arising on acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising subsequent to 1 July 1998 has been capitalised. Amortisation and impairment of intangible assets is based on their useful economic lives and they are amortised on a straight-line basis and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised and are reviewed for impairment at least annually or when there is an indication that the assets may be impaired. Impairment reviews compare the net carrying value with the recoverable amount (where recoverable amount is the higher of fair value less costs of disposal and value in use) Computer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years. Critical accounting estimates and judgements Assessment of the recoverable amount of an intangible asset and the useful economic life of an asset are based on management's estimates. Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts. Value in use and fair value less costs of disposal are both considered for these reviews and any impairment charge is based on these. The tests are dependent on management’s estimates in respect of the forecasting of future cash flows, the discount rates applicable to the future cash flows and what expected growth rates are reasonable. Judgement is required in determining the cash-generating units. Such estimates and judgements are subject to change as a result of changing economic conditions and actual cash flows may differ from forecasts. The below additional considerations have been applied by management regarding the potential financial impacts of increasing inflationary pressures, recently observable worldwide: –changes in the interest rate environment are taken into consideration when determining the discount rates; –terminal growth rates do not exceed the long-term annual inflation rate of the country or region, thus excluding any increased inflation growth experienced in the short-term; –additional sensitivity scenarios are applied for those markets or regions where the inflation and/or the exchange devaluation is considered significant based on management’s judgement. Consideration of climate risk impact The impact of climate risk on the future cash flows has also been considered for scenarios analysed in line with the climate change risk assessment. The climate change scenario analyses performed in Financial statements (continued)
Financial statements (continued) (a) Brands
The brands are protected by trademarks which are renewable indefinitely in all of the major markets where they are sold. There are not believed to be any legal, regulatory or contractual provisions that limit the useful lives of these brands. The nature of the premium drinks industry is that obsolescence is not a common issue, with indefinite brand lives being commonplace, and Diageo has a number of brands that were originally created more than 100 years ago. Accordingly, the Directors believe that it is appropriate that the brands are treated as having indefinite lives for accounting purposes and are therefore not amortised. (b) Goodwill For the purposes of impairment testing, goodwill has been attributed to the following cash-generating units:
Goodwill has arisen on the acquisition of businesses and includes synergies arising from cost savings, the opportunity to utilise Diageo’s distribution network to leverage marketing of the acquired products and the extension of the group’s portfolio of brands in new markets around the world. 238 Financial statements (continued) (c) Other intangibles Other intangibles principally comprise distribution rights. Diageo owns the global distribution rights for Ketel One vodka products in perpetuity, and the Directors believe that it is appropriate to treat these rights as having an indefinite life for accounting purposes. The carrying value at 30 June (d) Impairment testing Impairment tests are performed annually, or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. Recoverable amounts are calculated based on the value in use approach, also considering fair value less costs of disposal. The value in use calculations are based on discounted forecast cash flows using the assumption that cash flows continue in perpetuity at the terminal growth rate of each country or region. The individual brands, other intangibles with indefinite useful lives and the associated property, plant and equipment are aggregated as separate cash-generating units. Separate tests are carried out for each cash-generating unit and for each of the markets. Goodwill is attributed to each of the markets. The key assumptions used for the value in use calculations are as follows: Cash flows Cash flows are forecasted for each cash-generating unit for the financial years based on management's approved plans and reflect the following assumptions: –Cash flows are projected based on the actual operating results and a three-year strategic plan approved by management. Cash flows are extrapolated up to five years using expected growth rates in line with management’s best estimates. Growth rates reflect expectations of sales growth, operating costs and margin, based on past experience and external sources of information. –The five-year forecast period is extended by up to an additional ten years at acquisition date for some intangible assets and goodwill when management believes that this period is justified by the maturity of the market and expects to achieve growth in excess of the terminal growth rate driven by Diageo’s sales, marketing and distribution expertise. These cash flows beyond the five-year period are projected using steady or progressively declining growth rates. The main exception is India and the USL brands, where the forecast period is extended by an additional –Cash flows for the subsequent years after the forecast period are extrapolated based on a terminal growth rate which does not exceed the long-term annual inflation rate of the country or region. Discount rates The discount rates used are the weighted average cost of capital which reflect the returns on government bonds and an equity risk premium adjusted for the drinks industry specific to the cash-generating units. The group applies post-tax discount rates to post-tax cash flows as the valuation calculated using this method closely approximates to applying pre-tax discount rates to pre-tax cash flows. For goodwill, these assumptions are based on the cash-generating unit or group of units to which the goodwill is attributed. For brands, they are based on a weighted average taking into account the country or countries where sales are made. 239 Financial statements (continued) The pre-tax discount rates, terminal and long-term growth rates used for impairment testing are as follows:
As a result of the impairment In the year ended 30 June 2022, an impairment charge of £240 million in respect of the McDowell's brand was recognised in exceptional operating items, based on its value in use. The brand impairment reduced the deferred tax liability by £35 million. Further, in the year ended 30 June 2022, an impairment charge of £77 million in respect of the Bell’s brand was recognised in exceptional operating items, based on its value in use. The impairment reduced the deferred tax liability attributable to the brand by £20 million. In the year ended 30 June 2022, Diageo decided to wind down its operations in Russia. As a result, an impairment charge of £19 million in respect of the Smirnov goodwill was recognised in exceptional operating items. The Turkish economy became hyperinflationary for the year ended 30 June 2022, and an impairment charge of TRY 3,760 million 240 Financial statements (continued) (e) Sensitivity to change in key assumptions Impairment testing for the year ended 30 June The table below shows the headroom at 30 June
10. Property, plant and equipment Accounting policies Land and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. Leaseholds are generally depreciated over the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual values over their expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives fall within the following ranges: buildings – 10 to 50 years; within plant and equipment casks and containers – 15 to 50 years; other plant and equipment – 5 to 40 years; fixtures and fittings – 5 to 10 years; and returnable bottles and crates – 5 to 10 years. Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried at above their recoverable amounts. Government grants Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions pursuant to which they have been granted and that the grants will be received. Government grants in respect of property, plant and equipment are deducted from the asset that they relate to, reducing the depreciation expense charged to the income statement. 241 Financial statements (continued)
242 Financial statements (continued) 11. Biological assets Accounting policies Biological assets held by the group consist of agave (Agave Azul Tequilana Weber) plants. The harvested plants are used during the production of tequila. Biological assets are measured at fair value less costs to sell on initial recognition and at the end of each reporting period based on the present value of future cash flows discounted at an appropriate rate for Mexico. Agricultural produce is measured at fair value less costs to sell at the point of harvest which is used as the cost of inventory when the harvested agave is transferred. Changes in biological assets were as follows:
At 30 June 12. Leases Accounting policies Where the group is the lessee, all leases are recognised on the balance sheet as right-of-use assets and depreciated on a straight-line basis with the charge recognised in cost of sales or in other operating items depending on the nature of the costs. The liability, recognised as part of net borrowings, is measured at a discounted value and any interest is charged to finance charges. The group recognises services associated with a lease as other operating expenses. Payments associated with leases where the value of the asset when it is new is lower than $5,000 (leases of low value assets) and leases with a lease term of Financial statements (continued) (a) Movement in right-of-use assets The company principally leases warehouses, office buildings, plant and machinery, cars and distribution vehicles in the ordinary course of business.
(b) Lease liabilities
The future cash outflows, which are not included in lease liabilities on the balance sheet, in respect of extension and termination options which are not reasonably expected to be exercised are estimated at (c) Amounts recognised in the consolidated income statement In the year ended 30 June The total cash outflow for leases in the year ended 30 June Financial statements (continued) 13. Other investments Accounting policies Other investments are equity investments that are not classified as investments in associates or joint arrangements nor investments in subsidiaries. They are included in non-current assets. Subsequent to initial measurement, other investments are stated at fair value. Gains and losses arising from the changes in fair value are recognised in the income statement or in other comprehensive income on a case by case basis. Accumulated gains and losses included in other comprehensive income are not recycled to the income statement. Dividends from other investments are recognised in the consolidated income statement. Loans receivable are non-derivative financial assets that are not classified as equity investments. They are subsequently measured either at amortised cost using the effective interest method less allowance for impairment or at fair value with gains and losses arising from changes in fair value recognised in the income statement or in other comprehensive income that are recycled to the income statement on the de-recognition of the asset. Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous experience, economic conditions and forward-looking data. Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending on changes in the credit quality of the counterparty.
At 30 June Financial statements (continued) 14. Post employment benefits Accounting policies The group’s principal post employment funds are defined benefit plans. In addition, the group has defined contribution plans, unfunded post employment medical benefit liabilities and other unfunded defined benefit post employment liabilities. For post employment plans other than defined contribution plans, the amount charged to operating profit is the cost of accruing pension benefits promised to employees over the year, plus any changes arising on benefits granted to members by the group during the year. Net finance charges comprise the net deficit/ Contributions payable by the group in respect of defined contribution plans are charged to operating profit as incurred. Critical accounting estimates and judgements Application of IAS 19 requires the exercise of estimate and judgement in relation to various assumptions. Diageo determines the assumptions on a country by country basis in conjunction with its actuaries. Estimates are required in respect of uncertain future events, including the life expectancy of members of the funds, salary and pension increases, future inflation rates, discount rates and employee and pensioner demographics. The application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and the balance sheet. There may be interdependencies between the assumptions. Where there is an accounting surplus on a defined benefit plan, management judgement is necessary to determine whether the group can obtain economic benefits through a refund of the surplus or by reducing future contributions to the plan. (a) Post employment benefit plans The group operates a number of pension plans throughout the world, devised in accordance with local conditions and practices. Diageo's most significant plans are defined benefit plans and are funded by payments to separately administered trusts or insurance companies. The group also operates a number of plans that are generally unfunded, primarily in the United States, which provide to employees post employment medical benefits. The principal plans are in the United Kingdom, Ireland and the United States where benefits are based on employees’ length of service and salary at retirement. All valuations were performed by independent actuaries using the projected unit credit method to determine pension costs. The most recent funding valuations of the significant defined benefit plans were carried out as follows:
(1) The Diageo Pension Scheme (2) The Guinness Ireland Group Pension Scheme (GIGPS, the Irish The assets of the UK and Irish pension plans are held in separate trusts administered by trustees who are required to act in the best interests of the plans’ beneficiaries. For DPS, the trustee is Diageo Pension Trust Limited. As required by legislation, one-third of the directors of the Trust are nominated by the members of the DPS, member nominated directors are appointed from both the pensioner member community and the active member community. For the Irish Scheme, Diageo Ireland makes four nominations and appoints three further candidates nominated by representative groupings. Financial statements (continued) The amounts charged to the consolidated income statement and statement of comprehensive income for the group’s defined benefit plans for the three years ended 30 June
(i) The year ended 30 June 2022 includes settlement gains of £27 million in respect of the Enhanced Transfer Values (ETV) exercise carried out in the Irish Schemes and past service gains of £28 million as a result of the changes of the benefits in the Irish Scheme. In the year ended 30 June 2021, the exceptional past service loss of £5 million is in respect of the equalisation of Guaranteed Minimum Pension (GMP) benefits for men and (1) The (charge)/income before taxation is in respect of the following countries:
In addition to the charge in respect of defined benefit post employment plans, contributions to the group’s defined contribution plans were £44 million (2022 – £33 Financial statements (continued) The
(1) The plan assets and liabilities by type of post employment benefit and country
The balance sheet analysis of the post employment plans is as follows:
(1) Includes surplus restriction of The disclosures have been prepared in accordance with IFRIC 14. In particular, where the calculation for a plan results in a surplus, the recognised asset is limited to the present value of any available future refunds from the plan or reductions in future contributions to the plan, and any additional liabilities are recognised as required. At 30 June million; 2021 – £840 248 Financial statements (continued) surpluses have been recognised, with no provision made against them, as they are expected to be recoverable through a combination of a reduction in future cash contributions or ultimately via a cash refund when the last member’s obligations have been met. (b) Principal risks and assumptions The material post employment plans are not exposed to any unusual, entity-specific or scheme-specific risks but there are general risks: Inflation – The majority of the plans’ obligations are linked to inflation. Higher inflation will lead to increased liabilities which is partially offset by the plans holding inflation linked gilts, swaps and caps against the level of inflationary increases. Interest rate – The plan liabilities are determined using discount rates derived from yields on AA-rated corporate bonds. A decrease in corporate bond yields will increase plan liabilities though this will be partially offset by an increase in the value of the bonds held by the post employment plans. Mortality – The majority of the obligations are to provide benefits for the life of the members and their partners, so any increase in life expectancy will result in an increase in the plans’ liabilities. Asset returns – Assets held by the pension plans are invested in a diversified portfolio of equities, bonds and other assets. Volatility in asset values will lead to movements in the net deficit/surplus reported in the consolidated balance sheet for post employment plans which in addition will also impact the post employment expense in the consolidated income statement. The following weighted average assumptions were used to determine the group’s deficit/surplus in the main post employment plans at 30 June in the relevant year. The assumptions used to calculate the charge/credit in the consolidated income statement for the year ending 30 June are based on the assumptions disclosed as at the previous 30 June.
(1) The salary increase assumption in the United States is not a significant assumption as only a minimal amount of members’ pension entitlement is dependent on a member’s projected final salary. (2) The salary increase assumptions include an allowance for age-related promotional salary increases. For the principal UK and Irish pension funds, the table below illustrates the expected age at death of an average worker who retires currently at the age of 65, and one who is currently aged 45 and subsequently retires at the age of 65:
(1) Based on the CMI’s S3 mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements. (2) Based on the CMI's S3 mortality tables with scaling factors based on the experience of the plan, with suitable future improvements. Financial statements (continued) For the significant assumptions, the following sensitivity analyses estimate the potential impacts on the consolidated income statement for the year ending 30 June
(1) The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans. (i) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each sensitivity is calculated on a change in the key assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation linked assumptions (e.g. pension increases and salary increases where appropriate). (c) Investment and hedging strategy The investment strategy for the group’s funded post employment plans is determined locally by the trustees of the plan and/or Diageo, as appropriate, and takes account of the relevant statutory requirements. The objective of the investment strategy is to achieve a target rate of return in excess of the movement on the liabilities, whilst taking an acceptable level of investment risk relative to the liabilities. This objective is implemented by using the funds of the plans to invest in a variety of asset classes that are expected over the long-term to deliver a target rate of return. The majority of the investment strategies have significant amounts allocated to The discount rates used are based on the yields of high-quality fixed income investments. For the UK plans, which represent approximately Financial statements (continued) An analysis of the fair value of the plan assets is as follows:
(i) The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested in the long-term. Total cash contributions by the group to all post employment plans in the year ending 30 June Financial statements (continued) (d) Deficit funding arrangements UK plans In the year ended 30 June 2011 the group established a Pension Funding Partnership (PFP) in respect of the UK Scheme. Whisky inventory was transferred into the partnership but the group retains control over the partnership which at 30 June In 2030, the group will be required, dependent upon the funding position of the UK Scheme at that time, to pay an amount not greater than the actuarial deficit at that time, up to a maximum of £430 million in cash, to purchase the UK Scheme’s interest in the partnership. If the UK Scheme is in surplus at an actuarial triennial valuation excluding the value of the PFP, then the group can exit the PFP with the agreement of the trustees. During the year ended 30 June 2023, following a remeasurement of the Diageo Lifestyle Plan, Diageo made a £16 million one-off deficit contribution to satisfy minimum funding requirement. Irish plans The (e) Timing of benefit payments The following table provides information on the timing of the benefit payments and the average duration of the defined benefit obligations and the distribution of the timing of benefit payments:
The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are disclosed undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised on the consolidated balance sheet. They are in respect of benefits that have accrued at the balance sheet date and make no allowance for any benefits to be accrued subsequently. (f) Related party disclosures Information on transactions between the group and its pension plans is given in note 21. Financial statements (continued) 15. Working capital Accounting policies Inventories are stated at the lower of cost and net realisable value. Cost includes raw materials, direct labour and expenses, an appropriate proportion of production and other overheads, but not borrowing costs. Cost is calculated at the weighted average cost incurred in acquiring inventories. Maturing inventories and raw materials which are retained for more than one year are classified as current assets, as they are expected to be realised in the normal operating cycle. Trade and other receivables are initially recognised at fair value less transaction costs and subsequently carried at amortised cost less any allowance for discounts and doubtful debts. Trade receivables arise from contracts with customers, and are recognised when performance obligations are satisfied, and the consideration due is unconditional as only the passage of time is required before the payment is received. Allowance losses are calculated by reviewing lifetime expected credit losses using historic and forward-looking data on credit risk. Trade and other payables are initially recognised at fair value including transaction costs and subsequently carried at amortised costs. Contingent considerations recognised in business combinations are subsequently measured at fair value through income statement. The group evaluates supplier arrangements against a number of indicators to assess if the liability has the characteristics of a trade payable or should be classified as borrowings. This assessment considers the commercial purpose of the facility, whether payment terms are similar to customary payment terms, whether the group is legally discharged from its obligation towards suppliers before the end of the original payment term, and the group’s involvement in agreeing terms between banks and suppliers. Provisions are liabilities of uncertain timing or amount. A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are calculated on a discounted basis. The carrying amounts of provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. (a) Inventories
Maturing inventories include whisk(e)y, rum, tequila and Chinese white spirits. The following amounts of inventories are expected to be utilised after more than one year:
Inventories are disclosed net of provisions for obsolescence, an analysis of which is as follows:
Financial statements (continued) (b) Trade and other receivables
At 30 June The aged analysis of trade receivables, net of expected credit loss allowance, is as follows:
Trade and other receivables are disclosed net of expected credit loss allowance for doubtful debts, an analysis of which is as follows:
Financial statements (continued) (c) Trade and other payables
Interest payable at 30 June Together with the group’s partner banks, supply chain financing (SCF) facilities are provided to suppliers in certain countries. These arrangements enable suppliers to receive funding earlier than the invoice due date at their discretion and at their own cost. Payment terms continue to be agreed directly between the group and suppliers, independently from the availability of SCF facilities. Liabilities are settled in accordance with the original due date of invoices. The group does not incur any fees or receive any rebates where the suppliers choose to utilise these facilities. The group has determined that it is appropriate to present amounts outstanding subject to SCF arrangements as trade payables. Consistent with this classification, cash flows are presented either as operating cash flows or cash flows from investing activities, when related to the acquisition of non-current assets. At 30 June (d) Provisions
Financial statements (continued) Risk management and capital structure Introduction This section sets out the policies and procedures applied to manage the group’s capital structure and the financial risks the group is exposed to. Diageo considers the following components of its balance sheet to be capital: borrowings and equity. Diageo manages its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels. 16. Financial instruments and risk management Accounting policies Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction costs. For those financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date. The group classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets and liabilities at fair value through income statement and financial assets at fair value through other comprehensive income. The accounting policies for other investments and loans are described in note 13, for trade and other receivables and payables in note 15 and for cash and cash equivalents in note 17. Financial assets and liabilities at fair value through income statement include derivative assets and liabilities. Where financial assets or liabilities are eligible to be carried at either amortised cost or fair value through other comprehensive income, the group does not apply the fair value option. Derivative financial instruments are carried at fair value using a discounted cash flow model based on market data applied consistently for similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken to the income statement as they arise. Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the effective interest rate method. Financial liabilities in respect of the Zacapa acquisition are recognised at fair value. Hedge accounting The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges), commodity price risk of highly probable forecast transactions, Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed. Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair value of the underlying hedged asset or liability. If such a hedge relationship no longer meets hedge accounting criteria, fair value movements on the derivative continue to be taken to the income statement while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement over its remaining life using the effective interest rate method. Cash flow Net investment hedges take the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on translation of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as hedging instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to the extent that they are effective, with any ineffectiveness taken to the income statement. Foreign currency contracts hedging net investments are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness taken to the income statement. Financial statements (continued) The group’s funding, liquidity and exposure to foreign currency and interest rate risks are managed by the group’s treasury department. The treasury department uses a range of financial instruments to manage these underlying risks. Treasury operations are conducted within a framework of Board-approved policies and guidelines, which are recommended and monitored by the Finance Committee, chaired by the Chief Financial Officer. The policies and guidelines include benchmark exposure and/or hedge cover levels for key areas of treasury risk which are periodically reviewed by the Board following, for example, significant business, strategic or accounting changes. The framework provides for limited defined levels of flexibility in execution to allow for the optimal application of the Board-approved strategies. Transactions arising from the application of this flexibility are carried at fair value, gains or losses are taken to the income statement as they arise and are separately monitored on a daily basis using Value at Risk analysis. In the years ended 30 June The group purchases insurance for commercial or, where required, for legal or contractual reasons. In addition, the group retains insurable risk where external insurance is not considered an economic means of mitigating these risks. The Finance Committee receives a quarterly report on the key activities of the treasury department, however any exposures which differ from the defined benchmarks are reported as they arise. (a) Currency risk The group presents its consolidated financial statements in sterling and conducts business in many currencies. As a result, it is subject to foreign currency risk due to exchange rate movements, which will affect the group’s transactions and the translation of the results and underlying net assets of its operations. To manage the currency risk, the group uses certain financial instruments. Where hedge accounting is applied, hedges are documented and tested for effectiveness on an ongoing basis. Hedge of net investment in foreign operations The group hedges a certain portion of its exposure to fluctuations in the sterling value of its foreign operations by designating borrowings held in foreign currencies and using foreign currency spots, forwards, swaps and other financial derivatives. For the year ended 30 June At 30 June Hedge of foreign currency debt The group uses cross currency interest rate swaps to hedge the foreign currency risk associated with certain foreign currency denominated borrowings. Transaction exposure hedging The group’s policy is to hedge forecast transactional foreign currency risk on (b) Interest rate risk The group has an exposure to interest rate risk, arising principally on changes in US dollar, euro and sterling interest rates. To manage interest rate risk, the group manages its proportion of fixed to floating rate borrowings within limits approved by the Board, primarily through issuing fixed and floating rate borrowings, and by utilising interest rate swaps. These practices aim to minimise the group’s net finance charges with acceptable year-on-year volatility. To facilitate operational efficiency and effective hedge accounting, for the year ended 30 June
(1) The floating rate portion of net borrowings includes cash and cash equivalents, collaterals, floating rate loans and bonds and bank overdrafts. Financial statements (continued) The table below sets out the average monthly net borrowings and effective interest rate:
(i) For this calculation, net interest charge excludes fair value adjustments to derivative financial instruments and average monthly net borrowings include the impact of interest rate swaps that are no longer in a hedge relationship but exclude the market value adjustment for cross currency interest rate swaps. IBOR reform In accordance with the UK Financial Conduct Authority’s announcement on 5 March 2021, LIBOR benchmark rates were discontinued after 31 December 2021, except for the majority of the US dollar settings which In line with the relief provided by the amendment, the group assumes that the interest rate benchmark on which the cash flows of the hedged item, the hedging instrument or the hedged risk are based are not altered by the IBOR reform. The derivative hedging instruments provide a close approximation to the extent and nature of the risk exposure the group manages through hedging relationships. Included in floating rate net borrowings are interest rate swaps designated in fair value hedges, with a notional amount of (c) Commodity price risk Commodity price risk is managed in line with the principles approved by the Board either through long-term purchase contracts with suppliers or, where appropriate, derivative contracts. The group policy is to maintain the Value at Risk of commodity price risk arising from commodity exposures below 75 bps of forecast gross profit in any given financial year. Where derivative contracts are used, the commodity price risk exposure is hedged up to 24 months of forecast volume through exchange-traded and over-the-counter contracts (futures, forwards and swaps) and cash flow hedge accounting is applied. (d) Market risk sensitivity analysis The group uses a sensitivity analysis that estimates the impacts on the consolidated income statement and other comprehensive income of either an instantaneous increase or decrease of 0.5% in market interest rates or a 10% strengthening or weakening in sterling against all other currencies, from the rates applicable The sensitivity analysis estimates the impact of changes in interest and foreign exchange rates. All hedges are expected to be highly effective for this analysis and it considers the impact of all financial instruments including financial derivatives, cash and cash equivalents, borrowings and other financial assets and liabilities. The results of the sensitivity analysis should not be considered as projections of likely future events, gains or losses as actual results in the future may differ materially 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.
(1) The impact on foreign currency borrowings and derivatives in net investment hedges is largely offset by the foreign exchange difference arising on the translation of net investments. (2) The impact on the consolidated statement of comprehensive income includes the impact on the income statement. Financial statements (continued) (e) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. Credit risk arises on cash balances (including bank deposits and cash and cash equivalents), derivative financial instruments and credit exposures to customers, including outstanding loans, trade and other receivables, financial guarantees and committed transactions. The carrying amount of financial assets of Credit risk is managed separately for financial and business related credit exposures. Financial credit risk Diageo aims to minimise its financial credit risk through the application of risk management policies approved and monitored by the Board. Counterparties are predominantly limited to investment grade banks and financial institutions, and policy restricts the exposure to any one counterparty by setting credit limits taking into account the credit quality of the counterparty. The group’s policy is designed to ensure that individual counterparty limits are adhered to and that there are no significant concentrations of credit risk. The Board also defines the types of financial instruments which may be transacted. The credit risk arising through the use of financial instruments for currency, interest rate and commodity price risk management is estimated with reference to the fair value of contracts with a positive value, rather than the notional amount of the instruments themselves. Diageo annually reviews the credit limits applied and regularly monitors the counterparties’ credit quality reflecting market credit conditions. When derivative transactions are undertaken with bank counterparties, the group may, where appropriate, enter into certain agreements with such bank counterparties whereby the parties agree to post cash collateral for the benefit of the other if the net valuations of the derivatives are above a predetermined threshold. At 30 June Business related credit risk Exposures from loan, trade and other receivables are managed locally in the operating units where they arise and active risk management is applied, focusing on country risk, credit limits, ongoing credit evaluation and monitoring procedures. There is no significant concentration of credit risk with respect to loans, trade and other receivables as the group has a large number of customers which are internationally dispersed. (f) Liquidity risk Liquidity risk is the risk of Diageo encountering difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The group uses short-term commercial paper to finance its day-to-day operations. The group’s policy with regard to the expected maturity profile of borrowings is to limit the amount of such borrowings maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the level of commercial paper to 30% of gross borrowings less money market demand deposits. In addition, the group’s policy is to maintain backstop facilities with relationship banks to support commercial paper obligations. The following tables provide an analysis of the anticipated contractual cash flows including interest payable for the group’s financial liabilities and derivative instruments on an undiscounted basis. Where interest payments are calculated at a floating rate, rates of each cash flow until maturity of the instruments are calculated based on the forward yield curve prevailing at the respective year ends. The gross cash flows of cross currency swaps are presented for the purposes of this table. All other derivative contracts are presented on a net basis. Financial assets and liabilities are presented gross in the consolidated balance sheet although, in practice, the group uses netting arrangements to reduce its liquidity requirements on these instruments. Financial statements (continued) Contractual cash flows
(1) For the purpose of these tables, borrowings are defined as gross borrowings excluding lease liabilities and fair value of derivative instruments as disclosed in note 17. (2) Carrying amount of interest on borrowings, interest on derivatives and interest on other payable is included within interest payable in note 15. (3) Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32. The group had available undrawn committed bank facilities as follows:
The facilities can be used for general corporate purposes and, together with cash and cash equivalents, support the group’s commercial paper programmes. There are no financial covenants on the group’s material short- and long-term borrowings. Certain of these borrowings contain cross default provisions and negative pledges. The committed bank facilities are subject to a single financial covenant, being minimum interest cover ratio of two times (defined as the ratio of operating profit before exceptional items, aggregated with share of after tax results of associates and joint ventures, to net interest charges). They are also subject to pari passu ranking and negative pledge covenants. Any non-compliance with covenants underlying Diageo’s financing arrangements could, if not waived, constitute an event of default with respect to any such arrangements, and any non-compliance with covenants may, in particular circumstances, lead to an acceleration of maturity on certain borrowings and the inability to access committed facilities. Diageo was in full compliance with its financial, pari passu ranking and negative pledge covenants in respect of its material short- and long-term borrowings throughout each of the years presented. Financial statements (continued) (g) Fair value measurements Fair value measurements of financial instruments are presented through the use of a three-level fair value hierarchy that prioritises the valuation techniques used in fair value calculations. The group maintains policies and procedures to value instruments using the most relevant data available. If multiple inputs that fall into different levels of the hierarchy are used in the valuation of an instrument, the instrument is categorised on the basis of the most subjective input. Foreign currency forwards and swaps, cross currency swaps and interest rate swaps are valued using discounted cash flow techniques. These techniques incorporate inputs at levels 1 and 2, such as foreign exchange rates and interest rates. These market inputs are used in the discounted cash flow calculation incorporating the instrument’s term, notional amount and discount rate, and taking credit risk into account. As significant inputs to the valuation are observable in active markets, these instruments are categorised as level 2 in the hierarchy. Other financial liabilities include a put option, which does not have an expiry date, held by Industrias Licoreras de Guatemala (ILG) to sell the remaining 50% equity stake in Rum Creation & Products Inc., the owner of the Zacapa rum brand, to Diageo. The liability is fair valued using the discounted cash flow method and as at 30 June Included in other financial liabilities, the contingent consideration on acquisition of businesses represents the present value of payments up to Contingent considerations linked to certain volume targets at 30 June 2023 included £113 million in respect of the acquisition of Aviation Gin and Davos Brands (2022 – £157 million), £59 million in respect of the acquisition of 21Seeds (2022 – £59 million) and £18 million in respect of the acquisition of Lone River Ranch Water (2022 – £57 million). Contingent consideration of £70 million in respect of the acquisition of Don Papa Rum (2022 – £nil) is linked to certain financial performance targets. Contingent considerations are fair valued based on discounted cash flow method using assumptions not observable in the market. Contingent considerations are sensitive to possible changes in assumptions; a 10% increase or decrease in volume would increase or decrease the fair value of contingent considerations linked to certain volume targets by approximately £30 million and £50 million, respectively, and a 10% increase or decrease in cash flows would increase or decrease the fair value of contingent considerations linked to certain financial performance targets by approximately £25 million. There were no significant changes in the measurement and valuation techniques, or significant transfers between the levels of the financial assets and liabilities in the year ended 30 June The group’s financial assets and liabilities measured at fair value are categorised as follows:
In the years ended 30 June 261 Financial statements (continued) The movements in level 3 instruments, measured on a recurring basis, are as follows:
(h) Results of hedge relationships The group targets a one-to-one hedge ratio. The change in the credit risk of the hedging instruments or the hedged items is not expected to be the primary factor in the economic relationship. The notional amounts, contractual maturities and rates of the hedging instruments designated in hedging relationships
(1) In case of derivatives in cash flow hedges (commodity price risk and foreign currency risk), the range of the most significant contract’s hedged rates are presented. For hedges of the cash flow risk from a change in forward exchange rates using cross currency interest rate swaps, the retranslation of the related bond principal to closing exchange rates and recognition of interest on the related bonds will affect the income statement in each year until the related bonds mature in In respect of cash flow hedging instruments, a gain of £247 million (2022 – £124 million 262 Financial statements (continued) comprehensive income to operating profit in relation to commodity hedges. The carrying amount of hedged items recognised in the consolidated balance sheet in relation to hedges of cash flow risk arising from foreign currency debts equals the notional value of the hedging instruments at 30 June For cash flow hedges of forecast transactions at 30 June In respect of hedges of foreign currency borrowings that are no longer applicable at 30 June The For fair value hedges that are no longer applicable, the accumulated fair value changes shown on the consolidated balance sheet at 30 June The following table sets out information regarding the effectiveness of hedging relationships designated by the group, as well as the impacts on the income statement and other comprehensive income:
Financial statements (continued) (i) Reconciliation of financial instruments The table below sets out the group’s accounting classification of each class of financial assets and liabilities:
(1) Other investments and loans are including those in respect of associates. (2) Borrowings are defined as gross borrowings excluding lease liabilities and the fair value of derivative instruments. At 30 June (j) Capital management The group’s management is committed to enhancing shareholder value in the long-term, both by investing in the business and brands so as to deliver continued improvement in the return from those investments and by managing the capital structure. Diageo manages 264 Financial statements (continued) its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels. This is achieved by targeting an adjusted net borrowings (net borrowings aggregated with post employment benefit liabilities) to adjusted EBITDA leverage of 2.5 - 3.0 times, this range for Diageo being currently broadly consistent with an A band credit rating. Diageo would consider operating outside of this range in order to effect strategic initiatives within its stated goals, which could have an impact on its rating. If Diageo’s leverage was to be negatively impacted by the financing of an acquisition, it would seek over time to return to the range of 2.5 17. Net borrowings Accounting policies Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are designated in fair value hedge relationship. In these cases, the amortised cost is adjusted for the fair value of the risk being hedged, with changes in value recognised in the income statement. The fair value adjustment is calculated using a discounted cash flow technique based on unadjusted market data. Bank overdrafts form an integral part of the group’s cash management and are included as a component of net cash and cash equivalents in the consolidated statement of cash flows. Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and have an original maturity of three months or less, including money market deposits, commercial paper and investments. Net borrowings are defined as gross borrowings (short-term borrowings and long-term borrowings plus lease liabilities plus interest rate hedging instruments, cross currency interest rate swaps and foreign currency forwards and swaps used to manage borrowings) less cash and cash equivalents. Financial statements (continued)
266 Financial statements (continued) (1) SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, a 100% owned finance subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other subsidiary of Diageo plc guarantees the security. (2) SEC-registered debt issued on an unsecured basis by Diageo Capital plc, a 100% owned finance subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other subsidiary of Diageo plc guarantees the security. (i) The interest rates shown are those contracted on the underlying borrowings before taking into account any interest rate hedges (see note 16). (ii) Bonds are stated net of unamortised finance costs of (iii) Gross borrowings before derivative financial instruments are expected to mature as follows:
During the year, the following bonds were issued and repaid:
(a) Reconciliation of movement in net borrowings
(1) In the year ended 30 June (2) In the year ended 30 June 2023, other non-cash items are principally in respect of fair value changes of cross currency interest rate swaps and interest rate swaps of £(34) million and lease liabilities of £(82) million, partially offset by the £84 million fair value change of borrowings. In the year ended 30 June 2022, other non-cash items are principally in respect of fair value changes of cross currency interest rate swaps and interest rate swaps of £(346) million and lease liabilities of £(183) million, partially offset by the £331 million fair value change of borrowings. Financial statements (continued) (b) Analysis of net borrowings by currency
(1) Includes foreign currency forwards and swaps and leases. (2) Includes 18. Equity Accounting policies Own shares represent shares and share options of Diageo plc that are held in treasury or by employee share trusts for the purpose of fulfilling obligations in respect of various employee share plans or were acquired as part of a share buyback programme. Own shares are treated as a deduction from equity until the shares are cancelled, reissued or disposed of and when vest are transferred from own shares to retained earnings at their weighted average cost. Share-based payments include share awards and options granted to directors and employees. The fair value of equity settled share options and share grants is initially measured at grant date based on Monte Carlo and Black Scholes models and is charged to the income statement over the vesting period. For equity settled shares, the credit is included in retained earnings. Cancellations of share options are treated as an acceleration of the vesting period and any outstanding charge is recognised in operating profit immediately. Any surplus or deficit arising on the sale of the Diageo plc shares held by the group is included as a movement in equity. Dividends are (a) Allotted and fully paid share capital – ordinary shares of 28101⁄108 pence each
Financial statements (continued) (b) Hedging and exchange reserve
Currency basis spreads included in the hedging reserve represent the cost of hedging arising as a result of imperfections of foreign exchange markets. Exclusion of currency basis spreads would result in a (c) Own shares Movements in own shares
Share trust arrangements At 30 June Purchase of own shares Authorisation was given by shareholders on Financial statements (continued) During the year ended 30 June The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) for the year ended 30 June
(1) New maximum number of purchasable shares was authorised by shareholders at the AGM held on (d) Dividends
The proposed final Dividends are waived on all treasury shares owned by the company and all shares owned by the employee share trusts. Financial statements (continued) (e) Non-controlling interests Diageo consolidates USL, a company incorporated in India, with a Summarised financial information for USL and other subsidiaries, after fair value adjustments on acquisition, and the amounts attributable to non-controlling interests are as follows:
(1) (Loss)/profit for the year includes exceptional operating expenses attributable to non-controlling interests. (2) Other comprehensive (loss)/income is principally in respect of exchange on translating the subsidiaries to sterling. Financial statements (continued) (f) Employee share compensation The group uses a number of share award and option plans to grant to its directors and employees. The annual fair value charge in respect of the equity settled plans for the three years ended 30 June
Executive share awards have been made primarily under the Diageo 2014 Long Term Incentive Plan (DLTIP) from September 2014 onwards and delivered in conditional awards in the form of performance shares, performance share options, time-vesting restricted stock units (RSUs) and/or time-vesting share options (or cash-based equivalents in certain locations for regulatory reasons). Share options are granted at the market value at the time of grant. Prior to the introduction of the DLTIP, employees in associated companies were granted awards under the Diageo plc 2011 Associated Companies Share IncentivePlan (DACSIP). In the case of Executive Directors, conditional awards of time-vesting RSUs or forfeitable shares may be awarded under the 2020 Deferred Bonus Share Plan (DBSP), with vesting not subject to any performance conditions and not subject to a post-vesting retention period. The Share awards normally vest and are released on the third anniversary of the grant date. Participants do not make a payment to receive the award at grant. Executive Directors are required to hold any vested shares awarded under DLTIP for a further two-year post-vesting holding period. Share options may normally be exercised between three and ten years after the grant date. Executives in North America and Latin America and Caribbean are granted awards over the company’s ADRs (one ADR is equivalent to four ordinary shares). Performance shares under the DLTIP (for awards in 2020 and thereafter) are subject to the achievement of three performance measures: 1) compound annual growth in profit before exceptional items over three years; 2) compound annual growth in organic net sales over three years; 3) environmental, social and governance (ESG) priorities, weighted 40%, 40% and 20% of the maximum respectively, as set out in the Directors’ remuneration report. Performance share options under the DLTIP are subject to the achievement of two equally weighted performance measures: 1) a comparison of Diageo’s three-year TSR with a peer group; 2) cumulative free cash flow over a three-year period, measured at constant exchange rates. Performance measures and targets are set annually by the Remuneration Committee. The vesting range is 20% for Executive Directors and 25% for other participants for achieving minimum performance targets, up to 100% for achieving the maximum target level. Retesting of the performance measures is not permitted. For performance shares under the DLTIP, dividends are accrued on awards and are given to participants to the extent that the awards actually vest at the end of the performance period. Dividends are normally paid out in the form of shares. Savings plans are provided in the form of a savings-related share option plan. For UK employees, awards were made under the Diageo 2010 Sharesave plan (for options granted up until 2020) and the Diageo 2020 Sharesave plan (for options granted from 2021). For Republic of Ireland (ROI) based employees, awards were made under the Diageo 2009 Irish Sharesave Scheme (for options granted up until 2019) and the Diageo 2019 Irish Sharesave Scheme (for options granted in 2020). These are HMRC and Irish Revenue approved all-employee savings plans. For ROI employees, For US employees, the awards are made under the Diageo plc 2017 United States Employee Stock Purchase Plan. Employees agree to make regular monthly savings for a period of one year and acquire American Depositary Receipts (ADRs) at 15% discounted price (which is set at the time of grant) using their contributions at the end of the plan cycle. They receive the benefit of Financial statements (continued) For the three years ended 30 June
Transactions on schemes Transactions on the executive share award plans for the three years ended 30 June
The exercise price of share options outstanding at 30 June At 30 June Financial statements (continued) Other financial statements disclosures Introduction This section includes additional financial information that are either required by the relevant accounting standards or management considers these to be material information for shareholders. 19. Contingent liabilities and legal proceedings Accounting policies Provision is made for the anticipated settlement costs of legal or other disputes against the group where it is considered to be probable that a liability exists and a reliable estimate can be made of the likely outcome. Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of the estimated financial effect, appropriate disclosure is made but no provision created. Critical accounting judgements and estimates Judgement is necessary in assessing the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any settlement. Due to the inherent uncertainty in this evaluation process, actual losses may be different from the liability originally estimated. The group may be involved in legal proceedings in respect of which it is not possible to make a reliable estimate of any expected settlement. In such cases, appropriate disclosure is provided but no provision is made and no contingent liability is quantified. (a) Guarantees and related matters As of 30 June (b) Acquisition of USL shares from UBHL and related proceedings in relation to the USL transaction On 4 July 2013, Diageo completed its acquisition, under a share purchase agreement with United Breweries (Holdings) Limited (UBHL) and various other sellers (the SPA), of shares representing 14.98% in USL, including shares representing 6.98% from UBHL. The SPA was signed on 9 November 2012 as part of the transaction announced by Diageo in relation to USL on that day (the Original USL Transaction). Following a series of further transactions, as of 30 June Prior to the acquisition from UBHL on 4 July 2013, the High Court of Karnataka (High Court) had granted leave to UBHL under the Indian Companies Act 1956 (the Leave Order) to enable the sale by UBHL to Diageo to take place (the UBHL Share Sale) notwithstanding the continued existence of certain winding-up petitions that were pending against UBHL on the date of the SPA. At the time of the completion of the UBHL Share Sale, the Leave Order remained subject to review on appeal. However, as stated by Diageo at the time of closing, it was considered unlikely that any appeal process in respect of the Leave Order would definitively conclude on a timely basis and, accordingly, Diageo waived the conditionality under the SPA relating to the absence of insolvency proceedings in relation to UBHL and acquired the 6.98% stake in USL from UBHL at that time. Following appeal and counter-appeal in respect of the Leave Order, this matter is now beforethe Supreme Court of India which has issued an order that the status quo be maintained with regard to the UBHL Share Sale pending a hearing on the matter before it. Following a number of adjournments, the next date for a substantive hearing is yet to be fixed. In separate proceedings, the High Court passed a winding-up order against UBHL on 7 February 2017, and appeals filed by UBHL against that order have since been dismissed, initially by a division bench of the High Court and subsequently by the Supreme Court of India. Diageo continues to believe that the acquisition price of INR 1,440 per share paid to UBHL for the USL shares is fair and reasonable as regards UBHL, UBHL’s shareholders and UBHL’s secured and unsecured creditors. However, adverse results for Diageo in the proceedings referred to above could, absent leave or relief in other proceedings, ultimately result in Diageo losing title to the 6.98% stake in USL acquired from UBHL. Diageo believes, including by reason of its rights under USL’s articles of association to nominate USL’s CEO and CFO and the right to appoint, through USL, a majority of the directors on the boards of USL’s subsidiaries as well as its ability as promoter to nominate for appointment up to two-thirds of USL’s directors for so long as the chairperson of USL is an independent director, that it would remain in control of USL and would continue to be able to consolidate USL as a subsidiary for accounting purposes regardless of the outcome of this litigation. There can be no certainty as to the outcome of the existing or any further related legal proceedings or the time frame within which they would be concluded. Financial statements (continued) (c) Continuing matters relating to Dr Vijay Mallya and affiliates On 25 February 2016, Diageo and USL each announced that they had entered into arrangements with Dr Mallya under which he had agreed to resign from his position as a director and as chairman of USL and from his positions in USL’s subsidiaries. Diageo’s agreement with Dr Mallya (the February 2016 Agreement) provided for a payment of On account of various breaches and other provisions of agreements between Dr Mallya and persons connected with him and Diageo and/or USL, Diageo did not make the On 16 November 2017, Diageo and other relevant members of the Diageo group commenced claims in the High Court of Justice in England and Wales (the English High Court) against Dr Mallya in relation to these matters. At the same time DHN also commenced claims in the English High Court against Dr Mallya, his son Sidhartha Mallya, Watson and Continental Administration Services Limited (CASL) (a company affiliated with Dr Mallya and understood to hold assets on trust for him and certain persons affiliated with him) for in excess of Diageo continues to prosecute its claims and to defend the counterclaim. As part of these proceedings, Diageo and the other relevant members of its group filed an application for strike out and/or summary judgement in respect of certain aspects of the defence filed by Dr Mallya and the other defendants, including their defence in relation to Watson and CASL’s liability to repay DHN. The application was successful resulting in Watson being ordered to pay approximately A trial of the remaining elements of these claims was due to commence on 21 November 2022.However, on 26 July 2021 Dr Mallya was declared bankrupt by the English High Court pursuant to a bankruptcy petition presented by a consortium of Indian banks. Diageo and the relevant members of its group have informed the Trustee in Bankruptcy of their position as creditors in the bankruptcy and have engaged with the Trustee regarding their claims and the status of the current proceedings. An appeal by Dr Mallya At this stage, it is not possible to assess the extent to which the various ongoing proceedings related to Upon completion of an initial inquiry in April 2015 into past improper transactions which identified references to certain additional parties and matters, USL carried out an additional inquiry into these transactions (Additional Inquiry) which was completed in July 2016. The Additional Inquiry, prima facie, identified transactions indicating actual and potential diversion of funds from USL and its Indian and overseas subsidiaries to, in most cases, entities that appeared to be affiliated or associated with Dr Mallya. All amounts identified in the Additional Inquiry have been provided for or expensed in the financial statements of USL or its subsidiaries in the respective prior periods. USL has filed recovery suits against relevant parities identified pursuant to the Additional Inquiry. Further, at this stage, it is not possible for the management of USL to estimate the financial impact on USL, if any, arising out of potential non-compliance with applicable laws in relation to such fund diversions. Financial statements (continued) (d) Other matters in relation to USL In respect of the Watson backstop guarantee arrangements, the Securities and Exchange Board of India (SEBI) issued a notice to Diageo on 16 June 2016 that if there is any net liability incurred by Diageo (after any recovery under relevant security or other arrangements, which matters remain pending) on account of the Watson backstop guarantee, such liability, if any, would be considered to be part of the price paid for the acquisition of USL shares under the SPA which formed part of the Original USL Transaction and that, in that case, additional equivalent payments would be required to be made to those shareholders (representing 0.04% of the shares in USL) who tendered in the open offer made as part of the Original USL Transaction. Diageo believes that the Watson backstop guarantee arrangements were not part of the price paid or agreed to be paid for any USL shares under the Original USL Transaction and that therefore (e) USL’s dispute with IDBI Bank Limited Prior to the acquisition by Diageo of a controlling interest in USL, USL had prepaid a term loan of INR 6,280 million (£ Following the original maturity date of the loan, USL received notices from IDBI seeking to recall the loan, demanding a further sum of INR 459 million (£ On 27 June 2019, a single judge bench of the High Court issued an order dismissing the writ petition filed by USL, amongst other things, on the basis that the matter involved an issue of breach of contract by USL and was therefore not maintainable in exercise of the court’s writ jurisdiction. USL (f) Tax The international tax environment has seen increased scrutiny and rapid change over recent years bringing with it greater uncertainty for multinationals. Against this backdrop, Diageo has been monitoring developments and continues to engage transparently with the tax authorities in the countries where Diageo operates to ensure that the group manages its arrangements on a sustainable basis. The group operates in a large number of markets with complex tax and legislative regimes that are open to subjective Diageo has a large number of ongoing tax cases in Brazil and India. Since assessing an accurate value of contingent liabilities in these markets requires a high degree of judgement, contingent liabilities are disclosed on the basis of the current known possible exposure from tax assessment values. While not all of these cases are individually significant, the current aggregate known possible exposure from tax assessment values is up to approximately Financial statements (continued) fiscal environment in Brazil and in India, the possibility of further tax assessments related to the same matters cannot be ruled out and the judicial processes may take extended periods to conclude. Based on its current assessment, Diageo believes that no provision is required in respect of these issues. Payments were made under protest in India in respect of the periods 1 April 2006 to 31 March 2019 in relation to tax assessments where the risk is considered to be remote or possible. These payments have to be made in order to be able to challenge the assessments and as such have been recognised as a receivable in the group's balance sheet. The total amount of payments under protest recognised as a receivable as at 30 June (g) On 31 May 2023, a complaint against Diageo North America, Inc (DNA) was filed in the Supreme Court of New York by Combs Wine and Spirits LLC (an entity associated with Mr Sean Combs) alleging, inter alia, breach of contract in respect of a joint venture agreement related to DeLeón tequila. DNA has (h) Other The group has extensive international operations and routinely makes judgements on a range of legal, customs and tax matters which are incidental to the group's operations. Some of these judgements are or may become the subject of challenges and involve proceedings, the outcome of which cannot be foreseen. In particular, the group is currently a defendant in various customs proceedings that challenge the declared customs value of products imported by certain Diageo companies. Diageo continues to defend its position vigorously in these proceedings. Save as disclosed above, neither Diageo, nor any member of the Diageo group, is or has been engaged in, nor (so far as Diageo is aware) is there pending or threatened by or against it, any legal or arbitration proceedings which may have a significant effect on the financial position of the Diageo group. Financial statements (continued) 20. Commitments (a) Capital commitments Commitments for expenditure on intangibles and property, plant and equipment not provided for in these consolidated financial statements are estimated at £599 million (2022 – £399 (b) Other commitments The future minimum lease rentals payable in the year ended 30 June 21. Related party transactions Transactions between the group and its related parties are made on terms equivalent to those that prevail in arm’s length transactions. (a) Subsidiaries Transactions between the company and its subsidiaries are eliminated on consolidation and therefore are not disclosed. Details of the principal group companies are given in note 22. (b) Associates and joint ventures Sales and purchases to and from associates and joint ventures are principally in respect of premium drinks products but also include the provision of management services. Transactions and balances with associates and joint ventures are set out in the table below:
Other disclosures in respect of associates and joint ventures are included in note 6. (c) Key management personnel The key management of the group comprises the Executive and Non-Executive Directors, the members of the Executive Committee and the Company Secretary. They are listed under ‘Board of Directors and Company Secretary’ and ‘Executive Committee’.
(1) Time-apportioned fair value of unvested options and share awards. Non-Executive Directors do not receive share-based payments or post employment benefits. Financial statements (continued) There were no transactions with these related parties during the year ended 30 June (d) Pension plans In October 2022, Diageo plc provided an interim credit facility to Diageo Pension Trust Limited, consisting of £850 million for the Diageo Pension Scheme, to support temporary liquidity challenges until 29 December 2022. In December 2022, the maturity date was extended to 29 June 2023. The facility amount was reduced on 22 May 2023 to £350 million and on 14 June 2023 the maturity date was extended to 11 October 2023. The facility was subsequently cancelled on 25 July 2023. The Diageo pension plans are recharged with the cost of administration services provided by the group to the pension plans and with professional fees paid by the group on behalf of the pension plans. The total amount recharged for the year was £0.1 million (e) Directors’ remuneration
(1) Gains on options realised in the year and the benefit from share awards, calculated by using the share price applicable on the date of exercise of the share options and release of the awards. 279 Unaudited financial information 22. Principal group companies The companies listed below include those which principally affect the profits and assets of the group. The operating companies listed below may carry on the business described in the countries listed in conjunction with their subsidiaries and other group companies.
(1) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group. (2) Percentage ownership excludes 2.38% owned by the USL Benefit Trust. (3) Directly owned by Diageo plc. (4) French limited liability company. 23. Post balance sheet events Diageo will propose adopting new Articles of Association (New Articles) at the AGM to On 31 July 2023, the Unaudited financial information Definitions and reconciliation of non-GAAP measures to GAAP measures Diageo’s strategic planning process is based on certain non-GAAP measures, including organic movements. These non-GAAP measures are chosen for planning and reporting, and some of them are used for incentive purposes. The group’s management believes that these measures provide valuable additional information for users of the financial statements in understanding the group’s performance. These non-GAAP measures should be viewed as complementary to, and not replacements for, the comparable GAAP measures and reported movements therein. It is not possible to reconcile the forecast tax rate before exceptional items, forecast organic net sales growth and forecast organic operating profit growth to the most comparable GAAP measure as it is not possible to predict, without unreasonable effort, with reasonable certainty, the future impact of changes in exchange rates, acquisitions and disposals and potential exceptional items. Volume Volume is a performance indicator that is measured on an equivalent units basis to nine-litre cases of spirits. An equivalent unit represents one nine-litre case of spirits, which is approximately 272 servings. A serving comprises 33ml of spirits, 165ml of wine, or 330ml of ready to drink or beer. Therefore, to convert volume of products other than spirits to equivalent units, the following guide has been used: beer in hectolitres, divide by 0.9; wine in nine-litre cases, divide by five; ready to drink and certain pre-mixed products that are classified as ready to drink in nine-litre cases, divide by ten. Organic movements Organic information is presented using sterling amounts on a constant currency basis excluding the impact of exceptional items, certain fair value remeasurement, hyperinflation and acquisitions and disposals. Organic measures enable users to focus on the performance of the business which is common to both years and which represents those measures that local managers are most directly able to influence. Calculation of organic movements The organic movement percentage is the amount in the row titled ‘Organic movement’ in the tables below, expressed as a percentage of the relevant absolute amount in the row titled ‘2022 adjusted’. Organic operating margin is calculated by dividing operating profit before exceptional items by net sales after excluding the impact of exchange rate movements, certain fair value remeasurements, hyperinflation and acquisitions and disposals. (a) Exchange rates Exchange in the organic movement calculation reflects the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average exchange rates. Exchange impacts in respect of the external hedging of intergroup sales by the markets in a currency other than their functional currency and the intergroup recharging of services are also translated at prior period weighted average exchange rates and are allocated to the geographical segment to which they relate. Residual exchange impacts are reported as part of the Corporate segment. Results from hyperinflationary economies are translated at forward-looking rates. (b) Acquisitions and disposals For acquisitions in the current period, the post-acquisition results are excluded from the organic movement calculations. For acquisitions in the prior period, post-acquisition results are included in full in the prior period but are included in the organic movement calculation from the anniversary of the acquisition date in the current period. The acquisition row also eliminates the impact of transaction costs that have been charged to operating profit in the current or prior period in respect of acquisitions that, in management’s judgement, are expected to be completed. Where a business, brand, brand distribution right or agency agreement was disposed of or terminated in the reporting period, the group, in the organic movement calculations, excludes the results for that business from the current and prior period. In the calculation of operating profit, the overheads included in disposals are only those directly attributable to the businesses disposed of, and do not result from subjective judgements of management. (c) Exceptional items Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included within the income statement caption to which they relate, and are excluded from the organic movement calculations. Management believes that that separate disclosure of exceptional items and the classification between operating and non-operating items further helps investors to understand the performance of the group. Changes in estimates and reversals in relation to items previously recognised as exceptional are presented consistently as exceptional in the current year. 282 Unaudited financial information Exceptional operating items are those that are considered to be material and unusual or non-recurring in nature and are part of the operating activities of the group, such as one-off global restructuring programmes which can be multi-year, impairment of intangible assets and fixed assets, indirect tax settlements, property disposals and changes in post employment plans. Gains and losses on the sale or directly attributable to a prospective sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non-recurring items that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as exceptional non-operating items below operating profit in the income statement. Exceptional current and deferred tax items comprise material and unusual or non-recurring items that impact taxation. Examples include direct tax provisions and settlements in respect of prior years and the remeasurement of deferred tax assets and liabilities following tax rate changes. (d) Fair value remeasurement Fair value remeasurement in the organic movement calculation reflects an adjustment to eliminate the impact of fair value changes in biological assets, earn-out arrangements that are accounted for as remuneration and fair value changes relating to contingent consideration liabilities and equity options that arose on acquisitions recognised in the income statement. Growth on a constant basis Growth on a constant basis is a measure used by the group to understand the trends of the business and its recovery towards pre-Covid-19 performance. 2019 to 2023 growth on a constant basis for volume, sales, net sales and operating profit before exceptional items is calculated by adding up the respective periods’ organic movement in the row titled ‘Organic movement’ in the tables below, expressed as a percentage of the relevant absolute amount in the row titled '2019 adjusted’. The most comparable GAAP financial measure is '2019 to 2023 reported movement %' in the tables below which is calculated by combining the reported movements for the respective periods, expressed as a percentage of the 2019 reported amount. Adjustment in respect of hyperinflation The group's experience is that hyperinflationary conditions result in price increases that include both normal pricing actions reflecting changes in demand, commodity and other input costs or considerations to drive commercial competitiveness, as well as hyperinflationary elements and that for the calculation of organic movements, the distortion from hyperinflationary elements should be excluded. Cumulative inflation over 100% (2% per month compounded) over three years is one of the key indicators within IAS 29 to assess whether an economy is deemed to be hyperinflationary. As a result, the definition of 'Organic movements' includes price growth in markets deemed to be hyperinflationary economies, up to a maximum of 2% per month while also being on a constant currency basis. Corresponding adjustments have been made to all income statement related lines in the organic movement calculations. In the tables presenting the calculation of organic movements, 'hyperinflation' is included as a reconciling item between reported and organic movements and that also includes the relevant IAS 29 adjustments. 283 Unaudited financial information Organic movement calculations for the year ended 30 June 2023 were as follows:
284 Unaudited financial information
285 Unaudited financial information
(i) For the reconciliation of sales to net sales, see page 213. (ii) Percentages and margin movements are calculated on rounded figures. Notes: Information in respect of the organic movement calculations (1) The impact of movements in exchange rates on reported figures for operating profit was principally in respect of the favourable exchange impact of the strengthening of the US dollar and Mexican peso against the sterling, partially offset by the weakening of the Nigerian naira, Ghanaian cedi and the Turkish lira. (2) Acquisitions and disposals that had an effect on volume, sales, net sales, marketing and operating profit in the year ended 30 June 2023, are detailed on page 285. (3) Organic operating margin calculated by dividing Operating profit before exceptional items by net sales. 286 Business review (continued) In the year ended 30 June 2023, the acquisitions and disposals that affected volume, sales, net sales, marketing and operating profit were as follows, as per footnote (2) on the previous page:
287 Business review (continued) Earnings per share before exceptional items Earnings per share before exceptional items is calculated by dividing profit attributable to equity shareholders of the parent company before exceptional items by the weighted average number of shares in issue. Earnings per share before exceptional items for the year ended 30 June 2023 and 30 June 2022 are set out in the table below:
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash received/paid for working capital loans receivable, cash paid or received for investments and the net cash expenditure paid for property, plant and equipment and computer software that are included in net cash flow from investing activities. The The group’s management regards a portion of the purchase and disposal of property, plant and equipment and computer software as ultimately non-discretionary since ongoing investment in plant, machinery and technology is required to support the day-to-day operations, whereas acquisition and sale of businesses are discretionary. Where appropriate, separate explanations are given for the Free cash flow reconciliations for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
288 Business review (continued) Operating cash conversion Operating cash conversion is calculated by dividing cash generated from operations excluding cash inflows and The measure is excluding any hyperinflation adjustment above the organic treatment of hyperinflationary economies. The ratio is stated at the budgeted exchange rates for the respective year Operating cash conversion for the
(1) Excluding exceptional items. (2) Exceptional cash payments for winding down our Russian operations was £13 million (2022 – £13 million) and for Supply chain agility programme was £12 million (2022 - £nil). In the year ended 30 June 2022 exceptional cash payments for other donations were £2 million. (3) Excluding non-cash movements such as exchange and the 289 Business review (continued) Return on average invested capital Return on average invested capital is used by management to assess the return obtained from the group’s asset base and is calculated to aid evaluation of the performance of the business. The profit used in assessing the return on average invested capital reflects operating profit before exceptional items attributable to equity shareholders of the parent company plus share of after tax results of associates and joint ventures after applying the tax rate before exceptional items for the fiscal year. Average invested capital is calculated using the average derived from Calculations for the return on average invested capital for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
290 Business review (continued) Adjusted net borrowings to adjusted EBITDA Diageo manages its capital structure with the aim of achieving capital efficiency, providing flexibility to invest through the economic cycle and giving efficient access to debt markets at attractive cost levels. The group regularly assesses its debt and equity capital levels to enhance its capital structure by reviewing the ratio of adjusted net borrowings to adjusted EBITDA (earnings before exceptional operating items, non-operating items, interest, tax, depreciation, amortisation and impairment). Calculations for the ratio of adjusted net borrowings to adjusted EBITDA for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
291 Tax rate before exceptional items Tax rate before exceptional items is calculated by dividing the total tax charge before tax charges and credits in respect of exceptional items, by profit before taxation adjusted to exclude the impact of exceptional operating and non-operating items, expressed as a percentage. The measure is used by management to assess the rate of tax applied to the group’s operations before tax on exceptional items. The tax rates from operations before exceptional and after exceptional items for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
292 Other definitions Volume share is a brand’s retail volume expressed as a percentage of the retail volume of all brands in its segment. Value share is a brand’s retail sales value expressed as a percentage of the retail sales value of all brands in its segment. Unless otherwise stated, share refers to value share. Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries, excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duties are not always passed on to the customer and where a customer fails to pay for a product received, the group cannot reclaim the excise duty. The group therefore recognises excise duty as a cost to the group. Price/mix is the number of percentage points difference between the organic movement in net sales and the organic movement in volume. The difference arises because of changes in the composition of sales between higher and lower priced variants/markets or as price changes are implemented. Shipments comprise the volume of products sold to Diageo’s immediate (first tier) customers. Depletions are the estimated volume of the onward sales made by Diageo's immediate customers. Both shipments and depletions are measured on an equivalent units basis. References to emerging markets include Poland, Eastern Europe, Turkey, Latin America and Caribbean, Africa and Asia Pacific (excluding Australia, Korea and Japan). References to reserve brands include, but are not limited to, Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label Reserve, Johnnie Walker Aged 18 Years, John Walker & Sons Collection and other Johnnie Walker super and ultra-premium brands; The Singleton, Cardhu, Talisker, Lagavulin, Oban and other malt brands; Buchanan’s Special Reserve, Buchanan’s Red Seal; Haig Club whisky; Copper Dog whisky; Roe & Co; Bulleit Bourbon, Bulleit Rye; Orphan Barrel whiskey; Balcones whisky and rum; Tanqueray No. TEN and Tanqueray Malacca gin; Aviation, Chase, Jinzu and Villa Ascenti gin; Cîroc, Ketel One vodka, Ketel One Botanical; Don Julio, Casamigos, DeLeón and 21Seeds tequila; Mezcal Unión mezcal; Zacapa, Bundaberg Master Distillers' Collection, Pampero Aniversario and Don Papa rum; Shui Jing Fang, Seedlip, Belsazar and Pierde Almas. References to global giants include the following brand families: Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness. Local stars include Buchanan’s, Bundaberg, Crown Royal, JεB, McDowell’s, Old Parr, Yenì Raki, Black & White, Shui Jing Fang, Windsor and Ypióca. Global giants and local stars exclude ready to drink, non-alcoholic variants and beer except Guinness. References to Shui Jing Fang represent total Chinese white spirits of which Shui Jing Fang is the predominant brand. References to ready to drink also include ready to serve products, such as pre-mixed cans in some markets. References to beer include cider, flavoured malt beverages and some non-alcoholic products such as Malta Guinness. The results of Hop House 13 Lager are included in the Guinness figures. There is no industry-agreed definition for price tiers and for data providers such as IWSR, definitions can vary by market. Diageo bases price tier definitions on a methodology that uses external metrics (including market pricing data from Nielsen, IRI etc., as well as the IWSR segmentation) for benchmarking and internal pricing metrics for a consistent segmentation. References to the disposal of the USL Popular brands include non-exhaustively the Haywards, Old Tavern, White Mischief, Honey Bee, Green Label and Romanov brands. References to the group include Diageo plc and its consolidated subsidiaries. 293
The non-financial reporting boundaries and methodologies outlined here relate to the social and environmental performance disclosures set out in the Annual Report and the ESG Reporting Index. We describe below the general reporting methodologies and boundaries related to both non-environmental and environmental reporting. Where there are exceptions to these general reporting methodologies and boundaries, these have been included with the specific metric in the tables that follow. General reporting methodology and boundaries, covering both non-environmental and environmental metric reporting I. Reporting period Our reporting covers the financial year ended 30 June 2023 unless otherwise stated. II. Scope Unless otherwise stated(1), the boundaries for all non-financial information disclosed in the Annual Report and the ESG Reporting Index include the performance of the global operations of Diageo plc and its subsidiaries, together with the attributable share of the results of significant joint ventures and joint operations. The reporting boundaries are based on the principles outlined by the non-financial reporting strategy of our management, the nature of each indicator and, in the case of our greenhouse gas (GHG) emissions metrics, the Greenhouse Gas Protocol. Environmental data and health and safety data is collected and reported for all operational sites and office sites with more than 50 employees where we have operational control. The environmental impacts associated with leased facilities that do not meet the criteria already mentioned are excluded and considered immaterial to the company’s overall impacts. This scope is reviewed every year to assess the data and extent of impacts. GHG emissions associated with leased vehicles under operational control are being reviewed and reassessed to determine material significance to overall emissions and extent of overlap with Scope 3 indirect emissions. This review will be concluded in fiscal 24; our current estimate indicates leased vehicles may contribute 4%-5% of Scope 1 emissions or <0.5% of Scope 3 emissions. Material changes to environmental reporting methodologies are ratified at quarterly 2030 grain to glass Strategic Business Review meetings, chaired by the President, Global Supply Chain & Procurement and Chief Sustainability Officer. Exceptions to and limitations of each indicator are explained in the following pages section of this document. III. Baseline and targets The financial year ended 30 June 2020 is our baseline year. It applies to the majority of our ‘Society 2030: Spirit of Progress‘ targets. Exceptions are described in the following pages. The baseline data is used as the basis for calculating progress against our targets. We aim to achieve each target by fiscal 30, unless otherwise stated in the following pages of this document. IV. Acquisitions and disposals New acquisitions are included in the consolidated reporting for non-financial disclosure from the date when control passes or as soon as practically feasible, and no later than one year after assuming operational control.(2) This duration varies as each new acquisition has unique systems and processes that must be integrated. In case of disposals, data associated with the divestment is removed from the baseline, intervening years and current year unless otherwise stated in the following pages. V. Restatements We may have to restate historical data due to structural changes in our operations, including from acquisitions and divestments; improvements in data accuracy and calculation methodologies; material changes to relevant policies; and material changes in our non-financial reporting. To determine whether we need to restate historical data, we examine whether the qualitative or quantitative impacts of the changes to our non-financial reporting are material enough to compromise the accuracy, consistency and relevance of the reported information. In case a restatement for environmental data is necessary, we restate the data for the baseline year and intervening years. In case of our environmental data, we may need to adjust data to reflect updates to GHG emission factors, in line with the GHG Protocol recommendations; and any changes in reporting policy that result in a material change to the baseline of more than 1%. We also restate data where we can show that structural changes regarding outsourcing and insourcing have an impact of more than 1%. In certain cases, where historical data is unavailable, the environmental impacts for the baseline year and intervening years are extrapolated from current environmental impact data, based on production patterns. In fiscal 23, the baseline year GHG emissions impacts were restated to reflect changes to CO2e emission factors and updated calorific values. (1) Non-financial information, including baseline information, excludes the performance attributable to one of our business units in Greater China due to local regulatory restrictions. We believe the exclusion of this data does not materially impact our non-financial performance. We restate baseline and intervening years' non-financial information to reflect divestments, acquisitions, the exclusion of a business unit in China due to local regulatory restrictions, and any other changes that would otherwise compromise the accuracy, consistency and relevance of the reported information. (2) We define operational control using the definition of accounting standards for most of our ESG metrics. For greenhouse gas emissions, our definition is aligned with the Greenhouse Gas Protocol. 294 VI. Reliability and accuracy of data We have processes that govern the collection, review and validation of non-financial data included in this report, at market, regional and global levels. We have clear reporting lines and documentation of our processes; this report provides more detail about our reporting methodologies and calculation processes. Reporting methodologies are reviewed and updated each year by leadership teams. While we make every effort to capture all information as accurately as possible, it is neither feasible nor practical to measure all data with absolute certainty. Where we have made estimates or exercised judgement, this is highlighted within the reporting methodologies. Some of our listed subsidiaries also publish sustainability information either as standalone reports or as part of their annual report. Examples of sustainable information reporting are linked below: •United Spirits Limited: https://media.diageo.com/diageo-corporate-media/media/wxaflz30/united-spirits-limited-esg-reporting-index-2022.pdf •Sichuan Swellfun Co, Ltd: https://www.swellfun.com/ueditor/php/upload/file/20230426/1682490877231414.pdf •East Africa Breweries PLC: https://www.eabl.com/sites/default/files/documents/EABL_Sustainability_Report-2022.pdf •Guinness Nigeria plc: https://www.guinness-nigeria.com/PR1346/aws/media/14677/f22-sustainability-report.pdf VII. Reporting systems We use four main systems to collect, validate and analyse reported data. •Human Resources data is reported at site level using Workday, our global information management systems. HR data is collected on a monthly basis for all Workday markets.(1) Non-Workday markets(2) data is manually captured offline via HR Directors and the points of contact only for annual reports. Both Workday and non-Workday markets data are then consolidated. •Health and Safety information for performance measures is collected locally, on a monthly basis, using site held incident reports. This is collated and analysed using a web-based information management system and reported externally on an annual basis. •Environmental data is collected on key measures of environmental performance every year. This is collated and analysed using a web-based environmental management system. •Market-level ‘Society 2030: Spirit of Progress‘ data: Where ‘Society 2030: Spirit of Progress‘ programmes are managed at a local level, data is collated every quarter. The data is compiled at market, regional and global levels, alongside our other ‘Society 2030: Spirit of Progress‘ targets, and is reviewed by general managers, functional leadership teams, the 2030 grain to glass Strategic Business Review (SBR) and the Global Executive Committee during quarterly meetings. This regular assessment of performance enables us to manage programme risks and opportunities and helps us ensure that we have the right level of resources to deliver on our commitments. Scope and methodology of physical and transition climate risk scenario analysis reported on page 294. Scenario analysis of physical risks Important note on scenario analysis: Climate risk scenario analysis has limitations: it is not a predictor of the future and it is limited by the assumptions used, which themselves are subject to uncertainty. No single scenario is likely to materialise in the coming decades, and we are all likely to be exposed to both physical and transition risks as the world continues to warm as a consequence of emissions already in the atmosphere. The pathway to reducing emissions is also highly variable, as governments and industry pursue a variety of means, such as introducing regulation and developing new technologies. Nevertheless, scenario analysis is a powerful tool to understand how our business could be impacted under certain plausible but severe future conditions, and it allows us to understand where risks and opportunities are most likely to materialise, to understand trends and to integrate these into our strategy. Following the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we conducted scenario analysis to determine the likely financial impact of the most important physical risks on our assets and operations. The physical risks we identified of most importance were: 1.Water supply: Inability to produce brands due to constrained water supply as a result of drought caused by chronic climate change. 2.Agricultural material supply: Increased cost of raw materials due to scarcity caused by changes in growing conditions caused by chronic climate change 3.Site integrity: Inability to produce products, or damage to stored products due to acute weather events (floods or storms) 4.Disruption to agricultural material supply: Inability to receive agricultural materials due to acute weather events (floods or storms). Using the best available climate data and natural catastrophe-modelling techniques, our climate resilience partners calculated projected Estimated Annual Losses (EALs) and Value at Risk (VaR) for the present day and two future time periods (the 2030s and 2050s) under two climate scenarios. For most climate variables, these climate scenarios include a ‘moderate’ emissions reduction pathway (RCP4.5 or SSP245) and a ‘worst-case’ pathway (RCP 8.5 or SSP 585). The results were expressed as: Present day and projected EALs driven by: •The impact of drought, river floods and tropical windstorms on owned and third-party-operated production assets •The impact of floods and tropical windstorms on supplier assets (glass and cans); 295 and present day and projected VaR associated with: •The exposure of production assets to water stress •The exposure of production and supplier assets to tropical windstorms. Please see the diagram on page 294 for a summary of the scope of our physical and transition risk assessments and scenario analysis.) (1) Markets using our Workday online Human Resource system (2) Non-Workday markets refer to markets where the Workday online Human Resource System is not used. A summary of the scope of our physical and transition risk assessments and scenario analysis
Scenario analysis of transition risks Over fiscal years 21-23, we have conducted scenario analysis of the impact on our financial performance of transition risks stemming from a Paris-aligned scenario. Our modelling envisages a successful transition to a low-carbon economy in time to keep the temperature rise to 1-2⁰C by 2100 and assumes a variety of decarbonisation challenges and opportunities relating to ingredients, energy, packaging and transport costs, and changes in demand for our products (to 2030 and 2050). Over consecutive years, we have refined the model and incorporated data relating to our entire business, including production volume, sales, raw materials and packaging costs, and projected growth rates by category and market to inform future scenarios. In modelling the financial impact of a successful transition to a low-carbon economy, we considered two scenarios: 1.A baseline scenario which incorporates stated policies and national targets that are already in place and have detailed measures for their realisation; and 2.A transition scenario that assumes the world successfully reaches net zero emissions by 2050. This scenario considers necessary changes in the global energy sector and associated changes across all other sectors of the economy that can reasonably be modelled. Both scenarios rely on a combination of internal assumptions (e.g., production costs, sales and margin growth rates, product mix, etc) and external factors (e.g., carbon pricing, greening of energy production, decarbonisation of industry). External models available from the International Energy Agency, the Intergovernmental Panel on Climate Change and other institutions were supplemented where necessary by our expert partners' internal models. Together, these models gave us a range of plausible assumptions designed to capture a trajectory of changes in demand, costs, prices, regulation, technology and capital investments in relevant markets and business segments, that could result in the world achieving net zero emissions by 2050. We looked at how combinations of these changes might affect us both positively (increased demand for sustainable products) and negatively (higher costs) and estimated the combined effect on our cash flow to both 2030 and 2050. Outlined in the table on page 295, below are the materials that most affect our input costs, which may go up or down depending on the situation. We have modelled costs based on our exposure to global versus local changes; so, for example, glass and aluminium are procured globally, while the cost of energy, for example, is always local. For each scenario, we then estimated the prices of major input costs, where relevant by geography, and modelled the impact they would have on our operating profit. 296 Input costs assessed in the scenario analysis by geography
297 As a responsible business, we want to change the way people drink – for the better. This is why we promote moderate drinking and invest in education and programmes to discourage the harmful use of alcohol. Around the world, we reach audiences with messages that aim to change attitudes, whether it’s highlighting the harm of underage drinking or binge drinking, warning of the dangers of drink driving, or using our brands to highlight the importance of moderation.We have
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301 Doing business the right way from grain to glass We want to do business in the Governance and ethics Working with integrity is an important part of who we are and how we achieve our performance ambition to
302 Our people At Diageo, we strive to create an environment where all our people feel they are treated fairly and with respect. We commit to understanding what it means to act with integrity in our roles, to ensure we are doing business in the right way, meeting external expectations and our own standards. Our global health and safety ambition and strategy are designed to ensure all our people are safe when working, on site, at home and on the road, every day, everywhere. Employee profile data
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305 Champion inclusion and diversity Championing inclusion and diversity is at the heart of what we do, and is crucial to our purpose of ‘celebrating life, every day, everywhere’. We have set ourselves ambitious goals to drive progress, inside our business and beyond. They range from increasing representation of women and people from ethnically diverse backgrounds in our leadership, to using our media spend and influence to promote progressive portrayals in marketing, working with diverse creative teams and diverse-owned suppliers and supporting people in our local communities with hospitality and business skills.
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308 Pioneer grain-to-glass sustainability Our continued long-term success depends on the people and planet around us. Our work to pioneer grain-to-glass sustainability is divided into three areas: preserve water for life, accelerate to a low-carbon world and become sustainable by design. Our water stewardship strategy, ‘Preserve Water for Life’, outlines how we manage water in our supply chain, operations and communities, as well as advocate for collective action to improve water security. We started our decarbonisation journey in 2008, and we aim to reach net zero across our direct operations by 2030, using 100% renewable energy everywhere we operate. We are also committed to reducing our value chain carbon emissions by 50% by 2030. We are working to reduce our carbon footprint by reducing packaging, increasing recycled content and are focusing on regenerative agriculture. Preserve water for life Our strategy is based on best practice water stewardship in three areas: water accessibility, availability and quality. We are also working in partnership to better manage water globally and to lead collective action in critical water basins.
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311 Accelerating to a low-carbon world We know that our planet needs significant, science-based action to create a sustainable future. We have set ourselves bold targets to reach net zero carbon across our operations and to work with our suppliers to reduce our value chain carbon emissions by 50% by 2030.
