Annual Report 2020

Diageo is a global leader in beverage 
alcohol with an outstanding collection 
of brands across spirits and beer.
Our Performance Ambition is to be one of the 
best performing, most trusted and respected 
consumer products companies in the world.
Our products are sold in more 
than 180 countries and our brands include 
Johnnie Walker, Crown Royal, JεB, Buchanan’s 
and Windsor whiskies, Smirnoff, Cîroc 
and Ketel One vodkas, Captain Morgan, 
Baileys, Don Julio, Tanqueray and Guinness.
We are proud of the brands we make and 
the enjoyment they give to millions. We are 
passionate about the role alcohol plays in 
bringing people together, to celebrate life  
every day, everywhere.
Contents
Strategic report
Our brands .......................................................................	
2
Our global reach...........................................................	
3
Chairman’s statement .............................................	
4
Our purpose and ambition .................................	
6
Chief Executive’s statement ................................	
8
Our business model ..................................................	
10
Stakeholder engagement ....................................	
12
Our market dynamics ..............................................	
14
Our strategic priorities .............................................	
17
Key performance indicators ................................	
30
Sustainability performance .................................	
32
Our principal risks and  
risk management ........................................................	
38
Climate-related risks ..................................................	
42
Group financial review ............................................	
44
Business review .............................................................	
50
Category review ...........................................................	
60
Definitions and reconciliation  
of non-GAAP measures to  
GAAP measures ...........................................................	
62
Governance report
Board of Directors  
and Company Secretary ........................................	
68
Executive Committee ..............................................	
70
Corporate governance report ...........................	
72
Audit Committee report ........................................	
81
Nomination Committee report .......................	
83
Directors’ remuneration report ........................	
84
Directors’ report ............................................................	 107
Financial statements ..........................	 109
Additional information  
for shareholders ........................................	 183
Bulleit Bourbon whiskey​
Cover images, from left to right:
Top row:	
Ketel One vodka Grapefruit Spritz; consumer enjoying Guinness.
Second row:	 Diageo hand sanitiser; Diageo blenders from the ‘Craftswomen’ programme: Nicole Austin, Joanna Scandella, Emma Walker and Eboni Major; 
Baileys Coffee Granita.
Third row:	
Guinness ‘Stay at Home’ creative by Luke O'Reilly; Tanqueray and Smirnoff cocktails; Don Julio Blood Orange Paloma cocktail.
Fourth row:	 Johnnie & Ginger Highball cocktails; Diageo ‘Raising the Bar’ fund; Johnnie Walker Walking Tall cocktail from the Kitchen Sink Drinks programme.

(i)	 See definitions and reconciliation of non-GAAP measures to GAAP measures on pages 62-67. 
(ii)	 Net sales are sales less excise duties.
(iii)	 Includes recommended final dividend of 42.47p. 
(iv)	 Our 2020 number reflects the cumulative progress against our target from the 2019 and 2020 fiscal years. 
(v)	 Per 1,000 full-time employees. 
(vi)	 Data for the year ended 30 June 2019 has been restated where relevant in accordance with Diageo’s environmental reporting methodologies.
Δ	 Within PricewaterhouseCoopers LLP's (PwC) independent limited assurance scope. For further detail and the reporting methodologies, see our Sustainability & 
Responsibility Performance Addendum 2020. 
(i)	 Excluding corporate net sales of £38 million (2019: £53 million).
(ii)	 Excluding exceptional operating charges of £1,357 million (2019: £74 million) and net corporate operating costs of £147 million (2019: £189 million).
Unless otherwise stated in this document, percentage movements refer to organic movements which are non-GAAP measures. For a definition of organic movement and reconciliation 
of non-GAAP measures to GAAP measures, see pages 62-67. Share refers to value share. Percentage figures presented are reflective of a year-on-year comparison, namely 2019-2020, only.
2020 Financial performance
2020 Non-financial performance
2019
2020
EU217.0m
EU245.9m 
Reported movement 
Ô11.8%
Organic movement 
Ô11.2%
Volume (equivalent units)
2019
2020
£11,752m
£12,867m
Reported movement 
Ô8.7%
Organic movement 
Ô8.4%
Net sales(ii)
2019
2020
229.2m
66.02m
Number of people reached with moderation 
messages from our brands
Positive drinking(iv)
2019
2020
£2,137m
£4,042m
Reported movement 
Ô47.1%
Organic movement 
Ô14.4%
Operating proﬁt
2019
2020
£2,320m
£3,248m
2020 decrease of £928 million
2020 free cash ﬂow(i) £1,634 million
Net cash from operating activities
2019
2020
0.60∆
0.98
Lost-time accident frequency(v)
Health and safety
2019
2020
60.1p
130.7p
Reported movement 
Ô54.0%
Eps before exceptional items movement(i) Ô16.4%
Earnings per share (eps)
Ó2.0%
2019
2020
69.88p
68.57p
Total recommended dividend per share(iii)
2019
2020
4.62l/l∆
4.72l/l
Water eﬃciency(vi)
2020 Performance by region 
EU48.4m
Reported	
2%
Organic	
0%
EU40.2m
Reported	
11%
Organic	
11%
EU28.8m
Reported	
14%
Organic	
13%
EU19.0m
Reported	
15%
Organic	
15%
EU80.6m
Reported	
15%
Organic	
15%
£4,623m
Reported	
4%
Organic	
2%
£2,567m
Reported	
13%
Organic	
12%
£1,346m
Reported	
16%
Organic	
13%
£908m
Reported	
20%
Organic	
15%
£2,270m
Reported	
16%
Organic	
16%
£2,034m
Reported	
4%
Organic	
4%
£757m
Reported	
25%
Organic	
24%
£101m
Reported	
63%
Organic	
56%
£248m
Reported	
32%
Organic	
29%
Net sales(i)
Volume (equivalent units)
Operating profit(ii)
North America
Europe 
and Turkey
Africa
Latin America  
and Caribbean
Asia Pacific
£501m
Reported	
29%
Organic	
29%
1
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our brands
Our global portfolio
We have built a leading portfolio of brands across key categories and price points.
We own two of the world’s five largest spirits brands by retail sales value, Johnnie Walker and Smirnoff.(i) The combined retail sales value of our six global 
giants is over £16 billion.(ii)
Reserve
Exceptional spirits 
brands at premium 
price points to capture 
the global luxury 
opportunity.
Local stars
Can be individual to 
any one market and 
provide a platform for 
our business to grow.
Global giants
Our business is built 
around six of our 
biggest global brands.
(i)	 IWSR, 2019.
(ii)	 IWSR, 2019 and Global Data, 2019.
(iii)	Percentages do not add to 100. Reserve group includes some brands and variants 
in both global giants and local stars. For detail on percentage of total net sales by 
category, see page 60.
Net sales(iii)
Reserve
Local stars
Global giants
39%
20%
21%
2
DIAGEO Annual Report 2020

Our global reach
Our regional profile provides exposure to the greatest consumer growth opportunities in our sector.
We employ 27,775 talented people. Our products are sold in over 180 countries and each of our markets is accountable for its own performance  
and for driving growth.
(i)	 The above map is intended to illustrate general geographic regions where Diageo has a presence and/or in which its products are sold. It is not intended to imply that Diageo has a presence 
in and/or that its products are sold in every country within a geographic region.
(ii)	 Based on reported net sales for the year ended 30 June 2020. Does not include corporate net sales of £38 million (2019: £53 million).
Percentage share by region
​
North America
Europe  
and Turkey
Africa
Latin America  
and Caribbean
Asia Pacific
Volume
22.3
18.5
13.3
8.8
37.1
Net sales(i)
39.5​
21.9
11.5
7.8
19.3
Operating profit before exceptional items(ii)
55.9
20.8
2.8
6.8
13.7
Operating profit(iii)
91.4
30.4
(1.9)
10.6
(30.5)
Water withdrawal
13.7​
40.2​
34.7​
2.0​
9.4​
Carbon emissions(iv)
26.8​
27.4​
33.8​
4.5​
7.5​
Employees(v)
9.5
36.3
14.9
9.7
29.6
% share of net sales by region(i)(ii) 
US Spirits
Diageo Beer Company (DBC) USA
Canada
Other (principally Travel Retail)
North America
39.5%
Mexico
Paraguay, Uruguay and Brazil (PUB)
Central America and Caribbean (CCA)
Andean (Colombia and Venezuela)
Peru, Ecuador, Bolivia, 
Argentina, Chile (PEBAC) 
Other (principally Travel Retail)
Latin America 
and Caribbean
7.8%
East Africa
Africa Regional Markets (ARM)
Nigeria
South Africa
Other (principally Travel Retail)
Africa
11.5%
India
Greater China
Australia
South East Asia
North Asia
Travel Retail Asia and Middle East 
Asia Paciﬁc
19.3%
(i)	 Excluding corporate net sales of £38 million (2019: £53 million).
(ii)	 Excluding exceptional operating charges of £1,357 million (2019: £74 million) 
and net corporate operating costs of £147 million (2019: £189 million).
(iii)	Excluding net corporate operating costs of £147 million (2019: £210 million).
(iv)	Excludes corporate offices which account for 1.4% of combined impacts.
(v)	Employees have been allocated to the region in which they reside.
Europe
Turkey
Other (principally Travel Retail)
Europe 
and Turkey
21.9%
3
DIAGEO Annual Report 2020
STRATEGIC REPORT

This year, the onset of the Covid-19 pandemic 
has been extremely challenging for many people, 
communities and businesses around the world. 
At a testing time, Diageo has been able to rely on 
the culture of agility and efficiency that has been 
nurtured under Ivan’s leadership. I am particularly 
grateful to all our employees for their tenacity and 
commitment through this difficult period, and for 
their hard work to help tackle the public health 
emergency, their support for our communities 
and their work with our suppliers and customers.
Culture
Our ability to adapt to market challenges, 
combined with our unwavering focus on 
consumers and trade partners, are the foundation 
for the delivery of our Performance Ambition. 
During the year, we continued to invest 
behind the opportunities we believe will deliver 
the best returns. From brands to innovation and 
technology, we continued to enhance capabilities 
and drive efficiencies across the business. 
Although the trajectory of the global recovery 
from Covid-19 is uncertain, I am confident that our 
culture will continue to underpin our resilience 
and our longer-term success. 
Our stakeholders
Our purpose is to celebrate life, every day, 
everywhere. This requires us to be the best we 
can be at work, at home and in the community. 
It means engaging with our stakeholders, 
listening to their ideas and concerns and 
working constructively with them to find 
solutions to our shared challenges. You can 
read more about our stakeholder engagement 
on pages 12-13 and 76-77. 
Our first priority this year has been the health, 
safety and wellbeing of our employees. While 
Covid-19 restrictions prevented our annual Your 
Voice Survey from taking place this year, we 
developed a new survey tool which helped us 
understand employee engagement, listen to our people’s 
feedback and learn from their working experience during 
the pandemic. The Board was pleased with the survey 
results, with 91% of employees saying they were ‘proud 
to work at Diageo’. 
As the designated Non-Executive Director 
for workforce engagement, I have also very much 
appreciated the candid discussions I have had 
with employees. During the year, I held open and 
constructive sessions with employees across all 
five regions, both in person and, in the second half 
of the year, virtually. Our employees’ perspectives 
and ideas provide very valuable input for the Board’s 
consideration and our workforce engagement 
statement is available on page 77.
The global environment
As a business that sells its products in over 180 countries, 
we are never immune from volatility in the global 
trade environment. The global impact of Covid-19 is 
unprecedented. We are closely tracking and adapting to 
consumer behaviour and have taken swift action ranging 
from bolstering our financial liquidity to re-prioritising our 
investment plans. 
With the United Kingdom approaching the end 
of the transition period for exiting the European Union, 
we remain confident that the direct financial impact 
to Diageo will not be material. Under World Trade 
Organization rules the majority of our products already 
move tariff-free within the European Union and we 
see some potential longer-term opportunities if the 
United Kingdom can strike beneficial new trade deals.
Diageo in society
We are determined to build our business for the very long 
term and seek to make a positive impact on the issues that 
matter most to our stakeholders and to wider society. 
The work we do in the societies and communities in 
which we live and work is fully integrated with our 
strategic priorities. We have a longstanding commitment 
to promote positive drinking through encouraging 
Chairman’s statement​
Chairman’s statement
‘We are determined to build Diageo 
for the very long term and we seek to 
make a positive impact on the issues 
that matter most to our stakeholders 
and to wider society. During Covid-19 
we have been closely tracking and 
adapting to consumer behaviour and 
have taken swift action ranging from 
strengthening our financial liquidity  
to re-prioritising our investment plans.’ 
Javier Ferrán
Chairman 
Recommended  
final dividend  
per share
42.47p
0%
2019: 42.47p
Total dividend  
per share(i)
69.88p
 2%
2019: 68.57p
(i)	 Includes recommended  
final dividend of 42.47p.
Total shareholder return
(19)%
2019: 27%
4
DIAGEO Annual Report 2020

has been appointed President, Diageo North America and joined the 
Diageo Executive Committee, effective 1 July. Debra is taking over from 
Deirdre Mahlan, who is retiring after a long and successful career at the 
company. On behalf of the Board, I would like to thank Debra for her 
contribution to the Board since April 2019 and wish her well in her 
new role. Sir John Manzoni has also been appointed Non-Executive 
Director from 1 October. John will also join the Audit, Nomination and 
Remuneration Committees on appointment. In June, we announced the 
appointment of Melissa Bethell as a Non-Executive Director from 30 June. 
Melissa has also joined the Audit, Nomination and Remuneration 
Committees. In addition, Ho KwonPing, who has served as Non-Executive 
Director since October 2012, has decided he will not stand for re-election 
at the Annual General Meeting and will leave the Board on 28 September 
2020. I am appreciative of the valuable contribution he has made during 
his time on the Board.
Looking ahead
Diageo’s broad portfolio and geographic footprint, our leading market 
positions and our ability to execute at scale provide a solid foundation for 
recovery as we transition from the Covid-19 pandemic to a ‘new normal’. 
Our business continues to act with discipline and invest prudently to 
deliver high-quality, sustainable growth so that we can emerge stronger as 
the recovery in consumer demand and global travel takes hold. We remain 
confident that the long-term trends for our industry are extremely attractive. 
Your Board and executive leadership team will ensure that Diageo continues 
to focus on long-term value creation for all our stakeholders and that we 
actively support our industry and our communities. 
Javier Ferrán
Chairman
moderation and tackling misuse. We were encouraged to see the results 
of an international survey covering nine countries which shows 84% of 
drinkers are not drinking more than they did before the pandemic 
lockdowns.(i) We are not, however, complacent and continue our 
important work in this area, which you can read more about on pages 24-25.
Water is our most important ingredient and a precious shared resource 
which is coming under increasing pressure in many parts of the world. 
Managing our impact on water, and being good stewards of this resource, 
is our highest environmental priority. A big part of our action on water is 
our replenishment programme in water-stressed areas where we operate. 
We have made significant progress this year and have achieved our 2020 
target, meaning that we have replenished the total water used in our final 
product in these areas. This year Diageo was one of only 72 companies, 
out of 8,400 globally, to achieve an ‘A’ for Water Stewardship from CDP, the 
leading global disclosure system for environmental reporting. This puts 
Diageo in the top 1% of companies globally. You can read more about 
our water stewardship performance on page 34. 
Creating value 
In fiscal 2020, our performance was significantly impacted by the Covid-19 
pandemic. We took swift and decisive action across the business and this, 
combined with the changes that have been made over the last six years, 
provides solid foundations for future progress across the four areas of 
performance we measure: efficient growth, consistent value creation, 
credibility and trust, and engaged people.
​Return on invested capital was down 267 basis points at 12.4%. 
Total shareholder return (TSR) was minus 19% this year, although the 
compound average growth rate of both the five- and ten-year TSR was 
up double-digits, placing Diageo sixth in both periods amongst our 
consumer products peer group.
We continue to target dividend cover (the ratio of basic earnings 
per share before exceptional items to dividend per share) of between 
1.8 and 2.2 times. The recommended final dividend is 42.47 pence 
per share. This brings the recommended full-year dividend to 69.88 pence 
per share and dividend cover to 1.6 times. Subject to shareholder approval, 
the final dividend will be paid to UK shareholders on 8 October 2020. 
Payment will be made to US ADR holders on 14 October 2020. This year, 
we purchased 39 million shares, returning £1.25 billion to shareholders in 
the first phase of the current return of capital programme. On 9 April, we 
announced that we would not initiate the next phase of this programme 
in fiscal 2020. Given our elevated leverage ratio we are now pausing the 
share buyback programme until leverage is back within our target range of 
2.5-3.0 times adjusted net debt to EBITDA.
Board changes
From the end of October 2019, Susan Kilsby, Non-Executive Director  
and Chair of the Board’s Remuneration Committee, took over as the  
Senior Independent Director. She replaced Lord Davies of Abersoch,  
who had served as the Senior Independent Director since October 2011 
and who retired from the Board at the end of June. Lord Davies had  
been a non-executive Director for over nine years, and I am very  
grateful to him for his wise guidance and significant contribution 
to the Board’s deliberations.
In January, we announced the appointment of Valérie Chapoulaud-
Floquet as a Non-Executive Director, effective 1 January 2021. Valérie 
will also join the Audit, Nomination and Remuneration Committees. 
At the end of March, Debra Crew stepped down from the Board as she 
Statement on Section 172  
of the Companies Act 2006
Section 172 of the Companies Act 2006 requires the 
Directors to promote the success of the company for 
the benefit of the members as a whole, having regard 
to the interests of stakeholders in their decision-making. 
In making decisions, the Directors consider what is 
most likely to promote the success of the company for 
its shareholders in the long term, as well as the interests 
of the group’s stakeholders. The Directors understand 
the importance of taking into account the views of 
stakeholders and the impact of the company’s activities 
on local communities, the environment, including climate 
change, and the group’s reputation.
Read more about:
–– Our stakeholder groups on pages 12-13
–– How the views and interests of stakeholders were taken 
into account in decision-making on pages 76-77
(i)	 June 2020 survey of more than 11,000 people across nine countries in Africa, 
North America, Latin America, Asia and Europe conducted by YouGov for the  
International Alliance for Responsible Drinking (IARD). 
5
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our purpose and ambition
We are determined to build a company that will prosper over the very long term. As a global company we  
have an important role to play in ensuring the communities we are part of thrive. We want to deliver consistent 
performance and have a positive impact where we live, work, source and sell. 
We are a company built and sustained through innovation, creating new products, categories and experiences  
for consumers. We are the stewards of iconic, purpose-led brands created by entrepreneurs like John Walker, 
Charles Tanqueray and Arthur Guinness. Today, we stand on the shoulders of these giants and act with the  
same entrepreneurial spirit and determination. 
Our purpose and ambition are at 
the heart of everything we do.
Our strategic priorities provide the roadmap 
to achieving our ambition. 
Zacapa Rum ageing in oak barrels​
Our values and culture shape  
the way we work.
From purpose to performance
Celebrating life, every day, everywhere.
Our purpose – celebrating life, every day, everywhere –  
is about being the best we can be at work, at home and in the 
community. We are passionate about the role our brands play 
in celebrating life the world over. At the core of our approach 
is a commitment to positive drinking through promoting 
moderation and addressing the harmful use of alcohol:  
doing so is good for consumers and good for business. 
We take great care in building sustainable supply chains;  
in protecting the environment and the natural resources  
we all rely on; and in our commitment to skills, empowerment 
and inclusivity. 
Our ambition is to be one of the best performing, 
most trusted and respected consumer products 
companies in the world.
To be best performing, we need to deliver efficient  
growth and value creation for our shareholders. This means 
delivering quality, sustainable growth in net sales, steady 
margin expansion and reliable cash flows year after year.  
To be most trusted, we must do business the right way from 
grain to glass, and ensure our people are highly engaged  
and continuously learning. 
Our reputation is not just an outcome of our  
commercial performance. We only earn trust and respect 
through our actions and we work hard to ensure that  
we deliver on our promises.
Read more on page 17
1
2
3
These priorities 
are inter-related  
and mutually 
reinforcing.  
Together, they drive 
our company forward. 
Through them,  
we deliver the 
strategic outcomes 
against which  
we measure our 
performance.
To fulfil our Performance Ambition, we know that we must 
earn the trust and respect of all our stakeholders. This is why 
our culture is rooted in a deep sense of our purpose and values. 
Our values underpin our business and guide how we work:
–– Passionate about 
consumers and customers
–– Freedom to succeed
–– Proud of what we do
–– Valuing each other
–– Be the best
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6
DIAGEO Annual Report 2020

Our priorities ensure our stakeholders’ interests 
are integral to how we manage our business. 
Read more on pages 12-13
4
We measure our performance through a  
set of financial and non-financial indicators.
Read more on pages 30-31
5
​
Organic net sales growth 
​
Organic operating profit growth
​
Earnings per share before exceptional items
​
Free cash flow
​
Return on average invested capital
​
Total shareholder return
​
Reach and impact of positive drinking programmes
​
Health and safety
​
Water efficiency
​
Carbon emissions
​
Employee engagement
EG
EG
EG
EG
CVC
CVC
EP
CT
EP
CT
CT
CT
EP
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Suppliers 
Consumers 
People
Governments and regulators
Customers 
Investors
Communities
7
DIAGEO Annual Report 2020
STRATEGIC REPORT

The Covid-19 pandemic represents the most 
challenging environment for international 
businesses for a generation. I want to thank all  
my colleagues for their remarkable dedication  
in such difficult circumstances and, especially, 
for the support they have shown to each other, 
our partners and the communities in which we  
live and work. 
As well as causing devastating loss of life 
around the world, the pandemic has seriously 
affected many countries and significantly 
impacted our performance in the second 
half. Nonetheless, our business has shown 
considerable resilience throughout the 
pandemic. This is testament to the hard work 
of our colleagues and efforts over recent years 
to make our business more agile, putting the 
consumer at the heart of everything we do.
Our priority remains the health and wellbeing 
of our colleagues, while taking the necessary 
actions to protect our business. At the start of  
the pandemic, we put in place stringent safety 
protocols and heightened sanitation measures at 
all our sites and enabled employees to work from 
home wherever possible. Across the business, we 
have implemented new policies and resources to 
support all our people, both on site and at home.
From the beginning of this pandemic, 
we addressed the medical and humanitarian 
emergency with charitable donations, drinking 
water, food parcels, masks and hygiene products 
around the world. At a time of acute personal 
protective equipment (PPE) shortages, we  
donated alcohol to make more than ten million 
bottles of hand sanitiser for frontline healthcare 
workers in 20 countries and manufactured hand 
sanitiser to meet community surges in demand.
Many countries implemented lockdowns  
that included bar closures. As a result, we have 
provided support packages for bartenders and bar 
owners and have worked closely with our suppliers and 
customers to reduce the disruption to their businesses and 
ours. In June, we announced a $100 million recovery fund 
and global programme, ‘Raising the Bar’, to support pubs 
and bars as they start to welcome their customers back.  
We will continue to help communities and our industry, 
and we are determined to do what we can to support  
the global recovery. 
I am very proud of the way our people responded 
when they were truly tested this year. Together, we will 
enable Diageo and the communities in which we live  
and work to emerge stronger from this pandemic. 
Performance 
After several years of consistent delivery, the global 
outbreak of Covid-19 has presented significant challenges 
for our business, impacting fiscal 2020 performance.
In the first half, we delivered a good, consistent set 
of results, with broad based organic net sales growth 
across regions and categories; we continued to increase 
investment behind marketing and growth initiatives, 
while expanding organic operating margins; we returned 
£1.1 billion to shareholders via share buybacks and 
delivered solid free cash flow at almost £1 billion. 
For the full year, reported net sales were down 8.7%, 
driven by a decline in organic net sales. Organic net sales 
were down 8.4%, with growth in North America offset 
by declines in all other regions. Reported operating profit 
was down 47.1%, mainly driven by exceptional operating 
items, including impairments, and by a 14.4% decline in 
organic operating profit. The decline in organic operating 
profit was driven by an 11.2% decline in volumes, cost 
inflation and unabsorbed fixed costs, which were partially 
offset by short term cost reductions and ongoing 
productivity benefits. 
Reported and organic net sales were down across 
most brands and categories, with the exception of 
tequila, up 25%, Canadian whisky, up 8%, US whiskey, 
up 3% and ready to drink, up 8%. Organic net sales of our 
global giant brands were down 13%, driven by declines 
in Johnnie Walker and Guinness. Guinness was impacted 
Chief Executive’s statement​
Chief Executive’s statement
‘Covid-19 has vividly demonstrated that 
governments, businesses and communities 
must work together to build more resilient 
societies, better able to withstand major 
social and economic shocks. I am very  
proud of the way our people responded 
when they were truly tested this year. 
Together, we will enable Diageo and the 
communities in which we live and work 
to emerge stronger from this pandemic.’ 
Ivan Menezes
Chief Executive
Volume movement
11.8%  
2019: 2.3% 
Organic volume 
movement
11.2%  
2019: 2.3% 
Net sales movement
8.7%  
2019: 5.8% 
Organic net sales 
movement
8.4%  
2019: 6.1% 
Reported operating 
profit movement
47.1%  
2019: 9.5% 
Organic operating 
profit movement
14.4%  
2019: 9.0% 
8
DIAGEO Annual Report 2020

I am very proud of the inclusive and diverse culture we are creating at 
Diageo. Championing inclusion and diversity is fundamental to driving 
engagement and achieving the best possible outcomes for our business. 
This year, we were ranked the second Most Diverse and Inclusive 
Workplace globally by the Refinitiv Diversity and Inclusion Index. 
Raising the Bar
We are committed to taking every step necessary to champion equality 
everywhere. While we have made progress, there is so much more to do. 
I am proud that our $100 million global ‘Raising the Bar’ programme 
included a $20 million community fund to support social justice in 
the United States, helping Black communities and businesses recover 
from Covid-19. 
As we look ahead, we are determined to continue building resilience 
in our business and to support our communities. The United Nations’ 
International Labour Organization has forecast that 436 million enterprises 
worldwide face serious disruption and one in six young people will be 
unemployed due to Covid-19. Through our ‘Raising the Bar’ programme, 
we will provide support to help pay for the physical equipment needed 
for outlets to re-open in major hospitality centres around the world. These 
businesses play an essential role in bringing people together to socialise 
and celebrate – something that we have missed so much during this 
pandemic. They also sustain hundreds of millions of jobs, which provide 
a first foot on the employment ladder for many young people. 
Outlook
Our immediate focus is on emerging from Covid-19 in a stronger  
position, having built deeper relationships with our customers,  
consumers and the communities in which we operate. Although 
the trajectory of the recovery is uncertain, with volatility expected to 
continue into fiscal 2021, we are well-positioned to invest effectively, 
as consumer demand returns. Recovery will depend on the success 
of public health measures, the impact of economic policies, the pace 
at which lockdown measures are eased and how quickly consumers 
choose to return to bars and restaurants and resume international travel. 
Over the longer term, total beverage alcohol remains highly attractive, 
with robust fundamentals, and the actions we have taken over the last six 
years provide solid foundations to grow in a consistent, sustainable way. 
We have passionate, committed people, an enviable portfolio of brands 
and a strong balance sheet. I am confident in Diageo’s strategy and our 
ability to move quickly in the current environment. We will continue to 
execute with discipline and invest appropriately to ensure we are strongly 
positioned for a recovery in consumer demand.  
Ivan Menezes
Chief Executive 
by global on-trade closures and keg return schemes in the second half. 
Our local stars declined 7%, with continued growth of Crown Royal offset, 
primarily, by declines in Chinese white spirits in China. Our Reserve brands 
declined 4%, with double-digit growth in Don Julio and Casamigos offset 
by declines in Chinese white spirits, Johnnie Walker Reserve variants, Cîroc 
and Ketel One vodka. Earnings per share before exceptionals declined 
16.4%, driven primarily by lower operating profit.
During the second half, we reduced discretionary expenditure 
and reallocated resources across the group. As part of these mitigation 
measures, we stopped any A&P spend that would not be effective, but 
have been clear that we must remain invested in the medium to long 
term health of our brands and business. We also tightly managed 
working capital and deferred discretionary capital expenditure projects. 
We have a strong balance sheet and recognise the importance of 
liquidity through uncertain times. During the second half we issued an 
additional £2 billion of bonds and temporarily increased our committed 
facilities from £2.8 billion to £5.3 billion. We delivered solid cash flow 
performance, with free cash flow at £1.6 billion. As a result, we have 
the liquidity and the confidence to continue investing in our priorities. 
As demand recovers, we will continue investing behind the most effective 
initiatives to ensure we emerge stronger.
Communities
Covid-19 has vividly demonstrated that governments, businesses 
and communities must work together to build more resilient 
societies, better able to withstand major social and economic shocks. 
I am proud that, despite the pandemic, Diageo has maintained its 
community investment to ensure the business has a positive impact 
on society: promoting moderation and tackling alcohol misuse; reducing 
our carbon emissions and water usage; and supporting local communities 
through our global skills and empowerment programmes. You can read 
more on pages 24-29.
This year, our ambitious and stretching external targets for the 
environment and communities come to a close. While we are proud 
of our progress, we know there is much more to do. We have been 
developing our new targets to 2030, which will take our commitment to 
positive drinking, inclusion and diversity and grain-to-glass sustainability 
even further. You can read more on pages 32-37.
Scotch 
23%
Vodka 
11%
US Whiskey 
3%
Canadian Whisky 
8%
Rum 
7%
IMFL Whisky 
5%
Liqueurs 
5%
Gin 
5%
Tequila 
5%
Beer 
15%
Ready to drink 
7%
Other 
6%
2020 net sales by category (%)
9
DIAGEO Annual Report 2020
STRATEGIC REPORT

Creating a truly sustainable business  
for the very long term
Our business model
We deliver our strategic priorities through a business model that leverages  
global and local expertise, has the consumer at its heart and puts our responsibilities  
to our stakeholders front and centre.
Our enablers
Our people
We are proud of our people, whose passion, 
commitment and specialist skills make the difference.
27,775 
Our brands
We have a leading portfolio of iconic brands 
across spirits and beer.
200+
Our relationships
From grain to glass, strong, trusted relationships 
with all our stakeholders are essential to our business. 
180+ countries
Our insight and know-how
Our in-country sales and marketing teams give us greater 
agility and enhanced insight, so we can anticipate the 
diverse needs of our consumers and customers.
Our infrastructure
We have a global network of sites devoted to research 
and development, distillation, maturation, brewing,  
warehousing and packaging of spirits and beer. 
150+ sites
Our financial strength
Attractive industry margins, a strong balance sheet and 
solid free cash flows give us the financial strength to execute 
our strategy and deliver strong stakeholder returns over 
the long term.
What sets us apart 
Our brand portfolio 
and geographic footprint
Our leading brand portfolio offers 
consumers a broad range of products 
across categories and price points. 
We have extensive operations in the 
United States and Europe, as well as 
leading positions in many of the markets 
that are expected to contribute most to 
medium-term industry growth.
Our relationships with the trade
Diageo Reserve World Class™ discovers the 
next generation of bartending talent, who 
set the latest mixology trends and bring these 
to the best bars worldwide. Since its launch 
in 2009, we have created a network of 
relationships with bartenders, customers and 
distributors that provides us with a unique 
route to our consumers.
Our track record in innovation 
and brand building
We innovate across centuries-old brands such 
as Johnnie Walker, Tanqueray and Guinness, 
and we develop and grow new brands like Bulleit 
and Roe & Co. We use our archives, two of the 
largest and most comprehensive in the drinks 
industry, to provide a rich source of inspiration 
for our brands. 
Johnnie & Ginger Highball cocktail​
10
DIAGEO Annual Report 2020

Our expertise in distillation and brewing
Our supply chain teams are the guardians of our brands’ quality and 
craftsmanship. Their skills and experience range from the craft of 
barrel-making and coppersmithing, to blending scotch, brewing 
premium beer, designing packaging and ensuring our complex 
modern supply operations are working to the highest standards. 
The value we create(i)
Our people
We want our people to be the best they can be. We offer 
a diverse and inclusive workplace with opportunities for 
development and progression.
91%​
of employees are proud to work  
for Diageo
Our consumers
We are passionate about the role our brands play in 
celebrations globally. We are committed to promoting 
moderation and reducing alcohol misuse.
229.2m
people reached with moderation  
messages from our brands(ii) 
Our customers
We work closely with customers to build sustainable 
partnerships that help grow their businesses through 
great insight and execution. 
149,000
bar professionals trained through  
the Diageo Bar Academy 
Our communities
We help build thriving communities by making lasting 
contributions where we live, work, source and sell.
> 293,000 people benefitted from our 
community programmes
Our suppliers
We partner with suppliers to ensure long-term, mutually 
beneficial relationships. Respect for human rights is 
embedded throughout our global supply chain.
14th​
in the Gartner Supply Chain Top 25​
Our investors
We aim to maximise shareholder returns through 
consistent, efficient growth and a disciplined approach  
to capital allocation.
13%
compound annual growth rate in total 
shareholder return over 10 years
Governments and regulators
We contribute to economic and development priorities 
and advocate laws that protect communities where these 
are not already in place.
£1.3m
average amount generated for every  
£1m we contribute to national GDP(iii)
Our business activities 
Consumer 
insights
We have well-
established 
proprietary data 
tools to understand 
consumers’ attitudes 
and motivations. 
We convert this 
information into 
insights which 
enable us to respond 
with agility to our 
consumers’ interests 
and preferences.
Innovation
Using our deep 
understanding 
of trends and 
consumer 
socialising occasions, 
we focus on driving 
sustainable innovation 
that provides 
new products 
and experiences for 
consumers, whether 
they choose to drink 
alcohol or not.
Sourcing
From smallholder 
farmers in Africa  
to multinational 
companies, we work 
with our suppliers to 
procure high-quality 
raw materials and 
services. Where it 
makes sense, we 
source locally.
Distilling and 
brewing 
We distil, brew, 
bottle and distribute 
our premium spirits 
and beer brands 
through a globally 
co-ordinated supply 
operation, working 
to the highest 
quality and 
manufacturing 
standards. Where 
it makes sense, we 
produce locally.
Marketing
We invest in 
world-class marketing 
to responsibly build 
vibrant brands that 
resonate with our 
consumers. We have  
a rigorous Marketing 
Code and belong to 
the Global Alliance 
for Responsible 
Media, working  
with peers to push  
for further consumer 
and brand safeguards.
Selling
We grow by 
working in 
partnership with 
our customers.  
Our global  
and local  
sales teams use 
proprietary data 
tools and insights 
to extend our sales 
reach and improve 
our execution. When 
our customers grow, 
we grow too.
(i)	 Data points refer to fiscal 2020 other than where indicated.
(ii)	 Cumulative for fiscal 2019 and fiscal 2020.
(iii)	Oxford Economics, 2020 for calendar year 2019. 
11
DIAGEO Annual Report 2020
STRATEGIC REPORT

Ensuring a continuous dialogue
Stakeholder engagement
We aim to maintain open and positive dialogue with all our stakeholders, considering their key interests and 
communicating with them on a regular basis. This helps us build trust and respect and make choices as a business 
that help shape the role we play in society.
Our purpose and values help guide our engagement around the world.
Our stakeholders’ 
interests
How we respond
–– Prioritisation of health, safety 
and wellbeing
–– Investment in learning 
opportunities for employee 
growth and development
–– Ways of working, culture and 
benefits programme
–– Contribute to the growth of our 
brands and our performance
–– The promotion of inclusion 
and diversity 
–– Choice of brands for different 
occasions, including no- and 
lower-alcohol
–– Innovation in heritage brands 
and creation of new brands
–– Responsible marketing
–– Great experiences
–– Product quality
–– Sustainability credentials
–– Price
–– A portfolio of leading brands that 
meets evolving consumer preferences
–– Identification of opportunities that 
offer profitable growth
–– Insights into consumer behaviour 
and shopper trends 
–– Trusted product quality 
–– Innovation, promotional support 
and merchandising
–– Availability and reliable supply 
and stocking
–– Technical expertise
–– Company-wide employee 
engagement surveys
–– Consistent talent and performance 
management approach
–– Extensive online learning and 
development material 
–– Informative and up-to-date 
employee communication channels
–– Meetings with non-executive 
workforce engagement director
–– Employee interest groups​
–– Broad portfolio of choices across 
categories and price points
–– Insightful innovation that satisfies 
consumer preferences
–– Responsible advertising and 
marketing that adheres to our strict 
Diageo Marketing Code 
–– Active engagement and education 
to promote moderation and reduce 
the harmful use of alcohol
–– High-quality manufacturing 
and environmental standards
–– Use of best practice sales analytics 
and technology to support our 
retailers and distributors
–– Ongoing dialogue and account 
management support
–– Physical and virtual sales calls
–– Development of joint business plans
–– Regular business updates
–– Training and webinars through 
unique offerings, like the Diageo 
Bar Academy
Read more about how our Board 
engages with our stakeholders 
on pages 76-77
Our people are at the core of our 
business. We aim to build a trusting, 
respectful and inclusive culture so 
every individual feels highly engaged 
and can be their best. We want our 
people to feel their human rights are 
respected and they are treated with 
dignity. We are committed to creating 
opportunities for growth and to a 
continuous learning culture. ​
Understanding our consumers is key 
to growing our business sustainably 
for the long term. Consumer 
motivations, attitudes and behaviour 
form the basis of our brand marketing 
and innovations. We make our brands 
with pride and want them to be 
enjoyed responsibly. On occasions 
when consumers choose alcohol, we 
want them to ‘drink better, not more’. 
Our customer partners are experts in 
the products they buy and sell, as well 
as in the experiences they create and 
deliver. We work with a wide range  
of customers: big and small, on-trade 
and off, digital and e-commerce.  
Our passion is to ensure we nurture 
mutually beneficial relationships  
that deliver joint value and the  
best outcome for all our consumers.
People
Consumers
Customers
Why we engage
12
DIAGEO Annual Report 2020

Our suppliers and agencies are experts 
in the wide range of goods and services 
we require to create and market our 
brands. By working with them, we  
not only deliver high-quality products 
marketed responsibly, but improve  
our collective impact, ensuring 
sustainable supply chains, reducing  
our environmental impact and making 
positive contributions to society.
–– Developing strong, mutually 
beneficial partnerships
–– Collaborating to realise innovation 
–– Fair contract and payment terms
–– Consistent performance 
measurement
–– Joint risk assessment and mitigation
–– Impact of our operations on the 
local economy
–– Access to skills development
–– Opportunities for employment 
and supplier opportunities
–– Improved access to water, 
sanitation and hygiene 
–– Responsible use of natural resources
–– Gender equality, inclusion 
and diversity
–– Transparency and engagement
–– Strategic priorities
–– Financial performance
–– Corporate governance
–– Leadership credentials, experience 
and succession
–– Executive remuneration policy
–– Shareholder returns 
–– Environmental and social 
commitments and progress
–– Contribution to national economic 
and development priorities
–– Tax, excise and illicit trade
–– Positive drinking programmes 
and impacts
–– Wider sustainability agenda, including 
human rights, environmental impacts, 
sustainable agriculture and support 
for communities
–– Corporate behaviour
–– Partnering with Suppliers standard, 
our code for working with suppliers 
–– Direct resolution process 
–– Confidential, independent 
whistleblowing helpline 
and website 
–– Regional supplier awards 
–– Supplier financing
–– Supplier performance 
measurement and performance 
reviews with two-way feedback 
–– Standards assessments through 
independent bodies
–– Ongoing dialogue, annual reviews
–– Partnerships, including local raw 
material supply partnerships in Africa
–– Learning for Life, our global training 
programme for hospitality and retail 
sector workers
–– Our community water, sanitation and 
hygiene (WASH) programmes in Africa 
and India
–– Community programme design that 
includes gender equality and inclusion 
and diversity considerations
–– Tree planting programmes
–– Participation in sustainability indices
–– Stock exchange announcements
–– Results announcements
–– Investor roadshows
–– Meetings and calls
–– Capital Markets Days
–– Annual General Meeting
–– Annual Report, Form 20-F and 
Sustainability and Responsibility 
Performance Addendum
–– Shareholder information on  
www.diageo.com
–– Participation in investor conferences
–– Ongoing dialogue
–– Collaboration on responsible 
drinking initiatives and promotion of 
moderation, tackling illicit trade and 
strengthening industry standards
–– Participation in governments’ 
business and industry advisory groups
–– Sharing of research, economic 
modelling and international best 
practice, including as a member 
of industry trade organisations
–– Diageo Code of Business Conduct
Investing in sustainable growth 
means supporting and empowering 
the communities where we live, work, 
source and sell. By ensuring we make 
a positive contribution, we can help 
build thriving communities and 
strengthen our business. 
We want to enable equity and 
debt investors to have an in-depth 
understanding of our strategy 
and our operational and financial 
performance, so they can more 
accurately assess the value of our 
shares and the opportunities to 
finance our business.
The regulatory environment 
is critical to the success of our 
business. We believe it is important 
that those who can influence 
policy, laws and regulation 
understand our views. We also 
want to share information and 
perspectives on areas that can 
impact our business and 
public health.
Suppliers
Communities
Investors
Governments and regulators
13
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our market dynamics 
Total beverage alcohol is an attractive industry  
with a natural runway for sustainable growth
Drinking occasions and practices vary depending on local culture and traditions. We believe that drinking  
in a responsible way can be part of a balanced lifestyle in many societies around the world. 
Our markets are shaped by long-term consumer, economic, cultural and social trends, and the regulatory 
environment. Notwithstanding Covid-19, the long-term trends for our industry remain extremely attractive.
Sustain quality growth, 
Embed everyday 
efficiency, Invest smartly, 
Promote positive 
drinking, Pioneer 
grain-to-glass 
sustainability
Higher price spirits tiers grew
10 times faster
than the total spirits category
Consumers are increasingly choosing spirits 
Consumers who drink alcohol are increasingly choosing spirits over  
beer and wine. This is a long-term trend. In markets where spirits is a  
less mature category, mainstream spirits brands can offer quality and 
affordability. In more mature markets, premium core and Reserve brands 
offer choice and new experiences. 
Impact
Gin is an example of a category benefitting from switching, starting 
in Europe and now accelerating in markets like Australia, South Africa 
and Brazil. This has been fuelled, in part, by an increase in the number 
of occasions on which consumers are choosing gin, where traditionally 
they might have chosen beer or wine. In many emerging markets, 
spirits penetration is still low compared to developed markets, providing 
the potential for future growth. 
Our response
Our innovation brings new brands and serves to our customers.  
Our broad, global portfolio across categories and price points provides 
consumers with product choice to suit different occasions and their  
disposable income. 
Sustain quality growth,  
Embed everyday 
efficiency, Invest smartly, 
Promote positive 
drinking
Consumers want to ‘drink better’ 
Consumers are seeking new experiences and higher quality products. 
When it comes to beverage alcohol, consumers are ‘drinking better, 
not more’ – increasingly choosing brands and categories that stand 
out for superior quality, authenticity and taste. This premiumisation 
trend is supported by product innovation and fuelled by higher levels 
of prosperity and disposable income, coupled with a greater desire to 
explore new experiences, ingredients and serves for social occasions. 
Impact
Over the last 15 years, brands in higher price tiers have consistently 
grown volume faster than those in lower price tiers. Consumers are buying 
a broader range of premium products, including no- and lower-alcohol 
drinks, that reflect their diet and lifestyle choices and their interest in 
natural ingredients and craft production.
Our response
We have built an industry-leading portfolio of Reserve brands. We have 
done this through focused investment, brand-building, the creation of a 
dedicated management team and, in many countries, a dedicated route 
to market. Through the development of our Reserve portfolio, we are 
also able to influence the evolution of mass luxury spirits across different 
categories and occasions, including super premium scotch and tequila. 
We are also growing brands of the future. We do this through acquisition, 
through growing our own brands and through investing in entrepreneurs 
through our partnership with Distill Ventures.
£854 billion
retail sales value  
of global alcohol 
market(i)
6 billion
equivalent units  
of alcohol sold  
each year (ii)
600 million
new legal purchase age 
consumers are expected 
to enter the market  
by 2030(iii)
(i), (ii)	 IWSR, 2019.
(iii)	 World Bank, 2020.
Consumers are increasingly choosing spirits such as gin on occasions  
where, traditionally, they might have chosen beer or wine.
IWSR, 2019 volumes for the period 2015-2019.
+4% 
the increase in spirits share of total 
beverage alcohol
IWSR, 2019 for the period 2005-2019.
14
DIAGEO Annual Report 2020

An emerging middle class who can afford  
international-style spirits 
Global population growth and economic development are continuing 
to drive the emergence of consumers with a higher disposable income. 
These consumers are seeking new, aspirational experiences and driving 
demand for quality drinks at a range of price points. They are also moving 
away from informal alcohol, which is estimated to account for around 25% 
of global alcohol sales despite the associated health risks and loss of tax 
revenue for governments.
Impact
Demand for international-style spirits is rising. Around 600 million 
new legal purchase age consumers are expected to enter the market 
globally by 2030. Over the same period we expect hundreds of millions  
of consumers to be able to afford international-style spirits. 
Our response
We have built a portfolio of lower price point options. These give 
emerging market consumers access to our brands at affordable 
prices and enable us to help shape responsible drinking trends. 
Our mainstream spirits such as Baileys Delight and Smirnoff X1 in Africa, 
McDowell’s No. 1 in India and Black & White in Latin America provide 
quality products at affordable price points and offer opportunities for 
consumers to trade up as their disposable income increases.
Sustain quality growth,  
Invest smartly, Promote 
positive drinking
+17%
the annual rate at which the 
e-commerce sales channel for 
alcohol is expected to grow over 
the next five years
Consumers are changing how they socialise
Consumers in developed markets are moving away from high-energy, 
late-night occasions towards more informal and food-related occasions. 
They are increasingly interested in drinks that fit occasions before, during 
and after meals. This year, consumers have also been adapting to different 
ways of socialising at home as a result of the Covid-19 pandemic. 
Impact
Spirits, which are versatile and adaptable, are benefitting from the trend 
away from high-tempo socialising, as consumers discover new serves which 
are suitable for a broader range of occasions in which to enjoy our brands.
Our response
Our consumer insight enables us to innovate existing brands, anticipate 
new consumer occasions and create new brands that meet emerging 
consumer demand. This insight is supported by our ability to develop 
and launch products and campaigns rapidly and effectively, reaching 
the right consumers fast. In Latin America this year, when bars and 
restaurants closed due to the Covid-19 pandemic, our teams rapidly 
developed online platforms to help consumers make cocktails at home; 
worked with well-known chefs to pair recipes with signature serves; and 
brought the bar experience into consumers’ homes through live-streaming. 
A complex regulatory environment 
The beverage alcohol industry is highly regulated. Regulation varies 
widely between countries and jurisdictions, often evolving in response to 
changes in society. As a minimum we comply with all laws and regulations 
wherever we operate, but we have long understood that a responsible 
alcohol company must go beyond compliance. 
We are proud of our brands and we want them to be enjoyed 
responsibly. Through our work, we support the United Nations' and the 
World Health Organization’s goal of reducing harmful drinking by 10% by 
2025. We also advocate laws and industry standards, including minimum 
legal purchase age laws and maximum blood-alcohol concentration 
driving limits, in countries where these are not already in place.
Impact
While most people who choose to enjoy alcohol do so moderately  
and responsibly, the misuse of alcohol can harm individuals and those 
around them, damage our industry’s reputation and make it harder  
for us to create value. 
Our response
We want to offer consumers the opportunity to ‘drink better, not more’ 
– an approach that is rooted in our social values and aligns with our 
Sustain quality  
growth, Embed everyday 
efficiency, Invest smartly
+8%
the increase in spirits share of  
beverages in mainstream eating  
outlets in Great Britain
Consumers are changing how they buy
Alongside shifts in the way people socialise and consume, digital and 
technology are changing the way consumers find and buy our brands. 
Online shopping for alcohol is still low compared to other retail categories, 
but it is a fast-growing channel. Consumers are increasingly using 
the internet to discover and learn about brands and products, where 
previously they might have done so in venues and while out socialising.
Impact
As regulations continue to evolve and e-commerce expands further, 
digital channels will play an ever-increasing role in bringing our products 
to consumers. This trend has been accelerated by the impact of Covid-19. 
For example, Drizly, the American alcohol e-commerce marketplace,  
saw an increase in sales of over 400% in May versus growth projections 
prior to Covid-19(i).
Our response
We have developed our route to consumer approach through multiple 
channels, with e-commerce being a key focus area this year. We work with 
a range of online retailers to ensure that our products are competitively 
and responsibly marketed – for example, through partnerships with online 
grocery retailers, e-marketplaces and on-demand delivery companies. 
We are also developing our own digital channels that help consumers 
grow their understanding and knowledge of our brands, including 
through personalised experiences that help them find the right drink for 
the right occasion, such as Malts.com in Great Britain, TheBar.com in Brazil 
and our ‘What’s Your Whisky’ app which launched in November.
(i)	 Drizly, 2020.
Sustain quality  
growth, Embed everyday 
efficiency, Invest smartly, 
Promote positive drinking
750 million
consumers expected to be 
able to afford international-
style spirits by 2030
Euromonitor, 2020.
Kantar, Alcovision 2020 for the period 2009-2019.
IWSR Global Ecommerce Strategic Study, 2020.
15
DIAGEO Annual Report 2020
STRATEGIC REPORT

The right insights to deliver consumer-led growth
Everything we do is designed to delight consumers and 
customers. That means identifying the factors that drive 
consumer choice, so we can put the right product in front 
of the right consumer at the right time. 
Drawing on behavioural science and the power of data, 
we have transformed the way we understand consumer 
motivations and behaviours. Our Diageo Foresight system 
analyses trends so we can make strategic choices and anticipate 
major shifts. Our Consumer Choice Framework is giving us 
detailed information on a huge range of social contexts – what 
we call ‘occasions’ – so we better understand who is drinking, 
what, where and when. 
Together, these market-leading research tools are inspiring 
us to embrace bold, disruptive innovations, such as Ketel One 
Botanical and Smirnoff Infusions. At the same time, our insights 
enable us to unlock new opportunities for established brands. For 
example, we used improved global insights to re-launch Baileys as 
an ‘adult treat’ brand in 2016. The move has revitalised the brand, 
which is now well established across a range of treating occasions. 
This year, our insight told us consumers were looking to treats and 
baking as a creative outlet during lockdown and Baileys quickly 
repurposed its baking content across markets.
Our market dynamics continued
Sustain quality growth, 
Invest smartly, Promote 
positive drinking, 
Champion inclusion 
and diversity, Pioneer 
grain-to-glass  
sustainability
73%
of consumers believe it is not 
enough for brands to be 
environmentally responsible – 
they should be socially 
responsible too
business model as a producer of premium drinks. We are committed to 
promoting moderation while campaigning to reduce harmful drinking 
and improving laws and industry standards. Our Positive Drinking strategy, 
described on page 24, includes ambitious targets for areas where we can 
have the greatest impact in reducing harm: drink driving, underage 
drinking and heavy drinking. 
Consumers expect businesses to act responsibly 
Consumers, like all stakeholders, are increasingly challenging businesses 
to show how they make a positive impact on society and to demonstrate 
their commitment to protecting the environment. Stakeholders rightly 
expect to see that businesses are generating wealth, fostering inclusion 
and diversity, respecting human rights, supporting their communities and 
acting on important environmental issues, including climate change and 
water stress. 
Impact 
Earning trust and respect is fundamental to achieving our ambition. 
Any business that relies on agricultural raw materials and water has 
both a responsibility to the environment around it and an exposure to 
environmental risks. Our future success depends on us continuing to 
reduce our environmental impact and promoting inclusive economic 
growth, while making sure we do business with integrity and respect for 
human rights. 
Our response 
Our environmental programmes reduce carbon emissions and improve 
water efficiency throughout our value chain, and address waste and 
sustainable packaging, including the use of plastic. With the oversight of 
our Climate Risk Steering Group, we are integrating the management of 
climate-related issues into our business. Our Water Blueprint defines our 
approach to water stewardship and prioritises our actions in areas we have 
defined as water-stressed. 
We have a strategic commitment to inclusion and diversity within and 
beyond our business, while our community programmes are designed to 
empower women, help people develop their skills and increase access 
to clean water, sanitation and hygiene (WASH). Respect for human rights 
throughout our value chain, including the right to a safe workplace, 
underpins everything we do.
Baileys is well established across a range of treating occasions.
Sustain quality  
growth, Embed everyday 
efficiency, Promote  
positive drinking
Over 1 million
young people, parents and 
teachers educated on the dangers 
of underage drinking over the last 
three years 
Diageo, 2020.
Kantar Global Monitor, 2019.
16
DIAGEO Annual Report 2020

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Delivering our Performance Ambition
Our strategic priorities
Our strategic priorities support the achievement of our ambition to be one of the best performing, most trusted 
and respected consumer products companies in the world. Through them, we deliver the strategic outcomes 
against which we measure our performance.
Our ambition
To be one of the best 
performing, most 
trusted and 
respected consumer 
products companies  
in the world 
Strategic outcome:
Consistent value creation
Top-tier total shareholder returns, 
increase return on invested capital
CVC
Strategic outcome:
Efficient growth
Consistently grow organic  
net sales, grow operating profit, 
deliver strong free cash flow
EG
Strategic outcome:
Engaged people
High-performing and engaged 
teams, continuous learning, 
inclusive culture
EP
Strategic outcome:
Credibility and trust
Trusted by stakeholders for  
doing business the right way,  
from grain to glass
CT
The delivery of our strategic priorities is enabled by our culture and values
Our culture underpins the work we do to deliver our strategic priorities and is key to our success. It is shaped by our values and encourages our 
people to: lead bold execution that ensures consumers delight in our brands; act like entrepreneurs and encourage learning; take ownership for 
shaping and achieving our ambition; and create an inclusive environment where everyone can be their best.
We strive to share 
our values with 
our stakeholders, 
building mutually 
fulfilling relationships 
and partnerships.
Passionate about 
consumers and 
customers
Our curiosity and 
insights deliver 
experiences and 
products that delight 
and drive growth. 
Freedom to 
succeed
We foster an 
entrepreneurial 
spirit by giving each 
other the freedom 
to succeed. It’s how 
we move with pace 
and keep our big 
company small. 
Proud of what  
we do
We are proud of 
how we operate 
and what we stand 
for. We act sensitively 
with the highest 
standards for 
integrity and social 
responsibility. 
Valuing each other
We are creating 
a truly inclusive 
culture. We seek 
diversity in people 
and perspectives 
and believe in the 
benefits it delivers 
across our business.
Be the best
We are restless: 
always learning, 
always improving. 
We strive to be the 
best at work and in 
our communities.
Read more about the link 
between our strategic outcomes 
and our principal risks 
on pages 39-40
17
DIAGEO Annual Report 2020
STRATEGIC REPORT

Market dynamics
–– Consumers want to ‘drink better’
–– Consumers are increasingly choosing spirits
–– An emerging middle class who can afford  
international-style spirits 
–– Consumers are changing how they socialise
–– A complex regulatory environment
Strategic outcomes
Efficient growth, Consistent value creation,  
Credibility and trust
Progress in 2020
–– Continued investment in brand building, targeting  
the most effective opportunities
–– Further developed NRM processes and capabilities
–– Significantly enhanced Diageo Bar Academy content  
and support for bartenders and bar owners
–– Launched innovations to recruit new consumers and  
unlock new occasions, focusing on our global giants,  
no- and lower- alcohol and retail formats 
Looking ahead to 2021
–– Focus on emerging from the pandemic in a stronger  
position, having built deeper relationships with our  
customers and consumers
–– Continue to build our NRM capabilities and route to  
consumer at pace
–– Innovate creatively, focusing on the right opportunities  
for the current environment
Sustain quality growth
Our strategic priorities continued 
Delivering sustained quality growth
The demographic and economic market drivers for the beverage alcohol 
sector point to clear potential for growth. Over the long term, however, 
growth on its own is not enough to achieve our Performance Ambition. 
We need to make sure that our growth is sustainable, consistent and of 
high quality. 
Creating sustained, quality growth is not new to us. Brands such as 
Guinness and Johnnie Walker, which celebrates its 200th anniversary in 
2020, show how the right approach to quality, brand equity, innovation 
and investing for the long term can build lasting value. We focus on six  
key elements that help us sustain quality growth:
Creating sustainable and consistent quality growth  
is at the heart of our ambition to be ‘one of the best 
performing’. It enables us to invest in our business, grow 
our margins and deliver top-tier total shareholder returns. 
Key elements of our approach
–– Grow volume, price and mix 
–– Execute the most effective 
route to consumer 
–– Build brand equity 
–– Innovate sustainably 
–– Grow next generation 
brands 
–– Enable a positive 
policy environment
1
Grow volume, price and mix
Supported by improved capabilities in net revenue management (NRM),  
a balance of volume, price and mix is essential for driving consistent net 
sales growth. NRM is all about driving quality growth by making sure we 
are offering our consumers and customers the right assortment of brands 
and formats in the right place, at the right price, and for the right occasion. 
This year, we continued to embed NRM across the business. 
We established multi-disciplinary teams across markets and made our 
approach more holistic. This has allowed us to create actionable insights 
within shorter timeframes, increase the speed of our decision-making and 
enhance our ability to create, execute and adjust more bespoke plans that 
generate value for our customers and our business. 
For example, in Northern Ireland this year we were better able to 
meet specific consumer and customer preferences by changing the mix 
of brands and formats available, which also improved our promotional 
plans and further integrated customers’ needs into our decision-making. 
Our progress on NRM has enabled us to respond in an even more 
agile and targeted way to our consumers’ and customers’ rapidly evolving 
requirements during the Covid-19 pandemic. We adapted pack sizes and 
formats and reprioritised our investments in line with changing shopper 
behaviours and channel shifts.
Execute the most effective route to consumer
Our business is built on getting the right product to the right consumer 
for the right occasion – and at the right price. The shopper landscape is 
evolving, as are technologies and our consumers’ preferences. Through 
best practice sales analytics and technology, we are transforming the way 
we partner with our retailers and distributors. We want to ensure we create 
distinction and competitive advantage at every point in the route to 
consumer, not just when people enjoy our products. 
This year, in order to support our bar and restaurant  
customers affected by Covid-19-related closures, we  
developed ‘Cocktails To Go’ programmes. These enabled 
our customers to simplify their offering, continue delivering 
quality cocktail experiences and connect with consumers online.  
Our ‘How to’ guides contain a range of support, from information 
on how to partner with third-party delivery services to branded 
content for menus and digital promotion, cocktail recipes,  
‘to go’ packaging instructions and tips for enhancing the 
consumer experience.
18
DIAGEO Annual Report 2020

Crown Royal: sustained growth driven by 
insight and innovation
Connecting with consumers and their passions is at the heart of 
sustained quality growth. This year, Crown Royal grew 8% and 
was once again North America’s most valuable whisky brand(i), 
as consumers continue to connect with its purpose of ‘inspiring 
exceptional generosity’.
The insight that it is better to give than to receive really 
resonates, as Crown Royal’s Purple Bag community gifting 
campaign continues to show. This strong brand equity is 
supported by sustainable innovation and consistent investment. 
The result is that Crown Royal is recruiting new consumers, 
accessing new occasions and reinforcing its premium status.
Crown Royal Regal Apple, for example, is now in its sixth 
year of growth. Other innovations, such as this year’s Crown 
Royal Peach, are also contributing to the brand’s growth and 
vibrancy. Our marketing places Crown Royal at the centre of 
cultural occasions that connect with consumers. And in 2020, 
Crown Royal’s ‘The Guy Who’s Got It All’ campaign won a 
prestigious Effie advertising award.
During the Covid-19 pandemic, the brand continued to 
connect with consumers’ desire to give back, hosting an online 
#GenerosityHour that has supported bartenders affected 
by closures.
(i)	 Nielsen/NABCA for the 12 months to 31 May 2020.
Build brand equity
Our brands are key to our success and we work hard to ensure their 
long-term health by safeguarding and building their brand equity. This 
year, the second of our successful Six Nations Title Sponsorship, Guinness 
continued to build on its long-term affiliation with rugby. The brand has 
a history of powerful storytelling, releasing ‘Liberty Fields’, the latest advert 
in the ‘Made of More’ series during the Japan Rugby World Cup.
In the second half of the year, with Covid-19-related closures in 
the on-trade taking place just before St Patrick’s Day, Guinness quickly 
amended its plans to stay relevant to consumers and unveiled measures 
to support pub and bar staff. In the United States, Guinness released 
advertising with an optimistic and hopeful message to its consumers: 
‘We’ll March Again’. In Great Britain and Ireland when lockdowns were 
first put in place, Guinness announced over £2 million in funds to support 
on-trade staff, and in Nigeria, a new initiative saw Guinness support bar 
owners and staff impacted by closures by providing care packages.
Innovate sustainably
Driving sustainable growth is at the heart of our innovation. Led by 
our strength in developing consumer insights, each innovation either 
recruits new consumers, re-recruits them by giving them another reason 
to choose our products, or disrupts a category by changing consumer 
perceptions. Our focus is on recruiting new consumers to occasions and 
brands and this year 60% of our projects were in this category, compared 
to around 30% five years ago.
This year, Diageo brands won nearly 80 awards at the 2020 San 
Francisco World Spirits Competition, including 14 awards for innovation. 
Baileys Red Velvet Irish Liqueur, launched in the United States and Great 
Britain this year, was awarded a Double Gold, while Crown Royal Peach 
Flavoured Whisky was also recognised. George Dickel Bottled in Bond, 
a limited release 13-year-old whisky, was awarded Whisky of the Year 
by Whisky Advocate. 
Grow next generation brands
While it is vital to grow the big brands of today, we also want to seed 
the successful brands of the future. We grow next generation brands by 
acquiring brands, like Casamigos, and developing our own, like Roe & Co 
Irish Whiskey. 
This year, Zhong Shi JiTM, the new-to-world whisky we launched in 
China with our joint venture partner Yanghe Distillery Co. Ltd in 2019, 
was awarded a Silver Medal at the IWSC (International Wine and Spirit 
Competition). It is crafted by master blenders and distillers from Scotland 
and China through a unique process, including maturation in Chinese 
ceramic pots, which has created a full-flavoured, exceptionally 
smooth liquid.
We also grow next generation brands by investing in entrepreneurs 
with new ideas through our partnership with Distill Ventures. We have 
the option to acquire Distill Ventures’ portfolio companies and this year 
we acquired Seedlip. 
Enable a positive policy environment 
We sell our products in over 180 countries and to grow sustainably we rely 
on a transparent, predictable and fair public policy environment. We seek 
to secure this by constructively engaging governments and stakeholders 
around the world on evidence-based policies and recommendations 
to ensure our brands compete on a more equal playing field in terms of 
alcohol taxation and regulatory policy, while also supporting government 
policies and objectives. This year, for example, we worked with the local 
Spirits Association to help the Government of Uruguay develop robust 
laws aimed at reducing illicit trade on its border with Brazil. 
Crown Royal Regal Apple is in its sixth year of growth.
Hear more about Sustain Quality Growth from Ann Joy Muhoro,  
Head of Marketing, EABL, Kenya
visit diageo.com
19
DIAGEO Annual Report 2020
STRATEGIC REPORT

Market dynamics
–– Consumers want to  
‘drink better’
–– Consumers are increasingly 
choosing spirits
–– Consumers are changing  
how they socialise
–– Consumers are changing  
how they buy
–– Consumers expect businesses 
to act responsibly
Strategic outcomes
Efficient growth,  
Consistent value creation,  
Engaged people
Progress in 2020
–– Rollout of EDGE in Africa
–– Introduction of EDGE365  
and rollout in nine countries
–– Development of almost  
100 new intelligent  
automation processes
–– Agile adaptation of creative 
campaigns and initiatives  
to delight consumers and 
support customers during 
Covid-19 pandemic
Looking ahead to 2021
–– Leverage and strengthen  
our efficiency culture
–– Progress investments 
in data analytics and 
automation 
–– Strong focus on cost and cash
Embed everyday efficiency
Our strategic priorities continued 
Delivering everyday efficiency
We are ensuring our resources are deployed where they are most  
effective. This means using technology and data analytics to make better,  
faster decisions and work in a more agile way. It also means simplifying  
our business so that we can liberate our teams to better meet the needs  
of our consumers and customers. At the same time as freeing resources  
to focus on great performance, everyday efficiency enables us to generate 
savings that we can invest smartly.
We focus on three key elements to help embed everyday efficiency:
Simplifying the business, injecting speed into what we do 
Across the business, we are developing systems that enable our people to 
spend less time collecting data and more time on execution. Automated 
processes and reports are also liberating our people to create value by 
reducing task time and improving self-sufficiency. 
This year we automated a key part of our product development 
process. Each year, our technical teams manage many hundreds of new 
product development projects, ranging from global brand redesigns 
to cutting-edge innovations. Collating in a single file the thousands 
of individual data points needed to manage each project was a highly 
repetitive, manual activity. By leveraging intelligent automation, we have 
reduced the time it takes to create the data in the format we need – in 
some instances, what used to take weeks now takes hours. We have also 
been able to automate data entry at the start of each project. So rather 
than spending time on collating data, our people have more time for 
review and analysis, which has improved efficiency and accuracy. 
Focusing resources on delighting customers  
and consumers 
We are changing the way we work so we act with more agility and 
focus resources on our top business priorities. This year, with thousands 
of hospitality workers across the United States facing unprecedented 
challenges, we introduced the #TipsFromHome social media programme 
to help get bartenders back to work at home, and fundraise for hospitality 
relief funds. The programme features bartenders who use their creative 
talents to make drinks crafted from pantry staples to inspire consumers to 
make their own at home. Bartenders’ cocktail-making has been featured 
weekly on a ‘Cocktails de la Casa’ segment on ABC’s Jimmy Kimmel Live. 
Key elements of our approach
–– Simplifying the business, injecting speed into what we do 
–– Focusing resources on delighting customers and consumers 
–– Unleashing technology, including data and analytics, on our 
processes to drive efficiency and insights 
2
Everyday efficiency creates the fuel that allows us to invest smartly and sustain quality growth.  
At its heart, everyday efficiency is a mindset and a culture, which everyone in Diageo is encouraged  
to bring to life in their daily work.
#TipsFromHome features 
a range of our brands 
including Bulleit, Don 
Julio, Johnnie Walker  
and Ketel One Botanical. 
We are donating $1 
to the United States 
Bartenders’ Guild (USBG) 
every time someone 
shares a cocktail image 
on social media using 
#TipsFromHome and 
#DiageoDonation, up  
to a total of $1 million. 
This pledge is on top  
of more than $2 million 
we have donated this 
year to North American 
organisations serving  
the hospitality industry, 
including the USBG 
Foundation Covid-19 
Relief Campaign of the 
Bartender Emergency 
Assistance Program.
20
DIAGEO Annual Report 2020

Unleashing technology, including data and analytics,  
on our processes to drive efficiency and insights 
Data and analytics offer a clear opportunity to create scale benefits  
across our business. In fact, they are critical enablers which provide us  
with tools to understand not just what has happened, but why. They  
help us make better, faster decisions and give us deeper insights into 
customers and consumers. 
This year, the benefits of our investments have proved even more 
valuable, providing us with up-to-date insights in rapidly shifting market 
conditions. For example, earlier this year we introduced a new debtor 
reporting system. Using enhanced automation, this centralised approach 
to reporting enabled us to act with pace and agility and to more effectively 
manage our working capital when Covid-19 measures led to widespread 
closures of bars and restaurants around the world. 
Over the last two years we have been embedding a suite of 
technology tools, known as EDGE (Every Day Great Execution). These 
capture in-store data and, through predictive analytics, revolutionise 
our ability to offer the right brands, in the right outlets, in the right way. 
This means we can work with customers so that each outlet has specific 
standards and recommendations that help boost incremental sales. 
We introduced EDGE in the United States in early 2019 and this year 
extended it to eight further markets in Asia Pacific, Europe and Africa. 
In addition to accelerating the rollout of EDGE, we have also further 
developed the tools to reflect the rapid trend towards digitalisation. 
In North America, where the use of EDGE is most advanced, we have 
been able to further simplify our data reporting and insight generation, 
eliminating over 200 reports and introducing a standardised and highly 
visual dashboard that enables teams to use data for decision-making 
even more efficiently. 
EDGE365, which we introduced this year, is an industry-
leading application for our sales force that integrates everything 
they need to manage their customer relationships into a single 
mobile application. In markets such as Australia and Spain, where 
EDGE365 has been launched either with our sales teams or with 
our distributors, we have seen significant improvements in efficiency 
and effectiveness, enabling more in-depth engagement across a  
larger number of customers. 
In other parts of the business, we are piloting the use of advanced 
analytics to optimise distillation and fermentation processes at 
manufacturing sites, with early results showing yield improvements.  
We are also using data analytics to improve the accuracy of our demand 
forecasting in our supply operation. Through improved insights, planners 
can also identify any required adjustments more quickly. All of this is 
achieved while reducing the time spent on reporting. 
‘Stop the Stops’: an efficiency culture led by employees
We are seeing the benefits of having a culture of everyday efficiency 
embedded across the business. This includes our supply operations, 
where our ‘Stop the Stops’ initiative is empowering our production 
teams to use their experience and expertise to create value.
Part of our manufacturing excellence programme, ‘Stop 
the Stops’ is based on a simple insight: that no one understands 
production better than those working on it every day. Our operators 
know that unplanned stops to our lines mean the potential loss of 
value in the production of our brands, which can impact the quality 
and availability of our products. With their knowledge and expertise, 
our operators are the best people to identify and resolve  
unplanned stops. They are developing and delivering the  
equipment fixes we need to reach our goal of reducing  
unplanned stops to zero. At the same time, they are building 
their knowledge, enhancing product quality and improving their  
work environment. 
As we further develop ‘Stop the Stops’, we are rolling it out 
worldwide. In Europe, where it is most mature, we are already 
seeing higher engagement levels with our people, fewer defects 
and a typical reduction of 30% in unplanned stops.
Our ‘Stop the Stops’ initiative is empowering our production teams to use their experience and expertise to create value​.
Hear more about Embed Everyday Efficiency from Kirsten Wilson, Business 
Development Manager, Global Supply and Procurement, Scotland
visit diageo.com
21
DIAGEO Annual Report 2020
STRATEGIC REPORT

Market dynamics
–– Consumers want to ‘drink better’
–– Consumers are increasingly choosing spirits
–– An emerging middle class who can afford  
international-style spirits 
–– Consumers are changing how they socialise
–– Consumers expect businesses to act responsibly
Strategic outcomes
Efficient growth, Consistent value creation, Engaged people
Progress in 2020
–– Continued to develop our Catalyst tools 
–– Further developed our use of intelligent automation
–– Accelerated our e-commerce capabilities and strategy
–– Opened the Guinness Gatehouse in Shanghai
–– Received planning permission for our Johnnie Walker 
experience in Edinburgh
Looking ahead to 2021
–– Invest prudently, focusing on the most effective 
opportunities in the current environment
–– Enhance capabilities and continue to develop marketing data 
and analytical tools 
–– Build e-commerce and intelligent automation further
Invest smartly
Our strategic priorities continued 
Delivering smart investment
Investing smartly means focusing on areas in which we believe investment 
will bring the greatest benefits: our people; advertising and promotional 
(A&P) spend; technology, data and e-commerce; capital expenditure; and 
mergers and acquisitions (M&A).
Invest to grow and develop our people 
Investing in our people is critical to our future success. Smart 
investment means ensuring our people have the right opportunities 
to develop their skills and capabilities; the right tools and resources 
to make faster, smarter decisions; and better data, analytics and 
information. Our work on building an engaged, inclusive and diverse 
team is described on pages 26-27.
Acquire attractive new brands
Many of our iconic brands have been built over decades, or even  
centuries. While never losing sight of the importance of acting as  
stewards of these great brands, we need to identify and nurture the  
new brands that consumers will enjoy in the future. Our strategy is 
to invest in new-to-world brands which help us access fast-growing 
categories, such as no- and lower-alcohol drinks. 
Spend more on A&P, more effectively and efficiently
We have always invested in marketing our brands to support their 
long-term brand equity and growth. We combine our creative flair 
with smart investment in A&P, which ensures we get maximum impact 
from our marketing by increasing the efficiency and effectiveness of our 
spend. Our Marketing Catalyst data analytics tools, for example, help us 
to accurately predict the short- and long-term impacts of our investments. 
This means we confidently know when, where and how much to invest 
to grow our brands. 
Marketing Catalyst, which is now used in 60 countries by over a 
thousand marketers and our media agencies, is supporting greater data 
transparency and enabling us to track performance more closely than ever 
before. Its use covers global giants such as Guinness and Johnnie Walker 
and local stars like Tusker in Kenya and Bundaberg in Australia. Because 
Marketing Catalyst delivers more detailed insight as we gather more data, 
it gives us the confidence to invest in A&P for long-term growth. It also 
means we can optimise the short-term performance of our investments 
and make informed decisions where a change in market conditions or 
consumer behaviour might mean our investment is best focused elsewhere. 
For example, this year in North America we were able to achieve a 19% 
increase in our return on investment in a key channel over the busy holiday 
period. In Brazil, a shift in spend delivered a significant improvement in the 
return on Tanqueray investment and in Africa, where we have increased  
our use of Catalyst, the Senator brand in Kenya also achieved a 20% 
improvement in return on investment by increasing our A&P spend in better 
performing channels. We further developed Marketing Catalyst this year 
by embedding broader and deeper measurement. We also launched an 
enhanced version of Catalyst in Europe and North America which provides 
us with additional insight into how our decisions about A&P investment 
impact other key financial metrics such as net sales and operating profit.
We are investing in the future success of our business – 
but that investment needs to be ‘smart’ to support 
the delivery of consistent performance and enable 
sustainable, quality growth.
Key elements of our approach
–– Invest to grow and develop our people 
–– Acquire attractive new brands
–– Spend more on A&P, more effectively and efficiently 
–– Build capabilities in technology, data and e-commerce 
–– Support growth with the right capital investment
3
This year, we acquired 
Seedlip, the world’s first 
non-alcoholic distilled spirit. 
Seedlip was launched in 
2015 to solve the dilemma 
of ‘what to drink when 
you’re not drinking®’. 
Its founder, Ben Branson, 
set out to change the way 
the world drinks while 
continuing his family’s 
320-year-old farming 
legacy. In the last four and 
a half years, Seedlip has 
grown from Ben’s kitchen 
to a presence in more than 
25 countries, over 250 
top-rated restaurants, many 
of the world’s best cocktail 
bars, luxury hotels and 
high-quality retailers. 
22
DIAGEO Annual Report 2020

Hear more about Invest Smartly from Jennifer English, 
Global Brand Director, Baileys
Efficient and effective investment: acting with agility and creativity
Covid-19 led to the closure of bars and restaurants around the  
world – so we re-doubled our focus on investing behind opportunities 
that would be effective and relevant for consumers in a rapidly 
changing environment.
When the pandemic began, our brand team had a new 
advertisement depicting a busy summer party ready to drive 
sales of our new Smirnoff Red White & Berry Seltzer innovation 
in North America. The team worked quickly to adapt the original 
advertisement to the changed environment, making it fun and 
relevant to our consumers’ experience in lockdown. Leading 
with the message ‘Hang Out From Home For America’, it ran 
predominantly on TV, achieving positive feedback from consumers. 
Bulleit grew net sales by 4% this year. The brand responded to 
consumers being at home with a new Drinking Buddies campaign 
across digital and social media – and its first national TV campaign. 
#NewDrinkingBuddies delivered a tongue-in-cheek message that 
while we all miss our drinking buddies, at home, there are new ones 
everywhere. The campaign content was produced on an iPhone at home 
– delivering engaging content quickly and in a highly cost-effective way. 
Results were outstanding, with Bulleit adding 10bps of spirits share and 
gaining 34bps of US whiskey category share.(i) 
The original advertisement for the new Smirnoff Red White & Berry Seltzer innovation was quickly adapted in light of Covid-19.
Build capabilities in technology, data and e-commerce 
We are also investing in best-in-class technological capabilities that 
support productivity. We want to keep strengthening our analytical 
capabilities to build our competitive edge and take further strides in 
developing intelligent automation to make our core processes simpler 
and ensure our people are focused on higher value-added work.
This year, we have almost doubled the number of applications in 
which we use intelligent automation. We have used intelligent automation 
to inject speed and remove complexity for our marketers and creative 
agencies. Our Diageo Content Hub simplifies how our marketers and 
agencies are able to find relevant content and buy media. After less than 
two years in full operation, the millionth download was made in May this 
year. It took our previous tool over six years to achieve this – showing how 
the new hub has made it easier and faster for our people and agencies to 
access what they need.
While online shopping for alcohol is still at low levels compared  
to other retail categories, it is a fast-growing channel. With so many bar  
and restaurant closures resulting from Covid-19 lockdown measures,  
there has been a significant increase in consumers purchasing online  
this year and this has accelerated the development of e-commerce  
across our business. In our Caribbean and Central America market,  
for example, we moved swiftly, focusing our resources on developing  
our capabilities in this very underdeveloped channel – and with good 
results. In partnership with customer e-commerce platforms, delivery  
apps and distributors, we grew the e-commerce channel by over 400% 
between February and May.(i)
Support growth with the right capital investment 
Sound capital investments underpin our drive to achieve sustained, 
quality growth. That means investing in our supply footprint, so that 
we have the capacity to grow in the future. It also means strategically 
investing in maturing stocks to support our long-term success. We 
also invest in consumer experiences through distillery visitor centres 
and attractions where people can engage directly with our brands. 
In October we opened a new state-of-the-art Innovation and  
Research Centre in Scotland as part of our investment in the sustainable 
growth of the distilling industry. The £6.4 million laboratory provides a  
new home for our largest global science and innovation hub, where our 
teams work on science, technology and innovation projects across a 
number of our global brands, including Johnnie Walker, Smirnoff, 
Tanqueray, Gordon’s and Captain Morgan.
(i)	 Glovo & Appetito24, February to May 2020. 
(i)	 Nielsen, year-on-year growth, three months to 16 June 2020 and NABCA, year-on-year 
growth, three months to 31 May 2020.
visit diageo.com
23
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our goals for positive drinking
–– Change the way the world drinks for 
the better
–– Lead the industry in reducing underage 
drinking, drink driving and heavy drinking
–– Empower our people and brands to 
advocate moderation
We have set ourselves stretching targets 
to reach by 2025. 
Promote positive drinking
Our strategic priorities continued
Our brands have been part of people’s celebrations  
for generations. We take huge pride in them and we 
want people to continue enjoying them responsibly  
in the future.
We want everyone at Diageo to be an advocate 
for positive drinking and we have long campaigned  
to reduce alcohol-related harm. We know that for 
most people who drink alcohol, drinking responsibly  
is common sense – but we also know that harmful 
drinking causes significant issues for individuals  
and for society.
Promoting moderation is the right thing to do 
and it is an essential part of our Performance Ambition. 
Our commercial success depends on us creating a 
positive impact on society, wherever we live, work, 
source and sell. 
We aim to lead our industry in reducing underage 
drinking, drink driving and heavy drinking. We are 
working to empower our people and brands to make 
moderation the norm and we advocate improved 
laws and industry standards around the world. 
Promoting moderation 
We aim to reinforce the message of moderation in 
everything we do. 
We want our people to be ambassadors and 
we are using the reach and influence of our brands 
to carry moderation messages to consumers. For 
example, we continued to build on the success of 
our ‘Guinness Clear’ moderation campaign in the 
United Kingdom and Ireland through television and 
video on demand. Further campaigns bringing home 
the message of moderation to sports fans were run by 
Bundaberg, Captain Morgan and Crown Royal.
We want to change the way the world drinks for the better, by promoting moderation and addressing the  
harmful use of alcohol. Our goal is for people to ‘drink better, not more’ – because we are proud of our brands  
and we know that the best way for them to be enjoyed is responsibly.​
These campaigns enabled us to meet our target of 
reaching 200 million people with moderation 
messages from our brands five years early. We are 
proud of this achievement and we look forward to 
building on this commitment. 
Addressing underage drinking 
We have a longstanding commitment to tackling 
underage drinking. It is never acceptable for people 
underage to drink alcohol and we welcome the fact 
that fewer young people are drinking under age in 
many countries. Our programmes aim to ensure this 
downward trend continues and they have reached 
more than 375,000 people this year, across 20 countries. 
They include our flagship ‘Smashed’ education 
programme, which combines a live theatre production 
presented by professional actors with interactive 
workshops, evaluation and teaching resources 
for schools. In May 2020, we launched an online 
version of Smashed in the United Kingdom, making 
it available to more than a million school children. 
Preventing drink driving 
We have a longstanding commitment to addressing 
drink driving through a range of interventions. 
We invest in partnerships with police, local authorities 
and other agencies that support enforcement; 
we provide education for drivers and law enforcers; 
and we support safe rides and public transportation. 
One of our key partnerships is with UNITAR, the 
United Nations Institute for Training and Research. 
The partnership supports road safety events 
aimed at reducing traffic deaths and injuries and 
improving road safety globally. It has a particular focus 
on high-visibility enforcement in Latin America, Asia 
and Africa. In April 2020, in response to Covid-19, 
we collaborated with UNITAR as it launched a series 
of online training resources in English and Spanish for 
government officials responsible for road safety and 
law enforcement.
4
For more details see pages 30 and 33
Market dynamics 
–– Consumers want to 
‘drink better’ 
–– A complex regulatory 
environment
–– Consumers expect 
businesses to act 
responsibly
–– Consumers are changing 
how they buy
–– Consumers are increasingly 
choosing spirits
–– An emerging middle  
class who can afford 
international-style spirits 
Strategic outcomes
Credibility and trust, 
Engaged people 
Alignment to UN SDGs 
For more details see page 33
Progress in 2020 
–– Met our 2025 target on 
reaching 200m people with 
moderation messages from 
our brands
–– Responded to Covid-19 
through online resources 
combating underage 
drinking, tackling drink 
driving and promoting 
moderation in lockdown
Looking ahead to 2021
–– Continue to promote 
positive drinking by 
promoting moderation  
and reducing underage 
drinking, drink driving  
and heavy drinking
–– Go beyond our 2025 targets 
as we develop our strategy 
for 2030
24
DIAGEO Annual Report 2020

Tackling heavy episodic drinking 
DRINKiQ is one of our most important tools in promoting moderation 
and addressing heavy drinking. Now available in 16 languages and  
35 countries, DRINKiQ is a dedicated responsible drinking website that 
gives information on alcohol and its impact on the body, along with a 
range of resources to encourage moderate consumption. To empower 
more consumers to drink responsibly, we developed the DRINKiQ quiz 
(see case study, right). 
Alongside DRINKiQ, our brand campaigns and our initiatives for the 
night-time economy with a coalition of partner agencies help reduce 
alcohol-related problems in entertainment districts. 
Advocating improved laws and industry standards 
As a minimum, we comply with all laws and regulations wherever 
we operate. We advocate sensible new regulation based on evidence, 
including blood-alcohol volume driving limits and legal purchase age 
laws, in countries where these do not exist. We continue to call on 
governments to increase the legal purchase age to 18 years old where 
a lower rate is set, for example for purchasing beer in certain European 
countries such as Germany, Belgium and Denmark.
We have also joined in collective action with our industry, including 
through the International Alliance for Responsible Drinking (IARD). 
We support IARD’s commitments on digital marketing and commercial 
practices and a package of measures to combat underage drinking. For 
example, we have committed to including an age-restriction symbol or 
equivalent words on all of our alcohol brand products in all markets by 2024. 
Responsible marketing
Our Diageo Marketing Code (DMC) and Digital Code set mandatory 
minimum standards for responsible marketing and we review them every 
two years. 
At the heart of the DMC is our commitment to ensuring all our 
activities depict and encourage only responsible and moderate drinking, 
and never target those who are younger than the legal purchase age. 
Across some of our markets, advertising monitoring and industry 
bodies publicly report breaches of self-regulatory alcohol marketing codes. 
This year we are pleased to report that no breaches were upheld by key 
industry bodies about Diageo’s advertising.
Complaints about advertising upheld by key industry  
bodies that report publicly(i)
Country
Body
Industry 
complaints 
upheld
Complaints 
about Diageo 
brands upheld
Australia
ABAC Scheme
53
0
Ireland
Advertising Standards 
Authority – for Ireland (ASAI)
2
0
United Kingdom
The Portman Group
11
0
​
Advertising Standards 
Authority
11
0
United States
Distilled Spirits Council of 
the United States (DISCUS)
2
0
(i)	 From 1 July 2019 to 30 June 2020
Committed to promoting moderation  
and reducing harm
–– We were the first alcohol company to put nutritional 
information and alcohol content onto our labels. Our Diageo 
Consumer Information Standards (DCIS) provide benchmarks 
for the mandatory minimum information to be included on 
labels and packaging on all our brands, wherever they are 
legally permitted. 
–– We have long supported the World Health Organization’s goal 
of reducing harmful drinking by 10% across the world by 2025. 
We work with partners from within and beyond our industry on 
initiatives that advance that goal.
–– DRINKiQ.com, our dedicated responsible drinking website, 
is now available in 16 languages and 35 countries.
Hear more about Promote Positive Drinking from Srna Herzog,  
Head of Positive Drinking Programmes and Policies
visit diageo.com
Promoting positive drinking during Covid-19 
We were determined to make sure our longstanding work on 
positive drinking continued through the challenges of Covid-19 
– including by making the most of digital resources to promote 
moderation and tackle harmful drinking.
Our flagship DRINKiQ programme, which had launched an 
online quiz to educate consumers in responsible drinking over 
the festive period from November 2019 to January 2020, drew 
on the quiz again for a topical new campaign on responsible 
drinking at home during lockdown. Over both campaigns, more 
than 80,000 consumers completed the quiz, which was available 
in 28 countries and 18 languages. 
Our Virtual Good Host Guide, launched in May 2020, helped 
hosts to plan great online celebrations, including reminding 
people to measure their pour when making drinks. Finally, local 
campaigns such as our ‘double down’ initiative in Mexico saw 
brands including Buchanan’s, Johnnie Walker, Black & White, 
Don Julio, Smirnoff and Captain Morgan promote positive 
drinking through their digital reach. 
Our DRINKiQ quiz is accessible across a range of devices​.
25
DIAGEO Annual Report 2020
STRATEGIC REPORT

Champion inclusion and diversity 
Our strategic priorities continued
Our Performance Ambition is fuelled by our purpose and values. It drives us to create an inclusive culture where 
every individual can thrive and to champion inclusion and diversity in our business and in society more broadly. ​
5
Our inclusive and diverse culture is central to our purpose of ‘Celebrating 
life, every day, everywhere’. At the same time as being a moral imperative, 
having the best and most diverse talent drives innovation and commercial 
performance. We know that to be one of the best performing consumer 
products companies we need to leverage the broadest range of backgrounds, 
skills and capabilities, and create a fully inclusive, high-performing culture. 
We want to shape broader societal change by promoting equality and 
an inclusive culture through our brands, in our industry, across our value 
chain, and in the communities where we live, work, source and sell. 
Key elements of our approach
–– Foster the creation of an inclusive culture
–– Promote equality of experience for all employees 
–– Champion inclusion and diversity beyond our business 
United Kingdom and the many chapters internationally of our Spirited 
Women and Rainbow Networks. These groups support their members 
and offer leaders the opportunity to understand the barriers and concerns 
of diverse communities both within and outside the organisation, so that we 
can develop progressive approaches to breaking down barriers. Many of 
these groups focus on building allies who can help champion change and 
inclusion. For the last two years we have supported a global INC. week, a 
week-long series of employee-led events, panels and workshops designed 
to help accelerate an inclusive culture through open and authentic 
conversations on issues and opportunities. 
We also support inclusion through a range of progressive policies. 
Globally, for example, all new mothers are entitled to six months’ fully-paid 
maternity leave, with all new fathers being entitled to a minimum of four 
weeks’ paid paternity leave. In many markets – including the whole of 
North America and Europe, as well as Thailand, the Philippines, Singapore, 
Colombia, Venezuela, and Australia – parents have equal parental leave 
of up to 52 weeks. 
We are proud that our progress is recognised by others. This year, we 
were named by Equileap as the top company globally for gender equality, 
ranked second in the Refinitiv Diversity and Inclusion Index and were listed 
in the Bloomberg Gender Equality Index.
Driving change beyond our business
To be true champions of inclusion and diversity, we need to use the scale 
and expertise of our business to make a difference in the communities 
around us and in society at large. 
Inclusion and diversity are core elements of our community 
programmes, as described on page 28. Iconic brands including Guinness  
and Smirnoff have actively promoted inclusivity and equality in their 
advertising this year.
We continue to work with others to drive change. We are part of the 
United Nations Unstereotype Alliance, working with peers across industries 
to combat harmful stereotypes in advertising, and we are members of Open 
for Business, which advocates LGBTQ+ rights around the world. We sponsor 
the Creative Equals Returners programme, which supports women returning 
to the creative industries after a career break, and we are members of the 
World Federation of Advertisers’ Diversity & Inclusion Taskforce.
We also directly support under-represented groups and communities, 
especially those in the hospitality industry who have been so badly affected 
by Covid-19. In June 2020, we created the $20 million Diageo Community 
Fund to help address the urgent needs of Black communities and businesses 
in the United States who have been disproportionately harmed by Covid-19. 
Celebrating our inclusive and diverse culture
We believe that an inclusive and diverse business is a better place to 
work – and a better performing business. Everyone should have the 
freedom to succeed, irrespective of their gender, race, religion, disability, 
age or sexual orientation. 
Each of our markets has an inclusion and diversity plan and we have 
a global focus on developing a strong pipeline of female talent for all roles. 
This year, 39% of leadership roles in our business were held by women, 
taking us beyond the target we set for 2020, and towards our next 
milestone of 40% by 2025. 50% of our Board members and 38% of 
our Executive Committee members are women.
We also focus on ethnic diversity. This year, we began inviting 
employees in over 50 countries to confidentially disclose their ethnicity to 
help us understand the makeup of our workforce and develop plans and 
targets to ensure Diageo reflects local market demographics. 
We are also learning through employee listening sessions in every 
market and through our external partnerships with organisations such as 
INVOLVE, Business in the Community (BITC), and as early signatories of 
BITC’s Race at Work Charter. 
Fostering inclusion through progressive policies 
and employee resource groups
We continue to build employee-led advocacy through active employee 
resource groups (ERGs), such as AHEAD (African Heritage Employees at 
Diageo) and Conectados (Diageo employees championing Latin culture) 
in the United States, REACH (Race, Ethnicity and Cultural Heritage) in the 
Hear more about the work we 
have been doing to Champion 
Inclusion and Diversity
visit diageo.com
Market dynamics 
–– All stakeholders, including 
consumers and employees have 
an increasing expectation that 
businesses will have an inclusive 
and diverse culture
–– Our global footprint requires us 
to access and grow diverse talent 
–– Global multinationals have the 
ability to create policies that have 
a positive impact on society 
Strategic outcomes 
Consistent value creation, Credibility 
and trust, Engaged people
 Progress in 2020 
–– 39% of leadership roles in our 
business are held by women
–– Named by Equileap as the  
top company globally for 
gender equality
–– Began inviting employees 
globally to confidentially 
disclose their ethnicity
Looking ahead to 2021 
–– Establish progressive goals and 
targets to make a step change 
on ethnic diversity and sustain 
focus on gender diversity
–– Roll out inclusive leadership 
training more widely
–– Extend focus on ethnic diversity 
through our brands, suppliers 
and agencies
Alignment to UN SDGs 
26
DIAGEO Annual Report 2020

Engaged, empowered and proud of what we do
We want our people to be the best they can be, have the freedom to 
succeed and feel valued for who they are. This year, given the unique 
challenges faced by all employees during the Covid-19 pandemic, 
we have found innovative ways to support and engage our people. 
As well as increasing opportunities for flexible working and enhancing  
our employee assistance programme, we have developed specific courses 
on topics related to health, safety and wellbeing.
Our people
We want all our employees to feel valued to make a meaningful contribution to our purpose and ambition. We shape 
market-leading policies and practices so that our people are engaged, empowered and proud of what they do. 
Key elements of our approach
–– Engage and empower our people
–– Invest in our people’s growth through learning 
and development
–– Invest in leadership development to include a focus on 
fostering an entrepreneurial culture
A commitment to human rights, including employees’ rights, underpins 
everything we do – see our policy framework on page 37
Staying engaged and responsive
Employee engagement is one of the overarching measures that define 
our progress.
Covid-19 restrictions challenged our ability to deliver our annual Your 
Voice engagement survey this year, so in its place we launched a pulse 
survey tool to help us measure engagement, listen to employees’ 
feedback and learn from their experience of working during the pandemic. 
The response rate was 74%, with 91% of respondents reporting that 
they were ‘proud to work at Diageo’, and 86% confirming they would 
‘recommend Diageo as a great place to work’. We recognise that these 
results are not directly comparable year on year with our employee 
engagement index, which explores broader questions, but they are highly 
encouraging, both within the unique circumstances of this year and as 
part of our long-term drive to have fully engaged employees. 
Investing in our people’s future through training
Our new online learning management platform, My Learning Hub, is 
designed to help our employees, partners and distributors to be at their 
best, acquire new skills and develop a continuous learning culture that 
supports growth and progression (see case study, right).
Building leadership
We have always used a range of communications and leadership 
interventions to bring our strategy and purpose to life for employees. 
This year, our Chief Executive, senior leaders and employees from across 
the business have been closely involved in communicating our strategic 
priorities as part of our Performance Ambition, including through video 
stories and written guides on our Performance Ambition Hub.
We also moved our planned face-to-face leadership event to a 
virtual format and we are delivering engaging, global learning sessions on 
topics such as unleashing the power of teams and leading with pace and 
boldness. Like other measures we have taken since the pandemic began, 
we believe we have strengthened our business and culture by enhancing 
our ability to work flexibly and becoming more agile and responsive.
Our Sustainability & Responsibility Performance Addendum includes further 
information, including data on our employees by region, role and gender 
and new hires and leavers by gender
My Learning Hub was launched this year​.
My Learning Hub: building critical skills 
for the future
We want our people to be equipped with the best capability 
and tools to seize growth opportunities and tackle new 
challenges. My Learning Hub, our training and skills platform 
which launched this year, gives employees everything they 
need for their own development, making it easy to find, use, share 
and comment on a huge range of learning options. These include 
world-class capabilities from across our global teams and from 
external resources.
Since we launched My Learning Hub, the number of 
employees engaged in self-learning has trebled, with 90% 
now enrolled in programmes. We are seeing thousands of our 
people use our Dignity at Work and Integrity at Diageo training, 
reinforcing our strong ethics culture. My Learning Hub has also 
been invaluable in the face of Covid-19 restrictions – we have  
launched dedicated channels including remote working and 
wellbeing resources.
Average number of employees by region by gender(i)
Region
Men
%
Women
%
Total
North America
1,583
60
1,055
40
2,638
Europe and Turkey
6,062
60
4,025
40
10,087
Africa
2,983
72
1,161
28
4,144
Latin America and 
Caribbean
1,700
63
1,002
37
2,702
Asia Pacific
6,101
74
2,103
26
8,204
Diageo (total)
18,429
66
9,346
 34
27,775
Average number of employees by role by gender
Role
Men
%
Women
%
Total
Executive Committee​
8
62
5
38
13
Senior manager(ii)​
320​
61
203​
39​
523​
Line manager(iii)
2,381
69
1,071
31
3,452
Supervised employee(iv)
15,720
66
8,067
34
23,787
Diageo (total)
18,429
66
9,346
34
27,775
(i)	 Employees have been allocated to the region in which they reside.
(ii)	 Top leadership positions in Diageo, excluding Executive Committee.
(iii)	All Diageo employees (non-senior managers) with one or more direct reports.
(iv)	All Diageo employees (non-senior managers) who have no direct reports.
27
DIAGEO Annual Report 2020
STRATEGIC REPORT

We describe our work on embedding human rights throughout our 
value chain on page 36
We describe our engagement with stakeholders and our materiality 
process on page 32
Combating climate change and tackling the global water crisis are central to our 
strategy – read about our approach on pages 42-43
Our strategic priorities continued
Measuring our progress to 2020
Our pioneering ambition for grain-to-glass sustainability is supported by 
a comprehensive set of targets and objectives that help us drive, measure, 
and report transparently on our progress. 
In 2015, we set a range of environmental and social targets for  
2020 and we have since set other targets for renewable electricity and 
plastic packaging. 
Our continued long-term success depends on the people and planet 
around us. We recognise that poverty, inequality, climate change, water 
stress, biodiversity loss and other challenges threaten the environment 
and the prosperity of communities: a reality brought into sharp focus 
by Covid-19. 
We aim to be pioneers, driving innovation and solutions that will 
benefit our business, our communities and the environment. That means 
working with our whole value chain – the people and resources that 
contribute to our success, from grain to glass.
Pioneer grain-to-glass sustainability 
For our business to be sustainable, it needs to create enduring value – for us and for those around us.  
We must positively impact the communities in which we live, work, source and sell and protect the 
natural resources on which we all depend.
Key elements of our approach 
–– Support thriving communities where we live, work,  
source and sell
–– Build sustainable, resilient supply chains
–– Champion water stewardship and a low-carbon world 
–– Minimise waste and develop circular economy solutions
2030 ambitions: deeper connections and 
a stronger business
By showing leadership and by working with others, we aim to contribute 
to the delivery of the UN Sustainable Development Goals (SDGs) in the 
critical decade of action leading up to 2030, while giving our business 
a platform for sustained quality growth.
While the Covid-19 pandemic has delayed the launch of our full 
strategy for 2030 until later this financial year, it has also emphasised how 
important it is that we address issues that matter to our stakeholders and 
strengthen our business, deepening our connections with communities. 
Building inclusive, thriving communities that work for everyone is 
key to this. It requires us to be global champions for water stewardship 
and vocal advocates for a low-carbon world. It also means going further 
in exploring circular economy approaches, so we can make more drinks 
with fewer materials. 
At the same time, we aim to be more efficient, to reduce our costs,  
to build a more secure and resilient supply chain, and to attract and retain 
the best talent. Ultimately, this will help drive the trust, respect and 
commercial success that define our Performance Ambition.
6
Supporting thriving communities where we live, work, 
source and sell
We aim to promote sustainable growth through inclusive programmes that 
provide equal access for all to resources, skills and employment opportunities.
Our largest programme is Learning for Life (L4L). L4L focuses on 
training in hospitality, retail and entrepreneurship. We have kept growing 
and broadening L4L, and this year developed content focused on the 
wellbeing of people working in the hospitality industry, on environmental 
sustainability and on the impacts of Covid-19 on the sector. When the 
pandemic began restricting face-to-face interactions, we offered our 
training online – enabling us to continue to build skills and support 
our communities despite lockdown measures. Through our range 
of skills programmes we have reached 6,600 people this year. 
We also support communities by providing access to clean water, 
sanitation and hygiene (WASH) in water-stressed areas that supply our 
raw materials and support our business. These programmes contribute 
to SDG 6 (clean water and sanitation), while also helping to replenish 
the water we use in our products. 
The Covid-19 pandemic has reinforced the importance of WASH 
for individual and community wellbeing (see case study on page 29). 
Empowering programmes designed around inclusivity
Our community programmes aim to promote gender equality or 
empower people from under-represented groups. 
Our impact has been enhanced by our strategic partnership with 
CARE International UK, which works to address the root causes of gender 
inequality in our value chain through research, programming and advocacy. 
We have also supported CARE International UK’s emergency Covid-19 
response to address the disproportionate effects of the crisis on women 
across the world.
We also run programmes specifically designed to empower women, and 
supported over 35,000 women this year. Initiatives include our programme 
for women in Maharashtra and Rajasthan in India who manufacture and 
sell sanitary pads for their communities, and women in self-help groups 
in Maharashtra who run ‘water ATMs’ providing clean, safe water. 
We report on our performance against our targets in full on pages 33-35
Market dynamics 
–– Consumers want to ‘drink better’
–– Consumers expect businesses to act 
responsibly 
Strategic outcomes
Consistent value creation, 
Credibility and trust, 
Engaged people 
Progress in 2020
–– A detailed description of our social and 
environmental performance is on page 32 
Looking ahead to 2021
–– Launch our social and environmental 
strategy and targets for the critical decade 
to 2030 (see page 32)
–– Address where we have not met our 2020 
targets, such as water quality and reducing 
packaging weight
Alignment to UN SDGs
28
DIAGEO Annual Report 2020

This year Diageo invested £18.9 million or 1.0% (2019 – 0.3%) of operating 
profit in community initiatives. 
See our Sustainability & Responsibility Performance Addendum for further reporting 
on our community investments
Creating impact and opportunity in our supply chains 
We rely on resilient, thriving supply chains for the raw materials we use 
to make our brands. At the same time, our supply chain connects us to 
communities all over the world where we have a clear opportunity to 
have a positive social and environmental impact, by creating economic 
opportunity, promoting human rights and improving agricultural and 
environmental practices through responsible sourcing.
Driving progress through standards
Our Partnering with Suppliers standard sets out the minimum social, 
ethical and environmental standards we require all suppliers to follow as 
part of their contract with us. 
Our Sustainable Agriculture Guidelines (SAG) set out the standards we 
expect of suppliers of agricultural raw materials, and how they should work 
towards sustainable farming. We use the Sustainable Agriculture Initiative 
Platform’s Farm Sustainability Assessment (FSA) tool to check compliance, 
with FSA’s bronze rating being our minimum requirement. We also work 
through AIM-PROGRESS, a forum of leading consumer goods companies, 
and the not-for-profit SEDEX, which both allow suppliers to share 
assessments and audits of ethical and responsible practices.
Local sourcing and working directly with farmers 
We work directly with farmers on a range of sustainable agriculture 
projects, and we aim to increase our positive impact by sourcing locally 
where possible. We assist smallholder farmers in a variety of ways, such 
as: training, access to seeds and fertilisers, micro-loans, and financial 
resilience support. 
This year, we supported 78,600 farmers in Africa. We sourced 79% of 
agricultural raw materials locally within Africa for use by our African 
markets, compared with 82% last year. This percentage fell slightly as 
Covid-19 restrictions pushed us just below our target of 80%.
Reducing our environmental impact and protecting 
natural resources
We recognise that the threats to our environment are urgent and growing, 
which is why we are committed to a pioneering approach that combines 
action and advocacy on the issues that matter most to our stakeholders 
and to us.
Championing water stewardship and a low-carbon world 
Combating climate change and its associated impacts on water stress 
and the environment are at the heart of our strategy. We are committed 
to de-carbonising our own operations and our value chain, and acting as 
advocates for a low-carbon world. Water stewardship is a longstanding 
strategic priority for us and we are focused on preserving this critical 
resource, particularly in water-stressed areas. Our approach to carbon 
emission reduction and water stewardship is described in Responding 
to climate-related risks, pages 42-43. 
Taking action on waste
In the last three months of this year, we achieved zero waste to landfill 
at all our supply and office sites. We want to build on our use of circular 
economy approaches, push forward with our longstanding programmes 
to tackle packaging waste and make sure that more of what we do use is 
made from recycled material and can itself be recycled (see page 35). 
See our Sustainability & Responsibility Performance Addendum for further reporting 
on our non-financial performance
‘Raising the Bar’ will provide a $100 million global recovery package.
$100 million fund to help our industry recover 
from Covid-19
In June, we launched a new global programme, ‘Raising the Bar’, 
to help pubs and bars recover from the effects of the Covid-19 
pandemic. We are providing $100 million to support the 
recovery of major hospitality centres including New York, London, 
Edinburgh, Dublin, Belfast, Mexico City, São Paulo, Shanghai, Delhi, 
Mumbai, Bangalore, Nairobi, Dar es Salaam, Kampala and Sydney. 
The money will pay for the equipment neighbourhood pubs 
and bars need to enable them to re-open safely. Of this fund, 
$20 million will go to Black communities in the United States 
particularly affected by the pandemic.
We are also offering any bar, anywhere in the world, free 
access to digital training through the Diageo Bar Academy, which 
includes advice on how to implement social distancing, enhance 
hygiene measures and optimise their recovery.
We also supported customers, communities and healthcare 
systems where we live and work by: pledging over 10 million 
bottles of hand sanitiser to support frontline healthcare workers 
across more than 20 countries; donating to local charities and 
relief efforts; supporting bartenders’ wages; and providing food 
vouchers and emergency assistance.
Hear more about the work we have been doing to 
Pioneer Grain-to-Glass Sustainability
visit diageo.com
Meeting our water replenishment target and 
supporting communities through Covid-19
Access to clean drinking water, sanitation and hygiene (WASH) 
can transform communities – especially when hand washing is 
such an important part of protecting people and communities 
from Covid-19.
WASH projects play an important role in our water 
replenishment programme, alongside key water-related projects 
such as tree planting and rehabilitating dams and ponds. This year 
we reached over 250,000 people in Africa and India through our 
WASH projects.
Our water replenishment programme targets areas where 
water scarcity is a critical issue. We are therefore particularly 
pleased that this year we achieved our 2020 target of replenishing 
the amount of water used in our final product in water-stressed 
areas. Water stewardship will remain a core part of our approach 
in the decade ahead.
29
DIAGEO Annual Report 2020
STRATEGIC REPORT

Monitoring performance and progress
Key performance indicators
Financial indicators
Non-financial indicators
Organic net sales growth (%) 
8.4%
Positive drinking
Organic operating profit  
growth (%)
14.4%
Health and safety (lost-time accident 
frequency per 1,000 full-time employees)
Earnings per share before  
exceptional items (pence)(i)
109.4p
Water efficiency(iii) (l/l)
Definition
We report against three indicators for positive drinking.
Why we measure
We want to change the way the world drinks for the better 
by promoting moderation and addressing the harmful use 
of alcohol. Our goal is for people to ‘drink better, not more’ – 
because we are proud of our brands and we know that the 
best way for them to be enjoyed is responsibly.
Performance
We launched a new Positive Drinking strategy in 2018 and this is 
the second year we have reported against these targets for 2025.
More detail on page 33
Definition
Number of accidents per 1,000 full-time employees and directly 
supervised contractors resulting in time lost from work of one 
calendar day or more.
Why we measure
Health and safety is a basic human right: everyone has the right to 
work in a safe and healthy environment, and our Zero Harm 
philosophy is that everyone should go home safe and healthy, 
every day, everywhere.
Performance
We achieved a milestone safety performance level of 0.60 lost-time 
accidents (LTAs) per 1,000 employees, our lowest rate ever. This 
represents a 41% reduction in LTAs compared with 2019. We 
continued to focus on markets in particular need of support, 
delivering improvements by increasing compliance with our core 
standards and programmes. Our performance was helped by the 
sale of United National Breweries in South Africa, which had a 
higher LTA rate than Diageo’s average.
More detail on page 36-37
Definition
Ratio of the amount of water required to produce one litre of 
packaged product.
Why we measure
Water is the main ingredient in all of our brands. We aim to 
improve efficiency, and minimise our water use, particularly in 
water-stressed areas. This will ensure we can sustain production 
growth, address climate change risk and respond to the growing 
global demand for water, as scarcity increases.
Performance
Water efficiency improved by 2.1%Δ compared to 2019 and by 
46.0% versus our 2007 baseline. The impact of Covid-19 led to a 
reduction in packaged volume (which is a denominator in our 
water efficiency calculation) and a delay to key water recovery 
and reuse projects in East Africa and Nigeria. The benefits from 
these investments will be realised in future years.
More detail on page 34
Definition
Sales growth after deducting excise duties, excluding the  
impact of exchange rate movements, acquisitions and disposals.
Why we measure
This measure reflects our performance as the result of the 
choices made in terms of category and market participation,  
and Diageo’s ability to build brand equity, increase prices and 
grow market share.
Performance
Organic net sales declined 8.4%, driven mainly by an 11.2% 
reduction in volume partially offset by 2.8% positive price/mix. 
All regions reported declines in organic net sales except for 
North America.
More detail on page 45
Definition
Organic operating profit is calculated on a constant currency 
basis excluding the impact of exceptional items, certain fair 
value remeasurement, and acquisitions and disposals.
Why we measure
The movement in operating profit measures the efficiency 
and effectiveness of the business. Consistent operating profit 
growth is a business imperative, driven by investment 
choices, our focus on driving out costs across the business 
and improving mix.
Performance
Organic operating profit declined ahead of net sales at 14.4% 
with first half growth of 4.6% more than offset by impact of 
Covid-19 in the second half.
More detail on page 45
Definition
Profit before exceptional items attributable to equity 
shareholders of the parent company, divided by the 
weighted average number of shares in issue.
Why we measure
Earnings per share reflects the profitability of the business 
and how effectively we finance our balance sheet. It is a key 
measure for our shareholders.
Performance
Eps before exceptional items decreased 21.4 pence driven  
by decline in organic operating profit, lower income from 
associates and joint ventures, increased finance charges and  
the impact of acquisitions and disposals. These were partially 
offset by tax, lower non-controlling interests and the impact 
of the share buyback programme.
More detail on page 45
We use the following 11 key performance indicators (KPIs) to measure our financial and non-financial performance.
EG
R
EP
CT
Educate 5 million young 
people, parents and 
teachers about the dangers 
of underage drinking
Collect 50 million pledges 
never to drink and drive 
through #JoinThePact(ii)
Reach 200 million people 
with moderation messages 
from our brands
0.60Δ
4.62l/lΔ
EG
R
EG
R
EP
CT
CT
(8.4)
6.1
5.0
4.3
2.8
2016 
2017
2018
2019
2020
(14.4)
9.0
7.6
5.6
3.5
2016 
2017
2018
2019
2020
130.8
118.6
108.5
89.4
109.4
2016 
2017
2018
2019
2020
0.60Δ
0.98
1.00
1.14
1.44
2016 
2017
2018
2019
2020
4.62∆
4.72
5.04
5.09
5.24
2016 
2017
2018
2019
2020
1 million
2019: 632,000
25.3 million
2019: 16.88 million
229.2 million
2019: 66.02 million
See pages 24-25 for more information about our 
approach to pioneering positive drinking
30
DIAGEO Annual Report 2020

Relevance to our strategic outcomes: 
Efficient growth
Consistent value creation
Credibility and trust
Engaged people
Free cash flow  
(£ million)
1,634m
Carbon emissions(iv)  
(1,000 tonnes CO2e)
Return on average invested  
capital (ROIC) (%)
12.4%
Employee engagement (%)
Total shareholder return (%) 
(19)%
Definition
Absolute volume of carbon emissions, in 1,000 tonnes.
Why we measure
Carbon emissions are a key element of Diageo’s, and our 
industry’s, environmental impact. Reducing our carbon 
emissions is a significant part of our efforts to mitigate climate 
change, positioning us well for a future low-carbon economy, 
while creating energy efficiencies and savings now.
Performance
Carbon emissions reduced by 8.7%Δ in 2020, and cumulatively  
by 50.1% against our 2007 baseline, despite increased 
production volume.
More detail on page 34
Definition
Measured through our Your Voice survey; includes metrics 
for employee satisfaction, loyalty, advocacy and pride.
Why we measure
Employee engagement is a key enabler of our strategy and 
performance. The survey allows us to measure, quantitatively 
and qualitatively, how far employees believe we are living 
our values.
Performance
This year we were unable to conduct an annual Your Voice 
survey due to Covid-19. In its place we used a pulse survey tool 
to help us measure engagement, listen to employee feedback 
and learn from their experience of working during the pandemic. 
The survey had a response rate of 74%, with 91% reporting that 
they were ‘proud to work at Diageo’ and 86% confirming they 
would ‘recommend Diageo as a great place to work’. 
More detail on page 33
Definition
Free cash flow comprises the net cash flow from operating 
activities aggregated with the net cash received/paid for loans 
receivable and other investments, and the net cash cost paid 
for property, plant and equipment, and computer software.
Why we measure
Free cash flow is a key indicator of the financial management of 
the business and reflects the cash generated by the business to 
fund payments to our shareholders and acquisitions.
Performance
Free cash flow was £1,6 billion, primarily driven by the decline 
in operating profit, lower dividends from joint ventures and 
associates, increased use of working capital, higher tax payments 
and higher interest charges.
More detail on page 46
Definition
Profit before finance charges and exceptional items 
attributable to equity shareholders divided by average 
invested capital. Invested capital comprises net assets 
aggregated with exceptional restructuring costs and goodwill 
at the date of transition to IFRS, excluding post employment 
liabilities, net borrowings and non-controlling interests.
Why we measure
ROIC is used by management to assess the return obtained from 
the group’s asset base. Improving ROIC builds financial strength 
to enable Diageo to attain its financial objectives.
Performance
ROIC decreased 267bps against the prior comparable period 
driven mainly by organic operating profit decline.
More detail on page 46
Definition
Percentage growth in the value of a Diageo share (assuming 
all dividends and capital distributions are re-invested).
Why we measure
Diageo’s Directors have a fiduciary responsibility to maximise 
long-term value for shareholders. We also monitor our relative 
TSR performance against our peers.
Performance
TSR was down 19% over the past 12 months driven by the 
lower year on year share price. 
 
