deo-20240630

Statement on Section 172 of the Companies Act 2006

Section 172 of the Companies Act
2006 requires the Directors to
promote the success of the company
for the benefit of the members as a
whole, having regard to the interests
of stakeholders in their decision-
making. In making decisions, the

Directors consider what is most likely
to promote the success of the
company for its shareholders in the
long-term, as well as the interests of
the group’s stakeholders.
The Directors understand the
importance of taking into account the
views of stakeholders

and the impact of the company’s
activities on local communities, the
environment, including climate
change, and the group’s reputation.

Read more about how stakeholders were taken into
account in decision-making on pages 165-171.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES

EXCHANGE ACT OF 1934

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended: 30 June 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from __ to __

Commission file number 1-10691

DIAGEO plc

(Exact name of Registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organisation)

16 Great Marlborough Street, London W1F 7HS, England

(Address of principal executive offices)

Thomas B. Shropshire, Jr., General Counsel & Company Secretary

Tel: +44 20 7947 9100

E-mail: the.cosec@diageo.com

16 Great Marlborough Street, London W1F 7HS, England

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
American Depositary Shares	DEO	New York Stock Exchange
Ordinary shares of 28101/108 pence each		New York Stock Exchange(i)

(i)Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements

of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period

covered by the Annual Report: 2,432,411,924 ordinary shares of 28101/108 pence each.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No þ

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file

such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the

registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an

emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in

Rule 12b-2 of the Exchange Act :


Large Accelerated Filer	þ	Accelerated Filer	☐	Non-Accelerated Filer	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by checkmark if

the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards† provided pursuant to Section 13(a) of the Exchange Act. ¨


†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by

the registered public accounting firm that prepared or issued its audit report. þ

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the

registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive

based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this

filing:


U.S. GAAP ¨	International Financial Reporting Standards		Other ¨
	as issued by the International Accounting Standards Board	☑

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the

registrant has elected to follow. Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the

Exchange Act). Yes ☐ No þ



Item	Required item in Form 20-F	Page(s)
Part I
1.	Identity of directors, senior management and advisers	Not applicable
2.	Offer statistics and expected timetable	Not applicable
3.	Key information
	A. [Reserved]	—
	B. Capitalisation and indebtedness	Not applicable
	C. Reason for the offer and use of proceeds	Not applicable
	D. Risk factors	134-144
4.	Information on the company
	A. History and development of the company	7-8, 17, 64-65, 93-94, 158-159, 225, 260-264, 344-345, 351
	B. Business overview	7-8, 17, 20-24, 48-59, 61-62, 75-76, 80-89, 91-92, 102-103, 114-119, 135-139, 144, 158-159, 241-245, 264-271, 344-346
	C. Organisational structure	309
	D. Property, plant and equipment	49, 76, 269-272, 344-345
4A.	Unresolved staff comments	Not applicable
5.	Operating and financial review and prospects
	A. Operating results	17, 20-22, 38-40, 43-96, 132-135, 137-138, 141-142, 238-250, 252-253, 311-312
	B. Liquidity and capital resources	38-40, 46-47, 68-73, 79, 281-294, 316-317
	C. Research and development, patents and licenses, etc.	250, 345
	D. Trend information	17, 20-24, 43, 48-65, 74-76, 80-94, 132-133
	E. Critical Accounting Estimates	186, 238-239
6.	Directors, senior management and employees
	A. Directors and senior management	153-160
	B. Compensation	96, 192-221, 274-280, 309
	C. Board practices	18, 148-162, 176-179, 184-185, 192-194
	D. Employees	48, 75, 105-107, 251, 346
	E. Share ownership	192-223, 301-302
	F. Disclosure of a registrant’s action to recover erroneously awarded compensation	Not applicable
7.	Major shareholders and related party transactions
	A. Major shareholders	226
	B. Related party transactions	308-309
	C. Interests of experts and counsel	Not applicable
8.	Financial information
	A. Consolidated statements and other financial information	233-310
	B. Significant changes	10, 186, 238-239, 316, 318
9.	The offer and listing
	A. Offer and listing details	158, 226-227, 347-348
	B. Plan of distribution	Not applicable
	C. Markets	158, 226-227
	D. Selling shareholders	Not applicable
	E. Dilution	Not applicable
	F. Expenses of the issue	Not applicable

Cross reference to Form 20-F



Item	Required item in Form 20-F	Page(s)
10.	Additional information
	A. Share capital	Not applicable
	B. Memorandum and articles of association	158-159, 225-229
	C. Material contracts	72, 225, 345
	D. Exchange controls	351
	E. Taxation	255-259, 346-350
	F. Dividends and paying agents	Not applicable
	G. Statement by experts	Not applicable
	H. Documents on display	351
	I. Subsidiary information	Not applicable
11.	Quantitative and qualitative disclosures about market risk	284-294
12.	Description of securities other than equity securities
	A. Debt securities	Not applicable
	B. Warrants and rights	Not applicable
	C. Other securities	Not applicable
	D. American depositary shares	226-227, 347-350
Part II
13.	Defaults, dividend arrearages and delinquencies	Not applicable
14.	Material modifications to the rights of security holders and use of proceeds	Not applicable
15.	Controls and procedures
	A. Disclosure controls and procedures	177
	B. Management’s report on internal control over financial reporting	185
	C. Attestation report of the registered public accounting firm	230-232
	D. Changes in internal control over financial reporting	185
16A.	Audit committee financial expert	183
16B.	Code of ethics	159, 183
16C.	Principal accountant fees and services	180-182, 251
16D.	Exemptions from the listing standards for audit committees	Not applicable
16E.	Purchases of equity securities by the issuer and affiliated purchasers	236, 297-302
16F.	Change in registrant’s certifying accountant	Not applicable
16G.	Corporate governance	158-164, 173-190
16H.	Mine safety disclosure	Not applicable
16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	Not applicable
16J.	Insider trading policies	183
16K.	Cybersecurity	187
Part III
17.	Financial statements	Not applicable
18.	Financial statements	230-310
19.	Exhibits	353-354
Additional information
	Glossary of terms and US equivalents	356-357

Cross reference to Form 20-F (continued)

Diageo is a global leader in the beverage alcohol industry with an outstanding collection of brands across spirits and beer. Its products

are sold in nearly 180 countries around the world and its brands include Johnnie Walker, Crown Royal, JεB and Buchanan’s whiskies,

Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Casamigos, Tanqueray and Guinness. Diageo’s

Performance Ambition is to be one of the best performing, most trusted and respected consumer products companies in the world.

Diageo plc is incorporated as a public limited company in England and Wales. The company which is now Diageo plc was

incorporated as Arthur Guinness Son and Company Limited on 21 October 1886. The Diageo group was formed by the merger of the

Grand Metropolitan Public Limited Company and Guinness plc groups in December 1997. Diageo plc’s principal executive office is

located at 16 Great Marlborough Street, London W1F 7HS, England and its telephone number is +44 (0) 20 7947 9100. Diageo plc’s

agent for service in the United States for the purposes of Diageo’s registration statement on Form F-3 (333-269929) is General

Counsel, Diageo North America, Inc., 175 Greenwich Street, 3 World Trade Center, New York, NY 10007.

This is the Annual Report on Form 20-F of Diageo plc for the year ended 30 June 2024. The information set out in this Form 20-F

does not constitute Diageo plc’s statutory accounts under the UK Companies Act for the years ended 30 June 2024, 30 June 2023 and/

or 30 June 2022. The accounts for the years ended 30 June 2023 and 30 June 2022 have been delivered to the registrar of companies

for England and Wales and those for the year ended 30 June 2024 will be delivered to the registrar of companies for England and

Wales in due course.

This document contains forward-looking statements that involve risk and uncertainty because they relate to, and are dependent upon,

events and circumstances that will occur in the future. There are a number of factors that could cause actual results and developments

to differ materially from those expressed or implied by these forward-looking statements, including factors beyond Diageo’s control.

For more details, please refer to the Cautionary statement concerning forward-looking statements on pages 132-133.

This document may contain inactive textual addresses to websites operated by Diageo (including www.diageo.com) and third parties.

Reference to such websites is made for information purposes only, and any information found at such websites does not form a part of

this document and is not incorporated by reference into this document. Diageo does not make any representation or warranty with

respect to the accuracy or completeness of, or take any responsibility for, any information found at any websites operated by third

parties. This report includes names of Diageo’s products, which constitute trademarks or trade names which Diageo owns or which

others own and license to Diageo for use. In this report, the term ‘company’ refers to Diageo plc and terms ‘group’ and ‘Diageo’ refer

to the company and its consolidated subsidiaries, except as the context otherwise requires. A glossary of terms used in this report is

included at the end of the report.

The consolidated financial statements are prepared in accordance with IFRS® Accounting Standards (IFRSs) adopted by the UK (UK-

adopted International Accounting Standards) and IFRSs, as issued by the International Accounting Standards Board (IASB), including

interpretations issued by the IFRS Interpretations Committee. IFRS as adopted by the UK differs in certain respects from IFRS as

issued by the IASB. The differences have no impact on the group’s consolidated financial statements for the years presented. The

consolidated financial statements are prepared on a going concern basis under the historical cost convention, unless stated otherwise in

the relevant accounting policy.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

Introduction

Disclosures not included in Annual Report on Form 20-F

The following pages and sections of this document do not form part of the Annual Report on Form 20-F and are furnished to the SEC

for information only:

•Disclosures under the heading ‘Fiscal 24 non-financial performance’ on page 10.

•Disclosures under the headings ‘Whether you’re heading out…’ and ‘Diageo has a portfolio of iconic brands’ on pages 11 to

14.

•Disclosures under the heading ‘Diageo’s competitive advantages in an attractive industry’ on pages 15 to 16.

•Disclosures under the headings ‘Investing for the future’, ‘Employee engagement’ and ‘‘Spirit of Progress’: refreshing our

approach to ESG’ in the Chair’s statement on pages 17 to 18.

•Disclosures under the heading ‘Statement on Section 172 of the Companies Act 2006’ on page 19.

•Disclosures under the headings ‘Resilient performance in a challenging environment’, ‘Performance in our largest

categories’, ‘Guinness delivered its fourth fiscal year of double-digit growth’, ‘Doing business the right way:‘Spirit of

Progress’’, ‘Our people and leadership’ and ‘Outlook’ in the Chief Executive’s statement on pages 20 to 22.

•Disclosures under the heading ‘Our Growth Ambition’ on page 25.

•Disclosures under the headings ‘Strategy’ and ‘Enablers’ on page 26.

•Disclosures under the heading ‘Unleash the power of our brands and portfolio’ on page 27.

•Disclosures under the heading ‘Teaming up with the world’s biggest sporting events’ on page 28.

•Disclosures under the heading ‘To lead and shape consumer trends’ on page 30.

•Disclosures under the heading ‘Taking tequila around the world’ on page 31.

•Disclosures under the heading ‘Executed with operational excellence’ on page 33.

•Disclosures under the heading ‘F24 saw a record delivery of nearly $700 million in productivity benefits unlocked’ on page

34.

•Disclosures under the heading ‘Our strategy is underpinned by three enablers’ on pages 36 to 37.

•Disclosures under the heading 'Health and safety' on pages 107 to 109.

•Disclosures under the headings ‘Stakeholder engagement’, ‘Wider stakeholder engagement’ and ‘Workforce Engagement

statement’ on pages 165 to 174.

•Disclosures under the headings ‘Internal control and risk management’, ‘Viability statement’, ‘Going concern’, and ‘Political

donations’ on page 176.

•Disclosures under the headings ‘Disclosure of information to the auditor’ and ‘Corporate governance statement’ on page 225.

•Disclosures under the heading ‘Reporting boundaries and methodologies’ on pages 322 to 343.

Introduction (continued)

Strategic report

Diageo

Diageo is a global leader in Total Beverage Alcohol (TBA) and one of the world’s most successful brand builders. Our ambition is to

create one of the best performing, most trusted and respected, consumer products companies in the world.

P E R F O R M A N C E S N A P S H O T

Fiscal 24 financial performance


Volume (equivalent units)		Net sales(2)		Operating profit
EU230.5m		$20,269m		$6,001m
(2023: EU243.4m)		(2023: $20,555m)		(2023: $5,547m)
Reported movement	(5)%	Reported movement	(1)%	Reported movement	8%
Organic movement(1)	(4)%	Organic movement(1)	(1)%	Organic movement(1)	(5)%

Net cash from operating activities		Earnings per share (eps)		Total recommended dividend per share(3)
$4,105m		173.2c		103.48c
(2023: $3,636m)		(2023: 196.3c)		(2023: 98.55c)
2024 free cash flow(1)	$2,609m	Reported movement	(12)%	Increase	5%
2023 free cash flow(1)	$2,235m	Eps before exceptional items movement(1)	(9)%

Visit diageo.com for more information.

Fiscal 24 non-financial performance

Positive drinking

Inclusion and

diversity

Water efficiency -

across the

company

Greenhouse gas

emissions

2.2m

44%

(15.6)%

(23.8)%

(2023: 1.9m)

(2023: 44%)

(2023: (12.3)%)

(2023: (14.7)%)

Number of people

educated on the

dangers of underage

drinking through a

Diageo supported

education

programme

Percentage of female leaders

globally

Percentage change in water

efficiency compared to fiscal

20 baseline

Percentage change in total

direct and indirect greenhouse

gas emissions (market/net

based) compared to fiscal 20

baseline

46%

(2023: 43%)

Percentage of ethnically

diverse leaders globally

(1) See definitions and reconciliation of non-GAAP measures to GAAP measures on pages 311-321.

(2) Net sales are sales less excise duties

(3) Includes recommended final dividend of 62.98c.

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 311-321. Share refers to value share. Percentage figures presented are reflective of a year-on-year comparison, namely

2023-2024, unless otherwise specified.

Starting 1 July 2023, in line with reporting requirements, the functional currency of Diageo plc changed from sterling to US dollar which is applied prospectively.

Diageo also decided to change its presentation currency to US dollar with effect from 1 July 2023, applied retrospectively, as it believes that this change will

provide better alignment of the reporting of performance with its business exposures. Please see more information on page 238 under Accounting information and

policies.

Diageo has a portfolio of iconic brands

With over 200 brands and sales in nearly 180 countries, our portfolio brings together some of the most iconic brands from around the

globe that consumers have enjoyed for generations.

Our consumer insights, strong sense of purpose and pursuit of financial excellence underpin our passion to continue to be one of the

best brand builders in the world and create value for our stakeholders. We are proud custodians of 13 billion-dollar brands including

Johnnie Walker, Smirnoff, Guinness, Don Julio, Crown Royal, Baileys and Tanqueray.

We have built number one global positions in scotch, vodka, tequila, Canadian whisky, liqueurs and gin.(1)

Consumers are choosing to drink better, not more, and our advantaged portfolio, positioned towards fast-growing categories, allows

the consumer to premiumise through our extensive price ladder as well as attracting the recruitment of new, legal purchase age and

above (LPA+) consumers.

Many of our much-loved and established brands have a unique heritage, but we do not stand still. Diageo's ambition is to create one of

the best performing, most trusted and respected consumer products companies in the world. We move at pace to unleash the power of

our brands and portfolio to lead and shape consumer trends, and we execute decisively with operational excellence.

Alongside our brands, Diageo's entrepreneurial, talented and diverse workforce of more than 30,000 people globally are our biggest

asset. Led by a highly experienced Executive Committee, Diageo aims to help our consumers celebrate life, every day, everywhere,

and capture the next phase of growth in the TBA industry.

Our global footprint drives resilient growth

Share of reported net sales by region(2)(3)

(%)

(1) IWSR, 2023.

(2) The above map is intended to illustrate general geographic regions where Diageo has a presence and/or in which its products are sold. It is not intended to imply that

Diageo

has a presence in and/or that its products are sold in every country or territory within a geographic region

(3) Based on reported net sales for the year ended 30 June 2024. Does not include corporate net sales of $123 million (2022–$104 million).

MARKET OVERVIEW AND INVESTMENT CASE

Diageo’s competitive advantages in an attractive industry


Strong and resilient market dynamics…
Total Beverage Alcohol (TBA) is a highly attractive and exciting consumer category. TBA is resilient and growing; and the spirits category is growing even faster. TBA has grown at 4.4% CAGR in the 10 years through to 2023, and international spirits has grown at 5.1% over the same period.(1)
1	Consumers are choosing spirits
	Diageo sees a long-term trend of consumers choosing to switch to spirits from beer and wine. Spirits growth is supported by favourable population demographics, the increasing size of the middle class in key markets globally and strong premiumisation trends. These are expected to continue into the future.
2	People are drinking better, not more
	Spirits' long-term value growth is also driven by premiumisation as consumers want to drink better, not more. In the last 10 years, premium and above spirits grew from 26% of category value to almost 35%. The super-premium plus price-tier has grown in value more than two times faster than other price tiers in the category. This price tier gained 700 basis points of share of international spirits retail sales value (RSV) since 2013.(1)
3	Long runway for growth
	In 2021, we set out our ambition to grow TBA share by 50% from 4% to 6% by 2030. With 4.5% value share of TBA(1) currently, we have significant headroom for sustainable long-term growth.


aligned to our competitive advantages:

	Leading world-class brands
	•We have a proven track record in developing powerful global brands. For example, Johnnie Walker’s RSV has increased over 400% since 2002.(2) •Diageo brands have driven around 17% of total absolute dollar growth in the international spirits category since 2018.(1) •Our strategic M&A activities and reputation for active portfolio management position Diageo for sustainable long-term growth.
	Advantaged geographic footprint
	•Our geographic footprint gives us access to consumers in the world’s largest markets, such as the United States, as well as the vibrant markets of India and China. •Diageo’s geographic diversification supports resilient performance through global volatility.
	Broad portfolio across price points
	•Our advantaged portfolio enables trading up and down our extensive price ladder; whether our consumers are looking for a Smirnoff and soda or a Don Julio 1942 on the rocks, Diageo's portfolio offers consumer choice. •Our diverse and balanced portfolio enables us to respond quickly to emerging and growing category trends.
	Diverse and talented workforce
	•Our Executive Committee combines home-grown talent with externally recruited leaders who bring invaluable market experience, a wealth of functional expertise and fresh perspectives. •Our talented management team and broader workforce enable us to respond flexibly and quickly to current and future challenges. •Our global employee survey, Your Voice, remains above external benchmarks with 81% engagement levels and 89% expressing pride in working for Diageo.

(1) IWSR, 2023.

(2) Diageo consumption data.


	...positioning us to drive:

	Continued discipline of growth algorithm
	•Driving long-term sustainable growth is our priority, and we believe our growth algorithm continues to support this, through winning quality market share. •Price and mix, driven by long-term premiumisation and enabled by Revenue Growth Management, remain a consistent and core part of our top-line growth. •Since fiscal 18, we have generated annual savings of approximately $500 million through productivity savings, efficiencies and disciplined cost control and utilising our scale to fuel our investments. •We take the benefits of growth, productivity and operating leverage to reinvest smartly in brand building to drive quality market share – firmly balancing short-term share gains, while building for long-term sustainable growth.
	A disciplined approach to capital allocation
	•We prioritise organic investment for long-term growth: maturing stock (increased from $5.3 billion in fiscal 18 to $7.8 billion in fiscal 24) and capex (increased from $0.8-0.9 billion per annum fiscal 18-21 to $1.4-1.5 billion per annum fiscal 22-24, driven by capacity increases). •Active and disciplined portfolio management ($2.8 billion invested in acquisitions and $1.6 billion generated from disposals since fiscal 18). •We have grown our dividend year on year for 25 years (dating back to fiscal 2000). •Through fiscal 23, circa £25 billion has been returned to shareholders in dividends and share buybacks over the preceding 10 years. •We also returned $1 billion of excess capital, via share buybacks, during fiscal 24.
	A robust strategy and clear ambition that will....
	Build towards the next phase of our ambition to achieve TBA share of 6% by 2030. Our strategy to unleash the power of our brands and portfolio includes: •Sustaining the momentum in our global brands of Guinness, Johnnie Walker and Don Julio while driving regional growth opportunities like Crown Royal in North America and accelerating malt whiskey in Asia Pacific. •Leading and shaping key consumer trends, including tapping into the convenience, moderation and with food occasions to recruit new consumers into new occasions at scale. •Continuing to focus on operational excellence, including strengthening our route-to-market and evolving our approach to A&P efficiency, while driving accelerated productivity and allocating resources with discipline.

Chair's statement

“It has been a true privilege to lead Diageo’s Board. I look forward to working with John, the Board and all my Diageo colleagues to

ensure a smooth transition over the coming months.”

Long-term view of the business

Fiscal 24 has been a year of challenge and change for Diageo as we navigated global economic and sectoral volatility, set new

priorities, and appointed Directors to our Board.

Despite the global economic and political headwinds we face, the Total Beverage Alcohol (TBA) industry remains an attractive and

exciting sector. TBA has grown at a 4.4% compound annual growth rate (CAGR) over the past decade, and international spirits has

grown at 5.1% as measured by IWSR(1) over the same period, while premium beer where Guinness competes has also grown ahead of

TBA.

We are confident in the long term trend of sector premiumisation and we believe that it will continue, supported by demographic

trends, rising incomes in developing markets and spirits continuing to take share from beer and wine. Diageo’s advantaged portfolio is

balanced across geographies and price tiers, and in 2021, we set out our ambition to increase our share of TBA to 6% by 2030. This

year, we set strategic priorities that will drive future performance and position Diageo to capture the next phase of growth: we plan to

drive growth in our largest categories, lead and shape consumer trends and occasions, and raise the bar on execution.

As this report sets out, we are executing decisively against our growth ambition across our advantaged footprint, reinvesting behind

our business and actively managing our portfolio through disciplined acquisitions and disposals.


Recommended final dividend per share			Total dividend per share(1)
62.98c			5% to 103.48c
2023: 59.98c			2023: 98.55c
Total shareholder return (1 year)			Total shareholder return (10 year)
(24)%			6%
2023: (2)%			2023: 9%

(1) Includes recommended final dividend of 62.98c

Fiscal 24 performance

In fiscal 24, organic net sales were down 0.6% with positive price/mix performance mostly mitigating a decline in volume. Excluding

our Latin America and Caribbean region (LAC), the business grew organic net sales by 1.8%. Organic operating margin declined by

130bps, primarily driven by LAC. Organic operating profit declined 4.8%, as a result of the organic net sales decline, primarily due to

LAC and North America. The decline was also driven by an increase in investments in strategic capabilities, including in digital and

strengthening route-to-market, primarily in the United States (US), and in marketing.

We generated free cash flow of $2.6 billion. Strong working capital management and lower tax payments more than offset the

combined impact of the decline in operating profit, higher interest payments and increased investment in capex. Pre-exceptional

earnings per share declined mainly due to lower operating profit and higher finance charges. We increased our dividend by 5%,

reflecting our continued confidence in the long-term potential of the business and our commitment to a progressive dividend policy.

Despite the 12‐month Total Shareholder Return (TSR) of -24% for fiscal 24, the ten-year TSR remains solid at 6%.

Investing for the future

Diageo remains committed to delivering value for shareholders. Investing capital in maturing inventory and related production

capacity is key to delivering long-term sustainable growth. Our total maturing inventories have increased more than 42% over the past

five years, resulting in $7.8 billion of total aged inventory by the end of fiscal 24, up $0.5 billion compared to the prior year. Scotch is

our largest category, accounting for 24% of group net sales and comprising the majority of the value of our maturing inventories, which

may be held for periods ranging from a minimum of three years to, in some cases, more than 70 years.

‘Spirit of Progress’: refreshing our approach to ESG

We are now nearly five years on from the launch of 'Spirit of Progress’, our action plan on Environmental, Social and Governance

(ESG) issues. We have reflected on our progress to date, what we have learned so far and refreshed our focus for the critical years

ahead. We have simplified and prioritised the goals that form our 'Spirit of Progress' plan. This has allowed us to prioritise the areas

that are most material to our business including reducing the harmful use of alcohol, combating water stress and the impact of climate

change. We are also accelerating our work advocating for responsible alcohol consumption and water replenishment activities in the

communities in which we operate.

I am encouraged by the progress we have made this year on our positive drinking agenda. We have long championed awareness on the

risks of drink driving, including collaborating with law enforcement and local authorities. In 2021, we launched the Wrong Side of the

Road (WSOTR) digital learning resource with the United Nations Institute for Training and Research, aimed at raising awareness

about the consequences of drink driving on individuals and communities. WSOTR is available in digital and classroom formats and is

now live in 24 countries, and in fiscal 24, we reached more than one million people through WSOTR and other drink driving

programmes. We have now reached more than 2 million people since fiscal 20. To embed the message of moderation in culture in

APAC we have partnered with K-Pop star SUHO to produce a new song and music video, 'Savour every moment'. This is the first

time that responsible drinking messaging is conveyed through K-Pop.

We are steadfast in our focus on water by improving water efficiency at our own sites, investing in water replenishment and collective

action. For example, we are committed to replenishing more water than we use in our tequila operations in Mexico by 2026, and

mobilising collective action to improve water security. We are partnering with the State of Jalisco and local municipality in Ocotlán,

and in fiscal 24 we enabled large scale water reuse for local farmers, replenishing over 470,000 cubic metres of water.

We continue to take significant action to create a sustainable low carbon future, and limit the damaging effects of climate change. We

are partnering with governments and institutions in key geographies on our decarbonisation pathway. In the US, we were proud that the

Department of Energy selected Diageo as part of the Industrial Demonstrations Program fund to support the installation of heat

batteries at our Shelbyville and Plainfield sites, with the goal of building a model that can be replicated..

Employee engagement

Our people and inclusive culture are critical to Diageo’s success. This year, Karen Blackett took over accountability as the designated

Non-Executive Director for workforce engagement. All Non-Executive Directors participated in the programme engaging with

colleagues from all regions, functions, and organisational levels. The Board values the openness of conversations and insights on

positive aspects of Diageo’s culture, as well as areas for improvement. Diageo’s culture continues to be a source of pride and

competitive advantage, with high quality accessible leadership. This was reflected in the engagement results seen in our global

employee survey, Your Voice, which remain in the top quartile and above external benchmarks with 81% engagement levels and 89%

expressing pride in working for Diageo.

Board changes

We have announced further changes to the Board this year, and I am pleased that we have continued to attract high calibre of talent

with deep experience across beverage, consumer and regulated industries.

As we announced in March 2024, I plan to retire in February 2025 from the Diageo Board in my ninth year. My colleague and current

Non-Executive Director Sir John Manzoni has been appointed as my successor. John joined the Diageo Board in October 2020, having

been Chief Executive of the UK Civil Service. He is currently Chair of FTSE-listed multinational energy business SSE plc and a non-

executive director of engineering and technology company KBR, Inc. He was previously a non-executive director of the multinational

drinks business SAB Miller plc for 11 years. John brings a wealth of experience both from within the beverage alcohol world and from

his extensive private and public sector experience. I look forward to working with him, fellow Board members and my Diageo

colleagues to ensure a smooth transition.

Nik Jhangiani, currently Chief Financial Officer (CFO) at Coca-Cola Europacific Partners plc, the world’s largest Coca-Cola bottler,

will succeed Lavanya Chandrashekar as Diageo’s CFO on 1 September 2024 and we look forward to welcoming him to the Board.

Nik has more than 30 years of finance experience gained in roles in the UK, Europe, India, Africa and the US, including 20 years in

various CFO roles, and has spent most of his career in the consumer and beverage industries. I am confident that his record of success

as a CFO in multiple relevant markets will further strengthen our long-term track record of delivering sustainable returns for our

shareholders

After three years as CFO, the Board wishes to thank Lavanya warmly for her strong contributions to Diageo over the past six years.

She has been instrumental in framing our long-term ambitions, driving a culture of operational excellence throughout her tenure and

embedding a culture of everyday efficiency which has already delivered highly significant productivity savings across our business.

We wish Lavanya well for the future as she returns to the US.

Julie Brown, CFO and Executive Director of GSK plc since May 2023, will be appointed as a Non-Executive Director, effective 5

August 2024, and on appointment will succeed Alan Stewart as Chair of the Audit Committee. Julie brings many years of experience

in financial, commercial and strategic roles in international companies operating in highly regulated industries. She is strongly

committed to enabling diversity in business and to creating sustainable, long-term value for stakeholders. Julie previously served as

Chief Operating and Financial Officer and Executive Director, Burberry Group plc. Julie has also served as Group CFO of Smith &

Nephew plc and previously worked for 25 years at AstraZeneca plc in various finance, commercial and strategic roles including as

regional and country president and latterly as Interim Group CFO.

On behalf of the Board, I would like to thank Alan who has been a Director since 2014 and Chair of the Audit Committee since 2017.

He has served Diageo with great distinction, and we have benefitted greatly from his expertise and strategic input. We wish him the

very best for the future.

Summary

At Diageo, we speak of 'standing on the shoulders of giants' and honouring the founders on whose legacies this fantastic company is

built. Some years have undoubtedly been challenging, but I am proud to have been part of the company’s journey and to have worked

alongside such talented, dedicated, and entrepreneurial colleagues and leaders: the giants of today. They will carry this business

forward, live our purpose of celebrating life, every day, everywhere, and create value for our stakeholders. I am particularly proud of

the great strides we have made on the inclusion and diversity agenda, and the diverse leadership now in place on the Board and our

Executive Committee. I would like to express my deepest thanks to colleagues past and present. As I pass the baton to John, I remain

as excited about the future growth potential of Diageo as I was when I joined the Diageo Board in July 2016. I look forward to

watching the company and its people thrive under John’s stewardship.

Javier Ferrán

Chair

Chief Executive's statement

Fiscal 24 was challenging for Diageo and for the broader industry, with the unwinding and normalisation following the Covid-19 super-

cycle and the ongoing macroeconomic and geopolitical backdrop. Total Beverage Alcohol (TBA) however remains a highly attractive

sector, which will deliver sustainable long-term growth and generate shareholder value.

Diageo is a resilient business, and in fiscal 24 we have taken decisive actions to improve our near-term execution, including

addressing the inventory issues in our Latin America and Caribbean (LAC) region. We are strengthening our consumer insights, and by

the end of calendar year 2024 we will have rolled out our proprietary Consumer Choice Framework across markets covering a

significant portion of our net sales. This will give us a much deeper understanding of consumer motivations and occasions. We are

redeploying our resources where we have the best opportunities to grow and we have stepped up our route-to-market capabilities,

including in the United States (US), our largest market. We have also delivered a record year of productivity savings, nearly $700

million, over-delivering on our three-year productivity goal by $200 million.

(1)Source: Internal estimates, incorporating AC Nielson, Association of Canadian Distillers, Dichter & Neira, Frontline, Intage, IRI, ISCAM, NAMBCA, State Monopolies, TRAC,

IPSOS and other third party providers. All analysis of data has been applied with a tolerance of +/-3bps


Reported volume movement			Organic net sales movement
(5)%			(1)%
2023: (7)%			2023: 7%
Organic volume movement			Reported operating profit movement
(4)%			8%
2023: (1)%			2023: (6)%
Reported net sales movement			Organic operating profit movement
(1)%			(5)%
2023: 0%			2023: 7%

Resilient performance in a challenging environment

After three years of extraordinary topline growth, with 14.5% CAGR from fiscal 21 to fiscal 23, this fiscal, group organic net sales

declined 0.6%. The main driver was materially weaker performance in LAC, which makes up 8% of Diageo’s organic net sales value.

Excluding LAC, organic net sales grew 1.8%, driven by good growth in Africa, Asia Pacific, and Europe, partially offset by a decline

in North America (NAM). NAM performance reflects a cautious consumer environment and the impact of lapping inventory

replenishment in the prior year.

I’m pleased that in this challenging environment we ended the fiscal gaining or holding share in over 75% of our net sales value in

measured markets including the US. We are also holding or gaining share in most of our measured billion-dollar brands globally.

Organic operating profit declined 4.8% and our organic operating margin declined by 130bps, both primarily driven by LAC.

Excluding LAC, organic operating margin declined by 56bps and gross margin grew 17bps, driven by price increases and productivity

which offset the impact of cost inflation.

Regional performance

In LAC, following our update to investors in November 2023, we have worked with wholesale and customer partners to manage

inventories and ended fiscal 24 with more appropriate levels for the consumer environment. We implemented five targeted actions to

improve inventory visibility: expanding our access to sellout data; incentivising sellout data reporting; incentivising independent stock

counts; investing in commercial planning; and piloting digital case tracking, initially with two customers in Mexico. In Brazil, our

largest LAC market, the category improved in the second half and we gained share. Inventory levels have dramatically reduced in

Mexico to more appropriate levels, but we see persistent challenges in a highly competitive environment and have initiated a review to

improve performance. We know the importance of staying vigilant and continue to work diligently to keep improving visibility into

the distribution channels with the aim to deliver better insights earlier. I believe we have the necessary processes, data visibility,

leadership, incentives and sellout culture across the region to more closely align future performance with consumer demand.

In NAM, our strategic priorities remain clear. We will unlock growth by driving our largest brands in our largest categories of

whisk(e)y and tequila, recruiting into new occasions with innovation and raising the bar on execution. Crown Royal Blackberry

launched this year and has been a great success, especially in recruiting new consumers to whiskey. In tequila, Don Julio saw

increased momentum in the second half as it grew 15 times faster than the total US spirits industry, with the growth led by Don Julio

Reposado where we increased investment and expanded distribution. Guinness was the fastest-growing imported beer in the on-

trade, bolstered by the new “Lovely Day” campaign with long time brand fan Jason Momoa. For spirits, we have made the biggest

change in our route-to-market for a decade. Working with our distributors, we are putting more 'feet on the street' to target categories,

regions and locations with the highest growth potential. In the US, we finished the year winning or maintaining TBA market share for

brands covering 90% of our US net sales.

In Europe, we delivered resilient growth, mainly driven by another year of strong momentum and double-digit growth for Guinness,

helped in part by Guinness 0.0 for which net sales and volume more than doubled in the year. We achieved market share growth in

most European markets, despite lower consumer confidence.

In Asia Pacific, we grew organic net sales, volume and operating margin in challenging macroeconomic conditions while increasing

investment in the region. Growth was driven by Chinese white spirits, and strong performance in India with continued premiumisation

and double-digit growth in scotch and other whisky. Tequila also continues to gain momentum.

In Africa, beer was the key driver of performance. Despite a tough macroeconomic backdrop, we delivered organic net sales growth of

12% driven by price increases partially offset by volume declines.

These regional highlights bring to life the resilience and strength of our diversified global footprint.

Strengthening our operating model in key markets

As well as transforming our US route-to-market, we are also transforming our operating model in key regions where we see growth

opportunities. We are expanding our organisational structure in Dubai to solidify our leadership in premium spirits in the Middle East

and North Africa. We transformed our business model in the vibrant Nigerian market and entered a long-term partnership with a

distributions specialist which will allow us to increase distribution of Guinness – another example of Diageo’s proven asset light

model for the brand. We also announced that Diageo has acquired the distribution rights of all remaining brands currently distributed

by our joint venture, Moët Hennessy Diageo France. This followed our previous update in March 2024, where we outlined our phased

approach to transforming our distribution model in France by creating our own in-market company.

Performance in our largest categories

It has been another strong year for Guinness with the brand delivering 15% organic net sales growth, double-digit growth for seven

consecutive halves. We held or gained share in our top three markets for Guinness (Great Britain, Ireland and US) and we continued to

expand the brand's consumer base. Guinness 0.0, our alcohol-free offering, now accounts for nearly 3% of our Guinness volume

globally.

My ambition to take tequila around the world just as Diageo did with Johnnie Walker remains. It is a fun and versatile category and

Diageo was an early entrant. Tequila remains the fastest-growing scale spirits category and we have maintained our global tequila

leadership by value. You can read a case study on our tequila roll out on page 18.

Diageo remains the world leader in scotch, our largest category. While our scotch organic net sales performance was heavily impacted by LAC

inventory reductions, momentum with consumers continued in fiscal 24. We gained category share of scotch in 9 out of 10 of our largest

measured scotch markets. Johnnie Walker is living up to its “Keep Walking” mantra, driving over half of our scotch organic net sales and

continues to be the number one international spirits brand in value in calendar year 2023 as measured by IWSR.

Doing business the right way: ‘Spirit of Progress’

This fiscal, I initiated a review of our ESG strategy and as a result, we have simplified and prioritised the commitments that form our

'Spirit of Progress' plan. We are prioritising the areas that have the most significant impact on our commercial performance and our

advocacy efforts, including the harmful use of alcohol, water stress, carbon and our role in the communities in which we operate.

We’re not only doing the right thing for our people, consumers and communities, but also for our business in the long term.

Our people and leadership.

During my first year as CEO, I have taken great pride in the resilience and talent of our teams, including our Executive Committee

who bring together decades of experience in the industry, along with a breadth of market and functional expertise. I have spent time

with our teams around the world including in Ireland, US, Scotland, Kenya and Brazil. I have seen first-hand the commitment,

dedication, and resolve of Diageo’s people. I would like to thank every single person in our organisation for their hard work this year.

I would particularly like to thank our outgoing Chief Financial Officer (CFO) Lavanya Chandrashekar, who has been a trusted

colleague and partner to me, both when we worked together in North America, and more recently during my first year as Chief

Executive. On behalf of all Diageo colleagues, I wish her much future success as she returns to the US. I am delighted that Nik

Jhangiani will succeed Lavanya as CFO; he has more than 30 years of finance experience gained in roles in the UK, Europe, India,

Africa and the US, including 20 years as CFO; and has spent most of his career in the consumer and beverage industries including 20

years within the Coca-Cola system. His proven track-record and international mindset mean he will be a strong addition to our

leadership team.

Outlook

The consumer and macroeconomic environment and continues to be challenging with the conditions we saw towards the end of fiscal

24 persisting into fiscal 25, yet I continue to be confident in Diageo’s future.

Diageo possesses iconic and enduring brands from Guinness to Tanqueray to Johnnie Walker, all with unmatched heritage, but with

absolute relevance for today’s consumer. Our success has never come about by standing still, it has been achieved by blending those

great names with the most passionate teams, the best brand building, and a commitment to excellence. As the consumer and the

operating environment continues to evolve, we will keep adapting to emerging tastes, new social occasions and consumer passions.

We will unlock growth to create one of the best performing, most trusted and respected consumer products in the world.

Debra Crew

Chief Executive

Business model

A business built for the

long term

We deliver our strategic priorities through a business model that leverages global and local expertise, has the consumer at its heart, and

puts our responsibilities to our stakeholders front and centre.


What we do	1. We source	2. We innovate	3. We make
What we do	From smallholder farmers in Africa and Mexico, to multinational companies, we work with our suppliers to procure high-quality raw materials and services, with environmental sustainability in mind. Where it is right for our business, we grow and source locally.	Using our deep understanding of consumer trends and socialising occasions, we focus on driving sustainable innovation that provides new products and experiences for consumers; be that a non- alcoholic option or an offering that suits convenience or the on-trade.	We distil, brew and bottle our spirits and beer brands through a globally co- ordinated supply operation, working to the highest quality and manufacturing standards. We prioritise using local production where it is right for our business.



Working in the interest of our stakeholders					People
Working in the interest of our stakeholders				We want our people to be the best they can be. We offer a diverse and inclusive workplace with opportunities for development and progression.
	Consumers		Customers		Suppliers
We are passionate about the role our brands play in celebrations globally. We are committed to promoting moderation and reducing alcohol misuse.		We work closely with customers to build sustainable ways of working that help grow their businesses through great insight and execution.		We partner with suppliers to ensure long-term, mutually beneficial relationships. Respect for human rights is embedded throughout our global value chain.
	Communities		Investors		Governments and regulators
We help build thriving communities by making lasting contributions where we live, work, source and sell.		We aim to maximise long- term investor returns through consistent, sustainable growth and a disciplined approach to capital allocation.		We advocate for laws or regulatory change where we think there is a positive impact on our business and a benefit for our key stakeholders.

Our Growth

Ambition

In previous years, we were led by our well-established Performance Ambition, a strategy which delivered strong results. As we navigate the

next phase in our journey, we have continued to evolve our strategy, which centres on strong consumer and customer insights. As previewed at

our Capital Markets Event in November 2023 and the Consumer Analyst Group of New York (CAGNY) investor conference in February

2024, we have sharpened our strategy in order for us to achieve quality share of TBA of 6% by 2030 and generate value for our shareholders.

Our Growth Ambition is our evolved strategy to win in fiscal 25 and beyond and to deliver the next phase of sustainable growth.

Through the Growth Ambition we will continue to focus on delivering on four key strategic outcomes that are now embedded in the

business: providing efficient growth; delivering consistent value creation; building credibility and trust; and ensuring that our people

and high-performing teams are fully engaged.




PURPOSE	Celebrating life, every day, everywhere



AMBITION	To create one of the best performing, most trusted and respected, consumer products companies in the world



STRATEGY	Unleash the power of our brands and portfolio to lead and shape consumer trends executed with operational excellence
	BRANDS AND PORTFOLIO	CONSUMER TRENDS	OPERATIONAL EXCELLENCE
	Whisk(e)y and tequila Winning local portfolio Guinness growth	Premiumisation Recruitment New occasions	Evolve brand building muscle Commercial excellence Everyday efficiency



ENABLERS	Building a more Digital Diageo	Diverse and engaged talent with a focus on culture	’Spirit of Progress’ and doing business the right way from grain-to-glass


OUTCOMES	Achieve quality TBA share of 6% by 2030


Efficient growth	Consistent value creation	Credibility and trust	Engaged people
Consistently grow organic net sales, grow operating profit, deliver strong free cash flow	Top-tier total shareholder returns, increase return on invested capital	Trusted by stakeholders for doing business the right way, from grain-to- glass	High-performing and engaged teams, continuous learning, inclusive culture

Unleash the power

of our brands and portfolio

Our outstanding brands and broad portfolio remain a competitive advantage

Our strategy focuses on three areas:

1.Maintaining our undisputed number one value position in the whisk(e)y and tequila categories(1), maximising the large growth

opportunities they provide, while leveraging our heritage.

2.Winning with consumer-first local portfolios: markets must unleash the power of our portfolio by building strong brands with local

relevance, informed by deep consumer insight.

3.Continue Guinness breakout growth with our asset light model and innovation.

Examples of progress in fiscal 24:

•Johnnie Walker demonstrated its ability to continue to win across the price ladder. Johnnie Walker Blonde drove total trademark

share gains following its launch across Asia Pacific (APAC) and LAC. At the luxury end of the portfolio, Johnnie Walker Blue

Label gained share through the Xordinaire and Umami innovations(1).

•Godawan Single Malt, crafted with quality and sustainability at its core in the Alwar distillery, Rajasthan, was the most awarded

Indian single malt in 2023-2024.

•We have seen continued double-digit growth of Don Julio tequila in the United States, with momentum building internationally as

we shape the global expansion of the category.

•Guinness is the number one selling beer in Great Britain by value in the second half of the fiscal.(2)

(1) IWSR, 2023.

(2) Nielsen/CGA, 52 weeks to 18 May 2024

Teaming up with the world’s biggest sporting events

The power of sport knows no geographic limits – it is truly global. At Diageo, we are using sport to lift our brands, partnering with

iconic sporting occasions giving us incomparable visibility across the globe.

Shaping the future of Guinness with sport

Whilst Guinness has been the official partner of the Six Nations Rugby Championship since 2019, in 2024 the tournament helped it

reach new heights. During this year's Six Nations, sales of pints of Guinness in stadiums were up 15% compared with 2022, while

there was a 26% increase in pints of Guinness 0.0 sold in stadiums compared with 2023.

This year, Guinness also tapped into new areas at the Championship, kicking off its official partnership with the Guinness Women’s

Six Nations and increasing the amount of Guinness 0.0 beer taps, driving awareness and consumption of the non-alcoholic choice.

This expanded partnership is a key pillar in delivering against our strategy of making Guinness more relevant to more people, on more

occasions, more of the time.

New English Premier League partnership

In June, Guinness announced that from August it would be the official beer of the English Premier League. Premier League games are

broadcast into 900 million homes in 189 countries, heightening the brand's relevancy and visibility even further. The four-year

agreement will also see Guinness 0.0 named as the official non-alcoholic beer of the Premier League.

Taking our brands to new heights at the Super Bowl

Diageo’s NFL platform is another example of how our iconic brands can work with similarly iconic sporting events to deliver great

results.

Over the last five years, Diageo has built official partnerships with 20 different NFL teams, enabling advertising and profiling of our

brands in stadiums and beyond. In the 2023 season alone, Diageo brands used over 70 hours of digital signage at NFL stadiums and

over 71,000 samples were distributed across NFL league and team partner events.

Great brand and sports partnerships also allow for fantastic creativity to help build awareness and excitement. Nowhere was that

creativity more evident than on Super Bowl Sunday in February. In the week leading up to the Super Bowl, Don Julio took over the

STRAT Hotel in Las Vegas – using a projection to turn the hotel tower into a 1,149 ft tall bottle of Don Julio 1942.

Winning in India with Royal Challenge

One of the world’s most popular and watched annual sporting events is the Indian Premier League Cricket (IPL). While many brands sponsor

teams, Royal Challengers Bangalore (RCB), one of the founder members of the IPL, and named after renowned Indian whisky brand Royal

Challenge, is owned by United Spirits Limited, part of Diageo plc.

This ownership gives Royal Challenge whisky unprecedented visibility in one of the largest whisky markets in the world. One of the

greatest success stories this year has been via the Women’s Premier League, with the RCB women's team winning the title in March.

The global reach and attraction of sport is undeniable. We will continue to invest to showcase our iconic brands at events that excite and

matter to consumers across the globe.

To lead and shape

consumer trends

Consumers remain at the centre of everything we do

We are focused on anticipating and responding to shifts in consumer trends, enabled by capabilities and tools which we are constantly

evolving. Shaping and leading consumer trends enables us to:

1.Premiumise We want to drive and lead the ongoing trend of premiumisation in our industry, and we continue to develop our brand

building capabilities to do this. The nuances of premiumisation vary by market, so we ensure our brands hit the relevant local

premium cues; for example being relevant in popular culture or in appropriate experiential spaces.

2.Recruit: We continue to recruit new consumers into and from across TBA. With circa 550 million new legal purchase age

consumers forecast to enter the TBA market by 2033(1), we will respond with agility to the emerging trends that resonate with these

new cohorts, keeping our brands relevant. At the same time, we will keep winning in the right occasions to recruit from beer and

wine.

3.Win in new occasions: We will enter into new occasions to drive the growth of our categories. The landscape of socialising is ever

evolving, from the growth of the early evening occasion in some markets to the desire for increased options to moderate in others.

We will ensure our portfolio continues to evolve as consumer occasions do the same.

Examples of progress in fiscal 24:

•Our luxury malts are playing a key part in the premiumisation of scotch. Fiscal 24 saw the announcement of the Mortlach and

Philippe Starck partnership, generating attention and momentum in key markets ready for product launches in fiscal 25.

•Convenience is an increasingly important category for consumers entering TBA. Fiscal 24 saw Smirnoff SMASH Tea and Captain

Morgan Sliced execute fast launches and distribution ramp-ups in North America, resulting in both products winning share in

the category.

•The global growth of Guinness 0.0 has supported increased consumer desire for moderation options and enables us to offer more in

a wider set of occasions. This, alongside our 0.0 spirits brands which constitute three of the five largest 0.0 brands globally, gives

us a strong portfolio to capitalise on this trend.(2)

Taking tequila around the world

Our global rollout of tequila continued at pace in fiscal 24, underpinned by strong commercial execution.

Early bets on tequila are paying off

Diageo’s portfolio is positioned towards fast-growing categories and tequila is the fastest growing spirits category (+9% RSV

2022-2023). Diageo was among the early entrants into the space and continues to be the global leader in tequila with around a quarter

of value share.(2)

In NAM, our tequila portfolio grew US spirits share, driven by Don Julio, which increased momentum in the second half, growing 15

times faster than the total US spirits industry and gaining category share of tequila and spirits.(3) Spearheading this growth was Don

Julio Reposado, where we increased investment and expanded distribution to capitalise on the increasing popularity of aged tequila, as

consumers rapidly become more knowledgeable about the category.

We drove almost 12% organic net sales growth in markets outside NAM and LAC, leading to substantial market share gains across

Europe, APAC and Global Travel. Don Julio was the number one selling tequila at London Heathrow Airport throughout most of the

fiscal and is now available in nearly 60 countries. Casamigos is now in 33 countries and continues to recruit across Europe. This

summer, we have plans for over one million consumers to sample the Casa Paloma in Great Britain. Increased investment in these

brands to support their global rollout is amplified by our excellent marketing and brand building at scale, for example, Don Julio at the

Oscars and the Super Bowl.

In APAC, we have tapped into the demand for luxury products, positioning Don Julio 1942 as our flagship. It has entered the most

aspirational on-trade venues, allowing us to deliver high-quality activations, in partnership with influencers.

The Paloma

This fiscal year, we identified the Paloma cocktail as a vehicle to recruit consumers into the tequila category. Our consumer insights

showed the Paloma was emerging as the cocktail of choice for bartenders and brand ambassadors, particularly in Southern Europe.

The Paloma is a grapefruit-based, refreshing and visually appealing premium aperitif: a big glass, vibrant colour, and lots of flavour.

The Paloma is also an accessible way for consumers to discover tequila: it is light, easy to make, and fits beautifully into various

occasions whether consumers are at home, in a bar, or enjoying it with food.

(1) World Bank.

(2) IWSR, 2023.

(3) Nielsen/NABCA, 2024

Executed with

operational excellence

Our evolved operational excellence agenda is focused on brand building, commercial excellence and productivity

•We are evolving our brand building muscle to upgrade the effectiveness and efficiency of our Advertising and Promotion

(A&P) to ensure we invest behind the right brands, in the right places and through the right channels.

•We continue to upgrade our commercial capabilities with customers and consumers, building best-in-class execution

partnerships, digital merchandising and sales processes. The on-trade is also a critical channel for brand building and

exceptional experiences and we have increased focus.

•We will continue to deliver against our productivity agenda, sharpening our resource allocation to drive efficiency. Through

our Revenue Growth Management (RGM) capabilities and supply chain excellence by investing in digitisation, incremental

margin enhancement and supply network design opportunities.

Examples of progress in fiscal 24:

•In NAM, we improved our digital media efficiencies and effectiveness by applying enhanced technology to geographical

sales data and digital bidding algorithms. By combining our data and consumer understanding, we have evolved our media

targeting strategies by showing consumers brand-relevant media at key moments across hyper-targeted locations. This is

now scaled across our US brand portfolio.

•The Crown Royal Blackberry launch was an example of commercial execution excellence and resulted in consumer

recruitment into whiskey and share gains for the trademark. We partnered with our customers to deliver standout point of sale

experiences.

•We continued to strengthen our RGM capabilities, which are key to driving sustainable growth across volume, price and mix.

We made strategic price increases and targeted A&P investments holding our overall A&P flat for the year.

•Smirnoff marketing teams in over 40 markets used the Diageo Virtual Studio to take global assets for the 'We Do We'

campaign and delivered over 2,000 localised digital assets, saving nearly $15 million. In Great Britain, we increased

marketing investment for Guinness by 14%, smartly managed pricing corridors, and drove volume growth of 18%.

Fiscal 24 saw a record delivery

of nearly $700 million in productivity benefits unlocked

Our culture of everyday efficiency is firmly embedded into the business. We have delivered strong productivity benefits year on

year. At the end of fiscal 24, we completed a three-year period over which we delivered $1.7 billion of productivity benefits,

significantly exceeding the original commitment of $1.5 billion made at the beginning of fiscal 22. Fiscal 24 was our third consecutive

year of productivity and price offsetting the absolute impact of cost of goods inflation.

In fiscal 24, we delivered record productivity savings of nearly $700 million across cost of goods, marketing and overhead spend. The

productivity on cost of goods was across the end-to-end supply chain. We renegotiated contracts on key materials such as glass, labels

and grain neutral spirits and drove savings in logistics by further optimising warehousing capacity and container fill rate, and

renegotiating key ocean freight contracts. Across our manufacturing sites, we reduced waste and drove savings via labour optimisation

and robotics automation. In addition, we started to see benefits from our five-year supply chain agility programme, announced at the

end of fiscal 22.

Looking ahead, we have committed to significantly step up our productivity target to $2 billion over the next three years (fiscal

25-27). This will be enabled by the acceleration in annual savings across cost of goods, marketing and overheads and from our supply

agility programme.

Our strategy is

underpinned by

three enablers

We are focused on transforming three of our enablers: Digital, Talent and ESG

We are upweighting investment to fund a holistic, prioritised programme of digitisation (i) to facilitate marketing transformation and

re-invent brand building; (ii) to transform commercial execution and step-change our sales partnering; (iii) to unlock the next wave of

productivity savings. This is underpinned by the transformation of data, analytics and systems.

We continue to invest in talent transformation, ensuring our people embody our evolved values and behaviours. We are developing

capabilities to ensure our talent is upskilled in areas that are key to our strategy.

We are also implementing our evolved ESG approach for the next phase of delivery of our ‘Spirit of Progress‘ programme,

which focuses on maximising impact while protecting our licence to operate and grow.

Examples of progress in fiscal 24:

•Building a more Digital Diageo with 'What’s your Cocktail?', a generative AI platform to enable consumers to pair cocktails

with food.

•We have committed to creating an environment in which everyone at Diageo can thrive, feel engaged and valued for

their contributions.

•Driving triple wins with the Baileys Minis paper-based bottle trial.


	1	Building a more Digital Diageo
	'What's Your Cocktail?' An AI platform pairing cocktails with food In May, we launched 'What’s Your Cocktail?', a generative AI-driven digital platform to recommend cocktail pairings with individual food preferences. The platform helps consumers demystify cocktails by asking the desired atmosphere of their event and favourite food flavours to ensure the perfect serve for every occasion. Whilst the platform is consumer-first, we are also benefiting by gathering millions of first-party consumer data points, which helps give our consumers exactly what they want. Digital planning tool delivering productivity wins in supply chain This year we implemented a new Advanced Planning Tool (OMP) across our tequila asset base. It monitors our end-to- end supply chain and gives us the ability to smoothly plan for and respond to volatile changes in product demand. For example, this fiscal we have seen accelerated demand for Don Julio Reposado. The OMP tool enabled us to quickly run scenarios, look into end-to-end demand and balance our inventory and capacity, allowing us to communicate more quickly and effectively with customers and our suppliers to fulfil that demand.


2	Diverse and engaged talent with a focus on culture	3	’Spirit of Progress’ and doing business the right way from grain-to-glass
Diversity 40% of our Board and 46% of our leadership population, including our Executive Committee, are from an ethnically diverse background. We are proud to have reached our 45% ethnicity leadership representation ambition ahead of 2030. Engaged talent In the global employee survey, Your Voice, our results for the fiscal remained above external benchmarks with 81% engagement levels and 89% pride in working for Diageo. Culture To unleash greater speed and agility in our business, we are focusing strongly on culture and embedding four dial-up behaviours: external curiosity, efficient collaboration, experimentation and learning, and acting decisively.		Baileys Minis paper-based bottle trial In May, at the Time Out Festival in Barcelona, we launched a trial of a new innovation, the Baileys Minis paper-based bottle. We know our consumers are increasingly looking for sustainable packaging alternatives, whilst also expecting premium quality and design from our brands. These bottles are a step in our journey towards a more sustainable business. The Baileys Minis paper-based bottles are made with a dry moulded fibre bottle which is 90% paper, with a thin plastic liner and a foil seal. The development work behind these bottles is the result of strong collaboration across our Diageo teams worldwide, along with the help of valued external partners. This is further evidence of our dedication to progressing towards our ambition to accelerate to a low-carbon world.


Definition
Sales growth after deducting excise duties, excluding the impact of exchange rate movements, hyperinflation adjustment and acquisitions and disposals.	Organic operating profit growth is calculated on a constant currency basis, excluding the impact of exceptional items, certain fair value remeasurement, hyperinflation adjustment and acquisitions and disposals.	Profit before exceptional items attributable to equity shareholders of the parent company, divided by the weighted average number of shares in issue.
Why we measure
This measure reflects our delivery of efficient growth and consistent value creation. Organic net sales growth is the result of the choices we make between categories and market participation, and reflects Diageo's ability to build brand equity, increase prices and grow market share.	The movement in operating profit measures our delivery of efficient growth and consistent value creation. Consistent operating profit growth is a business imperative, driven by investment choices, our focus on driving out costs across the business and improving mix.	Earnings per share reflects the profitability of the business and how effectively we finance our balance sheet. Eps measures our delivery of efficient growth in the year and consistent value creation over time.
Performance
Reported net sales declined 1.4% due to an unfavourable foreign exchange impact, organic net sales decline and a negative impact from acquisitions and disposals, partially offset by hyperinflation adjustments. Organic net sales declined 0.6%. Positive price/mix of 2.9pps was more than offset by a 3.5% decline in volume, primarily driven by materially weaker performance in LAC, driven by fast- changing consumer sentiment and elevated inventory levels. A weaker consumer environment and the impact of lapping inventory replenishment in the prior year in North America also contributed to the decline. Excluding LAC, organic net sales grew 1.8%.	Reported operating profit grew 8.2%, primarily driven by the benefit from exceptional operating items, partially offset by a decrease in organic operating profit. Organic operating profit declined 4.8% as a result of the organic net sales decline, primarily due to a $302 million operating profit decline in LAC and a $142 million operating profit decline in North America. The decline was also driven by an increase in investments in strategic capabilities, including in digital and strengthening route-to- market, primarily in the US, and in marketing.	Basic eps decreased 23.1 cents, mainly driven by lower organic operating profit, higher finance charges and exceptional items, partially offset by lower tax and the impact of share buybacks. Basic eps before exceptional items decreased 16.9 cents.


	More detail on page 44			More detail on page 44			More detail on page 46

(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 311-321.

(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.


	Reported measures


Net cash from operating activities ($ million)				Return on closing invested capital (%)					Remuneration

Some KPIs are used as a measure

in the incentive plan for the

remuneration of executives. See our

Directors’ remuneration report

from page 192 for more detail.


	KPI: Key Performance Indicator


Definition
Net cash from operating activities comprises the net cash flow from operating activities as disclosed on the face of the consolidated statement of cash flows.		Profit for the year divided by net assets at the end of the financial year.


	Non-GAAP measures


Free cash flow ($ million)(1),(2)	Return on average invested capital (ROIC) (%)	Total shareholder return (TSR) (%)
2,609	15.8%	(24)%


Definition
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash expenditure paid for property, plant and equipment, and computer software. Definition of free cash flow has been redefined, see more details on page 46.	Profit before finance charges and exceptional items attributable to equity shareholders divided by average invested capital. Invested capital comprises net assets excluding net post- employment benefit assets/liabilities, net borrowings and non-controlling interests. Definition of return on average capital employed has been redefined, see more details on page 47.	Percentage growth in the value of a Diageo share (assuming all dividends and capital distributions are re-invested).
Why we measure
Free cash flow is a key indicator of the financial management of the business. Free cash flow reflects the delivery of efficient growth and consistent value creation as it measures the cash generated by the business to fund payments to our shareholders and future growth.	ROIC is used by management to assess the return obtained from the group’s asset base. Over time, ROIC reflects consistent value creation, as the returns Diageo generates from its asset base are both reinvested in the business and used to generate returns for investors through dividends and return of capital programmes.	Diageo’s Directors have a fiduciary responsibility to maximise long-term value for shareholders. TSR measures consistent value creation as it reflects the returns Diageo has delivered to investors in the year and over time. We also monitor our relative TSR performance against our peers.
Performance
Net cash from operating activities was $4,105 million, an increase of $469 million compared to fiscal 23. Free cash flow grew by $374 million to $2,609 million. Free cash flow growth was driven by strong working capital management and the positive impact of lapping one-off cash tax payments in the prior year. These favourable factors more than offset the negative impacts of lower operating profit and increased interest payments, attributable to the current higher interest rate environment. The increase in capital expenditure (capex) demonstrates our commitment to investing in the business for long-term sustainable growth.	ROIC decreased 255bps, mainly driven by lower operating profit, increased capex, maturing stock investment and continued portfolio optimisation through acquisitions and disposals. The decline was slightly offset by lower tax.	TSR was down 24% over the past 12 months driven by the lower year-on- year share price.


	More detail on page 46			More detail on page 47


Non-financial performance


Positive drinking	Employee Engagement Index	Inclusion and diversity

	81%


Number of people educated on the dangers of underage drinking through a Diageo supported education programme	2.2m
	(2023: 1.9m)
	Total to date:
	5.9m(1)


Percentage of female leaders globally	44%
Percentage of female leaders globally	(2023: 44%)
Percentage of ethnically diverse leaders globally	46%
Percentage of ethnically diverse leaders globally	(2023: 43%)


Definition
Number of people educated on the dangers of underage drinking through a Diageo supported education programme.	Measured through our Your Voice survey; includes metrics for employee satisfaction, advocacy and pride.(3)	The percentage of women and the percentage of ethnically diverse individuals who are in Diageo leadership roles.
Why we measure
We want to change the way the world drinks for the better by promoting moderation and addressing the harmful use of alcohol. We build credibility and trust by transparently reporting the total number of people educated on the dangers of underage drinking. This figure also demonstrates our commitment to engaging people on the dangers of harmful alcohol use.	Employee Engagement releases the full potential of our people and our business, and it’s a key enabler to our performance. The survey allows us to measure the extent to which employees believe we are living our values and is a measure of our culture. Reflecting on the results of our employee engagement level and taking action where needed each year helps us build credibility and trust with our people.	Nurturing an inclusive and diverse culture drives commercial performance and is the right thing to do. Transparently reporting the gender and ethnic diversity of our leadership cohort reflects our commitment to consistent value creation through our diverse workforce, building credibility and trust with our stakeholders and engaging with our people on inclusion and diversity.
Performance
We delivered a significant increase in our reach, particularly for the LAC region. Globally, we educated 2.2m young people about the dangers of underage drinking.	This year 89% of our people completed our Your Voice survey. 81% were identified as engaged. 89% declared themselves proud to work for Diageo, 81% would recommend Diageo as a great place to work and 74% were extremely satisfied with Diageo as a place to work.	This year, 44% of our leadership roles were held by women, the same percentage as last year, and 46% of our leaders were ethnically diverse, compared with 43% last year.


	More detail on page 100			More detail on page 105			More detail on pages 110-111

(1) (The baseline year for our ‘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.


	Non-financial performance


	Definition
	Percentage change in water efficiency across the company compared to fiscal 20 baseline. Refer to page 334 for how this metric is measured.	Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 20 baseline.
	Why we measure
	Our water efficiency programme is critical to helping us to address water security, particularly in water-stressed areas. In addition to preserving our licence to operate, minimising water use within our own operations underpins our commitment to delivering long-term value by future-proofing our business against the impacts of a changing climate. It also helps to ensure this precious resource can continue to be shared with the communities we live and work amongst.	Mitigating our impact on climate change is a business imperative. Reporting in detail on our efforts to reduce Scope 1 and 2 greenhouse gas emissions, even when it is challenging to do so, demonstrates our commitment to reducing our contribution to global warming and helps build credibility and trust. This is an important area for our business and external stakeholders, supporting our commitment to consistent value creation by future-proofing our business.
	Performance
	This year, our water efficiency across the company improved in total by 15.6% since our fiscal 20 baseline. The main drivers contributing to the strong performance in fiscal 24 were the continuous improvement initiatives in the water recovery plants at our East Africa sites and the optimisation of the reverse osmosis plant at our Cameronbridge site.	Our Scope 1 and 2 greenhouse gas emissions reduced in total by 23.8% from our fiscal 20 baseline. The main drivers contributing to the lower emissions are the increased use of on- site bioenergy (biomass, biogas and biofuel) across Africa, scotch and tequila markets and additional renewable electricity use, particularly in North America.


	More detail on page 121-124			More detail on page 125-128

(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 period up to the end of last financial year has been restated where relevant.

Operating results 2024 compared with 2023

Chief Financial Officer’s introduction

'After three years of strong topline growth, the industry, as well as Diageo’s financial performance, was challenged in fiscal 24. This was driven

by the uncertain global consumer environment across many of our markets. Organic net sales were down 0.6% driven by a volume decline and

primarily attributable to weak performance in LAC, which was impacted by weaker consumer demand and higher than expected inventory

levels in the first half of the fiscal year. Organic operating margin declined 56bps excluding LAC and was driven by continued investment in

the business through overheads and A&P.'

In these times of an uncertain consumer environment, we have focused on what we can control to continue to invest in our future. We

have focused on driving productivity, smart price mix and cash. I’m pleased to say we have increased our annual productivity

and delivered nearly $700 million in savings in fiscal 24 with the highest-ever contribution from cost of goods and supply initiatives.

And with this, we have comfortably exceeded the delivery of our three-year commitment of $1.5 billion of productivity having

delivered $1.7 billion. The supply chain agility programme which was set up at the beginning of fiscal 22 has also contributed to this

year’s productivity and is expected to continue to deliver incremental savings over the coming years even as we continue to invest in

the business, including in overheads and in A&P.

We have also continued our disciplined conversion of profit into cash and delivered free cash flow of $2.6 billion. We have driven this

by significantly stepping up our capabilities in managing both accounts payable and inventory with more discipline.

We remain a progressive dividend payer, increasing our dividend 5% in fiscal 24 as well as completing a new share buyback

programme up to $1 billion. Our leverage ratio was 3.0x as of 30 June 2024, and we remain committed to our leverage ratio and

our disciplined approach to capital allocation.

Our brands and portfolio, as well as our ability to lead and shape consumer trends, operational excellence and talented workforce give

me confidence that we can navigate temporary volatility and uncertainty, while continuing to drive sustainable long-term growth and

deliver shareholder value. With this being my last full fiscal year at Diageo, I am proud of our accomplishments over the last few

years. I am confident that Diageo will build on its foundation and remains on track to be one of the best performing, most trusted and

respected consumer products companies in the world.


Reported net sales growth			Net cash from operating activities
(1)%			$4,105m
Organic net sales growth(1)			Free cash flow(1)
(1)%			$2,609m
Reported operating profit growth			Return on closing invested capital
8%			34.5%
Organic operating profit growth(1)			Return on average invested capital(1)
(5)%			15.8%
Basic earnings per share			Total shareholder return
173.2c			(24)%
Earnings per share before exceptional items(1)
179.6c

(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 311-321.

Business review

Key performance indicators

Net sales ($ million)

Reported net sales declined 1.4%

Organic net sales declined 0.6%

Reported net sales declined 1.4%, due to an unfavourable foreign exchange impact, organic net sales decline and a negative impact

from acquisitions and disposals, partially offset by hyperinflation adjustments.

Organic net sales declined 0.6%. Positive price/mix of 2.9pps was more than offset by a 3.5% decline in volume, primarily driven by

materially weaker performance in LAC, driven by fast-changing consumer sentiment and elevated inventory levels. A weaker

consumer environment and the impact of lapping inventory replenishment in the prior year in North America also contributed to the

decline. Excluding LAC, organic net sales grew 1.8%.

Organic movement

(1)See pages 238-240 for an explanation under Accounting information and policies.

(2)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.

(3)See pages 239-240 and 312-314 for details on hyperinflation adjustments.

Operating profit ($ million)

Reported operating profit grew 8.2%

Organic operating profit declined 4.8%

Reported operating profit grew 8.2%, primarily driven by the benefit from exceptional operating items, partially offset by a decrease in

organic operating profit.

Organic operating profit declined 4.8% as a result of the organic net sales decline, primarily due to a $302 million operating profit

decline in LAC and a $142 million operating profit decline in North America. The decline was also driven by an increase in

investments in strategic capabilities, including in digital and strengthening route-to-market, primarily in the US, and in marketing.

(1)See page 238-240 for an explanation under Accounting information and policies.

(2) For further details on exceptional items see page 64.

(3)Fair value remeasurements. For further details see page 64.

(4)See pages 239-240 and 312-314 for details on hyperinflation adjustments.

Business review (continued)

Basic earnings per share (cents)

Basic eps decreased 11.8% from 196.3 cents to 173.2 cents

Basic eps before exceptional items(1) decreased 8.6% from 196.5 cents to 179.6 cents

Basic eps decreased 23.1 cents, mainly driven by lower organic operating profit, higher finance charges and exceptional items,

partially offset by lower tax and the impact of share buybacks.

Basic eps before exceptional items decreased 16.9 cents.

(1)See pages 311-321 for an explanation of the calculation and use of non-GAAP measures.

(2)See pages 238-240 for an explanation under Accounting information and policies.

(3)For further details on exceptional items see pages 64 and 246-250.

(4)Includes finance charges net of tax.

(5)Excludes finance charges related to acquisitions, disposals, share buybacks and includes finance charges related to hyperinflation adjustments.

(6)Excludes tax related to acquisitions, disposals and share buybacks.

(7)Fair value remeasurements. For further details see page 64.

Net cash from operating activities and free cash flow(1) ($ million)

Generated $4,105 million net cash from operating activities(2) and $2,609 million free cash flow

Net cash from operating activities was $4,105 million, an increase of $469 million compared to fiscal 23. Free cash flow grew by $374

million to $2,609 million.

Free cash flow growth was driven by strong working capital management and the positive impact of lapping one-off cash tax

payments in the prior year. These favourable factors more than offset the negative impacts of lower operating profit and increased

interest payments, attributable to the current higher interest rate environment. The increase in capital expenditure (capex) demonstrates

our commitment to investing in the business for long-term sustainable growth.

(1)Definition of free cash flow has been redefined, see more details on page 316.

(2)Net cash from operating activities excludes net capex (2024 – $(1,496) million; 2023 – $(1,401) million).

(3) See pages 238-240 for an explanation under Accounting information and policies.

(4)Exchange on operating profit before exceptional items.

(5)Operating profit excludes exchange, depreciation and amortisation, post-employment charges of $11 million and other non-cash items.

(6)Working capital movement includes maturing inventory.

(7)Other items include dividends received from associates and joint ventures and other investments and post-employment payments.

Business review (continued)

Our global reach

Our regional profile maximises the opportunity for growth in our sector. Where our products are sold each market is accountable for

its own performance and driving growth.

% share of reported net sales by region(1)(2)

(1) The above map is intended to illustrate general geographic regions where Diageo has a presence and/or in which its products are sold. It is not intended to imply

that Diageo has a

presence in and/or that its products are sold in every country or territory within a geographic region.

(2) Based on reported net sales for the year ended 30 June 2024. Does not include corporate net sales of $123 million (2023 – $104 million).