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Become sustainable by design We have already made progress in reducing our environmental impact, and we continue to work hard to meet our ‘Society 2030: Spirit of Progress‘ targets and become sustainable by design by reducing packaging, increasing recycled content and eliminating waste. 314
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Spirits and investments Spirits are produced in distilleries located worldwide. The group owns 30 Scotch whisky distilleries in Scotland, two whisky distilleries in Canada and Diageo’s maturing Scotch whisky is in warehouses in Scotland (Clackmannanshire area between Blackgrange, Cambus West and Menstrie, where we are holding approximately 50% of the group’s maturing Scotch whisky), its maturing Canadian whisky in Valleyfield and Gimli in Canada, its maturing American whiskey in Kentucky and Tennessee in the United States and maturing Chinese white In China, Diageo’s end-to-end Diageo owns a controlling equity stake in United Spirits Limited (USL) which is one of the leading alcoholic beverage companies in India selling close to Beer and investments Diageo’s principal brewing facility is at the St James’s Gate brewery in Dublin, Ireland. In addition, Diageo owns breweries in several African countries: Nigeria, Kenya, Ghana, Guinness flavour extract is shipped from Ireland to all overseas Guinness brewing operations which use the flavour extract to brew beer locally. Guinness is transported from Ireland to Great Britain in bulk to the Runcorn facility which carries out the kegging of Guinness Draught. Projects are underway to support future beer growth. In July 2022, Diageo announced plans to invest €200 million in Ireland’s first purpose-built carbon neutral brewery on a greenfield site in Littleconnell, Newbridge, Co. Kildare. A planning application for the new brewery was submitted in October 2022 and, if successful, brewing would commence in 2024. Furthermore, Diageo will also invest £21 million to build a £41 million The Diageo Flavoured 318 Ready to drink (RTD) Diageo produces a range of ready to drink products mainly in the United Kingdom, Italy, across Africa, Australia, the United States and Canada. Raw materials and supply agreements The group has several long-term contracts in place for the purchase of raw materials, including glass, other packaging, Like other consumer goods companies, we keep stocks in markets to compensate for extended lead times and demand volatility. Diageo is managing well through the current levels of uncertainty and constraints in our supply chain through expansion of our supplier base and agility in our logistics networks. Cereals, including barley, wheat, corn and sorghum are used in out scotch and beer production and in our spirits brand through purchased neutral spirit. Cream is the principal raw material used in the production of Irish cream liqueur and is sourced from Ireland. Grapes and aniseed are used in the production of raki and are sourced from suppliers in Turkey. Agave is a key raw material used in the production of our tequila brands and is sourced from Mexico. Other raw materials purchased in significant quantities to produce spirits and beer are molasses, Many products are supplied to customers in glass bottles. Glass Competition Diageo’s brands compete primarily on the basis of quality and price. Its business is built on getting the right product to the right consumer for the right occasion, and at the right price, including through taking into account ever evolving shopper landscapes, technologies and consumer preferences. Diageo also seeks to recruit and re-recruit consumers to its portfolio of brands, including through meaningful consumer engagement, sustainable innovation and investments in its brands. In spirits, Diageo’s major global competitors are Pernod Ricard, Beam Suntory, Bacardi and Brown-Forman, each of which has several brands that compete directly with Diageo’s brands. In addition, Diageo faces competition from regional and local companies in the countries in which it operates. In beer, Diageo also competes globally, as well as on a regional and local basis (with the profile varying between regions) with several competitors, including AB InBev, Molson Coors, Heineken, Constellation Brands and Carlsberg. Research and development Innovation forms an important part of Diageo’s growth strategy, playing a key role in positioning its brands for continued growth in both developed and emerging markets. The strength and depth of Diageo’s brand range also provides a solid platform from which to drive sustainable innovation that leads to new products and experiences for consumers, whether or not they choose to drink alcohol. Diageo focuses its innovation on its strategic priorities and the most significant consumer opportunities, including the development of global brand extensions and new-to-world products, and continuously invests to deepen its understanding of evolving trends and consumer socialising occasions to inform product and packaging development, ranging from global brand redesigns to cutting edge innovations. Supporting this, the Diageo group has ongoing programmes to develop new beverage products which are managed internally by the innovation and research and development function. Trademarks and other intellectual property Diageo produces, sells and distributes branded goods, and is therefore substantially dependent on the maintenance and protection of its trademarks. All brand names mentioned in this document are protected by trademarks. The Diageo group also holds trade secrets, as well as has substantial trade knowledge related to its products. The group believes that its significant trademarks are registered and/or otherwise protected (insofar as legal protection is available) in all material respects in its most important markets. Diageo also owns valuable patents and trade secrets for technology and takes all reasonable steps to protect these rights. Regulations and taxes Diageo’s worldwide operations are subject to extensive regulatory requirements relating to production, product liability, distribution, importation, marketing, promotion, sales, pricing, labelling, packaging, advertising, antitrust, labour, pensions, compliance and control systems and environmental issues. In the United States, the beverage alcohol industry is subject to strict federal and state government regulations. At the federal level, the Alcohol and Tobacco Tax and Trade Bureau, or TTB, of the US Treasury Department oversees the US beverage alcohol industry, including through regulating and collecting taxes on the production of alcohol within the United States and regulating trade practices. In addition, individual US states, as well as some local authorities in US jurisdictions in which Diageo sells or produces its products, administers and enforces industry-specific regulations and may apply additional excise taxes and, in many states, sales taxes. Federal, 319 state and local regulations cover virtually every aspect of Diageo's US operations, including production, importation, distribution, marketing, promotion, sales, pricing, labelling, packaging and advertising. Spirits and beer are subject to national import and excise duties in many markets around the world. Most countries impose excise duties on beverage alcohol products, although the form of such taxation varies significantly from a simple application to units of alcohol by volume, to advanced systems based on the imported or wholesale value of the product. Several countries impose additional import duty on distilled spirits, often discriminating between categories (such as 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 the overall European Union framework there are minimum rates of excise duties that must first be applied to each relevant category of beverage alcohol. Following its departure from the European Union, the UK is no longer subject to the European Union’s rules on excise duties and Import and excise duties can have a significant impact on the final pricing of Diageo’s products to consumers. These duties can affect a product’s revenue or margin, both by reducing consumption and/or by encouraging consumers to switch to lower-taxed categories of beverages. The group devotes resources to encouraging the equitable taxation treatment of all beverage alcohol categories and to reducing government imposed barriers to fair trading. The advertising, marketing and sale of alcohol are subject to various restrictions in markets around the world. These range from a complete prohibition of alcohol in certain cultures and jurisdictions, such as in certain states in India, to the prohibition of the import into a certain jurisdiction of spirits and beer, and to restrictions on the advertising style, media and content. In a number of countries, television is a prohibited medium for the marketing of spirits brands, while in other countries, television advertising, while permitted, is carefully regulated. Many countries also strictly regulate the use of internet-based advertising and social media in connection with alcohol sales. Any further prohibitions imposed on advertising or marketing, particularly within Diageo’s most significant markets, could have an adverse impact on beverage alcohol sales. Labelling of beverage alcohol products is also regulated in many markets, varying from the required inclusion of health warning labels to manufacturer or importer identification, alcohol strength and other consumer information. As well as producer, importer or bottler identification, specific warning statements related to the risks of drinking beverage alcohol products are required to be included on all beverage alcohol products sold in the US, in certain countries within the EU, and in a number of other jurisdictions in which Diageo operates. Spirits and beer are also regulated in distribution. In many countries, alcohol may only be sold through licensed outlets, both on- and off-trade, varying from government- or state-operated monopoly outlets (for example, in the off-trade channel in Norway, certain Canadian provinces, and certain US states) to the system of licensed on-trade outlets (for example, licensed bars and restaurants) which prevails in much of the Western world, including in the majority of US states, in the UK and in much of the EU. In a number of states in the US, wholesalers of alcoholic beverages must publish price lists periodically and/or must file price changes in some instances up to three months before they become effective. In a response to public health concerns, some governments have imposed or are considering imposing minimum pricing on beverage alcohol products and may consider raising the legal drinking age, further limiting the number, type or opening hours of retail outlets and/or expanding retail licensing requirements. Regulatory decisions and changes in the legal and regulatory environment could also increase Diageo’s costs and liabilities and/or impact on its business activities. Taxation This section provides a descriptive summary of certain US federal income tax and UK tax consequences that are likely to be material to the holders of the ordinary shares or ADSs, but only those who hold their ordinary shares or ADSs as capital assets for tax purposes. It does not purport to be a complete technical analysis or a listing of all potential tax effects relevant to the ownership of the ordinary shares or ADSs. This section does not apply to any holder who is subject to special rules, including: •a dealer in securities or foreign currency; •a trader in securities that elects to use a mark-to-market method of accounting for securities holdings; •a tax-exempt organisation; •a life insurance company; •a person liable for alternative minimum tax; •a person that actually or constructively owns 10% or more of the combined voting power of voting stock of Diageo or of the total value of stock of Diageo; •a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction; •a person that holds ordinary shares or ADSs as part of a wash sale for tax purposes; or •a US holder (as defined below) whose functional currency is not US dollar. If an entity or arrangement treated as a partnership for US federal income tax purposes holds ordinary shares or ADSs, the US federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding ordinary shares or ADSs should consult its tax advisor with regard to the US federal income tax treatment of an investment in ordinary shares or ADSs. For UK tax purposes, this section applies only to persons who are the absolute beneficial owners of ordinary shares or ADSs and who hold their ordinary shares or ADSs as investments. It assumes that holders of ADSs will be treated as holders of the underlying ordinary shares. In addition to those persons mentioned above, this section does not apply to holders that are banks, regulated investment companies, other financial institutions, or to persons who have or are deemed to have acquired their ordinary shares or 320 ADSs in the course of an employment or trade. This summary does not apply to persons who are treated as non-domiciled and resident in the United Kingdom for the purposes of UK tax law. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, the laws of the United Kingdom and the practice of In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. In general, and taking into account this assumption, for US federal income tax purposes and for the purposes of the Treaty, holders of ADRs evidencing ADSs should be treated as the owner of the shares represented by those ADSs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to US federal income tax or to UK tax on profits or gains. A US holder is a beneficial owner of ordinary shares or ADSs that is for US federal income tax purposes: •a citizen or resident for tax purposes of the United States and who is not and has at no point been resident in the United Kingdom; •a US domestic corporation; •an estate whose income is subject to US federal income tax regardless of its source; or •a trust if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust. This section is not intended to provide specific advice and no action should be taken or omitted in reliance upon it. This section addresses only certain aspects of US federal income tax and UK income tax, corporation tax, capital gains tax, inheritance tax and stamp taxes. Holders of the ordinary shares or ADSs are urged to consult their own tax advisors regarding the US federal, state and local, and UK and other tax consequences of owning and disposing of the shares or ADSs in their respective circumstances. In particular, holders are encouraged to confirm with their advisor whether they are US holders eligible for the benefits of the Treaty. Dividends UK taxation The company will not be required to withhold tax at source when paying a dividend. All dividends received by an individual shareholder or ADS holder who is resident in the UK for tax purposes will, except to the extent that they are earned through an ISA or other regime which exempts the dividends from tax, form part of that individual’s total income for income tax purposes and will represent the highest part of that income. A nil rate of income tax will apply to the first Any taxable dividend income in excess of the Nil Rate Amount will be subject to income tax at the following special rates (as at the •at the rate of 8.75%, to the extent that the relevant dividend income falls below the threshold for the higher rate of income tax; •at the rate of 33.75%, to the extent that the relevant dividend income falls above the threshold for the higher rate of income tax but below the threshold for the additional rate of income tax; and •at the rate of 39.35%, to the extent that the relevant dividend income falls above the threshold for the additional rate of income tax. In determining whether and, if so, to what extent the relevant dividend income falls above or below the threshold for the higher rate of income tax or, as the case may be, the additional rate of income tax, the individual’s total taxable dividend income for the tax year in question (including the part within the Nil Rate Amount) will, as noted above, be treated as the highest part of that individual’s total income for income tax purposes. Shareholders within the charge to UK corporation tax which are small companies (for the purposes of the UK taxation of dividends) will not generally be subject to tax on dividends from the company. Other shareholders within the charge to UK corporation tax will not be subject to tax on dividends from the company so long as the dividends fall within an exempt class and certain conditions are met. In general, dividends paid on shares that are ordinary share capital for UK tax purposes and are not redeemable and dividends paid to a person holding less than 10% of the issued share capital of the payer (or any class of that share capital) are examples of dividends that fall within an exempt class. US taxation Under the US federal income tax laws, and subject to the passive foreign investment company (PFIC) rules discussed below, the gross amount of any distribution (other than certain pro rata distribution of ordinary shares) paid to a US holder by Diageo in respect of its ordinary shares or ADSs out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) will be treated as a dividend that is subject to US federal income taxation. Dividends paid to a non-corporate US holder that constitute qualified dividend income will be taxed at the preferential rates applicable to long-term capital gains, provided that the ordinary shares or ADSs are held for more than 60 days during the 121-day period 321 beginning 60 days before the ex-dividend date and the holder meets other holding period requirements. Dividends paid by Diageo with respect to its ordinary shares or ADSs generally will be qualified dividend income to US holders that meet the holding period requirement, provided that, in the year that you receive the dividend, we are eligible for the benefits of the Treaty. We believe that we are currently eligible for the benefits of the Treaty and we therefore expect that dividends on the shares or ADSs will be qualified dividend income, but there can be no assurance that we will continue to be eligible for the benefits of the Treaty. Under UK law, dividends paid by the company are not subject to UK withholding tax. Therefore, the US holder will include in income for US federal income tax purposes the amount of the dividend received, and the receipt of a dividend will not entitle the US holder to a foreign tax credit. The dividend must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. Dividends will generally be income from sources outside the United States and will generally be ‘passive’ income for purposes of computing the foreign tax credit allowable to a US holder. The amount of the dividend distribution that must be included in income of a US holder will be the US dollar value of the pounds sterling payments made, determined at the spot pounds sterling/US dollar foreign exchange rate on the date of the dividend distribution, regardless of whether the payment is in fact converted into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is distributed to the date the payment is converted into US dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the holder’s basis in the ordinary shares or ADSs and thereafter as capital gain. However, Diageo does not expect to calculate earnings and profits in accordance with US federal income tax principles. Accordingly, a US holder should expect to generally treat distributions Diageo makes as dividends. Taxation of capital gains UK taxation A citizen or resident (for tax purposes) of the United States who has at no time been resident in the United Kingdom will not be liable for UK tax on capital gains realised or accrued on the sale or other disposal of ordinary shares or ADSs, unless the ordinary shares or ADSs are held in connection with a trade or business carried on by the holder in the United Kingdom through a UK branch, agency or a permanent establishment. A disposal (or deemed disposal) of shares or ADSs by a holder who is resident in the United Kingdom may, depending on the holder’s particular circumstances, and subject to any available exemption or relief, give rise to a chargeable gain or an allowable loss for the purposes of UK tax on capital gains. US taxation Subject to the PFIC rules discussed below, a US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount that is realised and the tax basis, determined in US dollars, in the ordinary shares or ADSs. Capital gain of a non-corporate US holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. PFIC rules Diageo believes that ordinary shares and ADSs should not currently be treated as stock of a PFIC for US federal income tax purposes, and we do not expect to become a PFIC in the foreseeable future. However this conclusion is a factual determination that is made annually and thus may be subject to change. It is therefore possible that we could become a PFIC in a future taxable year. If treated as a PFIC, gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as capital gain. Instead, unless a US holder elects to be taxed annually on a mark-to-market basis with respect to the ordinary shares or ADSs, US holders would be treated as if the holder had realised such gain and certain ‘excess distributions’ pro-rated over the holder’s holding period for the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain or distribution was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, a holder’s ordinary shares or ADSs will be treated as stock in a PFIC if Diageo were a PFIC at any time during the holding period in a holder’s ordinary shares or ADSs. In addition, dividends received from Diageo will not be eligible for the special tax rates applicable to qualified dividend income if Diageo is a PFIC (or is treated as a PFIC with respect to the holder) either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income. If you own our shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file IRS Form 8621. UK inheritance tax Subject to certain provisions relating to trusts or settlements, an ordinary share or ADS held by an individual shareholder who is domiciled in the United States for the purposes of the Convention between the United States and the United Kingdom relating to estate and gift taxes (the Convention) and who is neither domiciled in the UK nor (where certain conditions are met) a UK national (as 322 defined in the Convention), will generally not be subject to UK inheritance tax on the individual’s death (whether held on the date of death or gifted during the individual’s lifetime) except where the ordinary share or ADS is part of the business property of a UK permanent establishment of the individual or pertains to a UK fixed base of an individual who performs independent personal services. In a case where an ordinary share or ADS is subject both to UK inheritance tax and to US federal gift or estate tax, the Convention generally provides for inheritance tax paid in the United Kingdom to be credited against federal gift or estate tax payable in the United States, or for federal gift or estate tax paid in the United States to be credited against any inheritance tax payable in the United Kingdom, based on priority rules set forth in the Convention. UK stamp duty and stamp duty reserve tax Stamp duty and stamp reserve tax (SDRT) may arise upon the deposit of an underlying ordinary share with the Depositary, generally at the higher rate of 1.5% of its issue price or, as the case may be, of the consideration for transfer. The Depositary will pay the stamp duty or SDRT but will recover an amount in respect of such tax from the initial holders of ADSs. Following litigation, however, HMRC have confirmed that they will no longer seek to apply the 1.5% SDRT charge on an issue of shares to a depositary receipt issuer or to a person providing clearance services (or their nominee or agent) on the basis that this is not compatible with EU law. HMRC may continue to apply the 1.5% stamp duty or SDRT charge on transfers of shares to a depositary receipt issuer or to a person providing clearance services (or their nominee or agent) unless the transfer is an integral part of a raising of capital. Based on Purchases of ordinary shares (as opposed to ADRs) will be subject to UK stamp duty, and/or SDRT as the case may be, at the rate of 0.5% of the price payable for the ordinary shares at the time of the transfer. Stamp duty applies where a physical instrument of transfer is used to effect the transfer. SDRT applies to any agreement to transfer ordinary shares (regardless of whether or not the transfer is effected electronically or by way of an instrument of transfer). However, where ordinary shares being acquired are transferred direct to the Depositary’s nominee, the only charge will generally be the higher charge of 1.5% of the price payable for the ordinary shares so acquired. Any stamp duty payable (as opposed to SDRT) is rounded up to the nearest £5. No stamp duty (as opposed to SDRT) will be payable if the amount or value of the consideration is (and is certified to be) £1,000 or less. Stamp duty and SDRT are usually paid or borne by the purchaser. Whilst stamp duty and SDRT may in certain circumstances both apply to the same transaction, in practice usually only one or other will need to be paid. 323 Additional information for shareholders Annual General Meeting (AGM) The AGM will be held at etc.venues St Paul's, 200 Aldersgate, London EC1A 4HD at 2.30 pm on Thursday, Documents on display The Annual Report on Form 20-F and any other documents filed by the company with the US Securities Exchange Commission (SEC) may be inspected at the SEC’s office of Investor Education and Advocacy located at 100 F Street, NE, Washington, DC 20549-0213, USA. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. Filings with the SEC are also available to the public from commercial document retrieval services, and from the website maintained by the US Securities and Exchange Commission at www.sec.gov. Annual report to security holders Pursuant to Item 10.J of Form 20-F, Exhibit 15.2 to this annual report on Form 20-F includes Diageo's annual report to security holders. None of such annual report is incorporated by reference into this annual report on Form 20-F. Such annual report is not deemed to be filed as part of this annual report on Form 20-F. Warning to shareholders - share fraud Please beware of the share fraud of ‘boiler room’ scams, where shareholders are called ‘out of the blue’ by fraudsters (sometimes claiming to represent Diageo) attempting to obtain money or property dishonestly. Further information on boiler room scams can be found on the Financial Conduct Authority’s website (https://www.fca.org.uk/ scamsmart/share-bond-boiler-room-scams) but in short, if in doubt, take proper professional advice before making any investment decision. Electronic communications Shareholders can register for an account to manage their shareholding online, including being able to: check the number of shares they own and the value of their shareholding; register for electronic communications; update their personal details; provide a dividend mandate instruction; access dividend confirmations; and use the online share dealing service. To register for an account, shareholders should visit www.diageoregistrars.com. Dividend payments Direct payment into bank account Shareholders can have their cash dividend paid directly into their UK bank account on the dividend payment date. To register UK bank account details, shareholders can register for an online account at www.diageoregistrars.com or call the Registrar on +44 (0)371 277 1010* to request the relevant application form. For shareholders outside the UK, Link Group (a trading name of Link Market Services Limited and Link Market Services Trustees Limited) may be able to provide you with a range of services relating to your shareholding. To learn more about the services available to you please visit the shareholder portal at www.diageoregistrars.com or call +44 (0)371 277 1010*. Dividend Reinvestment Plan A Dividend Reinvestment Plan is offered by the Registrar, Link Market Services Trustees Limited, to give shareholders the opportunity to build up their shareholding in Diageo by using their cash dividends to purchase additional Diageo shares. To join the Dividend Reinvestment Plan, shareholders can call the Registrar, Link Group on +44 (0)371 277 1010* to request the relevant application form. Exchange controls Other than certain economic sanctions which may be in effect from time to time, there are currently no UK foreign exchange control restrictions on the payment of dividends, interest or other payments to holders of Diageo’s securities who are non-residents of the UK or on the conduct of Diageo’s operations. There are no restrictions under the company’s articles of association or under English law that limit the right of non-resident or foreign owners to hold or vote the company’s ordinary shares. Please refer to the ‘Taxation’ section on page Useful contacts The Registrar/Shareholder queries Link Group acts as the company’s registrar and can be contacted as follows: By email: Diageo@linkgroup.co.uk By telephone: +44 (0) 371 277 1010* In writing: Registrars – Link Group, Diageo Registrar, * Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open 08:00 to 17:30 UK time, Monday to Friday, excluding public holidays in England and Wales. 324 ADR administration Citibank Shareholder Services acts as the company’s ADR administrator and can be contacted as follows: By email: citibank@shareholders-online.com By telephone: +1 866 253 0933/ (International) +1 781 575 4555* In writing: Citibank Shareholder Services. PO Box 43077, Providence, RI 02940-3077 *Lines are open Monday to Friday 8:30 to 18:00 EST General Counsel and Company Secretary Tom Shropshire The.cosec@diageo.com Investor Relations investor.relations@diageo.com 325 Exhibits
326 Glossary of terms and US equivalents
(i) Pursuant to an Agreement of Resignation, Appointment and Acceptance dated 16 October 2007 by and among Diageo plc, Diageo Capital plc, Diageo Finance BV, Diageo Investment Corporation, The Bank of New York and Citibank NA, The Bank of New York Mellon has become the successor trustee to Citibank NA under Diageo’s indentures dated 3 August 1998, 8 December 2003 and 1 June 1999. Signature Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorised.
In this document the following words and expressions shall, unless the context otherwise requires, have the following meanings:
Exhibit 2.4 DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT As of 30 June 2023 Diageo plc. (“Diageo,” the “Company,” “we,” “us,” and “our”) had the following series of securities registered pursuant to Section 12(b) of the Act:
(i) Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements of the Securities and Exchange Commission. Capitalized terms used but not defined herein have the meanings given to them in Diageo’s annual report on Form 20-F for the fiscal year ended 30 June 2023. ORDINARY SHARES The following description of our ordinary shares is a summary and does not purport to be complete. It is subject to and qualified in its entirety by Diageo’s articles of association (as adopted by special resolution at the Annual General Meeting on 28 September 2020) and by the Companies Act 1985 and the Companies Act 2006 and any other applicable English law concerning companies, as amended from time to time. A copy of Diageo’s articles of association is filed as an exhibit to Diageo’s annual report on Form 20-F for the fiscal year ended 30 June 2023, as Exhibit 1.1. General As at 30 June 2023 there were 2,459,843,065 ordinary shares of 28101/108 pence each in issue with a nominal value of £711,760,146.12 million. On 25 July 2019 the Board of Diageo approved a return of capital program to return up to £4.5 billion to shareholders over the three-year period ending 30 June 2022. During the first phase, which completed on 31 January 2020, the group purchased 36.1 million ordinary shares. On 9 April 2020 Diageo announced that it had not initiated the next phase of the return of capital programme and that it would not do so during the remainder of the year ended 30 June 2020. On 12 May 2021 it was announced that Diageo was recommencing the up to £4.5 billion programme, extending the original completion date by two years to 30 June 2024. The final three phases of the £4.5 billion programme completed on 11 February 2022, 5 October 2022 and 1 February 2023 respectively, having announced in July 2022 that it would bring forward the final completion date to during the year ending 30 June 2023. Under these three additional phases Diageo purchased a further 88.1 million shares in total. On 25 January 2023 the Board of Diageo approved an additional share buyback programme to return up to £0.5 billion to shareholders by the end of the year ending 30 June 2023. This new programme commenced on 16 February 2023 and completed on 2 June 2023 with Diageo having purchased 14 million shares. All shares repurchased have been cancelled. Our ordinary shares are listed on the London Stock Exchange (LSE). Diageo ADSs (as further described below), representing four Diageo ordinary shares each, are listed on the New York Stock Exchange (NYSE) under the symbol “DEO”. All of Diageo’s ordinary shares are fully paid. Accordingly, no further contribution of capital may be required by Diageo from the holders of such shares. Diageo’s ordinary shares are represented in certificated form and also in uncertificated form under “CREST”. CREST is an electronic settlement system in the United Kingdom which enables Diageo’s ordinary shares to be evidenced other than by a physical certificate and transferred electronically rather than by delivery of a written stock transfer form. Diageo’s ordinary shares: •may be represented by certificates in registered form issued (subject to the terms of issue of the shares) following issuance of the shares by Diageo or receipt of a form of transfer (bearing evidence of payment of the appropriate stamp duty) by Diageo Registrar, PO Box 521, Darlington, DL1 9XS; or 331 •may be in uncertificated form with the relevant CREST member account being credited with the ordinary shares issued or transferred. Under English law, persons who are neither residents nor nationals of the United Kingdom may freely hold, vote and transfer Diageo ordinary shares in the same manner and under the same terms as UK residents or nationals. Dividend rights Holders of Diageo’s ordinary shares may, by ordinary resolution, declare dividends but may not declare dividends in excess of the amount recommended by the directors. The directors may also pay interim dividends or fixed rate dividends. No dividend may be paid other than out of profits available for distribution. All of Diageo’s ordinary shares rank equally for dividends, but the Board may withhold payment of all or any part of any dividends or other monies payable in respect of Diageo’s shares from a person with a 0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts. Dividends may be paid in currencies other than sterling and such dividends will be calculated using an appropriate market exchange rate as determined by the directors in accordance with Diageo’s articles of association. If a dividend has not been claimed, the directors may invest the dividend or use it in some other way for the benefit of Diageo until the dividend is claimed. If the dividend remains unclaimed for 12 years after the date such dividend was declared or became due for payment, it will be forfeited and will revert to Diageo (unless the directors decide otherwise). Diageo may stop sending cheques, warrants or similar financial instruments in payment of dividends by post in respect of any shares or may cease to employ any other means for payment of dividends if either (a) at least two consecutive payments have remained uncashed or are returned undelivered or that means of payment has failed, or (b) one payment remains uncashed or is returned undelivered or that means of payment has failed and reasonable enquiries have failed to establish any new postal address or account of the holder. Diageo must resume sending dividend cheques, warrants or similar financial instruments or employing that means of payment if the holder requests such resumption in writing. Diageo’s articles of association permit payment or satisfaction of a dividend wholly or partly by distribution of specific assets, including fully paid shares or debentures of any other company. Such action is only permitted upon the recommendation of the board and must be approved by ordinary resolution by the general meeting which declared the dividend. Voting rights Voting on any resolution at any general meeting of the company is by a show of hands unless a poll is duly demanded. On a show of hands, (a) every shareholder who is present in person at a general meeting, and every proxy appointed by any one shareholder and present at a general meeting, has/have one vote regardless of the number of shares held by the shareholder (or, subject to (b), represented by the proxy), and (b) every proxy present at a general meeting who has been appointed by more than one shareholder has one vote regardless of the number of shareholders who have appointed him or the number of shares held by those shareholders, unless he has been instructed to vote for a resolution by one or more shareholders and to vote against the resolution by one or more shareholders, in which case he has one vote for and one vote against the resolution. On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder, but a shareholder or proxy entitled to more than one vote need not cast all his votes or cast them all in the same way (the deadline for exercising voting rights by proxy is set out in the form of proxy). A poll may be demanded by any of the following: •the chairman of the general meeting; •at least three shareholders entitled to vote on the relevant resolution and present in person or by proxy at the meeting; •any shareholder or shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote on the relevant resolution; or •any shareholder or shareholders present in person or by proxy and holding shares conferring a right to vote on the relevant resolution on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. Diageo’s articles of association and the Companies Acts provide for matters to be transacted at general meetings of Diageo by the proposing and passing of two kinds of resolutions: •ordinary resolutions, which include resolutions for the election, re-election and removal of directors, the declaration of final dividends, the appointment and re-appointment of the external auditor, the approval of the remuneration report and remuneration policy and the grant of authority to allot shares; and •special resolutions, which include resolutions for the amendment of Diageo’s articles of association, resolutions relating to the disapplication of pre-emption rights, and resolutions modifying the rights of any class of Diageo’s shares at a meeting of the holders of such class. An ordinary resolution requires the affirmative vote of a simple majority of the votes cast at a validly constituted shareholders’ meeting. Special resolutions require the affirmative vote of not less than three-quarters of the votes cast at a validly constituted shareholders’ meeting. The necessary quorum for a shareholders’ meeting of Diageo is a minimum of two shareholders present in person or by proxy and entitled to vote. 332 A shareholder is not entitled to vote at any general meeting or class meeting in respect of any share held by him if he has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts. Directors Diageo’s articles of association provide for a Board of Directors, consisting (unless otherwise determined by an ordinary resolution of shareholders) of not fewer than three directors and not more than 25 directors, in which all powers to manage the business and affairs of Diageo are vested. Directors may be elected by the members in a general meeting or appointed by Diageo’s Board. At each annual general meeting, every director is required to retire and is then reconsidered for election/re-election by shareholders, assuming they wish to stand for election/re-election. There is no age limit requirement in respect of directors. Directors may also be removed before the expiration of their term of office in accordance with the provisions of the Companies Acts. Liquidation rights In the event of the liquidation of Diageo, after payment of all liabilities and deductions taking priority in accordance with English law, the balance of assets available for distribution will be distributed among the holders of ordinary shares according to the amounts paid up on the shares held by them. Pre-emption rights and new issues of shares While holders of ordinary shares have no pre-emptive rights under Diageo’s articles of association, the ability of the directors to cause Diageo to issue shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share scheme, is restricted. Under the Companies Acts, the directors of a company are, with certain exceptions, unable to allot any equity securities without express authorisation, which may be contained in a company’s articles of association or given by its shareholders in a general meeting by way of an ordinary resolution, but which in either event cannot last for more than five years. Under the Companies Acts, Diageo may also not allot shares for cash (otherwise than pursuant to an employee share scheme) without first making an offer to existing shareholders to allot such shares to them on the same or more favourable terms in proportion to their respective shareholdings, unless this requirement is disapplied by a special resolution of the shareholders. However, Diageo has in the past sought authority from its shareholders to allot shares and disapply pre-emptive rights (in each case subject to certain limitations). Disclosure of interests in Diageo’s shares There are no provisions in Diageo’s articles of association whereby persons acquiring, holding or disposing of a certain percentage of Diageo’s shares are required to make disclosure of their ownership percentage, although there are such requirements under the Companies Acts. The basic disclosure requirement under Part 6 of the Financial Services and Markets Act 2000 and Rule 5 of the Disclosure Guidance and Transparency Rules made by the Financial Conduct Authority (successor to the UK Financial Services Authority) imposes a statutory obligation on a person to notify Diageo and the Financial Conduct Authority of the percentage of the voting rights in Diageo he directly or indirectly holds or controls, or has rights over, through his direct or indirect holding of certain financial instruments, if the percentage of those voting rights: •reaches, exceeds or falls below 3% and/or any subsequent whole percentage figure as a result of an acquisition or disposal of shares or financial instruments; or •reaches, exceeds or falls below any such threshold as a result of any change in the breakdown or number of voting rights attached to shares in Diageo. The Disclosure Guidance and Transparency Rules set out in detail the circumstances in which an obligation of disclosure will arise, as well as certain exemptions from those obligations for specified persons. Under section 793 of the Companies Act 2006, Diageo may, by notice in writing, require a person that Diageo knows or has reasonable cause to believe is or was during the three years preceding the date of notice interested in Diageo’s shares to indicate whether or not that is the case and, if that person does or did hold an interest in Diageo’s shares, to provide certain information as set out in that Act. Article 19 of the EU Market Abuse Regulation (2014/596) (as it is incorporated into UK domestic law by virtue of the European Union (Withdrawal) Act 2018 and amended by The Market Abuse (Amendment) (EU Exit) Regulation 2019) further requires persons discharging managerial responsibilities within Diageo (and their persons closely associated) to notify Diageo of transactions conducted on their own account in Diageo shares or derivatives or certain financial instruments relating to Diageo shares. The City Code on Takeovers and Mergers also imposes strict disclosure requirements with regard to dealings in the securities of an offeror or offeree company on all parties to a takeover and also on their respective associates during the course of an offer period. 333 Variation of rights If, at any time, Diageo’s share capital is divided into different classes of shares, the rights attached to any class of shares may be varied, subject to the provisions of the Companies Acts, either with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of that class or upon the adoption of a special resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of Diageo’s articles of association relating to proceedings at a general meeting apply, except that (a) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class (excluding any shares of that class held as treasury shares) or, if such quorum is not present on an adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds, (b) any holder of shares of the class who is present in person or by proxy may demand a poll, and (c) each shareholder present in person or by proxy and entitled to vote will have one vote per share held in that particular class in the event a poll is taken. Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in all respects or by the reduction of the capital paid up on such shares or by the purchase or redemption by Diageo of its own shares, in each case in accordance with the Companies Acts and Diageo’s articles of association. Repurchase of shares Subject to authorisation by shareholder resolution, Diageo may purchase its own shares in accordance with the Companies Acts. Any shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the purchase, thereby reducing the amount of Diageo’s issued share capital. At the Annual General Meeting held on October 6, 2022, Diageo’s shareholders gave it authority to repurchase up to 227,870,414 of its ordinary shares subject to additional conditions. The minimum price which must be paid for such shares is 28101/108 pence and the maximum price is the higher of (a) 5% above the average market value of Diageo’s ordinary shares for the five business days immediately preceding the day on which that ordinary share is contracted to be purchased and (b) the higher of the price of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase is carried out. Restrictions on transfers of shares The Board may decline to register a transfer of a certificated Diageo share unless the instrument of transfer (a) is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require, (b) is in respect of only one class of share and (c) if to joint transferees, is in favour of not more than four such transferees. Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in Diageo’s articles of association) and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four. The Board may decline to register a transfer of any of Diageo’s certificated shares by a person with a 0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts, unless the transfer is shown to the Board to be pursuant to an arm’s length sale (as defined in Diageo’s articles of association). Substantive shareholder voting rights The company’s substantial shareholders do not have different voting rights. AMERICAN DEPOSITARY SHARES General The ordinary shares of Diageo may be issued in the form of American depositary shares, or ADSs. Each Diageo ADS represents four ordinary shares of Diageo. Citibank, N.A. is the depositary with respect to Diageo’s ADSs, which are evidenced by American depositary receipts, or ADRs. Each ADS represents an ownership interest in four ordinary shares deposited with the custodian, as agent of the depositary, under the Deposit Agreement dated 14 February 2013 between Diageo, the Depositary and owners and beneficiaries of the ADRs (the “Deposit Agreement”). Each ADS also represents any other securities, cash or other property which may be held by Citibank, N.A. as depositary. The principal executive office of Citibank, N.A. and the office at which the ADRs will be administered is currently located at 388 Greenwich Street, New York, New York 10013, United States. Citibank, N.A. is a national banking association organized under the laws of the United States. The custodian will be Citibank, N.A. (London Branch) and its duties will be administered from its principal London office, currently located at 25 Molesworth Street, Lewisham, London SE13 7EX, United Kingdom. You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an 334 ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are. Diageo will not treat ADR holders as shareholders and ADR holders will not have shareholder rights. English law governs shareholder rights. The depositary will be the holder of the ordinary shares underlying your ADSs. As a holder of ADRs, you will have ADR holder rights, which are set out in the Deposit Agreement. The Deposit Agreement also sets out the rights and obligations of the depositary. The following is a summary of the material terms of the Deposit Agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire form of Deposit Agreement and the form of ADR, which contain the terms of the ADSs. Please refer to Exhibit 99.A on Form F-6 (File No. 333-186400) filed with the Securities and Exchange Commission on 1 February 2013). Copies of the Deposit Agreement are also available for inspection at the offices of the depositary. Share Dividends and Other Distributions Diageo may make various types of distributions with respect to its securities. The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of underlying ordinary shares that your ADSs represent. Except as stated below, to the extent the depositary is legally permitted it will deliver such distributions to ADR holders in proportion to their interests in the following manner: •Cash. Upon receiving notice from Diageo that Diageo intends to distribute a cash dividend or other cash distribution, the depositary will establish a record date for such distribution. As promptly as practicable following the receipt of a cash dividend or other cash distribution from Diageo, the depositary will: (i) if at the time of receipt thereof any amounts received in a foreign currency can, in the judgment of the depositary, be converted on a practicable basis into U.S. dollars transferable into the United States, promptly convert or cause to be converted such cash dividend or cash distributions into U.S. dollars, (ii) if applicable, establish a record date for the distribution and (iii) distribute promptly such U.S. dollar amount, net of applicable fees, charges and expenses of the depositary and taxes withheld. The depositary shall distribute only such amount as can be distributed without attributing to any ADR holder a fraction of one cent. Any such fractional amounts shall be rounded to the nearest whole cent and so distributed to ADR holders entitled thereto. If the depositary cannot reasonably make such conversion or obtain any governmental approval or license necessary for the conversion, the depositary will hold any unconvertible foreign currency for your account without liability for any interest or, upon request, will distribute the foreign currency to you. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution. •Shares. Upon receiving notice from Diageo that Diageo intends to distribute a share dividend or free distribution of ordinary shares, the depositary will establish a record date for such distribution. The depositary will then either (i) deliver additional ADSs representing such ordinary shares, or (ii) if additional ADSs are not so distributed, take all actions necessary so that each ADS issued and outstanding after the ADS record date shall, to the extent permissible by law, thenceforth also represent rights and interests in the additional ordinary shares distributed, in each case net of applicable fees, charges and expenses of the depositary and taxes withheld. Only whole ADSs will be issued. Any ordinary shares which would result in fractional ADSs will be sold and the net proceeds will be distributed to the ADR holders entitled to them. •Rights to receive additional shares. Upon receiving notice from Diageo that Diageo intends to distribute rights to subscribe for additional ordinary shares or other rights and that Diageo wishes such rights to be made available to holders of ADSs, the depositary shall, after consultation with Diageo, have discretion as to the procedure for making such rights available to any ADR holders or in disposing of such rights on behalf of any ADR holders and making, as promptly as practicable, the net proceeds available to such ADR holders. If, by the terms of the offering of rights or for any other reason, the depositary may not either make such rights available to any ADR holders or dispose of such rights on behalf of any ADR holders and make the net proceeds available to such ADR holders, then the depositary shall allow such rights to lapse. If the depositary determines in its reasonable discretion that it is not lawful or practicable to make such rights available to all or certain ADR holders, if Diageo does not furnish such evidence or if the depositary determines it is not lawful or practicable to distribute such rights to all or some of the registered holders, the depositary may: •distribute such rights only to the holders to whom the depositary has determined such distribution is lawful and practicable; •if practicable, sell rights in proportion to the number of ADSs held by registered holders to whom the depositary has determined it may not lawfully or practicably make such rights available and distribute the net proceeds as cash; or •allow rights in proportion to the number of ADSs held by registered holders to whom the depositary has determined it may not lawfully or practicably make such rights available to lapse, in which case such registered holders will receive nothing. 335 Diageo has no obligation to file a registration statement under the Securities Act of 1933, as amended, in order to make any rights available to ADR holders. •Other Distributions. Upon receiving notice from Diageo that Diageo intends to distribute securities or property other than those described above and that Diageo wishes such rights to be made available to holders of ADSs, the depositary may distribute such securities or property in any manner it deems equitable and practicable. To the extent the depositary deems distribution of such securities or property not to be practicable, the depositary may, after consultation with Diageo, adopt any method that it reasonably deems to be equitable and practical, including but not limited to the sale of such securities or property and distribution of any net proceeds in the same way that cash is distributed. The depositary may choose any practical method of distribution for any specific ADR holder, including the distribution of securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited property. There can be no assurances that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. Deposit, Withdrawal and Cancellation The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian. In the case of the ADSs to be issued under a prospectus supplement, Diageo may arrange with the underwriters named therein to deposit such ordinary shares if and as provided in the prospectus supplement. Ordinary shares deposited with the custodian must also be accompanied by certain documents, including (a) in the case of certificated shares, instruments showing that such ordinary shares have been properly transferred or endorsed and (b) in the case of book-entry shares, confirmation of book-entry transfer and recordation, in each case to the person on whose behalf the deposit is being made. The custodian will hold all deposited ordinary shares for the account of the depositary. ADR holders thus have no direct ownership interest in the ordinary shares and have only such rights as are contained in the Deposit Agreement. The deposited shares and any other securities, property or cash received by the depositary or the custodian and held under the Deposit Agreement are referred to as deposited property. Upon each deposit of ordinary shares, receipt of related delivery documentation and compliance with the other provisions of the Deposit Agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue and deliver ADSs in the name of the person entitled thereto and, if applicable, issue ADRs evidencing the number of ADSs to which such person is entitled. ADRs will be delivered at the depositary’s principal office. The depositary will make arrangements for the acceptance of ADSs for book-entry settlement through The Depository Trust Company, or DTC. All ADSs held through DTC will be registered in the name of Cede & Co., the nominee for DTC. Unless issued as uncertificated ADSs, the ADSs registered in the name of Cede & Co. will be evidenced by one or more receipt(s) in the form of a “Balance Certificate,” which will provide that it represents the aggregate number of ADSs from time to time indicated in the records of the depositary as being issued to DTC hereunder and that the aggregate number of ADSs represented thereby may from time to time be increased or decreased by making adjustments on such records of the depositary and of DTC or Cede & Co. When you turn in your ADSs (and, if applicable, the ADRs evidencing the ADSs) at the depositary’s office, the depositary will, upon payment of certain applicable fees, charges and taxes, and upon receipt of proper instructions, deliver the underlying ordinary shares to you. At your risk, expense and request, the depositary will deliver (to the extent permitted by law) deposited property at the depositary’s principal office. The depositary may restrict the withdrawal of deposited securities only in connection with: •temporary delays caused by closing Diageo’s transfer books or those of the depositary or the deposit of ordinary shares in connection with voting at a shareholders’ meeting, or the payment of dividends; •the payment of fees, taxes and similar charges; or •compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or to the withdrawal of deposited securities. This right of withdrawal may not be limited by any other provision of the Deposit Agreement. Voting Rights If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the ordinary shares which underlie your ADRs. After receiving voting materials from Diageo, the depositary will, if Diageo asks it to, notify the ADR holders of any shareholder meeting or solicitation of consents for proxies. This notice will describe how you may, subject to English law and the provisions of Diageo’s articles of association, instruct the depositary to exercise the voting rights for the ordinary shares which underlie your ADSs. For instructions to be valid, the depositary must receive them on or before the date specified. The depositary will try, as far as practical, subject to English law and the provisions of Diageo’s articles of association, to vote or to have its agents vote the shares or other deposited securities as you instruct. The depositary will not vote or attempt to exercise the right to vote that attaches to the shares or other deposited securities, other than in accordance with your instructions or deemed instructions. If the depositary does not receive instructions from you on or before the specified date and voting is by poll, the depositary will deem you to have instructed it to give a discretionary proxy to a person designated by Diageo to vote such deposited securities. 336 However, we cannot assure you that you will receive our voting materials in time for you to give the depositary instructions to vote any deposited securities. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions to vote the deposited securities, if, for example, the instructions are not received in time to vote the amount of the deposited securities or if English or other applicable laws prohibit such voting. Notwithstanding anything contained in the Deposit Agreement or any ADR, the depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to ADR holders a notice that provides ADR holders with, or otherwise publicizes to ADR holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials). Notwithstanding anything else contained in the Deposit Agreement or any ADR, the depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of deposited securities if the taking of such action would violate applicable U.S. laws. Diageo has agreed to take any and all actions reasonably necessary and as permitted by English law to enable ADR holders and beneficial owners to exercise the voting rights accruing to the deposited securities. Reports and Other Communications The depositary will make available for inspection by ADR holders any reports and communications from Diageo that are both received by the depositary as holder of deposited property and made generally available by Diageo to the holders of deposited property. Upon the request of Diageo, the depositary will send to you copies of reports furnished by Diageo pursuant to the Deposit Agreement. Reclassifications, Recapitalizations and Mergers If Diageo takes actions that affect the deposited securities, including any change in par value, split-up, consolidation or other reclassification of deposited securities or any recapitalization, reorganization, merger, consolidation, sale of assets or other similar action, then the depositary may, and will if Diageo asks it to: •distribute additional or amended ADRs; •distribute cash, securities or other property it has received in connection with such actions; or •sell any securities or property received and distribute the proceeds as cash. If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited property and each ADS will then represent a proportionate interest in such property. Amendment and Termination Diageo may agree with the depositary to amend the Deposit Agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (except for taxes and other charges specifically payable by ADR holders under the Deposit Agreement), or affects any substantial existing right of ADR holders. If an ADR holder continues to hold ADRs when an amendment has become effective such ADR holder is deemed to agree to such amendment. No amendment will impair your right to surrender your ADSs and receive the underlying securities except to comply with mandatory provisions of applicable law. The depositary will terminate the Deposit Agreement if Diageo asks it to do so. The depositary may also terminate the Deposit Agreement if the depositary has told Diageo that it would like to resign and Diageo has not appointed a new depositary bank within 180 days. In either case, the depositary must notify you at least 90 days before termination. After termination, the depositary’s only responsibility will be (i) to advise you that the Deposit Agreement is terminated, (ii) to collect distributions on the deposited securities (iii) to sell rights and other property, and (iv) to deliver ordinary shares and other deposited securities upon cancellation of the ADRs. At any time from the termination date, the depositary may sell the deposited property which remains and hold the net proceeds of such sales and any other cash it is holding under the Deposit Agreement, without liability for interest, for the pro rata benefit of ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary shall have no obligations except to account for such proceeds and other cash. The depositary will not be required to invest such proceeds or pay interest on them. Limitations on Obligations and Liability to ADR Holders The Deposit Agreement expressly limits the obligations and liability of the depositary, Diageo and their respective agents. Neither Diageo nor the depositary assumes any obligation nor shall either of them be subject to any liability under the Deposit Agreement to any ADR holder, except that they each agree to perform their respective obligations specifically set forth in the Deposit Agreement without negligence or bad faith. Neither Diageo nor the depositary will be liable if: •law, regulation, the provisions of or governing any deposited securities, act of God, war or other circumstance beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit Agreement or the ADRs provide shall be done or performed by it; •it exercises or fails to exercise discretion permitted under the Deposit Agreement or the ADR; •it performs its obligations specifically set forth in the Deposit Agreement without negligence or bad faith; or 337 •it takes any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information. In the Deposit Agreement, Diageo agrees to indemnify Citibank, N.A. for acting as depositary, except for losses caused by Citibank, N.A.’s own negligence or bad faith, and Citibank, N.A. agrees to indemnify Diageo for losses resulting from its negligence or bad faith. The depositary will not be responsible for failing to carry out instructions to vote the deposited securities or for the manner in which the deposited securities are voted or the effect of the vote. The depositary may own and deal in deposited securities and in ADSs. Neither Diageo nor the depositary nor any of their respective directors, employees, agents or affiliates shall incur any liability for any consequential or punitive damages for any breach of the terms of the Deposit Agreement. Books of Depositary The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADSs and, if applicable, ADRs evidencing such ADSs. You may inspect such records at such office during regular business hours, but solely for the purpose of communicating with other holders in the interest of business matters relating to the Deposit Agreement. The depositary will maintain facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADSs. These facilities may be closed from time to time when the depositary considers it expedient to do so. 338 Exhibit 12.1 I, Debra Crew, certify that: 1.I have reviewed this annual report on Form 20-F of Diageo plc; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Date: 3 August 2023 /s/ Debra Crew Name: Debra Crew Title: Chief Executive (Principal Executive Officer) 339 Exhibit 12.2 I, Lavanya Chandrashekar, certify that: 1.I have reviewed this annual report on Form 20-F of Diageo plc; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Date: 3 August 2023 /s/ Lavanya Chandrashekar Name: Lavanya Chandrashekar Title: Chief Financial Officer (Principal Financial Officer) 340 Exhibit 13.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Diageo plc, a public limited company incorporated under the laws of England and Wales (the ‘Company’), hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 20-F for the year ended 30 June 2023 (the ‘Report’) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: 3 August 2023 /s/ Debra Crew Name: Debra Crew Title: Chief Executive (Principal Executive Officer) The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document. 341 Exhibit 13.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Diageo plc, a public limited company incorporated under the laws of England and Wales (the ‘Company’), hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 20-F for the year ended 30 June 2023 (the ‘Report’) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: 3 August 2023 /s/ Lavanya Chandrashekar Name: Lavanya Chandrashekar Title: Chief Financial Officer (Principal Financial Officer) The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document. Exhibit 15.1 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by reference in the Registration Statements on Form F-3of Diageo plc (No.333-269929), Diageo Capital plc (No. 333-269929-01) and Diageo Investment Corporation (No. 333-269929-02), and Form S-8 (No. 333-153481, 333-162490, 333-169934, 333-182315, 333-206290 and 333-223071)of our report dated 3 August 2023 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F. /s/ PricewaterhouseCoopers LLP London, United Kingdom 3 August 2023 | Estimated Value (£'000) | Award | Award Date | Awarded (ADRs) | Vesting (% Max) | Vesting (ADRs) | Option price | ADR price | Dividend equivalent share | Estimated value ( (2) The value of performance share awards and options awarded and vesting included in the table above for Debra Crew are pro-rata amounts reflecting the period from 5 to 30 June as a proportion of the three-year performance period, as shown in the single figure of remuneration on page 174. The 1,176 pro-rata performance shares awarded comprises 714 performance shares granted under the DLTIP (total award of 30,076 ADRs) and 462 performance shares granted under the DESAP (total award of 19,494 ADRs), which was granted in recognition of equity which was forfeited on joining Diageo. The pro-rata share options number reflects 714 share options granted under the DLTIP (total award of 30,076 ADRs) In considering the vesting outcome of the 2020 DLTIP awards, the Remuneration Committee was especially cognisant of investor concerns around the potential risk of windfall gains following volatility in global stock markets at the time of grant as a result of the Covid-19 pandemic. The Committee considered a number of factors including share price movement over the performance period (up 26%), Diageo's underlying financial performance, historical award and vesting levels and absolute award value. The Committee noted that the 2020 DLTIP awards were made in September 2020 and, in line with usual Diageo practice, the number of awards granted was determined using a six-month average share price up to 30 June. This helps to smooth out share price volatility and, at $143.63 for the 2020 grants, the price used to calculate the awards was only around 10% lower than the prior year's price. The Committee considered Diageo’s overall business performance and value created for shareholders and other relevant factors over the period and determined that the outcomes were fair and appropriate and made no adjustment to the payouts. It also considered the level of difficulty of the targets set at a time of uncertainty and determined that the vesting outcome was consistent with Diageo's long-term performance and returns to shareholders. Diageo's compound annual growth in net sales and profit over this period have also been at the top end of the global peer group. Pensions and benefits in the year ended 30 June Benefits provisions for the Executive Directors are in accordance with the information set out in the Directors’ remuneration Pension arrangements Ivan Menezes The SERP is an unfunded, non-qualified supplemental retirement programme. Under the plan, accrued company contributions are subject to quarterly interest credits. Under the rules of the SERP, Ivan Menezes, Debra Crew and Lavanya Chandrashekar participated in the US Cash Balance Plan and the Benefit Supplemental Plan (BSP), until August 2012, 30 September 2022 and June 2021 respectively, and have accrued benefits under both plans. The Cash Balance Plan is a qualified funded pension arrangement. Employer contributions Ivan Menezes was also a member of the Diageo Pension Scheme (DPS) in the United Kingdom between 1 February 1997 and 30 November 1999. The accrual of pensionable service ceased in 1999 but the linkage to salary remained until January 2012. Upon death in service on 6 June 2023, a life insurance benefit of $3 million 183 Governance (continued) The table below shows the pension benefits accrued by each Executive Director as at year end (or to
(3) Lavanya Chandrashekar's US benefits are higher at 30 June 2023 than at 30 June 2022 by £111k. The breakdown of this relates to £122k of which is due to pension benefits earned over the year (£110k of which is over and above the increase due to inflation – as reported in the single figure of remuneration, see page 174), £7k of which is due to interest earned on her deferred US benefits over the year and a reduction of (£18k) of which is due to exchange rate movements over the year. The Normal Retirement Age applicable to each Director’s benefits depends on the pension scheme, as outlined below.
Long-term incentive awards made during the year ended 30 June On 3 September The performance measures and targets for awards made in September
1.The cumulative free cash flow (FCF) targets have been restated in USD following the change in reporting currency from fiscal 24 onwards (original GBP target range was £7,650m - £9,450m). More details can be found on page 41. 20% (25% for Ms Crew as the awards were made before she became an Executive Director) of DLTIP awards will vest at threshold, with vesting in a straight line up to 100% if the maximum level of performance is achieved. As explained in the remuneration policy,
184 Governance (continued)
The proportion of the awards outlined above that will vest is dependent on the achievement of performance conditions and continued employment, and the actual value received may be nil. The vesting outcomes will be disclosed in the In accordance with the plan rules, the number of performance shares and share options granted under the DLTIP was calculated by using the average closing ADR price for the last six months of the preceding financial year ($ Governance (continued) Outstanding share plan interests
6. Details of the performance conditions attached to DLTIP 186 Governance (continued) efficiency (5.8% 7. (6) Details of the performance conditions attached to DLTIP awards of performance shares and share options granted in 2021 are organic net sales growth (5%-9%), organic growth in profit before exceptional items and tax (6.5%-13.5%), reduction in greenhouse gas emissions (19.1%-27.1%), improvement in water efficiency (6.3% 8. (7) Details of the performance conditions attached to DLTIP awards of performance shares and share options granted in 2022 are organic net sales growth (4.5%-8.5%), organic growth in profit before exceptional items and tax (5.0%-12.0%), reduction in greenhouse gas emissions (10.7%-17.6%), improvement in water efficiency (6.3%-12.1%), changing attitudes on dangers of underage drinking (2.6m-4.0m), % of female leaders (45%-47%), % ethnically diverse leaders (42%-44%), cumulative free cash flow ($10,175m-$12,569m) and relative total shareholder return (median-upper quintile). (8) The performance shares awarded to Debra Crew in 2020 under the Diageo Exceptional Stock Award Plan (DESAP) were granted in recognition of equity which was forfeited on joining Diageo in 2020 and have the same performance measures and targets as the 2020 DLTIP performance shares (see footnote 5). Debra Crew was granted a number of performance shares and restricted stock units under the DESAP in March 2022 for incentive and retention purposes. The DESAP performance shares will vest based on a performance hurdle of winning or holding market share in at least 2/3rs of total NSV in measured markets over the respective three-year performance periods (F23-F25 for awards due to vest in September 2026, F24-F26 for awards due to vest in September 2027 and F25-F27 for awards due to vest in September 2028). The DESAP restricted stock units vest subject to continued employment up to the vesting date. (9) In accordance with the policy and plan rules treatment on death-in-service, the 2020, 2021 and 2022 awards for Ivan Menezes 9. (10) Lavanya Chandrashekar was granted a number of restricted stock units prior to her appointment as CFO and joining the Board. 10. On 14 September (11) The Free Cash Flow (FCF) performance targets for both the 2021 Governance (continued)
The beneficial interests of the Directors who held office during the year ended 30 June
Notes September 2023. Governance (continued) Relative importance of spend on pay The Distributions to shareholders Staff pay The graph below shows the total shareholder return for Diageo plc and the FTSE 100 Index since 30 June
189 Governance (continued) Alignment of Executive pay with the wider workforce There is clear alignment in the approach to pay for executives and the wider workforce in the way that remuneration principles are followed, as well as the mechanics of the salary review process and incentive plan design, which are broadly consistent throughout the organisation. There is a strong focus on performance-related pay, and the performance measures under the annual incentive plan and long-term incentive plan are the same for executives and other eligible employees. The reward package for Executive Directors is consistent with that of the senior management population, however, a much higher proportion of total remuneration for the Executive Directors is linked to business performance, compared to the rest of the employee population. The Chairman also explains the Directors' remuneration policy to employees and seeks their feedback as part of the workforce engagement sessions. The structure of During the year, the Chairman explained the directors' remuneration policy and alignment with wider workforce pay to employees as part of the workforce engagement sessions. Remuneration Committee review of wider workforce pay Each year, the Remuneration Committee has a detailed session reviewing wider workforce remuneration. In fiscal 23, the review focussed on the prior year’s annual reward cycle outcomes, including improvements made to base pay competitive positions, the level of differentiation across our reward programmes, gender pay equity analysis, how cost-of-living challenges were addressed and how we have used reward structures to attract talent in key skills areas. The all-employee reward priorities for the coming year were also reviewed by the Committee. Information on wider workforce reward is also provided as required throughout the year to enable the Committee to consider the broader employee context when making executive remuneration decisions, for example the annual salary increase budgets by country. Supporting our employees We continue to focus on all aspects of the wellbeing of our employees. Early in fiscal 2023, we made a one-time recognition payment of £1,000 gross (capped at 15% of local equivalent annual salary) to thank employees for their ongoing efforts and support them with the rising cost of living in many locations. Since then, the Executive Committee has continued to monitor the cost-of-living in all our geographies using a formal monitoring process and has implemented actions as required, for example off-cycle salary increases in 16 high-inflation geographies. We have also provided financial education to all employees to support them in managing their personal finances more effectively. Other reward based initiatives include the roll out of a new recognition platform into North America and the UK, with more regions planned for fiscal 24. We have deployed global support for menopause, including a global app for employees. We continue to innovate with market leading benefit policies that support and demonstrate our commitment to diversity and inclusion, including increasing the provision of fertility support and personal counselling. We have continued to evolve our flexible working policy, creating guidelines to empower employees and leaders to decide how, when and where they create their best work, making sure our people consider what works best for the individual's and team's success. The renewed focus on our employee assistance programmes continued with the deployment of a global mental health online tool in November 2022. This enables employees to proactively manage their mental health and covers key topics like sleep, diet, relationships and managing stress. To date the tool has been downloaded by over 4.7k employees, which is 19% of the global population. CEO pay ratio In accordance with The Companies (Miscellaneous Reporting) Regulations 2018, the table 190 Governance (continued)
Methodology Consistent with the approach for Diageo’s disclosure in previous years, the methodology used to identify the employees at each quartile for Total full-time equivalent remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant year and has, other than where noted below, been calculated in line with the methodology for the ‘single figure of remuneration’ for the Chief Executive (shown on page Points to note for the year ended 30 June 191 Governance (continued) Change in pay for Directors compared to wider workforce The table below shows the percentage change in Directors’ remuneration and average remuneration of employees on an annual basis. Given the small size of Diageo plc’s workforce, data for all employees of the group has also been included.
Payments to former Directors Payments for loss of office Sir Ivan’s unvested long-term incentive awards granted in 2020, 2021 and 2022 vested early on 2 August 2023 in accordance with the treatment under the plan rules on death-in-service, subject to an assessment against the performance measures and time pro-rating. The Committee exercised its discretion under the policy to slightly extend the time pro-rating from 6 to 30 June 2023 on compassionate grounds to reflect the full fiscal 23 year. The 2020 award vested based on actual performance measured over the full three-year period to 30 June 2023 as disclosed on pages 178 and 180. The 2021 and 2022 awards vested subject to an assessment by the Committee against the performance measures as at 30 June 2023. Sir Ivan was originally awarded 36,675 PSP and 36,675 SESOP options in 2021 which were each time pro-rated to 24,427 awards. 192 Governance (continued) exercisable for 24 months from the date of death (already vested options) and the date of vesting (options vesting early on 2 August 2023), the Committee having exercised discretion to extend from 12 months to give the estate sufficient time to exercise the options. The two-year post-vesting holding Sir Ivan’s 2006 employment contract provided for lifetime medical cover for Sir Ivan and his spouse on a Governance (continued)
Fee policy Javier Ferrán’s fee as non-executive Chairman was increased by 3% from
remuneration for Non-Executive Directors’
194 Governance (continued) Looking ahead to
The measures and targets for the annual incentive plan are reviewed annually by the Remuneration Committee and are carefully chosen to drive financial and individual business performance goals related to the company’s short-term strategic operational objectives. The plan design for Executive Directors –net sales (% growth) (26.67% weighting): a key performance measure of year-on-year top line growth; –operating profit (% growth) (26.67% weighting): stretching profit targets drive operational efficiency and influence the level of returns that can be delivered to shareholders through increases in share price and dividend income not including exceptional items or exchange; –operating cash conversion (26.67% weighting): ensures focus on efficient cash delivery by the end of the year; and –individual business objectives (20% weighting): measurable deliverables that are specific to the individual and are focussed on supporting the delivery of key strategic objectives. The Committee has discretion to adjust the payout to reflect underlying business performance and any other relevant factors. Details of the targets for the year ending 30 June The annual incentive opportunity for Executive Directors will remain consistent with prior years, equal to 100% of base salary at target, with a maximum opportunity of 200% of base salary.
The performance share element of the DLTIP applies to the Executive Committee and the top level of senior leaders across the organisation worldwide, whilst the share option element is applicable to a much smaller population comprising only members of the Executive Committee. One market price performance-based option is valued at one-third of a performance share. The ESG •reduction in greenhouse gas •improvement in the water •number of people who •inclusion and diversity From fiscal 24, the water efficiency KPI under the 'Society 2023: Spirit of Progress' goals will use an index approach which links directly to the underlying water efficiency of the two production pillars of distillation and brewing & packaging. This methodology is described further on page 79 and the water efficiency component of the 2023 DLTIP awards reflects the updated 'Society 2030: Spirit of Progress' KPI. Awards are calculated on the basis of a six-month average share price for the period ending 30 June It is intended that a DLTIP award to the equivalent of 500% of base salary will be made to 195 Governance (continued) options. It is intended that a DLTIP award to the equivalent of 480% of salary will be made to Lavanya Chandrashekar in September The table below summarises the annual DLTIP awards to
Performance conditions for long-term incentive awards to be made in the year ending 30 June
(2) The cumulative free cash flow targets Governance (continued) Additional information
Key management personnel related party transactions Key management personnel of the group comprises the Executive and Non-Executive Directors, the members of the Executive Committee and the Company Secretary. Diageo plc has granted rolling indemnities to the Directors and the Company Secretary, uncapped in amount, in relation to certain losses and liabilities which they may incur in the course of acting as Directors or Company Secretary (as applicable) of Diageo plc or of one or more of its subsidiaries. These indemnities continue to be in place at 30 June Other than disclosed in this report, no Director had any interest, beneficial or non-beneficial, in the share capital of the company. 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 financial year, or which having been effected during an earlier financial year, remains in any respect outstanding or unperformed. There have been no material transactions during the last three years to which any Director or officer, or 3% or greater shareholder, or any spouse or dependent thereof, was a party. There is no significant outstanding indebtedness to the company from any Directors or officer or 3% or greater shareholder. Statutory and audit requirements This report was approved by a duly authorised Committee of the Board of Directors and was signed on its behalf on The Board has followed the principles of good governance as set out in the UK Corporate Governance Code and complied with the regulations contained in the Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules of the Financial Conduct Authority and the relevant schedules of the Companies Act 2006. The Companies Act 2006 and the Listing Rules require the company’s auditor to report on the audited information in their report and to state that this section has been properly prepared in accordance with these regulations. The Governance (continued) Directors’ report The Directors present the Directors’ report for the year ended 30 June Company status Diageo plc is a public limited liability company incorporated in England and Wales with registered number 23307 and registered office and principal place of business at 16 Great Marlborough Street, London W1F 7HS, United Kingdom. It is the ultimate holding company of the group, a full list of whose subsidiaries, partnerships, associates, joint ventures and joint arrangements is set out in Directors The Directors of the company who currently serve are shown in the section ‘Board of Directors’ on pages Auditor The auditor, PricewaterhouseCoopers LLP, is willing to continue in office and a resolution for its re-appointment as auditor of the company will be submitted to the AGM. Disclosure of information to the auditor In accordance with Corporate governance statement The corporate governance statement, prepared in accordance with rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, comprises the following sections of the Annual Report: the ‘Corporate governance report’, the ‘Audit Committee report’ and the ‘Additional information for shareholders’. Significant agreements – change of control The following significant agreements contain certain termination and other rights for Diageo’s counterparties upon a change of control of the company. Under the partners agreement governing the company’s 34% investment in Moët Hennessy SAS (MH) and Moët Hennessy International SAS (MHI), if a Competitor (as defined therein) directly or indirectly takes control of the company (which, for these purposes, would occur if such Competitor acquired more than 34% of the voting rights or equity interests in the company), LVMH Moët Hennessy – Louis Vuitton SA (LVMH) may require the company to sell its interests in MH and MHI to LVMH. The master agreement governing the operation of the group’s market-level distribution joint ventures with LVMH states that if any person acquires interests and rights in the company resulting in a Control Event (as defined) occurring in respect of the company, LVMH may within 12 months of the Control Event either appoint and remove the chairman of each joint venture entity governed by such master agreement, who shall be given a casting vote, or require each distribution joint venture entity to be wound up. Control Event for these purposes is defined as the acquisition by any person of more than 30% of the outstanding voting rights or equity interests in the company, provided that no other person or entity (or group of affiliated persons or entities) holds directly or indirectly more than 30% of the voting rights in the company. Governance (continued) Related party transactions Transactions with related parties are disclosed in note 21 to the consolidated financial statements. Major shareholders At 30 June
The company has not been notified of any other substantial interests in its securities since 30 June As at the close of business on Employment policies A key strategic imperative of the company is to attract, retain and grow a pool of diverse, talented employees. Diageo recognises that a diversity of skills and experiences in its workplace and communities will provide a competitive advantage. To enable this, the company has various global employment policies and standards, covering such issues as resourcing, data protection, human rights, dignity at work, health, safety and wellbeing. These policies and standards seek to ensure that the company treats current or prospective employees justly, solely according to their abilities to meet the requirements and standards of their role and in a fair and consistent way. This includes giving full and fair consideration to applications from prospective employees who are disabled, having regard to their aptitudes and abilities, and not discriminating against employees under any circumstances (including in relation to applications, training, career development and promotion) on the grounds of any disability. In the event that an employee, worker or contractor becomes disabled in the course of their employment or engagement, Diageo aims to ensure that reasonable steps are taken to accommodate their disability by making reasonable adjustments to their existing employment or engagement. Trading market for shares Diageo plc ordinary shares are listed on the London Stock Exchange (LSE) The Markets in Financial Instruments Directive (MiFID) allows for delayed publication of large trades with a sliding scale requirement based on qualifying minimum thresholds for the amount of consideration to be paid/the proportion of average daily turnover (ADT) of a stock represented by a trade. Provided that a trade/consideration equals or exceeds the qualifying minimum size, it will be eligible for deferred publication ranging from 60 minutes from time of trade to three trading days after time of trade. Fluctuations in the exchange rate between sterling and the US dollar will affect the US dollar equivalent of the sterling price of the ordinary shares on the LSE and, as a result, will affect the market price of the ADSs on the NYSE. In addition, such fluctuations will 199 Governance (continued) affect the US dollar amounts received by holders of ADSs on conversion of cash dividends paid in pounds sterling on the underlying ordinary shares. American depositary shares Fees and charges payable by ADR holders Citibank N.A. serves as the depositary (Depositary) for Diageo’s ADS programme. Pursuant to the deposit agreement dated 14 February 2013 between Diageo, the Depositary and owners and holders of ADSs (the Deposit Agreement), ADR holders may be required to pay various fees to the Depositary, and the Depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid. In particular, the Depositary, under the terms of the Deposit Agreement, shall charge a fee of up to $5.00 per 100 ADSs (or fraction thereof) relating to the issuance of ADSs; delivery of deposited securities against surrender of ADSs; distribution of cash dividends or other cash distributions (i.e. sale of rights and other entitlements); distribution of ADSs pursuant to stock dividends or other free stock distributions, or exercise of rights to purchase additional ADSs; distribution of securities other than ADSs or rights to purchase additional ADSs (i.e. spin-off shares); and depositary services. Citibank N.A. is located at 388 Greenwich Street, New York, New York, 10013, United States. In addition, ADR holders may be required under the Deposit Agreement to pay the Depositary (a) taxes (including applicable interest and penalties) and other governmental charges; (b) registration fees; (c) certain cable, telex, and facsimile transmission and delivery expenses; (d) the expenses and charges incurred by the Depositary in the conversion of foreign currency; (e) such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements; and (f) the fees and expenses incurred by the Depositary, the custodian, or any nominee in connection with the servicing or delivery of ADSs. The Depositary may (a) withhold dividends or other distributions or sell any or all of the shares underlying the ADSs in order to satisfy any tax or governmental charge and (b) deduct from any cash distribution the applicable fees and charges of, and expenses incurred by, the Depositary and any taxes, duties or other governmental charges on account. Direct and indirect payments by the Depositary The Depositary reimburses Diageo for certain expenses it incurs in connection with the ADR programme, subject to a ceiling set out in the Deposit Agreement pursuant to which the Depositary provides services to Diageo. The Depositary has also agreed to waive certain standard fees associated with the administration of the programme. Under the contractual arrangements with the Depositary, Diageo has received approximately Articles of association The company is incorporated under the name Diageo plc, and is registered in England and Wales under registered number 23307. The following description summarises certain provisions of Diageo’s articles of association (as adopted by special resolution at the Annual General Meeting on 28 September 2020) and applicable English law concerning companies (the Companies Acts), in each case as at Directors Diageo’s articles of association provide for a board of directors, consisting (unless otherwise determined by an ordinary resolution of shareholders) of not fewer than three directors and not more than 25 directors, in which all powers to manage the business and affairs of Diageo are vested. Directors may be elected by the members in a general meeting or appointed by the Board. At each annual general meeting, all the directors shall retire from office and may offer themselves for re-election by members. There is no age limit requirement in respect of directors. Directors may also be removed before the expiration of their term of office in accordance with the provisions of the Companies Acts. Voting rights Voting on any resolution at any general meeting of the company is by a show of hands unless a poll is duly demanded. On a show of hands, (a) every shareholder who is present in person at a general meeting, and every proxy appointed by any one shareholder and present at a general meeting, has/have one vote regardless of the number of shares held by the shareholder (or, subject to (b), represented by the proxy), and 200 (b) every proxy present at a general meeting who has been appointed by more than one shareholder has one vote regardless of the number of shareholders who have appointed On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder, but a shareholder or proxy entitled to more than one vote need not cast all A poll may be demanded by any of the following: •the chairman of the general meeting; •at least three shareholders entitled to vote on the relevant resolution and present in person or by proxy at the meeting; •any shareholder or shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote on the relevant resolution; or •any shareholder or shareholders present in person or by proxy and holding shares conferring a right to vote on the relevant resolution on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. Diageo’s articles of association and the Companies Acts provide for matters to be transacted at general meetings of Diageo by the proposing and passing of two kinds of resolutions: •ordinary resolutions, which include resolutions for the election, re-election and removal of directors, the declaration of final dividends, the appointment and re-appointment of the external auditor, the remuneration report and remuneration policy, the increase of authorised share capital and the grant of authority to allot shares; and •special resolutions, which include resolutions for the amendment of Diageo’s articles of association, resolutions relating to the disapplication of pre-emption rights, and resolutions modifying the rights of any class of Diageo’s shares at a meeting of the holders of such class. An ordinary resolution requires the affirmative vote of a simple majority of the votes cast by those entitled to vote at a meeting at which there is a quorum in order to be passed. Special resolutions require the affirmative vote of not less than three-quarters of the votes cast by those entitled to vote at a meeting at which there is a quorum in order to be passed. The necessary quorum for a meeting of Diageo is a minimum of two shareholders present in person or by proxy and entitled to vote. A shareholder is not entitled to vote at any general meeting or class meeting in respect of any share held by them if they have been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts. Pre-emption rights and new issues of shares While holders of ordinary shares have no pre-emptive rights under Diageo’s articles of association, the ability of the Directors to cause Diageo to issue shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share scheme, is restricted. Under the Companies Acts, the directors of a company are, with certain exceptions, unable to allot any equity securities without express authorisation, which may be contained in a company’s articles of association or given by its shareholders in a general meeting, but which in either event cannot last for more than five years. Under the Companies Acts, Diageo may also not allot shares for cash (otherwise than pursuant to an employee share scheme) without first making an offer to existing shareholders to allot such shares to them on the same or more favourable terms in proportion to their respective shareholdings, unless this requirement is waived by a special resolution of the shareholders. Repurchase of shares Subject to authorisation by special resolution, Diageo may purchase its own shares in accordance with the Companies Acts. Any shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the purchase, thereby reducing the amount of Diageo’s issued share capital. Restrictions on transfers of shares The Board may decline to register a transfer of a certificated Diageo share unless the instrument of transfer (a) is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty, and is accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require, (b) is in respect of only one class of share and (c) if to joint transferees, is in favour of not more than four such transferees. Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in Diageo’s articles of association) and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four. The Board may decline to register a transfer of any of Diageo’s certificated shares by a person with a 0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts, unless the transfer is shown to the Board to be pursuant to an arm’s-length sale (as defined in Diageo’s articles of association). 201 Other information Other information relevant to the Directors’ report may be found in the following sections of the Annual Report:
The Directors’ report of Diageo plc for the year ended 30 June In addition, certain disclosures required to be contained in the Directors’ report have been incorporated into the ‘Strategic report’ as set out in ‘Other information’ above. The Directors’ report, which has been approved by a duly appointed and authorised committee of the Board of Directors, was signed on its behalf by Tom Shropshire, the Company Secretary, on Report of Independent Registered Public Accounting Firm To theBoard of Directors and Shareholders of Diageo plc Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Diageo plc and its subsidiaries In our opinion, the consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 June Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Part II. 15.B. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 203 Financial statements Critical Audit Matters The critical audit matters communicated beloware mattersarising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to theconsolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Impairment As described in note 9 to the consolidated financial statements, the Company’s The principal considerations for our determination that performing procedures related to the impairment assessment Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s As described in Note 7 and Note 19 to the consolidated financial statements, current tax asset of £232 million and tax liability of £135 million includes £173 million of provisions for tax uncertainties. Tax treatments are not recognised unless it is probable that a tax authority will accept the treatment. Tax treatments are reviewed each year to assess whether a provision should be taken against full recognition of the treatment on the basis of potential settlement through negotiation and/or litigation with the relevant tax authorities. The Company operates in a large number of markets with complex tax and legislative regimes that are open to subjective interpretation, and for which can take several years to resolve. The Company has a number of ongoing tax audits worldwide for which provisions are recognised based on management’s best estimates and judgments concerning the ultimate The principal considerations for our determination that performing procedures related to 204 Financial statements (continued) Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the /s/ PricewaterhouseCoopers LLP London, United Kingdom We have served as the Company's auditor since 2015. Financial statements (continued) Consolidated income statement
The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Consolidated statement of comprehensive income
The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Consolidated balance sheet
The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements have been approved by a duly appointed and authorised committee of the Board of Directors and were signed on its behalf by Financial statements (continued) Consolidated statement of changes in equity
The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Consolidated statement of cash flows
(1) For the years ended 30 June The accompanying notes are an integral part of these consolidated financial statements. Financial statements (continued) Accounting information and policies Introduction This section describes the basis of preparation of the consolidated financial statements and the group’s accounting policies that are applicable to the financial statements as a whole. Accounting policies, critical accounting estimates and judgements specific to a note are included in the note to which they relate. Furthermore, the section details new accounting standards, amendments and interpretations, that the group has adopted in the current financial year or will adopt in subsequent years. 1. Accounting information and policies (a) Basis of preparation The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRSs) adopted by the UK The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. (b) Going concern Management (c) Consolidation The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. A subsidiary is an entity controlled by Diageo plc. The group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Where the group has the ability to exercise joint control over an entity but has rights to specified assets and obligations for liabilities of that entity, the entity is included on the basis of the group’s rights over those assets and liabilities. (d) Foreign currencies Items included in the financial statements of the group’s subsidiaries, associates and joint ventures are measured using the currency of the primary economic environment in which each entity operates (its functional currency). The consolidated financial statements are presented in sterling, which is the functional currency of the parent The income statements and cash flows of non-sterling entities are translated into sterling at weighted average rates of exchange, except for subsidiaries in hyperinflationary economies that are translated with the closing rate at the end of the Assets and liabilities are translated at closing rates. Exchange differences arising on the retranslation at closing rates of the opening balance sheets of overseas entities are taken to the exchange reserve, as are exchange differences arising on foreign currency borrowings and financial instruments designated as net investment hedges, to the extent that they are effective. Tax charges and credits arising on such items are also taken to the exchange reserve. Gains and losses accumulated in the exchange reserve are recycled to the 211 Financial statements (continued) income statement when the foreign operation is sold. Other exchange differences are taken to the income statement. Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. The principal foreign exchange rates used in the translation of financial statements for the three years ended 30 June
(1) Weighted average rates (2) Closing rates The group uses foreign exchange hedges to mitigate the effect of exchange rate movements. For further information, see note 16. (e) Critical accounting estimates and judgements Details of critical estimates and judgements which the Directors consider could have a significant impact –Exceptional items – management judgement whether exceptional or not – page –Taxation – management judgement –Brands, goodwill, –Post employment benefits – management judgement –Contingent liabilities and legal proceedings – management judgement in assessing the likelihood of whether a liability will arise and an estimate to quantify the possible range of any (f) Hyperinflationary accounting The group applied hyperinflationary accounting for its operations in Turkey, Venezuela and Lebanon. When applying IAS 29 on an ongoing basis, comparatives in stable currency are not restated and the effect of inflating opening The inflation rate used by the group is the official rate published by the Turkish Statistical Venezuela is a hyperinflationary economy where the government maintains a regime of strict currency controls with multiple foreign currency rate systems. The exchange rate used to translate the results of the group’s Venezuelan operations was VES/£ Financial statements (continued) The following table presents the contribution of the group’s Venezuelan operations to
Sterling amounts presented at the official reference exchange rate are results of simple mathematical conversion. The impact of hyperinflationary accounting for Lebanon was immaterial both in the current and comparative periods. (g) New accounting standards and interpretations The following –Amendments to IFRS –Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use –Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract –Amendments to Annual improvements 2018-2020 - IFRS 9 - Fees in the '10 per cent' Test, IFRS 16 - Lease incentives, IAS 41 - Taxation in Fair Value Measurements –Amendments to IAS 12 International Tax Reform – Pillar Two Model Rules The following IFRS 17 – Insurance contracts Based on a preliminary assessment, the group believes that the adoption of IFRS 17 will not have a significant impact on its consolidated results or financial position. There are a number of other amendments and clarifications to IFRSs, effective in future years, which are not expected to significantly impact the group’s consolidated results or financial position. (h) Climate change considerations The impact of climate change assessment and the net zero carbon emission target for Diageo's direct operations The climate change scenario analyses performed in The following considerations were made in respect of the financial statements: •The impact of climate change on factors (like residual values, useful lives and depreciation methods) that determine the carrying value of non-current assets. •The impact of climate change on forecasts of cash flows used (including •The impact of climate change on post-employment Financial statements (continued) Results for the year Introduction This section explains the results and performance of the group for the three years ended 30 June 2. Segmental information Accounting policies Sales comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the customer, which is determined by considering, among other factors, the delivery terms agreed with customers. For the sale of goods, the transfer of control occurs when the significant risks and rewards of ownership are passed to the customer. Based on the shipping terms agreed with customers, the transfer of control of goods occurs at the time of dispatch for the majority of sales. Where the transfer of control is subsequent to the dispatch of goods, the time between dispatch and receipt by the customer is generally less than five days. The group includes in sales the net consideration to which it expects to be entitled. Sales are recognised to the extent that it is highly probable that a significant reversal will not occur. Therefore, sales are stated net of expected price discounts, allowances for customer loyalty and certain promotional activities and similar items. Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing. Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries, excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duty are not always passed on to the customer and where a customer fails to pay for products received the group cannot reclaim the excise duty. The group therefore recognises excise duty, unless it regards itself as an agent of the regulatory authorities, as a cost to the group. Advertising costs, point of sale materials and sponsorship payments are charged to marketing in operating profit when the company has a right of access to the goods or services acquired. Diageo is an international manufacturer and distributor of premium drinks. Diageo also owns a number of investments in associates and joint ventures, as set out in note 6. The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating The Executive Committee considers the business principally from a geographical perspective based on the location of third-party sales and the business analysis is presented by geographical segment. In addition to these geographical selling segments, a further segment reviewed by the Executive Committee is the Supply Chain and Procurement (SC&P) segment, which manufactures products for other group companies and includes the production sites in the United Kingdom, Ireland, Italy, Guatemala and Mexico, as well as comprises the global procurement function. The group's operations also include the Corporate segment. Corporate Diageo uses shared services operations to deliver transaction processing activities for markets and operational entities. These centres are located in India, Hungary, Colombia and the Philippines. These captive business service centres also perform certain central finance activities, including elements of financial planning and reporting, treasury and HR services. The costs of shared services operations are recharged to the regions. For planning and management reporting purposes, Diageo uses budgeted exchange rates that are set at the prior year's weighted average exchange rate. In order to ensure a consistent basis on which performance is measured through the year, prior period results are also restated to the budgeted exchange rate. Segmental information for net sales and operating profit before exceptional items are reported on a consistent basis with management reporting. The adjustments required to retranslate the segmental information to actual exchange rates and to reconcile it to the group’s reported results are shown in the tables below. The comparative segmental information, prior to retranslation, has not been restated at the current year’s budgeted exchange rates but is presented at the budgeted rates for the respective year. In addition, for management reporting purposes, Diageo presents the result of acquisitions and disposals completed in the current and prior year separately from the results of the geographical segments. The impact of acquisitions and disposals on net sales and operating profit is disclosed under the appropriate geographical segments in the tables below at budgeted exchange rates. Financial statements (continued) (a) Segmental information for the consolidated income statement
Financial statements (continued)
Financial statements (continued)
(1) These items represent the IFRS 8 performance measures for the geographical and SC&P segments. (i) The net sales figures for SC&P reported to the Executive Committee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the SC&P segment to the other operating segments, inter-segmental sales are not material. (ii) The (iii) (b) Other segmental information
217 Financial statements (continued)
(c) Category and geographical analysis
(1) The geographical analysis of sales is based on the location of third-party (2) The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, investments in associates and joint ventures, other investments and non-current other receivables. (3) The management information provided to the chief operating 3. Operating costs
(a) Other external charges Other external charges include research and development expenditure in respect of new drinks products and package design of £53 million (2022 – £43 218 Financial statements (continued) (b) Auditors fees Other external charges include the fees of the principal auditors of the group, PricewaterhouseCoopers LLP and its affiliates (PwC) and are analysed below.