 
CVC
CVC
R
EP
CT
CT
Remuneration
Some KPIs are used as a measure in the incentives plans  
for the remuneration of executives. These are identified  
with the symbol 
See our Directors’ remuneration report from page 84  
for more detail.
(i)	 For reward purposes this measure is further adjusted 
for the impact of exchange rates and other factors not 
controlled by management, to ensure focus on our 
underlying performance drivers.
(ii)	 Building on what we have learnt from our drink driving 
interventions and feedback from our stakeholders, 
we are evolving our approach to focus on education 
programmes that promote changes in attitudes as a 
way to tackle drink driving. As a result, fiscal 2020 will be 
our final year for #JoinThePact, and we will no longer 
include it in our reporting.
(iii)	In accordance with Diageo’s environmental 
reporting methodologies, data for each of the four 
years in the period ended 30 June 2019 has been 
restated where relevant.
(iv)	In accordance with Diageo’s environmental reporting 
methodologies and WRI/WBCSD GHG Protocol, data for 
each of the four years in the period ended 30 June 2019 
has been restated where relevant.
Δ 	 Within PwC’s limited assurance scope. See page 184 
for further details.
507Δ
N/A
EG
R
EG
CT
EP
R
1,634
2,608
2,523
2,663
2,097
2016 
2017
2018
2019
2020
12.4
15.1
14.3
13.8
12.1
2016 
2017
2018
2019
2020
(19)
27
23
12
17
2016 
2017
2018
2019
2020
507∆
555
586
593
633
2016 
2017
2018
2019
2020
N/A
75
76
75
77
2016 
2017
2018
2019
2020
CVC
31
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our social and environmental performance
Sustainability performance
We have a comprehensive set of targets that help us drive, measure and report transparently on our progress. 
In 2015, we set a range of environmental and social targets for 2020. We have since set additional targets for 
positive drinking, renewable electricity and plastic packaging. 
In our communities work, a key improvement has been recognising 
that inclusion and gender equality should be built into every community 
programme, rather than treated as a separate objective.
We have also seen the importance of a holistic approach which 
draws on the strengths of the whole business and furthers the company’s  
wider objectives. Our community WASH programmes, for example, 
have changed their impact by focusing on communities directly 
connected to our core business while supporting our successful 
drive to replenish water in water-stressed areas.
We have seen how important it is to have total alignment within 
the business and strong sponsorship from leaders, as well as effective 
execution. We have also learnt that early investment in infrastructure 
and a process of continuous improvement are key to success. 
Finally, we have seen how we can increase our impact through 
long-term, strategic NGO partnerships with organisations like CARE 
International UK and WaterAid. 
Committed to a decade of action
We are developing our strategy to address our most material issues and 
support the delivery of the UN Sustainable Development Goals (SDGs) 
over the critical decade to 2030. While the launch of our strategy and targets 
has been delayed by Covid-19 until later this fiscal year, we are clear on our 
direction of travel and our overall goals. We know we must be leaders in 
promoting positive drinking, and be global advocates for water stewardship 
and a low-carbon world. We must champion inclusion and diversity 
within and beyond our business, and make sure we contribute to building 
inclusive, thriving communities wherever we live, work, source and sell. We 
will go further in pioneering sustainability, including through encouraging 
regenerative agriculture and driving circular economy approaches. 
Our strategy will continue to be based on the knowledge that our 
future success is intertwined with the success of those around us. In 
line with that thinking, in June 2020 we announced our ‘Raising the Bar’ 
programme – a $100 million recovery fund to support pubs and bars 
as they welcome customers back following the Covid-19 pandemic.
Proud of our progress, ambitious for the future
We believe our 2020 targets were among the most ambitious and 
stretching in our industry. 
Building on the success of earlier targets, we were among the first 
companies to set our greenhouse gas (GHG) reduction targets in line 
with the principles of the Science Based Targets initiative and were an 
early adopter of absolute, rather than relative, GHG reduction targets.
As we close our 2020 targets this year, we are proud of the significant 
progress we have made – and are aware that we have more to do. 
We have reduced our GHG emissions from direct operations by 
509,000 metric tonnes since 2007, delivering our commitment to a 50% 
absolute reduction. We have also reduced emissions by 33.7% across our 
total value chain. 
We have ensured that over 99.5% of our packaging is recyclable and 
achieved 45% recycled content in our packaging. In the last three months of 
this year, we achieved zero waste to landfill at all supply sites and offices.
We also sourced 79% of raw materials for our Africa business locally, 
narrowly missing our goal of 80%, having exceeded it in 2019. Our targets 
for supporting communities have helped to drive positive impacts for 
millions of people within and beyond our business, including, in 2020, 
supporting 250,000 people through our projects focused on clean water, 
sanitation and hygiene (WASH). 
We delivered on our target for water replenishment in water-stressed 
areas and achieved a 46.0% improvement in water use efficiency. This 
represents significant progress, but Covid-19 affected us reaching our 
efficiency target of 50% due to delayed implementation of water recycling 
projects in Africa and lower packaged volumes in some markets. 
Despite this significant progress, however, we have not achieved 
all our goals. As we reported last year, we have yet to achieve the full 
improvements we wanted in the quality of wastewater we discharge, for 
example, and we have found reducing the overall weight of our packaging 
by 15% more challenging than we expected. We provide full details of our 
performance on pages 34-35.
Taking forward what we have learnt
We have adapted our programmes over the years to improve their design 
as community needs, our business and the global context have changed.
See pages 28-29 for more information.
A rigorous materiality assessment
Our areas of focus for the next decade
Promote positive drinking
–– Promoting moderation 
–– Ensuring responsible marketing and retailing of alcohol
–– Preventing harmful use of alcohol
Champion inclusion and diversity
–– Including and empowering women, minorities and other under-represented groups
–– Fostering an inclusive and diverse culture
Pioneer grain-to-glass sustainability
–– Mitigating or adapting to climate change
–– Ensuring access to clean water, 
sanitation and hygiene
–– Reducing or eliminating waste 
–– Protecting the natural ecosystems our 
business relies on and strengthening 
security of raw material supply chains 
–– Supporting good livelihoods and 
working conditions
Built on the foundations of doing business the right way from grain to glass through a strong 
commitment to human rights and good governance. 
6
5
4
Developing our 2030 sustainability and responsibility strategy 
Extensive engagement with internal 
and external stakeholders 
Findings explored through:
–– Regional multi-function internal 
stakeholder workshops in Bangalore, 
London, Nairobi, New York and Singapore
–– A detailed workshop with full Diageo 
Executive Committee
–– Engagement with Diageo Board
Examination of external trends 
shaping our operating environment; 
alignment to UN SDGs in the critical 
decade ahead
32
DIAGEO Annual Report 2020

For our human rights and health and 
safety targets, see pages 36-37.
Positive drinking (2025 targets, cumulative progress)
​
Educate 5 million young people, parents and teachers about the dangers of underage drinking
1 million
UN SDG alignment 3.5; 12.8; 17.16
Collect 50 million pledges never to drink and drive through #JoinThePact(i)
25.3 million
UN SDG alignment 3.6; 12.8; 17.16
Reach 200 million people with moderation messages from our brands
229.2 million
UN SDG alignment 3.5; 12.8; 17.16
Our 2020 target
KPI
Progress
​Commentary
Inclusion and diversity
Build diversity, with 35%(ii) of 
leadership positions held by women 
by 2020 (40% by 2025) and measures 
implemented to help female employees 
attain and develop in leadership roles. 
% of leadership 
positions held  
by women.
​ 39%
​ ​This year, 39% of leadership roles in our business were held by women,  
taking us beyond the target we set for 2020, and towards our next milestone 
of 40% by 2025. Each of our markets has an inclusion and diversity plan which 
includes a focus on developing a strong pipeline of female talent for all roles.
UN SDG alignment 5.5; 8.1; 10.2; 10.4
Our people
​
Increase employee engagement to 80%, 
becoming a top quartile performer on 
measures such as employee satisfaction, 
pride and loyalty.
Employee satisfaction, 
loyalty, advocacy and 
pride, measured 
through the Your 
Voice survey.
​ ​We did not conduct our Your Voice survey because of Covid-19. In its place we used a pulse survey  
tool to help us measure engagement, listen to employees’ feedback and learn from their experience of 
working during the pandemic. The survey had a response rate of 74%, and 91% reported that they were 
‘proud to work at Diageo’, with 86% confirming they would ‘recommend Diageo as a great place to work’. 
While these results are not directly comparable year on year with our employee engagement index we are 
encouraged by this strong response.
Inclusive communities
​
Our community programmes 
enable those who live and work in 
our communities, particularly women, 
to have the skills and resources to build 
a better future for themselves. We will 
evaluate and report on the tangible 
impacts of our programmes. 
Number of people 
reached through skills 
and empowerment 
programmes. 
​ 6,600
​ ​Our skills programmes have reached more than 146,000 people since 2008, 
with typically more than 70% gaining permanent jobs. We helped more than 
6,600 people around the world this year. While the Covid-19 pandemic has 
meant we reached fewer people this year than planned, we have adapted 
our flagship Learning for Life programme to an online format, as described 
on page 28. 
​
Number of people 
reached through 
community water, 
sanitation and hygiene 
(WASH) programmes.
​ 250,000
​ ​We have supported WASH programmes in 11 countries this year,  
benefitting more than 250,000 people.
​
Number of women 
empowered by our 
programmes.
​ 35,000
​ ​We have empowered over 35,000 women through our programmes, 
including those related to entrepreneurship and menstrual health,  
taking the total empowered since our programmes began to 435,000.
UN SDG alignment 1.2; 4.4; 5.5; 5.A; 6.1; 
6.B; 8.1; 8.6; 10.2; 17.16
Sustainable supply chains
​
Deliver our responsible sourcing 
commitments with suppliers to improve 
labour standards and human rights in 
our supply chains.
% of potential high-risk 
supplier sites audited.
​ 82%
​ This year, 1,261 of our supplier sites assessed as a potential risk completed 
a SEDEX self-assessment. Of these, 412 were assessed as a potential high  
risk, with 82% independently audited over the past three years. Of these 
audits, we commissioned 263, while 73 audits came through SEDEX 
or AIM-PROGRESS mutual recognition audits. 152 of these audits were 
conducted in the past year.
UN SDG alignment 8.7; 8.8
Source 80% of our agricultural raw 
materials locally in Africa by 2020. 
% of agricultural raw 
materials sourced 
locally in Africa. 
​ 79%
​ ​We sourced 79% of agricultural raw materials locally within Africa for use by 
our African markets, compared with 82% last year. This percentage fell slightly 
as Covid-19 restrictions pushed us just below our target of 80%.
UN SDG alignment 8.3; 12.3
Establish partnerships with farmers to 
develop sustainable agricultural supplies 
of key raw materials. 
Number of smallholder 
farmers supported.
​ 78,600
​ We support more than 78,600 farmers in Africa in a variety of ways, 
including training, access to seeds and fertilisers, micro-loans and financial 
resilience support.​
UN SDG alignment 2.3; 2.4; 8.3; 12.2; 12.3
Performing against our social targets
See pages 24-25 for more 
information about our 
approach to pioneering 
positive drinking
(i)	 Building on what we have learnt from our drink driving interventions and feedback from our stakeholders, we are evolving our approach 
to focus on education programmes that promote changes in attitudes as a way to tackle drink driving. As a result, fiscal 2020 will be our 
final year for #JoinThePact, and we will no longer include it in our reporting.
(ii)	 We increased the 2020 target from 30% to 35% in 2017.
33
DIAGEO Annual Report 2020
STRATEGIC REPORT

Sustainability performance continued
Performing against our environmental targets(i)
Our 2020 target
KPI
Performance ​
​Progress
​Commentary
Water stewardship
​
Reduce water use through  
a 50% improvement in water  
use efficiency
% improvement in 
litres of water used  
per litre of packaged 
product
2.1%Δ
2020
46.0%
Cumulative
We are proud of the progress we have made on water stewardship and achieving a 46.0% 
improvement in water use efficiency, although we have fallen short of our 2020 target. This 
cumulative progress has been made through continuous improvement and innovation 
projects in our operations worldwide. This year, the impact of Covid-19 included a reduction 
in packaged volume (which is a denominator in our water efficiency calculation) and a delay 
to the commissioning of key water recycling and reuse facilities in East Africa and Nigeria. 
The benefits from these investments will be realised in future years.
This year, 16,692m3 of water were used for agricultural purposes on land under our 
operational control. We report this separately from water used in our direct operations. 
The volume of water we recycled or reused in our own production was 541,300m3, 
representing 3.3% of total water withdrawals.
UN SDG alignment 6.4
Return 100% of wastewater 
from our operations to the 
environment safely
% reduction in 
wastewater 
polluting power 
measured in  
BOD (‘000 tonnes)
6.8%Δ
2020
46.4%
Cumulative
As indicated in last year’s report, we did not meet this target by the 2020 deadline but are 
encouraged by the progress we have made in the last 12 months. We continue to meet all 
regulatory requirements on wastewater at our sites and 90% of sites have achieved our 2020 
target. We recognise the importance of returning water to the environment at an equal or 
better quality than the water we abstract and will continue to explore circular approaches to 
water use.
UN SDG alignment 6.3; 6.6
Replenish the amount of  
water used in our final product  
in water-stressed areas
% of water  
replenished in 
water-stressed  
areas (m³)
39.5%
2020
116%
Cumulative
Significant progress this financial year has resulted in us replenishing 1,400,000m3 of water, 
meaning that we have exceeded our cumulative target: we have replenished 116% of the 
total water used in our final product in water-stressed sites, representing 21.5% of total water 
used in water-stressed sites. 
This remains vital work and an area of focus for 2030.
UN SDG alignment 6.1; 6.2; 6.6; 6.B; 3.2; 15.1
Equip our suppliers with  
tools to protect water resources 
in our most water-stressed 
locations
% of key suppliers 
engaged in water 
management  
practices
​86%
2020
We engaged 144 suppliers to disclose their water management practices through CDP’s 
Supply Chain Water Programme, with an 86% response rate.
UN SDG alignment 6.1; 6.A; 6.B; 15.1; 17.16
Carbon
Reduce absolute  
greenhouse gas emissions  
from direct operations  
by 50%
% reduction  
in absolute GHG  
(kt CO2e)
8.7%Δ
2020
50.1%
Cumulative
We are proud to have achieved this stretching and important target, with an 8.7%Δ decrease 
in GHG emissions this year. In addition to continuous improvement at our operations and 
switching to lower carbon fuel, we have purchased renewable energy attribute certificates 
to support our carbon strategy. Achieving this target is a significant milestone, and we 
will build on it as we continue to decarbonise our business.
As a signatory to the RE100 global initiative committed to 100% renewable electricity, we 
aim to source 100% of our electricity from renewable sources by 2030. This year, 65.5% of 
electricity consumed was from renewable sources such as wind, hydro and solar (2019 – 
45.4%), therefore exceeding our 2025 interim target of 50%. In the United Kingdom, 100% of 
our electricity came from renewable sources. 
We use the World Resources Institute/World Business Council for Sustainable Development 
Greenhouse Gas Protocol as a basis for reporting our emissions, and we include all facilities 
where we have operational control for the full financial year. 
Diageo’s total direct and indirect carbon emissions (location/gross) this year were 710,986Δ 
tonnes (2019 – 746,769 tonnes), comprising direct emissions (Scope 1) of 567,081 tonnes 
(2019 – 599,043 tonnes), and indirect (Scope 2) emissions of 143,905 tonnes (2019 – 147,726 
tonnes). The intensity ratio for this year was 199Δ grams per litre packaged (2019 – 185 grams 
per litre packaged).(ii)
UN SDG alignment 7.2; 7.3; 12.6; 13.3
Achieve a 30% reduction  
in absolute greenhouse  
gas emissions along the  
total supply chain
% reduction  
in absolute GHG  
(kt CO2e)
5.5%
2020
33.7%
Cumulative
Our global effort across the total value chain to reduce GHG emissions has meant that 
we have achieved our 2020 target, with a 33.7% reduction in emissions in our total supply 
chain since the programme began. Our total supply chain carbon footprint this year was 
2,922,538 tonnes, a 5.5% improvement on 2019. 
This year we received responses from 88% of the 229 suppliers we engaged through the 
CDP and 51% of these suppliers reported that they had emissions reduction targets. 
Reducing our supply chain footprint is a key element of our decarbonisation strategy and 
will continue to be a focus in the years ahead.
UN SDG alignment 7.2; 7.3; 7.A; 12.6; 13.3; 17.16
Ensure all our new refrigeration 
equipment in trade is HFC-free,  
with a reduction in associated 
greenhouse gas emissions  
from 2015
% of new 
equipment 
sourced HFC-free 
from 1 July 2015
100%
2020
​99.5%
Cumulative
Eliminating HFCs plays a role in reducing our overall carbon footprint. 99.5% of the 53,000 
fridges we have bought since July 2015 were HFC-free. Since 2017 100% of the fridges we 
have bought were HFC-free and this remains an ongoing policy.
UN SDG alignment 12.6
34
DIAGEO Annual Report 2020

Our 2020 target
KPI
Performance ​
​Progress
​Commentary
Waste
​
Achieve zero waste to landfill
% reduction  
in total waste to  
landfill (tonnes)
39.0%Δ
2020
98.2%
Cumulative
In the last three months of this year, we achieved zero waste to landfill at all our supply and 
office sites, an important milestone in our ambition to be a zero-waste business(ii). Our 
progress has been driven by continuous improvement at our sites and by close collaboration 
with partners.
UN SDG alignment 12.5; 12.6
Packaging
Reduce total packaging by  
15%, while increasing recycled 
content to 45% and making 
100% of packaging recyclable
% of total packaging  
(by weight)
0.4%
2020
11.2%
Cumulative
We have made good progress in some areas, but as we reported last year we have found 
this target challenging and it will remain in place beyond 2020.
% of recycled 
content (by weight)
5.3%
2020
45.8%
Cumulative
We have met our commitment to increase recycled content in our packaging, attaining 
45.8% recycled content against a 45% target. Including returnable glass volumes drives the 
total recycled content of our packaging to 51.4%.
We remain committed to reducing the impact of our packaging and will continue to work 
with suppliers and other partners to provide customers and consumers with formats that 
advance recycling and a circular economy approach.
% of packaging 
recyclable (by 
weight)
0.8%
2020
99.5%
Cumulative
Following another year of progress we have moved to within 0.5% of our target. It is not 
currently possible to replace the remaining non-recyclable components, but we will 
continue to explore alternatives for these residual materials in addition to ensuring all our 
packaging is widely recyclable.
Sustainably source all of our  
paper and board packaging to  
ensure zero net deforestation
% of sustainably 
sourced paper and 
board packaging
​99%
2020
We define ‘sustainably sourced’ as Forest Stewardship Council (FSC) or Programme for the 
Endorsement of Forest Certification (PEFC) certified, or recycled fibre. This year, we engaged 
all of our 251 suppliers, with 98% responding. Collectively these suppliers have self-reported 
that 99% of the paper and board packaging they supply meets our sustainable sourcing 
criteria. Reduced demand due to Covid-19 limited our ability to meet the full 100%, which 
we were on track to reach.
UN SDG alignment 12.2; 12.6
Our 2025 packaging (plastic) targets(iii)
Achieve 40% average recycled  
content in all plastic bottles 
(and 100% by 2030)
Tonnes (metric) of 
recycled content/ 
total tonnes of 
plastics used
2.5%
2020
2.5%
Cumulative
In our second year of reporting against this target, we have delivered several opportunities 
to increase the use of recycled content in plastic (PET) bottles. In North America, for example, 
Seagram’s 7 Crown American whiskey moved all its PET formats to 100% recycled plastic 
bottles from January 2020. The full impact of the Seagram’s 7 project and other projects in 
the pipeline will advance us towards 40% recycled content by 2025 and 100% by 2030. 
While just 2% of our packaging is made from plastic (PET), we nonetheless consider this an 
important target.
UN SDG alignment 12.5; 12.6
Ensure 100% of our plastics will  
be designed to be recyclable,  
reusable or compostable in 
countries where we operate
Tonnes (metric)  
plastics widely 
recyclable 
(or reusable/ 
compostable)/ 
total tonnes of 
plastic used
4.3%
2020
85.3%
Cumulative
We continue to work on pack designs with our suppliers and other partners to remove 
non-recyclable plastics from our products and to promote better recycling infrastructure in 
selected markets. This year we eliminated approximately 500 tonnes of non-recyclable 
plastics.
UN SDG alignment 12.5; 12.6
(i)	 Baseline year is 2007 except for packaging which is 2009 and water replenishment which is 2015.
(ii) Please refer to our reporting methodologies for more information on how data has been compiled, including standards and assumptions used.
(iii) These targets were introduced in 2018.
Δ	 Within PwC’s limited assurance; see page 184 for further details.
35
DIAGEO Annual Report 2020
STRATEGIC REPORT

Doing business the right way from grain to glass
Making respect for human rights everyone’s business
Respect for human rights should be a part of everyone’s working day, 
as enshrined in our Code of Business Conduct. We are continuing 
to embed human rights into every function of our business, in every 
country, as part of our commitment to the UN Guiding Principles 
on Business and Human Rights (UNGP), which we signed in 2014.
We have a well-developed policy framework that addresses 
human rights and our commitment to integrity. We will not work 
with anyone who does not align with these standards. We use our 
comprehensive human rights impact assessment (HRIA) process, 
which considers our entire value chain, and our Responsible 
Sourcing programme as part of our risk monitoring process. 
In line with the UNGP, we have identified three external risks 
as particularly salient to our business: labour rights, including 
the risk of child labour, especially in agricultural supply networks;  
labour standards for contract workers; and sexual harassment in the 
hospitality sector. In response, we have developed a child protection 
toolkit for all markets where we source from smallholder farmers,  
to train employees who visit farms about risks to children’s safety. We 
have also delivered training on human rights with a specific focus on 
modern slavery to our procurement teams and a selection of key roles 
within the business. Our modern slavery statement is set out on our 
website. We introduced a Global Brand Promoter Standard in all our 
markets to protect brand promotion teams from harassment. Our 
governance process checks that this standard is included in agency 
contracts and that promoters receive relevant training.
Milestones this year
–– HRIAs conducted in North America (United States/Canada), 
Middle East (first phase), China and Australia; and action 
plans developed to address salient risks
–– Human rights training focused on modern slavery rolled out 
to our procurement teams and other key roles 
Sustainability performance continued
Progress against 2020 human rights target
Our 2020 target
​
KPI
​
Overall progress
Human rights
​
Act in accordance with the UN Guiding 
Principles on Business and Human Rights, 
by carrying out HRIAs in all markets
​ Number of markets  
in which we have carried out human 
rights impact assessments (HRIAs).
​ 17 of 21 markets
On track until Covid-19; target extended to December 2021.
Health and safety
Our global Health and Safety strategy aims to address the wellbeing 
and the safety of our people. At its heart is our global Zero Harm 
programme, which is designed to ensure that everyone goes home 
safe and healthy, every day, everywhere.
Our relentless focus on our Severe and Fatal Incident Prevention 
(SFIP) programme, specifically designed to identify and effectively 
control severe and fatal risks in our operations, has driven industry-
leading progress within Diageo. But we are deeply saddened to 
report that an employee died in a traffic accident in Tanzania. We 
have, however achieved our lost-time accident (LTA) target of less 
than one per 1,000 employees for the third year in a row, at 0.60Δ. Our 
independent contractors recorded 16 LTAs this year, a significant 
improvement on 24 in 2019.(i) Our performance was helped by the 
Doing the right thing, in the right way, is the foundation of our business. That means embedding respect for 
human rights into the way we work, every day, everywhere. We consider health and safety as a fundamental human 
right – and the health, safety and wellbeing of our employees is our highest priority.​
Strengthening our approach
Embedding human rights is a continuous and evolving process. This 
year, for example, we began integrating the findings of our HRIAs into 
the overall Diageo risk management process, and we will continue to 
build on this in the next financial year. Helping our people understand 
the nature of our business risks and human rights generally is also 
critical to our success, and we have developed human rights training 
for all Diageo employees, which we launched on our new online 
My Learning Hub (for more details on My Learning Hub see the case 
study on page 27).
We also understand the importance of reviewing our HRIA 
process to ensure it remains relevant. Applying a gender lens to 
HRIAs, for example, is critical. We have updated our approach to 
ensure the voices of women in our supply chain are fully heard 
throughout the assessment process, building more criteria into our 
country context reviews and exploring more assessment techniques 
such as women-only interviews with stakeholders.
sale of United National Breweries (UNB) in South Africa, which had a 
higher LTA rate than Diageo’s average. To keep our people informed 
and help them manage their physical and mental health during the 
pandemic, we launched a number of new health and wellbeing 
resources and engagement campaigns, including a virtual mental 
health awareness week.
This year, we introduced a new, broader total recordable 
accident (TRA) target of achieving 3.5 or fewer per 1,000 employees 
and site-based third-party contractors, and we achieved a strong rate 
of 2.12. This indicator has enabled markets to apply the same rigour 
to finding the root causes of all levels of accidents and near misses, 
which helps predict and prevent more serious accidents and illnesses. 
There is no acceptable level of accidents, and we want to continue to 
accelerate our health and safety culture and performance. Our aim is to 
(i)	 We do not report an LTA rate for independent contractors due to the difficulty and administrative burden in accurately recording headcount.
36
DIAGEO Annual Report 2020

Progress against 2020 health and safety target
Our 2020 target
​
KPI
Overall progress
Health and safety
​
Keep our people safe by achieving less 
than one lost-time accident (LTA) per 1,000 
employees and no fatalities 
 
​
Number of LTAs
Number of fatalities
Number of TRAs (new KPI this year)
​ 0.60Δ LTAs per 1,000 employees 
1 work-related fatality 
2.12 TRAs per 1,000 employees and site-based third-party contractors
2020 safety data by region
Employee LTA rate
Employee TRA rate
Independent 
contractor LTAs(i)
Fatalities(ii)
North America
0.31
2.21
0
0
Europe and Turkey
1.03
2.15
6
0
Africa
0.35
2.42
6​
1
Latin America and Caribbean
1.56
2.51
1
0
Asia Pacific
0.30
1.65​
3
0
Diageo (total)
0.60(iii)Δ
2.12
16
1
(i)	 We do not report an LTA rate for independent contractors due to the difficulty and administrative burden in accurately recording headcount.
(ii)	 Fatalities include any employee work-related fatality arising in their day-to-day work environment, or any work-related fatalities occurring to third parties and contractors  
(non full-time employees) while on Diageo’s premises.
(iii)	Our performance was helped by sale of United National Breweries (UNB) in South Africa, which had a higher LTA rate than Diageo’s average. Previous year baseline data is not 
restated for health and safety.
Δ	 Within PwC’s independent limited assurance scope.
UN SDG alignment 
3.9; 8.8
develop targets and performance measures for 2025 which  
combine leading and lagging health and safety indicators.  
At the same time, we are continuing to focus on improving  
our best practice culture and developing people’s capabilities.  
We are also working more closely with our contractors to ensure  
they are aligned with our expectations around Zero Harm and  
will be including more specific health and safety requirements  
in future service level agreements.
Non-financial information statement
Focus area
​
Relevant policies and standards 
Read more in this report
Page
Positive drinking
​
–– Marketing and Digital Marketing Policy
–– Employee Alcohol Global Policy
–– Position papers
–– Promote positive drinking
–– Performing against our social targets
24-25
33
Our employees
​
–– Code of Business Conduct
–– 2019 Great Britain Gender Pay Report
–– Human Rights Global Policy
–– Champion inclusion and diversity
–– Our people
–– Performing against our social targets
26
27
33
Grain-to-glass sustainability
​
–– Environmental Global Policy
–– Sustainable Agriculture Guidelines
–– Sustainable Packaging Commitments 
–– Water Blueprint
–– Partnering with Suppliers Standard
–– Pioneer grain-to-glass sustainability
–– Performing against our 
environmental targets
–– Responding to climate-related risks
28-29
34-35 
42-43
Human rights 
​
–– Human Rights Global Policy
–– Modern Slavery Statement
–– Global Brand Promoter Standard
–– Doing business the right way from 
grain to glass
36
Health and safety 
​
–– Health, Safety and Wellbeing Global Policy
–– Doing business the right way from 
grain to glass
36-37
Anti-bribery and corruption 
​
–– Code of Business Conduct
–– Effective risk management
41
Our contribution to the SDGs
–– Performing against our social targets
–– Performing against our 
environmental targets
33
34-35
37
DIAGEO Annual Report 2020
STRATEGIC REPORT

Effective risk management
Our principal risks and risk management
Well-managed risk-taking lies at the heart of our Performance Ambition. Great risk management drives better 
commercial decisions, protects our assets and supports a growing, resilient and sustainable business.
Responding to the 
Covid-19 pandemic
The Covid-19 pandemic has created 
multiple different risks for our business. 
The spread has been rapid and 
the impact to the global economic 
outlook remains uncertain. Protecting 
our people and our business and 
supporting our suppliers, customers 
and communities have been at 
the forefront of our response to the 
pandemic. Risk mitigations have been 
agile and effective with support and 
oversight by the Board.
An Executive Working Group, 
supported by local crisis management 
teams in our markets, has developed risk 
mitigation actions to protect our people 
that included best practice protocols 
aligned with government strategies and 
our people’s safety. Robust employee 
safety protocols were implemented 
including having all employees who 
were able to do so working remotely, 
and heightened sanitation measures 
and restrictions on movement to and 
from our production and warehousing 
sites. Pay principles were implemented 
to support employees globally. 
Protocols for a safe return to work 
have been developed and are being 
implemented on a location-by-location 
basis in line with government guidelines 
and ensuring an environment that 
supports our employees’ well-being 
and safety as the primary concern. 
Our business performance has been 
impacted by the containment actions 
adopted by governments around the 
globe as they seek to mitigate the 
impact of the pandemic, and the 
resulting disruption and economic 
effect on our consumers, customers 
and suppliers. The potential impacts and 
mitigation plans of Covid-19 have been 
built into several of our principal risks on 
the following pages. Further actions we 
are taking to protect our business and 
support our partners and communities 
are also described within the 
Strategic report.
 
Our approach
We believe that great risk management starts 
with the right conversations to drive better 
business decisions. Our focus is to identify and 
embed mitigation actions for material risks that 
could impact our current or future performance, 
and/or our reputation. Our approach is 
holistic and integrated, bringing together risk 
management, internal controls and business 
integrity, ensuring that our activities across this 
agenda focus on the risks that could have the 
greatest impact.
Accountability for managing risk is 
embedded into our management structures. 
Each market and function undertakes an annual 
risk assessment, establishes mitigation plans 
and monitors risk on a continual basis. Similarly, 
our Executive Audit & Risk Committee regularly  
assesses risk and the Board independently 
reviews the assessment. This Committee meets 
quarterly and received regular reports on 
the risks faced across the business and the 
effectiveness of the actions taken to mitigate 
these risks. We use internal and external data 
to monitor our risks and to make proactive 
interventions. We also establish cross-functional 
working groups and draw on the advice of 
experts where necessary to ensure significant 
risks are effectively managed, and where 
appropriate escalated to the Executive and 
Board for consideration. 
Risk management
Assess
Mitigate
Identify
Continuous  
review
Monitor & report
Insightful reporting.
Review of what is 
going on around us 
and ensuring we 
have the right plans 
in place.
Deep dive to identify 
our top risks.
Develop and embed 
mitigation actions.
Understanding the likelihood of the risk 
occurring and the impact.
risks that could impact delivery of our strategic 
objectives. Examples of risks for which we 
have zero appetite include risks that could: 
harm our people; impact product quality; 
cause us to market irresponsibly or otherwise 
act without integrity; and be non-compliant with 
laws and regulations, including those relating to 
financial reporting.
Our principal risks remain unchanged 
and continue to reflect a challenging 
external environment.
Emerging risks
There continues to be a focus on identifying and 
assessing potential emerging risks. These can be 
newly identified risks or known risks that have 
evolved over time. The Executive and Board 
formally review emerging risks. Our corporate 
strategy team undertakes horizon-scanning to 
monitor any potential disruptions that could 
dramatically change our industry and/or our 
business, from both a risk and opportunity 
perspective, for the Executive and the Board 
to understand the changing landscape and 
take appropriate actions. We perform scenario 
planning and draw on external thinking and 
research to consider the changes around us to 
understand how our risk profile could change 
over a longer time period. 
Risks relating to sustainability and climate 
change continue to evolve and a deeper review 
of this risk and the actions we are taking is 
provided in pages 42-43. 
The Covid-19 pandemic is considered in this 
report as an emerging risk. Where appropriate, 
actions to mitigate risks associated with Covid-19 
that are related to existing principal risks have 
been built into the mitigation strategies for 
those principal risks. 
Further details about our risk management 
approach are described in the Corporate 
governance report on page 72 and in the 
Audit Committee report on page 81.
Focus in the year
The Executive and Board considered the group’s 
principal risks and reviewed our risk appetite, 
setting the level of risk tolerance we have for 
38
DIAGEO Annual Report 2020

V
Risk
​ Impact
​ How we mitigate
​ Developments in 2020
1
Regulatory 
restrictions 
and indirect tax
Fiscal pressures and/or 
failure to address 
perceived growth in 
anti-alcohol sentiment.
​
–– Regulators in major 
markets impose 
indirect tax increases, 
trade barriers and/
or restrictions on 
marketing and 
availability.
–– Damage to our 
corporate reputation.​
​
–– Multi-year public policy plans, regulatory 
policy risk tracking and economic modelling.
–– Positive drinking programmes supported 
by a global industry platform to promote 
responsible drinking.
–– Evidence-based engagement to build 
trust and reputation with governments 
and other stakeholders.
–– Capability building on government affairs, 
alcohol policy and campaigning.​
​
–– Trade wars and protectionism have added pressure on tariffs and 
international trade relations. Volatility and uncertainty in the external 
policy environment, particularly in light of Covid-19 and ongoing 
anti-alcohol sentiment, continue to put pressure on indirect taxation 
and regulation. 
–– We are well placed to manage risks. We have improved our analysis 
and evidence based, public policy campaigning and enhanced our 
network of stakeholders. 
–– We have strengthened our capability in navigating marketing and 
availability regulations, including e-commerce. 
–– We are at the forefront of industry initiatives in promoting positive 
drinking, and have rapidly adapted to encourage responsible 
drinking at home and other responsible initiatives during the 
Covid-19 pandemic. ​
2
Economic change
Significant local volatility 
or upheaval, uncertainty 
or failure to react quickly 
enough to increasing 
volatility, including 
pandemics and the 
United Kingdom’s 
exit from the EU.
​
–– Social unrest, liquidity 
issues, generalised 
downturn, currency 
instability, inflationary 
pressures, possible 
changes to customs 
duties and tariffs and/ 
or eroded consumer 
confidence, impacting 
business forecasting 
and/or performance.​
​
–– Local and global monitoring of key business 
drivers and performance to prepare for 
rapid changes.
–– Group-level strategic analysis and scenario 
planning to strengthen market strategies and 
risk management. 
–– Strategic business reviews by Chief Executive 
and senior executives of local strategies. 
–– Multi-country investment strategy, and local 
sourcing strategies.
–– Hedging strategy and currency monitoring. 
–– Economic data is regularly monitored, analysed 
and updated and fed into our models.​
​
–– The Covid-19 pandemic has created extreme volatility in the short 
term as a result of the social restrictions implemented across the 
world. The impact of the virus on economic conditions over the 
medium-term (one to three years) is highly uncertain, in sharp 
contrast to the stable and growing GDP performance across most 
markets experienced in recent years. As a result, volatility is likely 
to increase significantly as many markets, both developed and 
emerging, will face challenging economic conditions and higher 
levels of unemployment leading to reduced consumer spending. 
To mitigate these challenges we will be regularly gathering data and 
obtaining insights which will enable us to assess conditions in the 
markets where we operate and amend our forecasts and investment 
decisions appropriately, both in individual markets and at a global 
level. In the short term we have reduced the planning horizon to 
three to six months from twelve months consistent with the current 
levels of uncertainty. We continue to assess multiple scenarios over 
the longer term to ensure ongoing viability/liquidity in all eventualities 
and to ensure our preparedness to invest as conditions improve. 
3
Critical industry 
developments
Failure to shape or 
participate in critical 
consumer, customer, 
channel and/or industry 
trends could threaten our 
leadership position and/or 
revenue streams.
​
–– Consumers move away 
from our brands to 
alternative products.
–– Failure to identify and 
exploit rapidly growing 
channels means our 
products are not on 
the shelf.
–– Less efficient business 
model compared to 
key competitors.
​
–– Highly diversified portfolio of brands to ensure 
coverage of consumer occasions, trends and 
price points.
–– Rigorous processes of strategy and innovation 
development at corporate and market level.
–– Systematic review of emerging consumer  
and route to consumer trends at market and 
brand level, including growth of disruptive 
digital technologies.
–– We focus our innovation on our strategic 
priorities and the biggest consumer 
opportunities through global brand  
extensions and new-to-world products.​
​
–– The social distancing measures deployed in response to the 
Covid-19 pandemic have had a significant impact on where and 
how people purchase and consume alcohol. In particular, the 
on-trade has faced significant disruption globally leading to higher 
consumption in the home which has been coupled with a shift 
to on-line purchasing. These trends are likely to continue to some 
degree after social restrictions are eased. We will continuously assess 
consumer trends and shifting behaviours and are well positioned to 
remain agile and continue to flex commercial strategies.
–– We are working closely with our e-commerce partners and 
customers for financially beneficial and globally consistent 
e-commerce solutions.
4
Non-compliance 
with laws and 
regulations
Non-compliance with 
local laws or regulations, 
or breach of our internal 
global policies and 
standards and/or 
significant internal 
control breakdown.
​
–– Severe damage to our 
corporate reputation 
and/or significant 
financial penalty.​
​
–– Code of Business Conduct and supporting 
policies and standards set out compliance 
requirements.
–– Risk assessment framework to identify, assess 
and monitor business and compliance risks.
–– Regular training, communications, annual 
certification and engagement activities to 
embed employee understanding.
–– Well-embedded Sarbanes-Oxley and 
Committee of Sponsoring Organizations 
control assurance programme.
–– Global third party due diligence process 
supported by technology and central oversight.​
​
–– Creation of a new Chief Business Integrity Officer role and 
supporting team to elevate the critical role that ethical decision-
making plays in our overall governance framework.
–– We refreshed our Code of Business Conduct and introduced a new 
Dignity At Work policy.
–– We delivered interactive Code of Business Conduct e-learning 
training sessions.
–– New interactive leadership engagement tool to further embed 
compliance understanding and capability.​
5
Sustainability and 
responsibility 
Failure to manage climate 
change risk, particularly 
water stress, or to meet 
key sustainability goals.
​
–– Reduced revenues and 
profits via increased 
taxation, regulation and 
supply chain volatility.
–– Damage to trust and 
reputation amongst 
consumers and other 
stakeholders.​
​
–– Sustainability and responsibility strategy  
credible with stakeholders and operationalised, 
delivering against majority of 2020 targets.
–– Resource scarcity issues identified and 
mitigations in place, including water,  
agricultural raw materials and energy. 
–– Human rights interventions delivering against 
UN Guiding Principles and United Kingdom’s 
Modern Slavery Act requirements. 
–– Key external partnerships in place to strengthen 
delivery and strategy.​
​
–– Achievement of the majority of sustainability and responsibility targets.
–– 2030 strategy being developed.
–– Cross-functional Climate Risk Steering Group continuing to develop 
approach to climate change risk reporting, guided by Task Force on 
Climate-related Financial Disclosures (TCFD) recommendations.
–– Water Blueprint continuing to be embedded with suppliers. 
–– Human rights impact assessments in North America (United States/
Canada), Middle East (first phase), China and Australia (see page 36). 
–– Second full year of progress against 2025 positive drinking targets, 
focused on moderation and reducing harm (see page 33). 
EG
CVC
CT
EG
CVC
CT
EP
EG
CVC
 V
EG
CVC
CT
 V
Efficient growth
EG
Consistent value creation
CVC
Credibility and trust
CT
Engaged people
EP
Risk included in viability assessment
V
EG
CVC
CT
EP
 V
For more information on our strategic priorities 
and outcomes, please see pages 17-29.
39
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our principal risks and risk management continued
Risk
​ Impact
​ How we mitigate
​ Developments in 2020
6
Cyber threat
Theft, loss and 
misappropriation of 
our most important 
digital assets.
​
–– Financial loss, 
operational disruption 
and reputational 
damage.​
​
–– Enterprise-wide cyber risk management processes 
and policies.
–– Information Security committee governs, tracks and 
reports risk and compliance activities. 
–– Comprehensive IT controls framework extends to 
manufacturing facilities.
–– Rigorous approach to third party risk management.
–– Mandatory global e-learning and regular phishing 
exercises for all employees.
–– Next generation security technologies deployed to 
tackle advanced attacks.​
​
–– Use of machine learning and threat intelligence to detect and 
block sophisticated threats. 
–– Conduct continuous breach simulation testing to supplement 
war gaming, red team and cyber stress-testing activities. 
–– Expanded workflow tools and automation tools to increase 
speed, efficiency and consistency of security operations. 
–– Continuously reviewing and adapting our cyber strategy to  
tackle risks related to Covid-19 and remote working.​
7
Data privacy
Breach of data protection 
laws or regulations
​
–– Harm to our reputation 
with consumers, 
customers and/or 
our people.
–– Non-compliance 
with data protection 
regulation.
–– Significant financial 
penalty of up to 4% 
of global turnover.​
​
–– Global data privacy programme with robust policy, 
training and communications.
–– Privacy impact assessments in key risk areas of 
the business.
–– Minimum standard for compliance set globally with 
a focus on key risk areas.​
​
–– Detailed review of data privacy requirements carried out in 
respect of information systems and processes, through a 
structured programme including analysis of access controls,  
data minimisation and masking, data retention and storage, 
record of processing activities, and third party data management.
8
Political instability 
and terrorism
Impacts from political 
instability and security 
threats including terrorism. ​
​
–– Diageo employees, 
sites or supply chain 
threatened and/ 
or harmed.
–– Our ability to operate 
in key markets is 
disrupted.​
​
–– Security function, led by subject matter experts, 
draws on a global management framework 
to ensure risks are systematically identified 
and controlled. 
–– In-country security managers oversee people 
and physical security.
–– Global risk monitoring and horizon-scanning to 
identify and respond to emerging risks promptly. 
–– Mandatory global travel risk management program 
for all business travellers.
–– Global business continuity and crisis management 
framework with scenario testing.
–– Global and market liaison with governments, 
academia, and industry on evolving threat 
landscape and best practices.​
​
–– Significant increase in global volatility often manifesting in civil 
unrest and violence, across many regions.
–– The Covid-19 pandemic has caused global disruption to 
communities, business, and economic well being. Its economic 
and social impact could exacerbate the underlying conditions 
driving volatility and increase the likelihood of further unrest. 
–– Unstable geo-politics: resurgent populist nationalism has driven 
erosion of multilateralism, raising the risk of regional conflict, 
trade wars and state-sponsored cyber-attacks. Increasing 
polarisation and political extremism have also driven increasing 
rates of far-right activity and terrorism.
–– We have fully activated our global crisis management and 
business continuity plans to address Covid-19.​
9
International tax
Significant changes to 
the international tax 
environment such as 
responding to concerns 
around the ‘digital 
economy’ and EU anti-tax 
abuse measures could 
alter our operating 
position. 
​
–– Increase in the cost of 
doing business arising 
from an increase in 
our effective and cash 
tax rates.
–– Changing tax laws  
and audit activity 
lead to additional 
tax exposures and 
uncertainty.​
​
–– Ongoing review of our tax policy in light of 
changing rules and stakeholder expectations.
–– Monitoring and, where appropriate, expressing 
views on the formulation of tax laws either directly 
or through trade associations or similar bodies.
–– End-to-end review of our processes to continually 
improve our tax control/ governance environment.
–– Submission of our country-by-country reports to 
the relevant tax authorities on an annual basis to 
ensure they have full visibility of our tax footprint.​
​
–– Increased risk of unilateral tax increases as governments seek to 
fund their spending during the Covid-19 pandemic.
–– Investment by governments in the digitalisation of tax 
administration will facilitate enhanced access to and analysis 
of our data, which is likely to increase audit activity.
–– The OECD’s work on digitalisation may result in changes to 
how multinationals are taxed and could result in unilateral and 
punitive tax measures if a consensus-based approach cannot 
be found. 
–– In common with other multinationals, we face scrutiny from 
certain authorities, as outlined in our contingent liability note.​
10 Product quality
Contamination of raw 
materials or finished 
product, or unsafe 
counterfeit product 
supplied to the market.
​
–– Harm to consumers
–– Corporate and brand 
reputation is damaged.
–– Financial losses due 
to supply disruption, 
product recalls, 
penalties and a loss 
of consumer trust.​
​
–– Food Safety System 22000 Certification in place 
for owned brewing and packaging sites, and 
third-party site audit programme in place.
–– Physical security standards and vetting procedures.
–– Anti-counterfeiting measures embedded in our 
packaging deter against reuse and make our 
products more difficult to copy.
–– Active programme to identify high-risk areas, 
engaging with customs and law enforcement 
authorities and participating in industry initiatives 
to monitor and prevent counterfeit activity.
–– Application of unique lot-codes on all products 
for product recall requirements.
–– Food fraud and food threat risk assessments 
regularly undertaken.
​
–– Global Food Safety Initiative assurance strategy being rolled out 
across wholly owned breweries and packaging sites, and key 
third party production sites.
–– Food fraud and food threat training developed for employees.
–– Brand protection and anti-counterfeit activities focused on 
high -risk markets and on new technology to assist with 
product verification. 
–– We are actively working with e-commerce sites to identify 
counterfeit activities and seek to stop those activities promptly.
–– Launch of project to develop the next generation security 
closures for our brands most at risk.
EG
CVC
CT
EP
EG
CVC
CT
EP
EG
CT
EP
CVC
CT
EG
CVC
CT
V
Efficient growth
EG
Consistent value creation
CVC
Credibility and trust
CT
Engaged people
EP
Risk included in viability assessment
V
40
DIAGEO Annual Report 2020

Business integrity
We remain deeply committed to operating in 
the right way in everything we do. Compliance 
and conducting our business with integrity are 
non-negotiables, and our approach to risk and 
compliance helps us go beyond the basics to 
encourage the right behaviours and attitudes 
everywhere, every day.
Our global Code of Business Conduct 
(Code), available in 20 languages, was refreshed 
this year to reiterate our expectations of how 
we manage compliance risk. The Code sets 
out what we stand for as a company and how 
we operate to enable all our employees to 
understand what is required of them in the 
conduct of our business across a range of 
compliance areas.
We undertake annual mandatory global 
training, with an integrated Annual Certification 
of Compliance (ACC) for all managers. In 2019, 
the ACC was completed by 100% of eligible 
employees. Global training is delivered in 
an easily accessible e-learning format with 
classroom training delivered to those employees 
who do not have regular access to a computer.
Another area of potential compliance risk 
is our interactions with third parties. Our Know 
Your Business Partner programme is designed to 
help us evaluate the risk of doing business with a 
Viability statement
In accordance with the United Kingdom’s Corporate Governance Code, the Directors have 
assessed the viability of the group for the three years to 30 June 2023, considering our current 
position and prospects, our strategy, the Board’s risk appetite, our business model to create a 
truly sustainable business for the very long term that includes our people, brands, relationships, 
insight and know-how, infrastructure and financial strength and our principal risks as set 
out in the Strategic report. The Directors believe a three-year horizon is appropriate for this 
assessment, as this aligns with our normal three-year strategic business planning processes. 
The three-year business plan is based on our current strategy and has been stress-tested 
by modelling severe but plausible downside scenarios, linked to our principal risks. In addition, 
and while still uncertain, the potential financial impact of the Covid-19 pandemic has been 
modelled in our scenarios. This has required using key assumptions that have a high degree 
of uncertainty, including but not limited to: the length of lockdown; the potential for a second 
wave; the recovery of our on-trade business; and increases in direct and indirect taxes.
Key severe but plausible scenarios considered include: 
–– Material negative changes in the macro-economic environment including the impact 
of Covid-19
–– Severe marketing and/or route to market restrictions or fiscal changes introduced by 
local governments
–– Unfavourable exchange movements in foreign currencies – primarily euro & US dollar 
to Sterling
–– A failure to adapt to or participate fully in critical industry developments 
–– Impact of severe climate change
–– Increased potential tax rate due to changes in the international tax environment. 
The principal risks considered in the most likely combination of downside scenarios are 
identified with the symbol ‘V’. None of these scenarios individually threaten the viability 
of Diageo, therefore the combined impact of these scenarios has been evaluated as the 
most severe stressed scenario. Stress-testing considers the effectiveness of mitigation actions 
and internal control systems, and makes certain assumptions about temporary reductions 
in discretionary spending including capital expenditure, dividend payments and advertising 
and promotion. It also considers whether additional financing facilities would be required. 
Based on the results of this analysis the Directors confirm they have a reasonable 
expectation that the group will be able to continue in operation and meet its liabilities 
as they fall due over the period to 30 June 2023.
Reported and substantiated breaches
636
299
273
111
2018
805
421
238
79
2019
644
384
195
60
2020
Reported 
Reported through SpeakUp 
Substantiated breaches
Code-related leavers 
third party prior to entering into a contractual 
relationship, as well as monitor any changes 
throughout our interactions. We assess all 
our business partners for potential compliance 
risks such as bribery and corruption, money 
laundering, tax evasion facilitation, data privacy 
breaches or other reputational red flags, and 
implement additional due diligence processes 
for those that pose a potentially higher risk. 
Central oversight is provided by our global 
business integrity team which undertakes regular 
reviews on the effectiveness of the programme.
We encourage our employees, and anyone 
we do business with, to raise concerns about 
potential breaches of our Code or policies. Our 
confidential whistle-blowing help line, SpeakUp, 
is available via phone or web portal, enabling 
anyone to report a concern. Additionally, we 
encourage employees to come forward to their 
line manager, legal, HR or risk and compliance 
and business integrity partners. 
This year 644 allegations of breaches were 
reported. There has been a decline in allegations 
versus last year, which is in line with external 
trends and probably due to increased working 
from home as a result of Covid-19 measures. 
The substantiation rate of allegations remains 
similar to last year with 35% of cases confirmed 
as breaches. 
All allegations are taken seriously, 
investigated and where required consequence 
management is performed. We monitor all 
breaches to identify trends or common areas 
where further action may be required. This 
year 60 people exited the business as a result 
of breaches of our Code or policies, versus 
79 people in prior year. The reduced number 
of breach leavers is due to a reduction in severity 
and type of breaches this year.
41
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our Climate Risk Steering Group
Our Climate Risk Steering Group meets quarterly and includes 
representatives from our Supply, Corporate Relations, Strategy, Treasury, 
Risk, Corporate Security, Financial Reporting and Brand functions. It aims  
to ensure we have an integrated, group-wide approach to assessing and 
mitigating climate-related risks, and that we adopt a strategic approach to 
adaptation planning for climate change. The Group provides updates to 
the Executive Committee and the Board. 
Responding to climate-related risks
Climate-related risks
We are committed to combating climate change and water challenges by decarbonising our value chain, 
implementing adaptation measures and acting as champions for water stewardship around the world.  
As well as being the right thing to do, this helps us protect our business as part of our wider approach  
to mitigating and adapting to climate-related risks. 
Reducing our emissions and championing water 
stewardship
Addressing climate change and its associated impacts, particularly for 
water, is central to our strategy. This year, we met our stretching targets 
to reduce absolute greenhouse gas emissions from direct operations 
by 50%, and by 30% in our supply chain. To reduce our climate impacts 
further, we are committed to procuring 100% of our electricity from 
renewable sources by 2030. We have also pledged our commitment 
to setting a science-based target in line with a 1.5°C future.
Water continues to be our most important strategic priority related 
to climate risk. Our Water Blueprint helps us drive better water availability, 
accessibility and quality in our supply chain and communities, while 
giving us the framework to reduce our overall impact and mitigate our  
risk. We focus particularly on water-stressed areas in Africa, India and  
Brazil, which account for approximately a third of our total production  
by volume (see map opposite). We have made particular progress on 
water efficiency in Africa (55.8%) and India (54.2%). We are committed 
to building on these achievements and to setting further ambitious 
targets for the critical decade ahead. 
Carbon emissions by region by year 
(1,000 tonnes CO2e)(i)(ii)
Region 
2007
2018
2019
2020
North America
211
44
54
128​
Europe and Turkey
399
279
232
149​
Africa
228
225
195​
164​
Latin America and Caribbean
8
18
19
22​
Asia Pacific
150
49
47
37​
Corporate
20
8
8
7​
Diageo (total)
1,016
623
555​
507Δ
UK
276​
212​
169​
85(iii)
Water efficiency by region by year (ii)(iv)
Region 
2007
2018
2019
2020
North America
6.88
5.55
5.26
5.03
Europe and Turkey
7.94
6.02
5.29
5.06​
Africa
9.48
4.45
4.37
4.19
Latin America and Caribbean
34.84
4.66
4.58
4.93​
Asia Pacific
7.06
3.64
3.36
3.72​
Diageo (total)
8.56​
5.04​
4.72
4.62Δ
(i)	 CO2e figures are calculated using the WRI/WBCSD GHG Protocol guidance available at  
the beginning of our financial year, the kWh/CO2e conversion factor provided by energy 
suppliers, the relevant factors to the country of operation, or the International Energy 
Agency, as applicable.
(ii)	 2007 baseline data, and data for each of the intervening years in the period ended 
30 June 2019, have been restated in accordance with the WRI/WBCSD GHG Protocol  
and Diageo’s environmental reporting methodologies.
(iii)	Diageo UK total direct and indirect carbon emissions were 85,079, comprising direct 
emissions (Scope 1) of 85,079 and indirect emissions (Scope 2) of 0. The intensity ratio was 
93grams/litre packaged. The UK total energy consumption was 1,049,178mWh, 
comprising 916,111mWh of direct energy and 133,067mWh of indirect energy.
(iv)	In accordance with our environmental reporting methodologies, total water used 
excludes irrigation water for agricultural purposes on land under our operational control.
Δ 	 Within PwC’s independent limited assurance scope.
	
Please refer to the reporting methodologies in our Sustainability & Responsibility 
Performance Addendum for more information on how data has been compiled, including 
standards and assumptions used.
30
477
2020∆
Direct and indirect carbon emissions by weight 
(1,000 tonnes CO2e)(i),(ii) 
(market-/net-based)
65
490
2019
70
516
2018
171
845
2007
Direct
Indirect
Board oversight of climate risk
Cross-functional Climate Risk Steering Group
Supply Climate Risk Mitigation Group
Joint Executive-level ownership
Ewan Andrew 
President, Global Supply and 
Procurement
Dan Mobley
Corporate Relations Director
Our approach to reducing our environmental impacts is described further  
on page 29.
We report our performance against all our environmental targets on pages 34-35.
42
DIAGEO Annual Report 2020

1.	 Kenya Brewing,  
Nairobi, Kenya
2.	 East Africa Maltings,  
Nairobi, Kenya
3.	 Seybrew, Seychelles
4.	 Isipingo, South Africa
5.	 Moshi, Tanzania
6.	 Dar es Salaam, Tanzania
7.	 Mwanza, Tanzania
8.	 UBL, Kampala, Uganda
9.	 IDU, Kampala, Uganda
10.	Accra, Achimota, Ghana
11.	Kumasi, Kaasi, Ghana
12.	Ogba, Lagos, Nigeria
13.	Paraipaba, Ceará, Brazil
14.	Agricultural lands,  
Ceará, Brazil
15.	Messejana, Brazil
16.	Maracanaú, Brazil
17.	Meta Abo, Ethiopia
18.	Marracuene, 
Mozambique
India
19.	Alwar, Rajasthan
20.	Aurangabad, 
Maharashtra
21.	Baddi, Himachal 
Pradesh
22.	Baramati, Maharashtra
23.	Hospet, Karnataka
24.	Kumbalgodu, Karnataka
25.	Malkajgiri, Telangana
26.	Meerut, Uttar Pradesh
27.	Nacharam, Telangana
28.	Pathankot, Punjab
29.	Pioneer, Maharashtra
30.	Rosa, Uttar Pradesh
31.	Serampore, West 
Bengal
32.	Sovereign, Karnataka
33.	Tern, Andhra Pradesh
34.	Udaipur, Rajasthan
Diageo sites located in water-stressed areas 
19
21
28
26
30
33
31
34
22
32
23
24
25
27
29
20
12
4
18
6
3
2
1
17
5
7
8
9
10
11
16
15
14
13
Sites 
Assessing and mitigating climate risk
As of this year, we have highlighted climate-related risk within our 
principal risk, sustainability and responsibility (see page 39).
Building on existing analysis and planning, we are taking steps to 
better understand the direct and indirect impacts of climate change and 
water stress on our business, so that we can further develop adaptation 
plans to ensure our supply chains are resilient. We recognise the importance 
of considering climate-related risks and opportunities in business decisions 
and strategic planning, and we acknowledge that adopting the 
recommendations of the Task Force on Climate-related Financial Disclosures 
(TCFD) is an important step in addressing climate change risks and 
supporting a transition to a low-carbon economy. 
To increase our understanding of the financial aspects, we carried 
out sustainability value assessments (SVAs) in three key markets in 2018. 
These examined the potential impact of water risk for Diageo over five 
and 10 years, strengthening the business case for water security measures 
in these markets. 
Building on this work, in 2021 we will complete a comprehensive 
assessment of physical and transition climate risks in countries representing 
a significant share of our production, and use data modelling climate 
scenarios to help us develop detailed risk mitigation and climate adaptation 
plans. This work will be overseen by our Climate Risk Steering Group. We will 
also update our water risk assessment of our own operations as part of our 
regular review of the impact of water stress on our supply chain and will 
extend our understanding of third-party operators’ water risk. This work, 
including SVAs and water risk assessments, will feed into our overall 
approaches to both climate risk mitigation and climate change adaptation. 
Working with others to champion decarbonisation 
and water stewardship
In March we were proud to partner with the United Nations 
Global Compact (UNGC) and a number of other leading global  
companies to launch an industry-driven, CEO-led initiative,  
the Water Resilience Coalition.
We have also pledged our commitment to setting a science- 
based target in line with a 1.5°C future, and are advocates for action 
on carbon and the water crisis, including through these groups: 
–– UNGC’s Business Ambition for 1.5°C
–– UNGC CEO Water Mandate 
–– Alliance for Water Stewardship
–– We Mean Business coalition 
–– Science Based Targets initiative
–– WaterAid 
We also share knowledge through the Beverage Industry 
Environment Roundtable (BIER), a coalition of global beverage 
companies working together to advance environmental 
sustainability. 
43
DIAGEO Annual Report 2020
STRATEGIC REPORT

Well positioned to emerge stronger
Group financial review
“This year our business has been significantly impacted by the Covid-19 pandemic. 
Restrictions imposed during the second half of the fiscal disrupted our operating 
environment, challenging the consistent performance that Diageo has delivered for eight 
consecutive half years. As a result, organic net sales were down 8.4% for the full year driven 
by volume declines on the back of the recent and sudden contraction of the total beverage 
alcohol industry, driven by the reduction of out of home consumption occasions. We 
quickly reset our discretionary spend, including A&P that we believed would not be 
effective in the rapidly changing environment. However, the pandemic still drove full year 
operating margin dilution of 212bps after delivering 13bps of accretion in the first half. 
Through disciplined actions to conserve cash we delivered £1.6 billion free cash flow and 
further strengthened Diageo’s liquidity position to ensure we are positioned to continue to 
invest smartly for the long term. Despite the challenges, our strategy remains unchanged 
and our agile and high-performance culture give me confidence that we are well 
positioned to emerge stronger and continue to create value for all of our stakeholders.” 
Kathryn Mikells
Chief Financial Officer
Reported net sales 
were down
8.7%
driven by organic declines
Reported operating 
profit declined
47.1%
driven mainly by 
exceptional operating 
items and decline in 
organic operating profit
Organic volumes 
were down
11.2%
Organic net sales 
were down
8.4%
Organic operating 
profit was down
14.4%
Net cash from 
operating  
activities was 
£2.3bn
Free cash flow was
£1.6bn
Basic eps of
60.1p
was down 54.0%
Eps before 
exceptional items 
decreased
16.4%
to 109.4 pence
Summary financial information
​
 
2020 
2019
Volume
EUm
217.0
245.9​
Net sales
£ million
11,752​
12,867
Marketing
£ million
1,841​
2,042​
Operating profit before exceptional items
£ million
3,494​
4,116
Exceptional operating items(i)
£ million
(1,357)​
(74)
Operating profit
£ million
2,137​
4,042
Share of associate and joint venture  
profit after tax
£ million
282​
312
Non-operating exceptional gain(i)
£ million
(23)
144
Net finance charges
£ million
(353)
(263)
Exceptional taxation credit/(charge)(i)
£ million
154​
(39)
Tax rate including exceptional items
%
28.8
21.2
Tax rate before exceptional items
%
21.7
20.6
Profit attributable to parent company’s 
shareholders
£ million
1,409​
3,160
Basic earnings per share
pence
60.1​
130.7
Earnings per share before exceptional items
pence
109.4
130.8
Recommended full year dividend
pence
69.9
68.6
(i)	 For further details of exceptional items see pages 130-131.
(i)	 Excluding corporate net sales of £38 million (2019 - £53 million).
(ii)	 Excluding net corporate cost of £147 million (2019 - £210 million).
(iii)	Excluding exceptional operating charges of £1,357 million (2019 - £74 million) and net corporate operating costs of £147 million (2019 - £189 million).
North America
Europe and Turkey
Africa
Latin America and Caribbean
Asia Pacific
4,623
Net sales(i)
2,567
1,346
908
2,270
48.4
Volume
40.2
28.8
19.0
80.6
2,034
Operating proﬁt 
before exceptionals(iii)
757
248
501
101
2,088
Operating proﬁt(ii)
695
242
(44)
(697)
44
DIAGEO Annual Report 2020

2020
2019
Exceptional operating items
Exchange
Acquisitions and disposals
Other(i)
Gross margin
Marketing
Other operating items
31.4%
18.2%
(1,097)
bps
(9)
bps
(8)
bps
(174)
bps
(60)
bps
3
bps
22
bps
 
Organic 
movement
2020
2019
4,042
(1,283)
(1)
(34)
(589)
2
2,137
Exceptional operating items(i)
Exchange
Acquisitions and disposals
FVA(ii)
Organic movement
 
​
Volume  
%
Net sales 
%
Marketing 
% 
Operating 
profit(i) 
%
North America
–
2​
(6)​
4​
Europe and Turkey
(11)​
(12)
(12)​
(24)​
Africa
(13)​
(13)
(8)
(56)​
Latin America and Caribbean
(15)​
(15)
(15)
(29)​
Asia Pacific
(15)​
(16)
(11)​
(29)​
Diageo – organic growth by region(ii)
(11)​
(8)
(10)​
(14)​
​
Volume  
%
Net sales 
%
Marketing 
% 
Operating 
profit(i) 
%
North America
(2)
4​
(5)​
4​
Europe and Turkey
(11)​
(13)
(13)
(25)
Africa
(14)
(16)
(8)​
(63)
Latin America and Caribbean
(15)
(20)
(23)
(32)
Asia Pacific
(15)
(16)
(11)
(29)
Diageo – reported growth by region(ii)
(12)
(9)
(10)​
(15)
Operating margin (%)
Reported operating margin declined 1,323bps 
Organic operating margin declined 212bps
Reported operating margin declined 1,323bps mainly driven by 
exceptional operating items and decline in organic operating margin.
Organic operating margin declined 212bps driven by lower 
volumes impacting fixed cost absorption, cost inflation and other 
expense offsetting savings in marketing investment and productivity 
benefits from cost efficiencies.
Net sales (£ million)
Reported net sales declined 8.7% 
Organic net sales declined 8.4% 
Reported net sales declined 8.7%, driven mainly by decline in organic 
net sales and, to a lesser extent, the negative impact of acquisitions 
and disposals, partially offset by favourable foreign exchange.
 Organic net sales declined 8.4% driven by an 11.2% reduction in 
volume partially offset by 2.8% positive price/mix. All regions reported 
declines in organic net sales except for North America and this shift in 
market mix was the main driver behind the positive price/mix.
(i)	 Exchange rate movements reflect the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average exchange rates. 
(ii)	 For the year ended 30 June 2019 trade investment of £10 million has been reclassified from marketing to net sales.
(i)	 For further details on exceptional items see pages 130-131.
(ii)	 Fair value adjustments. For further details on fair value remeasurement see page 48.​
(i)	 Fair value adjustments and reclassification.
Operating profit (£ million)
Reported operating profit declined 47.1%
Organic operating profit declined 14.4%
Reported operating profit was down 47.1% mainly driven by 
exceptional operating items and by decline in organic operating 
profit. Exceptional operating items were mainly driven by non-cash 
impairments in India, Korea, Nigeria and Ethiopia due to Covid-19 and 
challenging trading conditions.
Organic operating profit declined ahead of net sales at 14.4% with 
first half growth of 4.6% more than offset by impact of Covid-19 in the 
second half.
2020
2019
12,867
11,752
(76)
(10)
(1,416)
32
Exchange(i)
Acquisitions and disposals
Reclassiﬁcation(ii)
Volume
Price/mix
355
Organic 
movement
 
Basic earnings per share (pence)
Basic eps decreased 54.0% from 130.7 pence to 60.1 pence
Eps before exceptional items decreased 16.4% from 
130.8 pence to 109.4 pence
Basic eps decreased 70.6 pence principally due to impairments  
in exceptional items and the decline in organic operating profit.  
For further detail see pages 130-131.
Eps before exceptional items decreased 21.4 pence driven by 
decline in organic operating profit, lower income from associates and 
joint ventures, increased finance charges and the impact of acquisitions 
and disposal. These were partially offset by tax, lower non-controlling 
interests and the impact of the share buyback programme. 
(i)	 Includes finance charges net of tax. 
(ii)	 Excludes finance charges related to acquisitions, disposals and share buyback. 
(iii)	Excludes tax related to acquisitions, disposals and share buyback.
(iv)	Fair value adjustments and exchange on operating profit.
2020
2019
130.7
3.9
1.1
1.5
0.1
(49.2)
(1.2)
(24.4)
(1.2)
(1.2)
60.1
Exceptional items after tax
Acquisitions and disposals(i) 
Organic operating 
proﬁt growth
Associates and joint 
ventures
Finance charges(ii)
Tax(iiI)
Share buyback(i)
Non-controlling interests
Other(iv)
 
(i)	 Before exceptional operating items.
(ii)	 Includes Corporate. In the year ended 30 June 2020 corporate net sales were £38 million (2019 - £53 million). Net corporate operating costs were £147 million (2019 - £189 million). 
45
DIAGEO Annual Report 2020
STRATEGIC REPORT

2020
2019
15.1%
22
bps
(260)
bps
(24)
bps
(22)
bps
(12)
bps
29
bps
12.4%
Exchange
Acquisitions and disposals
Organic operating proﬁt growth
Associates and joint ventures
Tax
Other
 
Group financial review continued
Return on average invested capital (%)(i)
ROIC decreased 267bps
ROIC decreased 267bps against the prior comparable period 
driven mainly by organic operating profit decline.
Income statement
​
2019
£ million
Exchange (a)
£ million
Acquisitions and 
disposals (b)
£ million
Organic  
movement(i)
£ million
Fair value 
remeasurement (d)
£ million
Reclassification(ii)
£ million
2020
£ million
Sales
19,294
(1)
(108)
(1,478)
–
(10)
17,697
Excise duties
(6,427)
33
32
417
–
–
(5,945)
Net sales
12,867
32
(76)
(1,061)
–
(10)
11,752
Cost of sales
(4,866)
(31)
41
193
9
–
(4,654)
Gross profit
8,001
1
(35)
(868)
9
(10)
7,098
Marketing
(2,042)
3
(7)
195
–
10
(1,841)
Other operating items
(1,843)
(5)
8
84
(7)
–
(1,763)
Operating profit before 
exceptional items
4,116
(1)
(34)
(589)
2
–
3,494
Exceptional operating items (c)
(74)
​
​
​
​
(1,357)
Operating profit
4,042
​
​
​
​
2,137
Non-operating items (c)
144
​
​
​
​
(23)
Net finance charges
(263)
​
​
​
​
(353)
Share of after tax results of associates 
and joint ventures
312
​
​
​
​
282
Profit before taxation
4,235
​
​
​
​
2,043
Taxation (e)
(898)
​
​
​
​
(589)
Profit for the year
3,337
​
​
​
​
1,454
(i)	 For the definition of organic movement see page 62.
(ii)	 For the year ended 30 June 2019 trade investment of £10 million has been reclassified from marketing to net sales.
(i)	 ROIC calculation excludes exceptional operating items from operating profit and includes an adverse impact of 18bps as a result of the adoption of IFRS 16 on 1 July 2019. 
Free cash flow (£ million)
Generated £2,320 million from operating activities(i)(ii)  
£1,634 million free cash flow(ii)
Net cash from operating activities was £2,320 million, a decrease 
of £928 million compared to the prior period. Free cash flow 
was £1,634 million, £974 million lower compared to prior period 
primarily driven by the decline in operating profit, lower dividends 
from joint ventures and associates (see note 18(g) page 166), 
increased use of working capital, higher tax payments and higher 
interest charges. The tax increase was mainly due to one-off tax 
settlements and change in payment timing in the first half, which 
was partially offset by lower tax on reduced earnings in the 
second half as well as some delay in second half payments 
associated with Covid-19.
(i)	 Net cash from operating activities excludes net capex and movements in loans  
and other investments (2020 - £(686) million; 2019 - £(640) million).
(ii)	 Net cash from operating activities and free cash flow for the year ended 30 June 2020  
benefited by £74 million as a result of the adoption of IFRS 16 on 1 July 2019.
(iii)	Exchange on operating profit before exceptional items.
(iv)	Operating profit excludes exchange, depreciation and amortisation,  
post employment charges and other non-cash items.
(v)	Working capital movement includes maturing inventory.
(vi)	Other items include post employment payments, dividends received from  
associates and joint ventures, and movements in loans and other investments.
2020
2019
2,608
1,634
(1)
(541)
(106)
(47)
(96)
(56)
(127)
Exchange(iii)
Operating proﬁt(iv)
Working capital(v)
Capex
Tax
Interest
Other(vi)
 
46
DIAGEO Annual Report 2020

(a) Exchange
The impact of movements in exchange rates on reported figures for 
net sales is principally in respect of the translation exchange impact 
of the weakening of sterling against the US dollar, partially offset by 
strengthening of sterling against the Brazilian real, the Australian dollar 
and the euro. The impact of movements in exchange rates on reported 
figures for operating profit is principally in respect of the transactional 
exchange impact of the weakening of the Brazilian real, the Colombian 
peso and the Nigerian naira, broadly offset by translational exchange 
impact of the strengthening of the US dollar against sterling.
The effect of movements in exchange rates and other movements 
on profit before exceptional items and taxation for the year ended 
30 June 2020 is set out in the table below.
​
Gains/
(losses)
£ million
Translation impact
56
Transaction impact
(57)
Operating profit before exceptional items
(1)
Net finance charges
(2)
Associates – translation impact
(3)
Profit before exceptional items and taxation
(6)
 
​
Year ended
30 June 2020
Year ended
30 June 2019
Exchange rates
​
​
Translation £1 =
$1.26
$1.29
Transaction £1 =
$1.35
$1.33
Translation £1 =
€1.14
€1.13
Transaction £1 =
€1.12
€1.13
(b) Acquisitions and disposals 
The acquisitions and disposals movement was mainly attributable to the 
acquisition of Seedlip and Anna Seed 83, the disposal of United National 
Breweries and the prior year disposal of a portfolio of 19 brands to Sazerac.
See note 8 for further details.
(c) Exceptional items
Exceptional operating items in the year ended 30 June 2020 were 
£1,357 million before tax (2019 – £74 million).
Value in use calculation and fair value less costs of disposal 
methodologies were both considered to assess the recoverable amount of 
the India cash-generating unit. Having considered the volatility in local share 
prices, the premiums that businesses controlled by large multinationals 
trade at and other factors, we assessed a range of fair value less costs of 
disposal with particular focus on the value a third party may pay for a 
controlling stake in the current environment. The value in use calculation 
was above our view of fair value less costs of disposal and was therefore 
used to determine the recoverable amount of this cash-generating unit. 
Based on this, in the year ended 30 June 2020, an impairment charge of 
£655 million in respect of the India cash-generating unit containing the India 
goodwill was recognised in exceptional operating items. Impairment 
charges of £78 million in respect of the Old Tavern brand, £38 million in 
respect of the Bagpiper brand and £1 million in respect of fixed assets in 
India were also recognised in exceptional operating items. Forecast cash 
flow assumptions were reduced principally due to the general economic 
downturn further aggravated by the Covid-19 pandemic, including 
pandemic related recent regulatory changes, negatively impacting both 
demand and margins.
An impairment charge of £434 million in respect of the Windsor Premier 
brand was recognised in exceptional operating items. The forecast cash flow 
assumptions were reduced principally due to the recent regulatory changes 
limiting trade spend for wholesalers and venues and the Covid-19 
pandemic negatively impacting the challenging whisky category in Korea.
Having considered both value in use and fair value less cost of 
disposal, an impairment of £84 million in respect of the group’s Nigerian 
tangible fixed assets was recognised in exceptional operating items. The 
profit generating ability of the assets were reduced principally due to the 
deteriorated economic outlook as a result of the combination of the oil 
price crisis in Nigeria and the Covid-19 pandemic.
An impairment of £55 million in respect of the group’s Ethiopian 
tangible fixed assets was recognised in exceptional operating items. 
The forecast cash flow assumptions were reduced principally due to the 
impact of the recent excise duty increase and the Covid-19 pandemic.
In line with the group’s accounting policy, given the unusual nature and 
magnitude of the below items, these are reported as exceptional 
operating items:
(i) Diageo has launched the ‘Raising the Bar’ programme to support 
pubs and bars to welcome customers back and recover following the 
Covid-19 pandemic. The programme includes a commitment of 
$100 million (£81 million) over a period of up to two years from 1 July 2020, 
to support qualifying outlets across a limited number of iconic global cities 
and some regional cities in certain key markets. Diageo has also provided 
other forms of support to help the communities and the industry during 
the Covid-19 pandemic. Supporting packages for bartenders and bar 
owners and donations of grain neutral spirit to produce hand sanitisers 
amounted to £8 million in the year ended 30 June 2020.
(ii) In the year ended 30 June 2020, an exceptional charge of 
£30 million was recognised in respect of obsolete inventories that 
have been or will be destroyed as a direct consequence of the Covid-19 
pandemic. The amount comprises of a £23 million inventory provision  
and £7 million directly attributable to handling and destruction costs.
(iii) In the year ended 30 June 2020, an estimated benefit of 
$105 million (£83 million) for substitution drawback claims (net of legal 
and broker fees of $2 million (£2 million)) previously filed and to be filed 
with the US Government in relation to prior years was recognised in 
exceptional operating items. Following a recent court decision and a 
related legal assessment, the collection of the excise duty benefit has 
become virtually certain.
In the year ended 30 June 2019, the group recognised a provision 
of £35 million for indirect tax in respect of certain channel accounts and 
regulatory change in Korea in respect of prior years.
An assessment was issued by the Korea Tax Authority in the year 
ended 30 June 2020 that has resulted in the reversal of the prior year’s 
provision in the amount of £24 million.
On 26 October 2018, the High Court of Justice of England and Wales 
issued a judgment in a claim between Lloyds Banking Group Pension 
Trustees Limited (the claimant) and Lloyds Bank plc (defendant) that UK 
pension schemes should equalise pension benefits for men and women 
for the calculation of their guaranteed minimum pension liability. The 
judgment concluded that the claimant has a duty to amend their pension 
schemes to equalise benefits and provided comments on the method to 
be adopted to equalise the benefits. This court ruling impacts the majority 
of companies with a UK defined benefit pension plan that was in existence 
prior to 1997. For the Diageo Pension Scheme (DPS) an estimate was made 
of the impact of equalisation which increased the liabilities of the DPS by 
£21 million, with a corresponding charge to exceptional operating items.
In July 2019 Diageo reached agreement with the French tax 
authorities resulting in penalty charges of £18 million (see Taxation below).
Non-operating items in the year ended 30 June 2020 were £23 million 
loss before tax (2019 – £144 million income).
In the year ended 30 June 2020, Diageo completed the acquisition 
of Seedlip and Anna Seed 83 and acquired controlling interests in certain 
Distill Ventures entities. As a result of these entities becoming subsidiaries 
of the group a gain of £8 million arose, being the difference between the 
book value of the associates prior to the transaction and their fair value.
47
DIAGEO Annual Report 2020
STRATEGIC REPORT

Group financial review continued
The disposal of United National Breweries was completed in the 
year ended 30 June 2020, which has resulted in an aggregate exceptional 
loss of £32 million, including a £4 million cumulative exchange loss 
in respect of prior years, recycled from other comprehensive income, 
and an impairment charge recognised in the period.
The disposal of an associate, Equal Parts, LLC resulted in an exceptional 
loss of £1 million.
In the year ended 30 June 2020, the group has reversed $3 million 
(£2 million) from provisions in relation to the sale of a portfolio of  
19 brands to Sazerac on 20 December 2018.
In the year ended 30 June 2019 the aggregate consideration for 
the disposal of a portfolio of 19 brands to Sazerac was $550 million  
(£435 million) resulting in a profit before taxation of $198 million  
(£155 million).
The group recognised an exceptional loss of £9 million in respect  
of the disposal of United National Breweries.
The disposal of the Indian wine business has resulted in an exceptional 
loss of £2 million.
with cash generation. Diageo targets dividend cover (the ratio of basic 
earnings per share before exceptional items to dividend per share) within 
the range of 1.8-2.2 times. For the year ended 30 June 2020 dividend 
cover was 1.6 times. The recommended final dividend for the year ended 
30 June 2020, to be put to the shareholders for approval at the Annual 
General Meeting is 42.47 pence, the same as the final dividend for the year 
ended 30 June 2019. This brings the full year dividend to 69.88 pence per 
share, an increase of 2% on the prior year. We will keep future returns of 
capital, including dividends, under review through year ending 2021 to 
ensure we allocate Diageo’s capital in the best way to maximize value for 
the business and our stakeholders.
Subject to approval by shareholders, the final dividend will be paid to 
holders of ordinary shares and US ADRs on the register as of 14 August 2020. 
The ex-dividend date both for the holders of the ordinary shares and for 
US ADR holders is 13 August 2020. The final dividend, once approved 
by shareholders, will be paid to shareholders on 8 October 2020 and 
payment to US ADR holders will be made on 14 October 2020. A dividend 
reinvestment plan is available to holders of ordinary shares in respect of 
the final dividend and the plan notice date is 17 September 2020.
(g) Share buyback 
On 25 July 2019 the Board approved a return of capital programme to 
return up to £4.5 billion to shareholders over the three year period to 
30 June 2022.
During the year ended 30 June 2020 the group purchased 
approximately 39 million ordinary shares at a cost of £1,282 million 
(including £7 million of transaction costs) and funded the purchases 
through a combination of operating cash inflows and incremental 
borrowings. This amount includes the aggregate consideration of 
£26 million (including £17 million settlement payments for the purchases 
made in the year ended 30 June 2019 and 30 June 2020) in relation to the 
prior year programme, which was completed on 10 July 2019 resulting in 
the repurchase of 0.3 million shares in the year ended 30 June 2020. The 
shares purchased under the share buyback programmes were cancelled.
At 30 June 2020 the leverage ratio, calculated as adjusted net debt 
to adjusted EBITDA, was 3.3x and the group anticipates leverage to be 
above the target range of 2.5-3.0x through the year ending 30 June 2021. 
The company has paused the return of capital programme until leverage 
is back within the target range.
Movement in net borrowings and equity
Movement in net borrowings
​
2020
£ million
2019
£ million
Net borrowings at the beginning  
of the year
(11,277)
(9,091)
Free cash flow (a)
1,634
2,608
Acquisitions (b)
(130)
(56)
Sale of businesses and brands (c)
11
426
Share buyback programme
(1,282)
(2,775)
Proceeds from issue of share capital
1
1
Net sale of own shares for share schemes (d)
54
50
Dividends paid to non-controlling interests
(111)
(112)
Net movements in bonds (e)
4,368
1,598
Purchase of shares of non-controlling interests (f)
(62)
(784)
Net movements in other borrowings (g)
(285)
721
Equity dividends paid
(1,646)
(1,623)
Net increase in cash and cash equivalents
2,552
54
Net increase in bonds and other borrowings
(4,089)
(2,331)
Exchange differences (h)
(95)
(22)
Other non-cash items (i)
(86)
113
Adoption of IFRS 16
(251)
–
Net borrowings at the end of the year
(13,246)
(11,277)
(d) Fair value remeasurement
The adjustment to cost of sales reflects the elimination of fair value changes 
for biological assets in respect of growing agave plants of £9 million gain. 
The adjustment to other operating expenses is the elimination of fair value 
changes to contingent consideration liabilities in respect of prior year 
acquisitions of £7 million loss (£10 million loss in respect of the Casamigos 
contingent consideration liability, £4 million loss in respect of the Copper 
Dog contingent consideration liability and £7 million gain in respect of the 
Pierde Almas contingent consideration liability).
(e) Taxation 
The reported tax rate for the year ended 30 June 2020 was 28.8% 
compared with 21.2% for the year ended 30 June 2019. 
Included in the tax charge of £589 million for the year ended 
30 June 2020 is an exceptional tax credit of £154 million mainly comprising 
exceptional tax credits on the impairment of the Windsor and USL brands 
of £105 million and £25 million, respectively, exceptional tax credits in 
respect of fixed assets impairments in Nigeria and Ethiopia of £25 million 
and £10 million, respectively, and a further £7 million exceptional tax credit 
in respect of obsolete inventories offset by a £20 million exceptional tax 
charge in respect of substitution drawback claims.
In the year ended 30 June 2019, Diageo reached a resolution with the 
French tax authorities on the treatment of interest costs for all open periods 
which resulted in a total exceptional charge of €100 million (£88 million), 
comprising a tax charge of €69 million (£61 million), penalties of €21 million 
(£18 million) and interest of €10 million (£9 million). This brought to a close all 
open issues with the French tax authorities for periods up to and including 
30 June 2017. In addition, the tax charge for the year ended 30 June 2019 
included an exceptional tax credit of £51 million principally arising from 
remeasuring the deferred tax liabilities in respect of the Ketel One vodka 
distribution rights from 25% to 20.5%, an exceptional tax charge of £33 
million in respect of the disposal of a portfolio of 19 brands to Sazerac and an 
exceptional tax credit of £4 million in respect of the equalisation of liabilities 
for males and females in the Diageo Pension Scheme.
The tax rate before exceptional items for the year ended 30 June 2020 
was 21.7%, consistent with our guidance of 21%-22% and compared with 
20.6% in the prior comparable period. 
We continue to expect a tax rate before exceptional items for the year 
ending 30 June 2021 to be in the range of 21%-22%.
(f) Dividend 
The group aims to increase the dividend each year and the decision in 
respect of the dividend is made with reference to dividend cover as well 
as current performance trends including sales and profit after tax together 
See page 62 for the definition of exceptional items.
48
DIAGEO Annual Report 2020

(a)	See page 46 for the analysis of free cash flow.
(b)	In the year ended 30 June 2020, Diageo completed the acquisition of 
Seedlip and Anna Seed 83 as well as a number of smaller transactions 
and additional investments in the Distill Ventures programme. 
Additionally, acquisitions include deferred and contingent 
consideration paid in respect of prior year acquisitions.
	
In the year ended 30 June 2019, Diageo acquired the remaining 
70% of Copper Dog Whisky Limited that it did not already own,  
made additional investments in a number of Distill Venture associates 
and made contingent consideration payments in respect of prior  
year acquisitions. 
(c)	In the year ended 30 June 2020, sale of businesses and brands 
included the sale of United National Breweries, Diageo’s wholly 
owned sorghum beer business. In the year ended 30 June 2019,  
sale of businesses and brands represented the cash received on  
the disposal of a portfolio of 19 brands sold to Sazerac net of 
transaction costs.
(d)	Net sale of own shares comprised purchase of treasury shares for the 
future settlement of obligations under the employee share option 
schemes of £2 million (2019 – £16 million) less receipts from employees 
on the exercise of share options of £56 million (2019 – £66 million). 
(e)	In the year ended 30 June 2020, the group issued bonds of 
$4,100 million (£3,296 million), €1,750 million (£1,594 million) 
and £298 million (including £2 million discount and fee) and 
repaid bonds of $1,000 million (£820 million). In the year ended 
30 June 2019, the group issued bonds of €2,600 million 
(£2,270 million) and £496 million (including £4 million discount 
and fee) and repaid bonds of €1,350 million (£1,168 million).
(f) 	In the year ended 30 June 2020, Diageo acquired additional shares in 
United Spirits Limited for INR 5,495 million (£60 million) which took 
Diageo’s percentage of shares owned in United Spirits Limited from 
54.78% to 55.94% (excluding 2.38% owned by the USL Benefit Trust). 
During the year ended 30 June 2020, Diageo completed the purchase 
of 4% of the share capital of Serengeti Breweries Limited for $3 million 
(£2 million) which took Diageo’s effective economic interest in 
Serengeti Breweries Limited from 39.2% to 40.2%. 
	
