Diageo (DEO) 6-K Current report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE13a-16 OR15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

3 December 2019

Commission File Number:001-10691

DIAGEO plc

(Translation of registrant’s name into English)

Lakeside Drive, Park Royal, London NW10 7HQ

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form20-F or Form40-F.

Form20-F  ☒            Form40-F  ☐

Indicate by check mark whether the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1):  ☐

Indicate by check mark whether the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(7):  ☐

3 December 2019

Change in method for calculating organic non-GAAP measures

Diageo announced, at its Capital Markets Day on 22 May 2019, that it would change its method of calculating organic growth for periods beginning with the six months ending 31 December 2019. Organic growth is anon-GAAP financial measure. See ‘Explanatory Notes’ below for an explanation and reconciliation ofnon-GAAP measures.

Going forward, Diageo will calculate the exchange adjustment included in the organic movement calculation by translating the current period results at the prior period weighted average exchange rates. Previously, Diageo had calculated the exchange adjustment included in the organic calculation by translating the prior period results at the current period exchange rates.

This change in methodology will significantly simplify Diageo’s internal reporting processes by more closely aligning its calculation of organic movements with its internal management reporting. Diageo also believes this methodology will allow investors to better compare Diageo’s organic movements with its peer group listed on page 92 of the Annual Report 2019.

Exchange impacts in respect of the external hedging of the intergroup sales of products and the intergroup recharging of third party services will continue to be allocated to the geographical segment to which they relate. Any residual exchange impacts will continue to be reported in Corporate. Results from markets that have hyperinflationary economies are translated at respective years’ actual rates. As a result, no exchange difference is reported. Under the revised methodology, the adjustments included in respect of Acquisitions and Disposals in the organic reconciliation, calculated at the prior period’s weighted average rate, have not changed materially.

Organic growth for sales, net sales, marketing and operating profit for the years ended 30 June 2019 and 2018 and for the six month period ended 31 December 2018 are set out in the tables below under both the prior methodology and the new methodology with no significant difference for all periods, geographical segments and key categories:

2

Explanatory notes

Definitions and reconciliation ofnon-GAAP measures to GAAP measures

Diageo’s strategic planning process is based on certainnon-GAAP measures, including organic movements. Thesenon-GAAP measures are chosen for planning and reporting, and some of them are used for incentive purposes. The group’s management believes these measures provide valuable additional information for users of the financial statements in understanding the group’s performance. Thesenon-GAAP measures should be viewed as complementary to, and not replacements for, the comparable GAAP measures and reported movements therein.

Organic movements

Organic information is presented using pounds sterling amounts on a constant currency basis excluding the impact of exceptional items and acquisitions and disposals. Organic measures enable users to focus on the performance of the business which is common to both years and which represents those measures that local managers are most directly able to influence.

Calculation of organic movements under new methodology

The organic movement percentage is the amount in the row titled ‘Organic movement’ in the tables below, expressed as a percentage of the absolute amount in the associated relevant row titled ‘adjusted’. Organic operating margin is calculated by dividing operating profit before exceptional items by net sales after excluding the impact of exchange rate movements and acquisitions and disposals.

(a) Exchange rates

‘Exchange’ in the organic movement calculation reflects the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average exchange rates.

Exchange impacts in respect of the external hedging of inter group sales by the markets in a currency other than their functional currency and the inter group recharging of services are also translated at prior period weighted average exchange rates and are allocated to the geographical segment to which they relate. Residual exchange impacts are reported as part of the Corporate segment.

(b) Acquisitions and disposals

For acquisitions in the current period, the post acquisition results are excluded from the organic movement calculations. For acquisitions in the prior period, post acquisition results are included in full in the prior period but are included in the organic movement calculation from the anniversary of the acquisition date in the current period. The acquisition row also eliminates the impact of transaction costs that have been charged to operating profit in the current or prior period in respect of acquisitions that, in management’s judgement, are expected to be completed.