Fiscal 24	North America	Europe	Asia Pacific	Latin America and Caribbean	Africa
Volume (EU million )	50.1	51.3	74.9	22.1	32.1
Reported net sales(1) ($ million)	7,908	4,804	3,817	1,839	1,778
Reported operating profit(2) ($ million)	3,039	1,257	1,438	502	131
Operating profit before exceptional items(3) ($ million)	3,236	1,379	1,063	502	131
Water efficiency, percentage change compared to fiscal 20 baseline	2%	(12)%	(38)%	4%	(25)%
Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 20 baseline	(32)%	18%	(75)%	(59)%	(43)%
Average number of employees(4)	3,144	10,524	8,763	4,437	3,499

(1) Excluding corporate net sales of $123 million (2023 – $104 million).

(2) Excluding net corporate operating costs of $366 million (2023 – $(397) million).

(3) Excluding exceptional operating charges of $56 million (2023 – $(766) million) and net corporate operating costs of $366 million (2023 – $(397) million)

(4) Employees have been allocated to the region where they live.

Business review (continued)

Production facilities

The company owns manufacturing production facilities across the globe, including distilleries, breweries, packaging plants, maturation

warehouses, cooperages, and distribution warehouses. Diageo’s brands are also produced at plants owned and operated by third parties

and joint ventures at several locations around the world. We believe that our facilities are in good condition and working order. We

have adequate capacity to meet our current needs, and, in the beer and spirit categories, we have undertaken activities to increase our

production capacity to address our anticipated future demand.

The major facilities owned by Diageo with locations, principal activities, and products are presented in the table below as at 30 June

2024.


Location	Principal activities	Products
United Kingdom	distilling, bottling, warehousing, coopering	beer, scotch, gin, vodka, rum, ready to drink, non- alcoholic
Ireland	distilling, brewing, bottling, warehousing	beer, liqueur, Irish whiskey, non-alcoholic
Italy	distilling, bottling, warehousing	vodka, rum, ready to drink, non-alcoholic
Türkiye	distilling, bottling, warehousing	raki, vodka, gin, liqueur, wine
North America	distilling, bottling, warehousing	vodka, gin, rum, Canadian whisky, US whiskey, ready to drink
Brazil	distilling, bottling, warehousing	cachaça, vodka, ready to drink
Mexico	distilling, bottling, warehousing	tequila
East Africa	distilling, brewing, bottling, warehousing	beer, rum, vodka, gin, whisky, brandy, liqueur, ready to drink, bottled in East Africa (scotch)
Nigeria	distilling, brewing, bottling, warehousing	beer, rum, vodka, gin, ready to drink
South Africa	distilling, bottling, warehousing	rum, vodka, gin
ARM	distilling, brewing, bottling, warehousing	beer, vodka, gin, ready to drink
India	distilling, bottling, warehousing	rum, vodka, Indian whisky, gin, brandy, bottled in India (scotch)
Australia	distilling, bottling, warehousing	rum, vodka, gin, ready to drink
Greater China	distilling, warehousing	Chinese whisky, Chinese white spirits

For more details about our capital investments please see page 344.

Our route to consumer

We have five different route to consumer models across our business. Most 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 market.

Wholesalers and Distributors

Diageo sells to a wholesaler or distributor who also sells a range of other brands and categories directly to end outlets where

consumers can purchase our brands. Where required, this model may include a government control board (or similar), such as in

certain states in the US and provinces and territories in Canada.

Modern Trade

Diageo sells directly to a customer who owns and manages retail outlets, who then in turn sells to consumers via their outlets.

eMarketplace

Diageo sells to a third-party digital marketplace customer where that customer sells to B2B customers and consumers.

Direct to Consumer

Diageo sells directly to consumers, predominantly through portals such as Thebar.com, which is a growing route to consumer model

for our business. It allows for direct interface with our consumers rather than through third-party sites as in the eMarketplace model

above.

Direct to Store

Diageo sells and delivers directly to end outlets rather than via a central purchasing customer as in the Modern Trade model above.

This model is less common than the other models. For example,

it is used in Ireland for beer distribution.

Business review (continued)

North America

North America (NAM) net sales performance was negatively impacted by a cautious US consumer environment while share

performance improved consistently through the year driven by focused execution.

•Diageo NAM performance was impacted by US Spirits due to a cautious consumer environment, retailer inventory adjustments

and the lapping of inventory replenishment in the prior year. Against this backdrop, Diageo held share of US TBA in fiscal 24 and

delivered share gains in the second half compared to the first half, supported by innovation, focused investment, primarily in Don

Julio and Crown Royal, and improved execution.

•Reported net sales declined 2%, due to weaker organic net sales performance.

•Organic net sales declined 3%, due to lower sales in US Spirits and Canada, partially offset by growth in Diageo Beer Company

(DBC USA).

•Price/mix grew 2pps and was more than offset by a 4% decline in volume.

•US Spirits net sales declined 3%, driven by a volume decline of 5%. Depletion growth was approximately one percentage point

ahead of shipment growth, with some variations across brands. Overall inventory levels at distributors at the end of fiscal 24

remained in line with historical levels.

•DBC USA net sales grew 3%, reflecting strong growth in Guinness, Smirnoff flavoured malt beverages, and the launch of Captain

Morgan Sliced Apple.

•Organic operating margin declined 79bps, primarily due to an increase in overhead costs in support of strategic initiatives and

marketing investments, partially offset by improvements in gross margin. Gross margin improvement was driven by productivity

savings which more than offset an adverse impact from mix and inflation.

•Marketing investment declined 1%, but increased as a percentage of net sales. Investment was focused in Don Julio and other key

brands, while maintaining focus on marketing efficiencies.

US Spirits highlights(1):

•Tequila net sales declined 5%, largely due to a 22% decline in Casamigos attributable to lower consumer demand and the impact

of lapping inventory replenishments in the prior year following supply shortages. As a result, Casamigos depletions were ahead of

shipments with a 9% decline. Don Julio net sales increased 12%, despite lapping the impact of inventory replenishments in the

prior year. Supported by strong execution, depletions grew 21%, significantly ahead of shipments, and was led primarily by Don

Julio Reposado. Diageo's tequila portfolio grew share of the spirits industry in fiscal 24, with acceleration in the second half, led by

Don Julio.

•Crown Royal whisky net sales declined 1%, primarily due to Crown Royal Deluxe and Crown Royal Peach, mostly offset by the

successful launch of Crown Royal Blackberry. Crown Royal held share for the full year and gained share of the spirits industry in

the second half of the fiscal year.

•Vodka net sales declined 8%, reflecting weakness in the category. Cîroc net sales declined 28%, partially offset by the launch of

Cîroc Limonata, which recruited consumers and gained category share. Smirnoff net sales declined 3%, primarily driven by

Smirnoff No.21. While Ketel One net sales declined 5%, primarily driven by Ketel One Botanicals, Ketel One grew share of the

vodka category supported by our 'Made to Cocktail' campaign.

•Johnnie Walker net sales declined 10%, due to continued normalisation of demand for luxury variant Johnnie Walker Blue Label

and lower demand for Johnnie Walker Red Label. The trademark continues to outperform the scotch category and held share of the

spirits industry, driven by strong performance in Johnnie Walker Black Label.

•Captain Morgan net sales declined 6%, primarily due to Captain Morgan Original Spiced as consumers shifted into other spirits

categories. Captain Morgan lost both category and spirits industry share.

•Bulleit whiskey net sales increased 12%, significantly ahead of depletions growth as inventory levels continue to normalise. Bulleit

held share of the spirits industry.

•Buchanan's net sales increased 3%, primarily driven by continued momentum in Buchanan’s Pineapple which recruited new

consumers. Buchanan's trademark gained share of the spirits industry.

•Spirits-based cocktails(2) net sales increased 15%, driven by the successful launches of the Cocktail Collection and Smirnoff

Smash, which both gained share of category and the spirits industry. The Cocktail Collection consists of Ketel One Espresso

Martini, Ketel One Cosmopolitan, Astral Margarita and Tanqueray Negroni.

(1)Spirits brands and categories excluding cocktails, which includes ready to drink, ready-to-serve and non-alcoholic variants, except where noted.

(2) Spirits-based cocktails includes ready to serve and ready to drink variants.

Business review (continued)

Key financials ($ million): North America


	2023 re-presented(1)	Exchange	Acquisitions and disposals	Organic movement	Other(2)	2024	Reported movement %
Net sales	8,109	3	2	(206)	—	7,908	(2)
Marketing	1,631	1	5	(10)	—	1,627	—
Operating profit before exceptional items	3,222	160	(10)	(142)	6	3,236	—
Exceptional operating items(3)	(118)					(197)
Operating profit	3,104					3,039	(2)


	Organic volume movement	Reported volume movement	Organic net sales movement	Reported net sales movement
Markets and categories:	%	%	%	%
North America(4)	(4)	(4)	(3)	(2)

US Spirits(4)	(5)	(4)	(3)	(3)
DBC USA(5)	1	1	3	3
Canada	(5)	(4)	(2)	(3)

Spirits(4)	(5)	(5)	(4)	(4)
Beer	3	3	5	5
Ready to drink	(8)	(8)	(3)	(3)

Key brands(6):
		Organic volume movement(7)	Organic net sales movement	Reported net sales movement
		%	%	%
Crown Royal		—	(1)	(1)
Don Julio		19	11	11
Casamigos(8)		(16)	(21)	(22)
Smirnoff		(5)	(2)	(2)
Johnnie Walker		(7)	(10)	(10)
Captain Morgan		(10)	(6)	(6)
Guinness		3	6	6
Ketel One(9)		(4)	(5)	(5)
Baileys		(2)	—	—
Bulleit whiskey(10)		6	12	12
Buchanan's		8	3	3



North America contributed		North America organic net sales declined
39% of Diageo reported net sales in fiscal 24		3% in fiscal 24

Reported net

sales by market

(%)

Reported net

sales by

category (%)

(1) See pages 238-240 for an explanation under Accounting information and policies.

(2)Fair value remeasurements. For further details see page 64.

(3)For further details on exceptional operating items see pages 246-250.

(4)Reported volume movement includes impacts from acquisitions and/or disposals. For further details see page 311-321.

(5)Certain spirits-based ready to drink products in certain states are distributed through DBC USA and those net sales are captured within DBC USA.

(6)Spirits brands excluding cocktails, which includes ready to drink, ready- to-serve and non-alcoholic variants.

(7)Organic equals reported volume movement.

(8)Casamigos trademark includes both tequila and mezcal.

(9)Ketel One includes Ketel One vodka and Ketel One Botanicals.

(10)Bulleit whiskey excludes Bulleit Crafted Cocktails.

Business review (continued)

Europe

Resilient net sales growth with continued strong momentum in Guinness.

•Diageo Europe delivered strong performance with market share growth across most European markets despite persistent cost

inflation and lower consumer confidence.

•Reported net sales grew 12%, primarily driven by a hyperinflation adjustment(1) related to Türkiye and organic growth.

•Organic net sales grew 3%, driven by double-digit growth in Türkiye and mid single-digit growth in Great Britain and Ireland,

partially offset by declines, primarily in Northern and Eastern Europe. Excluding the impact of lapping the sales of inventories

from the previously announced winding down of operations in Russia in fiscal 23, overall organic net sales for the region grew 4%.

•Price/mix grew 4pps, driven by price increases across most markets, with Guinness growth driving particularly strong price/mix in

Great Britain and Ireland.

•Spirits net sales declined 1%, primarily due to softness in the spirits category despite improved market share performance through

fiscal 24, and the impact of lapping final sales of inventories in Russia. Strong growth in raki and Baileys was more than offset by

declines in scotch, gin, and rum. Excluding the effect of lapping final sales of inventories in Russia, spirits organic net sales grew

1%.

•Beer net sales grew 18%, primarily driven by Guinness. Double-digit volume and price/mix in Guinness were driven by share

gains in Ireland and Great Britain, supported by strong marketing and innovation. Guinness 0.0 net sales and volume more than

doubled in fiscal 24.

•Organic operating margin declined by 121bps. Strategic price increases more than offset the impact of cost inflation. Margin

decline reflects increased marketing investment as well as investments in strategic commercial initiatives. Excluding the impact of

lapping the profit from sales of inventories in Russia in fiscal 23, operating margin declined by 85bps.

•Marketing investment increased 4%, primarily driven by investment in tequila, beer and Johnnie Walker.

Market highlights:

•Great Britain net sales grew 5%, primarily driven by strong performance in Guinness, which gained share in both the on-trade and

off-trade. Share gains were driven by continued recruitment through strong brand building and new occasions, supported by

Guinness 0.0 and Nitrosurge innovations.

•Southern Europe net sales were 2% lower, mainly due to scotch, rum and gin, reflecting category decline. This was in spite of the

majority of the markets within Southern Europe gaining share, driven by the continued momentum in Johnnie Walker.

•Northern Europe net sales declined 4%, due to macroeconomic pressures impacting higher price point segments in scotch, gin and

vodka. The decline was partially offset by double-digit growth in Johnnie Walker Red Label, as consumers shifted into the

standard price tier. Market share of spirits declined, primarily driven by ready to drink (RTD) cocktails as a result of increased

competitive activity.

•Ireland net sales grew 7%, primarily driven by double-digit growth in Guinness. Strong share gains in the on-trade were driven by

effective brand building and the roll-out of Guinness 0.0 draught, now in more than 1,500 on-trade outlets.

•Eastern Europe net sales declined 7%, primarily driven by lapping the final sales of inventories in Russia in the first half of the

prior year. Excluding Russia, net sales grew 8% driven by strong performance in Guinness and scotch.

•Türkiye net sales grew 31% with volume growth of 4%, primarily reflecting the impact of price increases in response to inflation

and increased excise duties. Net sales growth was mostly driven by strong performance in raki and Johnnie Walker, with share

gains in whisky.

Key financials ($ million): Europe


	2023 re-presented(2)	Exchange	Reclassification	Acquisitions and disposals	Organic movement	Other(3)	Hyperinflation(1)	2024	Reported movement %
Net sales	4,303	(3)	62	26	124	—	292	4,804	12
Marketing	765	18	1	22	34	—	33	873	14
Operating profit before exceptional items	1,312	24	47	3	(15)	(3)	11	1,379	5
Exceptional operating items(4)	(12)							(122)
Operating profit	1,300							1,257	(6)

(1)See pages 312-314 for details on hyperinflation adjustments.

(2) See pages 238-240 for an explanation under Accounting information and policies.

(3) Fair value remeasurements. For further details see page 64.

(4)For further details on exceptional items see pages 64 and 246-250.

Business review (continued)

Asia Pacific

Asia Pacific delivered organic net sales, volume and operating margin growth in challenging macroeconomic conditions whilst

increasing investment in the region.

•Reported net sales declined 1%, driven by the negative impact of foreign exchange and the disposal of Windsor, which was

partially offset by organic sales growth.

•Organic net sales grew 4%, driven by strong growth of Chinese white spirits in Greater China, and other whisky and scotch in

India, partially offset by declines in South East Asia and Australia.

•Price/mix grew 4pps, driven by continued premiumisation and pricing within whisky in India and strong growth in Chinese white

spirits.

•Spirits net sales grew 6%, driven by strong performance in Greater China and India. Tequila delivered double-digit sales growth,

albeit on a smaller base, with particularly strong growth in Travel Retail and India, and also grew market share across most of the

region.

•Organic operating margin increased by 35bps, driven by positive mix, attributable to growth of Chinese white spirits in Greater

China and favourable product mix in India.

•Marketing investment grew 2%, with focused investment in Don Julio across the region supporting the global launch of tequila,

Chinese white spirits in Greater China, and in innovation supporting the launch of Johnnie Walker Blonde and in Johnnie Walker

Blue Label Xordinaire in Travel Retail.

Market highlights:

•India net sales grew 8%, driven by double-digit growth in other whisky and scotch, supported by price/mix from continued

premiumisation and price increases, driven primarily by Prestige and Above business segments. Whisky growth was driven by

McDowell’s and Royal Challenge, and scotch growth was driven by Black & White and Johnnie Walker Blonde. Black & White

was one of the fastest-growing scotch brands in the market and drove recruitment into the category.

•Greater China net sales grew 12%, primarily driven by strong growth in Chinese white spirits, partially offset by a decline in

scotch. Despite the challenging macroeconomic conditions, Chinese white spirits delivered strong double-digit growth, lapping a

double-digit decline in the prior year and with restocking of inventory in the first half of the fiscal year. While scotch performance

was impacted by downtrading to lower-priced segments, focused execution and investment drove an improvement in category

share within international spirits.

•Australia net sales declined 8% primarily due to RTDs, attributable to increased competitive activity. This also led to the market

losing share in fiscal 24.

•South East Asia net sales declined 8%, reflecting the impact of lapping double-digit growth in the prior year and a double-digit

decline in Vietnam, most notably in Johnnie Walker. That was partially offset by the strong performance of The Singleton across

most of the market.

•Travel Retail Asia and Middle East net sales grew 10%, primarily driven by Johnnie Walker Blue Label Xordinaire and Don Julio

1942. Tequila delivered strong share growth supported by focused execution with increased portfolio and brand distribution across

the market.

•North Asia (Korea and Japan) net sales increased by 3%, however market share declined in the fiscal year, primarily in Korea. Net

sales growth was driven by super-premium-plus scotch, led by Johnnie Walker Blue Label, which delivered strong double-digit

growth supported by targeted investment, and the launch of Johnnie Walker Blonde in Korea, which supported recruitment into

whisky.

Key financials ($ million): Asia Pacific


	2023 re-presented(1)	Exchange	Reclassification	Acquisitions and disposals	Organic movement	2024	Reported movement %
Net sales	3,841	(30)	(62)	(96)	164	3,817	(1)
Marketing	655	(11)	(1)	(8)	16	651	(1)
Operating profit before exceptional items	1,104	(29)	(47)	(25)	60	1,063	(4)
Exceptional operating items(2)	(581)					375
Operating profit	523					1,438	175

(1)See pages 238-240 for an explanation under Accounting information and policies.

(2) For further details on exceptional items see pages 246-250.

Business review (continued)

Latin America and Caribbean

Latin America & Caribbean performance was impacted by a reduction of elevated inventory to more appropriate levels for

the current consumer environment, which remains challenging.

•Diageo LAC performance was materially weaker driven by fast-changing consumer sentiment in the prior year which resulted in

elevated inventory levels and subsequent adjustments by wholesalers and customers in the fiscal year. While the consumer

environment remains challenging in Brazil, Central America and Caribbean and South LAC, some stabilisation of consumer

demand in the second half of fiscal 24 resulted in share gains. However, a highly competitive environment and consumer

downtrading are contributing to a persistently challenging environment in Mexico.

•Reported net sales declined 15%, reflecting weaker organic performance, partially offset by a favourable impact from foreign

exchange.

•Organic net sales declined 21%, driven by soft demand for the international premium spirits category across the region, reduction

of high levels of inventory to more appropriate levels for current consumer demand and lapping strong double-digit growth.

•Price/mix declined 6pps, reflecting downtrading and increased trade investment to manage inventory towards appropriate levels for

the current consumer environment.

•Spirits net sales declined 23%, primarily driven by scotch, particularly Buchanan’s, Johnnie Walker Black Label and Johnnie

Walker Red Label, as well as a strong double-digit decline in Don Julio in Mexico.

•Organic operating margin declined by 746 bps, primarily driven by negative mix, increased trade investment and lower operating

leverage.

•Marketing investment declined 20%, in response to the rapid deterioration in the consumer environment.

Market highlights:

•Brazil net sales declined 18%, primarily due to a double-digit decline in scotch. In the second half of fiscal 24, Brazil gained share

of spirits as consumer demand stabilised after a challenging start to the year.

•Mexico net sales declined 30%, primarily driven by strong double-digit declines in tequila, led by Don Julio and scotch, reflecting

the double-digit decline in spirits consumer demand throughout the fiscal year. There was downtrading with consumers shifting

towards local spirits and the operating environment remained highly competitive, particularly in tequila. Market share declined in

fiscal 24, particularly in tequila and scotch.

•Central America and Caribbean (CCA) net sales declined 25%, primarily due to a strong double-digit decline in scotch due to

increased competition from local spirits. In the second half of fiscal 24, the market gained share of spirits, supported by focused

execution.

•Andean (Colombia and Venezuela) net sales declined 17%, primarily driven by scotch due to weakening consumer demand which

resulted in consumers shifting towards local spirits from international spirits.

•South LAC (Argentina, Bolivia, Chile, Ecuador, Paraguay, Peru and Uruguay) net sales declined 9%, driven by scotch. Despite the

challenging environment, the market delivered share gains in the second half of the fiscal year.

Key financials ($ million): Latin America and Caribbean


	2023 re-presented⁽¹⁾	Exchange	Organic movement	Other (2)	2024	Reported movement %
Net sales	2,159	118	(459)	—	1,839	(15)
Marketing	355	21	(70)	—	306	(14)
Operating profit	783	37	(302)	(17)	502	(36)

(1)See page 238-240 for an explanation under Accounting information and policies.

(2) Fair value remeasurements. For further details see page 64.

Business review (continued)

Africa

Africa delivered robust organic net sales growth despite ongoing macroeconomic challenges.

•Diageo Africa benefitted from price increases and delivered strong performance in a challenging macroeconomic environment with

persistent inflationary markets.

•Reported net sales declined 13%, reflecting an unfavourable impact from foreign exchange, mainly due to a weakening Nigerian

naira, partially offset by organic growth.

•Organic net sales grew 12%, with growth across all markets except South Africa. Growth was driven by price increases, partially

offset by a 6% volume decline, primarily in spirits.

•Price/mix grew 18pps, mainly due to broad based price increases in beer and spirits across the region.

•Spirits net sales declined 2%, driven by a volume decline of 16%, which was partially offset by price increases across the region.

Tequila growth doubled, led by Don Julio, partially offsetting an 11% decline in Johnnie Walker.

•Beer net sales grew 19%, benefitting from price increases across the region and volume growth of 4%. Malta Guinness, Guinness

and Senator each delivered double-digit net sales growth.

•Organic operating margin increased by 194bps, as price increases and productivity savings more than offset cost inflation.

•Marketing investment grew 16%, focused on supporting spirits premiumisation, Guinness and tequila penetration.

Market highlights:

•East Africa net sales increased 9%, lapping a softer comparator following price increases. The increase was led by growth in beer,

mainly Senator, which also grew share of TBA in the fiscal year. RTDs, rum and scotch also contributed to the improvement.

•Nigeria net sales grew 31%, driven by strong price/mix supported by price increases, partially offset by a decline in volume. The

market lost share in almost all categories.

•Africa Regional Markets net sales grew 6%, led by growth in beer, primarily driven by Malta Guinness and Guinness, supported

by price increases. Growth in beer and RTDs was partially offset by a decline in spirits, particularly in Johnnie Walker. Strong

price/mix more than offset a volume decline of 6%.

•South Africa net sales declined 11%, primarily driven by lower volume of 17%, primarily in Johnnie Walker Black Label and

Smirnoff 1818. Spirits category growth was slower than the beer category, and Diageo South Africa lost share in spirits. This was

despite growth of the markets' share in the gin and tequila categories, led by Gordon’s and Don Julio.

Key financials ($ million): Africa


	2023 re- presented⁽¹⁾	Exchange	Reclassific ation	Acquisitions and disposals	Organic movement	Hyperinfla tion(2)	2024	Reported movement %
Net sales	2,039	(518)	—	—	235	22	1,778	(13)
Marketing	235	(53)	(12)	(1)	35	1	205	(13)
Operating profit before exceptional items	289	(222)		(11)	86	(11)	131	(55)
Exceptional operating items(3)	(55)						—
Operating profit	234						131	(44)

(1)See pages 238-240 for an explanation under Accounting information and policies.

(2)See pages 239-240 and 312-314 for details on hyperinflation adjustments.

(3) For further details on exceptional operating items see pages 64 and 246-250.

Business review (continued)

Corporate

Performance 2024

Sales and net sales

Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net sales

were $123 million in the year ended 30 June 2024, an increase of $19 million. Net sales were favorably impacted by an organic

increase of $13 million partially offset by $6 million exchange rate movement gain.

Operating costs

Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as well

as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply Chain

and Procurement. Operating costs were $366 million in the year ended 30 June 2024 a decrease of $31 million compared to operating

costs of $397 million in the year ended 30 June 2023. The $31 million decrease in costs in the year ended 30 June 2024 was

principally a result of favourable exchange rate movements of $22 million.

Performance 2023

Sales and net sales

Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net sales

were $104 million in the year ended 30 June 2023, an increase of $34 million. Net sales were favorably impacted by an organic

increase of $44 million partially offset by $10 million exchange rate movement loss.

Operating costs

Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as well

as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply Chain

and Procurement. Operating costs were $397 million in the year ended 30 June 2023 an increase of $80 million compared to operating

costs of $317 million in the year ended 30 June 2022. The $31 million increase in costs in the year ended 30 June 2023 was principally

a result of increased staff & IT costs and unfavourable exchange rate movements of $41 million.

Business review (continued)

Additional financial information

Year ended 30 June 2024


	Reported 2023	Exceptional operating items (c)	Exchange (a)	Acquisitions and disposals (b)	Organic movement(2)	Fair value remeasure- ment (d)	Reclassifi- cation	Hyper- inflation(2)	Reported 2024
Key financials - certain line items	re-presented(1) $ million	$ million	$ million	$ million	$ million	$ million	$ million	$ million	$ million
Sales	28,270	—	(654)	(381)	168	—	—	488	27,891
Excise duties	(7,715)	—	230	313	(297)	—	—	(153)	(7,622)
Net sales	20,555	—	(424)	(68)	(129)	—	—	335	20,269
Cost of sales	(8,289)	23	388	5	25	(16)	—	(207)	(8,071)
Gross profit	12,266	23	(36)	(63)	(104)	(16)	—	128	12,198
Marketing	(3,663)	—	19	(18)	(7)	—	12	(34)	(3,691)
Other operating items	(3,056)	799	9	38	(193)	2	(12)	(93)	(2,506)
Operating profit	5,547	822	(8)	(43)	(304)	(14)	—	1	6,001

Other line items:
Non-operating items	364								(70)
Taxation (e)	(1,163)								(1,294)

(1)See pages 238-240 for an explanation under Accounting information and policies.

(2)For the definition of organic movement and hyperinflation, see pages 311-321.

(i)Reported figures in the table above have been extracted from the income statement for the years ended 30 June 2023 and 30 June 2024.

(a) Exchange

The impact of movements in exchange rates on reported figures for operating profit was principally in respect of the unfavourable

exchange impact of the weakening of the Nigerian naira, the Turkish lira and the Kenyan shilling, partially offset by the favourable

impact of the Mexican peso and sterling against the US dollar.

The effect of movements in exchange rates and other movements on profit before exceptional items and taxation for the year ended 30

June 2024 is set out in the table below.


	Gains/ (losses) $ million
Translation impact	(37)
Transaction impact	29
Operating profit before exceptional items	(8)
Net finance charges – translation impact	22
Net finance charges – transaction impact	(24)
Net finance charges(1)	(2)
Associates – translation impact	15
Profit before exceptional items and taxation	5

(1) For more information about Finance income and charges please see page 252-253.


	Year ended 30 June 2024	Year ended 30 June 2023
Exchange rates
Translation $1 =	£0.80	£0.83
Transaction $1 =	£0.82	£0.77
Translation $1 =	€0.93	€0.96

Business review (continued)

(b) Acquisitions and disposals

The acquisitions and disposals movement in the year ended 30 June 2024 was primarily attributable to the acquisition of Don Papa

Rum and to the disposal of Windsor Global Co., Ltd. and Guinness Cameroun S.A.

See pages 229-232 for further details.

In the year ended 30 June 2024, exceptional operating items were a gain of $56 million (2023 – a loss of $766 million), mainly due to

the reversal of the Shui Jing Fang brand impairment (a gain of $379 million) partially offset by an impairment charge in respect of the

Chase brand and goodwill and tangible fixed assets (a charge of $101 million), an impairment charge in respect of certain brands in

the US ready to drink portfolio (a charge of $54 million), various dispute and litigation matters (a charge of $107 million) and the

supply chain agility programme (a charge of $61 million). In the year ended 30 June 2023, exceptional operating items were a loss of

$766 million, mainly due to charges related to brand impairment ($613 million) and the supply chain agility programme ($121

million).

In the year ended 30 June 2024, exceptional non-operating items were a loss of $70 million (2023 – a gain of $364 million), mainly driven

by the loss on the sale of the Windsor business in Korea ($58 million). In the year ended 30 June 2023, exceptional non-operating items

were a gain of $364 million, mainly driven by the gain in relation to the sale of Guinness Cameroun S.A. ($343 million).

See pages 260-264 for further details.

(d) Fair value remeasurement

The adjustment to cost of sales reflects the elimination of fair value changes for biological assets in respect of growing agave plants of

$16 million loss for the year ended 30 June 2024 (2023 – $nil). The adjustments to marketing and other operating expenses were the

elimination of fair value changes to contingent consideration liabilities and earn-out arrangements in respect of prior year acquisitions

of $155 million gain for the year ended 30 June 2024 (2023 – $153 million gain).

(e) Taxation

The reported tax rate for the year ended 30 June 2024 was 23.7% compared with 20.6% for the year ended 30 June 2023.

Included in the tax charge of $1,294 million in the year ended 30 June 2024 is a net exceptional tax charge of $24 million, including

an exceptional tax charge of $95 million in relation to the reversal of the Shui Jing Fang brand impairment charge, partly offset by a

tax credit of $19 million in respect of the Chase brand impairment and the related tangible fixed assets, a tax credit of $13 million

comprised of brand impairments in the US ready to drink portfolio, a tax credit of $23 million in relation to various dispute and

litigation matters in North America and a tax credit of $15 million in respect of the supply chain agility programme.

Included in the tax charge of $1,163 million in the year ended 30 June 2023 is a net exceptional tax credit of $226 million, including

an exceptional tax credit of $154 million in respect of brand impairments, mainly the McDowell's brand, a tax credit of $68 million in

respect of the deductibility of fees paid to Diageo plc for guaranteeing externally issued debt of its US group entities, a tax credit of

$27 million in respect of the supply chain agility programme, partly offset by a tax charge of $52 million in respect of the sale of

Guinness Cameroun S.A.

The tax rate before exceptional items for the year ended 30 June 2024 was 23.2% compared with 23.0% for the year ended 30 June

2023.

We expect the tax rate before exceptional items for the year ending 30 June 2025 to be in the region of 24%.

(f) Dividend

The group aims to increase the dividend each year. The decision in respect of the dividend is made with reference to the dividend

cover, as well as current performance trends, including sales and profit after tax together with cash generation. Diageo targets dividend

cover (the ratio of basic earnings per share before exceptional items to dividend per share) within the range of 1.8 - 2.2 times. For the

year ended 30 June 2024, dividend cover was 1.7 times. The recommended final dividend for the year ended 30 June 2024, to be put

to the shareholders for approval at the Annual General Meeting is 62.98 cents, an increase of 5% on the prior year final dividend. This

would bring the recommended full year dividend to 103.48 cents per share, an increase of 5% on the prior year. The group will keep

future returns of capital, including dividends, under review through the year ending 30 June 2025, to ensure Diageo’s capital is

allocated in the best way to maximise value for the business and its stakeholders.

Subject to approval by shareholders, the final dividend will be paid to holders of ordinary shares and US ADRs on the register as of

Business review (continued)

30 August 2024. The ex-dividend date will be 29 August 2024 for holders of ordinary shares, and 30 August 2024 for US ADR

holders. Holders of ordinary shares will receive their dividends in sterling unless they elect to receive their dividends in US dollar by

20 September 2024. The dividend per share in pence to be paid to ordinary shareholders will be announced on 3 October 2024 and

will be determined by the actual foreign exchange rates achieved by Diageo buying forward contracts for Sterling currency, entered

into during the three days preceding the announcement. The final dividend, once approved by shareholders, will be paid to both

holders of ordinary shares and US ADRs on 17 October 2024. A dividend reinvestment plan is available to holders of ordinary shares

in respect of the final dividend and the plan notice date is 20 September 2024.

(g) Return of capital

Diageo completed a total of $1.0 billion return of capital during the year ended 30 June 2024. This programme followed the successful

completion of Diageo's previous return of capital programme that ended on 2 June 2023, in which $0.6 billion of capital (announced as

up to £0.5 billion on 26 January 2023) was returned to shareholders.

In the year ended 30 June 2024, the company purchased 27.4 million ordinary shares (2023 – 37.8 million) at a cost of $987 million,

including transaction costs (2023 – $1,673 million including transaction costs of $16 million). All shares purchased under the share

buyback programme were cancelled.

Business review (continued)

Movements in net borrowings and equity


Movements in net borrowings	2024	2023
	$ million	re-presented(1) $ million
Net borrowings at the beginning of the year	(19,582)	(17,107)
Free cash flow (2)	2,609	2,235
Movements in loans and other investments	(47)	(68)
Acquisitions (3)	(6)	(404)
Investment in associates (3)	(133)	(112)
Sale of businesses and brands (4)	87	559
Share buyback programme (5)	(987)	(1,673)
Net sale of own shares for share schemes (6)	21	36
Purchase of treasury shares in respect of subsidiaries	(10)	—
Dividend paid to non-controlling interests	(117)	(117)
Net movements in bonds (7)	558	887
Purchase of shares of non-controlling interests (8)	(223)	(178)
Net movements in other borrowings (9)	(106)	69
Equity dividend paid	(2,242)	(2,065)
Net decrease in cash and cash equivalents	(596)	(831)
Net increase in bonds and other borrowings	(453)	(958)
Exchange differences (10)	(199)	(646)
Other non-cash items	(187)	(40)
Net borrowings at the end of the year	(21,017)	(19,582)

(1)See pages 238-240 for an explanation under Accounting information and policies.

(2) See page 316 for the analysis of free cash flow.

(3) In the year ended 30 June 2024, Diageo paid $6 million in respect of prior year acquisitions (2023 – $31 million). In the year ended

30 June 2023, acquisitions also included upfront payments of €246 million ($261 million) for Kanlaon Limited and Chat Noir Co. Inc.

(the owner of Don Papa Rum) and $102 million for Balcones Distilling.

In the years ended 30 June 2024 and 2023, investment in associates included additional investments in a number of Distill Ventures

associates.

(4) In the year ended 30 June 2024, sale of businesses and brands included a net cash consideration, net of disposal costs, of $88

million for the disposal of Windsor Global Co., Ltd. In the year ended 30 June 2023, sale of businesses and brands included the

disposal of Guinness Cameroun S.A. beer business for a net cash consideration, net of disposal costs, of $438 million and the disposal

of the Popular brands of Diageo’s USL business, for a cash consideration, net of disposal costs, of $92 million.

(5) See page 65 and 298-299 for details of Diageo's return of capital programmes.

(6) Net sale of own shares comprised receipts from employees on the exercise of share options of $38 million (2023 – $63 million)

less purchase of own shares for the future settlement of obligations under the employee share option schemes of $17 million (2023 –

$27 million).

(7) In the year ended 30 June 2024, the group issued bonds of $1,700 million ($1,690 million - net of discount and fee) consisting of

$800 million 5.375% fixed rate notes due 2026, $900 million 5.625% fixed rate notes due 2033, €500 million ($535 million - net of

discount and fee) floating rate notes due 2026 and repaid bonds of $500 million and €600 million ($632 million) and €500 million

($535 million). In the year ended 30 June 2023, the group issued bonds of $2,000 million ($1,989 million - net of discount and fee)

consisting of $500 million 5.2% fixed rate notes due 2025, $750 million 5.3% fixed rate notes due 2027, $750 million 5.5% fixed rate

notes due 2033 and €500 million 3.5% fixed rate notes due 2025 ($548 million - net discount and fee), and repaid bonds of $300

million and $1,350 million.

(8) On 16 January 2024, Diageo agreed with Combs Wine and Spirits LLC to purchase the 50% of the share capital of DeLeon Holdco

LLC that Diageo did not already own. On 24 March 2023, Diageo completed the purchase of an additional 14.97% of the share capital

of East African Breweries PLC (EABL). This increased Diageo's controlling shareholding position in EABL from 50.03% to 65.00%.

(9) In the year ended 30 June 2024, the net movements in other borrowings principally arose from the $229 million increase in

commercial paper offset by cash outflows of foreign currency swaps and forwards of $124 million and $104 million repayment of

lease liabilities. In the year ended 30 June 2023, the net movements in other borrowings principally arose from the increase in

Business review (continued)

commercial paper, collateral and bank loan balances offset by cash outflows of foreign currency swaps and forwards and repayment of

lease liabilities.

(10) In the year ended 30 June 2024, exchange losses arising on net borrowings of $199 million were primarily driven by adverse

exchange movements on sterling and euro denominated borrowings and unfavourable movements on cash and cash equivalents

partially offset by favourable movements on foreign currency swaps and forwards. In the year ended 30 June 2023, exchange losses

arising on net borrowings of $646 million were primarily driven by unfavourable exchange movements on sterling and euro

denominated borrowings and unfavourable exchange movements on cash and cash equivalents, foreign currency swaps and forwards.


Movements in equity	2024	2023
	$ million	re-presented(1) $ million
Equity at the beginning of the year	11,709	11,511
Adjustment to 2023 closing equity in respect of hyperinflation in Ghana (2)	51	—
Adjusted equity at the beginning of the year	11,760	11,511
Profit for the year	4,166	4,479
Exchange adjustments (3)	(645)	(358)
Remeasurement of post-employment benefit plans net of taxation	(61)	(562)
Purchase of shares of non-controlling interests (4)	(223)	(178)
Hyperinflation adjustments net of taxation (2)	365	180
Associates' transactions with non-controlling interests	—	(8)
Dividend declared to non-controlling interests	(121)	(117)
Equity dividend declared	(2,243)	(2,071)
Share buyback programme (5)	(997)	(1,543)
Other reserve movements	69	376
Equity at the end of the year	12,070	11,709

(1)See pages 238-240 for an explanation under Accounting information and policies.

(2) See pages 239-240 and 312-314 for details on hyperinflation adjustments.

(3) Exchange movements in the year ended 30 June 2024 primarily arose from exchange losses driven by the Turkish lira, the Mexican

peso, sterling and the euro. Exchange movements in the year ended 30 June 2023 primarily arose from exchange losses driven by

sterling, the Turkish lira, the Indian rupee and the Chinese yuan, partially offset by gains in the euro, the Mexican peso, and foreign

exchange on borrowings designated into net investment hedge before the functional currency change.

(4) On 16 January 2024, Diageo agreed with Combs Wine and Spirits LLC to purchase the 50% of the share capital of DeLeon Holdco

LLC that Diageo did not already own. On 24 March 2023, Diageo completed the purchase of an additional 14.97% of the share capital

of East African Breweries PLC (EABL). This increased Diageo's controlling shareholding position in EABL from 50.03% to 65.00%.

(5) See page 65 for details of Diageo's return of capital programmes.

Post-employment benefit plans

The net surplus of the group’s post-employment benefit plans decreased by $22 million from $739 million at 30 June 2023 to $717

million at 30 June 2024. The decrease in net surplus was predominantly attributable to the adverse change in the market value of assets

held by the post-employment benefit plans in the UK that was partially offset by the favourable change in the inflation rate in the

United Kingdom (from 2.7% to 2.6%).

Total cash contributions by the group to all post-employment benefit plans in the year ending 30 June 2025 are estimated to be

approximately $55 million.

Business review (continued)

Liquidity and capital resources

1. Sources and uses of liquidity

The primary source of the group’s liquidity over the last three financial years has been cash generated from operations. These funds

have generally been used to pay interest, taxes and dividends, and to fund capital expenditure and acquisitions, and, together with the

group’s current strong cash position, are expected to continue to fund future operating and capital needs. The group also issues short-

term commercial paper regularly in order to finance its day-to-day operations, and accesses the term debt capital markets regularly to

refinance maturing bonds each year and to manage liquidity.

The table below sets forth the group’s available undrawn committed bank facilities as at 30 June 2024, 30 June 2023 and 30 June

2022.


	30 June 2024	30 June 2023	30 June 2022
	$ million	re-presented $ million	re-presented $ million
Expiring within one year	625	125	960
Expiring between one and two years	1,040	625	125
Expiring after two years	1,585	2,625	2,290
	3,250	3,375	3,375

The facilities can be used for general corporate purposes and, together with cash and cash equivalents, support the group’s commercial

paper programmes.

There are no financial covenants on the group’s material short- and long-term borrowings. Certain of these borrowings contain cross

default provisions and negative pledges.

The committed bank facilities are subject to a single financial covenant, being minimum interest cover ratio of two times (defined as

the ratio of operating profit before exceptional items, aggregated with share of after tax results of associates and joint ventures, to net

interest charges). They are also subject to pari passu ranking and negative pledge covenants.

Any non-compliance with covenants underlying Diageo’s financing arrangements could, if not waived, constitute an event of default

with respect to any such arrangements, and any non-compliance with covenants may, in particular circumstances, lead to an

acceleration of maturity on certain borrowings and the inability to access committed facilities. Diageo was in full compliance with its

financial, pari passu ranking and negative pledge covenants in respect of its material short- and long-term borrowings throughout each

of the years presented.

2. Analysis of cash flows

The table below sets forth the group’s cash flows for the year ended 30 June 2024, 30 June 2023 and 30 June 2022.


	30 June 2024	30 June 2023	30 June 2022
	$ million	re-presented $ million	re-presented $ million
Net cash inflow from operating activities	4,105	3,636	5,213
Net cash outflow from investing activities	(1,595)	(1,426)	(1,792)
Net cash outflow from financing activities	(3,106)	(3,041)	(4,373)
Net decrease in net cash and cash equivalents	(596)	(831)	(952)
Exchange difference	(33)	(76)	(38)
Reclassification to asset held for sale	(30)	—	—
Net cash and cash equivalents at beginning of period	1,768	2,675	3,665
Net cash and cash equivalents at end of period	1,109	1,768	2,675

Net cash inflow from operating activities in fiscal 24 was $4,105 million (2023 – $3,636 million), an increase of $469 million

compared to fiscal 23, primarily driven by a year-on-year decrease of $646 million in working capital outflows and a $454 million

growth in operating profit, offset by a decrease of $804 million in depreciation, amortisation and impairment charges in operating

profit, driven by lower exceptional impairment charges and reversals in fiscal 24.

Net cash inflow from operating activities in fiscal 23 was $3,636 million (2022 – $5,213 million), a decrease of $1,577 million

compared to fiscal 22, primarily driven by a year-on-year increase of $1,173 million in working capital outflows and an increase of

$412 million tax and interest payments.

Business review (continued)

Net cash outflow from investing activities in fiscal 24 was $1,595 million (2023 – $1,426 million), a net increase in outflow of $169

million compared to fiscal 23, primarily driven by a decrease in net consideration received in respect of sale of businesses from $559

million to $87 million, offset by a decrease in net consideration paid in respect of business acquisitions from $516 million to $139

million.

Net cash outflow from investing activities in fiscal 23 was $1,426 million (2022 – $1,792 million), a net decrease in outflow of $366

million compared to fiscal 22, primarily driven by an increase in net consideration received in respect of sale of businesses from $102

million to $559 million, offset by an increase in net consideration paid in respect of business acquisitions from $364 million to $516

million.

Net cash outflow from financing activities in fiscal 24 was $3,106 million (2023 – $3,041 million), a net increase in outflow of $65

million compared to fiscal 23. This change was driven by a decrease in net inflow in relation to bond issuances and repayments from

$887 million to $558 million and an increase in equity dividend payments from $2,065 million to $2,242 million, mainly offset by the

decreased level of share buyback programme related cash outflows from $1,673 million to $987 million.

Net cash outflow from financing activities in fiscal 23 was $3,041 million (2022 – $4,373 million), a net decrease in outflow of $1,332

million compared to fiscal 22. This change was largely driven by the decreased level of share buyback programme related cash

outflows from $2,985 million to $1,673 million and a decrease in equity dividend payments from $2,300 million to $2,065 million,

partially offset by a decrease in net inflow in relation to bond issuances and repayments from $911 million to $887 million.

The operating, investing and financing activities described above resulted in a decrease in net cash and cash equivalents of $659

million, from $1,768 million at 30 June 2023 to $1,109 million at 30 June 2024 (2023 – decrease of $907 million, 2022 – decrease of

$990 million).

3. Analysis of borrowings

The group policy with regard to the expected maturity profile of borrowings of group finance companies is to limit the proportion of

such borrowings maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the level of

commercial paper to 30% of gross borrowings less money market demand deposits. In addition, it is group policy to maintain backstop

facility terms from relationship banks to support commercial paper obligations.

The group’s gross borrowings and net borrowings are measured at amortised cost with the exception of borrowings designated in fair

value hedge relationships, interest rate hedging instruments and foreign currency swaps and forwards. For borrowings designated in

fair value hedge relationships, Diageo recognises a fair value adjustment for the risk being hedged in the balance sheet, whereas

interest rate hedging instruments and foreign currency swaps and forwards are measured at fair value.

The table below sets forth the group’s gross borrowings and net borrowings as at 30 June 2024, 30 June 2023 and 30 June 2022.


	30 June 2024	30 June 2023	30 June 2022
	$ million	re-presented $ million	re-presented $ million
Overdrafts	(21)	(45)	(90)
Other borrowings due within one year	(2,864)	(2,097)	(1,752)
Borrowings due within one year	(2,885)	(2,142)	(1,842)
Borrowings due between one and three years	(4,873)	(4,437)	(3,408)
Borrowings due between three and five years	(4,222)	(3,620)	(3,177)
Borrowings due after five years	(9,521)	(10,592)	(10,958)
Fair value of foreign currency forwards and swaps	334	436	430
Fair value of interest rate hedging instruments	(376)	(476)	(342)
Lease liabilities	(604)	(564)	(575)
Gross borrowings	(22,147)	(21,395)	(19,872)
Offset by:
Cash and cash equivalents	1,130	1,813	2,765
Net borrowings	(21,017)	(19,582)	(17,107)

The table below sets forth the percentage of the group’s gross borrowings and cash and cash equivalents by currency as at 30 June

2024.

Business review (continued)


	Total	US dollar %	Sterling %	Euro %	Indian Rupee %	Chinese Yuan %	South Korean won %	Other %
Gross borrowings	(22,147)	43.00%	22.00%	26.00%	—%	4.00%	—%	5.00%
Cash and cash equivalents	1,130	12.00%	3.00%	5.00%	15.00%	23.00%	4.00%	38.00%

Based on average monthly net borrowings and net interest charge, the effective interest rate for the year ended 30 June 2024 was

4.3%. For this calculation, net interest charge excludes fair value adjustments to derivative financial instruments and borrowings and

average monthly net borrowings include the impact of interest rate swaps that are no longer in a hedge relationship but exclude the

market value adjustment for cross currency interest rate swaps.

For the year ended 30 June 2024, the group issued bonds of $1,700 million ($1,690 million - net of discount and fee) consisting of

$800 million 5.375% fixed rate notes due 2026, $900 million 5.625% fixed rate notes due 2033, €500 million ($535 million - net of

discount and fee) floating rate notes due 2026 and repaid bonds of $500 million and €600 million ($632 million) and €500 million

($535 million). In the year ended 30 June 2023, the group issued bonds of $2,000 million ($1,989 million - net of discount and fee)

consisting of $500 million 5.2% fixed rate notes due 2025, $750 million 5.3% fixed rate notes due 2027, $750 million 5.5% fixed rate

notes due 2033 and €500 million 3.5% fixed rate notes due 2025 ($548 million - net discount and fee), and repaid bonds of $300

million and $1,350 million. In the year ended 30 June 2022, the group issued bonds of €1,650 million ($1,800 million - net of discount

and fee) and £892 million ($1,171 million - net of discount and fee), and repaid bonds of €900 million ($1,060 million) and $1,000

million.

The principal components of the $1,435 million increase in net borrowings from 30 June 2023 to 30 June 2024 were mainly the

$2,609 million of free cash flow and $558 million net movements in bonds, partially offset by $2,242 million equity dividends and

$139 million in respect of the acquisitions.

The principal components of the $2,475 million increase in net borrowings from 30 June 2022 to 30 June 2023 were mainly the

$2,235 million of free cash flow and $887 million net movements in bonds, partially offset by $2,066 million equity dividends and

$516 million in respect of the acquisitions.

For information on the maturity profile of net borrowings and a further description of net borrowings, please see note 17 – Net

borrowings in the consolidated financial statements.

For information on the use of financial instruments including for hedging purposes, please see “Note 16 – Financial instruments” in

the consolidated financial statements.

The group’s management is committed to enhancing shareholder value in the long-term, both by investing in the business and brands

so as to deliver continued improvement in the return from those investments and by managing the capital structure. Diageo manages

its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to

debt markets at attractive cost levels. This is achieved by targeting an adjusted net borrowings (net borrowings aggregated with post-

employment benefit liabilities) to adjusted EBITDA leverage of 2.5 - 3.0 times, this range for Diageo being currently broadly

consistent with an A-band credit rating. Diageo would consider operating outside of this range in order to effect strategic initiatives

within its stated goals, which could have an impact on its rating. If Diageo’s leverage was to be negatively impacted by the financing

of an acquisition, it would seek over time to return to the range of 2.5 - 3.0 times. The group regularly assesses its debt and equity

capital levels against its stated policy for capital structure. As at 30 June 2024 the adjusted net borrowings of $21,446 million (2023 -

$20,053 million) to adjusted EBITDA ratio was 3.0 (2023 - 2.7) times. For this calculation, net borrowings are adjusted by post-

employment benefit liabilities before tax of $429 million (2023 - $471 million) whilst adjusted EBITDA of $7,037 million (2023 -

$7,353 million) comprises operating profit excluding exceptional operating items and depreciation, amortisation and impairment and

includes share of after tax results of associates and joint ventures.

See page 294 for the reconciliation and calculation of the adjusted net borrowing to adjusted EBITDA ratio.

The group’s funding, liquidity and exposure to foreign currency, interest rate risks, financial credit risk and commodity price risk are

conducted within a framework of board approved policies and guidelines. The group purchases insurance for commercial or, where

required, for legal or contractual reasons. In addition, the group retains some insurable risk where external insurance is not considered

to be an economic means of mitigating this risk. Loan, trade and other receivables exposures are managed locally in the operating

units where they arise and credit limits are established as deemed appropriate for the customer.

Business review (continued)

4. Contractual obligations and other commitments


	Payments due by period
As at 30 June 2024	Less than 1 year $ million	1-3 years $ million	3-5 years $ million	More than 5 years $ million	Total $ million
Long-term debt obligations	2,388	4,992	4,258	9,812	21,450
Interest obligations	791	1,043	789	1,866	4,489
Credit support obligations	14	—	—	—	14
Purchase obligations	2,413	1,009	389	37	3,848
Commitments for short-term leases and leases of low-value assets	16	6	1	—	23
Provisions and other non-current payables	101	225	187	192	705
Lease obligations	114	178	117	310	719
Capital commitments	780	3	—	—	783
Other financial liabilities	198	—	—	—	198
Total	6,815	7,456	5,741	12,217	32,229

Long-term debt obligations comprise the principal amount of borrowings (excluding foreign currency swaps) with an original maturity

of greater than one year. Interest obligations comprise interest payable on these borrowings and are calculated based on the fixed

amounts payable and where the interest rate is variable on an estimate of what the variable rates will be in the future. Credit support

obligations represent liabilities to counterparty banks in respect of cash received as collateral under credit support agreements.

Purchase obligations include various long-term purchase contracts entered into for the supply of raw materials, principally bulk

whisk(e)y, cereals, cans and glass bottles. Contracts are used to guarantee the supply of raw materials over the long-term and to enable

a more accurate prediction of costs of raw materials in the future. For certain provisions, discounted numbers are disclosed.

Corporate tax payable of $136 million and deferred tax liabilities of $2,947 million are not included in the table above, as the ultimate

timing of settlement cannot be reasonably estimated.

Management believe that it has sufficient funding for its working capital requirements.

Neither Diageo plc nor any member of the Diageo group has any off-balance sheet financing arrangements that currently have or are

reasonably likely to have a material future effect on the group’s financial condition, changes in financial condition, results of

operations, liquidity, capital expenditure or capital resources.

For more information on commitments and contingencies, please see note 19 – Contingent liabilities and legal proceedings in the

consolidated financial statements.

Business review (continued)

5. Capital repayments

Authorisation was given by shareholders on 28 September 2023 to purchase a maximum of 224,704,974 ordinary shares at a minimum

price of 28101/108 pence and a maximum price of the higher of (a) 105% of the average market value of the company's ordinary shares

for the five business days prior to the day the purchase is made and (b) the higher of the price of the last independent trade and the

highest current independent bid on the trading venue where the purchase is carried out. The programme expires at the conclusion of

the next Annual General Meeting or on 27 December 2024, if earlier.

Diageo completed a total of $1.0 billion return of capital during the year ended 30 June 2024. This programme followed the

successful completion of Diageo's previous return of capital programme that ended on 2 June 2023, in which $0.6 billion of capital

(announced as up to £0.5 billion on 26 January 2023) was returned to shareholders.

During the year ended 30 June 2024, the group purchased 28 million ordinary shares (2023 – 38 million; 2022 – 61 million),

representing approximately 1.1% of the issued ordinary share capital (2023 – 1.5%; 2022 – 2.4%) at an average price of 2918 pence

(3644 cents) per share, and an aggregate cost of $987 million, including transaction costs (2023 – 3616 pence (4382 cents) per share,

and an aggregate cost of $1,673 million, including $16 million of transaction costs; 2022 – 3709 pence (4842 cents) per share, and an

aggregate cost of $2,985 million, including $21 million of transaction costs) under the share buyback programme. The shares

purchased under the share buyback programmes were cancelled.

For further details about the shares purchased and the average price paid per share please refer to note 18 in the consolidated financial

statements.

Business review (continued)


Our global reach	Our regional profile maximises the opportunity for growth in our sector. Where our products are sold each market is accountable for its own performance and driving growth.

(1) The above map is intended to illustrate general geographic regions where Diageo has a presence and/or in which its products are sold. It is not intended to imply

that Diageo has a presence in and/or that its products are sold in every country or territory within a geographic region.

(2) Based on reported net sales for the year ended 30 June 2023. Does not include corporate net sales of $104 million (2022 – $70 million).


Fiscal 23	North America	Europe	Asia Pacific	Latin America and Caribbean	Africa
Volume (EUm)	52.4	51.3	80.8	26.2	32.7
Reported net sales(1) ($ million)	8,109	4,303	3,841	2,159	2,039
Reported operating profit(2) ($ million)	3,104	1,300	523	783	234
Operating profit before exceptional items(3) ($ million)	3,222	1,312	1,104	783	289
Water efficiency (litres per litre of product packaged)	5.11	4.98	2.91	4.15	3.19
Total direct and indirect carbon emissions by weight (market/net based) (1,000 tonnes CO2e)	83	194	9	26	89
Average number of employees(4)	3,115	10,062	9,000	4,325	3,735

(1) Excluding corporate net sales of $104 million (2022 – $70 million).

(2) Excluding net corporate operating costs of $397 million (2022 – $317 million).

(3) Excluding exceptional operating charges of $766 million (2022 – $477 million) and net corporate operating costs of $397 million (2022 – $317 million).

(4) Employees have been allocated to the region in which they reside.

Business review (continued)

Production facilities

The company owns manufacturing production facilities across the globe, including distilleries, breweries, packaging plants, maturation

warehouses, cooperages, and distribution warehouses. Diageo’s brands are also produced at plants owned and operated by third parties

and joint ventures at several locations around the world. We believe that our facilities are in good condition and working order. We

have adequate capacity to meet our current needs, and, in the beer and spirit categories, we have undertaken activities to increase our

production capacity to address our anticipated future demand.

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


Location	Principal activities	Products
United Kingdom	distilling, bottling, warehousing, cooperage	beer, scotch, gin, vodka, rum, ready to drink, non- alcoholic
Ireland	distilling, brewing, bottling, warehousing	beer, liqueur, Irish whiskey, non-alcoholic
Italy	distilling, bottling, warehousing	vodka, rum, ready to drink, non-alcoholic
Türkiye	distilling, bottling, warehousing	raki, vodka, gin
North America	distilling, bottling, warehousing	vodka, gin, rum, Canadian whisky, US whiskey, ready to drink
Brazil	distilling, bottling, warehousing	cachaça, vodka, ready to drink
Mexico	distilling, bottling, warehousing	tequila
East Africa	distilling, brewing, bottling, packaging, warehousing	beer, rum, vodka, gin, whisky, brandy, liqueur
Nigeria	distilling, brewing, bottling, packaging	beer, rum, vodka, gin
South Africa	distilling, bottling, warehousing	rum, vodka, gin
ARM	distilling, brewing, bottling, warehousing	beer, vodka, gin
India	distilling, bottling, warehousing	rum, vodka, Indian-Made Foreign Liquor (IMFL), whisky, scotch, gin
Australia	distilling, bottling, warehousing	rum, vodka, gin, ready to drink

For more details about our capital investments please see page 344-345.

Our route to consumer

We have five different route to consumer models across our business. Most 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 market.

Wholesalers and Distributors

Diageo sells to a wholesaler or distributor who also sells a range of other brands and categories directly to end outlets where

consumers can purchase our brands. Where required, this model may include a government control board (or similar), such as in

certain states in the US and Canada.

Modern Trade

Diageo sells directly to a customer who owns and manages retail outlets, who then in turn sells to consumers via their outlets.

eMarketplace

Diageo sells to a third-party digital market place customer where that customer sells to B2B customers and consumers.

Direct to Consumer

Diageo sells directly to consumers, predominantly through portals such as Thebar.com, which is a growing route to consumer model

for our business. It allows for direct interface with our consumers rather than through third-party sites as in the eMarketplace model

above.

Direct to Store

Diageo sells and delivers directly to end outlets rather than via a central purchasing customer as in the Modern Trade model above.

This model is less common than the other models. For example, it is used in Ireland for beer distribution.

Business review (continued)

Key performance indicators

Net sales ($ million)

Reported net sales grew 0.2%

Organic net sales grew 6.5%

Reported net sales grew 0.2%, driven by strong organic growth offset by unfavourable foreign exchange impacts.

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 of five regions delivered growth, despite lapping strong double-digit growth at the group level in fiscal 22. Price/mix was driven

by price increases and premiumisation.

Organic movement

(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.

(2)See pages 239-240 and 312-314 for details of hyperinflation adjustment.

Operating profit ($ million)

Reported operating profit decreased 5.9%

Organic operating profit grew 7.0%

Reported operating profit decreased 5.9%, mainly driven by the negative impacts from exchange rate movements and the negative

impact of exceptional operating items, primarily non-cash impairments related to India and the supply chain agility programme. These

unfavourable items were largely offset by growth in organic operating profit and fair value remeasurements.

Organic operating profit grew 7.0%, ahead of organic net sales growth, driven by growth across all regions except North America.

(1)For further details on exceptional operating items see pages 94 and 246-250.

(2)Fair value remeasurements. For further details see page 94.

(3)See pages 239-240 and 312-314 for details of hyperinflation adjustment.

Business review (continued)

Operating margin (%)

Reported operating margin declined by 176bps

Organic operating margin expanded by 15 bps

Reported operating margin declined by 176bps, with organic operating margin expansion more than offset by exceptional operating

items, negative impact of foreign exchange, acquisitions, disposals and other items.

Organic operating margin expanded by 15bps, reflecting disciplined cost management despite inflation. Strong operating margin

expansion in Asia Pacific, Africa and Latin America and Caribbean was partially offset by declines in North America and Europe.

Organic gross margin declined by 97bps, primarily driven by cost pressures. Price increases more than offset the absolute impact of

cost inflation.

Organic movement

15bps

(1)Operating margin in waterfall is rounded to nearest decimal place.

(2)For further details on exceptional operating items see pages 94 and 246-250.

(3)Fair value remeasurements and hyperinflation adjustment. For further details on fair value remeasurements see page 94. See pages 239-240 and 312-314 for details

of hyperinflation adjustment.

Basic earnings per share (cents)

Basic eps increased 6.3% from 184.6 cents to 196.3 cents

Basic eps before exceptional items(1) decreased 2.7% from 201.9 cents to 196.5 cents

Basic eps increased 11.7 cents, mainly driven by exceptional items and organic operating profit growth, partially offset by the negative

impacts from exchange rate movements and increased finance charges.

Basic eps before exceptional items decreased 5.4 cents.

(1)See page 316 for explanation of the calculation and use of non-GAAP measures.

(2)For further details on exceptional items see pages 94 and 246-250.

(3)Includes finance charges net of tax.

(4)Excludes finance charges related to acquisitions, disposals, share buybacks and includes finance charges related to hyperinflation adjustments.

(5)Excludes tax related to acquisitions, disposals and share buybacks.

(6)Fair value remeasurements. For further details see page 94.

(7)Operating profit hyperinflation adjustment movement was $16 million compared to fiscal 22 (F23 – $30 million; F22 – $14 million).

Business review (continued)

Net cash from operating activities and free cash flow ($ million)(1)

Generated $3,636 million net cash from operating activities(2) and $2,235 million free cash flow

Net cash from operating activities was $3,636 million, a decrease of $1,577 million compared to fiscal 22. Free cash flow declined by

$1,544 million to $2,235 million.

Free cash flow declined as strong growth in operating profit were more than offset by unfavourable foreign exchange impacts, higher

year-on-year working capital outflows, tax payments and interest paid.

The higher year-on-year working capital outflow was primarily driven by normalisation of creditors relative to fiscal 22 as our growth

rate moderated in fiscal 23.

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 globally.

(1) Definition of free cash flow has been redefined, see more details on page 316.

(2)Net cash from operating activities excludes net capex (2023 – $(1,401) million; 2022 – $(1,434) million).

(3)Exchange on operating profit before exceptional items.

(4)Operating profit excludes exchange, depreciation and amortisation, post employment charges of $38 million and other non-cash items.

(5)Working capital movement includes maturing inventory.

(6)Other items include dividends received from associates and joint ventures and post employment payments.

Return on average invested capital (%)(1)(2)

ROIC decreased (145)bps

ROIC decreased (145)bps, mainly driven by increased capex, maturing stock investment and continued portfolio optimisation through

acquisitions and disposals. The decline was partially offset by higher organic operating profit growth, net of higher tax.

(1)ROIC calculation excludes exceptional operating items from operating profit. For further details on ROIC see page 318.

(2) Definition of return on average invested capital has been redefined, see more details on pages 318.

Business review (continued)

North America

•Reported net sales were flat driven by acquisitions and organic growth offset by an unfavourable foreign exchange impact from the

weakening Canadian dollar.

•Organic net sales were flat as growth in Canada and Diageo Beer Company USA (DBC USA) were offset by a decline in US

Spirits.

•Strong price/mix growth was offset by a decline in volume, while the region held share of TBA.

•US Spirits net sales declined 1%, lapping strong double-digit growth impacted by distributor stock replenishment and increased

inventories of imported products in fiscal 22. Depletion growth was approximately two percentage points ahead of shipment

growth in fiscal 23, with some variation across brands. Overall inventory levels at distributors at the end of fiscal 23 were in line

with historical levels.

•DBC USA net sales grew 1% reflecting strong growth in Guinness, partially offset by a decline in Smirnoff flavoured malt

beverages.

•Organic operating margin declined by 101bps, primarily driven by cost inflation and an adverse category mix. Strategic price

increases and productivity savings more than offset the absolute impact of cost inflation.

•Marketing investment grew 2% as we continue to invest and support growth across key categories.

•Doubling the number of brands running responsible drinking campaigns, we reached more than 150 million consumers. We also

led efforts with Black, Latino, and Native American organisations to address the harmful use of alcohol in the United States

through our Multicultural Consortium for Responsible Drinking.

•Our operations reduced Scope 1 and 2 carbon emissions by 17% through continued energy efficiency and renewable energy

initiatives. Key factors in this included a full year of operation for our carbon neutral distillery at Lebanon, powered by 100%

renewable electricity, and running our Valleyfield site on renewable natural gas.

•Due to higher volume of distilled products going to maturation, overall water efficiency decreased by 0.8%. We implemented

water-saving initiatives across our sites that enabled us to reduce total water usage compared to last year.

Market highlights - US Spirits:

•Tequila net sales grew 15%, and drove significant share gains in both the spirits industry and tequila category. Casamigos net sales

grew 14% driven by strong price/mix and volume growth, and the launch of Casamigos Cristalino. Don Julio net sales grew 13%,

primarily driven by aged variants and the launch of ultra-premium Don Julio Rosado Reposado. Both Casamigos and Don Julio

shipments grew ahead of depletions as supply availability enabled distributors to increase inventory to more optimal levels.

•Crown Royal whisky net sales declined 10%, lapping inventory replenishment in fiscal 22 when the brand recovered from supply

constraints. Crown Royal gained double-digit share of the Canadian whisky category, and depletions grew ahead of shipments in

fiscal 23.

•Vodka net sales declined 7%, primarily due to Cîroc, partially offset by growth in Smirnoff. Smirnoff growth of 4% was driven by

core and flavoured variants. Ketel One net sales were flat, reflecting growth in the core variant offset by a decline in Ketel One

Botanicals. Cîroc net sales declined 32% as consumers shifted into other spirits categories.

•Johnnie Walker net sales declined 13%. Johnnie Walker gained share of the scotch category driven by Johnnie Walker Black Label

and Johnnie Walker Blue Label, and depletions grew ahead of shipments.

•Rum net sales declined 1%, primarily due to Captain Morgan, which declined 2%. Zacapa grew 13% driven by super-premium and

luxury variants.

•Bulleit whiskey net sales declined 6%, lapping inventory replenishment in fiscal 22 when the brand recovered from supply

constraints. Bulleit whiskey gained both spirits industry and US whiskey category share, and depletions grew double-digit.

•Buchanan's net sales grew 10%, primarily driven by the launch of Buchanan's Pineapple, an innovation that gained spirits industry

share. Buchanan's scotch declined 4%, but gained both spirits industry and scotch category share, and depletions grew ahead of

shipments.

•Single Malts net sales grew 25%, primarily driven by ultra-premium Lagavulin 16YO and luxury innovation Lagavulin 11YO

Charred Oak Cask.

•Spirit-based ready to drink (RTD) net sales declined 44% primarily due to lapping the launch of Crown Royal RTD in fiscal 22

and Loyal 9 underperformance in certain US states.

Business review (continued)

Key financials


	2022 (re- presented)	Exchange	Acquisitions and disposals	Organic movement	Other(1)	2023 (re- presented)	Reported movement (re- presented)
	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	8,106	(38)	27	14	—	8,109	—
Marketing	1,595	(14)	20	29	1	1,631	2
Operating profit before exceptional items	3,268	(34)	(15)	(76)	79	3,222	(1)
Exceptional operating items(2)	(1)					(118)
Operating profit	3,267					3,104	(5)


	Organic volume movement	Reported volume movement	Organic net sales movement	Reported net sales movement (re-presented)
Markets and categories:	%	%	%	%
North America(3)	(5)	(4)	—	—

US Spirits(3)	(6)	(6)	(1)	—
DBC USA(4)	(3)	(3)	1	1
Canada	(2)	(2)	4	(2)

Spirits(3)	(5)	(4)	—	—
Beer	(2)	(2)	2	1
Ready to drink	(11)	(11)	(16)	(18)

Global giants, local stars and reserve(5)		Organic volume movement(6) %	Organic net sales movement %	Reported net sales movement (re-presented) %
Crown Royal		(12)	(10)	(10)
Don Julio		8	13	13
Casamigos(7)		6	13	13
Johnnie Walker		(5)	(10)	(11)
Smirnoff		(1)	4	3
Captain Morgan		(5)	(1)	(1)
Ketel One		(3)	—	—
Guinness		4	9	8
Baileys		(4)	1	1
Bulleit whiskey(8)		(8)	(6)	(6)
Buchanan's		—	9	9



North America contributed		North America organic net sales were flat in fiscal 23
39% of Diageo reported net sales in fiscal 23

Reported net

sales by market

(%)

Reported net

sales by

category (%)

(1) Fair value remeasurements. For further details see page 94.

(2)For further details on exceptional operating items see pages 94 and 246-250.

(3)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 311 and 315.

(4)Certain spirits-based ready to drink products in certain states are distributed through DBC USA and those net sales are captured within DBC USA.

(5)Spirits brands excluding ready to drink and non-alcoholic variants.

(6)Organic equals reported volume movement.

(7)Casamigos trademark includes both tequila and mezcal.

(8)Bulleit whiskey excludes Bulleit Crafted Cocktails.

Business review (continued)

Europe

•Reported net sales grew 2%, driven by organic growth and the hyperinflation adjustment(1) related to Türkiye, partially offset by an

unfavourable impact from foreign exchange.

•Organic net sales grew 11%, driven by double-digit growth across most markets. Growth was mainly driven by price/mix, while

holding volume.

•Price/mix was primarily driven by strong price increases across all markets, and supported by positive mix in beer and scotch.

•Spirits net sales grew 10%, driven by growth in scotch, vodka, tequila. Johnnie Walker grew 29% driven by Northern Europe,

Southern Europe and Travel Retail.

•Beer net sales grew 18%, driven by price increases and volume growth. Guinness net sales grew 20% and gained share in the on-

trade in Great Britain and Ireland.

•Organic operating margin declined by 13bps, primarily driven by cost inflation, partially offset by price increases, improved

category mix and productivity savings.

•Marketing investment grew 7%, with focused investment in Tanqueray, Johnnie Walker, Baileys and Guinness.

•The SMASHED programme educated 112,910 young people on the dangers of underage drinking.

•We built strong momentum in year two of our water replenishment projects in Türkiye, generating the annual capacity to replenish

137,349m3 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 key distilleries (Auchroisk, Talisker and Cardhu) to biofuels. Our GHG emissions for beer stayed flat,

even though production volumes were higher than planned.

•Water efficiency decreased by 2.4% due to the volume of distilled product increasing faster than packaged product, because of its

maturation period. For beer, optimising pasteurisation in Runcorn and water recovery in St James’s Gate led to a 9% improvement

in water efficiency.

•In year two of our three-year Guinness regenerative agriculture pilot, launched in February 2022, we recruited 44 farms across

Ireland and gathered baseline data to let us accurately track the project’s impact.

Market highlights:

•Great Britain net sales grew 7%, mostly driven by strong performance in Guinness with strong market share gains. Spirits net sales

growth was driven by tequila, vodka and RTDs, partially offset by gin.