	
In the year ended 30 June 2019, purchase of shares of non-
controlling interests comprised RMB 6,774 million (£775 million) 
and transaction costs of £9 million in respect of the acquisition of 
23.43% of the share capital of Sichuan Shuijingfang Company Limited 
(SJF) in two separate transactions. This took Diageo’s shareholding in 
SJF from 39.71% to 63.14%.
(g)	In the year ended 30 June 2020, the net movement in other 
borrowings principally arose from foreign exchange swaps and 
forwards, partially offset by the cash movement on lease liabilities. 
In the comparable period movements were driven by the issue of 
commercial paper.
(h)	The exchange arising on net borrowings of £95 million is primarily 
driven by unfavourable exchange movements on US dollar and 
euro denominated borrowings and cash and cash equivalents, 
partially offset by a favourable movement on foreign exchange 
swaps and forwards.
(i)	 In the year ended 30 June 2020, other non-cash items are principally 
in respect of leases of £206 million entered into in the year, partially 
offset by the fair value changes of cross currency interest rate swaps.  
In the year ended 30 June 2019, other non-cash items are principally 
in respect of changes in the fair value of borrowings. 
Movement in equity
​
2020
£ million
2019
£ million
Equity at the beginning of the year
10,156
11,713
Profit for the year
1,454
3,337
Exchange adjustments (a)
(282)
255
Remeasurement of post employment plans 
net of taxation
3
36
Purchase of shares of non-controlling  
interests (b)
(62)
(784)
Dividends to non-controlling interests
(117)
(114)
Equity dividends paid
(1,646)
(1,623)
Share buyback programme
(1,256)
(2,801)
Other reserve movements
190
137
Equity at the end of the year
8,440
10,156
(a)	Exchange movement in the year ended 30 June 2020 primarily arose 
from exchange losses driven by the Indian rupee, euro and the Turkish 
lira, partially offset by exchange gains in respect of the US dollar. 
(b)	In the year ended 30 June 2020, Diageo acquired additional shares in 
United Spirits Limited for INR 5,495 million (£60 million) and additional 
shares in Serengeti Breweries Limited for $3 million (£2 million). 
In the year ended 30 June 2019, Diageo acquired additional shares 
in Sichuan Shuijingfang Company Limited (SJF) which was already 
controlled and therefore consolidated prior to the transaction.
Post employment plans 
The net surplus of the group’s post employment benefit plans increased 
by £148 million from £214 million at 30 June 2019 to £362 million at 
30 June 2020. The increase in net surplus is primarily attributable to an 
increase in the market value of the assets held by the post employment 
schemes, and the cash contribution paid into the plans in excess of 
income statement charge. These were partially offset by the change in 
assumptions in the United Kingdom (including an adverse impact due to 
the decrease in returns from ‘AA’ rated corporate bonds used to calculate 
the discount rates on the liabilities of the post employment plans (from 
2.3% to 1.5%) partially offset by a favourable impact of the decrease in 
inflation rate assumption (from 3.2% to 2.8%)).
The operating profit charge before exceptional items decreased 
by £3 million from £50 million for the year ended 30 June 2019 to 
£47 million for the year ended 30 June 2020. The operating profit for 
the year ended 30 June 2020 includes past service gains of £47 million 
in respect of the Guinness Ireland Group Pension Scheme (GIGPS), 
following separate communications to the deferred members in respect 
of changing their expectations of a full pension prior to reaching the 
age of 65 and to pensioners in respect of future pension increases  
(2019 – £54 million credit due to changes made to future pension 
increases for members of the Diageo Pension Scheme in the United 
Kingdom and changes to the GIGPS), and curtailment gains of £12 million 
(2019 – £4 million) mainly in respect of the Diageo Pension Scheme and 
the GIGPS.
Total cash contributions by the group to all post employment 
plans in the year ending 30 June 2021 are estimated to be approximately 
£140 million.
49
DIAGEO Annual Report 2020
STRATEGIC REPORT

Our markets
Diageo North America is headquartered  
in New York, having relocated from Norwalk, 
Connecticut, in January 2020. The business is 
comprised of US Spirits, Diageo Beer Company 
USA (DBC USA), and Diageo Canada, 
headquartered in Toronto.
Supply operations
With nine domestic production facilities across 
the United States, Canada and the U.S. Virgin 
Islands, Diageo North America’s supply function 
is one of the largest producers of beverage 
alcohol on the continent. We have made major 
investments in innovation and sustainability 
driving efficiency and best in class operations.
Our new Lebanon, Kentucky whiskey 
distillery will be carbon neutral, a first for Diageo. 
With electrified operations, powered by 100% 
renewable electricity, the distillery will avoid 
using fossil fuels for production.
Route to consumer
The route to consumer in the United States is 
through the three-tier system across our spirits 
and beer portfolio. We have consolidated our 
U.S. Spirits business into single distributors or 
brokers in 42 states and the District of Columbia, 
representing more than 80% of our spirits 
volume. US Spirits is responsible for the sale of 
our portfolio of spirits products and manages 
sales through two divisions focused on Open 
(distribution through private distributors) and 
Control (distribution through governmental 
entities) States. DBC USA sells and markets 
brands including Guinness and Smirnoff Ice in 
over 400 beer distributors across the US. Diageo 
Canada distributes our portfolio of spirits, RTD 
and beer brands across all Canadian provinces, 
which operate within a highly regulated federal 
and provincial system. Diageo Canada manages 
all sales operations with the provincial liquor 
control boards and national chain account 
customers directly, utilising brokers to support 
execution at the point of sale.
Our strategy in North America is to be 
consumer-first, occasion-oriented, and focused on 
developing competitive differentiation in both our 
brand propositions and our route to consumer. 
North America
Business review
Markets:
Organic volume 
movement 
%
Reported volume 
movement 
%
Organic net sales 
movement 
%
Reported net sales 
movement 
%
North America
–
(2)
2
4
US Spirits(ii)
(1)
(3)
2
3
DBC USA
7
7
8
10
Canada
7
4
7
7
Spirits
–
(3)
2
3
Beer
(7)
(7)
(6)
(4)
Ready to drink
17
17
19
22
Global giants, local stars and reserve(i):
Organic
volume
movement(iii)
%
Organic
net sales
movement 
%
Reported
net sales
movement
%
Crown Royal
8
8
10
Smirnoff
(1)
(2)
–
Johnnie Walker
(9)
(13)
(11)
Captain Morgan
(3)
(4)
(2)
Don Julio
21
26
29
Ketel One(iv)
(2)
(4)
(2)
Guinness
(6)
(5)
(3)
Baileys
–
1
3
Bulleit
5
4
7
Cîroc vodka
(15)
(14)
(13)
Casamigos
61
68
72
Tanqueray
–
–
3
North America is the second largest beverage alcohol market worldwide1. 
The consumer lies at the heart of our business, which has been more important than ever in the face of shifting 
consumer behaviours and changes in the external environment. Our focus is on recruiting and re-recruiting 
consumers into the portfolio through meaningful consumer engagement, sustainable innovation and investments 
in our brands. Our strategy is enabled by our data driven insights, executional excellence and a consistent focus on 
developing an advantaged route to market.
Key financials
2019 
£ million
FX 
£ million
Acquisitions 
and 
disposals 
£ million
Organic 
movement 
£ million
Other(v)
£ million
2020 
£ million
Reported 
movement
%
Net sales
4,460
101
(43)
105
–
4,623
4
Marketing
762
11
3
(49)
–
727
(5)
Operating profit before 
exceptional items
1,948
44
(28)
80
(10)
2,034
4
Exceptional operating items(vi)
–
54
Operating profit
1,948
2,088
7
US Spirits 
DBC USA
Canada
Other (principally 
Travel Retail)
Net sales by markets (%)
Spirits
Beer
Ready to drink
Other
Net sales by categories (%)
(i)	 Spirits brands excluding ready to drink.
(ii)	 Reported US Spirits volume, and net sales, growth include impacts from the disposal 
of portfolio of 19 brands to Sazerac.
(iii)	Organic equals reported volume movement.
(iv)	Ketel One includes Ketel One vodka and Ketel One Botanical.
(v)	The adjustment to other operating expenses is the elimination of fair value changes 
to contingent consideration liabilities in respect of prior year acquisitions.
(vi)	For further details on exceptional operating items see pages 130-131.
1.	 IWSR, Calendar Year 2019.
50
DIAGEO Annual Report 2020

Market highlights
Net sales in US Spirits were up 2%, with 
depletions ahead of shipments resulting in 
a reduction in distributor inventories. Don 
Julio and Casamigos delivered strong 
double-digit growth and gained share in 
the rapidly growing tequila category. While 
the brands were disproportionately 
impacted by the on-trade closures, an agile 
response drove strong demand in at-home 
occasions. Crown Royal grew net sales 8%, 
gaining further category share, driven by 
the continued growth of Crown Royal Regal 
Apple and Crown Royal Vanilla, and the 
success of the limited time offer, Crown 
Royal Peach. Johnnie Walker net sales 
declined 11% and the brand lost share in 
the scotch category. A decline in net sales 
in the first half, due to lapping the highly 
successful limited edition of “White Walker 
by Johnnie Walker”, was exacerbated in 
the second half by the on-trade channel 
closure. Malts continued to perform well 
with growth from Oban and Lagavulin, 
as well as Talisker and Mortlach. Vodka 
net sales were down 7%. Lower sales  
of Ketel One reflect its strong presence  
in the on-trade channel and a decline in 
Ketel One Botanical, lapping last year’s 
successful launch. Smirnoff net sales 
declined, although Smirnoff Zero Sugar 
Infusions and seasonal innovations, 
including the Smirnoff Red, White and Berry 
limited time offer performed well. Cîroc 
continued to decline. Bulleit net sales were 
up 4%. An effective marketing approach 
drove off-trade sales in the second half  
and continued share gain in US whiskey. 
Captain Morgan net sales declined 5% and 
the brand lost share in the rum category. 
Baileys net sales grew 1% driven by the 
launch of Baileys Red Velvet limited edition 
and growth in Baileys Salted Caramel. 
Diageo Beer Company USA net 
sales increased 8%, despite a reduction in 
distributors’ inventories. This reflected 
ready to drink growth of 19%, with 
continued strong growth across the 
Smirnoff range. Strong sales in the second 
half were supported by a large-scale media 
campaign to promote Smirnoff’s Red, White 
and Berry limited time offer variants, 
including Smirnoff Ice and a new Smirnoff 
Seltzer. Beer net sales declined 5% as a 
result of the closure of the on-trade and the 
Guinness Open Gate Brewery. However, 
beer gained share in the off-trade due to 
Guinness’ success in raising brand 
awareness and connecting with consumers 
during the Covid-19 lockdown.
Net sales in Canada grew 7%, with 
good growth across all categories except 
beer, which was more impacted by the 
on-trade channel closure. Shipments were 
slightly ahead of depletions, as customers 
held more stock to manage volatility in the 
second half. Vodka grew 6% with Smirnoff 
No.21 continuing to grow, supported by a 
new global campaign in the first half and 
the launch of the redesigned Smirnoff 
bottle in the second half. Cîroc and 
Ketel One both grew strongly. Crown Royal 
grew double-digit, gaining market share 
and strengthening its leadership position 
in the growing Canadian whisky category. 
Performance was supported by the launch 
of a new “generosity” campaign connecting 
the brand to its roots, and successful limited 
time offer innovations. Scotch grew 7%, 
with Johnnie Walker Black Label remaining 
the number-one selling scotch in Canada. 
Ready to drink net sales continued to 
deliver double-digit growth, with Smirnoff 
Ice retaining its position as the number-one 
selling ready to drink in Canada.
Marketing expenses declined 6%. 
This was due to reduced investment in the 
second half that we believed would have 
been ineffective during Covid-19, as well 
as productivity savings during the year. 
We believe that our marketing effectiveness 
tools will enable us to efficiently accelerate 
investment as consumer demand recovers.
This includes building key capabilities 
around commercial execution, Net Revenue 
Management, E-Commerce and robust 
performance management all of which 
is underpinned by data and analytics.
Sustainability and responsibility
We collected nearly 900,000 pledges never to 
drink and drive through various #JoinThePact 
initiatives, while Crown Royal and Captain 
Morgan leveraged their sports partnerships to 
promote integrated moderation campaigns 
through advertising and in-stadium activations. 
We announced plans for our new Kentucky 
whiskey distillery to be carbon neutral – a first 
for Diageo. It will be powered by 100% 
renewable electricity and will avoid using fossil 
fuels for the production of whiskey. We also 
introduced our first 100% recycled PET bottle, 
with Seagram’s 7 Crown. 
We improved water use efficiency by 4.4%, 
saving over 101 million litres this year. We have 
made meaningful progress in our zero waste to 
landfill target, identifying and implementing 
options to eliminate waste to landfill in two 
remaining sites during the last quarter. 
In September, 1,000 employees volunteered a 
day to local community causes through our 
Diageo CAREs programme. We trained more 
than 60 people in specialist hospitality skills 
through our Learning Skills for Life programme, 
which we have expanded into New Orleans. In 
June 2020, we created the Diageo Community 
Fund, with $20 million to support social justice 
in America, helping Black communities and 
businesses recover from Covid-19.
Regional performance 
North America delivered net sales growth of 2%, with growth in all three markets, US Spirits, Diageo Beer Company USA and Canada. Strong 
net sales growth in the first half of the year was only partially offset by lower on-trade sales in the second half. This reflects strong demand in  
the off-trade channel during Covid-19. US Spirits net sales increased 2%. Tequila net sales grew 36% reflecting strong double-digit growth in 
Don Julio and Casamigos throughout the year. Crown Royal net sales increased 8% driven by the sustained performance of innovations. Scotch 
net sales declined 9%. Good growth in Malts was offset by lower sales of Johnnie Walker, as a result of the on-trade channel closure in the second 
half and lapping the prior year success of “White Walker by Johnnie Walker”. Vodka net sales declined 7% due to lower sales of Smirnoff, Ketel One 
and Cîroc. Bulleit net sales increased 4%. Captain Morgan net sales decreased 5%. Diageo Beer Company USA grew net sales 8% as a result of the 
continued strong performance of ready to drink products. Beer net sales declined 5% due to the closure of the on-trade channel as a result of 
Covid-19. Net sales in Canada increased 7% with good broad-based growth across all categories, with the exception of beer, which was more 
impacted by the on-trade channel closure. North America operating margin increased 75bps. The adverse margin impact from lower fixed cost 
absorption and a change in category and channel mix resulting from Covid-19 was more than offset by reduced discretionary expenditure. 
STRATEGIC REPORT
51
DIAGEO Annual Report 2020

Our markets
Europe has comprised Great Britain, Ireland, 
France, Continental Europe (including 
Northern Europe, Central Europe, Iberia, the 
Mediterranean and the Europe Partner Markets 
distribution businesses) and Russia, whilst Turkey 
is a standalone market. Europe has been managed 
as a single market with country teams focusing 
on sales and customer marketing execution but 
has moved to a six market model, each with end 
to end accountability.
Supply operations
A number of Diageo’s International Supply 
Chain and Procurement operations are 
located in Europe including production 
sites the United Kingdom, Ireland and Italy. 
The group owns 29 distilleries in Scotland, a 
Dublin based brewery, distillery, and maturation 
and packaging facilities in Scotland, England, 
Ireland and Italy. The team leads all supply chain 
activities for Europe and manufactures whisky, 
vodka, gin, rum, beer, cream liqueurs, and other 
spirit-based drinks which are distributed in over 
180 countries. 
Following the announcement of a 
£150 million investment in whisky tourism 
in Scotland in 2018, we have begun the 
transformation of our Scotch whisky visitor 
experiences through investment in 12 malt 
whisky distillery visitor centres with a focus 
on the ‘Four Corners distilleries’, Glenkinchie, 
Caol Ila, Clynelish and Cardhu, celebrating the 
important role these single malts play in the 
flavours of Johnnie Walker. Also, as part of the 
investment programme, construction to create 
a global flagship visitor experience for Johnnie 
Walker in Edinburgh city centre is underway.
Route to consumer
In Great Britain we sell and market our products 
through Diageo GB (spirits, beer and ready 
to drink) and Justerini & Brooks Fine Wines 
(wines private clients and spirits). Products are 
distributed through independent wholesalers 
and directly to retailers. In the on-trade, products 
are sold through major brewers, multiple retail 
groups and smaller regional independent 
brewers and wholesalers. In the Republic of 
Ireland and Northern Ireland, Diageo sells and 
distributes directly to the on-trade and the 
off-trade as well as wholesalers. In France 
our products are sold through a joint 
venture arrangement with Moët Hennessy. 
In Continental Europe and Russia, we distribute 
Europe and Turkey
Business review continued
Markets:
Organic volume 
movement 
%
Reported volume 
movement 
%
Organic net sales 
movement 
%
Reported net sales 
movement 
%
Europe and Turkey
(11)
(11)
(12)
(13)
Europe
(10)
(10)
(12)
(12)
Turkey
(12)
(12)
(6)
(7)
Spirits
(11)
(11)
(11)
(11)
Beer
(16)
(16)
(20)
(21)
Ready to drink
(3)
(3)
(1)
–
Global giants and local stars(i):
Organic
volume
movement(ii)
%
Organic
net sales
movement 
%
Reported
net sales
movement
%
Guinness
(19)
(20)
(21)
Johnnie Walker
(17)
(20)
(21)
Baileys
(4)
(6)
(8)
Smirnoff
(14)
(11)
(12)
Captain Morgan
2
6
6
Yenì Raki
(22)
(15)
(15)
Tanqueray
(12)
(15)
(16)
JεB
(18)
(17)
(17)
Within the geography of Europe there have been two markets: Europe and Turkey. Across our Europe business 
we continue to drive execution at scale of our consumer marketing programme and continuously optimising our 
route to market. We remain focused on executing our strategy through growth of international premium spirits, 
beer and through premiumisation. Moving forward, we will be structured as six individual markets: Great Britain, 
Ireland, Turkey, Northern, Southern and Eastern Europe.
Key financials
2019 
£ million
FX 
£ million
Acquisitions
and 
disposals 
£ million
Organic 
movement 
£ million
Other(iii) 
£ million
2020 
£ million
Reported 
movement
%
Net sales
2,939
(23)
9
(358)
–
2,567
(13)
Marketing
490
(10)
4
(56)
–
428
(13)
Operating profit before 
exceptional items
1,014
(7)
(3)
(243)
(4)
757
(25)
Exceptional operating items(iv)
(18)
(62)
Operating profit
996
695
(30)
Europe
Turkey
Other (principally 
Travel Retail)
Net sales by markets (%)
Spirits
Beer
Ready to drink
Other
Net sales by categories (%)
(i)	 Spirits brands excluding ready to drink.
(ii)	 Organic equals reported volume movement. 
(iii)	The adjustment to other operating expenses is the elimination of fair value changes to 
contingent consideration liabilities in respect of prior year acquisitions. 
(iv)	For further details on exceptional operating items see pages 130-131.
52
DIAGEO Annual Report 2020

Market highlights
In Europe, net sales were down 12%.
In Great Britain, net sales declined 4%. 
Solid first half results were offset by the 
impact of on-trade closures from March 
despite an increase in off-trade sales. 
The impact was further amplified by the 
cancellation of significant sporting and 
cultural events. Continued growth in rum 
and liqueurs were offset by declines in 
beer, scotch, wine and vodka. Guinness 
was impacted by on-trade closures and 
the decision to support customers, and 
maintain product quality, through a keg 
return scheme. Focus on e-commerce 
was upweighted as partnerships were 
strengthened on activities to drive 
consumer engagement and sales.
Ireland net sales declined 20%. A 
soft first half performance was further 
exacerbated by on-trade closures. Beer 
declined 22%. Rockshore continued to 
grow double-digit through Rockshore 
Cider and high single-digit in Rockshore 
Lager despite Covid-19 lockdown 
restrictions. This was offset by declines 
in Guinness, driven by closure of the 
on-trade and further impacted by a keg 
return scheme to support customers and 
maintain product quality. Total spirits 
declined 10%, as off-trade sales increases 
were not sufficient to offset Covid-19 
related closures of the on-trade.
In Continental Europe, net sales 
declined 15%.
Iberia net sales were down 22%. 
Growth in the first half was offset by the 
impact of lockdowns affecting the on-trade 
channel and tourism in the second half, 
which accounts for a high proportion of 
sales in the market. On-trade investment 
was placed on hold as resources were 
deployed to the off-trade to support 
customers and activations in the off-trade. 
In Central Europe, net sales declined 
9%. Strong double-digit performance in  
the first half was impacted by on-trade 
lockdowns across the market in the second 
half. Captain Morgan performance was  
flat while Baileys, Smirnoff and Johnnie 
Walker declined.
In Northern Europe net sales declined 
1%. Good first half performance was offset 
by the cancellation of key events and 
on-trade closures in the second half. 
Resilient performance due to rum growth, 
driven by Captain Morgan Original Spiced 
Rum, and gin driven by Gordon’s Premium 
Pink Distilled Gin and Tanqueray Flor de 
Sevilla innovations in the second half, 
was offset by declines in scotch.
In the Mediterranean Hub, net sales 
declined 26%. Growth in the first half  
was offset by on-trade closures and 
significantly reduced tourism which 
severely impacted volume.
In Europe Partner Markets, net sales 
declined 19%. Rum and tequila growth were 
offset by declines in scotch and beer. Declines 
were mainly due to lockdowns affecting 
the on-trade, and while absolute inventory 
levels were reduced, they remain elevated 
relative to demand. Guinness also responded 
with a keg return scheme to support the 
channel and protect product quality.
Russia net sales were down 8%. 
Growth in gin was offset by declines in 
scotch and rum.
France net sales declined 5%. Good 
growth in rum was offset by a decline in 
scotch, driven by competitive challenges 
and category declines in standard scotch, 
and on-trade closures.
In Turkey, net sales declined 6%. 
Double-digit growth in the first half was 
offset by on-trade closures from March. 
Scotch declined 3%, as Bell’s growth was 
offset by Johnnie Walker and VAT 69. Raki 
declined 9%, with volume declines driven 
by ongoing impacts from excise increases 
in the first half and on-trade restrictions. 
Commercial and marketing teams were 
repurposed to focus on growth categories 
and less affected channels. 
Marketing investment declined 12%, 
in line with net sales. On-trade marketing 
spend was reduced, with some redeployed 
to digital, while focus was placed on 
e-commerce partnerships to deliver key 
celebrations as well as online platforms.
our spirits brands primarily through our own 
distribution companies, except in Europe Partner 
Markets where we typically use distributors. 
In Turkey, we sell our products via the 
distribution network of Mey İçki, our wholly 
owned subsidiary. Mey İçki distributes both local 
brands (raki, other spirits and wine) and Diageo’s 
global spirits brands.
Sustainability and responsibility
In our own operations, we achieved our 2020 
targets for greenhouse gas emissions reduction 
and waste. In the United Kingdom, we have 
reduced GHG emissions by 69% versus the 
baseline, attributable to ongoing energy 
efficiency improvements, fuel switching and 
renewable energy certificates for indirect and 
direct energy consumption. 
We continued to invest in our Learning 
for Life hospitality skills programme, adding 
an initiative in Greece to those in the United 
Kingdom, Italy, Spain, Ireland, Portugal, the 
Netherlands, Belgium and Germany. In doing so, 
we reached over 1,400 people in total across the 
region. We also provided further support to the 
Open Doors initiative in Ireland, with funding to 
establish it as a standalone entity. Open Doors 
gives opportunities to refugees, asylum seekers 
and non-native English speakers; young people 
under 25 with educational barriers; and people 
with disabilities.
As in all our regions, promoting positive 
drinking, with a focus on moderation, remains 
a key priority. Our ‘Weekend Not Wasted’ 
campaign to encourage 18-24-year-olds to 
drink responsibly was viewed by over 4 million 
people in the United Kingdom, Spain, Denmark 
and Germany. Our ‘Smashed’ theatre-based 
programme to tackle underage drinking, which 
began in this region, continued to go from 
strength to strength. Through the programme, 
we reached 119,000 young people in the United 
Kingdom, Ireland, Spain, Portugal and Italy.
Regional performance
Europe and Turkey net sales declined 12%. Growth in the first half was more than offset by the impact of Covid-19 in the second half. High 
on-trade exposure significantly impacted markets across the region through the closures of the channel in many countries. In Europe, beer 
was particularly impacted, declining 20%. Growth of scotch in the first half was offset by declines in Continental Europe and France in the second 
half due to on-trade closures. Rum grew 3%, driven by Captain Morgan. Vodka declined 12%, driven mainly by Smirnoff in Continental Europe. 
Gin declined 9%, driven by declines of Gordon’s and Tanqueray mainly in Continental Europe. Travel Retail was also severely impacted. In Turkey, 
net sales declined 6%, driven by declines in raki and vodka. Total operating margin declined 470bps. Impacts of the closure of the on-trade on 
volumes and adverse mix, bad debt provisions, along with one-offs and inflationary cost pressures in Turkey more than offset actions driving 
overhead and marketing spend savings through the second half.
STRATEGIC REPORT
53
DIAGEO Annual Report 2020

Our markets
The region comprises East Africa (Kenya, 
Tanzania and Uganda), Africa Regional Markets 
(Ghana, Cameroon, Ethiopia, Indian Ocean and 
Angola), Nigeria and South Africa.
Supply operations
We have 13 breweries in Africa and ten facilities 
which provide blending and malting services. In 
the year ended 30 June 2020 we completed the 
disposal of our sorghum beer business and our 
cider plant in South Africa. 
In addition, our beer and spirits brands are 
produced under licence by third parties in 14 
African countries and distribute beer and spirits 
through several 3rd party relationships across 
the region. In the year ended 30 June 2020 we 
agreed a contract for AB InBev to manufacture, 
sell and market Smirnoff ready to drink products 
and Guinness in South Africa. 
Route to consumer
Diageo has wholly owned entities in South 
Africa, Cameroon, Ethiopia, and Reunion. It 
has controlling stakes in East Africa Breweries 
Limited (EABL), Guinness Nigeria, Guinness 
Ghana and Seychelles Breweries Limited and 
a majority stake in a JV in Angola. In addition, 
Diageo has contract brewing arrangements 
in several countries across the region, most 
notably with the Castel Group as well as spirits 
distribution contracts in almost 30 countries.
Africa
Business review continued
In Africa our strategy is to grow through selective participation in beer and spirits, leveraging a broad range of the 
Diageo Portfolio. Guinness, Malta and several local brands lead our brewing portfolio while Johnnie Walker and 
Smirnoff are at the heart of our international premium spirits offerings. Locally we produce a range of mainstream 
spirits. We operate a fit for purpose operating model building resilience into our business and we drive smart 
investments to manufacturing, innovations and partnerships to unlock growth. 
Local sourcing is very important to our strategy, directly supporting our commercial operations whilst bringing 
wider benefits to local communities, farmers and society as a whole.
Markets:
Organic volume 
movement(iii) 
%
Reported volume 
movement 
%
Organic net sales 
movement 
%
Reported net sales 
movement 
%
Africa
(13)
(14)
(13)
(16)
East Africa
(11)
(11)
(10)
(9)
Africa Regional Markets
(12)
(17)
(8)
(13)
Nigeria
(10)
(10)
(20)
(19)
South Africa
(23)
(25)
(25)
(33)
Spirits
(10)
(10)
(14)
(15)
Beer
(16)
(16)
(13)
(13)
Ready to drink
(6)
(17)
(7)
(27)
Global giants and local stars(i):
Organic
volume
movement(ii)
%
Organic
net sales
movement 
%
Reported
net sales
movement
%
Guinness
(17)
(16)
(16)
Johnnie Walker
(8)
(18)
(19)
Smirnoff
(25)
(23)
(25)
Malta
(16)
(10)
(13)
Senator
(16)
(13)
(12)
Tusker
(22)
(20)
(20)
Serengeti
15
19
22
Key financials
2019 
£ million
FX 
£ million
Acquisitions
and 
disposals 
£ million
Organic 
movement 
£ million
2020 
£ million
Reported 
movement
%
Net sales
1,597
(10)
(41)
(200)
1,346
(16)
Marketing
174
–
–
(14)
160
(8)
Operating profit before 
exceptional items
275
(21)
(3)
(150)
101
(63)
Exceptional operating 
items(iv)
–
(145)
Operating profit
275
(44)
(116)
East Africa
Africa Regional 
Markets (ARM)
Nigeria
South Africa
Other (principally 
Travel Retail)
Net sales by markets (%)
Spirits
Beer
Ready to drink
Other
Net sales by categories (%)
(i)	 Spirits brands excluding ready to drink.
(ii)	 Organic equals reported volume movement. 
(iii)	Africa, Africa Regional Markets, South Africa and Ready to drink reported 
volume movement impacted by acquisitions and disposals.
(iv)	For further details on exceptional operating items see pages 130-131.
54
DIAGEO Annual Report 2020

Market highlights
In East Africa, net sales declined 10%. 
Strong first half growth, and a continuation 
of resilient sales growth in Tanzania in the 
second half, was offset by volume declines 
in other markets. Tanzania grew 14% as it 
was minimally impacted by limited Covid-19 
related lockdowns, and benefitted from the 
ongoing successes of Serengeti Lager and 
Serengeti Lite. Kenya declined 14%, driven 
by the high exposure to on-trade closures 
impacting Senator Keg and other beer sales, 
which was partially offset by vodka, driven 
by double-digit growth in Chrome and 
Triple Ace. Increased focus in the off-trade 
and e-commerce channels partially 
recovered lost on-trade sales. 
In Africa Regional Markets, net sales 
declined 8%. Resilient growth in Ghana 
during the year was offset by double-digit 
declines in Cameroon and Ethiopia. Due 
to the impact of Covid-19 in the second  
half, beer and spirits inventory levels  
were reduced. Ghana grew 5%, driven  
by continued success of the ABC Lager 
innovation and Malta Guinness growth, 
which addressed consumer shifts for 
portability and non-returnable formats 
throughout lockdown. Cameroon declined 
15% due to one-off production challenges 
in the first half, with the second half impacted 
by Covid-19 driving declines in Guinness in 
the on-trade. Ethiopia declined 24%, as beer 
and international premium spirits growth 
was impacted by excise increases, supply 
issues and the impact of on-trade closures. 
Impacts of shutdowns were partially offset 
as markets reprioritised brand packs to 
capture off-trade consumer shifts.
In Nigeria, net sales declined 20%.  
First half growth was offset by volume 
impacts from Covid-19 restrictions as 
it exacerbated an already challenging 
economic climate; while VAT and spirits 
excise increases also impacted consumer 
demand in a competitive environment. 
Robust performance of Orijin Bitters, 
successful spirits innovations, and 
increased at-home consumption, were 
offset by declines in beer. Malta Guinness 
and Guinness were impacted by on-trade 
closures. Increased focus on the off-trade 
and e-commerce channels, through 
the introduction of trade telesales and 
consumer platforms together with an 
online store, reduced some impacts 
of lockdown.
South Africa net sales declined 25%. 
Economic and social challenges in the  
first half were further exacerbated by the 
banning of alcohol sales across all channels 
from 27 March to 31 May. While absolute 
inventory levels were reduced, they 
remain elevated relative to demand. 
Scotch and vodka were most affected 
with double-digit declines, as a result of the 
softening economic climate and consumer 
shifts into the mainstream gin category. 
Marketing investment declined 8%. 
We rapidly reacted to consumer shifts in 
the second half, through telesales, pack 
reprioritisation and the redeployment 
of investment to e-commerce and the 
off-trade.
Sustainability and responsibility
Across Africa, more than 78,600 smallholder 
farmers and suppliers provide us with our raw 
materials, and we work with farmers to improve 
crop yield, livelihoods, and environmental and 
labour standards. We sourced 79% of agricultural 
raw materials locally within Africa for use by our 
African markets, compared with 82% last year. 
This percentage fell slightly as Covid-19 restrictions 
pushed us just below our target of 80%.
In 2019, we announced a £180 million 
investment in 11 breweries across Africa that 
include solar and biomass energy, and water 
treatment plants. We also co-founded the Africa 
Plastics Recycling Alliance, through which this 
year we secured regulatory approval in Nigeria 
for the use of rPET (recycled polyethylene 
terephthalate), which will encourage rPET 
investment. In Nigeria, through our partnership 
with the Food Beverage Recycling Alliance and 
Lagos State WaterWays Authority, we launched 
a clean-up programme to remove plastic waste 
from water sources in Lagos. In Ghana, we 
began monthly community clean-ups and a 
plastics buy-back programme, and continued 
to develop the pioneering GRIPE partnership to 
build plastic collection, recycling and 
reprocessing infrastructure.
Through our ongoing partnership 
with the NGO WaterAid, we brought clean 
water and a sanitation programme to 21,000 
people in Nigeria. And, with partners such as 
Amref Health Kenya, the Kenya Red Cross and 
WaterHealth International, we reached over 
173,000 people across Ghana, Kenya, South 
Africa, Uganda, Ethiopia, Tanzania, Chad and 
Cameroon. In Kenya, we worked with Nature 
Kenya, Kenya Forest Services, and community 
forest associations to plant 180,000 trees 
in Kisumu county, where our new brewery 
is located.
To promote positive drinking, this year we 
signed up 1.1 million pledges never to drink 
and drive in Nigeria through #JoinThePact. 
Through our ‘Smashed’ theatre-based 
programme, we educated 80,000 young people 
across the region about the dangers of 
underage drinking.
Regional performance
Africa net sales declined 13%. Growth in the first half was offset by the impact of Covid-19 in the second half. East Africa declined 10% where 
continued beer growth in Tanzania was offset by lockdown closures affecting the on-trade in Kenya and Uganda. Net sales in Nigeria declined 
20%, driven by double-digit declines in beer and scotch. In South Africa, net sales declined 25%, driven by scotch and vodka, as a result of both 
on-trade and off-trade closures and a troubled economic climate. Africa Regional Markets declined 8%, as strong beer growth in Ghana was offset 
by on-trade closures and the impact of significant excise increases in Ethiopia. Beer declined 13% as growth of Serengeti was offset by other key 
beer brands, including Guinness, Tusker and Senator, mainly due to on-trade closures. Spirits declined 14%, mainly impacting Johnnie Walker, 
Kenya Cane and Smirnoff. Operating margin declined 877bps, driven mainly by volume losses that caused lower fixed cost absorption and excise 
duty increases. These were partially offset by marketing spend savings and improved overhead management. 
STRATEGIC REPORT
55
DIAGEO Annual Report 2020

Our markets
Our Latin America and Caribbean (LAC) business 
comprises five markets: PUB (Paraguay, Uruguay 
and Brazil), Mexico, CCA (Central America and 
Caribbean), Andean (Colombia and Venezuela) 
and PEBAC (Peru, Ecuador, Bolivia, Argentina 
and Chile).
Supply operations
Many of the brands sold in the region 
are manufactured by our International 
Supply Centre in Europe, but we also 
own manufacturing facilities in Mexico that 
produce tequila, in Brazil to produce cachaça 
and vodka, and in Guatemala that produce 
Zacapa rum. We also work with a wide array of 
local co-packers, bottlers, and licensed brewers 
throughout Latin America and the Caribbean.
Route to consumer
We drive an efficient route to consumer 
through differentiated models tailored to each 
markets’ size and needs. In Mexico and Brazil 
our in-market companies sell to a wide network 
of retailers, wholesalers, and resellers which 
make our product available to shoppers in 
both the on and off premise outlets. In most of 
Central America and the Caribbean, Argentina, 
Ecuador, Bolivia, and Venezuela, we partner 
with geographically exclusive distributors 
who are in charge of the sales execution and 
marketing programmes. In Colombia, Peru, 
and Chile, we use hybrid models where 
Diageo sells directly to some key accounts 
while distributors are used to improve our 
products’ physical availability.
Latin America and Caribbean
Business review continued
In Latin America and Caribbean our strategic priority is to continue to lead with scotch, while broadening our category 
range through tequila, gins, vodka, rum, liqueurs and local spirits. As the industry leaders in spirits, we continue to 
strategically expand our reach and the breadth and depth of our portfolio of leading brands. Simultaneously, we are 
enhancing our supply structure enabling the business to widen our price points, providing both the emerging middle 
class, and an increasing number of affluent consumers with the premium brands they aspire to buy. Our presence is 
strengthened by our stance on responsible drinking and community development programmes. 
Markets:
Organic volume 
movement 
%
Reported volume 
movement 
%
Organic net sales 
movement 
%
Reported net sales 
movement 
%
Latin America and Caribbean
(15)
(15)
(15)
(20)
PUB
(14)
(14)
(7)
(17)
Mexico
(14)
(14)
(19)
(21)
CCA
(17)
(18)
(16)
(16)
Andean
2
3
8
(2)
PEBAC
(29)
(29)
(44)
(47)
Spirits
(16)
(16)
(16)
(21)
Beer
(10)
(10)
(9)
(11)
Ready to drink
–
–
8
2
Global giants and local stars(iii):
Organic
volume
movement(iv)
%
Organic
net sales
movement 
%
Reported
net sales
movement
%
Johnnie Walker
(27)
(29)
(33)
Buchanan’s
(15)
(14)
(17)
Old Parr
(17)
(16)
(20)
Smirnoff
(7)
4
(2)
Black & White
(9)
(10)
(18)
Tanqueray
6
17
7
Baileys
(15)
(13)
(21)
Key financials
2019 
£ million
FX 
£ million
Reclassifi-
cation(i) 
£ million
Acquisitions
and 
disposals 
£ million
Organic 
movement 
£ million
Other(ii) 
£ million
2020 
£ million
Reported 
movement
%
Net sales
1,130
(42)
(10)
(1)
(169)
–
908
(20)
Marketing
201
(7)
(10)
–
(29)
–
155
(23)
Operating profit before 
exceptional items
365
(26)
–
–
(107)
16
248
(32)
Exceptional operating 
items(v)
–
(6)
Operating profit
365
242
(34)
Net sales by categories (%)
Spirits
Beer
Ready to drink
Other
PUB
Mexico
CCA
Andean
PEBAC
Other (principally 
Travel Retail)
Net sales by markets (%)
(i)	 For the year ended 30 June 2019 trade investment of £10 million have been 
reclassified from marketing to net sales. 
(ii)	 The adjustment to cost of sales reflects the elimination of fair value changes 
for biological assets in respect of growing agave plants. The adjustment 
to other operating expenses is the elimination of fair value changes to 
contingent consideration liabilities in respect of prior year acquisitions.
(iii)	Spirits brands excluding ready to drink.
(iv)	Organic equals reported volume movement.
(v)	For further details on exceptional operating items see pages 130-131.
56
DIAGEO Annual Report 2020

Market highlights
In PUB (Paraguay, Uruguay and Brazil), net 
sales declined 7%, mainly driven by scotch 
declining 11% across the market. Brazil 
declined 5% as a solid first half was fully 
offset by Covid-19 on-trade closures and 
domestic and foreign travel restrictions. 
Momentum in gin continued as Tanqueray 
and Gordon’s grew double digit supported 
by major marketing campaigns. In Brazil, 
scotch net sales declined 6% as double-digit 
growth of White Horse and Buchanan’s was 
offset by declines in Johnnie Walker and 
Black & White. Johnnie Walker decline was 
driven by a strong reliance on the on-trade 
and border stores as well as the weakening 
economy and devaluation impacting 
consumption. Super-premium scotch 
remained resilient through actions taken  
to address the at-home occasion via digital 
activations and supporting availability of 
cocktail offerings. 
In Mexico, net sales were down 19% as 
the economic slowdown continued into the 
second half and was amplified by Covid-19, 
including the reduction of on-trade 
wholesaler inventory and stock returns to 
support customers. Despite this, the 
successful Smirnoff X1 Spicy Tamarind 
innovation delivered strong growth 
building on local cues and strong 
activations. This was fully offset by 
the softening of the scotch category, 
challenging trading conditions in the  
first half, and declines in Don Julio due  
to competitive pricing pressure. Tequila 
production was secured amidst non-
essential business closures along with  
an enhanced focus on e-commerce and 
off-trade partnerships. 
In CCA (Caribbean and Central 
America), net sales decreased 16% as 
broad-based growth in the first half was 
subsequently disrupted by restrictions to 
curtail the spread of Covid-19. The tequila 
category grew during the year driven by 
double-digit growth of Don Julio led by 
strong activations, however all other 
categories declined due to reduced  
tourism, on-trade closures and Covid-19 
related bans of alcohol sales. At-home 
occasion promotions and the launch of 
e-commerce platforms with our partners 
partially offset net sales declines.
Andean (Colombia and Venezuela)  
net sales increased 8% driven by Colombia. 
Scotch net sales grew mid-single digit driven 
by Buchanan’s, as double digit first half sales 
growth was followed by a resilient second 
half. Johnnie Walker was flat as on-trade 
closures muted strong first half performance 
of Johnnie Walker Red Label and Johnnie 
Walker Black Label. Brands such as 
Buchanan’s, Baileys and Smirnoff X1 Lulo 
benefitted from an agile shift of activations 
to at-home consumption, streamlined route 
to consumer solutions and the refocusing of 
resources to e-commerce throughout the 
Covid-19 lockdown. 
PEBAC (Peru, Ecuador, Bolivia, 
Argentina and Chile) net sales declined  
44% driven by continued social unrest 
across key markets compounded by  
the impact of Covid-19. Scotch declined 
significantly, however category share 
leadership was maintained across PEBAC 
benefiting from new and existing 
distribution partnerships. Strong double-
digit growth of Smirnoff No.21 as it lapped a 
softer comparable period and the successful 
Smirnoff Bitter Citric innovation continued 
to drive vodka in Argentina.
Marketing investment was down  
15%, in line with the decline in net sales. 
Despite cost mitigations in the second half, 
support was continued behind key brands 
and home occasions with #homehour 
#digitaldrink #onlinedrinkswithfriends  
and ‘Digital Golden Hour’ campaigns.
Sustainability and responsibility
We continued to focus on environmental 
improvements, particularly around water. In Brazil, 
we are constructing a new facility in Ceará state, 
which will bring together production from two 
existing sites. It will use solar energy, and water 
and effluent treatment facilities to reduce water 
consumption in beverage production by up to 
40%. In Mexico, we plan to reuse over 25% of 
the water involved in production. This year we 
completed the expansion of our production 
site in Jalisco, Mexico, which includes our largest 
water treatment plant in the region, and a boiler 
powered by wood chips and bagasse, a 
by-product of agave. 
We have worked hard to promote positive 
drinking, especially around reducing drink 
driving through our partnership with the  
United Nations Institute for Training and 
Research (UNITAR). In Brazil, we work with 
UNITAR and other stakeholders to support 
UNITAR’s programmes to promote road safety. 
In the Dominican Republic we work with 
UNITAR, the International Alliance for 
Responsible Drinking, and other industry 
partners to help the government with its 
breathalyser programme, including through 
training and by donating equipment for 
checkpoints. 
We also focused on reducing underage 
drinking through local adaptations of our 
‘Smashed’ theatre-based programme. This 
year, in Brazil we reached 80,000 young people 
through live and online versions of ‘Fala Sério’; 
in Peru, we reached 4,700 students in the 
second year of ‘La Bomba’; in Colombia we 
reached more than 13,000 students with 
‘Sacúdete’; and in Mexico, we reached 5,200 
teachers, parents and 7-9-year-olds with 
‘Teiquirisi Club’.
Our Learning for Life programmes continue 
to promote skills in the hospitality industry. This 
year, we began a new, 100% online programme 
of training in entrepreneurial skills for women 
in Atotonilco, Mexico, where we produce 
Don Julio. We also supported ‘Weaving the 
Future’ in Ceará, Brazil, for women in prison, 
reaching over 40 women so far. Through the 
programme they receive personal skills training, 
as well as technical and professional training in 
carnauba straw craftsmanship, to help them 
prepare for a better life when they are released.
Regional performance
Latin America and Caribbean net sales declined 15%. Performance in the second half continued to be impacted by economic and socio-political 
pressures in key markets compounded by the impact of the Covid-19 pandemic. All markets declined except Andean which grew 8% due to a 
strong first half and continued momentum in scotch in Colombia. Scotch overall declined 21% as growth in Buchanan’s in Colombia and Brazil, 
and White Horse in Brazil, were offset by declines in Johnnie Walker across the region. Gin grew double-digit primarily driven by Tanqueray in 
Brazil. Tequila was down 11% as strong Don Julio performance in Caribbean and Central America was more than offset by a decline in Mexico. 
Operating margin for the region was down 544bps due to the adverse impact of product mix and lower fixed cost absorption despite actions 
taken to reduce discretionary spend. 
STRATEGIC REPORT
57
DIAGEO Annual Report 2020

Our markets
Asia Pacific comprises India (including Nepal 
and Sri Lanka), Greater China (China, Taiwan, 
Hong Kong and Macau), Australia (including 
New Zealand), South East Asia (Vietnam, 
Thailand, Philippines, Indonesia, Malaysia, 
Singapore, Cambodia, Laos, Myanmar),  
North Asia (Korea and Japan) and Travel 
Retail Asia and Middle East. 
Supply operations
We have distilleries in Chengdu, China that 
produce Baijiu and in Bundaberg, Australia that 
produce Bundaberg Rum. Our manufacturing 
plant in Bali produces the highest quality spirits 
for the Indonesian market. United Spirits Limited 
(USL) in India operates 16 manufacturing sites 
across the country. In addition, USL and Diageo 
brands are also produced under licence by third 
party manufacturers. We have bottling plants 
in Thailand and Australia with ready to drink 
manufacturing capabilities. 
Route to consumer
In South East Asia, spirits and beer are sold 
through a combination of Diageo companies, 
joint venture arrangements, and third party 
distributors. In Thailand, Malaysia and Singapore, 
we have joint venture arrangements with Moët 
Hennessy, sharing administrative and distribution 
costs. Diageo operates wholly owned subsidiaries 
in the Philippines and Vietnam. In addition, in 
Vietnam, we own a 45.57% controlling equity 
stake in Hanoi Liquor Joint Stock Company 
which manufactures and sells vodka. In Indonesia, 
Guinness is brewed by, and distributed through 
third party arrangements. 
In Greater China our market presence 
is established through our 63.14% equity 
investment in Sichuan Shuijingfang Company 
Limited which manufactures and sells baijiu, 
and our wholly owned entity Diageo China 
Limited, which sells Diageo brands, and a joint 
venture arrangement with Moët Hennessy 
where administrative and distribution costs 
are shared. Diageo operates a wholly owned 
subsidiary in Taiwan. 
In India, we manufacture, market and sell 
Indian whisky, rum, brandy and other spirits 
through our 55.94% shareholding in USL. 
Diageo also sells its own brands through USL. 
Asia Pacific
Business review continued
In Asia Pacific our focus is to grow in both developed and emerging markets across our entire portfolio ranging 
from international and local spirits to ready to drink formats and beer. We have a clear long-term strategy that 
enables us to allocate resources behind brands that win in key consumer occasions and categories. We manage 
our portfolio to meet the increasing demands of the growing middle class and aim to inspire our consumers to 
drink better, not more. This strategy ensures that we deliver consistent and efficient growth with a key focus on 
developing our premium and super deluxe segments across the region.
Markets:
Organic volume 
movement(i) 
%
Reported volume 
movement 
%
Organic net sales 
movement 
%
Reported net sales 
movement 
%
Asia Pacific
(15)
(15)
(16)
(16)
India
(15)
(15)
(17)
(16)
Greater China
(4)
(4)
(7)
(7)
Australia
5
5
6
2
South East Asia
(19)
(20)
(23)
(21)
North Asia
(18)
(17)
(15)
(14)
Travel Retail Asia and Middle East
(47)
(47)
(46)
(47)
Spirits
(15)
(15)
(16)
(15)
Beer
(11)
(11)
(12)
(10)
Ready to drink
(4)
(4)
(1)
(5)
Global giants and local stars(ii):
Organic volume
movement(iii)
%
Organic net sales
movement 
%
Reported net sales
movement
%
Johnnie Walker
(23)
(25)
(24)
McDowell’s
(17)
(15)
(15)
Shui Jing Fang(iv)
(9)
(16)
(16)
Guinness
(10)
(12)
(10)
The Singleton
(5)
(1)
2
Royal Challenge
(15)
(15)
(14)
Windsor
(44)
(26)
(28)
Key financials
2019 
£ million
FX 
£ million
Acquisitions
and 
disposals 
£ million
Organic 
movement 
£ million
2020 
£ million
Reported 
movement 
%
Net sales
2,688
5
–
(423)
2,270
(16)
Marketing
412
–
–
(47)
365
(11)
Operating profit before 
exceptional items
703
5
–
(207)
501
(29)
Exceptional operating items(i)
(35)
(1,198)
Operating profit
668
(697)
(204)
India 
Greater China 
Australia 
South East Asia 
North Asia 
Other (principally 
Travel Retail) 
Net sales by markets (%)
Spirits 
Beer 
Ready to drink 
Other 
Net sales by categories (%)
(i)	 For further details on exceptional operating items see pages 130-131.
(ii)	 Spirits brands excluding ready to drink
(iii)	Organic equals reported volume movement. 
(iv)	Growth figures represent total Chinese  
white spirits of which Shui Jing Fang  
is the principal brand. 
58
DIAGEO Annual Report 2020

In Australia, we manufacture, market and sell 
Diageo products. In New Zealand we operate 
through third party distributors. In North Asia, 
we have our own distribution company in 
South Korea. In Japan, the majority of sales are 
through joint venture agreements with Moët 
Hennessy and Kirin. Airport shops and airline 
operators are serviced through a dedicated 
Diageo sales and marketing organisation. In the 
Middle East, we sell our products through third 
party distributors.
Sustainability and responsibility
Tackling drink driving and underage drinking 
remain priorities for us across the region. In 
Thailand and the Philippines, we have been 
Market highlights
In India, net sales declined 17%. First half 
growth was impacted principally by an 
economic slowdown which was further 
exacerbated in the second half by the 42 
day nationwide total lockdown of on-trade 
and off-trade alcohol sales, regulatory 
changes and continuation of on-trade 
closures thereafter. Prestige & Above 
declined 14%, driven by IMFL whisky and 
scotch. Popular brands declined 23%, 
driven by Old Tavern Whisky and 
McDowell’s No. 1 Rum. These declines were 
partially offset by Innovation growth in 
McDowell’s No.1 Luxury and Captain 
Morgan. Trade investment was optimised 
and refocused in the off-trade.
In Greater China, net sales declined 7%. 
Strong performance in scotch, liqueur and 
beer was offset by a decline in Chinese white 
spirits. Chinese white spirits declined 16%, 
as strong first half growth was offset by the 
impact of Covid-19 on the key Chinese New 
Year consumption period with consequential 
reduced sales and inventory reductions 
through the second half. Resilient scotch 
growth of 3%, was driven by malts and 
Johnnie Walker super deluxe growth in 
Mainland China along with continued 
growth in malts and Johnnie Walker super 
deluxe innovation in Taiwan. Beer grew 12% 
as it lapped a weaker prior year and 
supported by the launch of the first Guinness 
Gatehouse in Shanghai. Increased focus 
behind e-commerce drove improved digital 
consumer engagement and food delivery 
partnerships to address at-home 
consumption, softened the impact of 
lockdown driven volume losses. 
Australia net sales grew 6%. Strong first 
half growth was partially offset by a weaker 
but still solid second half performance 
despite Covid-19 lockdowns. This was 
mainly due to low exposure to the on-trade 
and a focus on accelerating e-commerce 
activities. Scotch grew 4%, driven by the 
new Johnnie Walker “Game of Thrones 
Limited Editions A Song of Fire and A Song 
of Ice” innovations. Rum grew 4%, driven  
by Captain Morgan and continued growth 
in Bundaberg. Gin grew double-digit and 
ready to drink grew 6%, as growth in the 
core brands was complimented by 
innovation in both categories such as 
Gordon’s Premium Pink Distilled Gin and 
Tanqueray Flor de Sevilla.
In South East Asia, net sales declined 
23%. Solid growth in Vietnam, driven by 
Johnnie Walker super deluxe and malts,  
was offset by Covid-19 related lockdowns 
across the region. Thailand declined 24%, 
driven by on-trade closures. Key Accounts  
declined double-digit due to Covid-19  
and a stock-return customer support 
programme in the second half. Indonesia 
declined double-digit mainly due to 
lockdowns impacting Guinness. Activities 
were upweighted to focus on at-home and  
small group consumer occasion trends.
In North Asia, net sales declined 15%,  
with double-digit declines in Japan and 
Korea. In Japan, declines in the first half 
were further exacerbated by on-trade 
lockdowns. In Korea, scotch declined 23%, 
driven by continued category contraction, 
regulatory changes limiting trade spend for 
wholesalers and venues affecting the 
category, on-trade closures and a reduction 
of inventory levels. This was partially offset 
through strong beer growth, driven by Hop 
House 13 Lager as it lapped launch in the 
prior period. Increased investment behind 
the off-trade in South Korea, especially 
through digital campaigns, contributed to 
increased at-home consumption.
In Travel Retail Asia and Middle East, 
net sales declined 46%. First half performance 
was impacted by challenging trading 
conditions in the Middle East including 
some reduction of inventory levels. In  
the second half the global travel channel 
was severely impacted by Covid-19 travel 
restrictions, with significant declines of 
passengers. While absolute inventory levels 
were reduced, it remains at a high level 
relative to ongoing reduced passenger travel.
Marketing investment declined 11%, 
as variable trade investment was repurposed 
and redeployed into the off-trade and 
e-commerce channel, which focused on 
home delivery and at-home consumption.
building on our partnership with the United 
Nations Institute for Training and Research 
(UNITAR) to address road safety, including by 
gathering 48,500 pledges in Thailand never to 
drink and drive through #JoinThePact. In India, 
we trained 2,942 enforcement officials on road 
safety and gathered 3 million pledges never to 
drink and drive through our ‘Road to Safety’ 
programme. To combat underage drinking, we 
brought our ‘Smashed’ theatre-based 
programme to the region and are now running it 
with local partners in Thailand, Taiwan, Indonesia, 
Australia and New Zealand. So far, we have 
reached more than 28,000 young people, parents 
and teachers, and in Australia we ran a live 
performance for the Federal Parliament. 
Human rights, the environment and 
empowering communities are issues that go 
hand-in-hand. In Tabanan, Bali, for example, 
we are supporting the local community through 
a multi-year eco-tourism project; while in India, 
our ‘water ATM’ programme is empowering 
women as entrepreneurs to run businesses that 
give people access to clean, low-cost drinking 
water. This year, 200 women joined the 
intervention, providing water for over 44,000 
people. We were also proud that, in India, as 
reported last year, we delivered our 2020 
carbon emissions and water efficiency targets 
12 months ahead of schedule. 
Regional performance
Asia Pacific net sales declined 16%. Despite growth in the first half for the region, all markets other than Australia declined due to the impact of 
Covid-19. Greater China declined 7% as scotch, liqueurs and beer growth was offset by declines in Chinese white spirits. Australia net sales grew 
6%, driven by ready to drink, liqueurs, gin and scotch. India net sales declined 17%, driven by the continued economic slowdown exacerbated by 
lockdowns impacting both Prestige and Above and Popular segments. South East Asia declined 23%, driven by scotch in Key Accounts and beer 
in Indonesia. North Asia declined 15%, driven by double-digit decline in scotch, partially offset by beer growth. In Travel Retail Asia and Middle 
East, net sales declined 46%, as first half declines were further exacerbated by significant declines of travellers due to Covid-19. Scotch declined 
20%, driven by Johnnie Walker in Travel Retail Asia and Middle East, South East Asia, and Korea. Operating margin declined 420bps driven mainly 
by volume loss due to closures which caused lower fixed cost absorption. These impacts were partially offset by a reduction of marketing spend 
and overhead savings.
STRATEGIC REPORT
59
DIAGEO Annual Report 2020

Scotch
Scotch represents 23% of Diageo’s net sales 
and declined by 17%. Soft performance in the 
first half was impacted by ongoing commercial 
challenges along with political and economic 
disruption which continued through the year. 
This was further exacerbated by Covid-19 in the 
second half. Johnnie Walker declined 22% 
where growth in Ethiopia, Canada and Australia 
was offset by most other markets. The brand 
also lapped strong innovation in the prior year. 
Buchanan’s declined 12% with double-digit 
growth in Colombia, primarily offset by 
continued declines in Mexico due to category 
softness. JεB declined 18% as global lockdowns 
exacerbated ongoing challenges for the brand 
in Continental Europe. Old Parr declined 15%, 
driven by downtrading to primary scotch and 
the impact of lockdown restrictions in Latin 
America and Caribbean. The malts portfolio, 
Category review
Business review continued
Key categories
Organic volume 
movement(iii) %
Organic net sales 
movement %
Reported net sales 
movement %
Spirits(i)
(11)
(8)
(8)
Scotch
(16)
(17)
(17)
Vodka(ii)(iv)
(8)
(8)
(8)
Canadian whisky
7 
8 
8 
Rum(ii)
(11)
(7)
(7)
Liqueurs
(4)
(4)
(5)
Indian-Made Foreign Liquor (IMFL) whisky
(14)
(14)
(13)
Tequila
12 
25 
27 
Gin(ii)
(9)
(4)
(5)
US whiskey
(1)
3 
4 
Beer
(15)
(15)
(15)
Ready to drink
5 
8 
3 
(i)	 Spirits brands excluding ready to drink.
(ii)	 Vodka, rum, gin including IMFL brands. 
(iii)	Organic equals reported volume movement except for vodka (10)%, Canadian whisky 6%, rum (12)%, liqueurs (5)% and ready to drink 1%, which were impacted by 
acquisitions and disposals.
(iv)	Vodka includes Ketel One Botanical.
whilst in growth in the first half, declined over 
the full year. Scotch innovations such as the 
collaborations with HBO’s Game of Thrones and 
Johnnie Walker Black Label 12 Year Old Origin 
Series were not enough to offset prior year. 
Vodka
Vodka represents 11% of Diageo’s net sales and 
declined by 8%. Challenging performance in the 
first half was further exacerbated by 
some category declines and on-trade closures. 
Smirnoff declined 6% globally, where growth in 
Mexico and Canada were offset by declines in 
Continental Europe, Africa, Brazil and US Spirits. 
Ketel One declined 6% driven mainly by US 
Spirits where on-trade sales mix was relatively 
stronger and also lapping the first full year of the 
Ketel One Botanical innovation. Cîroc declined 
17%, driven by continued performance 
challenges, mainly in US Spirits. Innovations 
across the vodka portfolio, such as Smirnoff X1 
Spicy Tamarind in Mexico, and limited time 
offers such as Cîroc White Grape, partially offset 
the declines in other brands and variants.
Canadian whisky
Canadian whisky represents 8% of Diageo’s net 
sales and grew 8%. Crown Royal in US Spirits 
grew 8% as it gained further category share 
despite a single digit decline in Crown Royal 
Deluxe. Positive results were driven by the 
sustained media investment enabling further 
momentum across the portfolio including 
continued double-digit growth of Crown Royal 
Regal Apple and Crown Royal Vanilla, and the 
success of the limited time offer variant Crown 
Royal Peach. In Canada, Crown Royal grew 
double-digit, gaining market share and 
strengthening its leadership position in the 
growing category.
Scotch 
Vodka 
US whiskey 
Canadian 
whisky 
Rum 
Indian-Made 
Foreign Liquor 
(IMFL) Whisky 
Net sales (%)
Marketing spend (%)
Liqueurs 
Gin 
Tequila 
Beer 
Ready to drink  
Other 
Volume (%)
60
DIAGEO Annual Report 2020

Global giants, local stars and reserve(i):
Organic volume 
movement(ii) %
Organic net sales 
movement %
Reported net sales 
movement %
Global giants
Johnnie Walker
(20)
(22)
(22)
Smirnoff
(9)
(6)
(6)
Baileys
(3)
(3)
(3)
Captain Morgan
(2)
(2)
–
Tanqueray
(5)
(4)
(4)
Guinness
(15)
(16)
(16)
Local stars
Crown Royal
7 
8 
10 
Yenì Raki
(22)
(15)
(15)
Buchanan’s
(14)
(12)
(13)
JεB
(18)
(18)
(18)
Windsor
(44)
(26)
(28)
Old Parr
(17)
(15)
(19)
Bundaberg
3 
–
(4)
Black & White
(7)
(5)
(10)
Ypióca
(17)
(14)
(24)
McDowell’s
(17)
(15)
(15)
Shui Jing Fang(iii)
(9)
(16)
(16)
Reserve
Scotch malts
(5)
(3)
(1)
Cîroc vodka
(17)
(17)
(16)
Ketel One(iv)
(4)
(6)
(4)
Don Julio
(1)
15 
16 
Bulleit
4 
3 
6 
(i)	 Spirits brands excluding ready to drink. 
(ii)	 Organic equals reported volume movement. 
(iii)	Growth figures represent total Chinese white spirits of which Shui Jing Fang is the principal brand. 
(iv)	Ketel One includes Ketel One vodka and Ketel One Botanical.
Rum
Rum represents 7% of Diageo’s net sales and 
declined by 7%. Growth in the first half was 
offset by declines due to some category 
challenges and Covid-19 impacts in US Spirits, 
India and East Africa. In Europe, Captain Morgan 
growth was partially offset by declines of 
Zacapa. 
Liqueurs
Liqueurs represent 5% of Diageo’s net sales and 
declined by 4%. Strong Baileys growth in the 
first half was offset by the impact of Covid-19, as 
increased off-trade growth, due to successful 
at-home activities, was not sufficient to fully 
mitigate the impact of on-trade closures. 
IMFL
IMFL whisky represents 5% of Diageo’s net sales 
and declined 14%. Growth in first half was offset 
by the on-going economic slowdown 
impacting the category, and nationwide 
Covid-19 lockdowns closing both on and 
off-trade outlets and major sporting events. 
Tequila
Tequila represents 5% of Diageo’s net sales and 
grew 25%. Casamigos was up strong double-
digit despite on-trade closures driven by strong 
category momentum in key markets and 
actions taken to strengthen its position in 
at-home occasions. Don Julio was up 15%, as 
continued growth in US Spirits was partially 
offset by Mexico declines due to competitor 
pricing pressures and lockdowns in the 
second half. 
Gin
Gin represents 5% of Diageo’s net sales and 
declined by 4%. Resilient full year performance 
in Brazil and Australia was offset by the impact 
of lockdowns, mainly in Europe.
US whiskey
US whiskey represents 3% of Diageo’s  
net sales and grew by 3%. Bulleit grew 4% in  
US Spirits, where it has been gaining category 
share, and in Canada grew 14%, despite 
lockdowns. Bulleit strengthened its positioning 
in the at-home occasion during Covid-19 with 
effective marketing campaigns across TV and 
social media.
Beer
Beer represents 15% of Diageo’s net sales and 
declined by 15%. Good first half performance 
was offset by declines in all regions in the 
second half driven by on-trade closures and 
excise increases in Africa. Guinness declined 
16%, as growth of Guinness Draught in Can was 
offset by on-trade volume declines in most 
markets. The on-trade decline was exacerbated 
by the Guinness keg return programme to 
support the on-trade and maintain product 
quality across Europe and North America. 
Serengeti continued to grow double-digit in 
East Africa but was offset by the decline in 
Senator Keg and Tusker which are highly 
exposed to the on-trade. Nigeria declined due 
to the challenging economic environment, and 
declines in Kenya and Ethiopia were due to 
excise increases, with all three markets further 
impacted by lockdowns. Rockshore continued 
to grow double-digit driven by Rockshore Cider 
and Rockshore Lager despite on-trade closures.
Ready to drink
Ready to drink represents 7% of Diageo’s  
net sales and grew 8% driven by Diageo  
Beer Company USA, Canada, and Australia. 
Smirnoff Ice Flavour innovations in Diageo Beer 
Company USA, Smirnoff Ice Smash and Smirnoff 
Spiked Seltzers all contributed to growth.
Global giants
Global giants represent 39% of Diageo’s net 
sales and declined by 13%. This was driven by 
declines in Johnnie Walker and Guinness across 
all regions, while Smirnoff declined in all regions 
except for Latin America and Caribbean. Good 
first half performance for all brands except 
Johnnie Walker was offset by global lockdowns 
in the second half. Johnnie Walker performance 
was also impacted by a continuation of political, 
and economic challenges in some emerging 
markets, as well as lapping “White Walker by 
Johnnie Walker” innovation last year.
Local stars
Local stars represent 20% of Diageo’s net 
sales and declined by 7%. Continued growth 
of Crown Royal in US Spirits was offset by 
declines, mainly in Chinese white spirits in  
China, McDowell’s in India, Buchanan’s in Latin 
America and Caribbean and US Spirits and JεB  
in Iberia and South Africa due to imposed 
lockdowns. Windsor continued to decline in 
Korea exacerbated by on-trade closures. 
Reserve
Reserve brands represent 21% of Diageo’s net 
sales and declined 4%. Continued growth 
in Don Julio and Casamigos in US Spirits 
were offset by declines in Chinese white spirits, 
Johnnie Walker Reserve variants, Cîroc and 
Ketel One. 
STRATEGIC REPORT
61
DIAGEO Annual Report 2020

Definitions and reconciliation of non-GAAP 
measures to GAAP measures
Definitions and reconciliation of non-GAAP measures to GAAP measures
Diageo’s strategic planning process is based 
on certain non-GAAP measures, including 
organic movements. These non-GAAP 
measures are chosen for planning and 
reporting, and some of them are used for 
incentive purposes. The group’s management 
believes these measures provide valuable 
additional information for users of the financial 
statements in understanding the group’s 
performance. These non-GAAP measures 
should be viewed as complementary to, and 
not replacements for, the comparable GAAP 
measures and reported movements therein.
It is not possible to reconcile the forecast 
tax rate before exceptional items and forecast 
organic operating profit increases to the most 
comparable GAAP measures as it is not possible 
to predict, without unreasonable effort, with 
reasonable certainty, the future impact of 
changes in exchange rates, acquisitions and 
disposals and potential exceptional items. 
Volume 
Volume is a non-GAAP measure that is 
measured on an equivalent units basis to 
nine-litre cases of spirits. An equivalent unit 
represents one nine-litre case of spirits, which is 
approximately 272 servings. A serving comprises 
33ml of spirits, 165ml of wine, or 330ml of ready 
to drink or beer. Therefore, to convert volume 
of products other than spirits to equivalent 
units, the following guide has been used: beer 
in hectolitres, divide by 0.9; wine in nine-litre 
cases, divide by five; ready to drink in nine-litre 
cases, divide by 10; and certain pre-mixed 
products that are classified as ready to drink 
in nine-litre cases, divide by ten. 
Organic movements 
Organic information is presented using pounds 
sterling amounts on a constant currency 
basis excluding the impact of exceptional 
items, certain fair value remeasurement and 
acquisitions and disposals. Organic measures 
enable users to focus on the performance of 
the business which is common to both years 
and which represents those measures that local 
managers are most directly able to influence.
Calculation of organic movements
The organic movement percentage is the 
amount in the row titled ‘Organic movement’ in 
the tables below, expressed as a percentage of 
the absolute amount in the associated relevant 
row titled ‘2019 adjusted’. Organic operating 
margin is calculated by dividing operating 
profit before exceptional items by net sales 
after excluding the impact of exchange rate 
movements, certain fair value remeasurement 
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.
The group changed its method of 
calculating the exchange impact used to 
calculate organic growth in its results during 
the year ending 30 June 2020. ‘Exchange’ in the 
organic movement calculation now reflects the 
adjustment to recalculate the reported results 
as if they had been generated 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. The change 
simplified processes by aligning management 
and organic reporting and is more consistent 
with how Diageo’s peer group report.
Exchange impacts in respect of the external 
hedging of intergroup sales by the markets in 
a currency other than their functional currency 
and the intergroup recharging of services 
are also translated at prior period weighted 
average exchange rates and are allocated to 
the geographical segment to which they relate. 
Residual exchange impacts are reported as part 
of the Corporate segment. 
(b) Acquisitions and disposals 
For acquisitions in the current period, the 
post acquisition results are excluded from the 
organic movement calculations. For acquisitions 
in the prior period, post acquisition results 
are included in full in the prior period but are 
included in the organic movement calculation 
from the anniversary of the acquisition date 
in the current period. The acquisition row also 
eliminates the impact of transaction costs that 
have been charged to operating profit in the 
current or prior period in respect of acquisitions 
that, in management’s judgement, are expected 
to be completed.
Where a business, brand, brand distribution 
right or agency agreement was disposed of, or 
terminated, in the reporting period, the group, 
in the organic movement calculations, excludes 
the results for that business from the current 
and prior period. In the calculation of operating 
profit, the overheads included in disposals are 
only those directly attributable to the businesses 
disposed of, and do not result from subjective 
judgements of management.
In addition, as part of acquisitions and 
disposals in the reconciliation for operating 
profit before exceptional items in the year 
ended 30 June 2019, there is a charge of 
£15 million in respect of an increase in the 
contingent consideration payable to the 
former owners of the Casamigos brand 
which was acquired in August 2017.
(c) Exceptional items 
Exceptional items are those that in 
management’s judgement need to be 
disclosed separately. Such items are included 
within the income statement caption to which 
they relate, and are excluded from the organic 
movement calculations. It is believed that 
separate disclosure of exceptional items and 
the classification between operating and 
non-operating further helps investors to 
understand the performance of the group.
Exceptional operating items are those 
that are considered to be material and 
unusual or non-recurring in nature and are 
part of the operating activities of the group 
such as impairment of intangible assets 
and 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, unusual 
non-recurring items, that are not in respect of 
the production, marketing and distribution of 
premium drinks, are disclosed as non-operating 
exceptional items below operating profit in the 
consolidated income statement.
Exceptional current and deferred tax items 
comprising material unusual non-recurring 
items that impact taxation. Examples include 
direct tax provisions and settlements in 
respect of prior years and the remeasurement 
of deferred tax assets and liabilities following 
tax rate changes.
(d) Fair value remeasurement
Fair value remeasurement in the organic 
movement calculation reflects an adjustment 
to eliminate the impact of fair value changes in 
biological assets and fair value changes relating 
to contingent consideration liabilities and equity 
options that arose on acquisitions recognised in 
the income statement.
62
DIAGEO Annual Report 2020

North America 
£ million
Europe and Turkey
£ million
Africa
£ million
Latin America
and Caribbean 
£ million
Asia Pacific
£ million
Corporate
£ million
Total
£ million
Sales
2019 reported
5,074
5,132
2,235
1,444
5,356
53
19,294
Exchange
(39)
(28)
(4)
3
(8)
2
(74)
Reclassification(iii)
–
–
–
(10)
–
–
(10)
Disposals(v)
(106)
(3)
(114)
(1)
(2)
–
(226)
2019 adjusted
4,929
5,101
2,117
1,436
5,346
55
18,984
Organic movement
98
(388)
(261)
(193)
(718)
(16)
(1,478)
Acquisitions and disposals(v)
42
10
64
–
2
–
118
Exchange
153
(26)
(9)
(59)
15
(1)
73
2020 reported
5,222
4,697
1,911
1,184
4,645
38
17,697
Organic movement %
2
(8)
(12)
(13)
(13)
(29)
(8)
Net sales
2019 reported
4,460
2,939
1,597
1,130
2,688
53
12,867
Exchange(i)
(34)
(19)
(2)
4
1
2
(48)
Reclassification(iii)
–
–
–
(10)
–
–
(10)
Disposals(v)
(75)
(1)
(91)
(1)
(1)
–
(169)
2019 adjusted
4,351
2,919
1,504
1,123
2,688
55
12,640
Organic movement
105
(358)
(200)
(169)
(423)
(16)
(1,061)
Acquisitions and disposals(v)
32
10
50
–
1
–
93
Exchange(i)
135
(4)
(8)
(46)
4
(1)
80
2020 reported
4,623
2,567
1,346
908
2,270
38
11,752
Organic movement %
2
(12)
(13)
(15)
(16)
(29)
(8)
Marketing
2019 reported
762
490
174
201
412
3
2,042
Exchange
(1)
(11)
–
1
(1)
–
(12)
Reclassification(iii)
–
–
–
(10)
–
–
(10)
Disposals(v)
–
–
(1)
–
–
–
(1)
2019 adjusted
761
479
173
192
411
3
2,019
Organic movement
(49)
(56)
(14)
(29)
(47)
–
(195)
Acquisitions and disposals(v)
3
4
1
–
–
–
8
Exchange
12
1
–
(8)
1
3
9
2020 reported
727
428
160
155
365
6
1,841
Organic movement %
(6)
(12)
(8)
(15)
(11)
–
(10)
Organic movement calculations for the year ended 30 June 2020 were as follows:
​
North America 
million
Europe and Turkey
million
Africa
million 
Latin America
and Caribbean 
million
Asia Pacific
million
Corporate
million
Total
million
Volume (equivalent units)
​
​
​
​
​
​
​
2019 reported
49.4
45.4
33.6
22.4
95.1
–
245.9
Disposals(v)
(2.1)
(0.1)
(2.7)
–
–
–
(4.9)
2019 adjusted
47.3
45.3
30.9
22.4
95.1
–
241.0
Organic movement
0.1
(5.2)
(4.0)
(3.4)
(14.5)
–
(27.0)
Acquisitions and disposals(v)
1.0
0.1
1.9
–
–
–
3.0
2020 reported
48.4
40.2
28.8
19.0
80.6
–
217.0
Organic movement %
–
(11)
(13)
(15)
(15)
–
(11)
STRATEGIC REPORT
63
DIAGEO Annual Report 2020

Volume
equ. units million
Sales
£ million
Net sales
£ million
Marketing
£ million
Operating
profit 
£ million
Year ended 30 June 2019
Acquisitions
Change in contingent consideration re Casamigos
–
–
–
–
15
–
–
–
–
15
Disposals
Portfolio of 19 brands
(2.2)
(114)
(79)
–
(42)
South African ready to drink
(0.5)
(65)
(43)
–
–
South African cider
–
(4)
(4)
–
(1)
UNB
(2.2)
(43)
(43)
(1)
(1)
(4.9)
(226)
(169)
(1)
(44)
Acquisitions and disposals
(4.9)
(226)
(169)
(1)
(29)
Year ended 30 June 2020
Acquisitions
Seedlip and Aecorn
0.1
12
12
7
(8)
0.1
12
12
7
(8)
Disposals
Supply contracts in respect of the 19 brands sold to Sazerac
1.1
42
31
–
3
South African ready to drink
0.3
33
19
–
–
UNB
1.5
31
31
1
–
2.9
106
81
1
3
Acquisitions and disposals
3.0
118
93
8
(5)
Definitions and reconciliation of non-GAAP measures to GAAP measures continued
North America 
£ million
Europe and Turkey
£ million
Africa
£ million
Latin America
and Caribbean 
£ million
Asia Pacific
£ million
Corporate
£ million
Total
£ million
Operating profit before exceptional items
2019 reported
1,948
1,014
275
365
703
(189)
4,116
Exchange(ii)
12
(16)
(4)
1
8
(1)
–
Acquisitions and disposals(v)
(27)
1
(3)
–
–
–
(29)
2019 adjusted
1,933
999
268
366
711
(190)
4,087
Organic movement
80
(243)
(150)
(107)
(207)
38
(589)
Acquisitions and disposals(v)
(1)
(4)
–
–
–
–
(5)
Fair value remeasurement of contingent 
considerations and equity option(iv)
(10)
(4)
–
7
–
–
(7)
Fair value remeasurement of biological 
assets
–
–
–
9
–
–
9
Exchange(ii)
32
9
(17)
(27)
(3)
5
(1)
2020 reported
2,034
757
101
248
501
(147)
3,494
Organic movement %
4
(24)
(56)
(29)
(29)
20
(14)
Organic operating margin %
2020
45.2%
29.5%
9.0%
27.1%
22.3%
n/a
30.2%
2019
44.4%
34.2%
17.8%
32.6%
26.5%
n/a
32.3%
Margin movement (bps)
75
(470)
(877)
(544)
(420)
n/a
(212)
1. For the reconciliation of sales to net sales see page 46.	
2. Percentages and margin movement are calculated on rounded figures.
Notes: Information in respect of the organic movement calculations
(i)	 The impact of movements in exchange rates on reported figures for net sales is principally 
in respect of the translation exchange impact of the weakening of sterling against the 
US dollar, partially offset by strengthening of sterling against the Brazilian real, the 
Australian dollar and the euro.
(ii)	 The impact of movements in exchange rates on reported figures for operating profit 
is principally in respect of the transactional exchange impact of the weakening of the 
Brazilian real, the Colombian peso and the Nigerian naira, broadly offset by translational 
exchange impact of the strengthening of the US dollar against sterling.
(iii)	For the year ended 30 June 2019 trade investment of £10 million has been reclassified 
from marketing to net sales.
(iv)	Change in contingent consideration re Casamigos was reported as part of acquisitions 
in year ended 30 June 2019.
(v)	In the year ended 30 June 2020 the acquisitions and disposals that affected volume, 
sales, net sales, marketing and operating profit were as follows: 
64
DIAGEO Annual Report 2020

Earnings per share before exceptional items 
Earnings per share before exceptional items is calculated by dividing profit attributable to equity shareholders of the parent company before exceptional 
items by the weighted average number of shares in issue. 
Earnings per share before exceptional items for the year ended 30 June 2020 and 30 June 2019 are set out in the table below. 
2020 
£ million
2019 
£ million
Profit attributable to equity shareholders of the parent company
1,409
3,160
Exceptional operating and non-operating items
1,380
(61)
Exceptional taxation charges/(benefits)
–
10
Tax in respect of exceptional operating and non-operating items
(154)
29
Exceptional items attributable to non-controlling interests
(69)
26
2,566
3,164
Weighted average number of shares
million
million
Shares in issue excluding own shares
2,346
2,418
Dilutive potential ordinary shares
8
10
2,354
2,428
pence
pence
Basic earnings per share before exceptional items
109.4
130.8
Diluted earnings per share before exceptional items
109.0
130.3
1.	 The impact of the adoption of IFRS 16 on 1 July 2019 on earnings per share before exceptional items for year ended 30 June 2020 is immaterial.
Free cash flow 
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash received/paid for working capital loans receivable, 
cash paid or received for investments and the net cash cost paid for property, plant and equipment and computer software that are included in net cash 
flow from investing activities. 
The remaining components of net cash flow from investing activities that do not form part of free cash flow, as defined by the group’s management, 
are in respect of the acquisition and sale of businesses and non-working capital loans to and from associates. 
The group’s management regards the purchase and disposal of property, plant and equipment and computer software as ultimately non-
discretionary since ongoing investment in plant, machinery and technology is required to support the day-to-day operations, whereas acquisitions 
and sales of businesses are discretionary. 
Where appropriate, separate explanations are given for the impacts of acquisitions and sale of businesses, dividends paid and the purchase of 
own shares, each of which arises from decisions that are independent from the running of the ongoing underlying business. 
Free cash flow reconciliations for the year ended 30 June 2020 and 30 June 2019 are set out in the table below: 
2020
£ million
2019
£ million
Net cash inflow from operating activities
2,320
3,248
Disposal of property, plant and equipment and computer software
14
32
Purchase of property, plant and equipment and computer software
(700)
(671)
Movements in loans and other investments
–
(1)
Free cash flow
1,634
2,608
1.	 Free cash flow for the year ended 30 June 2020 has benefited by £74 million as a result of the adoption of IFRS 16 on 1 July 2019.
Return on average total invested capital 
Return on average total invested capital is used by management to assess the return obtained from the group’s asset base and is calculated to aid 
evaluation of the performance of the business. 
The profit used in assessing the return on average total invested capital reflects operating profit before exceptional items attributable to the equity 
shareholders of the parent company plus share of after tax results of associates and joint ventures after applying the tax rate before exceptional items for 
the year. Average total invested capital is calculated using the average derived from the consolidated balance sheets at the beginning, middle and end of 
the year. Average capital employed comprises average net assets attributable to equity shareholders of the parent company for the year, excluding post 
employment benefit net assets/liabilities (net of deferred tax) and average net borrowings. This average capital employed is then aggregated with the 
average restructuring and integration costs net of tax, and goodwill written off to reserves at 1 July 2004, the date of transition to IFRS, to obtain the 
average total invested capital.
STRATEGIC REPORT
65
DIAGEO Annual Report 2020

Definitions and reconciliation of non-GAAP measures to GAAP measures continued
Calculations for the return on average total invested capital for the year ended 30 June 2020 and 30 June 2019 are set out in the table below. 
2020
£ million
2019
£ million
Operating profit
2,137
4,042
Exceptional operating items
1,357
74
Profit before exceptional operating items attributable to non-controlling interests
(114)
(151)
Share of after tax results of associates and joint ventures
282
312
Tax at the tax rate before exceptional items of 21.7% (2019 – 20.6%) 
(795)
(881)
2,867
3,396
Average net assets (excluding net post employment assets/liabilities)
9,063
10,847
Average non-controlling interests
(1,723)
(1,776)
Average net borrowings
12,551
10,240
Average integration and restructuring costs (net of tax)
1,639
1,639
Goodwill at 1 July 2004
1,562
1,562
Average total invested capital
23,092
22,512
Return on average total invested capital
12.4 %
15.1%
1.	 Calculation of average net borrowings includes £251million in respect of IFRS 16 adoption for 1 July 2019.
2.	 The return on average total invested capital for the year ended 30 June 2020 was adversely impacted by 18bps as a result of the adoption of IFRS 16 on 1 July 2019.
Adjusted net borrowings to earnings before exceptional operating items, interest, tax, depreciation, amortisation 
and impairment (adjusted EBITDA) 
Diageo manages its capital structure with the aim of achieving capital efficiency, provide flexibility to invest through the economic cycle and give efficient 
access to debt markets at attractive cost levels. The group regularly assesses its debt and equity capital levels to enhance its capital structure by reviewing 
the ratio of adjusted net borrowings to adjusted EBITDA.
Calculations for the ratio of adjusted net borrowings to adjusted EBITDA at 30 June 2020 and 30 June 2019 are set out in the table below. 
2020
£ million
2019
£ million
Borrowings due within one year
1,995
1,959
Borrowings due after one year
14,790
10,596
Fair value of foreign currency derivatives and interest rate hedging instruments
(686)
(474)
Lease liabilities
470
128
Less: Cash and cash equivalents
(3,323)
(932)
Net borrowings
13,246
11,277
Post employment benefit liabilities before tax
749
846
Adjusted net borrowings
13,995
12,123
Operating profit
2,137
4,042
Depreciation, amortisation and impairment (excluding exceptional items)
494
374
Share of after tax results of associates and joint ventures
282
312
Exceptional impairment
1,345
–
Non-operating items
(23)
144
EBITDA
4,235
4,872
Exceptional operating items (excluding impairment)
12
74
Non-operating items
23
(144)
Adjusted EBITDA
4,270
4,802
Adjusted net borrowings to adjusted EBITDA
3.3
2.5
1.	 The ratio of adjusted net borrowings to adjusted EBITDA at 30 June 2020 increased by 0.1 times as a result of the adoption of IFRS 16 on 1 July 2019.
66
DIAGEO Annual Report 2020

Other definitions 
Volume share is a brand’s retail volume 
expressed as a percentage of the retail 
volume of all brands in its segment. Value 
share is a brand’s retail sales value expressed 
as a percentage of the retail sales value of 
all brands in its segment. Unless otherwise 
stated, share refers to value share. 
Price/mix is the number of percentage 
points by which the organic movement in 
net sales differs to the organic movement 
in volume. The difference arises because of 
changes in the composition of sales between 
higher and lower priced variants/markets or 
as price changes are implemented. 
Shipments comprise the volume of 
products made to Diageo’s immediate (first 
tier) customers. Depletions are the estimated 
volume of the onward sales made by Diageo’s 
immediate customers. Both shipments and 
depletions are measured on an equivalent 
units basis. 
References to emerging markets include 
Russia, Eastern Europe, Turkey, Africa, Latin  
America and Caribbean, and Asia Pacific 
(excluding Australia, Korea and Japan). 
References to reserve brands include, but 
are not limited to, Johnnie Walker Blue Label, 
Johnnie Walker Green Label, Johnnie Walker 
Gold Label Reserve, Johnnie Walker Aged 18 
Years, John Walker & Sons Collection and other 
Johnnie Walker super premium brands; Roe & 
Co; The Singleton, Cardhu, Talisker, Lagavulin 
and other malt brands; Buchanan’s Special 
Reserve, Buchanan’s Red Seal; Bulleit Bourbon, 
Bulleit Rye; Tanqueray No. TEN, Tanqueray ready 
to drink, Tanqueray Malacca Gin; Cîroc, Ketel 
One vodka, Ketel One Botanicals; Don 
Julio, Casamigos, Zacapa, Bundaberg SDlx, 
Shui Jing Fang, Jinzu gin, Haig Club whisky, 
Orphan Barrel whiskey and DeLeón Tequila; 
Villa Ascenti, Copper Dog whisky, Belsazar, 
Pierde Almas. 
References to global giants include 
the following brand families: Johnnie 
Walker, Smirnoff, Captain Morgan, Baileys, 
Tanqueray and Guinness. Local stars spirits 
include Buchanan’s, Bundaberg, Crown Royal, 
JεB, McDowell’s, Old Parr, Yenì Raki, Black & 
White, Shui Jing Fang, Windsor and Ypióca. 
Global giants and local stars exclude ready to 
drink and beer except Guinness. References 
to Shui Jing Fang represent total Chinese 
white spirits of which Shui Jing Fang is the 
predominant brand. 
References to ready to drink also include 
ready to serve products, such as pre-mix 
cans in some markets, and progressive adult 
beverages in the United States and certain 
markets supplied by the United States. 
References to beer include cider and some 
non-alcoholic products such as Malta Guinness. 
The results of Hop House 13 Lager are 
included in the Guinness figures. 
References to the disposal of a portfolio 
of 19 brands comprise the following brands 
that were primarily sold in the United States: 
Seagram’s VO, Seagram’s 83, Seagram’s Five 
Star, Popov, Myers’s, Parrot Bay, Yukon Jack, 
Romana Sambuca, Scoresby, Goldschlager, 
Relska, Stirrings, The Club, Booth’s, Black 
Haus, Peligroso, Grind, Piehole and John Begg.
References to the group include Diageo plc 
and its consolidated subsidiaries. 
This Strategic Report,  
which has been approved  
by a duly appointed and 
authorised committee of  
the Board of Directors,  
was signed on its behalf  
by Siobhán Moriarty, the 
Company Secretary,  
on 4 August 2020.
Tax rate before exceptional items 
Tax rate before exceptional items is calculated by dividing the total tax charge on continuing 
operations before tax charges and credits in respect of exceptional items, by profit before taxation 
adjusted to exclude the impact of exceptional operating and non-operating items, expressed as a 
percentage. The measure is used by management to assess the rate of tax applied to the group’s 
continuing operations before tax on exceptional items. 
The tax rates from operations before exceptional and after exceptional items for the year ended 
30 June 2020 and year ended 30 June 2019 are set out in the table below: 
2020
£ million
2019
£ million
Tax before exceptional items (a)
743
859
Tax in respect of exceptional items
(154)
29
Exceptional tax charge/(credit)
–
10
Taxation on profit (b)
589
898
Profit before taxation and exceptional items (c)
3,423
4,174
Non-operating items
(23)
144
Exceptional finance charges
–
(9)
Exceptional operating items
(1,357)
(74)
Profit before taxation (d)
2,043
4,235
Tax rate before exceptional items (a/c)
21.7 %
20.6 %
Tax rate after exceptional items (b/d)
28.8 %
21.2 %
1.	 The tax rate before exceptional items is not materially affected by the adoption of IFRS 16 on 1 July 2019.
STRATEGIC REPORT
67
DIAGEO Annual Report 2020

Diversity, balance and experience
Appointed Chairman and Chairman of the 
Nomination Committee: January 2017 
(Appointed Chairman Designate and 
Non-Executive Director: July 2016) 
Key strengths: Brings extensive 
board-level experience from the 
drinks and consumer products 
industry, including at chief executive 
level, and has a wealth of experience 
in consumer goods through his 
venture capital activities to draw from 
in his role as Chairman and leader of 
the Board 
Current external appointments: 
Non-Executive Director, International 
Consolidated Airlines Group, S.A., 
Coca-Cola European Partners plc; 
Advisor, BlackRock Long Term 
Private Capital
Previous relevant experience:  
Non-Executive Director and Senior 
Independent Director, Associated 
British Foods plc; Member, Advisory 
Board of ESADE Business School; 
President and CEO, Bacardi Limited; 
Non-Executive Director, SABMiller plc
Appointed Chief Executive: July 2013 
(Appointed Executive Director:  
July 2012) 
Key strengths: Has extensive 
experience of over 20 years with 
the Diageo group at operational 
and leadership levels and within the 
consumer products industry, which 
brings valuable insight to lead the 
group and implement the strategy 
Current external appointments: Vice 
Chairman of the Council, Scotch 
Whisky Association; Non-Executive 
Director, Tapestry Inc.; Member of 
the Global Advisory Board, Kellogg 
School of Management, Northwestern 
University; Trustee, Movement to 
Work; Member, International Alliance 
for Responsible Drinking, CEO Group 
Previous Diageo roles: Chief Operating 
Officer; President, North America; 
Chairman, Diageo Asia Pacific; 
Chairman, Diageo Latin America 
and Caribbean; senior management 
positions, Guinness and then Diageo 
Previous relevant experience: marketing 
and strategy roles, Nestlé, Booz Allen 
Hamilton Inc. and Whirlpool
Appointed Chief Financial Officer and 
Executive Director: November 2015
Key strengths: Brings skills and 
experience from finance-based 
roles to effectively manage the  
group’s affairs relating to accounting, 
tax, treasury and investor relations, 
as well as commercial experience 
to the Board’s discussions
Current external appointments: 
Non-Executive Director and Audit 
Committee Chair, The Hartford 
Financial Services Group, Inc.; 
Member of the Main Committee, 
100 Group of Finance Directors 
Previous relevant experience: Corporate 
Executive Vice President and Chief 
Financial Officer, Xerox Corporation; 
Senior Vice President and Chief 
Financial Officer, ADT Corporation; 
Executive Vice President and Chief 
Financial Officer, Nalco Holding 
Company; Executive Vice President 
and CFO, UAL Corporation
Appointed Senior Independent Director: 
October 2019 (Appointed Non-
Executive Director: April 2018 and 
Chairman of the Remuneration 
Committee: January 2019)
Key strengths: Brings wide-ranging 
corporate governance and board- 
level experience across a number 
of industries, including a consumer 
goods sector focus, with particular 
expertise in mergers and acquisitions, 
corporate finance and transaction 
advisory work 
Current external appointments: 
Non-Executive Director, Unilever PLC, 
Unilever N.V., Fortune Brands Home & 
Security, Inc., BHP Group Plc, BHP Group 
Limited; Member, the Takeover Panel
Previous relevant experience: Senior 
Independent Director, BBA Aviation 
plc; Chairman, Shire plc, Mergers 
and Acquisitions EMEA, Credit 
Suisse; Senior Advisor, Credit Suisse; 
Non-Executive Director, Goldman 
Sachs International, Keurig Green 
Mountain, L’Occitane International, 
Coca-Cola HBC
Javier Ferrán
Chairman
Nationality: Spanish
Susan Kilsby
Senior Independent Director
Nationality: American/British
Ivan Menezes
Chief Executive
Nationality: American/British 
Kathryn Mikells
Chief Financial Officer
Nationality: American
E
E
N
A
N
R
Board of Directors and Company Secretary
Board diversity 
Board Committees 
Audit Committee
Executive Committee
Nomination Committee
Remuneration Committee
Chairman of the committee
Board composition 
Gender diversity
Non-Executive Director tenure
Chairman 
12%
Executive Directors 
25%
Non-Executive Directors 
63%
Male 
50%
Female 
50%
0-3 years 
40%
3-6 years 
40%
6-9 years 
20%
A
E
N
R
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DIAGEO Annual Report 2020

Melissa Bethell
Non-Executive Director
Nationality: American/British
Appointed Non-Executive Director:  
June 2020
Key strengths: Has extensive 
international corporate and financial 
experience, including in relation 
to private equity, financial sectors, 
strategic consultancy and advisory 
services, as well as having strong 
non-executive experience at  
board and committee levels 
across a range of industries, 
including retail, consumer goods 
and financial services
Current external appointments: 
Managing Partner, Atairos Europe; 
Non-Executive Director, Tesco plc, 
Exor N.V.
Previous relevant experience: Managing 
Director and Senior Advisor, Private 
Equity, Bain Capital; Non-Executive 
Director, Atento S.A., Worldpay plc, 
Samsonite S.A. 
A
N
R
Appointed Non-Executive Director:  
October 2012 
Key strengths: Brings extensive 
commercial and entrepreneurial 
experience of operating in emerging 
markets, in particular in Asia Pacific, 
as well as in various consumer-facing 
industries such as retail banking, 
airlines and hospitality
Current external appointments: Executive 
Chairman and Founder, Banyan Tree 
Holdings Limited; Chairman, Laguna 
Resorts & Hotels Public Company 
Limited (a subsidiary of Banyan 
Tree Holdings Limited) and Thai Wah  
Public Company Limited (each such 
company being owned or ultimately 
controlled by Ho KwonPing’s family); 
Chairman of Board of Trustees, 
Singapore Management University 
Previous relevant experience: Member, 
Global Advisory Board of Moelis & 
Company; Chairman, MediaCorp Pte. 
Ltd; Non-Executive Director, Singapore 
Airlines Limited, Singapore Power 
Limited, Standard Chartered PLC
Appointed Non-Executive Director: 
September 2014 (Appointed 
Chairman of the Audit Committee: 
January 2017)
Key strengths: Has a strong background 
in financial, investment banking and 
commercial matters, with particular 
expertise in consumer retail industries, 
as well as board and committee level 
experience at industry institutions
Current external appointments: 
Chief Financial Officer, Tesco PLC; 
Non-Executive Director, Tesco Bank; 
Member of the Advisory Board, 
Chartered Institute of Management 
Accountants; Member of the Main 
Committee & Chairman of Pension 
Committee, 100 Group of Finance 
Directors; Co-Chair, A4S CFO Network
Previous relevant experience: Chief 
Financial Officer, Marks & Spencer, 
AWAS; Non-Executive Director, Games 
Workshop plc; Group Finance Director, 
WH Smith plc; Chief Executive, 
Thomas Cook UK
Appointed Non-Executive Director: 
September 2014
Key strengths: Has specialist knowledge 
and understanding of consumer-
facing emerging technologies, 
cyber security and data issues, as 
well as wide experience of board and 
committee level appointments across 
diverse commercial, governmental 
and charitable institutions, as well 
as advisory roles in advertising and 
production of consumer goods
Current external appointments: Vice 
President, Facebook EMEA; Co-
President, Norwood; Member, Mayor’s 
Business Advisory Board; Member, 
HMG Industrial Strategy Council
Previous relevant experience: Executive 
Chairman, Karmarama; Deputy 
Chairman, Grey London; Board 
Director, BBH and Fragrance 
Foundation; President, Institute of 
Practitioners in Advertising; Director, 
Women’s Prize for Fiction; Co-Chair, 
Creative Industries Council; Board 
Member, CEW; Trustee, White Ribbon 
Alliance; Chair, Corporate Board, 
Women’s Aid
Ho KwonPing
Non-Executive Director
Nationality: Singaporean
Alan Stewart
Non-Executive Director
Nationality: British
Lady Mendelsohn
Non-Executive Director
Nationality: British
A
N
R 
A
N
R
A
N
R
Appointed General Counsel: July 2013 
Appointed Company Secretary:  
August 2018 
Previous Diageo roles: General  
Counsel Designate; Corporate M&A 
Counsel; Regional Counsel Ireland;  
General Counsel Europe 
Previous relevant experience: various 
positions in law firm private practice, 
Dublin and London 
Current external appointments:  
Non-Executive Director, Friends  
Board of the Royal Academy of Arts;  
Board Member, European General 
Counsel Association
Changes since 1 July 2019 
–– Debra Crew ceased to be Non-Executive Director on 24 March 2020 
and became President, Diageo North America from 1 July 2020. 
–– Melissa Bethell was appointed as Non-Executive Director with effect  
from 30 June 2020.
–– Lord Davies of Abersoch retired from the Board on 30 June 2020. 
Future appointments 
–– Sir John Manzoni has been appointed as a Non-Executive Director  
with effect from 1 October 2020. 
–– Valérie Chapoulaud-Floquet has been appointed as a Non-Executive 
Director with effect from 1 January 2021. 
Siobhán Moriarty 
General Counsel & 
Company Secretary 
Nationality: Irish 
E
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DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Broad skills and expertise
Executive Committee
Ewan Andrew
President, Global Supply  
and Procurement 
Nationality: British 
Appointed:  
September 2019
Previous Diageo roles: Supply Director, International  
Supply Centre; Senior Vice President, Supply 
Chain & Procurement, Latin America & Caribbean; 
Senior Vice President Manufacturing & Distilling, 
North America; various supply chain, operational 
management and procurement roles
Current external appointments: Member of the Council, 
Scotch Whisky Association
Debra Crew
President, Diageo  
North America 
Nationality: American 
Appointed: July 2020
​Previous Diageo roles: Non-Executive Director,  
Diageo plc
Previous relevant experience: Non-Executive Director, 
Newell Brands; President and CEO, Reynolds 
American, Inc; President, PepsiCo North America 
Nutrition, PepsiCo Americas Beverages, Western 
Europe Region; various positions with Kraft Foods, 
Nestlé. S.A., and Mars
Current external appointments: Non-Executive Director, 
Stanley Black & Decker, Inc., Mondelēz International
Cristina Diezhandino
Chief Marketing Officer  
Nationality: Spanish 
Appointed: July 2020
Previous Diageo roles: Global 
Category Director Scotch & Managing Director 
Reserve Brands; Managing Director, Caribbean and 
Central America; Marketing & Innovation Director, 
Diageo Africa; Category Director, Scotch Portfolio & 
Gins; Global Brand Director, Johnnie Walker
Previous relevant experience: Corporate Marketing 
Director, Allied Domecq Spain; marketing roles, 
Unilever HPC US, UK and Spain
Sam Fischer
President, Diageo  
Greater China and Asia Pacific 
Nationality: Australian 
Appointed:  
September 2014
Previous Diageo roles: Managing Director,  
Diageo Greater China; Managing Director of South 
East Asia, Diageo Asia Pacific; General Manager, 
Diageo IndoChina and Vietnam
Previous relevant experience: Senior management  
roles across Central Europe and Indochina,  
Colgate Palmolive
Current external appointments: Non-Executive Director, 
Burberry PLC
Alberto Gavazzi
President, Diageo Latin 
America & Caribbean, 
Global Travel & Sales Opex 
Nationality: Brazilian/Italian 
Appointed: July 2013
Previous Diageo roles: Managing Director, West  
Latin America and Caribbean; Global Category 
Director Whiskey, Gins and Reserve Brands; 
General Manager Brazil, Paraguay and Uruguay; 
Vice President Consumer Marketing, Chicago; 
Marketing Director, Brazil 
Previous relevant experience: Colgate-Palmolive;  
Unilever PLC
John Kennedy
President, Diageo Europe, 
Turkey and India 
Nationality: American 
Appointed: July 2016
​Previous Diageo roles: President, Europe and  
Western Europe; Chief Operating Officer, Western 
Europe; Marketing Director, Australia; General 
Manager for Innovation, North America; President 
and Chief Executive Officer, Diageo Canada; 
Managing Director, Diageo Ireland
Previous relevant experience: brand management roles, 
GlaxoSmithKline and Quaker Oats
Anand Kripalu
CEO, United Spirits Limited 
Nationality: Indian 
Appointed:  
September 2014
Previous Diageo roles: CEO-Designate,  
United Spirits Limited
Previous relevant experience: Various  
management roles at Mondelēz International, 
Cadbury and Unilever 
Current external appointments: Member of the Board of 
Governors, Indian Institute of Management, Jammu
Daniel Mobley
Corporate Relations Director 
Nationality: British 
Appointed: June 2017
Previous Diageo roles: 
Corporate Relations Director, Europe
Previous relevant experience: Regional Head of 
Corporate Affairs India & South Asia, Regional Head of 
Corporate Affairs Africa, Group Head of Government 
Relations, Standard Chartered; extensive government 
experience including in HM Treasury and Foreign & 
Commonwealth Office
Mairéad Nayager
Chief HR Officer 
Nationality: Irish 
Appointed: October 2015
​Previous Diageo roles: HR 
Director, Diageo Europe; HR Director, Brandhouse, 
South Africa; HR Director, Diageo Africa Regional 
Markets; Talent & Organisational Effectiveness 
Director, Diageo Africa; Employee Relations Manager, 
Diageo Ireland
Previous relevant experience: Irish Business and 
Employers’ Confederation
John O’Keeffe
President, Diageo Africa 
Nationality: Irish 
Appointed: July 2015
Previous Diageo roles: CEO 
and Managing Director, Guinness Nigeria;  
Global Head, Innovation; Global Head, Beer and 
Baileys; Managing Director Russia and Eastern 
Europe; various general management and 
marketing positions
Male 
62%
Female 
38%
Gender diversity
American 
23%
American/
British 
8%
Australian 
8%
Brazilian/Italian 8%
British 
14%
Indian 
8%
Irish 
23%
Spanish 
8%
Nationality
Ivan Menezes, Kathryn Mikells and Siobhán Moriarty are also members of the 
Executive Committee. Their biographies are found on pages 68 and 69.
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DIAGEO Annual Report 2020

