Annual Report 2023

In memory of
Sir Ivan Menezes
1959-2023

Career highlights During his decade as Chief Executive, Ivan Ivan was determined to be a pioneer on
Ivan Manuel Menezes was born on 10 July 1959, oversaw an outstanding period of change, environmental, social and governance (ESG)
in Pune, India. He held UK and US citizenship, growth and high performance. Diageo made issues, committing that Diageo would have
and Overseas Citizenship for India. huge strides towards his ambition for the a positive impact on society everywhere it
company to become one of the best operates. Diageo reduced carbon emissions
Ivan joined Diageo at its creation in 1997 performing, most trusted and respected in absolute terms under his leadership –
and held many senior positions in a career companies in the world. even as the company significantly
spanning over 25 years at the company. increased production and sales.
“Ivan was undoubtedly one of the finest leaders of his generation. He was there at He had been the Strategy Director for Now selling over 200 brands in nearly 180
countries, today Diageo is the number one Over the last five years, Diageo’s total
the creation of Diageo and over 25 years, shaped the company to become one of the Guinness plc, and when Diageo was created
through the merger of Guinness plc and company by retail sales value in international shareholder returns have outperformed the
best performing, most trusted and respected consumer companies. I saw first-hand his Grand Metropolitan, Ivan was appointed spirits, including tequila(1), a category in which
only eight years ago the company had no
FTSE 100, and the company has continued
its progressive policy to increase dividends
Group Integration Director tasked with
steadfast commitment to our people and to creating a culture that enabled everyone integrating this ‘merger of equals.’ substantive position. every year.
to thrive. He invested his time and energy in people at every level of the company and He became Global Marketing Director, UDV, Ivan was particularly proud to announce that In January 2023, Ivan was awarded a
knighthood for services to business and to
saw potential that others may have overlooked. This is one of many reasons why he in 1998 and was responsible for developing in December 2022, Guinness was ranked the
number one selling beer by value for the first equality in His Majesty The King’s 2023
the now iconic ‘Keep Walking’ campaign
was beloved by our employees, past and present. for Johnnie Walker. time in the on-trade in Great Britain.(2) New Year Honours List.

He subsequently held several senior Ivan was an inspirational champion for both
Ivan’s energy and his commitment to diversity created an inclusive business and positions within Diageo including Chief women and ethnic minorities in business.
enabled Diageo to have a positive impact on the communities we serve. His passion Operating Officer; President, Diageo North In 2008, there were no women on Diageo’s
Executive Committee; today, over half are
America; Chairman, Diageo Asia Pacific;
for our brands was second-to-none and in his heart, he remained the Johnnie Walker and Chairman, Diageo Latin America women, including his successor as Chief
marketer from his early days. The desire to build the world’s best brands never left and Caribbean. Executive, the Chief Financial Officer and the
Presidents of Diageo’s largest markets – North
him. We are truly privileged to have had the opportunity to work alongside such a Ivan was appointed to the Board as an America, Europe and India, and almost half of
Executive Director of Diageo in July 2012 the Executive Committee are ethnically diverse.
thoughtful and passionate colleague and friend – a true gentleman. He has built and served as Chief Executive Officer
an extraordinary legacy.” since July 2013. He was due to retire on
30 June 2023.
Javier Ferrán
Chairman

(1) IWSR, 2022

(2) CGA, 4 weeks to 3 December 2022
 We are a global leader in spirits.
From centuries-old names to the Take a look at how we Read our Chief Find out about our See our core
latest innovations, we have over build our brands Executive’s statement investment case competencies in action

200 brands and sell in nearly p6-7 p10-11 p14-15 p26-31

180 countries.
At Diageo, we are committed to
building and sustaining the very Strategic report: 4 Strategic report: 32 Governance report 96

best portfolio of brands, in what Our business Our performance

we believe to be the most exciting
Diageo at a glance 4 Our performance 32 Letter from the Chairman of the Board 98
Our brands 6 Summary financial review 36 of Directors
Chairman’s statement 8 Business review 40 Governance at a glance 99
consumer products category. Chief Executive’s statement
Market overview
10
12
Group financial review
‘Society 2030: Spirit of Progress’
54
57
Board of Directors
Executive Committee
100
104
Investment case 14 Promote positive drinking 58 Corporate governance report 106
Strategy 16 Doing business the right way 61 Audit Committee report 117
Strategic priorities 18 Our people and culture 63 Nomination Committee report 123
Business model 24 Health and safety 65 Directors’ remuneration report 126
World-class brand building 26 Champion inclusion and diversity 67 Directors’ report 154
Supply chain efficiency 28 Pioneer grain-to-glass sustainability 71
30 88
Entrepreneurial spirit Our principal risks and risk management
Viability statement 94
Financial statements 158

Non-financial and sustainability 95

information statement
Additional information 230
Unaudited financial information 232
Cautionary statement 241
Non-financial reporting boundaries and 242
methodologies
Independent Limited Assurance Report 263
to the Directors of Diageo plc on
Visit diageo.com for more information selected subject matter
Other additional information 267
Cover: Guinness in the on-trade

2 Diageo Annual Report 2023 Diageo Annual Report 2023 3

DIAGEO AT A GLANCE

A brilliant blend Fiscal 23 financial performance

of people and
Volume Net sales(2) Operating profit

STRATEGIC REPORT
(equivalent units)

EU243.4m £17,113m £4,632m

brands
(2022: EU263.0m) (2022: £15,452m) (2022: £4,409m)
Reported movement (7)%  Reported movement 11%  Reported movement 5% 
Organic movement(1) (1)%  Organic movement(1) 6%  Organic movement(1) 7% 

Net cash from Earnings per share Total recommended dividend

operating activities (eps) per share(3)
£3,024m 164.9p 80.00p
(2022: £3,935m) (2022: 140.2p) (2022: 76.18p)
2023 free cash flow(1) £1,800m Reported movement 18%  5% 
2022 free cash flow(1) £2,783m Eps before exceptional items
movement(1) 8% 

Since its formation more than The secret to our success is our understanding ourselves to be worthy of people’s trust
of those we serve. We constantly strive to know everywhere we live, work, source and sell. Visit diageo.com for more information
25 years ago, Diageo has been the consumers of our brands and our on-trade
We are currently three years into our ten-year ESG
committed to building and and off-trade customers better than anyone
action plan, ‘Society 2030: Spirit of Progress’. This
nurturing some of the world’s else. And we have invested in new digital
starts with our people. We are creating an inclusive
and data capabilities to constantly evolve our
most iconic brands which are
rooted in culture and local
insights, putting people at the heart of the way
we make, market and sell our brands. With the
culture and providing them with the skills and
opportunities to progress. We are also focussed on Fiscal 23 non-financial performance
protecting the natural world, preserving the water
right product in the right place at the right
communities. price, we are well positioned to win new
and resources on which we depend. By 2030, our
ambition is to achieve net zero emissions across
From a pint of Guinness to a Johnnie Walker consumers and retain existing ones.
our direct operations (Scope 1 and 2) and to work
Positive drinking Inclusion and diversity Water efficiency(4) Carbon emissions(4)
highball, a Don Julio margarita to a Tanqueray But we know consumer habits are changing. in partnership with our suppliers to halve the
and tonic, the brands behind our drinks have
1,985,817∆ 44%∆ 4.14l/l∆ 401∆
Today, people prioritise quality over quantity emissions in our supply chain (Scope 3).
become household names. And whether local – they are drinking better. We encourage this
or global, all our products share a common We know that purpose goes hand in hand with
‘premiumisation’; in fact, in every region of the (2022: 607,374) (2022: 44%) (2022: 4.09l/l) (2022: 424)
goal: to be part of celebrations, big or small. performance – never one without the other. This is
world, we have been steadily positioning our
why our ambition is to become one of the best Number of people educated Percentage of female Water use efficiency per litre of Total direct and indirect carbon
Our position across total beverage alcohol portfolio to capitalise on this long-term trend.
performing, most trusted and respected consumer on the dangers of underage leaders globally product packaged (litres/litre) emissions by weight (market/net
(TBA) means we have a long runway for We believe premiumisation goes hand in products companies.
quality, sustainable growth and we are drinking through a Diageo based) (1,000 tonnes CO2e)
hand with moderation. And as we grow, we are supported education
confident in our ability to deliver. We believe the We delivered over £3.1 billion through dividends
TBA market remains very attractive; over the
past five years it has grown at a 4% compound
committed to always encouraging moderation
through the promotion of responsible drinking
and share buybacks to our shareholders in
fiscal 23. And future investors can be confident
programme
43%∆
across our markets – it’s good for consumers,
too: we aim to consistently re-invest back into the
(2022: 41%)
annual growth rate (CAGR) by retail sales and good for business.
value, with spirits growing considerably faster business to continue growing. Percentage of ethnically diverse
at a 6% CAGR.(1) With more than 100 manufacturing sites and leaders globally
Our consumer insights, strong sense of purpose and
over 30,000 employees around the world,
Two years ago we set out our 2030 share pursuit of financial excellence fuel our passion to
our culture is rooted in a deep sense of our
ambition to grow from a 4% to 6% value share become one of the best brand builders in the world.
purpose, the personal connections we have to
of TBA. We are proud to be almost a third of our brands, our relationships with each other In 1759, when Arthur Guinness signed a 9,000-year (1) See Definitions and reconciliation of non-GAAP measures to GAAP measures on pages 232-239
the way there; we are now the leading and our passion to win in the marketplace. lease on the St James’s Gate brewery in Dublin, he (2) Net sales are sales less excise duties
international spirits player, holding a ~4.7% Our footprint is truly global and we push wanted his business to last. This visionary thinking (3) Includes recommended final dividend of 49.17p
value share.(1) But we are confident that there is (4) In accordance with Diageo’s environmental reporting methodologies and, where relevant, WRI/WBCSD GHG Protocol; data for the baseline year 2020 and for the intervening period up
underpins why we must continue to do business the to the end of last financial year has been restated where relevant
still plenty of headroom to grow. right way, from grain to glass. Δ Within the scope of PricewaterhouseCoopers LLP’s (PwC) independent limited assurance reported to the Directors. For further detail and the reporting methodologies, see pages 242-266.
(1) IWSR, 2022 Unless otherwise stated in this document, percentage movements refer to organic movements. For a definition of organic movement and reconciliation of all non-GAAP measures to GAAP
measures, see pages 232-239. Share refers to value share. Percentage figures presented are reflective of a year-on-year comparison, namely 2022-2023, unless otherwise specified.
Colleague in The Bar at Home

4 Diageo Annual Report 2023 Diageo Annual Report 2023 5

OUR BRANDS

Brand building Super-premium and above

price points

expertise

STRATEGIC REPORT
Reported net sales(1)

£4,559m 

Our portfolio offers Innovative spirit

We want to build brands that will stand the test of time. This is why

something for every taste we strive to move at pace with the latest consumer trends. And while
we honour the past, we are passionate about creating the brands of

and celebration.
the future.

Redefining categories
With a rich and actively managed portfolio and a proven innovation
From much-loved, established brands, such as capability, we are well placed to seize new opportunities, recruit new
Johnnie Walker, to the latest innovations, like consumers, continue to premiumise and drive ongoing performance.
Tanqueray 0.0, we create products, tastes and Advantaged portfolio Premium price points
experiences for people to enjoy. The breadth and depth of our portfolio has helped us grow across most
categories, with strong net sales growth in our three largest categories:
This requires focus and investment in what we scotch, tequila and beer. Reported net sales(1)
call a brilliant blend of ‘creativity with precision’.
We combine data, insights and innovation with
Premium-plus brands contributed 63% of reported net sales growth
and drove 57% of organic net sales growth in fiscal 23.
£6,258m 
the creative flair our consumers expect from us
as a custodian of some of the most iconic brands
in the world.

Organic net sales growth by category Reported net sales by price tier, F19–F23 Standard and below
Scotch 12% Super-premium+ 18% 27%
price points
Tequila 19%
Vodka 1% Premium 38% Reported net sales(1)
Canadian whisky
Rum
(9)%
2%
+7ppt 36%
£6,296m 
Liquers (1)%
Gin 5%
Standard 32%
IMFL whisky 15%
29%
Chinese white spirits (14)%
US whiskey (4)%
Beer 9%
Value 12%
Ready to drink 0% 8%

F19 F23

(1) Net sales are sales less excise duties

6 Diageo Annual Report 2023 Diageo Annual Report 2023 7

CHAIRMAN’S STATEMENT

brands and targeted innovation to I believe that our culture – the combination of We expect this innovation to contribute to our
Recommended final dividend respond to evolving consumer needs passion and commitment with agility, speed 2030 target to deliver a 40% improvement in
per share and tastes. Combined with active portfolio and entrepreneurial talent – is a major water use efficiency in water stressed areas.

49.17p  management, we believe that continuing to

invest in our brands now is fundamental to
differentiator for Diageo and a significant
source of our ongoing competitive advantage.
We are proud that Don Julio Blanco has become
the first brand to receive Environmentally
2022: 46.82p sustaining performance for the future. Responsible Agave certification from the
Board changes Tequila Regulatory Council and the
Total dividend per share(1) Long-term value creation I would like to extend a very warm welcome government of Jalisco.

STRATEGIC REPORT
5% to 80.00p 
Diageo continues to deliver long-term value to Debra Crew who re-joins the Board having
We also believe in the power of partnerships.
creation for our shareholders. We achieved taken over as Chief Executive a little sooner
In the UK, we’re investing in a new recycled
2022: 76.18p another strong year of performance for fiscal 23. than we had planned.
aluminium production facility, saving raw
We grew organic net sales by 6.5% at the top
At our Annual General Meeting (AGM) in materials and cutting carbon emissions.
Total shareholder return end of guidance, with strong price/mix
September, Lady Mendelsohn will have Our backing will help the British Aluminium
performance mitigating a modest decline in
(2)%  volume. Pre-exceptional earnings per share
increased 7.6%. We increased our final
reached her nine-year term as a Non-Executive
Director and will not stand for re-appointment.
Consortium for Advanced Alloys, a collective
of industry experts, develop a closed-loop,
2022: 4% On behalf of our Board, employees and circular approach to aluminium. Its recycling
dividend by 5%, reflecting our continued
shareholders, I would like to express my and manufacturing plant will roll hundreds of
strong performance and our commitment
heartfelt thanks to Nicola for her significant thousands of tonnes of aluminium sheet –
(1) Includes recommended final dividend of 49.17p to a progressive dividend policy.
contribution to Diageo. enough for over 400 million Guinness and

A solid platform
Our philosophy of investing over the long-term premixed Gordon’s and tonic cans a year.
Alan Stewart will also reach his nine-year
can occasionally impact return on average
anniversary in September; however, he will We have again incorporated the Task Force
invested capital (ROIC) in the short-term, as it
stand for re-appointment for a further year at on Climate-related Financial Disclosures
did in fiscal 23. ROIC was 16.3%, a decline of
the request of the company to enable a smooth framework into our reporting. While our
50bps. In fiscal 23 we increased capex,

for future growth

transition during fiscal 24 to a successor who analysis indicates the financial impact is not
invested in maturing stock and continued to
will take over as Chair of the Audit Committee. likely to be significant to 2030, we know that
actively and strategically manage our portfolio
managing the increasing climate risks we face,
through acquisitions and disposals. Finally, total Leadership such as water stress, remains a priority.
shareholder return (TSR) for the ten-year and
The Board diligently planned for Ivan’s succession,
five-year periods of 9% and 7%, respectively
and we are delighted to have appointed a leader Summary
remains strong despite the 12 month return of
of Debra’s calibre to the role. While sustained volatility and uncertainty
(2)% for fiscal 23 which was mainly driven by a
will continue to present challenges for the
It is impossible to reflect on the past year without thinking lower year-on-year share price. Debra has been a highly valued member of
consumer goods sector, we believe Diageo
Diageo’s leadership team in recent years with
of Sir Ivan Menezes. Employee engagement an impressive track record of delivery both at
remains well-positioned and resilient. We
are diversified by category, price point and
This was my final year as the lead Board Diageo and across other global consumer
Ivan’s leadership defined the culture of Diageo: diverse, member for workforce engagement. I have goods companies. She has deep consumer
geography. Our people are highly engaged
and have a track record of delivery through
creative, agile and entrepreneurial, passionately enormously enjoyed engaging with hundreds
of colleagues at all levels across Diageo, and I
industry expertise as well as proven strategic
capabilities, strong operational performance
uncertainty. And, our continued investment
engaged, and committed to social responsibility and continue to be impressed by their passion. My and a clear ability to build and lead teams.
in our brands and deep understanding of
our consumers position us well to capture
fellow Board member, Karen Blackett OBE, has
environmental sustainability. Today, our culture is our taken up this important role from July 2023.
I have no doubt that Diageo is in the right hands opportunities in TBA, a market we believe
for the next phase of its growth and I look forward has very attractive fundamentals.
greatest strength in an uncertain world, and the living That passion is reflected once again in the to working with Debra in her new role.
Diageo’s Board and leadership team remain
embodiment of Ivan’s legacy at Diageo. He will be results of our annual Your Voice employee
Delivering ‘Society 2030: Spirit focussed on securing long-term, sustainable
survey. Employee engagement remains very
missed by all of us. high at 84% – two points ahead of last year, of Progress’
value creation, by nurturing Diageo’s culture,
building our brands, and delivering our
while pride in Diageo is at an all-time high of I am encouraged by the energy, progress Performance Ambition.
91% – 14 points above our external benchmark. and ingenuity I see in our work to deliver our
The proportion of our colleagues who would ‘Society 2030: Spirit of Progress’ ESG action
recommend Diageo as a place to work is also
Global environment Dealing with uncertainty and volatility is the its potential. The growth of a global middle
the highest ever recorded, and our Net
plan. For example, agave is a key ingredient in
The last year has been another period of ‘new normal’ – and is likely to remain so for class and the appetite for increasing our tequilas, and we have been using targeted
some time. While this inevitably brings some premiumisation and to ‘drink better, not Promoter Score now stands at +36. drone technology on our agave farms in
broad and sustained uncertainty, and we Javier Ferrán
continue to see re-adjustment in working short-term challenges, especially for more’ are long-term, sectoral trends. We Jalisco, Mexico to help us minimise water Chairman
patterns and consumer behaviour following consumer goods companies like ours, the expect to continue to drive value growth in and fertiliser use.
the Covid-19 pandemic. Major economies breadth and depth of our portfolio and our the total beverage alcohol (TBA) category as
are facing the challenge of inflation, geographical footprint, harnessed to the hundreds of millions of consumers become
compounding cost-of-living pressures. passion and agility of our colleagues, mean able to access the premium drinks market,
we are well positioned to navigate those often moving away from informal or illicit
Geopolitical uncertainty remains elevated,
challenges and to take advantage of alcohol in the process. Statement on Section 172 of the Companies Act 2006
and the terrible conflict in Ukraine continues.
emerging opportunities, as we have done Section 172 of the Companies Act 2006 requires its shareholders in the long term, as well as the Read more about how stakeholders were
As ever, my colleagues have responded to At the same time, we have significant the Directors to promote the success of the interests of the group’s stakeholders. The Directors taken into account in decision-making on pages
successfully in recent years.
this operating environment with resilience headroom to grow within TBA, reflected in company for the benefit of the members as a understand the importance of taking into account 110-113
and entrepreneurialism. On behalf of the Long-term view of the business our medium-term ambition to grow our value whole, having regard to the interests of the views of stakeholders and the impact of the
Board, I would like to thank them for their share of the global market by 50%, from 4% stakeholders in their decision-making. In making company’s activities on local communities, the
Despite this ongoing turbulence, the decisions, the Directors consider what is most environment, including climate change, and the
sustained commitment and hard work. to 6% by 2030. We believe that share growth
fundamentals of our category remain likely to promote the success of the company for group’s reputation.
will be driven by sustained investment in our
attractive, and we are well-placed to realise

8 Diageo Annual Report 2023 Diageo Annual Report 2023 9

CHIEF EXECUTIVE’S STATEMENT

Reported volume movement

period, and in December 2022, Guinness Doing business the right way Diageo is well-placed to take advantage of
became the number one beer brand by Doing business the right way remains at the these opportunities. Our geographic reach offers

(7.4)%  value share in the on-trade in Great Britain.(1)

We have also continued to benefit from
heart of our plans for growth, and we have
made good progress in the past year on our
not just resilience through diversification, but also
exposure to consumers looking to ‘drink better,
2022: 10.3% not more’ around the world. Our long-term
sustained investment in our brand portfolio, ‘Society 2030: Spirit of Progress’ ESG action
plan to build a responsible, inclusive and investment in building and actively shaping our
Organic volume movement with our premium-plus brands now
portfolio gives us an advantaged position in the
accounting for 57% of net sales growth. sustainable business as we grow.
(0.8)%  Our premium-plus brands now account for
market, and our deep understanding of our

STRATEGIC REPORT
We want to change the way people drink for consumers allows us to strengthen our
63% of Diageo’s net sales, up 7ppts from the better, recognising that there is no drink of
2022: 10.3% relationship with them as we innovate to meet
fiscal 19. moderation, only the practice of moderation. their needs and expectations. Underpinning
Reported net sales movement While I am pleased that our business can This is why we promote moderate drinking these advantages, our core capabilities in
and invest in education and programmes to
10.7% 
deliver this performance even in the face of digital, world-class brand building, supply chain
significant turbulence in major markets, the discourage the harmful use of alcohol. and everyday efficiency allow us to execute
2022: 21.4% prospect of ongoing volatility in our operating Increasingly we are fully integrating our work effectively and with precision, while our ‘Society
environment means that there is no room for to promote responsible drinking into our brand 2030: Spirit of Progress’ ESG action plan ensures
Organic net sales movement complacency. We will continue to deliver messages, such as in Captain Morgan’s ‘Enjoy that our business will become more responsible,
investment in our brands for the long-term Slow’ campaign last year. diverse and sustainable as it grows.
6.5%  hand-in-hand with efficiency in our day-to-
day operations. At the same time, I want to
We continue to build a strong, diverse These are strengths that we will build on in the

Another year of
2022: 21.4% leadership team to better reflect the year ahead. With the potential we see across our
see our execution focus sharpen as we consumers we serve. 44% of our leaders business and our brands, we are confident that
Reported operating profit movement sustain high-quality growth and continue to globally are female, maintaining our progress we will continue to navigate successfully through
build market share.
5.1% 
against our 2030 ambition to reach 50%, a volatile external environment while delivering
while 43% of our leadership are now ethnically
Engine for growth our medium-term guidance: consistent organic

strong performance
2022: 18.2% diverse, an increase of 2% from fiscal 22. net sales growth in the range of 5% to 7% and
We are confident that Diageo remains
We have also made significant headway on sustainable organic operating profit of 6% to
well-positioned to deliver our medium-term
Organic operating profit movement guidance of consistent organic net sales our objective to embed sustainability in our 9%. At the same time, we remain focussed on
investing in our brands to meet our ambition of
7.0%  growth in the range of 5% to 7% and
sustainable organic operating profit of 6%
business. We have continued our progress
towards our net zero carbon goal in our direct increasing Diageo’s share of the total beverage
alcohol market by 50%, from 4% to 6%, over
2022: 26.3% to 9%. To achieve this, winning quality operations by 2030, with an absolute Scope 1
and 2 greenhouse gas emission reduction of the decade to 2030.
market share remains a primary focus and it
is one of the key areas of opportunity I see for 5.4% in fiscal 23. This was partly the result of
Like everyone at Diageo, I will miss Ivan’s kindness, improvement in fiscal 24. With our our continuing investments in renewable
wisdom and counsel in the months and years ahead. advantaged portfolio of brands, core energy, which now accounts for 45% of our
total energy use, an increase of 1.9% from
capabilities and competitive advantages,
It was an extraordinary privilege to know, work with and I believe we can drive market share gains of fiscal 22.
Debra Crew
Chief Executive
learn from Ivan over the last four years, and to benefit at least two-thirds of our total net sales value.
I’m pleased that we gained or held share in
Our other major sustainability focus is on
from his experience and generosity of spirit. Together with markets that total 70% of our net sales value
water stewardship. In the last year, we have
reduced the amount of water it takes to make
all my colleagues, I am determined that we will build on in fiscal 23.(2) each litre of our brands by 2.6% in our
and do justice to his legacy. Productivity, our culture of everyday efficiency
and smart investment will be critical to deliver
water-stressed areas.
We also completed water efficiency projects
our medium-term guidance. Notably, we that will deliver future benefit in several
unlocked a further £450 million of water-stressed areas including Kenya, Uganda
productivity savings during fiscal 23. and Nigeria. Beyond our own operations, we
Fiscal 23 performance Even with North America sales flat, following Fiscal 23 also saw standout performance
are working in partnership with CARE to
a period of very rapid growth, we have still from our scotch, tequila and beer categories. Even as the leading company in international
Diageo today is a business built to deliver spirits, as of 2022, we only held a ∼4.7% empower women and make them stewards of
resilient performance, even in turbulent times. been able to deliver overall organic net sales Scotch grew 12%, tequila grew 19% and beer
share of the TBA market.(3) This is up from 4% our investments in water sanitation in the
We are geographically diverse, with a value growth of 6.5% within our medium- was up 9% respectively. Johnnie Walker, the
in 2020 when we set our ambition to deliver communities in which we live and work
product portfolio built on long-term term guidance, and organic operating world’s leading international spirit brand,
a 50% increase by 2030. The opportunity is around the world.
investment in our brands, and a culture that margin expanded by 15bps. delivered another year of strong double-digit
significant. We are a company with a
delivers everyday efficiency while pursuing Our pre-exceptional earnings per share rose
growth, increasing 15%. Tequila continues to
diversified geographic footprint and Looking forward
opportunities with focus and agility. have strong consumer momentum and our
7.6% in fiscal 23 to 163.5 pence. And, we advantaged portfolio in a very large and I am very proud to become the Chief Executive
global market share of tequila rose 120bps to
Those underlying strengths are reflected in have once again been able to increase the attractive industry. Our business is set up for of Diageo at a moment of enormous potential
just over 23% of retail sales value. We also
our performance over the last year. We drove dividend by 5% to a full-year dividend of consistent, sustainable long-term growth for our business. We believe the TBA market is
launched our strategy to ignite a new
strong growth in four of our five regions, with 80.00 pence. driven by premiumisation and active the most exciting and creative consumer
‘Golden Age for Guinness’, with immediate
Europe and Asia Pacific growing double-digit. portfolio management. category in the world. Within it, spirits continue
results: organic net sales were up 16% in the
to gain share, and premiumisation is proving to
be a resilient trend.
(1) CGA, 4 weeks to 3 December 2022
(2) Internal estimates incorporating Nielsen, Association of Canadian Distillers, Dichter & Neira, Frontline, INTAGE, IRI, ISCAM, NABCA, Scentia, State Monopolies, TRAC, IPSOS and other
third-party providers. All analysis of data has been applied with a tolerance of +/- 3 bps. Percentages represent percent of markets by total Diageo net sales contribution that have held
or gained total trade share fiscal year to date. Measured markets indicate a market where we have purchased any market share data. Market share data may include beer, wine, spirits
or other elements. Measured market net sales value sums to 87% of total Diageo net sales value in fiscal 23
(3) IWSR, 2022

10 Diageo Annual Report 2023 Diageo Annual Report 2023 11

MARKET OVERVIEW

An attractive industry
with a runway

STRATEGIC REPORT
for growth
Total beverage alcohol (TBA) has seen a strong record of value
Retail sales value of global
growth over the last 10 years. And international spirits, where alcohol market(1)
Diageo is the number one player, has grown faster than TBA.(1)
We believe TBA presents sustainable long-term growth
$1.17 trillion
opportunities for Diageo, underpinned by attractive consumer
Equivalent units of alcohol sold(1)
fundamentals. This includes three key factors: a growing middle
class; increased spirits penetration; and premiumisation in both 5.4 billion
developed and emerging markets.

1 Consumer base that can 2 Consumers are increasingly 3 Consumers across the
afford premium spirits is growing choosing spirits over beer world are trading up, choosing
The latest projections by the United Nations and wine superior quality
suggest that the global population could
grow to around 8.5 billion by 2030.(2)
Over the past five years, the TBA market
worldwide grew at a 4% compound annual
Consumers are ‘drinking better, not more’
and are increasingly choosing brands and
546 million
new legal purchase age
Globally, an emerging middle class continues growth rate.(1) Spirits grew considerably faster categories that stand out for superior quality, consumers estimated to enter
to grow in key markets such as China, where at a 6% compound annual growth rate as authenticity and taste. the market by 2033(4)
it is estimated that, between 2022 and 2030, consumers increasingly move away from
We call this trend premiumisation, in which
the middle class and affluent consumer will beer and wine.(1)
consumers have a greater desire to explore
increase by 80 million, reaching nearly 40%
of the population.(3)
Spirits, which are versatile and adaptable,
have a strong position and considerable
new aspirational experiences, driving demand
for quality drinks at a range of price points.
470 million
estimated to join the middle class and
This continued growth of the ‘middle class runway for growth given consumers’ interest
above income bracket by 2032(4)
and above’ income bracket should enable in new serves suitable for a broader range of
470 million(4) more consumers to access and occasions, including with food and at home.
enjoy our brands by 2032.
+9%
increase in spirits TBA share(1)

(1) IWSR, 2022

(2) United Nations Department of Economic and Social Affairs, Population Division, 2022
(3) Mind the Generation Gap, Boston Consulting Group, 2023
(4) World Bank, 2022 Ketel One Bloody Mary

12 Diageo Annual Report 2023 Diageo Annual Report 2023 13

INVESTMENT CASE

Investing for Shareholder value creation

the long term

STRATEGIC REPORT
We expect to deliver organic Total shareholder return (TSR) Diageo FTSE 100
net sales growth consistently
250
in the range of 5% to 7%
Diageo has a bold ambition Active portfolio management We are consumer-focussed and brand
obsessed, and our workforce is encouraged
and organic operating profit 200

TSR rebased to 100

and is well-positioned to We use our deep consumer insights to
to have an entrepreneurial spirit, where new growth sustainably in the 150
acquire strategic brands in higher-growth
capture more of the total categories. In fiscal 23, we acquired Balcones ways of thinking are welcomed. Our ability to range of 6% to 9% for fiscal
adapt to market challenges and our
beverage alcohol (TBA) Distilling, a leading producer of award-
consistent focus on consumers and trade
23 to fiscal 25. Sustainable 100

winning super-premium and above US

top-line growth and 50
market opportunity. whiskey. We also acquired Don Papa Rum, a partners are the foundations from which we
deliver our Performance Ambition. As an productivity savings enable
super-premium dark rum from the Philippines, 0
organisation, we are restless and we work
With only 4.7% of global TBA share(1), we strengthening our position in the rum
hard to operate with agility and urgency to
smart re-investment to drive 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
believe we have significant headroom for category, which is premiumising.
sustainable, long-term growth, and our deliver consistent quality growth. long-term growth.
Our active portfolio management also
ambition is to outperform the market and Read more about our core competencies on
includes strategic disposals. In fiscal 23, we pages 26-31
increase our TBA value share to 6% by 2030.
sold Guinness Cameroun S.A., following a
Increasing spirits penetration strategic review which identified a more Delivering consistent Digital and data capabilities
efficient model to support the strong growth We’re investing in transformational digital
Diageo has a diversified footprint globally
of the brand in Cameroon. We also disposed performance and quality growth and data capabilities. In marketing,
with an advantaged portfolio of brands. To help ensure we deliver consistent
of Archers, as well as the disposal and CreativeX, our latest tool, enables us to
The breadth and depth of our portfolio performance and sustainable quality growth,
franchising of a portfolio of brands in India. assess the effectiveness of our digital content
across attractive categories and price we invest smartly in the areas we believe will
points positions us to capture large before deployment to ensure we provide the
Our core competencies bring the greatest benefits: capital perfect serve of advertising content to
consumer growth opportunities, and expenditure for our strategic categories,
Diageo is a world-class brand builder consumers. It is now deployed in markets
provides resilience to international trading digital capabilities, our ambitious
and has supply chain expertise, as well covering 75% of our net sales value. We’re
volatility. Globally, there is a significant sustainability agenda and our supply chain
as an entrepreneurial spirit and also supporting our customers and our global
opportunity to increase spirits penetration. agility programme.
advantaged culture. sales teams leverage data and insights from
In markets where the spirits category is less digital tools such as EDGE365 to extend our
mature, our mainstream brands give
Our world-class brand building is Production capacity and sales reach and improve our execution.
underpinned by deep consumer
emerging market consumers access to our
understanding, which fuels innovation and
maturing inventories
products at affordable prices. For example Continuing the digital transformation journey we
recruits consumers. We combine our In fiscal 23, scotch and tequila grew by 12%
McDowell’s No. 1 in India and Black & White embarked on in 2017, in fiscal 23, we launched
consumer insights with marketing creativity and 19% in net sales, respectively. Investing
in Latin America offer quality products at a five-year programme to modernise our IT
which we execute with precision. This is capital in production capacity is key to
more affordable price points and give environment and standardise our business
underpinned by smart investment in delivering long-term sustainable growth. We
opportunities to consumers to trade up in operations. This makes us more agile in our
marketing effectiveness tools, such as are investing in new whiskey distilleries in
the future. response to customer needs, provides us with
Catalyst, Sensor and CreativeX. North America and China and increasing our
world-class actionable insights and allows us to
tequila manufacturing footprint in Mexico.
Quality growth for Guinness We believe that our diverse supply chain be more efficient in our day-to-day operations.
Beer is our second largest category after across the markets where we source, make We are also investing in maturing inventories
scotch. Our business model for the category and sell is a key competitive advantage. We to support the future growth of these Investing in sustainability
is differentiated, increasingly asset-light, leverage the scale and breadth of our fast-growing categories. Over the last five By 2030, we expect to have invested around
highly profitable and provides exposure to business to build strategic relationships with years, we have increased maturing £1 billion of capital to support our drive to be
both emerging and developed markets. We suppliers that deliver regular cost savings, inventories from £4.0 billion to £5.8 billion, global champions for water stewardship and
use a variety of routes to the consumer, which we reinvest. Our culture of everyday including investments of £0.6 billion in a strong contributor to a low-carbon world.
depending on the most efficient model for efficiency and strong pipeline of productivity fiscal 23. We are doing this by improving water use
each market. Guinness leads our beer initiatives drove £450 million of savings in efficiency, investing in water replenishment,
portfolio and is available in more than 100 fiscal 23, fuelling sustained investment in using renewable energy, scaling circular
countries and territories. brand building. solutions and implementing regenerative
agriculture. These investments will also help
Read more about how Guinness became the Baileys over ice
us to be more efficient, reduce our resource
number one pint in Great Britain on pages 26-27
consumption, develop innovative solutions
and ensure a more resilient supply chain.

(1) IWSR, 2022

14 Diageo Annual Report 2023 Diageo Annual Report 2023 15

STRATEGY

Delivering our
Performance Ambition

STRATEGIC REPORT
Sustain quality growth Embed everyday efficiency Invest smartly
Creating sustainable and consistent quality Everyday efficiency creates the fuel that We are investing in the future success of our
growth is at the heart of our ambition to be allows us to invest smartly and sustain quality business – but that investment needs to be
one of the best performing consumer growth. At its heart, everyday efficiency is a smart to support the delivery of consistent
products companies. It means delivering mindset and a culture, which everyone in performance and enable sustainable,
At the core of our strategy Our six 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
consistent net sales and margin growth as Diageo is encouraged to bring to life in their quality growth.
well as top-tier shareholder returns. daily work.
is the flywheel for growth. these priorities, we deliver the strategic outcomes against which we measure our performance.
After several years of Read more on pages 18-23 Read more on pages 18-19 Read more on pages 20-21 Read more on pages 22-23

strong performance at
Diageo, it has a proven
track record.
OUR STRATEGIC PRIORITIES

t h Em
ow be
gr
d

Ch
ty

ev

ive a
ali

ery

a
qu

m dive
kin t
drin posi

pio

day
nd
in

n in ity
Susta

te

OUR AMBITION
Promo

efficiency
clusion
rs

To be one of the best

performing, most trusted
and respected consumer
products companies
in the world.

Pio
nee a ss
r g ra in - to- gl
s u s ta i n a b ilit y

I nv e s t s m a r t l y
Promote positive drinking Champion inclusion and diversity Pioneer grain-to-glass sustainability
We are determined to change the way the We believe that everybody should be able to We are focussed on preserving the resources
world drinks for the better. We will promote thrive in an environment that values their upon which our business and our
moderation and continue to invest in contribution and celebrates what makes communities depend. We are working to
OUR STRATEGIC OUTCOMES education programmes around the world to them unique. Across Diageo, we champion preserve water for life, accelerate to a
help reduce the harmful use of alcohol. As inclusion and diversity, from how we attract, low-carbon world and become sustainable
we reach more people with our programmes, recruit and develop our teams, to by design – helping to create a better future
we will change attitudes on underage representation in our supply chain, the ways for communities everywhere.
EG CVC CT EP drinking, drink driving and binge drinking. we portray the richness of society across our
Find out more about our performance
brands and our work to make a positive
against all our ‘Society 2030: Spirit of
Efficient growth Consistent value creation Credibility and trust Engaged people difference in our communities.
Progress’ ESG action plan on pages 57-87.
Consistently grow organic net Top-tier total shareholder Trusted by stakeholders for High-performing and engaged
sales, grow operating profit, returns, increase return doing business the right way, teams, continuous learning, Read more on pages 58-60 Read more on pages 67-70 Read more on pages 71-87
deliver strong free cash flow on invested capital from grain to glass inclusive culture

16 Diageo Annual Report 2023 Diageo Annual Report 2023 17

STRATEGIC PRIORITIES

Sustain To achieve our ambition of being one of the best To sustain quality growth, we focus on: Examples of progress in fiscal 23: • Made considered acquisitions focussed on
developing new brands of the future; • We drove strong growth in four of our five fast-growing, premium categories such as
performing, most trusted and respected consumer balancing volume, price and mix – what we regions, with Europe and Asia Pacific Don Papa Rum and Mr Black coffee liqueur
products companies in the world, delivering and

quality
call Revenue Growth Management; growing double-digit • Equally we made considered disposals
executing the most effective route to our

STRATEGIC REPORT
in aid of our long-term growth ambitions,
sustaining quality growth is key. This means consistent consumers; and working with governments
• Continued to generate quality growth
across key brands, including Guinness, including the sale of Archers and the
net sales and margin growth, as well as top-tier and stakeholders around the world to ensure
our brands compete on a more equal
which became the number one beer in the sale and franchise of selected local
Great Britain on-trade for the first time in brands in India
shareholder returns.

growth
playing field for alcohol taxation and
December 2022.(3)
regulatory policy.
• Launched new innovations in premium
Delivering sustained, quality growth is not new to us. Alongside this, we have a disciplined categories, including Don Julio Rosado in
Brands such as Johnnie Walker and Don Julio show how approach to portfolio management,
making acquisitions and disposals in line
tequila and Elusive Expressions in scotch

the right approach to quality, brand building, innovation with our strategy.
and investing for the long-term can build lasting value.

Case study: This is the brand’s third consecutive year of

double-digit net sales growth, with sales at an
This broad-based strong volume, price and
mix performance allowed us to offset record

Johnnie Walker all-time high. inflation seen globally as well as strong

foreign exchange headwinds to grow gross
Premiumising scotch margin by +1.1ppt.
Johnnie Walker’s growth has been primarily
Johnnie Walker has been a key driven by premiumisation. Ensuring we offer Record share performance
driver of our strong scotch consumers choice and provide options to Johnnie Walker has also extended its lead
easily trade up (e.g. moving from Johnnie as number one international spirits brand by
performance this year, seeing Walker Red Label to Johnnie Walker Black 34bps.(1) Every month, 93 million people who
sales growth of 15%. Label) have meant that price and volume have choose to drink alcoholic beverages choose
had strong growth across all our regions and Johnnie Walker.(2)
variants. In fact, the proportion of net sales
from Johnnie Walker premium products – As ever, this year we also looked to the
Johnnie Walker Black Label and above – future, and continued to invest ahead with a
reached 73% for the first time in fiscal 23. record high advertising and promotion (A&P)
spend of £545 million and 22% sales return
on A&P investment level with all markets
increasing spend versus last year.

Sustaining quality growth in Latin

America and Caribbean
This financial year, Johnnie Walker’s
performance in Latin America and
Caribbean stands out, with the region heavily
focussed on premiumisation.
Net sales grew +16% to a record high, and
gross margin percent grew +1ppt. Likewise
A&P grew +36% which funded double-digit
net sales growth of core variants (Johnnie
Walker Red Label +15%, Johnnie Walker
Black Label +18% and Johnnie Walker Blue
Label +22%). We were also excited to roll out
Johnnie Walker Blonde special edition across
Mexico, Brazil and Chile.

(1) IWSR, 2022

(2) How the world drinks, Kantar 2022
(3) CGA, 4 weeks to 3 December 2022

Johnnie Walker Gold Label Reserve (left)

Johnnie Walker Blonde (right)

18 Diageo Annual Report 2023 Diageo Annual Report 2023 19

STRATEGIC PRIORITIES continued

Embed Everyday efficiency creates the fuel that In the face of heightened inflation, more than Examples of progress in fiscal 23: • Made an £82 million saving from
ever, we have focussed on agility and speed • Delivered £450 million annualised savings procurement efficiency, which was
allows us to invest smartly and sustain to enable efficiencies across everything we across the end-to-end value chain impactful across all regions
quality growth. We want to ensure our

everyday
do. These savings have been realised and • Drove greater efficiency in our
• Began the first year of the five-year supply
have enabled us to continue to meet the

STRATEGIC REPORT
advertising and promotional (A&P)
resources are deployed where they are needs of our customers and consumers,
chain agility programme which will
strengthen and make fit for the future our investment, with savings made through
most effective. whilst still generating sufficient amounts to
reinvest smartly.
supply chain marketing effectiveness

efficiency
This means using technology and data
analytics to make better, faster decisions.
It also means simplifying our business so
that we can better meet the needs of our
consumers and customers.

Case study: 1 Synchronised fulfilment 3 Multi-dimensional

Logistics reinvention We revised our operating strategy by identifying

never out of stock and strategic brands and
partnerships with suppliers,
customers and industry
products, which account for 80% of our revenue. We built stronger partnerships with our
Focussing on these stock keeping units has
Through our logistics enabled us to service our customers faster,
customers, our suppliers and the industry,
working closer and more collaboratively. For
interventions, we are driving cutting cost, lead-time and carbon. example, we evolved our partnership with
sufficiency, efficiency, 2 Alternative routes, ports, ocean freight carrier CMA, becoming their
sustainability, agility and largest transatlantic customer to better
carriers and modes support both parties.
resilience by focussing In order to avoid congestion, we contracted
alternative transportation routes, ports, 4 Supply network design
on five key areas. carriers and modes. For example, we and investment
transferred a significant portion of our We studied our logistics process end-to-end,
movements in Scotland from ships to rail. from the plant to the customer, which helped
us anticipate and manage disruptions,
allowing us to deliver to markets more quickly
and efficiently. Additionally, by using regional
hubs, we also brought products closer to our
end customers and consumers.
5 Digitisation
All of this has been underpinned by strategic
interventions on digitisation. We have
real-time insights to anticipate supply chain
blockages, enabling us to take timely action.
We have been spearheading the use of
automation such as bots and intelligent
automation as a way to make the best
decision at any point. We are also
implementing artificial intelligence in our
order cycle to optimise product availability,
container fill rate and pricing.

Colleague in Cambus (left)

Guinness keg plant (right)

20 Diageo Annual Report 2023 Diageo Annual Report 2023 21

STRATEGIC PRIORITIES continued

Invest We continually invest in the future success We are constantly making investments across Examples of progress in fiscal 23: • In sustainability, we invested capex in
our business in different areas to ensure we • Maintained our 18% investment in A&P, data foundations and decarbonising our
of our business – but that investment needs are delivering consistent growth. enabling us to continue to invest behind supply chain
to be smart to support the delivery of

smartly
This includes investing in our supply chain, and grow our brands • Committed more than £60 million in capex

STRATEGIC REPORT
funding for water efficiency projects over
consistent performance and enable including transforming the end-to-end supply
network across our physical assets, as well as
• Invested in premium, high-growth
categories, such as tequila, as well as the next three years
sustainable, quality growth. in our technical and digital capabilities. brands like Don Papa Rum • We have hired colleagues with the aim of
• We significantly stepped up investments in building the internal capabilities necessary
This year, we have balanced quality key digital and experiential areas, including to deliver on our 2030 target
our Direct to Consumer (D2C) platform
growth and volume by driving pricing and
mix to increase premiumisation. We have
also optimised commercial decisions to
best sustain long-term growth.

Case study: Investing in new distilleries

In September 2021, we announced plans to
Saving water
The drone is also more efficient from a water
Tequila expand our tequila manufacturing footprint
in Mexico through an investment of more
saving perspective, using 70% less water than
manual applications, as well as decreasing
than £400 million. costs and having a positive impact on our
With the popularity of tequila In fiscal 23, £160 million of this investment was
carbon footprint through reducing the
requirement for vehicles.
on the rise(1), we saw an spent on the construction of two new distilleries
in the state of Jalisco, building further resiliency Because of this, water savings in fiscal 23 are
opportunity to be a driver of into our tequila supply chain and supporting expected to be 5.5 million litres, aiding us
growth in the category. growth in the category by increasing production further in our water stewardship ambitions.
capacity. Because of this, we can now operate
We did this by investing in 24 hours a day. Digitising our supply chain
As we seek to further digitise our supply chain
strategic key areas. The first of the two distilleries is expected to be processes, we have designed and implemented
operational by fiscal 24 Q1, and the second the first ever digital planning tool on aged
expected in fiscal 25 Q1. liquid, including the rotation of barrels
Using new technologies to drive between different age groups.
efficiency In addition, we have introduced an advanced
As part of our ‘Society 2030: Spirit of Progress‘ supply planning tool which should enable us
ESG action plan, we have been investing to drive end-to-end scenario planning and
in innovative environmentally friendly inventory optimisation.
technologies. This includes drones which can The investment actions that we are taking now,
count the number of agave plants in a field and those we have planned for the future, will
with greater accuracy and efficiency than support our plans to take tequila global.
manual processes.
Traditionally, spraying agave fields was done
manually and had to take place in the night
or very early in the morning. Operating in
darkness created high complexity, including
the risk of injury, wildlife attacks and exposure
to harmful agricultural supplies.
Using drones has not only ensured the safety of
(1) IWSR, 2022 our workers, but has also meant we can spray
Casamigos mason jar (above) between 20-30 hectares of agave a day, the
equivalent of the work of 30 people.
Drone in agave field in Jalisco (right)

22 Diageo Annual Report 2023 Diageo Annual Report 2023 23

BUSINESS MODEL

Creating a
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

sustainable business
and centre. Since launching our ‘Society 2030: Spirit of

STRATEGIC REPORT
Progress’ ESG action plan, we have set out to help create
a more inclusive and sustainable world, creating a positive
impact in our company, and for our society.

What we do 1. We source
From smallholder farmers in
2. We innovate
Using our deep understanding
3. We make
We distil, brew and bottle our
4. We transport
We move our products to where
5. We sell to customers
We grow by working closely
6. We market
to consumers
7. We help consumers
celebrate
Africa and Mexico to of trends and consumer spirits and beer brands through they need to be in the world, with our customers. Our global We invest in world-class We continually evolve our
multinational companies, we socialising occasions, we focus a globally coordinated supply whether that’s from a local and local sales teams use our marketing to responsibly data tools to understand
work with our suppliers to on driving sustainable operation, working to the distillery in market or shipping data, digital tools and insights to build vibrant brands that resonate consumers’ attitudes and
procure high-quality raw innovation that provides new highest quality and scotch around the world extend our sales reach, improve with our consumers. We have a motivations. We convert this
materials and services, with products and experiences for manufacturing standards. our execution and help rigorous global Marketing Code information into insights which
environmental sustainability in consumers, whether they choose Where it makes sense, we generate value for us and for and belong to the Global Alliance enable us to respond with
mind. Where it is practicable, to drink alcohol or not produce locally our customers. When our for Responsible Media, working agility to our consumers’
we source locally customers grow, we grow too with peers to push for interests and preferences
further consumer and
brand safeguards

Our core competencies Creating value

The ability to work our business model hard to deliver success comes from our strength Our business model allows us
across several key areas. These core competencies set us apart from our competition. to create value across four
main areas:

World-class brand Supply chain Entrepreneurial Financial – for

building efficiency spirit our investors
Our track record shows us to be We are constantly striving for Our inclusive, collaborative
experts in innovation and brand excellence across our supply culture enables us to work Human – for our people,
building. This is vital in order to chain, finding ways to improve together in a dynamic and agile suppliers, customers and
first make the right products, across all components and manner, creating a vibrant consumers
and then be able to take those sites, whether that’s research workplace as well as delivering
products to consumers and help and development, brewing our Performance Ambition. Social – for our
them celebrate. or packaging. communities

Read more on pages 26-27 Read more on pages 28-29 Read more on pages 30-31 Natural – for our
environment

Smirnoff orange smash

24 Diageo Annual Report 2023 Diageo Annual Report 2023 25

WORLD-CLASS BRAND BUILDING

The year Guinness

became Great Britain’s

STRATEGIC REPORT
favourite pint
Great Britain Secrets to success
Guinness, which has been around for over
This includes scaling up our alcohol-free
option, Guinness 0.0, growing our distribution

loves Guinness. two centuries, still manages to firmly embed

itself in culture with its visual distinctiveness.
and introducing new packs in the off-trade
and launching in the on-trade. In the
So much so, for the first In Great Britain, ‘the black stuff’ is heavily off-trade, the Guinness 0.0 four-pack was
recently the number one non-alcoholic item
time ever, in December associated with events like St Patrick’s Day
and the Six Nations rugby – because of this, by value and volume in Great Britain.(4)
2022, Guinness became Guinness saw a record on-trade share of And, in support of our ‘Society 2030: Spirit of
12.1% in March 2023.(2)
Britain’s number one beer Progress’ ESG action plan to promote positive
drinking, we put Guinness 0.0 at the heart of
But the brand is not only focussed on select
in the on-trade.(1) moments or seasons. Guinness has been the Six Nations Championship.
making its biggest marketing investment to New products have also been key. ‘Guinness
date in celebrations around the calendar Nitrosurge’, a first-of-its-kind device that
such as Christmas and summer – including allows Guinness fans to enjoy the two-part
launching the ‘Lovely Day For A Guinness’ pour at home, was rolled out in Great Britain
campaign which truly captures the in fiscal 23, premiumising the Guinness
summer feeling. experience in new spaces.
Guinness also has an ability to spot trends These unique abilities are underpinned
and jump on new opportunities. This year, the by world-class brand building. We are
brand partnered with the Women’s Six consistently leveraging our distinctive assets
Nations and viral DJ, Fred Again. and deep understanding of our consumers,
Choosing authentic partners in Great Britain, all powered by precision marketing.
who are both established and emerging This is the reason why in fiscal 23, more new
in terms of recognition, has enabled the consumers drank Guinness than ever before.
brand to increase +60bps to 3.6% among
women and +80bps to 7.7% amongst
18-34 year olds.(3)
While the recipe remains relatively
unchanged, the Guinness brand is
continually evolving and we actively
pursue innovation. In fact, we are currently
sustaining our biggest innovation pipeline
in the last 30 years.

(1) CGA, 4 weeks to 3 December 2022

(2) Neilsen, 2023
(3) Kantar, 2023
(4) IWSR, 2022

Guinness 0.0. (above)

‘Lovely Day For A Guinness’ campaign (right)

26 Diageo Annual Report 2023 Diageo Annual Report 2023 27

 SUPPLY CHAIN EFFICIENCY

Unboxing premium
scotch to reduce waste

STRATEGIC REPORT
A little over 150 years ago, Diageo remains as proud of its whiskies as
ever, and no less careful with its packaging.
After a successful test, we were able to
expand the project internationally. The first
Johnnie Walker had a But in the modern world, the task is different. phase was delivered over fiscal 23, and we
packaging problem. Too Our packaging is already robust; now it must
become sustainable too.
plan to roll it out to new markets in fiscal 24.
The work is a continuation of Diageo’s
many bottles were being Packaging is synonymous with waste, and
‘Society 2030: Spirit of Progress’ ESG action
broken in transit over too many industries have adopted a
plan to help create a more inclusive and
sustainable world.
‘take-make-dispose’ model. At Diageo,
choppy seas. The solution? we want to change this. We believe Promising results
The iconic ‘square’ bottle: convenience should not come at the cost
In fiscal 23, this new workstream has
of our natural resources.
packaging that could resulted in:
At the beginning of fiscal 23, we began a
be stacked safely
and efficiently.
thorough review of our whiskies and came to
the conclusion that not only could we change
141 million
cardboard boxes eliminated from
our packaging, but in some places, we could
our supply chain
get rid of it altogether.
Today, we continue that
This is why we started our work to phase out
tradition of finding new
ways to solve problems.
cardboard gift boxes across a selection of
products in our premium scotch portfolio. c.5,520 tonnes
After all, the luxury of our products is in the reduction in carbon emissions
liquid, not the packaging.

Bottles included in the trial Solving a problem at scale

The next step was to bring a team together.
With the sheer scale of the project, and the
range of packaging across different markets,
we gathered a group with global and
cross-functional expertise. The taskforce
worked to scope out the project, agree
timelines, communicate to customers and
make sure every market was aligned. To
minimise disruption to our supply chain, the
project was initially rolled out across selected
markets, testing the consumer response and
assessing if waste could really be reduced.

Bottling Johnnie Walker (left)

28 Diageo Annual Report 2023 Diageo Annual Report 2023 29

ENTREPRENEURIAL SPIRIT

Challenging
traditional marketing

STRATEGIC REPORT
concepts in Brazil
In fiscal 23, organic net Growing our Led by consumers
sales in Latin America e-commerce offering In Brazil, we have invested in a new content
For more than a decade, our award-winning laboratory. This is an interactive, digital
and Caribbean increased website, TheBar.com, has helped customers platform run by a team of creators who
monitor everything consumers are talking
by 9% and we plan to make cocktails at home. It has also been
a key driver of our digital performance, about, searching for, listening to or sharing
to keep growing. connecting people directly to Diageo’s online – in real time. It’s part of our evolution
brands through recipes, luxury gifts and from precision marketing to predictive
Part of our growth plan in personalised engraving. Brazil now hosts marketing, not only listening to what
consumers want, but anticipating future
the site’s biggest operation worldwide, with
the region is making critical an omnichannel approach that combines trends, too. The content lab is a complete
shift in communication, putting our brands at
investments in one of the physical stores and online engagement in
the heart of communities.
a powerful media engine.
most rapidly advancing Together, these innovations are challenging
parts of our business: Expertise across borders the notions of traditional marketing. Diageo’s
This year, we also set up Diageo’s first digital tools mean communication is no
digital marketing. digital hub in Latin America, allowing us to longer one-way, with brands talking to
share analytics, media insights, online consumers, but consumers talking to each
commerce and scalable content other: a more collective way of engaging with
across countries. online culture. And it’s working. Since our
The new hub has helped us engage more content lab was launched, Diageo’s whisky
closely with the people buying our brands. brands in the region have expanded their
It means we can create more relevant leading share of consumer engagement,
content, engage in live conversations, growing ‘talkability’ share by +7ppt.(1)
and be more responsive to what
consumers are saying online.
The hub has also enabled Diageo to scale up
its key capabilities from one market to
another – getting data from Colombia to
Mexico, fast. Artificial intelligence helps tailor
our work to local social media algorithms,
which has enabled us to optimise our media
in more than 37% of the region.

(1) Sprinklr, 2022

Colleagues meeting (above)

Johnnie Walker Brasil Instagram (right)

30 Diageo Annual Report 2023 Diageo Annual Report 2023 31

OUR PERFORMANCE

Monitoring performance and progress

Reported measures Reported measures

Net sales growth (%) Operating profit growth (%) Basic earnings per share (pence) Net cash from operating activities Return on closing invested
(£ million) capital (%)

STRATEGIC REPORT
2023 10.7 2023 5.1 2023 164.9 2023 3,024 2023 40.5

2022 21.4 2022 18.2 2022 140.2 2022 3,935 2022 35.1

2021 8.3 2021 74.6 2021 113.8 2021 3,654 2021 33.2

2020 (8.7) 2020 (47.1) 2020 60.1 2020 2,320 2020 17.2

2019 5.8 2019 9.5 2019 130.7 2019 3,248 2019 32.9

Definition Definition
Sales growth after deducting excise duties. Operating profit growth, including Profit attributable to equity shareholders of Net cash from operating activities Profit for the year divided by net assets at the
exceptional operating items. the parent company, divided by the weighted comprises the net cash flow from operating end of the financial year.
average number of shares in issue. activities as disclosed on the face of the
consolidated statement of cash flows.
Non-GAAP measures Non-GAAP measures

Organic net sales growth (%)(1) Organic operating profit Earnings per share before Free cash flow (£ million)(1),(2) Return on average invested Total shareholder return (TSR) (%)
growth (%)(1) exceptional items (pence)(1) capital (ROIC) (%)(1)

6.5% R K 7.0% R K 163.5p R K 1,800m R K 16.3% K (2)% R K

2023 6.5 2023 7.0 2023 163.5 2023 1,800 2023 16.3 2023 (2)

2022 21.4 2022 26.3 2022 151.9 2022 2,783 2022 16.8 2022 4

2021 16.0 2021 17.7 2021 117.5 2021 3,037 2021 13.5 2021 32

2020 (8.4) 2020 (14.4) 2020 109.4 2020 1,634 2020 12.4 2020 (19)

2019 6.1 2019 9.0 2019 130.8 2019 2,608 2019 15.1 2019 27

Definition Definition
Sales growth after deducting excise duties, Organic operating profit growth is calculated Profit before exceptional items attributable to Free cash flow comprises the net cash flow from Profit before finance charges and exceptional Percentage growth in the value of a Diageo share
excluding the impact of exchange rate on a constant currency basis, excluding the equity shareholders of the parent company, operating activities aggregated with the net cash items attributable to equity shareholders divided (assuming all dividends and capital distributions
movements, hyperinflation adjustment and impact of exceptional items, certain fair value divided by the weighted average number of received/paid for working capital loans by average invested capital. Invested capital are re-invested).
acquisitions and disposals. remeasurement, hyperinflation adjustment and shares in issue. receivable and other investments, and the net comprises net assets aggregated with
acquisitions and disposals. cash expenditure paid for property, plant and exceptional restructuring costs and goodwill
equipment, and computer software. at the date of transition to IFRS, excluding net
post employment benefit assets/liabilities,
net borrowings and non-controlling interests.

Why we measure Why we measure

This measure reflects our delivery of efficient The movement in operating profit measures our Earnings per share reflects the profitability of the Free cash flow is a key indicator of the financial ROIC is used by management to assess the Diageo’s Directors have a fiduciary responsibility to
growth and consistent value creation. Organic net delivery of efficient growth and consistent value business and how effectively we finance our management of the business. Free cash flow return obtained from the group’s asset base. maximise long-term value for shareholders. TSR
sales growth is the result of the choices we make creation. Consistent operating profit growth balance sheet. Eps measures our delivery of reflects the delivery of efficient growth and Over time, ROIC reflects consistent value creation, measures consistent value creation as it reflects the
between categories and market participation, is a business imperative, driven by investment efficient growth in the year and consistent value consistent value creation as it measures the cash as the returns Diageo generates from its asset returns Diageo has delivered to investors in the
and reflects Diageo’s ability to build brand equity, choices, our focus on driving out costs across the creation over time. generated by the business to fund payments to base are both reinvested in the business and year and over time. We also monitor our relative
increase prices and grow market share. business and improving mix. our shareholders and future growth. used to generate returns for investors through TSR performance against our peers.
dividends and return of capital programmes.

Performance Performance
Reported net sales grew 10.7%, driven by strong Reported operating profit grew 5.1%, mainly Basic eps increased 24.7 pence, mainly driven by Net cash from operating activities was £3,024 ROIC decreased 50bps, mainly driven by TSR was down 2% over the past 12 months driven
organic growth and favourable foreign exchange driven by growth in organic operating profit and organic operating profit growth and exceptional million, a decrease of £911 million compared to increased capex, maturing stock investment and by the lower year-on-year share price.
impacts. Organic net sales growth of 6.5% positive impacts from exchange rate movements. items, partially offset by increased finance fiscal 22. Free cash flow declined by £983 million continued portfolio optimisation through
reflects 7.3 percentage points of positive price/ These favourable items were largely offset by the charges and higher tax. Basic eps before to £1,800 million. Free cash flow declined as acquisitions and disposals. The decline was
mix and a decline in organic volume of 0.8%. negative impact of exceptional operating items, exceptional items increased 11.6 pence. strong growth in operating profit and favourable partially offset by higher organic operating profit
Four out of five regions delivered growth, despite primarily non-cash impairments related to India foreign exchange impacts were more than growth, net of higher tax.
lapping strong double-digit growth at the group and the supply chain agility programme. Organic offset by higher year-on-year working capital
level in fiscal 22. Price/mix was driven by price operating profit grew 7.0%, ahead of organic net outflows, tax payments, interest paid and
increases and premiumisation. sales growth, driven by growth across all regions capital investment.
except North America.
More detail on page 37 More detail on page 37 More detail on page 38 More detail on page 39 More detail on page 39
(1) Organic net sales growth, organic operating profit growth, earnings per share before exceptional items, free cash flow and return on average invested capital are non-GAAP measures.
See definitions and reconciliation of non-GAAP measures to GAAP measures on pages 232-239. Remuneration: Some KPIs are used as a measure in the incentive plan for the remuneration of executives.
R
See our Directors’ remuneration report from page 126 for more detail.
K KPI: Key Performance Indicator
(2) For reward purposes this measure is further adjusted for the impact of exchange rates, hyperinflation adjustment and other factors not controlled by management, to ensure focus on our
underlying performance drivers.

32 Diageo Annual Report 2023 Diageo Annual Report 2023 33

OUR PERFORMANCE continued

Non-financial performance Non-financial performance

Positive drinking Employee engagement (%) Health and safety (LTA) Inclusion and diversity Water efficiency(4) Carbon emissions(4)

84% 0.91 4.14 401

STRATEGIC REPORT
R K K K R K R K R K

Number of people 84% 0.91

44%
2023 2023 2023 4.14 2023 401
educated on the
dangers of underage
1,985,817 2022 82% 2022 0.92 Percentage of female leaders
(2022: 44%)
2022 4.09 2022 424
(2022: 607,374) globally
drinking through a 2021 81% 2021 1.03 2021 4.26 2021 445
Diageo supported Total to date:
education programme 3.8m(1)
2020 N/A(2) 2020 0.60
Percentage of ethnically
43% 2020 4.57 2020 470

2019 80% 2019 0.98 (2022: 41%) 2019 4.70 2019 508
diverse leaders globally

Definition Definition
Number of people educated on the dangers Measured through our Your Voice survey; Number of accidents per 1,000 full-time The percentage of women and the Water use efficiency per litre of product Total direct and indirect carbon
of underage drinking through a Diageo includes metrics for employee satisfaction, employees, directly supervised temporary percentage of ethnically diverse individuals packaged (litres/litre). emissions by weight (market/net based)
supported education programme. advocacy and pride.(3) staff and contractors resulting in time lost who are in Diageo leadership roles. (1,000 tonnes CO2e).
from work of one calendar day or more.

Why we measure Why we measure

We want to change the way the world drinks Employee engagement is a key enabler of Health and safety is a basic human right; our Nurturing an inclusive and diverse culture Water is the main ingredient in all of our Mitigating our impact on climate change is a
for the better by promoting moderation and our performance, as our people deliver our Zero Harm philosophy is that everyone drives commercial performance and is the brands. We aim to improve efficiency, and business imperative. Reporting in detail on
addressing the harmful use of alcohol. We strategy. The survey allows us to measure the should go home safe and healthy, every day, right thing to do. Transparently reporting the minimise our water use, particularly in our efforts to reduce carbon emissions from
build credibility and trust by transparently extent to which employees believe we are everywhere. The LTA measure demonstrates gender and ethnic diversity of our leadership water-stressed areas. Reporting on our efforts our direct operations, even when it is
reporting the total number of people living our values and is a measure of our our engagement with our people on safety cohort reflects our commitment to consistent to increase water efficiency builds credibility challenging to do, demonstrates our
educated on the dangers of underage culture. Reflecting on the results of our and delivering on our Zero Harm philosophy value creation through our diverse workforce, and trust and helps us engage with our commitment to reduce our contribution to
drinking. This figure also demonstrates our employee engagement level and taking and through reduced LTA builds credibility building credibility and trust with our stakeholders on this important topic. Our global warming and helps build credibility
commitment to engaging people on the action where needed each year helps us and trust. stakeholders and engaging with our people efforts to increase our water efficiency also and trust. This is an important topic for our
dangers of harmful alcohol use. build credibility and trust with our people. on inclusion and diversity. reflect our commitment to deliver consistent business and external stakeholders and
value creation by future proofing our business supports our commitment to consistent value
to the impacts of climate change. creation by future proofing our business.

Performance Performance
This year we implemented SMASHED Live in This year 90% of our people completed our This year’s rate of 0.91 is a marginal This year 44% of our leadership roles were Fiscal 23 saw changes to our production Our direct operations carbon emissions
10 new countries and SMASHED Online in Your Voice survey. 84% were identified as improvement on fiscal 22 performance. held by women, the same percentage as last profile which drove a 1.2% reduction in reduced by 5.4% in fiscal 23. The main
12 new countries. We educated 1,985,817 engaged. 91% declared themselves proud to Whilst the numbers of lost-time accidents year and 43% of our leaders were ethnically efficiency overall despite implementation of a drivers contributing to the lower emissions are
young people about the dangers of work for Diageo, 84% would recommend decreased, the severity rate relating to diverse, compared with 41% last year. number of water efficiency projects. Our the beneficial impact from our East Africa
underage drinking. Diageo as a great place to work and 77% lost-time accidents increased due to a water efficiency has increased by 9.4% biomass plants and increases in use of liquid
were extremely satisfied with Diageo as a carry-over of days lost for accidents in 2022. against the 2020 baseline. biofuel and renewable electricity.
place to work. Severity rate is a measure of the seriousness
of the incident and consequent absence
from work.

More detail on page 58 More detail on page 63 More detail on page 65 More detail on page 67 More detail on page 79 More detail on page 82

(1) The baseline year for our ‘Society 2030: Spirit of Progress’ goals is 2020 unless otherwise stated. For our target to educate 10 million young people, parents and teachers on the dangers
of underage drinking the baseline year is 2018.
(2) Because of the Covid-19 pandemic, in 2020 we did not run a full Your Voice survey. Instead we used a pulse survey tool to listen to employees’ feedback and learn from their experiences
of working during the pandemic. We therefore do not have a comparable employee engagement metric for 2020.
(3) In 2021, we updated the way we measure employee engagement in our Your Voice survey to bring it in line with standard practice. The 2019 survey results have been restated to reflect
the use of the same three questions applied in the 2021-2023 surveys (satisfaction, advocacy and pride). Remuneration: Some KPIs are used as a measure in the incentive plan for the remuneration of executives.
(4) In accordance with Diageo’s environmental reporting methodologies and, where relevant, WRI/WBCSD GHG Protocol; data for 2019, the baseline year 2020 and for the intervening R
See our Directors’ remuneration report from page 126 for more detail.
K KPI: Key Performance Indicator
period up to the end of last financial year has been restated where relevant.

34 Diageo Annual Report 2023 Diageo Annual Report 2023 35

SU MMARY FI NANCI AL REV IEW

Chief Financial Officer’s introduction Net sales (£ million) Reported net sales grew 10.7%, driven by strong organic growth and
favourable foreign exchange impacts.

Pages Reported net sales grew 10.7% Organic net sales growth of 6.5% reflects 7.3 percentage points of
positive price/mix and a decline in organic volume of 0.8%. Four out
Chief Financial Officer's introduction 36 Organic net sales grew 6.5% of five regions delivered growth, despite lapping strong double-digit
Summary financial review 37-39 growth at the group level in fiscal 22. Price/mix was driven by price
increases and premiumisation.

STRATEGIC REPORT
Business review
Organic movement
Intro 40-41
North America 42-43
Europe 44-45
1,083 17,113
Asia Pacific 46-47 15,452 702 104
Latin America and Caribbean 48-49 (114) (114)
Africa 50-51
Category and brand review 52-53
"I am encouraged by our fiscal 23 results which Group financial review 54-56
were in line with our medium-term guidance
despite ongoing economic volatility and 2022 Exchange(1) Acquisitions and
disposals
Hyperinflation(2) Volume Price/mix 2023

continued inflationary pressure. Our diversified Reported net sales growth Net cash from operating (1) 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.
portfolio and profitable growth algorithm (2) See pages 181 and 232-239 for details of hyperinflation adjustment.
10.7% á activities
continue to deliver sustainable growth, and our
consistent productivity savings enables us to
£3,024m â Operating profit (£ million) Reported operating profit grew 5.1%, mainly driven by growth in
organic operating profit and positive impacts from exchange rate
smartly reinvest in our brands. Organic net sales growth(1) Free cash flow(1) Reported operating profit grew 5.1% movements. These favourable items were largely offset by the
I am pleased with our performance in fiscal 23. We delivered a strong
set of results, despite ongoing global economic volatility and continued
6.5% á £1,800m â Organic operating profit grew 7.0% negative impact of exceptional operating items, primarily non-cash
impairments related to India and the supply chain agility programme.
inflationary pressure. Both organic net sales and organic operating profit Organic operating profit grew 7.0%, ahead of organic net sales
growth were within our medium-term guidance. Our advantaged portfolio Reported operating profit Return on closing growth, driven by growth across all regions except North America.
of brands and diversified global footprint continue to fuel sustainable
growth on top of two consecutive years of double-digit growth.
growth invested capital
Our profitable growth algorithm underpins this strong top line
performance. Our focus on quality sustainable growth is backed by
5.1% á 40.5% á
investing smartly in marketing and data analytics tools to support our Organic operating profit Return on average 321 4,632
4,409 122 53 22
outstanding brand-building capabilities, active portfolio management growth(1) invested capital(1)
and consumer-led innovation. Combined with our agile and dynamic
7.0% á 16.3% â
(234) (61)
supply chain and operational capabilities, they enable us to deliver
sustainable, long-term growth. Alongside premiumising our portfolio,
we are strategically increasing price and driving productivity, all of Basic earnings per share Total shareholder return
which enables us to invest smartly in the long-term.
We drove £450 million in productivity savings in fiscal 23 and delivered 164.9 pence á (2)% â 2022 Exceptional
operating items(1)
Exchange Acquisitions and
disposals
FVR(2) Hyperinflation(3) Organic movement 2023

our highest-ever contribution from supply initiatives. These productivity

savings fuelled a 6% increase in marketing spend and delivered (1) For further details on exceptional operating items see pages 179-181.
organic operating margin expansion of 15bps. Earnings per share before (2) Fair value remeasurements. For further details see page 55.
(3) See pages 181 and 232-239 for details of hyperinflation adjustment.
We continued our disciplined conversion of profit into cash and delivered exceptional items(1)
free cash flow of £1.8 billion. Strong operating discipline led to a reduction in
debtors. However, creditors declined due to the moderation of sales growth 163.5 pence á
in the year. We remain a progressive dividend payer and in addition to
completing our £4.5 billion multi-year return of capital programme, we also (1) Organic net sales growth, organic operating profit growth, earnings per share before
exceptional items, free cash flow and return on average invested capital are non-
returned an additional half a billion pounds of capital to shareholders. In
GAAP measures. See definitions and reconciliation of non-GAAP measures to GAAP
total, we returned £3.1 billion to shareholders through dividends and share measures on pages 232-239.
buybacks in fiscal 23.
Our core capabilities, strategic priorities and highly-engaged people give
me confidence in our ability to navigate short-term volatility and uncertainty
while continuing to drive sustainable long-term growth and deliver
shareholder value.
Finally, starting in fiscal 24, in line with reporting requirements the functional
currency of Diageo plc changed from sterling to US dollar. Diageo has also
changed its presentation currency to US dollar."
Lavanya Chandrashekar (Chief Financial Officer)

36 Diageo Annual Report 2023 Diageo Annual Report 2023 37

 c on tin ued

Operating margin (%) Reported operating margin declined by 1 7bps, with organic Net cas from operating acti ities and free Net cash from operating activities was 3,02 million, a decrease of
operating margin expansion more than offset by exceptional 911 million compared to fiscal 22. Free cash flow declined by 983
Reported operating margin declined 1 7 ps operating items, negative impact of foreign exchange, acquisitions, cas flow (£ million) million to 1,800 million.
Organic operating margin e panded 15 ps disposals and other items. enerated £ 0 million net cas from operating Free cash flow declined as strong growth in operating profit and
Organic operating margin expanded by 15bps, reflecting disciplined acti ities(1) and £1 00 million free cas flow favourable foreign exchange impacts were more than offset by
cost management despite inflation. Strong operating margin higher year-on-year wor ing capital outflows, tax payments, interest
expansion in Asia Pacific, Africa and atin America and aribbean paid and capital investment.

STRATEGIC REPORT
was partially offset by declines in North America and Europe.
The higher year-on-year wor ing capital outflow was primarily driven
Organic gross margin declined by 97bps, primarily driven by cost by normalisation of creditors relative to fiscal 22 as our growth rate
pressures. Price increases more than offset the absolute impact of moderated in fiscal 23.
cost inflation.
The additional tax payments were the result of increased profit
impacting tax instalments and higher balancing payments. The
increase in interest paid reflects the higher interest rate environment
Organic movement globally.

3,935
28 5 384
23 14 98 27 1 1,224 3,024
2,783 122
(112) (58) (15) (97) (1,152) 72 1,800
(996) (87)
(252) (226)

2022 Exceptional Exchange Acquisitions and Other(3) ross margin ar eting Other operating 2023(1) F22 Net F22 apex F22 Free Exchange(2) Operating or ing apex Tax Interest Other(5) F23 Free F23 apex F23 Net
operating items(2) disposals items cash from and cash flow profit(3) capital( ) cash flow and cash from
operating movements movements operating
activities in loans in loans activities
(1) Operating margin in waterfall is rounded to nearest decimal place. and other and other
(2) For further details on exceptional operating items see pages 179-181. investments investments
(3) Fair value remeasurements and hyperinflation adjustment. For further details on fair value remeasurements see page 55. See pages 181 and 232-239 for details of hyperinflation
adjustment. (1) Net cash from operating activities excludes net capex (2023 (1,167) million 2022 (1,080) million) and movements in loans and other investments.
(2) Exchange on operating profit before exceptional items.
(3) Operating profit excludes exchange, depreciation and amortisation, post employment charges of 36 million and other non-cash items.
( ) or ing capital movement includes maturing inventory.
asic earnings per s are (pence) asic eps increased 2 .7 pence, mainly driven by organic operating (5) Other items include dividends received from associates and joint ventures, movements in loans and other investments and post employment payments.
profit growth and exceptional items, partially offset by increased
asic eps increased 17.6% from 1 0. pence to 16 . finance charges and higher tax.
pence asic eps before exceptional items increased 11.6 pence.
Ret rn on a erage in ested capital (%)(1) ROI decreased (50)bps, mainly driven by increased capex,
maturing stoc investment and continued portfolio optimisation
asic eps efore e ceptional items(1) increased 7.6% RO decreased (50) ps through acquisitions and disposals. The decline was partially offset by
from 151. pence to 16 .5 pence higher organic operating profit growth, net of higher tax.

13 8 20 08 23 09 164 9
13 1 53
140 2
(2 0) (5 5) (4 3) 132
(1 7) 16 8 1 16 3
(33) (46)
(39) (65)

2022 Exceptional Exchange Acquisitions Organic Associates Finance Tax(5) Share Non- FVR(6) Hyperinflation 2023
items after on and operating and joint charges( ) buybac (3) controlling (operating 2022 Exchange Acquisitions and Organic Associates and Tax Other 2023
tax(2) operating disposals(3) profit ventures interests profit) (7) disposals operating profit joint ventures
profit
(1) ROI calculation excludes exceptional operating items from operating profit. For further details on ROI see page 238.
(1) See pages 232-239 for explanation of the calculation and use of non- AAP measures.
(2) For further details on exceptional items see pages 179-181.
(3) Includes finance charges net of tax.
( ) Excludes finance charges related to acquisitions, disposals, share buybac s and includes finance charges related to hyperinflation adjustments.
(5) Excludes tax related to acquisitions, disposals and share buybac s.
(6) Fair value remeasurements. For further details see page 55.
(7) Operating profit hyperinflation adjustment movement was 12 million compared to fiscal 22 (F23 22 million F22 10 million).

38 Diageo Annual Report 2023 Diageo Annual Report 2023 39

 rod ction facilities

O r global
Our regional profile maximises the opportunity for
The company owns manufacturing production facilities across the globe, including distilleries, breweries, pac aging plants, maturation warehouses,
growth in our sector. here our products are sold cooperages, and distribution warehouses. iageo s brands are also produced at plants owned and operated by third parties and joint ventures at
each mar et is accountable for its own several locations around the world. e believe that our facilities are in good condition and wor ing order. e have adequate capacity to meet our
current needs, and, in the beer and spirit categories, we have underta en activities to increase our production capacity to address our anticipated
performance and driving growth.

reac
future demand.
The major facilities with locations, principal activities, and products are presented in the below table.

STRATEGIC REPORT
ocation rinci a activitie ro ct
% s are of reported net sales region(1)( )
nited ingdom distilling, bottling, warehousing, cooperage beer, scotch, gin, vod a, rum, ready to drin , non-alcoholic

ort merica ro e Ireland distilling, brewing, bottling, warehousing beer, liqueur, Irish whis ey, non-alcoholic
Italy distilling, bottling, warehousing vod a, rum, ready to drin , non-alcoholic
% 1% Tur ey distilling, bottling, warehousing ra i, vod a, gin
North America distilling, bottling, warehousing vod a, gin, rum, anadian whis y, S whis ey, ready to drin
Great Britain
ra il distilling, bottling, warehousing cacha a, vod a, ready to drin
US Spirits Southern Europe exico distilling, bottling, warehousing tequila
Northern Europe East Africa distilling, brewing, bottling, pac aging, warehousing beer, rum, vod a, gin, whis y, brandy, liqueur
Ireland Nigeria distilling, brewing, bottling, pac aging beer, rum, vod a, gin
Diageo Beer Company (DBC) USA Eastern Europe South Africa distilling, bottling, warehousing rum, vod a, gin
Canada Turkey
Other (principally Travel Retail) Other (principally Travel Retail) AR distilling, brewing, bottling, warehousing beer, vod a, gin
India distilling, bottling, warehousing rum, vod a, Indian- ade Foreign iquor (I F ), whis y, scotch, gin
Australia distilling, bottling, warehousing rum, vod a, gin, ready to drin
ia aci ic
atin merica an ari ean
11% rica 1 % or more etai a o t o r ca ita inve tment ea e ee age

Brazil
10% India
O r ro te to cons mer
e have five different route to consumer models across our business. ost of the regions employ four of the five high level models defined below
however, how each model operates in certain countries will vary, as will the percentage of net sales delivered through the respective models in each
Mexico East Africa
Greater China mar et.
Africa Regional Markets (ARM) Australia olesalers and istri tors
CCA (Central America and Caribbean)
including Ghana, Cameroon, South East Asia
Indian Ocean and Angola iageo sells to a wholesaler or distributor who also sells a range of other brands and categories directly to end outlets where consumers can
South LAC North Asia
Andean Nigeria Other purchase our brands. here required, this model may include a government control board (or similar), such as in certain states in the S and
Other
(principally Travel Retail) South Africa (principally Travel Retail Asia and Middle East) anada.
Other (principally Travel Retail)
odern rade
iageo sells directly to a customer who owns and manages retail outlets, who then in turn sells to consumers via their outlets.
(1) The above map is intended to illustrate general geographic regions where iageo has a presence and/or in which its products are sold. It is not intended to imply that iageo has a
presence in and/or that its products are sold in every country or territory within a geographic region. e ar etplace
(2) ased on reported net sales for the year ended 30 une 2023. oes not include corporate net sales of 88 million (2022 5 million).
iageo sells to a third-party digital mar et place customer where that customer sells to 2 customers and consumers.

atin merica
irect to ons mer
i ca ort merica ro e ia aci ic an ari ean rica iageo sells directly to consumers, predominantly through portals such as Thebar.com, which is a growing route to consumer model for our
Volume (E m) 52. 51.3 80.8 26.2 32.7 business. It allows for direct interface with our consumers rather than through third-party sites as in the e ar etplace model above.
Reported net sales(1) ( million) 6,758 3,569 3,200 1,799 1,699
irect to tore
Reported operating profit(2) ( million) 2,592 1,097 32 661 176 iageo sells and delivers directly to end outlets rather than via a central purchasing customer as in the odern Trade model above. This model is
Operating profit before exceptional items(3) ( million) 2,689 1,105 905 661 220 less common than the other models. For example, it is used in Ireland for beer distribution.
ater efficiency (litres per litre of product pac aged) 5.11 .98 2.91 .15 3.19
Total direct and indirect carbon emissions by weight (mar et/net
based) (1,000 tonnes O2e) 83 19 9 26 89
Average number of employees( )
3,115 10,062 9,000 ,325 3,735
(1) Excluding corporate net sales of 88 million (2022 5 million).
(2) Excluding net corporate operating costs of 326 million (2022 238 million).
(3) Excluding exceptional operating charges of 622 million (2022 388 million) and net corporate operating costs of 326 million (2022 238 million).
( ) Employees have been allocated to the region where they live.

40 Diageo Annual Report 2023 Diageo Annual Report 2023 41

 c on tin u ed

Regional performance ar et ig lig ts pirits

Nort merica Nort merica is t e largest mar et for iageo and represents
o er one t ird of o r net sales. e a e a well positioned
portfolio of rands t at leans into premi misation and ig
Reported net sales grew 11%, primarily driven by a favourable
foreign exchange impact from the strengthening S dollar.
Organic net sales were flat as growth in anada and iageo eer
Tequila net sales grew 15%, and drove significant share gains in
both the spirits industry and tequila category. asamigos net sales
grew 1 % driven by strong price/mix and volume growth, and the
growt categories s c as w is e and te ila. O r strateg is ompany SA ( SA) were offset by a decline in S Spirits. launch of asamigos ristalino. on ulio net sales grew 13%,
Strong price/mix growth was offset by a decline in volume, while primarily driven by aged variants and the launch of ultra-premium
foc sed on accelerating s staina le growt t ro g data led the region held share of T A. on ulio Rosado Reposado. oth asamigos and on ulio
insig ts targeted in estment and e cellence in inno ation and S Spirits net sales declined 1%, lapping strong double-digit growth shipments grew ahead of depletions as supply availability enabled

STRATEGIC REPORT
o r ro te to mar et. impacted by distributor stoc replenishment and increased distributors to increase inventory to more optimal levels.
inventories of imported products in fiscal 22. epletion growth was rown Royal whis y net sales declined 10%, lapping inventory
approximately two percentage points ahead of shipment growth in replenishment in fiscal 22 when the brand recovered from supply
e financials fiscal 23, with some variation across brands. Overall inventory levels constraints. rown Royal gained double-digit share of the anadian
Acquisitions and Organic e orte at distributors at the end of fiscal 23 were in line with historical levels. whis y category, and depletions grew ahead of shipments in fiscal
2022 Exchange disposals movement Ot er movement
SA net sales grew 1% reflecting strong growth in uinness, 23.
million million million mi ion mi ion mi ion
partially offset by a decline in Smirnoff flavoured malt beverages. Vod a net sales declined 7%, primarily due to roc, partially offset
Net sales 6,095 632 20
Organic operating margin declined by 101bps, primarily driven by by growth in Smirnoff. Smirnoff growth of % was driven by core
ar eting 1,200 122 15 cost inflation and an adverse category mix. Strategic price increases and flavoured variants. etel One net sales were flat, reflecting
Operating profit before exceptional items 2, 5 2 9 (12) and productivity savings more than offset the absolute impact of growth in the core variant offset by a decline in etel One
Exceptional operating items(2) (1) cost inflation. otanicals. roc net sales declined 32% as consumers shifted into
Operating profit 2, 53 ar eting investment grew 2% as we continue to invest and other spirits categories.
support growth across ey categories. ohnnie al er net sales declined 13%. ohnnie al er gained
oubling the number of brands running responsible drin ing share of the scotch category driven by ohnnie al er lac abel
ar ets rands campaigns, we reached more than 150 million consumers. e also and ohnnie al er lue abel, and depletions grew ahead of
led efforts with lac , atino, and Native American organisations to shipments.
address the harmful use of alcohol in the nited States through our Rum net sales declined 1%, primarily due to aptain organ, which
ulticultural onsortium for Responsible rin ing. declined 2%. acapa grew 13% driven by super-premium and
Our operations reduced Scope 1 and 2 carbon emissions by 17% luxury variants.
through continued energy efficiency and renewable energy ulleit whis ey net sales declined 6%, lapping inventory
initiatives. ey factors in this included a full year of operation for our replenishment in fiscal 22 when the brand recovered from supply
carbon neutral distillery at ebanon, powered by 100% renewable constraints. ulleit whis ey gained both spirits industry and S
electricity, and running our Valleyfield site on renewable natural whis ey category share, and depletions grew double-digit.
gas. uchanan s net sales grew 10%, primarily driven by the launch of
ue to higher volume of distilled products going to maturation, uchanan s Pineapple, an innovation that gained spirits industry
overall water efficiency decreased by 0.8%. e implemented share. uchanan s scotch declined %, but gained both spirits
water-saving initiatives across our sites that enabled us to reduce industry and scotch category share, and depletions grew ahead of
The above map is intended to illustrate general geographic regions where iageo has a total water usage compared to last year. shipments.
presence and/or in which its products are sold. It is not intended to imply that iageo has a Single alts net sales grew 25%, primarily driven by ultra-premium
presence in and/or that its products are sold in every country or territory within a
geographic region. agavulin 16 O and luxury innovation agavulin 11 O harred Oa
as .
e orte net a e mar et e orte net a e categor Spirit-based ready to drin (RT ) net sales declined % primarily
due to lapping the launch of rown Royal RT in fiscal 22 and oyal
S Spirits 9 underperformance in certain S states.
ò ò Spirits
ò iageo eer ompany SA ò eer
ò anada ò Ready to drin
ò Other (principally Travel Retail) ò Other

Organic e orte Organic e orte Organic Organic e orte

vo me vo me net a e net a e vo me net a e net a e
movement movement movement movement
o a giant oca tar movement movement movement
ar et an categorie an re erve
North America(3) rown Royal
on ulio
S Spirits(3) asamigos(7)
SA( ) ohnnie al er
anada Smirnoff
aptain organ
Spirits(3) etel One
eer uinness
Ready to drin aileys
(1) Fair value remeasurements. For further details see page 55. ulleit whis ey(8)
(2) For further details on exceptional operating items see pages 179-181. uchanan s
(3) Reported volume movement has been impacted by acquisitions and/or disposals. For
further details see pages 232-236. (5) Spirits brands excluding ready to drin and non-alcoholic variants.
( ) ertain spirits-based ready to drin products in certain states are distributed through (6) Organic equals reported volume movement.
SA and those net sales are captured within SA. (7) asamigos trademar includes both tequila and me cal.
(8) ulleit whis ey excludes ulleit rafted oc tails.

42 Diageo Annual Report 2023 Diageo Annual Report 2023 43

 c on tin u ed

Regional performance ar et ig lig ts

rope rope is a di erse region wit a trend leading on trade c annel and to rism
otspots all of w ic offer a strong platform for t e de elopment of o r premi m
rands. e old a leaders ip positions across ma or categories and mar ets and
Reported net sales grew 11%, driven by organic growth and the
hyperinflation adjustment(1) related to Tur ey, partially offset by an
unfavourable impact from foreign exchange.
reat ritain net sales grew 7%, mostly driven by strong
performance in uinness with strong mar et share gains. Spirits net
sales growth was driven by tequila, vod a and RT s, partially offset
Organic net sales grew 11%, driven by double-digit growth across by gin.
a e een a le to ac ie e strong s are gains in t e last fiscal to deli er anot er
most mar ets. rowth was mainly driven by price/mix, while Northern Europe net sales grew 11%. rowth was primarily driven
ear of do le digit organic net sales growt . holding volume. by scotch with strong double-digit growth in ohnnie al er, and
Price/mix was primarily driven by strong price increases across all strong growth in vod a and tequila. Spirits gained mar et share.

STRATEGIC REPORT
e financials mar ets, and supported by positive mix in beer and scotch. Southern Europe net sales grew 12%, led by strong performance in
Spirits net sales grew 10%, driven by growth in scotch, vod a, scotch, in addition to tequila and gin. rowth reflected continued
Acquisitions and Organic e orte
2022 Exchange disposals movement Ot er erin ation movement
tequila. ohnnie al er grew 29% driven by Northern Europe, recovery in the on-trade and increased tourism, alongside mar et
million million million mi ion mi ion mi ion mi ion
Southern Europe and Travel Retail. share gains in spirits.
eer net sales grew 18%, driven by price increases and volume Ireland net sales grew 16%, primarily driven by growth in uinness
Net sales 3,212 (85) (9)
growth. uinness net sales grew 20% and gained share in the on- reflecting share gains in a recovering on- trade.
ar eting 577 3 2 trade in reat ritain and Ireland. Eastern Europe net sales declined 3%, due to the suspension of
Operating profit before exceptional items 1,017 5 (31) Organic operating margin declined by 13bps, primarily driven by exports to and sales in Russia as announced in arch 2022 and the
Exceptional operating items(3) (1 6) cost inflation, partially offset by price increases, improved category winding down of its operations announced in une 2022. In the rest
Operating profit 871 mix and productivity savings. of the mar et, spirits grew double-digit and gained mar et share
ar eting investment grew 7%, with focused investment in primarily driven by ohnnie al er.
Tanqueray, ohnnie al er, aileys and uinness. Tur ey net sales grew 38%, with volume growth of 9%. rowth was
The S ASHE programme educated 112,910 young people on the driven by price increases in response to inflation and higher excise
ar ets rands dangers of underage drin ing. duties. rowth was broad-based, led by scotch, vod a and ra i.
e built strong momentum in year two of our water replenishment
projects in Tur ey, generating the annual capacity to replenish
137,3 9m3 water.
Scope 1 and 2 carbon emissions increased by 35%, primarily driven
by increased scotch distillation. To mitigate some of this growth we
switched some ey distilleries (Auchrois , Talis er and ardhu) to
biofuels. Our H emissions for beer stayed flat, even though
production volumes were higher than planned.
ater efficiency decreased by 2. % due to the volume of distilled
product increasing faster than pac aged product, because of its
maturation period. For beer, optimising pasteurisation in Runcorn
The above map is intended to illustrate general geographic regions where iageo has a presence and water recovery in St ames s ate led to a 9% improvement in
and/or in which its products are sold. It is not intended to imply that iageo has a presence in water efficiency.
and/or that its products are sold in every country or territory within a geographic region.
In year two of our three-year uinness regenerative agriculture pilot,
e orte net a e mar et e orte net a e categor launched in February 2022, we recruited farms across Ireland
and gathered baseline data to let us accurately trac the project s
ò reat ritain
ò Spirits impact.
ò Northern Europe
ò eer
ò Southern Europe (1) See pages 181 and 232-239 for details of hyperinflation adjustment.
Ireland
ò Ready to drin
ò
ò Eastern Europe ò Other

ò Tur ey
ò Other (principally Travel Retail)

Organic e orte Organic net e orte net Organic Organic e orte

vo me vo me ae ae vo me net a e net a e
movement movement movement movement movement movement movement
ar et an categorie o a giant an oca tar
( )
Europe uinness
ohnnie al er
reat ritain( ) aileys
Southern Europe( )
Smirnoff
Northern Europe( )
aptain organ
Ireland( ) Tanqueray
Eastern Europe( )
Tur ey( ) en Ra i
(1) Fair value remeasurements. For further details see page 55.
Spirits( ) (2) See pages 181 and 232-239 for details of hyperinflation adjustment.
(3) Exceptional items are in respect of iageo s decision, announced on 28 une 2022, to
eer wind down its operations in Russia. For further details on exceptional operating items
( )
Ready to drin see pages 179-181.
( ) Reported volume movement has been impacted by acquisitions and/or disposals. For
further details see pages 232-236.
(5) Spirits brands excluding ready to drin and non-alcoholic variants.
(6) Organic equals reported volume movement, except for Tanqueray and , which had
reported volume movement of 1% and (6)% respectively.

44 Diageo Annual Report 2023 Diageo Annual Report 2023 45

 c on tin u ed

Regional performance ar et ig lig ts

sia acific n sia acific o r foc s is to grow in ot de eloped and
emerging mar ets across o r entire portfolio. e manage o r
portfolio to meet t e increasing demands of t e growing middle
Reported net sales grew 11%, primarily reflecting strong organic
growth and a favourable impact from foreign exchange.
Organic net sales grew 13%. All mar ets grew, except reater
India net sales grew 17%, driven by strong consumer demand and
continued premiumisation. I F whis y and scotch delivered
double-digit growth. Scotch growth was driven by lac og,
hina, with strong double-digit growth in India, South East Asia, ohnnie al er lac abel and lac hite.
class and aim to inspire o r cons mers to drin etter not more.
Travel Retail Asia and iddle East and North Asia. reater hina net sales declined %. Strong performance in scotch
Price/mix of 7% was led by strong price increases across all was more than offset by a decline in hinese white spirits which
e financials mar ets. Positive mix was driven by strength in premium-plus scotch continued to be impacted by ovid-19 restrictions, especially in the

STRATEGIC REPORT
in most mar ets. Volume grew 8% in premium-plus price tiers. on-trade. Scotch grew 13%, driven primarily by Taiwan, with strong
Acquisitions and Organic e orte
2022 Exchange disposals movement movement Spirits net sales grew 1 %, primarily driven by double-digit growth in performance in the super-premium-plus segment led by ohnnie
million million million mi ion mi ion scotch, the region s largest category. I F whis y(1) also contributed al er and The Singleton.
Net sales 2,88 65 (102) to growth, partially offset by a decline in hinese white spirits. Australia net sales grew 2%, primarily driven by price increases.
ar eting
Organic operating margin expanded by 363bps as the benefits rowth was led by rum, tequila and beer.
90 10
from the continued recovery of Travel Retail, price increases and South East Asia net sales grew 33%, benefitting from a strong
Operating profit before exceptional items 711 15 (21)
operational efficiencies more than offset the impact of cost inflation. recovery following the easing of ovid-19 restrictions and strong
Exceptional operating items(1) (2 1) ar eting investment grew 9%, with focused investment in scotch in growth in the super-premium-plus segment. Scotch grew 31%,
Operating profit 70 South East Asia, India, and reater hina. mostly driven by ohnnie al er premium variants, and single
Advocating for responsible consumption of alcohol through malts, primarily The Singleton and ortlach.
RIN i and brand campaigns, we reached more than 13 million North Asia ( orea and apan) net sales grew 15%, benefitting from
consumers with messages that promote moderation. the recovery of the on-trade. rowth was primarily driven by
The S ASHE programme educated 3 0,216 young people on the double-digit growth in indsor and ohnnie al er premium-plus
ar ets rands dangers of underage drin ing. variants led by ohnnie al er lue abel and ohnnie al er
e trained more than 8,236 people on business and hospitality lac abel.
s ills through our earning for ife programme and delivered 38, 67 Travel Retail Asia and iddle East net sales grew 67% primarily
training sessions through iageo ar Academy. driven by ohnnie al er premium-plus variants, led by ohnnie
Our water efficiency improved by 16.2% this year, mainly by al er lue abel and ohnnie al er lac abel.
focussing on continuous improvement across the region. e piloted
waterless cooling towers successfully in India and plan to introduce
them more widely.
Our Scope 1 and 2 carbon emissions decreased by 9%, mainly
because of a green energy tariff in Australia and focussed energy
improvement across the region.

(1) Indian- ade Foreign iquor (I F ) whis y.

The above map is intended to illustrate general geographic regions where iageo has a
presence and/or in which its products are sold. It is not intended to imply that iageo has a
presence in and/or that its products are sold in every country or territory within a
geographic region.

e orte net a e mar et e orte net a e categor

ò India ò Spirits
ò reater hina ò eer
ò Australia ò Ready to drin

ò South East Asia ò Other

ò North Asia
ò Other (principally Travel Retail Asia and
iddle East)

e orte Organic net e orte net Organic Organic e orte

Organic vo me vo me net a e net a e
vo me ae ae
ar et an movement
movement movement movement movement movement movement
categorie o a giant an oca tar
Asia Pacific(2) ohnnie al er
Shui ing Fang(5)
India(2) c owell s
reater hina uinness
Australia The Singleton
South East Asia(2) Smirnoff
North Asia indsor
Travel Retail Asia lac hite
and iddle East (1) For further details on exceptional operating items see pages 179-181.
(2) Reported volume movement has been impacted by acquisitions and/or disposals. For
further details see pages 232-236.
Spirits(2)(3)
(3) Spirits brands excluding ready to drin and non-alcoholic variants.
eer ( ) Organic equals reported volume movement.
Ready to drin (5) rowth figures represent total hinese white spirits of which Shui ing Fang is the
principal brand.

46 Diageo Annual Report 2023 Diageo Annual Report 2023 47

 c on tin u ed

Regional performance ar et ig lig ts

atin merica n atin merica and ari ean ( ) we are aiming to increase o r
mar et s are t ro g foc ssed cons mer centric deli er across core
categories incl ding scotc gin te ila and od a. e do t is t ro g
Reported net sales grew 18%, reflecting organic growth and a
favourable impact from foreign exchange, mainly due to a
strengthening of the exican peso and ra ilian real.
ra il net sales grew 8%, led by double-digit growth in ohnnie
al er and Old Parr. rowth was driven by price increases and
higher mar eting investment, leading to mar et share growth.
and ari ean targeted mar eting in estment in cons mer foc ssed occasions w ere
traditionall non spirit prod cts a e ad a strong presence.
Organic net sales grew 9%, with most mar ets delivering growth,
despite lapping strong double-digit growth in fiscal 22. rowth was
exico net sales grew 9%, primarily driven by scotch and tequila.
Scotch growth was led by ohnnie al er Red abel and ohnnie
broad-based across price tiers, except for value, which declined as al er lac abel, driven by price increases. Tequila growth was
a result of our premiumisation strategy. Strong price/mix was driven by price increases, the lapping of aged liquid supply

STRATEGIC REPORT
partially offset by a 3% decline in volume, primarily in the value constraints in fiscal 22 and increased mar eting investment.
price tier. ouble-digit sales growth in the first half of fiscal 23 was entral America and aribbean ( A) net sales grew 1 %, mainly
e financials followed by inventory normalisation in the second half. driven by scotch and tequila. rowth was driven by price increases,
Acquisitions and Organic e orte
Price/mix was driven by strong price increases across all mar ets, premiumisation and continuing momentum in the on-trade. Scotch
2022 Exchange disposals movement Ot er movement and positive mix supported by the strength in premium-plus scotch growth was mostly driven by ohnnie al er lac abel and
million million million mi ion mi ion mi ion in most mar ets. uchanan s, supported by increased mar eting investment. Tequila
Net sales 1,525 129 3 Spirits net sales grew 11%, primarily led by double-digit growth in growth was driven by on ulio 19 2.
ar eting 2 3 18 1
scotch, particularly ohnnie al er lac abel, ohnnie al er South A (Argentina, olivia, hile, Ecuador, Paraguay, Peru and
Red abel and Old Parr. rowth was also driven by strong double- ruguay) net sales grew 21%, primarily driven by scotch, vod a and
Operating profit 538 52
digit growth in on ulio and Smirnoff. gin. rowth was driven by price increases and premiumisation,
Organic operating margin expanded by 72bps. The positive impact partially offset by a decline in volume.
of price increases, premiumisation, leverage on operating costs and Andean ( olombia and Vene uela) net sales declined 7%, due to
one-off tax benefits more than offset the increases in mar eting an adverse macroeconomic environment in olombia. Strong price
ar ets rands investment and cost inflation. increases and premiumisation were more than offset by a decline in
ar eting investment grew 1 %, ahead of organic net sales growth, volume.
with increased investment in most mar ets.
e reached more than 176 million people with campaigns
promoting moderation. They included erribando itos , a
campaign created in fiscal 21 for Peru and expanded this year to
the aribbean and entral America mar et. It aims to challenge
myths about alcohol consumption. In fiscal 23, erribando itos
reached more than 51 million people.
The S ASHE programme educated 98 ,213 young people on the
dangers of underage drin ing.
e reduced our Scope 1 and 2 carbon emissions by 32%. Tequila
was the biggest contributor, through new or upgraded biomass
The above map is intended to illustrate general geographic regions where iageo has a
presence and/or in which its products are sold. It is not intended to imply that iageo has a
boilers in exico, and our changing production mix has also played
presence in and/or that its products are sold in every country or territory within a a part.
geographic region. e generated the annual capacity to replenish more than 280,977
e orte net a e mar et e orte net a e categor m3 through water sanitation and hygiene, tree planting and water
catchment rehabilitation projects for communities in ra il and
exico.
ra il ò Spirits
ò
exico ò eer
ò
ò Ready to drin
ò A
ò Other
ò South A
ò Andean
ò Other (principally Travel Retail)

Organic e orte Organic net e orte net Organic Organic e orte

vo me vo me ae ae vo me net a e net a e
movement movement movement movement movement movement movement
ar et an categorie o a giant an oca tar
atin America and ohnnie al er
aribbean(2) uchanan s
on ulio
ra il(3) Old Parr
exico(2) Smirnoff
A lac hite
(3)
South A Tanqueray
Andean(2) aileys
(1) Fair value remeasurements. For further details see page 55.
Spirits(2) (2) Reported volume movement has been impacted by acquisitions and/or disposals. For
eer further details see pages 232-236.
(3) From 1 uly 2022 ruguay and Paraguay domestic channels moved on a
Ready to drin management basis from P (Paraguay, ruguay and ra il) to PE A (Peru,
Ecuador, olivia, Argentina and hile) and the new cluster has been called South
A . This reflects how management reviews performance.
( ) Spirits brands excluding ready to drin and non-alcoholic variants.
(5) Organic equals reported volume movement.

48 Diageo Annual Report 2023 Diageo Annual Report 2023 49

 c on tin u ed

Regional performance ar et ig lig ts

frica n frica o r strateg is to grow o r eers fast and o r spirits
faster. O r operating model see s to ild resilience agilit and
strengt into o r frican sinesses as t e de elop. e dri e
Reported net sales grew 1%, primarily driven by organic growth and
disposals, mostly offset by an unfavourable impact from foreign
exchange.
East Africa net sales declined 2%. rowth in spirits was more than
offset by a volume decline in beer following price and duty
increases. Spirits growth was primarily driven by scotch, particularly
Organic net sales grew 5%, with growth across all mar ets, except ohnnie al er.
smart in estments t ro g local man fact ring inno ation and
East Africa. rowth was driven by price increases, partially offset by Africa Regional ar ets net sales grew 22% led by growth in beer,
partners ips to nloc growt . a decline in volume. primarily driven by alta uinness supported by price increases.
Price/mix of 12% was driven by price increases across all mar ets Spirits growth was primarily driven by ohnnie al er lac abel.

STRATEGIC REPORT
e financials and positive mix. Volume declines were primarily in the value and Nigeria net sales grew 11%. rowth was led by uinness and Orijin.
Acquisitions and Organic e orte standard price tiers. South Africa net sales grew 1%, primarily driven by growth in tequila
2022 Exchange disposals movement movement Spirits net sales grew 8%, driven by growth in international spirits and rum, which offset declines in vod a and gin. Super-premium-
million million million mi ion mi ion particularly ohnnie al er lac abel, and Orijin. plus brands grew strongly at 38%.
Net sales 1,682 ( 0) (26) eer net sales grew 3%, with strong growth in Africa Regional
ar eting 199 (3) (5) ar ets and Nigeria, partially offset by a decline in East Africa.
Operating profit before exceptional items 315 (1 1) 9 rowth was primarily driven by alta uinness and uinness,
which grew 22% and 7% respectively.
Exceptional operating items(1)
Organic operating margin expanded by 126bps, primarily driven by
Operating profit 315 price increases, productivity savings, positive category mix and
lapping prior year one-off costs. These impacts were partially offset
by cost inflation.
ar ets rands ar eting investment grew 2%, focused on supporting spirits
premiumisation and uinness.
The S ASHE programme educated 5 8, 78 young people on the
dangers of underage drin ing.
e reduced our Scope 1 and 2 carbon emissions by 33%, than s
largely to commissioning and optimising three biomass facilities in
enya and ganda.
Our water efficiency decreased by 2.6% because of lower
production volumes. e partly mitigated this by commissioning our
water recovery plants in Nigeria and further optimising our water
recovery plants in enya and ganda.
e trained more than 9,517 people (51% women) in business and
hospitality s ills through our earning for ife programme in seven
countries, including for the first time, o ambique.
The above map is intended to illustrate general geographic regions where iageo has a
presence and/or in which its products are sold. It is not intended to imply that iageo has a Our community water, sanitation and hygiene ( ASH) programmes
presence in and/or that its products are sold in every country or territory within a provided clean water, sanitation and hygiene for water-stressed
geographic region. communities near our sites in all our water-stressed mar ets.
Reported net sales mar et (%) Reported net sales categor (%)

ò Spirits
ò East Africa
ò eer
ò Africa Regional ar ets
ò Ready to drin
ò Nigeria
ò Other
ò South Africa
ò Other (principally
Travel Retail)

Organic e orte Organic e orte Organic Organic net e orte net

vo me vo me net a e net a e vo me ae ae
movement movement movement movement movement movement movement
ar et an categorie o a giant an oca tar
Africa(2) uinness
ohnnie al er
East Africa Smirnoff
Nigeria Ot er eer
Africa Regional ar ets(2) alta uinness
South Africa Senator
Tus er
Spirits(2) Serengeti
eer(2) (1) For further details on exceptional operating items see pages 179-181.
Ready to drin (2) (2) Reported volume movement has been impacted by acquisitions and/or disposals. For
further details see pages 232-236.
(3) Spirits brands excluding ready to drin and non-alcoholic variants.
( ) Organic equals reported volume movement, except for uinness and alta uinness,
which had reported volume movement of (9)% and (9)% respectively.

50 Diageo Annual Report 2023 Diageo Annual Report 2023 51

 c on tin u ed

lo al giants local stars and reser e(1)

Organic Organic e orte
vo me net a e net a e
movement movement movement

e categories o a giant
Organic Organic e orte e orte ohnnie al er 9 15 19
vo me net a e net a e net a e
movement movement movement categor uinness 1 16 17

STRATEGIC REPORT
irit Smirnoff (2) 8 1

Scotch aileys (5) 5

2 12 16 25
Tequila aptain organ (2) 5 11
10 19 32 12
Vod a(3)( ) Tanqueray ( ) 1 6
(3) 1 7 9
anadian whis y(5) oca tar
(10) (9) 6
Rum( ) rown Royal (12) (10)
(7) 2 9 5
iqueurs uchanan s (3) 7 15
( ) (1) 3 5
in( ) c owell s (1) 6
5 8 5
I F whis y (5) Shui ing Fang(3) (15) (1 ) (12)
8 15
hinese white spirits(5) Old Parr 9 18 2
(15) (1 ) (12) 3
S whis ey(5) lac hite 2 20 28
(8) ( ) 7 2
eer (9) (3)

ea to rin en Ra i 8 (10)
indsor 29 1 2
(1) Organic equals reported volume movement except for spirits (7)%, tequila 11%, vod a ( )%, gin (1)%, I F whis y (20)%, S whis ey (7)%, beer (8)% and ready to drin (7)%.
(2) Spirits brands excluding ready to drin and non-alcoholic variants. undaberg 18 21
(3) Vod a includes etel One otanical.
( ) Vod a, rum and gin include I F variants. pi ca (9) 7 21
(5) See pages 2- 3 for details of anadian whis y, S whis ey and pages 6- 7 for details of I F whis y and hinese white spirits.
e erve
on ulio 11 20 32
Reported ol me Reported net sales Reported mar eting asamigos( )
7 15 27
categor categor spend categor Scotch malts 3 16 19
etel One(5) (3) 1 11
ulleit whis ey(6) (9) (6)
roc vod a (23) (23) (17)
ò Scotch ò iqueurs (1) rands excluding ready to drin , non-alcoholic variants and beer except uinness.
(2) Organic equals reported volume movement except for uinness 0% and c owell s (2)%.
ò Vod a ò in (3) rowth figures represent total hinese white spirits of which Shui ing Fang is the principal brand.
ò S whis ey ò Tequila ( ) asamigos trademar includes both tequila and me cal.
(5) etel One includes etel One vod a and etel One otanical.
ò anadian whis y ò eer (6) ulleit whis ey excludes ulleit rafted oc tails.
ò Rum ò Ready to drin
ò I F whis y ò Other lo al giants
39% of iageo s reported net sales and grew 10%.
ocal stars
18% of iageo s reported net sales and declined 2%.
Spirits net sales grew 6%, with flat volume. rowth was across most categories, including double-digit performance in scotch, tequila and I F
whis y. Reser e
Scotch net sales grew 12%, with 2% volume growth. rowth was led by ohnnie al er, with strong growth of 15%, and scotch malts also grew 29% of iageo s reported net sales and grew 7%.
strongly at 16%.
ohnnie al er lac abel grew 16%, with particularly strong growth in Asia Pacific, where it grew 30%.
ohnnie al er lue abel grew 3%, supported by the return of Travel Retail.
ohnnie al er Red abel grew 16%, with double-digit growth in all regions except Africa.
Scotch malts grew 16%, primarily driven by strong double-digit growth in Asia Pacific and North America.
Tequila net sales grew 19%, reflecting strong performance of on ulio and asamigos which grew 20% and 16% respectively, driven by North
America.
Vod a net sales grew 1% with a volume decline of 3%. eclines in North America and Africa were offset by double-digit growth across all other
regions.
Rum net sales grew 2% driven by aptain organ growth across all regions except North America. Rum volume declined 7%.
iqueurs net sales declined 1%, driven by odiva.
eer net sales grew 9%, with growth in all regions driven by strong performance from uinness in reat ritain, Ireland, North America and
Africa.
Ready to drin net sales were flat, with growth in Europe and Africa offset by a decline in North America.