•Northern Europe net sales grew 11%. Growth was primarily driven by scotch with strong double-digit growth in Johnnie Walker,

and strong growth in vodka and tequila. Spirits gained market share.

•Southern Europe net sales grew 12%, led by strong performance in scotch, in addition to tequila and gin. Growth reflected

continued recovery in the on-trade and increased tourism, alongside market share gains in spirits.

•Ireland net sales grew 16%, primarily driven by growth in Guinness reflecting share gains in a recovering on- trade.

•Eastern Europe net sales declined 3%, due to the suspension of exports to and sales in Russia as announced in March 2022 and the

winding down of its operations announced in June 2022. In the rest of the market, spirits grew double-digit and gained market

share primarily driven by Johnnie Walker.

•Türkiye net sales grew 38%, with volume growth of 9%. Growth was driven by price increases in response to inflation and higher

excise duties. Growth was broad-based, led by scotch, vodka and raki.

Key financials


	2022 (re- presented)	Exchange	Acquisitions and disposals	Organic movement	Other(2)	Hyperinfla tion(1)	2023 (re- presented)	Reported movement
	$ million	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	4,238	(530)	(11)	466	—	140	4,303	2
Marketing	764	(74)	3	57	—	15	765	—
Operating profit before exceptional items	1,345	(144)	(43)	138	(14)	30	1,312	(2)
Exceptional operating items(3)	(184)						(12)
Operating profit	1,161						1,300	12

(1)See pages 239-240 and 312-314 for details of hyperinflation adjustment.

(2) Fair value remeasurements. For further details see page 94.

(3)Exceptional items are in respect of Diageo’s decision, announced on 28 June 2022, to wind down its operations in Russia. For further details on exceptional

operating items see pages 94 and 246-250.

Business review (continued)

Asia Pacific

•Reported net sales were flat, primarily reflecting strong organic growth offset by unfavourable impact from foreign exchange and

disposals.

•Organic net sales grew 13%. All markets grew, except Greater China, with strong double-digit growth in India, South East Asia,

Travel Retail Asia and Middle East and North Asia.

•Price/mix of 7% was led by strong price increases across all markets. Positive mix was driven by strength in premium-plus scotch

in most markets. Volume grew 8% in premium-plus price tiers.

•Spirits net sales grew 14%, primarily driven by double-digit growth in scotch, the region’s largest category. IMFL whisky(1) also

contributed to growth, partially offset by a decline in Chinese white spirits.

•Organic operating margin expanded by 363bps as the benefits from the continued recovery of Travel Retail, price increases and

operational efficiencies more than offset the impact of cost inflation.

•Marketing investment grew 9%, with focused investment in scotch in South East Asia, India, and Greater China.

•Advocating for responsible consumption of alcohol through DRINKiQ and brand campaigns, we reached more than 134 million

consumers with messages that promote moderation.

•The SMASHED programme educated 340,216 young people on the dangers of underage drinking.

•We trained more than 8,236 people on business and hospitality skills through our Learning for Life programme and delivered

38,467 training sessions through Diageo Bar Academy.

•Our water efficiency improved by 16.2% this year, mainly by focussing on continuous improvement across the region. We 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.

Market highlights:

•India net sales grew 17%, driven by strong consumer demand and continued premiumisation. IMFL whisky and scotch delivered

double-digit growth. Scotch growth was driven by Black Dog, Johnnie Walker Black Label and Black & White.

•Greater China net sales declined 4%. Strong performance in scotch was more than offset by a decline in Chinese white spirits

which continued to be impacted by Covid-19 restrictions, especially in the on-trade. Scotch grew 13%, driven primarily by

Taiwan, with strong performance in the super-premium-plus segment led by Johnnie Walker and The Singleton.

•Australia net sales grew 2%, primarily driven by price increases. Growth was led by rum, tequila and beer.

•South East Asia net sales grew 33%, benefitting from a strong recovery following the easing of Covid-19 restrictions and strong

growth in the super-premium-plus segment. Scotch grew 31%, mostly driven by Johnnie Walker premium variants, and single

malts, primarily The Singleton and Mortlach.

•North Asia (Korea and Japan) net sales grew 15%, benefitting from the recovery of the on-trade. Growth was primarily driven by

double-digit growth in Windsor and Johnnie Walker premium-plus variants led by Johnnie Walker Blue Label and Johnnie Walker

Black Label.

•Travel Retail Asia and Middle East net sales grew 67% primarily driven by Johnnie Walker premium-plus variants, led by Johnnie

Walker Blue Label and Johnnie Walker Black Label.

Key financials


	2022 (re- presented)	Exchange	Acquisitions and disposals	Organic movement	2023 (re- presented)	Reported movement (re- presented)
	$ million	$ million	$ million	$ million	$ million	%
Net sales	3,837	(334)	(136)	474	3,841	—
Marketing	651	(58)	—	62	655	1
Operating profit before exceptional items	947	(83)	(28)	268	1,104	17
Exceptional operating items(2)	(292)				(581)
Operating profit	655				523	(20)

(1) Indian-Made Foreign Liquor (IMFL) whisky.

(2)For further details on exceptional operating items see pages 94 and 246-250.

Business review (continued)

Latin America and Caribbean

•Reported net sales grew 7%, reflecting organic growth partially offset by unfavourable impact from foreign exchange, mainly due

to a weakening of the Colombian and Argentine peso.

•Organic net sales grew 9%, with most markets delivering growth, despite lapping strong double-digit growth in fiscal 22. Growth

was broad-based across price tiers, except for value, which declined as a result of our premiumisation strategy. Strong price/mix

was partially offset by a 3% decline in volume, primarily in the value price tier. Double-digit sales growth in the first half of fiscal

23 was followed by inventory normalisation in the second half.

•Price/mix was driven by strong price increases across all markets, and positive mix supported by the strength in premium-plus

scotch in most markets.

•Spirits net sales grew 11%, primarily led by double-digit growth in scotch, particularly Johnnie Walker Black Label, Johnnie

Walker Red Label and Old Parr. Growth was also driven by strong double-digit growth in Don Julio and Smirnoff.

•Organic operating margin expanded by 72bps. The positive impact of price increases, premiumisation, leverage on operating costs

and one-off tax benefits more than offset the increases in marketing investment and cost inflation.

•Marketing investment grew 14%, ahead of organic net sales growth, with increased investment in most markets.

•We reached more than 176 million people with campaigns promoting moderation. They included ‘Derribando Mitos’, a campaign

created in fiscal 21 for Peru and expanded this year to the Caribbean and Central America market. It aims to challenge myths about

alcohol consumption.In fiscal 23, 'Derribando Mitos' reached more than 51 million people in countries.

•The SMASHED programme educated 984,213 young people on the dangers of underage drinking.

•We reduced our Scope 1 and 2 carbon emissions by 32%. Tequila was the biggest contributor, through new or upgraded biomass

boilers in Mexico, and our changing production mix has also played a part.

•We generated the annual capacity to replenish more than 280,977 m3 through water sanitation and hygiene, tree planting and water

catchment rehabilitation projects for communities in Brazil and Mexico.

Market highlights:

•Brazil net sales grew 8%, led by double-digit growth in Johnnie Walker and Old Parr. Growth was driven by price increases and

higher marketing investment, leading to market share growth.

•Mexico net sales grew 9%, primarily driven by scotch and tequila. Scotch growth was led by Johnnie Walker Red Label and

Johnnie Walker Black Label, driven by price increases. Tequila growth was driven by price increases, the lapping of aged liquid

supply constraints in fiscal 22 and increased marketing investment.

•Central America and Caribbean (CCA) net sales grew 14%, mainly driven by scotch and tequila. Growth was driven by price

increases, premiumisation and continuing momentum in the on-trade. Scotch growth was mostly driven by Johnnie Walker Black

Label and Buchanan's, supported by increased marketing investment. Tequila growth was driven by Don Julio 1942.

•South LAC (Argentina, Bolivia, Chile, Ecuador, Paraguay, Peru and Uruguay) net sales grew 21%, primarily driven by scotch,

vodka and gin. Growth was driven by price increases and premiumisation, partially offset by a decline in volume.

•Andean (Colombia and Venezuela) net sales declined 7%, due to an adverse macroeconomic environment in Colombia. Strong

price increases and premiumisation were more than offset by a decline in volume.

Key financials


	2022 (re- presented)	Exchange	Acquisitions and disposals	Organic movement	Other(1)	2023 (re- presented)	Reported movement (re- presented)
	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	2,027	(61)	3	190	—	2,159	7
Marketing	324	(15)	1	45	—	355	10
Operating profit	712	(24)	—	83	12	783	10

(1)Fair value remeasurements. For further details see page 94.

Business review (continued)


Markets and categories	Organic volume movement %	Reported volume movement %	Organic net sales movement %	Reported net sales movement (re-presented) %
Latin America and Caribbean(1)	(3)	(3)	9	7

Brazil(2)	(1)	3	8	16
Mexico(1)	(4)	(3)	9	17
CCA	1	1	14	9
South LAC(2)	(3)	(11)	21	(8)
Andean(1)	(24)	(24)	(7)	(21)

Spirits(1)	(3)	(3)	11	8
Beer	9	9	16	13
Ready to drink	(13)	(13)	(7)	(10)
Global giants and local stars(3)		Organic volume movement(4) %	Organic net sales movement %	Reported net sales movement (re-presented) %
Johnnie Walker		4	16	12
Buchanan’s		(5)	6	—
Don Julio		6	22	26
Old Parr		10	20	14
Smirnoff		3	18	12
Black & White		(7)	13	13
Tanqueray		—	—	(5)
Baileys		(18)	(5)	(8)



Latin America and Caribbean contributed		Latin America and Caribbean organic net sales grew
11% of Diageo reported net sales in fiscal 23		9% in fiscal 23

Reported net

sales by market

(%)

Reported net sales

by category (%)

(1)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 311 and 315.

(2)From 1 July 2022 Uruguay and Paraguay domestic channels moved on a management basis from PUB (Paraguay, Uruguay and Brazil) to PEBAC (Peru, Ecuador,

Bolivia, Argentina and Chile) and the new cluster has been called South LAC. This reflects how management reviews performance.

(3)Spirits brands excluding ready to drink and non-alcoholic variants.

(4)Organic equals reported volume movement.

Business review (continued)

Africa

•Reported net sales declined 9%, primarily driven by an unfavourable impact from foreign exchange, partially offset by organic

growth.

•Organic net sales grew 5%, with growth across all markets, except East Africa. Growth was driven by price increases, partially

offset by a decline in volume.

•Price/mix of 12% was driven by price increases across all markets and positive mix. Volume declines were primarily in the value

and standard price tiers.

•Spirits net sales grew 8%, driven by growth in international spirits particularly Johnnie Walker Black Label, and Orijin.

•Beer net sales grew 3%, with strong growth in Africa Regional Markets and Nigeria, partially offset by a decline in East Africa.

Growth was primarily driven by Malta Guinness and Guinness, which grew 22% and 7% respectively.

•Organic operating margin expanded by 126bps, primarily driven by price increases, productivity savings, positive category mix

and lapping prior year one-off costs. These impacts were partially offset by cost inflation.

•Marketing investment grew 2%, focused on supporting spirits premiumisation and Guinness.

•The SMASHED programme educated 548,478 young people on the dangers of underage drinking.

•We reduced our Scope 1 and 2 carbon emissions by 33%, thanks largely to commissioning and optimising three biomass facilities

in Kenya and Uganda.

•Our water efficiency decreased by 2.6% because of lower production volumes. We partly mitigated this by commissioning our

water recovery plants in Nigeria and further optimising our water recovery plants in Kenya and Uganda.

•We trained more than 9,517 people (51% women) in business and hospitality skills through our Learning for Life programme in

seven countries, including for the first time, Mozambique.

•Our community water, sanitation and hygiene (WASH) programmes provided clean water, sanitation and hygiene for water-

stressed communities near our sites in all our water-stressed markets.

Market highlights:

•East Africa net sales declined 2%. Growth 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 Johnnie Walker.

•Africa Regional Markets net sales grew 22% led by growth in beer, primarily driven by Malta Guinness supported by price

increases. Spirits growth was primarily driven by Johnnie Walker Black Label.

•Nigeria net sales grew 11%. Growth was led by Guinness and Orijin.

•South Africa net sales grew 1%, primarily driven by growth in tequila and rum, which offset declines in vodka and gin. Super-

premium-plus brands grew strongly at 38%.

Key financials


	2022 (re- presented)	Exchange	Acquisitions and disposals	Organic movement	2023 (re- presented)	Reported movement (re- presented)
	$ million	$ million	$ million	$ million	$ million	%
Net sales	2,238	(273)	(37)	111	2,039	(9)
Marketing	266	(31)	(6)	6	235	(12)
Operating profit before exceptional items	419	(192)	13	49	289	(31)
Exceptional operating items(1)	—				(55)
Operating profit	419				234	(44)

(1)For further details on exceptional operating items see pages 94 and 246-250.

Business review (continued)

Corporate (re-presented)

Performance 2023

Sales and net sales

Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net sales

were $104 million in the year ended 30 June 2023, an increase of $34 million. Net sales were favorably impacted by an organic

increase of $44 million partially offset by $10 million exchange rate movement loss.

Operating costs

Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as well

as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply Chain

and Procurement. Operating costs were $397 million in the year ended 30 June 2023 an increase of $80 million compared to operating

costs of $317 million in the year ended 30 June 2022. The $31 million increase in costs in the year ended 30 June 2023 was principally

a result of increased staff & IT costs and unfavourable exchange rate movements of $41 million.

Performance 2022

Sales and net sales

Corporate net sales principally arise in the Guinness visitor centre in Dublin, Ireland and the income from the global licensing of

Diageo brands and trademarks. Corporate net sales were $70 million in the year ended 30 June 2022, an increase of $44 million

compared to the net sales of $26 million in the year ended 30 June 2021 due to organic increase of $47 million slightly offset by $3

million exchange rate movement loss.

Operating costs

Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as well

as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply Chain

and Procurement. Operating costs were $317 million in the year ended 30 June 2022 an increase of $37 million compared to operating

costs of $280 million in the year ended 30 June 2021. The increase in costs in the year ended 30 June 2022 was principally a result of

increased staff costs of $54 million, partially offset by favourable exchange rate movements of $17 million ($12 million transactional

exchange impact and $5 million translation impact).

Business review (continued)

Category and brand review

•Spirits net sales grew 6%, with flat volume. Growth was across most categories, including double-digit performance in scotch,

tequila and IMFL whisky.

•Scotch net sales grew 12%, with 2% volume growth. Growth was led by Johnnie Walker, with strong growth of 15%, and

scotch malts also grew strongly at 16%.

◦Johnnie Walker Black Label grew 16%, with particularly strong growth in Asia Pacific, where it grew 30%.

◦Johnnie Walker Blue Label grew 3%, supported by the return of Travel Retail.

◦Johnnie Walker Red Label 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 Don Julio and Casamigos which grew 20% and 16% respectively,

driven by North America.

•Vodka net sales grew 1% with a volume decline of 3%. Declines in North America and Africa were offset by double-digit

growth across all other regions.

•Rum net sales grew 2% driven by Captain Morgan growth across all regions except North America. Rum volume declined 7%.

•Liqueurs net sales declined 1%, driven by Godiva.

•Beer net sales grew 9%, with growth in all regions driven by strong performance from Guinness in Great Britain, Ireland, North

America and Africa.

•Ready to drink net sales were flat, with growth in Europe and Africa offset by a decline in North America.


Key categories	Organic volume movement(1) %	Organic net sales movement %	Reported net sales movement (re-presented) %	Reported net sales by category (re-presented) %
Spirits(2)	—	6	1	78
Scotch	2	12	5	25
Tequila	10	19	19	12
Vodka(3)(4)	(3)	1	(3)	9
Canadian whisky(5)	(10)	(9)	(10)	6
Rum(4)	(7)	2	(2)	5
Liqueurs	(4)	(1)	(7)	5
Gin(4)	—	5	(2)	5
IMFL whisky(5)	8	15	(10)	4
Chinese white spirits(5)	(15)	(14)	(21)	3
US whiskey(5)	(8)	(4)	(4)	2
Beer	(7)	9	(2)	15
Ready to drink	(6)	—	(7)	4


Reported volume by category	Reported net sales by category	Reported marketing spend by category


n	Scotch	n	Vodka	n	US whiskey	n	Canadian whisky	n	Rum	n	IMFL whisky
n	Liqueurs	n	Gin	n	Tequila	n	Beer	n	Ready to drink	n	Other

(1)Organic equals reported volume movement except for spirits (7)%, tequila 11%, vodka (4)%, gin (1)%, IMFL whisky (20)%, US whiskey (7)%, beer (8)% and

ready to drink (7)%.

(2)Spirits brands excluding ready to drink and non-alcoholic variants.

(3)Vodka includes Ketel One Botanical.

(4)Vodka, rum and gin include IMFL variants.

(5)See pages 80-81 for details of Canadian whisky, US whiskey and pages 84-85 for details of IMFL whisky and Chinese white spirits.

Business review (continued)

Additional financial information

Year ended 30 June 2023


Key financials - certain line items	30 June 2022 (re- presented) $ million	Exceptional operating items (c) $ million	Exchange (a) $ million	Acquisitions and disposals (b) $ million	Organic movement(1) $ million	Fair value remeasurement (d) $ million	Hyperinflation(1) $ million	30 June 2023 (re-presented) $ million
Sales	29,751	—	(2,122)	(916)	1,461	—	96	28,270
Excise duties	(9,235)	—	876	762	(162)	—	44	(7,715)
Net sales	20,516	—	(1,246)	(154)	1,299	—	140	20,555
Cost of sales	(7,923)	(80)	378	113	(699)	7	(85)	(8,289)
Gross profit	12,593	(80)	(868)	(41)	600	7	55	12,266
Marketing	(3,616)	—	193	(21)	(203)	(1)	(15)	(3,663)
Other operating items	(3,080)	(209)	157	(19)	34	71	(10)	(3,056)
Operating profit	5,897	(289)	(518)	(81)	431	77	30	5,547

Other line items:
Non-operating items	(88)							364
Taxation (e)	(1,398)							(1,163)

(1) For the definition of organic movement and hyperinflation see pages 311-315.

(i)Reported figures in the table above have been extracted from the income statement for the years ended 30 June 2022 and 30 June 2023.

(a) Exchange

The impact of movements in exchange rates on reported figures for operating profit was principally in respect of the unfavourable

exchange impact of the weakening of the sterling and Nigerian naira against the US dollar, partially offset by the strengthening of the

Mexican peso and the Brazilian real.

The effect of movements in exchange rates and other movements on profit before exceptional items and taxation for the year ended 30

June 2023 is set out in the table below.


	Gains/ (losses) (re-presented) $ million
Translation impact	(395)
Transaction impact	(123)
Operating profit before exceptional items	(518)
Net finance charges – translation impact	29
Net finance charges – transaction impact	8
Net finance charges	37
Associates – translation impact	(37)
Profit before exceptional items and taxation	(518)


	Year ended 30 June 2023	Year ended 30 June 2022
Exchange rates
Translation $1 =	£0.83	£0.75
Transaction $1 =	£0.77	£0.78
Translation $1 =	€0.96	€0.89

(b) Acquisitions and disposals

The acquisitions and disposals movement in the year ended 30 June 2023 was primarily attributable to the disposal of the United

Spirits Limited (USL) Popular brands and Guinness Cameroun S.A.

See pages 260-264 for further details.

Business review (continued)

In the year ended 30 June 2023, exceptional operating items were a loss of $766 million (2022 – a loss of $477 million), mainly due to

charges related to brand impairment ($613 million) and the supply chain agility programme ($121 million).

In the year ended 30 June 2023, exceptional non-operating items were a gain of $364 million (2022 – a loss of $88 million), mainly driven

by the gain in relation to the sale of Guinness Cameroun S.A. ($343 million).

See pages 246-250 for further details.

(d) Fair value remeasurement

The adjustment to cost of sales reflects the elimination of fair value changes for biological assets in respect of growing agave plants of

$nil for the year ended 30 June 2023 and $7 million loss for the year ended 30 June 2022. The adjustments to marketing and other

operating expenses were the elimination of fair value changes to contingent consideration liabilities and earn out arrangements in

respect of prior year acquisitions of $157 million gain for the year ended 30 June 2023 and $87 million gain for the year ended 30 June

2022.

(e) Taxation

The reported tax rate for the year ended 30 June 2023 was 20.6% compared with 24.1% for the year ended 30 June 2022.

Included in the tax charge of $1,163 million in the year ended 30 June 2023 is a net exceptional tax credit of $226 million, including

an exceptional tax credit of $154 million in respect of brand impairments, mainly the McDowell's brand, a tax credit of $68 million in

respect of the deductibility of fees paid to Diageo plc for guaranteeing externally issued debt of its US group entities, a tax credit of

$27 million in respect of the supply chain agility programme, partly offset by a tax charge of $52 million in respect of the sale of

Guinness Cameroun S.A.

The reported tax charge for the year ended 30 June 2022 included an exceptional tax credit of $40 million, comprising exceptional tax

credits of $45 million and $24 million on the impairment of the McDowell's and Bell's brands respectively, partly offset by an

exceptional tax charge of $29 million in respect of the gain on the sale of the Picon brand and a further tax charge of $4 million in

respect of winding down operations in Russia.

The tax rate before exceptional items for the year ended 30 June 2023 was 23.0% compared with 22.6% for the year ended 30 June

2022.

(f) Return of capital

Diageo completed a total of $1.7 billion return of capital for the year ended 30 June 2023, which included $1.1 billion related to the

successful completion of Diageo’s previous share buyback programme in which $5.8 billion of capital was returned to shareholders,

and returned an additional $0.6 billion of capital to shareholders which was announced as a new share buyback programme on 26

January 2023 and completed on 2 June 2023.

In the year ended 30 June 2023, the company purchased 37.8 million ordinary shares (2022 – 61.2 million) at a cost of $1,673 million

(including transaction costs of $16 million) (2022 – $2,985 million including transaction costs of $21 million). All shares purchased

under the share buyback programme were cancelled.

Business review (continued)

Movement in net borrowings and equity


Movements in net borrowings	2023	2022
	re-presented $ million	re-presented $ million
Net borrowings at the beginning of the year	(17,107)	(16,832)
Free cash flow (1)	2,235	3,779
Movements in loans and other investments	(68)	(96)
Acquisitions (2)	(404)	(278)
Investment in associates (2)	(112)	(86)
Sale of businesses and brands (3)	559	102
Share buyback programme (4)	(1,673)	(2,985)
Net sale of own shares for share schemes (5)	36	24
Purchase of treasury shares in respect of subsidiaries	—	(20)
Dividends paid to non-controlling interests	(117)	(108)
Net movements in bonds (6)	887	911
Purchase of shares of non-controlling interests (7)	(178)	—
Net movements in other borrowings (8)	69	105
Equity dividend paid	(2,065)	(2,300)
Net decrease in cash and cash equivalents	(831)	(952)
Net increase in bonds and other borrowings	(958)	(1,022)
Exchange differences (9)	(646)	1,967
Other non-cash items (10)	(40)	(268)
Net borrowings at the end of the year	(19,582)	(17,107)

(1) See page 316 for the analysis of free cash flow.

(2) In the year ended 30 June 2023, acquisitions included upfront payments of €246 million ($261 million) for Kanlaon Limited and

Chat Noir Co. Inc. (the owner of Don Papa Rum) and $102 million for Balcones Distilling.

In the year ended 30 June 2022, acquisitions included the final earn-out payment in respect of the Casamigos acquisition amounting to

$113 million and upfront payment of $82 million for 21Seeds.

In the years ended 30 June 2023 and 2022, investment in associates included additional investments in a number of Distill Ventures

associates.

(3) In the year ended 30 June 2023, sale of businesses and brands included the disposal of Guinness Cameroun S.A. beer business for

a net cash consideration, net of disposal costs, of $438 million and the disposal of the Popular brands of Diageo’s USL business, for a

cash consideration, net of disposal costs, of $92 million.

In the year ended 30 June 2022, sale of businesses and brands included the cash received on the disposal of Picon brand, net of

transaction costs.

(4) See page 94 for details of Diageo's return of capital programmes.

(5) Net sale of own shares comprised receipts from employees on the exercise of share options of $63 million (2022 – $43 million)

less purchase of own shares for the future settlement of obligations under the employee share option schemes of $27 million (2022 –

$19 million).

(6) In the year ended 30 June 2023, the group issued bonds of $2,000 million ($1,989 million - net of discount and fee) consisting of

$500 million 5.2% fixed rate notes due 2025, $750 million 5.3% fixed rate notes due 2027, $750 million 5.5% fixed rate notes due

2033 and €500 million 3.5% fixed rate notes due 2025 ($548 million - net discount and fee), and repaid bonds of $300 million and

$1,350 million. In the year ended 30 June 2022, the group issued bonds of €1,650 million ($1,800 million - net of discount and fee)

and £892 million ($1,171 million - including discount and fee), and repaid bonds of €900 million ($1,060 million) and $1,000 million.

(7) On 24 March 2023, Diageo completed the purchase of an additional 14.97% of the share capital of East African Breweries PLC

(EABL). This increased Diageo's controlling shareholding position in EABL from 50.03% to 65.00%.

(8) In the year ended 30 June 2023, the net movements in other borrowings principally arose from the increase in commercial paper,

collateral and bank loan balances offset by cash outflows of foreign currency swaps and forwards and repayment of lease liabilities. In

the year ended 30 June 2022, the net movements in other borrowings principally arose from cash movements of foreign currency

swaps and forwards partially offset by the repayment of lease liabilities.

Business review (continued)

(9) In the year ended 30 June 2023, exchange loss arising on net borrowings of $646 million were primarily driven by unfavourable

exchange movements on sterling and euro denominated borrowings and unfavourable exchange movements on cash and cash

equivalents, foreign currency swaps and forwards. In the year ended 30 June 2022, exchange gains arising on net borrowings of

$1,967 million were primarily driven by favourable exchange movements on sterling and euro denominated borrowings and foreign

currency swaps and forwards, partially offset by unfavourable movement on cash and cash equivalents.

(10) In the year ended 30 June 2023, other non-cash items were principally in respect of additional leases entered into during the year

partially offset by fair value movements of interest rate hedging instruments. In the year ended 30 June 2022, other non-cash items

were principally in respect of additional leases entered into during the year.


Movements in equity	2023 (re-presented) $ million	2022 (re-presented) $ million
Equity at the beginning of the year	11,511	11,719
Adjustment to 2021 closing equity in respect of hyperinflation in Türkiye (1)	—	349
Adjusted equity at the beginning of the year	11,511	12,068
Profit for the year	4,479	4,410
Exchange adjustments (2)	(358)	(583)
Remeasurement of post employment benefit plans net of taxation	(562)	661
Purchase of shares of non-controlling interests (3)	(178)	—
Hyperinflation adjustments net of taxation (1)	180	344
Associates' transactions with non-controlling interests	(8)	—
Dividend to non-controlling interests	(117)	(95)
Equity dividend declared	(2,071)	(2,286)
Share buyback programme (4)	(1,543)	(3,004)
Other reserve movements	376	(4)
Equity at the end of the year	11,709	11,511

(1) See page 312-314 for details of hyperinflation adjustments.

(2) Exchange movements in the year ended 30 June 2023 primarily arose from exchange loss driven by sterling, the Turkish lira, the

Indian rupee and the Chinese yuan, partially offset by gains in euro, Mexican peso and foreign exchange on borrowings designated

into net investment hedge before the functional currency change. Exchange movements in the year ended 30 June 2022 primarily arose

from exchange loss driven by the euro, the Turkish lira and the the Indian rupee, and includes foreign exchange on borrowings

designated into net investment hedge before the functional currency change.

(3) On 24 March 2023, Diageo completed the purchase of an additional 14.97% of the share capital of East African Breweries PLC

(EABL). This increased Diageo's controlling shareholding position in EABL from 50.03% to 65.00%.

(4) See page 94 for details of Diageo's return of capital programmes.

Post employment benefit plans

The net surplus of the group’s post employment benefit plans decreased by $653 million from $1,392 million at 30 June 2022 to $739

million at 30 June 2023. The decrease in net surplus was predominantly attributable to the unfavourable change in the market value of

assets held by the post employment benefit plans in the UK which was partially offset by the favourable change in the discount rate

assumptions in the UK due to the increase in returns from ‘AA’ rated corporate bonds used to calculate the discount rates on the

liabilities of the post employment benefit plans (from 3.8% to 5.2%). The net operating profit charge before exceptional items

increased by $38 million from $52 million for the year ended 30 June 2022 to $90 million for the year ended 30 June 2023.

During the year ended 30 June 2023, following a remeasurement of the Diageo Lifestyle Plan, Diageo made a $19 million one-off

deficit contribution to satisfy minimum funding requirement.

Business review (continued)

'Spirit of Progress'

Putting positive societal impact at the heart of our business strategy

We are a successful global business, building and nurturing some of the world’s most recognised brands. A fundamental part

of our success is taking focused action at scale to make our business sustainable and resilient for today and for future

generations.

Responding to the issues that matter

‘Spirit of Progress‘ is Diageo's environmental, social and governance (ESG) action plan designed to address the most material issues

facing our company, brands, people, suppliers and communities. Its ambitions are embedded in our business strategy and it aims to

make a positive impact on people and the planet everywhere we live, work, source and sell.

At the heart of ‘Spirit of Progress‘ framework are three priorities:

•Promote positive drinking – changing the way the world drinks for the better, through promoting moderation and addressing

the harmful use of alcohol.

•Champion inclusion and diversity – creating an environment where everyone contributes to a better business.

•Pioneer grain-to-glass sustainability – preserving the natural resources we all depend on.

At the launch in 2020, we set out a series of ambitious priority targets that aimed to deliver progress against our most material ESG

issues.(1) We are proud to have already met several targets well ahead of schedule, including two, supporting the promotion of positive

drinking.

However, ESG strategy and reporting is a fast-moving area, and we regularly assess our strategy in the context of successes and

challenges, changes in the reporting landscape and feedback from our stakeholders. All companies are dealing with uncertainty in

meeting ESG-related ambitions, and we are no different. We focus on external factors we can influence, however there remain many

external factors which we can't control. As a result, our roadmaps to delivery on our targets remain subject to uncertainty across most

areas. We also regularly apply our learnings from successes and challenges to update our roadmaps.

Therefore, in fiscal 24, we have reconsidered the underlying targets in our three priority areas. Our objective has been to direct our

resources towards those areas where our learnings and engagements with stakeholders tell us we have the best opportunity to mitigate

the highest risks and deliver the highest impact. Our review has also considered preliminary results of a refreshed double materiality

assessment ahead of our alignment with the requirements of the European Union’s Corporate Sustainability Reporting Directive

(CSRD).

This section of the Annual Report sets out our progress against our 12 priority performance targets which cover the areas most

material to our business. We believe the selected performance targets also address our highest risks and as a result, we will be

directing a higher proportion of our resources to these priorities to accelerate action, maintain momentum and refocus our efforts. The

remaining targets will continue to be part of ‘Spirit of Progress‘ and further details of actions taken can be found in our ESG Reporting

Index and on our website. We have also included context on target changes in our Reporting boundaries and methodologies, starting

from page 322-343.

Promote positive drinking

Around the world, we reach and engage audiences with messages that aim to change attitudes, whether it's highlighting the harm of

underage drinking or binge drinking, warning of the dangers of drink driving, or using our brands to highlight the importance of

moderation.

We are proud to have met our 2030 targets for DRINKiQ and

brand-led moderation campaigns in fiscal 22 and 23 respectively.

They remain important tools in our work to promote positive drinking and are embedded into our operations.

Our educational programmes, designed to change attitudes to the risks of alcohol misuse, are targeted at areas we believe we can have

the biggest reach and impact, particularly in the context of each geography where we sell our products.

As a result, we will be increasing our focus on SMASHED, an award-winning programme providing education on the dangers of underage

drinking, and on raising awareness of the dangers of drink driving through educational programmes and other partnerships. Our reporting will

reflect an increased emphasis on these programmes, while also providing qualitative information on our wider approach to promoting positive

drinking.

Business description (continued)

(1) For the materiality matrix please refer to our ESG Reporting Index.

Champion inclusion and diversity

Championing inclusion and diversity is at the heart of what we do. Our experience and belief is that gender and ethnic diversity in our

leadership population helps drive better and more sustainable performance. We also believe that providing hospitality and business

skills through Learning for Life to under-represented groups helps support both our communities and an industry that is a crucial

partner for Diageo. Therefore, we will continue to maintain a strong focus on these areas and report on our progress in our Annual

Report.

We will also continue to track our spend with diverse suppliers; please refer to our ESG Reporting Index for more information.

Our other inclusion and diversity ambitions remain important to our holistic value chain strategy; our qualitative reporting on our work with

women in our community beneficiary programmes, progressive marketing portrayal and Diageo Bar Academy is included on page 112.

Pioneering grain-to-glass sustainability

Our business depends on natural resources, and we are directly affected by changes in climate and the related challenges of

water- stress and nature loss. Our refined action plan focuses on two key areas: water and greenhouse gas emissions.

Water is our most important natural resource and water-stress is a growing challenge in many countries. We will be accelerating our

efforts to maximise our stewardship of this precious resource, prioritising water efficiency in own operations around the world,

replenishment in water-stressed communities and collective action to improve water accessibility, availability and quality as priority

performance targets.

We are proud to have met our commitment to investment in access to clean water, sanitation and hygiene (WASH) in fiscal 23 and

will continue to partner with communities to ensure the same level of impact is delivered, providing clear examples each year.

Greenhouse gas emissions contribute to climate change, and we must do our part to reduce them.

We will continue to focus on reducing greenhouse gas emissions in our direct operations around the world, investing in energy

efficiency and switching to renewable energy. We will continue to work with our suppliers to decarbonise, but as described on pages

125-126, we will be refocusing our supply chain efforts on areas where we exert the most control and those categories of emissions

which are most material to our footprint. Our Scope 1, 2 and 3 greenhouse gas emission reduction goals will remain as priority

performance targets.

Our efforts to reduce emissions are supported by key packaging targets, including reducing packaging weight and increasing recycled content,

for which we will continue to provide quantitative data. We also believe strongly that our regenerative agricultural programmes will reduce

emissions, address water-stress and nature loss over the longer term.

Other supporting targets relating to our efforts to reduce greenhouse gas emissions, including renewable energy, our work with

smallholder farmers, and other packaging and waste targets, will continue to be tracked and reported in our ESG Reporting Index.

Business description (continued)

Maintaining and measuring culture

Our culture is defined by our people, who are dedicated to driving sustainable growth by doing business the right way, every day,

everywhere. To enable this, we focus on embedding our culture in all aspects of our business, keeping people safe, protecting human

rights and living our values through our Code of Business Conduct. We report on each of these topics in turn in this section (see page

105-109).

Governance

Both the Board and the Executive Committee oversee ‘Spirit of Progress‘. As Chief Executive, Debra Crew, is ultimately accountable

for the overall performance of Diageo's ESG action plan, and its targets. Each target has a member of the Executive Committee

accountable for delivery and progress is reviewed regularly by the Executive Committee and the Board. The Board reviews our most

material ESG issues, our strategy to address those issues and our targets used to measure our strategy in action. The review of our

performance targets undertaken in fiscal 24 was led by members of the Executive Committee and approved by the Board.

Linking performance to remuneration

Our review of ‘Spirit of Progress’ did not change our view on five of our ambitions which are considered key performance indicators.

The targets in our long-term incentive plans include:

•Number of people who confirmed changed attitudes on the dangers of underage drinking following participation in a Diageo

supported education programme.

•Inclusion and diversity – percentage of female leaders globally.

•Inclusion and diversity – percentage of ethnically diverse leaders globally.

•Improvement in water efficiency, measured by our water efficiency index.

•Reduction in greenhouse gas emissions in our direct operations (Scope 1 and 2).

These represent all three strategic priorities of our ‘Spirit of Progress‘ action plan, and reflect our vision to mitigate risks, act on

opportunities and make a positive impact on people and the planet.

New regulatory frameworks

By 2026, we expect to report under the International Sustainability Standards Board (ISSB) and CSRD. We are undertaking a double

materiality assessment, the results of which will be reported on in fiscal 25. Our preliminary view is that our materiality assessment

supports our performance target review and simplification.

We continue to report aligned to the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Given

the interconnectivity of climate and nature, we have incorporated some of the Taskforce for Nature-related Financial Disclosures

(TNFD) into our TCFD reporting, with an aim to be fully aligned with TNFD in the medium-term.

In the United States, California has recently enacted the Voluntary Carbon Market Disclosures Act, California Assembly Bill No. 1305

(AB-1305) requiring companies operating in California to make certain disclosures regarding carbon neutrality and carbon emissions reduction

claims, and voluntary carbon offsets. We provide disclosures pursuant to AB-1305 in this section of the Annual Report, our Net Zero Carbon

Strategy on our website and our responses to CDP (formerly known as the Carbon Disclosure Project) climate change questionnaire, available

through CDP's website.

Reporting transparently

We define our performance measures carefully, along with clear reporting boundaries and methodologies for each. For more details,

see pages 322-343.

Business description (continued)

Promote positive drinking

We want to change the way people drink – for the better. This is why we promote moderate

drinking and invest in education programmes to discourage the harmful use of alcohol.

We want to change the way the world drinks – for the better. Our brands have been part of people’s celebrations for generations; we

make them with pride and they are made to be enjoyed responsibly.

We embrace our responsibility to proactively promote positive drinking. Therefore, in 2020, as part of the 'Spirit of Progress' strategy,

we unveiled our Positive Drinking approach with four pillars to deliver impact and change:

•Tackling harmful drinking through education.

•Promoting moderation via our brand marketing.

•Tackling underage drinking.

•Changing attitudes to drink driving.

We continuously evaluate our strategies, considering both opportunities and learnings. After incorporating feedback from our stakeholders, the

decision was taken that in fiscal 24 we would continue to scale our education programmes to address underage drinking and drink driving.

Having hit our targets for DRINKiQ, our interactive online education platform and moderation messaging in our brand strategy, we

embedded these crucial programmes into the rhythm of our daily business, with examples on page 101.

Protecting young people

We believe it is never acceptable for anyone underage to consume alcohol. That is why we have run campaigns and education

programmes to combat underage drinking for many years.

SMASHED is a programme that educates young people aged 10-17 in 38 countries on the dangers of underage drinking. It was

developed by Collingwood Learning, and we have been proud to sponsor it since 2018.

SMASHED began in 2005 as a live theatre production and has since been enhanced to enable online learning as well as live performances. To

make the programme as successful as possible, the performance can be tailored to specific countries using local actors and cultural references.



	Tackling underage drinking through SMASHED
	Target by 2030 Scale up our SMASHED partnership and educate 10 million young people, parents and teachers on the dangers of underage drinking		Number of people educated on the dangers of underage drinking through a Diageo- supported education programme in fiscal 24
			2.2m


n	2030 Target	10m
n	2023 progress to date	3.7m
n	2024 progress to date	5.9m

In fiscal 24 approximately 2.2m people have taken part in a live session or an online SMASHED programme. This includes a

projected 1.8m people who have confirmed changed attitudes to the dangers of underage drinking based on our sampling of

participant surveys. We have educated approximately 6 million people since our baseline year of 2018.

This year, our progress toward achieving our global SMASHED target has notably accelerated. From hosting regional partner summits

in Latin America and Caribbean, reaching young people during school holidays in Africa to maximising online digital profiling of

ideal partner schools in South East Asia, our approach to rolling out SMASHED in fiscal 24 has been innovative and collaborative.

Driving responsibly

We've long championed awareness on the risks of drink driving, including collaborating with law enforcement and local authorities.

In 2021, we launched the Wrong Side of the Road (WSOTR) digital learning resource with the United Nations Institute for Training

and Research (UNITAR), aimed at raising awareness about the consequences of drink driving on individuals and communities.

WSOTR is available in digital and classroom formats and is now live in 24 countries.

Business description (continued)

100



	Changing attitudes to drink driving
	Target by 2030 Extend our UNITAR partnership and promote changes in attitudes to drink driving, reaching five million people		Number of people educated about the dangers of drink driving in fiscal 24
			1.0m


n	2030 Target	5m
n	2023 progress to date	1.2m
n	2024 progress to date	2.2m

In fiscal 24, we reached 1m people through WSOTR and other drink driving programmes. To date, we have reached 2.2m people since

fiscal 20.

This fiscal, we worked to accelerate the development and roll out of partnerships between our in-market teams and local governments

as well as other key local stakeholders.

For example, in India, we continued to partner with Regional Transport Offices in eight states to embed WSOTR into the driving

licence application process. We also ran a Greater Chennai traffic police anti-drink drive campaign. The WSOTR team organised an

awareness drive with the Greater Chennai Police to educate people on the dangers of drink driving. Over 2,500 individuals were

educated at 20 different locations through this initiative.

In South Africa we launched the WSOTR 'WhatsApp' campaign with the Department of Gauteng Roads and Transport. The objective

was to empower Gauteng's youth with subsidised fees for learners licences, and through drivers' programmes promoting responsible

drinking and creating safer roads. This campaign delivered approximately 50,000 completions of WSOTR.

We also look to develop partnerships with organisations that we believe will help deliver our mutual ambitions. Therefore, in February

we partnered with Mothers Against Drunk Driving (MADD) in the United States, an organisation dedicated to the eradication of drink

driving. With our combined expertise and resources, together we will focus on education, awareness, and prevention campaigns. As

part of this partnership, MADD joined Diageo’s Multicultural Consortium for Responsible Drinking to help address the harmful use of

alcohol in the Black, Latino and Native American communities. Diageo also became an inaugural member of the MADD Network.

Together we will continue to build on our learnings and accelerate our progress going forward.

DRINKiQ

For DRINKiQ, we have seen further momentum in fiscal 24 through the development of creative campaigns that have weaved together

the global ambitions around DRINKiQ and moderation. For example, in March 2024, SUHO, a renowned K-pop star who leads the

group EXO fronted a Diageo campaign ‘Enjoy the Flow, Savour Every Moment’ to promote moderation and responsible drinking. The

digital campaign also led visitors in the APAC region to the DRINKiQ site. Within a week of the launch more than five million people

viewed the campaign.

Business description (continued)

101

Make moderation aspirational

Moderation encompasses a broad range of different consumer behaviours and choices, such as choosing not to drink on certain

occasions, or substituting a favourite drink with a non-alcoholic version. We aim to enable and reinforce the breadth of choices

that consumers have to moderate. As well as delivering choice to consumers, we know through our insights work that making

moderation feel aspirational and therefore a 'popular choice' is critical in driving positive drinking attitudes and behaviours.

In fiscal 24, we have successfully driven aspiration with a variety of campaigns, some led by a key brand, others leveraging a number

of brands across our portfolio. Highlights include:

1.In October we launched Captain Morgan Spiced Gold 0.0%, the brand’s first alcohol-free offering, supported in Great Britain

and Germany by the highly engaging 'Why You Whying' advertising campaign. The campaign reached over 19 million

people in Great Britain and 14 million in Germany, with 82% of consumers in Great Britain and 90% of consumers in

Germany agreeing that the campaign 'makes drinking moderately feel like a popular choice'.

2.In December we launched the 'Magic of Moderation' campaign in Great Britain featuring Guinness, Johnnie Walker,

Tanqueray 0.0% and Seedlip. The campaign promotes moderate ways of drinking to allow people to make the most of their

socialising occasions. The campaign reached five million people in Great Britain, with 85% of consumers agreeing that it

'makes drinking moderately feel like a popular choice'.

In addition to our brand moderation campaigns, our non-alcoholic brands also support our positive drinking ambition. We know that

our 0.0 brands have a strong role to play in giving consumers choice and that communications for these brands can promote positive

moderation behaviours and attitudes. For example, in fiscal 24, Guinness 0.0 has tapped into the moderation mindset to become

the fastest growing alcohol-free beer in Great Britain and Ireland. The brand will be the official global responsible drinking partner of

the English Premier League, providing further opportunities to support our positive drinking agenda.

Marketing in a responsible way

The Diageo Marketing Code (DMC) not only sets minimum standards for responsible marketing, it also represents a cornerstone of

our corporate culture and the way we do business. The DMC includes, among other principles, our commitment to making sure we

depict and encourage only responsible and moderate drinking, and never target underage audiences. We are proud to have a proven

track record of compliance, which is underpinned by mature business processes, and appropriate checks and balances in every market

we operate in.

In support of our commitment to responsible marketing, this year we have rolled out several tools to help our marketers uphold our

standard more easily:

•A refreshed Digital Marketing Standard, with clearer requirements on social media governance, targeting adults in digital

media and consumer data compliance, amongst other topics.

•An updated Influencer Marketing Standard, with enhanced requirements for selection of influencers, DMC briefing,

approvals and required disclosures.

•A self-certification e-learning module, for all Diageo and agency staff to ensure understanding of the DMC.

•A test of an AI-based assistant to support human DMC reviews and approvals of marketing materials, making the process

faster without compromising accuracy and control.

This year, the International Alliance for Responsible Drinking (IARD) reassessed our compliance with their Digital Guiding

Principles. These principles set out five measures that should be in place for all online alcohol marketing communications. We are

pleased to report that, after having 155 items from 14 markets measured by an independent third party, our score was 100% full

compliance rate. This achievement showcases how we leverage technology to uphold our responsible marketing practices, combining

automated monitoring with robust social media governance.

Finally, across some of our markets, advertising monitoring and industry bodies publicly report breaches of self-regulatory alcohol

marketing codes. No complaints about Diageo marketing were upheld by key industry bodies this fiscal year (see below) for any of

the following markets: United Kingdom, Australia and Ireland.

One complaint was upheld in November 2023 against Casamigos, by the Distilled Spirits Council of the United States (DISCUS),

about an ad depicting motorcycle riding without a helmet and a product placement in a music video, which depicted some scenes of

irresponsible consumption.

In response, Diageo agreed to not produce new Casamigos advertising content depicting motorcycle riding without helmets and

removed all references to the music video from the brand’s channels.

Complaints upheld by key industry bodies that report publicly:

Business description (continued)

102


Incidents of non-compliance concerning marketing communications – fiscal 24(1)
Country	Body	Industry complaints upheld	Complaints about Diageo brands upheld
United States	Distilled Spirits Council of the United States	2	1
Australia	ABAC Scheme	33	0
United Kingdom	Advertising Standards Authority	0	0
United Kingdom	Portman Group	18	0
Republic of Ireland	Advertising Standards Authority for Ireland	3	0

(1) From 1 July 2023 to 5 May 2024.



	Doing business the right way We want to do business in the right way every day, everywhere. We expect all stakeholders, including our people and suppliers, to demonstrate integrity, live our values, and behave in an ethical way as set out in our Code of Business Conduct.

Business Integrity

Working with integrity is fundamental to our identity and organisational strategy. We make sure our people and suppliers demonstrate

integrity, live our values and behave in an ethical way that underpins our Code of Business Conduct (Code). Each of us has a

responsibility for doing business the right way. By valuing not only what we do, but how we conduct business, we generate success

worth celebrating.

'Diageo’s Business Integrity agenda is embedded in every part of their business

In September we were delighted to be named one of the winners of the 2023 NAVEX Customer Excellence Awards in the

Governance, Risk and Compliance ('GRC') Programme of the Year category.

Annually, NAVEX (the external provider of our Breach Management database, EthicsPoint) honours organisations that demonstrate

the most innovative, impactful and successful risk and compliance programmes in practice today. The judges said: 'Diageo’s Business

Integrity agenda is embedded in every part of their business... [It] knows that performance can only be sustained if everyone is doing

the right thing, every day, everywhere'.

Code of Business Conduct

Our Code sets out the basis for how we work and conduct business. It lists key principles which guide our day-to-day operations,

decisions and interactions with colleagues and other stakeholders. Our Code forms what we stand for as a business and how we

demonstrate our high standards of integrity and ethical behaviour.

Each year, all eligible employees complete mandatory training on the Code, and at the end of the training certify that they have read,

understood and complied with the Code and our global policies. Training is via an interactive e-learning module accessible through

any device or classroom training for those who do not have regular computer access. This year, 97% of eligible employees completed

the training (fiscal 23: 97%).

In fiscal 24, we came together to celebrate our first ever Global Spirit of Integrity Day. The day covered key topics from our Code

including data privacy, cyber risk and dignity at work, as well as our controls transformation and risk management programme.

Attended live by many of our employees, a number of our markets further enhanced the themes of the day by running complimentary

sessions after the event. We expect to continue running similar programmes in the future.

Training our leaders

Treating each other with dignity and respect is an important part of doing business the right way. Our Dignity at Work training

programme relaunched in fiscal 24, supported leaders with the right tools and behavioural guides to lead with integrity. The

programme was also extended to new senior leaders joining the business in the year, and was included in a new managing director

onboarding playbook.

Encouraging people to speak up

We encourage everyone to report potential breaches of our Code, policies or standards through our global confidential grievance and

whistleblowing service, SpeakUp. The service, which is available through various channels (email, telephone and internet) in 19

languages, is monitored by the Global Business Integrity team to ensure that all allegations are handled appropriately, confidentially

and fairly.

In fiscal 24, we launched a new campaign, 'I Spoke Up, Ask Me Anything', which addressed and enhanced awareness of the

anonymous nature of SpeakUp reporting. See further details on SpeakUp cases raised in the year and the resulting actions taken in the

Audit Committee Report (page 178-187).

Business description (continued)

103

Managing third-party risks

Business integrity is also vital to our relationships with third parties. Our Know Your Business Partner (KYBP) programme helps us

screen for potential risks before we start a contractual relationship. In fiscal 24, improvements were made to our Breach Management

process including leveraging data analytics to better assess our third-party risk.

Standing up for human rights

At Diageo, we strive to create an environment where all our people feel they are treated fairly and with respect. We remain committed

to acting with integrity in our roles, to ensure we are doing business in the right way, meeting external expectations and our own

standards. We act in line with the UN Guiding Principles on Business and Human Rights (UNGPs) and are committed to embedding

respect for human rights into everyone’s working day, in every country throughout our business and value chain. Our policies cover

our responsibilities to protect the human rights of everyone working in our direct operations, our value chain and communities.

Our human rights governance

Our Code of Business Conduct and Global Human Rights Policy are an integral part of ensuring that Diageo’s culture is aligned with

our purpose and values. Our Code is approved by our Board of Directors and our Global Human Rights Policy is approved by our

Chief Executive Officer. Our human rights strategy is reviewed on a periodic basis by the Audit Committee of the Board of Directors

and by the Executive’s Audit and Risk Committee (ARC) as part of our principal risk on business ethics and integrity (see page 77-85

in our UK Annual Report). Responsibility for delivery is shared between the members of Diageo’s Executive Committee that are

responsible for the human rights of our employees, suppliers and communities. A number of our Executives, senior business leaders

and functional specialists lead the agenda via our Human Rights Steering Group (group and market level) and assess risks, emerging

issues, compliance and remediation within our enterprise risk management processes.

Staying ahead of emerging legal requirements and increasing stakeholder expectations

We continue to monitor new regulations, including the EU’s Corporate Sustainability Due Diligence Directive, and in fiscal 24,

took preparatory steps in anticipation of this regulation.

We have refreshed our list of salient risks, vulnerable groups, high risk markets and high risk commodities in our supply chain. We have

implemented new risk assessment tools for our direct operations and supply chain that allow us to better detect and mitigate risk before an

incident occurs. We are in the process of expanding our human rights due diligence further along our value chain – incorporating new

businesses, brand promoters, third-party operations, suppliers', stakeholders and our customers. When material potential risks are identified, we

look to put in place corrective action plans to mitigate the risk.

Focusing on salient human rights risks

In fiscal 24 we refreshed our assessment of salient risks that are most relevant to our business as specified in the Declaration on

Fundamental Principles and Rights at Work and the UNGPs. We looked at human rights benchmarks for our industry, priority

commodities in our supply chain and the increasing interdependence between human rights and climate impacts.

The assessment identified the following salient risks: health and safety, wages and benefits, working time, harassment and bullying,

discrimination, freedom of association and collective bargaining, child labour, forced labour, water sanitation and hygiene and land

rights. Whilst we conduct ongoing due diligence in all areas, we have prioritised health and safety, wages and benefits, working time,

harassment and bullying and discrimination based on severity, likelihood, attribution, leverage and breach data.

Prioritising vulnerable groups

We recognise that some groups of people are more vulnerable to human rights breaches and pay particular attention to these groups

within our risk assessments. Determined by human rights frameworks, our value chain, and human rights impact assessments, our

vulnerable groups are women, ethnic minorities, persons with disabilities, the LGBTQIA+ community, indigenous peoples, migrant

workers and contract/temporary workers and children.

Assessing risk in our direct operations

We use a variety of risk assessment tools in our direct operations. This includes self-assessment questionnaires for all direct

operations, third-party human rights assessments for high risk direct operations and deep dive assessments for groups that we consider

more vulnerable to risk. Where assessments identify material human rights concerns or suggest our approach can be strengthened to

better identify and prevent risk, we strive to put in place robust action plans to resolve matters, working with external experts when

appropriate.

Assessing risk and compliance in our supply chain

Within our Sustainable Procurement team, a dedicated Responsible Sourcing team is in place to lead the management and

implementation of our human rights approach beyond our own operations. Our Responsible Sourcing programme follows a risk-based

approach to assessing adherence to our Partnering with Suppliers standard. Suppliers are risk-assessed against the following three

criteria: location of supplier site(s), category of product or service and amount of spend. Suppliers who are assessed as high risk are

required to undertake an independent third-party Sedex Members Ethical Trade Audit (SMETA) or an equivalent four-pillar ethical

audit.

We have also mapped our salient risks within our full supply chain allowing us to prioritise our actions and drive positive social

impact where it is needed most. Part of this assessment includes identifying the scale, scope, remediability and likelihood of our

salient risks through different parts of our supply chain. These findings are helping us to focus our interventions on specific human

Business description (continued)

104

rights issues within each supply chain for greater impact. For more information, please refer to our ESG Reporting Index and our

Modern Slavery Statement.

Taking action to mitigate risk

Where we identify risk, we take action to mitigate the risk to our business and our people. For example:

•Contract labour review, recognising contract workers as a more vulnerable group than direct employees. This reviewed the

effectiveness of our governance processes as well as conducting interviews with contract workers to share their views. Based

on the findings and recommendations, we will strengthen our processes to improve our governance over contract labour.

•Global Dignity at Work Policy which tackles harassment and bullying in the workplace, and our Domestic and Family Abuse

guidelines supporting employees, their friends and family who may be experiencing harassment and bullying outside the workplace.

•Global Brand Promoter standard and training which establishes principles and guidelines to protect brand promoters from the risk of

sexual harassment.

•Child labour prevention programme for smallholder farmers, where we have trained key functions and business partners in

Africa to prevent child labour. We also deliver training direct to our smallholder farmers.

•Partnership with external parties to assess and address the health impacts of heat stress in sugarcane farming for our rum

supply through improved access to shade, drinking water, personal protective equipment and rest schedules.

•Regular training for teams and suppliers so they can effectively manage human rights risks.

Providing access to grievance mechanisms

We provide a global grievance and whistleblowing mechanism to our employees, business partners and communities, called

’SpeakUp’. For more information, see Business Integrity (previous page)

Engaging our stakeholders

We recognise the importance of listening to and consulting stakeholders on issues that affect them. We do this on an ongoing basis

through different mechanisms including worker interviews, reviewing grievance data and holding community dialogues.

Assessing the effectiveness of our approach

We measure the effectiveness of our human rights governance through our internal assurance framework and third-party human rights

assessments, in addition to monitoring allegation and breach trends and root causes. We continue to enhance our risk mitigation plans

based on lessons learned. For example, we took our brand promoter training online to increase accessibility.

This focus on due diligence and disclosure is crucial to us doing business the right way. It enables us to have transparency in our

engagements with employees and all stakeholders. We will continue to focus on this important area, embedding respect for human

rights into everyone’s working day, in every country and throughout our value chain.



	Our people and culture: The key to winning Our talented and diverse workforce, together with our people’s passion for our brands and unique culture continues to be a competitive advantage for our business, enabling our people to perform at their best.

Highly engaged, talented and diverse workforce

At Diageo, we are proud to have strong employee engagement levels across our business. Despite challenging economic circumstances our

people continue to express pride and passion for our consumers, business and brands. In our most recent Your Voice survey, a high proportion

of our people (89%) are proud to work for Diageo, significantly exceeding the external benchmark(1) by 10 percentage points. Our overall

engagement score also remains strong at 81%, which although being 3 percentage points lower than last year, is 5 percentage points higher than

the external benchmark. This impressive engagement index puts us in an advantaged position as an employer of choice and enables us to attract

and retain the best and most diverse talent.

Leadership and inclusive culture continue to be important drivers of employee engagement. We have built a workforce with the right

blend of diversity and expertise in our leadership and line manager population. We continue to upskill our managers’ coaching

capabilities, equipping them with the skills needed to inspire and develop their teams, through our line manager development

programme. In our recent Your Voice survey, 81% of our people believe that their line managers encourage and value different

perspectives and styles.

Career and talent management is crucial to sustaining high employee engagement levels and future-proofing our business

performance. Our 'Craft my Career' initiative provides the platform for our people to have meaningful discussions on how they can

grow and develop at Diageo. We also prioritise developing key talent for future roles through our global mobility and talent

development programmes. In fiscal 24, 71% of our leadership appointments were internal talent and more than 5,500 people globally

succeeded to make career moves which translates to an average of at least 15 people every day. We remained committed to enhancing

digital, data and analytics capabilities, which are vital for our present and future growth. The Digital Talent Incubator programme was

launched to further develop our digital capabilities and build a sustainable talent pipeline for digital roles. Additionally, through our

Business description (continued)

105

collaboration with an external partner specialising in digital capability building we successfully upskilled more than 3,000 employees

in digital competencies, reaffirming our commitment to staying at the forefront of digital innovation.

Embedding a culture of speed and agility

We believe that a culture of speed and agility is important in the current operating environment, marked by increased volatilities and

challenging macroeconomics. Our ability to respond faster to rapid changes in our internal and external environment will enable us to

deliver consistent performance and maintain our competitive edge. Therefore, we embarked on a culture transformation journey in

fiscal 24 to further embed speed and agility across our business. We have an advantaged and distinct culture in Diageo – that is

characterised by the passion our people have for the business, a strong sense of ownership, purpose driven approach, a collaborative

spirit, an inclusive mindset and a commitment to doing business the right way. We have continuously evolved our culture in Diageo

over past 26 years, preserving our culturally distinctive strengths that continue to enhance performance, whilst accelerating the key

shifts that will be critical to the next phase of Diageo’s growth ambition. As part of the culture transformation programme, we have

designed four ’dial-up’ behaviours which represent the key cultural pivots we want to make. These behaviours have been purposefully

chosen based on feedback from internal and external stakeholders including our employees. We have also refreshed our values to

ensure proper alignment with our cultural aspirations. Our refreshed values are: passionate about consumers and customers, value each

other, be better, proud of what we do. Our four 'dial-up behaviours' are externally curious, collaborating efficiently, experimenting,

and learning and acting decisively.

Over the last nine months, we have immersed people in the culture change journey and equipped our employees to practise the new

'dial-up behaviours'. These immersion sessions have been facilitated by a passionate group of over 550 culture change champions and

our business leaders. We have also integrated the 'dial-up behaviours' into our performance management, reward and recognition

processes. Celebrate, our new and innovative recognition platform is now live in over 56 countries. Following an accelerated

expansion in Q2 and Q4 of fiscal 24, it now reaches the majority of our employees. The programme helps foster a culture of gratitude

and appreciation, using instant and more frequent peer-to-peer recognition aligned with our purpose of celebrating life every day,

everywhere. Delivered through a modern consumer grade user experience, the platform has achieved a strong utilisation rate with over

90,000 recognition moments experienced - the equivalent to one award every six minutes. Furthermore, we are empowering and

equipping our 4000+ people managers across the globe with the necessary tools to role model and influence behaviour change within

their teams.

While we understand that cultural change can take time, we remain committed to amplifying and clarifying the expectations for our

people. We believe that by doing so, we can build a more responsive and resilient workforce that is better equipped to thrive and

succeed in today's rapidly changing business landscape.

(1) Based on a blend of Ipsos Karian and Box, Qualtrics benchmark data. Global Manufacturing benchmark includes organisations with global coverage that operate

within FMCG and other industry sectors.

Creating the enabling environment for our people to work and thrive

We believe that people are at their best, both at work and at home, when they are physically and mentally thriving, emotionally

balanced, financially secure and socially connected. Our wellbeing philosophy provides a framework around these four dimensions,

ensuring that wellbeing is a part of our culture every day, everywhere. In our most recent employee opinion pulse survey, 88% of

respondents felt they are aware of the health and wellbeing resources and support Diageo offers, which has in part been aided by

active wellbeing champion groups. Markets are supporting the wellbeing of our people in different ways such as in Australia, where

we have introduced ‘Wellbeing Leave’ encouraging employees to proactively plan time away from work to rest and support their

wellbeing and in the United Kingdom, where we had a dedicated wellbeing day in May to recognise Mental Health Awareness Week.

In fiscal 24, we have further challenged the stigma around mental health. Building on our already launched mental wellbeing app,

Unmind, we have created a Mental Health Awareness eLearning and on World Mental Health Day we facilitated global conversations

where leaders shared their own experiences of mental health, to both normalise and signpost to resources. We provide a focus on

financial wellbeing through regular masterclasses and mental 'wealth' first aid training. Many markets have led employee physical

wellness challenges, such as Ireland’s ‘Go Joe Challenge’.

Additionally, we have developed a suite of resources on a range of globally relevant topics such as sleep, physical activity and staying

resilient during seasonal changes and have hosted multiple global conversations on topics such as menopause and men’s health.

Our Diageo Flex philosophy continues to offer employees opportunities to balance their work-life integration. Our family leave policy

continues to be popular and amongst market leaders, with 701 employees utilising our extended paternity leave provision and 842

employees utilising our extended maternity leave provision in fiscal 24. Lastly, our investment in a multi-year technology

transformation programme will make it easier for our people to do more fulfilling work, improve access to quality data and insights

and drive greater productivity and efficiency in our business process.

Business description (continued)

106

Average number of employees by region and gender(1)


Region(2)	Men	%	Women	%	Not declared(3)	%	Total
North America	1,844	59%	1,286	41%	14	—	3,144
Europe	5,972	57%	4,538	43%	14	—	10,524
Asia Pacific	5,797	66%	2,965	34%	1	—	8,763
Latin America and Caribbean	2,225	64%	1,272	36%	2	—	3,499
Africa	2,761	62%	1,675	38%	1	—	4,437
Diageo (total)	18,599	61%	11,736	39%	32	—	30,367

Average number of employees by role and gender(1)


Role	Men	%	Women	%	Not declared(3)	%	Total
Executive(4)	7	54%	6	46%	0	—	13
Senior manager(5)	320	56%	252	44%	1	—	573
Line manager(6)	2,414	64%	1,330	35%	7	—	3,751
Supervised employee(7)	15,858	61%	10,148	39%	24	—	26,030
Diageo (total)	18,599	61%	11,736	39%	32	—	30,367

(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, and is not fully representative of the gender identity or diversity within our 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.

(4)Executive positions have been calculated based on year end as of 30 June.

(5)Top leadership positions in Diageo, excluding Executive Committee.

(6)All Diageo employees (excluding senior managers and Executive Committee) with one or more direct reports.

(7)All Diageo employees (excluding senior managers and Executive Committee) who have no direct reports.



	Health and safety We prioritise the health and safety of our people throughout our value chain to ensure everyone is safe when working on- site, at home, on the road, every day, everywhere.

Embedding a culture of health and safety

We believe that safety is everyone's responsibility and an integral part of everyone's job. Empowering and involving our people in

safety embeds our belief that there is no acceptable level of accidents.

Our Global Health, Safety and Wellbeing Policy, along with our Global Risk Management Standards, lay the foundation for our

corporate approach to health and safety. We conduct risk assessments and utilise compliance systems, technology, and training that

help us create and embed innovative ways of working that continuously improve safety.

We encourage our employees' participation and involvement in accident investigations and improvement initiatives, and also provide

them with the most up-to-date health and safety training, so they can carry out day-to-day tasks and activities safely. In addition, we

conduct company-wide communication campaigns and as such in fiscal 24 we held 'Stop and Think', 'Refocus our Minds', 'Leading for

Safety' and 'Strive for Zero' campaigns.

We have completed the first of our three-year 'Safer Together' strategy which incorporates a safety culture and a technology roadmap.

Our overall strategy is designed to prevent severe, fatal, and process safety incidents while enhancing our health and safety culture.

Our roadmap is designed to further embed an improved safety culture into all locations. Our technology roadmap includes digital

solutions, automation, forklift truck technology, manual handling aids and artificial intelligence with the aim of improving our health

and safety performance. Over the next two years we plan to invest over $50 million on 36 shuttle warehouses in our scotch operations

where casks are put away on pallets by an automatic shuttle, removing manual handling, in an effort to improve safety and increase

productivity. Our strategy and roadmaps extend to our contractors and third-party providers.

Business description (continued)

107

Empowering responsibility: Fostering a safe work environment

Leaders across the organisation are responsible for cascading and implementing health and safety policies and procedures among their

direct reports and third parties within their remit. We also expect all employees to take responsibility for their health and safety and

those around them, by acting in accordance with our Code.

We utilise a variety of tools to identify health and safety risks as per our Global Health, Safety and Wellbeing Policy. Each location is

required to perform hazard identification and risk assessments which assist us in identifying and addressing unsafe conditions. We also

have a safe observation programme across all locations to identify unsafe behaviours, recognise positive behaviours and to report

work-related hazards. All employees and third parties are encouraged to remove themselves from work situations they believe could

cause injury or ill health. Hazards are logged on local action planning systems and tracked for closure.

To track the effectiveness of our approach, all our locations, markets and global functional teams regularly monitor and review health

and safety. We report weekly our performance measures to the Global Supply Chain and Procurement Governance Leadership,

to Supply Chain and Procurement Leadership monthly and to the Executive Committee at quarterly meetings.

Our performance

We report on lost time accident frequency rate (LTAFR). This

year, we sustained 1.06 lost-time accidents (LTAs) per 1,000

full-time employees (including directly supervised

contractors), compared to 0.91 in fiscal 23.

5 year LTAFR trend

Business description (continued)

108

Our LTAFR increased against last fiscal, driven by increased numbers of lost time accidents in Scotland and North America. Both of

these markets together with tequila and Türkiye market implemented safety improvement plans aimed at improving safety

performance and safety culture. These improvement plans will be continued into the next fiscal.

Our total recordable accident frequency rate (TRAFR) records

work- related injuries that need more than first aid treatment decreased during this fiscal, demonstrating a consistent year-on-year

improvement in our overall numbers across the last three fiscal years, with a notable improvement in our tequila and Türkiye market. We

investigate each recordable accident to establish the root cause as well as uncover all contributing factors and insights we can learn from.

We share the key learnings across the organisation aiming to prevent recurrences. For more information, please refer to our ESG

Reporting Index.

(1) Fiscal 20 performance was impacted by Covid and reduced operations.

Continuous improvement initiatives

Our workplaces are constantly evolving with new technologies, processes, and equipment. Continuous improvement ensures that

health and safety measures keep pace with these changes, addressing emerging hazards effectively. In fiscal 24 we introduced several

initiatives and will continue to do so as part of our culture and technology roadmaps in fiscal 25.

•Across our commercial organisation, we have launched a driver training programme – a driver behaviour monitoring

application, which provides bespoke training modules linked to the individuals driving behaviour.

•We continue to roll out the Diageo Behavioural Standard in Africa, focused on assessing the safety culture of our African

locations, which inform action and communication plans. Plans have started in Mexico to roll out this global standard across our

tequila business. Other regions such as Europe and North America are working with consultants to launch a standard suitable to their

bespoke activities.

•We introduced a new AI platform in some of our European facilities. The platform provides a 3D visual interface of the

location and allows staff to interact with various safety 'tools' in a very intuitive, visual way within this digital space. Using a range of

media including; touch screens, large format digital kiosks, tablets and mobile devices staff and visitors can interact with all elements

of the safety management systems. This includes site induction and familiarisation, reporting safety hazards, completing safety

observations, communication of safety incidents and access to a range of safety documentation. In addition, the digital platform

provides 3D representation and digital twin model of the workplace, developing people's spatial awareness and providing an intuitive

medium for training and safety awareness.

•We are continuing to improve our data capabilities to predict and prevent injuries.

•We continue to develop our global health and safety platform and are introducing electronic solutions for permit to work,

management of change and contractor management.

Continuous improvement in health and safety is vital as we continue to enhance workplace conditions and reduce risks.

Business description (continued)

109



	Champion inclusion and diversity Championing inclusion and diversity is at the heart of what we do, and is crucial to our purpose of ‘celebrating life, every day, everywhere’.

Our people are critical to our success. We believe everybody should be able to work in an environment where they can thrive, and

their contributions are valued. We are proud that in our most recent Your Voice survey, 81% (fiscal 23: 84%) of employees would

recommend Diageo as a great place to work and 83% (fiscal 23: 85%) agreed that people from different backgrounds and opinions can

be themselves and thrive in the company. Despite a small drop in results, our outcomes are above external benchmarks.

We are committed to shaping broader societal change, reflective of our consumers. We look to champion this across our entire

business – with our people, through our value chain, across our brands and within the communities in which we operate. Inclusion and

diversity is a critical enabler of our ‘Spirit of Progress’ ambitions and every senior leader plays their part and is incentivised in driving

progress to deliver this ambition.

Whilst we celebrate where we are today, we know there is more to do. Alongside progressing our gender and ethnicity ambitions, we

must also focus on achieving our ambitions across all aspects of diversity.

Strengthening our female talent pipeline

In fiscal 24, representation of women in leadership roles, including our Executive Committee, remained strong at 44%, against our

2030 ambition of 50%. We're proud to have 70% female Board representation, and 46% female Executive Committee representation.

This led to Diageo being recognised as a Top Ten Best Performing company for both women on boards and in leadership roles in the

FTSE Women Leaders Review. We have also been listed first in the United Kingdom and third globally from 4,000 companies in the

Equileap Gender Equality Report recognising our continued commitment to leading the way in gender equality.