Throughout this year, there has been much focus on considering the 
impact of decisions on different stakeholder groups and on ensuring 
that decisions are made in light of the impact they may have on 
those stakeholders. In my role as designated non-executive director for 
workforce engagement, I have benefitted greatly from my interactions 
with the Diageo workforce across different locations and have sought 
to understand their views, present them to the Board and ensure that 
they are considered in our decision-making. Further details of how 
the Board engages with different stakeholder groups are set out on 
pages 76 and 77.
A good board is formed of a diverse group of individuals, each 
contributing different experiences, skills and backgrounds, and which 
enables independent and effective leadership coalescing around a 
common purpose and performance ambition. Inclusion and diversity 
remains a vital priority for us as a Board and for the wider company, and 
with that in mind, we are delighted to have announced the appointments 
of Melissa Bethell who joined the Board on 30 June 2020, as well as 
Sir John Manzoni and Valérie Chapoulaud-Floquet who will be joining 
the Board in October 2020 and January 2021 respectively. I am also 
excited that Debra Crew, formerly a non-executive director, has made 
the transition into executive management, being appointed President, 
Diageo North America. Finally, I am deeply grateful to Lord Davies, who 
has recently retired after more than nine years’ service on the Board, and 
to Ho KwonPing, who will shortly retire from the Board after eight years’ 
service. Further details of our Diversity Policy and recent changes to the 
Board are set out on pages 72 and 69.
We are clear that Diageo’s ability to deliver our strategy and to create 
sustainable long-term value for shareholders and other stakeholders is 
predicated on robust and efficient governance structures and processes, 
whatever the external environment. We remain firmly of the view that 
good corporate governance contributes to a sustainable business over 
the long term for the benefit of society as a whole. 
Solid governance principles
Letter from the Chairman of the Board of Directors
Compliance with the UK Corporate Governance Code 
During the financial year ended 30 June 2020, Diageo has applied the 
Principles and complied with the Provisions of the UK Corporate Governance 
Code 2018 (the Code). Below are highlights of Diageo’s compliance with 
certain areas of the Code, together with cross-references to other sections  
of this Annual Report where further information can be found. 
–– Independence: Over half of our Directors are independent non-
executive directors and the composition of all Board Committees 
complies with the Code. The Chairman was considered independent  
on his appointment. Susan Kilsby is our Senior Independent Director. 
Further information about the Board is set out on pages 68 and 69.
–– Governance framework: Diageo’s governance framework includes a 
clear separation of duties between the Chairman, the Chief Executive 
and the Senior Independent Director, as well as reserving certain 
matters to the Board for consideration and approval. The governance 
framework also sets out the role and scope of the various Board 
Committees and management committees. Further details are set 
out on page 73. 
–– Diversity: The Board believes diversity is an important factor in enabling 
good decision-making and considers diversity an essential part of its 
nomination and succession planning processes. It therefore formalised 
the diversity principles applicable to the Board into a formal written 
Diversity Policy. Information about the diversity of the Board and the 
Board’s Diversity Policy is set out on page 72.
–– Workforce engagement: The Chairman has been designated 
non-executive director for workforce engagement and has interacted 
with Diageo’s workforce directly and indirectly through multiple 
channels. Diageo’s workforce engagement statement for the year 
is set out on page 77.
–– Performance-related pay: Diageo places a strong focus on 
performance-related pay, with clear alignment between pay structures 
for executives and the wider workforce. Further details on executive 
reward are set out on pages 84 to 106.
Dear Shareholder
I am pleased, on behalf of the Board, to present the corporate governance 
report for the year ended 30 June 2020. It is the Board’s role to provide 
effective leadership to promote the long-term sustainable success of 
Diageo and to deliver long-term, sustainable value for shareholders. 
It is the responsibility of the Board to ensure that Diageo conducts its 
business with high standards of ethical behaviour and in a manner which 
contributes positively to wider society, having regard to the interests of 
its different stakeholders. In challenging and fast-moving environments, 
particular emphasis is placed on the Board’s ability to exercise good 
judgement as to the management of risk, the allocation of capital and 
other resources, while always adhering to uncompromising ethical 
standards. Underpinned by a strong purpose, values and culture, and 
led by a high-functioning Board and experienced Executive Committee, 
I am proud of the resilience and commitment shown by Diageo and its 
people during the year, and in particular during this recent difficult period.
Good corporate governance is a key factor in achieving effective 
leadership and sustainable corporate behaviour, irrespective of the 
external environment. It means ensuring that there is an effective 
framework of internal controls, practices, policies and systems which 
together define clear levels of accountability and authority for decision-
making, enabling management to take appropriate levels of risk within 
a culture of openness, ethics and values. The Board sets the tone for 
Diageo, guided by our deeply engrained corporate purpose and values, 
in achieving our Performance Ambition. Details of our governance 
structure and processes are set out on pages 72 and 73.
Javier Ferrán
Chairman
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DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Compliance statement
The principal corporate governance rules applying to Diageo (as 
a UK company listed on the London Stock Exchange) for the year 
ended 30 June 2020 are contained in the Code and the UK Financial 
Conduct Authority (FCA) Listing Rules, which require us to describe, 
in our Annual Report, our corporate governance from two points of 
view: the first dealing generally with our application of the Code’s main 
principles and the second dealing specifically with non-compliance with 
any of the Code’s provisions. The two descriptions together are designed 
to give shareholders a picture of governance arrangements in relation 
to the Code as a criterion of good practice.
A copy of the Code is publicly available on the website of the 
Financial Reporting Council (FRC), www.frc.org.uk.
Diageo can confirm that it has complied with all relevant provisions 
set out in the Code throughout the year. Details of changes to pension 
contributions for Executive Directors as required under the Code can be 
found in the Directors’ remuneration report on page 85.
Diageo must also comply with corporate governance rules contained 
in the FCA Disclosure Guidance and Transparency Rules and certain 
related provisions in the Companies Act 2006 (the Act).
As well as being subject to UK legislation and practice, as a company 
listed on the New York Stock Exchange (NYSE), Diageo is subject to the 
listing requirements of the NYSE and the rules of the U.S. Securities and 
Exchange Commission (SEC), as they apply to foreign private issuers. 
Compliance with the provisions of the US Sarbanes-Oxley Act of 2002 
(SOX), as it applies to foreign private issuers, is continually monitored.
As Diageo follows UK corporate governance practice, differences 
from the NYSE corporate governance standards are summarised in 
Diageo’s 20-F filing and on our website at https://www.diageo.com/en/
our-business/corporate-governance.
Board of Directors
Composition of the Board
The Board comprises the Non-Executive Chairman, two Executive 
Directors, the Senior Independent Director, and four independent 
Non-Executive Directors. The biographies of all Directors are set out  
in this Annual Report on pages 68 and 69.
Inclusion and diversity
Valuing inclusion and diversity is one of the core principles of Diageo’s 
global Human Rights Policy which applies to all employees, subsidiaries 
and third-party contractors and which has been implemented as part of 
our Code of Business Conduct programme. Our objective is to maintain 
and sustain an inclusive and diverse business in order to create a better 
working environment and a better-performing business. 
The Board has adopted a written Diversity Policy which is applicable to 
the Board only and sits alongside Diageo’s Code of Business Conduct and 
associated global policies, which set out Diageo’s broader commitment to 
inclusion and diversity. Diageo strongly supports diversity within its Board 
of Directors, including gender, age and professional diversity, as well as 
diversity of thought. The Board is comprised of individuals from a diverse 
range of skills, industries, backgrounds and nationalities, which enables a 
broad evaluation of all matters considered by the Board and contributes 
to a culture of collaborative and constructive discussion. The Board’s 
objective, as set out in its Diversity Policy, is that it shall include no less than 
40% female representation (with the ultimate goal being parity between 
males and females on the Board) and at least one director from an ethnic 
Enabling our ambition
Further information can be found in the ‘Champion inclusion and diversity’ 
and ‘Our people’ sections of ‘Our strategic priorities’ on pages 26 and 27.
Further details on the Board Committees can be found in the separate reports from 
each Committee on pages 81 to 106, and details of the Executive Committee can 
be found on page 79.
Corporate governance report
Duties of the Board
The Board manages overall control of the company’s affairs with 
reference to the formal schedule of matters reserved for the Board for 
decision. The schedule was last reviewed in April 2020 and is available at  
https://www.diageo.com/en/our-business/corporate-governance.
The Board has agreed an approach and adopted guidelines for 
dealing with conflicts of interest, and responsibility for authorising 
conflicts of interest is included in the schedule of matters reserved for the 
Board. The Board confirmed that, it was not aware of any situations that 
may or did give rise to conflicts with the interests of the company, other 
than those that may arise from Directors’ other appointments as disclosed 
in their biographies.
In order to fulfil their duties, procedures are in place for Directors 
to seek both independent advice and the advice and services of the 
Company Secretary, who is responsible for advising the Board, through 
the Chairman, on all governance matters. The Non-Executive Directors 
meet without management present, and also meet with the Chairman 
without management present, on a regular basis.
The terms of reference of Board Committees are reviewed 
regularly, most recently in April and June 2020, and are available  
at https://www.diageo.com/en/our-business/corporate-governance.
Corporate governance structure and division 
of responsibilities
The Board has established a corporate governance framework 
as shown on page 73. This includes the three Board Committees 
(Audit Committee, Nomination Committee and Remuneration 
Committee), as well as management committees which report to the 
Chief Executive or Chief Financial Officer (Executive Committee, Finance 
Committee, Audit & Risk Committee and Filings Assurance Committee).
There is a clear separation of the roles of the Chairman, the Senior 
Independent Director and the Chief Executive which has been clearly 
established, set out in writing and agreed by the Board. No individual 
or group dominates the Board’s decision-making processes. 
Considering stakeholders in decision-making
During the year, the Board reviewed how it was structured as 
regards governance of the group’s environmental, social and 
governance (ESG) programmes. This review was considered 
in the light of increased expectations as to listed companies’ 
commitment to such matters by a number of stakeholder groups, 
including consumers, government and employees. As part of its 
review, the Board considered the governance structures of peer 
group companies, the experience of individual Directors and 
feedback received directly from certain institutional investor 
bodies and indirectly through the company’s brokers. 
It was concluded that ESG was of such critical importance that 
all Directors should retain primary responsibility and involvement, 
rather than constituting a new standing committee of the Board 
dedicated to ESG matters.
minority background. Currently, women make up 50% of the Board 
and there are three directors from ethnic minority backgrounds.
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DIAGEO Annual Report 2020

Corporate governance structure and division of responsibilities
Senior Independent Director
Susan Kilsby
–– Acts as a sounding board for 
the Chairman and serves as an 
intermediary for the other Directors 
where necessary
–– Together with the other Non-
Executive Directors, leads the review 
of the performance of the Chairman, 
taking into account the views of 
the Executive Directors
–– Available to shareholders if they have 
concerns where contact through the 
normal channels has failed
Chairman
Javier Ferrán
–– Responsible for the operation, leadership 
and governance of the Board
–– Ensures all Directors are fully informed 
of matters and receives precise, timely 
and clear information sufficient to make 
informed judgements
–– Sets Board agendas and ensures sufficient 
time is allocated to ensure effective debate 
to support sound decision making
–– Ensures the effectiveness of the Board
–– Engages in discussions with shareholders
–– Meets with the Non-Executive Directors 
independently of the Executive Directors
–– Designated non-executive director for 
workforce engagement
Chief Executive
Ivan Menezes
–– Develops the group’s strategic direction 
for consideration and approval by the Board
–– Implements the strategy agreed by the Board
–– Manages the company and the group
–– Along with the CFO, leads discussions 
with investors
–– Is supported in his role by the 
Executive Committee
–– Is supported by the Filings Assurance 
Committee in the management of financial 
reporting of the company
Chief Financial Officer
Kathryn Mikells
–– Manages all aspects of the group’s 
financial affairs
–– Responsible for the management of 
the capital structure of the company
–– Contributes to the management of 
the group’s operations
–– Along with the Chief Executive, leads 
discussions with investors
–– Is supported by the Finance Committee 
and Filings Assurance Committee in the 
management of the financial affairs and 
reporting of the company
Non-Executive Directors
Melissa Bethell, Ho KwonPing, 
Lady Mendelsohn and Alan Stewart
The Non-Executive Directors, all of 
whom the Board has determined 
are independent, experienced and 
influential individuals from a diverse 
range of industries, backgrounds 
and countries. The independence of 
Ho KwonPing, who has served on the 
Board for over six years, was reviewed 
in 2019.
–– Constructively challenge the 
Executive Directors
–– Develop proposals on strategy
–– Scrutinise the performance 
of management
–– Satisfy themselves on the integrity 
of the financial information, controls 
and systems of risk management
–– Set the levels of remuneration 
for Executive Directors and 
senior management
–– Make recommendations to the 
Board concerning appointments 
to the Board
–– Devote such time as is necessary 
to the proper performance of 
their duties
A summary of the terms and  
conditions of appointment of the 
Non-Executive Directors is available  
at https://www.diageo.com/en/
our-business/corporate-governance.
Nomination  
Committee
Executive
Committee
Finance
Committee
Audit & Risk
Committee
Filings  
Assurance 
Committee
Audit  
Committee
Remuneration  
Committee
Board of Directors
Chief Executive 
has delegated  
authority to these 
Committees
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Company Secretary
Siobhán Moriarty
–– The Board is supported by the 
Company Secretary who ensures 
information is made available to 
Board members in a timely fashion
–– Supports the Chairman in setting 
Board agendas, designing and 
delivering Board inductions and 
Board evaluations, and co-ordinates 
post-evaluation action plans, 
including risk review and training 
requirements for the Board
–– Advises on corporate 
governance matters 
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DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Board attendance
Directors’ attendance record at the AGM, scheduled Board meetings and Board Committee meetings, for the year ended 30 June 2020 is set out in 
the table below. For Board and Board Committee meetings, attendance is expressed as the number of meetings attended out of the number that each 
Director was eligible to attend. Where Directors were unable to attend a meeting, they gave their views to the Chairman of each respective meeting 
ahead of that meeting being held.
​
Annual General  
Meeting 2019
Board  
(maximum 9)
Audit Committee  
(maximum 5)
Nomination Committee 
(maximum 5)
Remuneration Committee 
(maximum 5)
Javier Ferrán

9/9
5/5(i)
5/5
5/5(i)
Ivan Menezes

9/9
2/5(i)
5/5(i)
5/5(i)
Kathryn Mikells

9/9
5/5(i)
0/0
4/5(i)
Susan Kilsby

9/9
5/5
5/5
5/5
Melissa Bethell(ii)​
N/A 
0/0​
0/0​
0/0​
0/0​
Ho KwonPing(iii)

9/9
3/5
3/5
3/5
Nicola Mendelsohn(iii)

8/9
4/5
4/5
4/5
Alan Stewart

9/9
5/5
5/5
5/5
Former Directors
​
​
​
​
​
Debra Crew(iv)

5/5
4/4
3/3
3/3
Lord Davies(iii)(v)

7/9
4/5
4/5
2/5
Corporate governance report continued
Resilient and robust decision-making during the pandemic
In order better to assess the impact of the Covid-19 pandemic, to make 
well-informed and timely decisions and to provide strategic guidance 
on how the pandemic might impact Diageo’s business and operations, 
the Board increased the frequency of its meetings during April, May 
and June 2020, changed the agenda for its two-day Annual Strategy 
Conference held in April to focus solely on the impact of the pandemic, 
and constituted a committee of the Board with authority to approve 
urgent matters with agility and speed. The Board met virtually, using 
audio-video conferencing, to enable Directors located in different 
locations and time zones to participate in meetings, with senior 
executives providing updates and presentations. The agendas for these 
additional meetings were dedicated to providing the Board with the 
latest information on government containment measures taken or likely 
to be taken in various countries, including lockdowns, trade restrictions 
and closures, changes in macro-economic activity, including consumer 
behaviour and trends over the short and long terms, and scenario 
planning for the potential impact on Diageo’s business and that of our 
direct and indirect customers in different markets. The Board was also 
provided with information on the company’s liquidity position, latest 
trading and financial data, and details of management’s proposed actions 
in relation to Diageo’s workforce, plants and facilities, a number of which 
were closed as a result of government containment measures in some 
countries such as India and South Africa. Decisions were taken to manage 
the company’s liquidity, including reducing discretionary expenditure, 
monitoring working capital, launching debt issuances, and to reallocate 
resources and A&P expenditure to address changing consumer behaviour, 
including significantly decreased sales in the on-trade but increased 
sales in off-trade and e-commerce channels. A key priority is to ensure 
that Diageo emerges strongly from the pandemic, with its reputation 
enhanced by the decisions and actions taken by the Board and 
management over the period. It was therefore critical for the Board 
to ensure that Diageo’s workforce was protected through appropriate 
safety protocols across all production and office sites, including 
increased sanitation measures, safety equipment and restrictions on 
access, including office closures and working from home where possible. 
Another important consideration for the Board has been to provide 
appropriate support to its other stakeholders through initiatives such 
as the $100 million ‘Raising the Bar’ fund to assist the on-trade recovery, 
creation of materials for consumers including the ‘Virtual Good Host 
Guide’, the donation of alcohol to be made into bottles of sanitiser for 
frontline healthcare workers in a number of markets, working closely 
with suppliers and customers to minimise business disruption and to 
provide support packages for bartenders and others impacted by trade 
restrictions and closures.
(i)	 Attended by invitation.
(ii)	 Appointed to the Board on 30 June 2020.
(iii)	Where Non-Executive Directors were unable to attend a meeting, they gave their views 
to the Chairman of each respective meeting ahead of the meeting being held.
(iv)	 Retired from the Board on 24 March 2020.
(v)	 Retired from the Board on 30 June 2020.
5
6
8
4
6
Finance
Banking/corporate ﬁnance 
Consumer products 
Sales and marketing
General management 
Board skills and experience
The Board is of the view that it is essential to have an appropriate mix 
of attributes amongst its Directors, in particular in relation to experience, 
expertise, diversity and independence. Such a mixture of attributes 
enables the Board as a whole to provide informed opinions and advice 
on strategy and relevant topics, thereby discharging its duty of oversight. 
Key strengths and relevant experience of each Director are set out 
on pages 68 and 69, and a matrix of the Board’s current skills and 
experience is set out in the chart opposite.
74
DIAGEO Annual Report 2020

Board activities
Details of the main areas of focus of the Board and its Committees during the year are summarised below.
Area of focus
​
​ Strategic 
priority 
​ Strategic 
outcome
Strategic 
matters
–– Held the Annual Strategy Conference through an online meeting at which the group’s strategy  
was considered in depth, including the potential impact of the Covid-19 pandemic on consumer 
behaviour and the group’s strategy and operations
–– Regularly reviewed the group’s performance against the strategy
–– Received reports on the financial performance of the group
–– Reviewed the group’s tax strategic planning
–– Reviewed the group’s e-commerce strategy, North America commercial strategy and ambition,  
and the Africa strategy and performance
–– Reviewed the group’s strategy as to media procurement, raw materials procurement and 
global supply footprint
​ ​
​ ​
Operational 
matters
–– Reviewed and approved the annual funding plan, insurance, banking and capital 
expenditure requirements
–– Reviewed the impact of global trade developments and disputes
–– Reviewed the impact of Brexit and mitigation planning for Brexit and other related risks
–– Regularly reviewed and approved the group’s business development activities, reorganisations  
and various other projects
–– Approved various significant procurement and other contracts and reviewed product quality 
risk management processes
–– Reviewed the company’s innovation pipeline
–– Reviewed significant office and supply site property developments and proposals
–– Visited Diageo’s new offices in New York, which included receiving reports from management  
and meeting employees
​ ​
​ ​
Stakeholders
–– Reviewed the group’s strategy in relation to environmental, social and governance policy and 
proposed targets
–– Considered the company’s culture
–– Reviewed and made decisions in relation to the company’s capital allocation and liquidity position, 
and its return of capital policy, including its dividend and share buyback programmes
–– Received reports on workforce engagement over the year
–– Reviewed the company’s succession planning and talent strategy and board diversity policy
–– Reviewed the company’s sustainability and environmental strategy and proposed approach as to 
future ambition
–– Reviewed the company’s key pensions governance and funding positions
–– Received regular investor reports and reviewed a detailed investor perceptions study
–– Twice yearly, received an update on ESG matters
​ ​
​ ​
Governance, 
assurance 
and risk 
management
–– Received reports on the work of the various Board Committees
–– Received regular reports in relation to material legal matters
–– Received updates on regulatory and governance developments and areas of risk
–– Agreed actions from the 2019 internal evaluation of the Board’s performance
–– Approved the approach in relation to the 2020 external Board evaluation process
–– Approved the appointment of new Non-Executive Directors and new Senior Independent Director
–– Reviewed and approved new terms of reference for the Audit Committee, Remuneration 
Committee and Nomination Committee 
–– Reviewed and approved updated description of separation of duties between the Chairman,  
Chief Executive and Senior Independent Director
–– Reviewed and approved the schedule of matters reserved for the Board
–– Reviewed and approved the company’s financial reporting and risk footprint
–– Approved the constitution of a new committee of the Board authorised to approve actions to be 
taken in response to the Covid-19 pandemic
–– Approved increasing the number of Board meetings during year to ensure adequate governance 
in light of the Covid-19 pandemic
​ ​
​ ​
EG
CVC
CT
EP
EG
CT
EG
CVC
CT
EP
EG
CVC
75
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Stakeholder engagement 
Diageo’s culture and the nature of its business encourages the 
development of strong and positive relationships with external 
stakeholders, including business partners such as suppliers and customers, 
but also with government, consumers and the communities in which 
we operate. The Chief Executive and the Presidents are in regular contact 
with our principal customers, with performance updates being provided 
at all scheduled Board meetings. At least once a year, the Board meets in 
a location outside the United Kingdom, during which it receives feedback 
in person from key customers. For example, in October 2019 the Board 
met with representatives of some of its key customers in the United States, 
Canada and Latin America, and, in previous financial years, the Board met 
key customers in India and China. See page 77 for our statement on wider 
stakeholder engagement.
Diageo’s purpose and values require that we make a positive 
contribution to society and the communities in which we operate. 
During the year, the Board has focused in particular on the next phase 
of the company’s long-term strategy to make a positive contribution to 
wider society, building on the progress made in working towards its 2020 
environmental targets, including in water reuse and renewable energy in 
our African breweries, use of by-products from our distilleries in Scotland 
and the United States in energy generation, and improvements in 
packaging especially in relation to use of plastics. At its meeting in 
January 2020, the Board reviewed ambitious environmental and social 
targets beyond 2020. Further details of the company’s initiatives to reduce 
its environmental impact and to contribute to wider society can be found 
on pages 32 to 37, 42 and 43. 
Corporate governance report continued
How the Board is kept informed about 
stakeholder engagement
People 
The Board recognises the importance of effective engagement with 
Diageo’s employees and wider workforce, including contractors and 
temporary staff. On an annual basis, the Board holds an extended meeting 
at one of Diageo’s overseas locations. In recent years, the Board has visited 
the group’s operations in Chengdu, China and Bangalore, India, and 
during this year the Board visited the company’s office in New York, USA. 
During these visits, the Board engages directly with local management 
and other employees during site and trade visits, with Board presentations 
and Board dinners and lunches enabling the Board to meet a broad 
spectrum of employees from differing departments and markets. Indirect 
engagement with employees also takes place through works councils, 
employee and workforce forums, community groups, pulse surveys and 
town hall meetings. This year the Board has enhanced its engagement 
with people through the Chairman in his role as designated non-executive 
director for workforce engagement, which has enabled the Board to take 
decisions during the Covid-19 pandemic to prioritise the health, safety and 
well-being of the group’s workforce. 
​Diageo’s Workforce engagement statement is set out on page 77
Communities 
Maintaining close relationships with the communities in which Diageo 
operates has always been of critical importance to the Board, shaping 
its discussions and guiding the company’s approach to its responsibilities 
to wider society. The Board has had a number of discussions during the 
year to shape the company’s ambition for its impact on communities 
over the long term, including shaping targets and goals in relation 
to environmental and social initiatives. Recognising the severity of 
the impact of the Covid-19 pandemic on many of the communities in 
which the group operates, the Board focused on actions to support those 
communities, including those working in the on-trade such as bar tenders 
and hospitality employees. A number of initiatives were approved and 
launched by the Board during this period, as set out in detail on page 29. 
Suppliers 
The Chief Executive and Chief Financial Officer provide the Board 
with information about key suppliers as and when relevant to Board 
discussions, including when approval is required for material contracts 
with suppliers. During the year, the Board reviewed and approved several 
critical procurement agreements, including in relation to raw materials 
such as neutral spirit, agave, glass and carried out a detailed review of the 
group’s global media and digital agency arrangements. The Board also 
reviewed management’s strategy in relation to sourcing certain key raw 
materials. The Board considers that it is important that the group remains 
a trusted partner for suppliers, with the relationship enhanced through 
fair contract and payment terms and through compliance with Diageo’s 
‘Partnering with Suppliers Standard’. 
Investors 
The Board is kept updated on investor sentiment through a number of 
different channels, including a monthly report issued by Diageo’s investor 
relations team which frequently interacts with key investors and investor 
groups. In addition, the Chairman, Chief Executive and Chief Financial 
Officer meet on a regular basis with investors during each year. 
Shareholders can also contact the Chairman directly and put questions 
to the Board at the company’s annual general meeting. This year, the 
Board commissioned a report to provide an independent view on the 
company’s effectiveness in engaging with investors, the results of which 
were presented to the Board by the agency which compiled the report. 
In making decisions in relation to returns of capital, such as dividends 
and share buy backs, the Board has considered the views and priorities 
of investors recognising the importance of such return of capital to a 
wide range of investors, including institutional investors, pension funds 
Consumers 
Our business can only be sustained by a deep understanding of our 
consumers, their behaviours and motivations. At its Annual Strategy 
Conference, the Board receives presentations from the Executive 
Committee and other senior leaders on emerging consumer trends 
which provide opportunities to the business. At this year’s Annual Strategy 
Conference which was held in April, the Board focused on the impact of 
the Covid-19 pandemic on consumer behaviour, including short-term 
immediate activity, acceleration of existing trends and potential long-
term structural changes in the industry. At other meetings during the 
year, the Board has reviewed and provided guidance in relation to the 
group’s e-commerce strategy and its innovation pipeline, ensuring that 
the group’s portfolio remains broad and relevant to consumers with 
brands and products at different price points, in different categories, 
Customers 
The Board engages with customers, primarily through the Chief Executive, 
who provides information about key customers in his regular report, 
in other business Board reports and at the annual overseas extended 
Board meeting, during which the Board will meet and interact directly 
with key customers from a particular market or region. Understanding the 
importance to customers of maintaining a broad portfolio with consumer 
offerings at a variety of price points and categories, the Board regularly 
reviews both innovation and inorganic opportunities to enhance its 
portfolio. During the year, the Board approved a number of additional 
investments in start-up brands as part of its Distill Ventures programme. 
The Board has also reviewed the group’s product quality control 
procedures during the year, which enable the group to provide high-
quality products to customers, and has reviewed and approved material 
distribution agreements with certain customers. 
markets and channels. The Board takes into account that consumers are 
increasingly considering business reputation and ethics in their purchasing 
choices, underlining the importance of sustainable and responsible 
business practices to individual consumers as well as other stakeholders. 
76
DIAGEO Annual Report 2020

Wider stakeholder engagement statement 
During the last few months, given the spread of Covid-19 and 
the impact that this has had on our business and that of our 
customers, we have focused on maintaining an active dialogue 
and engaging with our different stakeholder groups in different 
ways. We have prioritised the safety of our employees by 
managing the situation through local crisis management 
teams, by ensuring that those who can work from home do so, 
using technology and systems which the group has invested 
in over recent years, and by providing regular and ongoing 
communications and guidance to all employees and the wider 
workforce. We also reviewed our processes and practices to 
ensure a safe working environment for those of our workforce 
who cannot work from home, including in production facilities. 
We have maintained an ongoing dialogue with customers 
and suppliers to understand their concerns and have worked 
closely with them to mitigate disruption, including providing an 
appropriate level of support to our key suppliers and customers. 
In relation to our investors and shareholders, we have engaged 
directly through our investor relations team, our regular 
communications and our engagement programme. In addition, 
we have provided updates on developments in trading in the 
form of market announcements to ensure that all shareholders 
are informed about the impact of the pandemic on our business. 
As part of this, we withdrew guidance on group organic net sales 
growth and organic operating profit growth for the year, given 
the uncertain nature of the pandemic and its global impact.
We are aware that our Annual General Meeting (AGM) 
is a critical and valued opportunity for our shareholders to 
communicate directly with the Board, both in terms of asking 
questions during the meeting itself and also engaging less 
formally with management afterwards. As the safety of our 
shareholders and employees remain our priority, this year we will 
of course need to adapt how we conduct our AGM to ensure that 
government guidelines and restrictions are complied with while 
aiming to maintain the ability of shareholders to communicate 
directly with the Board. Further details of our AGM are set out in 
the accompanying Notice of Meeting.
Further information on our stakeholder considerations and 
activities throughout the year can be found on pages 12 and 13 
and our section 172 statement is set out on page 5.
Government and regulators 
The Board engages indirectly with government, regulators and policy-
makers through regular reports from the Chief Executive as well as 
periodic updates from management. In particular, the Board has received 
regular briefings during the year on Brexit, developments in relation 
to tariffs and international trade disputes. A number of Directors have 
experience of working in or with governments in the United Kingdom 
and elsewhere, and provide insights as to policy-makers’ views and 
priorities which are then considered by the Board in making its decisions. 
The Board ensures that the company works closely with governmental 
and non-governmental bodies in relation to policy as to positive drinking, 
responsible advertising of alcoholic products, and education to enable 
consumers to make better choices about alcohol. 
and retail shareholders. Taking those views into account, as well as 
considering other factors including the company’s liquidity position, the 
potential impact of the Covid-19 pandemic, and the funding position of 
the company’s post employment benefits schemes, the Board decided 
not to initiate the next phase of its three-year return of capital programme 
but decided that it was appropriate to pay an interim dividend in April. 
Read more about our engagement on page 74
Workforce engagement statement
Our people are our most important asset and our inclusive and 
diverse culture is core to our purpose of ‘Celebrating life, every 
day, everywhere’, and essential to our future growth. We invest to 
grow and develop our people and aim to create an environment 
that enables everyone to thrive. We want to nurture great, diverse 
talent, with a range of backgrounds, skills and capabilities, while 
making a positive contribution to society. Diversity of thought 
fuels growth and innovation in our organisation and brings us 
closer to our consumer base. Understanding our employees’ 
views on the way they experience life at Diageo, from what works 
well, to where we can improve, makes good business sense. These 
insights help to shape our culture and make Diageo an attractive 
place to work, enabling us to recruit and retain the best talent. 
On 1 July 2019, the Chairman was appointed the designated 
non-executive director for workforce engagement on behalf of 
the Board, as he is best positioned to engage with our workforce 
through regular visits to the markets in which Diageo has a 
presence around the world.
During the past year, the Chairman met with over 1,200 
Diageo employees, representing every level and region in the 
organisation. These open and constructive sessions were held 
both in person and virtually, due to the Covid-19 outbreak. The 
Chairman enjoyed and appreciated the high levels of positive 
engagement, curiosity and candour in each discussion and 
was struck by the passion and pride employees had for Diageo.
The key themes that emerged from the past year’s workforce 
engagement discussions were:
–– The strength of Diageo’s culture; our brand heritage; the 
importance of inclusion and diversity; our leadership and 
transparency; our focus on wellbeing; and the investment 
in learning and development. 
–– Perspectives and ideas were also shared on the need to 
further simplify processes to enable even faster decision-making, 
greater knowledge sharing and collaboration with a recognition 
of the progress already made. Employees were keen to take 
advantage of best practice sharing of ideas across markets. 
The importance of connectivity and cross-functional collaboration 
provided valuable affirmation to the Board on the merits of 
the investment in new office space in New York and planned 
investment in central London, which will bring people together 
from disparate out-of-town locations and bring us closer to our 
consumers. The Chairman’s engagement with employees across 
the world in the second half of our fiscal year also served as a 
helpful checkpoint on the company’s handling of the Covid-19 
pandemic. This enabled the Board to review management’s 
decisions to prioritise the health, safety and wellbeing of 
employees through these uncertain and challenging times. In our 
recent Your Voice survey, employees reported high levels of pride 
in the care and support that Diageo has provided to our people, 
customers, partners and communities. 
The focus of this first year of workforce engagement has been 
to understand the broad themes surfaced by employees of their 
experiences working at Diageo. In the coming year, the Chairman 
intends to continue a varied programme including, meeting with 
key talent; hosting employee town halls and virtual engagement 
forums; and meeting with employee representative groups. 
Focus will be placed on the progress being made on areas of 
opportunity for improvement and on gathering employees’ 
views on other challenges the Board should consider.
77
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Corporate governance report continued
Performance evaluation
In November 2019, an evaluation of the Board’s effectiveness, including the 
effectiveness of the Chairman and the Board’s Committees, was undertaken 
with the assistance of the Company Secretary. The purpose of the evaluation 
was to review and evaluate how the Board and its Committees operate as 
measured against current best practice corporate governance principles, 
framed by reference to Principle L and Provisions 21, 22 and 23 of the Code. 
In addition to more conventional areas such as Board composition, 
administrative matters, performance and effectiveness, the 2019 evaluation 
focused on Directors’ views as to corporate culture, values and stakeholder 
engagement. These topics had been chosen in light of the prominence 
given to them in the Code and in subsequent commentary by government, 
corporate governance institutions and the investor community.
The evaluation was also conducted with reference to the detailed 
guidance on the optimal Board evaluation process set out in section 3 
of the FRC’s ‘Guidance on Board Effectiveness’ issued in July 2018. The 
evaluation was also designed to build on the outcome of the previous 
year’s evaluation carried out in November 2018, whose findings were 
summarised in last year’s Corporate governance report.
The 2019 evaluation process was an internal process, comprising 
a questionnaire sub-divided into the five sections highlighted in the 
table below. Responses to all questions were sent to the Chairman and 
responses on the effectiveness of the Committees were also submitted to 
the respective Committee chairmen. In addition, the Senior Independent 
Director held a meeting with Directors without the Chairman present to 
provide feedback in relation to the Chairman. The results of the evaluation 
process were reviewed by the Board at its meeting in December 2019 at 
which various actions were agreed to be taken. It is the Board’s intention 
to continue to review annually its performance and that of its Committees 
and individual Directors, with such evaluation being carried out by an 
external facilitator every three years. The evaluation to be undertaken in 
2020 will be undertaken with the assistance of an external facilitator.
The Chairman has confirmed that the Non-Executive Directors 
standing for re-election at this year’s AGM continue to perform effectively, 
both individually and collectively as a Board, and that each demonstrate 
commitment to their roles. 
The main conclusions and key areas for focus highlighted by the 2019 
evaluation are as follows: 
Board composition, membership and appointment processes
Main conclusions
Key areas for focus
–– While there was broadly an appropriate balance between the number of Executive and Non-Executive 
Directors, the current Board size appeared comparatively small
–– Need to ensure prospective new members of the Board have adequate industry experience and come 
from a variety of geographical backgrounds
–– Clear desire to maintain and enhance Board’s positive gender diversity and to ensure that the Board 
diversifies in other areas, particularly in relation to ethnic origin
–– Nomination Committee performance and ability to access pipeline of potential non-executive talent  
had improved
–– Executive and senior management succession planning has had good focus
–– Recruitment of additional Non-Executive Directors of appropriate 
quality, experience and background, with a view to ensuring 
appropriate gender and ethnic diversity on the Board
–– Continued review of pipeline of Non-Executive Directors on 
an ongoing basis
–– Review executive management succession planning and 
pipeline at least once a year in greater depth
Board administration, meetings, agendas and provision of information
Main conclusions
Key areas for focus
–– Strong satisfaction with the number of meetings, topics for discussion, quality and timeliness of Board papers
–– Board had benefitted from deep dives on specific topics ensuring immersion into particular areas of interest
–– Improvements noted in understanding of long-term consumer trends although more time could 
be allocated to idea generation, opportunity identification and potential impact of challenges
–– Detailed views provided in relation to topics for emerging areas to be the subject of future discussion 
by the Board
–– Reviewing the format, timing and agenda to enable better idea 
generation, opportunity identification and assessment of the 
potential impact of challenges at future annual strategy meetings
–– Continued shaping of agenda to ensure focus on highest 
value and identification of opportunities for deep-dive sessions 
and external speakers, especially in relation to areas such 
as environmental sustainability measures, and digital and 
technological developments
–– Continued vigilance in identifying and adapting to long-term 
trends and challenges, including societal trends
Board, Committee and Directors’ effectiveness and performance
​
Main conclusions
Key areas for focus
–– Strong satisfaction with the performance of the Board as a whole, improving across a broad range 
of subjects and continuing to be top performing
–– Various examples of discussions during the year were cited as being demonstrative of the Board’s 
positive performance and ability to provide high-quality and robust debate
–– Performance, transparency and openness of Executive Directors and Chairman noted in particular
–– Broad satisfaction with the amount of time allocated to enable full discussion at Board and 
Committee meetings
–– Flexibility provided by Board through access to specialist or technical advice, with external advisors 
attending meetings, establishing committees of the Board to address specific matters, and deep-dive 
and risk review sessions
–– Strong support for the effectiveness of the Board in balancing short-term and performance matters with 
long-term strategic thinking
–– Continue to reinforce and nurture the culture of transparency 
and openness in Board and Committee meetings
–– Increase time allocation for Audit Committee meetings 
by adding a further meeting to the Board’s annual cycle
–– Ensure adequate time is allocated to Nomination 
Committee meetings
Stakeholder engagement
​
Main conclusions
Key areas for focus
–– Seven categories of key stakeholder groups were identified: people, consumers, customers, suppliers, 
communities, investors and government and regulators
–– Board has sufficient visibility and clarity as to wider stakeholder interests in its decision-making processes, 
although improvements could be made in certain areas
–– Good understanding of investor perceptions and views
–– Ensuring wider stakeholder interests continue to be considered 
as part of decision-making processes
–– Increased focus on ESG matters through regular sessions at 
Board meetings
–– Continued regular review of investor interests and developments
–– Increased visibility for the Board on the company’s relationships 
with certain stakeholder groups
78
DIAGEO Annual Report 2020

Relations with shareholders
The Board’s primary contact with institutional shareholders is through 
the Chief Executive and Chief Financial Officer. The Chief Executive and 
Chief Financial Officer are supported by the investor relations department, 
which is in regular contact with institutional shareholders and sell-side 
analysts. A monthly investor relations report, including coverage of the 
company by sell-side analysts, is circulated to the Board.
The Board also ensures that all Directors develop an understanding 
of the views of major institutional shareholders through a periodic 
independent survey of shareholder opinion. In addition, major shareholders 
are invited to raise any company matters of interest to them at meetings 
with the Chairman of the Board and the Chairman of the Remuneration 
Committee. Reports on any meetings are made to the Board.
Shareholders are invited to write to the Chairman or any other 
Director and express their views on any issues of concern at any time, 
and the AGM provides an opportunity for shareholders to put their 
questions in person.
Executive direction and control
Executive Committee
The Executive Committee, appointed and chaired by the Chief Executive, 
supports him in discharging his responsibility for implementing the 
strategy agreed by the Board and for managing the company and 
the group.
It consists of the individuals responsible for the key operational 
and functional components of the business: North America, Europe 
and Turkey, Africa, Latin America and Caribbean, Asia Pacific, 
International Supply Centre and Corporate.
The Executive Committee focuses its time and agenda to align with 
the Performance Ambition and how to achieve Diageo’s financial and 
non-financial performance objectives. Performance metrics have been 
developed to measure progress. There is also focus on the company’s 
reputation. In support, monthly performance delivery calls, involving 
the managing directors of each market, focus on current performance.
Committees appointed by the Chief Executive and intended 
to have an ongoing remit, including the Audit & Risk Committee,  
Finance Committee and Filings Assurance Committee, are shown 
(with their remits) at https://www.diageo.com/en/our-business/ 
corporate-governance.
Additional information
Internal control and risk management
An ongoing process has been established for identifying, evaluating and 
managing risks faced by the group. This process, which complies with the 
requirements of the Code, has been in place for the full financial year and 
up to the date the financial statements were approved and accords with 
the guidance issued by the FRC in September 2014, entitled ‘Guidance 
on Risk Management, Internal Control and Related Financial and Business 
Reporting’. The Board confirms that, through the activities of the Audit 
Committee described below, a robust assessment of the principal risks 
facing the company, including those that would threaten its business 
model, future performance, solvency or liquidity, has been carried out. 
These risks and their mitigations are set out above in the section of this 
Annual Report dealing with principal risks.
The Board acknowledges that it is responsible for the company’s 
systems of internal control and risk management and for reviewing 
their effectiveness. The Board confirms that, through the activities of 
the Audit Committee described below, it has reviewed the effectiveness 
of the company’s systems of internal control and risk management.
During the year, in line with the Code, the Board considered 
the nature and extent of the risks it was willing to take to achieve its 
strategic goals and reviewed the existing internal statement of risk 
appetite (which was considered and recommended to the Board 
by both the Audit & Risk Committee and the Audit Committee).
In accordance with the Code, the Board has also considered the 
company’s longer-term viability, based on a robust assessment of its 
principal risks. This was done through the work of the Audit Committee which 
recommended the Viability statement (as set out on page 41) to the Board.
The company has in place internal control and risk management 
systems in relation to the company’s financial reporting process and the 
group’s process for the preparation of consolidated accounts. Further, 
a review of the consolidated financial statements is completed by 
management through the Filings Assurance Committee to ensure that 
the financial position and results of the group are appropriately reflected. 
Further details of this are set out in the Audit Committee report on 
pages 81 and 82.
Compliance and ethics programme 
Diageo is committed to conducting its business responsibly and in 
accordance with all laws and regulations to which its business activities 
are subject. We hold ourselves to the principles in our Code of Business 
Conduct, which is embedded through a comprehensive training and 
education programme for all employees.
Our Code of Business Conduct and other Diageo global policies 
are available at https://www.diageo.com/en/our-business/ 
corporate-governance.
In accordance with the requirements of the Sarbanes-Oxley Act 
(and related SEC rules), Diageo has adopted a code of ethics covering its 
Chief Executive, Chief Financial Officer, Presidents and other identifiable 
persons in the group, including those performing senior accounting and 
controller functions. No amendments to, or waivers in respect of, the code 
of ethics were made during the year.
The full text of the code of ethics is available at https://www.diageo.
com/en/our-business/corporate-governance.
Both the Audit & Risk Committee and the Audit Committee regularly 
review the strategy and operation of the compliance and ethics programme 
through the year.
Further information is given in the ‘Our principal risks and risk management’ 
section of this Annual Report on page 41
Culture, values and purpose
​
Main conclusions
Key areas for focus
–– Strong sense of connection and support amongst Directors for Diageo’s purpose of ‘Celebrating life, 
every day, everywhere’
–– Board demonstrates ethical leadership and displays the behaviours expected in a manner consistent with 
Diageo’s purpose and ambition
–– Strategy of the company is consistent with its purpose, values and ambition
–– Appropriate tone at the top permeates the organisation to ensure adequate focus on corporate reputation 
and the management of reputational risk
–– Satisfaction with how values and expected behaviours have been communicated within the company and 
externally to stakeholders
–– Continued focus on ensuring that behaviours of management 
throughout the organisation are consistent with the company’s 
purpose and values, and are consistent with communications in 
relation to ethical business practices
–– Continued emphasis on driving cultural change, ensuring 
agility and speed are consistently maintained throughout 
the organisation
–– Continued emphasis on effectiveness of Diageo’s contributions 
to society and effectiveness of the company’s processes and 
requirements in respect of suppliers and customers
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Directors’ responsibilities in respect of the 
Annual Report and financial statements
The Directors are responsible for preparing the Annual Report, 
the information filed with the SEC on Form 20-F and the group and 
parent company financial statements in accordance with applicable 
law and regulation.
Company law requires the Directors to prepare financial statements 
for each financial year. Under that law the Directors have prepared the 
group financial statements in accordance with International Financial 
Reporting Standards (IFRSs) as adopted by the European Union and 
company financial statements in accordance with United Kingdom 
Generally Accepted Accounting Practice (United Kingdom Accounting 
Standards, comprising FRS 101 ‘Reduced Disclosure Framework’, 
and applicable law). In preparing the group financial statements, the 
Directors have also elected to comply with IFRSs, issued by the International 
Accounting Standards Board (IASB). Under company law the Directors 
must not approve the financial statements unless they are satisfied 
that they give a true and fair view of the state of affairs of the group 
and company and of the profit or loss of the group and company for that 
period. In preparing the financial statements, the Directors are required to:
–– select suitable accounting policies and then apply them consistently;
–– state whether applicable IFRSs as adopted by the European Union 
and IFRSs issued by IASB have been followed for the group financial 
statements and United Kingdom Accounting Standards, comprising 
FRS 101, have been followed for the company financial statements, 
subject to any material departures disclosed and explained in the 
financial statements;
–– make judgements and accounting estimates that are reasonable and 
prudent; and
–– prepare the financial statements on the going concern basis unless it 
is inappropriate to presume that the group and company will continue 
in business.
The Directors are responsible for keeping adequate accounting records that 
are sufficient to show and explain the group and company’s transactions 
and disclose with reasonable accuracy at any time the financial position 
of the group and company and enable them to ensure that the financial 
statements and the Directors’ remuneration report comply with the 
Companies Act 2006 and, as regards the group financial statements, 
Article 4 of the IAS Regulation.
The financial statements for the year ended 30 June 2020 are 
included in the Annual Report, which is published in printed form and 
made available on the company’s website. The Directors are responsible 
for the maintenance and integrity of the Annual Report on the company’s 
website in accordance with UK legislation governing the preparation and 
dissemination of financial statements. Access to the website is available 
from outside the UK, where comparable legislation may be different.
Responsibility statement
The Directors consider that the Annual Report and Accounts, taken as a 
whole, is fair, balanced and understandable and provides the information 
necessary for shareholders to assess the group and company’s position 
and performance, business model and strategy.
Each of the Directors, whose names and functions are listed on 
pages 68 and 69, confirm that, to the best of their knowledge:
–– the group financial statements, which have been prepared in 
accordance with IFRSs as issued by the IASB and as adopted for use 
in the European Union, give a true and fair view of the assets, liabilities, 
financial position and profit of the group; and
–– the Directors’ report includes a fair review of the development and 
performance of the business and the position of the group and 
company, together with a description of the principal risks and 
uncertainties that it faces.
The responsibility statement was approved by the Board of Directors on 
3 August 2020.
Political donations
The group has not given any money for political purposes in the 
United Kingdom and made no donations to EU political organisations 
and incurred no EU political expenditure during the year.
The group made contributions to non-EU political parties totalling 
£0.38 million during the year (2019 – £0.38 million). These contributions 
were made almost exclusively to federal and state candidate committees, 
state political parties and federal leadership committees in North America 
(consistent with applicable laws), where it is common practice to make 
political contributions. No particular political persuasion was supported 
and contributions were made with the aim of promoting a better 
understanding of the group and its views on commercial matters, 
as well as a generally improved business environment.
Going concern
The potential financial impact of the Covid-19 pandemic has been 
modelled in our cash flow projections and stress tested by including 
several severe but plausible downside scenarios which are linked to our 
principal risks. In our downside Covid-19 scenario, we have considered 
the key impacts of the pandemic for each region including the potential 
restrictions on the sale of our products in both on trade and off trade 
channels. We have then considered the expected duration of those 
restrictions, as well as a forecast for the length of time to recovery (a 
return to 2019 volumes), based on industry projections. As a result of these 
factors, in our severe but plausible scenarios, we do not anticipate that the 
on-trade business recovers to volumes experienced in the year ending 
30 June 2019 within the next 18 month period. Even with these negative 
sensitivities for each region taken into account, the group’s cash position 
is still considered to remain strong, as we have protected our liquidity by 
increasing the level of committed facilities and accelerating certain bond 
issuance programmes. Mitigating actions, should they be required, are 
all within management’s control and could include reduced advertising 
and promotion spend, dividend cash payments, non-essential overheads 
and non-committed capital expenditure in the next 12 months. Having 
considered the outcome of these assessments, it is deemed appropriate 
to prepare the consolidated financial statements on a going concern basis. 
Although not assessed over the same period as the going concern, 
the viability of the group has been assessed above.
Management’s report on internal control over financial reporting 
Management, under the supervision of the Chief Executive and 
Chief Financial Officer, is responsible for establishing and maintaining 
adequate control over the group’s financial reporting. The Filings 
Assurance Committee supports the Chief Executive and Chief Financial 
Officer in ensuring the accuracy of the company’s financial reporting, 
filings and disclosures.
Management has assessed the effectiveness of Diageo’s internal 
control over financial reporting (as defined in Rules 13(a)-13(f) and 
15(d)-15(f) under the United States Securities Exchange Act of 1934) 
based on the framework in the document ‘Internal Control – Integrated 
Framework’, issued by the Committee of Sponsoring Organizations of 
the Treadway Commission (COSO) in 2013. Based on this assessment, 
management concluded that, as at 30 June 2020, internal control over 
financial reporting was effective.
During the period covered by this report, there were no changes in 
internal control over financial reporting that have materially affected or 
are reasonably likely to materially affect the effectiveness of internal control 
over financial reporting.
PricewaterhouseCoopers LLP (PwC), an independent registered 
public accounting firm, who also audit the group’s consolidated financial 
statements, has audited the effectiveness of the group’s internal control 
over financial reporting, and has issued an unqualified report thereon, 
which is included in PwC’s integrated audit report below and which 
will be included in the company’s Form 20-F to be filed with the SEC.
Corporate governance report continued
80
DIAGEO Annual Report 2020

Dear Shareholder
On behalf of the Audit Committee, I am pleased to present its 
report for the year ended 30 June 2020.
The purpose of this report is to describe how the Committee 
has carried out its responsibilities during the year. In overview, the 
role of the Audit Committee is to monitor and review: the integrity 
of the company’s financial statements and reporting; internal 
control and risk management; audit and risk programmes; 
business conduct and integrity; ‘whistleblowing’; and the 
appointment of the external auditor.
During the year, the Committee gave attention to all elements 
of its remit with continued focus on particular topics within the 
company’s risk management programme and emerging trends, 
including product quality risk management, cyber security and 
data access risks, internal and third-party data management and 
migration risks, pensions funding status and governance, and 
controls testing. During the year, the Committee also reviewed 
external analyses relating to the effectiveness of the company’s 
internal audit and controls, compliance and ethics functions, 
as well as internal reports on the steps being taken to address 
internal audit findings, controls issues and investigations.
As part of the annual Board evaluation, all members of the 
Audit Committee completed an evaluation of the Committee. 
This concluded that members were very satisfied with the 
performance of the Committee. In order to ensure that adequate 
time is given to enable the Committee to continue to carry out its 
duties to a high standard, it was decided to increase the number 
of meetings which it ordinarily holds each year. Further details of 
the evaluation can be found on pages 78 and 79.
In discharging its duties, the Audit Committee seeks to 
balance independent oversight of the matters within its remit 
with providing support and guidance to management. I am 
confident that the Committee, supported by members of senior 
management and the external auditor, has carried out its duties 
in the year under review effectively and to a high standard. 
Role of the Audit Committee
The formal role of the Audit Committee is set out in its terms of reference, 
which are available at https://www.diageo.com/en/our-business/
corporate-governance. Key elements of the role of the Committee and 
work carried out during the year are set out as follows.
Audit Committee report
Alan Stewart
Chairman of the Audit Committee
Composition of the Audit Committee
The members of the Audit Committee are independent non-executive 
directors and it comprises Alan Stewart (Committee Chairman), Melissa 
Bethell, Susan Kilsby, Ho KwonPing and Lady Mendelsohn. The Board has 
satisfied itself that the membership of the Audit Committee includes at 
least one Director with recent and relevant financial experience and has 
competence in accounting and/or auditing and in the sector which the 
company operates, and that all members are financially literate and have 
experience of corporate financial matters.
Financial statements
During the year, the Audit Committee met five times (and a subcommittee 
met twice) and reviewed both the interim results announcement, which 
included the interim financial statements, and the annual reports and 
associated preliminary results announcement, focusing on key areas of 
judgement and complexity, critical accounting policies, provisioning and 
any changes required in these areas or policies.
The company has in place internal control and risk management 
systems in relation to the company’s financial reporting process and the 
group’s process for the preparation of consolidated accounts. A review 
of the consolidated financial statements is completed by the Filings 
Assurance Committee (FAC) to ensure that the financial position and 
results of the group are appropriately reflected therein. In addition to 
reviewing draft financial statements for publication at the half and full year, 
the FAC is responsible for examining the company’s financial information 
and processes, the effectiveness of internal controls relating to financial 
reporting and disclosures, legal and compliance issues and, determining 
whether the company’s disclosures are accurate and adequate. The FAC 
comprises the Chief Executive, the Chief Financial Officer, the General 
Counsel & Company Secretary, the General Counsel Corporate, the 
Group Controller, the Chief Accountant, the Head of Investor Relations, the 
Head of Global Audit & Risk, the Controls Assurance Director, the Chief 
Business Integrity Officer and the company’s external auditor. The Audit 
Committee reviewed the work of the FAC and a report on the conclusions 
of the FAC process was provided to the Audit Committee by the Chief 
Financial Officer. 
Significant issues and judgements that were considered in respect 
of the 2020 financial statements were as follows. These include the matters 
relating to risks disclosed in the UK external auditor’s report.
–– Disclosure on the quality of the earnings (material items of income or 
expense) and one-off items included in cash flow. The Audit Committee 
agreed that sufficient disclosure was made in the financial statements. 
–– The Audit Committee determined that exceptional items are 
appropriately classified considering their size and nature, and sufficient 
disclosure is provided in the financial statements (see note 4). 
–– Review of carrying value of assets, in particular intangible assets. The 
Audit Committee assessed the impairment charge recognised and 
agreed that, at 30 June 2020, the recoverable amount of the company’s 
assets was in excess of their carrying value (see notes 6, 9 and 10).
–– Exchange rate used to translate operations in Venezuela. The Audit 
Committee agreed that the rate is reasonable for the year ended 
30 June 2020 for consolidation purposes, that represents the best 
estimation of the rate at which capital and dividend repatriations are 
expected to be realised (see note 1). 
–– Disclosure on taxation. The Audit Committee agreed that the separate 
presentation of the tax risk appropriately addresses the significant 
change in the international tax environment and sufficient and 
transparent disclosures are provided for the ongoing tax discussions 
(see page 40 and note 7). 
–– Review of legal cases. The Audit Committee agreed that adequate 
provision and/or disclosure has been made for all material litigation 
and disputes, based on the current most likely outcomes, including 
the litigation summarised in note 18. 
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CORPORATE GOVERNANCE

–– Assumptions used in respect of post employment plans. Having considered 
advice from external actuaries and assumptions used by companies with 
comparator plans, the Audit Committee agreed that the assumptions 
used to calculate the income statement and balance sheet assets and 
liabilities for post employment plans were appropriate (see note 13). 
–– Viability statement. The Audit Committee noted that severe but 
plausible risk scenarios had been identified; a robust risk assessment 
had been carried out; and the group’s viability and going concern 
consideration proved with stress testing. Taking into account the 
company’s balance sheet position, the Audit Committee expected 
the group to be able to meet its liabilities as they fell due over the 
three-year period ending 30 June 2023. The risk that the group would 
become insolvent during this timeframe was considered remote. 
The Audit Committee recommended to the Board that the 
Viability statement on page 41 be approved.
As part of its review of the Annual Report, the Audit Committee 
considered whether the report is ‘fair, balanced and understandable’ 
(noting the Code’s reference to ‘position’ as well as ‘performance, business 
model and strategy’). On the basis of this work, the Audit Committee 
recommended to the Board that it could make the required statement 
that the Annual Report is ‘fair, balanced and understandable’.
Internal control and risk management;  
audit and risk programme; business conduct  
and ethics (including ‘whistleblowing’)
At its meetings, the Audit Committee reviewed reports from the 
Head of the Global Audit & Risk (GAR) team, the Controls Assurance 
Director and the Chief Business Integrity Officer (including coverage of the 
areas mentioned in the title of this section) and had sight of the minutes 
of meetings of management’s Audit & Risk Committee. The work and 
reporting to the Committee of these functions during the year included 
focus on cyber security and data access risks, internal and third-party data 
management and migration risks, controls testing and steps being taken 
to address internal audit findings, controls issues and investigations. The 
Committee also reviewed reports prepared by external advisors relating 
to the effectiveness of the GAR team as well as the company’s compliance 
and ethics framework and function, and implemented various changes 
as a result of recommendations in those reports. The Committee also 
received regular updates from the General Counsel on significant litigation 
and from the Head of Tax on the group’s tax profile and key issues. 
The Committee also considered key risks and related mitigations, 
including those set out in the section of this Annual Report dealing with 
principal risks. Based on this activity during the year, the Audit Committee 
made a recommendation to the Board covering the nature and extent of 
the risks it was willing to take to achieve its strategic goals and its internal 
statement of risk appetite (which was considered also by management’s 
Audit & Risk Committee). The Board agreed this recommendation.
Through the activities of the Audit Committee described in this 
report and its related recommendations to the Board, the Board confirms 
that it has reviewed the effectiveness of the company’s systems of internal 
control and risk management and that there were no material failings 
identified and no significant failings identified which require disclosure 
in this Annual Report.
External auditor
During the year, the Audit Committee reviewed the external audit strategy 
and the findings of the external auditor from its review of the interim 
results and its audit of the consolidated financial statements.
The Audit Committee reviews annually the appointment of the 
auditor (taking into account the auditor’s effectiveness and independence 
and all appropriate guidelines) and makes a recommendation to the Board 
accordingly. Any decision to open the external audit to tender is taken on 
the recommendation of the Audit Committee. There are no contractual 
obligations that restrict the company’s current choice of external auditor. 
Following the last tender process, PwC was appointed as auditor of the 
company in 2015. The audit partner for the year ended 30 June 2020 
was Ian Chambers and Richard Oldfield is the audit partner from the 
year ending 30 June 2021 onwards. The company is required to have 
a mandatory audit tender after 10 years and, as the Audit Committee 
considers the relationship with the auditors to be working well and 
remains satisfied with their effectiveness, the Audit Committee does not 
currently anticipate that it will conduct an audit tender before it is required 
to do so. The Audit Committee considers this to be in the best interests 
of the company’s shareholders for the reasons outlined above and will 
continue to monitor this annually to ensure the timing for the audit tender 
remains appropriate, taking into account the effectiveness and 
independence of the auditor.
The company has complied with the provisions of The Statutory 
Audit Services for Large Companies Market Investigation (Mandatory Use 
of Competitive Tender Processes and Audit Committee Responsibilities) 
Order 2014 (CMA Order) for the year ended 30 June 2020.
The Audit Committee assesses the ongoing effectiveness and quality 
of the external auditor and audit process on the basis of meetings and 
a questionnaire-based internal review with the finance team and other 
senior executives. The group has a policy on auditor independence and 
on the use of the external auditor for non-audit services, which is reviewed 
annually, most recently in July 2020. The review takes into consideration 
effectiveness and upcoming expected changes to UK FRC regulation 
on non-audit services. Effective from 1 July 2020, any member of the 
PwC global network shall provide to the company, its subsidiaries or 
any related entity only permissible services, subject to the approval of 
the Audit Committee after it has properly assessed through its governance 
process the threats to independence and the safeguards applied in 
accordance with the FRC Ethical Standard. Any FRC permissible service 
to be provided by the auditor, regardless of the size of the engagement, 
must be specifically approved by the Audit Committee or its nominated 
delegate. The policy explicitly specifies the auditor independence review 
and approval mechanism process for permissible engagements costing 
more than £250,000. Fees paid to the auditor for audit, audit-related 
and other services are analysed in note 3(b) to the consolidated financial 
statements. The nature and level of all services provided by the external 
auditor are factors taken into account by the Audit Committee when it 
reviews annually the independence of the external auditor.
‘Financial expert’, composition and other attendees
For the purposes of the Code and the relevant rule under SOX, section 407, 
the Board has determined that Alan Stewart is independent and may 
be regarded as an Audit Committee financial expert, having recent and 
relevant financial experience, and that all members of the Audit Committee 
are independent Non-Executive Directors with relevant financial and sectoral 
competence. The Chairman, the Chief Financial Officer, the General Counsel 
& Company Secretary, the Group Controller, the Head of GAR, the Chief 
Business Integrity Officer, the General Counsel Corporate, the Controls 
Assurance Director, the Chief Accountant and the external auditor regularly 
attend meetings of the Committee. The Audit Committee met privately 
with the external auditor, the Chief Business Integrity Officer, the Controls 
Assurance Director and the Head of GAR regularly during the year.
FRC correspondence
The Committee reviewed correspondence between the company and the 
FRC following their review of the company’s annual report and accounts for 
the year ended 30 June 2019, including in respect of certain distributions and 
transactions related to the company’s employee share schemes undertaken 
between 10 May 2019 and 9 August 2019 which were contrary to applicable 
provisions of the Companies Act 2006 as further detailed on page 107. 
The Committee has overseen the incorporation of reporting and controls 
improvements following the FRC’s review and have incorporated those 
improvements into the company’s annual report and accounts for the year 
ended 30 June 2020. In June 2020, the FRC confirmed that the matters 
raised by their review are closed. The Committee notes that the FRC’s 
review does not provide assurance that the annual report and accounts 
are correct in all material respects as the FRC’s role is to consider 
compliance with reporting requirements.
Audit Committee report continued
82
DIAGEO Annual Report 2020

Dear Shareholder
On behalf of the Nomination Committee, I would like to present 
its report for the year ended 30 June 2020.
The Committee has ensured that there is a pipeline of strong 
candidates for potential nomination as Non-Executive Directors and 
reviewed succession planning and talent strategy for the Executive 
Committee. In order to further embed its long-standing commitment 
to diversity, the Committee also formalised the diversity principles 
applicable to the Board into a written Board Diversity Policy 
to promote a diverse and inclusive membership on the Board. This 
was approved and adopted by the Board in April 2020.
During the year, the Committee recommended that 
the Board appoint Melissa Bethell as Non-Executive Director, 
which recommendation was approved and took effect from 
30 June 2020, and also recommended that the Board appoint 
Valérie Chapoulaud-Floquet and Sir John Manzoni as Non-Executive 
Directors, which recommendations were subsequently approved 
and will take effect from 1 January 2021 and 1 October 2020 
respectively. These appointments had been preceded by a 
detailed market review and selection process carried out by the 
Committee with the assistance of Egon Zehnder, an independent 
consulting and recruitment agency which has no other 
connection with the company.
Melissa Bethell is the Managing Partner of Atairos Europe, 
an investment firm backed by Comcast NBC Universal, and 
spent over 18 years at Bain Capital, the global private equity firm, 
having previously worked at Goldman Sachs. Melissa is currently 
non-executive director on the boards of Tesco PLC and Exor, 
and has had considerable experience of other non-executive 
roles on other boards. Melissa brings her extensive expertise 
in international business strategy and investments to the 
company’s Board. Valérie Chapoulaud-Floquet is the former CEO 
of Rémy Cointreau S.A., which she led from September 2014 to 
December 2019, prior to which she had worked for Louis Vuitton, 
LVMH Group since 2008 in a number of different roles. Valérie’s 
extensive experience in consumer goods and premium drinks 
industries should serve Diageo well. Sir John Manzoni was 
Chief Executive of the Civil Service and Permanent Secretary to 
the UK Cabinet Office from 2014 to April 2020. He was previously 
President and Chief Executive Officer of Talisman Energy in 
Canada from 2007 to 2012 and had worked for BP from 1983 to 
2007 in various roles. Sir John was also Non-Executive Director 
of SABMiller plc from 2004 to 2014. Sir John’s commercial acumen 
and business knowledge, together with his more recent public 
service experience, will complement the Board. I look forward to 
welcoming both Valérie and Sir John to the Board in due course.
Nomination Committee report
Role of the Nomination Committee
The Nomination Committee is responsible for keeping under review 
the composition of the Board and succession to it, reviewing succession 
planning for key Executive Committee role succession, and succession 
planning and overall talent strategy for senior leadership positions, including 
in relation to ensuring and encouraging diversity in leadership positions. 
It makes recommendations to the Board concerning appointments to 
the Board. The recruitment process for Non-Executive Directors typically 
includes the development of a candidate profile and the engagement 
of a professional search agency (which has no other connection with the 
company) specialising in the recruitment of high-calibre non-executive 
directors. Reports on potential appointees are provided to the Committee, 
which, after careful consideration, makes a recommendation to the Board.
Any new Directors are appointed by the Board and, in accordance with 
the company’s articles of association, they must be elected at the next 
AGM to continue in office. All existing Directors retire by rotation every year.
The formal role of the Nomination Committee is set out in its terms of 
reference which are available at https://www.diageo.com/en/our-
business/corporate-governance.
Composition of the Nomination Committee
The Nomination Committee comprises Javier Ferrán (Committee Chairman), 
Melissa Bethell, Susan Kilsby, Ho KwonPing, Nicola Mendelsohn and Alan Stewart.
Induction, training and business engagement
There is a formal induction programme for new Directors, which 
includes meeting with Executive Committee members and other senior 
executives individually and visiting a number of operations and sites 
around the group. 
Following the initial induction for Non-Executive Directors, a continuing 
understanding of the business is developed through appropriate business 
engagements. Visits to customers, engagements with employees, and 
brand events were arranged during the year, although these have been 
impacted in the second half of the year due to Covid-19 travel restrictions.
In addition, Executive Committee members and other senior 
executives are invited, as appropriate, to Board and strategy meetings to 
make presentations on their areas of responsibility. The company’s policy is 
for all Directors to attend the AGM.
All Directors are also provided with the opportunity, and encouraged, 
to attend regular training to ensure they are kept up to date on relevant 
legal and governance developments or changes, best practice 
developments and changing commercial and other risks.
Activities of the Nomination Committee
The principal activities of the Nomination Committee during the year were: 
–– the consideration of the talent pipeline for potential new appointments 
to the Board including potential new Non-Executive Directors
–– the review of Board, committee and individual Director performance as 
part of the annual evaluation process
–– a review of the Executive Committee membership and succession 
planning for it and for senior leadership positions
–– preparation and adoption of a Board Diversity Policy
–– appointment of a new Senior Independent Director.
Diversity
Details of Board diversity and its diversity policy can be found on pages 68 
and 72. Details of diversity for the Executive Committee can be found on 
page 70. As at 30 June 2020, the percentage of women on the Executive 
Committee and their direct reports is 38%.
Evaluation
As part of the annual Board evaluation, all members of the Nomination 
Committee participated in an evaluation of the Committee. This 
concluded that the performance of the Committee continued to 
improve, with a strong pipeline of candidates resulting in excellent 
recent appointments to the Board and a continued focus on diversity 
and enhancements to the induction programme for new Directors. 
Further details of the evaluation can be found on pages 78 and 79. 
Javier Ferrán
Chairman of the Nomination Committee 
83
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Dear Shareholder
I am pleased to present to you the Directors’ remuneration report for 
the year ended 30 June 2020, which contains:
–– The proposed Directors’ remuneration policy, to be approved at 
the 2020 AGM; and
–– The annual remuneration report, describing how the policy has 
been put into practice during 2020, and how the new policy will be 
implemented in 2021.
I had the opportunity to consult with a number of shareholders during the 
year as we considered our proposals for the latest Directors’ remuneration 
policy and I want to thank you for your time and your input, which has 
been very helpful and constructive in shaping the final policy we are 
presenting here. 
When I began meeting with shareholders about Diageo’s remuneration 
policy review early in 2020, the coronavirus outbreak was in its very early 
stages and the severity and scale of its impact was not yet apparent. We 
now find ourselves in new and challenging circumstances. As for many 
companies, Diageo’s ability to do business has been immediately and 
significantly impacted by the pandemic, and we recognise that it has 
also caused considerable uncertainty and hardship for our employees, 
customers, suppliers and the communities in which we not only work, 
but also source and sell our products. 
In line with its values, Diageo’s response to the Covid-19 pandemic 
has been focused on looking after our people, and protecting the safety, 
health and wellbeing of all of our employees. Diageo has also acted fast 
to support those in need in the communities in which we operate, 
donating sanitisers and wipes to local health organisations across the 
world, as well as pledging financial support to bartenders who are unable 
to work during lockdown. 
Looking ahead, the company is committed to emerging stronger from 
the pandemic by focusing on consumers, customers, cost and cash. It is 
important that we have flexibility in our remuneration framework so that 
we can remain nimble in a rapidly changing world. 
Remuneration principles
Long-term value creation for shareholders and pay for performance 
continue to be at the heart of our remuneration policy and practices. 
Attracting and nurturing a vibrant mix of talent with a range of 
backgrounds, skills and capabilities – in good times and even more so 
in challenging times – enables Diageo to grow and thrive, and ultimately 
to deliver our Performance Ambition. Remuneration remains a key part 
of attracting and retaining the best people to lead our business, balanced 
against the need to ensure our packages are appropriate and fair in the 
business and wider employee context, delivering market-competitive pay 
in return for high performance against the company’s strategic objectives. 
We need to have the right tools in place to source talent globally 
and the increasingly restrictive corporate governance environment in 
the United Kingdom presents some challenges when considered against 
the significantly higher pay norms in the United States and other parts 
of the world, particularly given the increasing international mobility of 
the senior talent pool. The approach to setting executive remuneration 
continues to be guided by the following remuneration principles:
–– Delivery of business strategy;
–– Creating sustainable, long-term performance;
–– Winning best talent; and 
–– Consideration of stakeholder interests.
The Committee considers these principles carefully when making 
decisions on executive remuneration in order to strike the right balance 
between risk and reward, cost and sustainability, and competitiveness and 
fairness. This reflects the principles of the Corporate Governance Code in 
ensuring clarity, simplicity, appropriate management of risk, predictability, 
proportionality and alignment to culture (see page 105 for more detail 
on the role of the Remuneration Committee and how it delivers against 
these principles).
2020 Directors’ remuneration policy review
The remuneration policy was last approved by shareholders at the 2017 
AGM and is now due for review and approval by shareholders for the next 
three-year cycle.
Annual statement by the Chairman  
of the Remuneration Committee
Directors’ remuneration report
“The company is committed to emerging 
stronger from the pandemic. It is important that 
we have flexibility in our remuneration framework 
so that we can remain nimble in a rapidly 
changing world.”
In this year’s report
Remuneration at a glance
87
Pay for performance at a glance
88
Directors’ remuneration policy
89
Annual report on remuneration
95
Looking back on 2020
Single figure of remuneration table
95
Annual incentive payouts for 2020
96
Long-term incentives vesting in 2020
97
Pension and benefits in 2020
98
Long-term incentives awarded in 2020
98
Outstanding share plan interests
99
Shareholding requirements
100
CEO total remuneration and TSR performance
101
CEO pay ratio
101
Annual change in pay for Directors and employees
102
Non-Executive Director pay
103
Looking ahead to 2021
Salary increases for the year ahead
104
Annual incentive design for the year ahead
104
Long-term incentives for the year ahead
104
84
DIAGEO Annual Report 2020

On behalf of the Remuneration Committee, I have engaged with Diageo’s 
largest shareholders to understand their views on the policy proposals, as 
well as continuing an open dialogue on the ongoing appropriateness of 
executive short- and long-term incentive plan design, performance 
measures and target-setting, ensuring that remuneration arrangements 
continue to attract and retain the highest quality global talent. 
Having taken account of the viewpoints of the investor community 
and best practice corporate governance guidelines, the Committee 
decided to make a number of changes to the remuneration policy, 
effective 1 July 2020, subject to being approved by shareholders at the 
AGM on 28 September 2020. 
The key changes to the remuneration policy are:
–– Maximum pension contribution for new-hire Executive Directors 
set at 14% of salary, in line with the maximum offered to new-hire 
employees in the United Kingdom;
–– Commitment to align incumbent Executive Director pension 
contributions with the maximum offered to new-hire employees in the 
United Kingdom by 1 January 2023;
–– Introduction of new bonus deferral share plan, requiring Executive 
Directors to defer one-third of their earned annual bonus into shares for 
three years; and
–– Introduction of a post employment shareholding policy, requiring 
Executive Directors to hold some of their Diageo shares for two years 
after leaving the company. 
Other changes include the review of Non-Executive Director fees 
every year instead of every two years, an increase in the aggregate 
Non-Executive Director fee limit from £1.2 million to £1.75 million, the 
removal of the requirement for straight-line vesting between threshold 
and maximum under the long-term incentive plan, and, in response to 
feedback from shareholders, the consideration of a returns measure as one 
of the factors used by the Committee to assess the appropriateness of 
long-term incentive outcomes.
Pension
New Executive Director appointments
In accordance with the latest guidance from institutional investors in the 
United Kingdom, the maximum company pension contribution for new 
Executive Director appointments has been reduced from 20% of salary 
to 14% of salary, a change which has been in effect since 1 July 2019. 
The maximum pension contribution for Executive Directors under the 
remuneration policy is aligned to the offering for new-hire employees in 
the United Kingdom, who are eligible to receive a potential company 
contribution of 14% of salary under the defined contribution pension 
scheme, regardless of seniority or tenure.
Incumbent Executive Directors 
The Chief Executive agreed to a reduction in the company’s 
contribution to his pension scheme from 30% of salary to 20% of salary, 
effective 1 July 2019. This followed the earlier reduction to his pension 
from 40% of salary to 30% of salary, implemented on 1 July 2016. The 
pension contributions for the incumbent Chief Executive and Chief 
Financial Officer are now both set at 20% of salary and this is aligned to 
the current average company contribution to active members of all of the 
current and legacy pension schemes in the United Kingdom (weighted 
average of 20% of salary). The company pension contribution for many 
longer-serving employees participating in the legacy defined benefit or 
final salary schemes in the United Kingdom is higher than 20% of salary. As 
further context, the company contribution to active retirement schemes in 
the United States ranges between 10% and 16.5% of salary plus target bonus. 
The Committee has committed to align the company pension 
contributions for incumbent Executive Directors to the level applicable 
to new-hire employees in the United Kingdom (14% of salary) by  
1 January 2023.
Annual incentive
The annual incentive plan for the financial year ended 30 June 2020 
provided a bonus opportunity payable entirely in cash. In recognition of 
the external best practice guidelines in the United Kingdom and prevalent 
practice in other FTSE 100 companies, a new bonus deferral plan will be 
introduced for the year ended 30 June 2021, which will require Executive 
Directors to defer one-third of their actual earned bonus payment into 
Diageo shares, to be held for a minimum of three years. This further 
reinforces the focus on delivering long-term shareholder value, in addition 
to the high shareholding requirement, the level of stretch in performance 
targets under the incentive plans and the post-vesting holding period for 
long-term incentives. These measures ensure that executives are invested 
in managing risk appropriately for the business.
The structure of the annual incentive plan for Executive Directors 
in the year ending 30 June 2021 remains broadly the same, with 80% 
based on financial measures and 20% on individual business objectives. 
The average working capital measure (as a percentage of net sales value) 
will be replaced with a new operating cash conversion measure, in 
recognition of the criticality of strong cash performance and cost 
containment in the current challenging market conditions. 
Given the global nature of the pandemic, the uncertainty around the 
severity and duration of impact across multiple markets in which Diageo 
operates, and the significant difficulties in setting meaningful targets for 
the year ahead, the target-setting process for the annual incentive plan 
for 2021 will be managed in two half-year periods, with financial targets 
for the first half of the year (1 July 2020-31 December 2020) approved 
immediately after the announcement of Diageo’s final results in July 2020, 
and financial targets for the second half of the year (1 January 2021-
30 June 2021) approved immediately following the announcement 
of Diageo’s interim results in January 2021.
Diageo’s remuneration principles 
Delivery of business strategy
Short- and long-term incentive plans reward the delivery 
of our business strategy and Performance Ambition. 
Performance measures are reviewed regularly and 
stretching targets are set relative to the company’s 
growth plans and peer group performance. The 
Committee seeks to embed simplicity and transparency 
in the design and delivery of executive reward.
Creating sustainable, long-term performance
A significant proportion of remuneration is delivered 
in variable pay linked to business and individual 
performance, focused on consistent and responsible 
drivers of long-term growth. Performance against 
targets is assessed in the context of underlying 
business performance and the ‘quality of earnings’.
Winning best talent
Market-competitive total remuneration with an 
appropriate balance of reward and upside opportunity 
allows us to attract and retain the best talent from 
all over the world, which is critical to our continued 
business success.
Consideration of stakeholder interests
Executives are focused on creating sustainable share price 
growth. The requirement to build significant personal 
shareholdings in Diageo and hold long-term incentive 
awards for two years post-vesting encourages executives 
to think and act like owners. Decisions on executive 
remuneration are made with consideration of the 
interests of the wider workforce and other stakeholders, 
as well as taking account of the external climate.
85
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CORPORATE GOVERNANCE

Directors’ remuneration report continued
There will be no payout under the annual incentive plan until after 
the end of the financial year, in line with the normal timeline. The 
Remuneration Committee will consider Diageo’s holistic performance 
across the full financial year in order to determine the appropriate level 
of payment at the end of the financial year, based on a rigorous year-end 
assessment to ensure that the decisions that have been taken and the 
financial results that have been achieved align to the interests of Diageo’s 
shareholders and wider stakeholders over the long term. This review will 
consider factors such as market share, the relationship between revenue 
and profit performance, Diageo’s performance relative to its peer group, 
and any other relevant context impacting the business. The Committee 
retains full discretion to adjust annual incentive payouts to ensure they 
appropriately reflect underlying business performance and the experience 
of shareholders. Any discretionary adjustments will be detailed in the 
following year’s annual report on remuneration.
Long-term incentives
The Committee remains confident that the mix of performance shares 
and share options is an appropriate long-term incentive for the leaders 
of the business, and the share options element provides an additional 
stretch in that the share price has to grow materially in addition to the 
performance condition being achieved in order for the award to deliver 
value to executives. This further strengthens the alignment between 
the interests of executives and shareholders. Share option plans remain 
majority practice within Diageo’s international peer group, against which 
the company needs to remain competitive in order to attract and retain 
the highest calibre of talent. 
As a result of very rich and productive discussions with shareholders,  
I am pleased to confirm that long-term incentive awards in 2020 will 
include a measure based on ESG (Environmental, Social and Governance) 
priorities, in line with Diageo’s vision to make a positive impact on the 
environment and society. The ESG measure will cover water efficiency, 
carbon reduction, positive drinking and inclusion and diversity. In 
considering the appropriateness of ESG priorities under the long-term 
incentive plan, the Committee and I have been focused on selecting 
measures that are strategically critical to the business over the long term, 
as well as being measurable and able to be independently validated. The 
other measures under the long-term incentive award for 2020 are detailed 
on page 104. To those of you with whom I consulted, thank you for your 
extensive input and experience in assessing the design and effectiveness 
of the long-term incentive plan.
Due to the Covid-19 pandemic, the Committee has decided to 
set targets for 2020 long-term incentive awards after the interim results 
have been reported for the period 1 July 2020 to 31 December 2020, at 
which time it is envisaged that there will be better visibility of the market 
conditions for the company’s three-year plan. We intend to consult again 
with shareholders before these targets are set and disclosed. Long-term 
incentive awards will be made as normal in September 2020. Awards are 
calculated on the basis of a six-month average share price for the period 
ending 30 June 2020. At £28.43, this award price is in line with previous 
years, and as a result no adjustment to award size is deemed necessary. 
The Committee will keep under review the targets for outstanding 
long-term incentive awards made in 2018 and 2019 to ensure they  
remain appropriate.
Shareholding requirement
The in-employment shareholding requirement is high relative to other 
UK listed companies at 500% of salary for the Chief Executive and 400% of 
salary for the Chief Financial Officer, and both incumbents have exceeded 
that requirement at 2,635% and 791% respectively. 
In accordance with best practice guidelines under the Corporate 
Governance Code, a new post employment shareholding requirement 
policy will be implemented from 1 July 2020, under which Executive 
Directors leaving the company will be required to hold 100% of their 
in-employment shareholding requirement (or their actual shareholding, 
if lower) for one year after exit, reducing to 50% of their in-employment 
shareholding requirement in the second year after exit. This ensures that 
departing Executive Directors remain invested in Diageo’s long-term 
share price performance and the appropriate management of risk.
Other decisions made during 2020
In addition to reviewing salaries, incentive awards and payments for 
the Executive Committee, setting targets for the annual and long-term 
incentive plans, and reviewing annual and long-term incentive outcomes 
for the Executive Committee, the Committee made other decisions during 
the year ended 30 June 2020, as outlined below.
Chairman’s fee increase for 2020 waived until 2021
In light of the current challenges affecting the company in relation to 
the Covid-19 pandemic, the Chairman asked to defer his planned fee 
increase for 2020 until 2021. The Chairman’s fee has not increased since 
his appointment in January 2017, and the Committee had approved an 
increase from £600,000 to £650,000, effective 1 January 2020. This fee 
increase will instead take effect on 1 January 2021. 
No salary increases or bonus payments for Executive Directors in 2020
The significant and unpredictable impact of the pandemic on Diageo’s 
performance has required the company to review its approach to reward 
and incentives for all employees to reflect the challenges of the current 
environment, including the need to increase focus on cash and cost. Many 
of our employees will not receive a bonus for the year ended 30 June 2020 
and there will be no annual salary review implemented during 2020. In 
keeping with the approach taken for the majority of employees across the 
company in 2020, there will be no annual salary increase for Executive 
Directors or members of the Executive Committee during 2020. Downward 
discretion has been exercised so that there is no payout, irrespective of 
performance, against the individual business objectives under the annual 
incentive plan, meaning that there will be no annual incentive payout for 
Executive Directors or members of the Executive Committee for the year 
ended 30 June 2020.
Diageo has made the health and wellbeing of its employees its 
top priority in response to the Covid-19 pandemic. The company has 
safeguarded jobs, pay and benefits for its employees during the year ended 
30 June 2020, has rolled out a global Employee Assistance Programme to 
provide personal, legal and financial advice to employees and their families, 
has extended emergency, bereavement leave and life insurance to all 
employees across the world and has provided access to learning resources 
on remote working, wellness and resilience through change. No doubt 
there will continue to be uncertain and challenging times ahead, but in 
focusing on emerging stronger, Diageo seeks to deliver the best possible 
outcomes for employees, shareholders and society.
The Directors’ remuneration policy will be put forward for your 
consideration and approval by binding vote, and the annual remuneration 
report by advisory vote, at the AGM on 28 September 2020. Thank you to 
those shareholders that engaged with us as part of the 2020 remuneration 
policy review; I believe the new policy supports the business strategy, drives 
pay for performance and meets the needs of all our stakeholders. 
In closing, I want to recognise the level of energy, agility and resilience 
demonstrated by our people throughout these difficult times. There is a 
high level of passion, pride and accountability for our heritage-rich brands at 
Diageo and a shared commitment to be our best, and to do the right thing 
at work, in life and in the wider community. Our people have been working 
tirelessly to drive the best results for the business, and many people have 
continued to do their jobs outside of their homes to keep production and 
supply going. To all Diageo employees – thank you for your hard work, your 
solidarity and your commitment to emerging stronger.
Susan Kilsby
Non-Executive Director and Chairman of the Remuneration Committee
86
DIAGEO Annual Report 2020

​
​ Salary
Allowances and benefits
Annual incentive
Long-term incentives
Shareholding requirement
Purpose and  
link to strategy
​ –– Supports the attraction and 
retention of the best global 
talent with the capability 
to deliver Diageo’s strategy
–– Provision of market-
competitive and 
cost-effective benefits 
supports attraction and 
retention of talent
–– Incentivises delivery of Diageo’s 
financial and strategic targets
–– Provides focus on key financial 
metrics and the individual’s 
contribution to the 
company’s performance
–– Rewards consistent long-
term performance in line with 
Diageo’s business strategy
–– Provides focus on delivering 
superior long-term returns to 
shareholders
–– Ensures alignment 
between the interests 
of Executive Directors  
and shareholders
Key features
​ –– Normally reviewed annually  
on 1 October
–– Salaries take account of 
external market and internal 
employee context
–– Provision of competitive 
benefits linked to local 
market practice
–– Maximum company 
pension contribution is 14% 
of salary for new Executive 
Director appointments, 
which is aligned to the 
offering for new-hire 
employees in the 
United Kingdom
–– Target opportunity is  
100% of salary and maximum 
is 200% of salary
–– Performance measures, weightings 
and stretching targets are set by 
the Remuneration Committee
–– Subject to malus and 
clawback provisions
–– New requirement for Executive 
Directors to defer one-third of 
earned bonus payment into 
Diageo shares held for three years, 
first taking effect on the bonus for 
the year ended 30 June 2021
–– Remainder paid out in cash after 
the end of the financial year
–– Annual grant of performance 
shares and share options
–– CEO award 500% of salary
–– CFO award 480% of salary 
(% of salary for both CEO 
and CFO described 
in performance 
share equivalents)
–– Performance measures, 
weightings and stretching 
targets are set annually
–– Three-year performance period 
plus two-year retention period
–– Subject to malus and 
clawback provisions
–– Grant price based on six-month 
average to 30 June preceding 
grant date
–– Minimum shareholding 
requirement within five 
years of appointment:
–– CEO 500% of salary 
–– CFO 400% of salary
Planned for 
year ending 
30 June 2021
​ –– No salary increase for Executive 
Directors or Executive 
Committee members 
–– Exceptional salary increases 
only (e.g. on promotion) for the 
wider workforce during 2020
–– Allowances and benefits 
unchanged from prior year
–– Company pension 
contribution:
–– CEO 20% of salary 
–– CFO 20% of salary
–– Targets will be set over two 
half-year periods 
–– For the year ending 30 June 2021, 
measures on net sales growth, 
operating profit growth and 
operating cash conversion, 
weighted equally, with remaining 
20% on individual objectives
–– Retention of measures on 
NSV growth, relative TSR and 
cumulative free cash flow; 
introduction of new measures 
on ESG and EPS growth
–– Size of long-term incentive 
award opportunity is unchanged 
from prior year
–– New post employment 
shareholding 
requirement for  
Executive Directors of 
100% of in-employment 
requirement in the first 
year after leaving the 
company and 50% in the 
second year after leaving 
the company
Implementation 
in year ended 
30 June 2020
​ –– Effective 1 October 2019:
–– CEO 3% increase to 
$1,661,427
–– CFO 3% increase to 
$1,093,044
–– In line with the pay budget for 
the wider workforce (3% for the 
UK and the US in 2019)
–– Company pension 
contribution:
–– CEO 20% of salary 
(reduced from 30% 
of salary effective 
1 July 2019)
–– CFO 20% of salary
–– No annual incentive  
payout for Executive Directors 
in 2020
–– Vesting of 2017 performance 
shares at 6.9% of maximum
–– Vesting of 2017 share options at 
27.5% of maximum
–– CEO shareholding  
2,635% of salary
–– CFO shareholding  
791% of salary 
Implementation 
in year ended 
30 June 2019
​ –– Effective 1 October 2018:
–– CEO 2% increase to $1,613,036
–– CFO 2% increase to $1,061,208
–– Below the pay budget for the 
wider workforce
–– Company pension 
contribution:
–– CEO 30% of salary
–– CFO 20% of salary
–– Payout above target:
–– CEO 61.0% of maximum
–– CFO 57.6% of maximum 
–– Vesting of 2016 performance 
shares at 89.3% of maximum
–– Vesting of 2016 share options at 
73.1% of maximum
–– CEO shareholding  
2,620% of salary
–– CFO shareholding  
563% of salary
 
Remuneration at a glance
Proportionality and management of risk
The structure of Diageo’s executive remuneration package ensures that executives have a vested interest in delivering performance over the short and 
long term. There is a three-year deferral of part of the annual incentive payout into shares, a two-year retention period on any vested awards under the 
long-term incentive plan and a post employment shareholding requirement that applies for two years after leaving the company. The performance and 
retention periods for each element of remuneration are outlined below.
2020
Indicates a holding or clawback period
Salary
Allowances and benefits
Annual incentive plan
Long-term 
incentives
Shareholding requirement 
Performance shares
Share options
2021
2022
2023
2024
2025
87
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

5.5%
Target
Net sales growth
 
4.0%
 
7.0%
Actual (8.4%)
Threshold
Maximum
Organic growth in net sales
CAGR 
Actual 0.8%
Threshold
 
3.5%
 
Maximum 
6.0%
Midpoint
4.75%
Cumulative free cash ﬂow
 
 
£7,200m
 
Maximum
 
£8,600m
Actual £7,211
Threshold
Midpoint
£7,900m
 
4.5%
Maximum
10.5%
CAGR
Actual 0.3%
Organic growth in profit before exceptional items and tax
Threshold
Midpoint
7.5%
Threshold
Relative TSR ranking vs peer group 
 
Actual 7th
 
9th (median)
 
–
 
3rd (upper quintile)
Midpoint
Maximum
Target
6.2%
Operating profit growth 
 
Threshold
 
3.9%
 
Maximum 
8.5%
Actual (14.4%)
0
10
20
30
40
50
60
70
80
Average working capital 
(% net sales) 
Actual (22) bps 
Threshold
(1)bps
Target
39bps
Maximum
79bps
Directors’ remuneration report continued
Annual incentive (for the period 1 July 2019 to 30 June 2020)
Historical reward outcomes under the annual and long-term incentive plans over the past five years are shown below. Vesting outcomes under the  
long-term incentive plan are shown against annualised total shareholder return for the three-year period ended in the year of vesting (i.e. annualised  
TSR for the three years ended 30 June 2020 is shown against the vesting outcome for the 2017 long-term incentive awards vesting in 2020).  
Outcomes against annual incentive measures are shown against organic operating profit growth for each respective financial year, as disclosed  
in prior-year annual reports. 
Diageo’s share price growth  
over the period 30 June 2017 
to 30 June 2020
18.2%
Dividend distribution to 
shareholders in year ended  
30 June 2020
1.9%
Performance against the incentive targets had been tracking well until the beginning of the Covid-19 pandemic in early 2020. The outcomes are 
appropriate in light of year-end performance and the shareholder experience. Targets under both incentive plans are set with reference to Diageo’s 
strategic plan and the historical and forecasted performance of Diageo and its peers.
Long-term incentives (for the period 1 July 2017 to 30 June 2020) 
2268.5p
2681.5p
2017
2020
68.57p
69.88p
2019
2020
0
20
40
60
80
100
0
5
10
15
20
25
5-year vesting outcomes of long-term incentives
Vesting outcome (% of maximum)
Annualised TSR %
2016
Performance shares 
Share options
Annualised total shareholder return over three-year long-term 
incentive performance period
2017
2018
2019
2020
31%
70%
60%
89%
73%
27.5%
6.9%
0%
0%
0%
0
20
40
60
80
100
0%
0
2
4
6
8
10
-20
5-year history of annual incentive payouts
Payout (% of maximum)
Operating proﬁt growth %
Annual incentive payout 
Organic operating proﬁt growth (% on prior year)
2016
2017
2018
2019
2020
73%
75%
60%
72%
Pay for performance at a glance 
88
DIAGEO Annual Report 2020

Directors’ remuneration policy 
This section of the report summarises the policy for the remuneration of the company’s Directors. The policy will be put to a binding vote at the AGM 
on 28 September 2020, in accordance with section 439A of the Companies Act 2006.
The policy approved in September 2017 can be found on the company’s website at  
www.diageo.com/en/investors/financial-results-and-presentations/directors-remuneration-report-2017/.
The Committee discussed the details of the policy over a series of meetings, taking into account the strategic priorities of the business and evolving 
market practice. Input was sought from the management team whilst ensuring any conflict of interest was suitably mitigated. An external perspective  
was provided by major shareholder and independent advisers. These changes include: reduction of pension provision, introduction of a deferred bonus 
share plan, introduction of a post employment shareholding requirement, annual review of Non-Executive Director fees, increase to the Non-Executive 
Director fee limit, removal of the requirement for straight-line vesting between threshold and maximum under the long-term incentive plan and the 
consideration of a returns measure in the discretionary assessment of long-term incentive outcomes. The rationale for the changes are described on 
pages 84-86. The Committee reserves the right to make minor changes to the policy, where required for regulatory, tax or administrative reasons.
Base salary
Purpose and link to strategy 
Supports the attraction and retention of the best global talent with the capability to deliver Diageo’s strategy and performance goals.
Operation
–– Normally reviewed annually or following a change in responsibilities with any increases usually taking effect from 1 October.
–– The Remuneration Committee considers the following parameters when reviewing base salary levels:
–– Pay increases for other employees across the group.
–– Economic conditions and governance trends.
–– The individual’s performance, skills and responsibilities.
–– Base salaries (and total remuneration) at companies of similar size and international scope to Diageo, with roles typically benchmarked against the FTSE 30 
excluding financial services companies, or against similar comparator groups in other locations dependent on the Executive Director’s home market.
Opportunity 
Salary increases will be made in the context of the broader employee pay environment, and will normally be in line with those made to other employees 
in relevant markets in which Diageo operates, typically the United Kingdom and the United States, unless there is a change in role or responsibility or 
other exceptional circumstances.
Benefits
Purpose and link to strategy 
Provides market-competitive and cost-effective benefits.
Operation
–– The provision of benefits depends on the country of residence of the Executive Director and may include but is not limited to a company car or travel 
allowance, the provision of a contracted car service or equivalent, product allowance, life insurance, accidental death and disability insurance, medical 
cover, financial counselling and tax advice. 
–– The Remuneration Committee has discretion to offer additional allowances, or benefits, to Executive Directors, if considered appropriate and 
reasonable. These may include relocation expenses, housing allowance and school fees where a Director is asked to relocate from his/her home 
location as part of their appointment.
Opportunity 
–– The benefits package is set at a level which the Remuneration Committee considers: 
–– provides an appropriate level of benefits depending on the role and individual circumstances; 
–– is appropriate in the context of the benefits offered to the wider workforce in the relevant market; and 
–– is in line with comparable roles in companies of a similar size and complexity in the relevant market.
Post-retirement provision
Purpose and link to strategy 
Provides cost-effective, competitive post-retirement benefits.
Operation 
–– Provision of market-competitive pension arrangements or a cash alternative based on a percentage of base salary.
Opportunity 
–– The maximum company pension contribution under the 2020 remuneration policy is 14% of salary for any new Executive Director appointments. 
–– Current legacy company contributions for Ivan Menezes and Kathryn Mikells in the year ended 30 June 2020 were each 20% of base salary.  
The company contribution for Ivan Menezes was reduced from 40% to 30% effective 1 July 2016, and from 30% to 20% effective 1 July 2019.
–– It is the company’s intention to reduce the pension contribution for Ivan Menezes and Kathyrn Mikells to 14% of salary, in line with the maximum 
company contribution to new-hire employees in the United Kingdom, by 1 January 2023. 
89
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Directors’ remuneration report continued
Annual Incentive Plan (AIP)
​
​
Purpose and link to strategy 
Incentivises year-on-year delivery of Diageo’s financial and strategic targets over the year. Provides focus on key financial metrics and the individual’s 
contribution to the company’s performance.
Operation 
–– Performance measures, weightings and targets are set by the 
Remuneration Committee. Appropriately stretching targets are 
set by reference to the operating plan and historical and projected 
performance for the company and its peer group. 
–– The level of award is determined with reference to Diageo’s overall 
financial and strategic performance and individual performance.
–– A minimum of one-third of the actual earned bonus payment will 
normally be deferred into shares under the Deferred Bonus Share 
Plan, to be held for a minimum period of three years, other than in 
exceptional circumstances. The remainder of the bonus payment 
will be paid out in cash after the end of the financial year.
​ ​  
–– The Committee has discretion to adjust the level of payment if it is not 
deemed to reflect appropriately the individual’s contribution or the 
overall business performance. Any discretionary adjustments will be 
detailed in the following year’s annual report on remuneration. 
–– The Committee has discretion to apply malus or clawback to bonus,  
i.e. the company may seek to recover bonus paid or deferral into  
shares, in exceptional circumstances such as gross misconduct or  
gross negligence during the performance period.
–– Notional dividends accrue on deferred bonus share awards, delivered 
as shares or cash at the discretion of the Remuneration Committee at 
the end of the vesting period.
Opportunity 
–– For threshold performance, up to 50% of salary may be earned, with up to 100% of salary earned for on-target performance and a maximum of 200% 
of salary payable for outstanding performance.
Performance conditions 
Annual incentive plan awards are normally based 70%-100% on financial measures which may include, but are not limited to, measures of sales, 
profit and cash; and 0%-30% on broader objectives based on strategic goals and/or individual contribution.
Diageo Long-Term Incentive Plan (DLTIP)
​
​
Purpose and link to strategy 
Provides focus on delivering superior long-term returns to shareholders.
Operation 
–– An annual grant of performance shares and/or market-price share 
options which vest subject to a performance test and continued 
employment, normally over a period of three years. 
–– Measures and stretching targets are reviewed annually by the 
Remuneration Committee for each new award. 
–– The Remuneration Committee has the authority to exercise discretion 
to adjust the vesting outcome based on its assessment of underlying 
business performance over the performance period. This may include 
the consideration of factors such as holistic performance relative to 
peers, stakeholder outcomes and significant investment projects, 
for example. 
–– Following vesting there is normally a further retention period of two 
years. Executive Directors are able to exercise an option or sell sufficient 
shares to cover any tax liability when an award vests, provided they 
retain the net shares arising for the two-year retention period. 
–– Notional dividends accrue on performance share awards to the extent 
that the performance conditions have been met, delivered as shares or 
cash at the discretion of the Remuneration Committee at the end of 
the vesting period.
​ ​  
–– The Committee has discretion to reduce the number of shares which 
vest (subject to HMRC rules regarding approved share options), for 
example in the event of a material performance failure, or a material 
restatement of the financial statements. There is an extensive malus 
clause for awards made from September 2014. The Committee has 
discretion to decide that: 
–– the number of shares subject to the award will be reduced; 
–– the award will lapse; 
–– retention shares (i.e. vested shares subject to the additional two-year 
retention period) will be forfeited; 
–– vesting of the award or the end of any retention period will be 
delayed (e.g. until an investigation is completed); 
–– additional conditions will be imposed on the vesting of the award 
or the end of the retention period; and/or 
–– any award, bonus or other benefit which might have been 
granted or paid to the participant in any later year will be reduced 
or not awarded.
–– Malus and clawback provisions will apply up to delivery of shares 
at the end of the retention period (as opposed to the vesting date). 
The company also has the standard discretion to take account of 
unforeseen events such as a variation to share capital.
Opportunity 
–– The maximum annual grants for the Chief Executive and Chief Financial 
Officer are 500% and 480% of salary in performance share equivalents 
respectively (where a market-price option is valued at one-third of a 
performance share). Included within that maximum no more than 375% 
of salary will be awarded in face-value terms in options to any Executive 
Director in any year. 
 