(1) Audit related assurance services are in respect of reporting under section 404 of the US Sarbanes-Oxley Act and the review of the interim financial information. (2) Other assurance services comprise the aggregate fees for assurance and related services that are not reported under ‘total audit fees’. (i) Disclosure requirements for auditors fees in the United States are different from those required in the United Kingdom. The terminology by category required in the United States is disclosed in brackets in the above table. Audit services provided by firms other than PwC for the year ended 30 June (c) Staff costs and average number of employees
The average number of employees on a
At 30 June 219 Financial statements (continued) (d) Exceptional operating items Included in
4. Exceptional items Accounting policies Critical accounting judgements Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included within the income statement caption to which they relate. Changes in estimates and reversals in relation to items previously recognised as exceptional are presented consistently as exceptional in the current year. Operating items Exceptional operating items are those that are considered to be material and unusual or non-recurring in nature and are part of the operating activities of the group, such as one-off global restructuring programmes which can be multi-year, impairment of intangible assets and fixed assets, indirect tax settlements, property disposals and changes in post employment plans. Non-operating items Gains and losses on the sale or directly attributable to a prospective sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non-recurring items, that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as exceptional non-operating Taxation items Exceptional current and deferred tax items
220 Financial statements (continued)
In the year ended 30 June 2022, an impairment charge of £336 million was recognised in exceptional operating items in respect of the McDowell's For further information, see note 9 (d). (3) In the year ended 30 June 2023, Diageo agreed with one of its distributors in Africa to terminate the distribution license of one of its spirits brands, in respect of which a (4) In the year ended 30 June 2023, Diageo released unutilised provisions of £20 million from the £50 million exceptional charge taken Financial statements (continued) (6) On 26 May 2023, Diageo announced the (7) On (8) On 30 September 2022, Diageo announced the completion of the sale of the Popular brands of its United Spirits Limited (USL) business. The transaction resulted in an exceptional gain of £4 million. (9) Certain subsidiaries of USL were sold in the year ended 30 June 2023. The sale of these subsidiaries resulted in an exceptional gain of £1 million (2022 – nil; 2021 – £3 million). (10) In the year ended 30 June 2023, Diageo sold its Tyku brand. The transaction resulted in an exceptional loss of (11) In May 2022, Diageo sold its Picon brand. The sale resulted in an exceptional non-operating gain of £91 million, net of disposal costs. (12) In the year ended 30 June 2022, a loss of £95 million was recognised as a non-operating item attributable to the sale (13) On 25 March 2022, Diageo agreed to the sale of its Windsor business in Korea. At 30 June 2022, assets and liabilities attributable to Windsor business were classified as held for sale and were measured at the lower of their cost and fair value less cost of disposal. In the year ended 30 June 2022, a loss of £19 million was recognised as a non-operating item, mainly in relation to transaction and other costs directly attributable to the prospective sale of the business. (14) On 29 September 2022, the group acquired the part of (15) Other exceptional non-operating items include subsequent gains and charges of items that were originally recognised as exceptional at inception. In the year ended 30 June 2023, other exceptional non-operating items resulted in a net gain of £4 million (2022 – £6 million; 2021 – £11 million), mainly driven by the deferred consideration received in respect of the sale of United National Breweries. For further information on acquisition and sale of businesses and brands, see 222 Financial statements (continued) Cash payments and receipts included in net cash inflow from operating activities in respect of exceptional items were as follows:
5. Finance income and charges Accounting policies Net interest includes interest income and charges in respect of financial instruments and the results of hedging transactions used to manage interest rate risk. Finance charges directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of that asset. Borrowing costs which are not capitalised are recognised in the income statement Net other finance charges include items in respect of post employment plans, the discount unwind of long-term obligations and hyperinflation charges. The results of operations in hyperinflationary economies are adjusted to reflect the changes in the purchasing power of the local currency of the entity before being translated to sterling. The impact of derivatives, excluding cash flow hedges that are in respect of commodity price risk management or those that are used to hedge the currency risk of highly probable future currency cash flows, is included in interest income or interest charge. Financial statements (continued)
(1) Includes Financial statements (continued) 6. Investments in associates and joint ventures Accounting policies An associate is an undertaking in which the group has a long-term equity interest and over which it has the power to exercise significant influence. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The group’s interest in the net assets of associates and joint ventures is reported in investments in the consolidated balance sheet and its interest in their results (net of tax) is included in the consolidated income statement below the group’s operating profit. Associates and joint ventures are initially recorded at cost including transaction costs. Investments in associates and joint ventures are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment review compares the net carrying value with the recoverable amount, where the recoverable amount is the higher of the value in use calculated as the present value of the group’s share of the associate’s future cash flows and its fair value less costs of disposal. Diageo’s principal associate is Moët Hennessy of which Diageo owns 34%. Moët Hennessy is the wines and spirits A number of joint distribution arrangements have been established with LVMH in Asia Pacific and France, principally covering distribution of Diageo’s Scotch whisky and gin premium brands and Moët Hennessy’s champagne and cognac premium brands. Diageo and LVMH have each undertaken not to engage in any champagne or cognac activities competing with those of Moët Hennessy. The arrangements also contain certain provisions for the protection of Diageo as a non-controlling shareholder in Moët Hennessy. (a) An analysis of the movement in the group’s investments in associates and joint ventures is as follows:
(i) Investment in associates (ii) If certain performance targets are met by associates in the Distill Ventures programme, an additional 225 Financial statements (continued) (b) Moët Hennessy prepares its financial statements under IFRS as endorsed by the EU in euros to 31 December each year. The results Income statement information for the three years ended 30 June
(i) Including acquisition fair value adjustments principally in respect of Moët Hennessy’s brands and translated at £1 = (c) Information on transactions between the group and its associates and joint ventures is disclosed in note 21. (d) Investments in associates and joint ventures comprise the cost of shares less goodwill written off on acquisitions prior to 1 July 1998 of (e) The associates and joint ventures have not reported any material contingent liabilities in their latest financial statements. 7. Taxation Accounting policies Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax Critical accounting estimates and judgements The group is required to estimate the corporate tax in each of the jurisdictions in which it operates. Management is required to estimate the amount that should be recognised as a tax liability or tax asset in many countries which are subject to tax audits which by their nature are often complex and can take several years to resolve; current tax balances are based on such estimations. Tax provisions are based on management’s judgement and interpretation of country specific tax law and the likelihood of settlement. However, the actual tax liabilities could differ from the provision and in such event the group would be required to make an adjustment in a subsequent period which could have a material impact on the group’s profit for the year. The evaluation of deferred tax asset recoverability requires estimates to be made regarding the availability of future taxable income. For brands with an indefinite life, management’s 226 Financial statements (continued) brands with an indefinite life have been impaired, management considers this to be an indication of recovery through use and in such a case deferred tax on the brand value is recognised using the appropriate country corporate income tax rate. (a) Analysis of taxation charge for the year
(b) Exceptional tax (credits)/charges The taxation charge includes the following exceptional items:
(1) In the year ended 30 June 2023, an exceptional tax credit of £124 million was recognised mainly in respect of the impairment of the McDowell's brand. In the year ended 30 June 2022, the exceptional tax credit of £55 million consists of tax impact on the impairment of the McDowell's and Bell's (2) In the year ended 30 June (3) In the year ended 30 June Financial statements (continued) (c) Taxation rate reconciliation and factors that may affect future tax charges
(1) The table above reconciles the notional taxation charge calculated at the UK tax rate, to the actual total tax charge. As a group operating in multiple countries, the actual tax rates applicable to profits in those countries are different from the UK tax rate. The impact is shown in the table above as differences in overseas tax rates. The group’s worldwide business leads to the consideration of a number of important factors which may affect future tax charges, such as the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms, acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities. Significant ongoing changes in the international tax environment and an increase in global tax audit activity means that tax uncertainties and associated risks have been gradually increasing. In the medium term, these risks could result in an increase in tax liabilities or adjustments to the carrying value of deferred tax assets and liabilities. See note 19 (f). The group has a number of ongoing tax audits worldwide for which provisions are recognised in line with the relevant accounting standard, taking into account best estimates and management’s judgements concerning the ultimate outcome of the tax The cash tax paid Financial statements (continued) (d) Deferred tax assets and liabilities Deferred tax recognised in the consolidated balance sheet comprise the following net deferred tax (liabilities)/assets:
(1) Deferred tax on other temporary differences includes hyperinflation, fair value movement on cross-currency swaps, interest and finance costs, share-based payments and intra-group sales of products. After offsetting deferred tax assets and liabilities
Deferred tax assets of (e) Unrecognised deferred tax assets The following table
Additionally, no deferred tax asset has been recognised in respect of certain temporary differences arising from brand valuations, as the group is not planning to sell those brands thus the benefit from the temporary differences is unlikely to be realised. Financial statements (continued) (f) Unrecognised deferred tax liabilities Relevant legislation largely exempts overseas dividends remitted from tax. A tax liability is more likely to arise in respect of withholding taxes levied by the overseas jurisdiction. Deferred tax is provided where there is an intention to distribute earnings, and a tax liability arises. It is impractical to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings. The aggregate amount of temporary differences in respect of investments in subsidiaries, branches, interests in associates and joint ventures for which deferred tax liabilities have not been recognised is approximately Financial statements (continued) Operating assets and liabilities Introduction This section describes the assets used in the group’s operations and the liabilities incurred. Liabilities relating to the group’s financing activities are included in section ‘Risk management and capital structure’ and balance sheet information in respect of associates, joint ventures and taxation are covered in section ‘Results for the year’. This section also provides detailed disclosures on the group’s recent acquisitions and disposals, performance and financial position of its defined benefit post employment plans. 8. Acquisition and sale of businesses and brands and purchase of non-controlling interests Accounting policies The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up to, the date that control passes. Business combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any contingent consideration. Among other factors, the group considers the nature of, and compensation for the selling shareholders' continuing employment to determine if any contingent payments are for post-combination employee services, which are excluded from consideration. On the acquisition of a business, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of acquisition, are attributed to the net assets, including identifiable intangible assets and contingent liabilities acquired. Directly attributable acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred. The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholder’s proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition. Where the group has issued a put option over shares held by a non-controlling interest, the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options. Movements in the estimated liability in respect of put options are recognised in retained earnings. Transactions with non-controlling interests are recorded directly in retained earnings. For all entities in which the company directly or indirectly owns equity, a judgement is made to determine whether it controls and therefore should fully consolidate the investee. An assessment is carried out to determine whether the group has the exposure or rights to the variable returns of the investee and has the ability to affect those returns through its power over the investee. To establish control, an analysis is carried out of the substantive and protective rights that the group and the other investors hold. This assessment is dependent on the activities and purpose of the investee and the rights of the other shareholders, such as which party controls the board, executive committee and material policies of the investee. Determining whether the rights that the group holds are substantive, requires management judgement. Where less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder or organised group of vote holders, this may be an indicator of de facto control. An assessment is needed to determine all the factors relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be consolidated as a subsidiary. Where voting power and returns from an investment are split equally between two entities then the arrangement is accounted for as a joint venture. On an acquisition, fair values are attributed to the assets and liabilities acquired. This may involve material judgement to determine these values. Financial statements (continued) (a) Acquisition of businesses Fair value of net assets acquired and cash consideration paid in respect of the acquisition of subsidiaries in the three years ended 30 June
Cash consideration paid in respect of the acquisition of businesses and purchase of shares of non-controlling interests in the three years ended 30 June
Financial statements (continued) Acquisitions in the year On 10 March 2023, Diageo completed the acquisition of Kanlaon Limited and Chat Noir Co. Inc., (the owner of Don Papa Rum) to support Diageo’s participation in the super-premium dark rum segment for upfront cash consideration of €246 million (£218 million), deferred consideration of €4 million (£4 million) and contingent consideration of up to €178 million (£158 million) through to 2028 subject to certain financial performance targets, reflecting the brand’s expected growth potential. The fair value of the contingent consideration of €82 million (£72 million) was estimated by calculating the present value of the future expected cash flows which is dependent on management’s estimates in respect of the forecasting of future cash flows and the discount rates applicable to the future cash flows. The goodwill arising on the acquisition of Don Papa Rum represents expected revenue synergies and the acquired workforce. Don Papa Rum contributed £10 million to net sales and £15 million operating loss to the period, out of which £15 million is related to acquisition transaction and integration costs in the year ended 30 June 2023. The fair value measurement of assets and liabilities acquired is in progress. The fair values of assets and liabilities acquired are provisional and will be finalised in the year ending 30 June 2024. Diageo completed further acquisitions in the year ended 30 June 2023: (i) on 29 September 2022, the acquisition of the remaining issued share capital of Mr Black Spirits Pty Ltd, owner of Mr Black, the Australian premium cold brew coffee liqueur, that it did not already own; and (ii) on 2 November 2022, the acquisition of the entire issued share capital of Balcones Distilling, a Texas craft distiller and one of the leading producers of American single malt whiskey in the United States. The aggregate up-front cash consideration paid on completion of these transactions in the year ended 30 June 2023 was £98 million. Prior year acquisitions On 31 March 2022, Diageo acquired 100% equity interest in 21Seeds, to support Diageo's participation in the super premium flavoured tequila segment, for a total consideration of £62 million upfront in cash and a contingent consideration of up to £61 million linked to performance targets. Diageo completed further acquisitions in the year ended 30 June 2022, including (i) on 27 January 2022, the acquisition of Casa UM, to expand Reserve portfolio with premium artisanal mezcal brand, Mezcal Unión and (ii) on 29 June 2022, the acquisition of Vivanda, owner of the technology behind 'What's your Whisky' platform and the Journey of Flavour experience at Johnnie Walker Princes Street, to support Diageo's ambition to provide customised brand experiences across all channels. The aggregate upfront cash consideration paid on completion of these transactions in the year ended 30 June 2022 was £26 million. In addition, these transactions included provision for further contingent consideration of up to £18 million in aggregate, linked to performance targets and a further deferred consideration of £4 million. On 30 September 2020, Diageo completed the acquisition of Aviation Gin LLC (Aviation Gin) and Davos Brands LLC (Davos Brands) to support Diageo's participation in the super-premium gin segment for a total consideration of $337 million (£263 million) upfront in cash and contingent consideration of up to $275 million (£214 million) linked to performance targets. Diageo also completed a number of additional acquisitions in the year ended 30 June 2021, comprising: (i) Purchase of shares of non-controlling interests On 24 March 2023, Diageo completed the purchase of 14.97% of the share capital of EABL for an aggregate consideration of KES 22,732 million (£142 million) in cash and transaction costs of £4 million. This took Diageo’s shareholding in EABL from 50.03% to 65%. EABL was already controlled and therefore consolidated prior to this transaction. In the All transactions were recognised in retained earnings. Financial statements (continued) (b) Sale of businesses and brands Cash consideration received and net assets disposed of in respect of sale of businesses and brands in the three years ended 30 June
On 26 May 2023, Diageo completed the sale of Guinness Cameroun S.A., its brewery in Cameroon. The aggregate consideration for the disposal was £384 million, the disposed net asset of £63 million mainly included property, plant and equipment and trade and other payables. The transaction resulted in a non-operating exceptional gain of £310 million. The disposed Cameroon operations contributed net sales of £101 million (2022 – £124 million; 2021 – £113 million), operating profit of £26 million (2022– £27 million; 2021– £22 million) in the year ended 30 June 2023. On 30 September 2022, Diageo completed the sale of the Popular brands of its USL business. The aggregate consideration for the disposal was £87 million, the disposed net assets included net working capital of £31 million and brands of £22 million, and £16 million goodwill was derecognised. The transaction resulted in a non-operating exceptional gain of £4 million. Popular brands contributed net sales of £34 million (2022– £139 million; 2021 – £148 million), operating profit of £5 million (2022– £26 million; 2021– £30 million) in the year ended 30 June 2023. On 25 April 2022, Diageo sold its Ethiopian subsidiary, Meta Abo Brewery Share Company. A loss of £95 million was recognised as a non-operating item attributable to the sale, including cumulative translation losses in the amount of £63 million recycled to the income statement. On 10 May 2022, Diageo completed the sale of the Picon brand for an upfront consideration of €117 million (£100 million). The gain of £91 million, net of disposal cost, was recognised as a non-operating item in the income statement. In the year ended 30 June 2022, Prior year disposals further included the sale of certain Financial statements (continued) (c) Assets and liabilities held for sale
In March 2022, Financial statements (continued) 9. Intangible assets Accounting policies Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses. Acquired brands and other intangible assets are initially recognised at fair value if they are controlled through contractual or other legal rights, or are separable from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having indefinite useful economic lives, they are not amortised. Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets. Goodwill arising on acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising subsequent to 1 July 1998 has been capitalised. Amortisation and impairment of intangible assets is based on their useful economic lives and they are amortised on a straight-line basis and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised and are reviewed for impairment at least annually or when there is an indication that the assets may be impaired. Impairment reviews compare the net carrying value with the recoverable amount (where recoverable amount is the higher of fair value less costs of disposal and value in use) Computer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years. Critical accounting estimates and judgements Assessment of the recoverable amount of an intangible asset and the useful economic life of an asset are based on management's estimates. Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts. Value in use and fair value less costs of disposal are both considered for these reviews and any impairment charge is based on these. The tests are dependent on management’s estimates in respect of the forecasting of future cash flows, the discount rates applicable to the future cash flows and what expected growth rates are reasonable. Judgement is required in determining the cash-generating units. Such estimates and judgements are subject to change as a result of changing economic conditions and actual cash flows may differ from forecasts. The below additional considerations have been applied by management regarding the potential financial impacts of increasing inflationary pressures, recently observable worldwide: –changes in the interest rate environment are taken into consideration when determining the discount rates; –terminal growth rates do not exceed the long-term annual inflation rate of the country or region, thus excluding any increased inflation growth experienced in the short-term; –additional sensitivity scenarios are applied for those markets or regions where the inflation and/or the exchange devaluation is considered significant based on management’s judgement. Consideration of climate risk impact The impact of climate risk on the future cash flows has also been considered for scenarios analysed in line with the climate change risk assessment. The climate change scenario analyses performed in Financial statements (continued)
Financial statements (continued) (a) Brands
The brands are protected by trademarks which are renewable indefinitely in all of the major markets where they are sold. There are not believed to be any legal, regulatory or contractual provisions that limit the useful lives of these brands. The nature of the premium drinks industry is that obsolescence is not a common issue, with indefinite brand lives being commonplace, and Diageo has a number of brands that were originally created more than 100 years ago. Accordingly, the Directors believe that it is appropriate that the brands are treated as having indefinite lives for accounting purposes and are therefore not amortised. (b) Goodwill For the purposes of impairment testing, goodwill has been attributed to the following cash-generating units:
Goodwill has arisen on the acquisition of businesses and includes synergies arising from cost savings, the opportunity to utilise Diageo’s distribution network to leverage marketing of the acquired products and the extension of the group’s portfolio of brands in new markets around the world. 238 Financial statements (continued) (c) Other intangibles Other intangibles principally comprise distribution rights. Diageo owns the global distribution rights for Ketel One vodka products in perpetuity, and the Directors believe that it is appropriate to treat these rights as having an indefinite life for accounting purposes. The carrying value at 30 June (d) Impairment testing Impairment tests are performed annually, or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. Recoverable amounts are calculated based on the value in use approach, also considering fair value less costs of disposal. The value in use calculations are based on discounted forecast cash flows using the assumption that cash flows continue in perpetuity at the terminal growth rate of each country or region. The individual brands, other intangibles with indefinite useful lives and the associated property, plant and equipment are aggregated as separate cash-generating units. Separate tests are carried out for each cash-generating unit and for each of the markets. Goodwill is attributed to each of the markets. The key assumptions used for the value in use calculations are as follows: Cash flows Cash flows are forecasted for each cash-generating unit for the financial years based on management's approved plans and reflect the following assumptions: –Cash flows are projected based on the actual operating results and a three-year strategic plan approved by management. Cash flows are extrapolated up to five years using expected growth rates in line with management’s best estimates. Growth rates reflect expectations of sales growth, operating costs and margin, based on past experience and external sources of information. –The five-year forecast period is extended by up to an additional ten years at acquisition date for some intangible assets and goodwill when management believes that this period is justified by the maturity of the market and expects to achieve growth in excess of the terminal growth rate driven by Diageo’s sales, marketing and distribution expertise. These cash flows beyond the five-year period are projected using steady or progressively declining growth rates. The main exception is India and the USL brands, where the forecast period is extended by an additional –Cash flows for the subsequent years after the forecast period are extrapolated based on a terminal growth rate which does not exceed the long-term annual inflation rate of the country or region. Discount rates The discount rates used are the weighted average cost of capital which reflect the returns on government bonds and an equity risk premium adjusted for the drinks industry specific to the cash-generating units. The group applies post-tax discount rates to post-tax cash flows as the valuation calculated using this method closely approximates to applying pre-tax discount rates to pre-tax cash flows. For goodwill, these assumptions are based on the cash-generating unit or group of units to which the goodwill is attributed. For brands, they are based on a weighted average taking into account the country or countries where sales are made. 239 Financial statements (continued) The pre-tax discount rates, terminal and long-term growth rates used for impairment testing are as follows:
As a result of the impairment In the year ended 30 June 2022, an impairment charge of £240 million in respect of the McDowell's brand was recognised in exceptional operating items, based on its value in use. The brand impairment reduced the deferred tax liability by £35 million. Further, in the year ended 30 June 2022, an impairment charge of £77 million in respect of the Bell’s brand was recognised in exceptional operating items, based on its value in use. The impairment reduced the deferred tax liability attributable to the brand by £20 million. In the year ended 30 June 2022, Diageo decided to wind down its operations in Russia. As a result, an impairment charge of £19 million in respect of the Smirnov goodwill was recognised in exceptional operating items. The Turkish economy became hyperinflationary for the year ended 30 June 2022, and an impairment charge of TRY 3,760 million 240 Financial statements (continued) (e) Sensitivity to change in key assumptions Impairment testing for the year ended 30 June The table below shows the headroom at 30 June
10. Property, plant and equipment Accounting policies Land and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. Leaseholds are generally depreciated over the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual values over their expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives fall within the following ranges: buildings – 10 to 50 years; within plant and equipment casks and containers – 15 to 50 years; other plant and equipment – 5 to 40 years; fixtures and fittings – 5 to 10 years; and returnable bottles and crates – 5 to 10 years. Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried at above their recoverable amounts. Government grants Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions pursuant to which they have been granted and that the grants will be received. Government grants in respect of property, plant and equipment are deducted from the asset that they relate to, reducing the depreciation expense charged to the income statement. 241 Financial statements (continued)
242 Financial statements (continued) 11. Biological assets Accounting policies Biological assets held by the group consist of agave (Agave Azul Tequilana Weber) plants. The harvested plants are used during the production of tequila. Biological assets are measured at fair value less costs to sell on initial recognition and at the end of each reporting period based on the present value of future cash flows discounted at an appropriate rate for Mexico. Agricultural produce is measured at fair value less costs to sell at the point of harvest which is used as the cost of inventory when the harvested agave is transferred. Changes in biological assets were as follows:
At 30 June 12. Leases Accounting policies Where the group is the lessee, all leases are recognised on the balance sheet as right-of-use assets and depreciated on a straight-line basis with the charge recognised in cost of sales or in other operating items depending on the nature of the costs. The liability, recognised as part of net borrowings, is measured at a discounted value and any interest is charged to finance charges. The group recognises services associated with a lease as other operating expenses. Payments associated with leases where the value of the asset when it is new is lower than $5,000 (leases of low value assets) and leases with a lease term of Financial statements (continued) (a) Movement in right-of-use assets The company principally leases warehouses, office buildings, plant and machinery, cars and distribution vehicles in the ordinary course of business.
(b) Lease liabilities
The future cash outflows, which are not included in lease liabilities on the balance sheet, in respect of extension and termination options which are not reasonably expected to be exercised are estimated at (c) Amounts recognised in the consolidated income statement In the year ended 30 June The total cash outflow for leases in the year ended 30 June Financial statements (continued) 13. Other investments Accounting policies Other investments are equity investments that are not classified as investments in associates or joint arrangements nor investments in subsidiaries. They are included in non-current assets. Subsequent to initial measurement, other investments are stated at fair value. Gains and losses arising from the changes in fair value are recognised in the income statement or in other comprehensive income on a case by case basis. Accumulated gains and losses included in other comprehensive income are not recycled to the income statement. Dividends from other investments are recognised in the consolidated income statement. Loans receivable are non-derivative financial assets that are not classified as equity investments. They are subsequently measured either at amortised cost using the effective interest method less allowance for impairment or at fair value with gains and losses arising from changes in fair value recognised in the income statement or in other comprehensive income that are recycled to the income statement on the de-recognition of the asset. Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous experience, economic conditions and forward-looking data. Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending on changes in the credit quality of the counterparty.
At 30 June Financial statements (continued) 14. Post employment benefits Accounting policies The group’s principal post employment funds are defined benefit plans. In addition, the group has defined contribution plans, unfunded post employment medical benefit liabilities and other unfunded defined benefit post employment liabilities. For post employment plans other than defined contribution plans, the amount charged to operating profit is the cost of accruing pension benefits promised to employees over the year, plus any changes arising on benefits granted to members by the group during the year. Net finance charges comprise the net deficit/ Contributions payable by the group in respect of defined contribution plans are charged to operating profit as incurred. Critical accounting estimates and judgements Application of IAS 19 requires the exercise of estimate and judgement in relation to various assumptions. Diageo determines the assumptions on a country by country basis in conjunction with its actuaries. Estimates are required in respect of uncertain future events, including the life expectancy of members of the funds, salary and pension increases, future inflation rates, discount rates and employee and pensioner demographics. The application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and the balance sheet. There may be interdependencies between the assumptions. Where there is an accounting surplus on a defined benefit plan, management judgement is necessary to determine whether the group can obtain economic benefits through a refund of the surplus or by reducing future contributions to the plan. (a) Post employment benefit plans The group operates a number of pension plans throughout the world, devised in accordance with local conditions and practices. Diageo's most significant plans are defined benefit plans and are funded by payments to separately administered trusts or insurance companies. The group also operates a number of plans that are generally unfunded, primarily in the United States, which provide to employees post employment medical benefits. The principal plans are in the United Kingdom, Ireland and the United States where benefits are based on employees’ length of service and salary at retirement. All valuations were performed by independent actuaries using the projected unit credit method to determine pension costs. The most recent funding valuations of the significant defined benefit plans were carried out as follows:
(1) The Diageo Pension Scheme (2) The Guinness Ireland Group Pension Scheme (GIGPS, the Irish The assets of the UK and Irish pension plans are held in separate trusts administered by trustees who are required to act in the best interests of the plans’ beneficiaries. For DPS, the trustee is Diageo Pension Trust Limited. As required by legislation, one-third of the directors of the Trust are nominated by the members of the DPS, member nominated directors are appointed from both the pensioner member community and the active member community. For the Irish Scheme, Diageo Ireland makes four nominations and appoints three further candidates nominated by representative groupings. Financial statements (continued) The amounts charged to the consolidated income statement and statement of comprehensive income for the group’s defined benefit plans for the three years ended 30 June
(i) The year ended 30 June 2022 includes settlement gains of £27 million in respect of the Enhanced Transfer Values (ETV) exercise carried out in the Irish Schemes and past service gains of £28 million as a result of the changes of the benefits in the Irish Scheme. In the year ended 30 June 2021, the exceptional past service loss of £5 million is in respect of the equalisation of Guaranteed Minimum Pension (GMP) benefits for men and (1) The (charge)/income before taxation is in respect of the following countries:
In addition to the charge in respect of defined benefit post employment plans, contributions to the group’s defined contribution plans were £44 million (2022 – £33 Financial statements (continued) The
(1) The plan assets and liabilities by type of post employment benefit and country
The balance sheet analysis of the post employment plans is as follows:
(1) Includes surplus restriction of The disclosures have been prepared in accordance with IFRIC 14. In particular, where the calculation for a plan results in a surplus, the recognised asset is limited to the present value of any available future refunds from the plan or reductions in future contributions to the plan, and any additional liabilities are recognised as required. At 30 June million; 2021 – £840 248 Financial statements (continued) surpluses have been recognised, with no provision made against them, as they are expected to be recoverable through a combination of a reduction in future cash contributions or ultimately via a cash refund when the last member’s obligations have been met. (b) Principal risks and assumptions The material post employment plans are not exposed to any unusual, entity-specific or scheme-specific risks but there are general risks: Inflation – The majority of the plans’ obligations are linked to inflation. Higher inflation will lead to increased liabilities which is partially offset by the plans holding inflation linked gilts, swaps and caps against the level of inflationary increases. Interest rate – The plan liabilities are determined using discount rates derived from yields on AA-rated corporate bonds. A decrease in corporate bond yields will increase plan liabilities though this will be partially offset by an increase in the value of the bonds held by the post employment plans. Mortality – The majority of the obligations are to provide benefits for the life of the members and their partners, so any increase in life expectancy will result in an increase in the plans’ liabilities. Asset returns – Assets held by the pension plans are invested in a diversified portfolio of equities, bonds and other assets. Volatility in asset values will lead to movements in the net deficit/surplus reported in the consolidated balance sheet for post employment plans which in addition will also impact the post employment expense in the consolidated income statement. The following weighted average assumptions were used to determine the group’s deficit/surplus in the main post employment plans at 30 June in the relevant year. The assumptions used to calculate the charge/credit in the consolidated income statement for the year ending 30 June are based on the assumptions disclosed as at the previous 30 June.
(1) The salary increase assumption in the United States is not a significant assumption as only a minimal amount of members’ pension entitlement is dependent on a member’s projected final salary. (2) The salary increase assumptions include an allowance for age-related promotional salary increases. For the principal UK and Irish pension funds, the table below illustrates the expected age at death of an average worker who retires currently at the age of 65, and one who is currently aged 45 and subsequently retires at the age of 65:
(1) Based on the CMI’s S3 mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements. (2) Based on the CMI's S3 mortality tables with scaling factors based on the experience of the plan, with suitable future improvements. Financial statements (continued) For the significant assumptions, the following sensitivity analyses estimate the potential impacts on the consolidated income statement for the year ending 30 June
(1) The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans. (i) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each sensitivity is calculated on a change in the key assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation linked assumptions (e.g. pension increases and salary increases where appropriate). (c) Investment and hedging strategy The investment strategy for the group’s funded post employment plans is determined locally by the trustees of the plan and/or Diageo, as appropriate, and takes account of the relevant statutory requirements. The objective of the investment strategy is to achieve a target rate of return in excess of the movement on the liabilities, whilst taking an acceptable level of investment risk relative to the liabilities. This objective is implemented by using the funds of the plans to invest in a variety of asset classes that are expected over the long-term to deliver a target rate of return. The majority of the investment strategies have significant amounts allocated to The discount rates used are based on the yields of high-quality fixed income investments. For the UK plans, which represent approximately Financial statements (continued) An analysis of the fair value of the plan assets is as follows:
(i) The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested in the long-term. Total cash contributions by the group to all post employment plans in the year ending 30 June Financial statements (continued) (d) Deficit funding arrangements UK plans In the year ended 30 June 2011 the group established a Pension Funding Partnership (PFP) in respect of the UK Scheme. Whisky inventory was transferred into the partnership but the group retains control over the partnership which at 30 June In 2030, the group will be required, dependent upon the funding position of the UK Scheme at that time, to pay an amount not greater than the actuarial deficit at that time, up to a maximum of £430 million in cash, to purchase the UK Scheme’s interest in the partnership. If the UK Scheme is in surplus at an actuarial triennial valuation excluding the value of the PFP, then the group can exit the PFP with the agreement of the trustees. During the year ended 30 June 2023, following a remeasurement of the Diageo Lifestyle Plan, Diageo made a £16 million one-off deficit contribution to satisfy minimum funding requirement. Irish plans The (e) Timing of benefit payments The following table provides information on the timing of the benefit payments and the average duration of the defined benefit obligations and the distribution of the timing of benefit payments:
The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are disclosed undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised on the consolidated balance sheet. They are in respect of benefits that have accrued at the balance sheet date and make no allowance for any benefits to be accrued subsequently. (f) Related party disclosures Information on transactions between the group and its pension plans is given in note 21. Financial statements (continued) 15. Working capital Accounting policies Inventories are stated at the lower of cost and net realisable value. Cost includes raw materials, direct labour and expenses, an appropriate proportion of production and other overheads, but not borrowing costs. Cost is calculated at the weighted average cost incurred in acquiring inventories. Maturing inventories and raw materials which are retained for more than one year are classified as current assets, as they are expected to be realised in the normal operating cycle. Trade and other receivables are initially recognised at fair value less transaction costs and subsequently carried at amortised cost less any allowance for discounts and doubtful debts. Trade receivables arise from contracts with customers, and are recognised when performance obligations are satisfied, and the consideration due is unconditional as only the passage of time is required before the payment is received. Allowance losses are calculated by reviewing lifetime expected credit losses using historic and forward-looking data on credit risk. Trade and other payables are initially recognised at fair value including transaction costs and subsequently carried at amortised costs. Contingent considerations recognised in business combinations are subsequently measured at fair value through income statement. The group evaluates supplier arrangements against a number of indicators to assess if the liability has the characteristics of a trade payable or should be classified as borrowings. This assessment considers the commercial purpose of the facility, whether payment terms are similar to customary payment terms, whether the group is legally discharged from its obligation towards suppliers before the end of the original payment term, and the group’s involvement in agreeing terms between banks and suppliers. Provisions are liabilities of uncertain timing or amount. A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are calculated on a discounted basis. The carrying amounts of provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. (a) Inventories
Maturing inventories include whisk(e)y, rum, tequila and Chinese white spirits. The following amounts of inventories are expected to be utilised after more than one year:
Inventories are disclosed net of provisions for obsolescence, an analysis of which is as follows:
Financial statements (continued) (b) Trade and other receivables
At 30 June The aged analysis of trade receivables, net of expected credit loss allowance, is as follows:
Trade and other receivables are disclosed net of expected credit loss allowance for doubtful debts, an analysis of which is as follows:
Financial statements (continued) (c) Trade and other payables
Interest payable at 30 June Together with the group’s partner banks, supply chain financing (SCF) facilities are provided to suppliers in certain countries. These arrangements enable suppliers to receive funding earlier than the invoice due date at their discretion and at their own cost. Payment terms continue to be agreed directly between the group and suppliers, independently from the availability of SCF facilities. Liabilities are settled in accordance with the original due date of invoices. The group does not incur any fees or receive any rebates where the suppliers choose to utilise these facilities. The group has determined that it is appropriate to present amounts outstanding subject to SCF arrangements as trade payables. Consistent with this classification, cash flows are presented either as operating cash flows or cash flows from investing activities, when related to the acquisition of non-current assets. At 30 June (d) Provisions
Financial statements (continued) Risk management and capital structure Introduction This section sets out the policies and procedures applied to manage the group’s capital structure and the financial risks the group is exposed to. Diageo considers the following components of its balance sheet to be capital: borrowings and equity. Diageo manages its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels. 16. Financial instruments and risk management Accounting policies Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction costs. For those financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date. The group classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets and liabilities at fair value through income statement and financial assets at fair value through other comprehensive income. The accounting policies for other investments and loans are described in note 13, for trade and other receivables and payables in note 15 and for cash and cash equivalents in note 17. Financial assets and liabilities at fair value through income statement include derivative assets and liabilities. Where financial assets or liabilities are eligible to be carried at either amortised cost or fair value through other comprehensive income, the group does not apply the fair value option. Derivative financial instruments are carried at fair value using a discounted cash flow model based on market data applied consistently for similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken to the income statement as they arise. Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the effective interest rate method. Financial liabilities in respect of the Zacapa acquisition are recognised at fair value. Hedge accounting The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges), commodity price risk of highly probable forecast transactions, Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed. Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair value of the underlying hedged asset or liability. If such a hedge relationship no longer meets hedge accounting criteria, fair value movements on the derivative continue to be taken to the income statement while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement over its remaining life using the effective interest rate method. Cash flow Net investment hedges take the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on translation of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as hedging instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to the extent that they are effective, with any ineffectiveness taken to the income statement. Foreign currency contracts hedging net investments are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness taken to the income statement. Financial statements (continued) The group’s funding, liquidity and exposure to foreign currency and interest rate risks are managed by the group’s treasury department. The treasury department uses a range of financial instruments to manage these underlying risks. Treasury operations are conducted within a framework of Board-approved policies and guidelines, which are recommended and monitored by the Finance Committee, chaired by the Chief Financial Officer. The policies and guidelines include benchmark exposure and/or hedge cover levels for key areas of treasury risk which are periodically reviewed by the Board following, for example, significant business, strategic or accounting changes. The framework provides for limited defined levels of flexibility in execution to allow for the optimal application of the Board-approved strategies. Transactions arising from the application of this flexibility are carried at fair value, gains or losses are taken to the income statement as they arise and are separately monitored on a daily basis using Value at Risk analysis. In the years ended 30 June The group purchases insurance for commercial or, where required, for legal or contractual reasons. In addition, the group retains insurable risk where external insurance is not considered an economic means of mitigating these risks. The Finance Committee receives a quarterly report on the key activities of the treasury department, however any exposures which differ from the defined benchmarks are reported as they arise. (a) Currency risk The group presents its consolidated financial statements in sterling and conducts business in many currencies. As a result, it is subject to foreign currency risk due to exchange rate movements, which will affect the group’s transactions and the translation of the results and underlying net assets of its operations. To manage the currency risk, the group uses certain financial instruments. Where hedge accounting is applied, hedges are documented and tested for effectiveness on an ongoing basis. Hedge of net investment in foreign operations The group hedges a certain portion of its exposure to fluctuations in the sterling value of its foreign operations by designating borrowings held in foreign currencies and using foreign currency spots, forwards, swaps and other financial derivatives. For the year ended 30 June At 30 June Hedge of foreign currency debt The group uses cross currency interest rate swaps to hedge the foreign currency risk associated with certain foreign currency denominated borrowings. Transaction exposure hedging The group’s policy is to hedge forecast transactional foreign currency risk on (b) Interest rate risk The group has an exposure to interest rate risk, arising principally on changes in US dollar, euro and sterling interest rates. To manage interest rate risk, the group manages its proportion of fixed to floating rate borrowings within limits approved by the Board, primarily through issuing fixed and floating rate borrowings, and by utilising interest rate swaps. These practices aim to minimise the group’s net finance charges with acceptable year-on-year volatility. To facilitate operational efficiency and effective hedge accounting, for the year ended 30 June
(1) The floating rate portion of net borrowings includes cash and cash equivalents, collaterals, floating rate loans and bonds and bank overdrafts. Financial statements (continued) The table below sets out the average monthly net borrowings and effective interest rate:
(i) For this calculation, net interest charge excludes fair value adjustments to derivative financial instruments and average monthly net borrowings include the impact of interest rate swaps that are no longer in a hedge relationship but exclude the market value adjustment for cross currency interest rate swaps. IBOR reform In accordance with the UK Financial Conduct Authority’s announcement on 5 March 2021, LIBOR benchmark rates were discontinued after 31 December 2021, except for the majority of the US dollar settings which In line with the relief provided by the amendment, the group assumes that the interest rate benchmark on which the cash flows of the hedged item, the hedging instrument or the hedged risk are based are not altered by the IBOR reform. The derivative hedging instruments provide a close approximation to the extent and nature of the risk exposure the group manages through hedging relationships. Included in floating rate net borrowings are interest rate swaps designated in fair value hedges, with a notional amount of (c) Commodity price risk Commodity price risk is managed in line with the principles approved by the Board either through long-term purchase contracts with suppliers or, where appropriate, derivative contracts. The group policy is to maintain the Value at Risk of commodity price risk arising from commodity exposures below 75 bps of forecast gross profit in any given financial year. Where derivative contracts are used, the commodity price risk exposure is hedged up to 24 months of forecast volume through exchange-traded and over-the-counter contracts (futures, forwards and swaps) and cash flow hedge accounting is applied. (d) Market risk sensitivity analysis The group uses a sensitivity analysis that estimates the impacts on the consolidated income statement and other comprehensive income of either an instantaneous increase or decrease of 0.5% in market interest rates or a 10% strengthening or weakening in sterling against all other currencies, from the rates applicable The sensitivity analysis estimates the impact of changes in interest and foreign exchange rates. All hedges are expected to be highly effective for this analysis and it considers the impact of all financial instruments including financial derivatives, cash and cash equivalents, borrowings and other financial assets and liabilities. The results of the sensitivity analysis should not be considered as projections of likely future events, gains or losses as actual results in the future may differ materially 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.
(1) The impact on foreign currency borrowings and derivatives in net investment hedges is largely offset by the foreign exchange difference arising on the translation of net investments. (2) The impact on the consolidated statement of comprehensive income includes the impact on the income statement. Financial statements (continued) (e) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. Credit risk arises on cash balances (including bank deposits and cash and cash equivalents), derivative financial instruments and credit exposures to customers, including outstanding loans, trade and other receivables, financial guarantees and committed transactions. The carrying amount of financial assets of Credit risk is managed separately for financial and business related credit exposures. Financial credit risk Diageo aims to minimise its financial credit risk through the application of risk management policies approved and monitored by the Board. Counterparties are predominantly limited to investment grade banks and financial institutions, and policy restricts the exposure to any one counterparty by setting credit limits taking into account the credit quality of the counterparty. The group’s policy is designed to ensure that individual counterparty limits are adhered to and that there are no significant concentrations of credit risk. The Board also defines the types of financial instruments which may be transacted. The credit risk arising through the use of financial instruments for currency, interest rate and commodity price risk management is estimated with reference to the fair value of contracts with a positive value, rather than the notional amount of the instruments themselves. Diageo annually reviews the credit limits applied and regularly monitors the counterparties’ credit quality reflecting market credit conditions. When derivative transactions are undertaken with bank counterparties, the group may, where appropriate, enter into certain agreements with such bank counterparties whereby the parties agree to post cash collateral for the benefit of the other if the net valuations of the derivatives are above a predetermined threshold. At 30 June Business related credit risk Exposures from loan, trade and other receivables are managed locally in the operating units where they arise and active risk management is applied, focusing on country risk, credit limits, ongoing credit evaluation and monitoring procedures. There is no significant concentration of credit risk with respect to loans, trade and other receivables as the group has a large number of customers which are internationally dispersed. (f) Liquidity risk Liquidity risk is the risk of Diageo encountering difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The group uses short-term commercial paper to finance its day-to-day operations. The group’s policy with regard to the expected maturity profile of borrowings is to limit the amount of such borrowings maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the level of commercial paper to 30% of gross borrowings less money market demand deposits. In addition, the group’s policy is to maintain backstop facilities with relationship banks to support commercial paper obligations. The following tables provide an analysis of the anticipated contractual cash flows including interest payable for the group’s financial liabilities and derivative instruments on an undiscounted basis. Where interest payments are calculated at a floating rate, rates of each cash flow until maturity of the instruments are calculated based on the forward yield curve prevailing at the respective year ends. The gross cash flows of cross currency swaps are presented for the purposes of this table. All other derivative contracts are presented on a net basis. Financial assets and liabilities are presented gross in the consolidated balance sheet although, in practice, the group uses netting arrangements to reduce its liquidity requirements on these instruments. Financial statements (continued) Contractual cash flows
(1) For the purpose of these tables, borrowings are defined as gross borrowings excluding lease liabilities and fair value of derivative instruments as disclosed in note 17. (2) Carrying amount of interest on borrowings, interest on derivatives and interest on other payable is included within interest payable in note 15. (3) Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32. The group had available undrawn committed bank facilities as follows:
The facilities can be used for general corporate purposes and, together with cash and cash equivalents, support the group’s commercial paper programmes. There are no financial covenants on the group’s material short- and long-term borrowings. Certain of these borrowings contain cross default provisions and negative pledges. The committed bank facilities are subject to a single financial covenant, being minimum interest cover ratio of two times (defined as the ratio of operating profit before exceptional items, aggregated with share of after tax results of associates and joint ventures, to net interest charges). They are also subject to pari passu ranking and negative pledge covenants. Any non-compliance with covenants underlying Diageo’s financing arrangements could, if not waived, constitute an event of default with respect to any such arrangements, and any non-compliance with covenants may, in particular circumstances, lead to an acceleration of maturity on certain borrowings and the inability to access committed facilities. Diageo was in full compliance with its financial, pari passu ranking and negative pledge covenants in respect of its material short- and long-term borrowings throughout each of the years presented. Financial statements (continued) (g) Fair value measurements Fair value measurements of financial instruments are presented through the use of a three-level fair value hierarchy that prioritises the valuation techniques used in fair value calculations. The group maintains policies and procedures to value instruments using the most relevant data available. If multiple inputs that fall into different levels of the hierarchy are used in the valuation of an instrument, the instrument is categorised on the basis of the most subjective input. Foreign currency forwards and swaps, cross currency swaps and interest rate swaps are valued using discounted cash flow techniques. These techniques incorporate inputs at levels 1 and 2, such as foreign exchange rates and interest rates. These market inputs are used in the discounted cash flow calculation incorporating the instrument’s term, notional amount and discount rate, and taking credit risk into account. As significant inputs to the valuation are observable in active markets, these instruments are categorised as level 2 in the hierarchy. Other financial liabilities include a put option, which does not have an expiry date, held by Industrias Licoreras de Guatemala (ILG) to sell the remaining 50% equity stake in Rum Creation & Products Inc., the owner of the Zacapa rum brand, to Diageo. The liability is fair valued using the discounted cash flow method and as at 30 June Included in other financial liabilities, the contingent consideration on acquisition of businesses represents the present value of payments up to Contingent considerations linked to certain volume targets at 30 June 2023 included £113 million in respect of the acquisition of Aviation Gin and Davos Brands (2022 – £157 million), £59 million in respect of the acquisition of 21Seeds (2022 – £59 million) and £18 million in respect of the acquisition of Lone River Ranch Water (2022 – £57 million). Contingent consideration of £70 million in respect of the acquisition of Don Papa Rum (2022 – £nil) is linked to certain financial performance targets. Contingent considerations are fair valued based on discounted cash flow method using assumptions not observable in the market. Contingent considerations are sensitive to possible changes in assumptions; a 10% increase or decrease in volume would increase or decrease the fair value of contingent considerations linked to certain volume targets by approximately £30 million and £50 million, respectively, and a 10% increase or decrease in cash flows would increase or decrease the fair value of contingent considerations linked to certain financial performance targets by approximately £25 million. There were no significant changes in the measurement and valuation techniques, or significant transfers between the levels of the financial assets and liabilities in the year ended 30 June The group’s financial assets and liabilities measured at fair value are categorised as follows:
In the years ended 30 June 261 Financial statements (continued) The movements in level 3 instruments, measured on a recurring basis, are as follows:
(h) Results of hedge relationships The group targets a one-to-one hedge ratio. The change in the credit risk of the hedging instruments or the hedged items is not expected to be the primary factor in the economic relationship. The notional amounts, contractual maturities and rates of the hedging instruments designated in hedging relationships
(1) In case of derivatives in cash flow hedges (commodity price risk and foreign currency risk), the range of the most significant contract’s hedged rates are presented. For hedges of the cash flow risk from a change in forward exchange rates using cross currency interest rate swaps, the retranslation of the related bond principal to closing exchange rates and recognition of interest on the related bonds will affect the income statement in each year until the related bonds mature in In respect of cash flow hedging instruments, a gain of £247 million (2022 – £124 million 262 Financial statements (continued) comprehensive income to operating profit in relation to commodity hedges. The carrying amount of hedged items recognised in the consolidated balance sheet in relation to hedges of cash flow risk arising from foreign currency debts equals the notional value of the hedging instruments at 30 June For cash flow hedges of forecast transactions at 30 June In respect of hedges of foreign currency borrowings that are no longer applicable at 30 June The For fair value hedges that are no longer applicable, the accumulated fair value changes shown on the consolidated balance sheet at 30 June The following table sets out information regarding the effectiveness of hedging relationships designated by the group, as well as the impacts on the income statement and other comprehensive income:
Financial statements (continued) (i) Reconciliation of financial instruments The table below sets out the group’s accounting classification of each class of financial assets and liabilities:
(1) Other investments and loans are including those in respect of associates. (2) Borrowings are defined as gross borrowings excluding lease liabilities and the fair value of derivative instruments. At 30 June (j) Capital management The group’s management is committed to enhancing shareholder value in the long-term, both by investing in the business and brands so as to deliver continued improvement in the return from those investments and by managing the capital structure. Diageo manages 264 Financial statements (continued) its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels. This is achieved by targeting an adjusted net borrowings (net borrowings aggregated with post employment benefit liabilities) to adjusted EBITDA leverage of 2.5 - 3.0 times, this range for Diageo being currently broadly consistent with an A band credit rating. Diageo would consider operating outside of this range in order to effect strategic initiatives within its stated goals, which could have an impact on its rating. If Diageo’s leverage was to be negatively impacted by the financing of an acquisition, it would seek over time to return to the range of 2.5 17. Net borrowings Accounting policies Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are designated in fair value hedge relationship. In these cases, the amortised cost is adjusted for the fair value of the risk being hedged, with changes in value recognised in the income statement. The fair value adjustment is calculated using a discounted cash flow technique based on unadjusted market data. Bank overdrafts form an integral part of the group’s cash management and are included as a component of net cash and cash equivalents in the consolidated statement of cash flows. Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and have an original maturity of three months or less, including money market deposits, commercial paper and investments. Net borrowings are defined as gross borrowings (short-term borrowings and long-term borrowings plus lease liabilities plus interest rate hedging instruments, cross currency interest rate swaps and foreign currency forwards and swaps used to manage borrowings) less cash and cash equivalents. Financial statements (continued)
266 Financial statements (continued) (1) SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, a 100% owned finance subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other subsidiary of Diageo plc guarantees the security. (2) SEC-registered debt issued on an unsecured basis by Diageo Capital plc, a 100% owned finance subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other subsidiary of Diageo plc guarantees the security. (i) The interest rates shown are those contracted on the underlying borrowings before taking into account any interest rate hedges (see note 16). (ii) Bonds are stated net of unamortised finance costs of (iii) Gross borrowings before derivative financial instruments are expected to mature as follows:
During the year, the following bonds were issued and repaid:
(a) Reconciliation of movement in net borrowings
(1) In the year ended 30 June (2) In the year ended 30 June 2023, other non-cash items are principally in respect of fair value changes of cross currency interest rate swaps and interest rate swaps of £(34) million and lease liabilities of £(82) million, partially offset by the £84 million fair value change of borrowings. In the year ended 30 June 2022, other non-cash items are principally in respect of fair value changes of cross currency interest rate swaps and interest rate swaps of £(346) million and lease liabilities of £(183) million, partially offset by the £331 million fair value change of borrowings. Financial statements (continued) (b) Analysis of net borrowings by currency
(1) Includes foreign currency forwards and swaps and leases. (2) Includes 18. Equity Accounting policies Own shares represent shares and share options of Diageo plc that are held in treasury or by employee share trusts for the purpose of fulfilling obligations in respect of various employee share plans or were acquired as part of a share buyback programme. Own shares are treated as a deduction from equity until the shares are cancelled, reissued or disposed of and when vest are transferred from own shares to retained earnings at their weighted average cost. Share-based payments include share awards and options granted to directors and employees. The fair value of equity settled share options and share grants is initially measured at grant date based on Monte Carlo and Black Scholes models and is charged to the income statement over the vesting period. For equity settled shares, the credit is included in retained earnings. Cancellations of share options are treated as an acceleration of the vesting period and any outstanding charge is recognised in operating profit immediately. Any surplus or deficit arising on the sale of the Diageo plc shares held by the group is included as a movement in equity. Dividends are (a) Allotted and fully paid share capital – ordinary shares of 28101⁄108 pence each
Financial statements (continued) (b) Hedging and exchange reserve
Currency basis spreads included in the hedging reserve represent the cost of hedging arising as a result of imperfections of foreign exchange markets. Exclusion of currency basis spreads would result in a (c) Own shares Movements in own shares
Share trust arrangements At 30 June Purchase of own shares Authorisation was given by shareholders on Financial statements (continued) During the year ended 30 June The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) for the year ended 30 June
(1) New maximum number of purchasable shares was authorised by shareholders at the AGM held on (d) Dividends
The proposed final Dividends are waived on all treasury shares owned by the company and all shares owned by the employee share trusts. Financial statements (continued) (e) Non-controlling interests Diageo consolidates USL, a company incorporated in India, with a Summarised financial information for USL and other subsidiaries, after fair value adjustments on acquisition, and the amounts attributable to non-controlling interests are as follows:
(1) (Loss)/profit for the year includes exceptional operating expenses attributable to non-controlling interests. (2) Other comprehensive (loss)/income is principally in respect of exchange on translating the subsidiaries to sterling. Financial statements (continued) (f) Employee share compensation The group uses a number of share award and option plans to grant to its directors and employees. The annual fair value charge in respect of the equity settled plans for the three years ended 30 June
Executive share awards have been made primarily under the Diageo 2014 Long Term Incentive Plan (DLTIP) from September 2014 onwards and delivered in conditional awards in the form of performance shares, performance share options, time-vesting restricted stock units (RSUs) and/or time-vesting share options (or cash-based equivalents in certain locations for regulatory reasons). Share options are granted at the market value at the time of grant. Prior to the introduction of the DLTIP, employees in associated companies were granted awards under the Diageo plc 2011 Associated Companies Share IncentivePlan (DACSIP). In the case of Executive Directors, conditional awards of time-vesting RSUs or forfeitable shares may be awarded under the 2020 Deferred Bonus Share Plan (DBSP), with vesting not subject to any performance conditions and not subject to a post-vesting retention period. The Share awards normally vest and are released on the third anniversary of the grant date. Participants do not make a payment to receive the award at grant. Executive Directors are required to hold any vested shares awarded under DLTIP for a further two-year post-vesting holding period. Share options may normally be exercised between three and ten years after the grant date. Executives in North America and Latin America and Caribbean are granted awards over the company’s ADRs (one ADR is equivalent to four ordinary shares). Performance shares under the DLTIP (for awards in 2020 and thereafter) are subject to the achievement of three performance measures: 1) compound annual growth in profit before exceptional items over three years; 2) compound annual growth in organic net sales over three years; 3) environmental, social and governance (ESG) priorities, weighted 40%, 40% and 20% of the maximum respectively, as set out in the Directors’ remuneration report. Performance share options under the DLTIP are subject to the achievement of two equally weighted performance measures: 1) a comparison of Diageo’s three-year TSR with a peer group; 2) cumulative free cash flow over a three-year period, measured at constant exchange rates. Performance measures and targets are set annually by the Remuneration Committee. The vesting range is 20% for Executive Directors and 25% for other participants for achieving minimum performance targets, up to 100% for achieving the maximum target level. Retesting of the performance measures is not permitted. For performance shares under the DLTIP, dividends are accrued on awards and are given to participants to the extent that the awards actually vest at the end of the performance period. Dividends are normally paid out in the form of shares. Savings plans are provided in the form of a savings-related share option plan. For UK employees, awards were made under the Diageo 2010 Sharesave plan (for options granted up until 2020) and the Diageo 2020 Sharesave plan (for options granted from 2021). For Republic of Ireland (ROI) based employees, awards were made under the Diageo 2009 Irish Sharesave Scheme (for options granted up until 2019) and the Diageo 2019 Irish Sharesave Scheme (for options granted in 2020). These are HMRC and Irish Revenue approved all-employee savings plans. For ROI employees, For US employees, the awards are made under the Diageo plc 2017 United States Employee Stock Purchase Plan. Employees agree to make regular monthly savings for a period of one year and acquire American Depositary Receipts (ADRs) at 15% discounted price (which is set at the time of grant) using their contributions at the end of the plan cycle. They receive the benefit of Financial statements (continued) For the three years ended 30 June
Transactions on schemes Transactions on the executive share award plans for the three years ended 30 June
The exercise price of share options outstanding at 30 June At 30 June Financial statements (continued) Other financial statements disclosures Introduction This section includes additional financial information that are either required by the relevant accounting standards or management considers these to be material information for shareholders. 19. Contingent liabilities and legal proceedings Accounting policies Provision is made for the anticipated settlement costs of legal or other disputes against the group where it is considered to be probable that a liability exists and a reliable estimate can be made of the likely outcome. Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of the estimated financial effect, appropriate disclosure is made but no provision created. Critical accounting judgements and estimates Judgement is necessary in assessing the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any settlement. Due to the inherent uncertainty in this evaluation process, actual losses may be different from the liability originally estimated. The group may be involved in legal proceedings in respect of which it is not possible to make a reliable estimate of any expected settlement. In such cases, appropriate disclosure is provided but no provision is made and no contingent liability is quantified. (a) Guarantees and related matters As of 30 June (b) Acquisition of USL shares from UBHL and related proceedings in relation to the USL transaction On 4 July 2013, Diageo completed its acquisition, under a share purchase agreement with United Breweries (Holdings) Limited (UBHL) and various other sellers (the SPA), of shares representing 14.98% in USL, including shares representing 6.98% from UBHL. The SPA was signed on 9 November 2012 as part of the transaction announced by Diageo in relation to USL on that day (the Original USL Transaction). Following a series of further transactions, as of 30 June Prior to the acquisition from UBHL on 4 July 2013, the High Court of Karnataka (High Court) had granted leave to UBHL under the Indian Companies Act 1956 (the Leave Order) to enable the sale by UBHL to Diageo to take place (the UBHL Share Sale) notwithstanding the continued existence of certain winding-up petitions that were pending against UBHL on the date of the SPA. At the time of the completion of the UBHL Share Sale, the Leave Order remained subject to review on appeal. However, as stated by Diageo at the time of closing, it was considered unlikely that any appeal process in respect of the Leave Order would definitively conclude on a timely basis and, accordingly, Diageo waived the conditionality under the SPA relating to the absence of insolvency proceedings in relation to UBHL and acquired the 6.98% stake in USL from UBHL at that time. Following appeal and counter-appeal in respect of the Leave Order, this matter is now beforethe Supreme Court of India which has issued an order that the status quo be maintained with regard to the UBHL Share Sale pending a hearing on the matter before it. Following a number of adjournments, the next date for a substantive hearing is yet to be fixed. In separate proceedings, the High Court passed a winding-up order against UBHL on 7 February 2017, and appeals filed by UBHL against that order have since been dismissed, initially by a division bench of the High Court and subsequently by the Supreme Court of India. Diageo continues to believe that the acquisition price of INR 1,440 per share paid to UBHL for the USL shares is fair and reasonable as regards UBHL, UBHL’s shareholders and UBHL’s secured and unsecured creditors. However, adverse results for Diageo in the proceedings referred to above could, absent leave or relief in other proceedings, ultimately result in Diageo losing title to the 6.98% stake in USL acquired from UBHL. Diageo believes, including by reason of its rights under USL’s articles of association to nominate USL’s CEO and CFO and the right to appoint, through USL, a majority of the directors on the boards of USL’s subsidiaries as well as its ability as promoter to nominate for appointment up to two-thirds of USL’s directors for so long as the chairperson of USL is an independent director, that it would remain in control of USL and would continue to be able to consolidate USL as a subsidiary for accounting purposes regardless of the outcome of this litigation. There can be no certainty as to the outcome of the existing or any further related legal proceedings or the time frame within which they would be concluded. Financial statements (continued) (c) Continuing matters relating to Dr Vijay Mallya and affiliates On 25 February 2016, Diageo and USL each announced that they had entered into arrangements with Dr Mallya under which he had agreed to resign from his position as a director and as chairman of USL and from his positions in USL’s subsidiaries. Diageo’s agreement with Dr Mallya (the February 2016 Agreement) provided for a payment of On account of various breaches and other provisions of agreements between Dr Mallya and persons connected with him and Diageo and/or USL, Diageo did not make the On 16 November 2017, Diageo and other relevant members of the Diageo group commenced claims in the High Court of Justice in England and Wales (the English High Court) against Dr Mallya in relation to these matters. At the same time DHN also commenced claims in the English High Court against Dr Mallya, his son Sidhartha Mallya, Watson and Continental Administration Services Limited (CASL) (a company affiliated with Dr Mallya and understood to hold assets on trust for him and certain persons affiliated with him) for in excess of Diageo continues to prosecute its claims and to defend the counterclaim. As part of these proceedings, Diageo and the other relevant members of its group filed an application for strike out and/or summary judgement in respect of certain aspects of the defence filed by Dr Mallya and the other defendants, including their defence in relation to Watson and CASL’s liability to repay DHN. The application was successful resulting in Watson being ordered to pay approximately A trial of the remaining elements of these claims was due to commence on 21 November 2022.However, on 26 July 2021 Dr Mallya was declared bankrupt by the English High Court pursuant to a bankruptcy petition presented by a consortium of Indian banks. Diageo and the relevant members of its group have informed the Trustee in Bankruptcy of their position as creditors in the bankruptcy and have engaged with the Trustee regarding their claims and the status of the current proceedings. An appeal by Dr Mallya At this stage, it is not possible to assess the extent to which the various ongoing proceedings related to Upon completion of an initial inquiry in April 2015 into past improper transactions which identified references to certain additional parties and matters, USL carried out an additional inquiry into these transactions (Additional Inquiry) which was completed in July 2016. The Additional Inquiry, prima facie, identified transactions indicating actual and potential diversion of funds from USL and its Indian and overseas subsidiaries to, in most cases, entities that appeared to be affiliated or associated with Dr Mallya. All amounts identified in the Additional Inquiry have been provided for or expensed in the financial statements of USL or its subsidiaries in the respective prior periods. USL has filed recovery suits against relevant parities identified pursuant to the Additional Inquiry. Further, at this stage, it is not possible for the management of USL to estimate the financial impact on USL, if any, arising out of potential non-compliance with applicable laws in relation to such fund diversions. Financial statements (continued) (d) Other matters in relation to USL In respect of the Watson backstop guarantee arrangements, the Securities and Exchange Board of India (SEBI) issued a notice to Diageo on 16 June 2016 that if there is any net liability incurred by Diageo (after any recovery under relevant security or other arrangements, which matters remain pending) on account of the Watson backstop guarantee, such liability, if any, would be considered to be part of the price paid for the acquisition of USL shares under the SPA which formed part of the Original USL Transaction and that, in that case, additional equivalent payments would be required to be made to those shareholders (representing 0.04% of the shares in USL) who tendered in the open offer made as part of the Original USL Transaction. Diageo believes that the Watson backstop guarantee arrangements were not part of the price paid or agreed to be paid for any USL shares under the Original USL Transaction and that therefore (e) USL’s dispute with IDBI Bank Limited Prior to the acquisition by Diageo of a controlling interest in USL, USL had prepaid a term loan of INR 6,280 million (£ Following the original maturity date of the loan, USL received notices from IDBI seeking to recall the loan, demanding a further sum of INR 459 million (£ On 27 June 2019, a single judge bench of the High Court issued an order dismissing the writ petition filed by USL, amongst other things, on the basis that the matter involved an issue of breach of contract by USL and was therefore not maintainable in exercise of the court’s writ jurisdiction. USL (f) Tax The international tax environment has seen increased scrutiny and rapid change over recent years bringing with it greater uncertainty for multinationals. Against this backdrop, Diageo has been monitoring developments and continues to engage transparently with the tax authorities in the countries where Diageo operates to ensure that the group manages its arrangements on a sustainable basis. The group operates in a large number of markets with complex tax and legislative regimes that are open to subjective Diageo has a large number of ongoing tax cases in Brazil and India. Since assessing an accurate value of contingent liabilities in these markets requires a high degree of judgement, contingent liabilities are disclosed on the basis of the current known possible exposure from tax assessment values. While not all of these cases are individually significant, the current aggregate known possible exposure from tax assessment values is up to approximately Financial statements (continued) fiscal environment in Brazil and in India, the possibility of further tax assessments related to the same matters cannot be ruled out and the judicial processes may take extended periods to conclude. Based on its current assessment, Diageo believes that no provision is required in respect of these issues. Payments were made under protest in India in respect of the periods 1 April 2006 to 31 March 2019 in relation to tax assessments where the risk is considered to be remote or possible. These payments have to be made in order to be able to challenge the assessments and as such have been recognised as a receivable in the group's balance sheet. The total amount of payments under protest recognised as a receivable as at 30 June (g) On 31 May 2023, a complaint against Diageo North America, Inc (DNA) was filed in the Supreme Court of New York by Combs Wine and Spirits LLC (an entity associated with Mr Sean Combs) alleging, inter alia, breach of contract in respect of a joint venture agreement related to DeLeón tequila. DNA has (h) Other The group has extensive international operations and routinely makes judgements on a range of legal, customs and tax matters which are incidental to the group's operations. Some of these judgements are or may become the subject of challenges and involve proceedings, the outcome of which cannot be foreseen. In particular, the group is currently a defendant in various customs proceedings that challenge the declared customs value of products imported by certain Diageo companies. Diageo continues to defend its position vigorously in these proceedings. Save as disclosed above, neither Diageo, nor any member of the Diageo group, is or has been engaged in, nor (so far as Diageo is aware) is there pending or threatened by or against it, any legal or arbitration proceedings which may have a significant effect on the financial position of the Diageo group. Financial statements (continued) 20. Commitments (a) Capital commitments Commitments for expenditure on intangibles and property, plant and equipment not provided for in these consolidated financial statements are estimated at £599 million (2022 – £399 (b) Other commitments The future minimum lease rentals payable in the year ended 30 June 21. Related party transactions Transactions between the group and its related parties are made on terms equivalent to those that prevail in arm’s length transactions. (a) Subsidiaries Transactions between the company and its subsidiaries are eliminated on consolidation and therefore are not disclosed. Details of the principal group companies are given in note 22. (b) Associates and joint ventures Sales and purchases to and from associates and joint ventures are principally in respect of premium drinks products but also include the provision of management services. Transactions and balances with associates and joint ventures are set out in the table below:
Other disclosures in respect of associates and joint ventures are included in note 6. (c) Key management personnel The key management of the group comprises the Executive and Non-Executive Directors, the members of the Executive Committee and the Company Secretary. They are listed under ‘Board of Directors and Company Secretary’ and ‘Executive Committee’.
(1) Time-apportioned fair value of unvested options and share awards. Non-Executive Directors do not receive share-based payments or post employment benefits. Financial statements (continued) There were no transactions with these related parties during the year ended 30 June (d) Pension plans In October 2022, Diageo plc provided an interim credit facility to Diageo Pension Trust Limited, consisting of £850 million for the Diageo Pension Scheme, to support temporary liquidity challenges until 29 December 2022. In December 2022, the maturity date was extended to 29 June 2023. The facility amount was reduced on 22 May 2023 to £350 million and on 14 June 2023 the maturity date was extended to 11 October 2023. The facility was subsequently cancelled on 25 July 2023. The Diageo pension plans are recharged with the cost of administration services provided by the group to the pension plans and with professional fees paid by the group on behalf of the pension plans. The total amount recharged for the year was £0.1 million (e) Directors’ remuneration
(1) Gains on options realised in the year and the benefit from share awards, calculated by using the share price applicable on the date of exercise of the share options and release of the awards. 279 Unaudited financial information 22. Principal group companies The companies listed below include those which principally affect the profits and assets of the group. The operating companies listed below may carry on the business described in the countries listed in conjunction with their subsidiaries and other group companies.
(1) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group. (2) Percentage ownership excludes 2.38% owned by the USL Benefit Trust. (3) Directly owned by Diageo plc. (4) French limited liability company. 23. Post balance sheet events Diageo will propose adopting new Articles of Association (New Articles) at the AGM to On 31 July 2023, the Unaudited financial information Definitions and reconciliation of non-GAAP measures to GAAP measures Diageo’s strategic planning process is based on certain non-GAAP measures, including organic movements. These non-GAAP measures are chosen for planning and reporting, and some of them are used for incentive purposes. The group’s management believes that these measures provide valuable additional information for users of the financial statements in understanding the group’s performance. These non-GAAP measures should be viewed as complementary to, and not replacements for, the comparable GAAP measures and reported movements therein. It is not possible to reconcile the forecast tax rate before exceptional items, forecast organic net sales growth and forecast organic operating profit growth to the most comparable GAAP measure as it is not possible to predict, without unreasonable effort, with reasonable certainty, the future impact of changes in exchange rates, acquisitions and disposals and potential exceptional items. Volume Volume is a performance indicator that is measured on an equivalent units basis to nine-litre cases of spirits. An equivalent unit represents one nine-litre case of spirits, which is approximately 272 servings. A serving comprises 33ml of spirits, 165ml of wine, or 330ml of ready to drink or beer. Therefore, to convert volume of products other than spirits to equivalent units, the following guide has been used: beer in hectolitres, divide by 0.9; wine in nine-litre cases, divide by five; ready to drink and certain pre-mixed products that are classified as ready to drink in nine-litre cases, divide by ten. Organic movements Organic information is presented using sterling amounts on a constant currency basis excluding the impact of exceptional items, certain fair value remeasurement, hyperinflation and acquisitions and disposals. Organic measures enable users to focus on the performance of the business which is common to both years and which represents those measures that local managers are most directly able to influence. Calculation of organic movements The organic movement percentage is the amount in the row titled ‘Organic movement’ in the tables below, expressed as a percentage of the relevant absolute amount in the row titled ‘2022 adjusted’. Organic operating margin is calculated by dividing operating profit before exceptional items by net sales after excluding the impact of exchange rate movements, certain fair value remeasurements, hyperinflation and acquisitions and disposals. (a) Exchange rates Exchange in the organic movement calculation reflects the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average exchange rates. Exchange impacts in respect of the external hedging of intergroup sales by the markets in a currency other than their functional currency and the intergroup recharging of services are also translated at prior period weighted average exchange rates and are allocated to the geographical segment to which they relate. Residual exchange impacts are reported as part of the Corporate segment. Results from hyperinflationary economies are translated at forward-looking rates. (b) Acquisitions and disposals For acquisitions in the current period, the post-acquisition results are excluded from the organic movement calculations. For acquisitions in the prior period, post-acquisition results are included in full in the prior period but are included in the organic movement calculation from the anniversary of the acquisition date in the current period. The acquisition row also eliminates the impact of transaction costs that have been charged to operating profit in the current or prior period in respect of acquisitions that, in management’s judgement, are expected to be completed. Where a business, brand, brand distribution right or agency agreement was disposed of or terminated in the reporting period, the group, in the organic movement calculations, excludes the results for that business from the current and prior period. In the calculation of operating profit, the overheads included in disposals are only those directly attributable to the businesses disposed of, and do not result from subjective judgements of management. (c) Exceptional items Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included within the income statement caption to which they relate, and are excluded from the organic movement calculations. Management believes that that separate disclosure of exceptional items and the classification between operating and non-operating items further helps investors to understand the performance of the group. Changes in estimates and reversals in relation to items previously recognised as exceptional are presented consistently as exceptional in the current year. 282 Unaudited financial information Exceptional operating items are those that are considered to be material and unusual or non-recurring in nature and are part of the operating activities of the group, such as one-off global restructuring programmes which can be multi-year, impairment of intangible assets and fixed assets, indirect tax settlements, property disposals and changes in post employment plans. Gains and losses on the sale or directly attributable to a prospective sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non-recurring items that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as exceptional non-operating items below operating profit in the income statement. Exceptional current and deferred tax items comprise material and unusual or non-recurring items that impact taxation. Examples include direct tax provisions and settlements in respect of prior years and the remeasurement of deferred tax assets and liabilities following tax rate changes. (d) Fair value remeasurement Fair value remeasurement in the organic movement calculation reflects an adjustment to eliminate the impact of fair value changes in biological assets, earn-out arrangements that are accounted for as remuneration and fair value changes relating to contingent consideration liabilities and equity options that arose on acquisitions recognised in the income statement. Growth on a constant basis Growth on a constant basis is a measure used by the group to understand the trends of the business and its recovery towards pre-Covid-19 performance. 2019 to 2023 growth on a constant basis for volume, sales, net sales and operating profit before exceptional items is calculated by adding up the respective periods’ organic movement in the row titled ‘Organic movement’ in the tables below, expressed as a percentage of the relevant absolute amount in the row titled '2019 adjusted’. The most comparable GAAP financial measure is '2019 to 2023 reported movement %' in the tables below which is calculated by combining the reported movements for the respective periods, expressed as a percentage of the 2019 reported amount. Adjustment in respect of hyperinflation The group's experience is that hyperinflationary conditions result in price increases that include both normal pricing actions reflecting changes in demand, commodity and other input costs or considerations to drive commercial competitiveness, as well as hyperinflationary elements and that for the calculation of organic movements, the distortion from hyperinflationary elements should be excluded. Cumulative inflation over 100% (2% per month compounded) over three years is one of the key indicators within IAS 29 to assess whether an economy is deemed to be hyperinflationary. As a result, the definition of 'Organic movements' includes price growth in markets deemed to be hyperinflationary economies, up to a maximum of 2% per month while also being on a constant currency basis. Corresponding adjustments have been made to all income statement related lines in the organic movement calculations. In the tables presenting the calculation of organic movements, 'hyperinflation' is included as a reconciling item between reported and organic movements and that also includes the relevant IAS 29 adjustments. 283 Unaudited financial information Organic movement calculations for the year ended 30 June 2023 were as follows:
284 Unaudited financial information
285 Unaudited financial information
(i) For the reconciliation of sales to net sales, see page 213. (ii) Percentages and margin movements are calculated on rounded figures. Notes: Information in respect of the organic movement calculations (1) The impact of movements in exchange rates on reported figures for operating profit was principally in respect of the favourable exchange impact of the strengthening of the US dollar and Mexican peso against the sterling, partially offset by the weakening of the Nigerian naira, Ghanaian cedi and the Turkish lira. (2) Acquisitions and disposals that had an effect on volume, sales, net sales, marketing and operating profit in the year ended 30 June 2023, are detailed on page 285. (3) Organic operating margin calculated by dividing Operating profit before exceptional items by net sales. 286 Business review (continued) In the year ended 30 June 2023, the acquisitions and disposals that affected volume, sales, net sales, marketing and operating profit were as follows, as per footnote (2) on the previous page:
287 Business review (continued) Earnings per share before exceptional items Earnings per share before exceptional items is calculated by dividing profit attributable to equity shareholders of the parent company before exceptional items by the weighted average number of shares in issue. Earnings per share before exceptional items for the year ended 30 June 2023 and 30 June 2022 are set out in the table below:
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash received/paid for working capital loans receivable, cash paid or received for investments and the net cash expenditure paid for property, plant and equipment and computer software that are included in net cash flow from investing activities. The The group’s management regards a portion of the purchase and disposal of property, plant and equipment and computer software as ultimately non-discretionary since ongoing investment in plant, machinery and technology is required to support the day-to-day operations, whereas acquisition and sale of businesses are discretionary. Where appropriate, separate explanations are given for the Free cash flow reconciliations for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
288 Business review (continued) Operating cash conversion Operating cash conversion is calculated by dividing cash generated from operations excluding cash inflows and The measure is excluding any hyperinflation adjustment above the organic treatment of hyperinflationary economies. The ratio is stated at the budgeted exchange rates for the respective year Operating cash conversion for the
(1) Excluding exceptional items. (2) Exceptional cash payments for winding down our Russian operations was £13 million (2022 – £13 million) and for Supply chain agility programme was £12 million (2022 - £nil). In the year ended 30 June 2022 exceptional cash payments for other donations were £2 million. (3) Excluding non-cash movements such as exchange and the 289 Business review (continued) Return on average invested capital Return on average invested capital is used by management to assess the return obtained from the group’s asset base and is calculated to aid evaluation of the performance of the business. The profit used in assessing the return on average invested capital reflects operating profit before exceptional items attributable to equity shareholders of the parent company plus share of after tax results of associates and joint ventures after applying the tax rate before exceptional items for the fiscal year. Average invested capital is calculated using the average derived from Calculations for the return on average invested capital for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
290 Business review (continued) Adjusted net borrowings to adjusted EBITDA Diageo manages its capital structure with the aim of achieving capital efficiency, providing flexibility to invest through the economic cycle and giving efficient access to debt markets at attractive cost levels. The group regularly assesses its debt and equity capital levels to enhance its capital structure by reviewing the ratio of adjusted net borrowings to adjusted EBITDA (earnings before exceptional operating items, non-operating items, interest, tax, depreciation, amortisation and impairment). Calculations for the ratio of adjusted net borrowings to adjusted EBITDA for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
291 Tax rate before exceptional items Tax rate before exceptional items is calculated by dividing the total tax charge before tax charges and credits in respect of exceptional items, by profit before taxation adjusted to exclude the impact of exceptional operating and non-operating items, expressed as a percentage. The measure is used by management to assess the rate of tax applied to the group’s operations before tax on exceptional items. The tax rates from operations before exceptional and after exceptional items for the years ended 30 June 2023 and 30 June 2022 are set out in the table below:
292 Other definitions Volume share is a brand’s retail volume expressed as a percentage of the retail volume of all brands in its segment. Value share is a brand’s retail sales value expressed as a percentage of the retail sales value of all brands in its segment. Unless otherwise stated, share refers to value share. Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries, excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duties are not always passed on to the customer and where a customer fails to pay for a product received, the group cannot reclaim the excise duty. The group therefore recognises excise duty as a cost to the group. Price/mix is the number of percentage points difference between the organic movement in net sales and the organic movement in volume. The difference arises because of changes in the composition of sales between higher and lower priced variants/markets or as price changes are implemented. Shipments comprise the volume of products sold to Diageo’s immediate (first tier) customers. Depletions are the estimated volume of the onward sales made by Diageo's immediate customers. Both shipments and depletions are measured on an equivalent units basis. References to emerging markets include Poland, Eastern Europe, Turkey, Latin America and Caribbean, Africa and Asia Pacific (excluding Australia, Korea and Japan). References to reserve brands include, but are not limited to, Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label Reserve, Johnnie Walker Aged 18 Years, John Walker & Sons Collection and other Johnnie Walker super and ultra-premium brands; The Singleton, Cardhu, Talisker, Lagavulin, Oban and other malt brands; Buchanan’s Special Reserve, Buchanan’s Red Seal; Haig Club whisky; Copper Dog whisky; Roe & Co; Bulleit Bourbon, Bulleit Rye; Orphan Barrel whiskey; Balcones whisky and rum; Tanqueray No. TEN and Tanqueray Malacca gin; Aviation, Chase, Jinzu and Villa Ascenti gin; Cîroc, Ketel One vodka, Ketel One Botanical; Don Julio, Casamigos, DeLeón and 21Seeds tequila; Mezcal Unión mezcal; Zacapa, Bundaberg Master Distillers' Collection, Pampero Aniversario and Don Papa rum; Shui Jing Fang, Seedlip, Belsazar and Pierde Almas. References to global giants include the following brand families: Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness. Local stars include Buchanan’s, Bundaberg, Crown Royal, JεB, McDowell’s, Old Parr, Yenì Raki, Black & White, Shui Jing Fang, Windsor and Ypióca. Global giants and local stars exclude ready to drink, non-alcoholic variants and beer except Guinness. References to Shui Jing Fang represent total Chinese white spirits of which Shui Jing Fang is the predominant brand. References to ready to drink also include ready to serve products, such as pre-mixed cans in some markets. References to beer include cider, flavoured malt beverages and some non-alcoholic products such as Malta Guinness. The results of Hop House 13 Lager are included in the Guinness figures. There is no industry-agreed definition for price tiers and for data providers such as IWSR, definitions can vary by market. Diageo bases price tier definitions on a methodology that uses external metrics (including market pricing data from Nielsen, IRI etc., as well as the IWSR segmentation) for benchmarking and internal pricing metrics for a consistent segmentation. References to the disposal of the USL Popular brands include non-exhaustively the Haywards, Old Tavern, White Mischief, Honey Bee, Green Label and Romanov brands. References to the group include Diageo plc and its consolidated subsidiaries. 293
The non-financial reporting boundaries and methodologies outlined here relate to the social and environmental performance disclosures set out in the Annual Report and the ESG Reporting Index. We describe below the general reporting methodologies and boundaries related to both non-environmental and environmental reporting. Where there are exceptions to these general reporting methodologies and boundaries, these have been included with the specific metric in the tables that follow. General reporting methodology and boundaries, covering both non-environmental and environmental metric reporting I. Reporting period Our reporting covers the financial year ended 30 June 2023 unless otherwise stated. II. Scope Unless otherwise stated(1), the boundaries for all non-financial information disclosed in the Annual Report and the ESG Reporting Index include the performance of the global operations of Diageo plc and its subsidiaries, together with the attributable share of the results of significant joint ventures and joint operations. The reporting boundaries are based on the principles outlined by the non-financial reporting strategy of our management, the nature of each indicator and, in the case of our greenhouse gas (GHG) emissions metrics, the Greenhouse Gas Protocol. Environmental data and health and safety data is collected and reported for all operational sites and office sites with more than 50 employees where we have operational control. The environmental impacts associated with leased facilities that do not meet the criteria already mentioned are excluded and considered immaterial to the company’s overall impacts. This scope is reviewed every year to assess the data and extent of impacts. GHG emissions associated with leased vehicles under operational control are being reviewed and reassessed to determine material significance to overall emissions and extent of overlap with Scope 3 indirect emissions. This review will be concluded in fiscal 24; our current estimate indicates leased vehicles may contribute 4%-5% of Scope 1 emissions or <0.5% of Scope 3 emissions. Material changes to environmental reporting methodologies are ratified at quarterly 2030 grain to glass Strategic Business Review meetings, chaired by the President, Global Supply Chain & Procurement and Chief Sustainability Officer. Exceptions to and limitations of each indicator are explained in the following pages section of this document. III. Baseline and targets The financial year ended 30 June 2020 is our baseline year. It applies to the majority of our ‘Society 2030: Spirit of Progress‘ targets. Exceptions are described in the following pages. The baseline data is used as the basis for calculating progress against our targets. We aim to achieve each target by fiscal 30, unless otherwise stated in the following pages of this document. IV. Acquisitions and disposals New acquisitions are included in the consolidated reporting for non-financial disclosure from the date when control passes or as soon as practically feasible, and no later than one year after assuming operational control.(2) This duration varies as each new acquisition has unique systems and processes that must be integrated. In case of disposals, data associated with the divestment is removed from the baseline, intervening years and current year unless otherwise stated in the following pages. V. Restatements We may have to restate historical data due to structural changes in our operations, including from acquisitions and divestments; improvements in data accuracy and calculation methodologies; material changes to relevant policies; and material changes in our non-financial reporting. To determine whether we need to restate historical data, we examine whether the qualitative or quantitative impacts of the changes to our non-financial reporting are material enough to compromise the accuracy, consistency and relevance of the reported information. In case a restatement for environmental data is necessary, we restate the data for the baseline year and intervening years. In case of our environmental data, we may need to adjust data to reflect updates to GHG emission factors, in line with the GHG Protocol recommendations; and any changes in reporting policy that result in a material change to the baseline of more than 1%. We also restate data where we can show that structural changes regarding outsourcing and insourcing have an impact of more than 1%. In certain cases, where historical data is unavailable, the environmental impacts for the baseline year and intervening years are extrapolated from current environmental impact data, based on production patterns. In fiscal 23, the baseline year GHG emissions impacts were restated to reflect changes to CO2e emission factors and updated calorific values. (1) Non-financial information, including baseline information, excludes the performance attributable to one of our business units in Greater China due to local regulatory restrictions. We believe the exclusion of this data does not materially impact our non-financial performance. We restate baseline and intervening years' non-financial information to reflect divestments, acquisitions, the exclusion of a business unit in China due to local regulatory restrictions, and any other changes that would otherwise compromise the accuracy, consistency and relevance of the reported information. (2) We define operational control using the definition of accounting standards for most of our ESG metrics. For greenhouse gas emissions, our definition is aligned with the Greenhouse Gas Protocol. 294 VI. Reliability and accuracy of data We have processes that govern the collection, review and validation of non-financial data included in this report, at market, regional and global levels. We have clear reporting lines and documentation of our processes; this report provides more detail about our reporting methodologies and calculation processes. Reporting methodologies are reviewed and updated each year by leadership teams. While we make every effort to capture all information as accurately as possible, it is neither feasible nor practical to measure all data with absolute certainty. Where we have made estimates or exercised judgement, this is highlighted within the reporting methodologies. Some of our listed subsidiaries also publish sustainability information either as standalone reports or as part of their annual report. Examples of sustainable information reporting are linked below: •United Spirits Limited: https://media.diageo.com/diageo-corporate-media/media/wxaflz30/united-spirits-limited-esg-reporting-index-2022.pdf •Sichuan Swellfun Co, Ltd: https://www.swellfun.com/ueditor/php/upload/file/20230426/1682490877231414.pdf •East Africa Breweries PLC: https://www.eabl.com/sites/default/files/documents/EABL_Sustainability_Report-2022.pdf •Guinness Nigeria plc: https://www.guinness-nigeria.com/PR1346/aws/media/14677/f22-sustainability-report.pdf VII. Reporting systems We use four main systems to collect, validate and analyse reported data. •Human Resources data is reported at site level using Workday, our global information management systems. HR data is collected on a monthly basis for all Workday markets.(1) Non-Workday markets(2) data is manually captured offline via HR Directors and the points of contact only for annual reports. Both Workday and non-Workday markets data are then consolidated. •Health and Safety information for performance measures is collected locally, on a monthly basis, using site held incident reports. This is collated and analysed using a web-based information management system and reported externally on an annual basis. •Environmental data is collected on key measures of environmental performance every year. This is collated and analysed using a web-based environmental management system. •Market-level ‘Society 2030: Spirit of Progress‘ data: Where ‘Society 2030: Spirit of Progress‘ programmes are managed at a local level, data is collated every quarter. The data is compiled at market, regional and global levels, alongside our other ‘Society 2030: Spirit of Progress‘ targets, and is reviewed by general managers, functional leadership teams, the 2030 grain to glass Strategic Business Review (SBR) and the Global Executive Committee during quarterly meetings. This regular assessment of performance enables us to manage programme risks and opportunities and helps us ensure that we have the right level of resources to deliver on our commitments. Scope and methodology of physical and transition climate risk scenario analysis reported on page 294. Scenario analysis of physical risks Important note on scenario analysis: Climate risk scenario analysis has limitations: it is not a predictor of the future and it is limited by the assumptions used, which themselves are subject to uncertainty. No single scenario is likely to materialise in the coming decades, and we are all likely to be exposed to both physical and transition risks as the world continues to warm as a consequence of emissions already in the atmosphere. The pathway to reducing emissions is also highly variable, as governments and industry pursue a variety of means, such as introducing regulation and developing new technologies. Nevertheless, scenario analysis is a powerful tool to understand how our business could be impacted under certain plausible but severe future conditions, and it allows us to understand where risks and opportunities are most likely to materialise, to understand trends and to integrate these into our strategy. Following the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we conducted scenario analysis to determine the likely financial impact of the most important physical risks on our assets and operations. The physical risks we identified of most importance were: 1.Water supply: Inability to produce brands due to constrained water supply as a result of drought caused by chronic climate change. 2.Agricultural material supply: Increased cost of raw materials due to scarcity caused by changes in growing conditions caused by chronic climate change 3.Site integrity: Inability to produce products, or damage to stored products due to acute weather events (floods or storms) 4.Disruption to agricultural material supply: Inability to receive agricultural materials due to acute weather events (floods or storms). Using the best available climate data and natural catastrophe-modelling techniques, our climate resilience partners calculated projected Estimated Annual Losses (EALs) and Value at Risk (VaR) for the present day and two future time periods (the 2030s and 2050s) under two climate scenarios. For most climate variables, these climate scenarios include a ‘moderate’ emissions reduction pathway (RCP4.5 or SSP245) and a ‘worst-case’ pathway (RCP 8.5 or SSP 585). The results were expressed as: Present day and projected EALs driven by: •The impact of drought, river floods and tropical windstorms on owned and third-party-operated production assets •The impact of floods and tropical windstorms on supplier assets (glass and cans); 295 and present day and projected VaR associated with: •The exposure of production assets to water stress •The exposure of production and supplier assets to tropical windstorms. Please see the diagram on page 294 for a summary of the scope of our physical and transition risk assessments and scenario analysis.) (1) Markets using our Workday online Human Resource system (2) Non-Workday markets refer to markets where the Workday online Human Resource System is not used. A summary of the scope of our physical and transition risk assessments and scenario analysis
Scenario analysis of transition risks Over fiscal years 21-23, we have conducted scenario analysis of the impact on our financial performance of transition risks stemming from a Paris-aligned scenario. Our modelling envisages a successful transition to a low-carbon economy in time to keep the temperature rise to 1-2⁰C by 2100 and assumes a variety of decarbonisation challenges and opportunities relating to ingredients, energy, packaging and transport costs, and changes in demand for our products (to 2030 and 2050). Over consecutive years, we have refined the model and incorporated data relating to our entire business, including production volume, sales, raw materials and packaging costs, and projected growth rates by category and market to inform future scenarios. In modelling the financial impact of a successful transition to a low-carbon economy, we considered two scenarios: 1.A baseline scenario which incorporates stated policies and national targets that are already in place and have detailed measures for their realisation; and 2.A transition scenario that assumes the world successfully reaches net zero emissions by 2050. This scenario considers necessary changes in the global energy sector and associated changes across all other sectors of the economy that can reasonably be modelled. Both scenarios rely on a combination of internal assumptions (e.g., production costs, sales and margin growth rates, product mix, etc) and external factors (e.g., carbon pricing, greening of energy production, decarbonisation of industry). External models available from the International Energy Agency, the Intergovernmental Panel on Climate Change and other institutions were supplemented where necessary by our expert partners' internal models. Together, these models gave us a range of plausible assumptions designed to capture a trajectory of changes in demand, costs, prices, regulation, technology and capital investments in relevant markets and business segments, that could result in the world achieving net zero emissions by 2050. We looked at how combinations of these changes might affect us both positively (increased demand for sustainable products) and negatively (higher costs) and estimated the combined effect on our cash flow to both 2030 and 2050. Outlined in the table on page 295, below are the materials that most affect our input costs, which may go up or down depending on the situation. We have modelled costs based on our exposure to global versus local changes; so, for example, glass and aluminium are procured globally, while the cost of energy, for example, is always local. For each scenario, we then estimated the prices of major input costs, where relevant by geography, and modelled the impact they would have on our operating profit. 296 Input costs assessed in the scenario analysis by geography
297 As a responsible business, we want to change the way people drink – for the better. This is why we promote moderate drinking and invest in education and programmes to discourage the harmful use of alcohol. Around the world, we reach audiences with messages that aim to change attitudes, whether it’s highlighting the harm of underage drinking or binge drinking, warning of the dangers of drink driving, or using our brands to highlight the importance of moderation.We have
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301 Doing business the right way from grain to glass We want to do business in the Governance and ethics Working with integrity is an important part of who we are and how we achieve our performance ambition to
302 Our people At Diageo, we strive to create an environment where all our people feel they are treated fairly and with respect. We commit to understanding what it means to act with integrity in our roles, to ensure we are doing business in the right way, meeting external expectations and our own standards. Our global health and safety ambition and strategy are designed to ensure all our people are safe when working, on site, at home and on the road, every day, everywhere. Employee profile data
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305 Champion inclusion and diversity Championing inclusion and diversity is at the heart of what we do, and is crucial to our purpose of ‘celebrating life, every day, everywhere’. We have set ourselves ambitious goals to drive progress, inside our business and beyond. They range from increasing representation of women and people from ethnically diverse backgrounds in our leadership, to using our media spend and influence to promote progressive portrayals in marketing, working with diverse creative teams and diverse-owned suppliers and supporting people in our local communities with hospitality and business skills.