We focus on strengthening our female leadership pipeline and investing in the next generation of female leaders, particularly across

areas where women have historically been under-represented, including commercial, general management and supply roles. Examples

of this include our 'Horizons' development programme piloted in fiscal 24 to strengthen general manager succession and support the

transition of leaders across functions, with 55% female representation in our first cohort. We launched the Global Supply Chain and

Procurement 'Accelerator' leadership programme of which 66% of participants were female and the 'Striding Women' initiative across

LAC strengthening retention and diversity of future talent. Our North America business also launched a commercial pilot partnering

with Sistas in Sales (SIS), an organisation committed to serve women of colour in professional sales careers across the United States.

These initiatives are complemented by our policies and practices – helping us to foster a gender-inclusive environment, providing

support at varying life stages including our 'Family Leave' policy, ‘Thriving Through Menopause’ guidelines, 'Pregnancy Loss'

guidelines and our 'Fertility’ guidelines which recently launched in Ireland.

Our 20 Spirited Women Network chapters are key to creating and amplifying our guidelines and policies, as well as partnering with

the business to best develop and grow talent. In fiscal 24 our Great Britain and Ireland chapters championed mentoring and coaching

programmes reaching 364 pairings, of which 84% were female.

Maintaining ethnic diversity

Today, 40% of our Board and 46% of our leadership population, including our Executive Committee, is ethnically diverse and we are proud to

have reached our 45% ethnicity leadership representation ambition ahead of 2030. We achieved this through 43% of internal promotions and

45% external appointments into the leadership cohort being ethnically diverse in fiscal 24. We want to maintain the momentum achieved to

date, while embedding the actions and enhancing our culture that has led to such positive outcomes. Disclosure is key to this and we are proud

that 96% of our leadership population and 71% overall, in the markets where legislation allows, have shared this information voluntarily.

We remain committed to creating a diverse and inclusive workforce that represents the communities we serve, and understand the

importance of diversifying our talent attraction and external partnerships. In North America, we've renewed partnerships with

Prospanica (The Association of Hispanic MBAs & Business Professionals) and the National Black MBA Association to support a

diverse talent pipeline. In Great Britain, we've partnered with Multiverse to launch a two-year apprenticeship programme aimed at

under-represented groups in commercial roles. The cohort consisted of ethnically diverse and female apprentices, further strengthening

our future leader pipeline.


Gender representation of our leadership(1), (3)
Role	Men	%	Women	%	Total
Leadership population(2)	327	56%	258	44%	585(3)

Business description (continued)

110


Ethnic representation of our leadership(1), (4)
Role	Ethnically diverse	%	Non- ethnically diverse	%	Decline to self- identify	%	Not disclosed	%	Total
Leadership population(2)	259	46%	270	47%	19	3%	20	4%	568

(1) This data is calculated as an average across the four quarters of fiscal 24.

(2) Leadership population encompasses Executive Committee and senior managers.

(3) One leader has opted not to disclose their gender; they cannot be positively attributed to either group and therefore are included.

(4) 18 leaders are based in countries that do not collect ethnicity data. As such, these leaders are not in scope. Please refer to the Reporting boundaries and

methodologies for further information, see pages 322-343.

Building an inclusive culture through leading progressive policies and guidelines

Our market-leading policies and practices are shaped by and for our people and allow us to continue to provide an environment

where they are supported and cared for.

We continue to embed and scale our existing policies and guidelines, including 'Domestic and Family Abuse', 'Gender Expression and

Identity’ and 'Disability Inclusion' guidelines. We also continue to support our employees’ individual circumstances and needs through

our 'Flexible Working' and 'Wellbeing' philosophies. In fiscal 24 we launched our Carers Leave policy in the UK, which went beyond

statutory entitlement giving our people up to 10 days paid leave to care, or arrange care, for dependents. This policy is accessible to all

employees, regardless of gender, but we recognise that women are more likely to take up caring responsibilities. We will be extending

this policy to other markets during fiscal 25.

Leveraging the power of our Resource Groups to drive inclusion locally

At Diageo, creating a sense of belonging for everyone is at the heart of everything we do. Our 60 employee resource groups (ERGs)

worldwide champion key calendar moments that represent the voice of our consumers and promote inclusivity. These include events

such as Hispanic Futures Month led by 'Connectados'; Black Heritage Month sponsored by 'AHEAD' (African Heritage Employees at

Diageo); International Day of People with Disabilities in partnership with the 'We Are All Able' group; the 'Rainbow Network' Pride

flag-raising event, and our annual Inclusion Week celebration now in its seventh year, seeing over 5,800 employees join across 29

virtual sessions.

In addition to this, fiscal 24 saw new initiatives and innovations including:

•Neuroinclusion – Diageo's first neurodivergent ERG PRISM launched in Ireland and Great Britain. In partnership with

PRISM, our Irish Brand Homes were accredited by Ireland's National Autism Charity ‘As I Am’ as autism friendly

attractions in November 2023.

•LGBT+ Gold Standard – The launch of Diageo India’s ‘Rainbow Network’ which saw members partner with the business

to help secure the prestigious Gold Award for LGBT+ Inclusion by India’s Workplace Equality Index (IWEI).

•Guinness Luck of the Dragon – To toast Lunar New Year the ‘P.A.N' (Pacific Asian Network) ERG partnered with

Guinness Open Gate Breweries in Baltimore and Chicago to launch a limited-edition brew and identified two local Asian

American and Pacific Islanders (AAPI) nonprofits to support as part of the festivities.

Business description (continued)

111

Promoting inclusivity within our value chain

Part of how we promote sustainable growth, and a resilient supply chain is giving equal access to resources, skills, and employment

opportunities in communities where we live, work, source and sell. An important way we deliver this is through Learning for Life

(L4L), our business and hospitality skills programme for people from

under-represented groups. L4L also tackles barriers faced by other under-represented groups including ethnically diverse communities

and people with disabilities. Our inclusive by design principles include recruitment practices, training content and venue accessibility,

as well as modules on inclusion and diversity.



	Building a thriving and inclusive hospitality industry
	Ambition by 2030 Provide business and hospitality skills to 200,000 people, increasing employability and improving livelihoods through Learning for Life and our other skills programmes		Number of people reached through Learning for Life and other skills programmes in fiscal 24
			36k

200k


n	2030 Target	200k
n	2023 progress to date	62k
n	2024 progress to date	98k

In fiscal 24, we reached 36,000 people in 36 countries and territories with L4L, over 50% of them women. To deliver an even greater

positive impact, this year we piloted new partnerships with our customers and distributors to increase employment rates for students

graduating from our programme.

Through Diageo Bar Academy we provide accessible training and resources aiming to create a sustainable, inclusive, and thriving

hospitality industry that works for all. In fiscal 24 we continued to deliver in-person and online training to hospitality workers, with an

emphasis on women, in Africa (Zambia, Mozambique, Cameroon) and India to support their industry progression.

Increasing the representation of diverse voices through our progressive marketing practices

As one of the world's largest advertisers, we're committed to playing our part across the industry to ensure that everyone, from script to

screen, sees themselves represented. We use our marketing to challenge stereotypes and commit investment to address under-

representation of diverse voices in media, making mainstream media more inclusive.

In fiscal 24, we are proud to have made significant advancements in our accessibility practices across our media and campaigns.

Working with television station ITV, Guinness made sporting history by trialling live descriptive audio commentary for two Guinness

Six Nations rugby games, to help make sure blind and partially-sighted fans could follow every aspect of the game. Smirnoff’s biggest

global campaign for over a decade, 'We Do We', launched across different markets shining a light on under-represented groups and

advocating for more inclusive socialising. In the UK, the brand partnered with accessibility and inclusive consultancy, 'Tilting the

Lens', to execute an 'access for all' pledge to make socialising and our events more accessible. In India, Smirnoff partnered with Kala

Ghoda Art festival, one of India’s top exhibition festivals in Mumbai to support the Hijra community, a transgender community facing

significant social exclusion. In Brazil, the brand partnered with IZA, launching a unique track and dance challenge to support local

Afro-Brazilian communities and Pride activities across the country.

Creating inclusive communities

We champion inclusion and diversity in the communities connected to our production sites and sourcing areas. We work with

WaterAid and CARE International UK to ensure that when we provide Water Sanitation and Hygiene (WASH) to communities in

water-stressed markets, we also facilitate community dialogues to tackle social norms that prevent women's equal access to and

agency over WASH. This year more than 50% of WASH committee members were women across our programmes in nine countries.

We have also expanded our inclusive approach to our work with smallholder farmers to include Kenya, Tanzania, Nigeria and Ghana.

In partnership with Sightsavers and CARE International UK, we provide equal access to agricultural training and resources for

women, youth and people with disabilities. See more detail in our ESG Reporting Index.

Business description (continued)

112

Driving sustainable economic impact with diverse suppliers

We believe diverse-owned and disadvantaged suppliers deliver sustainable economic impact in the many communities where we

operate. We champion diverse suppliers through partnership, advocacy and celebrating success.

In fiscal 24, Diageo was awarded Platinum Top Global Champion for Supplier Diversity and Inclusion by WEConnect International.

This award recognises our deep commitment to global inclusive sourcing from diverse groups including ethnic minority, women,

LGBT, veteran and disabled-owned businesses. More information on our supplier diversity strategy and programmes can be found in

our ESG Reporting Index.



	Managing climate and nature risks and opportunities by pioneering grain-to-glass sustainability Our business depends on natural resources and we are directly affected by changes in climate and the related challenges of nature loss, particularly freshwater. We continue to address the risks and opportunities that climate change and nature pose to our business through focused programmes on our most material risks, and greatest opportunities.

Introduction

We are committed to acting responsibly to mitigate our contribution to global warming, to conserve the environment on which we rely

and to support our licence to operate and grow. Climate risk is intensifying, with extreme weather events and temperature rises taking

place even faster than many scientists had expected. While our analysis suggests our business is resilient in the short- and medium-

term, we must take action now to ensure our continued resilience, as well as that of the communities in which we operate.

Pioneering grain-to-glass sustainability is how we adapt to climate change and address nature loss throughout our supply chain, mitigating the

risks associated with changing environmental and biodiversity factors. Putting climate, nature and people at the heart of our strategy is good for

our business and good for the planet. We believe that through the mitigations and adaptations we have in place or planned, our business is

resilient to the impacts of climate change and nature loss.

Our Action Plan – ‘Spirit of Progress‘

Pioneering grain-to-glass sustainability means setting ambitious targets. Our ‘Spirit of Progress’ targets reflect our most material ESG issues

and align to the UN Sustainable Development Goals. We are also proud to be a signatory to the UN's Race to Zero and Race to Resilience

campaigns reflecting our commitment to climate change mitigation and adaptation.

The issues surrounding climate change are complex, making progress against our ambitious targets challenging – for example the measurement

and reduction of Scope 3 greenhouse gas emissions, and the development of the infrastructure to reduce Scope 1 and 2 emissions are

particularly challenging. As we become more advanced in understanding our impacts and taking action to address them, we will also evolve

our practices and metrics. We regularly review our grain-to-glass sustainability strategy, and in fiscal 24 we further refined it to accelerate our

water ambitions and refine our carbon focus. We have reconsidered how we prioritise and report on our most important topics, focusing on our

priority performance targets. Performance against supporting goals including some of our packaging and waste targets have been separately

reported in the ESG Reporting Index.

Reporting

We have used the guidance of the Task Force on Climate-related Financial Disclosures (TCFD) framework for reporting. Our Net Zero Carbon

Strategy (first published in 2022) outlines how we will achieve our decarbonisation vision across our business and value chain. We continually

refine this strategy, considering the guidance of the UK Transition Plan Taskforce and we expect to refresh our strategy in the future to adapt to

ever-changing market, infrastructure and policy conditions.

Increasingly we are incorporating nature risks and dependencies into our strategic planning. We have begun to identify and quantify

our material impacts and dependencies, following the guidance of the Taskforce on Nature-related Financial Disclosures (TNFD)'s

LEAP (Locate, Evaluate, Assess, Prepare) framework.

Governance

Given the importance of the risks, we have governance processes in place to ensure that we consider and factor climate and nature risk

into our business operations and planning processes. To supplement our ‘Spirit of Progress‘ governance (summarised on page 99),

our sustainability teams and senior leaders hold monthly sustainability performance reviews. We track water efficiency and carbon

reduction projects and hold quarterly strategic business reviews focusing on multi-year progress and plans. Significant risks identified

are escalated to enterprise risk management forums at group level. We oversee climate and nature risk specifically at the highest level

of the company, managing through these governance structures and processes:

•Executive sponsorship and responsibility is shared jointly between the President, Global Supply Chain & Procurement and

Chief Sustainability Officer (Ewan Andrew) and the Global Corporate Relations Director (Daniel Mobley).

•They are supported by our cross-functional Climate and Nature Risk Steering Group.

•The Climate and Nature Risk Steering Group provides regular updates to the executive sponsors and the Board which allows for

potential risks and opportunities to be part of strategic decision-making.

•The Board retains ultimate responsibility for the oversight of climate-related risks and opportunities.

Business description (continued)

113

•Additionally, several cross-functional working groups are responsible for addressing the key risks and opportunities we

identify.

•Any impacts on our consolidated financial statements from climate and nature risks and performance against non-financial

metrics are shared with and considered by the Audit Committee annually.

•Any potential financial impacts from climate and nature risks are also reviewed and considered by the Audit Committee.


Board oversight			Audit Committee

Executive Committee ownership

Executive sponsors
President, Global Supply Chain & Procurement and Chief Sustainability Officer			Global Corporate Relations Director

Cross-functional Climate and Nature Risk Steering Group
Corporate relations		Supply & Procurement		Strategy
Risk	Finance		Legal		Marketin g


Working groups assigned to address key risks and opportunities identified

Risk Management

Identifying climate risks and opportunities

We divide climate risk into physical and transition risks. Physical risks include chronic changes, like sea level rises, temperature

changes and acute events like floods, droughts and heatwaves. Transition risks arise from actions to mitigate climate change, such as

policy and legal changes (e.g. carbon taxes); technology changes (e.g. renewable energy) or market changes (e.g. growing consumer

demand for more sustainable products). Both categories of risk are already occurring and likely to increase. As temperatures continue

to rise globally, we continue to assess and prepare for emerging physical and transition risks.

We are partnering with climate resilience and nature experts to identify and assess how generally recognised climate and nature risks

apply specifically to our business. The factors that determine how climate change creates risks and opportunities for our business are

multiple and complex, creating challenges in quantifying the size of the impact and likelihood of these risks. Notwithstanding,

scenario analysis allows us to test the various assumptions related to climate change and how they may affect our business. This year,

we have further developed our capability in modelling the impacts of climate change under physical and transition risk scenarios.

Climate change resilience

Our experience in managing the impact of normal variations in climatic conditions, water availability and agricultural yields has made

us more resilient and adaptable. We do this through careful planning in our supply chain and procurement organisation. We work with

peers to drive enhanced technological practices at scale, which optimise crop management and seed quality. We also collaborate on

the development of novel high-yielding, drought and temperature- resilient crop varieties. We manage water in a way that makes our

operations more resilient and helps our local communities and agricultural sourcing areas to adapt, with a specific focus on water-

stressed areas. Since first referencing it in 2010, we have integrated climate risk into our enterprise risk management processes, within

our principal risk factors. This is now an integral part of our strategic and business continuity planning.

Identifying and assessing our physical risks

To assess the physical risks that we are exposed to and how they may develop under various scenarios, from 2021 to 2024, we worked

with climate resilience experts to look at all of our direct operations sites and key third-party suppliers. We have also included some

sites that are planned or under construction, to ensure we understand their exposure and prepare their resilience. This table illustrates

how we have phased the work:

Business description (continued)

114


Fiscal year	2021	2022	2023	2024
Markets/ regions assessed for physical risks	Largest supply centres •Scotland •North America	Highest water risk •Africa •Mexico •India •Türkiye	Remaining locations •Asia Pacific •Latin America and Caribbean •Europe	Acquisitions and additions to operational footprint •Asia Pacific •North America •Europe

Following each successive year's analysis, the total global physical risk footprint was refreshed.

We conducted physical risk assessments that measured the exposure and vulnerability of the activities at our sites, the key third-party

operations and suppliers' assets to 19 climate-related hazards. In addition, we reviewed the vulnerability of the main agricultural

materials and our key distribution routes to climate change. We then considered how the climate-related hazards and our site

vulnerabilities would materialise under two different levels of future warming: Intergovernmental Panel on Climate Change (IPCC)

scenario RCP (Representative Concentration Pathway) 4.5 – medium warming of 2-3°C, and IPCC scenario RCP8.5 – severe warming

of 4-5°C and two timeframes (to 2030 and to 2050). These scenarios were chosen to represent a 'worst case' (RCP8.5) and a 'medium

case' (RCP4.5) under which to assess our resilience.


IPCC scenario	Description
RCP 4.5	Warming of 2-3°C by 2100
RCP 8.5	Warming of 4-5°C by 2100

For our own sites and many of our third-party operator sites producing beverages on our behalf, we analysed climate-related risks

they are likely to be exposed to. For those that are most strategically important or at greatest risk, we carried out more detailed

assessments. At each location, we considered a combination of the different production activities (e.g. distilling and packaging) as well

as parts of the supportive processes that might be affected (e.g. infrastructure, water supply and energy sources) and the 19 physical

climate-related risks that might occur.

We also analysed our key suppliers' factories and warehouses; for example those handling our most critical or specialised ingredients

and components, key agricultural commodities, and our most critical distribution routes, to identify which might be exposed to

physical risk in the future.

Given the dependence of our business on agricultural raw materials, we gave this area particular attention, conducting detailed

analyses of the most important crops used in our products. This research highlighted the vulnerabilities of each crop type, how their

exposure may increase in the growing regions over time and the possible adaptation and mitigation responses to these. The diagram on

page 116 illustrates the main risks the most important commodities are exposed to, by region.

In addition to the bulk agricultural raw materials outlined in the illustration, we conducted a high-level analysis of raw materials included in

our products critical for the characteristics they impart – for example, juniper, angelica and liquorice. The results of the agricultural raw

material assessments have informed and will continue to inform our strategy.

Risk assessment results – our most important physical risks

Our climate risk assessment, without consideration of mitigation or adaptation actions, confirmed three key points:

1.Water-stress, including drought, is our most significant climate-related physical risk in terms of prevalence, trajectory and

potential financial impact. It affects our ability to produce our products, the access to agricultural ingredients that we need

and, ultimately, our licence to operate.

2.All agricultural raw materials are at risk from climate change; we see that risk increasing under the timeframes and

scenarios we analysed. Our models suggest that the costs of most commodities are likely to increase as a result of climate

change, although estimates of the precise impact vary significantly depending on the model used and underscoring the

difficulty of these projections. These factors potentially affect our own operations and those of some of our suppliers.

3.Acute weather events, including floods, winds, hurricanes/storms, heatwaves and wildfires, are projected to increase and

may cause disruption to our operations, although their impact is unlikely to be as significant as that of the risks related to

water and agricultural materials.

Business description (continued)

115

Deep dive – our water scarcity risk

Water is vital to our operations and the raw materials we use when creating our products. We give great focus to understanding water-

related risks so we can mitigate and adapt to them.

In addition to our physical climate risk assessments to analyse the risks from water availability, water temperature, water quality and

flooding, we also conduct water-stress analyses at our sites every two years.

We undertake this work using site surveys and World Resources Institute (WRI) Aqueduct data. We also complete water source

vulnerability assessments (SVAs) to further enhance the insights we need to address risks. By fiscal 23, we worked with our expert

partners to complete SVAs at 22 of our sites located in water-stressed areas; in fiscal 24 we completed SVAs on a further eight sites.

This work provides comprehensive insights into how our risk profile may vary with climate change, such as the degree of vulnerability

to water-stress within our operations and supply chains. We can then use these insights to help us act where we believe it is most

needed, whether that is in increased water efficiency requirements, replenishment commitments or prioritised climate adaptation

planning.

Focus on water-stress

We have been regularly assessing our wholly-owned production sites for water-stress since 2008. The most recent water risk

assessment, conducted in 2023, identified five new water-stressed sites and was updated in fiscal 24 to reflect changes in our

operations due to disposals. We follow a three-step approach to assessing water-stress in our production sites, combining the results

from the WRI Aqueduct mapping tool with external validation from independent hydrologists and internal site surveys encompassing

physical, regulatory, social, and reputational considerations. Below are the operational sites that we have identified as being in water-

stressed areas, the sites for which we have conducted source vulnerability assessments (SVAs) and the countries where we have

identified priority water basins.

Business description (continued)

117

Quantitative impact of physical risk determined by scenario analysis

This year, we collaborated with climate resilience experts to develop and implement an automated scenario analysis tool to inform our

climate adaptation strategy. The tool allows us to perform further scenario analyses and test numerous sensitivities to defined

variables. For example, we can analyse the sensitivity to climate risks of certain categories or markets and estimate the impact of the

adaptation measures that we have implemented. This is a significant step forward in the integration of climate risk into our strategic

planning processes. We modelled the chronic risk of water availability, the acute risk of drought, commodity price increases due to

climate change and one-off climate-related events.

Water-stress and drought

Under the warming scenarios we modelled, nearly a quarter of our sales will be exposed to increased water-stress in both scenarios

and timeframes. Under these warming scenarios, the absolute number of sites may not increase significantly, but, under both

timeframes, those sites affected may suffer even greater shortages of water, which may impact our operations and the health and

wellbeing of employees at those sites.

Analysing the financial impact of drought is particularly difficult due to the many factors involved, including the probability of

drought, the length of time operations may be suspended and the impact of any adaptation or contingency measures. We have

modelled what we are currently able to through scenario analysis, our own assessment of vulnerability and with highly conservative

assumptions (e.g. limited downtime in all sites due to drought). We have concluded that, by 2030, we do not anticipate that drought

will have a significant impact on our operations (including key third-party operations) or on our financial condition. Beyond 2030, it is

more difficult to analyse, given the increased uncertainties inherent in modelling over a significant period of time. Our models show

that adaptation actions are needed, particularly in the period between 2030 and 2050 in order to prevent impactful interruption to our

operations and supply chains. If no action is taken, the outcome may potentially result in lost sales. In our strategy section below, we

outline the interventions we are currently implementing to future-proof our business against drought.

Commodity scarcity and pricing

Commodity price increases due to climate change are more difficult to estimate, with the models we used producing highly varied

estimates. Climate risk is likely to result in a projected price increase for the majority of our commodities. Our scenario analysis helps

us build in commodity price risk into our raw material procurement strategies, particularly for crops with unique provenance (e.g.

agave and vanilla) or high sensitivity to growing conditions (e.g. hops). Our modelling suggests the biggest risks of higher prices in

2030 and again in 2050 are likely to impact agave, sorghum, rice, wheat, dairy and hops. There are considerable differences between

models, but the impacts in both 2030 and 2050 may be significant.

Flooding and tropical storms

Flooding and storms are the next most likely physical risks to affect our financial performance, given the risk of damage to our sites

and disruption to our supply of agricultural ingredients. Although the direct risk to our sites from acute physical events will increase,

our scale, global supply footprint and capabilities in resilience management mean we are well-positioned to ensure flooding and

storms do not interrupt our overall ability to serve our customers or have a significant financial impact on a global scale.

Heatwaves, wildfires and landslides are also identified as acute physical risks. Their potential financial impact is not modelled in our

scenario analysis but adaptations to these risks are planned where they are projected to increase.

Identifying and assessing our transition risks and

opportunities

We have performed additional scenario analysis to estimate the financial impact of transition risks and opportunities under a Paris-

aligned emissions scenario (RCP2.6). The analysis provided us with a better understanding of our risks and opportunities associated

with transitioning to a low-carbon economy. Through this analysis we have refined our financial estimation and gained further clarity

on how to respond.

We identified those risks with the most potential impact by looking at our agricultural inputs, production and packaging, distribution

and sales channels. Through this analysis, we were able to determine the most important transition risks and opportunities to monitor,

including:

1.Decarbonisation costs: Changes to our supply chain and production costs, including carbon taxes and related changes to input

costs (risk and opportunity).

2.Consumer behaviour: Changes in consumer behaviour to opt for more sustainable options, e.g. choosing circular products or

locally produced brands (risk and opportunity).

3.Regulatory changes: Shifts in public policies, e.g. restrictions on packaging, water use, agricultural materials or land that

affect our ability to make our products (risk).

4.Technology changes: Adopting low-carbon production of our products and packaging and the associated risk of not doing

this fast enough (risk and opportunity).

Of those risks and opportunities outlined above, the greatest impacts are likely to arise from consumer behaviour and from input cost

increases related to the cost of decarbonisation. The table on page 120 summarises the physical and transition risks and opportunities

we consider the most important.

Business description (continued)

118

Quantitative impact of transition risks and opportunities

Transitioning to a low-carbon economy presents both risks to and opportunities for our business. Through our scenario analysis, we

have been able to estimate the impact on our operations and financial condition to 2030, concluding that it is unlikely to be significant

over that period – even assuming that we bear any changes in production costs.

Packaging is the key transition risk and opportunity

We identified that the key driver of transition risk to 2050, was our use of glass, which could contribute to an overall production cost

increase. We noted that lower transport and energy costs would partially mitigate this impact. We acknowledge that extending the

analysis to 2050 is subject to many variables and ambiguities and, therefore, substantial uncertainty. However, it allows us to estimate

what a 'worst-case scenario' may look like, based on our best available modelling of cost trajectories.

Our modelling has allowed us to estimate the impact on our operations and the financial condition of some of the possible mitigating

actions we take, which can include pricing, improvement in energy use, sourcing and using lightweight glass, reducing the carbon

intensity of glass production and using returnable or reusable packaging. The results of the scenario analysis of both physical and

transition risks are reflected in our assessment of viability and impairment (see page 86 of the UK Annual Report).

Business description (continued)

119

Summary of our most important climate risks and opportunities


Risks
Risk description	Water scarcity Increasing water scarcity and water-stress affects our ability to continue to source from and produce in water-stressed areas	Agricultural raw material availability Climate-related impacts on agricultural material availability cause scarcity or price increases
Category	Physical – chronic	Physical – chronic
Timeframe(1)	Short-term (one to five years), medium-term (five to 10 years) and long-term (10 to 30 years)	Medium-, long-term
Impact (if not mitigated)	Moderate(2)	Moderate(2)
Response examples	•Improvements in water use efficiency in our operations, with more ambitious targets at water-stressed sites •Water replenishment plans in 100% of water-stressed areas •Collective action activities to improve water security in Diageo's ‘priority water basins’ •Nature-based solutions that support climate mitigation, adaptation and water replenishment •Exploring alternative formats and ingredients with potential to reduce water use •Rainwater harvesting, Aquifer recharge, Dam de-silting	•Regenerative agriculture adaptations •Smallholder farmer support •Development of drought-resistant ingredients (e.g. sorghum, anise and barley varieties) •Alternative sourcing locations •Substitution with alternative crops •Increased use of cover cropping •Improved water management in agricultural practices

Risk description	Input costs Policy changes (carbon taxation, shift to renewables) cause increases in input costs	Consumer behaviour Consumers prioritise purchasing more sustainable products, rejecting those perceived to have a negative environmental impact
Category	Transition – policy/legal	Transition – market
Timeframe(1)	Short-, medium-term	Short-, medium-, long-term
Impact (if not mitigated)	Moderate(2)	Moderate(2)
Response examples	Supply chain decarbonisation Engaging suppliers in low-carbon technology options for their operations Reduced packaging weight	Reduced packaging weight Increased recycled content in packaging Developing circular product offerings Purchasing more sustainably-grown raw materials Communicating these changes to consumers
Opportunities
Opportunity description	Supply chain decarbonisation Reducing our Scope 1, 2 and 3 emissions lowers our exposure to carbon taxes and related costs, and improves our reputation with customers and consumers	Innovation in sustainable products and packaging Developing more sustainable products meets consumers increasing demands
Category	Transition – policy/legal	Transition – market
Timeframe(1)	Short-, medium-term	Short-, medium-term
Impact (if not realised)	Moderate(2)	Moderate(2)
Response examples	•Decarbonisation programme and capital investment in our operations •Renewable energy investments •Regenerative agriculture programme •Collaboration, partnerships and capability building within our supply chain	•Innovation to deliver more sustainable products (e.g. refillable and reusable packaging, alternative packaging materials) •ecoSPIRITS (reusable glass packaging format), lower waste, lower carbon distribution technology

(1) Timeframes chosen align to those used in our scenario analyses, where short-term (one to five years) reflects the typical strategic planning timeframe, medium-term

(five to 10 years) includes the timeframe to 2030 which our scenarios model, and long-term (10 to 30 years) includes the timeframe to 2050 which is also modelled by

our scenarios.

(2) 'Low' impact is defined as having a negligible impact on customer service, or an absorbable disruptive impact on one or more brands. 'Moderate' impact is defined as

disruption to 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 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 damage.

Business description (continued)

120

Integrating nature risk into our climate risk strategy

In alignment with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), we have commenced

assessing our nature-related dependencies, impacts, risks and opportunities. We conducted a nature baseline across our supply chains

during fiscal 24. We identified material pressures across the value chain and estimated our contribution to environmental impacts. We

identified the geographic areas where these could be harmful to nature, using datasets covering four dimensions of nature: land, water,

biodiversity and ecosystem services. Our assessment encompassed our agricultural upstream supply chains, our direct operations and

an initial assessment of some of our packaging supply chains.

Results of our nature risk assessment

The greatest risks are to our agricultural raw material sourcing arising from water scarcity, as much of our agricultural materials are

grown in water-stressed regions. The results aligned with the observations from our climate scenario analysis. The raw materials with

the highest relative nature impact were assessed as agave, broken rice, sugarcane, sorghum and barley.

Although we have been conducting climate risk assessments for several years, this nature risk assessment is a new analysis and only a

subset of ecosystem services could be incorporated into the model. We have made good progress on understanding our dependencies

and impact on nature and have begun to weave nature into our broader strategy. We intend to continue our assessment of and response

to nature-related dependencies, impacts, risks and opportunities, aligned to the recommendations of the TNFD.

Our strategy for grain-to-glass sustainability

Our 'Pioneer grain-to-glass sustainability' strategy acknowledges the breadth of the environmental and social consequences of a

changing climate and our dependencies on nature and people. It recognises how interlinked these issues are and how deeply connected

and dependent our value chain is on nature, broader society and its evolving expectations. We continue to learn and evolve our

approach, aiming to take action where it has the most material impact.

Our targets are mapped against our most material issues, water and carbon, and reflect the complexity of the risks and opportunities

we face. By taking action and delivering on our commitments, we are taking steps to make our business more resilient while

preserving our licence to operate and grow.

Our carbon and water roadmaps outline the projects needed to deliver our 2030 targets. These plans are backed by capital investment

and undergo regular and rigorous stress testing to build confidence in our ability to deliver our targets. We are learning and improving

our plans and are extending them across our supply chain. Enhancing and digitising our sustainability data and reporting framework

has and will continue to provide more detailed insight into what is required to deliver our strategy.

We expect to invest around $1.2 billion between 2020 and 2030 to accelerate our ambition to preserve water and take a more focused

approach to carbon reduction, with around $0.3 billion invested so far. Much of the progress within our own operations comes from

our sites in Africa and India. We are beginning to see the impact of our investments in our North America and Europe regions, with

more action to come as we head toward 2030.

Preserve Water for life

Water is the most important ingredient in our products. It is also a precious shared resource that is facing increasing pressure in many

parts of the world, due to the impacts of climate change and the competing demands for freshwater resources. As outlined in our

physical risk assessment, it is our most important climate risk.

In fiscal 24, we undertook a detailed review of our water strategy to assess how we are addressing risks and opportunities and to

further accelerate our impact and approach. The results of this review underpin our current four-pillar strategic approach, focusing on

operations, supply chain, communities and advocacy. We are prioritising the integration of our water programmes with other actions we

are taking to address impacts on climate, nature and people. For example, a key development in our refreshed strategy is that we will

extend our water replenishment and collective action programmes to include indirect water use in our upstream supply chain. As a

result, we will increase the number of our priority basins to prioritise action. We will also better leverage our brands to deliver on our

goals and increase our focus on engaging with governments to encourage progressive climate and water policy and investments. Our

ambitious action on water will help to ensure our sites, supply chains and communities build resiliency in a changing climate.

Business description (continued)

121



	Water efficiency
	Target by 2030 Reduce water use in our operations with a 40% improvement in water use efficiency in water-stressed areas		Percentage change in water efficiency index from the prior year – in water-stressed areas
			(6.2)%


	Target by 2030 Reduce water use in our operations with a 30% improvement across the company		Percentage change in water efficiency index from the prior year – across the company
			(3.7)%

Following a detailed review of our water use efficiency methodology in fiscal 23, we adopted an enhanced measurement methodology – the

water efficiency index. This shows the aggregated change in water use efficiency across our production processes (brewing/packaging and

distilling) weighted by their water use. Brewing/packaging do not require maturation; the process occurs closer to the sale of our products.

However, distillation can occur years before a product is packaged and sold. Therefore, efficiency in brewing/packaging is measured against

the litres of product packaged, while distillation efficiency is measured against the litres of pure alcohol (LPA) produced, addressing the

maturation period. This year, we used 29,820 m3 of water for agricultural purposes on land under our operational control in Mexico and

Türkiye. We report this separately from water used in our direct operations and do not include it in our water efficiency calculations. More

detail can be found in our Reporting boundaries and methodologies section on pages 322-343. Our focus on water-stressed areas has

continued to deliver strong water use efficiency performance with a 6.2% improvement versus fiscal 23 and 21.3% improvement since

our fiscal 20 baseline. This was primarily driven by the continuous improvement initiatives at our sites in East Africa, where we

further optimised our water recovery plants.

Our performance across the company on water use efficiency has improved by 3.7% in comparison to the previous year and by 15.6%

since our fiscal 20 baseline(1). We also delivered efficiency improvements in our Scottish sites, resulting from better performance of the

reverse osmosis plant at our Cameronbridge site.

Four years into our action plan, we are ahead of our water use efficiency commitments, both globally and in water-stressed areas. Our

efforts to date have been primarily focused on more established production regions with higher exposure to water-stress, like Africa and

India. Future, planned divestments in areas where we have already made strong progress, for example Guinness Nigeria, may result in a

slowed progress versus our baseline, however, we will continue to drive improvements at remaining sites and will take further action at

our sites in Latin America, which have seen significant expansion.

As we continue to install or increase the capacity of water recovery technologies across our sites, the volume of water recovered and

recycled from water-stressed areas reached 890,476 m3 in fiscal 24 – equivalent to 17% of total water used in water-stressed areas.

Innovation and new technologies are critical to meeting our water use efficiency targets. We are partnering with Diageo Sustainable

Solutions (DSS) to find, test and embed the new technologies into our roadmaps. In fiscal 24, we launched a DSS innovation round

Business description (continued)

122

addressing five different water challenges, including water use efficiency and maximising the value of wastewater streams. We are

concluding our 4T2 Sensor pilot at our Leven site, optimising water use associated with clean-in-place systems through sensor

technology. We are now planning a scale adoption of this technology across other sites.

(1) Under the previous water efficiency methodology, water use efficiency per litre of product packaged (litres/litre) - across the company was 4.1, measured in litres of water

per litre of product packaged (litres/litre). The percentage change in litres of water used per litre of product packaged from the prior year - across the company was a 2.8%

improvement compared to fiscal 23 and 11.2% improvement compared to our fiscal 20 baseline. Water use efficiency per litre of product packaged (litres/litre) – water-

stressed areas was 3.2, measured in litres of water per litre of product packaged (litres/litre). The percentage change in litres of water used per litre of product packaged

from the prior year – water-stressed areas was a 6.6% improvement compared to fiscal 23. Under the new methodology, the water efficiency index – across the company

was 84.4 and the water efficiency index – water-stressed areas was 78.7 in fiscal 24.



	Water replenishment
	Target by 2026 Replenish more water than we use for operations in water-stressed areas		Cumulative change in volumetric replenishment capacity of projects developed from fiscal 16 to fiscal 24
			70%


n	2026 Target	100%
n	2023 progress to date	71.5%
n	2024 progress to date	70.0%

Our water replenishment programme continues to deliver positive results, with another strong year delivering local water projects. We are on

track to reach our 2026 target of replenishing more water than we use for our operations in water-stressed areas. In fiscal 24, we implemented

projects that have the annual volumetric replenishment capacity of 1,230,000 m3 of water. Despite the cumulative progress against this target,

the year on year performance can vary because of the multiple projects and performance changes. Cumulatively (fiscal 16 to fiscal 24) we have

replenished 70% of our estimated fiscal 26 volume.

Overall, in fiscal 24, we completed 30 replenishment projects in 10 countries, cumulatively implementing over 120 projects between fiscal 21

and fiscal 24. In Jalisco, Mexico, we were proud to partner with the local authority to invest in a significant wastewater treatment plant, which

will also redirect treated water to be used by local farms – delivering both water quality and water availability benefits to the catchment. In

Kenya we completed nine clean water and sanitation projects in schools and villages in our supply chain, as part of our replenishment

programme. In Türkiye, we continued to progress our irrigation improvement project with our grape farmers, increasing the number of hectares

of vineyards. Where appropriate, we implemented nature-based solutions which this year included reforestation in Kenya and infiltration in

India.

An important part of our approach on water is that it remains people-centric. We have committed to providing access to clean water, sanitation

and hygiene (WASH) in water-stressed communities near our sites and in water-stressed areas that supply our raw materials. In fiscal 23, we

reached our 2030 target, meaning all nine of the markets included in our target invested in WASH projects since 2020. We will maintain this

commitment, investing every year to 2030. For more information, refer to our ESG Reporting Index.



	Water collective action
	Target by 2030 Engage in collective action in all priority water basins to improve water accessibility, availability and quality and contribute to net positive water impact		Percentage of priority water basins with collective action participation
			67%


		12


n	2030 Target	12
n	2023 progress to date	6
n	2024 progress to date	8

Business description (continued)

123

Recognising that businesses need to partner with others to build climate resilience and ensure continuity of operations, our collective

action programme embraces a collaborative approach towards water stewardship in our 12 priority water-stressed basins across 10

countries.

The collective action programme involves multi-stakeholder partnerships including other companies, NGOs, public sector

organisations and communities. Together these partnership initiatives aim to pool knowledge, expertise and resources to identify and

implement solutions to address shared water challenges.

In fiscal 24, through our partnership with The Nature Conservancy, we started two more collective action initiatives; one with

WaterAid under the Lagos Aqua Initiative in Nigeria’s Ogun basin to transform WASH services in Lagos; and another in the Gediz

basin in Türkiye for conservation of water resources and enhanced fertiliser management.

We were named the basin champion for two more basins in fiscal 24 – the Santiago Lerma River Basin in Mexico and the Upper Godavari River

Basin in India. This is in addition to being basin champion for Kenya’s Upper Tana Basin. As basin champion, Diageo commits to providing

overall leadership on efforts to rejuvenate selected basins. This is a strong reflection of Diageo’s commitment to addressing shared water

challenges and acknowledges that our efforts can only be successful when approached collectively.

Advocacy

Water is under pressure around the world, and the issues around preserving it are challenging and complex. It will take multilateral action to

address the challenge of the water, climate and nature crisis. At COP28, we were among businesses calling for more action on water and climate

resilience. We also attended the UN SDG Summit in New York and World Water Week in Stockholm to share our ambition and learnings, and

advocate for more companies and partners to scale up collaboration. We are members of leading international organisations such as the Water

Resilience Coalition, Alliance for Water Stewardship and we have strategic partnerships with WaterAid and The Nature Conservancy that

support this call to action.

Business description (continued)

124

Our carbon commitment and learnings

We are committed to accelerating towards a low-carbon future and following a science-based approach to drive the pace and scale of

change required. Our targets to achieve net zero emissions(1) demonstrate our commitment to mitigating our impact on climate change.

To achieve this goal, we have developed decarbonisation roadmaps detailing the measures we are taking and will take to reduce

emissions and ensuring that new sites are developed with low emission technologies embedded from the outset. Across our supply

chain we are clear on the decarbonisation levers that we control and the solutions that require collaboration with others to progress.

We acknowledge that realising this scale of transformation will require partnering for systemic change and delivering decarbonisation

solutions in areas outside our direct control. Not all of our suppliers and partners are at the same stage of the net zero journey, nor is

the necessary external infrastructure always available at scale.

We recognise that policy frameworks and market signals are not always incentivising the necessary pace of change across all markets

in which we operate. We are focusing on the areas where we can affect the biggest positive impacts across our value chain, partnering

with others and advocating for change to unlock some of the external challenges we face. The pathway that we are pursuing, for the

critical enablers that will be required to deliver against it, is outlined below.

Our risk assessment and scenario analysis inform us that consumer behaviour is an important transition risk and companies that do not

decarbonise their operations will suffer, as consumers continue to demand more sustainable products. Decarbonisation requires

investment and partnership by working with suppliers to innovate in low-carbon manufacturing techniques.

Our pathway to net zero(1)

Business description (continued)

125


Our approach to delivery

Scope 1 (6%)(2)	Scope 2 (0.1%)(2)	Scope 3 (94%)(2)

1.Embedding energy efficiency into our processes. 2.Progressing to 100% renewable electricity, fuel and heat. 3.Renewable energy certificates, innovations, partnerships and carbon removals to close the gap(1).	1.Continue to switch to renewable electricity. 2.Create additional renewable energy capacity to power our sites, exporting surplus energy to the local grid, through on-site developments and using power purchase agreements.	For Scope 3 greenhouse gas emissions, we will shift our focus to delivering triple wins through a refreshed strategy focusing on three pillars of engagement, prioritising our level of engagement and investment to where we have the greatest level of control and in those areas that are most critical to our license to operate. These three workstreams include 1) Diageo enabled projects, 2) Strategic innovation and 3) Selective engagement (collaborative action).

Enabled by scalable technology and process innovations and transformational partnerships to decarbonise the end-to-end supply chain.

(1)Net zero emissions are reached when anthropogenic (i.e. human-caused) emissions of greenhouse gases into the atmosphere are balanced by anthropogenic

removals over a specified period. A science-based approach to net zero covers emission scope 1, 2 and 3 with direct abatement of approximately 90% from our

emissions baseline and up to 10% of high-quality certified carbon offsets to neutralise hard-to-abate residual emissions to close the gap to zero.

(2)This is an estimate based on current management expectations; the underlying assumptions and future developments may change over time, which would cause changes to

management expectations and this information. See pages 114-120 for more about the potential impact of climate change on Diageo and our current plans to manage and

mitigate risks.

(3)‘Carbon-neutral’ or ‘carbon neutrality’ refers to an outcome where GHG emissions have been neutralised through a combination of emissions reductions efforts and

the purchase of carbon offsets/credits resulting in no net release of carbon dioxide. Any carbon offset purchases for discrete carbon neutral claims are specifically

for certification and are not included in annually reported Diageo greenhouse gas emission footprint.

(4)Four carbon-neutral facilities have been assessed and certified using PAS 2060 – Carbon Neutrality Standard and Certification (Scope 1 and 2, Direct Operations

boundary). We also require site emissions be reduced in alignment with an equivalent net zero trajectory, allowing less than 5-10% of residual emissions to be

neutralised via the purchase of carbon offsets. Any purchased carbon offsets for these specific carbon neutral claims are not applied to fiscal 24 reported greenhouse

gas emissions.

Business description (continued)

126



	Emissions from our direct operations
	Target by 2030 Become net zero carbon in our direct operations (Scope 1 and 2)		Percentage change in absolute greenhouse gas emissions (direct and indirect greenhouse gas emissions by weight (market/net based)) from the prior year
			(10.7)%

In fiscal 24, we decreased greenhouse gas emissions from our direct operations by a further 10.7%, continuing our year-on-year

reduction towards our 2030 target. Investing in renewable energy across our global footprint has enabled us to reduce our emissions,

despite production increases in brewed and distilled volumes across several markets.

This year, our performance has benefitted from increased biomass use at our existing bioenergy plants in Mexico, East Africa and

Scotland and further roll out of liquid biofuel at a number of scotch distillery and malting sites. We continue to use renewable natural

gas in Canada and Scotland, where we directly contribute Diageo distillery co-product feedstock to generate our green gas certificates.

We also reopened our iconic Port Ellen Scotch whisky distillery, operating on renewable fuel and electricity, with a carbon-neutral

commitment.(1)

Across our other sites, we have been converting fossil fuel energy use to zero carbon renewable electricity. Several incremental

projects at our packaging sites are expected to deliver their first full year of benefit in fiscal 25, with the switching of our Runcorn beer

packaging site natural gas combined heat and power plant to imported renewable electricity through the grid.

Our continued reduction of greenhouse gas emissions has driven a cumulative saving of 23.8% in greenhouse gas emissions versus our

fiscal 20 baseline. We have delivered these savings through investment in new and existing bioenergy plants in East Africa, Scotland,

India and Mexico, where we have replaced fossil fuel use with liquid biofuel. We have also switched to renewable natural gas in

Canada and Scotland.

We source renewable electricity in sites such as Africa and LAC that has helped us reduce our Scope 2 emissions from our fiscal

20 baseline.

We are rolling out innovative and proven technologies at our sites, guided by mature decarbonisation roadmaps and detailed capital

investment plans. We are making progress on reducing our direct operations emissions, with our planned rate of reduction increasing

as we approach 2030, through the optimisation of energy use and conversion to renewable energy sources.

For more information on our use of renewable energy, please refer to our ESG Reporting Index.

(1) We assess and certify sites using PAS 2060 – Carbon Neutrality Standard and Certification (Scope 1 and 2, direct operations boundary). We also require that site

emissions be reduced in alignment with an equivalent net zero trajectory, allowing less than 5-10% of residual emissions to be neutralised using the purchase of carbon

offsets. Any purchased carbon offsets for these specific carbon neutral claims are not applied to fiscal 24 reported greenhouse gas emissions.

Business description (continued)

127


Total direct and indirect greenhouse gas emissions by region by year
Total direct and indirect greenhouse gas emissions by weight (market/net based) (1,000 tonnes CO2e)
Region	2020	2022	2023	2024
North America	127	100	83	86
Europe	152	145	195	179
Asia Pacific	32	10	9	7
Latin America and Caribbean	22	38	25	9
Africa	137	132	89	77
Diageo (total)	470	424	401	358


Streamlined Energy and Carbon Reporting (SECR)
	2020	2021	2022	2023	2024
Total Global energy consumption (MWh)	3,310,508	3,396,078	3,560,231	3,502,997	3,459,068
Market based (net) intensity ratio of GHG emissions (g CO2e per litre of packaged product)	139	122	105	105	96
Total UK energy consumption (MWh)	1,056,931	1,064,795	1,091,153	1,244,375	1,247,734
Direct (MWh)	924,022	927,917	951,302	1,097,353	1,092,867
Indirect (MWh)	132,910	136,878	139,851	147,021	154,867
Total UK direct and indirect GHG emissions (kt CO2e)	86	71	84	136	121
Scope 1	86	71	84	136	121
Scope 2	0	0	0	0	0



	Emissions from across our value chain
	Target by 2030 Reduce our value chain (Scope 3) carbon emissions by 50%		Percentage change in absolute greenhouse gas emissions (ktCO2e) from the prior year
			(5.0)%

Our value chain (Scope 3 greenhouse gas emissions) target is to achieve an absolute reduction of 50% by 2030 (and 100% by 2050) compared

to our fiscal 20 baseline. Compared to fiscal 23, our Scope 3 greenhouse gas emissions were reduced by 5%, a significant improvement on the

previous year. Scope 3 performance depends on many internal and external factors. In the current year, the improvement has been driven

primarily by resource efficiency, improved inventory management, fluctuating demand and logistics and distribution optimisation, partially

offset by increased emissions capital expenditure associated with our grain-to-glass sustainability strategy.

Despite a positive performance in fiscal 24, we are still showing an increase of 13.5% compared to our fiscal 20 baseline, a year

impacted by Covid-19, resulting in artificially low Scope 3 emissions. Performance since then has been impacted as a result of

business growth and also a reflection of the challenge of reducing emissions across the value chain.

We recognise that external factors can help or hinder our intended progress. We are improving and refining our decarbonisation

roadmap as we learn, leading to increased engagement and planning with key partners along our supply chain to address some of these

opportunities and challenges. However, there are still many hurdles to overcome as outlined above in our pathway to net zero.

Business description (continued)

128

In fiscal 25, we will evolve our Science Based Targets Initiative (SBTi) targets by disaggregating our Forest, Land and Agriculture (FLAG)

emissions for separate reporting where appropriate. As a first step, we are further analysing all categories of material emissions in our value

chain to reflect the changes in our business since we first set SBTi targets. These steps, together with enhancements to our decarbonisation

roadmap, will provide clearer direction for our business and our partners.

Moving towards regenerative agricultural sourcing

Businesses have a shared interest in helping to restore the natural resources on which we all depend. We are committed to making our

agricultural supply chains economically, socially and environmentally sustainable.



	Regenerative agriculture programmes
	Target by 2030 Develop regenerative agriculture programmes in five key sourcing landscapes		Number of regenerative agriculture programmes initiated
			3


n	2030 Target	5
n	2023 progress to date	1
n	2024 progress to date	4

In fiscal 24, we progressed our ambition to help farmers test regenerative agriculture across some of our key ingredients including

barley, wheat and agave. Whilst these early stage programmes are important, we recognise the challenges facing regenerative

agriculture. These can only be addressed through mobilising increased collective action, simplifying the ask of our suppliers and

designing shared transition plans.

We launched three new regenerative agriculture programmes in the fiscal, with two in key geographies.

For the Scotch programme, 20 farms across three regions are participating and engaging with partners to reduce their carbon footprint

and inform future agronomic improvements. Through our partnership with James Hutton Institute, we commissioned research trials on

cover crops and seed mixes to analyse their ability to improve the soil. We have also looked at how to best integrate cover crops and

seed mixing into rotations to reduce fertiliser application.

Our tequila regenerative agriculture programme has focused on delivering a robust baseline and agronomic assessment across 19 of

our most strategic agave suppliers and on our own Don Julio agave farm. The results provided insights on how to decarbonise existing

practices and improve nutrient management. We have set up a demonstration area on our farm to conduct improvement trials for

engagement with our suppliers.

We entered the second year of the Guinness barley regenerative programme in Ireland. Through our collaboration with Agricarbon,

our soil carbon measurement partner, on-the-ground field measurements have been used to establish a baseline which will act as a

reference as we continue to identify additional levers to increase soil carbon stocks.

Making packaging more sustainable

We continue to respond proactively to legislation and consumer demand for sustainable products. We are committed to reducing our

value chain carbon footprint by reducing packaging weight, increasing our recycled content, reducing single use packaging and

deploying and scaling circular business models.

Many consumers want to transition to sustainable products but, in practice, experience barriers to being able to do so. To address these barriers,

we are focused on value, desirability and delivering sustainable objectives. Aligning with our customers is critical to making progress alongside

consumers. In anticipation of future trends, we are piloting a number of test and learn initiatives including circular business models.

We are leveraging Diageo-enabled initiatives and partnerships and supplier programmes. For example, we have partnered with

ecoSPIRITS to pilot the use of refillable spirits packaging (ecoTOTES) in the on-trade across 18 markets over the next three years.

Each refillable container is designed to be used up to 150 times and aims to eliminate up to 1,000 single-use bottles over their lifespan.

Other examples of how we are reducing our packaging footprint in fiscal 24 include:

•We launched our Baileys aluminium bottle in selected international airports. The new aluminium bottle is five times lighter

than the traditional 70cl Baileys bottles, with an anticipated 44% reduction in carbon versus the current glass bottle

•We rationalised select sizes of our glass beer bottle portfolio and launched our lightweight design, saving 3,000 tonnes of

glass per annum.

•We redesigned our Johnnie Walker Blue Label range, reducing weight across the portfolio of sizes and contributing to the

overall weight saving of 170 kilotonnes of glass purchased in the year.

Business description (continued)

129



	Reducing packaging weight and increasing recycled content
	Target by 2030 Continue our work to reduce total packaging and increase recycled content in our packaging (delivering a 10% reduction in packaging weight and increasing the percentage of recycled content in our packaging to 60%)		Percentage change of total packaging (by weight) in fiscal 24
			(14)%

In fiscal 24, we continued to focus our efforts across our core portfolio and we reduced our packaging weight by 14%, in comparison

to fiscal 23. This is 1% below our 2020 baseline, despite increased production volumes from fiscal 20 to fiscal 24.

We have made significant progress in fiscal 24, with some pivotal shifts across our beer and ready to drink portfolios, transitioning

targeted products to aluminium cans and saving 2,000 tonnes of glass per annum. Our ambition to eliminate cartons, wherever

reasonably possible, has resulted in the elimination of 9 million cartons across our tequila portfolio – in particular, across our Don

Julio range – reducing our packaging weight by 591 tonnes.



	Change in percentage of recycled content (by weight) in fiscal 24
			3%


n	2030 Target	60%
n	2023 progress to date	39%
n	2024 progress to date	42%

In fiscal 24, our recycled content totalled 42%. For glass, we increased recycled content in our Cîroc portfolio to 26% and across our green

glass, we continue to push towards 95%. We are working across our brands to obtain technical approvals of higher recycled content in our

packaging and we continue to partner with suppliers and industry bodies.

We continue to trial increased recycled content in glass and while access to quality cullet remains a challenge in the industry, we are

confident that we can adapt to the required changes and are already implementing higher recycled content across some of our brands,

in both green and amber glass. Diageo remains committed to identifying collaborations and finding solutions to support improvements

to infrastructure and availability of material. In North America, we launched the ‘Don’t Trash Glass’ initiative during fiscal 23, a

partnership with the Glass Packaging Institute and Glass King, to improve glass recycling rates. During its first year, the programme

collected over 900 tonnes of glass and is now expanding into additional states.

For more information on rPET (recycled polyethylene terephthalate) in our plastic packaging, recyclability of our packaging and waste

reduction efforts, refer to our ESG Reporting Index.

Business description (continued)

130

How we have reported consistently with the recommendations of the Task Force on Climate-related Financial Disclosures

(TCFD)

In this year's disclosures, we have complied with the FCA's Listing Rule 9.8.6(R). Our climate-related financial disclosures are

considered to be consistent with the TCFD's recommendations and recommended disclosures, as illustrated in the index below.


TCFD recommendation	Consistency
GOVERNANCE See page 113
a.Describe the board’s oversight of climate-related risks and opportunities.	Yes. See page 113.
b.Describe management’s role in assessing and managing climate-related risks and opportunities.	Yes. See page 113.
RISK MANAGEMENT See pages 114-121
a.Describe the organisation’s processes for identifying and assessing climate-related risks.	Yes. See pages 114-120. Having completed comprehensive risk assessments our focus is now on ensuring appropriate adaptation plans are in place for all risks identified.
b.Describe the organisation’s processes for managing climate- related risks.
c.Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management.
STRATEGY See pages 121-130
a.Describe the climate-related risks and opportunities the organisation has identified over the short-, medium-, and long-term.	We have described risks and opportunities for our business, in all of our owned, operating locations and our most important third-party operations, as well as the impact of those risks and opportunities on our strategy. We have modelled the resilience of our strategy under three climate-related scenarios. See pages 323-325. We have co-developed a scenario analysis tool with climate experts to enable regular updates to our scenario analyses.
b.Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning.
c.Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
METRICS & TARGETS See pages 121-130
a.Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.	Yes. See pages 121-130.
b.Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.	Yes for Scope 1 and 2. See page 127. We are working with global GHG accounting bodies and our suppliers to get more detailed Scope 3 data. As we refine our value chain data, we can be more specific about our GHG footprint.
c.Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.	Yes. See pages 121-130.

Business description (continued)

131

Cautionary statement concerning forward-looking statements

This document contains ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only to

historical or current facts and may generally, but not always, be identified by the use of words such as “’will”, “anticipates”, “should”,

“could”, “would”, “targets”, “aims”, “may”, “expects”, “intends” or similar expressions statements. In this document, such statements

include those that express forecasts, expectations, plans, outlook, objectives and projections with respect to future matters, including

information related to Diageo’s fiscal 25 outlook, Diageo’s medium-term guidance, Diageo’s supply chain agility programme, future

Total Beverage Alcohol market share ambitions and any other statements relating to Diageo’s performance for the year ending 30 June

2025 or thereafter.

Forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in

the future. There is a number of factors that could cause actual results and developments to differ materially from those expressed or

implied by these forward-looking statements, including factors that are outside Diageo's control, which include (but are not limited to):

(i) economic, political, social or other developments in countries and markets in which Diageo operates, including geopolitical

instability as a result of Russia's invasion of Ukraine and the conflict in the Middle East and macroeconomic events that may affect

Diageo’s customers, suppliers and/or financial counterparties; (ii) the effects of climate change, or legal, regulatory or market

measures intended to address climate change; (iii) changes in consumer preferences and tastes, including as a result of disruptive

market forces, changes in demographics and evolving social trends (including any shifts in consumer tastes towards at-home

occasions, premiumisation, small-batch craft alcohol, or lower or non-alcoholic products and/or developments in e-commerce); (iv)

changes in the domestic and international tax environment that could lead to uncertainty around the application of existing and new tax

laws and unexpected tax exposures; (v) changes in the cost of production, including as a result of increases in the cost of commodities,

labour and/or energy due to inflation and/or supply chain disruptions; (vi) any litigation or other similar proceedings (including with

tax, customs, competition, environmental, anti-corruption or other regulatory authorities); (vii) legal and regulatory developments,

including changes in regulations relating to environmental issues and/or e-commerce; (viii) the consequences of any failure of internal

controls; (ix) the consequences of any failure by Diageo or its associates to comply with anti-corruption, sanctions, trade restrictions or

similar laws and regulations, or any failure of Diageo’s related internal policies and procedures to comply with applicable law or

regulation; (x) Diageo’s ability to make sufficient progress against or achieve its ESG ambitions; (xi) cyber-attacks and IT threats or

any other disruptions to core business operations; (xii) contamination, counterfeiting or other circumstances which could harm the

level of customer support for Diageo’s brands and adversely impact its sales; (xiii) Diageo’s ability to maintain its brand image and

corporate reputation or to adapt to a changing media environment; (xiv) fluctuations in exchange rates and/or interest rates; (xv)

Diageo’s ability to successfully execute its strategic business transformation projects; (xvi) Diageo’s ability to derive the expected

benefits from its business strategies, including Diageo’s investments in e-commerce and its luxury portfolio; (xvii) increased

competitive product and pricing pressures, including as a result of introductions of new products or categories that compete with

Diageo’s products and consolidations by competitors and retailers; (xviii) increased costs for, or shortages of, talent, as well as labour

strikes or disputes; (xix) movements in the value of the assets and liabilities related to Diageo’s pension plans; (xx) Diageo’s ability to

renew supply, distribution, manufacturing or licence agreements (or related rights) and licences on favourable terms, or at all, when

they expire; or (xxi) any failure by Diageo to protect its intellectual property rights.

In preparing the ESG-related information contained in this document, Diageo has made a number of key judgements, estimations and

assumptions and the processes and issues involved are complex. The ESG-related forward looking statements should be treated with

special caution, as ESG and climate data, models and methodologies are often relatively new, are rapidly evolving and are not of the

same standard as those available in the context of other financial information, nor are they subject to the same or equivalent disclosure

standards, historical reference points, benchmarks, market consensus or globally accepted accounting principles. In particular, it is not

possible to rely on historical data as a strong indicator of future trajectories in the case of climate change and its evolution. Outputs of

models, processed data and methodologies are also likely to be affected by underlying data quality, which can be hard to assess and we

expect industry guidance, market practice, and regulations in this field to continue to change. There are also challenges faced in

relation to the ability to access data on a timely basis and the lack of consistency and comparability between data that is available. This

means the ESG-related forward-looking statements and ESG metrics discussed in this document carry an additional degree of inherent

risk and uncertainty, and therefore, our actual results and developments could differ materially from those expressed or implied by the

ESG-related forward-looking statements in this document.

In light of the uncertainty as to the nature of future policy and market responses to climate change, including between regions, and the

effectiveness of any such responses, Diageo may have to re-evaluate its progress and adapt its approach towards its ESG ambitions,

commitments and targets in the future, update the methodologies it uses or alter its approach to ESG and climate analysis and may be

required to amend, update and recalculate its ESG disclosures and assessments in the future, as market practice and data quality and

availability develop rapidly.

All oral and written forward-looking statements made on or after the date of this document and attributable to Diageo are expressly

qualified in their entirety by the cautionary statements contained or referred to in this section. Further details of potential risks and

uncertainties affecting Diageo are described in our filings with the London Stock Exchange and the US Securities and Exchange

Commission (SEC), including in our Annual Report on Form 20-F for the year ended 30 June 2024.

Business description (continued)

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Any forward-looking statements made by or on behalf of Diageo speak only as of the date they are made. Diageo expressly disclaims

any obligation or undertaking to publicly update or revise these forward-looking statements other than as required by applicable law.

The reader should, however, consult any additional disclosures that Diageo may make in any documents which it publishes and/or

files with the SEC.

All readers, wherever located, should take note of these disclosures. This document includes names of Diageo’s products, which

Diageo plc 2024.

The information in this document does not constitute an offer to sell or an invitation to buy shares in Diageo plc or an invitation or

inducement to engage in any other investment activities.

This document may include information about Diageo’s target debt rating. A security rating is not a recommendation to buy, sell or

hold securities and may be subject to revision or withdrawal at any time by the assigning rating organisation. Each rating should be

evaluated independently of any other rating.

Past performance cannot be relied upon as a guide to future performance.

References in this document to information on websites are included as an aid to their location and such information is not

incorporated in, and does not form part of, this document unless otherwise noted.

Business description (continued)

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Risk factors

Investing in the securities of Diageo involves risk. Diageo believes the following to be the principal risks and uncertainties that are

most likely to have a material adverse impact on the Diageo group. These risks should be carefully considered together with other

information included elsewhere within this annual report. If any of these risks occur, either alone or in combination with other

risks, Diageo’s business, financial condition and performance could suffer and the trading price and liquidity of its securities could

decline. The order of presentation of the risk factors below does not necessarily indicate the likelihood of a particular risk’s

occurrence or the potential magnitude of its financial consequences.

In addition, because any global business of the kind Diageo is engaged in is inherently exposed to risks that become apparent only

with the benefit of hindsight, risks which Diageo does not currently deem to be material or of which it is not presently aware could

also materially and adversely impact Diageo’s business, financial condition and performance in future periods.

Risks related to the global economy

Diageo’s business has been and may, in the future, be adversely impacted by unfavourable economic, political, social or

other developments and risks (including those resulting from a public health threat, increases in geopolitical instability,

including in relation to Russia’s invasion of Ukraine and conflict in the Middle East, and/or inflationary pressures) in the

countries in which it operates

Diageo’s products are sold in nearly 180 countries worldwide, and Diageo may be adversely affected by global economic volatility

or unfavourable economic developments in any of the countries or regions where it has distribution networks, marketing

companies or production facilities. In particular, Diageo’s business is dependent on general economic conditions in its major

markets, which include the United States, the United Kingdom, the countries that form the European Union, and certain countries

within the Latin American region, India and China, and failure to react quickly enough to changes in those economies could have

an adverse effect on financial performance.

The markets in which Diageo operates have been significantly impacted, and could be impacted in the future, by public health

threats, such as the Covid-19 pandemic. Similarly, Russia’s invasion of Ukraine and the ongoing conflict in the Middle East has,

among other things, resulted in elevated geopolitical instability and economic volatility. The economic volatility attributable to

these conflicts is part of, and contributing to, a larger trend of high inflation and a higher interest rate environment globally, which

has had and may continue to have a significant adverse effect on economic activity that could have a material adverse impact on

Diageo’s business, financial condition, results of operations and/or the price of Diageo’s securities.

Any future significant deterioration in economic conditions globally or in any of Diageo’s important markets, including economic

slowdowns, global, regional or local recessions or depressions, currency instability, increased unemployment levels, increased

custom duties, tariffs and/or other tax rates, increased inflationary pressures and/or disruptions to credit and capital markets, could

lead to eroded consumer confidence and decreased consumer spending more generally, which in turn could reduce consumer

demand for Diageo’s products. Unfavourable economic conditions could also negatively impact Diageo’s customers, distributors,

suppliers, and financial counterparties, who may experience cash flow problems, increased credit defaults, decreases in disposable

income or other financial issues, which could lead to changes to ordinary customer stocking patterns, including destocking or

stocking ahead of potential price increases as well as an increase in Diageo’s bad debt expense. In addition, volatility in the capital

and credit markets caused by unfavourable economic developments and uncertainties, including the heightened geopolitical

instability caused by Russia’s invasion of Ukraine, the conflict in the Middle East, and/or inflationary pressures, could result in a

reduction in the availability of, or a further increase in the cost of, financing to Diageo.

Diageo’s business could also be affected by other economic developments such as fluctuations in currency exchange rates, the

imposition of any import, investment or currency restrictions (including the potential impact of any global, regional or local trade

wars or any tariffs, customs duties or other restrictions or barriers imposed on the import or export of goods between territories,

including but not limited to, imports into and exports from the United States, China, the United Kingdom and/or the European

Union), the imposition of economic or trade sanctions, or any restrictions on the repatriation of earnings and capital. Any of these

developments may have a material adverse effect on Diageo’s financial performance.

Diageo’s operations are also subject to a variety of other risks and uncertainties related to its global operations, including adverse

political, social or other developments. Political and/or social unrest or uncertainties, natural disasters, public health threats

(including the Covid-19 pandemic and any future epidemics or pandemics, and government responses thereto), politically-

motivated violence and terrorist threats and/or acts, including those which are specifically directed at the alcohol industry, may also

occur in countries where Diageo has operations. Additionally, recent and upcoming elections in key countries including the United

States, United Kingdom, Europe and India may lead to increased political, economic, social, consumer and regulatory volatility.

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Many of the above risks are heightened, or occur more frequently, in emerging markets, such as Nigeria, Ghana and Türkiye. In

general, emerging markets are also exposed to relatively higher risks attributable to unstable governments, corruption, crime and

lack of law enforcement, undeveloped or biased legal systems, expropriation of assets, sovereign default, military conflicts,

liquidity constraints, inflation, devaluation, price volatility and currency convertibility issues, as well as other legal and regulatory

risks and uncertainties. Developments in emerging markets can affect Diageo’s ability to import or export products and to

repatriate funds, as well as impact levels of consumer demand (for example, in duty-free outlets at airports or in on-trade premises

in affected regions) and therefore Diageo’s levels of sales or profitability. Any of these factors may affect Diageo

disproportionately or in a different manner from its competitors, depending on Diageo’s specific exposure to any particular

emerging market, and could have a material adverse effect on Diageo’s business and financial results.

Climate change, or legal, regulatory or market measures to address climate change or other environmental concerns, may

negatively affect Diageo’s business or operations, and water scarcity or water quality issues could negatively impact

Diageo’s production costs and capacity

Climate change is occurring around the world as a result of carbon dioxide and other greenhouse gases in the atmosphere having an

adverse effect on global temperatures, weather patterns and the frequency and severity of extreme weather-related events and

disasters. To the extent that weather patterns and climate change, or legal, regulatory or market measures enacted to address such

climate change or other environmental concerns, have a negative effect on agricultural productivity in the various regions from

which Diageo procures its raw materials, Diageo may be subject to decreased availability of, or increased prices for, a number of

raw materials that are necessary in the production of Diageo’s products, including wheat, maize, barley, sugar cane/molasses,

vanilla, agave, rice, grapes, sorghum, and aniseed. Severe weather events or changes in the frequency or intensity of weather events

could also pose physical risks to Diageo’s production facilities, impair Diageo’s production operations or disrupt Diageo’s supply

chain, which may affect production operations, delivery of its products to customers and insurance costs and coverage. For

example, a number of Diageo’s distilleries in Scotland are in lower coastal areas and, as a result, may suffer disruption due to

coastal flooding and/or storms. Climate change and geographic limitations related to the production may also expose Diageo to

water scarcity and quality risks due to the water required to produce its products, including water consumed in the agricultural

supply chain. If climate change leads to droughts or water over-exploitation or has a negative effect on water availability or quality

in areas that are part of Diageo’s supply chain, the price of water may increase in certain areas and certain jurisdictions may adopt

regulations restricting the use of water or enact other unfavourable changes.

Water, which is the main ingredient in virtually all of Diageo’s products and a major component within its agricultural supply

chain, is also a limited resource in many parts of the world. As demand for water continues to increase, and as water becomes

scarcer and the quality of available water deteriorates, including as a result of climate change, Diageo may be affected by increased

production costs (including as a result of increases in certain water-related taxes or related regulations), capacity constraints, or

requests to cease production entirely in water-stressed areas, which in turn could adversely affect Diageo’s business, financial

results and reputation. A number of Diageo’s production sites are in water-stressed areas and may be exposed to potential

disruption if demand for water exceeds the available amount during a certain period or if the poor quality of available water

restricts its use.

In addition, a failure by Diageo to respond appropriately to increased governmental or public pressure for further reductions in

greenhouse gas emissions, water usage and/or to address any other perceived environmental issues could damage Diageo's

reputation. Increased governmental or public pressure for further reductions in greenhouse gas emissions or water usage may also

cause Diageo to incur increased costs for energy, transportation and raw materials, as well as potentially require Diageo to make

additional investments in facilities and equipment, thus adversely impacting Diageo’s business and financial results. As

governments and business take action to reduce or mitigate the effects of climate change, Diageo and its supply chain are expected

to incur increased costs, including those associated with required improvements to energy usage in agriculture and glass

manufacturing, water efficiency and usage, land practices and competition for land from food crops, the rising cost of natural gas

and rising worldwide carbon prices. It is possible these costs increase beyond what is currently expected or that other categories of

costs increase unexpectedly, either or both of which could have an adverse impact on Diageo’s financial results.

Diageo is also required to report greenhouse gas emissions, energy usage data and related environmental information to a variety of

entities, and comply with the European Union Emissions Trading Scheme. Regulators in various jurisdictions, including Europe,

the United States and the United Kingdom, have focused efforts on increased disclosures related to ESG matters, including climate

change and mitigation efforts. These regulations, in particular the Corporate Sustainability Reporting Directive and the Corporate

Sustainability Due Diligence Directive, have expanded the nature, scope and complexity of matters that companies are required to

control, assess and report. This will require Diageo to make additional investments and implement new practices and reporting

processes, and will entail additional compliance risk. Disparate and evolving standards for identifying, measuring and reporting

ESG metrics, including ESG-related disclosures that may be required by the US Securities and Exchange Commission, the UK

Financial Conduct Authority, and European and other regulators, will likely increase compliance burdens and associated regulatory

and reporting costs and complexity significantly. Furthermore, while ESG reporting has improved, data remains of limited quality

and consistency and is more uncertain than historical financial information. ESG data, methodologies and standards may evolve

over time in line with market practice, regulation, or owing to scientific developments. The use of inconsistent or incomplete data

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and models could result in sub-optimal decision making. If Diageo is unable to accurately measure and disclose required data in a

timely manner, it could be subject to penalties in certain jurisdictions.