52 Diageo Annual Report 2023 Diageo Annual Report 2023 53

 O

mmar income statement (d) air al e remeas rement (g) Ret rn of capital
c i ition an air va e The adjustments to mar eting and other operating expenses were the iageo completed a total of 1. billion return of capital for the year
c ange i oa Organic remea rement
30 une 2022 a movement erin ation ne elimination of fair value changes to contingent consideration liabilities ended 30 une 2023, which included 0.9 billion related to the
million mi ion mi ion mi ion mi ion mi ion mi ion and earn out arrangements in respect of prior year acquisitions of 113 successful completion of iageo s previous share buybac programme
ae 22, 8 million gain for the year ended 30 une 2023 and 65 million gain for in which .5 billion of capital was returned to shareholders, and
the year ended 30 une 2022. returned an additional 0.5 billion of capital to shareholders which was
Excise duties (6,996)
announced as a new share buybac programme on 16 February 2023
et a e 15, 52 (e) a ation and completed on 2 une 2023.

STRATEGIC REPORT
ost of sales (5,973) The reported tax rate for the year ended 30 une 2023 was 20.5%
compared with 23.9% for the year ended 30 une 2022. In the year ended 30 une 2023, the company purchased 37.8 million
ro ro it 9, 79
ordinary shares (2022 61.2 million) at a cost of 1,381 million
ar eting (2,721) Included in the tax charge of 970 million in the year ended 30 une (including transaction costs of 13 million) (2022 2,28 million
Other operating items (1,961) 2023 is a net exceptional tax credit of 186 million, including an including transaction costs of 16 million). All shares purchased under
O erating ro it e ore e ce tiona item ,797 exceptional tax credit of 12 million in respect of brand impairments, the share buybac programme were cancelled.
mainly the c owell s brand, a tax credit of 57 million in respect of
Exceptional operating items (c) (388)
the deductibility of fees paid to iageo plc for guaranteeing externally o ement in net orrowings and e it
O erating ro it , 09 issued debt of its S group entities, a tax credit of 23 million in respect o ements in net orrowings
Non-operating items (c) (17) of the supply chain agility programme, partly offset by a tax charge of 2022
Net finance charges ( 22) 2 million in respect of the sale of uinness ameroun S.A. mi ion million
Share of after tax results of associates and joint ventures 17 The reported tax charge for the year ended 30 une 2022 included an et orro ing at t e eginning o t e ear (12,109)
ro it e ore ta ation ,387 exceptional tax credit of 31 million, comprising exceptional tax credits Free cash flow (1) 2,783
Taxation (e) (1,0 9) of 35 million and 20 million on the impairment of the c owell s
Acquisitions (2) (206)
ro it or t e ear 3,338 and ell s brands respectively, partly offset by an exceptional tax
Investment in associates (2) (65)
charge of 23 million in respect of the gain on the sale of the Picon
(1) For the definition of organic movement and hyperinflation see pages 232-233. Sale of businesses and brands (3) 82
brand and a further tax charge of 3 million in respect of winding
(a) c ange ear en e ear ended down operations in Russia. Share buybac programme ( ) (2,28 )
The impact of movements in exchange rates on reported figures for The tax rate before exceptional items for the year ended 30 une 2023 Net sale of own shares for share schemes (5) 18
ne 30 une 2022
operating profit was principally in respect of the favourable exchange was 23.0% compared with 22.5% for the year ended 30 une 2022. Purchase of treasury shares in respect of
Exchange rates subsidiaries (15)
impact of the strengthening of the S dollar and exican peso against
Translation 1 1.33 e expect the tax rate before exceptional items for the year ending 30 ividends paid to non-controlling interests (81)
the sterling, partially offset by the wea ening of the Nigerian naira,
Transaction 1 1.29 une 202 to be in the region of 2 %.
hanaian cedi and the Tur ish lira. Net movements in bonds (6) 7 2
The effect of movements in exchange rates and other movements on
Translation 1 1.18 (f) i idend Purchase of shares of non-controlling interests (7)
profit before exceptional items and taxation for the year ended 30 Transaction 1 1.15 The group aims to increase the dividend each year. The decision in Net movements in other borrowings (8) 79
une 2023 is set out in the table below. respect of the dividend is made with reference to the dividend cover, as Equity dividend paid (1,718)
( ) c isitions and disposals well as current performance trends, including sales and profit after tax et ecrea e in ca an ca e iva ent (665)
ain
o e The acquisitions and disposals movement in the year ended 30 une together with cash generation. iageo targets dividend cover (the ratio
Net increase in bonds and other borrowings (825)
mi ion 2023 was primarily attributable to the disposal of the nited Spirits of basic earnings per share before exceptional items to dividend per
Translation impact imited ( S ) Popular brands and uinness ameroun S.A. share) within the range of 1.8-2.2 times. For the year ended 30 une Exchange differences (9) (33 )
Transaction impact 2023, dividend cover is 2.0 times. The recommended final dividend for Other non-cash items (10) (20 )
O erating ro it e ore e ce tiona item ee age or rt er etai the year ended 30 une 2023, to be put to the shareholders for et orro ing at t e en o t e ear (1 ,137)
approval at the Annual eneral eeting is 9.17 pence, an increase of
Net finance charges translation impact
(c) ceptional items 5% on the prior year final dividend. This would bring the full year (1) See page 39 for the analysis of free cash flow.
Net finance charges transaction impact dividend to 80.00 pence per share, an increase of 5% on the prior
In the year ended 30 une 2023, exceptional operating items were a (2) In the year ended 30 une 2023, acquisitions included upfront
Net finance charges year. The group will eep future returns of capital, including dividends,
loss of 622 million (2022 a loss of 388 million), mainly due to payments of 2 6 million ( 218 million) for anlaon imited and hat
Associates translation impact charges related to brand impairment ( 98 million) and the supply under review through the year ending 30 une 202 , to ensure
Noir o. Inc. (the owner of on Papa Rum) and 102 million ( 89
ro it e ore e ce tiona item an ta ation chain agility programme ( 100 million). iageo s capital is allocated in the best way to maximise value for the
million) for alcones istilling.
business and its sta eholders.
In the year ended 30 une 2023, exceptional non-operating items were a In the year ended 30 une 2022, acquisitions included the final earn-
Subject to approval by shareholders, the final dividend will be paid to
gain of 328 million (2022 a loss of 17 million), mainly driven by the gain out payment in respect of the asamigos acquisition amounting to 113
holders of ordinary shares and S A Rs on the register as of 25 August
in relation to the sale of uinness ameroun S.A. ( 310 million). million ( 83 million) and upfront payment of 62 million for 21Seeds.
2023. The ex-dividend date both for holders of ordinary shares and for
ee age or rt er etai an t e e inition o e ce tiona S A R holders is 2 August 2023. The final dividend, once approved In the years ended 30 une 2023 and 2022, investment in associates
item by shareholders, will be paid to shareholders on 12 October 2023 and included additional investments in a number of istill Ventures
payment to S A R holders will be made on 17 October 2023. A associates.
dividend reinvestment plan is available to holders of ordinary shares in
(3) In the year ended 30 une 2023, sale of businesses and brands
respect of the final dividend and the plan notice date is 22 September
included the disposal of uinness ameroun S.A. beer business for a
2023.
net cash consideration, net of disposal costs, of 35 million and the
disposal of the Popular brands of iageo s S business, for a cash
consideration, net of disposal costs, of 83 million.
In the year ended 30 une 2022, sale of businesses and brands
included the cash received on the disposal of Picon brand, net of
transaction costs.
( ) See more details of iageo s return of capital programmes above
on this page.

54 Diageo Annual Report 2023 Diageo Annual Report 2023 55

 O c on tin u ed 'SOCIETY 2030: SPIRIT OF PROGRESS'

(5) Net sale of own shares comprised receipts from employees on the o ements in e it
exercise of share options of 51 million (2022 32 million) less
purchase of own shares for the future settlement of obligations under
the employee share option schemes of 22 million (2022 1 million).
2023
£ million
2022
million
o o og p tting
(6) In the year ended 30 une 2023, the group issued bonds of 2,000
million ( 1,788 million net of discount and fee) and 500 million
it at t e eginning o t e ear
Adjustment to 2021 closing equity in respect of
hyperinflation in Tur ey (1)
8, 31

251
positi e societal impact at t e eart of o r
( 1 million net of discount and fee), and repaid bonds of 1,650
million ( 1,3 0 million). In the year ended 30 une 2022, the group te e it at t e eginning o t e ear 8,682 siness strateg

STRATEGIC REPORT
issued bonds of 1,650 million ( 1,371 million - net of discount and fee) Profit for the year 3,338
and 892 million (including 8 million discount and fee), and repaid Exchange adjustments (2) 799
bonds of 900 million ( 769 million) and 1,000 million ( 752 million). Remeasurement of post employment benefit plans e are a successful global business, building and nurturing some of the world s most recognised
net of taxation 97
(7) On 2 arch 2023, iageo completed the purchase of an brands. A fundamental part of our success is being responsible. That is about ma ing sure we are
additional 1 .97% of the share capital of East African reweries P Purchase of shares of non-controlling interests (3)
(EA ). This increased iageo s controlling shareholding position in Hyperinflation adjustments net of taxation (1) 291
inclusive and sustainable, and ac nowledging that our impact and influence extend beyond our
EA from 50.03% to 65.00%. Associates transactions with non-controlling own operations. It is also about being accountable and transparent which is why we report our
interests
(8) In the year ended 30 une 2023, the net movements in other non-financial performance in this section.
borrowings principally arose from the increase in commercial paper, ividend to non-controlling interests (72)
collateral and ban loan balances offset by cash outflows of foreign Equity dividend paid (1,718)
currency swaps and forwards and repayment of lease liabilities. In the Share buybac programme ( ) (2,310) Responding to t e iss es t at matter ore specifically, Society 2030 Spirit of Progress helps us to
year ended 30 une 2022, the net movements in other borrowings Other reserve movements 7 Society 2030 Spirit of Progress is our global programme addressing anage our ris s from climate change, and spot opportunities to
principally arose from cash movements of foreign currency swaps and the most material(1) issues facing our company, people, brands, innovate.
it at t e en o t e ear 9,51
forwards partially offset by the repayment of lease liabilities. suppliers and communities. Its ambitions are embedded in our Attract the best, most diverse talent.
(1) See pages 181 and 232-239 for details of hyperinflation adjustments. business strategy, and it aims to ma e a positive impact on people and a e our supply chains more resilient.
(9) In the year ended 30 une 2023, exchange gains arising on net
the planet everywhere we live, wor , source and sell. Enhance our reputation with our investors, consumers and other
borrowings of 159 million were primarily driven by favourable (2) Exchange movements in the year ended 30 une 2023 primarily sta eholders.
exchange movements on S dollar and euro denominated borrowings arose from exchange loss driven by the Tur ish lira, the Indian rupee The programme builds on our earlier progress on environmental, social
Strengthen our brands.
and unfavourable exchange movements on cash and cash and the hinese yuan, partially offset by gains in exican peso and and governance (ES ) issues. At the heart of Society 2030 Spirit of
equivalents, foreign currency swaps and forwards. In the year ended S dollar. Exchange movements in the year ended 30 une 2022 Progress are three priorities o ernance
30 une 2022, exchange losses arising on net borrowings of 33 primarily arose from exchange gains driven by the S dollar and the oth the oard and the Executive ommittee oversee our Society
Promote positive drin ing changing the way the world drin s, for
million were primarily driven by adverse exchange movements on S Indian rupee, partially offset by Tur ish lira. 2030 Spirit of Progress plan. The oard conducts regular reviews of
the better.
dollar denominated borrowings, partially offset by favourable our most material issues, our strategy to address those issues and our
(3) On 2 arch 2023, iageo completed the purchase of an hampion inclusion and diversity creating an inclusive and
movement on euro denominated borrowings, cash and cash targets used to measure our strategy in action. Our hief Executive,
additional 1 .97% of the share capital of East African reweries P diverse culture for a better business.
equivalents, foreign currency swaps and forwards. ebra rew, is ultimately accountable for overall performance against
(EA ). This increased iageo s controlling shareholding position in Pioneer grain-to-glass sustainability preserving the natural
(10) In the year ended 30 une 2023, other non-cash items were resources we all depend on. ES targets, while responsibility for the component parts of Society
EA from 50.03% to 65.00%.
principally in respect of additional leases entered into during the year 2030 Spirit of Progress is shared between members of our Executive
( ) See page 55 for details of iageo s return of capital programmes. e have set 25 targets across a range of ES issues that matter to our ommittee. At the local and mar et level, our regional presidents and
partially offset by fair value movements of interest rate hedging
business, to the communities we wor with, to society as a whole and to general managers have frontline responsibility, supported by our
instruments. In the year ended 30 une 2022, other non-cash items
the planet. e ve mapped these targets to the objectives and timeline
were principally in respect of additional leases entered into during the ost emplo ment enefit plans of the N s 2030 Sustainable evelopment oals. hile we have
lobal Spirit of Progress irector and team. The mar ets are also
year. The net surplus of the group s post employment benefit plans supported by Executive ommittee members representing global
made significant progress against many of our targets, there is still functions.
decreased by 56 million from 1,151 million at 30 une 2022 to 587 much to do. In some cases, we set our targets with the expectation that
million at 30 une 2023. The decrease in net surplus was
predominantly attributable to the unfavourable change in the mar et
we d need innovation to reach them, and we still do. e also regularly in ing performance to rem neration
review our material issues to ma e sure the Society 2030 Spirit of Five of our targets are ey performance indicators for our business as a
value of assets held by the post employment benefit plans in the Progress plan is still fit for purpose to address the issues most material
which was partially offset by the favourable change in the discount rate whole, which is why they are also lin ed to our senior leaders long-
to our business and our impact on people and the planet. hile we term incentive plans. The goals in our long-term incentive plans
assumptions in the due to the increase in returns from AA rated made no changes to our plan or targets in fiscal 23, we will continue to
corporate bonds used to calculate the discount rates on the liabilities of include
assess them and expect to refine and possibly reframe our approach to
the post employment benefit plans (from 3.8% to 5.2%). The net material issues in fiscal 2 . Number of people who confirm changed attitudes to the dangers of
operating profit charge before exceptional items increased by 36 underage drin ing after participating in a iageo-supported
million from 39 million for the year ended 30 une 2022 to 75 million This section of the Annual Report sets out our progress against our education programme.
for the year ended 30 une 2023. targets in fiscal 23, and our future plans. It contains reporting on other Inclusion and diversity (one measure of the percentage of female
aspects of our non-financial performance, as part of our continuing leaders globally and another measure of the percentage of
uring the year ended 30 une 2023, following a remeasurement of drive to be transparent and accountable. This includes reporting on
the iageo ifestyle Plan, iageo made a 16 million one-off deficit ethnically diverse leaders globally).
how we are addressing climate change ris against the Improvement in water efficiency.
contribution to satisfy minimum funding requirement. recommendations of the Tas Force on limate-related Financial Reduction in greenhouse gas emissions in our direct operations
Total cash contributions by the group to all post employment benefit isclosures (T F ). It also includes information about our approach to (Scope 1 2).
plans in the year ending 30 une 202 are estimated to be human rights, business integrity, our people and health and safety, all
approximately 75 million ( 95 million). of which are fundamental to our long-term success as a responsible This represents all three strategic priorities of our Society 2030 Spirit of
business. Progress ambition, and reflects our vision to ma e a positive impact on
the environment and society.
etter world a etter siness
y wor ing towards our goals, we are doing the right thing by
Reporting transparentl
contributing to a better society and a healthier planet. e believe we e define our targets carefully, along with clear non-financial reporting
are also ma ing ourselves a better, more competitive business, and boundaries and methodologies for each. For more details, see pages
one that is more resilient for the long term. 2 2-262. The reporting of non-financial information is evolving quic ly.
e are committed to continuously evaluating and improving our
(1) Our latest materiality assessment is included in our ES Reporting Index.
approach as well as responding to changes in regulation.

56 Diageo Annual Report 2023 Diageo Annual Report 2023 57

PRO OTE POSITI E RI I G

To achieve this, we have Our brands are among our most powerful tools in shaping consumer
attitudes and promoting moderation. e are proud to have achieved
o o positi e drin ing Extended S ASHE ive to 10 new countries and S ASHE Online
to 12 new countries including Argentina, hile, Paraguay, Panama
and osta Rica.
our 2030 target early, having reached more than 1. billion people in
total with messages of moderation from fiscal 21 to the end of fiscal 23.
e have done this by delivering campaigns at scale in all the ey
aunched a shorter facilitated live version, allowing us to reach
As a responsible business, we want to change the way people drin for the regions where we operate.
more people while maintaining the programme s effectiveness. This
better. This is why we promote moderate drin ing and invest in education was a direct response to feedbac from teachers. Our fiscal 23 highlights include
eveloped three new versions of S ASHE Online in India.

STRATEGIC REPORT
programmes to discourage the harmful use of alcohol. aunched a new version of S ASHE Online for Northern Ireland.
In North America, reaching 88 million people with our ohnnie
al er Rewind the Night moderation campaign.
S ASHE has been recognised by industry and mar eting peers, In atin America and aribbean, continuing to expand the
Around the world, we reach audiences with messages that aim to e have launched RIN i in all the mar ets where it s legally winning 12 awards from eight organisations in fiscal 23. The awards erribando itos moderation campaign, now in its third year, to
change attitudes, whether it s highlighting the harm of underage permissible. It is live in 21 mar ets, 56 countries and 23 languages, and recognised the quality of the learning experience, the creativity of its reach 51 million people across seven countries.
drin ing or binge drin ing, warning of the dangers of drin driving, or we promote it through our product labels, social media channels and immersive, story-led approach and excellence in other areas including In hina, combining the power of the aileys and Tanqueray No.
using our brands to highlight the importance of moderation. mar eting to ma e sure as many people as possible use it. hile we innovation and digital technology. TEN brands with a deep understanding of popular culture and a
have reached our target by launching RIN i in all the mar ets we digital first approach to promote moderation among young, urban
e continue to loo for ways to improve as we strive to engage more anging attit des to drin dri ing adults, reaching 1 .8 million people.
operate in, we are determined to continue promoting it so that
people through our wor to promote positive drin ing. This extends to
consumers have access to information that can increase their e remain committed to using our expertise in consumer insights and
how we measure and evaluate the impact of our wor and its effect on arget
nowledge and awareness of the impact of harmful drin ing. mar eting to positively influence attitudes towards moderation across
changing peoples attitudes. Extend our NITAR partnership and promote changes in attitudes to
In fiscal 23, mar ets around the world ran campaigns to connect the world.
drin driving, reaching five million people
ow we promote positi e drin ing people with RIN i . In Hungary, we teamed up with S iget, the
m er o eo e e cate a o t ar eting in a responsi le wa
Our main tools are Island of Freedom, the biggest summer festival in entral Eastern
Europe, to deliver an innovative RIN i campaign. Visitors got
t e anger o rin riving in i ca 706 Our iageo ar eting ode ( ) and igital ode not only set
RI our interactive online platform that gives users facts minimum standards for responsible mar eting, they also represent a
about alcohol and the effects of drin ing on the body and mind, responsible drin ing messages and lin s to RIN i .com through cornerstone of our corporate culture and the way we do business. The
and the impact that harmful alcohol consumption has on people reusable cups, fence banners, tote bags, Faceboo and Instagram includes, among other principles, our commitment to ma ing
510k 1,216k Target 5,000k
and society. posts. Tens of thousands of people visited RIN i during the summer sure we depict and encourage only responsible and moderate
and the campaign was shortlisted for the European Festival Awards. In 2020 2022 2023 2030
S S E an award-winning programme that educates young drin ing, and never target underage audiences. e are proud to have
people on the dangers of underage drin ing. South orea, a RIN i digital campaign over the festive period e have long wor ed to alert people to the dangers of drin driving. a proven trac record of compliance, which is underpinned by mature
' S R ' our interactive learning experience that resulted in more than 20,000 people completing the RIN i ui Initially we partnered with police, local authorities and other agencies business processes, and appropriate chec s and balances in every
aims to discourage drin driving. and 2. million page views in just one month. that support enforcement of drin drive laws. In 2021, we launched the mar et we operate in.
harnessing our mar eting resources to rong Side of the Road ( SOTR) digital learning resource with the
promote moderation through our brands. ac ling nderage drin ing t ro g nited Nations Institute for Training and Research ( NITAR) to help e published the latest version of the in anuary 2023, with
people understand the impact of drin -driving on themselves and enhanced rules governing the mar eting of our non-alcoholic brands
e stringently control our own mar eting and advertising, in line with T 2030 others. and reinforcing our commitment to advertise them to adults only. Also,
our iageo ar eting ode. e wor with our industry and with Scale up our S ASHE partnership and educate 10 million young in September 2022 we launched a new e-learning module on digital
SOTR is available in digital and classroom formats, is live in 2
advertising organisations to help create a safe environment in media people, parents and teachers on the dangers of underage drin ing compliance for our brand teams worldwide, with guidance on topics
countries, and reached 706,000 people in fiscal 23. This year, we have
and online. including
found new ways to reach more people through partnerships in India,
Our wor is coordinated by our Positive rin ing ouncil, which has reaching 230,000 people by Transparency ma ing sure that influencers social media posts
representatives from across the business.
23 1 5 17 aunching SOTR with the national road safety agency driving-
test candidates can now experience SOTR as they wait for their
promoting our brands tell consumers about the nature of the
partnership with hashtags such as Ad.
ncreasing nowledge and awareness wit driving test.
ata privacy further strengthening our approach to the use of
RN i 1.8m 3.8m Target 10m
consumer data in our digital mar eting in line with PR ( eneral
a ing SOTR available in a classroom format through driving
ata Protection Regulation) principles.
2018 2022 2023 2030
schools.
T 2030 e continue to play a leading role in shaping a vision for a safe,
hampion health literacy and tac le harm through RIN i in every e believe that promoting SOTR in a setting such as a driving
e believe it is never acceptable for anyone underage to consume inclusive online ecosystem for our consumers and brands. This is why
mar et where we live, wor , source and sell school, where people are already learning about road safety is a
alcohol. This is why we have run campaigns and programmes to we have championed the updated version of the orld Federation of
particularly effective setting for this resource.
Advertisers ( FA) lobal edia harter, released in arch 2023, re-
RI 1 combat underage drin ing for many years, including campaigns to
ensure a consistent approach to legal purchase age for alcohol across sing t e power of o r rands emphasising our focus on mar eting responsibly and ma ing a positive
categories. S ASHE is a programme that educates young people societal impact.
Target aged from 10 to 17 in 38 countries on the dangers of underage drin ing arget e are pleased to report that all our ads complied with a 2023 review
Target 21 Met
either live or online format. It was developed by ollingwood earning everage iageo mar eting and innovation to ma e moderation the by the FA s Responsible ar eting Pact and the European
2020 2030 and we are proud to sponsor it. norm reaching 1 billion people with dedicated responsible drin ing Advertising Standards Alliance, aimed at ma ing sure alcoholic
S ASHE began in 2005 as a live theatre production and has since messages beverage ads do not contain elements that appeal mainly
RIN i is our online responsible drin ing tool. It champions health
been adapted for online learning. To ma e the programme as m er o eo e reac e it re on i e to minors. e are also pleased that no complaints about iageo
literacy by providing facts about alcohol, complementing resources
offered by governments, charities and other sta eholders. The aim is to successful as possible, the performance can be tailored to specific rin ing me age rom o r ran in i ca 6 5m mar eting were upheld by ey industry bodies this year (see next
page).
invite consumers to change their attitudes to alcohol and empower countries using local actors and cultural references.
them to achieve a balanced lifestyle. In fiscal 23, our ambition was to educate more than 800,000 people
through S ASHE , but we have surpassed this by educating 1,985,817 823m Target 1,000m 1,468m
people, with 1,5 8,996 people confirming changed attitudes on the
2020 2022 Target Met 2023
dangers of underage drin ing following participation in a iageo-
supported education programme. e have educated 3.79 million
people since our baseline year of 2018.

( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited assurance reported to the irectors. For further detail and the reporting methodologies, see pages 2 2-266.

58 Diageo Annual Report 2023 Diageo Annual Report 2023 59

 O O O con tin ued OI G SI ESS T E RIG T Y

verti ing com aint e e in tr o ie t at re ort ic

Across some of our mar ets, advertising regulators and industry bodies publicly report breaches of self-regulatory alcohol mar eting codes. No
breaches were upheld by any of these ey bodies about iageo s advertising this year.
nci ent o non com iance concerning mar eting comm nication
oing siness t e g a
Industry complaints omplaints about iageo
ountry ody upheld brands upheld e want to do business in the right way every day, everywhere. This
nited States istilled Spirits ouncil of the nited States 0 0
Australia A A Scheme 27 0
is about ma ing sure our people and suppliers demonstrating

STRATEGIC REPORT
nited ingdom Advertising Standards Authority 17 0 integrity, living our values, and behaving in an ethical way that
Portman roup 9 0 underpins our ode of usiness onduct. e expect everyone who
Republic of Ireland Advertising Standards Authority for Ireland 3 0 wor s for us and alongside us to uphold human rights and stand up
(1) From 1 uly 2022 to 5 ay 2023. for what is right.

tanding p for man rig ts oc ssing on salient man rig ts iss es

e want people who wor for us or with us to feel they are treated Our Human Rights Impact Assessment (HRIA) programme from 2015 to
fairly and with respect. This means wor ing hard to ma e sure we don t 2021 highlighted three salient external business and supply chain ris s
infringe their human rights, and that we are not complicit with anyone labour rights, including child labour ris s labour standards for contract
else who does. e see to build credibility and trust by expecting wor ers and sexual harassment in the hospitality sector. In response,
everyone who wor s with us to adopt our standards. we created awareness programmes on child labour and modern
Our policies cover our responsibilities to protect the human rights of slavery, conducted an independent review of contract labour and
everyone wor ing in our direct operations, our value chain and developed standards and training to protect brand promotion teams.
communities. They are in line with internationally recognised laws, To refresh and enhance our assessment of salient issues, we re
regulations and guidelines including the N uiding Principles on reviewing current and emerging laws and regulations alongside our
usiness and Human Rights, and the International abor Organi ation s internal processes to assess our operational, commercial and
eclaration on Fundamental Principles and Rights at or . reputational ris in priority jurisdictions. e are also assessing salient
pdating o r man rig ts go ernance ris s for third-party suppliers in priority supply chains.
e continue to enhance our policies(1), standards and disclosures and e have also continued to address our global salient ris s by
embed human rights in our enterprise ris management processes.
aunching a brand promoter training website in 18 languages to
In fiscal 23, our lobal Audit and Ris team reviewed our human rights help us trac training completions and agency compliance with our
due diligence by ris area and ris setting to loo for opportunities to rand Promoter Standard.
strengthen our approach and better assess its effectiveness. As a result,
we are strengthening our internal governance ris assessment process
and committing to more frequent audits of our high-ris mar ets with
rand promoter training we site in
A strategic human rights review with the oard at least once a year 1 lang ages
An annual review of our list of high-ris mar ets for direct operations
An annual review of human rights ris s by direct operations against
a self-assessment questionnaire Refreshing our child labour training and ma ing it part of our wider
A commitment to audit high-ris mar ets once every three years smallholder farmer programme from fiscal 2
Participating in a pilot project in Africa to understand the gaps that
e have also developed training to build our teams capability in exist within our supply chain to living wage benchmar s and how
effectively managing human rights ris s. This helps us to be alert to we can support our supply chain to bridge those gaps through time.
these ris s and able to act effectively when we see them.
S
(1) https //www.diageo.com/en/our-business/corporate-governance/code-of-business-
conduct/policies-and-standards
To enhance our approach to responsible sourcing we have begun
screening for human rights with higher-ris potential suppliers before
onboarding. This helps us ma e more informed decisions on human
rights ris s and gives us the chance to assess and mitigate the salient
issues before we contract with a supplier. e have also extended our
supplier requirements on responsible sourcing to our licensed
manufacturers globally.
C
limate change is already having a negative impact on people and
communities, not least through water stress, but also by affecting
wor ing conditions. e ve begun a project loo ing at how we can help
wor ers in our sugarcane supply chain avoid serious health impacts
from heat stress driven by climate change. e have partnered with
N Os, government agencies, customers and our suppliers to build
awareness around the issues wor ers face in a changing climate,
measure their metabolic data and implement plans to improve
am e o a mo eration cam aign inne conditions. This includes providing wor ers with more water and mobile
shade tents, as well as rest schedules designed around the conditions

60 Diageo Annual Report 2023 Diageo Annual Report 2023 61

 OI G SI ESS T E RIG T Y con tinu ed O R PEOP E C T RE

in specific sites. e have launched this programme with our suppliers

in our rum supply chain in amaica and uatemala.
p olding siness integrit
usiness integrity is also vital in our networ of relationships with third
parties. Our now our usiness Partner ( P) programme helps us
screen for potential ris s and be certain about the true identity of third
O r people and c lt re
or ing with integrity is an important part of who we are and how we
achieve our performance ambition to be the best performing, most trusted
and respected consumer products company in the world. e all have a
parties before we start a contractual relationship with them.
Throughout fiscal 23, we continued to expand our third-party screening
oo
part to play in building credibility and trust with sta eholders by doing our programme to incorporate the many new sanctions rules relating to
Russia s invasion of raine. e also focussed on streamlining the

STRATEGIC REPORT
jobs in the right way. y being proud of what we do, and how we do it, our
conduct will bring about success we can all be proud of. P process by better integrating it into our customer and vendor Our talented and diverse wor force, together with our brands and inclusive culture,
R C C
onboarding to ma e ourselves more efficient, without ma ing the continue to be a competitive advantage for our business, enabling us to perform at our best.
process any less thorough.
Our ode of usiness onduct is central to how we encourage all our
people to wor in the right way by ma ing the right choices. Our ode P
sets out what we stand for as a business and how we demonstrate our e encourage everyone to report potential breaches of our ode, we have seen a 31% increase in the number of external applicants for
high standards of integrity and ethical behaviour. It is guided by our policies or standards through our confidential whistleblowing service, open roles, while engagement with our employer brand in edIn
purpose and values. It see s to provide clarity on how we are expected Spea p. This is run by an independent third-party, is available around content has been above benchmar levels.
to behave to build the trust and respect of everyone who interacts the cloc and lets employees and external parties report concerns iageo s purpose is celebrating life every day, everywhere .
with us. anonymously. This includes issues li e bullying, harassment, Recognising the importance of celebration in engagement and
discrimination and human rights concerns. performance, in fiscal 23 we began to roll out a global employee
Each year, all eligible employees receive mandatory training as an recognition programme, elebrate. This programme empowers our
opportunity to reflect and certify that they have read, understood and The number of Spea p reports filed fell during fiscal 23 and is now
people to formally ac nowledge each other for the small and big
complied with the ode and our global policies. This year, 97% of similar to pre-pandemic levels. In fiscal 23, we rolled out a global
moments. uilding a culture of gratitude and appreciation is core to
eligible employees completed the training. awareness campaign for Spea p, emphasising our ero tolerance of
how we live our values and purpose every day. So far, employees have
retaliation against anyone reporting a concern or helping with an
Training is via an interactive e-learning module accessible through any made 27,000 awards in North America, nited ingdom and Ireland
investigation. The video-based campaign also showcased the
device, or classroom training for those who do not have regular through the programme. In mar ets where elebrate is live, 85% of
Spea p R code for easy access to the system.
computer access. The training covers topics that help employees employees have received recognition through the elebrate platform
understand more about doing the right thing, from grain to glass. T and we intend to roll the platform out across all our mar ets to further
Treating each other with dignity and respect is an important part of strengthen our culture.
This year, there were 88 breaches of the ode, down by 27%
doing business the right way. To reinforce this, we ve created a training
compared to fiscal 22.
programme for our leaders called eading with Integrity, designed to elping o r people realise t eir potential
e believe that iageo grows when our people grow. Our talent
Increase awareness of our ignity at or policy strategy is to empower our people with the developmental experiences
raining completed ive guidance on managing Spea p reports and resolving any to facilitate their growth and successful careers at iageo. To support
7% of eligi le emplo ees conflicts
ive leaders the tools they need to handle and resolve issues
C our people s career progression, we aim to fill our vacancies internally
where we can. In fiscal 23, we recorded 5,092 career moves which
around ignity at or
uild nowledge, shared understanding and s ills on the
ig l engaged people and an incl si e c lt re translates to an average of 1 people a day ma ing career moves. e
Our 30,237 people(1) are our most valuable assets. Their sense of have increased internal appointments into leadership roles to 72.8%
importance of leading in line with our values and leadership up one percentage point on fiscal 22. Our general managers come
purpose and pride in what they do, and their commitment to our
standards from diverse functional and professional bac grounds, fuelling our
brands, consumers, customers and each other are the hallmar s of
our culture. strong performance with diversity of experience, and giving our people
opportunities for cross-functional experiences. Also, international moves
In ecember 2022, we celebrated our 25th anniversary with a global
increased by 15.9% this year, and we continued to offer developmental
webcast and heard from employees on what they valued most about
webinars, wor shops and networ ing to all employees through our
wor ing for iageo. The themes were consistent with those emerging
raft my areer programme.
from our employee listening sessions, namely the quality of our talent,
our purpose, values and brands, and our uniquely diverse wor force To meet the demands of our growth strategy, we are putting extra
and inclusive culture. The feedbac also reinforces our core values we investment into new and emerging capabilities in digital, ES and
are passionate about our customers and consumers and always strive leadership. In fiscal 23, our people completed 11,538 digital training
to be the best. e give each other freedom to succeed and value each courses in different areas in partnership with our external partners.
other. e wor hard so we can be proud of what we do, and this pride Through our igital Now capability programme, we are equipping our
is a source of energy that fuels our performance. people with the capability and mindset to accelerate digital
transformation. Similarly, we partnered with Oxford Sa d usiness
mplo ee ngagement nde School to ups ill our leadership in ES to support the delivery of our
Society 2030 Spirit of Progress goals.
( )
% e believe that an environment of openness, integrity and trust fosters
greater collaboration, experimentation, and bolder execution. Our
espite ongoing volatility in our mar ets, we continue to see strong Senior eadership Team have focussed on how to enable bolder
employee engagement. In our our Voice survey this year, our performance by creating a psychologically safe environment, helping
Employee Engagement Index increased from 82% in fiscal 22 to 8 %, their teams ta e ris s, share their opinions and experiment with
and our Employer Advocacy score the proportion of people who innovative ideas. e have seen a five percentage point increase in the
would recommend iageo as a great place to wor is 8 %, which is proportion of employees who feel comfortable with raising concerns,
11 percentage points higher than our external benchmar (3) . That is an ideas, and opinions without fear of consequence this year compared to
improvement of two percentage points on last year. Similarly, the fiscal 22.
percentage of people who are proud to wor for iageo improved by (1) This data is calculated as an average across the 12 months of fiscal 23.
(2) This is based upon the respondents to the fiscal 23 our Voice engagement survey.
one percentage point to 91%, which is 1 percentage points higher (3) ased on a blend of Ipsos arian and ox, ualtrics benchmar data. lobal
than our external benchmar . This strong advocacy and pride anufacturing benchmar includes organisations with global coverage that operate
O
contributes to the strength of our external employer brand. In fiscal 23, within F and other industry sectors.

62 Diageo Annual Report 2023 Diageo Annual Report 2023 63

O O con tin u ed E T S FETY

na ling a great emplo ee e perience

Putting our people at the heart of everything we do is critical to our
success it s how we deliver our people strategy and performance
ambition, and create the most inclusive and diverse culture. To achieve
ealt and a
this, it s imperative we ta e the needs and opinions of our people into
account in designing and implementing effective people-centric It is our ambition to create a world-class health and safety culture to ma e sure we protect our
solutions.
people across our business.

STRATEGIC REPORT
This year, we launched our employee experience champions networ ,
providing a global, diverse voice of the employee networ enabling us
to co-create solutions with and for our people. About 200 employee
experience champions have been involved in our HR transformation e have designed our Safer Together strategy and its associated onitoring o r e performance meas res
programmes, sharing feedbac on our people processes and policies, programmes to prevent severe, fatal and process safety incidents. Our e report lost-time accident frequency rate ( TAFR). This year, we
brainstorming ideas to radically liberate our people from low-value, global policies, standards, compliance systems, technology and sustained 0.91 lost-time accidents ( TAs) per 1,000 full-time
time consuming activities and validating HR technology prototypes and O r o ice ace are e igne it team co a oration an e eing in min training create and embed innovative ways of wor ing aimed at employees, compared to 0.92 in fiscal 22. The severity rate of these
solutions. continuous improvement. The goal is to prevent accidents by eeping TAs is a measure of the seriousness of the incidents and any absence
Our commitment to creating a strong employee experience has health and safety at the front of everyone s minds. from wor they cause. This year, the severity rate increased due to a
reinforced our employer advocacy and employer brand position. Over eing proacti e not reacti e carry-over of days lost for accidents that occurred in fiscal 22.
the years, we have been recognised in many mar ets for great people
One of our priorities is to create and embed a scorecard for leading Our total recordable accident frequency rate (TRAFR) records wor -
practices. Recently, iageo Tur ey won a ury special award for HR
and lagging ey performance indicators for health and safety. related injuries that need more than first aid treatment. e investigate
practices in Sales(1) while iageo North America achieved a top 10 est
agging indicators li e total recordable accident frequency rate each recordable accident to establish the root cause as well as
ompanies ran ing(2).
(TRAFR) and lost-time accident frequency rate ( TAFR) allow us to uncover all contributing factors and insights we can learn from. e
pporting o r people s well eing monitor performance, but they do not indicate the effectiveness of our share the ey learnings across the organisation aiming to prevent
e remain committed to supporting our people s wellbeing, offering initiatives in preventing incidents and accidents. For this we use a recurrences.
guidance, and education in line with the four dimensions of our lobal leading indicator severe injury and fatality exposure (SIFe) to
ellbeing Philosophy. e ma e wellbeing part of our culture every consider incidents that could be classified as near misses and which cting to impro e performance
day, everywhere so that our people are thriving physically and had the potential to cause life-threatening or life-altering outcomes. reating awareness of accident trends and communicating them
mentally, emotionally balanced, financially secure and socially effectively across our business is an important part of learning from
Senior management reviews performance against lagging and leading them. Employees need to understand the ris s inherent in their
connected. indicators each month, alongside any action we can ta e to prevent wor place, and how they could lead to injury. espite improvements in
In our 2023 employee survey, 79% of the respondents felt iageo was incidents. e believe that safety is everyone s responsibility and an our global health and safety PI performance, accidents increased in
sufficiently supporting their health and wellbeing . ith wellbeing iageo r e receiving t e in a e r ecia a ar ae et or integral part of everyone s job. Empowering and involving our people exico and Tur ey. In exico, we have significantly increased our
support identified as a ey engagement driver, this underlines the need in safety embeds the idea that there is no acceptable level of agriculture footprint, which coincided with an increase in incidents. In
for us to continue to focus on wellbeing and improve our support. verage n m er o em o ee region gen er accidents. Improving our performance on leading indicators and Tur ey, the increase is predominantly in our distilling and pac aging
getting all employees more involved in spotting ha ards strengthens operations. As a result of these trends, the lobal Health and Safety
In fiscal 23, we increased our focus on mental health and financial Not
Region(2) en % omen % declared(3) % Total the safety culture at each site and ma es us better at reducing the ris team intervened to help local teams to address and improve
wellbeing. This included launching the nmind mental wellbeing app
North America 1,839 59 % 1,258 0% 18 0.6 % 3,115 of accidents. performance. In both mar ets, global and regional health and safety
ma ing us the first fast-moving consumer goods (F ) company to
Europe 5,836 58 % ,211 2% 15 0.1 % 10,062 experts wor ed with local teams on site to find the root cause of the dip
ma e it available for all employees, globally. In response to the rising e also provide employees with the most up-to-date health and safety
cost of living, we delivered regular financial wellbeing masterclasses Asia Pacific 5,957 66 % 3,0 2 3 % 1 % 9,000 training, so they can carry out day-to-day tas s and activities safely in performance and agree a time-bound improvement plan. y
and offered mental wealth first aid training to help identify financial atin America every day, everywhere. Our strategy extends to our contractors and involving our people in reviewing ris assessments and by ma ing sure
stress and signpost others to support. e also offered a global one- and aribbean 2,733 63 % 1,592 37 % 0 % ,325 third-party providers, because they share our commitment to eeping operations and leadership teams are regularly inspecting sites and
time payment to all employees to support with the rising cost of living. Africa 2, 88 67 % 1,2 33 % 3 0.1 % 3,735 the ris of accidents to a minimum. equipment, we have improved our ability to spot potential dangers as
This payment was well received as it was equivalent to 15% of the ota
well as areas for improvement.
Our global self-assessment compliance programme helps eep all our
annual salary of employees in some mar ets. Our Employee Assistance e will continue to focus on implementing our systems and technology
locations legally compliant as well as aligned with our own health and
Programme continues to offer employees free, confidential advice and verage n m er o em o ee ro e gen er roadmap, aiming to codify and simplify some of our high-ris wor
safety requirements. Our locations audit themselves against our global
counselling around the cloc on personal, emotional, and wor -life Not activities and processes as well as further enhance our predictive
declared(3) health and safety standards and ways of wor ing. ocations capture
issues. Role en % omen % % Total
analytical capability. e will also continue to strengthen our health
Executive( )
7 50 % 7 50 % 0 % 1
these assessments and action plans on our global governance digital
e now that our people thrive when they feel empowered to decide platform. Our independent Audit Assurance programme is designed to and safety culture by rolling out our ehavioural Standard globally. e
how, when and where they create their best wor . Recognising that Senior
ma e sure sites complete the audits correctly and complete any action use the standard to measure the maturity level of our health and safety
manager(5) 311 56 % 2 8 % 1 0.2 % 560 culture on a scale with four levels baseline, stable, progressive and
flexibility means different things to different people, we have always plans. Senior leaders review performance against these plans.
ine manager(6) 2,27 65 % 1,198 3 % 6 0.2 % 3, 78 leading. The standard helps us spot ey themes and actions.
ta en a progressive and inclusive approach to flexible wor ing,
Supervised Through our Safer Together programme and communication
ma ing sure our people consider what wor s best for the individual
employee(7) 16,261 62 % 9,89 38 % 30 0.1 % 26,185 platforms, our lobal Health and Safety team regularly communicates
and team. e have designed our office spaces to foster greater team
iageo tota with all sites about specific initiatives and shared learnings from our
collaboration, positive social interactions and deeper connections with
leading and lagging PI insights. Each month, our year-to-date
our brands and culture. (1) This data has been compiled as monthly average based on the proportion of
employees who have identified their gender identity as male, female or undisclosed, performance is discussed and reviewed at site and regional level, and
and will not be fully representative of the gender identity or diversity within our globally with senior leaders and global governance teams.
employee population.
(2) Employees have been allocated to the region where they live.
(3) This data represents the proportion of employees who have chosen not to disclose
their gender identity as male or female. ( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited
( ) Executive positions have been calculated based on year end as of 30 une. assurance reported to the irectors. For further detail and the reporting
(5) Top leadership positions in iageo, excluding Executive ommittee. methodologies, see pages 2 2-266.
(6) All iageo employees (excluding senior managers and Executive ommittee) with one
(1) The award is by Sales Networ . or more direct reports.
(2) Seramount 2022 100 est ompanies ist. (7) All iageo employees (excluding senior managers and Executive ommittee) who
have no direct reports.

64 Diageo Annual Report 2023 Diageo Annual Report 2023 65

 c on tin u ed O O

imiting ris from a ardo s s stances wit

nderstanding t e ris of se ere and fatal
in ries a lo al rocess afet ramewor a o incl sion and di ersit
Our strategy aims to eliminate severe and fatal injuries. How we handle ha ardous substances is essential to
Alongside our ris assessment protocols, which let us spot and safeguarding people and the environment. e are committed
to protecting our employees, visitors and contractors, as well as
hampioning inclusion and diversity is at the heart of what we do,
mitigate potential ris s with change management procedures,
in fiscal 23 we started a Severe and Fatal Incident Exposure protecting the local communities in which we operate. In fiscal and is crucial to our purpose of celebrating life, every day, everywhere .

STRATEGIC REPORT
(SIFe) engagement programme. SIFe considers both potential 23, we ve developed a global process safety framewor to
and actual incidents that could result in a life-threatening or life- embed the right behaviour, systems and processes to manage
altering injury. SIFe is part of our lobal Health and Safety PI or control incidents that could cause toxic effects, fires or
scorecard. e use a decision-tree approach, based on our ife explosions. Not only is it the right thing to do, as it means we play a part in shaping
Saving Rules, to identify any incident or safety-critical behaviour a more equitable society, it also ma es us a better business. e are elping women ild careers
The framewor includes a Process Safety Policy and ris
with a potentially life-threatening or life-altering outcome. proud of having an inclusive culture where everyone can be e have a clear equal opportunities recruitment policy,
calculator, and Process Safety Ris anagement standards. All
themselves, as it helps us attract and retain the best and most diverse allowing us to hire the best talent, while ensuring a diverse slate
hen an incident has been classified as having SIFe, it triggers our sites can use the standards to help them assess their
talent, and allows us to be more innovative and perform better. e ve of candidates throughout recruitment stages. e believe our
these processes operations and create plans to fill any gaps. Sites can also
set ourselves ambitious goals, inside our business and beyond. industry should do more to attract women, particularly in areas
document and share ris assessments on our digital platform,
e issue a global safety alert to heighten vigilance. where women have historically been under-represented,
as well as share best practice and training tools through our Our inclusion and diversity index score in our 2023 our Voice
A site representative shares an investigation report of including science, technology, engineering and mathematics
new process safety networ . employee survey remains high at 83% positive sentiment. This shows
findings and remediation actions ta en. (STE ) and commercial roles. In Europe, 72% of graduates in
our commitment to creating an environment where colleagues can
lobal Safety Alert and action plan is communicated to all The framewor helps us reduce the ris of injury and
belong and thrive. our Supply hain Procurement function are female, and in
sites and the action close-out is assured. environmental damage, as well as eep production quality high
fiscal 23, 80% of job offers were to women (an increase in the
while controlling our costs. romoting di ersit
Together with our long-standing lagging indicators of ost-Time last four years of over 25%). In fiscal 23, we launched our first
Accident and Total Recordable Frequency Rates, the SIFe e promote inclusion and diversity in every sense, from gender, apprenticeship accelerator programme specifically for digital
process provides a comprehensive approach to managing our ethnicity, age and disability, to sexual orientation, social bac ground roles in our business, with 83% of job offers going to
incident prevention programme. and education and we re proud of the progress we re ma ing. women. y focussing on early careers and entry-level roles, we
Since 2020, driving diverse representation in our leadership cohort(1) continue to build our pipeline of female talent.
has been lin ed to our long-term incentive plan ( TIP), which means we
incentivise every senior leader to ma e progress against this agenda.
ampioning et nic di ersit
mpowering women m ition
m ition hampion ethnic diversity, with an ambition to increase representation of
hampion gender diversity, with an ambition to achieve 50% leaders from ethnically diverse bac grounds to 5% by 2030
representation of women in leadership roles by 2030 ercentage o et nica iver e ea er g o a
ercentage o ema e ea er g o a %
% Ambition 45%
43%
Ambition 50%
44% 2020 2023 2030

2020 2023 2030

e employ 30,237 people of 115 nationalities in over 70 countries
In fiscal 23, representation of women in our leadership, including our which means we have a wor force whose diversity reflects that of our
Executive ommittee, remained strong at %, maintaining our consumers and mar ets. e want ethnic diversity at every level of our
progress of 88% against our 2030 ambition to achieve 50% business, including in our leadership cohort. The more progress we
representation of women in leadership roles. e re proud to have 73% ma e, the more strongly we connect with our consumers and the more
female oard representation following the appointment of ebra rew diverse our thin ing becomes, fuelling our creativity and
as EO, and 50% female executive committee representation. In fiscal competitiveness.
23, 5% of external appointments and 6% of internal promotions to
urrently, 36% of our oard and 3% of our leadership (up from 1%
our leadership cohort were female. e re recognised for our gender
in fiscal 22), including our Executive ommittee, is made up of
equality wor by the FTSE omen eaders Review, loomberg Equality
ethnically diverse talent, supported by 39% of external appointments
Index and others. In 2023, the Equileap ender Equality lobal Report
and 6% of internal promotions into our leadership cohort across fiscal
ran ed us second overall globally and first in the for gender
23. Also, our former EO Ivan ene es, hief HR Officer ouise
equality. Our policies and practices help foster a truly gender-equal
Prashad and eneral ounsel ompany Secretary Tom Shropshire
and inclusive environment. As well as our Family eave policy, we have
were recognised in the Involve Empower Role odel ists, which
Thriving Through enopause guidelines, Pregnancy oss guidelines
highlights leaders championing inclusion in business.
and Flexible or ing and ellbeing philosophies.
To help us understand the ma eup of our wor force and set
(1) Our leadership cohort reflects the top 2% of roles globally encompassing Executive
ommittee members and senior managers meaningful goals, we invite all employees (where local laws allow) to
share their ethnicity. y the end of fiscal 23, 75% of our global
wor force and 97% of our leadership cohort had disclosed their ethnic
bac ground in our confidential HR system.
Each mar et and function have set stretching five-year diversity plans
covering representation and development, supplier diversity and
ea t an a et c t re
inclusive mar eting.

66 Diageo Annual Report 2023 Diageo Annual Report 2023 67

 O O continu ed

In anuary 2023, we launched inclusive design training that was

created by design, brand and semiotics experts. This promotes
ar eting in progressi e wa s pporting di erse s ppliers
ttracting et nicall di erse talent
inclusivity across our products, advertising campaigns and physical m ition m ition
In ra il, our Programa Origens initiative attracts, hires and
brand experiences, wor ing to remove unconscious bias from the se our creative and media spend to support progressive voices, Increase spend with diverse-owned and disadvantaged businesses to
generates opportunities for lac and Indigenous people in
design process and celebrate the individual and cultural differences of measuring and increasing spend year on year 15% by 2030
higher education. Through professional development, including
the consumers we design for. A recent example of inclusive design was ercentage o en it iver e o ne
English language lessons, and mentoring opportunities, the
programme has seen more than 0 people join to date. ma ing disabled accessibility a ey feature at iageo s brand home,
easurement and evaluation framewor under development
an i a vantage ine e 6. %
ohnnie al er Princes Street, ensuring the highest standards of As one of the world s largest advertisers, we re committed to changing the

STRATEGIC REPORT
accessibility and inclusion for our guests. industry from script to screen, so that everyone sees themselves represented.
ampioning incl sion t ro g mplo ee Reso rce ro ps e use our Progressive ar eting to challenge stereotypes and commit 6.3% Ambition 15%
romoting et nicall di erse siness investment to address under-representation of diverse voices in media,
Our networ of Employee Resource roups (ER s) create connected 2022 2023 2030
In North America, we became anchor investors in Pronghorn, a ma ing mainstream media more inclusive. e are founding members of
communities of support, while helping the business better understand
10-year initiative to diversify the spirits industry. It s cultivating the the nited Nations omen nstereotype Alliance and the orld e believe a value chain built on inclusion and diversity can enhance
our diverse communities concerns. Our ER s include AHEA (African
next generation of diverse founders, executive leaders and Federation of Advertisers I Tas Force and wor across the industry to representation, employment and resilience in marginalised
Heritage Employees at iageo) onectados ( iageo employees
entrepreneurs to generate 2. billion in economic value for the foster inclusion and diversity in front of and behind the camera. For the past communities, ultimately benefitting the wider economy and
championing atin culture) and PAN (Pan Asian Networ ), in the
lac community by 2032. In fiscal 23, Pronghorn has invested four years we have sponsored the reative Equals reative omebac strengthening our business.
nited States e Are All Able and REA H (Race, Ethnicity and
in 19 lac -owned spirits brands, supported founders with Programme that focuses on bringing more women, disabled and
ultural Heritage), in Europe and our international Spirited omen In fiscal 22, .8% of our global spend was with diverse-owned and
mentoring programmes, and wor ed with the industry and neurodivergent people into the creative industry.
and Rainbow Networ s. Highlights from this year include disadvantaged businesses. e ve since increased our number of
commercial partners to develop a talent pipeline of lac
In fiscal 23, we refreshed our Progressive ar eting Framewor and training diverse suppliers, as well as incorporated more disadvantaged groups
leaders. onecta o led Hispanic Future onth, recognising the
to include a new model focused on inclusive design, which allows us to be at li e smallholder farmers in Africa, Tur ey and exico. In fiscal 23,
contributions of Hispanic Americans to the history, culture and
the forefront of brea ing stereotypes in advertising for gender, race, sexuality, we ve spent 620 million with 979 diverse-owned and disadvantaged
achievements of the nited States. This included celebrating the
ender representation of o r leaders ip(1) ( ) age, disability and social status. Some 7% of our global mar eting suppliers approximately 6.3% of global spend.
Tequila on ulio Fund, which in 2022 awarded a 20,000 grant to
five Hispanic entrepreneurs who live their craft Por Amor . campaigns were shot by female directors or photographers. To help us connect with diverse-owned businesses, we ve wor ed with
oe en omen ota
eadership population (2)
319 56% 25 % 573(3) e ain o et or , including new chapters forming across India, Two powerful examples of progressive mar eting and our commitment to advocacy organisations, including E onnect International, S
South East Asia and South Africa led our Pride celebrations with authentic representation in action are the uinness ' rothers' and aileys and others. For example, through isability IN, we ve matched iageo
78 iageo offices and sites ta ing part in our annual Pride flag- elicious escriptions campaigns. The uinness rothers campaign in employees with disabled-owned businesses to share feedbac and
t nic representation of o r leaders ip(1) ( )
raising event championing greater T IA awareness and Africa, featuring iracle, a blind actor, celebrates how football fans ma e industry insights to understand the challenges they face in wor ing with
on ec ine inclusion. In 2023, ohnnie al er was a partner at Sydney orld the experience of watching the game accessible for everyone including global corporations. In enya and olombia, we re proud to be part of
t nica et nica to e ot
oe iver e iver e i enti i co e ota Pride while ohnnie al er Princes Street was the lead sponsor at members of the blind and visually impaired community. embers of this Sourcing2Equal, an initiative increasing access to corporate
eadership Edinburgh Pride. community were consulted to ma e the campaign reflected authentic procurement opportunities for women-owned businesses.
population(2) 2 9 3% 289 50% 19 3% 17 3% 57 Throughout arch 2023, championed by our irite omen experiences. e are proud that in 2023 we were awarded Platinum in the Top
et or , we celebrated International omen s ay with the theme lobal hampions for Supplier iversity Inclusion Awards by
aileys elicious escriptions was launched on lobal Accessibility
(1) This data is calculated as an average across the four quarters of fiscal 23. of EmbraceEquity. This included the launch event, hosted by E onnect International. This is the highest possible accolade in this
(2) eadership population encompasses Executive ommittee and senior managers. Awareness ay in consultation with the Royal National Institute of lind
ouise Prashad, hief HR Officer, where former EO Ivan ene es, category, recognising iageo as leader in inclusive spend, policies and
(3) One person has opted not to disclose their gender they cannot be positively attributed People (RNI ) and eta. aileys created a guide on how to write delicious
to either group and therefore are not included.
oard member aren lac ett and Pronghorn co-founder ia procedures.
image descriptions, helping ensure those who rely on screen readers
( ) Please refer to our non-financial reporting boundaries and methodologies in the Simms tal ed about the importance of being curious, empathetic
experience the full deliciousness of aileys treats. In reat ritain, the
Additional information section on pages 2 2-262 for more information on how data and proactive.
has been compiled, including standards and assumptions used. campaign achieved a reach of more than 12 million, with view-through
rates up to 25.2%, five times higher than eta regional and category N rt ring women owned siness
N rt ring incl si it benchmar s.(1) In alisco, exico, we ve wor ed with a women-owned supplier
to decorate bottles of on ulio for 15 years. e recognised
Our growing range of policies and guidelines help foster an inclusive
their potential, helping them to develop their quality and safety
environment that supports every employee.
ele rate di erse a dience processes and grow alongside the on ulio brand. Today the
Our isability Inclusion guidelines, introduced in October 2022, were ohnnie al er emphasises progressive mar eting to celebrate business has 150 employees, approximately 90% of them
created by employees, with our e Are All Able employee resource and appeal to a diverse audience. The result is that globally women, including single mothers and people with disabilities.
group and our external partner isability IN, and are available in 15 around 29% of ohnnie al er drin ers are female, with that
languages. They give everyone nowledge, tools and guidance to proportion growing in most mar ets this year. In the nited
support people with disabilities, covering issues from digital and States, ohnnie al er drin ers are also more ethnically diverse ilding a t ri ing and incl si e ospitalit
physical accessibility to appropriate language to enable positive than those of other whis ies, at % compared to 31% for other ind str
conversations about disability. Through disability disclosure , we invite whis ies.(2)
employees in more than 0 countries to share their disability m ition
confidentially, helping us to better understand our wor force. In the nited ingdom, ohnnie al er partnered with Provide business and hospitality s ills to 200,000 people, increasing
ridgerton star Simone Ashley and Instagram community iet employability and improving livelihoods through earning for ife and
Paratha to champion the creative representation of the South our other s ills programmes
Asian community. m er o eo e reac e t ro g earning or
In the nited States, ohnnie al er s First Strides initiative i e an ot er i rogramme in i ca 1.6
debuted an alternative red carpet at the Oscars to spotlight
seven film ma ers boundary-pushing contributions to culture.
The brand delivered over 200 million paid media impressions
30.9k 62.5k Ambition 200k
that encouraged consumers to support female entertainment
projects. 2020 2022 2023 2030

em er o o r ain o et or re o rce gro ce e rating o r

on or i o in rg ri e in ne (1) PH and eta ( rand ift Study)
(2) ohnnie al er rand uidance system 2022 study

68 Diageo Annual Report 2023 Diageo Annual Report 2023 69

 O O continu ed O O

Part of how we promote sustainable growth and a resilient supply e re committed to addressing barriers women face in accessing the
chain is through inclusive programmes giving equal access to s ills, resources and opportunities we provide. This includes ma ing
resources, s ills and employment opportunities. This includes earning
for ife ( ), our business and hospitality s ills programme for people
from under-represented groups.
sure at least 50% of people benefitting from our community
programmes are women, and that these programmes meet women s
anaging climate ris s and
In fiscal 23 we reached 31,600 people in 19 mar ets with earning for
ife, 59% of them women.
needs throughout design, implementation and evaluation. In fiscal 23,
59% of people benefiting from were women. opport nities b o g
e also want to tac le barriers faced by other under-represented
This year, we ve started to wor with aterAid and ARE International
to give women a voice in decision-ma ing about water, sanitation g a o gla a ab l

STRATEGIC REPORT
groups including the ethnically diverse community and people with and hygiene ( ASH). In each community where we run a ASH
disabilities. In fiscal 23, we updated our inclusive by design principles to project, we set up a committee with equal representation from men
include recruitment practices, training content and venue accessibility, and women. This includes facilitating community dialogue to tac le Our business depends on natural resources and we are directly affected by
as well as modules on inclusion and diversity. social norms that prevent women s equal access to, and agency over
ASH. This year 56% of ASH committee members were women
changes in climate and the related challenges of nature and biodiversity loss.
e ran a impact assessment in atin America, celebrating the
programme s 15th anniversary and its positive impact on communities.
across our programmes in nine countries. hile we already feel the effects of climate change in our global operations,
Insights from the assessment will shape the programme s future, e ve also piloted a gender-inclusive approach to our wor with there are also opportunities for companies that develop credible plans to adapt
increasing its reach and impact globally. smallholder farmers. This includes equal access to agricultural training
and resources, and engaging with suppliers to increase women s
to changing circumstances.
m ition membership and leadership of farmer groups. e ll roll this out as part
Through the iageo ar Academy ( A) we will deliver 1.5 million of our programmes for smallholder farmers from fiscal 2 . A changing climate has implications across our end-to-end operations.
training sessions, providing s ills and resources to help build a O r action plan ociet 0 0 pirit of rogress
or more in ormation on o r an ma o er armer
It can affect crops li e barley and wheat, and natural resources li e Pioneering grain-to-glass sustainability includes ambitious targets, such
thriving hospitality sector that wor s for all water that we rely on to ma e our products. It can cause disruption to
rogramme ee age an as achieving net ero carbon emissions from our direct operations
m er o artici ation in training
e ion e ivere t ro g iageo ar 6 our manufacturing sites and supply chain through extreme weather.
And it can affect the communities we wor with by threatening their
(Scopes 1 and 2) by 2030, and across our full value chain (Scope 3) by
2050 or earlier, using water more efficiently and ta ing action to
ca em in i ca livelihoods. ut there are also opportunities for companies that
elping nder represented comm nities o ercome replenish water in water-stressed areas. Our Society 2030 Spirit of
innovate to ma e their operations and the products they sell more Progress targets reflect our most material ES issues, and they align to
arriers to ed cation sustainable.
304k 540k Ambition 1,500k In fiscal 23, we gave 1.75 million in endowments to Historically the N Sustainable evelopment oals. e are also proud to be a
lac olleges and niversities (H s) and inority-Serving These issues intersect and converge. A changing climate can threaten signatory to the N s Race to ero and Race to Resilience campaigns
2020 2022 2023 2030
institutions in the nited States. This followed the 10 million in our ey commodities and our communities, while production, reflecting our commitment to climate change mitigation and adaptation.
endowments to 25 H s in 2021. This is part of how we agriculture and pac aging produce carbon which can accelerate The issues are complex, which ma es progress against our ambitious
Through the A, we wor to drive sustainable growth in the hospitality
address educational barriers in under-represented communities, climate change. ust as these issues are connected, our response and targets challenging. As we become more sophisticated in
sector and ma e it more diverse. omen are under-represented, in
by funding students in need and development programmes that actions are too. e are wor ing hard to reduce carbon emissions from understanding our impacts and ta ing action to address them, we will
management and behind the bar. A helps them overcome two of
complement traditional learning. our sites, for example by introducing renewable energy in our operations. also evolve our practices and metrics to ma e sure we strive to focus
their biggest barriers lac of mentors and role models, and lac of
Preserving water and promoting sustainable farming protects our on and communicate the right things effectively.
access to training.
commodities. And by reusing waste co-products from production, we
In fiscal 23, we delivered 236,000 training sessions to bartenders, help sustain the agricultural system that underpins what we do.
waiting staff, owners and managers through face-to-face and virtual
e are committed to acting responsibly to mitigate our contribution to
training, e-learning and masterclasses. e adapted courses to help the
global warming and conserve the environment in which we operate,
industry respond to challenges including staff shortages and hiring,
while simultaneously adapting to the effects of a changing climate to
retaining and ups illing staff while meeting guests increased
eep our business resilient. e loo to achieve this through our
expectations. e also ran women-only mentoring and training in
strategic priority to pioneer grain-to-glass sustainability , which focuses
Africa, atin America and India.
on three areas preserve water for life , accelerate to a low-carbon
This year, 88% of survey respondents agreed or strongly agreed that world and become sustainable by design . Actions we ta e across
A presents a modern and progressive view of the bar community, these priorities are transforming our business to thrive in the longer term.
up from 8 % in 2022. Also, 82% of women agreed or strongly agreed
that A supports their advancement in the industry, up from 68% oc ssing on grain to glass s staina ilit
in 2022. Pioneering grain-to-glass sustainability is how we manage our
environmental and climate challenges, and how we help preserve the
reating incl si e comm nities scarce natural resources the world depends on. It is also how we adapt
to climate change throughout our supply chain, and mitigate its effects.
m ition
y managing our environmental impacts and the impact of the
Ensure 50% of beneficiaries of our community programmes are
environment on us, we support our business and the communities we
women and that our community programmes are designed to e are committe to acting re on i to mitigate o r contri tion to
wor alongside to be resilient for the long term. This is good for the
enhance diversity and inclusion of under-represented groups g o a arming an con erve t e environment in ic e o erate
planet and also good for our business. y investing in renewable
ercentage o ene iciarie o o r comm nit
rogramme o are omen 5 % energy, for instance, we lower carbon emissions by depending less on
fossil fuels. e also manage ris and build resilience as the world
moves towards a low-carbon economy.
e are committe to im roving acce to c ean ater anitation an
On
giene in comm nitie near o r ite
Ambition 50% Track

2020 2030

70 Diageo Annual Report 2023 Diageo Annual Report 2023 71

 O O c on tin ued

a ing climate c ange part of o r strateg oar over ig t it ommittee dentif ing and assessing o r p sical ris s O r p sical ris s res lts
To understand, quantify and mitigate climate ris s and adapt to their To assess the physical ris s we are exposed to, and how they could Our assessment confirmed three ey points
impact, we partner with climate resilience experts to assess them, develop under various scenarios, we wor ed with climate resilience
1. ater scarcity is our most significant climate-related physical ris
model their possible financial impact, and develop strategies to adapt ec tive ommittee o ner i experts from 2021 to 2023 to loo at our full global supply chain. This
in terms of prevalence, trajectory and potential financial impact. It
and remain resilient over the long-term. table shows how we have phased the wor
affects our ability to produce our products, and the access to
any complex factors determine how climate change creates ris s i ca ear agricultural ingredients that we need.
and opportunities for our business, which ma es it harder to quantify ec tive on or ar ets/ argest supply Highest water ris Remaining locations 2. All agricultural ingredients are at ris , and we see that ris

STRATEGIC REPORT
how big an impact they ll have, and when. Even so, scenario analysis President, lobal Supply hain lobal orporate Relations regions centres Africa Asia Pacific increasing under the timeframes and scenarios we analysed. Our
helps us test how various assumptions related to climate change could assessed for Scotland exico atin America and models suggest that costs of most commodities will increase as a
Procurement and hief irector physical ris s North America India aribbean
affect our business. This year we ve once again modelled with climate Sustainability Officer result of climate change, although estimates of the precise impact
Tur ey Europe
resilience experts the impacts of climate change under transition ris vary significantly depending on the model used, underscoring the
and physical ris scenarios. This scope covers all our wholly owned sites (except acquisitions completed difficulty of such projections.
ross-functional limate Ris Steering roup
after the start of the 2023 evaluation) and ey third-party operations. e 3. Acute weather events, including floods, winds and storms, are
e have incorporated the guidance of the Tas Force on limate-
orporate relations Supply Strategy also included some sites that are planned or under construction to ma e projected to increase and to cause interruption to operations
related Financial isclosures (T F ) framewor into our reporting since
Ris Finance egal ar eting sure we understand their exposure and build their resilience. however, they are unli ely to have a significant financial impact
2020. It s helped us describe how we re decarbonising our value chain,
on us, under the scenarios analysed.
mitigating and adapting to climate ris s and impacts, and spotting Our physical ris assessments measured how exposed and vulnerable
opportunities for transitioning to a low-carbon future. Through scenario activities at our sites and ey third-party operations and suppliers are to sical ris s in o r s ppl c ain
analysis, we ve also learned the range of possible financial impacts of or ing groups assigned to address ey ris s 19 climate-related ha ards. e reviewed the vulnerability of the main Our assessment of supply chain ris explored three areas agricultural
various climate scenarios in our business. e started our carbon and opportunities identified agricultural materials we procure in each region, and also ran a high- commodities, supplier assets and distribution routes.
reduction efforts in 2008, as well as championing water stewardship level analysis of our ey distribution routes (road, rail and ports). e
around the world to combat water stress. In 2022 we published our Net In previous years we had covered a wide range of agricultural
limate c ange and rem neration did this under two scenarios (IP scenario R P .5 medium warming
ero arbon Strategy, which outlines how we will achieve our commodities used in the regions analysed, and this year we expanded
of 2-3 , and IP scenario R P8.5 severe warming of -5 ) and
decarbonisation vision in direct operations. e intend to build on this The performance element of the long-term incentive plan ( TIP) for our our analysis to include hops and dairy. This highlighted the particular
two timeframes (to 2030 and to 2050).
with our net ero transition plan, ta ing into account the final guidance senior leaders encourages and rewards performance against certain vulnerabilities of each crop type, how their exposure was li ely to
of the Transition Plan Tas force when it s published. ES measures (introduced in 2020, for fiscal 21 to 23). Some 10% of Production sites For our own sites and many of our third-party increase in the growing regions of interest over time, and possible
the performance share award, which is granted to the Executive operator sites that produce beverages on our behalf, we analysed at adaptation and mitigation responses. The diagram on page 7 sums
o ernance ommittee as well as other senior leaders, targets carbon emissions a high level the ris s they are li ely to be exposed to. For those that up the main ris s that the most important commodities are exposed to
iven its importance, we have governance processes in place and water efficiency, which directly support mitigation of, and are most strategically important or at greatest ris , we carried out by region.
intended to ensure that we consider and factor climate ris into our adaptation to, climate ris (see the irectors remuneration report on more detailed assessments. At each location, we loo ed at a
As well as the bul commodities outlined in the diagram, we also did a
business operations and planning processes. To supplement our pages 126-153. combination of the different activities (e.g. malting, distilling and
high-level analysis of ingredients included in our products that are
Society 2030 Spirit of Progress governance summarised on page 57, pac aging), the part of the process that might be affected (e.g.
dentif ing climate ris s and opport nities critical to particular categories for the characteristics they impart
our sustainability teams hold monthly sustainability performance infrastructure, water supply and energy sources) and the 19 physical
limate ris is generally divided into physical and transition ris . juniper, angelica and liquorice, for example. The results of the
reviews, trac priority water efficiency and carbon reduction projects, ris s that might occur.
Physical ris s include chronic changes li e sea level rises and agricultural commodity assessments have and will continue to inform
and hold quarterly sustainability business reviews that focus on multi- Supply chain and logistics for all mar ets assessed, we analysed our
temperature changes, and acute events li e floods, droughts and our strategy. This includes wor ing with farmers to increase their crops
year progress and plans leading up to 2030. e oversee climate ris ey suppliers factories and warehouses, for example those handling
heatwaves. Transition ris s arise from actions to mitigate climate resilience to climate change, and developing contingencies where this
specifically at the highest level of the company, and manage it through our most critical or specialised ingredients and components, ey
change, such as policy and legal changes li e carbon taxes isn t possible.
these governance structures and processes agricultural commodities, and our most critical distribution routes
technology changes, li e renewable energy or mar et changes, li e (road, rail, and ports), to identify which might be exposed to physical
Executive sponsorship and responsibility is shared jointly between the growing consumer demand for more sustainable products. ris in the future.
President, lobal Supply hain Procurement and hief
Sustainability Officer (Ewan Andrew) and the lobal orporate oth categories of ris are already materialising in everyday life, and
Relations irector ( aniel obley). both are li ely to increase. As the world continues to warm while we
At an operational level, they are supported by our cross-functional intensify efforts to mitigate climate change, we need to assess and
limate Ris Steering roup, which meets up to twice a month. prepare for both physical and transition ris s. Opportunities,
ithin this, a sub-group from Supply hain Procurement oversees meanwhile, could arise from us mitigating ris s more effectively than
physical ris s, with other cross-functional wor ing groups responsible our competitors, or creating competitive advantage, for instance by
for addressing transition ris s and opportunities, for example mar et meeting consumer demand for more sustainable products.
and reputation, policy and legal, and technology.
The limate Ris Steering roup updates executive sponsors monthly limate c ange resilience
on progress and issues relating to climate ris , and quarterly updates Our experience in managing the impact of normal variations in
are provided to the oard, ma ing sure that potential ris s and climatic conditions, water availability and agricultural yields has made
opportunities and their impact are part of decision-ma ing. us more resilient and adaptable. e adapt through careful planning in
Any potential financial implications of climate ris and potential our supply chain and procurement organisation, by partnering to
impacts on our consolidated financial statements, including develop high-yield, drought-resistant crops, and by managing water in
performance and progress against non-financial metrics, are also a way that ma es our operations more resilient and helps our local
shared with and considered by the Audit ommittee annually. communities and agricultural sourcing areas to adapt, with specific
focus in water-stressed areas. e have integrated climate ris into our
enterprise ris management processes since first referencing it within
our principal ris factors in 2010. It is also part of our strategic and
business continuity plans.

re erving ater an romoting taina e arming rotect o r commo itie an comm nitie

72 Diageo Annual Report 2023 Diageo Annual Report 2023 73

 O O c on tin ued

e assessed more than 1,200 suppliers assets and found the most antitati e impact of p sical ris
e climate ris s to agric lt ral ingredients region common ris s were water stress and higher temperatures, with humidity Our assessment shows that generally our sites are li ely to be exposed
and wildfire ris s also intensifying in some locations. e use this to more frequent acute weather events li e floods and storms, but
information to wor with suppliers on future adaptations and
ort merica ro e r e financial impacts are unli ely to be significant. e are more exposed
contingencies. e discuss this further in the Strategy section on page to the acute ris of drought, and to chronic changes li e water scarcity.
ai e T W arley W D P T D P F
78. ater scarcity is the biggest climate-related ris to our operations,
arley T P heat W P T W F Fi
T W T W T W F Fi
Our analysis of distribution routes included ey ports, roads and rail since we have many sites in water-stressed areas that might face
Rye Rye
networ s identified in our supply chain in each of the mar ets we interruption to operations if the warming temperature scenarios play

STRATEGIC REPORT
Sugar beet T W P Sugar beet T T W D
assessed. The analysis showed that, in general, the ris s to ports come out. Through our scenario analysis we have estimated the impact on
American white oa T W airy W T
from water stress and changing temperatures, while the ris s to road our operations and financial condition to 2030, concluding that it is
Hops T Fi W Di Hops W D T
networ s are broader, including chronic ris s, li e temperature unli ely to be significant by that date. This is largely due to the
increases and sea level rises, and acute ris s, such as storms, floods or adaptation actions we are ta ing (detailed below) and our
wildfires. e assessed both acute and chronic ris s to be higher in contingencies to deal with short-term disruptions to our operations. This
warmer countries (e.g. India, exico and Tur ey). These insights help is reflected in our assessment of viability and impairment (see page
us plan effectively for additional future contingencies we may require in 9 ).
our distribution routes.
ater stress
sical ris s region iageo nder the warming scenarios we modelled, the proportion of our sales
and e t ird part s ppl sites exposed to extremely high water stress is li ely to increase by 2030
and again by 2050, with the sites most li ely to be affected in India,
The most common physical ha ards projected to intensify are water-
exico, Tur ey and North America. nder these warming scenarios,
related ris s (water availability, water temperature and flooding) and
even though the number of sites affected may not change
high temperature. High temperatures might affect employees health
substantially, those that are affected are li ely to suffer even greater
and productivity, and processes such as fermentation and maturation,
shortages of water, under both timeframes, which could have an
which are sensitive to temperature variations. There s also increased
impact on our operations, and on the health and wellbeing of
cost associated with process and facility cooling. old temperature
employees at those sites.
ris s are projected to decline in all regions we analysed.

ater ris ro g t
rought is the only physical ris li ely to affect our operations or
iven the importance of water to our operations and producing our
atin merica an ari ean rica ia aci ic financial condition in any material way, because we rely on water to
products, we focus particularly on understanding water-related ris s so
ma e our products. Analysing the financial impact of drought is
Sugar cane T W H F P S arley T D P arley T W D P we can mitigate and adapt to them. As well as our physical climate ris
particularly difficult because there are many factors involved, including
Agave T ai e T D F rapes T W D P assessments loo ing at the ris s from water availability, water
the probability of drought, how long operations would have to be
Sorghum T P Rice T P F
temperature, water quality and flooding, we conduct water-stress
suspended and the impact of any adaptation or contingency
T W T W D P H
analysis at our sites every two to three years, using site surveys and
Sugar beet olasses (sugar cane) measures.
T W P
orld Resources Institute ( RI) Aqueduct data. In fiscal 23, we
Sugar cane
enhanced our water ris assessment by completing water source Even so, we have modelled what we can, using scenario analysis and
assava T D P
vulnerability assessments at 22 of our sites located in water-stressed our own assessment of vulnerability, and considering highly
Vanilla T S
areas, with the help of expert partners. conservative assumptions (e.g. some downtime in all sites due to
drought). e concluded that, by 2030, we don t expect drought to
The water stress, climate ris and source vulnerability assessments give
have a significant impact on our operations or on our financial
riorit raw materials ol me limate ris s li el to affect agric lt ral commodities us comprehensive insights into how this profile might change due to
condition. eyond 2030 it is much harder to analyse, given the lengthy
climate change. They also show the degree of vulnerability of our
timeframe. ut our models do show that if we don t ta e mitigating
ò arley ò Sorghum operations and supply chains to water stress, bearing in mind various
T Temperature P Precipitation (variability/extremes) Fi Fires action by 2050, drought could have the potential to interrupt
ò Agave ò airy contributing factors in these sites catchment areas. limate ris
operations and, as a result, potential lost sales. e discuss how we
ò ò assessment tells us the number of our current sites exposed to high
heat Rye D rought W ater stress H Hurricane/storm plan to deal with this ris in the Strategy section on page 78.
water stress isn t projected to increase significantly in the foreseeable
ò ai e ò Raisins
F Flood Di isease S Sea level
future. ut water stress is li ely to become more severe at some sites, ommodit pricing
ò olasses ò Others
ma ing the detailed understanding of source vulnerability particularly
(including ommodity pricing is more difficult to estimate in these scenarios, with
ò Rice valuable. The figure on page 76 shows our water-stressed sites and
hops, anise the models we used producing highly varied estimates. Prices were
ò rapes and vanilla) those that have had source vulnerability assessments completed, as projected to increase for the majority of our commodities. The scenario
ò Sugar well as those that are in our priority water basins. analysis helps us build commodity price ris into our raw material
eograp ical scope of o r p sical ris assessments procurement strategies, particularly for crops with unique provenance
(e.g. agave and vanilla) or high sensitivity to growing conditions (e.g.
O ne e t ir art ite ier a et actorie hops). Our modelling suggested the biggest ris s of higher prices in
egion a e e etai e a e ment gric t ra commo itie are o e ort
2050 were to agave, sorghum, rice, dairy and hops. There are
North America 12 8 86 6
significant differences between models, but the impacts in 2050 could
Europe 76 13 18 262 27 be significant.
Asia Pacific 63 11 6 281 9
atin America and aribbean 6 6 2 251 13
Africa 8 5 6 366 1
ota n a

(1) Some commodities were analysed in more than one location.

or more etai on o r cenario ana i a roac ee t e on inancia re orting o n arie an met o o ogie ection on age

74 Diageo Annual Report 2023 Diageo Annual Report 2023 75

 O O c on tin ued

looding and storms antitati e impact of transition ris s and

Flooding and storms are the next most li ely physical ris s to affect our opport nities
oc s on water stress financial performance, since they might damage our sites or disrupt
ecause we rely so greatly on water, we have been assessing our wholly owned production sites for water stress regularly since 2008. The Transitioning to a low-carbon economy creates both ris s and
our supply of agricultural commodities, and the price of most of the opportunities for us. Through our scenario analysis we have estimated
most recent assessment, in 2021, was updated in fiscal 23 to reflect changes in our operations due to disposals. The assessment and our commodities we analysed is set to increase under the scenarios
classification of a site as water-stressed is based on external ( RI Aqueduct databases for watersheds around the world) and internal the impact on our operations and financial condition to 2030,
developed. Although the ris to our sites from acute physical events will concluding that it is unli ely to be significant by that date, even
site surveys covering physical, regulatory, social and reputational considerations. It will be updated again in fiscal 2 . Shown below are increase, it is unli ely to be significant in the scenarios and timeframes
the sites for which we have conducted source vulnerability assessments, and those countries in which we have identified priority water assuming that we bear all changes in production costs.
we analysed.

STRATEGIC REPORT
basins. e found the ey driver of transition ris was glass and, to a lesser
iageo sites located in water stressed areas and priorit water asins in 0 dentif ing and assessing o r transition ris s and extent, aluminium pac aging, which would contribute to an overall
opport nities production cost increase. e also saw that lower transport and energy
To assess transition ris s and opportunities, and to estimate their costs would partially mitigate this impact. The categories and mar ets
35 financial impact under a Paris-aligned emissions scenario, we wor ed most affected in this scenario were those where glass constitutes a
with climate resilience experts. The wor performed deepened our relatively higher proportion of overall cost, particularly tequila, cream
36 liqueurs and the Indian mar et. ower future transport costs meant that
understanding of our ris s and opportunities which led to refined
37 categories where transport costs were relatively higher as a proportion
28 financial estimation of the ris s and opportunities along with further
J 38 of total cost were less affected, relatively, by increased glass cost.
26 clarity on how to respond to them.
27 31
C In fiscal 21 to 23 we analysed, as defined by T F , the ris s and Extending the analysis to 2050 is subject to many variables and
22 32
21 33 opportunities associated with transitioning to a low-carbon economy. un nowns and therefore significant uncertainty. ut it lets us estimate
23 29
34 what a worst case scenario could loo li e based on our best
24 39 30 e identified the ris s with the most potential impact by loo ing at our
A available modelling of cost trajectories, and understand what s driving
I
25 agricultural inputs, production and pac aging, distribution and sales
channels arriving at these most important transition ris s and ris so that we can develop plans to mitigate it. ased on this
1 D E H modelling we could ma e the estimated impact on our operations and
8 13 opportunities to monitor
4 11 financial condition not significant through pricing and/or our planned
2 5 17
12 18 1. ecarbonisation costs hanges to our production costs improvements in energy use, producing lightweight glass, reducing the
3 9 19 associated with moving to a low-carbon economy, including
6 F 14 carbon intensity of glass production, and using returnable or reusable
20 carbon taxes and related changes to input costs (ris and pac aging where possible.
10 G 40
B 7 16 opportunity).
15 2. onsumer behaviour hanges in consumer behaviour to become The results of our scenario analysis of both physical and transition ris s
more sustainable, e.g. choosing circular (reusable) products or are reflected in our assessment of viability and impairment (see page
locally produced brands (ris and opportunity). 9 ).
Sites
Sites where a source vulnerability
3. Regulatory changes For example, restrictions on pac aging,
assessment (SVA) has been water use, agricultural materials or land that affect our ability to
carried out ma e our products (ris ).
ountries in which we have . Technology changes Shifting to low-carbon production of our
identified priority water basins products and pac aging, and the associated ris of not doing this
ite fast enough (ris and opportunity).
1 El harcon, exico 9 Achimota, hana 17 East Africa altings, enya 25 Tarsus, Tur ey 33 Nacharam, India
The next table on page 78 summarises the physical and transition ris s
2 Agricultural lands, 10 agos, Nigeria 18 isumu, enya 26 Nasi , India 34 al ajgiri, India
uadalajara, exico and opportunities we consider most important to manage overall.
3 a Primavera, exico 11 ampala, ganda 19 Tus er, enya 27 daipur, India 35 Pathan ot, India
4 Agricultural lands, 12 wan a, Tan ania 20 Seybrew, Seychelles 28 Alwar, India 36 eerut, India
ara, ra il
5 Itaitinga, ra il 13 oshi, Tan ania 21 Ala ehir, Tur ey 29 aramati, India 37 Rosa, India
6 essejana, ra il 14 ar es Salaam, Tan ania 22 Ac payam, Tur ey 30 Hospet, India 38 Serampore, India
7 Paraipaba, ara, ra il 15 Isipingo, South Africa 23 Nev ehir, Tur ey 31 Aurangabad, India 39 umbalgodu, India
8 aase, hana 16 arracuene, o ambique 24 Ta el, Tur ey 32 Pioneer, India 40 Pac aging, Indonesia

A exico D hana G Tan ania I Tur ey

B ra il E Nigeria H enya J India

C F ganda

76 Diageo Annual Report 2023 Diageo Annual Report 2023 77

 O O c on tin ued

mmar of o r most important climate ris s and opport nities agriculture, and improves how we use water in our operations. It also In fiscal 23, we completed water efficiency projects that will deliver
prioritises providing clean water to the communities we wor in, and benefits in several water-stressed areas. In enya, ganda and Nigeria
Ris s strongly advocates and drives more collective action to contribute to a we have installed or increased the capacity of water recovery plants.
i e cri tion ater carcit gric t ra ra materia avai a i it net positive water impact in water-stressed basins. The volume of water recovered has now reached 530,850m3,
Increasing water scarcity and water stress affects our ability to limate-related impacts on agricultural material availability equivalent to around 12% of total water withdrawals avoided across
Our wor on water has earned us a place on the P ater Security
continue to produce in water-stressed areas cause scarcity or price increases our African sites. This has helped to mitigate some of the obstacles to
A ist for the seventh year in a row, placing us in the top tier of
ategor Physical chronic Physical chronic water efficiency created by lower production volume in Africa.
participating companies for sustainable water management.
ime rame Short-term (one to five years), medium-term (five to 10 years) and edium-, long-term e are also building for the future. In fiscal 23, we bro e ground on a

STRATEGIC REPORT
long-term (10 to 30 years) wastewater treatment plant at our El harc n site in exico. This will
ater efficienc
m act i not mitigate oderate(1) oderate(1) enable the construction of a water recovery plant in fiscal 2 , which we
T 2030 expect to start delivering water efficiency improvements from fiscal 25.
e on e e am e Improvements in water use efficiency Regenerative agriculture adaptations
ater replenishment plans in 100% of water-stressed areas Smallholder farmer support Reduce water use in our operations with a 0% improvement in e are also partnering with innovators to embed new technologies
ollective action programme to improve water security in evelopment of drought-resistant crops water use efficiency in water-stressed areas and a 30% improvement identified through our iageo Sustainable Solutions ( SS) programme
iageo s priority water basins Alternative sourcing locations across the company into our site roadmaps. One example is our partnership with T2
Substitution with alternative crops
Improved water management P sensors on sensor technologies, which we expect will reduce the
amount of water required to clean equipment between production

i e cri tion n t co t on mer e avio r

.6% runs.
Thirteen of our distilleries have now achieved Alliance for ater
Policy changes (carbon taxation, shift to renewables) cause onsumers prioritise purchasing more sustainable products,
increases in input costs rejecting those perceived to have a negative environmental 16.2% Target 40%
Stewardship certification (the internationally recognised, auditable
impact standard for responsible water use), including ameronbridge,
2020 2023 2030 Scotland, 11 Speyside distilleries and the Alwar distillery in India,
ategor Transition policy/legal Transition mar et
ma ing us the first distiller to be certified against this leading standard
ime rame Short-, medium- term Short-, medium-, long-term P in Asia.
m act i not mitigate oderate(1) oderate(1)
e on e e am e Supply chain decarbonisation Pac aging weight reduction (1. )% limate, water and regenerative agriculture are strongly connected.
This is why we continue our wor to influence indirect water use in our
Engaging suppliers in low-carbon technology development for Increased recycled content in pac aging
their operations eveloping circular (refill, reuse) product offerings agricultural supply chains. This means mapping our water use and
Pac aging weight reduction technologies 9.4% Target 30% continuing to run water improvement projects with farmers, especially
smallholders. This helps us ma e our overall supply chain more resilient
2020 2023 2022 2030
and support vulnerable communities, particularly in water-stressed areas.
Opport nities
Our water strategy aims to improve water security, especially in water-
O ort nit e cri tion c ain ecar oni ation nnovation in taina e ro ct an ac aging stressed areas. This is achieved through both projects to improve our
ater replenis ment
Reducing our Scope 1, 2 and 3 emissions lowers our exposure to eveloping more sustainable products (e.g. lighter-weight,
carbon taxes and related costs, and improves our reputation higher-recycled content, more refillable and reusable containers) operational efficiency and our replenishment programme, which wor s T 202
with customers and consumers meets consumers increasing demands with local communities to replenish more water than we consume in Replenish more water than we use for operations in water-stressed
ategor Transition policy/legal Transition mar et water-stressed areas. Across our business, we re proud to have areas
improved water efficiency by 51.1% since we started measuring P
ime rame
m act i not rea i e
Shor-t, medium-term
oderate(1)
Short-, medium-term
oderate(1)
performance against this metric in 2007 and by 9. % since our 2020
baseline. In water-stressed areas, efficiency has improved even further,
23 %
e on e e am e ecarbonisation programme and capital investment Innovation to deliver more sustainable products (e.g. refillable by 16.2% against the 2020 baseline.
Renewable energy and regenerative agriculture and reusable pac aging, alternative pac aging materials) 71.5% Target 100%
hile our ongoing focus on water-stressed areas continued to deliver
(1) ow impact is defined as having a negligible impact on customer service, or an absorbable disruptive impact on one or more brands. oderate impact is defined as disruption to efficiency improvements of 2.6% vs fiscal 22, fiscal 23 saw changes to 2016 2023 2026
production/supply chain creating an inability to service a small portion of our customer base, the impact of which is manageable or a significant short-term impact on one or more of our production profile that drove a 1.2% reduction in water use
our core or local priority brands that is absorbable by the business. High impact is defined as an inability to service a significant portion of our customer base, or major reputational
efficiency per litre of product pac aged ( .09 litres/litre to .1 litres/ Our water replenishment programme, an important contribution to
damage.
litre). This was despite the implementation of a number of water supporting the climate resilience of our communities and supply chains,
has had another strong year, putting us firmly on trac to reach our
O r strateg for grain to glass s staina ilit investment for fiscal 2 to 26 to continue our progress towards our efficiency projects across our production portfolio.
2026 target. In fiscal 23, our projects developed the annual volumetric
Our strategic priority to Pioneer grain-to-glass sustainability 2030 goals.
Our production footprint is complex it includes distillation, brewing and replenishment capacity of 1,311,010 m3 water. This represents 22% of
ac nowledges the breadth of the environmental and social Our carbon and water roadmaps outline the projects needed to deliver pac aging, and uses water in related but different ways. hile we saw our target for 2026, and cumulatively (fiscal 16 to fiscal 23) we have
consequences of climate change. It also reflects how interlin ed they our 2030 goals. These plans are bac ed by capital investment and efficiency improvements across our distillation sites of 3.5% compared replenished 71.5% of our estimated fiscal 26 volume. In India, Nigeria,
are and that our value chain is a series of interdependent parts. Our undergo regular stress testing to help us in our efforts to meet our to fiscal 22, the increasing proportion of distillation in our portfolio Seychelles and South Africa we have achieved our 2026 replenishment
targets reflect the complexity of the ris s and opportunities we face and targets. Enhancing and digitising our sustainability data and reporting produced an overall decline in performance according to the way we target three years early. For 13 sites in these countries, we are now
are mapped to our most material issues water, carbon and the framewor has given us more detailed insight into the progress in currently measure water efficiency litres of water used per litre of replenishing all the water we directly consume in the local water basin
sustainability of our pac aging. delivering our strategy. This lets us see where we need to optimise pac aged product. The reason for the decline under this combined or the basin where we source the raw materials for the site.
y setting challenging targets, Society 2030 Spirit of Progress loo s to innovation opportunities or overcome project delivery challenges. metric is that most distilled products need to be matured for a number
Overall, in fiscal 23 we have completed 35 replenishment projects in 11
manage the potential impact of climate ris s on our business, as well of years before bottling, so much of the water used in fiscal 23 went
Responding to ris s and opport nities into distilling product that won t be pac aged for years to come.
countries. Highlights include nature-based projects improving water
as minimising our impact on the environment and supporting quality and availability in priority catchments. In alisco, exico, we
The next sections outline our targets and the progress we have made
communities we wor with. against those targets. e define our targets carefully, along with clear For this reason, in fiscal 23, we reviewed our water efficiency have wor ed with government, N Os and local sta eholders to restore
e cannot meet our target without investment. e expect to invest non-financial reporting boundaries and methodologies for each. For methodology, so that it better reflects our progress and challenges on a wetland treating wastewater in a project that s the first of its ind for
around 1 billion ( 1.2 billion) to drive improvements in environmental more details, see pages 2 2-262. water efficiency against the bac ground of our business model. us. Other ambitious replenishment projects include improving irrigation
sustainability by 2030. y doing this, we will strengthen our business by Following a detailed review, we defined a new methodology that uses with farmers in Tur ey, de-silting dams to increase water infiltration in
strengthening our communities and ma ing our value chain more
reser ing water an index approach to show the aggregated change in water efficiency India, and providing access to water for many smallholder farming
Our Preserve ater for ife strategy is context-based and recognises across our different production pillars weighted by their proportional communities in Tan ania, hana, ra il, exico, ganda, enya
resilient. In the process, we can manage our climate ris s and act on the connections between how we use water and the impact on
opportunities we find. uch of the focus to date has been on our sites water use. This methodology better represents underlying year-on-year and India.
communities, supply chains and the environment. It is a grain-to-glass site-level efficiency performance and, critically, addresses the timing
in Africa, where we have invested in biomass and solar energy, energy approach that aims to replenish water in water-stressed catchments, ( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited assurance
efficiency and water recovery initiatives. e plan to increase difference between distillation and pac aging, due to maturation reported to the irectors. For further detail and the reporting methodologies, see
supports farmers (especially smallholders) and regenerative requirements. e will change our measurement approach in fiscal 2 . pages 2 2-266.

78 Diageo Annual Report 2023 Diageo Annual Report 2023 79

 O O c on tin ued

ater for comm nities ater collecti e action imiting car on emissions
The planet needs significant science-based action to create a sustainable, low-carbon future and to mitigate the ris from climate change. e aim
arget arget to reach net ero across our direct operations by 2030. e have also stated our ambition to being net ero across our value chain by 2050, and
Invest in improving access to clean water, sanitation and hygiene Engage in collective action in all priority water basins to improve halving these emissions by 2030. e have detailed plans for reducing emissions across our existing sites and we are also investing in carbon-neutral
( ASH) in communities near our sites and local sourcing areas in all water accessibility, availability and quality and contribute to net production(2) sites to add to those we already have.
our water-stressed mar ets positive water impact
at wa to net ero(1)
ercentage o ater tre e mar et it ercentage o riorit ater a in it co ective
inve tment in 100% action artici ation 50%

STRATEGIC REPORT
20 0
200 20 2020 202 2030
Target
88.9% 100% Met 33% 50% Target 100%

2020 2022 2023 2020 2022 2023 2030 G G G G S 2030: T S 2030: S 3

20 2020 S P S P
An important part of our approach to water is providing access to e don t tac le water stress alone. e launched the iageo ollective SOP S T
clean water, sanitation and hygiene ( ASH) in water-stressed Action Programme in 2020, recognising that we need to collaborate T 20 2020 Scope 1 net ero Scope 1 net ero
communities near our sites and in water-stressed areas that supply our with multiple sta eholders to create solutions and interventions that -50% -50% Scope 2 net ero Scope 2 net ero
raw materials. improve the water security across entire water-stressed catchments. Scopes 1 2 Scopes 1 2 Scope 3 -50% Scope 3 net ero
Through this, we are now active in six out of our 12 priority water -30% Scope 3
e reached our 2030 target in fiscal 23, launching a project in exico
basins strategically important areas suffering particular water stress -33% -50.1% Scopes 1 2
to harvest rainwater in 37 schools and provide drin ing water in alisco,
in 10 countries. In fiscal 23, with support through our partnership with Scopes 1 2 -33.7% Scopes 1-3
home of our tequila distilleries. This means all nine of the mar ets
The Nature onservancy, we began two initiatives one with the
included in our target have invested in ASH projects since 2020. In 200 200 2020
International nion for onservation of Nature in ganda s Victoria
fiscal 23, we invested in 17 ASH projects in seven countries bringing P
Nile basin where we source sorghum and barley for our brewery in
safe water and sanitation to 71,655 people.
ampala, and another in the odavari 3 basin in India. e have also S ecarbonisation of direct operations by embedding energy efficiency and energy recovery ontinue to explore innovations, partnerships
In fiscal 23, we have also helped ensure more female representation in agreed to be a basin champion for the ater Resilience oalition in into our processes and wor ing towards using 100% renewable fuel and heat. and carbon removals to maintain compliance
ASH programmes, which ma es it more li ely that everyone will enya s pper Tana basin, partnering with the pper Tana-Nairobi Exploring innovations, partnerships and renewable energy certification. with our S Ti-aligned net ero commitment.
benefit equally from access to water. For more about this, see the ater Fund, increasing the commitment and investment we have
section on championing inclusion and diversity (page 70). In fiscal 2 , already made there to improving the water security of the whole basin, S 2 ontinue switch to renewable electricity. Once we have achieved 100% renewable
we ll consider how best to bring ASH projects to more communities in which feeds Nairobi, home of our Tus er brewery. reate additional renewable energy capacity to power our sites through on-site electricity by 2030 we will focus on moving
developments and using power purchase agreements (PPA). towards more on-site/near-site generation.
our supply chains.
vocac
ater is under pressure around the world, and the issues around S 3 P : For example low-carbon glass and aluminium manufacturing pac aging reduction innovative glass coatings that support light-
weighting, and moving towards circular pac aging solutions.
preserving it are complex. So it will ta e multilateral action to address
: Regenerative agriculture programmes scale-up to reduce the emissions associated with crop growth.
the challenge of responsible stewardship and scarcity. At the OP27 P : obilising the value chain by engaging, inspiring and activating our supplier and customer networ to jointly decarbonise e.g.
climate change conference, we were among businesses calling for through the development of renewable energy solutions and increased carbon emission understanding and transparency.
more action on water and climate resilience. e also attended the N C : ross-functional governance structure in place creating shared Scope 3 delivery responsibility.
ater onference in New or in arch 2023 and were among the
first businesses to sign a declaration calling for accelerated action on F : e continually test our decarbonisation progress through reports that assess the sufficiency of our plans to deliver our in-year, 2030 and 2050
water stewardship. Our partnerships with leading international targets. ecarbonisation plans are in place across our site footprint and we monitor them through performance management and strategic business reviews.
Through iageo Sustainable Solutions ( SS) and supplier collaboration, we identify opportunities to partner and innovate, driving systems change within the
organisations, such as ater Resilience oalition, Alliance for ater beverage industry. e may need to use high-quality certified carbon offsets to neutralise hard-to-abate residual emissions, though we anticipate these being no
Stewardship and aterAid, are fundamental to our ambition to more than 5-10% of our baseline.
support the climate resilience of our business and communities. They
(1) This is an estimate based on current management expectations the underlying assumptions and future developments may change over time, which would cause changes to management
also help us advocate for more global action to address the water and expectations and this information. See pages 73-78 for more about the potential impact of climate change on iageo and our current plans to manage and mitigate ris s.
nature crisis. ontinuing this important advocacy, we plan to attend
orld ater ee in Stoc holm in August 2023, N S Summit in Our ris assessment and scenario analysis show us that consumer behaviour is an important transition ris , and companies who don t decarbonise
September and OP28 in ecember. their operations will suffer as consumers increasingly demand more sustainable products. Also, decarbonisation requires investment. ut by wor ing
( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited with suppliers to innovate in low-carbon manufacturing techniques for glass production, for example, we help to accelerate towards a low-carbon
assurance reported to the irectors. For further detail and the reporting world while benefitting from the experience that comes from early innovation.
methodologies, see pages 2 2-266.
(2) Four carbon-neutral facilities have been assessed and certified using PAS2060 arbon Neutrality Standard and ertification (Scope 1 2, irect Operations boundary) as reducing
emissions aligned to an equivalent net ero trajectory with 5-10% of residual emissions neutralised using purchase of carbon offsets.

80 Diageo Annual Report 2023 Diageo Annual Report 2023 81

PIO EER GR I TO G SS S ST I I ITY contin ued

This year we have increased our use of renewable thermal energy by otal direct and indirect car on emissions
missions from o r direct operations 1.3% compared to last year across our global operations. The start up
ositi e partners ips
T 2030 of three biomass facilities at our sites in enya and ganda produced region ear T 2030
ecome net ero carbon in our direct operations (Scopes 1 and 2) our biggest single increase in renewable thermal energy use, a 25% T evelop regenerative agriculture pilot programmes in
increase in renewable fuel and heat across our Africa mar et 000 CO2 five ey sourcing landscapes
P
compared to fiscal 22. e also increased energy output from on-site R 2020 2021 2022 2023

biomass and biogas plants and introduced renewable biofuel at two North America 127 125 100 3 1
5. % sites in Scotland. As we ma e renewable energy advances across our Europe 152 129 1

STRATEGIC REPORT
operations, we have reduced our usage of certificate bac ed Asia Pacific 32 10 10
renewable gas. 1 Target 5
atin America and aribbean 22 27 38 2
14.7% Target 100% 2022 2023 2030
e are a significant enabler of the generation of biomethane in Africa 137 15 132
2020 2023 2030 Scotland through the supply of iageo distillery co-products. This is 0 2 0
used by third parties as a feedstoc to generate green gas, which is e are committed to partnerships with farmers to help them
In fiscal 23, as part of our ambition to decarbonise our operations to injected into the natural gas networ . e then reuse the resulting implement projects to test new regenerative farming approaches and
treamlined nerg and ar on Reporting practices, measure the results and share what we learn. y following
decouple growth from emissions, we continued to reduce our absolute renewable gas in our distilleries, with 23% of the green gas used by our
carbon emissions (direct and indirect carbon emissions by weight sites in Scotland derived from our own feedstoc s this year. ( R) regenerative practices, agriculture can restore soil health and fertility,
(mar et/net based)), achieving a further 5. % reduction on last fiscal 2020 2021 2022 2023
boost biodiversity, protect watersheds and promote ecological
year and a cumulative 1 .7% improvement from our fiscal 20 baseline. Total lobal energy resilience. y focussing on life above and below ground, everyone
missions from across o r al e c ain consumption ( h) 3,310,388 3,392,923 3,557,760 3 0 33 benefits from regenerative agriculture from the farmer to the
The main factor in reducing our emissions in fiscal 23 was our ecosystem.
T 2030 Total mar et based (net)
continued investment in renewable energy. e commissioned biomass
intensity ratio of H emissions e also continue to build our understanding of the agronomic context
facilities at sites in enya and ganda, bringing significant emissions Reduce our value chain (Scope 3) carbon emissions by 50%
(g O2e per litre of pac aged across our ey crops and sourcing regions, wor ing with agronomic
reductions of approximately 2,000 tonnes O2e over the course of P product) 139 122 105 105
the year. e increased on-site bioenergy use at facilities in Scotland partners and our suppliers, growers and farmers. e are currently
CO2
and Tur ey and also replaced fossil fuel with liquid biofuels at two of
our whis y distilleries in Scotland. e have also implemented
1. % Total
( h)
energy consumption
1,056,931 1,06 ,795 1,091,153 2 30 conducting assessments in the nited ingdom, nited States, India,
ra il, exico and East Africa for barley, wheat, corn, rice, sugarcane,
irect ( h) 92 ,022 927,917 951,302 02 03 agave and sorghum production systems.
continuous improvement initiatives across a number of sites, and
Indirect ( h) 132,910 136,878 139,851 03
continued to use certificate-bac ed renewable natural gas at facilities (20.7)% Target 50%
in the and anada. Total direct and indirect
2022 2023 2020 baseline 2030 carbon emissions ( t O2e) 86 71 8 3 inness arle programme
To reach our 2030 S Ti-approved near-term target for direct Scope 1 86 71 8 3 '
operations, we must reduce our emissions by more than 95% from our e continue to refine our understanding of our baseline and footprint,
including our supplier networ , after reviewing our total value chain Scope 2 In Ireland, our programme loo ing for ways to lower-carbon
2020 baseline. e continue to invest in carbon-neutral facilities, in emissions of barley production for uinness is in its second year,
addition to our four carbon-neutral distilleries1 in Scotland and North footprint and associated emissions in 2023. This year our Scope 3 O2e ( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited
emissions decreased by 1.2% but we remain behind our 2020 baseline assurance reported to the irectors. For further detail and the reporting with 5 farmers now participating. ata from 1,125 soil samples
America. e are designing new sites in exico, anada, Ireland and methodologies, see pages 2 2-266. showed that three quarters of the soil s carbon footprint is from
hina to be as efficient and low-emitting as possible. by 20.7%.
nitrogen fertilisers. This shows there s potential to reduce
Our emissions derived from pac aging decreased due to reductions in o ing towards regenerati e agric lt ral emissions by at least 30% from the baseline year through
T 2030 volumes, as well as decarbonisation activities including glass light-
se 100% renewable energy across all our direct operations so rcing regenerative practices and low-carbon fertilisers.
weighting, carton removals, and switching to lower-carbon materials.
by 2030 This was partly offset by increased emissions attributed to capital Our supply chain connects us to communities around the world. This e also supplied barley farmers with cover crops, which fix
C goods, including investments in plants that enable our low-carbon gives us the chance to ma e a positive social and environmental nitrogen and carbon in soil, and quantified biomass they
23 1. % transition. impact by enhancing livelihoods and promoting regenerative generate.
agriculture.
e are navigating the complexities of Scope 3 to ensure we achieve
45% Target 100% our reduction targets, and enable impactful change up and down the One of the foundations of our regenerative agriculture strategy is our
value chain by wor ing with our suppliers, our peers and the wider Sustainable Agriculture uidelines (SA ), which set out the principles ocal so rcing
2020 2023 2030 we expect our agricultural raw materials suppliers to adopt to ma e T 2030
beverage industry.
farming more regenerative. e wor with suppliers and farmers across Provide all local sourcing communities with agricultural s ills and
This year, 5% of all the energy consumed at our facilities came from As well as reducing Scope 3 emissions by 50% by 2030, we want to
our supply chains to implement, assess and scale regenerative resources, building economic and environmental resilience
renewable sources, an increase of 1.9% on last year. To achieve this, achieve a net ero value chain by 2050 or sooner. To achieve these
practices. (supporting 150,000 smallholders)
we have increased the use renewable electricity, fuel and heat. Our targets, in common with many multinationals, we are wor ing with
improved performance in fiscal 23 was driven largely by the global H accounting bodies and our suppliers to get more detailed This wor also helps ma e our supply chain more resilient. Our
electrification of our sites, our efforts to source renewable electricity and Scope 3 data. As we refine our value chain data, we can be more assessments show the possible impacts of climate change on
our investment in biomass technology. specific about our H footprint, including refined categories of agricultural commodities, and that they are vulnerable to climate 23 1 .
upstream and downstream Scope 3 emissions. ha ards including water stress, temperature rises and flooding,
As a signatory of the RE100 initiative, with a target to reach 100%
particularly where the commodities only grow in one country.
electricity from renewable sources by 2030, we are proud that we are 12.9k Target 150k
already ahead of our 2025 target of 50% renewable electricity, (1) Four carbon-neutral facilities have been assessed and certified using PAS2060 e wor with communities to help them adapt and build resilience
arbon Neutrality Standard and ertification (Scope 1 2, irect Operations 2022 2023 2030
reaching 86.7% this year, up from 85.6% in fiscal 22. e have through our Preserve ater for ife strategy, implementing
boundary) as reducing emissions aligned to an equivalent net ero trajectory with
invested in 100% renewable electricity sites li e our ebanon all-electric 5-10% of residual emissions neutralised using purchase of carbon offsets. regenerative agricultural practices and developing climate-resistant here low yields and quality issues threaten smallholders income, we
distillery in North America. omprising approximately 8,000 panels ( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited variants of agricultural crops. e are also exploring alternative crops wor with suppliers, research organisations and other partners to build
that will add .1 of renewable electricity generation capacity. As assurance reported to the irectors. For further detail and the reporting to build diversity and enhance resilience in crop systems and across
methodologies, see pages 2 2-266. more resilient local supply chains. This has included developing more
well as reaching 100% renewable electricity ourselves, we encourage our raw materials portfolio. y wor ing with farmers in this way, and by climate-resistant and higher-yielding varieties of sorghum adapted for
our suppliers to use more electricity through power purchase giving them s ills and resources, we ma e them and their communities enya and hana.
agreements (PPAs) and support additional power generation economically, environmentally and socially stronger, as well as
opportunities in our mar ets. strengthening our own supply chain. e are on course to reach our target of supporting 150,000
smallholders by 2030, after supporting nearly 13,000 farmers in fiscal
23 with sustainable development.