–– Awards vest at 20% of maximum for threshold performance and 
100% of maximum if the performance conditions are met in full. The 
vesting schedule related to the levels of performance between 
threshold and maximum, including whether or not this will include an 
interim stretch performance level, will be determined by the Committee 
on an annual basis and disclosed in the relevant remuneration report for 
that year. There is a ranking profile for the vesting of the part of the 
award based on relative total shareholder return, starting at 20% of 
maximum for achieving the threshold.
90
DIAGEO Annual Report 2020

Diageo Long-Term Incentive Plan (DLTIP) continued
Performance conditions 
–– The vesting of awards is linked to a range of measures which may 
include, but are not limited to:
–– a growth measure (e.g. net sales growth, operating profit growth); 
–– a measure of efficiency (e.g. operating margin, cumulative free 
cash flow, return on invested capital); 
–– a measure of Diageo’s performance in relation to its peers 
(e.g. relative total shareholder return); and
–– a measure relating to ESG (environmental, social or 
governance) priorities.
​ ​  
–– Measures that apply to performance shares and market-price options 
may differ, as is the case for current awards. Weightings of these 
measures may also vary year on year. 
–– The Remuneration Committee has discretion to amend the 
performance conditions in exceptional circumstances if it considers 
it appropriate to do so, e.g. in cases of accounting policy changes, 
merger and acquisition activities or disposals. Any such amendments 
would be fully disclosed and explained in the following year’s annual 
report on remuneration.
All-employee share plans
Purpose and link to strategy 
–– To encourage broader employee share ownership through locally 
approved plans.
​ ​ Opportunity 
–– Limits for all-employee share plans are set by the tax authorities. 
The company may choose to set its own lower limits.
Operation 
–– The company operates tax-efficient all-employee share acquisition 
plans in various jurisdictions. 
–– Executive Directors’ eligibility may depend on their country of 
residence, tax status and employment company.
​ ​ Performance conditions 
–– Under the UK Share Incentive Plan, the annual award of Freeshares is 
based on Diageo plc financial measures which may include, but are  
not limited to, measures of sales, profit and cash.
Shareholding requirement
Purpose and link to strategy 
–– Ensures alignment between the interests of Executive Directors and shareholders.
Operation 
–– The minimum in-employment shareholding requirement is 500% of 
base salary for the Chief Executive and 400% of base salary for any other 
Executive Directors. 
–– Executive Directors are expected to build up their in-employment 
shareholding within five years of their appointment to the Board. 
–– Executive Directors will be restricted from selling more than 50% 
of shares which vest under the long-term incentive plan or deferred 
bonus share plan (excluding the sale of shares to cover tax on vesting 
and other exceptional circumstances to be specifically approved by the 
Chief Executive and/or Chairman), until the shareholding requirement 
is met.
​ ​
–– In order to provide further long-term alignment with shareholders, 
Executive Directors will normally be expected to maintain a holding 
of shares in Diageo for a two-year period after leaving the company. 
Executive Directors will normally be required to continue to hold 
100% of the in-employment shareholding requirement (or, if lower, 
their actual shareholding on cessation) for the first year after leaving 
the company, reducing to 50% for the second year after leaving 
the company.
Chairman of the Board and Non-Executive Directors
Purpose and link to strategy 
–– Supports the attraction, motivation and retention of world-class talent and reflects the value of the individual, their skills and experience, 
and performance.
Operation 
–– Fees for the Chairman and Non-Executive Directors are normally 
reviewed every year. 
–– A proportion of the Chairman’s annual fee is used for the monthly 
purchase of Diageo ordinary shares, which have to be retained until 
the Chairman retires from the company or ceases to be a Director. 
–– Fees are reviewed in the light of market practice in the FTSE 30, 
excluding financial services companies, and anticipated workload, 
tasks and potential liabilities. 
–– The Chairman and Non-Executive Directors do not participate in 
any of the company’s incentive plans nor do they receive pension 
contributions or benefits. Their travel and accommodation expenses in 
connection with attendance at Board meetings (and any tax thereon) 
are paid by the company. 
​ ​
–– The Chairman and the Non-Executive Directors are eligible to receive 
a product allowance or cash equivalent at the same level as the 
Executive Directors. 
–– All Non-Executive Directors have letters of appointment. A 
summary of their terms and conditions of appointment is available 
at www.diageo.com. The Chairman of the Board, Javier Ferrán, was 
appointed on 1 January 2017, under a letter of appointment for an 
initial three-year term, terminable on six months’ notice by either party 
or, if terminated by the company, by payment of six months’ fees in lieu 
of notice.
Opportunity 
–– Fees for Non-Executive Directors are within the limits set by the shareholders from time to time, with an aggregate limit of £1,750,000, excluding the 
Chairman’s fees.
91
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Projected total remuneration scenarios
The graphs below illustrate scenarios for the projected total 
remuneration of Executive Directors at four different levels of 
performance: minimum, target, maximum, and maximum including 
assumed share price appreciation of 50% (in accordance with the 
Corporate Governance Code). The impact of potential share price 
movements is excluded from the other three scenarios. These charts 
reflect projected remuneration for the financial year ending 30 June 2021. 
Performance measures
Further details of the performance measures under the annual incentive 
plan for the year ending 30 June 2021 and under the long-term incentive 
plan for awards made in September 2020, and how they are aligned with 
company strategy and the creation of shareholder value, are set out in 
the annual report on remuneration, on page 104. Targets will be disclosed 
in next year’s annual report on remuneration.
Performance targets are set to be stretching yet achievable, 
and take into account the company’s strategic priorities and business 
environment. The Committee sets targets based on a range of 
reference points including the corporate strategy and broker forecasts 
for both Diageo and its peers.
Approach to recruitment remuneration
Diageo is a global organisation selling its products in more than 
180 countries around the world. The ability to recruit and retain the 
best talent from all over the world is critical to the future success of the 
business. People diversity in all its forms is a core element of Diageo’s 
global talent strategy and, managed effectively, is a key driver in delivering 
Diageo’s Performance Ambition.
The Remuneration Committee’s overarching principle for recruitment 
remuneration is to pay no more than is necessary to attract an Executive 
Director of the calibre required to shape and deliver Diageo’s business 
strategy, recognising that Diageo competes for talent in a global 
marketplace. The Committee will seek to align any remuneration 
package with Diageo’s remuneration policy as laid out above, but 
retains the discretion to offer a remuneration package which is necessary 
to meet the individual circumstances of the recruited Executive Director 
and to enable the hiring of an individual with the necessary skills and 
expertise. However, the maximum short and long-term incentive 
opportunity will follow the policy, although awards may be granted 
with different performance measures and targets in the first year. On 
appointment of an external Executive Director, the Committee may decide 
to compensate for variable remuneration elements the Director forfeits 
when leaving their current employer. In doing so, the Committee will 
ensure that any such compensation would have a fair value no higher 
than that of the awards forfeited, and would generally be determined 
on a comparable basis taking into account factors including the form 
in which the awards were granted, performance conditions attached, 
the probability of the awards vesting (e.g. past, current and likely future 
performance) as well as the vesting schedules. Depending on individual 
circumstances at the time, the Committee has the discretion to determine 
the type of award (i.e. cash, shares or options, holding period and whether 
or not performance conditions would apply).
Any such award would be fully disclosed and explained in the 
following year’s annual report on remuneration. When exercising its 
discretion in establishing the reward package for a new Executive Director, 
the Committee will carefully consider the balance between the need 
to secure an individual in the best interests of the company against 
the concerns of investors about the quantum of remuneration and, 
if considered appropriate at the time, will consult with the company’s 
biggest shareholders. The Remuneration Committee will provide timely 
disclosure of the reward package of any new Executive Director.
Directors’ remuneration report continued
Basis of calculation and assumptions:
The ‘Minimum’ scenario shows fixed remuneration only, i.e. base salary for 
the year ending 30 June 2021, total value of contractually agreed benefits 
for 2021, and the pension benefits to be accrued over the year ending 
30 June 2021. These are the only elements of the Executive Directors’ 
remuneration packages that are not subject to performance conditions.
The ‘Target’ scenario shows fixed remuneration as above, plus a target 
payout of 50% of the maximum annual bonus and threshold performance 
vesting for long-term incentive awards at 20% of the maximum award.
The ‘Maximum’ scenario reflects fixed remuneration, plus full payout 
of annual and long-term incentives.
The ‘Maximum plus share price growth’ scenario reflects fixed 
remuneration, plus full payout of annual and long-term incentives, 
including for the latter an assumed 50% share price appreciation over 
the performance period.
For long-term incentives, the awards are treated as though they were 
granted all in performance shares.
The amounts shown in sterling are converted using the cumulative 
weighted average exchange rate for the year ended 30 June 2020 of  
£1 = $1.26.
Ivan Menezes
$’000
Minimum
Target
Maximum
Maximum plus 50% 
share price increase
0
5,000
10,000
15,000
20,000
100%
30%
60%
69%
30%
40%
16%
24%
19%
12%
Total $2,217 (£1,759)
Total $5,539 (£4,396)
Total $13,847 (£10,989)
Total $18,000 (£14,286)
$’000
Minimum
Target
Maximum
Maximum plus 50% 
share price increase
0
2,000
4,000
6,000
8,000
10,000
12,000
100%
30%
59%
69%
31%
39%
16%
25%
19%
12%
Total $1,381 (£1,096)
Total $3,523 (£2,796)
Total $8,814 (£6,995)
Total $11,437 (£9,077)
Kathryn Mikells
Salary, beneﬁts and pension 
Annual incentive 
Long-term incentives
92
DIAGEO Annual Report 2020

Service contracts and policy on payment for loss of office (including takeover provisions)
Executive Directors have rolling service contracts, details of which are set out below. These are available for inspection at the company’s registered office.
Executive Director
Date of service contract
Ivan Menezes
7 May 2013
Kathryn Mikells
1 October 2015
Notice period
The contracts provide for a period of six months’ notice by the Executive Director or 12 months’ notice by the company, 
the same as would apply for any newly-appointed Executive Director. A payment may be made in lieu of notice equivalent 
to 12 months’ base salary and the cost to the company of providing contractual benefits (including pension contributions 
but excluding incentive plans). The service contracts also provide for the payment of outstanding pay and bonus, 
if an Executive Directors leaves following a takeover, or other change of control of Diageo plc.
If, on the termination date, the Executive Director has exceeded his/her accrued holiday entitlement, the value of such 
excess may be deducted by the company from any sums due to him/her, except to the extent that such deduction would 
subject the Executive Director to additional tax under section 409A of the Code (in the case of Ivan Menezes). If the Executive 
Director on the termination date has accrued but untaken holiday entitlement, the company will, at its discretion, either 
require the Executive Director to take such unused holiday during any notice period or make a payment to him/her in lieu 
of it, provided always that if the employment is terminated for cause then the Executive Director will not be entitled to any 
such payment. 
Mitigation
The Remuneration Committee may exercise its discretion to require a proportion of the termination payment to be paid in 
instalments and, upon the Executive Director commencing new employment, to be subject to mitigation except where 
termination is within 12 months of a takeover, or within such 12 months the Executive Director leaves due to a material 
diminution in status.
Annual incentive plan 
(AIP)
Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, 
transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, 
the Executive Director is usually entitled to an incentive payment pro-rated for the period of service during the performance 
period, which is typically payable at the usual payment date. Where the Executive Director leaves for any other reason, no 
payment or bonus deferral will be made. The amount is subject to performance conditions being met and is at the discretion 
of the Committee. The Committee has discretion to determine an earlier payment date, for example on death in service. 
The bonus may, if the Committee decides, be paid wholly in cash.
2020 Deferred Bonus 
Share Plan (DBSP)​
Where the Executive Director leaves for any reason other than dismissal, they are entitled to retain any deferred bonus shares, 
which will vest on departure, subject to any holding requirements under the post employment shareholding policy. It is not 
considered necessary for the bonus deferral to continue to apply after leaving, since the bonus is already earned based on 
performance, and there is a post employment shareholding requirement that ensures the Executive Director continues to 
be invested in the company’s longer-term interests. On a takeover or other corporate event, awards vest in full.​
Diageo 2014 Long-Term  
Incentive Plan (DLTIP) 
Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, 
transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, 
awards vest on the original vesting date unless the Remuneration Committee decides otherwise (for example in the case 
of death in service). When an Executive Director leaves for any other reason, all unvested awards generally lapse immediately. 
The retention period for vested awards continues for all leavers other than in cases of disability, ill health or death in service, 
unless the Remuneration Committee decides otherwise.
The proportion of the award released depends on the extent to which the performance condition is met. The number 
of shares is reduced on a pro-rata basis reflecting the length of time the Executive Director was employed by the company 
during the performance period, unless the Committee decides otherwise (for example in the case of death in service).
On a takeover or other corporate event, awards vest subject to the extent to which the performance conditions are 
met and, unless the Committee decides otherwise, the awards are time pro-rated. Otherwise the Committee, in agreement 
with the new company, may decide that awards should be swapped for awards over shares in the new company; where 
awards are granted in the form of options, then on vesting they are generally exercisable for 12 months (or six months for 
approved options).
Repatriation/other
In cases where an Executive Director was recruited from outside the United Kingdom and has been relocated to the 
United Kingdom as part of their appointment, the company will pay reasonable repatriation costs for leavers at the 
Committee’s discretion. The company may also pay for reasonable costs in relation to the termination, for example tax, 
legal and outplacement support, where appropriate.
93
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Non-Executive Directors’ unexpired terms of appointment
All Non-Executive Directors are on three-year terms which are expected to 
be extended up to a total of nine years. The date of initial appointment to 
the Board and the point at which the current letter of appointment expires 
for Non-Executive Directors are shown in the table below. Debra Crew 
stepped down from the Board on 24 March 2020 and Lord Davies of 
Abersoch retired on 30 June 2020, having extended his term in 2019 in 
order to ensure continuity during the recruitment of additional Directors 
to the Board.
Non-Executive Directors
​
Date of appointment 
to the Board
​
Current letter of 
appointment expires
Javier Ferrán
​ 22 July 2016
​ AGM 2022
Susan Kilsby​
​ 4 April 2018​
​ AGM 2021​
Lord Davies of Abersoch
​ 1 September 2010
​ 30 June 2020​
Melissa Bethell​
​ 30 June 2020​
​ AGM 2023​
Debra Crew​
​ 18 April 2019​
​ 24 March 2020​
Ho KwonPing
​ 1 October 2012
​ AGM 2021
Nicola Mendelsohn​
​ 1 September 2014​
​ AGM 2020​
Alan Stewart​
​ 1 September 2014
​ AGM 2020​
Payments under previous policies
The Committee reserves the right to make any remuneration payments 
and payments for loss of office, notwithstanding that they are not in 
line with the policy set out above, where the terms of the payment 
were agreed (i) under a previous policy, in which case the provision of 
that policy shall continue to apply until such payments have been made; 
(ii) before the policy or the relevant legislation came into effect; or (iii) at a 
time when the relevant individual was not a Director of the company and, 
in the opinion of the Committee, the payment was not in consideration for 
the individual becoming a Director of the company. 
Remuneration for the wider workforce
The structure of the reward package for the wider employee population is 
based on the principle that it should be sufficient to attract and retain the 
best talent and be competitive within our broader industry, remunerating 
employees for their contribution linked to our holistic performance. 
It is driven by local market practice as well as level of seniority and 
accountability, reflecting the global nature of Diageo’s business. 
There is clear alignment in the pay structures for executives and the 
wider workforce, in the way that remuneration principles are followed 
as well as the mechanics of the salary review process and incentive plan 
design, which are broadly consistent throughout the organisation. The 
performance measures under the annual incentive plan and long-term 
incentive plan are the same for executives and other eligible employees. 
There is a strong focus on performance-related pay, with appropriate 
levels of differentiation to ensure that reward is invested in the talent that 
will make the biggest contribution to the execution of Diageo’s strategy. 
Where possible, the company also encourages employee share ownership 
through a number of share plans that allow employees to benefit from the 
company’s success. 
The remuneration approach for Executive Directors is consistent 
with the reward package for members of the Executive Committee and 
the senior management population. Generally speaking, a much higher 
proportion of total remuneration for the Executive Directors is linked to 
business performance, compared to the rest of the employee population, 
so that remuneration will increase or decrease in line with business 
performance and to align the interests of Executive Directors 
and shareholders. 
Each year the Remuneration Committee is briefed on the structure 
and quantum of the all-employee remuneration framework as well as 
throughout the year being informed about the context, challenges and 
opportunities relating to the remuneration of the wider workforce across 
the world to enable the Committee to consider the broader employee 
context when making executive remuneration decisions. 
In 2020, the Remuneration Committee has considered:
–– Challenges and opportunities relating to the attraction and retention of 
key talent and the market competitiveness of specialist and critical roles 
(for example, in digital and e-commerce);
–– Pay philosophy and pay positioning globally;
–– Review of the gender pay gap report for the UK;
–– Differentiation of global reward outcomes and incentive payouts 
(where there is an individual element to recognise performance and 
potential) by gender; and
–– The review of global benefits programmes to better leverage 
economies of scale, to provide more consistent standards across the 
core offering and to provide more flexibility and choice, where possible, 
in line with the reward philosophy and in support of the company’s 
culture of inclusion and diversity.
The Committee also considers the annual salary increase budgets for 
employees in key markets as well as pay for the global senior management 
population. As part of the review of the Directors’ remuneration policy 
for 2020, the Committee has considered each element of remuneration 
for executives and its alignment with the reward opportunity for other 
employees across the organisation, as an important factor in determining 
the appropriate balance of risk and reward to incentivise the delivery of 
Diageo’s business strategy and Performance Ambition.
Shareholder engagement
The Committee greatly values the continued dialogue with Diageo’s 
shareholders and regularly engages with shareholders and representative 
bodies to take their views into account when setting and implementing 
the company’s remuneration policies. 
This year, the company has engaged extensively with shareholders 
and their proxy advisors on the 2020 remuneration policy review, incentive 
plan design, performance measures and the approach to target setting 
as well as viewpoints on the Corporate Governance Code and its 
implications for Diageo’s remuneration policy and practices. More 
detail on the engagement with shareholders in 2020 can be found 
in the Remuneration Committee Chair’s letter on pages 84-86.
Workforce engagement
Diageo runs annual employee engagement surveys, as well as more 
recently regular ‘pulse’ surveys on the company’s handling of the 
impact of the pandemic on the workforce, which give employees the 
opportunity to give feedback and express their views on a variety of 
topics including remuneration. Any comments relating to Executive 
Directors’ remuneration are fed back to the Remuneration Committee.  
The Chairman was appointed to lead workforce engagement on behalf 
of the Board on 1 July 2019 and throughout the year has met with a range 
of employees across all levels and regions to hear their views on the 
company, culture and working environment. A workforce engagement 
statement has been shared with employees to feed back the key insights 
from all of the engagement activities during 2020.
Directors’ remuneration report continued
94
DIAGEO Annual Report 2020

Single total figure of remuneration for Executive Directors (audited)
The table below details the Executive Directors’ remuneration for the year ended 30 June 2020.
​
​
Ivan Menezes(i)
Kathryn Mikells(i)
​
Fixed pay
2020 
‘000
2020 
‘000
2019
‘000
2019
‘000
2020 
‘000
2020 
‘000
2019
‘000
2019
‘000
​
Salary
£1,309​
$1,649
£1,244
$1,605
£861
$1,085
£819
$1,056
​
Benefits(ii)
£99​
$124​
£95
$123
£42​
$53​
£27
$34
​
Pension(iii)
£281
$354
£407
$525
£176
$221
£168
$217
Total fixed pay
£1,689
$2,127​
£1,746
$2,253
£1,079​
$1,359​
£1,014
$1,307
​
​
​
​
​
​
​
​
​
​
Performance related pay
​
​
​
​
​
​
​
​
​
Annual incentive(iv)
£0​
$0​
£1,521
$1,961
£0​
$0​
£946
$1,220
​
Long-term incentives(v)
​
​
​
​
​
​
​
​
​
Value delivered through 
performance
£408​
$514​
£4,724
$6,094
£258​
$324​
£2,654
$3,423
​
Value delivered through  
share price growth
£42​
$53​
£3,785
$4,882
£27​
$33​
£2,891
$3,730
​
Other incentives(vi)
£0​
$0​
£0
$0
£4​
$5​
£4
$5​
​
Total variable pay
£450​
$567​
£10,030
$12,937
£289​
$362​
£6,495
$8,378
​
​
​
​
​
​
​
​
​
​
​
Total single figure 
of remuneration
£2,139
$2,694​
£11,776
$15,190
£1,368​
$1,721​
£7,509
$9,685
Notes
(i)
Exchange 
rate
​ The amounts shown in sterling are converted using the cumulative weighted average exchange rate for the respective financial year. For the year ended 30 June 2020 the 
exchange rate was £1 = $1.26 and for the year ended 30 June 2019 the exchange rate was £1 = $1.29. Ivan Menezes and Kathryn Mikells are both paid in US dollars.
​ ​
(ii)
Benefits
​ Benefits is the gross value of all taxable benefits. For Ivan Menezes, these include medical insurance (£15k), company car allowance (£17k), contracted car service 
(£11k), financial counselling (£52k), product allowance, life and long-term disability cover. Kathryn Mikells’ benefits include flexible benefits allowance (£18k), 
financial counselling (£16k), contracted car service (£3k), life cover (£4k) and product allowance.
​  
(iii)
Pension
​ Pension benefits earned during the year represent the increase in the pension fund balances over the year in the Diageo North America Inc. pension plans over 
and above the increase due to inflation. As Ivan Menezes has been a deferred member of the Diageo Pension Scheme (DPS) in the United Kingdom since 
31 January 2012, and receives standard statutory increases in deferment the United Kingdom pension amount that accrued over the two years in excess of inflation 
is nil. Kathryn Mikells became a Director and started accruing benefits in the Supplemental Executive Retirement Plan (SERP) with effect from 9 November 2015.
​ Page 
98
(iv)
Annual 
incentive
Threshold performance was not achieved against the financial measures under the annual incentive plan. In view of the impact of Covid-19 on business 
performance and the absence of any bonus payout for many employees further down in the organisation, the Remuneration Committee exercised its discretion 
to waive any payout for the individual element of the annual incentive plan. As a result, there is no annual incentive payout for the Executive Directors and 
Executive Committee in 2020.
(v)
Long-term 
incentives
​ Long-term incentives represent the estimated gain delivered through share options and performance shares where performance conditions have been met in the 
respective financial year. It also includes the value of additional shares granted in lieu of dividends on these vested performance shares.
Value delivered through performance’ is calculated as the number of vested performance shares and dividend shares multiplied by the share price on the date 
of grant. 
 ‘Value delivered through share price growth’ is calculated as the difference between the average share price in the last three months of the financial year and 
the share price on the date of grant multiplied by the number of vested performance shares and share options.
For 2020, long-term incentives comprise performance shares and share options awarded in 2017 and due to vest in September 2020 at 6.9% and 27.5% 
of maximum respectively. No discretion was exercised by the Remuneration Committee in determining these long-term incentive outcomes.
For 2019, long-term incentives comprise performance shares and share options awarded in 2016 that vested in September 2019 at 89.3% and 73.1% 
of maximum respectively, and dividend shares arising on performance shares that vested in September 2019. Long-term incentives have been re-stated to 
reflect the share price on the vesting date. No discretion was exercised by the Remuneration Committee in determining these long-term incentive outcomes.
​ Page 
97
(vi)
Other 
incentives
​ Other incentives include the face value of awards made under the all-employee share plans (number of shares multiplied by the share price on the date of grant). 
Awards do not have performance conditions attached. No discretion was exercised by the Remuneration Committee in determining these long-term incentive outcomes.
​ ​
Annual report on remuneration
The following section provides details of how the company’s 2017 remuneration policy was implemented during the year ended 30 June 2020, and how 
the Remuneration Committee intends to implement the proposed remuneration policy in the year ending 30 June 2021.
External appointments held by the Executive Directors 
Executive Directors may accept external appointments as Non-Executive 
Directors of other companies and retain any related fees paid to them, 
subject to the specific approval of the Board in each case.
Ivan Menezes – During the year ended 30 June 2020, Ivan Menezes 
served as a Non-Executive Director of Tapestry Inc and earned fees of $90,000. 
In line with the Tapestry Inc policy for outside directors, Ivan Menezes is eligible 
to be granted share options and restricted share units (RSUs). During the 
year ended 30 June 2020, he was granted 13,069 options at an option price 
of $27.07, 70 RSUs at a fair market value of $13.50 per share, 35 RSUs at a fair 
market value of $26.77, 23 RSUs in lieu of dividends at a fair market value of 
$25.97 and 19 RSUs in lieu of dividends at a fair market value of $31.81.
Kathryn Mikells – During the year ended 30 June 2020, Kathryn Mikells 
served as a Non-Executive Director of the Hartford Financial Services 
Group Inc. and earned fees of $105,406, which were deferred into equity.
Payments to former Directors (audited)
There were no payments to former Directors in the year ended  
30 June 2020.
Payments for loss of office (audited)
There were no payments for loss of office to Executive Directors in the 
year ended 30 June 2020.
95
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Annual incentive plan (AIP) (audited)
AIP payout for the year ended 30 June 2020 
AIP payouts for the Executive Directors are based 80% on performance against the group financial measures and 20% on performance against  
Individual Business Objectives (IBOs), as assessed by the Remuneration Committee and summarised in the table below.
As a direct result of the Covid-19 pandemic and the impact on business performance in the second half of the financial year, none of the 
performance measures were met and no AIP payouts will be made for the year ended 30 June 2020 to Executive Directors or any members of the 
Executive Committee. Whilst progress had been made against individual business objectives, the Committee decided that in light of the impact of the 
Covid-19 pandemic on business performance, no payout would be made to Executive Directors or members of the Executive Committee against this 
element of the annual incentive plan for the year ended 30 June 2020.
Group financial measures(i)
Measure
Weighting
Threshold
Target
Maximum
Actual
Payout  
(% of total AIP 
opportunity)
Net sales (% growth)(ii)
26.7%
4.0%
5.5%
7.0%
(8.4%) 
0%
Operating profit (% growth)(ii)
26.7%
3.9%
6.2%
8.5%
(14.4%)
0%
Average working capital (% net sales)(iii)
26.7%
(1)bps
39bps
79bps
(22bps)
0%
Group financial payout
80%
​
​
​
​
0%
Individual business objectives
Measure (IBOs equally weighted)
Weighting
Target
​
Payout  
(% of total AIP 
opportunity)
Ivan Menezes Chief Executive
20%
​
​
–​
Global Scotch performance 
 
​
Growth in Scotch net sales 
Growth in Scotch CAAP  
(Contribution after A&P) 
–​
Global Reserve performance 
​
Growth in Reserve net sales 
Growth in Reserve CAAP
 
–​
Positive drinking
​
Lead the industry to proactively  
ensure the promotion of moderation  
and the reduction of harmful drinking.
​
–​
Kathryn Mikells Chief Financial Officer
20%
​
​
–​
Group cash performance
​
Deliver year-end operating cash flow outcome
​
–​
Earnings per share performance
​
Deliver earnings per share target 
​
–​
Key business driver 
​
Deliver 2020 initiatives across carbon and water 
and develop plan for delivery in F21 and F22
​
–​
Payout
​
Group 
(weighted 80%)
IBO 
(weighted 20%)
Total 
(% max)
Total 
(% salary)
Total  
(’000)(iv)
Total  
(’000)
Ivan Menezes
0%
–
0%
0%
£0
$0
Kathryn Mikells
0%
–
0%
0%
£0
$0
(i)	 Performance against the AIP measures is calculated using 2020 budgeted exchange rates in line with management reporting and excludes the impact of exchange and any  
exceptional items.
(ii)	 For AIP purposes, the net sales and operating profit measures are calculated after adjustments for acquisitions and disposals at budgeted foreign exchange rates. 
(iii)	For AIP purposes, average working capital as a percentage of net sales is calculated as the average of the last 12 months of operating working capital (excluding maturing inventories  
and restructuring provisions) divided by annual net sales.
(iv)	AIP payments are calculated using base salary as at 30 June 2020, in line with the global policy that applies to other employees across the company.
Directors’ remuneration report continued
Looking back on 2020
96
DIAGEO Annual Report 2020

Long-term incentive plans (LTIP) (audited)
As approved by shareholders at the AGM in September 2014, long-term incentive awards are made under the Diageo Long-Term Incentive Plan (DLTIP). 
Awards are designed to incentivise Executive Directors and senior managers to deliver long-term sustainable performance and are subject to performance 
conditions normally measured over a three-year period. Awards are delivered on an annual basis in both performance shares and share options. With the 
exception of the TSR measure, awards vest at 20% of maximum for threshold performance, and 100% of the award will vest if the performance conditions 
are met in full, with a straight-line payout between threshold and maximum. 
Share options – granted in September 2017, vesting in September 2020 (audited)
On 4 September 2017, Ivan Menezes and Kathryn Mikells received share option awards of 51,268 ADRs and 32,380 ADRs respectively under the DLTIP, 
with an exercise price of $134.06. The award was subject to a performance condition assessed over a three-year period based on the achievement of 
the following equally weighted performance measures:
–– Diageo’s three-year total shareholder return (TSR) ranked against the TSR of a peer group of international drinks and consumer goods companies;
–– growth in compound annual adjusted profit before exceptional items and tax. 
The vesting profile for relative TSR is shown below:
TSR ranking (out of 17)
Vesting (% max) ​
TSR peer group (16 companies)
1st, 2nd or 3rd
100 ​
AB InBev
Mondelēz International
4th
95 ​
Brown-Forman
Nestlé
5th
75 ​
Carlsberg
PepsiCo
6th
65 ​
Coca-Cola
Pernod Ricard
7th
55 ​
Colgate-Palmolive
Procter & Gamble
8th
45 ​
Groupe Danone
Reckitt Benckiser
9th
20 ​
Heineken
L’Oreal
10th or below
0 ​
Kimberly-Clark
Unilever
Performance shares – awarded in September 2017, vesting in September 2020 (audited) 
On 4 September 2017, Ivan Menezes and Kathryn Mikells received performance share awards of 51,268 ADRs and 32,380 ADRs respectively under the 
DLTIP. Awards vest after a three-year period subject to the achievement of specified performance conditions. Notional dividends accrue on awards and 
are paid out either in cash or shares in accordance with the vesting schedule.
The vesting of 2017 performance share awards was subject to the achievement of three equally weighted performance measures:
–– growth in compound annual adjusted profit before exceptional items and tax; 
–– growth in organic net sales on a compound annual basis; and
–– cumulative adjusted free cash flow.
The targets and vesting outcome for performance share and share option awards granted in September 2017 are shown in the following tables:
Vesting of 2017 DLTIP
Threshold
Midpoint
Maximum
Actual
Vesting 
(% maximum)
Organic net sales (CAGR)(i)
3.5%
4.75%
6.0%
0.8%​
0%
Adjusted profit before exceptional items and tax (CAGR)(ii)
4.5%
7.5%
10.5%
0.3%​
0%
Cumulative free cash flow(iii)
£7,200m
£7,900m
£8,600m
£7,211m​
20.6%
Vesting of performance shares (% maximum)
​
​
​
​
6.9%
Adjusted profit before exceptional items and tax (CAGR)(ii)
4.5%
7.5%
10.5%
0.3%​
0%​
Relative total shareholder return(iv)
9th
–
3rd 
7th​
55%​
Vesting of share options (% maximum)
​
​
​
​
27.5%
(i)	 The compound annual growth rate (CAGR) for organic net sales is based on the application of annual organic net sales growth rates in each of the individual years ended June 2018, 
June 2019 and June 2020 (using the year ended 30 June 2017 as a base). 
(ii)	 The compound annual growth rate (CAGR) for profit before exceptional items and tax is based on the application of annual adjusted PBET growth rates in each of the individual years ended 
June 2018, June 2019 and June 2020 (using the year ended June 2017 as a base) excluding the impact of exchange, exceptional items, share buyback programmes and the post employment 
net income/charges included in other financial charges.
(iii)	Cumulative free cash flow is the aggregate of free cash flow for the three-year period excluding the impact of exchange, cash flows from exceptional items and the interest cost on share 
buyback programmes. As stated on page 166 of this Annual Report, Diageo believes that during the year ended 30 June 2020 an aggregate minimum dividend payment of €181 million 
(£166 million) should have been received in respect of its 34% investment in Moët Hennessy SAS and Moët Hennessy International SAS for their financial year ended 31 December 2019. 
Diageo believes that non-payment of this dividend constitutes a breach of the Partners’ Agreement that governs this investment and has commenced arbitration proceedings in respect of 
this dispute. Had this dividend been received before 30 June 2020, it would have resulted in cumulative free cash flow of £7,377m for the three-year period ended 30 June 2020, and a vesting 
outcome of 10% of maximum under the 2017 performance share award, instead of 6.9% of maximum as outlined in the table above. To the extent that any amounts are received by Diageo 
that are referable to this missed dividend payment, the Remuneration Committee will be asked to exercise its discretion to approve the vesting and release of up to the remaining 3.1% of the 
2017 performance share award, on the basis that such amounts are most appropriately attributable to free cash flow for the year ended 30 June 2020. In this event, corresponding disclosure 
would be made in the remuneration report for the financial year in which the remaining award vests and is released to the Executive Directors, if applicable. In line with the above, for the 
purpose of assessing long-term incentive outcomes, any amounts received by Diageo that are referable to the missed dividend payment would be included in free cash flow for the year 
ended 30 June 2020 and not for any future period, to avoid any double counting. 
(iv)	Relative total shareholder return is measured as the percentage growth in Diageo’s ordinary share price (assuming all dividends and capital distributions are re-invested) compared to the 
total shareholder return of the peer group of 16 international drinks and consumer goods companies, based on an average period of six months, and converted to a common currency  
(US dollars). 20% of the part of the award based on relative total shareholder return vests if the threshold is achieved at a ranking of 9th, with full vesting for a ranking of 1st, 2nd or 3rd.  
As outlined in the TSR table above, the vesting profile for this measure does not operate on a straight-line basis between threshold and maximum.
Accordingly, the 2017 performance share award vested at 6.9% and the 2017 share option award vested at 27.5% of the maximum.​
97
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Pension and benefits in the year ended 30 June 2020
Benefits provisions for the Executive Directors are in accordance with the information set out in the Directors’ remuneration policy table.
Pension arrangements (audited)
Ivan Menezes and Kathryn Mikells are members of the Diageo North America Inc. Supplemental Executive Retirement Plan (SERP) with an accrual rate of 
20% of base salary during the year ended 30 June 2020. The accrual rate for Ivan Menezes was reduced from 30% to 20% of salary with effect 1 July 2019.
The SERP is an unfunded, non-qualified supplemental retirement programme. Under the plan, accrued company contributions are subject to quarterly 
interest credits. Under the rules of the SERP, employees can withdraw the balance of the plan six months after leaving service (in the case of Ivan Menezes) 
or six months after leaving service or age 55, if later (in the case of Kathryn Mikells). The balance may be withdrawn in either a lump sum or five equal 
annual instalments, depending on the size of the balance.
Ivan Menezes participated in the US Cash Balance Plan and the Benefit Supplemental Plan (BSP) until August 2012 and has accrued benefits under 
both plans. The Cash Balance Plan is a qualified funded pension arrangement. Employer contributions are 10% of pay capped at the Internal Revenue 
Service (IRS) limit. The BSP is a non-qualified unfunded arrangement; notional employer contributions are 10% of pay above the IRS limit. Interest 
(notional for the BSP) is credited quarterly on both plans.
Ivan Menezes was also a member of the Diageo Pension Scheme (DPS) in the United Kingdom between 1 February 1997 and 30 November 1999. 
The accrual of pensionable service ceased in 1999 but the linkage to salary remained until January 2012. Under the Rules of the Scheme, this benefit 
is payable unreduced from age 60. Ivan Menezes is able to take his UK pension benefits from age 58 without consent, and his benefit would not be 
subject to any actuarial reduction in respect of early payment. This is a discretionary policy Diageo offers that is not set out in the DPS Scheme Rules. 
Upon death in service, a life insurance benefit of $3 million is payable for Ivan Menezes and a lump sum of four times base salary is payable for 
Kathryn Mikells.
The table below shows the pension benefits accrued by each Director to date. The accrued UK benefits for Ivan Menezes are annual pension 
amounts, whereas the accrued US benefits for Ivan Menezes and Kathryn Mikells are one-off cash balance amounts.
​
30 June 2020
30 June 2019
Executive Director
UK pension 
£’000 p.a.
US benefit 
£’000
UK pension 
£’000 p.a.
US benefit 
£’000
Ivan Menezes(i)
74
8,225
73
7,543
Kathryn Mikells(ii)
Nil
797
Nil
587
(i)	 Ivan Menezes’ US benefits are higher at 30 June 2020 than at 30 June 2019 by £682k:
a.	 £368k of which is due to pension benefits earned over the year (£281k of which is over and above the increase due to inflation – as reported in the single figure of remuneration, see page 95);
b.	 £58k of which is due to interest earned on his deferred US benefits over the year; and 
c.	 £256k of which is due to exchange rate movements over the year. 
(ii)	 Kathryn Mikells’ US benefits are higher at 30 June 2020 than at 30 June 2019 by £210k:
a.	 £186k of which is due to pension benefits earned over the year (£176k of which is over and above the increase due to inflation – as reported in the single figure of remuneration, see page 95); 
and
b.	 £24k of which is due to exchange rate movements over the year. 
The normal retirement age applicable to each Director’s benefits depends on the pension scheme, as outlined below.
Executive Director
UK benefits (DPS)
US benefits (Cash Balance 
Plan)
US benefits (BSP)
US benefits (SERP)
Ivan Menezes
60
65
6 months after leaving service
6 months after leaving service
Kathryn Mikells
n/a
n/a
n/a
6 months after leaving service, or age 55 if later
Long-term incentive awards made during the year ended 30 June 2020 (audited)
On 2 September 2019, Ivan Menezes and Kathryn Mikells received awards of performance shares and market-price share options under the DLTIP; 
details are provided in the table below. The three-year period over which performance will be measured is 1 July 2019 to 30 June 2022. 
The performance conditions for performance share awards are organic net sales growth (3.75%-6%), cumulative free cash flow (£8,600m-£9,600m) 
and organic profit before exceptional items and tax growth (4.5%-10.5%), equally weighted. The performance measures for share option awards are 
organic profit before exceptional items and tax growth (4.5%-10.5%) and relative total shareholder return (median-upper quintile), equally weighted. 
The targets were disclosed in full in the 2019 remuneration report.
20% of DLTIP awards will vest at threshold, with vesting up to 100% if the maximum level of performance is achieved.
Executive Director
Date of grant
Plan
Share type
Awards made 
during the year
Exercise 
price
Face value 
‘000
Face value 
(% of salary)
Ivan Menezes
02/09/2019
DLTIP – share options
ADR
38,827
$170.28
$6,230
375%
Ivan Menezes
02/09/2019
DLTIP – performance shares
ADR
38,827
–
$6,230
375%
Kathryn Mikells
02/09/2019
DLTIP – share options
ADR
24,522
$170.28
$3,935
360%
Kathryn Mikells
02/09/2019
DLTIP – performance shares
ADR
24,522
–
$3,935
360%
Directors’ remuneration report continued
98
DIAGEO Annual Report 2020

The proportion of the awards outlined above that will vest is dependent upon the achievement of performance conditions and continued employment, 
and the actual value may be nil. The vesting outcomes will be disclosed in the 2022 Annual Report.
The face value of each award has been calculated using the award price. In accordance with the Plan Rules, the number of performance shares and 
share options granted under the DLTIP was calculated by using the average closing share price for the last six months of the preceding financial year 
($160.46). In accordance with the plan rules, the exercise price was calculated using the average closing share price of the three days preceding the grant 
date ($170.28). The ADR price on the date of grant was $174.72.
Outstanding share plan interests (audited)
Plan name
Date of award
Performance 
period
Date of 
vesting
Share type
Share price 
on date 
of grant
Exercise 
price
Number 
of shares/
options at 
30 June 
2019(i)
Granted
Vested/
exercised
Dividends 
awarded 
and released
Lapsed
Number of 
shares/options 
at 30 June 
2020
Ivan Menezes
DLTIP – share options
Sep 2015
2015-2018
2018
ADR
​
$104.93
29,895
​
​
​
​
29,895
DLTIP – share options(iii)
Sep 2016
2016-2019
2019
ADR
​
$113.66
54,356
​
​
14,622
39,734
Total vested but unexercised share options in Ords(ii)
278,516
DLTIP – share options(iv)
Sep 2017
2017-2020
2020
ADR
​
$134.06
51,268
​
​
​
​
51,268
DLTIP – share options(v)
Sep 2018
2018-2021
2021
ADR
​
$140.89
42,848
​
​
​
​
42,848
DLTIP – share options
Sep 2019
2019-2022
2022
ADR
​
$170.28
0
38,827
​
​
​
38,827
Total unvested share options subject to performance in Ords(ii)
531,772
DLTIP – performance 
shares(vii)
Sep 2016
2016-2019
2019
ADR
$115.77
​
54,356
​
48,539
2,792​
5,817
0
DLTIP – performance 
shares(iv)
Sep 2017
2017-2020
2020
ADR
$134.83
​
51,268
​
​
​
​
51,268
DLTIP – performance 
shares(v)
Sep 2018
2018-2021
2021
ADR
$139.41
​
42,848
​
​
​
​
42,848
DLTIP – performance shares
Sep 2019
2019-2022
2022
ADR
$174.72
​
0
38,827
​
​
​
38,827
Total unvested shares subject to performance in Ords(ii)
531,772
Kathryn Mikells(ix)
DLTIP – share options(iii)(vi)
Sep 2016
2016-2019
2019
Ord
​
2113p
128,253
​
​
34,501
93,752
Total vested but unexercised share options in Ords
93,752
DLTIP – share options(iv)
Sep 2017
2017-2020
2020
ADR
​
$134.06
32,380
​
​
​
​
32,380
DLTIP – share options(v)
Sep 2018
2018-2021
2021
ADR
​
$140.89
27,062
​
​
​
​
27,062
DLTIP – share options
Sep 2019
2019-2022
2022
ADR
​
$170.28
0
24,522
​
​
​
24,522
Total unvested share options subject to performance in Ords(ii)
335,856
DLTIP – performance 
shares(viii)
Sep 2016
2016-2019
2019
Ord
2127p
​
128,253
​
114,529
6,220​
13,724
0
DLTIP – performance 
shares(iv)
Sep 2017
2017-2020
2020
ADR
$134.83
​
32,380
​
​
​
​
32,380
DLTIP – performance 
shares(v)
Sep 2018
2018-2021
2021
ADR
$139.41
​
27,062
​
​
​
​
27,062
DLTIP – performance shares
Sep 2019
2019-2022
2022
ADR
$174.72
​
0
24,522
​
​
​
24,522
Total unvested shares subject to performance in Ords(ii)
 335,856
(i)	 For unvested awards this is the number of shares/options initially awarded. For exercisable share options, this is the number of outstanding options. All share options have an  
expiry date of 10 years after the date of grant.
(ii)	 ADRs have been converted to Ords (one ADR is equivalent to four ordinary shares) for the purpose of calculating the total number of vested and unvested shares and options.
(iii)	The total number of share options granted under the DLTIP in September 2016 and showing as outstanding as at 30 June 2020 are vested but unexercised share options.
(iv)	Awards made of performance shares and share options under the DLTIP in September 2017 and due to vest in September 2020 are included here as unvested share awards subject  
to performance conditions, although the awards have also been included in the single figure of remuneration table on page 95, since the performance period ended during the  
year ended 30 June 2020. 
(v)	Details of the performance conditions attached to DLTIP awards of performance shares and share options granted in 2018 are organic net sales growth (3.75%-6%), organic growth 
in profit before exceptional items and tax (4.5%-10.5%), cumulative free cash flow (£7,400m-£8,700m) and relative total shareholder return (median-upper quintile). Full details  
of the performance conditions were disclosed in Diageo’s 2018 annual report on remuneration.
(vi)	1,419 Ords of this award were delivered as tax-qualified share options.
(vii)		 Ivan Menezes must retain 26,583 ADRs of the 48,539 shares that vested on 5 September 2019 until 5 September 2021 under the post-vesting retention period.
(viii)	Kathryn Mikells must retain 63,854 Ords of the 114,529 shares that vested on 4 September 2019 until 5 September 2021 under the post-vesting retention period.
(ix)		 Kathryn Mikells also holds 1,031 outstanding options over ordinary shares under an all-employee share plan, which are not subject to performance and not included in this table.
99
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Directors’ shareholding requirements and share and other interests (audited) 
The beneficial interests of the Directors in office at 30 June 2020 (and their connected persons) in the ordinary shares (or ordinary share equivalents) of the 
company are shown in the table below.
​
Ordinary shares or equivalent(i) (ix)
​
​
​
​
31 July 2020(ii)
30 June 2020 
(or date of 
departure, if earlier)
30 June 2019 
(or date of 
appointment, if later)
Shareholding 
requirement 
(% salary) (iii)
Shareholding at 
31 July 2020  
(% salary)(iii)
Shareholding 
requirement met
Chairman
–
​
​
​
​
​
Javier Ferrán(vi)
250,802​
250,496
217,000
–
–
–
Executive Directors
​
​
​
​
​
​
Ivan Menezes(iv) (vi)
1,134,374​
1,134,374​
1,122,042
500%
2,635%
Yes
Kathryn Mikells(v) (vi)
223,964​
223,964
158,506
400%
791%
Yes
Non-Executive Directors
​
​
​
​
​
​
Lord Davies of Abersoch
–​
5,052
5,052
–
–
–
Ho KwonPing
4,649​
4,649​
4,543
–
–
–
Alan Stewart
6,905​
6,905​
6,751
–
–
–
Nicola Mendelsohn
5,000​
5,000​
5,000
–
–
–
Susan Kilsby(vi)
2,600​
2,600​
2,600
–
–
–
Debra Crew(vi) (vii)
–​
260
260
–
–
–
Melissa Bethell(viii)​
–​
–
–​
–​
–​
–​
Notes
(i)	 Each person listed beneficially owns less than 1% of Diageo’s ordinary shares. Ordinary shares held by Directors have the same voting rights as all other ordinary shares.
(ii)	 Any change in shareholding between the end of the financial year on 30 June 2020 and the last practicable date before publication of this report, being 31 July 2020, is outlined in the table 
above. The last practicable date is within one month of the AGM notice. 
(iii)	Both the shareholding requirement and shareholding at 31 July 2020 are expressed as a percentage of base salary on 30 June 2020 and calculated using an average share price for the year 
ended 30 June 2020 of 3062.84 pence.
(iv)	In addition to the number of shares reported in the table above, Ivan Menezes holds 69,629 number of vested but unexercised share options (over ADRs; equal to 278,516 ordinary shares).
(v)	In addition to the number of shares reported in the table above, Kathryn Mikells holds 93,752 vested but unexercised share options (over ordinary shares). 
(vi)	Javier Ferrán, Ivan Menezes, Kathryn Mikells, Susan Kilsby and Debra Crew have share interests in ADRs (one ADR is equivalent to four ordinary shares); the share interests in the table are 
stated as ordinary share equivalents. 
(vii)		 Debra Crew stepped down from the Board on 24 March 2020.
(viii)	Melissa Bethell was appointed to the Board on 30 June 2020. 
(ix)		 No share options were exercised by the Directors during the year ended 30 June 2020.
Directors’ remuneration report continued
Relative importance of spend on pay
The graph below illustrates the relative importance of spend on pay (total remuneration of all group employees) compared with distributions  
to shareholders (total dividends plus the share buyback programme but excluding transaction costs), and the percentage change from the year  
ended 30 June 2019 to the year ended 30 June 2020. The Committee considers that there are no other significant distributions or payments of  
profit or cash flow.
Distributions to shareholders
Staﬀ pay
2019 
2020
1,580
1,404
(11.1)%
4,392
2,904
(33.9)%
Relative importance of spend on pay – percentage change
100
DIAGEO Annual Report 2020

CEO pay ratio
In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, the table below sets out Diageo’s CEO pay ratios for the year ended 
30 June 2020. This compares the Chief Executive’s total remuneration – converted into sterling – with the equivalent remuneration for the employees 
paid at the 25th (P25), 50th (P50) and 75th (P75) percentile of Diageo’s workforce in the United Kingdom. The total remuneration for each quartile employee, 
and the salary component within this, is also outlined in the table below.
Year
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2019(i)
Option A(ii)
265:1​
208:1​
166:1​
2020
Option A(ii) (iii)
51:1
39:1
31:1
2020​
Total pay and benefits
£41,881
£54,234
£68,112
2020​
Salary
£30,866
£37,632
£52,659
(i)	 2019 CEO pay ratios have been updated to reflect the value of the updated 2019 single figure of remuneration, which incorporates long-term incentives based on actual share price 
at vesting, rather than the average share price in the last three months of the financial year, which had been used as a proxy for the 2019 disclosure. 
(ii)	 Only people employed in the United Kingdom and with the same number of contractual working hours throughout the full 12-month period have been included in the calculation. 
Inclusion of employees outside this group would require a complex simulation of full-time annual remuneration and would not have a meaningful impact on the ratio. 
(iii)	The total remuneration for employees is based on actual earnings for the 11 months to 31 May 2020, and a projection for June 2020 that replicates the relevant items of the previous 
month’s earnings. This pragmatic approach provides an accurate calculation of the ratios, while mitigating the challenge of the limited timeframe between the end of the financial year 
and the publishing of the Annual Report. Pay changes from May to June would seldom be material. This assumption was tested by replicating the 2019 calculation using actual earnings for 
June 2019, which resulted in no change to the median employee total pay and benefits figure for 2019 and indicated that the maximum variance in the median pay ratio in any given year 
would be 1 point only. 
0
50
100
150
200
250
300
350
400
450
500
0
5
10
15
20
25
30
35
40
45
50
Diageo
FTSE  100
Chief Executive
total remuneration
Total shareholder return –
value of hypothetical £100 holding
Chief Executive total remuneration
£ million
June 2020
June 2019
June 2018
June 2017
June 2016
June 2015
June 2014
June 2013
June 2012
June 2011
June 2010
​
Paul S Walsh  
£’000
Paul S Walsh  
£’000
Paul S Walsh  
£’000
Ivan Menezes(i)  
£’000
Ivan Menezes(i)  
£’000
Ivan Menezes(i)  
£’000
Ivan Menezes(i) 
£’000
Ivan Menezes(i) 
£’000
Ivan Menezes(i) 
£’000
Ivan  
Menezes(ii) 
£’000​
Chief Executive total remuneration 
(includes legacy LTIP awards)
4,449
11,746
15,557
7,312
3,888
4,156
3,399
8,995
11,776
2,139
Annual incentive(ii)
77%
74%
51%
9%
44%
65%
68%
70%
61.0%
0%​
Share option(ii)
100%
100%
100%
71%
0%
0%
0%
60%
73.1%
27.5%​
Performance share(ii)
0%
65%
95%
55%
33%
31%
0%
70%
89.3%
6.9%​
(i)	 To enable comparison Ivan Menezes’ single total figure of remuneration has been converted into sterling using the average weighted exchange rate for the relevant financial year.
(ii)	 % maximum opportunity. 
Chief Executive total remuneration and TSR performance
The graph below shows the total shareholder return for Diageo and the FTSE 100 Index since 30 June 2010 and demonstrates the relationship between 
pay and performance for the Chief Executive, using current and previously published single total remuneration figures. The FTSE 100 Index has been 
chosen because it is a widely recognised performance benchmark for large companies in the United Kingdom.
101
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Directors’ remuneration report continued
Methodology 
Consistent with the approach for Diageo’s voluntary disclosure in 2019, the calculation methodology used to identify the employees at each 
quartile for 2020 is Option A, as defined in the regulations. We believe this is the most robust and accurate approach, and in line with shareholder 
expectations. Total full-time equivalent remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant 
year and has, other than where noted below, been calculated in line with the methodology for the ‘single figure of remuneration’ for the Chief Executive 
(shown on page 95 of this report). Actual remuneration was converted into the full-time equivalent for the role and location by pro-rating earnings to 
reflect full-time contractual working hours and these figures were then ranked to identify the employees sitting at the percentiles. In light of financial 
performance outcomes being signed off close to the publishing date of the Annual Report, the Diageo Group Business Multiple – which applies to the 
majority of UK employees – has been used to calculate all payments under the annual incentive schemes, although specific regional or market business 
multiples may apply in practice. Pension values are not calculated on the same basis as the Chief Executive figure, but rather as the total of contributions made 
by the company during the financial year. This approach allows meaningful data for a large group of individuals to be obtained in a more efficient way. 
Points to note for the year ended 30 June 2020 
As indicated in last year’s disclosure, Diageo’s Chief Executive has a larger proportion of his total remuneration linked to business performance than 
other employees in the UK workforce. Last year’s performance was strong, but in 2020 there will be no annual incentive payout and long-term 
incentives related to the three-year period ended 30 June 2020 will have limited vesting. As a result, total remuneration for the Chief Executive has 
changed significantly from 2019 to 2020. Total remuneration across the wider UK workforce has also reduced due to the absence of a bonus pay 
out and freeshares award as a result of the Covid-19 pandemic, as evidenced by the reduction in the total pay and benefits figures versus last year. 
However, the main driver for the reduction of the pay ratios is variable pay for the Chief Executive. The median pay ratio for 2020 is consistent with 
the pay and progression policies for Diageo’s UK employees as a whole. As in 2019, the individual receiving median pay belongs to the group of 
manufacturing workers involved in the distillation, warehousing, maturation, bottling and packaging of Scotch whisky and other spirits and beer that 
makes up almost half of the workforce in the United Kingdom. 
Looking after our people and investing in talent
Throughout the Covid-19 pandemic, our focus has been firmly on the wellbeing of our employees and providing the policies, support and guidance  
they need. Diageo has sought to provide stability and reassurance to its workforce by safeguarding jobs, pay and benefits, and has increased its overall 
benefit offering by rolling-out a global employee assistance programme and extending access to bereavement leave and life insurance to all employees 
across the world.
To help us emerge stronger, we continue to invest in attracting world-class talent by offering total reward packages that people value and that 
support them to be their best. Although most employees’ salaries will remain unchanged in 2020, we still aim to offer fair and competitive rates of 
pay across the business and therefore we continue to carry out regular market benchmarking which allows us to intervene where required. 
We are proud of being a UK Living Wage employer since 2017 and of the progress we have made towards closing the gender pay gap (more details 
available at www.diageo.com) . Benefits such as competitive pension schemes, the opportunity to participate in employee share-ownership schemes, a 
product allowance to help employees enjoy Diageo products, generous leave policies, healthcare and life insurance are key parts of our total reward offering. 
Annual change in pay for Directors and all employees
In line with the requirements in The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, which 
implement Articles 9a and 9b of European Directive 2017/828/EC1 (commonly known as the Revised Shareholder Rights Directive or SRD), the 
table below shows the percentage change in Directors’ remuneration and average remuneration of employees from the year ended 30 June 2019 to 
the year ended 30 June 2020. Given the small number of people employed by the Diageo plc entity, data for all employees of the Diageo Group has 
been included.
Relatively few employees will receive a bonus in 2020 and there will be no annual incentive payout for Executive Directors, the impact of which 
is visible in the bonus percentage change. The year-on-year movement in salary for Executive Directors and employees reflects the annual review 
implemented in October 2019 and changes throughout the financial year ending 30 June 2020. The impact of the announced absence of a global 
salary review in 2020 will be reflected in next year’s disclosure. The increase in Kathryn Mikell’s benefits relates to the provision of financial counselling 
for compliance with UK and US tax affairs, as referenced in the single figure table on page 95. On 29 January 2019 Susan Kilsby was appointed Chair of 
the Remuneration Committee and subsequently became Senior Independent Director on 31 October 2019. These positions were previously held by 
Lord Davies of Abersoch and, as a result, there is a significant change in both of their fees from 2019 to 2020. 
102
DIAGEO Annual Report 2020

Non-Executive Directors
Fee policy
Javier Ferrán’s fee as non-executive Chairman as at 1 January 2020 is £600,000 per annum, rising to £650,000 on 1 January 2021 (the planned increase for 1 
January 2020 was deferred, at the Chairman’s request, due to the Covid-19 pandemic). The Chairman’s fee is appropriately positioned against our 
comparator group of FTSE 30 companies excluding financial services.
The basic fee for Non-Executive Directors increased from £92,000 to £98,000 and the additional fee for the Senior Non-Executive Director increased 
from £25,000 to £30,000, both effective 1 January 2020. There was no change to the additional fees for the Chair of the Audit Committee and Chair of the 
Remuneration Committee in the year ended 30 June 2020. The next review is scheduled for January 2021.
​
January 
2020
January 
2019
Per annum fees
£’000
£’000
Chairman of the Board
600
600
Non-Executive Directors
​
​
Base fee
98
92
Senior Non-Executive Director
30
25
Chairman of the Audit Committee
30
30
Chairman of the Remuneration Committee
30
30
Non-Executive Directors’ remuneration for the year ended 30 June 2020 (audited)
​
Fees 
£’000
Taxable benefits(i)  
£’000
Total 
£’000
​
2020
2019
2020
2019
2020
2019
Chairman
​
​
​
​
​
​
Javier Ferrán(ii)
600
600
1
1
601
601
Non-Executive Directors
​
​
​
​
​
​
Lord Davies of Abersoch
103​
134​
2​
1
105
135
Susan Kilsby
144​
105
10​
6
154
111
Melissa Bethell(iii)​
0​
–​
0​
–
0​
–
Debra Crew(iv)
71​
19
8​
–
79​
19
Ho KwonPing
95
92
4​
2
99
94
Nicola S Mendelsohn
95
92
1
1
96
93
Alan JH Stewart
125​
122
1
1
126​
123
(i)	 Taxable benefits include a product allowance and expense reimbursements relating to travel, accommodation and subsistence in connection with attendance at Board meetings during the 
year, which are deemed by HMRC to be taxable in the United Kingdom. The amounts in the single figure of total remuneration table above include the grossed-up cost of UK tax paid by the 
company on behalf of the Directors. Non-taxable expense reimbursements have not been included in the single figure of remuneration table above. 
(ii)	 £100,000 of Javier Ferrán’s net remuneration in the year ended 30 June 2020 was used for the monthly purchase of Diageo ordinary shares, which must be retained until he retires from the 
company or ceases to be a Director for any other reason.
(iii)	Melissa Bethell was appointed to the Board on 30 June 2020 and received £377 in fees for the year ended 30 June 2020.
(iv)	Debra Crew stepped down from the Board on 24 March 2020.
2020
Year-on-year change in pay for Directors compared to the global average employee
Average  
employee (i)
​
Executive Directors (ii)
​
Non-Executive Directors (iii)
​
Ivan Menezes
Kathryn Mikells ​
Javier Ferran
Debra Crew (iv)
Lord Davies
Susan Kilsby
Ho KwonPing
Nicola 
Mendelsohn
Alan Stewart
Salary
3.7%​ ​
2.7%​
2.8%​ ​
0%​
3.3%​
(22.9%)​
37.3%​
3.3%​
3.3%​
2.5%​
Bonus
(67.8%)​​
(100%)​
(100%)​​
–
–
–
–
–
–
–
Benefits
6.9%​ ​
0.8%​
55.9%​​
0%​
527.7%​
27.4%​
68.9%​
93.3%​
0%​
0%​
(i)	 Calculated by dividing staff cost related to salaries, bonus and benefits by the average number of employees on a full-time equivalent basis, as disclosed in the financial statements under 
Staff cost and average number of employees (note 3c) on page 129-130, but reduced to account for the inclusion of Executive Directors in reported figures. The salary, bonus and benefits 
data are subsets of the Wages and Salaries figure disclosed in note 3c. In line with the approach for the Directors, bonus reflects the payout in relation to performance during the relevant 
financial year. 
(ii)	 Calculated using the data from the single figure table in the annual report on remuneration (page 95) in US dollars, as both Ivan Menezes and Kathryn Mikells are paid in this currency. 
(iii)	Calculated using the fees and taxable benefits disclosed under Non-Executive Directors’ remuneration in the table below. Taxable benefits for Non-Executive Directors comprise a product 
allowance as well as expense reimbursements relating to attendance at Board meetings, which may be variable year-on-year and have not exceeded £10k in total.
(iv)	Debra Crew was appointed to the Board on 18 April 2019 and stood down on 24 March 2020. To enable comparison and to provide a meaningful reflection of annual percentage increase, 
for the purposes of this calculation, her 2019 and 2020 fees were adjusted to reflect full-year appointment to the Board.
103
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Directors’ remuneration report continued
Salary increases for the year ending 30 June 2021
As outlined in the 2019 annual report on remuneration, base salaries for the Chief Executive and Chief Financial Officer were increased by 3%, effective  
from 1 October 2019.
In April 2020, the Remuneration Committee reviewed base salaries for senior management and agreed that no increase to salaries will apply from 
1 October 2020, in light of the impact of the Covid-19 pandemic on business performance in the year ended 30 June 2020.
​
Ivan Menezes
Kathryn Mikells
Salary at 1 October (‘000)
2020
2019
2020
2019
Base salary
$1,661
$1,661
$1,093
$1,093
% increase (over previous year)
0%
3%
0%
3%
Annual incentive design for the year ending 30 June 2021
The measures and targets used in the AIP are reviewed annually by the Remuneration Committee and are chosen to drive financial and individual 
business performance goals related to the company’s short-term strategic operational objectives. The AIP design for Executive Directors in the year 
ending 30 June 2021 will comprise the following performance measures and weightings, with targets set for each half-year period and the final payout 
determined at the year-end, subject to the Committee’s assessment of holistic performance over the full financial year: 
–– operating profit (% growth) (26.67% weighting): stretching profit targets drive operational efficiency and influence the level of returns that can be 
delivered to shareholders through increases in share price and dividend income not including exceptional items or exchange;
–– net sales (% growth) (26.67% weighting): a key performance measure of year-on-year top line growth;
–– operating cash conversion (26.67% weighting): ensures focus on efficient cash delivery by the end of the year; 
–– individual business objectives (20% weighting): measurable deliverables that are specific to the individual and are focused on supporting the delivery of 
key strategic objectives.
The Committee has discretion to adjust the payout to reflect underlying business performance and any other relevant factors.
Details of the targets for the year ending 30 June 2021 will be disclosed retrospectively in next year’s annual report on remuneration, by which time 
they will no longer be deemed commercially sensitive by the Board.
Long-term incentive awards to be made in the year ending 30 June 2021
The long-term incentive plan measures are reviewed annually by the Remuneration Committee and are selected to reward long-term consistent 
performance in line with Diageo’s business strategy and to create alignment with the delivery of value for shareholders. The Committee has ensured that the 
incentive structure for senior management does not raise environmental, social and governance risks by inadvertently motivating irresponsible behaviour.
As last year, DLTIP awards made in September 2020 will comprise awards of both performance shares and share options, based on stretching 
targets against the key performance measures outlined in the table below. The measure on profit before exceptional items and tax has been replaced 
by a measure on adjusted earnings per share growth to include the impact of tax. In addition, a new ESG measure has been introduced, as described below.
The performance share element of the DLTIP applies to the Executive Committee and the top cadre of senior leaders across the organisation 
worldwide, whilst the share option element is applicable to a much smaller population comprising only members of the Executive Committee. 
One market price option is valued at one-third of a performance share.
Given the uncertainty of the severity and duration of the impact of the Covid-19 pandemic on the long-term business plan, the targets for this award 
will be set after the announcement of the interim financial results in January 2021.
​
Performance shares
Share options
​
​
Organic net  
sales growth
Cumulative free  
cash flow
ESG  
measure
Growth in adjusted  
earnings per share
Relative total 
shareholder return
Weighting (% total)
 40%
40%
20%
 50%
50%
The ESG measure comprises four goals reflecting Diageo’s vision to make a positive impact on the environment and society, with each goal weighted equally: 
–– carbon reduction in direct operations;
–– water efficiency in direct operations;
–– number of people with positive attitudinal change on the dangers of underage drinking following participation in the Smashed education programme; and
–– inclusion and diversity metric (one measure on % female leaders globally, and another measure on % ethnically diverse leaders in certain geographies).
Awards are calculated on the basis of a six-month average share price for the period ending 30 June 2020, which is in line with the award price for 
previous years and as a result no adjustment to award size is considered necessary.
It is intended that a DLTIP award of 500% of base salary will be made to Ivan Menezes in September 2020, comprising 375% of salary in performance shares 
and 125% of salary in market-price share options (in performance share equivalents; one market price option is valued at one-third of a performance share).
It is intended that a DLTIP award of 480% of salary will be made to Kathryn Mikells in September 2020, comprising 360% of salary in performance shares 
and 120% of salary in market price share options (in performance share equivalents). 
Looking ahead to 2021
104
DIAGEO Annual Report 2020

Additional information 
Remuneration Committee
Over the year, the Remuneration Committee has consisted of the following independent Non-Executive Directors: Susan Kilsby, Lord Davies of Abersoch, 
Melissa Bethell, Ho KwonPing, Nicola S Mendelsohn, Alan JH Stewart and Debra Crew. Susan Kilsby is the Chair of the Remuneration Committee. The 
Chairman of the Board and the Chief Executive may, by invitation, attend Remuneration Committee meetings except when their own remuneration is 
discussed. Diageo’s Chief Human Resources Officer and Global Performance and Reward Director are also invited from time to time by the Remuneration 
Committee to provide their views and advice. The Chief Executive and Chief Human Resources Officer are not present when their own remuneration is 
discussed. The Chief Financial Officer may also attend to provide performance context to the Committee during its discussions about target setting. 
Information on meetings held and Director attendance is disclosed in the corporate governance report.
The Remuneration Committee’s principal responsibilities are:
–– making recommendations to the Board on remuneration policy as applied to the Executive Directors and the Executive Committee;
–– setting, reviewing and approving individual remuneration arrangements for the Chairman of the Board, Executive Directors and Executive Committee 
members including terms and conditions of employment;
–– determining arrangements in relation to termination of employment of the Executive Directors and other designated senior executives;
–– making recommendations to the Board concerning the introduction of any new share incentive plans which require approval by shareholders; and
–– ensuring that remuneration outcomes are appropriate in the context of underlying business performance, that remuneration practices are 
implemented in accordance with the approved remuneration policy, and that remuneration does not raise environmental, social and governance 
issues by inadvertently motivating irresponsible behaviour. 
Full terms of reference for the Committee are available at www.diageo.com and on request from the Company Secretary.
The Committee has considered the remuneration policy and practices in the context of the principles of the Corporate Governance Code, as follows:
Clarity – the Committee engages regularly with executives, shareholders and their representative bodies in order to explain the approach to 
executive pay;
Simplicity – the purpose, structure and strategic alignment of each element of pay has been clearly laid out in the remuneration policy;
Risk – there is an appropriate mix of fixed and variable pay, and financial and non-financial objectives, and there are robust measures in place to 
ensure alignment with long-term shareholder interests, including the post-vesting retention period, shareholding requirement and bonus deferral  
into shares;
Predictability – the pay opportunity under different performance scenarios are set out on page 92 of this report;
Proportionality – executives are incentivised to achieve stretching targets over an annual and three-year period, and the Committee assesses 
performance holistically at the end of each period, taking into account underlying business performance and the internal and external context. 
The Committee may exercise discretion to ensure that payouts are appropriate; and
Alignment with culture – non-financial objectives may be incentivised under the individual business objective element of the annual incentive plan 
and ESG priorities are incentivised under the long-term incentive plan, which reinforces the company’s purpose and values.
External advisors 
During the year ended 30 June 2020, the Remuneration Committee received advice on executive remuneration from Deloitte. Deloitte was appointed 
by the Committee in May 2019, following a comprehensive tendering process with several consulting firms. Deloitte is a founding member of the 
Remuneration Consultants Group and adheres to its code in relation to executive remuneration consulting. The Committee requests Deloitte attend 
meetings periodically during the year and is satisfied that the advice it has received has been objective and independent. 
Deloitte provides unrelated services to the company in the areas of immigration services and management consultancy. During the year, Deloitte 
supported the Committee in providing: remuneration benchmarking survey data to support the salary review for the Executive Committee, advice on 
the design of long-term incentives and the level of stretch in the long-term incentive targets and periodic updates on the TSR of Diageo and its peer 
companies for outstanding performance cycles. The fees paid to Deloitte in relation to advice provided to the Committee were £151,100 and were 
determined on a time and expenses basis.
Clifford Chance provided advice on the operation of share plans during the year. Fees paid in relation to this advice, again on a time and expenses basis, 
were £62,095.
The Committee is satisfied that the Deloitte and Clifford Chance engagement partners and teams that provide remuneration advice to the 
Committee do not have connections with Diageo that may impair their independence. The Committee reviewed the potential for conflicts of interest  
and judged that there were appropriate safeguards against such conflicts.
The table below summarises the annual DLTIP awards to Ivan Menezes and Kathryn Mikells in September 2020.
Grant value (% salary)
Chief Executive
Chief Financial Officer
Performance share equivalents (1 share: 3 options)
Performance shares
375%
360%
Share options
125%
120%
Total
500%
480%
105
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Statement of voting
The following table summarises the details of votes cast in respect of the resolutions on the Directors’ remuneration policy at the 2017 AGM and the 
annual report on remuneration at the 2019 AGM.
​
​
For
Against
Total votes cast
Abstentions
Directors’ remuneration policy
Total number of votes
1,905,251,510
75,507,013
1,980,758,523
2,048,247
Percentage of votes cast
96.19%
3.81%
100%
n/a
Annual report on remuneration
Total number of votes
1,694,726,156
54,505,285
1,749,231,441
11,478,228
Percentage of votes cast
96.88%
3.12%
100%
n/a​
The Committee was pleased with the level of support shown for the remuneration policy and implementation report and appreciated the active 
participation of shareholders and their representative advisory bodies in consulting on executive remuneration matters.
Emoluments and share interests of senior management 
The total emoluments for the year ended 30 June 2020 of the Executive Directors, the Executive Committee members and the Company Secretary 
(together, the senior management) of Diageo comprising base salary, annual incentive plan, share incentive plan, termination payments and other 
benefits were £12.1 million (2019 – £21.5 million). 
The aggregate amount of gains made by the senior management from the exercise of share options and from the vesting of awards during the 
year was £37.3 million. In addition, they were granted 738,490 performance-based share options under the Diageo Long-Term Incentive Plan (DLTIP) 
during the year at a weighted average share price of 3483 pence, exercisable by 2029 and no options were granted under DLTIP that are not subject to 
performance. In addition they were granted 680 options over ordinary shares under the UK savings-related share options scheme (SAYE). They were also 
awarded 700,279 performance shares under the DLTIP in September 2019, which will vest in three years subject to the relevant performance conditions. 
Senior management options over ordinary shares 
At 31 July 2020, the senior management had an aggregate beneficial interest in 2,610,138 ordinary shares in the company and in the following options 
over ordinary shares in the company:
​
Number of options
Weighted average 
exercise price
Option period
Ivan Menezes
810,288
2561p
2018-2029​
Kathryn Mikells
429,608
2718p
2019-2029​
Other(i)
2,483,620​
2458p
2013-2029​
3,723,516
(i)	 Other members of the Executive Committee, which includes the Company Secretary. 
Key management personnel related party transactions (audited)
Key management personnel of the group comprises the Executive and Non-Executive Directors, the members of the Executive Committee and the 
Company Secretary.
Diageo plc has granted rolling indemnities to the Directors and the Company Secretary, uncapped in amount, in relation to certain losses and 
liabilities which they may incur in the course of acting as Directors or Company Secretary (as applicable) of Diageo plc or of one or more of its subsidiaries. 
These indemnities continue to be in place at 30 June 2020.
Other than disclosed in this report, no Director had any interest, beneficial or non-beneficial, in the share capital of the company. Save as disclosed 
above, no Director has or has had any interest in any transaction which is or was unusual in its nature, or which is or was significant to the business of 
the group and which was effected by any member of the group during the financial year, or which having been effected during an earlier financial year, 
remains in any respect outstanding or unperformed. There have been no material transactions during the last three years to which any Director or officer, 
or 3% or greater shareholder, or any spouse or dependent thereof, was a party. There is no significant outstanding indebtedness to the company from any 
Directors or officer or 3% or greater shareholder.
Statutory and audit requirements
This report was approved by a duly authorised Committee of the Board of Directors and was signed on its behalf on 4 August 2020 by Susan Kilsby who is 
Chairman of the Remuneration Committee.
The Board has followed the principles of good governance as set out in the UK Corporate Governance Code and complied with the regulations 
contained in the Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules of the 
Financial Conduct Authority and the relevant schedules of the Companies Act 2006.
The Companies Act 2006 and the Listing Rules require the company’s auditor to report on the audited information in their report and to state 
that this section has been properly prepared in accordance with these regulations.
PwC has audited the report to the extent required by the Regulations, being the sections headed Single total figure of remuneration for 
Executive Directors (and notes), Annual incentive plan (AIP), Long-term incentive plans (LTIPs), Pension arrangements, Directors’ shareholding 
requirements and share and other interests, Outstanding share plan interests, Non-Executive Directors’ remuneration and Key management 
personnel related party transactions.
The annual report on remuneration and Directors’ remuneration report are subject to shareholder approval at the AGM on 28 September 2020;  
Terms defined in this remuneration report are used solely herein.
Directors’ remuneration report continued
106
DIAGEO Annual Report 2020

The Directors present the Directors’ report for the year ended 30 June 2020.
Annual General Meeting (AGM)
The AGM will be held at the company’s registered office at Lakeside Drive, 
Park Royal, London NW10 7HQ on 28 September 2020 at 2.30 pm.
Directors
The Directors of the company who currently serve are shown in the 
section ‘Board of Directors and Company Secretary’ on pages 68 and 
69 and the names of additional and former Directors who served 
during the year are listed on page 69.
In accordance with the UK Corporate Governance Code, all 
the Directors, with the exception of Ho KwonPing, will retire by rotation 
at the AGM and offer themselves for re-election.
Further details of Directors’ contracts, remuneration and their interests 
in the shares of the company at 30 June 2020 are given in the Directors’ 
remuneration report.
The Directors’ powers are determined by UK legislation and Diageo’s 
articles of association. The Directors may exercise all the company’s powers 
provided that Diageo’s articles of association or applicable legislation do 
not stipulate that any powers must be exercised by the members.
Auditor
The auditor, PricewaterhouseCoopers LLP, is willing to continue in office 
and a resolution for its re-appointment as auditor of the company will be 
submitted to the AGM.
Disclosure of information to the auditor
In accordance with section 418 of the Companies Act 2006, the Directors 
who held office at the date of approval of this Directors’ report confirm 
that, so far as they are each aware, there is no relevant audit information of 
which the company’s auditor is unaware; and each Director has taken all 
reasonable steps to ascertain any relevant audit information and to ensure 
that the company’s auditor is aware of that information.
Corporate governance statement
The corporate governance statement, prepared in accordance with 
rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance and 
Transparency Rules, comprises the following sections of the Annual 
Report: the ‘Corporate governance report’, the ‘Audit Committee report’ 
and the ‘Additional information for shareholders’.
Significant agreements – change of control
The following significant agreements contain certain termination and 
other rights for Diageo’s counterparties upon a change of control of 
the company.
Under the partners agreement governing the company’s 34% 
investment in Moët Hennessy SAS (MH) and Moët Hennessy International 
SAS (MHI), if a Competitor (as defined therein) directly or indirectly takes 
control of the company (which, for these purposes, would occur if such 
competitor acquired more than 34% of the voting rights or equity interests 
in the company), LVMH Moët Hennessy – Louis Vuitton SA (LVMH) 
may require the company to sell its interests in MH and MHI to LVMH.
The master agreement governing the operation of the group’s 
market-level distribution joint ventures with LVMH states that if any person 
acquires interests and rights in the company resulting in a Control Event 
(as defined) occurring in respect of the company, LVMH may within 
12 months of the Control Event either appoint and remove the chairman 
of each joint venture entity governed by such master agreement, who 
shall be given a casting vote, or require each distribution joint venture 
entity to be wound up. Control Event for these purposes is defined as 
the acquisition by any person of more than 30% of the outstanding voting 
rights or equity interests in the company, provided that no other person or 
entity (or group of affiliated persons or entities) holds directly or indirectly 
more than 30% of the voting rights in the company.
Related party transactions
Transactions with other related parties are disclosed in note 20 to the 
consolidated financial statements.
Distributions
In April 2020, the Directors became aware that certain share buy-backs 
and certain transactions related to the company’s employee share schemes 
with or for the benefit of the Company’s employee benefit and share 
ownership trusts undertaken between 10 May 2019 and 9 August 2019, 
amounting to approximately £320 million, (‘the affected transactions’), 
were undertaken contrary to the applicable provisions of the Companies 
Act 2006 as they were undertaken following utilisation in full of the 
company’s distributable reserves as set out in its balance sheet as at 
30 June 2018. At the Annual General Meeting to be held on 28 September 
2020, a resolution will be proposed which will appropriate an equivalent 
amount of distributable profits of the company to the payments made in 
respect of the affected transactions and will implement arrangements to 
put all potentially affected parties, so far as possible, in the position in 
which they were intended to be had the affected transactions been 
undertaken in accordance with the applicable provisions of the Companies 
Act 2006. This resolution and the arrangements that it implements will, if 
approved by shareholders, constitute a related party transaction under 
IAS 24 and under the Listing Rules, as the Directors would benefit from the 
waiver of any claims that the company has or may have against them as a 
result of the affected transactions. These arrangements are not expected 
to have any effect on the company’s financial position as the company has 
not recorded or disclosed its right potentially to make claims against any 
person in respect of the affected transactions as an asset or contingent 
asset of the company. The company has reviewed and implemented 
additional controls relating to distributable reserves to ensure that relevant 
requirements are complied with, and these controls will be subject to 
regular assessment as to ongoing effectiveness.
Major shareholders
At 30 June 2020, the following substantial interests (3% or more) in the 
company’s ordinary share capital (voting securities) had been notified to 
the company.
Shareholder
Number of  
ordinary shares
Percentage 
of issued ordinary 
share (excluding  
treasury shares) 
Date of  
notification 
of interest 
BlackRock Investment Management 
(UK) Limited (indirect holding)
147,296,928
5.89%
3 December 
2009
Capital Research and Management 
Company (indirect holding)
124,653,096
4.99%
28 April  
2009
The company has not been notified of any other substantial interests in 
its securities since 30 June 2020. The company’s substantial shareholders 
do not have different voting rights. Diageo, so far as is known by the 
company, is not directly or indirectly owned or controlled by another 
corporation or by any government. Diageo knows of no arrangements, 
the operation of which may at a subsequent date result in a change of 
control of the company.
Employment policies
A key strategic imperative of the company is to attract, retain and grow 
a pool of diverse, talented employees. Diageo recognises that a diversity 
of skills and experiences in its workplace and communities will provide 
a competitive advantage. To enable this the company has various global 
employment policies and standards, covering such issues as resourcing, 
data protection, human rights, health, safety and wellbeing. These 
policies and standards seek to ensure that the company treats current 
or prospective employees justly, solely according to their abilities to meet 
the requirements and standards of their role and in a fair and consistent 
way. This includes giving full and fair consideration to applications from 
Directors’ report 
Directors’ report
107
DIAGEO Annual Report 2020
CORPORATE GOVERNANCE

Other information
Other information relevant to the Directors’ report may be found in the following sections of the Annual Report:
Information (including that required by UK 
Listing Authority Listing Rule 9.8.4)
​
Location in Annual Report
Agreements with controlling shareholders
​
Not applicable
Amendment of articles of association
​
Additional information for shareholders – Articles of association
Contracts of significance
​
Not applicable
Details of long-term incentive schemes
​
Directors’ remuneration report
Directors – appointment and powers
​
Additional information for shareholders – Articles of association – Directors
Directors’ indemnities and compensation
​
Directors’ remuneration report – Additional information; Financial statements –  
note 20 Related party transactions
Dividends
​
Group financial review; Financial Statements – Unaudited financial information
Engagement with employees
​
Corporate governance report – Workforce engagement statement
Engagement with suppliers, customers and others
​
Stakeholder engagement; Corporate governance report – Stakeholder engagement
Events since 30 June 2020
​
Not applicable
Financial risk management
​
Financial statements – note 15 Financial instruments and risk management
Future developments
​
Chairman’s statement; Chief Executive’s statement; Our market dynamics
Greenhouse gas emissions
​
Sustainability performance; Climate-related risks; Additional information for shareholders –  
External limited assurance of selected sustainability and responsibility performance data
Interest capitalised
​
Not applicable
Non-pre-emptive issues of equity for cash (including 
in respect of major unlisted subsidiaries)
​
Not applicable
Parent participation in a placing by a listed subsidiary
​
Not applicable
Political donations
​
Corporate governance report
Provision of services by a controlling shareholder
​
Not applicable
Publication of unaudited financial information
​
Unaudited financial information
Purchase of own shares
​
Additional information for shareholders – Articles of association – Repurchase of shares;  
Financial statements – note 17 Equity
Research and development
​
Financial statements – note 3 Operating costs
Restrictions on transfer of securities
​
Additional information for shareholders – Articles of association – Restrictions on transfer of shares 
Review of the business and principal risks and 
uncertainties
​
Chief Executive’s statement; Our principal risks and risk management; Business reviews
Share capital – structure, voting and other rights
​
Additional information for shareholders – Articles of association; Financial statements– note 17 Equity
Share capital – employee share plan voting rights
​
Financial statements – note 17 Equity
Shareholder waivers of dividends
​
Financial statements – note 17 Equity
Shareholder waivers of future dividends
​
Financial statements – note 17 Equity
Sustainability and responsibility
​
Sustainability performance; Climate-related risks
Waiver of emoluments by a director
​
Not applicable
Waiver of future emoluments by a director
​
Not applicable
The Directors’ report of Diageo plc for the year ended 30 June 2020 comprises these pages and the sections of the Annual Report referred to 
under ‘Directors’, ‘Corporate governance statement’ and ‘Other information’ above, which are incorporated into the Directors’ report by reference.
In addition, certain disclosures required to be contained in the Directors’ report have been incorporated into the ‘Strategic report’ as set out in 
‘Other information’ above.
The Directors’ report, which has been approved by a duly appointed and authorised committee of the Board of Directors, was signed on its behalf 
by Siobhán Moriarty, the Company Secretary, on 4 August 2020.
Directors’ report continued
prospective employees who are disabled, having regard to their aptitudes and abilities, and not discriminating against employees under any 
circumstances (including in relation to applications, training, career development and promotion) on the grounds of any disability.
108
DIAGEO Annual Report 2020

Financial statements
Introduction
The financial statements of the group are prepared in accordance 
with International Financial Reporting Standards (IFRS) as adopted 
for use in the European Union (EU) and as issued by the 
International Accounting Standards Board (IASB).
The financial statements of Diageo plc (the company) are 
prepared in accordance with the Companies Act 2006 and in 
accordance with Financial Reporting Standard 101 Reduced 
Disclosure Framework (FRS 101).
The financial statements also include ’Unaudited Financial 
Information’ which is not required by the relevant accounting 
standards or other regulations but management believes this 
section provides important additional information.
Contents
Independent auditor’s report to the
members of Diageo plc 	
	
	
110
Primary statements
Consolidated income statement 	
	
	
119
Consolidated statement of comprehensive income 	
120
Consolidated balance sheet 	
	
	
121
Consolidated statement of changes in equity 	 	
122
Consolidated statement of cash flows 	 	
	
123
Accounting information and policies
1.	
Accounting information and policies 	
	
124
Results for the year 
2.	
Segmental information 	
	
	
126
3.	
Operating costs 	
	
	
129
4.	
Exceptional items 	
	
	
130
5.	
Finance income and charges 	
	
	
131
6.	
Investments in associates and joint ventures 	
132
7.	
Taxation 	
	
	
133
Operating assets and liabilities 
8	
Acquisition and sale of businesses and purchase  
of non-controlling interests 		
	
136
9.	
Intangible assets 	
	
	
138
10.	 Property, plant and equipment 	
	
	
141
11.	 Leases	
	
	
143
12.	 Other investments 	
	
	
144
13.	 Post employment benefits 	
	
	
145
14.	 Working capital 	
	
	
149
Risk management and capital structure 
15.	 Financial instruments and risk management 	
151
16.	 Net borrowings 	
	
	
158
17.	 Equity	
	
	
159
Other financial information 
18.	 Contingent liabilities and legal proceedings 	
163
19.	 Commitments 	
	
	
167
20.	 Related party transactions 	
	
	
168
21.	 Principal group companies 	
	
	
168
Financial statements of the company	
169
Unaudited financial information	 	
180
Introduction and contents
FINANCIAL STATEMENTS
109
DIAGEO Annual Report 2020

Independent auditors’ report to the members of Diageo plc
Report on the audit of the financial statements
Opinion
In our opinion:
–	 Diageo plc’s group financial statements and company financial 
statements (the ‘financial statements’) give a true and fair view of the 
state of the group’s and of the company’s affairs as at 30 June 2020 
and of the group’s profit and cash flows for the year then ended;
–	 the group financial statements have been properly prepared in 
accordance with International Financial Reporting Standards (IFRSs) 
as adopted by the European Union;
–	 the company financial statements have been properly prepared in 
accordance with United Kingdom Generally Accepted Accounting 
Practice (United Kingdom Accounting Standards, comprising 
FRS 101 ‘Reduced Disclosure Framework’, and applicable law); and
–	 the financial statements have been prepared in accordance with the 
requirements of the Companies Act 2006 and, as regards the group 
financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements, included within the Annual 
Report, which comprise: the consolidated and company balance sheets 
as at 30 June 2020; the consolidated income statement and consolidated 
statement of comprehensive income, the consolidated statement of 
cash flows, and the consolidated and company statements of changes 
in equity for the year then ended; and the notes to the group and 
company financial statements, which include a description of the 
significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 1 to the group financial statements, the group, 
in addition to applying IFRSs as adopted by the European Union, 
has also applied IFRSs as issued by the International Accounting 
Standards Board (IASB).
In our opinion, the group financial statements have been properly 
prepared in accordance with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards on 
Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities under 
ISAs (UK) are further described in the Auditors’ responsibilities for the audit 
of the financial statements section of our report. We believe that the audit 
evidence we have obtained is sufficient and appropriate to provide a basis 
for our opinion.
Independence
We remained independent of the group in accordance with the ethical 
requirements that are relevant to our audit of the financial statements 
in the UK, which includes the FRC’s Ethical Standard, as applicable to 
listed public interest entities, and we have fulfilled our other ethical 
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit 
services prohibited by the FRC’s Ethical Standard were not provided to 
the group or the company.
Other than those disclosed in the note 3(b) to the group financial 
statements, we have provided no non-audit services to the group or 
the company in the period from 1 July 2019 to 30 June 2020.
Our audit approach
Overview
Materiality
–	 Group financial statements: £191 million (2019 - £209 million), based on 5% of three-year weighted average profit before taxation and exceptional 
items (as defined in note 4 to the group financial statements).
–	 Company financial statements: £299 million (2019 - £93 million), based on 0.5% of net assets. For the purposes of the group audit, we applied a lower 
materiality of £26 million (2019 - £24 million) to company balances and transactions, other than those which were eliminated on consolidation in the 
group financial statements.
Audit scope
–	 We conducted full scope audit work in nine countries in which the group has significant operations. Our work also covered the five group shared 
service centres.
–	 In addition, we performed the audit of specific balances and transactions in six countries, and obtained reporting over the financial information of Moët 
Hennessy, the group’s principal associate, from its auditor.
–	 Due to the current restrictions on travel and social distancing measures, enacted in response to the global Covid-19 pandemic, the group engagement 
team used video conferencing to oversee the component auditor work and had remote discussions with management of nine countries where full 
scope audits were performed, four shared service centres and two of the countries where audits of specific balances and transactions took place.
Areas of focus
–	 Carrying value of goodwill and indefinite-lived intangible assets (group)
–	 Uncertain tax positions in respect of direct and indirect taxes (group)
–	 Presentation of exceptional items (group)
–	 Provisions and contingent liabilities (group and company)
–	 Post employment benefit obligations (group)
–	 Impairment assessment of the company’s investment in subsidiary undertakings (company)
–	 Impact of Covid-19 (group and company)
110
DIAGEO Annual Report 2020

The scope of our audit
As part of designing our audit, we determined materiality and assessed the 
risks of material misstatement in the financial statements. In particular, we 
looked at where the directors made subjective judgements, for example 
in respect of significant accounting estimates that involved making 
assumptions and considering future events that are inherently uncertain.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, we identified that 
the principal risks of non-compliance with laws and regulations related to 
but not limited to, the Companies Act 2006, the Listing Rules, UK tax 
legislation and equivalent local laws and regulations applicable to 
significant component teams, and we considered the extent to which 
non-compliance might have a material effect on the financial statements. 
We also considered those laws and regulations that have a direct impact 
on the preparation of the financial statements such as the Companies  
Act 2006. 
We evaluated management’s incentives and opportunities for 
fraudulent manipulation of the financial statements (including the risk of 
override of controls), and determined that the principal risks were related 
to management bias in accounting estimates and judgements. The group 
engagement team shared this risk assessment with the component 
auditors so that they could include appropriate audit procedures in 
response to such risks in their work. Audit procedures performed by 
the group engagement team and component auditors included:
–	 Gaining an understanding of the legal and regulatory framework 
applicable to the group and the industry in which it operates, and 
considering the risk of acts by the group which were contrary to 
applicable laws and regulations, including fraud. We designed audit 
procedures at group and at the component level to respond to the risk, 
recognising that the risk of not detecting a material misstatement due 
to fraud is higher than the risk of not detecting one resulting from error. 
We also understood the results of whistleblowing procedures and 
related investigations. We focused on known and suspected instances 
of non-compliance with laws and regulations that could give rise to a 
material misstatement in the group and company financial statements, 
including, but not limited to, the Companies Act 2006, the Listing Rules, 
UK tax legislation and equivalent local laws and regulations applicable 
to significant component teams.
–	 Testing which included, but was not limited to, agreement of the financial 
statement disclosures to underlying supporting documentation, 
review of correspondence with the Financial Reporting Council 
and legal advisors, enquiries of management, review of significant 
component auditors’ work and review of internal audit reports in 
so far as they related to the financial statements.
–	 We did not identify any key audit matters relating to irregularities, 
including fraud. As in all of our audits we also addressed the risk of 
management override of internal controls, including testing journals, 
and evaluated whether there was evidence of bias by the directors 
that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above 
and the further removed non-compliance with laws and regulations 
is from the events and transactions reflected in the financial statements, 
the less likely we would become aware of it. Also, the risk of not 
detecting a material misstatement due to fraud is higher than the risk 
of not detecting one resulting from error, as fraud may involve deliberate 
concealment by, for example, forgery or intentional misrepresentations, 
or through collusion.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional 
judgement, were of most significance in the audit of the financial 
statements of the current period and include the most significant assessed 
risks of material misstatement (whether or not due to fraud) identified by 
the auditors, including those which had the greatest effect on: the overall 
audit strategy; the allocation of resources in the audit; and directing the 
efforts of the engagement team. These matters, and any comments we 
make on the results of our procedures thereon, were addressed in the 
context of our audit of the financial statements as a whole, and in forming 
our opinion thereon, and we do not provide a separate opinion on these 
matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill and indefinite-lived intangible assets (group)
Refer to the Report of the Audit Committee and note 9 – Intangible assets
The group has goodwill of £1,912 million, indefinite-lived brand 
intangibles of £7,755 million and other indefinite-lived intangible assets 
of £1,509 million as at 30 June 2020.
Goodwill and indefinite-lived intangible assets must be tested for 
impairment on at least an annual basis. The determination of recoverable 
amount, being the higher of value in use and fair value less costs of 
disposal, requires estimations on the part of management in both 
identifying and then valuing the relevant group’s cash-generating units 
(CGUs). Recoverable amounts are based on management’s assumptions 
of variables and market conditions such as future price and volume 
growth rates, the timing of future operating expenditure, and the most 
appropriate discount and long-term growth rates.
An impairment charge was recognised in respect of the goodwill 
allocated to India in the amount of £655 million. Impairment charges 
were recognised on the Old Tavern Whisky and Bagpiper brands of 
£78 million and £38 million respectively, giving rise to a deferred tax 
benefit of £25 million.
 
