Document and Entity Information
Document and Entity Information | 6 Months Ended |
Dec. 31, 2018 | |
Document - Document and Entity Information [Abstract] | |
Document Type | 6-K |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2018 |
Document Fiscal Year Focus | 2,019 |
Document Fiscal Period Focus | H1 |
Trading Symbol | DEO |
Entity Registrant Name | DIAGEO PLC |
Entity Central Index Key | 835,403 |
Current Fiscal Year End Date | --06-30 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Income Statement - GBP (£) £ in Millions, shares in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Profit or loss [abstract] | ||
Sales | £ 10,363 | £ 9,934 |
Excise duties | (3,455) | (3,404) |
Net sales | 6,908 | 6,530 |
Cost of sales | (2,508) | (2,439) |
Gross profit | 4,400 | 4,091 |
Marketing | (1,054) | (968) |
Other operating expenses | (916) | (933) |
Operating profit | 2,430 | 2,190 |
Non-operating items | 146 | |
Finance income | 181 | 113 |
Finance charges | (309) | (267) |
Share of after tax results of associates and joint ventures | 179 | 168 |
Profit before taxation | 2,627 | 2,204 |
Taxation | (560) | (77) |
Profit for the period | 2,067 | 2,127 |
Attributable to: | ||
Equity shareholders of the parent company | 1,976 | 2,058 |
Non-controlling interests | 91 | 69 |
Profit for the period | £ 2,067 | £ 2,127 |
Weighted average number of shares | ||
Shares in issue excluding own shares | 2,442 | 2,505 |
Dilutive potential ordinary shares | 10 | 12 |
Weighted average number of shares | 2,452 | 2,517 |
Basic earnings per share | £ 0.809 | £ 0.822 |
Diluted earnings per share | £ 0.806 | £ 0.818 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statement Of Comprehensive Income - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net remeasurement of post employment plans | ||
- group | £ 183 | £ (85) |
- associates and joint ventures | 1 | 5 |
Tax on post employment plans | (34) | (6) |
Other comprehensive income that will not be reclassified to profit or loss, net of tax, Total | 150 | (86) |
Exchange differences on translation of foreign operations | ||
- group | 265 | (492) |
- associates and joint ventures | 43 | 33 |
- non-controlling interests | 42 | (54) |
Net investment hedges | (99) | 85 |
Tax on exchange differences - group | 1 | 11 |
Effective portion of changes in fair value of cash flow hedges | ||
Tax on effective portion of changes in fair value of cash flow hedges | (2) | 6 |
Hyperinflation adjustment | (4) | 13 |
Tax on hyperinflation adjustment | 2 | (6) |
Other comprehensive income that will be reclassified to profit or loss, net of tax, Total | 235 | (378) |
Other comprehensive profit/(loss), net of tax, for the period | 385 | (464) |
Profit for the period | 2,067 | 2,127 |
Total comprehensive income for the period | 2,452 | 1,663 |
Attributable to: | ||
Equity shareholders of the parent company | 2,319 | 1,648 |
Non-controlling interests | 133 | 15 |
Total comprehensive income for the period | 2,452 | 1,663 |
Cash flow hedges [member] | Foreign currency debt [member] | ||
Effective portion of changes in fair value of cash flow hedges | ||
Effective portion of changes in fair value of cash flow hedges | 115 | (96) |
- recycled to income statement | (71) | 49 |
Cash flow hedges [member] | Transaction exposure hedging [member] | ||
Effective portion of changes in fair value of cash flow hedges | ||
Effective portion of changes in fair value of cash flow hedges | (66) | 53 |
- recycled to income statement | 20 | 15 |
Cash flow hedges [member] | Commodity price risk [member] | ||
Effective portion of changes in fair value of cash flow hedges | ||
Effective portion of changes in fair value of cash flow hedges | (6) | 1 |
Cash flow hedges [member] | Associates [member] | ||
Effective portion of changes in fair value of cash flow hedges | ||
Effective portion of changes in fair value of cash flow hedges | £ (5) | £ 4 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Balance Sheet - GBP (£) £ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Non-current assets | |||
Intangible assets | £ 12,555 | £ 12,572 | £ 12,807 |
Property, plant and equipment | 4,238 | 4,089 | 3,953 |
Biological assets | 26 | 23 | 21 |
Investments in associates and joint ventures | 3,230 | 3,009 | 3,053 |
Other investments | 48 | 46 | 49 |
Other receivables | 59 | 46 | 56 |
Other financial assets | 281 | 182 | 184 |
Deferred tax assets | 106 | 122 | 179 |
Post employment benefit assets | 1,036 | 935 | 300 |
Non-current assets, Total | 21,579 | 21,024 | 20,602 |
Current assets | |||
Inventories | 5,276 | 5,015 | 4,919 |
Trade and other receivables | 3,541 | 2,678 | 3,431 |
Assets held for sale | 83 | 24 | |
Corporate tax receivables | 12 | 65 | 107 |
Other financial assets | 12 | 35 | 123 |
Cash and cash equivalents | 1,591 | 874 | 920 |
Current assets, Total | 10,515 | 8,691 | 9,500 |
Total assets | 32,094 | 29,715 | 30,102 |
Current liabilities | |||
Borrowings and bank overdrafts | (1,742) | (1,828) | (2,378) |
Other financial liabilities | (386) | (230) | (324) |
Trade and other payables | (4,415) | (3,950) | (4,142) |
Liabilities held for sale | (32) | ||
Corporate tax payables | (446) | (243) | (300) |
Provisions | (107) | (109) | (109) |
Current liabilities | (7,128) | (6,360) | (7,253) |
Non-current liabilities | |||
Borrowings | (10,272) | (8,074) | (7,647) |
Other financial liabilities | (154) | (212) | (426) |
Other payables | (250) | (209) | (196) |
Provisions | (295) | (288) | (286) |
Deferred tax liabilities | (2,123) | (1,987) | (1,786) |
Post employment benefit liabilities | (739) | (872) | (818) |
Non-current liabilities | (13,833) | (11,642) | (11,159) |
Total liabilities | (20,961) | (18,002) | (18,412) |
Net assets | 11,133 | 11,713 | 11,690 |
Equity | |||
Share capital | 767 | 780 | 789 |
Share premium | 1,350 | 1,349 | 1,349 |
Other reserves | 2,341 | 2,133 | 2,362 |
Retained earnings | 4,908 | 5,686 | 5,422 |
Equity attributable to equity shareholders of the parent company | 9,366 | 9,948 | 9,922 |
Non-controlling interests | 1,767 | 1,765 | 1,768 |
Total equity | £ 11,133 | £ 11,713 | £ 11,690 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statement of Changes in Equity - GBP (£) £ in Millions | Total | Share capital [member] | Share premium [member] | Other reserves [member] | Own shares [member] | Other retained earnings [member] | Total [member] | Equity attributable to parent company shareholders [member] | Non-controlling interests [member] |
Beginning balance at Jun. 30, 2017 | £ 12,028 | £ 797 | £ 1,348 | £ 2,693 | £ (2,176) | £ 7,651 | £ 5,475 | £ 10,313 | £ 1,715 |
Adoption of IFRS 15 (note 1) | (71) | (69) | (69) | (69) | (2) | ||||
Profit for the period | 2,127 | 2,058 | 2,058 | 2,058 | 69 | ||||
Other comprehensive income | (464) | (331) | (79) | (79) | (410) | (54) | |||
Employee share schemes | (5) | (2) | (3) | (5) | (5) | ||||
Share-based incentive plans | 21 | 21 | 21 | 21 | |||||
Share-based incentive plans in respect of associates | 5 | 5 | 5 | 5 | |||||
Tax on share-based incentive plans | 7 | 7 | 7 | 7 | |||||
Shares issued | 1 | 1 | 1 | ||||||
Purchase of non-controlling interests | (70) | (70) | (70) | 70 | |||||
Purchase of rights issue of non-controlling interests | 26 | (5) | (5) | (5) | 31 | ||||
Change in fair value of put options | (32) | (32) | (32) | (32) | |||||
Share buyback programme | (924) | (8) | (916) | (916) | (924) | ||||
Dividends paid | (1,029) | (968) | (968) | (968) | (61) | ||||
Ending balance at Dec. 31, 2017 | 11,690 | 789 | 1,349 | 2,362 | (2,178) | 7,600 | 5,422 | 9,922 | 1,768 |
Beginning balance at Jun. 30, 2018 | 11,713 | 780 | 1,349 | 2,133 | (2,144) | 7,830 | 5,686 | 9,948 | 1,765 |
Profit for the period | 2,067 | 1,976 | 1,976 | 1,976 | 91 | ||||
Other comprehensive income | 385 | 195 | 148 | 148 | 343 | 42 | |||
Employee share schemes | 47 | 73 | (26) | 47 | 47 | ||||
Share-based incentive plans | 25 | 25 | 25 | 25 | |||||
Share-based incentive plans in respect of associates | 3 | 3 | 3 | 3 | |||||
Shares issued | 1 | 1 | 1 | ||||||
Purchase of non-controlling interests | (703) | (627) | (627) | (627) | (76) | ||||
Change in fair value of put options | (2) | (2) | (2) | (2) | |||||
Share buyback programme | (1,355) | (13) | 13 | (1,355) | (1,355) | (1,355) | |||
Dividends declared | (1,048) | (993) | (993) | (993) | (55) | ||||
Ending balance at Dec. 31, 2018 | £ 11,133 | £ 767 | £ 1,350 | £ 2,341 | £ (2,071) | £ 6,979 | £ 4,908 | £ 9,366 | £ 1,767 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statement of Cash Flows £ in Millions, $ in Millions | 6 Months Ended | |
Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) | |
Cash flows from operating activities | ||
Profit for the period | £ 2,067 | £ 2,127 |
Taxation | 560 | 77 |
Share of after tax results of associates and joint ventures | (179) | (168) |
Net finance charges | 128 | 154 |
Non-operating items | (146) | |
Operating profit | 2,430 | 2,190 |
Increase in inventories | (245) | (162) |
Increase in trade and other receivables | (829) | (908) |
Increase in trade and other payables and provisions | 418 | 540 |
Net increase in working capital | (656) | (530) |
Depreciation, amortisation and impairment | 185 | 187 |
Dividends received | 3 | 3 |
Post employment payments less amounts included in operating profit | (61) | (66) |
Other items | 37 | |
Adjustments to reconcile profit (loss), Total | 164 | 124 |
Cash generated from operations | 1,938 | 1,784 |
Interest received | 101 | 76 |
Interest paid | (206) | (204) |
Taxation paid | (229) | (408) |
Net total of interest received, interest paid and taxation paid | (334) | (536) |
Net cash inflow from operating activities | 1,604 | 1,248 |
Cash flows from investing activities | ||
Disposal of property, plant and equipment and computer software | 13 | 9 |
Purchase of property, plant and equipment and computer software | (271) | (210) |
Movements in loans and other investments | (18) | |
Sale of businesses and brands | 419 | 2 |
Acquisition of businesses | (32) | (561) |
Net cash inflow/(outflow) from investing activities | 129 | (778) |
Cash flows from financing activities | ||
Share buyback programme | (1,275) | (742) |
Proceeds from issue of share capital | 1 | 1 |
Net sale/(purchase) of own shares for share schemes | 25 | (28) |
Dividends paid to non-controlling interests | (76) | (61) |
Rights issue proceeds from non-controlling interests | 26 | |
Proceeds from bonds | 1,754 | 1,136 |
Repayment of bonds | (948) | |
Purchase of shares of non-controlling interests | (697) | |
Net movements in other borrowings | 220 | 911 |
Equity dividends paid | (993) | (968) |
Net cash outflow from financing activities | (1,041) | (673) |
Net increase/(decrease) in net cash and cash equivalents | 692 | (203) |
Exchange differences | 14 | (28) |
Net cash and cash equivalents at beginning of the period | 693 | 917 |
Net cash and cash equivalents at end of the period | 1,399 | 686 |
Net cash and cash equivalents consist of: | ||
Cash and cash equivalents | 1,591 | 920 |
Bank overdrafts | (192) | (234) |
Net cash and cash equivalents at end of the period | £ 1,399 | £ 686 |
Basis of preparation