Where a business, brand, brand distribution right or agency agreement was disposed of, or terminated, in the period up to the date of the external results announcement, the group, in the organic movement calculations, excludes the results for that business from the current and prior period. In the calculation of operating profit, the overheads included in disposals are only those directly attributable to the businesses disposed of, and do not result from subjective judgements of management.

3

(c) Exceptional items

Exceptional items are those that in management’s judgement need to be disclosed by virtue of their size and/or nature. Such items are included within the income statement caption to which they relate, and are separately disclosed in the notes to the consolidated financial statements, and are excluded from the organic movement calculations.

Exceptional operating items are those that are considered to be material and/or unusual ornon-recurring in nature and are part of the operating activities of the group such as impairments of fixed assets, indirect tax settlements, property disposals and changes in post-employment plans.

Gains and losses on the sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusualnon-recurring items, that are not in respect of the production, marketing and distribution of premium drinks, are disclosed asnon-operating exceptional items below operating profit in the consolidated income statement.

Exceptional current and deferred tax items, comprising material unusualnon-recurring items, impact taxation. Examples include, direct tax provisions and settlements in respect of prior years and the remeasurement of deferred tax assets and liabilities following tax rate changes.

It is believed that separate disclosure of exceptional items and the classification between operating andnon-operating items further helps investors to understand the performance of the group.

4

Organic movement calculations for the year ended 30 June 2019 under both the new and old methodologies were as follows:

Year ended 30 June 2019

As calculated under new methodology
	North America £ million			Europe and Turkey £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			Corporate £ million			Total £ million
Sales
2018 reported		4,671			5,232			2,083			1,352			5,042			52			18,432
Exchange		(34	)		(1	)		(4	)		5			(17	)		(1	)		(52	)
Disposals		(175	)		(7	)		(4	)		(1	)		(10	)		—			(197	)
2018 adjusted		4,462			5,224			2,075			1,356			5,015			51			18,183
Organic movement		239			223			145			127			461			3			1,198
Acquisitions and disposals		133			2			2			1			1			—			139
Exchange		240			(317	)		13			(40	)		(121	)		(1	)		(226	)
2019 reported		5,074			5,132			2,235			1,444			5,356			53			19,294
Organic movement %		5			4			7			9			9			6			7
Net sales
2018 reported		4,116			2,932			1,491			1,069			2,503			52			12,163
Exchange		(28	)		(4	)		(4	)		3			(8	)		(1	)		(42	)
Disposals		(136	)		(3	)		(3	)		(1	)		(6	)		—			(149	)
2018 adjusted		3,952			2,925			1,484			1,071			2,489			51			11,972
Organic movement		206			113			104			89			231			3			746
Acquisitions and disposals		93			—			1			1			1			—			96
Exchange		209			(99	)		8			(31	)		(33	)		(1	)		53
2019 reported		4,460			2,939			1,597			1,130			2,688			53			12,867
Organic movement %		5			4			7			8			9			6			6
Marketing
2018 reported		662			474			158			196			388			4			1,882
Exchange		(5	)		(4	)		1			—			(2	)		—			(10	)
Reclassification		—			—			10			—			—			—			10
Disposals		(1	)		—			—			—			—			—			(1	)
2018 adjusted		656			470			169			196			386			4			1,881
Organic movement		71			27			4			11			27			(1	)		139
Acquisitions and disposals		2			—			—			—			—			—			2
Exchange		33			(7	)		1			(6	)		(1	)		—			20
2019 reported		762			490			174			201			412			3			2,042
Organic movement%		11			6			2			6			7			(25	)		7
Operating profit
2018 reported		1,882			1,028			191			308			568			(158	)		3,819
Exchange		(23	)		(3	)		6			—			(3	)		6			(17	)
Acquisitions and disposals		(85	)		(2	)		(2	)		—			(2	)		—			(91	)
2018 adjusted		1,774			1,023			195			308			563			(152	)		3,711
Organic movement		62			29			77			67			148			(44	)		339
Acquisitions and disposals		30			(1	)		—			—			—			(1	)		28
Exchange		82			(37	)		3			(10	)		(8	)		8			38
2019 reported		1,948			1,014			275			365			703			(189	)		4,116
Organic movement %		3			3			39			22			26			(29	)		9
Organic operating margin
2019		44.2	%		34.6	%		17.1	%		32.3	%		26.1	%		n/a			31.8	%
2018		44.9	%		35.0	%		13.1	%		28.8	%		22.6	%		n/a			31.0	%
Margin improvement/(decline) (bps)		(73	)		(35	)		399			357			352			n/a			85