Diageo’s operations are also subject to environmental regulations by national, regional and local agencies, including, in certain

cases, regulations that impose liability without regard to fault. These regulations can result in liability that might adversely affect

Diageo’s operations and financial condition. As regulators in Diageo’s markets continue to respond to rising concerns about the

impact of climate change and other environmental threats, regulation and enforcement is becoming stricter. There can be no

assurance that Diageo will not incur a substantial liability or that applicable laws and regulations will not change or become more

stringent in the future.

Risks related to Diageo’s industry

Demand for Diageo’s products may be adversely affected by many factors, including disruptive market forces, changes in

consumer preferences and tastes and the adverse impacts of declining economies

Diageo’s portfolio of brands includes some of the world’s leading beverage alcohol brands, as well as a number of brands that are

prominent in certain regional and/or country-specific markets. Any inability by Diageo to respond and adapt either its products or

its processes to disruptive market forces, including e-commerce, artificial intelligence, digital, and new formats, could impact

Diageo’s ability to effectively service its customers and consumers with the required agility, thereby threatening market share,

revenue, profitability and growth ambitions. While Diageo is focused on expanding its digital platforms and effectively using

technology in its supply chains, there is no guarantee that these efforts will help Diageo gain and/or maintain a competitive

advantage over its peers.

Consumer preferences on a global, regional and/or local scale may shift due to a variety of factors, including changes in

demographics, evolving social trends (including any shifts in consumer tastes towards at-home consumption occasions,

premiumisation, small-batch craft alcohol, lower or no alcohol beverages, or other alternative products), changes in travel, holiday

or leisure activity patterns, weather conditions, public health regulations and/or health and wellness concerns, any or all of which

may reduce consumers’ willingness to purchase beverage alcohol products from large producers such as Diageo or at all. There is

also a risk to Diageo’s brands emerging from consumers making brand choices that reflect their increasingly polarised socio-

political views, including with respect to ESG matters. The market share, profitability and growth ambitions of Diageo’s brands, as

well as Diageo’s reputation more generally, could also be adversely affected by any failure by Diageo to service its customers and

consumers with the required agility or to provide consistent, reliable quality in its products or in its service levels to customers.

Economic pressures in the markets Diageo serves may also reduce consumer demand for Diageo’s products. In particular, inflation,

as measured by the consumer price index remains elevated in advanced and emerging market economies, including in the United

Kingdom, Europe and the United States, driven mainly by supply chain issues (including input shortages, labour constraints, rising

commodity prices and soaring shipping costs), excess demand for goods and services, and significant increases in energy prices.

Rising costs of living have negatively impacted the spending habits of consumers in various markets which Diageo serves and have

caused some consumers to choose products which have lower price points, including those of Diageo’s competitors. Changes in

consumers’ spending habits due to inflation and rising costs of living have had and may continue to have an adverse effect on

Diageo’s business and financial results.

In addition, the social acceptability of Diageo’s products may decline due to regulatory action, negative publicity surrounding, and/

or public concerns about, alcohol consumption. For example, a number of jurisdictions, such as Canada, are updating their

guidance around alcohol. Such anti-alcohol publicity or sentiment could also result in regulatory action, litigation or customer

complaints against companies in the beverage alcohol industry and have an adverse effect on Diageo’s business and financial

results.

Diageo’s business has historically benefitted from the launch of new-to-world products or variants of existing brands (with recent

examples including premium ready-to-serve cocktails, such as The Cocktail Collection, and Crown Royal Blackberry), and

continuing product innovation and the creation of extensions to existing brands remain significant elements of Diageo’s growth

plans. The launch and ongoing success of new-to-world products or global brand extensions is inherently uncertain, especially with

respect to such products’ initial and continuing appeal to consumers. Similarly, brands that Diageo acquires may not deliver the

expected benefits and/or may not scale as expected. The failure to successfully launch a new product or an extension of an existing

brand, or to maintain the product’s initial popularity, can give rise to inventory write-offs and other costs, as well as negatively

impact the consumer perception of and thus the growth of an existing brand. There can be no assurance of Diageo’s continuing

ability to develop and launch successful new products or variants of existing products, or to ensure or extend the profitable lifespan

of its existing products.

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Diageo is subject to tax uncertainties, including changes in tax obligations, tax laws, regulations and interpretations, as well

as enforcement actions by tax authorities

Changes in the political and economic climate have resulted in an increased focus on tax collection in recent years, leading to

greater uncertainty for multinational companies such as Diageo. In recent years, tax authorities have shown an increased appetite to

challenge the methodology used by multinational enterprises, even where a company complies with international best practice

guidelines. Changes in tax law (including tax rates), tax treaties, accounting policies and accounting standards, including as a result

of the Organisation for Economic Co-operation and Development’s review of base erosion and profit shifting and the European

Union’s anti-tax abuse measures, combined with increased investments by governments in the digitisation of tax administration,

could also result in increased levels of audit activity, investigations, litigation or other actions by relevant tax authorities. Diageo

also operates in a large number of jurisdictions with complex tax and legislative regimes and whose related laws and regulations

are open to subjective interpretation. These countries include Brazil, India and countries in East Africa, where Diageo is currently

involved in a large number of tax cases, including some cases that could potentially create significant exposures or liability for

Diageo. Diageo may be subject to further future tax assessments in these jurisdictions based on the same or similar matters.

Assessing the potential financial exposure arising from these and other cases is particularly challenging due to the uncertain fiscal

and political environment in these jurisdictions. Any such investigations, litigation or other actions may result in damages,

penalties or fines as well as reputational damage to Diageo or its brands, and as a result, adversely impact Diageo’s business and

financial results. For additional information with respect to legal proceedings, including potential tax liabilities in Brazil and India,

see note 19 to the consolidated financial statements.

Beverage alcohol products are also subject to national excise taxes, import duties, sales or value-added taxes and other types of

direct and indirect taxes in most countries around the world, most of which are specific to individual jurisdictions. Increases in any

such taxes, or the imposition of new taxes, have had and could continue to have a material adverse impact on Diageo’s revenue

from sales or its margin, either through reducing the overall level of beverage alcohol consumption, having a disproportionate

impact on certain categories and/or by encouraging consumers to switch to lower-taxed categories of beverage alcohol.

In addition to the above, other significant changes in tax law, tax treaties, related accounting policies and accounting standards

could also increase Diageo’s cost of doing business and lead to a rise in Diageo’s effective tax rate and/or unexpected tax

exposures, thus adversely affecting Diageo’s business and financial results.

Any increases in the cost of production could affect Diageo’s profitability, including increases in the cost of commodities,

labour and/or energy due to inflation

The components that Diageo uses for the production of its beverage alcohol products are largely commodities purchased from

suppliers which are subject to price volatility caused by factors outside of Diageo’s control, including, inflation, changes in global

and regional supply and demand, weather and/or agricultural conditions, fluctuations in relevant exchange rates and/or

governmental controls. Fluctuations in the prices of various commodities, including energy prices, may result in unexpected

increases in the cost of the raw materials Diageo uses in the production of its products, including the prices of the agricultural

commodities, flavourings and other raw materials necessary for Diageo to produce its various beverages, as well as glass bottles

and other packaging materials, thus increasing Diageo’s production costs.

Diageo may also be adversely affected by shortages of any such materials, by increases in energy costs resulting in higher

transportation, freight or other related operating costs, by inflation in any of the jurisdictions in which it produces its products.

Diageo may not be able to increase its prices or create sufficient efficiencies to offset these increased costs without suffering

reduced volumes of products sold and/or decreased operating profit.

While Diageo continues to closely monitor its operating environment, it is possible that the ongoing volatility related to significant

cost inflation along with a potential weakening of consumer spending power may have an adverse effect on Diageo’s business

financial condition and results of operations.

Diageo is subject to litigation specifically directed at the beverage alcohol industry, as well as to other litigation

Diageo and other companies operating in the beverage alcohol industry are, from time to time, exposed to class action or other

private or governmental litigation and claims relating to product liability, alcohol marketing, advertising or distribution practices,

alcohol abuse problems or other health consequences arising from the excessive consumption of or other misuse of alcohol,

including underage drinking. Diageo may also be subject to litigation arising from legacy and discontinued activities, as well as

other litigation in the ordinary course of its operations, including in connection with commercial disputes and the acquisition or

disposal of businesses or other assets. Diageo is further subject to the risk of litigation, enforcement or other regulatory actions by

tax, customs, competition, environmental, anti-corruption and other relevant regulatory authorities, including with respect to the

methodology for assessing importation value, transfer pricing or compliance matters. Diageo’s listing in the United States may also

expose it to a higher risk of securities-related class action suits, particularly following any significant decline in the price of

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Diageo’s securities. Any such litigation or other actions may be expensive to defend and result in damages, penalties or fines as

well as reputational damage to Diageo or its brands, and/or impact the ability of management to focus on other business matters,

and may adversely affect Diageo’s business and financial results. For additional information with respect to legal proceedings, see

note 19 to the consolidated financial statements.

Risks related to regulation

Regulatory decisions and changes in the legal, and regulatory environment could increase Diageo’s costs and liabilities or

limit its business activities

Diageo’s operations are subject to extensive regulatory requirements relating to production, distribution, importation, marketing,

advertising, sales, pricing, labelling, packaging, product liability, antitrust, labour, pensions, compliance and control systems, and

environmental issues. Changes in any such applicable laws, regulations or governmental or regulatory policies and/or practices

could cause Diageo to incur material additional costs or liabilities that could adversely affect its business. In particular,

governmental bodies in jurisdictions where Diageo operates may impose new product, production or labelling requirements (for

example Ireland from 2026), limitations on the marketing, advertising and/or promotion activities used to market beverage alcohol,

restrictions on retail outlets, restrictions on importation and distribution or other restrictions on the locations or occasions where

beverage alcohol is sold which directly or indirectly limit the sales of Diageo products. Regulatory authorities under whose laws

Diageo operates may also have enforcement power that can subject the group to actions such as product recalls, product seizures or

other sanctions which could have an adverse effect on Diageo’s sales or damage its reputation.

Diageo is also subject to antitrust and competition laws in many of the jurisdictions in which it operates. In a number of these

jurisdictions, there has been an increase in the enforcement of these laws during recent years. Should this trend continue, this may,

among other things, result in increased regulatory scrutiny of Diageo, potential reputational damage and/or increased costs related

to compliance.

Diageo is required to comply with data privacy laws and regulations in many of the markets in which it operates. For example,

Diageo is subject to the General Data Protection Regulation (“GDPR”) in the European Union, the United Kingdom General Data

Protection Regulation (“UK GDPR”), data privacy legislation in the United States and the Personal Information Protection Law

(“PIPL”) in China. Breach of any of these laws or regulations could lead to significant penalties (including, under the GDPR and

the UK GDPR, a fine of up to 4% of annual global turnover), other types of government enforcement actions, private litigation

and/or damage to Diageo’s reputation, as well as impact Diageo’s ability to deliver on its digital productivity and growth plans.

In many of the markets in which Diageo operates, the overall legal and regulatory landscape has become more complex in recent

years and changes to the regulatory environment in which Diageo operates could also cause Diageo to incur material additional

costs or liabilities, which could adversely affect Diageo’s business and financial performance. For additional information on the

increased complexity of the legal and regulatory landscape please see "— Climate change, or legal, regulatory or market measures

to address climate change or other environmental concerns, may negatively affect Diageo’s business or operations, and water

scarcity or water quality issues could negatively impact Diageo’s production costs and capacity" above.

Defective internal controls could adversely affect Diageo’s financial reporting and management processes, as well as the

accuracy of public disclosures

Diageo has in place internal control and risk management systems in relation to its financial reporting process and its process for

the preparation of consolidated financial statements. In addition, management undertakes a review of the consolidated financial

statements in order to ensure that the financial position and results of the group are appropriately reflected therein. Diageo is

required by the laws of various jurisdictions to publicly disclose its financial results, as well as developments that could materially

affect its financial results. Accurate disclosures provide investors and other market professionals with information to understand

Diageo’s business. In addition, the reliability of financial reporting is important in ensuring that the business’ management and its

results are based on reliable data.

Regulators routinely review the financial statements of listed companies such as Diageo for compliance with existing, new or

revised accounting and regulatory requirements. Should Diageo be subject to an investigation into potential non-compliance with

accounting and disclosure requirements or be found to have breached any such requirements, this may, among other things, lead to

restatements of previously reported results, significant penalties, public censure and/or litigation. Any such regulatory action could

adversely affect Diageo’s business and financial results, reputation and the price of Diageo’s securities. In addition, defective

internal controls could result in inaccuracies or lack of clarity in public disclosures and could result in a material misstatement of

financial reporting. This could create market uncertainty regarding the reliability of the data presented and have an adverse impact

on Diageo’s reputation and the price of Diageo’s securities.

Any failure by Diageo to comply with anti-corruption laws, anti-money laundering laws, economic sanctions laws, trade

restrictions or similar laws or regulations, or any failure of Diageo’s related internal policies and procedures designed to

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comply with applicable law, may have a material adverse effect on Diageo’s business and financial results, Diageo's

reputation and the price of Diageo' securities

Diageo produces and markets its products on a global scale, including in certain countries that, as a result of political and economic

instability, a lack of well-developed legal systems and/or potentially corrupt business environments, have a higher level of

corruption risk than other countries. There is increasing scrutiny and enforcement by regulators in many jurisdictions of anti-

corruption laws, including pursuant to the US Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and certain

jurisdictions’ equivalent local laws. Such enforcement has been enhanced by applicable regulations in the United States, which

offer substantial financial rewards to whistleblowers for reporting information that leads to monetary fines, and the United

Kingdom, which has enacted the Economic Crime and Corporate Transparency Act 2023 introducing a new corporate criminal

offence of failure to prevent fraud.

If Diageo or any of its associates fails to comply with anti-corruption laws (including anti-bribery laws), anti-money laundering

laws or with existing or new economic sanctions or trade restrictions imposed by the United States, the European Union or other

national or international authorities that are applicable to Diageo or its associates, including any sanctions introduced in response to

Russia's invasion of Ukraine, Diageo may be exposed to the costs associated with investigating potential misconduct as well as

significant financial penalties and/or reputational damage.

While Diageo has implemented and maintains internal practices, procedures and controls designed to ensure compliance with anti-

corruption laws, sanctions, trade restrictions or similar laws and regulations, and routinely conducts investigations, either at its own

initiative or in response to requests from regulators in connection with compliance with such internal controls, there is no guarantee

that such procedures will be effective in preventing compliance failures at Diageo or at third parties with whom Diageo maintains

business relationships. In addition, any lack of an embedded business integrity culture and associated control framework in any

market could increase the risk of non-compliance with relevant laws and regulations.

Any investigations and lawsuits, regardless of the ultimate outcome of the proceeding, are time consuming and expensive and can

divert the time and effort of Diageo’s personnel, including senior management, from its business. Adverse publicity, legal and

enforcement proceedings, and enhanced government scrutiny can also have a negative impact on Diageo’s reputation. To the extent

that violations of anti-corruption, sanctions and/or trade restriction laws and regulations, and/or Diageo’s internal policies and

procedures, are found, or if Diageo’s internal policies and procedures are found not to comply with applicable law, possible

regulatory sanctions, fines and other penalties or consequences, including reputational damage, may also be material. For

additional information with respect to legal proceedings, see note 19 to the consolidated financial statements.

Risks related to Diageo’s business

Diageo may incur significant cost in connection with attempting to achieve its ESG ambitions, and may be subject to

increased scrutiny and reputational risk if it is unable to make sufficient progress against or achieve its objectives

Diageo has articulated certain ESG ambitions as part of its ‘Spirit of Progress’ targets and is undertaking a number of strategic and

operational initiatives in order to achieve those ambitions. In addition, from time to time, Diageo may introduce new initiatives in

the future to make progress against those targets, as well as to address other ESG-related issues that arise. Diageo expects to incur

significant costs and investments in connection with any such initiatives (including those related to human resources, technology,

capital projects and operations), and as a result of compliance with new laws, regulations, reporting frameworks and industry

practices. Consistent with many companies across the alcohol beverage industry, Diageo expects that future innovations and

technological improvement, and increased collaboration with governments and other businesses, including those within the alcohol

beverage industry which may compete with Diageo, will be required in order to achieve and sustain its ESG-related ambitions. In

addition, the data, methodologies and standards that Diageo has used to develop its targets will likely evolve over time. Any

changes could result in revisions to Diageo’s internal frameworks and reported data, and could mean that reported figures are not

reconcilable or comparable year on year.

Furthermore, Diageo’s own current expectations with respect to its expected pathway to achieve its Spirit of Progress ambitions

(including achieving “net zero”) are subject to change as underlying assumptions and its own operations change over time,

including as a result of new information, changed expectations and innovation. In the event that Diageo is unable to make

sufficient progress in a timely manner or achieve its ESG-related ambitions, it may be subject to additional scrutiny and criticism,

and may face regulatory censure and/or fine. In addition, stakeholders and others who disagree with Diageo’s approach may speak

negatively or advocate against Diageo or its products, with the potential to harm Diageo’s reputation or business through negative

publicity, adverse government treatment, product boycotts or other means. Diageo could suffer reputation damage and a loss of

trust from consumers, investors and other stakeholders, and/or the price of Diageo’s securities could be adversely affected, if it

fails to achieve any of these goals for any reason or is otherwise perceived to be failing to act responsibly with respect to the

environment or to effectively respond to regulatory requirements concerning climate change.

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Diageo may be adversely affected by cyber-attacks and IT threats or other disruptions to core business operations

including manufacturing and supply, business service centres and/or information systems

Diageo relies on information technology (IT) systems, networks and services, including internet sites, data hosting and processing

tools, hardware (including laptops and mobile devices), software, and technical platforms and applications, to process, store and

transmit large amounts of data and to help it manage its business. Diageo uses its IT systems, networks and services for, among

other key business functions, the hosting of its primary and brand-specific websites and its internal network and communications

systems; supply and production planning, execution and shipping; the collection and storage of customer, consumer, investor

relations and employee data; processing various types of transactions, including summarising and reporting its results of

operations; the development and storage of strategic corporate plans; and ensuring compliance with various legal, regulatory and

tax requirements. As with all large systems, Diageo’s IT systems, including those managed or hosted by third parties, could be

subject to sophisticated cyber-attacks (including phishing and ransomware attacks), IT threats by external or internal parties intent

on disrupting production or other business processes or otherwise extracting or corrupting information, or other cyber incidents

such as the CrowdStrike incident in July 2024 where computers were affected on a global basis (including at Diageo). The

sophistication of cybersecurity threat actors also continues to grow and evolve, including the risks associated with emerging

technologies, such as artificial intelligence used for nefarious purposes. In recent years, ransomware attacks against some of

Diageo’s peers have become more frequent, which has increased the likelihood of Diageo being targeted for a similar cyber-attack.

Diageo’s vulnerability to such cyber-attacks could also be increased due to a significant proportion of its employees working

remotely. Unauthorised access to Diageo’s IT systems could disrupt Diageo’s business, including its beverage alcohol and other

production capabilities, and/or lead to theft, loss or misappropriation of critical assets or to outside parties having access to

confidential or even highly confidential information, including privileged data, personal data or strategic information of Diageo

and its current or former employees, customers and consumers. Such information could also be made public in a manner that harms

Diageo’s reputation and financial results and, particularly in the case of personal data, could lead to regulators imposing significant

fines on Diageo.

Diageo’s use of shared business services centres, located in Hungary, Colombia, the Philippines and India, to deliver transaction

processing activities for markets and operational entities also means that any sustained disruption to a centre or issue impacting the

reliability of the information systems used could impact a large portion of Diageo’s business operations. The captive shared

business services centres in Hungary and India also perform certain central finance activities, including elements of financial

planning and reporting, treasury and HR services. Any transitions of transaction processes to, from or within shared business

services centres, as well as other projects which impact Diageo’s IT systems, could lead to business disruption. In addition, if

Diageo does not allocate and properly manage the resources necessary to build, sustain and protect these centres or its wider IT

systems, it could be subject to losses attributable to processing inefficiencies, the unexpected failure of computer systems, devices

and software used by its IT platforms, production or supply chain disruptions, the unintended disclosure of sensitive business or

personal data and the corruption or loss of accounting data necessary for it to produce accurate and timely financial reports. In

certain circumstances, such disruptions or failures could also result in property damage, breaches of regulations, litigation, legal

liabilities and reparation costs, thereby having a material adverse effect on Diageo’s business and financial results.

Loss, operational disruptions to or closure of a production site, office or other key facility due to unforeseen or catastrophic

events or otherwise, could have a material adverse effect on Diageo's business and financial results

International and domestic security risks including terrorism and military conflicts, as well as natural hazards, also pose a threat to

the safety of Diageo’s employees and third parties at its offices, sites and events, as well as its property and products. Diageo

operates production facilities around the world. If there was a technical failure, or a fire, explosion, flood or other significant event,

at one or more of Diageo’s production facilities, this could result in significant damage to the facilities, plant or equipment, their

surroundings and/or the local environment and/or injury or loss of life. Such an event could also lead to a loss of production

capacity, result in regulatory action or legal liability, and/or damage Diageo’s reputation.

Diageo has a substantial inventory of aged product categories, including Scotch whisky, which may mature over periods of up to

30 years or more. A substantial portion of this maturing inventory is stored in Scotland, and the loss through contamination, fire or

other natural disaster of all or a portion of the stock of any one of those aged product categories, including as a result of climate

change-related severe weather events, could result in a significant reduction in supply of those products, and consequently, Diageo

would not be able to meet consumer demand for those products as such demand arises. There can be no assurance that insurance

proceeds would cover the replacement value of Diageo’s maturing inventory or other assets in the event that such assets were lost

due to contamination, fire or natural disasters, destruction resulting from negligence or the acts of third parties, or any failure of

information systems or data infrastructure.

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Contamination, counterfeiting or other events could harm the integrity of customer support for Diageo’s brands and

adversely affect the sales of those brands

The success of Diageo’s brands depends upon the positive image that consumers have of those brands, and contamination, whether

arising accidentally, or through deliberate third party action, or other events that harm the integrity of consumer support for those

brands, could adversely affect their sales and Diageo’s corporate and brand reputation. Diageo purchases most of the raw materials

for the production and packaging of its products from third party producers or on the open market. Diageo may be subject to

liability if contaminants in those raw materials or defects in the distillation, fermentation or bottling process lead to reduced

beverage quality or illness among, or injury to Diageo’s consumers, or if the products do not otherwise comply with applicable

food safety regulations. Diageo has had to recall products in the past due to contamination or damage and may have to do so again

in the future. A significant product liability judgement or a widespread product recall may cause harm to consumers and negatively

impact sales and profitability of the affected brand or all of Diageo’s brands for a period of time depending on product availability,

competitive reaction and consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, any resulting

negative publicity could adversely affect Diageo’s reputation with existing and potential customers as well as its corporate and

individual brand image.

Additionally, third parties sell products which are either counterfeit versions of Diageo brands or inferior brands that look like

Diageo brands, and consumers of Diageo brands could confuse Diageo products with such counterfeit products. A negative

consumer experience with such a product could cause them to refrain from purchasing Diageo brands in the future and impair

Diageo’s brand equity, thus adversely affecting Diageo’s business. There is also a risk of physical threats to Diageo’s people due to

the illicit nature of the type of organisations or individuals involved in counterfeit activities.

The value of Diageo’s brands and its net sales may be negatively affected by its failure to maintain its brand image and

corporate reputation or adapt to a changing media environment

The value of Diageo’s brands and its profitability depends heavily on its ability to maintain its brand image and corporate

reputation. Adverse publicity, whether or not justified, may tarnish Diageo’s reputation and cause consumers to purchase products

offered by its competitors instead of by Diageo. Such adverse publicity could arise as a result of a perceived failure by Diageo to

make adequate positive social contributions, including in relation to the level of taxes paid by Diageo, or ESG-related performance,

or by any failure of internal controls or compliance breaches leading to violations of Diageo’s Code of Business Conduct, Code of

Ethics, its other key policies or the laws or regulations of the jurisdictions in which it operates. Diageo has also established and

may continue to establish relationships with brand founders and/or other public figures to develop and promote its brands, and to

establish brand equity, history and authenticity with consumers. If certain such individuals were to stop promoting a Diageo brand

or brands contrary to their agreements, Diageo’s business could be adversely affected. In addition, certain such individuals could

engage in behaviour, make statements or use their platforms in a manner that reflects poorly on Diageo’s brand image and

corporate reputation or otherwise adversely affects Diageo. Diageo may be unable to prevent such actions, and the actions Diageo

takes to address them may not be effective in all cases. Negative claims or publicity involving Diageo, its culture and values,

brands, or any of its key employees or brand endorsers could damage Diageo’s brands and/or reputation, regardless of whether

such claims are accurate, causing Diageo to lose existing customers or fail to attract new customers, and may have a material

adverse effect on Diageo’s business and financial results.

In addition, Diageo’s ability to maintain, extend, and expand its brand image depends on its ability to adapt to a rapidly changing

media environment. Diageo maintains an online presence as part of its business operations, and increasingly relies on social media

and online dissemination of advertising campaigns. Diageo’s reputation may suffer if it is perceived to fail to appropriately restrict

access to its online content or if it breaches any marketing regulation, code or policy. In addition, the growing use of social and

digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or

comments about Diageo, its brands or its products on social or digital media, whether or not valid, could seriously damage

Diageo’s brands and reputation. Any failure to maintain, extend, and expand Diageo’s brand image or adapt to a changing media

environment may have a material adverse effect on Diageo’s business and financial results and reputation, as well as the price of

Diageo’s securities.

Diageo’s operations and financial results may be adversely affected by fluctuations in exchange rates and fluctuations in

interest rates

Diageo is engaged in an international business that operates in, and makes sales into, countries with different currencies, while its

financial results for the year ended 30 June 2024 are presented in US dollars. As a result, Diageo is subject to foreign currency risk

due to exchange rate movements, which affect the US dollar value of its transactions, as well as the translation of the results and

underlying net assets of its operations to the US dollar. Movements in exchange rates used to translate foreign currencies into US

dollars may have a significant impact on Diageo’s reported results of operations from year to year. Exchange rate fluctuations may

also expose Diageo to increased interest expense on borrowings denominated in currencies which appreciate against the US dollar.

As a result, Diageo’s business and financial results may be adversely affected by fluctuations in exchange rates.

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In addition, Diageo may be adversely impacted by fluctuations in interest rates, mainly through increased interest expense.

Accommodative monetary policy had generally made borrowings less expensive in the markets in which Diageo operates until

recent years. However, the global economy has experienced persistently high levels of inflation, while benchmark interest rates,

such as the US federal funds rate, have risen. Such inflationary pressures stem from and are compounded by ongoing disruptions in

the global supply chain due to geopolitical tensions, including the conflicts in Ukraine and the Middle East and rising energy prices

(particularly for oil and gas). As a result, the availability and prices of inputs available to Diageo from its first- and second-tier

suppliers are expected to be volatile and inflationary pressures more broadly are expected to persist. As a result, market

expectations are currently that benchmark interests rates could continue to rise and may be accompanied by other measures to

reverse accommodative policy, such as quantitative tightening. Sharp increases and/or unexpected moves in interest rates due to

any of the foregoing factors could have macroeconomic effects that materially adversely affect Diageo’s business and its financial

results. In particular, rising interest rates could lead to a material increase in Diageo’s funding costs. In addition, if there is an

extended period of constraint in the capital markets and, at the same time, cash flows from Diageo’s business are under pressure,

Diageo’s ability to fund its long-term strategies may be materially adversely impacted.

Any failure by Diageo to execute its strategic business transformation projects could adversely affect Diageo’s business

processes, or operating and financial performance

Failure to execute strategic business transformation projects effectively, namely the implementation of SAP S/4 Hana, our Spirit of

Progress ESG action plan and our supply chain agility programme, could result in delays or changes to their expected benefits or

negatively affect our ability to continuously improve our internal control and reporting environment. Any delay or disruption in our

strategic business transformation projects may have a negative impact on our critical business processes or on our operating and

financial performance.

As the external environment continues to change, including those changes driven by evolving stakeholder expectations, consumer

behaviours and preferences, and heightened regulatory requirements, the ambition and objectives of our strategic transformation

initiatives may need to adapt, which may require new and different capabilities and skills within our workforce and may negatively

impact our ability to deliver the anticipated benefits in the time period expected, or at all.

Given the state of volatility and disruption in the external environment in recent years and the increased pace of change being

experienced in our business and industry, we have been very focused on ensuring we have the right skills and human resources to

deliver our strategic business transformation initiatives. However, failure to have the right strategic partnerships and talent in key

positions to deliver and sustain these initiatives going forward may result in delays, unforeseen costs and other disruptions to our

business, competitive positioning and financial performance.

Diageo may not be able to derive the expected benefits from its business strategies, including in relation to expansion in

emerging markets, acquisitions, investments in joint ventures, productivity initiatives or inventory forecasting

There can be no assurance that Diageo’s business strategies will result in opportunities for growth and improved margins. Part of

Diageo’s growth strategy includes expanding its business in certain emerging market countries where Diageo believes there are

strong prospects for growth. There is no guarantee that this strategy will be successful, and some of these markets may represent a

higher risk in terms of their changing regulatory environments and higher degrees of uncertainty over levels of consumer spending.

As part of its growth strategy, Diageo also made a number of acquisitions in recent years, and it is possible that Diageo may not be

able to derive the expected benefits from these acquisitions and/or may experience unexpected integration challenges. In the future,

Diageo’s business strategies will, almost certainly, give rise to further business combinations, acquisitions, disposals, joint ventures

and/or partnerships (including any associated financing or the assumption of actual or potential liabilities, depending on the

transaction contemplated). However, there can be no assurance that any such transaction would be completed and/or that it would

deliver the anticipated benefits, cost savings or synergies. The success of any transaction also depends in part on Diageo’s ability to

successfully integrate new businesses with its existing operations. Acquisitions may also expose Diageo to liabilities it may not be

aware of at the time of the acquisition, for example if acquired companies and business do not act, or have not acted, in compliance

with applicable laws and regulations. For additional information on the challenges of integration please see note 19 to the

consolidated financial statements.

Diageo may from time to time hold interests and investments in joint ventures and associated companies in which it has a non-

controlling interest and may continue to do so. In these cases, Diageo may have limited influence over, and limited or no control

of, the governance, performance and cost of operations of the joint ventures and associated companies. Some of these joint

ventures and associated companies may represent significant investments, and these investee entities or other joint venture partners

or equity holders may make business, financial or investment decisions contrary to Diageo's interests (including with respect to the

distribution of profits and dividends) or may make decisions different from those that Diageo itself may have made.

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To strengthen the resilience and agility of Diageo’s supply chain, Diageo has recently initiated a supply chain agility programme,

expected to be implemented over the five years starting from the fiscal year ended 30 June 2023. There can be no assurance that

this programme or other programmes designed to improve the effectiveness and efficiency of end-to-end operations, will deliver

the expected benefits. Such programmes may also result in significant costs to Diageo or may have other adverse impacts on the

business and operations of the group.

Certain of Diageo’s aged product categories may mature over decades, and forecasts of demand for such products in future periods

are subject to significant uncertainty. There is an inherent risk of forecasting error in determining the quantity of maturing stock to

lay down in a given year for future consumption as a result of changes in business strategy, market demand and unplanned shifts in

consumer preferences, introductions of competing products and other changes in market conditions. Any forecasting error could

lead to Diageo being unable to meet the objectives of its business strategy, future demand or lead to a surplus of inventory and

consequent write-down in value of maturing stocks. If Diageo is unable to accurately forecast demand for its products or efficiently

manage its inventory, this may have a material adverse effect on Diageo’s business and financial results.

Diageo faces competition that may reduce its market share and margins

Diageo faces substantial competition from several international companies as well as regional and local companies (including craft

breweries and micro distilleries) in the countries in which it operates and competes with other drinks companies across a wide

range of consumer drinking occasions. Within a number of categories, the beverage alcohol industry has experienced consolidation

among major global producers, as evidenced by business combinations of substantial value carried out by significant competitors

in recent years. Consolidation is also taking place among Diageo’s customers in many countries. In addition, there has been a

recent increase in competition for distribution channels, notably e-commerce channels. These trends may lead to stronger

competitors, increased competitive pressure from customers, negative impacts on Diageo’s distribution network (including sub-

optimal routes to customers and consumers), downward pressure on prices, predatory marketing tactics by Diageo’s competitors

and/or a decline in Diageo’s market share in any of these categories. For example, expansion in the seltzer and ready to drink

categories has increased competitive pressures across product categories and in certain markets (such as in the United States).

Adverse developments in economic conditions or declines in demand or consumer spending may also result in intensified

competition for market share, with potentially adverse effects on sales volumes and prices. Any of these factors may adversely

affect Diageo’s results and potential for growth.

Diageo’s business may be adversely affected by increased costs for, or shortages of, talent, or by labour strikes or disputes

Diageo’s business could be adversely affected by labour or skill shortages or increased labour costs due to increased competition

for employees, higher employee turnover or increased employee benefit costs. There is no guarantee that Diageo will continue to

be able to recruit, retain and develop personnel possessing the skill sets that it requires to deliver its strategy, for example in

relation to sales, marketing and innovation capability within markets, or in its senior management. The loss of senior management

or other key personnel or the inability to identify, attract and retain qualified personnel in the future could make it difficult to

manage Diageo’s operations and adversely affect Diageo’s business and financial results. In addition, labour strikes, work

stoppages or slowdowns within Diageo’s operations or those of Diageo’s suppliers could adversely impact Diageo.

Diageo’s operations and financial results may be adversely affected by movements in the value of assets and liabilities

related to its pension plans

Diageo operates a number of pension plans throughout the world, which vary in accordance with local conditions and practices.

The majority of these pension plans are defined benefit plans and are funded by payments to separately administered trusts or

insurance companies. The ability of these pension plans to meet their pension obligations may be affected by, among other things,

the performance of assets owned by these pension plans, the liabilities in connection with the pension plans, the underlying

actuarial assumptions used to calculate the surplus or deficit in the plans, in particular the discount rate and long-term inflation

rates used to calculate the liabilities of the pension funds, and any changes in applicable laws and regulations. If there are

significant declines in financial markets and/or deterioration in the value of fund assets or changes in discount rates or inflation

rates, Diageo may need to make substantial contributions to these pension funds in the future.

Furthermore, if the market values of the assets held by Diageo’s pension funds decline, the valuations of assets by the pension

trustees decline or the valuation of liabilities in connection with pension plans increase, pension expenses may increase which, as a

result, could materially adversely affect Diageo’s financial position. There is no assurance that interest rates or inflation rates will

remain constant, that pension fund assets can earn the assumed rate of return annually or that the value of liabilities will not

fluctuate significantly. Diageo’s actual experience may also be significantly more negative than the assumptions used.

Diageo’s operations may be adversely affected by failure to maintain or renegotiate distribution, supply, manufacturing or

licence agreements on favourable terms

Diageo’s business has a number of distribution, supply, manufacturing or licence agreements for brands owned by it or by other

companies. These agreements vary depending on the particular brand, but tend to be for a fixed number of years. There can be no

assurance that Diageo will be able to renegotiate its rights on favourable terms when these agreements expire or that they will not

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be terminated. Failure to renew these agreements on favourable terms, or any disputes with distributors of Diageo’s products or

suppliers of raw materials, could have an adverse impact on Diageo’s business and financial results.

Diageo may not be able to protect its intellectual property rights

Given the importance of brand recognition to its business, Diageo has invested considerable effort in protecting its intellectual

property rights, including trademark registration and domain names. Diageo’s patents cover some of its process technology,

including some aspects of its bottle marking technology. Diageo also uses security measures and agreements to protect its

confidential information and trade secrets. However, Diageo cannot be certain that the steps it has taken will be sufficient or that

third parties will not infringe on or misappropriate its intellectual property rights in its brands or products or, indeed, that Diageo

will not inadvertently infringe a third party’s intellectual property rights. Moreover, some of the countries in which Diageo

operates offer less intellectual property protection than Europe or North America. Given the attractiveness of Diageo’s brands to

consumers, it is not uncommon for counterfeit products to be manufactured and traded in certain jurisdictions. Diageo cannot be

certain that the steps it takes to assist the authorities to prevent, detect and eliminate counterfeit products will be effective in

preventing material loss of profits or erosion of brand equity resulting from lower quality or even dangerous counterfeit product

reaching the market. If Diageo is unable to protect its intellectual property rights against infringement or misappropriation, this

could materially harm its future financial results and ability to develop its business.

Risks related to Diageo’s securities

It may be difficult to effect service of US process and enforce US legal process against Diageo and its directors

Diageo is a public limited company incorporated under the laws of England and Wales. The majority of Diageo’s directors and

officers, and some of the experts named in this document, reside outside of the United States. A substantial portion of Diageo’s

assets, and all or a substantial portion of the assets of such persons, are located outside of the United States. Therefore, it may not

be possible to effect service of process within the United States upon Diageo or these persons in order to enforce judgments of US

courts against Diageo or these persons based on the civil liability provisions of US federal securities laws. There is also doubt as to

the enforceability in England and Wales, in original actions or in actions for enforcement of judgments of US courts, of civil

liabilities solely based on the US federal securities laws. In addition, punitive damages in actions brought in the United States or

elsewhere may be unenforceable in England and Wales.

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NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT

Our ESG reporting approach

Reporting transparently on the ESG issues that affect our business, and that our business creates, plays a vital role in delivering our

strategy. It helps us to manage ESG risks, take opportunities and promote sustainable development everywhere we live, work, source

and sell.

Our ESG reporting suite aims to provide comprehensive and comparable disclosures for a broad range of stakeholders. As well as

publishing our integrated Annual Report and ESG Reporting Index each year, we also submit non-financial information to

benchmarking and index organisations, including those listed on the Awards and ranking page of our website.

The non-financial reporting space is evolving quickly. We are committed to continually evaluating and improving our approach and to

actively tracking emerging ESG regulation, frameworks and good practice. Since launching our ‘Spirit of 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.

How we report to our stakeholders – our reporting suite


Annual Report Where we present our most material disclosures and describe how our strategy delivers value for our business and other stakeholders. The performance of non-financial KPIs are integrated into the relevant focus area sections. The document also includes detailed non-financial reporting boundaries and methodologies.		Diageo.com Where, through the ‘Spirit of Progress‘ section, we give more details of our approach and performance, with examples of our strategy in action.	ESG Reporting Index Where we provide additional disclosures in line with the GRI (Global Reporting Initiative) Standards, UNGC advanced reporting criteria index and our response to the Sustainability Accounting Standards Board (SASB).

Who are our stakeholders? Everyone who is affected by our business, and everyone who affects it, is a stakeholder. A detailed

description of our stakeholder engagement process is on pages 100-103 of the UK Annual Report.

This non-financial and sustainability information statement provided on pages 146-147 provides an overview of topics and related

reporting references in our external reporting as required by sections 414CA and 414CB of the Companies Act 2006.

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Non-financial and sustainability information statement


Reporting requirement as per Companies Act 2006 414CA and 414CB	Focus area	Read more in Diageo's reports	Relevant policies, standards or documents	Page reference
Environmental matters
1(a) environmental matters (including the impact of the company’s business on the environment)	‘Spirit of Progress‘		•Global Environment Policy(1) •Sustainable Agriculture Guidelines(1) •Sustainable Packaging Commitments(1) •Partnering with Suppliers Standard(1) •Deforestation Guidelines(4) •Water Stewardship Strategy(4) •Net Zero Carbon Strategy(4) •Reinventing Packaging Strategy(4) •Diageo Water Collective Action Implementation Guide(4)	p.97-99
	Pioneer grain-to- glass sustainability			p.97-99
Our people
1(b) the company’s employees	Our people and culture	•Talent and diverse workforce •Culture •Gender and ethnic diversity •Inclusive hospitality industry and communities •Progressive marketing •Diverse suppliers	•Code of Business Conduct(2) •Great Britain / Scotland and Republic of Ireland Gender Pay Gap Report 2023(4) •Global Human Rights Policy(1) •Directors' Remuneration Policy(4)	p.105-107
	Champion inclusion and diversity			p.105-107
	Health and safety	•Embedding culture of health and safety	•Global Health, Safety and Wellbeing Policy(1)	p.107-109
1(c) social matters	‘Spirit of Progress‘			p.97-99
	Promote positive drinking	•Tackling underage drinking •Changing attitude to drink driving •Make moderation aspirational •Marketing in a responsible way	•Global Marketing and Digital Marketing Policy(1) •Global Employee Alcohol Policy(1)	p.100-103
Human rights
1(d) respect for human rights	Human rights	•Standing up for human rights	•Global Human Rights Policy(1) •Modern Slavery Statement(3) •Global Brand Promoter Standard(1) •Privacy Policy(1)	p.103-105
Anti-bribery and corruption
1(e) anti-corruption and anti-bribery matters	Doing business the right way		•Code of Business Conduct(1) •Privacy Policy(1) •Global Tax Policy(1) •Global Information Management and Security Policy(4)	p.103-105
Business model
2(a) a brief description of the company’s business model	Diageo's business model	•Strategic Report •Business integrity •Assessing risk •Engaging stakeholders		p.23-37
Risk management
2(d) a description of the principal risks relating to the matters mentioned in subsection	Our principal risks and risk management	•Effective risk management •Principal risks	•Global Quality Policy(1) •Business Continuity Management Standard(4) •Risk Management Standard(4)	p.134-144 p.176
	Viability statement	•Viability statement		p.134-144 p.176

146


Reporting requirement as per Companies Act 2006 414CA and 414CB	Focus area	Read more in Diageo's reports	Relevant policies, standards or documents	Page reference
Non-financial performance
2(e) a description of the non-financial key performance indicators relevant to the company’s business	Our performance: monitoring performance and progress	•Our performance •‘Spirit of Progress’		p.41-42
Climate-related financial disclosures as required by sections 414CA and 414CB of the Companies Act 2006
(a) description of the company’s governance arrangements in relation to assessing and managing climate-related risks and opportunities;	Pioneer grain-to- glass sustainability	•Identifying climate risks and opportunities •Governance	See above under Environmental matters	p.113
(b) a description of how the company identifies, assesses, and manages climate-related risks and opportunities;		•Identifying climate risks and opportunities		p.114-121
(c) a description of how processes for identifying, assessing, and managing climate-related risks are integrated into the company’s overall risk management process;		•Our principal risk and risk management •Identifying climate risks and opportunities		p.134-144 p.114-121
(d) a description of— (i) the principal climate-related risks and opportunities arising in connection with the company’s operations, and		•Our principal risk and risk management •Identifying climate risks and opportunities		p.134-144 p.114-121
(d) a description of—(ii) the time periods by reference to which those risks and opportunities are assessed;		•Identifying climate risks and opportunities •Quantitative impact of transitions risks and opportunities •Our pathway to net zero		p.114-121
(e) a description of the actual and potential impacts of the principal climate-related risks and opportunities on the company’s business model and strategy;		•Identifying climate risks and opportunities •Identifying and assessing our transitions risks and opportunities		p.114-121
(f) an analysis of the resilience of the company’s business model and strategy, taking into consideration different climate-related scenarios;		•Climate change resilience •Viability statement •Scenario analysis of physical risks		p.114-121 and p.176
(g) a description of the targets used by the company to manage climate-related risks and to realise climate-related opportunities and of performance against those targets; and		•Our strategy for grain-to-glass sustainability		p.114-130
(h) a description of the key performance indicators used to assess progress against targets used to manage climate- related risks and realise climate-related opportunities and of the calculations on which those key performance indicators are based		•Our strategy for grain-to-glass sustainability		p.114-130

(1) https://www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct/policies-and-standards

(2) https://www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct

(3) https://www.diageo.com/en/esg/doing-business-the-right-way/modern-slavery-statement

(4) Externally published documents on different subsites

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LETTER FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

Supporting the business through Leadership

Dear Shareholder

It is with great pleasure that I present, on behalf of the Board, the corporate governance report for the year ended 30 June 2024. This

report summarises how Diageo's leadership and governance structures have supported Diageo during the course of the year in

seeking to achieve long-term sustainable success.

The Board is committed actively to creating long-term sustainable growth and delivering shareholder value. We aim to do so by building

Diageo's business through a portfolio of leading international brands, aligned to the highest growth categories and core industry trends. This

year has seen continued volatility in consumer markets in a number of different geographies. In such a challenging external environment, it

is particularly important that Diageo has resilient leadership, with a clear strategy, underpinned by strong values and culture, while

remaining agile and adaptable, moving swiftly to respond to consumer trends and opportunities. It is the Board's responsibility to ensure

that the company has the leadership required to achieve its long-term success and that management has the strategic direction and aims to

achieve its growth ambition, supported by and centred on a strong, values-based culture.

While navigating the current turbulent external environment, we have continued to invest behind the business, ensuring that Diageo is well-

positioned in key categories and to take advantage of opportunities in fast-moving consumer trends. We look to manage our capital

allocation in an appropriate manner, investing in growth areas, managing our portfolio, resources and footprint to optimise efficiency and

focusing resources where they are most effective.

Leadership has been an area of particular focus for directors recently as we look to build the future composition of the Board,

reflecting changes in some key roles through the coming months and into the second half of fiscal 25. We aim to have a balanced

and experienced Board, comprising a diverse range of individuals with different skills and from different backgrounds, with an

ability to express informed and independent views and opinions. With the recently announced new appointments to the Board, I

am confident that Diageo will continue to have the effective and resilient leadership required to achieve its growth ambition over

the long term.

Javier Ferrán(Chair)

Governance

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	Compliance with the UK Corporate Governance Code
	The Board considers that, for the year ended 30 June 2024, Diageo has fully applied the Principles and complied with the Provisions of the UK Corporate Governance Code 2018 (the Code).
	The table below details where content complying with the Code's requirements can be found.
		Visit diageo.com for more information.


1	Board Leadership & Company Purpose
A.	Board of Directors	Board of Directors	154
		Board Chair Succession	189
		Performance Evaluation	190
B.	Purpose, Values and Culture	Our Business Today	13
B.	Purpose, Values and Culture	’Spirit of Progress’	97
C.	Resources and Control Framework	Business Model	23
		Our Principal Risks and Risk Management	134
		Corporate Governance Structure and Division of Responsibilities	153
D.	Stakeholder Engagement	Stakeholder Engagement	165
	Stakeholder Engagement	Section 172 Statement	19
E.	Workforce Policies and Practices	Our Business Today	13
		’Spirit of Progress’	97
		Doing Business the Right Way	103
		Business Integrity Programmes	182
2	Division of Responsibilities
F.	Role of the Chair	Letter from the Chairman of the Board of Directors	148
		Corporate Governance Structure and Division of Responsibilities	153
		Performance Evaluation	190
G.	Division of Responsibilities	Corporate Governance Structure and Division of Responsibilities	153
		Composition of Board	158
H.	Role of the Non- Executive Director	Corporate Governance Structure and Division of Responsibilities	153
	Role of the Non- Executive Director	Board of Directors	154
I.	Board Policies, Process, Information, Time and Resources	How our Board monitors Culture	175
		Duties of the Board	158
		Board Activities	162


3	Composition, Succession and Evaluation
J.	Appointments to the Board	Board Chair Succession	189
		Champion Inclusion and Diversity	110
		Recruitment and election procedures	188
K.	Board Skills, Experience and Knowledge	Composition of the Board	158
L.	Board Evaluation	Performance evaluation	190
4	Audit, Risk and Internal Controls
M.	Independence, and Effectiveness of Internal and External Auditors	Audit Committee Report	178
N.	Fair, Balanced, and Understandable Assessment	Director's Confirmations	177
O.	Risk and Internal Controls	Corporate Governance Structure and Division of Responsibilities	153
O.	Risk and Internal Controls	Our Principal Risks and Risk Management	134
5	Remuneration
P.	Alignment to Purpose, Values and Long-Term Success	Remuneration Committee Chair's letter	192
		Remuneration at a Glance	195
		Director's Remuneration Policy	200
Q.	Remuneration Policy	Remuneration Committee Chair’s letter	192
Q.	Remuneration Policy	Director’s remuneration policy	200
R.	Independent Judgement and Discretion	Remuneration Committee Chair’s letter	192
R.	Independent Judgement and Discretion	Consideration of wider workforce remuneration	205

Governance (continued)

149

Governance at a glance

Enabling our

Growth Ambition

Achieving Diageo's Growth Ambition is dependent on our Board and Executive Committee providing effective leadership for long-

term sustainable success, despite challenges in the external environment.



	Highlights of fiscal 24
	•Shaping Diageo's future through our business transformation projects, across our supply chain and systems infrastructures, and the strategy refresh which led to creation of the Growth Ambition. •Announcing changes in key Board roles to build our strong leadership during the next few months and into the second half of fiscal 25. •Refocusing our culture on our core values and behaviours to embed agility and maintain our highly engaged, talented and diverse workforce.
		Read more on pages 170, 173 and 175



	Diversity
	Diageo has a long-standing commitment to being an inclusive and diverse organisation, including at the most senior leadership levels. Our diverse Board composition has enabled Diageo to be ranked as one of the best performing FTSE 100 companies in terms of female representation, as recognised by the FTSE Women Leaders Review, and has met the Parker Review's target as to ethnic minority representation. As an example, three of the Board's most critical roles, Chief Executive, Chief Financial Officer and Senior Independent Director, are held by women.
		Read more on pages 190-191



	Building our leadership
	During the year, the Nomination Committee and Board has been creating the leadership required at Board and Executive Committee levels to continue growing Diageo's business, including enabling smooth transitions in key roles including that of the Board Chair, Audit Committee Chair and Chief Financial Officer.

	Board composition


ò	Chair
ò	Executive director
ò	Non-executive director

Governance (continued)

151

BOARD OF DIRECTORS


Position	Board skills and competencies	Key external appointments
Javier Ferrán	Key strengths: Brings extensive board-level experience from the drinks and consumer products industry, including at chief executive level, and has a wealth of experience in consumer goods through his venture capital activities to draw from in his role as Chair and leader of the Board	Current external appointments: Chair, International Consolidated Airlines Group, S.A. Previous relevant experience: Non-Executive Director and Senior Independent Director, Associated British Foods plc; Non-Executive Director, Coca-Cola European Partners plc; Member, Advisory Board of ESADE Business School; President and CEO, Bacardi Limited; Non-Executive Director, SABMiller plc
Chair
Nationality: Spanish
Appointed: Chair and Chair of the Nomination Committee: January 2017 (Appointed Chair Designate and Non-Executive Director: July 2016)
Debra Crew	Key strengths: Has broad experience in various consumer products sectors at board, chief executive and management leadership levels, as well as over five years' experience in non- executive and executive roles at Diageo	Current external appointments: Non-Executive Director, Stanley Black & Decker, Inc. Previous Diageo roles: Interim Chief Executive; Chief Operating Officer; President, North America; Non-Executive Director, Diageo plc Previous relevant experience: Non-Executive Director, Newell Brands, Mondelēz International Inc.; President and CEO, Reynolds American, Inc; President, PepsiCo North America Nutrition, PepsiCo Americas Beverages, Western Europe Region; various positions with Kraft Foods, Nestlé, S.A., and Mars
Chief Executive
Nationality: American
Appointed: Chief Executive and Executive Director: June 2023
Lavanya Chandrashekar	Key strengths: Brings broad financial expertise, commercial skills and strong consumer goods experience to manage the group’s affairs relating to financial controls, accounting, tax, treasury and investor relations	Previous Diageo roles: Chief Financial Officer, Diageo North America and Global Head of Investor Relations Previous relevant experience: VP Finance, Global Cost Leadership and Supply Chain, Mondelēz International; VP Finance, North America, Mondelēz International; VP Finance, Eastern Europe, Middle East and Africa, Mondelēz International; various senior finance roles at Procter & Gamble
Chief Financial Officer
Nationality: American
Appointed: Chief Financial Officer and Executive Director: July 2021
Susan Kilsby	Key strengths: Brings wide- ranging corporate governance and board- level experience across a number of industries, including a consumer goods sector focus, with particular expertise in mergers and acquisitions, corporate finance and transaction advisory work	Current external appointments: Non-Executive Chair, Fortune Brands Innovations, Inc.; Non-Executive Director and Chair of Corporate Responsibility Committee, Unilever PLC; Non- Executive Director and Chair of Talent and Remuneration Committee, COFRA Holding AG; Member and Chair of Remuneration Committee, the Takeover Panel Previous relevant experience: Senior Independent Director and Chair of Remuneration Committee, BHP Group Plc, BHP Group Limited; Senior Independent Director, BBA Aviation plc; Chair, Shire plc; Chair, Mergers and Acquisitions EMEA, Credit Suisse; Non- Executive Director, Goldman Sachs International, Keurig Green Mountain, L’Occitane International, Coca-Cola HBC, NHS England
Senior Independent Director
Nationality: American/British
Appointed: Senior Independent Director: October 2019 (Appointed Non-Executive Director: April 2018 and Chair of the Remuneration Committee: January 2019)
Melissa Bethell	Key strengths: Has extensive international corporate and financial experience, including in relation to private equity, financial sectors, strategic consultancy and advisory services, as well as having strong non-executive experience at board and committee levels across a range of industries, including retail, consumer goods and financial services	Current external appointments: Non-Executive Director, Tesco PLC, Exor N.V.; Senior Advisor and Director of investee companies, Atairos Europe Previous relevant experience: Managing Director and Senior Advisor, Private Equity, Bain Capital; Non-Executive Director, Atento S.A., Worldpay plc, Samsonite S.A.
Non-Executive Director
Nationality: American/British
Appointed: Non-Executive Director: June 2020

Board

committees

Audit

Committee

Executive

Committee

Nomination

Committee

Remuneration

Committee

Chair of the

committee

Governance (continued)

154


Position	Board skills and competencies	Key external appointments
Karen Blackett	Key strengths: Brings expertise in marketing, media and the creative industries, as well as broad experience in public policy and strategic initiatives through a number of different government, industry and public bodies	Current external appointments: Chancellor, University of Portsmouth; Founding Trustee, BEO (Black Equity Organisation); Non-Executive Director, Creative UK Previous relevant experience: UK President, WPP plc; UK Race Equality Business Champion, HM Government; Business Ambassador, Department for International Trade, HM Government; Chairwoman, MediaCom UK & Ireland; Chief Executive Officer, GroupM UK, MediaCom UK; Chief Operations Officer, MediaCom EMEA; Marketing Director, MediaCom; UK Country Manager, WPP plc; Non-Executive Director, The Pipeline
Non-Executive Director
Nationality: British
Appointed: Non-Executive Director: June 2022
Valérie Chapoulaud-Floquet	Key strengths: Brings strong experience and expertise in the luxury consumer goods sector, having spent her career in the industry working in a number of international markets, including developed and emerging markets, and as a former CEO in the premium drinks industry	Current external appointments: Non-Executive Director, Lead Independent Director and Chair of Governance Committee, Danone S.A.; Non-Executive Director, Acné Studios A.B., Agrolimen S.A., Nextstage S.C.A.; Vice Chair, Sofisport Previous relevant experience: Chief Executive Officer, Rémy Cointreau S.A.; President and CEO for the Americas, Louis Vuitton, LVMH Group; President and CEO for North America, Louis Vuitton, LVMH Group; President South Europe, Louis Vuitton, LVMH Group; President & CEO, Louis Vuitton Taiwan, LVMH Group; President, Luxury Product Division USA, L’Oréal Group; Non-Executive Director, Jacobs Holding AG
Non-Executive Director
Nationality: French
Appointed: Non-Executive Director: January 2021
Sir John Manzoni	Key strengths: Has strong commercial executive experience as a former CEO in the energy sector and non- executive board-level experience, including in the alcoholic beverage industry, as well as more recent expertise in public policy and government affairs	Current external appointments: Chair, SSE plc; Chair, Atomic Weapons Establishment; Non-Executive Director, KBR Inc Previous relevant experience: Chief Executive of the Civil Service and Permanent Secretary of the Cabinet Office, HM Government; President and Chief Executive Officer, Talisman Energy; Chief Executive, Refining & Marketing, BP p.l.c.; Chief Executive, Gas & Power, BP p.l.c.; Non-Executive Director, SABMiller plc
Non-Executive Director
Nationality: British
Appointed: Non-Executive Director: October 2020
Alan Stewart	Key strengths: Has a strong background in financial, investment banking and commercial matters, with particular expertise in consumer retail industries, as well as board and committee- level experience at industry institutions	Current external appointments: Non-Executive Director and Chair of Audit Committee, Burberry Group plc; Partner, Altair Advisory LLP Previous relevant experience: Chief Financial Officer, Tesco PLC; Non- Executive Director, Tesco Bank; Chief Financial Officer, Marks & Spencer Group plc, AWAS; Non-Executive Director, Games Workshop plc; Group Finance Director, WH Smith PLC; Chief Executive, Thomas Cook UK; Non-Executive Director and Chair of the Remuneration Committee, Reckitt Benckiser Group plc
Non-Executive Director
Nationality: British
Appointed: Non-Executive Director: September 2014 (Appointed Chair of the Audit Committee: January 2017)
Ireena Vittal	Key strengths: Brings a wealth of FMCG experience from a career in executive consulting with a focus on consumer sectors and emerging markets, including India, as well as broad experience in non- executive board roles in the UK and India	Current external appointments: Non-Executive Director, Compass plc, Asian Paints Limited; Non-Executive and Lead Independent Director, Godrej Consumer Products Limited; Director and Member, UrbanClap Technologies India Private Limited; Advisory Board Member, Russell Reynolds Associates Previous relevant experience: Head of Marketing and Sales, Hutchinson Max Telecom; Partner, McKinsey and Company; Non-Executive Director, Wipro Limited, Housing Development Finance Corporation Limited, Titan Company Limited, Tata Global Beverages Limited, GlaxoSmithKline Consumer Healthcare
Non-Executive Director
Nationality: Indian
Appointed: Non-Executive Director: October 2020

Board

committees

Audit

Committee

Executive

Committee

Nomination

Committee

Remuneration

Committee

Chair of the

committee

Debra Crew and Lavanya Chandrashekar are also members of the Executive Committee.

Their biographies can be found on page 154.

(1) John Kennedy, who had previously been a member of the Executive Committee, most recently as President, Europe and India, from July 2016 until December

2022 when he left the company. He rejoined the company and was reappointed to the Executive Committee as President, Europe in January 2024.

Governance (continued)

155

EXECUTIVE COMMITTEE


	Position	Key external appointments
1	Ewan Andrew	Current external appointments: Member, Scotch Whisky Association Council, Scottish Business Climate Collaboration Board, One Planet Business for Biodiversity Board, Gartner Executive Advisory Board Previous Diageo roles: Supply Director, International Supply Centre; Senior Vice President, Supply Chain & Procurement, Latin America and Caribbean; Senior Vice President Manufacturing & Distilling, North America; various supply chain, operational management and procurement roles
	President, Global Supply Chain & Procurement and Chief Sustainability Officer
	Nationality: British
	Appointed: September 2019
2	Alvaro Cardenas	Previous Diageo roles: Managing Director, Andean Region; Director, End-to-End Global Commercial Processes; Finance Director, South East Asia Region, PUB (Paraguay, Uruguay and Brazil) Region, Andean Region, Colombia
	President, Latin America and Caribbean
	Nationality: Colombian
	Appointed: January 2021
3	Cristina Diezhandino	Previous Diageo roles: Global Category Director, Scotch & Managing Director, Reserve Brands; Managing Director, Caribbean and Central America; Marketing & Innovation Director, Diageo Africa; Category Director, Scotch Portfolio & Gins; Global Brand Director, Johnnie Walker Previous relevant experience: Corporate Marketing Director, Allied Domecq Spain; marketing roles, Unilever HPC US, UK and Spain
	Chief Marketing Officer
	Nationality: Spanish
	Appointed: July 2020
4	Sally Grimes	Current external appointments: Director, Continental Grains Company Previous relevant experience: Chief Executive Officer, Clif Bar & Company; Group President, Prepared Foods, Tyson Foods; President, International & Chief Global Growth Officer, Tyson Foods; President, Gourmet Food Group and Chief Innovation Officer, Hillshire Brands Company
	Chief Executive Officer, North America
	Nationality: American
	Appointed: October 2023
5	John Kennedy	Previous Diageo roles: President, Europe and India; President, Europe and Western Europe; Chief Operating Officer, Western Europe; Marketing Director, Australia; General Manager for Innovation, North America; President and Chief Executive Officer, Diageo Canada; Managing Director, Diageo Ireland Previous relevant experience: Brand management roles, GlaxoSmithKline, Quaker Oats
	President, Europe
	Nationality: American
	Appointed: January 2024
6	Daniel Mobley	Previous Diageo roles: Corporate Relations Director, Europe Previous relevant experience: Regional Head of Corporate Affairs, India & South Asia, Regional Head of Corporate Affairs, Africa, Group Head of Government Relations, Standard Chartered; extensive government experience including in HM Treasury and Foreign & Commonwealth Office
	Global Corporate Relations Director
	Nationality: British
	Appointed: June 2017
7	Hina Nagarajan	Current external appointments: Non-Executive Director, BP p.l.c. Previous Diageo roles: CEO-Designate, United Spirits Limited; Managing Director, Africa Regional Markets Previous relevant experience: Managing Director, China & SVP North Asia, Reckitt Benckiser; General Manager, Malaysia & Singapore, Reckitt Benckiser; CEO & MD Mary Kay India; senior marketing and general management roles, ICI Paints India and Nestlé India
	Managing Director and CEO of United Spirits Limited
	Nationality: Indian
	Appointed: July 2021
8	Dayalan Nayager	Previous Diageo roles: President, Africa; Managing Director, Great Britain and Justerini & Brooks, Ireland and France, Global Travel; Regional Director, Global Travel Europe; Commercial Director, South Africa; Customer Marketing Director, South Africa; Key Account Director, South Africa Previous relevant experience: Various positions, Heinz, Mars
	President, Africa and Chief Commercial Officer
	Nationality: South African/British
	Appointed: July 2022
9	John O'Keeffe	Previous Diageo roles: President, Asia Pacific & Global Travel; President, Africa & Beer; CEO and Managing Director, Guinness Nigeria; Global Head, Innovation; Global Head, Beer and Baileys; Managing Director, Russia and Eastern Europe; various management and marketing positions
	President, Asia Pacific, Global Travel and India
	Nationality: Irish
	Appointed: July 2015

Governance (continued)

156

Board of Directors

Composition of the Board

The Board comprises the Non-Executive Chair, two Executive Directors, the Senior Independent Director, and six independent Non-

Executive Directors. The biographies of all Directors are set out in this Annual Report on pages 154-155.

Inclusion and diversity

The Board sees championing inclusion and diversity as one of the key enablers for achieving Diageo’s ambition. It is also a core

principle of the company’s global Human Rights Policy which applies to all employees, subsidiaries and third-party contractors and

which has been implemented as part of our Code of Business Conduct programme. Our objective is to maintain and sustain an

inclusive and diverse business, across all levels, functions and geographies, in order to create a better working environment and a

better performing business. As part of this, the Board has adopted a written Board Diversity Policy alongside Diageo’s Code of

Business Conduct and associated global policies, which set out Diageo’s broader commitment to inclusion and diversity. Diageo

strongly supports diversity within its Board of Directors, including gender, ethnicity, age and professional diversity, as well as

diversity of thought. The Board is comprised of individuals from a diverse range of skills, industries, backgrounds and nationalities,

which enables a broad evaluation of all matters considered by the Board and contributes to a culture of collaborative and constructive

discussion. The Board’s objective, as set out in its Diversity Policy, is that it shall include no less than 40% female representation

(with the ultimate goal being parity between males and females on the Board) and at least one Director from a minority ethnic group.

As at 24 July 2024, women make up 70% of the Board and there are four Directors (40%) who self-disclose as being from minority

ethnic groups. Further information about diversity at Board and senior executive levels can be found on page 191 and in the 'Our

people and culture' and 'Champion inclusion and diversity' sections of the Strategic Report on pages 105-107 and 110-113

respectively. The Board's Diversity Policy is available at https://www.diageo.com/en/our-business/corporate-governance/board-

diversity.

Outside interests and conflicts

The Board has adopted guidelines for dealing with conflicts of interest, with Directors' outside interests being regularly reviewed and

responsibility for authorising conflicts of interest reserved for the Board. In the case of a potential conflict, the Nomination Committee

considers the circumstances, appropriate controls and protocols, and makes a recommendation to the Board. The Board confirmed that

it was not aware of any situations that may or did give rise to conflicts with the interests of the company, other than those that may

arise from Directors’ other appointments as disclosed in their biographies.

Duties of the Board

The Board manages overall control of the company’s affairs with reference to the formal schedule of matters reserved for the Board

for decision. The schedule was last reviewed in July 2024 and is available at https://www.diageo.com/en/our-business/corporate-

governance. In order to fulfil their duties, procedures are in place for Directors to seek both independent advice and the advice and

services of the Company Secretary, who is responsible for advising the Board on all governance matters. The Board considers a

number of factors when making decisions, including the potential impact of those decisions on various stakeholder groups and on the

company's ‘Spirit of Progress‘ and other non-financial targets, including in respect of environmental sustainability. Further

information on the Board and the Audit Committee's roles in climate risk governance can be found on page 113. The terms of

reference of Board Committees are reviewed regularly, most recently in July 2024, and are available at

https://www.diageo.com/en/our-business/corporate-governance.

Corporate governance requirements

In January 2024, the Financial Reporting Council (FRC) published a new version of the UK Corporate Governance Code, which will

apply to companies with a premium listing on the London Stock Exchange, including Diageo, for financial periods starting on or after

1 January 2025. Until such time, the principal corporate governance rules applying to Diageo for the year ended 30 June 2024 are

contained in the 2018 UK Corporate Governance Code (the Code) and the UK Financial Conduct Authority (FCA) Listing Rules,

which require us to describe, in our Annual Report, our corporate governance from two points of view: the first dealing generally with

our application of the Code’s main principles and the second dealing specifically with non-compliance with any of the Code’s

provisions. The two descriptions together are designed to give shareholders a picture of governance arrangements in relation to the

Code as a criterion of good practice. A copy of the Code is publicly available on the website of the FRC, www.frc.org.uk. Diageo’s

statement as to compliance with the Code during the year ended 30 June 2024 can be found on page 158. Diageo must also comply

with corporate governance rules contained in the FCA Disclosure Guidance and Transparency Rules and certain related provisions in

the Companies Act 2006 (the Act). Diageo is also listed on the New York Stock Exchange (NYSE), and as such is subject to the

applicable rules of this exchange and jurisdiction. For example, Diageo is subject to the listing requirements of the NYSE and the rules

of the US Securities and Exchange Commission (SEC), as they apply to foreign private issuers. Compliance with the provisions of the

US Sarbanes-Oxley Act of 2002 (SOX), as it applies to foreign private issuers, is continually monitored.

Governance (continued)

158

Compliance with US corporate governance rules

Under applicable SEC rules and the NYSE’s corporate governance rules for listed companies, Diageo must disclose any significant

ways in which its corporate governance practices differ from those followed by US companies under NYSE listing standards. Diageo

believes the following to be the significant areas in which there are differences between its corporate governance practices and NYSE

corporate governance rules applicable to US companies. This information is also provided on the company’s website at

www.diageo.com.

•Basis of regulation: UK listed companies are required to include in their annual report a narrative statement of (i) how they

have applied the principles of the Code and (ii) whether or not they have complied with the best practice provisions of the

Code. NYSE listed companies must adopt and disclose their corporate governance guidelines. Certain UK companies are

required to include in their annual report statements as to (i) how directors have complied with Section 172 of the Act, which

requires directors to promote the success of the company for the benefit of the members as a whole, having regard to the

interests of stakeholders and (ii) how directors have engaged with and taken account of the views of the company’s

workforce and other stakeholder groups. Diageo complied throughout the year with the best practice provisions of the Code

and the disclosure requirements noted above.

•Director independence: The Code requires at least half the Board (excluding the Chair) to be independent Non-Executive

Directors, as determined by affirmatively concluding that a Director is independent in character and judgement and

determining whether there are relationships and circumstances which are likely to affect, or could appear to affect, the

Director’s judgement. The Code requires the Board to state its reasons if it determines that a director is independent

notwithstanding the existence of relationships or circumstances which may appear relevant to its determination. NYSE

rules require a majority of independent directors, according to the NYSE’s own 'brightline' tests and an affirmative

determination by the Board that the Director has no material relationship with the listed company. Diageo’s Board has

determined that, in its judgement and without taking into account the NYSE brightline tests, all of the Non-Executive

Directors are independent. As such, currently eight of Diageo’s ten Directors are independent. Further details of this

determination in relation to Alan Stewart, Non-Executive Director and Chair of the Audit Committee, are set out on page

160.

•Chair and Chief Executive: The Code requires these roles to be separate. There is no corresponding requirement for US

companies. Diageo has a separate Chair and Chief Executive.

•Non-Executive Director meetings: NYSE rules require Non-Management Directors to meet regularly without management

present and independent directors to meet separately at least once a year. The Code requires Non-Executive Directors to meet

without the Chair present at least annually to appraise the Chair’s performance. During the year, Diageo has complied with

these requirements with independent Non-Executive Directors, including the Chair, meeting without the Executive Directors

present five times and independent Non-Executive Directors meeting without the Chair or Executive Directors present twice.

•Board committees: Diageo has a number of Board committees that are similar in purpose and constitution to those required by

NYSE rules. Diageo’s Audit, Remuneration and Nomination Committees consist entirely of independent Non-Executive

Directors. Under NYSE standards, companies are required to have a nominating/corporate governance committee, which

develops and recommends a set of corporate governance principles and is composed entirely of independent directors. The

terms of reference for Diageo’s Nomination Committee, which comply with the Code, do not contain such a requirement. In

accordance with the requirements of the Code, Diageo has disclosed on pages 171-172 the results and means of its annual

evaluation of the Board, its Committees and the Directors, and it provides extensive information regarding the Directors’

compensation in the Directors’ remuneration report on pages 198-224.