Basis of preparation | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Basis of preparation | 1. Basis of preparation This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the EU. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group’s condensed consolidated financial statements for the periods presented. The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the IASB and as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company’s published consolidated financial statements for the year ended 30 June 2018 except for the impact of the adoption of new accounting standards and amendments explained below. IFRS is subject to ongoing review and endorsement by the EU or possible amendment by interpretative guidance and the issuance of new standards by the IASB. In preparing these condensed interim financial statements, the significant judgements made by management when applying the group’s accounting policies and the significant areas where estimates were required were the same as those that applied to the consolidated financial statements for the year ended 30 June 2018, with the exception of changes in estimates disclosed in note 13 – Contingent liabilities and legal proceedings. Having reassessed the principal risks the directors considered it appropriate to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements. New accounting standards The following amendments to the accounting standards, issued by the IASB or International Financial Reporting Interpretations Committee (IFRIC) and endorsed by the EU, have been adopted by the group from 1 July 2018 with no impact on the group’s consolidated results, financial position or disclosures: • Amendments to IAS 40 – Transfers of Investment Property • Amendments to IFRS 2 – Classification and Measurement of Share-based payment transactions • Amendments to IFRS 4 – Applying IFRS 9 with IFRS 4 Insurance contracts • Improvements to IFRS 1 – First-time Adoption of International Financial Reporting Standards: Deletion of short-term exemptions for first-time adopters • Improvements to IAS 28 – Investments in Associates and Joint Ventures: Measuring investees at fair value through profit or loss: an investment-by-investment IFRS 15 - Revenue from contracts with customers The following standard issued by the IASB and endorsed by the EU, have not yet been adopted by the group: IFRS 16 – Leases sheet as right of use assets and depreciated on a straight line basis. The liability, recognised as part of net borrowings, will be measured at a discounted value and any interest will be charged to finance charges in the income statement. Therefore, the charge to the income statement for the operating lease payment will be replaced with depreciation on the right of use asset and the interest charge inherent in the lease. The group will implement IFRS 16 from 1 July 2019 by applying the modified retrospective method, meaning that the comparative figures in the financial statements for the year ending 30 June 2020 will not be restated to show the impact of IFRS 16. The operating leases which will be recorded on the balance sheet following implementation of IFRS 16 are principally in respect of warehouses, office buildings, plant and machinery, cars and distribution vehicles. The group has decided to reduce the complexity of implementation to take advantage of a number of practical expedients on transition on 1 July 2019 namely: (i) to measure the right of use asset at the same value as the lease liability (ii) to apply the short term and low value exemptions (iii) to treat, wherever possible, services provided as an income statement item and only capitalise the lease payment amounts in respect of the asset The anticipated impact of the standard on the group is not yet known though is not expected to be material on the income statement or net assets. Assets and liabilities will be grossed up for the net present value of the outstanding operating lease liabilities excluding low value assets and short term leases as at 1 July 2019. Operating lease commitments were £312 million as at 30 June 2018. The following standard, issued by the IASB has not been endorsed by the EU and has not been adopted by the group: IFRS 17 – Insurance Contracts There are a number of other amendments and clarifications to IFRS, effective in future years, which are not expected to significantly impact the group’s consolidated results or financial position. |
Segmental information
Segmental information | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Segmental information | 2. Segmental information The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating decision maker). 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 International Supply Centre (ISC), which manufactures products for other group companies and includes the production sites in the United Kingdom, Ireland, Italy and Guatemala. Continuing operations also include the Corporate function. Corporate revenues and costs are in respect of central costs, including finance, marketing, corporate relations, human resources and legal, as well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the ISC. They also include rents receivable and payable in respect of properties not used by the group in the manufacture, sale or distribution of premium drinks. Diageo uses shared services operations, including captive and outsourced centres, to deliver transaction processing activities for markets and operational entities. These centres are located in Hungary, Kenya, Colombia, the Philippines and India. The captive business service centre in Budapest also performs certain central finance activities, including elements of financial planning and reporting and treasury. The results of shared services operations are recharged to the regions. The segmental information for net sales and operating profit before exceptional items is reported at budgeted exchange rates in line with management reporting. For management reporting purposes the group measures the current period at, and restates the prior period net sales and operating profit to, the current year’s budgeted exchange rates. These exchange rates are set prior to the financial year as part of the financial planning process and provide a consistent exchange rate to measure the performance of the business throughout the year. 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 year ended 30 June 2018. In addition, for management reporting purposes Diageo presents separately the result of acquisitions and disposals completed in the current and prior year 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. Six months ended North Europe Africa Latin Asia ISC Eliminate Total Corporate Total 31 December 2018 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 2,667 2,879 1,160 864 2,765 923 (923 ) 10,335 28 10,363 Net sales At budgeted exchange rates (i) 2,108 1,629 784 648 1,379 980 (920 ) 6,608 29 6,637 Acquisitions and disposals 68 1 1 — 1 — — 71 — 71 ISC allocation 7 35 3 8 7 (60 ) — — — — Retranslation to actual exchange rates 173 (32 ) 33 16 11 3 (3 ) 201 (1 ) 200 Net sales 2,356 1,633 821 672 1,398 923 (923 ) 6,880 28 6,908 Operating profit/(loss) At budgeted exchange rates (i) 953 581 143 221 385 88 — 2,371 (77 ) 2,294 Acquisitions and disposals 40 1 1 — — — — 42 — 42 ISC allocation 10 46 4 19 9 (88 ) — — — — Retranslation to actual exchange rates 98 (14 ) 5 14 15 — — 118 (3 ) 115 Operating profit/(loss) before exceptional items 1,101 614 153 254 409 — — 2,531 (80 ) 2,451 Exceptional items — — — — — — — — (21 ) (21 ) Operating profit/(loss) 1,101 614 153 254 409 — — 2,531 (101 ) 2,430 Non-operating 146 Net finance charges (128 ) Share of after tax results of associates and joint ventures 179 Profit before taxation 2,627 Six months ended North Europe Africa Latin Asia ISC Eliminate Total Corporate Total 31 December 2017 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 2,467 2,887 1,088 840 2,625 797 (797 ) 9,907 27 9,934 Net sales At budgeted exchange rates (i) 2,151 1,521 753 629 1,306 827 (778 ) 6,409 24 6,433 Acquisitions and disposals 20 — — — — — — 20 — 20 ISC allocation 7 28 3 6 5 (49 ) — — — — Retranslation to actual 5 50 18 14 (13 ) 19 (19 ) 74 3 77 Net sales 2,183 1,599 774 649 1,298 797 (797 ) 6,503 27 6,530 Operating profit/(loss) At budgeted exchange rates (i) 1,038 541 116 208 325 74 — 2,302 (89 ) 2,213 Acquisitions and disposals 2 — — — — — — 2 — 2 ISC allocation 10 43 3 10 8 (74 ) — — — — Retranslation to actual (23 ) 15 1 — (17 ) — — (24 ) (1 ) (25 ) Operating profit/(loss) 1,027 599 120 218 316 — — 2,280 (90 ) 2,190 Net finance charges (154 ) Share of after tax results of associates and joint ventures 168 Profit before taxation 2,204 (i) These items represent the IFRS 8 performance measures for the geographical and ISC segments. (1) The net sales figures for ISC reported to the Executive Committee primarily comprise inter-segmental sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the ISC segment to the other operating segments, inter-segmental sales are not material. (2) The group’s net finance charges are managed centrally and are not attributable to individual operating segments. (3) Approximately 40% of annual net sales occur in the last four months of each calendar year. Weighted average exchange rates used in the translation of income statements were US dollar – £1 = $1.29 (2017 – £1 = $1.32) and euro – £1 = €1.12 (2017 – £1 = €1.12). Exchange rates used to translate assets and liabilities at the balance sheet date were US dollar – £1 = $1.27 (31 December 2017 – £1 = $1.35, 30 June 2018 – £1 = $1.32) and euro – £1 = €1.11 (31 December 2017 – £1 = €1.12, 30 June 2018 – £1 = €1.13). The group uses foreign exchange transaction hedges to mitigate the effect of exchange rate movements. |
Exceptional items
Exceptional items | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Exceptional items | 3. Exceptional items Exceptional items are those which, in management’s judgement, need to be disclosed separately by virtue of their size or nature in order for the user to obtain a proper understanding of the financial information. See page 49 for the definition of exceptional items and the criteria used to determine whether an exceptional item is accounted for as operating or non-operating. Six months ended Six months ended Items included in operating profit GMP equalisation (21 ) — (21 ) Non-operating Portfolio of 19 brands 154 — United National Breweries (8 ) — 146 — Exceptional items before taxation 125 — Items included in taxation Tax on exceptional operating items 4 — Tax on exceptional non-operating (34 ) — Exceptional taxation — 360 (30 ) 360 Total exceptional items 95 360 Attributable to: Equity shareholders of the parent company 95 360 Non-controlling — — Total exceptional items 95 360 Exceptional items included in operating profit are charged to other operating expenses. |
Finance income and charges