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308 Pioneer grain-to-glass sustainability Our continued long-term success depends on the people and planet around us. Our work to pioneer grain-to-glass sustainability is divided into three areas: preserve water for life, accelerate to a low-carbon world and become sustainable by design. Our water stewardship strategy, ‘Preserve Water for Life’, outlines how we manage water in our supply chain, operations and communities, as well as advocate for collective action to improve water security. We started our decarbonisation journey in 2008, and we aim to reach net zero across our direct operations by 2030, using 100% renewable energy everywhere we operate. We are also committed to reducing our value chain carbon emissions by 50% by 2030. We are working to reduce our carbon footprint by reducing packaging, increasing recycled content and are focusing on regenerative agriculture. Preserve water for life Our strategy is based on best practice water stewardship in three areas: water accessibility, availability and quality. We are also working in partnership to better manage water globally and to lead collective action in critical water basins.
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311 Accelerating to a low-carbon world We know that our planet needs significant, science-based action to create a sustainable future. We have set ourselves bold targets to reach net zero carbon across our operations and to work with our suppliers to reduce our value chain carbon emissions by 50% by 2030.
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Become sustainable by design We have already made progress in reducing our environmental impact, and we continue to work hard to meet our ‘Society 2030: Spirit of Progress‘ targets and become sustainable by design by reducing packaging, increasing recycled content and eliminating waste. 314
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Spirits and investments Spirits are produced in distilleries located worldwide. The group owns 30 Scotch whisky distilleries in Scotland, two whisky distilleries in Canada and Diageo’s maturing Scotch whisky is in warehouses in Scotland (Clackmannanshire area between Blackgrange, Cambus West and Menstrie, where we are holding approximately 50% of the group’s maturing Scotch whisky), its maturing Canadian whisky in Valleyfield and Gimli in Canada, its maturing American whiskey in Kentucky and Tennessee in the United States and maturing Chinese white In China, Diageo’s end-to-end Diageo owns a controlling equity stake in United Spirits Limited (USL) which is one of the leading alcoholic beverage companies in India selling close to Beer and investments Diageo’s principal brewing facility is at the St James’s Gate brewery in Dublin, Ireland. In addition, Diageo owns breweries in several African countries: Nigeria, Kenya, Ghana, Guinness flavour extract is shipped from Ireland to all overseas Guinness brewing operations which use the flavour extract to brew beer locally. Guinness is transported from Ireland to Great Britain in bulk to the Runcorn facility which carries out the kegging of Guinness Draught. Projects are underway to support future beer growth. In July 2022, Diageo announced plans to invest €200 million in Ireland’s first purpose-built carbon neutral brewery on a greenfield site in Littleconnell, Newbridge, Co. Kildare. A planning application for the new brewery was submitted in October 2022 and, if successful, brewing would commence in 2024. Furthermore, Diageo will also invest £21 million to build a £41 million The Diageo Flavoured 318 Ready to drink (RTD) Diageo produces a range of ready to drink products mainly in the United Kingdom, Italy, across Africa, Australia, the United States and Canada. Raw materials and supply agreements The group has several long-term contracts in place for the purchase of raw materials, including glass, other packaging, Like other consumer goods companies, we keep stocks in markets to compensate for extended lead times and demand volatility. Diageo is managing well through the current levels of uncertainty and constraints in our supply chain through expansion of our supplier base and agility in our logistics networks. Cereals, including barley, wheat, corn and sorghum are used in out scotch and beer production and in our spirits brand through purchased neutral spirit. Cream is the principal raw material used in the production of Irish cream liqueur and is sourced from Ireland. Grapes and aniseed are used in the production of raki and are sourced from suppliers in Turkey. Agave is a key raw material used in the production of our tequila brands and is sourced from Mexico. Other raw materials purchased in significant quantities to produce spirits and beer are molasses, Many products are supplied to customers in glass bottles. Glass Competition Diageo’s brands compete primarily on the basis of quality and price. Its business is built on getting the right product to the right consumer for the right occasion, and at the right price, including through taking into account ever evolving shopper landscapes, technologies and consumer preferences. Diageo also seeks to recruit and re-recruit consumers to its portfolio of brands, including through meaningful consumer engagement, sustainable innovation and investments in its brands. In spirits, Diageo’s major global competitors are Pernod Ricard, Beam Suntory, Bacardi and Brown-Forman, each of which has several brands that compete directly with Diageo’s brands. In addition, Diageo faces competition from regional and local companies in the countries in which it operates. In beer, Diageo also competes globally, as well as on a regional and local basis (with the profile varying between regions) with several competitors, including AB InBev, Molson Coors, Heineken, Constellation Brands and Carlsberg. Research and development Innovation forms an important part of Diageo’s growth strategy, playing a key role in positioning its brands for continued growth in both developed and emerging markets. The strength and depth of Diageo’s brand range also provides a solid platform from which to drive sustainable innovation that leads to new products and experiences for consumers, whether or not they choose to drink alcohol. Diageo focuses its innovation on its strategic priorities and the most significant consumer opportunities, including the development of global brand extensions and new-to-world products, and continuously invests to deepen its understanding of evolving trends and consumer socialising occasions to inform product and packaging development, ranging from global brand redesigns to cutting edge innovations. Supporting this, the Diageo group has ongoing programmes to develop new beverage products which are managed internally by the innovation and research and development function. Trademarks and other intellectual property Diageo produces, sells and distributes branded goods, and is therefore substantially dependent on the maintenance and protection of its trademarks. All brand names mentioned in this document are protected by trademarks. The Diageo group also holds trade secrets, as well as has substantial trade knowledge related to its products. The group believes that its significant trademarks are registered and/or otherwise protected (insofar as legal protection is available) in all material respects in its most important markets. Diageo also owns valuable patents and trade secrets for technology and takes all reasonable steps to protect these rights. Regulations and taxes Diageo’s worldwide operations are subject to extensive regulatory requirements relating to production, product liability, distribution, importation, marketing, promotion, sales, pricing, labelling, packaging, advertising, antitrust, labour, pensions, compliance and control systems and environmental issues. In the United States, the beverage alcohol industry is subject to strict federal and state government regulations. At the federal level, the Alcohol and Tobacco Tax and Trade Bureau, or TTB, of the US Treasury Department oversees the US beverage alcohol industry, including through regulating and collecting taxes on the production of alcohol within the United States and regulating trade practices. In addition, individual US states, as well as some local authorities in US jurisdictions in which Diageo sells or produces its products, administers and enforces industry-specific regulations and may apply additional excise taxes and, in many states, sales taxes. Federal, 319 state and local regulations cover virtually every aspect of Diageo's US operations, including production, importation, distribution, marketing, promotion, sales, pricing, labelling, packaging and advertising. Spirits and beer are subject to national import and excise duties in many markets around the world. Most countries impose excise duties on beverage alcohol products, although the form of such taxation varies significantly from a simple application to units of alcohol by volume, to advanced systems based on the imported or wholesale value of the product. Several countries impose additional import duty on distilled spirits, often discriminating between categories (such as 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 the overall European Union framework there are minimum rates of excise duties that must first be applied to each relevant category of beverage alcohol. Following its departure from the European Union, the UK is no longer subject to the European Union’s rules on excise duties and Import and excise duties can have a significant impact on the final pricing of Diageo’s products to consumers. These duties can affect a product’s revenue or margin, both by reducing consumption and/or by encouraging consumers to switch to lower-taxed categories of beverages. The group devotes resources to encouraging the equitable taxation treatment of all beverage alcohol categories and to reducing government imposed barriers to fair trading. The advertising, marketing and sale of alcohol are subject to various restrictions in markets around the world. These range from a complete prohibition of alcohol in certain cultures and jurisdictions, such as in certain states in India, to the prohibition of the import into a certain jurisdiction of spirits and beer, and to restrictions on the advertising style, media and content. In a number of countries, television is a prohibited medium for the marketing of spirits brands, while in other countries, television advertising, while permitted, is carefully regulated. Many countries also strictly regulate the use of internet-based advertising and social media in connection with alcohol sales. Any further prohibitions imposed on advertising or marketing, particularly within Diageo’s most significant markets, could have an adverse impact on beverage alcohol sales. Labelling of beverage alcohol products is also regulated in many markets, varying from the required inclusion of health warning labels to manufacturer or importer identification, alcohol strength and other consumer information. As well as producer, importer or bottler identification, specific warning statements related to the risks of drinking beverage alcohol products are required to be included on all beverage alcohol products sold in the US, in certain countries within the EU, and in a number of other jurisdictions in which Diageo operates. Spirits and beer are also regulated in distribution. In many countries, alcohol may only be sold through licensed outlets, both on- and off-trade, varying from government- or state-operated monopoly outlets (for example, in the off-trade channel in Norway, certain Canadian provinces, and certain US states) to the system of licensed on-trade outlets (for example, licensed bars and restaurants) which prevails in much of the Western world, including in the majority of US states, in the UK and in much of the EU. In a number of states in the US, wholesalers of alcoholic beverages must publish price lists periodically and/or must file price changes in some instances up to three months before they become effective. In a response to public health concerns, some governments have imposed or are considering imposing minimum pricing on beverage alcohol products and may consider raising the legal drinking age, further limiting the number, type or opening hours of retail outlets and/or expanding retail licensing requirements. Regulatory decisions and changes in the legal and regulatory environment could also increase Diageo’s costs and liabilities and/or impact on its business activities. Taxation This section provides a descriptive summary of certain US federal income tax and UK tax consequences that are likely to be material to the holders of the ordinary shares or ADSs, but only those who hold their ordinary shares or ADSs as capital assets for tax purposes. It does not purport to be a complete technical analysis or a listing of all potential tax effects relevant to the ownership of the ordinary shares or ADSs. This section does not apply to any holder who is subject to special rules, including: •a dealer in securities or foreign currency; •a trader in securities that elects to use a mark-to-market method of accounting for securities holdings; •a tax-exempt organisation; •a life insurance company; •a person liable for alternative minimum tax; •a person that actually or constructively owns 10% or more of the combined voting power of voting stock of Diageo or of the total value of stock of Diageo; •a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction; •a person that holds ordinary shares or ADSs as part of a wash sale for tax purposes; or •a US holder (as defined below) whose functional currency is not US dollar. If an entity or arrangement treated as a partnership for US federal income tax purposes holds ordinary shares or ADSs, the US federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding ordinary shares or ADSs should consult its tax advisor with regard to the US federal income tax treatment of an investment in ordinary shares or ADSs. For UK tax purposes, this section applies only to persons who are the absolute beneficial owners of ordinary shares or ADSs and who hold their ordinary shares or ADSs as investments. It assumes that holders of ADSs will be treated as holders of the underlying ordinary shares. In addition to those persons mentioned above, this section does not apply to holders that are banks, regulated investment companies, other financial institutions, or to persons who have or are deemed to have acquired their ordinary shares or 320 ADSs in the course of an employment or trade. This summary does not apply to persons who are treated as non-domiciled and resident in the United Kingdom for the purposes of UK tax law. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, the laws of the United Kingdom and the practice of In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. In general, and taking into account this assumption, for US federal income tax purposes and for the purposes of the Treaty, holders of ADRs evidencing ADSs should be treated as the owner of the shares represented by those ADSs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to US federal income tax or to UK tax on profits or gains. A US holder is a beneficial owner of ordinary shares or ADSs that is for US federal income tax purposes: •a citizen or resident for tax purposes of the United States and who is not and has at no point been resident in the United Kingdom; •a US domestic corporation; •an estate whose income is subject to US federal income tax regardless of its source; or •a trust if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust. This section is not intended to provide specific advice and no action should be taken or omitted in reliance upon it. This section addresses only certain aspects of US federal income tax and UK income tax, corporation tax, capital gains tax, inheritance tax and stamp taxes. Holders of the ordinary shares or ADSs are urged to consult their own tax advisors regarding the US federal, state and local, and UK and other tax consequences of owning and disposing of the shares or ADSs in their respective circumstances. In particular, holders are encouraged to confirm with their advisor whether they are US holders eligible for the benefits of the Treaty. Dividends UK taxation The company will not be required to withhold tax at source when paying a dividend. All dividends received by an individual shareholder or ADS holder who is resident in the UK for tax purposes will, except to the extent that they are earned through an ISA or other regime which exempts the dividends from tax, form part of that individual’s total income for income tax purposes and will represent the highest part of that income. A nil rate of income tax will apply to the first Any taxable dividend income in excess of the Nil Rate Amount will be subject to income tax at the following special rates (as at the •at the rate of 8.75%, to the extent that the relevant dividend income falls below the threshold for the higher rate of income tax; •at the rate of 33.75%, to the extent that the relevant dividend income falls above the threshold for the higher rate of income tax but below the threshold for the additional rate of income tax; and •at the rate of 39.35%, to the extent that the relevant dividend income falls above the threshold for the additional rate of income tax. In determining whether and, if so, to what extent the relevant dividend income falls above or below the threshold for the higher rate of income tax or, as the case may be, the additional rate of income tax, the individual’s total taxable dividend income for the tax year in question (including the part within the Nil Rate Amount) will, as noted above, be treated as the highest part of that individual’s total income for income tax purposes. Shareholders within the charge to UK corporation tax which are small companies (for the purposes of the UK taxation of dividends) will not generally be subject to tax on dividends from the company. Other shareholders within the charge to UK corporation tax will not be subject to tax on dividends from the company so long as the dividends fall within an exempt class and certain conditions are met. In general, dividends paid on shares that are ordinary share capital for UK tax purposes and are not redeemable and dividends paid to a person holding less than 10% of the issued share capital of the payer (or any class of that share capital) are examples of dividends that fall within an exempt class. US taxation Under the US federal income tax laws, and subject to the passive foreign investment company (PFIC) rules discussed below, the gross amount of any distribution (other than certain pro rata distribution of ordinary shares) paid to a US holder by Diageo in respect of its ordinary shares or ADSs out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) will be treated as a dividend that is subject to US federal income taxation. Dividends paid to a non-corporate US holder that constitute qualified dividend income will be taxed at the preferential rates applicable to long-term capital gains, provided that the ordinary shares or ADSs are held for more than 60 days during the 121-day period 321 beginning 60 days before the ex-dividend date and the holder meets other holding period requirements. Dividends paid by Diageo with respect to its ordinary shares or ADSs generally will be qualified dividend income to US holders that meet the holding period requirement, provided that, in the year that you receive the dividend, we are eligible for the benefits of the Treaty. We believe that we are currently eligible for the benefits of the Treaty and we therefore expect that dividends on the shares or ADSs will be qualified dividend income, but there can be no assurance that we will continue to be eligible for the benefits of the Treaty. Under UK law, dividends paid by the company are not subject to UK withholding tax. Therefore, the US holder will include in income for US federal income tax purposes the amount of the dividend received, and the receipt of a dividend will not entitle the US holder to a foreign tax credit. The dividend must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. Dividends will generally be income from sources outside the United States and will generally be ‘passive’ income for purposes of computing the foreign tax credit allowable to a US holder. The amount of the dividend distribution that must be included in income of a US holder will be the US dollar value of the pounds sterling payments made, determined at the spot pounds sterling/US dollar foreign exchange rate on the date of the dividend distribution, regardless of whether the payment is in fact converted into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is distributed to the date the payment is converted into US dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the holder’s basis in the ordinary shares or ADSs and thereafter as capital gain. However, Diageo does not expect to calculate earnings and profits in accordance with US federal income tax principles. Accordingly, a US holder should expect to generally treat distributions Diageo makes as dividends. Taxation of capital gains UK taxation A citizen or resident (for tax purposes) of the United States who has at no time been resident in the United Kingdom will not be liable for UK tax on capital gains realised or accrued on the sale or other disposal of ordinary shares or ADSs, unless the ordinary shares or ADSs are held in connection with a trade or business carried on by the holder in the United Kingdom through a UK branch, agency or a permanent establishment. A disposal (or deemed disposal) of shares or ADSs by a holder who is resident in the United Kingdom may, depending on the holder’s particular circumstances, and subject to any available exemption or relief, give rise to a chargeable gain or an allowable loss for the purposes of UK tax on capital gains. US taxation Subject to the PFIC rules discussed below, a US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount that is realised and the tax basis, determined in US dollars, in the ordinary shares or ADSs. Capital gain of a non-corporate US holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. PFIC rules Diageo believes that ordinary shares and ADSs should not currently be treated as stock of a PFIC for US federal income tax purposes, and we do not expect to become a PFIC in the foreseeable future. However this conclusion is a factual determination that is made annually and thus may be subject to change. It is therefore possible that we could become a PFIC in a future taxable year. If treated as a PFIC, gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as capital gain. Instead, unless a US holder elects to be taxed annually on a mark-to-market basis with respect to the ordinary shares or ADSs, US holders would be treated as if the holder had realised such gain and certain ‘excess distributions’ pro-rated over the holder’s holding period for the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain or distribution was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, a holder’s ordinary shares or ADSs will be treated as stock in a PFIC if Diageo were a PFIC at any time during the holding period in a holder’s ordinary shares or ADSs. In addition, dividends received from Diageo will not be eligible for the special tax rates applicable to qualified dividend income if Diageo is a PFIC (or is treated as a PFIC with respect to the holder) either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income. If you own our shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file IRS Form 8621. UK inheritance tax Subject to certain provisions relating to trusts or settlements, an ordinary share or ADS held by an individual shareholder who is domiciled in the United States for the purposes of the Convention between the United States and the United Kingdom relating to estate and gift taxes (the Convention) and who is neither domiciled in the UK nor (where certain conditions are met) a UK national (as 322 defined in the Convention), will generally not be subject to UK inheritance tax on the individual’s death (whether held on the date of death or gifted during the individual’s lifetime) except where the ordinary share or ADS is part of the business property of a UK permanent establishment of the individual or pertains to a UK fixed base of an individual who performs independent personal services. In a case where an ordinary share or ADS is subject both to UK inheritance tax and to US federal gift or estate tax, the Convention generally provides for inheritance tax paid in the United Kingdom to be credited against federal gift or estate tax payable in the United States, or for federal gift or estate tax paid in the United States to be credited against any inheritance tax payable in the United Kingdom, based on priority rules set forth in the Convention. UK stamp duty and stamp duty reserve tax Stamp duty and stamp reserve tax (SDRT) may arise upon the deposit of an underlying ordinary share with the Depositary, generally at the higher rate of 1.5% of its issue price or, as the case may be, of the consideration for transfer. The Depositary will pay the stamp duty or SDRT but will recover an amount in respect of such tax from the initial holders of ADSs. Following litigation, however, HMRC have confirmed that they will no longer seek to apply the 1.5% SDRT charge on an issue of shares to a depositary receipt issuer or to a person providing clearance services (or their nominee or agent) on the basis that this is not compatible with EU law. HMRC may continue to apply the 1.5% stamp duty or SDRT charge on transfers of shares to a depositary receipt issuer or to a person providing clearance services (or their nominee or agent) unless the transfer is an integral part of a raising of capital. Based on Purchases of ordinary shares (as opposed to ADRs) will be subject to UK stamp duty, and/or SDRT as the case may be, at the rate of 0.5% of the price payable for the ordinary shares at the time of the transfer. Stamp duty applies where a physical instrument of transfer is used to effect the transfer. SDRT applies to any agreement to transfer ordinary shares (regardless of whether or not the transfer is effected electronically or by way of an instrument of transfer). However, where ordinary shares being acquired are transferred direct to the Depositary’s nominee, the only charge will generally be the higher charge of 1.5% of the price payable for the ordinary shares so acquired. Any stamp duty payable (as opposed to SDRT) is rounded up to the nearest £5. No stamp duty (as opposed to SDRT) will be payable if the amount or value of the consideration is (and is certified to be) £1,000 or less. Stamp duty and SDRT are usually paid or borne by the purchaser. Whilst stamp duty and SDRT may in certain circumstances both apply to the same transaction, in practice usually only one or other will need to be paid. 323 Additional information for shareholders Annual General Meeting (AGM) The AGM will be held at etc.venues St Paul's, 200 Aldersgate, London EC1A 4HD at 2.30 pm on Thursday, Documents on display The Annual Report on Form 20-F and any other documents filed by the company with the US Securities Exchange Commission (SEC) may be inspected at the SEC’s office of Investor Education and Advocacy located at 100 F Street, NE, Washington, DC 20549-0213, USA. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. Filings with the SEC are also available to the public from commercial document retrieval services, and from the website maintained by the US Securities and Exchange Commission at www.sec.gov. Annual report to security holders Pursuant to Item 10.J of Form 20-F, Exhibit 15.2 to this annual report on Form 20-F includes Diageo's annual report to security holders. None of such annual report is incorporated by reference into this annual report on Form 20-F. Such annual report is not deemed to be filed as part of this annual report on Form 20-F. Warning to shareholders - share fraud Please beware of the share fraud of ‘boiler room’ scams, where shareholders are called ‘out of the blue’ by fraudsters (sometimes claiming to represent Diageo) attempting to obtain money or property dishonestly. Further information on boiler room scams can be found on the Financial Conduct Authority’s website (https://www.fca.org.uk/ scamsmart/share-bond-boiler-room-scams) but in short, if in doubt, take proper professional advice before making any investment decision. Electronic communications Shareholders can register for an account to manage their shareholding online, including being able to: check the number of shares they own and the value of their shareholding; register for electronic communications; update their personal details; provide a dividend mandate instruction; access dividend confirmations; and use the online share dealing service. To register for an account, shareholders should visit www.diageoregistrars.com. Dividend payments Direct payment into bank account Shareholders can have their cash dividend paid directly into their UK bank account on the dividend payment date. To register UK bank account details, shareholders can register for an online account at www.diageoregistrars.com or call the Registrar on +44 (0)371 277 1010* to request the relevant application form. For shareholders outside the UK, Link Group (a trading name of Link Market Services Limited and Link Market Services Trustees Limited) may be able to provide you with a range of services relating to your shareholding. To learn more about the services available to you please visit the shareholder portal at www.diageoregistrars.com or call +44 (0)371 277 1010*. Dividend Reinvestment Plan A Dividend Reinvestment Plan is offered by the Registrar, Link Market Services Trustees Limited, to give shareholders the opportunity to build up their shareholding in Diageo by using their cash dividends to purchase additional Diageo shares. To join the Dividend Reinvestment Plan, shareholders can call the Registrar, Link Group on +44 (0)371 277 1010* to request the relevant application form. Exchange controls Other than certain economic sanctions which may be in effect from time to time, there are currently no UK foreign exchange control restrictions on the payment of dividends, interest or other payments to holders of Diageo’s securities who are non-residents of the UK or on the conduct of Diageo’s operations. There are no restrictions under the company’s articles of association or under English law that limit the right of non-resident or foreign owners to hold or vote the company’s ordinary shares. Please refer to the ‘Taxation’ section on page Useful contacts The Registrar/Shareholder queries Link Group acts as the company’s registrar and can be contacted as follows: By email: Diageo@linkgroup.co.uk By telephone: +44 (0) 371 277 1010* In writing: Registrars – Link Group, Diageo Registrar, * Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open 08:00 to 17:30 UK time, Monday to Friday, excluding public holidays in England and Wales. 324 ADR administration Citibank Shareholder Services acts as the company’s ADR administrator and can be contacted as follows: By email: citibank@shareholders-online.com By telephone: +1 866 253 0933/ (International) +1 781 575 4555* In writing: Citibank Shareholder Services. PO Box 43077, Providence, RI 02940-3077 *Lines are open Monday to Friday 8:30 to 18:00 EST General Counsel and Company Secretary Tom Shropshire The.cosec@diageo.com Investor Relations investor.relations@diageo.com 325 Exhibits
326 Glossary of terms and US equivalents
(i) Pursuant to an Agreement of Resignation, Appointment and Acceptance dated 16 October 2007 by and among Diageo plc, Diageo Capital plc, Diageo Finance BV, Diageo Investment Corporation, The Bank of New York and Citibank NA, The Bank of New York Mellon has become the successor trustee to Citibank NA under Diageo’s indentures dated 3 August 1998, 8 December 2003 and 1 June 1999. Signature Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorised.
In this document the following words and expressions shall, unless the context otherwise requires, have the following meanings:
Exhibit 2.4 DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT As of 30 June 2023 Diageo plc. (“Diageo,” the “Company,” “we,” “us,” and “our”) had the following series of securities registered pursuant to Section 12(b) of the Act:
(i) Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements of the Securities and Exchange Commission. Capitalized terms used but not defined herein have the meanings given to them in Diageo’s annual report on Form 20-F for the fiscal year ended 30 June 2023. ORDINARY SHARES The following description of our ordinary shares is a summary and does not purport to be complete. It is subject to and qualified in its entirety by Diageo’s articles of association (as adopted by special resolution at the Annual General Meeting on 28 September 2020) and by the Companies Act 1985 and the Companies Act 2006 and any other applicable English law concerning companies, as amended from time to time. A copy of Diageo’s articles of association is filed as an exhibit to Diageo’s annual report on Form 20-F for the fiscal year ended 30 June 2023, as Exhibit 1.1. General As at 30 June 2023 there were 2,459,843,065 ordinary shares of 28101/108 pence each in issue with a nominal value of £711,760,146.12 million. On 25 July 2019 the Board of Diageo approved a return of capital program to return up to £4.5 billion to shareholders over the three-year period ending 30 June 2022. During the first phase, which completed on 31 January 2020, the group purchased 36.1 million ordinary shares. On 9 April 2020 Diageo announced that it had not initiated the next phase of the return of capital programme and that it would not do so during the remainder of the year ended 30 June 2020. On 12 May 2021 it was announced that Diageo was recommencing the up to £4.5 billion programme, extending the original completion date by two years to 30 June 2024. The final three phases of the £4.5 billion programme completed on 11 February 2022, 5 October 2022 and 1 February 2023 respectively, having announced in July 2022 that it would bring forward the final completion date to during the year ending 30 June 2023. Under these three additional phases Diageo purchased a further 88.1 million shares in total. On 25 January 2023 the Board of Diageo approved an additional share buyback programme to return up to £0.5 billion to shareholders by the end of the year ending 30 June 2023. This new programme commenced on 16 February 2023 and completed on 2 June 2023 with Diageo having purchased 14 million shares. All shares repurchased have been cancelled. Our ordinary shares are listed on the London Stock Exchange (LSE). Diageo ADSs (as further described below), representing four Diageo ordinary shares each, are listed on the New York Stock Exchange (NYSE) under the symbol “DEO”. All of Diageo’s ordinary shares are fully paid. Accordingly, no further contribution of capital may be required by Diageo from the holders of such shares. Diageo’s ordinary shares are represented in certificated form and also in uncertificated form under “CREST”. CREST is an electronic settlement system in the United Kingdom which enables Diageo’s ordinary shares to be evidenced other than by a physical certificate and transferred electronically rather than by delivery of a written stock transfer form. Diageo’s ordinary shares: •may be represented by certificates in registered form issued (subject to the terms of issue of the shares) following issuance of the shares by Diageo or receipt of a form of transfer (bearing evidence of payment of the appropriate stamp duty) by Diageo Registrar, PO Box 521, Darlington, DL1 9XS; or 331 •may be in uncertificated form with the relevant CREST member account being credited with the ordinary shares issued or transferred. Under English law, persons who are neither residents nor nationals of the United Kingdom may freely hold, vote and transfer Diageo ordinary shares in the same manner and under the same terms as UK residents or nationals. Dividend rights Holders of Diageo’s ordinary shares may, by ordinary resolution, declare dividends but may not declare dividends in excess of the amount recommended by the directors. The directors may also pay interim dividends or fixed rate dividends. No dividend may be paid other than out of profits available for distribution. All of Diageo’s ordinary shares rank equally for dividends, but the Board may withhold payment of all or any part of any dividends or other monies payable in respect of Diageo’s shares from a person with a 0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts. Dividends may be paid in currencies other than sterling and such dividends will be calculated using an appropriate market exchange rate as determined by the directors in accordance with Diageo’s articles of association. If a dividend has not been claimed, the directors may invest the dividend or use it in some other way for the benefit of Diageo until the dividend is claimed. If the dividend remains unclaimed for 12 years after the date such dividend was declared or became due for payment, it will be forfeited and will revert to Diageo (unless the directors decide otherwise). Diageo may stop sending cheques, warrants or similar financial instruments in payment of dividends by post in respect of any shares or may cease to employ any other means for payment of dividends if either (a) at least two consecutive payments have remained uncashed or are returned undelivered or that means of payment has failed, or (b) one payment remains uncashed or is returned undelivered or that means of payment has failed and reasonable enquiries have failed to establish any new postal address or account of the holder. Diageo must resume sending dividend cheques, warrants or similar financial instruments or employing that means of payment if the holder requests such resumption in writing. Diageo’s articles of association permit payment or satisfaction of a dividend wholly or partly by distribution of specific assets, including fully paid shares or debentures of any other company. Such action is only permitted upon the recommendation of the board and must be approved by ordinary resolution by the general meeting which declared the dividend. Voting rights Voting on any resolution at any general meeting of the company is by a show of hands unless a poll is duly demanded. On a show of hands, (a) every shareholder who is present in person at a general meeting, and every proxy appointed by any one shareholder and present at a general meeting, has/have one vote regardless of the number of shares held by the shareholder (or, subject to (b), represented by the proxy), and (b) every proxy present at a general meeting who has been appointed by more than one shareholder has one vote regardless of the number of shareholders who have appointed him or the number of shares held by those shareholders, unless he has been instructed to vote for a resolution by one or more shareholders and to vote against the resolution by one or more shareholders, in which case he has one vote for and one vote against the resolution. On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder, but a shareholder or proxy entitled to more than one vote need not cast all his votes or cast them all in the same way (the deadline for exercising voting rights by proxy is set out in the form of proxy). A poll may be demanded by any of the following: •the chairman of the general meeting; •at least three shareholders entitled to vote on the relevant resolution and present in person or by proxy at the meeting; •any shareholder or shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote on the relevant resolution; or •any shareholder or shareholders present in person or by proxy and holding shares conferring a right to vote on the relevant resolution on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. Diageo’s articles of association and the Companies Acts provide for matters to be transacted at general meetings of Diageo by the proposing and passing of two kinds of resolutions: •ordinary resolutions, which include resolutions for the election, re-election and removal of directors, the declaration of final dividends, the appointment and re-appointment of the external auditor, the approval of the remuneration report and remuneration policy and the grant of authority to allot shares; and •special resolutions, which include resolutions for the amendment of Diageo’s articles of association, resolutions relating to the disapplication of pre-emption rights, and resolutions modifying the rights of any class of Diageo’s shares at a meeting of the holders of such class. An ordinary resolution requires the affirmative vote of a simple majority of the votes cast at a validly constituted shareholders’ meeting. Special resolutions require the affirmative vote of not less than three-quarters of the votes cast at a validly constituted shareholders’ meeting. The necessary quorum for a shareholders’ meeting of Diageo is a minimum of two shareholders present in person or by proxy and entitled to vote. 332 A shareholder is not entitled to vote at any general meeting or class meeting in respect of any share held by him if he has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts. Directors Diageo’s articles of association provide for a Board of Directors, consisting (unless otherwise determined by an ordinary resolution of shareholders) of not fewer than three directors and not more than 25 directors, in which all powers to manage the business and affairs of Diageo are vested. Directors may be elected by the members in a general meeting or appointed by Diageo’s Board. At each annual general meeting, every director is required to retire and is then reconsidered for election/re-election by shareholders, assuming they wish to stand for election/re-election. There is no age limit requirement in respect of directors. Directors may also be removed before the expiration of their term of office in accordance with the provisions of the Companies Acts. Liquidation rights In the event of the liquidation of Diageo, after payment of all liabilities and deductions taking priority in accordance with English law, the balance of assets available for distribution will be distributed among the holders of ordinary shares according to the amounts paid up on the shares held by them. Pre-emption rights and new issues of shares While holders of ordinary shares have no pre-emptive rights under Diageo’s articles of association, the ability of the directors to cause Diageo to issue shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share scheme, is restricted. Under the Companies Acts, the directors of a company are, with certain exceptions, unable to allot any equity securities without express authorisation, which may be contained in a company’s articles of association or given by its shareholders in a general meeting by way of an ordinary resolution, but which in either event cannot last for more than five years. Under the Companies Acts, Diageo may also not allot shares for cash (otherwise than pursuant to an employee share scheme) without first making an offer to existing shareholders to allot such shares to them on the same or more favourable terms in proportion to their respective shareholdings, unless this requirement is disapplied by a special resolution of the shareholders. However, Diageo has in the past sought authority from its shareholders to allot shares and disapply pre-emptive rights (in each case subject to certain limitations). Disclosure of interests in Diageo’s shares There are no provisions in Diageo’s articles of association whereby persons acquiring, holding or disposing of a certain percentage of Diageo’s shares are required to make disclosure of their ownership percentage, although there are such requirements under the Companies Acts. The basic disclosure requirement under Part 6 of the Financial Services and Markets Act 2000 and Rule 5 of the Disclosure Guidance and Transparency Rules made by the Financial Conduct Authority (successor to the UK Financial Services Authority) imposes a statutory obligation on a person to notify Diageo and the Financial Conduct Authority of the percentage of the voting rights in Diageo he directly or indirectly holds or controls, or has rights over, through his direct or indirect holding of certain financial instruments, if the percentage of those voting rights: •reaches, exceeds or falls below 3% and/or any subsequent whole percentage figure as a result of an acquisition or disposal of shares or financial instruments; or •reaches, exceeds or falls below any such threshold as a result of any change in the breakdown or number of voting rights attached to shares in Diageo. The Disclosure Guidance and Transparency Rules set out in detail the circumstances in which an obligation of disclosure will arise, as well as certain exemptions from those obligations for specified persons. Under section 793 of the Companies Act 2006, Diageo may, by notice in writing, require a person that Diageo knows or has reasonable cause to believe is or was during the three years preceding the date of notice interested in Diageo’s shares to indicate whether or not that is the case and, if that person does or did hold an interest in Diageo’s shares, to provide certain information as set out in that Act. Article 19 of the EU Market Abuse Regulation (2014/596) (as it is incorporated into UK domestic law by virtue of the European Union (Withdrawal) Act 2018 and amended by The Market Abuse (Amendment) (EU Exit) Regulation 2019) further requires persons discharging managerial responsibilities within Diageo (and their persons closely associated) to notify Diageo of transactions conducted on their own account in Diageo shares or derivatives or certain financial instruments relating to Diageo shares. The City Code on Takeovers and Mergers also imposes strict disclosure requirements with regard to dealings in the securities of an offeror or offeree company on all parties to a takeover and also on their respective associates during the course of an offer period. 333 Variation of rights If, at any time, Diageo’s share capital is divided into different classes of shares, the rights attached to any class of shares may be varied, subject to the provisions of the Companies Acts, either with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of that class or upon the adoption of a special resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of Diageo’s articles of association relating to proceedings at a general meeting apply, except that (a) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class (excluding any shares of that class held as treasury shares) or, if such quorum is not present on an adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds, (b) any holder of shares of the class who is present in person or by proxy may demand a poll, and (c) each shareholder present in person or by proxy and entitled to vote will have one vote per share held in that particular class in the event a poll is taken. Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in all respects or by the reduction of the capital paid up on such shares or by the purchase or redemption by Diageo of its own shares, in each case in accordance with the Companies Acts and Diageo’s articles of association. Repurchase of shares Subject to authorisation by shareholder resolution, Diageo may purchase its own shares in accordance with the Companies Acts. Any shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the purchase, thereby reducing the amount of Diageo’s issued share capital. At the Annual General Meeting held on October 6, 2022, Diageo’s shareholders gave it authority to repurchase up to 227,870,414 of its ordinary shares subject to additional conditions. The minimum price which must be paid for such shares is 28101/108 pence and the maximum price is the higher of (a) 5% above the average market value of Diageo’s ordinary shares for the five business days immediately preceding the day on which that ordinary share is contracted to be purchased and (b) the higher of the price of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase is carried out. Restrictions on transfers of shares The Board may decline to register a transfer of a certificated Diageo share unless the instrument of transfer (a) is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require, (b) is in respect of only one class of share and (c) if to joint transferees, is in favour of not more than four such transferees. Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in Diageo’s articles of association) and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four. The Board may decline to register a transfer of any of Diageo’s certificated shares by a person with a 0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the Companies Acts, unless the transfer is shown to the Board to be pursuant to an arm’s length sale (as defined in Diageo’s articles of association). Substantive shareholder voting rights The company’s substantial shareholders do not have different voting rights. AMERICAN DEPOSITARY SHARES General The ordinary shares of Diageo may be issued in the form of American depositary shares, or ADSs. Each Diageo ADS represents four ordinary shares of Diageo. Citibank, N.A. is the depositary with respect to Diageo’s ADSs, which are evidenced by American depositary receipts, or ADRs. Each ADS represents an ownership interest in four ordinary shares deposited with the custodian, as agent of the depositary, under the Deposit Agreement dated 14 February 2013 between Diageo, the Depositary and owners and beneficiaries of the ADRs (the “Deposit Agreement”). Each ADS also represents any other securities, cash or other property which may be held by Citibank, N.A. as depositary. The principal executive office of Citibank, N.A. and the office at which the ADRs will be administered is currently located at 388 Greenwich Street, New York, New York 10013, United States. Citibank, N.A. is a national banking association organized under the laws of the United States. The custodian will be Citibank, N.A. (London Branch) and its duties will be administered from its principal London office, currently located at 25 Molesworth Street, Lewisham, London SE13 7EX, United Kingdom. You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an 334 ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are. Diageo will not treat ADR holders as shareholders and ADR holders will not have shareholder rights. English law governs shareholder rights. The depositary will be the holder of the ordinary shares underlying your ADSs. As a holder of ADRs, you will have ADR holder rights, which are set out in the Deposit Agreement. The Deposit Agreement also sets out the rights and obligations of the depositary. The following is a summary of the material terms of the Deposit Agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire form of Deposit Agreement and the form of ADR, which contain the terms of the ADSs. Please refer to Exhibit 99.A on Form F-6 (File No. 333-186400) filed with the Securities and Exchange Commission on 1 February 2013). Copies of the Deposit Agreement are also available for inspection at the offices of the depositary. Share Dividends and Other Distributions Diageo may make various types of distributions with respect to its securities. The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of underlying ordinary shares that your ADSs represent. Except as stated below, to the extent the depositary is legally permitted it will deliver such distributions to ADR holders in proportion to their interests in the following manner: •Cash. Upon receiving notice from Diageo that Diageo intends to distribute a cash dividend or other cash distribution, the depositary will establish a record date for such distribution. As promptly as practicable following the receipt of a cash dividend or other cash distribution from Diageo, the depositary will: (i) if at the time of receipt thereof any amounts received in a foreign currency can, in the judgment of the depositary, be converted on a practicable basis into U.S. dollars transferable into the United States, promptly convert or cause to be converted such cash dividend or cash distributions into U.S. dollars, (ii) if applicable, establish a record date for the distribution and (iii) distribute promptly such U.S. dollar amount, net of applicable fees, charges and expenses of the depositary and taxes withheld. The depositary shall distribute only such amount as can be distributed without attributing to any ADR holder a fraction of one cent. Any such fractional amounts shall be rounded to the nearest whole cent and so distributed to ADR holders entitled thereto. If the depositary cannot reasonably make such conversion or obtain any governmental approval or license necessary for the conversion, the depositary will hold any unconvertible foreign currency for your account without liability for any interest or, upon request, will distribute the foreign currency to you. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution. •Shares. Upon receiving notice from Diageo that Diageo intends to distribute a share dividend or free distribution of ordinary shares, the depositary will establish a record date for such distribution. The depositary will then either (i) deliver additional ADSs representing such ordinary shares, or (ii) if additional ADSs are not so distributed, take all actions necessary so that each ADS issued and outstanding after the ADS record date shall, to the extent permissible by law, thenceforth also represent rights and interests in the additional ordinary shares distributed, in each case net of applicable fees, charges and expenses of the depositary and taxes withheld. Only whole ADSs will be issued. Any ordinary shares which would result in fractional ADSs will be sold and the net proceeds will be distributed to the ADR holders entitled to them. •Rights to receive additional shares. Upon receiving notice from Diageo that Diageo intends to distribute rights to subscribe for additional ordinary shares or other rights and that Diageo wishes such rights to be made available to holders of ADSs, the depositary shall, after consultation with Diageo, have discretion as to the procedure for making such rights available to any ADR holders or in disposing of such rights on behalf of any ADR holders and making, as promptly as practicable, the net proceeds available to such ADR holders. If, by the terms of the offering of rights or for any other reason, the depositary may not either make such rights available to any ADR holders or dispose of such rights on behalf of any ADR holders and make the net proceeds available to such ADR holders, then the depositary shall allow such rights to lapse. If the depositary determines in its reasonable discretion that it is not lawful or practicable to make such rights available to all or certain ADR holders, if Diageo does not furnish such evidence or if the depositary determines it is not lawful or practicable to distribute such rights to all or some of the registered holders, the depositary may: •distribute such rights only to the holders to whom the depositary has determined such distribution is lawful and practicable; •if practicable, sell rights in proportion to the number of ADSs held by registered holders to whom the depositary has determined it may not lawfully or practicably make such rights available and distribute the net proceeds as cash; or •allow rights in proportion to the number of ADSs held by registered holders to whom the depositary has determined it may not lawfully or practicably make such rights available to lapse, in which case such registered holders will receive nothing. 335 Diageo has no obligation to file a registration statement under the Securities Act of 1933, as amended, in order to make any rights available to ADR holders. •Other Distributions. Upon receiving notice from Diageo that Diageo intends to distribute securities or property other than those described above and that Diageo wishes such rights to be made available to holders of ADSs, the depositary may distribute such securities or property in any manner it deems equitable and practicable. To the extent the depositary deems distribution of such securities or property not to be practicable, the depositary may, after consultation with Diageo, adopt any method that it reasonably deems to be equitable and practical, including but not limited to the sale of such securities or property and distribution of any net proceeds in the same way that cash is distributed. The depositary may choose any practical method of distribution for any specific ADR holder, including the distribution of securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited property. There can be no assurances that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. Deposit, Withdrawal and Cancellation The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian. In the case of the ADSs to be issued under a prospectus supplement, Diageo may arrange with the underwriters named therein to deposit such ordinary shares if and as provided in the prospectus supplement. Ordinary shares deposited with the custodian must also be accompanied by certain documents, including (a) in the case of certificated shares, instruments showing that such ordinary shares have been properly transferred or endorsed and (b) in the case of book-entry shares, confirmation of book-entry transfer and recordation, in each case to the person on whose behalf the deposit is being made. The custodian will hold all deposited ordinary shares for the account of the depositary. ADR holders thus have no direct ownership interest in the ordinary shares and have only such rights as are contained in the Deposit Agreement. The deposited shares and any other securities, property or cash received by the depositary or the custodian and held under the Deposit Agreement are referred to as deposited property. Upon each deposit of ordinary shares, receipt of related delivery documentation and compliance with the other provisions of the Deposit Agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue and deliver ADSs in the name of the person entitled thereto and, if applicable, issue ADRs evidencing the number of ADSs to which such person is entitled. ADRs will be delivered at the depositary’s principal office. The depositary will make arrangements for the acceptance of ADSs for book-entry settlement through The Depository Trust Company, or DTC. All ADSs held through DTC will be registered in the name of Cede & Co., the nominee for DTC. Unless issued as uncertificated ADSs, the ADSs registered in the name of Cede & Co. will be evidenced by one or more receipt(s) in the form of a “Balance Certificate,” which will provide that it represents the aggregate number of ADSs from time to time indicated in the records of the depositary as being issued to DTC hereunder and that the aggregate number of ADSs represented thereby may from time to time be increased or decreased by making adjustments on such records of the depositary and of DTC or Cede & Co. When you turn in your ADSs (and, if applicable, the ADRs evidencing the ADSs) at the depositary’s office, the depositary will, upon payment of certain applicable fees, charges and taxes, and upon receipt of proper instructions, deliver the underlying ordinary shares to you. At your risk, expense and request, the depositary will deliver (to the extent permitted by law) deposited property at the depositary’s principal office. The depositary may restrict the withdrawal of deposited securities only in connection with: •temporary delays caused by closing Diageo’s transfer books or those of the depositary or the deposit of ordinary shares in connection with voting at a shareholders’ meeting, or the payment of dividends; •the payment of fees, taxes and similar charges; or •compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or to the withdrawal of deposited securities. This right of withdrawal may not be limited by any other provision of the Deposit Agreement. Voting Rights If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the ordinary shares which underlie your ADRs. After receiving voting materials from Diageo, the depositary will, if Diageo asks it to, notify the ADR holders of any shareholder meeting or solicitation of consents for proxies. This notice will describe how you may, subject to English law and the provisions of Diageo’s articles of association, instruct the depositary to exercise the voting rights for the ordinary shares which underlie your ADSs. For instructions to be valid, the depositary must receive them on or before the date specified. The depositary will try, as far as practical, subject to English law and the provisions of Diageo’s articles of association, to vote or to have its agents vote the shares or other deposited securities as you instruct. The depositary will not vote or attempt to exercise the right to vote that attaches to the shares or other deposited securities, other than in accordance with your instructions or deemed instructions. If the depositary does not receive instructions from you on or before the specified date and voting is by poll, the depositary will deem you to have instructed it to give a discretionary proxy to a person designated by Diageo to vote such deposited securities. 336 However, we cannot assure you that you will receive our voting materials in time for you to give the depositary instructions to vote any deposited securities. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions to vote the deposited securities, if, for example, the instructions are not received in time to vote the amount of the deposited securities or if English or other applicable laws prohibit such voting. Notwithstanding anything contained in the Deposit Agreement or any ADR, the depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to ADR holders a notice that provides ADR holders with, or otherwise publicizes to ADR holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials). Notwithstanding anything else contained in the Deposit Agreement or any ADR, the depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of deposited securities if the taking of such action would violate applicable U.S. laws. Diageo has agreed to take any and all actions reasonably necessary and as permitted by English law to enable ADR holders and beneficial owners to exercise the voting rights accruing to the deposited securities. Reports and Other Communications The depositary will make available for inspection by ADR holders any reports and communications from Diageo that are both received by the depositary as holder of deposited property and made generally available by Diageo to the holders of deposited property. Upon the request of Diageo, the depositary will send to you copies of reports furnished by Diageo pursuant to the Deposit Agreement. Reclassifications, Recapitalizations and Mergers If Diageo takes actions that affect the deposited securities, including any change in par value, split-up, consolidation or other reclassification of deposited securities or any recapitalization, reorganization, merger, consolidation, sale of assets or other similar action, then the depositary may, and will if Diageo asks it to: •distribute additional or amended ADRs; •distribute cash, securities or other property it has received in connection with such actions; or •sell any securities or property received and distribute the proceeds as cash. If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited property and each ADS will then represent a proportionate interest in such property. Amendment and Termination Diageo may agree with the depositary to amend the Deposit Agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (except for taxes and other charges specifically payable by ADR holders under the Deposit Agreement), or affects any substantial existing right of ADR holders. If an ADR holder continues to hold ADRs when an amendment has become effective such ADR holder is deemed to agree to such amendment. No amendment will impair your right to surrender your ADSs and receive the underlying securities except to comply with mandatory provisions of applicable law. The depositary will terminate the Deposit Agreement if Diageo asks it to do so. The depositary may also terminate the Deposit Agreement if the depositary has told Diageo that it would like to resign and Diageo has not appointed a new depositary bank within 180 days. In either case, the depositary must notify you at least 90 days before termination. After termination, the depositary’s only responsibility will be (i) to advise you that the Deposit Agreement is terminated, (ii) to collect distributions on the deposited securities (iii) to sell rights and other property, and (iv) to deliver ordinary shares and other deposited securities upon cancellation of the ADRs. At any time from the termination date, the depositary may sell the deposited property which remains and hold the net proceeds of such sales and any other cash it is holding under the Deposit Agreement, without liability for interest, for the pro rata benefit of ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary shall have no obligations except to account for such proceeds and other cash. The depositary will not be required to invest such proceeds or pay interest on them. Limitations on Obligations and Liability to ADR Holders The Deposit Agreement expressly limits the obligations and liability of the depositary, Diageo and their respective agents. Neither Diageo nor the depositary assumes any obligation nor shall either of them be subject to any liability under the Deposit Agreement to any ADR holder, except that they each agree to perform their respective obligations specifically set forth in the Deposit Agreement without negligence or bad faith. Neither Diageo nor the depositary will be liable if: •law, regulation, the provisions of or governing any deposited securities, act of God, war or other circumstance beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit Agreement or the ADRs provide shall be done or performed by it; •it exercises or fails to exercise discretion permitted under the Deposit Agreement or the ADR; •it performs its obligations specifically set forth in the Deposit Agreement without negligence or bad faith; or 337 •it takes any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information. In the Deposit Agreement, Diageo agrees to indemnify Citibank, N.A. for acting as depositary, except for losses caused by Citibank, N.A.’s own negligence or bad faith, and Citibank, N.A. agrees to indemnify Diageo for losses resulting from its negligence or bad faith. The depositary will not be responsible for failing to carry out instructions to vote the deposited securities or for the manner in which the deposited securities are voted or the effect of the vote. The depositary may own and deal in deposited securities and in ADSs. Neither Diageo nor the depositary nor any of their respective directors, employees, agents or affiliates shall incur any liability for any consequential or punitive damages for any breach of the terms of the Deposit Agreement. Books of Depositary The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADSs and, if applicable, ADRs evidencing such ADSs. You may inspect such records at such office during regular business hours, but solely for the purpose of communicating with other holders in the interest of business matters relating to the Deposit Agreement. The depositary will maintain facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADSs. These facilities may be closed from time to time when the depositary considers it expedient to do so. 338 Exhibit 12.1 I, Debra Crew, certify that: 1.I have reviewed this annual report on Form 20-F of Diageo plc; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Date: 3 August 2023 /s/ Debra Crew Name: Debra Crew Title: Chief Executive (Principal Executive Officer) 339 Exhibit 12.2 I, Lavanya Chandrashekar, certify that: 1.I have reviewed this annual report on Form 20-F of Diageo plc; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Date: 3 August 2023 /s/ Lavanya Chandrashekar Name: Lavanya Chandrashekar Title: Chief Financial Officer (Principal Financial Officer) 340 Exhibit 13.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Diageo plc, a public limited company incorporated under the laws of England and Wales (the ‘Company’), hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 20-F for the year ended 30 June 2023 (the ‘Report’) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: 3 August 2023 /s/ Debra Crew Name: Debra Crew Title: Chief Executive (Principal Executive Officer) The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document. 341 Exhibit 13.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Diageo plc, a public limited company incorporated under the laws of England and Wales (the ‘Company’), hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 20-F for the year ended 30 June 2023 (the ‘Report’) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: 3 August 2023 /s/ Lavanya Chandrashekar Name: Lavanya Chandrashekar Title: Chief Financial Officer (Principal Financial Officer) The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document. Exhibit 15.1 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by reference in the Registration Statements on Form F-3of Diageo plc (No.333-269929), Diageo Capital plc (No. 333-269929-01) and Diageo Investment Corporation (No. 333-269929-02), and Form S-8 (No. 333-153481, 333-162490, 333-169934, 333-182315, 333-206290 and 333-223071)of our report dated 3 August 2023 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F. /s/ PricewaterhouseCoopers LLP London, United Kingdom 3 August 2023 | Estimated value (£'000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ivan Menezes | Ivan Menezes | Performance shares | 02/09/2019 | 38,827 | 59.3 | % | 23,024 | — | $190 | 1,390 | $4,644 | £3,492 | Ivan Menezes | Performance shares | 03/09/2020 | 43,377 | 98.7 | % | 42,813 | — | $179 | 2,796 | $8,142 | £6,785 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share options | 02/09/2019 | 38,827 | 61.5 | % | 23,878 | $ | 170.28 | $190 | — | $476 | £358 | Share options | 03/09/2020 | 43,377 | 77.5 | % | 33,617 | $ | 133.88 | $179 | — | $1,501 | £1,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debra Crew | Debra Crew | Performance shares | 03/09/2020 | 1,176(2) | 98.8 | % | 1,161 | $179 | 75 | $221 | £184 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share options | 03/09/2020 | 714(2) | 77.5 | % | 553 | $ | 133.88 | $179 | $25 | £21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lavanya Chandrashekar | Lavanya Chandrashekar | Performance shares | 02/09/2019 | 1,444 | 59.8 | % | 863 | — | $190 | 52 | $174 | £131 | Lavanya Chandrashekar | Performance shares | 03/09/2020 | 1,827 | 98.8 | % | 1,805 | — | $179 | 117 | $343 | £286 |
30 June 2022 | 30 June 2021 | |||||||||||||
Executive Director | UK pension £'000 p.a. | US benefit £'000 | UK pension £'000 p.a. | US benefit £'000 | ||||||||||
Ivan Menezes1 | 75 | 9,251 | 75 | 7,645 | ||||||||||
Lavanya Chandrashekar2 | Nil | 302 | Nil | 160 |
30 June 2023 | 30 June 2022 | |||||||||||||
Executive Director | UK pension £'000 p.a. | US benefit £'000 | UK pension £'000 p.a. | US benefit £'000 | ||||||||||
Ivan Menezes(1) | 75 | 9,563 | 75 | 9,251 | ||||||||||
Debra Crew(2) | Nil | 761 | Nil | 761 | ||||||||||
Lavanya Chandrashekar(3) | Nil | 413 | Nil | 302 |
Executive Director | UK benefits (DPS) | US benefits (Cash Balance Plan) | US benefits (BSP) | US benefits (SERP) | ||||||||||
Ivan Menezes | 60 | 65 | 6 months after leaving service | 6 months after leaving service | ||||||||||
Lavanya Chandrashekar | n/a | 65 | 6 months after leaving service, or age 55 if later | 6 months after leaving service, or age 55 if later | ||||||||||
Executive Director | UK benefits (DPS) | US benefits (Cash Balance Plan) | US benefits (BSP) | US benefits (SERP) | ||||||||||
Ivan Menezes | 60 | 65 | 6 months after leaving service | 6 months after leaving service | ||||||||||
Debra Crew | n/a | 65 | 6 months after leaving service, or age 55 if later | 6 months after leaving service, or age 55 if later | ||||||||||
Lavanya Chandrashekar | n/a | 65 | 6 months after leaving service, or age 55 if later | 6 months after leaving service, or age 55 if later | ||||||||||
Performance shares | Share options | |||||||||||||||||||||||||||||||
2021 DLTIP | Organic net sales growth | Organic profit before exceptional items and tax growth | Reduction in greenhouse gas emission | Improvement in water efficiency | Changed attitudes on dangers of underage drinking | % Female leaders | % Ethnically diverse leaders | Cumulative free cash flow | Relative TSR | |||||||||||||||||||||||
Weighting | 40 | % | 40 | % | 5 | % | 5 | % | 5 | % | 2.5 | % | 2.5 | % | 50 | % | 50 | % | ||||||||||||||
Target range | 5% - 9% | 6.5% - 13.5% | 19.1% - 27.1% | 6.3% - 12.1% | 2.3m - 3.7m | 44% - 46% | 39% - 41% | £7,450m - £9,250m | Median - upper quintile |
Performance shares | Share options | |||||||||||||||||||||||||||||||
2022 DLTIP | Organic net sales growth | Organic profit before exceptional items and tax growth | Reduction in greenhouse gas emission | Water efficiency | Changed attitudes on dangers of underage drinking | % Female leaders | % Ethnically diverse leaders | Cumulative free cash flow(1) | Relative TSR | |||||||||||||||||||||||
Weighting | 40 | % | 40 | % | 5 | % | 5 | % | 5 | % | 2.5 | % | 2.5 | % | 50 | % | 50 | % | ||||||||||||||
Target range | 4.5% - 8.5% | 5% - 12% | 10.7% - 17.6% | 6.3% - 12.1% | 2.6m - 4.0m | 45% - 47% | 42% - 44% | $10,175m - $12,569m | Median - upper quintile |
Executive Director | Date of grant | Plan | Share type | Awards made during the year | Exercise price | Face value $'000 | Face value (% of salary) | ||||||||||||||||
Ivan Menezes | 03/09/2021 | DLTIP - share options | ADR | 36,675 | $194.75 | $6,417 | 375 | % | |||||||||||||||
Ivan Menezes | 03/09/2021 | DLTIP - performance shares | ADR | 36,675 | — | $6,417 | 375 | % | |||||||||||||||
Lavanya Chandrashekar | 03/09/2021 | DLTIP - share options | ADR | 20,060 | $194.75 | $3,510 | 360 | % | |||||||||||||||
Lavanya Chandrashekar | 03/09/2021 | DLTIP - performance shares | ADR | 20,060 | — | $3,510 | 360 | % |
Executive Director | Date of grant | Plan | Share type | Awards made during the year | Exercise price | Face value $'000 | Face value (% of salary) | ||||||||||||||||