•Code of ethics: NYSE rules require a Code of Business Conduct and Code of Ethics to be adopted for directors, executive

officers and employees and disclosure of any waivers for executive directors or officers. Diageo has adopted a Code of

Business Conduct for all Directors, officers and employees, as well as a Code of Ethics for Senior Financial Officers in

accordance with the requirements of SOX. See page 183 for further details.

•Compliance certification: NYSE rules require chief executives to certify to the NYSE their awareness of any NYSE corporate

governance violations. Diageo is exempt from this as a foreign private issuer but is required to notify the NYSE if any

executive officer becomes aware of any non-compliance with NYSE corporate governance standards. No such notification

was necessary during the period covered by this report.

Structure and division of responsibilities

The Board is committed to the highest standards of corporate governance and risk management, which is demonstrated in its

established corporate governance framework, illustrated on page 153. This includes the three Board Committees (Audit Committee,

Nomination Committee and Remuneration Committee), as well as management committees which report to the Chief Executive or

Chief Financial Officer (Executive Committee, Finance Committee, Audit & Risk Committee and Filings Assurance Committee).

There is a clear separation of the roles of the Chair, the Senior Independent Director and the Chief Executive which has been clearly

established, set out in writing and approved by the Board. A copy of this is available at https://www.diageo.com/en/our-business/

corporate-governance. No individual or group dominates the Board’s decision-making processes.


	Further details on the Board Committees can be found in the separate reports from each committee on pages 178-224, and details of the Executive Committee can be found on pages 156.

Governance (continued)

159

Board skills and experience

Having an appropriate mix of experience, expertise, diversity and independence is essential for Diageo's Board. Such diverse attributes

enable the Board as a whole to provide informed opinions and advice on strategy and relevant topics, thereby discharging its duty of

oversight. The Board skills matrix helps to identify the experience and expertise of existing Directors, required skill sets or

competencies, and the strategic requirements of the company. The key strengths and relevant experience of each Director are set out

on pages 154-155, and a matrix of the Board’s current skills and experience is set out below.

Independence

The Code requires the Board to state its reasons for concluding that a director is independent notwithstanding the existence of certain

relationships or circumstances which are likely to impair or appear to impair the director's independence. A non-exhaustive list of such

circumstances is set out in provision 10 of the Code and include, amongst other things, the fact that a director has served on the board

for more than nine years. As noted in last year's annual report, Alan Stewart, who was first appointed to the Board in September 2014

and has therefore exceeded nine years on the Board, agreed to extend the term of his appointment to enable a smooth transition of the

role of Chair of the Audit Committee. As announced on 20 February 2024, Julie Brown will be joining the Board and succeeding Alan

as Chair of the Audit Committee with effect from 5 August 2024. Accordingly, Alan will retire from the Board immediately prior to

the 2024 AGM and not stand for re-appointment. The Board considered the matter of Alan's independence in light of this extension

and concluded that, notwithstanding his serving for more than nine years, he continues to make high-quality contributions to Board

and committee meetings, providing effective and constructive challenge to management and demonstrating objective and independent

judgement. In light of this assessment, originally made in July 2023 and recently confirmed by the Board, the Board has determined

that Alan Stewart remains independent.

Board and Committee attendance

Directors’ attendance record at the last AGM, scheduled Board meetings and Board Committee meetings, for the year ended 30 June

2024 is set out in the table shown on page 150. Directors are expected to attend all meetings of the Board and its Committees and the

AGM, but if unable to do so they are encouraged to give their views to the Chair of the meeting in advance. The 2023 AGM was held

as a combined physical and electronic meeting via a live webcast with all Directors attending either physically or by video link. For

Board and Board Committee meetings, attendance is expressed as the number of meetings attended of the number that each Director

was eligible to attend. The 2024 AGM is scheduled to be held on 26 September 2024.

Governance (continued)

160


Areas of focus		Strategic outcomes	Stakeholders
Strategic matters	•Held a two-day Annual Strategy Conference (ASC) focusing on key strategic matters, including implementation of strategic transformation programmes, regional reviews of North America and Asia Pacific, whisky strategy, developments in the group's ESG programme including ’Spirit of Progress’ •Regularly reviewed the group’s performance against the strategy •Received reports on the financial performance of the group as against the annual plan •Reviewed the group’s governance frameworks for reputation management, tax strategy and policy •Received reports on the macroeconomic environment, socio-political matters and emerging trends •Carried out deep dives into key strategic topics including its operations, portfolio and footprint in North America and Africa, its digital marketing strategy, and its global travel business
Operational matters	•Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements •Regularly reviewed and approved the group’s M&A and business development activities, reorganisations and various other projects •Reviewed the group's internal culture and values, including in respect of diversity and inclusion, values and behaviours •Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors •Reviewed the company’s capital allocation, funding and liquidity positions, and those of its pension schemes •Reviewed and approved the company’s return of capital proposals, including interim and final dividends and share buyback programme •Approved new roles and appointments to the Board, including a new future Chair of the Board, a new Chief Financial Officer and a new Chair of the Audit Committee of the Board •Acting through the Nomination Committee, reviewed the company’s succession planning and talent strategy
ESG matters	•Supervised conduct of double materiality assessment, reviewed progress in relation to the group's ’Spirit of Progress’ programme and refreshed the programme in light of the initial double materiality assessment results •Received reports on workforce engagement over the year •Received regular investor reports •Received regular updates on ESG matters and progress towards ‘Spirit of Progress‘ targets •Engaged an external facilitator to carry out evaluation of the Board’s performance, reviewed results and agreed action points •Reviewed schedule of matters reserved for the Board and terms of reference of its Committees
Assurance and risk management	•Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk •On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks •On the recommendation of the Audit Committee, approved the company’s filings, financial and non-financial reporting including interim and preliminary results announcements, US filings and Annual Report

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Stakeholder engagement

We aim to maintain open and positive dialogue with all our stakeholders, considering their key interests in our decision-making and

communicating with them on a regular basis. This dialogue helps us build trust and respect and make choices as a business that help

shape the role we play in society.

The development of strong and positive relationships between Diageo and its external stakeholders is an intrinsic part of our purpose

and culture. Our stakeholders include not only business partners such as suppliers and customers, our people and workforce, but also

government, consumers and the wider communities in which we operate. As noted in the company’s statement on Section 172 of the

Companies Act 2006 set out on page 19 in making their decisions and in discharging their duties to promote the success of the

company, the Directors must have regard to the interests of its stakeholders. We have summarised below why our stakeholders are

important to us, what we believe their principal interests are and how the Board and company seeks to engage and respond.


Stakeholder and why we engage
Our people –People are at the core of our business –We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled –We want our people to be treated with dignity at work and their human rights respected	What we believe matters most to them •Prioritisation of health, safety and well- being •Learning and development opportunities •Purpose, culture and benefits •Contributing to the growth of our brands and performance •Promotion of inclusion and diversity •Sustainability and societal credentials How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme •Direct engagement through visits to offices, production and supply chain sites during the year •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, Your Voice and pulse surveys and townhall meetings	Reporting to the Board •Regular reports from workforce engagement activities •Feedback through employee surveys, including annual group-wide Your Voice survey •Sessions on different aspects of culture, values and behaviours at Board meetings led by Chief HR Officer Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems •Continuing workforce engagement activities including as part of business transformation implementation and change management
Consumers •Understanding our consumers is critical for our business’s long-term growth •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’	What we believe matters most to them •Choice of brands for different occasions, including no- and lower- alcohol •Innovation in heritage brands and creation and nurturing of new brands •Responsible marketing •Great experiences •Product quality •Sustainability and societal credentials •Price How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference •Regular review of business development opportunities, including active brand portfolio management •Review of innovation pipeline as part of the Annual Strategy Conference	Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends •Papers prepared by strategy team on evolving consumer behaviours globally and in key regions •Regular updates by Business Development and Innovation teams on organic and inorganic opportunities and portfolio choices Upcoming priorities •Ongoing review of portfolio and category participation opportunities •Developing pipeline of innovation informed by consumer insights •Enhancing marketing effectiveness through detailed understanding of consumer motivation, globally and by region or market

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Stakeholder and why we engage
Customers •Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences	What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences •Identification of opportunities that offer profitable growth •Insights into consumer behaviour and shopper trends •Trusted product quality •Innovation, promotional support and merchandising •Availability and reliable supply and stocking •Technical expertise •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points •Review of supply chain footprint to ensure efficient delivery of products to customers •Direct engagement with key customers during market visits	Reporting to the Board •Regular performance updates by the Chief Executive, including customer and route-to-consumer concerns •Deep dive reviews on key regions or markets, such as Great Britain and North America, including consideration of key customer relationships and ways of working Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of key customers during market visits and throughout Board calendar •Enhancing relationships between the company and its customers through engagement opportunities
Suppliers •Our suppliers, service providers and agencies are experts in their fields •We rely on them to deliver high-quality products and market responsibly •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society	What we believe matters most to them •Strong, mutually beneficial partnerships •Strategic alignment and growth opportunities •Fair contract and payment terms •Collaboration to realise innovation •Consistent performance measures •Joint risk assessment and mitigation •Sustainability and societal credentials How the Board seeks to engage •Periodic review of supply chain footprint in key markets to ensure resilience and flexibility, monitoring environmental impacts and efficiencies •Review and approval of material supply and procurement contracts including for critical raw materials •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with Diageo's 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals	Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board •Periodic updates provided to the Board in relation to supply chain agility programme rollout •Proposals put to the Board include summaries of potential implications for suppliers as a key stakeholder group Upcoming priorities •Continued focus on rollout of supply chain agility programme •Monitoring impact of supply chain disruption on operations •Supervision of initiatives to improve sustainability and supply chain resilience

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Stakeholder and why we engage
Communities •We aim to create long-term value for the communities in which we live, work, source and sell •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity	What we believe matters most to them •Impact of our operations on the local economy •Access to skills development, employment and supplier opportunities •Inclusion, diversity and tackling inequality in all forms •Responsible use of natural resources, biodiversity and sustainability •Transparency and engagement How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking, inclusion and diversity •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains	Reporting to the Board •Reports provided to Board on progress made in relation to 'Spirit of Progress' targets •Proposals put to the Board include summaries of potential implications for local communities •Reports on macroeconomic and socio-political events provided to Board by management Upcoming priorities •Enabling acceleration of key aspects of 'Spirit of Progress' targets, including in respect of positive drinking and water stewardship •Increased focus on carbon reduction initiatives
Governments and regulators •The regulatory environment is critical to the success of our business •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business	What we believe matters most to them •Compliance with applicable laws and regulations •Contribution to national and local economic development and public health priorities •International trade, excise, regulation and tackling illicit trade •Tackling harmful drinking and the impact of responsible drinking initiatives •Climate change and water sustainability agendas, including carbon reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities How the Board seeks to engage •Indirect engagement through periodic updates from the Chief Executive and corporate relations executives •Review of macroeconomic and geopolitical developments as part of strategy sessions •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy	Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board •Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management Upcoming priorities •Monitoring developments in regulation and best practice in respect of non-financial reporting requirements, corporate governance and audit regime •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking, inclusion and diversity

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Stakeholder and why we engage
Investors •We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it	What we believe matters most to them •Strategic priorities, opportunities and risks •Financial performance •Corporate governance •Leadership credentials, experience and succession •Executive remuneration policy •Shareholder returns •Environmental, inclusion and diversity, and social commitments and progress How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through Investor Relations programme of events •Participation in investor conferences such as the Consumer Analyst Group of New York meeting (CAGNY) •Hosting investor events such as the Capital Markets Event held in New York in November 2023 •Attendance at the Annual General Meeting in September 2023, including responding to questions from shareholders	Reporting to the Board •Monthly reports compiled by Investor Relations team provided to the Board, providing details on engagement sessions with investors and key trends •Chief Executive reporting investor sentiment to the Board as part of regular updates at Board meetings, including feedback following participation at analyst and investor conferences Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year •Preparing for the Annual General Meeting to be held in September 2024 •Engaging directly with investors through post-results announcement roadshows



	Engaging with investors and shareholders

	Diageo's Investor Relations (IR) team support the Chief Executive, Chief Financial Officer and other members of the Board and Executive Committee with arranging a programme of engagement events, attendance at analyst conferences, meetings and calls with a wide variety of shareholders, investors and analysts. The IR team monitor Diageo's share price performance and trading patterns, review analyst research notes and recommendations, peer group and other sector news, providing regular reports to the Board and Executive Committee. During fiscal 24, there have been over 400 meetings or calls between investors and management, including the Chief Executive, Chief Financial Officer or other members of the Executive Committee and IR team. A key example of how the company engages with investors is the Capital Markets Event held in November 2023 at which Diageo's Executive Committee highlighted the company's strategic priorities, showcased case studies of strategy being put into action, including in relation to the opportunities for whisky in India, innovation in Guinness and the rollout of tequila into new markets. These engagement events allow investors to get a more detailed understanding of our market dynamics and opportunities and how Diageo looks to grow its business, while also allowing management to have a direct dialogue with investors.

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Creation of our Growth Ambition

Decision made

Supported by the group strategy team and Executive Committee, the Chief Executive has carried out a review and assessment of

our strategy in light of the evolving external environment, resulting in the identification of strategic imperatives and priorities to

enable future growth. This overview, which was presented to and approved by the Board, led to the creation of Diageo’s Growth

Ambition, further details of which are set out on pages 25-26.

Stakeholder considerations

Diageo’s strategy has been to consistently and steadily gain share and build global brands despite various challenges and dynamic

external factors, such as Covid-19, the cost of living crisis, consumer trends and stakeholder expectations. In recent years, the

macroeconomic, geopolitical and societal environment has continued to be volatile seeing a period of accelerated change in many

respects, including digitalisation and technological advances, while other longer-term trends, such as premiumisation, have broadly

continued, albeit in a less consistent manner. The Growth Ambition has at its core the interests and demands of consumers, which

vary considerably by market, and, by extension, customers. The review also considered the interests and needs of Diageo’s

employees and broader workforce, who need the systems, processes, structures and capabilities to enable growth by responding to

and leading consumer trends appropriately. The review also considered the interests of shareholders, aiming to create value, which

can be reinvested in our brands and business, and returned to shareholders.

’Spirit of Progress’ review and refinement

Decision made

Diageo’s ambitious global ESG action plan, ‘Spirit of Progress’, was launched in 2020, having been approved by the Board, with

the aim to make a positive impact on people and the planet and to help create a more inclusive and sustainable world. Approaching

the mid-point of the overall programme, during fiscal 24 management undertook a review of the action plan’s current status and

recommended a refinement and focus of resources on those targets which address our highest risks and in respect of which we can

have the greatest impact. The Board approved the review and resulting refinement of these targets and priority areas.

Stakeholder considerations

Diageo has a longstanding commitment to carrying on its business in a sustainable and resilient way, given the importance of

environmental and social responsibility and the impact that the Company has on its different stakeholder groups. For example,

Diageo’s workforce want to work for a company that values the environment and community in which it operates, encourages

inclusion of a diverse range of people and builds respect, engagement and fulfillment. Investors and shareholders benefit from

business practices which are sustainable and result in consistent holistic performance, balancing resource and capital allocation

over time. The review, which is described in more detail on page 97, considered the underlying targets of the programme’s three

priority areas and the degree to which progress had been made against them, the reasons why significant progress had been made

against certain targets but not against other targets, and the preliminary results of management's double materiality assessment. The

review also included consideration of various external factors and uncertainties which impact our ability to achieve certain targets,

how stakeholder approaches and expectations developed over time, and areas where Diageo could have a disproportionate impact

through additional resource and focus. As a result of the review, Diageo will focus its efforts on those areas and targets which

address our highest risks and in respect of which we can have the greatest impact, recognising the continuing importance of

sustainability to our stakeholders.

Appointment of future Board Chair

Decision made

The Board approved the appointment of Sir John Manzoni, an existing Non-Executive Director, as Chair of the Board effective on

or around 5 February 2025, succeeding Javier Ferrán, who will be standing down in his ninth year on the Board.

Stakeholder considerations

The Board considered Sir John Manzoni’s record since joining the Board in 2020, having made high-quality contributions to Board

and committee meetings, providing effective and constructive challenge to management and demonstrating objective and

independent judgment. The Board considered that Sir John facilitated constructive Board relations in a manner which was

consistent with the Board’s transparent and open culture, and had supported the current Chair in instilling appropriate values,

behaviours and culture in the Board and senior management. Sir John has extensive leadership experience across a number of

complex and fast-changing sectors, in the UK and globally, including in executive and non-executive capacities within the private

sector as well as in the UK civil service. His experience in the public sector, working with government, civil service and

regulators, would be particularly beneficial to Diageo. Sir John’s current appointments and commitments were also noted,

including his roles on other company boards, in light of the commitments and demands of the role, as was the fact that he was

independent on appointment, as required by the Code, and remained independent. Overall, the Board concluded that Sir John was

the most suitable candidate and that his appointment as Chair would be of benefit to the company, its shareholders and wider

stakeholders.

Wider stakeholder engagement

Diageo has ambitious goals across a variety of social and environmental targets and has a long track record of working with

stakeholders to achieve these goals. Our ambition to be one of the best performing, most trusted and respected consumer products

companies in the world can only be achieved through engagement and partnership with our stakeholders. The Board and its members

have engaged directly and indirectly with a variety of its key stakeholders during fiscal 24 in order to respond to stakeholder

considerations in making its decisions and determining the company’s strategy and goals. These include the following activities:

•In October 2023, the Board met and engaged with customers and retailers in Chicago, touring shops and stores. During these

meetings and visits, Directors discussed with customers and their staff what trends were emerging and how they were impacting sales,

stock and inventory levels and consumer choice. Similarly, when meeting in April 2024 in London, the Board heard the views of

senior executives from Diageo's largest on-trade customers, grocery and wholesale customers in the United Kingdom. Feedback

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received from customers in different markets is also reported to the Board by the Chief Executive in her regular performance

summaries. Diageo partners with its customers to analyse the performance of its portfolio and marketing investment as well as market

trends and consumer activity, in order to enhance the company's consumer insights tools which enhance its innovation, product

development and marketing initiatives.

•Directors, both individually and collectively, have visited a number of different Diageo offices and production sites

during the year. Our Chair, Chief Executive and Chief Financial Officer travel regularly to different sites around the

world, but our Non-Executive Directors also visit Diageo locations. For example, in October 2023 Non-Executive

Directors visited the company's packaging facility and plant in Plainfield, Illinois, as well as its newly opened Guinness

Open Gate brewery and tap room in Chicago. A number of Non-Executive Directors have also visited Diageo's tequila

operations and agave farms in Mexico over the course of the year. These visits enabled the Board to get a deeper

understanding of the company's production processes and facilities, as well as the impact of brand homes on brand

equity and consumer choice. Engaging directly with employees through these visits, as well as the regular workforce

engagement sessions, is an important means of providing insights as to the complexity of managing distribution and

logistics routes, inventory management and demand forecasting, informing strategic decision-making and supply chain

efficiency.

•The Board has a well-established workforce engagement programme, in which each Non-Executive Director is involved in

regular engagement sessions with different parts of the global workforce over the course of the year, both virtual and in

person. Through these sessions, Non-Executive Directors gain insights into the company’s culture which are then fed back to

the company’s engagement teams and used to shape our approach to people. See pages 172-173 for this year’s workforce

engagement statement which includes further details of how the programme has operated during the year.

•Board members, and in particular the Chief Executive and Chief Financial Officer, participate in an extensive programme of

regular meetings, calls and other engagement activities with investors and analysts, co-ordinated by the Investor Relations

function. See page 169 for a timeline summarising this programme, which includes highlights from fiscal 24 including the

company's Capital Markets Event hosted in its New York office in November 2023 and the company's participation at the

annual conference of the Consumer Analyst Group of New York held in Florida in February 2024. Materials from these

sessions are available on https://www.diageo.com/en/investors/results-reports-and-presentations.

Further information on our stakeholders, what we think is important to them and how the Board engages and responds to them can be

found on pages 165-170. Case studies summarising how stakeholder considerations were taken into account by the Board during fiscal

24, as required by Section 172 of the Companies Act, in respect of three of its principal decisions are set out on page 170.

Executive direction and control

Executive Committee

The Executive Committee, appointed and chaired by the Chief Executive, supports her in discharging her responsibility for

implementing the strategy agreed by the Board and for managing the company and the group. It consists of the individuals responsible

for the key operational and functional components of the business: North America, Europe, Africa, Latin America and Caribbean, Asia

Pacific, India, Supply Chain and Procurement and Corporate. The Executive Committee focuses its time and agenda to align with the

Growth Ambition and how to achieve Diageo’s financial and non-financial performance objectives. Performance metrics have been

developed to measure progress. There is also focus on the company’s reputation. In support, monthly performance delivery calls,

involving the managing directors of each market, focus on current performance. Committees appointed by the Chief Executive and

intended to have an ongoing remit, including the Audit & Risk Committee, Finance Committee and Filings Assurance Committee, are

shown (with their remits) at https://www.diageo.com/en/our-business/corporate governance.

Performance evaluation

The effectiveness of the Board and its Committees is vital to the overall success of the Group. The last externally facilitated evaluation

of the Board had been carried out in 2020. After internal evaluations conducted in 2021 and 2022, in accordance with Provision 21 of

the Code, another externally facilitated evaluation was conducted during 2023. In line with the UK Corporate Governance Code, in

August 2023 the Board instructed Dr Tracy Long of Boardroom Review Limited (BRL), an independent professional consultancy

which specialises in board reviews and evaluations, to conduct an externally facilitated evaluation. Dr Long and BRL have no

connection with Diageo or its directors.

The purpose of the evaluation was to conduct a comprehensive review and evaluate how the Board and its Committees operate as

measured against current best practice corporate governance principles and in accordance with the Code guidance. The review

encouraged candid reflections from the Board in order to build on strengths, identify challenges and consider recommendations.

The evaluation was conducted through a series of one-to-one interviews with each Director as well as a number of key executives and

third parties who interact frequently with the Board, an information review and observations of meetings. Dr Long attended and

observed Board and Committee meetings during September and October 2023, including private meetings between Non-Executive

Directors at which no Executive Directors or management were present. A report was then prepared for discussion with individual

Directors and the Board as a whole.

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171

The findings of the evaluation indicate that the Board is considered to be well governed and effective. A particular key strength of the

Board is in its composition, expertise and performance as well as the contents of its meetings. Diversity, inclusion, trust and

transparency are other key strengths the Board is actively committed to ensuring it reflects its consumer and global marketplace.

A summary of the key findings and recommendations was presented by Dr Long to the Board in December 2023, following which the

Chair and Company Secretary determined areas of focus for approval by the Board.



	Key recommendations	Actions for focus in 2024/25
	General feedback
	•Continue to ensure Board members feel well integrated into the Board and company	•Increase lines of communication between management and Board members
	•Ensure focus on diversity continues	•Consider opportunities for more engagement between Board members and the workforce
	Board composition and succession
	•Nomination Committee to tailor induction programmes for specific new Non-Executive Directors depending on their background and experience	•Enhance the succession planning transition process to identify potential new Board members with relevant sector experience
		•Continue to review the balance of skills, expertise and knowledge of the Board
	•Continue to increase focus on communication channels with brokers, shareholders and other stakeholders	•Focus recruitment and talent pipeline on key areas for additional expertise
	•Enhance and align technology with the growth agenda and with testing various assumptions
	People and culture
	•Continue external talent search for executive and senior leader roles as well as focus on the development of internal talent	•Continue to promote and protect the company’s corporate culture and values
	•Ensure regular structured engagement between Nomination Committee members and high potential internal candidates	•Continue to review the talent pipeline of executives and senior management
		•Review and track high potential candidates both internally and externally
	Strategy and risk
	•Review and track key strategic decisions and investments focusing on medium and longer-term issues as well as emerging trends	•Enhance the group risk appetite statement, including in relation to description of risk appetite for principal risks
		•Continue to maintain strategic focus and to monitor the changing business landscape including wider external competition and consumers
	•Allocate appropriate time and resources during Board discussions to ensure the right challenge and support is provided on strategic and operational risk reviews
		•Continue to focus on the company’s approach to ESG and effective stakeholder engagement as well as shareholder communication

Progress made against 2023/24 actions

Good progress has been made against the actions identified following last year’s internally facilitated performance evaluation:

–There has been an increased focus on Board and management succession planning and ensuring a pipeline of high-quality,

diverse talent.

–The Board has continued to improve the direct channels of communication between management and Board members.

–The Board has continued to develop and enhance induction process for new Directors and ensures high-quality pre-read

materials, action closure and time allocation for Board meetings.

Workforce Engagement statement

At Diageo, we believe that our people are critical to our company’s success, and that creating an inclusive culture and an environment

where colleagues can freely express their views and feel listened to is key to sustaining high levels of engagement and performance, as

well as ensuring Diageo remains a great place to work. To understand our colleagues’ experiences, we gather their feedback through

both formal and informal channels. Diageo’s Workforce Engagement programme is an important way for the Board to hear

employees' and other colleagues' insights on key topics, including culture, strategy, and ways of working. It is also a valued

opportunity for teams to have direct access to Board members.

In fiscal 24, Karen Blackett took over accountability as the designated Non-Executive Director for workforce engagement from Javier

Ferrán. Karen, alongside all Non-Executive Directors, held fifteen sessions across the year, engaging with 539 colleagues from all

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regions, functions, and organisational levels below senior leadership. Sessions have taken place both virtually and face to face, in line

with Board members’ travel, and have been highly engaging. Board members have valued the openness of conversations and the

opportunity to gather insights on many positive aspects of Diageo’s culture, as well as areas for improvement.

The key themes emerging from these workforce engagement discussions are:

•Diageo’s culture continues to be a source of pride and a strong advantage for the business, characterised as ambitious,

progressive and collaborative, as well as high quality and accessibility of leadership. Diageo’s leading approach to inclusion

and diversity, and the richness and growth this brings, were positive highlights in these discussions.

•Diageo’s unique purpose and values are highlighted frequently as reasons colleagues join and remain at Diageo, as well as

Diageo’s commitment to its 'Spirit of Progress' agenda and embedded approach to doing business the right way.

•Confidence and belief in Diageo’s diverse brand portfolio are key drivers of motivation for employees. Improved consumer

and customer connectivity and high standards of execution in activating on our brands were highlighted as strengths, while

the need to accelerate the speed of innovation to market was frequently cited as an area for improvement.

•The high calibre of talent across the business is also seen as a strength, and colleagues spoke positively about diversity in

leadership and opportunities to further their learning and career development. Colleagues also highlighted the value Diageo’s

Employee Resource Groups bring to the business and expressed an appetite for greater access and visibility of these

important groups.

•While high workloads and complex systems and processes were highlighted as barriers that can at times prevent colleagues

from operating in the most efficient way, improvements in collaboration and connectivity through technology, as well as an

overall cultural shift underway, were praised. Investment being made in digital, data and analytical capabilities is seen

positively, and colleagues look forward to these investments improving workload and liberating burdensome processes.

These themes were also reflected in this year’s engagement results seen in the global employee survey, Your Voice, which remains top

quartile and above external benchmarks with 81% engagement levels and 89% pride in working for Diageo.

Insights gathered from workforce engagement sessions held by the Board, alongside broader listening tools such as the Your Voice

survey, annual employee engagement and pulse surveys, have helped the company to listen and respond to the perspectives of our

employees, as well as identify specific areas to further enhance our employee experience.

Purpose, values and culture

The Board is responsible for establishing Diageo’s purpose, values and culture and for monitoring how embedded that culture is

within our business. Diageo has a long-established purpose and set of values which resonate strongly with our employees, as indicated

by the Board's engagement sessions with Diageo's workforce and our employee surveys. We are very conscious that Diageo must

operate with the highest standards of governance, doing business the right way, from grain-to-glass. This principle is embedded in our

Code of Business Conduct and global policies, aligned with our 'Spirit of Progress' goals, and reflected in our ways of working. We

are pleased that we have a strong reputation for inclusion and diversity which reflects our values, attracts the best talent and enables

our people to succeed.

There are a number of ways in which the Board monitors and assesses culture, including:

Site visits

Directors are encouraged to visit the group’s offices, production facilities and sites in different markets and regions so that they can get

a better understanding of the business and interact with employees and the wider workforce. During fiscal 24, Board meetings have

been held in the company's headquarters in London on a number of occasions, enabling Directors to meet and interact with employees,

including with members of the local management team for Great Britain. The Board has also met in Chicago where they met members

of the North America executive team and visited our spirits production facility at Plainfield, Illinois. Various Directors have also

travelled to other locations, including our tequila operations in Mexico. These site visits enable Directors to meet and discuss issues

with local management and workforce members, to observe Diageo’s safety and sustainability processes working in practice and to

assess how effectively Diageo’s culture is communicated and embedded across a variety of geographies, functions and roles. As part

of the Board's workforce engagement programme, Non-Executive Directors regularly hold in-person and virtual meetings, townhalls,

focus groups and question and answer sessions with Diageo employees in different locations over the course of the year.

Employee surveys

The Board receives reports from the Chief HR Officer on the results of the company’s global annual ‘Your Voice’ survey, including

levels of employee engagement, employee perceptions of Diageo’s purpose and of their line managers (including net promoter scores),

and any themes raised. The survey results also give visibility of areas on which management must continue to focus. Results of this

year's 'Your Voice' survey are described on page 105.

SpeakUp allegation reporting

Regular reports are provided by the Business Integrity team to the Audit Committee, providing information and data on reported

allegations of breaches of the Code of Business Conduct and other group policies, including those received through our confidential

and independent whistleblowing service SpeakUp. These reports also include analyses of emerging trends, investigation status reports

and closure rates, and summaries of actions taken. These reports enable the Directors to gain an understanding of common issues and

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Additional information

Internal control and risk management

An ongoing process has been established for identifying, evaluating and managing risks faced by the group. This process, which complies with

the requirements of the Code, has been in place for the full financial year and up to the date the consolidated financial statements were

approved and accords with the guidance issued by the FRC in September 2014, entitled ‘Guidance on Risk Management, Internal Control and

Related Financial and Business Reporting’. The Board confirms that, through the activities of the Audit Committee described below, a robust

assessment of the principal and emerging risks facing the company, including those that would threaten its business model, future performance,

solvency or liquidity, has been carried out. These risks and their mitigations are set out above in the section of the UK Annual Report dealing

with principal and emerging risks on pages 134 to 144.

The Board acknowledges that it is responsible for the company’s systems of internal control and risk management and for reviewing

their effectiveness. The Board confirms that, through the activities of the Audit Committee described in its report, it has reviewed the

effectiveness of the company’s systems of internal control and risk management. During the year, the Audit Committee considered the

nature and extent of the risks that the Board was willing to take to achieve its strategic goals and reviewed the existing internal

statement of risk appetite, which had been updated this year by the Executive Audit & Risk Committee, following which the Audit

Committee made a recommendation to the Board which was then approved. The Audit Committee reviews the company's principal

risks regularly throughout the year in accordance with a schedule proposed by management with each such risk being reviewed by

management in the Audit & Risk Committee or other management steering groups prior to it being considered by the Audit

Committee. The Board also regularly reviews emerging and disruptive risks as part of its Annual Strategy Conference, held this year

in April in London, from which a number of topics are identified for more detailed review by either the Board or the Audit Committee

over the following 12 months. The company has in place internal control and risk management systems in relation to the company’s

financial reporting process and the group’s process for the preparation of consolidated accounts. Further, a review of the contents of

the company's public filings and disclosures, including its consolidated financial statements and non-financial disclosures, is

completed by management through the Filings Assurance Committee to ensure that the contents of the company's interim and

preliminary results announcements, Annual Report and Form 20-F appropriately reflect the non-financial and financial position and

results of the group. Further details of this are set out in the Audit Committee report on pages 178-187.

Viability statement

In accordance with the Code, the Board has also considered the company’s longer-term viability, based on a robust assessment of its

principal and emerging risks. This was done through the work of the Audit Committee which recommended the Viability statement to

the Board. For further information about how the Board has reviewed the long-term prospects of the group, see page 86 of the UK

Annual Report.

Going concern

Management prepared 18 month cash flow forecasts which were also sensitised to reflect severe but plausible downside scenarios

taking into consideration the group's principal risks. In the base case scenario, management included assumptions for mid-single digit

net sales growth, slightly growing operating margin and global TBA market share growth. In light of the ongoing geo-political

volatility, the base case outlook and severe but plausible downside scenarios incorporated considerations for a prolonged global

recession, supply chain disruptions, higher inflation and further geo-political deterioration. Even under these scenarios, the group’s

liquidity is still expected to remain strong. Mitigating actions, should they be required, are all within management’s control and could

include reductions in discretionary spending such as acquisitions and capital expenditure, lower level of A&P and investment in

maturing stock, as well as a temporary suspension or reduction in its return of capital to shareholders (dividends or share buybacks) in

the next 12 months, or drawdowns on committed facilities. Having considered the outcome of these assessments, the Directors are

comfortable that the company is a going concern for at least 12 months from the date of signing the group's consolidated financial

statements.

Political donations

The group has not given any money for political purposes in the United Kingdom during the year. Our US based subsidiary, Diageo

North America, Inc. made contributions solely at its own discretion to non-UK political candidates and committees in the United

States, where it is common practice to do so. Contributions of approximately $1.1 million (2023: $1.0 million) were made by Diageo

North America, Inc. during the financial year to US state and local candidates and committees, consistent with applicable laws.

Additionally, our Australian based subsidiary made contributions, solely at its own discretion, totalling approximately $0.01 million.

The US contributions reflect no endorsement of a particular political party, and contributions were made with the aim of promoting a

better understanding of our business and our views on commercial matters, as well as a generally improved business environment.

Governance (continued)

176

Directors' responsibilities in respect of the Annual Report, Form 20-F and financial statements

The Directors are responsible for preparing the Annual Report, the information filed with the SEC on Form 20-F and the group and

parent company financial statements in accordance with applicable law and regulation. Company law requires the Directors to prepare

financial statements for each financial year. Under company law, the Directors have prepared the group consolidated financial

statements in accordance with UK-adopted international accounting standards and the parent company financial statements in

accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS

101 ‘Reduced Disclosure Framework’, and applicable law). In preparing the group consolidated financial statements, the Directors

have also elected to comply with International Financial Reporting Standards issued by the International Accounting Standards Board

(IFRSs as issued by IASB).

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair

view of the state of affairs of the group and parent company and of the profit or loss of the group and parent company for that period.

In preparing the financial statements, the Directors are required to:

•select suitable accounting policies and then apply them consistently;

•state whether applicable UK-adopted international accounting standards, IFRSs issued by IASB have been followed for the

group financial statements and United Kingdom Accounting Standards, comprising FRS 101 ‘Reduced Disclosure

Framework’ and applicable law have been followed for the parent company financial statements, subject to any material

departures disclosed and explained in the financial statements;

•make judgements and accounting estimates that are reasonable and prudent; and

•prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company

will continue in business.

The Directors are responsible for safeguarding the assets of the group and parent company and hence for taking reasonable steps for

the prevention and detection of fraud and other irregularities. The Directors are also responsible for keeping adequate accounting

records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at

any time the financial position of the group and parent company and enable them to ensure that the financial statements and the

Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and

integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing

the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors’ confirmations

The Directors consider that the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable and

provides the information necessary for shareholders to assess the group’s and parent company’s position and performance, business

model and strategy. Each of the Directors, whose names and functions are listed on pages 154 and 155 confirm that, to the best of their

knowledge:

•the group consolidated financial statements, which have been prepared in accordance with UK-adopted international

accounting standards, IFRSs issued by IASB, give a true and fair view of the assets, liabilities, financial position and profit of

the group;

•the parent company financial statements, which have been prepared in accordance with United Kingdom Accounting

Standards, comprising FRS 101 ‘Reduced Disclosure Framework’ and applicable law, give a true and fair view of the assets,

liabilities, financial position and profit of the parent company; and

•the Strategic Report includes a fair review of the development and performance of the business and the position of the group

and parent company, together with a description of the principal risks and uncertainties that it faces.

In accordance with section 418 of the Companies Act 2006, each of the Directors who held office at the date of the approval of the

Directors’ report confirm that, so far as the Director is aware, there is no relevant audit information of which the group’s and parent

company’s auditors are unaware, and each Director has taken all the steps that they ought to have taken as a Director in order to make

themselves aware of any relevant audit information and to establish that the group's and parent company’s auditors are aware of that

information.

The responsibility statement was approved by a duly appointed and authorised committee of the Board of Directors on 29 July 2024.

Governance (continued)

177

AUDIT COMMITTEE REPORT

Ensuring integrity across the business

Dear Shareholder

On behalf of the Audit Committee, I am delighted to present the Committee’s report for the year ended 30 June 2024.

The purpose of this report is to describe how the Audit Committee has carried out its responsibilities during the year. The role of the Audit

Committee is to monitor and review the integrity of financial information and reporting, and to provide assurance to the Board that the

company's internal controls and risk management processes, including its internal audit, business integrity and compliance processes, are

appropriate and regularly reviewed. The Audit Committee also oversees the work of the external auditor, monitors its independence, approves

its remuneration and recommends its appointment. The Committee is also responsible for reviewing the company's principal and emerging

risks, which it carried out over the course of the year through a series of risk review deep dives.

During fiscal 24, the Committee undertook an external audit services tender process as the current auditors had been in role since fiscal 16.

Further details are set out on pages 180-181.

The Committee has also kept under regular review the company's cyber security risk management processes, governance systems and

capabilities, in light of continuing risks in respect of cyber threats. See page 187 for further details.

This report also describes areas of significant and particular focus for the Committee over the year. During fiscal 24 this included regularly

monitoring progress of the company's multi-year programme to improve its internal processes and upgrade its financial systems and

technology. This programme has been designed to enhance Diageo's business resilience and controls environment through simplifying and

standardising the group's ways of working, improving access to data, and enhancing reporting through implementation of a new cloud-based

enterprise resource planning platform. Strategic business transformation has been identified as a new principal risk this year. The Committee

has also increased its focus on the company's demand forecasting capabilities, stock in trade and inventory levels monitoring processes and

controls, particularly in light of reduced demand in certain regions such as Latin America and Caribbean.

As part of the company's year end reporting processes, the Committee has reviewed and challenged management's approach, analysis and

recommendations, taking into account the views of the external auditor, in order to conclude on its Annual Report and financial statements. In

addition, the Committee has considered and reviewed the group's principal and emerging risks on a rolling basis throughout the course of the

year. Further information is provided on pages 181-184.

Having chaired the Committee since 2017, I will be stepping down from the role shortly and am delighted that Julie Brown has been appointed

as my successor, effective from 5 August 2024. I believe that the Committee has an open and constructive relationship with management and

the external auditors, whom I thank for their assistance over the year. I also thank my fellow Committee members for their diligence and

engagement. The Committee remains committed to continuing to discharge its duties in an effective and diligent manner during fiscal 25.

Alan Stewart

Chair of the Audit Committee

Governance (continued)

178

Role and composition of the Audit Committee

The role of the Audit Committee is fully described in its terms of reference, which are available at https://www.diageo.com/en/our-

business/corporate-governance. The members of the Audit Committee are independent Non-Executive Directors being Alan Stewart

(Committee Chair), Melissa Bethell, Karen Blackett, Valérie Chapoulaud-Floquet, Susan Kilsby, Sir John Manzoni and Ireena Vittal.

The Chair of the Board, the Chief Financial Officer, the General Counsel & Company Secretary, the Group Controller, the Head of

Global Audit & Risk (GAR), the Chief Business Integrity Officer, the

General Counsel Corporate, the Group Chief Accountant and the external auditor regularly attend meetings of the Committee. The

Audit Committee met privately with the external auditor, the Chief Business Integrity Officer and the Head of GAR regularly during

the year. During the course of the year, the Committee met five times and constituted subcommittees to manage the external audit

tender process and to review progress of the year end audit and reporting processes. Details of attendance of all Board and Committee

meetings by Directors are set out on page 150.

Reporting and financial statements

During the year, the Audit Committee reviewed the interim results announcement, including the interim financial statements, the

Annual Report and associated preliminary results announcement and Form 20-F, focusing on key areas of judgement and complexity,

critical accounting policies, disclosures (including those relating to contingent liabilities, climate change and principal risks), viability

and going concern assessments, provisioning and any changes required in these areas or policies. The Audit Committee has also

focused in particular on the company’s approach to assurance and internal approvals processes. Under the supervision of the Audit

Committee, management has again sought to refine our non-financial reporting in order to enhance consistency and intelligibility

throughout the Annual Report, while also complying with the recommendations of the Task Force on Climate-related Financial

Disclosures.

This year the Committee has continued to regularly review progress of the company's transformation project to improve Diageo’s

internal processes and upgrading its financial systems and technology, monitoring progress against the project's targets and timeline,

including its controls framework and reporting capabilities.

The company has in place internal control and risk management systems in relation to the company’s financial and non-financial

reporting process including the group’s process for the preparation of consolidated financial statements. A review of the consolidated

financial statements and the draft Annual Report is completed by the Filings Assurance Committee (FAC) to ensure that the financial

position and results of the group are appropriately reflected therein. In addition to reviewing draft financial statements for publication

at the half and full year, the FAC is responsible for examining the company’s financial and non-financial information and disclosures,

the effectiveness of internal controls relating to financial and non-financial reporting and disclosures, legal and compliance issues and

determining whether the company’s disclosures are accurate and adequate. This year additional focus has been given to the adequacy

of regional inventory monitoring processes, especially in Latin America and Caribbean. The FAC comprises senior executives such as

the Chief Executive, the Chief Financial Officer, the General Counsel & Company Secretary, the General Counsel Corporate &

Deputy Company Secretary, the Group Controller, the Group Chief Accountant, the Head of Investor Relations, the Head of GAR and

the Chief Business Integrity Officer. The company’s external auditor also attends meetings of the FAC. Presidents of each region and

their finance directors attend the FAC on request. The Audit Committee reviewed the work of the FAC and a report on the conclusions

of the FAC process was provided to the Audit Committee by the Chief Financial Officer.

Diageo has carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive and Chief

Financial Officer, of the effectiveness of the design and operation of Diageo's disclosure controls and procedures (as defined in the US

Securities Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Annual Report. Based upon that evaluation, Diageo's Chief

Executive and Chief Financial Officer concluded that, as of 30 June 2024, Diageo's disclosure controls and procedures were effective.

As part of its review of the company's Annual Report and associated disclosures, the Audit Committee has considered whether the report is 'fair,

balanced and understandable' and provides the information necessary for shareholders to assess the company's position, performance, business

model and strategy, as required by Principle N of the Code. In doing so, the Committee has noted the guidance issued by the FRC on this subject

as well as best practice recommendations from external advisors. The Committee has considered factors such as whether the report includes

descriptions of the business model, strategy and principal risks which are sufficiently clear and detailed to enable users to understand their

importance to the company, whether the report is consistent throughout with the narrative reflecting the financial statements and understanding of

directors during the year, that information is presented fairly, without omission of material information and not in a manner which might mislead

users.

The Committee has also considered the presentation of GAAP and non-GAAP measures to ensure appropriate prominence is given to

GAAP measures and that non-GAAP measures are presented consistently and can be clearly reconciled. The Audit Committee has

also considered the governance and processes undertaken by management in drafting, developing and reviewing the contents of the

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 work of the FAC. On this basis, the Audit Committee

recommended to the Board that it could make the required statement that the Annual Report is 'fair, balanced and understandable'.

Governance (continued)

179

SEC correspondence

The Committee reviewed a comment letter addressed to the company which had been received in March 2024 from the SEC following

its review of the company's Form 20-F for fiscal 23. The letter raised a question as to the presentation of non-GAAP line items in a

table expressed to be the company's summary income statement. The company responded by proposing to rename and reformat the

contents of the relevant table in future filings, following which the SEC confirmed that it had completed its review. The Committee

notes that Diageo remains responsible for the accuracy and adequacy of its disclosures.

External auditor

During the year, the Audit Committee reviewed the external audit strategy and the findings of the external auditor from its review of

the interim results and its audit of the consolidated financial statements.

The Audit Committee reviews annually the appointment of the auditor (taking into account the auditor’s effectiveness and

independence and all appropriate guidelines) and makes a recommendation to the Board accordingly. Any decision to open the

external audit to tender is taken on the recommendation of the Audit Committee, as was the case in 2023. There are no contractual

obligations that restrict the company’s current choice of external auditor.

PwC first became Diageo’s external auditor in fiscal 16 following a tender process carried out in 2015. PwC's re-appointment for

fiscal 24 was approved by shareholders at the 2023 AGM.

External audit tender process

At the recommendation of the Audit Committee and as the company is required to have a mandatory audit tender after 10 years by the

Statutory Auditors and Third Country Auditors Regulations 2016, an audit services tender process was undertaken during fiscal 24 to

provide sufficient time for an adequate transition in the event that a new audit firm was selected. In undertaking this tender, the

company has complied with the provisions of The Statutory Audit Services for Large Companies Market Investigation (Mandatory

Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 for the year ended 30 June 2024.

In determining the process for the audit services tender, management took into consideration and followed the FRC's guidance on

audit tendering, with the Audit Committee making robust decisions to ensure that the requirements of the FRC's minimum standard for

audit committees were met. Included in the process were a review of each firm's most recent FRC Audit Quality Review reports, a

consideration of potential conflicts of interest and independence checks, and identification of key individuals with appropriate skills

and experience to act as potential lead partners. Clear and objective criteria for assessing success were determined and agreed.

A timeline summary of the key steps taken is set out below.



	Audit tender process
	April 2023	Review of the audit market including firms outside the ‘Big 4’ professional consultancy firms to determine their minimum capability and capacity requirements.
	May to June 2023	Constituted a sub-committee of the Audit Committee and identified shortlisted firms for interview.
	September to October 2023	Determined list of assessment criteria, created and opened data room to share information, and carried out series of management meetings with each shortlisted firms.
	October to November 2023	Presentation to the Audit Committee followed by the submission of formal requests for proposal from the shortlisted firms.
	December 2023	Review of proposals from firms, consideration by Audit Committee and recommendation to the Board.

In December 2023, a sub-committee of the Audit Committee reviewed of the final presentations and responses to the Request for

Proposal submitted by each of the shortlisted firms and based its decision on a combination of audit approach, team continuity in key

roles and understanding Diageo’s business and risks. The sub-committee refined the shortlisted firms from four to three and presented

a recommendation to the Audit Committee and subsequently to the Board. The recommendation comprised a preferred firm and an

alternative firm. After careful thought and consideration, the Board decided to reappoint PwC as the external auditor. Feedback was

given to all participating firms as part of the tender process.

Since the conclusion of the audit for the year ended 30 June 2023, Scott Berryman has been lead audit partner with responsibility for

signing the Diageo plc audit opinion on behalf of PwC. Scott will remain as such for the year ending 30 June 2025 onwards. The

Board will propose the reappointment of PwC at the AGM to be held in September 2024.

Governance (continued)

180

External auditor effectiveness and quality

The Audit Committee assesses the ongoing effectiveness and quality of the external auditor and audit process through a number of

methods, commencing with identification of appropriate risks by the external auditor as part of its detailed audit plan presented to the

Audit Committee at the start of the audit cycle. These risks were reviewed by the Committee and the work performed by the auditor

was used to test management’s assumptions and estimates relating to such risks. The effectiveness of the audit process in addressing

these matters was assessed through reports presented by the auditor to the Audit Committee which were discussed by the Committee at

both the half-year, in January, and year end, in July. Following completion of the audit process, feedback on its effectiveness was

provided during review meetings with the company’s management and finance team, who also completed questionnaires on their

experience of the audit. Both management and the auditor provided their assessments of auditor effectiveness and quality to the Audit

Committee for consideration at its meeting in December. The auditor assessment is undertaken based on the requirements of the Code

as well as guidance issued to audit committees by the FRC in April 2016 and Minimum Standards for Audit Committees published by

the FRC in May 2023, as well as the NYSE listing rule 303A.07. It includes consideration of the findings of the FRC's Audit Quality

Review team which published its 2022/23 Audit Quality Inspection and Supervision report on PwC in July 2023, periodic regulatory

review carried out by the US Public Company Accounting Oversight Board (PCAOB) and the Quality Assurance Department of the

Institute of Chartered Accountants in England and Wales, as well as benchmarking of the auditor as against its peers. The assessment

also takes into consideration PwC's annually published Transparency Report which sets out how the firm upholds its professional

responsibilities and seeks to ensure delivery of quality in its services. The results of the survey conducted during fiscal 24 indicated a

consensus view that overall performance is solid. Consistent strong feedback was received in relation to solid auditor independence

and quality control, strong professional expertise and business knowledge, and solid quality communication between PwC and

management. Areas where continued focus was required remained consistent with the prior year assessment including timely review

and feedback on audit matters, better alignment in internal communication, resource continuity and use, pro-activity in driving

efficiencies, provision of best practice examples of processes and controls, and transparency on audit activities throughout the year. It

was concluded that the relationship between the auditor and management was strong and open. The auditor team communicated

openly and clearly those areas which they considered significant and their views on such matters. Senior members of the PwC team

had been very visible throughout the business and strengthened relationships with management.

During the external audit, the auditor challenged management on its approach taken as to brand impairment testing, including

discussing and reviewing management's plans and strategies for future growth of the brands as against recent performance and

forecasts. The auditor also challenged management as to other judgemental matters such as pension obligation valuations and

uncertain tax positions, assessing management's analysis as to these potential exposures and disclosures in the Annual Report. The

auditor also challenged management while preparing the Annual Report in relation to whether there was sufficient balance in the

Strategic Report and as to disclosures of critical accounting policies and practices, including those relating to impairment of goodwill

and indefinite life intangible assets, pensions valuation and uncertain tax positions. The Audit Committee assessed these challenges,

discussing them with management and the auditor, and seeking additional information and evidence from management in support of

these assessments.

External auditor independence

The group has a policy on auditor independence and on the use of the external auditor for non-audit services, which is reviewed

annually, most recently in July 2024. Under the auditor independence policy, any member of the PwC global network shall provide to

the company, its subsidiaries or any related entity only permissible services, subject to the approval of the Audit Committee after it has

properly assessed through its governance process the threats to independence and the safeguards applied in accordance with the FRC

Ethical Standard, SEC auditor independence rules and US Public Company Accounting Oversight Board rules. These services are set

out in full in the policy and are generally those which the external auditor is best placed to provide, which may include reporting

required by law or regulation to be performed by the auditor and services where the services are closely linked to audit work and

where the auditor's understanding of the group is relevant to the services. Any FRC permissible service to be provided by the auditor,

regardless of the size of the engagement, must be specifically approved by the Audit Committee or its nominated delegate (being the

Chair of the Audit Committee) based on a defined scope of pre-approved services. The policy explicitly specifies the auditor

independence review and approval mechanism process by the Committee for permissible engagements above the specified threshold

of £100,000. Fees paid to the auditor for audit, audit-related and other services are analysed in note 4(b) to the consolidated financial

statements. The nature and level of all services provided by the external auditor are factors taken into account by the Audit Committee

when it reviews annually the independence of the external auditor. During the year, no non-assurance related services were provided

by the external auditor to the company, its subsidiaries or any related entity other than personal tax services provided to two Non-

Executive Directors and the provision of services in connection with the issuance of senior notes by a group company.

Internal audit, controls assurance and risk

The company’s internal GAR team undertakes an annual audit and risk plan by delivering a series of internal assurance and audit

assignments across a variety of markets, processes, business units and functions. On the conclusion of each assignment, GAR issues a

report on its findings which may also include an overall rating as to the status of the market, process or function being audited,

detailed reasons for the rating and actions to be taken within a specific timetable. The Audit Committee receives regular reports from

the Head of GAR on the latest reports issued.

Governance (continued)

181

This year GAR has undertaken a number of audits including both market and functional audits as well as of certain of the group's end-

to-end processes and procedures. The Audit Committee assesses the effectiveness of GAR by reviewing its annual audit plan at the

start of the financial year, monitoring its ongoing quality throughout the year, and assessing completion rates and feedback provided

following completion of the annual audit plan. Having carried out this assessment, the Audit Committee is of the view that the quality,

experience and expertise of GAR is appropriate for the business. The company operates a global controls assurance programme for

financial reporting controls in each market and function, which monitors compliance with and effective operation of the company’s

controls framework. The Audit Committee receives regular reports on the status of the controls assurance plan, actions taken to

enhance controls design and effectiveness, awareness training provided to employees, testing results and trends analysis derived from

the company’s integrated risk management system. The Committee also reviewed and approved changes to the principal risk

descriptions and risk footprint, as well as receiving regular presentations and reviews of the status of its principal and emerging risks.

This year, these reviews have covered areas including business ethics and integrity, human rights, anti-counterfeit, geo-political

volatility and business interruption, business transformation, stock in trade, cyber security and IT resilience, climate change and

sustainability, and international taxation. A new principal risk in relation to strategic business transformation was identified this year.

Business Integrity programmes

Diageo is committed to conducting its business responsibly and in accordance with all laws and regulations to which it's business activities are

subject. We hold ourselves to the principles in our Code of Business Conduct, which is embedded through a comprehensive training and

education programme for all employees. Our employees are expected to act in accordance with our values, the Code of Business Conduct and

in compliance with applicable laws and regulations. The Audit Committee monitors compliance with the company’s ethical standards through

the Business Integrity framework, which helps enhance and protect all aspects of the company’s business. Regular reports are provided to the

Audit Committee by the Chief Business Integrity Officer on progress in providing guidance, training and tools for all levels in the business,

completion rates

for training modules, launch and rollout of new programmes or policies, monitoring use of whistleblowing mechanisms and investigating

allegations of breaches.

Our Code of Business Conduct, available in 19 languages, sets out what Diageo stands for as a company and how Diageo operates,

enabling all employees to understand what is required of them in working for Diageo. Annual training on the Code of Business

Conduct and associated policies is mandatory for all managers and their direct reports globally, encompassing over 24,000 eligible

employees during the year ended 30 June 2024. Training is delivered in an easily accessible e-learning format, with classroom training

delivered to those employees who do not have regular access to a computer. The Code of Business Conduct and other global policies

are available at https://www.diageo.com/en/our-business/corporate-governance.

Third-party risk is also managed through our Know Your Business Partner programme, which is designed to help the company

evaluate the risk of doing business with a third party before entering and during a contractual relationship. Business partners are

assessed for potential risks including economic sanctions, bribery and corruption, money laundering, facilitation of tax evasion, data

privacy, human rights and other reputational issues.

Employees and third-party business partners are encouraged to raise concerns about potential breaches of the Code of Business

Conduct or policies, either to line managers, legal or HR colleagues, risk, compliance and Business Integrity teams or to SpeakUp, a

confidential whistleblowing mechanism. SpeakUp is a global service administered by an independent provider, accessible online or by

telephone. Where legally permitted, it can be used anonymously and reports kept confidential. Allegations are investigated by

independent Diageo teams, with progress being monitored by the Business Integrity team. When allegations are substantiated,

appropriate disciplinary and corrective actions are taken. The Audit Committee receives and reviews regular reports on allegations,

including trends information, root cause analysis and investigation closure rates. Since all of Diageo's Non-Executive Directors attend

the Audit Committee, all Non-Executive Directors who make up the Board routinely review the findings of the company's

whistleblowing processes in accordance with the UK Corporate Governance Code.

During the year ended 30 June 2024, 759 allegations of breaches were reported which is an increase on prior years. The substantiation

rate of allegations confirmed as breaches is 34% (versus 33% in fiscal 23). As of the end of fiscal 24, 70 people exited the business as

a result of breaches of our Code of Business Conduct or policies (fiscal 23: 57 people). The number of leavers for fiscal 23 has been

restated due to a number of open cases from fiscal 23 being concluded this year. At the end of fiscal 24, we had 223 open cases, which

may lead to more people exiting the business. See below a summary of reported and substantiated breaches over the past three years.

Governance (continued)

182

Reported and substantiated breaches

2022

2023

2024


ò	Reported
ò	Reported through SpeakUp
ò	Substantiated breaches
ò	Code-related leavers

Senior financial officers’ code of ethics and dealing code

In accordance with the requirements of SOX and related SEC rules, Diageo has adopted a code of ethics covering its Chief Executive,

Chief Financial Officer, and other senior financial officers. During the year, no waivers were granted in respect of this code of ethics.

The full text of the code of ethics is available at https://www.diageo.com/en/our-business/corporate-governance/compliance. Both the

Audit & Risk Committee and the Audit Committee regularly review the strategy and operation of the Business Integrity programme

through the year.

The company has also adopted a dealing code setting out requirements in relation to dealings in Diageo securities by Directors,

Executive Committee members and certain other employees, which is designed to ensure compliance with applicable insider trading

and market abuse regulations, in particular the UK Market Abuse Regulation.

'Financial expert', recent and relevant financial experience

The Board has satisfied itself that the membership of the Audit Committee includes at least one Director with recent and relevant

financial experience and has competence in accounting and/or auditing and in the sector which the company operates, and that all

members are financially literate and have experience of corporate financial matters. For the purposes of the Code and the relevant rule

under SOX, Section 407, the Board has determined that Alan Stewart is independent and may be regarded as an Audit Committee

financial expert, having recent and relevant financial experience, and that all members of the Audit Committee are independent Non-

Executive Directors with relevant financial and sectoral competence. See pages 154-155 for details of relevant experience of

Directors.

Governance (continued)

183

Committee activities

Details of the main areas of focus of the Audit Committee during the year include those summarised below:


Areas of focus		Strategic outcome
Corporate reporting	•Half and full year external reporting updates •Interim and preliminary results review and approval •Annual Report and consolidated financial statements, Form 20-F review and approval •Implications of group functional and presentation currency change on reporting
Internal controls	•GAR updates •Business Integrity updates including breach and reporting update •Controls testing update and Section 404 assessment •Implications on controls environment of systems and process changes •Business transformation projects monitoring •Inventory and stock in trade monitoring controls review and enhancements
External audit and assurance	•Report on external audit at half and full year periods •Insights and observations on reporting review •Auditor independence and non-audit work reviews •Auditor independence policy review •Review of management representation letters •Appointment of auditor and review of terms of engagement and fees •Auditor performance and effectiveness review and assessment •Commencement of auditor tender process •Audit regime reform and approach to assurance
Risk management	•Principal and emerging risk reviews and tracking •Risk updates, including group risk footprint and risk appetite review and approvals •Business ethics and integrity, human rights, anti-counterfeit, geo- political volatility and business interruption, business transformation, stock in trade, cyber security and IT resilience, climate change and sustainability, and international taxation risk reviews


Key
Strategic outcomes
	Efficient growth	Credibility and trust	Consistent value creation	Engaged people

Governance (continued)

184

Management’s report on internal control over financial reporting

Management, under the supervision of the Chief Executive and Chief Financial Officer, is responsible for establishing and maintaining

adequate internal control over the group’s financial reporting.

Diageo’s internal control over financial reporting includes policies and procedures that: pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions

are recorded as necessary to permit the preparation of financial statements in accordance with IFRS as issued by the International

Accounting Standards Board (IASB), IFRS Accounting Standards adopted by the UK; provide reasonable assurance that receipts and

expenditures are made only in accordance with authorisation of management and the directors of the company; and provide reasonable

assurance regarding prevention or timely detection of any unauthorised acquisition, use or disposition of assets that could have a

material effect on the consolidated financial statements.

Management has assessed the effectiveness of Diageo’s internal control over financial reporting (as defined in Rules 13(a)-13(f) and

15(d)-15(f) under the United States Securities Exchange Act of 1934) based on the framework in the document ‘Internal Control –

Integrated Framework’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based

on this assessment, management concluded that, as at 30 June 2024, internal control over financial reporting was effective.

Any internal control framework, no matter how well designed, has inherent limitations, including the possibility of human error and

the circumvention or overriding of controls and procedures and may not prevent or detect misstatements. Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions or because the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, who also audit the group’s consolidated financial

statements, has audited the effectiveness of the group’s internal control over financial reporting as of June 30, 2024, and has issued an

unqualified report thereon, which is included on pages 230 to 232 of this document.

Changes in internal control over financial reporting

During the period covered by this report, there were no changes in internal control over financial reporting that have materially

affected or are reasonably likely to materially affect the effectiveness of internal control over financial reporting.

Directors’ responsibilities in respect of the Annual Report and financial statements

The Directors are responsible for preparing the Annual Report, the information filed with the SEC on Form 20-F and the group and

parent company financial statements in accordance with applicable law and regulations.

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185

Significant issues and judgements

Significant issues and judgements that were considered in respect of the 2024 financial statements are set out below. Our consideration

of issues included discussion of the key audit matters as outlined in the appendix to the independent auditors’ report.


Matter considered		How the Audit Committee addressed the matter
The nature and size of any one-off items impacting the quality of the earnings and cash flows.		The Audit Committee assessed whether the related presentation and disclosure of those items in the financial statements were appropriate based on management’s analysis, and concluded that they were.
Items that were to be presented as exceptional. Refer to note 3 of the Financial Statements.		The Audit Committee assessed whether the reporting of those items as exceptional, was in line with the group’s accounting policy, and that sufficient disclosure was provided in the financial statements, and concluded that they were.
Whether the carrying value of assets, in particular intangible assets, was supportable. Refer to notes 6, 9, 10 and 13 of the Financial Statements.		The Audit Committee reviewed the methodology applied in conducting impairment reviews and the result of management's impairment assessments that were performed during the year. The Committee was provided with information about the carrying amounts and the key assumptions incorporated in management’s estimate of discounted cash flows of significant assets that are sensitive to key assumptions. The Committee reviewed the key assumptions used in the impairment testing, including management’s cash flow forecasts, growth rates and the discount rate used in value in use calculations and agreed they were appropriate. The Committee agreed with management’s judgements and conclusions, whereby the previous impairment charge of $379 million in respect of Shui Jing Fang brand has been reversed, while Chase brand and related goodwill and fixed assets, certain brands in the US ready to drink portfolio, and some smaller other brands and investments in associates have been impaired by $170 million in the year ended 30 June 2024, out of which $155 million was reported as exceptional operating charge. The Committee agreed that the recoverable amount of the company’s other assets was in excess of their carrying value and that appropriate disclosure was provided with respect to assets impaired, and whose value is more sensitive to changes in assumptions.
The group’s more significant tax exposures and the appropriateness of any related provisions and financial statement disclosures. Refer to page 134 of 'Risk factors' and note 7 of the Financial Statements.		The Audit Committee agreed that disclosure of tax risk appropriately addresses the significant change in the international tax environment, and that appropriate provisions and other disclosure with respect to uncertain tax positions were reflected in the financial statements.
The appropriateness of the valuation of post-employment liabilities, and the recognition of any surplus. Refer to note 14 of the Financial Statements.		The measurement of post-employment liabilities is sensitive to changes in long-term interest rates, inflation and mortality assumptions. Having reviewed management’s papers setting out key changes to actuarial assumptions, the Audit Committee agreed that the assumptions used in the valuation are appropriate. The Committee reviewed management’s assessment of the economic benefit available as a refund of the surplus or as a reduction of contribution and the key judgements made in respect of the surplus restriction and concluded that those judgements were appropriate. The Committee reviewed and concluded that sufficient disclosures were provided in the financial statements.
Significant legal matters impacting the group. Refer to note 19 of the Financial Statements.		The Committee agreed that adequate provision and/or disclosure have been made for all material litigation and disputes, based on the current most likely outcomes, including the litigation summarised in note 19 of the Financial Statements.
Functional currency of Diageo plc and presentation currency of Diageo group.		The Audit Committee agreed that in line with reporting requirements the functional currency of Diageo plc has changed from sterling to US dollar which is applied prospectively from fiscal 24. This is because the group's share of net sales and expenses in the US and other countries whose currencies correlate closely with the US dollar has been increasing over the years, and that trend is expected to continue in line with the group's strategic focus. Diageo has also decided to change its presentation currency to US dollar with effect from 1 July 2023, applied retrospectively, as it believes that this change will provide better alignment of the reporting of performance with its business exposures.
Whether the Annual Report is fair, balanced and understandable.		The Audit Committee concluded that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy and that there is an appropriate balance between statutory (GAAP) and adjusted (non-GAAP) measures.
The impact of climate change on the group’s financial reporting and financial statements. Refer to pages 113-131 of 'Pioneer grain-to-glass sustainability' and note 1 and note 9 of the Financial Statements.		The Audit Committee agreed that the disclosures on pages 113-131 made in response to the recommendations of the Task Force on Climate-related Financial Disclosures are appropriate and that the assumptions used in the financial statements are consistent with these disclosures.

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Cyber Security Risk Management

Cyber security risk management is an integral part of Diageo’s overall group risk management programme and aligned to Diageo’s

risk management framework, with cyber security risk forming a central part of the principal risk ‘Cyber and IT resilience’ as set out

on page 140. Our cyber security risk management programme is aligned to industry best practices and provides a framework for

handling cyber security threats and incidents across the global organisation, including threats and incidents associated with the use

of IT applications and services provided by IT and non-IT third parties. Our programme is designed to work across all Diageo

functions, markets, and entities. This framework includes steps for assessing the severity of a cyber security threat, identifying the

source of a cyber security threat including whether the cyber security threat is associated with a third-party service provider,

implementing cyber security countermeasures and mitigation strategies and informing management and our Board of material cyber

security threats and incidents. Our cyber security team also engages third-party security experts for industry benchmarking analysis,

risk assessments and conducting system enhancements and support when necessary. Our cyber security team is responsible for

assessing our cyber security risk management programme and we engage third parties for such assessments approximately every

one to two years. In addition, our cyber security processes includes a training and awareness outreach programme that provides

training to all employees annually and more frequent targeted training across functions, markets, and entities.

The Board has overall responsibility for our risk management, including in respect of cyber security, oversight of which has been

delegated to the Audit Committee. The Audit Committee is responsible for ensuring that management has processes in place

designed to identify and evaluate cyber security risks to which the company is exposed and implement processes and programmes

to manage cyber security risks and mitigate cyber security incidents. The Audit Committee also reports material cyber security risks

to the Board. Management is responsible for identifying, considering and assessing material cyber security risks on an ongoing

basis, establishing processes to ensure that such potential cyber security risk exposures are monitored, putting in place appropriate

mitigation measures and maintaining cyber security programmes. Our cyber security programmes are under the direction of our

Chief Information Security Officer (CISO) who receives reports from our cyber security team and monitors the prevention,

detection, mitigation, and remediation of cyber security incidents. Our CISO and dedicated personnel are certified and experienced

information systems security professionals and information security managers with many years of relevant industry experience and

accredited certifications. Management, including the CISO and our cyber security team, regularly update the Audit Committee on

the company’s cyber security programmes, material cyber security risks and mitigation strategies and provide cyber security reports

on a half-yearly basis that cover, among other topics, assessments of the company’s cyber security programmes, developments in

cyber security and updates to the company’s cyber security programmes, security risk footprint with risk appetite, and mitigation

strategies.

During fiscal 24, we did not identify any cyber security threats that have materially affected or are reasonably likely to materially

affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks

from cyber security threats, or provide assurances that we have not experienced an undetected cyber security incident. For more

information about these risks, please see the section on ‘Our Principal Risks and Risk Management’ on pages 134-144.

Governance (continued)

187

NOMINATION COMMITTEE REPORT

Building our talent for the future

Dear Shareholder

I am pleased to provide the report of the Nomination Committee for the year ended

30 June 2024.

The Nomination Committee has had an active year, discharging its responsibilities to ensure adequate succession planning for Board

appointments, including the maintenance of a pipeline of strong candidates for potential nomination to the Board, and supervising

transitions for new appointments. This year the Committee has spent significant time looking towards the future, building on strong

foundations as Diageo continues to develop and grow its business. The Committee has supervised the transition of key roles such as

the Board Chair, the Audit Committee Chair and the Chief Financial Officer.

I look forward to welcoming Julie Brown and Nik Jhangiani to the Board in the near future, thanking Alan Stewart and Lavanya

Chandrashekar for their years of service. As I will also be standing down in February 2025, being in my ninth year on the Board

following which date I will no longer be deemed to be independent under the UK Corporate Governance Code. I congratulate Sir John

Manzoni on his appointment.

This year the Committee also managed the evaluation of the effectiveness of the Board, its Committees, members and processes.

As required by the Code, the evaluation was facilitated by an

external consultancy firm which had been selected by the

Committee following a tender process. Further details, including

the review’s conclusions, recommendations and actions as agreed

by the Board, are set out on pages 171-172.

The Committee has continued to discharge its role in overseeing the company's talent planning and succession for Executive

Committee members. Sally Grimes was appointed Chief Executive Officer, Diageo North America in October 2023 and John Kennedy

was welcomed back to Diageo in January 2024 when he was appointed President, Europe.

With these Board and Executive Committee changes, I am confident that Diageo has the leadership required for it to continue its

progress towards fulfilling its growth ambition and to create value for its shareholders and other stakeholders.

Javier Ferrán

Chair of the Nomination Committee

Role and composition of the Nomination Committee

The Nomination Committee is responsible for keeping under review the composition of the Board and succession to it, reviewing

succession planning for key Executive Committee roles, and succession planning and overall talent strategy for senior leadership

positions, including in relation to ensuring and encouraging diversity in leadership positions. It makes recommendations to the Board

concerning appointments to the Board. More details on the role of the Nomination Committee are set out in its terms of reference

which are available at

https://www.diageo.com/en/our-business/corporate-governance.

The Nomination Committee comprises Javier Ferrán (Committee Chair), Melissa Bethell, Karen Blackett, Valérie Chapoulaud-

Floquet, Susan Kilsby, Sir John Manzoni, Alan Stewart and Ireena Vittal.

Succession planning

The Committee reviews the effectiveness and adequacy of succession planning processes and the succession plans for both the Board

and Executive Committee. Succession plans are tailored for key roles, based on merit and objective criteria, and designed to ensure

inclusion and diversity. Consideration is given to the length of tenure of each incumbent with the aim prospectively to anticipate

potential changes to the Board or Executive Committee and address vacancies proactively enabling smooth succession. The Board

should comprise a majority of independent Non-Executive Directors, free of conflicts of interest, and with sufficient time to discharge

their duties as Board members. The Board has a long-standing commitment to diversity, believing that a diverse Board enables a broad

range of views to be expressed, enhancing decision-making for the benefit of the long-term interests of the company and its

stakeholders. The composition and capabilities of the Board should be appropriate and reflective of Diageo’s global scale, business

and operations, its strategy, portfolio, consumer base, culture and status as a listed company. Directors should have sufficient

understanding of the company and its operations, the markets and industry in which it participates, to understand the key trends and

developments which are relevant for Diageo.