Finance income and charges | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Finance income and charges | 4. Finance income and charges Six months ended Six months ended Interest income 102 74 Fair value gain on financial instruments 59 29 Total interest income 161 103 Interest charges (224 ) (208 ) Fair value loss on financial instruments (57 ) (25 ) Total interest charges (281 ) (233 ) Net interest charges (120 ) (130 ) Net finance income in respect of post employment plans in surplus 14 4 Hyperinflation adjustment in respect of Venezuela (a) 6 6 Total other finance income 20 10 Net finance charge in respect of post employment plans in deficit (12 ) (11 ) Unwinding of discounts (8 ) (6 ) Interest in respect of tax (5 ) — Change in financial liability (Level 3) (2 ) (16 ) Other finance charges (1 ) (1 ) Total other finance charges (28 ) (34 ) Net other finance charges (8 ) (24 ) (a) Hyperinflation adjustment in respect of Venezuela Venezuela is a hyper-inflationary economy where the government maintains a regime of strict currency controls with multiple foreign currency rate systems. Access to US dollars on these exchange systems is very limited. In March 2018 Venezuela’s President ordered a re-denomination The following table presents the contribution of the group’s Venezuelan operations to the consolidated income statement, cash flow statement and net assets for the six months ended 31 December 2018 and with the amounts that would have resulted if the DICOM exchange rate had been applied for consolidation. At estimated At DICOM Net sales — 1 Operating profit — — Other finance income - hyperinflation adjustment 6 72 Net cash inflow from operating activities — 1 Net assets 65 843 |
Taxation
Taxation | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Taxation | 5. Taxation For the six months ended 31 December 2018, the £560 million taxation charge (2017 – £77 million) comprises a UK tax charge of £134 million (2017 – £64 million) and a foreign tax charge of £426 million (2017 – £13 million). Exceptional items in the six months ended 31 December 2018 comprised a tax charge of £30 million in respect of the disposal of a portfolio of 19 brands to Sazerac less a tax credit in respect of the equalisation of benefits in the Diageo Pension Scheme. |
Inventories
Inventories | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Inventories | 6. Inventories 31 December £ million 30 June £ million 31 December £ million Raw materials and consumables 327 321 352 Work in progress 51 44 46 Maturing inventories 4,201 4,028 3,904 Finished goods and goods for resale 697 622 617 5,276 5,015 4,919 |
Net borrowings
Net borrowings | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Net borrowings | 7. Net borrowings 31 December £ million 30 June 31 December £ million Borrowings due within one year and bank overdrafts (1,742 ) (1,828 ) (2,378 ) Borrowings due after one year (10,272 ) (8,074 ) (7,647 ) Fair value of foreign currency forwards and swaps 195 107 82 Fair value of interest rate hedging instruments 20 (15 ) (10 ) Finance lease liabilities (144 ) (155 ) (165 ) (11,943 ) (9,965 ) (10,118 ) Cash and cash equivalents 1,591 874 920 (10,352 ) (9,091 ) (9,198 ) |
Reconciliation of movement in n
Reconciliation of movement in net borrowings | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Reconciliation of movement in net borrowings | 8. Reconciliation of movement in net borrowings Six months ended Six months ended Net increase/(decrease) in cash and cash equivalents before exchange 692 (203 ) Net increase in bonds and other borrowings (1,974 ) (1,099 ) Net increase in net borrowings from cash flows (1,282 ) (1,302 ) Exchange differences on net borrowings (32 ) 47 Other non-cash 53 (51 ) Net borrowings at beginning of the period (9,091 ) (7,892 ) Net borrowings at end of the period (10,352 ) (9,198 ) In the six months ended 31 December 2018, the group issued bonds of €2,000 million (£1,754 million) under its European Debt Issuance Programme and in the comparable period the group issued bonds of €1,275 million (£1,136 million) and repaid bonds of $1,250 million (£948 million). All bonds, medium-term notes and commercial paper issued by Diageo plc’s 100% owned subsidiaries are fully and unconditionally guaranteed by Diageo plc. |
Financial instruments
Financial instruments | 6 Months Ended |
Dec. 31, 2018 | |
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Financial instruments | 9. Financial instruments 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 expire, held by Industrias Licoreras de Guatemala (ILG) to sell the remaining 50% equity stake in Rum Creations & Products Inc, the owner of the Zacapa rum brand, to Diageo. The liability is fair valued and as at 31 December 2018 an amount of £171 million (30 June 2018 - £164 million) is recognised as a liability with changes in fair value included in retained earnings. As the valuation of this option uses assumptions not observable in the market, it is categorised as level 3 in the hierarchy. As at 31 December 2018 because it is unknown when or if ILG will exercise the option the liability is measured as if the exercise date is on the last day of the current financial year considering forecast future performance (in prior years the potential liability also assumed a possible exercise date). The option is sensitive to reasonably possible changes in assumptions. If the option were to be exercised as at 30 June 2020, the fair value of the liability would increase by approximately £20 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 six months ended 31 December 2018. The group’s financial assets and liabilities measured at fair value are categorised as follows: 31 December £ million 30 June £ million 31 December (i) £ million Derivative assets 293 217 307 Derivative liabilities (145 ) (123 ) (184 ) Valuation techniques based on observable market input (Level 2) 148 94 123 Other financial assets 91 89 72 Other financial liabilities (171 ) (164 ) (219 ) Valuation techniques based on unobservable market input (Level 3) (80 ) (75 ) (147 ) (i) Restated to include loans and advances to associates and third parties. Finance lease liabilities were £144 million at 31 December 2018 (30 June 2018 – £155 million). The carrying amount of the group’s financial assets and liabilities are generally the same as their fair value apart from borrowings. At 31 December 2018 the fair value of gross borrowings (excluding finance lease liabilities, the financial liability in respect of the share buyback programme and the fair value of derivative instruments) was £12,409 million and the carrying value was £12,014 million (30 June 2018– £10,304 million and £9,902 million respectively). |
Dividends and other reserves
Dividends and other reserves | 6 Months Ended |
Dec. 31, 2018 | |
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Dividends and other reserves | 10. Dividends and other reserves Six months ended £ million Six months ended £ million Amounts recognised as distributions to equity shareholders in the period Final dividend for the year ended 30 June 2018 of 40.4 pence per share (2017 – 38.5 pence) 993 968 An interim dividend of 26.1 pence per share (2017 – 24.9 pence) was approved by the Board of Directors on 30 January 2019. As the approval was after the balance sheet date, it has not been included as a liability. Other reserves of £2,341 million at 31 December 2018 (2017 – £2,362 million) include a capital redemption reserve of £3,176 million (2017 – £3,146 million), a hedging reserve of £83 million deficit (2017 – £11 million surplus) and an exchange reserve of £752 million deficit (2017 – £795 million deficit). Out of the £83 million hedging reserve deficit £22 million surplus (2017 – £24 million deficit) is attributable to cost of hedging reserve. |
Acquisition of businesses and p
Acquisition of businesses and purchase of non-controlling interests | 6 Months Ended |
Dec. 31, 2018 | |
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Acquisition of businesses and purchase of non-controlling interests | 11. Acquisition of businesses and purchase of non-controlling On 17 August 2018 Diageo completed the purchase of 20.29% of the share capital of Sichuan Shuijingfang Company Limited (SJF) for RMB 6,084 million (£696 million) and transaction costs of £7 million (£1 million of which had been paid by 31 December 2018). This took Diageo’s shareholding in SJF from 39.71% to 60%. SJF was already controlled and therefore consolidated prior to the transaction. On 28 September 2018 Diageo acquired the remaining 70% of Copper Dog Whisky Limited (CDWL) that it did not already own for an upfront valuation of £6.5 million and further earn-out earn-out Other acquisitions include deferred consideration paid in respect of prior year acquisitions and additional investments in a number of Distill Venture associates. |
Sale of businesses and brands
Sale of businesses and brands | 6 Months Ended |
Dec. 31, 2018 | |
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Sale of businesses and brands | 12. Sale of businesses and brands Cash consideration received and net assets disposed of in respect of sale of businesses and brands in the six months ended 31 December 2018, were in respect of the disposal of a portfolio of 19 brands to Sazerac on 20 December 2018: £ million Sale consideration Cash received in period 419 Transaction costs payable (17 ) Deferred consideration receivable 16 418 Net assets disposed of Brands (230 ) Goodwill (12 ) Property, plant and equipment (2 ) Investment in associates (3 ) Inventories (17 ) (264 ) Gain on disposal before taxation 154 Taxation (34 ) Gain on disposal after taxation 120 Diageo completed the sale of a portfolio of 19 brands (see page 55 for the list of brands disposed of) to Sazerac on 20 December 2018 for an aggregate consideration of $550 million (£435 million). The net proceeds of approximately £340 million, after corporate tax and transaction costs, will be returned to shareholders through a share buyback programme to be completed by 30 June 2019, which is incremental to the previously announced programme. Diageo will continue to provide manufacturing services for all disposed brands until December 2019 and for five brands up to December 2028. In the six months ended 31 December 2018 these brands contributed net sales of £67 million (2017 – £81 million), operating profit of £43 million (2017 – £52 million) and profit after taxation of £34 million (2017 – £41 million). The disposal of United National Breweries (UNB), Diageo’s wholly owned sorghum business in South Africa, was agreed in December 2018 for a gross consideration, subject to adjustments, of ZAR 731 million (£40 million). The assets and liabilities of UNB have been transferred to assets and liabilities held for sale respectively and the prospective sale has resulted in an exceptional loss of approximately £8 million. The disposal is expected to be completed in the second half of the year ending 30 June 2019, subject to receipt of regulatory approvals. |
Contingent liabilities and lega
Contingent liabilities and legal proceedings | 6 Months Ended |
Dec. 31, 2018 | |