As calculated under old methodology
	North America £ million			Europe and Turkey £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			Corporate £ million			Total £ million
Sales
2018 reported		4,671			5,232			2,083			1,352			5,042			52			18,432
Exchange		200			(291	)		12			(35	)		(120	)		—			(234	)
Disposals		(185	)		(7	)		(4	)		(1	)		(10	)		—			(207	)
2018 adjusted		4,686			4,934			2,091			1,316			4,912			52			17,991
Organic movement		249			195			142			127			443			1			1,157
Acquisitions and disposals		139			3			2			1			1			—			146
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2019 reported		5,074			5,132			2,235			1,444			5,356			53			19,294
Organic movement %		5			4			7			10			9			2			6
Net sales
2018 reported		4,116			2,932			1,491			1,069			2,503			52			12,163
Exchange		176			(95	)		8			(29	)		(36	)		—			24
Disposals		(143	)		(3	)		(3	)		(1	)		(6	)		—			(156	)
2018 adjusted		4,149			2,834			1,496			1,039			2,461			52			12,031
Organic movement		216			104			100			90			226			1			737
Acquisitions and disposals		95			1			1			1			1			—			99
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2019 reported		4,460			2,939			1,597			1,130			2,688			53			12,867
Organic movement %		5			4			7			9			9			2			6
Marketing
2018 reported		662			474			158			196			388			4			1,882
Exchange		24			(10	)		1			(7	)		(3	)		—			5
Reclassification		—			—			10			—			—			—			10
Disposals		(1	)		—			—			—			—			—			(1	)
2018 adjusted		685			464			169			189			385			4			1,896
Organic movement		75			26			5			12			27			(1	)		144
Acquisitions and disposals		2			—			—			—			—			—			2
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2019 reported		762			490			174			201			412			3			2,042
Organic movement %		11			6			3			6			7			(25	)		8
Operating profit
2018 reported		1,882			1,028			191			308			568			(158	)		3,819
Exchange		74			(35	)		(6	)		(2	)		(6	)		—			25
Acquisitions and disposals		(90	)		(2	)		(2	)		—			(2	)		—			(96	)
2018 adjusted		1,866			991			183			306			560			(158	)		3,748
Organic movement		52			22			91			59			143			(31	)		336
Acquisitions and disposals		30			1			1			—			—			—			32
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2019 reported		1,948			1,014			275			365			703			(189	)		4,116
Organic movement %		3			2			50			19			26			(20	)		9
Organic operating margin
2019		43.9	%		34.5	%		17.2	%		32.3	%		26.2	%		n/a			32.0	%
2018		45.0	%		35.0	%		12.2	%		29.5	%		22.8	%		n/a			31.2	%
Margin improvement/(decline) (bps)		(103	)		(49	)		494			288			341			n/a			83

Key categories - as calculated under new methodology

	Organic volume movement %			Organic net sales movement %			Reported net sales movement %
Spirits		3			7			6
Scotch		2			6			6
Vodka		2			2			4
US whiskey		2			4			9
Canadian whisky		6			6			8
Rum		(3	)		(2	)		(3	)
Indian-Made Foreign Liquor (IMFL) whisky		6			8			3
Liqueurs		1			3			4
Gin		17			23			23
Tequila		19			29			37
Beer		1			3			4
Ready to drink		7			12			12