Recruitment and election procedures

The recruitment process for Non-Executive Directors includes the development of a candidate profile and the engagement of a

professional search agency specialising in the recruitment of high-calibre candidates. During the year, we have engaged executive

search companies Russell Reynolds Associates to assist with recruitment of candidates for the role of Board Chair and Egon Zehnder

to assist with recruitment of candidates for the roles of Audit Committee Chair and Chief Financial Officer. Neither of these firms

Governance (continued)

188

have any other connection with the company except that Ireena Vittal, a Non-Executive Director, is a member of the advisory board of

Russell Reynolds Associates, although she did not hold this role at the time that Diageo engaged Russell Reynolds Associates.

In the case of Executive Director or Executive Committee appointments, an executive leadership assessment may be carried out by an

external professional agency. Reports on potential appointees are provided to the Committee, which, after careful consideration, makes

a recommendation to the Board. In determining its recommendations, the Committee has regard to a broad range of factors including

the candidate's background, skill set and experience, their ability to express independent judgement and participate across a broad

range of topics, including on sustainability and societal matters, their ability to devote sufficient time to the company and whether their

appointment would contribute towards the Board’s diversity objectives which are set out in the Board Diversity Policy. This policy,

which applies to the Board and its Committees, reflects the Board's belief that it is critical that Board membership includes a diverse

range of skills, professional and industry backgrounds, geographical experience and expertise, gender, tenure, ethnicity and diversity

of thought.

Any new Directors are appointed by the Board and, in accordance with the company’s articles of association, they must be elected at

the next AGM to continue in office. All existing Directors retire by rotation and stand for re-election every year. The company’s

policy is for all Directors to attend the AGM, either physically or by video conference as permitted by the company's articles of

association. Details of attendance of all Board and Committee meetings by Directors are set out on page 150. The 2024 AGM is

scheduled to be held on 26 September 2024.

External appointments

While the Board does not have a written policy as regards the maximum number of other appointments that Directors should have,

before recommending new appointments to the Board, the Nomination Committee considers other demands on candidates’ time. As a

general principle, the Committee takes the view that Non-Executive Directors should have no more than four, and Executive Directors

no more than one, listed mandates in addition to their role as a director of the company. However, each director's situation is

considered individually. For example, when she joins the Board, Julie Brown will not also be a member of the Remuneration

Committee or the Nomination Committee, due to her other commitments. Once appointed, any proposed additional external

appointments are also reviewed by the Nomination Committee to ensure that the additional demands on a Director’s time will not

impact on the Director’s ability to perform his or her role as a Director of the company before the additional appointment is

recommended for approval by the Board. Directors’ interests are reviewed and updated at each Board meeting. The Board has

concluded that each Non-Executive Director has sufficient time to discharge their duties as a director of the company, taking into

consideration their external appointments and commitments.

Board Chair succession

The Nomination Committee plays a key role in overseeing Board level changes, considering potential candidates and making

recommendations on appointments to the Board. During fiscal 24, Diageo announced a number of changes in Diageo's Board

membership which will take effect over the coming months including, in particular, a future change in the Board Chair.

As the current Board Chair is approaching the maximum tenure that the Code deems appropriate for a director to be considered to be

independent, during fiscal 23 the Nomination Committee commenced a succession planning process to enable a smooth transition over

a reasonable timeframe. The process was led by the Nomination Committee, chaired by the Senior Independent Director and supported

by the Chief HR Officer, with the current Board Chair and any existing Directors who were potential candidates for the role recusing

themselves from the process and from participation in discussions on Chair succession during Board and Committee sessions. Clear

criteria for successful candidates were developed which included key requirements and priorities including in respect of background and

experience, attributes and behaviour, within the context of the culture, strategy and leadership needed for the Board and company. These

were discussed and approved by the Nomination Committee and used to identify potential candidates. During the first half of fiscal 24, a

variety of candidates were considered and interviewed by members of the Nomination Committee.

In March 2024, the Nomination Committee recommended to the Board that Sir John Manzoni was the most suitable candidate to

succeed Javier Ferrán as Board Chair. The Board approved this recommendation and on 19 March 2024 announced the transition with

Javier Ferrán continuing as Chair of the Board until his retirement in February 2025, at which point Sir John will succeed him. In

addition to Sir John's long-standing experience in beverage alcohol, having served on the board of SABMiller plc for eleven years and

having been a member of the Diageo Board since 2020, he has an outstanding track record of leadership across a number of complex

and fast-changing sectors in the UK and globally.

Set out below are the principal steps taken in relation to the Board Chair succession and transition process:

During fiscal 23:

•In April 2023, the Nomination Committee authorised the Senior Independent Director to engage an external professional

executive search agency.

•Russell Reynolds Associates (which, at the time of engagement, had no connection with the company other than acting as an

executive search agency) was engaged to assist with the succession process.

•Key criteria for potential candidates, set out in a success profile, were reviewed and discussed by the Nomination Committee.

During fiscal 24:

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189

•Various external candidates were considered and shortlisted for review by members of the Nomination Committee, together

with internal candidates, as against the success profile

•The Nomination Committee recommended that the Board approve the appointment of Sir John Manzoni as Diageo's next

Chair, and the Remuneration Committee approved remuneration arrangements for the role. The Board then unanimously

approved the appointment and a regulatory announcement was released on 19 March 2024.

•Following release of the regulatory announcement, Sir John has been undertaking a transition programme to familiarise

himself with the role of Chair and to prepare for transitioning into the role in February 2025.

Activities of the Nomination Committee

The principal activities of the Nomination Committee during the year were:

•the consideration, selection and recommendation as to the appointment of and transition plan for a new Chief Financial Officer;

•the consideration, selection and recommendation as to the appointment of and transition plan for a new Chair of the Board;

•the consideration of the talent pipeline for potential new Non-Executive Directors and other appointments to the Board, including a

new Chair of the Audit Committee;

•the design and conduct of the annual review of Board, Committee and individual Director effectiveness and performance and a

review of the findings of the review and recommended actions;

•consideration and approval of the report of the Committee in the company’s Annual Report and consolidated financial statements for

the year ended 30 June 2024;

•consideration and recommendation to the Board of proposed changes in Directors’ outside interests and any potential conflicts of

interest; and

•a review of the succession plans for Executive Committee roles, including potential candidates for such roles, their backgrounds and

experience, and how such candidates would contribute towards the company's diversity objectives.

Board evaluation

As part of the annual Board evaluation, all members of the Nomination Committee participated in an evaluation of the Committee.

Feedback indicated that the Committee was effective and that Directors were satisfied with its performance, that it had managed the

Chief Executive succession during the year well and that its processes were robust, transparent and effective. Further details of the

evaluation can be found on page 171-172.

Induction and training

Our customary induction processes for newly appointed Directors include individual meetings with Executive Committee members

and other senior executives, visits to the company’s production facilities and offices including the company's head office in London

and the group's spirits production facilities, scotch brand homes, visitor centres and archives in Scotland. This is supplemented by

documents, materials and information, including corporate governance guidance materials, Diageo's Code of Business Conduct and

other relevant policy documents, historical Board and Committee papers, recent results announcements and materials, investor

relations reports, performance data and a wide range of other internal and external reports, presentations and analyses.

Induction programmes for new Directors are tailored to suit the particular background and experience of the individual Director, with

the Committee advising on priorities for that individual and tracking induction activity. These induction processes supplement existing

practices whereby a continuing understanding of the business is developed through appropriate business engagements for Non-

Executive Directors such as visits to customers, engagements with employees, and brand events worked into the annual cycle of Board

meetings. Training on specific areas of risk and detailed reviews of strategic matters are provided by Executive Committee members,

other internal senior leaders and external guest speakers and specialists through presentations, roundtable discussions and other

sessions as part of the Board’s Annual Strategy Conference and during the year as part of Board and Audit Committee meetings. In

addition, Executive Committee members and other senior executives are invited, as appropriate, to Board and strategy meetings to

make presentations on their areas of responsibility. All Directors are also provided with regular briefings to ensure they are kept up to

date on relevant legal and governance developments or changes, best practice developments and changing commercial and other risks.

Diversity

The Board has a long-standing commitment to prioritise diversity and supports the recommendations of the FTSE Women Leaders

Review (previously the Hampton-Alexander Review) on gender diversity and the Parker Review on ethnic diversity. The Board seeks

to promote inclusion and diversity by objectively considering candidates for Board and Executive Committee roles on the basis of

their skill set, experience, expertise, knowledge, gender, cultural and geographical backgrounds, ethnicity and age. The Board

Diversity Policy sets out specific objectives with parity between male and female members of the Board being the ultimate goal in

terms of gender diversity, with a commitment to have no less than 40% female representation on the Board, and having at least one

Director reflecting ethnic diversity as defined in accordance with the Parker Review. The Committee is pleased to confirm that both

these objectives have currently been met. The Board Diversity Policy also sets out the Board’s support for management’s actions to

increase the proportion of senior leadership roles held by women and by people from minority backgrounds and other under-

represented groups. As at 30 June 2024, the percentage of women on the Executive Committee and their direct reports is 47%.

Governance (continued)

190

Board and Executive Committee reporting on gender identity or sex


	Number of Board members	Percentage of the Board	Number of senior positions on the Board (CEO, CFO, SID and Chair)	Number in executive management	Percentage of executive management
Men	3	30.0%	1	7	54.0%
Women	7	70.0%	3	6	46.0%
Not specified/prefer not to say	—	—	—	—	—

Board and Executive Committee reporting on ethnic background


	Number of Board members	Percentage of the Board	Number of senior positions on the Board (CEO, CFO, SID and Chair)	Number in executive management	Percentage of executive management
White British or other White (including minority-white groups)	6	60.0%	3	7	53.8%
Mixed/Multiple Ethnic Groups	—	—	—	1	7.7%
Asian/Asian British	3	30.0%	1	3	23.1%
Black/African/Caribbean/Black British	1	10.0%	—	1	7.7%
Other ethnic group, including Arab	—	—	—	1	7.7%
Not specified/prefer not to say	—	—	—	—	—


Board composition		Non-Executive Director tenure		Board gender diversity		Board ethnic diversity


ò	Chair	ò	0 – 3 years	ò	Male	ò	Directors of colour
ò	Executive Director	ò	3 – 6 years	ò	Female	ò	White European
ò	Non-Executive Director	ò	6 – 9 years

Executive committee nationality


ò	British	ò	Indian
ò	American	ò	Irish
ò	American/British	ò	South African/British
ò	Colombian	ò	Spanish

Board diversity data

•Directors are defined as all Non-Executive and Executive Directors appointed to the Board. Board diversity related data are

collated directly from each Director annually using a questionnaire and are given on a self-identifying basis.

•Directors of colour are defined in accordance with the Parker Review definitions as those 'who identify as or have evident

heritage from African, Asian, Middle Eastern, Central and South American regions'.

•All Board diversity data above are given as at 30 June 2024.

Governance (continued)

191

Annual statement by the Chair of the Remuneration Committee

Dear Shareholder

I am pleased to present the Directors' remuneration report for the year ended 30 June 2024, which contains:

◦The current Directors' remuneration policy, which was approved at the AGM on 28 September 2023; and

◦The annual remuneration report, describing how the Remuneration Policy has been put into practice in 2024 and will be

implemented in 2025.

This is the first year of operation of the new remuneration policy and the new Diageo Long-Term Incentive Plan (DLTIP)

approved last year. On behalf of the Committee I would like to express my thanks to shareholders for their overwhelming support

with 95.4% of the AGM votes cast in favour of the new Policy.

CFO transition

On 3 May 2024, we announced that Lavanya Chandrashekar will step down from the role of Chief Financial Officer (CFO) in

fiscal 25 and leave Diageo, and that Nik Jhangiani will become the new CFO. Lavanya’s remuneration arrangements, which

confirm the Committee exercised its discretion to treat her as a good leaver for the purposes of incentives, are set out on page 219

and Nik’s remuneration arrangements are disclosed in the 'Looking Ahead to 2025' section of this report (page 222). In addition to

his annual remuneration, Nik will receive compensation for incentive plan awards forfeited from his previous employer. Full

details of the one-off compensation awards will be disclosed at the time they are confirmed and will be reported in next year's

report. Both sets of arrangements are in accordance with the Remuneration Policy.

Performance in year

Fiscal 24 was a challenging year for Diageo and despite macroeconomic and geopolitical headwinds, we delivered strong full-year

cash flow and improved market share. Against rapid fluctuations in our industry, we focused on the key drivers of operational

excellence, developing insights into consumers, resource allocation, routes to market and driving efficiencies in our business that

will set us up to take advantage of the next stage of growth.

During the year, the company maintained its position as a global leader in spirits and demonstrated its capabilities as one of the

world's best brand builders. Our advantaged portfolio which is balanced across geographies and price tiers enables us to both

premiumise and attract new consumers.

Organic net sales and organic operating profit declined during fiscal 24, primarily driven by our Latin American business

performance. We delivered $0.7 billion in productivity savings across all cost categories, gained or held share in over 75% of our

net sales value in measured markets and generated free cash flow of $2.6 billion.

Non-financial measures are a critical indicator for building a platform for future sustainable growth and we are pleased that we

have demonstrated progress in the measures that are aligned with our ’Spirit of Progress’ action plan. These included a greenhouse

gas emission reduction of 23.8% and water efficiency improvement of 15.6%, both compared to fiscal 20 baseline and strong

performance in the diversity of our global leadership, maintaining female representation at 44% and increasing ethnically diverse

leadership to 46%.

Incentive outcomes

Achieving our ambition to be the best performing, most trusted and respected consumer products company in the world requires the

appropriate balance of annual and long-term incentive measures and a process to ensure that targets that are set are challenging but

achievable and aligned to shareholders' interests.

In determining the annual and long-term incentive outcomes, the Committee reviews not only the outcomes against the performance

metrics in the plans, but also considers Diageo's wider business performance including market share performance, financial

performance relative to our TSR peer group, and other financial and non-financial measures. The Committee also considers the impact

on Diageo's stakeholders more broadly.

Annual incentive

The annual incentive plan (AIP) outcomes for 2024 relating to net sales value (NSV) and operating profit (OP) were below threshold

and operating cash conversion (OCC) was close to target which led to a payment of 16% of maximum on financials. Further detail is

provided on page 207. The Committee considered this outcome against the business performance and concluded that the design of the

AIP worked effectively in aligning reward and performance and the outcome was fair.

The AIP also includes individual bonus objectives (IBOs) and the outcomes for the Executive Directors are set out in more detail on

page 207. As a result of the financial and individual performance for fiscal 24, Debra Crew received 24.8% of maximum and Lavanya

Chandrashekar received 22.8% of maximum.

Long-term incentives

Governance (continued)

192

In terms of the DLTIP vesting outcomes for the three-year performance period ending 30 June 2024, an exceptional level of delivery

in the early part of the three-year period resulted in an achievement of 8.7% compound annual growth in NSV and therefore a vesting

of 94% of maximum. The compound annual growth in profit before exceptional items and tax (PBET) was 6.9% which resulted in a

vesting of 24% of maximum. Free cash flow (FCF) was $9,798 million and total shareholder return (TSR) ranked 14th in our peer

group and both were below threshold of the range.

The 2021 performance share awards also included metrics which were in support of our ’Spirit of Progress’ action plan. The four

metrics measure an increase in water efficiency, reduction in carbon emissions, promotion of positive drinking and building diversity

representation in leadership. Demanding three-year targets were established for our goals in this area and the achievement across all of

these resulted in a 46% level of vesting for these non-financial measures. The detail of the performance against these metrics is set out

on page 210 and more information on the 'Spirit of Progress' action plan is at pages 97-131.

Overall this resulted in a final vesting outcome of 58.9% of maximum for the 2021 performance share award for the CEO and 56.5%

for the CFO. The share option awards will not vest for either Director.

The Committee believes that the DLTIP drove the desired behaviours to support the company’s values and strategy and that the

Directors’ remuneration policy has operated as intended in 2024. The Committee will continue to make sure the metrics and structure

of the DLTIP are appropriate in the future as the business continues to evolve.

Looking forward to 2025

The 1 October 2024 salary increase proposed for Debra Crew is 4.25% which is slightly below the expected average salary

increase budget for the wider workforce in the United Kingdom. The salary for the newly appointed CFO will next be reviewed on

1 October 2025.

The structure and performance measures for both the annual and long-term incentives remain unchanged for fiscal 25 for

Executive Directors. The annual incentive plan will continue to include NSV, OP and OCC with relevant strategic IBOs for the

Executive Directors.

The long-term incentive plan measures continue to drive the key drivers of sustainable business performance and remain

unchanged with a combination of financial metrics (NSV and PBET growth, cumulative FCF and relative TSR) and non-financial

metrics related to our 'Spirit of Progress' action plan. The Committee set fiscal 25 financial targets by considering a number of

factors including historical performance, consumer trends amid ongoing macroeconomic challenges, market conditions and the

competitive landscape. These targets align with our focus on achieving our medium-term guidance ranges.

In summary

Diageo's resilient performance despite a challenging consumer environment is reflected in the incentive outcomes and the decisions

that the Committee has made. The outcomes are in line with the company’s philosophy of delivering competitive pay in return for high

performance against the company’s strategic objectives.

The Committee recognises that a key enabler of the strategy is the company’s ability to attract and retain diverse and engaged talent

with a focus on our culture and values. To achieve this, we must ensure that remuneration structures remain competitive at all levels.

Diageo is a global business with global and local market leading brands and we therefore compete for talent in a global marketplace.

The topic of retention of high calibre talent at all levels is one that is regularly considered by the Committee.

During 2025 Javier Ferrán will retire as Chair and we welcome Sir John Manzoni as his successor. It has been a pleasure to work with

Javier and I wish to personally thank him for his wise counsel and leadership of the Board. Alongside a new Chair, we will also see a

transition in CFO as I noted at the start of my statement, and I extend my thanks to Lavanya for her hard work and support to the

Committee and look forward to working with Nik in the coming months.

On behalf of the Committee I would like to thank all our investors, employees and stakeholders for their continued support and I ask

that shareholders vote to approve this report at the AGM on 26 September 2024.

Susan Kilsby

Non-Executive Director and Chair of the Remuneration Committee

Remuneration principles

The approach to setting executive remuneration continues to be guided by the remuneration principles set out below. The Committee

considers these principles carefully when making decisions on executive remuneration in order to strike the right balance between risk

and reward, cost and sustainability, and competitiveness and fairness.

The company has a strategy to grow and leverage its leaders globally given the international nature of the business. We also need to have

the right tools in place to source talent globally and the increasingly restrictive corporate governance environment in the United Kingdom

presents some challenges when considered against the significantly higher pay norms in the United States and other parts of the world,

particularly given the increasing international mobility of the senior talent pool.

Long-term value creation for shareholders and pay for performance remains at the heart of our remuneration policy and practices.

Attracting and nurturing a vibrant mix of international talent with a range of backgrounds, skills and capabilities enables Diageo

to grow and thrive, and ultimately to deliver our Growth Ambition. Remuneration remains a key part of attracting and retaining

the best people to lead our global business, balanced against the need to ensure our packages are appropriate and fair in the

Governance (continued)

193

business and wider employee context, delivering market-competitive pay in return for high performance against the company’s

strategic objectives.


	Delivery of business strategy
	Short and long-term incentive plans reward the delivery of our business strategy and Growth Ambition. Performance measures are reviewed regularly and stretching targets are set relative to the company’s growth plans and peer group forecasted performance. The Committee seeks to embed simplicity and transparency in the design and delivery of executive reward.
	Creating sustainable, long-term performance
	A significant proportion of remuneration is delivered in variable pay linked to business and individual performance, focused on consistent and responsible drivers of long-term growth. Performance against targets is assessed in the context of underlying business performance and the ‘quality of earnings’.
	Winning best talent
	Well designed and market-competitive total remuneration, with an appropriate balance of fixed reward and upside opportunity, allows us to attract and retain the best talent from all over the world in a competitive talent market, which is critical to our continued business success.
	Consideration of stakeholder interests
	Executives are focused on creating sustainable share price growth. The requirement to build significant personal shareholdings in Diageo, and to hold shares acquired from long-term incentive awards for two years post-vesting aligns executives and shareholders. Decisions on executive remuneration are made with consideration of the interests of the wider workforce and other stakeholders, as well as the external climate.

Governance (continued)

194


Remuneration at a glance
	Salary	Allowances and benefits	Annual incentive	Long-term incentives	Shareholding requirement
Purpose	•Supports the attraction and retention of the best global talent with the capability to deliver Diageo’s strategy	•Provision of market-competitive and cost-effective benefits supports attraction and retention of talent	•Incentivises delivery of Diageo’s financial and strategic targets •Provides focus on key financial metrics and the individual’s contribution to the company’s performance	•Rewards consistent long-term performance in line with Diageo’s business strategy •Provides focus on delivering superior long-term returns to shareholders	•Ensures alignment between the interests of Executive Directors and shareholders
Key features of current policy	•Normally reviewed annually on 1 October •Salaries take account of external market and internal employee context	•Provision of competitive benefits linked to local market practice •Maximum company pension contribution is 14% of salary, which is aligned to the offering for the wider workforce in the United Kingdom	•Target opportunity is 100% of salary and maximum is 200% of salary •Performance measures, weightings and stretching targets are set by the Remuneration Committee •Subject to malus and clawback provisions •Executive Directors defer a minimum of one-third of earned bonus payment into Diageo shares held for three years •Remainder paid out in cash after the end of the financial year	•Annual grant of performance shares and share options ◦CEO award up to 500% of salary ◦CFO award up to 480% of salary (% of salary for both CEO and CFO described in performance share equivalents) •Performance measures, weightings and stretching targets are set annually •Three-year performance period plus two-year retention period •Subject to malus and clawback provisions •Number of awards granted is based on a six-month average share price to 30 June preceding grant date	•Minimum shareholding requirement within five years of appointment: ◦CEO 500% of salary ◦CFO 400% of salary •Post- employment shareholding requirement for Executive Directors of 100% of the in- employment requirement (or, if lower, their actual shareholding on cessation) to be retained in full for two years after leaving the company
Planned for year ending 30 June 2025	•4.25% salary increase for the CEO, below the annual salary budgets for the wider workforce in the United Kingdom •New CFO appointment from autumn 2024. No salary increase in fiscal 25	•Allowances and benefits unchanged from prior year •Company pension contributions 14% of salary	•Size of annual incentive award opportunity is unchanged from prior year. For fiscal 25, measures are net sales growth, operating profit growth and operating cash conversion, 80% in total weighted equally, with remaining 20% on individual objectives	–Performance measures are net sales growth, relative TSR, cumulative free cash flow, profit before exceptional items and tax and ‘Spirit of Progress‘ measures –Size of long-term incentive award opportunity is in line with the policy	•No change to in- employment shareholding requirement •Post- employment shareholding in line with the Policy
Implementation in year ended 30 June 2024	•4% salary increase for the CFO, slightly below the annual salary budgets for the wider workforce in the United Kingdom and the United States •No increase for the CEO in fiscal 24 following appointme nt on 8 June 2023	•Allowances and benefits unchanged from prior year •Company pension contribution of 14% for CEO and CFO. Aligned to the UK workforce	•Payout of 16% of maximum for the financial elements of the plan •Total payout of 24.8% of maximum for the CEO and 22.8% for the CFO	•Vesting of 2021 performance shares at 58.9% of maximum for Debra Crew, and 56.5% of maximum for Lavanya Chandrashekar •The 2021 share options lapsed for both Debra Crew and Lavanya Chandrashekar	•As at 30 June 2024, Debra Crew's shareholding was 240% of salary (she has until June 2028 to meet her requirement) •As at 30 June 2024, Lavanya Chandrashekar's shareholding was 100% of salary (she had until July 2026 to meet her requirement)

Governance (continued)

195

Pay for performance at a glance

The charts below show performance outcomes against targets for the long-term and annual incentive plans. Targets under both

incentive plans are set with reference to Diageo’s strategic plan and the historical and forecasted performance of Diageo and its

peers.

Long-term incentives (for the period 1 July 2021 to 30 June 2024)

Organic net sales growth

Cumulative free cash flow

CAGR

Threshold

Midpoint

Maximum

Threshold

Midpoint

Maximum

5.0%

7.0%

9.0%

$10,058m

$11,273m

$12,488m

Actual 8.7%

Actual $9,798m

Organic profit before exceptional items and tax growth

Relative TSR ranking vs peer group

CAGR

Threshold

Midpoint

Maximum

Threshold

Midpoint

Maximum

6.5%

10.0%

13.5%

9th (median)

–

3rd (upper quintile)

Actual 6.9%

Actual 14th


ESG measure	Unit of measurement	Threshold	Midpoint	Maximum	Actual
Carbon reduction	Reduction in greenhouse gas emissions (cum%)	19.1%	23.1%	27.1%	19.6%
Water efficiency	Improvement in water efficiency (cum%)	6.3%	9.2%	12.1%	4.2%
Positive drinking	Number of people who confirmed changed attitudes on the dangers of underage drinking following participation in a Diageo supported education programme	2.3m	3.0m	3.7m	3.8m
Inclusion & diversity	% female leaders globally	44%	45%	46%	44%
	% ethnically diverse leaders globally	39%	40%	41%	46%

Annual incentive (for the period 1 July 2023 to 30 June 2024)

Net sales growth

Operating profit growth

Threshold

Target

Maximum

Threshold

Midpoint

Maximum

3.1%

6.1%

9.1%

1.4%

6.4%

11.4%

Actual -0.6%

Actual -4.8%


Operating cash conversion
	Threshold	Target	Maximum
	95%	100%	105%

		l
		Actual 99.6%

Governance (continued)

196

Remuneration Committee Governance

Remuneration Committee

The Remuneration Committee consists of the following independent Non-Executive Directors: Susan Kilsby, Melissa Bethell, Karen

Blackett, Valérie Chapoulaud-Floquet, Sir John Manzoni, Alan Stewart and Ireena Vittal. Susan Kilsby is the Chair of the

Remuneration Committee and also the Senior Independent Director. The Chair of the Board and the Chief Executive are invited to

attend Remuneration Committee meetings, except when their own remuneration is being discussed. The Chief Human Resources

Officer and Global Performance and Reward Director are also invited by the Remuneration Committee to provide their views and

advice. The Chief Financial Officer may also attend to provide performance context to the Committee during its discussions about

target setting and incentive outcomes. The Remuneration Committee's terms of reference are available in the corporate governance

section of the company's website and on request from the Company Secretary.

The Remuneration Committee is responsible for all executive remuneration decisions throughout the year, which includes setting

financial targets for the annual and long-term incentive plans and the outcomes under these plans. The Committee considered the

remuneration policy and practices in the context of the principles of the Corporate Governance Code, as follows:

Clarity – the Committee engages regularly with executives, shareholders and their representative bodies in order to explain the

approach to executive pay;

Simplicity – the purpose, structure and strategic alignment of each element of pay has been laid out in the remuneration policy;

Risk – there is an appropriate mix of fixed and variable pay, and financial and non-financial objectives. There are robust measures in

place to ensure alignment with long-term shareholder interests, including the DLTIP post-vesting retention period, shareholding

requirement, bonus deferral into shares and malus and clawback provisions updated for prevailing legal and regulatory requirements.

The Committee also considers the impact on behaviour of both the measures and targets set;

Predictability-the pay opportunity under different performance scenarios is set out in the approved Directors' remuneration policy

(page 136 of the 2023 UK Annual Report);

Proportionality – executives are incentivised to achieve stretching targets over annual and three-year performance periods, and the

Committee assesses performance holistically at the end of each period, taking into account underlying business performance and the

internal and external context. The Committee may exercise discretion to ensure that payouts are appropriate; and

Alignment with culture – non-financial objectives may be incentivised under the individual business objective element of the annual

incentive plan and ‘Spirit of Progress‘ (ESG) priorities are incentivised under the long-term incentive plan, which reinforces the

company’s purpose and values. The design of remuneration, and the measures used, reflect Diageo's culture.

External advisors

During the year ended 30 June 2024, the Remuneration Committee received advice on Directors' remuneration from FIT. FIT was

appointed by the Committee in October 2022 following a review of alternative providers and were selected on the basis of their

understanding of the company's culture and business and the capability of their team.

The fees paid to FIT in fiscal 24 for advice provided to the Committee were £84,671. All fees were determined on a time and expenses

basis.

The Committee is satisfied that FIT's engagement partners, and the teams that provide remuneration advice to the Committee, have no

connections with Diageo that may impair their independence. The Committee reviewed the potential for conflicts of interest and

judged that there were appropriate safeguards against such conflicts. FIT does not provide Diageo with any other services. FIT is a

founder member of the Remuneration Consultants Group (RCG) which is responsible for developing and maintaining the Code of

Conduct for Consultants to Remuneration Committees of UK listed companies. FIT attended Remuneration Committee meetings

during the year and the Committee is satisfied that the advice it has received has been objective and independent.

Governance (continued)

198

Directors' remuneration policy

This section of the report sets out the details of the 2023 Directors' remuneration policy which was approved by shareholders at the AGM on 28

September 2023 and which applied from that date. The Policy Considerations section has been updated to reflect the anticipated appointment of

a new CFO in Autumn 2024, updated NED terms of appointment and employee engagement leadership.

The actual current approved policy can be found on the company’s website at https://www.diageo.com/en/our-business/corporate-

governance/remuneration-at-diageo.

As referenced in the Remuneration Committee Chair’s statement, the Committee believes the current policy continues to support the

business strategy.

The Committee reserves the right to make minor changes to the policy, where required for regulatory, tax or administrative reasons.


l	Base salary
	Purpose and link to strategy
	Supports the attraction and retention of the best global talent with the capability to deliver Diageo’s strategy and performance goals.
	Operation
	•Normally reviewed annually or following a change in responsibilities with any increases usually taking effect from 1 October. •The Remuneration Committee considers the following parameters when reviewing base salary levels: ◦Pay increases for other employees across the group. ◦Economic conditions and governance trends. ◦The individual’s performance, skills and responsibilities. ◦Base salaries (and total remuneration) at companies of similar size and international scope to Diageo, with roles typically benchmarked against the FTSE 30 excluding financial services companies, or against similar comparator groups in other locations dependent on the Executive Director’s home market as well as global consumer goods companies.
	Opportunity
	Salary increases will be made in the context of the broader employee pay environment, and will normally be in line with those made to other employees in the relevant markets in which Diageo operates, typically the United Kingdom and the United States, unless there is a change in role or responsibility or other exceptional circumstances.
l	Benefits
	Purpose and link to strategy
	Provides market-competitive and cost-effective benefits as part of remuneration packages designed to attract and retain the best global talent.
	Operation
	•The provision of benefits typically depends on the country of residence of the Executive Director and may include but is not limited to a company car or travel allowance, the provision of a contracted car service or equivalent, product allowance, life insurance, accidental death and disability insurance, medical and dental cover, tax support and tax return preparation costs. •The Remuneration Committee has discretion to offer additional allowances, or benefits, to Executive Directors, if considered appropriate and reasonable. These may include, but are not limited to, relocation expenses, housing allowance and school fees where a Director is asked to relocate from his/her home location as part of their appointment. Where appropriate, for example in relation to relocation benefits, the company may also meet the tax costs associated with the benefit provision.
	Opportunity
	•The benefits package is set at a level which the Remuneration Committee considers: ◦provides an appropriate level of benefits depending on the role and individual circumstances; ◦is appropriate in the context of the benefits offered to the wider workforce in the relevant market; and ◦is in line with comparable roles in companies of a similar size and complexity in the relevant market.
l	Post-retirement provision
	Purpose and link to strategy
	Provides competitive post-retirement benefits which are part of remuneration packages designed to attract and retain the best global talent.
	Operation
	•Provision of market-competitive pension arrangements or a cash alternative based on a percentage of base salary.
	Opportunity
	•The maximum pension contribution, or cash alternative allowance, for Executive Directors is 14% of salary. The current CEO and CFO receive a pension contribution of 14% of salary, in line with the UK workforce.

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200


l	Annual Incentive Plan (AIP)
	Purpose and link to strategy
	Incentivises delivery of Diageo’s annual financial targets and the achievement of key individual objectives which are chosen to align with the business strategy and create a platform for sustainable longer-term performance. Compulsory deferral of a minimum of one-third of any annual incentive earned into shares for three years promotes longer-term alignment of Executive Directors' interests with shareholders’ interests.
	Operation
	•Performance measures, weightings and targets are set by the Remuneration Committee. Appropriately stretching targets are set by reference to the operating plan and historical and projected performance for the company and its peer group. •The level of award is determined with reference to Diageo’s overall financial and strategic performance and individual performance. •A minimum of one-third of the actual earned bonus payment is normally deferred into a share award (pre-tax deferral) or owned shares (post-tax deferral) under the Deferred Bonus Share Plan, to be held for a minimum period of three years, other than in exceptional circumstances. The remainder of the bonus payment is paid out in cash after the end of the financial year. •The Remuneration Committee has discretion to adjust the level of payment if it is not deemed to reflect appropriately the individual’s contribution or the overall business performance. Any discretionary adjustments will be detailed in the following year’s annual report on remuneration. •The Remuneration Committee has discretion to apply malus or clawback to bonus as detailed in the 'Malus and Clawback' 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 Remuneration Committee at the end of the vesting period (on post-tax deferral into owned shares, actual dividends are payable).
	Opportunity
	For threshold performance, up to 50% of salary may be earned, with up to 100% of salary earned for on-target performance and a maximum of 200% of salary payable for outstanding performance. The maximum includes the deferred share element but excludes dividend equivalents payable in respect of deferred share awards.
	Performance conditions
	Annual incentive plan awards are normally based 70%-100% on financial measures which may include, but are not limited to, measures of sales, profit and cash, and 0%-30% on broader objectives based on strategic goals and/or individual contribution. The Remuneration Committee has discretion to amend the performance measures in exceptional circumstances if it considers it appropriate to do so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and explained in the following year’s annual report on remuneration.
l	Diageo Long-Term Incentive Plan (DLTIP)
	Purpose and link to strategy
	Provides a long-term incentive to achieve key performance measures which support the company’s strategy, and to align interests with shareholders.
	Operation
	•An annual grant of performance shares and/or market-price share options which vest subject to a performance test and continued employment, normally over a period of three years. •Measures and stretching targets are reviewed annually by the Remuneration Committee for each new award. •The Remuneration Committee has the authority to exercise discretion to adjust the vesting outcome based on its assessment of the overall business performance over the performance period. This may include the consideration of factors such as holistic performance relative to peers, stakeholder outcomes and significant investment projects, for example. •Following vesting, there is normally a further retention period of two years. Executive Directors are able to exercise an option or sell sufficient shares to cover any tax liability when an award vests, provided they retain the net shares arising for the two-year retention period. •Notional dividends accrue on performance share awards to the extent that the performance conditions have been met, delivered as shares or cash at the discretion of the Remuneration Committee at the end of the vesting period. •The Remuneration Committee has discretion to apply malus or clawback to bonus as detailed in the 'Malus and Clawback' section below.
	Opportunity
	•The maximum annual grants for the Chief Executive and Chief Financial Officer are 500% and 480% of salary in performance share equivalents respectively (where a market-price option is valued at one-third of a performance share). Included within that maximum, no more than 375% of salary will be awarded in face-value terms in options, with the balance awarded in performance shares, to any Executive Director in any year. •Awards vest at 20% of maximum for threshold performance and 100% of maximum if the performance conditions are met in full. The vesting schedule related to the levels of performance between threshold and maximum, including whether or not this will include an interim stretch performance level, will be determined by the Remuneration Committee on an annual basis and disclosed in the relevant remuneration report for that year. There is a ranking profile for the vesting of the part of the award based on relative total shareholder return, starting at 20% of maximum for achieving the threshold.
	Performance conditions
	The vesting of awards is linked to a range of measures which may include, but are not limited to: •a growth measure (e.g. net sales growth, operating profit growth); •a measure of efficiency (e.g. operating margin, cumulative free cash flow, return on invested capital); •a measure of Diageo’s performance in relation to its peers (e.g. relative total shareholder return); and •a measure relating to our ‘Spirit of Progress‘ (environmental, social or governance) priorities. Measures that apply to performance shares and market-price options may differ, as is the case for current awards. Weightings of these measures may also vary year-on-year. The Remuneration Committee has discretion to amend the performance conditions in exceptional circumstances if it considers it appropriate to do so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and explained in the following year’s annual report on remuneration.

Governance (continued)

201


	Malus and Clawback
	Under the AIP and DLTIP, the Remuneration Committee has discretion to apply malus and clawback in the circumstances specified in the applicable malus and clawback policy from time to time in place, for example: •Material misstatement of results or an error resulting in overpayment. •Risk failure resulting in material financial loss or any business area being the subject of a regulatory investigation or in breach of regulation. •Employee misconduct/disciplinary action. •Employee accountability for material reputational damage to the group which could have been avoided. •In respect of the application of malus, deterioration in the financial situation of the group which limits the ability to fund incentive awards. •Any other matter which, in the reasonable opinion of the Remuneration Committee, is required to be considered to comply with prevailing legal and/or regulatory requirements. The malus and clawback provisions may be invoked for one year following an AIP cash payment and two years following a DLTIP vesting. Where the Remuneration Committee determines that malus and/or clawback will apply, the Remuneration Committee has discretion to determine the basis of application and the means by which malus and/or clawback will be implemented. The malus and clawback policy will be reviewed from time to time to ensure that the policy is compliant with any regulatory requirements, such as the NYSE listing rules.


l	All-employee share plans
	Purpose and link to strategy
	To encourage broader employee share ownership through locally approved plans.
	Operation
	•The company operates tax-efficient all-employee share acquisition plans in various jurisdictions. •Executive Directors’ eligibility may depend on their country of residence, tax status and employment company.
	Opportunity
	•Limits for all-employee share plans are set by the tax authorities. The company may choose to set its own lower limits.
	Performance conditions
	•Under the UK Share Incentive Plan, the annual award of Freeshares may be based on Diageo plc financial measures which may include, but are not limited to, measures of sales, profit and cash.
l	Shareholding requirement
	Purpose and link to strategy
	•Ensures alignment between the interests of Executive Directors and shareholders.
	Operation
	•The minimum in-employment shareholding requirement is 500% of base salary for the Chief Executive and 400% of base salary for any other Executive Directors. •Executive Directors are normally expected to build up their in-employment shareholding within five years of their appointment to the Board. •Shares that count towards these minimum shareholding requirements are shares beneficially held by the Executive Director and their connected persons, including Deferred Bonus Share Plan (DBSP) shares within the three-year deferral period, on a net (if post-tax deferral)/notional net (if pre-tax deferral) of tax basis. •Executive Directors 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 Chief Executive and/or Chair), until the shareholding requirement is met. •In order to provide further long-term alignment with shareholders, Executive Directors will normally be expected to maintain a Diageo 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 Directors enter into a deed undertaking to comply with the requirement and committing to hold the required number of shares in a specified nominee account.

l	Chair of the Board and Non-Executive Directors' fees
	Purpose and link to strategy
	•Supports the attraction and retention of world-class talent and reflects the value of the individual, their skills and experience.
	Operation
	•Fees for the Chairman and Non-Executive Directors are normally reviewed every year. •A proportion of the Chairman’s annual fee may be used for the monthly purchase of Diageo ordinary shares, which have to be retained until the Chairman retires from the company or ceases to be a Director. •Fees are reviewed in light of market practice in the FTSE 30, excluding financial services companies, and anticipated workload, tasks and potential liabilities. •The Chairman and Non-Executive Directors do not participate in any of the company’s incentive plans nor do they receive pension contributions or benefits. Their travel and accommodation expenses in connection with attendance at Board meetings (and any tax thereon) are paid by the company. •The Chairman and the Non-Executive Directors are eligible to receive a product allowance or cash equivalent at the same level as the Executive Directors. •All Non-Executive Directors have letters of appointment. A summary of their terms and conditions of appointment is available at www.diageo.com. The Chairman of the Board, Javier Ferrán, was re-appointed on 6 October 2022 for a three-year term, terminable on three months’ notice by either party or, if terminated by the company, by payment of three months’ fees in lieu of notice.






	Opportunity
	•Fees for Non-Executive Directors are within the limits set by the shareholders from time to time, with an aggregate limit of £1,750,000, excluding the Chair’s fees.

Governance (continued)

202

Policy considerations

Performance measures

Further details of the performance measures under the fiscal 25 annual incentive plan and measures and targets for DLTIP awards to

be made in September 2024, are set out in the annual report on remuneration, on page 222.

Annual incentive targets will be disclosed retrospectively in next year’s annual report on remuneration as they are deemed by the Board to

be commercially sensitive until after the end of the fiscal year.

Performance targets are set to be stretching yet achievable, and take into account the company’s strategic priorities and business

environment. The Remuneration Committee sets targets based on a range of reference points, including the corporate strategy and

broker forecasts for both Diageo and its peers.

Approach to recruitment remuneration

Diageo is a global organisation selling its products in nearly 180 countries around the world. The ability to recruit and retain the best

talent from all over the world is critical to the future success of the business. People diversity in all its forms is a core element of

Diageo’s global talent strategy and, managed effectively, is a key driver in delivering Diageo’s Growth Ambition.

The Remuneration Committee’s overarching principle for recruitment remuneration is to pay no more than is necessary to attract an

Executive Director of the calibre required to shape and deliver Diageo’s business strategy, recognising that Diageo competes for talent

in a global marketplace. The Committee will seek to align any remuneration package with Diageo’s remuneration policy, but retains

the discretion to offer a remuneration package which is necessary to meet the individual circumstances of the recruited Executive

Director and to enable the hiring of an individual with the necessary skills and expertise. However, the maximum short-term and long-

term incentive opportunity will follow the policy, although awards may be granted with different performance measures and targets in

the first year. On appointment of an external Executive Director, the Committee may decide to compensate for variable remuneration

elements the individual forfeits when leaving their current employer. In doing so, the Committee will ensure that any such

compensation would have a fair value no higher than that of the awards forfeited, and would generally be determined on a comparable

basis taking into account factors including the form in which the awards were granted, performance conditions attached, the

probability of the awards vesting (e.g. past, current and likely future performance), as well as the vesting schedules. Depending on

individual circumstances at the time, the Committee has the discretion to determine the type of award (i.e. cash, shares or options),

holding period and whether or not performance conditions would apply.

Any such award would be fully disclosed and explained in the following year’s annual report on remuneration. When exercising its

discretion in establishing the reward package for a new Executive Director, the Committee will carefully consider the balance between

the need to secure an individual in the best interests of the company against the concerns of investors about the quantum of

remuneration and, if considered appropriate at the time, will consult with the company’s biggest shareholders. The Remuneration

Committee will provide timely disclosure of the reward package of any new Executive Director.

Governance (continued)

203

Service contracts and policy on payment for loss of office (including takeover provisions)

Executive Directors have rolling service contracts, details of which are set out below. These are available for inspection at the

company’s registered office.


Executive Director	Date of service contract
Debra Crew	28 March 2023
Lavanya Chandrashekar	13 January 2021


Notice period	The contracts provide for a period of six months’ notice by the Executive Director or 12 months’ notice by the company, the same as would apply for any newly-appointed Executive Director. A payment may be made in lieu of notice consisting of a sum equivalent to the base salary which the Executive Director would have received for any notice period outstanding on the date employment ends and the cost to the company of providing contractual benefits for this period (including pension contributions but excluding incentive plans). If, on the termination date, the Executive Director has exceeded their accrued holiday entitlement, the value of such excess may be deducted by the company from any sums due to them. If the Executive Director, on the termination date, has accrued but untaken holiday entitlement, the company will, at its discretion, either require the Executive Director to take such unused holiday during any notice period or make a payment to them in lieu of it, provided that if the employment is terminated for cause then the Executive Director will not be entitled to any such payment.
Mitigation	The Remuneration Committee requires (or may exercise its discretion to require) a proportion of the termination payment to be paid in instalments and, upon the Executive Director commencing new employment, to be subject to mitigation.
Annual Incentive Plan (AIP)	Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, the Executive Director is usually entitled to an incentive payment pro-rated for the period of service during the performance period, which is typically payable at the usual payment date unless the Committee decides otherwise. Where the Executive Director leaves for any other reason, no payment or bonus deferral will be made. The amount is subject to performance measures being met and is at the discretion of the Committee. The Committee has discretion to determine an earlier payment date, for example, on death in service. The bonus may, if the Committee decides, be paid wholly in cash.
2020 Deferred Bonus Share Plan (DBSP)	Where the Executive Director leaves for any reason other than dismissal, they are entitled to retain any deferred bonus shares, which vest in full on departure, subject to any holding requirements under the post-employment shareholding policy. It is not considered necessary for the bonus deferral to continue to apply after leaving, since the bonus is already earned based on performance, and there is a post-employment shareholding requirement that ensures the Executive Director continues to be invested in the company’s longer-term interests. On a takeover, awards vest in full. On other corporate events, the Remuneration Committee may allow awards to vest in full.
Diageo Long-Term Incentive Plan (DLTIP)	Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, awards continue in effect. Awards will vest on the original vesting date with the exception of death in service, when awards will vest on the date of death, in each case unless the Remuneration Committee decides otherwise. When an Executive Director leaves for any other reason, all unvested awards generally lapse immediately. The applicable retention period for vested awards continues for all leavers (other than in cases of disability, ill-health or death in service, where the retention period will end on the date of death or leaving employment), unless the Remuneration Committee decides otherwise. Where awards were granted in the form of options, on vesting they are generally exercisable for 12 months (or six months for approved options). The proportion of the award released depends on the extent to which the performance condition is met. The number of shares is reduced on a pro-rata basis reflecting the length of time the Executive Director was employed by the company during the performance period, unless the Remuneration Committee decides otherwise (for example, in the case of death in service). Where an Executive Director leaves within one month of the normal vesting date of the award, awards are not time pro-rated, unless the Remuneration Committee decides otherwise. On a takeover or other corporate event, awards vest subject to the extent to which the performance conditions are met and, unless the Remuneration Committee decides otherwise, the awards are time pro-rated. Otherwise the Committee, in agreement with the new company, may decide that awards should be swapped for awards over shares in the new company.
Repatriation/other	In cases where an Executive Director was recruited from outside the United Kingdom and has been relocated to the United Kingdom as part of their appointment, the company may pay reasonable repatriation costs for leavers at the Remuneration Committee’s discretion. The company may also pay for reasonable costs in relation to the termination, for example, tax, legal and outplacement support, where appropriate.

Governance (continued)

204

Non-Executive Directors’ unexpired terms of appointment

All Non-Executive Directors are on three-year terms which are expected to be extended up to a total of nine years. The date of initial

appointment to the Board and the point at which the current letter of appointment expires for Non-Executive Directors are shown in

the table below.


Non-Executive Directors	Date of appointment to the Board	Current letter of appointment expires
Javier Ferrán	22 July 2016	AGM 2025
Susan Kilsby	4 April 2018	AGM 2024
Melissa Bethell	30 June 2020	AGM 2026
Karen Blackett	1 June 2022	AGM 2025
Valérie Chapoulaud-Floquet	1 January 2021	AGM 2024
Sir John Manzoni	1 October 2020	AGM 2026
Alan Stewart	1 September 2014	AGM 2024
Ireena Vittal	2 October 2020	AGM 2026

Payments under previous policies

The Committee reserves the right to make any remuneration payments and payments for loss of office, notwithstanding that they are

not in line with the policy set out above, where the terms of the payment were agreed (i) under a previous policy, in which case the

provision of that policy shall continue to apply until such payments have been made; (ii) before the policy or the relevant legislation

came into effect; or (iii) at a time when the relevant individual was not a director of the company and, in the opinion of the Committee,

the payment was not in consideration for the individual becoming a director of the company.

Approach to stakeholder engagement

Shareholder engagement

The Committee is interested in the views of investors and maintains an ongoing dialogue with a broad group of shareholders and

institutional advisors on remuneration matters. In advance of finalising our proposed policy that was approved at the 2023 AGM, the

Chair of the Remuneration Committee consulted with the company's largest shareholders and their representatives about the policy

and the implementation plan for fiscal 24. The responses received from shareholders were supportive of the proposed change to

enhance the post-cessation shareholding requirement, as well as the planned implementation for fiscal 24.

Employee engagement on executive remuneration

Karen Blackett took over accountability for global workforce engagement sessions during the year and there were focus group

sessions led by her and other Non-Executive Directors. As part of this engagement, there was a session where the Remuneration

Committee Chair shared information with employees about executive remuneration, including the Directors' remuneration policy, the

role of the Remuneration Committee, executive remuneration principles and structure and how executive pay aligns with pay for the

wider workforce. This is the first year of undertaking the engagement on remuneration in this format and it was found to be productive

and informative by the Committee Chair and the participating employees.

Diageo also runs annual employee engagement surveys, which gives employees the opportunity to provide feedback and express their

views on a variety of topics, including remuneration. Any comments relating to Executive Directors' remuneration are fed back to the

Remuneration Committee.

These activities ensure that shareholder views and interests, as well as the all-employee reward context at Diageo, are considered when

making executive remuneration decisions.

Consideration of wider workforce remuneration

When reviewing Executive Directors’ salaries, the Committee takes into account the company’s salary budgets for key geographies

and, each year, the Committee has a session reviewing various aspects of workforce remuneration to deepen its understanding of

employee pay arrangements. There is clear alignment in the approach to pay for executives and the wider workforce in the way that

remuneration principles are followed, as well as the mechanics of the salary review process and incentive plan design, which are

broadly consistent throughout the organisation. The performance measures under the annual incentive plan and long-term incentive

plan are the same for executives and other eligible employees. The key differences are that a larger percentage of Executive Directors'

remuneration is performance related than that of other employees and salary, benefits and incentive participation levels vary according

to role, seniority and business priorities.

When reviewing the Directors’ remuneration policy, the Committee considered the remuneration arrangements for the workforce

globally, as well as market practice in the FTSE 30 (excluding financial services) and Diageo’s global consumer peer group. Given the

minimal changes proposed for the 2023 Directors’ remuneration policy, employees were not specifically consulted on this.

Governance (continued)

205

Annual report on remuneration

The following section provides details of how the company’s 2023 remuneration policy was implemented during the year ended 30

June 2024, and how the Remuneration Committee intends to implement the proposed remuneration policy in the year ending 30 June

2025.

Single total figure of remuneration for Executive Directors

The table below details the Executive Directors’ remuneration for the year ended 30 June 2024.


	Debra Crew(1)(8)				Lavanya Chandrashekar(1)
	2024	2024	2023	2023	2024	2024	2023	2023
	£ '000	$ '000	£ '000	$ '000	£ '000	$ '000	£ '000	$ '000
Fixed pay
Salary	£1,392	$1,750	£105	$126	£823	$1,034	£831	$997
Benefits (2)	£112	$140	£4	$5	£37	$47	£53	$63
Pension(3)	£193	$242	£10	$13	£112	$140	£110	$133
Total fixed pay(7)	£1,696	$2,132	£120	$145	£972	$1,221	£993	$1,193

Performance related pay
Annual incentive(4)	£690	$868	£79	$95	£379	$476	£603	$723
Long-term incentives(5)	£678	$852	£166	$199	£1,350	$1,697	£258	$309
Other incentives (6)	£3	$4	—	—	£4	$5	£3	$4
Total variable pay(7)	£1,371	$1,724	£245	$294	£1,732	$2,178	£864	$1,037

Total single figure of remuneration(7)	£3,067	$3,856	£365	$439	£2,704	$3,399	£1,857	$2,230


(1)	Exchange rate	The amounts shown in US dollars are converted to sterling using the cumulative weighted average exchange rate for the respective financial year. For the year ended 30 June 2024, the exchange rate was £1 = $1.26 and for the year ended 30 June 2023 it was £1 = $1.20. Debra Crew and Lavanya Chandrashekar are paid in US dollars.
(2)	Benefits	The benefits numbers include the gross value of all taxable benefits. For Debra Crew, these include flexible benefits allowance ($22.1k), tax return preparation ($19.2k), contracted car service ($58.7k), medical and dental ($22.2k), product allowance and life and long-term disability cover. Lavanya Chandrashekar's benefits include flexible benefits allowance ($23.8k), travel allowance ($13.5k), product allowance and life and long-term disability cover.
(3)	Pension	Pension benefits reflect the increase in the pension fund balances over the year in the Diageo North America Inc. pension plans which are over and above the increase due to inflation. Debra Crew started to accrue benefits in the Supplemental Executive Retirement Plan (SERP) from 1 October 2022. Lavanya Chandrashekar started accruing benefits in the SERP from 1 July 2021. The company pension contribution has been 14% of salary from 1 January 2023 for all Executive Directors, aligned to the rate for the UK workforce.	Page 211
(4)	Annual incentive	The performance achieved under the fiscal 24 annual incentive plan resulted in an outcome of 16.0% of maximum for the financial elements of the plan. Financial elements represented 80% of the maximum incentive opportunity. Taking account of performance against Individual Business Objectives (IBOs), which represent 20% of the maximum opportunity, the annual incentive payout is 24.8% of maximum for Debra Crew and 22.8% of maximum for Lavanya Chandrashekar. In accordance with their elections to defer post-tax, one-third of the annual incentive for fiscal 24 shown in the table above for Debra Crew and Lavanya Chandrashekar will be deferred into owned shares which are held for three years in a nominee account.	Page 207
(5)	Long-term incentives	Long-term incentives represent the estimated gain (based on the average three-month ADR price to 30 June 2024 of $137.77) delivered through share options and performance shares where performance conditions have been met in the respective financial year. It also includes the value of additional shares earned in lieu of dividends on these vested performance shares. For Debra Crew, the 2021 performance shares and share options were granted before she became an Executive Director, and due to a slightly different vesting schedule for awards granted below the Board, vested at 58.9% and 0.0% of maximum respectively. The long-term incentive value reflects the proportion of the three-year period in which she was appointed as CEO. Lavanya Chandrashekar's 2021 performance shares and share options were granted after she became an Executive Director and vested at 56.5% and 0.0% of maximum respectively. Of the 2024 long term incentive amounts shown in the table above none are related to share price appreciation over the fiscal 22 to fiscal 24 performance period. For fiscal 23, long-term incentives comprise performance shares and share options awarded in 2020 that vested in September 2023 at 98.8% and 77.5% of maximum respectively for Debra Crew and Lavanya Chandrashekar, including dividend equivalents on performance shares. These 2020 long-term incentive amounts have been restated to reflect the ADR share price on the vesting date of $160.19 instead of the average three-month ADR share price used in last year’s report of $178.52.	Page 209
(6)	Other incentives	Other incentives include the grant face value of awards made under the all-employee share plans. Awards do not have performance conditions attached.
(7)	Totals	Some figures and sub-totals add up to slightly different amounts than the totals due to rounding.
(8)	Other	The 2023 figures shown for Debra Crew are in respect of the period from 5 June 2023 to 30 June 2023; following her appointment as interim CEO on 5 June 2023 and CEO and Executive Director on 8 June 2023.

Governance (continued)

206

Looking back on 2024

Annual incentive plan (AIP) payouts for 2024

AIP payout for the year ended 30 June 2024

AIP payouts for the Executive Directors serving during the year are based 80% on performance against the group financial measures and 20%

on performance against Individual Business Objectives (IBOs), as assessed by the Remuneration Committee and summarised in the table

below.


Group financial measures(1)
Measure	Weighting	Threshold	Target	Maximum	Actual	Payout (% of total AIP opportunity)
Payout opportunity (% maximum)		25%	50%	100%
Net sales value (% growth)(2)	26.7%	3.1%	6.1%	9.1%	(0.6)%	—
Operating profit (% growth)(2)	26.7%	1.4%	6.4%	11.4%	(4.8)%	—
Operating cash conversion(3)	26.7%	95.0%	100.0%	105.0%	99.6%	12.80%
Full year performance for 1 July 2023 - 30 June 2024	80.0%					12.80%


Individual business objectives
Measure (IBOs equally weighted) and target	Weighting	Result	Payout (% of total AIP opportunity)
Debra Crew Chief Executive	20.00%		12.00%
Global market share performance Grow or hold total trade market share in 2/3rds of total net sales in measured markets	10.00%	We gained or held total trade market share in markets that total 75% of our net sales in fiscal 24(6)	5.00%
Productivity improvement Deliver an overall productivity improvement in fiscal 24 of $505m across all cost categories	10.00%	The productivity target for fiscal 24 has been exceeded as set out below: By the end of fiscal 24, we delivered $698m in productivity savings across all cost categories including supply, marketing and indirect overheads	7.00%
Lavanya Chandrashekar Chief Financial Officer	20.00%		10.00%
Productivity improvement Deliver an overall productivity improvement in fiscal 24 of $505m across all cost categories	10.00%	The productivity target for fiscal 24 has been exceeded as set out below: By the end of fiscal 24, we delivered $698m in productivity savings across all cost categories including supply, marketing and indirect overheads	7.00%
Finance transformation Implement actions to continue the improvement of financial forecasting and sustainable cash management Deliver the agreed project milestones for the finance technology roll out within budget Implement the new functional and presentational currency into all areas of management and reporting	10.00%	A summary of performance against the finance transformation milestones for fiscal 24 is as follows: Automated forecasting models built internally, rolled out and subject to further embedding Key actions completed to support the delivery of strong cash performance Initial stage of a significant programme of global technology change underway Go live of required changes to functional currency in over 50 systems, restructuring of FX hedges and completion of reporting cycles	3.00%

Governance (continued)

207


Payout
	Group (weighted 80%)	IBO (weighted 20%)	Total (% max)	Total (% annual salary)	Total (’000) USD
Debra Crew(4),(5)	12.80%	12.00%	24.80%	49.60%	$868
Lavanya Chandrashekar(4),(5)	12.80%	10.00%	22.80%	45.60%	$476

(1) Performance against the AIP measures is calculated using 2024 budgeted exchange rates and is measured on a currency-neutral basis.

(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 and incorporates the organic treatment of hyperinflationary economies.

(3) For AIP purposes, operating cash conversion (OCC) is calculated by dividing cash generated from operations excluding cash inflows/outflows in respect of

exceptional items, 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.

(4) AIP payments are calculated using base salary as at 30 June 2024, in line with the global policy that applies to other employees across the company.

(5) In accordance with the 2023 remuneration policy and their individual elections to defer post tax, one-third of Debra Crew's and Lavanya Chandrashekar's after tax

AIP payout disclosed in the table above will be deferred into Diageo shares, which will be held for three years in a nominee account. These shares will be acquired

in September 2024 and the number of shares will be disclosed in the 2025 remuneration report.

(6) Market share reflects internal estimates incorporating Nielsen, Association of Canadian Distillers, CGA, Dichter and Neira, Frontline, Intage, IRI, ISCAM,

NABCA, Scentia, State Monopolies, TRAC, Ipsos and other third-party providers.

(7)No discretion was exercised by the Remuneration Committee in determining the AIP outcome.

Governance (continued)

208

Long-term incentive plans (LTIPs) vesting in

2024

Long-term incentive awards up to and including September 2023 were made under the Diageo Long-Term Incentive Plan (DLTIP),

which was approved by shareholders at the AGM in September 2014. Awards are designed to incentivise Executive Directors and

senior managers to deliver long-term sustainable performance and are subject to performance conditions measured over a three-year

period. Awards are granted on an annual basis in both performance shares and share options. Awards granted to Executive Directors

vest at 20% of maximum for threshold performance, and 100% of the award will vest if the performance conditions are met in full,

with a straight-line payout between threshold and maximum.

Share options – granted in September 2021, vesting in September 2024

In September 2021, Debra Crew (although not an Executive Director at the time of grant) and Lavanya Chandrashekar received share

option awards over ADRs under the DLTIP, with an exercise price of $194.75. The award was subject to a performance condition

assessed over a three-year period based on the achievement of the following equally weighted performance measures:

•Relative total shareholder return (TSR) ranked against the TSR of a peer group of international drinks and consumer goods

companies; and

•Cumulative free cash flow (FCF)

The vesting profile for grants to Executive Directors for relative TSR is shown below:


TSR ranking (out of 17)	Vesting (% max)	TSR ranking (out of 17)	Vesting (% max)	TSR peer group (16 companies)
1st, 2nd or 3rd	100	7th	55	AB InBev	Heineken	Pernod Ricard
4th	95	8th	45	Brown-Forman	Kimberly-Clark	Procter & Gamble
5th	75	9th	20	Carlsberg	L'Oréal	Reckitt Benckiser
6th	65	10th or below	0	The Coca-Cola Company	Mondelēz International	Unilever
				Colgate-Palmolive	Nestlé
				Groupe Danone	PepsiCo

Performance shares – awarded in September 2021, vesting in September 2024

In September 2021, Debra Crew (although not Executive Director at the time of grant) and Lavanya Chandrashekar received

performance share awards under the DLTIP. Awards vest after a three-year period subject to the achievement of three performance

conditions outlined below:

•Organic net sales value (NSV) growth (weighted 40%);

•Profit before exceptional items and tax (PBET) growth (weighted 40%); and

•ESG measures (water efficiency, carbon reduction, positive drinking, and diversity & inclusion) weighted 20%.

Notional dividends accrue on awards and are paid out either in cash or shares on the number of shares which vest.

Governance (continued)

209

Vesting outcome for 2021 performance share and share option awards in September 2024

The 2021 performance share award vested at 58.9% of maximum for Debra Crew and 56.5% of maximum for Lavanya

Chandrashekar. The 2021 share options lapsed having not met the threshold performance metric as detailed below:


Vesting of 2021 DLTIP(5)	Weighting	Threshold	Midpoint	Maximum	Actual	Debra Crew vesting (% maximum)(5)(6)	Lavanya Chandrashekar vesting (% maximum)(5)(6)
Vesting if performance achieved (% maximum)(6)		20%/25%	60%/62.5%	100%
Organic net sales value growth (NSV)(1)	40.0%	5.0%	7.0%	9.0%	8.7%	37.8%	37.6%
Profit before exceptional items and tax (PBET) growth(2)	40.0%	6.5%	10.0%	13.5%	6.9%	11.7%	9.8%
Carbon reduction (ESG)	5.0%	19.1%	23.1%	27.1%	19.6%	1.5%	1.3%
Water efficiency (ESG)	5.0%	6.3%	9.2%	12.1%	4.2%	—	—
Positive drinking (ESG)	5.0%	2.3m	3.0m	3.7m	3.8m	5.0%	5.0%
Inclusion & diversity - % female leaders globally (ESG)	2.5%	44.0%	45.0%	46.0%	44.0%	0.6%	0.5%
Inclusion & diversity - % ethnically diverse leaders globally (ESG)	2.5%	39.0%	40.0%	41.0%	46.0%	2.5%	2.5%
Vesting of performance shares (% maximum)						58.9%	56.5%
Cumulative free cash flow (FCF)(3)	50.0%	$10,058m	$11,273m	$12,488m	$9,798m	—	—
Relative total shareholder return(4)	50.0%	9th	—	3rd	14th	—	—
Vesting of share options (% maximum)						—	—

(1)NSV growth is calculated at budgeted currency exchange rates, after adjustments for acquisitions and disposals and incorporates the organic treatment of

hyperinflationary economies.

(2) PBET growth is presented on a constant currency basis and it excludes the impact of acquisitions and disposals. The impact of hyperinflation on operating 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 excluded the interest on current year’s share repurchase program (SRP) and excludes the year-over-year change of

M&A related interest.

(3)Cumulative FCF is based on the outcome for each of the three years within the performance period, measured before exceptional items and on an FX neutral basis

by adjusting actual outcomes back 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 known and planned

at the beginning of the vesting period, are excluded from the three-year performance. Note that FCF has been restated in USD following the change in functional

currency.

(4)Relative total shareholder return (TSR) is measured as the percentage growth in Diageo’s share price (assuming all dividends and capital distributions are re-

invested) compared to the TSR of a peer group of 16 international drinks and consumer goods companies. TSR calculations are based on an averaging period of six

months and converted to a common currency (US dollars). Calculation is performed and provided by FIT.

(5) No discretion was exercised by the Remuneration Committee in determining the long-term incentive outcomes.

(6)At the time of grant of the 2021 awards, Debra Crew was not an Executive Director. The vesting schedule for awards granted to executives below the Board has a

threshold vesting of 25% of maximum (62.5% at midpoint). Vesting at threshold for awards granted to Executive Directors is 20% of maximum (60.0% at

midpoint).

Governance (continued)

210

Summary of performance share awards and options vesting


	Award	Award Date	Awarded (ADRs)	Vesting (% Max)	Vesting (ADRs)	Option price	ADR price	Dividend equivalent share	Estimated value ($'000)(1)
Debra Crew (2)	Performance Shares	03/09/2021	9663	58.9%	5,691		$137.77	494	$852
	Share Options	03/09/2021	9663	—	—	$194.75	$137.77	—	—
Lavanya Chandrashekar	Performance Shares	03/09/2021	20,060	56.5%	11,333		$137.77	985	$1,697
	Share Options	03/09/2021	20,060	—	—	$194.75	$137.77	—	—

1) The total long-term incentives value shown in the single figure of remuneration on page 206 is the total of performance shares and share options in the table above and is based on an

average ADR price for the last three months of the fiscal year ($137.77).

(2) The number of ADRs and the resulting value of performance share awards and options relating to Debra Crew in the table above are pro-rata figures that reflect the proportion of the

three-year performance period in which she was appointed as Chief Executive Officer. The original number of Performance Shares and Share Options awarded is shown on page 213. The

total number of Performance Shares awarded was 27,019 and 15,914 vested in total of which 5,691 is shown above. The total value of the vested award, including dividend equivalent

shares (17,297 ADRs) is $2,383,007. No share options vested.

The Committee considered Diageo’s overall business performance and value created for shareholders over the period and determined

that the outcomes were fair and appropriate; consequently no adjustment to the vesting outcomes were made. It also considered the

level of difficulty of the targets and determined that the vesting outcome was consistent with Diageo's long-term performance and

returns to shareholders. No share options were exercised by any Director during the year ended 30 June 2024.

Pensions and benefits in the year ended 30 June 2024

Benefits provisions for the Executive Directors are in accordance with the information set out in the Directors’ remuneration policy.

Pension arrangements

Debra Crew and Lavanya Chandrashekar are members of the Diageo North America Inc. Supplemental Executive Retirement Plan

(SERP) with an accrual rate of 14% of base salary during the year ended 30 June 2024. The SERP is an unfunded, non-qualified

supplemental retirement programme. Under the plan, accrued company contributions are subject to quarterly interest credits. Under

the rules of the SERP, they 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 size of the balance.

Debra Crew and Lavanya Chandrashekar participated in the US Cash Balance Plan and the Benefit Supplemental Plan (BSP), until 30

September 2022 and June 2021 respectively, and have accrued benefits under both plans. The Cash Balance Plan is a qualified funded

pension arrangement. Employer contributions were 10% of pay capped at the Internal Revenue Service (IRS) limit. The BSP is a non-

qualified unfunded arrangement; notional employer contributions were 10% of pay above the IRS limit. Interest (notional for the BSP)

is credited quarterly on both plans.

In the event of death in service, a lump sum of six times base salary is payable for Debra Crew and Lavanya Chandrashekar.

The table below shows the pension benefits accrued by each Executive Director as at year end. The accrued US benefits for Debra

Crew and Lavanya Chandrashekar are one-off cash balance amounts.


30 June 2024	30 June 2023
Executive Director	US benefit value $'000	US benefit value $'000
Debra Crew(1)	1,245	958
Lavanya Chandrashekar(2)	689	520

(1) Debra Crew's US benefits reflect an increase of $287,000 over the year to 30 June 2024. This increase reflects $253,000 which is due to additional pension benefits earned over the year

(of which $242,000 is over and above the increase due to inflation - and is reported in the total single figure of remuneration table on page 206); and, $34,000 which is due to interest

earned over the year on her deferred US benefits.

(2) Lavanya Chandrashekar's US benefits reflect an increase of $169,000 over the year to 30 June 2024. This increase reflects $159,000 which is due to additional pension benefits earned

over the year (of which $140,000 of which is over and above the increase due to inflation – and is reported in the total single figure of remuneration table on page 206); and $10,000 of

which is due to interest earned on her deferred US benefits.

The Normal Retirement Age applicable to each Director’s benefits depends on the pension scheme, as outlined below.


Executive Director	UK benefits (DPS)	US benefits (Cash Balance Plan)	US benefits (BSP)	US benefits (SERP)
Debra Crew	n/a	65	6 months after leaving service, or age 55 if later	6 months after leaving service, or age 55 if later
Lavanya Chandrashekar	n/a	65	6 months after leaving service, or age 55 if later	6 months after leaving service, or age 55 if later

Governance (continued)

211

Long-term incentive awards made during the year ended 30 June 2024

On 4 September 2023, Debra Crew and Lavanya Chandrashekar received awards of performance shares and market-priced share

options under the DLTIP based on a percentage of base salary as outlined below. The three-year period over which performance will

be measured is 1 July 2023 to 30 June 2026.

The performance measures and targets for awards granted in September 2023 are outlined below. Net sales value and profit before

exceptional items and tax are key levers for driving top and bottom line growth. The free cash flow measure was selected because it

represents a robust indicator of cash performance consistent with typical external practice and is a key strategic priority. Total

shareholder return, the only relative performance measure under the plan, provides good alignment with shareholder interests and

increases the leverage based on share price growth. Finally, the environmental, social and governance (ESG) measure (20% of total

performance share award), which was introduced in 2020, reinforces the stretching and strategically important goals under Diageo's

10-year ‘Spirit of Progress’ action plan to help create an inclusive and sustainable world. The definitions for the ESG measures were

set out on page 152 of the annual remuneration report for fiscal 23.


	Performance shares							Share options
2023 DLTIP	Organic net sales value (CAGR)	Organic profit before exceptional items and tax (CAGR)	Greenhouse gas reduction	Water efficiency index	Positive drinking	% Female leaders	% Ethnically diverse leaders	Cumulative free cash flow(1)	Relative TSR
Weighting	40%	40%	5%	5%	5%	2.5%	2.5%	50%	50%
Target range	4.0% - 8.0%	4.5% - 11.5%	17.9% - 25.9%	3.7% - 8.3%	2.8m - 4.2m	47% - 49%	44% - 46%	$9,400m - $12,600m	9th - 3rd and above

(1) The cumulative free cash flow targets are shown in USD following the change to functional currency from fiscal 24. More details can be found on this on pages

238-239

20% of DLTIP awards will vest at threshold, with vesting in a straight line up to 100% if the maximum level of performance is

achieved. As explained in the remuneration policy, one performance share is deemed equal in value at grant to three share options.