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Contingent liabilities and legal proceedings | 13. Contingent liabilities and legal proceedings (a) Guarantees and related matters As of 31 December 2018, the group has no material unprovided guarantees or indemnities in respect of liabilities of third parties. (b) Acquisition of USL shares from UBHL, winding-up 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 21,767,749 shares (14.98%) in United Spirits Limited (USL) for a total consideration of INR 31.3 billion (£349 million), including 10,141,437 shares (6.98%) from UBHL. The SPA was signed on 9 November 2012 and was part of the transaction announced by Diageo in relation to USL on that day (the Original USL Transaction). Through a series of further transactions, as of 2 July 2014, Diageo had a 54.78% investment in USL (excluding 2.38% owned by the USL Benefit Trust). Prior to the acquisition from UBHL on 4 July 2013, the High Court of Karnataka (High Court) had granted leave to UBHL under sections 536 and 537 of 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 five winding-up winding-up Following closing of the UBHL Share Sale, appeals were filed by various petitioners in respect of the Leave Order. On 20 December 2013, the division bench of the High Court set aside the Leave Order (the December 2013 Order). Following the December 2013 Order, Diageo filed special leave petitions (SLPs) in the Supreme Court of India against the December 2013 Order. On 10 February 2014, the Supreme Court of India issued an order giving notice in respect of the SLPs and ordering that the status quo be maintained with regard to the UBHL Share Sale pending a hearing on the matter in the Supreme Court. Following a number of adjournments, the next date for a substantive hearing of the SLPs (in respect of which leave has since been granted and which have been converted to civil appeals) is yet to be fixed. In separate proceedings, the High Court passed a winding-up 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 10,141,437 USL shares acquired from UBHL. Diageo believes it would remain in control of USL and be able to consolidate USL as a subsidiary 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 timeframe within which they would be concluded. Diageo also has the benefit of certain contractual undertakings and commitments from the relevant sellers in relation to potential challenges to its unencumbered title to the USL shares acquired on 4 July 2013, including relating to the winding-up (c) Continuing matters relating to the resignation of Dr Vijay Mallya from USL and USL internal inquiries 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. As specified by Diageo in its announcement at that time, these arrangements ended its prior agreement with Dr Mallya regarding his position at USL, therefore bringing to an end the uncertainty relating to the governance of USL, and put in place a five-year global non-compete non-interference, non-solicitation for the year ended 31 March 2014 (the Initial Inquiry) which had revealed, among other things, certain diversions of USL funds. Dr Mallya also agreed not to pursue any claims against Diageo, USL and their affiliates (including under the prior agreement with Diageo). In evaluating entering into such arrangements, Diageo considered the impact of the arrangements on USL and all of USL’s shareholders, and came to the view that the arrangements were in the best interests of USL and its shareholders. Diageo’s agreement with Dr Mallya (the February 2016 Agreement) provided for a payment of $75 million (£53 million) to Dr Mallya over a five year period in consideration for the five-year global non-compete, non-interference, non-solicitation USL-related As previously announced by USL, the Initial Inquiry identified certain additional parties and matters indicating the possible existence of other improper transactions. These transactions could not be fully analysed during the Initial Inquiry and, accordingly, USL, as previously announced, mandated that its Managing Director and Chief Executive Officer conduct a further inquiry into the transactions involving the additional parties and the additional matters to determine whether they also suffered from improprieties (the Additional Inquiry). USL announced the results of the Additional Inquiry in a notice to the Indian Stock Exchange dated 9 July 2016. The mutual release in relation to the Initial Inquiry agreed by Diageo and USL with Dr Mallya announced on 25 February 2016 does not extend to matters arising out of the Additional Inquiry. As stated in USL’s previous announcement, the Additional Inquiry revealed further instances of actual or potential fund diversions from USL and its Indian and overseas subsidiaries to, in most cases, Indian and overseas entities in which Dr Mallya appears to have a material direct or indirect interest, as well as other potentially improper transactions involving USL and its Indian and overseas subsidiaries. In connection with the matters identified by the Additional Inquiry, USL has, pursuant to a detailed review of each case of such fund diversion and after obtaining expert legal advice, where appropriate, filed civil suits for recovery of funds from certain parties, including Dr Mallya, before the relevant courts in India. The amounts identified in the Additional Inquiry have been previously provided for or expensed in the financial statements of USL or its subsidiaries for prior periods. 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 (d) Other continuing matters relating to Dr Mallya and affiliates DHN issued a conditional backstop guarantee on 2 August 2013 to Standard Chartered Bank (Standard Chartered) pursuant to a guarantee commitment agreement (the Guarantee Agreement). The guarantee was in respect of the liabilities of Watson, a company affiliated with Dr Mallya, under a $135 million (£92 million) facility from Standard Chartered (the Facility Agreement). The Guarantee Agreement was entered into as part of the arrangements put in place and announced at the closing of the USL transaction on 4 July 2013. DHN’s provision of the Guarantee Agreement enabled the refinancing of certain existing borrowings of Watson from a third party bank and facilitated the release by that bank of rights over certain USL shares that were to be acquired by Diageo as part of the USL transaction. The facility matured and entered into default in May 2015. In aggregate DHN paid Standard Chartered $141 million (£96 million) under this guarantee, i.e. including payments of default interest and various fees and expenses. Watson remains liable for all amounts paid by DHN under the guarantee. Under the guarantee documentation with Standard Chartered, DHN is entitled to the benefit of the underlying security package for the loan, including: (a) certain shares in United Breweries Limited (UBL) held solely by Dr Mallya and certain other shares in UBL held by Dr Mallya jointly with his son Sidhartha Mallya, and (b) the shareholding in Watson. Aspects of the security package are the subject of various proceedings in India in which third parties are alleging and asserting prior rights to certain assets comprised in the security package or otherwise seeking to restrain enforcement against certain assets by Standard Chartered and/or DHN. These proceedings are ongoing and DHN will continue to vigorously pursue these matters as part of its efforts for enforcement of the underlying security and recovery of outstanding amounts. Diageo believes that the existence of any prior rights or dispute in relation to the security would be in breach of representations and warranties given by Dr Mallya to Standard Chartered at the time the security was granted and further believes that certain actions taken by Dr Mallya in relation to the proceedings described above also breached his obligations to Standard Chartered. In addition to these third party proceedings, Dr Mallya is also subject to proceedings in India under the Prevention of Money Laundering Act and the Fugitive Economic Offenders Act in which the relevant Indian authority, the Directorate of Enforcement, is seeking confiscation of the UBL shares which were provided as security for Watson’s liabilities. DHN is participating in these proceedings in order to protect its security interest in respect of the UBL shares. Under the terms of the guarantee and as a matter of law, there are arrangements to pass on to DHN the benefit of the security package upon payment under the guarantee of all amounts owed to Standard Chartered. Payment under the guarantee has now occurred as described above. To the extent possible in the context of the proceedings described above, Standard Chartered has taken certain recovery steps and is working with DHN in relation to these proceedings. DHN is actively monitoring the security package and is discussing with Standard Chartered steps to continue enforcement against the background of the proceedings described above, as well as enforcement steps in relation to elements of the security package that are unaffected by those proceedings. DHN’s ability to assume or enforce security over some elements of the security package is also subject to regulatory consent. It is not at this stage possible to determine whether such consent would be forthcoming. In addition to the Indian proceedings just described, certain of the assets comprised in the security package may also be affected by a worldwide freezing order of the English High Court granted on 24 November 2017 and continued on 8 December 2017 and 8 May 2018 in respect of the assets of Dr Mallya. The agreement with Dr Mallya referenced in paragraph (c) above does not impact the security package. Watson remains liable for all amounts paid pursuant to the guarantee and DHN has the benefit of a counter-indemnity from Watson in respect of payments in connection with the guarantee. The various security providers, including Dr Mallya and Watson, acknowledged in the February 2016 Agreement referred to in paragraph (c) above that DHN is entitled to the benefit of the security package underlying the Standard Chartered facility and have also undertaken to take all necessary actions in that regard. Further, Diageo believes that the existence of any prior rights or disputes in relation to the security package would be in breach of certain confirmations given to Diageo and DHN pursuant to that agreement by Dr Mallya, Watson and certain connected persons. On 16 November 2017, DHN commenced various claims in the English High Court for, in aggregate, in excess of $142 million (£105 million) (plus interest) in relation to these matters, including the following: (i) a claim against Watson for $141 million (£96 million) (plus interest) under Watson’s counter-indemnity to DHN in respect of payments made by DHN to Standard Chartered under the guarantee referred to above; (ii) a claim against Dr Mallya and Sidhartha Mallya under various agreements creating or relating to the security package referred to above for (a) the costs incurred to date in the various Indian proceedings referred to above (plus interest), and (b) damages of $141 million (£96 million), being DHN’s loss as a result of those Indian proceedings which currently prevent enforcement of the security over shares in UBL (plus interest); and (iii) a claim against CASL, as a co-surety (e) Other matters in relation to USL Following USL’s earlier updates concerning the Initial Inquiry as well as in relation to the arrangements with Dr Mallya that were the subject of the 25 February 2016 announcement, USL and Diageo have received various notices from Indian regulatory authorities, including the Ministry of Corporate Affairs, Enforcement Directorate and Securities and Exchange Board of India (SEBI). Diageo and USL are cooperating fully with the authorities in relation to these matters. Diageo and USL have also received notices from SEBI requesting information in relation to, and explanation of the reasons for, the arrangements with Dr Mallya that were the subject of the 25 February 2016 announcement as well as, in the case of USL, in relation to the Initial Inquiry and the Additional Inquiry, and, in the case of Diageo, whether such arrangements with Dr Mallya or the Watson backstop guarantee arrangements referred to in paragraphs (c) and (d) above were part of agreements previously made with Dr Mallya at the time of the Original