Key categories - as calculated under old methodology

	Organic volume movement %			Organic net sales movement %			Reported net sales movement %
Spirits		3			7			6
Scotch		2			6			6
Vodka		2			2			4
US whiskey		2			4			9
Canadian whisky		6			6			8
Rum		(3	)		(2	)		(3	)
Indian-Made Foreign Liquor (IMFL)) whisky		6			8			3
Liqueurs		1			4			4
Gin		17			22			23
Tequila		19			29			37
Beer		1			3			4
Ready to drink		7			12			12

5

Organic movement calculations for the six months ended 31 December 2018 under the new and old methodologies were as follows:

Six months ended 31 December 2018

As calculated under new methodology
	North America £ million			Europe and Turkey £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			Corporate £ million			Total £ million
Sales
2017 reported		2,467			2,887			1,088			840			2,625			27			9,934
Exchange		(70	)		(45	)		(10	)		(14	)		(61	)		(1	)		(201	)
Reclassification		1			12			—			—			(13	)		—			—
Disposals		(92	)		(4	)		(2	)		—			(9	)		—			(107	)
2017 adjusted		2,306			2,850			1,076			826			2,542			26			9,626
Organic movement		143			193			74			59			292			2			763
Acquisitions and disposals		88			3			2			1			1			—			95
Exchange		130			(167	)		8			(22	)		(70	)		—			(121	)
2018 reported		2,667			2,879			1,160			864			2,765			28			10,363
Organic movement %		6			7			7			7			11			8			8
Net sales
2017 reported		2,183			1,599			774			649			1,298			27			6,530
Exchange		(63	)		(17	)		(9	)		(11	)		(22	)		(1	)		(123	)
Reclassification		1			12			—			—			(13	)		—			—
Disposals		(72	)		(2	)		(2	)		—			(5	)		—			(81	)
2017 adjusted		2,049			1,592			763			638			1,258			26			6,326
Organic movement		125			86			50			49			156			2			468
Acquisitions and disposals		69			1			1			1			1			—			73
Exchange		113			(46	)		7			(16	)		(17	)		—			41
2018 reported		2,356			1,633			821			672			1,398			28			6,908
Organic movement %		6			5			7			8			12			8			7
Marketing
2017 reported		338			246			83			109			188			4			968
Exchange		(4	)		—			4			(2	)		(3	)		(2	)		(7	)
Reclassification		(1	)		—			—			1			—			—			—
Disposals		(1	)		—			—			—			—			—			(1	)
2017 adjusted		332			246			87			108			185			2			960
Organic movement		30			18			4			7			25			(1	)		83
Acquisitions		2			—			—			—			—			—			2
Exchange		19			(4	)		—			(5	)		(2	)		1			9
2018 reported		383			260			91			110			208			2			1,054
Organic movement %		9			7			5			6			14			(50	)		9
Operating profit
2017 reported		1,027			599			120			218			316			(90	)		2,190
Exchange		(22	)		(9	)		1			(3	)		(7	)		11			(29	)
Reclassification		1			9			—			(1	)		(9	)		—			—
Acquisitions and disposals		(43	)		(1	)		(1	)		—			(1	)		—			(46	)
2017 adjusted		963			598			120			214			299			(79	)		2,115
Organic movement		39			38			31			47			112			(7	)		260
Acquisitions and disposals		42			1			1			—			—			—			44
Exchange		57			(23	)		1			(7	)		(2	)		6			32
2018 reported		1,101			614			153			254			409			(80	)		2,451
Organic movement %		4			6			26			22			37			(9	)		12
Organic operating margin
2018		46.1	%		37.9	%		18.6	%		38.0	%		29.1	%		n/a			35.0	%
2017		47.0	%		37.6	%		15.7	%		33.5	%		23.8	%		n/a			33.4	%
Margin improvement/ (decline) (bps)		(91	)		34			285			445			530			n/a			152