82 Diageo Annual Report 2023 Diageo Annual Report 2023 83

 O O c on tin ued

e have wor ed mainly in enya to test and learn from our approach Examples of how we are reducing our pac aging footprint include ange in ercentage o rec c e Rec cled content and rec cla ilit of plastic
to support our smallholders before expanding to the networ of
smallholders we source from. The programme focuses on training and
Pioneering net- ero glass bottles In ecember 2022, we content eig t in i ca (1. )% arget
announced our partnership with Encirc, a leading glass
enabling nowledge transfer for the transition to more resilient Ensure 100% of our plastics are designed to be widely recyclable or
manufacturer and co-pac er, to create the world s first net ero
agriculture production systems. e trained smallholders on improving 39% 39% Target reusable/compostable
glass bottles at scale by 2030. The new furnace at Encirc s plant in 60%
soil health, wor ing with technical and implementation partners on the ercentage o rec c a e or re a e
ground. e have also supported our smallholders with essential
resources such as high-quality, certified seeds, distributing more than
heshire, nited ingdom, will reduce carbon emissions by 90%
with an energy mix of green electricity and low-carbon hydrogen.
2020 2023 2030
com o ta e a tic e in i ca 11. %
e expect that carbon capture technology will capture the Recycled content now ma es up 39% of our pac aging, down 1.2% on

STRATEGIC REPORT
100 tonnes of input at a subsidised rate to smallholder farmers. fiscal 22. This is because of a shortage of cullet, a feedstoc for
remaining carbon emissions by 2030. The furnaces are expected to 72% 83% Target 100%
ast year, we partnered with an agricultural technology provider to be fully operational by 2027 and to produce up to 200 million recycled glass, in the nited ingdom and North America. e
digitise our smallholder value chains. Starting with our primary crop for Smirnoff, aptain organ, ordon s and Tanqueray bottles a year continue to face challenges in sourcing quality recycled glass and PET 2020 2022 2023 2025
smallholder farmers, sorghum, we have rolled the technology platform by 2030. (polyethylene terephthalate), though we are wor ing with suppliers and
out across hana, enya and ganda in fiscal 23. e aim to broaden eading the way to sustainable aluminium e have invested in a industry peers to strengthen recycling infrastructure. In fiscal 23, we achieved 83.2% recyclability for plastics, an increase of
this to Nigeria and Tan ania. The technology acts as a valuable data groundbrea ing project to create a circular economy for aluminium 11.2% from last year. e continue to use the technically recyclable
espite the challenges, we have made positive changes, moving
source. e aim to use it to tailor our offering to smallholders based on in the nited ingdom. e are funding a new consortium ( A A definition. The remaining non-recyclable components are currently not
ohnnie al er old abel Reserve from 0% recycled content to 0%
their needs, while monitoring changes to baseline data to ma e sure ritish Aluminium onsortium for Advanced Alloys), which will replaceable, although we continue to explore alternatives.
and trialling ohnnie al er core si es with increased recycled content.
our interventions have an impact on the ground. To help accelerate build a plant to provide recycled aluminium for more than 00 e also launched Talis er x Parley ilder Seas in the brand s first
change for smallholders, we launched challenges through iageo million cans of uinness and pre-mixed ordon s and tonic, arget
100% recycled bottle.
Sustainable Solutions, encouraging innovators to pitch ideas relating to significantly reducing our carbon emissions while also creating jobs Achieve 0% recycled content in our plastic bottles by 2025, and
soil biodiversity, carbon (relating to soil health) and water. in the nited ingdom. 100% by 2030
ioneering a ig ter ott e ercentage o rec c e content in o r
To clarify farming communities needs, we have used the main
communication method in our sourcing regions radio. or ing with
Red cing pac aging weig t and increasing In 2021, we launched a challenge to develop lightweight bottles a tic ott e e 7%
rec cled content through iageo Sustainable Solutions. This led to us wor ing with 2020
local agricultural radio shows and Farm Radio International, we are
glass industry consultants E ER , which has developed an
loo ing to understand farmers challenges to help us target our arget 3.2% 7% Interim target 40% Target 100%
innovative glass coating technology that could enable us to use
support. Together, we ran a six-wee series on Farming as a usiness , ontinue our wor to reduce total pac aging and increase recycled lighter glass for bottles, without reducing their strength. e 2022 2023 2025 2030
discussing challenges to women in agriculture and the support content in our pac aging (delivering a 10% reduction in pac aging invited strategic supply chain partner Ardagh roup to
available to farmers. isteners could freephone to submit views in their weight and increasing the percentage of recycled content in our collaborate, and they engaged manufacturing software specialist In fiscal 23, we started projects in North America, Europe and Africa to
local dialect across eight radio stations in hana and ganda. pac aging to 60%) assault Syst mes to support with testing the E ER coating. increase recycled content in plastic bottles, particularly single-use
a ing pac aging more s staina le ercentage re ction o tota e have been testing the coating through industry-first lab-based formats, and achieved 7% recycled content in plastic bottles.

onsumers are rightly demanding more sustainable products and

ac aging eig t in i ca . % and virtual trials. Virtual trials allow us to develop innovations
This year, in the nited ingdom we have moved our ohnnie al er
using real-time digital representations of products and processes,
legislation continues to drive industry changes. e are committed to Red abel 1.75 bottles to 30% recycled PET. Our North America
which reduces time, cost, energy and raw materials. After the
reducing our value chain s carbon footprint by reducing pac aging (14.9)% Target 10%
business achieved 26% recycled content in plastic bottles and in Africa
trials, we will test the thinner glass on our ohnnie al er bottles.
and increasing the recycled content in the pac aging we produce. e we trialled 0% recycled content. In hana, we have partnered with
2022 2023 2020 baseline 2030 Through this collaboration, we hope to significantly reduce the
are also developing circular business models and designs, which allow the ohinani roup to introduce the first bottle-to-bottle recycling plant
raw materials needed to create a bottle, and the overall weight,
for more reusable and refillable pac aging. in the country. In fiscal 23, 2,000 metric tonnes of plastic have been
In fiscal 23, we reduced pac aging weight by . % compared to fiscal so it ta es less carbon to transport our bottles.
y becoming sustainable by design in pac aging, we reduce our collected, with the aim of the plant being fully operational in fiscal 2 .
22, but this was 1 .9% above our 2020 baseline because we have
carbon footprint, by using fewer materials in production and by limiting The plant will have a capacity to recycle 15,000 metric tonnes of plastic
increased production from fiscal 20 to fiscal 22. In fiscal 23, we
emissions when the pac aging reaches the end of its life. e buy most per year.
removed 1 1 million cartons from some of our ohnnie al er and arget
of our pac aging materials, so partnerships are crucial to achieving scotch brands. e have reduced weight in our primary scotch portfolio Also, our largest pac aging site in Scotland has removed single-use
Ensure 100% of our pac aging is widely recyclable (or reusable/
our ambitions. An example is iageo Sustainable Solutions ( SS), by moving some of our bottles into standard, more lightweight formats, shrin -wrap across a range of products, saving 67 metric tonnes of
compostable)
where we partner with technology innovators, customers, suppliers and allowing us to ta e some heavier formats out of the portfolio. These plastic per year, and delivering shrin -wrap-free drin flas s to 7
ercentage o ac aging rec c a e
researchers to spot potential technology brea throughs and pilot them,
with the ultimate aim of scaling them to increase their impact.
changes have saved almost ,000 tonnes of glass and 9,170 tonnes of
board in fiscal 23. From fiscal 2 , we will continue to embed our esign eig t 7. % countries.
e will see these shifts continue in fiscal 2 sourcing recycled PET
for Sustainability pac aging guidelines, emphasising use of lightweight Target 100% remains a priority.
glass and recycled content. e also continue to encourage bars, 97.9%
restaurants and other on-trade outlets to support the reuse of pac aging.
2020 2023 2030

In fiscal 23, 97.9% of our pac aging was technically recyclable, using
the same fiscal 22 methodology.
e have an ambition to adjust our recyclability metrics in line with
mar et-differentiated recycling framewor s in the future.

84 Diageo Annual Report 2023 Diageo Annual Report 2023 85

PI O EER GR I TO G SS S ST I I I TY c on tin ued

Re sing and red cing waste In the second half of fiscal 23, we launched an initiative with our ow we a e reported consistent wit t e recommendations of t e as orce on limate related
e manage around one million tonnes of waste each year. This suppliers and P to fully understand the waste in our supply base.
includes co-products from our production processes in the form of The project will loo for ways to change how we approach waste inancial isclos res ( )
spent grain and other agricultural commodities. These co-products management across our Tier 1 supply chain by avoiding waste to
return to agriculture in the form of animal feed and fertiliser and are landfill and recovering and recycling more waste by 2030. Our
commitment to a more sustainable and less wasteful supply chain is recommendation ompliance
also used as feedstoc s for biomass facilities. This helps reduce the
environmental footprint of our agricultural supply chain and supports also reflected in our mar eting, where our point-of-sale (POS) project is O ee age
our regenerative agriculture programmes. y reusing scarce resources, wor ing towards guidelines for sourcing better materials for a. escribe the board s oversight of climate-related ris s and opportunities.

STRATEGIC REPORT
we help improve the system that produces our ey ingredients. In experiential mar eting, as well as designing POS and campaign props b. escribe management s role in assessing and managing climate-related ris s and es. See page 72.
addition, we aim to divert all waste from landfill, so it is recycled or for reuse. opportunities.
reused. ast year, we reported that a third-party contractor at one of our ee age
facilities in Australia had incorrectly diverted waste material to landfill. a. escribe the organisation s processes for identifying and assessing climate-related
Red cing waste to landfill This prompted a global review in fiscal 23 of more than 350 waste ris s. es. See pages 73-78. Having completed comprehensive ris
T 2030 handlers and our own internal waste management practices, aiming to b. escribe the organisation s processes for managing climate-related ris s. assessments our focus is now on ensuring appropriate adaptation plans
strengthen our controls and avoid similar issues in the future. This c. escribe how processes for identifying, assessing, and managing climate-related are in place for all ris s identified.
Achieve ero waste in our direct operations and ero waste to landfill ris s are integrated into the organisation s overall ris management.
hadn t been possible during the ovid-19 pandemic because of
in our supply chain
restrictions on site visits. The review of waste handlers identified 111 ee age
P
5.5% metric tonnes of waste that hadn t been accounted for in fiscal 22,
ta ing the total volume of waste sent to landfill to 279 tonnes. e have
a. escribe the climate-related ris s and opportunities the organisation has identified
over the short, medium, and long term.
e have described ris s and opportunities for our business in 95% of
our operating locations, as well as the impact of those ris s and
200 Tonnes
now included this in waste-to-landfill volumes for fiscal 22, representing b. escribe the impact of climate-related ris s and opportunities on the organisation s opportunities on our strategy. e have modelled the resilience of our
0.028% of the 98 ,057 tonnes we handled in that year. e ll continue businesses, strategy, and financial planning. strategy under three climate-related scenarios. See pages 2 3-2 5. As a
180 tonnes 279 tonnes next step we are exploring the further development of our scenario
to assess our waste handlers regularly and improve our internal c. escribe the resilience of the organisation s strategy, ta ing into consideration
different climate-related scenarios, including a 2 or lower scenario. analysis capability and associated tools.
2023: Target Met 2022 controls to maintain our ero waste to landfill status.
ee age
lobally, the total volume of waste diverted from our direct operations e consider we have achieved ero waste to landfill if we have
disposed of less than 0.2% of baseline waste-to-landfill volume during a. isclose the metrics used by the organisation to assess climate-related ris s and es. See pages 79-86.
to landfill was 180 tonnes this year (vs 279 tonnes in fiscal 22), which is opportunities in line with its strategy and ris management process.
below our ero waste to landfill de minimis threshold of 200 tonnes. the year. This volume equates to 200 tonnes and excludes any waste
we are required to send to landfill under local regulations. b. isclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas ( H ) es for Scope 1 and 2. See page 82. e are wor ing with global H
e recycle, reuse and recover more than 99.98% of waste from our emissions and the related ris s. accounting bodies and our suppliers to get more detailed Scope 3 data.
global operations either for our own reuse or in partnership with local ( ) ithin the scope of Pricewaterhouse oopers P s (Pw ) independent assurance As we refine our value chain data, we can be more specific about our
agricultural communities and energy and waste handlers. Our reported to the irectors. For further detail and the reporting methodologies, see H footprint, including refined categories of upstream and
performance in fiscal 23 means we have achieved a ey milestone in pages 2 2-266. downstream Scope 3 emissions.
fulfilling our 2030 direct operations ero-waste commitments. c. escribe the targets used by the organisation to manage climate-related ris s and es. See pages 79-86.
opportunities and performance against targets.

86 Diageo Annual Report 2023 Diageo Annual Report 2023 87

O

This list does not include all of our ris s, and the ris s listed are not set out in order of priority.

ris ell-managed ris -ta ing lies at the heart of

our Performance Ambition. Effective ris
ross Ris
i an im act
ovement refers to the gross movement in the ris , before mitigations and controls, from the prior year.
itigation an ro i ovement

management management drives better commercial

decisions, protects our assets and supports a
1. limate c ange
and s staina ilit
ore mitigation
The cross-functional limate Ris Steering roup sets our strategy for ongoing climate ris
assessment, and manages associated opportunities and ris s, while continuing to develop our
ncrea ing
limate action failure,
approach to climate change ris reporting (see page 71). Resource-scarcity issues have been extreme weather and
growing, resilient and sustainable business. EG CVC CT EP V
identified and mitigated, especially within agricultural ingredient sourcing, and manufacturing, biodiversity loss top the list

STRATEGIC REPORT
Physical and transition climate water and energy. of the globe s highest ris s,
change ris s, including water Physical ris exposures have been identified for sites assessed in North America and Scotland, with regulations and
stress, extreme weather events, Africa, exico, India, and Tur ey and being built into site and category ris footprints. government interventions
temperature rises and Society 2030 Spirit of Progress ambition was launched and operationalised to deliver against expected to continue to
O r approac Ris appetite increased regulation, may ey targets and longer-term goals. increase.
e believe that effective ris management starts with the right The AR and the Audit ommittee have defined the group s ris result in increased volatility in ater blueprint was defined and operationalised in water-stressed locations. Transition climate ris is
conversations to drive better business decisions. Our primary focus is to appetite across our ris categories (Strategic, Financial, Operational the supply of raw materials, ommunication programmes are in place to share impact, strengthen reputation and support expected to increase in
production costs, capacity advocacy platform. li elihood due to the
identify and embed mitigating actions for material ris s that could and Regulatory). A three-point ris appetite scale (Averse, autious constraints and higher costs of arbon pricing is being assessed as an internal mechanism to drive deeper understanding of the acceleration of regulatory
impact our current or future performance, and/or our reputation. Our and Open) and appetite ratings have been applied, using both compliance. impact of our energy choices. efforts to control global
ris management efforts aim to be holistic and integrated, bringing quantitative and qualitative criteria that align to the delivery of our The failure of the business to Our T F modelling and mitigation plans incorporate the ris of a -5 climate change warming. In addition,
together ris management, internal controls and business integrity, Performance Ambition. This category-led approach enables practical meet our sustainability goals scenario, which may arise as a result of collective climate action failure. transition ris s associated
could result in loss of licence to with increased customer
ensuring that our activities across this agenda focus on the ris s that application of ris appetite thresholds to all business ris s, which eve o ment in
operate, financial loss and Progress against our Society 2030 Spirit of Progress targets (see pages 79 - 86). and consumer awareness
could have the greatest impact. e have recently reviewed and informs the level of mitigation required. Examples of ris s for which we and action on climate
reputational damage amongst Further multi-year climate change ris assessments and scenario analysis performed in atin
refreshed our principal ris s, our ris appetite, and our approach to ris have an averse appetite include ris s that could harm our people customers, consumers, America and aribbean, Asia Pacific, and Europe to evaluate short and long-term impacts from change are li ely to
management. Our approach is also structured to ensure that we ta e impact product quality cause us to mar et irresponsibly or act without investors and other physical and transition ris s. accelerate.
all reasonable steps to mitigate, but not necessarily eliminate, our integrity and be non-compliant with laws and regulations, including sta eholders. e have further increased resource dedicated to the mitigation of climate impact within our
principal ris s in this context. those relating to financial reporting. The collective climate action sustainability, sourcing, and finance teams.
failure to meet sustainability Our response includes mitigations, (action to reduce our impact on climate change), and
Accountability for managing ris is embedded into our management Ris s that can be partially mitigated through insurance are also goals may result in severe adaptations, (action to reduce the impact of climate change on our operations).
structures, an annual ris assessment establishes mitigation plans and identified and evaluated. e focus our insurance resources on the warming of -5 as per IP
monitors ris on a continual basis. most critical areas or where there is a legal requirement, see ing a scenario R P8.5 modelling.
balance between retained ris and ris transfer. As insurance mar ets . Reg lation trade ore mitigation ncrea ing
Our Executive Audit Ris ommittee (AR ) regularly assesses ris , e run multi-year public policy campaigns to minimise ris and unloc tax, trade and regulatory
are getting tighter, this is an area we continue to monitor. Pressures on public finances
and the Audit ommittee, acting for the oard, independently reviews arriers and opportunities.
and public health concerns
the assessment. The AR meets quarterly and receives regular reports merging ris s e have active involvement with the nited ingdom, the European nion and the nited States
on the ris s faced across the business and the effectiveness of the
indirect ta authorities to prevent escalation of tariff tensions and promote free new trade agreements.
are increasing.
The AR and Audit ommittee formally review emerging ris s. Our This has resulted in an
EG CVC CT V Our positive drin ing programmes are supported by a global industry platform to promote
actions ta en to mitigate these ris s. e use internal and external data Strategy and lobal Audit and Ris teams underta e hori on-scanning responsible drin ing and tac le spirits discrimination.
increasing li elihood of
to monitor our ris s and to ma e proactive interventions. e also Post pandemic, we see ris s changes in regulations,
to monitor any potential disruptions that could dramatically change our associated with geopolitical e practice evidence-based engagement to build trust and reputation with governments, health
trade barriers or indirect tax
establish cross-functional wor ing groups and use expert advice where industry and/or our business, from both a ris and opportunity tensions, global inflation and ministries and other sta eholders.
to mitigate increased
necessary to ensure significant ris s are effectively managed and, perspective, for the Executive ommittee to understand the changing debt crises which cause eve o ment in inflation and debt crises.
where appropriate, escalated to the AR and Audit ommittee for pressures on public finances, e have continued to prioritise the execution of public policy campaigns in all mar ets, to
landscape and ta e appropriate actions. resulting in the need to raise minimise ris s and unloc tax, trade and regulatory opportunities.
consideration.
e are currently monitoring a number of emerging ris s across the new tax revenue.
rt er etai a o t o r ri management a roac are e cri e business. There is a ris to our brands emerging from consumers In addition, public health
in t e or orate governance re ort on age an in t e it ma ing brand choices which reflect their increasingly polarised socio- concerns may lead regulators
ommittee re ort on age in major mar ets to ban or
political views. acro-economic and financial ris has also increased restrict the mar eting or sale of
O r principal ris s since last year as persistently high levels of inflation and interest rate alcohol, while increased trade
The Audit ommittee considers principal ris s to be the most significant hi es have resulted in cost-of-living crises and instability in financial tensions and/or fiscal
mar ets across many countries in which we operate. e are in the first pressures may prompt the
ris s faced by the group, including those that are the most material to introduction of additional
our performance and that could threaten our business model or future year of a five-year global programme to transform and digitalise trade barriers and/or
long-term performance, solvency or liquidity. They do not comprise all processes. As a result, the scale of the impact on our business, disproportionate tax increases,
the ris s associated with our business and are not set out in priority resources, and ways of wor ing represents an emerging ris as we all of which may result in
navigate through the programme. financial loss.
order. Additional ris s not nown to management, or currently deemed
to be less significant, may also have an adverse effect on the business.

EG CVC CT EP V
trategic o tcomes Efficient growth onsistent value
creation
redibility and trust Engaged people Ris included in
viability assessment

ross Ris o ement Increasing ecreasing Stable

88 Diageo Annual Report 2023 Diageo Annual Report 2023 89

O con tinu ed

i an im act itigation an ro i ovement i an im act itigation an ro i ovement

. eopolitical ore mitigation
e have global policies in place to prioritise the health and safety of our people.
ta e 5. nternational ore mitigation
e monitor and, where appropriate, express views on the formulation of tax laws either directly
ta e
New ris categorisation.
olatilit and There is a lobal usiness ontinuity Programme in place, including training, to enhance our direct ta or through trade associations or similar bodies.
capability to react effectively to a crisis and minimise disruption. e continuously monitor the international tax landscape for new taxes and tax legislation
siness lobal supply chain ris programmes improve our ability to maintain operational processes
EG CVC CT V
introduced and wor on improving tax processes, data, and system capabilities to enable us to
through volatility, thereby increasing our resilience. hanges in the international ensure compliance.
interr ption ulti-channel product availability enables consumers to flexibly continue to purchase our tax environment may lead to e are continuing the implementation of our tax transformation programme, to standardise,
EG CVC CT EP V
products. an increased cost of centralise and automate tax activities and controls where possible.

STRATEGIC REPORT
eopolitical forces, primarily Insurance policies are in place to protect against the financial consequences of covered events. compliance, an increase in our e continue to review and adapt our global transfer pricing policies to ensure profits are taxed in
driven by the Russia/ raine Our lobal orporate Security Policy ensures appropriate security measures are in place across effective tax rates and/or line with business activities and economic substance.
conflict (but also several other all mar ets and sites. unexpected tax exposures and
additional uncertainty, which eve o ment in
vectors globally), coupled with lobal Flex Philosophy on wor ing patterns and home wor ing are well-embedded and support e continue to monitor tax laws, and progress the implementation of our tax transformation
macro-economic stress, business continuity. could result in financial loss.
programme. The Organisation for Economic ooperation and evelopments (OE ) wor on
increase the li elihood of eve o ment in digitalisation will li ely impact how and where multinationals are taxed, for example, through the
international and domestic HO declaration that the global health emergency was over, and restrictions were widely lifted. implementation of a global agreement on a minimum effective tax rate under the Pillar Two rules.
tensions, disputes, conflict, The business has reacted to manage the impact of the raine conflict, which included closing The ris of unilateral tax measures (increased rates, new taxes, new extra-territorial measures)
unrest, and crime. down our Russia business unit, supporting employee safety in raine, and continuing to monitor may increase if the OE isn t successful in generating the consensus required to implement its
A significant interruption to our for potential escalation and broader impacts. proposals at scale.
business due to external The geopolitical situation in Europe, with the Russian invasion of raine, has continued to impact
events or a global health business. e announced that we would wind down our business in Russia in une 2022. 6. ppl c ain ore mitigation
e have aligned our operating strategy across the supply chain.
ta e
emergency could restrict
access to our products,
disr ption e have enhanced our digital infrastructure through the use of Artificial Intelligence and
EG CVC CT V
automation to simplify decision-ma ing.
negatively affect our The use of real time analytics and insights has enabled us to proactively respond to changes in
operations and brands, or Supply chain disruptions can consumer demand.
pose a threat to the safety of be induced by a range of Integrated usiness Planning has been implemented, ensuring end-to-end decision-ma ing.
our employees any of which reasons, including and not e have wor ed with our suppliers to create ecosystems to ensure continued service and
could have a negative impact limited to, geopolitical tension, minimal disruption, moving away from single supplier models.
on our commercial and changes in commodity The number of pac ing operations and hubs that are closer to the mar ets has increased,
financial performance. mar ets, increasing li elihood creating more flexibility and responsiveness.
pcoming election cycles in of severe weather events,
ey mar ets including the S, cybersecurity threats across eve o ment in
and Europe are li ely to the end-to-end supply chain, e have focused on segmentation and the implementation of differentiated supply strategies.
lead to increased volatility. macro-economic instability e have secured additional capacity on ey pac aging components and with our ports, carriers
(such as inflation) impacting and third-party logistics providers.
. acro economic ore mitigation
e monitor locally and globally ey business drivers and performance to prepare for rapid
ta e the responsiveness from our In addition, we have secured additional ocean capacity, moving 20% of shipments from
Scotland from ocean to rail transport, and established visibility on lead times that have given us
New ris categorisation. suppliers, regulatory changes
and financial changes in the external environment.
and changes in customer and increased accuracy and visibility.
entral hedging and currency monitoring ta e place to manage volatility which arises. e continue to manage our product portfolio to drive harmonisation and simplification.
olatilit roup-level strategic analysis and scenario planning is managed at both a global and a local
consumer behaviours.
e have enhanced our digital infrastructure and capability through artificial intelligence and
EG CVC V level, to strengthen mar et strategies and ris management across the business. Supply chains are li ely to be advanced automation roadmap.
e have multi-country investment and local sourcing strategies. expected to operate in this e have incorporated both upside and downside scenario planning for better ris mitigation.
Failure to react quic ly enough never normal for the near to
to changing macro-economic There are dedicated cross-functional steering groups to manage acute issues including inflation.
mid-term.
conditions and financial eve o ment in
volatility could erode Advanced analytics have been introduced to scenario plan volume ranges over a longer time The occurrence of these events
consumer confidence and period, allowing better mitigation against changes in the external landscape. are li ely result in impacts to
adversely impact financial Scenario-planning has been embedded into Executive and oard meetings and integrated into supply chain lead times and
performance. the strategic planning cycle. sufficiency of supply and
acroeconomic conditions Inflation has remained high and has reduced more slowly than expected in many countries. High therefore may have a
include inflationary pressures, levels of inflation are expected to continue in the short to medium-term. negative impact on our
unemployment and global Foreign exchange volatility has increased across several of our mar ets. commercial and
trade tensions. financial performance.
Financial volatility ris could
arise from variability in
financial mar ets, interest rate
fluctuations and currency
instability.

trategic o tcomes EG Efficient growth CVC onsistent value

creation
CT redibility and trust EP Engaged people V Ris included in
viability assessment

ross Ris o ement Increasing ecreasing Stable

90 Diageo Annual Report 2023 Diageo Annual Report 2023 91

O con tinu ed

i an im act itigation an ro i ovement i an im act itigation an ro i ovement

7. er and ore mitigation
Enterprise-wide cyber ris management processes and policies are in place.
ncrea ing 9 ore mitigation
e have a highly diversified portfolio of brands sold across the world, to ensure broad
ta e
eopolitical tensions are
resilience e run a cyber security training and awareness outreach program, including regular phishing growing, and there is an coverage of consumer occasions, geographies, trends and price points.
EG CVC CT V
exercises. increased li elihood of a EG CVC CT V
e operate a rigorous process of strategy development and governance at corporate and
e have an identity and access management framewor . more sophisticated cyber mar et level, using a suite of propriety and third-party data tools, including our rand
There is a rise in cyber attac s IT and Operations Technology (OT) disaster recovery and business continuity testing ta es place onsumer demand is uidance System, lobal Performance Suite and onsumer hoice Framewor .
threat which could affect any
which impact supply chain across ey systems. increasingly disrupted as a e perform a systematic review of emerging consumer and route to consumer trends at
organisation.
operations and the e monitor internal systems and respond to cyber threats. result of heightened macro- mar et and brand level.

STRATEGIC REPORT
manufacturing industry. e have information management and data resiliency measures across systems. economic volatility, with e focus our innovation on our strategic priorities and the biggest consumer opportunities,
Sophisticated cyber and IT Assurance is in place over IT controls for ey third-party managed systems. inflation and cost-of-living through global brand extensions and new-to-world products.
threats (both within our crises across many countries Our emand Radar system provides enhanced demand forecasting capability at mar et
eve o ment in adversely impacting prices
networ and at third parties), e have enhanced our cyber security operations and OT cyber capabilities across sites. and category level, allowing us to optimise mar eting investment.
including those facilitated and consumer spending sing our Volatility Trac er tool, we can review changes in consumer attitudes and
e are upgrading our enterprise resource planning system and associated processes to ensure power.
through breaches of internal they remain resilient. spending, both within our category and across the wider consumer economy.
policies and unauthorised onsumer patterns are also eve o ment in
access continue to be being disrupted by, but not onsumer behaviour and drivers of choice are fragmented, as consumers increasingly
prevalent, and could lead to limited to, digital technology, ma e product choices reflecting their personal socio-political values.
theft, loss and health and lifestyle priorities, e are investing in our social listening capability to improve our understanding and
misappropriation of critical altered consumption semantic analysis of online consumer signals.
assets, such as personal and behaviour, and new formats
consumer data, and and technologies.
operational / production Inability to respond and adapt
systems. our products or processes to
Inadequate IT resilience these disruptive mar et forces
arrangements and integration could impact our ability to
with legacy systems and our effectively service our
increasing dependence on customers and consumers with
third-party IT services and the required agility, and result
solutions could cause in financial loss.
disruption to core business
operations, including 10 ore mitigation
e use food safety system standards (FSS 22000) in place for our owned brewing and
ta e
manufacturing and supply,
pac aging sites. The majority of these sites are certified, with the exceptions being newly
resulting in financial loss and
EG CT
acquired and redeveloped sites, where we are upgrading the systems to meet the
reputational damage.
standards.
Accidental or malicious
. siness et ics ore mitigation
Our ode of usiness onduct and supporting policies and standards set out compliance
ncrea ing
contamination of raw
e monitor the FSS 22000 certification of third-party sites and exercise our right to audit
where necessary.
Across the different mar ets
and integrit requirements which are then embedded throughout iageo via regular training,
in which we operate there
materials or finished product, Regular ris assessments are underta en against our food fraud and food threat standards.
communications, annual certification, and ris -based global and local engagement activities. and/or ineffective brand e have also initiated a programme to strengthen and expand our global quality standards
EG CT EP
are increasing regulations protection and intervention to
Robust whistleblower mechanisms for complaints to be raised, properly investigated and to bring further rigour to our quality ways of wor ing for specific categories of products. The
There are increased regulatory from the governing bodies, address counterfeiting of our
remedial actions ta en. initial focus of this wor is non-alcoholic and ready to drin products where we are
expectations with new legal and the value of financial products supplied to mar et,
Ris management process and assessment framewor to identify, assess, mitigate, and monitor harmonising our quality standards.
regimes being imposed, and a penalties imposed is also could cause harm to
business and compliance ris s. Anti-counterfeiting measures embedded in our pac aging deter against reuse, ma ing our
heightened enforcement growing. This has resulted consumers, damage our
ell-embedded control assurance programme and centralised second line of defence. products more difficult to copy and enabling rapid authentication.
stance being adopted across in an increase in both the corporate and brand
Third-party due diligence process supported by technology and central oversight. e operate an active programme to identify high-ris areas, engage with customs and law
different mar ets. li elihood and impact of reputation and pose potential
tilisation of data and analytics tools to proactively support ris identification, assessment, and enforcement authorities, and participate in industry initiatives to monitor and prevent
the ris . threats to our people due to
ac of an embedded ongoing governance. counterfeiting activity, pursuing enforcement and prosecution where possible.
business integrity culture or the illicit nature of e run an online monitoring and ta edown programme across high-ris e-commerce and
eve o ment in
any breach of our policies, organisations involved in social media platforms, and directly engage with many platforms to create awareness and
Significant updates have been made to our third-party due diligence by shifting core aspects of
relevant laws or regulations counterfeiting activities. stop counterfeit listings.
the process to a centralised team, which will leverage expertise, centralise oversight, and shorten
(including but not limited to on-boarding time frames. eve o ment in
anti-corruption, money e have updated our ode of usiness onduct and ountering orruption policy to address The geopolitical ris in Eastern Europe (including Russia) brings increased ris of counterfeit
laundering, global anti-fraud more fully. as it creates porous borders while the growth of tequila has seen a rise in counterfeit tequila
competition, human rights, Values-based training and engagement have been deployed across all levels, with a particular cases in a number of mar ets.
data protection and economic focus on anti-retaliation, anti-bullying and leading with integrity. Our lobal Trac and Trace Standards have been strengthened and rolled out across
sanctions) could result in New guidance has been developed around screening of third parties to address our growing Supply. Annual tests and audits are in place.
significant penalties, financial irect to onsumer business opportunities. The ris of a product quality issue remains stable, though material sourcing challenges mean
loss and reputational damage. e have continued to enhance our governance processes around global human rights to ensure that we need to maintain and implement our standards effectively to mitigate this additional
that human rights considerations are strengthened across all business operations and reflect ris . The number of food safety alerts raised by regulatory authorities is rising.
emerging human rights regulations across the globe. e have further developed and standardised our approach to monitoring nown and
emerging food safety ris s associated with the spirits category, by expanding our global
spirits product integrity testing programme.
e have strengthened our investigation capabilities, with a new vendor wholly focussed on
identifying the source of counterfeit pac aging impacting cross-border counterfeit trade.
e continued the roll-out of upgraded liquid authentication machines.
e have upgraded our approach to identifying the source of counterfeit pac aging and
authentication.

EG CVC CT EP V
trategic o tcomes Efficient growth onsistent value
creation
redibility and trust Engaged people Ris included in
viability assessment

ross Ris o ement Increasing ecreasing Stable

92 Diageo Annual Report 2023 Diageo Annual Report 2023 93

 O O O

ia ilit statement O r e tn a a
Reporting transparently on the ES issues that affect our business, and that our business creates, plays a vital role in delivering our strategy. It helps
The irectors have reviewed the long-term prospects of the group in Second, they considered the potential impact of severe but plausible
us to manage ES ris s, ta e opportunities and promote sustainable development everywhere we live, wor , source and sell.
order to assess its viability. This review considered the activities and scenarios over this period, each of which contain a combination of
principal ris s of the group, together with factors li ely to affect the principal ris s. None of the scenarios individually or in aggregate Our ES reporting suite aims to provide comprehensive and comparable disclosures for a broad range of sta eholders. As well as publishing our
group s future performance, financial position, cash flows, liquidity would cause iageo to cease to be viable. A summary of the severe integrated Annual Report and ES Reporting Index each year, we also submit non-financial information to benchmar ing and index organisations,

STRATEGIC REPORT
position and borrowing facilities, as described in this Annual Report. and plausible ris s modelled, and the level of severity reviewed is including those listed on the Awards and ran ing page of our website.
included below. The non-financial reporting space is evolving quic ly. e are committed to continually evaluating and improving our approach and to actively
ssessment
Thirdly, they considered the group s sources of liquidity to fund both the trac ing emerging ES regulation, framewor s and good practice.
In order to report on the long-term viability of the group, the irectors
strategic plan and the impact of the severe scenarios over this period.
reviewed the overall funding capacity and headroom available to
iageo has continuous access to the debt capital mar ets and ow we report to o r sta e olders o r reporting s ite
withstand severe and plausible downside events, and carried out a
robust assessment of the relevant principal ris s facing the group, committed facilities over the viability period, including the ability to
including those that would threaten its business model, future refinance any maturing debt, or meet new funding requirements at
performance, solvency, or liquidity. This assessment also included the commercially acceptable terms. The group s liquidity is supported by a
review and understanding of mitigating factors for each principal ris . healthy balance of short-term and long-term debt programmes and
The ris s and mitigating factors are summarised in this Annual Report. 2.7 billion of committed credit facilities, if required. The group also has
flexibility in reducing discretionary spending, including acquisitions and
e ia ilit assessment as t ree parts capital expenditure, as well as temporarily suspending/reducing its
First, the irectors considered the period over which they have a return of capital to shareholders (dividends or share buybac s).
reasonable expectation that the group will continue to operate and
meet its liabilities. A three-year period is considered appropriate for this
viability assessment as this period is covered by the group s strategic nn al Report here we present our iageo.com here, through the Society Reporting nde here we give
plan and carries a high level of confidence in assessing viability. most material disclosures and describe how 2030 Spirit of Progress section, we give additional disclosures in line with the RI
our strategy delivers value for our business more details of our approach and Standards and the N advanced reporting
i cenario mo e e e cri tion an everit rinci a ri
and other sta eholders. The performance of performance, with examples of our strategy criteria index, plus our response to the
o a economic Prolonged global stagflation compounded by heightened geopolitical tensions and sharp economic challenges, eopolitical volatility
non-financial PIs are integrated into the in action. Sustainability Accounting Standards oard
o nt rn including large interest rate hi es, sustained foreign exchange volatility and instability in the financial mar ets. This and business
results in lost sales, through reduced consumer confidence, greater volatility amongst our customers and suppliers, and disruption relevant focus area sections. The document (SAS ). This document also includes detailed
heightened price sensitivity. ost-of-living increases lead to rising industrial unrest at supply sites and increases in Supply chain also includes detailed non-financial non-financial reporting boundaries and
interest rates result in financial institution and/or credit mar et-related failures. disruption reporting boundaries and methodologies. methodologies.
Sales Reduction in volumes across the three-year period, and consumer downtrading, with reduced price increases. International direct
tax ho are our sta eholders Everyone who is affected by our business, and everyone who affects it, is a sta eholder. A detailed description of our
ncrea e geo Increased geopolitical tensions result in a spi e in cyber attac s, impacting supply operations across multiple iageo yber and IT sta eholder engagement process is on pages 110-113 of this Annual Report.
o itica ten ion sites and resulting in production downtime. Heightened tensions also result in disruptions to iageo s route to mar et resilience
and adversely impact on consumer demand for and/or availability of iageo products, negatively affecting sales. eopolitical volatility
Non financial and s staina ilit information statement
Sales ost sales from adverse impact on consumer demand/availability, production downtime and route to mar et and business oc s area Rele ant policies and standards Read more in t is report age
disruption. disruption
onsumer demand e cri tion o iageo ine mo e usiness model 2 -25
disruption ociet irit o rogre Society 2030 Spirit of Progress 57
on mer c oice onsumer preferences move away from alcohol consumption driven by changing lifestyle priorities and social habits. Regulation, trade romote o itive rin ing lobal ar eting and igital ar eting Policy(1) Promote positive drin ing including 58-60
c ange an onsumer demand becomes more fragmented as consumers ma e product choices reflecting their personal socio- barriers and indirect lobal Employee Alcohol Policy(1) performance of the relating metrics
reg ator im act political values, and as a result of a perceived misalignment with iageo or its products, consumers do not purchase tax Position papers(1) 32-35
our products, thereby negatively impacting our sales and profitability. In parallel, large public debt levels and/or onsumer demand am ion inc ion an iver it ode of usiness onduct(1) hampion inclusion and diversity including 67-70
increased anti-alcohol pressure lead governments in major mar ets to impose significant excise increases, restrictive disruption O r eo e an c t re reat ritain and Scotland ender Pay ap Report performance of the relating metrics
trade measures or other excessive regulatory measures. 2022 Our people and culture 63-6
Sales oss of sales to the non and low-alcohol segment, and reduced sales growth due to the fragmentation of Republic of Ireland ender Pay ap Report 2022
consumer demand. lobal Human Rights Policy(1)
imate c ange an Increasing global temperatures impact our ability to ma e products due to constrained water supply, leading to a limate change and ioneer grain to g a taina i it lobal Environment Policy(1) Pioneer grain-to-glass sustainability including 71-87
nat ra a ar rotational short-term shutdown occurring across some of our water-stressed sites. limate change drives increasing sustainability Sustainable Agriculture uidelines(1) managing climate ris s and opportunities
costs of raw materials, while the acceleration of taxation against carbon use increases our operational costs. Extreme Supply chain Sustainable Pac aging ommitments(1) and performance of the related metrics 88-93
weather events occur more frequently, impacting our supply facilities, causing production outages. The assumptions disruption Partnering with Suppliers Standard(1) Our principal ris s and ris management
associated with this scenario are based upon our T F scenario modelling, and applied to a three-year period. eforestation uidelines
eopolitical volatility
Sales oss of sales due to operational outages as a result of disruption to production at water-stressed sites, and the and business a orce on imate re ate inancia Pioneer grain-to-glass sustainability including 71-87
impact of extreme weather events. disruption i c o re managing climate ris s and opportunities
and performance of the related metrics 88-93
om ine cenario The highly unli ely event of the combination of all of the above scenarios occurring at the same time. Our principal ris s and ris management

anagement has prepared cash flow forecasts which have also been buybac programme and dividend payments in the next 12 months, or man rig t lobal Human Rights Policy(1) oing business the right way 61-62
sensitised to reflect severe but plausible downside scenarios, ta ing into drawdowns on committed facilities. Having considered the outcome of odern Slavery Statement(2) Our principal ris s and ris management 88-93
lobal rand Promoter Standard(1)
consideration the group s principal ris s. In the base case scenario, these assessments, the irectors are comfortable that the company is a
ea t an a et lobal Health, Safety and ellbeing Policy(1) Health and Safety 65-66
management has included assumptions for mid-single digit net sales going concern for at least 12 months from the date of signing the
growth, operating margin improvement and global T A mar et share group s consolidated financial statements. nti ri er an corr tion ode of usiness onduct(1) oing business the right way 61-62
Our principal ris s and ris management 88-93
growth. Even under the severe downside scenarios, the group s cash
position is still expected to remain strong. itigating actions, should oncl sion (1) https //www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct/policies-and-standards
they be required, are all within management s control and could On the basis described above, the irectors have a reasonable (2) https //www.diageo.com/en/esg/doing-business-the-right-way-from-grain-to-glass/modern-slavery-statement

include reductions in discretionary spending, such as acquisitions and expectation that the group will be able to continue in operation and This Strategic Report, which has been approved by a duly appointed and authorised committee of the oard of irectors, was signed on its behalf
capital expenditure, as well as a temporary suspension of the share meet its liabilities as they fall due over the three-year period of their by Tom Shropshire, the ompany Secretary, on 31 uly 2023.
assessment.

94 Diageo Annual Report 2023 Diageo Annual Report 2023 95

Governance report

GOVERNANCE REPORT
Contents
Letter from the Chairman of the Board of Directors 98
Governance at a glance 99
Board of Directors 100
Executive Committee 104
Corporate governance report 106
Audit Committee report 117
Nomination Committee report 123
Directors’ remuneration report 126
Directors’ report 154

96 Diageo Annual Report 2023 Diageo Annual Report 2023 97

 O O O O O O

na ling o r m ition o g a o ernance a a gla

oard Non e ec ti e oard gender oard et nic
evolving to changing circumstances, as well as resilient and composition director ten re di ersit di ersit
committed to our strategy, values and purpose. It is the
responsibility of the oard to provide direction for management,
setting the strategic aims and performance ambition of the
company, centred on iageo s strong culture. The oard is also
responsible for ensuring that the company has effective
operational leadership to implement its strategy of investing for
long-term sustainable growth. e were therefore very pleased
to welcome ebra rew bac to the oard as hief Executive in
une.

ò hairman ò 0 3 years ò ale ò irectors of colour

ear are older ò Executive director ò 3 6 years ò Female ò hite European

ò Non-executive director ò 6 9 years
On behalf of the oard, I am pleased to

GOVERNANCE REPORT
present the corporate governance report for iscal ig lig ts
the year ended 30 une 2023, which
summarises how the oard and our oard composition and c anges nn al eneral eeting
governance has provided leadership over iageo ran ed as the leading FTSE 100 company in the FTSE This year s A was held on 6 October 2022 at etc.venues St
omen eaders Review in February 2023 for the third year running, Paul s, 200 Aldersgate, ondon.
the year in support of the long-term with 63.6% female representation on the oard. It was held as a hybrid meeting with over 130 people attending
sustainable success of iageo. ebra rew rejoined the oard as hief Executive and Executive physically, including shareholders, proxies, corporate
irector on 8 une 2023 following the sad passing of Sir Ivan representatives and guests, and with the ability for others to attend
iageo s business has grown consistently over the last few years ene es. remotely or by virtual means using an online platform.
under the leadership of Sir Ivan ene es, despite the challenges of All irectors attended the A either physically or remotely.
the pandemic, instability in the global political and economic oard attendance uring the A , the hief Executive gave a review of the
environment and continued inflationary pressures. e remain avier err n ( hairman) uring fiscal 23, there were seven scheduled meetings of the oard performance of the company during fiscal 22, following which the
deeply grateful for his transformational leadership as we reflect on which irectors attended either physically or remotely using video hairman too questions from shareholders which were responded
his sad passing. conference facilities. to by the hairman and other irectors.
irectors attendance record at the last A , scheduled oard and The vote procedure was carried out by way of poll as authorised by
elivering our ambition in such a challenging and turbulent
oard ommittee meetings, for fiscal 23 is set out in the table the Articles of Association. All resolutions contained in the Notice of
environment requires leadership which is agile and creative,
below. Attendance is expressed as the number of scheduled eeting were passed.

ompliance wit t e orporate o ernance ode meetings attended out of the number that each irector was eligible
or invited to attend.
The oard considers that for the year ended 30 une 2023, iageo has fully applied the Principles and complied with the Provisions of the
orporate overnance ode 2018 (the ode) except for the pension alignment required under Provision 38, where full compliance was Annual eneral oard Audit ommittee Nomination ommittee Remuneration
achieved from 1 anuary 2023 when company pension contributions for the then hief Executive were aligned to that of the wider wor force eeting 2022 (maximum 7) (maximum 5) (maximum 6) ommittee

as explained on page 1 3. avier Ferr n ü 7/7 5/5(1) 6/6 7/7(1)

ebra rew(2) N/A 0/0 0/0 0/0 1/1(1)
The table below details where ey content on the compliance with the ode can be found in this report.
avanya handrashe ar ü 6/6 5/5(1) 0/0 1/1(1)
oard eaders ip ompan rpose omposition ccession and al ation Susan ilsby ü 7/7 5/5 6/6 7/7
Section 172 statement age eadership and experience age elissa ethell ü 7/7 /5 6/6 7/7
oard of irectors age Performance evaluation age aren lac ett ü 6/7 /5 6/6 7/7
2023 overnance at a glance age Nomination ommittee report age Val rie hapoulaud-Floquet ü 6/7 /5 6/6 7/7
Purpose, values and culture age Sir ohn an oni ü 7/7 5/5 6/6 7/7
oard activities age ady endelsohn ü 7/7 5/5 6/6 6/7
i ision of Responsi ilities dit Ris and nternal ontrols Alan Stewart ü 7/7 5/5 6/6 7/7

orporate governance structure and division of responsibilities age Audit ommittee report age Ireena Vittal ü 7/7 /5 6/6 7/7
an ormer irector
oard and committee attendance age Rem neration Sir Ivan ene es(3) ü 5/6 2/5(1) /5(1) /6(1)
irector independence age Remuneration ommittee report age (1) Attended by invitation.
(2) Appointed to the oard on 8 une 2023.
(3) eased being a director on 6 une 2023.

98 Diageo Annual Report 2023 Diageo Annual Report 2023 99

 O O O

eaders ip and 1.
airman
a ier err n N 4
enior ndependent irector
A N R

ion li Spanish ationa it American/ ritish

oin hairman and hairman of the Nomination ommittee Appointed: Senior Independent irector October 2019 (Appointed Non-
anuary 2017 (Appointed hairman esignate and Non-Executive Executive irector April 2018 and hairman of the Remuneration
irector uly 2016) ommittee anuary 2019)
n rings extensive board-level experience from the drin s e trengt rings wide-ranging corporate governance and board level
and consumer products industry, including at chief executive level, and experience across a number of industries, including a consumer goods
has a wealth of experience in consumer goods through his venture capital sector focus, with particular expertise in mergers and acquisitions,
activities to draw from in his role as hairman and leader of the oard corporate finance and transaction advisory wor
n n l oin m n hairman, International onsolidated rrent e terna a ointment Non-Executive hair, Fortune rands
Airlines roup, S.A. Senior Advisor and chairman of investee company Innovations, Inc. Non-Executive irector, nilever P , NHS England
board, lac Roc ong Term Private apital ember, the Ta eover Panel
io l n i n Non-Executive irector and Senior revio re evant e erience Senior Independent irector and hair of
Independent irector, Associated ritish Foods plc Non-Executive irector, Remuneration ommittee, HP roup Plc, HP roup imited Senior
oca- ola European Partners plc ember, Advisory oard of ESA E Independent irector, A Aviation plc hairman, Shire plc hairman,
usiness School President and EO, acardi imited Non-Executive ergers and Acquisitions E EA, redit Suisse Senior Advisor, redit
irector, SA iller plc Suisse Non-Executive irector, oldman Sachs International, eurig
reen ountain, Occitane International, oca- ola H

2 E 5 A N R

ief ec ti e Non ec ti e irector

GOVERNANCE REPORT
ationa it American ationa it American/ ritish
1 2
ointe hief Executive and Executive irector une 2023 ointe Non-Executive irector une 2020
e trengt Has broad experience in various consumer products sectors e trengt Has extensive international corporate and financial
at board, chief executive and management leadership levels, as well as experience, including in relation to private equity, financial sectors,
over four years experience in non-executive and executive roles at iageo strategic consultancy and advisory services, as well as having strong non-
rrent e terna a ointment Non-Executive irector, Stanley, lac executive experience at board and committee levels across a range of
ec er, Inc. industries, including retail, consumer goods and financial services
revio iageo ro e hief Operating Officer President, North America rrent e terna a ointment Non-Executive irector, Tesco P , Exor
Non-Executive irector, iageo plc N.V. hair, Ocean Outdoor imited Senior Advisor, Atairos
revio re evant e erience Non-Executive irector, Newell rands, revio re evant e erience anaging irector and Senior Advisor,
ondel International Inc. President and EO, Reynolds American, Inc Private Equity, ain apital Non-Executive irector, Atento S.A., orldpay
President, Pepsi o North America Nutrition, Pepsi o Americas everages, plc, Samsonite S.A.
estern Europe Region various positions with raft Foods, Nestl , S.A.,
and ars
3 E 6. aren lac ett A N R

ief inancial Officer Non ec ti e irector

ationa it American ationa it ritish
3 4
ointe hief Financial Officer and Executive irector uly 2021 ointe Non-Executive irector une 2022
e trengt rings broad financial expertise, commercial s ills and e trengt rings expertise in mar eting, media and the creative
strong consumer goods experience to manage the group s affairs relating industries, as well as broad experience in public policy and strategic
to financial controls, accounting, tax, treasury and investor relations initiatives through a number of different government, industry and public
revio iageo ro e hief Financial Officer, iageo North America and bodies
lobal Head of Investor Relations rrent e terna a ointment President, PP plc hancellor,
revio re evant e erience Vice President Finance, lobal ost niversity of Portsmouth Founding Trustee, EO ( lac Equity
eadership and Supply hain, ondel International VP Finance, North Organisation) Non-Executive irector, reative , Non-Executive
America, ondel International VP Finance, Eastern Europe, iddle East irector, The Pipeline
and Africa, ondel International various senior finance roles at Procter revio re evant e erience Race Equality usiness hampion, H
amble overnment usiness Ambassador, epartment for International Trade,
H overnment hairwoman, edia om Ireland hief Executive
Officer, roup hief Executive Officer, edia om hief
Operations Officer, edia om E EA ar eting irector, edia om
ountry anager, PP plc

5 6

Board committees N Nomination Committee

A Audit Committee R Remuneration Committee
E Executive Committee Chairman of the committee

100 Diageo Annual Report 2023 Diageo Annual Report 2023 101
 O O O c on tin u ed

7 A N R 10. lan tewart A N R

Non ec ti e irector Non ec ti e irector

ationa it French ationa it ritish
ointe Non-Executive irector anuary 2021 ointe Non-Executive irector September 201 (Appointed hairman
e trengt rings strong experience and expertise in the luxury of the Audit ommittee anuary 2017)
consumer goods sector, having spent her career in the industry wor ing in e trengt Has a strong bac ground in financial, investment ban ing
a number of international mar ets, including developed and emerging and commercial matters, with particular expertise in consumer retail
mar ets, and as a former EO in the premium drin s industry industries, as well as board and committee level experience at industry
rrent e terna a ointment Non-Executive irector, ead Independent institutions
irector and hair of overnance ommittee, anone S.A. Non- rrent e terna a ointment Non-Executive irector and hair of the
Executive irector, Acn Studios A. ., Agrolimen S.A., Nextstage S. .A., Remuneration ommittee, Rec itt enc iser roup P Non-Executive
acobs Holding A Vice hairman, Sofisport irector and hair of Audit ommittee, urberry roup plc
revio re evant e erience hief Executive Officer, R my ointreau revio re evant e erience hief Financial Officer, Tesco P Non-
S.A. President and EO for the Americas, ouis Vuitton, V H roup Executive irector, Tesco an hief Financial Officer, ar s Spencer
President and EO for North America, ouis Vuitton, V H roup roup plc, A AS Non-Executive irector, ames or shop plc roup
7 8 President South Europe, ouis Vuitton, V H roup President and EO, Finance irector, H Smith P hief Executive, Thomas oo
ouis Vuitton Taiwan, V H roup President, uxury Product ivision for
the SA, Or al roup

. ir o n an oni A N R 11 A N R

Non ec ti e irector Non ec ti e irector

ationa it ritish ationa it Indian

GOVERNANCE REPORT
ointe Non-Executive irector October 2020 ointe Non-Executive irector October 2020
e trengt Has strong commercial executive experience as a former e trengt rings a wealth of F experience from a career in
EO in the energy sector and non-executive board level experience, executive consulting with a focus on consumer sectors and emerging
including in the alcoholic beverage industry, as well as more recent mar ets, including India, as well as broad experience in non-executive
expertise in public policy and government affairs board roles in the and India
rrent e terna a ointment hairman, SSE plc hairman, Atomic rrent e terna a ointment Non-Executive irector, ompass roup
eapons Establishment Non-Executive irector, R Inc. P Non-Executive and ead Independent irector, odrej onsumer
revio re evant e erience hief Executive of the ivil Service and Products imited Non-Executive irector, Asian Paints imited
Permanent Secretary of the abinet Office, H overnment President revio re evant e erience Head of ar eting and Sales, Hutchinson
and hief Executive Officer, Talisman Energy hief Executive, Refining ax Telecom Partner, c insey and ompany Non-Executive irector,
9 10 ar eting, P p.l.c. hief Executive, as Power, P p.l.c. Non-Executive ipro imited, Housing evelopment Finance orporation imited, Titan
irector, SA iller plc ompany imited, Tata lobal everages imited, Tata Industries,
laxoSmith line onsumer Healthcare

9 A N R

Non ec ti e irector
ationa it ritish
ointe Non-Executive irector September 201
e trengt Has specialist nowledge and understanding of consumer-
facing emerging technologies, privacy and data issues, as well as wide
experience of board and committee level appointments across diverse
commercial, governmental and charitable institutions, as well as advisory
roles in advertising and production of consumer goods
rrent e terna a ointment Head of the lobal usiness roup, eta
Platforms Inc. o-President, Norwood ember, ayor s usiness
Advisory oard hair, Follicular ymphoma Foundation
revio re evant e erience Executive hairman, armarama eputy
hairman, rey ondon oard irector, H, Fragrance Foundation
11 President, Institute of Practitioners in Advertising irector, omen s Pri e
for Fiction o- hair, reative Industries ouncil ember, H Industrial
Strategy ouncil oard ember, E Trustee, hite Ribbon Alliance
hair, orporate oard, omen s Aid

Board committees N Nomination Committee

A Audit Committee R Remuneration Committee
E Executive Committee Chairman of the committee

102 Diageo Annual Report 2023 Diageo Annual Report 2023 103
 O

pertise and 1. wan ndrew

resident lo al ppl ain roc rement and ief
6
anaging irector and O of nited pirits imited
staina ilit Officer ationa it Indian
ationa it ritish ointe uly 2021
ointe September 2019 revio iageo ro e EO- esignate, nited Spirits imited anaging
revio iageo ro e Supply irector, International Supply entre Senior irector, Africa Regional ar ets
Vice President, Supply hain Procurement, atin America and revio re evant e erience anaging irector, hina SVP North Asia,
aribbean Senior Vice President anufacturing istilling, North Rec itt enc iser eneral anager, alaysia Singapore, Rec itt
America various supply chain, operational management and enc iser EO ary ay India senior mar eting and general
procurement roles management roles, I I Paints India and Nestl India
rrent e terna a ointment ember, Scotch his y Association
ouncil, Scottish usiness limate ollaboration oard, One Planet
7. a alan Na ager
usiness for iodiversity oard resident frica
ationa it South African/ ritish
. ora a enc i
ointe uly 2022
resident rope
revio iageo ro e anaging irector, reat ritain and usterini
1 2 3 ationa it French roo s, Ireland and France, lobal Travel Regional irector, lobal
ointe anuary 2023 Travel Europe ommercial irector, South Africa ustomer ar eting
revio iageo ro e anaging irector, Northern Europe irector, South Africa ey Account irector, South Africa

revio re evant e erience rand EO and Area irector, East and revio re evant e erience Various positions, Hein , ars and Pic n
Southern Africa, President, France and Regional Finance irector, Europe, Pay Retailers

GOVERNANCE REPORT
ritish American Tobacco
8
. l aro ardenas resident sia acific lo al ra el
resident atin merica and ari ean ationa it Irish
ationa it olombian ointe uly 2015
ointe anuary 2021 revio iageo ro e President, Africa eer EO and anaging
revio iageo ro e anaging irector, Andean Region irector, End- irector, uinness Nigeria lobal Head, Innovation lobal Head, eer
to-End lobal ommercial Processes Finance irector, South East Asia and aileys anaging irector, Russia and Eastern Europe various
4 5 6 Region, P (Paraguay, ruguay and ra il) Region, Andean Region, management and mar eting positions
olombia
9
4 ief R Officer
ief ar eting Officer ationa it ritish
ationa it Spanish ointe anuary 2022
ointe uly 2020 revio iageo ro e lobal Talent irector Talent irector, Africa HR
revio iageo ro e lobal ategory irector, Scotch anaging irector, Europe, est atin America and aribbean, lobal Functions
irector, Reserve rands anaging irector, aribbean and entral revio re evant e erience various HR roles, Sta is roup and Hilton
America ar eting Innovation irector, iageo Africa ategory Hotels
irector, Scotch Portfolio ins lobal rand irector, ohnnie al er
revio re evant e erience orporate ar eting irector, Allied
10
omecq Spain mar eting roles, nilever HP S, and Spain resident Nort merica
7 8 9 ationa it American
5
ointe October 2022
ebra rew and avanya handrashe ar are also
members of the Executive ommittee.
lo al orporate Relations irector revio iageo ro e President, S Spirits and anada eneral
Their biographies can be found on page 101. ationa it ritish anager, ontinental Europe President, S ontrols States and anada
ointe une 2017 President, iageo hateau Estate ines
revio iageo ro e orporate Relations irector, Europe revio re evant e erience oston onsulting roup
revio re evant e erience Regional Head of orporate Affairs, India 11
South Asia, Regional Head of orporate Affairs, Africa, roup Head of
overnment Relations, Standard hartered extensive government eneral o nsel ompan ecretar
experience including in H Treasury and Foreign ommonwealth ationa it American/ ritish
Office ointe uly 2021
rrent e terna a ointment ember of the ourt (Non-Executive
irector), The an of England Trustee, New or niversity School of
10 11 aw ember of the Steering ommittee, The Par er Review Trustee,
harity Projects imited ( omic Relief) irector, omic Relief imited
revio re evant e erience Partner lobal S Practice Head,
in laters P

104 Diageo Annual Report 2023 Diageo Annual Report 2023 105
 O O O O

oard of irectors orporate go ernance re irements

na ling o r a b o omposition of t e oard

The oard comprises the Non-Executive hairman, two Executive
irectors, the Senior Independent irector, and seven independent
The principal corporate governance rules applying to iageo (as a
company listed on the ondon Stoc Exchange) for the year ended 30
une 2023 are contained in the 2018 orporate overnance ode
orporate governance structure and division of responsibilities Non-Executive irectors. The biographies of all irectors are set out in (the ode) and the Financial onduct Authority (F A) isting Rules,
this Annual Report on pages 101 and 103. ebra rew was appointed which require us to describe, in our Annual Report, our corporate
hief Executive and irector, effective 8 une 2023. governance from two points of view the first dealing generally with our
Non ec ti e irectors enior ndependent irector
application of the ode s main principles and the second dealing
e i a et e a rie an i ncl sion and di ersit specifically with non-compliance with any of the ode s provisions. The
a o a o et ir o n Acts as a sounding board for the
The oard sees championing inclusion and diversity as one of the ey two descriptions together are designed to give shareholders a picture of
an oni a en e o n an Nomination hairman and serves as an
enablers for achieving iageo s ambition. It is also a core principle of governance arrangements in relation to the ode as a criterion of good
te art reena itta an aren Committee intermediary for the other
the company s global Human Rights Policy which applies to all practice. A copy of the ode is publicly available on the website of the
ac ett irectors where necessary
employees, subsidiaries and third-party contractors and which has been Financial Reporting ouncil (FR ), www.frc.org.u . iageo s statement
The Non-Executive irectors, all of Together with the other Non-
implemented as part of our ode of usiness onduct programme. Our as to compliance with the ode during the year ended 30 une 2023
whom the oard has determined Audit Remuneration Executive irectors, leads the
objective is to maintain and sustain an inclusive and diverse business, can be found on page 98. iageo must also comply with corporate
are independent, experienced and Committee Committee review of the performance of the
across all levels, functions and geographies, in order to create a better governance rules contained in the F A isclosure uidance and
influential individuals from a hairman, ta ing into account
wor ing environment and a better performing business. As part of this, Transparency Rules and certain related provisions in the ompanies Act
diverse range of industries, the views of the Executive
the oard has adopted a written oard iversity Policy alongside 2006 (the Act). iageo is also listed on the New or Stoc Exchange
bac grounds and countries. irectors
iageo s ode of usiness onduct and associated global policies, (N SE), and as such is subject to the applicable rules of this exchange
Available to shareholders if they
onstructively challenge the which set out iageo s broader commitment to inclusion and diversity. and jurisdiction. For example, iageo is subject to the listing
ight and rigo have concerns where contact
Executive irectors vers rou iageo strongly supports diversity within its oard of irectors, including requirements of the N SE and the rules of the S Securities and
to s through the normal channels has
evelop proposals on strategy en failed
gender, ethnicity, age and professional diversity, as well as diversity of Exchange ommission (SE ), as they apply to foreign private issuers.
ch
d

Scrutinise the performance of thought. The oard is comprised of individuals from a diverse range of ompliance with the provisions of the S Sarbanes-Oxley Act of 2002
pen

alle

Board of Directors

GOVERNANCE REPORT
management s ills, industries, bac grounds and nationalities, which enables a broad (SO ), as it applies to foreign private issuers, is continually monitored.
Inde

nge

Satisfy themselves on the ompan ecretar evaluation of all matters considered by the oard and contributes to a ompliance wit corporate go ernance r les
integrity of the financial om ro ire culture of collaborative and constructive discussion. The oard s
nder applicable SE rules and the N SE s corporate governance
information, controls and The oard is supported by the objective, as set out in its iversity Policy, is that it shall include no less
Chief Executive has rules for listed companies, iageo must disclose any significant ways in
systems of ris management ompany Secretary who ensures than 0% female representation (with the ultimate goal being parity
delegated authority to which its corporate governance practices differ from those followed by
Set the levels of remuneration information is made available to between males and females on the oard) and at least one irector
these Committees S companies under N SE listing standards. iageo believes the
for Executive irectors and oard members in a timely from a minority ethnic group. As at 26 uly 2023, women ma e up 73%
following to be the significant areas in which there are differences
senior management fashion of the oard and there are four irectors (36%) who self-disclose as
L e a d ers hip between its corporate governance practices and N SE corporate
a e recommendations to the Supports the hairman in setting being from minority ethnic groups. Further information about diversity at
governance rules applicable to S companies. This information is also
oard concerning appointments oard agendas, designing and oard and senior executive levels can be found on page 125 and in the
provided on the company s website at www.diageo.com.
to the oard delivering oard inductions and Our people and culture and hampion inclusion and diversity
Filings asis of regulation listed companies are required to include in
evote such time as is Executive oard evaluations, and co- sections of the Strategic Report on pages 63-6 and 67-70 respectively.
Assurance their annual report a narrative statement of (i) how they have
necessary to the proper Committee ordinates post-evaluation action The oard s iversity Policy is available at https //www.diageo.com/
Committee en/our-business/corporate-governance/board-diversity. applied the principles of the ode and (ii) whether or not they have
performance of their duties plans, including ris review and
complied with the best practice provisions of the ode. N SE listed
training requirements for the
A summary of the terms and
oard
O tside interests and conflicts companies must adopt and disclose their corporate governance
conditions of appointment of the Finance Audit & Risk The oard has adopted guidelines for dealing with conflicts of interest, guidelines. ertain companies are required to include in their
Advises on corporate
Non-Executive irectors is available Committee Committee with irectors outside interests being regularly reviewed and annual report statements as to (i) how directors have complied with
governance matters
at https //www.diageo.com/en/ responsibility for authorising conflicts of interest reserved for the oard. Section 172 of the Act, which requires directors to promote the
Is a member of the Executive
our-business/corporate- In the case of a potential conflict, the Nomination ommittee considers success of the company for the benefit of the members as a whole,
ommittee as eneral ounsel
governance. the circumstances, appropriate controls and protocols, and ma es a having regard to the interests of sta eholders and (ii) how directors
Business unit risk
recommendation to the oard. The oard confirmed that it was not have engaged with and ta en account of the views of the
management
aware of any situations that may or did give rise to conflicts with the company s wor force and other sta eholder groups. iageo
interests of the company, other than those that may arise from irectors complied throughout the year with the best practice provisions of the
other appointments as disclosed in their biographies. ode and the disclosure requirements noted above, other than as
described on page 98.
ief ec ti e airman ief inancial Officer ties of t e oard irector independence The ode requires at least half the oard
e ra re avier err n avan a an ra e ar The oard manages overall control of the company s affairs with (excluding the hairman) to be independent Non-Executive
evelops the group s strategic direction Responsible for the operation, anages all aspects of the group s reference to the formal schedule of matters reserved for the oard for irectors, as determined by affirmatively concluding that a irector is
for consideration and approval by the leadership and governance of the financial affairs decision. The schedule was last reviewed in uly 2023 and is available independent in character and judgement and determining whether
oard oard Responsible for the management of at https //www.diageo.com/en/our-business/corporate-governance. there are relationships and circumstances which are li ely to affect,
Implements the strategy agreed by the Ensures all irectors are fully informed the capital structure of the company In order to fulfil their duties, procedures are in place for irectors to see or could appear to affect, the irector s judgement. The ode
oard of matters and receives precise, timely ontributes to the management of the both independent advice and the advice and services of the ompany requires the oard to state its reasons if it determines that a director
eads the Executive ommittee and clear information sufficient to group s operations Secretary, who is responsible for advising the oard on all governance is independent notwithstanding the existence of relationships or
anages the company and the group ma e informed judgements Along with the hief Executive, leads matters. The oard considers a number of factors when ma ing circumstances which may appear relevant to its determination. N SE
Along with the hief Financial Officer, Sets oard agendas and ensures discussions with investors decisions, including the potential impact of those decisions on various rules require a majority of independent directors, according to the
leads discussions with investors sufficient time is allocated to ensure Is supported by the Finance sta eholder groups and on the ompany s Society 2030 Spirit of N SE s own brightline tests and an affirmative determination by the
Is supported in her role by the Executive effective debate to support sound ommittee and Filings Assurance Progress and other non-financial targets, including in respect of oard that the irector has no material relationship with the listed
ommittee decision-ma ing ommittee in the management of the environmental sustainability. Further information on the oard and the company. iageo s oard has determined that, in its judgement and
Is supported by the Finance ommittee Ensures the effectiveness of the oard financial affairs and reporting of the Audit ommittee s roles in climate ris governance can be found on without ta ing into account the N SE brightline tests, all of the Non-
and Filings Assurance ommittee in the Engages in discussions with company page 72. The terms of reference of oard ommittees are reviewed Executive irectors are independent. As such, currently nine of
management of financial reporting of shareholders Is a member of the Executive regularly, most recently in uly 2023, and are available at iageo s eleven irectors are independent. Further details of this
the company eets with the Non-Executive irectors ommittee https //www.diageo.com/en/our-business/corporate-governance. determination in relation to Alan Stewart, Non-Executive irector and
independently of the Executive hairman of the Audit ommittee, are set out on page 108.

106 Diageo Annual Report 2023 Diageo Annual Report 2023 107
 O O O O c ontin ued

hairman and hief Executive The ode requires these roles to be oversight. The oard s ills matrix helps to identify the experience and Re appointment at s
separate. There is no corresponding requirement for S companies. expertise of existing irectors, required s ill sets or competencies, and The hairman has confirmed that the Non-Executive irectors standing offer specialist advice, as well as holding management to account. As
iageo has a separate hairman and hief Executive. the strategic requirements of the company. ey strengths and relevant for re-appointment at this year s A continue to perform effectively, can be seen from the attendance records set out on page 99, irectors
Non-Executive irector meetings N SE rules require Non- experience of each irector are set out on pages 101 and 103, and a both individually and collectively as a oard, and that each Non- attendance levels have been consistently high throughout the year
anagement irectors to meet regularly without management and matrix of the oard s current s ills and experience is set out below. Executive irector demonstrates commitment to their roles and ended 30 une 2023.
independent directors to meet separately at least once a year. The continues to provide constructive challenge, strategic guidance and
an ing and corporate finance
ode requires Non-Executive irectors to meet without the hairman
present at least annually to appraise the hairman s performance. ommercial matters oard acti ities
uring the year, iageo has complied with these requirements with onsumer products etails of the main areas of focus of the oard and its ommittees during the year include those summarised below
independent Non-Executive irectors, including the hairman, orporate governance
rea o oc trategic riorit trategic o tcome ta e o er
meeting without the Executive irectors present four times and Emerging mar ets
independent Non-Executive irectors meeting without the hairman trategic Held a two-day Annual Strategy onference (AS ) focussing on ey strategic matters,
Finance
matter including implementation of strategy across regions, convenience, hina, ES performance 1 EG
or Executive irectors present twice. Food and beverages and supply chain strategy
oard committees iageo has a number of oard committees that overnment and public policy
Regularly reviewed the group s performance against the strategy
are similar in purpose and constitution to those required by N SE eneral management
Received reports on the financial performance of the group as against the annual plan 2 CVC
rules. iageo s Audit, Remuneration and Nomination ommittees Reviewed the group s tax strategy and policy
A Received reports on the macro-economic environment, socio-political matters and emerging
consist entirely of independent Non-Executive irectors. nder N SE
edia
trends 3
standards, companies are required to have a nominating/corporate arried out deep dives into ey strategic topics including the group s scotch whis y portfolio
Sales and mar eting
governance committee, which develops and recommends a set of and strategy, tequila strategy, consumer insights, atin America and aribbean region,
corporate governance principles and is composed entirely of Strategy culture and capabilities, hina, health and wellness, and volatility scenario planning 6
independent directors. The terms of reference for iageo s Sustainability

Nomination ommittee, which comply with the ode, do not contain Technology O erationa Reviewed and approved the group s three-year plan and annual funding plan, insurance,
such a requirement. In accordance with the requirements of the Transaction advisory matter ban ing and capital expenditure requirements 1 EG
Reviewed the group s long-term demand forecasting processes, global business operations

GOVERNANCE REPORT
ode, iageo has disclosed on page 113 the results and means of its
ndependence and shared service centre arrangements
annual evaluation of the oard, its ommittees and the irectors,
The ode requires the oard to state its reasons for concluding that a
Regularly reviewed and approved the group s A and business development activities, 2 CVC
and it provides extensive information regarding the irectors reorganisations and various other projects
director is independent notwithstanding the existence of certain Reviewed the group s supply chain activities, including supply footprint
compensation in the irectors remuneration report on pages
126-153 .
relationships or circumstances which are li ely to impair or appear to Approved capital expenditure investments, and various significant procurement, systems and 3 EP
impair the director s independence. A non-exhaustive list of such other contracts, having ta en into consideration financial, operational, sustainability and
ode of ethics N SE rules require a ode of usiness onduct and other ES related factors
circumstances is set out in provision 10 of the ode and include,
ode of Ethics to be adopted for directors, officers and employees Initiated a global business transformation programme and systems upgrade
amongst other things, the fact that a director has served on the board Reviewed the company s capital allocation, funding and liquidity positions, and those of its
and disclosure of any waivers for executive directors or officers.
for more than nine years. In September 2023, Alan Stewart will have pension schemes, and approved interim and final dividends
iageo has adopted a ode of usiness onduct for all irectors, Reviewed and approved the company s share buybac programme
served for nine years on the oard since he was first appointed in
officers and employees, as well as a ode of Ethics for Senior Approved the appointment of a new hief Executive, including as an Executive irector
September 201 . Alan has also served as hairman of the Audit
Financial Officers in accordance with the requirements of SO . See Acting through the Nomination ommittee, reviewed the company s succession planning and
ommittee since anuary 2017. The oard has requested and Alan has talent strategy
page 121 for further details.
agreed to extend the term of his appointment to enable a smooth
ompliance certification N SE rules require chief executives to matter Increased focus on ES matters throughout the year, including conducting a deep dive in
certify to the N SE their awareness of any N SE corporate
transition of the role of hair of the Audit ommittee at a time when the relation to the company s approach to ES matters and its Society 2030 Spirit of Progress 1 CVC
company is commencing a significant business change programme to programme at the AS
governance violations. iageo is exempt from this as a foreign
upgrade its financial systems and technology in order to enhance the Reviewed approach and methodologies used in relation to non-financial targets
private issuer but is required to notify the N SE if any executive
company s reporting and controls environment, as further described on Received reports on wor force engagement over the year 4 CT
officer becomes aware of any non-compliance with N SE corporate Received regular investor reports
page 112. The oard believes that, given the critical role of the Audit
governance standards. No such notification was necessary during Received regular updates on ES matters and progress towards Society 2030 Spirit of
the period covered by this report.
ommittee in supervising this programme, this additional period will
Progress targets 5 EP
help preserve the level of nowledge and experience on and help ompleted actions identified following the previous evaluation of the oard s performance
tr ct re and di ision of responsi ilities support a successful transition to a successor, who is expected to be and carried out an internal evaluation of the oard s performance
appointed prior to the 202 A . It was further considered to be in the Reviewed schedule of matters reserved for the oard and terms of reference of its ommittees
6
The oard is committed to the highest standards of corporate
governance and ris management, which is demonstrated in its best interests of the company that Alan continues in this role to provide
rance Received reports in relation to material legal matters, including disputes, regulatory and
established corporate governance framewor , illustrated on page 106. further continuity in light of other changes to the oard and, in governance developments, and areas of legal or regulatory ris 2 EG
particular, the recent transition in hief Executive. The oard has also an ri On the recommendation of the Audit ommittee, approved the company s ris footprint,
This includes the three oard ommittees (Audit ommittee,
Nomination ommittee and Remuneration ommittee), as well as considered the matter of Alan s independence in light of this extension management including reviewing and updating the principal ris s
and concluded that, notwithstanding his serving for more than nine On the recommendation of the Audit ommittee, approved the company s filings, financial 3 CVC
management committees which report to the hief Executive or hief and non-financial reporting including interim and preliminary results announcements, S
Financial Officer (Executive ommittee, Finance ommittee, Audit years, he continues to ma e high-quality contributions to oard and filings and Annual Report
Ris ommittee and Filings Assurance ommittee). There is a clear committee meetings, providing effective and constructive challenge to 6 CT
separation of the roles of the hairman, the Senior Independent management and demonstrating objective and independent judgment.
irector and the hief Executive which has been clearly established, set In light of this assessment, the oard has determined that Alan Stewart
out in writing and approved by the oard. A copy of this is available at remains independent. e
https //www.diageo.com/en/our-business/corporate-governance. No oard and ommittee attendance trategic rioritie trategic o tcome ta e o er
individual or group dominates the oard s decision-ma ing processes. irectors attendance record at the last A , scheduled oard 1 EG
Sustain quality growth Efficient growth People
meetings and oard ommittee meetings, for the year ended 30 une
rt er etai on t e oar ommittee can e o n in t e e arate 2023 is set out in the table shown on page 99. irectors are expected to 2 Embed everyday efficiency CVC
onsistent value creation onsumers
re ort rom eac committee on age an etai o t e
ec tive ommittee can e o n on age
attend all meetings of the oard and its ommittees and the A , but 3 Invest smartly CT
redibility and trust ustomers
if unable to do so they are encouraged to give their views to the hair EP
4 Promote positive drin ing Engaged people Suppliers
oard s ills and e perience of the meeting in advance. The 2022 A was held as a combined
physical and electronic meeting via a live webcast with all irectors 5 hampion inclusion and diversity ommunities
Having an appropriate mix of experience, expertise, diversity and
independence is essential for iageo s oard. Such diverse attributes attending either physically or by video lin . For oard and oard 6 Pioneer grain-to-glass sustainability Investors
enable the oard as a whole to provide informed opinions and advice ommittee meetings, attendance is expressed as the number of
meetings attended of the number that each irector was eligible to overnments and regulators
on strategy and relevant topics, thereby discharging its duty of
attend.

108 Diageo Annual Report 2023 Diageo Annual Report 2023 109
 O O O O c ontin ued

ta e older gag ta e o er an e engage

at e e ieve matter mo t to t em e orting to t e oar
Strong, mutually beneficial partnerships Terms of material contracts with
Strategic alignment and growth opportunities suppliers are reviewed by the oard
e aim to maintain open and positive dialogue The development of strong and positive relationships between iageo Fair contract and payment terms Periodic updates provided to the
and its external sta eholders is an intrinsic part of our purpose and ollaboration to realise innovation oard in relation to supply chain
with all our sta eholders, considering their ey culture. Our sta eholders include not only business partners such as ppliers
onsistent performance measures agility programme rollout
oint ris assessment and mitigation Supply chain sustainability and other
interests in our decision-ma ing and suppliers and customers, our people and wor force, but also Our suppliers, service providers and agencies are Sustainability and societal credentials ES data included in quarterly
Society 2030 Spirit of Progress
government, consumers and the wider communities in which we
communicating with them on a regular basis. operate. As noted in the company s statement on Section 172 of the
experts in their fields o t e oar ee to engage reports provided to the oard
e rely on them to deliver high-quality products Periodic review of supply chain footprint in ey mar ets to ensure
This dialogue helps us build trust and respect ompanies Act 2006 set out on page 9, in ma ing their decisions and
and mar et responsibly resilience and flexibility, monitoring environmental impacts and
coming rioritie
in discharging their duties to promote the success of the company, the efficiencies ontinued focus on rollout of supply
and ma e choices as a business that help shape irectors must have regard to the interests of its sta eholders. e have e collaborate with them to improve our collective Review and approval of material supply and procurement contracts chain agility programme
including for critical raw materials onitoring impact of supply chain
the role we play in society. summarised below why our sta eholders are important to us, what we impact, ensure sustainable and resilient supply Supporting management in improving supplier relationships disruption on operations, including
believe their principal interests are and how the oard and company chains, and ma e positive contributions to society through fair contract and payment terms, compliance with iageo s through Audit ommittee ris reviews
Partnering with Suppliers Standard and wor ing collaboratively to Supervision of initiatives to improve
see s to engage and respond. mitigate environmental impacts and achieve ES goals sustainability and supply chain
resilience
ta e o er an e engage at e e ieve matter mo t to t em e orting to t e oar
at e e ieve matter mo t to t em e orting to t e oar Impact of our operations on the local economy uarterly reports provided to oard
Prioritisation of health, safety and well-being Regular reports from wor force Access to s ills development, employment and supplier on progress made in relation to
earning and development opportunities engagement activities opportunities Society 2030 Spirit of Progress
Purpose, culture and benefits Feedbac through employee surveys, Inclusion, diversity and tac ling inequality in all forms targets
Responsible use of natural resources, biodiversity and sustainability Reports on macro-economic and
O r people ontributing to the growth of our brands and performance
Promotion of inclusion and diversity
including annual group-wide our
Voice survey
omm nities Transparency and engagement socio-political events provided to
e aim to create long-term value for the oard by management
People are at the core of our business

GOVERNANCE REPORT
Sustainability and societal credentials ulture and capabilities session at
oard meeting led by hief HR Officer o t e oar ee to engage
e aim to build a trusting, respectful and inclusive o t e oar ee to engage communities in which we live, wor , source and sell coming rioritie
Setting targets and monitoring progress on broader societal
culture where people feel engaged and fulfilled Active dialogue maintained throughout the year as part of the
coming rioritie e can help build thriving communities and matters, including promoting positive drin ing, inclusion and onitoring progress in relation to
oard s ongoing wor force engagement programme aintaining focus on simplifying strengthen our business through empowering diversity positive drin ing programmes,
e want our people to be treated with dignity at irect engagement through visits to offices, production and supply internal processes, including onsidering the environmental and social consequences for including S ASHE and similar
wor and their human rights respected chain sites during the year upgrading and transforming business
people, increasing access to opportunities and communities of its ey decisions, including encouraging inclusion initiatives
Indirect engagement through feedbac from wor s councils, operations and systems championing inclusion and diversity and diversity, equal employment opportunities, s ills development Supporting management in advocacy
employee and wor force forums, community groups, our Voice Evolving wor force engagement and support for communities and through wider value chains in relation to water stewardship
and pulse surveys and townhall meetings programme ambitions
at e e ieve matter mo t to t em e orting to t e oar
at e e ieve matter mo t to t em e orting to t e oar Strategic priorities, opportunities and ris s onthly reports compiled by Investor
hoice of brands for different occasions, including no- and lower- Regular performance updates by the Financial performance Relations team provided to the oard,
alcohol hief Executive, including on ey orporate governance providing details on engagement
Innovation in heritage brands and creation and nurturing of new consumer trends eadership credentials, experience and succession sessions with investors and ey trends
brands Papers prepared by strategy team on n estors Executive remuneration policy
Shareholder returns
iennial survey of investor sentiment
carried out by external consultancy
ons mers Responsible mar eting
reat experiences
evolving consumer behaviours in
advance of Annual Strategy e want to enable equity and debt investors to Environmental, inclusion and diversity, and social commitments and and report provided to the oard
nderstanding our consumers is critical for our Product quality onference have an in-depth understanding of our strategy, progress
Sustainability and societal credentials Regular updates by usiness coming rioritie
business long-term growth Price evelopment and Innovation teams
our operational, financial and holistic o t e oar ee to engage ontinued proactive engagement with
onsumer motivations, attitudes and behaviours on organic and inorganic performance, so that they can more accurately Regular engagement between ey investors and hief Executive investors through structured
form the basis of our business strategy, brand o t e oar ee to engage opportunities and portfolio choices assess the value of our business and the and hief Financial Officer through Investor Relations programme programme of engagement activities
onitoring consumer behaviours, motivations and insights of events over the year
mar eting and innovation coming rioritie opportunities and ris s of investing in it Participation in investor conferences such as the onsumer Analyst Preparing for the Annual eneral
Responding to and anticipating emerging consumer trends as part
roup of New or meeting in February 2023 eeting to be held in September 2023
e want consumers to enjoy our products of strategic sessions, including the Annual Strategy onference Ongoing review of portfolio and
Hosting investor events such as the iageo Scotch day in une 2023 Engaging directly with investors
Regular review of business development opportunities, including category participation opportunities
responsibly and for them to drin better, not more active brand portfolio management eveloping pipeline of innovation Attendance at the Annual eneral eeting in October 2022, through roadshow following
Review of innovation pipeline as part of the Annual Strategy informed by consumer insights including responding to questions from shareholders announcement of fiscal 23 results
onference Enhancing mar eting effectiveness at e e ieve matter mo t to t em e orting to t e oar
through detailed understanding of
consumer motivation ompliance with applicable laws and regulations Reports on socio-political events and
ontribution to national and local economic development and issues periodically provided to the
at e e ieve matter mo t to t em e orting to t e oar public health priorities oard
A portfolio of leading brands that meets evolving consumer Regular performance updates by the International trade, excise, regulation and tac ling illicit trade evelopments in regulatory matters,
Tac ling harmful drin ing and the impact of responsible drin ing including governance and reporting
preferences
Identification of opportunities that offer profitable growth
hief Executive, including customer
and route-to-consumer concerns
o ernments and Reg lators initiatives obligations, are included in biannual
Insights into consumer behaviour and shopper trends eep dive reviews on ey regions or The regulatory environment is critical to the success limate change and water sustainability agendas, including carbon reports to the oard prepared by
Trusted product quality mar ets, including for example during reduction, human rights, environmental impacts, sustainable management
stomers of our business agriculture, biodiversity and support for communities
Innovation, promotional support and merchandising fiscal 23 in relation to atin America
Availability and reliable supply and stoc ing and aribbean, include consideration e share information and perspectives with those coming rioritie
Our customers are a broad range of businesses, Technical expertise of customer relationships
o t e oar ee to engage onitoring developments in
large and small, on-trade and off-trade, retailers, oint ris assessment and mitigation
who influence policy and regulation to enable Indirect engagement through periodic updates from hief regulation and best practice in respect
wholesalers and distributors, digital and e- Sustainability and societal credentials coming rioritie them to understand our views on areas that can Executive and corporate relations executives of non-financial reporting
impact public health and our business Review of macro-economic and geopolitical developments as part requirements, corporate governance
commerce o t e oar ee to engage Scheduling face-to-face meetings for
of strategy sessions and audit regime
irectors to meet representatives of
e want to nurture mutually beneficial Regular review of innovation pipeline and inorganic opportunities to ey customers during mar et visits pdates on regulatory developments, including in relation to non- Supporting management s advocacy
ensure a broad portfolio at multiple price points Enhancing relationships between the financial reporting, corporate governance and public policy in relation to ey public policy matters
relationships to deliver joint value and great including water stewardship, positive
Review of supply chain footprint to ensure efficient delivery of company and its customers through
consumer experiences products to customers engagement opportunities drin ing, inclusion and diversity
irect engagement with ey customers during mar et visits

110 Diageo Annual Report 2023 Diageo Annual Report 2023 111
 O O O O c ontin ued

rincipal oard decision ransforming o r the benefits for investors and analysts in better understanding including the former and current hief Executives and the FO, erformance e al ation
business performance by minimising foreign exchange volatility alongside other senior executives at the annual onsumer Analyst
siness processes and s stems through the presentation of results and declaration of dividends in roup of New or meeting held in February 2023 in Florida.
ith the assistance of the ompany Secretary, the evaluation of the
In ay 2022, the oard approved the commencement of a multi-year oard s effectiveness, including the effectiveness of the oard s
S dollars, consistent with the company s functional currency and Investor representatives and analysts were also invited to attend a ommittees and irectors, was underta en from ecember 2022 to
project with the aim of improving iageo s internal processes and more representative of its underlying business presentation at ohnnie al er Princes Street in Edinburgh which
upgrading its financial systems and technology. This project is anuary 2023. The purpose of the evaluation was to review and
the ability to offer choice to shareholders as to which currency in focussed on the company s scotch whis y portfolio and business led evaluate how the oard and its ommittees operate as measured
expected to be a significant business change programme introducing which to receive payment of dividends and by the current hief Executive supported by the hief ar eting
more intuitive business processes, powered by technology, to provide against current best practice corporate governance principles framed
the implications of the new platform for supply chain third parties Officer and the hief Financial Officer, which was also webcast. by reference to Principle and Provisions 21, 22 and 23 of the ode.
better access to data and information in order to enable quic er and and customers, including customer and vendor lifecycle aterials from these sessions are available on https //
more informed decision-ma ing. The project, which is expected to be management processes, product sales reporting and returnable www.diageo.com/en/investors/results-reports-and-presentations. This year s evaluation was an internally managed process, comprising
implemented over a five-year period, has been designed to enhance pac aging management. an online questionnaire for all irectors to complete, designed to
iageo s business resilience and controls environment through Further information on our sta eholders, what we thin is important to gather an assessment of the level of satisfaction with specific areas and
simplifying and standardising the group s ways of wor ing across its ider sta e older engagement them and how the oard engages and responds to them can be found to enable each irector to express their views on them. The evaluation
functional domains. A ey part of the project will be a transition to a iageo has ambitious goals across a variety of social and on pages 110-111. A case study summarising how sta eholder focused on irectors views on three areas, being (i) oard
new cloud-based enterprise resource planning platform, SAP S/ environmental targets and has a long trac record of wor ing with considerations were ta en into account by the oard during fiscal 23, composition, balance and performance, (ii) oard and ommittee
HANA, which will be used to manage iageo s day-to-day business sta eholders to achieve these goals. Our ambition to be one of the as required by Section 172 of the ompanies Act, in respect of one of topics, support and provision of information, and (iii) ommittees
activities, enabling the flow of data between the group s business best performing, most trusted and respected consumer products its principal decisions is set out on page 112. effectiveness and performance. Responses to questions were sent to
processes in a way which minimises duplication and provides data companies in the world can only be achieved through engagement the hairman of the oard and responses on the effectiveness of the
integrity. uring the course of fiscal 23, the progress of the project has and partnership with our sta eholders. The oard and its members ec ti e direction and control ommittees were also submitted to the respective ommittee
been monitored by both the oard and Audit ommittee due to its have engaged directly and indirectly with a number of its ey ec ti e ommittee hairmen. Following receipt of responses on the evaluation on the
importance to the company s controls and reporting capabilities. For sta eholders during fiscal 23, which has seen continued volatility and The Executive ommittee, appointed and chaired by the hief hairman, the Senior Independent irector held a meeting with the
example, at its meetings in anuary 2023 and April 2023 the Audit uncertainty in many mar ets and has sought to understand and Executive, supports her in discharging her responsibility for irectors without the hairman present to provide feedbac in relation
ommittee reviewed reports from the project team and supervised ey respond to sta eholder considerations in ma ing its decisions and implementing the strategy agreed by the oard and for managing the to the hairman, consistent with the requirements of the ode. The
decisions. These included the appropriate timing and phasing of rollout determining the company s strategy and goals. These include the results of the evaluation process were reviewed by the oard at its

GOVERNANCE REPORT
company and the group. It consists of the individuals responsible for
of the project, the need to ensure standardisation of end-to-end following activities the ey operational and functional components of the business North meeting in anuary 2023 at which various actions were agreed to be
process ownership through a global process ownership model, the America, Europe, Africa, atin America and aribbean, Asia Pacific, ta en. It is the oard s intention to continue to review annually its
uring fiscal 23, the oard met and engaged with the company s
establishment of appropriate governance structures for the project, and Supply hain and Procurement and orporate. The Executive performance and that of its ommittees and individual irectors, with
ey customers in North America, discussing their experience of
the selection and engagement of ey third-party suppliers and partners ommittee focusses its time and agenda to align with the Performance such evaluation being carried out by an external facilitator every three
wor ing with iageo including over the period of the ovid-19
for implementation. Ambition and how to achieve iageo s financial and non-financial years. The evaluation to be underta en in 2023 will be carried out by
pandemic, how the company s Raising the ar programme and
The oard has also considered a number of broader interdependencies performance objectives. Performance metrics have been developed to the end of the calendar year with the assistance of an external
other support measures assisted them during this period and the
between this project and other matters, including its relationship with measure progress. There is also focus on the company s reputation. In facilitator, which will be engaged in due course following completion of
impact of inflation and cost-of-living pressures on current consumer
the company s culture and wor force capabilities, and the impact of support, monthly performance delivery calls, involving the managing a tender process. The hairman has confirmed that the Non-Executive
trends. Feedbac received from customers in different mar ets is
the project on the scope of wor of certain other functions. One related directors of each mar et, focus on current performance. ommittees irectors standing for re-election at this year s A continue to
also reported to the oard by the hief Executive in her regular
matter was the impact of the change in the company s functional appointed by the hief Executive and intended to have an ongoing perform effectively, both individually and collectively as a oard, and
performance summaries. ustomer feedbac about mar et trends
currency to S dollar which too effect from 1 uly 2023, as noted on remit, including the Audit Ris ommittee, Finance ommittee and that each demonstrates commitment to their roles. The main
and consumer activity, as well as the performance of the company s
page 36. As it was important to ensure that the company s reporting Filings Assurance ommittee, are shown (with their remits) at https // conclusions and ey areas for focus highlighted by the ecember 2022
portfolio, is an important input into the company s consumer insights
systems were capable of operating in a different currency, the oard www.diageo.com/en/our-business/corporate governance. evaluation are set out in the table below.
tools which are used as guidance for innovation, product
was ept informed of the wor being underta en to prepare the development and mar eting initiatives.
company s reporting systems to minimise any disruption and ensure a The oard has continued its annual cycle of visits to different iageo
smooth transition. As a result, when the functional currency change offices and production sites during fiscal 23. irectors met in ain conc ion e action or oc
too effect, the oard approved go live of the systems change and Scotland in November 2022 for a multi-day meeting including an eneral feed ac
approved a change in the company s presentation currency to S immersion into our production processes and facilities and a deep road satisfaction with the composition, expertise and performance of the oard and ontinue to encourage culture of open discussion amongst oard
dollar to provide a better alignment of the reporting of iageo s dive into the commercial and mar eting aspects of our scotch content of its meetings members and with Executive ommittee members
performance with its business exposures. The oard has also decided whis y business. eeting a broad group of employees supporting iversity, inclusivity and openness of the oard are strengths There remain opportunities for improvement in the interactions
that commencing with the interim dividend to be declared in anuary our production and scotch businesses enabled a deep Performance of the ommittees was felt to be strong and led well by the respective between management and oard members
202 and paid in April 202 , it intends to declare future dividends understanding of the complexity of long-term forecasting and hairs
denominated in S dollar but that, subject to the relevant resolutions demand planning on production and maturation timelines for aged oard composition
being passed at the forthcoming A , holders of ordinary shares will liquids. This is particularly relevant to recent decisions in relation to oard members feel well integrated into the oard and company ontinue focus on oard and management succession planning and
continue to receive their dividends in sterling and will be offered the significant capital investment in our supply chain including in Strong focus on succession planning, particularly over the short to mid term on ensuring pipeline of high-quality, diverse talent
option to elect to receive their dividends in S dollar instead while distillation and maturation capacity, where learnings from our Transition in oard composition will require continued focus on ey areas of expertise Identify ey areas for additional expertise and focus recruitment and
holders of the company s A Rs will continue to receive dividends in S supply sites in Scotland can be applied in relation to developing our and experience talent pipeline on these areas in particular
dollar as is currently the case. supply capacity in other mar ets, including for example in respect of trategic foc s
The potential implications of the project on ey sta eholder groups tequila production in exico. ontinued focus on medium and longer-term issues, including trac ing of ey Increase focus on ey strategic matters, emerging trends and medium
have been important factors in these considerations, as required under The oard s wor force engagement programme is a well- strategic decisions and investments to long-term issues, ensuring appropriate allocation of time and
Section 172 of the ompanies Act. These have included established process with regular engagement sessions held with Regular discussions of culture and values are welcomed resources
different parts of the global wor force over the course of the year, ontinued focus on Society 2030 Spirit of Progress programme including approach Schedule post-completion reviews of ey strategic decisions
the impact of this project on the day-to-day activities and involving all Non-Executive irectors. These sessions provide Non- to reporting in light of changing regulatory environment Identify alternative ways of reporting progress in relation to ongoing
Opportunities to enhance strategic focus of oard discussions, including in respect of initiatives and projects
experience of employees and the wider wor force, including in Executive irectors with insights into the company s culture which emerging trends over the medium and long term
particular the importance of simplification and streamlining of are then fed bac to the company s engagement teams and used The wor force engagement process has been effective and beneficial
internal processes, as noted by feedbac consistently received to shape our approach to people. See page 11 for this year s
through the various engagement structures used by the oard to ompan secretarial s pport
wor force engagement statement which includes further details of
understand wor force views the programme. road recognition of an effective ompany Secretarial function and the support ontinue to find opportunities for oard to engage with wor force in
the improved capabilities in terms of accessibility and robustness of provided to the oard different geographies and to visit production facilities, sites and offices
Engagement with investors and analysts has remained a focus Re-design of the oard induction process has been very positive ontinue to develop and enhance induction process for new irectors
data as a result of implementing the new platform, which should during fiscal 23, with a programme of regular meetings, calls and Pre-read materials have improved significantly however, there is a desire for even ontinue focus on ensuring high-quality pre-read materials, action
enable quic er reporting both internally but also to external other engagement activities coordinated by the Investor Relations greater focus on ey issues closure and time allocation
sta eholders including regulators and authorities function. Highlights include participation by oard members,

112 Diageo Annual Report 2023 Diageo Annual Report 2023 113
 O O O O c ontin ued

or force ngagement statement rpose al es and c lt re or force engagement programme ia ilit statement
At iageo, creating an inclusive culture and an environment where The oard is responsible for establishing iageo s purpose, values and Insights drawn from the oard s annual programme of wor force In accordance with the ode, the oard has also considered the
people can openly share their views and feel listened to is ey to culture and for monitoring how embedded that culture is within our engagement are used by the oard to monitor and assess the culture company s longer-term viability, based on a robust assessment of its
sustaining high levels of engagement and remaining a great place to business. iageo has a long-established purpose and set of values of the company, with recommendations being fed bac to principal and emerging ris s. This was done through the wor of the
wor . which resonate strongly with our employees, as indicated by the management regularly with wor force engagement being discussed at Audit ommittee which recommended the Viability statement to the
oard s engagement sessions with iageo s wor force and our oard meeting sessions twice a year. Over the past few years, the oard. For further information about how the oard has reviewed the
To help us understand colleagues experience at iageo, we listen to engagement programme has expanded to enable all Non-Executive long-term prospects of the group, see page 9 .
employee surveys. e are very conscious that iageo must operate
their views using formal and informal channels. iageo s or force irectors to participate by directly engaging with employees from a
with the highest standards of governance, doing business the right
Engagement programme is an important way for the oard to gather variety of regions, functions and levels in the business. From 1 uly oing concern
way, from grain to glass. This principle is embedded in our ode of
employee insights and feedbac on ey topics, including culture, 2023, the role of Non-Executive irector with responsibility for anagement prepared cash flow forecasts which were also sensitised
usiness onduct and global policies, aligned with our Society 2030
strategy and ways of wor ing. It is also a valued opportunity for teams wor force engagement transitioned from the hairman to aren to reflect severe but plausible downside scenarios ta ing into
Spirit of Progress goals, and reflected in our ways of wor ing. e are
to have direct access to members of the oard. lac ett. For more on wor force engagement, see pages 11 . consideration the group s principal ris s. In the base case scenario,
pleased that we have a strong reputation for inclusion and diversity
iageo s hairman has acted as Non-Executive irector designated to management included assumptions for mid-single digit net sales
which reflects our values, attracts the best talent and enables our
growth, operating margin improvement and global T A mar et share
wor force engagement over the past four years. In fiscal 23, together people to succeed. In order to improve our pace, agility and resilience, dditional information growth. In light of the ongoing geopolitical volatility, the base case
with all Non-Executive irectors, twelve sessions were held with 9 8 we continue to loo to simplify and streamline our internal processes nternal control and ris management
colleagues across all regions, functions and organisational levels. outloo and severe but plausible downside scenarios incorporated
including through the launch of a significant business process and An ongoing process has been established for identifying, evaluating and considerations for a prolonged global recession, supply chain
Sessions have been highly engaging, with the hairman and Non- systems transformation project which is implemented in phases over managing ris s faced by the group. This process, which complies with the disruptions, higher inflation and further geopolitical deterioration. Even
Executive irectors valuing open conversations. These have highlighted the next few years, further details of which are set out on page 112. requirements of the ode, has been in place for the full financial year and under these scenarios, the group s liquidity is still expected to remain
many positive aspects of iageo s culture, as well as areas of There are a number of ways in which the oard monitors and assesses up to the date the consolidated financial statements were approved and strong, as it was protected by issuing 500 million of fixed rate euro
opportunity. culture, including accords with the guidance issued by the FR in September 201 , entitled and 2 billion of fixed rate dollar-denominated bonds in the year
uidance on Ris anagement, Internal ontrol and Related Financial ended 30 une 2023. itigating actions, should they be required, are
The themes emerging from these wor force engagement discussions ite isits and usiness Reporting . The oard confirms that, through the activities of all within management s control and could include reductions in
are irectors are encouraged to visit the group s offices, production the Audit ommittee described below, a robust assessment of the principal discretionary spending such as acquisitions and capital expenditure, as

GOVERNANCE REPORT
olleagues shared their pride in wor ing for iageo and attributed facilities and sites in different mar ets and regions so that they can get and emerging ris s facing the company, including those that would well as a temporary suspension of the share buybac programme and
this to the company s advantaged culture, which connects them a better understanding of the business and interact with employees threaten its business model, future performance, solvency or liquidity, has dividend payments in the next 12 months, or drawdowns on committed
with iageo s purpose and brands, as well as the quality of and the wider wor force. Over the last year, irectors have visited the been carried out. These ris s and their mitigations are set out above in the facilities. Having considered the outcome of these assessments, the
leadership and management s focus on performance. company s headquarters in ondon on a number of occasions as well section of this Annual Report dealing with principal and emerging ris s on irectors are comfortable that the company is a going concern for at
iageo s ongoing commitment to Society 2030 Spirit of Progress as our offices in New or , meeting and interacting with employees. pages 88-93. least 12 months from the date of signing the group s consolidated
targets, including a leading approach to inclusion and diversity, as There have also been visits to our spirits production facilities, scotch financial statements.
brand homes and visitor centres in Scotland and a number of irectors The oard ac nowledges that it is responsible for the company s
well as an embedded approach to doing business in the right way
have also travelled or are planning to travel to other locations, systems of internal control and ris management and for reviewing olitical donations
were positive highlights in the discussions.
including our tequila operations in exico. At these locations, irectors their effectiveness. The oard confirms that, through the activities of the The group has not given any money for political purposes in the nited
The calibre of talent across the business is seen as a strength and
get the opportunity to meet and discuss issues with employees, to see Audit ommittee described in its report, it has reviewed the ingdom and made no donations to E political organisations and
colleagues spo e positively about opportunities for learning and
how iageo s safety and sustainability processes wor in practice, to effectiveness of the company s systems of internal control and ris incurred no E political expenditure during the year. The group made
career development.
tal with local management and wor force and to assess how management. uring the year, the Audit ommittee considered the contributions to non-E political parties totalling 0.83 million during
Overly complex systems and processes were highlighted as barriers
effectively iageo s culture is communicated and embedded at all nature and extent of the ris s that the oard was willing to ta e to the year (2022 0.6 million). These contributions were made almost
that can at times prevent colleagues from operating in the most
levels. As part of the oard s wor force engagement programme, Non- achieve its strategic goals and reviewed the existing internal statement exclusively to federal and state candidate committees, state political
efficient way. Improvements are being felt, and colleagues spo e
Executive irectors regularly hold in-person and virtual meetings, of ris appetite, which had been updated this year by the Executive parties and federal leadership committees in North America (consistent
positively of iageo s commitment to invest further in this area,
townhalls and question and answer sessions with iageo employees in Audit Ris ommittee, following which the Audit ommittee made a with applicable laws), where it is common practice to ma e political
including iageo s recently announced five-year investment into
different locations over the course of the year. recommendation to the oard which was then approved. The Audit contributions. No particular political persuasion was supported and
global digital transformation.
ommittee reviews the company s principal ris s regularly throughout contributions were made with the aim of promoting a better
olleagues ac nowledged positive shifts that are helping to speed
mplo ee s r e s the year in accordance with a schedule proposed by management understanding of the group and its views on commercial matters, as
up decisions, such as stronger cross-mar et collaboration, freedom
The oard receives reports from the hief HR Officer on the results of with each such ris being reviewed by management in the Audit Ris well as a generally improved business environment.
to test and learn and quic er decision-ma ing.
the company s global annual our Voice survey, including levels of ommittee prior to it being considered by the Audit ommittee. The
These themes were also reflected in this year s strong engagement employee engagement, employee perceptions of iageo s purpose oard also regularly reviews emerging and disruptive ris s as part of its
results seen in the global employee survey, our Voice, where and of their line managers (including net promoter scores), and any Annual Strategy onference, held this year in April in New or , from
engagement levels grew a further 1% to 8 %, and pride in wor ing for themes raised. The survey results also give visibility of areas on which which a number of topics are identified for more detailed review by
iageo is at an all-time high at 91%. management must continue to focus, including continued simplification either the oard or the Audit ommittee over the following 12 months.
Insights gathered from wor force engagement sessions held by the and process improvement wor across the business. Results of this The company has in place internal control and ris management
oard, alongside broader listening tools such as our Voice survey, year s our Voice survey are indicated on pages 0- 1. systems in relation to the company s financial reporting process and
have helped to listen and respond to the perspectives of our the group s process for the preparation of consolidated accounts.
pea p allegation reporting Further, a review of the contents of the company s public filings and
employees, as well as identify specific areas to further enhance our The usiness Integrity team provides regular reports to the Audit
employee experience. disclosures, including its consolidated financial statements and non-
ommittee of allegations of breaches of the ode of usiness onduct financial disclosures, is completed by management through the Filings
In this coming year, aren lac ett has ta en over accountability as and other group policies, including those received through our Assurance ommittee to ensure that the contents of the company s
the designated Non-Executive irector for wor force engagement. confidential and independent whistleblowing service Spea p. These interim and preliminary results announcements, Annual Report and
aren, along with all other Non-Executive irectors, will continue to reports also include analyses of emerging trends, investigation status Form 20-F appropriately reflect the non-financial and financial position
engage in meaningful conversation with a wide range of colleagues to reports and closure rates, and summaries of actions ta en. These and results of the group. Further details of this are set out in the Audit
help shape our culture, policies and ways of wor ing, and ensure these reports enable the irectors to gain an understanding of common ommittee report on pages 117-122.
insights help to inform the oard s decision-ma ing. issues and action planning, as well as providing insights into how
embedded iageo s purpose, values and culture are across its mar ets
and functions.
or more etai o t e ea ervice ee age an

114 Diageo Annual Report 2023 Diageo Annual Report 2023 115
 O O O O c ontin ued O O

irectors responsi ilities in respect of t e nn al Report irectors confirmations

orm 0 and financial statements
The irectors are responsible for preparing the Annual Report, the
information filed with the SE on Form 20-F and the group and parent
The irectors consider that the Annual Report and financial statements,
ta en as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the group s and
g g across t e siness
company financial statements in accordance with applicable law and parent company s position and performance, business model and
regulation. ompany law requires the irectors to prepare financial strategy. Each of the irectors, whose names and functions are listed
statements for each financial year. nder that law, the irectors have on pages 101 and 103 confirm that, to the best of their nowledge
prepared the group consolidated financial statements in accordance the group consolidated financial statements, which have been The ommittee has also supervised progress in relation to a
with -adopted international accounting standards and the parent prepared in accordance with -adopted international accounting business transformation project which the company has
company financial statements in accordance with nited ingdom standards, IFRSs issued by IAS , give a true and fair view of the commenced this year and which, once implemented, will enhance
enerally Accepted Accounting Practice ( nited ingdom Accounting assets, liabilities, financial position and profit of the group the company s internal reporting, systems and data management
Standards, comprising FRS 101 Reduced isclosure Framewor , and the parent company financial statements, which have been capabilities. Further details of this project are set out on page 112.
applicable law). In preparing the group consolidated financial prepared in accordance with nited ingdom Accounting
statements, the irectors have also elected to comply with International Over the past few years, we have been closely following proposed
Standards, comprising FRS 101 Reduced isclosure Framewor and
Financial Reporting Standards issued by the International Accounting regulatory and reporting changes, including changes to the
applicable law, give a true and fair view of the assets, liabilities,
Standards oard (IFRSs as issued by IAS ). corporate governance and audit regimes, implications of future E
financial position and profit of the parent company and
reporting requirements with regard to corporate sustainability and
nder company law, the irectors must not approve the financial the Strategic Report includes a fair review of the development and
supply chain due diligence, and developments in S disclosure
statements unless they are satisfied that they give a true and fair view performance of the business and the position of the group and
requirements including in relation to climate change. This year the
of the state of affairs of the group and parent company and of the parent company, together with a description of the principal ris s
ommittee has supervised how the company is responding to and
profit or loss of the group and parent company for that period. In and uncertainties that it faces.
preparing for these changes, in particular focussing on its approach as
preparing the financial statements, the irectors are required to In accordance with section 18 of the ompanies Act 2006, each of to the development of internal processes and capabilities for the
select suitable accounting policies and then apply them consistently the irectors who held office at the date of the approval of the ear are older validation and assurance of externally reported information in

GOVERNANCE REPORT
irectors report confirm that, so far as the irector is aware, there is no anticipation of drafting an audit and assurance policy. The company
state whether applicable -adopted international accounting
relevant audit information of which the group s and parent company s
On behalf of the Audit ommittee, I am has also ta en further steps this year to integrate its financial and non-
standards, IFRSs issued by IAS have been followed for the group
financial statements and nited ingdom Accounting Standards, auditors are unaware, and each irector has ta en all the steps that delighted to present the ommittee s report for financial disclosure processes to improve consistency and robustness in
comprising FRS 101 Reduced isclosure Framewor and applicable they ought to have ta en as a irector in order to ma e themselves the year ended 30 une 2023. reporting with oversight by the ommittee. e have also commenced
law have been followed for the parent company financial aware of any relevant audit information and to establish that the an audit services tender process during fiscal 23 which we expect to
statements, subject to any material departures disclosed and group s and parent company s auditors are aware of that information. complete before the end of the current year.
The Audit ommittee has discharged its responsibilities over the
explained in the financial statements The responsibility statement was approved by a duly appointed and year by providing effective independent oversight, with the support The performance of the Audit ommittee was again evaluated this
ma e judgements and accounting estimates that are reasonable authorised committee of the oard of irectors on 31 uly 2023. of management and the external auditors. The ommittee has year and I am pleased to note that feedbac from irectors
and prudent and carried out its role of monitoring and reviewing the integrity of the indicated very strong satisfaction with the ommittee s performance.
prepare the financial statements on the going concern basis unless company s financial statements and reporting, its internal control
it is inappropriate to presume that the group and company will The ommittee remains committed to continuing to discharge its
and ris management processes, its audit and ris activities,
continue in business. duties effectively and diligently during fiscal 2 .
business conduct and integrity, whistleblowing and breach
The irectors are responsible for safeguarding the assets of the group allegation investigations, and the appointment and performance of
and parent company and hence for ta ing reasonable steps for the the external auditor. Regular reports on internal audit findings,
prevention and detection of fraud and other irregularities. The irectors business integrity and controls assurance wor , breach allegation
are also responsible for eeping adequate accounting records that are and investigation processes were given to and reviewed by the
sufficient to show and explain the group s and parent company s ommittee. The ommittee has also reviewed the company s
transactions and disclose with reasonable accuracy at any time the principal and emerging ris s, its approach to ris appetite and
financial position of the group and parent company and enable them mitigations and has reviewed deep dives into ey areas of potential
to ensure that the financial statements and the irectors Remuneration ris including supply chain disruption, pension funding, cyber hairman of the Audit ommittee
Report comply with the ompanies Act 2006. The irectors are security and IT resilience, climate change, counterfeit and product
responsible for the maintenance and integrity of the corporate and quality, pandemics and business interruption, business ethics and
financial information included on the company s website. egislation in integrity, and international taxation.
the nited ingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Role and composition of t e dit ommittee Reporting and financial statements
The role of the Audit ommittee is fully described in its terms of uring the year, the Audit ommittee reviewed the interim results
reference, which are available at https //www.diageo.com/en/our- announcement, including the interim financial statements, the Annual
business/corporate-governance. The members of the Audit ommittee Report and associated preliminary results announcement and Form
are independent Non-Executive irectors being Alan Stewart 20-F, focussing on ey areas of judgement and complexity, critical
( ommittee hairman), elissa ethell, aren lac ett, Susan ilsby, accounting policies, disclosures (including those relating to contingent
Val rie hapoulaud-Floquet, Sir ohn an oni, ady endelsohn and liabilities, climate change and principal ris s), viability and going
Ireena Vittal. The hairman of the oard, the hief Financial Officer, concern assessments, provisioning and any changes required in these
the eneral ounsel ompany Secretary, the roup ontroller, the areas or policies. The Audit ommittee has also focussed in particular
Head of lobal Audit Ris ( AR), the hief usiness Integrity Officer, on the company s approach to assurance and internal approvals
the eneral ounsel orporate, the roup hief Accountant and the processes. The company has again loo ed to develop its non-financial
external auditor regularly attend meetings of the ommittee. The Audit reporting in a manner that enhances consistency with the financial
ommittee met privately with the external auditor, the hief usiness reporting and throughout the Strategic Report, including in relation to
Integrity Officer and the Head of AR regularly during the year. uring compliance with the recommendations of the Tas Force on limate-
the course of the year, the ommittee met five times and its duly related Financial isclosures.
appointed subcommittee met once. etails of attendance of all oard
and ommittee meetings by irectors are set out on page 99.