Ivan Menezes | 02/09/2022 | DLTIP - share options | ADR | 33,845 | $176.95 | $6,610 | 375 | % | |||||||||||||||
Ivan Menezes | 02/09/2022 | DLTIP - performance shares | ADR | 33,845 | — | $6,610 | 375 | % | |||||||||||||||
Debra Crew | 02/09/2022 | DLTIP - share options | ADR | 26,629 | $176.95 | $5,200 | 360 | % | |||||||||||||||
Debra Crew | 02/09/2022 | DLTIP - performance shares | ADR | 26,629 | $0.00 | $5,200 | 360 | % | |||||||||||||||
Lavanya Chandrashekar | 02/09/2022 | DLTIP - share options | ADR | 18,512 | $176.95 | $3,615 | 360 | % | |||||||||||||||
Lavanya Chandrashekar | 02/09/2022 | DLTIP - performance shares | ADR | 18,512 | — | $3,615 | 360 | % |
Plan name | Date of award | Performance period | Date of vesting | Share type | Share price on date of grant | Exercise price | Number of shares/options at 30 June 2021 1 | Granted | Vested/exercised | Dividend Equivalent Shares released | Lapsed | Number of shares/options at 30 June 2022 | ||||||||||||||||||||||||||
Ivan Menezes | ||||||||||||||||||||||||||||||||||||||
DLTIP – share options10 | Sep 2015 | 2015-2018 | 2018 | ADR | $104.93 | 29,895 | 29,895 | 0 | ||||||||||||||||||||||||||||||
DLTIP – share options10 | Sep 2016 | 2016-2019 | 2019 | ADR | $113.66 | 39,734 | 39,734 | — | ||||||||||||||||||||||||||||||
DLTIP – share options3 | Sep 2017 | 2017-2020 | 2020 | ADR | $134.06 | 14,098 | 14,098 | |||||||||||||||||||||||||||||||
DLTIP – share options3 | Sep 2018 | 2018-2021 | 2021 | ADR | $140.89 | 42,848 | 38,564 | 4,284 | ||||||||||||||||||||||||||||||
Total vested but unexercised share options in Ords2 | 73,528 | |||||||||||||||||||||||||||||||||||||
DLTIP - share options4,5 | Sep 2019 | 2019-2022 | 2022 | ADR | $170.28 | 38,827 | 38,827 | |||||||||||||||||||||||||||||||
DLTIP - share options6 | Sep 2020 | 2020-2023 | 2023 | ADR | $133.88 | 43,377 | 43,377 | |||||||||||||||||||||||||||||||
DLTIP - share options7 | Sep 2021 | 2021-2024 | 2024 | ADR | $194.75 | 0 | 36,675 | 36,675 | ||||||||||||||||||||||||||||||
Total unvested share options subject to performance in Ords2 | 475,516 | |||||||||||||||||||||||||||||||||||||
DLTIP - performance shares8 | Sep 2018 | 2018-2021 | 2021 | ADR | $139.41 | 42,848 | 12,554 | 701 | 30,294 | 0 | ||||||||||||||||||||||||||||
DLTIP - performance shares4,5 | Sep 2019 | 2019-2022 | 2022 | ADR | $174.72 | 38,827 | 38,827 | |||||||||||||||||||||||||||||||
DLTIP - performance shares6 | Sep 2020 | 2020-2023 | 2023 | ADR | $133.70 | 43,377 | 43,377 | |||||||||||||||||||||||||||||||
DLTIP - performance shares7 | Sep 2021 | 2021-2024 | 2024 | ADR | $195.97 | 0 | 36,675 | 36,675 | ||||||||||||||||||||||||||||||
Total unvested shares subject to performance in Ords2 | 475,516 | |||||||||||||||||||||||||||||||||||||
Lavanya Chandrashekar | ||||||||||||||||||||||||||||||||||||||
DLTIP – share options3 | Sep 2018 | 2018-2021 | 2021 | ADR | $140.89 | 3,832 | 3,832 | |||||||||||||||||||||||||||||||
DLTIP – share options3 | Sep 2018 | 2018-2021 | 2021 | ADR | $140.89 | 1,064 | 1,064 | |||||||||||||||||||||||||||||||
Total vested but unexercised share options in Ords2 | 19,584 | |||||||||||||||||||||||||||||||||||||
DLTIP – share options7 | Sep 2021 | 2021-2024 | 2024 | ADR | $194.75 | 20,060 | 20,060 | |||||||||||||||||||||||||||||||
Total unvested share options subject to performance in Ords2 | 80,240 | |||||||||||||||||||||||||||||||||||||
DLTIP – performance shares | Sep 2018 | 2018-2021 | 2021 | ADR | $139.41 | 1,593 | 503 | 28 | 1,090 | 0 | ||||||||||||||||||||||||||||
DLTIP – performance shares4,5 | Sep 2019 | 2019-2022 | 2022 | ADR | $174.72 | 1,444 | 1,444 | |||||||||||||||||||||||||||||||
DLTIP – performance shares6 | Sep 2020 | 2020-2023 | 2023 | ADR | $133.70 | 1,827 | 1,827 | |||||||||||||||||||||||||||||||
DLTIP – performance shares7 | Sep 2021 | 2021-2024 | 2024 | ADR | $195.97 | 20,060 | 20,060 | |||||||||||||||||||||||||||||||
Total unvested shares subject to performance in Ords2 | 93,324 | |||||||||||||||||||||||||||||||||||||
DLTIP – restricted stock units | Sep 2018 | 2018-2021 | 2021 | ADR | $139.41 | 766 | 766 | 0 | ||||||||||||||||||||||||||||||
DLTIP – restricted stock units | Sep 2018 | 2018-2021 | 2021 | ADR | $139.41 | 1774 | 1,774 | 0 | ||||||||||||||||||||||||||||||
DLTIP – restricted stock units | Sep 2019 | 2019-2022 | 2022 | ADR | $174.72 | 1567 | 1,567 | |||||||||||||||||||||||||||||||
DLTIP – restricted stock units | Sep 2020 | 2020-2023 | 2023 | ADR | $133.70 | 2,635 | 2,635 | |||||||||||||||||||||||||||||||
Total unvested shares not subject to performance in Ords2,9 | 16,808 |
Plan name | Date of award | Performance period | Year of vesting | Award calculation share price | Exercise price | Number of shares/options at 30 June 2022 (1) | Granted | Vested/exercised | Dividend equivalent Shares released | Lapsed | Number of shares/options at 30 June 2023 | Share type | ||||||||||||||||||||||||||
Ivan Menezes | ||||||||||||||||||||||||||||||||||||||
DLTIP – share options(3) | Sep 2017 | 2017-2020 | 2020 | $134.06 | 14,098 | 14,098 | ADR | |||||||||||||||||||||||||||||||
DLTIP – share options(3) | Sep 2018 | 2018-2021 | 2021 | $140.89 | 4,284 | 4,284 | ADR | |||||||||||||||||||||||||||||||
DLTIP – share options(3) | Sep 2019 | 2019-2022 | 2022 | $170.28 | 38,827 | 14,949 | 23,878 | ADR | ||||||||||||||||||||||||||||||
Total vested but unexercised share options in Ordinary shares(2) | 169,040 | ORD | ||||||||||||||||||||||||||||||||||||
DLTIP - share options(4) (5) (9) | Sep 2020 | 2020-2023 | 2023 | $133.88 | 43,377 | 43,377 | ADR | |||||||||||||||||||||||||||||||
DLTIP – share options(6) (9) (11) | Sep 2021 | 2021-2024 | 2024 | $194.75 | 36,675 | 12,248 | 24,427 | ADR | ||||||||||||||||||||||||||||||
DLTIP - share options(7) (9) (11) | Sep 2022 | 2022-2025 | 2025 | $176.95 | 33,845 | 22,574 | 11,271 | ADR | ||||||||||||||||||||||||||||||
Total unvested share options subject to performance in Ordinary shares(2) | 316,300 | ORD | ||||||||||||||||||||||||||||||||||||
DLTIP - performance shares | Sep 2019 | 2019-2022 | 2022 | $160.46 | 38,827 | 23,024 | 1,476 | 15,803 | 0 | ADR | ||||||||||||||||||||||||||||
DLTIP - performance shares(4) (5) (9) | Sep 2020 | 2020-2023 | 2023 | $143.63 | 43,377 | 43,377 | ADR | |||||||||||||||||||||||||||||||
DLTIP - performance shares(6) (9) | Sep 2021 | 2021-2024 | 2024 | $174.97 | 36,675 | 12,248 | 24,427 | ADR | ||||||||||||||||||||||||||||||
DLTIP - performance shares(7) (9) | Sep 2022 | 2022-2025 | 2025 | $195.29 | 33,845 | 22,574 | 11,271 | ADR | ||||||||||||||||||||||||||||||
Total unvested shares subject to performance in Ordinary shares(2) | 316,300 | ORD | ||||||||||||||||||||||||||||||||||||
Debra Crew | ||||||||||||||||||||||||||||||||||||||
DLTIP - share options(4) (5) | Sep 2020 | 2020-2023 | 2023 | $133.88 | 30,076 | 30,076 | ADR | |||||||||||||||||||||||||||||||
DLTIP – share options(6) (11) | Sep 2021 | 2021-2024 | 2024 | $194.75 | 27,019 | 27,019 | ADR | |||||||||||||||||||||||||||||||
DLTIP - share options(7) (11) | Sep 2022 | 2022-2025 | 2025 | $176.95 | 26,629 | 26,629 | ADR | |||||||||||||||||||||||||||||||
Total unvested share options subject to performance in Ordinary shares(2) | 334,896 | ORD | ||||||||||||||||||||||||||||||||||||
DLTIP - performance shares(4) (5) | Sep 2020 | 2020-2023 | 2023 | $143.63 | 30,076 | 30,076 | ADR | |||||||||||||||||||||||||||||||
DLTIP - performance shares(6) | Sep 2021 | 2021-2024 | 2024 | $174.97 | 27,019 | 27,019 | ADR | |||||||||||||||||||||||||||||||
DLTIP - performance shares(7) | Sep 2022 | 2022-2025 | 2025 | $195.29 | 26,629 | 26,629 | ADR | |||||||||||||||||||||||||||||||
DESAP - performance shares(4)(5)(8) | Sep 2020 | 2020-2023 | 2023 | $143.63 | 19,494 | 19,494 | ADR | |||||||||||||||||||||||||||||||
DESAP - performance shares(8) | Mar 2022 | 2023-2025 | 2026 | $197.06 | 8,796 | 8,796 | ADR | |||||||||||||||||||||||||||||||
DESAP - performance shares(8) | Mar 2022 | 2024-2026 | 2027 | $197.06 | 8,930 | 8,930 | ADR | |||||||||||||||||||||||||||||||
DESAP - performance shares(8) | Mar 2022 | 2025-2027 | 2028 | $197.06 | 8,930 | 8,930 | ADR | |||||||||||||||||||||||||||||||
Total unvested shares subject to performance in Ordinary shares(2) | 519,496 | ORD | ||||||||||||||||||||||||||||||||||||
DESAP – restricted stock units (8) | Mar 2022 | 2027 | $197.06 | 8,796 | 8,796 | ADR | ||||||||||||||||||||||||||||||||
DESAP – restricted stock units (8) | Mar 2022 | 2028 | $197.06 | 8,930 | 8,930 | ADR | ||||||||||||||||||||||||||||||||
DESAP – restricted stock units (8) | Mar 2022 | 2029 | $197.06 | 8,930 | 8,930 | ADR | ||||||||||||||||||||||||||||||||
Total unvested shares not subject to performance in Ordinary shares(2), (8) | 106,624 | ORD | ||||||||||||||||||||||||||||||||||||
Lavanya Chandrashekar | ||||||||||||||||||||||||||||||||||||||
DLTIP – share options(3) | Sep 2018 | 2018-2021 | 2021 | $140.89 | 3,832 | 3,832 | ADR | |||||||||||||||||||||||||||||||
DLTIP – share options(3) | Sep 2018 | 2018-2021 | 2021 | $140.89 | 1,064 | 1,064 | ADR | |||||||||||||||||||||||||||||||
Total vested but unexercised share options in Ordinary shares(2) | 19,584 | ORD | ||||||||||||||||||||||||||||||||||||
DLTIP – share options(6) (11) | Sep 2021 | 2021-2024 | 2024 | $194.75 | 20,060 | 20,060 | ADR | |||||||||||||||||||||||||||||||
DLTIP – share options(7) (11) | Sep 2022 | 2022-2025 | 2025 | $176.95 | 18,512 | 18,512 | ADR | |||||||||||||||||||||||||||||||
Total unvested share options subject to performance in Ordinary shares(2) | 154,288 | ORD | ||||||||||||||||||||||||||||||||||||
DLTIP – performance shares | Sep 2019 | 2019-2022 | 2022 | $160.46 | 1,444 | 863 | 55 | 581 | — | ADR | ||||||||||||||||||||||||||||
DLTIP – performance shares(4) (5) | Sep 2020 | 2020-2023 | 2023 | $143.63 | 1,827 | 1,827 | ADR | |||||||||||||||||||||||||||||||
DLTIP – performance shares(6) | Sep 2021 | 2021-2024 | 2024 | $174.97 | 20,060 | 20,060 | ADR | |||||||||||||||||||||||||||||||
DLTIP – performance shares(7) | Sep 2022 | 2022-2025 | 2025 | $195.29 | 18,512 | 18,512 | ADR | |||||||||||||||||||||||||||||||
Total unvested shares subject to performance in Ordinary shares(2) | 161,596 | ORD | ||||||||||||||||||||||||||||||||||||
DLTIP – restricted stock units (10) | Sep 2019 | 2019-2022 | 2022 | $160.46 | 1,567 | 1,567 | 1,567 | — | ADR | |||||||||||||||||||||||||||||
DLTIP – restricted stock units (10) | Sep 2020 | 2020-2023 | 2023 | $143.63 | 2,635 | 2,635 | ADR | |||||||||||||||||||||||||||||||
Total unvested shares not subject to performance in Ordinary shares(2),(10) | 10,540 | ORD |
Directors’ shareholding requirements and share and other interests |
Ordinary shares or equivalent1,2 | ||||||||||||||||||||
26 July 2022 | 30 June 2022(or date of departure, if earlier) | 30 June 2021 (or date of appointment if later) | Shareholding requirement (% salary)3 | Shareholding at 26 July 2022 (% salary)3 | Shareholding requirement met | |||||||||||||||
Chairman | ||||||||||||||||||||
Javier Ferrán7,9 | 307,522 | 307,288 | 254,242 | |||||||||||||||||
Executive Directors | ||||||||||||||||||||
Ivan Menezes4,5,7 | 1,078,566 | 1,078,566 | 1,145,894 | 500 | % | 3,093 | % | Yes | ||||||||||||
Lavanya Chandrashekar6,7 | 6,228 | 6,228 | 400 | % | 31 | % | No - to be met by July 2026 | |||||||||||||
Non-Executive Directors | ||||||||||||||||||||
Susan Kilsby7 | 2,600 | 2,600 | 2,600 | |||||||||||||||||
Melissa Bethell | 2,668 | 2,668 | ||||||||||||||||||
Valérie Chapoulaud-Floquet | 2,055 | 2,055 | 2,017 | |||||||||||||||||
Sir John Manzoni | 2,870 | 2,870 | 2,816 | |||||||||||||||||
Lady Mendelsohn | 5,000 | 5,000 | 5,000 | |||||||||||||||||
Alan Stewart | 7,120 | 7,120 | 7,069 | |||||||||||||||||
Ireena Vittal | 0 | 0 | ||||||||||||||||||
Karen Blackett8 | 0 | 0 |
Ordinary shares or equivalent(1),(2) | ||||||||||||||||||||
26 July 2023 | 30 June 2023 (or date of cessation, if earlier)(or date of departure, if earlier) | 30 June 2022 (or date of appointment if later) | Shareholding requirement (% salary)(3) | Shareholding at 25 July 2023 (% salary)(3) | Shareholding requirement met | |||||||||||||||
Chairman | ||||||||||||||||||||
Javier Ferrán(7) | 310,720 | 310,468 | 307,288 | |||||||||||||||||
Executive Directors | ||||||||||||||||||||
Ivan Menezes(4),(7) | 1,141,234 | 1,141,234 | 1,078,566 | 500 | % | 2,728 | % | Yes | ||||||||||||
Debra Crew(7),(8) | 260 | 260 | n/a | 500 | % | 1 | % | No - to be met by June 2028 | ||||||||||||
Lavanya Chandrashekar (5),(6),(7) | 11,113 | 11,109 | 6,228 | 400 | % | 47 | % | No - to be met by July 2026 | ||||||||||||
Non-Executive Directors | ||||||||||||||||||||
Susan Kilsby(7) | 2,600 | 2,600 | 2,600 | |||||||||||||||||
Melissa Bethell | 2,668 | 2,668 | 26.68 | |||||||||||||||||
Valérie Chapoulaud-Floquet | 2,098 | 2,098 | 2,055 | |||||||||||||||||
Sir John Manzoni | 2,929 | 2,929 | 2,870 | |||||||||||||||||
Lady Nicola Mendelsohn | 5,000 | 5,000 | 5,000 | |||||||||||||||||
Alan Stewart | 7,269 | 7,269 | 7,120 | |||||||||||||||||
Ireena Vittal | — | — | — | |||||||||||||||||
Karen Blackett | — | — | — |
Ivan Menezes(1) £'000 F14 | Ivan Menezes(1) £'000 F15 | Ivan Menezes(1) £'000 F16 | Ivan Menezes(1) £'000 F17 | Ivan Menezes1 £'000 F18 | Ivan Menezes(1) £'000 F19 | Ivan Menezes(1) £'000 F20 | Ivan Menezes(1) £'000 F21 | Ivan Menezes(1) £'000 F22 | Ivan Menezes(1) £'000 F23 | Debra Crew(1) £'000 F23 | |||||||||||||||||||||||||
Chief Executive total remuneration (includes legacy DLTIP awards) | 7,312 | 3,888 | 4,156 | 3,399 | 8,995 | 11,776 | 2,273 | 6,019 | 7,343 | 10,582 | 403 | ||||||||||||||||||||||||
Annual incentive(2) | 9 | % | 44 | % | 65 | % | 68 | % | 70 | % | 61 | % | 0.0 | % | 94 | % | 93.75 | % | 37.25 | % | 35.38 | % | |||||||||||||
Share options(2) | 71 | % | 0 | % | 0 | % | 0 | % | 60 | % | 73 | % | 27.5 | % | 10.0 | % | 61.5 | % | 77.5 | % | 77.5 | % | |||||||||||||
Performance shares(2) | 55 | % | 33 | % | 31 | % | 0 | % | 70 | % | 89 | % | 10.0 | % | 29.3 | % | 59.3 | % | 98.7 | % | 98.8 | % |
Paul S Walsh £'000 F13 | Ivan Menezes1 £'000 F14 | Ivan Menezes1 £'000 F15 | Ivan Menezes1 £'000 F16 | Ivan Menezes1 £'000 F17 | Ivan Menezes1 £'000 F18 | Ivan Menezes1 £'000 F19 | Ivan Menezes1 £'000 F20 | Ivan Menezes1 £'000 F21 | Ivan Menezes1 £'000 F22 | |||||||||||||||||||||||
Chief Executive total remuneration (includes legacy LTIP awards) | 15,557 | 7,312 | 3,888 | 4,156 | 3,399 | 8,995 | 11,776 | 2,273 | 6,019 | 7,881 | ||||||||||||||||||||||
Annual incentive2 | 51 | % | 9 | % | 44 | % | 65 | % | 68 | % | 70 | % | 61.0 | % | 0 | % | 93.75 | % | 93.75 | % | ||||||||||||
Share options2 | 100 | % | 71 | % | 0 | % | 0 | % | 0 | % | 60 | % | 73.1 | % | 27.5 | % | 10.0 | % | 61.5 | % | ||||||||||||
Performance shares2 | 95 | % | 55 | % | 33 | % | 31 | % | 0 | % | 70 | % | 89.3 | % | 10.0 | % | 29.3 | % | 59.3 | % |
Year | Method | Median pay ratio | ||||||||||||
Option A | ||||||||||||||
2023 | Total pay and benefits | £47,295 | £61,733 | £80,159 | ||||||||||
2023 | Salary | £33,137 | £44,398 | £54,679 | ||||||||||
Option A | 146:1 | 114:1 | 90:1 | |||||||||||
2021 | Option A(2) | 127:1 | 100:1 | 79:1 | ||||||||||
2020 | Option A(2) | 50:1 | 38:1 | 31:1 | ||||||||||
Option A | ||||||||||||||
Year-on-year change in pay for Directors compared to the global average employee | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | |||||||||||||||||||||
Plc employee average1 | 11.1 | % | 25.8 | % | 10.5 | % | 5.1 | % | N/A | 38.8 | % | 7.5 | % | (100) | % | 9.0 | % | ||||||||||||
Average global employee2 | 6.4 | % | 38.4 | % | 11.7 | % | 0.0 | % | 278.8 | % | 12.6 | % | 5.3 | % | (68) | % | 6.9 | % | |||||||||||
Executive Directors3 | |||||||||||||||||||||||||||||
Ivan Menezes8 | 2.3 | % | 4.4 | 59.5 | % | 0.7 | % | N/A5 | (10.7) | % | 2.7 | % | (100) | % | 0.8 | % | |||||||||||||
Lavanya Chandrashekar | N/A5 | N/A5 | N/A5 | N/A5 | N/A5 | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Non-Executive Directors4 | |||||||||||||||||||||||||||||
Melissa Bethell | 2.3 | — | 16.0 | N/A5 | — | — | — | — | — | ||||||||||||||||||||
Valérie Chapoulaud-Floquet6 | — | — | — | N/A5 | — | — | — | — | — | ||||||||||||||||||||
Javier Ferrán (Chairman) | 8.3 | % | — | 28.8 | % | 0.0 | % | — | 0.0 | % | 0.0 | % | — | 0.0 | % | ||||||||||||||
Susan Kilsby7 | 3.8 | % | — | 300.0 | % | 9.6 | % | — | (87.7) | % | 37.3 | % | — | 68.9 | % | ||||||||||||||
Sir John Manzoni6 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Lady Mendelsohn | 2.3 | % | — | 0.0 | % | 3.2 | % | — | 0.0 | % | 3.3 | % | — | 0.0 | % | ||||||||||||||
Alan Stewart | 4.7 | % | — | 0.0 | % | 2.4 | % | — | 0.0 | % | 2.5 | % | — | 0.0 | % | ||||||||||||||
Ireena Vittal6 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Karen Blackett | N/A5 | — | N/A5 | — | — | — | — | — | — |
2023 | 2022 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | |||||||||||||||||||||||||||
Plc employee average(1) | 9.0 | % | (61.3 | %) | (7.2 | %) | 11.1 | % | 25.8 | % | 10.5 | % | 5.1 | % | N/A(5) | 38.8 | % | 7.5 | % | (100.0 | %) | 9.0 | % | |||||||||||||||
Average global employee(2) | 12.9 | % | (41.6 | %) | 17.0 | % | 6.4 | % | 38.4 | % | 11.7 | % | — | 278.8 | % | 12.6 | % | 5.3 | % | (67.8) | 6.9 | % | ||||||||||||||||
Executive Directors(3) | ||||||||||||||||||||||||||||||||||||||
Ivan Menezes(6) | — | — | — | 2.3 | % | 4.4 | % | 59.5 | % | 0.7 | % | N/A(5) | -10.7 | % | 2.7 | % | -100.0 | % | 0.8 | % | ||||||||||||||||||
Debra Crew(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | ||||||||||||||||||||||||||
Lavanya Chandrashekar | 2.3 | % | (58.8 | %) | (89.4 | %) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | N/A(5) | |||||||||||||||||||||||
Non-Executive Directors(4) | ||||||||||||||||||||||||||||||||||||||
Melissa Bethell (7) | 3.0 | % | — | 10.1 | % | 2.3 | % | — | 16.0 | % | N/A(5) | — | — | — | — | — | ||||||||||||||||||||||
Karen Blackett (5) | N/A(5) | — | N/A(5) | N/A(5) | — | N/A(5) | — | — | — | — | — | — | ||||||||||||||||||||||||||
Valérie Chapoulaud-Floquet (7) | 3.0 | % | — | 108.5 | % | — | — | — | N/A(5) | — | — | — | — | — | ||||||||||||||||||||||||
Javier Ferrán (Chairman) | 2.3 | % | — | (22.4 | %) | 8.3 | % | — | 28.8 | % | 0.0 | % | — | 0.0 | % | 0.0 | % | — | 0.0 | % | ||||||||||||||||||
Susan Kilsby (7) | 2.6 | % | — | 125.7 | % | 3.8 | % | — | 300.0 | % | 9.6 | % | — | (87.7 | %) | 37.3 | % | — | 68.9 | % | ||||||||||||||||||
Sir John Manzoni (7) | 3.0 | % | — | 20.0 | % | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Lady Mendelsohn | 3.0 | % | — | 0.0 | % | 2.3 | % | — | 0.0 | % | 3.2 | % | — | 0.0 | % | 3.3 | % | — | 0.0 | % | ||||||||||||||||||
Alan Stewart | 3.2 | % | — | 0.0 | % | 4.7 | % | — | 0.0 | % | 2.4 | % | — | 0.0 | % | 2.5 | % | — | 0.0 | % | ||||||||||||||||||
Ireena Vittal (7) | 3.0 | % | — | 734.0 | % | — | — | — | — | — | 0.0 | % | — | — | 0.0 | % |
Non-Executive Directors |
January 2022 | January 2021 | |||||||
Per annum fees | £'000 | £'000 | ||||||
Chairman of the Board | 650 | 600 | ||||||
Non-Executive Directors | ||||||||
Base fee | 101 | 98 | ||||||
Senior Non-Executive Director | 30 | 30 | ||||||
Chairman of the Audit Committee | 35 | 30 | ||||||
Chairman of the Remuneration Committee | 35 | 30 |
January 2023 | January 2022 | |||||||
Per annum fees | £'000 | £'000 | ||||||
Chairman of the Board | 670 | 650 | ||||||
Non-Executive Directors | ||||||||
Base fee | 104 | 101 | ||||||
Senior Non-Executive Director | 30 | 30 | ||||||
Chairman of the Audit Committee | 35 | 35 | ||||||
Chairman of the Remuneration Committee | 35 | 35 |
Fees £'000 | Taxable benefits1 £'000 | Total £'0004 | ||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
Chairman | ||||||||||||||||||||
Javier Ferrán2 | 650 | 600 | 2 | 1 | 652 | 601 | ||||||||||||||
Non-Executive Directors | ||||||||||||||||||||
Susan Kilsby | 164 | 158 | 5 | 1 | 169 | 159 | ||||||||||||||
Melissa Bethell | 100 | 98 | 1 | 1 | 102 | 99 | ||||||||||||||
Valérie Chapoulaud-Floquet | 100 | 49 | 5 | 1 | 105 | 50 | ||||||||||||||
Sir John Manzoni | 100 | 74 | 1 | 1 | 102 | 75 | ||||||||||||||
Lady Mendelsohn | 100 | 98 | 1 | 1 | 102 | 99 | ||||||||||||||
Alan Stewart | 134 | 128 | 1 | 1 | 135 | 129 | ||||||||||||||
Ireena Vittal | 100 | 73 | 1 | 1 | 102 | 74 | ||||||||||||||
Karen Blackett3 | 8 | n/a | — | n/a | 9 | n/a |
Fees £'000 | Taxable benefits £'000(1) | Total £'000(4) | ||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Chairman | ||||||||||||||||||||
Javier Ferrán(2) | 665 | 650 | 1 | 2 | 666 | 652 | ||||||||||||||
Non-Executive Directors | ||||||||||||||||||||
Melissa Bethell | 103 | 100 | 2 | 1 | 105 | 102 | ||||||||||||||
Karen Blackett(3) | 103 | 8 | 1 | — | 104 | 9 | ||||||||||||||
Valérie Chapoulaud-Floquet | 103 | 100 | 10 | 5 | 113 | 105 | ||||||||||||||
Susan Kilsby | 168 | 164 | 11 | 5 | 179 | 169 | ||||||||||||||
Sir John Manzoni | 103 | 100 | 2 | 1 | 105 | 102 | ||||||||||||||
Lady Mendelsohn | 103 | 100 | 1 | 1 | 104 | 102 | ||||||||||||||
Alan Stewart | 138 | 134 | 1 | 1 | 139 | 135 | ||||||||||||||
Ireena Vittal | 103 | 100 | 10 | 1 | 113 | 102 |
Salary increases |
Ivan Menezes | Lavanya Chandrashekar | |||||||||||||
Salary at 1 October ('000) | 2022 | 2021 | 2022 | 2021 | ||||||||||
Base salary | $1,763 | $1,711 | $1,004 | $975 | ||||||||||
% increase (over previous year) | 3 | % | 3 | % | 3 | % | — |
Debra Crew | Lavanya Chandrashekar | |||||||||||||
Salary at 1 October ('000) | 2023 | 2022 | 2023 | 2022 | ||||||||||
Base salary | $1,750 | n/a | $1,044 | $1,004 | ||||||||||
% increase (over previous year) | n/a | n/a | 4 | % | 3 |
Annual incentive design for the year ending 30 June |
Long-term incentive awards to be made in the year ending 30 June |
Grant value (% salary) | Chief Executive | Chief Financial Officer | ||||||
Performance share equivalents (1 share: 3 options) | ||||||||
Performance shares | 375 | % | 360 | % | ||||
Share options | 125 | % | 120 | % | ||||
Total | 500 | % | 480 | % |
Performance shares | Share options | |||||||||||||||||||||||||||||||||||||
Organic profit before exceptional items and tax (CAGR) | Environmental, social & governance (ESG) | |||||||||||||||||||||||||||||||||||||
Organic net sales (CAGR) | Greenhouse gas reduction1 | Water efficiency | Positive drinking | % Female leaders | % Ethnically diverse leaders | Vesting schedule | Relative Total Shareholder Return | Cumulative free cash flow (£m) | Vesting schedule | |||||||||||||||||||||||||||||
Weighting (% total) | 40 | % | 40 | % | 5 | % | 5 | % | 5 | % | 2.5 | % | 2.5 | % | 100 | % | 50.0 | % | 50.0 | % | 100 | % | ||||||||||||||||
Maximum | 8.5 | % | 12.0 | % | 17.6 | % | 12.1 | % | 4.0m | 47 | % | 44 | % | 100 | % | 3rd and above | £9,450 | 100 | % | |||||||||||||||||||
Midpoint | 6.5 | % | 8.5 | % | 14.2 | % | 9.2 | % | 3.3m | 46 | % | 43 | % | 60 | % | — | £8,550 | 60 | % | |||||||||||||||||||
Threshold | 4.5 | % | 5.0 | % | 10.7 | % | 6.3 | % | 2.6m | 45 | % | 42 | % | 20 | % | 9th and above | £7,650 | 20 | % |
Performance shares | Share options | |||||||||||||||||||||||||||||||||||||
Organic profit before exceptional items and tax (CAGR) | Environmental, social & governance (ESG) | |||||||||||||||||||||||||||||||||||||
Organic net sales (CAGR) | Greenhouse gas reduction | Water efficiency index (1) | Positive drinking | % Female leaders | % Ethnically diverse leaders | Vesting schedule | Relative Total Shareholder Return | Cumulative free cash flow ($m) (2) | Vesting schedule | |||||||||||||||||||||||||||||
Weighting (% total) | 40 | % | 40 | % | 5 | % | 5 | % | 5 | % | 2.5 | % | 2.5 | % | 50.0 | % | 50.0 | % | ||||||||||||||||||||
Maximum | 8.0 | % | 11.5 | % | 25.9 | % | 8.3 | % | 4.2m | 49 | % | 46 | % | 100 | % | 3rd and above | $12,600 | 100 | % | |||||||||||||||||||
Midpoint | 6.0 | % | 8.0 | % | 21.9 | % | 6.0 | % | 3.5m | 48 | % | 45 | % | 60 | % | — | $11,000 | 60 | % | |||||||||||||||||||
Threshold | 4.0 | % | 4.5 | % | 17.9 | % | 3.7 | % | 2.8m | 47 | % | 44 | % | 20 | % | 9th and above | $9,400 | 20 | % |
Number of options | Weighted average exercise price (£) | Exercise period | |||||||||
Ivan Menezes | 549,044 | 30.67 | 2020-2031 | ||||||||
Lavanya Chandrashekar | 99,824 | 33.73 | 2021-2031 | ||||||||
Other1 | 1,349,935 | 30.14 | 2015-2031 | ||||||||
Shareholder | Number of ordinary shares | Percentage of issued ordinary share (excluding treasury shares) | Date of notification of interest | ||||||||
BlackRock Investment Management (UK) Limited (indirect holding) | 147,296,928 | 5.89 | % | 3 December 2009 | |||||||
Capital Research and Management Company (indirect holding) | 124,653,096 | 4.99 | % | 28 April 2009 | |||||||
Massachusetts Financial Services Company (indirect holding) | 114,036,646 | 4.95 | % | 1 June 2022 |
Information (including that required by UK Listing Authority Listing Rule 9.8.4) | Location in Annual Report | ||||
Agreements with controlling shareholders | Not applicable | ||||
Contracts of significance | Not applicable | ||||
Details of long-term incentive schemes | Directors’ remuneration report | ||||
Directors’ indemnities and compensation | Directors’ remuneration report - Additional information; Consolidated financial statements - note 21 Related party transactions | ||||
Dividends | Group financial review; Consolidated financial statements - Unaudited financial information | ||||
Engagement with employees | Corporate governance report - Workforce engagement statement | ||||
Engagement with suppliers, customers and others | Corporate governance report - Stakeholder engagement | ||||
Events post 30 June | Consolidated financial statements - note 23 Post balance sheet events | ||||
Financial risk management | Consolidated financial statements - note 16 Financial instruments and risk management | ||||
Future developments | Chairman’s statement; Chief Executive’s statement; Our market dynamics | ||||
Greenhouse gas emissions | |||||
Interest capitalised | Not applicable | ||||
Non-pre-emptive issues of equity for cash (including in respect of major unlisted subsidiaries) | Not applicable | ||||
Parent participation in a placing by a listed subsidiary | Not applicable | ||||
Political donations | Corporate governance report | ||||
Provision of services by a controlling shareholder | Not applicable | ||||
Publication of unaudited financial information | Unaudited financial information | ||||
Purchase of own shares | Repurchase of shares; Consolidated financial statements - note 18 Equity | ||||
Research and development | Other Additional | ||||
Review of the business and principal risks and uncertainties | Chief Executive’s statement; Our principal risks and risk management; | ||||
Share capital - structure, voting and other rights | Consolidated financial statements - note 18 Equity | ||||
Share capital - employee share plan voting rights | Consolidated financial statements - note 18 Equity | ||||
Shareholder waivers of dividends | Consolidated financial statements - note 18 Equity | ||||
Shareholder waivers of future dividends | Consolidated financial statements - note 18 Equity | ||||
Sustainability and responsibility | |||||
Waiver of emoluments by a director | Not applicable | ||||
Waiver of future emoluments by a director | Not applicable |
Notes | Year ended 30 June 2022 £ million | Year ended 30 June 2021 £ million | Year ended 30 June 2020 £ million | |||||||||||
Sales | 2 | 22,448 | 19,153 | 17,697 | ||||||||||
Excise duties | 3 | (6,996) | (6,420) | (5,945) | ||||||||||
Net sales | 2 | 15,452 | 12,733 | 11,752 | ||||||||||
Cost of sales | 3 | (5,973) | (5,038) | (4,654) | ||||||||||
Gross profit | 9,479 | 7,695 | 7,098 | |||||||||||
Marketing | 3 | (2,721) | (2,163) | (1,841) | ||||||||||
Other operating items | 3 | (2,349) | (1,801) | (3,120) | ||||||||||
Operating profit | 4,409 | 3,731 | 2,137 | |||||||||||
Non-operating items | 4 | (17) | 14 | (23) | ||||||||||
Finance income | 5 | 497 | 278 | 366 | ||||||||||
Finance charges | 5 | (919) | (651) | (719) | ||||||||||
Share of after tax results of associates and joint ventures | 6 | 417 | 334 | 282 | ||||||||||
Profit before taxation | 4,387 | 3,706 | 2,043 | |||||||||||
Taxation | 7 | (1,049) | (907) | (589) | ||||||||||
Profit for the year | 3,338 | 2,799 | 1,454 | |||||||||||
Attributable to: | ||||||||||||||
Equity shareholders of the parent company | 3,249 | 2,660 | 1,409 | |||||||||||
Non-controlling interests | 89 | 139 | 45 | |||||||||||
3,338 | 2,799 | 1,454 | ||||||||||||
million | million | million | ||||||||||||
Weighted average number of shares | ||||||||||||||
Shares in issue excluding own shares | 2,318 | 2,337 | 2,346 | |||||||||||
Dilutive potential ordinary shares | 7 | 8 | 8 | |||||||||||
2,325 | 2,345 | 2,354 | ||||||||||||
pence | pence | pence | ||||||||||||
Basic earnings per share | 140.2 | 113.8 | 60.1 | |||||||||||
Diluted earnings per share | 139.7 | 113.4 | 59.9 | |||||||||||
Notes | Year ended 30 June 2023 £ million | Year ended 30 June 2022 £ million | Year ended 30 June 2021 £ million | |||||||||||
Sales | 2 | 23,515 | 22,448 | 19,153 | ||||||||||
Excise duties | 3 | (6,402) | (6,996) | (6,420) | ||||||||||
Net sales | 2 | 17,113 | 15,452 | 12,733 | ||||||||||
Cost of sales | 3 | (6,899) | (5,973) | (5,038) | ||||||||||
Gross profit | 10,214 | 9,479 | 7,695 | |||||||||||
Marketing | 3 | (3,051) | (2,721) | (2,163) | ||||||||||
Other operating items | 3 | (2,531) | (2,349) | (1,801) | ||||||||||
Operating profit | 4,632 | 4,409 | 3,731 | |||||||||||
Non-operating items | 4 | 328 | (17) | 14 | ||||||||||
Finance income | 5 | 340 | 497 | 278 | ||||||||||
Finance charges | 5 | (934) | (919) | (651) | ||||||||||
Share of after tax results of associates and joint ventures | 6 | 370 | 417 | 334 | ||||||||||
Profit before taxation | 4,736 | 4,387 | 3,706 | |||||||||||
Taxation | 7 | (970) | (1,049) | (907) | ||||||||||
Profit for the year | 3,766 | 3,338 | 2,799 | |||||||||||
Attributable to: | ||||||||||||||
Equity shareholders of the parent company | 3,734 | 3,249 | 2,660 | |||||||||||
Non-controlling interests | 32 | 89 | 139 | |||||||||||
3,766 | 3,338 | 2,799 | ||||||||||||
million | million | million | ||||||||||||
Weighted average number of shares | ||||||||||||||
Shares in issue excluding own shares | 2,264 | 2,318 | 2,337 | |||||||||||
Dilutive potential ordinary shares | 7 | 7 | 8 | |||||||||||
2,271 | 2,325 | 2,345 | ||||||||||||
pence | pence | pence | ||||||||||||
Basic earnings per share | 164.9 | 140.2 | 113.8 | |||||||||||
Diluted earnings per share | 164.4 | 139.7 | 113.4 | |||||||||||
Notes | Year ended 30 June 2022 £ million | Year ended 30 June 2021 £ million | Year ended 30 June 2020 £ million | |||||||||||
Other comprehensive income | ||||||||||||||
Items that will not be recycled subsequently to the income statement | ||||||||||||||
Net remeasurement of post employment benefit plans | ||||||||||||||
Group | 14 | 616 | 16 | 38 | ||||||||||
Associates and joint ventures | 5 | 3 | (14) | |||||||||||
Non-controlling interests | 14 | (1) | — | — | ||||||||||
Tax on post employment benefit plans | (123) | (46) | (21) | |||||||||||
Changes in the fair value of equity investments at fair value through other comprehensive income | (12) | — | — | |||||||||||
485 | (27) | 3 | ||||||||||||
Items that may be recycled subsequently to the income statement | ||||||||||||||
Exchange differences on translation of foreign operations | ||||||||||||||
Group | 1,128 | (1,233) | (104) | |||||||||||
Associates and joint ventures | 6 | 60 | (240) | 82 | ||||||||||
Non-controlling interests | 171 | (173) | (37) | |||||||||||
Net investment hedges | (623) | 810 | (227) | |||||||||||
Exchange loss recycled to the income statement | ||||||||||||||
On disposal of foreign operations | 8 | 63 | — | 4 | ||||||||||
Tax on exchange differences – group | (6) | (9) | 4 | |||||||||||
Tax on exchange differences – non-controlling interests | — | (1) | — | |||||||||||
Effective portion of changes in fair value of cash flow hedges | ||||||||||||||
Hedge of foreign currency debt of the group | 233 | (298) | 221 | |||||||||||
Transaction exposure hedging of the group | (172) | 101 | (43) | |||||||||||
Hedges by associates and joint ventures | (15) | (1) | 6 | |||||||||||
Commodity price risk hedging of the group | 78 | 41 | (11) | |||||||||||
Recycled to income statement – hedge of foreign currency debt of the group | (239) | 175 | (75) | |||||||||||
Recycled to income statement – transaction exposure hedging of the group | 42 | 10 | 42 | |||||||||||
Recycled to income statement – commodity price risk hedging of the group | (46) | (2) | 8 | |||||||||||
Tax on effective portion of changes in fair value of cash flow hedges | 32 | (6) | (23) | |||||||||||
Hyperinflation adjustments | 365 | (17) | (18) | |||||||||||
Tax on hyperinflation adjustments | (74) | 5 | 4 | |||||||||||
997 | (838) | (167) | ||||||||||||
Other comprehensive income/(loss), net of tax, for the year | 1,482 | (865) | (164) | |||||||||||
Profit for the year | 3,338 | 2,799 | 1,454 | |||||||||||
Total comprehensive income for the year | 4,820 | 1,934 | 1,290 | |||||||||||
Attributable to: | ||||||||||||||
Equity shareholders of the parent company | 4,561 | 1,969 | 1,282 | |||||||||||
Non-controlling interests | 18 | 259 | (35) | 8 | ||||||||||
Total comprehensive income for the year | 4,820 | 1,934 | 1,290 |
Notes | Year ended 30 June 2023 £ million | Year ended 30 June 2022 £ million | Year ended 30 June 2021 £ million | |||||||||||
Other comprehensive income | ||||||||||||||
Items that will not be recycled subsequently to the income statement | ||||||||||||||
Net remeasurement of post employment benefit plans | ||||||||||||||
Group | 14 | (643) | 616 | 16 | ||||||||||
Associates and joint ventures | 13 | 5 | 3 | |||||||||||
Non-controlling interests | 14 | — | (1) | — | ||||||||||
Tax on post employment benefit plans | 161 | (123) | (46) | |||||||||||
Changes in the fair value of equity investments at fair value through other comprehensive income | (4) | (12) | — | |||||||||||
(473) | 485 | (27) | ||||||||||||
Items that may be recycled subsequently to the income statement | ||||||||||||||
Exchange differences on translation of foreign operations | ||||||||||||||
Group | (876) | 1,128 | (1,233) | |||||||||||
Associates and joint ventures | 6 | (59) | 60 | (240) | ||||||||||
Non-controlling interests | (148) | 171 | (173) | |||||||||||
Net investment hedges | 416 | (623) | 810 | |||||||||||
Exchange (gain)/loss recycled to the income statement | ||||||||||||||
On disposal of foreign operations | 8 | (18) | 63 | — | ||||||||||
On step acquisitions | (1) | — | — | |||||||||||
Tax on exchange differences – group | (2) | (6) | (9) | |||||||||||
Tax on exchange differences – non-controlling interests | — | — | (1) | |||||||||||
Effective portion of changes in fair value of cash flow hedges | ||||||||||||||
Hedge of foreign currency debt of the group | 6 | 233 | (298) | |||||||||||
Transaction exposure hedging of the group | 273 | (172) | 101 | |||||||||||
Hedges by associates and joint ventures | 24 | (15) | (1) | |||||||||||
Commodity price risk hedging of the group | (56) | 78 | 41 | |||||||||||
Recycled to income statement – hedge of foreign currency debt of the group | 54 | (239) | 175 | |||||||||||
Recycled to income statement – transaction exposure hedging of the group | (13) | 42 | 10 | |||||||||||
Recycled to income statement – commodity price risk hedging of the group | (33) | (46) | (2) | |||||||||||
Tax on effective portion of changes in fair value of cash flow hedges | (39) | 32 | (6) | |||||||||||
Hyperinflation adjustments | 182 | 365 | (17) | |||||||||||
Tax on hyperinflation adjustments | (39) | (74) | 5 | |||||||||||
(329) | 997 | (838) | ||||||||||||
Other comprehensive (loss)/income, net of tax, for the year | (802) | 1,482 | (865) | |||||||||||
Profit for the year | 3,766 | 3,338 | 2,799 | |||||||||||
Total comprehensive income for the year | 2,964 | 4,820 | 1,934 | |||||||||||
Attributable to: | ||||||||||||||
Equity shareholders of the parent company | 3,080 | 4,561 | 1,969 | |||||||||||
Non-controlling interests | 18 | (116) | 259 | (35) | ||||||||||
Total comprehensive income for the year | 2,964 | 4,820 | 1,934 |
30 June 2022 | 30 June 2021 | ||||||||||||||||
Notes | £ million | £ million | £ million | £ million | |||||||||||||
Non-current assets | |||||||||||||||||
Intangible assets | 9 | 11,902 | 10,764 | ||||||||||||||
Property, plant and equipment | 10 | 5,848 | 4,849 | ||||||||||||||
Biological assets | 11 | 94 | 66 | ||||||||||||||
Investments in associates and joint ventures | 6 | 3,652 | 3,308 | ||||||||||||||
Other investments | 13 | 37 | 40 | ||||||||||||||
Other receivables | 15 | 37 | 36 | ||||||||||||||
Other financial assets | 16 | 345 | 327 | ||||||||||||||
Deferred tax assets | 7 | 114 | 100 | ||||||||||||||
Post employment benefit assets | 14 | 1,553 | 1,018 | ||||||||||||||
23,582 | 20,508 | ||||||||||||||||
Current assets | |||||||||||||||||
Inventories | 15 | 7,094 | 6,045 | ||||||||||||||
Trade and other receivables | 15 | 2,933 | 2,385 | ||||||||||||||
Corporate tax receivables | 7 | 149 | 145 | ||||||||||||||
Assets held for sale | 8 | 222 | — | ||||||||||||||
Other financial assets | 16 | 251 | 121 | ||||||||||||||
Cash and cash equivalents | 17 | 2,285 | 2,749 | ||||||||||||||
12,934 | 11,445 | ||||||||||||||||
Total assets | 36,516 | 31,953 | |||||||||||||||
Current liabilities | |||||||||||||||||
Borrowings and bank overdrafts | 17 | (1,522) | (1,862) | ||||||||||||||
Other financial liabilities | 16 | (444) | (257) | ||||||||||||||
Share buyback liability | 18 | (117) | (91) | ||||||||||||||
Trade and other payables | 15 | (5,887) | (4,648) | ||||||||||||||
Liabilities held for sale | 8 | (61) | — | ||||||||||||||
Corporate tax payables | 7 | (252) | (146) | ||||||||||||||
Provisions | 15 | (159) | (138) | ||||||||||||||
(8,442) | (7,142) | ||||||||||||||||
Non-current liabilities | |||||||||||||||||
Borrowings | 17 | (14,498) | (12,865) | ||||||||||||||
Other financial liabilities | 16 | (703) | (384) | ||||||||||||||
Other payables | 15 | (380) | (338) | ||||||||||||||
Provisions | 15 | (258) | (274) | ||||||||||||||
Deferred tax liabilities | 7 | (2,319) | (1,945) | ||||||||||||||
Post employment benefit liabilities | 14 | (402) | (574) | ||||||||||||||
(18,560) | (16,380) | ||||||||||||||||
Total liabilities | (27,002) | (23,522) | |||||||||||||||
Net assets | 9,514 | 8,431 | |||||||||||||||
Equity | |||||||||||||||||
Share capital | 18 | 723 | 741 | ||||||||||||||
Share premium | 1,351 | 1,351 | |||||||||||||||
Other reserves | 2,174 | 1,621 | |||||||||||||||
Retained earnings | 3,550 | 3,184 | |||||||||||||||
Equity attributable to equity shareholders of the parent company | 7,798 | 6,897 | |||||||||||||||
Non-controlling interests | 18 | 1,716 | 1,534 | ||||||||||||||
Total equity | 9,514 | 8,431 |
30 June 2023 | 30 June 2022 | ||||||||||||||||
Notes | £ million | £ million | £ million | £ million | |||||||||||||
Non-current assets | |||||||||||||||||
Intangible assets | 9 | 11,512 | 11,902 | ||||||||||||||
Property, plant and equipment | 10 | 6,142 | 5,848 | ||||||||||||||
Biological assets | 11 | 156 | 94 | ||||||||||||||
Investments in associates and joint ventures | 6 | 3,829 | 3,652 | ||||||||||||||
Other investments | 13 | 57 | 37 | ||||||||||||||
Other receivables | 15 | 31 | 37 | ||||||||||||||
Other financial assets | 16 | 394 | 345 | ||||||||||||||
Deferred tax assets | 7 | 141 | 114 | ||||||||||||||
Post employment benefit assets | 14 | 960 | 1,553 | ||||||||||||||
23,222 | 23,582 | ||||||||||||||||
Current assets | |||||||||||||||||
Inventories | 15 | 7,661 | 7,094 | ||||||||||||||
Trade and other receivables | 15 | 2,720 | 2,933 | ||||||||||||||
Corporate tax receivables | 7 | 232 | 149 | ||||||||||||||
Assets held for sale | 8 | — | 222 | ||||||||||||||
Other financial assets | 16 | 347 | 251 | ||||||||||||||
Cash and cash equivalents | 17 | 1,439 | 2,285 | ||||||||||||||
12,399 | 12,934 | ||||||||||||||||
Total assets | 35,621 | 36,516 | |||||||||||||||
Current liabilities | |||||||||||||||||
Borrowings and bank overdrafts | 17 | (1,701) | (1,522) | ||||||||||||||
Other financial liabilities | 16 | (359) | (444) | ||||||||||||||
Share buyback liability | — | (117) | |||||||||||||||
Trade and other payables | 15 | (5,300) | (5,887) | ||||||||||||||
Liabilities held for sale | 8 | — | (61) | ||||||||||||||
Corporate tax payables | 7 | (135) | (252) | ||||||||||||||
Provisions | 15 | (119) | (159) | ||||||||||||||
(7,614) | (8,442) | ||||||||||||||||
Non-current liabilities | |||||||||||||||||
Borrowings | 17 | (14,801) | (14,498) | ||||||||||||||
Other financial liabilities | 16 | (747) | (703) | ||||||||||||||
Other payables | 15 | (368) | (380) | ||||||||||||||
Provisions | 15 | (243) | (258) | ||||||||||||||
Deferred tax liabilities | 7 | (2,183) | (2,319) | ||||||||||||||
Post employment benefit liabilities | 14 | (373) | (402) | ||||||||||||||
(18,715) | (18,560) | ||||||||||||||||
Total liabilities | (26,329) | (27,002) | |||||||||||||||
Net assets | 9,292 | 9,514 | |||||||||||||||
Equity | |||||||||||||||||
Share capital | 18 | 712 | 723 | ||||||||||||||
Share premium | 1,351 | 1,351 | |||||||||||||||
Other reserves | 1,861 | 2,174 | |||||||||||||||
Retained earnings | 3,898 | 3,550 | |||||||||||||||
Equity attributable to equity shareholders of the parent company | 7,822 | 7,798 | |||||||||||||||
Non-controlling interests | 18 | 1,470 | 1,716 | ||||||||||||||
Total equity | 9,292 | 9,514 |
Other reserves | Retained earnings/(deficit) | |||||||||||||||||||||||||||||||||||||
Notes | Share capital £ million | Share premium £ million | Capital redemption reserve £ million | Hedging and exchange reserve £ million | Own shares £ million | Other retained earnings £ million | Total £ million | Equity attributable to parent company shareholders £ million | Non- controlling interests £ million | Total equity £ million | ||||||||||||||||||||||||||||
At 30 June 2019 | 753 | 1,350 | 3,190 | (818) | (2,026) | 5,912 | 3,886 | 8,361 | 1,795 | 10,156 | ||||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 1,409 | 1,409 | 1,409 | 45 | 1,454 | ||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (116) | — | (11) | (11) | (127) | (37) | (164) | ||||||||||||||||||||||||||||
Total comprehensive (loss)/ income for the year | — | — | — | (116) | — | 1,398 | 1,398 | 1,282 | 8 | 1,290 | ||||||||||||||||||||||||||||
Employee share schemes | — | — | — | — | 90 | (36) | 54 | 54 | — | 54 | ||||||||||||||||||||||||||||
Share-based incentive plans | 18 | — | — | — | — | — | 2 | 2 | 2 | — | 2 | |||||||||||||||||||||||||||
Share-based incentive plans in respect of associates | — | — | — | — | — | 4 | 4 | 4 | — | 4 | ||||||||||||||||||||||||||||
Tax on share-based incentive plans | — | — | — | — | — | 1 | 1 | 1 | — | 1 | ||||||||||||||||||||||||||||
Share-based payments and purchase of treasury shares in respect of subsidiaries | — | — | — | — | — | (1) | (1) | (1) | — | (1) | ||||||||||||||||||||||||||||
Shares issued | — | 1 | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||||||
Transfers | — | — | — | 5 | — | (5) | (5) | — | — | — | ||||||||||||||||||||||||||||
Purchase of non-controlling interests | 8 | — | — | — | — | — | (39) | (39) | (39) | (23) | (62) | |||||||||||||||||||||||||||
Non-controlling interest in respect of new subsidiary | — | — | — | — | — | — | — | — | 5 | 5 | ||||||||||||||||||||||||||||
Change in fair value of put option | — | — | — | — | — | 9 | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||
Share buyback programme | (11) | — | 11 | — | — | (1,256) | (1,256) | (1,256) | — | (1,256) | ||||||||||||||||||||||||||||
Dividend declared for the year | — | — | — | — | — | (1,646) | (1,646) | (1,646) | (117) | (1,763) | ||||||||||||||||||||||||||||
At 30 June 2020 | 742 | 1,351 | 3,201 | (929) | (1,936) | 4,343 | 2,407 | 6,772 | 1,668 | 8,440 | ||||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 2,660 | 2,660 | 2,660 | 139 | 2,799 | ||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (652) | — | (39) | (39) | (691) | (174) | (865) | ||||||||||||||||||||||||||||
Total comprehensive (loss)/income for the year | — | — | — | (652) | — | 2,621 | 2,621 | 1,969 | (35) | 1,934 | ||||||||||||||||||||||||||||
Employee share schemes | — | — | — | — | 59 | (10) | 49 | 49 | — | 49 | ||||||||||||||||||||||||||||
Share-based incentive plans | 18 | — | — | — | — | — | 49 | 49 | 49 | — | 49 | |||||||||||||||||||||||||||
Share-based incentive plans in respect of associates | — | — | — | — | — | 3 | 3 | 3 | — | 3 | ||||||||||||||||||||||||||||
Tax on share-based incentive plans | — | — | — | — | — | 9 | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||
Purchase of non-controlling interests | 8 | — | — | — | — | — | (15) | (15) | (15) | (27) | (42) | |||||||||||||||||||||||||||
Associates' transactions with non-controlling interests | — | — | — | — | — | (91) | (91) | (91) | — | (91) | ||||||||||||||||||||||||||||
Change in fair value of put option | — | — | — | — | — | (2) | (2) | (2) | — | (2) | ||||||||||||||||||||||||||||
Share buyback programme | (1) | — | 1 | — | — | (200) | (200) | (200) | — | (200) | ||||||||||||||||||||||||||||
Dividend declared for the year | 18 | — | — | — | — | — | (1,646) | (1,646) | (1,646) | (72) | (1,718) | |||||||||||||||||||||||||||
At 30 June 2021 | 741 | 1,351 | 3,202 | (1,581) | (1,877) | 5,061 | 3,184 | 6,897 | 1,534 | 8,431 | ||||||||||||||||||||||||||||
Adjustment to 2021 closing equity in respect of hyperinflation in Turkey | — | — | — | — | — | 251 | 251 | 251 | — | 251 | ||||||||||||||||||||||||||||
Adjusted opening balance | 741 | 1,351 | 3,202 | (1,581) | (1,877) | 5,312 | 3,435 | 7,148 | 1,534 | 8,682 | ||||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 3,249 | 3,249 | 3,249 | 89 | 3,338 | ||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 535 | — | 777 | 777 | 1,312 | 170 | 1,482 | ||||||||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | 535 | — | 4,026 | 4,026 | 4,561 | 259 | 4,820 | ||||||||||||||||||||||||||||
Employee share schemes | — | — | — | — | 39 | 50 | 89 | 89 | — | 89 | ||||||||||||||||||||||||||||
Share-based incentive plans | 18 | — | — | — | — | — | 59 | 59 | 59 | — | 59 | |||||||||||||||||||||||||||
Share-based incentive plans in respect of associates | — | — | — | — | — | 4 | 4 | 4 | — | 4 | ||||||||||||||||||||||||||||
Tax on share-based incentive plans | — | — | — | — | — | 9 | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||
Share-based payments and purchase of own shares in respect of subsidiaries | — | — | — | — | — | (11) | (11) | (11) | (6) | (17) | ||||||||||||||||||||||||||||
Unclaimed dividend | — | — | — | — | — | 3 | 3 | 3 | 1 | 4 | ||||||||||||||||||||||||||||
Change in fair value of put option | — | — | — | — | — | (34) | (34) | (34) | — | (34) | ||||||||||||||||||||||||||||
Share buyback programme | (18) | — | 18 | — | — | (2,310) | (2,310) | (2,310) | — | (2,310) | ||||||||||||||||||||||||||||
Dividend declared for the year | 18 | — | — | — | — | — | (1,720) | (1,720) | (1,720) | (72) | (1,792) | |||||||||||||||||||||||||||
At 30 June 2022 | 723 | 1,351 | 3,220 | (1,046) | (1,838) | 5,388 | 3,550 | 7,798 | 1,716 | 9,514 |
Other reserves | Retained earnings/(deficit) | |||||||||||||||||||||||||||||||||||||
Notes | Share capital £ million | Share premium £ million | Capital redemption reserve £ million | Hedging and exchange reserve £ million | Own shares £ million | Other retained earnings £ million | Total £ million | Equity attributable to parent company shareholders £ million | Non- controlling interests £ million | Total equity £ million | ||||||||||||||||||||||||||||
At 30 June 2020 | 742 | 1,351 | 3,201 | (929) | (1,936) | 4,343 | 2,407 | 6,772 | 1,668 | 8,440 | ||||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 2,660 | 2,660 | 2,660 | 139 | 2,799 | ||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (652) | — | (39) | (39) | (691) | (174) | (865) | ||||||||||||||||||||||||||||
Total comprehensive (loss)/income for the year | — | — | — | (652) | — | 2,621 | 2,621 | 1,969 | (35) | 1,934 | ||||||||||||||||||||||||||||
Employee share schemes | — | — | — | — | 59 | (10) | 49 | 49 | — | 49 | ||||||||||||||||||||||||||||
Share-based incentive plans | 18 | — | — | — | — | — | 49 | 49 | 49 | — | 49 | |||||||||||||||||||||||||||
Share-based incentive plans in respect of associates | — | — | — | — | — | 3 | 3 | 3 | — | 3 | ||||||||||||||||||||||||||||
Tax on share-based incentive plans | — | — | — | — | — | 9 | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||
Purchase of non-controlling interests | 8 | — | — | — | — | — | (15) | (15) | (15) | (27) | (42) | |||||||||||||||||||||||||||
Associates' transactions with non-controlling interests | — | — | — | — | — | (91) | (91) | (91) | — | (91) | ||||||||||||||||||||||||||||
Change in fair value of put option | — | — | — | — | — | (2) | (2) | (2) | — | (2) | ||||||||||||||||||||||||||||
Share buyback programme | (1) | — | 1 | — | — | (200) | (200) | (200) | — | (200) | ||||||||||||||||||||||||||||
Dividend declared for the year | 18 | — | — | — | — | — | (1,646) | (1,646) | (1,646) | (72) | (1,718) | |||||||||||||||||||||||||||
At 30 June 2021 | 741 | 1,351 | 3,202 | (1,581) | (1,877) | 5,061 | 3,184 | 6,897 | 1,534 | 8,431 | ||||||||||||||||||||||||||||
Adjustment to 2021 closing equity in respect of hyperinflation in Turkey | — | — | — | — | — | 251 | 251 | 251 | — | 251 | ||||||||||||||||||||||||||||
Adjusted opening balance | 741 | 1,351 | 3,202 | (1,581) | (1,877) | 5,312 | 3,435 | 7,148 | 1,534 | 8,682 | ||||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 3,249 | 3,249 | 3,249 | 89 | 3,338 | ||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 535 | — | 777 | 777 | 1,312 | 170 | 1,482 | ||||||||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | 535 | — | 4,026 | 4,026 | 4,561 | 259 | 4,820 | ||||||||||||||||||||||||||||
Employee share schemes | — | — | — | — | 39 | 50 | 89 | 89 | — | 89 | ||||||||||||||||||||||||||||
Share-based incentive plans | 18 | — | — | — | — | — | 59 | 59 | 59 | — | 59 | |||||||||||||||||||||||||||
Share-based incentive plans in respect of associates | — | — | — | — | — | 4 | 4 | 4 | — | 4 | ||||||||||||||||||||||||||||
Tax on share-based incentive plans | — | — | — | — | — | 9 | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||
Share-based payments and purchase of own shares in respect of subsidiaries | — | — | — | — | — | (11) | (11) | (11) | (6) | (17) | ||||||||||||||||||||||||||||
Unclaimed dividend | — | — | — | — | — | 3 | 3 | 3 | 1 | 4 | ||||||||||||||||||||||||||||
Change in fair value of put option | — | — | — | — | — | (34) | (34) | (34) | — | (34) | ||||||||||||||||||||||||||||
Share buyback programme | (18) | — | 18 | — | — | (2,310) | (2,310) | (2,310) | — | (2,310) | ||||||||||||||||||||||||||||
Dividend declared for the year | 18 | — | — | — | — | — | (1,720) | (1,720) | (1,720) | (72) | (1,792) | |||||||||||||||||||||||||||
At 30 June 2022 | 723 | 1,351 | 3,220 | (1,046) | (1,838) | 5,388 | 3,550 | 7,798 | 1,716 | 9,514 | ||||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 3,734 | 3,734 | 3,734 | 32 | 3,766 | ||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (324) | — | (330) | (330) | (654) | (148) | (802) | ||||||||||||||||||||||||||||
Total comprehensive (loss)/income for the year | — | — | — | (324) | — | 3,404 | 3,404 | 3,080 | (116) | 2,964 | ||||||||||||||||||||||||||||
Employee share schemes | — | — | — | — | 24 | 24 | 48 | 48 | — | 48 | ||||||||||||||||||||||||||||
Share-based incentive plans | 18 | — | — | — | — | — | 49 | 49 | 49 | — | 49 | |||||||||||||||||||||||||||
Share-based incentive plans in respect of associates | — | — | — | — | — | 6 | 6 | 6 | — | 6 | ||||||||||||||||||||||||||||
Tax on share-based incentive plans | — | — | — | — | — | 6 | 6 | 6 | — | 6 | ||||||||||||||||||||||||||||
Share-based payments and purchase of own shares in respect of subsidiaries | — | — | — | — | — | 3 | 3 | 3 | 2 | 5 | ||||||||||||||||||||||||||||
Purchase of non-controlling interests | 8 | — | — | — | — | — | (111) | (111) | (111) | (35) | (146) | |||||||||||||||||||||||||||
Associates' transactions with non-controlling interests | — | — | — | — | — | (7) | (7) | (7) | — | (7) | ||||||||||||||||||||||||||||
Unclaimed dividend | — | — | — | — | — | 1 | 1 | 1 | — | 1 | ||||||||||||||||||||||||||||
Change in fair value of put option | — | — | — | — | — | (16) | (16) | (16) | — | (16) | ||||||||||||||||||||||||||||
Share buyback programme | (11) | — | 11 | — | — | (1,273) | (1,273) | (1,273) | — | (1,273) | ||||||||||||||||||||||||||||
Dividend declared for the year | 18 | — | — | — | — | — | (1,762) | (1,762) | (1,762) | (97) | (1,859) | |||||||||||||||||||||||||||
At 30 June 2023 | 712 | 1,351 | 3,231 | (1,370) | (1,814) | 5,712 | 3,898 | 7,822 | 1,470 | 9,292 |
Year ended 30 June 2022 | Year ended 30 June 2021 | Year ended 30 June 2020 | |||||||||||||||||||||
Notes | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Profit for the year | 3,338 | 2,799 | 1,454 | ||||||||||||||||||||
Taxation | 1,049 | 907 | 589 | ||||||||||||||||||||
Share of after tax results of associates and joint ventures | (417) | (334) | (282) | ||||||||||||||||||||
Net finance charges | 422 | 373 | 353 | ||||||||||||||||||||
Non-operating items | 17 | (14) | 23 | ||||||||||||||||||||
Operating profit | 4,409 | 3,731 | 2,137 | ||||||||||||||||||||
Increase in inventories | (740) | (443) | (366) | ||||||||||||||||||||
(Increase)/decrease in trade and other receivables | (378) | (446) | 523 | ||||||||||||||||||||
Increase/(decrease) in trade and other payables and provisions | 939 | 1,220 | (485) | ||||||||||||||||||||
Net (increase)/decrease in working capital | (179) | 331 | (328) | ||||||||||||||||||||
Depreciation, amortisation and impairment | 828 | 447 | 1,839 | ||||||||||||||||||||
Dividends received | 190 | 290 | 4 | ||||||||||||||||||||
Post employment payments less amounts included in operating profit | (89) | (30) | (109) | ||||||||||||||||||||
Other items | 53 | 88 | (14) | ||||||||||||||||||||
982 | 795 | 1,720 | |||||||||||||||||||||
Cash generated from operations | 5,212 | 4,857 | 3,529 | ||||||||||||||||||||
Interest received | 110 | 89 | 185 | ||||||||||||||||||||
Interest paid | (438) | (440) | (493) | ||||||||||||||||||||
Taxation paid | (949) | (852) | (901) | ||||||||||||||||||||
(1,277) | (1,203) | (1,209) | |||||||||||||||||||||
Net cash inflow from operating activities | 3,935 | 3,654 | 2,320 | ||||||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Disposal of property, plant and equipment and computer software | 17 | 13 | 14 | ||||||||||||||||||||
Purchase of property, plant and equipment and computer software | (1,097) | (626) | (700) | ||||||||||||||||||||
Movements in loans and other investments | (72) | (4) | — | ||||||||||||||||||||
Sale of businesses and brands | 8 | 82 | 14 | 11 | |||||||||||||||||||
Acquisition of businesses | 8 | (271) | (488) | (130) | |||||||||||||||||||
Net cash outflow from investing activities | (1,341) | (1,091) | (805) | ||||||||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Share buyback programme | 18 | (2,284) | (109) | (1,282) | |||||||||||||||||||
Proceeds from issue of share capital | — | — | 1 | ||||||||||||||||||||
Net sale of own shares for share schemes | 18 | 49 | 54 | ||||||||||||||||||||
Purchase of treasury shares in respect of subsidiaries | (15) | — | — | ||||||||||||||||||||
Dividends paid to non-controlling interests | (81) | (77) | (111) | ||||||||||||||||||||
Proceeds from bonds | 17 | 2,263 | 1,031 | 5,188 | |||||||||||||||||||
Repayment of bonds | 17 | (1,521) | (1,247) | (820) | |||||||||||||||||||
Purchase of shares of non-controlling interests | 8 | — | (42) | (62) | |||||||||||||||||||
Cash inflow from other borrowings(1) | 503 | 34 | 497 | ||||||||||||||||||||
Cash outflow from other borrowings(1) | (424) | (787) | (782) | ||||||||||||||||||||
Equity dividends paid | (1,718) | (1,646) | (1,646) | ||||||||||||||||||||
Net cash (outflow)/inflow from financing activities | (3,259) | (2,794) | 1,037 | ||||||||||||||||||||
Net (decrease)/increase in net cash and cash equivalents | 17 | (665) | (231) | 2,552 | |||||||||||||||||||
Exchange differences | 239 | (285) | (120) | ||||||||||||||||||||
Net cash and cash equivalents at beginning of the year | 2,637 | 3,153 | 721 | ||||||||||||||||||||
Net cash and cash equivalents at end of the year | 2,211 | 2,637 | 3,153 | ||||||||||||||||||||
Net cash and cash equivalents consist of: | |||||||||||||||||||||||
Cash and cash equivalents | 17 | 2,285 | 2,749 | 3,323 | |||||||||||||||||||
Bank overdrafts | 17 | (74) | (112) | (170) | |||||||||||||||||||
2,211 | 2,637 | 3,153 |
Year ended 30 June 2023 | Year ended 30 June 2022 | Year ended 30 June 2021 | |||||||||||||||||||||
Notes | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Profit for the year | 3,766 | 3,338 | 2,799 | ||||||||||||||||||||
Taxation | 970 | 1,049 | 907 | ||||||||||||||||||||
Share of after tax results of associates and joint ventures | (370) | (417) | (334) | ||||||||||||||||||||
Net finance charges | 594 | 422 | 373 | ||||||||||||||||||||
Non-operating items | (328) | 17 | (14) | ||||||||||||||||||||
Operating profit | 4,632 | 4,409 | 3,731 | ||||||||||||||||||||
Increase in inventories | (675) | (740) | (443) | ||||||||||||||||||||
Decrease/(increase) in trade and other receivables | 121 | (378) | (446) | ||||||||||||||||||||
(Decrease)/increase in trade and other payables and provisions | (621) | 939 | 1,220 | ||||||||||||||||||||
Net (increase)/decrease in working capital | (1,175) | (179) | 331 | ||||||||||||||||||||
Depreciation, amortisation and impairment | 1,066 | 828 | 447 | ||||||||||||||||||||
Dividends received | 219 | 190 | 290 | ||||||||||||||||||||
Post employment payments less amounts included in operating profit | (25) | (89) | (30) | ||||||||||||||||||||
Other items | 62 | 53 | 88 | ||||||||||||||||||||
1,322 | 982 | 795 | |||||||||||||||||||||
Cash generated from operations | 4,779 | 5,212 | 4,857 | ||||||||||||||||||||
Interest received | 131 | 110 | 89 | ||||||||||||||||||||
Interest paid | (685) | (438) | (440) | ||||||||||||||||||||
Taxation paid | (1,201) | (949) | (852) | ||||||||||||||||||||
(1,755) | (1,277) | (1,203) | |||||||||||||||||||||
Net cash inflow from operating activities | 3,024 | 3,935 | 3,654 | ||||||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Disposal of property, plant and equipment and computer software | 13 | 17 | 13 | ||||||||||||||||||||
Purchase of property, plant and equipment and computer software | (1,180) | (1,097) | (626) | ||||||||||||||||||||
Movements in loans and other investments | (57) | (72) | (4) | ||||||||||||||||||||
Sale of businesses and brands | 8 | 462 | 82 | 14 | |||||||||||||||||||
Acquisition of subsidiaries(1) | 8 | (342) | (206) | (450) | |||||||||||||||||||
Investments in associates and joint ventures(1) | 8 | (93) | (65) | (38) | |||||||||||||||||||
Net cash outflow from investing activities | (1,197) | (1,341) | (1,091) | ||||||||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Share buyback programme | 18 | (1,381) | (2,284) | (109) | |||||||||||||||||||
Net sale of own shares for share schemes | 29 | 18 | 49 | ||||||||||||||||||||
Purchase of treasury shares in respect of subsidiaries | — | (15) | — | ||||||||||||||||||||
Dividends paid to non-controlling interests | (97) | (81) | (77) | ||||||||||||||||||||
Proceeds from bonds | 17 | 2,229 | 2,263 | 1,031 | |||||||||||||||||||
Repayment of bonds | 17 | (1,340) | (1,521) | (1,247) | |||||||||||||||||||
Purchase of shares of non-controlling interests | 8 | (146) | — | (42) | |||||||||||||||||||
Cash inflow from other borrowings | 433 | 503 | 34 | ||||||||||||||||||||
Cash outflow from other borrowings | (374) | (424) | (787) | ||||||||||||||||||||
Equity dividends paid | (1,761) | (1,718) | (1,646) | ||||||||||||||||||||
Net cash outflow from financing activities | (2,408) | (3,259) | (2,794) | ||||||||||||||||||||
Net decrease in net cash and cash equivalents | 17 | (581) | (665) | (231) | |||||||||||||||||||
Exchange differences | (227) | 239 | (285) | ||||||||||||||||||||
Net cash and cash equivalents at beginning of the year | 2,211 | 2,637 | 3,153 | ||||||||||||||||||||
Net cash and cash equivalents at end of the year | 1,403 | 2,211 | 2,637 | ||||||||||||||||||||
Net cash and cash equivalents consist of: | |||||||||||||||||||||||
Cash and cash equivalents | 17 | 1,439 | 2,285 | 2,749 | |||||||||||||||||||
Bank overdrafts | 17 | (36) | (74) | (112) | |||||||||||||||||||
1,403 | 2,211 | 2,637 |
2022 | 2021 | 2020 | |||||||||
US dollar | |||||||||||
Income statement and cash flows(1) | 1.33 | 1.35 | 1.26 | ||||||||
Assets and liabilities(2) | 1.21 | 1.39 | 1.23 | ||||||||
Euro | |||||||||||
Income statement and cash flows(1) | 1.18 | 1.13 | 1.14 | ||||||||
Assets and liabilities(2) | 1.16 | 1.17 | 1.09 |
2023 | 2022 | 2021 | |||||||||
US dollar | |||||||||||
Income statement and cash flows(1) | 1.20 | 1.33 | 1.35 | ||||||||
Assets and liabilities(2) | 1.26 | 1.21 | 1.39 | ||||||||
Euro | |||||||||||
Income statement and cash flows(1) | 1.15 | 1.18 | 1.13 | ||||||||
Assets and liabilities(2) | 1.17 | 1.16 | 1.17 |
Year ended 30 June 2022 | Year ended 30 June 2021 | |||||||||||||
At estimated exchange rate | At official reference exchange rate | At estimated exchange rate(1) | At official reference exchange rate(1) | |||||||||||
759 VES/£ | 7 VES/£ | 237 VES/£ | 4 VES/£ | |||||||||||
£ million | £ million | £ million | £ million | |||||||||||
Net sales | — | 15 | — | 4 | ||||||||||
Operating (loss)/profit | (1) | (1) | (1) | 11 | ||||||||||
Other finance income - hyperinflation adjustment | 1 | 157 | 2 | 122 | ||||||||||
Net cash (outflow)/inflow from operating activities | — | (5) | — | 9 | ||||||||||
Net assets | 41 | 4,606 | 38 | 2,016 |
Year ended 30 June 2023 | Year ended 30 June 2022 | |||||||||||||
At estimated exchange rate | At official reference exchange rate | At estimated exchange rate | At official reference exchange rate | |||||||||||
3,807 VES/£ | 36 VES/£ | 759 VES/£ | 7 VES/£ | |||||||||||
£ million | £ million | £ million | £ million | |||||||||||
Net sales | — | 9 | — | 15 | ||||||||||
Operating loss | — | — | (1) | (1) | ||||||||||
Other finance (charges)/income - hyperinflation adjustment | (2) | (212) | 1 | 157 | ||||||||||
Net cash outflow from operating activities | — | (3) | — | (5) | ||||||||||
Net assets | 6 | 657 | 41 | 4,606 |
North America | Europe | Asia Pacific | Africa | Latin America and Caribbean | SC&P | Eliminate inter- segment sales | Total operating segments | Corporate and other | Total | |||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||
2022 | ||||||||||||||||||||||||||||||||
Sales | 6,682 | 5,740 | 5,624 | 2,403 | 1,945 | 2,010 | (2,010) | 22,394 | 54 | 22,448 | ||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 5,955 | 3,258 | 2,879 | 1,699 | 1,486 | 2,095 | (2,016) | 15,356 | 55 | 15,411 | ||||||||||||||||||||||
Acquisitions and disposals | 34 | 23 | — | 15 | 3 | — | — | 75 | — | 75 | ||||||||||||||||||||||
SC&P allocation | 9 | 46 | 9 | 3 | 12 | (79) | — | — | — | — | ||||||||||||||||||||||
Retranslation to actual exchange rates | 97 | (304) | (4) | (35) | 24 | (6) | 6 | (222) | (1) | (223) | ||||||||||||||||||||||
Hyperinflation | — | 189 | — | — | — | — | — | 189 | — | 189 | ||||||||||||||||||||||
Net sales | 6,095 | 3,212 | 2,884 | 1,682 | 1,525 | 2,010 | (2,010) | 15,398 | 54 | 15,452 | ||||||||||||||||||||||
Operating profit/(loss) | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 2,388 | 1,086 | 703 | 346 | 528 | (22) | — | 5,029 | (256) | 4,773 | ||||||||||||||||||||||
Acquisitions and disposals | (28) | 11 | — | (10) | — | — | — | (27) | — | (27) | ||||||||||||||||||||||
SC&P allocation | (1) | (18) | (2) | (1) | — | 22 | — | — | — | — | ||||||||||||||||||||||
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 32 | 36 | — | — | (3) | — | — | 65 | — | 65 | ||||||||||||||||||||||
Fair value remeasurement of biological assets | — | — | — | — | (5) | — | — | (5) | — | (5) | ||||||||||||||||||||||
Retranslation to actual exchange rates | 63 | (108) | 10 | (20) | 18 | — | — | (37) | 18 | (19) | ||||||||||||||||||||||
Hyperinflation | — | 10 | — | — | — | — | — | 10 | — | 10 | ||||||||||||||||||||||
Operating profit/(loss) before exceptional items | 2,454 | 1,017 | 711 | 315 | 538 | — | — | 5,035 | (238) | 4,797 | ||||||||||||||||||||||
Exceptional items | (1) | (146) | (241) | — | — | — | — | (388) | — | (388) | ||||||||||||||||||||||
Operating profit/(loss) | 2,453 | 871 | 470 | 315 | 538 | — | — | 4,647 | (238) | 4,409 | ||||||||||||||||||||||
Non-operating items | (17) | |||||||||||||||||||||||||||||||
Net finance charges | (422) | |||||||||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | ||||||||||||||||||||||||||||||||
Moët Hennessy | 425 | |||||||||||||||||||||||||||||||
Other | (8) | |||||||||||||||||||||||||||||||
Profit before taxation | 4,387 |
North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | SC&P | Eliminate inter- segment sales | Total operating segments | Corporate and other | Total | |||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||
2023 | ||||||||||||||||||||||||||||||||
Sales | 7,382 | 5,996 | 5,403 | 2,260 | 2,386 | 3,073 | (3,073) | 23,427 | 88 | 23,515 | ||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 6,052 | 3,377 | 3,084 | 1,642 | 1,631 | 2,942 | (2,876) | 15,852 | 87 | 15,939 | ||||||||||||||||||||||
Acquisitions and disposals | 20 | 20 | 35 | 3 | 104 | — | — | 182 | — | 182 | ||||||||||||||||||||||
SC&P allocation | 8 | 38 | 8 | 9 | 3 | (66) | — | — | — | — | ||||||||||||||||||||||
Retranslation to actual exchange rates | 678 | (41) | 73 | 145 | (39) | 197 | (197) | 816 | 1 | 817 | ||||||||||||||||||||||
Hyperinflation | — | 175 | — | — | — | — | — | 175 | — | 175 | ||||||||||||||||||||||
Net sales | 6,758 | 3,569 | 3,200 | 1,799 | 1,699 | 3,073 | (3,073) | 17,025 | 88 | 17,113 | ||||||||||||||||||||||
Operating profit/(loss) | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 2,337 | 1,076 | 886 | 597 | 347 | (32) | — | 5,211 | (292) | 4,919 | ||||||||||||||||||||||
Acquisitions and disposals | (18) | (13) | 5 | — | 27 | — | — | 1 | (6) | (5) | ||||||||||||||||||||||
SC&P allocation | 3 | (24) | (6) | (3) | (2) | 32 | — | — | — | — | ||||||||||||||||||||||
Fair value remeasurements | 87 | 25 | — | 1 | — | — | — | 113 | — | 113 | ||||||||||||||||||||||
Retranslation to actual exchange rates | 280 | 18 | 20 | 66 | (152) | — | — | 232 | (28) | 204 | ||||||||||||||||||||||
Hyperinflation | — | 23 | — | — | — | — | — | 23 | — | 23 | ||||||||||||||||||||||
Operating profit/(loss) before exceptional items | 2,689 | 1,105 | 905 | 661 | 220 | — | — | 5,580 | (326) | 5,254 | ||||||||||||||||||||||
Exceptional operating items | (97) | (8) | (473) | — | (44) | — | — | (622) | — | (622) | ||||||||||||||||||||||
Operating profit/(loss) | 2,592 | 1,097 | 432 | 661 | 176 | — | — | 4,958 | (326) | 4,632 | ||||||||||||||||||||||
Non-operating items | 328 | |||||||||||||||||||||||||||||||
Net finance charges | (594) | |||||||||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | 370 | |||||||||||||||||||||||||||||||
Profit before taxation | 4,736 |
North America | Europe | Asia Pacific | Africa | Latin America and Caribbean | SC&P | Eliminate inter- segment sales | Total operating segments | Corporate and other | Total | |||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||
2021 | ||||||||||||||||||||||||||||||||
Sales | 5,803 | 4,795 | 5,146 | 2,020 | 1,369 | 1,537 | (1,537) | 19,133 | 20 | 19,153 | ||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 5,527 | 2,579 | 2,561 | 1,541 | 1,176 | 1,627 | (1,548) | 13,463 | 20 | 13,483 | ||||||||||||||||||||||
Acquisitions and disposals | 28 | 2 | — | 5 | — | — | — | 35 | — | 35 | ||||||||||||||||||||||
SC&P allocation | 9 | 45 | 9 | 3 | 13 | (79) | — | — | — | — | ||||||||||||||||||||||
Retranslation to actual exchange rates | (355) | (68) | (82) | (137) | (143) | (11) | 11 | (785) | — | (785) | ||||||||||||||||||||||
Net sales | 5,209 | 2,558 | 2,488 | 1,412 | 1,046 | 1,537 | (1,537) | 12,713 | 20 | 12,733 | ||||||||||||||||||||||
Operating profit/(loss) | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 2,469 | 728 | 628 | 228 | 422 | (97) | — | 4,378 | (218) | 4,160 | ||||||||||||||||||||||
Acquisitions and disposals | (18) | (3) | — | — | — | — | — | (21) | — | (21) | ||||||||||||||||||||||
SC&P allocation | (30) | (32) | (5) | (3) | (27) | 97 | — | — | — | — | ||||||||||||||||||||||
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | (9) | (27) | — | — | — | — | — | (36) | — | (36) | ||||||||||||||||||||||
Retranslation to actual exchange rates | (175) | (31) | (15) | (54) | (92) | — | — | (367) | 10 | (357) | ||||||||||||||||||||||
Operating profit/(loss) before exceptional items | 2,237 | 635 | 608 | 171 | 303 | — | — | 3,954 | (208) | 3,746 | ||||||||||||||||||||||
Exceptional items | — | (15) | — | — | — | — | — | (15) | — | (15) | ||||||||||||||||||||||
Operating profit/(loss) | 2,237 | 620 | 608 | 171 | 303 | — | — | 3,939 | (208) | 3,731 | ||||||||||||||||||||||
Non-operating items | 14 | |||||||||||||||||||||||||||||||
Net finance charges | (373) | |||||||||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | ||||||||||||||||||||||||||||||||
Moët Hennessy | 335 | |||||||||||||||||||||||||||||||
Other | (1) | |||||||||||||||||||||||||||||||
Profit before taxation | 3,706 |
North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | SC&P | Eliminate inter- segment sales | Total operating segments | Corporate and other | Total | |||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||
2022 | ||||||||||||||||||||||||||||||||
Sales | 6,682 | 5,740 | 5,624 | 1,945 | 2,403 | 2,010 | (2,010) | 22,394 | 54 | 22,448 | ||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 5,955 | 3,258 | 2,879 | 1,486 | 1,699 | 2,095 | (2,016) | 15,356 | 55 | 15,411 | ||||||||||||||||||||||
Acquisitions and disposals | 34 | 23 | — | 3 | 15 | — | — | 75 | — | 75 | ||||||||||||||||||||||
SC&P allocation | 9 | 46 | 9 | 12 | 3 | (79) | — | — | — | — | ||||||||||||||||||||||
Retranslation to actual exchange rates | 97 | (304) | (4) | 24 | (35) | (6) | 6 | (222) | (1) | (223) | ||||||||||||||||||||||
Hyperinflation | — | 189 | — | — | — | — | — | 189 | — | 189 | ||||||||||||||||||||||
Net sales | 6,095 | 3,212 | 2,884 | 1,525 | 1,682 | 2,010 | (2,010) | 15,398 | 54 | 15,452 | ||||||||||||||||||||||
Operating profit/(loss) | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 2,388 | 1,086 | 703 | 528 | 346 | (22) | — | 5,029 | (256) | 4,773 | ||||||||||||||||||||||
Acquisitions and disposals | (28) | 11 | — | — | (10) | — | — | (27) | — | (27) | ||||||||||||||||||||||
SC&P allocation | (1) | (18) | (2) | — | (1) | 22 | — | — | — | — | ||||||||||||||||||||||
Fair value remeasurements | 32 | 36 | — | (8) | — | — | — | 60 | — | 60 | ||||||||||||||||||||||
Retranslation to actual exchange rates | 63 | (108) | 10 | 18 | (20) | — | — | (37) | 18 | (19) | ||||||||||||||||||||||
Hyperinflation | — | 10 | — | — | — | — | — | 10 | — | 10 | ||||||||||||||||||||||
Operating profit/(loss) before exceptional items | 2,454 | 1,017 | 711 | 538 | 315 | — | — | 5,035 | (238) | 4,797 | ||||||||||||||||||||||
Exceptional operating items | (1) | (146) | (241) | — | — | — | — | (388) | — | (388) | ||||||||||||||||||||||
Operating profit/(loss) | 2,453 | 871 | 470 | 538 | 315 | — | — | 4,647 | (238) | 4,409 | ||||||||||||||||||||||
Non-operating items | (17) | |||||||||||||||||||||||||||||||
Net finance charges | (422) | |||||||||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | 417 | |||||||||||||||||||||||||||||||
Profit before taxation | 4,387 |
North America | Europe | Asia Pacific | Africa | Latin America and Caribbean | SC&P | Eliminate inter- segment sales | Total operating segments | Corporate and other | Total | |||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||
2020 | ||||||||||||||||||||||||||||||||
Sales | 5,222 | 4,697 | 4,645 | 1,911 | 1,184 | 1,343 | (1,343) | 17,659 | 38 | 17,697 | ||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 4,445 | 2,501 | 2,253 | 1,300 | 944 | 1,439 | (1,341) | 11,541 | 38 | 11,579 | ||||||||||||||||||||||
Acquisitions and disposals | 32 | 10 | 1 | 50 | — | — | — | 93 | — | 93 | ||||||||||||||||||||||
SC&P allocation | 11 | 60 | 12 | 4 | 10 | (98) | — | (1) | 1 | — | ||||||||||||||||||||||
Retranslation to actual exchange rates | 135 | (4) | 4 | (8) | (46) | 2 | (2) | 81 | (1) | 80 | ||||||||||||||||||||||
Net sales | 4,623 | 2,567 | 2,270 | 1,346 | 908 | 1,343 | (1,343) | 11,714 | 38 | 11,752 | ||||||||||||||||||||||
Operating profit/(loss) | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 2,007 | 730 | 498 | 116 | 254 | 45 | — | 3,650 | (152) | 3,498 | ||||||||||||||||||||||
Acquisitions and disposals | (1) | (4) | — | — | — | — | — | (5) | — | (5) | ||||||||||||||||||||||
SC&P allocation | 6 | 26 | 6 | 2 | 5 | (45) | — | — | — | — | ||||||||||||||||||||||
Fair value remeasurement of contingent consideration | (10) | (4) | — | — | 7 | — | — | (7) | — | (7) | ||||||||||||||||||||||
Fair value remeasurement of biological assets | — | — | — | — | 9 | — | — | 9 | — | 9 | ||||||||||||||||||||||
Retranslation to actual exchange rates | 32 | 9 | (3) | (17) | (27) | — | — | (6) | 5 | (1) | ||||||||||||||||||||||
Operating profit/(loss) before exceptional items | 2,034 | 757 | 501 | 101 | 248 | — | — | 3,641 | (147) | 3,494 | ||||||||||||||||||||||
Exceptional items | 54 | (62) | (1,198) | (145) | (6) | — | — | (1,357) | — | (1,357) | ||||||||||||||||||||||
Operating profit/(loss) | 2,088 | 695 | (697) | (44) | 242 | — | — | 2,284 | (147) | 2,137 | ||||||||||||||||||||||
Non-operating items | (23) | |||||||||||||||||||||||||||||||
Net finance charges | (353) | |||||||||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | ||||||||||||||||||||||||||||||||
Moët Hennessy | 285 | |||||||||||||||||||||||||||||||
Other | (3) | |||||||||||||||||||||||||||||||
Profit before taxation | 2,043 |
North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | SC&P | Eliminate inter- segment sales | Total operating segments | Corporate and other | Total | |||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||
2021 | ||||||||||||||||||||||||||||||||
Sales | 5,803 | 4,795 | 5,146 | 1,369 | 2,020 | 1,537 | (1,537) | 19,133 | 20 | 19,153 | ||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 5,527 | 2,579 | 2,561 | 1,176 | 1,541 | 1,627 | (1,548) | 13,463 | 20 | 13,483 | ||||||||||||||||||||||
Acquisitions and disposals | 28 | 2 | — | — | 5 | — | — | 35 | — | 35 | ||||||||||||||||||||||
SC&P allocation | 9 | 45 | 9 | 13 | 3 | (79) | — | — | — | — | ||||||||||||||||||||||
Retranslation to actual exchange rates | (355) | (68) | (82) | (143) | (137) | (11) | 11 | (785) | — | (785) | ||||||||||||||||||||||
Net sales | 5,209 | 2,558 | 2,488 | 1,046 | 1,412 | 1,537 | (1,537) | 12,713 | 20 | 12,733 | ||||||||||||||||||||||