As calculated under old methodology
	North America £ million			Europe and Turkey £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			Corporate £ million			Total £ million
Sales
2017 reported		2,467			2,887			1,088			840			2,625			27			9,394
Exchange		52			(193	)		(1	)		(47	)		(125	)		—			(314	)
Reclassification		1			12			—			—			(13	)		—			—
Disposals		(97	)		(4	)		(3	)		—			(9	)		—			(113	)
2017 adjusted		2,423			2,702			1,084			793			2,478			27			9,507
Organic movement		151			174			74			70			286			1			756
Acquisitions and disposals		93			3			2			1			1			—			100
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		2,667			2,879			1,160			864			2,765			28			10,363
Organic movement %		6			6			7			9			12			4			8
Net sales
2017 reported		2,183			1,599			774			649			1,298			27			6,530
Exchange		44			(60	)		(1	)		(35	)		(39	)		—			(91	)
Reclassification		1			12			—			—			(13	)		—			—
Disposals		(75	)		(2	)		(2	)		—			(5	)		—			(84	)
2017 adjusted		2,153			1,549			771			614			1,241			27			6,355
Organic movement		130			83			49			57			156			1			476
Acquisitions and disposals		73			1			1			1			1			—			77
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		2,356			1,633			821			672			1,398			28			6,908
Organic movement %		6			5			6			9			13			4			7
Marketing
2017 reported		338			246			83			109			188			4			968
Exchange		10			(7	)		3			(6	)		(4	)		—			(4	)
Reclassification		(1	)		—			—			1			—			—			—
Disposals		(1	)		—			—			—			—			—			(1	)
2017 adjusted		346			239			86			104			184			4			963
Organic movement		36			21			5			6			24			(2	)		90
Acquisitions		1			—			—			—			—			—			1
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		383			260			91			110			208			2			1,054
Organic movement %		10			9			6			6			13			(50	)		9
Operating profit
2017 reported		1,027			599			120			218			316			(90	)		2,190
Exchange		39			(25	)		(2	)		(7	)		(3	)		(2	)		—
Reclassification		1			9			—			(1	)		(9	)		—			—
Acquisitions and disposals		(46	)		(1	)		(1	)		—			(1	)		—			(49	)
2017 adjusted		1,021			582			117			210			303			(92	)		2,141
Organic movement		36			31			35			44			106			12			264
Acquisitions and disposals		44			1			1			—			—			—			46
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		1,101			614			153			254			409			(80	)		2,451
Organic movement %		4			5			30			21			35			13			12
Organic operating margin		%			%			%			%			%			%			%
2018		46.3	%		37.6	%		18.5	%		37.9	%		29.3	%		n/a			35.2	%
2017		47.4	%		37.6	%		15.2	%		34.2	%		24.4	%		n/a			33.7	%
Margin improvement/ (decline) (bps)		(112	)		(1	)		336			365			486			n/a			152

Key categories - as calculated under new methodology

	Organic volume movement %			Organic net sales movement %			Reported net sales movement %
Spirits		4			7			5
Scotch		4			7			6
Vodka		2			2			2
US whiskey		2			4			6
Canadian whisky		5			5			6
Rum		(4	)		(4	)		(5	)
Indian-Made Foreign Liquor (IMFL) whisky		9			11			2
Liqueurs		—			2			2
Gin		25			29			29
Tequila		18			29			36
Beer		2			4			5
Ready to drink		9			16			15

Key categories - as calculated under old methodology

	Organic volume movement %			Organic net sales movement %			Reported net sales movement %
Spirits		4			7			5
Scotch		4			7			6
Vodka		2			3			2
US whiskey		2			4			6
Canadian whisky		5			5			6
Rum		(4	)		(3	)		(5	)
Indian-Made Foreign Liquor (IMFL) whisky		9			11			2
Liqueurs		—			3			2
Gin		25			28			29
Tequila		18			29			36
Beer		2			4			5
Ready to drink		9			16			15

6

Organic movement calculations for the year ended 30 June 2018 under both the new and old methodologies were as follows:

Year ended 30 June 2018

As calculated under new methodology
	North America £ million			Europe and Turkey £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			Corporate £ million			Total £ million
Sales
2017 reported		4,725			4,985			2,132			1,303			4,923			46			18,114
Exchange		8			(6	)		(3	)		26			14			—			39
Reclassification		(8	)		16			1			2			(11	)		—			—
Disposals		—			(2	)		—			—			(216	)		—			(218	)
2017 adjusted		4,725			4,993			2,130			1,331			4,710			46			17,935
Organic movement		168			391			92			94			522			4			1,271
Acquisitions and disposals		58			—			—			—			8			—			66
Exchange		(280	)		(152	)		(139	)		(73	)		(198	)		2			(840	)
2018 reported		4,671			5,232			2,083			1,352			5,042			52			18,432
Organic movement %		4			8			4			7			11			9			7
Net sales
2017 reported		4,161			2,824			1,556			1,044			2,419			46			12,050
Exchange		8			(2	)		(2	)		27			14			—			45
Reclassification		(8	)		16			1			2			(11	)		—			—
Disposals		—			(2	)		—			—			(57	)		—			(59	)
2017 adjusted		4,161			2,836			1,555			1,073			2,365			46			12,036
Organic movement		150			124			48			55			232			4			613
Acquisitions and disposals		52			—			—			—			4			—			56
Exchange		(247	)		(28	)		(112	)		(59	)		(98	)		2			(542	)
2018 reported		4,116			2,932			1,491			1,069			2,503			52			12,163
Organic movement %		4			4			3			5			10			9			5
Marketing
2017 reported		642			443			166			195			343			9			1,798
Exchange		11			10			(2	)		4			(13	)		(1	)		9
Reclassification		(2	)		1			—			1			—			—			—
Disposals		—			—			—			—			—			—			—
2017 adjusted		651			454			164			200			330			8			1,807
Organic movement		42			19			6			5			70			(3	)		139
Acquisitions and disposals		8			—			—			—			—			—			8
Exchange		(39	)		1			(12	)		(9	)		(12	)		(1	)		(72	)
2018 reported		662			474			158			196			388			4			1,882
Organic movement %		6			4			4			3			21			(38	)		8
Operating profit before exceptional items
2017 reported		1,899			936			218			250			487			(189	)		3,601
Exchange		102			(5	)		16			37			41			1			192
Reclassification		(4	)		11			2			(1	)		(8	)		—			—
Acquisitions and disposals		—			—			—			1			—			1			2
2017 adjusted		1,997			942			236			287			520			(187	)		3,795
Organic movement		24			93			—			48			85			32			282
Acquisitions and disposals		4			—			—			—			1			—			5
Exchange		(143	)		(7	)		(45	)		(27	)		(38	)		(3	)		(263	)
2018 reported		1,882			1,028			191			308			568			(158	)		3,819
Organic movement %		1			10			—			17			16			17			7
Organic operating margin		%			%			%			%			%			%			%
2018		46.9	%		35.0	%		14.7	%		29.7	%		23.3	%		n/a			32.2	%
2017		48.0	%		33.2	%		15.2	%		26.7	%		22.0	%		n/a			31.5	%
Margin (decline)/ improvement (bps)		(111	)		175			(45	)		295			131			n/a			70