116 Diageo Annual Report 2023 Diageo Annual Report 2023 117
 O O con tin u ed

This year the ommittee has also had oversight of management s R correspondence ternal a ditor effecti eness and alit ternal a ditor independence
transformation project to improve iageo s internal processes and The ommittee reviewed a letter to the company from the FR The Audit ommittee assesses the ongoing effectiveness and quality of The group has a policy on auditor independence and on the use of the
upgrading its financial systems and technology, with a particular focus following their review of the company s interim results announcement the external auditor and audit process through a number of methods, external auditor for non-audit services, which is reviewed annually,
on its impact on the company s controls and reporting capabilities. The for the six months ended 31 ecember 2022. The ommittee was commencing with identification of appropriate ris s by the external most recently in uly 2023. hen last reviewed, minor changes were
impact of the change in the company s functional and presentation pleased to note that the FR had no questions or queries to raise auditor as part of its detailed audit plan presented to the Audit agreed to be made to the policy s contents, reflecting the change in
currency, which too effect in uly 2023, was also considered by the following their review, although their letter did include some matters ommittee at the start of the audit cycle. These ris s were reviewed by functional currency of the company and certain other administrative
ommittee. Further details of this project are set out on page 112. which the FR believed could be improved for the benefit to users. In the ommittee and the wor performed by the auditor was used to test changes. nder the auditor independence policy, any member of the
its reply to the FR , the company noted those comments and management s assumptions and estimates relating to such ris s. The Pw global networ shall provide to the company, its subsidiaries or
The company has in place internal control and ris management effectiveness of the audit process in addressing these matters was
systems in relation to the company s financial and non-financial confirmed that they would be ta en into consideration in future any related entity only permissible services, subject to the approval of
assessed through reports presented by the auditor to the Audit
reporting process including the group s process for the preparation of reporting. The ommittee notes that the FR s review does not provide ommittee which were discussed by the ommittee at both the half- the Audit ommittee after it has properly assessed through its
consolidated financial statements. A review of the consolidated assurance that the interim results were correct in all material respects year, in anuary, and year-end, in uly. Following completion of the governance process the threats to independence and the safeguards
financial statements and the draft Annual Report is completed by the as the FR s role is not to verify information but to consider compliance audit process, feedbac on its effectiveness was provided through applied in accordance with the FR Ethical Standard and S Public
Filings Assurance ommittee (FA ) to ensure that the financial position with reporting requirements. review meetings with the company s finance team and management ompany Accounting Oversight oard rules. These services are set out
and results of the group are appropriately reflected therein. In addition and completion of questionnaires, in advance of management and the in full in the policy and are generally those which the external auditor is
ternal a ditor auditor providing assessments of auditor effectiveness and quality to best placed to provide, which may include reporting required by law or
to reviewing draft financial statements for publication at the half and
uring the year, the Audit ommittee reviewed the external audit the Audit ommittee for consideration at its meeting in ecember. This regulation to be performed by the auditor and services where the
full year, the FA is responsible for examining the company s financial
strategy and the findings of the external auditor from its review of the year the questionnaire was updated to ensure more focus on the extent services are closely lin ed to audit wor and where the auditor s
and non-financial information and disclosures, the effectiveness of
interim results and its audit of the consolidated financial statements. to which the auditor had challenged management. The auditor understanding of the group is relevant to the services. Any FR
internal controls relating to financial and non-financial reporting and
The Audit ommittee reviews annually the appointment of the auditor assessment is underta en based on guidance issued to audit permissible service to be provided by the auditor, regardless of the si e
disclosures, legal and compliance issues and determining whether the
(ta ing into account the auditor s effectiveness and independence and committees by the FR in April 2016 and draft inimum Standards for of the engagement, must be specifically approved by the Audit
company s disclosures are accurate and adequate. The FA comprises
Audit ommittees published by the FR in November 2022, and ommittee or its nominated delegate (being the hairman of the Audit
senior executives such as the hief Executive, the hief Financial all appropriate guidelines) and ma es a recommendation to the oard
includes consideration of the findings of the FR s Audit uality Review ommittee) based on a defined scope of pre-approved services. The
Officer, the eneral ounsel ompany Secretary, the eneral accordingly. Any decision to open the external audit to tender is ta en team which published its report on Pw in uly 2022, periodic
ounsel orporate eputy ompany Secretary, the roup on the recommendation of the Audit ommittee. There are no policy explicitly specifies the auditor independence review and
regulatory review carried out by the P AO and the uality Assurance

GOVERNANCE REPORT
ontroller, the roup hief Accountant, the Head of Investor Relations, contractual obligations that restrict the company s current choice of epartment of the Institute of hartered Accountants in England and approval mechanism process by the ommittee for permissible
the Head of AR and the hief usiness Integrity Officer. The external auditor. Following the last tender process, Pw was appointed ales, as well as benchmar ing of the auditor as against its peers. In engagements above the specified threshold of 100,000. Fees paid to
company s external auditor also attends meetings of the FA . The as auditor of the company in 2015. Richard Oldfield became the lead this year s assessment, the overall satisfaction with Pw s performance the auditor for audit, audit-related and other services are analysed in
Audit ommittee reviewed the wor of the FA and a report on the audit partner for the year ended 30 une 2021, following the rotation of was rated as solid, remaining broadly flat as compared to the prior note 3(b) to the consolidated financial statements. The nature and level
conclusions of the FA process was provided to the Audit ommittee the previous partner, and has been the lead audit partner during the year. ecreases from the prior year resulted from two issues, being the of all services provided by the external auditor are factors ta en into
by the hief Financial Officer. year ended 30 une 2023. After three years in role, Richard is stepping audit process in relation to hyperinflation in Tur ey and the audit of account by the Audit ommittee when it reviews annually the
down as the lead audit partner at Pw on the conclusion of the audit certain subsidiaries. onsistent strong feedbac was provided as to independence of the external auditor. uring the year, no non-
iageo has carried out an evaluation, under the supervision and with auditor independence, quality control processes, professional expertise, assurance related services were provided by the external auditor to the
for the year ended 30 une 2023. e than Richard for his conduct of
the participation of management, including the hief Executive and business nowledge and quality communication between auditors and company, its subsidiaries or any related entity other than personal tax
the audit during his tenure. Richard will be replaced by Scott erryman.
hief Financial Officer, of the effectiveness of the design and operation management, which was consistent with the prior year s assessment. services provided to two Non-Executive irectors and the provision of
The selection process for the new lead audit partner was designed to
of iageo s disclosure controls and procedures (as defined in the S Areas where continued focus was required included timely review and services in connection with the issuance of senior notes by a group
identify the best qualified partner for the role, to ensure audit quality. A
Securities Exchange Act Rule 13a-15(e)) as of the end of the period feedbac on audit matters, better alignment in internal communication, company.
shortlist of candidates was identified and interviewed by the hairman
covered by this Annual Report. ased upon that evaluation, iageo s resource continuity and use, pro-activity in driving efficiencies, provision
of the Audit ommittee and the hief Financial Officer. The final
hief Executive and hief Financial Officer concluded that, as of 30 of best practice examples of processes and controls, and transparency inancial e pert recent and rele ant financial
selection was based on feedbac from those interviews as well as an on audit activities throughout the year. It was concluded that the
une 2023, iageo s disclosure controls and procedures were effective.
assessment of the candidates experience and expertise. e loo e perience
relationship between the auditor and management was strong and
As part of its review of the company s Annual Report and associated forward to wor ing with Scott, who has extensive nowledge of and The oard has satisfied itself that the membership of the Audit
open, with open and clear communications on areas and views which
disclosures, the Audit ommittee has considered whether the report is S reporting requirements, and who we believe will continue to ensure are considered significant. ommittee includes at least one irector with recent and relevant
fair, balanced and understandable and provides the information the quality of the audit. uring the external audit, the auditor challenged management on its financial experience and has competence in accounting and/or
necessary for shareholders to assess the company s position, approach ta en as to impairment testing, including in relation to the auditing and in the sector which the company operates, and that all
As the company is required to have a mandatory audit tender after 10 members are financially literate and have experience of corporate
performance, business model and strategy, as required by Principle N impact of business projects across a number of mar ets and economic
years, management has initiated an audit services tender process financial matters. For the purposes of the ode and the relevant rule
of the ode. In doing so, the ommittee has noted the guidance conditions in India and Tur ey, and other judgemental matters such as
which is expected to complete during the year ending 30 une 202 . under SO , Section 07, the oard has determined that Alan Stewart is
issued by the FR on this subject as well as best practice pension valuations and tax assessments. The auditor also challenged
The Audit ommittee considers that it is appropriate to initiate such a independent and may be regarded as an Audit ommittee financial
recommendations from external advisors. The ommittee has management while preparing the Annual Report in relation to whether
process at this time in order to prepare for an adequate transition expert, having recent and relevant financial experience, and that all
considered factors such as whether the report includes descriptions of disclosures as to the impact of certain ris s in the financial statements
during 2025 in the event that a new audit firm is selected. The members of the Audit ommittee are independent Non-Executive
the business model, strategy and principal ris s which are sufficiently were sufficiently consistent with and lin ed to the ris s and disclosures
company has complied with the provisions of The Statutory Audit irectors with relevant financial and sectoral competence. See pages
clear and detailed to enable users to understand their importance to set out in the Strategic Report and whether there was sufficient balance
Services for arge ompanies ar et Investigation ( andatory se of 101 and 103 for details of relevant experience of irectors.
the company, whether the report is consistent throughout with the in the Strategic Report. These challenges were assessed by the Audit
ompetitive Tender Processes and Audit ommittee Responsibilities)
narrative reflecting the financial statements and understanding of ommittee which sought additional evidence from management in nternal a dit controls ass rance and ris
Order 201 ( A Order) for the year ended 30 une 2023.
directors during the year, that information is presented fairly, without support of their assessments, including requesting that independent
omission of material information and not in a manner which might The company s internal AR team underta es an annual audit and ris
legal opinions were provided as to certain tax positions.
mislead users. plan by delivering a series of internal assurance and audit assignments
across a variety of mar ets, processes, business units and functions. On
The ommittee has also considered the presentation of AAP and the conclusion of each assignment, AR issues a report on its findings
non- AAP measures to ensure appropriate prominence is given to which may also include an overall rating as to the status of the mar et,
AAP measures and that non- AAP measures are presented process or function being audited, detailed reasons for the rating and
consistently and can be clearly reconciled. The Audit ommittee has actions to be ta en within a specific timetable. The Audit ommittee
also considered the governance and processes underta en by receives regular reports from the Head of AR on the latest reports
management in drafting, developing and reviewing the contents of the issued.
Annual Report, which have been designed to ensure the robustness
and adequacy of the information contained in it, including review by
and input from senior executives, the company s advisors and through
the wor of the FA . On this basis, the Audit ommittee recommended
to the oard that it could ma e the required statement that the Annual
Report is fair, balanced and understandable .

118 Diageo Annual Report 2023 Diageo Annual Report 2023 119
 O O con tin u ed

This year AR has underta en a number of audits of the group s end- reports globally, encompassing over 21,000 eligible employees during enior financial officers code of et ics and dealing anagement s report on internal control o er financial
to-end processes and procedures in addition to mar et and functional the year ended 30 une 2023. Training is delivered in an easily reporting
audits. The Audit ommittee assesses the effectiveness of AR by accessible e-learning format, with classroom training delivered to those code
In accordance with the requirements of SO and related SE rules, anagement, under the supervision of the hief Executive and hief
reviewing its annual audit plan at the start of the financial year, employees who do not have regular access to a computer. The ode
iageo has adopted a code of ethics covering its hief Executive, Financial Officer, is responsible for establishing and maintaining
monitoring its ongoing quality throughout the year, and assessing of usiness onduct and other global policies are available at https //
hief Financial Officer, and other senior financial officers. uring the adequate control over the group s financial reporting. The Filings
completion rates and feedbac provided following completion of the www.diageo.com/en/our-business/corporate-governance.
year, no waivers were granted in respect of, this code of ethics. The full Assurance ommittee supports the hief Executive and hief Financial
annual audit plan. Having carried out this assessment, the Audit
Third-party ris is also managed through our now our usiness text of the code of ethics is available at https //www.diageo.com/en/ Officer in ensuring the accuracy of the company s financial reporting,
ommittee is of the view that the quality, experience and expertise of
Partner programme, which is designed to help the company evaluate our-business/corporate-governance/compliance. oth the Audit Ris filings and disclosures. As summarised on page 118, prior to interim
AR is appropriate for the business. The company operates a global
the ris of doing business with a third-party before entering and during ommittee and the Audit ommittee regularly review the strategy and reporting and preliminary reporting each year, the Filings Assurance
controls assurance programme for controls in each mar et and
a contractual relationship. usiness partners are assessed for potential operation of the usiness Integrity programme through the year. ommittee examines the company s financial information and
function, which monitors compliance with and effective operation of
ris s including economic sanctions, bribery and corruption, money processes, the effectiveness of its controls in respect of financial
the company s controls framewor . The Audit ommittee receives The company has also adopted a dealing code setting out
laundering, facilitation of tax evasion, data privacy and other reporting, and the contents of its disclosures.
regular reports on the status of the controls assurance plan, actions requirements in relation to dealings in iageo securities by irectors,
reputational issues.
ta en to enhance controls design and effectiveness, awareness training Executive ommittee members and certain other employees, which is anagement has assessed the effectiveness of iageo s internal
provided to employees, testing results and trends analysis derived from Employees and third-party business partners are encouraged to raise designed to ensure compliance with applicable insider trading and control over financial reporting (as defined in Rules 13(a)-13(f) and
the company s integrated ris management system. The ommittee concerns about potential breaches of the ode of usiness onduct or mar et abuse regulations, in particular the ar et Abuse 15(d)-15(f) under the nited States Securities Exchange Act of 193 )
also reviewed and approved changes to the principal ris descriptions policies, either to line managers, legal or HR colleagues, ris , Regulation. based on the framewor in the document Internal ontrol Integrated
and ris footprint, as well as receiving regular presentations and compliance and usiness Integrity teams, or to Spea p, a confidential Framewor , issued by the ommittee of Sponsoring Organi ations of
reviews of the status of its principal and emerging ris s. This year, these whistleblowing mechanism. Spea p is a global service administered dit and ss rance olic the Treadway ommission ( OSO) in 2013. ased on this assessment,
reviews have covered areas including cyber security and IT resilience, by an independent provider, accessible online or by telephone. here uring the year management has reviewed its approach to assurance management concluded that, as at 30 une 2023, internal control over
climate change, counterfeit and product quality, pandemics and legally permitted, it can be used anonymously and reports ept in preparation for drafting and adopting an audit and assurance financial reporting was effective. uring the period covered by this
business interruption, business ethics and integrity, and international confidential. Allegations are investigated by independent iageo policy, consistent with the reporting requirements set out in draft report, there were no changes in internal control over financial
taxation. teams, with progress being monitored by the usiness Integrity team. legislation proposed by the epartment for usiness and Trade in reporting that have materially affected or are reasonably li ely to
materially affect the effectiveness of internal control over financial

GOVERNANCE REPORT
hen allegations are substantiated, appropriate disciplinary and uly 2023. The ommittee has reviewed and discussed the principles
siness ntegrit programmes corrective actions are ta en. The Audit ommittee receives and on which such policy will be based and will continue to monitor reporting. The same independent registered public accounting firm
iageo is committed to conducting its business responsibly and in reviews regular reports on allegations, including trends information, management s development of the policy. which audits the group s consolidated financial statements has audited
accordance with all laws and regulations to which its business activities root cause analysis and investigation closure rates. Since all of the effectiveness of the group s internal control over financial reporting,
are subject. e hold ourselves to the principles in our ode of usiness iageo s Non-Executive irectors attend the Audit ommittee, all Non- and has issued an unqualified report thereon, which is included in the
onduct, which is embedded through a comprehensive training and Executive irectors who ma e up the oard routinely review the integrated audit report which is included in the company s Form 20-F to
education programme for all employees. Our employees are expected findings of the company s whistleblowing processes in accordance with be filed with the SE .
to act in accordance with our values, the ode of usiness onduct the orporate overnance ode.
and in compliance with applicable laws and regulations. The Audit ommittee acti ities
ommittee monitors compliance with the company s ethical standards uring the year ended 30 une 2023, 629 allegations of breaches were
reported which was broadly consistent with the prior year. The etails of the main areas of focus of the Audit ommittee during the year include those summarised below
through the usiness Integrity framewor , which helps enhance and
substantiation rate of allegations has also remained broadly consistent
protect all aspects of the company s business. Regular reports are rea o oc trategic riorit trategic o tcome
compared to last year, with 32% of cases confirmed as breaches
provided to the Audit ommittee by the hief usiness Integrity Officer or orate Half and full year external reporting updates
(versus 30% in fiscal 22). As of the end of fiscal 23, 3 people exited 1 6 EG CVC CT
on progress in providing guidance, training and tools for all levels in re orting Interim and preliminary results review and approval
the business as a result of breaches of our ode of usiness onduct or Annual Report and consolidated financial statements, Form 20-F review and approval
the business, completion rates for training modules, launch and rollout policies (fiscal 22 5 people). This is due to a reduction in severity and Implications of group functional and presentation currency change on reporting
of new programmes or policies, monitoring use of whistleblowing type of breaches this year. The number of leavers for fiscal 22 has been nterna contro AR updates
mechanisms and investigating allegations of breaches. restated due to a number of open cases from fiscal 22 being CT
usiness Integrity updates including breach and reporting update 1
Our ode of usiness onduct, available in 20 languages, sets out concluded this year. At the end of fiscal 23, we had 137 open cases, ontrols testing update and Section 0 assessment
which may lead to more people exiting the business. See below a Implications on controls environment of systems and process changes
what iageo stands for as a company and how iageo operates,
summary of reported and substantiated breaches over the past three terna a it Report on external audit at half and full year periods
enabling all employees to understand what is required of them in CT
years. an a rance Insights and observations on reporting review 1
wor ing for iageo. Annual training on the ode of usiness onduct Auditor independence and non-audit wor reviews
and associated policies is mandatory for all managers and their direct Auditor independence policy review
Review of management representation letters
Appointment of auditor and review of terms of engagement and fees
Reported and s stantiated reac es Auditor performance and effectiveness review and assessment
ommencement of auditor tender process
0 1 0 0 Audit regime reform and approach to assurance, preparatory to drafting an audit and
assurance policy
87 i Principal and emerging ris reviews and trac ing
635 629 EG CVC CT
management Ris updates, including group ris footprint and ris appetite review and approvals 1 6
280 Supply chain disruption, counterfeit, product quality, climate change and sustainability, energy,
33 19
pandemics and business interruption, cyber and IT resilience, pension funding, business
191 transformation and tax ris reviews
156 158
63
5 3 e
trategic rioritie trategic o tcome
1 Sustain quality growth 3 Invest smartly 5 hampion inclusion and diversity EG Efficient growth CT redibility and trust
ò Reported
2 Embed everyday efficiency 4 Promote positive drin ing 6 Pioneer grain-to-glass sustainability CVC onsistent value creation EP Engaged people
ò Reported through Spea p
ò Substantiated breaches
ò ode-related leavers

120 Diageo Annual Report 2023 Diageo Annual Report 2023 121
 O O con tin u ed O O O O

ignificant iss es and dgements

Significant issues and judgements that were considered in respect of the 2023 financial statements are set out below. Our consideration of issues
included discussion of the ey audit matters as outlined in the appendix to the independent auditors report. a o g o r talent strateg
atter con i ere o t e it ommittee a re e t e matter
The nature and si e of any one-off items impacting The Audit ommittee assessed whether the related presentation and disclosure of those items in the financial
the quality of the earnings and cash flows. statements were appropriate based on management s analysis, and concluded that they were.
Items that were to be presented as exceptional. The Audit ommittee assessed whether the reporting of those items as exceptional, was in line with the
Refer to note of the Financial Statements. group s accounting policy, and that sufficient disclosure was provided in the financial statements, and e welcome ebra bac to the oard and congratulate her on her
concluded that they were. appointment. The ommittee was unanimous in deciding that
hether the carrying value of assets, in particular The Audit ommittee reviewed the methodology applied in conducting impairment assessments and result of ebra is the right person to lead iageo into the next phase of
intangible assets, was supportable. Refer to notes management s impairment assessments that were performed during the year. The ommittee was provided growth, with her deep understanding of the company and its
6, 9, 10 and 13 of the Financial Statements. with information about the carrying amounts and the ey assumptions incorporated in management s sta eholders coupled with her broad experience in other consumer
estimate of discounted cash flows of significant assets that are sensitive to ey assumptions. The ommittee
reviewed the ey assumptions used in the impairment testing, including management s cash flow forecasts,
goods industries.
growth rates and the discount rate used in value in use calculations and agreed they were appropriate. This year the ommittee also managed the evaluation of the
The ommittee agreed with management s judgements and conclusions, whereby c owell s, some smaller
other brands and investments in associates and certain fixed assets have been impaired by 5 9 million in the
effectiveness of the oard, its ommittees, members and processes.
year ended 30 une 2023, out of which 520 million was reported as exceptional operating charge. The Further details, including the review s conclusions, recommendations
ommittee agreed that the recoverable amount of the company s other assets was in excess of their carrying and actions as presented to the oard in anuary 2023, are set out
value and that appropriate disclosure was provided with respect to assets impaired, and whose value is more on page 113.
sensitive to changes in assumptions.
The ommittee has also been involved in reviewing talent planning
The group s more significant tax exposures and the The Audit ommittee agreed that disclosure of tax ris appropriately addresses the significant change in the
appropriateness of any related provisions and international tax environment, and that appropriate provisions and other disclosure with respect to uncertain and succession of Executive ommittee membership, with two
financial statement disclosures. Refer to page 91 of tax positions were reflected in the financial statements. changes being implemented or approved during the year. laudia
Our principal ris s and ris management and note ear are older Schubert was appointed as President, North America in October

GOVERNANCE REPORT
7 of the Financial Statements. I am pleased to provide the report of the 2022 and Soraya enchi h assumed the role of President, Europe in
The appropriateness of the valuation of post The measurement of post employment liabilities is sensitive to changes in long-term interest rates, inflation and anuary 2023. I congratulate laudia and Soraya on their
employment liabilities, and the recognition of any mortality assumptions. Having reviewed management s papers setting out ey changes to actuarial Nomination ommittee for the year ended appointments and loo forward to wor ing with them.
surplus. Refer to note 1 of the Financial assumptions, the Audit ommittee agreed that the assumptions used in the valuation are appropriate. The
Statements. ommittee reviewed management s assessment of the economic benefit available as a refund of the surplus
30 une 2023.
or as a reduction of contribution and the ey judgements made in respect of the surplus restriction and
concluded that those judgements were appropriate. The ommittee reviewed and concluded that sufficient A ey responsibility for the ommittee is to ensure adequate
disclosures were provided in the financial statements. succession planning for oard appointments, maintenance of a
Significant legal matters impacting the group. The ommittee agreed that adequate provision and/or disclosure have been made for all material litigation pipeline of strong candidates for potential nomination as directors, avier err n
Refer to note 19 of the Financial Statements. and disputes, based on the current most li ely outcomes, including the litigation summarised in note 19 of the and supervising transitions for new appointments. uring this year,
Financial Statements. hairman of the Nomination ommittee
the ommittee had oversight of the transition of hief Executives
Accounting for business combinations. Refer to iageo acquired anlaon imited and hat Noir o. Inc. on 10 arch 2023 and completed a number of with ebra rew succeeding Sir Ivan ene es after ten years of
note 8 of the Financial Statements. other smaller acquisitions during the year ended 30 une 2023, for an aggregate consideration of 397
million. As at the completion date of these acquisitions, iageo performed valuations of the identifiable assets dedicated leadership of the company. This transition was well
and liabilities and the resulting goodwill. The purchase price allocation exercises are subject to management s underway when Ivan sadly passed away following a brief illness,
judgement and estimates, including forecast cash flows, buyer specific synergies and the applicable discount with ebra ta ing over earlier than expected.
rates used in valuations. The ommittee reviewed management s purchase price allocations and the
disclosures provided in the Financial Statements and concluded they were appropriate.
Functional currency of iageo plc and presentation The Audit ommittee agreed that in line with reporting requirements the functional currency of iageo plc has
currency of iageo group. changed from sterling to S dollar which is applied prospectively from fiscal 2 . This is because the group s Role and composition of t e Nomination ommittee In the case of Executive irector or Executive ommittee appointments,
share of net sales and expenses in the S and other countries whose currencies correlate closely with the S an executive leadership assessment may be carried out by an external
dollar has been increasing over the years, and that trend is expected to continue in line with the group s The Nomination ommittee is responsible for eeping under review the
strategic focus. iageo has also decided to change its presentation currency to S dollar with effect from 1 composition of the oard and succession to it, reviewing succession professional agency. Reports on potential appointees are provided to
uly 2023, applied retrospectively, as it believes that this change will provide better alignment of the reporting planning for ey Executive ommittee roles, and succession planning the ommittee, which, after careful consideration, ma es a
of performance with its business exposures. and overall talent strategy for senior leadership positions, including in recommendation to the oard. In determining its recommendations,
hether the Annual Report is fair, balanced and The Audit ommittee concluded that the Annual Report, ta en as a whole, is fair, balanced and relation to ensuring and encouraging diversity in leadership positions. It the ommittee has regard to a broad range of factors including the
understandable. understandable and provides the information necessary for shareholders to assess the company s ma es recommendations to the oard concerning appointments to the candidate s bac ground, s illset and experience, their ability to express
performance, business model and strategy and that there is an appropriate balance between statutory independent judgement and participate across a broad range of
( AAP) and adjusted (non- AAP) measures ensuring equal prominence. oard. ore details on the role of the Nomination ommittee are set
out in its terms of reference which are available at topics, including on sustainability and societal matters, their ability to
The impact of climate change on the group s The Audit ommittee agreed that the disclosures on pages 71-87 made in response to the recommendations https //www.diageo.com/en/our-business/corporate-governance. devote sufficient time to the company and whether their appointment
financial reporting and financial statements. Refer of the Tas Force on limate-related Financial isclosures are appropriate and that the assumptions used in would contribute towards the oard s diversity objectives which are set
to pages 71-87 of Pioneer grain-to-glass the financial statements are consistent with these disclosures. The Nomination ommittee comprises avier Ferr n ( ommittee out in the oard iversity Policy. This policy, which applies to the oard
sustainability and note 1 and note 9 of the hairman), elissa ethell, aren lac ett, Susan ilsby, Val rie and its ommittees, reflects the oard s belief that it is critical that
Financial Statements. hapoulaud-Floquet, Sir ohn an oni, ady endelsohn, Alan oard membership includes a diverse range of s ills, professional and
Stewart and Ireena Vittal. industry bac grounds, geographical experience and expertise, gender,
Recr itment and election proced res tenure, ethnicity and diversity of thought.
The recruitment process for Non-Executive irectors includes the Any new irectors are appointed by the oard and, in accordance with
development of a candidate profile and the engagement of a the company s articles of association, they must be elected at the next
professional search agency specialising in the recruitment of high- A to continue in office. All existing irectors retire by rotation and
calibre candidates. e have engaged executive search companies stand for re-election every year. The company s policy is for all
Egon ehnder and Russell Reynolds Associates (neither of which have irectors to attend the A , either physically or by video conference
a connection with the company other than acting as an executive as permitted by the company s Articles of Association. etails of
search agency) to assist with our current recruitment and pipelining attendance of all oard and ommittee meetings by irectors are set
requirements. out on page 99.

122 Diageo Annual Report 2023 Diageo Annual Report 2023 123
 O O O O con tin u ed

ternal appointments The Nomination ommittee reviewed the results of an external nd ction and training appropriate, to oard and strategy meetings to ma e presentations on
hile the oard does not have a written policy as regards the talent benchmar ing exercise conducted by an executive search Our customary induction processes for newly appointed irectors their areas of responsibility. All irectors are also provided with regular
maximum number of other appointments that irectors should have, firm, alongside continued assessment of the development of includes individual meetings with Executive ommittee members and briefings to ensure they are ept up to date on relevant legal and
before recommending new appointments to the oard, the Nomination candidates on iageo s internal succession plan. other senior executives, visits to the company s production facilities and governance developments or changes, best practice developments
ommittee considers other demands on candidates time. As a general offices including the company s head office in ondon and the group s and changing commercial and other ris s.
ommencing during fiscal 21 and subject to ongoing review thereafter
principle, the ommittee ta es the view that Non-Executive irectors A focussed longlist of external candidates was reviewed by the spirits production facilities, scotch brand homes, visitor centres and i ersit
should have no more than four, and Executive irectors no more than Nomination ommittee, together with internal candidates. archives in Scotland.
The oard has a longstanding commitment to prioritise diversity and
one, listed mandates in addition to their role as a director of the Internal candidates were invited to ta e part in a formal assessment Induction programmes for new irectors are tailored to suit the supports the recommendations of the FTSE omen eaders Review
company. Once appointed, any proposed additional external process overseen by the hairman supported by the hief HR particular bac ground and experience of the individual irector, with (previously the Hampton-Alexander Review) on gender diversity and
appointments are also reviewed by the Nomination ommittee to Officer. the ommittee advising on priorities for that individual and trac ing the Par er Review on ethnic diversity. The oard iversity Policy sets out
ensure that the additional demands on a irector s time will not impact A panel of Nomination ommittee members met shortlisted induction activity. These induction processes supplement existing specific objectives with parity between male and female members of
on the irector s ability to perform his or her role as a irector of the candidates for formal panel interviews with the hairman and the practices whereby a continuing understanding of the business is the oard being the ultimate goal in terms of gender diversity, with a
company before the additional appointment is recommended for Non-Executive irectors. developed through appropriate business engagements for Non- commitment to have no less than 0% female representation on the
approval by the oard. irectors interests are reviewed and updated evelopment plans were drawn up for internal candidates to Executive irectors such as visits to customers, engagements with oard, and having at least one irector reflecting ethnic diversity as
at each oard meeting. The oard has concluded that each Non- enable the Nomination ommittee to review progress on a periodic employees, and brand events wor ed into the annual cycle of oard defined in accordance with the Par er Review. The ommittee is
Executive irector has sufficient time to discharge their duties as a basis. meetings. Training on specific areas of ris and detailed reviews of pleased to confirm that both these objectives have currently been met.
director of the company, ta ing into consideration their external
uring fiscal 22 strategic matters are provided by Executive ommittee members, other The oard iversity Policy also sets out the oard s support for
appointments and commitments.
Periodic regular review of the development progress of internal internal senior leaders and external guest spea ers and specialists management s actions to increase the proportion of senior leadership
O s ccession candidates was underta en by the Nomination ommittee. through presentations, roundtable discussions and other sessions as roles held by women and by people from minority bac grounds and
It is the role of the Nomination ommittee to have oversight of the The role specification was ept under ongoing review to ensure it part of the oard s Annual Strategy onference and during the year as other under-represented groups. As at 30 une 2023, the percentage of
company s senior leadership development and succession plans, reflected developments in iageo s business context and any part of oard and Audit ommittee meetings. In addition, Executive women on the Executive ommittee and their direct reports is 3%.
ensuring that the company has a pipeline of high-quality candidates emerging requirements. ommittee members and other senior executives are invited, as
for senior roles which is aligned with the company s long-term strategic

GOVERNANCE REPORT
uring fiscal 23 oar an ec tive ommittee re orting on gen er i entit or e
ambitions and diverse leadership requirements. In arch 2023, it was
Proposed remuneration arrangements for the incoming and m er o enior o ition on
announced that, after ten years in role, Sir Ivan ene es would retire t e oar O O an m er in e ec tive ercentage o e ec tive
outgoing hief Executives were reviewed and approved by the m er o oar mem er ercentage o t e oar air management management
as hief Executive and step down from the oard on 30 une 2023
Remuneration ommittee. en 3 27.3 % 1 7 50.0 %
and that ebra rew, then hief Operating Officer, would ta e over as
The Nomination ommittee recommended that the oard approve
hief Executive effective 1 uly 2023. Sir Ivan, who was one of the s omen 8 72.7 % 3 7 50.0 %
the appointment of ebra rew as iageo s next hief Executive.
longest serving FTSE 100 chief executives, had led the company Not specified/prefer not to say
The Remuneration ommittee approved remuneration
through an outstanding period of change, growth and performance.
arrangements for the appointment of ebra rew and the oar an ec tive ommittee re orting on et nic ac gro n
As succession planning is an ongoing process, the Nomination retirement of Sir Ivan ene es. m er o oar ercentage o t e m er o enior o ition on t e m er in e ec tive ercentage o e ec tive
ommittee had an established process for identifying the most suitable The oard unanimously approved the appointment and a mem er oar oar O O an air management management
person for the role of hief Executive including a shortlist of potential regulatory announcement was released on 28 arch 2023. hite ritish or other hite (including minority-white groups) 7 63.6 % 3 8 57.1 %
successors which was ept under review in anticipation of a transition. ixed/ ultiple Ethnic roups
As part of this process, the Nomination ommittee conducted a review cti ities of t e Nomination ommittee
The principal activities of the Nomination ommittee during the year Asian/Asian ritish 3 27.3 % 1 3 21. %
of potential candidates including a number of internal candidates on
were lac /African/ aribbean/ lac ritish 1 9.1 % 1 7.2 %
the company s internal succession plan as well as external candidates.
The review included candidates who had different bac grounds and the consideration, selection and recommendation as to the Other ethnic group, including Arab 2 1 .3 %
experience, and included diverse candidates. Following this review, the appointment of and transition plan for a new hief Executive Not specified/prefer not to say
Nomination ommittee made a recommendation to the oard that the consideration of the talent pipeline for potential new Non-
ebra rew was the most suitable successor to Sir Ivan, having been a Executive irectors and other appointments to the oard oar on ec tive irector oar gen er oar et nic
highly valued member of the Executive ommittee with an impressive the design and conduct of the annual review of oard, ommittee com o ition ten re iver it iver it
trac record at both iageo and other global consumer goods and individual irector effectiveness and performance and a review
companies. Acting on the recommendation of the Nomination of the findings of the review and recommended actions
ommittee, the oard approved her appointment and announced the consideration and approval of the report of the ommittee in the
transition on 28 arch 2023. ith the sad passing of Sir Ivan in early company s Annual Report and consolidated financial statements for
une 2023 after a brief illness, ebra s appointment as hief Executive the year ended 30 une 2023
and Executive irector too effect earlier than expected, on 8 une 2023. consideration and recommendation to the oard of proposed
changes in irectors outside interests and any potential conflicts of
Set out below are the principal steps ta en in relation to the
interest and
announcement of the appointment of a new hief Executive on 28
a review of the succession plans for Executive ommittee roles,
arch 2023 ò hairman ò 0 3 years ò ale ò irectors of colour
including potential candidates for such roles, their bac grounds and
Prior to fiscal 21 and ongoing thereafter experience, and how such candidates would contribute towards the ò Executive irector ò 3 6 years ò Female ò hite European

A preliminary assessment of potential internal candidates and their company s diversity objectives. ò Non-Executive irector ò 6 9 years
development plans was reviewed, as part of annual talent and
al ation ec ti e committee nationalit oard di ersit data
succession review with the oard.
As part of the annual oard evaluation, all members of the Nomination irectors are defined as all Non-Executive and Executive irectors
uring fiscal 21 appointed to the oard. oard diversity related data are collated
ommittee participated in an evaluation of the ommittee. Feedbac 22% 22% 8% 8% 8% 8% 8% 8% 8%
An updated role specification for the hief Executive was prepared, indicated that the ommittee was effective and that irectors were directly from each irector annually using a questionnaire and are
reviewed and approved by the Nomination ommittee. Amongst satisfied with its performance, that it had managed the hief Executive given on a self-identifying basis.
other things, this set out the requirements for the role with regards to succession during the year well and that its processes were robust, ò ritish ò Indian irectors of colour are defined in accordance with the Par er
leadership capabilities, personal characteristics and ey transparent and effective. Further details of the evaluation can be ò American ò Irish Review definitions as those who identify as or have evident heritage
experiences, within the context of the performance and culture found on page 113. from African, Asian, iddle Eastern, entral and South American
ò American/ ritish ò South African/ ritish
needed in iageo. regions .
ò olombian ò Spanish
All oard diversity data above are given as at 30 une 2023.
ò French

124 Diageo Annual Report 2023 Diageo Annual Report 2023 125
 O O O

nn al statement t e a man t e O transition

On 28 arch 2023, we announced that Sir Ivan ene es would retire
on 30 une 2023 and ebra rew would be appointed as the next
nn a incentive
For the annual incentive, outcomes under the Net Sales (NSV) and
Operating Profit (OP) measures were at and just under target
em ne at n mm ttee EO from the start of fiscal 2 . Following the announcement on 7 une
2023 that Sir Ivan had sadly passed away, ebra rew was appointed
respectively and Operating ash onversion (O ) performance fell
short of the minimum threshold required. Further detail is provided on
to the oard as EO and Executive irector on 8 une 2023, having page 1 0. Following a holistic review of business performance in the
ta en over as interim EO on 5 une due to Sir Ivan s deteriorating year, the ommittee concluded that the outcome was fair and did
On behalf of the ommittee, I engaged with our largest shareholders health. not require any adjustment. Our annual incentive also includes
and their representatives on the new policy and considered the Individual usiness Objectives (I Os) and the outcomes are
feedbac received, which was positive. e also reviewed mar et e set the salary for ebra rew at 1,750,000, slightly below Sir
described on page 1 0.
practice trends in the FTSE 30 (excluding financial services) and our Ivan s salary. The ommittee determined that this salary level reflects
global consumer goods peer group. Further, and in line with our ebra s significant relevant experience, which includes a prior EO Once I O outcomes are included, overall annual incentive payouts
remuneration principles, the ommittee considered the remuneration position in the nited States and four years with iageo, including time for fiscal 23 were 37% of maximum for Sir Ivan ene es, 35% of
arrangements for the wor force globally when reviewing the policy on the iageo oard as a Non-Executive irector. The ommittee maximum for ebra rew and 36% of maximum for avanya
for Executive irectors. considered both the FTSE 30 pay practices, as well as those of our handrashe ar.
global peer group when determining the appropriate level of pay for
e value the views we have received from our shareholders and the ong term incentive
our hief Executive.
strong support we have had in recent years. aintaining both the Strong financial performance over the three-year period, particularly
dialogue and the support continue to be important to the ommittee. The remuneration arrangements for Sir Ivan were approved within the in respect of growth in organic net sales and profit before exceptional
terms of the irectors remuneration policy and application of the plan items and tax (P ET), free cash flow (F F) and share price growth of
rules on death in service. Further details, including exercises of 26% resulted in a vesting outcome of 99% of maximum for the 2020
discretion by the ommittee, can be found on page 150. performance share awards for the prior EO, the EO and the FO
ear are older n t is ear s report and 78% of maximum for the 2020 share options granted to the
ine er ormance an em o ee

GOVERNANCE REPORT
I am pleased to present the irectors remuneration report for the Remuneration at a glance 129 prior EO and the EO. The 2020 performance share awards were
As mentioned elsewhere in the Annual Report, iageo delivered a
year ended 30 une 2023, which contains Pay for performance at a glance 130 the first iageo awards which included an Environmental, Social and
strong set of 2023 results during a period of economic volatility and
overnance (ES ) component and the outcomes against these
The updated irectors remuneration policy, which shareholders Remuneration ommittee governance 131 continued inflationary pressures. oth organic net sales and organic
measures show solid progress towards iageo s Society 2030 Spirit
are being as ed to approve at the Annual eneral eeting irectors remuneration policy 132 operating profit growth were within our medium-term guidance and
of Progress ambition over this first three-year period.
(A ) on 28 September 2023 and Annual report on remuneration 139 follow two consecutive years of double-digit growth and are reflected
The annual remuneration report, describing how the current in lower annual incentive outcomes this year relative to the prior two Prior to confirming the vesting of TIP awards, the ommittee
irectors remuneration policy has been implemented during oo ing ac on 0 years. Over the year, we gained or held mar et share in mar ets that considered whether there was a compelling case to change the
2023 and how the policy will be implemented in 202 . total 70% of our net sales value, delivered further expansion of organic formulaic outcome by reviewing overall business performance and
Single figure of remuneration table 139
operating margin through productivity savings and return on invested the targets set for these awards. For the 2020 TIP awards, the
roposed irectors Rem neration olic Annual incentive payouts for 2023 1 0 capital was 16.3%. ommittee was especially cognisant of investor concerns around the
The ommittee has reviewed the current irectors remuneration ong-term incentives vesting in 2023 1 1 potential for windfall gains given the timing of the grant during the
policy and determined that it continues to support the company s olleagues across the business have continued to show resilience,
Pensions and benefits in 2023 1 3 ovid-19 pandemic. The ommittee considered various factors,
strategy and will do so for the next three years. The ommittee is agility and commitment during this period of sustained uncertainty.
ong-term incentives awarded in 2023 1 including the share price used to calculate the 2020 awards relative
therefore as ing shareholders to approve our current policy, largely iageo continues to focus on being mar et competitive and pro-active
to the prior year s price, the stretch of the targets and the
Outstanding share plan interests 1 5 in the ways it supports the wellbeing of employees. Employee
unchanged except for a governance enhancement to the post- performance relative to peers (see page 1 2 for more detail). The
cessation shareholding requirement, which further improves Shareholding requirement and share interests 1 7 engagement has remained high again this year at 8 %, two point
ommittee determined that the outcomes were appropriate and
shareholder alignment. Executive irectors will now be required to EO total remuneration and TSR performance 1 8 higher than in 2022. Early in fiscal 23, iageo made a one-time
aligned to the assessment of iageo s underlying business
hold 100% of their in-service shareholding level (500% of salary for ider wor force remuneration and EO pay ratio 1 9 payment of 1,000 gross (capped at 15% of local equivalent annual
performance over the three-year period and made no adjustment to
the EO and 00% of salary for the FO) for two years post-exit. salary) to all employees below Executive ommittee level to recognise
hange in pay for irectors and wider wor force 150 the vesting levels.
e have also improved the level of disclosure of our malus and their commitment through challenging times. In addition, ongoing
Non-Executive irector pay 151 monitoring of the cost-of-living in all our geographies has resulted in The ommittee believes that the incentive plans continue to drive the
clawbac policy.
off-cycle salary increases in countries experiencing the highest inflation. desired behaviours to support the company s values and strategy
As well as submitting an updated irectors remuneration policy for oo ing a ead to 0 Other measures, such as financial education and progressive benefit and that the irectors remuneration policy has operated as intended
approval at the A in September 2023, shareholders are also Salary increases for the year ahead 152 policies have been implemented and more detail can be found on in 2023.
being as ed to approve the rules of the new iageo ong-Term Annual incentive design for the year ahead 152 page 1 8.
Incentive Plan ( TIP), as it is close to its 10-year expiry. No significant e ear a ea an a ignment o incentive it trateg
ong-term incentives for the year ahead 152 ncentive o tcome The ommittee approved a base salary increase of % for the FO,
changes are being proposed to the rules.
In determining annual and long-term incentive outcomes, the effective 1 October 2023, having reviewed mar et practice in the
uring the year, the ommittee reviewed the current irectors Remuneration ommittee reviews not only the financial outcomes FTSE 30 and our global consumer goods peer group. This increase is
remuneration policy. In doing so, it sought to ensure continued against targets set but also considers iageo s wider business below the 2023 salary increase budget for employees in the ,
alignment with the delivery of business strategy, our ongoing ability performance. It assesses mar et share gains, financial returns relative which was 5%. There will be no increase for the EO, whose next
to recruit and retain high-quality, international talent and to meet to our Alcoholic everages and TSR peer groups, progress made review will be in October 202 .
the expectations of our shareholders and the governance towards our Society 2030 Spirit of Progress goals and employee
community. onsideration was given to the global nature of the engagement, among other factors. It also considers the experience of
business, which includes a large presence in North America and, shareholders over the applicable performance period, in particular the
therefore, the need to compete for talent in a global pool. Attracting company s TSR performance relative to our peer group.
and retaining ey talent in an increasingly competitive talent pool is
critical for our business and, at all levels, iageo s talent strategy
involves a global approach to internal talent mobility. Remuneration
is an important aspect of being able to meet our talent objectives.

126 Diageo Annual Report 2023 Diageo Annual Report 2023 127
 O O O con tin ued

The structure and performance measures for the annual and long- Rem neration principles at a an e
term incentives remain unchanged for 202 as these continue to The approach to setting executive remuneration continues to be
align with the company s strategic priorities. The annual incentive guided by the remuneration principles set out below. The alar llowances and nn al incenti e ong term are olding
focuses on net sales growth, operating profit (both of which ommittee considers these principles carefully when ma ing
decisions on executive remuneration in order to stri e the right enefits incenti es re irement
represent critical measures of growth for iageo) and operating
balance between ris and reward, cost and sustainability, and r oe Supports the attraction Provision of mar et- Incentivises delivery of Rewards consistent long-term Ensures alignment between
cash conversion (which recognises the criticality of strong cash and retention of the competitive and cost- iageo s financial and performance in line with the interests of Executive
performance and cash containment, particularly in the current competitiveness and fairness. best global talent with effective benefits supports strategic targets iageo s business strategy irectors and shareholders
the capability to attraction and retention of Provides focus on ey Provides focus on delivering
challenging mar et conditions) and I Os add focus on individual The company has a strategy to grow and leverage its leaders globally deliver iageo s talent financial metrics and the superior long-term returns to
strategic and financial objectives. The long-term incentive given the international nature of the business. e also need to have strategy individual s contribution to shareholders
measures reflect ey drivers of long-term growth by incorporating the company s
the right tools in place to source talent globally and the increasingly performance
organic net sales, organic profit before exceptional items and tax restrictive corporate governance environment in the nited ingdom e eat re o Normally reviewed Provision of competitive Target opportunity is 100% Annual grant of performance inimum shareholding
(P ET), free cash flow (F F), TSR and ey ES measures presents some challenges when considered against the significantly c rrent o ic annually on 1 October benefits lin ed to local of salary and maximum is shares and share options requirement within five years
(greenhouse gas reduction, water efficiency, positive drin ing and higher pay norms in the nited States and other parts of the world, ro o e e Salaries ta e account mar et practice 200% of salary EO award up to 500% of of appointment
of external mar et and aximum company Performance measures, salary EO 500% of salary
gender and ethnic diversity). particularly given the increasing international mobility of the senior o ic c ange internal employee pension contribution is 1 % weightings and stretching FO award up to 80% of FO 00% of salary
talent pool. context of salary, which is aligned targets are set by the salary Post-employment
e were one of the first companies to include ES measures in a to the offering for the wider Remuneration ommittee (% of salary for both EO shareholding requirement for
long-term plan bac in 2020, and consequently, as our practices ong-term value creation for shareholders and pay for wor force in the nited Subject to malus and and FO described in Executive irectors of 100%
evolve, we recognise that PIs also need to evolve. The ommittee ingdom clawbac provisions performance share of in-employment
performance remains at the heart of our remuneration policy and Executive irectors defer a equivalents) requirement in the first year
believes in setting targets that incentivise the management team to minimum of one-third of Performance measures, after leaving the company
practices. Attracting and nurturing a vibrant mix of international
ma e the right long-term decisions for all sta eholders and the earned bonus payment weightings and stretching and 50% in the second year
environment. The water efficiency PI under the Society 2030 Spirit talent with a range of bac grounds, s ills and capabilities into iageo shares held for targets are set annually after leaving the company
of Progress goals will, from fiscal 2 , use an index approach, which enables iageo to grow and thrive, and ultimately to deliver our three years Three-year performance ro o e o ic c ange
Remainder paid out in period plus two-year Post-employment
lin s directly to the underlying water efficiency of the two production Performance Ambition. Remuneration remains a ey part of cash after the end of the retention period shareholding requirement for

GOVERNANCE REPORT
pillars of distillation and brewing pac aging. This approach attracting and retaining the best people to lead our global financial year Subject to malus and Executive irectors of 100%
reduces sensitivity to product mix compared to the current measure business, balanced against the need to ensure our pac ages are clawbac provisions of in-employment
Number of awards granted is requirement to be retained in
and the methodology used for each pillar is more consistent with appropriate and fair in the business and wider employee context, based on a six-month full for two years after leaving
what s used by our industry peers (see page 79 for more detail). The delivering mar et-competitive pay in return for high performance average share price to 30 the company
water efficiency component of the 2023 TIP awards reflects the une preceding grant date
against the company s strategic objectives.
updated water efficiency index PI. anne or ear % salary increase for Allowances and benefits Si e of annual incentive Performance measures are No change to in-employment
en ing ne the FO, below the unchanged from prior award opportunity is net sales growth, relative shareholding requirement
As described on page 36 we are changing our functional currency eli er of siness strateg annual salary budgets year unchanged from prior TSR, cumulative free cash Post-employment
from pounds sterling to S dollars from fiscal 2 . The Free ash for the wider wor force ompany pension year. For fiscal 2 , flow, profit before shareholding of 100% of in-
Short and long-term incentive plans reward the in the nited ingdom contributions 1 % of measures are net sales exceptional items and tax year shareholding for two
Flow (F F) targets for the 2023 TIP awards have therefore been New EO salary growth, operating profit and Society 2030 Spirit of years after leaving the
delivery of our business strategy and Performance
set and disclosed in S dollars (see page 153) and the Free ash appointment from 5 growth and operating cash Progress measures company
Ambition. Performance measures are reviewed une 2023. No salary conversion, 80% in total Si e of long-term incentive
Flow (F F) targets for the in-flight awards have been translated into
regularly and stretching targets are set relative to the increase in fiscal 2 weighted equally, with award opportunity is
S dollars in accordance with the agreed methodology (see pages remaining 20% on unchanged from prior year
company s growth plans and peer group forecasted
1 and 1 6). individual objectives
performance. The ommittee see s to embed
m ementation 3% salary increase for Allowances and benefits Payout of 32.5% of Vesting of 2020 performance As at 30 une 2023, Ivan
n mmar simplicity and transparency in the design and delivery
in ear en e the EO and FO, unchanged from prior year maximum for the financial shares at 98.7% of maximum ene es shareholding was
iageo s resilient performance in another period of broad and of executive reward. ne slightly below the ompany pension elements of the plan for Ivan ene es, and 98.8% 2,728% of salary
annual salary budgets contribution Total payout of 37.25% of of maximum for ebra rew As at 30 une 2023, ebra
sustained uncertainty is reflected in the incentive outcomes and the
reating s staina le long term for the wider wor force EO 20% of salary until maximum for the prior and avanya handrashe ar rew s shareholding was 1%
decisions the ommittee has made, which it considers are in line in the nited ingdom 1 anuary 2023, which EO, 35.38% for the EO Vesting of 2020 share options of salary (she has until 8
with the company s philosophy of delivering mar et competitive pay performance and the nited States was then reduced to and 36.0% for the FO at 77.5% of maximum for une 2028 to meet her
Ivan ene es and ebra requirement)
in return for high performance against the company s strategic A significant proportion of remuneration is delivered in 1 % of salary
rew. avanya As at 30 une 2023, avanya
FO 1 % of salary
objectives. variable pay lin ed to business and individual handrashe ar did not handrashe ar s
receive share options in 2020 shareholding was 7% of
performance, focussed on consistent and responsible salary (she has until 1 uly
I hope that you will vote in favour of the proposed irectors
drivers of long-term growth. Performance against 2026 to meet her
remuneration policy and the irectors remuneration report for fiscal requirement)
targets is assessed in the context of underlying
23 at the A on 28 September 2023. m ementation 3% salary increase for Allowances and benefits Payout of 100% of Vesting of 2019 performance As at 30 une 2022, Ivan
business performance and the quality of earnings .
in ear en e the EO in line with unchanged from prior year maximum for the financial shares at 59.3% of maximum ene es shareholding was
Finally, and importantly, I would li e to personally reiterate the wider wor force in the ompany pension elements of the plan for Ivan ene es and 59.8% 3,093% of salary
inning est talent ne
sentiment which has been so well expressed elsewhere in this nited ingdom and contribution Total payout of 93.75% of of maximum for avanya As at 30 une 2022, avanya
Annual Report about the sad and shoc ing loss of our EO, Sir Ivan the nited States in EO 20% of salary maximum for the EO and handrashe ar handrashe ar s
ell designed and mar et-competitive total 2021 FO 1 % of salary 90.0% of maximum for the Vesting of 2019 share options shareholding was 31% of
ene es, just wee s before his planned retirement. It was a remuneration, with an appropriate balance of fixed FO appointed 1 uly FO at 61.5% of maximum for salary (she has until 1 uly
pleasure and an honour to wor with Sir Ivan over the years and my reward and upside opportunity, allows us to attract 2021. No salary Ivan ene es. The FO did 2026 to meet requirement)
increases post not receive share options in
thoughts continue to be with his family at this time. and retain the best talent from all over the world in a appointment in 2021 2019
competitive talent mar et, which is critical to our
continued business success.

onsideration of sta e older interests

Executives are focussed on creating sustainable share
price growth. The requirement to build significant
personal shareholdings in iageo, and to hold shares
an i acquired from long-term incentive awards for two
Non-Executive irector and hair of the Remuneration ommittee years post-vesting aligns executives and shareholders.
ecisions on executive remuneration are made with
consideration of the interests of the wider wor force
and other sta eholders, as well as the external climate.

128 Diageo Annual Report 2023 Diageo Annual Report 2023 129
 O O O con tin ued

The charts below show performance outcomes against targets for the long-term and annual incentive plans. Targets under both incentive plans are set with
Rem neration ommittee ommittee assesses performance holistically at the end of each period,
The Remuneration ommittee consists of the following independent ta ing into account underlying business performance and the internal
reference to iageo s strategic plan and the historical and forecasted performance of iageo and its peers.
Non-Executive irectors Susan ilsby, elissa ethell, Val rie and external context. The ommittee may exercise discretion to ensure
ong term incenti es (for t e period 1 l 0 0 to 0 ne 0 ) hapoulaud-Floquet, Sir ohn an oni, ady endelsohn, Alan that payouts are appropriate and
Organic gro t in net a e m ative ree ca o Stewart, Ireena Vittal and aren lac ett. Susan ilsby is the hair of ignment it c t re non-financial objectives may be incentivised
A R re o i oint a im m re o i oint a im m
the Remuneration ommittee and also the Senior Independent under the individual business objective element of the annual incentive
.0% 6.0% 8.0% 6,200m 7,200m 8,200m
irector. The hairman of the oard and the hief Executive are plan and Society 2030 Spirit of Progress (ES ) priorities are
invited to attend Remuneration ommittee meetings, except when their
incentivised under the long-term incentive plan, which reinforces the
own remuneration is being discussed. The hief Human Resources
Actual 1 .5% Actual 8, 0 m
Officer and lobal Performance and Reward irector are also invited company s purpose and values. The design of remuneration and the
by the Remuneration ommittee to provide their views and advice. The measures used, reflect iageo s culture.
Organic gro t in ro it e ore e ce tiona item an ta e ative ran ing v eer gro
hief Financial Officer may also attend to provide performance context
A R re o i oint a im m re o i oint a im m
to the ommittee during its discussions about target setting and
ternal ad isors
.5% 8.25% 12.0% 9th (median) 3rd (upper quintile)
incentive outcomes. The Remuneration ommittee s terms of reference uring the year ended 30 une 2023, the Remuneration ommittee
are available in the corporate governance section of the company s received advice on irectors remuneration from both eloitte and FIT.
Actual 16.5% Actual 7th
website and on request from the ompany Secretary. FIT was appointed as the ommittee s new external advisor in October
mea re nit o mea rement re o i oint a im m ct a 2022.
The Remuneration ommittee is responsible for all executive
ar on re ction Reduction in greenhouse gas emissions (cum%) 6.3% 10.3% 1 .3% The fees paid to eloitte in fiscal 23 (until the end of their appointment)
remuneration decisions throughout the year, which includes setting
ater e icienc Improvement in water efficiency (cum%) 5.8% 8.5% 11.2% financial targets for the annual and long-term incentive plans and the for advice provided to the ommittee were 33,900. The fees paid to
o itive rin ing Number of people who confirmed changed attitudes on the dangers outcomes under these plans. uring fiscal 23, the Remuneration FIT in fiscal 23 since their date of appointment were 11 ,265. All fees

GOVERNANCE REPORT
of underage drin ing following participation in a iageo supported ommittee also reviewed the irectors remuneration policy and were determined on a time and expenses basis.
education programme 0.75m 1.00m 1.25m m
consulted with iageo s largest investors in preparation for see ing The ommittee is satisfied that FIT s (and previously eloitte s)
nc ion iver it % female leaders globally 1% 2% 3% shareholder approval at the 2023 A , as well as the EO transition engagement partners, and the teams that provide remuneration
% ethnically diverse leaders globally 38% 39% 0% arrangements and the death-in-service remuneration arrangements advice to the ommittee, have no connections with iageo that may
following the sad passing of Sir Ivan ene es. The ommittee impair their independence. The ommittee reviewed the potential for
nn al incenti e (for t e period 1 l 0 to 0 ne 0 ) considered the remuneration policy and practices in the context of the conflicts of interest and judged that there were appropriate safeguards
et a e gro t O erating ro it gro t principles of the orporate overnance ode, as follows against such conflicts. eloitte provided and continues to provide
re o arget a im m re o i oint a im m arit the ommittee engages regularly with executives, unrelated services to the company in the areas of immigration and
3.5% 6.5% 9.5% 2.5% 7.5% 12.5% shareholders and their representative bodies in order to explain the management consultancy. FIT does not provide iageo with any other
approach to executive pay services. eloitte and FIT are founder members of the Remuneration
Actual 6.5% Actual 7.0% onsultants roup (R ) which is responsible for developing and
im icit the purpose, structure and strategic alignment of each maintaining the ode of onduct for onsultants to Remuneration
O erating ca conver ion iageo s share price growth over rowth in dividend distribution element of pay has been laid out in the remuneration policy ommittees of listed companies. FIT attended Remuneration
the period 30 une 2020 to 30 une to shareholders in year ended to
re o arget a im m 2023 30 une 2023 i there is an appropriate mix of fixed and variable pay, and ommittee meetings during the year following their appointment and
95% 100% 105% financial and non-financial objectives, and there are robust measures the ommittee is satisfied that the advice it has received has been
26 5 in place to ensure alignment with long-term shareholder interests, objective and independen
Actual 93.3% 2023 £33.79 2023 80.00p including the TIP post-vesting retention period, shareholding
requirement, bonus deferral into shares and malus and clawbac tatement of oting
2020 £26.82 2022 76.18p The following table summarises the details of votes cast in respect of
provisions. The ommittee also considers the impact on behaviour of
both the measures and targets set the resolutions on the irectors remuneration policy at the 2020 A
Historic 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 and the irectors remuneration report (excluding the policy) at the
the three years ended 30 une 2023 is shown against the vesting outcome for the 2020 long-term incentive awards vesting in 2023). Outcomes against
re icta i it the pay opportunity under different performance 2022 A .
annual incentive financial measures are shown against organic operating profit growth for each respective financial year, as disclosed in prior-year scenarios is set out on page 136 of this report
annual reports.
ro ortiona it executives are incentivised to achieve stretching
ear ve ting o tcome o ong term incentive ear i tor o ann a incentive a o t targets over annual and three-year performance periods, and the
Executive irector vesting outcome (% of maximum) Annualised TSR % Payout (% of maximum) Operating profit growth % For Against Total votes cast Abstentions

100 30 100 30 irector rem neration o ic Total number of votes 1,6 , 3,671 121,538,951 1,765,982,622 3,321, 27
100%
98.7%

80 24 80 24 Percentage of votes cast 93.12% 6.88% 100% n/a

61.5%
59.3%
89%

60%

100%
77.5%

60 18 60 18 irector rem neration re ort e c ing Total number of votes 1,612,2 5, 2 88,630,650 1,700,876,07 28,285,201
29.3%

t e o ic
73%

27.5%

40 12 40 12 Percentage of votes cast 9 .79% 5.21% 100% n/a

20 6
10%

10%

20 6
32.5%

(1) As shown on pages 89 9 of the 2020 Annual Report.

0 0
0%

0 0 (2) As shown on pages 106 112 and 119-131 of the 2022 Annual Report.
2019 2020 2021 2022 2023
2019 2021 2022 2023
-20
2020

ò Performance shares ò Annual incentive payout (financial measures

ò Share options excluding individual business objectives)
ò Annualised total shareholder return over three-year long-term ò Organic operating profit growth (% on prior year)
incentive performance period

130 Diageo Annual Report 2023 Diageo Annual Report 2023 131
 O O O con tin ued

nn al ncenti e lan ( )
rpose and lin to strateg
This section of the report sets out the 2023 irectors remuneration the ommittee believes the current policy continues to support the
Incentivises delivery of iageo s annual financial targets and the achievement of ey individual objectives which are chosen to align with the
policy which will be put to a binding vote at the A on 28 September business strategy and therefore the new policy being put forward for
business strategy and create a platform for sustainable longer-term performance. ompulsory deferral of a minimum of one-third of any annual
2023 and, if approved, will apply with effect from 1 uly 2023. shareholder approval remains largely the same. The ey change from
incentive earned into shares for three years promotes longer-term alignment of Executive irectors interests with shareholders interests.
the current policy relates to the increase in post-cessation shareholding
The current policy, which was approved by shareholders in September Operation
requirement which requires 100% of the in-service shareholding
2020, can be found on the company s website at https //
requirement (or, if lower, their actual shareholding on cessation) to be Performance measures, weightings and targets are set by the Remuneration ommittee. Appropriately stretching targets are set by reference to
www.diageo.com/en/our-business/corporate-governance/
held for two years after leaving (from 100% in the first year and 50% in the operating plan and historical and projected performance for the company and its peer group.
remuneration-at-diageo.
the second year under the current policy). e have improved The level of award is determined with reference to iageo s overall financial and strategic performance and individual performance.
The Remuneration ommittee discussed the details of the policy over a disclosures by providing more detail on our malus and clawbac A minimum of one-third of the actual earned bonus payment is normally deferred into a share award (pre-tax deferral) or owned shares (post-
series of meetings, ta ing into account the strategic priorities of the policy, the shareholding requirements and the enforcement mechanism tax deferral) under the eferred onus Share Plan, to be held for a minimum period of three years, other than in exceptional circumstances. The
business and evolving mar et practice. An external perspective was for the post-cessation shareholding requirements. Some minor editorial remainder of the bonus payment is paid out in cash after the end of the financial year.
provided by the Remuneration ommittee s advisor and the changes have also been made. The Remuneration ommittee has discretion to adjust the level of payment if it is not deemed to reflect appropriately the individual s
Remuneration ommittee hair engaged with the company s 20 contribution or the overall business performance. Any discretionary adjustments will be detailed in the following year s annual report on
The ommittee reserves the right to ma e minor changes to the policy,
largest shareholders and their representatives regarding the policy remuneration.
where required for regulatory, tax or administrative reasons.
proposals. As referenced in the Remuneration ommittee hair s letter, The Remuneration ommittee has discretion to apply malus or clawbac to bonus as detailed in the alus and lawbac section below.
In the case of pre-tax deferral, notional dividends accrue on deferred bonus share awards, delivered as shares or cash at the discretion of the
ase salar Remuneration ommittee at the end of the vesting period (on post-tax deferral into owned shares, actual dividends are payable).
rpose and lin to strateg Opport nit
Supports the attraction and retention of the best global talent with the capability to deliver iageo s strategy and performance goals. For threshold performance, up to 50% of salary may be earned, with up to 100% of salary earned for on-target performance and a maximum of
200% of salary payable for outstanding performance. The maximum includes the deferred share element but excludes dividend equivalents
Operation

GOVERNANCE REPORT
payable in respect of deferred share awards.
Normally reviewed annually or following a change in responsibilities with any increases usually ta ing effect from 1 October.
The Remuneration ommittee considers the following parameters when reviewing base salary levels erformance conditions
Pay increases for other employees across the group. Annual incentive plan awards are normally based 70%-100% on financial measures which may include, but are not limited to, measures of sales,
Economic conditions and governance trends. profit and cash, and 0%-30% on broader objectives based on strategic goals and/or individual contribution.
The individual s performance, s ills and responsibilities. The Remuneration ommittee has discretion to amend the performance measures in exceptional circumstances if it considers it appropriate to do
ase salaries (and total remuneration) at companies of similar si e and international scope to iageo, with roles typically benchmar ed against so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and
the FTSE 30 excluding financial services companies, or against similar comparator groups in other locations dependent on the Executive explained in the following year s annual report on remuneration.
irector s home mar et as well as global consumer goods companies.
iageo ong erm ncenti e lan ( )
Opport nit
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
rpose and lin to strateg
employees in the relevant mar ets in which iageo operates, typically the nited ingdom and the nited States, unless there is a change in role or Provides a long-term incentive to achieve ey performance measures which support the company s strategy, and to align interests with
responsibility or other exceptional circumstances. shareholders.
Operation
enefits An annual grant of performance shares and/or mar et-price share options which vest subject to a performance test and continued
rpose and lin to strateg employment, normally over a period of three years.
Provides mar et-competitive and cost-effective benefits as part of remuneration pac ages designed to attract and retain the best global talent. easures and stretching targets are reviewed annually by the Remuneration ommittee for each new award.
The Remuneration ommittee has the authority to exercise discretion to adjust the vesting outcome based on its assessment of the overall
Operation business performance over the performance period. This may include the consideration of factors such as holistic performance relative to peers,
The provision of benefits typically depends on the country of residence of the Executive irector and may include but is not limited to a company sta eholder outcomes and significant investment projects, for example.
car or travel allowance, the provision of a contracted car service or equivalent, product allowance, life insurance, accidental death and disability Following vesting, there is normally a further retention period of two years. Executive irectors are able to exercise an option or sell sufficient
insurance, medical and dental cover, tax support and tax return preparation costs. shares to cover any tax liability when an award vests, provided they retain the net shares arising for the two-year retention period.
The Remuneration ommittee has discretion to offer additional allowances, or benefits, to Executive irectors, if considered appropriate and Notional dividends accrue on performance share awards to the extent that the performance conditions have been met, delivered as shares or
reasonable. These may include, but are not limited to, relocation expenses, housing allowance and school fees where a irector is as ed to cash at the discretion of the Remuneration ommittee at the end of the vesting period.
relocate from his/her home location as part of their appointment. here appropriate, for example in relation to relocation benefits, the company The Remuneration ommittee has discretion to apply malus or clawbac to bonus as detailed in the alus and lawbac section below.
may also meet the tax costs associated with the benefit provision.
Opport nit
Opport nit The maximum annual grants for the hief Executive and hief Financial Officer are 500% and 80% of salary in performance share
The benefits pac age is set at a level which the Remuneration ommittee considers equivalents respectively (where a mar et-price option is valued at one-third of a performance share). Included within that maximum, no more
provides an appropriate level of benefits depending on the role and individual circumstances than 375% of salary will be awarded in face-value terms in options, with the balance awarded in performance shares, to any Executive irector
is appropriate in the context of the benefits offered to the wider wor force in the relevant mar et and in any year.
is in line with comparable roles in companies of a similar si e and complexity in the relevant mar et. 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
ost retirement pro ision performance level, will be determined by the Remuneration ommittee on an annual basis and disclosed in the relevant remuneration report
rpose and lin to strateg for that year. There is a ran ing profile for the vesting of the part of the award based on relative total shareholder return, starting at 20% of
Provides competitive post-retirement benefits which are part of remuneration pac ages designed to attract and retain the best global talent. maximum for achieving the threshold.
Operation
Provision of mar et-competitive pension arrangements or a cash alternative based on a percentage of base salary.
Opport nit
The maximum pension contribution, or cash alternative allowance, for Executive irectors is 1 % of salary. The current EO and FO receive a
pension contribution of 1 % of salary, in line with the wor force.

132 Diageo Annual Report 2023 Diageo Annual Report 2023 133
 O O O con tin ued

iageo ong erm ncenti e lan ( ) contin ed airman of t e oard and Non ec ti e irectors fees
erformance conditions rpose and lin to strateg
The vesting of awards is lin ed to a range of measures which may include, but are not limited to Supports the attraction and retention of world-class talent and reflects the value of the individual, their s ills and experience.
a growth measure (e.g. net sales growth, operating profit growth) Operation
a measure of efficiency (e.g. operating margin, cumulative free cash flow, return on invested capital) Fees for the hairman and Non-Executive irectors are normally reviewed every year.
a measure of iageo s performance in relation to its peers (e.g. relative total shareholder return) and A proportion of the hairman s annual fee may be used for the monthly purchase of iageo ordinary shares, which have to be retained until
a measure relating to our Society 2030 Spirit of Progress (environmental, social or governance) priorities. the hairman retires from the company or ceases to be a irector.
easures that apply to performance shares and mar et-price options may differ, as is the case for current awards. eightings of these measures Fees are reviewed in light of mar et practice in the FTSE 30, excluding financial services companies, and anticipated wor load, tas s and
may also vary year on year. potential liabilities.
The Remuneration ommittee has discretion to amend the performance conditions in exceptional circumstances if it considers it appropriate to do The hairman and Non-Executive irectors do not participate in any of the company s incentive plans nor do they receive pension
so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and contributions or benefits. Their travel and accommodation expenses in connection with attendance at oard meetings (and any tax thereon)
explained in the following year s annual report on remuneration. are paid by the company.
al s and law ac The hairman and the Non-Executive irectors are eligible to receive a product allowance or cash equivalent at the same level as the
Executive irectors.
nder the AIP and TIP, the Remuneration ommittee has discretion to apply malus and clawbac in the circumstances specified in the All Non-Executive irectors have letters of appointment. A summary of their terms and conditions of appointment is available at
applicable malus and clawbac policy from time to time in place, for example
www.diageo.com. The hairman of the oard, avier Ferr n, was re-appointed on 6 October 2022 for a three-year term, terminable on three
aterial misstatement of results or an error resulting in overpayment. months notice by either party or, if terminated by the company, by payment of three months fees in lieu of notice.
Ris failure resulting in material financial loss or any business area being the subject of a regulatory investigation or in breach of regulation. Opport nit
Employee misconduct/disciplinary action.
Fees for Non-Executive irectors are within the limits set by the shareholders from time to time, with an aggregate limit of 1,750,000, excluding
Employee accountability for material reputational damage to the group which could have been avoided.
the hairman s fees.
In respect of the application of malus, deterioration in the financial situation of the roup which limits the ability to fund incentive awards.
Any other matter which, in the reasonable opinion of the Remuneration ommittee, is required to be considered to comply with prevailing legal

GOVERNANCE REPORT
and/or regulatory requirements.
The malus and clawbac provisions may be invo ed for one year following an AIP cash payment and two years following a TIP vesting. here
the Remuneration ommittee determines that malus and/or clawbac will apply, the Remuneration ommittee has discretion to determine the
basis of application and the means by which malus and/or clawbac will be implemented.
The malus and clawbac policy will be reviewed from time to time to ensure that the policy is compliant with any regulatory requirements, such as
the N SE listing rules.

ll emplo ee s are plans

rpose and lin to strateg
To encourage broader employee share ownership through locally approved plans.
Operation
The company operates tax-efficient all-employee share acquisition plans in various jurisdictions.
Executive irectors eligibility may depend on their country of residence, tax status and employment company.
Opport nit
imits for all-employee share plans are set by the tax authorities. The company may choose to set its own lower limits.
erformance conditions
nder the Share Incentive Plan, the annual award of Freeshares may be based on iageo plc financial measures which may include, but
are not limited to, measures of sales, profit and cash.

are olding re irement

rpose and lin to strateg
Ensures alignment between the interests of Executive irectors and shareholders.
Operation
The minimum in-employment shareholding requirement is 500% of base salary for the hief Executive and 00% of base salary for any other
Executive irectors.
Executive irectors are normally expected to build up their in-employment shareholding within five years of their appointment to the oard.
Shares that count towards these minimum shareholding requirements are shares beneficially held by the Executive irector and their connected
persons, including eferred onus Share Plan ( SP) shares within the three-year deferral period, on a net (if post-tax deferral)/notional net (if
pre-tax deferral) of tax basis.
Executive irectors are 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 hief
Executive and/or hairman), until the shareholding requirement is met.
In order to provide further long-term alignment with shareholders, Executive irectors will normally be expected to maintain a iageo
shareholding of 100% of the in-employment shareholding requirement (or, if lower, their actual shareholding on cessation) for two years after
leaving the company.
The Executive irectors enter into a deed underta ing to comply with the requirement and committing to hold the required number of shares in
a specified nominee account.

134 Diageo Annual Report 2023 Diageo Annual Report 2023 135
 O O O con tin ued

er ice contracts and polic on pa ment for loss of office (incl ding ta eo er pro isions)
Executive irectors have rolling service contracts, details of which are set out below. These are available for inspection at the company s registered
office.
erformance meas res The Target scenario shows fixed remuneration as described above, ec tive irector ate o ervice contract

Further details of the performance measures under the fiscal 2 annual plus a target payout of 50% of the maximum annual incentive and a ebra rew 28 arch 2023
incentive plan and measures and targets for TIP awards to be made midpoint payout of 60% of the maximum long-term incentive awards. avanya handrashe ar 13 anuary 2021
in September 2023, are set out in the annual report on remuneration, The aximum scenario reflects fixed remuneration, plus full payout of
on page 153. Annual incentive targets will be disclosed retrospectively annual and long-term incentives. otice erio The contracts provide for a period of six months notice by the Executive irector or 12 months notice by the
in next year s annual report on remuneration as they are deemed by company, the same as would apply for any newly-appointed Executive irector. A payment may be made in lieu
The aximum plus share price growth scenario reflects fixed
the oard to be commercially sensitive until after the end of the fiscal of notice consisting of a sum equivalent to the base salary which the Executive irector would have received for
remuneration, plus full payout of annual and long-term incentives,
year. any notice period outstanding on the date employment ends and the cost to the company of providing
including, for the latter, an assumed 50% share price appreciation
contractual benefits for this period (including pension contributions but excluding incentive plans).
Performance targets are set to be stretching yet achievable, and ta e over the performance period.
into account the company s strategic priorities and business If, on the termination date, the Executive irector has exceeded their accrued holiday entitlement, the value of
For long-term incentives, the awards are treated as though they were such excess may be deducted by the company from any sums due to them. If the Executive irector, on the
environment. The Remuneration ommittee sets targets based on a
granted entirely as performance share awards. termination date, has accrued but unta en holiday entitlement, the company will, at its discretion, either require
range of reference points, including the corporate strategy and bro er
forecasts for both iageo and its peers. The amounts shown in sterling are converted using the cumulative the Executive irector to ta e such unused holiday during any notice period or ma e a payment to them in lieu of
weighted average exchange rate for the year ended 30 une 2023 of it, provided that if the employment is terminated for cause then the Executive irector will not be entitled to any
ro ected total rem neration scenarios 1 1.20. such payment.
The graphs below illustrate scenarios for the projected total itigation The Remuneration ommittee requires (or may exercise its discretion to require) a proportion of the termination
remuneration of Executive irectors at four different levels of pproac to recr itment rem neration payment to be paid in instalments and, upon the Executive irector commencing new employment, to be subject
performance minimum, target, maximum, and maximum including iageo is a global organisation selling its products in more than 180 to mitigation.
assumed share price appreciation of 50%. The impact of potential countries around the world. The ability to recruit and retain the best

GOVERNANCE REPORT
share price movements is excluded from the other three scenarios. talent from all over the world is critical to the future success of the nn a ncentive an here the Executive irector leaves for reasons including retirement, death in service, disability, ill-health, injury,
These charts reflect projected remuneration for the year ending 30 business. People diversity in all its forms is a core element of iageo s redundancy, transfer out of the group and other circumstances at the Remuneration ommittee s discretion
une 202 . global talent strategy and, managed effectively, is a ey driver in during the financial year, the Executive irector is usually entitled to an incentive payment pro-rated for the period
delivering iageo s Performance Ambition. of service during the performance period, which is typically payable at the usual payment date unless the
Debra Crew ommittee decides otherwise. here the Executive irector leaves for any other reason, no payment or bonus
The Remuneration ommittee s overarching principle for recruitment deferral will be made. The amount is subject to performance measures being met and is at the discretion of the
Minimum 100% remuneration is to pay no more than is necessary to attract an
Total $2,028 (£1,690) ommittee. The ommittee has discretion to determine an earlier payment date, for example, on death in
Executive irector of the calibre required to shape and deliver iageo s service. The bonus may, if the ommittee decides, be paid wholly in cash.
Target 21% 20% 59%
Total $9,028 (£7,523) business strategy, recognising that iageo competes for talent in a
e erre on are an here the Executive irector leaves for any reason other than dismissal, they are entitled to retain any deferred
Maximum
global mar etplace. The ommittee will see to align any
13% 25% 62% bonus shares, which vest in full on departure, subject to any holding requirements under the post-employment
Total $14,278 (£11,898) remuneration pac age with iageo s remuneration policy, but retains
the discretion to offer a remuneration pac age which is necessary to shareholding policy. It is not considered necessary for the bonus deferral to continue to apply after leaving, since
Maximum plus 50% 10% 19% 71%
share price increase Total $18,653 (£15,544) meet the individual circumstances of the recruited Executive irector the bonus is already earned based on performance, and there is a post-employment shareholding requirement
$’000 0 5,000 10,000 15,000 20,000
and to enable the hiring of an individual with the necessary s ills and that ensures the Executive irector continues to be invested in the company s longer-term interests. On a
expertise. However, the maximum short-term and long-term incentive ta eover, awards vest in full. On other corporate events, the Remuneration ommittee may allow awards to vest
Salary, benefits and pension in full.
opportunity will follow the policy, although awards may be granted
Annual incentive iageo ong erm ncentive an here the Executive irector leaves for reasons including retirement, death in service, disability, ill-health, injury,
with different performance measures and targets in the first year. On
Long-term incentives redundancy, transfer out of the group and other circumstances at the Remuneration ommittee s discretion
appointment of an external Executive irector, the ommittee may
decide to compensate for variable remuneration elements the during the financial year, awards continue in effect. Awards will vest on the original vesting date with the
exception of death in service, when awards will vest on the date of death, in each case unless the Remuneration
Lavanya Chandrashekar individual forfeits when leaving their current employer. In doing so, the
ommittee will ensure that any such compensation would have a fair ommittee decides otherwise. hen an Executive irector leaves for any other reason, all unvested awards
Minimum 100% value no higher than that of the awards forfeited, and would generally generally lapse immediately. The applicable retention period for vested awards continues for all leavers (other
Total $1,235 (£1,029)
be determined on a comparable basis ta ing into account factors than in cases of disability, ill-health or death in service, where the retention period will end on the date of death or
Target 23% 20% 57% leaving employment), unless the Remuneration ommittee decides otherwise. here awards were granted in the
Total $5,287 (£4,406) including the form in which the awards were granted, performance
conditions attached, the probability of the awards vesting (e.g. past, form of options, on vesting they are generally exercisable for 12 months (or six months for approved options).
Maximum 15% 25% 60%
Total $8,337 (£6,947) current and li ely future performance), as well as the vesting schedules. The proportion of the award released depends on the extent to which the performance condition is met. The
Maximum plus 50% 12% 19% 69% epending on individual circumstances at the time, the ommittee has number of shares is reduced on a pro-rata basis reflecting the length of time the Executive irector was employed
share price increase Total $10,843 (£9,036) the discretion to determine the type of award (i.e. cash, shares or by the company during the performance period, unless the Remuneration ommittee decides otherwise (for
$’000 0 2,000 4,000 6,000 8,000 10,000 12,000
options), holding period and whether or not performance conditions example, in the case of death in service).
would apply.
Salary, benefits and pension here an Executive irector leaves within one month of the normal vesting date of the award, awards are not
Annual incentive Any such award would be fully disclosed and explained in the time pro-rated, unless the Remuneration ommittee decides otherwise.
Long-term incentives following year s annual report on remuneration. hen exercising its
discretion in establishing the reward pac age for a new Executive On a ta eover or other corporate event, awards vest subject to the extent to which the performance conditions
irector, the ommittee will carefully consider the balance between the are met and, unless the Remuneration ommittee decides otherwise, the awards are time pro-rated. Otherwise
asis of calc lation and ass mptions need to secure an individual in the best interests of the company the ommittee, in agreement with the new company, may decide that awards should be swapped for awards
The inimum scenario shows fixed remuneration only, i.e. base salary against the concerns of investors about the quantum of remuneration over shares in the new company.
for the year ending 30 une 202 , value of benefits received in the year and, if considered appropriate at the time, will consult with the e atriation ot er In cases where an Executive irector was recruited from outside the nited ingdom and has been relocated to
ended 30 une 2023, or the projected annual benefit value for year company s biggest shareholders. The Remuneration ommittee will the nited ingdom as part of their appointment, the company may pay reasonable repatriation costs for leavers
ending 30 une 202 in the case of the newly appointed EO, and the provide timely disclosure of the reward pac age of any new Executive at the Remuneration ommittee s discretion. The company may also pay for reasonable costs in relation to the
pension benefits to be accrued over the year ending 30 une 202 . irector. termination, for example, tax, legal and outplacement support, where appropriate.
These are the only elements of the Executive irectors remuneration
pac ages that are not subject to performance conditions.

136 Diageo Annual Report 2023 Diageo Annual Report 2023 137
 O O O con tin ued

Non ec ti e irectors ne pired terms of m o ee engagement on e ec tive rem neration

The hairman of the oard led global wor force engagement sessions
appointment throughout the year and there were focus group sessions led by other
All Non-Executive irectors are on three-year terms which are expected Non-Executive irectors (more information can be found in the
to be extended up to a total of nine years. The date of initial corporate governance section on page 110). As part of this The following section provides details of how the company s 2020 remuneration policy was implemented during the year ended 30 une 2023, and
appointment to the oard and the point at which the current letter of engagement, there was a session where the hairman shared how the Remuneration ommittee intends to implement the proposed remuneration policy in the year ending 30 une 202 .
appointment expires for Non-Executive irectors are shown in the table information with employees about executive remuneration, including
below. the irectors remuneration policy, the role of the Remuneration ingle total fig re of rem neration for ec ti e irectors (a dited)
ommittee, executive remuneration principles and structure and how The table below details the Executive irectors remuneration for the year ended 30 une 2023.
ate o a ointment to t e rrent etter o
on ec tive irector oar a ointment e ire executive pay aligns with pay for the wider wor force. van ene e e ra re avan a an ra e ar

avier Ferr n 22 uly 2016 A 2025 iageo also runs annual employee engagement surveys, which gives 2022 2022 2022 2022 2022 2022
000 000 000 000 000 000
Susan ilsby April 2018 A 202 employees the opportunity to give feedbac and express their views on
a variety of topics, including remuneration. Any comments relating to Fixed pay
elissa ethell 30 une 2020 A 2023
Executive irectors remuneration are fed bac to the Remuneration Salary (3) 1,277 1,699 n/a n/a 733 975
Val rie hapoulaud-Floquet 1 anuary 2021 A 202
ommittee. enefits ( )
133 177 n/a n/a 29 571
Sir ohn an oni 1 October 2020 A 2023
These activities ensure that shareholder views and interests, as well as Pension(5) 209 278 n/a n/a 103 138
ady endelsohn 1 September 201 A 2023
the all-employee reward context at iageo, are considered when ota i e a 1,619 2,153 n/a n/a 1,265 1,68
Alan Stewart 1 September 201 A 2023
ma ing executive remuneration decisions.
Ireena Vittal 2 October 2020 A 2023
Performance
aren lac ett 1 une 2022 A 2025 onsideration of wider wor force rem neration related pay
hen reviewing Executive irectors salaries, the ommittee ta es into
Annual incentive(6) 2, 13 3,209 n/a n/a 1,320 1,755
a ments nder pre io s policies account the company s salary budgets for ey geographies and, each
ong-term
year, the ommittee has a session reviewing various aspects of

GOVERNANCE REPORT
The ommittee reserves the right to ma e any remuneration payments incentives(7) 3,312 , 05 n/a n/a 121 161
and payments for loss of office, notwithstanding that they are not in line wor force remuneration to deepen its understanding of employee pay
Other incentives (8) n/a n/a n/a n/a
with the policy set out above, where the terms of the payment were arrangements. There is clear alignment in the approach to pay for
executives and the wider wor force in the way that remuneration ota varia e
agreed (i) under a previous policy, in which case the provision of that a 5,72 7,613 n/a n/a 1, 0 1,916
policy shall continue to apply until such payments have been made (ii) principles are followed, as well as the mechanics of the salary review
before the policy or the relevant legislation came into effect or (iii) at a process and incentive plan design, which are broadly consistent
throughout the organisation. The performance measures under the ota ing e ig re
time when the relevant individual was not a director of the company o rem neration 7,3 3 9,767 n/a n/a 2,706 3,599
and, in the opinion of the ommittee, the payment was not in annual incentive plan and long-term incentive plan are the same for
consideration for the individual becoming a director of the company. executives and other eligible employees. The ey differences are that a ote
larger percentage of Executive irectors remuneration is performance (1) Exchange The amounts shown in S dollars are converted to sterling using the cumulative weighted average exchange rate for the respective financial year. For the year
pproac to sta e older engagement related than that of other employees and salary, benefits and incentive rate ended 30 une 2023, the exchange rate was 1
and avanya handrashe ar are paid in S dollars.
1.20 and for the year ended 30 une 2022, the exchange rate was 1 1.33. Ivan ene es, ebra rew

are o er engagement participation levels vary according to role, seniority and business
(2) EO Ivan ene es pay and benefits reflects time served in fiscal 2023 up to and including the date of his death-in-service, which was also his last day of
The ommittee is interested in the views of investors and maintains an priorities. transition employment (6 une 2023). ebra rew s pay and benefits reflect the period 5 to 30 une 2023 only, following her appointment as interim EO on 5 une
ongoing dialogue with a broad group of shareholders and institutional 2023 and EO and Executive irector on 8 une 2023.
hen reviewing the irectors remuneration policy, the ommittee
advisors on remuneration matters. In advance of finalising our (3) Salary Ivan ene es salary figure includes an amount of 2 in respect of unta en annual leave.
considered the remuneration arrangements for the wor force globally,
proposed policy to be approved at the 2023 A , the hair of the as well as mar et practice in the FTSE 30 (excluding financial services) ( ) enefits The benefits numbers include the gross value of all taxable benefits. For Ivan ene es, these include medical insurance ( 17 ), company car allowance ( 17 ),
Remuneration ommittee consulted with the company s largest contracted car service ( 19 ), tax return preparation ( 68 ), product allowance, life and long-term disability cover. ebra rew s benefits for the period 5 to 30
and iageo s global consumer peer group. The hairman also une include flexible benefits allowance ( 1.2 ), travel allowance ( 798), tax return preparation ( 1. ), product allowance and life and long-term disability
shareholders and their representatives about the policy and the explains the irectors remuneration policy to employees and see s cover. avanya handrashe ar s benefits include flexible benefits allowance ( 20 ), travel allowance ( 11 ), tax return preparation ( 1 . ), product allowance
implementation plan for fiscal 2 . The responses received from their feedbac as part of the wor force engagement sessions, as and life and long-term disability cover.
shareholders were supportive of the proposed change to enhance the described above. iven the minimal changes proposed for the 2023 (5) Pension Pension benefits earned during the year represents the increase in the pension fund balances over the year in the iageo North America Inc. pension plans Page
irectors remuneration policy, employees were not specifically over and above the increase due to inflation. Ivan ene es was a deferred member of the iageo Pension Scheme ( PS) since 31 anuary 2012 and the 1 3
post-cessation shareholding requirement, as well as the planned pension amount that accrued in excess of inflation over each of 2022 and 2023 under this scheme was nil. ebra rew started to accrue benefits in the
implementation for fiscal 2 . consulted on this. Supplemental Executive Retirement Plan (SERP) from 1 October 2022. avanya handrashe ar started accruing benefits in the SERP from 1 uly 2021. The
company pension contribution has been 1 % of salary from 1 anuary 2023 for all Executive irectors, aligned to the rate for the wor force.
(6) Annual The performance achieved under the fiscal 23 annual incentive plan resulted in an outcome of 32.5% of maximum for the financial elements of the plan, which Page
incentive represented 80% of the maximum incentive opportunity. Ta ing account of performance against Individual usiness Objectives (I Os), the annual incentive 1 0
payout is 37.25% of maximum for Ivan ene es, 35.38% of maximum for ebra rew and 36.0% of maximum for avanya handrashe ar. For ebra rew,
the 2023 amount reflects the period 5 to 30 une 2023 (as a proportion of the financial year).
In accordance with their elections to defer post-tax, one-third of the annual incentive for fiscal 23 shown in the table above for ebra rew (which relates to the
period 5 to 30 une 2023) and avanya handrashe ar will be deferred into owned shares which are held for three years in a nominee account. The annual
incentive for Ivan ene es will be paid entirely in cash, the ommittee having exercised discretion to waive the one-third deferral into shares (see page 150 for
more details.
(7) ong-term ong-term incentives represent the estimated gain (based on the average three-month A R price to 30 une 2023 of 178.52) delivered through share options Page
incentives and performance shares where performance conditions have been met in the respective financial year. It also includes the value of additional shares earned in 1 1
lieu of dividends on these vested performance shares. For Ivan ene es, the 2023 long-term incentives amount comprises performance shares and share
options awarded in 2020 and vesting at 98.7% and 77.5% of maximum respectively. For ebra rew, the 2023 amount reflects the period 5 to 30 une (as a
proportion of the three-year performance period). The 2020 performance shares and share options were granted before she became an Executive irector,
and due to a slightly different vesting schedule for awards granted below the oard, vested at 98.8% and 77.5% of maximum respectively. avanya
handrashe ar s 2020 performance share award was also granted before she became an Executive irector and vested at 98.8% of maximum.
Of the 2023 long-term incentive amounts shown in the table above, 2,95 for Ivan ene es, 67 for ebra rew and 72 for avanya handrashe ar
related to share price appreciation over the fiscal 21 to fiscal 23 performance period.
For 2022, long-term incentives comprise performance shares and share options awarded in 2019 that vested in September 2022 at 59.3% and 61.5% of
maximum respectively for Ivan ene es and performance shares that vested at 59.8% for avanya handrashe ar, including dividend equivalents on
performance shares. 2020 long-term incentive amounts have been restated to reflect the A R share price on the vesting date of 175.09 instead of the average
three-month A R share price used in last year s report of 190.22.
(8) Other Other incentives include the grant face value of awards made under the all-employee share plans. Awards do not have performance conditions attached.
incentives
(9) Totals Some figures and sub-totals add up to slightly different amounts than the totals due to rounding.

138 Diageo Annual Report 2023 Diageo Annual Report 2023 139
 O O O con tin ued

2023 a o t
roup I O ota Total ota Total
(weighted 80%) (weighted 20%) ma (% annual salary) ( 000) S

Ivan ene es( ),(5)

26.00% 11.25% 69. 0% 1,223
nn al incenti e plan ( ) pa o ts for 0 (a dited) ebra rew ( ),(5)
26.00% 9.38% 5. 0% 95
pa o t for t e ear ended 0 ne 0 avanya handrashe ar( ),(5)
26.00% 10.00% 72.00% 723
AIP payouts for all of the Executive irectors serving during the year are based 80% on performance against the group financial measures and
(1) Performance against the AIP measures is calculated using 2023 budgeted exchange rates and is measured on a currency-neutral basis.
20% on performance against Individual usiness Objectives (I Os), as assessed by the Remuneration ommittee and summarised in the table (2) For AIP purposes, Net Sales Value (NSV) growth and Operating Profit (OP) growth are calculated on budgeted currency exchange rates, after adjustments for acquisitions and disposals
below. and incorporates the organic treatment of hyperinflationary economies.
(3) For AIP purposes, Operating ash onversion (O ) is calculated by dividing cash generated from operations excluding cash inflows/outflows in respect of exceptional items,
ro p financial meas res(1) dividends, maturing inventories and post-employment payments in excess of the amount charged to operating profit by operating profit before depreciation, amortisation, impairment
and exceptional items. The measure incorporates the organic treatment of hyperinflationary economies. The ratio is stated at the budgeted exchange rate for the year.
a o t ( ) AIP payments are calculated using base salary as at 30 une 2023, in line with the global policy that applies to other employees across the company. For Ivan ene es, the payment
o tota reflects time employed in fiscal 23 up to and including 6 une 2023. For ebra rew, the payment disclosed reflects the period 5 to 30 une, covering the period from appointment as
easure eighting Threshold Target aximum ct a o ort nit
interim EO on 5 une 2023 to the end of the fiscal year and is based on her EO salary which applied from 5 une 2023.
Payout opportunity (% maximum) 25% 50% 100% (5) In accordance with the 2020 remuneration policy and their individual elections to defer post tax, one-third of ebra rew s and avanya handrashe ar s after tax AIP payout disclosed
in the table above will be deferred into iageo shares, which will be held for three years in a nominee account. These shares will be acquired in September 2023 and the number of
Net sales (% growth)(2) 26.67% 3.5% 6.5% 9.5%
shares will be disclosed in the 202 remuneration report. The ommittee waived the deferral requirement in respect of Ivan ene es.
Operating profit (% growth)(2) 26.67% 2.5% 7.5% 12.5% (6) ar et share reflects internal estimates incorporating Nielsen, Association of anadian istillers, A, ichter and Neira, Frontline, Intage, IRI, IS A , NA A, Scentia, State
onopolies, TRA , Ipsos and other third-party providers.
Operating cash conversion(3) 26.67% 95.0% 100.0% 105.0%
(7) No discretion was exercised by the Remuneration ommittee in determining the AIP outcome.
Full year performance for 1 uly 2022 - 30 une 2023
ong term incenti e plans ( s) esting in 0 (a dited)
ndi id al siness o ecti es
a o t
ong-term incentive awards are made under the iageo ong-Term Incentive Plan ( TIP), which was approved by shareholders at the A in
o tota September 201 , which will be presented for shareholder renewal at the A in September 2023. Awards are designed to incentivise Executive

GOVERNANCE REPORT
ea re O e a eig te an target eig ting e t o ort nit
irectors and senior managers to deliver long-term sustainable performance and are subject to performance conditions measured over a three-year
van ene e hief Executive period. Awards are granted on an annual basis in both performance shares and share options. Awards granted to Executive irectors vest at 20%
o a mar et are er ormance 10.00 % e gained or held total trade mar et share in mar ets that total 70% of our 5.00% 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
row or hold total trade mar et share in 2/3rds net sales in fiscal 23(6) between threshold and maximum.
of total net sales in measured mar ets.
are options granted in eptem er 0 0 esting in eptem er 0 (a dited)
o itive rin ing 10.00 % Positive drin ing targets for fiscal 23 have been exceeded as set out below 6.25% In September 2020, Ivan ene es and ebra rew (although not an Executive irector at the time of grant) received share option awards over
ontinued improvement in Positive rin ing in y the end of fiscal 23, we had educated just under 2 million people on the
A Rs under the TIP, with an exercise price of 133.88. The award was subject to a performance condition assessed over a three-year period
fiscal 23 dangers of underage drin ing, far exceeding the target.
Educate 809,000 people on the dangers of The 2030 target of reaching 1 billion people with dedicated responsible based on the achievement of the following equally weighted performance measures
underage drin ing. drin ing messaging has been met several years earlier than planned.
Significant achievement with iageo mar ets across the world reaching 31,600
Relative total shareholder return (TSR) ran ed against the TSR of a peer group of international drin s and consumer goods companies and
Progress towards a cumulative total of 1 billion
people with dedicated responsible drin ing people with business and hospitality s ills training. umulative free cash flow (F F)
messaging by 2030.
The vesting profile for grants to Executive irectors for relative TSR is shown below
Help create a thriving hospitality sector post
ovid-19 where responsible drin ing is the norm TSR ran ing (out of 17) Vesting (% max) TSR ran ing (out of 17) Vesting (% max) TSR peer group (16 companies)
by reaching 19, 00 people by the end of fiscal
23 through s ills building programmes. 1st, 2nd or 3rd 100 7th 55 A Inbev Heine en Pernod Ricard
th 95 8th 5 rown-Forman imberly- lar Procter amble
avan a an ra e ar hief Financial Officer 5th 75 9th 20 arlsberg Or al Rec itt enc iser
o a o erating margin 10.00 % Achieved a performance level just below AOP for fiscal 23. 3.75% 6th 65 10th or below 0 The oca- ola ompany ondel International nilever
eliver Operating argin in line with fiscal 23
Annual Operating Plan (AOP). olgate-Palmolive Nestl
inance ran ormation 10.00 % There has been over delivery on the finance transformation milestones for fiscal 23 6.25% roupe anone Pepsi o
Reduce time ta en to set up customers in as follows
specified mar ets, thereby increasing speed to elivered a new integrated customer account solution into six mar ets ma ing erformance s ares awarded in eptem er 0 0 esting in eptem er 0 (a dited)
mar et and supporting growth. customer set up time faster than the target of 10 business days.
Reduce finance organisation costs (people and elivered finance productivity savings of greater than 18m.
In September 2020, Ivan ene es, ebra rew and avanya handrashe ar ( s rew and s handrashe ar were not Executive irectors at the
indirect) by 10 million. losure of 100% of all audit management actions, where these were required. time of grant) received performance share awards under the TIP. Awards vest after a three-year period subject to the achievement of three
lose 80% of audit management action plans S A improvement target exceeded for high priority incidents and just under performance conditions outlined below
on time. target for critical incidents.
Improve Service evel Agreement(S A) Organic Net Sales Value (NSV) growth (weighted 0%)
performance by resolving 80% of both critical Profit efore Exceptional items and Tax (P ET) growth (weighted 0%) and
and high priority incidents within the specified ES measures (water efficiency, carbon reduction, positive drin ing diversity inclusion) weighted 20%.
S A timeframe.
Notional dividends accrue on awards and are paid out either in cash or shares on the number of shares which vest.

ote
The AIP payout for ebra rew is based 80% on performance against the group financial measures as noted in the table at the top of this page
and 20% on performance against I Os. ebra rew s I Os for fiscal 23 related to her role as hief Operating Officer ( OO), prior to appointment
as EO late in the financial year following the death in service of Ivan ene es. The first of two equally weighted I Os for the OO role (growing or
holding total trade mar et share in 2/3rds of total net shares in measured mar ets) was aligned to Ivan ene es s goal and was achieved. s
rew s second I O for the OO role was to grow value mar et share in North America Total everage Alcohol, whilst driving operating margin in
line with Annual Operating Plan (AOP) targets and there was satisfactory delivery under this I O. The resulting overall I O outcome was 9.38% out
of a total of 20%.

140 Diageo Annual Report 2023 Diageo Annual Report 2023 141
 O O O con tin ued

esting o tcome for 0 0 performance s are and s are option awards in eptem er 0 (a dited) ensions and enefits in t e ear ended 0 ne 0
The 2020 performance share award vested at 98.7% of maximum for Ivan ene es and 98.8% of maximum for ebra rew and avanya
handrashe ar. The 2020 share options vested at 77.5% of maximum for Ivan ene es and ebra rew, as detailed below enefits provisions for the Executive irectors are in accordance with the information set out in the irectors remuneration policy.

avanya ension arrangements (a dited)

Ivan ene es handrashe ar Ivan ene es was a member of the iageo North America Inc. Supplemental Executive Retirement Plan (SERP), with an accrual rate of 20% of
vesting ebra rew vesting vesting
Vesting of 2020 TIP(5) eighting Threshold idpoint aximum Actual (% maximum)(5) (% maximum)(5)(6) (% maximum)(5)(6) base salary until 1 anuary 2023 when it was reduced to 1 % of base salary, until his date of death of 6 une 2023. ebra rew and avanya
Vesting if performance achieved (% maximum) 20%/25% 60%/62.5% 100% handrashe ar are members of the SERP with an accrual rate of 1 % of base salary respectively during the year ended 30 une 2023. The SERP is
Organic net sales growth (NSV) (1)
0.0% .0% 6.0% 8.0% 1 .5% 0.0% 0.0% 0.0% an unfunded, non-qualified supplemental retirement programme. nder the plan, accrued company contributions are subject to quarterly interest
Profit before exceptional items and tax (P ET) growth(2) 0.0% .5% 8.25% 12.0% 16.5% 0.0% 0.0% 0.0% credits. nder the rules of the SERP, ebra rew and avanya handrashe ar can withdraw the balance of the plan six months after leaving service
or age 55, if later and the balance may be withdrawn in either a lump sum or five equal annual instalments, depending on the si e of the balance.
arbon reduction (ES ) 5.0% 6.3% 10.3% 1 .3% 1 .7% 5.0% 5.0% 5.0%
ater efficiency (ES ) 5.0% 5.8% 8.5% 11.2% 9. % 3.7% 3.8% 3.8% Ivan ene es, ebra rew and avanya handrashe ar participated in the S ash alance Plan and the enefit Supplemental Plan ( SP), until
Positive drin ing (ES ) 5.0% 0.75m 1.0m 1.25m 2.2m 5.0% 5.0% 5.0%
August 2012, 30 September 2022 and une 2021 respectively, and have accrued benefits under both plans. The ash alance Plan is a qualified
funded pension arrangement. Employer contributions were 10% of pay capped at the Internal Revenue Service (IRS) limit. The SP is a non-qualified
Inclusion diversity - % female leaders globally (ES ) 2.5% 1.0% 2.0% 3.0% .0% 2.5% 2.5% 2.5%
unfunded arrangement notional employer contributions were 10% of pay above the IRS limit. Interest (notional for the SP) is credited quarterly on
Inclusion diversity - % ethnically diverse leaders both plans.
globally (ES ) 2.5% 38.0% 39.0% 0.0% 3.0% 2.5% 2.5% 2.5%
e ting o er ormance are ma im m Ivan ene es was also a member of the iageo Pension Scheme ( PS) in the nited ingdom between 1 February 1997 and 30 November 1999.
umulative free cash flow (F F)(3) 50.0% 6,200m 7,200m 8,200m 8, 0 m 50.0% 50.0% n/a
The accrual of pensionable service ceased in 1999 but the lin age to salary remained until anuary 2012.
Relative total shareholder return( )
50.0% 9th 3rd 7th 27.5% 27.5% n/a pon death in service on 6 une 2023, a life insurance benefit of 3 million became payable by the insurance provider for Ivan ene es. In the
e ting o are o tion ma im m n a event of death in service, a lump sum of six times base salary is payable to ebra rew and avanya handrashe ar.
The table below shows the pension benefits accrued by each Executive irector as at year end (or to 6 une 2023 in the case of Ivan ene es). The
(1) Net Sales Value (NSV) growth is calculated on budgeted currency exchange rates, after adjustments for acquisitions and disposals and incorporates the organic treatment of
hyperinflationary economies. accrued nited ingdom benefits for Ivan ene es are annual pension amounts, whereas the accrued S benefits for Ivan ene es, ebra rew

GOVERNANCE REPORT
(2) Profit before exceptionals and tax growth is presented on a constant currency basis and it excludes the impact of acquisitions and disposals. The impact of hyperinflation on operating and avanya handrashe ar are one-off cash balance amounts.
profit is considered under the same organic methodology as for net sales while the impact on other lines (primarily on finance charges) is excluded. This metric also includes adjustment
to exclude the fair value remeasurement of contingent considerations, earn out arrangements and biological assets and to exclude post-employment credits. Furthermore, the metric ne 30 une 2022
excluded the interest on current year s share repurchase program (SRP) and excludes the year-over-year change of A related interest. en ion ene it pension S benefit
(3) umulative F F is based on the outcome for each of the three years within the performance period, measured before exceptional items and on an F neutral basis by adjusting actual Executive irector a 000 p.a. 000
outcomes bac to the base year exchange rates, and incorporates the organic treatment of hyperinflationary economies. Furthermore, the cash flow impact of any material business
development activities such as share repurchase programmes, acquisitions and disposals, which were not nown and planned at the beginning of the vesting period, are excluded from Ivan ene es(1) 75 9,251
the 3-year performance. ebra rew (2)
i Nil 761
( ) Relative total shareholder return (TSR) is measured as the percentage growth in iageo s share price (assuming all dividends and capital distributions are re-invested) compared to the
TSR of a peer group of 16 international drin s and consumer goods companies. TSR calculations are based on an averaging period of 6 months and converted to a common currency avanya handrashe ar(3) i Nil 302
( S dollars). alculation is performed and provided by FIT
(5) No discretion was exercised by the Remuneration ommittee in determining the long-term incentive outcomes. (1) Ivan ene es S benefits are higher at 6 une 2023 than at 30 une 2022 by 312 . The brea down of this relates to 52 of which is due to pension benefits earned over the year
(6) At the time of grant of the 2020 awards, ebra rew and avanya handrashe ar were not Executive irectors. The vesting schedule for awards granted to executives below the oard (none of which is over and above the increase due to inflation as reported in the single figure of remuneration, see page 139), 103 of which is due to interest earned on his deferred
has a threshold vesting of 25% of maximum (62.5% at midpoint). Vesting at threshold for awards granted to Executive irectors is 20% of maximum (60.0% at midpoint). No options S benefits until his death in service and a reduction of ( 2 3 ) which is due to exchange rate movements over the year.
were granted to avanya handrashe ar in 2020 as she was not on the Executive ommittee at the time of grant. (2) ebra rew s S benefits are the same at 30 une 2023 than at the date of her appointment to interim EO and Executive irector and EO. The brea down of this relates to 10 of
which is due to pension benefits earned over the year (all of which is over and above the increase due to inflation as reported in the single figure of remuneration, see page 139), 1 of
mmar of performance s are awards and options esting (a dited) which is due to interest earned on her deferred S benefits over the year and a reduction of ( 11 ) of which is due to exchange rate movements over the year.
(3) avanya handrashe ar s S benefits are higher at 30 une 2023 than at 30 une 2022 by 111 . The brea down of this relates to 122 of which is due to pension benefits earned over
ividend Estimated Estimated the year ( 110 of which is over and above the increase due to inflation as reported in the single figure of remuneration, see page 139), 7 of which is due to interest earned on her
Awarded Vesting Vesting equivalent value value deferred S benefits over the year and a reduction of ( 18 ) of which is due to exchange rate movements over the year.
Award Award ate (A Rs) (% ax) (A Rs) Option price A R price share ( 000)(1) ( 000)
Ivan ene es Performance shares 03/09/2020 3,377 98.7% 2,813 178.52 2,796 8,1 2 6,785 The Normal Retirement Age applicable to each irector s benefits depends on the pension scheme, as outlined below.
Share options 03/09/2020 3,377 77.5% 33,617 133.88 178.52 1,501 1,251 benefits S benefits S benefits S benefits
ebra rew Performance shares 03/09/2020 1,176(2) 98.8% 1,161 178.52 75 221 18 Executive irector ( PS) ( ash alance Plan) ( SP) (SERP)

Share options 03/09/2020 71 (2)

77.5% 553 133.88 178.52 25 21 Ivan ene es 60 65 6 months after leaving service 6 months after leaving service

avanya Performance shares 03/09/2020 1,827 98.8% 1,805 178.52 117 3 3 286 ebra rew n/a 65 6 months after leaving service, or age 55 if later 6 months after leaving service, or age 55 if later
handrashe ar avanya handrashe ar n/a 65 6 months after leaving service, or age 55 if later 6 months after leaving service, or age 55 if later

(1) The total long-term incentives value shown in the single figure of remuneration on page 139 is split between performance shares and share options in the table above and is based on an
average A R price for the last three months of the fiscal year ( 178.52).
(2) The value of performance share awards and options awarded and vesting included in the table above for ebra rew are pro-rata amounts reflecting the period from 5 to 30 une as a
proportion of the three-year performance period, as shown in the single figure of remuneration on page 139. The 1,176 pro-rata performance shares awarded comprises 71 performance
shares granted under the TIP (total award of 30,076 A Rs) and 62 performance shares granted under the ESAP (total award of 19, 9 A Rs), which was granted in recognition of
equity which was forfeited on joining iageo. The pro-rata share options number reflects 71 share options granted under the TIP (total award of 30,076 A Rs)

In considering the vesting outcome of the 2020 TIP awards, the Remuneration ommittee was especially cognisant of investor concerns around
the potential ris of windfall gains following volatility in global stoc mar ets at the time of grant as a result of the ovid-19 pandemic. The
ommittee considered a number of factors including share price movement over the performance period (up 26%), iageo s underlying financial
performance, historical award and vesting levels and absolute award value. The ommittee noted that the 2020 TIP awards were made in
September 2020 and, in line with usual iageo practice, the number of awards granted was determined using a six-month average share price up
to 30 une. This helps to smooth out share price volatility and, at 1 3.63 for the 2020 grants, the price used to calculate the awards was only
around 10% lower than the prior year s price. The ommittee considered iageo s overall business performance and value created for shareholders
and other relevant factors over the period and determined that the outcomes were fair and appropriate and made no adjustment to the payouts. It
also considered the level of difficulty of the targets set at a time of uncertainty and determined that the vesting outcome was consistent with iageo s
long-term performance and returns to shareholders. iageo s compound annual growth in net sales and profit over this period have also been at
the top end of the global peer group.