Operating profit/(loss) | ||||||||||||||||||||||||||||||||
At budgeted exchange rates(1) | 2,469 | 728 | 628 | 422 | 228 | (97) | — | 4,378 | (218) | 4,160 | ||||||||||||||||||||||
Acquisitions and disposals | (18) | (3) | — | — | — | — | — | (21) | — | (21) | ||||||||||||||||||||||
SC&P allocation | (30) | (32) | (5) | (27) | (3) | 97 | — | — | — | — | ||||||||||||||||||||||
Fair value remeasurement of contingent consideration | (9) | (27) | — | — | — | — | — | (36) | — | (36) | ||||||||||||||||||||||
Retranslation to actual exchange rates | (175) | (31) | (15) | (92) | (54) | — | — | (367) | 10 | (357) | ||||||||||||||||||||||
Operating profit/(loss) before exceptional items | 2,237 | 635 | 608 | 303 | 171 | — | — | 3,954 | (208) | 3,746 | ||||||||||||||||||||||
Exceptional operating items | — | (15) | — | — | — | — | — | (15) | — | (15) | ||||||||||||||||||||||
Operating profit/(loss) | 2,237 | 620 | 608 | 303 | 171 | — | — | 3,939 | (208) | 3,731 | ||||||||||||||||||||||
Non-operating items | 14 | |||||||||||||||||||||||||||||||
Net finance charges | (373) | |||||||||||||||||||||||||||||||
Share of after tax results of associates and joint ventures | 334 | |||||||||||||||||||||||||||||||
Profit before taxation | 3,706 |
North America £ million | Europe £ million | Asia Pacific £ million | Latin America and Caribbean £ million | Africa £ million | SC&P £ million | Corporate and other £ million | Total £ million | |||||||||||||||||||
2023 | ||||||||||||||||||||||||||
Purchase of property, plant and equipment and computer software | 197 | 209 | 166 | 121 | 126 | 356 | 5 | 1,180 | ||||||||||||||||||
Depreciation and intangible asset amortisation | (95) | (98) | (61) | (18) | (80) | (134) | (10) | (496) | ||||||||||||||||||
Exceptional impairment of tangible assets | (52) | 2 | (22) | — | — | — | — | (72) | ||||||||||||||||||
Exceptional impairment of intangible assets | (29) | (25) | (444) | — | — | — | — | (498) | ||||||||||||||||||
2022 | ||||||||||||||||||||||||||
Purchase of property, plant and equipment and computer software | 230 | 187 | 146 | 128 | 139 | 256 | 11 | 1,097 | ||||||||||||||||||
Depreciation and intangible asset amortisation | (80) | (93) | (93) | (16) | (81) | (116) | (10) | (489) | ||||||||||||||||||
Exceptional impairment of tangible assets | — | (3) | — | — | — | — | — | (3) | ||||||||||||||||||
Exceptional impairment of intangible assets | — | (96) | (240) | — | — | — | — | (336) | ||||||||||||||||||
2021 | ||||||||||||||||||||||||||
Purchase of property, plant and equipment and computer software | 153 | 23 | 56 | 20 | 125 | 125 | 124 | 626 | ||||||||||||||||||
Depreciation and intangible asset amortisation | (76) | (31) | (60) | (16) | (79) | (126) | (59) | (447) | ||||||||||||||||||
North America £ million | Europe £ million | Asia Pacific £ million | Africa £ million | Latin America and Caribbean £ million | SC&P £ million | Corporate and other £ million | Total £ million | |||||||||||||||||||
2022 | ||||||||||||||||||||||||||
Capital expenditure | 230 | 187 | 146 | 139 | 128 | 256 | 11 | 1,097 | ||||||||||||||||||
Depreciation and intangible asset amortisation | (80) | (93) | (93) | (81) | (16) | (116) | (10) | (489) | ||||||||||||||||||
Exceptional impairment of tangible assets | — | (3) | — | — | — | — | — | (3) | ||||||||||||||||||
Exceptional impairment of intangible assets | — | (96) | (240) | — | — | — | — | (336) | ||||||||||||||||||
2021 | ||||||||||||||||||||||||||
Capital expenditure | 153 | 23 | 56 | 125 | 20 | 125 | 124 | 626 | ||||||||||||||||||
Depreciation and intangible asset amortisation | (76) | (31) | (60) | (79) | (16) | (126) | (59) | (447) | ||||||||||||||||||
2020 | ||||||||||||||||||||||||||
Capital expenditure | 145 | 24 | 59 | 128 | 48 | 191 | 105 | 700 | ||||||||||||||||||
Depreciation and intangible asset amortisation | (68) | (37) | (59) | (103) | (21) | (119) | (73) | (480) | ||||||||||||||||||
Underlying impairment | — | (7) | — | — | (7) | — | — | (14) | ||||||||||||||||||
Exceptional impairment of tangible assets | — | — | (1) | (139) | — | — | — | (140) | ||||||||||||||||||
Exceptional impairment of intangible assets | — | — | (1,205) | — | — | — | — | (1,205) |
Category analysis | Geographic analysis | ||||||||||||||||||||||||||||||||||||||||
Spirits £ million | Beer £ million | Ready to drink £ million | Other £ million | Total £ million | United States £ million | India £ million | Great Britain £ million | Nether- lands £ million | Rest of World £ million | Total £ million | |||||||||||||||||||||||||||||||
2022 | |||||||||||||||||||||||||||||||||||||||||
Sales(1) | 18,164 | 3,128 | 882 | 274 | 22,448 | 6,327 | 3,219 | 2,142 | 89 | 10,671 | 22,448 | ||||||||||||||||||||||||||||||
Non-current assets(2), (3) | 5,899 | 2,396 | 2,413 | 2,600 | 8,261 | 21,569 | |||||||||||||||||||||||||||||||||||
2021 | |||||||||||||||||||||||||||||||||||||||||
Sales(1) | 15,634 | 2,562 | 741 | 216 | 19,153 | 5,441 | 3,011 | 1,822 | 70 | 8,809 | 19,153 | ||||||||||||||||||||||||||||||
Non-current assets(2), (3) | 4,320 | 2,561 | 2,119 | 2,474 | 7,589 | 19,063 | |||||||||||||||||||||||||||||||||||
2020 | |||||||||||||||||||||||||||||||||||||||||
Sales(1) | 14,158 | 2,687 | 621 | 231 | 17,697 | 4,839 | 2,783 | 1,684 | 62 | 8,329 | 17,697 | ||||||||||||||||||||||||||||||
Non-current assets(2), (3) | 5,028 | 2,758 | 1,911 | 2,661 | 7,563 | 19,921 |
Category analysis | Geographic analysis | ||||||||||||||||||||||||||||||||||||||||
Spirits £ million | Beer £ million | Ready to drink £ million | Other £ million | Total £ million | United States £ million | India £ million | Great Britain £ million | Rest of World £ million | Total £ million | ||||||||||||||||||||||||||||||||
2023 | |||||||||||||||||||||||||||||||||||||||||
Sales(1) | 19,004 | 3,355 | 899 | 257 | 23,515 | 6,972 | 2,751 | 2,138 | 11,654 | 23,515 | |||||||||||||||||||||||||||||||
Non-current assets(2), (3) | 5,816 | 1,798 | 2,909 | 11,204 | 21,727 | ||||||||||||||||||||||||||||||||||||
2022 | |||||||||||||||||||||||||||||||||||||||||
Sales(1) | 18,164 | 3,128 | 882 | 274 | 22,448 | 6,327 | 3,219 | 2,142 | 10,760 | 22,448 | |||||||||||||||||||||||||||||||
Non-current assets(2), (3) | 5,899 | 2,396 | 2,413 | 10,861 | 21,569 | ||||||||||||||||||||||||||||||||||||
2021 | |||||||||||||||||||||||||||||||||||||||||
Sales(1) | 15,634 | 2,562 | 741 | 216 | 19,153 | 5,441 | 3,011 | 1,822 | 8,879 | 19,153 | |||||||||||||||||||||||||||||||
Non-current assets(2), (3) | 4,320 | 2,561 | 2,119 | 10,063 | 19,063 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Excise duties | 6,996 | 6,420 | 5,945 | ||||||||
Cost of sales | 5,973 | 5,038 | 4,654 | ||||||||
Marketing | 2,721 | 2,163 | 1,841 | ||||||||
Other operating items | 2,349 | 1,801 | 3,120 | ||||||||
18,039 | 15,422 | 15,560 | |||||||||
Comprising: | |||||||||||
Excise duties | |||||||||||
United States | 614 | 589 | 585 | ||||||||
Great Britain | 1,172 | 1,018 | 930 | ||||||||
India | 2,182 | 2,127 | 1,927 | ||||||||
Other | 3,028 | 2,686 | 2,503 | ||||||||
Increase in inventories | (909) | (293) | (275) | ||||||||
Raw materials and consumables | 4,017 | 3,126 | 2,842 | ||||||||
Marketing | 2,721 | 2,163 | 1,841 | ||||||||
Other external charges | 2,597 | 1,978 | 2,044 | ||||||||
Staff costs | 1,795 | 1,586 | 1,404 | ||||||||
Depreciation, amortisation and impairment | 828 | 447 | 1,839 | ||||||||
Gains on disposal of properties | (2) | (1) | (2) | ||||||||
Net foreign exchange losses | 10 | 22 | 15 | ||||||||
Other operating income | (14) | (26) | (93) | ||||||||
18,039 | 15,422 | 15,560 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Excise duties | 6,402 | 6,996 | 6,420 | ||||||||
Cost of sales | 6,899 | 5,973 | 5,038 | ||||||||
Marketing | 3,051 | 2,721 | 2,163 | ||||||||
Other operating items | 2,531 | 2,349 | 1,801 | ||||||||
18,883 | 18,039 | 15,422 | |||||||||
Comprising: | |||||||||||
Excise duties | |||||||||||
India | 1,625 | 2,182 | 2,127 | ||||||||
Great Britain | 1,095 | 1,172 | 1,018 | ||||||||
United States | 687 | 614 | 589 | ||||||||
Other | 2,995 | 3,028 | 2,686 | ||||||||
Increase in inventories | (513) | (909) | (293) | ||||||||
Raw materials and consumables | 4,328 | 4,017 | 3,126 | ||||||||
Marketing | 3,051 | 2,721 | 2,163 | ||||||||
Other external charges | 2,747 | 2,597 | 1,978 | ||||||||
Staff costs | 1,830 | 1,795 | 1,586 | ||||||||
Depreciation, amortisation and impairment | 1,066 | 828 | 447 | ||||||||
Gains on disposal of properties | (4) | (2) | (1) | ||||||||
Net foreign exchange losses | 10 | 10 | 22 | ||||||||
Other operating income | (34) | (14) | (26) | ||||||||
18,883 | 18,039 | 15,422 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Audit of these financial statements | 4.2 | 3.8 | 5.3 | ||||||||
Audit of financial statements of subsidiaries | 6.1 | 4.4 | 3.6 | ||||||||
Audit related assurance services(1) | 2.5 | 2.6 | 2.4 | ||||||||
Total audit fees (Audit fees) | 12.8 | 10.8 | 11.3 | ||||||||
Other assurance services (Audit related fees)(2) | 0.7 | 0.8 | 0.8 | ||||||||
13.5 | 11.6 | 12.1 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Audit of these financial statements | 5.2 | 4.2 | 3.8 | ||||||||
Audit of financial statements of subsidiaries | 5.7 | 6.1 | 4.4 | ||||||||
Audit related assurance services(1) | 2.7 | 2.5 | 2.6 | ||||||||
Total audit fees (Audit fees) | 13.6 | 12.8 | 10.8 | ||||||||
Other assurance services (Audit related fees)(2) | 1.2 | 0.7 | 0.8 | ||||||||
14.8 | 13.5 | 11.6 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Aggregate remuneration | |||||||||||
Wages and salaries | 1,557 | 1,336 | 1,251 | ||||||||
Share-based incentive plans | 59 | 50 | 3 | ||||||||
Employer’s social security | 107 | 83 | 79 | ||||||||
Employer’s pension | |||||||||||
Defined benefit plans | 36 | 82 | 37 | ||||||||
Defined contribution plans | 33 | 25 | 24 | ||||||||
Other post employment plans | 3 | 10 | 10 | ||||||||
1,795 | 1,586 | 1,404 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Aggregate remuneration | |||||||||||
Wages and salaries | 1,548 | 1,557 | 1,336 | ||||||||
Share-based incentive plans | 48 | 59 | 50 | ||||||||
Employer’s social security | 115 | 107 | 83 | ||||||||
Employer’s pension | |||||||||||
Defined benefit plans | 67 | 36 | 82 | ||||||||
Defined contribution plans | 44 | 33 | 25 | ||||||||
Other post employment plans | 8 | 3 | 10 | ||||||||
1,830 | 1,795 | 1,586 |
2022 | 2021 (Restated)(i) | 2020 (Restated)(i) | |||||||||
North America | 2,811 | 2,562 | 2,459 | ||||||||
Europe | 3,014 | 3,237 | 3,323 | ||||||||
Asia Pacific | 6,500 | 6,474 | 6,559 | ||||||||
Africa | 4,061 | 4,016 | 4,617 | ||||||||
Latin America and Caribbean | 1,500 | 1,505 | 1,549 | ||||||||
SC&P | 5,025 | 5,085 | 4,908 | ||||||||
Corporate and other | 5,076 | 4,687 | 4,940 | ||||||||
27,987 | 27,566 | 28,355 |
2023 | 2022 | 2021 | |||||||||
North America | 2,884 | 2,811 | 2,562 | ||||||||
Europe | 2,789 | 3,014 | 3,237 | ||||||||
Asia Pacific | 6,856 | 6,500 | 6,474 | ||||||||
Latin America and Caribbean | 1,495 | 1,500 | 1,505 | ||||||||
Africa | 3,526 | 4,061 | 4,016 | ||||||||
SC&P | 6,934 | 5,025 | 5,085 | ||||||||
Corporate and other | 5,753 | 5,076 | 4,687 | ||||||||
30,237 | 27,987 | 27,566 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Staff costs | |||||||||||
Guaranteed minimum pension equalisation charge | — | 5 | — | ||||||||
Other external charges | 52 | 13 | 95 | ||||||||
Other operating income | — | (3) | (83) | ||||||||
Depreciation, amortisation and impairment | |||||||||||
Brand, goodwill, tangible and other assets impairment | 336 | — | 1,345 | ||||||||
Total exceptional operating items (note 4) | 388 | 15 | 1,357 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Depreciation, amortisation and impairment | |||||||||||
Brand and goodwill impairment | 498 | 336 | — | ||||||||
Tangible asset impairment and accelerated depreciation | 72 | — | — | ||||||||
Staff costs | 10 | — | 5 | ||||||||
Other external charges | 60 | 52 | 13 | ||||||||
Other operating income | (18) | — | (3) | ||||||||
Total exceptional operating items (note 4) | 622 | 388 | 15 | ||||||||
Cost of sales | 67 | — | — | ||||||||
Other operating expenses | 555 | 388 | 15 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Exceptional operating items | |||||||||||
Brand, goodwill, tangible and other assets impairment (a) | (336) | — | (1,345) | ||||||||
Winding down Russian operations (b) | (50) | — | — | ||||||||
Donations (c) | (2) | (5) | (89) | ||||||||
Ongoing litigation in Turkey (d) | — | (15) | — | ||||||||
Guaranteed minimum pension equalisation (e) | — | (5) | — | ||||||||
Obsolete inventories (f) | — | 7 | (30) | ||||||||
Substitution drawback (g) | — | 3 | 83 | ||||||||
Indirect tax in Korea (h) | — | — | 24 | ||||||||
(388) | (15) | (1,357) | |||||||||
Non-operating items | |||||||||||
Sale of businesses and brands | |||||||||||
Meta Abo Brewery (i) | (95) | — | — | ||||||||
Windsor business (j) | (19) | — | — | ||||||||
Picon brand (k) | 91 | — | — | ||||||||
United National Breweries (l) | 6 | 10 | (32) | ||||||||
USL businesses (m) | — | 3 | — | ||||||||
Portfolio of 19 brands (n) | — | 1 | 2 | ||||||||
Loss on disposal of associate (o) | — | — | (1) | ||||||||
Step acquisitions (p) | — | — | 8 | ||||||||
(17) | 14 | (23) | |||||||||
Exceptional items before taxation | (405) | (1) | (1,380) | ||||||||
Items included in taxation (note 7 (b)) | 31 | (84) | 154 | ||||||||
Total exceptional items | (374) | (85) | (1,226) | ||||||||
Attributable to: | |||||||||||
Equity shareholders of the parent company | (271) | (86) | (1,157) | ||||||||
Non-controlling interests | (103) | 1 | (69) | ||||||||
Total exceptional items | (374) | (85) | (1,226) |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Exceptional operating items | |||||||||||
Brand and goodwill impairment (1) | (498) | (336) | — | ||||||||
Supply chain agility programme (2) | (100) | — | — | ||||||||
Distribution termination fee (3) | (44) | — | — | ||||||||
Winding down Russian operations (4) | 20 | (50) | — | ||||||||
Other exceptional operating items (5) | — | (2) | (15) | ||||||||
(622) | (388) | (15) | |||||||||
Non-operating items | |||||||||||
Sale of businesses and brands | |||||||||||
Guinness Cameroun S.A. (6) | 310 | — | — | ||||||||
Archers brand (7) | 20 | — | — | ||||||||
USL Popular brands (8) | 4 | — | — | ||||||||
USL businesses (9) | 1 | — | 3 | ||||||||
Tyku brand (10) | (3) | — | — | ||||||||
Picon brand (11) | — | 91 | — | ||||||||
Meta Abo Brewery (12) | — | (95) | — | ||||||||
Windsor business (13) | — | (19) | — | ||||||||
Step acquisition - Mr Black (14) | (8) | — | — | ||||||||
Other non-operating exceptional items (15) | 4 | 6 | 11 | ||||||||
328 | (17) | 14 | |||||||||
Exceptional items before taxation | (294) | (405) | (1) | ||||||||
Tax on exceptional items (note 7 (b)) | 186 | 31 | (84) | ||||||||
Total exceptional items | (108) | (374) | (85) | ||||||||
Attributable to: | |||||||||||
Equity shareholders of the parent company | 33 | (271) | (86) | ||||||||
Non-controlling interests | (141) | (103) | 1 | ||||||||
Total exceptional items | (108) | (374) | (85) |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Donations | (37) | (50) | (7) | ||||||||
Thalidomide (note 15 (d) (i)) | (16) | (15) | (17) | ||||||||
Winding down Russian operations | (13) | — | — | ||||||||
Indirect tax in Korea | — | (10) | — | ||||||||
Ongoing litigation in Turkey | — | (1) | — | ||||||||
Substitution drawback | — | 60 | 26 | ||||||||
French tax audit | — | — | (88) | ||||||||
Total cash payments | (66) | (16) | (86) |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Thalidomide (note 15 (d) (i)) | (14) | (16) | (15) | ||||||||
Winding down Russian operations | (13) | (13) | — | ||||||||
Supply chain agility programme | (12) | — | — | ||||||||
Donations | — | (37) | (50) | ||||||||
Indirect tax in Korea | — | — | (10) | ||||||||
Ongoing litigation in Turkey | — | — | (1) | ||||||||
Substitution drawback | — | — | 60 | ||||||||
Total cash payments | (39) | (66) | (16) |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Interest income | 127 | 119 | 192 | ||||||||
Fair value gain on financial instruments | 341 | 124 | 123 | ||||||||
Total interest income(1) | 468 | 243 | 315 | ||||||||
Interest charge on bank loans, bonds and overdrafts | (371) | (365) | (390) | ||||||||
Interest charge on leases | (12) | (16) | (15) | ||||||||
Interest charge on other borrowings | (92) | (84) | (120) | ||||||||
Fair value loss on financial instruments | (346) | (126) | (123) | ||||||||
Total interest charges(1) | (821) | (591) | (648) | ||||||||
Net interest charges | (353) | (348) | (333) | ||||||||
Net finance income in respect of post employment plans in surplus (note 14) | 22 | 18 | 26 | ||||||||
Hyperinflation adjustment in respect of Venezuela (note 1) | 1 | 2 | 6 | ||||||||
Interest income in respect of direct and indirect tax | 2 | 15 | 16 | ||||||||
Unwinding of discounts | 4 | — | — | ||||||||
Other finance income | — | — | 3 | ||||||||
Total other finance income | 29 | 35 | 51 | ||||||||
Net finance charge in respect of post employment plans in deficit (note 14) | (12) | (13) | (17) | ||||||||
Hyperinflation adjustment and foreign exchange revaluation of monetary items in respect of Lebanon (note 1) | (3) | (8) | — | ||||||||
Unwinding of discounts | (11) | (20) | (24) | ||||||||
Interest charge in respect of direct and indirect tax | (16) | (11) | (22) | ||||||||
Change in financial liability (Level 3) | (20) | (7) | (6) | ||||||||
Hyperinflation adjustment in respect of Turkey (note 1) | (34) | — | — | ||||||||
Guarantee fees | (1) | (1) | (1) | ||||||||
Other finance charges | (1) | — | (1) | ||||||||
Total other finance charges | (98) | (60) | (71) | ||||||||
Net other finance charges | (69) | (25) | (20) |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Interest income | 160 | 127 | 119 | ||||||||
Fair value gain on financial instruments | 103 | 341 | 124 | ||||||||
Total interest income(1) | 263 | 468 | 243 | ||||||||
Interest charge on bank loans, bonds and overdrafts | (470) | (371) | (365) | ||||||||
Interest charge on leases | (15) | (12) | (16) | ||||||||
Interest charge on other borrowings | (271) | (92) | (84) | ||||||||
Fair value loss on financial instruments | (102) | (346) | (126) | ||||||||
Total interest charges(1) | (858) | (821) | (591) | ||||||||
Net interest charges | (595) | (353) | (348) | ||||||||
Net finance income in respect of post employment plans in surplus (note 14) | 59 | 22 | 18 | ||||||||
Hyperinflation adjustment in respect of Turkey (note 1 (f)) | 10 | — | — | ||||||||
Hyperinflation adjustment in respect of Venezuela (note 1 (f)) | — | 1 | 2 | ||||||||
Interest income in respect of direct and indirect tax | 8 | 2 | 15 | ||||||||
Unwinding of discounts | — | 4 | — | ||||||||
Total other finance income | 77 | 29 | 35 | ||||||||
Net finance charge in respect of post employment plans in deficit (note 14) | (15) | (12) | (13) | ||||||||
Hyperinflation adjustment in respect of Turkey (note 1 (f)) | — | (34) | — | ||||||||
Hyperinflation adjustment in respect of Venezuela (note 1 (f)) | (2) | — | — | ||||||||
Hyperinflation adjustment and foreign exchange revaluation of monetary items in respect of Lebanon (note 1 (f)) | — | (3) | (8) | ||||||||
Unwinding of discounts | (13) | (11) | (20) | ||||||||
Interest charge in respect of direct and indirect tax | (25) | (16) | (11) | ||||||||
Change in financial liability (Level 3) | (8) | (20) | (7) | ||||||||
Guarantee fees | (1) | (1) | (1) | ||||||||
Other finance charges | (12) | (1) | — | ||||||||
Total other finance charges | (76) | (98) | (60) | ||||||||
Net other finance income/(charges) | 1 | (69) | (25) |
Moët Hennessy £ million | Others £ million | Total £ million | |||||||||
Cost less provisions | |||||||||||
At 30 June 2020 | 3,395 | 162 | 3,557 | ||||||||
Exchange differences | (228) | (12) | (240) | ||||||||
Additions | — | 38 | 38 | ||||||||
Share of profit/(loss) after tax | 335 | (1) | 334 | ||||||||
Dividends | (289) | (1) | (290) | ||||||||
Share of movements in other comprehensive income and equity | (85) | — | (85) | ||||||||
Transfer | — | 2 | 2 | ||||||||
Impairment charged during the year | — | (8) | (8) | ||||||||
At 30 June 2021 | 3,128 | 180 | 3,308 | ||||||||
Exchange differences | 48 | 12 | 60 | ||||||||
Additions | — | 65 | 65 | ||||||||
Share of profit/(loss) after tax | 425 | (8) | 417 | ||||||||
Dividends | (186) | (4) | (190) | ||||||||
Share of movements in other comprehensive income and equity | (6) | — | (6) | ||||||||
Impairment charged during the year | — | (2) | (2) | ||||||||
At 30 June 2022 | 3,409 | 243 | 3,652 |
Moët Hennessy £ million | Others £ million | Total £ million | |||||||||
Cost less provisions | |||||||||||
At 30 June 2021 | 3,128 | 180 | 3,308 | ||||||||
Exchange differences | 48 | 12 | 60 | ||||||||
Additions | — | 65 | 65 | ||||||||
Share of profit/(loss) after tax | 425 | (8) | 417 | ||||||||
Dividends | (186) | (4) | (190) | ||||||||
Share of movements in other comprehensive income and equity | (6) | — | (6) | ||||||||
Impairment charged during the year | — | (2) | (2) | ||||||||
At 30 June 2022 | 3,409 | 243 | 3,652 | ||||||||
Exchange differences | (51) | (8) | (59) | ||||||||
Additions | — | 93 | 93 | ||||||||
Share of profit/(loss) after tax | 379 | (9) | 370 | ||||||||
Step acquisition | — | (17) | (17) | ||||||||
Dividends | (214) | (5) | (219) | ||||||||
Share of movements in other comprehensive income and equity | 36 | — | 36 | ||||||||
Transfer | — | 1 | 1 | ||||||||
Impairment charged during the year | — | (28) | (28) | ||||||||
At 30 June 2023 | 3,559 | 270 | 3,829 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Sales | 5,553 | 4,819 | 4,425 | ||||||||
Profit for the year | 1,250 | 985 | 838 | ||||||||
Total comprehensive income | 1,269 | 999 | 765 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Sales | 6,003 | 5,553 | 4,819 | ||||||||
Profit for the year | 1,117 | 1,250 | 985 | ||||||||
Total comprehensive income | 1,161 | 1,269 | 999 |
2022 £ million | 2021 £ million | ||||||||||
Non-current assets | 5,957 | 5,320 | |||||||||
Current assets | 8,447 | 7,800 | |||||||||
Total assets | 14,404 | 13,120 | |||||||||
Non-current liabilities | (1,791) | (1,665) | |||||||||
Current liabilities | (2,415) | (2,256) | |||||||||
Total liabilities | (4,206) | (3,921) | |||||||||
Net assets | 10,198 | 9,199 |
2023 £ million | 2022 £ million | ||||||||||
Non-current assets | 6,774 | 5,957 | |||||||||
Current assets | 9,155 | 8,447 | |||||||||
Total assets | 15,929 | 14,404 | |||||||||
Non-current liabilities | (2,108) | (1,791) | |||||||||
Current liabilities | (3,160) | (2,415) | |||||||||
Total liabilities | (5,268) | (4,206) | |||||||||
Net assets | 10,661 | 10,198 |
United Kingdom | Rest of world | Total | |||||||||||||||||||||||||||
2022 £ million | 2021 £ million | 2020 £ million | 2022 £ million | 2021 £ million | 2020 £ million | 2022 £ million | 2021 £ million | 2020 £ million | |||||||||||||||||||||
Current tax | |||||||||||||||||||||||||||||
Current year | 174 | 100 | 108 | 867 | 684 | 589 | 1,041 | 784 | 697 | ||||||||||||||||||||
Adjustments in respect of prior years | 10 | 1 | 6 | 16 | 28 | (25) | 26 | 29 | (19) | ||||||||||||||||||||
184 | 101 | 114 | 883 | 712 | 564 | 1,067 | 813 | 678 | |||||||||||||||||||||
Deferred tax | |||||||||||||||||||||||||||||
Origination and reversal of temporary differences | — | 13 | 24 | 21 | 18 | (143) | 21 | 31 | (119) | ||||||||||||||||||||
Changes in tax rates | 2 | 46 | 6 | 1 | 32 | 39 | 3 | 78 | 45 | ||||||||||||||||||||
Adjustments in respect of prior years | — | 8 | — | (42) | (23) | (15) | (42) | (15) | (15) | ||||||||||||||||||||
2 | 67 | 30 | (20) | 27 | (119) | (18) | 94 | (89) | |||||||||||||||||||||
Taxation on profit | 186 | 168 | 144 | 863 | 739 | 445 | 1,049 | 907 | 589 |
United Kingdom | Rest of world | Total | |||||||||||||||||||||||||||
2023 £ million | 2022 £ million | 2021 £ million | 2023 £ million | 2022 £ million | 2021 £ million | 2023 £ million | 2022 £ million | 2021 £ million | |||||||||||||||||||||
Current tax | |||||||||||||||||||||||||||||
Current year | 160 | 174 | 100 | 879 | 867 | 684 | 1,039 | 1,041 | 784 | ||||||||||||||||||||
Adjustments in respect of prior years | 33 | 10 | 1 | (39) | 16 | 28 | (6) | 26 | 29 | ||||||||||||||||||||
193 | 184 | 101 | 840 | 883 | 712 | 1,033 | 1,067 | 813 | |||||||||||||||||||||
Deferred tax | |||||||||||||||||||||||||||||
Origination and reversal of temporary differences | 25 | — | 13 | (70) | 21 | 18 | (45) | 21 | 31 | ||||||||||||||||||||
Changes in tax rates | — | 2 | 46 | 11 | 1 | 32 | 11 | 3 | 78 | ||||||||||||||||||||
Adjustments in respect of prior years | 6 | — | 8 | (35) | (42) | (23) | (29) | (42) | (15) | ||||||||||||||||||||
31 | 2 | 67 | (94) | (20) | 27 | (63) | (18) | 94 | |||||||||||||||||||||
Taxation on profit | 224 | 186 | 168 | 746 | 863 | 739 | 970 | 1,049 | 907 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Brand and tangible asset impairment(1) | (55) | — | (165) | ||||||||
Sale of Picon brand | 23 | — | — | ||||||||
Winding down Russian operations | 3 | — | — | ||||||||
Donations(2) | (2) | (5) | — | ||||||||
Tax rate change in the United Kingdom(3) | — | 46 | — | ||||||||
Tax rate change in the Netherlands(4) | — | 42 | — | ||||||||
Obsolete inventories | — | 1 | (7) | ||||||||
Substitution drawback | — | 1 | 20 | ||||||||
Guaranteed minimum pension equalisation | — | (1) | — | ||||||||
Other items | — | — | (2) | ||||||||
(31) | 84 | (154) |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Brand impairment(1) | (124) | (55) | — | ||||||||
US guarantee fee claim(2) | (57) | — | — | ||||||||
Supply chain agility programme | (23) | — | — | ||||||||
Distribution termination fee | (11) | — | — | ||||||||
Disposal of businesses and brands(3) | 29 | 23 | — | ||||||||
Winding down Russian operations | — | 3 | — | ||||||||
Tax rate change in the United Kingdom(4) | — | — | 46 | ||||||||
Tax rate change in the Netherlands(5) | — | — | 42 | ||||||||
Other items | — | (2) | (4) | ||||||||
(186) | (31) | 84 |
2022 £ million | 2022 % | 2021 £ million | 2021 % | 2020 £ million | 2020 % | |||||||||||||||
Profit before taxation | 4,387 | 3,706 | 2,043 | |||||||||||||||||
Notional charge at UK corporation tax rate | 833 | 19.0 | 704 | 19.0 | 388 | 19.0 | ||||||||||||||
Elimination of notional tax on share of after tax results of associates and joint ventures | (79) | (1.8) | (63) | (1.7) | (54) | (2.6) | ||||||||||||||
Differences in overseas tax rates | 161 | 3.7 | 128 | 3.5 | 53 | 2.6 | ||||||||||||||
Effect of intra-group financing | — | — | — | — | (13) | (0.6) | ||||||||||||||
Non-taxable gain on disposals of businesses | — | — | (2) | (0.1) | — | — | ||||||||||||||
Step-up gain | — | — | — | — | (2) | (0.1) | ||||||||||||||
Other tax rate and tax base differences | — | — | — | — | (47) | (2.3) | ||||||||||||||
Other items not chargeable | (49) | (1.1) | (52) | (1.4) | (60) | (3.0) | ||||||||||||||
Impairment | 36 | 0.8 | — | — | 135 | 6.6 | ||||||||||||||
Non-deductible losses on disposals of businesses | 21 | 0.5 | — | — | 6 | 0.3 | ||||||||||||||
Other items not deductible(1) | 58 | 1.3 | 67 | 1.8 | 115 | 5.6 | ||||||||||||||
Irrecoverable withholding taxes | 39 | 0.9 | 25 | 0.7 | 36 | 1.7 | ||||||||||||||
Movement in provision in respect of uncertain tax positions(2) | 42 | 0.9 | 1 | — | 6 | 0.3 | ||||||||||||||
Changes in tax rates(3) | 3 | 0.1 | 78 | 2.1 | 45 | 2.2 | ||||||||||||||
Adjustments in respect of prior years(4) | (16) | (0.4) | 21 | 0.6 | (19) | (0.9) | ||||||||||||||
Taxation on profit | 1,049 | 23.9 | 907 | 24.5 | 589 | 28.8 | ||||||||||||||
Tax rate before exceptional items | — | 22.5 | — | 22.2 | — | 21.7 |
2023 £ million | 2023 % | 2022 £ million | 2022 % | 2021 £ million | 2021 % | |||||||||||||||
Profit before taxation | 4,736 | 4,387 | 3,706 | |||||||||||||||||
Notional charge at UK corporation tax rate | 971 | 20.5 | 833 | 19.0 | 704 | 19.0 | ||||||||||||||
Elimination of notional tax on share of after tax results of associates and joint ventures | (76) | (1.6) | (79) | (1.8) | (63) | (1.7) | ||||||||||||||
Differences in overseas tax rates | 95 | 2.0 | 161 | 3.7 | 128 | 3.5 | ||||||||||||||
Disposal of businesses and brands | (42) | (0.9) | 21 | 0.5 | (2) | (0.1) | ||||||||||||||
Other items not chargeable | (63) | (1.3) | (49) | (1.1) | (52) | (1.4) | ||||||||||||||
Impairment | (2) | — | 36 | 0.8 | — | — | ||||||||||||||
Other items not deductible | 71 | 1.5 | 58 | 1.3 | 67 | 1.8 | ||||||||||||||
Irrecoverable withholding taxes | 38 | 0.8 | 39 | 0.9 | 25 | 0.7 | ||||||||||||||
Movement in provision in respect of uncertain tax positions(1) | 27 | 0.6 | 42 | 0.9 | 1 | — | ||||||||||||||
Changes in tax rates(2) | 11 | 0.2 | 3 | 0.1 | 78 | 2.1 | ||||||||||||||
Adjustments in respect of prior years(3) | (60) | (1.3) | (16) | (0.4) | 21 | 0.6 | ||||||||||||||
Taxation on profit | 970 | 20.5 | 1,049 | 23.9 | 907 | 24.5 | ||||||||||||||
Tax rate before exceptional items | — | 23.0 | — | 22.5 | — | 22.2 |
Property, plant and equipment £ million | Intangible assets £ million | Post employment plans £ million | Tax losses £ million | Other temporary differences(1) £ million | Total £ million | |||||||||||||||
At 30 June 2020 | (340) | (1,736) | (72) | 61 | 234 | (1,853) | ||||||||||||||
Exchange differences | 26 | 176 | (7) | (5) | (17) | 173 | ||||||||||||||
Recognised in income statement | (28) | (19) | 2 | — | 29 | (16) | ||||||||||||||
Reclassification | — | 7 | — | — | (7) | — | ||||||||||||||
Recognised in other comprehensive loss and equity | — | — | (6) | — | (2) | (8) | ||||||||||||||
Tax rate change – recognised in income statement | (39) | (48) | (2) | 1 | 10 | (78) | ||||||||||||||
Tax rate change – recognised in other comprehensive loss and equity | — | — | (44) | — | (4) | (48) | ||||||||||||||
Acquisition of subsidiaries | — | (16) | — | — | 1 | (15) | ||||||||||||||
At 30 June 2021 | (381) | (1,636) | (129) | 57 | 244 | (1,845) | ||||||||||||||
Exchange differences | (21) | (155) | 3 | 3 | 17 | (153) | ||||||||||||||
Recognised in income statement | (42) | (3) | (10) | 2 | 74 | 21 | ||||||||||||||
Reclassification | 2 | 40 | — | — | (7) | 35 | ||||||||||||||
Recognised in other comprehensive loss and equity | (20) | (104) | (103) | — | 20 | (207) | ||||||||||||||
Tax rate change – recognised in income statement | (1) | (3) | — | 1 | — | (3) | ||||||||||||||
Tax rate change – recognised in other comprehensive loss and equity | — | — | (22) | — | 2 | (20) | ||||||||||||||
Acquisition of businesses | — | (31) | — | — | — | (31) | ||||||||||||||
Sale of businesses | (5) | — | — | — | 3 | (2) | ||||||||||||||
At 30 June 2022 | (468) | (1,892) | (261) | 63 | 353 | (2,205) |
Property, plant and equipment £ million | Intangible assets £ million | Post employment plans £ million | Tax losses £ million | Other temporary differences(1) £ million | Total £ million | |||||||||||||||
At 30 June 2021 | (381) | (1,636) | (129) | 57 | 244 | (1,845) | ||||||||||||||
Exchange differences | (21) | (155) | 3 | 3 | 17 | (153) | ||||||||||||||
Recognised in income statement | (42) | (3) | (10) | 2 | 74 | 21 | ||||||||||||||
Reclassification | 2 | 40 | — | — | (7) | 35 | ||||||||||||||
Recognised in other comprehensive loss and equity | (20) | (104) | (103) | — | 20 | (207) | ||||||||||||||
Tax rate change – recognised in income statement | (1) | (3) | — | 1 | — | (3) | ||||||||||||||
Tax rate change – recognised in other comprehensive loss and equity | — | — | (22) | — | 2 | (20) | ||||||||||||||
Acquisition of subsidiaries | — | (31) | — | — | — | (31) | ||||||||||||||
Sale of businesses | (5) | — | — | — | 3 | (2) | ||||||||||||||
At 30 June 2022 | (468) | (1,892) | (261) | 63 | 353 | (2,205) | ||||||||||||||
Exchange differences | 33 | 113 | (3) | 1 | (10) | 134 | ||||||||||||||
Recognised in income statement | (30) | 93 | 2 | (15) | 24 | 74 | ||||||||||||||
Recognised in other comprehensive income and equity | (6) | (30) | 152 | — | (50) | 66 | ||||||||||||||
Tax rate change – recognised in income statement | (1) | (12) | (1) | — | 3 | (11) | ||||||||||||||
Acquisition of subsidiaries | — | (71) | — | — | — | (71) | ||||||||||||||
Transfer from asset held for sale | (2) | (37) | — | — | 5 | (34) | ||||||||||||||
Sale of businesses | 10 | — | (1) | — | (4) | 5 | ||||||||||||||
At 30 June 2023 | (464) | (1,836) | (112) | 49 | 321 | (2,042) |
2022 £ million | 2021 £ million | |||||||
Deferred tax assets | 114 | 100 | ||||||
Deferred tax liabilities | (2,319) | (1,945) | ||||||
(2,205) | (1,845) |
2023 £ million | 2022 £ million | |||||||
Deferred tax assets | 141 | 114 | ||||||
Deferred tax liabilities | (2,183) | (2,319) | ||||||
(2,042) | (2,205) |
2022 £ million | 2021 £ million | |||||||
Capital losses – indefinite | 98 | 105 | ||||||
Trading losses – indefinite | 25 | 23 | ||||||
Trading and capital losses – expiry dates up to 2032 | 46 | 50 | ||||||
169 | 178 |
2023 £ million | 2022 £ million | |||||||
Capital losses – indefinite | 98 | 98 | ||||||
Trading losses – indefinite | 24 | 25 | ||||||
Trading and capital losses – expiry dates up to 2032 | 39 | 46 | ||||||
161 | 169 |
Net assets acquired and consideration | ||||||||||||||||||||
21Seeds £ million | Other £ million | 2022 £ million | 2021 £ million | 2020 £ million | ||||||||||||||||
Brands and other intangibles | 84 | 36 | 120 | 334 | 102 | |||||||||||||||
Property, plant and equipment | — | — | — | 15 | — | |||||||||||||||
Inventories | 4 | 2 | 6 | 12 | 2 | |||||||||||||||
Other working capital | — | 3 | 3 | (3) | (3) | |||||||||||||||
Deferred tax | (20) | (11) | (31) | (15) | (19) | |||||||||||||||
Borrowings | — | — | — | (8) | — | |||||||||||||||
Cash | 1 | — | 1 | 4 | 2 | |||||||||||||||
Fair value of assets and liabilities | 69 | 30 | 99 | 339 | 84 | |||||||||||||||
Goodwill arising on acquisition | 48 | 22 | 70 | 274 | 8 | |||||||||||||||
Settlement of pre-existing relationship | — | (1) | (1) | — | — | |||||||||||||||
Step acquisitions | — | (6) | (6) | — | (23) | |||||||||||||||
Consideration payable | 117 | 45 | 162 | 613 | 69 | |||||||||||||||
Satisfied by: | ||||||||||||||||||||
Cash consideration paid | (62) | (26) | (88) | (358) | (27) | |||||||||||||||
Contingent consideration payable | (55) | (15) | (70) | (253) | (42) | |||||||||||||||
Deferred consideration payable | — | (4) | (4) | (2) | — | |||||||||||||||
(117) | (45) | (162) | (613) | (69) |
Net assets acquired and consideration | |||||||||||||||||
Don Papa £ million | Other £ million | 2023 £ million | 2022 £ million | 2021 £ million | |||||||||||||
Brands and other intangibles | 293 | 45 | 338 | 120 | 334 | ||||||||||||
Property, plant and equipment | 1 | 24 | 25 | — | 15 | ||||||||||||
Inventories | 6 | 21 | 27 | 6 | 12 | ||||||||||||
Other working capital | (2) | (1) | (3) | 3 | (3) | ||||||||||||
Deferred tax | (67) | (4) | (71) | (31) | (15) | ||||||||||||
Borrowings | — | — | — | — | (8) | ||||||||||||
(Overdraft)/Cash | (1) | 1 | — | 1 | 4 | ||||||||||||
Fair value of assets and liabilities | 230 | 86 | 316 | 99 | 339 | ||||||||||||
Goodwill arising on acquisition | 64 | 28 | 92 | 70 | 274 | ||||||||||||
Settlement of pre-existing relationship | — | — | — | (1) | — | ||||||||||||
Step acquisitions | — | (11) | (11) | (6) | — | ||||||||||||
Consideration payable | 294 | 103 | 397 | 162 | 613 | ||||||||||||
Satisfied by: | |||||||||||||||||
Cash consideration paid | (218) | (98) | (316) | (88) | (358) | ||||||||||||
Contingent consideration payable | (72) | (4) | (76) | (70) | (253) | ||||||||||||
Deferred consideration payable | (4) | (1) | (5) | (4) | (2) | ||||||||||||
(294) | (103) | (397) | (162) | (613) |
Consideration | |||||||||||
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Acquisitions in the year - subsidiaries | |||||||||||
Cash consideration paid | (88) | (358) | (27) | ||||||||
Prior year acquisitions - subsidiaries | |||||||||||
Contingent consideration paid for Casamigos | (83) | (89) | (49) | ||||||||
Other consideration | (36) | (7) | (9) | ||||||||
Investments in associates | |||||||||||
Cash consideration paid | (4) | — | (6) | ||||||||
Capital injection | (61) | (38) | (41) | ||||||||
Cash acquired | 1 | 4 | 2 | ||||||||
Net cash outflow on acquisition of businesses | (271) | (488) | (130) | ||||||||
Purchase of shares of non-controlling interests | — | (42) | (62) | ||||||||
Total net cash outflow | (271) | (530) | (192) |
Consideration | |||||||||||
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Acquisitions in the year - subsidiaries | |||||||||||
Cash consideration paid | (316) | (88) | (358) | ||||||||
Cash acquired | — | 1 | 4 | ||||||||
Prior year acquisitions - subsidiaries | |||||||||||
Contingent consideration paid for Casamigos | — | (83) | (89) | ||||||||
Other consideration | (26) | (36) | (7) | ||||||||
Investments in associates | |||||||||||
Cash consideration paid | (14) | (4) | — | ||||||||
Capital injection | (79) | (61) | (38) | ||||||||
Net cash outflow on acquisition of businesses | (435) | (271) | (488) | ||||||||
Purchase of shares of non-controlling interests | (146) | — | (42) | ||||||||
Total net cash outflow | (581) | (271) | (530) |
2022 £ million | 2021 £ million | 2020 £ million | ||||||||||||||||||
Sale consideration | ||||||||||||||||||||
Cash received | 106 | 14 | 11 | |||||||||||||||||
Overdraft disposed of | 2 | — | — | |||||||||||||||||
Transaction and other directly attributable costs paid | (26) | — | — | |||||||||||||||||
Net cash received | 82 | 14 | 11 | |||||||||||||||||
Transaction costs payable | (16) | 1 | (1) | |||||||||||||||||
66 | 15 | 10 | ||||||||||||||||||
Net assets disposed of | ||||||||||||||||||||
Goodwill | (14) | — | — | |||||||||||||||||
Property, plant and equipment | (11) | (2) | (1) | |||||||||||||||||
Investment in associates | — | — | (1) | |||||||||||||||||
Assets and liabilities held for sale | — | — | (30) | |||||||||||||||||
Inventories | (4) | — | — | |||||||||||||||||
Other working capital | 15 | 1 | — | |||||||||||||||||
Other borrowings | 1 | — | — | |||||||||||||||||
Corporate tax | (5) | — | — | |||||||||||||||||
Deferred tax | (2) | — | — | |||||||||||||||||
(20) | (1) | (32) | ||||||||||||||||||
Impairment charge recognised up until the date of sale | — | — | (7) | |||||||||||||||||
Exchange recycled from other comprehensive income | (63) | — | (4) | |||||||||||||||||
(Loss)/gain on disposal before taxation | (17) | 14 | (33) | |||||||||||||||||
Taxation | (23) | — | — | |||||||||||||||||
(Loss)/gain on disposal after taxation | (40) | 14 | (33) |
Guinness Cameroun S.A. £ million | Other £ million | 2023 £ million | 2022 £ million | 2021 £ million | |||||||||||||||||||
Sale consideration | |||||||||||||||||||||||
Cash received | 384 | 115 | 499 | 106 | 14 | ||||||||||||||||||
(Cash)/overdraft disposed of | (13) | — | (13) | 2 | — | ||||||||||||||||||
Transaction and other directly attributable costs paid | (17) | (7) | (24) | (26) | — | ||||||||||||||||||
Net cash received | 354 | 108 | 462 | 82 | 14 | ||||||||||||||||||
Transaction costs payable | (8) | 3 | (5) | (16) | 1 | ||||||||||||||||||
346 | 111 | 457 | 66 | 15 | |||||||||||||||||||
Net assets disposed of | |||||||||||||||||||||||
Goodwill | — | — | — | (14) | — | ||||||||||||||||||
Property, plant and equipment | (103) | (3) | (106) | (11) | (2) | ||||||||||||||||||
Assets and liabilities held for sale | — | (79) | (79) | — | — | ||||||||||||||||||
Inventories | (24) | (4) | (28) | (4) | — | ||||||||||||||||||
Other working capital | 69 | — | 69 | 15 | 1 | ||||||||||||||||||
Other borrowings | 2 | — | 2 | 1 | — | ||||||||||||||||||
Corporate tax | (3) | — | (3) | (5) | — | ||||||||||||||||||
Deferred tax | 5 | — | 5 | (2) | — | ||||||||||||||||||
Post employment benefit liabilities | 4 | — | 4 | — | — | ||||||||||||||||||
(50) | (86) | (136) | (20) | (1) | |||||||||||||||||||
Impairment charge recognised up until the date of sale | (3) | — | (3) | — | — | ||||||||||||||||||
Exchange recycled from other comprehensive income | 17 | 1 | 18 | (63) | — | ||||||||||||||||||
Gain/(loss) on disposal before taxation | 310 | 26 | 336 | (17) | 14 | ||||||||||||||||||
Taxation | (42) | 13 | (29) | (23) | — | ||||||||||||||||||
Gain/(loss) on disposal after taxation | 268 | 39 | 307 | (40) | 14 |
Windsor business £ million | USL Popular brands £ million | 2022 £ million | |||||||||
Intangible assets | 145 | 20 | 165 | ||||||||
Property, plant and equipment | 3 | 9 | 12 | ||||||||
Other investments | 1 | — | 1 | ||||||||
Inventories | 6 | 15 | 21 | ||||||||
Trade and other receivables | 1 | 22 | 23 | ||||||||
Assets held for sale | 156 | 66 | 222 | ||||||||
Trade and other payables | (5) | (13) | (18) | ||||||||
Corporation tax | (6) | — | (6) | ||||||||
Deferred tax | (28) | (7) | (35) | ||||||||
Leases | (2) | — | (2) | ||||||||
Liabilities held for sale | (41) | (20) | (61) | ||||||||
Total | 115 | 46 | 161 |
Brands £ million | Goodwill £ million | Other intangibles £ million | Computer software £ million | Total £ million | |||||||||||||
Cost | |||||||||||||||||
At 30 June 2020 | 8,923 | 2,664 | 1,587 | 698 | 13,872 | ||||||||||||
Exchange differences | (799) | (311) | (174) | (30) | (1,314) | ||||||||||||
Additions | 334 | 274 | 8 | 32 | 648 | ||||||||||||
Disposals | — | — | — | (27) | (27) | ||||||||||||
At 30 June 2021 | 8,458 | 2,627 | 1,421 | 673 | 13,179 | ||||||||||||
Hyperinflation adjustment in respect of Turkey | 315 | 208 | — | 1 | 524 | ||||||||||||
Exchange differences | 639 | 145 | 194 | 28 | 1,006 | ||||||||||||
Additions | 109 | 70 | 55 | 67 | 301 | ||||||||||||
Disposals | (23) | (42) | — | (23) | (88) | ||||||||||||
Reclassification to asset held for sale | (560) | — | — | (8) | (568) | ||||||||||||
At 30 June 2022 | 8,938 | 3,008 | 1,670 | 738 | 14,354 | ||||||||||||
Amortisation and impairment | |||||||||||||||||
At 30 June 2020 | 1,168 | 752 | 78 | 574 | 2,572 | ||||||||||||
Exchange differences | (71) | (82) | (3) | (26) | (182) | ||||||||||||
Amortisation for the year | — | — | 5 | 44 | 49 | ||||||||||||
Disposals | — | — | — | (24) | (24) | ||||||||||||
At 30 June 2021 | 1,097 | 670 | 80 | 568 | 2,415 | ||||||||||||
Exchange differences | 51 | 60 | (1) | 25 | 135 | ||||||||||||
Amortisation for the year | — | — | 7 | 38 | 45 | ||||||||||||
Impairment | 317 | 19 | — | — | 336 | ||||||||||||
Disposals | (23) | (28) | — | (20) | (71) | ||||||||||||
Reclassification to asset held for sale | (400) | — | — | (8) | (408) | ||||||||||||
At 30 June 2022 | 1,042 | 721 | 86 | 603 | 2,452 | ||||||||||||
Carrying amount | |||||||||||||||||
At 30 June 2022 | 7,896 | 2,287 | 1,584 | 135 | 11,902 | ||||||||||||
At 30 June 2021 | 7,361 | 1,957 | 1,341 | 105 | 10,764 | ||||||||||||
At 30 June 2020 | 7,755 | 1,912 | 1,509 | 124 | 11,300 |
Brands £ million | Goodwill £ million | Other intangibles £ million | Computer software £ million | Total £ million | |||||||||||||
Cost | |||||||||||||||||
At 30 June 2021 | 8,458 | 2,627 | 1,421 | 673 | 13,179 | ||||||||||||
Hyperinflation adjustment in respect of Turkey | 315 | 208 | — | 1 | 524 | ||||||||||||
Exchange differences | 639 | 145 | 194 | 28 | 1,006 | ||||||||||||
Additions | 109 | 70 | 55 | 67 | 301 | ||||||||||||
Disposals | (23) | (42) | — | (23) | (88) | ||||||||||||
Reclassification to asset held for sale | (560) | — | — | (8) | (568) | ||||||||||||
At 30 June 2022 | 8,938 | 3,008 | 1,670 | 738 | 14,354 | ||||||||||||
Hyperinflation adjustment in respect of Turkey | 81 | 60 | — | — | 141 | ||||||||||||
Exchange differences | (531) | (257) | (64) | (16) | (868) | ||||||||||||
Additions | 338 | 92 | 13 | 155 | 598 | ||||||||||||
Disposals | — | — | — | (26) | (26) | ||||||||||||
Reclassification from/(to) asset held for sale | 453 | (29) | — | — | 424 | ||||||||||||
At 30 June 2023 | 9,279 | 2,874 | 1,619 | 851 | 14,623 | ||||||||||||
Amortisation and impairment | |||||||||||||||||
At 30 June 2021 | 1,097 | 670 | 80 | 568 | 2,415 | ||||||||||||
Exchange differences | 51 | 60 | (1) | 25 | 135 | ||||||||||||
Amortisation for the year | — | — | 7 | 38 | 45 | ||||||||||||
Impairment | 317 | 19 | — | — | 336 | ||||||||||||
Disposals | (23) | (28) | — | (20) | (71) | ||||||||||||
Reclassification to asset held for sale | (400) | — | — | (8) | (408) | ||||||||||||
At 30 June 2022 | 1,042 | 721 | 86 | 603 | 2,452 | ||||||||||||
Exchange differences | (96) | (61) | (1) | (15) | (173) | ||||||||||||
Amortisation for the year | — | — | 16 | 40 | 56 | ||||||||||||
Impairment | 498 | — | — | — | 498 | ||||||||||||
Disposals | — | — | — | (24) | (24) | ||||||||||||
Reclassification from/(to) asset held for sale | 315 | (13) | — | — | 302 | ||||||||||||
At 30 June 2023 | 1,759 | 647 | 101 | 604 | 3,111 | ||||||||||||
Carrying amount | |||||||||||||||||
At 30 June 2023 | 7,520 | 2,227 | 1,518 | 247 | 11,512 | ||||||||||||
At 30 June 2022 | 7,896 | 2,287 | 1,584 | 135 | 11,902 | ||||||||||||
At 30 June 2021 | 7,361 | 1,957 | 1,341 | 105 | 10,764 |
Principal markets | 2022 £ million | 2021 £ million | |||||||||
Crown Royal whisky | United States | 1,210 | 1,053 | ||||||||
Captain Morgan rum | Global | 993 | 864 | ||||||||
McDowell's No.1 whisky, rum and brandy | India | 778 | 944 | ||||||||
Smirnoff vodka | Global | 681 | 593 | ||||||||
Johnnie Walker whisky | Global | 625 | 625 | ||||||||
Casamigos tequila | United States | 499 | 434 | ||||||||
Yenì raki | Turkey | 294 | 141 | ||||||||
Shui Jing Fang Chinese white spirit | Greater China | 279 | 253 | ||||||||
Aviation American gin | United States | 218 | 190 | ||||||||
Don Julio tequila | United States | 207 | 185 | ||||||||
Signature whisky | India | 191 | 177 | ||||||||
Seagram's 7 Crown whiskey | United States | 184 | 160 | ||||||||
Black Dog whisky | India | 162 | 150 | ||||||||
Antiquity whisky | India | 158 | 147 | ||||||||
Zacapa rum | Global | 158 | 138 | ||||||||
Gordon's gin | Europe | 119 | 119 | ||||||||
Bell's whisky | Europe | 102 | 179 | ||||||||
Windsor Premier whisky | Korea | — | 145 | ||||||||
Other brands | 1,038 | 864 | |||||||||
7,896 | 7,361 |
Principal markets | 2023 £ million | 2022 £ million | |||||||||
Crown Royal whisky | United States | 1,162 | 1,210 | ||||||||
Captain Morgan rum | Global | 954 | 993 | ||||||||
Smirnoff vodka | Global | 654 | 681 | ||||||||
Johnnie Walker whisky | Global | 625 | 625 | ||||||||
Casamigos tequila | United States | 479 | 499 | ||||||||
McDowell's No.1 whisky, rum and brandy | India | 308 | 778 | ||||||||
Don Papa rum | Europe | 282 | — | ||||||||
Yenì raki | Turkey | 249 | 294 | ||||||||
Shui Jing Fang Chinese white spirit | Greater China | 246 | 279 | ||||||||
Don Julio tequila | United States | 235 | 207 | ||||||||
Aviation American gin | United States | 209 | 218 | ||||||||
Seagram's 7 Crown whiskey | United States | 177 | 184 | ||||||||
Signature whisky | India | 176 | 191 | ||||||||
Zacapa rum | Global | 152 | 158 | ||||||||
Black Dog whisky | India | 149 | 162 | ||||||||
Antiquity whisky | India | 145 | 158 | ||||||||
Windsor Premier whisky | Korea | 137 | — | ||||||||
Gordon's gin | Europe | 119 | 119 | ||||||||
Bell's whisky | Europe | 102 | 102 | ||||||||
Other brands | 960 | 1,038 | |||||||||
7,520 | 7,896 |
2022 £ million | 2021 £ million | |||||||
North America | 773 | 609 | ||||||
Europe | ||||||||
Turkey | 255 | 143 | ||||||
Asia Pacific | ||||||||
Greater China | 141 | 128 | ||||||
India | 747 | 693 | ||||||
Latin America and Caribbean – Mexico | 142 | 126 | ||||||
Other cash-generating units | 229 | 258 | ||||||
2,287 | 1,957 |
2023 £ million | 2022 £ million | |||||||
North America | 767 | 773 | ||||||
Europe | ||||||||
Turkey | 216 | 255 | ||||||
Asia Pacific | ||||||||
Greater China | 124 | 141 | ||||||
India | 673 | 747 | ||||||
Latin America and Caribbean – Mexico | 161 | 142 | ||||||
Other cash-generating units | 286 | 229 | ||||||
2,227 | 2,287 |
2022 | 2021 | |||||||||||||||||||
Pre-tax discount rate % | Terminal growth rate % | Long-term growth rate % | Pre-tax discount rate % | Terminal growth rate % | Long-term growth rate % | |||||||||||||||
North America – United States | 8 | 2 | 4 | 7 | 2 | 4 | ||||||||||||||
Europe | ||||||||||||||||||||
United Kingdom | 8 | 2 | 4 | 6 | 2 | 4 | ||||||||||||||
Turkey | 31 | 15 | 25 | 22 | 11 | 16 | ||||||||||||||
Asia Pacific | ||||||||||||||||||||
Australia | 7 | 2 | 5 | 6 | 2 | 5 | ||||||||||||||
India | 14 | 4 | 11 | 12 | 4 | 11 | ||||||||||||||
Africa | ||||||||||||||||||||
South Africa | 16 | — | 6 | 13 | — | 6 | ||||||||||||||
Nigeria | 24 | 12 | 15 | 19 | 10 | 14 | ||||||||||||||
Latin America and Caribbean | ||||||||||||||||||||
Brazil | 12 | 3 | 6 | 11 | 3 | 6 | ||||||||||||||
2023 | 2022 | |||||||||||||||||||
Pre-tax discount rate % | Terminal growth rate % | Long-term growth rate % | Pre-tax discount rate % | Terminal growth rate % | Long-term growth rate % | |||||||||||||||
North America – United States | 9 | 2 | 4 | 8 | 2 | 4 | ||||||||||||||
Europe | ||||||||||||||||||||
United Kingdom | 9 | 2 | 5 | 8 | 2 | 4 | ||||||||||||||
Turkey | 28 | 16 | 28 | 31 | 15 | 25 | ||||||||||||||
Asia Pacific | ||||||||||||||||||||
Australia | 10 | 3 | 5 | 7 | 2 | 5 | ||||||||||||||
Korea | 11 | (2) | 4 | 7 | 2 | 5 | ||||||||||||||
India | 14 | 4 | 15 | 14 | 4 | 11 | ||||||||||||||
Greater China | 11 | 2 | 6 | 7 | 2 | 7 | ||||||||||||||
Latin America and Caribbean | ||||||||||||||||||||
Brazil | 16 | 3 | 6 | 12 | 3 | 6 | ||||||||||||||
Mexico | 13 | 3 | 6 | 14 | 3 | 6 | ||||||||||||||
Africa | ||||||||||||||||||||
Africa Emerging Markets | 35 | 8 | 18 | 12 | 5 | 11 | ||||||||||||||
South Africa | 20 | 5 | 6 | 16 | — | 6 | ||||||||||||||
Nigeria | 35 | 5 | 18 | 24 | 12 | 15 | ||||||||||||||
Increase in discount rate | Decrease in terminal growth rate | Decrease in annual growth rate in forecast period 2023-2029 | Decrease in cash flows | Decrease in future volume forecast | Further devaluation of local currency | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value of CGU £ million | Headroom £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
McDowell's No.1 | 892 | — | 1ppt | (92) | n/a | n/a | 2ppt | (121) | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bell's | 145 | — | 3ppt | (27) | 1ppt | (9) | n/a | n/a | 10 | % | (15) | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Yenì Raki | 346 | 44 | 7ppt | (95) | n/a | n/a | n/a | n/a | n/a | n/a | 4 | % | (20) | n/a | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Turkey | 688 | 14 | 7ppt | (249) | 1ppt | (13) | n/a | n/a | 10 | % | (88) | 1 | % | (124) | 66 | % | (69) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in discount rate | Decrease in terminal growth rate | Decrease in annual growth rate in forecast period 2024-2029 | Decrease in cash flows(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value of CGU £ million | Headroom £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | Reasonably possible change | Potential impairment charge £ million | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
McDowell's | 379 | — | 1ppt | (38) | 1ppt | (26) | 2ppt | (67) | 10 | % | (76) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Land and buildings £ million | Plant and equipment £ million | Fixtures and fittings £ million | Returnable bottles and crates £ million | Under construction £ million | Total £ million | |||||||||||||||
Cost | ||||||||||||||||||||
At 30 June 2020 | 2,141 | 4,868 | 127 | 575 | 549 | 8,260 | ||||||||||||||
Exchange differences | (137) | (322) | (10) | (55) | (34) | (558) | ||||||||||||||
Acquisitions | 9 | 2 | — | — | 4 | 15 | ||||||||||||||
Sale of businesses | (1) | (3) | — | — | — | (4) | ||||||||||||||
Additions | 95 | 149 | 9 | 27 | 367 | 647 | ||||||||||||||
Disposals | (24) | (126) | (7) | (21) | — | (178) | ||||||||||||||
Transfers | 77 | 146 | 2 | 2 | (227) | — | ||||||||||||||
At 30 June 2021 | 2,160 | 4,714 | 121 | 528 | 659 | 8,182 | ||||||||||||||
Hyperinflation adjustment in respect of Turkey | 56 | 32 | 2 | — | 7 | 97 | ||||||||||||||
Exchange differences | 107 | 226 | 1 | 11 | 45 | 390 | ||||||||||||||
Sale of businesses | (4) | (58) | (3) | (19) | (1) | (85) | ||||||||||||||
Additions | 230 | 245 | 8 | 41 | 612 | 1,136 | ||||||||||||||
Disposals | (65) | (122) | (15) | (32) | (3) | (237) | ||||||||||||||
Transfers | 177 | 249 | 10 | 13 | (449) | — | ||||||||||||||
Reclassification to assets held for sale | (8) | (25) | — | — | — | (33) | ||||||||||||||
At 30 June 2022 | 2,653 | 5,261 | 124 | 542 | 870 | 9,450 | ||||||||||||||
Depreciation | ||||||||||||||||||||
30 June 2020 | 597 | 2,256 | 86 | 395 | — | 3,334 | ||||||||||||||
Exchange differences | (31) | (167) | (8) | (39) | — | (245) | ||||||||||||||
Depreciation charge for the year | 110 | 244 | 15 | 29 | — | 398 | ||||||||||||||
Sale of businesses | — | (2) | — | — | — | (2) | ||||||||||||||
Disposals | (18) | (113) | (7) | (14) | — | (152) | ||||||||||||||
At 30 June 2021 | 658 | 2,218 | 86 | 371 | — | 3,333 | ||||||||||||||
Exchange differences | 31 | 94 | 1 | 9 | — | 135 | ||||||||||||||
Depreciation charge for the year | 127 | 277 | 14 | 29 | — | 447 | ||||||||||||||
Sale of businesses | (4) | (50) | (2) | (18) | — | (74) | ||||||||||||||
Disposals | (62) | (113) | (13) | (30) | — | (218) | ||||||||||||||
Transfers | 5 | 4 | (9) | — | — | — | ||||||||||||||
Reclassification to assets held for sale | (5) | (16) | — | — | — | (21) | ||||||||||||||
At 30 June 2022 | 750 | 2,414 | 77 | 361 | — | 3,602 | ||||||||||||||
Carrying amount | ||||||||||||||||||||
At 30 June 2022 | 1,903 | 2,847 | 47 | 181 | 870 | 5,848 | ||||||||||||||
At 30 June 2021 | 1,502 | 2,496 | 35 | 157 | 659 | 4,849 | ||||||||||||||
At 30 June 2020 | 1,544 | 2,612 | 41 | 180 | 549 | 4,926 |
Land and buildings £ million | Plant and equipment £ million | Fixtures and fittings £ million | Returnable bottles and crates £ million | Under construction £ million | Total £ million | |||||||||||||||
Cost | ||||||||||||||||||||
At 30 June 2021 | 2,160 | 4,714 | 121 | 528 | 659 | 8,182 | ||||||||||||||
Hyperinflation adjustment in respect of Turkey and Venezuela | 56 | 32 | 2 | — | 7 | 97 | ||||||||||||||
Exchange differences | 107 | 226 | 1 | 11 | 45 | 390 | ||||||||||||||
Sale of businesses | (4) | (58) | (3) | (19) | (1) | (85) | ||||||||||||||
Additions | 230 | 245 | 8 | 41 | 612 | 1,136 | ||||||||||||||
Disposals | (65) | (122) | (15) | (32) | (3) | (237) | ||||||||||||||
Transfers | 177 | 249 | 10 | 13 | (449) | — | ||||||||||||||
Reclassification to assets held for sale | (8) | (25) | — | — | — | (33) | ||||||||||||||
At 30 June 2022 | 2,653 | 5,261 | 124 | 542 | 870 | 9,450 | ||||||||||||||
Hyperinflation adjustment in respect of Turkey and Venezuela | 5 | 10 | 1 | — | 4 | 20 | ||||||||||||||
Exchange differences | (166) | (331) | (6) | (49) | (30) | (582) | ||||||||||||||
Acquisitions | 8 | 14 | — | 3 | — | 25 | ||||||||||||||
Sale of businesses | (35) | (147) | (3) | (55) | (3) | (243) | ||||||||||||||
Additions | 111 | 214 | 13 | 50 | 832 | 1,220 | ||||||||||||||
Disposals | (64) | (141) | (12) | (105) | (2) | (324) | ||||||||||||||
Transfers | 146 | 238 | 12 | 28 | (424) | — | ||||||||||||||
Reclassification from assets held for sale | 2 | — | 1 | — | — | 3 | ||||||||||||||
At 30 June 2023 | 2,660 | 5,118 | 130 | 414 | 1,247 | 9,569 | ||||||||||||||
Depreciation | ||||||||||||||||||||
At 30 June 2021 | 658 | 2,218 | 86 | 371 | — | 3,333 | ||||||||||||||
Exchange differences | 31 | 94 | 1 | 9 | — | 135 | ||||||||||||||
Depreciation charge for the year | 125 | 276 | 14 | 29 | — | 444 | ||||||||||||||
Exceptional impairment | 2 | 1 | — | — | — | 3 | ||||||||||||||
Sale of businesses | (4) | (50) | (2) | (18) | — | (74) | ||||||||||||||
Disposals | (62) | (113) | (13) | (30) | — | (218) | ||||||||||||||
Transfers | 5 | 4 | (9) | — | — | — | ||||||||||||||
Reclassification to assets held for sale | (5) | (16) | — | — | — | (21) | ||||||||||||||
At 30 June 2022 | 750 | 2,414 | 77 | 361 | — | 3,602 | ||||||||||||||
Exchange differences | (38) | (176) | (3) | (27) | — | (244) | ||||||||||||||
Depreciation charge for the year | 125 | 269 | 13 | 33 | — | 440 | ||||||||||||||
Exceptional accelerated depreciation and impairment | 31 | 41 | — | — | — | 72 | ||||||||||||||
Sale of businesses | (21) | (80) | (2) | (34) | — | (137) | ||||||||||||||
Disposals | (63) | (130) | (11) | (103) | — | (307) | ||||||||||||||
Reclassification from assets held for sale | — | — | 1 | — | — | 1 | ||||||||||||||
At 30 June 2023 | 784 | 2,338 | 75 | 230 | — | 3,427 | ||||||||||||||
Carrying amount | ||||||||||||||||||||
At 30 June 2023 | 1,876 | 2,780 | 55 | 184 | 1,247 | 6,142 | ||||||||||||||
At 30 June 2022 | 1,903 | 2,847 | 47 | 181 | 870 | 5,848 | ||||||||||||||
At 30 June 2021 | 1,502 | 2,496 | 35 | 157 | 659 | 4,849 |
Biological assets £ million | |||||
Fair value | |||||
At 30 June | |||||
Exchange differences | |||||
10 | |||||
Transferred to inventories | (11) | ||||
Fair value change | (5) | ||||
Farming cost capitalised | 34 | ||||
At 30 June 2022 | 94 | ||||
Exchange differences | 15 | ||||
Transferred to inventories | (8) | ||||
Fair value change | — | ||||
Farming cost capitalised | 55 | ||||
At 30 June 2023 | 156 |
Land and buildings £ million | Plant and equipment £ million | Under construction £ million | Total £ million | |||||||||||||||||
At 30 June 2020 | 269 | 276 | 32 | 577 | ||||||||||||||||
Exchange differences | (21) | (18) | — | (39) | ||||||||||||||||
Additions | 33 | 23 | — | 56 | ||||||||||||||||
Transfers | (1) | (63) | (3) | (67) | ||||||||||||||||
Acquisitions | 8 | — | — | 8 | ||||||||||||||||
Depreciation | (58) | (34) | — | (92) | ||||||||||||||||
At 30 June 2021 | 230 | 184 | 29 | 443 | ||||||||||||||||
Exchange differences | 26 | 14 | — | 40 | ||||||||||||||||
Additions | 129 | 56 | — | 185 | ||||||||||||||||
Transfers | 29 | — | (29) | — | ||||||||||||||||
Reclassification to assets held for sale | (1) | (1) | — | (2) | ||||||||||||||||
Disposal | (6) | — | — | (6) | ||||||||||||||||
Depreciation | (54) | (41) | — | (95) | ||||||||||||||||
At 30 June 2022 | 353 | 212 | — | 565 |
Land and buildings £ million | Plant and equipment £ million | Under construction £ million | Total £ million | |||||||||||||||||
At 30 June 2021 | 230 | 184 | 29 | 443 | ||||||||||||||||
Exchange differences | 26 | 14 | — | 40 | ||||||||||||||||
Additions | 129 | 56 | — | 185 | ||||||||||||||||
Transfers | 29 | — | (29) | — | ||||||||||||||||
Reclassification to assets held for sale | (1) | (1) | — | (2) | ||||||||||||||||
Disposals | (6) | — | — | (6) | ||||||||||||||||
Depreciation | (54) | (41) | — | (95) | ||||||||||||||||
At 30 June 2022 | 353 | 212 | — | 565 | ||||||||||||||||
Exchange differences | (3) | (23) | — | (26) | ||||||||||||||||
Additions | 45 | 37 | — | 82 | ||||||||||||||||
Reclassification from assets held for sale | 1 | 1 | — | 2 | ||||||||||||||||
Derecognition due to disposal of business | (1) | (1) | — | (2) | ||||||||||||||||
Depreciation | (56) | (39) | — | (95) | ||||||||||||||||
At 30 June 2023 | 339 | 187 | — | 526 |
2022 £ million | 2021 £ million | |||||||
Current lease liabilities | (85) | (82) | ||||||
Non-current lease liabilities | (390) | (281) | ||||||
(475) | (363) |
2023 £ million | 2022 £ million | |||||||
Current lease liabilities | (75) | (85) | ||||||
Non-current lease liabilities | (373) | (390) | ||||||
(448) | (475) |
Loans £ million | Other investments £ million | Total £ million | |||||||||
Cost less allowances or fair value | |||||||||||
At 30 June 2020 | 7 | 34 | 41 | ||||||||
Exchange differences | — | (3) | (3) | ||||||||
Additions | 5 | — | 5 | ||||||||
Repayments and disposals | (1) | — | (1) | ||||||||
Transfer | (1) | (1) | (2) | ||||||||
At 30 June 2021 | 10 | 30 | 40 | ||||||||
Exchange differences | 2 | 1 | 3 | ||||||||
Additions | 6 | 9 | 15 | ||||||||
Repayments and disposals | (1) | (1) | (2) | ||||||||
Fair value adjustment | — | (13) | (13) | ||||||||
Step acquisitions | — | (6) | (6) | ||||||||
Capitalised interest | 1 | — | 1 | ||||||||
Transfer | — | (1) | (1) | ||||||||
At 30 June 2022 | 18 | 19 | 37 |
Loans £ million | Other investments £ million | Total £ million | |||||||||
Cost less allowances or fair value | |||||||||||
At 30 June 2021 | 10 | 30 | 40 | ||||||||
Exchange differences | 2 | 1 | 3 | ||||||||
Additions | 6 | 9 | 15 | ||||||||
Repayments and disposals | (1) | (1) | (2) | ||||||||
Fair value adjustment | — | (13) | (13) | ||||||||
Step acquisitions | — | (6) | (6) | ||||||||
Capitalised interest | 1 | — | 1 | ||||||||
Transfer | — | (1) | (1) | ||||||||
At 30 June 2022 | 18 | 19 | 37 | ||||||||
Exchange differences | (1) | — | (1) | ||||||||
Additions | 20 | 9 | 29 | ||||||||
Repayments and disposals | (3) | — | (3) | ||||||||
Fair value adjustment | — | (4) | (4) | ||||||||
Capitalised interest | 1 | — | 1 | ||||||||
Impairment charged during the year | — | (2) | (2) | ||||||||
At 30 June 2023 | 35 | 22 | 57 |
Principal plans | Date of valuation | ||||
United Kingdom(1) | 1 April 2021 | ||||
Ireland(2) | 31 December | ||||
United States | 1 January |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Current service cost and administrative expenses | (107) | (105) | (109) | ||||||||
Past service gains – ordinary activities | 34 | — | 50 | ||||||||
Past service losses – exceptional | — | (5) | — | ||||||||
Gains on curtailments and settlements | 34 | 18 | 12 | ||||||||
Charge to operating profit | (39) | (92) | (47) | ||||||||
Net finance gain in respect of post employment plans | 10 | 5 | 9 | ||||||||
Charge before taxation(1) | (29) | (87) | (38) | ||||||||
Actual returns less amounts included in finance income | (1,432) | (6) | 774 | ||||||||
Experience (losses)/gains | (35) | 80 | 34 | ||||||||
Changes in financial assumptions | 2,133 | 125 | (754) | ||||||||
Changes in demographic assumptions | (40) | (183) | (14) | ||||||||
Other comprehensive income | 626 | 16 | 40 | ||||||||
Changes in the surplus restriction | (11) | — | (2) | ||||||||
Total other comprehensive income | 615 | 16 | 38 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Current service cost and administrative expenses | (76) | (107) | (105) | ||||||||
Past service (losses)/gains – ordinary activities | (1) | 34 | — | ||||||||
Past service losses – exceptional | — | — | (5) | ||||||||
Gains on curtailments and settlements | 2 | 34 | 18 | ||||||||
Charge to operating profit | (75) | (39) | (92) | ||||||||
Net finance income in respect of post employment plans | 44 | 10 | 5 | ||||||||
Charge before taxation(1) | (31) | (29) | (87) | ||||||||
Actual returns less amounts included in finance income | (1,435) | (1,432) | (6) | ||||||||
Experience (losses)/gains | (226) | (35) | 80 | ||||||||
Changes in financial assumptions | 958 | 2,133 | 125 | ||||||||
Changes in demographic assumptions | 53 | (40) | (183) | ||||||||
Other comprehensive (loss)/income | (650) | 626 | 16 | ||||||||
Changes in the surplus restriction | 7 | (11) | — | ||||||||
Total other comprehensive (loss)/income | (643) | 615 | 16 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
United Kingdom | (27) | (46) | (23) | ||||||||
Ireland | 45 | 4 | 34 | ||||||||
United States | (31) | (28) | (30) | ||||||||
Other | (16) | (17) | (19) | ||||||||
(29) | (87) | (38) |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
United Kingdom | 15 | (27) | (46) | ||||||||
Ireland | 1 | 45 | 4 | ||||||||
United States | (32) | (31) | (28) | ||||||||
Other | (15) | (16) | (17) | ||||||||
(31) | (29) | (87) |
Plan assets £ million | Plan liabilities £ million | Net surplus £ million | |||||||||
At 30 June 2020 | 10,422 | (10,057) | 365 | ||||||||
Exchange differences | (214) | 245 | 31 | ||||||||
Charge before taxation(1) | 149 | (236) | (87) | ||||||||
Other comprehensive income/(loss)(2) | (6) | 22 | 16 | ||||||||
Contributions by the group | 122 | — | 122 | ||||||||
Settlements paid(3) | (169) | 169 | — | ||||||||
Employee contributions | 4 | (4) | — | ||||||||
Benefits paid | (416) | 416 | — | ||||||||
At 30 June 2021 | 9,892 | (9,445) | 447 | ||||||||
Exchange differences | 93 | (100) | (7) | ||||||||
Charge before taxation(1) | 176 | (205) | (29) | ||||||||
Other comprehensive income/(loss)(2) | (1,432) | 2,058 | 626 | ||||||||
Contributions by the group | 128 | — | 128 | ||||||||
Settlements paid(3) | (52) | 52 | — | ||||||||
Employee contributions | 5 | (5) | — | ||||||||
Benefits paid | (411) | 411 | — | ||||||||
At 30 June 2022 | 8,399 | (7,234) | 1,165 |
Plan assets £ million | Plan liabilities £ million | Net surplus £ million | |||||||||
At 30 June 2021 | 9,892 | (9,445) | 447 | ||||||||
Exchange differences | 93 | (100) | (7) | ||||||||
Income/(charge) before taxation | 176 | (205) | (29) | ||||||||
Other comprehensive (loss)/income(1) | (1,432) | 2,058 | 626 | ||||||||
Contributions by the group | 128 | — | 128 | ||||||||
Settlements paid(2) | (52) | 52 | — | ||||||||
Employee contributions | 5 | (5) | — | ||||||||
Benefits paid | (411) | 411 | — | ||||||||
At 30 June 2022 | 8,399 | (7,234) | 1,165 | ||||||||
Exchange differences | (49) | 55 | 6 | ||||||||
Disposals | — | 4 | 4 | ||||||||
Income/(charge) before taxation | 298 | (329) | (31) | ||||||||
Other comprehensive (loss)/income(1) | (1,435) | 785 | (650) | ||||||||
Contributions by the group | 100 | — | 100 | ||||||||
Employee contributions | 5 | (5) | — | ||||||||
Benefits paid | (472) | 472 | — | ||||||||
At 30 June 2023 | 6,846 | (6,252) | 594 |
2022 | 2021 | |||||||||||||
Plan assets £ million | Plan liabilities £ million | Plan assets £ million | Plan liabilities £ million | |||||||||||
Pensions | ||||||||||||||
United Kingdom | 6,041 | (4,897) | 7,341 | (6,580) | ||||||||||
Ireland | 1,645 | (1,409) | 1,826 | (1,926) | ||||||||||
United States | 453 | (408) | 470 | (373) | ||||||||||
Other | 191 | (212) | 186 | (225) | ||||||||||
Post employment medical | 2 | (225) | 2 | (262) | ||||||||||
Other post employment | 67 | (83) | 67 | (79) | ||||||||||
8,399 | (7,234) | 9,892 | (9,445) |
2023 | 2022 | |||||||||||||
Plan assets £ million | Plan liabilities £ million | Plan assets £ million | Plan liabilities £ million | |||||||||||
Pensions | ||||||||||||||
United Kingdom | 4,578 | (4,041) | 6,041 | (4,897) | ||||||||||
Ireland | 1,588 | (1,310) | 1,645 | (1,409) | ||||||||||
United States | 441 | (411) | 453 | (408) | ||||||||||
Other | 180 | (194) | 191 | (212) | ||||||||||
Post employment medical | 2 | (227) | 2 | (225) | ||||||||||
Other post employment | 57 | (69) | 67 | (83) | ||||||||||
6,846 | (6,252) | 8,399 | (7,234) |
2022 | 2021 | |||||||||||||
Non- current assets(1) £ million | Non- current liabilities £ million | Non- current assets(1) £ million | Non- current liabilities £ million | |||||||||||
Funded plans | 1,553 | (144) | 1,018 | (279) | ||||||||||
Unfunded plans | — | (258) | — | (295) | ||||||||||
1,553 | (402) | 1,018 | (574) |
2023 | 2022 | |||||||||||||
Non- current assets(1) £ million | Non- current liabilities £ million | Non- current assets(1) £ million | Non- current liabilities £ million | |||||||||||
Funded plans | 960 | (132) | 1,553 | (144) | ||||||||||
Unfunded plans | — | (241) | — | (258) | ||||||||||
960 | (373) | 1,553 | (402) |
United Kingdom | Ireland | United States(1) | |||||||||||||||||||||||||||
2022% | 2021% | 2020% | 2022% | 2021% | 2020% | 2022% | 2021% | 2020% | |||||||||||||||||||||
Rate of general increase in salaries(2) | 3.6 | 3.4 | 3.2 | 3.8 | 3.0 | 2.6 | — | — | — | ||||||||||||||||||||
Rate of increase to pensions in payment | 2.9 | 3.1 | 3.0 | 2.2 | 1.7 | 1.4 | — | — | — | ||||||||||||||||||||
Rate of increase to deferred pensions | 2.6 | 2.5 | 2.1 | 2.3 | 1.6 | 1.2 | — | — | — | ||||||||||||||||||||
Discount rate for plan liabilities | 3.8 | 1.9 | 1.5 | 3.2 | 1.0 | 1.2 | 4.4 | 2.7 | 2.6 | ||||||||||||||||||||
Inflation – CPI | 2.6 | 2.5 | 2.1 | 2.4 | 1.6 | 1.2 | 2.3 | 2.3 | 1.4 | ||||||||||||||||||||
Inflation - RPI | 3.1 | 3.0 | 2.8 | — | — | — | — | — | — |
United Kingdom | Ireland | United States(1) | |||||||||||||||||||||||||||
2023% | 2022% | 2021% | 2023% | 2022% | 2021% | 2023% | 2022% | 2021% | |||||||||||||||||||||
Rate of general increase in salaries(2) | 3.7 | 3.6 | 3.4 | 3.9 | 3.8 | 3.0 | — | — | — | ||||||||||||||||||||
Rate of increase to pensions in payment | 2.9 | 2.9 | 3.1 | 2.3 | 2.2 | 1.7 | — | — | — | ||||||||||||||||||||
Rate of increase to deferred pensions | 2.7 | 2.6 | 2.5 | 2.4 | 2.3 | 1.6 | — | — | — | ||||||||||||||||||||
Discount rate for plan liabilities | 5.2 | 3.8 | 1.9 | 3.6 | 3.2 | 1.0 | 4.9 | 4.4 | 2.7 | ||||||||||||||||||||
Inflation – CPI | 2.7 | 2.6 | 2.5 | 2.5 | 2.4 | 1.6 | 2.2 | 2.3 | 2.3 | ||||||||||||||||||||
Inflation - RPI | 3.2 | 3.1 | 3.0 | — | — | — | — | — | — |
United Kingdom(1) | Ireland(2) | United States | |||||||||||||||||||||||||||
2022 Age | 2021 Age | 2020 Age | 2022 Age | 2021 Age | 2020 Age | 2022 Age | 2021 Age | 2020 Age | |||||||||||||||||||||
Retiring currently at age 65 | |||||||||||||||||||||||||||||
Male | 87.1 | 87.2 | 86.4 | 87.7 | 86.9 | 86.6 | 85.5 | 85.4 | 85.6 | ||||||||||||||||||||
Female | 88.7 | 88.7 | 88.7 | 90.0 | 89.3 | 89.3 | 87.2 | 87.1 | 87.3 | ||||||||||||||||||||
Currently aged 45, retiring at age 65 | |||||||||||||||||||||||||||||
Male | 88.5 | 88.6 | 88.5 | 89.3 | 88.6 | 89.6 | 87.0 | 86.9 | 87.2 | ||||||||||||||||||||
Female | 90.7 | 90.8 | 90.8 | 91.7 | 91.1 | 92.3 | 88.6 | 88.5 | 88.9 |
United Kingdom(1) | Ireland(2) | United States | |||||||||||||||||||||||||||
2023 Age | 2022 Age | 2021 Age | 2023 Age | 2022 Age | 2021 Age | 2023 Age | 2022 Age | 2021 Age | |||||||||||||||||||||
Retiring currently at age 65 | |||||||||||||||||||||||||||||
Male | 86.8 | 87.1 | 87.2 | 87.2 | 87.7 | 86.9 | 85.6 | 85.5 | 85.4 | ||||||||||||||||||||
Female | 88.4 | 88.7 | 88.7 | 89.6 | 90.0 | 89.3 | 87.2 | 87.2 | 87.1 | ||||||||||||||||||||
Currently aged 45, retiring at age 65 | |||||||||||||||||||||||||||||
Male | 88.1 | 88.5 | 88.6 | 88.8 | 89.3 | 88.6 | 87.1 | 87.0 | 86.9 | ||||||||||||||||||||
Female | 90.4 | 90.7 | 90.8 | 91.3 | 91.7 | 91.1 | 88.7 | 88.6 | 88.5 |
United Kingdom | Ireland | United States | |||||||||||||||||||||||||||
Benefit/(cost) | Operating profit £ million | Profit after taxation £ million | Plan liabilities(1) £ million | Operating profit £ million | Profit after taxation £ million | Plan liabilities(1) £ million | Operating profit £ million | Profit after taxation £ million | Plan liabilities(1) £ million | ||||||||||||||||||||
Effect of 0.5% increase in discount rate | 2 | 19 | 336 | 1 | 4 | 96 | 1 | 3 | 22 | ||||||||||||||||||||
Effect of 0.5% decrease in discount rate | (3) | (17) | (374) | (1) | (4) | (108) | (1) | (3) | (23) | ||||||||||||||||||||
Effect of 0.5% increase in inflation | (2) | (9) | (246) | (1) | (3) | (59) | — | (1) | (10) | ||||||||||||||||||||
Effect of 0.5% decrease in inflation | 2 | 10 | 260 | 1 | 3 | 57 | — | 1 | 9 | ||||||||||||||||||||
Effect of 1 year increase in life expectancy | — | (6) | (171) | — | (2) | (56) | — | (1) | (17) |
United Kingdom | Ireland | United States | |||||||||||||||||||||||||||
Benefit/(cost) | Operating profit £ million | Profit after taxation £ million | Plan liabilities(1) £ million | Operating profit £ million | Profit after taxation £ million | Plan liabilities(1) £ million | Operating profit £ million | Profit after taxation £ million | Plan liabilities(1) £ million | ||||||||||||||||||||
Effect of 0.5% increase in discount rate | 2 | 15 | 259 | 1 | 5 | 85 | 2 | 2 | 22 | ||||||||||||||||||||
Effect of 0.5% decrease in discount rate | (2) | (14) | (267) | (1) | (4) | (95) | (2) | (2) | (24) | ||||||||||||||||||||
Effect of 0.5% increase in inflation | (1) | (8) | (156) | — | (2) | (49) | — | (1) | (9) | ||||||||||||||||||||
Effect of 0.5% decrease in inflation | 2 | 8 | 173 | — | 2 | 50 | — | 1 | 8 | ||||||||||||||||||||
Effect of one year increase in life expectancy | — | (6) | (131) | — | (2) | (55) | — | (1) | (15) |
2022 | |||||||||||||||||||||||||||||
United Kingdom £ million | Ireland £ million | United States and other £ million | Total £ million | ||||||||||||||||||||||||||
Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Total | |||||||||||||||||||||
Equities | 23 | 1,218 | — | 319 | 70 | 105 | 93 | 1,642 | 1,735 | ||||||||||||||||||||
Bonds | |||||||||||||||||||||||||||||
Fixed-interest government | 2 | 86 | — | 30 | 49 | 152 | 51 | 268 | 319 | ||||||||||||||||||||
Inflation-linked government | — | — | — | 199 | 1 | 1 | 1 | 200 | 201 | ||||||||||||||||||||
Investment grade corporate | — | 68 | — | 388 | 25 | 222 | 25 | 678 | 703 | ||||||||||||||||||||
Non-investment grade | 44 | 557 | 2 | 200 | 1 | 1 | 47 | 758 | 805 | ||||||||||||||||||||
Loan securities | 11 | 1,271 | — | 98 | — | — | 11 | 1,369 | 1,380 | ||||||||||||||||||||
Repurchase agreements | 2,400 | (215) | — | — | — | — | 2,400 | (215) | 2,185 | ||||||||||||||||||||
Liability Driven Investment (LDI) | — | 119 | — | 46 | — | — | — | 165 | 165 | ||||||||||||||||||||
Property | 28 | 716 | — | 74 | — | 1 | 28 | 791 | 819 | ||||||||||||||||||||
Hedge funds | — | 107 | — | 92 | — | 5 | — | 204 | 204 | ||||||||||||||||||||
Interest rate and inflation swaps | — | (900) | — | 37 | — | — | — | (863) | (863) | ||||||||||||||||||||
Cash and other | 24 | 481 | 7 | 154 | — | 80 | 31 | 715 | 746 | ||||||||||||||||||||
Total bid value of assets | 2,532 | 3,508 | 9 | 1,637 | 146 | 567 | 2,687 | 5,712 | 8,399 |
2023 | |||||||||||||||||||||||||||||
United Kingdom £ million | Ireland £ million | United States and other £ million | Total £ million | ||||||||||||||||||||||||||
Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Total | |||||||||||||||||||||
Equities | 12 | 916 | — | 291 | 64 | 98 | 76 | 1,305 | 1,381 | ||||||||||||||||||||
Bonds | |||||||||||||||||||||||||||||
Fixed-interest government | 18 | 24 | — | 6 | 48 | 8 | 66 | 38 | 104 | ||||||||||||||||||||
Inflation-linked government | — | — | — | 96 | 2 | 2 | 2 | 98 | 100 | ||||||||||||||||||||
Investment grade corporate | — | 29 | — | 328 | 21 | 227 | 21 | 584 | 605 | ||||||||||||||||||||
Non-investment grade | 22 | 289 | 6 | 186 | 2 | 133 | 30 | 608 | 638 | ||||||||||||||||||||
Loan securities | 13 | 526 | — | 84 | — | — | 13 | 610 | 623 | ||||||||||||||||||||
Repurchase agreements | 2,351 | 826 | — | — | — | — | 2,351 | 826 | 3,177 | ||||||||||||||||||||
Liability Driven Investment (LDI) | — | — | — | 81 | — | — | — | 81 | 81 | ||||||||||||||||||||
Property | 29 | 462 | — | 62 | — | 1 | 29 | 525 | 554 | ||||||||||||||||||||
Hedge funds | — | — | — | 12 | — | 5 | — | 17 | 17 | ||||||||||||||||||||
Interest rate and inflation swaps | — | (971) | 102 | (18) | — | — | 102 | (989) | (887) | ||||||||||||||||||||
Cash and other | 46 | (14) | 5 | 347 | — | 69 | 51 | 402 | 453 | ||||||||||||||||||||
Total bid value of assets | 2,491 | 2,087 | 113 | 1,475 | 137 | 543 | 2,741 | 4,105 | 6,846 |
2021 | |||||||||||||||||||||||||||||
United Kingdom £ million | Ireland £ million | United States and other £ million | Total £ million | ||||||||||||||||||||||||||
Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Total | |||||||||||||||||||||