USL Transaction announced on 9 November 2012 and the open offer made as part of the Original USL Transaction. Diageo and USL have complied with such information requests and Diageo has confirmed that, consistent with prior disclosures, the Watson backstop guarantee arrangements and the matters described in the 25 February 2016 announcement were not the subject of any earlier agreement with Dr Mallya. In respect of the Watson backstop guarantee arrangements, SEBI issued a further 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 is clear 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 therefore believes the decision in the SEBI notice to be misconceived and wrong in law and appealed against it before the Securities Appellate Tribunal, Mumbai (SAT). On 1 November 2017, SAT issued an order in respect of Diageo’s appeal in which, amongst other things, it observed that the relevant officer at SEBI had neither considered Diageo’s earlier reply nor provided Diageo with an opportunity to be heard, and accordingly directed SEBI to pass a fresh order after giving Diageo an opportunity to be heard. Following SAT’s order, Diageo has made its further submissions in the matter, including at a personal hearing before a Deputy General Manager of SEBI. Diageo is unable to assess if the notices or enquiries referred to above will result in enforcement action or, if this were to transpire, to quantify meaningfully the possible loss or range of loss, if any, to which any such action might give rise if determined against Diageo or USL. In relation to the matters described in the 25 February 2016 announcement, Diageo had also responded to a show cause notice dated 12 May 2017 from SEBI arising out of the previous correspondence in this regard and made its further submissions in the matter, including at a personal hearing before a Whole Time Member of SEBI. On 6 September 2018, SEBI issued an order holding that Diageo had acquired sole control of USL following its earlier open offers, and that no fresh open offer was triggered by Diageo. (f) USL inventory review As announced in USL’s results for the quarter ended 31 December 2018, USL recently learned of potential differences in inventory of certain categories of work in progress and related processes in certain plants in India. USL are undertaking a review and will take appropriate steps to understand and address any issues. At this stage, USL is unable to determine the related financial impact, if any, arising from such potential differences. (g) SEC Inquiry Diageo has received requests for information from the US Securities and Exchange Commission (SEC) regarding its distribution in and public disclosures regarding the United States and its distribution in certain other Diageo markets as well as additional context about the Diageo group globally. Diageo is currently responding to the SEC’s requests for information in this matter. Diageo is unable to assess if the inquiry will evolve into further information requests or an enforcement action or, if this were to transpire, to quantify meaningfully the possible loss or range of loss, if any, to which any such action might give rise. (h) 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. In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption in the UK controlled foreign company rules. The Group Financing Exemption was introduced in legislation by the UK government in 2013. In common with other UK-based Diageo has also been in discussions with the French Tax Authorities over the deductibility of certain interest costs. As previously reported, the French Tax Authorities have issued assessments denying tax relief for interest costs incurred in the periods ended 30 June 2011 to 30 June 2017. Diageo believes that the interest costs are deductible and accordingly is challenging the assessments from the French Tax Authorities. Including interest and penalties, the exposure for the periods ended 30 June 2011 to 31 December 2018 is approximately €241 million (£214 million). Based on its current assessment, Diageo believes that no provision is required in respect of this issue. The group operates in a large number of markets with complex tax and legislative regimes that are open to subjective interpretation. As assessing an accurate value of contingent liabilities in these markets requires a high level of judgment, contingent liabilities are disclosed on the basis of the current known possible exposure from tax assessment values. Diageo has reviewed its disclosures in relation to Brazil and India, where Diageo has a large number of ongoing tax cases. While these cases are not individually significant, the current assessment of the aggregate possible exposures is up to approximately £260 million for Brazil and up to approximately £130 million for India. The group believes that the likelihood that the tax authorities will ultimately prevail is lower than probable but higher than remote. Due to the fiscal environment in Brazil and in India the possibility of further tax assessments related to the same matters cannot be ruled out. Based on its current assessment, Diageo believes that no provision is required in respect of these issues. (i) Other The group has extensive international operations and is a defendant in a number of legal, customs and tax proceedings incidental to these operations, the outcome of which cannot at present 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. |
Related party transactions
Related party transactions | 6 Months Ended |
Dec. 31, 2018 | |
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Related party transactions | 14. Related party transactions The group’s significant related parties are its associates, joint ventures, key management personnel and pension plans. There have been no transactions with these related parties during the six months ended 31 December 2018 on terms other than those that prevail in arm’s length transactions. |
Post balance sheet events
Post balance sheet events | 6 Months Ended |
Dec. 31, 2018 | |
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Post balance sheet events | 15. Post balance sheet events On 30 January 2019 the Board approved an incremental share buyback programme of £660 million, bringing the total programme up to £3.0 billion for the year ending 30 June 2019. |
Basis of preparation (Policies)
Basis of preparation (Policies) | 6 Months Ended |
Dec. 31, 2018 | |
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Basis of preparation | Basis of preparation This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the EU. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group’s condensed consolidated financial statements for the periods presented. The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the IASB and as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company’s published consolidated financial statements for the year ended 30 June 2018 except for the impact of the adoption of new accounting standards and amendments explained below. IFRS is subject to ongoing review and endorsement by the EU or possible amendment by interpretative guidance and the issuance of new standards by the IASB. In preparing these condensed interim financial statements, the significant judgements made by management when applying the group’s accounting policies and the significant areas where estimates were required were the same as those that applied to the consolidated financial statements for the year ended 30 June 2018, with the exception of changes in estimates disclosed in note 13 – Contingent liabilities and legal proceedings. Having reassessed the principal risks the directors considered it appropriate to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements. |
New accounting standards | New accounting standards The following amendments to the accounting standards, issued by the IASB or International Financial Reporting Interpretations Committee (IFRIC) and endorsed by the EU, have been adopted by the group from 1 July 2018 with no impact on the group’s consolidated results, financial position or disclosures: • Amendments to IAS 40 – Transfers of Investment Property • Amendments to IFRS 2 – Classification and Measurement of Share-based payment transactions • Amendments to IFRS 4 – Applying IFRS 9 with IFRS 4 Insurance contracts • Improvements to IFRS 1 – First-time Adoption of International Financial Reporting Standards: Deletion of short-term exemptions for first-time adopters • Improvements to IAS 28 – Investments in Associates and Joint Ventures: Measuring investees at fair value through profit or loss: an investment-by-investment IFRS 15 - Revenue from contracts with customers The following standard issued by the IASB and endorsed by the EU, have not yet been adopted by the group: IFRS 16 – Leases sheet as right of use assets and depreciated on a straight line basis. The liability, recognised as part of net borrowings, will be measured at a discounted value and any interest will be charged to finance charges in the income statement. Therefore, the charge to the income statement for the operating lease payment will be replaced with depreciation on the right of use asset and the interest charge inherent in the lease. The group will implement IFRS 16 from 1 July 2019 by applying the modified retrospective method, meaning that the comparative figures in the financial statements for the year ending 30 June 2020 will not be restated to show the impact of IFRS 16. The operating leases which will be recorded on the balance sheet following implementation of IFRS 16 are principally in respect of warehouses, office buildings, plant and machinery, cars and distribution vehicles. The group has decided to reduce the complexity of implementation to take advantage of a number of practical expedients on transition on 1 July 2019 namely: (i) to measure the right of use asset at the same value as the lease liability (ii) to apply the short term and low value exemptions (iii) to treat, wherever possible, services provided as an income statement item and only capitalise the lease payment amounts in respect of the asset The anticipated impact of the standard on the group is not yet known though is not expected to be material on the income statement or net assets. Assets and liabilities will be grossed up for the net present value of the outstanding operating lease liabilities excluding low value assets and short term leases as at 1 July 2019. Operating lease commitments were £312 million as at 30 June 2018. The following standard, issued by the IASB has not been endorsed by the EU and has not been adopted by the group: IFRS 17 – Insurance Contracts There are a number of other amendments and clarifications to IFRS, effective in future years, which are not expected to significantly impact the group’s consolidated results or financial position. |
Segmental information (Tables)
Segmental information (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