142 Diageo Annual Report 2023 Diageo Annual Report 2023 143
 O O O con tin ued

ong term incenti e awards made d ring t e ear ended 0 ne 0 (a dited) O tstanding s are plan interests (a dited)
On 3 September 2022, Ivan ene es, ebra rew and avanya handrashe ar received awards of performance shares and mar et-priced share Number of ividend Number of
Award shares/ equivalent shares/
options under the TIP based on a percentage of base salary as outlined below. s rew was not an Executive irector at the time of grant. The ate of Performance ear of calculation options at 30 Vested/ Shares options at 30 Share
three-year period over which performance will be measured is 1 uly 2022 to 30 une 2025. Plan name award period vesting share price Exercise price une 2022 (1) ranted exercised released apsed une 2023 type
van ene e
The performance measures and targets for awards made in September 2022 are outlined below. Net sales and profit before exceptional items and
tax are ey levers for driving top and bottom line growth. The free cash flow measure was selected because it represents a robust measure of cash TIP share options(3) Sep 2017 2017-2020 2020 13 .06 1 ,098 1 ,098 A R
performance consistent with typical external practice and is a ey strategic priority. Total shareholder return, the only relative performance measure TIP share options(3) Sep 2018 2018-2021 2021 1 0.89 ,28 ,28 A R
under the plan, provides good alignment with shareholder interests and increases the leverage based on share price growth. Finally, the TIP share options(3) Sep 2019 2019-2022 2022 170.28 38,827 1 ,9 9 23,878 A R
environmental, social and governance (ES ) measure (20% of total performance share award), which was introduced in 2020, reinforces the ota ve te t ne erci e are o tion in Or inar are O
stretching and strategically important goals under the Society 2030 Spirit of Progress ambition, iageo s 10-year action plan to help create an TIP - share options( ) (5) (9)
Sep 2020 2020-2023 2023 133.88 3,377 3,377 A R
inclusive and sustainable world. The definition of the ES measures was set out on page 130 of the annual remuneration report for fiscal 22.
TIP share options(6) (9) (11) Sep 2021 2021-202 202 19 .75 36,675 12,2 8 2 , 27 A R
Performance shares Share options (7) (9) (11)
TIP - share options Sep 2022 2022-2025 2025 176.95 33,8 5 22,57 11,271 A R
hanged
Organic profit attitudes on ota nve te are o tion ect to er ormance in Or inar are O
before Reduction in dangers of
Organic net exceptional items greenhouse gas underage % Female % Ethnically
TIP - performance shares Sep 2019 2019-2022 2022 160. 6 38,827 23,02 1, 76 15,803 0 A R
(1)
2022 TIP sales growth and tax growth emission ater efficiency drin ing leaders diverse leaders umulative free cash flow Relative TSR
TIP - performance shares( ) (5) (9)
Sep 2020 2020-2023 2023 1 3.63 3,377 3,377 A R
eighting 0% 0% 5% 5% 5% 2.5% 2.5% 50% 50% TIP - performance shares(6) (9) Sep 2021 2021-202 202 17 .97 36,675 12,2 8 2 , 27 A R
Target range .5% - 8.5% 5% - 12% 10.7% - 17.6% 6.3% - 12.1% 2.6m - .0m 5% - 7% 2% - % 10,175m - 12,569m edian - upper quintile TIP - performance shares(7) (9) Sep 2022 2022-2025 2025 195.29 33,8 5 22,57 11,271 A R
(1) The cumulative free cash flow (F F) targets have been restated in S following the change in reporting currency from fiscal 2 onwards (original P target range was 7,650m - ota nve te are ect to er ormance in Or inar are O
9, 50m). ore details can be found on page 36. e ra re

GOVERNANCE REPORT
TIP - share options( ) (5) Sep 2020 2020-2023 2023 133.88 30,076 30,076 A R
20% (25% for s rew as the awards were made before she became an Executive irector) of TIP awards will vest at threshold, with vesting in a
straight line up to 100% if the maximum level of performance is achieved. As explained in the remuneration policy, one performance share is TIP share options(6) (11) Sep 2021 2021-202 202 19 .75 27,019 27,019 A R
deemed equal in value at grant to three share options. TIP - share options(7) (11) Sep 2022 2022-2025 2025 176.95 26,629 26,629 A R
ota nve te are o tion ect to er ormance in Or inar are O
Awards made Exercise Face value Face value
Executive irector ate of grant Plan Share type during the year price 000 (% of salary) TIP - performance shares( ) (5) Sep 2020 2020-2023 2023 1 3.63 30,076 30,076 A R
Ivan ene es 02/09/2022 TIP - share options A R 33,8 5 176.95 6,610 375% TIP - performance shares(6) Sep 2021 2021-202 202 17 .97 27,019 27,019 A R
Ivan ene es 02/09/2022 TIP - performance shares A R 33,8 5 6,610 375% TIP - performance shares(7) Sep 2022 2022-2025 2025 195.29 26,629 26,629 A R
ebra rew 02/09/2022 TIP - share options A R 26,629 176.95 5,200 360% ESAP - performance shares( )(5)(8) Sep 2020 2020-2023 2023 1 3.63 19, 9 19, 9 A R

ebra rew 02/09/2022 TIP - performance shares A R 26,629 5,200 360% ESAP - performance shares(8) ar 2022 2023-2025 2026 197.06 8,796 8,796 A R

avanya handrashe ar 02/09/2022 TIP - share options A R 18,512 176.95 3,615 360% ESAP - performance shares(8) ar 2022 202 -2026 2027 197.06 8,930 8,930 A R

avanya handrashe ar 02/09/2022 TIP - performance shares A R 18,512 3,615 360% ESAP - performance shares(8) ar 2022 2025-2027 2028 197.06 8,930 8,930 A R
ota nve te are ect to er ormance in Or inar are O
The proportion of the awards outlined above that will vest is dependent on the achievement of performance conditions and continued employment, ESAP restricted stoc units (8) ar 2022 2027 197.06 8,796 8,796 A R
and the actual value received may be nil. The vesting outcomes will be disclosed in the 2025 annual remuneration report. ESAP restricted stoc units (8) ar 2022 2028 197.06 8,930 8,930 A R
(8)
In accordance with the plan rules, the number of performance shares and share options granted under the TIP was calculated by using the ESAP restricted stoc units ar 2022 2029 197.06 8,930 8,930 A R
average closing A R price for the last six months of the preceding financial year ( 195.29). This price is used to determine the face value in the table ota nve te are not ect to er ormance in Or inar are O
above. In accordance with the plan rules, the exercise price was calculated using the average closing A R price of the three days preceding the avan a an ra e ar
grant date ( 176.95).
TIP share options(3) Sep 2018 2018-2021 2021 1 0.89 3,832 3,832 A R
TIP share options(3) Sep 2018 2018-2021 2021 1 0.89 1,06 1,06 A R
ota ve te t ne erci e are o tion in Or inar are O
TIP share options(6) (11) Sep 2021 2021-202 202 19 .75 20,060 20,060 A R
TIP share options(7) (11) Sep 2022 2022-2025 2025 176.95 18,512 18,512 A R
ota nve te are o tion ect to er ormance in Or inar are O
TIP performance shares Sep 2019 2019-2022 2022 160. 6 1, 863 55 581 A R
TIP performance shares( ) (5)
Sep 2020 2020-2023 2023 1 3.63 1,827 1,827 A R
TIP performance shares(6) Sep 2021 2021-202 202 17 .97 20,060 20,060 A R
TIP performance shares(7) Sep 2022 2022-2025 2025 195.29 18,512 18,512 A R
ota nve te are ect to er ormance in Or inar are O
TIP restricted stoc units (10) Sep 2019 2019-2022 2022 160. 6 1,567 1,567 1,567 A R
TIP restricted stoc units (10) Sep 2020 2020-2023 2023 1 3.63 2,635 2,635 A R
ota nve te are not ect to er ormance in Or inar are O

144 Diageo Annual Report 2023 Diageo Annual Report 2023 145
 O O O con tin ued

(1) 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. irectors s are olding re irement and s are interests (a dited)
(2) A Rs have been converted to OR s (one A R is equivalent to four ordinary shares) for the purpose of calculating the total number of vested and unvested shares and options.
(3) The total number of share options granted under the TIP in September 2017, 2018 and 2019 showing as outstanding as at 30 une 2023 are vested but unexercised share options. The beneficial interests of the irectors who held office during the year ended 30 une 2023 (and their connected persons) in the ordinary shares (or
( ) Performance shares and share options granted under the TIP in September 2020 and due to vest in September 2023 are included here as unvested share awards subject to ordinary share equivalents) of the company are shown in the table below.
performance conditions, although the awards have also been included in the single figure of remuneration table on page 139, since the performance period ended during the year
ended 30 une 2023. Or inar are or e iva ent
(5) etails of the performance conditions attached to TIP and ESAP awards of performance shares and share options granted in 2020 are organic net sales growth ( %-8%), organic ne 30 une 2022
growth in profit before exceptional items and tax ( .5%-12%), reduction in greenhouse gas emissions (6.3% - 1 .3%), improvement in water efficiency (5.8%-11.2%), changing attitudes or ate o (or date of Shareholding Shareholding at
on dangers of underage drin ing (0.75m-1.25m), % of female leaders ( 1%- 3%), % of ethnically diverse leaders (38%- 0%), cumulative free cash flow ( 6,200m- 8,200m) and ce ation i appointment if requirement 25 uly 2023
ear ier later) (% salary)(3) (% salary)(3) Shareholding requirement met
relative total shareholder return (median-upper quintile).
(6) etails of the performance conditions attached to TIP awards of performance shares and share options granted in 2021 are organic net sales growth (5%-9%), organic growth in profit airman
before exceptional items and tax (6.5%-13.5%), reduction in greenhouse gas emissions (19.1%-27.1%), improvement in water efficiency (6.3%-12.1%), changing attitudes on dangers of
underage drin ing (2.3m-3.7m), % of female leaders ( %- 6%), % of ethnically diverse leaders (39%- 1%), cumulative free cash flow ( 10,058m- 12, 88m) and relative total
avier Ferr n(7) 307,288
shareholder return (median-upper quintile). ec tive irector
(7) etails of the performance conditions attached to TIP awards of performance shares and share options granted in 2022 are organic net sales growth ( .5%-8.5%), organic growth in
profit before exceptional items and tax (5.0%-12.0%), reduction in greenhouse gas emissions (10.7%-17.6%), improvement in water efficiency (6.3%-12.1%), changing attitudes on
Ivan ene es( ),(7)
1,078,566 500% 2,728% es
dangers of underage drin ing (2.6m- .0m), % of female leaders ( 5%- 7%), % ethnically diverse leaders ( 2%- %), cumulative free cash flow ( 10,175m- 12,569m) and relative total ebra rew(7),(8) n/a 500% 1% No - to be met by une 2028
shareholder return (median-upper quintile).
(8) The performance shares awarded to ebra rew in 2020 under the iageo Exceptional Stoc Award Plan ( ESAP) were granted in recognition of equity which was forfeited on joining
avanya handrashe ar (5),(6),(7) 6,228 00% 7% No - to be met by uly 2026
iageo in 2020 and have the same performance measures and targets as the 2020 TIP performance shares (see footnote 5). ebra rew was granted a number of performance on ec tive irector
shares and restricted stoc units under the ESAP in arch 2022 for incentive and retention purposes. The ESAP performance shares will vest based on a performance hurdle of winning
or holding mar et share in at least 2/3rs of total NSV in measured mar ets over the respective three-year performance periods (F23-F25 for awards due to vest in September 2026, F2 - Susan ilsby(7) 2,600
F26 for awards due to vest in September 2027 and F25-F27 for awards due to vest in September 2028). The ESAP restricted stoc units vest subject to continued employment up to the elissa ethell 2,668
vesting date.
(9) In accordance with the policy and plan rules treatment on death-in-service, the 2020, 2021 and 2022 awards for Ivan ene es vested early on 2 August 2023 based on an assessment of Val rie hapoulaud-Floquet 2,055
performance as at 30 une 2023. Further information can be found on page 150. Sir ohn an oni 2,870
(10) avanya handrashe ar was granted a number of restricted stoc units prior to her appointment as FO and joining the oard.
(11) The Free ash Flow (F F) performance targets for both the 2021 and 2022 TIP awards have been restated in S following the change in functional currency. ore details can be ady Nicola endelsohn 5,000
found on page 36. Alan Stewart 7,120

GOVERNANCE REPORT
Ireena Vittal
aren lac ett

ote
(1) Each person listed beneficially owns less than 1% of iageo s ordinary shares. Ordinary shares held by irectors have the same voting rights as all other ordinary shares.
(2) Any change in shareholding between the end of the financial year on 30 une 2023 and the last practicable date before publication of this report, being 26 uly 2023, is outlined in the
table above.
(3) oth the shareholding requirement and shareholding at 26 uly 2023 are expressed as a percentage of base salary on 30 une 2023 and calculated using a three-month average share
price for period ending 30 une 2023 of 35.11.
( ) In addition to the number of shares reported in the table above, Ivan ene es estate holds 169,0 0 vested but unexercised share options.
(5) avanya handrashe ar s 2022 eferred onus Plan Shares (1,698 A Rs) are included in the total share interests shown above.
(6) In addition to the number of shares reported in the table above, avanya handrashe ar holds 19,58 vested but unexercised share options.
(7) avier Ferr n, Ivan ene es, ebra rew, avanya handrashe ar and Susan ilsby have share interests in A Rs (one A R is equivalent to four ordinary shares). The share interests in
the table are stated as ordinary share equivalents.
(8) ebra rew joined iageo in 2020 and her first tranche of iageo share awards will vest in September 202

Relati e importance of spend on pa

The graphs below illustrate the relative importance of spend on pay (total remuneration of all group employees) compared with distributions to
shareholders (total dividends plus the share buybac programme but excluding transaction costs), and the percentage change from the year ended
30 une 2022 to the year ended 30 une 2023. There are no other significant distributions or payments of profit or cash flow.

i tri tion to are o er ta a

(21 5) 19
2023 3,129 2023 1,830

2022 3,986 2022 1,795

146 Diageo Annual Report 2023 Diageo Annual Report 2023 147
 O O O con tin ued

O total rem neration and R performance

The graph below shows the total shareholder return for iageo plc and the FTSE 100 Index since 30 une 2013 and demonstrates the relationship
orting o r em o ee
between pay and performance for the hief Executive, using current and previously published single total remuneration figures. The FTSE 100 Index
e continue to focus on all aspects of the wellbeing of our employees. Early in fiscal 2023, we made a one-time recognition payment of 1,000
has been chosen because it is a widely recognised performance benchmar for large companies in the nited ingdom.
gross (capped at 15% of local equivalent annual salary) to than employees for their ongoing efforts and support them with the rising cost of living
Total shareholder return – Chief Executive total remuneration in many locations. Since then, the Executive ommittee has continued to monitor the cost-of-living in all our geographies using a formal monitoring
value of hypothetical £100 holding (includes legacy LTIP awards) (£'000) process and has implemented actions as required, for example off-cycle salary increases in 16 high-inflation geographies. e have also provided
Diageo
400 40,000 financial education to all employees to support them in managing their personal finances more effectively.
FTSE 100
Chief Executive 360 36,000 Other reward based initiatives include the roll out of a new recognition platform into North America and the , with more regions planned for fiscal
total remuneration
2 . e have deployed global support for menopause, including a global app for employees.
320 32,000
e continue to innovate with mar et leading benefit policies that support and demonstrate our commitment to diversity and inclusion, including
280 28,000
increasing the provision of fertility support and personal counselling. e have continued to evolve our flexible wor ing policy, creating guidelines to
240 24,000 empower employees and leaders to decide how, when and where they create their best wor , ma ing sure our people consider what wor s best for
the individual s and team s success.
200 20,000
The renewed focus on our employee assistance programmes continued with the deployment of a global mental health online tool in November
160 16,000
2022. This enables employees to proactively manage their mental health and covers ey topics li e sleep, diet, relationships and managing stress.
120 12,000 To date the tool has been downloaded by over .7 employees, which is 19% of the global population.
80 8,000 O pa ratio
40 4,000
In accordance with The ompanies ( iscellaneous Reporting) Regulations 2018, the table below sets out iageo s EO pay ratios for the year
ended 30 une 2023. These EO pay ratios provide a comparison of the hief Executive s total remuneration, comprising the sum of both Ivan

GOVERNANCE REPORT
0 0 ene es and ebra rew s total single figure of remuneration, converted into sterling, with the equivalent remuneration for the employees paid at
June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 June 2022 June 2023 the 25th (P25), 50th (P50) and 75th (P75) percentile of iageo s wor force in the nited ingdom. Also shown are the salary and total remuneration
for each quartile employee.
Ivan Ivan Ivan Ivan Ivan Ivan Ivan Ivan Ivan van e ra
ene es(1) ene es(1) ene es(1) ene es(1) ene es1 ene es(1) ene es(1) ene es(1) ene es(1) ene e re ear et o t ercenti e a ratio e ian a ratio t ercenti e a ratio
000 000 000 000 000 000 000 000 000
F1 F15 F16 F17 F18 F19 F20 F21 F22 O tion
hief Executive total remuneration Total pay and benefits 7,295 61,733 80,159
(includes legacy TIP awards) 7,312 3,888 ,156 3,399 8,995 11,776 2,273 6,019 7,3 3
Salary 33,137 ,398 5 ,679
Annual incentive(2) 9.0% .0% 65.0% 68.0% 70.0% 61.0% 0.0% 93.8% 93.8%
2022 (1) Option A(2) 1 61 11 1 90 1
Share options(2) 71.0% 0.0% 0.0% 0.0% 60.0% 73.1% 27.5% 10.0% 61.5%
2021 Option A(2) 127 1 100 1 79 1
Performance shares(2) 55.0% 33.0% 31.0% 0.0% 70.0% 89.3% 10.0% 29.3% 59.3%
2020 Option A(2) 50 1 38 1 31 1
(1) To enable comparison, Ivan ene es and ebra rew s single total figure of remuneration has been converted into sterling using the average weighted exchange rate for the relevant 2019 Option A(2) 265 1 208 1 166 1
financial year. The figure represented in the graph for fiscal 23 is the combined single figure total for Ivan ene es and ebra rew.
(2) % of total maximum opportunity. (1) 2022 EO pay ratios have been updated to reflect the value of the updated 2022 single figure which incorporates long-term incentives based on the actual share price at vesting, rather
than the average share price in the last three months of the financial year which had been used for the 2022 disclosure.
(2) Only people employed in the nited ingdom and with the same number of contractual wor ing hours throughout the full 12-month period have been included in the calculation.
Rem neration for t e wider wor force and O pa ratio Inclusion of employees outside of this group would require a complex simulation of full-time annual remuneration based on a number of assumptions and would not have a meaningful
impact on the ratio.
ignment o ec tive a it t e i er or orce
There is clear alignment in the approach to pay for executives and the wider wor force in the way that remuneration principles are followed, as well et odolog
as the mechanics of the salary review process and incentive plan design, which are broadly consistent throughout the organisation. There is a strong onsistent with the approach for iageo s disclosure in previous years, the methodology used to identify the employees at each quartile for 2023 is
focus on performance-related pay, and the performance measures under the annual incentive plan and long-term incentive plan are the same for Option A, as defined in the regulations. e believe this is the most robust and accurate approach, and is in line with shareholder expectations.
executives and other eligible employees. The reward pac age for Executive irectors is consistent with that of the senior management population, Total full-time equivalent remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant year and has,
however, a much higher proportion of total remuneration for the Executive irectors is lin ed to business performance, compared to the rest of the other than where noted below, been calculated in line with the methodology for the single figure of remuneration for the hief Executive (shown on
employee population. The hairman also explains the irectors remuneration policy to employees and see s their feedbac as part of the page 139 of this report). The total remuneration calculations were based on data as at 30 une 2023. Actual remuneration was converted into the
wor force engagement sessions. full-time equivalent for the role and location by pro-rating earnings to reflect full-time contractual wor ing hours and these figures were then ran ed
The structure of our reward pac ages is based on the principle that it should enable iageo to attract and retain the best talent globally within our to identify the employees sitting at the percentiles. To ensure that the total remuneration for the selected median, 25th and 75th percentile employee
broader industry. It is driven by local mar et practice, as well as the level of seniority and accountability, reflecting the global nature of our business. is sufficiently representative of those positions, we calculated the total remuneration for a number of employees above and below each of the
iageo is committed to fostering an inclusive and diverse wor place, and creating a culture where every individual can thrive. Reflective of this, pay selected median, 25th and 75th percentile employees and used the median value. In light of financial performance outcomes being signed off
parity and consistency of treatment for all employees are critical to the reward practices across the organisation. The reward framewor is regularly close to the publication of the Annual Report, the iageo roup business multiple, which is applicable to the majority of employees, has been
reviewed to ensure employees are rewarded fairly and appropriately, in line with the business strategy, performance outcomes, competitive paid used to calculate all payments under the annual incentive, although some employees may receive a variation on this multiple in practice. Pension
mar et practice and our diversity agenda. values for each employee are not calculated on an actuarial basis as for the hief Executive, but rather as the notional cost of the company s
pension contribution during the financial year, according to the relevant section of the pension scheme for each individual. This approach allows
uring the year, the hairman explained the directors remuneration policy and alignment with wider wor force pay to employees as part of the meaningful data for a large group of people to be obtained in a more efficient way.
wor force engagement sessions.
oints to note for t e ear ended 0 ne 0
em neration ommittee revie o i er or orce a
iageo has delivered a strong set of results for fiscal 23 during a period of volatility, however payouts under the annual incentive plan both for
Each year, the Remuneration ommittee has a detailed session reviewing wider wor force remuneration. In fiscal 23, the review focussed on the
iageo s hief Executive and the wider wor force are lower than the prior two years which saw double digit growth in organic net sales and
prior year s annual reward cycle outcomes, including improvements made to base pay competitive positions, the level of differentiation across our
operating profit. The annual incentive plan outcome is directly lin ed to awards made under the Freeshares scheme, which all employees are
reward programmes, gender pay equity analysis, how cost-of-living challenges were addressed and how we have used reward structures to attract
eligible to participate in. The median remuneration and resulting pay ratio for 2023 are consistent with the pay and progression policies for iageo s
talent in ey s ills areas. The all-employee reward priorities for the coming year were also reviewed by the ommittee. Information on wider
employees as a whole and reflect the impact of performance-related pay on total remuneration for the year. As the hief Executive has a larger
wor force reward is also provided as required throughout the year to enable the ommittee to consider the broader employee context when
proportion of their total remuneration lin ed to business performance than other employees in the wor force, the ratio has increased versus last
ma ing executive remuneration decisions, for example the annual salary increase budgets by country.
year due to a significantly higher performance outcome under the 2020 long-term incentives which vested this year, compared to the 2019 awards

148 Diageo Annual Report 2023 Diageo Annual Report 2023 149
 O O O con tin ued

which vested last year which has more than made up for the lower bonus outcome this year and resulted in a higher value used for the hief company will continue to provide tax support up to a maximum annual amount of 28,000 (excl. VAT) for fees incurred in connection with and
Executive s remuneration. However, total remuneration for employees is reduced by the lower bonus outcome for fiscal 23 relative to fiscal 22. S tax return submissions up to and including the 2023 S tax return and the 2023/2 tax return, which are the final returns required to be
submitted on behalf of Sir Ivan before tax filings become a matter for his estate. pon death-in-service, a life assurance benefit of 3 million became
ange in pa for irectors compared to wider wor force payable by the insurance provider and Sir Ivan s pension benefits will be treated in accordance with the terms of the relevant pension plans.
The table below shows the percentage change in irectors remuneration and average remuneration of employees on an annual basis. iven the
small si e of iageo plc s wor force, data for all employees of the group has also been included.

Non ec ti e irectors
2022 2021 2020 ee polic
a ar on ene it Salary onus enefits Salary onus enefits Salary onus enefits avier Ferr n s fee as non-executive hairman was increased by 3% from 650,000 per annum to 670,000 on 1 October 2022. The hairman s
Plc employee average(1) 11.1% 25.8% 10.5% 5.1% N/A(5) 38.8% 7.5% (100.0%) 9.0% fee is appropriately positioned against our comparator group of FTSE 30 companies excluding financial services. The Executive irectors and the
Average global employee(2) 6. % 38. % 11.7% 278.8% 12.6% 5.3% (67.8) 6.9% hairman also approved an increase in the base fee for Non-Executive irectors of 3% (from 101,000 to 10 ,000), effective 1 October 2022.
ec tive irector 2022
er ann m ee 000
Ivan ene es(6) 2.3% . % 59.5% 0.7% N/A(5) (10.7)% 2.7% (100.0)% 0.8%
airman o t e oar 650
ebra rew(5) N/A(5) N/A(5) N/A(5) N/A(5) N/A(5) N/A(5) N/A(5) N/A(5) N/A(5)
(5) (5) (5) (5) (5) (5) (5) (5) (5) on ec tive irector
avanya handrashe ar N/A N/A N/A N/A N/A N/A N/A N/A N/A
ase fee 101
on ec tive irector
Senior Non-Executive irector 30
elissa ethell (7) 2.3% 16.0% N/A(5)
hairman of the Audit ommittee 35
aren lac ett (5) N/A(5) N/A(5)
hairman of the Remuneration ommittee 35
Val rie hapoulaud-Floquet (7) N/A(5)
avier Ferr n ( hairman) 8.3% 28.8% 0.0% 0.0% 0.0% 0.0% ingle total fig re of rem neration for Non ec ti e irectors (a dited)

GOVERNANCE REPORT
Susan ilsby (7) 3.8% 300.0% 9.6% (87.7%) 37.3% 68.9%
ee a a e ene it ota
Sir ohn an oni (7)
2022 2022 2022
ady endelsohn 2.3% 0.0% 3.2% 0.0% 3.3% 0.0%
airman
Alan Stewart .7% 0.0% 2. % 0.0% 2.5% 0.0%
avier Ferr n(2) 650 2 652
Ireena Vittal (7) 0.0% 0.0%
Non ec ti e irectors
(1) Around 60 -based employees are employed by iageo plc. Their remuneration has been calculated in line with the approach used for the EO pay-ratio calculation and the average elissa ethell 100 1 102
year-on-year change has been reported. Only those employed during the full financial year have been included in calculations.
aren lac ett(3) 8 9
(2) alculated 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 note 3c to the financial
statements under staff costs and average number of employees on page 178, but reduced to account for the inclusion of Executive irectors in reported figures. The salary, bonus and Val rie hapoulaud-Floquet 100 5 105
benefits cost data used for calculation are subsets of the ages and salaries figure disclosed in this note. The salary data used for this calculation has been adjusted to exclude costs
Susan ilsby 16 5 169
related to severance payments which are included in staff costs, and last year s disclosure has been updated in line with this for consistency. In line with the approach for irectors, the
bonus values used for the calculation reflect the bonus earned in relation to performance during the relevant financial year. Sir ohn an oni 100 1 102
(3) alculated using the data from the single figure table in the annual report on remuneration (page 139) in S dollars, reflecting payment currency for Ivan ene es, ebra rew and
avanya handrashe ar.
ady endelsohn 100 1 102
( ) alculated using the fees and taxable benefits disclosed under Non-Executive irectors remuneration in the table on page 151. Taxable benefits for Non-Executive irectors comprise a Alan Stewart 13 1 135
product allowance as well as expense reimbursements relating to attendance at oard meetings, which may vary year-on-year.
(5) N/A refers to a nil value in the previous year or an incomplete prior year, meaning that the year-on-year change cannot be calculated.
Ireena Vittal 100 1 102
(6) The year-on-year percentage change for Ivan ene es for 2023 is not included as we are not reporting full year values for 2023.
(7) The increase in benefits value in fiscal 23 relates to an increase in travel expenses due to more in-person meetings ta ing place in fiscal 23. (1) Taxable benefits include a product allowance and expense reimbursements relating to travel, accommodation and subsistence in connection with attendance at oard meetings during
the year, which are deemed by H R to be taxable in the nited ingdom. The amounts in the single total figure of remuneration table above include any tax gross-ups on the benefits
provided by the company on behalf of the irectors. Non-taxable expense reimbursements have not been included in the single figure of remuneration table above.
a ments to former irectors (a dited) (2) 100,000 of avier Ferr n s net remuneration in the year ended 30 une 2023 was used for the monthly purchase of iageo ordinary shares, which will be retained until he retires from the
There were no payments to former irectors in the year ended 30 une 2023. company or ceases to be a irector for any other reason.
(3) aren lac ett was appointed to the oard on 1 une 2022.
a ments for loss of office (a dited) ( ) Some figures add up to slightly different totals due to rounding.
etails of Sir Ivan ene es salary, benefits and bonus payable up to and including the date of his death, which was also his last day of
employment (6 une 2023) are set out in the single total figure table on page 139. The time pro-rated bonus is based on full year performance and is
payable at the normal time entirely in cash, the ommittee having exercised its discretion to waive the one-third payment in deferred shares. Sir
Ivan s deferred bonus shares from fiscal 21 and fiscal 22 vested on the date of death in accordance with the plan rules.
Sir Ivan s unvested long-term incentive awards granted in 2020, 2021 and 2022 vested early on 2 August 2023 in accordance with the treatment
under the plan rules on death-in-service, subject to an assessment against the performance measures and time pro-rating. The ommittee exercised
its discretion under the policy to slightly extend the time pro-rating from 6 to 30 une 2023 on compassionate grounds to reflect the full fiscal 23 year.
The 2020 award vested based on actual performance measured over the full three-year period to 30 une 2023 as disclosed on pages 1 1 and 1 2.
The 2021 and 2022 awards vested subject to an assessment by the ommittee against the performance measures as at 30 une 2023. Sir Ivan was
originally awarded 36,675 PSP and 36,675 SESOP options in 2021 which were each time pro-rated to 2 , 27 awards. The 2021 PSP award vested at
81.2% and the 2021 SESOP award vested at 10.0%. The 2022 awards (33,8 5 PSP awards and 33,8 5 SESOP awards) were each time pro-rated to
11,271 awards and vested at 8.0% (PSP) and 0.0% (SESOP). The total vesting value of the 2021 and 2022 awards was 3,693 and 987
respectively, calculated based on the average iageo A R share price over the three months from 1 April 2023 to 30 une 2023 of 178.52. The
ommittee has chosen not to disclose the detail of performance relative to the targets set for each performance measure for the 2021 and 2022
awards, measured over the shortened period, on the basis that the information is regarded as commercially sensitive. SESOP options will be
exercisable for 2 months from the date of death (already vested options) and the date of vesting (options vesting early on 2 August 2023), the
ommittee having exercised discretion to extend from 12 months to give the estate sufficient time to exercise the options. The two-year post-vesting
holding periods will not apply and the post-employment shareholding requirement falls away.
Sir Ivan s 2006 employment contract provided for lifetime medical cover for Sir Ivan and his spouse on a cost sharing basis with the company. The
lifetime medical cover will continue for Sir Ivan s surviving spouse, the company cost of which for the first year is 12,381, based on 2023 rates. The

150 Diageo Annual Report 2023 Diageo Annual Report 2023 151
 O O O con tin ued

2024 erformance conditions for long term incenti e awards to e made in t e ear ending 0
Performance shares
ne 0
Share options
Environmental, social governance (ES )
Organic profit
based on stretching targets against the ey performance measures as
alar increases for t e ear ending 0 ne outlined in the table on page 153, assessed over a three-year Organic net
before
exceptional items reenhouse
ater
efficiency Positive % Female
% Ethnically
diverse Vesting
Relative Total
Shareholder umulative free
sales ( A R) and tax ( A R) gas reduction index (1) drin ing leaders leaders schedule Return cash flow ( m) (2) Vesting schedule
0 performance period. The relative total shareholder return measure is eighting (% total) 0% 0% 5% 5% 5% 2.5% 2.5% 50.0% 50.0%
The Remuneration ommittee reviewed base salaries for Executive based on the same constituent group and vesting schedule as outlined
aximum 8.0% 11.5% 25.9% 8.3% .2m 9% 6% 100% 3rd and 12,600 100%
ommittee members and agreed the following increase for the hief on page 1 1.
above
Financial Officer, effective 1 October 2023. The performance share element of the TIP applies to the Executive idpoint 6.0% 8.0% 21.9% 6.0% 3.5m 8% 5% 60% 11,000 60%
ebra rew s salary for the EO role became effective when she was ommittee and the top level of senior leaders across the organisation Threshold .0% .5% 17.9% 3.7% 2.8m 7% % 20% 9th and 9, 00 20%
appointed as interim EO on 5 une 2023. Her next salary review will worldwide, whilst the share option element is applicable to a much above
be in October 202 . smaller population comprising only members of the Executive
ommittee. One mar et price performance-based option is valued at (1) For more information on the water efficiency index, see pages 152 and 79.
e ra re avan a an ra e ar one-third of a performance share. (2) The cumulative free cash flow targets are shown in S following the change in functional currency from P to S from fiscal 2 . ore details on this can be found on page 36.
a ar at Octo er 2023 2022 2023 2022
The ES measures in the TIP comprise four goals reflecting the
ase salary n/a 1,00
Society 2030 Spirit of Progress strategy, to ma e a positive impact on
% increase (over previous year) n a n/a 3% the environment and society. Each goal is weighted equally
reduction in greenhouse gas emissions in our direct operations
nn al incenti e design for t e ear ending (scope 1 2) tat tor and a dit re irements
0 ne 0 improvement in the water efficiency index e management personnel related part
This report was approved by a duly authorised ommittee of the oard
The measures and targets for the annual incentive plan are reviewed
number of people who confirm changed attitudes to the dangers of transactions (a dited) of irectors and was signed on its behalf on 31 uly 2023 by Susan

GOVERNANCE REPORT
underage drin ing after participating in a iageo-supported ey management personnel of the group comprises the Executive and ilsby who is hair of the Remuneration ommittee.
annually by the Remuneration ommittee and are carefully chosen to education programme and
drive financial and individual business performance goals related to Non-Executive irectors, the members of the Executive ommittee and
inclusion and diversity (percentage of female leaders globally and the ompany Secretary. The oard has followed the principles of good governance as set out in
the company s short-term strategic operational objectives. The plan percentage of ethnically diverse leaders globally). the orporate overnance ode and complied with the
design for Executive irectors for the year ending 30 une 202 will iageo plc has granted rolling indemnities to the irectors and the regulations contained in the Schedule 8 of the arge and edium-
comprise the following performance measures and weightings (no From fiscal 2 , the water efficiency PI under the Society 2023 Spirit of ompany Secretary, uncapped in amount, in relation to certain losses si ed ompanies and roups (Accounts and Reports) Regulations
change from last year), with targets set for the full financial year Progress goals will use an index approach which lin s directly to the and liabilities which they may incur in the course of acting as irectors 2008, the isting Rules of the Financial onduct Authority and the
underlying water efficiency of the two production pillars of distillation or ompany Secretary (as applicable) of iageo plc or of one or more
net a e (% growth) (26.67% weighting) a ey performance relevant schedules of the ompanies Act 2006.
and brewing pac aging. This methodology is described further on of its subsidiaries. These indemnities continue to be in place at 30 une
measure of year-on-year top line growth page 79 and the water efficiency component of the 2023 TIP awards The ompanies Act 2006 and the isting Rules require the company s
o erating ro it (% growth) (26.67% weighting) stretching profit 2023.
reflects the updated Society 2030 Spirit of Progress PI. auditor to report on the audited information in their report and to state
targets drive operational efficiency and influence the level of returns Other than disclosed in this report, no irector had any interest, that this section has been properly prepared in accordance with these
that can be delivered to shareholders through increases in share Awards are calculated on the basis of a six-month average share price beneficial or non-beneficial, in the share capital of the company. Save regulations.
price and dividend income not including exceptional items or for the period ending 30 une 2023. as disclosed above, no irector has or has had any interest in any
exchange transaction which is or was unusual in its nature, or which is or was Pw has audited the report to the extent required by the regulations,
It is intended that a TIP award to the equivalent of 500% of base being the sections headed Single total figure of remuneration for
o erating ca conver ion (26.67% weighting) ensures focus on significant to the business of the group and which was effected by any
salary will be made to ebra rew in September 2023, comprising Executive irectors (and notes), Payments to former irectors,
efficient cash delivery by the end of the year and member of the group during the financial year, or which having been
375% of salary in performance shares and the equivalent of 125% of Payments for loss of office, Annual incentive plan (AIP) payouts for
in ivi a ine o ective (20% weighting) measurable effected during an earlier financial year, remains in any respect
salary in mar et price performance-based share options. It is intended 2023, ong-term incentive plans ( TIPs) vesting in 2023, Pensions and
deliverables that are specific to the individual and are focussed on outstanding or unperformed. There have been no material transactions
that a TIP award to the equivalent of 80% of salary will be made to benefits, irectors shareholding requirement and share interests,
supporting the delivery of ey strategic objectives. during the last three years to which any irector or officer, or 3% or
avanya handrashe ar in September 2023, comprising 360% of Outstanding share plan interests, Non-Executive irectors
The ommittee has discretion to adjust the payout to reflect underlying greater shareholder, or any spouse or dependent thereof, was a party.
salary in performance shares and the equivalent of 120% of salary in remuneration and ey management personnel related party
business performance and any other relevant factors. There is no significant outstanding indebtedness to the company from
mar et price share options. In performance share equivalents, one transactions.
any irectors or officer or 3% or greater shareholder.
etails of the targets for the year ending 30 une 202 will be disclosed mar et price option is valued at one-third of a performance share.
The annual remuneration report is subject to an advisory vote by
retrospectively in next year s annual report on remuneration, by which The table below summarises the annual TIP awards to ebra rew shareholders at the A on 28 September 2023. The irectors
time they will no longer be deemed commercially sensitive by the and avanya handrashe ar to be made in September 2023. remuneration policy is subject to a binding vote by shareholders at the
oard. A on 28 September 2023. Terms defined in this irectors
ie ec tive ie inancia O icer
The annual incentive opportunity for Executive irectors will remain er ormance are e iva ent are o tion
remuneration report are used solely herein.
rant va e a ar
consistent with prior years, equal to 100% of base salary at target, with Performance shares 375% 360%
a maximum opportunity of 200% of base salary.
Share options 125% 120%
ong term incenti e awards to e made in t e ota

ear ending 0 ne 0
The long-term incentive plan measures are reviewed annually by the
Remuneration ommittee and are selected to reward long-term
consistent performance in line with iageo s business strategy and to
create alignment with the delivery of value for shareholders. The
ommittee has ensured that the incentive structure for senior
management does not raise environmental, social and governance
ris s by inadvertently motivating irresponsible behaviour
As per last year, TIP awards to be made in September 2023 will
comprise awards of both performance shares and share options,

152 Diageo Annual Report 2023 Diageo Annual Report 2023 153
 O O

mplo ment policies other cash distributions (i.e. sale of rights and other entitlements)
A ey strategic imperative of the company is to attract, retain and grow distribution of A Ss pursuant to stoc dividends or other free stoc
a pool of diverse, talented employees. iageo recognises that a distributions, or exercise of rights to purchase additional A Ss
diversity of s ills and experiences in its wor place and communities will distribution of securities other than A Ss or rights to purchase
The irectors present the irectors report for the year ended 30 une acquires interests and rights in the company resulting in a ontrol additional A Ss (i.e. spin-off shares) and depositary services. itiban
provide a competitive advantage. To enable this, the company has
2023. Event (as defined) occurring in respect of the company, V H may N.A. is located at 388 reenwich Street, New or , New or , 10013,
various global employment policies and standards, covering such
within 12 months of the ontrol Event either appoint and remove the nited States. In addition, A R holders may be required under the
ompan stat s chairman of each joint venture entity governed by such master
issues as resourcing, data protection, human rights, dignity at wor ,
eposit Agreement to pay the epositary (a) taxes (including
iageo plc is a public limited liability company incorporated in health, safety and wellbeing. These policies and standards see to
agreement, who shall be given a casting vote, or require each applicable interest and penalties) and other governmental charges
England and ales with registered number 23307 and registered office ensure that the company treats current or prospective employees justly,
distribution joint venture entity to be wound up. ontrol Event for these (b) registration fees (c) certain cable, telex, and facsimile transmission
and principal place of business at 16 reat arlborough Street, solely according to their abilities to meet the requirements and
purposes is defined as the acquisition by any person of more than 30% and delivery expenses (d) the expenses and charges incurred by the
ondon 1F 7HS, nited ingdom. The company s telephone number standards of their role and in a fair and consistent way. This includes
of the outstanding voting rights or equity interests in the company, epositary in the conversion of foreign currency (e) such fees and
is (0) 20 79 7 9100. The ompany s agent in the nited States is giving full and fair consideration to applications from prospective
provided that no other person or entity (or group of affiliated persons expenses as are incurred by the epositary in connection with
eneral ounsel, iageo North America, Inc., 175 reenwich Street, 3 employees who are disabled, having regard to their aptitudes and
or entities) holds directly or indirectly more than 30% of the voting compliance with exchange control regulations and other regulatory
orld Trade enter, New or , N 10007, nited States. The company abilities, and not discriminating against employees under any
rights in the company. requirements and (f) the fees and expenses incurred by the epositary,
was incorporated on 21 October 1886. It is the ultimate holding circumstances (including in relation to applications, training, career
the custodian, or any nominee in connection with the servicing or
company of the group, a full list of whose subsidiaries, partnerships, Related part transactions development and promotion) on the grounds of any disability. In the
delivery of A Ss. The epositary may (a) withhold dividends or other
associates, joint ventures and joint arrangements is set out in note 10 to Transactions with related parties are disclosed in note 21 to the event that an employee, wor er or contractor becomes disabled in the
course of their employment or engagement, iageo aims to ensure distributions or sell any or all of the shares underlying the A Ss in order
the financial statements set out on pages 22 -229. consolidated financial statements. to satisfy any tax or governmental charge and (b) deduct from any
that reasonable steps are ta en to accommodate their disability by
cash distribution the applicable fees and charges of, and expenses
irectors a or s are olders ma ing reasonable adjustments to their existing employment or
incurred by, the epositary and any taxes, duties or other
The irectors of the company who currently serve are shown in the At 30 une 2023, the following substantial interests (3% or more) in the engagement.
governmental charges on account.
section oard of irectors on pages 101 and 103 and in accordance company s ordinary share capital (voting securities) had been notified
with the orporate overnance ode, all the irectors will retire by to the company
rading mar et for s ares irect and indirect pa ments t e epositar

GOVERNANCE REPORT
rotation at the A and offer themselves for re-election. Further details iageo plc ordinary shares are listed on the ondon Stoc Exchange
The epositary reimburses iageo for certain expenses it incurs in
of irectors contracts, remuneration and their interests in the shares of
ercentage ( SE). iageo A Ss, representing four iageo ordinary shares each,
o i e or inar connection with the A R programme, subject to a ceiling set out in the
the company at 30 une 2023 are given in the irectors remuneration m er o are e c ing ate o noti ication o are listed on the New or Stoc Exchange (N SE). iageo plc
are o er or inar are trea r are intere t eposit Agreement pursuant to which the epositary provides services
report. The irectors powers are determined by legislation and completed the voluntary delisting of its shares from the ublin Euronext
lac Roc Investment to iageo. The epositary has also agreed to waive certain standard
iageo s articles of association. The irectors may exercise all the and Paris Euronext Exchanges by 30 ay 2023. The principal trading
anagement ( ) imited fees associated with the administration of the programme. nder the
company s powers provided that iageo s articles of association or mar et for the ordinary shares is the SE. iageo shares are traded on
(indirect holding) 1 7,296,928 5.89% 3 ecember 2009 contractual arrangements with the epositary, iageo has received
applicable legislation do not stipulate that any powers must be the SE s electronic order boo . Orders placed on the order boo are
apital Research and approximately 2.6 million arising out of fees charged in respect of
exercised by the members. displayed on-screen through a central electronic system and trades are
anagement ompany dividends paid during the year and a fixed contribution to the
(indirect holding) 12 ,653,096 .99% 28 April 2009 automatically executed, in price and then time priority, when orders
company s A R programme costs. These payments are received for
ditor assachusetts Financial match with corresponding buy or sell orders. Only member firms of the
expenses associated with non-deal road shows, third-party investor
The auditor, Pricewaterhouse oopers P, is willing to continue in office Services ompany (indirect SE, or the SE itself if requested by the member firm, can enter or
relations consultant fees and expenses, iageo s cost for administration
and a resolution for its re-appointment as auditor of the company will holding) 11 ,036,6 6 .95% 1 une 2022 delete orders on behalf of clients or on their own account. All orders
of the A R programme not absorbed by the epositary and related
be submitted to the A . are anonymous. Although use of the order boo is not mandatory, all
(1) On 3 February 2023, lac Roc Inc. filed an Amendment to Schedule 13 with the activities (e.g. expenses associated with the A ), travel expenses to
trades, whether or not executed through the order boo and regardless
SE in respect of the calendar year ended 31 ecember 2010, reporting that, as of attend training and seminars, exchange listing fees, legal fees, auditing
isclos re of information to t e a ditor ecember 31, 2022, 190,02 ,658 ordinary shares representing 8. % of the issued of si e, must be reported within three minutes of execution, but may be
fees and expenses, the SE filing fees, expenses related to iageo s
In accordance with Section 18 of the ompanies Act 2006, the ordinary share capital were beneficially owned by lac Roc Inc. and its subsidiaries eligible for deferred publication.
(including lac Roc Investment anagement ( ) imited).
compliance with S securities law and regulations (including, without
irectors who held office at the date of approval of this irectors report The ar ets in Financial Instruments irective ( iFI ) allows for limitation, the Sarbanes-Oxley Act) and other expenses incurred by
(2) On 8 February 2023, assachusetts Financial Services ompany filed an Amendment
confirm that, so far as they are each aware, there is no relevant audit to Schedule 13 with the SE in respect of the calendar year ended 31 ecember delayed publication of large trades with a sliding scale requirement iageo in relation to the A R programme.
information of which the company s auditor is unaware and each 2018, reporting that, as of ecember 31, 2022, 118,813,187 ordinary shares representing based on qualifying minimum thresholds for the amount of
irector has ta en all reasonable steps to ascertain any relevant audit 5.2% of the issued ordinary share capital were beneficially owned by assachusetts
information and to ensure that the company s auditor is aware of that Financial Services ompany. consideration to be paid/the proportion of average daily turnover rticles of association
(A T) of a stoc represented by a trade. Provided that a trade/ The company is incorporated under the name iageo plc, and is
information The company has not been notified of any other substantial interests in consideration equals or exceeds the qualifying minimum si e, it will be
its securities since 30 une 2023. The company s substantial registered in England and ales under registered number 23307. The
orporate go ernance statement eligible for deferred publication ranging from 60 minutes from time of following description summarises certain provisions of iageo s articles
shareholders do not have different voting rights. iageo, so far as is trade to three trading days after time of trade. Fluctuations in the
The corporate governance statement, prepared in accordance with nown by the company, is not directly or indirectly owned or controlled of association (as adopted by special resolution at the Annual eneral
exchange rate between sterling and the S dollar will affect the S eeting on 28 September 2020) and applicable English law
rule 7.2 of the Financial onduct Authority s isclosure uidance and by another corporation or by any government. iageo nows of no dollar equivalent of the sterling price of the ordinary shares on the SE concerning companies (the ompanies Acts), in each case as at 26
Transparency Rules, comprises the following sections of the Annual arrangements, the operation of which may at a subsequent date result and, as a result, will affect the mar et price of the A Ss on the N SE. In uly 2023. This summary is qualified in its entirety by reference to the
Report the orporate governance report , the Audit ommittee in a change of control of the company. addition, such fluctuations will affect the S dollar amounts received by ompanies Acts and iageo s articles of association. Investors can
report and the Additional information for shareholders .
As at the close of business on 26 uly 2023, 32 ,35 ,320 ordinary holders of A Ss on conversion of cash dividends paid in pounds obtain copies of iageo s articles of association by contacting the
ignificant agreements c ange of control shares, including those held through American epositary Shares sterling on the underlying ordinary shares. ompany Secretary at the.cosec diageo.com. Any amendment to the
The following significant agreements contain certain termination and (A Ss), were held by approximately 2,678 holders (including American articles of association of the company may be made in accordance
epositary Receipt (A R) holders) with registered addresses in the merican depositar s ares
other rights for iageo s counterparties upon a change of control of the with the provisions of the ompanies Act 2006, by way of special
company. nder the partners agreement governing the company s nited States, representing approximately 1 . 3% of the outstanding ees and c arges pa a le R olders resolution.
3 % investment in o t Hennessy SAS ( H) and o t Hennessy ordinary shares (excluding treasury shares). At such date, 81,01 ,8 6 itiban N.A. serves as the depositary ( epositary) for iageo s A S
International SAS ( HI), if a ompetitor (as defined therein) directly or A Ss were held by 2,22 registered A R holders. Since certain of such programme. Pursuant to the deposit agreement dated 1 February irectors
indirectly ta es control of the company (which, for these purposes, ordinary shares and A Ss are held by nominees or former rand 2013 between iageo, the epositary and owners and holders of A Ss iageo s articles of association provide for a board of directors,
would occur if such ompetitor acquired more than 3 % of the voting etropolitan P or uinness plc A R holders who have not re- (the eposit Agreement), A R holders may be required to pay various consisting (unless otherwise determined by an ordinary resolution of
rights or equity interests in the company), V H o t Hennessy ouis registered their A Ss, the number of holders may not be representative fees to the epositary, and the epositary may refuse to provide any shareholders) of not fewer than three directors and not more than 25
Vuitton SA ( V H) may require the company to sell its interests in H of the number of beneficial owners in the nited States or the ordinary service for which a fee is assessed until the applicable fee has been directors, in which all powers to manage the business and affairs of
and HI to V H. shares held by them. paid. In particular, the epositary, under the terms of the eposit iageo are vested. irectors may be elected by the members in a
Agreement, shall charge a fee of up to 5.00 per 100 A Ss (or fraction general meeting or appointed by the oard. At each annual general
The master agreement governing the operation of the group s mar et- thereof) relating to the issuance of A Ss delivery of deposited meeting, all the directors shall retire from office and may offer
level distribution joint ventures with V H states that if any person securities against surrender of A Ss distribution of cash dividends or themselves for re-election by members. There is no age limit

154 Diageo Annual Report 2023 Diageo Annual Report 2023 155
 O O con tin u ed

requirement in respect of directors. irectors may also be removed A shareholder is not entitled to vote at any general meeting or class Ot er information
before the expiration of their term of office in accordance with the meeting in respect of any share held by them if they have been served Other information relevant to the irectors report may be found in the following sections of the Annual Report
provisions of the ompanies Acts. with a restriction notice (as defined in iageo s articles of association)
after failure to provide iageo with information concerning interests in n ormation inc ing t at re ire i ting t orit i ting e ocation in nn a e ort
oting rig ts those shares required to be provided under the ompanies Acts. Agreements with controlling shareholders Not applicable
Voting on any resolution at any general meeting of the company is by
re emption rig ts and new iss es of s ares ontracts of significance Not applicable
a show of hands unless a poll is duly demanded. On a show of hands,
hile holders of ordinary shares have no pre-emptive rights under etails of long-term incentive schemes irectors remuneration report
(a) every shareholder who is present in person at a general meeting,
iageo s articles of association, the ability of the irectors to cause irectors indemnities and compensation irectors remuneration report - Additional information onsolidated financial
and every proxy appointed by any one shareholder and present at a statements - note 21 Related party transactions
iageo to issue shares, securities convertible into shares or rights to
general meeting, has/have one vote regardless of the number of ividends roup financial review onsolidated financial statements - naudited financial
shares, otherwise than pursuant to an employee share scheme, is
shares held by the shareholder (or, subject to (b), represented by the information
restricted. nder the ompanies Acts, the directors of a company are,
proxy), and Engagement with employees orporate governance report - or force engagement statement
with certain exceptions, unable to allot any equity securities without
(b) every proxy present at a general meeting who has been appointed express authorisation, which may be contained in a company s articles Engagement with suppliers, customers and others orporate governance report - Sta eholder engagement
by more than one shareholder has one vote regardless of the number of association or given by its shareholders in a general meeting, but Events post 30 une 2023 onsolidated financial statements - note 23 Post balance sheet events
of shareholders who have appointed him/her or the number of shares which in either event cannot last for more than five years. nder the Financial ris management onsolidated financial statements - note 16 Financial instruments and ris
held by those shareholders, unless he/she has been instructed to vote ompanies Acts, iageo may also not allot shares for cash (otherwise management
for a resolution by one or more shareholders and to vote against the than pursuant to an employee share scheme) without first ma ing an Future developments hairman s statement hief Executive s statement Our mar et dynamics
resolution by one or more shareholders, in which case he/she has one offer to existing shareholders to allot such shares to them on the same
reenhouse gas emissions Pioneer grain-to-glass sustainability Non-Financial and sustainability information
vote for and one vote against the resolution. or more favourable terms in proportion to their respective statement
On a poll, every shareholder who is present in person or by proxy has shareholdings, unless this requirement is waived by a special resolution Interest capitalised Not applicable
one vote for every share held by that shareholder, but a shareholder or of the shareholders.
Non-pre-emptive issues of equity for cash (including in respect of major Not applicable
proxy entitled to more than one vote need not cast all his/her votes or Rep rc ase of s ares unlisted subsidiaries)

GOVERNANCE REPORT
cast them all in the same way (the deadline for exercising voting rights Parent participation in a placing by a listed subsidiary Not applicable
Subject to authorisation by special resolution, iageo may purchase its
by proxy is set out in the form of proxy). Political donations orporate governance report
own shares in accordance with the ompanies Acts. Any shares which
A poll may be demanded by any of the following have been bought bac may be held as treasury shares or, if not so Provision of services by a controlling shareholder Not applicable
held, must be cancelled immediately upon completion of the purchase, Publication of unaudited financial information naudited financial information
the chairman of the general meeting
thereby reducing the amount of iageo s issued share capital.
at least three shareholders entitled to vote on the relevant resolution Purchase of own shares Repurchase of shares onsolidated financial statements - note 18 Equity
and present in person or by proxy at the meeting Restrictions on transfers of s ares Research and development Other Additional Information - Research and development onsolidated financial
any shareholder or shareholders present in person or by proxy and statements - note 3 Operating costs
The oard may decline to register a transfer of a certificated iageo
representing in the aggregate not less than one-tenth of the total share unless the instrument of transfer (a) is duly stamped or certified or Review of the business and principal ris s and uncertainties hief Executive s statement Our principal ris s and ris management Pioneer grain-
voting rights of all shareholders entitled to vote on the relevant to-glass sustainability usiness reviews
otherwise shown to the satisfaction of the oard to be exempt from
resolution or stamp duty, and is accompanied by the relevant share certificate and Share capital - structure, voting and other rights onsolidated financial statements - note 18 Equity
any shareholder or shareholders present in person or by proxy and such other evidence of the right to transfer as the oard may Share capital - employee share plan voting rights onsolidated financial statements - note 18 Equity
holding shares conferring a right to vote on the relevant resolution reasonably require, (b) is in respect of only one class of share and (c) if Shareholder waivers of dividends onsolidated financial statements - note 18 Equity
on which there have been paid up sums in the aggregate equal to to joint transferees, is in favour of not more than four such transferees. Shareholder waivers of future dividends onsolidated financial statements - note 18 Equity
not less than one-tenth of the total sum paid up on all the shares Registration of a transfer of an uncertificated share may be refused in
conferring that right. Sustainability and responsibility Pioneer grain-to-glass sustainability
the circumstances set out in the uncertificated securities rules (as
aiver of emoluments by a director Not applicable
iageo s articles of association and the ompanies Acts provide for defined in iageo s articles of association) and where, in the case of a
transfer to joint holders, the number of joint holders to whom the aiver of future emoluments by a director Not applicable
matters to be transacted at general meetings of iageo by the
proposing and passing of two inds of resolutions uncertificated share is to be transferred exceeds four.
The irectors report of iageo plc for the year ended 30 une 2023 comprises these pages and the sections of the Annual Report referred to under
ordinary resolutions, which include resolutions for the election, re- The oard may decline to register a transfer of any of iageo s irectors , orporate governance statement and Other information above, which are incorporated into the irectors report by reference.
election and removal of directors, the declaration of final dividends, certificated shares by a person with a 0.25% interest (as defined in
iageo s articles of association) if such a person has been served with In addition, certain disclosures required to be contained in the irectors report have been incorporated into the Strategic report as set out in Other
the appointment and re-appointment of the external auditor, the
a restriction notice (as defined in iageo s articles of association) after information above.
remuneration report and remuneration policy, the increase of
authorised share capital and the grant of authority to allot shares failure to provide iageo with information concerning interests in those The irectors report, which has been approved by a duly appointed and authorised committee of the oard of irectors, was signed on its behalf
and shares required to be provided under the ompanies Acts, unless the by Tom Shropshire, the ompany Secretary, on 31 uly 2023.
special resolutions, which include resolutions for the amendment of transfer is shown to the oard to be pursuant to an arm s-length sale
iageo s articles of association, resolutions relating to the (as defined in iageo s articles of association).
disapplication of pre-emption rights, and resolutions modifying the
rights of any class of iageo 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 iageo is a
minimum of two shareholders present in person or by proxy and
entitled to vote.

156 Diageo Annual Report 2023 Diageo Annual Report 2023 157
 a al statements
ontents
ntrod ction
Independent auditors report to the members of iageo plc 160
The group s consolidated financial statements, which have
P been prepared in accordance with international accounting
standards in conformity with the requirements of the
onsolidated income statement 168
ompanies Act 2006 and International Financial Reporting
onsolidated statement of comprehensive income 169 Standards (IFRS) adopted by the ( -adopted
onsolidated balance sheet 170 International Accounting Standards) and IFRSs as issued by
the International Accounting Standards oard (IAS ), give a
onsolidated statement of changes in equity 171
true and fair view of the assets, liabilities, financial position
onsolidated statement of cash flows 172 and profit of the group.
The financial statements of iageo plc (the company) are
1. Accounting information and policies 173 prepared in accordance with the ompanies Act 2006 and in
accordance with Financial Reporting Standard 101 Reduced
R isclosure Framewor (FRS 101).
2. Segmental information 175
3. Operating costs 178
. Exceptional items 179
5. Finance income and charges 181
6. Investments in associates and joint ventures 182
7. Taxation 183
O
8. Acquisition and sale of businesses and brands and
purchase of non-controlling interests 186
9. Intangible assets 189
10. Property, plant and equipment 193

FINANCIAL STATEMENTS
11. iological assets 19
12. eases 19
13. Other investments 195
1 . Post employment benefits 195
15. or ing capital
R
16. Financial instruments and ris management 202
17. Net borrowings 210
18. Equity 211
O
19. ontingent liabilities and legal proceedings 215
20. ommitments 217
21. Related party transactions 217
22. Principal group companies 218
23. Post balance sheet events 218
F 219

158 Diageo Annual Report 2023 Diageo Annual Report 2023 159
 O O O O O

performing inquiries of senior management, including but not limited to members of the roup Executive and regional and mar et chief financial
officers, to identify areas of possible breaches of laws and regulations
reviewing correspondence with regulators, including the FR , Securities and Exchange ommission and the tax authorities in iageo s ey
1. O r nmodified opinion mar ets
In our opinion assessing matters reported through the group s whistleblowing programme and the results of management s investigation in so far as they
iageo plc s ( iageo ) group financial statements and company financial statements (the financial statements ) give a true and fair view of the related to the financial statements
state of the group s and of the company s affairs as at 30 une 2023 and of the group s profit and the group s cash flows for the year then ended challenging assumptions and judgements made by management in its significant accounting estimates, in particular in relation to ey audit
the group financial statements have been properly prepared in accordance with -adopted international accounting standards as applied in matters
accordance with the provisions of the ompanies Act 2006 agreeing the financial statement disclosures to underlying supporting documentation and
the group financial statements have been properly prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued inspecting correspondence with legal advisors and internal audit reports in so far as they related to the financial statements.
by the International Accounting Standards oard e also evaluated management s incentives and opportunities for fraudulent manipulation of the financial statements, including the ris of
the company financial statements have been properly prepared in accordance with nited ingdom enerally Accepted Accounting Practice management override of internal controls. e determined that the principal ris s were related to posting inappropriate journal entries to, for
( nited ingdom Accounting Standards, comprising FRS 101 Reduced isclosure Framewor , and applicable law) and example, suppress expenses such as trade spend to improve financial performance, and management bias in accounting estimates. e did not
the financial statements have been prepared in accordance with the requirements of the ompanies Act 2006. identify any ey audit matters specific to irregularities, including fraud.
Our opinion is consistent with our reporting to the Audit ommittee. ow we str ct red t e a dit scope
at we a dited Partners and staff from 12 countries across the Pw networ have spent more than 85,000 hours supporting this report, which in addition to the
e have audited the financial statements, included within the Annual Report 2023 (the Annual Report ), which comprise the consolidated and opinion provides amongst other things, information on how we approached the audit and how it changed from the previous year.
company balance sheets as at 30 une 2023 the consolidated income statement and consolidated statement of comprehensive income, the e tailored the scope of our audit to ensure that we performed enough wor to be able to give an opinion on the financial statements as a
consolidated statement of cash flows, and the consolidated and company statements of changes in equity for the year then ended and the notes to whole, ta ing into account the structure of the group and the company, the accounting processes and controls, and the alcoholic beverage industry.
the financial statements, which include a description of the significant accounting policies. There were three important aspects of our wor in which they operate.

asis for o r opinion it or er orme on in ivi a ine nit

e conducted our audit in accordance with International Standards on Auditing ( ) ( ISAs ( ) ) and applicable law. Our responsibilities under e received opinions from nine Pw member firms which had been appointed as the auditors of twenty-two group business units, either in relation
ISAs ( ) are further described in The scope of an audit and our responsibility section of this report. e believe that the audit evidence we have to all of the financial information or specific accounts and balances. This included eighteen operating business units and four treasury business units.
obtained is sufficient and appropriate to provide a basis for our opinion. e also obtained reporting from a non-Pw member firm over the financial information of o t Hennessy, the group s principal associate.
In September 2022, we hosted in ondon an in-person meeting for senior staff from Pw member firms involved in the audit. At this meeting we
considered developments specific to iageo, ey audit matters and changes to the audit necessitated by the macro-economic instability
O r independence
experienced during the financial year. e heard from ey members of management and the hair of the Audit ommittee.
e remained independent of iageo in accordance with the ethical requirements that are relevant to our audit of the financial statements in the ,
e issued formal, written instructions to each business unit audit team setting out the wor to be performed by each of them. e were in active
which includes the Financial Reporting ouncil s ( FR ) Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
dialogue throughout the year with the teams responsible for these audits this included consideration of how they planned and performed their wor .
other ethical responsibilities in accordance with these requirements.
Senior team members visited the business unit audit teams in reat ritain, Hungary, Ireland, India, exico, Tur ey and the nited States. e also
To the best of our nowledge and belief, we declare that non-audit services prohibited by the FR s Ethical Standard were not provided.
visited the audit team in hina to further our understanding of the group s businesses. These gave us an opportunity to discuss the audit with local
Other than those disclosed in note 3(b) to the group financial statements, we have provided no non-audit services to iageo or its controlled
teams, but also to meet directly with management to hear about the mar et and iageo opportunities and challenges. Senior team members also
underta ings in the period under audit.
attended via video conference the final audit meetings for certain business units, including reat ritain, Tur ey, and the nited States. uring these
Pw was initially appointed by you on 15 October 2015 and has acted for eight uninterrupted years. This is the third and final year that Richard
meetings, the findings reported by each of the audit teams were discussed. e evaluated the sufficiency of the audit evidence obtained through
Oldfield has acted as your Senior Statutory Auditor, with other changes in senior audit team members reflecting required partner rotation in
discussions with each team and a review of the audit wor ing papers.
Australia, Scotland, and over the group s Treasury, Tax and technology functions.
Our independence, including the nature and si e of non-audit services provided, was reviewed during the year by the Audit ommittee. it or er orme at are ervice centre

FINANCIAL STATEMENTS
A significant number of operational processes which are critical to financial reporting are underta en in the O captive shared business service
. O r a dit centres in olombia, Hungary, India and the Philippines. Pw teams in these locations tested controls and transactions which supported the
e scope of an a dit and o r responsi ilit financial information for many of the twenty-one business units in scope, to ensure that adequate audit evidence was obtained.
An audit has an important role in providing confidence in the financial statements that are provided by companies to their members. The scope of
it roce re n erta en at a gro eve an on t e com an
an audit is sometimes not fully understood. e believe that it is important that you understand the scope and the concept of materiality in order to
e ensured that appropriate further audit wor was underta en at a group level and for the company. This wor included auditing, for example,
understand the assurance that this opinion provides. A description of the scope of an audit is provided on the FR s website at www.frc.org.u /
the consolidation of the group s results, the preparation of the financial statements, certain disclosures within the irectors Remuneration Report,
auditorsresponsibilities we recommend that you read this description carefully. It is also important that you understand the inherent limitations of the
litigation provisions and exposures and management s entity level and oversight controls relevant to financial reporting. e also performed wor
audit, for example
centrally for the audit of technology and IT general controls, goodwill and intangible assets, taxation, and one-off transactions, including acquisitions
the ris of not detecting a material misstatement due to fraud is higher than the ris of not detecting one resulting from error, as fraud may and disposals, underta en during the year. This wor was supported by team members who are based in udapest and angalore.
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion and ollectively, these three areas of wor covered 73% of group net sales, 82% of group total assets, and 71% of group profit before exceptional
our audit testing includes, in a limited number of cases, testing of complete populations of certain transactions and balances, predominantly items and tax (P ET (as defined in note )).
using data auditing techniques, e.g. the testing of manual journals and the deactivation of leaver accounts on ey applications. However, in most In planning our audit, we continued to embrace technology and innovation in the audit process to drive quality and efficiency. e continued to
cases it involves selecting a limited number of items for testing. In some situations, we target particular items for testing based on their si e or ris expand the deployment of technology solutions on our audit and for the first time relied on data auditing of revenue for iageo reat ritain, testing
characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is the full population by tracing sales orders through to delivery note, invoice and ultimately the general ledger and cash. e also used artificial
selected. An approach based upon sampling may not identify all issues. intelligence in the testing of some cash balances, and continued using our technology tools to enhance our scoping and ris assessment, with more
Our objectives are to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to targeted testing and real time reporting by our global tea
fraud or error, and to issue a report to you that includes our opinion. This opinion is not over any particular number or disclosure. Reasonable anges to t e a dit in 0
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs ( ) will always detect a material The audit approach remained broadly unchanged.
misstatement when it exists. isstatements are considered material if, individually or in the aggregate, they could reasonably be expected to e considered the changing relative contribution of individual business units in determining which ones should be included within the audit
influence the economic decisions you ta e on the basis of these financial statements. scope, with the only change being the removal of the group s business in enya.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. e designed procedures in line with our As required by auditing standards, our team undertoo procedures which were deliberately unexpected and could not have reasonably been
responsibilities, capable of detecting material misstatements caused by such irregularities, albeit these are subject to the inherent limitations predicted by iageo s management. As an example, performing procedures over balances and transactions which otherwise wouldn t have been
discussed above. e focused on any nown and potential instances of non-compliance with laws and regulations that could give rise to a material subject to audit procedures due to their si e such as the group s acquisition of alcones istilling and rotating the inventory count locations and
misstatement in the financial statements, including, but not limited to, the ompanies Act 2006, the isting Rules, international tax legislation and approach year on year. The results of these procedures were consistent with our expectations.
anti-bribery legislation. Examples of the procedures which we performed included In executing our audit, we were particularly mindful of the changing economic and political conditions. hilst the group delivered continued
gaining an understanding of the legal and regulatory framewor applicable to iageo and the alcoholic beverage industry, and considering the growth during the year benefiting from price increases and productivity savings, this growth has not been consistent across all business units or
ris of acts by iageo which are contrary to applicable laws and regulations, including fraud

160 Diageo Annual Report 2023 Diageo Annual Report 2023 161
 O O O O O con tinu ed

achieved evenly over the year. e considered how these factors were included in future cash flows used in management s models supporting ey y their nature financial statements present historical information which does not fully capture future events. e did determine that the ey areas
audit areas and management s assessment of going concern. in the financial statements that are more li ely to be materially impacted by climate change are those areas that are based on estimated future cash
flows. As a result, we considered in particular how climate ris s and the impact of the Society 2030 Spirit of Progress commitments would impact
aterialit the assumptions made in the forecasts prepared by iageo used in the group s impairment analysis (see also ey audit matter on Valuation of
The scope of our audit was influenced by our application of the concept of materiality. e set certain quantitative thresholds for materiality. These, goodwill and brand intangibles) and for going concern purposes. e challenged how longer term physical chronic ris s had been considered such
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on as water scarcity from water stress together with the impacts of chronic weather on agricultural supply chains, and shorter-term transitional ris s such
the individual financial statement line items ( FS Is ) and disclosures and in evaluating the effect of misstatements. as the introduction of carbon taxes. Our procedures did not identify any material impact on our audit for the year ended 30 une 2023. e ensured
that the assumptions used in preparation of the financial statements are consistent with the Tas Force on limate-related Financial isclosures
ased on our professional judgement, we determined materiality for the financial statements as a whole as follows
( T F ) disclosure.
ro om an The accuracy of iageo s progress against its Society 2030 Spirit of Progress metrics set out on pages 57 - 87 is not included within the scope of
this audit. e were engaged separately to provide independent limited assurance to the irectors over some of these metrics mar ed with the
Overa materia it 251m (2022 239m). 273m (2022 278m).
For the purposes of the group audit, we increased materiality to symbol . The independent limited assurance report, which explains the scope of our wor and the limited procedures underta en is included in the
0m (2022 20m), other than for those balances which were Annual Report 2023 on page 263. imited assurance varies significantly and is substantially less in scope than that of our financial audit, which
eliminated on consolidation. provides reasonable assurance.
o e etermine it 5% of the P ET 0.5% of the net assets.
This approach has not changed compared to the prior year. This approach has not changed compared to the prior year. . O r concl sions relating to going concern
e e ieve t i i In assessing iageo s performance, you exclude items identified e consider a net asset measure to reflect the nature of the ased on the wor we have performed, which included understanding and evaluating the group s financial forecasts and the stress testing of
by management as exceptional. Therefore, we have used P ET company, which primarily acts as a holding company for the liquidity, assessing and testing ris factors that could impact the going concern basis of accounting such as the impacts of an inflationary
a ro riate which is a generally accepted auditing benchmar . group s investments and holds certain liabilities on the balance environment and testing the amounts of debt maturing during the assessment period, we have not identified any material uncertainties relating to
sheet.
The results of procedures performed over balances and events or conditions that, individually or collectively, may cast significant doubt on the group s and the company s ability to continue as a going
transactions contributing to the group s overall results were used concern for a period of at least twelve months from when the financial statements are authorised for issue.
to support our group opinion. In auditing the financial statements, we have concluded that the directors use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
e as ed each of the teams reporting on the individual business units to wor to assigned materiality levels which reflected the si e of the However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group s and the company s
operations they audited. This materiality will differ from that used in any external audit of the separate financial statements for these business units, ability to continue as a going concern.
for example the materiality used for the company balance sheet and reported profit was lowered to 0m for the group audit as described in the In relation to the directors reporting on how they have applied the orporate overnance ode ( the ode ), we have nothing material to
table. The range of materiality allocated across the business unit audits was between 25m ( iageo Investment orporation) and 155m (North add or draw attention to in relation to the directors statement in the financial statements about whether the directors considered it appropriate to
America). adopt the going concern basis of accounting.
hen planning the audit, we considered if multiple misstatements may exist which, when aggregated, could exceed our overall materiality level. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
In order to reduce the ris of multiple misstatements which could aggregate to this amount we used a lower level of materiality, nown as
performance materiality, to identify the individual balances, classes of transactions and disclosures that were subject to audit. Our performance . Reporting on ot er information
materiality was 188m (2022 179m) for the group and 205m (2022 209m) for the company, being 75% of overall materiality for both the group The other information comprises all of the information in the Annual Report other than the financial statements and our auditors report thereon. The
and company financial statements. In determining this amount, we considered a number of factors - the history of low levels of misstatements, our directors are responsible for the other information, which includes reporting based on the T F recommendations. Our opinion on the financial
ris assessment and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly
here the audit identified any items that were not reflected appropriately in the financial information, we considered these items carefully to stated in this report, any form of assurance thereon.
assess if they were individually or in aggregate material. e agreed with the Audit ommittee that we would report to them misstatements identified In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
which were qualitatively significant or which exceeded 12m (2022 11m). This amount was 1 m for the company (2022 10m). The Audit other information is materially inconsistent with the financial statements or our nowledge obtained in the audit, or otherwise appears to be
ommittee was responsible for deciding whether adjustments should be made to the financial statements in respect of those items. The irectors materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude
concluded that all items which remained unadjusted were not material to the financial statements, either individually or in aggregate. e agreed whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the wor we
with their conclusion. have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. e have nothing to

FINANCIAL STATEMENTS
e a dit matters report based on these responsibilities.
e attended each of the five Audit ommittee and sub- ommittee meetings held during the year. Part of each meeting involved a private ith respect to the Strategic report and irectors report, we also considered whether the disclosures required by the ompanies Act 2006
discussion without management present. e also met with the hair of the Audit ommittee on an ad-hoc basis. uring these various conversations have been included.
we discussed our observations on a variety of accounting matters, for example the accounting for acquisitions, disposals and changes in ased on our wor underta en in the course of the audit, the ompanies Act 2006 requires us also to report certain opinions and matters as
assumptions used in the group s impairment assessment over goodwill and brand intangibles assets, and observations on controls over financial described below.
reporting. In ecember, the Audit ommittee discussed and challenged the audit plan. The plan included the matters which we considered trategic report and irectors report
presented the highest ris to the audit (the ey audit matters) and other information on our audit approach such as our approach to specific In our opinion, based on the wor underta en in the course of the audit, the information given in the Strategic report and irectors report for the
balances, the audit of journals and where the latest technology would be used to obtain better quality audit evidence. year ended 30 une 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
The areas of highest ris for the group audit and where we focused most effort and resources are substantially unchanged from the prior year. In light of the nowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not
They were identify any material misstatements in the Strategic report and irectors report.
Valuation of goodwill and brand intangible assets
ncertain tax positions in respect of direct and indirect taxes in India and ra il and irectors Rem neration
Valuation of post-employment benefit assets and liabilities. In our opinion, the part of the irectors Remuneration Report to be audited has been properly prepared in accordance with the ompanies Act
2006.
To help you understand their impact on the audit, we have listed them in order of decreasing audit effort. ost of these areas are common with
other international beverage companies. The ey audit matters above are consistent with last year. orporate go ernance statement
e have included in an appendix to this report an explanation of each item, why it was discussed and how the audit approach was tailored to The isting Rules require us to review the directors statements in relation to going concern, longer-term viability and that part of the corporate
address the concerns. governance statement relating to the company s compliance with the provisions of the orporate overnance ode specified for our review.
As the sponsoring company for the nited ingdom schemes, valuation of post-employment benefit schemes was also identified as a ey audit Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other
matter for the company. information section of this report.
e impact of climate ris on o r a dit ased on the wor underta en as part of our audit, we have concluded that each of the following elements of the corporate governance
As explained in the Non-financial and sustainability information statement section of the Strategic Report, the group has also performed a ris statement is materially consistent with the financial statements and our nowledge obtained during the audit, and we have nothing material to add
assessment to understand the potential impacts of climate change upon ey selected businesses, in particular how increasing global temperatures or draw attention to in relation to
are li ely to impact operations due to water scarcity and policy changes impacting input costs. As part of our audit, we made enquiries of
The directors confirmation that they have carried out a robust assessment of the emerging and principal ris s
management to understand the extent of the potential impact of climate change on the group s business and the financial statements, including
The disclosures in the Annual Report that describe those principal ris s, what procedures are in place to identify emerging ris s and an
reviewing management s climate change ris assessment and climate change scenarios which were prepared with support from an external expert.
explanation of how these are being managed or mitigated
e used our nowledge of the group and we engaged with our own climate change experts to evaluate the ris assessment performed by
management, and to understand the scenarios considered.

162 Diageo Annual Report 2023 Diageo Annual Report 2023 163
I EPE E T I TORS' REPORT TO T E E ERS OF I GEO P C con tinu ed

The directors statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting ppendi e a dit matters
in preparing them, and their identification of any material uncertainties to the group s and company s ability to continue to do so over a period of ey audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and
at least twelve months from the date of approval of the financial statements include the most significant assessed ris s of potential material misstatement (whether or not due to fraud) identified by us. They include those which
The directors explanation as to their assessment of the group s and company s prospects, the period this assessment covers and why the period had the greatest effect on the overall audit strategy the allocation of resources in the audit and directing the efforts of the audit team. These
is appropriate and matters, and any comments we ma e on the results of our procedures, were addressed in the context of our audit of the financial statements as a
The directors statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or This is not a complete list of all ris s identified by our audit.
assumptions.
Our review of the directors statement regarding the longer-term viability of the group and company was substantially less in scope than an audit al ation of goodwill and rand intangi le assets
and only consisted of ma ing inquiries and considering the directors process supporting their statement chec ing that the statement is in alignment
Nat re of t e e dit atter
with the relevant provisions of the orporate overnance ode and considering whether the statement is consistent with the financial
statements and our nowledge and understanding of the group and company and their environment obtained in the course of the audit. m acte 2022

In addition, based on the wor underta en as part of our audit, we have concluded that each of the following elements of the corporate oodwill m 2,287m
governance statement is materially consistent with the financial statements and our nowledge obtained during the audit rands m 7,896m
The directors statement that they consider the Annual Report, ta en as a whole, is fair, balanced and understandable, and provides the
oodwill and brand assets have been recognised as a result of acquisitions, in the current and prior years. iageo is required to perform testing of
information necessary for the members to assess the group s and company s position, performance, business model and strategy
the recoverable amounts of these assets at least annually because they are deemed to have an indefinite life and are therefore not amortised.
The section of the Annual Report that describes the review of effectiveness of ris management and internal control systems and
Testing was primarily performed by iageo over goodwill on a number of cash generating units ( s) and brands in ay and impairment
The section of the Annual Report describing the wor of the Audit ommittee.
triggers considered up to the balance sheet date. The testing, with supporting sensitivity analyses, calculated the value in use (VI ) and fair value
e have nothing to report in respect of our responsibility to report when the directors statement relating to the company s compliance with the less cost of disposal and compared this amount to the carrying value. VI was predominantly used, unless management believed that fair value
ode does not properly disclose a departure from a relevant provision of the ode specified under the isting Rules for review by the auditors. less cost of disposal would result in a higher recoverable amount for any or brand.
ertain s and brands were identified as being sensitive to reasonable changes in significant assumptions and are required to be disclosed in
5. ception reporting re ired t e ompanies ct 006 the Annual Report.
nder the ompanies Act 2006 we are required to report to you if, in our opinion The methodology in the models is dependent on various assumptions, both short term and long term in nature. These assumptions, which are
we have not obtained all the information and explanations we require for our audit or subject to estimation uncertainty, are derived from a combination of management s judgement, experts engaged by management and mar et
adequate accounting records have not been ept by the company, or returns adequate for our audit have not been received from branches not data. The significant assumptions that we focused our audit on were those with greater levels of management judgement and for which variations
visited by us or had the most significant impact on the recoverable amounts. Specifically, these included iageo s strategic plans for fiscal years 202 to 2026
certain disclosures of directors remuneration specified by law are not made or including long-term growth rates, discount rates, and forecasts for volume, revenue and operating profit growth.
the company financial statements and the part of the irectors Remuneration Report to be audited are not in agreement with the accounting e disc ssion wit t e dit ommittee
records and returns.
e discussed with the Audit ommittee the methodologies and significant assumptions used to determine the recoverable values of the goodwill
e have no exceptions to report arising from this responsibility. in India and Tur ey, the eni Ra i brand, and the portfolio of S (India) brands.
These discussions covered
6. Responsi ilities of t e directors for t e financial statements the macroeconomic environment
As explained more fully in the irectors responsibilities in respect of the Annual Report, Form 20-F and financial statements set out on page 116, the the consistency of assumptions of the impact of climate change with the impacts discussed in the unaudited disclosures on pages 71-87 in
directors are responsible for the preparation of the financial statements in accordance with the applicable framewor and for being satisfied that response to the recommendations of the Tas Force for limate related Financial isclosures
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 reasonably possible alternatives for significant assumptions for example, the appropriateness of discount rates relative to our independently
financial statements that are free from material misstatement, whether due to fraud or error. calculated ranges and
In preparing the financial statements, the directors are responsible for assessing the group s and the company s ability to continue as a going

FINANCIAL STATEMENTS
the disclosures made in relation to goodwill and brand intangibles, including the use of sensitivity analysis to explain estimation uncertainty and
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either the conditions that would result in an impairment being recognised.
intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.
The directors are also responsible for the other information referenced above. ow o r a dit addressed t e e dit atter
e validated the appropriateness of the s selected.
7. se of t is report e evaluated the design and operation of controls in place over the methodologies and calculation of fair value less cost of disposal and VI
This report, including the opinions, has been prepared for and only for the company s members as a body in accordance with hapter 3 of Part 16 for each and selection of the significant assumptions used.
of the ompanies Act 2006 and for no other purpose. e do not, in giving these opinions, accept or assume responsibility for any other purpose or e agreed the mathematical accuracy of the calculations, to estimate the VI .
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. In respect of the significant assumptions, our testing included the following
challenging the achievability of management s strategic plan and the prospects for iageo s businesses for the specific s and brands. e
paid particular attention to achievement of the strategic plan and margin improvements through productivity initiatives in light of historical
ability to achieve these and the current elevated inflationary environment
R O S S obtaining and evaluating evidence where available for critical data relating to significant assumptions of forecasted growth, from a
for and on behalf of Pricewaterhouse oopers P combination of historic experience, external mar et (e.g. I SR, the leading source of data and analysis on the global beverage alcohol
hartered Accountants and Statutory Auditors mar et) and other financial information
ondon assessing whether the cash flows included in the model were in accordance with the accounting standard IAS 36 Impairment of Assets
31 uly 2023 independently assessing the sensitivity of the VI to reasonable variations in significant assumptions, both individually and in aggregate and
determining a reasonable range for the discount rate used within the model, with the assistance of Pw valuation experts, and comparing it to
the discount rate used by management.
e evaluated and tested the disclosures made in the Annual Report in relation to goodwill and indefinite-lived intangibles, and considered them to
be reasonable.
Rele ant references in nn al Report
Note 1(e) - ritical accounting estimates and judgements Note - Exceptional items
Note 9 - Intangible assets

164 Diageo Annual Report 2023 Diageo Annual Report 2023 165
 O O O O O con tinu ed

ncertain ta positions in respect of direct and indirect ta es in ndia and ra il al ation of post emplo ment enefit sc emes
Nat re of t e e dit atter Nat re of t e e dit atter
m acte 2022 m acte 2022
urrent tax assets m 1 9m Post-employment benefit plan assets ( roup) m 8,399m
urrent tax liabilities m 252m Post-employment benefit plan assets ( ompany) m 6.0 1m
Provision for tax uncertainties m 156m Post employment benefit plan liabilities ( roup) m 7,23 m
The group operates across a large number of jurisdictions and in the normal course of business is subject to periodic challenges by tax authorities Post employment benefit plan liabilities ( ompany) m ,897m
on a range of matters, including transfer pricing, direct and indirect taxes, and transaction related matters. In common with all alcohol beverage
The most significant post-employment schemes are within the nited ingdom, Ireland and the nited States all of which are in a net surplus
companies, taxation is particularly challenging because of specific alcohol duties and the international distribution of certain brands.
position as at 30 une 2023.
iageo ma es judgements in assessing the li elihood of potentially material exposures, develops estimates to determine provisions where
ithin the and Ireland pension schemes, the group invests in pension investment vehicles (PIVs) which are increasingly complex to value
required, and considers whether contingent liability disclosures should be made. Of particular significance are direct and indirect tax assessments
and in the current environment are experiencing a significant amount of volatility.
in developing mar ets and assessments relating to financing and transfer pricing arrangements. The impact of a more aggressive tax stance by
The valuation of pension plan liabilities is dependent on a number of actuarial assumptions. anagement uses external actuaries to assist in
tax authorities to deal with government financing requirements following the ovid pandemic, and, in certain instances, changes in local tax
determining these assumptions, and to determine the valuation of the defined benefit obligation. The experts use valuation methodologies that
regulations together with ongoing inspections by local tax and customs authorities and international bodies could materially impact the amounts
require a number of mar et-based inputs and other financial and demographic assumptions, including salary increases, mortality rates, discount
recorded in the group financial statements.
rates, inflation levels and the impact of any changes in individual pension plans. The significant assumptions that we focused our audit on were
e disc ssion wit t e dit ommittee those with greater levels of management judgement, and for which variations had the most significant impact on the liabilities.
e discussed with the Audit ommittee the judgements ta en by management in assessing the ris of a potentially material exposure, and the Specifically, these included the discount rates, inflation rates and mortality rates.
significant assumptions used by management in determining the level of direct and indirect tax provisioning. Our discussions specifically covered e disc ssion wit t e dit ommittee
matters in ra il and India. e also discussed the disclosures, including those made in note 7 and note 19 to the Annual Report.
e discussed with the Audit ommittee the methodologies and significant assumptions used by management to determine the value of the
ow o r a dit addressed t e e dit atter defined benefit assets and liabilities for the significant plans. e have performed our procedures over the following
e evaluated the design and implementation of controls to identify uncertain tax positions related to direct and indirect taxes, and the related the valuation of pension investment vehicles by sending confirmation requests to investment managers and custodians and reperforming the
accounting policy for providing for and disclosing tax exposures. asset valuation calculations and
Pw tax specialists gained an understanding of the current status of tax assessments and investigations and monitored developments in the methodology used by management s experts to update ey assumptions used in calculating the defined benefit obligations, including
ongoing disputes. e read recent rulings and correspondence with tax authorities, as well as external advice provided by the group s tax experts changes to discount rates reflecting inflationary pressure in the year and updates to mortality assumptions for the and Irish schemes in line
and legal advisors to satisfy ourselves that the tax provisions had been appropriately recorded or adjusted to reflect the latest developments. with the ontinuous ortality Investigation ( I ) model published at the year end.
here 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. e also challenged management s ey assumptions.
ow o r a dit addressed t e e dit atter
e agreed the mathematical accuracy of the provision calculation. e evaluated the design and implementation of controls in place over both the pension investments and defined benefit pension obligations.
e evaluated and tested the related disclosures in relation to uncertain tax positions and considered them to be reasonable. e also evaluated the objectivity and competence of iageo s experts involved in the valuation of the defined benefit obligations.
e have confirmed the year end valuation of pension assets, including investments in pension investment vehicles, with both investment
Rele ant references in nn al Report managers and custodians, and reperformed the year end valuation calculations of these assets. In addition, we have reviewed the latest service
Note 1(e) - ritical accounting estimates and judgements Note 7 - Taxation organisation reports for the investment managers in order to determine the effectiveness of controls they operate related to investment valuation.
Note - Exceptional items Note 15 - or ing capital Our actuarial experts assessed the appropriateness of the methodology used to estimate the liabilities, and to review the calculations prepared
Note 5 - Finance income and charges Note 19 - ontingent liabilities and legal by iageo s actuarial experts. They also understood the judgments made by iageo and their actuarial experts in determining the significant
proceedings assumptions, and compared these assumptions to our independently compiled expected ranges based on mar et observable indices, relevant
national and industry benchmar s, and our mar et experience, for the significant plans.

FINANCIAL STATEMENTS
ased on our procedures, we considered management s significant assumptions to be within reasonable ranges. e evaluated and tested the
related disclosures in relation to the defined benefit obligation, and considered them to be reasonable.
Rele ant references in nn al Report
Note 1(e) - ritical accounting estimates and judgements Note 1 - Post employment benefits
( roup)
Note 6 - Post employment benefits
( ompany)

166 Diageo Annual Report 2023 Diageo Annual Report 2023 167
 ear en e ear ended ear ended ear en e ear ended ear ended
ne 30 une 2022 30 une 2021 ne 30 une 2022 30 une 2021
Notes mi ion million million Notes mi ion million million
ae 2 22, 8 19,153 Ot er com re en ive income
Excise duties 3 (6,996) (6, 20) tem t at i not e rec c e e ent to t e income tatement
et a e 2 15, 52 12,733 Net remeasurement of post employment benefit plans
ost of sales 3 (5,973) (5,038) roup 14 616 16
ro ro it 9, 79 7,695 Associates and joint ventures 5 3
ar eting 3 (2,721) (2,163) Non-controlling interests 14 (1)
Other operating items 3 (2,3 9) (1,801) Tax on post employment benefit plans (123) ( 6)
O erating ro it , 09 3,731 hanges in the fair value of equity investments at fair value through other comprehensive income (12)
Non-operating items (17) 1 85 (27)
Finance income 5 97 278 tem t at ma e rec c e e ent to t e income tatement
Finance charges 5 (919) (651) Exchange differences on translation of foreign operations
Share of after tax results of associates and joint ventures 6 17 33 roup 1,128 (1,233)
ro it e ore ta ation ,387 3,706 Associates and joint ventures 6 60 (2 0)
Taxation 7 (1,0 9) (907) Non-controlling interests 171 (173)
ro it or t e ear 3,338 2,799 Net investment hedges (623) 810
Exchange (gain)/loss recycled to the income statement
ttri ta e to On disposal of foreign operations 8 63
Equity shareholders of the parent company 3,2 9 2,660 On step acquisitions
Non-controlling interests 89 139 Tax on exchange differences group (6) (9)
3,338 2,799 Tax on exchange differences non-controlling interests (1)
Effective portion of changes in fair value of cash flow hedges
eig te average n m er o are mi ion million million Hedge of foreign currency debt of the group 233 (298)
Shares in issue excluding own shares 2,318 2,337 Transaction exposure hedging of the group (172) 101
ilutive potential ordinary shares 7 8 Hedges by associates and joint ventures (15) (1)
2,325 2,3 5 ommodity price ris hedging of the group 78 1
Recycled to income statement hedge of foreign currency debt of the group (239) 175
ence pence pence Recycled to income statement transaction exposure hedging of the group 2 10

FINANCIAL STATEMENTS
a ic earning er are 1 0.2 113.8 Recycled to income statement commodity price ris hedging of the group ( 6) (2)
i te earning er are 139.7 113. Tax on effective portion of changes in fair value of cash flow hedges 32 (6)
Hyperinflation adjustments 365 (17)
The accompanying notes are an integral part of these consolidated financial statements.
Tax on hyperinflation adjustments 7 (7 ) 5
997 (838)
Ot er com re en ive o income net o ta or t e ear 1, 82 (865)
ro it or t e ear 3,338 2,799
ota com re en ive income or t e ear ,820 1,93

ttri ta e to
Equity shareholders of the parent company ,561 1,969
Non-controlling interests 18 259 (35)
ota com re en ive income or t e ear ,820 1,93

The accompanying notes are an integral part of these consolidated financial statements.

168 Diageo Annual Report 2023 Diageo Annual Report 2023 169
 con tin u ed

ne 30 une 2022 Ot er re erve etaine earning e icit

Notes mi ion mi ion million million
it
on c rrent a et e ging attri ta e to
a ita an Ot er arent on
Intangible assets 9 11,902 are are re em tion e c ange O n retaine com an contro ing
ca ita remi m re erve re erve are earning ota are o er intere t ota e it
Property, plant and equipment 10 5,8 8 Notes mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion

iological assets 11 9 t ne 7 2 1,351 3,201 (929) (1,936) ,3 3 2, 07 6,772 1,668 8, 0

Investments in associates and joint ventures 6 3,652 Profit for the year 2,660 2,660 2,660 139 2,799
Other comprehensive loss (652) (39) (39) (691) (17 ) (865)
Other investments 13 37
ota com re en ive o income or t e ear
Other receivables 15 37
Employee share schemes 59 (10) 9 9 9
Other financial assets 16 3 5
Share-based incentive plans 18 9 9 9 9
eferred tax assets 7 11
Share-based incentive plans in respect of
Post employment benefit assets 1 1,553 associates 3 3 3 3
23,582 Tax on share-based incentive plans 9 9 9 9
rrent a et Purchase of non-controlling interests 8 (15) (15) (15) (27) ( 2)
Inventories 15 7,09 Associates transactions with non-controlling
interests (91) (91) (91) (91)
Trade and other receivables 15 2,933 hange in fair value of put option (2) (2) (2) (2)
orporate tax receivables 7 1 9 Share buybac programme (1) 1 (200) (200) (200) (200)
Assets held for sale 8 222 ividend declared for the year 18 (1,6 6) (1,6 6) (1,6 6) (72) (1,718)
Other financial assets 16 251 t ne 7 1 1,351 3,202 (1,581) (1,877) 5,061 3,18 6,897 1,53 8, 31
ash and cash equivalents 17 2,285 Adjustment to 2021 closing equity in respect of
hyperinflation in Tur ey 251 251 251 251
12,93
te o ening a ance 7 1 1,351 3,202 (1,581) (1,877) 5,312 3, 35 7,1 8 1,53 8,682
ota a et 36,516
Profit for the year 3,2 9 3,2 9 3,2 9 89 3,338
rrent ia i itie
Other comprehensive income 535 777 777 1,312 170 1, 82
orrowings and ban overdrafts 17 (1,522) ota com re en ive income or t e ear 535 ,026 ,026 ,561 259 ,820
Other financial liabilities 16 ( ) Employee share schemes 39 50 89 89 89
Share buybac liability (117) Share-based incentive plans 18 59 59 59 59
Trade and other payables 15 (5,887) Share-based incentive plans in respect of
iabilities held for sale 8 (61) associates
Tax on share-based incentive plans 9 9 9 9
orporate tax payables 7 (252)
Share-based payments and purchase of own
Provisions 15 (159) shares in respect of subsidiaries (11) (11) (11) (6) (17)

FINANCIAL STATEMENTS
(8, 2) nclaimed dividend 3 3 3 1
on c rrent ia i itie hange in fair value of put option (3 ) (3 ) (3 ) (3 )
orrowings 17 (1 , 98) Share buybac programme (18) 18 (2,310) (2,310) (2,310) (2,310)
Other financial liabilities 16 (703) ividend declared for the year 18 (1,720) (1,720) (1,720) (72) (1,792)
Other payables 15 (380) t ne
Provisions 15 (258) Profit for the year
Other comprehensive loss
eferred tax liabilities 7 (2,319)
ota com re en ive o income or t e ear
Post employment benefit liabilities 1 ( 02)
Employee share schemes
(18,560)
Share-based incentive plans 18
ota ia i itie (27,002)
Share-based incentive plans in respect of
et a et 9,51 associates
it Tax on share-based incentive plans
Share capital 18 723 Share-based payments and purchase of own
shares in respect of subsidiaries
Share premium 1,351 Purchase of non-controlling interests 8
Other reserves 2,17 Associates transactions with non-controlling
Retained earnings 3,550 interests
it attri ta e to e it are o er o t e arent com an 7,798 nclaimed dividend
hange in fair value of put option
on contro ing intere t 18 1,716
Share buybac programme
ota e it 9,51
ividend declared for the year 18
The accompanying notes are an integral part of these consolidated financial statements. t ne

These consolidated financial statements have been approved by a duly appointed and authorised committee of the oard of irectors on The accompanying notes are an integral part of these consolidated financial statements.
31 uly 2023 and were signed on its behalf by ebra rew and avanya handrashe ar, irectors.

170 Diageo Annual Report 2023 Diageo Annual Report 2023 171
 c on tin u ed

Accounting information and policies

ear en e ne ear ended 30 une 2022 ear ended 30 une 2021
ntrod ction
Notes mi ion mi ion million million million million
This section describes the basis of preparation of the consolidated financial statements and the group s accounting policies that are applicable to
a o rom o erating activitie the financial statements as a whole. Accounting policies, critical accounting estimates and judgements specific to a note are included in the note to
which they relate. Furthermore, the section details new accounting standards, amendments and interpretations, that the group has adopted in the
Profit for the year 3,338 2,799
current financial year or will adopt in subsequent years.
Taxation 1,0 9 907
functional currency). The consolidated financial statements are
Share of after tax results of associates and joint ventures ( 17) (33 ) 1. cco nting information and policies presented in sterling, which is the functional currency of the parent
Net finance charges 22 373 (a) asis of preparation company, iageo plc. The functional currency of iageo plc is
Non-operating items 17 (1 ) The consolidated financial statements are prepared in accordance with determined by using management judgement that considers the parent
O erating ro it , 09 3,731 company as an extension of its subsidiaries.
international accounting standards in conformity with the requirements
The income statements and cash flows of non-sterling entities are
Increase in inventories (7 0) ( 3) of the ompanies Act 2006 and International Financial Reporting
translated into sterling at weighted average rates of exchange, except
ecrease/(increase) in trade and other receivables (378) ( 6) Standards (IFRSs) adopted by the ( -adopted International
for subsidiaries in hyperinflationary economies that are translated with
( ecrease)/increase in trade and other payables and provisions 939 1,220 Accounting Standards) and IFRSs, as issued by the IAS , including
the closing rate at the end of the year and for substantial transactions
et increa e ecrea e in or ing ca ita (179) 331 interpretations issued by the IFRS Interpretations ommittee. IFRS as
that are translated at the rate on the date of the transaction. Exchange
epreciation, amortisation and impairment 828 7
adopted by the differs in certain respects from IFRS as issued by the
differences arising on the retranslation to closing rates are ta en to the
IAS . The differences have no impact on the group s consolidated
ividends received 190 290 exchange reserve.
financial statements for the years presented. The consolidated financial
Post employment payments less amounts included in operating profit (89) (30) Assets and liabilities are translated at closing rates. Exchange
statements are prepared on a going concern basis under the historical
Other items 53 88 differences arising on the retranslation at closing rates of the opening
cost convention, unless stated otherwise in the relevant accounting
982 795 balance sheets of overseas entities are ta en to the exchange reserve,
policy.
as are exchange differences arising on foreign currency borrowings and
a generate rom o eration 5,212 ,857 The preparation of financial statements in conformity with IFRS
financial instruments designated as net investment hedges, to the extent
Interest received 110 89 requires management to ma e estimates and assumptions that affect
that they are effective. Tax charges and credits arising on such items are
Interest paid ( 38) ( 0) the reported amounts of assets and liabilities, the disclosure of
also ta en to the exchange reserve. ains and losses accumulated in
Taxation paid (9 9) (852) contingent assets and liabilities at the date of the financial statements,
the exchange reserve are recycled to the income statement when the
(1,277) (1,203)
and the reported amounts of revenues and expenses during the year.
foreign operation is sold. Other exchange differences are ta en to the
Actual results could differ from those estimates.
et ca in o rom o erating activitie 3,935 3,65 income statement. Transactions in foreign currencies are recorded at
a o rom inve ting activitie ( ) oing concern the rate of exchange at the date of the transaction.
isposal of property, plant and equipment and computer software 17 13 anagement prepared cash flow forecasts which were also sensitised The principal foreign exchange rates used in the translation of
Purchase of property, plant and equipment and computer software (1,097) (626) to reflect severe but plausible downside scenarios ta ing into financial statements for the three years ended 30 une 2023, expressed
consideration the group s principal ris s. In the base case scenario, in S dollars and euros per 1, were as follows
ovements in loans and other investments (72) ( )
management included assumptions for mid-single digit net sales 2023 2022 2021
Sale of businesses and brands 8 82 1
growth, operating margin improvement and global T A mar et share
Acquisition of subsidiaries(1) 8 (206) ( 50) S
growth. In light of the ongoing geopolitical volatility, the base case
Investments in associates and joint ventures(1) 8 (65) (38) outloo and severe but plausible downside scenarios incorporated Income statement and cash flows(1) 20 1.33 1.35
et ca o t o rom inve ting activitie (1,3 1) (1,091) considerations for a prolonged global recession, supply chain Assets and liabilities(2) 2 1.21 1.39

FINANCIAL STATEMENTS
a o rom inancing activitie disruptions, higher inflation and further geopolitical deterioration. Even E
Share buybac programme 18 (2,28 ) (109) under these scenarios, the group s liquidity is still expected to remain Income statement and cash flows(1) 1.18 1.13
Net sale of own shares for share schemes 18 9 strong, as it was protected by issuing 500 million of fixed rate euro
Assets and liabilities(2) 1.16 1.17
Purchase of treasury shares in respect of subsidiaries (15) and 2 billion of fixed rate dollar-denominated bonds in the year ended
30 une 2023. itigating actions, should they be required, are all within (1) eighted average rates
ividends paid to non-controlling interests (81) (77) (2) losing rates
management s control and could include reductions in discretionary
Proceeds from bonds 17 2,263 1,031 The group uses foreign exchange hedges to mitigate the effect of
spending such as acquisitions and capital expenditure, as well as a
Repayment of bonds 17 (1,521) (1,2 7) temporary suspension of the share buybac programme and dividend exchange rate movements. For further information, see note 16.
Purchase of shares of non-controlling interests 8 ( 2) payments in the next 12 months, or drawdowns on committed facilities. (e) ritical acco nting estimates and dgements
ash inflow from other borrowings 503 3 Having considered the outcome of these assessments, the irectors are etails of critical estimates and judgements which the irectors consider
ash outflow from other borrowings ( 2 ) (787) comfortable that the company is a going concern for at least 12 months could have a significant impact on the financial statements are set out
Equity dividends paid (1,718) (1,6 6) from the date of signing the group s consolidated financial statements. in the related notes as follows
et ca o t o rom inancing activitie (3,259) (2,79 ) (c) onsolidation Exceptional items management judgement whether exceptional or
et ecrea e in net ca an ca e iva ent 17 (665) (231) The consolidated financial statements include the results of the not page 179
Exchange differences 239 (285) company and its subsidiaries together with the group s attributable Taxation management judgement whether a provision is required
Net cash and cash equivalents at beginning of the year 2,637 3,153 share of the results of associates and joint ventures. A subsidiary is an and management estimate of amount of corporate tax payable or
et ca an ca e iva ent at en o t e ear 2,211 2,637 entity controlled by iageo plc. The group controls an investee when it is receivable, the recoverability of deferred tax assets and expectation
exposed, or has rights, to variable returns from its involvement with the on manner of recovery of deferred taxes pages 183 and 216
investee and has the ability to affect those returns through its power rands, goodwill, other intangibles and contingent considerations
et ca an ca e iva ent con i t o
over the investee. here the group has the ability to exercise joint management judgement whether the assets and liabilities are to be
ash and cash equivalents 17 2,285 2,7 9
control over an entity but has rights to specified assets and obligations recognised and synergies resulting from an acquisition.
an overdrafts 17 (7 ) (112) for liabilities of that entity, the entity is included on the basis of the anagement judgement and estimate are required in determining
2,211 2,637 group s rights over those assets and liabilities. future cash flows and appropriate applicable assumptions to support
the intangible asset and contingent consideration value pages 18
(1) For the years ended 30 une 2022 and 30 une 2021, the previously reported line item of Acquisition of businesses has been replaced with Acquisition of subsidiaries and Investments in (d) oreign c rrencies
associates and joint ventures to show separately the amounts which had previously been shown combined. and 206
Items included in the financial statements of the group s subsidiaries,
The accompanying notes are an integral part of these consolidated financial statements. associates and joint ventures are measured using the currency of the
primary economic environment in which each entity operates (its

172 Diageo Annual Report 2023 Diageo Annual Report 2023 173
FI CI ST TE E TS c on tin u ed

Post employment benefits management judgement whether a Sterling amounts presented at the official reference exchange rate are
surplus can be recovered and management estimate in determining results of simple mathematical conversion.
the assumptions in calculating the liabilities of the funds page 195 The impact of hyperinflationary accounting for ebanon was immaterial
ontingent liabilities and legal proceedings management both in the current and comparative periods.
judgement in assessing the li elihood of whether a liability will arise (g) New acco nting standards and interpretations ntrod ction
and an estimate to quantify the possible range of any settlement This section explains the results and performance of the group for the three years ended 30 une 2023. isclosures are provided for segmental
The following amendments to the accounting standards, issued by the
and significant unprovided tax matters where maximum exposure is information, operating costs, exceptional items, finance income and charges, the group s share of results of associates and joint ventures, taxation.
IAS and endorsed by the , were adopted by the group from 1 uly
provided for each page 215 For associates, joint ventures and taxation, balance sheet disclosures are also provided in this section.
2022 with no impact on the group s consolidated results, financial
(f) perinflationar acco nting position or disclosures
The group applied hyperinflationary accounting for its operations in Amendments to IFRS 3 pdating a Reference to the onceptual
. egmental information
Tur ey, Vene uela and ebanon. Tur ey has been a hyperinflationary Framewor
economy where cumulative inflation for the three years ended 30 une Amendments to IAS 16 Property, Plant and Equipment Proceeds
2022 exceeded 100%. onsequently, since arch 2022, the group cco nting policies
before Intended se
applies hyperinflationary accounting for its Tur ish operations. The Amendments to IAS 37 Onerous ontracts - ost of Fulfilling a a e comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods
group s consolidated financial statements for the years ended 30 une ontract includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as
2023 and 30 une 2022 include the results and financial position of its value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the
Amendments to Annual improvements 2018-2020 - IFRS 9 - Fees in
Tur ish operations restated to the measuring unit current at the end of customer, which is determined by considering, among other factors, the delivery terms agreed with customers. For the sale of goods, the
the 10 per cent Test, IFRS 16 - ease incentives, IAS 1 - Taxation in
each period, with hyperinflationary gains and losses in respect of transfer of control occurs when the significant ris s and rewards of ownership are passed to the customer. ased on the shipping terms
Fair Value easurements agreed with customers, the transfer of control of goods occurs at the time of dispatch for the majority of sales. here the transfer of control is
monetary items being reported in finance income and charges. Amendments to IAS 12 International Tax Reform Pillar Two odel subsequent to the dispatch of goods, the time between dispatch and receipt by the customer is generally less than five days. The group
omparative amounts presented in the consolidated financial Rules 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
statements were not restated. Hyperinflationary accounting needs to be
The following standard and amendments issued by the IAS have been significant reversal will not occur. Therefore, sales are stated net of expected price discounts, allowances for customer loyalty and certain
applied as if Tur ey has always been a hyperinflationary economy, promotional activities and similar items. enerally, payment of the transaction price is due within credit terms that are consistent with industry
endorsed by the and have not been adopted by the group
hence, as per iageo s accounting policy choice, the differences practices, with no element of financing.
between equity at 30 une 2021 as reported and the equity after the IFRS 17 Insurance contracts (effective from the year ending 30 une
202 ) is ultimately intended to replace IFRS . ased on a et a e are sales less excise duties. iageo incurs excise duties throughout the world. In the majority of countries, excise duties are
restatement of the non-monetary items to the measuring unit current at
preliminary assessment, the group believes that the adoption of IFRS effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the
30 une 2021 were recognised in retained earnings. Such restatement
17 will not have a significant impact on its consolidated results or 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
includes impairment of TR 2,133 million ( 177 million) recognised on the
financial position. customer and where a customer fails to pay for products received the group cannot reclaim the excise duty. The group therefore recognises
goodwill in the Tur ey cash-generating unit and TR 1,627 million ( 135
Amendments to IAS 12 - Income taxes (effective from the year ending excise duty, unless it regards itself as an agent of the regulatory authorities, as a cost to the group.
million) in respect of the en Ra i brand, as a result of the increased
carrying values for those due to hyperinflation adjustments. hen 30 une 202 ) requires an entity to recognise deferred tax on initial verti ing co t , point of sale materials and sponsorship payments are charged to mar eting in operating profit when the company has a
applying IAS 29 on an ongoing basis, comparatives in stable currency recognition of particular transactions to the extent that the right of access to the goods or services acquired.
are not restated and the effect of inflating opening net assets to the transaction gives rise to equal amounts of deferred tax assets and
measuring unit current at the end of the reporting period is presented in liabilities. The proposed amendments would apply to transactions
other comprehensive income. The inflation rate used by the group is the such as leases and decommissioning obligations for which an entity iageo is an international manufacturer and distributor of premium drin s. iageo also owns a number of investments in associates and joint
official rate published by the Tur ish Statistical Institute. The movement recognises both an asset and a liability. The group believes that the ventures, as set out in note 6.
in the publicly available official price index for the year ended 30 une adoption of these amendments will not have a significant impact on The segmental information presented is consistent with management reporting provided to the Executive ommittee (the chief operating
2023 was 38% (2022 79%). its consolidated results and financial position. decision-ma er).
Vene uela is a hyperinflationary economy where the government There are a number of other amendments and clarifications to IFRSs, The Executive ommittee 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

FINANCIAL STATEMENTS
maintains a regime of strict currency controls with multiple foreign effective in future years, which are not expected to significantly impact
Executive ommittee is the Supply hain and Procurement (S P) segment, which manufactures products for other group companies and includes
currency rate systems. The exchange rate used to translate the results of the group s consolidated results or financial position.
the production sites in the nited ingdom, Ireland, Italy, uatemala and exico, as well as comprises the global procurement function.
the group s Vene uelan operations was VES/ 3,807 for the year ended ( ) limate c ange considerations The group s operations also include the orporate segment. orporate costs are in respect of central costs, including finance, mar eting,
30 une 2023 (2022 VES/ 759). This rate reflects management s
The impact of climate change assessment and the net ero carbon corporate relations, human resources and legal, as well as certain information systems, facilities and employee costs that are not allocable to the
estimate of the exchange rate considering inflation and the most
emission target for iageo s direct operations (Scope 1 2) for 2030 geographical segments or to the S P.
appropriate official exchange rate. ovement in the price index for the
have been considered as part of the assessment of estimates and iageo uses shared services operations to deliver transaction processing activities for mar ets and operational entities. These centres are located
year ended 30 une 2023 was 382% (2022 268%). The inflation rate
judgements in preparing the group s consolidated financial statements. in India, Hungary, olombia and the Philippines. These captive business service centres also perform certain central finance activities, including
used by the group is provided by an independent valuer because no
The climate change scenario analyses performed in 2023 elements of financial planning and reporting, treasury and HR services. The costs of shared services operations are recharged to the regions.
reliable, officially published rate is available for Vene uela.
conducted in line with T F recommendations ( Transition For planning and management reporting purposes, iageo uses budgeted exchange rates that are set at the prior year s weighted average
The following table presents the contribution of the group s
Scenario (R P 2.6), a oderate arming Scenario (R P .5) and a exchange rate. In order to ensure a consistent basis on which performance is measured through the year, prior period results are also restated to the
Vene uelan operations to consolidated net sales, operating profit,
Severe arming Scenario (R P 8.5)) identified no material financial budgeted exchange rate. Segmental information for net sales and operating profit before exceptional items are reported on a consistent basis with
operating cash flow and assets for the years ended 30 une 2023 and
impact to these financial statements. management reporting. The adjustments required to retranslate the segmental information to actual exchange rates and to reconcile it to the
30 une 2022 and with the amounts that would have resulted if the
The following considerations were made in respect of the financial group s reported results are shown in the tables below. The comparative segmental information, prior to retranslation, has not been restated at the
official reference exchange rate had been applied
statements current year s budgeted exchange rates but is presented at the budgeted rates for the respective year.
Y 30 2023 ear ended 30 une 2022
The impact of climate change on factors (li e residual values, useful In addition, for management reporting purposes, iageo presents the result of acquisitions and disposals completed in the current and prior year
At official separately from the results of the geographical segments. The impact of acquisitions and disposals on net sales and operating profit is disclosed
At estimated reference lives and depreciation methods) that determine the carrying value of
exchange rate exchange rate
non-current assets. under the appropriate geographical segments in the tables below at budgeted exchange rates.
3 0 ES 3 ES 759 VES/ 7 VES/
million million
The impact of climate change on forecasts of cash flows used
(including forecast depreciation in line with capital expenditure plans
Net sales 15
for iageo s net ero carbon emission commitment) in impairment
Operating loss (1) (1)
assessments for the value-in-use of non-current assets including
Other finance goodwill (see note 9).
(charges)/income -
hyperinflation The impact of climate change on post-employment assets.
adjustment 2 22 1 157
Net cash outflow from
operating activities 3 (5)
Net assets 1 ,606

174 Diageo Annual Report 2023 Diageo Annual Report 2023 175
 c on tin u ed

(a) egmental information for t e consolidated income statement atin Eliminate

America inter- Total
North Asia and segment operating orporate
atin iminate America Europe Pacific aribbean Africa S P sales segments and other Total
merica inter ota
ort ia an egment o erating or orate 2021 million million million million million million million million million million
merica ro e aci ic ari ean rica ae egment an ot er ota
ae 5,803 ,795 5,1 6 1,369 2,020 1,537 (1,537) 19,133 20 19,153
mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion
et a e
ae
At budgeted exchange rates(1) 5,527 2,579 2,561 1,176 1,5 1 1,627 (1,5 8) 13, 63 20 13, 83
et a e
(1) Acquisitions and disposals 28 2 5 35 35
At budgeted exchange rates
S P allocation 9 5 9 13 3 (79)
Acquisitions and disposals
Retranslation to actual exchange rates (355) (68) (82) (1 3) (137) (11) 11 (785) (785)
S P allocation
5,209 2,558 2, 88 1,0 6 1, 12 1,537 (1,537) 12,713 20 12,733
Retranslation to actual exchange rates
( )
Hyperinflation
At budgeted exchange rates(1) 2, 69 728 628 22 228 (97) ,378 (218) ,160
et a e
Acquisitions and disposals (18) (3) (21) (21)
O erating ro it o
S P allocation (30) (32) (5) (27) (3) 97
At budgeted exchange rates(1)
Fair value remeasurement of contingent consideration (9) (27) (36) (36)
Acquisitions and disposals
Retranslation to actual exchange rates (175) (31) (15) (92) (5 ) (367) 10 (357)
S P allocation
O erating ro it o e ore e ce tiona item 2,237 635 608 303 171 3,95 (208) 3,7 6
Fair value remeasurements
Exceptional operating items (15) (15) (15)
Retranslation to actual exchange rates
O erating ro it o 2,237 620 608 303 171 3,939 (208) 3,731
Hyperinflation
Non-operating items 1
O erating ro it o e ore e ce tiona item
Net finance charges (373)
Exceptional operating items
Share of after tax results of associates and joint
O erating ro it o ventures 33
Non-operating items ro it e ore ta ation 3,706
Net finance charges
Share of after tax results of associates and joint (1) These items represent the IFRS 8 performance measures for the geographical and S P segments.
(i) The net sales figures for S P reported to the Executive ommittee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental
ventures
analysis. Apart from sales by the S P segment to the other operating segments, inter-segmental sales are not material.
ro it e ore ta ation (ii) The group s net finance charges are managed centrally and are not attributable to individual operating segments.
(iii) Approximately 38% of annual net sales occurred in the last four months of calendar year 2022.

atin Eliminate ( ) Ot er segmental information

America inter- Total
North Asia and segment operating orporate atin
America Europe Pacific aribbean Africa S P sales segments and other Total merica
ort ia an or orate
2022 million million million million million million million million million million merica ro e aci ic ari ean rica an ot er ota
mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion
ae 6,682 5,7 0 5,62 1,9 5 2, 03 2,010 (2,010) 22,39 5 22, 8

FINANCIAL STATEMENTS
et a e
Purchase of property, plant and equipment and computer
At budgeted exchange rates(1) 5,955 3,258 2,879 1, 86 1,699 2,095 (2,016) 15,356 55 15, 11 software
Acquisitions and disposals 3 23 3 15 75 75 epreciation and intangible asset amortisation
S P allocation 9 6 9 12 3 (79) Exceptional impairment of tangible assets
Retranslation to actual exchange rates 97 (30 ) ( ) 2 (35) (6) 6 (222) (1) (223) Exceptional impairment of intangible assets
Hyperinflation 189 189 189
et a e 6,095 3,212 2,88 1,525 1,682 2,010 (2,010) 15,398 5 15, 52 Purchase of property, plant and equipment and computer
O erating ro it o software 230 187 1 6 128 139 256 11 1,097

At budgeted exchange rates(1) 2,388 1,086 703 528 3 6 (22) 5,029 (256) ,773 epreciation and intangible asset amortisation (80) (93) (93) (16) (81) (116) (10) ( 89)

Acquisitions and disposals (28) 11 (10) (27) (27) Exceptional impairment of tangible assets (3) (3)

S P allocation (1) (18) (2) (1) 22 Exceptional impairment of intangible assets (96) (2 0) (336)

Fair value remeasurements 32 36 (8) 60 60

Purchase of property, plant and equipment and computer
Retranslation to actual exchange rates 63 (108) 10 18 (20) (37) 18 (19)
software 153 23 56 20 125 125 12 626
Hyperinflation 10 10 10
epreciation and intangible asset amortisation (76) (31) (60) (16) (79) (126) (59) ( 7)
O erating ro it o e ore e ce tiona item 2, 5 1,017 711 538 315 5,035 (238) ,797
Exceptional operating items (1) (1 6) (2 1) (388) (388)
O erating ro it o 2, 53 871 70 538 315 ,6 7 (238) , 09
Non-operating items (17)
Net finance charges ( 22)
Share of after tax results of associates and joint
ventures 17
ro it e ore ta ation ,387

176 Diageo Annual Report 2023 Diageo Annual Report 2023 177
 c on tin u ed

(c) ategor and geograp ical anal sis The average number of employees on a full-time equivalent basis . ceptional items
(excluding employees of associates and joint ventures) was as follows
ategor ana i eogra ic ana i

irit eer
ea to
rin Ot er ota
nite
tate n ia
reat
ritain
e to
or ota
2022 2021
cco nting policies
mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion North America 2,811 2,562
ritica acco nting gement
Europe 3,01 3,237
Sales (1)
Asia Pacific 6,500 6, 7 Exceptional items are those that in management s judgement
Non-current assets(2), (3) atin America and aribbean 1,500 1,505 need to be disclosed separately. Such items are included within
the income statement caption to which they relate. anagement
Africa ,061 ,016
believes that separate disclosure of exceptional items and the
Sales(1) 18,16 3,128 882 27 22, 8 6,327 3,219 2,1 2 10,760 22, 8 S P 5,025 5,085 classification between operating and non-operating further helps
Non-current assets(2), (3) 5,899 2,396 2, 13 10,861 21,569 orporate and other 5,076 ,687 investors to understand the performance of the group.
27,987 27,566 hanges in estimates and reversals in relation to items
Sales(1) 15,63 2,562 7 1 216 19,153 5, 1 3,011 1,822 8,879 19,153 previously recognised as exceptional are presented consistently
At 30 une 2023, on a full-time equivalent basis, the group had 30,269 as exceptional in the current year.
Non-current assets(2), (3) ,320 2,561 2,119 10,063 19,063
(2022 28,558 2021 27,783) employees. The average number of
O erating item
(1) The geographical analysis of sales is based on the location of third-party customers. employees of the group, including part-time employees, for the year
(2) The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, was 30, 19 (2022 28,137 2021 28,025). Exceptional operating items are those that are considered to be
investments in associates and joint ventures, other investments and non-current other receivables. material and unusual or non-recurring in nature and are part of
(3) The management information provided to the chief operating decision-ma er does not include an analysis of assets and liabilities by category and therefore is not disclosed. (d) ceptional operating items the operating activities of the group, such as one-off global
Included in the table above are exceptional operating items as follows restructuring programmes which can be multi-year, impairment
. Operating costs ( ) ditors fees of intangible assets and fixed assets, indirect tax settlements,
Other external charges include the fees of the principal auditors of the 2022 202
2022 2021
mi ion property disposals and changes in post employment plans.
mi ion million million
group, Pricewaterhouse oopers P and its affiliates (Pw ) and are
epreciation, amortisation and impairment on o erating item
analysed below.
Excise duties 6,996 6, 20 rand and goodwill impairment 498 336
ains and losses on the sale or directly attributable to a
ost of sales 5,973 5,038 2022 2021
Tangible asset impairment and accelerated
mi ion million million prospective sale of businesses, brands or distribution rights, step
ar eting 2,721 2,163 depreciation 7
Audit of these financial statements .2 3.8 up gains and losses that arise when an investment becomes an
Other operating items 2,3 9 1,801 Staff costs 10 5 associate or an associate becomes a subsidiary and other
Audit of financial statements of subsidiaries 6.1 .
18,039 15, 22 Other external charges 60 52 13 material, unusual non-recurring items, that are not in respect of
Audit related assurance services(1) 2.5 2.6
om ri ing Other operating income (3) the production, mar eting and distribution of premium drin s,
Total audit fees (Audit fees) 12.8 10.8 are disclosed as exceptional non-operating items below
Excise duties ota e ce tiona o erating item note 388 15
Other assurance services (Audit related operating profit in the income statement.
India 2,182 2,127 fees)(2) 0.7 0.8 ost of sales
reat ritain 1,172 1,018 13.5 11.6 Other operating expenses 388 15 a ation item
nited States 61 589 Exceptional current and deferred tax items comprise material
(1) Audit related assurance services are in respect of reporting under section 0 of the S and unusual or non-recurring items that impact taxation.
Other 3,028 2,686 Sarbanes-Oxley Act and the review of the interim financial information.
(2) Other assurance services comprise the aggregate fees for assurance and related
Examples include direct tax provisions and settlements in respect
Increase in inventories (909) (293) of prior years and the remeasurement of deferred tax assets and
services that are not reported under total audit fees .