We evaluated the appropriateness of management’s identification 
of the group’s cash-generating units (CGUs) and tested the operation 
of the group’s controls over the impairment assessment process, 
which we found to be satisfactory for the purposes of our audit.
Our audit procedures included challenging management on the 
appropriateness of the impairment models and reasonableness of the 
assumptions used, focusing in particular on the CGU containing the India 
goodwill, certain India brands and the Windsor Premier brand through 
performing the following:
–	 Benchmarking Diageo’s key market-related assumptions in the models, 
including discount rates, long-term growth rates and exchange rates, 
against external data, using our valuation expertise;
–	 Assessing the reliability of cash flow forecasts through a review of actual 
past performance and comparison to previous forecasts;
–	 Testing the mathematical accuracy and performing sensitivity analyses 
of the models;
–	 Understanding the commercial prospects of the assets, and where 
possible comparison of assumptions with external data sources;
FINANCIAL STATEMENTS
111
DIAGEO Annual Report 2020

Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill and indefinite-lived intangible assets (group) 
continued
A further impairment charge was recognised on the Windsor Premier 
Brand in Korea in the amount of £434 million, giving rise to a deferred tax 
benefit of £105 million.
Management has determined that in addition to those CGUs and 
brands which were impaired, the McDowell’s No. 1, Antiquity and Bell’s 
brands are sensitive to reasonably possible changes in the assumptions 
used, which could result in the calculated recoverable amount being 
lower than the carrying value of the CGU or the brand in future periods. 
Additional sensitivity disclosure has been included in the group financial 
statements in respect of these CGUs.
–	 For India we have challenged management’s assessment of fair value 
less costs of disposal and value in use, in determining the appropriate 
basis for impairment and are satisfied with management’s conclusion 
that value in use was the most appropriate basis;
–	 For the India goodwill and brands, we assessed the reasonableness 
of the forecasts by challenging the assumptions in respect of growth 
and margin strategies in the Indian market, considering the Covid-19 
pandemic and the longer term impact on price increases;
–	 For the Windsor Premier brand, we specifically challenged the 
reasonableness of the forecast assumptions in the context of 
consumer demand changing due to the new National Tax Service 
regulations and the impact of Covid-19; and 
–	 Tested the tax effect recorded in relation to impairments.
We note that significant assumptions have had to be made by 
management in respect of the period over which volumes will recover 
to be in line with 2019, and the period for which additional sales taxes 
may be in place as a result of Covid-19.
We have assessed the appropriateness and completeness of the 
related disclosures in note 9 of the group financial statements, including 
the sensitivities provided in respect of India goodwill and the McDowell’s 
No.1, Bagpiper, Antiquity, Bell’s and Windsor Premier brands, and 
considered them to be reasonable.
Uncertain tax positions in respect of direct and indirect taxes (group)
Refer to the Report of the Audit Committee, note 7 - Taxation, and note 18 – 
Contingent iabilities and legal proceedings
The group operates across a large number of jurisdictions and is subject to 
periodic challenges by local tax authorities on a range of tax matters 
during the normal course of business, including transfer pricing, direct and 
indirect taxes, and transaction related tax matters. As at 30 June 2020, the 
group has corporate tax receivable of £190 million, corporate tax payable 
of £246 million, deferred tax assets of £119 million and deferred tax 
liabilities of £1,972 million. The group also has provisions of £189m for tax 
uncertainties.
Where the amount of tax payable is uncertain, the group establishes 
provisions based on management’s judgement of the likelihood of 
settlement being required.
Management makes judgments in assessing the likelihood of 
potentially material exposures and develops estimates to determine 
such provisions where required. This included the impact of the European 
Commission’s State Aid investigation, direct and indirect tax assessments 
in developing markets and assessments relating to financing and transfer 
pricing structures.
In certain instances, the impact of changes in local tax regulations and 
ongoing inspections by local tax authorities and international bodies could 
materially impact the amounts recorded in the group financial statements.
We evaluated the design and implementation of controls in respect of 
identifying uncertain tax positions, which we found to be satisfactory for 
the purposes of our audit. We also evaluated the related accounting policy 
for provisioning for tax exposures and found it to be appropriate.
We used our tax specialists to gain an understanding of the current 
status of tax assessments and investigations and to monitor developments 
in ongoing disputes. We read recent rulings and correspondence with 
local tax authorities, as well as external advice provided by the group’s 
tax experts and legal advisors where relevant, to satisfy ourselves that 
the tax provisions had been appropriately recorded or adjusted to reflect 
the latest developments. Where the basis for the conclusion reached was 
less clear, we challenged the advice from legal advisors and tax experts on 
how their view was reached.
We challenged management’s key assumptions, in particular on 
cases where there had been significant developments with tax authorities, 
noting no significant deviations from our expectations.
We assessed the appropriateness of the related disclosures in  
notes 7 and 18 of the group financial statements and considered them 
to be reasonable.
112
DIAGEO Annual Report 2020

Key audit matter
How our audit addressed the key audit matter
Presentation of exceptional items (group)
Refer to the Report of the Audit Committee and note 4 – Exceptional items, and note 7(b) 
- Exceptional tax (credits)/charges 
Consistent with prior years the group has reported exceptional items 
separately within the consolidated income statement which are excluded 
from management’s reporting of the underlying results of the group.
The nature of these exceptional items is explained within the group 
accounting policy and includes gains or losses arising on acquisitions or 
disposals, changes in post-employment plans, impairment of intangible 
and fixed assets, staff costs, finance charges, other external charges and 
costs resulting from non-recurring legal or tax matters.
This year the group has reported £1,357 million of net operating 
exceptional charges, £23 million of net exceptional non-operating charges 
and £154 million of net tax exceptional credits, which are primarily in 
respect of: 
–	 Goodwill and indefinite-lived intangible asset impairments;
–	 Tangible fixed asset impairments;
–	 A provision in respect of Diageo’s ’Raising the Bar’ programme in 
response to Covid-19 impacts to on-trade pubs and bars;
–	 A provision in respect of obsolete inventories, including handling 
and destruction costs, due to Covid-19;
–	 A provision in respect of a loss on the disposal of UNB;
–	 A gain related to substitution drawback claims filed with the US 
Government; and
–	 A tax credit in respect of a final assessment on an indirect tax matter 
in Korea, resulting in the reversal of a previously recognised provision.
Our specific area of focus was to assess whether the items identified by 
management as exceptional met the definition of the group’s accounting 
policy (i.e. are considered to be material and unusual or non-recurring 
in nature) and have been treated consistently, as the identification of 
such items requires judgement by management. Consistency in the 
identification and presentation of these items is important to ensure the 
comparability of year-on-year reporting.
We evaluated the design and implementation of controls in respect of 
exceptional items, which we found to be satisfactory for the purposes of 
our audit.
We considered the judgements and estimates within management’s 
accounting papers for the one-off transactions and obtained corroborative 
evidence for the items presented as exceptional items. We considered 
these to be supportable.
Our procedures in respect of the impairment charges recognised 
on goodwill and indefinite-lived intangibles (£1,345 million) and the 
associated deferred tax benefit (£130 million) are covered in the related 
key audit matter above.
In respect of the impairment charges recognised on tangible fixed 
assets in Nigeria and Ethiopia of £84 million and £55 million respectively, 
we evaluated management’s valuation assessment against third-party 
industry data and validated the mathematical accuracy of the models used 
to determine the charge and associated £35 million deferred tax credit. In 
addition, we held discussions with third-party valuers to understand the 
valuation methodology applied.
In respect of the £81 million provision for Diageo’s ’Raising the Bar’ 
programme, we tested management’s calculation of the amount recorded 
and the assessment of whether the cost met the recognition criteria. 
In respect of the £30 million provision recorded for obsolete 
inventories and the associated £7 million tax credit, due to Covid-19, we 
assessed whether these items were specific to the pandemic and whether 
a constructive obligation had been communicated. For returns received in 
the period, we tested the receipt of the inventory and validated the 
associated handling and destruction costs back to supporting information.
In respect of the £32 million provision for the loss on the disposal 
of UNB, we tested management’s calculation of the loss on sale and 
write-down of deferred consideration receivable through testing the 
final executed contract and assessed management’s judgement over 
the increased risk of recoverability of the receivable.
In respect of the £83 million gain for expected benefits for substitution 
drawback claims previously filed and to be filed with the US Government 
and the associated £20 million tax charge, we tested management’s 
calculation of the amount, reviewed the legal correspondence on the 
ruling in the period, and assessed whether the gain meets the ‘virtually 
certain’ criteria for recognition.
In respect of the £24 million credit arising on the reversal of a prior 
year indirect tax provision related to Korea, we tested the receipt of the 
final assessment issued by the Korean Tax Authority and confirmed the 
final assessment was lower than the provision previously recorded.
We challenged management’s rationale for the designation of 
certain items as exceptional and assessed such items against the group’s 
accounting policy, considering the nature and value of the items and 
ensuring a consistent approach had been taken year on year.
We assessed the appropriateness and completeness of the disclosures 
in notes 4 and 7(b) and other related notes to the group financial 
statements and checked that these reflected the output of management’s 
accounting papers, noting no significant deviations from our expectations.
We also considered whether there were items that were recorded 
within underlying profit that we determined to be exceptional in nature 
and should have been reported within ‘exceptional items’. No such 
material items were identified.
FINANCIAL STATEMENTS
113
DIAGEO Annual Report 2020

Key audit matter
How our audit addressed the key audit matter
Provisions and contingent liabilities (group and company)
Refer to the Report of the Audit Committee, note 18 – Contingent liabilities and legal 
proceedings, and note 14(d) - Provisions
The group faces a number of threatened and actual legal and regulatory 
cases. There is a high level of judgement required in assessing the 
likelihood of settlement and the disclosures required. There is also 
estimation risk in assessing the level of potential exposure that may exist.
We evaluated the design and implementation of controls in respect of 
litigation and regulatory matters, which we found to be satisfactory for 
the purposes of our audit.
Our procedures included the following:
–	 Where relevant, reading external legal advice obtained by management 
to assess the likelihood and quantum of the potential liability;
–	 Discussing open matters and developments with the group and 
regional general counsel;
–	 Meeting with regional and local management and reading 
relevant correspondence;
–	 Assessing and challenging management’s conclusions through 
understanding precedents set in similar cases to assess management’s 
judgments and estimates of the liability where relevant; and
–	 Circularising relevant third-party legal confirmations, together with 
follow up discussions, where appropriate, on certain cases.
Based on the evidence obtained, whilst noting the inherent uncertainty 
with such legal and regulatory matters, we determined that the level of 
provisioning at 30 June 2020 is appropriate.
We assessed the appropriateness of the related disclosures in notes 18 
and 14(d) of the group financial statements, and consider them to be 
reasonable.
Post employment benefit obligations (group)
Refer to the Report of the Audit Committee and note 13 – Post employment benefits
The group has approximately 40 defined benefit post employment plans. 
The total present value of obligations is £10,057 million at 30 June 2020, 
which is significant in the context of the overall balance sheet of the 
group. The group’s most significant plans are in the United Kingdom, 
Ireland and the United States.
The valuation of pension plan liabilities requires estimation in 
determining appropriate assumptions such as salary increases, mortality 
rates, discount rates, inflation levels and the impact of any changes in 
individual pension plans. Movements in these assumptions can have a 
material impact on the determination of the liability. Management uses 
external actuaries to assist in determining these assumptions.
We evaluated the design and implementation of controls in respect of 
post employment benefit obligations, which we found to be satisfactory 
for the purposes of our audit. 
We used our actuarial experts to assess whether the assumptions used 
in calculating the liabilities for the United Kingdom, Ireland and the United 
States pension plans were reasonable, by performing the following:
–	 Assessing whether salary increases and mortality rate assumptions were 
consistent with the specifics of each plan and, where applicable, with 
relevant national and industry benchmarks;
–	 Verifying that the discount and inflation rates used were consistent with 
our internally developed benchmarks and in line with other companies’ 
recent external reporting; and
–	 Reviewing the calculations prepared by external actuaries to assess the 
consistency of the assumptions used.
Based on our procedures, we noted no exceptions and considered 
management’s key assumptions to be within reasonable ranges.
We assessed the appropriateness of the related disclosures in note 13  
of the group financial statements, and consider them to be reasonable. 
Impairment assessment of the company’s investment in subsidiary 
undertakings
Refer to the Report of the Audit Committee, note 3 to company’s financial statements – 
Investment in subsidiary undertakings
Investments in subsidiaries undertakings are accounted for at historical 
cost less impairment provisions for any permanent decrease in value in the 
company’s balance sheet. At 30 June 2020, the company held investments 
in subsidiaries undertakings with a historical cost of £61,342 million. 
The carrying amounts of the company’s investments are reviewed 
at each reporting date to determine whether there is an indication of 
impairment. If such an indication exists, then the asset’s recoverable 
amount is estimated. Losses are recognised in the statement of 
comprehensive income and reflected in an allowance against the 
carrying value.
 During the financial year, the group carried out a restructuring project 
impacting a number of its subsidiary companies, which resulted in a fair 
value increase to the investments in subsidiary undertakings of £45,062 
million. As a result of the restructuring certain investments became 
impaired. In addition, the impact of Covid-19 further increased the 
impairment charge which totalled £10,054 million, and has been 
netted-off against the unrealised profit in other comprehensive income, 
as detailed in Note 3 of the company financial statements. 
We evaluated the models prepared for the internal restructuring project 
and involved our valuation experts to assess the appropriateness of the 
valuation models and key assumptions used for each of the subsidiaries.
We obtained supporting documentation to test each step of the 
restructuring plan and, using our restructuring experts, we assessed 
each step of the plan against the legal requirements in respect of reserve 
distributions and capital reductions. We found the transactions to be in 
accordance with the relevant law and regulations.
Using our valuation experts, we tested the reasonableness of key 
assumptions underpinning management’s recoverable amount of the 
company’s investments. We assessed management’s assumptions by 
comparison to relevant third-party data and economic forecasts.
We tested the mathematical accuracy of the impairment model 
including assessing whether the model appropriately reflected the values 
from the external valuation report or, where applicable, were consistent 
with the output from the group impairment assessments.
Based on our procedures, we consider the assumptions used in 
the models to be reasonable. We also assessed the appropriateness and 
completeness of the related disclosures in note 3 of the company financial 
statements and consider them to be reasonable.
114
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Key audit matter
How our audit addressed the key audit matter
Impact of Covid-19 (group and company)
Refer to the Report of the Audit Committee and note 1 - Accounting information  
and policies 
The Covid-19 pandemic has had a significant impact on the recent 
trading performance of the group, particularly within the on-trade market. 
The extent of the negative impact of the pandemic on future trading 
performance is difficult to predict. Therefore, there is inherent uncertainty 
in determining the impact of the pandemic on certain aspects of the 
financial statements.
The key impacts of Covid-19 on the group and parent company financial 
statements are:
–	 The budgets and models supporting the goodwill, indefinite-lived 
intangible and tangible fixed asset impairment assessments have 
been updated to reflect management’s best estimate of the impacts 
of Covid-19. The assumptions applied in this analysis have been 
determined internally, however they incorporate views of external 
commentators and other third-party data sources, where relevant. 
Consideration of the impact on the carrying value of goodwill, brand 
intangible and tangible fixed assets is described in the related key audit 
matters above.
–	 Similarly, management’s reassessment of the carrying value of the 
company’s investments in subsidiary undertakings resulted in a 
reduction to the valuations at the year end, in part arising due to the 
impact of Covid-19 on the underlying businesses, as described in the 
related key audit matter above. 
–	 These models and related assumptions also underpin management’s 
going concern and viability assessments. Management has modelled 
severe but plausible downside scenarios to its base case trading 
forecast. Having considered these models, together with a robust 
assessment of planned and possible mitigating actions, management 
has concluded that the group remains a going concern, and that there 
is no materiality uncertainty in respect of this conclusion. Refer to pages 
41 and 124.
–	 Diageo launched its ’Raising the Bar’ programme to provide $100 
million (£81 million) of funding over a period of up to two years to 
support the recovery of pub and bar outlets following the Covid-19 
pandemic, together with additional support packages and donations 
totalling £8 million. An exceptional charge of £89 million has been 
recognised, as described in the related key audit matter above.
–	 A provision in respect of obsolete inventories with limited shelf lives of 
£23 million has been recognised, together with associated destruction 
costs of £7 million, that has been directly attributable to Covid-19. An 
exceptional charge of £30 million has been recognised, as described in 
the related key audit matter above. 
In addition, management’s way of working, including the operation of 
controls, has been impacted by Covid-19 as a result of a large number 
of staff working remotely. For example, this has meant virtual review 
meetings replaced in-person meetings and certain planned inventory 
counts were performed before or after the year end. There is inevitably 
an increase in risk due the remote accessing of IT systems, and potentially 
heightened cyber risk.
We validated that the cash flow forecast models used across the goodwill 
impairment, going concern and viability assessments were consistent.
Our procedures in respect of the goodwill and indefinite-lived 
intangible asset impairment assessments are covered in the related key 
audit matter above.
Our procedures in respect of the tangible fixed asset impairment 
assessments are covered in the exceptionals key audit matter above.
Our procedures in respect of the company’s investments in subsidiary 
undertakings are covered in the related key audit matter above.
With respect to management’s going concern assessment, we:
–	 Evaluated management’s base case and downside scenarios, 
challenging the key assumptions;
–	 Considered the group’s available financing and maturity profile to 
assess liquidity through the assessment period;
–	 Tested the mathematical integrity of the forecasts and the models and 
reconciled these to Board approved budgets;
–	 Performed our own independent sensitivity analysis to assess further 
appropriate downside scenarios; and
–	 We assessed the reasonableness of management’s planned or potential 
mitigating actions.
Our conclusions in respect of going concern are set out separately within 
this report.
Our procedures in respect of Diageo’s ’Raising the Bar’ programme 
and obsolete inventories are covered in the exceptionals key audit  
matter above. 
We performed additional procedures to assess any control 
implications arising from the impact of Covid-19, including inquiries 
with respect to the operation of IT and business process controls, 
and whether there has been any impact on the group given the 
heightened cyber risk. We performed a detailed assessment of the 
policies and procedures that management has in place to mitigate 
cyber risk exposure. We also instructed our component teams to 
perform additional procedures to understand if there were any changes 
to management’s planned operation of controls or monitoring activities.
Based on the inquiries performed and the results of our audit 
procedures, we did not identify any evidence of material deterioration 
in the control environment.
We increased the frequency and extent of our oversight over 
component audit teams, using video conferencing and remote working 
paper reviews, to satisfy ourselves as to the appropriateness of audit work 
performed at significant and material components.
With respect to inventory counts, where management did not 
perform counts at the year end date, we performed counts at different 
dates and performed additional procedures to roll the results back or 
forward to 30 June 2020. For inventory counts at certain locations we 
attended virtually using a live video feed and were able to obtain the 
level of evidence and support that we required.
We considered the appropriateness of management disclosures in the 
financial statements in respect of the impact of the current environment 
and the increased uncertainty on certain accounting estimates and 
consider these to be appropriate.
FINANCIAL STATEMENTS
115
DIAGEO Annual Report 2020

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed 
enough work to be able to give an opinion on the financial statements 
as a whole, taking into account the structure of the group and the 
company, the accounting processes and controls, and the industry 
in which they operate.
The group operates as 18 geographically based markets across five 
regions, together with supply and corporate functions. These markets 
report through a significant number of individual reporting components, 
which are supported by the group’s five principal shared service centres 
in Hungary, Kenya, Colombia, the Philippines and India. The outputs from 
these shared service centres are included in the financial information of 
the reporting components they service, and therefore are not separate 
reporting components. In establishing the overall approach to the group 
audit, we determined the type of work that needed to be performed 
at reporting components by us, as the group engagement team, or 
component auditors from either other PwC network firms or the non-PwC 
firm operating under our instruction. This included consideration of the 
procedures required to be performed by our audit teams at the group’s 
shared service centres to support our component auditors.
We identified one reporting component which, in our view, required 
an audit of its complete financial information, due to its significance 
to the group. This reporting component was North America. A further 
14 reporting components had an audit of their complete financial 
information, either due to their size or their risk characteristics, which 
included nine operating, two corporate and three treasury reporting 
components. We audited specific balances and transactions at a further 
nine reporting components, and obtained reporting over the financial 
information of Moët Hennessy, the group’s principal associate, from 
its auditor, primarily to ensure appropriate audit coverage. The work 
performed at each of the five shared services centres, including testing of 
transaction processing and controls, supported the financial information 
of the reporting components they service.
Certain specific audit procedures over central corporate functions and 
areas of significant judgement, including goodwill and intangible assets, 
business combinations, taxation, and material provisions and contingent 
liabilities, were performed at the group’s head office. We also performed 
work centrally on systems and IT general controls, consolidation journals 
and one-off transactions undertaken by the group during the year.
Together, the central and component locations at which work was 
performed by the group engagement team and component auditors 
accounted for 75% of group net sales, 90% of group total assets, and 74% 
of group profit before tax and exceptional items, with work performed by 
the group engagement team over all exceptional items, as listed in note 4 
to the consolidated financial statements. At the group level, we also 
carried out analytical and other procedures on the reporting components 
not covered by the procedures described above.
Where the work was performed by component auditors, including 
by our shared service centre auditors, we determined the level of 
involvement we needed to have in the audit work at those locations to be 
able to conclude whether sufficient appropriate audit evidence had been 
obtained as a basis for our opinion on the group financial statements as 
a whole. We issued formal, written instructions to component auditors 
setting out the work to be performed by each of them and maintained 
regular communication throughout the audit cycle. These interactions 
included attending component clearance video conference calls and 
holding regular conference calls, as well as reviewing and assessing 
matters reported.
Due to the current restrictions on travel and social distancing 
measures, enacted as a response to global pandemic, the group 
engagement leader and senior members of the group engagement team 
used video conferencing to oversee the component auditor work and had 
video discussions with management of the 15 component locations (in 
nine countries) in scope for an audit of their complete financial 
information, as well as four of the shared centre locations and nine of the 
components (four countries) where audits of specific balances and 
transactions took place. Senior team members also attended via video 
conference the clearance meetings for certain components, including 
North America and India. During the clearance meetings, the findings 
reported by all component teams were discussed. The group engagement 
team also evaluated the sufficiency of the audit evidence obtained 
through discussions with, and remote review of the audit working papers 
of, component teams. 
Materiality
The scope of our audit was influenced by our application of 
materiality. We set certain quantitative thresholds for materiality. 
These, together with qualitative considerations, helped us to determine 
the scope of our audit and the nature, timing and extent of our audit 
procedures on the individual financial statement line items and disclosures 
and in evaluating the effect of misstatements, both individually and in 
aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for 
the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£191 million (2019: £209 million).
£299 million (2019: £93 million).
For the purposes of the audit of the group financial 
statements, we applied a lower materiality of £26 million (2019 
- £24 million) to all balances and transactions, other than those 
which were eliminated on consolidation in the group financial 
statements.
How we 
determined it
5% of three-year weighted average profit before taxation and 
exceptional items (as defined in note 4 to the group financial 
statements).
In the prior year, materiality was calculated using 5% of profit 
before taxation and exceptional items for the year ended  
30 June 2019. 
Materiality of £299 million for the company financial statements 
was based on 0.5% of net assets. Our lower materiality of 
£26 million for the line items set out above was based on our 
calculation and allocation of component materiality for the 
group audit.
116
DIAGEO Annual Report 2020

Rationale for 
benchmark 
applied
Based on the benchmarks used in the annual report, profit 
before tax and exceptionals is the primary measure used by the 
shareholders in assessing the performance of the group, and is a 
generally accepted auditing benchmark.
As a result of the Covid-19 pandemic, the results of the 
business for the year ended 30 June 2020 were impacted, 
however the overall size of the business, both geographically and 
in terms of products, did not reduce. In these situations, auditing 
standards allow for the use of an average of the current and prior 
periods to appropriately reflect the size of the business.
Balances and transactions that eliminate upon consolidation 
were audited to a higher materiality. We consider a net asset 
measure to reflect the nature of the company, which primarily 
acts as a holding company for the group’s investments and 
holds certain liabilities on the balance sheet.
The results of procedures performed over balances and 
transactions contributing to the group’s overall results were 
used to support our group opinion
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality 
allocated across components was between £9.5 million and £130 million. Certain components were audited to a local statutory audit materiality that 
was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to it misstatements identified during our audit above £9.5 million (group audit) (2019: £10 
million) and £9.5 million (company audit) (2019: £10 million) as well as misstatements below those amounts that, in our view, warranted reporting for 
qualitative reasons. 
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add or draw attention to in respect 
of the directors’ statement in the financial statements about whether the directors considered 
it appropriate to adopt the going concern basis of accounting in preparing the financial 
statements and the directors’ identification of any material uncertainties to the group’s and 
the company’s ability to continue as a going concern over a period of at least twelve months 
from the date of approval of the financial statements.
We have nothing material to add or to draw attention to.
However, because not all future events or conditions can 
be predicted, this statement is not a guarantee as to the 
group’s and company’s ability to continue as a going 
concern.
We are required to report if the directors’ statement relating to Going Concern in accordance 
with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.
We have nothing to report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. 
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, 
we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the 
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially 
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there 
is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, 
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on 
these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK Companies Act 2006 
have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06), ISAs (UK) and the 
Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as described below (required by ISAs (UK) 
unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ report for the 
year ended 30 June 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not 
identify any material misstatements in the Strategic report and Directors’ report. (CA06)
FINANCIAL STATEMENTS
117
DIAGEO Annual Report 2020

The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency or liquidity of the group
We have nothing material to add or draw attention to regarding:
–	 The directors’ confirmation on page 79 of the Annual Report that they have carried out a robust assessment of the principal risks facing the group, 
including those that would threaten its business model, future performance, solvency or liquidity.
– 	The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
– 	The directors’ explanation on page 41 of the Annual Report as to how they have assessed the prospects of the group, over what period they have done 
so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the group will be 
able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing 
attention to any necessary qualifications or assumptions.
We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of the principal risks 
facing the group and statement in relation to the longer-term viability of the group. Our review was substantially less in scope than an audit and only 
consisted of making inquiries and considering the directors’ process supporting their statements; checking that the statements are in alignment with the 
relevant provisions of the UK Corporate Governance Code (the ’Code’); and considering whether the statements are consistent with the knowledge and 
understanding of the group and company and their environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
–	 The statement given by the directors, on page 80, that they consider the Annual Report taken as a whole to be fair, balanced and understandable, and 
provides the information necessary for the members to assess the group’s and company’s position and performance, business model and strategy is 
materially inconsistent with our knowledge of the group and company obtained in the course of performing our audit. 
–	 The section of the Annual Report on page 81 describing the work of the Audit Committee does not appropriately address matters communicated by 
us to the Audit Committee. 
–	 The directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the 
Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. 
(CA06)
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Responsibility Statement set out on page 80, 
the directors are responsible for the preparation of the financial statements 
in accordance with the applicable framework and for being satisfied that 
they give a true and fair view. The directors are also responsible for such 
internal control as they determine is necessary to enable the preparation 
of financial statements that are free from material misstatement, whether 
due to fraud or error.
In preparing the financial statements, the directors are responsible for 
assessing the group’s and the company’s ability to continue as a going 
concern, disclosing, as applicable, matters related to going concern and 
using the going concern basis of accounting unless the directors either 
intend to liquidate the group or the company or to cease operations, or 
have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the 
financial statements as a whole are free from material misstatement, 
whether due to fraud or error, and to issue an auditors’ report that includes 
our opinion. Reasonable assurance is a high level of assurance, but is not 
a guarantee that an audit conducted in accordance with ISAs (UK) will 
always detect a material misstatement when it exists. Misstatements can 
arise from fraud or error and are considered material if, individually or in the 
aggregate, they could reasonably be expected to influence the economic 
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial 
statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the 
company’s members as a body in accordance with Chapter 3 of Part 16 of 
the Companies Act 2006 and for no other purpose. We do not, in giving 
these opinions, accept or assume responsibility for any other purpose or to 
any other person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in 
our opinion:
–	 we have not received all the information and explanations we require 
for our audit; or
–	 adequate accounting records have not been kept by the company, or 
returns adequate for our audit have not been received from branches 
not visited by us; or
–	 certain disclosures of directors’ remuneration specified by law are not 
made; or
–	 the company financial statements and the part of the Directors’ 
remuneration report to be audited are not in agreement with the 
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the audit committee, we were 
appointed by the members on 15 October 2015 to audit the financial 
statements for the year ended 30 June 2016 and subsequent financial 
periods. The period of total uninterrupted engagement is 5 years, 
covering the years ended 30 June 2016 to 30 June 2020.
Ian Chambers (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
4 August 2020
118
DIAGEO Annual Report 2020

Consolidated income statement 
Notes
Year ended 
30 June 2020
£ million
Year ended 
30 June 2019
£ million
Year ended 
30 June 2018
£ million
Sales
2
17,697
19,294
18,432
Excise duties
3
(5,945)
(6,427)
(6,269)
Net sales
2
11,752
12,867
12,163
Cost of sales
3
(4,654)
(4,866)
(4,634)
Gross profit
7,098
8,001
7,529
Marketing
3
(1,841)
(2,042)
(1,882)
Other operating items
3
(3,120)
(1,917)
(1,956)
Operating profit
2,137
4,042
3,691
Non-operating items
4
(23)
144
–
Finance income
5
366
442
243
Finance charges
5
(719)
(705)
(503)
Share of after tax results of associates and joint ventures
6
282
312
309
Profit before taxation
2,043
4,235
3,740
Taxation
7
(589)
(898)
(596)
Profit for the year
1,454
3,337
3,144
Attributable to:
Equity shareholders of the parent company 
1,409
3,160
3,022
Non-controlling interests
45
177
122
1,454
3,337
3,144
Weighted average number of shares
million
million
million
Shares in issue excluding own shares
2,346
2,418
2,484
Dilutive potential ordinary shares
8
10
11
2,354
2,428
2,495
pence
pence
pence
Basic earnings per share
60.1
130.7
121.7
Diluted earnings per share
59.9
130.1
121.1
The accompanying notes are an integral part of these consolidated financial statements. 
FINANCIAL STATEMENTS
119
DIAGEO Annual Report 2020

Consolidated statement of comprehensive income 
Year ended  
30 June 2020
£ million
Year ended  
30 June 2019
£ million
Year ended  
30 June 2018
£ million
Other comprehensive income
Items that will not be recycled subsequently to the income statement
Net remeasurement of post employment plans
Group
38
33
456
Associates and joint ventures
(14)
2
2
Non-controlling interests
–
–
1
Tax on post employment plans
(21)
1
(91)
3
36
368
Items that may be recycled subsequently to the income statement
Exchange differences on translation of foreign operations
Group
(104)
274
(631)
Associates and joint ventures
82
19
3
Non-controlling interests
(37)
55
(72)
Net investment hedges
(227)
(93)
91
Exchange loss recycled to the income statement
On translation of foreign operations
4
–
–
Tax on exchange differences – group
4
(19)
7
Tax on exchange differences – non-controlling interests
–
–
2
Effective portion of changes in fair value of cash flow hedges
Hedge of foreign currency debt of the group
221
180
(64)
Transaction exposure hedging of the group
(43)
(86)
22
Hedges by associates and joint ventures
6
(6)
(15)
Commodity price risk hedging of the group
(11)
(9)
–
Recycled to income statement – hedge of foreign currency debt of the group
(75)
(82)
6
Recycled to income statement – transaction exposure hedging of the group
42
45
(7)
Recycled to income statement – commodity price risk hedging of the group
8
–
–
Tax on effective portion of changes in fair value of cash flow hedges
(23)
(11)
14
Hyperinflation adjustment
(18)
(22)
11
Tax on hyperinflation adjustment
4
6
(11)
(167)
251
(644)
Other comprehensive (loss)/profit, net of tax, for the year
(164)
287
(276)
Profit for the year
1,454
3,337
3,144
Total comprehensive income for the year
1,290
3,624
2,868
Attributable to:
Equity shareholders of the parent company 
1,282
3,392
2,815
Non-controlling interests
8
232
53
Total comprehensive income for the year
1,290
3,624
2,868
The accompanying notes are an integral part of these consolidated financial statements. 
120
DIAGEO Annual Report 2020

Consolidated balance sheet 
Notes
30 June 2020
30 June 2019
£ million
£ million
£ million
£ million
Non-current assets
Intangible assets
9
11,300
12,557
Property, plant and equipment
10
4,926
4,455
Biological assets
51
34
Investments in associates and joint ventures
6
3,557
3,173
Other investments
12
41
49
Other receivables
14
46
53
Other financial assets
15
686
404
Deferred tax assets
7
119
138
Post employment benefit assets
13
1,111
1,060
21,837
21,923
Current assets
Inventories
14
5,772
5,472
Trade and other receivables
14
2,111
2,694
Corporate tax receivable
7
190
83
Assets held for sale
–
65
Other financial assets
15
75
127
Cash and cash equivalents
16
3,323
932
11,471
9,373
Total assets
33,308
31,296
Current liabilities
Borrowings and bank overdrafts
16
(1,995)
(1,959)
Other financial liabilities
15
(389)
(307)
Share buyback liability
17
–
(26)
Trade and other payables
14
(3,683)
(4,202)
Liabilities held for sale
–
(32)
Corporate tax payable
7
(246)
(378)
Provisions
14
(183)
(99)
(6,496)
(7,003)
Non-current liabilities
Borrowings
16
(14,790)
(10,596)
Other financial liabilities
15
(393)
(124)
Other payables
14
(175)
(222)
Provisions
14
(293)
(317)
Deferred tax liabilities
7
(1,972)
(2,032)
Post employment benefit liabilities
13
(749)
(846)
(18,372)
(14,137)
Total liabilities
(24,868)
(21,140)
Net assets
8,440
10,156
Equity
Share capital
17
742
753
Share premium
1,351
1,350
Other reserves
2,272
2,372
Retained earnings
2,407
3,886
Equity attributable to equity shareholders of the parent company
6,772
8,361
Non-controlling interests
17
1,668
1,795
Total equity
8,440
10,156
The accompanying notes are an integral part of these consolidated financial statements. 
These consolidated financial statements have been approved by a duly appointed and authorised committee of the Board of Directors and were 
signed on 4 August 2020 on its behalf by Ivan Menezes and Kathryn Mikells, Directors. 
FINANCIAL STATEMENTS
121
DIAGEO Annual Report 2020

Consolidated statement of changes in equity 
Share 
capital 
£ million
Share 
premium 
£ million
Other reserves
Retained earnings/(deficit)
Equity 
attributable 
to parent 
company 
shareholders 
£ million
Non- 
controlling 
interests 
£ million
Total 
equity 
£ million
Capital 
redemption 
reserve 
£ million
Hedging 
and 
exchange 
reserve 
£ million
Own 
shares 
£ million
Other 
retained 
earnings 
£ million
Total 
£ million
At 30 June 2017
797
1,348
3,146
(453)
(2,176)
7,651
5,475
10,313
1,715
12,028
Adoption of IFRS 15
–
–
–
–
–
(89)
(89)
(89)
(2)
(91)
Adoption of IFRS 9 by associate
–
–
–
(3)
–
3
3
–
–
–
Profit for the year
–
–
–
–
–
3,022
3,022
3,022
122
3,144
Other comprehensive (loss)/income
–
–
–
(574)
–
367
367
(207)
(69)
(276)
Total comprehensive (loss)/income for the year
–
–
–
(574)
–
3,389
3,389
2,815
53
2,868
Employee share schemes
–
–
–
–
32
(7)
25
25
–
25
Share-based incentive plans
–
–
–
–
–
39
39
39
–
39
Share-based incentive plans in respect of associates
–
–
–
–
–
4
4
4
–
4
Tax on share-based incentive plans
–
–
–
–
–
(2)
(2)
(2)
–
(2)
Shares issued
–
1
–
–
–
–
–
1
–
1
Purchase of non-controlling interests
–
–
–
–
–
(72)
(72)
(72)
70
(2)
Disposal of non-controlling interests 
–
–
–
–
–
–
–
–
(1)
(1)
Purchase of right issue of non-controlling interests
–
–
–
–
–
(5)
(5)
(5)
31
26
Change in fair value of put option
–
–
–
–
–
7
7
7
–
7
Share buyback programme
(17)
–
17
–
–
(1,507)
(1,507)
(1,507)
–
(1,507)
Dividends paid
–
–
–
–
–
(1,581)
(1,581)
(1,581)
(101)
(1,682)
At 30 June 2018
780
1,349
3,163
(1,030)
(2,144)
7,830
5,686
9,948
1,765
11,713
Profit for the year
–
–
–
–
–
3,160
3,160
3,160
177
3,337
Other comprehensive income
–
–
–
212
–
20
20
232
55
287
Total comprehensive income for the year
–
–
–
212
–
3,180
3,180
3,392
232
3,624
Employee share schemes
–
–
–
–
118
(49)
69
69
–
69
Share-based incentive plans
–
–
–
–
–
49
49
49
–
49
Share-based incentive plans in respect of associates
–
–
–
–
–
3
3
3
–
3
Tax on share-based incentive plans
–
–
–
–
–
20
20
20
–
20
Shares issued
–
1
–
–
–
–
–
1
–
1
Purchase of non-controlling interests (note 8)
–
–
–
–
–
(694)
(694)
(694)
(90)
(784)
Non-controlling interest in respect of new subsidiary
–
–
–
–
–
–
–
–
2
2
Change in fair value of put option
–
–
–
–
–
(3)
(3)
(3)
–
(3)
Share buyback programme
(27)
–
27
–
–
(2,801)
(2,801)
(2,801)
–
(2,801)
Dividends paid
–
–
–
–
–
(1,623)
(1,623)
(1,623)
(114)
(1,737)
At 30 June 2019
753
1,350
3,190
(818)
(2,026)
5,912
3,886
8,361
1,795
10,156
Profit for the year
–
–
–
–
–
1,409
1,409
1,409
45
1,454
Other comprehensive loss
–
–
–
(116)
–
(11)
(11)
(127)
(37)
(164)
Total comprehensive (loss)/income for the year
–
–
–
(116)
–
1,398
1,398
1,282
8
1,290
Employee share schemes
–
–
–
–
90
(36)
54
54
–
54
Share-based incentive plans
–
–
–
–
–
2
2
2
–
2
Share-based incentive plans in respect of associates
–
–
–
–
–
4
4
4
–
4
Tax on share-based incentive plans
–
–
–
–
–
1
1
1
–
1
Share based payments and purchase of
treasury shares in respect of subsidiaries
–
–
–
–
–
(1)
(1)
(1)
–
(1)
Shares issued
–
1
–
–
–
–
–
1
–
1
Transfers
–
–
–
5
–
(5)
(5)
–
–
–
Purchase of non-controlling interests (note 8)
–
–
–
–
–
(39)
(39)
(39)
(23)
(62)
Non-controlling interest in respect of new subsidiary
–
–
–
–
–
–
–
–
5
5
Change in fair value of put option
–
–
–
–
–
9
9
9
–
9
Share buyback programme
(11)
–
11
–
–
(1,256)
(1,256)
(1,256)
–
(1,256)
Dividends declared
–
–
–
–
–
(1,646)
(1,646)
(1,646)
(117)
(1,763)
At 30 June 2020
742
1,351
3,201
(929)
(1,936)
4,343
2,407
6,772
1,668
8,440
The accompanying notes are an integral part of these consolidated financial statements. 
122
DIAGEO Annual Report 2020

Consolidated statement of cash flows 
Notes
Year ended 30 June 2020
Year ended 30 June 2019
Year ended 30 June 2018
£ million
£ million
£ million
£ million
£ million
£ million
Cash flows from operating activities
Profit for the year
1,454
3,337
3,144
Taxation
589
898
596
Share of after tax results of associates and joint ventures
(282)
(312)
(309)
Net finance charges
353
263
260
Non-operating items
23
(144)
–
Operating profit
2,137
4,042
3,691
Increase in inventories
(366)
(434)
(271)
Decrease/(increase) in trade and other receivables
523
11
(202)
(Decrease)/increase in trade and other payables and provisions
(485)
201
314
Net increase in working capital
(328)
(222)
(159)
Depreciation, amortisation and impairment
1,839
374
493
Dividends received
4
168
159
Post employment payments less amounts included in operating profit
(109)
(121)
(108)
Other items
(14)
64
10
1,720
485
554
Cash generated from operations
3,529
4,305
4,086
Interest received
185
216
167
Interest paid
(493)
(468)
(418)
Taxation paid
(901)
(805)
(751)
(1,209)
(1,057)
(1,002)
Net cash inflow from operating activities
2,320
3,248
3,084
Cash flows from investing activities
Disposal of property, plant and equipment and computer software
14
32
40
Purchase of property, plant and equipment and computer software
(700)
(671)
(584)
Movements in loans and other investments
–
(1)
(17)
Sale of businesses and brands
8
11
426
4
Acquisition of businesses
8
(130)
(56)
(594)
Net cash outflow from investing activities
(805)
(270)
(1,151)
Cash flows from financing activities
Share buyback programme
17
(1,282)
(2,775)
(1,507)
Proceeds from issue of share capital
1
1
1
Net sale of own shares for share schemes
54
50
8
Dividends paid to non-controlling interests
(111)
(112)
(80)
Purchase of shares of non-controlling interests
8
(62)
(784)
–
Rights issue proceeds from non-controlling interests
–
–
26
Proceeds from bonds
16
5,188
2,766
2,612
Repayment of bonds
16
(820)
(1,168)
(1,571)
Net movements in other borrowings
(285)
721
(26)
Equity dividends paid
17
(1,646)
(1,623)
(1,581)
Net cash inflow/(outflow) from financing activities
1,037
(2,924)
(2,118)
Net increase/(decrease) in net cash and cash equivalents
16
2,552
54
(185)
Exchange differences
(120)
(26)
(39)
Net cash and cash equivalents at beginning of the year
721
693
917
Net cash and cash equivalents at end of the year
3,153
721
693
Net cash and cash equivalents consist of:
Cash and cash equivalents
16
3,323
932
874
Bank overdrafts
16
(170)
(211)
(181)
3,153
721
693
The accompanying notes are an integral part of these consolidated financial statements. 
FINANCIAL STATEMENTS
123
DIAGEO Annual Report 2020

Accounting information and policies 
Introduction 
This section describes the basis of preparation of the consolidated financial statements and the group’s accounting policies that are applicable to the 
financial statements as a whole. Accounting policies, critical accounting estimates and judgements that are specific to a note are included in the note  
to which they relate. This section also explains new accounting standards, amendments and interpretations, that the group has adopted in the current 
financial year or will adopt in subsequent years. 
1. Accounting information and policies 
(a) Basis of preparation 
The consolidated financial statements are prepared in accordance 
with the Companies Act 2006 and International Financial Reporting 
Standards (IFRS) and related interpretations as adopted for use in the 
European Union (EU) and as issued by the International Accounting 
Standards Board (IASB). 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 consolidated financial statements for the years presented. 
The consolidated financial statements are prepared on a going concern  
basis under the historical cost convention, unless stated otherwise in the 
relevant accounting policy. 
The preparation of financial statements in conformity with IFRS 
requires management to make estimates and assumptions that affect 
the reported amounts of assets and liabilities, the disclosure of contingent 
assets and liabilities at the date of the financial statements, and the 
reported amounts of revenues and expenses during the year. Actual 
results could differ from those estimates. 
(b) Going concern 
The potential financial impact of the Covid-19 pandemic has been 
modelled in our cash flow projections and stress tested by including 
several severe but plausible downside scenarios which are linked to our 
principal risks. In our downside Covid-19 scenario, we have considered 
the key impacts of the pandemic for each region including the potential 
restrictions on the sale of our products in both on-trade and off-trade 
channels. We have then considered the expected duration of those 
restrictions, as well as a forecast for the length of time to recovery (a 
return to 2019 volumes), based on industry projections. As a result of these 
factors, in our severe but plausible scenarios, we do not anticipate that 
the on-trade business recovers to volumes experienced in the year ending 
30 June 2019 within the next 18 month period. Even with these negative 
sensitivities for each region taken into account, the group’s cash position 
is still considered to remain strong, as we have protected our liquidity by 
increasing the level of committed facilities and accelerating certain bond 
issuance programmes. Mitigating actions, should they be required, are 
all within management’s control and could include reduced advertising 
and promotion spend, dividend cash payments, non-essential overheads 
and non-committed capital expenditure in the next 12 months. Having 
considered the outcome of these assessments, it is deemed appropriate 
to prepare the consolidated financial statements on a going concern basis.
(c) Consolidation 
The consolidated financial statements include the results of the company 
and its subsidiaries together with the group’s attributable share of the 
results of associates and joint ventures. A subsidiary is an entity controlled 
by Diageo plc. The group controls an investee when it is exposed, or has 
rights, to variable returns from its involvement with the investee and has 
the ability to affect those returns through its power over the investee. 
Where the group has the ability to exercise joint control over an entity  
but has rights to specified assets and obligations for liabilities of that entity, 
the entity is included on the basis of the group’s rights over those assets 
and liabilities. 
(d) Foreign currencies 
Items included in the financial statements of the group’s subsidiaries, 
associates and joint ventures are measured using the currency of the 
primary economic environment in which each entity operates (its 
functional currency). The consolidated financial statements are 
presented in sterling, which is the functional currency of the 
parent company. 
The income statements and cash flows of non-sterling entities are 
translated into sterling at weighted average rates of exchange, other than 
substantial transactions that are translated at the rate on the date of the 
transaction. Exchange differences arising on the retranslation to closing 
rates are taken to the exchange reserve. 
Assets and liabilities are translated at closing rates. Exchange 
differences arising on the retranslation at closing rates of the opening 
balance sheets of overseas entities are taken to the exchange reserve, 
as are exchange differences arising on foreign currency borrowings and 
financial instruments designated as net investment hedges, to the extent 
that they are effective. Tax charges and credits arising on such items are 
also taken to the exchange reserve. Gains and losses accumulated in the 
exchange reserve are recycled to the income statement when the foreign 
operation is sold. Other exchange differences are taken to the income 
statement. Transactions in foreign currencies are recorded at the rate of 
exchange at the date of the transaction. 
The principal foreign exchange rates used in the translation of financial 
statements for the three years ended 30 June 2020, expressed in US dollars 
and euros per £1, were as follows: 
2020
2019
2018
US dollar
Income statement and cash flows(i)
1.26
1.29
1.35
Assets and liabilities(ii)
1.23
1.27
1.32
Euro
Income statement and cash flows(i)
1.14
1.13
1.13
Assets and liabilities(ii)
1.09
1.12
1.13
(i)	 Weighted average rates 
(ii)	Year end rates 
The group uses foreign exchange hedges to mitigate the effect of 
exchange rate movements. For further information see note 15. 
(e) Critical accounting estimates and judgements 
Details of critical estimates and judgements which the directors consider 
could have a significant impact upon the financial statements are set out 
in the related notes as follows: 
124
DIAGEO Annual Report 2020

–	 Exceptional items – management judgement whether exceptional or 
not – page 130
–	 Taxation – management judgement of whether a provision is required 
and management estimate of amount of corporate tax payable or 
receivable, the recoverability of deferred tax assets and expectation 
on manner of recovery of deferred taxes – pages 133 and 163
–	 Brands, goodwill and other intangibles – management judgement of 
the assets to be recognised and synergies resulting from an acquisition. 
Management judgement and estimate are required in determining 
future cash flows and appropriate applicable assumptions to support 
the intangible asset value – page 138
–	 Post employment benefits – management judgement in determining 
whether a surplus can be recovered and management estimate in 
determining the assumptions in calculating the liabilities of the funds – 
page 145
–	 Contingent liabilities and legal proceedings – management 
judgement in assessing the likelihood of whether a liability will arise 
and an estimate to quantify the possible range of any settlement 
and significant unprovided tax matters where maximum exposure is 
provided for each – page 163
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. The foreign currency denominated transactions and 
balances of the group’s Venezuelan operations are translated into the local 
functional currency (Venezuelan bolivar) at the rate they are expected to 
be settled, applying the most appropriate official exchange rate (DICOM). 
For consolidation purposes, the group converts its Venezuelan operations 
using management’s estimate of the exchange rate considering forecast 
inflation and the most appropriate official exchange rate. The exchange 
rate used to translate the results of the group’s Venezuelan operations was 
VES/£ 10,024,865 for the year ended 30 June 2020 (2019 – VES/£ 403,700). 
Movement in the price index for the year ended 30 June 2020 was 2,464% 
(2019 – 1,087,262%). The inflation rate used by the group is provided by an 
independent valuer, because no reliable, official published rate is available 
that is representative of the situation in Venezuela.
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 year ended 30 June 2020 and 30 June 
2019 and with the amounts that would have resulted if the official DICOM 
exchange rate had been applied: 
Year ended 30 June 2020
Year ended 30 June 2019
At estimated
exchange rate
10,024,865 VES/£
£ million
At DICOM
exchange rate
252,558 VES/£
£ million
At estimated 
exchange rate
403,700 VES/£
£ million
At DICOM 
exchange rate
8,553 VES/£
£ million
Net sales
–
3
–
3
Operating profit
–
10
–
2
Other finance 
income 
– hyperinflation 
adjustment
6
222
10
455
Net cash inflow 
from operating 
activities
–
6
–
5
Net assets
48
1,893
56
2,643
(f) New accounting standards and interpretations 
The following amendments to the accounting standards, issued by the 
IASB which have been endorsed by the EU, have been adopted by the 
group from 1 July 2019 with no impact on the group’s consolidated 
results, financial position or disclosures: 
–	 Amendments to IAS 28 – Long-term Interests in Associates and 
Joint Ventures 
–	 Amendments to IFRS 9 – Prepayment Features with 
Negative Compensation 
–	 Improvements to IFRS 3 and IFRS 11 – Business combinations and 
Joint arrangements – Accounting for previously held interests 
–	 Improvements to IAS 12 – Income taxes – Accounting for income tax 
consequences of payments on financial instruments that are classified 
as equity 
–	 Improvements to IAS 23 – Borrowing costs on completed 
qualifying assets 
The following amendments and standards issued by the IASB which have 
been endorsed by the EU, have been adopted by the group: 
IFRS 15 – Revenue from contracts with customers. The group adopted 
IFRS 15 from 1 July 2017 by applying the modified retrospective transition 
method, recognising the cumulative effect of initially applying IFRS 15 
as an adjustment to the balance of retained earnings as at 1 July 2017. 
Retained earnings for the year ended 30 June 2017 was not restated. 
IFRS 16 – Leases. The group adopted IFRS 16 from 1 July 2019 by 
applying the modified retrospective method, meaning that the figures, as 
at, and for the years ended 30 June 2018 and 2019 have not been restated. 
IFRS 16 replaced existing lease guidance including IAS 17 – Leases, IFRIC 4, 
SIC-15 and SIC-27. Information in respect of the adoption of IFRS 16 is 
included in note 11. 
Amendments to IAS 19 - Plan Amendment, Curtailment or 
Settlement. The amendment requires the remeasurement of service 
cost and interest charge for the rest of the period following plan 
amendments, settlements and curtailments using actuarial assumptions 
prevailing at the date of these events. The amendment is applicable to 
Diageo from 1 July 2019 on a prospective basis and has resulted in an 
additional service cost of £1 million following the remeasurement of the 
Irish Scheme. 
The following amendment and standard, issued by the IASB has not been 
adopted by the group: 
IFRS 17 – Insurance contracts (effective in the year ending 30 June 2022) 
is ultimately intended to replace IFRS 4. 
Based on a preliminary assessment the group believes that the 
adoption of IFRS 17 will not have a significant impact on its consolidated 
results or financial position. 
Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark 
reform (phase 1). The amendment provides temporary relief 
from applying specific hedge accounting requirements to hedging 
relationships directly affected by interbank offered rate (IBOR) reform.  
The reliefs have the effect that IBOR reform should not generally cause 
hedge accounting to terminate. 
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. 
FINANCIAL STATEMENTS
125
DIAGEO Annual Report 2020

Results for the year 
Introduction 
This section explains the results and performance of the group for the three years ended 30 June 2020. Disclosures are provided for segmental 
information, operating costs, exceptional items, finance income and charges, the group’s share of results of associates and joint ventures, taxation.  
For associates, joint ventures and taxation, balance sheet disclosures are also provided in this section. 
2. Segmental information 
Accounting policies 
Sales comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods 
includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as 
value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the customer, 
which is determined considering, among other factors, the delivery terms agreed with customers. For the sale of goods the transfer of control occurs, 
when the significant risks and rewards of ownership are passed to the customer. Based on the shipping terms agreed with customers, the transfer of 
control of goods occurs at the time of dispatch for the majority of sales. Where the transfer of control is subsequent to the dispatch of goods, the time 
between dispatch and receipt by the customer is generally less than 5 days. The group includes in sales the net consideration to which it expects 
to be entitled. Sales are recognised to the extent that it is highly probable that a significant reversal will not occur. Therefore, sales are stated net of 
expected price discounts, allowances for customer loyalty and certain promotional activities and similar items. Generally, payment of the transaction 
price is due within credit terms that are consistent with industry practices, with no element of financing. 
Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries excise duties are effectively 
a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. 
It is generally not included as a separate item on external invoices; increases in excise duty are not always passed on to the customer and where 
a customer fails to pay for products received the group cannot reclaim the excise duty. The group therefore recognises excise duty, unless it regards 
itself as an agent of the regulatory authorities, as a cost to the group. 
Advertising costs, point of sale materials and sponsorship payments are charged to marketing in operating profit when the company has a 
right of access to the goods or services acquired. 
Diageo is an international manufacturer and distributor of premium drinks. Diageo also owns a number of investments in associates and joint ventures 
as set out in note 6. 
The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating 
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, Guatemala and Mexico. 
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 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 centers in Budapest and Bangalore also perform certain central finance 
activities, including elements of financial planning and reporting and treasury. The costs of shared service operations are recharged to the regions. 
As part of the annual planning process a budget exchange rate is set each year equal to the prior year’s weighted average rate. This rate is used for 
management reporting purposes and, in order to ensure a consistent basis on which performance is measured through the year, the prior period results 
are restated to the budget rate as well. Segmental information for net sales and operating profit before exceptionals are reported on a consistent basis 
with our management reporting. The adjustments required to retranslate the segmental information to actual exchange rates and to reconcile it to the 
group’s reported results are shown in the tables below. The comparative segmental information, prior to retranslation, has not been restated at the 
current year’s budgeted exchange rates but is presented at the budgeted rates for the respective year. 
In addition, for management reporting purposes Diageo presents separately the results 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 following tables at budgeted exchange rates. 
126
DIAGEO Annual Report 2020

(a) Segmental information for the consolidated income statement 
2020
North 
America
£ million
Europe and  
Turkey
£ million
Africa
£ million
Latin America 
and 
Caribbean
£ million
Asia  
Pacific 
£ million
ISC
£ million
Eliminate  
inter-  
segment  
sales 
£ million
Total  
operating  
segments 
£ million
Corporate  
and other 
£ million
Total
£ million
Sales
5,222
4,697
1,911
1,184
4,645
1,343
(1,343)
17,659
38
17,697
Net sales
At budgeted exchange rates(i)
4,445
2,501
1,300
944
2,253
1,439
(1,341)
11,541
38
11,579
Acquisitions and disposals
32
10
50
–
1
–
–
93
–
93
ISC allocation
11
60
4
10
12
(98)
–
(1)
1
–
Retranslation to actual exchange rates
135
(4)
(8)
(46)
4
2
(2)
81
(1)
80
Net sales
4,623
2,567
1,346
908
2,270
1,343
(1,343)
11,714
38
11,752
Operating profit/(loss)
At budgeted exchange rates(i)
2,007
730
116
254
498
45
–
3,650
(152)
3,498
Acquisitions and disposals
(1)
(4)
–
–
–
–
–
(5)
–
(5)
ISC allocation
6
26
2
5
6
(45)
–
–
–
–
Fair value remeasurement of 
contingent consideration
(10)
(4)
–
7
–
–
–
(7)
–
(7)
Fair value remeasurement of biological 
assets
–
–
–
9
–
–
–
9
–
9
Retranslation to actual exchange rates
32
9
(17)
(27)
(3)
–
–
(6)
5
(1)
Operating profit/(loss) before 
exceptional items
2,034
757
101
248
501
–
–
3,641
(147)
3,494
Exceptional items 
54
(62)
(145)
(6)
(1,198)
–
–
(1,357)
–
(1,357)
Operating profit/(loss)
2,088
695
(44)
242
(697)
–
–
2,284
(147)
2,137
Non-operating items
(23)
Net finance charges
(353)
Share of after tax results of associates 
and joint ventures
Moët Hennessy
285
Other
(3)
Profit before taxation
2,043
2019
North  
America
£ million
Europe and  
Turkey
£ million
Africa
£ million
Latin America 
and  
Caribbean
£ million
Asia 
Pacific
£ million
ISC
£ million
Eliminate 
inter- 
segment 
sales
£ million
Total 
operating 
segments
£ million
Corporate 
and other
£ million
Total
£ million
Sales
5,074
5,132
2,235
1,444
5,356
1,739
(1,739)
19,241
53
19,294
Net sales
At budgeted exchange rates(i)
4,034
2,951
1,529
1,095
2,656
1,843
(1,738)
12,370
54
12,424
Acquisitions and disposals
88
1
1
1
1
–
–
92
–
92
ISC allocation
11
63
5
15
11
(105)
–
–
–
–
Retranslation to actual exchange rates
327
(76)
62
19
20
1
(1)
352
(1)
351
Net sales
4,460
2,939
1,597
1,130
2,688
1,739
(1,739)
12,814
53
12,867
Operating profit/(loss)
At budgeted exchange rates(i)
1,755
972
257
312
671
139
–
4,106
(186)
3,920
Acquisitions and disposals
29
(1)
–
–
–
–
–
28
–
28
ISC allocation
13
72
6
32
16
(139)
–
–
–
–
Retranslation to actual exchange rates
151
(29)
12
21
16
–
–
171
(3)
168
Operating profit/(loss) before 
exceptional items
1,948
1,014
275
365
703
–
–
4,305
(189)
4,116
Exceptional items 
–
(18)
–
–
(35)
–
–
(53)
(21)
(74)
Operating profit/(loss)
1,948
996
275
365
668
–
–
4,252
(210)
4,042
Non-operating items
144
Net finance charges
(263)
Share of after tax results of associates  
and joint ventures
Moët Hennessy
310
Other
2
Profit before taxation
4,235
FINANCIAL STATEMENTS
127
DIAGEO Annual Report 2020

2018
North  
America
£ million
Europe and  
Turkey
£ million
Africa
£ million
Latin America 
and  
Caribbean
£ million
Asia 
Pacific
£ million
ISC
£ million
Eliminate 
inter- 
segment 
sales
£ million
Total 
operating 
segments
£ million
Corporate 
and other
£ million
Total
£ million
Sales
4,671
5,232
2,083
1,352
5,042
1,457
(1,457)
18,380
52
18,432
Net sales
At budgeted exchange rates(i)
4,138
2,821
1,467
1,064
2,555
1,512
(1,425)
12,132
48
12,180
Acquisitions and disposals
50
–
–
–
–
–
–
50
–
50
ISC allocation
11
53
4
11
8
(87)
–
–
–
–
Retranslation to actual exchange rates
(83)
58
20
(6)
(60)
32
(32)
(71)
4
(67)
Net sales
4,116
2,932
1,491
1,069
2,503
1,457
(1,457)
12,111
52
12,163
Operating profit/(loss)
At budgeted exchange rates(i)
1,925
941
180
298
588
112
–
4,044
(160)
3,884
Acquisitions and disposals
4
–
–
–
–
–
–
4
–
4
ISC allocation
14
67
5
14
12
(112)
–
–
–
–
Retranslation to actual exchange rates
(61)
20
6
(4)
(32)
–
–
(71)
2
(69)
Operating profit/(loss) before 
exceptional items
1,882
1,028
191
308
568
–
–
3,977
(158)
3,819
Exceptional items 
–
–
(128)
–
–
–
–
(128)
–
(128)
Operating profit/(loss)
1,882
1,028
63
308
568
–
–
3,849
(158)
3,691
Non-operating items
–
Net finance charges
(260)
Share of after tax results of associates  
and joint ventures
Moët Hennessy
305
Other
4
Profit before taxation
3,740
(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-segment 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 45% of annual net sales occurred in the last four months of the calendar year 2019. 
(b) Other segmental information 
North 
America 
£ million
Europe and 
Turkey 
£ million
Africa 
£ million
Latin America 
and 
Caribbean 
£ million
Asia 
Pacific 
£ million
ISC 
£ million
Corporate 
and other 
£ million
Total 
£ million
2020
Capital expenditure
145
24
128
48
59
191
105
700
Depreciation and intangible asset amortisation
(68)
(37)
(103)
(21)
(59)
(119)
(73)
(480)
Underlying impairment
–
(7)
–
(7)
–
–
–
(14)
Exceptional impairment of tangible assets
–
–
(139)
–
(1)
–
–
(140)
Exceptional impairment of intangible assets
–
–
–
–
(1,205)
–
–
(1,205)
2019
Capital expenditure
150
32
160
48
40
197
44
671
Depreciation and intangible asset amortisation
(51)
(18)
(81)
(13)
(42)
(110)
(59)
(374)
2018
Capital expenditure
132
22
163
44
44
131
48
584
Depreciation and intangible asset amortisation
(44)
(20)
(77)
(7)
(42)
(110)
(68)
(368)
Exceptional impairment of tangible assets
–
–
(35)
–
–
–
–
(35)
Exceptional impairment of intangible assets
–
–
(90)
–
–
–
–
(90)
128
DIAGEO Annual Report 2020

3. Operating costs 
2020
£ million
2019
£ million
2018
£ million
Excise duties
5,945
6,427
6,269
Cost of sales
4,654
4,866
4,634
Marketing
1,841
2,042
1,882
Other operating items
3,120
1,917
1,956
15,560
15,252
14,741
Comprising:
Excise duties
Great Britain
930
898
853
United States
585
587
548
India
1,927
2,202
2,094
Other
2,503
2,740
2,774
Increase in inventories
(275)
(446)
(296)
Raw materials and consumables
2,842
3,007
3,052
Marketing
1,841
2,042
1,882
Other external charges
2,044
2,285
1,849
Staff costs
1,404
1,580
1,509
Depreciation, amortisation and 
impairment
1,839
374
493
Gains on disposal of properties
(2)
(5)
(9)
Net foreign exchange losses/(gains)
15
(7)
6
Other operating income 
(93)
(5)
(14)
15,560
15,252
14,741
(a) Other external charges 
Other external charges include research and development expenditure  
in respect of new drinks products and package design of £34 million  
(2019 – £35 million; 2018 – £36 million) and maintenance and repairs 
of £105 million (2019 – £103 million; 2018 – £117 million).
(b) Auditor fees 
Other external charges include the fees of the principal auditor of the 
group, PricewaterhouseCoopers LLP and its affiliates (PwC) and are 
analysed below. 
2020
£ million
2019
£ million
2018
£ million
Audit of these financial statements
5.3
3.8
3.3
Audit of financial statements of 
subsidiaries
3.6
3.4
3.3
Audit related assurance services(i)
2.4
1.6
1.6
Total audit fees (Audit fees)
11.3
8.8
8.2
Other services relevant to taxation  
(Tax fees)
–
–
0.1
Other assurance services (Audit related 
fees)(ii)
0.8
0.7
0.6
All other non-audit fees (All other fees)
–
0.2
1.0
12.1
9.7
9.9
(i)	 Audit related assurance services are in respect of reporting under section 404 of the 
US Sarbanes-Oxley Act and the review of the interim financial information. 
(ii)	Other assurance services comprise the aggregate fees for assurance and related services that 
are in respect of the performance of the audit or review of the financial statements and are 
not reported under ‘total audit fees’. 
(1) 	Disclosure requirements for auditor fees in the United States are different from those 
required in the United Kingdom. The terminology by category required in the United States 
is disclosed in brackets in the above table. All figures are the same for the disclosures in the 
United Kingdom and the United States apart from £0.4 million (2019 – £0.4 million; 2018 – 
£0.4 million) of the cost in respect of the review of the interim financial information which 
would be included in audit related fees in the United States rather than audit fees. 
Audit services provided by firms other than PwC for the year ended 
30 June 2020 were £0.1 million (2019 – £0.1 million; 2018 – £0.1 million).  
PwC fees for audit services in respect of employee pension plans 
were £0.3 million for the year ended 30 June 2020 (2019 – £0.3 million; 
2018 – £0.3 million).
(c) Staff costs and average number of employees 
2020
£ million
2019
£ million
2018
£ million
Aggregate remuneration
Wages and salaries
1,251
1,344
1,272
Share-based incentive plans
3
50
40
Employer’s social security
79
96
95
Employer’s pension
Defined benefit plans
37
61
73
Defined contribution plans
24
19
18
Other post employment plans
10
10
11
1,404
1,580
1,509
(c) Category and geographical analysis 
Category analysis
Geographic analysis
Spirits 
£ million
Beer 
£ million
Ready to 
drink 
£ million
Other 
£ million
Total 
£ million
Great 
Britain 
£ million
United 
States 
£ million
Nether- 
lands 
£ million
India 
£ million
Rest of 
World 
£ million
Total 
£ million
2020
Sales(i)
14,158
2,342
966
231
17,697
1,684
4,839
62
2,783
8,329
17,697
Non-current assets(ii), (iii)
1,911
5,028
2,661
2,758
7,563
19,921
2019
Sales(i)
15,283
2,758
945
308
19,294
1,706
4,724
70
3,236
9,558
19,294
Non-current assets(ii), (iii)
1,637
4,662
2,525
3,829
7,668
20,321
2018
Sales(i)
14,605
2,647
854
326
18,432
1,630
4,310
63
3,086
9,343
18,432
Non-current assets(ii), (iii)
1,717
4,221
2,367
3,688
7,792
19,785
(i)	 The geographical analysis of sales is based on the location of third party customers. 
(ii)	The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, 
investments in associates and joint ventures, other investments and non-current other receivables. 
(iii) 	The management information provided to the chief operating decision maker does not include an analysis of assets and liabilities by category and therefore is not disclosed. 
FINANCIAL STATEMENTS
129
DIAGEO Annual Report 2020

2020
£ million
2019
£ million
2018
£ million
Exceptional operating items
Brand, goodwill, tangible and 
other assets impairment (a)
(1,345)
–
(128)
Donations (b (i))
(89)
–
–
Obsolete inventories (b (ii))
(30)
–
–
Substitution drawback (b (iii))
83
–
–
Indirect tax in Korea (c)
24
(35)
–
Guaranteed minimum pension 
equalisation (d)
–
(21)
–
French tax audit penalty (note 7 (b) (ii))
–
(18)
–
(1,357)
(74)
(128)
Non-operating items
Step acquisitions (e)
8
–
–
Sale of businesses and brands
United National Breweries (f)
(32)
(9)
–
Loss on disposal of associate (g)
(1)
–
–
Portfolio of 19 brands (h)
2
155
–
USL wine business (i)
–
(2)
–
(23)
144
–
French tax audit interest (note 7 (b) (ii))
–
(9)
–
Exceptional items before taxation
(1,380)
61
(128)
Items included in taxation (note 7 (b))
154
(39)
203
Total exceptional items
(1,226)
22
75
Attributable to:
Equity shareholders of the  
parent company
(1,157)
(4)
75
Non-controlling interests
(69)
26
–
Total exceptional items
(1,226)
22
75
(a) Value in use calculation and fair value less costs of disposal 
methodologies were both considered to assess the recoverable 
amount of the India cash-generating unit. Having considered the volatility 
in local share prices, the premiums that businesses controlled by large 
multinationals trade at and other factors, we assessed a range of fair value 
less costs of disposal with particular focus on the value a third party may 
pay for a controlling stake in the current environment. The value in use 
calculation was above our view of fair value less costs of disposal and was 
therefore used to determine the recoverable amount of this cash-
generating unit. Based on this, in the year ended 30 June 2020, an 
impairment charge of £655 million in respect of the India cash-generating 
unit containing the India goodwill was recognised in other operating 
items. Impairment charges of £78 million in respect of the Old Tavern 
brand, £38 million in respect of the Bagpiper brand and £1 million in 
respect of fixed assets in India were also recognised in other operating 
items. Forecast cash flow assumptions were reduced principally due to the 
general economic downturn further aggravated by the Covid-19 
pandemic, including pandemic related recent regulatory changes, 
negatively impacting both demand and margins. 
An impairment charge of £434 million in respect of the Windsor 
Premier brand was recognised in other operating items. The forecast cash 
flow assumptions were reduced principally due to the recent regulatory 
changes limiting trade spend for wholesalers and venues and the Covid-19 
pandemic negatively impacting the challenging whisky category in Korea.
For further information see note 9 (d). 
Having considered both value in use and fair value less cost 
of disposal, an impairment of £84 million in respect of the group’s 
Nigerian tangible fixed assets was recognised in other operating items. 
The profit generating ability of the assets were reduced principally due 
to the deteriorated economic outlook as a result of the combination of 
the oil price crisis in Nigeria and the Covid-19 pandemic. 
The average number of employees on a full time equivalent basis 
(excluding employees of associates and joint ventures) was as follows: 
2020
2019
2018
North America
2,466
2,410
2,406
Europe and Turkey
3,350
3,609
3,747
Africa
4,003
4,338
4,625
Latin America and Caribbean
1,549
1,610
2,536
Asia Pacific
6,559
7,038
8,008
ISC
4,908
4,919
4,227
Corporate and other
4,940
4,496
4,368
27,775
28,420
29,917
At 30 June 2020 the group had, on a full time equivalent basis, 27,788 
(2019 – 28,150; 2018 – 29,362) employees. The average number of 
employees of the group, including part time employees, for the year 
was 28,490 (2019 – 29,402; 2018 – 30,761). 
(d) Exceptional operating items 
Included in other operating items are the following: 
2020
£ million
2019
£ million
2018
£ million
Staff costs
Guaranteed minimum pension 
equalisation charge
–
21
–
Other external charges
95
53
–
Other operating income
(83)
–
–
Increase in inventories
–
–
3
Depreciation, amortisation  
and impairment
Brand, goodwill, tangible and other 
assets impairment
1,345
–
125
Total exceptional operating items 
(note 4)
1,357
74
128
4. Exceptional items 
Accounting policies 
Critical accounting judgements 
Exceptional items are those that in management’s judgement need 
to be disclosed separately. Such items are included within the income 
statement caption to which they relate. It is believed that separate 
disclosure of exceptional items and the classification between 
operating and non-operating further helps investors to understand 
the performance of the group. 
Operating items 
Exceptional operating items are those that are considered to be 
material and unusual or non-recurring in nature and are part of the 
operating activities of the group such as impairment of intangible 
assets and fixed assets, indirect tax settlements, property disposals 
and changes in post employment plans. 
Non-operating items 
Gains and losses on the sale of businesses, brands or distribution rights, 
step up gains and losses that arise when an investment becomes 
an associate or an associate becomes a subsidiary and other material, 
unusual non-recurring items, that are not in respect of the production, 
marketing and distribution of premium drinks, are disclosed as 
non-operating exceptional items below operating profit in the 
consolidated income statement. 
Taxation items 
Exceptional current and deferred tax items comprising material 
unusual non-recurring items that impact taxation. Examples include  
direct tax provisions and settlements in respect of prior years and  
the remeasurement of deferred tax assets and liabilities following tax 
rate changes. 
130
DIAGEO Annual Report 2020

An impairment of £55 million in respect of the group’s Ethiopian tangible 
fixed assets was recognised in other operating items. The forecast cash 
flow assumptions were reduced principally due to the impact of the 
recent excise duty increase and the Covid-19 pandemic. 
For further information see note 10. 
In the year ended 30 June 2018, an impairment charge of £128 million  
in respect of the Meta brand, Ethiopian tangible fixed assets, associated 
spare parts reported in inventory and goodwill allocated to the Africa 
Regional Markets cash-generating unit has been recognised in other 
operating items. 
(b) In line with the group’s accounting policy, given the unusual nature 
and magnitude of the below items, these are reported as exceptional 
operating items:
(i) Diageo has launched the ‘Raising the Bar’ programme to support pubs 
and bars to welcome customers back and recover following the Covid-19 
pandemic. The programme includes a commitment of $100 million  
(£81 million) over a period of up to two years from 1 July 2020, to support 
qualifying outlets across a limited number of iconic global cities and some 
regional cities in certain key markets.
Diageo has also provided other forms of support to help the 
communities and the industry during the Covid-19 pandemic. Supporting 
packages for bartenders and bar owners and donations of grain neutral 
spirit to produce hand sanitisers amounted to £8 million in the year ended 
30 June 2020. 
(ii) In the year ended 30 June 2020, an exceptional charge of £30 million 
was recognised in respect of obsolete inventories that have been or will be 
destroyed as a direct consequence of the Covid-19 pandemic. The amount 
comprises of a £23 million inventory provision and £7 million directly 
attributable to handling and destruction costs. 
(iii) In the year ended 30 June 2020, an estimated benefit of $105 million 
(£83 million) for substitution drawback claims (net of legal and broker 
fees of $2 million (£2 million)) previously filed and to be filed with the US 
Government in relation to prior years was recognised in other operating 
items. Following a recent court decision and a related legal assessment, 
the collection of the excise duty benefit has become virtually certain. 
(c) In the year ended 30 June 2019, the group has recognised a provision 
of £35 million for indirect tax in respect of certain channel accounts and 
regulatory change in Korea in respect of prior years. 
An assessment was issued by the Korea Tax Authority in the year 
ended 30 June 2020 that has resulted in the reversal of the prior year’s 
provision in the amount of £24 million. 
(d) On 26 October 2018, the High Court of Justice of England and Wales 
issued a judgement in a claim between Lloyds Banking Group Pension 
Trustees Limited (the claimant) and Lloyds Bank plc (defendant) that UK 
pension schemes should equalise pension benefits for men and women 
for the calculation of their guaranteed minimum pension liability. The 
judgement concluded that the claimant has a duty to amend their 
pension schemes to equalise benefits and provided comments on the 
method to be adopted to equalise the benefits. This court ruling impacts 
the majority of companies with a UK defined benefit pension plan that 
was in existence prior to 1997. For the Diageo Pension Scheme (DPS) an 
estimate was made of the impact of equalisation which increased the 
liabilities of the DPS by £21 million, with a corresponding charge to 
exceptional operating items.
(e) In the year ended 30 June 2020, Diageo completed the acquisition  
of Seedlip and Anna Seed 83 and acquired controlling interests in certain 
Distill Ventures entities. As a result of these entities becoming subsidiaries 
of the group a gain of £8 million arose, being the difference between the 
book value of the associates prior to the transaction and their fair value. 
For further information see note 8 (a). 
5. Finance income and charges 
Accounting policies 
Net interest includes interest income and charges in respect of 
financial instruments and the results of hedging transactions used to 
manage interest rate risk. 
Finance charges directly attributable to the acquisition, construction 
or production of a qualifying asset, being an asset that necessarily takes 
a substantial period of time to get ready for its intended use or sale, 
are added to the cost of that asset. Borrowing costs which are not 
capitalised are recognised in the income statement based on the 
effective interest method. All other finance charges are recognised 
primarily in the income statement in the year in which they are incurred. 
Net other finance charges include items in respect of post 
employment plans, the discount unwind of long-term obligations and 
hyperinflation charges. The results of operations in hyperinflationary 
economies are adjusted to reflect the changes in the purchasing power 
of the local currency of the entity before being translated to sterling. 
The impact of derivatives, excluding cash flow hedges that are 
in respect of commodity risk management or those that are used to 
hedge the currency risk of highly probable future currency cash flows, 
is included in interest income or interest charge. 
(f) The disposal of United National Breweries was completed in the year 
ended 30 June 2020, which has resulted in an aggregate exceptional  
loss of £32 million, including a £4 million cumulative exchange loss 
in respect of prior years, recycled from other comprehensive income, 
and an impairment charge recognised in the period. In the year ended 
30 June 2019 the group recognised an exceptional loss of £9 million in 
respect of the disposal of United National Breweries.
(g) In the year ended 30 June 2020, the disposal of an associate, Equal 
Parts, LLC resulted in an exceptional loss of £1 million. 
(h) In the year ended 30 June 2020, the group has reversed $3 million  
(£2 million) from provisions in relation to the sale of a portfolio of 19 brands 
to Sazerac on 20 December 2018. The aggregate consideration for the 
disposal was $550 million (£435 million) resulting in a profit before taxation 
of $198 million (£155 million). in the year ended 30 June 2019.
See note 8 (b) for further information.
(i) In the year ended 30 June 2019, the disposal of the Indian wine business 
has resulted in an exceptional loss of £2 million. 
Cash payments and receipts included in net cash inflow from operating 
activities in respect of exceptional items were as follows:
2020
£ million
2019
£ million
2018
£ million
French tax audit
(88)
–
–
Thalidomide
(17)
(15)
(13)
Donation
(7)
–
–
Substitution drawback
26
–
–
UK transfer pricing settlement
–
–
(143)
Competition authority investigation  
in Turkey 
–
–
(4)
Total cash payments
(86)
(15)
(160)
FINANCIAL STATEMENTS
131
DIAGEO Annual Report 2020

6. Investments in associates and joint ventures 
2020
£ million
2019
£ million
2018
£ million
Interest income
192
232
155
Fair value gain on financial instruments
123
155
61
Total interest income(i)
315
387
216
Interest charge on bank loans, bonds 
and overdrafts(ii)
(390)
(349)
(322)
Interest charge on leases classified as 
finance leases under the previous 
standard
(6)
(7)
(9)
Interest charge on leases (IFRS 16 
adoption impact)(iii)
(9)
–
–
Interest charge on all other 
borrowings(ii)
(120)
(122)
(64)
Fair value loss on financial instruments
(123)
(157)
(62)
Total interest charges(i)
(648)
(635)
(457)
Net interest charges
(333)
(248)
(241)
Net finance income in respect of post 
employment plans in surplus (note 13)
26
29
9
Hyperinflation adjustment in respect of 
Venezuela (note 1)
6
10
18
Interest income in respect of direct and 
indirect tax
16
16
–
Other finance income
3
–
–
Total other finance income
51
55
27
Net finance charge in respect of post 
employment plans in deficit (note 13)
(17)
(22)
(20)
Unwinding of discounts
(24)
(17)
(14)
Interest charge in respect of direct and 
indirect tax
(22)
(11)
(10)
Change in financial liability (Level 3)
(6)
(8)
–
Other finance charges (exceptional)(iv)
–
(9)
–
Guarantee fees
(1)
–
–
Other finance charges
(1)
(3)
(2)
Total other finance charges
(71)
(70)
(46)
Net other finance charges
(20)
(15)
(19)
(i)	 Includes £46 million interest income and £(471) million interest charge in respect of 
financial assets and liabilities that are not measured at fair value through the income 
statement (2019 – £86 million income and £(439) million charge; 2018 – £73 million 
income and £(394) million charge). 
(ii) 	The presentation of the years ended 30 June 2019 and 30 June 2018 have been changed 
due to a reclassification to include £302 million (2018 - £269 million) of interest in respect 
of bonds formerly included previously in ‘interest charge on all other borrowings’.
(iii)	Interest expense of £9 million for the year ended 30 June 2020 in respect of leases that 
in prior years were classified as operating leases under the previous accounting standard 
(and were charged to other external charges) and following the adoption of IFRS 16 have 
now been capitalised. 
(iv) In respect of the French tax audit settlement (see note 7(b)(ii)). 
Accounting policies 
An associate is an undertaking in which the group has a long-term 
equity interest and over which it has the power to exercise significant 
influence. A joint venture is a joint arrangement whereby the parties 
that have joint control of the arrangement have rights to the net assets 
of the arrangement. The group’s interest in the net assets of associates 
and joint ventures is reported in investments in the consolidated 
balance sheet and its interest in their results (net of tax) is included in 
the consolidated income statement below the group’s operating profit. 
Associates and joint ventures are initially recorded at cost including 
transaction costs. Investments in associates and joint ventures are 
reviewed for impairment whenever events or circumstances indicate 
that the carrying amount may not be recoverable. The impairment 
review compares the net carrying value with the recoverable amount, 
where the recoverable amount is the higher of the value in use 
calculated as the present value of the group’s share of the associate’s 
future cash flows and its fair value less costs to sell. 
Diageo’s principal associate is Moët Hennessy, of which Diageo owns 34%. 
Moët Hennessy is the spirits and wine subsidiary of LVMH Moët Hennessy 
– Louis Vuitton SA (LVMH). LVMH is based in France and is listed on the 
Paris Stock Exchange. Moët Hennessy is also based in France and is a 
producer and exporter of champagne and cognac brands. 
A number of joint distribution arrangements have been established 
with LVMH in Asia Pacific and France, principally covering distribution of 
Diageo’s Scotch whisky and gin premium brands and Moët Hennessy’s 
champagne and cognac premium brands. Diageo and LVMH have 
each undertaken not to engage in any champagne or cognac activities 
competing with those of Moët Hennessy. The arrangements also contain 
certain provisions for the protection of Diageo as a non-controlling 
shareholder in Moët Hennessy. 
(a) An analysis of the movement in the group’s investments in associates 
and joint ventures is as follows: 
Moët 
Hennessy 
£ million
Others 
£ million
Total 
£ million
Cost less provisions
At 30 June 2018
2,875
134
3,009
Exchange differences
16
3
19
Additions
–
32
32
Share of profit after tax
310
2
312
Disposals
–
(3)
(3)
Dividends
(160)
(8)
(168)
Share of movements in other 
comprehensive income and equity
(1)
–
(1)
Step acquisitions
–
(7)
(7)
Other(i)
–
(20)
(20)
At 30 June 2019
3,040
133
3,173
Exchange differences
78
4
82
Additions
–
47
47
Share of profit after tax
285
(3)
282
Disposals
–
(1)
(1)
Dividends
–
(4)
(4)
Share of movements in other 
comprehensive income and equity
(8)
–
(8)
Step acquisitions
–
(11)
(11)
Transfer
–
(2)
(2)
Other
–
(1)
(1)
At 30 June 2020
3,395
162
3,557
(i)	 Other movements in the year ended 30 June 2019 comprise £20 million of advances 
promised to associates at 30 June 2019, on achieving certain performance targets which are 
now only recognised when those targets are achieved. There was a corresponding decrease 
of £20 million in other payables. 
(1) 	Investment in associates balance includes loans given to and preference shares invested 
in associates of £82 million (2019 – £55 million). 
(2)	If certain performance targets are met by associates in the Distill Ventures programmes, 
an additional £22 million (2019 – £31 million) will be invested in those associates. 
132
DIAGEO Annual Report 2020

(b) Income statement information for the three years ended 30 June 2020 
and balance sheet information as at 30 June 2020 and 30 June 2019 of 
Moët Hennessy is as follows: 
2020
£ million
2019
£ million
2018
£ million
Sales
4,425
4,713
4,445
Profit for the year
838
911
897
Total comprehensive income
765
865
799
Moët Hennessy prepares its financial statements under IFRS as endorsed 
by the EU in euros to 31 December each year. The results are adjusted for 
alignment to Diageo accounting policies and are a major part of the Wines 
& Spirits division of LVMH. The results are translated at £1 = €1.14 (2019 – 
£1 = €1.13; 2018 – £1 = €1.13). 
7. Taxation 
Accounting policies 
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between 
accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax benefits are not recognised unless it is probable that 
the tax positions are sustainable. Once considered to be probable, tax benefits are reviewed each year to assess whether a provision should be taken 
against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. Tax provisions are included in current 
liabilities. Penalties and interest on tax liabilities are included in operating profit and finance charges, respectively. 
Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting 
purposes and their value for tax purposes. The amount of deferred tax reflects the expected recoverable amount and is based on the expected 
manner of recovery or settlement of the carrying amount of assets and liabilities, using the basis of taxation enacted or substantively enacted by the 
balance sheet date. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future. No deferred 
tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where the group is able to control the remittance of 
earnings and it is probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance. 
Critical accounting estimates and judgements 
The group is required to estimate the corporate tax in each of the many jurisdictions in which it operates. Management is required to estimate the 
amount that should be recognised as a tax liability or tax asset in many countries which are subject to tax audits which by their nature are often 
complex and can take several years to resolve; current tax balances are based on such estimations. Tax provisions are based on management’s 
judgement and interpretation of country specific tax law and the likelihood of settlement. However, the actual tax liabilities could differ from the 
provision and in such event the group would be required to make an adjustment in a subsequent period which could have a material impact on 
the group’s profit for the year. 
The evaluation of deferred tax asset recoverability requires estimates to be made regarding the availability of future taxable income. For brands 
with an indefinite life, management’s primary intention is to recover the book value through a potential sale in the future, and therefore the deferred 
tax on the brand value is generally recognised using the appropriate country capital gains tax rate. To the extent brands with an indefinite life have 
been impaired, management considers this to be an indication of recovery through use and in such a case deferred tax on the brand value is 
recognised using the appropriate country corporate income tax rate. 
2020
£ million
2019
£ million
Non-current assets
5,310
4,413
Current assets
8,352
7,564
Total assets
13,662
11,977
Non-current liabilities
(1,480)
(1,008)
Current liabilities
(2,197)
(2,029)
Total liabilities
(3,677)
(3,037)
Net assets
9,985
8,940
(1)	Including acquisition fair value adjustments principally in respect of Moët Hennessy’s brands 
and translated at £1 = €1.09 (2019 – £1 = €1.12). 
(c) Information on transactions between the group and its associates 
and joint ventures is disclosed in note 20. 
(d) Investments in associates and joint ventures comprise the cost of 
shares less goodwill written off on acquisitions prior to 1 July 1998 of  
£1,312 million (2019 – £1,249 million), plus the group’s share of post 
acquisition reserves of £2,245 million (2019 – £1,924 million). 
(e) The associates and joint ventures have not reported any material 
contingent liabilities in their latest financial statements. 
(a) Analysis of taxation charge for the year 
United Kingdom
Rest of world
Total
2020
£ million
2019
£ million
2018
£ million
2020
£ million
2019
£ million
2018
£ million
2020
£ million
2019
£ million
2018
£ million
Current tax
Current year
108
150
131
589
713
503
697
863
634
Adjustments in respect of prior years
6
(3)
71
(25)
52
(2)
(19)
49
69
114
147
202
564
765
501
678
912
703
Deferred tax
Origination and reversal of temporary differences
24
29
40
(143)
(19)
127
(119)
10
167
Changes in tax rates
6
(2)
(11)
39
(52)
(360)
45
(54)
(371)
Adjustments in respect of prior years
–
5
95
(15)
25
2
(15)
30
97
30
32
124
(119)
(46)
(231)
(89)
(14)
(107)
Taxation on profit
144
179
326
445
719
270
589
898
596
FINANCIAL STATEMENTS
133
DIAGEO Annual Report 2020

(b) Exceptional tax (credits)/charges 
The taxation charge includes the following exceptional items: 
2020
£ million
2019
£ million
2018
£ million
Brand and tangible asset impairment(i)
(165)
–
(13)
Substitution drawback
20
–
–
Obsolete inventories
(7)
–
–
Other items
(2)
–
–
French tax audit settlement(ii)
–
61
–
Tax rate change in the Netherlands(iii)
–
(51)
–
Sale of businesses and brands
–
33
–
Guaranteed minimum pension equalisation 
–
(4)
–
US tax reform(iv)
–
–
(354)
UK transfer pricing settlement(v)
–
–
143
UK industrial building allowance
–
–
21
(154)
39
(203)
(i)	 Exceptional tax credit of £165 million consists of the impairment of the Windsor and USL brands of £105 million and £25 million, respectively, exceptional tax credits in respect of fixed assets 
impairments in Nigeria and Ethiopia of £25 million and £10 million, respectively.
(ii) 	As disclosed in the 2019 Annual Report, in July 2019 Diageo reached a resolution with the French tax authorities on the treatment of interest costs for all open periods which resulted in a total 
exceptional charge of €100 million (£88 million), comprising a tax charge of €69 million (£61 million), penalties of €21 million (£18 million) and interest of €10 million (£9 million). This brought 
to a close all open issues with the French tax authorities for periods up to and including 30 June 2017. 
(iii)	During the year ended 30 June 2019 the Dutch Senate agreed to a phased reduction in the Dutch corporate tax rate which is effective from 1 January 2020. An exceptional tax credit of  
£51 million principally arose from remeasuring the deferred tax liabilities in respect of the Ketel One vodka distribution rights from a then anticipated tax rate of 25% to 20.5%. The Dutch 
Senate subsequently agreed in a tax rate of 21.7% on 19 December 2019. The remeasurement of deferred tax liabilities in the year ended 30 June 2020 was recognised as a current tax charge. 
(iv) The exceptional tax credit of £354 million ($478 million) resulted from applying the Tax Cuts and Jobs Act (TCJA), enacted on 22 December 2017, in the United States. The credit principally arose 
on remeasuring the deferred tax liabilities in respect of intangibles and other assets for the change in the US Federal tax rate from 35% to 21%, resulting in an exceptional tax credit of £363 million 
($490 million), which is partially offset by £9 million ($12 million) exceptional tax charge in respect of repatriation of untaxed foreign earnings. In addition, there was a one-off charge of £11 million 
($15 million) to other comprehensive income and equity, in respect of the remeasurement of the deferred tax assets on post employment liabilities and share-based incentive plans as a result of 
applying the provisions of the TCJA. 
(v) 	During 2017 Diageo was in discussions with HMRC to seek clarity on Diageo’s transfer pricing and related issues, and in the first half of the year ending 30 June 2018 a preliminary assessment 
for diverted profits tax notice was issued. Final charging notices were issued in August 2017 and Diageo paid £107 million in respect of the two years ended 30 June 2016. Diageo agreed in 
June 2018 with HMRC that diverted profits tax does not apply and at the same time has reached resolution on the transfer pricing issues being discussed. The agreement in respect of transfer 
pricing covers the period from 1 July 2014 to 30 June 2017 and has resulted in an additional UK tax charge of £143 million. In the year ended 30 June 2018 an additional tax charge of £47 million 
was recognised in current tax which is based on the approach agreed with HMRC. 
(1)	Diageo has launched the ‘Raising the Bar’ programme to support pubs and bars to welcome customers back and recover following the Covid-19 pandemic including a commitment of 
$100 million (£81 million) over a period of up to two years from 1 July 2020. Due to current uncertainty on the precise nature of the spend, it cannot be determined whether the amounts will 
be deductible for tax purposes in future periods. As a result, no deferred tax asset has been recognized in respect of the provision at the year ended 30 June 2020.
(c) Taxation rate reconciliation and factors that may affect future tax charges 
2020
£ million
2019
£ million
2018
£ million
Profit before taxation
2,043
4,235
3,740
Notional charge at UK corporation tax rate of 19% (2019 – 19%; 2018 – 19%)
388
805
711
Elimination of notional tax on share of after tax results of associates and joint ventures
(54)
(59)
(58)
Differences in overseas tax rates
53
106
134
Effect of intra-group financing
(13)
(34)
(61)
Non taxable gain on disposals of businesses
–
(3)
–
Step-up gain
(2)
–
–
Other tax rate and tax base differences
(84)
(132)
(109)
Other items not chargeable
(62)
(54)
(79)
Impairment
135
–
16
Non deductible losses on disposal of businesses
6
–
–
Other non deductible exceptional items
–
12
9
Other items not deductible(i)
211
231
238
Changes in tax rates(ii)
45
(54)
(371)
Fair value adjustment in respect of assets held for sale
–
1
–
Adjustments in respect of prior years(iii)
(34)
79
166
Taxation on profit
589
898
596
(i)	 Other items not deductible include controlled foreign companies charge, irrecoverable withholding tax and additional state and local taxes.
(ii)	Changes in tax rates for the year ended 30 June 2020 mainly due to the Netherlands, UK, India and Kenya. Changes in tax rates for the year ended 30 June 2019 principally arose from the tax rate 
change in the Netherlands. Changes in tax rates for the year ended 30 June 2018 was mainly due to the application of the TCJA. 
(iii)	Adjustment in respect of prior years for the year ended 30 June 2019 includes £61 million exceptional tax charge in respect of the French tax audit settlement. The £166 million prior year 
adjustment for the year ended 30 June 2018 is principally in respect of the exceptional tax charge in respect of the UK transfer pricing agreement. 
134
DIAGEO Annual Report 2020

After offsetting deferred tax assets and liabilities where appropriate within 
territories, the net deferred tax liability comprises: 
2020
£ million
2019
£ million
Deferred tax assets
119
138
Deferred tax liabilities
(1,972)
(2,032)
(1,853)
(1,894)
The deferred tax assets of £119 million includes £66 million (2019 – 
£60 million) arising in jurisdictions with prior year taxable losses. The 
majority of the asset is in respect of Ireland, where the amounts arose 
from timing differences on pension funding payments. It is considered 
more likely than not that there will be sufficient future taxable profits to 
realise these deferred tax assets, the majority of which can be carried 
forward indefinitely. 
(e) Unrecognised deferred tax assets 
Deferred tax assets have not been recognised in respect of the following 
tax losses: 
2020
£ million
2019
£ million
Capital losses – indefinite
76
62
Trading losses – indefinite
30
70
Trading losses – expiry dates up to 2029
70
53
176
185
(f) Unrecognised deferred tax liabilities 
UK legislation largely exempts overseas dividends remitted from UK tax.  
A tax liability is more likely to arise in respect of withholding taxes levied  
by the overseas jurisdiction. Deferred tax is provided where there is an 
intention to distribute earnings, and a tax liability arises. It is impractical to 
estimate the amount of unrecognised deferred tax liabilities in respect of 
these unremitted earnings. 
The aggregate amount of temporary differences in respect of 
investments in subsidiaries, branches, interests in associates and joint 
ventures for which deferred tax liabilities have not been recognised 
is approximately £14.7 billion (2019 – £13 billion). Comparatives were 
restated to include reclassifications between share premium, retained 
earnings and investments within the US group.
The table above reconciles the notional taxation charge calculated at the UK tax rate, to the actual total tax charge. As a group operating in multiple 
countries, the actual tax rates applicable to profits in those countries are different from the UK tax rate. The impact is shown in the table above as 
differences in overseas tax rates. The group’s worldwide business leads to the consideration of a number of important factors which may affect future 
tax charges, such as: the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms, 
acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities. 
Significant ongoing changes in the international tax environment and an increase in global tax audit activity means that tax uncertainties and 
associated risks have been gradually increasing. In the medium term, these risks could result in an increase in tax liabilities or adjustments to the carrying 
value of deferred tax assets and liabilities. See note 18 (h).
The group has a number of ongoing tax audits worldwide for which provisions are recognised based on best estimates and management’s 
judgements concerning the ultimate outcome of the audit. As at 30 June 2020 the ongoing audits that are provided for individually are not expected 
to result in a material tax liability. The current tax asset of £190 million (2019 – £83 million) and tax liability of £246 million (2019 – £378 million) includes 
£189 million (2019 – £251 million) of provisions for tax uncertainties. 
(d) Deferred tax assets and liabilities 
The amounts of deferred tax accounted for in the consolidated balance sheet comprise the following net deferred tax assets/(liabilities): 
Property,
plant and
equipment
£ million
Intangible
assets
£ million
Post
employment
plans
£ million
Tax losses
£ million
Other
temporary
differences(i)
£ million
Total
£ million
At 30 June 2018
(292)
(1,812)
(27)
32
234
(1,865)
Exchange differences
(7)
(47)
2
1
4
(47)
Recognised in income statement – continuing operations
(51)
14
(17)
(14)
28
(40)
Reclassification
(2)
(3)
12
3
(10)
–
Recognised in other comprehensive income and equity
–
–
(8)
5
(1)
(4)
Tax rate change – recognised in income statement
1
51
(1)
2
1
54
Tax rate change – recognised in other comprehensive income and 
equity
–
–
1
(5)
8
4
Acquisition of subsidiaries
–
(5)
–
–
–
(5)
Transfer to assets held for sale
2
7
–
–
–
9
At 30 June 2019
(349)
(1,795)
(38)
24
264
(1,894)
Exchange differences
–
12
1
(1)
(7)
5
Recognised in income statement – continuing operations
(10)
115
(5)
7
27
134
Reclassification
8
6
–
(3)
(11)
–
Recognised in other comprehensive income and equity
–
(3)
(16)
34
(33)
(18)
Tax rate change – recognised in income statement
11
(52)
2
–
(6)
(45)
Tax rate change – recognised in other comprehensive income and 
equity
–
–
(16)
–
–
(16)
Acquisition of subsidiaries
–
(19)
–
–
–
(19)
At 30 June 2020
(340)
(1,736)
(72)
61
234
(1,853)
(i)	 Deferred tax on other temporary differences includes fair value movement on cross-currency swaps, interest and finance costs, restructuring provisions, share-based payments and intra group 
sales of products. 
FINANCIAL STATEMENTS
135
DIAGEO Annual Report 2020

(a) Acquisition of businesses 
Fair value of net assets acquired and cash consideration paid in respect of 
the acquisition of businesses and the purchase of shares of non-controlling 
interests in the three years ended 30 June 2020 were as follows: 
Net assets acquired and consideration
2020
£ million
2019
£ million
2018
£ million
Brands and other intangibles
102
25
478
Inventories
2
–
4
Other working capital
(3)
(2)
2
Deferred tax
(19)
(5)
–
Cash
2
–
6
Fair value of assets and liabilities
84
18
490
Goodwill arising on acquisition
8
10
249
Step acquisitions
(23)
(7)
–
Consideration payable
69
21
739
Satisfied by:
Cash consideration paid
(27)
(6)
(555)
Contingent consideration payable
(42)
(15)
(184)
(69)
(21)
(739)
Cash consideration paid for subsidiaries
(27)
(6)
(6)
Cash consideration paid for Casamigos
(49)
(9)
(549)
Cash consideration paid in respect of 
other prior year acquisitions
(9)
(9)
(22)
Cash consideration paid for 
investments in associates
(6)
(15)
(12)
Capital injection in associates
(41)
(17)
(11)
Cash acquired
2
–
6
Net cash outflow on acquisition of 
businesses
(130)
(56)
(594)
Purchase of shares of non-controlling 
interests
(62)
(784)
–
Total net cash outflow
(192)
(840)
(594)
Acquisitions in the year
During the year ended 30 June 2020, Diageo completed a number of 
acquisitions, the largest of these were Seedlip Ltd and Anna Seed 83 Ltd, 
the brand owners of Seedlip and Aecorn distilled non-alcoholic spirits 
and aperitifs, both of which completed on 6 August 2019. The contingent 
consideration payable represents the present value of payments up 
to £60 million linked to certain performance targets and are expected 
to be paid over the next six years. 
Operating assets and liabilities
Introduction 
This section describes the assets used to generate the group’s performance and the liabilities incurred. Liabilities relating to the group’s financing activities 
are included in section ‘Risk management and capital structure’ and balance sheet information in respect of associates, joint ventures and taxation are 
covered in section ‘Results for the year’. This section also provides detailed disclosures on the group’s recent acquisitions and disposals, performance and 
financial position of its defined benefit post employment plans. 
8. Acquisition and sale of businesses and purchase of non-controlling interests 
Accounting policies 
The consolidated financial statements include the results of the 
company and its subsidiaries together with the group’s attributable 
share of the results of associates and joint ventures. The results of 
subsidiaries acquired or sold are included in the income statement 
from, or up to, the date that control passes. 
Business combinations are accounted for using the acquisition 
method. Identifiable assets, liabilities and contingent liabilities acquired 
are measured at fair value at acquisition date. The consideration payable 
is measured at fair value and includes the fair value of any contingent 
consideration. Among other factors, the group considers the nature of, 
and compensation for the selling shareholders’ continuing employment 
to determine if any contingent payments are for post-combination 
employee services, which are excluded from consideration. 
On the acquisition of a business, or of an interest in an associate or 
joint venture, fair values, reflecting conditions at the date of acquisition, 
are attributed to the net assets including identifiable intangible assets 
and contingent liabilities acquired. Directly attributable acquisition costs 
in respect of subsidiary companies acquired are recognised in other 
external charges as incurred. 
The non-controlling interests on the date of acquisition can be 
measured either at the fair value or at the non-controlling shareholder’s 
proportion of the net fair value of the identifiable assets assumed. 
This choice is made separately for each acquisition. 
Where the group has issued a put option over shares held by a 
non-controlling interest, the group derecognises the non-controlling 
interests and instead recognises a contingent deferred consideration 
liability for the estimated amount likely to be paid to the non-controlling 
interest on the exercise of those options. Movements in the estimated 
liability in respect of put options are recognised in retained earnings. 
Transactions with non-controlling interests are recorded directly 
in retained earnings. 
For all entities in which the company, directly or indirectly, owns 
equity a judgement is made to determine whether the investor controls 
the investee and therefore should fully consolidate the investee. An 
assessment is carried out to determine whether the group has the 
exposure or rights to the variable returns of the investee and has the 
ability to affect those returns through its power over the investee. To 
establish control an analysis is carried out of the substantive and 
protective rights that the group and the other investors hold. This 
assessment is dependent on the activities and purpose of the investee 
and the rights of the other shareholders, such as which party controls 
the board, executive committee and material policies of the investee. 
Determining whether the rights that the group holds are substantive 
requires management judgement. 
Where less than 50% of the equity of an investee is held, and the 
group holds significantly more voting rights than any other vote holder 
or organised group of vote holders this may be an indicator of de facto 
control. An assessment is needed to determine all the factors relevant to 
the relationship with the investee to ascertain whether control has been 
established and whether the investee should be consolidated as a 
subsidiary. Where voting power and returns from an investment are split 
equally between two entities then the arrangement is accounted for as 
a joint venture. 
On an acquisition fair values are attributed to the assets and 
liabilities acquired. This may involve material judgement to determine 
these values. 
136
DIAGEO Annual Report 2020

Prior year acquisitions
On 28 September 2018, Diageo acquired Copper Dog Whisky Limited. In addition, Diageo has made a number of smaller acquisitions of brands, 
distribution rights and equity interests in various drinks businesses and made contingent consideration payments in respect of prior year acquisitions. 
On 15 August 2017, Diageo completed the purchase of 100% of the share capital of Casamigos Tequila, LLC (Casamigos), a super premium tequila 
based in the United States, for $1,000 million (£777 million) of which $300 million (£233 million) was contingent on Casamigos achieving certain 
performance targets. 
On 14 March 2018, Diageo completed the acquisition of Belsazar GmbH, a premium aperitif from Germany’s Black Forest. 
On 2 May 2018, Diageo acquired 100% of the intellectual property of Pierde Almas, an ultra premium mezcal. 
Purchase of shares of non-controlling interests 
On 29 July 2019, East African Breweries Limited completed the purchase of 4% of the share capital of Serengeti Breweries Limited for $3 million 
(£2 million). This increased Diageo’s effective economic interest from 39.2% to 40.2%. 
In August 2019 and February 2020, in two separate purchases, Diageo acquired shares in United Spirits Limited (USL) for INR 5,495 million (£60 million) 
which increased Diageo’s percentage of shares owned in USL from 54.78% to 55.94% (excluding 2.38% owned by the USL Benefit Trust). 
On 17 August 2018 and 9 April 2019, Diageo completed the purchase of 20.29% and 3.14% of the share capital of Sichuan Shuijingfang Company 
Limited (SJF) for an aggregate consideration of RMB 6,774 million (£775 million) and transaction costs of £9 million. This took Diageo’s shareholding in SJF 
from 39.71% to 63.14%. SJF was already controlled and therefore consolidated prior to these transactions. 
(b) Sale of businesses
Cash consideration received and net assets disposed of in respect of sale of businesses in the two years ended 30 June 2020: 
UNB
£ million
Other
£ million
Total
£ million
2019
£ million
Sale consideration
Cash received in year
10
1
11
438
Transaction and other directly attributable costs paid
–
–
–
(12)
Net cash received
10
1
11
426
Transaction costs payable
(1)
–
(1)
(4)
9
1
10
422
Net assets disposed of
Brands
–
–
–
(230)
Goodwill
–
–
–
(12)
Property, plant and equipment
–
(1)
(1)
(6)
Investment in associates
–
(1)
(1)
(3)
Assets and liabilities held for sale
(30)
–
(30)
–
Inventories
–
–
–
(18)
(30)
(2)
(32)
(269)
Impairment charge recognised up until the date of sale
(7)
–
(7)
–
Exchange recycled from other comprehensive income
(4)
–
(4)
–
(Loss)/gain on disposal before taxation
(32)
(1)
(33)
153
Taxation
–
–
–
(33)
(Loss)/gain on disposal after taxation
(32)
(1)
(33)
120
On 1 April 2020, Diageo completed the sale of United National Breweries (UNB), Diageo’s wholly owned sorghum beer business in South Africa. In the year 
ended 30 June 2020, up until the date of sale, UNB contributed net sales of £31 million (2019 – £43 million; 2018 – £49 million), operating profit of £nil 
(2019 – £1 million; 2018 – £6 million) and profit after taxation of £nil (2019 – £1 million; 2018 – £4 million).
In the year ended 30 June 2019, Diageo completed the sale of a portfolio of 19 brands to Sazerac for an aggregate consideration of $550 million  
(£435 million). Diageo continued to provide manufacturing services for all disposed brands until December 2019 with some extended up to June 2020 
and for five brands will continue up to December 2028. 
In the year ended 30 June 2018, there were no significant disposals completed by the group. 
FINANCIAL STATEMENTS
137
DIAGEO Annual Report 2020

9. Intangible assets 
Accounting policies 
Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses. Acquired brands 
and other intangible assets are initially recognised at fair value when they are controlled through contractual or other legal rights, or are separable 
from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having indefinite useful economic lives, 
they are not amortised. 
Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair 
value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets acquired. Goodwill arising on 
acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising subsequent to 1 July 1998 
has been capitalised. 
Amortisation and impairment of intangible assets is based on their useful economic lives and are amortised on a straight-line basis over 
those lives and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and 
intangible assets that are regarded as having indefinite useful economic lives are not amortised and are reviewed for impairment at least annually or 
when there is an indication that the assets may be impaired. Impairment reviews compare the net carrying value with the recoverable amount (where 
recoverable amount is the higher of fair value less costs of disposal and value in use). Amortisation and any impairment write downs are charged to 
other operating expenses in the income statement. 
Computer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and useful lives 
are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years. 
Critical accounting estimates and judgements 
Assessment of the recoverable amount of an intangible asset and the useful economic life of an asset are based on management’s estimates. 
Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts. Value in  
use and fair value less costs of disposal were both considered for these reviews and any impairment charge was based on these. The tests are 
dependent on management’s estimates in respect of the forecasting of future cash flows, the discount rates applicable to the future cash flows and 
what expected growth rates are reasonable. Judgement is required in determining the cash-generating units. Such estimates and judgements are 
subject to change as a result of changing economic conditions and actual cash flows may differ from forecasts.
Additional estimates have been applied by management regarding the potential financial impact of the Covid-19 pandemic across markets.  
In this regard a combination of the following factors was considered in every impairment model: 
–	 the future development of the virus, including the duration, scale and geographic extent of the closures; 
–	 the expected scale and duration of the economic recovery; 
–	 the size of the on-trade channel in the market; 
–	 the life cycle phase of the brand and the maturity of the market. 
Brands 
£ million
Goodwill 
£ million
Other 
intangibles 
£ million
Computer 
software 
£ million
Total 
£ million
Cost
At 30 June 2018
8,946
2,788
1,482
604
13,820
Exchange differences
182
28
56
8
274
Additions
25
10
2
46
83
Disposals(i)
(230)
(12)
–
(5)
(247)
Transfers to assets held for sale(ii)
(28)
(19)
–
–
(47)
At 30 June 2019
8,895
2,795
1,540
653
13,883
Exchange differences
(74)
(139)
44
–
(169)
Additions
102
8
3
52
165
Disposals
–
–
–
(7)
(7)
At 30 June 2020
8,923
2,664
1,587
698
13,872
Amortisation and impairment
At 30 June 2018
616
110
75
447
1,248
Exchange differences
5
3
–
8
16
Amortisation for the year
–
–
3
60
63
Disposals
–
–
–
(1)
(1)
At 30 June 2019
621
113
78
514
1,326
Exchange differences
(17)
(16)
(1)
2
(32)
Amortisation for the year
–
–
1
62
63
Impairment
564
655
–
–
1,219
Disposals
–
–
–
(4)
(4)
At 30 June 2020
1,168
752
78
574
2,572
Carrying amount
At 30 June 2020
7,755
1,912
1,509
124
11,300
At 30 June 2019
8,274
2,682
1,462
139
12,557
At 30 June 2018
8,330
2,678
1,407
157
12,572
(i) 	In the year ended 30 June 2019 Diageo completed the sale of a portfolio of 19 brands to Sazerac. See note 8(b) for further information. 
(ii) 	Transfers to assets held for sale in the year ended 30 June 2019 was in respect of United National Breweries (UNB). 
138
DIAGEO Annual Report 2020

(c) Other intangibles 
Other intangibles principally comprise distribution rights. Diageo owns the 
global distribution rights for Ketel One vodka products in perpetuity, and 
the Directors believe that it is appropriate to treat these rights as having an 
indefinite life for accounting purposes. The carrying value at 30 June 2020 
was £1,464 million (2019 – £1,418 million). 
(d) Impairment testing 
Impairment tests are performed annually, or more frequently if events or 
circumstances indicate that the carrying amount may not be recoverable. 
Recoverable amounts are calculated based on the value in use approach 
also considering fair value less cost to sale. The value in use calculations are 
based on discounted forecast cash flows using the assumption that cash 
flows continue in perpetuity at the terminal growth rate of each country or 
region. The individual brands, other intangibles with indefinite useful lives 
and their associated tangible fixed assets are aggregated as separate 
cash-generating units. Separate tests are carried out for each cash-
generating unit and for each of the markets. Goodwill is attributed to each 
of the markets. 
The key assumptions used for the value in use calculations are  
as follows: 
Cash flows 
Cash flows are forecast for each cash-generating unit for the financial year, 
which is approved by management and reflect the following assumptions:
–	 Cash flows are projected based on the actual operating results and 
a three-year plan approved by the management. Cash flows are 
extrapolated up to five-years using expected growth rates in line with 
management’s best estimates. Growth rates reflect expectations of sales 
growth, operating costs and margin, based on past experience and 
external sources of information. Where applicable, multiple cash flow 
scenarios were populated to predict the potential outcome, considering 
the increased risk of uncertainty around the duration and severity of the 
Covid-19 pandemic in the different markets. A simple average of these 
projections served as the estimation of the recoverable amount of the 
cash-generating units including the goodwill of USL, Indian brands, 
Nigeria and Windsor Premier brand. Management has no information 
which would indicate that any of the scenarios are more likely than 
the others; 
(a) Brands 
At 30 June 2020, the principal acquired brands, all of which are regarded as having indefinite useful economic lives, are as follows: 
Principal markets
2020 
£ million
2019 
£ million
Crown Royal whisky
United States
1,190
1,153
McDowell’s No.1 whisky, rum and brandy
India
1,050
1,112
Captain Morgan rum
Global
977
946
Smirnoff vodka
Global
670
648
Johnnie Walker whisky
Global
625
625
Casamigos tequila
United States
491
476
Shui Jing Fang Chinese white spirit
Greater China
260
259
Yenì Raki
Turkey
202
231
Signature whisky
India
197
209
Seagram’s 7 Crown whiskey
United States
181
176
Don Julio tequila
United States
179
209
Bell’s whisky
Europe
179
179
Black Dog whisky
India
167
177
Antiquity whisky
India
163
173
Zacapa rum
Global
156
151
Windsor Premier whisky
Korea
154
589
Gordon’s gin
Europe
119
119
Old Parr whisky
Global
110
106
Other brands
685
736
7,755
8,274
The brands are protected by trademarks, which are renewable indefinitely, 
in all of the major markets where they are sold. There are not believed 
to be any legal, regulatory or contractual provisions that limit the useful 
lives of these brands. The nature of the premium drinks industry is that 
obsolescence is not a common issue, with indefinite brand lives being 
commonplace, and Diageo has a number of brands that were originally 
created more than 100 years ago. Accordingly, the Directors believe that 
it is appropriate that the brands are treated as having indefinite lives for 
accounting purposes and are therefore not amortised. 
(b) Goodwill 
For the purposes of impairment testing, goodwill has been attributed to 
the following cash-generating units: 
2020 
£ million
2019 
£ million
North America
416
403
Europe and Turkey
Europe (excluding Turkey)
181
172
Turkey
205
234
Latin America and Caribbean – Mexico
123
143
Asia Pacific
Greater China
132
131
India
770
1,511
Other cash-generating units
85
88
1,912
2,682
Goodwill has arisen on the acquisition of businesses and includes 
synergies arising from cost savings, the opportunity to utilise Diageo’s 
distribution network to leverage marketing of the acquired products and 
the extension of the group’s portfolio of brands in new markets around 
the world. 
FINANCIAL STATEMENTS
139
DIAGEO Annual Report 2020