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Summary of Impact of Acquisitions and Disposals on Net Sales and Operating Profit Disclosed under the Appropriate 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. Six months ended North Europe Africa Latin Asia ISC Eliminate Total Corporate Total 31 December 2018 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 2,667 2,879 1,160 864 2,765 923 (923 ) 10,335 28 10,363 Net sales At budgeted exchange rates (i) 2,108 1,629 784 648 1,379 980 (920 ) 6,608 29 6,637 Acquisitions and disposals 68 1 1 — 1 — — 71 — 71 ISC allocation 7 35 3 8 7 (60 ) — — — — Retranslation to actual exchange rates 173 (32 ) 33 16 11 3 (3 ) 201 (1 ) 200 Net sales 2,356 1,633 821 672 1,398 923 (923 ) 6,880 28 6,908 Operating profit/(loss) At budgeted exchange rates (i) 953 581 143 221 385 88 — 2,371 (77 ) 2,294 Acquisitions and disposals 40 1 1 — — — — 42 — 42 ISC allocation 10 46 4 19 9 (88 ) — — — — Retranslation to actual exchange rates 98 (14 ) 5 14 15 — — 118 (3 ) 115 Operating profit/(loss) before exceptional items 1,101 614 153 254 409 — — 2,531 (80 ) 2,451 Exceptional items — — — — — — — — (21 ) (21 ) Operating profit/(loss) 1,101 614 153 254 409 — — 2,531 (101 ) 2,430 Non-operating 146 Net finance charges (128 ) Share of after tax results of associates and joint ventures 179 Profit before taxation 2,627 Six months ended North Europe Africa Latin Asia ISC Eliminate Total Corporate Total 31 December 2017 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 2,467 2,887 1,088 840 2,625 797 (797 ) 9,907 27 9,934 Net sales At budgeted exchange rates (i) 2,151 1,521 753 629 1,306 827 (778 ) 6,409 24 6,433 Acquisitions and disposals 20 — — — — — — 20 — 20 ISC allocation 7 28 3 6 5 (49 ) — — — — Retranslation to actual 5 50 18 14 (13 ) 19 (19 ) 74 3 77 Net sales 2,183 1,599 774 649 1,298 797 (797 ) 6,503 27 6,530 Operating profit/(loss) At budgeted exchange rates (i) 1,038 541 116 208 325 74 — 2,302 (89 ) 2,213 Acquisitions and disposals 2 — — — — — — 2 — 2 ISC allocation 10 43 3 10 8 (74 ) — — — — Retranslation to actual (23 ) 15 1 — (17 ) — — (24 ) (1 ) (25 ) Operating profit/(loss) 1,027 599 120 218 316 — — 2,280 (90 ) 2,190 Net finance charges (154 ) Share of after tax results of associates and joint ventures 168 Profit before taxation 2,204 (i) These items represent the IFRS 8 performance measures for the geographical and ISC segments. (1) The net sales figures for ISC reported to the Executive Committee primarily comprise inter-segmental sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the ISC segment to the other operating segments, inter-segmental sales are not material. (2) The group’s net finance charges are managed centrally and are not attributable to individual operating segments. (3) Approximately 40% of annual net sales occur in the last four months of each calendar year. |
Exceptional items (Tables)
Exceptional items (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Schedule of Information about Exceptional Items | Six months ended Six months ended Items included in operating profit GMP equalisation (21 ) — (21 ) Non-operating Portfolio of 19 brands 154 — United National Breweries (8 ) — 146 — Exceptional items before taxation 125 — Items included in taxation Tax on exceptional operating items 4 — Tax on exceptional non-operating (34 ) — Exceptional taxation — 360 (30 ) 360 Total exceptional items 95 360 Attributable to: Equity shareholders of the parent company 95 360 Non-controlling — — Total exceptional items 95 360 |
Finance income and charges (Tab
Finance income and charges (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Schedule of Impact from Derivatives Among Interest Income/(Charge) | Six months ended Six months ended Interest income 102 74 Fair value gain on financial instruments 59 29 Total interest income 161 103 Interest charges (224 ) (208 ) Fair value loss on financial instruments (57 ) (25 ) Total interest charges (281 ) (233 ) Net interest charges (120 ) (130 ) Net finance income in respect of post employment plans in surplus 14 4 Hyperinflation adjustment in respect of Venezuela (a) 6 6 Total other finance income 20 10 Net finance charge in respect of post employment plans in deficit (12 ) (11 ) Unwinding of discounts (8 ) (6 ) Interest in respect of tax (5 ) — Change in financial liability (Level 3) (2 ) (16 ) Other finance charges (1 ) (1 ) Total other finance charges (28 ) (34 ) Net other finance charges (8 ) (24 ) |
Summary of Geographical Operations | The following table presents the contribution of the group’s Venezuelan operations to the consolidated income statement, cash flow statement and net assets for the six months ended 31 December 2018 and with the amounts that would have resulted if the DICOM exchange rate had been applied for consolidation. At estimated At DICOM Net sales — 1 Operating profit — — Other finance income - hyperinflation adjustment 6 72 Net cash inflow from operating activities — 1 Net assets 65 843 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Summary of Information about Inventories | 31 December £ million 30 June £ million 31 December £ million Raw materials and consumables 327 321 352 Work in progress 51 44 46 Maturing inventories 4,201 4,028 3,904 Finished goods and goods for resale 697 622 617 5,276 5,015 4,919 |
Net borrowings (Tables)
Net borrowings (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Schedule of Information about Borrowings | 31 December £ million 30 June 31 December £ million Borrowings due within one year and bank overdrafts (1,742 ) (1,828 ) (2,378 ) Borrowings due after one year (10,272 ) (8,074 ) (7,647 ) Fair value of foreign currency forwards and swaps 195 107 82 Fair value of interest rate hedging instruments 20 (15 ) (10 ) Finance lease liabilities (144 ) (155 ) (165 ) (11,943 ) (9,965 ) (10,118 ) Cash and cash equivalents 1,591 874 920 (10,352 ) (9,091 ) (9,198 ) |
Reconciliation of movement in_2
Reconciliation of movement in net borrowings (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Schedule of Information about Reconciliation of Movement in Net Borrowings | Six months ended Six months ended Net increase/(decrease) in cash and cash equivalents before exchange 692 (203 ) Net increase in bonds and other borrowings (1,974 ) (1,099 ) Net increase in net borrowings from cash flows (1,282 ) (1,302 ) Exchange differences on net borrowings (32 ) 47 Other non-cash 53 (51 ) Net borrowings at beginning of the period (9,091 ) (7,892 ) Net borrowings at end of the period (10,352 ) (9,198 ) |
Financial instruments (Tables)
Financial instruments (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Schedule of Information about Financial Assets and Liabilities Measured at Fair Value | The group’s financial assets and liabilities measured at fair value are categorised as follows: 31 December £ million 30 June £ million 31 December (i) £ million Derivative assets 293 217 307 Derivative liabilities (145 ) (123 ) (184 ) Valuation techniques based on observable market input (Level 2) 148 94 123 Other financial assets 91 89 72 Other financial liabilities (171 ) (164 ) (219 ) Valuation techniques based on unobservable market input (Level 3) (80 ) (75 ) (147 ) (i) Restated to include loans and advances to associates and third parties. |
Dividends and other reserves (T
Dividends and other reserves (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Schedule of Information about Dividends | Six months ended £ million Six months ended £ million Amounts recognised as distributions to equity shareholders in the period Final dividend for the year ended 30 June 2018 of 40.4 pence per share (2017 – 38.5 pence) 993 968 |
Sale of businesses and brands (
Sale of businesses and brands (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Text block [abstract] | |
Cash Consideration Received and Net Assets Disposed of in Respect of Sale of Businesses and Brands and the Disposal of a Portfolio of 19 Brands | Cash consideration received and net assets disposed of in respect of sale of businesses and brands in the six months ended 31 December 2018, were in respect of the disposal of a portfolio of 19 brands to Sazerac on 20 December 2018: £ million Sale consideration Cash received in period 419 Transaction costs payable (17 ) Deferred consideration receivable 16 418 Net assets disposed of Brands (230 ) Goodwill (12 ) Property, plant and equipment (2 ) Investment in associates (3 ) Inventories (17 ) (264 ) Gain on disposal before taxation 154 Taxation (34 ) Gain on disposal after taxation 120 |
Basis of Preparation - Addition
Basis of Preparation - Additional Information (Detail) - GBP (£) £ in Millions | 6 Months Ended | ||
Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Disclosure of expected impact of initial application of new standards or interpretations [line items] | |||
Increase/(decrease) in retained earnings | £ (4,908) | £ (5,686) | £ (5,422) |
Increase (decrease) in net assets | £ 11,133 | 11,713 | 11,690 |
Operating lease commitments | 312 | ||
IFRS 16 [member] | |||
Disclosure of expected impact of initial application of new standards or interpretations [line items] | |||
Entity's effective period end date to apply new IFRS | Jun. 30, 2020 | ||
Entity's effective period end date to apply new IFRS | Jul. 1, 2019 | ||
IFRS 15 [member] | Increase (decrease) due to application of IFRS 15 [member] | |||
Disclosure of expected impact of initial application of new standards or interpretations [line items] | |||
Increase/(decrease) in retained earnings | 91 | 71 | |
Increase (decrease) in net assets | £ (91) | £ (71) | |
IFRS 17 [member] | |||
Disclosure of expected impact of initial application of new standards or interpretations [line items] | |||
Entity's effective period end date to apply new IFRS | Jun. 30, 2022 |
Segmental Information - Summary
Segmental Information - Summary of Impact of Acquisitions and Disposals on Net Sales and Operating Profit Disclosed under the Appropriate Geographical Segments (Detail) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of operating segments [line items] | ||
Sales | £ 10,363 | £ 9,934 |
Net sales | ||
At budgeted exchange rates | 6,637 | 6,433 |
Acquisitions and disposals | 71 | 20 |
Retranslation to actual exchange rates | 200 | 77 |
Net sales | 6,908 | 6,530 |
Operating profit/(loss) | ||
At budgeted exchange rates | 2,294 | 2,213 |
Acquisitions and disposals | 42 | 2 |
Retranslation to actual exchange rates | 115 | (25) |
Operating profit/(loss) before exceptional items | 2,451 | |
Exceptional items | (21) | |
Operating profit | 2,430 | 2,190 |
Non-operating items | 146 | |
Net finance charges | (128) | (154) |
Share of after tax results of associates and joint ventures | 179 | 168 |
Profit before taxation | 2,627 | 2,204 |
Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 10,335 | 9,907 |
Net sales | ||
At budgeted exchange rates | 6,608 | 6,409 |
Acquisitions and disposals | 71 | 20 |
Retranslation to actual exchange rates | 201 | 74 |
Net sales | 6,880 | 6,503 |
Operating profit/(loss) | ||
At budgeted exchange rates | 2,371 | 2,302 |
Acquisitions and disposals | 42 | 2 |
Retranslation to actual exchange rates | 118 | (24) |
Operating profit/(loss) before exceptional items | 2,531 | |
Operating profit | 2,531 | 2,280 |
Eliminate inter-segment sales [member] | ||
Disclosure of operating segments [line items] | ||
Sales | (923) | (797) |
Net sales | ||
At budgeted exchange rates | (920) | (778) |
Retranslation to actual exchange rates | (3) | (19) |
Net sales | (923) | (797) |
Corporate and other [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 28 | 27 |
Net sales | ||
At budgeted exchange rates | 29 | 24 |
Retranslation to actual exchange rates | (1) | 3 |
Net sales | 28 | 27 |
Operating profit/(loss) | ||
At budgeted exchange rates | (77) | (89) |
Retranslation to actual exchange rates | (3) | (1) |