Equities | — | 604 | 2 | 306 | 70 | 106 | 72 | 1,016 | 1,088 | ||||||||||||||||||||
Bonds | |||||||||||||||||||||||||||||
Fixed-interest government | 86 | 61 | — | 81 | 47 | 4 | 133 | 146 | 279 | ||||||||||||||||||||
Inflation-linked government | — | — | — | 239 | — | — | — | 239 | 239 | ||||||||||||||||||||
Investment grade corporate | 13 | 499 | — | 355 | 24 | 367 | 37 | 1,221 | 1,258 | ||||||||||||||||||||
Non-investment grade | 17 | 134 | 2 | 115 | 2 | 10 | 21 | 259 | 280 | ||||||||||||||||||||
Loan securities | 58 | 1,731 | 1 | 278 | — | — | 59 | 2,009 | 2,068 | ||||||||||||||||||||
Repurchase agreements | 4,512 | (904) | — | — | — | — | 4,512 | (904) | 3,608 | ||||||||||||||||||||
Liability Driven Investment (LDI) | 2 | 210 | — | 66 | — | — | 2 | 276 | 278 | ||||||||||||||||||||
Property | — | 685 | — | 72 | — | 1 | — | 758 | 758 | ||||||||||||||||||||
Hedge funds | — | 101 | — | 139 | — | 4 | — | 244 | 244 | ||||||||||||||||||||
Interest rate and inflation swaps | — | (994) | — | 108 | — | — | — | (886) | (886) | ||||||||||||||||||||
Cash and other | 12 | 514 | 2 | 60 | — | 90 | 14 | 664 | 678 | ||||||||||||||||||||
Total bid value of assets | 4,700 | 2,641 | 7 | 1,819 | 143 | 582 | 4,850 | 5,042 | 9,892 |
2022 | |||||||||||||||||||||||||||||
United Kingdom £ million | Ireland £ million | United States and other £ million | Total £ million | ||||||||||||||||||||||||||
Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Total | |||||||||||||||||||||
Equities | 23 | 1,218 | — | 319 | 70 | 105 | 93 | 1,642 | 1,735 | ||||||||||||||||||||
Bonds | |||||||||||||||||||||||||||||
Fixed-interest government | 2 | 86 | — | 30 | 49 | 152 | 51 | 268 | 319 | ||||||||||||||||||||
Inflation-linked government | — | — | — | 199 | 1 | 1 | 1 | 200 | 201 | ||||||||||||||||||||
Investment grade corporate | — | 68 | — | 388 | 25 | 222 | 25 | 678 | 703 | ||||||||||||||||||||
Non-investment grade | 44 | 557 | 2 | 200 | 1 | 1 | 47 | 758 | 805 | ||||||||||||||||||||
Loan securities | 11 | 1,271 | — | 98 | — | — | 11 | 1,369 | 1,380 | ||||||||||||||||||||
Repurchase agreements | 2,400 | (215) | — | — | — | — | 2,400 | (215) | 2,185 | ||||||||||||||||||||
Liability Driven Investment (LDI) | — | 119 | — | 46 | — | — | — | 165 | 165 | ||||||||||||||||||||
Property | 28 | 716 | — | 74 | — | 1 | 28 | 791 | 819 | ||||||||||||||||||||
Hedge funds | — | 107 | — | 92 | — | 5 | — | 204 | 204 | ||||||||||||||||||||
Interest rate and inflation swaps | — | (900) | — | 37 | — | — | — | (863) | (863) | ||||||||||||||||||||
Cash and other | 24 | 481 | 7 | 154 | — | 80 | 31 | 715 | 746 | ||||||||||||||||||||
Total bid value of assets | 2,532 | 3,508 | 9 | 1,637 | 146 | 567 | 2,687 | 5,712 | 8,399 |
United Kingdom | Ireland | United States | ||||||||||||||||||
2022 £ million | 2021 £ million | 2022 £ million | 2021 £ million | 2022 £ million | 2021 £ million | |||||||||||||||
Maturity analysis of benefits expected to be paid | ||||||||||||||||||||
Within one year | 295 | 288 | 70 | 84 | 58 | 52 | ||||||||||||||
Between 1 to 5 years | 1,082 | 1,112 | 353 | 338 | 187 | 145 | ||||||||||||||
Between 6 to 15 years | 2,556 | 2,606 | 704 | 656 | 310 | 247 | ||||||||||||||
Between 16 to 25 years | 2,252 | 2,314 | 634 | 588 | 183 | 145 | ||||||||||||||
Beyond 25 years | 2,787 | 2,840 | 768 | 746 | 174 | 138 | ||||||||||||||
Total | 8,972 | 9,160 | 2,529 | 2,412 | 912 | 727 | ||||||||||||||
years | years | years | years | years | years | |||||||||||||||
Average duration of the defined benefit obligation | 15 | 18 | 15 | 18 | 9 | 11 |
United Kingdom | Ireland | United States | ||||||||||||||||||
2023 £ million | 2022 £ million | 2023 £ million | 2022 £ million | 2023 £ million | 2022 £ million | |||||||||||||||
Maturity analysis of benefits expected to be paid | ||||||||||||||||||||
Within one year | 303 | 295 | 73 | 70 | 57 | 58 | ||||||||||||||
Between 1 to 5 years | 1,090 | 1,082 | 367 | 353 | 174 | 187 | ||||||||||||||
Between 6 to 15 years | 2,439 | 2,556 | 727 | 704 | 331 | 310 | ||||||||||||||
Between 16 to 25 years | 2,244 | 2,252 | 645 | 634 | 206 | 183 | ||||||||||||||
Beyond 25 years | 2,664 | 2,787 | 747 | 768 | 187 | 174 | ||||||||||||||
Total | 8,740 | 8,972 | 2,559 | 2,529 | 955 | 912 | ||||||||||||||
years | years | years | years | years | years | |||||||||||||||
Average duration of the defined benefit obligation | 14 | 15 | 14 | 15 | 9 | 9 |
2022 £ million | 2021 £ million | |||||||
Raw materials and consumables | 489 | 348 | ||||||
Work in progress | 86 | 60 | ||||||
Maturing inventories | 5,229 | 4,668 | ||||||
Finished goods and goods for resale | 1,290 | 969 | ||||||
7,094 | 6,045 |
2023 £ million | 2022 £ million | |||||||
Raw materials and consumables | 543 | 489 | ||||||
Work in progress | 132 | 86 | ||||||
Maturing inventories | 5,794 | 5,229 | ||||||
Finished goods and goods for resale | 1,192 | 1,290 | ||||||
7,661 | 7,094 |
2022 £ million | 2021 £ million | |||||||
Raw materials and consumables | 15 | 17 | ||||||
Maturing inventories | 3,713 | 3,296 | ||||||
3,728 | 3,313 |
2023 £ million | 2022 £ million | |||||||
Raw materials and consumables | 23 | 15 | ||||||
Maturing inventories | 4,063 | 3,713 | ||||||
4,086 | 3,728 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Balance at beginning of the year | 96 | 98 | 63 | ||||||||
Exchange differences | 6 | (8) | — | ||||||||
Income statement charge | 6 | 20 | 47 | ||||||||
Utilised | (13) | (14) | (12) | ||||||||
Sale of businesses | (1) | — | — | ||||||||
94 | 96 | 98 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Balance at beginning of the year | 94 | 96 | 98 | ||||||||
Exchange differences | (27) | 6 | (8) | ||||||||
Income statement charge | 55 | 6 | 20 | ||||||||
Utilised | (19) | (13) | (14) | ||||||||
Sale of businesses | (1) | (1) | — | ||||||||
102 | 94 | 96 |
2022 | 2021 | |||||||||||||
Current assets £ million | Non-current assets £ million | Current assets £ million | Non-current assets £ million | |||||||||||
Trade receivables | 2,155 | — | 1,817 | — | ||||||||||
Interest receivable | 18 | — | 35 | — | ||||||||||
VAT recoverable and other prepaid taxes | 290 | 15 | 216 | 18 | ||||||||||
Other receivables | 158 | 13 | 148 | 18 | ||||||||||
Prepayments | 290 | 9 | 150 | — | ||||||||||
Accrued income | 22 | — | 19 | — | ||||||||||
2,933 | 37 | 2,385 | 36 |
2023 | 2022 | |||||||||||||
Current assets £ million | Non-current assets £ million | Current assets £ million | Non-current assets £ million | |||||||||||
Trade receivables | 2,011 | — | 2,155 | — | ||||||||||
Interest receivable | 12 | — | 18 | — | ||||||||||
VAT recoverable and other prepaid taxes | 271 | 15 | 290 | 15 | ||||||||||
Other receivables | 163 | 13 | 158 | 13 | ||||||||||
Prepayments | 229 | 3 | 290 | 9 | ||||||||||
Accrued income | 34 | — | 22 | — | ||||||||||
2,720 | 31 | 2,933 | 37 |
2022 £ million | 2021 £ million | |||||||
Not overdue | 2,114 | 1,771 | ||||||
Overdue 1 – 30 days | 19 | 15 | ||||||
Overdue 31 – 60 days | 8 | 8 | ||||||
Overdue 61 – 90 days | 5 | 6 | ||||||
Overdue 91 – 180 days | 5 | 7 | ||||||
Overdue more than 180 days | 4 | 10 | ||||||
2,155 | 1,817 |
2023 £ million | 2022 £ million | |||||||
Not overdue | 1,967 | 2,114 | ||||||
Overdue 1 – 30 days | 25 | 19 | ||||||
Overdue 31 – 60 days | 7 | 8 | ||||||
Overdue 61 – 90 days | 3 | 5 | ||||||
Overdue 91 – 180 days | 6 | 5 | ||||||
Overdue more than 180 days | 3 | 4 | ||||||
2,011 | 2,155 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Balance at beginning of the year | 112 | 160 | 113 | ||||||||
Exchange differences | 6 | (13) | (3) | ||||||||
Income statement charge/(release) | 21 | (15) | 55 | ||||||||
Written off | (21) | (20) | (5) | ||||||||
118 | 112 | 160 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Balance at beginning of the year | 118 | 112 | 160 | ||||||||
Exchange differences | (12) | 6 | (13) | ||||||||
Income statement (release)/charge | (3) | 21 | (15) | ||||||||
Written off | (14) | (21) | (20) | ||||||||
89 | 118 | 112 |
2022 | 2021 | |||||||||||||
Current liabilities £ million | Non-current liabilities £ million | Current liabilities £ million | Non-current liabilities £ million | |||||||||||
Trade payables | 2,705 | — | 2,014 | — | ||||||||||
Interest payable | 143 | — | 124 | — | ||||||||||
Tax and social security excluding income tax | 696 | — | 656 | — | ||||||||||
Other payables | 600 | 380 | 606 | 338 | ||||||||||
Accruals | 1,635 | — | 1,152 | — | ||||||||||
Deferred income | 90 | — | 72 | — | ||||||||||
Dividend payable to non-controlling interests | 18 | — | 24 | — | ||||||||||
5,887 | 380 | 4,648 | 338 |
2023 | 2022 | |||||||||||||
Current liabilities £ million | Non-current liabilities £ million | Current liabilities £ million | Non-current liabilities £ million | |||||||||||
Trade payables | 2,659 | — | 2,705 | — | ||||||||||
Interest payable | 237 | — | 143 | — | ||||||||||
Tax and social security excluding income tax | 632 | — | 696 | — | ||||||||||
Other payables | 432 | 368 | 600 | 380 | ||||||||||
Accruals | 1,229 | — | 1,635 | — | ||||||||||
Deferred income | 73 | — | 90 | — | ||||||||||
Dividend payable to non-controlling interests | 38 | — | 18 | — | ||||||||||
5,300 | 368 | 5,887 | 380 |
Thalidomide £ million | Other £ million | Total £ million | |||||||||
At 30 June 2021 | 190 | 222 | 412 | ||||||||
Exchange differences | — | 18 | 18 | ||||||||
Disposal of businesses | — | (6) | (6) | ||||||||
Provisions charged during the year | — | 65 | 65 | ||||||||
Provisions utilised during the year | (16) | (73) | (89) | ||||||||
Transfers from other payables | — | 12 | 12 | ||||||||
Unwinding of discounts | 4 | 1 | 5 | ||||||||
At 30 June 2022 | 178 | 239 | 417 | ||||||||
Current liabilities | 12 | 147 | 159 | ||||||||
Non-current liabilities | 166 | 92 | 258 | ||||||||
178 | 239 | 417 |
Thalidomide £ million | Other £ million | Total £ million | |||||||||
At 30 June 2022 | 178 | 239 | 417 | ||||||||
Exchange differences | (1) | (26) | (27) | ||||||||
Disposal of businesses | — | (2) | (2) | ||||||||
Provisions charged during the year | — | 31 | 31 | ||||||||
Provisions utilised during the year | (14) | (61) | (75) | ||||||||
Transfers from other payables | — | 12 | 12 | ||||||||
Unwinding of discounts | 5 | 1 | 6 | ||||||||
At 30 June 2023 | 168 | 194 | 362 | ||||||||
Current liabilities | 13 | 106 | 119 | ||||||||
Non-current liabilities | 155 | 88 | 243 | ||||||||
168 | 194 | 362 |
2022 | 2021 | |||||||||||||
£ million | % | £ million | % | |||||||||||
Fixed rate | 11,070 | 78 | 9,278 | 77 | ||||||||||
Floating rate(1) | 2,612 | 19 | 2,521 | 21 | ||||||||||
Impact of financial derivatives and fair value adjustments | (20) | — | (53) | (1) | ||||||||||
Lease liabilities | 475 | 3 | 363 | 3 | ||||||||||
Net borrowings | 14,137 | 100 | 12,109 | 100 |
2023 | 2022 | |||||||||||||
£ million | % | £ million | % | |||||||||||
Fixed rate | 11,961 | 77 | 11,070 | 78 | ||||||||||
Floating rate(1) | 3,225 | 21 | 2,612 | 19 | ||||||||||
Impact of financial derivatives and fair value adjustments | (93) | (1) | (20) | — | ||||||||||
Lease liabilities | 448 | 3 | 475 | 3 | ||||||||||
Net borrowings | 15,541 | 100 | 14,137 | 100 |
Average monthly net borrowings | Effective interest rate | ||||||||||||||||
2022 £ million | 2021 £ million | 2020 £ million | 2022 % | 2021 % | 2020 % | ||||||||||||
12,692 | 12,702 | 12,708 | 2.7 | 2.7 | 2.6 |
Average monthly net borrowings | Effective interest rate | ||||||||||||||||
2023 £ million | 2022 £ million | 2021 £ million | 2023 % | 2022 % | 2021 % | ||||||||||||
15,244 | 12,692 | 12,702 | 3.9 | 2.7 | 2.7 |
Impact on income statement gain/(loss) | Impact on consolidated comprehensive income gain/(loss)(1) (2) | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
£ million | £ million | £ million | £ million | |||||||||||
0.5% decrease in interest rates | 13 | 13 | 31 | 23 | ||||||||||
0.5% increase in interest rates | (13) | (13) | (30) | (22) | ||||||||||
10% weakening of sterling | (33) | (32) | (1,125) | (1,008) | ||||||||||
10% strengthening of sterling | 28 | 27 | 922 | 825 |
Impact on income statement gain/(loss) | Impact on consolidated comprehensive income gain/(loss)(1) (2) | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
£ million | £ million | £ million | £ million | |||||||||||
0.5% decrease in interest rates | 16 | 13 | 36 | 31 | ||||||||||
0.5% increase in interest rates | (16) | (13) | (35) | (30) | ||||||||||
10% weakening of sterling | (45) | (33) | (1,336) | (1,125) | ||||||||||
10% strengthening of sterling | 36 | 28 | 1,093 | 922 |
Due within 1 year £ million | Due between 1 and 3 years £ million | Due between 3 and 5 years £ million | Due after 5 years £ million | Total £ million | Carrying amount at balance sheet date £ million | |||||||||||||||
2022 | ||||||||||||||||||||
Borrowings(1) | (1,524) | (2,842) | (2,738) | (9,276) | (16,380) | (16,020) | ||||||||||||||
Interest on borrowings(1)(2) | (427) | (626) | (560) | (1,622) | (3,235) | (141) | ||||||||||||||
Lease capital repayments | (85) | (107) | (61) | (222) | (475) | (475) | ||||||||||||||
Lease future interest payments | (13) | (20) | (16) | (44) | (93) | — | ||||||||||||||
Trade and other financial liabilities(3) | (4,765) | (123) | (142) | (126) | (5,156) | (5,145) | ||||||||||||||
Non-derivative financial liabilities | (6,814) | (3,718) | (3,517) | (11,290) | (25,339) | (21,781) | ||||||||||||||
Cross currency swaps (gross) | ||||||||||||||||||||
Receivable | 851 | 90 | 90 | 1,442 | 2,473 | — | ||||||||||||||
Payable | (783) | (56) | (56) | (958) | (1,853) | — | ||||||||||||||
Other derivative instruments (net) | (86) | (123) | (78) | (65) | (352) | — | ||||||||||||||
Derivative instruments(2) | (18) | (89) | (44) | 419 | 268 | 22 | ||||||||||||||
2021 | ||||||||||||||||||||
Borrowings(1) | (1,859) | (2,590) | (2,788) | (7,498) | (14,735) | (14,727) | ||||||||||||||
Interest on borrowings(1)(2) | (390) | (552) | (467) | (1,375) | (2,784) | (122) | ||||||||||||||
Lease capital repayments | (82) | (92) | (45) | (144) | (363) | (363) | ||||||||||||||
Lease future interest payments | (9) | (12) | (8) | (25) | (54) | — | ||||||||||||||
Trade and other financial liabilities(3) | (3,800) | (71) | (108) | (191) | (4,170) | (4,125) | ||||||||||||||
Non-derivative financial liabilities | (6,140) | (3,317) | (3,416) | (9,233) | (22,106) | (19,337) | ||||||||||||||
Cross currency swaps (gross) | ||||||||||||||||||||
Receivable | 57 | 780 | 79 | 1,294 | 2,210 | — | ||||||||||||||
Payable | (41) | (811) | (56) | (986) | (1,894) | — | ||||||||||||||
Other derivative instruments (net) | 143 | 54 | — | (23) | 174 | — | ||||||||||||||
Derivative instruments(2) | 159 | 23 | 23 | 285 | 490 | 312 |
Due within 1 year £ million | Due between 1 and 3 years £ million | Due between 3 and 5 years £ million | Due after 5 years £ million | Total £ million | Carrying amount at balance sheet date £ million | |||||||||||||||
2023 | ||||||||||||||||||||
Borrowings(1) | (1,707) | (3,615) | (2,980) | (8,652) | (16,954) | (16,502) | ||||||||||||||
Interest on borrowings(1)(2) | (541) | (750) | (623) | (1,503) | (3,417) | (217) | ||||||||||||||
Lease capital repayments | (75) | (104) | (69) | (200) | (448) | (448) | ||||||||||||||
Lease future interest payments | (18) | (28) | (19) | (37) | (102) | — | ||||||||||||||
Trade and other financial liabilities(3) | (4,417) | (231) | (122) | (96) | (4,866) | (4,782) | ||||||||||||||
Non-derivative financial liabilities | (6,758) | (4,728) | (3,813) | (10,488) | (25,787) | (21,949) | ||||||||||||||
Cross currency swaps (gross) | ||||||||||||||||||||
Receivable | 43 | 87 | 87 | 1,341 | 1,558 | |||||||||||||||
Payable | (28) | (56) | (56) | (930) | (1,070) | |||||||||||||||
Other derivative instruments (net) | 19 | (88) | (79) | (54) | (202) | |||||||||||||||
Derivative instruments(2) | 34 | (57) | (48) | 357 | 286 | 134 | ||||||||||||||
2022 | ||||||||||||||||||||
Borrowings(1) | (1,524) | (2,842) | (2,738) | (9,276) | (16,380) | (16,020) | ||||||||||||||
Interest on borrowings(1)(2) | (427) | (626) | (560) | (1,622) | (3,235) | (141) | ||||||||||||||
Lease capital repayments | (85) | (107) | (61) | (222) | (475) | (475) | ||||||||||||||
Lease future interest payments | (13) | (20) | (16) | (44) | (93) | — | ||||||||||||||
Trade and other financial liabilities(3) | (4,765) | (123) | (142) | (126) | (5,156) | (5,145) | ||||||||||||||
Non-derivative financial liabilities | (6,814) | (3,718) | (3,517) | (11,290) | (25,339) | (21,781) | ||||||||||||||
Cross currency swaps (gross) | ||||||||||||||||||||
Receivable | 851 | 90 | 90 | 1,442 | 2,473 | |||||||||||||||
Payable | (783) | (56) | (56) | (958) | (1,853) | |||||||||||||||
Other derivative instruments (net) | (86) | (123) | (78) | (65) | (352) | |||||||||||||||
Derivative instruments(2) | (18) | (89) | (44) | 419 | 268 | 22 |
2022 £ million | 2021 £ million | |||||||
Expiring within one year | 793 | 540 | ||||||
Expiring between one and two years | 103 | 691 | ||||||
Expiring after two years | 1,893 | 1,287 | ||||||
2,789 | 2,518 |
2023 £ million | 2022 £ million | |||||||
Expiring within one year | 99 | 793 | ||||||
Expiring between one and two years | 496 | 103 | ||||||
Expiring after two years | 2,083 | 1,893 | ||||||
2,678 | 2,789 |
2022 £ million | 2021 £ million | |||||||
Derivative assets | 480 | 443 | ||||||
Derivative liabilities | (456) | (129) | ||||||
Valuation techniques based on observable market input (Level 2) | 24 | 314 | ||||||
Financial assets - other | 184 | 138 | ||||||
Financial liabilities - other | (587) | (578) | ||||||
Valuation techniques based on unobservable market input (Level 3) | (403) | (440) |
2023 £ million | 2022 £ million | |||||||
Derivative assets | 594 | 480 | ||||||
Derivative liabilities | (440) | (456) | ||||||
Valuation techniques based on observable market input (Level 2) | 154 | 24 | ||||||
Financial assets - other | 192 | 184 | ||||||
Financial liabilities - other | (529) | (587) | ||||||
Valuation techniques based on unobservable market input (Level 3) | (337) | (403) |
Zacapa financial liability | Contingent consideration recognised on acquisition of businesses(1) | Zacapa financial liability | Contingent consideration recognised on acquisition of businesses(1) | |||||||||||
2022 | 2022 | 2021 | 2021 | |||||||||||
£ million | £ million | £ million | £ million | |||||||||||
At the beginning of the year | (149) | (429) | (167) | (249) | ||||||||||
Net (losses)/gains included in the income statement | (20) | 62 | (7) | (47) | ||||||||||
Net (losses)/gains included in exchange in other comprehensive income | (26) | (39) | 21 | 31 | ||||||||||
Net losses included in retained earnings | (34) | — | (2) | — | ||||||||||
Acquisitions | — | (70) | — | (253) | ||||||||||
Settlement of liabilities | 13 | 105 | 6 | 89 | ||||||||||
At the end of the year | (216) | (371) | (149) | (429) |
Zacapa financial liability | Contingent consideration recognised on acquisition of businesses | Zacapa financial liability | Contingent consideration recognised on acquisition of businesses | |||||||||||
2023 | 2023 | 2022 | 2022 | |||||||||||
£ million | £ million | £ million | £ million | |||||||||||
At the beginning of the year | (216) | (371) | (149) | (429) | ||||||||||
Net (losses)/gains included in the income statement | (8) | 117 | (20) | 62 | ||||||||||
Net gains/(losses) included in exchange in other comprehensive income | 9 | 11 | (26) | (39) | ||||||||||
Net losses included in retained earnings | (16) | — | (34) | — | ||||||||||
Acquisitions | — | (76) | — | (70) | ||||||||||
Settlement of liabilities | 13 | 8 | 13 | 105 | ||||||||||
At the end of the year | (218) | (311) | (216) | (371) |
Notional amounts £ million | Maturity | Range of hedged rates(1) | |||||||||
Net investment hedges | |||||||||||
Derivatives in net investment hedges of foreign operations | July | ||||||||||
Cash flow hedges | |||||||||||
Derivatives in cash flow hedge (foreign currency debt) | September 2036 - April 2043 | US dollar 1.60 - 1.88 | |||||||||
Derivatives in cash flow hedge (foreign currency risk) | 1,734 | September 2023 - December 2024 | US dollar 1.05 - 1.33, Mexican peso 14.76 - 18.38 | ||||||||
Derivatives in cash flow hedge (commodity price risk) | 217 | July 2023 - September 2024 | Feed Wheat: 183.75 - 240.00 USD/Bu LME Aluminium: 2,248 - 3,399 USD/Mt | ||||||||
Fair value hedges | |||||||||||
Derivatives in fair value hedge (interest rate risk) | 3,999 | September 2023 - April 2030 | (0.01) - 3.09% | ||||||||
2022 | |||||||||||
Net investment hedges | |||||||||||
Derivatives in net investment hedges of foreign operations | 11 | July 2022 | Turkish lira 22.27 | ||||||||
Cash flow hedges | |||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 1,694 | April 2023 - April 2043 | US dollar 1.22 - 1.88 | ||||||||
Derivatives in cash flow hedge (foreign currency risk) | 1,874 | September 2022 - June 2024 | US dollar 1.22 - 1.42, euro 1.13 - 1.17 | ||||||||
Derivatives in cash flow hedge (commodity price risk) | 234 | July 2022 - March 2024 | Natural Gas: 1.67 - 3.57 GBP/therm(ec) LME Aluminium: 2,009 - 3,399 USD/Mt | ||||||||
Fair value hedges | |||||||||||
Derivatives in fair value hedge (interest rate risk) | (0.01) - 3.09% |
At the beginning of the year £ million | Consolidated Income statement £ million | Consolidated statement of comprehensive income £ million | Other £ million | At the end of the year £ million | |||||||||||||
2022 | |||||||||||||||||
Net investment hedges | |||||||||||||||||
Derivatives in net investment hedges of foreign operations | — | — | 5 | (6) | (1) | ||||||||||||
Cash flow hedges | |||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 154 | 239 | (6) | (20) | 367 | ||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | 53 | (11) | (130) | 11 | (77) | ||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 16 | 46 | 32 | (44) | 50 | ||||||||||||
Fair value hedges | |||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | 63 | (346) | — | — | (283) | ||||||||||||
Fair value hedge hedged item | (65) | 341 | — | — | 276 | ||||||||||||
Instruments in fair value hedge relationship | (2) | (5) | — | — | (7) | ||||||||||||
2021 | |||||||||||||||||
Net investment hedges | |||||||||||||||||
Derivatives in net investment hedges of foreign operations | — | — | 3 | (3) | — | ||||||||||||
Cash flow hedges | |||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 469 | (175) | (123) | (17) | 154 | ||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | (58) | (26) | 111 | 26 | 53 | ||||||||||||
Derivatives in cash flow hedge (commodity price risk) | (9) | 2 | 39 | (16) | 16 | ||||||||||||
Fair value hedges | |||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | 189 | (126) | — | — | 63 | ||||||||||||
Fair value hedge hedged item | (189) | 124 | — | — | (65) | ||||||||||||
Instruments in fair value hedge relationship | — | (2) | — | — | (2) |
At the beginning of the year £ million | Consolidated Income statement £ million | Consolidated statement of comprehensive income £ million | Other £ million | At the end of the year £ million | |||||||||||||
2023 | |||||||||||||||||
Net investment hedges | |||||||||||||||||
Derivatives in net investment hedges of foreign operations | (1) | — | — | 1 | — | ||||||||||||
Cash flow hedges | |||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 367 | (54) | 60 | (25) | 348 | ||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | (77) | (17) | 260 | 17 | 183 | ||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 50 | 33 | (89) | (19) | (25) | ||||||||||||
Fair value hedges | |||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | (283) | (94) | — | — | (377) | ||||||||||||
Fair value hedge hedged item | 276 | 96 | — | — | 372 | ||||||||||||
Instruments in fair value hedge relationship | (7) | 2 | — | — | (5) | ||||||||||||
2022 | |||||||||||||||||
Net investment hedges | |||||||||||||||||
Derivatives in net investment hedges of foreign operations | — | — | 5 | (6) | (1) | ||||||||||||
Cash flow hedges | |||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 154 | 239 | (6) | (20) | 367 | ||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | 53 | (11) | (130) | 11 | (77) | ||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 16 | 46 | 32 | (44) | 50 | ||||||||||||
Fair value hedges | |||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | 63 | (346) | — | — | (283) | ||||||||||||
Fair value hedge hedged item | (65) | 341 | — | — | 276 | ||||||||||||
Instruments in fair value hedge relationship | (2) | (5) | — | — | (7) |
Fair value through income statement £ million | Fair value through other comprehensive income £ million | Assets and liabilities at amortised cost £ million | Not categorised as a financial instrument £ million | Total £ million | Current £ million | Non-current £ million | |||||||||||||||||
2022 | |||||||||||||||||||||||
Other investments and loans(1) | 180 | 4 | 15 | 1 | 200 | — | 200 | ||||||||||||||||
Trade and other receivables | — | — | 2,365 | 605 | 2,970 | 2,933 | 37 | ||||||||||||||||
Cash and cash equivalents | — | — | 2,285 | — | 2,285 | 2,285 | — | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | 1 | — | — | — | 1 | — | 1 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 367 | — | — | — | 367 | 43 | 324 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | 32 | — | — | — | 32 | 15 | 17 | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 57 | — | — | — | 57 | 57 | — | ||||||||||||||||
Other instruments | 136 | — | — | — | 136 | 136 | — | ||||||||||||||||
Leases | — | — | 3 | — | 3 | — | 3 | ||||||||||||||||
Total other financial assets | 593 | — | 3 | — | 596 | 251 | 345 | ||||||||||||||||
Total financial assets | 773 | 4 | 4,668 | 606 | 6,051 | 5,469 | 582 | ||||||||||||||||
Borrowings(2) | — | — | (16,020) | — | (16,020) | (1,522) | (14,498) | ||||||||||||||||
Trade and other payables | (371) | — | (4,774) | (1,122) | (6,267) | (5,887) | (380) | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | (284) | — | — | — | (284) | (1) | (283) | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | (109) | — | — | — | (109) | (81) | (28) | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | (7) | — | — | — | (7) | (5) | (2) | ||||||||||||||||
Derivatives in net investment hedge | (1) | — | — | — | (1) | (1) | — | ||||||||||||||||
Other instruments | (271) | — | (117) | — | (388) | (388) | — | ||||||||||||||||
Leases | — | — | (475) | — | (475) | (85) | (390) | ||||||||||||||||
Total other financial liabilities | (672) | — | (592) | — | (1,264) | (561) | (703) | ||||||||||||||||
Total financial liabilities | (1,043) | — | (21,386) | (1,122) | (23,551) | (7,970) | (15,581) | ||||||||||||||||
Total net financial (liabilities)/assets | (270) | 4 | (16,718) | (516) | (17,500) | (2,501) | (14,999) | ||||||||||||||||
2021 | |||||||||||||||||||||||
Other investments and loans(1) | 121 | 17 | 8 | 2 | 148 | — | 148 | ||||||||||||||||
Trade and other receivables | — | — | 2,017 | 404 | 2,421 | 2,385 | 36 | ||||||||||||||||
Cash and cash equivalents | — | — | 2,749 | — | 2,749 | 2,749 | — | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | 106 | — | — | — | 106 | 4 | 102 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 205 | — | — | — | 205 | — | 205 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | 61 | — | — | — | 61 | 57 | 4 | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 16 | — | — | — | 16 | 14 | 2 | ||||||||||||||||
Other instruments | 55 | — | — | — | 55 | 46 | 9 | ||||||||||||||||
Leases | — | — | 5 | — | 5 | — | 5 | ||||||||||||||||
Total other financial assets | 443 | — | 5 | — | 448 | 121 | 327 | ||||||||||||||||
Total financial assets | 564 | 17 | 4,779 | 406 | 5,766 | 5,255 | 511 | ||||||||||||||||
Borrowings(2) | — | — | (14,727) | — | (14,727) | (1,862) | (12,865) | ||||||||||||||||
Trade and other payables | (429) | — | (3,580) | (977) | (4,986) | (4,648) | (338) | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | (43) | — | — | — | (43) | — | (43) | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | (51) | — | — | — | (51) | — | (51) | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | (8) | — | — | — | (8) | (5) | (3) | ||||||||||||||||
Other instruments | (176) | — | (91) | — | (267) | (261) | (6) | ||||||||||||||||
Leases | — | — | (363) | — | (363) | (82) | (281) | ||||||||||||||||
Total other financial liabilities | (278) | — | (454) | — | (732) | (348) | (384) | ||||||||||||||||
Total financial liabilities | (707) | — | (18,761) | (977) | (20,445) | (6,858) | (13,587) | ||||||||||||||||
Total net financial (liabilities)/assets | (143) | 17 | (13,982) | (571) | (14,679) | (1,603) | (13,076) |
Fair value through income statement £ million | Fair value through other comprehensive income £ million | Assets and liabilities at amortised cost £ million | Not categorised as a financial instrument £ million | Total £ million | Current £ million | Non-current £ million | |||||||||||||||||
2023 | |||||||||||||||||||||||
Other investments and loans(1) | 192 | — | 31 | 2 | 225 | — | 225 | ||||||||||||||||
Trade and other receivables | — | — | 2,234 | 517 | 2,751 | 2,720 | 31 | ||||||||||||||||
Cash and cash equivalents | — | — | 1,439 | — | 1,439 | 1,439 | — | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 348 | — | — | — | 348 | — | 348 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | 192 | — | — | — | 192 | 147 | 45 | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 2 | — | — | — | 2 | 2 | — | ||||||||||||||||
Other instruments | 198 | — | — | — | 198 | 198 | — | ||||||||||||||||
Leases | — | — | 1 | — | 1 | — | 1 | ||||||||||||||||
Total other financial assets | 740 | — | 1 | — | 741 | 347 | 394 | ||||||||||||||||
Total financial assets | 932 | — | 3,705 | 519 | 5,156 | 4,506 | 650 | ||||||||||||||||
Borrowings(2) | — | — | (16,502) | — | (16,502) | (1,701) | (14,801) | ||||||||||||||||
Trade and other payables | (311) | — | (4,472) | (885) | (5,668) | (5,300) | (368) | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | (377) | — | — | — | (377) | (6) | (371) | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | (9) | — | — | — | (9) | (7) | (2) | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | (27) | — | — | — | (27) | (26) | (1) | ||||||||||||||||
Other instruments | (245) | — | — | — | (245) | (245) | — | ||||||||||||||||
Leases | — | — | (448) | — | (448) | (75) | (373) | ||||||||||||||||
Total other financial liabilities | (658) | — | (448) | — | (1,106) | (359) | (747) | ||||||||||||||||
Total financial liabilities | (969) | — | (21,422) | (885) | (23,276) | (7,360) | (15,916) | ||||||||||||||||
Total net financial (liabilities)/assets | (37) | — | (17,717) | (366) | (18,120) | (2,854) | (15,266) | ||||||||||||||||
2022 | |||||||||||||||||||||||
Other investments and loans(1) | 180 | 4 | 15 | 1 | 200 | — | 200 | ||||||||||||||||
Trade and other receivables | — | — | 2,365 | 605 | 2,970 | 2,933 | 37 | ||||||||||||||||
Cash and cash equivalents | — | — | 2,285 | — | 2,285 | 2,285 | — | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | 1 | — | — | — | 1 | — | 1 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency debt) | 367 | — | — | — | 367 | 43 | 324 | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | 32 | — | — | — | 32 | 15 | 17 | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | 57 | — | — | — | 57 | 57 | — | ||||||||||||||||
Other instruments | 136 | — | — | — | 136 | 136 | — | ||||||||||||||||
Leases | — | — | 3 | — | 3 | — | 3 | ||||||||||||||||
Total other financial assets | 593 | — | 3 | — | 596 | 251 | 345 | ||||||||||||||||
Total financial assets | 773 | 4 | 4,668 | 606 | 6,051 | 5,469 | 582 | ||||||||||||||||
Borrowings(2) | — | — | (16,020) | — | (16,020) | (1,522) | (14,498) | ||||||||||||||||
Trade and other payables | (371) | — | (4,774) | (1,122) | (6,267) | (5,887) | (380) | ||||||||||||||||
Derivatives in fair value hedge (interest rate risk) | (284) | — | — | — | (284) | (1) | (283) | ||||||||||||||||
Derivatives in cash flow hedge (foreign currency risk) | (109) | — | — | — | (109) | (81) | (28) | ||||||||||||||||
Derivatives in cash flow hedge (commodity price risk) | (7) | — | — | — | (7) | (5) | (2) | ||||||||||||||||
Derivatives in net investment hedge | (1) | — | — | — | (1) | (1) | — | ||||||||||||||||
Other instruments | (271) | — | (117) | — | (388) | (388) | — | ||||||||||||||||
Leases | — | — | (475) | — | (475) | (85) | (390) | ||||||||||||||||
Total other financial liabilities | (672) | — | (592) | — | (1,264) | (561) | (703) | ||||||||||||||||
Total financial liabilities | (1,043) | — | (21,386) | (1,122) | (23,551) | (7,970) | (15,581) | ||||||||||||||||
Total net financial (liabilities)/assets | (270) | 4 | (16,718) | (516) | (17,500) | (2,501) | (14,999) |
2022 £ million | 2021 £ million | |||||||
Bank overdrafts | 74 | 112 | ||||||
Bank and other loans | 105 | 160 | ||||||
Credit support obligations | (19) | 98 | ||||||
€ 900 million 0.25% bonds due 2021 | — | 769 | ||||||
$ 300 million 8% bonds due 2022(1) | 248 | — | ||||||
$ 1,000 million 2.875% bonds due 2022(1) | — | 719 | ||||||
$ 1,350 million 2.625% bonds due 2023 | 1,115 | — | ||||||
Fair value adjustment to borrowings | (1) | 4 | ||||||
Borrowings due within one year | 1,522 | 1,862 | ||||||
$ 300 million 8% bonds due 2022(1) | — | 215 | ||||||
$ 1,350 million 2.625% bonds due 2023 | — | 970 | ||||||
€ 600 million 0.125% bonds due 2023 | 516 | 511 | ||||||
$ 500 million 3.5% bonds due 2023 | 413 | 360 | ||||||
$ 600 million 2.125% bonds due 2024 | 495 | 431 | ||||||
€ 500 million 1.75% bonds due 2024 | 430 | 426 | ||||||
€ 500 million 0.5% bonds due 2024 | 430 | 425 | ||||||
$ 750 million 1.375% bonds due 2025 | 618 | 537 | ||||||
€ 600 million 1% bonds due 2025 | 515 | 510 | ||||||
€ 850 million 2.375% bonds due 2026 | 731 | 723 | ||||||
£ 500 million 1.75% bonds due 2026 | 498 | 497 | ||||||
€ 750 million 1.875% bonds due 2027 | 643 | 637 | ||||||
€ 500 million 1.5% bonds due 2027 | 430 | 426 | ||||||
€ 700 million 0.125% bonds due 2028 | 600 | 594 | ||||||
$ 500 million 3.875% bonds due 2028 | 411 | 358 | ||||||
£ 300 million 2.375% bonds due 2028 | 298 | — | ||||||
$ 1,000 million 2.375% bonds due 2029 | 819 | 711 | ||||||
£ 300 million 2.875% bonds due 2029 | 298 | 298 | ||||||
€ 750 million 1.15% bonds due 2029 | 645 | — | ||||||
$ 1,000 million 2% bonds due 2030 | 821 | 714 | ||||||
€ 1,000 million 2.5% bonds due 2032 | 856 | 850 | ||||||
$ 750 million 2.125% bonds due 2032 | 614 | 534 | ||||||
£ 400 million 1.25% bonds due 2033 | 395 | 395 | ||||||
€ 900 million 1.15% bonds due 2034 | 770 | — | ||||||
$ 400 million 7.45% bonds due 2035(1) | 331 | 288 | ||||||
$ 600 million 5.875% bonds due 2036 | 491 | 427 | ||||||
£ 600 million 2.75% bonds due 2038 | 595 | — | ||||||
$ 500 million 4.25% bonds due 2042(1) | 409 | 356 | ||||||
$ 500 million 3.875% bonds due 2043 | 407 | 353 | ||||||
Bank and other loans | 293 | 253 | ||||||
Fair value adjustment to borrowings | (274) | 66 | ||||||
Borrowings due after one year | 14,498 | 12,865 | ||||||
Total borrowings before derivative financial instruments | 16,020 | 14,727 | ||||||
Fair value of cross currency interest rate swaps | (367) | (154) | ||||||
Fair value of foreign currency swaps and forwards | 11 | (15) | ||||||
Fair value of interest rate hedging instruments | 283 | (63) | ||||||
Lease liabilities | 475 | 363 | ||||||
Gross borrowings | 16,422 | 14,858 | ||||||
Less: Cash and cash equivalents | (2,285) | (2,749) | ||||||
Net borrowings | 14,137 | 12,109 |
2023 £ million | 2022 £ million | |||||||
Bank overdrafts | 36 | 74 | ||||||
Commercial paper | 198 | — | ||||||
Bank and other loans | 121 | 105 | ||||||
Credit support obligations | 15 | (19) | ||||||
$ 300 million 8% bonds due 2022(1) | — | 248 | ||||||
$ 1,350 million 2.625% bonds due 2023(2) | — | 1,115 | ||||||
€ 600 million 0.125% bonds due 2023 | 513 | — | ||||||
$ 500 million 3.5% bonds due 2023(2) | 397 | — | ||||||
€ 500 million 0.5% bonds due 2024 | 427 | — | ||||||
Fair value adjustment to borrowings | (6) | (1) | ||||||
Borrowings due within one year | 1,701 | 1,522 | ||||||
€ 600 million 0.125% bonds due 2023 | — | 516 | ||||||
$ 500 million 3.5% bonds due 2023(2) | — | 413 | ||||||
€ 500 million 0.5% bonds due 2024 | — | 430 | ||||||
$ 600 million 2.125% bonds due 2024(2) | 476 | 495 | ||||||
€ 500 million 1.75% bonds due 2024 | 427 | 430 | ||||||
$ 500 million 5.20% bonds due 2025(2) | 396 | — | ||||||
$ 750 million 1.375% bonds due 2025(2) | 594 | 618 | ||||||
€ 600 million 1% bonds due 2025 | 511 | 515 | ||||||
€ 500 million 3.5% bonds due 2025 | 427 | — | ||||||
€ 850 million 2.375% bonds due 2026 | 725 | 731 | ||||||
£ 500 million 1.750% bonds due 2026 | 497 | 498 | ||||||
$ 750 million 5.3% bonds due 2027(2) | 593 | — | ||||||
€ 750 million 1.875% bonds due 2027 | 638 | 643 | ||||||
€ 500 million 1.5% bonds due 2027 | 426 | 430 | ||||||
€ 700 million 0.125% bonds due 2028 | 595 | 600 | ||||||
$ 500 million 3.875% bonds due 2028(2) | 395 | 411 | ||||||
£ 300 million 2.375% bonds due 2028 | 298 | 298 | ||||||
$ 1,000 million 2.375% bonds due 2029(2) | 787 | 819 | ||||||
£ 300 million 2.875% bonds due 2029 | 299 | 298 | ||||||
€ 750 million 1.15% bonds due 2029 | 640 | 645 | ||||||
$ 1,000 million 2% bonds due 2030(2) | 789 | 821 | ||||||
€ 1,000 million 2.5% bonds due 2032 | 850 | 856 | ||||||
$ 750 million 2.125% bonds due 2032(2) | 590 | 614 | ||||||
£ 400 million 1.25% bonds due 2033 | 396 | 395 | ||||||
$ 750 million 5.5% bonds due 2033(2) | 590 | — | ||||||
€ 900 million 1.15% bonds due 2034 | 764 | 770 | ||||||
$ 400 million 7.45% bonds due 2035(1) | 317 | 331 | ||||||
$ 600 million 5.875% bonds due 2036(2) | 472 | 491 | ||||||
£ 600 million 2.75% bonds due 2038 | 595 | 595 | ||||||
$ 500 million 4.250% bonds due 2042(1) | 393 | 409 | ||||||
$ 500 million 3.875% bonds due 2043(2) | 391 | 407 | ||||||
Bank and other loans | 296 | 293 | ||||||
Fair value adjustment to borrowings | (366) | (274) | ||||||
Borrowings due after one year | 14,801 | 14,498 | ||||||
Total borrowings before derivative financial instruments | 16,502 | 16,020 | ||||||
Fair value of cross currency interest rate swaps | (348) | (367) | ||||||
Fair value of foreign currency swaps and forwards | 1 | 11 | ||||||
Fair value of interest rate hedging instruments | 377 | 283 | ||||||
Lease liabilities | 448 | 475 | ||||||
Gross borrowings | 16,980 | 16,422 | ||||||
Less: Cash and cash equivalents | (1,439) | (2,285) | ||||||
Net borrowings | 15,541 | 14,137 |
2022 £ million | 2021 £ million | |||||||||||||
Within one year | 1,522 | 1,862 | ||||||||||||
Between one and three years | 2,817 | 2,623 | ||||||||||||
Between three and five years | 2,625 | 2,788 | ||||||||||||
Beyond five years | 9,056 | 7,454 | ||||||||||||
16,020 | 14,727 |
2023 £ million | 2022 £ million | |||||||||||||
Within one year | 1,701 | 1,522 | ||||||||||||
Between one and three years | 3,522 | 2,817 | ||||||||||||
Between three and five years | 2,874 | 2,625 | ||||||||||||
Beyond five years | 8,405 | 9,056 | ||||||||||||
16,502 | 16,020 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Issued | |||||||||||
€ denominated | 1,371 | 636 | 1,594 | ||||||||
£ denominated | 892 | 395 | 298 | ||||||||
$ denominated | — | — | 3,296 | ||||||||
Repaid | |||||||||||
€ denominated | (769) | (696) | — | ||||||||
$ denominated | (752) | (551) | (820) | ||||||||
742 | (216) | 4,368 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Issued | |||||||||||
€ denominated | 441 | 1,371 | 636 | ||||||||
£ denominated | — | 892 | 395 | ||||||||
$ denominated | 1,788 | — | — | ||||||||
Repaid | |||||||||||
€ denominated | — | (769) | (696) | ||||||||
$ denominated | (1,340) | (752) | (551) | ||||||||
889 | 742 | (216) |
2022 £ million | 2021 £ million | |||||||
At beginning of the year | 12,109 | 13,246 | ||||||
Net decrease in cash and cash equivalents before exchange | 665 | 231 | ||||||
Net increase/(decrease) in bonds and other borrowings(1) | 825 | (967) | ||||||
Increase/(decrease) in net borrowings from cash flows | 1,490 | (736) | ||||||
Exchange differences on net borrowings | 334 | (598) | ||||||
Other non-cash items(2) | 204 | 197 | ||||||
Net borrowings at end of the year | 14,137 | 12,109 |
2023 £ million | 2022 £ million | |||||||
At beginning of the year | 14,137 | 12,109 | ||||||
Net decrease in cash and cash equivalents before exchange | 581 | 665 | ||||||
Net increase in bonds and other borrowings(1) | 950 | 825 | ||||||
Increase in net borrowings from cash flows | 1,531 | 1,490 | ||||||
Exchange differences on net borrowings | (159) | 334 | ||||||
Other non-cash items(2) | 32 | 204 | ||||||
Net borrowings at end of the year | 15,541 | 14,137 |
2022 | 2021 | |||||||||||||
Cash and cash equivalents £ million | Gross borrowings(1) £ million | Cash and cash equivalents £ million | Gross borrowings(1) £ million | |||||||||||
US dollar | 1,315 | (3,260) | 1,890 | (4,001) | ||||||||||
Euro | 61 | (2,943) | 82 | (2,841) | ||||||||||
Sterling | 67 | (9,214) | 38 | (7,279) | ||||||||||
Indian rupee | 26 | (74) | 26 | (109) | ||||||||||
Mexican peso | 14 | (264) | 9 | (102) | ||||||||||
Kenyan shilling | 53 | (254) | 16 | (293) | ||||||||||
Hungarian forint | 2 | (214) | 3 | (241) | ||||||||||
Chinese yuan | 290 | (75) | 255 | (20) | ||||||||||
Nigerian naira | 133 | — | 60 | (1) | ||||||||||
Other(2) | 324 | (124) | 370 | 29 | ||||||||||
Total | 2,285 | (16,422) | 2,749 | (14,858) |
2023 | 2022 | |||||||||||||
Cash and cash equivalents £ million | Gross borrowings(1) £ million | Cash and cash equivalents £ million | Gross borrowings(1) £ million | |||||||||||
US dollar | 542 | (5,751) | 1,315 | (3,260) | ||||||||||
Euro(2) | 48 | (3,864) | 61 | (2,943) | ||||||||||
Sterling | 46 | (6,227) | 67 | (9,214) | ||||||||||
Indian rupee | 123 | (31) | 26 | (74) | ||||||||||
Mexican peso | 25 | (286) | 14 | (264) | ||||||||||
Hungarian forint | 3 | (261) | 2 | (214) | ||||||||||
Kenyan shilling | 28 | (253) | 53 | (254) | ||||||||||
Chinese yuan | 199 | (63) | 290 | (75) | ||||||||||
Nigerian naira | 83 | — | 133 | — | ||||||||||
Other(2) | 342 | (244) | 324 | (124) | ||||||||||
Total | 1,439 | (16,980) | 2,285 | (16,422) |
Number of shares million | Nominal value £ million | |||||||
At 30 June 2022 | 2,498 | 723 | ||||||
At 30 June 2021 | 2,559 | 741 | ||||||
At 30 June 2020 | 2,562 | 742 |
Number of shares million | Nominal value £ million | |||||||
At 30 June 2023 | 2,460 | 712 | ||||||
At 30 June 2022 | 2,498 | 723 | ||||||
At 30 June 2021 | 2,559 | 741 |
Hedging reserve £ million | Exchange reserve £ million | Total £ million | |||||||||
At 30 June 2019 | (37) | (781) | (818) | ||||||||
Other comprehensive income/(loss) | 125 | (241) | (116) | ||||||||
Transfers from other retained earnings | 5 | — | 5 | ||||||||
At 30 June 2020 | 93 | (1,022) | (929) | ||||||||
Other comprehensive income/(loss) | 20 | (672) | (652) | ||||||||
At 30 June 2021 | 113 | (1,694) | (1,581) | ||||||||
Other comprehensive (loss)/income | (87) | 622 | 535 | ||||||||
At 30 June 2022 | 26 | (1,072) | (1,046) |
Hedging reserve £ million | Exchange reserve £ million | Total £ million | |||||||||
At 30 June 2020 | 93 | (1,022) | (929) | ||||||||
Other comprehensive income/(loss) | 20 | (672) | (652) | ||||||||
At 30 June 2021 | 113 | (1,694) | (1,581) | ||||||||
Other comprehensive (loss)/income | (87) | 622 | 535 | ||||||||
At 30 June 2022 | 26 | (1,072) | (1,046) | ||||||||
Other comprehensive income/(loss) | 216 | (540) | (324) | ||||||||
At 30 June 2023 | 242 | (1,612) | (1,370) |
Number of shares million | Purchase consideration £ million | |||||||
At 30 June 2019 | 232 | 2,026 | ||||||
Share trust arrangements | (1) | (7) | ||||||
Shares used to satisfy options | (4) | (83) | ||||||
Shares purchased - share buyback programme | 39 | 1,282 | ||||||
Shares cancelled | (39) | (1,282) | ||||||
At 30 June 2020 | 227 | 1,936 | ||||||
Share trust arrangements | (1) | (11) | ||||||
Shares used to satisfy options | (3) | (48) | ||||||
Shares purchased - share buyback programme | 3 | 109 | ||||||
Shares cancelled | (3) | (109) | ||||||
At 30 June 2021 | 223 | 1,877 | ||||||
Share trust arrangements | (2) | (23) | ||||||
Shares used to satisfy options | (2) | (16) | ||||||
Shares purchased - share buyback programme | 61 | 2,284 | ||||||
Shares cancelled | (61) | (2,284) | ||||||
At 30 June 2022 | 219 | 1,838 |
Number of shares million | Purchase consideration £ million | |||||||
At 30 June 2020 | 227 | 1,936 | ||||||
Share trust arrangements | (1) | (11) | ||||||
Shares used to satisfy options | (3) | (48) | ||||||
Shares purchased - share buyback programme | 3 | 109 | ||||||
Shares cancelled | (3) | (109) | ||||||
At 30 June 2021 | 223 | 1,877 | ||||||
Share trust arrangements | (2) | (23) | ||||||
Shares used to satisfy options | (2) | (16) | ||||||
Shares purchased - share buyback programme | 61 | 2,284 | ||||||
Shares cancelled | (61) | (2,284) | ||||||
At 30 June 2022 | 219 | 1,838 | ||||||
Share trust arrangements | (1) | (12) | ||||||
Shares used to satisfy options | (2) | (12) | ||||||
Shares purchased - share buyback programme | 38 | 1,381 | ||||||
Shares cancelled | (38) | (1,381) | ||||||
At 30 June 2023 | 216 | 1,814 |
Period | Number of shares purchased under share buyback programme | Total number of shares purchased | Average price paid pence | Authorised purchases unutilised at month end | ||||||||||
July 2021 | 1,728,254 | 1,728,254 | 3457 | 227,758,747 | ||||||||||
August 2021 | 2,396,223 | 2,396,223 | 3538 | 225,362,524 | ||||||||||
September 2021 | 3,175,936 | 3,175,936 | 3493 | 222,186,588 | ||||||||||
October 2021(1) | 1,565,980 | 1,565,980 | 3550 | 232,045,302 | ||||||||||
November 2021 | 1,375,946 | 1,375,946 | 3785 | 230,669,356 | ||||||||||
December 2021 | 4,423,031 | 4,423,031 | 3960 | 226,246,325 | ||||||||||
January 2022 | 5,822,743 | 5,822,743 | 3797 | 220,423,582 | ||||||||||
February 2022 | 5,865,710 | 5,865,710 | 3714 | 214,557,872 | ||||||||||
March 2022 | 8,480,736 | 8,480,736 | 3588 | 206,077,136 | ||||||||||
April 2022 | 7,260,564 | 7,260,564 | 3935 | 198,816,572 | ||||||||||
May 2022 | 12,627,704 | 12,627,704 | 3724 | 186,188,868 | ||||||||||
June 2022 | 6,771,405 | 6,771,405 | 3584 | 179,417,463 | ||||||||||
Total | 61,494,232 | 61,494,232 | 3708 | 179,417,463 |
Period | Number of shares purchased under share buyback programme | Total number of shares purchased | Average price paid pence | Authorised purchases unutilised at month end | ||||||||||
July 2022 | 1,660,507 | 1,660,507 | 3567 | 177,756,956 | ||||||||||
August 2022 | 1,646,883 | 1,646,883 | 3820 | 176,110,073 | ||||||||||
September 2022 | 2,273,226 | 2,273,226 | 3744 | 173,836,847 | ||||||||||
1-6 October 2022 | 131,864 | 131,864 | 3702 | 173,704,983 | ||||||||||
7-31 October 2022 (1) | — | — | — | 227,870,414 | ||||||||||
November 2022 | 4,497,414 | 4,497,414 | 3679 | 223,373,000 | ||||||||||
December 2022 | 4,571,923 | 4,571,923 | 3710 | 218,801,077 | ||||||||||
January 2023 | 7,989,915 | 7,989,915 | 3558 | 210,811,162 | ||||||||||
February 2023 | 1,718,877 | 1,718,877 | 3577 | 209,092,285 | ||||||||||
March 2023 | 4,353,777 | 4,353,777 | 3541 | 204,738,508 | ||||||||||
April 2023 | 2,883,950 | 2,883,950 | 3672 | 201,854,558 | ||||||||||
May 2023 | 5,196,558 | 5,196,558 | 3534 | 196,658,000 | ||||||||||
June 2023 | 410,562 | 410,562 | 3348 | 196,247,438 | ||||||||||
Total | 37,335,456 | 37,335,456 | 3617 | 196,247,438 |
2022 | 2021 | 2020 | |||||||||
£ million | £ million | £ million | |||||||||
Amounts recognised as distributions to equity shareholders in the year | |||||||||||
Final dividend for the year ended 30 June 2021 | |||||||||||
44.59 pence per share (2020 – 42.47 pence; 2019 – 42.47 pence) | 1,040 | 992 | 1,006 | ||||||||
Interim dividend for the year ended 30 June 2022 | |||||||||||
29.36 pence per share (2021 – 27.96 pence; 2020 – 27.41 pence) | 680 | 654 | 640 | ||||||||
1,720 | 1,646 | 1,646 |
2023 | 2022 | 2021 | |||||||||
£ million | £ million | £ million | |||||||||
Amounts recognised as distributions to equity shareholders in the year | |||||||||||
Final dividend for the year ended 30 June 2022 | |||||||||||
46.82 pence per share (2021 – 44.59 pence; 2020 – 42.47 pence) | 1,066 | 1,040 | 992 | ||||||||
Interim dividend for the year ended 30 June 2023 | |||||||||||
30.83 pence per share (2022 – 29.36 pence; 2021 – 27.96 pence) | 696 | 680 | 654 | ||||||||
1,762 | 1,720 | 1,646 |
2022 | 2021 | 2020 | |||||||||||||||
USL £ million | Others £ million | Total £ million | Total £ million | Total £ million | |||||||||||||
Income statement | |||||||||||||||||
Sales | 3,194 | 2,603 | 5,797 | 5,140 | 4,688 | ||||||||||||
Net sales | 1,013 | 2,042 | 3,055 | 2,553 | 2,314 | ||||||||||||
(Loss)/profit for the year | (127) | 354 | 227 | 298 | 85 | ||||||||||||
Other comprehensive income/(loss)(1) | 134 | 199 | 333 | (434) | (96) | ||||||||||||
Total comprehensive income/(loss) | 7 | 553 | 560 | (136) | (11) | ||||||||||||
Attributable to non-controlling interests | 3 | 256 | 259 | (35) | 8 | ||||||||||||
Balance sheet | |||||||||||||||||
Non-current assets(2) | 1,668 | 3,349 | 5,017 | 4,669 | 5,170 | ||||||||||||
Current assets | 727 | 1,275 | 2,002 | 1,492 | 1,280 | ||||||||||||
Non-current liabilities | (275) | (1,224) | (1,499) | (1,356) | (1,459) | ||||||||||||
Current liabilities | (441) | (1,205) | (1,646) | (1,335) | (1,188) | ||||||||||||
Net assets | 1,679 | 2,195 | 3,874 | 3,470 | 3,803 | ||||||||||||
Attributable to non-controlling interests | 717 | 999 | 1,716 | 1,534 | 1,668 | ||||||||||||
Cash flow | |||||||||||||||||
Net cash inflow from operating activities | 149 | 541 | 690 | 661 | 233 | ||||||||||||
Net cash outflow from investing activities | (74) | (215) | (289) | (137) | (152) | ||||||||||||
Net cash outflow from financing activities | (72) | (250) | (322) | (371) | (209) | ||||||||||||
Net increase/(decrease) in cash and cash equivalents | 3 | 76 | 79 | 153 | (128) | ||||||||||||
Exchange differences | — | 52 | 52 | (19) | (3) | ||||||||||||
Dividends payable to non-controlling interests | — | (72) | (72) | (72) | (117) |
2023 | 2022 | 2021 | |||||||||||||||
USL £ million | Others £ million | Total £ million | Total £ million | Total £ million | |||||||||||||
Income statement | |||||||||||||||||
Sales | 2,713 | 2,628 | 5,341 | 5,797 | 5,140 | ||||||||||||
Net sales | 1,087 | 2,051 | 3,138 | 3,055 | 2,553 | ||||||||||||
(Loss)/profit for the year(1) | (215) | 289 | 74 | 227 | 298 | ||||||||||||
Other comprehensive (loss)/income(2) | (133) | (154) | (287) | 333 | (434) | ||||||||||||
Total comprehensive (loss)/income | (348) | 135 | (213) | 560 | (136) | ||||||||||||
Attributable to non-controlling interests | (149) | 33 | (116) | 259 | (35) | ||||||||||||
Balance sheet | |||||||||||||||||
Non-current assets(3) | 1,074 | 3,175 | 4,249 | 5,017 | 4,669 | ||||||||||||
Current assets | 790 | 1,049 | 1,839 | 2,002 | 1,492 | ||||||||||||
Non-current liabilities | (151) | (1,164) | (1,315) | (1,499) | (1,356) | ||||||||||||
Current liabilities | (384) | (1,035) | (1,419) | (1,646) | (1,335) | ||||||||||||
Net assets | 1,329 | 2,025 | 3,354 | 3,874 | 3,470 | ||||||||||||
Attributable to non-controlling interests | 568 | 902 | 1,470 | 1,716 | 1,534 | ||||||||||||
Cash flow | |||||||||||||||||
Net cash inflow from operating activities | 120 | 383 | 503 | 690 | 661 | ||||||||||||
Net cash inflow/(outflow) from investing activities | 34 | (231) | (197) | (289) | (137) | ||||||||||||
Net cash outflow from financing activities | (48) | (93) | (141) | (322) | (371) | ||||||||||||
Net increase in cash and cash equivalents | 106 | 59 | 165 | 79 | 153 | ||||||||||||
Exchange differences | (7) | (77) | (84) | 52 | (19) | ||||||||||||
Dividends payable to non-controlling interests | — | (97) | (97) | (72) | (72) |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Executive share award plans | 51 | 41 | (3) | ||||||||
Executive share option plans | 4 | 4 | 2 | ||||||||
Savings plans | 4 | 4 | 3 | ||||||||
59 | 49 | 2 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Executive share award plans | 41 | 51 | 41 | ||||||||
Executive share option plans | 4 | 4 | 4 | ||||||||
Savings plans | 4 | 4 | 4 | ||||||||
49 | 59 | 49 |
2022 | 2021 | 2020 | |||||||||
Risk free interest rate | 0.4 | % | (0.1 | %) | 0.4 | % | |||||
Expected life of the awards | 40 months | 36 months | 37 months | ||||||||
Dividend yield | 2.1 | % | 2.7 | % | 1.9 | % | |||||
Weighted average share price | 3545 p | 2557 p | 3501 p | ||||||||
Weighted average fair value of awards granted in the year | 2729 p | 2107 p | 899 p | ||||||||
Number of awards granted in the year | 2.1 million | 2.1 million | 1.7 million | ||||||||
Fair value of all awards granted in the year | £57 million | £45 million | £16 million |
2023 | 2022 | 2021 | |||||||||
Risk free interest rate | 3.1 | % | 0.4 | % | (0.1 | %) | |||||
Expected life of the awards | 35 months | 40 months | 36 months | ||||||||
Dividend yield | 2.0 | % | 2.1 | % | 2.7 | % | |||||
Weighted average share price | 3758 p | 3545 p | 2557 p | ||||||||
Weighted average fair value of awards granted in the year | 1992 p | 2729 p | 2107 p | ||||||||
Number of awards granted in the year | 1.7 million | 2.1 million | 2.1 million | ||||||||
Fair value of all awards granted in the year | £34 million | £57 million | £45 million |
2022 Number of awards million | 2021 Number of awards million | 2020 Number of awards million | ||||||||||||||||||
Balance outstanding at 1 July | 5.3 | 5.6 | 7.0 | |||||||||||||||||
Granted | 2.1 | 2.1 | 1.8 | |||||||||||||||||
Awarded | (1.1) | (1.2) | (2.5) | |||||||||||||||||
Forfeited | (1.1) | (1.2) | (0.7) | |||||||||||||||||
Balance outstanding at 30 June | 5.2 | 5.3 | 5.6 |
2023 million | 2022 million | 2021 million | ||||||||||||||||||
Number of awards outstanding at 1 July | 5.2 | 5.3 | 5.6 | |||||||||||||||||
Granted | 1.7 | 2.1 | 2.1 | |||||||||||||||||
Awarded | (1.1) | (1.1) | (1.2) | |||||||||||||||||
Forfeited | (0.9) | (1.1) | (1.2) | |||||||||||||||||
Number of awards outstanding at 30 June | 4.9 | 5.2 | 5.3 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Income statement items | |||||||||||
Sales | 11 | 8 | 9 | ||||||||
Purchases | 31 | 23 | 29 | ||||||||
Balance sheet items | |||||||||||
Group payables | 2 | 5 | 2 | ||||||||
Group receivables | 2 | 1 | 1 | ||||||||
Loans payable | — | 9 | 6 | ||||||||
Loans receivable | 175 | 108 | 82 | ||||||||
Cash flow items | |||||||||||
Loans and equity contributions, net | 66 | 38 | 47 |
2023 £ million | 2022 £ million | 2021 £ million | |||||||||
Income statement items | |||||||||||
Sales | 10 | 11 | 8 | ||||||||
Purchases | 13 | 31 | 23 | ||||||||
Balance sheet items | |||||||||||
Group payables | 2 | 2 | 5 | ||||||||
Group receivables | 1 | 2 | 1 | ||||||||
Loans payable | — | — | 9 | ||||||||
Loans receivable | 197 | 175 | 108 | ||||||||
Cash flow items | |||||||||||
Loans and equity contributions, net | 93 | 66 | 38 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Salaries and short-term employee benefits | 10 | 9 | 10 | ||||||||
Annual incentive plan | 13 | 13 | — | ||||||||
Non-Executive Directors’ fees | 1 | 1 | 1 | ||||||||
Share-based payments(1) | 19 | 12 | (11) | ||||||||
Post employment benefits | 2 | 1 | 2 | ||||||||
Termination benefits | — | 2 | 2 | ||||||||
45 | 38 | 4 |
2023 | 2022 | 2021 | |||||||||
£ million | £ million | £ million | |||||||||
Salaries and short-term employee benefits | 11 | 10 | 9 | ||||||||
Annual incentive plan | 6 | 13 | 13 | ||||||||
Non-Executive Directors’ fees | 1 | 1 | 1 | ||||||||
Share-based payments(1) | 12 | 19 | 12 | ||||||||
Post employment benefits | 2 | 2 | 1 | ||||||||
Termination benefits | — | — | 2 | ||||||||
32 | 45 | 38 |
2022 £ million | 2021 £ million | 2020 £ million | |||||||||
Salaries and short-term employee benefits | 3 | 2 | 2 | ||||||||
Annual incentive plan | 4 | 4 | — | ||||||||
Non-Executive Directors' fees | 1 | 1 | 1 | ||||||||
Share option exercises(1) | 4 | — | — | ||||||||
Shares vesting(1) | 3 | 1 | 11 | ||||||||
Post employment benefits | — | — | 1 | ||||||||
15 | 8 | 15 |
2023 | 2022 | 2021 | |||||||||
£ million | £ million | £ million | |||||||||
Salaries and short-term employee benefits | 3 | 3 | 2 | ||||||||
Annual incentive plan | 2 | 4 | 4 | ||||||||
Non-Executive Directors' fees | 1 | 1 | 1 | ||||||||
Share option exercises(1) | — | 4 | — | ||||||||
Shares vesting(1) | 4 | 3 | 1 | ||||||||
Post employment benefits | 1 | — | — | ||||||||
11 | 15 | 8 |
Country of incorporation | Country of operation | Percentage of equity owned(1) | Business description | |||||||||||
Subsidiaries | ||||||||||||||
Diageo Ireland Unlimited Company | Ireland | Worldwide | 100% | Production, marketing and distribution of premium drinks | ||||||||||
Diageo Great Britain Limited | England | Great Britain | 100% | Marketing and distribution of premium drinks | ||||||||||
Diageo Scotland Limited | Scotland | Worldwide | 100% | Production, marketing and distribution of premium drinks | ||||||||||
Diageo Brands B.V. | Netherlands | Worldwide | 100% | Marketing and distribution of premium drinks | ||||||||||
Diageo North America, Inc. | United States | Worldwide | 100% | Production, importing, marketing and distribution of premium drinks | ||||||||||
United Spirits Limited(2) | India | India | Production, importing, marketing and distribution of premium drinks | |||||||||||
Diageo Capital plc(3) | Scotland | United Kingdom | 100% | Financing company for the group | ||||||||||
Diageo Capital B.V.(3) | Netherlands | Netherlands | 100% | Financing company for the group | ||||||||||
Diageo Finance plc(3) | England | United Kingdom | 100% | Financing company for the group | ||||||||||
Diageo Investment Corporation | United States | United States | 100% | Financing company for the US group | ||||||||||
Mey İçki Sanayi ve Ticaret A.Ş. | Turkey | Turkey | 100% | Production, marketing and distribution of premium drinks | ||||||||||
Associates | ||||||||||||||
Moët Hennessy, SAS(4) | France | France | 34% | Production, marketing and distribution of premium drinks |
North America million | Europe million | Asia Pacific million | Latin America and Caribbean million | Africa million | Corporate million | Total million | |||||||||||||||||
Volume (equivalent units) | |||||||||||||||||||||||
2019 reported | 49.4 | 45.4 | 95.1 | 22.4 | 33.6 | — | 245.9 | ||||||||||||||||
Disposals | (2.1) | (0.1) | — | — | (2.7) | — | (4.9) | ||||||||||||||||
2019 adjusted | 47.3 | 45.3 | 95.1 | 22.4 | 30.9 | — | 241.0 | ||||||||||||||||
Organic movement (2020) | 0.1 | (5.2) | (14.5) | (3.4) | (4.0) | — | (27.0) | ||||||||||||||||
Organic movement (2021) | 5.1 | 2.9 | 7.0 | 4.1 | 4.8 | — | 23.9 | ||||||||||||||||
Organic movement (2022) | 1.4 | 8.5 | 6.6 | 4.0 | 4.0 | — | 24.5 | ||||||||||||||||
2020, 2021 and 2022 movement on a constant basis | 6.6 | 6.2 | (0.9) | 4.7 | 4.8 | — | 21.4 | ||||||||||||||||
Volume (equivalent units) | |||||||||||||||||||||||
2022 reported | 54.8 | 51.2 | 94.2 | 27.1 | 35.7 | — | 263.0 | ||||||||||||||||
Disposals(2) | — | (0.8) | (23.3) | — | (1.9) | — | (26.0) | ||||||||||||||||
2022 adjusted | 54.8 | 50.4 | 70.9 | 27.1 | 33.8 | — | 237.0 | ||||||||||||||||
Organic movement | (2.5) | 0.1 | 3.9 | (0.9) | (2.4) | — | (1.8) | ||||||||||||||||
Acquisitions and disposals(2) | 0.1 | 0.8 | 6.0 | — | 1.3 | — | 8.2 | ||||||||||||||||
2023 reported | 52.4 | 51.3 | 80.8 | 26.2 | 32.7 | — | 243.4 | ||||||||||||||||
Organic movement % | (5) | — | 5 | (3) | (7) | — | (1) | ||||||||||||||||
2019 to 2023 reported growth % | 6 | 13 | (15) | 17 | (3) | — | (1) | ||||||||||||||||
2019 to 2023 growth on a constant basis % | 9 | 14 | 3 | 17 | 8 | — | 8 |
North America £ million | Europe £ million | Asia Pacific £ million | Latin America and Caribbean £ million | Africa £ million | Corporate £ million | Total £ million | |||||||||||||||||
Sales | |||||||||||||||||||||||
2022 reported | 6,682 | 5,740 | 5,624 | 1,945 | 2,403 | 54 | 22,448 | ||||||||||||||||
Exchange | (51) | (149) | (4) | (19) | (1) | — | (224) | ||||||||||||||||
Disposals(2) | — | (36) | (884) | — | (195) | — | (1,115) | ||||||||||||||||
Hyperinflation | — | (213) | — | — | — | — | (213) | ||||||||||||||||
2022 adjusted | 6,631 | 5,342 | 4,736 | 1,926 | 2,207 | 54 | 20,896 | ||||||||||||||||
Organic movement | (15) | 553 | 317 | 132 | 71 | 33 | 1,091 | ||||||||||||||||
Acquisitions and disposals(2) | 23 | 22 | 225 | 6 | 156 | — | 432 | ||||||||||||||||
Exchange | 743 | (205) | 125 | 196 | (48) | 1 | 812 | ||||||||||||||||
Hyperinflation | — | 284 | — | — | — | — | 284 | ||||||||||||||||
2023 reported | 7,382 | 5,996 | 5,403 | 2,260 | 2,386 | 88 | 23,515 | ||||||||||||||||
Organic movement % | — | 10 | 7 | 7 | 3 | 61 | 5 | ||||||||||||||||
North America £ million | Europe £ million | Asia Pacific £ million | Latin America and Caribbean £ million | Africa £ million | Corporate £ million | Total £ million | |||||||||||||||||
Net sales | |||||||||||||||||||||||
2019 reported | 4,460 | 2,939 | 2,688 | 1,130 | 1,597 | 53 | 12,867 | ||||||||||||||||
Exchange | (34) | (19) | 1 | 4 | (2) | 2 | (48) | ||||||||||||||||
Reclassification | — | — | — | (10) | — | — | (10) | ||||||||||||||||
Disposals | (75) | (1) | (1) | (1) | (91) | — | (169) | ||||||||||||||||
2019 adjusted | 4,351 | 2,919 | 2,688 | 1,123 | 1,504 | 55 | 12,640 | ||||||||||||||||
Organic movement (2020) | 105 | (358) | (423) | (169) | (200) | (16) | (1,061) | ||||||||||||||||
Organic movement (2021) | 929 | 108 | 308 | 275 | 258 | (18) | 1,860 | ||||||||||||||||
Organic movement (2022) | 754 | 766 | 402 | 451 | 308 | 35 | 2,716 | ||||||||||||||||
2020, 2021 and 2022 movement on a constant basis | 1,788 | 516 | 287 | 557 | 366 | 1 | 3,515 | ||||||||||||||||
Net sales | |||||||||||||||||||||||
2022 reported | 6,095 | 3,212 | 2,884 | 1,525 | 1,682 | 54 | 15,452 | ||||||||||||||||
Exchange(1) | (46) | (44) | (8) | (16) | (1) | — | (115) | ||||||||||||||||
Disposals(2) | — | (29) | (137) | — | (130) | — | (296) | ||||||||||||||||
Hyperinflation | — | (71) | — | — | — | — | (71) | ||||||||||||||||
2022 adjusted | 6,049 | 3,068 | 2,739 | 1,509 | 1,551 | 54 | 14,970 | ||||||||||||||||
Organic movement | 11 | 347 | 353 | 142 | 83 | 33 | 969 | ||||||||||||||||
Acquisitions and disposals(2) | 20 | 20 | 35 | 3 | 104 | — | 182 | ||||||||||||||||
Exchange(1) | 678 | (41) | 73 | 145 | (39) | 1 | 817 | ||||||||||||||||
Hyperinflation | — | 175 | — | — | — | — | 175 | ||||||||||||||||
2023 reported | 6,758 | 3,569 | 3,200 | 1,799 | 1,699 | 88 | 17,113 | ||||||||||||||||
Organic movement % | — | 11 | 13 | 9 | 5 | 61 | 6 | ||||||||||||||||
2019 to 2023 reported growth % | 52 | 21 | 19 | 59 | 6 | 66 | 33 | ||||||||||||||||
2019 to 2023 growth on a constant basis % | 41 | 30 | 24 | 62 | 30 | 62 | 35 | ||||||||||||||||
North America £ million | Europe £ million | Asia Pacific £ million | Latin America and Caribbean £ million | Africa £ million | Corporate £ million | Total £ million | |||||||||||||||||
Marketing | |||||||||||||||||||||||
2022 reported | 1,200 | 577 | 490 | 243 | 199 | 12 | 2,721 | ||||||||||||||||
Exchange | (12) | 5 | (2) | (3) | (2) | (1) | (15) | ||||||||||||||||
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 1 | — | — | — | — | — | 1 | ||||||||||||||||
Disposals(2) | — | (1) | — | — | (9) | — | (10) | ||||||||||||||||
Hyperinflation | — | (6) | — | — | — | — | (6) | ||||||||||||||||
2022 adjusted | 1,189 | 575 | 488 | 240 | 188 | 11 | 2,691 | ||||||||||||||||
Organic movement | 22 | 42 | 46 | 34 | 4 | 4 | 152 | ||||||||||||||||
Acquisitions and disposals(2) | 15 | 3 | — | 1 | 4 | 2 | 25 | ||||||||||||||||
Exchange | 134 | (2) | 12 | 21 | (1) | 2 | 166 | ||||||||||||||||
Hyperinflation | — | 17 | — | — | — | — | 17 | ||||||||||||||||
2023 reported | 1,360 | 635 | 546 | 296 | 195 | 19 | 3,051 | ||||||||||||||||
Organic movement % | 2 | 7 | 9 | 14 | 2 | 36 | 6 | ||||||||||||||||
Operating profit before exceptional items | North America £ million | Europe £ million | Asia Pacific £ million | Latin America and Caribbean £ million | Africa £ million | Corporate £ million | Total £ million | ||||||||||||||||
2019 reported | 4,116 | ||||||||||||||||||||||
Disposal | (29) | ||||||||||||||||||||||
2019 adjusted | 4,087 | ||||||||||||||||||||||
Organic movement (2020) | (589) | ||||||||||||||||||||||
Organic movement (2021) | 627 | ||||||||||||||||||||||
Organic movement (2022) | 995 | ||||||||||||||||||||||
2020, 2021 and 2022 movement on a constant basis | 1,033 | ||||||||||||||||||||||
Operating profit before exceptional items | |||||||||||||||||||||||
2022 reported | 2,454 | 1,017 | 711 | 538 | 315 | (238) | 4,797 | ||||||||||||||||
Exchange(1) | (31) | (13) | (5) | (14) | 11 | (30) | (82) | ||||||||||||||||
Fair value remeasurement of contingent considerations and equity option | (32) | (36) | — | 8 | — | — | (60) | ||||||||||||||||
Acquisitions and disposals(2) | 6 | (18) | (26) | — | (18) | — | (56) | ||||||||||||||||
Hyperinflation | — | (1) | — | — | — | — | (1) | ||||||||||||||||
2022 adjusted | 2,397 | 949 | 680 | 532 | 308 | (268) | 4,598 | ||||||||||||||||
Organic movement | (57) | 103 | 200 | 62 | 37 | (24) | 321 | ||||||||||||||||
Acquisitions and disposals(2) | (18) | (13) | 5 | — | 27 | (6) | (5) | ||||||||||||||||
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 87 | 25 | — | 1 | — | — | 113 | ||||||||||||||||
Exchange(1) | 280 | 18 | 20 | 66 | (152) | (28) | 204 | ||||||||||||||||
Hyperinflation | — | 23 | — | — | — | — | 23 | ||||||||||||||||
2023 reported | 2,689 | 1,105 | 905 | 661 | 220 | (326) | 5,254 | ||||||||||||||||
Organic movement % | (2) | 11 | 29 | 12 | 12 | (9) | 7 | ||||||||||||||||
Organic operating margin % (3) | |||||||||||||||||||||||
2023 | 38.6 | 30.8 | 28.5 | 36.0 | 21.1 | n/a | 30.9 | ||||||||||||||||
2022 | 39.6 | 30.9 | 24.8 | 35.3 | 19.9 | n/a | 30.7 | ||||||||||||||||
Margin movement (bps) | (101) | (13) | 363 | 72 | 126 | n/a | 15 | ||||||||||||||||
2019 to 2021 reported growth % | 28 | ||||||||||||||||||||||
2019 to 2023 growth on a constant basis % | 33 | ||||||||||||||||||||||
Volume equ. units million | Sales £ million | Net sales £ million | Marketing £ million | Operating profit £ million | |||||||||||||
Year ended 30 June 2022 | |||||||||||||||||
Acquisitions | |||||||||||||||||
Chase Distillery | — | — | — | — | 1 | ||||||||||||
Lone River Ranch Water | — | — | — | — | 6 | ||||||||||||
— | — | — | — | 7 | |||||||||||||
Disposals | |||||||||||||||||
USL Popular brands | (23.3) | (884) | (137) | — | (26) | ||||||||||||
Archers brand | (0.1) | (16) | (10) | — | (7) | ||||||||||||
Meta Abo Brewery | (0.3) | (16) | (12) | (1) | 8 | ||||||||||||
Picon brand | (0.7) | (20) | (19) | (1) | (12) | ||||||||||||
Guinness Cameroun S.A. | (1.6) | (179) | (118) | (8) | (26) | ||||||||||||
(26.0) | (1,115) | (296) | (10) | (63) | |||||||||||||
Acquisitions and disposals | (26.0) | (1,115) | (296) | (10) | (56) | ||||||||||||
Year ended 30 June 2023 | |||||||||||||||||
Acquisitions | |||||||||||||||||
Mr Black | — | 8 | 7 | 3 | (2) | ||||||||||||
Balcones Distilling | — | 4 | 4 | 4 | (12) | ||||||||||||
Mezcal Unión | — | 8 | 4 | 3 | (1) | ||||||||||||
21Seeds | 0.1 | 9 | 8 | 8 | (9) | ||||||||||||
Don Papa Rum | 0.1 | 10 | 10 | 3 | (15) | ||||||||||||
0.2 | 39 | 33 | 21 | (39) | |||||||||||||
Disposal | |||||||||||||||||
USL Popular brands | 6.0 | 225 | 35 | — | 5 | ||||||||||||
Archers brand | 0.7 | 12 | 10 | — | 2 | ||||||||||||
Guinness Cameroun S.A. | 1.3 | 156 | 104 | 4 | 27 | ||||||||||||
8.0 | 393 | 149 | 4 | 34 | |||||||||||||
Acquisitions and disposals | 8.2 | 432 | 182 | 25 | (5) |
2023 £ million | 2022 £ million | |||||||
Profit attributable to equity shareholders of the parent company | 3,734 | 3,249 | ||||||
Exceptional operating and non-operating items | 294 | 405 | ||||||
Exceptional tax items and tax in respect of exceptional operating and non-operating items | (186) | (31) | ||||||
Exceptional items attributable to non-controlling interests | (141) | (103) | ||||||
Profit attributable to equity shareholders of the parent company before exceptional items | 3,701 | 3,520 | ||||||
Weighted average number of shares | million | million | ||||||
Shares in issue excluding own shares | 2,264 | 2,318 | ||||||
Dilutive potential ordinary shares | 7 | 7 | ||||||
Diluted shares in issue excluding own shares | 2,271 | 2,325 | ||||||
pence | pence | |||||||
Basic earnings per share before exceptional items | 163.5 | 151.9 | ||||||
Diluted earnings per share before exceptional items | 163.0 | 151.4 |
2023 £ million | 2022 £ million | |||||||
Net cash inflow from operating activities | 3,024 | 3,935 | ||||||
Disposal of property, plant and equipment and computer software | 13 | 17 | ||||||
Purchase of property, plant and equipment and computer software | (1,180) | (1,097) | ||||||
Movements in loans and other investments | (57) | (72) | ||||||
Free cash flow | 1,800 | 2,783 |
2023 £ million | 2022 £ million | |||||||
Profit for the year | 3,766 | 3,338 | ||||||
Taxation | 970 | 1,049 | ||||||
Share of after tax results of associates and joint ventures | (370) | (417) | ||||||
Net finance charges | 594 | 422 | ||||||
Non-operating items | (328) | 17 | ||||||
Operating profit | 4,632 | 4,409 | ||||||
Exceptional operating items | 622 | 388 | ||||||
Fair value remeasurement | (124) | (60) | ||||||
Depreciation, amortisation and impairment(1) | 496 | 489 | ||||||
Hyperinflation adjustment | (28) | (10) | ||||||
Retranslation to budgeted exchange rates | (198) | 27 | ||||||
5,400 | 5,243 | |||||||
Cash generated from operations | 4,779 | 5,212 | ||||||
Net exceptional cash paid(2) | 25 | 15 | ||||||
Post employment payments less amounts included in operating profit(1) | 25 | 89 | ||||||
Net movement in maturing inventories(3) | 577 | 360 | ||||||
Provision movement | 65 | 58 | ||||||
Dividends received from associates | (219) | (190) | ||||||
Other items(1) | 14 | (53) | ||||||
Hyperinflation adjustment | (29) | (22) | ||||||
Retranslation to budgeted exchange rates | (198) | 42 | ||||||
5,039 | 5,511 | |||||||
Operating cash conversion | 93.3 | % | 105.1 | % |
2023 £ million | 2022 £ million | |||||||
Operating profit | 4,632 | 4,409 | ||||||
Exceptional operating items | 622 | 388 | ||||||
Profit before exceptional operating items attributable to non-controlling interests | (173) | (192) | ||||||
Share of after tax results of associates and joint ventures | 370 | 417 | ||||||
Tax at the tax rate before exceptional items of 23.0% (2022 – 22.5%) | (1,294) | (1,173) | ||||||
4,157 | 3,849 | |||||||
Average net assets (excluding net post employment benefit assets/liabilities) | 8,924 | 8,428 | ||||||
Average non-controlling interests | (1,638) | (1,641) | ||||||
Average net borrowings | 14,949 | 12,859 | ||||||
Average integration and restructuring costs (net of tax) | 1,639 | 1,639 | ||||||
Goodwill at 1 July 2004 | 1,562 | 1,562 | ||||||
Average invested capital | 25,436 | 22,847 | ||||||
Return on average invested capital | 16.3% | 16.8% |
Year ended 30 June | |||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | |||||||||||||
Income statement data | £ million | £ million | £ million | £ million | £ million | ||||||||||||
Sales | 22,448 | 19,153 | 17,697 | 19,294 | 18,432 | ||||||||||||
Excise duties | (6,996) | (6,420) | (5,945) | (6,427) | (6,269) | ||||||||||||
Net sales | 15,452 | 12,733 | 11,752 | 12,867 | 12,163 | ||||||||||||
Cost of sales | (5,973) | (5,038) | (4,654) | (4,866) | (4,634) | ||||||||||||
Gross profit | 9,479 | 7,695 | 7,098 | 8,001 | 7,529 | ||||||||||||
Marketing | (2,721) | (2,163) | (1,841) | (2,042) | (1,882) | ||||||||||||
Other operating items | (2,349) | (1,801) | (3,120) | (1,917) | (1,956) | ||||||||||||
Operating profit | 4,409 | 3,731 | 2,137 | 4,042 | 3,691 | ||||||||||||
Non-operating items | (17) | 14 | (23) | 144 | — | ||||||||||||
Net interest and other finance charges | (422) | (373) | (353) | (263) | (260) | ||||||||||||
Share of after tax results of associates and joint ventures | 417 | 334 | 282 | 312 | 309 | ||||||||||||
Profit before taxation | 4,387 | 3,706 | 2,043 | 4,235 | 3,740 | ||||||||||||
Tax before exceptional items | (1,080) | (823) | (743) | (859) | (799) | ||||||||||||
Exceptional taxation | 31 | (84) | 154 | (39) | 203 | ||||||||||||
Profit for the year | 3,338 | 2,799 | 1,454 | 3,337 | 3,144 | ||||||||||||
Weighted average number of shares | million | million | million | million | million | ||||||||||||
Shares in issue excluding own shares | 2,318 | 2,337 | 2,346 | 2,418 | 2,484 | ||||||||||||
Dilutive potential ordinary shares | 7 | 8 | 8 | 10 | 11 | ||||||||||||
2,325 | 2,345 | 2,354 | 2,428 | 2,495 | |||||||||||||
Per share data | pence | pence | pence | pence | pence | ||||||||||||
Basic earnings per share | 140.2 | 113.8 | 60.1 | 130.7 | 121.7 | ||||||||||||
Diluted earnings per share | 139.7 | 113.4 | 59.9 | 130.1 | 121.1 | ||||||||||||
Dividend per share | 76.18 | 72.55 | 69.88 | 68.57 | 65.30 | ||||||||||||
2023 £ million | 2022 £ million | |||||||
Borrowings due within one year | 1,701 | 1,522 | ||||||
Borrowings due after one year | 14,801 | 14,498 | ||||||
Fair value of foreign currency derivatives and interest rate hedging instruments | 30 | (73) | ||||||
Lease liabilities | 448 | 475 | ||||||
Less: Cash and cash equivalents | (1,439) | (2,285) | ||||||
Net borrowings | 15,541 | 14,137 | ||||||
Post employment benefit liabilities before tax | 373 | 402 | ||||||
Adjusted net borrowings | 15,914 | 14,539 | ||||||
Profit for the year | 3,766 | 3,338 | ||||||
Taxation | 970 | 1,049 | ||||||
Net finance charges | 594 | 422 | ||||||
Depreciation, amortisation and impairment (excluding exceptional impairment) | 496 | 492 | ||||||
Exceptional impairment | 570 | 336 | ||||||
EBITDA | 6,396 | 5,637 | ||||||
Exceptional operating items (excluding impairment) | 52 | 49 | ||||||
Non-operating items | (328) | 17 | ||||||
Adjusted EBITDA | 6,120 | 5,703 | ||||||
Adjusted net borrowings to adjusted EBITDA | 2.6 | 2.5 |
2023 £ million | 2022 £ million | |||||||
Taxation on profit (a) | 970 | 1,049 | ||||||
Tax in respect of exceptional items | 129 | 31 | ||||||
Exceptional tax credit | 57 | — | ||||||
Tax before exceptional items (b) | 1,156 | 1,080 | ||||||
Profit before taxation (c) | 4,736 | 4,387 | ||||||
Non-operating items | (328) | 17 | ||||||
Exceptional operating items | 622 | 388 | ||||||
Profit before taxation and exceptional items (d) | 5,030 | 4,792 | ||||||
Tax rate after exceptional items (a/c) | 20.5 | % | 23.9 | % | ||||
Tax rate before exceptional items (b/d) | 23.0 | % | 22.5 | % |
As at 30 June | |||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | |||||||||||||
Balance sheet data | £ million | £ million | £ million | £ million | £ million | ||||||||||||
Non-current assets | 23,582 | 20,508 | 21,837 | 21,923 | 21,024 | ||||||||||||
Current assets | 12,934 | 11,445 | 11,471 | 9,373 | 8,691 | ||||||||||||
Total assets | 36,516 | 31,953 | 33,308 | 31,296 | 29,715 | ||||||||||||
Current liabilities | (8,442) | (7,142) | (6,496) | (7,003) | (6,360) | ||||||||||||