–	 The five-year forecast period is extended by up to an additional ten years at acquisition date for some intangible assets and goodwill when 
management believes that this period is justified by the maturity of the market and expects to achieve growth in excess of the terminal growth rate 
driven by Diageo’s sales, marketing and distribution expertise. Cash flows beyond the five-year period are projected using steady or progressively 
declining growth rates. These rates do not exceed the annual growth rate of the real gross domestic product (GDP) aggregated with the long-term 
annual inflation rate of the country or region; 
–	 Cash flows for the subsequent years after the forecast period are extrapolated based on a terminal growth rate which does not exceed the long-term 
annual inflation rate of the country or region. 
The calculation of value in use as at 30 June 2020 is based on a five-year detailed plan for every cash-generating unit, except for India where the period is 
extended by an additional four years.
Discount rates 
The discount rates used are the weighted average cost of capital which reflects the returns on government bonds and an equity risk premium adjusted 
for the drinks industry specific to the cash-generating units. Further risk premiums are applied according to management’s assessment of the risks in 
respect of the cash flows for a particular asset or cash-generating unit. The group applies post-tax discount rates to post-tax cash flows as the valuation 
calculated using this method closely approximates to applying pre-tax discount rates to pre-tax cash flows. 
For goodwill, these assumptions are based on the cash-generating unit or group of units to which the goodwill is attributed. For brands, they are 
based on a weighted average taking into account the country or countries where sales are made. 
The pre-tax discount rates, terminal and long-term growth rates used for impairment testing are as follows: 
2020
2019
Pre-tax 
discount 
rate 
%
Terminal  
growth 
rate 
%
Long-term  
growth  
rate 
%
Pre-tax 
discount 
rate 
%
Terminal  
growth 
rate 
%
Long-term  
growth  
rate 
%
North America – United States
8
2
4
9
2
4
Europe and Turkey
Europe (excluding Turkey)
7
2
4
7
2
4
Turkey
22
11
15
25
13
16
Africa
Ethiopia
21
8
17
25
8
17
South Africa
18
–
7
18
–
7
Latin America and Caribbean
Brazil
15
3
6
16
4
6
Mexico
16
3
5
17
3
6
Asia Pacific
Korea
10
(4)
–
8
2
–
Greater China
9
3
8
10
3
8
India
12
4
12
14
5
12
Value in use calculation and fair value less costs of disposal methodologies were both considered to assess the recoverable amount of the India cash-
generating unit. Having considered the volatility in local share prices, the premiums that businesses controlled by large multinationals trade at and other 
factors, we assessed a range of fair value less costs of disposal with particular focus on the value a third party may pay for a controlling stake in the current 
environment. The value in use calculation was above our view of fair value less costs of disposal and was therefore used to determine the recoverable 
amount of this cash-generating unit. Based on this, in the year ended 30 June 2020, an impairment charge of £655 million in respect of the India 
cash-generating unit containing the India goodwill was recognized in exceptional operating items. In the year ended 30 June 2020, impairment charges 
of £78 million in respect of the Old Tavern brand and £38 million in respect of the Bagpiper brand in India were also recognised in exceptional operating 
items, based on their value in use. Forecast cash flow assumptions were reduced principally due to the general economic downturn further aggravated 
by the Covid-19 pandemic, including pandemic related recent regulatory changes both negatively impacting demand and margins. The brand 
impairment reduced the deferred tax liability by £25 million. The recoverable amount is £3,444 million in respect of the India cash-generating unit, £20 
million in respect of the Old Tavern brand and £94 million in respect of the Bagpiper brand cash-generating units.
In the year ended 30 June 2020, an impairment charge of £434 million in respect of the Windsor Premier brand has been recognised in exceptional 
operating items, based on its value in use. The impairment reduced the deferred tax liability attributable to the brand by £105 million resulting in a net 
exceptional loss of £329 million. The forecast cash flow assumptions were reduced principally due to the recent regulatory changes limiting trade spend 
for wholesalers and venues and the Covid-19 pandemic negatively impacting the challenging whisky category in Korea. The recoverable amount is 
£164 million in respect of the Windsor Premier brand cash-generating unit. 
140
DIAGEO Annual Report 2020

10. Property, plant and equipment 
Accounting policies 
Land and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. Leaseholds are generally depreciated over 
the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual values over their 
expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives fall within the following 
ranges: buildings – 10 to 50 years; within plant and equipment casks and containers – 15 to 50 years; other plant and equipment – 5 to 25 years; 
fixtures and fittings – 5 to 10 years; and returnable bottles and crates – 5 to 10 years. 
Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried at above 
their recoverable amounts. 
Government grants 
Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions pursuant to which they have 
been granted and that the grants will be received. Government grants in respect of property, plant and equipment are deducted from the asset that 
they relate to, reducing the depreciation expense charged to the income statement. 
(e) Sensitivity to change in key assumptions 
Impairment testing for the year ended 30 June 2020 has identified the following cash-generating units as being sensitive to reasonably possible changes 
in assumptions. 
The table below shows the headroom at 30 June 2020 and the impairment charge that would be required if the assumptions in the calculation of 
their value in use were changed: 
Carrying value  
of CGU  
£ million
Headroom 
£ million
1ppt increase in  
discount rate 
£ million
2ppt decrease in 
annual growth rate 
in forecast period 
2021-2029 
£ million
0.5-1ppt 
 reduction in the 
rate of price 
increase  
£ million
Covid-19 scenario 
£ million
India(i)
3,444
–
(242)
(235)
(297)
(396)
Bagpiper brand(i)
94
–
(11)
(16)
(19)
(17)
Antiquity brand(i)
166
8
(15)
(18)
(13)
(25)
McDowell’s No.1 brand(i)
1,179
29
(121)
(173)
(216)
(234)
Windsor Premier brand(ii)
164
–
–
–
–
(30)
Bell’s brand(iii)
225
12
(11)
–
–
–
(i)	 Reasonably possible changes in key assumptions that would result in an additional impairment of the India cash-generating unit, Bagpiper, Antiquity and McDowell’s No.1 brands would be a  
1ppt increase in discount rate or a 2ppt decrease in the annual growth rate in forecast period of 2021-2029 or a 0.5-1ppt reduction in the rate of price increase. Furthermore, due to the Covid-19 
pandemic, a permanent delay of the F20 lost base recovery period is also considered to be a reasonably possible scenario due to the severity of measures taken in India and the introduction of 
unprecedented increase of taxes on alcohol. In the Covid-19 scenario above it was assumed that F19 base will be reached by F25. 
(ii)	Due to the high-level uncertainty of the Covid-19 pandemic, additional possible changes in volume growth rates are forecasted assuming permanent damage of local whisky category with no 
recovery to F19 levels based on latest outlook of IWSR reports, and the fact that the majority of sales are on-trade.
(iii) 	The Bell’s brand is disclosed as sensitive due to strong competition and challenging market conditions. The only change in the key assumptions considered reasonably possible that would result 
in an impairment of the brand would be a 1ppt increase in discount rate. 
(f) USL combination of popular brands 
Following the acquisition of United Spirits Limited (USL) in 2014, all material brands together with the associated property, plant and equipment  
(the brands) were fair valued and capitalised. Each year since the acquisition, the brands were tested separately for impairment. 
The long-term strategic priorities have continued to evolve for the Indian market with a greater emphasis on premium brands, operating margin 
expansion and generating marketing spend efficiencies. This has resulted in the management and marketing teams managing, reporting both internally 
and externally, and allocating resources to the popular category rather than to individual brands. 
In the year ended 30 June 2020, the impairment tests have been carried out for the brands within the popular category as a single cash-generating 
unit and also at the individual brand level to ensure that the change in the definition of cash-generating units does not result in the understatement of  
an impairment charge. The impairment charge of £116 million on Old Tavern Whisky and Bagpiper was based on the individual brand level impairment 
models. For the year ending 30 June 2021 a single impairment test will be carried out at the popular category in accordance with how this category is 
now managed. 
The principal USL brands in the popular category are Director’s Special, Bagpiper, Old Tavern Whisky and White Mischief. 
FINANCIAL STATEMENTS
141
DIAGEO Annual Report 2020

Land and 
buildings 
£ million
Plant and 
equipment 
£ million
Fixtures 
and 
fittings 
£ million
Returnable 
bottles and 
crates 
£ million
Under 
construction 
£ million
Total 
£ million
Cost
At 30 June 2018
1,585
4,102
126
534
432
6,779
Exchange differences
16
54
1
4
10
85
Sale of businesses
(2)
(7)
(1)
–
–
(10)
Additions
42
180
9
31
383
645
Disposals
(16)
(32)
(13)
(21)
(2)
(84)
Transfers
87
218
3
18
(329)
(3)
At 30 June 2019
1,712
4,515
125
566
494
7,412
Recognition of right-of-use asset on adoption of IFRS 16
173
63
–
–
–
236
Adjusted balance at 1 July 2019
1,885
4,578
125
566
494
7,648
Exchange differences
(10)
(22)
–
(1)
(9)
(42)
Additions
202
156
13
34
439
844
Disposals
(46)
(86)
(20)
(37)
(1)
(190)
Transfers
110
242
9
13
(374)
–
At 30 June 2020
2,141
4,868
127
575
549
8,260
Depreciation
At 30 June 2018
467
1,761
91
371
–
2,690
Exchange differences
4
23
–
3
–
30
Depreciation charge for the year
49
216
13
33
–
311
Sale of businesses
–
(4)
–
–
–
(4)
Disposals
(9)
(25)
(12)
(17)
–
(63)
Transfers
–
(6)
(1)
–
–
(7)
At 30 June 2019
511
1,965
91
390
–
2,957
Exchange differences
–
(5)
(1)
(2)
–
(8)
Depreciation charge for the year
106
260
15
36
–
417
Exceptional impairment
20
114
–
6
–
140
Disposals
(40)
(78)
(19)
(35)
–
(172)
At 30 June 2020
597
2,256
86
395
–
3,334
Carrying amount
At 30 June 2020
1,544
2,612
41
180
549
4,926
At 30 June 2019
1,201
2,550
34
176
494
4,455
At 30 June 2018
1,118
2,341
35
163
432
4,089
(a) The net book value of land and buildings comprises freeholds of £1,218 million (2019 – £1,162 million), long leaseholds of £6 million (2019 –  
£21 million) and short leaseholds of £320 million (2019 – £18 million). Depreciation was not charged on £161 million (2019 – £164 million) of land. 
(b) Property, plant and equipment is net of a government grant of £150 million (2019 – £143 million) received in prior years in respect of the construction 
of a rum distillery in the US Virgin Islands. 
(c) In the year ended 30 June 2020, an impairment charge of £84 million in respect of the Nigeria tangible fixed asset has been recognised in exceptional 
operating items. The impairment reduced the deferred tax liability by £25 million resulting in a net exceptional loss of £59 million. The profit generating 
ability of the assets were reduced principally due to the deteriorated economic outlook as a result of the combination of the oil price crisis in Nigeria 
and the Covid-19 pandemic. The recoverable amount is £140 million in respect of the Nigeria cash-generating unit based on the fair value of the assets 
applying the cost valuation technique and it is considered a Level 3 instrument within the fair value hierarchy as the assumptions used in the valuation 
are not observable in the market. The valuation is only sensitive to the cost of replacing the assets and if this was 10% less, the fair value of the assets 
would decrease by approximately £14 million.
(d) In the year ended 30 June 2020, an impairment charge of £55 million in respect of the Ethiopia tangible fixed asset has been recognised in exceptional 
operating items. The impairment reduced the deferred tax liability by £10 million resulting in a net exceptional loss of £45 million. The forecast cash flow 
assumptions were reduced principally due to the impact of recent excise duty increase and Covid-19 pandemic. The recoverable amount is £12 million 
in respect of the Ethiopia cash-generating unit based on the fair value of the assets.
142
DIAGEO Annual Report 2020

11. Leases 
The impact of the adoption of IFRS 16 on affected lines of the consolidated 
balance sheet at 1 July 2019 is as follows: 
30 June 2019 
£ million
IFRS 16 impact 
£ million
1 July 2019 
£ million
Non-current assets
Property, plant and equipment
4,455
236
4,691
Other financial assets
404
1
405
Current assets
Trade and other receivables
2,694
(2)
2,692
Current liabilities
Other financial liabilities
(307)
(64)
(371)
Trade and other payables
(4,202)
13
(4,189)
Non-current liabilities
Other financial liabilities
(124)
(187)
(311)
Provisions
(317)
3
(314)
As a result of the adoption of IFRS 16, on 1 July 2019 the total assets 
increased by £235 million from £31,296 million to £31,531 million and total 
liabilities increased by £235 million from £21,140 million to £21,375 million. 
The leases (previously classified as operating leases) which have been 
recognised at adoption are principally in respect of warehouses, office 
buildings, plant and machinery, cars and distribution vehicles. There is 
no impact on deferred tax balances. 
The adoption of IFRS 16 resulted in an immaterial benefit to operating 
profit and an immaterial increase in finance charges. Profit before tax, 
taxation and earnings per share have not been significantly impacted.  
The adoption of IFRS 16 has had no impact on the group’s net cash flows 
although a presentation change has been reflected whereby the principal 
element of the lease payments (for leases formerly classified as operating 
leases under IAS 17) of £74 million for the year ended 30 June 2020, are 
disclosed as part of cash flow from financing activities and the interest 
element is included in cash flow from operating activities. Under IAS 17 
both the principal and interest cash flows from operating leases would 
have been disclosed as part of cash flows from operating activities. 
A reconciliation of differences between the operating lease 
commitments disclosed under IAS 17 and disclosed in note 19(b) of 
Diageo’s 2019 Annual Report and the lease liabilities under IFRS 16,  
at 1 July 2019, is as follows: 
£ million
Operating lease commitments at 30 June 2019
(321)
Leases expiring within a year of 1 July 2019
19
Low value assets
11
Impact of discounting
40
Total additional lease liabilities recognised on adoption  
of IFRS 16
(251)
Finance lease liabilities at 30 June 2019
(128)
Total lease liabilities at 1 July 2019
(379)
Total lease liabilities at 1 July 2019 – current
(107)
Total lease liabilities at 1 July 2019 – non-current
(272)
Accounting policies 
Where the group is the lessee, all leases are recognised on the balance 
sheet as right-of-use assets and depreciated on a straight-line basis 
with the charge recognised in cost of sales. The liability, recognised 
as part of net borrowings, is measured at a discounted value and any 
interest is charged to finance charges. 
The group recognises services associated with a lease as other 
operating expenses. Payments associated with leases where the 
value of the asset when it is new is lower than $5,000 (leases of low 
value assets) and leases with a lease term of twelve months or less 
(short term leases) are recognised as other operating expenses. 
A judgement in calculating the lease liability at initial recognition 
includes determining the lease term where extension or termination 
options exist. In such instances any economic incentive to retain or 
end a lease are considered and extension periods are only included 
when it is considered reasonably certain that an option to extend a 
lease will be exercised. 
For the years ended 30 June 2019 and 2018, where the group had 
substantially all the risks and rewards of ownership of an asset subject 
to a lease, the lease was treated as a finance lease. Assets held under 
finance leases were recognised as assets of the group at their fair value 
at the inception of the lease. The corresponding liability to the lessor 
was included in other financial liabilities on the consolidated balance 
sheet. Lease payments were apportioned between interest expense 
and a reduction of the lease obligation so as to achieve a constant rate 
of interest on the remaining balance of the liability. Other leases were 
treated as operating leases, with payments and receipts taken to the 
income statement on a straight-line basis over the life of the lease. 
(a) Adoption of IFRS 16 
Under the new standard, outstanding lease liabilities have been 
recognised at 1 July 2019, for leases previously classified as operating 
leases, at the present value of the future lease payments over their 
reasonably certain lease term. Right-of-use assets have been recognised 
equal to the net present value of the lease liabilities, adjusted for the 
amount of any prepaid or accrued lease payment, lease incentives and 
provisions for onerous leases. There was no impact on retained earnings  
as at 1 July 2019. The interest rate used to discount the future payments  
in the calculation of the lease liability is the incremental borrowing rate  
at 1 July 2019 taking into account the currency and duration of the lease.  
The weighted average incremental borrowing rate applied across all 
operating leases capitalised on 1 July 2019 was 3.2%. 
For leases previously classified as finance leases the group recognised 
the carrying amount of the lease asset and lease liability immediately 
before transition as the carrying amount of the right-of-use asset and 
the lease liability at the date of adoption of IFRS 16, 1 July 2019. The 
re-measurement principles of IFRS 16 are only applied after that date. 
The group has decided to reduce the complexity of implementation 
by taking advantage of a number of practical expedients on transition on  
1 July 2019 namely: 
(i)	 to not capitalise leases which expire within a year of 1 July 2019; 
(ii)	 to apply a single discount rate to portfolios of leases with similar 
characteristics; and 
(iii)	 to adjust the right-of-use asset by the amount of any provision 
for onerous leases recognised immediately before the date of 
initial application. 
The group has not capitalised leases where the value of the asset when it 
is new is lower than $5,000 (low value assets). 
FINANCIAL STATEMENTS
143
DIAGEO Annual Report 2020

(b) Movement in right-of-use assets 
Land and 
buildings 
£ million
Plant and 
equipment 
£ million
Under 
construction 
£ million
Total 
£ million
At 30 June 2019(i)
2
228
–
230
Adoption of IFRS16
173
63
–
236
Adjusted balance at 1 July 2019
175
291
–
466
Exchange differences
(3)
2
–
(1)
Additions
150
24
32
206
Disposals
(2)
–
–
(2)
Depreciation(ii)
(51)
(41)
–
(92)
At 30 June 2020
269
276
32
577
(i) 	In the year ended 30 June 2019 and 30 June 2018, only leases that met the criteria of finance leases under IAS 17 – Leases were capitalised and included in property, plant and equipment. 
(ii) 	In the year ended 30 June 2019 depreciation on assets held under finance leases was £12 million 
12. Other investments 
Accounting policies 
Other investments are such equity investments that are not classified 
as investments in associates or joint arrangements nor investments 
in subsidiaries. They are included in non-current assets. Subsequent 
to initial measurement, other investments are stated at fair value. 
Gains and losses arising from the changes in fair value are recognised 
in the income statement or in other comprehensive income on a 
case by case basis. Accumulated gains and losses included in other 
comprehensive income are not recycled to the income statement. 
Dividends from other investments are recognised in the consolidated 
income statement. 
Loans receivable are non-derivative financial assets that are 
not classified as equity investments. They are subsequently measured 
either at amortised cost using the effective interest method less 
allowance for impairment or at fair value with gains and losses arising 
from changes in fair value recognised in the income statement or 
in other comprehensive income that are recycled to the income 
statement on the de-recognition of the asset. Allowances for expected 
credit losses are made based on the risk of non-payment taking 
into account ageing, previous experience, economic conditions 
and forward-looking data. Such allowances are measured as either 
12-months expected credit losses or lifetime expected credit losses 
depending on changes in the credit quality of the counterparty. 
Loans 
£ million
Others 
£ million
Total 
£ million
Cost less allowances or fair value
At 30 June 2018
35
11
46
Additions
2
–
2
Repayments and disposals
(1)
–
(1)
Fair value adjustment
–
2
2
Transfers
(19)
19
–
At 30 June 2019
17
32
49
Exchange differences
1
1
2
Additions
3
–
3
Repayments and disposals
(1)
(2)
(3)
Fair value adjustment
–
2
2
Provision charged during the year
(14)
–
(14)
Capitalised interest
1
–
1
Transfer
–
1
1
At 30 June 2020
7
34
41
At 30 June 2020, loans comprise £4 million (2019 – £17 million; 2018 –  
£35 million) of loans to customers and other third parties, after allowances 
of £127 million (2019 – £111 million; 2018 – £108 million), and £3 million 
(2019 – £nil; 2018 – £nil) of loans to associates. 
(c) Lease liabilities 
2020 
£ million
2019 
£ million
Current lease liabilities
(106)
(43)
Non-current lease liabilities
(364)
(85)
(470)
(128)
(i) 	In the year ended 30 June 2019, the group only recognised lease liabilities in relation to 
leases that were classified as finance leases under IAS 17 – Leases. The lease liabilities were 
presented as part of the group’s net borrowings in the year ended 30 June 2019. 
The future cash outflows, which are not included in lease liabilities on the 
balance sheet, in respect of extension and termination options which are 
not reasonably expected to be exercised are estimated at £284 million. 
(d) Amounts recognised in the consolidated income statement 
In the year ended 30 June 2020 other operating expenses (within other 
external charges) included £39 million in respect of leases of low value 
assets and short term leases and £11 million in respect of variable lease 
payments. In the year ended 30 June 2019 other external charges included 
operating lease expenses in respect of plant and machinery of £19 million 
(2018 – £21 million) and other assets (mainly properties) of £101 million  
(2018 – £87 million). Refer to note 5 for further information relating to the 
interest expenses on lease liabilities.
The total cash outflow for leases in the year ended 30 June 2020 
was £180 million. 
144
DIAGEO Annual Report 2020

(a) Post employment benefit plans 
The group operates a number of pension plans throughout the world, 
devised in accordance with local conditions and practices. Our most 
significant plans are defined benefit plans and are funded by payments  
to separately administered trusts or insurance companies. The group 
also operates a number of plans that are generally unfunded, primarily 
in the United States, which provide to employees post employment  
medical benefits. 
The principal plans are in the United Kingdom, Ireland and the 
United States where benefits are based on employees’ length of service 
and salary at retirement. All valuations were performed by independent 
actuaries using the projected unit credit method to determine pension 
costs. The most recent funding valuations of the significant defined 
benefit plans were carried out as follows: 
Principal plans
Date of valuation
United Kingdom(i)
1 April 2018
Ireland(ii)
31 December 2018
United States
1 January 2020
(i)	 The Diageo Pension Scheme (DPS) closed to new members in November 2005. Employees 
who have joined Diageo in the United Kingdom since the defined benefit scheme closed 
had been eligible to become members of the Diageo Lifestyle Plan (a cash balance defined 
benefit pension plan) until 1 January 2018. Since then new employees have been eligible to 
become members of a Diageo administered defined contribution plan. 
(ii)	The Irish scheme closed to new members in May 2013. Employees who have joined Diageo 
in Ireland since the defined benefit scheme closed have been eligible to become members 
of Diageo administered defined contribution plans. 
The assets of the UK and Irish pension plans are held in separate trusts 
administered by trustees who are required to act in the best interests 
of the plans’ beneficiaries. For DPS, the trustee is Diageo Pension Trust 
Limited. As required by legislation, one-third of the directors of the Trust 
are nominated by the members of the DPS, member nominated directors 
are appointed from both the pensioner member community and the 
active member community. For the Irish Scheme Diageo Ireland makes 
four nominations and appoints three further candidates nominated by 
representative groupings. 
The amounts charged to the consolidated income statement for the 
group’s defined benefit post employment plans and the consolidated 
statement of comprehensive income for the three years ended 30 June 
2020 are as follows: 
2020
£ million
2019
£ million
2018
£ million
Current service cost and administrative 
expenses
(109)
(110)
(123)
Past service gains – ordinary activities
50
56
33
Past service losses – exceptional
–
(21)
–
Gains on curtailments and settlements
12
4
6
Charge to operating profit
(47)
(71)
(84)
Net finance gain/(charge) in respect of 
post employment plans
9
7
(11)
Charge before taxation(i)
(38)
(64)
(95)
Actual returns less amounts included in 
finance income
774
438
312
Experience gains/(losses)
34
113
(30)
Changes in financial assumptions
(754)
(514)
108
Changes in demographic assumptions
(14)
(6)
69
Other comprehensive income
40
31
459
Changes in the surplus restriction
(2)
2
(2)
Total other comprehensive income
38
33
457
(1)	The year ended 30 June 2020 includes past service gains of £47 million in respect of the  
Irish Scheme following separate communications to the deferred members in respect 
of changing their expectations of a full pension prior to reaching the age of 65 and to 
pensioners in respect of future pension increases. (2019 – £54 million in respect of changes 
made to future pension increases for members of the UK Scheme and changes to the 
principal Irish Scheme.) The exceptional past service loss, in the year ended 30 June 2019, of 
£21 million is in respect of the equalisation of Guaranteed Minimum Pension (GMP) benefits 
for men and women. 
(i) 	The charge/income before taxation in respect of the following countries is: 
2020
£ million
2019
£ million
2018
£ million
United Kingdom
(23)
(3)
(49)
Ireland
34
(13)
1
United States
(30)
(30)
(29)
Other
(19)
(18)
(18)
(38)
(64)
(95)
In addition to the charge in respect of defined benefit post employment 
plans, contributions to the group’s defined contribution plans were  
£24 million (2019 – £19 million; 2018 – £18 million). 
13. Post employment benefits 
Accounting policies 
The group’s principal pension funds are defined benefit plans. 
In addition, the group has defined contribution plans, unfunded 
post employment medical benefit liabilities and other unfunded 
defined benefit post employment liabilities. For post employment 
plans, other than defined contribution plans, the amount charged 
to operating profit is the cost of accruing pension benefits promised 
to employees over the year, plus any changes arising on benefits 
granted to members by the group during the year. Net finance 
charges comprise the net deficit/asset on the plans at the beginning 
of the year, adjusted for cash flows in the year, multiplied by the 
discount rate for plan liabilities. The differences between the fair 
value of the plans’ assets and the present value of the plans’ liabilities 
are disclosed as an asset or liability on the consolidated balance sheet. 
Any differences due to changes in assumptions or experience are 
recognised in other comprehensive income. The amount of any 
pension fund asset recognised on the balance sheet is limited to 
any future refunds from the plan or the present value of reductions 
in future contributions to the plan. 
Contributions payable by the group in respect of defined 
contribution plans are charged to operating profit as incurred. 
Critical accounting estimates and judgements 
Application of IAS 19 requires the exercise of estimate and judgement 
in relation to various assumptions. 
Diageo determines the assumptions on a country by country basis 
in conjunction with its actuaries. Estimates are required in respect of 
uncertain future events including the life expectancy of members of 
the funds, salary and pension increases, future inflation rates, discount 
rates and employee and pensioner demographics. The application of 
different assumptions could have a significant effect on the amounts 
reflected in the income statement, other comprehensive income 
and the balance sheet. There may be interdependencies between 
the assumptions. 
Where there is an accounting surplus on a defined benefit plan 
management judgement is necessary to determine whether the group 
can obtain a refund of the surplus by reducing future contributions 
to the plan. 
FINANCIAL STATEMENTS
145
DIAGEO Annual Report 2020

The following weighted average assumptions were used to determine the group’s deficit/surplus in the main post employment plans at 30 June in the 
relevant year. The assumptions used to calculate the charge/credit in the consolidated income statement for the year ending 30 June are based on the 
assumptions disclosed as at the previous 30 June. 
United Kingdom
Ireland
United States(i)
2020
%
2019
%
2018
%
2020
%
2019
%
2018
%
2020
%
2019
%
2018
%
Rate of general increase in salaries(ii)
3.2
3.6
4.3
2.6
2.3
3.2
–
–
–
Rate of increase to pensions in payment
3.0
3.2
3.3
1.4
1.5
2.0
–
–
–
Rate of increase to deferred pensions
2.1
2.2
2.1
1.2
1.3
1.8
–
–
–
Discount rate for plan liabilities
1.5
2.3
2.8
1.2
1.2
1.7
2.6
3.4
4.1
Inflation – CPI
2.1
2.2
2.1
1.2
1.3
1.8
1.4
1.7
2.1
Inflation – RPI
2.8
3.2
3.1
–
–
–
–
–
–
(i)	 The salary increase assumption in the United States is not a significant assumption as only a minimal amount of members’ pension entitlement is dependent on a member’s projected final salary. 
(ii)	The salary increase assumptions include an allowance for age related promotional salary increases. 
The movement in the net (deficit)/surplus for the two years ended  
30 June 2020 is set out below: 
Plan 
assets
£ million
Plan 
liabilities
£ million
Net 
(deficit)/
surplus
£ million
At 30 June 2018
9,310
(9,244)
66
Exchange differences
45
(55)
(10)
Charge before taxation
234
(298)
(64)
Other comprehensive income/(loss)(i)
438
(407)
31
Contributions by the group
192
–
192
Employee contributions
5
(5)
–
Benefits paid
(511)
511
–
At 30 June 2019
9,713
(9,498)
215
Exchange differences
65
(73)
(8)
Charge before taxation
198
(236)
(38)
Other comprehensive income/(loss)(i)
774
(734)
40
Contributions by the group
156
–
156
Employee contributions
5
(5)
–
Benefits paid
(489)
489
–
At 30 June 2020
10,422
(10,057)
365
(i)	 Excludes surplus restriction. 
The plan assets and liabilities by type of post employment benefit and 
country is as follows:
2020
2019
Plan  
assets 
£ million
Plan  
liabilities 
£ million
Plan  
assets 
£ million
Plan  
liabilities 
£ million
Pensions
United Kingdom
7,696
(6,831)
7,115
(6,257)
Ireland
1,810
(2,031)
1,747
(2,098)
United States
660
(578)
593
(545)
Other
183
(240)
186
(234)
Post employment 
medical
2
(288)
1
(275)
Other post employment
71
(89)
71
(89)
10,422
(10,057)
9,713
(9,498)
The balance sheet analysis of the post employment plans is as follows: 
2020
2019
Non- 
current 
assets(i)  
£ million
Non- 
current  
liabilities 
£ million
Non- 
current  
assets(i) 
£ million
Non- 
current  
liabilities  
£ million
Funded plans
1,111
(434)
1,060
(547)
Unfunded plans
–
(315)
–
(299)
1,111
(749)
1,060
(846)
(i)	 Includes surplus restriction of £3 million (2019 – £1 million). 
The disclosures have been prepared in accordance with IFRIC 14. 
In particular, where the calculation for a plan results in a surplus, the 
recognised asset is limited to the present value of any available future 
refunds from the plan or reductions in future contributions to the plan, 
and any additional liabilities are recognised as required. The DPS at 
30 June 2020 had a net surplus of £934 million (2019 – £906 million; 
2018 – £819 million). This surplus has been recognised, with no provision 
made against it, as it is expected to be recoverable through a combination 
of a reduction in future cash contributions or ultimately via a cash refund 
when the last member’s obligations have been met. 
(b) Principal risks and assumptions 
The material post employment plans are not exposed to any unusual, 
entity specific or scheme specific risks but there are general risks: 
Inflation – The majority of the plans’ obligations are linked to inflation. 
Higher inflation will lead to increased liabilities which is partially offset by 
the plans holding inflation linked gilts, swaps and caps against the level  
of inflationary increases. 
Interest rate – The plan liabilities are determined using discount rates 
derived from yields on AA-rated corporate bonds. A decrease in corporate 
bond yields will increase plan liabilities though this will be partially offset by 
an increase in the value of the bonds held by the post employment plans. 
Mortality – The majority of the obligations are to provide benefits for the 
life of the members and their partners, so any increase in life expectancy 
will result in an increase in the plans’ liabilities. 
Asset returns – Assets held by the pension plans are invested in a 
diversified portfolio of equities, bonds and other assets. Volatility in asset 
values will lead to movements in the net deficit/surplus reported in the 
consolidated balance sheet for post employment plans which in addition 
will also impact the post employment expense in the consolidated 
income statement. 
146
DIAGEO Annual Report 2020

For the principal UK and Irish pension funds, the table below illustrates the expected age at death of an average worker who retires currently at the age of 
65, and one who is currently aged 45 and subsequently retires at the age of 65: 
United Kingdom(i)
Ireland(ii)
United States
2020
Age
2019
Age
2018
Age
2020
Age
2019
Age
2018
Age
2020
Age
2019
Age
2018
Age
Retiring currently at age 65
Male
86.4
86.2
86.1
86.6
86.5
86.4
85.6
85.7
86.0
Female
88.7
88.5
88.4
89.3
89.2
89.2
87.3
87.7
88.0
Currently aged 45, retiring at age 65
Male
88.5
88.3
88.2
89.6
89.5
89.4
87.2
87.3
87.6
Female
90.8
90.6
90.5
92.3
92.2
92.1
88.9
89.3
89.6
(i)	 Based on the CMI’s S2 mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements. 
(ii)	Based on the ‘00’ series of mortality tables with scaling factors based on the experience of the plan and with suitable future improvements. 
For the significant assumptions, the following sensitivity analyses estimate the potential impacts on the consolidated income statement for the year 
ended 30 June 2021 and on the plan liabilities at 30 June 2020: 
United Kingdom
Ireland
United States and other
Benefit/(cost)
Operating 
profit 
£ million
Profit after 
taxation 
£ million
Plan  
liabilities(i) 
£ million
Operating 
profit 
£ million
Profit after 
taxation 
£ million
Plan  
liabilities(i) 
£ million
Operating 
profit 
£ million
Profit after 
taxation 
£ million
Plan  
liabilities(i) 
£ million
Effect of 0.5% increase in discount rate
5
17
568
2
3
174
1
2
38
Effect of 0.5% decrease in discount rate
(6)
(14)
(644)
(2)
(2)
(202)
(2)
(2)
(42)
Effect of 0.5% increase in inflation
(5)
(9)
(405)
(1)
(3)
(152)
(1)
(1)
(14)
Effect of 0.5% decrease in inflation
5
10
448
1
3
126
1
1
13
Effect of one year increase in life expectancy
(1)
(4)
(304)
–
(1)
(86)
–
(1)
(34)
(i)	 The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans. 
(1)	The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each 
sensitivity is calculated on a change in the key assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation linked assumptions 
(e.g. pension increases and salary increases where appropriate). 
(c) Investment and hedging strategy 
The investment strategy for the group’s funded post employment plans is determined locally by the trustees of the plan and/or Diageo, as appropriate, 
and takes account of the relevant statutory requirements. The objective of the investment strategy is to achieve a target rate of return in excess of the 
movement on the liabilities, whilst taking an acceptable level of investment risk relative to the liabilities. This objective is implemented by using the 
funds of the plans to invest in a variety of asset classes that are expected over the long-term to deliver a target rate of return. The majority of the 
investment strategies have significant amounts allocated to equities, with the intention that this will result in the ongoing cost to the group of the post 
employment plans being lower over the long-term, within acceptable boundaries of risk. Significant amounts are invested in bonds in order to provide a 
natural hedge against movements in the liabilities of the plans. At 30 June 2020, approximately 82% and 90% (2019 – 56% and 78%) of the UK Scheme’s 
liabilities measured on the Trustee’s funding basis were hedged against future movements in gilt based interest rates and RPI inflation, respectively, 
through the combined effect of bonds and swaps. At 30 June 2020, approximately 48% and 70% (2019 – 44% and 71%) of the Irish Scheme’s liabilities 
measured on the Trustee’s funding basis were hedged against future movements in euro government bond based interest rates and euro inflation, 
respectively, through the combined effect of bonds and swaps. 
The discount rates used are based on the yields of high quality fixed income investments. For the UK plans, which represent approximately 68% of 
total plan liabilities, the discount rate is determined by reference to the yield curves of AA-rated corporate bonds for which the timing and amount of 
cash outflows are similar to those of the plans. A similar process is used to determine the discount rates used for the non-UK plans. 
FINANCIAL STATEMENTS
147
DIAGEO Annual Report 2020

An analysis of the fair value of the plan assets is as follows: 
2020
2019
United Kingdom 
£ million
Ireland 
£ million
United States 
and other 
£ million
Total 
£ million
United Kingdom 
£ million
Ireland 
£ million
United States  
and other 
£ million
Total 
£ million
Equities
Quoted
1
315
255
571
19
294
248
561
Unquoted and private equity
501
1
21
523
504
–
21
525
Bonds
Fixed-interest government
114
124
50
288
123
129
46
298
Inflation-linked government
–
247
–
247
–
262
–
262
Investment grade corporate
507
306
467
1,280
404
337
421
1,162
Non-investment grade
137
77
17
231
163
74
15
252
Loan securities
1,697
328
–
2,025
1,362
331
–
1,693
Repurchase agreements
4,809
–
–
4,809
4,629
–
–
4,629
Liability driven investment (LDI)
222
64
–
286
185
40
–
225
Property – unquoted(i)
620
85
1
706
744
84
1
829
Hedge funds
92
134
4
230
75
135
–
210
Interest rate and inflation swaps
(1,048)
66
–
(982)
(1,048)
30
–
(1,018)
Cash and other
44
63
101
208
(45)
31
99
85
Total bid value of assets
7,696
1,810
916
10,422
7,115
1,747
851
9,713
(1)	The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested  
in the long-term. 
(i)	 At 30 June 2020, the fair value of property assets of £331 million were subject to “material valuation uncertainty”. The external valuers have confirmed, the inclusion of the “material 
valuation uncertainty” declaration does not mean that valuations cannot be relied upon but instead in the current extraordinary circumstances less certainty can be attached to valuations 
than would otherwise be the case. The group considers the value to be materially accurate on the basis that any short term impact of Covid-19 would not be reflective of the value of these 
long-term investments.
Total cash contributions by the group to all post employment plans in the year ending 30 June 2021 are estimated to be approximately £140 million. 
(d) Deficit funding arrangements 
UK plans 
In the year ended 30 June 2011 the group established a Pension Funding Partnership (PFP) in respect of the UK Scheme. Whisky inventory was transferred 
into the partnership but the group retains control over the partnership which at 30 June 2020 held inventory with a book value of £586 million (2019 –  
£661 million). The partnership is fully consolidated in the group financial statements. The UK Scheme has a limited interest in the partnership and, as a  
partner, is entitled to a distribution from the profits of the partnership. Following the finalisation of the trustee valuation at 1 April 2018 the PFP was 
amended and the contribution to the DPS in the year ended 30 June 2020 was £11 million (2019 – £25 million). The last payment is expected to be in 2030. 
In 2030 the group will be required, dependent upon the funding position of the UK Scheme at that time, to pay an amount not greater than the 
actuarial deficit at that time, up to a maximum of £430 million in cash, to purchase the UK Scheme’s interest in the partnership. If the UK Scheme is in 
surplus at an actuarial triennial valuation excluding the value of the PFP, then the group can exit the PFP with the agreement of the trustees. 
Irish plans 
The group has agreed a deficit funding arrangement with the trustees of the Irish Scheme under which it contributes to the Irish Scheme €23 million (£21 million) 
per annum until the year ending 30 June 2028. The agreement also provides for additional cash contributions into escrow of up to €135 million (£124 million)  
if the deficit is not reduced at each triennial valuation to agreed limits up to 2027. As part of this funding plan, Diageo has also granted to the Irish Scheme a 
contingent asset comprising mortgages over certain land and buildings and fixed and floating charges over certain receivables of the group up to a value of 
€200 million (£183 million). As a result of the actuarial triennial valuation as of 31 December 2015, the group made additional cash contributions of €9 million  
(£8 million) (2019 – €9 million; 2018 – €9 million). The 31 December 2018 triennial actuarial valuation did not result in any additional funding requirement. 
(e) Timing of benefit payments 
The following table provides information on the timing of the benefit payments and the average duration of the defined benefit obligations and the 
distribution of the timing of benefit payments: 
United Kingdom
Ireland
United States
2020
£ million
2019
£ million
2020
£ million
2019
£ million
2020
£ million
2019
£ million
Maturity analysis of benefits expected to be paid
Within one year
346
395
76
75
56
63
Between 1 to 5 years
1,202
1,197
364
367
202
202
Between 6 to 15 years
2,556
2,663
691
723
357
359
Between 16 to 25 years
2,083
2,078
627
657
196
207
Beyond 25 years
2,648
2,909
918
1,008
173
185
Total
8,835
9,242
2,676
2,830
984
1,016
years
years
years
years
years
years
Average duration of the defined benefit obligation
18
17
18
18
11
10
The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are disclosed 
undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised in the consolidated balance sheet. They are 
in respect of benefits that have accrued at the balance sheet date and make no allowance for any benefits accrued subsequently. 
148
DIAGEO Annual Report 2020

(f) Related party disclosures 
Information on transactions between the group and its pension plans is 
given in note 20. 
14. Working capital 
Accounting policies 
Inventories are stated at the lower of cost and net realisable value. 
Cost includes raw materials, direct labour and expenses, an appropriate 
proportion of production and other overheads, but not borrowing 
costs. Cost is calculated at the weighted average cost incurred in 
acquiring inventories. Maturing inventories and raw materials which are 
retained for more than one year are classified as current assets, as they 
are expected to be realised in the normal operating cycle. 
Trade and other receivables are initially recognised at fair value 
less transaction costs and subsequently carried at amortised cost less 
any allowance for discounts and doubtful debts. Trade receivables arise 
from contracts with customers, and are recognised when performance 
obligations are satisfied, and the consideration due is unconditional as 
only the passage of time is required before the payment is received. 
Allowance losses are calculated by reviewing lifetime expected credit 
losses using historic and forward-looking data on credit risk. 
Trade and other payables are initially recognised at fair value 
including transaction costs and subsequently carried at amortised 
costs. Contingent consideration recognised in business combinations 
are subsequently measured at fair value through income statement. 
The group evaluates supplier arrangements against a number of 
indicators to assess if the liability has the characteristics of a trade 
payable or should be classified as borrowings. These indicators include 
whether payment terms are similar to customary payment terms.
Provisions are liabilities of uncertain timing or amount. A provision 
is recognised if, as a result of a past event, the group has a present legal 
or constructive obligation that can be estimated reliably, and it is 
probable that an outflow of economic benefits will be required to 
settle the obligation. Provisions are calculated on a discounted basis. 
The carrying amounts of provisions are reviewed at each balance sheet 
date and adjusted to reflect the current best estimate. 
(a) Inventories 
2020
£ million
2019
£ million
Raw materials and consumables
363
338
Work in progress
48
46
Maturing inventories
4,562
4,334
Finished goods and goods for resale
799
754
5,772
5,472
Maturing inventories include whisk(e)y, rum, tequila and Chinese white 
spirits. The following amounts of inventories are expected to be utilised 
after more than one year: 
2020
£ million
2019
£ million
Raw materials and consumables
18
14
Maturing inventories
3,740
3,434
3,758
3,448
Inventories are disclosed net of provisions for obsolescence, an analysis of 
which is as follows: 
2020
£ million
2019
£ million
2018
£ million
Balance at beginning of the year
63
71
88
Exchange differences
–
–
(2)
Income statement charge/(release)(i)
47
(3)
–
Utilised
(12)
(5)
(15)
98
63
71
(i) 	Income statement charge in the year ended 30 June 2020 comprise £23 million exceptional 
charge due to Covid-19. 
(b) Trade and other receivables 
2020
2019
Current
assets
£ million
Non-current
assets
£ million
Current
assets
£ million
Non-current
assets
£ million
Trade receivables
1,498
–
2,173
–
Interest receivable
29
–
25
–
VAT recoverable and 
other prepaid taxes
192
13
132
14
Other receivables
210
31
141
31
Prepayments
157
2
202
8
Accrued income
25
–
21
–
2,111
46
2,694
53
At 30 June 2020, approximately 16%, 28% and 14% of the group’s trade 
receivables of £1,498 million are due from counterparties based in the 
United Kingdom, the United States and India, respectively. Accrued 
income primarily represents amounts receivable from customers in 
respect of performance obligations satisfied but not yet invoiced. 
The aged analysis of trade receivables, net of expected credit loss 
allowance, is as follows: 
2020
£ million
2019
£ million
Not overdue
1,379
2,083
Overdue 1 – 30 days
5
27
Overdue 31 – 60 days
23
21
Overdue 61 – 90 days
39
13
Overdue 91 – 180 days
39
15
Overdue more than 180 days
13
14
1,498
2,173
Trade and other receivables are disclosed net of expected credit loss 
allowance for doubtful debts, an analysis of which is as follows: 
2020
£ million
2019
£ million
2018
£ million
Balance at beginning of the year
113
97
129
Exchange differences
(3)
3
(4)
Income statement charge
55
23
18
Written off
(5)
(10)
(46)
160
113
97
Due to the global financial uncertainty arising from the Covid-19 
pandemic, management has considered the elevated credit risk on trade 
and other receivables. In addition, certain balances (where there was an 
objective evidence of credit impairment) have been provided for on an 
individual basis. This has resulted in a charge of £55 million for impairment 
provisions recognised in the income statement, out of which £29 million 
expected credit loss allowance is directly in relation to the current difficult 
trading environment.
FINANCIAL STATEMENTS
149
DIAGEO Annual Report 2020

(c) Trade and other payables 
2020
2019
Current 
liabilities 
£ million
Non-current 
liabilities 
£ million
Current 
liabilities 
£ million
Non-current 
liabilities 
£ million
Trade payables
1,333
–
1,694
–
Interest payable
152
–
127
–
Tax and social security excluding income tax
698
–
640
–
Other payables
420
175
565
222
Accruals
971
–
1,097
–
Deferred income
79
–
56
–
Dividend payable to non-controlling interests
30
–
23
–
3,683
175
4,202
222
Interest payable at 30 June 2020 includes interest on non-derivative financial instruments of £148 million (2019 – £124 million). Deferred income 
represents amounts paid by customers in respect of performance obligations not yet satisfied. Non-current liabilities include £110 million (2019 – 
£153 million) in respect of the net present value of contingent consideration in respect of the acquisition of Casamigos. 
The amount of contract liabilities recognised as revenue in the current year is £56 million (2019 – £37 million).
Together with the group’s partner banks supply chain financing (SCF) facilities are provided to our suppliers in certain countries. These 
arrangements enable suppliers to receive funding earlier than the invoice due date at their discretion and at their own cost. The group settles trade 
payables in accordance with agreed payment terms with the supplier. At 30 June 2020 the amount that has been subject to SCF and accounted for 
as trade payables was £309 million (2019 – £371 million).
(d) Provisions 
Thalidomide 
£ million
Other 
£ million
Total 
£ million
At 30 June 2019
209
207
416
Exchange differences
–
(3)
(3)
Provisions charged during the year
–
120
120
Provisions utilised during the year
(17)
(20)
(37)
Transfers to other payables
–
(27)
(27)
Unwinding of discounts
7
–
7
At 30 June 2020
199
277
476
Current liabilities
17
166
183
Non-current liabilities
182
111
293
199
277
476
(a) Provisions have been established in respect of the discounted value of the group’s commitment to the UK and Australian Thalidomide Trusts. 
These provisions will be utilised over the period of the commitments up to 2037. 
(b) The largest item in other provisions at 30 June 2020 is £81 million in respect of ‘Raising the Bar’ programme. In June 2020 Diageo launched this 
two years global programme to support pubs and bars to welcome customers back and recover following the Covid-19 pandemic. 
150
DIAGEO Annual Report 2020

Risk management and capital structure 
Introduction 
This section sets out the policies and procedures applied to manage the group’s capital structure and the financial risks the group is exposed to. 
Diageo considers the following components of its balance sheet to be capital: borrowings and equity. Diageo manages its capital structure to achieve 
capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels. 
15. Financial instruments and risk management 
Accounting policies 
Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction costs. For those 
financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date. 
The group classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets 
and liabilities at fair value through profit and loss and financial assets at fair value through other comprehensive income. 
The accounting policies for other investments and loans are described in note 12, for trade and other receivables and payables in note 14 
and for cash and cash equivalents in note 16. 
Financial assets and liabilities at fair value through profit or loss include derivative assets and liabilities. Where financial assets or liabilities  
are eligible to be carried at either amortised cost or fair value through other comprehensive income, the group does not apply the fair value option. 
Derivative financial instruments are carried at fair value using a discounted cash flow model based on market data applied consistently for 
similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken to the income statement  
as they arise. 
Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship. The difference between the initial 
carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the 
effective interest rate method. The Zacapa related financial liabilities are recognised at fair value.
Hedge accounting 
The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and liabilities (fair 
value hedges), highly probable forecast transactions or the cash flow risk from a change in exchange or interest rates (cash flow hedges) and hedges 
of net investments in foreign operations (net investment hedges). The designated portion of the hedging instruments is included in other financial 
assets and liabilities on the consolidated balance sheet. The effectiveness of such hedges is assessed at inception and at least on a quarterly basis, 
using prospective testing. Methods used for testing effectiveness include dollar offset, critical terms, regression analysis and hypothetical models. 
Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed. 
Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair value of the underlying 
hedged asset or liability. 
If such a hedge relationship no longer meets hedge accounting criteria, fair value movements on the derivative continue to be taken to the 
income statement while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement 
over its remaining life using the effective interest rate method. 
Cash flow hedges are used to hedge the foreign currency risk of highly probable future foreign currency cash flows, the commodity price risk 
of highly probable future transactions, as well as the cash flow risk from changes in exchange or interest rates. The effective portion of the gain or loss 
on the hedges is recognised in other comprehensive income, while any ineffective part is recognised in the income statement. Amounts recorded 
in other comprehensive income are recycled to the income statement in the same period in which the underlying foreign currency, commodity 
exposure or interest exposure affects the income statement. 
Net investment hedges take the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on translation 
of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as hedging instruments are 
revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to the extent that they are 
effective, with any ineffectiveness taken to the income statement. Foreign exchange contracts hedging net investments are carried at fair value. 
Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness taken to the income statement. 
The group’s funding, liquidity and exposure to foreign currency and interest rate risks are managed by the group’s treasury department. The treasury 
department uses a range of financial instruments to manage these underlying risks. 
Treasury operations are conducted within a framework of Board-approved policies and guidelines, which are recommended and monitored by the 
finance committee, chaired by the Chief Financial Officer. The policies and guidelines include benchmark exposure and/or hedge cover levels for key 
areas of treasury risk which are periodically reviewed by the Board following, for example, significant business, strategic or accounting changes. The 
framework provides for limited defined levels of flexibility in execution to allow for the optimal application of the Board-approved strategies. Transactions 
arising from the application of this flexibility are carried at fair value, gains or losses are taken to the income statement as they arise and are separately 
monitored on a daily basis using Value at Risk analysis. In the years ended 30 June 2020 and 30 June 2019 gains and losses on these transactions were  
not material. The group does not use derivatives for speculative purposes. All transactions in derivative financial instruments are initially undertaken to 
manage the risks arising from underlying business activities. 
The group purchases insurance for commercial or, where required, for legal or contractual reasons. In addition, the group retains insurable risk where 
external insurance is not considered an economic means of mitigating these risks. 
The finance committee receives a monthly report on the key activities of the treasury department, which would identify any exposures which differ 
from the defined benchmarks, should they arise. 
FINANCIAL STATEMENTS
151
DIAGEO Annual Report 2020

(a) Currency risk 
The group presents its consolidated financial statements in sterling and 
conducts business in many currencies. As a result, it is subject to foreign 
currency risk due to exchange rate movements, which will affect the 
group’s transactions and the translation of the results and underlying  
net assets of its operations. To manage the currency risk the group uses 
certain financial instruments. Where hedge accounting is applied, hedges 
are documented and tested for effectiveness on an ongoing basis. The 
impact of the Covid-19 pandemic on the group’s cash flow hedges has 
been considered to determine if the hedged forecast cash flows remain 
highly probable, in relation to forecasted sales transactions on the net  
US dollar exposure of the group and other hedged currency pairs.  
In making this assessment, the potential financial impact of the Covid-19 
pandemic has been modelled in the group’s cash flow projections  
and stress tested. For the year ended 30 June 2020, no material 
ineffectiveness was recognized based on the group’s assessment, 
however if there was a reduction in foreign currency forecast transactions, 
any potential ineffectiveness would be recognized in the consolidated 
income statement. 
Hedge of net investment in foreign operations 
The group hedges a certain portion of its exposure to fluctuations in the 
sterling value of its foreign operations by designating borrowings held  
in foreign currencies and using foreign currency spots, forwards, swaps 
and other financial derivatives. For the year ended 30 June 2020 the 
group’s guidance was to maintain total net investment Value at Risk  
to total Net Asset value below 20%, where Value at Risk is defined as  
the maximum amount of loss over a one-year period with a 95% 
probability confidence level. 
At 30 June 2020 foreign currency borrowings designated in net 
investment hedge relationships amounted to £9,127 million (2019 – 
£4,001 million, including financial derivatives). 
Hedge of foreign currency debt 
The group uses cross currency interest rate swaps to hedge the foreign 
currency risk associated with certain foreign currency denominated 
borrowings. 
Transaction exposure hedging 
The group’s policy is to hedge up to 24 months forecast transactional 
foreign currency risk on the net US dollar exposure of the group targeting 
75% coverage for the current financial year and up to 18 months for 
other currency pairs. The group’s exposure to foreign currency risk 
arising principally on forecasted sales transactions is managed using 
forward agreements and options. 
(b) Interest rate risk 
The group has an exposure to interest rate risk, arising principally 
on changes in US dollar, euro and sterling interest rates. To manage 
interest rate risk, the group manages its proportion of fixed to floating 
rate borrowings within limits approved by the Board, primarily through 
issuing fixed and floating rate borrowings and commercial paper, and by 
utilising interest rate swaps. These practices aim to minimise the group’s 
net finance charges with acceptable year-on-year volatility. To facilitate 
operational efficiency and effective hedge accounting, for the year 
ended 30 June 2020 the group’s policy was to maintain fixed rate 
borrowings within a band of 40% to 60% of forecasted net borrowings. 
In September 2019 the Board approved to temporarily amend the 
approved 40% – 60% fixed debt band to 40% – 70% for a period of 
15 months until 31 December 2020. For these calculations, net borrowings 
exclude interest rate related fair value adjustments. The majority of the 
group’s existing interest rate derivatives are designated as hedges and are 
expected to be effective. Fair value of these derivatives is recognised in the 
income statement, along with any changes in the relevant fair value of the 
underlying hedged asset or liability. The group’s net borrowings interest 
rate profile as at 30 June 2020 and 2019 is as follows: 
2020
2019 
(reclassification)
£ million
%
£ million
%
Fixed rate
9,213
70
6,181
55
Floating rate(i)
3,746
28
5,071
45
Impact of financial 
derivatives and fair 
value adjustments
(183)
(1)
(103)
(1)
Lease liabilities(ii)
470
3
128
1
Net borrowings
13,246
100
11,277
100
(i)	 The floating rate portion of net borrowings includes cash and cash equivalents, collaterals, 
floating rate loans and bonds and bank overdrafts. 
(ii)	At 30 June 2019 the group reported lease liabilities of £128 million in respect of leases that 
met the criteria of ‘finance leases’ under IAS 17 – Leases, in the floating rate categorisation. 
As at 30 June 2020 lease liabilities are disclosed separately. 
The table below sets out the average monthly net borrowings and 
effective interest rate: 
Average monthly net borrowings
Effective interest rate
2020
£ million
2019
£ million
2018
£ million
2020
%
2019
%
2018
%
12,708
10,393
9,063
2.6
2.4
2.6
(1) 	For this calculation, net interest charge excludes fair value adjustments to derivative financial 
instruments and borrowings and average monthly net borrowings includes the impact of 
interest rate swaps that are no longer in a hedge relationship but excludes the market value 
adjustment for cross currency interest rate swaps. 
(c) Commodity price risk 
Commodity price risk is managed in line with the principles approved 
by the Board either through long-term purchase contracts with suppliers 
or, where appropriate, derivative contracts. The group policy is to maintain 
the Value at Risk of commodity price risk arisen from commodity exposures 
below 75 bps of forecast gross margin in any given financial year. Where 
derivative contracts are used the commodity price risk exposure is hedged 
up to 24 months of forecast volume through exchange-traded and 
over-the-counter contracts (futures, forwards and swaps) and cash flow 
hedge accounting is applied.
(d) Market risk sensitivity analysis 
The group uses a sensitivity analysis that estimates the impacts on the 
consolidated income statement and other comprehensive income of 
either an instantaneous increase or decrease of 0.5% in market interest 
rates or a 10% strengthening or weakening in sterling against all other 
currencies, from the rates applicable at 30 June 2020 and 30 June 2019,  
for each class of financial instruments with all other variables remaining 
152
DIAGEO Annual Report 2020

institutions, primarily with a long-term credit rating within the A band or 
better, and the policy restricts the exposure to any one counterparty 
by setting credit limits taking into account the credit quality of the 
counterparty. The group’s policy is designed to ensure that individual 
counterparty limits are adhered to and that there are no significant 
concentrations of credit risk. The Board also defines the types of financial 
instruments which may be transacted. The credit risk arising through the 
use of financial instruments for currency and interest rate risk management 
is estimated with reference to the fair value of contracts with a positive 
value, rather than the notional amount of the instruments themselves. 
Diageo annually reviews the credit limits applied and regularly monitors 
the counterparties’ credit quality reflecting market credit conditions. 
When derivative transactions are undertaken with bank counterparties, 
the group may, where appropriate, enter into certain agreements with 
such bank counterparties whereby the parties agree to post cash collateral 
for the benefit of the other if the net valuations of the derivatives are above 
a predetermined threshold. At 30 June 2020, the collateral held under 
these agreements amounted to $221 million (£180 million) (2019 – 
$152 million (£120 million)). 
Business related credit risk 
Loan, trade and other receivables exposures are managed locally in the 
operating units where they arise and active risk management is applied, 
focusing on country risk, credit limits, ongoing credit evaluation and 
monitoring procedures. There is no significant concentration of credit risk 
with respect to loans, trade and other receivables as the group has a large 
number of customers which are internationally dispersed. 
(f) Liquidity risk 
Liquidity risk is the risk that Diageo may encounter difficulties in 
meeting its obligations associated with financial liabilities that are 
settled by delivering cash or other financial assets. The group uses 
short-term commercial paper to finance its day-to-day operations. The 
group’s policy with regard to the expected maturity profile of borrowings 
is to limit the amount of such borrowings maturing within 12 months to 
50% of gross borrowings less money market demand deposits, and the 
level of commercial paper to 30% of gross borrowings less money market 
demand deposits. In addition, the group’s policy is to maintain backstop 
facilities with relationship banks to support commercial paper obligations. 
The following tables provide an analysis of the anticipated contractual 
cash flows including interest payable for the group’s financial liabilities  
and derivative instruments on an undiscounted basis. Where interest 
payments are calculated at a floating rate, rates of each cash flow until 
maturity of the instruments are calculated based on the forward yield 
curve prevailing at the respective year ends. The gross cash flows of cross 
currency swaps are presented for the purposes of this table. All other 
derivative contracts are presented on a net basis. Financial assets and 
liabilities are presented gross in the consolidated balance sheet although, 
in practice, the group uses netting arrangements to reduce its liquidity 
requirements on these instruments. 
constant. The sensitivity analysis excludes the impact of market risks on  
the net post employment benefit liabilities and assets, and corporate tax 
payable. This analysis is for illustrative purposes only, as in practice interest 
and foreign exchange rates rarely change in isolation. 
The sensitivity analysis estimates the impact of changes in  
interest and foreign exchange rates. All hedges are expected to be  
highly effective for this analysis and it considers the impact of all  
financial instruments including financial derivatives, cash and cash 
equivalents, borrowings and other financial assets and liabilities.  
The results of the sensitivity analysis should not be considered as 
projections of likely future events, gains or losses as actual results in the 
future may differ materially due to developments in the global financial 
markets which may cause fluctuations in interest and exchange rates to 
vary from the hypothetical amounts disclosed in the table below. 
Impact on income 
statement gain/(loss)
Impact on consolidated  
comprehensive income  
gain/(loss)(i) (ii)
2020
£ million
2019
(restated(iii))
£ million
2020
£ million
2019
(restated(iii))
£ million
0.5% decrease in interest 
rates
19
27
45
40
0.5% increase in interest 
rates
(19)
(27)
(43)
(39)
10% weakening of 
sterling
(26)
(17)
(1,384)
(1,001)
10% strengthening of 
sterling
22
14
1,132
805
(i)	 The impact on foreign currency borrowings and derivatives in net investment hedges  
is largely offset by the foreign exchange difference arising on the translation of  
net investments. 
(ii)	The impact on the consolidated statement of comprehensive income includes the impact 
on the income statement. 
(iii)	The year ended 30 June 2019 has been restated to reflect the increase or decrease of 0.5% in 
market interest rates from the rates applicable at 30 June 2019. 
(e) Credit risk 
Credit risk refers to the risk that a counterparty will default on its 
contractual obligations resulting in financial loss to the group. Credit 
risk arises on cash balances (including bank deposits and cash and cash 
equivalents), derivative financial instruments and credit exposures to 
customers, including outstanding loans, trade and other receivables, 
financial guarantees and committed transactions. 
The carrying amount of financial assets of £5,989 million (2019 – 
£3,950 million) represents the group’s exposure to credit risk at the balance 
sheet date as disclosed in section (i), excluding the impact of any collateral 
held or other credit enhancements. A financial asset is in default when the 
counterparty fails to pay its contractual obligations. Financial assets are 
written off when there is no reasonable expectation of recovery. 
Credit risk is managed separately for financial and business related 
credit exposures. 
Financial credit risk 
Diageo aims to minimise its financial credit risk through the application 
of risk management policies approved and monitored by the Board. 
Counterparties are predominantly limited to major banks and financial 
FINANCIAL STATEMENTS
153
DIAGEO Annual Report 2020

The group had available undrawn committed bank facilities as follows: 
2020
£ million
2019
£ million
Expiring within one year(i)
2,439
–
Expiring between one and two years
610
–
Expiring after two years
2,236
2,756
5,285
2,756
(i)	 Diageo has the rights to extend £813 million of the committed facilities expiring within one 
year to May 2022. 
The facilities can be used for general corporate purposes and, together 
with cash and cash equivalents, support the group’s commercial 
paper programmes. 
There are no financial covenants on the group’s material short- and 
long-term borrowings. Certain of these borrowings contain cross default 
provisions and negative pledges. 
The committed bank facilities are subject to a single financial 
covenant, being minimum interest cover ratio of two times (defined as 
the ratio of operating profit before exceptional items, aggregated with 
share of after tax results of associates and joint ventures, to net interest). 
They are also subject to pari passu ranking and negative pledge covenants. 
Any non-compliance with covenants underlying Diageo’s financing 
arrangements could, if not waived, constitute an event of default with 
respect to any such arrangements, and any non-compliance with 
covenants may, in particular circumstances, lead to an acceleration of 
maturity on certain borrowings and the inability to access committed 
facilities. Diageo was in full compliance with its financial, pari passu 
ranking and negative pledge covenants in respect of its material short 
and long-term borrowings throughout each of the years presented. 
(g) Fair value measurements 
Fair value measurements of financial instruments are presented through 
the use of a three-level fair value hierarchy that prioritises the valuation 
techniques used in fair value calculations. 
The group maintains policies and procedures to value instruments 
using the most relevant data available. If multiple inputs that fall into 
different levels of the hierarchy are used in the valuation of an instrument, 
the instrument is categorised on the basis of the most subjective input. 
Foreign currency forwards and swaps, cross currency swaps and 
interest rate swaps are valued using discounted cash flow techniques. 
These techniques incorporate inputs at levels 1 and 2, such as foreign 
exchange rates and interest rates. These market inputs are used in the 
discounted cash flow calculation incorporating the instrument’s term, 
notional amount and discount rate, and taking credit risk into account.  
As significant inputs to the valuation are observable in active markets, 
these instruments are categorised as level 2 in the hierarchy. 
Other financial liabilities include a put option, which does not have  
an expiry date, held by Industrias Licoreras de Guatemala (ILG) to sell the 
remaining 50% equity stake in Rum Creations & Products Inc, the owner  
of the Zacapa rum brand, to Diageo. The liability is fair valued and as at  
30 June 2020 an amount of £167 million (30 June 2019 – £174 million)  
is recognised as a liability with changes in fair value of the put option 
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 30 June 2020 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 next financial year considering forecast future performance.
Included in other financial liabilities, the contingent consideration on 
acquisition of businesses represents the present value of payments up to 
£283 million linked to certain performance targets which are expected to 
be paid over the next 10 years. 
Contractual cash flows 
Due within 
1 year
£ million
Due between
1 and 3 years 
£ million
Due between
3 and 5 years 
£ million
Due after
5 years
£ million
Total
£ million
Carrying
amount at
balance
sheet date
£ million
2020
Borrowings(i)
(1,994)
(2,980)
(3,080)
(8,615)
(16,669)
(16,785)
Interest on borrowings(i)(iii)
(466)
(669)
(541)
(1,741)
(3,417)
(148)
Lease capital repayments
(106)
(135)
(71)
(158)
(470)
(470)
Lease future interest payments
(9)
(13)
(9)
(31)
(62)
–
Trade and other financial liabilities(ii)
(2,833)
(127)
(48)
(35)
(3,043)
(3,006)
Non-derivative financial liabilities
(5,408)
(3,924)
(3,749)
(10,580)
(23,661)
(20,409)
Cross currency swaps (gross)
Receivable
65
902
89
1,506
2,562
–
Payable
(41)
(824)
(56)
(1,014)
(1,935)
–
Other derivative instruments (net)
21
89
45
19
174
–
Derivative instruments(iii)
45
167
78
511
801
610
2019
Borrowings(i)
(1,957)
(2,942)
(2,845)
(4,748)
(12,492)
(12,555)
Interest on borrowings(i)(iii)
(363)
(489)
(368)
(1,362)
(2,582)
(124)
Finance lease capital repayments(iv)
(43)
(43)
(33)
(9)
(128)
(128)
Finance lease future interest payments(iv)
(5)
(7)
(3)
–
(15)
–
Trade and other financial liabilities(ii)
(3,305)
(233)
(3)
(11)
(3,552)
(3,524)
Non-derivative financial liabilities
(5,673)
(3,714)
(3,252)
(6,130)
(18,769)
(16,331)
Cross currency swaps (gross)
Receivable
63
125
854
1,503
2,545
–
Payable
(41)
(82)
(811)
(1,042)
(1,976)
–
Other derivative instruments (net)
70
27
30
18
145
–
Derivative instruments(iii)
92
70
73
479
714
400
(i)	 For the purpose of these tables above, borrowings are defined as gross borrowings excluding lease liabilities and fair value of derivative instruments as disclosed in note 16. 
(ii)	Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32. 
(iii)	Carrying amount of interest on borrowings, interest on derivatives and interest on other payable is included within interest payable in note 14. 
(iv)	For the year ended 30 June 2019 lease liabilities only include liabilities that met the criteria of ‘finance leases’ under IAS 17 – Leases. 
154
DIAGEO Annual Report 2020

The group’s financial assets and liabilities measured at fair value are categorised as follows: 
2020
£ million
2019
£ million
Derivative assets
758
531
Derivative liabilities
(145)
(129)
Valuation techniques based on observable market input (Level 2)
613
402
Financial assets – other
116
86
Financial liabilities – other
(416)
(401)
Valuation techniques based on unobservable market input (Level 3)
(300)
(315)
In the year ended 30 June 2020, the increase in financial assets – other of £30 million is principally due to additions. In the year ended 30 June 2019 
the decrease in financial assets – other of £3 million was mainly due to additions offset by advances promised to associates recognised only when 
targets are achieved. 
The movements in level 3 instruments, measured on a recurring basis, are as follows: 
Zacapa  
financial  
liability
2020
£ million
Contingent 
consideration 
recognised on 
acquisition of 
businesses(i)
2020
£ million
Zacapa  
financial  
liability
2019
£ million
Contingent 
consideration 
recognised on 
acquisition of 
businesses
2019
£ million
At the beginning of the year
(174)
(227)
(164)
(188)
Net losses included in the income statement
(6)
(24)
(8)
(25)
Net losses included in exchange in other comprehensive income
(5)
(5)
(8)
(8)
Net gains/(losses) included in retained earnings
9
–
(3)
–
Additions
–
(42)
–
(15)
Settlement of liabilities
9
49
9
9
At the end of the year
(167)
(249)
(174)
(227)
(i) Included in the balance at 30 June 2020 is £173 million in respect of the acquisition of Casamigos (2019 – £197 million). 
There were no transfers between levels during the two years ended 30 June 2020 and 30 June 2019. 
(h) Results of hedge relationships 
The group targets a one-to-one hedge ratio. Strengths of the economic relationship between the hedged item and the hedging instrument is analysed 
on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of timing, cash flows or value except when 
the critical terms of the hedging instrument and hedged item are closely aligned. The change in the credit risk of the hedging instruments or the hedged 
items is not expected to be the primary factor in the economic relationship. 
The notional amounts, contractual maturities and rates of the hedging instruments designated in hedging relationships as of 30 June 2020 by the 
main risk categories are as follows: 
Notional 
amounts  
£ million
Maturity
Range of hedged rates(i)
2020
Net investment hedges
Derivatives in net investment hedges of foreign operations
–
–
–
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)
1,667
April 2023-April 2043
US dollar 1.22-1.88
Derivatives in cash flow hedge (foreign currency exchange risk)
1,428
September 2020-March 2022
US dollar 1.19-1.36, euro 1.06-1.18
Derivatives in cash flow hedge (commodity price risk)
133
July 2020 – February 2023
Corn: 3.45 – 4.04 USD/Bu 
Fuel Oil: 1.11 – 1.87 USD/gal
Fair value hedges
Derivatives in fair value hedge (interest rate risk)
6,092
July 2020-April 2030
(0.01)-4.83%
2019
Net investment hedges
Derivatives in net investment hedges of foreign operations
68
July 2019
Turkish lira 7.55
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)
1,614
April 2023-April 2043
US dollar 1.22-1.88
Derivatives in cash flow hedge (foreign currency exchange risk)
1,599
September 2019-February 2021
US dollar 1.28-1.47, euro 1.08-1.15
Derivatives in cash flow hedge (commodity price risk)
97
July 2019-May 2021
Wheat 148.75-171 GBP/t, 
Aluminium 1971-2204 USD/MT
Fair value hedges
Derivatives in fair value hedge (interest rate risk)
4,063
May 2020-May 2028
(0.01)-3.09%
(i)	 In case of derivatives in cash flow hedge (commodity price risk and foreign exchange risk) the range of the most significant contract’s hedged rates are presented. 
FINANCIAL STATEMENTS
155
DIAGEO Annual Report 2020

For hedges of the cash flow risk from a change in forward exchange rates using cross currency interest rate swaps, the retranslation of the related bond 
principal to closing exchange rates and recognition of interest on the related bonds will affect the income statement in each year until the related bonds 
mature in 2023, 2036 and 2043. Exchange retranslation and the interest on the hedged bonds in the income statement are expected to offset those on 
the cross currency swaps in each of the years. 
In respect of cash flow hedging instruments, a gain of £173 million (2019 – £79 million gain; 2018 – £57 million loss) has been recognised in other 
comprehensive income due to changes in fair value. A loss of £42 million has been transferred out of other comprehensive income to other operating 
expenses and a gain of £75 million to other finance charges, respectively (2019 – a loss of £45 million and a gain of £82 million; 2018 – a gain of £7 million 
and a loss of £6 million) to offset the foreign exchange impact on the underlying transactions. A loss of £8 million (2019 - £nil, 2018 - £nil) has been 
transferred out of other comprehensive income to operating profit in relation to commodity hedges. The carrying amount of hedged items recognised in 
the statement of financial position in relation to hedges of cash flow risk arising from foreign currency debts equals the notional value of the hedging 
instruments at 30 June 2020 and are included within borrowings. The notional amount for cash flow hedges of foreign currency debt at 30 June 2020 was 
£1,667 million (2019 – £1,614 million). 
For cash flow hedges of forecast transactions at 30 June 2020, based on year end interest and exchange rates, there is expected to be a loss to the 
income statement of £62 million in the year ending 30 June 2021 and a gain of £4 million in the year ending 30 June 2022. 
For hedges, that are no longer applicable at 30 June 2020, a loss of £20 million (2019 – a loss of £20 million) in respect of hedges of foreign currency 
borrowings is reported in reserves. There was no significant ineffectiveness on net investment and cash flow hedges during the year ended 30 June 2020. 
The carrying amount of hedged items recognised in the statement of financial position in relation to fair value hedges £6,092 million (2019 – 
£4,063 million) equals the notional value of the hedging instruments at 30 June 2020 and are included within borrowings. 
For fair value hedges, that are no longer applicable, the accumulated fair value changes shown on the statement of financial position at 30 June 2020 
was £13 million (2019 – £21 million). 
The following table sets out information regarding the effectiveness of hedging relationships designated by the Group, as well as the impacts 
on profit or loss and other comprehensive income: 
At the  
beginning  
of the year 
£ million
Income statement 
£ million
Other 
comprehensive 
income 
£ million
Other 
£ million
At the end 
of the year 
£ million
2020
Net investment hedges
Derivatives in net investment hedges of foreign operations
(1)
–
(1)
2
–
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)
271
75
146
(23)
469
Derivatives in cash flow hedge (foreign currency exchange risk)
(57)
(47)
(1)
47
(58)
Derivatives in cash flow hedge (commodity price risk)
(9)
(8)
(3)
11
(9)
Fair value hedges
Derivatives in fair value hedge (interest rate risk)
104
85
–
–
189
Fair value hedge hedged item
(103)
(86)
–
–
(189)
Instruments in fair value hedge relationship
1
(1)
–
–
–
2019
Net investment hedges
Derivatives in net investment hedges of foreign operations
(3)
–
(25)
27
(1)
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)
112
82
98
(21)
271
Derivatives in cash flow hedge (foreign currency exchange risk)
(16)
(24)
(41)
24
(57)
Derivatives in cash flow hedge (commodity price risk)
–
–
(9)
–
(9)
Fair value hedges
Derivatives in fair value hedge (interest rate risk)
(15)
119
–
–
104
Fair value hedge hedged item
17
(120)
–
–
(103)
Instruments in fair value hedge relationship
2
(1)
–
–
1
156
DIAGEO Annual Report 2020

(i) Reconciliation of financial instruments 
The table below sets out the group’s accounting classification of each class of financial assets and liabilities: 
Fair value 
through 
income 
statement 
£ million
Fair value 
through other 
comprehensive 
income 
£ million
Assets and 
liabilities at 
amortised cost 
£ million
Not categorised 
as a financial 
instrument 
£ million
Total 
£ million
Current 
£ million
Non-current 
£ million
2020
Other investments and loans(i)
96
20
5
2
123
–
123
Trade and other receivables
–
–
1,784
373
2,157
2,111
46
Cash and cash equivalents
–
–
3,323
–
3,323
3,323
–
Derivatives in fair value hedge (interest rate risk)
189
–
–
–
189
–
189
Derivatives in cash flow hedge (foreign currency debt)
469
–
–
–
469
–
469
Derivatives in cash flow hedge (foreign currency exchange risk)
8
–
–
–
8
1
7
Derivatives in cash flow hedge (commodity price risk)
1
–
–
–
1
1
–
Other instruments
91
–
–
–
91
73
18
Leases
–
–
3
–
3
–
3
Total other financial assets
758
–
3
–
761
75
686
Total financial assets
854
20
5,115
375
6,364
5,509
855
Borrowings(ii)
–
–
(16,785)
–
(16,785)
(1,995)
(14,790)
Trade and other payables
(249)
–
(2,742)
(867)
(3,858)
(3,683)
(175)
Derivatives in cash flow hedge (foreign currency exchange risk)
(66)
–
–
–
(66)
(52)
(14)
Derivatives in cash flow hedge (commodity price risk)
(10)
–
–
–
(10)
(9)
(1)
Other instruments
(236)
–
–
–
(236)
(222)
(14)
Leases
–
–
(470)
–
(470)
(106)
(364)
Total other financial liabilities
(312)
–
(470)
–
(782)
(389)
(393)
Total financial liabilities
(561)
–
(19,997)
(867)
(21,425)
(6,067)
(15,358)
Total net financial assets/(liabilities)
293
20
(14,882)
(492)
(15,061)
(558)
(14,503)
2019
Other investments and loans(i)
67
19
16
2
104
–
104
Trade and other receivables
–
–
2,385
362
2,747
2,694
53
Cash and cash equivalents
–
–
932
–
932
932
–
Derivatives in fair value hedge (interest rate risk)
104
–
–
–
104
2
102
Derivatives in cash flow hedge (foreign currency debt)
283
–
–
–
283
–
283
Derivatives in cash flow hedge (foreign currency exchange risk)
1
–
–
–
1
1
–
Other instruments at fair value
143
–
–
–
143
124
19
Total other financial assets
531
–
–
–
531
127
404
Total financial assets
598
19
3,333
364
4,314
3,753
561
Borrowings(ii)
–
–
(12,555)
–
(12,555)
(1,959)
(10,596)
Trade and other payables
(227)
–
(3,251)
(946)
(4,424)
(4,202)
(222)
Derivatives in cash flow hedge (foreign currency debt)
(12)
–
–
–
(12)
–
(12)
Derivatives in cash flow hedge (foreign currency exchange risk)
(58)
–
–
–
(58)
(41)
(17)
Derivatives in cash flow hedge (commodity price risk)
(9)
–
–
–
(9)
(9)
–
Derivatives in net investment hedge
(1)
–
–
–
(1)
(1)
–
Other instruments
(223)
–
(26)
–
(249)
(239)
(10)
Finance leases(iii)
–
–
(128)
–
(128)
(43)
(85)
Total other financial liabilities
(303)
–
(154)
–
(457)
(333)
(124)
Total financial liabilities
(530)
–
(15,960)
(946)
(17,436)
(6,494)
(10,942)
Total net financial liabilities
68
19
(12,627)
(582)
(13,122)
(2,741)
(10,381)
(i)	 Other investments and loans are including those in respect of associates. 
(ii)	Borrowings are defined as gross borrowings excluding lease liabilities and the fair value of derivative instruments. 
(iii)	In the year ended 30 June 2019 lease liabilities only include liabilities that met the criteria of ‘finance leases’ under IAS 17 – Leases.
At 30 June 2020 and 30 June 2019, the carrying values of cash and cash equivalents, other financial assets and liabilities approximate to fair values.  
At 30 June 2020 the fair value of borrowings, based on unadjusted quoted market data, was £18,175 million (2019 – £13,240 million). 
FINANCIAL STATEMENTS
157
DIAGEO Annual Report 2020

(j) Capital management 
The group’s management is committed to enhancing shareholder value  
in the long-term, both by investing in the business and brands so as to 
deliver continued improvement in the return from those investments 
and by managing the capital structure. Diageo manages its capital 
structure to achieve capital efficiency, provide flexibility to invest through 
the economic cycle and give efficient access to debt markets at attractive 
cost levels. This is achieved by targeting an adjusted net borrowings 
(net borrowings aggregated with post employment benefit liabilities) to 
adjusted EBITDA leverage of 2.5 – 3.0 times, this range for Diageo being 
currently broadly consistent with an A band credit rating. Diageo would 
consider operating outside of this range in order to effect strategic 
initiatives within its stated goals, which could have an impact on 
its rating. If Diageo’s leverage was to be negatively impacted by the 
financing of an acquisition, it would seek over time to return to the range 
of 2.5 – 3.0 times. The group regularly assesses its debt and equity capital 
levels against its stated policy for capital structure. As at 30 June 2020 the 
adjusted net borrowings (£13,995 million) to adjusted EBITDA ratio was 
3.3 times. For this calculation net borrowings are adjusted by post 
employment benefit liabilities before tax (£749 million) whilst adjusted 
EBITDA (£4,270 million) comprises operating profit excluding exceptional 
operating items and depreciation, amortisation and impairment and 
includes share of after tax results of associates and joint ventures. 
16. Net borrowings 
Accounting policies 
Borrowings are initially recognised at fair value net of transaction 
costs and are subsequently reported at amortised cost. Certain bonds 
are designated in fair value hedge relationship. In these cases, the 
amortised cost is adjusted for the fair value of the risk being hedged, 
with changes in value recognised in the income statement. The fair 
value adjustment is calculated using a discounted cash flow technique 
based on unadjusted market data. 
Bank overdrafts form an integral part of the group’s cash 
management and are included as a component of net cash and cash 
equivalents in the consolidated statement of cash flows. 
Cash and cash equivalents comprise cash in hand and deposits 
which are readily convertible to known amounts of cash and which are 
subject to insignificant risk of changes in value and have an original 
maturity of three months or less, including money market deposits, 
commercial paper and investments. 
Net borrowings are defined as gross borrowings (short-term 
borrowings and long-term borrowings plus lease liabilities plus interest 
rate hedging instruments, cross currency interest rate swaps and 
funding foreign currency forwards and swaps used to manage 
borrowings) less cash and cash equivalents. 
As a result of the adoption of IFRS 16 on 1 July 2019, net 
borrowings include leases previously classified as operating leases 
under IAS 17. Comparative information has not been restated. 
2020
£ million
2019
£ million
Bank overdrafts
170
211
Commercial paper
–
649
Bank and other loans
367
190
Credit support obligations
180
120
US$ 500 million floating bonds due 2020
–
394
US$ 500 million 3% bonds due 2020
–
393
€ 775 million 0% bonds due 2020
711
–
US$ 696 million 4.828% bonds due 2020
566
–
Fair value adjustment to borrowings
1
2
Borrowings due within one year
1,995
1,959
€ 775 million 0% bonds due 2020
–
691
US$ 696 million 4.828% bonds due 2020
–
538
€ 900 million 0.25% bonds due 2021
825
802
US$ 1,000 million 2.875% bonds due 2022(i)
812
785
US$ 300 million 8% bonds due 2022(i)
243
235
US$ 1,350 million 2.625% bonds due 2023
1,096
1,060
€ 600 million 0.125% bonds due 2023
548
533
US$ 500 million 3.5% bonds due 2023
405
393
US$ 600 million 2.125% bonds due 2024
487
–
€ 500 million 1.75% bonds due 2024
456
444
€ 500 million 0.5% bonds due 2024
456
443
US$ 750 million 1.375% bonds due 2025
606
–
€ 600 million 1% bonds due 2025
546
531
€ 850 million 2.375% bonds due 2026
776
755
£ 500 million 1.75% bonds due 2026
496
496
€ 750 million 1.875% bonds due 2027
683
–
€ 500 million 1.5% bonds due 2027
457
445
US$ 500 million 3.875% bonds due 2028
404
391
US$ 1,000 million 2.375% bonds due 2029
804
–
£ 300 million 2.875% bonds due 2029
298
–
US$ 1,000 million 2% bonds due 2030
807
–
€ 1,000 million 2.5% bonds due 2032
911
–
US$ 750 million 2.125% bonds due 2032
603
–
US$ 400 million 7.45% bonds due 2035(i)
325
315
US$ 600 million 5.875% bonds due 2036
483
468
US$ 500 million 4.25% bonds due 2042(i)
402
389
US$ 500 million 3.875% bonds due 2043
400
387
Bank and other loans
260
373
Fair value adjustment to borrowings
201
122
Borrowings due after one year
14,790
10,596
Total borrowings before derivative financial 
instruments
16,785
12,555
Fair value of cross currency interest rate swaps
(469)
(271)
Fair value of foreign exchange swaps and forwards
(28)
(99)
Fair value of interest rate hedging instruments
(189)
(104)
Lease liabilities(ii)
470
128
Gross borrowings
16,569
12,209
Less: Cash and cash equivalents
(3,323)
(932)
Net borrowings
13,246
11,277
(i)	 SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, 
a 100% owned finance subsidiary of Diageo plc. 
(ii)	In the year ended 30 June 2019 lease liabilities only includes leases that were classified 
as finance leases under IAS 17 – Leases. 
(1) 	The interest rates shown are those contracted on the underlying borrowings before taking 
into account any interest rate hedges (see note 15). 
(2) 	Bonds are stated net of unamortised finance costs of £86 million (2019 – £63 million; 
2018 – £60 million). 
(3) 	Bonds are reported above at amortised cost with a fair value adjustment shown separately. 
(4) 	All bonds, medium-term notes and commercial paper issued on an unsecured basis by the 
group’s 100% owned subsidiaries are fully and unconditionally guaranteed on an unsecured 
basis by Diageo plc. 
158
DIAGEO Annual Report 2020

Gross borrowings before derivative financial instruments are expected to 
mature as follows: 
2020
£ million
2019
£ million
Within one year
1,995
1,959
Between one and three years
3,013
2,940
Between three and five years
3,134
2,879
Beyond five years
8,643
4,777
16,785
12,555
During the year the following bonds were issued and repaid: 
2020
£ million
2019
£ million
2018
£ million
Issued
€ denominated
1,594
2,270
1,136
£ denominated
298
496
–
US$ denominated
3,296
–
1,476
Repaid
€ denominated
–
(1,168)
–
US$ denominated
(820)
–
(1,571)
4,368
1,598
1,041
(a) Reconciliation of movement in net borrowings 
2020
£ million
2019
£ million
At beginning of the year
11,277
9,091
Net increase in cash and cash equivalents before 
exchange
(2,552)
(54)
Net increase in bonds and other borrowings(i)
4,089
2,331
Change in net borrowings from cash flows
1,537
2,277
Exchange differences on net borrowings
95
22
Other non-cash items(ii)
86
(113)
Adoption of IFRS 16
251
–
Net borrowings at end of the year
13,246
11,277
(i)	 In the year ended 30 June 2020, net increase in bonds and other borrowings excludes 
£6 million cash outflow in respect of derivatives designated in forward point hedges 
(2019 – £12 million). 
(ii)	In the years ended 30 June 2020 other non-cash items are principally in respect of leases of 
£206 million entered into in the period partially offset by the fair value changes of cross 
currency interest rate swaps. In the year ended 30 June 2019 other non-cash items are 
principally in respect of changes in the fair value of borrowings. 
(b) Analysis of net borrowings by currency 
2020
2019
Cash and cash  
equivalents 
£ million
Gross  
borrowings(i) 
£ million
Cash and cash 
equivalents 
£ million
Gross 
borrowings(i) 
£ million
US dollar
2,649
(6,300)
88
525
Euro
57
(3,119)
70
(2,910)
Sterling
19
(6,233)
40
(9,308)
Indian rupee
13
(253)
23
(247)
Kenyan shilling
28
(351)
79
(223)
Hungarian forint
3
(239)
4
157
Mexican peso
16
(104)
16
(78)
South African rand
1
(23)
23
(35)
Chinese yuan
207
(1)
249
9
Other(ii)
330
54
340
(99)
Total
3,323
(16,569)
932
(12,209)
(i)	  Includes foreign currency forwards and swaps and leases. 
(ii)	 Includes £100 million (Turkish lira) cash and cash equivalents in cash-pooling arrangements 
(2019 – £122 million (Turkish lira)). 
17. Equity 
Accounting policies 
Own shares represent shares and share options of Diageo plc that 
are held in treasury or by employee share trusts for the purpose of 
fulfilling obligations in respect of various employee share plans or 
were acquired as part of a share buyback programme. Own shares 
are treated as a deduction from equity until the shares are cancelled, 
reissued or disposed of and when vest are transferred from own shares 
to retained earnings at their weighted average cost. 
Share-based payments include share awards and options 
granted to directors and employees. The fair value of equity settled 
share options and share grants is initially measured at grant date based 
on the binomial or Monte Carlo models and is charged to the income 
statement over the vesting period. For equity settled shares the credit 
is included in retained earnings. Cancellations of share options are 
treated as an acceleration of the vesting period and any outstanding 
charge is recognised in operating profit immediately. Any surplus or 
deficit arising on the sale of the Diageo plc shares held by the group is 
included as a movement in equity. 
Dividends are included in the financial statements in the year in 
which they are approved. 
(a) Allotted and fully paid share capital – ordinary shares of 
28101⁄108 pence each 
Number
of shares
million
Nominal
value
£ million
At 30 June 2020
2,562
742
At 30 June 2019
2,601
753
At 30 June 2018
2,695
780
(b) Hedging and exchange reserve 
Hedging 
reserve 
£ million
Exchange 
reserve 
£ million
Total 
£ million
At 30 June 2017
(21)
(432)
(453)
Other comprehensive loss
(44)
(530)
(574)
Adoption of IFRS 9 by associate
(3)
–
(3)
At 30 June 2018
(68)
(962)
(1,030)
Other comprehensive income
31
181
212
At 30 June 2019
(37)
(781)
(818)
Other comprehensive income/(loss)
125
(241)
(116)
Transfers from other retained earnings
5
–
5
At 30 June 2020
93
(1,022)
(929)
£30 million surplus (2019 – £1 million surplus, 2018 – £9 million deficit) out 
of the hedging reserve represents the cost of hedging arising as a result of 
imperfections of foreign exchange markets in the form of foreign currency 
basis spreads.
FINANCIAL STATEMENTS
159
DIAGEO Annual Report 2020

(c) Own shares 
Movements in own shares 
Number 
of shares 
million
Purchase 
consideration 
£ million
At 30 June 2017
241
2,176
Share trust arrangements
(1)
(9)
Shares purchased – employee share plans
2
66
Shares used to satisfy options
(4)
(89)
Shares purchased – share buyback programme
59
1,507
Shares cancelled
(59)
(1,507)
At 30 June 2018
238
2,144
Share trust arrangements
(1)
(14)
Shares used to satisfy options
(5)
(104)
Shares purchased – share buyback programme
95
2,775
Shares cancelled
(95)
(2,775)
At 30 June 2019
232
2,026
Share trust arrangements
(1)
(7)
Shares used to satisfy options
(4)
(83)
Shares purchased – share buyback programme
39
1,282
Shares cancelled
(39)
(1,282)
At 30 June 2020
227
1,936
Share trust arrangements 
At 30 June 2020 the employee share trusts owned 2 million of ordinary 
shares in Diageo plc (the company) at a cost of £51 million and market 
value of £57 million (2019 – 3 million shares at a cost of £58 million, market 
value £92 million; 2018 – 4 million shares at a cost of £72 million, market 
value £106 million). Dividends receivable by the employee share trusts 
on the shares are waived and the trustee abstains from voting. 
Purchase of own shares 
Authorisation was given by shareholders on 19 September 2019 
to purchase a maximum of 237,177,623 shares at a minimum price 
of 28101/108 pence and a maximum price of higher of (a) 105% of the 
average of the middle market quotations for an ordinary share for 
the five preceding business days and (b) the higher of the price of the 
last independent trade and the highest current independent bid on 
the London Stock Exchange at the time the purchase is carried out. 
The programme expires at the conclusion of the next Annual General 
Meeting or on 18 December 2020 if earlier. 
During the year ended 30 June 2019 the company purchased call 
options over 4 million shares at a cost of £14 million to hedge employee 
share awards and share option grants. These are three-year call options, 
denominated in sterling. During the year ended 30 June 2018, as part of 
the employee share schemes, the company purchased 2.5 million ordinary 
shares, nominal value of £1 million, representing approximately 0.1% of 
the issued ordinary share capital (excluding treasury shares). 
On 25 July 2019, the Board approved a return of capital programme 
with up to £4.5 billion to be returned to shareholders over the three-year 
period to 30 June 2022. Under the first phase of the programme, 
which ended on 31 January 2020, the group returned £1.25 billion 
via share buybacks.
During the year ended 30 June 2020 the group purchased 
approximately 39 million ordinary shares (2019 – 94.7 million, 2018 –  
58.9 million), representing approximately 1.5% of the issued ordinary share 
capital (2019 – 3.5%, 2018 – 2.1%) at an average price of £32.43 per share, 
and an aggregate cost of £1,282 million (including £7 million of transaction 
costs) (2019 – £29.24 per share, and an aggregate cost of £2,775 million 
including £6 million of transaction costs, 2018 – £25.43 per share, and an 
aggregate cost of £1,507 million, including £9 million of transaction costs) 
under the share buyback programme. This amount includes the 
aggregate consideration of £26 million (including £17 million settlement 
payments for the purchases made in the year ended 30 June 2019 
and 30 June 2020) in relation to the prior year programme, which was 
completed on 10 July 2019 resulting in the repurchase of 0.3 million shares 
in the year ended 30 June 2020. The shares purchased under the share 
buyback programmes were cancelled. 
At 30 June 2020 the leverage ratio, calculated as adjusted net 
borrowings to adjusted EBITDA, was 3.3x and the group anticipates 
leverage to be above the target range of 2.5-3.0x through the year ending 
30 June 2021. The company has paused the return of capital programme 
until leverage is back within the target range.
The monthly breakdown of all shares purchased and the average 
price paid per share (excluding expenses) for the year ended 30 June 2020 
were as follows: 
Period
Number
of shares
purchased 
under share 
buyback 
programme
Total number 
of shares 
purchased
Average 
price paid  
pence
Authorised 
purchases 
unutilised at 
month end
July 2019
270,502
270,502
3373
162,912,211
August 2019
5,945,767
5,945,767
3422
156,966,444
1-19 September 2019
5,662,939
5,662,939
3514
151,303,505
20-30 September 2019
2,549,669
2,549,669
3249
234,627,954
October 2019
9,959,084
9,959,084
3220
224,668,870
November 2019
3,837,551
3,837,551
3099
220,831,319
December 2019
6,597,406
6,597,406
3100
214,233,913
January 2020
4,176,677
4,176,677
3165
210,057,236
Total
38,999,595
38,999,595
3243
210,057,236
In April 2020, the Directors became aware that certain share buybacks 
and certain transactions related to the company’s employee share 
schemes with or for the benefit of the company’s employee benefit and 
share ownership trusts undertaken between 10 May 2019 and 9 August 
2019, were undertaken contrary to the applicable provisions of the 
Companies Act 2006 as they were undertaken following utilisation in full of 
the company’s distributable reserves. For further details, refer to note 9 of 
the company financial statements of Diageo plc.
(d) Dividends 
2020
£ million
2019
£ million
2018
£ million
Amounts recognised as distributions 
to equity shareholders in the year
Final dividend for the year ended  
30 June 2019
42.47 pence per share (2018 –  
40.4 pence; 2017 – 38.5 pence)
1,006
993
968
Interim dividend for the year ended  
30 June 2020
27.41 pence per share (2019 –  
26.1 pence; 2018 – 24.9 pence)
640
630
613
1,646
1,623
1,581
The proposed final dividend of £992 million (42.47 pence per share)  
for the year ended 30 June 2020 was approved by the Board of Directors 
on 3 August 2020. As this was after the balance sheet date and the 
dividend is subject to approval by shareholders at the Annual General 
Meeting, this dividend has not been included as a liability in these 
consolidated financial statements. There are no corporate tax 
consequences arising from this treatment.
Dividends are waived on all treasury shares owned by the company 
and all shares owned by the employee share trusts. 
160
DIAGEO Annual Report 2020

(e) Non-controlling interests 
Diageo consolidates USL, a company incorporated in India, with a 42.73% non-controlling interest and has a 50% controlling interest in Ketel One 
Worldwide B.V. (Ketel One), a company incorporated in the Netherlands. All other consolidated subsidiaries are fully owned or the non-controlling 
interests are not material. 
Summarised financial information for USL and other subsidiaries, after fair value adjustments on acquisition, and the amounts attributable to 
non-controlling interests are as follows: 
2020
2019
2018
USL 
£ million
Others
£ million
Total 
£ million
Total 
£ million
Total 
£ million
Income statement
Sales
2,790
1,898
4,688
5,346
4,926
Net sales
846
1,468
2,314
2,656
2,431
(Loss)/profit for the year
(53)
138
85
383
244
Other comprehensive (loss)/income(i)
(112)
16
(96)
137
(163)
Total comprehensive (loss)/income
(165)
154
(11)
520
81
Attributable to non-controlling interests
(71)
79
8
234
53
Balance sheet
Non-current assets(ii)
2,041
3,129
5,170
5,313
4,973
Current assets
541
739
1,280
1,469
1,384
Non-current liabilities
(349)
(1,110)
(1,459)
(1,526)
(1,425)
Current liabilities
(466)
(722)
(1,188)
(1,204)
(1,183)
Net assets
1,767
2,036
3,803
4,052
3,749
Attributable to non-controlling interests
756
912
1,668
1,795
1,765
Cash flow
Net cash inflow from operating activities
29
204
233
542
334
Net cash outflow from investing activities
(16)
(136)
(152)
(157)
(136)
Net cash outflow from financing activities
(34)
(175)
(209)
(266)
(164)
Net (decrease)/increase in cash and cash equivalents
(21)
(107)
(128)
119
34
Exchange differences
(1)
(2)
(3)
3
(2)
Dividends payable to non-controlling interests
–
(117)
(117)
(114)
(101)
(i)	 Other comprehensive income is principally in respect of exchange on translating the subsidiaries to sterling. 
(ii)	Non-current assets include the global distribution rights to distribute Ketel One vodka products throughout the world. The carrying value of the distribution rights at 30 June 2020 was 
£1,464 million (2019 – £1,418 million; 2018 – £1,363 million). 
(1) 	On 29 July 2019 East African Breweries Limited completed a purchase of 4% of the share capital of Serengeti Breweries Limited. This increased Diageo’s effective economic interest from 39.2% 
to 40.2%. 
(2) 	On 20 August 2019 and 28 February 2020 Diageo completed the purchase of 0.46% and 0.7% of the share capital of United Spirits Limited (USL) respectively. This increased Diageo’s controlling 
shareholding position from 54.78% to 55.94%, excluding 2.38% owned by the USL Share Trust. 
FINANCIAL STATEMENTS
161
DIAGEO Annual Report 2020

(f) Employee share compensation 
The group uses a number of share award and option plans to grant to its 
directors and employees. 
The annual fair value charge in respect of the equity settled plans for 
the three years ended 30 June 2020 is as follows: 
2020
£ million
2019
£ million
2018
£ million
Executive share award plans
(3)
41
33
Executive share option plans
2
4
3
Savings plans
3
4
3
2
49
39
Executive share awards are primarily made under the Diageo 2014 Long 
Term Incentive Plan (DLTIP) from September 2014 onwards. Prior to the 
introduction of the DLTIP, employees in associated companies were 
granted awards under the Diageo plc 2011 Associated Companies 
Share Incentive Plan (DACSIP). There was a single grant in September 2016 
under the Diageo Performance Incentive plan. Under all of these plans, 
conditional awards can be delivered in the form of restricted shares or 
share options at the market value at the time of grant. 
Share awards normally vest and are released on the third anniversary of 
the grant date. Participants do not make a payment to receive the award at 
grant. Executive Directors are required to hold any vested shares awarded 
from 2014 for a further two-year period. Share options may normally be 
exercised between three and ten years after the grant date. Executives in 
North America and Latin America and Caribbean are granted awards over 
the company’s ADSs (one ADS is equivalent to four ordinary shares). 
Performance shares under the DLTIP are subject to the achievement 
of three equally weighted performance tests: 1) compound annual 
growth in profit before exceptional items over three years; 2) compound 
annual growth in organic net sales over three years; 3) cumulative free 
cash flow over a three-year period, measured at constant exchange rates. 
Shares awarded under the Diageo Performance Incentive plan (DPI) in 
September 2016 are subject to the achievement of two equally weighted 
performance tests over the three-year performance period. These were:  
1) compound annual growth in organic net sales over three years; and  
2) productivity savings over three years, with an assessment of line 
manager performance as an underpin. Performance share options 
under the DLTIP are subject to the achievement of two equally weighted 
performance tests: 1) a comparison of Diageo’s three-year TSR with a peer 
group; 2) compound annual growth in profit before exceptional items over 
three years. Performance measures and targets are set annually by the 
Remuneration Committee. The vesting range is 20% or 25% (for Executive 
Directors and for other participants respectively) for achieving minimum 
performance targets, up to 100% for achieving the maximum target level. 
Retesting of the performance condition is not permitted. 
For performance shares under the DLTIP dividends are accrued on 
awards and are given to participants to the extent that the awards actually 
vest at the end of the performance period. Dividends are normally paid 
out in the form of shares. 
For the three years ended 30 June 2020, the calculation of the fair 
value of each share award used the Monte Carlo pricing model and 
the following assumptions: 
2020
2019
2018
Risk free interest rate
0.4%
0.8%
0.3%
Expected life of the awards
37 months
37 months
37 months
Dividend yield
1.9%
2.4%
2.6%
Weighted average share price
3501 p
2736 p
2573 p
Weighted average fair value of awards 
granted in the year
899 p
1941 p
1761 p
Number of awards granted in the year
1.7 million
2.5 million
2.3 million
Fair value of all awards granted  
in the year
£16 million
£48 million
£41 million
Transactions on schemes 
Transactions on the executive share award plans for the three years ended 
30 June 2020 were as follows: 
2020
2019
2018
Number of 
awards
million
Number of 
awards
million
Number of 
awards
million
Balance outstanding at 1 July
7.0
7.8
7.9
Granted
1.8
2.5
2.3
Awarded
(2.5)
(2.1)
(0.7)
Forfeited
(0.7)
(1.2)
(1.7)
Balance outstanding at 30 June
5.6
7.0
7.8
The exercise price of share options outstanding at 30 June 2020 was in the 
range of 1080-3483 pence (2019 – 952-2773 pence; 2018 – 765-2602 
pence). 
At 30 June 2020, 3.8 million share options were exercisable at a weighted 
average exercise price of 1998 pence. 
162
DIAGEO Annual Report 2020