FINANCIAL STATEMENTS
Raw materials and consumables ,017 3,126 (i) isclosure requirements for auditors fees in the nited States are different from those liabilities following tax rate changes.
ar eting 2,721 2,163 required in the nited ingdom. The terminology by category required in the nited
States is disclosed in brac ets in the above table.
Other external charges 2,597 1,978
Audit services provided by firms other than Pw for the year ended 30
Staff costs 1,795 1,586
une 2023 were 0.1 million (2022 0.1 million 2021 0.1 million).
epreciation, amortisation and impairment 828 7 Further Pw fees for audit services in respect of post employment plans
ains on disposal of properties (2) (1) were 0.3 million for the year ended 30 une 2023 (2022 0.2 million
Net foreign exchange losses 10 22 2021 0.2 million).
Other operating income (1 ) (26)
(c) taff costs and a erage n m er of emplo ees
18,039 15, 22
2022 2021
mi ion million million
(a) Ot er e ternal c arges
ggregate rem neration
Other external charges include research and development expenditure
in respect of new drin s products and pac age design of 53 million ages and salaries 1,5 8 1,557 1,336
(2022 3 million 2021 0 million) and maintenance and repairs of Share-based incentive plans 8 59 50
1 3 million (2022 136 million 2021 107 million). Employer s social security 115 107 83
Employer s pension
efined benefit plans 67 36 82
efined contribution plans 33 25
Other post employment plans 8 3 10
1,795 1,586

178 Diageo Annual Report 2023 Diageo Annual Report 2023 179
 c on tin u ed

2022 2021 ( ) In the year ended 30 une 2023, iageo released unutilised ash payments and receipts included in net cash inflow from operating
mi ion million million 2022 2021
provisions of 20 million from the 50 million exceptional charge ta en activities in respect of exceptional items were as follows mi ion million million
ce tiona o erating item in the year ended 30 une 2022, in respect of winding down its
2022 2021 Interest income 127 119
rand and goodwill impairment (1) (336) operations in Russia. mi ion million million
Fair value gain on financial instruments 3 1 12
Supply chain agility programme (2) (5) Other exceptional operating items include subsequent gains and Thalidomide (note 15 (d) (i)) (16) (15) ota intere t income 68 2 3
istribution termination fee (3) charges of items that were originally recognised as exceptional at inding down Russian operations (13) Interest charge on ban loans, bonds and
inding down Russian operations ( ) (50) inception. In the year ended 30 une 2022, other exceptional operating Supply chain agility programme overdrafts (371) (365)
items resulted in a loss of 2 million driven by the reinvestment of
Other exceptional operating items (5) (2) (15) onations (37) (50) Interest charge on leases (12) (16)
Raising the ar corporate tax benefits. In the year ended 30 une 2021,
(388) other exceptional operating items were a loss of 15 million mainly Indirect tax in orea (10) Interest charge on other borrowings (92) (8 )
on o erating item driven by the charge of the ongoing litigation in Tur ey. Ongoing litigation in Tur ey (1) Fair value loss on financial instruments (3 6) (126)
Sale of businesses and brands (6) On 26 ay 2023, iageo announced the completion of the sale of Substitution drawbac 60 ota intere t c arge (821) (591)
uinness ameroun S.A. (6) its wholly owned subsidiary in ameroon, uinness ameroun S.A., to ota ca a ment (66) (16) et intere t c arge (353) (3 8)
Archers brand (7) the astel roup for an aggregate consideration of 38 million Net finance income in respect of post
resulting in an exceptional gain of 310 million, including cumulative 5. inance income and c arges employment plans in surplus (note 1 ) 22 18
S Popular brands (8)
translation gain in the amount of 17 million recycled to the income Hyperinflation adjustment in respect of
S businesses (9) 3 statement. Tur ey (note 1 (f))
Ty u brand (10) cco nting policies Hyperinflation adjustment in respect of
(7) On 26 October 2022, iageo completed the sale of its Archers
Picon brand (11) 91 Net interest includes interest income and charges in respect of Vene uela (note 1 (f)) 1 2
brand. The transaction resulted in an exceptional gain of 20 million.
eta Abo rewery (12) (95) financial instruments and the results of hedging transactions Interest income in respect of direct and
(8) On 30 September 2022, iageo announced the completion of the used to manage interest rate ris . indirect tax 2 15
indsor business (13) (19)
sale of the Popular brands of its nited Spirits imited ( S ) business. nwinding of discounts
Step acquisition - r lac (1 ) The transaction resulted in an exceptional gain of million. inance c arge directly attributable to the acquisition,
construction or production of a qualifying asset, being an asset ota ot er inance income 29 35
Other non-operating exceptional items (15) 6 11
(9) ertain subsidiaries of S were sold in the year ended 30 une that necessarily ta es a substantial period of time to get ready Net finance charge in respec
2023. The sale of these subsidiaries resulted in an exceptional gain of for its intended use or sale, are added to the cost of that asset. ) (12) (13)
1 million (2022 nil 2021 3 million). orrowing costs which are not capitalised are recognised in the Hyperinflation adjustment in respect of
ce tiona item e ore ta ation ( 05) (1) Tur ey (note 1 (f)) (3 )
(10) In the year ended 30 une 2023, iageo sold its Ty u brand. The income statement using the effective interest method. All other
Tax on exceptional items 31 (8 ) finance charges are recognised primarily in the income Hyperinflation adjustment in respect of
transaction resulted in an exceptional loss of 3 million. Vene uela (note 1 (f))
statement in the year in which they are incurred.
(11) In ay 2022, iageo sold its Picon brand. The sale resulted in an Hyperinflation adjustment and foreign
ota e ce tiona item (37 ) (85) et ot er inance c arge include items in respect of post exchange revaluation of monetary items
exceptional non-operating gain of 91 million, net of disposal costs.
Attributable to employment plans, the discount unwind of long-term obligations in respect of ebanon (note 1 (f)) (3) (8)
(12) In the year ended 30 une 2022, a loss of 95 million was and hyperinflation charges. The results of operations in nwinding of discounts (11) (20)
Equity shareholders of the parent company (271) (86)
recognised as a non-operating item attributable to the sale of eta Abo hyperinflationary economies are adjusted to reflect the changes
Non-controlling interests (103) 1 Interest charge in respect of direct and
rewery Share ompany in Ethiopia. in the purchasing power of the local currency of the entity before indirect tax (16) (11)
ota e ce tiona item (37 ) (85)
(13) On 25 arch 2022, iageo agreed to the sale of its indsor being translated to sterling. hange in financial liability ( evel 3) (20) (7)
(1) In the year ended 30 une 2023, an impairment charge of business in orea. At 30 une 2022, assets and liabilities attributable to The impact of derivatives, excluding cash flow hedges that uarantee fees (1) (1)
98 million was recognised in exceptional operating items mainly indsor business were classified as held for sale and were measured at are in respect of commodity price ris management or those that
Other finance charges (1)

FINANCIAL STATEMENTS
driven by the c owell s brand in India. the lower of their cost and fair value less cost of disposal. In the year are used to hedge the currency ris of highly probable future
currency cash flows, is included in interest income or interest ota ot er inance c arge (98) (60)
In the year ended 30 une 2022, an impairment charge of 336 million ended 30 une 2022, a loss of 19 million was recognised as a non-
operating item, mainly in relation to transaction and other costs directly charge. et ot er inance income c arge (69) (25)
was recognised in exceptional operating items in respect of the
c owell s brand ( 2 0 million), the ell s brand ( 77 million) and attributable to the prospective sale of the business. The conditional
(1) Includes 81 million interest income and (522) million interest charge in respect of
goodwill related to Smirnov ( 19 million). agreement was terminated in the year ended 30 une 2023 as the financial assets and liabilities that are not measured at fair value through income
For further information, see note 9 (d). buyer was unable to meet certain conditions to completion. statement (2022 27 million income and ( 17) million charge 2021 28 million
income and ( 29) million charge).
(2) In the year ended 30 une 2023, an exceptional charge of 100 (1 ) On 29 September 2022, the group acquired the part of the entire
million was accounted for in respect of the supply chain agility issued share capital of r lac Spirits Pty td, owner of r lac , the
programme announced in uly 2022. ith this five-year spanning Australian premium cold brew coffee liqueur, that it did not already
programme, iageo expects to strengthen its supply chain, improve its own. As a result of r lac becoming a subsidiary of the group in the
resilience and agility, drive efficiencies, deliver additional productivity year ended 30 une 2023, a loss of 8 million arose, being the
savings and ma e its supply operations more sustainable. Total difference between the boo value of the associate prior to the
implementation cost of the programme is expected to be up to 500 transaction and its fair value plus transaction costs.
million over the five-year period, which will comprise non-cash items (15) Other exceptional non-operating items include subsequent gains
and one-off expenses, the majority of which are expected to be and charges of items that were originally recognised as exceptional at
recognised as exceptional operating items. The exceptional charge for inception. In the year ended 30 une 2023, other exceptional non-
the year ended 30 une 2023 was primarily in respect of accelerated operating items resulted in a net gain of million (2022 6 million
depreciation, being additional depreciation of assets in the period 2021 11 million), mainly driven by the deferred consideration received
directly attributable to the programme, and impairment of property, in respect of the sale of nited National reweries.
plant and equipment in respect of North America and India.
Restructuring cash expenditure was 12 million in the year ended 30 For further information on acquisition and sale of businesses and
une 2023. brands, see notes 8 (a) and 8 (b).

(3) In the year ended 30 une 2023, iageo agreed with one of its
distributors in Africa to terminate the distribution license of one of its
spirits brands, in respect of which a provision of million was
provided for and was recognised as an operating exceptional charge.
No payment was made in the period.

180 Diageo Annual Report 2023 Diageo Annual Report 2023 181
 c on tin u ed

6. n estments in associates and oint ent res enne

o t
Ot er ota
7. a ation
mi ion mi ion mi ion

cco nting policies ot e rovi ion cco nting policies

An associate is an underta ing in which the group has a long-term At 30 une 2021 3,128 180 3,308
urrent tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between
equity interest and over which it has the power to exercise significant Exchange differences 8 12 60 accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax treatments are not recognised unless it is
influence. A joint venture is a joint arrangement whereby the parties Additions 65 65 probable that a tax authority will accept the treatment. Once considered to be probable, tax treatments are reviewed each year to assess
that have joint control of the arrangement have rights to the net Share of profit/(loss) after tax 25 (8) 17 whether a provision should be ta en against full recognition of the treatment on the basis of potential settlement through negotiation and/or
assets of the arrangement. The group s interest in the net assets of ividends (186) ( ) (190) litigation with the relevant tax authorities. Tax provisions are included in current liabilities. Penalties and interest on tax liabilities are included
associates and joint ventures is reported in investments in the in operating profit and finance charges, respectively.
Share of movements in other
consolidated balance sheet and its interest in their results (net of tax) comprehensive income and equity (6) (6) Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting
is included in the consolidated income statement below the group s purposes and their value for tax purposes, except for deferred tax provision arising on goodwill from business combinations. The amount of
Impairment charged during the year (2) (2)
operating profit. Associates and joint ventures are initially recorded at deferred tax reflects the expected recoverable amount and is based on the expected manner of recovery or settlement of the carrying
cost including transaction costs. Investments in associates and joint At ne amount of assets and liabilities, using the basis of taxation enacted or substantively enacted by the balance sheet date. eferred tax assets
ventures are reviewed for impairment whenever events or Exchange differences are not recognised where it is more li ely than not that the assets will not be realised in the future. No deferred tax liability is provided in
circumstances indicate that the carrying amount may not be Additions respect of any future remittance of earnings of foreign subsidiaries where the group is able to control the remittance of earnings and it is
recoverable. The impairment review compares the net carrying value Share of profit/(loss) after tax probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance.
with the recoverable amount, where the recoverable amount is the Step acquisition ritica acco nting e timate an gement
higher of the value in use calculated as the present value of the
ividends The group is required to estimate the corporate tax in each of the jurisdictions in which it operates. anagement is required to estimate the
group s share of the associate s future cash flows and its fair value
less costs of disposal. Share of movements in other 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
comprehensive income and equity often complex and can ta e several years to resolve current tax balances are based on such estimations. Tax provisions are based on
Transfer management s judgement and interpretation of country specific tax law and the li elihood of settlement. However, the actual tax liabilities
iageo s principal associate is o t Hennessy of which iageo owns Impairment charged during the year could differ from the provision and in such event the group would be required to ma e an adjustment in a subsequent period which could
3 %. o t Hennessy is the wines and spirits division of V H o t At ne have a material impact on the group s profit for the year.
Hennessy ouis Vuitton SA ( V H). V H is based in France and is The evaluation of deferred tax asset recoverability requires estimates to be made regarding the availability of future taxable income. For
listed on the Paris Stoc Exchange. o t Hennessy is also based in (i) Investment in associates includes loans given to and preference shares invested in brands with an indefinite life, management s intention is to recover the boo value through a potential sale in the future, and therefore the
France and is a producer and exporter of champagne and cognac associates of 168 million (2022 163 million). deferred tax on the brand value is generally recognised using the appropriate country capital gains tax rate. To the extent brands with an
(ii) If certain performance targets are met by associates in the istill Ventures programme,
brands. an additional 27 million (2022 22 million) will be invested in those associates.
indefinite life have been impaired, management considers this to be an indication of recovery through use and in such a case deferred tax
A number of joint distribution arrangements have been established on the brand value is recognised using the appropriate country corporate income tax rate.
with V H in Asia Pacific and France, principally covering distribution of (b) o t Hennessy prepares its financial statements under IFRS as
iageo s Scotch whis y and gin premium brands and o t Hennessy s endorsed by the E in euros to 31 ecember each year. The results were
champagne and cognac premium brands. iageo and V H have adjusted for alignment with iageo accounting policies and were (a) nal sis of ta ation c arge for t e ear
each underta en not to engage in any champagne or cognac activities translated at 1 1.15 (2022 1 1.18 2021 1 1.13).
nite ing om e to or ota
competing with those of o t Hennessy. The arrangements also contain Income statement information for the three years ended 30 une
2022 2021 2022 2021 2022 2021
certain provisions for the protection of iageo as a non-controlling 2023 and balance sheet information as at 30 une 2023 and 30 une mi ion million million mi ion million million mi ion million million
shareholder in o t Hennessy. 2022 of o t Hennessy are as follows rrent ta
(a) An analysis of the movement in the group s investments in 2022 2021 urrent year 17 100 867 68 1,0 1 78
mi ion million million

FINANCIAL STATEMENTS
associates and joint ventures is as follows Adjustments in respect of prior years 10 1 16 28 26 29
Sales 5,553 ,819
18 101 883 712 1,067 813
Profit for the year 1,250 985
e erre ta
Total comprehensive income 1,269 999
Origination and reversal of temporary differences 13 21 18 21 31
2022 hanges in tax rates 2 6 1 32 3 78
mi ion million
Adjustments in respect of prior years 8 ( 2) (23) ( 2) (15)
Non-current assets 5,957
2 67 (20) 27 (18) 9
urrent assets 8, 7
a ation on ro it 186 168 863 739 1,0 9 907
Total assets 1 , 0
Non-current liabilities (1,791)
urrent liabilities (2, 15)
Total liabilities ( ,206)
et a et 10,198
(i) Including acquisition fair value adjustments principally in respect of o t Hennessy s
brands and translated at 1 1.17 (2022 1 1.16).

(c) Information on transactions between the group and its associates

and joint ventures is disclosed in note 21.
(d) Investments in associates and joint ventures comprise the cost of
shares less goodwill written off on acquisitions prior to 1 uly 1998 of
1,38 million (2022 1,3 0 million), plus the group s share of post
acquisition reserves of 2, 5 million (2022 2,312 million).
(e) The associates and joint ventures have not reported any material
contingent liabilities in their latest financial statements.

182 Diageo Annual Report 2023 Diageo Annual Report 2023 183
 c on tin u ed

( ) ceptional ta (credits) c arges The cash tax paid in the year ended 30 une 2023 amounts to 1,201 million (30 une 2022 9 9 million) and is 231 million higher than the
The taxation charge includes the following exceptional items current tax charge (30 une 2022 100 million lower). This arises as a result of timing differences between the accrual of income taxes, the
movement in the provision for uncertain tax positions and the actual payment of cash.
2022 2021 In ecember 2021, the OE released a framewor for Pillar Two odel Rules which will introduce a global minimum corporate tax rate of 15%
mi ion million million
applicable to multinational enterprise groups with global revenue over 750 million. The legislation implementing the rules in the was
rand impairment(1) (55)
substantively enacted on 20 une 2023 and will apply to iageo from the financial year ending 30 une 2025 onwards. iageo is reviewing this
S guarantee fee claim(2) legislation and also monitoring the status of implementation of the model rules outside of the to understand the potential impact on the group.
Supply chain agility programme iageo has applied the temporary exception under IAS 12 in relation to the accounting for deferred taxes arising from the implementation of the
istribution termination fee Pillar Two rules.
isposal of businesses and brands(3) 23 (d) eferred ta assets and lia ilities
inding down Russian operations 3 eferred tax recognised in the consolidated balance sheet comprise the following net deferred tax (liabilities)/assets
Tax rate change in the nited ingdom( )
6
ro ert ot Ot er
(5)
Tax rate change in the Netherlands 2 ant an ntangi e em o ment tem orar
e i ment a et an a o e i erence ota
Other items (2) ( ) mi ion mi ion mi ion mi ion mi ion mi ion

(31) 8 At 30 une 2021 (381) (1,636) (129) 57 2 (1,8 5)

Exchange differences (21) (155) 3 3 17 (153)
(1) In the year ended 30 une 2023, an exceptional tax credit of 12 million was recognised mainly in respect of the impairment of the c owell s brand. In the year ended 30 une 2022,
the exceptional tax credit of 55 million consists of tax impact on the impairment of the c owell s and ell s brands for 35 million and 20 million, respectively. Recognised in income statement ( 2) (3) (10) 2 7 21
(2) In the year ended 30 une 2023, an exceptional tax credit of 57 million was recognised in respect of the deductibility of fees paid to iageo plc for guaranteeing externally issued debt Reclassification 2 0 (7) 35
of S group entities. Following engagement with the tax authorities, guarantee fees for the periods ended 30 une 2012 to 30 une 2022 are fully deductible.
(3) In the year ended 30 une 2023, the exceptional net tax charge of 29 million mainly comprised of a tax charge of 2 million in respect of the sale of uinness ameroun S.A., partly Recognised in other comprehensive loss and equity (20) (10 ) (103) 20 (207)
offset by a tax credit of 10 million in respect of the sale of certain S businesses. In the year ended 30 une 2022, a 23 million exceptional tax charge was recognised in respect of the Tax rate change recognised in income statement (1) (3) 1 (3)
gain on the sale of the Picon brand.
( ) On 2 ay 2021, legislation was substantively enacted in the to increase the corporate tax rate to 25% with effect from 1 April 2023. As a result of the change, an exceptional tax Tax rate change recognised in other comprehensive loss and equity (22) 2 (20)
charge of 6 million was recognised for the year ended 30 une 2021 in relation to the remeasurement of deferred tax assets and liabilities. In addition, there was a one-off charge of
Acquisition of subsidiaries (31) (31)
8 million to other comprehensive income and equity, mainly in respect of the remeasurement of the deferred tax liabilities on the post employment assets.
(5) On 15 ecember 2020, legislation was substantively enacted in the Netherlands to maintain the headline corporate tax rate at 25%, reversing a previously enacted reduction in the Sale of businesses
corporate tax rate to 21.7% from 2021. As a result of the change, an exceptional tax charge of 2 million was recognised for the year ended 30 une 2021 in relation to the
remeasurement of deferred tax liabilities. In the year ended 30 une 2022, the utch Senate enacted an increased tax rate of 25.8%. The remeasurement of deferred tax liabilities was At ne
recognised as an underlying tax charge. Exchange differences
(c) a ation rate reconciliation and factors t at ma affect f t re ta c arges Recognised in income statement
Recognised in other comprehensive income and equity
2022 2022 2021 2021
mi ion million % million % Tax rate change recognised in income statement
Profit before taxation ,387 3,706 Acquisition of subsidiaries
Notional charge at corporation tax rate 833 19.0 70 19.0 Transfer from asset held for sale
Elimination of notional tax on share of after tax results of associates and joint Sale of businesses
ventures (79) (1.8) (63) (1.7) At ne
ifferences in overseas tax rates 161 3.7 128 3.5
isposal of businesses and brands 21 0.5 (2) (0.1) (1) eferred tax on other temporary differences includes hyperinflation, fair value movement on cross-currency swaps, interest and finance costs, share-based payments and intra-group
sales of products.

FINANCIAL STATEMENTS
Other items not chargeable ( 9) (1.1) (52) (1. )
After offsetting deferred tax assets and liabilities that relate to taxes 2022
Impairment 36 0.8 mi ion million
levied by the same taxation authority on the same taxable fiscal unit,
Other items not deductible 58 1.3 67 1.8 the net deferred tax liability comprises apital losses indefinite 98
Irrecoverable withholding taxes 39 0.9 25 0.7 Trading losses indefinite 25
2022
ovement in provision in respect of uncertain tax positions(1) 2 0.9 1 mi ion million Trading and capital losses expiry dates up to 2032 6
hanges in tax rates(2) 3 0.1 78 2.1 eferred tax assets 11 169
(3)
Adjustments in respect of prior years (16) (0. ) 21 0.6 eferred tax liabilities (2,319)
a ation on ro it 1,0 9 23.9 907 2 .5 (2,205)
Additionally, no deferred tax asset has been recognised in respect of
certain temporary differences arising from brand valuations, as the
a rate e ore e ce tiona item 22.5 22.2
eferred tax assets of 1 1 million include 65 million (2022 7 group is not planning to sell those brands thus the benefit from the
temporary differences is unli ely to be realised.
(1) ovement in provision in respect of uncertain tax positions includes both current and prior year uncertain tax position movements. million) arising in jurisdictions with prior year taxable losses, primarily in
(2) hanges in tax rates for the year ended 30 une 2021 are mainly due to the tax rate change in the Netherlands and the nited ingdom.
(3) Excludes prior year movement in provisions. Also included an exceptional tax credit of 57 million in respect of the deductibility of fees paid to iageo plc for guaranteeing externally
ermany and ra il. It is considered more li ely than not that there will (f) nrecognised deferred ta lia ilities
issued debt of its S group entities. be sufficient future taxable profits to realise these deferred tax assets, Relevant legislation largely exempts overseas dividends remitted from
which for the most part arose on losses from a historic one-off tax. A tax liability is more li ely to arise in respect of withholding taxes
The table above reconciles the notional taxation charge calculated at the tax rate, to the actual total tax charge. As a group operating in transaction, and on existing provisions. The majority of deferred tax levied by the overseas jurisdiction. eferred tax is provided where there
multiple countries, the actual tax rates applicable to profits in those countries are different from the tax rate. The impact is shown in the table assets can be carried forward indefinitely. From the total recognised tax is an intention to distribute earnings, and a tax liability arises. It is
above as differences in overseas tax rates. The group s worldwide business leads to the consideration of a number of important factors which may losses of 9 million, it is expected that 10 million will be utilised in the impractical to estimate the amount of unrecognised deferred tax
affect future tax charges, such as the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax year ending 30 une 202 . liabilities in respect of these unremitted earnings.
regime reforms, acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities.
The aggregate amount of temporary differences in respect of
Significant ongoing changes in the international tax environment and an increase in global tax audit activity means that tax uncertainties and (e) nrecognised deferred ta assets
investments in subsidiaries, branches, interests in associates and joint
associated ris s have been gradually increasing. In the medium term, these ris s could result in an increase in tax liabilities or adjustments to the The following table shows the tax value of tax losses which has not been
ventures for which deferred tax liabilities have not been recognised is
carrying value of deferred tax assets and liabilities. See note 19 (f). recognised due to uncertainty over their utilisation in future periods. The
approximately 19.8 billion (2022 21.0 billion).
The group has a number of ongoing tax audits worldwide for which provisions are recognised in line with the relevant accounting standard, gross value of those losses is 632 million (2022 67 million).
ta ing into account best estimates and management s judgements concerning the ultimate outcome of the tax audits. For the year ended 30 une
2023, ongoing audits that are provided for individually are not expected to result in a material tax liability. The current tax asset of 232 million (30
une 2022 1 9 million) and tax liability of 135 million (30 une 2022 252 million) include 173 million (30 une 2022 156 million) of
provisions for tax uncertainties.

184 Diageo Annual Report 2023 Diageo Annual Report 2023 185
 c on tin u ed

(a) c isition of sinesses

Fair value of net assets acquired and cash consideration paid in respect of the acquisition of subsidiaries in the three years ended 30 une 2023
were as follows

ntrod ction et a et ac ire an con i eration

on a a Ot er 2022 2021
This section describes the assets used in the group s operations and the liabilities incurred. iabilities relating to the group s financing activities are mi ion mi ion mi ion million million
included in section Ris management and capital structure and balance sheet information in respect of associates, joint ventures and taxation are rands and other intangibles 120 33
covered in section Results for the year . This section also provides detailed disclosures on the group s recent acquisitions and disposals, performance
Property, plant and equipment 15
and financial position of its defined benefit post employment plans.
Inventories 6 12
. c isition and sale of sinesses and rands and p rc ase of non controlling interests Other wor ing capital 3 (3)
eferred tax (31) (15)
cco nting policies orrowings (8)
The consolidated financial statements include the results of the company and its subsidiaries together with the group s attributable share of (Overdraft)/ ash 1
the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up to, air va e o a et an ia i itie 99 339
the date that control passes. oodwill arising on acquisition 70 27
usiness combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired are
Settlement of pre-existing relationship (1)
measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any contingent
Step acquisitions (6)
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 i eration a a e 162 613
On the acquisition of a business, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of Satisfied by
acquisition, are attributed to the net assets, including identifiable intangible assets and contingent liabilities acquired. irectly attributable ash consideration paid (88) (358)
acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred. ontingent consideration payable (70) (253)
The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholder s
eferred consideration payable ( ) (2)
proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition.
here the group has issued a put option over shares held by a non-controlling interest, the group derecognises the non-controlling (162) (613)
interests and instead recognises a contingent deferred consideration liability for the estimated amount li ely to be paid to the non-controlling
ash consideration paid in respect of the acquisition of businesses and of which 15 million is related to acquisition transaction and integration
interest on the exercise of those options. ovements in the estimated liability in respect of put options are recognised in retained earnings.
purchase of shares of non-controlling interests in the three years ended costs in the year ended 30 une 2023. The fair value measurement of
Transactions with non-controlling interests are recorded directly in retained earnings.
30 une 2023 were as follows assets and liabilities acquired is in progress. The fair values of assets
For all entities in which the company directly or indirectly owns equity, a judgement is made to determine whether it controls and therefore
and liabilities acquired are provisional and will be finalised in the year
should fully consolidate the investee. An assessment is carried out to determine whether the group has the exposure or rights to the variable on i eration
ending 30 une 202 .
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 2022 2021
mi ion million million iageo completed further acquisitions in the year ended 30 une
out of the substantive and protective rights that the group and the other investors hold. This assessment is dependent on the activities and
Acquisitions in the year - subsidiaries 2023 (i) on 29 September 2022, the acquisition of the remaining issued
purpose of the investee and the rights of the other shareholders, such as which party controls the board, executive committee and material
share capital of r lac Spirits Pty td, owner of r lac , the
policies of the investee. etermining whether the rights that the group holds are substantive, requires management judgement. ash consideration paid (88) (358)
Australian premium cold brew coffee liqueur, that it did not already
here less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder ash acquired 1 own and (ii) on 2 November 2022, the acquisition of the entire issued
or organised group of vote holders, this may be an indicator of de facto control. An assessment is needed to determine all the factors
Prior year acquisitions - subsidiaries share capital of alcones istilling, a Texas craft distiller and one of the
relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be

FINANCIAL STATEMENTS
ontingent consideration paid for leading producers of American single malt whis ey in the nited States.
consolidated as a subsidiary. here voting power and returns from an investment are split equally between two entities then the
asamigos (83) (89) The aggregate up-front cash consideration paid on completion of these
arrangement is accounted for as a joint venture.
Other consideration (36) (7) transactions in the year ended 30 une 2023 was 98 million.
On an acquisition, fair values are attributed to the assets and liabilities acquired. This may involve material judgement to determine these
values. Investments in associates rior ear ac i ition
ash consideration paid ( ) On 31 arch 2022, iageo acquired 100% equity interest in 21Seeds, to
apital injection (61) (38) support iageo s participation in the super premium flavoured tequila
Net cas o tflow on ac isition of segment, for a total consideration of 62 million upfront in cash and a
sinesses (271) ( 88) contingent consideration of up to 61 million lin ed to performance
Purchase of shares of non-controlling targets.
interests ( 2) iageo completed further acquisitions in the year ended 30 une
ota net ca o t o (271) (530) 2022, including (i) on 27 anuary 2022, the acquisition of asa , to
expand Reserve portfolio with premium artisanal me cal brand, e cal
c i ition in t e ear ni n and (ii) on 29 une 2022, the acquisition of Vivanda, owner of the
On 10 arch 2023, iageo completed the acquisition of anlaon technology behind hat s your his y platform and the ourney of
imited and hat Noir o. Inc., (the owner of on Papa Rum) to Flavour experience at ohnnie al er Princes Street, to support
support iageo s participation in the super-premium dar rum segment iageo s ambition to provide customised brand experiences across all
for upfront cash consideration of 2 6 million ( 218 million), deferred channels. The aggregate upfront cash consideration paid on
consideration of million ( million) and contingent consideration of completion of these transactions in the year ended 30 une 2022 was
up to 178 million ( 158 million) through to 2028 subject to certain 26 million. In addition, these transactions included provision for further
financial performance targets, reflecting the brand s expected growth contingent consideration of up to 18 million in aggregate, lin ed to
potential. The fair value of the contingent consideration of 82 million performance targets and a further deferred consideration of million.
( 72 million) was estimated by calculating the present value of the On 30 September 2020, iageo completed the acquisition of
future expected cash flows which is dependent on management s Aviation in (Aviation in) and avos rands ( avos rands)
estimates in respect of the forecasting of future cash flows and the to support iageo s participation in the super-premium gin segment for
discount rates applicable to the future cash flows. The goodwill arising a total consideration of 337 million ( 263 million) upfront in cash and
on the acquisition of on Papa Rum represents expected revenue contingent consideration of up to 275 million ( 21 million) lin ed to
synergies and the acquired wor force. on Papa Rum contributed performance targets.
10 million to net sales and 15 million operating loss to the period, out

186 Diageo Annual Report 2023 Diageo Annual Report 2023 187
 c on tin u ed

iageo also completed a number of additional acquisitions in the year rc a e o are o non contro ing intere t (c) ssets and lia ilities eld for sale
ended 30 une 2021, comprising (i) in February 2021, the acquisition of On 2 arch 2023, iageo completed the purchase of 1 .97% of the Assets and liabilities held for sale at 30 une 2022 included iageo s indsor business in orea and the portfolio of Popular brands of S .
hase istillery imited, to further support iageo s participation in the share capital of EA for an aggregate consideration of ES 22,732 In arch 2022, iageo agreed to sell its indsor business in orea to ayside/ etis Private Equity onsortium. On 27 September 2022, iageo
premium-plus gin segment in the nited ingdom (ii) in arch 2021, million ( 1 2 million) in cash and transaction costs of million. This announced the termination of the conditional agreement. onsequently, the recoverable assets and liabilities attributable to the business were
the acquisition of Far est Spirits , owner of the one River Ranch too iageo s shareholding in EA from 50.03% to 65%. EA was reclassified out of held for sale.
ater brand, to improve iageo s participation in the ready to drin already controlled and therefore consolidated prior to this transaction.
On 27 ay 2022, S reached agreement with Inbrew everages Pvt imited for the sale of Popular brands. On 30 September 2022, iageo
category in the nited States and (iii) in April 2021, the acquisition of In the year ended 30 une 2021, EA , a iageo subsidiary
announced the completion of the sale of the selected Popular brands, accordingly the assets and liabilities attributable to the business were
Sons of iberty Spirits ompany, to expand iageo s spirits-based ready completed the acquisition of 30% of shares in Serengeti reweries
disposed from held for sale.
to drin portfolio with oyal 9 oc tails. The aggregate upfront cash imited for a consideration of 55 million ( 2 million) in cash and
consideration paid on completion of these three transactions in the year 16 million in the form of shareholder loan from two iageo subsidiaries
in 2021, increasing iageo s effective economic interest from 0.2% to . ntangi le assets
ended 30 une 2021 was 95 million. In addition, two of these
transactions included provision for further contingent consideration of 7.0%.
up to 86 million in aggregate, in each case lin ed to performance All transactions were recognised in retained earnings. cco nting policies
targets, and one of the transactions provided for a further 2 million of Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses.
deferred consideration, of which 1 million was paid by 30 une 2021. Acquired brands and other intangible assets are initially recognised at fair value if they are controlled through contractual or other legal
rights, or are separable from the rest of the business, and the fair value can be reliably measured. here these assets are regarded as
( ) ale of sinesses and rands having indefinite useful economic lives, they are not amortised.
ash consideration received and net assets disposed of in respect of sale of businesses and brands in the three years ended 30 une 2023 were as oodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair
follows value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets. oodwill arising on
acquisitions prior to 1 uly 1998 was eliminated against reserves, and this goodwill has not been reinstated. oodwill arising subsequent to 1
inne
amero n Ot er 2022 2021
uly 1998 has been capitalised.
mi ion mi ion mi ion million million Amortisation and impairment of intangible assets is based on their useful economic lives and they are amortised on a straight-line basis
a e con i eration and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. oodwill and
ash received 106 1 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
( ash)/overdraft disposed of 2
recoverable amount (where recoverable amount is the higher of fair value less costs of disposal and value in use) and in case the net
Transaction and other directly attributable costs paid (26)
carrying value exceeds the recoverable amount an impairment charge is recognised. Amortisation and any impairment write downs are
et ca receive 82 1 charged to other operating expenses in the income statement.
Transaction costs payable (16) 1 omputer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and
66 15 useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years
et a et i oe o ritica acco nting e timate an gement
oodwill (1 )
Assessment of the recoverable amount of an intangible asset and the useful economic life of an asset are based on management s estimates.
Property, plant and equipment (11) (2) Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts.
Assets and liabilities held for sale Value in use and fair value less costs of disposal are both considered for these reviews and any impairment charge is based on these. The
Inventories ( ) tests are dependent on management s estimates in respect of the forecasting of future cash flows, the discount rates applicable to the future
Other wor ing capital 15 1 cash flows and what expected growth rates are reasonable. udgement 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.
Other borrowings 1
The below additional considerations have been applied by management regarding the potential financial impacts of increasing

FINANCIAL STATEMENTS
orporate tax (5) inflationary pressures, recently observable worldwide
eferred tax (2) changes in the interest rate environment are ta en into consideration when determining the discount rates
Post employment benefit liabilities terminal growth rates do not exceed the long-term annual inflation rate of the country or region, thus excluding any increased inflation
(20) (1) growth experienced in the short-term
additional sensitivity scenarios are applied for those mar ets or regions where the inflation and/or the exchange devaluation is
Impairment charge recognised up until the date of sale
considered significant based on management s judgement.
Exchange recycled from other comprehensive income (63)
ain o on i o a e ore ta ation (17) 1 on i eration o c imate ri im act
Taxation (23) The impact of climate ris on the future cash flows has also been considered for scenarios analysed in line with the climate change ris
ain o on i o a a ter ta ation ( 0) 1 assessment. The climate change scenario analyses performed in 2023 conducted in line with T F recommendations ( Transition
Scenario (R P 2.6), a oderate arming Scenario (R P .5) and a Severe arming Scenario (R P 8.5)) identified no material financial
On 26 ay 2023, iageo completed the sale of uinness ameroun S.A., its brewery in ameroon. The aggregate consideration for the disposal impact to the current year impairment assessments.
was 38 million, the disposed net asset of 63 million mainly included property, plant and equipment and trade and other payables. The
transaction resulted in a non-operating exceptional gain of 310 million. The disposed ameroon operations contributed net sales of 101 million
(2022 12 million 2021 113 million), operating profit of 26 million (2022 27 million 2021 22 million) in the year ended 30 une 2023.
On 30 September 2022, iageo completed the sale of the Popular brands of its S business. The aggregate consideration for the disposal was
87 million, the disposed net assets included net wor ing capital of 31 million and brands of 22 million, and 16 million goodwill was
derecognised. The transaction resulted in a non-operating exceptional gain of million. Popular brands contributed net sales of 3 million (2022
139 million 2021 1 8 million), operating profit of 5 million (2022 26 million 2021 30 million) in the year ended 30 une 2023.
On 25 April 2022, iageo sold its Ethiopian subsidiary, eta Abo rewery Share ompany. A loss of 95 million was recognised as a non-
operating item attributable to the sale, including cumulative translation losses in the amount of 63 million recycled to the income statement.
On 10 ay 2022, iageo completed the sale of the Picon brand for an upfront consideration of 117 million ( 100 million). The gain of
91 million, net of disposal cost, was recognised as a non-operating item in the income statement.
In the year ended 30 une 2022, AR 133 million ( 6 million) (2021 10 million) of deferred consideration was paid to iageo in respect of the
sale of nited National reweries. The disposal was completed on 1 April 2020 for an aggregate consideration of AR 600 million ( 27 million) from
which AR 378 million ( 17 million) was deferred.
Prior year disposals further included the sale of certain S subsidiaries in the year ended 30 une 2021 for an aggregate consideration of 3 million,
which resulted in an exceptional gain of 3 million.

188 Diageo Annual Report 2023 Diageo Annual Report 2023 189
 c on tin u ed

Ot er om ter (a) rands

ran oo i intangi e o t are ota
mi ion mi ion mi ion mi ion mi ion The principal acquired brands, all of which are regarded as having indefinite useful economic lives, are as follows
ot
2022
At 30 une 2021 8, 58 2,627 1, 21 673 13,179 Principal mar ets mi ion million

Hyperinflation adjustment in respect of Tur ey 315 208 1 52 rown Royal whis y nited States 1,210
Exchange differences 639 1 5 19 28 1,006 aptain organ rum lobal 993
Additions 109 70 55 67 301 Smirnoff vod a lobal 681
isposals (23) ( 2) (23) (88) ohnnie al er whis y lobal 625
Reclassification to asset held for sale (560) (8) (568) asamigos tequila nited States 99
t ne c owell s No.1 whis y, rum and brandy India 778
Hyperinflation adjustment in respect of Tur ey on Papa rum Europe
Exchange differences en ra i Tur ey 29
Additions Shui ing Fang hinese white spirit reater hina 279
isposals
on ulio tequila nited States 207
Reclassification from/(to) asset held for sale
Aviation American gin nited States 218
t ne
Seagram s 7 rown whis ey nited States 18
morti ation an im airment
Signature whis y India 191
At 30 une 2021 1,097 670 80 568 2, 15
acapa rum lobal 158
Exchange differences 51 60 (1) 25 135
Amortisation for the year 7 38 5 lac og whis y India 162

Impairment 317 19 336 Antiquity whis y India 158

isposals (23) (28) (20) (71) indsor Premier whis y orea
Reclassification to asset held for sale ( 00) (8) ( 08) ordon s gin Europe 119
t ne ell s whis y Europe 102
Exchange differences Other brands 1,038
Amortisation for the year 7,896
Impairment
The brands are protected by trademar s which are renewable indefinitely (d) mpairment testing
isposals in all of the major mar ets where they are sold. There are not believed Impairment tests are performed annually, or more frequently if events or
Reclassification from/(to) asset held for sale to be any legal, regulatory or contractual provisions that limit the useful circumstances indicate that the carrying amount may not be
t ne lives of these brands. The nature of the premium drin s industry is that recoverable. Recoverable amounts are calculated based on the value
arr ing amo nt obsolescence is not a common issue, with indefinite brand lives being in use approach, also considering fair value less costs of disposal. The
t ne commonplace, and iageo has a number of brands that were originally value in use calculations are based on discounted forecast cash flows
At 30 une 2022 7,896 2,287 1,58 135 11,902 created more than 100 years ago. Accordingly, the irectors believe using the assumption that cash flows continue in perpetuity at the
At 30 une 2021 7,361 1,957 1,3 1 105 10,76
that it is appropriate that the brands are treated as having indefinite terminal growth rate of each country or region. The individual brands,
lives for accounting purposes and are therefore not amortised. other intangibles with indefinite useful lives and the associated property,

FINANCIAL STATEMENTS
( ) oodwill plant and equipment are aggregated as separate cash-generating
units. Separate tests are carried out for each cash-generating unit and
For the purposes of impairment testing, goodwill has been attributed to
for each of the mar ets. oodwill is attributed to each of the mar ets.
the following cash-generating units
The ey assumptions used for the value in use calculations are as
2022 follows
mi ion million

North America 773 a o

Europe ash flows are forecasted for each cash-generating unit for the financial
years based on management s approved plans and reflect the
Tur ey 255
following assumptions
Asia Pacific
ash flows are projected based on the actual operating results and
reater hina 1 1
a three-year strategic plan approved by management. ash flows
India 7 7
are extrapolated up to five years using expected growth rates in line
atin America and aribbean exico 1 2 with management s best estimates. rowth rates reflect expectations
Other cash-generating units 229 of sales growth, operating costs and margin, based on past
2,287 experience and external sources of information. A simple average of
these projections serves as the estimation of the recoverable amount
oodwill has arisen on the acquisition of businesses and includes synergies of the cash-generating units. anagement has no information which
arising from cost savings, the opportunity to utilise iageo s distribution would indicate that any of the scenarios are more li ely than others
networ to leverage mar eting of the acquired products and the extension The five-year forecast period is extended by up to an additional ten
of the group s portfolio of brands in new mar ets around the world. years at acquisition date for some intangible assets and goodwill
when management believes that this period is justified by the
(c) Ot er intangi les maturity of the mar et and expects to achieve growth in excess of
Other intangibles principally comprise distribution rights. iageo owns the terminal growth rate driven by iageo s sales, mar eting and
the global distribution rights for etel One vod a products in perpetuity, distribution expertise. These cash flows beyond the five-year period
and the irectors believe that it is appropriate to treat these rights as are projected using steady or progressively declining growth rates.
having an indefinite life for accounting purposes. The carrying value at
30 une 2023 was 1, 28 million (2022 1, 88 million).

190 Diageo Annual Report 2023 Diageo Annual Report 2023 191
 c on tin u ed

The main exception is India and the S brands, where the forecast group applies post-tax discount rates to post-tax cash flows as the 10. ropert plant and e ipment
period is extended by an additional one year of detailed forecasts valuation calculated using this method closely approximates to
ash flows for the subsequent years after the forecast period are applying pre-tax discount rates to pre-tax cash flows. cco nting policies
extrapolated based on a terminal growth rate which does not For goodwill, these assumptions are based on the cash-generating and and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. easeholds are generally depreciated
exceed the long-term annual inflation rate of the country or region. unit or group of units to which the goodwill is attributed. For brands, over the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual
they are based on a weighted average ta ing into account the country values over their expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives
i co nt rate
or countries where sales are made. fall within the following ranges buildings 10 to 50 years within plant and equipment cas s and containers 15 to 50 years other plant and
The discount rates used are the weighted average cost of capital which
The pre-tax discount rates, terminal and long-term growth rates used equipment 5 to 0 years fixtures and fittings 5 to 10 years and returnable bottles and crates 5 to 10 years.
reflect the returns on government bonds and an equity ris premium
for impairment testing are as follows Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried
adjusted for the drin s industry specific to the cash-generating units. The
at above their recoverable amounts.
2022
overnment grant
re ta i co nt ermina gro t ong term gro t Pre-tax discount Terminal growth ong-term growth
rate rate rate rate rate rate overnment 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. overnment grants in respect of property, plant and equipment are deducted
North America nited States 8 2
from the asset that they relate to, reducing the depreciation expense charged to the income statement.
Europe
nited ingdom 8 2 i t re et rna e
an an ant an an ott e an n er
Tur ey 31 15 25 i ing e i ment itting crate con tr ction ota
Asia Pacific mi ion mi ion mi ion mi ion mi ion mi ion
ot
Australia 7 2 5
t ne 2,160 ,71 121 528 659 8,182
orea 7 2 5
Hyperinflation adjustment in respect of Tur ey and Vene uela 56 32 2 7 97
India 1 11 Exchange differences 107 226 1 11 5 390
reater hina 7 2 7 Sale of businesses ( ) (58) (3) (19) (1) (85)
atin America and aribbean Additions 230 2 5 8 1 612 1,136
ra il 12 3 6 isposals (65) (122) (15) (32) (3) (237)
exico 1 3 6 Transfers 177 2 9 10 13 ( 9)
Africa Reclassification to assets held for sale (8) (25) (33)
t ne
Africa Emerging ar ets 12 5 11
Hyperinflation adjustment in respect of Tur ey and Vene uela
South Africa 16 6
Exchange differences
Nigeria 2 12 15 Acquisitions
Sale of businesses
As a result of the impairment review, in the year ended 30 une 2023, an impairment charge of 20 million in respect of the c owell s brand and
Additions
2 million in respect of the irector s Special brand were recognised in exceptional operating items. Value in use and fair value less costs of
isposals
disposal methodologies were both considered to assess the recoverable amount. The value in use that was calculated exceeded the fair value less
Transfers
costs of disposal. The charge is mainly driven by the adverse inflationary environment and the reduction in forecast cash flow assumptions in ower
Prestige and Popular segments in India. The brand impairment reduced the deferred tax liability by 111 million. The recoverable amount is Reclassification from assets held for sale
379 million in respect of the c owell s brand and 11 million in respect of the irector s Special brand cash-generating units. t ne

FINANCIAL STATEMENTS
As a result of the impairment review, in the year ended 30 une 2023, an additional impairment charge of 5 million was recognised in e reciation
exceptional operating items in respect of some brands where boo value was not recoverable. The charge is mainly driven by strategic change in t ne 658 2,218 86 371 3,333
some categories as a result of the challenging operating environment and premiumisation. Value in use and fair value less costs of disposal Exchange differences 31 9 1 9 135
methodologies were both considered to assess the recoverable amount. The value in use that was calculated exceeded the fair value less costs of epreciation charge for the year 125 276 1 29
disposal. The brand impairment reduced the deferred tax liability by 13 million. Exceptional impairment 2 1 3
In the year ended 30 une 2022, an impairment charge of 2 0 million in respect of the c owell s brand was recognised in exceptional Sale of businesses ( ) (50) (2) (18) (7 )
operating items, based on its value in use. The brand impairment reduced the deferred tax liability by 35 million. isposals (62) (113) (13) (30) (218)
Further, in the year ended 30 une 2022, an impairment charge of 77 million in respect of the ell s brand was recognised in exceptional Transfers 5 (9)
operating items, based on its value in use. The impairment reduced the deferred tax liability attributable to the brand by 20 million. Reclassification to assets held for sale (5) (16) (21)
In the year ended 30 une 2022, iageo decided to wind down its operations in Russia. As a result, an impairment charge of 19 million in t ne
respect of the Smirnov goodwill was recognised in exceptional operating items. Exchange differences
The Tur ish economy became hyperinflationary for the year ended 30 une 2022, and an impairment charge of TR 3,760 million ( 312 million) epreciation charge for the year
on the opening carrying amount of the Tur ey cash-generating unit was recognised in retained earnings. From this impairment charge, TR 1,627 Exceptional accelerated depreciation and impairment
million ( 135 million) was directly attributable to the en Ra i brand and the remaining TR 2,133 million ( 177 million) impairment charge was Sale of businesses
recognised on the Tur ey goodwill. isposals
(e) ensiti it to c ange in e ass mptions Reclassification from assets held for sale
Impairment testing for the year ended 30 une 2023 has identified the following cash-generating units as being sensitive to reasonably possible t ne
changes in assumptions. arr ing amo nt
The table below shows the headroom at 30 une 2023 and the impairment charge that would be required if the assumptions in the calculation t ne
of their value in use were changed At 30 une 2022 1,903 2,8 7 7 181 870 5,8 8
ecrea e in ann a gro t rate in At 30 une 2021 1,502 2, 96 35 157 659 ,8 9
ncrea e in i co nt rate ecrea e in termina gro t rate oreca t erio ecrea e in ca o
otentia otentia otentia otentia
arr ing va e im airment im airment im airment im airment
The net boo value of land and buildings comprises freeholds of 1, 81 million (2022 1, million), long leaseholds of 3 million (2022 3 million) and
o ea room ea ona c arge ea ona c arge ea ona c arge ea ona c arge short leaseholds of 389 million (2022 10 million). epreciation was not charged on 1 1 million (2022 11 million) of land.
mi ion mi ion o i e c ange mi ion o i e c ange mi ion o i e c ange mi ion o i e c ange mi ion
Property, plant and equipment is net of a government grant of 1 7 million (2022 153 million) received in prior years in respect of the
c owell s 379 1ppt (38) 1ppt (26) 2ppt (67) 10 % (76) construction of a rum distillery in the S Virgin Islands.
(1) Including reasonably possible changes in productivity saving assumptions.

192 Diageo Annual Report 2023 Diageo Annual Report 2023 193
 c on tin u ed

11. iological assets (a) o ement in rig t of se assets 1 . Ot er in estments 1 . ost emplo ment enefits
The company principally leases warehouses, office buildings, plant and
machinery, cars and distribution vehicles in the ordinary course of
cco nting policies cco nting policies cco nting policies
business.
iological assets held by the group consist of agave (Agave A ul Ot er inve tment are equity investments that are not classified The group s principal post employment funds are defined benefit
an an ant an n er as investments in associates or joint arrangements nor plans. In addition, the group has defined contribution plans,
Tequilana eber) plants. The harvested plants are used during i ing e i ment con tr ction ota
the production of tequila. mi ion mi ion mi ion mi ion investments in subsidiaries. They are included in non-current unfunded post employment medical benefit liabilities and other
iological assets are measured at fair value less costs to sell At 30 une 2021 230 18 29 3 assets. Subsequent to initial measurement, other investments are unfunded defined benefit post employment liabilities. For post
on initial recognition and at the end of each reporting period Exchange differences 26 1 0 stated at fair value. ains and losses arising from the changes in employment plans other than defined contribution plans, the
based on the present value of future cash flows discounted at an fair value are recognised in the income statement or in other amount charged to operating profit is the cost of accruing
Additions 129 56 185
appropriate rate for exico. comprehensive income on a case by case basis. Accumulated pension benefits promised to employees over the year, plus any
Agricultural produce is measured at fair value less costs to Transfers 29 (29) gains and losses included in other comprehensive income are changes arising on benefits granted to members by the group
sell at the point of harvest which is used as the cost of inventory Reclassification to not recycled to the income statement. ividends from other during the year. Net finance charges comprise the net deficit/
when the harvested agave is transferred. assets held for sale (1) (1) (2)
investments are recognised in the consolidated income surplus on the plans at the beginning of the year, adjusted for
isposals (6) (6) statement. cash flows in the year, multiplied by the discount rate for plan
epreciation (5 ) ( 1) (95) liabilities. The differences between the fair value of the plans
anges in iological assets were as follows oan receiva e are non-derivative financial assets that are not
t ne assets and the present value of the plans liabilities are disclosed
classified as equity investments. They are subsequently
Exchange differences as an asset or liability on the consolidated balance sheet. Any
io ogica measured either at amortised cost using the effective interest
a et differences due to changes in assumptions or experience are
mi ion Additions method less allowance for impairment or at fair value with gains
recognised in other comprehensive income. The amount of any
air va e Reclassification from and losses arising from changes in fair value recognised in the
pension fund asset recognised on the balance sheet is limited to
At 30 une 2021 66 assets held for sale income statement or in other comprehensive income that are
any future refunds from the plan or the present value of
erecognition due to recycled to the income statement on the de-recognition of the
Exchange differences 10 reductions in future contributions to the plan.
disposal of business asset. Allowances for expected credit losses are made based on
Transferred to inventories (11) ontributions payable by the group in respect of defined
epreciation the ris of non-payment ta ing into account ageing, previous
Fair value change (5) contribution plans are charged to operating profit as incurred.
t ne experience, economic conditions and forward-loo ing data.
Farming cost capitalised 3 Such allowances are measured as either 12-months expected ritical acco nting estimates and dgements
t ne ( ) ease lia ilities credit losses or lifetime expected credit losses depending on Application of IAS 19 requires the exercise of estimate and
Exchange differences changes in the credit quality of the counterparty. judgement in relation to various assumptions.
2022
Transferred to inventories mi ion million iageo determines the assumptions on a country by country
Fair value change urrent lease liabilities (85) basis in conjunction with its actuaries. Estimates are required in
Ot er
oan inve tment ota respect of uncertain future events, including the life expectancy
Farming cost capitalised Non-current lease liabilities (390) mi ion mi ion mi ion of members of the funds, salary and pension increases, future
t ne ( 75) ost less allowances or fair value inflation rates, discount rates and employee and pensioner
At 30 une 2021 10 30 0 demographics. The application of different assumptions could
At 30 une 2023, the number of agave plants was approximately The future cash outflows, which are not included in lease liabilities on
Exchange differences 2 1 3 have a significant effect on the amounts reflected in the income
37 million (2022 33 million), ranging from new plantations up to seven the balance sheet, in respect of extension and termination options
Additions 6 9 15 statement, other comprehensive income and the balance sheet.
year-old plants. which are not reasonably expected to be exercised are estimated at
Repayments and disposals (1) (1) (2)
There may be interdependencies between the assumptions.
261 million (2022 282 million).
1 . eases here there is an accounting surplus on a defined benefit

FINANCIAL STATEMENTS
Fair value adjustment (13) (13)
(c) mo nts recognised in t e consolidated income plan, management judgement is necessary to determine
Step acquisitions (6) (6)
statement whether the group can obtain economic benefits through a
cco nting policies apitalised interest 1 1 refund of the surplus or by reducing future contributions to the
In the year ended 30 une 2023, other external charges (within other Transfer (1) (1)
here the group is the lessee, all leases are recognised on the plan.
operating items) included 57 million (2022 39 million) in respect
balance sheet as right-of-use assets and depreciated on a t ne
of leases of low value assets and short term leases and million (2022
straight-line basis with the charge recognised in cost of sales or 9 million) in respect of variable lease payments. Refer to note 5 for
Exchange differences
in other operating items depending on the nature of the costs. further information relating to the interest expenses on lease liabilities. Additions (a) ost emplo ment enefit plans
The liability, recognised as part of net borrowings, is measured at The total cash outflow for leases in the year ended 30 une 2023 was Repayments and disposals The group operates a number of pension plans throughout the world,
a discounted value and any interest is charged to finance 172 million (2022 15 million). Fair value adjustment devised in accordance with local conditions and practices. iageo s
charges. apitalised interest
most significant plans are defined benefit plans and are funded by
The group recognises services associated with a lease as payments to separately administered trusts or insurance companies. The
Impairment charged during the year
other operating expenses. Payments associated with leases group also operates a number of plans that are generally unfunded,
where the value of the asset when it is new is lower than 5,000 t ne primarily in the nited States, which provide to employees post
(leases of low value assets) and leases with a lease term of 12 employment medical benefits.
At 30 une 2023, loans comprise 6 million (2022 6 million 2021
months or less (short term leases) are recognised as other The principal plans are in the nited ingdom, Ireland and the
3 million) of loans to customers and other third parties, after
operating expenses. A judgement in calculating the lease nited States where benefits are based on employees length of service
allowances of 121 million (2022 129 million 2021 113 million), and
liability at initial recognition includes determining the lease term and salary at retirement. All valuations were performed by independent
29 million (2022 12 million 2021 7 million) of loans to associates.
where extension or termination options exist. In such instances, actuaries using the projected unit credit method to determine pension
any economic incentive to retain or end a lease are considered costs.
and extension periods are only included when it is considered
reasonably certain that an option to extend a lease will be
exercised.

194 Diageo Annual Report 2023 Diageo Annual Report 2023 195
 c on tin u ed

The most recent funding valuations of the significant defined benefit In addition to the charge in respect of defined benefit post employment The disclosures have been prepared in accordance with IFRI 1 . In ntere t rate The plan liabilities are determined using discount rates
plans were carried out as follows plans, contributions to the group s defined contribution plans were particular, where the calculation for a plan results in a surplus, the derived from yields on AA-rated corporate bonds. A decrease in
million (2022 33 million 2021 25 million). recognised asset is limited to the present value of any available future corporate bond yields will increase plan liabilities though this will be
rinci a an ate o va ation
The movements in the net surplus for the two years ended 30 une refunds from the plan or reductions in future contributions to the plan, partially offset by an increase in the value of the bonds held by the post
nited ingdom(1) 1 April 2021 and any additional liabilities are recognised as required. At 30 une employment plans.
2023 is set out below
Ireland(2) 31 ecember 2021 2023, the PS had a net surplus of 589 million (2022 1,17 million
an an et
orta it The majority of the obligations are to provide benefits for the
nited States 1 anuary 2022 2021 8 0 million) and the I PS had a net surplus of 260 million
a et ia i itie r life of the members and their partners, so any increase in life
mi ion mi ion mi ion (2022 a surplus of 221 million 2021 a deficit of 79 million) and other
(1) The iageo Pension Scheme ( PS, the Scheme) closed to new members in
expectancy will result in an increase in the plans liabilities.
t ne 9,892 (9, 5) 7 schemes in a surplus totalled of 111 million (2022 158 million 2021
November 2005. Employees who joined iageo in the nited ingdom between et ret rn Assets held by the pension plans are invested in a
November 2005 and anuary 2018, had been eligible to become members of the Exchange differences 93 (100) (7) 178 million). oth of these surpluses have been recognised, with no
iageo ifestyle Plan (a cash balance defined benefit plan). Since then, new employees provision made against them, as they are expected to be recoverable diversified portfolio of equities, bonds and other assets. Volatility in asset
Income/(charge) before taxation 176 (205) (29)
have been eligible to become members of a master trust defined contribution plans. through a combination of a reduction in future cash contributions or values will lead to movements in the net deficit/surplus reported in the
(2) The uinness Ireland roup Pension Scheme ( I PS, the Irish scheme) closed to new Other comprehensive (loss)/income(1) (1, 32) 2,058 626 ultimately via a cash refund when the last member s obligations have consolidated balance sheet for post employment plans which in
members in ay 2013. Employees who have joined iageo in Ireland since the defined
ontributions by the group 128 128 been met. addition will also impact the post employment expense in the
benefit scheme closed have been eligible to become members of a master trust
defined contribution plans. Settlements paid(2) (52) 52 consolidated income statement.
( ) rincipal ris s and ass mptions The following weighted average assumptions were used to
The assets of the and Irish pension plans are held in separate trusts Employee contributions 5 (5)
The material post employment plans are not exposed to any unusual, determine the group s deficit/surplus in the main post employment
administered by trustees who are required to act in the best interests of enefits paid ( 11) 11 entity-specific or scheme-specific ris s but there are general ris s plans at 30 une in the relevant year. The assumptions used to calculate
the plans beneficiaries. For PS, the trustee is iageo Pension Trust t ne
n ation The majority of the plans obligations are lin ed to inflation. the charge/credit in the consolidated income statement for the year
imited. As required by legislation, one-third of the directors of the Trust Exchange differences
Higher inflation will lead to increased liabilities which is partially offset ending 30 une are based on the assumptions disclosed as at the
are nominated by the members of the PS, member nominated
isposals by the plans holding inflation lin ed gilts, swaps and caps against the previous 30 une.
directors are appointed from both the pensioner member community
and the active member community. For the Irish Scheme, iageo Income/(charge) before taxation level of inflationary increases.
Ireland ma es four nominations and appoints three further candidates Other comprehensive (loss)/income(1)
nite ing om re an nite tate
nominated by representative groupings. ontributions by the group 2022 2021 2022 2021 2022 2021
The amounts charged to the consolidated income statement and Employee contributions % % % % % %
statement of comprehensive income for the group s defined benefit Rate of general increase in salaries(2) 3.6 3. 3.8 3.0
enefits paid
plans for the three years ended 30 une 2023 are as follows Rate of increase to pensions in payment 2.9 3.1 2.2 1.7
t ne
2022 2021 Rate of increase to deferred pensions 2.6 2.5 2.3 1.6
mi ion million million (1) Excludes surplus restriction. iscount rate for plan liabilities 3.8 1.9 3.2 1.0 . 2.7
urrent service cost and administrative (2) Includes settlement payment of 52 million on ETV exercise in Ireland.
expenses (107) (105) Inflation PI 2.6 2.5 2. 1.6 2.3 2.3
The plan assets and liabilities by type of post employment benefit and Inflation - RPI 3.1 3.0
Past service (losses)/gains ordinary
activities 3
country are as follows
2022 (1) The salary increase assumption in the nited States is not a significant assumption as only a minimal amount of members pension entitlement is dependent on a member s projected
Past service losses exceptional (5) final salary.
an an Plan Plan
ains on curtailments and settlements 3 18 a et ia i itie assets liabilities (2) The salary increase assumptions include an allowance for age-related promotional salary increases.
mi ion mi ion million million
harge to operating profit (39) (92) For the principal and Irish pension funds, the table below illustrates the expected age at death of an average wor er who retires currently at the
Pensions
Net finance income in respect of post age of 65, and one who is currently aged 5 and subsequently retires at the age of 65
employment plans 10 5 nited ingdom 6,0 1 ( ,897)

FINANCIAL STATEMENTS
Ireland 1,6 5 (1, 09) nite ing om re an nite tate
arge e ore ta ation (29) (87)
2022 2021 2022 2021 2022 2021
Actual returns less amounts included in nited States 53 ( 08) ge Age Age ge Age Age ge Age Age
finance income (1, 32) (6) Other 191 (212) etiring c rrent at age
Experience (losses)/gains (35) 80 Post employment medical 2 (225) ale 87.1 87.2 87.7 86.9 85.5 85.
hanges in financial assumptions 2,133 125 Other post employment 67 (83) Female 88.7 88.7 90.0 89.3 87.2 87.1
hanges in demographic assumptions ( 0) (183) 8,399 (7,23 ) rrent age retiring at age
Other comprehensive (loss)/income 626 16 ale 88.5 88.6 89.3 88.6 87.0 86.9
The balance sheet analysis of the post employment plans is as follows
hanges in the surplus restriction (11) Female 90.7 90.8 91.7 91.1 88.6 88.5
ota ot er com re en ive o income 615 16 2022
on on Non- Non- (1) ased on the I s S3 mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements.
c rrent c rrent current current (2) ased on the I s S3 mortality tables with scaling factors based on the experience of the plan, with suitable future improvements.
(i) The year ended 30 une 2022 includes settlement gains of 27 million in respect of the a et ia i itie assets(1) liabilities
Enhanced Transfer Values (ETV) exercise carried out in the Irish Schemes and past mi ion mi ion million million
service gains of 28 million as a result of the changes of the benefits in the Irish For the significant assumptions, the following sensitivity analyses estimate the potential impacts on the consolidated income statement for the year
Scheme. In the year ended 30 une 2021, the exceptional past service loss of 5 million Funded plans 1,553 (1 ) ending 30 une 202 and on the plan liabilities at 30 une 2023
is in respect of the equalisation of uaranteed inimum Pension ( P) benefits for nfunded plans (258)
men and women. nite ing om re an nite tate
(1) The (charge)/income before taxation is in respect of the following countries 1,553 ( 02)
Operating Profit after an Operating Profit after an Operating Profit after an
profit taxation ia i itie profit taxation ia i itie profit taxation ia i itie
2022 2021 (1) Includes surplus restriction of 7 million (2022 1 million). ene it co t million million mi ion million million mi ion million million mi ion
mi ion million million
Effect of 0.5% increase in discount rate 2 15 1 5 2 2
nited ingdom (27) ( 6)
Effect of 0.5% decrease in discount rate (2) (1 ) (1) ( ) (2) (2)
Ireland 5
Effect of 0.5% increase in inflation (1) (8) (2) (1)
nited States (31) (28)
Effect of 0.5% decrease in inflation 2 8 2 1
Other (16) (17)
Effect of one year increase in life expectancy (6) (2) (1)
(29) (87)
(1) The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans.
(i) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each
sensitivity is calculated on a change in the ey assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation lin ed assumptions
(e.g. pension increases and salary increases where appropriate).

196 Diageo Annual Report 2023 Diageo Annual Report 2023 197
 c on tin u ed

(c) n estment and edging strateg (d) eficit f nding arrangements

The investment strategy for the group s funded post employment plans is determined locally by the trustees of the plan and/or iageo, as an
appropriate, and ta es account of the relevant statutory requirements. The objective of the investment strategy is to achieve a target rate of return in In the year ended 30 une 2011, the group established a Pension Funding Partnership (PFP) in respect of the Scheme. his y inventory was
excess of the movement on the liabilities, whilst ta ing an acceptable level of investment ris relative to the liabilities. This objective is implemented transferred into the partnership but the group retains control over the partnership which at 30 une 2023 held inventory with a boo value of 732
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 million (2022 561 million). The partnership is fully consolidated in the group financial statements. The Scheme has a limited interest in the
majority of the investment strategies have significant amounts allocated to bonds, in order to provide a natural hedge against movements in the partnership and, as a partner, is entitled to a distribution from the profits of the partnership. The arrangement is expected to cease in 2030, and
liabilities of the plans. At 30 une 2023, approximately 97% and 98% (2022 100% and 103%) of the plans liabilities measured on the Trustee s contributions to the scheme in any year will be dependent on the funding position of the scheme at the previous 31 arch. iven the surplus
funding basis (gilts 50bp) were hedged against future movements in interest rates and inflation, respectively, through the combined effect of bonds funding position in the PS, there were no contributions to the PS in the years ended 30 une 2023 and 30 une 2022.
and swaps. At 30 une 2023, approximately 92% and 112% (2022 70% and 76%) of the Irish plans liabilities measured on the Trustee s funding In 2030, the group will be required, dependent upon the funding position of the Scheme at that time, to pay an amount not greater than the
basis (euro-swaps 50bp) were hedged against future movements in interest rates and inflation, respectively, through the combined effect of bonds actuarial deficit at that time, up to a maximum of 30 million in cash, to purchase the Scheme s interest in the partnership. If the Scheme is
and swaps. 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.
The discount rates used are based on the yields of high-quality fixed income investments. For the plans, which represent approximately 65% uring the year ended 30 une 2023, following a remeasurement of the iageo ifestyle Plan, iageo made a 16 million one-off deficit contribution
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 to satisfy minimum funding requirement.
of cash outflows are similar to those of the plans. A similar process is used to determine the discount rates used for the non- plans. ri an
An analysis of the fair value of the plan assets is as follows The 31 ecember 2021 triennial actuarial valuation of the uinness Ireland roup Pension Scheme was completed during the year ended 30 une
2023 showing the Scheme is fully funded on the Trustee s ongoing funding basis and the statutory minimum funding standard basis. iven the fully
funded position, no deficit contributions were payable in the year ended 30 une 2023 and the Trustee agreed to the company s request to
nite ing om re an nite tate an ot er ota
mi ion mi ion mi ion mi ion terminate the contingent arrangements comprising mortgages over certain land and buildings and fixed and floating charges over certain
ote n ote ote n ote ote n ote ote n ote ota receivables of the group up to a value of 200 million ( 171 million). The company has agreed with the Trustee conditional contributions of up to
Equities
35 million ( 30 million) by 31 ecember 202 , 39 million ( 33 million) by 31 ecember 2027 and 39 million ( 33 million) by 31 ecember 2030
if a deficit is identified at those valuations.
onds
Fixed-interest government (e) iming of enefit pa ments
Inflation-lin ed government 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
Investment grade corporate
Non-investment grade nite ing om re an nite tate

oan securities 2022 2022 2022

mi ion million mi ion million mi ion million
Repurchase agreements aturity analysis of benefits expected to be paid
iability riven Investment ( I) ithin one year 295 70 58
Property etween 1 to 5 years 1,082 353 187
Hedge funds etween 6 to 15 years 2,556 70 310
Interest rate and inflation swaps etween 16 to 25 years 2,252 63 183
ash and other eyond 25 years 2,787 768 17
Total bid value of assets Total 8,972 2,529 912
ear years ear years ear years
2022
Average duration of the defined benefit obligation 15 15 9

FINANCIAL STATEMENTS
nited ingdom Ireland nited States and other Total
million million million million
uoted nquoted uoted nquoted uoted nquoted uoted nquoted Total The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are disclosed
Equities 23 1,218 319 70 105 93 1,6 2 1,735 undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised on the consolidated balance sheet. They
are in respect of benefits that have accrued at the balance sheet date and ma e no allowance for any benefits to be accrued subsequently.
onds
Fixed-interest government 2 86 30 9 152 51 268 319 (f) Related part disclos res
Inflation-lin ed government 199 1 1 1 200 201 Information on transactions between the group and its pension plans is given in note 21.
Investment grade corporate 68 388 25 222 25 678 703
Non-investment grade 557 2 200 1 1 7 758 805
oan securities 11 1,271 98 11 1,369 1,380
Repurchase agreements 2, 00 (215) 2, 00 (215) 2,185
iability riven Investment ( I) 119 6 165 165
Property 28 716 7 1 28 791 819
Hedge funds 107 92 5 20 20
Interest rate and inflation swaps (900) 37 (863) (863)
ash and other 2 81 7 15 80 31 715 7 6
Total bid value of assets 2,532 3,508 9 1,637 1 6 567 2,687 5,712 8,399

(i) The asset classes include some cash holdings that are temporary. This cash is li ely to be invested imminently and so has been included in the asset class where it is anticipated to be
invested in the long-term.

Total cash contributions by the group to all post employment plans in the year ending 30 une 202 are estimated to be approximately 75 million
( 95 million).

198 Diageo Annual Report 2023 Diageo Annual Report 2023 199
 c on tin u ed

15. or ing capital Inventories are disclosed net of provisions for obsolescence, an analysis (c) rade and ot er pa a les
of which is as follows
2022
2022 2021
cco nting policies mi ion million million
rrent
ia i itie
on c rrent
ia i itie
urrent
liabilities
Non-current
liabilities
alance at beginning of the year 96 98 mi ion mi ion million million
nventorie are stated at the lower of cost and net realisable
value. ost includes raw materials, direct labour and expenses, Exchange differences 6 (8) Trade payables 2,705
an appropriate proportion of production and other overheads, Income statement charge 6 20 Interest payable 1 3
but not borrowing costs. ost is calculated at the weighted tilised (13) (1 ) Tax and social security excluding income tax 696
average cost incurred in acquiring inventories. aturing Other payables 600 380
Sale of businesses (1)
inventories and raw materials which are retained for more than
9 96 Accruals 1,635
one year are classified as current assets, as they are expected to
eferred income 90
be realised in the normal operating cycle.
( ) rade and ot er recei a les ividend payable to non-controlling interests 18
ra e an ot er receiva e are initially recognised at fair value
less transaction costs and subsequently carried at amortised cost 5,887 380
2022
less any allowance for discounts and doubtful debts. Trade rrent on c rrent urrent Non-current
receivables arise from contracts with customers, and are a et a et assets assets Interest payable at 30 une 2023 includes interest on non-derivative financial instruments of 217 million (2022 1 1 million). Accruals at 30 une
recognised when performance obligations are satisfied, and the
mi ion mi ion million million 2023 include 561 million (2022 613 million) accrued discounts attributed to sales recognised. eferred income represents amounts paid by
Trade receivables 2,155 customers in respect of performance obligations not yet satisfied. The amount of contract liabilities recognised as revenue in the current year is
consideration due is unconditional as only the passage of time is
required before the payment is received. Allowance losses are Interest receivable 18 90 million (2022 72 million). Non-current liabilities include the net present value of contingent consideration in respect of prior acquisitions of
calculated by reviewing lifetime expected credit losses using VAT recoverable and other 293 million (2022 353 million). For further information on contingent consideration, please refer to note 16 (g).
historic and forward-loo ing data on credit ris . prepaid taxes 290 15 Together with the group s partner ban s, supply chain financing (S F) facilities are provided to suppliers in certain countries. These arrangements
Other receivables 158 13 enable suppliers to receive funding earlier than the invoice due date at their discretion and at their own cost. Payment terms continue to be agreed
ra e an ot er a a e are initially recognised at fair value directly between the group and suppliers, independently from the availability of S F facilities. iabilities are settled in accordance with the original
including transaction costs and subsequently carried at Prepayments 290 9
due date of invoices. The group does not incur any fees or receive any rebates where the suppliers choose to utilise these facilities. The group has
amortised costs. ontingent considerations recognised in Accrued income 22
determined that it is appropriate to present amounts outstanding subject to S F arrangements as trade payables. onsistent with this classification,
business combinations are subsequently measured at fair value 2,933 37 cash flows are presented either as operating cash flows or cash flows from investing activities, when related to the acquisition of non-current assets.
through income statement. The group evaluates supplier
At 30 une 2023, the amount that has been subject to S F and accounted for as trade payables was 727 million (2022 789 million).
arrangements against a number of indicators to assess if the At 30 une 2023, approximately 26%, 1 % and 11% of the group s
liability has the characteristics of a trade payable or should be trade receivables of 2,011 million are due from counterparties based in (d) ro isions
classified as borrowings. This assessment considers the the nited States, nited ingdom and India, respectively. Accrued
commercial purpose of the facility, whether payment terms are income primarily represents amounts receivable from customers in
a i omi e Ot er ota
mi ion mi ion mi ion
similar to customary payment terms, whether the group is legally respect of performance obligations satisfied but not yet invoiced.
discharged from its obligation towards suppliers before the end t ne
The aged analysis of trade receivables, net of expected credit loss
of the original payment term, and the group s involvement in Exchange differences
allowance, is as follows
agreeing terms between ban s and suppliers. isposal of businesses
rovi ion are liabilities of uncertain timing or amount. A 2022
mi ion million
Provisions charged during the year
provision is recognised if, as a result of a past event, the group Provisions utilised during the year
Not overdue 2,11
has a present legal or constructive obligation that can be
Overdue 1 30 days 19 Transfers from other payables
estimated reliably, and it is probable that an outflow of

FINANCIAL STATEMENTS
Overdue 31 60 days 8 nwinding of discounts
economic benefits will be required to settle the obligation.
Provisions are calculated on a discounted basis. The carrying Overdue 61 90 days 5 t ne
amounts of provisions are reviewed at each balance sheet date Overdue 91 180 days 5 urrent liabilities
and adjusted to reflect the current best estimate. Overdue more than 180 days Non-current liabilities
2,155
(a) n entories Trade and other receivables are disclosed net of expected credit loss
Provisions have been established in respect of the discounted value of the group s commitment to the and Australian Thalidomide Trusts. These
provisions will be utilised over the period of the commitments up to 2037.
2022 allowance for doubtful debts, an analysis of which is as follows
mi ion million The largest item in other provisions at 30 une 2023 is 51 million (2022 9 million) in respect of employee deferred compensation plans which
Raw materials and consumables 89 2022 2021 will be utilised when employees leave the group.
mi ion million million
or in progress 86 alance at beginning of the year 112 160
aturing inventories 5,229 Exchange differences 6 (13)
Finished goods and goods for resale 1,290 Income statement (release)/charge 21 (15)
7,09 ritten off (21) (20)
118 112
aturing inventories include whis (e)y, rum, tequila and hinese white
spirits. The following amounts of inventories are expected to be utilised
after more than one year
2022
mi ion million

Raw materials and consumables 15

aturing inventories 3,713
3,728

200 Diageo Annual Report 2023 Diageo Annual Report 2023 201
 c on tin u ed

speculative purposes. All transactions in derivative financial instruments 2022

are initially underta en to manage the ris s arising from underlying mi ion million %
business activities. Fixed rate 11,070 78
The group purchases insurance for commercial or, where required,
Floating rate(1) 2,612 19
ntrod ction for legal or contractual reasons. In addition, the group retains insurable
Impact of financial derivatives
This section sets out the policies and procedures applied to manage the group s capital structure and the financial ris s the group is exposed to. ris where external insurance is not considered an economic means of
mitigating these ris s. and fair value adjustments (20)
iageo considers the following components of its balance sheet to be capital borrowings and equity. iageo manages its capital structure to
achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt mar ets at attractive cost levels. The Finance ommittee receives a quarterly report on the ey ease liabilities 75 3
activities of the treasury department, however any exposures which et orro ing 1 ,137 100
16. inancial instr ments and ris management differ from the defined benchmar s are reported as they arise.
(1) The floating rate portion of net borrowings includes cash and cash equivalents,
(a) rrenc ris collaterals, floating rate loans and bonds and ban overdrafts.
cco nting policies The group presents its consolidated financial statements in sterling and
The table below sets out the average monthly net borrowings and
conducts business in many currencies. As a result, it is subject to foreign
Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction effective interest rate
currency ris due to exchange rate movements, which will affect the
costs. For those financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at group s transactions and the translation of the results and underlying verage mont net orro ing ective intere t rate
each balance sheet date. net assets of its operations. To manage the currency ris , the group uses 2022 2021 2022 2021
The group classifies its financial assets and liabilities into the following categories financial assets and liabilities at amortised cost, financial certain financial instruments. here hedge accounting is applied, mi ion million million % %
assets and liabilities at fair value through income statement and financial assets at fair value through other comprehensive income. hedges are documented and tested for effectiveness on an ongoing 12,692 12,702 2.7 2.7
The accounting policies for other investments and loans are described in note 13, for trade and other receivables and payables in note 15 basis.
and for cash and cash equivalents in note 17. (i) For this calculation, net interest charge excludes fair value adjustments to derivative
Financial assets and liabilities at fair value through income statement include derivative assets and liabilities. here financial assets or e ge o net inve tment in oreign o eration financial instruments and average monthly net borrowings include the impact of interest
rate swaps that are no longer in a hedge relationship but exclude the mar et value
liabilities are eligible to be carried at either amortised cost or fair value through other comprehensive income, the group does not apply the The group hedges a certain portion of its exposure to fluctuations in the adjustment for cross currency interest rate swaps.
fair value option. sterling value of its foreign operations by designating borrowings held in
erivative financial instruments are carried at fair value using a discounted cash flow model based on mar et data applied consistently foreign currencies and using foreign currency spots, forwards, swaps O re orm
for similar types of instruments. ains and losses on derivatives that do not qualify for hedge accounting treatment are ta en to the income and other financial derivatives. For the year ended 30 une 2023, the In accordance with the Financial onduct Authority s
statement as they arise. group s intention was to maintain total net investment Value at Ris to announcement on 5 arch 2021, I OR benchmar rates were
Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship. The difference between the total net asset value below 20%, where Value at Ris is defined as the discontinued after 31 ecember 2021, except for the majority of the S
initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms maximum amount of loss over a one-year period with a 95% dollar settings which are discontinued from 30 une 2023. There have
using the effective interest rate method. Financial liabilities in respect of the acapa acquisition are recognised at fair value. probability confidence level. been amendments to the contractual terms of I OR-referenced interest
At 30 une 2023, foreign currency borrowings designated in net rates and the corresponding update of the hedge designations. y 30
e ge acco nting investment hedge relationships amounted to 10,627 million (2022 une 2022, changes required to systems and processes in relation to the
8,7 2 million), including financial derivatives. fair valuation of financial instruments were implemented and the
The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and transition had no material tax or accounting implications. The group
liabilities (fair value hedges), commodity price ris of highly probable forecast transactions, as well as the cash flow ris from a change in e ge o oreign c rrenc e t also evaluated the implications of the reference rate changes in relation
exchange or interest rates (cash flow hedges) and hedges of net investments in foreign operations (net investment hedges). The designated The group uses cross currency interest rate swaps to hedge the foreign to other valuation models and credit ris , and concluded that they were
portion of the hedging instruments is included in other financial assets and liabilities on the consolidated balance sheet. The effectiveness of currency ris associated with certain foreign currency denominated not material.
such hedges is assessed at inception and at least on a quarterly basis, using prospective testing. ethods used for testing effectiveness borrowings. In line with the relief provided by the amendment, the group
include dollar offset, critical terms, regression analysis and hypothetical models. assumes that the interest rate benchmar on which the cash flows of the
ran action e o re e ging
hedged item, the hedging instrument or the hedged ris are based are

FINANCIAL STATEMENTS
air va e e ge are used to manage the currency and/or interest rate ris s to which the fair value of certain assets and liabilities are The group s policy is to hedge forecast transactional foreign currency
exposed. hanges in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair ris on major currency pair exposures up to 2 months, targeting 75% not altered by the I OR reform. The derivative hedging instruments
value of the underlying hedged asset or liability. If such a hedge relationship no longer meets hedge accounting criteria, fair value coverage for the current financial year, and on other currency provide a close approximation to the extent and nature of the ris
movements on the derivative continue to be ta en to the income statement while any fair value adjustments made to the underlying hedged exposures up to 18 months. The group s exposure to foreign currency exposure the group manages through hedging relationships.
item to that date are amortised through the income statement over its remaining life using the effective interest rate method. ris arising principally on forecasted sales transactions is managed Included in floating rate net borrowings are interest rate swaps
using forward agreements and options. designated in fair value hedges, with a notional amount of
a o e ges are used to hedge the foreign currency ris of highly probable future foreign currency cash flows, the commodity price ris 2,063 million (2022 2,893 million) whose interest rates are based on
of highly probable future transactions, as well as the cash flow ris from changes in exchange or interest rates. The effective portion of the ( ) nterest rate ris S I OR. In preparation for the discontinuation of S I OR, the
gain or loss on the hedges is recognised in other comprehensive income, while any ineffective part is recognised in the income statement. The group has an exposure to interest rate ris , arising principally on group have amended these agreements to reference the Secured
Amounts recorded in other comprehensive income are recycled to the income statement in the same period in which the underlying foreign changes in S dollar, euro and sterling interest rates. To manage Overnight Financing Rate (SOFR) resulting in economically equivalent
currency, commodity or interest exposure affects the income statement. interest rate ris , the group manages its proportion of fixed to floating trades upon transition. The floating legs of the transitioned trades will
rate borrowings within limits approved by the oard, primarily through become SOFR based subsequent to the last S I OR based interest
et inve tment e ge ta e the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on translation issuing fixed and floating rate borrowings, and by utilising interest rate
of net investments are recorded in other comprehensive income and included in the exchange reserve. iabilities used as hedging payments.
swaps. These practices aim to minimise the group s net finance charges
instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to with acceptable year-on-year volatility. To facilitate operational (c) ommodit price ris
the extent that they are effective, with any ineffectiveness ta en to the income statement. Foreign currency contracts hedging net investments efficiency and effective hedge accounting, for the year ended 30 une ommodity price ris is managed in line with the principles approved
are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness ta en to the 2023 the group s policy was to maintain fixed rate borrowings within a by the oard either through long-term purchase contracts with suppliers
income statement. band of 0% to 90% of forecast net borrowings. For these calculations, or, where appropriate, derivative contracts. The group policy is to
net borrowings exclude interest rate related fair value adjustments. The maintain the Value at Ris of commodity price ris arising from
majority of the group s existing interest rate derivatives are designated commodity exposures below 75 bps of forecast gross profit in any given
The group s funding, liquidity and exposure to foreign currency and periodically reviewed by the oard following, for example, significant as hedges and are expected to be effective. Fair value of these
financial year. here derivative contracts are used, the commodity
interest rate ris s are managed by the group s treasury department. The business, strategic or accounting changes. The framewor provides for derivatives is recognised in the income statement, along with any
price ris exposure is hedged up to 2 months of forecast volume
treasury department uses a range of financial instruments to manage limited defined levels of flexibility in execution to allow for the optimal changes in the relevant fair value of the underlying hedged asset or
through exchange-traded and over-the-counter contracts (futures,
these underlying ris s. application of the oard-approved strategies. Transactions arising from liability. The interest rate profile of the group s net borrowings is as
follows forwards and swaps) and cash flow hedge accounting is applied.
Treasury operations are conducted within a framewor of oard- the application of this flexibility are carried at fair value, gains or losses
approved policies and guidelines, which are recommended and are ta en to the income statement as they arise and are separately
monitored by the Finance ommittee, chaired by the hief Financial monitored on a daily basis using Value at Ris analysis. In the years
Officer. The policies and guidelines include benchmar exposure and/ ended 30 une 2023 and 30 une 2022, gains and losses on these
or hedge cover levels for ey areas of treasury ris which are transactions were not material. The group does not use derivatives for

202 Diageo Annual Report 2023 Diageo Annual Report 2023 203
 c on tin u ed

(d) ar et ris sensiti it anal sis inancia cre it ri ontract a ca o

The group uses a sensitivity analysis that estimates the impacts on the iageo aims to minimise its financial credit ris through the application arr ing
amo nt at
consolidated income statement and other comprehensive income of of ris management policies approved and monitored by the oard. e it in e et een e et een e a ter a ance
either an instantaneous increase or decrease of 0.5% in mar et interest ounterparties are predominantly limited to investment grade ban s ear an ear an ear ear ota eet ate
mi ion mi ion mi ion mi ion mi ion mi ion
rates or a 10% strengthening or wea ening in sterling against all other and financial institutions, and policy restricts the exposure to any one
currencies, from the rates applicable for each class of financial counterparty by setting credit limits ta ing into account the credit quality
instruments on the consolidated balance sheet at these dates with all of the counterparty. The group s policy is designed to ensure that orrowings(1)
other variables remaining constant. The sensitivity analysis excludes the individual counterparty limits are adhered to and that there are no Interest on borrowings(1)(2)
impact of mar et ris on the net post employment benefit liabilities and significant concentrations of credit ris . The oard also defines the types ease capital repayments
assets, and corporate tax payable. This analysis is for illustrative of financial instruments which may be transacted. The credit ris arising ease future interest payments
purposes only, as in practice interest and foreign exchange rates rarely through the use of financial instruments for currency, interest rate and
Trade and other financial liabilities(3)
change in isolation. commodity price ris management is estimated with reference to the
fair value of contracts with a positive value, rather than the notional on erivative inancia ia i itie
The sensitivity analysis estimates the impact of changes in interest
and foreign exchange rates. All hedges are expected to be highly amount of the instruments themselves. iageo annually reviews the ross currency swaps (gross)
effective for this analysis and it considers the impact of all financial credit limits applied and regularly monitors the counterparties credit Receivable
instruments including financial derivatives, cash and cash equivalents, quality reflecting mar et credit conditions. Payable
borrowings and other financial assets and liabilities. The results of the hen derivative transactions are underta en with ban
Other derivative instruments (net)
sensitivity analysis should not be considered as projections of li ely counterparties, the group may, where appropriate, enter into certain
erivative in tr ment
future events, gains or losses as actual results in the future may differ agreements with such ban counterparties whereby the parties agree to
materially due to developments in the global financial mar ets which post cash collateral for the benefit of the other if the net valuations of
may cause fluctuations in interest and exchange rates to vary from the the derivatives are above a predetermined threshold. At 30 une 2023, orrowings(1) (1,52 ) (2,8 2) (2,738) (9,276) (16,380) (16,020)
hypothetical amounts disclosed in the table below. the collateral held under these agreements amounted to (19) million Interest on borrowings(1)(2) ( 27) (626) (560) (1,622) (3,235) (1 1)
( (15) million) (2022 23 million ( 19 million)). ease capital repayments (85) (107) (61) (222) ( 75) ( 75)
m act on income m act on con o i ate
tatement
gain o
com re en ive income
gain o
ine re ate cre it ri ease future interest payments (13) (20) (16) ( ) (93)
2022 2022
Exposures from loan, trade and other receivables are managed locally Trade and other financial liabilities(3) ( ,765) (123) (1 2) (126) (5,156) (5,1 5)
mi ion million mi ion million in the operating units where they arise and active ris management is on erivative inancia ia i itie (6,81 ) (3,718) (3,517) (11,290) (25,339) (21,781)
0.5% decrease in interest rates 13 31 applied, focusing on country ris , credit limits, ongoing credit evaluation
ross currency swaps (gross)
0.5% increase in interest rates (13) (30) and monitoring procedures. There is no significant concentration of
credit ris with respect to loans, trade and other receivables as the Receivable 851 90 90 1, 2 2, 73
10% wea ening of sterling (33) (1,125)
group has a large number of customers which are internationally Payable (783) (56) (56) (958) (1,853)
10% strengthening of sterling 28 922
dispersed. Other derivative instruments (net) (86) (123) (78) (65) (352)
erivative in tr ment (18) (89) ( ) 19 268 22
(1) The impact on foreign currency borrowings and derivatives in net investment hedges is
largely offset by the foreign exchange difference arising on the translation of net
(f) i idit ris
investments. iquidity ris is the ris of iageo encountering difficulties in meeting its (1) For the purpose of these tables, borrowings are defined as gross borrowings excluding lease liabilities and fair value of derivative instruments as disclosed in note 17.
(2) The impact on the consolidated statement of comprehensive income includes the obligations associated with financial liabilities that are settled by (2) arrying amount of interest on borrowings, interest on derivatives and interest on other payable is included within interest payable in note 15.
impact on the income statement. delivering cash or other financial assets. The group uses short-term (3) Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32.

(e) redit ris commercial paper to finance its day-to-day operations. The group s
policy with regard to the expected maturity profile of borrowings is to The group had available undrawn committed ban facilities as follows (g) air al e meas rements
redit ris refers to the ris that a counterparty will default on its

FINANCIAL STATEMENTS
limit the amount of such borrowings maturing within 12 months to 50% Fair value measurements of financial instruments are presented through
contractual obligations resulting in financial loss to the group. redit ris 2022
of gross borrowings less money mar et demand deposits, and the level mi ion million the use of a three-level fair value hierarchy that prioritises the valuation
arises on cash balances (including ban deposits and cash and cash
of commercial paper to 30% of gross borrowings less money mar et Expiring within one year 793 techniques used in fair value calculations.
equivalents), derivative financial instruments and credit exposures to
demand deposits. In addition, the group s policy is to maintain Expiring between one and two years 103 The group maintains policies and procedures to value instruments
customers, including outstanding loans, trade and other receivables,
bac stop facilities with relationship ban s to support commercial paper using the most relevant data available. If multiple inputs that fall into
financial guarantees and committed transactions. Expiring after two years 1,893
obligations. different levels of the hierarchy are used in the valuation of an
The carrying amount of financial assets of ,637 million (2022 2,789
The following tables provide an analysis of the anticipated instrument, the instrument is categorised on the basis of the most
5, 5 million) represents the group s exposure to credit ris at the
contractual cash flows including interest payable for the group s subjective input.
balance sheet date as disclosed in section (i), excluding the impact of The facilities can be used for general corporate purposes and, together
financial liabilities and derivative instruments on an undiscounted basis. Foreign currency forwards and swaps, cross currency swaps and
any collateral held or other credit enhancements. A financial asset is in with cash and cash equivalents, support the group s commercial paper
here interest payments are calculated at a floating rate, rates of each interest rate swaps are valued using discounted cash flow techniques.
default when the counterparty fails to pay its contractual obligations. programmes.
cash flow until maturity of the instruments are calculated based on the These techniques incorporate inputs at levels 1 and 2, such as foreign
Financial assets are written off when there is no reasonable expectation There are no financial covenants on the group s material short- and
forward yield curve prevailing at the respective year ends. The gross exchange rates and interest rates. These mar et inputs are used in the
of recovery. long-term borrowings. ertain of these borrowings contain cross default
cash flows of cross currency swaps are presented for the purposes of discounted cash flow calculation incorporating the instrument s term,
redit ris is managed separately for financial and business related provisions and negative pledges.
this table. All other derivative contracts are presented on a net basis. notional amount and discount rate, and ta ing credit ris into account.
credit exposures. The committed ban facilities are subject to a single financial
Financial assets and liabilities are presented gross in the consolidated As significant inputs to the valuation are observable in active mar ets,
covenant, being minimum interest cover ratio of two times (defined as
balance sheet although, in practice, the group uses netting these instruments are categorised as level 2 in the hierarchy.
the ratio of operating profit before exceptional items, aggregated with
arrangements to reduce its liquidity requirements on these instruments. Other financial liabilities include a put option, which does not have
share of after tax results of associates and joint ventures, to net interest
an expiry date, held by Industrias icoreras de uatemala (I ) to sell
charges). They are also subject to pari passu ran ing and negative
the remaining 50% equity sta e in Rum reation Products Inc., the
pledge covenants.
owner of the acapa rum brand, to iageo. The liability is fair valued
Any non-compliance with covenants underlying iageo s financing
using the discounted cash flow method and as at 30 une 2023, an
arrangements could, if not waived, constitute an event of default with
amount of 218 million (30 une 2022 216 million) is recognised as a
respect to any such arrangements, and any non-compliance with
liability with changes in the fair value of the put option included in
covenants may, in particular circumstances, lead to an acceleration of
retained earnings. As the valuation of this option uses assumptions not
maturity on certain borrowings and the inability to access committed
observable in the mar et, it is categorised as level 3 in the hierarchy. As
facilities. iageo was in full compliance with its financial, pari passu
at 30 une 2023, because it is un nown when or if I will exercise the
ran ing and negative pledge covenants in respect of its material short-
option, the liability is measured as if the exercise date is on the last day
and long-term borrowings throughout each of the years presented.
of the next financial year considering forecast future performance. The

204 Diageo Annual Report 2023 Diageo Annual Report 2023 205
 c on tin u ed

option is sensitive to reasonably possible changes in assumptions if the cash flow method using assumptions not observable in the mar et. The notional amounts, contractual maturities and rates of the hedging instruments designated in hedging relationships by the main ris
option were to be exercised as at 30 une 2025, the fair value of the ontingent considerations are sensitive to possible changes in categories are as follows
liability would increase by approximately 30 million. assumptions a 10% increase or decrease in volume would increase or
otiona
Included in other financial liabilities, the contingent consideration on decrease the fair value of contingent considerations lin ed to certain amo nt
acquisition of businesses represents the present value of payments up to volume targets by approximately 30 million and 50 million, mi ion at rit ange o e ge rate

22 million, which are expected to be paid over the next eight years. respectively, and a 10% increase or decrease in cash flows would
ontingent considerations lin ed to certain volume targets at 30 une increase or decrease the fair value of contingent considerations lin ed et inve tment e ge
2023 included 113 million in respect of the acquisition of Aviation in to certain financial performance targets by approximately 25 million. erivatives in net investment hedges of foreign operations o ar
and avos rands (2022 157 million), 59 million in respect of the There were no significant changes in the measurement and
a o e ge
acquisition of 21Seeds (2022 59 million) and 18 million in respect of valuation techniques, or significant transfers between the levels of the
the acquisition of one River Ranch ater (2022 57 million). financial assets and liabilities in the year ended 30 une 2023. erivatives in cash flow hedge (foreign currency debt) e tem er ri o ar
ontingent consideration of 70 million in respect of the acquisition of The group s financial assets and liabilities measured at fair value are erivatives in cash flow hedge (foreign currency ris ) e tem er ecem er o ar
on Papa Rum (2022 nil) is lin ed to certain financial performance categorised as follows e ican e o
targets. ontingent considerations are fair valued based on discounted erivatives in cash flow hedge (commodity price ris ) e tem er ee eat
mini m t
2022
mi ion million air va e e ge
erivative assets 80 erivatives in fair value hedge (interest rate ris ) e tem er ri
erivative liabilities ( 56)
a ation tec ni e a e on o erva e mar et in t eve 2 et inve tment e ge
Financial assets - other 18 erivatives in net investment hedges of foreign operations 11 uly 2022 Tur ish lira 22.27
Financial liabilities - other (587) a o e ge
a ation tec ni e a e on no erva e mar et in t eve ( 03) erivatives in cash flow hedge (foreign currency debt) 1,69 April 2023 - April 20 3 S dollar 1.22 - 1.88
erivatives in cash flow hedge (foreign currency ris ) 1,87 September 2022 - une 202 S dollar 1.22 - 1. 2, euro 1.13 - 1.17
In the years ended 30 une 2023 and 30 une 2022, the increase in financial assets - other of 8 million (2022 6 million) is principally in respect erivatives in cash flow hedge (commodity price ris ) 23 uly 2022 - arch 202 Natural as 1.67 - 3.57 P/therm(ec)
of acquisitions. E Aluminium 2,009 - 3,399 S / t
The movements in level 3 instruments, measured on a recurring basis, are as follows air va e e ge
ontingent ontingent erivatives in fair value hedge (interest rate ris ) , September 2022 - April 2030 (0.01) - 3.09%
con i eration consideration
aca a recogni e on acapa recognised on
inancia ac i ition o financial acquisition of (1) In case of derivatives in cash flow hedges (commodity price ris and foreign currency ris ), the range of the most significant contract s hedged rates are presented.
ia i it ine e liability businesses
2022 2022
For hedges of the cash flow ris from a change in forward exchange rates using cross currency interest rate swaps, the retranslation of the related
mi ion mi ion million million bond principal to closing exchange rates and recognition of interest on the related bonds will affect the income statement in each year until the
At the beginning of the year (1 9) ( 29) related bonds mature in 2036 and 20 3. Exchange retranslation and the interest on the hedged bonds in the income statement are expected to
Net (losses)/gains included in the income statement (20) 62 offset those on the cross currency swaps in each of the years.
In respect of cash flow hedging instruments, a gain of 2 7 million (2022 12 million gain 2021 157 million loss) was recognised in other
Net gains/(losses) included in exchange in other comprehensive income (26) (39)
comprehensive income due to changes in fair value. A gain of 13 million was transferred out of other comprehensive income to other operating
Net losses included in retained earnings (3 ) expenses and a loss of 5 million to other finance charges, respectively, (2022 a loss of 2 million and a gain of 239 million 2021 a loss of
Acquisitions (70) 10 million and a loss of 175 million) to offset the foreign exchange impact on the underlying transactions. A gain of 33 million (2022 6 million

FINANCIAL STATEMENTS
Settlement of liabilities 13 105 gain, 2021 2 million gain) was transferred out of other comprehensive income to operating profit in relation to commodity hedges. The carrying
t t e en o t e ear (216) (371) amount of hedged items recognised in the consolidated balance sheet in relation to hedges of cash flow ris arising from foreign currency debts
equals the notional value of the hedging instruments at 30 une 2023 and are included within borrowings. The notional amount for cash flow
( ) Res lts of edge relations ips hedges of foreign currency debt at 30 une 2023 was 873 million (2022 1,69 million).
The group targets a one-to-one hedge ratio. The strength of the economic relationship between the hedged items and the hedging instruments is For cash flow hedges of forecast transactions at 30 une 2023, based on year end interest and exchange rates, a gain to the income statement
analysed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of differences in timing, of 1 3 million in the year ending 30 une 202 and a gain of 20 million in the year ending 30 une 2025 is expected to be recognised.
cash flows or value except when the critical terms of the hedging instrument and hedged item are closely aligned. The change in the credit ris of In respect of hedges of foreign currency borrowings that are no longer applicable at 30 une 2023, a loss of 18 million (2022 a loss of 19
the hedging instruments or the hedged items is not expected to be the primary factor in the economic relationship. million) was reported in reserves. There was no significant ineffectiveness on net investment and cash flow hedges during the year ended 30 une
2023.
The 3,999 million (2022 , million) notional value of hedged items in fair value hedges equals to the notional value of hedging
instruments designated in these relationships at 30 une 2023 and the carrying amount of hedged items are included within borrowings in the
consolidated balance sheet.
For fair value hedges that are no longer applicable, the accumulated fair value changes shown on the consolidated balance sheet at 30 une
2023 was nil (2022 1 million).

206 Diageo Annual Report 2023 Diageo Annual Report 2023 207
 c on tin u ed

The following table sets out information regarding the effectiveness of hedging relationships designated by the group, as well as the impacts on the (i) Reconciliation of financial instr ments
income statement and other comprehensive income The table below sets out the group s accounting classification of each class of financial assets and liabilities
on o i ate
tatement o air va e
t t e eginning on o i ate ncome com re en ive t t e en air va e t ro g ot er et an ot categori e
o t e ear tatement income Ot er o t e ear t ro g income com re en ive ia i itie at a a inancia
mi ion mi ion mi ion mi ion mi ion tatement income amorti e co t in tr ment ota rrent on c rrent
mi ion mi ion mi ion mi ion mi ion mi ion mi ion

et inve tment e ge
(1)
Other investments and loans
erivatives in net investment hedges of foreign operations
Trade and other receivables
a o e ge
ash and cash equivalents
erivatives in cash flow hedge (foreign currency debt)
erivatives in cash flow hedge (foreign currency debt)
erivatives in cash flow hedge (foreign currency ris )
erivatives in cash flow hedge (foreign currency ris )
erivatives in cash flow hedge (commodity price ris )
erivatives in cash flow hedge (commodity price ris )
air va e e ge
Other instruments
erivatives in fair value hedge (interest rate ris )
eases
Fair value hedge hedged item
Total other financial assets
Instruments in fair value hedge relationship
ota inancia a et
orrowings(2)
et inve tment e ge
Trade and other payables
erivatives in net investment hedges of foreign operations 5 (6) (1)
erivatives in fair value hedge (interest rate ris )
a o e ge
erivatives in cash flow hedge (foreign currency ris )
erivatives in cash flow hedge (foreign currency debt) 15 239 (6) (20) 367
erivatives in cash flow hedge (commodity price ris )
erivatives in cash flow hedge (foreign currency ris ) 53 (11) (130) 11 (77)
Other instruments
erivatives in cash flow hedge (commodity price ris ) 16 6 32 ( ) 50
eases
air va e e ge
Total other financial liabilities
erivatives in fair value hedge (interest rate ris ) 63 (3 6) (283)
ota inancia ia i itie
Fair value hedge hedged item (65) 3 1 276
ota net inancia ia i itie a et
Instruments in fair value hedge relationship (2) (5) (7)

Other investments and loans(1) 180 15 1 200 200

Trade and other receivables 2,365 605 2,970 2,933 37
ash and cash equivalents 2,285 2,285 2,285
erivatives in fair value hedge (interest rate ris ) 1 1 1
erivatives in cash flow hedge (foreign currency debt) 367 367 3 32

FINANCIAL STATEMENTS
erivatives in cash flow hedge (foreign currency ris ) 32 32 15 17
erivatives in cash flow hedge (commodity price ris ) 57 57 57
Other instruments 136 136 136
eases 3 3 3
Total other financial assets 593 3 596 251 3 5
ota inancia a et 773 ,668 606 6,051 5, 69 582
orrowings(2) (16,020) (16,020) (1,522) (1 , 98)
Trade and other payables (371) ( ,77 ) (1,122) (6,267) (5,887) (380)
erivatives in fair value hedge (interest rate ris ) (28 ) (28 ) (1) (283)
erivatives in cash flow hedge (foreign currency ris ) (109) (109) (81) (28)
erivatives in cash flow hedge (commodity price ris ) (7) (7) (5) (2)
erivatives in net investment hedge (1) (1) (1)
Other instruments (271) (117) (388) (388)
eases ( 75) ( 75) (85) (390)
Total other financial liabilities (672) (592) (1,26 ) (561) (703)
ota inancia ia i itie (1,0 3) (21,386) (1,122) (23,551) (7,970) (15,581)
ota net inancia ia i itie a et (270) (16,718) (516) (17,500) (2,501) (1 ,999)

(1) Other investments and loans are including those in respect of associates.
(2) orrowings are defined as gross borrowings excluding lease liabilities and the fair value of derivative instruments.

At 30 une 2023 and 30 une 2022, the carrying values of cash and cash equivalents, other financial assets and liabilities approximate fair values.
At 30 une 2023, the fair value of borrowings, based on unadjusted quoted mar et data, was 15,6 1 million (2022 15,628 million).