Non-current liabilities | (18,560) | (16,380) | (18,372) | (14,137) | (11,642) | ||||||||||||
Total liabilities | (27,002) | (23,522) | (24,868) | (21,140) | (18,002) | ||||||||||||
Net assets | 9,514 | 8,431 | 8,440 | 10,156 | 11,713 | ||||||||||||
Share capital | 723 | 741 | 742 | 753 | 780 | ||||||||||||
Share premium | 1,351 | 1,351 | 1,351 | 1,350 | 1,349 | ||||||||||||
Other reserves | 2,174 | 1,621 | 2,272 | 2,372 | 2,133 | ||||||||||||
Retained earnings | 3,550 | 3,184 | 2,407 | 3,886 | 5,686 | ||||||||||||
Equity attributable to equity shareholders of the parent company | 7,798 | 6,897 | 6,772 | 8,361 | 9,948 | ||||||||||||
Non-controlling interests | 1,716 | 1,534 | 1,668 | 1,795 | 1,765 | ||||||||||||
Total equity | 9,514 | 8,431 | 8,440 | 10,156 | 11,713 | ||||||||||||
Net borrowings | (14,137) | (12,109) | (13,246) | (11,277) | (9,091) |
Timeframe | Short term (0-5yrs) | Medium term (2030) | Long term (2050) | |||||||||||||||||
Geography | All Diageo and key third-party operations in North America, Scotland (fiscal 21); India, Africa, Mexico and Turkey (fiscal 22); and Asia Pacific, Europe and Latin America and Caribbean (fiscal 23). | |||||||||||||||||||
Risk types | Physical risks Water (availability, quality, temperature), temperature, flooding, landslide, wildfires, wind, humidity | Transition risks and opportunities | ||||||||||||||||||
Temperature scenarios | +4 to +5ºC (extreme) RCP 8.5' | +2 to +3ºC (moderate) RCP 4.5' | 1.5ºC to 2ºC (Paris agreement) RCP 2.6' | |||||||||||||||||
Scope | ||||||||||||||||||||
Raw materials 1,200+ suppliers' sites Key raw materials* (wheat, barley, maize, cane and beet sugar, vanilla, aniseed, grapes, broken rice, sorghum, agave, dairy, hops) *+4 to +5ºC scenario only | Processing Approximately 250 Diageo and third-party operations' sites Detailed assessments of 39 sites | Distribution Key road, rail routes Key sea ports (69) | Risks reviewed Policy and legal risks Technology risks Market risks Reputation risks | Opportunities Resource efficiency Energy source Products and services Markets | ||||||||||||||||
Scenario analysis Energy Transport Packaging Raw materials | Scenario analysis Pack weight reduction Circular offerings |
Region | Global | UK | US | Canada | Mexico | Turkey | India | Africa | Asia Pacific | LAC | Ireland | ||||||||||||||||||||||||
Glass | l | ||||||||||||||||||||||||||||||||||
Aluminium | l | ||||||||||||||||||||||||||||||||||
Land transport | l | ||||||||||||||||||||||||||||||||||
Ocean transport | l | ||||||||||||||||||||||||||||||||||
Energy | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||
Electricity | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||
Raw materials: | |||||||||||||||||||||||||||||||||||
Barley | l | ||||||||||||||||||||||||||||||||||
Wheat | l | ||||||||||||||||||||||||||||||||||
Maize | l | ||||||||||||||||||||||||||||||||||
Rice | l | ||||||||||||||||||||||||||||||||||
Sorghum | l | ||||||||||||||||||||||||||||||||||
Sugar | l | ||||||||||||||||||||||||||||||||||
Vanilla | l | ||||||||||||||||||||||||||||||||||
Aniseed | l | ||||||||||||||||||||||||||||||||||
Agave | l | ||||||||||||||||||||||||||||||||||
Grapes | l | ||||||||||||||||||||||||||||||||||
Hops | l | ||||||||||||||||||||||||||||||||||
Dairy | l |
Target | Champion health literacy and tackle harm through DRINKiQ in every market where we live, work, source and sell | ||||
Performance measure | Number of markets that have launched DRINKiQ | ||||
Definition | •Markets required for DRINKiQ rollout were identified during the initial project scoping phase in fiscal 20. The baseline is the total number of Diageo markets where we live, work, source and sell. •‘Launched’ means the DRINKiQ website is live and accessible by consumers in the market from November 2020. | ||||
Data preparation | •The Global Spirit of Progress team manages all aspects of DRINKiQ design, development and deployment (except China, where we had to use a local vendor for build due to firewall issues). •We engage and manage the global agency that is responsible for building and testing every website in every market throughout all stages of development, user acceptance testing and deployment. •The agency web developers who build the DRINKiQ website undertake a series of steps to deploy DRINKiQ to the production environment. Once the deployment is complete, the agency conducts testing to verify overall site performance and functionality is operating as intended. The completion of the testing concludes the deployment process, and the site/updates are deemed as ‘live’ since they are available on www.drinkiq.com. | ||||
Scope exception | Turkey is the only market in which we are unable to roll out DRINKiQ due to legal restrictions. Travel Retail Asia covers multiple geographical territories and is therefore not counted as an individual market in scope for delivering our DRINKiQ target. |
Target | Leverage Diageo marketing and innovation to make moderation the norm – reaching 1 billion people with dedicated responsible drinking messaging | ||||
Performance measure | Number of people reached through campaigns and training specifically designed to promote moderation | ||||
Definition | We deliver responsible drinking campaigns and training through social media, viral videos, events, traditional media campaigns and other forms of marketing by Diageo brands. | ||||
Scope exception | Markets are only included where we have verifiable media data provided by third-party partners. | ||||
Reporting period | 1 June to 31 May. Our baseline year for calculating cumulative progress is fiscal 21. | ||||
Data preparation | Data on how many people our campaigns reach is collected by our media agency partners and reported to us. Diageo’s media agency partners manage measurement and verification of this data through various industry-standard practices optimised for each media channel. •Digital media: Cookies/pixels provide unique consumer identifiers. These identifiers provide us with the ability to estimate how many people we reach across a single campaign. •Non-digital media: Utilising industry-standard audience measurement for each platform, we can estimate how many people our campaigns reach for any TV, radio, out of home or other non-digital channel. For example, we utilise industry-standard metrics, such as Nielsen, to estimate viewer audience for a TV programme during which we ran an ad. For out of home, industry-standard measurement of foot traffic, vetted through third-party organisations, is used to estimate the number of people who pass by a billboard. To attempt to prevent double counting, we also adjust the data in the context of the adult population for each market. Each market's total annual reach figure comprises either the highest number of people reached in any given quarter in that market, or the highest number of people reached by a specific campaign in that market, whichever is the greater. | ||||
Limitations | Reach data cannot be as accurately deduplicated over periods of time longer than a year. When reporting how many people we reach over time periods of longer than one fiscal year, figures for individual fiscal years are added together to provide a cumulative number. |
Target | Scale up our SMASHED partnership and educate 10 million young people, parents and teachers on the dangers of underage drinking | ||||
Performance measure | •Number of people educated on the dangers of underage drinking through a Diageo-supported education programme •Number of people who confirmed changed attitudes on the dangers of underage drinking following participation in a Diageo-supported education programme | ||||
Definition | SMASHED is our flagship underage drinking programme, developed and delivered in partnership with Collingwood Learning (Collingwood) and sponsored by Diageo. Our SMASHED partnership aims to change attitudes to underage drinking through live theatre performances and workshops and interactive online events. Live: A live or virtual theatre performance in schools or other community setting, with interactive workshops for students, resources for teachers and parents, and comprehensive evaluation. Online: An innovative and engaging e-learning course, telling the SMASHED story though filmed clips, with interactive learning tools, student assessment and teacher support. Offline: SMASHED Online can also be delivered offline through PowerPoint and video clips. People educated: Target age group (10-17), who have participated in the full 60-minute live or online learning experience. Completions for online are counted only on course completion, and live completion is counted when the number, as stated by the teacher, has completed the full 60-minute session, which is then confirmed by the local delivery partner. Changed attitudes: A young person who confirmed a changed attitude is someone who responds to the post-survey question by stating that they are less likely to drink underage. This is supported by evidenced progression through pre- and post-performance surveys against all other learning outcomes, with the ‘less likely to drink underage’ results as the core indicator. | ||||
Scope exception | Local adaptations: Collingwood has set criteria for partners – a local delivery partner, ministry of education (or similar) and sponsors – to support the success of local adaptations on the ground. Each delivery partner will culturally and linguistically adapt the storyline and interactive elements to suit the local audience, with guidance from Collingwood. Collingwood collaborates with delivery partners to ensure they comply with the original content while accommodating appropriate adaptations. This is also supported by programme sponsors and educational stakeholders to support links with existing curriculum. Evaluation questions remain consistent worldwide, both pre- and post-programme. Collingwood does not allow changes to the content or intent of the questions. The only adaptations made are for language translation. | ||||
Reporting period | The complexity of gathering data from hundreds of schools globally with different academic years means there is a lag in reporting information from our live programmes. Each financial year we include data from 1 June to 31 May. The baseline year for the reporting of cumulative progress towards our target is our financial year ended 30 June 2018; reporting is therefore cumulative progress from July 2018 onwards. |
Target (continued) | Scale up our SMASHED partnership and educate 10 million young people, parents and teachers on the dangers of underage drinking | ||||
Data preparation | The number of people educated is supplied by in-country delivery partners to Collingwood. When SMASHED is delivered by a third-party and is partially funded by Diageo, we only claim the proportion of people educated that our funding contributes to. From September 2022, where an audience numbers over 500 students in one session, we have categorised these as ‘large-scale special events’. Where large-scale events are run if there are a sufficient number of facilitators (ratio 1:200) then the full number of people educated is included. If the number of facilitators present is below this ratio, then the number of people in attendance are capped at the large-scale event number. The number of people educated is calculated by adding together the number of people reached in each country. SMASHED Live operates pre- and post-evaluation surveys of at least 20% of the target audience of young learners as part of the programme on the day. This represents 20% of the participating schools on each tour. The following sampling criteria have been established to measure attitude change: •Assess 20% of programme participants through pre- and post-evaluation surveys. •The participants that make the 20% sample have to be selected randomly. •If the sample is less than 200 people, the same participants must take the pre- and post-evaluation surveys. •The sample has to be approximately 50% male and 50% female. The number of people who confirmed changed attitude is calculated by projecting the results of the survey, for those who have confirmed in the post-survey question that they are less likely to drink underage, to the total number of people educated for the events run. The data, alongside supporting evidence is supplied by delivery partners and then consolidated and reviewed by Collingwood before being shared with us for review and reporting. We have assumed that teachers are an impartial and accurate provider of student numbers, with clear knowledge of the groups allocated to SMASHED. We have also assumed that students participating in SMASHED Live and Online have adequate literacy skills to understand and complete written evaluation forms. | ||||
Limitation | We consider double counting to be highly unlikely, given the activity is only delivered once to any audience within the curricular requirements for the year. No unique personal identifiers are collected, for data privacy reasons. •We avoid having schools run SMASHED Live and Online concurrently by offering only a single option in the vast majority of countries. Where two programmes are available, we mitigate the risk of duplication by offering programmes strategically to different school areas. In the unlikely event a school uses SMASHED Online and SMASHED Live, we assume that the school will utilise courses for different student groups. We mitigate the risk further by checking participating school data quarterly and communicating with teachers. •We have assumed that the number of students expected to either repeat a year group or change secondary schools is negligible, based on the most recent statistics from third parties. |
Target | Extend our UNITAR partnership, and promote changes in attitudes to drink driving, reaching five million people by 2030 | ||||
Performance measure | •Number of people educated about the dangers of drink driving •Number of people who confirmed attitudinal change on the dangers of drink driving through the Diageo supported programme •Number of law enforcement officers trained through the UNITAR High Visibility Enforcement (HVE) programme. | ||||
Definition | We run two programmes that aim to address the dangers of drink driving. Our Wrong Side of the Road (WSOTR) programme, primarily delivered online, is designed to help people understand the consequences of drink driving by listening to the repercussions for people who decided to get behind the wheel after drinking. All stories are real and aim to help prevent other people from making the same mistakes. The purpose is to show the effects that this decision can have on the individual and the people around them, helping viewers to consider what would happen if they were in a similar situation. We also partner with UNITAR on its high-visibility enforcement training programme, an online training course which aims to help government and law enforcement officials design and implement interventions that contribute to reducing the number of alcohol-related fatalities and injuries. Changed attitudes: A person who confirmed a changed attitude is someone who responds to the post-experience survey by stating that they are less likely to drink and drive because of participating in the Diageo learning experience. | ||||
Scope exception | For programmes that are partially funded by Diageo, we only claim the proportion of people educated that our funding contributes to. | ||||
Reporting period | 1 July to 30 June. Our baseline year is fiscal 22. | ||||
Data preparation | To measure attitude change, at least 20% of WSOTR participants are assessed through a pre- and post-programme survey as to whether they are less likely to drink and drive because of their participation. The different formats are reported in the following ways: •Online: The online completions are reported daily through a data report pulled from Diageo’s internal PowerBi system. •Online through third parties: Depending on the format, their numbers can either be generated by the main system through the daily report or through their own reports. They must provide back-up data, which is then validated by the Diageo global team. •Offline: In markets where internet access is a challenge, we have tailored the experience to be used offline at events or high-footfall locations. Completions are captured on forms that are then collated and input to a report. These reports are submitted quarterly and reviewed and verified by the global team. | ||||
Limitations | - |
Performance measure | Code of Business Conduct Mandatory Training | ||||
Definition | Annually, we request all Diageo employees to complete the Code of Business Conduct e-learning. This requires employees to confirm their commitment to their compliance and ethics accountabilities, and certify that they have read, understood, and complied with our Code of Business Conduct and supporting Global policies. | ||||
Scope exception | Employees on long-term leave e.g. family leave, sickness leave. | ||||
Data preparation | We deliver the Code of Business Conduct e-learning through our global online training tool, My Learning Hub, which holds a record of who has participated in and completed the course. Participation and completion records are reported to market and function leadership teams and reviewed by Business Integrity leads. | ||||
Limitation | - |
Performance measure | SpeakUp | ||||
Definition | We inform all employees and third parties about our SpeakUp whistleblowing telephone service and online portal, which is available in all 20 of our Code languages. The service is run by an independent external party 24 hours a day, 365 days a year. | ||||
Scope exception | - | ||||
Data preparation | We capture allegations reported either via SpeakUp or our internal channels in our global breach management tool. | ||||
Limitation | - |
Performance measure | Reported and substantiated breaches | ||||
Definition | Reported breaches are potential breaches of our Code of Business Conduct, policies or standards made known to the business, either via our SpeakUp service or brought to our attention internally. Substantiated breaches are those reports that ultimately result in sufficient evidence being gathered to support the concern raised. | ||||
Scope exception | - | ||||
Data preparation | We update the number of substantiated breaches and Code-related leavers from previous years to include the outcomes of those reports made in one financial year – but for which the investigation and any associated disciplinary actions are not closed until the following financial year, after the Annual Report has been published. This enables us to make a full and accurate year-on-year comparison. | ||||
Limitation | - |
Employees have been allocated to the role in which they occupy. We define Executive as a member of the Executive Committee; Senior Manager (SL, L2, L3) as those in top leadership positions excluding Executive Committee members; Line Manager as all Diageo employees (excluding Executive Committee members and Senior Managers) with one or more direct reports; and Supervised employee as all remaining Diageo employees (excluding Executive Committee members, Senior Managers and Line Managers) who have no direct reports. | ||||||||
Scope exception | All Diageo employees are in scope for this performance measure. However, people data from joint ventures and associates where Diageo does not have operational control are not included. | |||||||
Total employee data comprises our average number of FTE employees across 12 months. Employee data is captured globally through financial and HR information and reporting systems. Employee type includes Regular, Graduates and Fixed Term Contract (FTC) across all markets. Data from markets where Diageo has not implemented its global HR system is collected by local HR teams to form a total Diageo view. | Employee data comprises our average number of FTE employees across 12 months except Executives, which are reported as of 30 June 2023 because of the small population size. Employee data is captured globally through financial and HR information and reporting systems. Employee type includes Regular, Graduates and Fixed Term Contract (FTC) across all markets. Data from markets where Diageo has not implemented its global HR system is collected by local HR teams to form a total Diageo view. | |||||||
Limitation | Joint operations are included but, where Diageo does not have operational control, only high-level regional data is available. Markets where our global HR system, Workday, is not in place are reliant on manual data collection or, in some cases, we may not be able to obtain data. These markets include Ypioca, Zacapa, United Spirits Limited – India (partial), Casamigos, Balcones, Davos, Vietnam Spirits and Wine, Don Papa Rum, Moet Hennessy Diageo, Korea (partial), Japan JWS, Angola and Northern Cyprus. | Joint operations are included but, where Diageo does not have operational control, only high-level regional data is available. Markets where our global HR system, Workday, is not in place are reliant on manual data collection or, in some cases, we may not be able to obtain data. These markets include Ypioca, Zacapa, United Spirits Limited – India (partial), Casamigos, Balcones, Davos, Vietnam Spirits and Wine, Don Papa Rum, Moet Hennessy Diageo, Korea (partial), Japan JWS, Angola and Northern Cyprus. |
Performance measure | ||||||||
The LTAFR is the number of lost-time accidents (LTAs) per 1,000 full-time employees (Occupational Health & Safety (OH&S) FTE). We define an LTA as any work-related incident resulting in injury or illness, where a healthcare professional or Diageo recommends one or more full days away from work, or where a job restriction or modification prevents the employee from conducting their routine tasks and activities and from working a full shift. We consider an injury or illness to be work-related when an event or exposure in the work environment (including people working at home) either caused or contributed to the resulting condition, or significantly aggravated a medically documented and treated pre-existing injury or illness. LTA numbers also include any OH&S FTE work-related fatalities. In line with industry best practice, for the purposes of calculating this KPI, we include all Diageo employees, as well as temporary staff and contractors who work under our direct day-to-day supervision in our definition of OH&S FTE. | ||||||||
Scope exception | ||||||||
We collect and report safety data for all sites where we have full operational control, including all office sites. It includes newly acquired businesses as soon as resources and systems are in place, and no later than one year after we have assumed operational control. We exclude safety data associated with any divestments during the current reporting year from reporting in the current period. When an incident occurs at any site (operational, corporate office, remote commercial and remote home-working environments), the local line manager and local health and safety team will initiate an accident investigation and root-cause analysis. If the accident is classified as an LTA, then the local health and safety representative will escalate to the site leadership team, who will in turn escalate to regional, market and global leadership. Each month, sites are required to submit details associated with all incidents, accidents and LTAs, as well as OH&S FTE data for their site. OH&S FTE data is primarily obtained directly from the global HR/payroll system or estimated using employee numbers, average number of hours worked, absences and overtime information, if actual data is not readily available. Contractor agencies provide data on the hours worked by each contractor. This is then combined with Diageo employee data to calculate the total FTE data for the month. Safety data and OH&S FTE data is reported at site level using our global data management system. | ||||||||
Performance measure | Total recordable accident frequency rate (TRAFR) less than 3.5 | ||||
Definition | TRAFR is the sum of all work-related accidents including OH&S FTE/non-FTE (contractors) fatalities on Diageo premises, OH&S FTE/non-FTE LTAs, OH&S FTE medical treatment cases (MTC), and non-FTE permanent location-based MTCs, expressed as rate per 1,000 OH&S FTEs plus permanent location-based non-FTEs. We consider an injury or illness to be work-related when an event or exposure in the work environment (including people working at home) either caused or contributed to the resulting condition, or significantly aggravated a medically documented and treated pre-existing injury or illness. | ||||
Scope exception | As under LTAFR | ||||
Data preparation | As under LTAFR | ||||
Limitation | We do not report MTCs for non-site-based contractors. |
Performance measure | Number of fatalities | ||||
Definition | A fatality includes any work-related fatality of an employee or contractor under our direct supervision in their day-to-day work environment (on or off our premises), or any work-related fatality suffered by a third-party or contractor (non-FTEs) while on our premises. We consider a fatality to be work-related when an event or exposure in the work environment (including people working at home) either caused or contributed to the event. | ||||
Scope exception | - | ||||
Data preparation | As under LTAFR | ||||
Limitation | - |
Performance measure | Lost-time injury frequency rate (LTIFR) | ||||
Definition | Lost-time injury frequency rate (LTIFR) is a standard Occupational Safety and Health Administration (OSHA) metric that measures the number of lost-time injuries occurring in a workplace per one million hours worked. | ||||
Scope exception | As under LTAFR | ||||
Data preparation | As under LTAFR | ||||
Limitation | We do not report LTIFR for independent contractors because of the difficulty and administrative burden in accurately recording headcount. |
Performance measure | Lost-time injury rate (LTIR) | ||||
Definition | LTIR is a standard OSHA metric that calculates the number of lost-time injuries occurring in a workplace per 200,000 hours worked. | ||||
Scope exception | As under LTAFR | ||||
Data preparation | As under LTAFR | ||||
Limitation | We do not report LTIR for independent contractors because of the difficulty and administrative burden in accurately recording headcount. |
Performance measure | Employee Engagement Index | ||||
Definition | The Employee Engagement Index is calculated as the percentage of respondents who answer positively to three questions in our Your Voice survey: I am proud to work for Diageo; I would recommend Diageo as a great place to work; I am extremely satisfied with Diageo as a place to work. | ||||
Scope exception | – | ||||
Reporting period | The data was collected between 6 and 31 March 2023, so the results are based on feedback from participants in that particular window. | ||||
Data preparation | The index is calculated from an anonymous annual survey run by an independent third-party. | ||||
Limitation | Contractors and employees on long-term leave are excluded. |
Ambition | Champion gender diversity, with an ambition to achieve 50% representation of women in leadership roles by 2030 | ||||
Performance measure | Percentage of female leaders globally | ||||
Definition | Leadership roles comprise Executive Committee members (Exec), Senior Leaders (SL), Level 2 (L2) and Level 3 (L3) roles, some of which will be vacant at any point in time. Employee type includes those on regular and fixed-term contracts. | ||||
Scope exception | Non-Executive Directors and extended workers (agency workers, independent contractors, freelancers and consultants) are not in scope, nor are joint ventures, joint operations or associates where Diageo does not have operational control. | ||||
Data preparation | The KPI is calculated as the average of filled leadership roles at the end of each of the four quarters across the fiscal year. The total leadership population is calculated from markets that collect gender information through Workday, enabling all employees in scope to self-disclose this information. Gender data is disclosed by employees themselves on a voluntary basis on our online Human Resources system (Workday). All leaders in scope have the ability to disclose gender information on Workday. | ||||
Limitations | Where employees have chosen not to declare their gender, this information is excluded from the gender representation data. |
Ambition | Champion ethnic diversity with an ambition to increase representation of leaders from ethnically diverse backgrounds to 45% by 2030 | ||||
Performance measure | Percentage of ethnically diverse leaders globally | ||||
Definition | Leadership roles comprise Executive Committee members (Exec), Senior Leaders (SL), Level 2 (L2) and Level 3 (L3) roles, some of which will be vacant at any point in time. Employee type includes those on regular and fixed-term contracts. We define ethnically diverse as those ethnic groups who are, or were historically, systematically under-represented, disenfranchised and/or economically excluded. Ethnically diverse people can be a majority or a minority in a country. | ||||
Scope exception | Non-Executive Directors and extended workers (agency workers, independent contractors, freelancers and consultants) are not in scope, nor are joint ventures, joint operations or associates where Diageo does not have operational control. | ||||
Data preparation | The KPI is calculated as the average of filled leadership roles at the end of each of the four quarters across the fiscal year. Ethnicity data is disclosed by employees on a voluntary basis on Workday. The relevant ethnicity fields are based on the country in which the individual is employed to ensure all are culturally relevant. Ethnicity is selected by individuals within the Leadership population from a pre-defined list that encompasses those ethnic types most readily seen within the specific country, based on local census and governmental data. We determined eight categories of ethnicity, considering Diageo’s market footprint, historic under-representation and alignment across regions: Asian, Black, Hispanic/Latin American, Indian, Indigenous, Middle Eastern and Turkish, Mixed and Other Ethnic Groups. If an individual has identified as another type of local ethnicity, the people analytics team manually assign them to the closest fit, for the purposes of this data gathering exercise only. Although employees based in India (Diageo India and Diageo Global Business Operations) are on the Workday system, they do not submit ethnicity data through Workday due to cultural sensitivities. So, self-disclosure is not the basis for data capture. Nationality is obtained by the local HR team through official identification documents by employees during the onboarding process and disclosed on Workday. Indian nationals are recorded by HR as being of Indian ethnicity. For India-based employees not of Indian nationality, the local HR director confirms their ethnicity through a confidential conversation with the individual. Based on a third-party study commissioned by Diageo, ‘Hispanic/Latin American’ is adopted as a term to categorise all people originating from the Latin America and Caribbean (LAC) region, including both indigenous and historically migrant populations. For the purposes of this data gathering exercise, all employees identifying as White with a LAC nationality have been recorded as Hispanic/Latin American. Non-LAC nationals are mapped to their identified ethnicity. | ||||
Limitations | Employees who identify as White, declined to self-identify or have not disclosed their ethnicity are not counted as ethnically diverse. |
Ambition | Accelerate inclusion and diversity in our value chain, increasing the share of our global spend with diverse-owned and disadvantaged businesses to 15% by 2030 | ||||
Performance measure | Percentage of spend with diverse-owned and disadvantaged businesses | ||||
Definition | We define diverse-owned suppliers as for-profit businesses majority owned and operated by under-represented communities, including (but not limited to) women, ethnic minorities, LGBTQIA+, people with disabilities and other minority groups identified in the markets where we source. Although we try to define diverse businesses consistently across all our markets, we recognise that diversity can differ across geographical regions, cultures and communities. This means that we define ethnic minority groups on a local level rather than global. In addition, in some markets, we have identified other regionally specific under-represented groups to make sure we are as inclusive as possible. Disadvantaged businesses include smallholder farmers. The UN’s Food and Agriculture Organization describes a smallholder farmer as one who farms an area below the median threshold of their country. For the purposes of supplier diversity reporting, we consider a smallholder farmer in Africa to be one that farms an area of less than ten acres. In other markets, we use locally recognised guidance, such as for agave farmers in Mexico where the Consejo Regulador del Tequila defines this as 50,000 plants. These suppliers, which can be individuals or farm families, are widely considered to be disadvantaged because of factors including their size and exposure to global commodity markets. Where our direct suppliers are not diverse-owned, we will consider spend with disadvantaged businesses in their own value chains. This is considered as tier two direct diverse spend. | ||||
Scope exception | Spend from categories that are deemed as non-influenceable is excluded from our baseline spend and diverse spend calculations. Examples include customs charges, taxation and charitable donations. | ||||
Data preparation | Our total global spend is extracted from our global enterprise software, SAP, and also from other local market enterprise resource planning systems, with spend identified as non-influenceable deducted from this amount. Our spend with diverse-owned and disadvantaged suppliers is calculated as a percentage of this total spend, and is considered our tier 1 diverse spend total. We ask our direct suppliers who are not diverse-owned to report their spend with diverse-owned business in their supply chains, and we calculate our tier 2 diverse total from these submissions. Our tier 1 and tier 2 spend calculations are combined and are reflected in the total spend reported against this target. | ||||
Limitations | - |
Ambition | Provide business and hospitality skills to 200,000 people, increasing employability and improving livelihoods through Learning for Life and our other skills programmes | ||||
Performance measure | Number of people reached through Learning for Life and other skills programmes | ||||
Definition | Our business and hospitality skills training programmes, including Learning for Life, aim to increase participants’ employability, improve livelihoods and support a thriving hospitality sector that works for all. The core curriculum includes modules on technical skills, life skills and inclusion and diversity. | ||||
Scope exception | Only markets running business and hospitality programmes are in scope. Markets with no such programmes are Australia, South Korea, Turkey and Eastern Europe. For entrepreneurship programmes to be included, the metric owner determines that the initiatives are appropriate to be included under the definition of providing business or hospitality skills related to our value chain. | ||||
Data preparation | We collate the number of beneficiaries of Learning for Life and other skills programmes through participant programme completion records (collected face to face or via our online training systems) maintained by Diageo programme managers or third-party delivery partners. We make sure double counting is avoided through programme registration and completion records. | ||||
Limitation | Accuracy relies on the quality of data provided by our third-party delivery partners. |
Ambition | Through the Diageo Bar Academy (DBA), we will provide 1.5 million training sessions delivering skills and resources to help build a thriving hospitality sector that works for all | ||||
Performance measure | Number of participations in training sessions delivered through Diageo Bar Academy | ||||
Definition | We measure the number of participations in DBA training sessions. One individual could receive multiple training sessions and each training participation would count towards our target. The DBA delivers a range of hospitality skills training to owners, managers, bartenders and wait staff with the objective of raising professional standards in the industry and helping professionals and businesses to thrive. Examples of course content include alcohol category knowledge, drink preparation skills, serving skills including responsible serving, business and bar management skills. Training includes physical, virtual, e-learning and masterclass tutorials. | ||||
Scope exception | - | ||||
Data preparation | Participants in all these DBA trainings are included in this performance measure. Diageo obtains data on the number of participations in trainings delivered in different ways depending on the types of course, as outlined below: •Physical training: attendance number in face-to-face sessions delivered to groups of participants •Virtual training: attendance number in live online sessions •E-learning: number of completions of self-directed learning courses •Masterclass: number of attendances at Live Tutorials and number of viewers of the recorded sessions From fiscal 23 we include online training data from China, where different digital platforms are used. | ||||
Limitation | Accuracy of data in case of physical trainings relies on third-party delivery partners. |
Ambition | Ensure 50% of beneficiaries of our community programmes are women and that our community programmes are designed to enhance diversity and inclusion of under-represented groups | ||||
Performance measure | Percentage of beneficiaries of our community programmes who are women | ||||
Definition | For Learning for Life (or equivalent) programmes, we measure the number and percentage of women who have gained business and hospitality skills. | ||||
Scope exception | Our scope currently includes female beneficiaries of registered business and hospitality skills programmes. In future, the scope of this target will also include female representation on our water sanitation and hygiene (WASH) committees and women who benefit from initiatives such as our smallholder farmer programmes. | ||||
Data preparation | For Learning for Life programmes (and other skills programmes), we collect data on the number of female participants through training records managed by Diageo programme managers or third-party delivery partners. | ||||
Limitation | Accuracy relies on the quality of data provided by our third-party delivery partners. |
Target | Reduce water use in our operations with a 40% improvement in water-use efficiency in water-stressed areas and a 30% improvement across the company | ||||
Performance measure | Water use efficiency per litre of product packaged (Litres/Litre) | ||||
Additional performance measure | Percentage improvement in litres of water used per litre of product packaged from the prior year | ||||
Definition | We prepare and report water withdrawal (use) from sites where we have operational control, using internally developed reporting methodologies based on the GRI Standards. Water withdrawal includes water obtained from ground water, surface water, mains supply and water delivered to the site by tanker, less any clean water provided back to local communities directly from a site. Uncontaminated water abstracted and returned to the same source under local consent, water abstracted from the sea, and rainwater collection are excluded from reported water withdrawal data. For water-stressed only: We define water-stressed areas using the World Resources Institute (WRI) Aqueduct tool, UN definitions and internal survey information. During the reporting period, we identified 40 of our sites as located within water-stressed areas. An assessment of our sites located in water-stressed areas is completed every two years and includes any new-build or acquired sites and excludes any sites divested. | ||||
Scope exception | The volume of water used at Diageo-operated agricultural lands – in Brazil, Mexico and Turkey – is quantified and reported separately. | ||||
Data preparation | Water withdrawal(use) is measured primarily from meter readings and invoices. In limited cases, estimates are used. Water efficiency per litre of packaged product is calculated by dividing total water withdrawal by the total packaged volume. We use litres of packaged product as the measure for comparison, because this indicates how much water has been used relative to the amount of finished product that has been packaged. We measure litres of packaged product by site and aggregate them at group level. For fiscal 23, the total volume packaged used for the denominator in efficiency indicators is 3,801,239,185 litres. | ||||
Limitation | In limited cases (e.g., failure or malfunction of water meters), estimates are used for water withdrawals. |
Target | Replenish more water than we use for our operations for all of our sites in water-stressed areas by 2026 | ||||
Performance measure | Annual volumetric replenishment capacity of projects developed (m3) | ||||
Definition | This performance measure is total water replenishment capacity created in fiscal 23 in water-stressed areas. We define replenishment (or volumetric water benefit), in line with the WRI, as the volume of water resulting from water stewardship activities that modify the hydrology in a beneficial way and/or help reduce shared water challenges, improve water stewardship outcomes, and meet the targets of Sustainable Development Goal 6. Replenishment capacity created by replenishment projects is calculated by reference to Diageo’s Water Replenishment Implementation Guide and Technical Protocol. When projects are delivered by a third-party and partially funded by Diageo, to avoid double counting, we only claim the proportion of volumetric capacity attributable to Diageo. We define water-stressed areas using the WRI Aqueduct tool (at the Minor Basin level), UN definitions and internal survey information. During the reporting period, we identified 40 of our sites as located within water-stressed areas. An assessment of our sites located in water-stressed areas is completed every two years and includes any new-build or acquired sites and excludes any sites divested. In order to be considered within the annual volumetric replenishment capacity, replenishment projects need to be in a water-stressed area (i.e., a site’s water catchment and/or water-stressed water basins from which we source local raw materials). The methodology for calculating the volume of water replenished for Diageo’s Water Replenishment Programme is based on the WRI’s Volumetric Water Benefit Accounting: A Method For Implementing and Valuing Water Stewardship Activities (2019, www.wri.org/research/volumetric-water-benefit-accounting-vwba-method-implementing-and-valuing-water-stewardship), which is a “comprehensive, standardised and science-based methodology to calculate and evaluate the benefits of water stewardship activities.” We detail the approach adopted and mathematical calculations applied in the Diageo Water Replenishment Programme Technical Protocol (2019) and provide a step-by-step implementation guide for markets to ensure consistency and robust controls: Diageo Water Replenishment Implementation Guide (2022). | ||||
Scope exception | — | ||||
Reporting period | 1 June to 31 May (previously 16 June to 15 June; see under Limitation, below). | ||||
Data preparation | Data required to calculate the indicative volume of water replenished is collected by an implementation partner and confirmed on completion of the project. This data is then validated by an external validator, and confirmed by the Diageo global lead for water. The Diageo Water Replenishment Implementation Guide provides templates for calculating water volume replenished – the estimated volumes are pre-validated by the global team before the project is implemented. Volumes are then validated again after the commissioning of the project. The project volumes for fiscal 26 are restated every year to reflect latest estimates and previous fiscal actuals. | ||||
Limitation | The complexity of gathering data from multiple projects globally means there can be a delay in reporting information. This means we currently include data from projects completed by 31 May 2023 to allow us to consolidate data by fiscal year end. |
Target | Invest in improving access to clean water, sanitation and hygiene (WASH) in communities near our sites and local sourcing areas in all of our water-stressed markets | ||||
Performance measure | Percentage of water-stressed markets with investment in WASH | ||||
Definition | This target tracks funding committed and spent on new WASH facilities to improve local community access to clean water, sanitation or hygiene in communities within the same water basin as our sites and local sourcing areas. We usually define Diageo’s markets as countries or locations where we operate or sell our products. To ensure comprehensive coverage, this KPI instead defines each market as an individual country, as set out on page 40. This means that the KPI considers water stress and investment at a country level, rather than at a market level. We define water-stressed areas using the WRI Aqueduct tool at the minor basin level, UN definitions and internal survey information. During the reporting period, we identified 40 of our sites across 12 countries as located in water-stressed areas, with 34 of these locations currently operational and six non-operational. An assessment of our sites located in water-stressed areas is completed every two years and includes any new-build or acquired sites and excludes any sites divested. The KPI is calculated as a percentage of the number of water-stressed markets in which Diageo has invested in WASH programmes in the same minor water basin as the site, divided by the total number of (in scope) water-stressed markets in which Diageo operates. | ||||
Scope exception | The scope excludes water-stressed markets in which Diageo operates where there is no demand or requirement for new community WASH projects (Turkey, Indonesia, Seychelles). These exclusions are verified by an expert implementing partner, and are based on government, WRI or World Health Organization information on WASH risk and availability. It also excludes Diageo WASH projects in markets that are not assessed as water stressed or where we do not have direct operations (for example, Myanmar). | ||||
Reporting period | 1 June to 31 May | ||||
Data preparation | Data on the WASH programmes, including locations, clean water yield, and the number of people (including the number of women) who benefit is calculated by NGO delivery partners and validated by an external validator. The KPI is calculated as a percentage, i.e., the total number of water-stressed markets in which Diageo has invested in WASH programmes divided by the total number of (in scope) water-stressed markets in which Diageo operates. | ||||
Limitation | The complexity of gathering data from multiple projects globally means there can be a delay in reporting information. This means we currently include data from projects completed by 31 May 2023 to allow us to consolidate data by fiscal year end. |
Target | Engage in collective action in all of our priority water basins to improve water accessibility, availability and quality and contribute to a net positive water impact | ||||
Performance measure | Percentage of priority water basins with collective action participation | ||||
Definition | We identify priority water basins using a Diageo criticality assessment (based on expert judgement and consumption volumes) and those facing high water risk, according to the WRI Aqueduct tool. These basins would benefit most from Diageo operational sites participating in collective action to address identified water challenges. Collective action in water stewardship includes multi-stakeholder water management initiatives or projects that involve interaction with government entities, local communities, NGOs and/or civil society organisations. | ||||
Scope exception | — | ||||
Data preparation | Priority water basins with collective action participation are reported at country level and tracked by the Diageo global metric owner. | ||||
Limitation | — |
Target | Become net zero carbon in our direct operations (Scope 1 and 2) | ||||
Performance measure | Total direct and indirect carbon emissions by weight (market/net based) (1000 tonnes CO2e) | ||||
Additional performance measures | Percentage reduction in absolute carbon emissions (direct and indirect carbon emissions by weight (market/net based)) from the prior year Market based (net) intensity ratio of GHG emissions (grams CO2e per litre of packaged product) | ||||
Definition | Scope 1 and 2 emissions are presented as the absolute GHG emissions (Direct – Scope 1 emissions from on-site energy consumption of fuel sources and Indirect – Scope 2 emissions from purchased electricity and heat) in 1000 tonnes CO2e using market-based reporting methodology. Market-based GHG emission intensity ratio is calculated as grammes per CO2e per litre, using direct operations packaged product volume in litres for fiscal 23. | ||||
Scope exception | We exclude minor quantities of Scope 1 emissions up to 0.5% of a site's emissions, to a maximum of 50 tonnes CO2e per emission source, as well as the carbon emissions associated with biogas flaring, since they are determined to be insignificant to our overall impacts. More details can be found in the Scope section of General Reporting methodology and boundaries, covering both non-environmental and environmental metric reporting. Biological/biogenic CO2 emissions from the combustion of bioenergy, and from direct operations processes such as fermentation to create alcohol are outside of scope and are reported separately. However, bioenergy CO2e emissions associated with methane and nitrous oxides that are not absorbed in bioenergy feedstock growth are included in Scope 1 emissions. We do not include carbon offsets or credits in the Scope 1 and 2 GHG emissions market-based approach. |
Data preparation | We calculate CO2e emissions data based on direct measurement of energy use (meter readings/invoices) for the majority of sites. Market-based emissions We externally report Scope 1 and 2 GHG emissions using metric tonnes of CO2e to compare the emissions from the seven main GHGs based on their global warming potential. We base our CO2e reduction targets and reporting protocols (since 2007) on market-based emissions. Direct (Scope 1) emissions We report fuel consumption by fuel type at site level using the environmental management system. Using calorific values, the fuel is then converted to energy consumption, in kilowatt hours (kWh), by fuel type, and is multiplied by the relevant CO2e emission factor to derive total CO2e emissions. Scope 1 emission factors for fuels are typically average fuel CO2e emissions factors and calorific values (the latest available at the end of the reporting year) from the UK Government Department for Energy Security and Net Zero. We apply product-specific factors, where available. Energy attribute certificates (EACs), derived from our distillery by-product feedstock and processed by a third-party to generate biomethane, form a component of our decarbonisation, together with purchased renewable gas EACs (i.e., from certificate-backed biomethane supplied indirectly through the natural gas grid). This is reflected in data preparation and aggregation. Indirect (Scope 2) emissions We report GHG emissions from electricity as market-based emissions in line with the WRI/WBCSD GHG Protocol Scope 2 guidance 2015. Electricity consumption recorded on our environmental management system is multiplied by emissions factors specified in EACs, contracts, power purchase agreements and supplier utility emissions, as detailed in the GHG Protocol’s Scope 2 guidance. We use GHG Protocol Scope 2 guidance to ensure EACs and associated contractual instruments meet the required standards. GHG emission factors relating to indirect emissions are updated with the latest available by end of the financial year. Fugitive and owned agricultural (Scope 1) emissions We calculate fugitive emissions based on the amount of emitted ozone-depleting substances and fluorinated gases, multiplied by the relevant emission factor to represent the global warming potential in tonnes of CO2e. Annually, each site reports the quantity (mass) of each material/gas emitted based any added/topped-up amount, reported via the environmental management system. The mass of each of emitted ozone-depleting substance and fluorinated gas is multiplied by the relevant emission factor and then added together to report the equivalent GHG emissions in tonnes of CO2e. We calculate agricultural emissions from direct operations owned and operated agricultural land only based on fertiliser use. The annual quantity (mass) of inorganic fertiliser is multiplied by the percentage of nitrogen content and by the relevant GHG emission and conversion factors (i.e., nitrogen to nitrous oxide, nitrous oxide GHG emission factor) to determine the equivalent tonnes CO2e emissions. Scope 1 and Scope 2 data aggregation Total direct and indirect carbon emissions by weight (market/net based) (1,000 tonnes CO2e) is the aggregation of Scope 1 and 2 GHG emissions with fugitive and owned agriculture emissions for external reporting annually. The percentage reduction in absolute carbon emissions (direct and indirect carbon emissions by weight (market/net based)) from the prior year is a percentage change calculation with reference to the corresponding prior year figure. Our net zero emissions target for 2030 remains consistent with earlier reporting protocols and is based on market-based emissions. GHG emission intensity ratios Total, aggregated direct operations market-based emissions (as detailed above) are divided, by the volume of direct operations packaged product reported in the same period. The market-based emissions are converted to grammes of CO2e and the volume of packaged product is reported in litres to generate relevant GHG emission intensity ratios in g CO2e/litre packaged. For fiscal 23, the total volume packaged used for the denominator in intensity indicators is 3,801,239,185 litres. | ||||
Limitation | Where invoices or site meter readings are not available – due, for example, to timing differences or metering issues – we estimate consumption. |
Target | Reduce our value chain (Scope 3) carbon emissions by 50% | ||||
Performance measure | Percentage reduction in absolute greenhouse gas emissions (ktCO2e) from the prior year | ||||
Definition | Scope 3 emissions are all indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions (but excluding Scope 2 emissions from purchased power and heat). The CO2e emissions relating to all categories of materials and services within our value chain include those from purchased raw materials, packaging, third-party manufacturers, consumer use and disposal. We aggregate emissions from upstream and downstream logistics and distribution, including Category 4 logistics emissions. In addition, we include Category 2 capital goods, Category 3 fuels and energy-related activities, Category 5 waste generated in operations, Category 6 business travel and Category 7 employee commuting. The emissions attributable to all categories of materials and services provide a total value chain, Scope 3 footprint. We do not include carbon offsets or credits in the Scope 3 GHG emissions market-based or location-based approach. | ||||
Scope exception | Any categories of Scope 3 emissions not listed in the definition above are not currently included in our external reporting. | ||||
Data preparation | We report Scope 3 GHG emissions using metric tonnes of CO2e to compare the emissions from the seven main GHGs based on their global warming potential. We base our CO2e reduction targets and reporting protocols on real consumption location-based emissions. We report in line with the WRI/WBCSD GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, 2011. We calculate CO2e emissions data on the basis of the volume of materials purchased, services provided, capital equipment purchased and distances travelled for upstream/downstream logistics. Supplier-specific emission factors and/or emission factors from literature are then applied to the component type to derive an absolute CO2e emissions volume, in metric tonnes. | ||||
Limitation | — |
Target | Use 100% renewable energy across all our direct operations | ||||
Performance measure | Change in percentage of renewable energy across our direct operations | ||||
Definition | We report total energy use and renewable energy use in megawatt hours (MWh) and/or terajoules (TJ). Total energy and renewable energy use are determined from direct and indirect energy consumption; energy generated on our sites and purchased energy. We determine direct energy (renewable/non-renewable) from the quantity of different fuel types (in metric tonnes, litres) of renewable and non-renewable fuels, and by applying the relevant calorific value (either from BEIS or the supplier). We measure indirect energy (renewable/non-renewable) in MWh and/or TJ from energy utilities or suppliers and/or by applying the relevant EACs. For avoidance of doubt, we include directly connected renewable energy generated on or near our sites, where all energy is used on site and no EACs are created (e.g., roof-mounted solar panels with all generated renewable electricity used on site). | ||||
Scope exception | We exclude minor energy sources that account for less than 0.5% of a site's overall Scope 1 and 2 emissions, up to a maximum of 50 t CO2e of individual emission source. They are considered immaterial to our overall impact. | ||||
Data preparation | We report total energy and renewable energy in MWh and/or TJ. We calculate direct and indirect energy data based on the direct measurement of energy use (meter readings/invoices for volumes of fuel supplied) for the majority of sites. We report fuel consumption by fuel type at site level using the environmental management system. Using calorific values, the fuel is then converted to energy consumption, in kWh, by fuel type and classified as either renewable or non-renewable based on fuel type or source. EACs, derived from our distillery by-product feedstock and processed by a third-party to generate biogas, together with purchased renewable gas EACs, are applied to relevant natural gas supplied to sites via a common carrier pipeline/network. This is reflected in data preparation and aggregation. All indirect energy generated and used on site, along with purchased indirect energy supplied through the grid is classified as renewable by the allocation of EACs, contracts, power purchase agreements and supplier specific utility factors, where relevant. To achieve the percentage of renewable energy use, we divide total renewable energy into direct and indirect energy supplies (in MWh) by total energy use, comprising all reported energy sources (MWh). | ||||
Limitation | Energy data is calculated based on direct measurement of energy use (meter readings/invoices) for the majority of sites. Where invoices are not available – due, for example, to timing differences – consumption is estimated. These instances account for less than 1% of the total. |
Target | Achieve zero waste in our direct operations and zero waste to landfill in our supply chain | ||||
Performance measure | Percentage reduction in total waste sent to landfill from the prior year | ||||
Definition | We record the type and quantity of all waste to landfill using our internal environmental reporting methodologies and GRI Standards. The definition of waste to landfill includes all hazardous waste and all unwanted or discarded material produced in solid, sludge or liquid form from manufacturing and office sites, except asbestos waste and/or other waste required by national or state legislation to be landfilled in either specified registered sites or other landfill sites. The definition includes all refuse, garbage, construction debris, treatment and process sludge, and materials that a site has been unable to reclaim, reuse or recover. We consider we have achieved zero waste to landfill if we have disposed of less than 0.2% of baseline waste-to-landfill volume during the year. Some 0.2% of baseline waste-to-landfill volume equates to 200 tonnes and excludes any waste we are required to dispose to landfill under local regulations. | ||||
Scope exception | — | ||||
Data preparation | Sites typically collect primary waste data from weighbridge tickets and invoices from waste handlers. Data is reported by waste type at site level using the environmental management system. | ||||
Limitation | Incidents may occur where small quantities of waste are sent to landfill by accident or because of operational changes, such as acquiring new sites, changing who handles our waste and issues with waste disposal suppliers. |
Target | Continue our work to reduce total packaging (delivering a 10% reduction in packaging weight) | ||||
Performance measure | Percentage reduction of total packaging (by weight) | ||||
Definition | We determine changes to packaging weight by quantifying the weight reduction in grammes multiplied by the number of product lines (SKUs) affected, on an annualised basis. | ||||
Scope exception | — | ||||
Data preparation | We collate packaging material volume data from enterprise software, including SAP and other sources, for total volume of packaging purchased and weight. We verify weight data through quarterly supplier questionnaires. | ||||
Limitation | Reporting relies on suppliers' technical information and supporting supplementary information. |
Target | Continue our work to increase recycled content on our packaging (increasing the percentage of recycled content of our packaging to 60%) | ||||
Performance measure | Change in percentage of recycled content (by weight) | ||||
Definition | We determine recycled content by establishing the percentage weight of non-virgin materials used to generate the packaging components. | ||||
Scope exception | — | ||||
Data preparation | We collate packaging material volume data from enterprise software, including SAP and other sources, for the total volume of packaging purchased. We collect recycled content data through quarterly supplier questionnaires and then consolidate and internally verify it. | ||||
Limitation | Reporting relies on suppliers' technical information and supporting supplementary information. |
Target | Ensure 100% of our packaging is widely recyclable (or reusable/compostable) | ||||
Performance measure | Percentage of packaging recyclable (by weight) | ||||
Definition | For fiscal 23, we are reporting our 'technically recyclable' number. This includes packaging that is technically possible to recycle, but does not take into account whether the collection, sorting and recycling of the package happens in practice, at scale and at viable cost. | ||||
Scope exception | — | ||||
Data preparation | Packaging material volume data is collated from enterprise software, including SAP (materials supplied) and other sources. It is then consolidated and internally verified, based on the best available information. | ||||
Limitation | Reporting relies on suppliers' technical information and supporting supplementary information. |
Target | Achieve 40% recycled content in our plastic bottles by 2025, and 100% by 2030 | ||||
Performance measure | Percentage of recycled content in our plastic bottles used | ||||
Definition | This is determined by quantifying the metric tonnes of non-virgin plastic in the total volume of all plastic bottles used at each site or market reported through a plastics database. | ||||
Scope exception | — | ||||
Data preparation | We collate plastic material volume data from enterprise software, including SAP and other sources, for the total volume of plastics purchased. We collect recycled content data through quarterly supplier questionnaires and then consolidate and internally verify it. | ||||
Limitation | Reporting relies on suppliers' technical information and supporting supplementary information. |
Target | Ensure 100% of our plastics are designed to be widely recyclable (or reusable/compostable) by 2025 | ||||
Performance measure | Percentage of recyclable (or reusable/compostable) plastic used | ||||
Definition | For fiscal 23, we are reporting our 'technically recyclable' number. This includes packaging that is technically possible to recycle, but does not take into account whether the collection, sorting and recycling of the package happens in practice, at scale and at viable cost. | ||||
Scope exception | — | ||||
Data preparation | Packaging material volume data is collated from enterprise software, including SAP (materials supplied) and other sources. It is then consolidated and internally verified, based on the best available information. | ||||
Limitation | Reporting relies on suppliers' technical information and supporting supplementary information. |
Target | Provide all of our local sourcing communities with agricultural skills and resources, building economic and environmental resilience (supporting 150,000 smallholder farmers) | ||||
Performance measure | Number of smallholder farmers in our supply chain supported by our smallholder farmer programme | ||||
Definition | We define a smallholder farmer as an individual or family farming an area of less than four hectares, for the primary markets in scope for this target. Our local sourcing communities are those where we engage directly with smallholder farmers, or indirectly through our suppliers. We define providing agricultural skills and inputs aimed at improving the methods and activities used by smallholder farmers to farm effectively and sustainably by providing training or providing or facilitating access to farm inputs such as certified seeds and mechanisation. Building economic and environmental resilience involves improving smallholders’ financial awareness, their family income and/or their understanding of how to act in a climate-smart way. | ||||
Scope exception | Our work with smallholder farmers is currently focussed around sorghum value chains in five countries in Africa. For Fiscal 23, we focussed efforts on Kenya. With this focus we have learned how to best deploy at scale. | ||||
Data preparation | Our sourcing teams and third-party partners track the number of smallholder farmers undergoing training and education or being provided with access to farm inputs both manually and directly into our new digital platform. The baseline year for our smallholder programmes is fiscal 22. The performance measure is refreshed each year, rather than accumulated over consecutive years, to evidence evolution of the number of smallholder supported on a year-by-year basis. | ||||
Limitation | Monitoring is likely to evolve over time, because collecting data at smallholder-farm level is complex, with a heavy reliance on individuals, a lack of publicly available high-impact datasets and a lack of real-time data. |
Target | Develop regenerative agriculture pilot programmes in five key sourcing landscapes | ||||
Performance measure | Number of regenerative agriculture pilot programmes initiated | ||||
Definition | We define our key sourcing landscapes as locations from which we source our most material crops, in terms of volumes sourced, product dependency (e.g., agave for tequila) and contribution to our Scope 3 GHG footprint. The programmes include: •On-the-ground programmes with farmers to test and integrate regenerative and low-carbon practices in crop production systems •On-farm measurements and data collection protocols to track improvements in soil health, soil carbon, biodiversity, water stewardship and farm profitability •Collaborative programmes with our suppliers, other commodity off-takers, expert agronomists, technology providers, NGOs or specialist organisations | ||||
Scope exception | — | ||||
Data preparation | Data is consolidated for each pilot programme, tracking KPIs and reporting on improvements against key outcomes. The baseline year is fiscal 23. The baseline year for assessing the results of our first pilot programme, Guinness barley, is fiscal 23. | ||||
Limitation | — |
Other additional information |
1.1 | |||||
2.1 | Indenture, dated as of 3 August 1998, among Diageo Capital plc, Diageo plc and The Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form F-1 (File No. 333-8874) filed with the Securities and Exchange Commission on 24 July 1998 (pages 365 to 504 of paper filing)).(i) | ||||
2.2 | Indenture, dated as of 1 June 1999, among Diageo Investment Corporation, Diageo plc and The Bank of New York Mellon (incorporated by reference to Exhibit 2.2 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 15 November 2001 (pages 241 to 317 of paper filing)).(i) | ||||
2.3 | |||||
2.4 | |||||
4.1 | |||||
4.2 | |||||
4.3 | |||||
4.4 | |||||
4.5 | |||||
4.6 | |||||
4.7 | |||||
4.8 | |||||
4.9 | |||||
6.1 | Description of earnings per share (included in the section | ||||
8.1 | |||||
12.1 | |||||
12.2 | |||||
13.1 | |||||
13.2 | |||||
15.1 | |||||
15.2 | |||||
101.INS | Inline XBRL Instance Document | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema | ||||
101.CAL | Inline XBRL Taxonomy Extension Schema Calculation Linkbase | ||||
101.DEF | Inline XBRL Taxonomy Extension Schema Definition Linkbase | ||||
101.LAB | Inline XBRL Taxonomy Extension Schema Label Linkbase | ||||
101.PRE | Inline XBRL Taxonomy Extension Schema Presentation Linkbase |
DIAGEO plc | ||
(REGISTRANT) | ||
/s/ Lavanya Chandrashekar | ||
Name: Lavanya Chandrashekar | ||
Title: Chief Financial Officer | ||
Term used in UK annual report | US equivalent or definition | ||||
Associates | Entities accounted for under the equity method | ||||
American Depositary Receipt (ADR) | Receipt evidencing ownership of an ADS | ||||
American Depositary Share (ADS) | Registered negotiable security, listed on the New York Stock Exchange, representing four Diageo plc ordinary shares of 28101/108 pence each | ||||
Called up share capital | Common stock | ||||
Capital redemption reserve | Other additional capital | ||||
Company | Diageo plc | ||||
CPI | Consumer price index | ||||
Creditors | Accounts payable and accrued liabilities | ||||
Debtors | Accounts receivable | ||||
Employee share schemes | Employee stock benefit plans | ||||
Employment or staff costs | Payroll costs | ||||
Equivalent units | An equivalent unit represents one nine-litre case of spirits, which is approximately 272 servings. A serving comprises 33ml of spirits, 165ml of wine, or 330ml of ready to drink or beer. To convert volume of products other than spirits to equivalent units: beer in hectolitres divide by 0.9, wine in nine-litre cases divide by five, ready to drink in nine-litre cases divide by 10, and certain pre-mixed products classified as ready to drink in nine-litre cases divide by five. | ||||
Euro, €, ¢ | Euro currency | ||||
Exceptional items | Items that, in management’s judgement, need to be disclosed separately by virtue of their size or nature | ||||
Excise duty | Tax charged by a sovereign territory on the production, manufacture, sale or distribution of selected goods (including imported goods) within that territory. It is generally based on the quantity or alcohol content of goods, rather than their value, and is typically applied to alcohol products and fuels. | ||||
Finance lease | Capital lease | ||||
Financial year | Fiscal year | ||||
Free cash flow | Net cash flow from operating activities aggregated with net purchase and disposal of property, plant and equipment and computer software and with movements in loans | ||||
Freehold | Ownership with absolute rights in perpetuity | ||||
GAAP | Generally accepted accounting principles | ||||
Group and Diageo | Diageo plc and its consolidated subsidiaries | ||||
IFRS | International Financial Reporting Standards as adopted for use in the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board | ||||
Impact Databank, IWSR, IRI, Beverage Information Group and Plato Logic | Information source companies that research the beverage alcohol industry and are independent from industry participants | ||||
Net sales | Sales after deducting excise duties | ||||
Noon buying rate | Buying rate at noon in New York City for cable transfers in sterling as certified for customs purposes by the Federal Reserve Bank of New York | ||||
Operating profit | Net operating income | ||||
Organic movement | At level foreign exchange rates and after adjusting for exceptional items, acquisitions and disposals for continuing operations | ||||
Own shares | Treasury stock | ||||
Pound sterling, sterling, £, pence, p | UK currency | ||||
Price/mix | Price/mix is the number of percentage points by which the organic movement in net sales exceeds the organic movement in volume. The difference arises because of changes in the composition of sales between higher and lower priced variants/markets or as price changes are implemented. | ||||
Profit | Earnings |
Term used in UK annual report | US equivalent or definition | ||||
Profit for the year | Net income | ||||
Provisions | Accruals for losses/contingencies | ||||
Reserves | Accumulated earnings, other comprehensive income and additional paid in capital | ||||
RPI | Retail price index | ||||
Ready to drink | Ready to drink products. Ready to drink also include ready to serve products, such as pre-mix cans in some markets, and progressive adult beverages in the United States and certain markets supplied by the United States. | ||||
SEC | US Securities and Exchange Commission | ||||
Share premium | Additional paid in capital or paid in surplus | ||||
Shareholders’ funds | Shareholders’ equity | ||||
Shareholders | Stockholders | ||||
Shares | Common stock | ||||
Shares and ordinary shares | Diageo plc’s ordinary shares | ||||
Shares in issue | Shares issued and outstanding | ||||
Trade and other payables | Accounts payable and accrued liabilities | ||||
Trade and other receivables | Accounts receivable | ||||
US dollar, US$, $, ¢ | US currency |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
American Depositary Shares | DEO | New York Stock Exchange | ||||||
Ordinary shares of 28101/108 pence each | New York Stock Exchange(i) |