As calculated under old methodology
	North America £ million			Europe and Turkey £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			Corporate £ million			Total £ million
Sales
2017 reported		4,725			4,985			2,132			1,303			4,923			46			18,114
Exchange		(261	)		(113	)		(130	)		(61	)		(160	)		1			(724	)
Reclassification		(8	)		16			1			2			(11	)		—			—
Disposals		—			(3	)		—			—			(207	)		—			(210	)
2017 adjusted		4,456			4,885			2,003			1,244			4,545			47			17,180
Organic movement		160			347			80			108			489			5			1,189
Acquisitions and disposals		55			—			—			—			8			—			63
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		4,671			5,232			2,083			1,352			5,042			52			18,432
Organic movement %		4			7			4			9			11			11			7
Net Sales
2017 reported		4,161			2,824			1,556			1,044			2,419			46			12,050
Exchange		(228	)		(15	)		(105	)		(43	)		(64	)		1			(454	)
Reclassification		(8	)		16			1			2			(11	)		—			—
Disposals		—			(3	)		—			—			(55	)		—			(58	)
2017 adjusted		3,925			2,822			1,452			1,003			2,289			47			11,538
Organic movement		142			110			39			66			210			5			572
Acquisitions and disposals		49			—			—			—			4			—			53
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		4,116			2,932			1,491			1,069			2,503			52			12,163
Organic movement %		4			4			3			7			9			11			5
Marketing
2017 reported		642			443			166			195			343			9			1,798
Exchange		(21	)		2			(11	)		(8	)		(5	)		(1	)		(44	)
Reclassification		(2	)		1			—			1			—			—			—
Disposals		—			—			—			—			—			—			—
2017 adjusted		619			446			155			188			338			8			1,754
Organic movement		35			28			3			8			50			(4	)		120
Acquisitions and disposals		8			—			—			—			—			—			8
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		662			474			158			196			388			4			1,882
Organic movement %		6			6			2			4			15			(50	)		7
Operating profit before exceptional items
2017 reported		1,899			936			218			259			487			(189	)		3,601
Exchange		(60	)		7			(20	)		10			1			6			(56	)
Reclassification		(4	)		11			2			(1	)		(8	)		—			—
Acquisitions and disposals		—			—			—			—			(2	)		1			(1	)
2017 reported		1,835			954			200			259			478			(182	)		3,544
Organic movement		43			74			(9	)		49			83			24			270
Acquisitions and disposals		4			—			—			—			1			—			5
Exchange		n/a			n/a			n/a			n/a			n/a			n/a			n/a
2018 reported		1,882			1,028			191			308			568			(158	)		3,819
Organic movement %		2			8			(5	)		19			19			13			8
Organic operating margin		%			%			%			%			%			%			%
2018		46.2	%		35.1	%		12.8	%		28.8	%		22.7	%		n/a			31.5	%
2017		46.8	%		33.8	%		13.8	%		25.8	%		20.9	%		n/a			30.7	%
Margin (decline)/ improvement (bps)		(58	)		126			(96	)		299			181			n/a			78

Key categories - as calculated under new methodology

	Organic volume movement %			Organic net sales movement %			Reported net sales movement %
Spirits		3			5			2
Scotch		3			2			1
Vodka		1			(1	)		(6	)
US whiskey		2			7			1
Canadian whisky		—			2			(4	)
Rum		(3	)		1			(4	)
Indian-Made Foreign Liquor (IMFL) whisky		4			8			(1	)
Liqueurs		6			5			4
Gin		17			17			14
Tequila		35			40			56
Beer		1			5			(1	)
Ready to drink		2			4			—

Key categories - as calculated under old methodology

	Organic volume movement %			Organic net sales movement %			Reported net sales movement %
Spirits		3			5			2
Scotch		3			2			1
Vodka		1			(1	)		(6	)
US whiskey		2			7			1
Canadian whisky		—			2			(4	)
Rum		(3	)		1			(4	)
Indian-Made Foreign Liquor (IMFL) whisky		4			8			(1	)
Liqueurs		6			6			4
Gin		17			16			14
Tequila		35			40			56
Beer		1			4			(1	)
Ready to drink		2			4			—

7

Contacts
Investor enquiries:	Andy Ryan	+44 (0) 20 8978 6504
		investor.relations@diageo.com

Editor notes

Diageo is a global leader in beverage alcohol with an outstanding collection of brands across spirits and beer categories. These brands include Johnnie Walker, Crown Royal, J&B, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

Diageo’s products are sold in more than 180 countries around the world. The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO). For more information about Diageo, its people, brands, and performance, visit us atDiageo.com. For our global resource that promotes responsible drinking through the sharing of best practice tools, information and initiatives, visitDRINKiQ.com.

Celebrating life, every day, everywhere.

8

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

		Diageo plc
		(Registrant)
Date: 3 December 2019	By:	/s/ James Edmunds
		Name: James Edmunds
		Title:   Deputy Company Secretary

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