208 Diageo Annual Report 2023 Diageo Annual Report 2023 209
 c on tin u ed

( ) apital management 2022 (i) The interest rates shown are those contracted on the underlying borrowings before
ta ing into account any interest rate hedges (see note 16).
( ) nal sis of net orrowings c rrenc
mi ion million
The group s management is committed to enhancing shareholder value (ii) onds are stated net of unamortised finance costs of 81 million (2022 85 million).
an overdrafts 7 2022
in the long-term, both by investing in the business and brands so as to (iii) All bonds, medium-term notes and commercial paper issued on an unsecured basis by
deliver continued improvement in the return from those investments and ommercial paper the group s 100% owned subsidiaries are fully and unconditionally guaranteed on an a an ash and
ca ro cash ross
an and other loans 105 unsecured basis by iageo plc and no other subsidiary of iageo plc guarantees such e iva ent orro ing equivalents borrowings(1)
by managing the capital structure. iageo manages its capital structure securities. mi ion mi ion million million
to achieve capital efficiency, provide flexibility to invest through the redit support obligations (19)
ross borrowings before derivative financial instruments are expected S dollar 1,315 (3,260)
economic cycle and give efficient access to debt mar ets at attractive 300 million 8% bonds due 2022(1) 2 8
cost levels. This is achieved by targeting an adjusted net borrowings to mature as follows Euro(2) 61 (2,9 3)
1,350 million 2.625% bonds due 2023(2) 1,115
(net borrowings aggregated with post employment benefit liabilities) to Sterling 67 (9,21 )
600 million 0.125% bonds due 2023 2022
adjusted E IT A leverage of 2.5 - 3.0 times, this range for iageo being 500 million 3.5% bonds due 2023(2)
mi ion million Indian rupee 26 (7 )
currently broadly consistent with an A band credit rating. iageo would ithin one year 1,522 exican peso 1 (26 )
500 million 0.5% bonds due 202
consider operating outside of this range in order to effect strategic etween one and three years 2,817
Fair value adjustment to borrowings (1) Hungarian forint 2 (21 )
initiatives within its stated goals, which could have an impact on its etween three and five years 2,625
orro ing e it in one ear 1,522 enyan shilling 53 (25 )
rating. If iageo s leverage was to be negatively impacted by the
600 million 0.125% bonds due 2023 516 eyond five years 9,056 hinese yuan 290 (75)
financing of an acquisition, it would see over time to return to the
range of 2.5 3.0 times. The group regularly assesses its debt and 500 million 3.5% bonds due 2023(2) 13 16,020 Nigerian naira 133
equity capital levels against its stated policy for capital structure. As at 500 million 0.5% bonds due 202 30 Other(2) 32 (12 )
uring the year, the following bonds were issued and repaid
30 une 2023, the adjusted net borrowings ( 15,91 million) to adjusted 600 million 2.125% bonds due 202 (2) 95 ota 2,285 (16, 22)
E IT A ratio was 2.6 times. For this calculation, net borrowings are 500 million 1.75% bonds due 202 30 2022 2021
adjusted by post employment benefit liabilities before tax ( 373 million) mi ion million million
(1) Includes foreign currency forwards and swaps and leases.
500 million 5.2% bonds due 2025(2)
whilst adjusted E IT A ( 6,120 million) comprises operating profit e (2) Includes 21 million (Euro) cash and cash equivalents in cash-pooling arrangements
750 million 1.375% bonds due 2025(2) 618 (2022 23 million (Tur ish lira and Euro)).
excluding exceptional operating items and depreciation, amortisation denominated 1,371 636
and impairment and includes share of after tax results of associates and 600 million 1% bonds due 2025 515
denominated 892 395
joint ventures. 500 million 3.5% bonds due 2025 1 . it
denominated
850 million 2.375% bonds due 2026 731
e ai
17. Net orrowings 500 million 1.75% bonds due 2026 98 cco nting policies
750 million 5.3% bonds due 2027(2) denominated (769) (696)
O n are represent shares and share options of iageo plc
750 million 1.875% bonds due 2027 6 3 denominated (752) (551)
cco nting policies that are held in treasury or by employee share trusts for the
500 million 1.5% bonds due 2027 30 7 2 (216) purpose of fulfilling obligations in respect of various employee
orro ing are initially recognised at fair value net of transaction
costs and are subsequently reported at amortised cost. ertain 700 million 0.125% bonds due 2028 600 share plans or were acquired as part of a share buybac
500 million 3.875% bonds due 2028(2) 11
(a) Reconciliation of mo ement in net orrowings programme. Own shares are treated as a deduction from equity
bonds are designated in fair value hedge relationship. In these
cases, the amortised cost is adjusted for the fair value of the ris 300 million 2.375% bonds due 2028 298 2022
until the shares are cancelled, reissued or disposed of and when
being hedged, with changes in value recognised in the income 1,000 million 2.375% bonds due 2029(2) 819
mi ion million vest are transferred from own shares to retained earnings at their
statement. The fair value adjustment is calculated using a At beginning of the year 12,109 weighted average cost.
300 million 2.875% bonds due 2029 298
discounted cash flow technique based on unadjusted mar et 750 million 1.15% bonds due 2029 6 5 Net decrease in cash and cash equivalents before are a e a ment include share awards and options
data. exchange 665 granted to directors and employees. The fair value of equity
1,000 million 2% bonds due 2030(2) 821
Net increase in bonds and other borrowings(1) 825 settled share options and share grants is initially measured at
an over ra t form an integral part of the group s cash 1,000 million 2.5% bonds due 2032 856
ncrea e in net orro ing rom ca o 1, 90 grant date based on onte arlo and lac Scholes models

FINANCIAL STATEMENTS
management and are included as a component of net cash and 750 million 2.125% bonds due 2032(2) 61
Exchange differences on net borrowings 33 and is charged to the income statement over the vesting period.
cash equivalents in the consolidated statement of cash flows. 00 million 1.25% bonds due 2033 395 For equity settled shares, the credit is included in retained
Other non-cash items(2) 20
a an ca e iva ent comprise cash in hand and deposits 750 million 5.5% bonds due 2033(2) earnings. ancellations of share options are treated as an
which are readily convertible to nown amounts of cash and 900 million 1.15% bonds due 203 770 et orro ing at en o t e ear 1 ,137
acceleration of the vesting period and any outstanding charge is
which are subject to insignificant ris of changes in value and 00 million 7. 5% bonds due 2035(1) 331 (1) In the year ended 30 une 2023, net increase in bonds and other borrowings excludes
recognised in operating profit immediately. Any surplus or deficit
have an original maturity of three months or less, including 600 million 5.875% bonds due 2036(2) 91 2 million cash outflow in respect of derivatives designated in forward point hedges arising on the sale of the iageo plc shares held by the group is
money mar et deposits, commercial paper and investments. 600 million 2.75% bonds due 2038 595 (2022 million). included as a movement in equity.
(2) In the year ended 30 une 2023, other non-cash items are principally in respect of fair
et orro ing are defined as gross borrowings (short-term 500 million .25% bonds due 20 2 (1)
09 value changes of cross currency interest rate swaps and interest rate swaps of ivi en are recognised in the financial statements in the year
borrowings and long-term borrowings plus lease liabilities plus 500 million 3.875% bonds due 20 3(2) 07 (3 ) million and lease liabilities of (82) million, partially offset by the 8 million fair in which they are approved.
value change of borrowings. In the year ended 30 une 2022, other non-cash items are
interest rate hedging instruments, cross currency interest rate an and other loans 293 principally in respect of fair value changes of cross currency interest rate swaps and
swaps and foreign currency forwards and swaps used to Fair value adjustment to borrowings (27 ) interest rate swaps of (3 6) million and lease liabilities of (183) million, partially offset
manage borrowings) less cash and cash equivalents. by the 331 million fair value change of borrowings. (a) llotted and f ll paid s are capital ordinar s ares
orro ing e a ter one ear 1 , 98
Total borrowings before derivative financial instruments 16,020
of 101 10 pence eac
Fair value of cross currency interest rate swaps (367) m er omina
o are va e
Fair value of foreign currency swaps and forwards 11 mi ion mi ion
Fair value of interest rate hedging instruments 283 t ne
ease liabilities 75 At 30 une 2022 2, 98 723
ro orro ing 16, 22 At 30 une 2021 2,559 7 1
ess ash and cash equivalents (2,285)
et orro ing 1 ,137

(1) SE -registered debt issued on an unsecured basis by iageo Investment orporation, a

100% owned finance subsidiary of iageo plc and fully and unconditionally
guaranteed by iageo plc. No other subsidiary of iageo plc guarantees the security.
(2) SE -registered debt issued on an unsecured basis by iageo apital plc, a 100%
owned finance subsidiary of iageo plc and fully and unconditionally guaranteed by
iageo plc. No other subsidiary of iageo plc guarantees the security.

210 Diageo Annual Report 2023 Diageo Annual Report 2023 211
 c on tin u ed

( ) edging and e c ange reser e February 2023, and returned an additional 0.5 billion of capital to (e) Non controlling interests
shareholders which was announced as a new share buybac iageo consolidates S , a company incorporated in India, with a 2.79% non-controlling interest, Sichuan Shuijingfang ompany imited, a
e ging c ange programme on 16 February 2023 and completed on 2 une 2023.
re erve re erve ota company incorporated in hina, with a 36.83% non-controlling interest and has a 50% controlling interest in etel One orldwide .V. ( etel One),
mi ion mi ion mi ion uring the year ended 30 une 2023, the group purchased a company incorporated in the Netherlands.
At ne 93 (1,022) (929) 38 million ordinary shares (2022 61 million 2021 3 million), Summarised financial information for S and other subsidiaries, after fair value adjustments on acquisition, and the amounts attributable to
Other comprehensive income/(loss) 20 2 2 representing approximately 1.5% of the issued ordinary share capital non-controlling interests are as follows
(2022 2. % 2021 0.1%) at an average price of 3616 pence per
t ne 113 (1,69 ) (1,581)
share, and an aggregate cost of 1,381 million (including 13 million of 2022 2021
Other comprehensive (loss)/income (87) 622 535 transaction costs) (2022 3709 pence per share, and an aggregate Ot er ota Total Total
mi ion mi ion mi ion million million
t ne cost of 2,28 million, including 16 million of transaction costs 2021
ncome tatement
Other comprehensive income/(loss) 3 07 pence per share, and an aggregate cost of 109 million, including
1 million of transaction costs) under the share buybac programme. Sales 5,797 5,1 0
t ne
The shares purchased under the share buybac programmes were Net sales 3,055 2,553
urrency basis spreads included in the hedging reserve represent the cancelled. ( oss)/profit for the year(1) 227 298
cost of hedging arising as a result of imperfections of foreign exchange The monthly brea down of all shares purchased and the average Other comprehensive (loss)/income(2) 333 ( 3 )
mar ets. Exclusion of currency basis spreads would result in a 20 price paid per share (excluding expenses) for the year ended 30 une
Total comprehensive (loss)/income 560 (136)
million credit (2022 22 million credit, 2021 22 million credit) to the 2023 were as follows
hedging reserve. Attributable to non-controlling interests 259 (35)
m er
o are t ori e a ance eet
(c) Own s ares rc a e n er verage rc a e
are ac ota n m er o rice ai n ti i e at Non-current assets(3) 5,017 ,669
ovement in o n are erio rogramme are rc a e ence mont en
urrent assets 2,002 1, 92
uly 2022 1,660,507 1,660,507 3567 177,756,956
m er rc a e
o are con i eration
Non-current liabilities (1, 99) (1,356)
August 2022 1,6 6,883 1,6 6,883 3820 176,110,073
mi ion mi ion
urrent liabilities (1,6 6) (1,335)
September 2022 2,273,226 2,273,226 37 173,836,8 7
t ne 227 1,936 Net assets 3,87 3, 70
1-6 October 2022 131,86 131,86 3702 173,70 ,983
Share trust arrangements (1) (11) Attributable to non-controlling interests 1,716 1,53
7-31 October 2022 (1) 227,870, 1
Shares used to satisfy options (3) ( 8) a o
November 2022 , 97, 1 , 97, 1 3679 223,373,000
Shares purchased - share buybac programme 3 109 Net cash inflow from operating activities 690 661
ecember 2022 ,571,923 ,571,923 3710 218,801,077
Shares cancelled (3) (109) Net cash inflow/(outflow) from investing activities (289) (137)
anuary 2023 7,989,915 7,989,915 3558 210,811,162
t ne 223 1,877 Net cash outflow from financing activities (322) (371)
February 2023 1,718,877 1,718,877 3577 209,092,285
Share trust arrangements (2) (23) Net increase in cash and cash equivalents 79 153
arch 2023 ,353,777 ,353,777 35 1 20 ,738,508
Shares used to satisfy options (2) (16) Exchange differences 52 (19)
April 2023 2,883,950 2,883,950 3672 201,85 ,558
Shares purchased - share buybac programme 61 2,28 ividends payable to non-controlling interests (72) (72)
ay 2023 5,196,558 5,196,558 353 196,658,000
Shares cancelled (61) (2,28 )
une 2023 10,562 10,562 33 8 196,2 7, 38 (1) ( oss)/profit for the year includes exceptional operating expenses attributable to non-controlling interests.
t ne
ota (2) Other comprehensive (loss)/income is principally in respect of exchange on translating the subsidiaries to sterling.
Share trust arrangements (3) Non-current assets include the global distribution rights to distribute etel One vod a products throughout the world. The carrying value of the distribution rights at 30 une 2023 was
1, 28 million (2022 1, 88 million 2021 1,295 million).
Shares used to satisfy options (1) New maximum number of purchasable shares was authorised by shareholders at the (i) On 31 ecember 2022, S completed the merger with its subsidiary, Pioneer istilleries imited (P ) 75% owned by S . nder the terms, P s minority shareholders received

FINANCIAL STATEMENTS
Shares purchased - share buybac programme A held on 6 October 2022. additional shares in S in exchange for their 25% interest in P and non-controlling interest increased from 2.73% to 2.79%.
(ii) On 2 arch 2023, iageo completed the purchase of an additional 1 .97% of the share capital of EA . This increased iageo s controlling shareholding position in EA from 50.03%
Shares cancelled (d) i idends to 65.00%.
t ne 2022 2021
mi ion million million (f) mplo ee s are compensation onus Share Plan ( SP), with vesting not subject to any performance
are tr t arrangement mo nt recogni e a i tri tion to The group uses a number of share award and option plans to grant to conditions and not subject to a post-vesting retention period. The TIP
At 30 une 2023, the employee share trusts owned 3 million of ordinary e it are o er in t e ear plan rules will be presented for renewal at the A in September 2023
its directors and employees.
shares in iageo plc (the company) at a cost of 52 million and mar et Final dividend for the year ended 30 une and any future awards made post approval will be made under the
2022 6.82 pence per share (2021 .59 The annual fair value charge in respect of the equity settled plans
value of 101 million (2022 2 million shares at a cost of 25 million, pence 2020 2. 7 pence) 1,0 0 992 for the three years ended 30 une 2023 is as follows new plan rules.
mar et value 63 million 2021 2 million shares at a cost of 7 million, Share awards normally vest and are released on the third
Interim dividend for the year ended 30 une 2022 2021
mar et value 7 million). ividends receivable by the employee share 2023 30.83 pence per share (2022 29.36 anniversary of the grant date. Participants do not ma e a payment to
mi ion million million
trusts on the shares are waived and the trustee abstains from voting. pence 2021 27.96 pence) 680 65 receive the award at grant. Executive irectors are required to hold any
Executive share award plans 51 1 vested shares awarded under TIP for a further two-year post-vesting
rc a e o o n are 1,720 1,6 6
Executive share option plans holding period. Share options may normally be exercised between
Authorisation was given by shareholders on 6 October 2022 to Savings plans three and ten years after the grant date. Executives in North America
The proposed final dividend of 1,113 million ( 9.17 pence per share) for
purchase a maximum of 227,870, 1 ordinary shares at a minimum and atin America and aribbean are granted awards over the
the year ended 30 une 2023 was approved by a duly authorised 59 9
price of 28101/108 pence and a maximum price of the higher of (a) company s A Rs (one A R is equivalent to four ordinary shares).
committee of the oard of irectors on 31 uly 2023. As this was after
105% of the average mar et value of the company s ordinary shares for Performance shares under the TIP (for awards in 2020 and
the balance sheet date and the dividend is subject to approval by Executive share awards have been made primarily under the iageo
the five business days prior to the day the purchase is made and (b) the thereafter) are subject to the achievement of three performance
shareholders at the Annual eneral eeting, this dividend has not been 201 ong Term Incentive Plan ( TIP) from September 201 onwards
higher of the price of the last independent trade and the highest current measures 1) compound annual growth in profit before exceptional
included as a liability in these consolidated financial statements. There and delivered in conditional awards in the form of performance shares,
independent bid on the trading venue where the purchase is carried items over three years 2) compound annual growth in organic net sales
are no corporate tax consequences arising from this treatment. performance share options, time-vesting restricted stoc units (RS s)
out. The programme expires at the conclusion of the next Annual over three years 3) environmental, social and governance (ES )
ividends are waived on all treasury shares owned by the company and/or time-vesting share options (or cash-based equivalents in certain
eneral eeting or on 5 anuary 202 , if earlier. priorities, weighted 0%, 0% and 20% of the maximum respectively,
and all shares owned by the employee share trusts. locations for regulatory reasons). Share options are granted at the
iageo completed a total of 1. billion return of capital for the year as set out in the irectors remuneration report. Performance share
mar et value at the time of grant. Prior to the introduction of the TIP,
ended 30 une 2023, which included 0.9 billion related to the options under the TIP are subject to the achievement of two equally
employees in associated companies were granted awards under the weighted performance measures 1) a comparison of iageo s three-
successful completion of iageo s previous share buybac programme
in which .5 billion of capital was returned to shareholders finalised in iageo plc 2011 Associated ompanies Share Incentive Plan ( A SIP). year TSR with a peer group 2) cumulative free cash flow over a three-
In the case of Executive irectors, conditional awards of time-vesting year period, measured at constant exchange rates. Performance
RS s or forfeitable shares may be awarded under the 2020 eferred measures and targets are set annually by the Remuneration ommittee.

212 Diageo Annual Report 2023 Diageo Annual Report 2023 213
 c on tin u ed

The vesting range is 20% for Executive irectors and 25% for other For the three years ended 30 une 2023, the calculation of the fair value
participants for achieving minimum performance targets, up to 100% of each share award used the onte arlo and lac Scholes pricing
for achieving the maximum target level. Retesting of the performance model and the following assumptions
measures is not permitted.
For performance shares under the TIP, dividends are accrued on 2022 2021
ntrod ction
awards and are given to participants to the extent that the awards Ris free interest rate 0. % (0.1%)
This section includes additional financial information that are either required by the relevant accounting standards or management considers these
actually vest at the end of the performance period. ividends are Expected life of the awards mont 0 months 36 months to be material information for shareholders.
normally paid out in the form of shares. ividend yield 2.1% 2.7%
Savings plans are provided in the form of a savings-related share
option plan. For employees, awards were made under the iageo
eighted average share price 35 5 p 2557 p 1 . ontingent lia ilities and legal proceedings In separate proceedings, the High ourt passed a winding-up order
eighted average fair value of
against H on 7 February 2017, and appeals filed by H against
2010 Sharesave plan (for options granted up until 2020) and the that order have since been dismissed, initially by a division bench of the
awards granted in the year 2729 p 2107 p
iageo 2020 Sharesave plan (for options granted from 2021). cco nting policies High ourt and subsequently by the Supreme ourt of India.
Number of awards granted in
For Republic of Ireland (ROI) based employees, awards were made Provision is made for the anticipated settlement costs of legal or iageo continues to believe that the acquisition price of INR 1, 0
the year mi ion 2.1 million 2.1 million
under the iageo 2009 Irish Sharesave Scheme (for options granted up other disputes against the group where it is considered to be per share paid to H for the S shares is fair and reasonable as
Fair value of all awards granted
until 2019) and the iageo 2019 Irish Sharesave Scheme (for options in the year mi ion 57 million 5 million probable that a liability exists and a reliable estimate can be regards H , H s shareholders and H s secured and unsecured
granted in 2020). These are H R and Irish Revenue approved all- made of the li ely outcome. here it is possible that a settlement creditors. However, adverse results for iageo in the proceedings
employee savings plans. ran action on c eme may be reached or it is not possible to ma e a reliable estimate referred to above could, absent leave or relief in other proceedings,
For ROI employees, grants from 2021 and 2022 were made under Transactions on the executive share award plans for the three years of the estimated financial effect, appropriate disclosure is made ultimately result in iageo losing title to the 6.98% sta e in S
the iageo 2020 Sharesave plan which is not an approved plan in the ended 30 une 2023 were as follows acquired from H . iageo believes, including by reason of its rights
but no provision created.
Republic of Ireland. These plans are made available to and ROI under S s articles of association to nominate S s EO and FO
employees who are employed on the annual results announcement 2022 2021 ritica acco nting gement an e timate and the right to appoint, through S , a majority of the directors on the
mi ion million million
date. Participants can save monthly, with deductions ta en directly from udgement is necessary in assessing the li elihood that a claim boards of S s subsidiaries as well as its ability as promoter to
net pay, for a period of 3 or 5 years. In return, employees are granted Number of awards outstanding at 1 uly 5.3 5.6
will succeed, or a liability will arise, and an estimate to quantify nominate for appointment up to two-thirds of S s directors for so long
the option to buy iageo shares using the savings accrued at the end of ranted 2.1 2.1 the possible range of any settlement. ue to the inherent as the chairperson of S is an independent director, that it would
the relevant savings period and at a 20% discounted option price, Awarded (1.1) (1.2) uncertainty in this evaluation process, actual losses may be remain in control of S and would continue to be able to consolidate
which is set at the time of grant. Provided participants fulfil the terms set Forfeited (1.1) (1.2) different from the liability originally estimated. The group may be S as a subsidiary for accounting purposes regardless of the outcome
out within the relevant or ROI tax approved scheme rules, any gains Number of awards outstanding at 30 une 5.2 5.3 involved in legal proceedings in respect of which it is not of this litigation.
from the option exercise are free from or ROI income tax. For the possible to ma e a reliable estimate of any expected settlement. There can be no certainty as to the outcome of the existing or any
ROI Sharesave awards granted in 2021 and 2022, as these are not The exercise price of share options outstanding at 30 une 2023 was in In such cases, appropriate disclosure is provided but no further related legal proceedings or the time frame within which they
made under a Revenue tax approved plan, the gains from the option the range of 1709 pence - 386 pence (2022 170 pence - 02 provision is made and no contingent liability is quantified. would be concluded.
exercise are subject to ROI income tax. pence 2021 1232 pence - 3 83 pence).
For S employees, the awards are made under the iageo plc 2017 At 30 une 2023, 2.5 million share options were exercisable at a (c) ontin ing matters relating to r i a all a and
nited States Employee Stoc Purchase Plan. Employees agree to ma e weighted average exercise price of 2 3 pence. eighted average (a) arantees and related matters affiliates
regular monthly savings for a period of one year and acquire American remaining contractual life of share options was five years at 30 une As of 30 une 2023, the group has no material unprovided guarantees On 25 February 2016, iageo and S each announced that they had
epositary Receipts (A Rs) at 15% discounted price (which is set at the 2023. or indemnities in respect of liabilities of third parties. entered into arrangements with r allya under which he had agreed
time of grant) using their contributions at the end of the plan cycle. They to resign from his position as a director and as chairman of S and
receive the benefit of tax relief if certain conditions are satisfied. ( ) c isition of s ares from and related from his positions in S s subsidiaries.
proceedings in relation to t e transaction iageo s agreement with r allya (the February 2016 Agreement)
On uly 2013, iageo completed its acquisition, under a share provided for a payment of 75 million ( 60 million) to r allya over a

FINANCIAL STATEMENTS
purchase agreement with nited reweries (Holdings) imited ( H ) five-year period of which 0 million ( 32 million) was paid on signing
and various other sellers (the SPA), of shares representing 1 .98% in of the February 2016 Agreement with the balance being payable in
S , including shares representing 6.98% from H . The SPA was equal instalments of 7 million ( 6 million) a year over five years
signed on 9 November 2012 as part of the transaction announced by (2017-2021). All payments were subject to and conditional on r
iageo in relation to S on that day (the Original S Transaction). allya s compliance with the agreement. The February 2016 Agreement
Following a series of further transactions, as of 30 une 2023, iageo also provided for the release of r allya s personal obligations to
has a 55.88% investment in S (excluding 2.38% owned by the S indemnify iageo Holdings Netherlands .V. ( HN) in respect of its
enefit Trust). earlier liability ( 1 1 million ( 112 million)) under a bac stop guarantee
Prior to the acquisition from H on uly 2013, the High ourt of of certain borrowings of atson imited ( atson) (a company affiliated
arnata a (High ourt) had granted leave to H under the Indian with r allya).
ompanies Act 1956 (the eave Order) to enable the sale by H to On account of various breaches and other provisions of agreements
iageo to ta e place (the H Share Sale) notwithstanding the between r allya and persons connected with him and iageo and/
continued existence of certain winding-up petitions that were pending or S , iageo did not ma e the five instalment payments due during
against H on the date of the SPA. At the time of the completion of the five-year period between 2017 and 2021. In addition, iageo has
the H Share Sale, the eave Order remained subject to review on also demanded that r allya repay the 0 million ( 32 million) paid
appeal. However, as stated by iageo at the time of closing, it was by iageo in February 2016 and sought compensation for various losses
considered unli ely that any appeal process in respect of the eave incurred by the relevant members of the iageo group.
Order would definitively conclude on a timely basis and, accordingly, On 16 November 2017, iageo and other relevant members of the
iageo waived the conditionality under the SPA relating to the absence iageo group commenced claims in the High ourt of ustice in
of insolvency proceedings in relation to H and acquired the 6.98% England and ales (the English High ourt) against r allya in
sta e in S from H at that time. relation to these matters. At the same time HN also commenced
Following appeal and counter-appeal in respect of the eave Order, claims in the English High ourt against r allya, his son Sidhartha
this matter is now before the Supreme ourt of India which has issued allya, atson and ontinental Administration Services imited ( AS )
an order that the status quo be maintained with regard to the H (a company affiliated with r allya and understood to hold assets on
Share Sale pending a hearing on the matter before it. Following a trust for him and certain persons affiliated with him) for in excess of 1 2
number of adjournments, the next date for a substantive hearing is yet million ( 113 million) (plus interest) in relation to atson s liability to HN
to be fixed. in respect of its borrowings referred to above and the breach of
associated security documents. r allya, Sidhartha allya and the

214 Diageo Annual Report 2023 Diageo Annual Report 2023 215
 c on tin u ed

relevant affiliated companies filed a defence to these claims, and r believes that the atson bac stop guarantee arrangements were not The group operates in a large number of mar ets with complex tax arbitration proceedings which may have a significant effect on the
allya also filed a counterclaim for payment of the two instalment part of the price paid or agreed to be paid for any S shares under the and legislative regimes that are open to subjective interpretation, and financial position of the iageo group.
payments that had by that time been withheld as described above. Original S Transaction and that therefore SE I s decision was not for which tax audits can ta e several years to resolve. In the context of
iageo continues to prosecute its claims and to defend the consistent with applicable law, and iageo appealed against it before these operations, it is possible that tax exposures which have not yet 0. ommitments
counterclaim. As part of these proceedings, iageo and the other the Securities Appellate Tribunal, umbai (SAT). On 1 November 2017, materialised (including those which could arise as a result of tax (a) apital commitments
relevant members of its group filed an application for stri e out and/or SAT issued an order in respect of iageo s appeal in which, amongst assessments) may result in losses to the group. In the circumstances ommitments for expenditure on intangibles and property, plant and
summary judgement in respect of certain aspects of the defence filed by other things, it observed that the relevant officer at SE I had neither where tax authorities have raised assessments, challenging equipment not provided for in these consolidated financial statements
r allya and the other defendants, including their defence in relation considered iageo s earlier reply nor provided iageo with an interpretations which may lead to a possible material outflow, these are estimated at 599 million (2022 399 million 2021 263 million).
to atson and AS s liability to repay HN. The application was opportunity to be heard, and accordingly directed SE I to pass a fresh have been included as contingent liabilities. here the potential tax
successful resulting in atson being ordered to pay approximately 135 order after giving iageo an opportunity to be heard. Following SAT s exposures are nown to us and have not been assessed, the group ( ) Ot er commitments
million ( 107 million) plus various amounts in respect of interest to HN, order, iageo made its further submissions in the matter, including at a considers disclosure of such matters ta ing into account their si e and The future minimum lease rentals payable in the year ended 30 une
with AS being held liable as co-surety for 50% of any such amount personal hearing before a eputy eneral anager of SE I. On 26 nature, relevant regulatory requirements and potential prejudice of the 2023 for short-term leases and leases of low-value assets are estimated
unpaid by atson. These amounts were, contrary to the relevant orders, une 2019, SE I issued an order reiterating the directions contained in its future resolution or assessment thereof. at 36 million (2022 13 million 2021 11 million). The total future
not paid by the relevant deadlines and atson and AS s remaining previous notice dated 16 une 2016. As with the previous SE I notice, iageo has a large number of ongoing tax cases in ra il and India. cash outflows for leases that had not yet commenced, and not
defences in the proceedings were struc out. iageo and HN have iageo believes that SE I s latest order is not consistent with applicable Since assessing an accurate value of contingent liabilities in these recognised as lease liabilities at 30 une 2023, are estimated at 11
accordingly sought asset disclosure and are considering further law. iageo appealed against this order before SAT and, after a mar ets requires a high degree of judgement, contingent liabilities are million (2022 11 million 2021 132 million).
enforcement steps against atson and AS , both in the nited hearing in arch 2023, SAT allowed iageo s appeal on 26 uly 2023. disclosed on the basis of the current nown possible exposure from tax
ingdom and in other jurisdictions where they are present or hold Accordingly, SE I s order dated 26 une 2019 stands quashed. nder assessment values. hile not all of these cases are individually
1. Related part transactions
assets. applicable law, SE I is entitled to file an appeal against SAT s order significant, the current aggregate nown possible exposure from tax Transactions between the group and its related parties are made on
A trial of the remaining elements of these claims was due to before the Supreme ourt of India. Therefore, pending any appeal assessment values is up to approximately 616 million for ra il and up terms equivalent to those that prevail in arm s length transactions.
commence on 21 November 2022. However, on 26 uly 2021 r allya which may be filed by SE I, there can be no certainty as to its outcome to approximately 90 million for India. The group believes that the (a) sidiaries
was declared ban rupt by the English High ourt pursuant to a or the timeframe within which any such appeal would be concluded. li elihood that the tax authorities will ultimately prevail is lower than Transactions between the company and its subsidiaries are eliminated
ban ruptcy petition presented by a consortium of Indian ban s. iageo probable but higher than remote. ue to the fiscal environment in ra il on consolidation and therefore are not disclosed. etails of the principal
and the relevant members of its group have informed the Trustee in (e) s disp te wit an imited and in India, the possibility of further tax assessments related to the group companies are given in note 22.
an ruptcy of their position as creditors in the ban ruptcy and have Prior to the acquisition by iageo of a controlling interest in S , S same matters cannot be ruled out and the judicial processes may ta e ( ) ssociates and oint ent res
engaged with the Trustee regarding their claims and the status of the had prepaid a term loan of INR 6,280 million ( 60 million) ta en extended periods to conclude. ased on its current assessment, iageo
Sales and purchases to and from associates and joint ventures are
current proceedings. An appeal by r allya against his ban ruptcy through I I an imited (I I), an Indian ban , which was secured on believes that no provision is required in respect of these issues.
principally in respect of premium drin s products but also include the
(and an appeal by the ban consortium against orders made in the certain fixed assets and brands of S , as well as by a pledge of certain Payments were made under protest in India in respect of the periods
provision of management services.
course of the ban ruptcy proceedings) are pending. In light of the shares in S held by the S enefit Trust (of which S is the sole 1 April 2006 to 31 arch 2019 in relation to tax assessments where the
Transactions and balances with associates and joint ventures are set
uncertainty posed by the ongoing ban ruptcy proceedings, the trial of beneficiary). The maturity date of the loan was 31 arch 2015. I I ris is considered to be remote or possible. These payments have to be
out in the table below
iageo s claim was initially relisted to ta e place in February 202 . disputed the prepayment, following which S filed a writ petition in made in order to be able to challenge the assessments and as such
However, r allya s appeal against his ban ruptcy and the ban s November 2013 before the High ourt of arnata a (the High ourt) have been recognised as a receivable in the group s balance sheet. The 2022 2021
cross appeal will not now be heard until April 202 , and thus the trial of challenging the ban s actions. total amount of payments under protest recognised as a receivable as mi ion million million
iageo s claim has been deferred from February 202 until after those Following the original maturity date of the loan, S received notices at 30 une 2023 is 116 million (corporate tax payments of 10 million ncome tatement item
appeals have been determined. from I I see ing to recall the loan, demanding a further sum of INR and indirect tax payments of 12 million). Sales 11 8
At this stage, it is not possible to assess the extent to which the 59 million ( million) on account of the outstanding principal,
various ongoing proceedings related to the ban ruptcy will affect the (g) Ot er disp tes Purchases 31 23
accrued interest and other amounts, and also threatening to enforce the
remaining elements of the claims by iageo and the relevant members On 31 ay 2023, a complaint against iageo North America, Inc ( NA) a ance eet item
security in the event that S did not ma e these further payments.
of its group. was filed in the Supreme ourt of New or by ombs ine and Spirits roup payables 2 5
Pursuant to an application filed by S before the High ourt in the writ

FINANCIAL STATEMENTS
pon completion of an initial inquiry in April 2015 into past improper (an entity associated with r Sean ombs) alleging, inter alia,
proceedings, the High ourt directed that, subject to S depositing roup receivables 2 1
transactions which identified references to certain additional parties and breach of contract in respect of a joint venture agreement related to
such further amount with the ban (which amount was duly deposited oans payable 9
matters, S carried out an additional inquiry into these transactions e e n tequila. NA has also served notice of material breaches and
by S ), the ban should hold the amount in a suspense account and oans receivable 175 108
(Additional Inquiry) which was completed in uly 2016. The Additional termination to r ombs and his relevant associated entities of certain
not deal with any of the secured assets including the shares until
Inquiry, prima facie, identified transactions indicating actual and agreements related to services provided by r ombs and these a o item
disposal of the original writ petition filed by S before the High ourt.
potential diversion of funds from S and its Indian and overseas entities in respect of roc, and notice of material breaches and an oans and equity contributions, net 66 38
On 27 une 2019, a single judge bench of the High ourt issued an
subsidiaries to, in most cases, entities that appeared to be affiliated or intent to arbitrate in respect of the e e n joint venture agreement.
order dismissing the writ petition filed by S , amongst other things, on
associated with r allya. All amounts identified in the Additional iageo categorically denies the allegations that have been made by r Other disclosures in respect of associates and joint ventures are
the basis that the matter involved an issue of breach of contract by S
Inquiry have been provided for or expensed in the financial statements ombs and his associated parties in the complaint and will defend itself included in note 6.
and was therefore not maintainable in exercise of the court s writ
of S or its subsidiaries in the respective prior periods. S has filed vigorously. iageo will refrain from ma ing any further disclosures given
jurisdiction. S filed an appeal against this order before a division (c) e management personnel
recovery suits against relevant parities identified pursuant to the the inherent uncertainties of these matters and the prejudicial nature
bench of the High ourt, which on 30 uly 2019 issued an interim order The ey management of the group comprises the Executive and Non-
Additional Inquiry. any such disclosures may have on the potential outcomes related
directing the ban to not deal with any of the secured assets until the Executive irectors, the members of the Executive ommittee and the
Further, at this stage, it is not possible for the management of S to thereto or other associated matters.
next date of hearing. On 13 anuary 2020, the division bench of the ompany Secretary. They are listed under oard of irectors and
estimate the financial impact on S , if any, arising out of potential non- High ourt admitted the writ appeal and extended the interim stay. This ( ) Ot er ompany Secretary and Executive ommittee .
compliance with applicable laws in relation to such fund diversions. appeal is currently pending. ased on the assessment of S s The group has extensive international operations and routinely ma es
management supported by external legal opinions, S continues to judgements on a range of legal, customs and tax matters which are 2022 2021
(d) Ot er matters in relation to
believe that it has a strong case on the merits and therefore continues to incidental to the group s operations. Some of these judgements are or mi ion million million
In respect of the atson bac stop guarantee arrangements, the
believe that the secured assets will be released to S and the aforesaid may become the subject of challenges and involve proceedings, the Salaries and short-term employee benefits 10 9
Securities and Exchange oard of India (SE I) issued a notice to iageo
amount of INR 59 million ( million) remains recoverable from I I. outcome of which cannot be foreseen. In particular, the group is Annual incentive plan 13 13
on 16 une 2016 that if there is any net liability incurred by iageo (after
any recovery under relevant security or other arrangements, which (f) a currently a defendant in various customs proceedings that challenge Non-Executive irectors fees 1 1
matters remain pending) on account of the atson bac stop the declared customs value of products imported by certain iageo Share-based payments(1) 19 12
The international tax environment has seen increased scrutiny and rapid companies. iageo continues to defend its position vigorously in these
guarantee, such liability, if any, would be considered to be part of the change over recent years bringing with it greater uncertainty for Post employment benefits 2 1
price paid for the acquisition of S shares under the SPA which formed proceedings.
multinationals. Against this bac drop, iageo has been monitoring Save as disclosed above, neither iageo, nor any member of the Termination benefits 2
part of the Original S Transaction and that, in that case, additional developments and continues to engage transparently with the tax iageo group, is or has been engaged in, nor (so far as iageo is 5 38
equivalent payments would be required to be made to those authorities in the countries where iageo operates to ensure that the
shareholders (representing 0.0 % of the shares in S ) who tendered in aware) is there pending or threatened by or against it, any legal or
group manages its arrangements on a sustainable basis. (1) Time-apportioned fair value of unvested options and share awards.
the open offer made as part of the Original S Transaction. iageo

216 Diageo Annual Report 2023 Diageo Annual Report 2023 217
 c on tin u ed

Non-Executive irectors do not receive share-based payments or post (e) irectors rem neration
employment benefits.
There were no transactions with these related parties during the year 2022 2021

ended 30 une 2023 on terms other than those that prevail in arm s mi ion million million

length transactions. Salaries and short-term employee benefits 3 2 ne 30 une 2022

Annual incentive plan Notes mi ion mi ion million million
(d) ension plans
Non-Executive irectors fees 1 1 on c rrent a et
In October 2022, iageo plc provided an interim credit facility to
iageo Pension Trust imited, consisting of 850 million for the iageo Share option exercises(1) Investments in subsidiary underta ings 3 61,561
Pension Scheme, to support temporary liquidity challenges until 29 Shares vesting(1) 3 1 Other financial assets 536
ecember 2022. In ecember 2022, the maturity date was extended to Post employment benefits Post employment benefit assets 6 1,210
29 une 2023. The facility amount was reduced on 22 ay 2023 to 15 8
350 million and on 1 une 2023 the maturity date was extended to 11 63,307
October 2023. The facility was subsequently cancelled on 25 uly 2023. (1) ains on options realised in the year and the benefit from share awards, calculated by rrent a et
The iageo pension plans are recharged with the cost of using the share price applicable on the date of exercise of the share options and Amounts owed by group underta ings 2,879
administration services provided by the group to the pension plans and release of the awards.
Trade and other receivables 7
with professional fees paid by the group on behalf of the pension plans.
Other financial assets 96
The total amount recharged for the year was 0.1 million (2022 0.1
million 2021 0.1 million). ash and cash equivalents 16
2,998
ota a et 66,305
. rincipal gro p companies
rrent ia i itie
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. Amounts owed to group underta ings ( 8)
Other financial liabilities (16 )
o ntr o ercentage o
incor oration o ntr o o eration e it o ne ine e cri tion
Trade and other payables (37)
i iarie Provisions 7 (11)
iageo Ireland nlimited ompany Ireland orldwide 100% Production, mar eting and distribution of premium drin s (260)
iageo reat ritain imited England reat ritain 100% ar eting and distribution of premium drin s on c rrent ia i itie
iageo Scotland imited Scotland orldwide 100% Production, mar eting and distribution of premium drin s Amounts owed to group underta ings (9,385)
iageo rands .V. Netherlands orldwide 100% ar eting and distribution of premium drin s Other financial liabilities (536)
iageo North America, Inc. nited States orldwide 100% Production, importing, mar eting and distribution of premium drin s Provisions 7 (158)
nited Spirits imited(2) India India 55.88% Production, importing, mar eting and distribution of premium drin s eferred tax liabilities 5 (2 3)
iageo apital plc(3) Scotland nited ingdom 100% Financing company for the group Post employment benefit liabilities 6 (66)
iageo apital .V.(3) Netherlands Netherlands 100% Financing company for the group
(10,388)
iageo Finance plc(3) England nited ingdom 100% Financing company for the group
ota ia i itie (10,6 8)
iageo Investment orporation nited States nited States 100% Financing company for the S group
et a et 55,657
ey i Sanayi ve Ticaret A. . Tur ey Tur ey 100% Production, mar eting and distribution of premium drin s
it

FINANCIAL STATEMENTS
ociate
Share capital (2023 2, 60 million shares (2022 2, 98 million shares) of 28 101/108 pence
o t Hennessy, SAS( ) France France 3 % Production, mar eting and distribution of premium drin s
each) 9 723
(1) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group. Share premium 1,351
(2) Percentage ownership excludes 2.38% owned by the S enefit Trust.
erger reserve 9 9,161
(3) irectly owned by iageo plc.
( ) French limited liability company. apital redemption reserve 3,220
1 , 55
. ost alance s eet e ents Retained earnings
Starting 1 uly 2023, in line with reporting requirements the functional currency of iageo plc has changed from sterling to S dollar which is applied At beginning of year 3,780
prospectively. This is because the group s share of net sales and expenses in the S and other countries whose currencies correlate closely with the
S dollar has been increasing over the years, and that trend is expected to continue in line with the group s strategic focus. iageo has also decided Profit for the year 1,026
to change its presentation currency to S dollar with effect from 1 uly 2023, applied retrospectively, as it believes that this change will provide better Other changes in retained earnings (3,60 )
alignment of the reporting of performance with its business exposures. 1,202
iageo will propose adopting new Articles of Association (New Articles) at the A to be held on 28 September 2023 which reflects the change
ota e it 55,657
in the functional currency of iageo plc and presentation currency of the group from sterling to S dollar. The New Articles shall, among other
things, empower the oard to declare and/or pay dividends in any currency or currencies and enable the oard to ma e provisions for
The accompanying notes are an integral part of these parent company financial statements.
shareholders to receive dividends in a different currency to the currency in which dividends were declared. Subject to the approval of the New
These financial statements have been approved by a duly appointed and authorised committee of the oard of irectors on 31 uly 2023 and
Articles by shareholders at the A and commencing with the interim dividend that is expected to be declared in anuary 202 , iageo s future
were signed on its behalf by ebra rew and avanya handrashe ar, irectors.
dividends will be declared in S dollar. Holders of ordinary shares will continue to receive their dividends in sterling but will have the option to elect
to receive it in S dollar. Holders of A Rs will continue to receive dividends in S dollar. ompany registration number 23307
On 31 uly 2023, the oard approved plans for a further return of capital programme of 1.0 billion to shareholders.

218 Diageo Annual Report 2023 Diageo Annual Report 2023 219
 c on tin u ed

etaine earning e icit 1. cco nting policies of t e compan ensions and ot er post emplo ment enefits
a ita
asis of preparation The company s accounting policy for post employment benefits is the
re em tion
are ca ita are remi m erger re erve re erve O n are Ot er re erve ota ota e it The financial statements of iageo plc (the company) are prepared in same as set out in note 1 to the consolidated financial statements. The
mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion accordance with Financial Reporting Standard 101 Reduced isclosure company acts as sponsor of all post employment plans for the
t ne 7 1 1,351 9,161 3,202 (1,877) 5,657 3,780 58,235 Framewor (FRS 101). benefit of employees and former employees throughout the group.
In preparing these financial statements, the company applies the There is no contractual agreement or stated policy for charging the net
Profit for the year 1,026 1,026 1,026
recognition, measurement, and disclosure requirements of International defined benefit costs for the plan measured in accordance with FRS 101,
Other comprehensive income 275 275 275 to other group companies whose employees participate in these group
Financial Reporting Standards as adopted by the (IFRS), but ma es
ota com re en ive income or t e ear wide plans. However, recharges to other group companies are made
amendments where necessary in order to comply with the ompanies
Employee share schemes 39 50 89 89 Act 2006 and has excluded certain information as permitted by FRS 101. on a funding basis and are credited against post employment service
Share-based incentive plans 59 59 59 The financial statements are prepared on a going concern basis costs to the extent they are in respect of current service. The fair value of
Tax on share-based incentive plans 1 1 1 under the historical cost convention, except for certain financial the plans assets less the present value of the plans liabilities are
instruments and post employment benefits which are measured and disclosed as a net asset or net liability on the company s balance sheet
nclaimed dividend 2 2 2
stated at their fair value. as it is deemed to be the legal sponsor of these plans. The net income
Share buybac programme (18) 18 (2,310) (2,310) (2,310) charge/credit reflects the change in the defined benefit obligation,
y virtue of section 08 of the ompanies Act 2006, the company is
ividend declared for the year (1,720) (1,720) (1,720) resulting from service in the current year, benefit changes, curtailments
exempt from presenting an income statement and disclosing employee
t ne numbers and staff costs. The company has ta en advantage of the and settlements. Past service costs are recognised in income. The net
Profit for the year exemption under FRS 101 from preparing a cash flow statement and interest cost is calculated by applying the discount rate to the net
related notes, disclosures in respect of transactions and the capital balance of the defined benefit obligation and the fair value of the plan
Other comprehensive loss
management of wholly owned subsidiaries, the effects of new but not assets and is included in the income statement. Any differences due to
ota com re en ive income or t e ear changes in assumptions or experience are recognised in other
yet effective IFRSs and disclosures in respect of the compensation of ey
Employee share schemes comprehensive income.
management personnel. As the consolidated financial statements of
Share-based incentive plans
iageo plc include equivalent disclosures, the company has also utilised ro isions
Tax on share-based incentive plans exemptions available under FRS 101 from disclosing IFRS 2 Share-based The company s accounting policy for provisions is the same as set out in
nclaimed dividend Payment in respect of group settled share-based payments, disclosures note 15 to the consolidated financial statements.
Share buybac programme required by IFRS 7 Financial Instruments isclosures and by IFRS 13 Fair
ividend declared for the year Value easurement. a ation
The company s accounting policy for taxation is the same as set out in
t ne n estments in s sidiaries note 7 to the consolidated financial statements.
Investments in subsidiaries are stated at historical cost less impairment
The accompanying notes are an integral part of these parent company financial statements. provisions for any permanent decrease in value. The carrying amounts inancial assets and lia ilities
of the company s investments are reviewed at each reporting date to inancia a et an ia i itie are initially recorded at fair value
determine whether there is an indication of impairment. If such an including, where permitted by IFRS 9, any directly attributable
indication exists, then the asset s recoverable amount is estimated. transaction costs. For those financial assets that are not subsequently
osses are recognised in the statement of comprehensive income and held at fair value, the company assesses whether there is evidence of

FINANCIAL STATEMENTS
reflected in an allowance against the carrying value. here an event impairment at each balance sheet date. The company classifies its
results in the asset s recoverable amount being higher than the financial assets and liabilities into the following categories financial
previously impaired carrying value, the original impairment may be assets and liabilities at amortised cost, financial assets and liabilities at
reversed through the statement of comprehensive income in subsequent fair value through income statement and financial assets at fair value
periods. through other comprehensive income. here financial assets or
liabilities are eligible to be carried at either amortised cost or fair value,
i idends the company does not apply the fair value option.
ividends payable and dividends receivable are recognised in the
financial statements in the year in which they are approved. mo nt o e gro n erta ing are initially measured at fair
value and are subsequently reported at amortised cost. Non-interest
are ased pa ments emplo ee enefits bearing trade receivables are stated at their nominal value as they are
The company s accounting policy for share-based payments is the due on demand. Allowances for expected credit losses are made based
same as set out in note 18 to the consolidated financial statements. on the ris of non-payment, ta ing into account ageing, previous
here the company grants options over its own shares to the experience, economic conditions and forward-loo ing data. Such
employees of its subsidiaries, it generally recharges the cost to the allowances are measured as either 12-month expected credit losses or
relevant group company. here the amount is not recharged, the value lifetime expected credit losses depending on changes in the credit
of the options is recognised as a capital contribution to the subsidiaries quality of the counterparty. Expected credit loss is immaterial for
and increases the cost of investment. amounts owed by group underta ings.
mo nt o e to gro n erta ing 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.

220 Diageo Annual Report 2023 Diageo Annual Report 2023 221
 c on tin u ed

inancial g arantee contract lia ilities . inancial assets and lia ilities 6. ost emplo ment enefits . inancial g arantees and letters of comfort
Financial guarantee contract liabilities are measured initially at their fair Other financial assets and liabilities are recorded at fair value through The movement in the net surplus for the two years ended 30 une 2023, The company has guaranteed certain external borrowings of
values. These liabilities are subsequently measured at the higher of the income statement and comprise the fair value of interest rate swaps for all post employment plans for which the company is the sponsor, subsidiaries which at 30 une 2023 amounted to 16,508 million (2022
amount determined under IAS 37 and the amount initially recognised and cross currency interest rate swaps with subsidiary underta ings, is as follows 15,933 million).
(fair value) less where appropriate, cumulative amortisation of the initial where the company acts as an intermediary between group companies, The company has also provided irrevocable guarantees relating to
amount recognised. an a et an ia i itie et r
therefore it is not expected that there will be any net impact on future the liabilities of certain of its utch subsidiaries. The company has
mi ion mi ion mi ion
dgements in appl ing acco nting policies and e cash flows. assessed that the li elihood of these guarantees being called is remote.
Amounts owed by and to group underta ings, trade and other t ne 7,3 1 (6,582) 759 The irectors do not expect the company to be liable for any legal
so rces of estimation ncertaint
receivables and trade and other payables are measured at amortised Income/(charge) before taxation 13 (161) (27) obligation in respect of these financial guarantee agreements, and they
The preparation of financial statements requires the directors to ma e
cost. Other comprehensive (loss)/income (1,191) 1,557 366 have been recognised at nil fair value.
estimates and assumptions that affect the reported amounts of assets
Amounts owed by and to group underta ings are interest bearing ontributions by group companies 6 6 The company issues letter of comfort to provide sufficient funds to
and liabilities, the disclosure of contingent assets and liabilities at the
and unsecured. For a majority of the loans owed to other group directly owned subsidiary underta ings as and when required.
date of the financial statements, and the reported amounts of revenues Employee contributions 1 (1)
companies, the company has a contractual right to defer payment by
and expenses during the year. Actual results could differ from those
one year and one day and they are therefore classified as non-current enefits paid (290) 290 . are olders f nds
estimates.
liabilities. Other amounts owed by and to group underta ings are t ne (a) erger reser e
The critical accounting policies, which the directors consider are of
repayable on demand. Income/(charge) before taxation On the acquisition of a business, or of an interest in an associate, fair
greater complexity and/or particularly subject to the exercise of
Other comprehensive (loss)/income values, reflecting conditions at the date of acquisition, are attributed to
estimates and judgements, are the same as those disclosed in note 1 to 5. eferred ta assets and lia ilities the net assets acquired. here merger relief is applicable under the
the consolidated financial statements in respect of taxation, post ontributions by group companies
ompanies Acts, the difference between the fair value of the business
employment benefits, contingent liabilities and legal proceedings. ot Ot er enefits paid
em o ment tem orar acquired and the nominal value of shares issued as purchase
A critical accounting estimate, specific to the company is the an i erence ota t ne consideration is treated as a merger reserve.
assessment of the recoverable amount of the investments in mi ion mi ion mi ion
subsidiaries. Impairment reviews are carried out to ensure that the value t ne (190) 6 (1 ) The net surplus for the post employment plans of 537 million (2022 ( ) Own s ares
of the investments in subsidiaries are not carried at above their hanges in tax rates 1,1 million) for which the company is a sponsor comprises funded At 30 une 2023, own shares comprised 3 million ordinary shares held
(23) (1) (2 )
recoverable amounts. The tests are dependent on management s plans of 591 million (2022 1,210 million) disclosed as part of non- by employee share trusts (2022 2 million 2021 2 million) and 213
Recognised in income statement ( ) (2) (6)
estimates in respect of the forecasting of future cash flows, the discount current assets and unfunded liabilities of 5 million (2022 million ordinary shares repurchased and held as treasury shares (2022
rates applicable to the future cash flows and expected growth rates. Recognised in other comprehensive 66 million) disclosed as part of non-current liabilities.
income and equity (69) (69) 217 million 2021 221 million).
Such estimates and judgements are subject to change as a result of The disclosures have been prepared in accordance with IFRI 1 . In uring the year ended 30 une 2023, the group purchased
changing economic conditions and actual cash flows may differ from t ne
particular, where the calculation for a plan results in a surplus, the 38 million ordinary shares (2022 61 million 2021 3 million),
forecasts. hanges in tax rates recognised asset is limited to the present value of any available future representing approximately 1.5% of the issued ordinary share capital
Additional estimates have been applied by management regarding Recognised in income statement refunds from the plan or reductions in future contributions to the plan, (2022 2. % 2021 0.1%) at an average price of 3616 pence per
the potential financial impacts of increasing inflationary pressures. Recognised in other comprehensive and any additional liabilities are recognised as required. share, and an aggregate cost of 1,381 million (including 13 million of
etails are set out in note 9 to the consolidated financial statements. income and equity Additional information on the post employment plans and the transaction costs) (2022 3709 pence per share, and an aggregate
t ne principal ris s and assumptions applicable is disclosed in note 1 to the cost of 2,28 million, including 16 million of transaction costs 2021
. ncome statement consolidated financial statements. 3 07 pence per share, and an aggregate cost of 109 million, including
Note 3 to the consolidated financial statements provides details of the eferred tax on other temporary differences includes assets in respect of 1 million of transaction costs) under the share buybac programme.
remuneration of the company s auditor for the group. the Thalidomide Trust liability of 0 million (2022 2 million) and 7. ro isions The shares purchased under the share buybac programmes were
Information on irectors emoluments, share and other interests, share-based payment liabilities of 2 million (2022 1 million). cancelled.
a i omi e
transactions and pension entitlements is included in the irectors Information on movements in own shares is provided in note 18(c) to

FINANCIAL STATEMENTS
mi ion
remuneration report in this Annual Report. the consolidated financial statements.
t ne
. n estments in s sidiar nderta ings Provisions utilised during the year (c) Retained earnings
nwinding of discounts 7,236 million (2022 7,672 million) of retained earnings is available
ot mi ion
t ne for the payment of dividends or purchases of own shares. etermining
t ne the company s reserves available for distribution is complex and
Additions requires, in some instances, the application of judgement. The company
The company s commitment to the Thalidomide Trust is discounted
t ne and will be utilised over the period of the commitment up to 2037. has determined what is realised and unrealised profits in accordance
At 30 une 2023, 12 million (2022 11 million) of provision is with the ompanies Act 2006 and the guidance included in I AE
rovi ion current and 1 9 million (2022 158 million) is non-current. Technical Release TE H 02/17 uidance on realised and
t ne distributable profits under the ompanies Act 2006 . The company s
reserves available for distribution include adjustments to retained
Increase in the year
earnings in respect of the unrealised portion of the dividend in specie
t ne received by the company, post employment benefit surpluses and
share-based payment charges capitalised to investments.
arr ing amo nt
t ne
At 30 une 2022 61,561

Investments in subsidiary underta ings are stated at historical cost of

72,70 million (2022 72,701 million) less impairment provisions of
11,1 0 million (2022 11,1 0 million).
Investments in subsidiary underta ings include 1 0 million (2022
137 million) of costs in respect of share-based payments, granted to
subsidiary underta ings which were not recharged to the subsidiaries.
The additions comprise 3 million not recharged and capitalised as a
cost of investment during the year ended 30 une 2023.
A list of group companies as at 30 une 2023 is provided in note 10.

222 Diageo Annual Report 2023 Diageo Annual Report 2023 223
 c on tin u ed

10. ro p companies n one ia Av. Ejercito Nacional, 8 3- , Torre Paseo Acceso osta del Este, Ave a Rotonda, usiness Par ,
, 2, exico ity , 11520 Torre V. piso 15 Panama ity
In accordance with Section 09 of the ompanies Act 2006 a full list of subsidiaries, partnerships, associates, joint ventures and joint arrangements, l end Sudirman av. 76-78, Sudirman Pla a,
the country of incorporation and the effective percentage of equity owned, as at 30 une 2023 are disclosed below. nless otherwise stated the Pla a arein, 15th, a arta Selatan, 12910, a arta iageo e ico e iageo anama
share capital disclosed comprises ordinary shares which are indirectly held by iageo plc. ita ara n one ia alle obernador Rafael Rebollar 95, ol San Panama city, est oulevard, PH ARIFA, 9th and
re an iguel de hapultepec, el iguel Hidalgo P 10th, Santa aria usiness
O N R ana a iageo ec ar eting ervice 11850, exico ity iageo ai an nc
Nangor House, estern Estate, Nangor Road,
ngo a 13 Peter Street, Suite 1501, Ontario, 5V 2H2, enmar ublin, 12 arag a
Toronto Sund rogsgade 19, 2. 2100, openhagen arretera Atotonilco - uadalajara, Atotonilco el
Rua Fernao de Sousa, ondominio engo, etter i e o re an n imite om an Avda Aviadores del haco 2050. Edificio orld
iageo ana a o ing nc Alto, alisco, 7750 trade center. Torre 3 piso 11
A, 11.s floor, Fraction A37, neighbourhood Vila iageo enmar ai e o n imite om an
Alice, Province of uanda iageo ana a nc iageo e ico omercia i a ora e iageo arag a
ominican e ic re an ro r tee e ignate ctivit
iageo ngo a imita a oul Henri- ourassa E., 9225, ocal A, uebec, iageo e ico e er
Num. 07 Av. acinto Ignacio anon, Sector om an
rgentina H1E 1P6 , ontreal Independencia SN Santiago, atatl n, Oaxaca
Ensanche Paraiso, Edificio he Space, Piso 3rd, St. ames s ate, ublin 8 Vi ctor Andres elaunde 1 7, Vi a Principal 133,
iageo merica e ec i tri tion nc istrito Nacional, Santo omingo 70 0 Interior 107, Piso 10, San Isidro, ima
ernardo de Irigoyen 972, floor 7, office A, A A m o ee are ominee re an
iageo re an e ec i tri tion nc iageo ominicana om ra e ca e e iageo er
iageo e rgentina e ignate ctivit om an
ie rance rt r inne on om an in Porfirio ia 17, alisco, 7750, Atotonilco el Alto ii ine
tra ia
Avenida Apoquindo 5950, Piso , Oficina 0 -103, Rue ules efebvre, 75009, Paris n imite om an iageo e ico O eracione e 10th Floor ommerce and Industry Pla a uilding,
162 lues Point Road, evel 1, NS , 2060,
c ahons Point as ondes Santiago de hile iageo re an inance n imite om an iageo e ico irit c inley Hill r, Taguig, 163
inne rance o ing
n a erg i ti ing nve tment t t iageo i e imita a iageo re an o ing n imite om an on io gavera e iageo ia aci ic are ervice entre
73, Rue de Provence, 75009, Paris
ina iageo re an n imite om an imite nc
evel 7, 99 acquarie Street, Sydney, NS 2000 nite i ti er rance ervicio gavera e
1F, One useum Place, 669 in ha Road, ingan nit 1, 17th Floor, Ore entral 9th Avenue corner
iageo tra ia imite erman iageo etirement aving an en ion r tee o am i e
istrict, Shanghai 31st Street onifacio lobal ity, Taguig ity, 163
e ignate ctivit om an
r ac irit t t Reeperbahn 1, 20359, Hamburg Estrada Nacional numero 1, icanhine, iageo ort nc
iageo ina imite iageo r e o ing imite arracuene
hittred Street, , 670, undaberg e a ar m iageo ii ine ree ort nc
Fengxiang Village Fengyu Town, Eryuan ounty, inne tore o e imite iageo arrac ene a
n a erg i ti ing om an t imite ali ai inority Region, unnan Province iageo erman m iageo ii ine nc
ri e re erie o ing n imite om an et er an
tria iageo i or ai o t reece ort an nite nter ri e o ing nc
ai e en ion r tee e ignate ctivit e Ruyter ades, Postbus 2852 1000cw Amsterdam
Teinfaltstrasse 8, 1010, ien No. 9 uanxing Road, inniu istrict, hengdu, eof. ifisias 115, Athens, 115 2 om an nit 3 /F, 13 egaspi Par view ondominium,
610036 nite i ti er intner arlos Palanca Street cor. egaspi Street, a ati
iageo tria m iageo e a ta
ic an eng i ing ang ro o t olenwerf 12, 101 , Amsterdam ity
e gi m ern e Strada Statale 63, 12069, Santa Vittoria d Alba
No.28 iafeng Road, 2502, 5, Pudong istrict, iageo t antic at oir o nc
.3 oornveld 150, 1731, elli Heritage Hall, e archant Street, St Peter Port, ( N)
200137, Shanghai iageo ran o an
iageo e gi m 1 H iageo O eration ta
iageo ang ai imite iageo a ita Pr yo opowa Str. 31, P 01 208 arsaw
erm a iageo ro n rance om an imite Via Ernesto ugaro 15, 10126, Torino
nit 1101, 1102, uilding 16, No.1000 inhai Road, iageo ig an o ing iageo o a oo
Victoria Place, 5th Floor, 31 Victoria Street, Shanghai ong ong iageo ta ia
Hamilton, H 10 31/F, Tower two, Times Square, 1 atheson street a an iageo o ing et er an ort ga
iageo i or ec no og ang ai o t
ta anta imite auseway ay, Hong ong iageo e er an Avenida . oao II, No 50, piso 2, letra , Edificio
nit , 2nd Floor, est ogistics enter, No. 88 9-7-1 A asa a, inato- u, To yo 16 -0001
iageo ong ong imite ar Vermelho, 1990-095 isboa
ra i inhai Avenue, Nanshan Street, Shen hen iageo a an mini tration ervice iageo e a
ngar iageo ort ga i tri i ora e e i a
Fa enda Santa Eli a, ona Rural, ear , iageo ain en en o t o a arming nitiative

FINANCIAL STATEMENTS
iageo a an ni e oa a
62.685-000, Paraipaba o om ia o sa yorgy ut 1 , udapest, 113 terini roo m orter
en a omania
ioca grico a 100 street No.13 21 Office 502. ogota iageo ine ervice rivate om an e viac e er an
imite are R NO 1870/1/176, Aln House, Off Eldama Ravine Expo usiness Par , Street Aviator Popisteanu 5 A,
unicipio de Itaitinga, Estado do eara, na iageo o om ia lose, estlands, Nairobi e ea an ladirea 2, et 1-3, Sector 1, ucharest, 0122
Rodovia R 116, no 15.000, airro iboia, EP iageo ngar inance imite ia i it
61.880-000 o ta ica om an iageo en a imite 123 arlton ore Road, evel 2, Newmar et, 1023, iageo a an
Trejos ontealegre, Edificio Esca u, Village II, a e nion Auc land ia
ioca n tria e e i a iageo ngar ar eting ervice imite
Oficinas 03-118 y 03-120, istrito San Rafael, San ia i it om an 5 Rue Alexis e Villeneuve 97 00 Saint- enis iageo e ea an imite aspiys aya Street, 22, main bld. 1, bld. 5, floor 3,
Rua Olimpiadas, 205, floor 1 -15, 0 551-000, Sao
ose igeria apartment VII, room 31a, 11530 , oscow
Paulo n ia iageo e nion
iageo o ta ica Oba A ran Avenue I eja, 2 , agos, P 21071, i tri tion oint toc om an
iageo ra i t a empapura ain Road, Opp Nagawara a e, e anon
roatia arle SE Tower, 2nd floor, arnata a, 5600 5, 100001 iageo ran i tri tor
garia iageo O ore
He toroviceva ulica 2, 10000, agreb angalore iageo ran igeria t
7 Is ars o Shose lvd., Trade enter Europe, inga ore
iageo ine ervice n ia rivate imite e ico
building 12, floor 2, 1528, Sofia iageo roatia oo a ge or a
iageo garia t ec e ic arathon Futurex, A- ing, 2601, 26th Floor, N Apote ergata 10, 0180 Oslo
oshi arg, ower Parel, umbai, 00 013
ameroon Namesti I. P. Pavlova 1789/5. th floor, 120 00, iageo or a
Prague 2 iageo i ti erie rivate imite
535 rue AF O I, ouala P.O. ox 12 5 anama
iageo n ia rivate imite
iageo ameroon t

224 Diageo Annual Report 2023 Diageo Annual Report 2023 225
 c on tin u ed

112 Robinson Road, 1, 5th Floor, 1, Singapore i iam an er on an on imite i e ort imite e eit i ti er nc i more ra ing No. 7 uanghua Road, haoyang istrict, eijing,
68902 e ec no ogie imite o ing imite i rc ive nc e ra ing 100020
iageo inga ore te t e n ei ing on ting o t
16 reat arlborough St, ondon, 1F 7HS imite 300 elaware Ave Ste 210-A ilmington, E 19801 arretera Nacional Acarigua- arquisimeto asa
treetcar nve tment o ing te t Agropecuaria as arias I .A.S-N Sector los No. 9 uanxing Road, inniu istrict, hengdu,
nna ee imite nite i ti er rance imite ee nc
o t rica uayones a iel, ara. 610036
n am nve tment 3rd Floor apital House, 3 pper ueen Street, 3 11 Silverside Road Tatnall uilding, Ste 10 eng iang ai ra e eve o ment o
uilding 3, axwell Office Par , agwa rescent gro ec aria a aria
e arer ine imite elfast ilmington, E 19810 imite
est, aterfall ity, idrand, 2090 iageo o a imite a amigo irit om an ietnam
a e i ti er o ing imite eng eng an i or ar eting o imite
iageo o t rica t imite No. 157, 21/8 Street, Phuoc y ard, Phan Rang -
iageo ort ern re an imite a amigo e ia
nite i ti er o t ern rica ro rietar a e i ti er imite Thap ham ity, Ninh Thuan Province
ro ction imite ta ing ervice ic an e n o t
imite iageo imite iageo ietnam
61 St. ames s Street, ondon, S 1A 1 ivan a nc No. 998, uanxing Road, Hongguang ounty,
o t orea iageo i tri tion om an imite im a e hengdu, 610000
932-9 , aewol-ro, aewol-myun, Icheon-shi, terini roo imite 381 Par Avenue South, Suite 1015, New or , N
iageo imite 8 idlothian Avenue, Eastlea, Harare eng i in ra ing o imite
yeonggi-do, 173 2, Icheon nite tate 10016
iageo ire inance o viation in nternationa i ti er im a e rivate a
in or o a o t 1 Estate Annaberg Shannon rove, RR1 ox imite
iageo m o ee are ominee imite avo ran 211 Avenida alec n, entre y , Vedado, Pla a
iageo orea o t 9 00, ingshill, VI 00850-9703
iageo inance c de la Revoluci n, a Habana
ain iageo nc 5 estheimer 1000, Houston, T 77056
iageo inance imite on antiago
Avda de la Victoria 32, Edificio Spirit, 28023, 1209 Orange Street, New astle, elaware 19801 a cone i ti ing ngo a
iageo inancing r e imite ana
adrid ec no og r g a Rua om Eduardo Andre uaca, S/No, OTE ,
iageo reat ritain imite uanda uinness rewery, Plot 1 loc , Industrial Area,
iageo ana 1 25 South ingstown Road, South ingstown, RI Pasaje Paseo e as arretas, 2580, oficina 1301, aasi, P. O. ox 1536, umasi
e en iageo ea t care imite 02879 ontevideo n tria e e i a a ngo a
inne ana re erie c
avlegatan street 22/ , 11330, Stoc holm iageo o ing imite iageo o a irit or oration iageo r g a
riti irgin an ngar
iageo e en iageo o ing imite 175 reenwich Street, Three orld Trade enter, ene e a
New or , N 10007 ommerce House, ic hams ay 1, PO ox 31 0, o sa yorgy ut 1 , udapest, 113
it er an iageo o an nve tment imite Av Intercomunal Al Primera, os Taques, Estado
a room c i ition nc Road Town, Tortola iageo m o ee O ner i rogram
Falc n
Place de la are 12, ausanne, 1003 iageo nve tment o ing imite m reation ro ct nc Organi ation
avo ervice arag ana
iageo i e iageo Over ea o ing imite Sea eadow House, lac burne Highway, P.O. atema a
iageo merica nc Av a Hormiga con Intersecci n de la arretera
an ania iageo cot an nve tment imite ox 116, Road Town, Tortola alle 8-19 ona 9, uet altenango
iageo merica nc via Payara, . . Tierra uena Acarigua
iageo are O ner i r tee imite a mer nve tment ro imite ne o e t ra ocie a nonima
R Africa egal Attorneys, Plot 60, rsino Street ra ing
iageo eer om an o ing imite
P.O. ox 328 0, ar es Salaam iageo r e o ing imite Av. ircunvalacion Norte ( ose Asunsion n ia
magro imite iageo nc ana a
iageo r e imite Rodrigue ) Edificio istribuidora etropol, Tower, 2 Vittal allya Road, angalore,
r e iageo nve tment or oration Porlamar, Estado Nueva Esparta abatt House, 207 ueen s uay est, Suite 299, 560001
iageo o ing
Esentepe ah. ahar S . O dile River Pla a iageo atin merica ari ean e ra ing Ontario, 5 1A7, Toronto o a a enger ort rivate imite
iageo nve tment
Vyndham rand Apt. No 13/25 Sisli, Istanbul iageo on co o everage ar ra ing inne ana a imite
ran etro o itan a ita om an imite
e o i er ana i ve icaret iageo ort merica o n ation nc iageo eva arta ina nite irit imite
ran etro o itan tate imite
e i ana i ve icaret iageo ort merica nc ra ing 27 Shuijing Street, injiang istrict, hengdu, n one ia
ran etro o itan nternationa o ing imite 610065
raine i or nve tment eta m orter l. Raya aba- aba No. 88, anjar ari Padang,
ran etro o itan imite

FINANCIAL STATEMENTS
eng i ing ang angcang i or a e o esa Nyambu, ecamatan ediri, abupaten
1v Pavla Tychyny avenue , 2152, yiv o irit Ave. San Felipe rbani aci n a astellana,
inne imite t Tabanan, Provinsi ali
iageo raine tirring Edificio entro oinasa, Piso 6. aracas, 1060
inne Over ea o ing imite 1F, One useum Place, 669 in ha Road, ingan anggeng rea i a a rima
nite ing om iageo ene e a istrict, Shanghai
inne Over ea imite en a
11 ochside Place, Edinburgh, EH12 9HA aIIe 1 Este, Edificio y alpon TP, ona Industrial e n ang ai on ting o t
ame c anan om an imite a aracarita, unicipio os uayos, estado 5th Floor, arden ity usiness Par , loc A,
rt r e on imite arabobo No. 21 Shuijing Street, injiang istrict, hengdu, arden ity Road, Off Exit 7, Thi a Superhighway,
o n a er an on imite 610011 Nairobi, P.O. ox 30161-00100
o er og i imite rran ra ing
an aon t eng e n ar eting o imite en a re erie imite
iageo a ita c e ea e
r ac t No. 38 iuyuan Road, ongming Street, ionglai, en a imite
iageo cot an imite a ra ing hengdu
an era or on an om an imite arden ity usiness Par , 5th Floor, P.O. Office
cot an imite ra ing eng e n i or o imite
e i ti er om an ioc emica imite ox Number 30161-00100, Nairobi
o n aig om an imite at rican re erie c
e imm rin om an imite
e oc nagar i ti er imite ampala Road, Industrial Area, Nairobi, P.O. ox
1 12-00100
at rican a ting imite
Tus er House, Ruara a, PO ox 30161, 00100
Nairobi PO

226 Diageo Annual Report 2023 Diageo Annual Report 2023 227
 c on tin u ed

o at rica imite Plot 3-17 Port ell Road, u ira, ampala, P.O. ox ngar a eno rin t anoi i or an everage oint toc om an aca
nternationa imite 7130 Soro sari ut 26, udapest, 1095 International House, 6 Nile Street, ondon, a ico Avenida omercial de acau, nos 251 -301, AIA
gan a re erie imite England, N1 7SR O Tower, evel 20, acau
em o ro ertie imite ac nic m c
Plot No 1 alt Road, Portbell u ira P.O. ox 3221 a Oa imite ong ong o t enne iageo aca imite
e anon n ia
ampala nite tate Room 06, 13A/F. South Tower, orld Finance
eirut Symposium ldg, 10th floor, eirut, PO ox nternationa i ti er gan a imite E- 7/5., O hla Industrial Area, Phase II, New entre, Harbour ity, 17 anton Road, Tsim Sha a a ia
113-5250 elhi, South elhi, 110020 10 5 odge ane Fallon, NV 89 06
Tsui, owloon
Tus er House, Ruara a, PO ox 30161, 00100 nit 30-01, evel 30, Tower A, Vertical usiness
iageo e anon ao irit everage rivate imite eva a irit iageo nternationa irit om an imite
Nairobi PO Suite, Avenue 3, angsar South, No. 8, alan
Verdun Street, Ibi a uilding, eirut, PO ox at rican a ting gan a imite ta 1222 SE ideon Street Portland, OR 97202 erinchi, 59200 uala umpur
113-5631 Via Tortona 15, 201 , ilan aam om nite ing om o t enne iageo a a ia n
iageo e anon o ing nite ing om 9 heatfield Road, E IN R H, EH11 2P
iococ tai 127 E arm Springs Road, as Vegas, NV 89119
a riti 11 ochside Place, Edinburgh, EH12 9HA ot ian i ti er imite et er an
a an ro ne tter ott ing
IFS ourt, Twenty Eight, ybercity, Ebene oc i e imite artner i e ort riti i ti er om an imite olenwerf 12, 101 , Amsterdam
8 5-3 amino awa, Hiyoshi-cho Hio i-shi, 16192 oastal Highway, ewes, elaware 19958
ian O ort nitie an nve tment imite c o e o cot an t agoshima iageo o t enne
ronroot e ic o ing
16 reat arlborough St, ondon, 1F 7HS oma a ano e i ti er om an t O O O inga ore
et er an 1935 . Irving Par hicago, I 60613
ina 83 lemenceau Ave, 09-01 E Square, Singapore
iageo en ion r t imite it a everage om an
olenwerf 12, 101 , Amsterdam et er an 80 A, 88 iddle incheng Road, Shanghai, Pilot 239920
a ei e imite ia i it artner i 2 59 E 8th Street, os Angeles, alifornia 90021
ete One or i e eresstraat 1, 811 A reda Free Trade one o t enne iageo inga ore te t
ee i t o ern irit o t enne iageo ina o t
igeria an re
a a ace Over ea imite 251 ittle Falls rive, ilmington, elaware 19808 ai an
Oba A ran Avenue I eja, 2 , agos, P 21071, ain
100001 nite irit reat ritain imite ine a nc o ta ica No. 9 , itrtown Office Tower, 12th Floor, Rama
alle eneral Vara del Rey 5, 1 Piso, 26003
inne igeria c nite irit imite Heredia-Flores lorente, ervecer a de osta Rica, Road, angmai, Pathumwan, ang o , 10330
ogro o, a Rioja 3 11 Silverside Road, Rodney uilding, Suite 10 ,
ilmington, elaware 19810 Edificio orporativo de FIF O iageo o t enne ai an imite
ort r o ing imite an arra
ra t irit O e i a e n o
Sehit ehmet etin So a , ucu Sanayi lgesi nite tate alle al , 7 a aguna, 38320 Santa ru de raine
, 99 50, a i agusa Tenerife 517 est 39th Street Austin, T 78751 ominican e ic
175 reenwich Street, Three orld Trade enter, hervonoarmiys a Street, bld. 9/2, apt. 70, yiv
r o c i ve ara n tri t New or , N 10007 om ania ervecera e anaria o rmet ra e Independencia Street, No. 129, Santiago
i t ominicana eagram raine imite
ii ine a i ornia im ca t nc Tomino (Ponteverda), 36750, Parroquia de oian, 5 5 ohnson Avenue, roo lyn, N 11237
arrio de entinela, 1 Salvador Sturla Street, Ensanche Naco, Santo nite ing om
nit 1, 17th Floor, Ore entral 9th Avenue corner o ing na og i i
31st Street onifacio lobal ity, Taguig ity, 163 a omino remi m irit omingo Persimmon House, Fulford, or O19 FE
ee i nc 575 rand Street, E1507 New or , N 10002
o ing nc nite ing om eagram ominicana ra a gar etro o itan ome imite
2950 North oop Ste 1200 Houston, T ran treet everage
nite i ti er intner ii ine nc 77092-8808 20 ing Street Prince Albert House aidenhead Segunda (2da) Street, os Platanitos, Santiago
S 61 T 6220 Avalon oulevard, Suite 220, Alpharetta, A (1) irectly owned by iageo plc.
ar et irit 30009 n tria e icore nternationa e (2) ormant company.
an a a o imite rance (3) Ownership held in class of A shares.
ene e a rong orn nitiative o ing
imihurura, asabo, mujyi was igali, 7130 Port 35 astlehill, The Royal ile, Edinburgh, EH1 2NE ( ) Ownership held in class of shares.
Ave. San Felipe rbani aci n a astellana, 65 SE ashington Street Portland, OR 9721 105 oulevard de la ission archand, (5) Ownership held in class of A shares and shares.
ell u ira e cotc i eritage entre imite ourbevoie, 92 00
Edificio entro oinasa, Piso 6. aracas, 1060 (6) Ownership held in preference shares.
at rican re erie an a imite o e irit i ti er
n tria am ero o t enne iageo (7) Ownership held in equity shares and preference
735 10th Street, Fortuna, A 955 0 shares.

FINANCIAL STATEMENTS
e c e e 39- 5 ermondsey Street, ondon, SE1 3 F ong ong
ietnam (8) Operation is managed by iageo.
O rien House, 273 e Rocher, ahe on on otanica rin imite e oo irit
621 Pham Van hi Street, istrict 6, Ho hi inh evel 5 , Hopewell entre, 183 ueen s Road East, (9) ompanies controlled by the group based on
e c e e re erie imite ity 6 New avendish Street, ondon, 1 8T 838 al er Road, Suite 21-2, over, elaware Hong ong management s assessments.
1990 (10) iageo shares joint control over these entities under
o t an ietnam irit an ine t e imite o t enne iageo ong ong imite shareholder s agreements, and iageo s rights to profit,
on e
Southern Sudan African Par Hotel, uba Town O 71-75 Shelton Street, ovent arden, ondon, assets and liabilities of the companies are dependent
2H 9 8601296, TT Administrative Services , 888 S a an on the performance of the group s brands rather the
a t rican everage o t ern an tra ia Fifth Avenue, Ste 1600, Portland, Oregon, 9720 effective equity ownership of the companies.
imite ea r or imite 13F imbocho itsui uilding, 1-105 (11) ased on 55.88% equity investment in S that
50 ertie Street, Port elbourne, Victoria 3207 i erton andajimbocho, hiyoda- u, To yo
an ania 8 ing Edward Street, Oxford, O 1 H excludes 2.38% owned by the S enefit Trust.
e or i i ti er imite 936 S 1st Ave, iami, F 33130 o t enne iageo (12) Operation is managed by o t Hennessey.
2nd Floor, East ing T F uilding, Ohio street. ti On e i imite O o a
enmar
P.O. ox 328 0 ar es Salaam allindalloch astle, allindalloch, anffshire A 37
Stauningvej 38, 6900 S jern ietnam
an ania imite 9A
ta ning i o ing 9 o uc Street, Pham inh Ho ard, Hai a
Plot 117/2, Access Road, Nelson andela a in a oc i ti er Trung istrict, Ha Noi ity
Expressway, hang Ombe Industrial Area, P.O. rance Harbourside rewery, Tretoil Farm, odmin,
ox 1080, ar es Salaam ornwall, P 30 5 A
2 /32 rue ean oujon, 75008 Paris
erengeti re erie imite
o t enne nternationa e o t e t ermentori m imite
11. ost alance s eet e ents
gan a Starting 1 uly 2023, in line with reporting requirements the functional currency of iageo plc has changed from sterling to S dollar which is applied
o t enne Here 70 ath Road, Arnos Vale, ristol, S 3AP
prospectively. This is because the group s share of net sales and expenses in the S and other countries whose currencies correlate closely with the
erman S dollar has been increasing over the years, and that trend is expected to continue in line with the group s strategic focus. The change in functional
o artstr. 7, 53115 onn currency is not expected to significantly impact iageo plc s retained earnings that are available for the payment of dividends or purchases of own
ein an i ti er m shares. iageo has also decided to change its presentation currency to S dollar with effect from 1 uly 2023, applied retrospectively, as it believes
that this change will provide better alignment of the reporting of performance with its business exposures.
On 31 uly 2023, the oard approved plans for a further return of capital programme of 1.0 billion to shareholders.

228 Diageo Annual Report 2023 Diageo Annual Report 2023 229
Additional information

Contents
Unaudited financial information 232
Cautionary statement 241
Non-financial reporting boundaries and methodologies 242
Independent Limited Assurance Report to the Directors of Diageo 263
plc on selected subject matter
Other additional information 267

ADDITIONAL INFORMATION
230 Diageo Annual Report 2023 Diageo Annual Report 2023 231
 O O

rowt on a constant asis considerations to drive commercial competitiveness, as well as

rowth on a constant basis is a measure used by the group to hyperinflationary elements and that for the calculation of organic
understand the trends of the business and its recovery towards pre- movements, the distortion from hyperinflationary elements should be
1. efinitions and reconciliation of non meas res to meas res ovid-19 performance. excluded.
2019 to 2023 growth on a constant basis for volume, sales, net umulative inflation over 100% (2% per month compounded)
iageo s strategic planning process is based on certain non- AAP c i ition an i oa sales and operating profit before exceptional items is calculated by over three years is one of the ey indicators within IAS 29 to assess
measures, including organic movements. These non- AAP measures For acquisitions in the current period, the post-acquisition results are adding up the respective periods organic movement in the row titled whether an economy is deemed to be hyperinflationary. As a result,
are chosen for planning and reporting, and some of them are used for excluded from the organic movement calculations. For acquisitions in Organic movement in the tables below, expressed as a percentage the definition of Organic movements includes price growth in
incentive purposes. The group s management believes that these the prior period, post-acquisition results are included in full in the prior of the relevant absolute amount in the row titled 2019 adjusted . The mar ets deemed to be hyperinflationary economies, up to a
measures provide valuable additional information for users of the period but are included in the organic movement calculation from the most comparable AAP financial measure is 2019 to 2023 reported maximum of 2% per month while also being on a constant currency
financial statements in understanding the group s performance. These anniversary of the acquisition date in the current period. The acquisition movement % in the tables below which is calculated by combining basis. orresponding adjustments have been made to all income
non- AAP measures should be viewed as complementary to, and not row also eliminates the impact of transaction costs that have been the reported movements for the respective periods, expressed as a statement related lines in the organic movement calculations.
replacements for, the comparable AAP measures and reported charged to operating profit in the current or prior period in respect of percentage of the 2019 reported amount. In the tables presenting the calculation of organic movements,
movements therein. acquisitions that, in management s judgement, are expected to be hyperinflation is included as a reconciling item between reported
It is not possible to reconcile the forecast tax rate before exceptional completed. d stment in respect of perinflation and organic movements and that also includes the relevant IAS 29
items, forecast organic net sales growth and forecast organic operating here a business, brand, brand distribution right or agency The group s experience is that hyperinflationary conditions result in adjustments.
profit growth to the most comparable AAP measure as it is not agreement was disposed of or terminated in the reporting period, the price increases that include both normal pricing actions reflecting
possible to predict, without unreasonable effort, with reasonable group, in the organic movement calculations, excludes the results for changes in demand, commodity and other input costs or
certainty, the future impact of changes in exchange rates, acquisitions that business from the current and prior period. In the calculation of
and disposals and potential exceptional items. operating profit, the overheads included in disposals are only those Organic mo ement calc lations for t e ear ended 0 ne 0 were as follows
directly attributable to the businesses disposed of, and do not result
ol me ia atin merica
from subjective judgements of management. ort merica ro e aci ic an ari ean rica or orate ota
Volume is a performance indicator that is measured on an equivalent mi ion mi ion mi ion mi ion mi ion mi ion mi ion
units basis to nine-litre cases of spirits. An equivalent unit represents c ce tiona item o me e iva ent nit
one nine-litre case of spirits, which is approximately 272 servings. A Exceptional items are those that in management s judgement need to 2019 reported 9. 5. 95.1 22. 33.6 2 5.9
serving comprises 33ml of spirits, 165ml of wine, or 330ml of ready to be disclosed separately. Such items are included within the income
isposals (2.1) (0.1) (2.7) ( .9)
drin or beer. Therefore, to convert volume of products other than statement caption to which they relate, and are excluded from the
spirits to equivalent units, the following guide has been used beer in organic movement calculations. anagement believes that that 2019 adjusted 7.3 5.3 95.1 22. 30.9 2 1.0
hectolitres, divide by 0.9 wine in nine-litre cases, divide by five ready separate disclosure of exceptional items and the classification between Organic movement
to drin and certain pre-mixed products that are classified as ready to operating and non-operating items further helps investors to Organic movement
drin in nine-litre cases, divide by ten. understand the performance of the group. hanges in estimates and Organic movement
reversals in relation to items previously recognised as exceptional are
Organic mo ements presented consistently as exceptional in the current year.
an movement on a con tant a i
Organic information is presented using sterling amounts on a constant Exceptional operating items are those that are considered to be
currency basis excluding the impact of exceptional items, certain fair material and unusual or non-recurring in nature and are part of the o me e iva ent nit
value remeasurement, hyperinflation and acquisitions and disposals. operating activities of the group, such as one-off global restructuring 2022 reported 5 .8 51.2 9 .2 27.1 35.7 263.0
Organic measures enable users to focus on the performance of the programmes which can be multi-year, impairment of intangible assets isposals(2) (0.8) (23.3) (1.9) (26.0)
business which is common to both years and which represents those and fixed assets, indirect tax settlements, property disposals and 2022 adjusted 5 .8 50. 70.9 27.1 33.8 237.0
measures that local managers are most directly able to influence. changes in post employment plans.
Organic movement
ains and losses on the sale or directly attributable to a prospective
alc lation of organic mo ements sale of businesses, brands or distribution rights, step up gains and c i ition an i oa
The organic movement percentage is the amount in the row titled losses that arise when an investment becomes an associate or an re orte
Organic movement in the tables below, expressed as a percentage of associate becomes a subsidiary and other material, unusual non- Organic movement
the relevant absolute amount in the row titled 2022 adjusted . Organic recurring items that are not in respect of the production, mar eting and
operating margin is calculated by dividing operating profit before distribution of premium drin s, are disclosed as exceptional non- to re orte gro t
exceptional items by net sales after excluding the impact of exchange operating items below operating profit in the income statement. to gro t on a con tant a i
rate movements, certain fair value remeasurements, hyperinflation and Exceptional current and deferred tax items comprise material and
acquisitions and disposals. unusual or non-recurring items that impact taxation. Examples include ia atin merica
direct tax provisions and settlements in respect of prior years and the ort merica ro e aci ic an ari ean rica or orate ota
a c ange rate mi ion mi ion mi ion mi ion mi ion mi ion mi ion
Exchange in the organic movement calculation reflects the adjustment remeasurement of deferred tax assets and liabilities following tax rate
ae
to recalculate the reported results as if they had been generated at the changes.
2022 reported 6,682 5,7 0 5,62 1,9 5 2, 03 5 22, 8
prior period weighted average exchange rates. air va e remea rement Exchange (51) (1 9) ( ) (19) (1) (22 )
Exchange impacts in respect of the external hedging of intergroup
Fair value remeasurement in the organic movement calculation reflects isposals(2) (36) (88 ) (195) (1,115)
sales by the mar ets in a currency other than their functional currency
an adjustment to eliminate the impact of fair value changes in
and the intergroup recharging of services are also translated at prior Hyperinflation (213) (213)
biological assets, earn-out arrangements that are accounted for as

ADDITIONAL INFORMATION
period weighted average exchange rates and are allocated to the 2022 adjusted 6,631 5,3 2 ,736 1,926 2,207 5 20,896
remuneration and fair value changes relating to contingent
geographical segment to which they relate. Residual exchange Organic movement
consideration liabilities and equity options that arose on acquisitions
impacts are reported as part of the orporate segment. Results from
recognised in the income statement. c i ition an i oa
hyperinflationary economies are translated at forward-loo ing rates.
c ange
erin ation
re orte
Organic movement

232 Diageo Annual Report 2023 Diageo Annual Report 2023 233
 O O con tinu ed

ia atin merica ia atin merica

ort merica ro e aci ic an ari ean rica or orate ota ort merica ro e aci ic an ari ean rica or orate ota
mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion mi ion

et a e in oi o ion l i m
2019 reported , 60 2,939 2,688 1,130 1,597 53 12,867 2019 reported ,116
Exchange (3 ) (19) 1 (2) 2 ( 8) isposal (29)
2019 adjusted ,087
Reclassification (10) (10)
Organic movement (5 )
isposals (75) (1) (1) (1) (91) (169)
Organic movement 6 7
2019 adjusted ,351 2,919 2,688 1,123 1,50 55 12,6 0
Organic movement 5
Organic movement
an movement on a con tant a i
Organic movement
Organic movement ia atin merica
ort merica ro e aci ic an ari ean rica or orate ota
an movement on a con tant a i mi ion mi ion mi ion mi ion mi ion mi ion mi ion

O erating ro it e ore e ce tiona item

et a e 2022 reported 2, 5 1,017 711 538 315 (238) ,797
2022 reported 6,095 3,212 2,88 1,525 1,682 5 15, 52 Exchange(1) (31) (13) (5) (1 ) 11 (30) (82)
Exchange(1) ( 6) ( ) (8) (16) (1) (115) Fair value remeasurement of contingent considerations and
equity option (32) (36) 8 (60)
(2)
isposals (29) (137) (130) (296)
Acquisitions and disposals(2) 6 (18) (26) (18) (56)
Hyperinflation (71) (71) Hyperinflation (1) (1)
2022 adjusted 6,0 9 3,068 2,739 1,509 1,551 5 1 ,970 2022 adjusted 2,397 9 9 680 532 308 (268) ,598
Organic movement Organic movement
c i ition an i oa c i ition an i oa
c ange air va e remea rement o contingent con i eration
erin ation e it o tion an earn o t arrangement
re orte c ange
Organic movement erin ation
re orte
to re orte gro t Organic movement
to gro t on a con tant a i
Organic o erating margin
ia atin merica n a
ort merica ro e aci ic an ari ean rica or orate ota
mi ion mi ion mi ion mi ion mi ion mi ion mi ion 2022 39.6 30.9 2 .8 35.3 19.9 n/a 30.7
ar eting argin movement n a
2022 reported 1,200 577 90 2 3 199 12 2,721
Exchange (12) 5 (2) (3) (2) (1) (15) to re orte gro t
Fair value remeasurement of contingent considerations, to gro t on a con tant a i
equity option and earn out arrangements 1 1
isposals(2) (1) (9) (10) (i) For the reconciliation of sales to net sales, see page 5 .
(ii) Percentages and margin movements are calculated on rounded figures.
Hyperinflation (6) (6)
Notes Information in respect of the organic movement calculations
2022 adjusted 1,189 575 88 2 0 188 11 2,691
(1) The impact of movements in exchange rates on reported figures for operating profit was principally in respect of the favourable exchange impact of the strengthening of the S dollar
Organic movement and exican peso against the sterling, partially offset by the wea ening of the Nigerian naira, hanaian cedi and the Tur ish lira.
(2) Acquisitions and disposals that had an effect on volume, sales, net sales, mar eting and operating profit in the year ended 30 une 2023, are detailed on page 236.
c i ition an i oa
(3) Organic operating margin calculated by dividing Operating profit before exceptional items by net sales.
c ange
erin ation
re orte
Organic movement

ADDITIONAL INFORMATION
234 Diageo Annual Report 2023 Diageo Annual Report 2023 235
 O O con tinu ed

In the year ended 30 une 2023, the acquisitions and disposals that affected volume, sales, net sales, mar eting and operating profit were as ree cas flow
follows, as per footnote (2) on the previous page Free cash flow comprises the net cash flow from operating activities aggregated with the net cash received/paid for wor ing capital loans
O erating receivable, cash paid or received for investments and the net cash expenditure paid for property, plant and equipment and computer software that
o me ae et a e ar eting ro it are included in net cash flow from investing activities.
e nit mi ion mi ion mi ion mi ion mi ion
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
ear en e ne
management, are in respect of the acquisition and sale of businesses and non-wor ing capital loans to and from associates.
c i ition The group s management regards a portion of the purchase and disposal of property, plant and equipment and computer software as ultimately
hase istillery 1 non-discretionary since ongoing investment in plant, machinery and technology is required to support the day-to-day operations, whereas
one River Ranch ater 6 acquisition and sale of businesses are discretionary.
7 here appropriate, separate explanations are given for the impacts of acquisition and sale of businesses, dividends paid and the purchase of
i oa
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 years ended 30 une 2023 and 30 une 2022 are set out in the table below
S Popular brands (23.3) (88 ) (137) (26)
Archers brand (0.1) (16) (10) (7) 2022
mi ion million
eta Abo rewery (0.3) (16) (12) (1) 8
Picon brand (0.7) (20) (19) (1) (12) Net cash inflow from operating activities 3,935

uinness ameroun S.A. (1.6) (179) (118) (8) (26) isposal of property, plant and equipment and computer software 17

(26.0) (1,115) (296) (10) (63) Purchase of property, plant and equipment and computer software (1,097)
ovements in loans and other investments (72)

c i ition an i oa ree ca o 2,783

ear en e ne
Operating cas con ersion
c i ition
Operating cash conversion is calculated by dividing cash generated from operations excluding cash inflows and outflows in respect of exceptional
r lac items, dividends received from associates, maturing inventories, provisions, other items and post employment payments in excess of the amount
alcones istilling charged to operating profit by operating profit before depreciation, amortisation, impairment and exceptional operating items.
e cal ni n The measure is excluding any hyperinflation adjustment above the organic treatment of hyperinflationary economies. The ratio is stated at the
21Seeds budgeted exchange rates for the respective year and is expressed as a percentage.
Operating cash conversion for the years ended 30 une 2023 and 30 une 2022 were as follows
on Papa Rum
2022
mi ion million
i oa
S Popular brands Profit for the year 3,338
Archers brand Taxation 1,0 9
uinness ameroun S.A. Share of after tax results of associates and joint ventures ( 17)
Net finance charges 22
Non-operating items 17
c i ition an i oa Operating profit , 09
Exceptional operating items 388
arnings per s are efore e ceptional items Fair value remeasurement (60)
Earnings per share before exceptional items is calculated by dividing profit attributable to equity shareholders of the parent company before epreciation, amortisation and impairment(1) 89
exceptional items by the weighted average number of shares in issue. Hyperinflation adjustment (10)
Earnings per share before exceptional items for the year ended 30 une 2023 and 30 une 2022 are set out in the table below Retranslation to budgeted exchange rates 27

2022
5,2 3
mi ion million
ash generated from operations 5,212
Profit attributable to equity shareholders of the parent company 3,2 9
Net exceptional cash paid(2) 15
Exceptional operating and non-operating items 05
Post employment payments less amounts included in operating profit(1) 89
Exceptional tax items and tax in respect of exceptional operating and non-operating items (31)
Net movement in maturing inventories(3) 360
Exceptional items attributable to non-controlling interests (103)
Provision movement 58
ro it attri ta e to e it are o er o t e arent com an e ore e ce tiona item 3,520
ividends received from associates (190)

ADDITIONAL INFORMATION
Other items(1) (53)
eig te average n m er o are mi ion million
Hyperinflation adjustment (22)
Shares in issue excluding own shares 2,318
Retranslation to budgeted exchange rates 2
ilutive potential ordinary shares 7
5,511
i te are in i ee c ing o n are 2,325

O erating ca conver ion

ence pence
a ic earning er are e ore e ce tiona item 151.9 (1) Excluding exceptional items.
(2) Exceptional cash payments for winding down our Russian operations was 13 million (2022 13 million) and for Supply chain agility programme was 12 million (2022 - nil). In the year
i te earning er are e ore e ce tiona item 151. ended 30 une 2022 exceptional cash payments for other donations were 2 million.
(3) Excluding non-cash movements such as exchange and the impact of acquisitions and disposals.

236 Diageo Annual Report 2023 Diageo Annual Report 2023 237
 O O con tinu ed

Ret rn on a erage in ested capital a rate efore e ceptional items

Return on average invested capital is used by management to assess the return obtained from the group s asset base and is calculated to aid Tax rate before exceptional items is calculated by dividing the total tax charge before tax charges and credits in respect of exceptional items, by
evaluation of the performance of the business. profit before taxation adjusted to exclude the impact of exceptional operating and non-operating items, expressed as a percentage. The measure is
The profit used in assessing the return on average invested capital reflects operating profit before exceptional items attributable to equity used by management to assess the rate of tax applied to the group s operations before tax on exceptional items.
shareholders of the parent company plus share of after tax results of associates and joint ventures after applying the tax rate before exceptional The tax rates from operations before exceptional and after exceptional items for the years ended 30 une 2023 and 30 une 2022 are set out in
items for the fiscal year. Average invested capital is calculated using the average derived from the consolidated balance sheets at the beginning, the table below
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 net post employment benefit assets/liabilities (net of deferred tax) and average net borrowings. This average capital employed 2022
million
is then aggregated with the average restructuring and integration costs net of tax, and goodwill written off to reserves at 1 uly 200 , the date of mi ion

transition to IFRS, to obtain the average total invested capital. Taxation on profit (a) 1,0 9
alculations for the return on average invested capital for the years ended 30 une 2023 and 30 une 2022 are set out in the table below Tax in respect of exceptional items 31
2022 Exceptional tax credit
mi ion million a e ore e ce tiona item 1,080
Operating profit , 09
Exceptional operating items 388 Profit before taxation (c) ,387
Profit before exceptional operating items attributable to non-controlling interests (192) Non-operating items 17
Share of after tax results of associates and joint ventures 17 Exceptional operating items 388
Tax at the tax rate before exceptional items of 23.0% (2022 22.5%) (1,173) ro it e ore ta ation an e ce tiona item ,792
3,8 9
Tax rate after exceptional items (a/c) 23.9%
Average net assets (excluding net post employment benefit assets/liabilities) 8, 28 a rate efore e ceptional items ( d) 22.5%
Average non-controlling interests (1,6 1)
Average net borrowings 12,859 Ot er definitions whis y opper og whis y Roe o ulleit ourbon, ulleit Rye
Average integration and restructuring costs (net of tax) 1,639 Volume share is a brand s retail volume expressed as a percentage of Orphan arrel whis ey alcones whis y and rum Tanqueray No. TEN
the retail volume of all brands in its segment. Value share is a brand s and Tanqueray alacca gin Aviation, hase, in u and Villa Ascenti
oodwill at 1 uly 200 1,562
retail sales value expressed as a percentage of the retail sales value of gin roc, etel One vod a, etel One otanical on ulio,
Average invested capital 22,8 7 asamigos, e e n and 21Seeds tequila e cal ni n me cal
all brands in its segment. nless otherwise stated, share refers to value
share. acapa, undaberg aster istillers ollection, Pampero Aniversario
et rn on average inve te ca ita 16.8% Net sales are sales less excise duties. iageo incurs excise duties and on Papa rum Shui ing Fang, Seedlip, elsa ar and Pierde
throughout the world. In the majority of countries, excise duties are Almas.
d sted net orrowings to ad sted effectively a production tax which becomes payable when the product References to global giants include the following brand families
iageo manages its capital structure with the aim of achieving capital efficiency, providing flexibility to invest through the economic cycle and giving is removed from bonded premises and is not directly related to the ohnnie al er, Smirnoff, aptain organ, aileys, Tanqueray and
efficient access to debt mar ets at attractive cost levels. The group regularly assesses its debt and equity capital levels to enhance its capital value of sales. It is generally not included as a separate item on external uinness. ocal stars include uchanan s, undaberg, rown Royal,
structure by reviewing the ratio of adjusted net borrowings to adjusted E IT A (earnings before exceptional operating items, non-operating items, invoices increases in excise duties are not always passed on to the , c owell s, Old Parr, en Ra i, lac hite, Shui ing Fang,
interest, tax, depreciation, amortisation and impairment). customer and where a customer fails to pay for a product received, the indsor and pi ca. lobal giants and local stars exclude ready to
group cannot reclaim the excise duty. The group therefore recognises drin , non-alcoholic variants and beer except uinness. References to
alculations for the ratio of adjusted net borrowings to adjusted E IT A for the years ended30 une 2023 and 30 une 2022 are set out in the Shui ing Fang represent total hinese white spirits of which Shui ing
table below excise duty as a cost to the group.
Price/mix is the number of percentage points difference between the Fang is the predominant brand.
2022 organic movement in net sales and the organic movement in volume. References to ready to drin also include ready to serve products,
mi ion million The difference arises because of changes in the composition of sales such as pre-mixed cans in some mar ets.
orrowings due within one year 1,522 between higher and lower priced variants/mar ets or as price changes References to beer include cider, flavoured malt beverages and
are implemented. some non-alcoholic products such as alta uinness.
orrowings due after one year 1 , 98
Shipments comprise the volume of products sold to iageo s The results of Hop House 13 ager are included in the uinness
Fair value of foreign currency derivatives and interest rate hedging instruments (73) figures.
immediate (first tier) customers. epletions are the estimated volume of
ease liabilities 75 There is no industry-agreed definition for price tiers and for data
the onward sales made by iageo s immediate customers. oth
ess ash and cash equivalents (2,285) shipments and depletions are measured on an equivalent units basis. providers such as I SR, definitions can vary by mar et. iageo bases
Net borrowings 1 ,137 References to emerging mar ets include Poland, Eastern Europe, price tier definitions on a methodology that uses external metrics
Post employment benefit liabilities before tax Tur ey, atin America and aribbean, Africa and Asia Pacific (including mar et pricing data from Nielsen, IRI etc., as well as the I SR
02
(excluding Australia, orea and apan). segmentation) for benchmar ing and internal pricing metrics for a
te net orro ing 1 ,539
References to reserve brands include, but are not limited to, ohnnie consistent segmentation.
al er lue abel, ohnnie al er reen abel, ohnnie al er old References to the disposal of the S Popular brands include non-
Profit for the year 3,338 abel Reserve, ohnnie al er Aged 18 ears, ohn al er Sons exhaustively the Haywards, Old Tavern, hite ischief, Honey ee,
Taxation 1,0 9 ollection and other ohnnie al er super and ultra-premium brands reen abel and Romanov brands.

ADDITIONAL INFORMATION
Net finance charges 22 The Singleton, ardhu, Talis er, agavulin, Oban and other malt References to the group include iageo plc and its consolidated
epreciation, amortisation and impairment (excluding exceptional impairment) brands uchanan s Special Reserve, uchanan s Red Seal Haig lub subsidiaries.
92
Exceptional impairment 336
E IT A 5,637
Exceptional operating items (excluding impairment) 9
Non-operating items 17
te 5,703

te net orro ing to a te 2.5

238 Diageo Annual Report 2023 Diageo Annual Report 2023 239
 O O con tinu ed O

. ontract al o ligations and ot er commitments

a ment e erio
e t an ore t an
ear ear ear ear ota
mi ion mi ion mi ion mi ion mi ion
This document contains forward-loo ing statements. These statements and assumptions and the processes and issues involved are complex.
can be identified by the fact that they do not relate only to historical or The ES -related forward loo ing statements should be treated with
at ne
current facts and may generally, but not always, be identified by the use special caution, as ES and climate data, models and methodologies
ong-term debt obligations
of words such as will , anticipates , should , could , would , are often relatively new, are rapidly evolving and are not of the same
Interest obligations targets , aims , may , expects , intends or similar expressions standard as those available in the context of other financial information,
redit support obligations statements. In this document, such statements include those that express nor are they subject to the same or equivalent disclosure standards,
Purchase obligations forecasts, expectations, plans, outloo , objectives and projections with historical reference points, benchmar s, mar et consensus or globally
ommitments for short-term leases and leases of low-value assets respect to future matters, including information related to iageo s fiscal accepted accounting principles. In particular, it is not possible to rely on
2 outloo , iageo s medium-term guidance for fiscal 23 to fiscal 25, historical data as a strong indicator of future trajectories in the case of
Provisions and other non-current payables
iageo s supply chain agility programme, future Total everage Alcohol climate change and its evolution. Outputs of models, processed data
ease obligations mar et share ambitions and any other statements relating to iageo s and methodologies are also li ely to be affected by underlying data
apital commitments performance for the year ending 30 une 202 or thereafter. quality, which can be hard to assess and we expect industry guidance,
Other financial liabilities Forward-loo ing statements involve ris and uncertainty because mar et practice, and regulations in this field to continue to change.
ota they relate to events and depend on circumstances that will occur in the There are also challenges faced in relation to the ability to access data
future. There is a number of factors that could cause actual results and on a timely basis and the lac of consistency and comparability
ong-term debt obligations comprise the principal amount of borrowings (excluding foreign currency swaps) with an original maturity of greater developments to differ materially from those expressed or implied by between data that is available. This means the ES -related forward-
than one year. Interest obligations comprise interest payable on these borrowings and are calculated based on the fixed amounts payable and these forward-loo ing statements, including factors that are outside loo ing statements and ES metrics discussed in this document carry an
where the interest rate is variable on an estimate of what the variable rates will be in the future. redit support obligations represent liabilities to iageo s control, which include (but are not limited to) additional degree of inherent ris and uncertainty, and as a result, our
counterparty ban s in respect of cash received as collateral under credit support agreements. Purchase obligations include various long-term (i) economic, political, social or other developments in countries and actual results and developments could differ materially from those
purchase contracts entered into for the supply of raw materials, principally bul whis (e)y, cereals, cans and glass bottles. ontracts are used to mar ets in which iageo operates, including macro-economic events expressed or implied by the ES -related forward-loo ing statements in
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 that may affect iageo s customers, suppliers and/or financial this document.
certain provisions, discounted numbers are disclosed. counterparties (ii) the effects of climate change, or legal, regulatory or In light of the uncertainty as to the nature of future policy and
orporate tax payable of 135 million and deferred tax liabilities of 2,183 million are not included in the table above, as the ultimate timing of mar et measures intended to address climate change (iii) changes in mar et responses to climate change, including between regions, and
settlement cannot be reasonably estimated. consumer preferences and tastes, including as a result of disruptive the effectiveness of any such responses, iageo may have to re-
anagement believe that it has sufficient funding for its wor ing capital requirements. mar et forces, changes in demographics and evolving social trends evaluate its progress and evolve its approach towards its ES ambitions,
(including any shifts in consumer tastes towards at-home occasions, commitments and targets in the future, update the methodologies it uses
. Off alance s eet arrangements premiumisation, small-batch craft alcohol, or lower or no-alcohol or alter its approach to ES and climate analysis and may be required
Neither iageo plc nor any member of the iageo group has any off-balance sheet financing arrangements that currently have or are reasonably products and/or developments in e-commerce) (iv) changes in the to amend, update and recalculate its ES disclosures and assessments
li ely to have a material future effect on the group s financial condition, changes in financial condition, results of operations, liquidity, capital domestic and international tax environment that could lead to in the future, as mar et practice and data quality and availability
expenditure or capital resources. uncertainty around the application of existing and new tax laws and develops rapidly.
unexpected tax exposures (v) changes in the cost of production, All oral and written forward-loo ing statements made on or after the
including as a result of increases in the cost of commodities, labour date of this document and attributable to iageo are expressly qualified
and/or energy due to inflation and/or supply chain disruptions (vi) any in their entirety by the cautionary statements contained or referred to in
litigation or other similar proceedings (including with tax, customs, this section. Further details of potential ris s and uncertainties affecting
competition, environmental, anti-corruption or other regulatory iageo are described in our filings with the ondon Stoc Exchange and
authorities) (vii) legal and regulatory developments, including changes the S Securities and Exchange ommission (SE ), including in our
in regulations relating to environmental issues and/or e-commerce (viii) Annual Report on Form 20-F for the year ended 30 une 2023.
the consequences of any failure of internal controls (ix) the Any forward-loo ing statements made by or on behalf of iageo
consequences of any failure by iageo or its associates to comply with spea only as of the date they are made. iageo expressly disclaims
anti-corruption, sanctions, trade restrictions or similar laws and any obligation or underta ing to publicly update or revise these forward-
regulations, or any failure of iageo s related internal policies and loo ing statements other than as required by applicable law. The reader
procedures to comply with applicable law or regulation (x) iageo s should, however, consult any additional disclosures that iageo may
ability to ma e sufficient progress against or achieve its ES ambitions ma e in any documents which it publishes and/or files with the SE .
(xi) cyber-attac s and IT threats or any other disruptions to core business All readers, wherever located, should ta e note of these disclosures.
operations (xii) contamination, counterfeiting or other circumstances This document includes names of iageo s products, which constitute
which could harm the level of customer support for iageo s brands and trademar s or trade names which iageo owns, or which others own
adversely impact its sales (xiii) iageo s ability to maintain its brand and license to iageo for use. All rights reserved. iageo plc 2023.
image and corporate reputation or to adapt to a changing media The information in this document does not constitute an offer to sell
environment (xiv) fluctuations in exchange rates and/or interest rates or an invitation to buy shares in iageo plc or an invitation or
(xv) iageo s ability to derive the expected benefits from its business inducement to engage in any other investment activities.
strategies, including iageo s investments in e-commerce and its luxury This document may include information about iageo s target debt

ADDITIONAL INFORMATION
portfolio (xvi) increased competitive product and pricing pressures, rating. A security rating is not a recommendation to buy, sell or hold
including as a result of introductions of new products or categories that securities and may be subject to revision or withdrawal at any time by
are competitive with iageo s products and consolidations by the assigning rating organisation. Each rating should be evaluated
competitors and retailers (xvii) increased costs for, or shortages of, independently of any other rating.
talent, as well as labour stri es or disputes (xviii) movements in the Past performance cannot be relied upon as a guide to future
value of the assets and liabilities related to iageo s pension plans (xix) performance.
iageo s ability to renew supply, distribution, manufacturing or licence References in this document to information on websites are included
agreements (or related rights) and licences on favourable terms, or at as an aid to their location and such information is not incorporated in,
all, when they expire or (xx) any failure by iageo to protect its and does not form part of, this document unless otherwise noted.
intellectual property rights.
In preparing the ES -related information contained in this
document, iageo has made a number of ey judgements, estimations

240 Diageo Annual Report 2023 Diageo Annual Report 2023 241
 O O O O O O

. Relia ilit and acc rac of data

Non financial reporting bo a and e have processes that govern the collection, review and validation of
non-financial data included in this report, at mar et, regional and
global levels. e have clear reporting lines and documentation of our
and transition ris s as the world continues to warm as a consequence
of emissions already in the atmosphere. The pathway to reducing
emissions is also highly variable, as governments and industry pursue a

o olog processes this report provides more detail about our reporting
methodologies and calculation processes. Reporting methodologies
are reviewed and updated each year by leadership teams.
variety of means, such as introducing regulation and developing new
technologies. Nevertheless, scenario analysis is a powerful tool to
understand how our business could be impacted under certain
hile we ma e every effort to capture all information as accurately plausible but severe future conditions, and it allows us to understand
The non-financial reporting boundaries and Exceptions to and limitations of each indicator are explained in the
as possible, it is neither feasible nor practical to measure all data with where ris s and opportunities are most li ely to materialise, to
following pages section of this document.
methodologies outlined here relate to the social absolute certainty. here we have made estimates or exercised understand trends and to integrate these into our strategy.
. aseline and targets judgement, this is highlighted within the reporting methodologies. Following the recommendations of the Tas Force on limate-
and environmental performance disclosures set The financial year ended 30 une 2020 is our baseline year. It applies The metrics with the symbol are within the scope of Pw s related Financial isclosures (T F ), we conducted scenario analysis to
out in the Annual Report and the ES Reporting to the majority of our Society 2030 Spirit of Progress targets. independent limited assurance reported to the irectors see pages determine the li ely financial impact of the most important physical
Index. e describe below the general reporting Exceptions are described in the following pages. The baseline data is 263-266 of this document. ris s on our assets and operations. The physical ris s we identified of
used as the basis for calculating progress against our targets. Some of our listed subsidiaries also publish sustainability information most importance were
methodologies and boundaries related to both e aim to achieve each target by fiscal 30, unless otherwise stated either as standalone reports or as part of their annual report. Examples
1. ater supply Inability to produce brands due to constrained
non-environmental and environmental reporting. in the following pages of this document. of sustainable information reporting are lin ed below
water supply as a result of drought caused by chronic climate
here there are exceptions to these general . c isitions and disposals nited Spirits imited https //media.diageo.com/diageo- change.
New acquisitions are included in the consolidated reporting for non- corporate-media/media/wxafl 30/united-spirits-limited-esg- 2. Agricultural material supply Increased cost of raw materials due
reporting methodologies and boundaries, these financial disclosure from the date when control passes or as soon as reporting-index-2022.pdf to scarcity caused by changes in growing conditions caused by
have been included with the specific metric in the practically feasible, and no later than one year after assuming Sichuan Swellfun o, td https //www.swellfun.com/ueditor/php/ chronic climate change.
operational control.(2) This duration varies as each new acquisition has upload/file/20230 26/1682 90877231 1 .pdf 3. Site integrity Inability to produce products, or damage to stored
tables that follow. East Africa reweries P https //www.eabl.com/sites/default/ products due to acute weather events (floods or storms).
unique systems and processes that must be integrated. In case of
eneral reporting met odolog and o ndaries disposals, data associated with the divestment is removed from the files/documents/EA Sustainability Report-2022.pdf . isruption to agricultural material supply Inability to receive
baseline, intervening years and current year unless otherwise stated in uinness Nigeria plc https //www.guinness-nigeria.com/PR13 6/ agricultural materials due to acute weather events (floods or
co ering ot non en ironmental and the following pages. aws/media/1 677/f22-sustainability-report.pdf storms).
en ironmental metric reporting . Reporting s stems sing the best available climate data and natural catastrophe-
. Restatements
e use four main systems to collect, validate and analyse reported modelling techniques, our climate resilience partners calculated
e may have to restate historical data due to structural changes in our
. Reporting period data. projected Estimated Annual osses (EA s) and Value at Ris (VaR) for
operations, including from acquisitions and divestments improvements
Our reporting covers the financial year ended 30 une 2023 unless the present day and two future time periods (the 2030s and 2050s)
in data accuracy and calculation methodologies material changes to Human Resources data is reported at site level using or day, our
otherwise stated. under two climate scenarios. For most climate variables, these climate
relevant policies and material changes in our non-financial reporting. global information management systems. HR data is collected on a scenarios include a moderate emissions reduction pathway (R P .5
To determine whether we need to restate historical data, we monthly basis for all or day mar ets.(1) Non- or day mar ets(2)
. cope examine whether the qualitative or quantitative impacts of the changes
or SSP2 5) and a worst-case pathway (R P 8.5 or SSP 585). The
nless otherwise stated(1), the boundaries for all non-financial data is manually captured offline via HR irectors and the points of results were expressed as
to our non-financial reporting are material enough to compromise the contact only for annual reports. oth or day and non- or day
information disclosed in the Annual Report and the ES Reporting accuracy, consistency and relevance of the reported information. In Present day and projected EA s driven by
Index include the performance of the global operations of iageo plc mar ets data are then consolidated.
case a restatement for environmental data is necessary, we restate the Health and Safety information for performance measures is
and its subsidiaries, together with the attributable share of the results of The impact of drought, river floods and tropical windstorms on
data for the baseline year and intervening years. collected locally, on a monthly basis, using site held incident reports.
significant joint ventures and joint operations. owned and third-party-operated production assets.
In case of our environmental data, we may need to adjust data to This is collated and analysed using a web-based information
The reporting boundaries are based on the principles outlined by The impact of floods and tropical windstorms on supplier assets
reflect updates to H emission factors, in line with the H Protocol management system and reported externally on an annual basis.
the non-financial reporting strategy of our management, the nature of (glass and cans)
recommendations and any changes in reporting policy that result in a Environmental data is collected on ey measures of environmental
each indicator and, in the case of our greenhouse gas ( H ) material change to the baseline of more than 1%. e also restate data and present day and projected VaR associated with
emissions metrics, the reenhouse as Protocol. performance every year. This is collated and analysed using a web-
where we can show that structural changes regarding outsourcing and based environmental management system.
Environmental data and health and safety data is collected and The exposure of production assets to water stress.
insourcing have an impact of more than 1%. In certain cases, where ar et-level Society 2030 Spirit of Progress data here Society
reported for all operational sites and office sites with more than 50 The exposure of production and supplier assets to tropical
historical data is unavailable, the environmental impacts for the 2030 Spirit of Progress programmes are managed at a local level,
employees where we have operational control. The environmental windstorms.
baseline year and intervening years are extrapolated from current data is collated every quarter. The data is compiled at mar et,
impacts associated with leased facilities that do not meet the criteria environmental impact data, based on production patterns. Please see the diagram on page 2 for a summary of the scope of
already mentioned are excluded and considered immaterial to the regional and global levels, alongside our other Society 2030 Spirit
In fiscal 23, the baseline year H emissions impacts were restated of Progress targets, and is reviewed by general managers, our physical and transition ris assessments and scenario analysis.)
company s overall impacts. This scope is reviewed every year to assess to reflect changes to O2e emission factors and updated calorific
the data and extent of impacts. functional leadership teams, the 2030 grain to glass Strategic
values. (1) ar ets using our or day online Human Resource system.
H emissions associated with leased vehicles under operational usiness Review (S R) and the lobal Executive ommittee during (2) Non- or day mar ets refer to mar ets where the or day online Human Resource
control are being reviewed and reassessed to determine material quarterly meetings. system is not used.

significance to overall emissions and extent of overlap with Scope 3 This regular assessment of performance enables us to manage
indirect emissions. This review will be concluded in fiscal 2 our current programme ris s and opportunities and helps us ensure that we have
estimate indicates leased vehicles may contribute %-5% of Scope 1 the right level of resources to deliver on our commitments.