Operating profit/(loss) before exceptional items | (80) | |
Exceptional items | (21) | |
Operating profit | (101) | (90) |
North America [member] | Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 2,667 | 2,467 |
Net sales | ||
At budgeted exchange rates | 2,108 | 2,151 |
Acquisitions and disposals | 68 | 20 |
ISC allocation | 7 | 7 |
Retranslation to actual exchange rates | 173 | 5 |
Net sales | 2,356 | 2,183 |
Operating profit/(loss) | ||
At budgeted exchange rates | 953 | 1,038 |
Acquisitions and disposals | 40 | 2 |
ISC allocation | 10 | 10 |
Retranslation to actual exchange rates | 98 | (23) |
Operating profit/(loss) before exceptional items | 1,101 | |
Operating profit | 1,101 | 1,027 |
Europe and Turkey [member] | Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 2,879 | 2,887 |
Net sales | ||
At budgeted exchange rates | 1,629 | 1,521 |
Acquisitions and disposals | 1 | |
ISC allocation | 35 | 28 |
Retranslation to actual exchange rates | (32) | 50 |
Net sales | 1,633 | 1,599 |
Operating profit/(loss) | ||
At budgeted exchange rates | 581 | 541 |
Acquisitions and disposals | 1 | |
ISC allocation | 46 | 43 |
Retranslation to actual exchange rates | (14) | 15 |
Operating profit/(loss) before exceptional items | 614 | |
Operating profit | 614 | 599 |
Africa [member] | Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 1,160 | 1,088 |
Net sales | ||
At budgeted exchange rates | 784 | 753 |
Acquisitions and disposals | 1 | |
ISC allocation | 3 | 3 |
Retranslation to actual exchange rates | 33 | 18 |
Net sales | 821 | 774 |
Operating profit/(loss) | ||
At budgeted exchange rates | 143 | 116 |
Acquisitions and disposals | 1 | |
ISC allocation | 4 | 3 |
Retranslation to actual exchange rates | 5 | 1 |
Operating profit/(loss) before exceptional items | 153 | |
Operating profit | 153 | 120 |
Latin America and Caribbean [member] | Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 864 | 840 |
Net sales | ||
At budgeted exchange rates | 648 | 629 |
ISC allocation | 8 | 6 |
Retranslation to actual exchange rates | 16 | 14 |
Net sales | 672 | 649 |
Operating profit/(loss) | ||
At budgeted exchange rates | 221 | 208 |
ISC allocation | 19 | 10 |
Retranslation to actual exchange rates | 14 | |
Operating profit/(loss) before exceptional items | 254 | |
Operating profit | 254 | 218 |
Asia Pacific [member] | Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 2,765 | 2,625 |
Net sales | ||
At budgeted exchange rates | 1,379 | 1,306 |
Acquisitions and disposals | 1 | |
ISC allocation | 7 | 5 |
Retranslation to actual exchange rates | 11 | (13) |
Net sales | 1,398 | 1,298 |
Operating profit/(loss) | ||
At budgeted exchange rates | 385 | 325 |
ISC allocation | 9 | 8 |
Retranslation to actual exchange rates | 15 | (17) |
Operating profit/(loss) before exceptional items | 409 | |
Operating profit | 409 | 316 |
ISC [member] | Total operating segments [member] | ||
Disclosure of operating segments [line items] | ||
Sales | 923 | 797 |
Net sales | ||
At budgeted exchange rates | 980 | 827 |
ISC allocation | (60) | (49) |
Retranslation to actual exchange rates | 3 | 19 |
Net sales | 923 | 797 |
Operating profit/(loss) | ||
At budgeted exchange rates | 88 | 74 |
ISC allocation | £ (88) | £ (74) |
Segmental Information - Summa_2
Segmental Information - Summary of Impact of Acquisitions and Disposals on Net Sales and Operating Profit Disclosed under the Appropriate Geographical Segments (Parenthetical) (Detail) | 4 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of operating segments [abstract] | ||
Annual net sales occur in the last four months | 40.00% | 40.00% |
Segmental Information - Additio
Segmental Information - Additional Information (Detail) - ExchangeRate | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
US dollar [member] | |||
Disclosure of foreign exchange rates [line items] | |||
Weighted average exchange rates used in translation of income statements | 1.29 | 1.32 | |
Exchange rate used to translate assets and liabilities | 1.27 | 1.35 | 1.32 |
Euro [member] | |||
Disclosure of foreign exchange rates [line items] | |||
Weighted average exchange rates used in translation of income statements | 1.12 | 1.12 | |
Exchange rate used to translate assets and liabilities | 1.11 | 1.12 | 1.13 |
Exceptional Items - Schedule of
Exceptional Items - Schedule of Information about Exceptional Items (Detail) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of exceptional items [line items] | ||
Operating profit items | £ 2,430 | £ 2,190 |
Non-operating items | 146 | |
Profit before taxation | 2,627 | 2,204 |
Exceptional taxation | (560) | (77) |
Total exceptional items | 2,067 | 2,127 |
Attributable to: | ||
Non-controlling interests | 91 | 69 |
Total exceptional items | 2,067 | 2,127 |
GMP equalisation [member] | ||
Disclosure of exceptional items [line items] | ||
Operating profit items | (21) | |
Exceptional items [member] | ||
Disclosure of exceptional items [line items] | ||
Operating profit items | (21) | |
Non-operating items | 146 | |
Profit before taxation | 125 | |
Exceptional taxation | (30) | 360 |
Total exceptional items | 95 | 360 |
Attributable to: | ||
Equity shareholders of the parent company | 95 | 360 |
Non-controlling interests | 0 | 0 |
Total exceptional items | 95 | 360 |
Portfolio of 19 brands [member] | ||
Disclosure of exceptional items [line items] | ||
Non-operating items | 154 | |
United National Breweries [member] | ||
Disclosure of exceptional items [line items] | ||
Non-operating items | (8) | |
Exceptional operating items [member] | ||
Disclosure of exceptional items [line items] | ||
Exceptional taxation | 4 | |
Exceptional non-operating Items [member] | ||
Disclosure of exceptional items [line items] | ||
Exceptional taxation | £ (34) | |
Tax Cuts and Jobs Act [member] | ||
Disclosure of exceptional items [line items] | ||
Exceptional taxation | £ 360 |
Finance Income and Charges - Sc
Finance Income and Charges - Schedule of Impact from Derivatives Among Interest Income/(Charge) (Detail) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Material income and expense [abstract] | ||
Interest income | £ 102 | £ 74 |
Fair value gain on financial instruments | 59 | 29 |
Total interest income | 161 | 103 |
Interest charges | (224) | (208) |
Fair value loss on financial instruments | (57) | (25) |
Total interest charges | (281) | (233) |
Net interest charges | (120) | (130) |
Net finance income in respect of post employment plans in surplus | 14 | 4 |
Hyperinflation adjustment in respect of Venezuela | 6 | 6 |
Total other finance income | 20 | 10 |
Net finance charge in respect of post employment plans in deficit | (12) | (11) |
Unwinding of discounts | (8) | (6) |
Interest in respect of tax | (5) | |
Change in financial liability | (2) | (16) |
Other finance charges | (1) | (1) |
Total other finance charges | (28) | (34) |
Net other finance charges | £ (8) | £ (24) |
Finance Income and Charges - Ad
Finance Income and Charges - Additional Information (Detail) - Venezuela [member] | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Venezuelan bolivar fuerte [member] | ||
Disclosure of geographical areas [line items] | ||
Exchange rate | 63,450 | |
Venezuelan bolvar Soberano [member] | ||
Disclosure of geographical areas [line items] | ||
Exchange rate | 10,466 | 0.6345 |
Finance Income and Charges - Su
Finance Income and Charges - Summary of Geographical operations (Detail) - GBP (£) £ in Millions | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Disclosure of geographical areas [line items] | |||
Net sales | £ 6,908 | £ 6,530 | |
Operating profit | 2,430 | 2,190 | |
Other finance income - hyperinflation adjustment | 20 | 10 | |
Net cash inflow from operating activities | 1,604 | 1,248 | |
Net assets | 11,133 | £ 11,690 | £ 11,713 |
Venezuela [member] | |||
Disclosure of geographical areas [line items] | |||
Operating profit | 0 | ||
Other finance income - hyperinflation adjustment | 6 | ||
Net assets | 65 | ||
Venezuela [member] | Reported if in compliance with requirement of IFRS [member] | |||
Disclosure of geographical areas [line items] | |||
Net sales | 1 | ||
Operating profit | 0 | ||
Other finance income - hyperinflation adjustment | 72 | ||
Net cash inflow from operating activities | 1 | ||
Net assets | £ 843 |
Finance Income and Charges - _2
Finance Income and Charges - Summary of Geographical operations (Parenthetical) (Detail) - Venezuelan bolvar Soberano [member] - Venezuela [member] | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of geographical areas [line items] | ||
Exchange rate | 10,466 | 0.6345 |
Reported if in compliance with requirement of IFRS [member] | ||
Disclosure of geographical areas [line items] | ||
Exchange rate | 809 |
Taxation - Additional Informati
Taxation - Additional Information (Detail) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of exceptional tax expense income [line items] | ||
Tax charge | £ 560 | £ 77 |
Exceptional items [member] | ||
Disclosure of exceptional tax expense income [line items] | ||
Tax charge | 30 | (360) |
UK [Member] | ||
Disclosure of exceptional tax expense income [line items] | ||
Tax charge | 134 | 64 |
Rest of world [member] | ||
Disclosure of exceptional tax expense income [line items] | ||
Tax charge | £ 426 | £ 13 |
Inventories - Summary of Inform
Inventories - Summary of Information about Inventories (Detail) - GBP (£) £ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Disclosure of inventories [abstract] | |||
Raw materials and consumables | £ 327 | £ 321 | £ 352 |
Work in progress | 51 | 44 | 46 |
Maturing inventories | 4,201 | 4,028 | 3,904 |
Finished goods and goods for resale | 697 | 622 | 617 |
Inventories | £ 5,276 | £ 5,015 | £ 4,919 |
Net Borrowings - Schedule of Bo
Net Borrowings - Schedule of Borrowings (Detail) - GBP (£) £ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Disclosure of detailed information about borrowings [abstract] | ||||
Borrowings due within one year and bank overdrafts | £ (1,742) | £ (1,828) | £ (2,378) | |
Borrowings due after one year | (10,272) | (8,074) | (7,647) | |
Fair value of foreign currency forwards and swaps | 195 | 107 | 82 | |
Fair value of interest rate hedging instruments | 20 | (15) | (10) | |
Finance lease liabilities | (144) | (155) | (165) | |
Gross borrowings | (11,943) | (9,965) | (10,118) | |
Cash and cash equivalents | 1,591 | 874 | 920 | |
Net borrowings | £ (10,352) | £ (9,091) | £ (9,198) | £ (7,892) |
Reconciliation of Movement in_3
Reconciliation of Movement in Net Borrowings - Schedule of Information about Reconciliation of Movement in Net Borrowings (Detail) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Borrowings [abstract] | ||
Net increase/(decrease) in cash and cash equivalents before exchange | £ 692 | £ (203) |
Net increase in bonds and other borrowings | (1,974) | (1,099) |
Net increase in net borrowings from cash flows | (1,282) | (1,302) |
Exchange differences on net borrowings | (32) | 47 |
Other non-cash items | 53 | (51) |
Net borrowings at beginning of the period | (9,091) | (7,892) |
Net borrowings at end of the period | £ (10,352) | £ (9,198) |
Reconciliation of Movement in_4
Reconciliation of Movement in Net Borrowings - Additional Information (Detail) € in Millions, £ in Millions, $ in Millions | 6 Months Ended | ||||
Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) | Dec. 31, 2017USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2017EUR (€) | |