Other financial information 
Introduction 
This section includes additional financial information that are either required by the relevant accounting standards or management considers these to be 
material information for shareholders. 
18. Contingent liabilities and legal proceedings
Accounting policies 
Provision is made for the anticipated settlement costs of legal or 
other disputes against the group where it is considered to be probable 
that a liability exists and a reliable estimate can be made of the likely 
outcome. Where it is possible that a settlement may be reached or it 
is not possible to make a reliable estimate of the estimated financial 
effect appropriate disclosure is made but no provision created. 
Critical accounting judgements and estimates 
Judgement is necessary in assessing the likelihood that a claim 
will succeed, or a liability will arise, and an estimate to quantify the 
possible range of any settlement. Due to the inherent uncertainty in 
this evaluation process, actual losses may be different from the liability 
originally estimated. The group may be involved in legal proceedings 
in respect of which it is not possible to make a reliable estimate of 
any expected settlement, if any. In such cases appropriate disclosure 
is provided but no provision is made and no contingent liability 
is quantified. 
(a) Guarantees and related matters 
As of 30 June 2020, 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 
petitions against UBHL and other proceedings in relation 
to the USL transaction 
On 4 July 2013, Diageo completed its acquisition, under a share purchase 
agreement with United Breweries (Holdings) Limited (UBHL) and various 
other sellers (the SPA), of 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). Following 
a series of further transactions, as of 30 June 2020, Diageo has a 55.94% 
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 petitions  
that were pending against UBHL on 9 November 2012, being the date  
of the SPA. Additional winding-up petitions have been brought against 
UBHL since 9 November 2012, and the Leave Order did not extend to 
them. At the time of the completion of the UBHL Share Sale, the Leave Order 
remained subject to review on appeal. However, as stated by Diageo at the 
time of closing on 4 July 2013, it was considered unlikely that any appeal 
process in respect of the Leave Order would definitively conclude on a 
timely basis and, accordingly, Diageo waived the conditionality under the 
SPA relating to the absence of insolvency proceedings in relation to UBHL 
and acquired the 10,141,437 USL shares from UBHL at that time. 
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 
order against UBHL on 7 February 2017. On 4 March 2017, UBHL 
appealed against this order before a division bench of the High Court. 
On 6 March 2020, the division bench of the High Court, confirmed the 
winding up order dated 7 February 2017, and dismissed the appeal 
filed by UBHL. On 30 June 2020, UBHL filed a special leave petition in 
the Supreme Court of India against the order of the division bench of 
the High Court. This petition is currently pending. 
Diageo continues to believe that the acquisition price of INR 1,440 
per share paid to UBHL for the USL shares is fair and reasonable as regards 
UBHL, UBHL’s shareholders and UBHL’s secured and unsecured creditors. 
However, adverse results for Diageo in the proceedings referred to above 
could, absent leave or relief in other proceedings, ultimately result in Diageo 
losing title to the 6.98% stake acquired from UBHL (now represented by 
50,707,185 USL shares following a share split). Diageo believes, including by 
reason of its rights under USL’s articles of association to nominate USL’s CEO 
and CFO and the right to appoint, through USL, a majority of the directors 
on the boards of USL’s subsidiaries as well as its ability as promoter to 
nominate for appointment up to two-thirds of USL’s directors for so long 
as the chairperson of USL is an independent director, that it would remain 
in control of USL and 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 petitions described above and/or 
certain losses and costs that may be incurred in the event of third party 
actions relating to the acquisition of the USL shares. 
FINANCIAL STATEMENTS
163
DIAGEO Annual Report 2020

(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 (excluding the United Kingdom), non-interference, 
non-solicitation and standstill arrangement with Dr Mallya. As part of 
those arrangements, USL, Diageo and Dr Mallya agreed a mutual release in 
relation to matters arising out of an inquiry into certain matters referred to 
in USL’s financial statements and the qualified auditor’s report 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 (£61 million) to Dr Mallya over  
a five year period in consideration for the five-year global non-compete, 
non-interference, non-solicitation and standstill commitments referred 
to above, his resignation from USL and the termination of his USL-related 
appointment and governance rights, the relinquishing of rights and 
benefits attached to his position at USL, and his agreement not to 
pursue claims against Diageo and USL. The February 2016 Agreement also 
provided for the release of Dr Mallya’s personal obligations to indemnify  
(i) Diageo Holdings Netherlands B.V. (DHN) in respect of its earlier liability 
($141 million (£115 million)) under a backstop guarantee of certain 
borrowings of Watson Limited (Watson) (a company affiliated with  
Dr Mallya), and (ii) Diageo Finance plc in respect of its earlier liability  
(£30 million) under a guarantee of certain borrowings of United Breweries 
Overseas Limited, a subsidiary of UBHL. $40 million (£32 million) of the  
$75 million (£61 million) amount was paid on signing of the February 2016 
Agreement with the balance being payable in equal instalments of  
$7 million (£6 million) a year over five years, subject to and conditional 
on Dr Mallya’s compliance with certain terms of the agreement. 
While the first four instalments of $7 million (£6 million) each 
would have become due on 25 February 2017, 25 February 2018, 
25 February 2019 and 25 February 2020, respectively, owing to various 
reasons (including breaches committed by Dr Mallya and certain persons 
connected with him of several provisions of the February 2016 Agreement 
and agreements of the same date between Dr Mallya and USL), Diageo 
believes that it was not liable to pay such amounts and did not do so. 
Diageo further believes that it is very unlikely to become liable to pay any 
future instalments, to Dr Mallya. By notice to Dr Mallya and certain persons 
connected with him on 24 February 2017, 3 November 2017, 
23 February 2018, 22 August 2018, 22 February 2019 and 24 February 
2020, Diageo and other group companies have demanded from Dr Mallya 
the repayment of $40 million (£32 million) which was paid by Diageo on 
25 February 2016, and also sought compensation from him for various 
losses incurred by the relevant members of the Diageo group on account 
of the breaches committed by him and certain persons connected with 
him. On 16 November 2017, Diageo and other relevant members of the 
Diageo group commenced claims in the High Court of Justice in England 
and Wales (the English High Court) against Dr Mallya in relation to certain 
of the matters specified in those notices. At the same time DHN also 
commenced claims in the English High Court against Dr Mallya, his 
son Sidhartha Mallya, Watson (a company affiliated with Dr Mallya), 
Continental Administration Services Limited (CASL) (a company affiliated 
with Dr Mallya and understood to hold assets on trust for him and certain 
persons affiliated with him) for in excess of $142 million (£115 million)  
(plus interest) in relation to Watson’s liability to DHN in respect of its 
borrowings referred to above and the breach of associated security 
documents. These additional claims are described in paragraph (d) below. 
Dr Mallya, Sidhartha Mallya and the relevant affiliated companies filed 
a defence to such claims and the additional claims on 12 March 2018,  
and Dr Mallya also filed a counterclaim for payment of the two $7 million 
(£6 million) instalment payments withheld by Diageo as described above. 
Diageo and the other relevant members of its group filed a reply to that 
defence and a defence to the counter-claim on 5 September 2018. 
Diageo continues to prosecute its claims and to defend the 
counterclaim. As part of this, on 18 December 2018, Diageo and the other 
relevant members of its group filed an application for strike out and/or 
summary judgement in respect of certain aspects of the defence filed 
by Dr Mallya and the other defendants, including their defence in relation 
to Watson and CASL’s liability to repay DHN. That application was made 
by DHN on the basis that the defence filed by Dr Mallya and his co-
defendants in relation to those matters had no real prospect of success. 
DHN’s summary judgement and strike out application was heard by 
the English High Court on 24 May 2019. The court decided in favour of 
DHN that (i) Watson is liable to pay, and has no defence against paying, 
$135 million (£110 million) plus interest of $11 million (£9 million) to DHN, 
and (ii) CASL is liable, as co-surety, to pay, and has no defence against 
paying, 50% of any such amount unpaid by Watson, i.e. up to $67.5 million 
(£55 million) plus interest of $5.5 million (£5 million) to DHN. Watson and 
CASL were ordered to pay such sums, as well as certain amounts in respect 
of DHN and Diageo’s costs, to DHN by 21 June 2019. Such amounts were 
not paid on that date by either Watson or CASL. Accordingly, Diageo and 
DHN have sought asset disclosure and are considering further 
enforcement steps against those companies, both in the United Kingdom 
and in other jurisdictions where they are present or hold assets. 
The remaining elements of the claims originally commenced on  
16 November 2017 by Diageo and the relevant members of its group 
are now proceeding to trial and following a case management 
conference on 6 December 2019, that trial is scheduled to take place 
from 11 October 2021 through 21 October 2021. 
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. 
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DIAGEO Annual Report 2020

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 with applicable laws in relation 
to such fund diversions. 
(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 (£110 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 (£115 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 
and others 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 by DHN 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, DHN continues to work towards enforcement of the security 
package, including, when appropriate, in conjunction with Standard 
Chartered. 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, as well as a claim against CASL as a co-surety with DHN of 
Watson’s obligations. 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 (£115 
million) (plus interest) in relation to these matters, including the following: 
(i) a claim against Watson for $141 million (£115 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 (£115 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 with DHN of Watson’s obligations 
under the Facility Agreement, for 50% of the difference between the 
amount claimed under (i) above and the amount (if any) that DHN is 
in fact able to recover from Watson, Dr Mallya and/or Sidhartha Mallya. 
As noted in paragraph (c), Dr Mallya, Sidhartha Mallya and the relevant 
affiliated companies filed a defence to these claims on 12 March 2018. 
Diageo and the other relevant members of its group filed a reply to that 
defence on 5 September 2018. 
DHN and Diageo continue to prosecute these claims. As part of that, 
on 18 December 2018, Diageo and the other relevant members of its 
group filed an application for strike out and/or summary judgment in 
respect of certain aspects of the defence filed by Dr Mallya, Sidhartha 
Mallya and the relevant affiliated companies, including in respect of 
Watson and CASL’s liability to repay DHN. The successful outcome of 
that application and the current status of other aspects of the claims 
are described in paragraph (c) above. 
(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 co-operating fully with the authorities in 
relation to these matters. Diageo and USL have also received notices 
from EBI 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, 
FINANCIAL STATEMENTS
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DIAGEO Annual Report 2020

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 made 
its further submissions in the matter, including at a personal hearing 
before a Deputy General Manager of SEBI. On 26 June 2019, SEBI issued  
an order reiterating the directions contained in its previous notice dated 
16 June 2016. As with the previous notice, Diageo believes SEBI’s latest 
order to be misconceived and wrong in law and has filed an appeal 
before SAT against the order. This appeal is currently pending. 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 range of loss, if any, to which any such action might give rise 
to 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’s dispute with IDBI Bank Limited 
Prior to the acquisition by Diageo of a controlling interest in USL, USL  
had prepaid a term loan of INR 6,280 million (£68 million) taken through 
IDBI Bank Limited (IDBI), an Indian bank, which was secured on certain 
fixed assets and brands of USL, as well as by a pledge of certain shares in 
USL held by the USL Benefit Trust (of which USL is the sole beneficiary). 
The maturity date of the loan was 31 March 2015. IDBI disputed the 
prepayment, following which USL filed a writ petition in November 2013 
before the High Court of Karnataka (the High Court) challenging the  
bank’s actions. 
Following the original maturity date of the loan, USL received notices from 
IDBI seeking to recall the loan, demanding a further sum of INR 459 million 
(£5 million) on account of the outstanding principal, accrued interest and 
other amounts, and also threatening to enforce the security in the event 
that USL did not make these further payments. Pursuant to an application 
filed by USL before the High Court in the writ proceedings, the High Court 
directed that, subject to USL depositing such further amount with the 
bank (which amount was duly deposited by USL), the bank should hold 
the amount in a suspense account and not deal with any of the secured 
assets including the shares until disposal of the original writ petition filed 
by USL before the High Court. 
On 27 June 2019, a single judge bench of the High Court issued an 
order dismissing the writ petition filed by USL, amongst other things, 
on the basis that the matter involved an issue of breach of contract by 
USL and was therefore not maintainable in exercise of the court’s writ 
jurisdiction. USL has since filed an appeal against this order before a 
division bench of the High Court, which on 30 July 2019 has issued an 
interim order directing the bank to not deal with any of the secured assets 
until the next date of hearing. On 13 January 2020, the division bench 
of the High Court admitted the writ appeal and extended the interim 
stay. This appeal is currently pending. Based on the assessment of USL’s 
management supported by external legal opinions, USL continues to 
believe that it has a strong case on the merits and therefore continues to 
believe that the aforesaid amount of INR 459 million (£5 million) remains 
recoverable from IDBI. 
(g) 2019 Moët Hennessy dividend
No dividend was received during the financial year ended 30 June 2020 
in respect of Diageo’s 34% investment in Moët Hennessy SAS and Moët 
Hennessy International SAS (together MH). This investment is governed by 
a Partners’ Agreement with certain members of the LVMH Moët Hennessy 
- Louis Vuitton group (LVMH) which holds 66% of MH, which includes the 
dividend policy and minimum annual dividend requirements for MH. 
Diageo believes that non-payment by MH of the dividend in respect of the 
financial year ended 31 December 2019 constitutes a breach by LVMH of 
the Partners’ Agreement and that the minimum aggregate dividend that 
should have been received by Diageo in respect of that period was 
€181 million (£166 million). Diageo has commenced arbitration 
proceedings under the Partners’ Agreement in respect of this dispute.
(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 April 2019, the European Commission issued its decision in a state 
aid investigation into the Group Financing Exemption in the UK controlled 
foreign company rules. The European Commission found that part of the 
Group Financing Exemption constitutes state aid. The Group Financing 
Exemption was introduced in legislation by the UK government in 2013.  
166
DIAGEO Annual Report 2020

In common with other UK-based international companies whose 
arrangements are in line with current UK CFC legislation Diageo may 
be affected by the ultimate outcome of this investigation. The UK 
government and other UK-based international companies, including 
Diageo, have appealed to the General Court of the European Union 
against the decision. The UK government is required to commence 
collection proceedings and therefore it is expected that Diageo will 
have to make a payment in the year ending 30 June 2021 in respect 
of this case. At present it is not possible to determine the amount that 
the UK government will seek to collect. If the decision of the European 
Commission is upheld, Diageo calculates its maximum potential liability  
to be approximately £275 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 judgement, 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 £285 million for Brazil and up to 
approximately £150 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. 
Payments were made under protest in India in respect of the periods 
1 April 2006 to 31 March 2017 in relation to tax assessments where the risk 
is considered to be remote or possible. These payments have to be made 
in order to challenge the assessments and as such have been recognised 
as a receivable on the consolidated balance sheet. The total amount 
of protest payments recognised as a receivable as at 30 June 2020 is 
£117 million (corporate tax payments of £107 million and indirect tax 
payments of £10 million).
A lawsuit was filed on 15 April 2019 by the National Association of 
Manufacturers (NAM) against the United States Department of the 
Treasury (U.S. Treasury) and the United States Customs and Border 
Protection (CBP) on behalf of its affected industry members, including 
Diageo, to invalidate regulations published in February 2019 and to ensure 
that substitution drawback is permitted in accordance with 19 U.S.C.§ 
1313(j)(2) as amended by the Trade Facilitation and Trade Enforcement Act 
of 2015, which was enacted on 24 February 2016 (TFTEA). Substitution 
drawback permits the refund, including of excise taxes, paid on imported 
merchandise when sufficiently similar substitute merchandise is exported. 
The United States Congress passed the TFTEA to, among other things, 
clarify and broaden the standard for what constitutes substitute 
merchandise. This change should entitle Diageo to obtain substitution 
drawback in respect of certain eligible product categories. Despite this 
change in the law, U.S. Treasury and CBP issued final regulations in 2019 
declaring that substitution drawback is not available for imports when 
substituted with an export on which no tax was paid. The Court of 
International Trade issued a judgement in favour of NAM on 18 February 
2020, denying the request by the U.S. Treasury and CBP for a stay of 
payment on 15 May 2020, and on 26 May 2020, ordered the immediate 
processing of claims. Current eligible claims of Diageo Americas Supply, 
Inc. are estimated at £95 million ($117 million), with a financial impact 
of £87 million ($110 million) for the year ended 30 June 2020 of which 
Diageo has received £26 million ($33 million). However, on 23 July 2020 
the U.S. Treasury and CBP filed an appeal with the U.S. Federal Court of 
Appeal, and, although Diageo believes that the NAM is more likely than 
not to ultimately prevail, if they were to fail, the CBP could be permitted to 
recover these payments. 
(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.
19. Commitments 
(a) Capital commitments 
Commitments for expenditure on intangibles and property, plant and 
equipment not provided for in these consolidated financial statements 
are estimated at £312 million (2019 – £255 million; 2018 – £161 million). 
(b) Other commitments 
The minimum lease rentals payable in the year ending 30 June 2020 for 
short term and low value leases are estimated at £19 million. The total 
future cash outflows for leases that had not yet commenced, and not 
recognised as lease liabilities at 30 June 2020, are estimated at £133 million. 
FINANCIAL STATEMENTS
167
DIAGEO Annual Report 2020

21. Principal group companies 
The companies listed below include those which principally affect the profits and assets of the group. The operating companies listed below may carry on 
the business described in the countries listed in conjunction with their subsidiaries and other group companies. 
Country of incorporation
Country of operation
Percentage of 
equity owned(i)
Business description
Subsidiaries
Diageo Ireland
Republic of Ireland
Worldwide
100%
Production, marketing and distribution of premium drinks
Diageo Great Britain Limited
England
Great Britain
100%
Marketing and distribution of premium drinks
Diageo Scotland Limited
Scotland
Worldwide
100%
Production, marketing and distribution of premium drinks
Diageo Brands B.V.
Netherlands
Worldwide
100%
Marketing and distribution of premium drinks
Diageo North America, Inc.
United States
Worldwide
100%
Production, importing, marketing and distribution of premium drinks
United Spirits Limited(ii)
India
India
55.94%
Production, importing, marketing and distribution of premium drinks
Diageo Capital plc(iii)
Scotland
United Kingdom
100%
Financing company for the group
Diageo Finance plc(iii)
England
United Kingdom
100%
Financing company for the group
Diageo Investment Corporation
United States
United States
100%
Financing company for the US group
Mey İçki Sanayi ve Ticaret A.Ş.
Turkey
Turkey
100%
Production, marketing and distribution of premium drinks
Associates
Moët Hennessy, SAS(iv)
France
France
34%
Production, marketing and distribution of premium drinks
(i)	 All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group. 
(ii)	Percentage ownership excludes 2.38% owned by the USL Benefit Trust. 
(iii)	Directly owned by Diageo plc. 
(iv)	French limited liability company.
20. Related party transactions 
Transactions between the group and its related parties are made on terms 
equivalent to those that prevail in arm’s length transactions. 
(a) Subsidiaries 
Transactions between the company and its subsidiaries are eliminated on 
consolidation and therefore are not disclosed. Details of the principal 
group companies are given in note 21. 
(b) Associates and joint ventures 
Sales and purchases to and from associates and joint ventures are 
principally in respect of premium drinks products but also include the 
provision of management services. 
Transactions and balances with associates and joint ventures are set 
out in the table below: 
2020
£ million
2019
£ million
2018
£ million
Income statement items
Sales
9
9
10
Purchases
29
28
29
Balance sheet items
Group payables
2
12
3
Group receivables
1
2
2
Loans payable
6
6
6
Loans receivable
82
55
59
Cash flow items
Loans and equity contributions, net
47
32
37
Other disclosures in respect of associates and joint ventures are included in 
note 6. 
(c) Key management personnel 
The key management of the group comprises the Executive and 
Non-Executive Directors, the members of the Executive Committee and 
the Company Secretary. They are listed under ‘Board of Directors and 
Company Secretary’ and ‘Executive Committee’. 
2020
£ million
2019
£ million
2018
£ million
Salaries and short-term employee benefits
10
10
10
Annual incentive plan
–
10
10
Non-Executive Directors’ fees
1
1
1
Share-based payments(i)
(11)
20
15
Post employment benefits
2
3
2
Termination benefits(ii)
2
–
–
4
44
38
(i)	 Time-apportioned fair value of unvested options and share awards. 
(ii)	£1 million of the termination benefits disclosed for 2020 have been paid in the year ended 30 
June 2020; a further £1 million will be paid in the year ending 30 June 2021.
Non-Executive Directors do not receive share-based payments or post 
employment benefits. Details of the individual Directors’ remuneration 
are given in ’Single total figure of remuneration for Executive Directors’ and 
’Non-Executive Directors’ remuneration’ in the Directors’ remuneration report. 
(d) Pension plans 
The Diageo pension plans are recharged with the cost of administration 
services provided by the group to the pension plans and with professional 
fees paid by the group on behalf of the pension plans. The total amount 
recharged for the year was £nil (2019 – £3 million; 2018 – £14 million). 
(e) Directors’ remuneration 
2020
£ million
2019
£ million
2018
£ million
Salaries and short-term employee benefits
2
2
2
Annual incentive plan
–
2
3
Non-Executive Directors’ fees
1
1
1
Share option exercises(i)
–
2
–
Shares vesting(i)
11
13
1
Post employment benefits 
1
1
1
15
21
8
(i)	 Gains on options realised in the year and the benefit from share awards, calculated by  
using the share price applicable on the date of exercise of the share options and release  
of the awards. 
Details of the individual Directors’ remuneration are given in ’Single total 
figure of remuneration for Executive Directors’ and ’Non-Executive 
Directors’ remuneration’ in the Directors’ remuneration report. 
168
DIAGEO Annual Report 2020

Company balance sheet of Diageo plc
30 June 2020
30 June 2019
Notes
£ million
£ million
£ million
£ million
Non-current assets
Investment in subsidiary undertakings
3
61,342
27,046
Other financial assets
4
644
386
Post employment benefit assets
6
963
951
62,949
28,383
Current assets
Amounts owed by group undertakings
4
7,514
253
Trade and other receivables
9
5
Other financial assets
4
–
6
Cash and cash equivalents
12
35
7,535
299
Total assets
70,484
28,682
Current liabilities
Amounts owed to group undertakings
4
(7)
(4)
Other financial liabilities
4
–
(32)
Trade and other payables
(45)
(54)
Provisions
7
(15)
(13)
(67)
(103)
Non-current liabilities
Amounts owed to group undertakings
4
(9,556)
(9,121)
Other financial liabilities
4
(644)
(386)
Provisions
7
(173)
(192)
Deferred tax liabilities
5
(127)
(107)
Post employment benefit liabilities
6
(100)
(95)
(10,600)
(9,901)
Total liabilities
(10,667)
(10,004)
Net assets
59,817
18,678
Equity
Share capital (2020 – 2,562 million shares (2019 – 2,601 million shares) of 28 101/108 pence each)
9
742
753
Share premium
1,351
1,350
Merger reserve
9
9,161
9,161
Capital redemption reserve
3,201
3,190
14,455
14,454
Retained earnings:
At beginning of year
4,224
4,775
Profit for the year
11,480
3,714
Other changes in retained earnings
29,658
(4,265)
45,362
4,224
Total equity
59,817
18,678
The accompanying notes are an integral part of these parent company financial statements.
These financial statements were approved by a duly appointed and authorised committee of the Board of Directors and were signed on its behalf  
on 4 August 2020 by Ivan Menezes and Kathryn Mikells, Directors.
Company registration number No. 23307	
FINANCIAL STATEMENTS
169
DIAGEO Annual Report 2020

Statement of changes in equity for Diageo plc
Retained earnings
Share capital
£ million
Share 
premium
£ million
Merger  
reserve
£ million
Capital 
redemption 
reserve
£ million
Own shares
£ million
Other reserve
£ million
Total
£ million
Total equity
£ million
At 30 June 2018
780
1,349
9,161
3,163
(2,144)
6,919
4,775
19,228
Profit for the year
–
–
–
–
–
3,714
3,714
3,714
Other comprehensive income for the year
–
–
–
–
–
40
40
40
Total comprehensive income for the year
–
–
–
–
–
3,754
3,754
3,754
Employee share schemes
–
–
–
–
118
(49)
69
69
Share-based incentive plans
–
–
–
–
–
49
49
49
Tax on share-based incentive plans
–
–
–
–
–
1
1
1
Shares issued
–
1
–
–
–
–
–
1
Share buyback programme
(27)
–
–
27
–
(2,801)
(2,801)
(2,801)
Dividends paid
–
–
–
–
–
(1,623)
(1,623)
(1,623)
At 30 June 2019
753
1,350
9,161
3,190
(2,026)
6,250
4,224
18,678
Profit for the year
–
–
–
–
–
11,480
11,480
11,480
Other comprehensive income for the year
–
–
–
–
–
32,506
32,506
32,506
Total comprehensive income for the year
–
–
–
–
–
43,986
43,986
43,986
Employee share schemes
–
–
–
–
90
(36)
54
54
Share-based incentive plans
–
–
–
–
–
2
2
2
Tax on share-based incentive plans
–
–
–
–
–
(2)
(2)
(2)
Shares issued
–
1
–
–
–
–
–
1
Share buyback programme
(11)
–
–
11
–
(1,256)
(1,256)
(1,256)
Dividends paid
–
–
–
–
–
(1,646)
(1,646)
(1,646)
At 30 June 2020
742
1,351
9,161
3,201
(1,936)
47,298
45,362
59,817
The accompanying notes are an integral part of these parent company financial statements.
170
DIAGEO Annual Report 2020

Notes to the company financial statements of Diageo plc
1. Accounting policies of the company
Basis of preparation
The financial statements of Diageo plc (the company) are prepared in 
accordance with Financial Reporting Standard 101 Reduced Disclosure 
Framework (FRS 101).
In preparing these financial statements, the company applies the 
recognition, measurement, and disclosure requirements of International 
Financial Reporting Standards as adopted by the EU (IFRS), but makes 
amendments where necessary in order to comply with the Companies  
Act 2006 and has excluded certain information as permitted by FRS 101. 
The financial statements are prepared on a going concern basis under 
the historical cost convention, except that certain financial instruments 
and post employment benefits which are measured and stated at their  
fair value.
By virtue of section 408 of the Companies Act 2006 the company is 
exempt from presenting an income statement and disclosing employee 
numbers and staff costs. The company has taken advantage of the 
exemption under FRS 101 from preparing a cash flow statement and 
related notes, disclosures in respect of transactions and the capital 
management of wholly owned subsidiaries, the effects of new but not  
yet effective IFRSs and disclosures in respect of the compensation of Key 
Management Personnel. As the consolidated financial statements of 
Diageo plc include equivalent disclosures, the company has also utilised 
exemptions available under FRS 101 from disclosing IFRS 2 Share-based 
Payments in respect of group settled share-based payments, disclosures 
required by IFRS 7 Financial Instruments Disclosures and by IFRS 13 Fair 
Value Measurement. 
Investment in subsidiaries
Investments in subsidiaries are stated at historical cost less impairment 
provisions for any permanent decrease in value. The carrying amounts of 
the company’s investments are reviewed at each reporting date to 
determine whether there is an indication of impairment. If such an 
indication exists, then the asset’s recoverable amount is estimated. Losses 
are recognised in the statement of comprehensive income and reflected 
in an allowance against the carrying value. Where an event results in the 
asset’s recoverable amount being higher than the previously impaired 
carrying value, the original impairment may be reversed through the 
statement of comprehensive income in subsequent periods.
Dividends received and paid
Dividends are included in the financial statements in the financial year in 
which they are approved. Dividends received are included in the financial 
statements in the year in which they are receivable.
Share-based payments – employee benefits
The company’s accounting policy for share-based payments is the  
same as set out in note 17 to the consolidated financial statements.  
Where the company grants options over its own shares to the employees 
of its subsidiaries, it generally recharges the cost to the relevant group 
company. Where the amount is not recharged, the value of the options is 
recognised as a capital contribution to the subsidiaries and increases the 
cost of investment.
Pensions and other post employment benefits
The company’s accounting policy for post employment benefits is the 
same as set out in note 13 to the consolidated financial statements. The 
company acts as sponsor of all UK post employment plans for the benefit 
of employees and former employees throughout the group. There is 
no contractual agreement or stated policy for charging the net defined 
benefit costs for the plan measured in accordance with FRS 101, to other 
group companies whose employees participate in these group wide 
plans. However, recharges to other group companies are made on a 
funding basis and are credited against post employment service costs to 
the extent they are in respect of current service. The fair value of the plans’ 
assets less the present value of the plans’ liabilities are disclosed as a net 
asset or net liability on the company’s balance sheet as it is deemed to be 
the legal sponsor of these plans. The net income charge/credit reflects 
the increase in the defined benefit obligation resulting from service in the 
current year, benefit changes, curtailments and settlements. Past service 
costs are recognised in income. The net interest cost is calculated by 
applying the discount rate to the net balance of the defined benefit 
obligation and the fair value of the plan assets and is included in the 
income statement. Any differences due to changes in assumptions or 
experience are recognised in other comprehensive income.
Provisions
Provisions are liabilities of uncertain timing or amount. A provision is 
recognised if, as a result of a past event, the group has a present legal or 
constructive obligation that can be estimated reliably, and it is probable 
that an outflow of economic benefits will be required to settle the 
obligation. Provisions are calculated on a discounted basis. The carrying 
amounts of provisions are reviewed at each balance sheet date and 
adjusted to reflect the current best estimate. 
Taxation
Current tax is based on taxable profit for the year. Taxable profit is different 
from accounting profit due to temporary differences between accounting 
and tax treatments, and due to items that are never taxable or tax 
deductible. Tax benefits are not recognised unless it is probable that the 
tax positions are sustainable. Once considered to be probable, tax benefits 
are reviewed each year to assess whether a provision should be taken 
against full recognition of the benefit on the basis of potential settlement 
through negotiation and/or litigation. Tax provisions are included in 
current liabilities. Penalties and interest on tax liabilities are included in 
profit before taxation. 
Full provision for deferred tax is made for temporary differences 
between the carrying value of assets and liabilities for financial reporting 
purposes and their value for tax purposes. The amount of deferred tax 
reflects the expected recoverable amount and is based on the expected 
manner of realisation or settlement of the carrying amount of assets and 
liabilities, using the basis of taxation enacted or substantively enacted by 
the balance sheet date. Deferred tax assets are not recognised where it is 
more likely than not that the assets will not be realised in the future.
Financial assets and liabilities
Financial assets and liabilities are initially recorded at fair value including, 
where permitted by IFRS 9, any directly attributable transaction costs.  
For those financial assets that are not subsequently held at fair value, the 
company assesses whether there is evidence of impairment at each 
balance sheet date. The company classifies its financial assets and liabilities 
into the following categories: financial assets and liabilities at amortised 
cost, financial assets and liabilities at fair value through profit and loss and 
financial assets at fair value through other comprehensive income. Where 
financial assets or liabilities are eligible to be carried at either amortised 
cost or fair value the company does not apply the fair value option.
Amounts owed by group undertakings are initially measured at  
fair value and are subsequently reported at amortised cost. Non-interest 
bearing trade receivables are stated at their nominal value as they are due on 
demand. Allowances for expected credit losses are made based on the risk 
of non-payment, taking into account ageing, previous experience, economic 
conditions and forward looking data. Such allowances are measured as 
either 12-month expected credit losses or lifetime expected credit losses 
depending on changes in the credit quality of the counterparty.
FINANCIAL STATEMENTS
171
DIAGEO Annual Report 2020

Amounts owed to group undertakings are initially measured at  
fair value and are subsequently reported at amortised cost. Non-interest 
bearing trade payables are stated at their nominal value as they are due  
on demand. For a number of loans owed to other group companies, the 
company has a contractual right to defer payment by one year and one 
day and therefore these amounts are disclosed as non-current liabilities.
Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially at their  
fair values. These liabilities are subsequently measured at the higher of  
the amount determined under IAS 37 and the amount initially recognised 
(fair value) less where appropriate, cumulative amortisation of the initial 
amount recognised.
Judgements in applying accounting policies and key sources  
of estimation uncertainty 
The preparation of financial statements requires the directors to make 
estimates and assumptions that affect the reported amounts of assets 
and liabilities, the disclosure of contingent assets and liabilities at the date 
of the financial statements, and the reported amounts of revenues and 
expenses during the year. Actual results could differ from those estimates.
The critical accounting policies, which the directors consider are 
of greater complexity and/or particularly subject to the exercise of 
estimates and judgements, are the same as those disclosed in note 1 
to the consolidated financial statements in respect of taxation, post 
employment benefits, contingent liabilities and legal proceedings. 
A critical accounting estimate, specific to the company is the 
assessment of the recoverable amount of the investments in subsidiaries. 
Impairment reviews are carried out to ensure that the value of the 
investments in subsidiaries are not carried at above their recoverable 
amounts. The tests are dependent on management’s estimates in respect 
of the forecasting of future cash flows, the discount rates applicable to 
the future cash flows and expected growth rates. Such estimates and 
judgements are subject to change as a result of changing economic 
conditions and actual cash flows may differ from forecasts. Impairment 
testing for the year ended 30 June 2020 has identified some investments 
as being sensitive to reasonably possible changes in assumptions.
Additional estimates have been applied by management regarding 
the potential financial impact of the Covid-19 pandemic in respect of the 
anticipated future cash flows of the indirect operating subsidiaries of the 
company. Details in respect of Covid-19 assessment are set out in note 9 
to the consolidated financial statements.
2. Income statement
Note 3 to the consolidated financial statements provides details of the 
remuneration of the company’s auditor for the group.
Information on Directors’ emoluments, share and other interests, 
transactions and pension entitlements is included in the Directors’ 
remuneration report in this Annual Report.
3. Investment in subsidiary undertakings
£ million
Cost
At 30 June 2019
27,332
Additions (a)
45,150
At 30 June 2020
72,482
Provision
At 30 June 2019
(286)
Increase in the year (b)
(10,854)
At 30 June 2020
(11,140)
Carrying amount
At 30 June 2020
61,342
At 30 June 2019
27,046
(a) On 12 August 2019 the company increased its investment in its wholly 
owned subsidiary, Guinness Overseas Holdings Limited (GOHL), following 
the issuance of 87,560,000 new ordinary shares of £1 at par value by GOHL.
On 12 December 2019 the group carried out a restructuring of the 
ownership of a number of its subsidiaries. This involved Diageo plc 
increasing its investment in its wholly owned subsidiary, Tanqueray 
Gordon and Company Limited (TGCL) by £45,062 million through the 
issuance of 181,867,487 new ordinary shares of £100 at a premium of 
£26,875 million by TGCL. TGCL used this capital injection to purchase, 
itself and via an indirect wholly owned subsidiary, a number of companies 
from other Diageo wholly owned group companies at market value. The 
gains arising on the sales made by the relevant subsidiaries were paid up 
through the group as dividends in specie of £42,588 million to Diageo plc. 
This amount has been recognised in other comprehensive income 
as it arose from an intra-group restructuring and is considered to be 
non-distributable. Additional proceeds of the capital injection were 
used to settle certain intercompany loans between wholly owned 
indirect subsidiaries.
Investment in subsidiary undertakings include £132 million (2019 
– £132 million) of costs in respect of share-based payments, granted to 
subsidiary undertakings which were not recharged to the subsidiaries. 
(b) On 11 December 2019, Anyslam Limited (a wholly owned subsidiary 
of the company) declared and paid an interim dividend of £844 million, 
resulting in a decrease in the net assets of Anyslam Limited and 
consequently an impairment of £712 million in the company’s investment. 
During the year ended 30 June 2020 as a result of negative market 
conditions in Ethiopia, the recoverable amount of the company’s investment 
decreased in GOHL, which is the owner of the group’s business in Ethiopia. 
As a consequence, an impairment of £88 million was recognised in respect 
of the company’s investment.
As a result of the intra-group transactions, the direct investments in 
TGCL and Diageo Holdings Limited (DHL) have been impaired by £10,054 
million in the year ended 30 June 2020. To the extent that an impairment 
was recognised in the income statement on the investment Diageo plc 
holds in Diageo Holdings Limited, a corresponding amount has been 
released from other comprehensive income (that has earlier been 
172
DIAGEO Annual Report 2020

6. Post employment benefits
The movement in the net surplus for the two years ended 30 June 2020, 
for all UK post employment plans for which the company is the sponsor, is 
as follows:
Plan assets
£ million
Plan liabilities
£ million
Net surplus
£ million
At 30 June 2018
6,792
(6,035)
757
Charge before taxation
177
(180)
(3)
Other comprehensive income/(loss)
413
(399)
14
Contributions by group companies
88
–
88
Employee contributions
1
(1)
–
Benefits paid
(356)
356
–
At 30 June 2019
7,115
(6,259)
856
Charge before taxation
155
(178)
(23)
Other comprehensive income/(loss)
699
(734)
(35)
Contributions by group companies
65
–
65
Employee contributions
1
(1)
–
Benefits paid
(339)
339
–
At 30 June 2020
7,696
(6,833)
863
The net surplus for the UK post employment plans of £863 million  
(2019 – £856 million) for which the company is a sponsor comprises 
funded plans of £963 million (2019 – £951 million) disclosed as part of 
non-current assets and unfunded liabilities of £100 million (2019 –  
£95 million) disclosed as part of non-current liabilities.
The disclosures have been prepared in accordance with IFRIC 14.  
In particular, where the calculation for a plan results in a surplus, the 
recognised asset is limited to the present value of any available future 
refunds from the plan or reductions in future contributions to the plan, 
and any additional liabilities are recognised as required. 
Additional information on the UK post employment plans and the 
principal risks and assumptions applicable is disclosed in note 13 to the 
consolidated financial statements.
7. Provisions
Thalidomide
£ million
Other
£ million
Total
£ million
At 30 June 2019
196
9
205
Provisions utilised during the year
(15)
–
(15)
Reversal
–
(8)
(8)
Unwinding of discounts
6
–
6
At 30 June 2020
187
1
188
The company’s commitment to the UK Thalidomide Trust is discounted 
and will be utilised over the period of the commitment up to 2037.
At 30 June 2020 £15 million (2019 – £13 million) of provision is current 
and £173 million (2019 – £192 million) is non-current.
8. Financial guarantees and letters of comfort
The company has guaranteed certain external borrowings of 
subsidiaries which at 30 June 2020 amounted to £15,701 million (2019 – 
£11,603 million).
The company has also provided irrevocable guarantees relating to 
the liabilities of certain of its Irish and Dutch subsidiaries. In addition, 
the company has provided a guarantee to the Guinness Ireland Group 
Pension Scheme. The company has assessed that the likelihood of these 
guarantees being called as remote. The Directors do not expect the 
company to be liable for any legal obligation in respect of these financial 
recognised in relation to the dividend in specie) to the income statement 
in Diageo plc as it is deemed realised to the extent of the impairment.
Impairment testing for the year ended 30 June 2020 has identified 
that the recoverable amount of investments in DHL and TGCL are sensitive 
to reasonably possible changes in assumptions due to the fact that current 
investment book value is equal to current fair value of the underlying 
indirect operating subsidiaries. We refer to the sensitivities reported in 
our consolidated financial statements in note 9e. Any impairments in the 
sensitive cash-generating units as disclosed in note 9 have the potential 
to impact the carrying value of the Company’s investments in DHL and  
TGCL by a similar amount. The impact may however be less as any such 
impairments could be compensated through better than expected 
performances in other business units that our subsidiaries are also  
invested in.
A list of group companies as at 30 June 2020 is provided in note 10.
4. Financial assets and liabilities
Other financial assets and liabilities are recorded at fair value through 
profit and loss and comprise the fair value of interest rate swaps and 
cross currency interest rate swaps with subsidiary undertakings, where the 
company acts as an intermediary between group companies, therefore 
it is not expected that there will be any net impact on future cash flows. 
Amounts owed by and to group undertakings, trade and other 
receivables and trade and other payables are measured at amortised cost. 
Amounts owed by and to group undertakings are interest bearing and 
unsecured. For a majority of the loans owed to other group companies, 
the company has a contractual right to defer payment by one year and 
one day and they are therefore classified as non-current liabilities. Other 
amounts owed by and to group undertakings are repayable on demand. 
5. Deferred tax assets and liabilities
Post 
employment 
plans
£ million
Other 
temporary 
differences
£ million
Total
£ million
At 30 June 2018
(129)
39
(90)
Recognised in income statement
(9)
(1)
(10)
Recognised in other comprehensive 
income and equity
(8)
1
(7)
At 30 June 2019
(146)
39
(107)
Changes in tax rates
(17)
4
(13)
Recognised in income statement
(5)
(3)
(8)
Recognised in other comprehensive 
income and equity
4
(3)
1
At 30 June 2020
(164)
37
(127)
Deferred tax on other temporary differences includes assets in respect of 
the UK Thalidomide Trust liability of £36 million (2019 – £33 million) and 
share-based payment liabilities of £1 million (2019 – £5 million).
FINANCIAL STATEMENTS
173
DIAGEO Annual Report 2020

guarantee agreements, and they have been recognised at nil fair value.
The company issued a non-binding letter of comfort to provide sufficient 
funds to directly owned subsidiary undertakings to enable them to 
continue to be accounted as going concerns, as and when required.
9. Shareholders’ funds
(a) Merger reserve 
On the acquisition of a business, or of an interest in an associate, fair values, 
reflecting conditions at the date of acquisition, are attributed to the net 
assets acquired. Where merger relief is applicable under the UK Companies 
Acts, the difference between the fair value of the business acquired and 
the nominal value of shares issued as purchase consideration is treated as 
a merger reserve.
(b) Own shares
At 30 June 2020 own shares comprised 2 million ordinary shares held by 
employee share trusts (2019 – 3 million; 2018 – 4 million); 222 million 
ordinary shares repurchased and held as treasury shares (2019 – 222 million; 
2018 – 222 million); and 3 million ordinary shares held as treasury shares for 
hedging share scheme grants (2019 – 7 million; 2018 – 12 million). 
During the year ended 30 June 2020 the group purchased 
approximately 39 million ordinary shares (2019 – 94.7 million), representing 
approximately 1.5% of the issued ordinary share capital (2019 – 3.5%) at an 
average price of £32.43 per share, and an aggregate cost of £1,282 million 
(including £7 million of transaction costs) (2019 – £29.24 per share, and 
an aggregate cost of £2,775 million including £6 million of transaction 
costs) under the share buyback programme. This amount includes the 
aggregate consideration of £26 million (including £17 million settlement 
payments for the purchases made in the year ended 30 June 2019 
and 30 June 2020) in relation to the prior year programme, which was 
completed on 10 July 2019 resulting in the repurchase of 0.3 million shares 
in the year ended 30 June 2020. The shares purchased under the share 
buyback programmes were cancelled.
Information on movements in own shares is provided in note 17(c) to 
the consolidated financial statements.
(c) Retained earnings
During the year ended 30 June 2020 the company received a dividend  
in specie from its subsidiary undertakings of £42,588 million. This amount 
has been recognised in other comprehensive income as it arose from  
an intra-group restructuring and is considered to be non-distributable.  
The impairment in respect of TGCL and Diageo Holdings Limited  
referred to in note 3 (b) has been offset against this gain as it reduces 
non-distributable reserves.
The company received dividend of £12,398 million (2019 – 
£3,931million) that has been recognised in the income statement. £11,996 
million (2019 – £3,593 million) of retained earnings is available for the 
payment of dividends or purchases of own shares. Determining the 
company’s reserves available for distribution is complex and requires, in 
some instances, the application of judgement. The company has 
determined what is realised and unrealised in accordance with the 
Companies Act 2006 and the guidance included in ICAEW Technical 
Release TECH 02/17BL ‘Guidance on realised and distributable profits 
under the Companies Act 2006’. The company’s reserves available for 
distribution include adjustments to retained earnings in respect of the 
unrealised portion of the dividend in specie received by the company, 
post employment benefit surpluses and share based payment charges 
capitalised to investments.
In April 2020, the Directors became aware that certain share buybacks 
and certain transactions related to the company’s employee share schemes 
with or for the benefit of the company’s employee benefit and share 
ownership trusts undertaken between 10 May 2019 and 9 August 2019, 
amounting to approximately £320 million, (‘the affected transactions’), 
were undertaken contrary to the applicable provisions of the Companies 
Act 2006 as they were undertaken following utilisation in full of the 
company’s distributable reserves as set out in its balance sheet as at 30 
June 2018. At the Annual General Meeting to be held on 28 September 
2020, a resolution will be proposed which will appropriate an equivalent 
amount of distributable profits of the company to the payments made in 
respect of the affected transactions and will implement arrangements to 
put all potentially affected parties, so far as possible, in the position in 
which they were intended to be had the affected transactions been 
undertaken in accordance with the applicable provisions of the 
Companies Act 2006. This resolution and the arrangements that it 
implements will, if approved by shareholders, constitute a related party 
transaction under IAS 24 and under the Listing Rules, as the Directors 
would benefit from the waiver of any claims that the company has or may 
have against them as a result of the affected transactions. These 
arrangements are not expected to have any effect on the company’s 
financial position as the company has not recorded or disclosed its right 
potentially to make claims against any person in respect of the affected 
transactions as an asset or contingent asset of the company.
174
DIAGEO Annual Report 2020

10. Group companies
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, joint ventures and joint arrangements, the 
country of incorporation and the effective percentage of equity owned, as at 30 June 2020 are disclosed below. Unless otherwise stated the share capital 
disclosed comprises ordinary shares which are indirectly held by Diageo plc.
FULLY OWNED SUBSIDIARIES
Angola
Rua Fernao de Sousa, Condominio Bengo, Letter A, 
11.s floor, Fraction A37, neighbourhood Vila Alice, 
Province of Luanda
Diageo Angola Limitada
Argentina
Bernardo de Irigoyen 972, floor 7, office A, CABA
Diageo de Argentina S.A.
Australia
162 Blues Point Road, Level 1, NSW, 2060, 
McMahons Point
Bundaberg Distilling Investments Pty Ltd
Crescendo Australia Pty Ltd(iii)
D.C.L (Holdings) Australia  
Proprietary Limited(ii),(iii)
Diageo Australia Limited(iii)
Whitted Street, QLD, 4670, Bundaberg
Bundaberg Distilling Company Pty. Limited(v)
Austria
Teinfaltstrasse 8, 1010, Wien
Diageo Austria GmbH
Belgium
Z.3 Doornveld 150, 1731, Zellik
Diageo Belgium N.V.
Bermuda
Victoria Place, 5th Floor, 31 Victoria Street,  
Hamilton, HM10
Atalantaf Limited
Brazil
Av. Washington Soares, 1280, Ceará, 60.810-350, 
Fortaleza
Ypioca industrial de Bebidas S.A.
Fazenda Santa Eliza, s/n, Ceará, 62.685-000, 
Paraipaba
Ypioca Agricola LTDA
Rua Olimpiadas, 205, floor 14-15, 04551-000,  
Sao Paulo
Diageo Brasil Ltda
Bulgaria
7 Iskarsko Shose Blvd., Trade Center Europe,  
building 12, floor 2, 1528, Sofia
Diageo Bulgaria Ltd
Cameroon
Bassa industrial trade zone, Ndog HemII,  
PO BOX 1213 Douala
Guinness Cameroun S A
Canada
134 Peter Street, Suite 1501, Ontario,  
M5V 2H2, Toronto
Diageo Canada Holdings Inc.
Diageo Canada Inc.
Boul Henri-Bourassa E., 9225, Local A,  
Quebec, H1E 1P6 , Montreal
Diageo Americas Supply Quebec  
Distribution Inc.
Diageo Ireland Quebec Distribution Inc.
Cayman Islands
Second Floor, Century Yard, PO Box 448GT,  
Cricket Square, Grand Cayman
Grand Metropolitan (Cayman Islands) Limited(ii)
Chile
Cerro El Plomo 5630, Piso 13, Las Condes
Diageo Chile Limitada
China
No. 9 Quanxing Road, Jinniu District, 610036, 
Chengdu City
Sichuan Chengdu Shuijingfang Group Co., Ltd
No.209 Gonghe Road, Tower 2, Enterprise Centre, 
2101, 21, Jing’an District, 200070, Shanghai
Diageo China Limited
No.28 Jiafeng Road, 2502, 5, Pudong District, 
200137, Shanghai
Diageo (Shanghai) Limited
Colombia
100 street No.13 21 Office 502. Bogota
Diageo Colombia S.A.
Costa Rica
1 km Este Periodico La Nacion, Llorente de Tibas, 
Edificio Vinum Store, San Jose
Diageo Costa Rica S.A.
Croatia
Hektoroviceva ulica 2, 10000, Zagreb
Diageo Croatia d.o.o.za usluge
Cyprus
3 Themistokli Dervi Ave, Julia House, 1066, Nicosia
Horizon Developments Limited(ii)
Czech Republic
Na Pankráci 1724/129, 140 00, Prague
Diageo Czech Marketing Services LLC
Denmark
Sundkrogsgade 21, 2100, Copenhagen
Diageo Denmark AS
Dominican Republic
A J Aybar 204 SD, Santo Domingo
Diageo Dominicana S.R.L.
Ethiopia
Region Oromia, Kebele 05 Sebeta Hawas,  
Sebeta Town
Meta Abo Brewery Share Company
France
73, Rue de Provence, 75009, Paris
Diageo France Investments S.A.S.
Diageo France S.A.S.
Guinness France Holdings S.A.S
United Distillers France SAS
Germany
Reeperbahn 1, 20359, Hamburg
Belsazar GmbH
Diageo Germany GmbH
Greece
27, Agiou Thoma street, Marousi, 151 24, Athens
Diageo Hellas S.A.
Guernsey
Heritage Hall, Le Marchant Street,  
St Peter Port, GY1 4HY
Diageo Group Insurance Company Limited
Hong Kong
11 Hoi Shing Road, Room 7, 18, Tsuen Wan,  
New Territories, 999077
Diageo RTD Hong Kong Limited
3/F, 21 Li Yuen Street West Central
Vast Fund Limited
31/F Tower Two, Times Square, 1 Matheson Street, 
Causeway Bay
Diageo International Spirits Company Limited
Hungary
1132 Budapest, Vaci ut 20-26
Diageo Business Services Limited
Diageo Employee Ownership  
Program Organization
Diageo Hungary Finance Limited  
Liability Company
Diageo Hungary Marketing Services Limited 
Liability Company
India
Block E, 2 nd Floor, The MIRA, Plot 1&2, Ishwar Nagar, 
Mathura Road New Delhi South Delhi DL 110065
Diageo Distilleries Private Limited(vii)
Ganpatrao Kadam Marg. Piramal towers 4, 
Maharashtra 400013, Mumbai
Diageo India Private Limited
Kempapura Main Road, Opp Nagawara Lake,  
Karle SEZ Tower, 2nd floor, Karnataka, 560045, 
Bangalore
Diageo Business Services India Private Limited
Indonesia
Jl Jend Sudirman Kav. 76-78, Sudirman Plaza,  
Plaza Marein, 15th, Jakarta Selatan, 12910, Jakarta
PT Gitaswara Indonesia(ix)
Jl. Raya Kaba-Kaba No. 88, Banjar Carik Padang,  
Desa Nyambu, Kecamatan Kediri,  
Kabupaten Tabanan, Provinsi Bali
PT Langgeng Kreasi Jayaprima
Italy
Strada Statale 63, 12069, Santa Vittoria d’Alba (CN)
Diageo Operations Italy S.p.A.
Via Ernesto Lugaro 15, 10126, Torino
Diageo Italia S.p.A.
Jamaica
7th Floor, Scotiabank Centre, Duke Street, Kingston
Trelawny Estates Limited
Lot14, Gilbert Drive, Lakeside Park, Discovery Bay, St. Ann
Myers Rum Company (Jamaica) Limited(ii)
Japan
Nakano-ku 4-10-2, Nakano Central Park South, 17, 
Tokyo, 164-0001
Diageo Japan K.K
FINANCIAL STATEMENTS
175
DIAGEO Annual Report 2020

Kazakhstan
Timiryazev street 28 V, office 704, Bostandik district, 
50040, Almaty
Diageo Kazakhstan LLP.
Kenya
L R NO 1870/1/176, Aln House, Eldama Ravine Close, 
off Eldama Ravine Road, Westlands, Nairobi
Diageo Kenya Limited
La Reunion
14, rue Jules Thirel A30 97460 Saint Paul,  
Reunion Island
Diageo Reunion SA
Lebanon
Verdun Street, Ibiza Building, Beirut,  
PO Box 113-5631
Diageo Lebanon Holding SAL
Diageo LENA Offshore SAL
Mexico
Carretera Atotonilco Guadalajar, kilómetro 8, 
Atotonilco el Alto 47750 Jalisco
Diageo Mexico Comercializadora S.A. de C.V.
Diageo Mexico II SA de CV Sociedad Financiera 
de Objeto Multiple, E.N.R.
Diageo Mexico SA de CV
Porfirio Diaz 17, Jalisco, 47750, Atotonilco el Alto
Diageo Mexico Operaciones S.A.de C.V.
Don Julio Agavera S.A. de C.V.
Don Julio Agricultura y Servicios S.A. de C.V.
Servicios Agavera, S.A.de C.V.
Mozambique
Estrada Nacional numero 1, Micanhine, Marracuene
Diageo Supply Marracuene Lda.
New Zealand
123 Carlton Gore Road, Level 2, Newmarket, 1023, 
Auckland
Diageo New Zealand Limited(iii)
80 Queen Street, 1010, Auckland
Gilbeys New Zealand Limited
Nigeria
Oba Akran Avenue Ikeja, 24, Lagos, PMB 21071, 
100001
Diageo Brands Nigeria Ltd
Norway
Apotekergata 10, 0180 Oslo
Diageo Norway AS
Panama
Costa del Este, Ave La Rotonda, Business Park,  
Torre V. piso 15 Panama City
Diageo Panama S.A.
Panama city, West Boulevard, PH ARIFA,  
9th and 10th, Santa Maria Business
Diageo Taiwan Inc.
Paraguay
Avda Aviadores del Chaco 2050.  
Edificio World trade center. Torre 3 piso 11
Diageo Paraguay S.R.L.
Peru
Vi­ctor Andres Belaunde 147, Vi­a Principal 133, 
Interior 107, Piso 10, San Isidro, Lima
Diageo Peru S.A.
Philippines
Lower G/F, Unit A Eight West Campus Le Grand 
Avenue, Mckinley West Fort Bonifacio, Taguig City, 
NCR Fourth District, 1630
Diageo Asia Pacific Shared Services Centre 
Limited, Inc.
Unit 1, 17th Floor, Ore Central 9th Avenue corner 
31st Street Bonifacio Global City, Taguig City, 1634
Diageo Export SR Inc.(ii)
Diageo Philippines Free Port Inc(ii)
Diageo Philippines, Inc
North Island United Enterprise Holdings Inc(ii)
United Distillers & Vintners Philippines Inc(ii)
Poland
Warsaw, Przyokopowa Str. 31, PL 01 – 208 Warsaw
Diageo Polska Sp. z o.o.
Portugal
Avenida D. Joao II, No 50, piso 2, letra D,  
Edificio Mar Vermelho, 1990-095 Lisboa
Diageo Portugal – Distribuidora de Bebidas, 
Unipessoal, Lda
Republic of Ireland
Nangor House, Western Estate, Nangor Road, 
Dublin, 12
Gilbeys of Ireland Unlimited Company
R & A Bailey & Co
UDV Ireland Group (Trustees) Designated 
Activity Company
St. James’s Gate, Dublin 8
1759 Property Limited
AGS Employee Shares Nominees (Ireland) 
Designated Activity Company 
Arthur Guinness Son & Company (Dublin)(ii
Diageo Europe Holdings Limited
Diageo Ireland
Diageo Ireland Finance 1 Unlimited Company
Diageo Ireland Finance 2 Unlimited Company
Diageo Ireland Finance 3 Unlimited Company
Diageo Ireland Finance Unlimited Company
Diageo Ireland Holdings Unlimited Company
Diageo Ireland Pension Trustee Designated 
Activity Company
Diageo Retirement Savings Plan Designated 
Activity Company
Diageo Turkey Holdings Limited
Guinness Storehouse Limited
Irish Ale Breweries Holdings Unlimited 
Company(iii)
Irish Ale Breweries Limited
Powtom 11 Limited
Powtom 12 Limited
Powtom 13 Limited
Powtom 14 Limited
Powtom 16 Limited
Powtom 17 Limited
Powtom 18 Unlimited Company
R&A Bailey Pension Trustee Designated  
Activity Company
Russia
Kaspiyskaya Street, 22, main bld. 1, bld. 5, floor 3, 
apartment VII, room 31a, 115304, Moscow
D Distribution Joint-Stock Company
Diageo Brands Distributors LLC
Singapore
Singapore, 112 Robinson Road, 1, 5th Floor, 1, 68902
Diageo GTME Pte Ltd
Diageo Singapore Pte Ltd.
Diageo Singapore Supply Pte. Ltd.
Streetcar Investment Holding Pte. Ltd.
South Africa
Building 3, Maxwell Office Park,  
Magwa Crescent West, Waterfall City, Midrand, 2090
Diageo South Africa (Pty) Limited
Diageo Southern Africa Markets (Pty) Ltd
United Distillers Southern Africa  
(Proprietary) Limited
South Korea
46, Dumujae-ro, Bubal-eup, Icheon-shi,  
Gyeonggi-do, 17317, Icheon
Diageo Korea Company Limited
Spain
Avda de la Victoria 32, Edificio Spirit, 28023, Madrid
Diageo Espana S.A.
Sweden
Gavlegatan street 22/C, 11330, Stockholm
Diageo Sweden AB
Switzerland
Rue du Grand-Pre 2b, 1007, Lausanne
Diageo Suisse S.A.
Tanzania
CRB Africa Legal Attorneys, Plot 60,  
Ursino Street P.O. Box 32840, Dar es Salaam
Sumagro Limited(ii)
The Netherlands
Molenwerf 12, 1014 BG, Amsterdam
Diageo Atlantic B.V.
Diageo Brands B.V.
Diageo Highlands Holding B.V.
Diageo Holdings Netherlands B.V.
Diageo Molenwerf B.V.
Diageo Nederland B.V.
Global Farming Initiative B.V.
Relay B.V.(v)
Selviac Nederland B.V.
De Ruyterkades, Postbus 2852 1000cw Amsterdam
United Distillers & Vintners (SJ) B.V.(ii)
Turkey
Büyükdere Caddesi, Bahar Sokak, River Plaza, N0:13, 
25-29, Þiþli, 34394, Istanbul
Mey Alkollu Ickiler Sanayi ve Ticaret A.S
Mey Icki Sanayi ve Ticaret A.S.
Ukraine
1v Pavla Tychyny avenue , 2152, Kyiv
Diageo Ukraine LLC
176
DIAGEO Annual Report 2020

United Kingdom
3rd Floor Capital House, 3 Upper Queen Street, Belfast
Diageo Global Supply IBC Limited
Diageo Northern Ireland Limited(i)
S & B Production Limited(i)
61 St. James’s Street, London, SW1A 1LZ
Justerini & Brooks, Limited
Edinburgh Park, 5 Lochside Way,  
Edinburgh, EH12 9DT
Arthur Bell & Sons Limited
Copper Dog Whisky Limited
Diageo Capital plc(i)
Diageo Scotland Limited
J & B Scotland Limited(ii)
John Haig & Company Limited
The Lochnagar Distillery Limited(ii)
William Sanderson and Son Limited(ii)
Zepf Technologies UK Limited
Lakeside Drive, Park Royal, NW10 7HQ, London
Anyslam Investments
Anyslam Limited(i),(viii)
Cellarers (Wines) Limited
DEF Investments Limited
Diageo (IH) Limited(ii)
Diageo Balkans Limited
Diageo CL1 Limited
Diageo Distribution Company Limited
Diageo DV Limited
Diageo Eire Finance & Co
Diageo Employee Shares Nominees Limited(i),(ii)
Diageo Finance Australia LLP
Diageo Finance plc(i)
Diageo Finance US Limited
Diageo Financing Turkey Limited
Diageo Great Britain Limited
Diageo Healthcare Limited(ii)
Diageo Holdings Limited(i)
Diageo Holland Investments Limited(ii)
Diageo Investment Holdings Limited
Diageo Overseas Holdings Limited(vi)
Diageo Scotland Investment Limited
Diageo Share Ownership Trustees Limited(i),(ii)
Diageo Treasury Australia LLP
Diageo UK Turkey Holdings Limited(vi)
Diageo UK Turkey Limited
Diageo US Holdings
Diageo US Investments
Grand Metropolitan Capital Company Limited
Grand Metropolitan Estates Limited
Grand Metropolitan International  
Holdings Limited
Grand Metropolitan Limited
Guinness Limited(i)
Guinness Overseas Holdings Limited(i)
Guinness Overseas Limited
James Buchanan & Company Limited(ii)
John Walker and Sons Limited(ii)
Tanqueray Gordon and Company, Limited(i)
The Distillers Company (Biochemicals) Limited(ii)
The Pimm’s Drinks Company Limited(ii)
Tipplesworth Limited
UDV (SJ) Holdings Limited(i)
UDV (SJ) Limited
United Distillers France Limited(ii)
Suites 5 & 6 Woodlands Court, Burnham Road, 
Beaconsfield, Buckinghamshire, HP9 2SF
Anna Seed 83 Limited
First Floor, Quay 2, 139 Fountainbridge,  
Edinburgh, EH3 9QG
3R Whisky Limited
United States
1 Estate Annaberg & Shannon Grove, RR1 Box 9400, 
Kingshill, VI 00850-9703
Diageo USVI Inc
1105 Bale Lane, Calistoga CA 94515
Whisky Archive Inc
1209 Orange Street, Wilmington, Delaware 19801
ASL Leasing and Investment LLC  
CT Staffing Services LLC
DV Technology LLC  
175 Greenwich Street, Three World Trade Center, 
New York, NY 10007
Ballroom Acquisition, Inc.
Diageo Americas Supply, Inc.
Diageo Americas, Inc.
Diageo Beer Company USA
Diageo Inc.
Diageo Investment Corporation
Diageo Latin America & Caribbean LLC
Diageo North America Foundation, Inc.
Diageo North America, Inc.(v)
Liquor Investment LLC
Stirrings LLC
The Bulleit Distillery, Inc.
222 Cliffwood Avenue, Los Angeles, CA 90049
Soh Spirits LLC
3411 Silverside Road Tatnall Building,  
Ste 104 Wilmington, DE 19810
Casamigos Spirits Company LLC
Casamigos Tequila LLC
Uruguay
Calle Guipuzcoa No. 331 – oficina 1301, Montevideo
Diageo Uruguay SA
Venezuela
Av Intercomunal Alí Primera, Los Taques, 
Estado Falcón
DV Paraguana, C.A.
Av La Hormiga con Intersección de la Carretera via 
Payara, C.C. Tierra Buena Acarigua
Mull Trading, C.A.
Av. Circunvalacion Norte (Jose Asunsion Rodriguez) 
Edificio Distribuidora Metropol, Porlamar,  
Estado Nueva Esparta
Clyde Trading, C.A.(v)
Cupar Trading, C.A.(v)
Diageo Nueva Esparta, C.A.(ii)
DV Trading, C.A.(v)
Zeta Importers, C.A.(v)
Ave. San Felipe Urbanización La Castellana,  
Edificio Centro Coinasa, Piso 6. Caracas, 1060
Diageo Venezuela C.A.
Industrias Pampero C.A.
Calle 1 con calle CaIIe 1 Este; Edificio y Galpon BTP, 
Zona Industrial La Caracarita; Municipio Los Guayos; 
estado Carabobo
Arran Tradings, C.A.
DV Release, C.A.
Islay Trading, C.A.
L4L Trading, C.A.
Lismore Trading, C.A.
Skye Trading, C.A.
Carretera Nacional Acarigua-Barquisimeto Casa 
Agropecuaria Las Marias I C.A.S-N Sector los 
Guayones La Miel, Lara
Agropecuarias Las Marias I C.A.
Vietnam
No. 157, 21/8 Street, Phuoc My Ward, Phan Rang – 
Thap Cham City, Ninh Thuan Province
Diageo Vietnam
Zimbabwe
48 Midlothian Avenue, Eastlea, Harare
International Distillers – Zimbabwe  
(Private) Limited(ii)
SUBSIDIARIES WHERE THE EFFECTIVE 
INTEREST IS LESS THAN 100%
Angola
Rua Dom Eduardo Andre Muaca, S/No, LOTE C4, 
Luanda
DIREF Industria de Bebidas,Lda-Angola JV – 
50.10%
British Virgin Islands
Sea Meadow House, Blackburne Highway,  
P.O. Box 116, Road Town, Tortola
Palmer Investment Group Limited(xi) – 55.94%
USL Holdings Limited(ii),(xi) – 55.94%
Wickhams Cay, 1, OMC Chambers, Road Town, 
Tortola
Rum Creation & Products, Inc.(v) – 50.00%
Canada
Labatt House, 207 Queen’s Quay West, Suite 299, 
Ontario, M5J 1A7, Toronto
Guinness Canada Limited – 51.00%
China
Chengdu City, Jinjiang District Shuijing Street No21, 
610011
Chengdu Swellfun Marketing Co. Limited – 
63.14%
No. 9 Quanxing Road, Jinniu District, 610036, 
Chengdu City
Chengdu Jianghai Trade Development  
Co. Limited – 63.14%
Chengdu Ruijin Trade Co. Limited – 63.14%
Chengdu Tengyuan Liquor Marketing  
Co. Limited – 63.14%
Sichuan Swellfun Co., Ltd – 63.14%
Qionglai City, Linqiong Industrial Park Road 318 W, 
611538
Chengdu Swellfun Liquor Co. Limited – 63.14%
Unit 215, Xinxing Building, No. 8, Jia Feng Road,  
Wai Gao Qiao Free Trade Zone, Shanghai
United Spirits (Shanghai) Trading Company 
Ltd(xi) – 55.94%
FINANCIAL STATEMENTS
177
DIAGEO Annual Report 2020

ASSOCIATES
Australia
50 Bertie Street, Port Melbourne, Victoria 3207
New World Whisky Distillery PTY Limited – 
30.00%
Cabel Partners, Level 5, 1 James Place,  
North Sydney, NSW 2060
Mr Black Spirits Pty Ltd. – 45.00%
Curaçao
Citco Curacao, Schottegatweg Oost 44, Willemstad
International Brand Developers N.V. – 25.00%
Denmark
Stauningvej 38, 6900 Skjern
Stauning Whisky Holding ApS – 40.00%
France
24/32 rue Jean Goujon – 75008 Paris
Moet Hennessy International – 34.00%
Moet Hennessy, SAS – 34.00%
Hungary
26 Soroksari ut, Budapest, 1095
Zwack Unicum plc – 26.00%
India
No.34, 1St Floor, B.Ramachandra Adithanar Road 
(4th Main Road), Gandhi Nagar,  
Adyar Chennai Chennai Tn 600020
Hip Bar Private Limited – 14.54%
Italy
Via Tortona 15, 20144, Milan
Niococktails S.R.L. – 20.00%
Spain
Calle General Vara del Rey 5, 1 Piso,  
26003 Logroño, La Rioja
El Bandarra, S.L. – 25.00%
Carrtera La Cuesta Taco Km 0.5. La Laguna,  
Santa Crus De Teneriffe
Compania Cervecera De Canarias, S.A. – 20.00%
Tomino (Ponteverda), 36750, Parroquia de Goian, 
Barrio de Centinela, 1
Valdomino Premium Spirits, S.L. – 25.52%
The Netherlands
Ceresstraat 1, 4811 CA Breda
Canbrew B.V.(iv) – 28.16%
United Kingdom
1 Orchard Road, St George, Bristol, BS5 7HS
Caleno Drinks Ltd – 20.00%
17 Grosvenor Street, Mayfair, London W1K 4QG
Del Professore Limited – 20.00%
28 Vale Road, Claygate, Esher, KT10 0NJ
London Botanical Drinks Limited – 20.00%
354 Castlehill, The Royal Mile, Edinburgh, EH1 2NE
The Scotch Whisky Heritage Centre Limited(vi) – 
29.00%
Ballindalloch Castle, Ballindalloch,  
Banffshire AB37 9AX
Ballindalloch Distillery LLP – 33.33%
Cambridge Distillery, 20 High Street,  
Grantchester, Cambridge CB3 9NF
Cambridge Distillery Limited – 33.33%
Ghana
Guinness Brewery, Plot 1 Block L, Industrial Area, 
Kaasi, P. O. Box 1536, Kumasi
Guinness Ghana Breweries Plc – 80.40%
Guatemala
Calle 8-19 zona 9, Quetzaltenango
Anejos De Altura, Sociedad Anonima – 50.00%
India
Roxana Towers, Ground Floor, M.No.7-1-24/1/RT/
G1&G2, Greenlands, Begumpet, Hyderabad 500 016
Pioneer Distilleries Limited(xi) – 41.95%
Sovereign Distilleries Limited(xi) – 55.94%
Tern Distilleries Private Limited(xi) – 55.94%
UB Tower, #24, Vittal Mallya Road, Bangalore-560001
Royal Challengers Sports Private Limited(xi) – 
55.94%
United Spirits Limited(xi) – 55.94%
Jersey
Ordnance House, 31 Pier Road, St Helier, JE4 8PW
UB Sports Management Overseas Ltd(xi) – 
55.94%
Kenya
Tusker House, Ruaraka, PO Box 30161, 
00100 Nairobi GPO
Allsopp (East Africa) Limited(ii) – 48.52%
EABL International Limited(ii) – 50.03%
East African Breweries Limited – 50.03%
East African Maltings Limited – 50.03%
Kenya Breweries Limited – 50.03%
Tembo Properties Limited(ii) – 50.03%
Tusker Football Club – 50.03%
UDV Kenya Limited – 76.85%
Lebanon
Beirut Symposium Bldg, 10th floor, Beirut,  
PO Box 113-5250, Beirut
Diageo Lebanon SAL – 84.99%
Mauritius
IFS Court, Twenty Eight, Cybercity, Ebene
Asian Opportunities and Investment Limited(ii),(xi) 
– 55.94%
Nigeria
Oba Akran Avenue Ikeja, 24, Lagos, PMB 21071, 
100001
Guinness Nigeria plc – 58.02%
North Cyprus
Sehit Mehmet Cetin Sokak,  
Kucuk Sanayi Bölgesi, 48, 99450, Gazi Magusa
Turk Alkollu Icki ve Sarap Endustri Ltd. – 66.00%
Panama
Edificio Vallarino, Penthouse Calle 52 y Elvira Mendez, 
Panama City
Montrose International SA(xi) – 55.94%
Philippines
Unit 1, 17th Floor, Ore Central 9th Avenue corner 
31st Street Bonifacio Global City, Taguig City, 1634
ULM Holdings Inc(ii) – 40.00%
Rwanda
Kimihurura, Gasabo, Umujyi was Kigali,  
7130 Port Bell Luzira
East African Breweries Rwanda Limited – 50.03%
Seychelles
O’Brien House, 273 Le Rocher, Mahe
Seychelles Breweries Limited – 54.40%
Singapore
120 Robinson Road, #08-01, Singapore 068913
United Spirit Singapore Pte. Ltd.(xi) – 55.94%
South Sudan
Southern Sudan African Park Hotel, Juba Town
East African Beverages (Southern Sudan) 
Limited – 49.53%
Tanzania
2nd Floor, East Wing TDFL Building, Ohio street.  
P.O. Box 32840 Dar es Salaam
EABL (Tanzania) Limited(ii) – 50.03%
Plot 117/2, Access Road, Nelson Mandela Expressway, 
Chang’Ombe Industrial Area, P.O. Box 41080,  
Dar es Salaam
Serengeti Breweries Limited – 27.52%
The Netherlands
Molenwerf 12, 1014 BG, Amsterdam
Ketel One Worldwide B.V.(iv) – 50.00%
Uganda
PO BOX 7130 Kampala
East African Maltings (Uganda) Limited(ii) – 
50.03%
Plot 3-17 Port Bell Road, Luzira, Kampala,  
P.O. Box 7130
Uganda Breweries Limited – 49.03%
Plot No 1 Malt Road,  
Portbell Luzira P.O. Box 3221 Kampala
International Distillers Uganda Limited – 50.03%
United Kingdom
Edinburgh Park, 5 Lochside Way,  
Edinburgh, EH12 9DT
Lochside MWS Limited Partnership 
McDowell & Co. (Scotland) Ltd(xi) – 55.94%
Lakeside Drive, Park Royal, NW10 7HQ, London
Diageo Pension Trust Limited(i),(ix) – 55.00%
Lakeside MWS Limited Liability Partnership 
Shaw Wallace Overseas Limited(xi) – 55.94%
United Spirits (Great Britain) Limited(xi) – 55.94%
United Spirits (UK) Limited(xi) – 55.94%
USL Holdings (UK) Limited(xi) – 55.94%
Suites 5 & 6 Woodlands Court, Burnham Road, 
Beaconsfield, Buckinghamshire, HP9 2SF
Seedlip Ltd – 91.10%
United States
175 Greenwich Street, Three World Trade Center, 
New York, NY 10007
California Simulcast Inc(ii) – 80.00%
D/CE Holdings LLC – 50.00%
1209 Orange Street, Wilmington, Delaware 19801
Corigin Minibar II LLC - 99.997%
2711 Centerville Road, Suite 400, Wilmington, 
Delaware 19808
Liquidity Inc.(ii),(xi) – 55.94%
Vietnam
621 Pham Van Chi Street, District 6, Ho Chi Minh City
Vietnam Spirits and Wine LTD – 55.00%
178
DIAGEO Annual Report 2020

Central Working, Eccleston Yards,  
25 Eccleston Place, SW1W 9NF
Pulpex Limited(i) – 49.60%
20 King Street Prince Albert House 
 Maidenhead SL6 1DT
El Rayo Limited – 20.00%
Harbourside Brewery, Tretoil Farm, Bodmin, 
Cornwall, PL30 5BA
The Southwest Fermentorium Limited – 25.00%
United States
1045 Dodge Lane Fallon, NV 89406
Nevada Spirits De LLC – 25.00%
2459 E 8th Street; Los Angeles, California 90021
Modern Spirits LLC – 20.00%
517 West 39th Street Austin, TX 78751
Gourmet Grade LLC – 20.23%
575 Grand Street, #E1507 New York, NY 10002
Grand Street Beverages LLC – 38.89%
65 SE Washington Street Portland, OR 97214
House Spirits Distillery LLC – 30.15%
1222 SE Gideon Street Portland, OR 97202
Naam Som LLC – 30.00%
874 Walker Rd. Suite C, Dover, 19904
Analog Liquid LLC – 27.78%
735 10th Street Fortuna, CA 95540
Redwood Spirits Inc – 20.00%
1935 W. Irving Park Chicago, IL 60613
Ritual Beverage Company LLC – 33.33%
1524 Sherman Avenue, Hood River, OR 97031
Wilderton, LLC – 30.56%
Vietnam
94 Lo Duc Street, Pham Dinh Ho Ward,  
Hai Ba Trung District, Ha Noi City
Hanoi Liquor Joint Stock Company (Halico) – 
45.57%
JOINT VENTURES
United Kingdom
9 Wheatfield Road, EDINBURGH, EH11 2PX
Lothian Distillers Limited – 50.00%
North British Distillery Company Limited – 
50.00%
JOINT OPERATIONS(x)
China
Room 1101,Building 3,No.68,Aoti Street,  
Jianye District, Nanjing City
Jiangsu Diageo Spirits Co., Ltd – 50.00%
702A, Taiping Finance Tower,  
488 Middle Yincheng Road, Shanghai,  
Pilot Free Trade Zone
Moet Hennessy Diageo (China) Co Ltd(xii) – 
67.00%
Costa Rica
Llorente de Tibás, 1Km este del Periódico La Nación
HA&COM Bebidas del Mundo, SA – 50.00%
Cuba
Calle 246 y Quinta Avenida, Complejo Barlovento, 
Jaimanitas, Playa, Havana
Ron Santiago S.A. – 50.00%
Dominican Republic
Independencia Street, No. 129, Santiago
Gist Dominicana S.A. – 60.25%
Salvador Sturla Street, Ensanche Naco,  
Santo Domingo
Seagram Dominicana S.A. – 60.83%
Segunda (2da) Street, Los Platanitos, Santiago
Industria de Licores Internationales S.A. – 
59.71%
France
105 Boulevard de la Mission Marchand,  
Courbevoie, 92400
MHD Moet Hennessy Diageo SAS – 0.05%
Hong Kong
Level 54, Hopewell Centre, 183 Queen’s Road East
Moet Hennessy Diageo Hong Kong Limited(xii) 
– 67.00%
Room 06, 13A/F. South Tower, World Finance 
Centre, Harbour City, 17 Canton Road, Tsim Sha Tsui, 
Kowloon
Diageo International Spirits Company Limited 
– 50.00%
Japan
Jinbocho Mitsui Bldg, Chiyodaku, Kandajinbocho, 
Tokyo
MHD Moet Hennessy Diageo K.K.(xii) – 67.00%
Nakano-ku 4-10-2, Nakano Central Park South, 17, 
Tokyo, 164-0001
Diageo Kirin Company Limited – 51.00%
Macau
Unit 43 & 45, Level 20, AIA Tower, Nos 251A – 
301 Avenida Comercial de Macau
Moet Hennessy Diageo Macau Limited(xii) – 
67.00%
Malaysia
Unit 30-01, Level 30, Tower A, Vertical Business Suite, 
Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 
59200 Kuala Lumpur
Moet Hennessy Diageo Malaysia Sdn Bhd.(xii) – 
67.00%
Singapore
83 Clemenceau Ave, #09-01 UE Square, 239920
Moet Hennessy Diageo Singapore Pte. Ltd(xii) – 
67.00%
Thailand
No. 944, Mitrtown Office Tower, 12th Floor, Rama 4 
Road, Wangmai, Pathumwan, Bangkok, 10330
Diageo Moet Hennessy (Thailand) Limited(xiii) – 
63.02%
The Netherlands
Molenwerf 12, 1014 BG, Amsterdam
Diageo-Moet Hennessy B.V.(iv) – 67.00%
Ukraine
Chervonoarmiyska Street, bld. 9/2, apt. 70, Kyiv
Seagram Ukraine Limited(ii) – 60.90%
United Kingdom
Persimmon House, Fulford, York YO19 4FE
Trafalgar Metropolitan Homes Limited – 50.00%
(i) 	Directly owned by Diageo plc
(ii) 	Dormant company.
(iii) 	Ownership held in class of A shares.
(iv) Ownership held in class of B shares.
(v) 	Ownership held in class of A shares and B shares.
(vi)	 Ownership held in preference shares.
(vii)	 Ownership held in equity shares and preference shares.
(viii)	99.11% owned by Diageo plc.
(ix) 	Companies controlled by the group based on 
management’s assessments.
(x) 	 Diageo shares joint control over these entities under 
shareholder’s agreements, and Diageo’s rights to profit, 
assets and liabilities of the companies are dependent on 
the performance of the group’s brands rather the effective 
equity ownership of the companies.
(xi) 	 Based on 55.94% equity investment in USL that excludes 
2.38% owned by the USL Benefit Trust.
(xii) 	Operation is managed by Moet Hennessey.
(xiii) 	Operations is managed by Diageo.
FINANCIAL STATEMENTS
179
DIAGEO Annual Report 2020

Unaudited financial information
1. Five years financial information
The following tables present selected consolidated financial data for Diageo for the five years ended 30 June 2020 and as at the respective year ends.  
The data presented below for the five years ended 30 June 2020 and the respective year ends has been derived from Diageo’s consolidated financial 
statements.
Income statement data
Year ended 30 June
2020
£ million
2019
£ million
2018
£ million
2017
£ million
2016
£ million
Sales
17,697
19,294
18,432
18,114
15,641
Excise duties
(5,945)
(6,427)
(6,269)
(6,064)
(5,156)
Net sales
11,752
12,867
12,163
12,050
10,485
Cost of sales
(4,654)
(4,866)
(4,634)
(4,680)
(4,251)
Gross profit
7,098
8,001
7,529
7,370
6,234
Marketing
(1,841)
(2,042)
(1,882)
(1,798)
(1,562)
Other operating expenses
(3,120)
(1,917)
(1,956)
(2,013)
(1,831)
Operating profit
2,137
4,042
3,691
3,559
2,841
Non-operating items
(23)
144
–
20
123
Net interest and other finance charges
(353)
(263)
(260)
(329)
(327)
Share of after tax results of associates and joint ventures
282
312
309
309
221
Profit before taxation
2,043
4,235
3,740
3,559
2,858
Tax before exceptional items
(743)
(859)
(799)
(736)
(552)
Exceptional taxation
154
(39)
203
4
56
Profit from continuing operations
1,454
3,337
3,144
2,827
2,362
Discontinued operations
–
–
–
(55)
–
Profit for the year
1,454
3,337
3,144
2,772
2,362
Weighted average number of shares
million
million
million
million
million
Shares in issue excluding own shares
2,346
2,418
2,484
2,512
2,508
Dilutive potential ordinary shares
8
10
11
11
10
2,354
2,428
2,495
2,523
2,518
Per share data
pence
pence
pence
pence
pence
Dividend per share
 69.88
68.57
65.30
62.20
59.20
Basic earnings per share
Continuing operations – before exceptional items
109.4
130.8
118.6
108.5
89.4
Continuing operations – after exceptional items
60.1
130.7
121.7
108.2
89.5
Discontinued operations
–
–
–
(2.2)
–
60.1
130.7
121.7
106.0
89.5
Diluted earnings per share
Continuing operations
59.9
130.1
121.1
107.7
89.1
Discontinued operations
–
–
–
(2.2)
–
59.9
130.1
121.1
105.5
89.1
180
DIAGEO Annual Report 2020

As at 30 June
Balance sheet data
2020
£ million
2019
£ million
2018
£ million
2017
£ million
2016
£ million
Non-current assets
21,837
21,923
21,024
20,196
19,639
Current assets
11,471
9,373
8,691
8,652
8,852
Total assets
33,308
31,296
29,715
28,848
28,491
Current liabilities
(6,496)
(7,003)
(6,360)
(6,660)
(6,187)
Non-current liabilities
(18,372)
(14,137)
(11,642)
(10,160)
(12,124)
Total liabilities
(24,868)
(21,140)
(18,002)
(16,820)
(18,311)
Net assets
8,440
10,156
11,713
12,028
10,180
Share capital
742
753
780
797
797
Share premium
1,351
1,350
1,349
1,348
1,347
Other reserves
2,272
2,372
2,133
2,693
2,625
Retained earnings
2,407
3,886
5,686
5,475
3,761
Equity attributable to equity shareholders of the parent company
6,772
8,361
9,948
10,313
8,530
Non-controlling interests
1,668
1,795
1,765
1,715
1,650
Total equity
8,440
10,156
11,713
12,028
10,180
Net borrowings
(13,246)
(11,277)
(9,091)
(7,892)
(8,635)
2. Contractual obligations and other commitments
Payments due by period
Less than
1 year
£ million
1-3 years
£ million
3-5 years
£ million
More than
5 years
£ million
Total
£ million
As at 30 June 2020
Long-term debt obligations
1,645
2,980
3,079
8,615
16,319
Interest obligations
466
669
541
1,741
3,417
Credit support obligations
180
–
–
–
180
Purchase obligations
1,073
567
128
9
1,777
Commitments for short-term leases and leases of low-value assets
12
5
1
1
19
Post employment benefits(i)
37
64
53
62
216
Provisions and other non-current payables
185
179
115
174
653
Lease obligations
115
148
80
189
532
Capital commitments
301
10
1
–
312
Other financial liabilities
167
–
–
–
167
Total
4,181
4,622
3,998
10,791
23,592
(i)	 For further information see note 13 to the consolidated financial statements. 
Long-term debt obligations comprise the principal amount of borrowings (excluding foreign currency swaps) with an original maturity of greater than 
one year. Interest obligations comprise interest payable on these borrowings and are calculated based on the fixed amounts payable and where the 
interest rate is variable on an estimate of what the variable rates will be in the future. Credit support obligations represent liabilities to counterparty banks 
in respect of cash received as collateral under credit support agreements. Purchase obligations include various long-term purchase contracts entered into 
for the supply of raw materials, principally bulk whisk(e)y, cereals, cans and glass bottles. Contracts are used to guarantee the supply of raw materials over 
the long term and to enable a more accurate prediction of costs of raw materials in the future. For certain provisions discounted numbers are disclosed. 
Corporate tax payable of £246 million and deferred tax liabilities are not included in the table above, as the ultimate timing of settlement cannot be 
reasonably estimated. 
Management believe that it has sufficient funding for its working capital requirements. 
Post employment benefits contractual obligations comprise committed deficit contributions but exclude future service cost contributions.
3. Off-balance sheet arrangements
Neither Diageo plc nor any member of the Diageo group has any off-balance sheet financing arrangements that currently have or are reasonably likely  
to have a material future effect on the group’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditure or 
capital resources. 
FINANCIAL STATEMENTS
181
DIAGEO Annual Report 2020

Cautionary statement concerning forward-looking statements 
This document contains ‘forward-looking’ statements. These statements 
can be identified by the fact that they do not relate only to historical or 
current facts. In particular, forward-looking statements include all 
statements that express forecasts, expectations, plans, outlook, objectives 
and projections with respect to future matters, including trends in results 
of operations, margins, growth rates, overall market trends, the impact of 
changes in interest or exchange rates, the availability or cost of financing 
to Diageo, anticipated cost savings or synergies, expected investments, 
the completion of any strategic transactions or restructuring programmes, 
anticipated tax rates, changes in the international tax environment, 
expected cash payments, outcomes of litigation or regulatory enquiries, 
anticipated changes in the value of assets and liabilities related to pension 
schemes and general economic conditions. By their nature, forward-
looking statements involve risk and uncertainty because they relate to 
events and depend on circumstances that will occur in the future. There 
are a number of factors that could cause actual results and developments 
to differ materially from those expressed or implied by these forward-
looking statements, including factors that are outside Diageo’s control. 
Factors that could cause actual results and developments to differ 
materially from those expressed or implied by forward-looking statements 
include, but are not limited to: 
–	 economic, political, social or other developments in countries and 
markets in which Diageo operates (including as a result of the Covid-19 
pandemic), which may contribute to a reduction in demand for 
Diageo’s products, adverse impacts on Diageo’s customer, supplier and/
or financial counterparties, or the imposition of import, investment or 
currency restrictions (including the potential impact of any global, 
regional or local trade wars or any tariffs, duties or other restrictions or 
barriers imposed on the import or export of goods between territories, 
including but not limited to, imports into and exports from the United 
States and the European Union and/or the United Kingdom);
–	 the impact of the Covid-19 pandemic, or other epidemics or  
pandemics, on Diageo’s business, financial condition, cash flows and 
results of operation; 
–	 the negotiating process surrounding, as well as the final terms of, the 
United Kingdom’s future trading relationships with the European Union 
and other countries, which could lead to a sustained period of 
economic and political uncertainty and complexity whilst successor 
trading arrangements with other countries are negotiated, finalised and 
implemented, potentially adversely impacting economic conditions in 
the United Kingdom and Europe more generally as well as Diageo’s 
business operations and financial performance; 
–	 changes in consumer preferences and tastes, including as a result of 
changes in demographics, evolving social trends (including any shifts in 
consumer tastes towards small-batch craft alcohol, lower or no alcohol, 
or other alternative products), changes in travel, holiday or leisure 
activity patterns, weather conditions, health concerns, pandemics and/
or a downturn in economic conditions; 
–	 changes in the domestic and international tax environment, including 
as a result of the OECD Base Erosion and Profit Shifting Initiative and EU 
anti-tax abuse measures, leading to uncertainty around the application 
of existing and new tax laws and unexpected tax exposures; 
–	 the effects of climate change, or legal, regulatory or market measures 
intended to address climate change, on Diageo’s business or operations, 
including on the cost and supply of water; 
–	 changes in the cost of production, including as a result of increases in 
the cost of commodities, labour and/or energy or as a result of inflation; 
–	 any litigation or other similar proceedings (including with tax, customs, 
competition, environmental, anti-corruption or other regulatory 
authorities), including litigation directed at the beverage alcohol 
industry generally or at Diageo in particular; 
–	 legal and regulatory developments, including changes in regulations 
relating to production, distribution, importation, marketing, advertising, 
sales, pricing, labelling, packaging, product liability, antitrust,  
labour, compliance and control systems, environmental issues and/ 
or data privacy; 
–	 the consequences of any failure by Diageo or its associates to comply 
with anti-corruption, sanctions, trade restrictions or similar laws and 
regulations, or any failure of Diageo’s related internal policies and 
procedures to comply with applicable law or regulation; 
–	 the consequences of any failure of internal controls, including those 
affecting compliance with existing or new accounting and/or  
disclosure requirements; 
–	 Diageo’s ability to maintain its brand image and corporate reputation  
or to adapt to a changing media environment; 
–	 contamination, counterfeiting or other circumstances which could 
harm the level of customer support for Diageo’s brands and adversely 
impact its sales;
–	 increased competitive product and pricing pressures, including as a 
result of actions by increasingly consolidated competitors or increased 
competition from regional and local companies, that could negatively 
impact Diageo’s market share, distribution network, costs and/or pricing; 
–	 any disruption to production facilities, business service centres or 
information systems, including as a result of cyber attacks; 
–	 increased costs for, or shortages of, talent, as well as labour strikes 
or disputes; 
–	 Diageo’s ability to derive the expected benefits from its business 
strategies, including in relation to expansion in emerging markets, 
acquisitions and/or disposals, cost savings and productivity initiatives or 
inventory forecasting; 
–	 fluctuations in exchange rates and/or interest rates, which may impact 
the value of transactions and assets denominated in other currencies, 
increase Diageo’s cost of financing or otherwise adversely affect 
Diageo’s financial results; 
–	 movements in the value of the assets and liabilities related to Diageo’s 
pension plans; 
–	 Diageo’s ability to renew supply, distribution, manufacturing or licence 
agreements (or related rights) and licences on favourable terms, or at all, 
when they expire; or 
–	 any failure by Diageo to protect its intellectual property rights. 
All oral and written forward-looking statements made on or after the date 
of this document and attributable to Diageo are expressly qualified in their 
entirety by the above cautionary factors and by the ‘Risk Factors’ included 
in Diageo’s Annual Report on Form 20-F for the year ended 30 June 2020 
filed with the US Securities and Exchange Commission (SEC). Any 
forward-looking statements made by or on behalf of Diageo speak only as 
of the date they are made. Diageo does not undertake to update 
forward-looking statements to reflect any changes in Diageo’s 
expectations with regard thereto or any changes in events, conditions or 
circumstances on which any such statement is based. The reader should, 
however, consult any additional disclosures that Diageo may make in any 
documents which it publishes and/or files with the SEC. All readers, 
wherever located, should take note of these disclosures. 
This document includes names of Diageo’s products, which constitute 
trademarks or trade names which Diageo owns, or which others own and 
license to Diageo for use. All rights reserved. © Diageo plc 2020. 
The information in this document does not constitute an offer to sell 
or an invitation to buy shares in Diageo plc or an invitation or inducement 
to engage in any other investment activities. 
This document may include information about Diageo’s target debt 
rating. A security rating is not a recommendation to buy, sell or hold 
securities and may be subject to revision or withdrawal at any time by 
the assigning rating organisation. Each rating should be evaluated 
independently of any other rating. 
Past performance cannot be relied upon as a guide to 
future performance. 
182
DIAGEO Annual Report 2020

Additional information for shareholders
Articles of association
The company is incorporated under the name Diageo plc, and is 
registered in England and Wales under registered number 23307. 
The following description summarises certain provisions of 
Diageo’s articles of association (as adopted by special resolution at the 
Annual General Meeting on 19 September 2019) and applicable English 
law concerning companies (the Companies Acts), in each case as at 
4 August 2020. This summary is qualified in its entirety by reference to 
the Companies Acts and Diageo’s articles of association.
Investors can obtain copies of Diageo’s articles of association by 
contacting the Company Secretary at the.cosec@diageo.com. 
Any amendment to the articles of association of the company may  
be made in accordance with the provisions of the Companies Act 2006,  
by way of special resolution.
Directors
Diageo’s articles of association provide for a board of directors, consisting 
(unless otherwise determined by an ordinary resolution of shareholders) of 
not fewer than three directors and not more than 25 directors, in which all 
powers to manage the business and affairs of Diageo are vested. Directors 
may be elected by the members in a general meeting or appointed by the 
Board of Diageo. At each annual general meeting, all the directors shall 
retire from office and may offer themselves for re-election by members. 
There is no age limit requirement in respect of directors. Directors may 
also be removed before the expiration of their term of office in accordance 
with the provisions of the Companies Acts.
Voting rights
Voting on any resolution at any general meeting of the company is by 
a show of hands unless a poll is duly demanded. On a show of hands, 
(a) every shareholder who is present in person at a general meeting, 
and every proxy appointed by any one shareholder and present at a 
general meeting, has/have one vote regardless of the number of shares 
held by the shareholder (or, subject to (b), represented by the proxy), and 
(b) every proxy present at a general meeting who has been appointed 
by more than one shareholder has one vote regardless of the number of 
shareholders who have appointed him or the number of shares held by 
those shareholders, unless he has been instructed to vote for a resolution 
by one or more shareholders and to vote against the resolution by one or 
more shareholders, in which case he has one vote for and one vote against 
the resolution.
On a poll, every shareholder who is present in person or by proxy has 
one vote for every share held by that shareholder, but a shareholder or 
proxy entitled to more than one vote need not cast all his votes or cast 
them all in the same way (the deadline for exercising voting rights by 
proxy is set out in the form of proxy).
A poll may be demanded by any of the following:
–	 the chairman of the general meeting;
–	 at least three shareholders entitled to vote on the relevant resolution 
and present in person or by proxy at the meeting;
–	 any shareholder or shareholders present in person or by proxy and 
representing in the aggregate not less than one-tenth of the total 
voting rights of all shareholders entitled to vote on the relevant 
resolution; or
–	 any shareholder or shareholders present in person or by proxy and 
holding shares conferring a right to vote on the relevant resolution  
on which there have been paid up sums in the aggregate equal to not 
less than one-tenth of the total sum paid up on all the shares conferring 
that right.
Diageo’s articles of association and the Companies Acts provide for 
matters to be transacted at general meetings of Diageo by the proposing 
and passing of two kinds of resolutions:
–	 ordinary resolutions, which include resolutions for the election, 
re‑election and removal of directors, the declaration of final dividends, 
the appointment and re-appointment of the external auditor, the 
remuneration report and remuneration policy, the increase of 
authorised share capital and the grant of authority to allot shares; and
–	 special resolutions, which include resolutions for the amendment of 
Diageo’s articles of association, resolutions relating to the disapplication 
of pre-emption rights, and resolutions modifying the rights of any class 
of Diageo’s shares at a meeting of the holders of such class.
An ordinary resolution requires the affirmative vote of a simple majority 
of the votes cast by those entitled to vote at a meeting at which there is a 
quorum in order to be passed. Special resolutions require the affirmative 
vote of not less than three-quarters of the votes cast by those entitled  
to vote at a meeting at which there is a quorum in order to be passed.  
The necessary quorum for a meeting of Diageo is a minimum of two 
shareholders present in person or by proxy and entitled to vote.
A shareholder is not entitled to vote at any general meeting or class 
meeting in respect of any share held by them if they have been served 
with a restriction notice (as defined in Diageo’s articles of association) after 
failure to provide Diageo with information concerning interests in those 
shares required to be provided under the Companies Acts.
Pre-emption rights and new issues of shares
While holders of ordinary shares have no pre-emptive rights under 
Diageo’s articles of association, the ability of the Directors to cause 
Diageo to issue shares, securities convertible into shares or rights to 
shares, otherwise than pursuant to an employee share scheme, is 
restricted. Under the Companies Acts, the directors of a company are, 
with certain exceptions, unable to allot any equity securities without 
express authorisation, which may be contained in a company’s articles 
of association or given by its shareholders in a general meeting, but which 
in either event cannot last for more than five years. Under the Companies 
Acts, Diageo may also not allot shares for cash (otherwise than pursuant 
to an employee share scheme) without first making an offer to existing 
shareholders to allot such shares to them on the same or more favourable 
terms in proportion to their respective shareholdings, unless this 
requirement is waived by a special resolution of the shareholders.
Repurchase of shares
Subject to authorisation by special resolution, Diageo may purchase its 
own shares in accordance with the Companies Acts. Any shares which 
have been bought back may be held as treasury shares or, if not so held, 
must be cancelled immediately upon completion of the purchase, thereby 
reducing the amount of Diageo’s issued share capital.
Restrictions on transfers of shares
The Board may decline to register a transfer of a certificated Diageo share 
unless the instrument of transfer (a) is duly stamped or certified or 
otherwise shown to the satisfaction of the Board to be exempt from stamp 
duty, and is accompanied by the relevant share certificate and such other 
evidence of the right to transfer as the Board may reasonably require,  
(b) is in respect of only one class of share and (c) if to joint transferees,  
is in favour of not more than four such transferees.
Registration of a transfer of an uncertificated share may be refused in 
the circumstances set out in the uncertificated securities rules (as defined 
in Diageo’s articles of association) and where, in the case of a transfer to 
joint holders, the number of joint holders to whom the uncertificated 
share is to be transferred exceeds four.
183
DIAGEO Annual Report 2020
ADDITIONAL INFORMATION

The Board may decline to register a transfer of any of Diageo’s certificated 
shares by a person with a 0.25% interest (as defined in Diageo’s articles 
of association) if such a person has been served with a restriction notice 
(as defined in Diageo’s articles of association) after failure to provide 
Diageo with information concerning interests in those shares required 
to be provided under the Companies Acts, unless the transfer is shown 
to the Board to be pursuant to an arm’s-length sale (as defined in Diageo’s 
articles of association). 
Documents on display
The Annual Report on Form 20-F and any other documents filed by the 
company with the US Securities Exchange Commission (SEC) may be 
inspected at the SEC’s office of Investor Education and Advocacy located 
at 100 F Street, NE, Washington, DC 20549-0213, USA. Please call the SEC 
at 1-800-SEC-0330 for further information on the public reference rooms 
and their copy charges. Filings with the SEC are also available to the 
public from commercial document retrieval services, and from the 
website maintained by the US Securities and Exchange Commission 
at www.sec.gov.
External limited assurance of selected  
sustainability and responsibility performance data
We engaged PwC LLP to perform an independent limited assurance 
engagement, reporting to the Board of Directors of Diageo plc, 
over selected sustainability and responsibility (S&R) performance data 
marked with the symbol Δ within the Strategic Report of the Annual 
Report 2020, and the S&R Performance Addendum to the Annual 
Report 2020. PwC LLP’s engagement was performed in accordance 
with International Standard on Assurance Engagements 3000 (Revised) 
‘Assurance Engagements other than Audits and Reviews of Historical 
Financial Information’ and, in respect of the greenhouse gas emissions, 
in accordance with International Standard on Assurance Engagements 
3410 ‘Assurance engagements on greenhouse gas statements’, issued 
by the International Auditing and Assurance Standards Board.
PwC LLP’s full assurance opinion is available in the S&R  
Performance Addendum to the Annual Report 2020, available at  
https://www.diageo.com/en/in-society/our-role-in-society/our-reporting/. 
A summary of the work they performed is included in their assurance 
opinion. It is important to read the selected S&R performance data 
contained within this report in the context of PwC LLP’s full limited 
assurance opinion and our reporting methodologies. Our reporting 
methodologies are included in the S&R Performance Addendum to 
the Annual Report, available at https://www.diageo.com/en/in-society/
our-role-in-society/our-reporting/.
Warning to shareholders – share fraud
Please beware of the share fraud of ‘boiler room’ scams, where 
shareholders are called ‘out of the blue’ by fraudsters (sometimes claiming 
to represent Diageo) attempting to obtain money or property dishonestly. 
Further information is available in the investor section of the company’s 
website (www.diageo.com) but in short, if in doubt, take proper 
professional advice before making any investment decision.
Electronic communications
Shareholders can register for an account to manage their shareholding 
online, including being able to: check the number of shares they own and 
the value of their shareholding; register for electronic communications; 
update their personal details; provide a dividend mandate instruction; 
access dividend confirmations; and use the online share dealing 
service. To register for an account, shareholders should visit  
www.diageoregistrars.com.
Dividend payments
Direct payment into bank account
Shareholders can have their cash dividend paid directly into their UK  
bank account on the dividend payment date. 
For shareholders who live outside the UK, Link Asset Services offers 
an International Payment Service whereby shareholders can receive their 
dividend payment by draft or electronically in the currency of their choice 
for a fee.
To register UK bank account details or to sign up for the International 
Payment Service, shareholders can register for an online account at  
www.diageoregistrars.com or call the Registrar, Link Asset Services  
on +44 (0)371 277 1010* to request the relevant application form.
Dividend Reinvestment Plan
A Dividend Reinvestment Plan is offered by the Registrar, Link Market 
Services Trustees Limited, to give shareholders the opportunity to build 
up their shareholding in Diageo by using their cash dividends to purchase 
additional Diageo shares.
To join the Dividend Reinvestment Plan, shareholders can call the 
Registrar, Link Asset Services on +44 (0)371 277 1010* to request the 
relevant application form.
The Registrar
Link Asset Services acts as the Company’s registrar and can be contacted  
as follows:
By email: Diageo@linkgroup.co.uk
By telephone: +44 (0) 371 277 1010*
In writing: Registrars – Link Asset Services, Diageo Registrar, PO Box 521, 
Darlington DL1 9XS
**
Calls are charged at the standard geographic rate and will vary by provider. Calls outside 
the United Kingdom will be charged at the applicable international rate. Lines are open  
09:00 to 17:30, Monday to Friday, excluding public holidays in England and Wales.
184
DIAGEO Annual Report 2020

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© 2020 Diageo plc. All rights reserved. All brands mentioned in this Annual Report are trademarks and are registered and/or otherwise protected in accordance with applicable law.
Diageo plc
Lakeside Drive
Park Royal
London
NW10 7HQ
United Kingdom
T: +44 (0) 20 8978 6000
www.diageo.com
Registered in England
No. 23307