ADDITIONAL INFORMATION
emissions or 0.5% of Scope 3 emissions.
aterial changes to environmental reporting methodologies are
ratified at quarterly 2030 grain to glass Strategic usiness Review
cope and met odolog of p sical and transition
meetings, chaired by the President, lobal Supply hain climate ris scenario anal sis reported on pages
Procurement and hief Sustainability Officer. 7 7
(1) Non-financial information, including baseline information, excludes the performance attributable to one of our business units in reater hina due to local regulatory restrictions. e believe the cenario anal sis of p sical ris s
exclusion of this data does not materially impact our non-financial performance. e restate baseline and intervening years non-financial information to reflect divestments, acquisitions, the exclusion m ortant note on cenario ana i
of a business unit in hina due to local regulatory restrictions, and any other changes that would otherwise compromise the accuracy, consistency and relevance of the reported information.
(2) e define operational control using the definition of accounting standards for most of our ES metrics. For greenhouse gas emissions, our definition is aligned with the reenhouse as Protocol.
limate ris scenario analysis has limitations it is not a predictor of the
future and it is limited by the assumptions used, which themselves are
subject to uncertainty. No single scenario is li ely to materialise in the
coming decades, and we are all li ely to be exposed to both physical

242 Diageo Annual Report 2023 Diageo Annual Report 2023 243
 O O O O O O c on tin ued

s mmar of t e scope of o r p sical and transition ris assessments and scenario anal sis np t costs assessed in t e scenario anal sis geograp
ime rame Short term (0-5yrs) edium term (2030) ong term (2050) ia
egion o a ana a e ico r e n ia rica aci ic re an
eogra All iageo and ey third-party operations in North America, Scotland (fiscal 21) India, Africa, exico and Tur ey (fiscal 22)
and Asia Pacific, Europe and atin America and aribbean (fiscal 23). lass
i t e ica ri ran ition ri an o ort nitie Aluminium
ater (availability, quality, temperature), temperature,
flooding, landslide, wildfires, wind, humidity and transport
em erat re cenario to 5 (extreme) 2 to 3 (moderate) 1.5 to 2 (Paris agreement) Ocean transport
R P 8.5 R P .5 R P 2.6
co e Energy
Electricity
Raw materials
a materia roce ing i tri tion i revie e O ort nitie
1,200 suppliers sites Approximately 250 ey road, rail routes Policy and legal ris s Resource efficiency arley
ey raw materials iageo and third-party ey sea ports (69) Technology ris s Energy source
(wheat, barley, mai e, operations sites ar et ris s Products and services heat
cane and beet sugar, etailed assessments Reputation ris s ar ets
of 39 sites ai e
vanilla, aniseed,
grapes, bro en rice, cenario ana i cenario ana i Rice
sorghum, agave, dairy, Energy Pac weight reduction
hops) Transport ircular offerings Sorghum
to 5 scenario Pac aging
only Raw materials Sugar
Vanilla
cenario anal sis of transition ris s
Over fiscal years 21-23, we have conducted scenario analysis of the impact on our financial performance of transition ris s stemming from a Paris- Aniseed
aligned scenario. Our modelling envisages a successful transition to a low-carbon economy in time to eep the temperature rise to 1-2 by 2100 Agave
and assumes a variety of decarbonisation challenges and opportunities relating to ingredients, energy, pac aging and transport costs, and changes
in demand for our products (to 2030 and 2050). Over consecutive years, we have refined the model and incorporated data relating to our entire rapes
business, including production volume, sales, raw materials and pac aging costs, and projected growth rates by category and mar et to inform Hops
future scenarios.
airy
In modelling the financial impact of a successful transition to a low-carbon economy, we considered two scenarios
1. A baseline scenario which incorporates stated policies and national targets that are already in place and have detailed measures for their
realisation and
2. A transition scenario that assumes the world successfully reaches net ero emissions by 2050. This scenario considers necessary changes in the
global energy sector and associated changes across all other sectors of the economy that can reasonably be modelled.
oth scenarios rely on a combination of internal assumptions (e.g., production costs, sales and margin growth rates, product mix, etc) and external
factors (e.g., carbon pricing, greening of energy production, decarbonisation of industry). External models available from the International Energy
Agency, the Intergovernmental Panel on limate hange and other institutions were supplemented where necessary by our expert partners internal
models. Together, these models gave us a range of plausible assumptions designed to capture a trajectory of changes in demand, costs, prices,
regulation, technology and capital investments in relevant mar ets and business segments, that could result in the world achieving net ero
emissions by 2050. e loo ed at how combinations of these changes might affect us both positively (increased demand for sustainable products)
and negatively (higher costs) and estimated the combined effect on our cash flow to both 2030 and 2050. Outlined in the table on page 2 5, below
are the materials that most affect our input costs, which may go up or down depending on the situation. e have modelled costs based on our
exposure to global versus local changes so, for example, glass and aluminium are procured globally, while the cost of energy, for example, is
always local. For each scenario, we then estimated the prices of major input costs, where relevant by geography, and modelled the impact they
would have on our operating profit.

ADDITIONAL INFORMATION
244 Diageo Annual Report 2023 Diageo Annual Report 2023 245
 O O O O O O c on tin ued

arget ca e o r artner i an e cate mi ion o ng eo e arent an teac er on t e

romote o drin ing er ormance mea re

anger o n erage rin ing
Number of people educated on the dangers of underage drin ing through a iageo-supported education
programme
Number of people who confirmed changed attitudes on the dangers of underage drin ing following participation in
a iageo-supported education programme
e inition S ASHE is our flagship underage drin ing programme, developed and delivered in partnership with ollingwood
As a responsible business, we want to change the way people drin for the better. This is why we promote moderate drin ing and invest in earning ( ollingwood) and sponsored by iageo. Our S ASHE partnership aims to change attitudes to underage
education and programmes to discourage the harmful use of alcohol. Around the world, we reach audiences with messages that aim to change drin ing through live theatre performances and wor shops and interactive online events.
attitudes, whether it s highlighting the harm of underage drin ing or binge drin ing, warning of the dangers of drin driving, or using our brands to ive A live or virtual theatre performance in schools or other community setting, with interactive wor shops for students,
highlight the importance of moderation. resources for teachers and parents, and comprehensive evaluation.
Our wor spea s to audiences across the globe. e continue to innovate and loo for ways to improve as we strive to engage more and more On ine An innovative and engaging e-learning course, telling the S ASHE story though filmed clips, with interactive
people through our wor to promote positive drin ing. This desire to learn and improve extends to how we measure and evaluate the impact of our learning tools, student assessment and teacher support.
wor and its effect on changing people s attitudes. O ine S ASHE Online can also be delivered offline through PowerPoint and video clips.
e have reached our RIN i target by launching it in all our mar ets where legally permissible, but we are determined to continue promoting eo e e cate Target age group (10-17), who have participated in the full 60-minute live or online learning
RIN i so that consumers have access to information that can increase their nowledge and awareness of the impact of harmful drin ing. experience. ompletions for online are counted only on course completion, and live completion is counted when the
number, as stated by the teacher, has completed the full 60-minute session, which is then confirmed by the local
delivery partner.
arget am ion ea t iterac an tac e arm t ro g i in ever mar et ere e ive or o rce an e ange attit e A young person who confirmed a changed attitude is someone who responds to the post-survey
er ormance mea re Number of mar ets that have launched RIN i question by stating that they are less li ely to drin underage. This is supported by evidenced progression through pre-
e inition ar ets required for RIN i rollout were identified during the initial project scoping phase in fiscal 20. The baseline is and post-performance surveys against all other learning outcomes, with the less li ely to drin underage results as the
the total number of iageo mar ets where we live, wor , source and sell. core indicator.
aunched means the RIN i website is live and accessible by consumers in the mar et from November 2020. co e e ce tion oca a a tation ollingwood has set criteria for partners a local delivery partner, ministry of education (or similar)
ata re aration The lobal Spirit of Progress team manages all aspects of RIN i design, development and deployment (except and sponsors to support the success of local adaptations on the ground.
hina, where we had to use a local vendor for build due to firewall issues). Each delivery partner will culturally and linguistically adapt the storyline and interactive elements to suit the local
e engage and manage the global agency that is responsible for building and testing every website in every mar et audience, with guidance from ollingwood.
throughout all stages of development, user acceptance testing and deployment. ollingwood collaborates with delivery partners to ensure they comply with the original content while
The agency web developers who build the RIN i website underta e a series of steps to deploy RIN i to the accommodating appropriate adaptations. This is also supported by programme sponsors and educational
production environment. Once the deployment is complete, the agency conducts testing to verify overall site sta eholders to support lin s with existing curriculum. Evaluation questions remain consistent worldwide, both pre- and
performance and functionality is operating as intended. The completion of the testing concludes the deployment post-programme. ollingwood does not allow changes to the content or intent of the questions. The only adaptations
process, and the site/updates are deemed as live since they are available on www.drin iq.com. made are for language translation.
co e e ce tion Tur ey is the only mar et in which we are unable to roll out RIN i due to legal restrictions. Travel Retail Asia covers e orting erio The complexity of gathering data from hundreds of schools globally with different academic years means there is a lag
multiple geographical territories and is therefore not counted as an individual mar et in scope for delivering our RIN i in reporting information from our live programmes. Each financial year we include data from 1 une to 31 ay.
target. The baseline year for the reporting of cumulative progress towards our target is our financial year ended 30 une 2018
reporting is therefore cumulative progress from uly 2018 onwards.
arget everage iageo mar eting an innovation to ma e mo eration t e norm reac ing i ion eo e it ata re aration The number of people educated is supplied by in-country delivery partners to ollingwood. hen S ASHE is
delivered by a third-party and is partially funded by iageo, we only claim the proportion of people educated that our
e icate re on i e rin ing me aging
funding contributes to.
er ormance mea re Number of people reached through campaigns and training specifically designed to promote moderation From September 2022, where an audience numbers over 500 students in one session, we have categorised these
e inition e deliver responsible drin ing campaigns and training through social media, viral videos, events, traditional media as large-scale special events . here large-scale events are run if there are a sufficient number of facilitators (ratio
campaigns and other forms of mar eting by iageo brands. 1 200) then the full number of people educated is included. If the number of facilitators present is below this ratio, then
co e e ce tion ar ets are only included where we have verifiable media data provided by third-party partners. the number of people in attendance are capped at the large-scale event number.
The number of people educated is calculated by adding together the number of people reached in each country.
e orting erio 1 une to 31 ay. Our baseline year for calculating cumulative progress is fiscal 21. S ASHE ive operates pre- and post-evaluation surveys of at least 20% of the target audience of young learners as
ata re aration ata on how many people our campaigns reach is collected by our media agency partners and reported to us. iageo s part of the programme on the day. This represents 20% of the participating schools on each tour.
media agency partners manage measurement and verification of this data through various industry-standard practices The following sampling criteria have been established to measure attitude change
optimised for each media channel.
Assess 20% of programme participants through pre- and post-evaluation surveys.
igital media oo ies/pixels provide unique consumer identifiers. These identifiers provide us with the ability to The participants that ma e the 20% sample have to be selected randomly.
estimate how many people we reach across a single campaign. If the sample is less than 200 people, the same participants must ta e the pre- and post-evaluation surveys.
Non-digital media tilising industry-standard audience measurement for each platform, we can estimate how many The sample has to be approximately 50% male and 50% female.
people our campaigns reach for any TV, radio, out of home or other non-digital channel. For example, we utilise
The number of people who confirmed changed attitude is calculated by projecting the results of the survey, for those
industry-standard metrics, such as Nielsen, to estimate viewer audience for a TV programme during which we ran an
who have confirmed in the post-survey question that they are less li ely to drin underage, to the total number of
ad. For out of home, industry-standard measurement of foot traffic, vetted through third-party organisations, is used to
people educated for the events run.

ADDITIONAL INFORMATION
estimate the number of people who pass by a billboard.
The data, alongside supporting evidence is supplied by delivery partners and then consolidated and reviewed by
To attempt to prevent double counting, we also adjust the data in the context of the adult population for each mar et. ollingwood before being shared with us for review and reporting.
Each mar et s total annual reach figure comprises either the highest number of people reached in any given quarter in e have assumed that teachers are an impartial and accurate provider of student numbers, with clear nowledge
that mar et, or the highest number of people reached by a specific campaign in that mar et, whichever is the greater. of the groups allocated to S ASHE . e have also assumed that students participating in S ASHE ive and Online
imitation Reach data cannot be as accurately deduplicated over periods of time longer than a year. hen reporting how many have adequate literacy s ills to understand and complete written evaluation forms.
people we reach over time periods of longer than one fiscal year, figures for individual fiscal years are added together to
provide a cumulative number.

246 Diageo Annual Report 2023 Diageo Annual Report 2023 247
 O O O O O O c on tin ued

arget contin e ca e o r artner i an e cate mi ion o ng eo e arent an teac er on t e

imitation
anger o n erage rin ing
e consider double counting to be highly unli ely, given the activity is only delivered once to any audience within the
curricular requirements for the year. No unique personal identifiers are collected, for data privacy reasons.
oing b g a
e avoid having schools run S ASHE ive and Online concurrently by offering only a single option in the vast
majority of countries. here two programmes are available, we mitigate the ris of duplication by offering
programmes strategically to different school areas. In the unli ely event a school uses S ASHE Online and
from grain to glass
S ASHE ive, we assume that the school will utilise courses for different student groups. e mitigate the ris e want to do business in the right way every day, everywhere. This is about ensuring our people and suppliers demonstrate integrity, live our
further by chec ing participating school data quarterly and communicating with teachers. values, and behave in an ethical way that underpins our ode of onduct. e expect everyone who wor s for us and alongside us to uphold
e have assumed that the number of students expected to either repeat a year group or change secondary human rights and stand up for what is right, as we grow sustainably and responsibly.
schools is negligible, based on the most recent statistics from third parties.

arget ten o r
eo e
artner i an romote c ange in attit e to rin riving reac ing ive mi ion
o ernance and
er ormance mea re Number of people educated about the dangers of drin driving
Number of people who confirmed attitudinal change on the dangers of drin driving through the iageo supported
programme
Number of law enforcement officers trained through the NITAR High Visibility Enforcement (HVE) programme. or ing with integrity is an important part of who we are and how we achieve our performance ambition to be the best performing, most trusted
e inition e run two programmes that aim to address the dangers of drin driving. Our rong Side of the Road ( SOTR) and respected consumer products company in the world.
programme, primarily delivered online, is designed to help people understand the consequences of drin driving by er ormance mea re o eo ine on ct an ator raining
listening to the repercussions for people who decided to get behind the wheel after drin ing. All stories are real and
aim to help prevent other people from ma ing the same mista es. The purpose is to show the effects that this decision e inition Annually, we request all iageo employees to complete the ode of usiness onduct e-learning. This requires
can have on the individual and the people around them, helping viewers to consider what would happen if they were employees to confirm their commitment to their compliance and ethics accountabilities, and certify that they have
in a similar situation. read, understood, and complied with our ode of usiness onduct and supporting lobal policies.
e also partner with NITAR on its high-visibility enforcement training programme, an online training course which co e e ce tion Employees on long-term leave e.g. family leave, sic ness leave.
aims to help government and law enforcement officials design and implement interventions that contribute to reducing ata re aration e deliver the ode of usiness onduct e-learning through our global online training tool, y earning Hub, which
the number of alcohol-related fatalities and injuries. holds a record of who has participated in and completed the course. Participation and completion records are
hanged attitudes A person who confirmed a changed attitude is someone who responds to the post-experience reported to mar et and function leadership teams and reviewed by usiness Integrity leads.
survey by stating that they are less li ely to drin and drive because of participating in the iageo learning experience.
imitation -
co e e ce tion For programmes that are partially funded by iageo, we only claim the proportion of people educated that our
funding contributes to. er ormance mea re ea
e orting erio 1 uly to 30 une. Our baseline year is fiscal 22.
e inition e inform all employees and third parties about our Spea p whistleblowing telephone service and online portal,
ata re aration To measure attitude change, at least 20% of SOTR participants are assessed through a pre- and post-programme which is available in all 20 of our ode languages. The service is run by an independent external party 2 hours a day,
survey as to whether they are less li ely to drin and drive because of their participation. 365 days a year.
The different formats are reported in the following ways
co e e ce tion -
Online The online completions are reported daily through a data report pulled from iageo s internal Power i ata re aration e capture allegations reported either via Spea p or our internal channels in our global breach management tool.
system.
Online through third parties epending on the format, their numbers can either be generated by the main system imitation -
through the daily report or through their own reports. They must provide bac -up data, which is then validated by
the iageo global team. er ormance mea re e orte an tantiate reac e
Offline In mar ets where internet access is a challenge, we have tailored the experience to be used offline at events e inition Reported breaches are potential breaches of our ode of usiness onduct, policies or standards made nown to the
or high-footfall locations. ompletions are captured on forms that are then collated and input to a report. These business, either via our Spea p service or brought to our attention internally. Substantiated breaches are those reports
reports are submitted quarterly and reviewed and verified by the global team. that ultimately result in sufficient evidence being gathered to support the concern raised.
imitation - co e e ce tion -
ata re aration e update the number of substantiated breaches and ode-related leavers from previous years to include the
outcomes of those reports made in one financial year but for which the investigation and any associated disciplinary
actions are not closed until the following financial year, after the Annual Report has been published. This enables us to
ma e a full and accurate year-on-year comparison.
imitation -

ADDITIONAL INFORMATION
248 Diageo Annual Report 2023 Diageo Annual Report 2023 249
 O O O O O O c on tin ued

er ormance mea re man rig t im act a e ment

e inition iageo has been a signatory to the N uiding Principles on usiness and Human Rights ( N Ps) since 201 . As part
of our commitment to act in accordance with the N Ps, we partnered with usiness for Social Responsibility in 2016 to
formulate our human rights strategy and deliver a Human Rights Impact Assessment (HRIA) in all of our mar ets. An
O r o l
HRIA is a process for identifying, understanding, assessing and addressing the adverse effects of business activities on
the human rights of impacted rights-holders such as wor ers and community members. At iageo, we strive to create an environment where all our people feel they are treated fairly and with respect. e commit to understanding what it means
co e e ce tion To date, we have conducted HRIAs in Australia, ra il, hina, olombia, hana, uatemala, India, enya, exico, to act with integrity in our roles, to ensure we are doing business in the right way, meeting external expectations and our own standards. Our global health
the iddle East, Nigeria, North America ( nited States and anada), North Asia (South orea and apan), PE A and safety ambition and strategy are designed to ensure all our people are safe when wor ing, on site, at home and on the road, every day, everywhere.
(Peru, Ecuador, olivia, Argentina and hile), South Africa, Tan ania, Thailand, Tur ey, ganda and the nited mplo ee profile data
ingdom. From fiscal 2 , all direct operations will be required to complete a detailed annual human rights self
assessment questionnaire, and ta e remedial action where necessary. er ormance verage n m er o em o ee region verage n m er o em o ee ro e gen er
mea re gen er
ata re aration e have conducted a corporate-level ris assessment and mapped our global policies and processes against the
N Ps, while also considering ris s in different geographies using our understanding and external reference data. e inition Employees have been allocated to the region in which Employees have been allocated to the role in which they occupy.
Following the corporate-level assessment, we developed a comprehensive human rights impact assessment tool it they reside. e define Executive as a member of the Executive ommittee
to guide our mar ets through a systematic review of their businesses to identify and assess potential human rights Senior anager (S , 2, 3) as those in top leadership positions
impacts, including modern slavery ris s, throughout our value chain. excluding Executive ommittee members ine anager as all iageo
here assessments identify human rights concerns or suggest our approach can be strengthened to better identify employees (excluding Executive ommittee members and Senior
and prevent ris , we put in place robust action plans to resolve matters, wor ing with external experts when anagers) with one or more direct reports and Supervised employee as
appropriate. all remaining iageo employees (excluding Executive ommittee
imitation e have completed an HRIA in every mar et, but not every country. e discuss significant actual and potential members, Senior anagers and ine anagers) who have no direct
negative impacts on local communities at global and local levels but do not collate and report this by specific every reports.
location. co e All iageo employees are in scope for this performance All iageo employees are in scope for this performance measure.
e ce tion measure. However, people data from joint ventures and However, people data from joint ventures and associates where iageo
associates where iageo does not have operational does not have operational control are not included.
control are not included.
ata Total employee data comprises our average number of Employee data comprises our average number of FTE employees across
re aration FTE employees across 12 months. Employee data is 12 months except Executives, which are reported as of 30 une 2023
captured globally through financial and HR information because of the small population si e. Employee data is captured
and reporting systems. globally through financial and HR information and reporting systems.
Employee type includes Regular, raduates and Employee type includes Regular, raduates and Fixed Term ontract
Fixed Term ontract (FT ) across all mar ets. ata from (FT ) across all mar ets. ata from mar ets where iageo has not
mar ets where iageo has not implemented its global implemented its global HR system is collected by local HR teams to form
HR system is collected by local HR teams to form a total a total iageo view.
iageo view.
imitation oint operations are included but, where iageo does oint operations are included but, where iageo does not have
not have operational control, only high-level regional operational control, only high-level regional data is available.
data is available. ar ets where our global HR system, or day, is not in place are
ar ets where our global HR system, or day, is reliant on manual data collection or, in some cases, we may not be able
not in place are reliant on manual data collection or, in to obtain data. These mar ets include pioca, acapa, nited Spirits
some cases, we may not be able to obtain data. These imited India (partial), asamigos, alcones, avos, Vietnam Spirits
mar ets include pioca, acapa, nited Spirits imited and ine, on Papa Rum, oet Hennessy iageo, orea (partial),
India (partial), asamigos, alcones, avos, Vietnam apan S, Angola and Northern yprus.
Spirits and ine, on Papa Rum, oet Hennessy
iageo, orea (partial), apan S, Angola and
Northern yprus.

ealt and safet

er ormance mea re o t time acci ent re enc rate
e inition The TAFR is the number of lost-time accidents ( TAs) per 1,000 full-time employees (Occupational Health Safety
(OH S) FTE).
e define an TA as any wor -related incident resulting in injury or illness, where a healthcare professional or
iageo recommends one or more full days away from wor , or where a job restriction or modification prevents the
employee from conducting their routine tas s and activities and from wor ing a full shift.

ADDITIONAL INFORMATION
e consider an injury or illness to be wor -related when an event or exposure in the wor environment (including
people wor ing at home) either caused or contributed to the resulting condition, or significantly aggravated a
medically documented and treated pre-existing injury or illness.
TA numbers also include any OH S FTE wor -related fatalities.
In line with industry best practice, for the purposes of calculating this PI, we include all iageo employees, as well
as temporary staff and contractors who wor under our direct day-to-day supervision in our definition of OH S FTE.
co e e ce tion e have loo ed closely into which home-wor ing injuries should be in scope for reporting for example, an injury
would be in scope if caused by an activity involving wor -related equipment, such as an employee injuring a finger by
getting it trapped in a laptop cover. If the injured person did not report the accident on the same shift to their
immediate line manager and/or iageo point of contact, unless there are reasonable grounds, this accident is not in
scope as wor -related.

250 Diageo Annual Report 2023 Diageo Annual Report 2023 251
 O O O O O O c on tin ued

ata re aration e collect and report safety data for all sites where we have full operational control, including all office sites. It includes
newly acquired businesses as soon as resources and systems are in place, and no later than one year after we have
assumed operational control. e exclude safety data associated with any divestments during the current reporting
year from reporting in the current period.
ampion l o and
hen an incident occurs at any site (operational, corporate office, remote commercial and remote home-wor ing
environments), the local line manager and local health and safety team will initiate an accident investigation and root-
cause analysis. If the accident is classified as an TA, then the local health and safety representative will escalate to the
site leadership team, who will in turn escalate to regional, mar et and global leadership. Each month, sites are required
to submit details associated with all incidents, accidents and TAs, as well as OH S FTE data for their site. OH S FTE hampioning inclusion and diversity is at the heart of what we do, and is crucial to our purpose of celebrating life, every day, everywhere .
data is primarily obtained directly from the global HR/payroll system or estimated using employee numbers, average e have set ourselves ambitious goals to drive progress, inside our business and beyond. They range from increasing representation of women
number of hours wor ed, absences and overtime information, if actual data is not readily available. ontractor and people from ethnically diverse bac grounds in our leadership, to using our media spend and influence to promote progressive portrayals in
agencies provide data on the hours wor ed by each contractor. This is then combined with iageo employee data to mar eting, wor ing with diverse creative teams and diverse-owned suppliers and supporting people in our local communities with hospitality and
calculate the total FTE data for the month. Safety data and OH S FTE data is reported at site level using our global business s ills.
data management system. m ition am ion gen er iver it it an am ition to ac ieve re re entation o omen in ea er i ro e
imitation e do not report TAFR for independent contractors because of the difficulty and administrative burden in accurately
recording headcount.
er ormance mea re Percentage of female leaders globally
er ormance mea re ota recor a e acci ent re enc rate e t an e inition eadership roles comprise Executive ommittee members (Exec), Senior eaders (S ), evel 2 ( 2) and evel 3 ( 3)
roles, some of which will be vacant at any point in time. Employee type includes those on regular and fixed-term
e inition TRAFR is the sum of all wor -related accidents including OH S FTE/non-FTE (contractors) fatalities on iageo premises,
contracts.
OH S FTE/non-FTE TAs, OH S FTE medical treatment cases ( T ), and non-FTE permanent location-based T s,
expressed as rate per 1,000 OH S FTEs plus permanent location-based non-FTEs. co e e ce tion Non-Executive irectors and extended wor ers (agency wor ers, independent contractors, freelancers and consultants)
e consider an injury or illness to be wor -related when an event or exposure in the wor environment (including are not in scope, nor are joint ventures, joint operations or associates where iageo does not have operational control.
people wor ing at home) either caused or contributed to the resulting condition, or significantly aggravated a ata re aration The PI is calculated as the average of filled leadership roles at the end of each of the four quarters across the fiscal year. The
medically documented and treated pre-existing injury or illness. total leadership population is calculated from mar ets that collect gender information through or day, enabling all
co e e ce tion As under TAFR employees in scope to self-disclose this information. ender data is disclosed by employees themselves on a voluntary
basis on our online Human Resources system ( or day). All leaders in scope have the ability to disclose gender
ata re aration As under TAFR information on or day.
imitation e do not report T s for non-site-based contractors.
imitation here employees have chosen not to declare their gender, this information is excluded from the gender representation
data.
er ormance mea re m er o ata itie
e inition A fatality includes any wor -related fatality of an employee or contractor under our direct supervision in their day-to- m ition am ion et nic iver it it an am ition to increa e re re entation o ea er rom et nica iver e
day wor environment (on or off our premises), or any wor -related fatality suffered by a third-party or contractor (non- ac gro n to
FTEs) while on our premises.
e consider a fatality to be wor -related when an event or exposure in the wor environment (including people er ormance mea re Percentage of ethnically diverse leaders globally
wor ing at home) either caused or contributed to the event. e inition eadership roles comprise Executive ommittee members (Exec), Senior eaders (S ), evel 2 ( 2) and evel 3 ( 3) roles, some
co e e ce tion - of which will be vacant at any point in time. Employee type includes those on regular and fixed-term contracts.
ata re aration As under TAFR e define ethnically diverse as those ethnic groups who are, or were historically, systematically under-represented,
disenfranchised and/or economically excluded.
imitation -
Ethnically diverse people can be a majority or a minority in a country.
er ormance mea re co e e ce tion Non-Executive irectors and extended wor ers (agency wor ers, independent contractors, freelancers and consultants)
o t time in r re enc rate
are not in scope, nor are joint ventures, joint operations or associates where iageo does not have operational control.
e inition ost-time injury frequency rate ( TIFR) is a standard Occupational Safety and Health Administration (OSHA) metric that
ata re aration The PI is calculated as the average of filled leadership roles at the end of each of the four quarters across the fiscal year.
measures the number of lost-time injuries occurring in a wor place per one million hours wor ed.
Ethnicity data is disclosed by employees on a voluntary basis on or day. The relevant ethnicity fields are based on
co e e ce tion As under TAFR
the country in which the individual is employed to ensure all are culturally relevant.
ata re aration As under TAFR Ethnicity is selected by individuals within the eadership population from a pre-defined list that encompasses those
imitation e do not report TIFR for independent contractors because of the difficulty and administrative burden in accurately ethnic types most readily seen within the specific country, based on local census and governmental data.
recording headcount. e determined eight categories of ethnicity, considering iageo s mar et footprint, historic under-representation
and alignment across regions Asian, lac , Hispanic/ atin American, Indian, Indigenous, iddle Eastern and Tur ish,
er ormance mea re o t time in r rate ixed and Other Ethnic roups. If an individual has identified as another type of local ethnicity, the people analytics
e inition TIR is a standard OSHA metric that calculates the number of lost-time injuries occurring in a wor place per 200,000 team manually assign them to the closest fit, for the purposes of this data gathering exercise only.
hours wor ed. Although employees based in India ( iageo India and iageo lobal usiness Operations) are on the or day
co e e ce tion As under TAFR system, they do not submit ethnicity data through or day due to cultural sensitivities. So, self-disclosure is not the
basis for data capture. Nationality is obtained by the local HR team through official identification documents by
ata re aration As under TAFR
employees during the onboarding process and disclosed on or day. Indian nationals are recorded by HR as being

ADDITIONAL INFORMATION
imitation e do not report TIR for independent contractors because of the difficulty and administrative burden in accurately of Indian ethnicity. For India-based employees not of Indian nationality, the local HR director confirms their ethnicity
recording headcount. through a confidential conversation with the individual.
ased on a third-party study commissioned by iageo, Hispanic/ atin American is adopted as a term to
er ormance mea re m o ee ngagement n e categorise all people originating from the atin America and aribbean ( A ) region, including both indigenous and
e inition The Employee Engagement Index is calculated as the percentage of respondents who answer positively to three historically migrant populations. For the purposes of this data gathering exercise, all employees identifying as hite
questions in our our Voice survey I am proud to wor for iageo I would recommend iageo as a great place to with a A nationality have been recorded as Hispanic/ atin American. Non- A nationals are mapped to their
wor I am extremely satisfied with iageo as a place to wor . identified ethnicity.
co e e ce tion imitation Employees who identify as hite, declined to self-identify or have not disclosed their ethnicity are not counted as
e orting erio The data was collected between 6 and 31 arch 2023, so the results are based on feedbac from participants in that ethnically diverse.
particular window.
ata re aration The index is calculated from an anonymous annual survey run by an independent third-party.
imitation ontractors and employees on long-term leave are excluded.
252 Diageo Annual Report 2023 Diageo Annual Report 2023 253
 O O O O O O c on tin ued

m ition cce erate inc ion an iver it in o r va e c ain increa ing t e are o o r g o a en it m ition ro g t e iageo ar ca em e i rovi e mi ion training e ion e ivering i an
iver e o ne an i a vantage ine e to re o rce to e i a t riving o ita it ector t at or or a
er ormance mea re Percentage of spend with diverse-owned and disadvantaged businesses er ormance mea re Number of participations in training sessions delivered through iageo ar Academy
e inition e define diverse-owned suppliers as for-profit businesses majority owned and operated by under-represented e inition e measure the number of participations in A training sessions. One individual could receive multiple training
communities, including (but not limited to) women, ethnic minorities, T IA , people with disabilities and other sessions and each training participation would count towards our target.
minority groups identified in the mar ets where we source. The A delivers a range of hospitality s ills training to owners, managers, bartenders and wait staff with the
Although we try to define diverse businesses consistently across all our mar ets, we recognise that diversity can objective of raising professional standards in the industry and helping professionals and businesses to thrive. Examples
differ across geographical regions, cultures and communities. This means that we define ethnic minority groups on a of course content include alcohol category nowledge, drin preparation s ills, serving s ills including responsible
local level rather than global. In addition, in some mar ets, we have identified other regionally specific under- serving, business and bar management s ills.
represented groups to ma e sure we are as inclusive as possible. Training includes physical, virtual, e-learning and masterclass tutorials.
isadvantaged businesses include smallholder farmers. The N s Food and Agriculture Organi ation describes a co e e ce tion -
smallholder farmer as one who farms an area below the median threshold of their country. For the purposes of supplier ata re aration Participants in all these A trainings are included in this performance measure.
diversity reporting, we consider a smallholder farmer in Africa to be one that farms an area of less than ten acres. In iageo obtains data on the number of participations in trainings delivered in different ways depending on the types of
other mar ets, we use locally recognised guidance, such as for agave farmers in exico where the onsejo Regulador course, as outlined below
del Tequila defines this as 50,000 plants. These suppliers, which can be individuals or farm families, are widely
considered to be disadvantaged because of factors including their si e and exposure to global commodity mar ets. Physical training attendance number in face-to-face sessions delivered to groups of participants
here our direct suppliers are not diverse-owned, we will consider spend with disadvantaged businesses in their Virtual training attendance number in live online sessions
own value chains. This is considered as tier two direct diverse spend. E-learning number of completions of self-directed learning courses
co e e ce tion Spend from categories that are deemed as non-influenceable is excluded from our baseline spend and diverse spend asterclass number of attendances at ive Tutorials and number of viewers of the recorded sessions
calculations. Examples include customs charges, taxation and charitable donations. From fiscal 23 we include online training data from hina, where different digital platforms are used.
e orting erio 1 uly to 30 une. Our baseline year is fiscal 22. imitation Accuracy of data in case of physical trainings relies on third-party delivery partners.
ata re aration Our total global spend is extracted from our global enterprise software, SAP, and also from other local mar et
enterprise resource planning systems, with spend identified as non-influenceable deducted from this amount. Our m ition n re o ene iciarie o o r comm nit rogramme are omen an t at o r comm nit
spend with diverse-owned and disadvantaged suppliers is calculated as a percentage of this total spend, and is rogramme are e igne to en ance iver it an inc ion o n er re re ente gro
considered our tier 1 diverse spend total. er ormance mea re Percentage of beneficiaries of our community programmes who are women
e as our direct suppliers who are not diverse-owned to report their spend with diverse-owned business in their
e inition For earning for ife (or equivalent) programmes, we measure the number and percentage of women who have
supply chains, and we calculate our tier 2 diverse total from these submissions.
gained business and hospitality s ills.
Our tier 1 and tier 2 spend calculations are combined and are reflected in the total spend reported against this target.
co e e ce tion Our scope currently includes female beneficiaries of registered business and hospitality s ills programmes. In future, the
imitation -
scope of this target will also include female representation on our water sanitation and hygiene ( ASH) committees
and women who benefit from initiatives such as our smallholder farmer programmes.
m ition rovi e ine an o ita it i to eo e increa ing em o a i it an im roving
ata re aration For earning for ife programmes (and other s ills programmes), we collect data on the number of female participants
ive i oo t ro g earning or i e an o r ot er i rogramme through training records managed by iageo programme managers or third-party delivery partners.
er ormance mea re Number of people reached through earning for ife and other s ills programmes imitation Accuracy relies on the quality of data provided by our third-party delivery partners.
e inition Our business and hospitality s ills training programmes, including earning for ife, aim to increase participants
employability, improve livelihoods and support a thriving hospitality sector that wor s for all. The core curriculum
includes modules on technical s ills, life s ills and inclusion and diversity.
co e e ce tion Only mar ets running business and hospitality programmes are in scope. ar ets with no such programmes are
Australia, South orea, Tur ey and Eastern Europe. For entrepreneurship programmes to be included, the metric owner
ioneer g a o gla a ab l
determines that the initiatives are appropriate to be included under the definition of providing business or hospitality
s ills related to our value chain.
ata re aration e collate the number of beneficiaries of earning for ife and other s ills programmes through participant
programme completion records (collected face to face or via our online training systems) maintained by iageo
programme managers or third-party delivery partners. Our continued long-term success depends on the people and planet around us. Our wor to pioneer grain-to-glass sustainability is divided into three
e ma e sure double counting is avoided through programme registration and completion records. areas preserve water for life, accelerate to a low-carbon world and become sustainable by design.
imitation Accuracy relies on the quality of data provided by our third-party delivery partners. Our water stewardship strategy, Preserve ater for ife , outlines how we manage water in our supply chain, operations and communities, as
well as advocate for collective action to improve water security. e started our decarbonisation journey in 2008, and we aim to reach net ero
across our direct operations by 2030, using 100% renewable energy everywhere we operate. e are also committed to reducing our value chain
carbon emissions by 50% by 2030. e are wor ing to reduce our carbon footprint by reducing pac aging, increasing recycled content and are
focusing on regenerative agriculture.

ADDITIONAL INFORMATION
254 Diageo Annual Report 2023 Diageo Annual Report 2023 255
 O O O O O O c on tin ued

arget e eni more ater t an e e or o r o eration or a o o r ite in ater tre e area

reser e a for l er ormance mea re

e inition
Annual volumetric replenishment capacity of projects developed (m3)
This performance measure is total water replenishment capacity created in fiscal 23 in water-stressed areas. e define
replenishment (or volumetric water benefit), in line with the RI, as the volume of water resulting from water
stewardship activities that modify the hydrology in a beneficial way and/or help reduce shared water challenges,
improve water stewardship outcomes, and meet the targets of Sustainable evelopment oal 6.
Replenishment capacity created by replenishment projects is calculated by reference to iageo s ater Replenishment
Our strategy is based on best practice water stewardship in three areas water accessibility, availability and quality. e are also wor ing in Implementation uide and Technical Protocol. hen projects are delivered by a third-party and partially funded by iageo, to
partnership to better manage water globally and to lead collective action in critical water basins. avoid double counting, we only claim the proportion of volumetric capacity attributable to iageo.
e define water-stressed areas using the RI Aqueduct tool (at the inor asin level), N definitions and internal
arget e ce ater e in o r o eration it a im rovement in ater e e icienc in ater tre e survey information. uring the reporting period, we identified 0 of our sites as located within water-stressed areas. An
area an a im rovement acro t e com an assessment of our sites located in water-stressed areas is completed every two years and includes any new-build or
er ormance mea re ater use efficiency per litre of product pac aged ( itres/ itre) acquired sites and excludes any sites divested. In order to be considered within the annual volumetric replenishment
capacity, replenishment projects need to be in a water-stressed area (i.e., a site s water catchment and/or water-
itiona er ormance Percentage improvement in litres of water used per litre of product pac aged from the prior year
stressed water basins from which we source local raw materials).
mea re
The methodology for calculating the volume of water replenished for iageo s ater Replenishment Programme is
e inition e prepare and report water withdrawal (use) from sites where we have operational control, using internally based on the RI s Volumetric ater enefit Accounting A ethod For Implementing and Valuing ater Stewardship
developed reporting methodologies based on the RI Standards. Activities (2019, www.wri.org/research/volumetric-water-benefit-accounting-vwba-method-implementing-and-valuing-
ater withdrawal includes water obtained from ground water, surface water, mains supply and water delivered to water-stewardship), which is a comprehensive, standardised and science-based methodology to calculate and
the site by tan er, less any clean water provided bac to local communities directly from a site. ncontaminated water evaluate the benefits of water stewardship activities. e detail the approach adopted and mathematical calculations
abstracted and returned to the same source under local consent, water abstracted from the sea, and rainwater applied in the iageo ater Replenishment Programme Technical Protocol (2019) and provide a step-by-step
collection are excluded from reported water withdrawal data. implementation guide for mar ets to ensure consistency and robust controls iageo ater Replenishment
For water-stressed only e define water-stressed areas using the orld Resources Institute ( RI) Aqueduct tool, N Implementation uide (2022).
definitions and internal survey information. uring the reporting period, we identified 0 of our sites as located within co e e ce tion
water-stressed areas. An assessment of our sites located in water-stressed areas is completed every two years and
includes any new-build or acquired sites and excludes any sites divested. e orting erio 1 une to 31 ay (previously 16 une to 15 une see under imitation, below).
co e e ce tion The volume of water used at iageo-operated agricultural lands in ra il, exico and Tur ey is quantified and ata re aration ata required to calculate the indicative volume of water replenished is collected by an implementation partner and
reported separately. confirmed on completion of the project. This data is then validated by an external validator, and confirmed by the
iageo global lead for water. The iageo ater Replenishment Implementation uide provides templates for
ata re aration ater withdrawal (use) is measured primarily from meter readings and invoices. In limited cases, estimates are used. ater calculating water volume replenished the estimated volumes are pre-validated by the global team before the project
efficiency per litre of pac aged product is calculated by dividing total water withdrawal by the total pac aged volume. is implemented. Volumes are then validated again after the commissioning of the project.
e use litres of pac aged product as the measure for comparison, because this indicates how much water has The project volumes for fiscal 26 are restated every year to reflect latest estimates and previous fiscal actuals.
been used relative to the amount of finished product that has been pac aged. e measure litres of pac aged product
imitation The complexity of gathering data from multiple projects globally means there can be a delay in reporting information. This
by site and aggregate them at group level. For fiscal 23, the total volume pac aged used for the denominator in
means we currently include data from projects completed by 31 ay 2023 to allow us to consolidate data by fiscal year end.
efficiency indicators is 3,801,239,185 litres .
imitation In limited cases (e.g., failure or malfunction of water meters), estimates are used for water withdrawals.

ithin the scope of Pricewaterhouse oopers P s (Pw ) independent limited assurance reported to the irectors. For further detail and the reporting methodologies, see pages 2 2-266.

ADDITIONAL INFORMATION
256 Diageo Annual Report 2023 Diageo Annual Report 2023 257
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arget nve t in im roving acce to c ean ater anitation an giene in comm nitie near o r ite e inition Scope 1 and 2 emissions are presented as the absolute H emissions ( irect Scope 1 emissions from on-site energy
an oca o rcing area in a o o r ater tre e mar et consumption of fuel sources and Indirect Scope 2 emissions from purchased electricity and heat) in 1000 tonnes
O2e using mar et-based reporting methodology. ar et-based H emission intensity ratio is calculated as
er ormance mea re Percentage of water-stressed mar ets with investment in ASH
grammes per O2e per litre, using direct operations pac aged product volume in litres for fiscal 23.
e inition This target trac s funding committed and spent on new ASH facilities to improve local community access to clean
water, sanitation or hygiene in communities within the same water basin as our sites and local sourcing areas. co e e ce tion e exclude minor quantities of Scope 1 emissions up to 0.5% of a site s emissions, to a maximum of 50 tonnes O2e
e usually define iageo s mar ets as countries or locations where we operate or sell our products. To ensure per emission source, as well as the carbon emissions associated with biogas flaring, since they are determined to be
comprehensive coverage, this PI instead defines each mar et as an individual country, as set out on page 0. This insignificant to our overall impacts. ore details can be found in the Scope section of eneral Reporting methodology
means that the PI considers water stress and investment at a country level, rather than at a mar et level. and boundaries, covering both non-environmental and environmental metric reporting.
e define water-stressed areas using the RI Aqueduct tool at the minor basin level, N definitions and internal iological/biogenic O2 emissions from the combustion of bioenergy, and from direct operations processes such as
survey information. uring the reporting period, we identified 0 of our sites across 12 countries as located in water- fermentation to create alcohol are outside of scope and are reported separately. However, bioenergy O2e emissions
stressed areas, with 3 of these locations currently operational and six non-operational. An assessment of our sites associated with methane and nitrous oxides that are not absorbed in bioenergy feedstoc growth are included in
located in water-stressed areas is completed every two years and includes any new-build or acquired sites and Scope 1 emissions.
excludes any sites divested. e do not include carbon offsets or credits in the Scope 1 and 2 H emissions mar et-based approach.
The PI is calculated as a percentage of the number of water-stressed mar ets in which iageo has invested in ata re aration e calculate O2e emissions data based on direct measurement of energy use (meter readings/invoices) for the
ASH programmes in the same minor water basin as the site, divided by the total number of (in scope) water-stressed majority of sites.
mar ets in which iageo operates. ar et a e emi ion
co e e ce tion The scope excludes water-stressed mar ets in which iageo operates where there is no demand or requirement for e externally report Scope 1 and 2 H emissions using metric tonnes of O2e to compare the emissions from the
new community ASH projects (Tur ey, Indonesia, Seychelles). seven main H s based on their global warming potential. e base our O2e reduction targets and reporting
These exclusions are verified by an expert implementing partner, and are based on government, RI or orld protocols (since 2007) on mar et-based emissions.
Health Organi ation information on ASH ris and availability. irect co e emi ion
It also excludes iageo ASH projects in mar ets that are not assessed as water stressed or where we do not have e report fuel consumption by fuel type at site level using the environmental management system. sing calorific
direct operations (for example, yanmar). values, the fuel is then converted to energy consumption, in ilowatt hours ( h), by fuel type, and is multiplied by the
relevant O2e emission factor to derive total O2e emissions. Scope 1 emission factors for fuels are typically average
e orting erio 1 une to 31 ay fuel O2e emissions factors and calorific values (the latest available at the end of the reporting year) from the
ata re aration ata on the ASH programmes, including locations, clean water yield, and the number of people (including the overnment epartment for Energy Security and Net ero. e apply product-specific factors, where available. Energy
number of women) who benefit is calculated by N O delivery partners and validated by an external validator. attribute certificates (EA s), derived from our distillery by-product feedstoc and processed by a third-party to generate
The PI is calculated as a percentage, i.e., the total number of water-stressed mar ets in which iageo has invested in biomethane, form a component of our decarbonisation, together with purchased renewable gas EA s (i.e., from
ASH programmes divided by the total number of (in scope) water-stressed mar ets in which iageo operates. certificate-bac ed biomethane supplied indirectly through the natural gas grid). This is reflected in data preparation
imitation The complexity of gathering data from multiple projects globally means there can be a delay in reporting information. and aggregation.
This means we currently include data from projects completed by 31 ay 2023 to allow us to consolidate data by fiscal n irect co e emi ion
year end. e report H emissions from electricity as mar et-based emissions in line with the RI/ S H Protocol
Scope 2 guidance 2015. Electricity consumption recorded on our environmental management system is multiplied by
emissions factors specified in EA s, contracts, power purchase agreements and supplier utility emissions, as detailed in
arget ngage in co ective action in a o o r riorit ater a in to im rove ater acce i i it avai a i it an the H Protocol s Scope 2 guidance. e use H Protocol Scope 2 guidance to ensure EA s and associated
a it an contri te to a net o itive ater im act contractual instruments meet the required standards. H emission factors relating to indirect emissions are updated
er ormance mea re Percentage of priority water basins with collective action participation with the latest available by end of the financial year.
e inition e identify priority water basins using a iageo criticality assessment (based on expert judgement and consumption gitive an o ne agric t ra co e emi ion
volumes) and those facing high water ris , according to the RI Aqueduct tool. These basins would benefit most from e calculate fugitive emissions based on the amount of emitted o one-depleting substances and fluorinated gases,
iageo operational sites participating in collective action to address identified water challenges. multiplied by the relevant emission factor to represent the global warming potential in tonnes of O2e. Annually, each
ollective action in water stewardship includes multi-sta eholder water management initiatives or projects that site reports the quantity (mass) of each material/gas emitted based any added/topped-up amount, reported via the
involve interaction with government entities, local communities, N Os and/or civil society organisations. environmental management system. The mass of each of emitted o one-depleting substance and fluorinated gas is
multiplied by the relevant emission factor and then added together to report the equivalent H emissions in tonnes of
co e e ce tion O2e.
ata re aration Priority water basins with collective action participation are reported at country level and trac ed by the iageo global e calculate agricultural emissions from direct operations owned and operated agricultural land only based on
metric owner. fertiliser use. The annual quantity (mass) of inorganic fertiliser is multiplied by the percentage of nitrogen content and
imitation by the relevant H emission and conversion factors (i.e., nitrogen to nitrous oxide, nitrous oxide H emission factor)
to determine the equivalent tonnes O2e emissions.
co e an co e ata aggregation
Total direct and indirect carbon emissions by weight (mar et/net based) (1,000 tonnes O2e) is the aggregation of
ccelerating to a lo a bo o l Scope 1 and 2 H emissions with fugitive and owned agriculture emissions for external reporting annually. The
percentage reduction in absolute carbon emissions (direct and indirect carbon emissions by weight (mar et/net
based)) from the prior year is a percentage change calculation with reference to the corresponding prior year figure.
Our net ero emissions target for 2030 remains consistent with earlier reporting protocols and is based on mar et-
based emissions.
emi ion inten it ratio

ADDITIONAL INFORMATION
e now that our planet needs significant, science-based action to create a sustainable future. e have set ourselves bold targets to reach net ero Total, aggregated direct operations mar et-based emissions (as detailed above) are divided, by the volume of direct
carbon across our operations and to wor with our suppliers to reduce our value chain carbon emissions by 50% by 2030. operations pac aged product reported in the same period. The mar et-based emissions are converted to grammes of
O2e and the volume of pac aged product is reported in litres to generate relevant H emission intensity ratios in g
arget ecome net ero car on in o r irect o eration co e an O2e/litre pac aged. For fiscal 23, the total volume pac aged used for the denominator in intensity indicators is
er ormance mea re Total direct and indirect carbon emissions by weight (mar et/net based) (1000 tonnes O2e) 3,801,239,185 litres.
itiona er ormance Percentage reduction in absolute carbon emissions (direct and indirect carbon emissions by weight (mar et/net imitation here invoices or site meter readings are not available due, for example, to timing differences or metering issues
mea re based)) from the prior year we estimate consumption.

ar et based (net) intensity ratio of H emissions (grams O2e per litre of pac aged product)

258 Diageo Annual Report 2023 Diageo Annual Report 2023 259
 O O O O O O c on tin ued

arget e ce o r va e c ain co e car on emi ion

er ormance mea re
e inition
Percentage reduction in absolute greenhouse gas emissions ( t O2e) from the prior year
Scope 3 emissions are all indirect emissions that occur in the value chain of the reporting company, including both ecome a abl g
upstream and downstream emissions (but excluding Scope 2 emissions from purchased power and heat).
The O2e emissions relating to all categories of materials and services within our value chain include those from
purchased raw materials, pac aging, third-party manufacturers, consumer use and disposal. e aggregate emissions
from upstream and downstream logistics and distribution, including ategory logistics emissions. In addition, we
include ategory 2 capital goods, ategory 3 fuels and energy-related activities, ategory 5 waste generated in e have already made progress in reducing our environmental impact, and we continue to wor hard to meet our Society 2030 Spirit of Progress
operations, ategory 6 business travel and ategory 7 employee commuting. The emissions attributable to all targets and become sustainable by design by reducing pac aging, increasing recycled content and eliminating waste.
categories of materials and services provide a total value chain, Scope 3 footprint.
e do not include carbon offsets or credits in the Scope 3 H emissions mar et-based or location-based arget c ieve ero a te in o r irect o eration an ero a te to an i in o r c ain
approach. er ormance mea re Percentage reduction in total waste sent to landfill from the prior year
co e e ce tion Any categories of Scope 3 emissions not listed in the definition above are not currently included in our external itiona mea re Total volume of waste sent to landfill (tonnes)
reporting.
e inition e record the type and quantity of all waste to landfill using our internal environmental reporting methodologies and
ata re aration e report Scope 3 H emissions using metric tonnes of O2e to compare the emissions from the seven main H s RI Standards. The definition of waste to landfill includes all ha ardous waste and all unwanted or discarded material
based on their global warming potential. e base our O2e reduction targets and reporting protocols on real produced in solid, sludge or liquid form from manufacturing and office sites, except asbestos waste and/or other waste
consumption location-based emissions. e report in line with the RI/ S H Protocol orporate Value hain required by national or state legislation to be landfilled in either specified registered sites or other landfill sites. The
(Scope 3) Accounting and Reporting Standard, 2011. definition includes all refuse, garbage, construction debris, treatment and process sludge, and materials that a site has
e calculate O2e emissions data on the basis of the volume of materials purchased, services provided, capital been unable to reclaim, reuse or recover.
equipment purchased and distances travelled for upstream/downstream logistics. Supplier-specific emission factors e consider we have achieved ero waste to landfill if we have disposed of less than 0.2% of baseline waste-to-
and/or emission factors from literature are then applied to the component type to derive an absolute O2e emissions landfill volume during the year. Some 0.2% of baseline waste-to-landfill volume equates to 200 tonnes and excludes
volume, in metric tonnes. any waste we are required to dispose to landfill under local regulations.
imitation co e e ce tion
ata re aration Sites typically collect primary waste data from weighbridge tic ets and invoices from waste handlers. ata is reported
arget e rene a e energ acro a o r irect o eration by waste type at site level using the environmental management system.
er ormance mea re hange in percentage of renewable energy across our direct operations imitation Incidents may occur where small quantities of waste are sent to landfill by accident or because of operational changes,
e inition e report total energy use and renewable energy use in megawatt hours ( h) and/or terajoules (T ). Total energy such as acquiring new sites, changing who handles our waste and issues with waste disposal suppliers.
and renewable energy use are determined from direct and indirect energy consumption energy generated on our sites
and purchased energy. e determine direct energy (renewable/non-renewable) from the quantity of different fuel arget ontin e o r or to re ce tota ac aging e ivering a re ction in ac aging eig t
types (in metric tonnes, litres) of renewable and non-renewable fuels, and by applying the relevant calorific value er ormance mea re Percentage reduction of total pac aging (by weight)
(either from EIS or the supplier). e measure indirect energy (renewable/non-renewable) in h and/or T from
e inition e determine changes to pac aging weight by quantifying the weight reduction in grammes multiplied by the number
energy utilities or suppliers and/or by applying the relevant EA s.
of product lines (S s) affected, on an annualised basis.
For avoidance of doubt, we include directly connected renewable energy generated on or near our sites, where all
energy is used on site and no EA s are created (e.g., roof-mounted solar panels with all generated renewable co e e ce tion
electricity used on site). ata re aration e collate pac aging material volume data from enterprise software, including SAP and other sources, for total
co e e ce tion e exclude minor energy sources that account for less than 0.5% of a site s overall Scope 1 and 2 emissions, up to a volume of pac aging purchased and weight. e verify weight data through quarterly supplier questionnaires.
maximum of 50 t O2e of individual emission source. They are considered immaterial to our overall impact. imitation Reporting relies on suppliers technical information and supporting supplementary information.
ata re aration e report total energy and renewable energy in h and/or T . e calculate direct and indirect energy data based
on the direct measurement of energy use (meter readings/invoices for volumes of fuel supplied) for the majority of arget ontin e o r or to increa e rec c e content on o r ac aging increa ing t e ercentage o rec c e
sites. content o o r ac aging to
e report fuel consumption by fuel type at site level using the environmental management system. sing calorific er ormance mea re hange in percentage of recycled content (by weight)
values, the fuel is then converted to energy consumption, in h, by fuel type and classified as either renewable or
e inition e determine recycled content by establishing the percentage weight of non-virgin materials used to generate the
non-renewable based on fuel type or source. EA s, derived from our distillery by-product feedstoc and processed by
pac aging components.
a third-party to generate biogas, together with purchased renewable gas EA s, are applied to relevant natural gas
supplied to sites via a common carrier pipeline/networ . This is reflected in data preparation and aggregation. co e e ce tion
All indirect energy generated and used on site, along with purchased indirect energy supplied through the grid is ata re aration e collate pac aging material volume data from enterprise software, including SAP and other sources, for the total
classified as renewable by the allocation of EA s, contracts, power purchase agreements and supplier specific utility volume of pac aging purchased. e collect recycled content data through quarterly supplier questionnaires and then
factors, where relevant. consolidate and internally verify it.
To achieve the percentage of renewable energy use, we divide total renewable energy into direct and indirect imitation Reporting relies on suppliers technical information and supporting supplementary information.
energy supplies (in h) by total energy use, comprising all reported energy sources ( h).
imitation Energy data is calculated based on direct measurement of energy use (meter readings/invoices) for the majority of arget n re o o r ac aging i i e rec c a e or re a e com o ta e
sites. here invoices are not available due, for example, to timing differences consumption is estimated. These

ADDITIONAL INFORMATION
er ormance mea re Percentage of pac aging recyclable (by weight)
instances account for less than 1% of the total.
e inition For fiscal 23, we are reporting our technically recyclable number. This includes pac aging that is technically possible to
recycle, but does not ta e into account whether the collection, sorting and recycling of the pac age happens in
practice, at scale and at viable cost.
co e e ce tion
ata re aration Pac aging material volume data is collated from enterprise software, including SAP (materials supplied) and other
sources. It is then consolidated and internally verified, based on the best available information.
imitation Reporting relies on suppliers technical information and supporting supplementary information.

260 Diageo Annual Report 2023 Diageo Annual Report 2023 261
 O O O O O O c on tin ued I EPE E T I ITE SS R CE REPORT O SE ECTE S ECT TTER

arget c ieve rec c e content in o r a tic ott e an

er ormance mea re
e inition
Percentage of recycled content in our plastic bottles used
This is determined by quantifying the metric tonnes of non-virgin plastic in the total volume of all plastic bottles used at a o
each site or mar et reported through a plastics database.
co e e ce tion
ata re aration e collate plastic material volume data from enterprise software, including SAP and other sources, for the total volume
to t e irectors of iageo plc on
imitation
of plastics purchased. e collect recycled content data through quarterly supplier questionnaires and then consolidate
and internally verify it.
Reporting relies on suppliers technical information and supporting supplementary information.
selected s ect matter
arget n re o o r a tic are e igne to e i e rec c a e or re a e com o ta e O r limited ass rance concl sion
er ormance mea re Percentage of recyclable (or reusable/compostable) plastic used ased on the procedures we have performed, as described under Summary of wor performed and the evidence we have obtained, nothing has
e inition For fiscal 23, we are reporting our technically recyclable number. This includes pac aging that is technically possible to come to our attention that causes us to believe that the information mar ed with the symbol in iageo plc s ( iageo s ) Annual Report ( the
recycle, but does not ta e into account whether the collection, sorting and recycling of the pac age happens in Report ) for the year ended 30 une 2023 and summarised below (together the Subject atter Information ), has not been prepared, in all material
practice, at scale and at viable cost. respects, in accordance with iageo s Reporting boundaries and methodologies (the Reporting riteria ) set out on pages 2 2-262 of the Annual
Report.
co e e ce tion
ata re aration Pac aging material volume data is collated from enterprise software, including SAP (materials supplied) and other at we ass red
sources. It is then consolidated and internally verified, based on the best available information. The Subject atter Information needs to be read and understood together with the Reporting riteria which iageo s irectors are solely responsible
imitation Reporting relies on suppliers technical information and supporting supplementary information. for selecting and applying. The Subject atter Information are set out below
S I S
arget rovi e a o o r oca o rcing comm nitie it agric t ra i an re o rce i ing economic an 30 2023 I
environmenta re i ience orting ma o er armer E S :
er ormance mea re Number of smallholder farmers in our supply chain supported by our smallholder farmer programme Total volume pac aged (litres) 1 3,801,239,185 page 256
e inition e define a smallholder farmer as an individual or family farming an area of less than four hectares, for the primary ater use efficiency per litre of product pac aged (litres/litre) 2 .1 pages 5 and 79
mar ets in scope for this target. Our local sourcing communities are those where we engage directly with smallholder Percentage improvement in litres of water used per litre of product pac aged from the prior year (percentage) 7 (1.2)% page 79
farmers, or indirectly through our suppliers. Percentage reduction in absolute carbon emissions (direct and indirect carbon emissions by weight (mar et / net 5. % page 82
e define providing agricultural s ills and inputs aimed at improving the methods and activities used by based)) from the prior year 7
smallholder farmers to farm effectively and sustainably by providing training or providing or facilitating access to farm Total direct and indirect carbon emissions by weight (mar et/net based) (1,000 tonnes O2e) 1
01 pages 5 and 83
inputs such as certified seeds and mechanisation. ar et based (net) intensity ratio of H emissions (g O2e per litre of pac aged product) 2 105 page 83
uilding economic and environmental resilience involves improving smallholders financial awareness, their family
Percentage reduction in total waste sent to landfill from the prior year 7 35.5 % page 86
income and/or their understanding of how to act in a climate-smart way.
ost time accident frequency rate per 1,000 full-time employees (FTEs) 3 0.91 page 65
co e e ce tion Our wor with smallholder farmers is currently focussed around sorghum value chains in five countries in Africa. For
Fiscal 23, we focussed efforts on enya. ith this focus we have learned how to best deploy at scale. S 2022 3 2023 :
Number of people educated on the dangers of underage drin ing through a iageo supported education 1,985,817 pages 5 and 58
ata re aration Our sourcing teams and third-party partners trac the number of smallholder farmers undergoing training and programme 1
education or being provided with access to farm inputs both manually and directly into our new digital platform. The
Number of people who confirmed changed attitudes on the dangers of underage drin ing following participation in 1,5 8,996 page 58
baseline year for our smallholder programmes is fiscal 22. a iageo supported education programme 1
The performance measure is refreshed each year, rather than accumulated over consecutive years, to evidence
evolution of the number of smallholder supported on a year-by-year basis.
I :
The percentage of female leaders globally % pages 5 and 67-68
imitation onitoring is li ely to evolve over time, because collecting data at smallholder-farm level is complex, with a heavy
reliance on individuals, a lac of publicly available high-impact datasets and a lac of real-time data. The percentage of ethnically diverse leaders globally 5 3% pages 5 and 67-68
R :
arget eve o regenerative agric t re i ot rogramme in ive e o rcing an ca e Annual volumetric replenishment capacity (m3) of projects developed 3 1,311,010 page 79
er ormance mea re Number of regenerative agriculture pilot programmes initiated Percentage of water-stressed mar ets where iageo have invested in improving access to clean water, sanitation 100 % page 80
and hygiene near sites and local sourcing areas (F 21-F 23) 6
e inition e define our ey sourcing landscapes as locations from which we source our most material crops, in terms of
volumes sourced, product dependency (e.g., agave for tequila) and contribution to our Scope 3 H footprint. The footnote refers to our assessment of materiality discussed in this report.
The programmes include
The scope of our wor did not extend to information in respect of earlier periods or to any other information included in, or lin ed from, the Report.
On-the-ground programmes with farmers to test and integrate regenerative and low-carbon practices in crop
production systems O r wor
On-farm measurements and data collection protocols to trac improvements in soil health, soil carbon, biodiversity, rofessional standards applied

ADDITIONAL INFORMATION
water stewardship and farm profitability
e performed a limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) Assurance
ollaborative programmes with our suppliers, other commodity off-ta ers, expert agronomists, technology providers, Engagements other than Audits or Reviews of Historical Financial Information and, in respect of the greenhouse gas emissions, in accordance with
N Os or specialist organisations International Standard on Assurance Engagements 3 10 Assurance engagements on greenhouse gas statements , issued by the International
co e e ce tion Auditing and Assurance Standards oard.
ata re aration ata is consolidated for each pilot programme, trac ing PIs and reporting on improvements against ey outcomes. O r independence and alit control
The baseline year is fiscal 23. The baseline year for assessing the results of our first pilot programme, uinness barley, is e have complied with the Institute of hartered Accountants in England and ales ode of Ethics, which includes independence and other
fiscal 23. requirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional
imitation behaviour, that are at least as demanding as the applicable provisions of the International Ethics Standards oard for Accountants International
ode of Ethics for Professional Accountants (including International Independence Standards).

262 Diageo Annual Report 2023 Diageo Annual Report 2023 263
I EPE E T I I TE SS R CE REPORT O SE ECTE S ECT TTER contin ued

e apply International Standard on uality anagement ( ) 1 and accordingly maintain a comprehensive system of quality control including e ass rance matters
documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
mmar of wor performed lassification of waste
e performed a limited assurance engagement. ecause a limited assurance engagement can cover a range of assurance, we give more detail Nature of the issue iageo engages a wide range of third parties in the collection, management and disposal of the waste generated through their
about the procedures performed, so that the intended users can understand the nature, timing and extent of procedures we performed as context global operations. As soon as waste leaves a site, iageo is no longer in control of the waste journey ta en and there is a loss of
for our conclusion. These procedures performed vary in nature and timing from, and are less in extent than for, a reasonable assurance visibility of waste disposal routes. iageo then often has to rely on management information provided by third parties to
appropriately classify waste - particularly waste sent to landfill.
engagement. onsequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed. There is a ris that waste is inappropriately classified, by iageo or a third party, as another waste stream (e.g. recycled despite its
In performing our assurance procedures, which were based on our professional judgement, we performed the following final disposal route being to landfill).
considered the suitability of the circumstances of iageo s use of the Reporting riteria, as the basis for preparing the Subject atter Information How our wor addressed the hilst our testing approach in relation to third parties is unique to each individual aspect of the Subject atter Information, the
ey assurance matter following are examples of wor performed at some of the 12 iageo sites selected in relation to waste specifically
obtained an understanding of iageo s control environment, processes and systems relevant to the preparation of the Subject atter
Information. Our procedures did not include evaluating the suitability of the design or operating effectiveness of control activities Performed wal through procedures to gain an understanding of the end-to-end waste journey for selected waste streams, and
evaluated the appropriateness of measurement and evaluation methods, reporting policies used and estimates made by iageo, noting that our enquired with local management to understand how they are comfortable with data obtained from third party waste handlers
procedures did not involve testing the data on which the estimates are based or separately developing our own estimates against which to Enquired with third party waste handlers to understand how they compile their management information they send to iageo
evaluate iageo s estimates Obtained an understanding of any specific contractual obligations in place on third party waste handlers in relation to sending
waste to landfill
undertoo site visits at 12 of iageo s sites we selected these sites based on their inherent ris , materiality to the group, and an analysis of Obtained third party confirmations of year to date waste to landfill volumes for a sample of waste handlers servicing the sites
unexpected fluctuations in the Subject atter Information since the prior period. of these sites based in Scotland, ganda, hana and the Obtained and reviewed waste traceability review reports completed by local site management of waste collections made from
nited States were performed virtually using live feed streaming under our direction. A further 8 sites in Scotland (2), England, India, Nigeria (2), by third parties
exico and Australia were conducted as physical visits Attended a waste traceability review conducted by local site management with a third party waste handler
Reviewed the group management schedule of waste handler reviews, assessing ey findings and the broader impact on the
performed limited substantive testing on a selective basis of the Subject atter Information related to the Environmental and Safety indicators group
listed above, which is aggregated from information submitted by iageo s operational sites. Testing was conducted as part of the site visits and Performed substantive testing to confirm accuracy and classification of waste values reported, and for a sample of waste
involved comparing year on year movements and obtaining explanations from management for significant differences we identified, agreeing collections (5-15) within management information and corroborated to supporting documentation (e.g. weighbridge tic ets)
arithmetical accuracy and agreeing data points to or from source information to chec that the underlying subject matter was complete and Obtained weighbridge calibration certificates, or equivalent documents, to confirm accuracy of actual waste collection volumes
Obtained and reviewed calculations performed by selected waste handlers to report total waste sent to landfill figures and
accurate, and had been appropriately evaluated or measured, recorded, collated and reported
Obtained and assessed reasonableness of estimation methodologies applied locally in the absence of reliable third party data,
the Subject atter Information related to ater Replenishment indicators is aggregated from the specific water replenishment programmes and validated data inputs.
underta en by iageo. In order to understand the ey processes and controls for reporting, we made management enquiries and performed
Element(s) of the Subject Percentage reduction in total waste sent to landfill from the prior year
limited substantive testing on a selective basis by sampling 5 out of 35 projects, based on their inherent ris and materiality to the annual atter Information most
volumetric water replenishment capacity. This specifically focused on understanding how programmes are selected and implemented by significantly impacted
implementation partners on behalf of iageo. This testing chec ed that underlying information had been appropriately evaluated or measured,
recorded, collated and reported
performed limited substantive testing on a selective basis of the Subject atter Information related to the Smashed and Inclusion and iversity
pplication of comple criteria
indicators. This testing was performed at the iageo head office, to chec that underlying information was complete and accurate, and had Nature of the issue iageo has extensive internal ris management and assurance guidance to support local site management teams to collate and
report health and safety incidents consistently. hilst this guidance is detailed, there are some complex areas which can sometimes
been appropriately evaluated or measured, recorded, collated and reported and be open to interpretation or judgement, resulting in significant assurance ris s around completeness, accuracy, classification and
evaluated the disclosures in, and overall presentation of the Subject atter Information. presentation and disclosure.
Our assurance procedures specifically did not include evaluating the suitability of design or operating effectiveness of control activities.
There are complex definitions and exception criteria specific to ost Time Accidents ( TAs), which determine whether an incident is
aterialit reportable and how it should be classified. For example, in relation to the lost time accident reporting, judgements can arise in
e are required to plan and perform our wor to address the areas where we have identified that a material misstatement of the Subject atter interpreting ey definitions wor -related or job restriction based on detailed internal definitions and criteria which may not be
present in the external criteria.
Information is li ely to arise. e set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to
determine the nature, timing and extent of our procedures in support of our conclusion. e believe that it is important that the intended users How our wor addressed the hilst our testing approach in relation to judgements is unique to each individual aspect of the Subject atter Information, the
understand the concept and the level of materiality to place our conclusion in context. ey assurance matter following are examples of wor performed at some of the 12 iageo sites selected in relation to lost time accident reporting
specifically
ased on our professional judgement, we determined materiality for the Subject atter Information as follows Obtained an understanding of local safety governance and escalation channels available to local site management
Performed wal through procedures to gain an understanding of local incident reporting procedures to ensure and assess
ateriality differs depending upon the nature of the Subject atter Information. e apply professional judgement to consider the consistency when utilising classification guidance
most appropriate materiality benchmar for each aspect of the Subject atter Information, having considered how the intended Enquired with local site management to understand how they classify incidents for complex or unusual incidents
Performed substantive testing over all lost time accidents reported to date, and for a sample of between 5-15 other incidents to
users may use the information. confirm classification
Obtained additional corroborating evidence where underlying incident reporting was not sufficient to substantiate incident
The benchmar approach for each aspect of the Subject atter Information is indicated in the table by one of the following classification. In some instances, these were escalated and discussed with lobal overnance.
numbers Additional testing has also been performed at a group-level, specifically
1
This metric is an absolute number. A benchmar materiality of 5% has been applied. Substantive testing for a sample of 20 incidents globally not classified as a lost time accident (e.g. medical treatment case or first
2 aid case) to ensure incident classification was appropriate
This metric measures intensity, which is calculated as a ratio between 2 different numbers. A benchmar of 5% has been applied to Enquired with the lobal overnance team on incident classification where underlying evidence was not clear and obtained
both the numerator and denominator used in the calculation. additional corroborating evidence, where needed.
3
This metric is a ratio. Each misclassified lost time accident is considered material whilst materiality for 1,000 FTEs is set at 5% Element(s) of the Subject ost time accident frequency rate per 1,000 full-time employees

ADDITIONAL INFORMATION
This metric is a percentage. A benchmar materiality of 2.5% has been applied to both the number of female leaders and total atter Information most
number of leaders used in the percentage calculation. significantly impacted
5
This metric is a percentage. A benchmar materiality of 2.5% has been applied to both the number of ethnically diverse leaders
and total number of leaders used in the percentage calculation. allenges of non financial information
6
This metric is a percentage. Any identified misstatement in either the numerator or denominator is considered material. The absence of a significant body of established practice upon which to draw to evaluate and measure non-financial information allows for
7
This metric is a percentage change. A benchmar of 5% has been applied to both the numerator and denominator. different, but acceptable, evaluation and measurement techniques that can affect comparability between entities, and over time.
Non-financial information is subject to more inherent limitations than financial information, given the characteristics of the underlying subject matter
e also agreed to report to the irectors misstatements ( reportable misstatements ) identified during our wor at a level below overall materiality, and the methods used for measuring or evaluating it. The precision of different measurement techniques may also vary.
as well as misstatements below that lower level, that in our view warranted reporting for qualitative reasons. The irectors are responsible for
deciding whether adjustments should be made to the Subject atter Information in respect of those items.

264 Diageo Annual Report 2023 Diageo Annual Report 2023 265
I EPE E T I I TE SS R CE REPORT O SE ECTE S ECT TTER contin ued O O O O

Reporting on ot er information whis y, rum, and brandy), lac og (scotch), Signature (Indian
The other information comprises all of the information in the Report other than the Subject atter Information and our assurance report. The
irectors are responsible for the other information. As explained above, our conclusion does not extend to the other information and, accordingly, Ot er additional whis y), Royal hallenge (Indian whis y) and Antiquity (Indian whis y).
eer and in estments
iageo s principal brewing facility is at the St ames s ate brewery in
we do not express any form of assurance thereon. In connection with our assurance of the Subject atter Information, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially inconsistent with the Subject atter Information or our
nowledge obtained during the assurance engagement, or otherwise appears to contain a material misstatement of fact. If we identify an apparent
o a o ublin, Ireland. In addition, iageo owns breweries in several African
countries Nigeria, enya, hana, Tan ania, ganda, and the
material inconsistency or material misstatement of fact, we are required to perform procedures to conclude whether there is a material misstatement Seychelles. uring the year ended 30 une 2023, uinness ameroun
of the Subject atter Information or a material misstatement of the other information, and to ta e appropriate actions in the circumstances. pirits and in estments S.A. was sold to the astel roup.
Spirits are produced in distilleries located worldwide. The group owns uinness flavour extract is shipped from Ireland to all overseas
Responsi ilities of t e irectors 30 Scotch whis y distilleries in Scotland, two whis y distilleries in uinness brewing operations which use the flavour extract to brew beer
As explained in the irectors Statement on page 116 of the Annual Report, the irectors of iageo are responsible for anada and three in the nited States. iageo produces Smirnoff locally. uinness is transported from Ireland to reat ritain in bul to the
internationally. etel One and roc vod as are purchased as finished Runcorn facility which carries out the egging of uinness raught.
determining appropriate reporting topics and selecting or establishing suitable criteria for measuring or evaluating the underlying subject matter
product from The Nolet roup and aison Villevert, respectively. in Projects are underway to support future beer growth. In uly 2022,
ensuring that those criteria are relevant and appropriate to iageo and the intended users of the Report
distilleries are in both the nited ingdom and in Santa Vittoria, Italy. iageo announced plans to invest 200 million in Ireland s first
the preparation of the Subject atter Information in accordance with the Reporting riteria including designing, implementing and maintaining
aileys is produced in the Republic of Ireland and Northern Ireland. purpose-built carbon neutral brewery on a greenfield site in
systems, processes and internal controls over the evaluation or measurement of the underlying subject matter to result in Subject atter
Irish whis ey is distilled at the Roe o distillery in ublin. Rum is ittleconnell, Newbridge, o. ildare. A planning application for the
Information that is free from material misstatement, whether due to fraud or error and
distilled in the S Virgin Islands and in Australia, Vene uela, and new brewery was submitted in October 2022 and, if successful,
producing the Report, including underlying data and statements of irectors responsibility, which provides a balanced reflection of iageo s
uatemala and is blended and bottled in the nited States, anada, brewing would commence in 202 . Furthermore, iageo will also
performance in this area and discloses, with supporting rationale, matters relevant to the intended users of the Report.
Italy and the nited ingdom. Ra i is produced in Tur ey, hinese invest 21 million to build a new production area at St. ames s ate
O r responsi ilities white spirits are produced in hengdu, in the Sichuan province of and increase brewing capacity of uinness 0.0, building on the
e are responsible for hina, cacha a is produced in ear State in ra il and tequila in 1 million announced to expand and optimise capacity at its beer
exico. The hase istillery in England produces vod a and gin. pac aging facilities in elfast and Runcorn. or on these three
planning and performing the engagement to obtain limited assurance about whether the Subject atter Information is free from material projects is substantially complete with capacity coming onstream in
misstatement, whether due to fraud or error iageo s maturing Scotch whis y is in warehouses in Scotland
( lac mannanshire area between lac grange, ambus est and 2023 calendar year.
forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained and The iageo eer ategory Third-Party Operations Team are the
reporting our conclusion to the irectors of iageo. enstrie, where we are holding approximately 50% of the group s
maturing Scotch whis y), its maturing anadian whis y in Valleyfield technical brewers supporting the delivery of over two and a half million
hectoliters of beer and ready to drin products supplied through over
se of t is report and imli in anada, its maturing American whis ey in entuc y and
50 partner breweries and beverage pac aging facilities across the
Our report, including our conclusion, has been prepared solely for the irectors of iageo in accordance with the agreement between us dated 31 Tennessee in the nited States and maturing hinese white spirits in
hengdu, hina. world. The team s focus is upon assuring the consistent quality of
anuary 2023 (as varied). To the fullest extent permitted by law, we do not accept or assume responsibility or liability to anyone other than the oard
There is a significant progress in our investment of 185 million in iageo brands produced at third-party facilities and on enhancing
of irectors and iageo for our wor or this report except where terms are expressly agreed between us in writing.
the Scotch whis y and tourism sectors in Scotland. This has included iageo value through supporting the start-up of new partnerships and
the creation of a major new ohnnie al er global brand attraction in delivery of innovation projects. In addition to supporting uinness and
Edinburgh ( ohnnie al er Princes Street). The distillery visitor beer, the team has an expanding role in the support of third-party
investment has focused on the Four orners distilleries , len inchie, manufacturing of ready to drin and spirits in Asia-Pacific and Africa.
P C P
aol Ila, lynelish and ardhu, celebrating the important role these avo re ma t everage are made from original base containing
hartered Accountants
single malts play in the flavours of ohnnie al er. The new visitor malt, but then stripped of malt character and flavoured. This product
ondon experiences at len inchie, lynelish and ardhu are now fully segment is implemented mainly in the nited States, anada and the
operational and aol Ila opened in August 2022. The iconic lost aribbean.
31 uly 2023
distillery of Port Ellen is expected to be bac in production in the
ea to rin
summer of 2023.
iageo produces a range of ready to drin products mainly in the nited
In hina, wor continues with our 75 million investment in the
ingdom, Italy, across Africa, Australia, the nited States and anada.
Eryuan malt whis y distillery. It will produce our first hina-origin, single
malt whis y and be carbon-neutral on opening. Raw materials and s ppl agreements
In North America, further capacity expansion projects are now The group has several long-term contracts in place for the purchase of
underway to support future growth including the 2 5 million raw materials, including glass, other pac aging, spirits, cream, rum
construction of a carbon neutral rown Royal distillery in anada to and grapes. Forward contracts are in place for the purchase of cereals
supplement existing manufacturing operations. and pac aging materials to minimise the effects of short-term price
iageo s end-to-end tequila production is in exico, and more fluctuations. The global ocean freight crisis coupled with volatile but
than 500 million dollars is being invested to expand our strong consumer demand, change in consumer habits (for example,
manufacturing footprint through an investment in new facilities in the the increase in e-commerce, the energy crisis, residual impact of
state of alisco to support growth. As part of our expansion and our ovid-19 and impact of the conflict in raine) are the ey drivers of
investments in the tequila category, we have different digital constraints that we are managing through.
transformation projects under implementation at the El harc n i e other consumer goods companies, we eep stoc s in mar ets
production site to respond to the growing demand in tequila and the to compensate for extended lead times and demand volatility. iageo
expansion of our operations. Projects include additional technology is managing well through the current levels of uncertainty and

ADDITIONAL INFORMATION
support and automatisation of our new bottling line on site, which will constraints in our supply chain through expansion of our supplier base
be dedicated to asamigos tequila. The use of technology will allow us and agility in our logistics networ s.
to operate 2 /7. ereals, including barley, wheat, corn and sorghum are used in out
iageo owns a controlling equity sta e in nited Spirits imited scotch and beer production and in our spirits brand through purchased
( S ) which is one of the leading alcoholic beverage companies in neutral spirit. ream is the principal raw material used in the
India selling close to 66 million equivalent units (reported) in fiscal 23 of production of Irish cream liqueur and is sourced from Ireland. rapes
Indian- ade Foreign iquor (I F ) and imported liquors. S has a and aniseed are used in the production of ra i and are sourced from
significant mar et presence across India and operates 12 owned sites, suppliers in Tur ey. Agave is a ey raw material used in the production
as well as a networ of leased and third-party manufacturing facilities of our tequila brands and is sourced from exico. Other raw materials
in India. S owns several Indian brands, such as c owell s (Indian purchased in significant quantities to produce spirits and beer are
molasses, sugar, and several flavours (such as juniper berries, agave,

266 Diageo Annual Report 2023 Diageo Annual Report 2023 267
O O O O contin e

chocolate, and herbs). These are sourced from suppliers around the enforces industry-specific regulations and may apply additional excise Regulatory decisions and changes in the legal and regulatory A S holder is a beneficial owner of ordinary shares or A Ss that is
world. taxes and, in many states, sales taxes. Federal, state and local environment could also increase iageo s costs and liabilities and/or for S federal income tax purposes
any products are supplied to customers in glass bottles. lass in regulations cover virtually every aspect of iageo s S operations, impact on its business activities.
a citi en or resident for tax purposes of the nited States and who is
purchased from a variety of multinational and local suppliers. The including production, importation, distribution, mar eting, promotion,
largest suppliers are Ardagh Pac aging in the nited ingdom and sales, pricing, labelling, pac aging and advertising. a ation not and has at no point been resident in the nited ingdom
This section provides a descriptive summary of certain S federal a S domestic corporation
Owens-Illinois in the nited States. Spirits and beer are subject to national import and excise duties in
income tax and tax consequences that are li ely to be material to an estate whose income is subject to S federal income tax
many mar ets around the world. ost countries impose excise duties
ompetition on beverage alcohol products, although the form of such taxation the holders of the ordinary shares or A Ss, but only those who hold regardless of its source or
iageo s brands compete primarily on the basis of quality and price. Its their ordinary shares or A Ss as capital assets for tax purposes. It does a trust if a S court can exercise primary supervision over the trust s
varies significantly from a simple application to units of alcohol by
business is built on getting the right product to the right consumer for the not purport to be a complete technical analysis or a listing of all administration and one or more S persons are authorised to
volume, to advanced systems based on the imported or wholesale
right occasion, and at the right price, including through ta ing into account potential tax effects relevant to the ownership of the ordinary shares or control all substantial decisions of the trust.
value of the product. Several countries impose additional import duty
ever evolving shopper landscapes, technologies and consumer on distilled spirits, often discriminating between categories (such as A Ss. This section does not apply to any holder who is subject to This section is not intended to provide specific advice and no action
preferences. iageo also see s to recruit and re-recruit consumers to its Scotch whis y or bourbon) in the rate of such tariffs. ithin the special rules, including should be ta en or omitted in reliance upon it. This section addresses
portfolio of brands, including through meaningful consumer engagement, European nion, such products are subject to different rates of excise only certain aspects of S federal income tax and income tax,
a dealer in securities or foreign currency
sustainable innovation and investments in its brands. duty in each country, but within the overall European nion framewor corporation tax, capital gains tax, inheritance tax and stamp taxes.
a trader in securities that elects to use a mar -to-mar et method of
In spirits, iageo s major global competitors are Pernod Ricard, there are minimum rates of excise duties that must first be applied to Holders of the ordinary shares or A Ss are urged to consult their own
accounting for securities holdings
eam Suntory, acardi and rown-Forman, each of which has several each relevant category of beverage alcohol. Following its departure tax advisors regarding the S federal, state and local, and and
a tax-exempt organisation
brands that compete directly with iageo s brands. In addition, iageo from the European nion, the is no longer subject to the European other tax consequences of owning and disposing of the shares or A Ss
a life insurance company
faces competition from regional and local companies in the countries nion s rules on excise duties and will introduce a new alcohol duty in their respective circumstances. In particular, holders are encouraged
a person liable for alternative minimum tax
in which it operates. system from August 2023. The implementation of this system, which to confirm with their advisor whether they are S holders eligible for the
a person that actually or constructively owns 10% or more of the
In beer, iageo also competes globally, as well as on a regional aims to simplify the previous duty regime, could impact iageo s benefits of the Treaty.
combined voting power of voting stoc of iageo or of the total
and local basis (with the profile varying between regions) with several business activities. value of stoc of iageo i idends
competitors, including A In ev, olson oors, Heine en, Import and excise duties can have a significant impact on the final a person that holds ordinary shares or A Ss as part of a straddle or
onstellation rands and arlsberg. pricing of iageo s products to consumers. These duties can affect a ta ation
a hedging or conversion transaction
product s revenue or margin, both by reducing consumption and/or by The company will not be required to withhold tax at source when
Researc and de elopment a person that holds ordinary shares or A Ss as part of a wash sale
paying a dividend.
Innovation forms an important part of iageo s growth strategy, encouraging consumers to switch to lower-taxed categories of for tax purposes or
beverages. The group devotes resources to encouraging the equitable All dividends received by an individual shareholder or A S holder
playing a ey role in positioning its brands for continued growth in both a S holder (as defined below) whose functional currency is not S
taxation treatment of all beverage alcohol categories and to reducing who is resident in the for tax purposes will, except to the extent that
developed and emerging mar ets. The strength and depth of iageo s dollar.
government imposed barriers to fair trading. they are earned through an ISA or other regime which exempts the
brand range also provides a solid platform from which to drive If an entity or arrangement treated as a partnership for S federal dividends from tax, form part of that individual s total income for
sustainable innovation that leads to new products and experiences for The advertising, mar eting and sale of alcohol are subject to
various restrictions in mar ets around the world. These range from a income tax purposes holds ordinary shares or A Ss, the S federal income tax purposes and will represent the highest part of that income.
consumers, whether or not they choose to drin alcohol. iageo income tax treatment of a partner will generally depend on the status A nil rate of income tax will apply to the first 1,000 of taxable
focuses its innovation on its strategic priorities and the most significant complete prohibition of alcohol in certain cultures and jurisdictions,
such as in certain states in India, to the prohibition of the import into a of the partner and the tax treatment of the partnership. A partner in a dividend income received by an individual shareholder in the
consumer opportunities, including the development of global brand partnership holding ordinary shares or A Ss should consult its tax 2023/202 tax year, and to the first 500 of taxable dividend income
extensions and new-to-world products, and continuously invests to certain jurisdiction of spirits and beer, and to restrictions on the
advertising style, media and content. In a number of countries, advisor with regard to the S federal income tax treatment of an received by an individual shareholder in the 202 /2025 tax year (the
deepen its understanding of evolving trends and consumer socialising investment in ordinary shares or A Ss. Nil Rate Amount), regardless of what tax rate would otherwise apply to
occasions to inform product and pac aging development, ranging television is a prohibited medium for the mar eting of spirits brands,
while in other countries, television advertising, while permitted, is For tax purposes, this section applies only to persons who are that dividend income.
from global brand redesigns to cutting edge innovations. Supporting the absolute beneficial owners of ordinary shares or A Ss and who Any taxable dividend income in excess of the Nil Rate Amount will
this, the iageo group has ongoing programmes to develop new carefully regulated. any countries also strictly regulate the use of
internet-based advertising and social media in connection with alcohol hold their ordinary shares or A Ss as investments. It assumes that be subject to income tax at the following special rates (as at the
beverage products which are managed internally by the innovation holders of A Ss will be treated as holders of the underlying ordinary 2023/202 tax year)
and research and development function. sales. Any further prohibitions imposed on advertising or mar eting,
particularly within iageo s most significant mar ets, could have an shares. In addition to those persons mentioned above, this section does
at the rate of 8.75%, to the extent that the relevant dividend income
rademar s and ot er intellect al propert adverse impact on beverage alcohol sales. not apply to holders that are ban s, regulated investment companies,
falls below the threshold for the higher rate of income tax
abelling of beverage alcohol products is also regulated in many other financial institutions, or to persons who have or are deemed to
iageo produces, sells and distributes branded goods, and is therefore at the rate of 33.75%, to the extent that the relevant dividend
mar ets, varying from the required inclusion of health warning labels to have acquired their ordinary shares or A Ss in the course of an
substantially dependent on the maintenance and protection of its income falls above the threshold for the higher rate of income tax
manufacturer or importer identification, alcohol strength and other employment or trade. This summary does not apply to persons who are
trademar s. All brand names mentioned in this document are but below the threshold for the additional rate of income tax and
consumer information. As well as producer, importer or bottler identification, treated as non-domiciled and resident in the nited ingdom for the
protected by trademar s. The iageo group also holds trade secrets, at the rate of 39.35%, to the extent that the relevant dividend income
specific warning statements related to the ris s of drin ing beverage alcohol purposes of tax law.
as well as has substantial trade nowledge related to its products. The falls above the threshold for the additional rate of income tax.
products are required to be included on all beverage alcohol products sold This section is based on the Internal Revenue ode of 1986, as
group believes that its significant trademar s are registered and/or
in the S, in certain countries within the E , and in a number of other amended, its legislative history, existing and proposed regulations, In determining whether and, if so, to what extent the relevant dividend
otherwise protected (insofar as legal protection is available) in all
jurisdictions in which iageo operates. published rulings and court decisions, the laws of the nited ingdom income falls above or below the threshold for the higher rate of income
material respects in its most important mar ets. iageo also owns
Spirits and beer are also regulated in distribution. In many countries, and the practice of His ajesty s Revenue and ustoms (H R ), all as tax or, as the case may be, the additional rate of income tax, the
valuable patents and trade secrets for technology and ta es all
alcohol may only be sold through licensed outlets, both on- and off- currently in effect, as well as on the onvention etween the individual s total taxable dividend income for the tax year in question
reasonable steps to protect these rights.
trade, varying from government- or state-operated monopoly outlets overnment of the nited ingdom of reat ritain and Northern (including the part within the Nil Rate Amount) will, as noted above, be
Reg lations and ta es (for example, in the off-trade channel in Norway, certain anadian Ireland and the overnment of the nited States of America for the treated as the highest part of that individual s total income for income
iageo s worldwide operations are subject to extensive regulatory provinces, and certain S states) to the system of licensed on-trade Avoidance of ouble Taxation and the Prevention of Fiscal Evasion tax purposes.
with Respect to Taxes on Income and apital ains (the Treaty). These Shareholders within the charge to corporation tax which are

ADDITIONAL INFORMATION
requirements relating to production, product liability, distribution, outlets (for example, licensed bars and restaurants) which prevails in
importation, mar eting, promotion, sales, pricing, labelling, pac aging, much of the estern world, including in the majority of S states, in the laws are subject to change, possibly on a retroactive basis. small companies (for the purposes of the taxation of dividends) will
advertising, antitrust, labour, pensions, compliance and control systems and in much of the E . In a number of states in the S, wholesalers In addition, this section is based in part upon the representations of not generally be subject to tax on dividends from the company. Other
and environmental issues. of alcoholic beverages must publish price lists periodically and/or must the epositary and the assumption that each obligation in the eposit shareholders within the charge to corporation tax will not be subject
In the nited States, the beverage alcohol industry is subject to strict file price changes in some instances up to three months before they Agreement and any related agreement will be performed in to tax on dividends from the company so long as the dividends fall
federal and state government regulations. At the federal level, the become effective. In a response to public health concerns, some accordance with its terms. In general, and ta ing into account this within an exempt class and certain conditions are met. In general,
Alcohol and Tobacco Tax and Trade ureau, or TT , of the S Treasury governments have imposed or are considering imposing minimum assumption, for S federal income tax purposes and for the purposes dividends paid on shares that are ordinary share capital for tax
epartment oversees the S beverage alcohol industry, including pricing on beverage alcohol products and may consider raising the of the Treaty, holders of A Rs evidencing A Ss should be treated as purposes and are not redeemable and dividends paid to a person
through regulating and collecting taxes on the production of alcohol legal drin ing age, further limiting the number, type or opening hours the owner of the shares represented by those A Ss. Exchanges of holding less than 10% of the issued share capital of the payer (or any
within the nited States and regulating trade practices. In addition, of retail outlets and/or expanding retail licensing requirements. shares for A Rs, and A Rs for shares, generally will not be subject to class of that share capital) are examples of dividends that fall within an
individual S states, as well as some local authorities in S jurisdictions S federal income tax or to tax on profits or gains. exempt class.
in which iageo sells or produces its products, administers and

268 Diageo Annual Report 2023 Diageo Annual Report 2023 269
O O O O con tin u ed

ta ation a ation of capital gains in eritance ta ased on H R s published practice, no stamp duty will be
nder the S federal income tax laws, and subject to the passive ta ation Subject to certain provisions relating to trusts or settlements, an payable on the acquisition or transfer of A Rs. Furthermore, an
foreign investment company (PFI ) rules discussed below, the gross A citi en or resident (for tax purposes) of the nited States who has at ordinary share or A S held by an individual shareholder who is agreement to transfer A Ss in the form of A Rs will not give rise to a
amount of any distribution (other than certain pro rata distribution of no time been resident in the nited ingdom will not be liable for domiciled in the nited States for the purposes of the onvention liability to S RT.
ordinary shares) paid to a S holder by iageo in respect of its tax on capital gains realised or accrued on the sale or other disposal of between the nited States and the nited ingdom relating to estate Purchases of ordinary shares (as opposed to A Rs) will be subject to
ordinary shares or A Ss out of its current or accumulated earnings and ordinary shares or A Ss, unless the ordinary shares or A Ss are held in and gift taxes (the onvention) and who is neither domiciled in the stamp duty, and/or S RT as the case may be, at the rate of 0.5% of the
profits (as determined for S federal income tax purposes) will be connection with a trade or business carried on by the holder in the nor (where certain conditions are met) a national (as defined in the price payable for the ordinary shares at the time of the transfer. Stamp duty
treated as a dividend that is subject to S federal income taxation. nited ingdom through a branch, agency or a permanent onvention), will generally not be subject to inheritance tax on the applies where a physical instrument of transfer is used to effect the transfer.
ividends paid to a non-corporate S holder that constitute establishment. A disposal (or deemed disposal) of shares or A Ss by a individual s death (whether held on the date of death or gifted during S RT applies to any agreement to transfer ordinary shares (regardless of
qualified dividend income will be taxed at the preferential rates holder who is resident in the nited ingdom may, depending on the the individual s lifetime) except where the ordinary share or A S is part whether or not the transfer is effected electronically or by way of an
applicable to long-term capital gains, provided that the ordinary shares holder s particular circumstances, and subject to any available of the business property of a permanent establishment of the instrument of transfer). However, where ordinary shares being acquired are
or A Ss are held for more than 60 days during the 121-day period exemption or relief, give rise to a chargeable gain or an allowable loss individual or pertains to a fixed base of an individual who performs transferred direct to the epositary s nominee, the only charge will generally
beginning 60 days before the ex-dividend date and the holder meets for the purposes of tax on capital gains. independent personal services. In a case where an ordinary share or be the higher charge of 1.5% of the price payable for the ordinary shares so
other holding period requirements. ividends paid by iageo with A S is subject both to inheritance tax and to S federal gift or acquired.
respect to its ordinary shares or A Ss generally will be qualified ta ation estate tax, the onvention generally provides for inheritance tax paid Any stamp duty payable (as opposed to S RT) is rounded up to the
dividend income to S holders that meet the holding period Subject to the PFI rules discussed below, a S holder who sells or in the nited ingdom to be credited against federal gift or estate tax nearest 5. No stamp duty (as opposed to S RT) will be payable if the
requirement, provided that, in the year that you receive the dividend, otherwise disposes of ordinary shares or A Ss will recognise capital payable in the nited States, or for federal gift or estate tax paid in the amount or value of the consideration is (and is certified to be) 1,000
we are eligible for the benefits of the Treaty. e believe that we are gain or loss for S federal income tax purposes equal to the difference nited States to be credited against any inheritance tax payable in the or less. Stamp duty and S RT are usually paid or borne by the
currently eligible for the benefits of the Treaty and we therefore expect between the S dollar value of the amount that is realised and the tax nited ingdom, based on priority rules set forth in the onvention. purchaser.
that dividends on the shares or A Ss will be qualified dividend income, basis, determined in S dollars, in the ordinary shares or A Ss. apital hilst stamp duty and S RT may in certain circumstances both
but there can be no assurance that we will continue to be eligible for gain of a non-corporate S holder is generally taxed at preferential stamp d t and stamp d t reser e ta apply to the same transaction, in practice usually only one or other will
the benefits of the Treaty. nder law, dividends paid by the rates where the property is held for more than one year. The gain or Stamp duty and stamp reserve tax (S RT) may arise upon the deposit need to be paid.
company are not subject to withholding tax. Therefore, the S loss will generally be income or loss from sources within the nited of an underlying ordinary share with the epositary, generally at the
holder will include in income for S federal income tax purposes the States for foreign tax credit limitation purposes. higher rate of 1.5% of its issue price or, as the case may be, of the
amount of the dividend received, and the receipt of a dividend will not consideration for transfer. The epositary will pay the stamp duty or
r les S RT but will recover an amount in respect of such tax from the initial
entitle the S holder to a foreign tax credit.
iageo believes that ordinary shares and A Ss should not currently be holders of A Ss. Following litigation, however, H R have confirmed
The dividend must be included in income when the S holder, in the
treated as stoc of a PFI for S federal income tax purposes, and we that they will no longer see to apply the 1.5% S RT charge on an issue
case of shares, or the epositary, in the case of A Ss, receives the
do not expect to become a PFI in the foreseeable future. However this of shares to a depositary receipt issuer or to a person providing
dividend, actually or constructively. The dividend will not be eligible for
conclusion is a factual determination that is made annually and thus clearance services (or their nominee or agent) on the basis that this is
the dividends-received deduction generally allowed to S corporations
may be subject to change. It is therefore possible that we could not compatible with E law. H R may continue to apply the 1.5%
in respect of dividends received from other S corporations. ividends
become a PFI in a future taxable year. stamp duty or S RT charge on transfers of shares to a depositary
will generally be income from sources outside the nited States and
If treated as a PFI , gain realised on the sale or other disposition of receipt issuer or to a person providing clearance services (or their
will generally be passive income for purposes of computing the
ordinary shares or A Ss would in general not be treated as capital gain. nominee or agent) unless the transfer is an integral part of a raising of
foreign tax credit allowable to a S holder. The amount of the dividend
Instead, unless a S holder elects to be taxed annually on a mar -to-mar et capital. H R s current practice states that the 1.5% charge on issues
distribution that must be included in income of a S holder will be the
basis with respect to the ordinary shares or A Ss, S holders would be will remain disapplied following rexit unless the stamp taxes on shares
S dollar value of the pounds sterling payments made, determined at
treated as if the holder had realised such gain and certain excess legislation is amended. However, since the is no longer bound by
the spot pounds sterling/ S dollar foreign exchange rate on the date
distributions pro-rated over the holder s holding period for the ordinary E law, the position may change, possibly as a result of any changes in
of the dividend distribution, regardless of whether the payment is in fact
shares or A Ss and would be taxed at the highest tax rate in effect for each the status of retained E law.
converted into S dollars. enerally, any gain or loss resulting from
such year to which the gain or distribution was allocated, together with an
currency exchange fluctuations during the period from the date the
interest charge in respect of the tax attributable to each such year. ith
dividend payment is distributed to the date the payment is converted
certain exceptions, a holder s ordinary shares or A Ss will be treated as
into S dollars will be treated as ordinary income or loss and will not
stoc in a PFI if iageo were a PFI at any time during the holding period
be eligible for the special tax rate applicable to qualified dividend
in a holder s ordinary shares or A Ss. In addition, dividends received from
income. The gain or loss generally will be income or loss from sources
iageo will not be eligible for the special tax rates applicable to qualified
within the nited States for foreign tax credit limitation purposes.
dividend income if iageo is a PFI (or is treated as a PFI with respect to
istributions in excess of current and accumulated earnings and profits,
the holder) either in the taxable year of the distribution or the preceding
as determined for S federal income tax purposes, will be treated as a
taxable year, but instead will be taxable at rates applicable to ordinary
non-taxable return of capital to the extent of the holder s basis in the
income. If you own our shares or A Ss during any year that we are a PFI
ordinary shares or A Ss and thereafter as capital gain. However,
with respect to you, you may be required to file IRS Form 8621.
iageo does not expect to calculate earnings and profits in
accordance with S federal income tax principles. Accordingly, a S
holder should expect to generally treat distributions iageo ma es as
dividends.

270 Diageo Annual Report 2023 Diageo Annual Report 2023 271
 ITI O I FOR TIO FOR S RE O ERS

c ange controls
dditional Other than certain economic sanctions which may be in effect from
time to time, there are currently no foreign exchange control

information for restrictions on the payment of dividends, interest or other payments to

holders of iageo s securities who are non-residents of the
conduct of iageo s operations.
or on the

s a e e s There are no restrictions under the company s articles of association

or under English law that limit the right of non-resident or foreign
owners to hold or vote the company s ordinary shares.
Please refer to the Taxation section on pages 269-271 for details
nn al eneral eeting ( ) relating to the taxation of dividend payments.
The A will be held at etc.venues St Paul s, 200 Aldersgate, ondon
E 1A H at 2.30 pm on Thursday, 28 September 2023. sef l contacts
oc ments on displa e Registrar are older eries
The Annual Report on Form 20-F and any other documents filed by the in roup acts as the company s registrar and can be contacted as
company with the S Securities Exchange ommission (SE ) may be follows
inspected at the SE s office of Investor Education and Advocacy y email iageo lin group.co.u
located at 100 F Street, NE, ashington, 205 9-0213, SA. Please y telephone (0) 371 277 1010
call the SE at 1-800-SE -0330 for further information on the public In writing Registrars in roup, iageo Registrar, entral Square, 29
reference rooms and their copy charges. Filings with the SE are also ellington Street, eeds, S1 1 .
available to the public from commercial document retrieval services,
alls are charged at the standard geographic rate and will vary by provider. alls
and from the website maintained by the S Securities and Exchange outside the nited ingdom will be charged at the applicable international rate. ines
ommission at www.sec.gov. are open 08 00 to 17 30 time, onday to Friday, excluding public holidays in
England and ales.
arning to s are olders s are fra d
R administration
Please beware of the share fraud of boiler room scams, where itiban Shareholder Services acts as the company s A R
shareholders are called out of the blue by fraudsters (sometimes claiming administrator and can be contacted as follows
to represent iageo) attempting to obtain money or property dishonestly.
Further information on boiler room scams can be found on the Financial y email citiban shareholders-online.com
onduct Authority s website (https //www.fca.org.u / scamsmart/share- y telephone 1 866 253 0933/ (International) 1 781 575 555
bond-boiler-room-scams) but in short, if in doubt, ta e proper professional In writing itiban Shareholder Services. PO ox 3077,
advice before ma ing any investment decision. Providence, RI 029 0-3077
ines are open onday to Friday 8 30 to 18 00 EST
lectronic comm nications
Shareholders can register for an account to manage their shareholding eneral o nsel and ompan ecretar
online, including being able to chec the number of shares they own Tom Shropshire
and the value of their shareholding register for electronic The.cosec diageo.com
communications update their personal details provide a dividend

FINANCIAL STATEMENTS
mandate instruction access dividend confirmations and use the online n estor Relations
share dealing service. To register for an account, shareholders should investor.relations diageo.com
visit www.diageoregistrars.com.

i idend pa ments
irect pa ment into an acco nt
Shareholders can have their cash dividend paid directly into their
ban account on the dividend payment date. To register ban
account details, shareholders can register for an online account at
www.diageoregistrars.com or call the Registrar on (0)371 277 1010
to request the relevant application form. For shareholders outside the
, in roup (a trading name of in ar et Services imited and
in ar et Services Trustees imited) may be able to provide you with
a range of services relating to your shareholding. To learn more about
the services available to you please visit the shareholder portal at
www.diageoregistrars.com or call (0)371 277 1010 .
i idend Rein estment lan
A ividend Reinvestment Plan is offered by the Registrar, in ar et
Services Trustees imited, to give shareholders the opportunity to build
up their shareholding in iageo by using their cash dividends to
purchase additional iageo shares. To join the ividend Reinvestment
Plan, shareholders can call the Registrar, in roup on
(0)371 277 1010 to request the relevant application form.
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Printed by Paragon Customer Communications, an FSC®
and ISO 140001 certified company.
Consultancy and design by Black Sun Global

272 Diageo Annual Report 2023

Celebrating life,
every day, everywhere

Diageo plc
16 Great Marlborough Street
London
W1F 7HS
United Kingdom
T: +44 (0) 20 7947 9100
www.diageo.com
Registered in England
No. 23307

© 2023 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.