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||||
Bonds issued | £ 1,136 | € 1,275 | |||
Repayment of bonds | £ 948 | $ 1,250 | |||
Percentage of ownership interest in subsidiaries | 100.00% | 100.00% | 100.00% | ||
European debt issuance programme [member] | |||||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||||
Bonds issued | £ 1,754 | € 2,000 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - GBP (£) £ in Millions | 6 Months Ended | ||
Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about financial instruments [line items] | |||
Liabilities | £ 20,961 | £ 18,002 | £ 18,412 |
Finance lease liabilities | 144 | 155 | £ 165 |
Borrowings | £ 12,014 | 9,902 | |
Industrias Licoreras De Guatemala [member] | |||
Disclosure of detailed information about financial instruments [line items] | |||
Percentage of ownership interest | 50.00% | ||
Liabilities | £ 171 | 164 | |
Fair value [member] | Level 1 [member] | |||
Disclosure of detailed information about financial instruments [line items] | |||
Borrowings | 12,409 | £ 10,304 | |
Option exercised two years later [member] | |||
Disclosure of detailed information about financial instruments [line items] | |||
Increase or decrease in fair value of liability | £ 20 |
Financial Instruments - Schedul
Financial Instruments - Schedule of Financial Assets and Liabilities Measured at Fair Value (Detail) - GBP (£) £ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Valuation techniques based on observable market input (level 2) [member] | |||
Disclosure of detailed information about financial instruments [line items] | |||
Derivative assets | £ 293 | £ 217 | £ 307 |
Derivative liabilities | (145) | (123) | (184) |
Financial assets/(liabilities) at fair value | 148 | 94 | 123 |
Valuation techniques based on unobservable market input (level 3) [member] | |||
Disclosure of detailed information about financial instruments [line items] | |||
Other financial assets | 91 | 89 | 72 |
Other financial liabilities | (171) | (164) | (219) |
Financial assets/(liabilities) at fair value | £ (80) | £ (75) | £ (147) |
Dividends and Other Reserves -
Dividends and Other Reserves - Schedule of Information about Dividends (Detail) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure Of Information About Dividends [abstract] | ||
Final dividend for the year ended 30 June 2018 of 40.4 pence per share (2017 - 38.5 pence) | £ 993 | £ 968 |
Dividends and Other Reserves _2
Dividends and Other Reserves - Schedule of Information about Dividends (Parenthetical) (Detail) - £ / shares | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Disclosure Of Information About Dividends [abstract] | ||
Final dividend per share | £ 0.404 | £ 0.385 |
Dividends and Other Reserves _3
Dividends and Other Reserves - Additional Information (Detail) - GBP (£) £ / shares in Units, £ in Millions | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Disclosure of reserves within equity [line items] | |||
Interim dividend per share | £ 0.261 | £ 0.249 | |
Other reserves | £ 2,341 | £ 2,362 | £ 2,133 |
Capital redemption reserve | 3,176 | 3,146 | |
Hedging reserve | (83) | 11 | |
Exchange reserve | 752 | 795 | |
Cost of hedging reserve [member] | |||
Disclosure of reserves within equity [line items] | |||
Hedging reserve | £ 22 | £ (24) |
Acquisition of Businesses and_2
Acquisition of Businesses and Purchase of Non-controlling Interests - Additional Information (Detail) ¥ in Millions, £ in Millions | Dec. 31, 2018 | Aug. 17, 2018GBP (£) | Aug. 17, 2018CNY (¥) | Jun. 30, 2018 | Dec. 31, 2018GBP (£) | Dec. 31, 2017 | Sep. 28, 2018GBP (£) |
Disclosure of business combinations and purchase of NCI [line items] | |||||||
Purchase of shares of NCI | £ 697 | ||||||
Percentage of interest acquired | 100.00% | 100.00% | |||||
Sichuan Shuijingfang Company Limited [member] | |||||||
Disclosure of business combinations and purchase of NCI [line items] | |||||||
Percentage of interest acquired | 20.29% | 20.29% | |||||
Purchase of shares of NCI | £ 696 | ¥ 6,084 | |||||
Transaction cost incurred | £ 7 | ||||||
Transaction costs paid | £ 1 | ||||||
Percentage of interest acquired | 60.00% | 39.71% | |||||
CDWL Acquisition [member] | |||||||
Disclosure of business combinations and purchase of NCI [line items] | |||||||
Percentage of interest acquired | 70.00% | ||||||
Consideration payable | £ 6.5 | ||||||
Discounted current estimate for earn-out payments | £ 10 |
Sale of Businesses and Brands -
Sale of Businesses and Brands - Cash Consideration Received and Net Assets Disposed of in Respect of Sale of Businesses and Brands and the Disposal of a Portfolio of 19 Brands (Detail) - GBP (£) £ in Millions | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Disclosure Of Businesses And Intangible Assets [line items] | |||
Property, plant and equipment | £ (4,238) | £ (3,953) | £ (4,089) |
Net assets disposed | (11,133) | (11,690) | £ (11,713) |
Gain on disposal before taxation | 2,627 | 2,204 | |
Taxation | (560) | (77) | |
Gain on disposal after taxation | 2,067 | £ 2,127 | |
Entities Value For Disposals [member] | |||
Disclosure Of Businesses And Intangible Assets [line items] | |||
Cash received in period | 419 | ||
Transaction costs payable | (17) | ||
Deferred consideration receivable | 16 | ||
Consideration received | 418 | ||
Brands | (230) | ||
Goodwill | (12) | ||
Property, plant and equipment | (2) | ||
Investment in associates | (3) | ||
Inventories | (17) | ||
Net assets disposed | (264) | ||
Gain on disposal before taxation | 154 | ||
Taxation | (34) | ||
Gain on disposal after taxation | £ 120 |
Sale of Businesses and Brands_2
Sale of Businesses and Brands - Additional Information (Detail) £ in Millions, R in Millions, $ in Millions | Dec. 20, 2018GBP (£) | Dec. 20, 2018USD ($) | Dec. 31, 2018GBP (£) | Dec. 31, 2018ZAR (R) | Dec. 31, 2017GBP (£) |
United National Breweries [member] | |||||
Disclosure of business disposal [line items] | |||||
Consideration received on sale of business | £ 40 | R 731 | |||
Exceptional loss | 8 | ||||
US brands [member] | |||||
Disclosure of business disposal [line items] | |||||
Net sales contributed | 67 | £ 81 | |||
Operating profit contributed | 43 | 52 | |||
Profit after tax contributed | 34 | £ 41 | |||
Portfolio of 19 brands [member] | |||||
Disclosure of business disposal [line items] | |||||
Aggregate consideration | £ 435 | $ 550 | |||
Net proceeds after tax and transaction costs | £ 340 |
Contingent Liabilities and Le_2
Contingent Liabilities and Legal Proceedings - Additional Information (Detail) ₨ / shares in Units, € in Millions, £ in Millions, $ in Millions, ₨ in Billions | 6 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2018GBP (£) | Dec. 31, 2018USD ($) | Dec. 31, 2017GBP (£)Petition | Dec. 31, 2017USD ($)Petition | Jun. 30, 2015GBP (£) | Jun. 30, 2015USD ($) | Jun. 30, 2014GBP (£)shares | Jun. 30, 2014USD ($)shares | Jun. 30, 2014GBP (£)₨ / shares | Jun. 30, 2013 | Dec. 31, 2018EUR (€) | Dec. 31, 2017USD ($) | Oct. 31, 2017GBP (£) | Jun. 30, 2014INR (₨) | |
Disclosure of contingent liabilities [line items] | ||||||||||||||
Ownership Interest in subsidiary | 100.00% | 100.00% | 100.00% | 100.00% | ||||||||||
United Spirits Limited [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Shares percentage of additional equivalent payments required to be made to shareholders | 0.04% | 0.04% | ||||||||||||
Diageo Holdings Netherlands BV [member] | Watson Limited [member] | Standard Chartered Bank (SCB) [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Facility payment under guarantee agreement | £ 96 | $ 141 | ||||||||||||
UBHL [member] | United Spirits Limited [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Acquisition price per share | ₨ / shares | ₨ 1,440 | |||||||||||||
SPA [member] | United Spirits Limited [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Date of acquisition | Nov. 9, 2012 | |||||||||||||
Business acquisition number of shares acquired | shares | 21,767,749 | 21,767,749 | ||||||||||||
Business acquisition, percentage of interest acquired | 14.98% | 14.98% | 14.98% | |||||||||||
Total consideration | £ 349 | ₨ 349 | ₨ 31.3 | |||||||||||
Ownership Interest in subsidiary | 54.78% | 54.78% | ||||||||||||
Ownership interest by external party | 2.38% | 2.38% | ||||||||||||
Completion date of original acquisition | Jul. 4, 2013 | Jul. 4, 2013 | ||||||||||||
SPA [member] | UBHL [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Number of pending winding-up petitions | Petition | 5 | 5 | ||||||||||||
SPA [member] | UBHL [member] | United Spirits Limited [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Business acquisition number of shares acquired | shares | 10,141,437 | 10,141,437 | ||||||||||||
Business acquisition, percentage of interest acquired | 6.98% | 6.98% | 6.98% | |||||||||||
Contingent Liability for Guarantees [member] | Diageo Holdings Netherlands BV [member] | Watson Limited [member] | Standard Chartered Bank (SCB) [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Guarantee provided in respect of bank facility | £ 92 | $ 135 | ||||||||||||
Tax Contingent Liability [member] | France [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Interest and penalties | £ 214 | € 241 | ||||||||||||
Tax Contingent Liability [member] | Maximum [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Interest and penalties | £ 278 | |||||||||||||
Tax Contingent Liability [member] | Maximum [member] | Brazil [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Interest and penalties | 260 | |||||||||||||
Tax Contingent Liability [member] | Maximum [member] | India [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Interest and penalties | 130 | |||||||||||||
25 February agreement [member] | Watson Limited [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Claim or damages related to breach of associated security documents | £ 96 | $ 141 | ||||||||||||
Damages related to breach of associated security documents | £ 105 | $ 142 | ||||||||||||
Percentage of damages claimed | 50.00% | 50.00% | ||||||||||||
25 February agreement [member] | Dr Mallya [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Payment relating to disengagement agreements | £ 53 | $ 75 | ||||||||||||
Global non-compete, non-interference, non-solicitation and standstill commitments term | 5 years | 5 years | ||||||||||||
Consideration payment period | 5 years | 5 years | ||||||||||||
Agreement date | Feb. 25, 2016 | Feb. 25, 2016 | ||||||||||||
Payment relating to disengagement agreements | £ 28 | $ 40 | ||||||||||||
Amount payable in equal installments to Dr Mallya | 5 | $ 7 | ||||||||||||
Installment not liable to pay related to breaches of several provisions | 5 | 7 | ||||||||||||
Demanding the repayment of original amount paid | £ 28 | $ 40 | 28 | $ 40 | ||||||||||
Counter claim payment | 5 | $ 7 | ||||||||||||
25 February agreement [member] | United Breweries Overseas Limited [member] | ||||||||||||||
Disclosure of contingent liabilities [line items] | ||||||||||||||
Claim or damages related to breach of associated security documents | £ 30 |
Post Balance Sheet Events - Add
Post Balance Sheet Events - Additional Information (Detail) - GBP (£) £ in Millions | 1 Months Ended | |
Jun. 30, 2019 | Jan. 30, 2019 | |
Share buy-back programme [member] | ||
Disclosure of non-adjusting events after reporting period [line items] | ||
Share buyback | £ 3,000 | £ 660 |