Executive Director	Date of grant	Plan	Share type	Awards made during the year	Exercise price	Face value $'000	Face value (% of salary)
Debra Crew	04/09/2023	DLTIP - share options	ADR	36,971	$166.67	$6,563	375%
Debra Crew	04/09/2023	DLTIP - performance shares	ADR	36,971		$6,563	375%
Lavanya Chandrashekar	04/09/2023	DLTIP - share options	ADR	21,182	$166.67	$3,760	360%
Lavanya Chandrashekar	04/09/2023	DLTIP - performance shares	ADR	21,182		$3,760	360%

The proportion of the awards outlined above that will vest is dependent on the achievement of performance conditions and continued

employment, and the actual value received may be nil. The vesting outcomes will be disclosed in the 2026 annual remuneration report.

In accordance with the plan rules, the number of performance shares and share options granted under the DLTIP was calculated by

using the average closing ADR price for the last six months of the preceding financial year ($177.50). This price is used to determine

the face value in the table above. In accordance with the plan rules, the exercise price was calculated using the average closing ADR

price of the three days preceding the grant date ($166.67).

Governance (continued)

212

Outstanding share plan interests


Plan name	Date of award	Performa nce period	Year of vesting	Award calculati on share price	Exercise price	Number of shares/ options at 30 June 2023(1)	Granted	Vested/ exercised	Dividen d equivale nt shares released	Lapsed	Number of shares/ options at 30 June 2024(1)
Debra Crew
DLTIP - Share Options(4)	Sep 2021	2021-2024	2024		$194.75	27,019					27,019	ADR
DLTIP - Share Options	Sep 2022	2022-2025	2025		$176.95	26,629					26,629	ADR
DLTIP - Share Options	Sep 2023	2023-2026	2026		$166.67		36,971				36,971	ADR
Total unvested share options subject to performance in Ordinary shares(2)											362,476	ORD
DLTIP - Share Options(3)	Sep 2020	2020-2023	2023		$133.88	30,076		23,308		6,768	23,308	ADR
Total vested but unexercised share options in Ordinary shares(2)											93,232	ORD
DLTIP - Performance Shares	Sep 2020	2020-2023	2023	$143.63		30,076		29,715	2,101	361	—	ADR
DESAP - Performance Shares(5)	Sep 2020	2020-2023	2023	$143.63		19,494		20,622	1,362	234	—	ADR
Total vested shares subject to performance in Ordinary shares(2)											—	ORD
DLTIP - Performance Shares(4)	Sep 2021	2021-2024	2024	$174.97		27,019					27,019	ADR
DLTIP - Performance Shares	Sep 2022	2022-2025	2025	$195.29		26,629					26,629	ADR
DLTIP - Performance Shares	Sep 2023	2023-2026	2026	$177.50			36,971				36,971	ADR
DESAP - Performance Shares(5)	Mar 2022	2023-2025	2026	$197.06		8,796					8,796	ADR
DESAP - Performance Shares(5)	Mar 2022	2024-2026	2027	$197.06		8,930					8,930	ADR
DESAP - Performance Shares(5)	Mar 2022	2025-2027	2028	$197.06		8,930					8,930	ADR
Total unvested shares subject to performance in Ordinary shares(2)											469,100	ORD
DESAP - Restricted Stock Unit(5)	Mar 2022		2027	$197.06		8,796					8,796	ADR
DESAP - Restricted Stock Unit(5)	Mar 2022		2028	$197.06		8,930					8,930	ADR
DESAP - Restricted Stock Unit(5)	Mar 2022		2029	$197.06		8,930					8,930	ADR
Total unvested shares not subject to performance in Ordinary shares(2)											106,624	ORD
Lavanya Chandrashekar
DLTIP - Share Options(3)	Sep 2018	2018-2021	2021		$140.89	3,832		3,832			3,832	ADR
DLTIP - Share Options(3)	Sep 2018	2018-2021	2021		$140.89	1,064		1,064			1,064	ADR
Total vested but unexercised share options in Ordinary shares(2)											19,584	ORD
DLTIP - Share Options(4)	Sep 2021	2021-2024	2024		$194.75	20,060					20,060	ADR
DLTIP - Share Options	Sep 2022	2022-2025	2025		$176.95	18,512					18,512	ADR
DLTIP - Share Options	Sep 2023	2023-2026	2026		$166.67		21,182				21,182	ADR
Total unvested share options subject to performance in Ordinary shares(2)											239,016	ORD
DLTIP - Performance Shares	Sep 2020	2020-2023	2023	$143.63		1,827		1,805	127	22	—	ADR
Total vested shares subject to performance in Ordinary shares(2)											—	ORD
DLTIP - Performance Shares	Sep 2021	2021-2024	2024	$174.97		20,060					20,060	ADR
DLTIP - Performance Shares	Sep 2022	2022-2025	2025	$195.29		18,512					18,512	ADR
DLTIP - Performance Shares	Sep 2023	2023-2026	2026	$177.50			21,182				21,182	ADR
Total unvested shares subject to performance in Ordinary shares(2)											239,016	ORD
DLTIP - Restricted Stock Units(6)	Sep 2020	2020-2023	2023	$143.63		2,635		2,635	2,635		—	ADR
Total unvested shares not subject to performance in Ordinary shares(2)											—	ORD

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.

2) ADRs have been converted to ORDs (one ADR is equivalent to four ordinary shares) for the purpose of calculating the total number of vested and unvested shares

and options.

3) The total number of share options granted under the DLTIP in September 2018 and 2020 showing as outstanding as at 30 June 2024 are vested but unexercised

share options.

(4)Performance shares and share options granted under the DLTIP in September 2021 and due to vest in September 2024 are included here as unvested share awards

subject to performance conditions, although the awards have also been included in the single figure of remuneration table on page 206, since the performance period

ended during the year ended 30 June 2024.

(5)The performance shares awarded to Debra Crew in 2020 and vested in 2023 under the Diageo Exceptional Stock Award Plan (DESAP) were granted in recognition

of equity which was forfeited on joining Diageo in 2020 and had the same performance measures and targets as the 2020 DLTIP performance shares. Debra Crew

was granted a number of performance shares and restricted stock units under the DESAP in March 2022 for incentive and retention purposes. The DESAP

performance shares will vest based on a performance hurdle of winning or holding market share in at least 2/3rs of total NSV in measured markets over the

Governance (continued)

213

Directors’ shareholding requirement and share interests

The beneficial interests of the Directors who held office during the year ended 30 June 2024 (and their connected persons) in the

ordinary shares (or ordinary share equivalents) of the company are shown in the table below.


	Ordinary shares or equivalent(1),(2)
	24 July 2024	30 June 2024 (or date of cessation, if earlier)	30 June 2023 (or date of appointment if later)	Shareholding requirement (% salary)(3)	Shareholding at 30 June 2024 (% salary)(3)	Shareholding requirement met
Chair
Javier Ferrán(5)	314,830	314,498	310,468
Executive Directors
Debra Crew(4)(5)	122,736	122,736	260	500%	240%	No - to be met by June 2028
Lavanya Chandrashekar (4),(5),(6)	30,412	30,406	17,901	400%	100%	No - to be met by July 2026
Non-Executive Directors
Susan Kilsby(5)	2,600	2,600	2,600
Melissa Bethell	2,668	2,668	2,668
Valérie Chapoulaud-Floquet	2,154	2,154	2,098
Sir John Manzoni	3,007	3,007	2,929
Lady Nicola Mendelsohn(8)	N/A	5,000	5,000
Alan Stewart(7)	7,550	7,550	7,354
Ireena Vittal	—	—	—
Karen Blackett	702	702	—

Notes

(1) Each person listed beneficially owns less than 1% of Diageo’s ordinary shares. Ordinary shares held by Directors have the same voting rights as all other ordinary

shares.

(2) Any change in shareholding between the end of the financial year on 30 June 2024 and the last practicable date before publication of this report, being 24 July

2024, is outlined in the table above.

(3) Both the shareholding requirement and shareholding at 30 June 2024 are expressed as a percentage of base salary on 30 June 2024 and calculated using a three-

month average share price for period ending 30 June 2024 of £27.22. For the purposes of the shareholding requirement any vested but unexercised share options are

reflected on an estimated net of tax basis.

(4) The total share interests shown above include 2023 Deferred Bonus Plan Shares for Debra Crew (109 ADRs) and Lavanya Chandrashekar (754 ADRs).

(5) Javier Ferrán, Debra Crew, Lavanya Chandrashekar and Susan Kilsby have share interests in ADRs (one ADR is equivalent to four ordinary shares). The share

interests in the table are stated as ordinary share equivalents.

(6)The figure as at 30 June 2023 for Lavanya Chandrashekar reflects the correction of an error in last year's report which had omitted her interests in 1,698 ADRs

(equivalent to 6,792 ordinary shares) awarded as a proportion of her annual incentive outcome for the year ended 30 June 2022. The value of this award had been

correctly reflected in the single total figure of remuneration disclosures in the 2022 and 2023 Directors' Remuneration Reports and was disclosed to shareholders at

the time of the award.

(7)The figure as at 30 June 2023 for Alan Stewart has been corrected from 7,269 shares to 7,354 shares. The correction reflects additional shares acquired via an

automatic dividend reinvestment plan.

(8) Lady Mendelsohn resigned from the Board on 28 September 2023 and therefore no details are included for the shareholding after her date of cessation.

Governance (continued)

215

Relative importance of spend on pay

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 buyback programme but excluding transaction costs), and the percentage

change from the year ended 30 June 2023 to the year ended 30 June 2024. There are no other significant distributions or payments of

profit or cash flow.


Distributions to shareholders (13.7)%	Staff pay5.4%

CEO total remuneration and TSR performance

The graph below show the total shareholder return for Diageo plc and the FTSE 100 Index since 30 June 2014 and demonstrates the

relationship between pay and performance for the Chief Executive, using current and previously published single total remuneration

figures. The FTSE 100 Index has been chosen because it is a widely recognised performance benchmark for large companies in the

United Kingdom.


	Total shareholder return - value of hypothetical £100 holding		Chief Executive total remuneration (includes legacy LTIP awards) (£'000)


ò	Diageo
ò	FTSE 100
ò	Chief Executive total remuneration


	Ivan Menezes(1) £'000 F15	Ivan Menezes(1) £'000 F16	Ivan Menezes(1) £'000 F17	Ivan Menezes(1) £'000 F18	Ivan Menezes(1) £'000 F19	Ivan Menezes(1) £'000 F20	Ivan Menezes(1) £'000 F21	Ivan Menezes(1) £'000 F22	Ivan Menezes(1) £'000 F23	Debra Crew(1)(2) £'000 F23	Debra Crew(1)(2) £'000 F24
Chief Executive total remuneration(2)	3,888	4,156	3,399	8,995	11,776	2,273	6,019	7,343	10,582	403	3,067
Annual incentive(3)	44.0%	65.0%	68.0%	70.0%	61.0%	0.0%	93.8%	93.8%	37.3%	35.4%	24.8%
Share options(3)	0.0%	0.0%	0.0%	60.0%	73.1%	27.5%	10.0%	61.5%	77.5%	77.5%	0.0%
Performance shares(3)	33.0%	31.0%	0.0%	70.0%	89.3%	10.0%	29.3%	59.3%	98.7%	98.8%	58.9%

(1) To enable comparison, Ivan Menezes’ and Debra Crew's single total figure of remuneration has been converted into sterling using the average weighted exchange

rate for the relevant financial year. The figure represented in the graph for fiscal 23 is the combined single figure total for Ivan Menezes and Debra Crew.

(2) The single total figure of remuneration for Debra Crew in fiscal 23 and fiscal 24 includes pro-rata long-term incentive plan awards proportionate to the duration of

her appointment as CEO.

(3) % of total maximum opportunity.

Governance (continued)

216

Remuneration for the wider workforce and CEO pay ratio

Alignment of Executive pay with the wider workforce

There is clear alignment in the approach to pay for executives and the wider workforce in the way that remuneration principles are

followed, as well as the mechanics of the salary review process and incentive plan design, which are broadly consistent throughout the

organisation. There is a strong focus on performance-related pay, and the performance measures under the annual incentive plan and

long-term incentive plan are the same for executives and other eligible employees. The reward package for Executive Directors is

consistent with that of the senior management population, however, a much higher proportion of total remuneration for the Executive

Directors is linked to business performance, compared to the rest of the employee population.

The structure of our reward packages is based on the principle that it should enable Diageo to attract and retain the best talent globally

within our broader industry. It is driven by local market practice, as well as the level of seniority and accountability, reflecting the

global nature of our business. Diageo is committed to fostering an inclusive and diverse workplace, and creating a culture where every

individual can thrive. Reflective of this, pay parity and consistency of treatment for all employees are critical to the reward practices

across the organisation. The reward framework is regularly reviewed to ensure employees are rewarded fairly and appropriately, in

line with the business strategy, performance outcomes, competitive market practice and our diversity and inclusion agenda.

During the year, the Remuneration Committee Chair explained to employees the Directors' remuneration policy, the role of the

Committee, executive remuneration principles and structure and sought their feedback on wider reward matters as part of the

workforce engagement sessions. In 2024 this was a new format and was viewed by the Committee Chair, and the employees who

participated, to be a productive and informative discussion.

Remuneration Committee review of wider workforce pay

Each year, the Remuneration Committee has a detailed session reviewing wider workforce remuneration. In fiscal 24, the review

focused on the prior year’s annual reward cycle outcomes, including base pay competitive positions, retaining talent in a global

market, the level of differentiation across our reward programmes, gender pay analysis, and how we connect performance and reward

programmes. The Committee also considered the challenges of attracting and retaining critical talent in a global marketplace at all

levels as well as the all-employee reward priorities for the coming year. Information on wider workforce reward is also provided as

required throughout the year to enable the Committee to consider the broader employee context when making executive remuneration

decisions, for example the annual salary increase budgets by country.

Supporting our employees

We focus on all aspects of the wellbeing of our employees. We monitor the cost-of-living in all our geographies using a formal

monitoring process and have implemented actions as required, typically by awarding off-cycle salary increases in high-inflation

geographies. We have provided financial education to all employees to support them in managing their personal finances more

effectively. Our global group of wellbeing champions work with regional and market teams to drive wellbeing initiatives locally,

coming together each quarter for a global connect. Over fiscal 24, activations have included mental health first aider training, external

speakers on wellbeing topics such as men's health, menopause, resilience, nutrition as well as holding masterclasses in activities to

support wellbeing.

In fiscal 24 we rolled out Celebrate, our global recognition platform, to over 50 countries having been initially piloted in NAM and the

UK. We now have the majority of the Diageo workforce covered by the programme and have seen 90,000 recognition moments to

17,000 employees. The programme supports embedding a culture of speed and agility and enables leaders and peers to recognise

actions in the moment.

We continue to innovate with benefit policies that support and demonstrate our commitment to diversity and inclusion. In fiscal 24 we

introduced a Carers Leave policy in the UK which provides all employees with two weeks paid leave per year to care, or arrange care,

for dependents. This supports the attraction and retention of the best talent through a market leading policy, and by supporting

flexibility and wellness. We will be working on a wider roll out across fiscal 25.

Fiscal 24 saw the launch of a new Employee Resource Group (ERG) for neurodiverse colleagues (PRISM) which complements the

other ERGs in place supporting all colleagues. PRISM amplifies the voice of the neurodivergent community and is involved in our

business supporting areas such as brand mobilisation. These practices reflect our progressive culture, where our policies are a hallmark

of our business and differentiates our employee value proposition.

CEO pay ratio

In accordance with The Companies (Miscellaneous Reporting) Regulations 2018, the table below sets out Diageo’s CEO pay ratios for

the year ended 30 June 2024. These CEO pay ratios provide a comparison of the Chief Executive’s total remuneration based on Debra

Crew's total single figure of remuneration, converted into sterling, with the equivalent remuneration for the employees paid at the 25th

(P25), 50th (P50) and 75th (P75) percentile of Diageo’s workforce in the United Kingdom. Also shown are the salary and total

remuneration for each quartile employee.

Governance (continued)

217


Year	Method	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio
2024(1)	Option A	69:1	51:1	40:1
2024	Total pay and benefits	£44,668	£60,620	£77,388
2024	Salary	£39,229	£50,720	£59,850
2023(2)(3)	Option A(4)	231:1	177:1	137:1
2022(3)	Option A(4)	146:1	114:1	90:1
2021	Option A(4)	127:1	100:1	79:1
2020	Option A(4)	50:1	38:1	31:1
2019	Option A(4)	265:1	208:1	166:1

(1) Debra Crew's total single figure of remuneration figure (see page 206 for details) in fiscal 24 used in the calculation of the CEO pay ratio includes pro-rata long-term

incentive plan awards proportionate to the duration of her appointment as CEO.

(2) 2023 CEO pay ratios comprise the sum of both Sir Ivan Menezes' and Debra Crew's total single figure of remuneration converted to sterling.

(3) 2023 and 2022 CEO pay ratios have been updated to reflect the value of the updated prior year single figure of remuneration 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

original disclosure.

(4) Only people employed in the United Kingdom and with the same number of contractual working hours throughout the full 12-month period have been included in

the calculation. Inclusion of employees outside 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.

Methodology

Consistent with the approach for Diageo’s disclosure in previous years, the methodology used to identify the employees at each

quartile for 2024 is Option A, as defined in the regulations. We believe this is the most robust and accurate approach, and is in line

with shareholder expectations.

Total full-time equivalent remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant

year and has, other than where noted below, been calculated in line with the methodology for the ‘single total figure of remuneration’

for the Chief Executive (shown on page 206 of this report). The total remuneration calculations were based on data as at 30 June 2024.

Actual remuneration was converted into the full-time equivalent for the role and location by pro-rating earnings to reflect full-time

contractual working hours and these figures were then ranked to identify the employees sitting at the percentiles. To ensure that the

total remuneration for the selected median, 25th and 75th percentile employee is sufficiently representative of those positions, we

calculated the total remuneration for a number of employees above and below each of the selected median, 25th and 75th percentile UK

employees and used the median value. In light of financial performance outcomes being signed off close to the publication of the

Annual Report, the Diageo Group business multiple, which is applicable to the majority of UK employees, has been used to calculate

all payments under the annual incentive, although some employees may receive a variation on this multiple in practice. Pension values

for each employee are not calculated on an actuarial basis as for the Chief 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 meaningful data for a large group of people to be obtained in a more efficient way.

Points to note for the year ended 30 June 2024

The median remuneration and resulting pay ratio for 2024 are consistent with the pay and progression policies for Diageo’s UK

employees as a whole and reflect the impact of performance-related pay on total remuneration for the year. As the Chief Executive has

a larger proportion of her total remuneration linked to business performance than other employees in the UK workforce, the ratio has

decreased versus last year due to proportionate reduction in incentive outcome for the CEO for 2024 versus 2023.

Governance (continued)

218

Change in pay for Directors compared to wider workforce

The table below shows the percentage change in Directors’ remuneration and average remuneration of employees on an annual basis.

Given the small size of Diageo plc’s workforce, data for all employees of the group has also been included.



	2024			2023			2022			2021			2020
	Salary	Bonus	Benefits	Salary	Bonus	Benefits	Salary	Bonus	Benefits	Salary	Bonus	Benefits	Salary	Bonus	Benefits
Plc employee average(1)	6.2%	(44.8%)	10.0%	9.0%	(61.3%)	(7.2%)	11.1%	25.8%	10.5%	5.1%	N/A(5)	38.8%	7.5%	(100.0%)	9.0%
Average global employee(2)	11.1%	(17.6%)	3.1%	12.9%	(41.6%)	17.0%	6.4%	38.4%	11.7%	—	278.8%	12.6%	5.3%	(67.8%)	6.9%
Executive Directors(3)
Debra Crew(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)
Lavanya Chandrashekar	3.8%	(34.1%)	(22.1%)	2.3%	(58.8)%	(89.4)%	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)	N/A(5)
Non-Executive Directors(4)
Melissa Bethell	3.6%	_	218.4%	3.0%	—	10.1%	2.3%	—	16.0%	N/A(5)	—	—	—	—	—
Karen Blackett (5)	3.6%	_	4231.3%	N/A(5)	—	N/A(5)	N/A(5)	—	N/A(5)	—	—	—	—	—	—
Valérie Chapoulaud- Floquet	3.6%	_	159.0%	3.0%	—	108.5%	—	—	—	N/A(5)	—	—	—	—	—
Javier Ferrán (Chair)	4.1%	_	132.9%	2.3%	—	(22.4%)	8.3%	—	28.8%	—	—	—	—	—	—
Susan Kilsby	4.5%	_	182.7%	2.6%	—	125.7%	3.8%	—	300.0%	9.6%	—	(87.7%)	37.3%	—	68.9%
Sir John Manzoni	3.6%	_	241.5%	3.0%	—	20.0%	—	—	—	—	—	—	—	—	—
Lady Nicola Mendelsohn	N/A(5)	_	N/A(5)	3.0%	—	—	2.3%	—	—	3.2%	—	—	3.3%	—	—
Alan Stewart	2.7%	_	252.8%	3.2%	—	—	4.7%	—	—	2.4%	—	—	2.5%	—	—
Ireena Vittal	3.6%	_	689.2%	3.0%	—	734.0%	—	—	—	—	—	—	—	—	—

1.Around 15 UK-based employees are employed by Diageo plc. Their remuneration has been calculated in line with the approach used for the CEO pay-ratio

calculation and the average year-on-year change has been reported. Only those employed during the full financial year have been included in calculations.

2.Calculated by dividing staff cost related to salaries, bonus and benefits by the average number of employees on a full-time equivalent basis, as disclosed in note 4c

to the financial statements under staff costs and average number of employees on page 251, but reduced to account for the inclusion of Executive Directors in

reported figures. The salary, bonus and benefits cost data used for calculation are subsets of the Wages and salaries figure disclosed in this note. The salary data

used for this calculation has been adjusted to exclude costs 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 Directors, the bonus values used for the calculation reflect the bonus earned in relation to

performance during the relevant financial year.

3.Calculated using the data from the single total figure of remuneration table on page 206) in US dollars, reflecting payment currency for Debra Crew and Lavanya

Chandrashekar.

4.Calculated using the fees and taxable benefits disclosed under Non-Executive Directors’ remuneration in the table on page 221. Taxable benefits for Non-Executive

Directors comprise a product allowance as well as expense reimbursements relating to attendance at Board 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.

Payments to former Directors

There were no payments to former Directors in the year ended 30 June 2024.

Payments for loss of office

It was announced on 3 May 2024 that Lavanya Chandrashekar would be stepping down as Chief Financial Officer and as a director of

Diageo during fiscal 25. Details of the remuneration arrangements for Lavanya, which were approved by the Remuneration

Committee and are in accordance with the Directors’ remuneration policy, are set out below. Full details of the values of any amounts

paid will be reported in the Directors' remuneration report next year.

Lavanya’s service contract provides for a twelve-month notice period (which commenced on 3 May 2024) and she remains eligible for

salary and benefits until the date she leaves the company. If the company so determines, Lavanya may be paid a payment in lieu of

notice to cover salary and the cost of contractual benefits in respect of any remaining portion of the notice period.

Lavanya is required to retain the lower of the level of her actual shareholding as at the leave date, or shares to the value of 400% of

salary, for two years post her leave date in accordance with the Directors' remuneration policy.

The Remuneration Committee exercised its discretion to treat Lavanya as a good leaver under the incentive arrangements in

accordance with the remuneration policy. Lavanya will be eligible to receive a bonus under Diageo’s annual incentive plan (AIP) for

the financial years ending 30 June 2024 and 30 June 2025 on a time pro-rata basis reflecting time employed in the respective financial

year (excluding any period of garden leave). Any payments due will be payable at the normal times and subject to financial

performance outcomes and delivery against individual business objectives, with one-third delivered in deferred bonus shares in

accordance with the normal deferral rules (provided that in respect of any award made after the leave date, the award will be made on

Governance (continued)

219

terms that it will vest immediately upon award). Deferred bonus shares related to bonuses for prior financial years, will vest on the

leave date in accordance with the remuneration policy. Any deferred bonus shares which are delivered by the leave date are subject to

the post-cessation shareholding requirement.

Lavanya’s unvested Long-Term Incentive Plan (LTIP) awards (granted in 2021, 2022 and 2023) will continue and vest (subject to the

extent that the relevant performance conditions, assessed at the time of vesting, are satisfied and subject to time pro-rating to reflect

the period employed during the performance period) on the original vesting dates. To the extent they vest, options granted in 2021 will

be exercisable until 3 March 2026 (the Committee having exercised discretion to slightly extend the normal exercise period), options

granted in 2022 will be exercisable until 2 September 2026 and options granted in 2023 will be exercisable until 4 September 2027.

Regarding already vested but unexercised options granted in 2018, the Committee exercised its discretion to allow these to be

exercisable within 18 months (instead of the default 12 months) of leaving and lapse thereafter. All LTIP awards will continue to be

subject to their respective two-year post-vesting holding periods. No further LTIP awards will be granted. Shares held under the Share

Incentive Plan will be treated in accordance with the rules of that plan. The company’s Malus and Clawback Policy will continue to

apply.

As permitted under the Remuneration Policy, Lavanya will receive a contribution of up to a maximum of £25,000 excluding VAT

towards legal fees incurred in connection with agreeing her departure terms. She will also receive up to a maximum annual amount of

£20,000 plus VAT per year for fees incurred in connection with UK and US tax return submissions for three years following her

departure. Finally, in relation to repatriation from the UK to the US, flights and shipping of possessions will be provided in accordance

with the company’s Global Mobility Policy, as well as a net sum of £114,500 to cover disturbance costs in connection with her

repatriation to the US.

Governance (continued)

220

Non-Executive Directors

Fee policy

Javier Ferrán’s fee as non-executive Chair was increased by 4.5% (from £670,000 to £700,000) on 1 October 2023. The Chair’s fee is

appropriately positioned against our comparator group of FTSE 30 companies excluding financial services. The Executive Directors

and the Chair approved an increase in the base fee for Non-Executive Directors of 3.8% (from £104,000 to £108,000), effective 1

October 2023.


	2024	2023
Per annum fees	£'000	£'000
Chair of the Board	700	670
Non-Executive Directors
Base fee	108	104
Senior Non-Executive Director	35	30
Chair of the Audit Committee	35	35
Chair of the Remuneration Committee	35	35

Single total figure of remuneration for Non-Executive Directors


	Fees £'000		Taxable benefits £'000(1)		Total £'000(2)
	2024	2023	2024	2023	2024	2023
Chair
Javier Ferrán	692	665	4	1	696	666
Non-Executive Directors
Melissa Bethell	107	103	5	2	112	105
Karen Blackett	107	103	5	1	112	104
Valérie Chapoulaud-Floquet	107	103	13	10	120	113
Susan Kilsby	176	168	14	11	190	179
Sir John Manzoni	107	103	4	2	111	105
Lady Nicola Mendelsohn(3)	26	103	1	1	27	104
Alan Stewart	142	138	4	1	146	139
Ireena Vittal	107	103	10	10	117	113

(1)Taxable benefits include a product allowance and expense reimbursements relating to travel, accommodation and subsistence in connection with attendance at

Board meetings during the year, which are deemed by HMRC to be taxable in the United Kingdom. The amounts in the single total figure of remuneration table

above include any tax gross-ups on the benefits provided by the company on behalf of the Directors. Non-taxable expense reimbursements have not been included

in the single figure of remuneration table above.

(2) Some figures add up to slightly different totals due to rounding.

(3) Lady Mendelsohn resigned from the Board at the 2023 AGM on 28 September 2023.

Governance (continued)

221

Looking ahead to 2025

Salary increases for the year ending 30 June 2025

The Remuneration Committee reviewed base salaries for Executive Committee members and agreed the following increase for the

Chief Executive Officer, effective 1 October 2024.


	Debra Crew		Lavanya Chandrashekar
Salary at 1 October ('000)	2024	2023	2024	2023
Base salary	$1,824	$1,750	$1,044	$1,044
% increase (over previous year)	4.25%	n/a	0%	4%

As previously announced, Nik Jhanghiani will join the Board in Autumn 2024. His annual salary will be £900,000 and his benefits and

incentives will be in accordance with the remuneration policy. In addition, Nik will be entitled to an additional one-off award on

joining to compensate him for the financial loss of forfeited awards from his previous employer. Full details will be provided when

these are confirmed at the time of the award and in the Directors' remuneration report next year.

Annual incentive design for the year ending

30 June 2025

The measures and targets for the annual incentive plan are reviewed annually by the Remuneration Committee and are carefully

chosen to drive financial and individual business performance goals related to the company’s short-term strategic operational

objectives. The plan design for Executive Directors for the year ending 30 June 2025 will comprise the following performance

measures and weightings (no change from last year), with targets set for the full financial year:

•net sales value (% growth) (26.67% weighting): a key performance measure of year-on-year top line growth;

•operating profit (% growth) (26.67% weighting): stretching profit targets drive operational efficiency and influence the level of

returns that can be delivered to shareholders through increases in share price and dividend income not including exceptional items or

exchange;

•operating cash conversion (26.67% weighting): ensures focus on efficient cash delivery by the end of the year; and

•individual business objectives (20% weighting): measurable deliverables that are specific to the individual and are focused on

supporting the delivery of key strategic objectives.

The Committee has discretion to adjust the payout to reflect appropriately an individual's contribution or the overall business context.

Details of the targets for the year ending 30 June 2025 will be disclosed retrospectively in next year’s annual report, by which time

they will no longer be deemed commercially sensitive by the Board.

The annual incentive opportunity for Executive Directors will remain consistent with prior years, equal to 100% of base salary at

target, with a maximum opportunity of 200% of base salary.

Long-term incentive awards to be made in the year ending 30 June 2025

The long-term incentive plan measures are reviewed annually by the Remuneration Committee and are selected to reward long-term

consistent performance in line with Diageo’s business strategy and to create alignment with the delivery of value for shareholders. The

Committee has ensured that the incentive structure for senior management does not raise environmental, social and governance risks

by inadvertently motivating irresponsible behaviour.

As per last year, DLTIP awards to be made in September 2024 will comprise awards of both performance shares and share options,

based on stretching targets against the key performance measures as outlined in the table on page 223, assessed over a three-year

performance period. The relative total shareholder return measure is based on the same constituent group and vesting schedule as

outlined on page 209.

The Committee set fiscal 2025 financial targets by considering a number of factors including historical performance, consumer trends

amid ongoing macroeconomic challenges, market conditions and the competitive landscape. These targets align with our focus on

returning to our medium-term guidance ranges.

The ESG measures in the DLTIP comprise five ambitions reflecting the ‘Spirit of Progress‘ action plan, to make a positive impact on

the environment and society. Each goal is weighted equally:

•reduction in greenhouse gas emissions in our direct operations (Scope 1&2);

•improvement in the water efficiency index;

•number of people who confirm changed attitudes on the dangers of underage drinking after participating in a Diageo-supported

education programme; and

•inclusion and diversity (percentage of female leaders globally and percentage of ethnically diverse leaders globally).

Governance (continued)

222

In setting ESG targets, the Committee took account of the material progress made to date across the various measures versus the 'Spirit

of Progress' 2030 action plan. The Committee considered the opportunity to continuously improve against high levels of achievement

and has set targets in this context.

The performance share element of the DLTIP applies to the Executive Committee and the top level of senior leaders across the

organisation worldwide, whilst the share option element is applicable to a much smaller population comprising only members of the

Executive Committee. One market price performance-based option is valued at one-third of a performance share.

Awards are calculated on the basis of a six-month average share price for the period ending 30 June 2024. This averaging period

which is in line with Diageo's standard practice, helps to smooth out volatility in share price. The price used to calculate the awards

(on the basis of ordinary shares) to be granted in September 2024 was 11% higher than the share price at the time the Committee

approved the awards to be granted.

It is intended that a DLTIP award to the equivalent of 500% of base salary will be made to Debra Crew in September 2024,

comprising 375% of salary in performance shares and the equivalent of 125% of salary in market price performance-based share

options. It is intended that a DLTIP award to the equivalent of 480% of salary will be made to Nik Jhangiani in 2024 following the

commencement of his employment, comprising 360% of salary in performance shares and the equivalent of 120% of salary in market

price share options. In performance share equivalents, one market price option is valued at one-third of a performance share.

The table below summarises the annual DLTIP awards to Debra Crew and Nik Jhangiani to be made in 2024.


Grant value (% salary)	Chief Executive	Chief Financial Officer
	Performance share equivalents (1 share: 3 options)
Performance shares	375%	360%
Share options	125%	120%
Total	500%	480%

Performance conditions for long-term incentive awards to be made in the year ending 30 June 2025(1)


	Performance shares								Share options
		Organic profit before exceptional items and tax (CAGR)	Environmental, social & governance (ESG)
	Organic net sales (CAGR)	Organic profit before exceptional items and tax (CAGR)	Greenhouse gas reduction	Water efficiency index	Positive drinking	% Female leaders	% Ethnically diverse leaders	Vesting schedule	Relative Total Shareholder Return	Cumulative free cash flow ($m)	Vesting schedule
Weighting (% total)	40%	40%	5%	5%	5%	2.5%	2.5%		50.0%	50.0%
Maximum	6.0%	9.1%	29.9%	11.2%	3.7m	50%	49%	100%	3rd and above	$9,950	100%
Midpoint	4.5%	6.1%	23.1%	8.7%	3.1m	48%	47%	60%	—	$8,550	60%
Threshold	3.0%	3.1%	16.3%	6.2%	2.5m	46%	45%	20%	9th	$7,150	20%

(1) Details of the considerations taken in to account when setting the targets for the DLTIP by the Committee are set out on page 222.

Governance (continued)

223

Additional information

Key management personnel related party transactions

Key management personnel of the group comprises the Executive and Non-Executive Directors, the members of the Executive

Committee and the Company Secretary.

Diageo plc has granted rolling indemnities to the Directors and the Company Secretary, uncapped in amount, in relation to certain

losses and liabilities which they may incur in the course of acting as Directors or Company Secretary (as applicable) of Diageo plc or

of one or more of its subsidiaries. These indemnities continue to be in place at 30 June 2024.

Other than disclosed in this report, no Director had any interest, beneficial or non-beneficial, in the share capital of the company. Save

as disclosed above, no Director has or has had any interest in any transaction which is or was unusual in its nature, or which is or was

significant to the business of the group and which was effected by any member of the group during the financial year, or which having

been effected during an earlier financial year, remains in any respect outstanding or unperformed. There have been no material

transactions during the last three years to which any Director or officer, or 3% or greater shareholder, or any spouse or dependent

thereof, was a party. There is no significant outstanding indebtedness to the company from any Directors or officer or 3% or greater

shareholder.

Statutory and audit requirements

This report was approved by a duly authorised Committee of the Board of Directors and was signed on its behalf on 29 July 2024 by

Susan Kilsby who is Chair of the Remuneration Committee.

The Board has followed the principles of good governance as set out in the UK Corporate Governance Code and complied with the

regulations contained in the Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations

2008, the Listing Rules of the Financial Conduct Authority and the relevant schedules of the Companies Act 2006.

The Companies Act 2006 and the Listing Rules require the company’s auditor to report on the audited information in their report and

to state that this section has been properly prepared in accordance with these regulations.

The annual remuneration report is subject to an advisory vote by shareholders at the AGM on 26 September 2024. Terms defined in

this Directors' remuneration report are used solely herein.

Governance (continued)

224

Directors’ report

The Directors present the Directors’ report for the year ended 30 June 2024.

Company status

Diageo plc is a public limited liability company incorporated in England and Wales with registered number 23307 and registered

office and principal place of business at 16 Great Marlborough Street, London W1F 7HS, United Kingdom. The company's telephone

number is +44 (0) 20 7947 9100. The company's agent in the United States is General Counsel, Diageo North America, Inc., 175

Greenwich Street, 3 World Trade Center, New York, NY 10007, United States. The company was incorporated on 21 October 1886. It

is the ultimate holding company of the group, a full list of whose subsidiaries, partnerships, associates, joint ventures and joint

arrangements is set out in note 10 to the financial statements set out on page 220-225 of the UK Annual Report.

Directors

The Directors of the company who currently serve are shown in the section ‘Board of Directors’ on pages 154-155 in accordance with

the UK Corporate Governance Code, all the Directors will retire by rotation at the AGM and offer themselves for re-election. Further

details of Directors’ contracts, remuneration and their interests in the shares of the company at 30 June 2024 are given in the

Directors’ remuneration report. The Directors’ powers are determined by UK legislation and Diageo’s articles of association. The

Directors may exercise all the company’s powers provided that Diageo’s articles of association or applicable legislation do not

stipulate that any powers must be exercised by the members.

Auditor

The auditor, PricewaterhouseCoopers LLP, is willing to continue in office and a resolution for its re-appointment as auditor of the

company will be submitted to the AGM.

Disclosure of information to the auditor

In accordance with Section 418 of the Companies Act 2006, the Directors who held office at the date of approval of this Directors’

report confirm that, so far as they are each aware, there is no relevant audit information of which the company’s auditor is unaware;

and each Director has taken all reasonable steps to ascertain any relevant audit information and to ensure that the company’s auditor is

aware of that information.

Corporate governance statement

The corporate governance statement, prepared in accordance with rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance

and Transparency Rules, comprises the following sections of the Annual Report: the ‘Corporate governance report’, the ‘Audit

Committee report’ and the ‘Additional information for shareholders’.

Significant agreements – change of control

The following significant agreements contain certain termination and other rights for Diageo’s counterparties upon a change of control

of the company. Under the partners agreement governing the company’s 34% investment in Moët Hennessy SAS (MH) and Moët

Hennessy International SAS (MHI), if a Competitor (as defined therein) directly or indirectly takes control of the company (which, for

these purposes, would occur if such Competitor acquired more than 34% of the voting rights or equity interests in the company),

LVMH Moët Hennessy – Louis Vuitton SA (LVMH) may require the company to sell its interests in MH and MHI to LVMH.

The master agreement governing the operation of the group’s market-level distribution joint ventures with LVMH states that if any

person acquires interests and rights in the company resulting in a Control Event (as defined) occurring in respect of the company,

LVMH may within 12 months of the Control Event either appoint and remove the chair of each joint venture entity governed by such

master agreement, who shall be given a casting vote, or require each distribution joint venture entity to be wound up. Control Event

for these purposes is defined as the acquisition by any person of more than 30% of the outstanding voting rights or equity interests in

the company, provided that no other person or entity (or group of affiliated persons or entities) holds directly or indirectly more than

30% of the voting rights in the company.

Governance (continued)

225

Related party transactions

Transactions with related parties are disclosed in note 21 to the consolidated financial statements.

Major shareholders

At 30 June 2024, the following substantial interests (3% or more) in the company’s ordinary share capital (voting securities) had been

notified to the company:


Shareholder	Number of ordinary shares	Percentage of issued ordinary share (excluding treasury shares)	Date of notification of interest
BlackRock Investment Management (UK) Limited (indirect holding)(1)	147,296,928	5.89%	3 December 2009
Capital Research and Management Company (indirect holding)	124,653,096	4.99%	28 April 2009
Massachusetts Financial Services Company (indirect holding)	111,560,606	4.99%	29 February 2024

(1) On 25 January 2024, BlackRock Inc. filed an Amendment to Schedule 13G with the SEC in respect of the calendar year ended 31 December 2023, reporting that, as

of 25 January 2024, 192,713,107 ordinary shares representing 8.6% of the issued ordinary share capital were beneficially owned by BlackRock Inc. and its

subsidiaries (including BlackRock Investment Management (UK) Limited).

The company has not been notified of any other substantial interests in its securities since 30 June 2024. The company’s substantial

shareholders do not have different voting rights. Diageo, so far as is known by the company, is not directly or indirectly owned or

controlled by another corporation or by any government. Diageo knows of no arrangements, the operation of which may at a

subsequent date result in a change of control of the company.

As at the close of business on 24 July 2024, 325,119,456 ordinary shares, including those held through American Depositary Shares

(ADSs), were held by approximately 2,598 holders (including American Depositary Receipt (ADR) holders) with registered addresses

in the United States, representing approximately 14.6% of the outstanding ordinary shares (excluding treasury shares). At such date,

81,092,735 ADSs were held by 2,140 registered ADR holders. Since certain of such ordinary shares and ADSs are held by nominees

or former Grand Metropolitan PLC or Guinness plc ADR holders who have not re-registered their ADSs, the number of holders may

not be representative of the number of beneficial owners in the United States or the ordinary shares held by them.

Employment policies

A key strategic imperative of the company is to attract, retain and grow a pool of diverse, talented employees. Diageo recognises that a

diversity of skills and experiences in its workplace and communities will provide a competitive advantage. To enable this, the

company has various global employment policies and standards, covering such issues as resourcing, data protection, human rights,

dignity at work, health, safety and wellbeing. These policies and standards seek to ensure that the company treats current or

prospective employees justly, solely according to their abilities to meet the requirements and standards of their role and in a fair and

consistent way. This includes giving full and fair consideration to applications from prospective employees who are disabled, having

regard to their aptitudes and abilities, and not discriminating against employees under any circumstances (including in relation to

applications, training, career development and promotion) on the grounds of any disability. In the event that an employee, worker or

contractor becomes disabled in the course of their employment or engagement, Diageo aims to ensure that reasonable steps are taken

to accommodate their disability by making reasonable adjustments to their existing employment or engagement.

Trading market for shares

Diageo plc ordinary shares are listed on the London Stock Exchange (LSE). Diageo ADSs, representing four Diageo ordinary shares

each, are listed on the New York Stock Exchange (NYSE). The principal trading market for the ordinary shares is the LSE. Diageo

shares are traded on the LSE’s electronic order book. Orders placed on the order book are displayed on-screen through a central

electronic system and trades are automatically executed, in price and then time priority, when orders match with corresponding buy or

sell orders. Only member firms of the LSE, or the LSE itself if requested by the member firm, can enter or delete orders on behalf of

clients or on their own account. All orders are anonymous. Although use of the order book is not mandatory, all trades, whether or not

executed through the order book and regardless of size, must be reported within three minutes of execution, but may be eligible for

deferred publication.

The Markets in Financial Instruments Directive (MiFID) allows for delayed publication of large trades with a sliding scale

requirement based on qualifying minimum thresholds for the amount of consideration to be paid/the proportion of average daily

turnover (ADT) of a stock represented by a trade. Provided that a trade/consideration equals or exceeds the qualifying minimum size,

it will be eligible for deferred publication ranging from 60 minutes from time of trade to three trading days after time of trade.

American depositary shares

Fees and charges payable by ADR holders

Citibank N.A. serves as the depositary (Depositary) for Diageo’s ADS programme. Pursuant to the deposit agreement dated

14 February 2013 between Diageo, the Depositary and owners and holders of ADSs (the Deposit Agreement), ADR holders may be

required to pay various fees to the Depositary, and the Depositary may refuse to provide any service for which a fee is assessed until

Governance (continued)

226

the applicable fee has been paid. In particular, the Depositary, under the terms of the Deposit Agreement, shall charge a fee of up to

$5.00 per 100 ADSs (or fraction thereof) relating to the issuance of ADSs; delivery of deposited securities against surrender of ADSs;

distribution of cash dividends or other cash distributions (i.e. sale of rights and other entitlements); distribution of ADSs pursuant to

stock dividends or other free stock distributions, or exercise of rights to purchase additional ADSs; distribution of securities other than

ADSs or rights to purchase additional ADSs (i.e. spin-off shares); and depositary services. Citibank N.A. is located at 388 Greenwich

Street, New York, New York, 10013, United States. In addition, ADR holders may be required under the Deposit Agreement to pay

the Depositary (a) taxes (including applicable interest and penalties) and other governmental charges; (b) registration fees; (c) certain

cable, telex, and facsimile transmission and delivery expenses; (d) the expenses and charges incurred by the Depositary in the

conversion of foreign currency; (e) such fees and expenses as are incurred by the Depositary in connection with compliance with

exchange control regulations and other regulatory requirements; and (f) the fees and expenses incurred by the Depositary, the

custodian, or any nominee in connection with the servicing or delivery of ADSs. The Depositary may (a) withhold dividends or other

distributions or sell any or all of the shares underlying the ADSs in order to satisfy any tax or governmental charge and (b) deduct

from any cash distribution the applicable fees and charges of, and expenses incurred by, the Depositary and any taxes, duties or other

governmental charges on account.

Direct and indirect payments by the Depositary

The Depositary reimburses Diageo for certain expenses it incurs in connection with the ADR programme, subject to a ceiling set out in

the Deposit Agreement pursuant to which the Depositary provides services to Diageo. The Depositary has also agreed to waive certain

standard fees associated with the administration of the programme. Under the contractual arrangements with the Depositary, Diageo

has received approximately $1.3 million arising out of fees charged in respect of dividends paid during the year and issuance and

cancellation fees to cover the Company's ADR programme costs. These payments are received for expenses associated with non-deal

road shows, third-party investor relations consultant fees and expenses, Diageo’s cost for administration of the ADR programme not

absorbed by the Depositary and related activities (e.g. expenses associated with the AGM), travel expenses to attend training and

seminars, exchange listing fees, legal fees, auditing fees and expenses, the SEC filing fees, expenses related to Diageo’s compliance

with US securities law and regulations (including, without limitation, the Sarbanes-Oxley Act) and other expenses incurred by Diageo

in relation to the ADR programme.

Articles of association

The company is incorporated under the name Diageo plc, and is registered in England and Wales under registered number 23307. The

following description summarises certain provisions of Diageo’s articles of association (as adopted by special resolution at the Annual

General Meeting on 28 September 2023) and applicable English law concerning companies (the Companies Acts), in each case as at

24 July 2024. This summary is qualified in its entirety by reference to the Companies Acts and Diageo’s articles of association.

Investors can obtain copies of Diageo’s articles of association by contacting the Company Secretary at: the.cosec@diageo.com. Any

amendment to the articles of association of the company may be made in accordance with the provisions of the Companies Act 2006,

by way of special resolution.

Directors

Diageo’s articles of association provide for a board of directors, consisting (unless otherwise determined by an ordinary resolution of

shareholders) of not fewer than three directors and not more than 25 directors, in which all powers to manage the business and affairs

of Diageo are vested.

A director must not vote on, or count towards the quorum in relation to, any resolution of the Board in respect of any contract in which

they have an interest and, if they do so, their vote will not be counted. This prohibition does not apply to any resolution where that

interest cannot reasonably be regarded as likely to give rise to a conflict of interest or where that interest arises only from certain

specified matters, including: (a) indemnifying the director in respect of obligations incurred at the request of or for the benefit of the

company or any of its subsidiary undertakings; (b) indemnifying a third party in respect of obligations of the company or any of its

subsidiary undertakings for which the director has assumed responsibility in whole or in part under an indemnity or guarantee or by

the giving of security; (c) offers of securities by the company or any of its subsidiary undertakings in which the director will or may be

entitled to participate as a holder of securities; (d) contracts concerning another company in which the director is the holder of or

beneficially interested in less than 1% of any class of the equity share capital of such company; (e) employee benefits in relation to the

company or any of its subsidiary undertakings in which the director will share in a similar manner to other employees; and (g) the

purchase or maintenance of insurance against any liability for, or for the benefit of, any director or directors or for, or for the benefit

of, persons who include directors.

Directors may be elected by the members in a general meeting or appointed by the Board.

The directors are empowered to exercise all the powers of the company to borrow money, subject to any limitation in Diageo’s articles

of association (currently two times the adjusted capital and reserves of the company as defined in the articles of association), unless

previously sanctioned by an ordinary resolution of the company.

At each annual general meeting, all the directors at the date on which the notice convening the annual general meeting is approved by

the Board shall retire from office and may offer themselves for re-election by members. There is no age limit requirement in respect of

directors.

Directors may also be removed before the expiration of their term of office in accordance with the provisions of the Companies Acts.

Governance (continued)

227

Directors are not required to hold any shares of the company by way of qualification.

Voting rights

Voting on any resolution at any general meeting of the company is by a show of hands unless a poll is duly demanded. On a show of

hands,

(a) every shareholder who is present in person at a general meeting, and every proxy appointed by any one shareholder and present at a

general meeting, has/have one vote regardless of the number of shares held by the shareholder (or, subject to (b), represented by the

proxy), and

(b) every proxy present at a general meeting who has been appointed by more than one shareholder has one vote regardless of the

number of shareholders who have appointed him/her or the number of shares held by those shareholders, unless he/she has been

instructed to vote for a resolution by one or more shareholders and to vote against the resolution by one or more shareholders, in

which case he/she has one vote for and one vote against the resolution.

On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder, but a

shareholder or proxy entitled to more than one vote need not cast all his/her votes or cast them all in the same way (the deadline for

exercising voting rights by proxy is set out in the form of proxy).

A poll may be demanded by any of the following:

•the chair of the general meeting;

•at least three shareholders entitled to vote on the relevant resolution and present in person or by proxy at the meeting;

•any shareholder or shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the

total voting rights of all shareholders entitled to vote on the relevant resolution; or

•any shareholder or shareholders present in person or by proxy and holding shares conferring a right to vote on the relevant

resolution on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on

all the shares conferring that right.

Diageo’s articles of association and the Companies Acts provide for matters to be transacted at general meetings of Diageo by the

proposing and passing of two kinds of resolutions:

•ordinary resolutions, which include resolutions for the election, re-election and removal of directors, the declaration of final

dividends, the appointment and re-appointment of the external auditor, the remuneration report and remuneration policy, the

increase of authorised share capital and the grant of authority to allot shares; and

•special resolutions, which include resolutions for the amendment of Diageo’s articles of association, resolutions relating to

the disapplication of pre-emption rights, and resolutions modifying the rights of any class of Diageo’s shares at a meeting of

the holders of such class.

An ordinary resolution requires the affirmative vote of a simple majority of the votes cast by those entitled to vote at a meeting at

which there is a quorum in order to be passed. Special resolutions require the affirmative vote of not less than three-quarters of the

votes cast by those entitled to vote at a meeting at which there is a quorum in order to be passed. The necessary quorum for a meeting

of Diageo is a minimum of two shareholders present in person or by proxy and entitled to vote.

A shareholder is not entitled to vote at any general meeting or class meeting in respect of any share held by them if they have been

served with a restriction notice (as defined in Diageo's articles of association) after failure to provide Diageo with information

concerning interests in those shares required to be provided under the Companies Acts.

Pre-emption rights and new issues of shares

While holders of ordinary shares have no pre-emptive rights under Diageo’s articles of association, the ability of the Directors to cause

Diageo to issue shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share scheme, is

restricted. Under the Companies Acts, the directors of a company are, with certain exceptions, unable to allot any equity securities

without express authorisation, which may be contained in a company’s articles of association or given by its shareholders in a general

meeting, but which in either event cannot last for more than five years. Under the Companies Acts, Diageo may also not allot shares

for cash (otherwise than pursuant to an employee share scheme) without first making an offer to existing shareholders to allot such

shares to them on the same or more favourable terms in proportion to their respective shareholdings, unless this requirement is waived

by a special resolution of the shareholders.

Repurchase of shares

Subject to authorisation by special resolution, Diageo may purchase its own shares in accordance with the Companies Acts. Any

shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion

of the purchase, thereby reducing the amount of Diageo’s issued share capital.

Restrictions on transfers of shares

The Board may decline to register a transfer of a certificated Diageo share unless the instrument of transfer (a) is duly stamped or

certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty, and is accompanied by the relevant share

certificate and such other evidence of the right to transfer as the Board may reasonably require, (b) is in respect of only one class of

share and (c) if to joint transferees, is in favour of not more than four such transferees. Registration of a transfer of an uncertificated

Governance (continued)

228

share may be refused in the circumstances set out in the uncertificated securities rules (as defined in Diageo’s articles of association)

and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred

exceeds four.

The Board may decline to register a transfer of any of Diageo’s certificated shares by a person with a 0.25% interest (as defined in

Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of

association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the

Companies Acts, unless the transfer is shown to the Board to be pursuant to an arm’s-length sale (as defined in Diageo’s articles of

association).

Other information

Other information relevant to the Directors’ report may be found in the following sections of the Annual Report:


Information (including that required by UK Listing Authority Listing Rule 9.8.4)	Location in Annual Report
Agreements with controlling shareholders	Not applicable
Contracts of significance	Not applicable
Details of long-term incentive schemes	Directors’ remuneration report
Directors’ indemnities and compensation	Directors’ remuneration report - Additional information; Consolidated financial statements - note 21 Related party transactions
Dividends	Group financial review; Consolidated financial statements - Unaudited financial information
Engagement with employees	Corporate governance report - Workforce engagement statement
Engagement with suppliers, customers and others	Corporate governance report - Stakeholder engagement
Events post 30 June 2024	Consolidated financial statements - note 23 Post balance sheet events
Financial risk management	Consolidated financial statements - note 16 Financial instruments and risk management
Future developments	Chair’s statement; Chief Executive’s statement; Market overview and investment case; Business model; Our growth ambition
Greenhouse gas emissions	Pioneer grain-to-glass sustainability; Non-Financial and sustainability information statement
Interest capitalised	Not applicable
Non-pre-emptive issues of equity for cash (including in respect of major unlisted subsidiaries)	Not applicable
Parent participation in a placing by a listed subsidiary	Not applicable
Political donations	Corporate governance report
Provision of services by a controlling shareholder	Not applicable
Publication of unaudited financial information	Unaudited financial information
Purchase of own shares	Repurchase of shares; Consolidated financial statements - note 18 Equity
Research and development	Other additional information - Research and development; Consolidated financial statements - note 4 Operating costs
Review of the business and principal risks and uncertainties	Chief Executive’s statement; Our principal risks and risk management; Pioneer grain-to-glass sustainability; Business review
Share capital - structure, voting and other rights	Consolidated financial statements - note 18 Equity
Share capital - employee share plan voting rights	Consolidated financial statements - note 18 Equity
Shareholder waivers of dividends	Consolidated financial statements - note 18 Equity
Shareholder waivers of future dividends	Consolidated financial statements - note 18 Equity
Streamlined Energy and Carbon Reporting (SECR) disclosures	Pioneer grain-to-glass sustainability
Sustainability and responsibility	Pioneer grain-to-glass sustainability
Waiver of emoluments by a director	Not applicable
Waiver of future emoluments by a director	Not applicable

The Directors’ report of Diageo plc for the year ended 30 June 2024 comprises these pages and the sections of the Annual Report

referred to under ‘Directors’, ‘Corporate governance statement’ and ‘Other information’ above, which are incorporated into the

Directors’ report by reference.

In addition, certain disclosures required to be contained in the Directors’ report have been incorporated into the ‘Strategic report’ as

set out in ‘Other information’ above.

The Directors’ report, which has been approved by a duly appointed and authorised committee of the Board of Directors, was signed

on its behalf by Tom Shropshire, the Company Secretary, on 29 July 2024.

Governance (continued)

229

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Diageo plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Diageo plc and its subsidiaries (the “Company”) as of 30 June 2024

and 2023, and the related consolidated income statements and consolidated statements of comprehensive income, of changes in equity

and of cash flows for each of the three years in the period ended 30 June 2024, including the related notes (collectively referred to as

the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of 30 June

2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of

the Company as of 30 June 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period

ended 30 June 2024 in conformity with UK-adopted International Accounting Standards and IFRS Accounting Standards as issued by

the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective

internal control over financial reporting as of 30 June 2024, based on criteria established in Internal Control - Integrated Framework

(2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over

financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s

Report on Internal Control over Financial Reporting appearing under Part II. 15.B. Our responsibility is to express opinions on the

Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to

error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the

consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such

procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well

as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting

included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and

testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included

performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable

basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding

prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

230

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial

statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or

disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or

complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the

critical audit matters or on the accounts or disclosures to which they relate.

Assessment for impairment and impairment reversals associated with brand intangible assets

As described in Note 9 to the consolidated financial statements, the Company’s brand intangible assets carrying amount at 30 June

2024 was $9,642 million, with an impairment charge of $128 million and a reversal of previously recorded impairments of $379

million recognised during the year. Management performs impairment tests for brand intangible assets annually, or more frequently if

events or circumstances indicate that the carrying amount may not be recoverable. Reversal of an impairment loss is considered if the

recoverable amount of the brand intangible asset is significantly above the carrying value over an extended period. Recoverable

amounts are calculated based on the value in use approach, also considering fair value less costs of disposal. The value in use

calculations are based on discounted forecasted cash flows using assumptions that cash flows continue in perpetuity at the terminal

growth rate of each country or region. If the net carrying value exceeds the recoverable amount an impairment charge is recognised.

The increased carrying amount of a brand intangible asset attributable to a reversal of an impairment loss shall not exceed the carrying

amount that would have been determined had no impairment loss been recognised for the asset in prior years. Management makes

judgements in determining the value in use. The significant assumptions used for the value in use calculations are estimated sales

growth, margin and terminal growth rate, as well as the discount rate applicable to the future cash flows.

The principal considerations for our determination that performing procedures related to the impairment and impairment reversal

assessment for brand intangible assets is a critical audit matter are (i) the significant judgement made by management when estimating

the recoverable amount; (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating

management’s significant assumptions, related to sales growth, margin and the terminal growth rate included in forecasted cash flows,

as well as the discount rate; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion

on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s

impairment tests, including controls over the measurement of the recoverable amounts. These procedures also included, among others:

(i) testing management’s process for estimating the recoverable amount of brands; (ii), evaluating the appropriateness of the

methodology used to determine the recoverable amount; (iii) testing the completeness, accuracy, and relevance of underlying data

used in the models; and (iv) evaluating the reasonableness of the significant assumptions used by management in estimating future

cash flows related to revenue growth rates, cost of sales, terminal growth rate and the specific weighted-average cost of capital used to

discount future cash flows. Evaluating the reasonableness of management’s assumptions related to revenue growth rates, margin and

the terminal growth rate involved evaluating whether the assumptions used were reasonable considering (i) consistency with external

market and industry data, (ii) the current and past performance of the brand intangible assets and (iii) whether the assumptions were

consistent with evidence obtained in other areas of the audit. Professionals with specialised skill and knowledge were used to assist in

the evaluation of the weighted-average cost of capital assumption used to discount future cash flows.

Contingent liabilities associated with Brazil taxes

As described in Note 19 to the consolidated financial statements, the Company’s current aggregate known possible exposure from tax

assessment values in Brazil is up to approximately $853 million with no provision in respect to these issues. As disclosed by

management, the Company is currently involved in a large number of tax cases in Brazil and may be subject to further future tax

assessments in this jurisdiction based on the same or similar matters. Provisions are made for the anticipated settlement cost of legal

or other disputes against the Company where it is considered to be probable that a liability exists and a reliable estimate can be made

of the likely outcome. Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of the

estimated financial effect, appropriate disclosure is made but no provision is created. Management judgement is necessary in assessing

the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any settlement.

The principal considerations for our determination that performing procedures related to contingent liabilities associated with Brazil

taxes is a critical audit matter are (i) the significant judgments made by management in estimating a provision due to the large number

of ongoing tax cases and current possible exposure from tax assessment values; (ii) a high degree of auditor judgement, subjectivity

and effort in performing procedures and evaluating audit evidence related to the assessment of the probability of an expected

settlement; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion

on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recognition and

measurement of the contingent liabilities associated with taxes. These procedures also included, among others: (i) assessing the

reasonableness of information used in determining the likelihood that tax authorities will ultimately prevail; (ii) testing the calculation

231

Consolidated statement of comprehensive income


	Notes	Year ended 30 June 2024 $ million	Year ended 30 June 2023 re-presented(1) $ million	Year ended 30 June 2022 re-presented(1) $ million
Other comprehensive income
Items that will not be recycled subsequently to the income statement
Net remeasurement of post-employment benefit plans
Group	14	(76)	(771)	820
Associates and joint ventures		1	16	6
Non-controlling interests	14	—	—	(1)
Tax on post-employment benefit plans		14	193	(164)
Changes in the fair value of equity investments at fair value through other comprehensive income		(1)	(5)	(15)
		(62)	(567)	646
Items that may be recycled subsequently to the income statement
Exchange differences on translation of foreign operations
Group		(516)	(906)	756
Associates and joint ventures	6	(64)	132	(570)
Non-controlling interests		(21)	(100)	(83)
Net investment hedges		(70)	499	(829)
Exchange loss recycled to the income statement
On disposal of foreign operations	8	26	15	143
On step acquisitions		—	2	—
Tax on exchange differences – group		11	2	(21)
Effective portion of changes in fair value of cash flow hedges
Hedge of foreign currency debt of the group		(58)	7	309
Transaction exposure hedging of the group		61	328	(230)
Hedges by associates and joint ventures		(3)	29	(20)
Commodity price risk hedging of the group		13	(67)	104
Recycled to income statement – hedge of foreign currency debt of the group		152	65	(319)
Recycled to income statement – transaction exposure hedging of the group		(266)	(16)	57
Recycled to income statement – commodity price risk hedging of the group		9	(39)	(61)
Cost of hedging		(51)	—	—
Recycled to income statement – cost of hedging		(27)	—	—
Tax on effective portion of changes in fair value of cash flow hedges		16	(46)	42
Hyperinflation adjustments		503	229	431
Tax on hyperinflation adjustments(2)		(138)	(49)	(87)
		(423)	85	(378)
Other comprehensive (loss)/income, net of tax, for the year		(485)	(482)	268
Profit for the year		4,166	4,479	4,410
Total comprehensive income for the year		3,681	3,997	4,678
Attributable to:
Equity shareholders of the parent company		3,404	4,063	4,632
Non-controlling interests	18	277	(66)	46
Total comprehensive income for the year		3,681	3,997	4,678

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

(1) See pages 238-240 for an explanation under Accounting information and policies.

(2) Tax on hyperinflation adjustments $(111) million and tax rate change on hyperinflation adjustments $(27) million.

Financial statements (continued)

234

Consolidated balance sheet


		30 June 2024		30 June 2023		1 July 2022
	Notes	$ million	$ million	re-presented(1) $ million	re-presented(1) $ million	re-presented(1) $ million	re-presented(1) $ million
Non-current assets
Intangible assets	9	14,814		14,506		14,401
Property, plant and equipment	10	8,509		7,738		7,076
Biological assets	11	199		197		114
Investments in associates and joint ventures	6	5,032		4,825		4,418
Other investments	13	94		71		45
Other receivables	15	38		39		45
Other financial assets	16	373		497		418
Deferred tax assets	7	143		178		138
Post-employment benefit assets	14	1,146		1,210		1,878
			30,348		29,261		28,533
Current assets
Inventories	15	9,720		9,653		8,584
Trade and other receivables	15	3,487		3,427		3,549
Corporate tax receivables	7	304		292		180
Assets held for sale	8	130		—		269
Other financial assets	16	355		437		303
Cash and cash equivalents	17	1,130		1,813		2,765
			15,126		15,622		15,650
Total assets			45,474		44,883		44,183
Current liabilities
Borrowings and bank overdrafts	17	(2,885)		(2,142)		(1,842)
Other financial liabilities	16	(348)		(453)		(538)
Share buyback liability		—		—		(141)
Trade and other payables	15	(6,354)		(6,678)		(7,123)
Liabilities held for sale	8	(48)		—		(74)
Corporate tax payables	7	(136)		(170)		(305)
Provisions	15	(97)		(150)		(192)
			(9,868)		(9,593)		(10,215)
Non-current liabilities
Borrowings	17	(18,616)		(18,649)		(17,543)
Other financial liabilities	16	(940)		(941)		(850)
Other payables	15	(304)		(463)		(459)
Provisions	15	(300)		(306)		(312)
Deferred tax liabilities	7	(2,947)		(2,751)		(2,807)
Post-employment benefit liabilities	14	(429)		(471)		(486)
			(23,536)		(23,581)		(22,457)
Total liabilities			(33,404)		(33,174)		(32,672)
Net assets			12,070		11,709		11,511
Equity
Share capital	18	887		898		875
Share premium		1,703		1,703		1,635
Other reserves		(91)		665		658
Retained earnings		7,533		6,590		6,267
Equity attributable to equity shareholders of the parent company			10,032		9,856		9,435
Non-controlling interests	18		2,038		1,853		2,076
Total equity			12,070		11,709		11,511

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

These consolidated financial statements have been approved by a duly appointed and authorised committee of the Board of Directors on

29 July 2024 and were signed on its behalf by Debra Crew and Lavanya Chandrashekar, Directors.

(1) See pages 238-240 for an explanation under Accounting information and policies.

Financial statements (continued)

235

Consolidated statement of changes in equity


				Other reserves		Retained earnings/(deficit)
	Notes	Share capital $ million	Share premium $ million	Capital redemption reserve $ million	Hedging and exchange reserve $ million	Own shares $ million	Other retained earnings $ million	Total $ million	Equity attributable to parent company shareholders $ million	Non- controlling interests $ million	Total equity $ million
At 30 June 2021 (re-presented(1))		1,030	1,878	4,451	(3,218)	(2,609)	8,055	5,446	9,587	2,132	11,719
Adjustment to 2021 closing equity in respect of hyperinflation in Türkiye		—	—	—	—	—	349	349	349	—	349
Adjusted opening balance		1,030	1,878	4,451	(3,218)	(2,609)	8,404	5,795	9,936	2,132	12,068
Retranslation impact of opening balances(2)		(131)	(243)	(579)	619	334	—	334	—	—	—
Profit for the year		—	—	—	—	—	4,280	4,280	4,280	130	4,410
Other comprehensive (loss)/income		—	—	—	(639)	—	991	991	352	(84)	268
Total comprehensive (loss)/income for the year		—	—	—	(639)	—	5,271	5,271	4,632	46	4,678
Employee share schemes		—	—	—	—	52	67	119	119	—	119
Share-based incentive plans	18	—	—	—	—	—	79	79	79	—	79
Share-based incentive plans in respect of associates		—	—	—	—	—	5	5	5	—	5
Tax on share-based incentive plans		—	—	—	—	—	11	11	11	—	11
Share-based payments and purchase of own shares in respect of subsidiaries		—	—	—	—	—	(15)	(15)	(15)	(8)	(23)
Unclaimed dividend		—	—	—	—	—	3	3	3	1	4
Change in fair value of put option		—	—	—	—	—	(45)	(45)	(45)	—	(45)
Share buyback programme		(24)	—	24	—	—	(3,004)	(3,004)	(3,004)	—	(3,004)
Dividend declared for the year	18	—	—	—	—	—	(2,286)	(2,286)	(2,286)	(95)	(2,381)
At 30 June 2022 (re-presented(1))		875	1,635	3,896	(3,238)	(2,223)	8,490	6,267	9,435	2,076	11,511
Retranslation impact of opening balances(2)		36	68	162	(173)	(93)	—	(93)	—	—	—
Profit for the year		—	—	—	—	—	4,445	4,445	4,445	34	4,479
Other comprehensive income/(loss)		—	—	—	5	—	(387)	(387)	(382)	(100)	(482)
Total comprehensive income/(loss) for the year		—	—	—	5	—	4,058	4,058	4,063	(66)	3,997
Employee share schemes		—	—	—	—	30	29	59	59	—	59
Share-based incentive plans	18	—	—	—	—	—	58	58	58	—	58
Share-based incentive plans in respect of associates		—	—	—	—	—	6	6	6	—	6
Tax on share-based incentive plans		—	—	—	—	—	7	7	7	—	7
Share-based payments and purchase of own shares in respect of subsidiaries		—	—	—	—	—	4	4	4	2	6
Purchase of non-controlling interests	8	—	—	—	—	—	(136)	(136)	(136)	(42)	(178)
Associates' transactions with non-controlling interests		—	—	—	—	—	(8)	(8)	(8)	—	(8)
Unclaimed dividend		—	—	—	—	—	1	1	1	—	1
Change in fair value of put option		—	—	—	—	—	(19)	(19)	(19)	—	(19)
Share buyback programme		(13)	—	13	—	—	(1,543)	(1,543)	(1,543)	—	(1,543)
Dividend declared for the year	18	—	—	—	—	—	(2,071)	(2,071)	(2,071)	(117)	(2,188)
At 30 June 2023 (re-presented(1))		898	1,703	4,071	(3,406)	(2,286)	8,876	6,590	9,856	1,853	11,709
Adjustment to 2023 closing equity in respect of hyperinflation in Ghana		—	—	—	—	—	41	41	41	10	51
Adjusted opening balance		898	1,703	4,071	(3,406)	(2,286)	8,917	6,631	9,897	1,863	11,760
Profit for the year		—	—	—	—	—	3,870	3,870	3,870	296	4,166
Other comprehensive (loss)/income		—	—	—	(767)	—	301	301	(466)	(19)	(485)
Total comprehensive (loss)/income for the year		—	—	—	(767)	—	4,171	4,171	3,404	277	3,681
Employee share schemes		—	—	—	—	36	12	48	48	—	48
Share-based incentive plans	18	—	—	—	—	—	43	43	43	—	43
Share-based incentive plans in respect of associates		—	—	—	—	—	5	5	5	—	5
Share-based payments and purchase of own shares in respect of subsidiaries		—	—	—	—	—	(6)	(6)	(6)	(4)	(10)
Purchase of non-controlling interests	8	—	—	—	—	—	(246)	(246)	(246)	23	(223)
Tax on purchase of non-controlling interests		—	—	—	—	—	53	53	53	—	53
Unclaimed dividend		—	—	—	—	—	1	1	1	—	1
Change in fair value of put option		—	—	—	—	—	73	73	73	—	73
Share buyback programme		(11)	—	11	—	—	(997)	(997)	(997)	—	(997)
Dividend declared for the year	18	—	—	—	—	—	(2,243)	(2,243)	(2,243)	(121)	(2,364)
At 30 June 2024		887	1,703	4,082	(4,173)	(2,250)	9,783	7,533	10,032	2,038	12,070

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

(1) See pages 238-240 for an explanation under Accounting information and policies.

(2) Includes foreign translation differences arising from the retranslation of reserves due to the change in the group’s presentation currency.

Financial statements (continued)

236

Consolidated statement of cash flows


		Year ended 30 June 2024		Year ended 30 June 2023		Year ended 30 June 2022
	Notes	$ million	$ million	re- presented(1) $ million	re- presented(1) $ million	re- presented(1) $ million	re- presented(1) $ million
Cash flows from operating activities
Profit for the year		4,166		4,479		4,410
Taxation		1,294		1,163		1,398
Share of after tax results of associates and joint ventures		(414)		(443)		(555)
Net finance charges		885		712		556
Non-operating items		70		(364)		88
Operating profit			6,001		5,547		5,897
Increase in inventories		(156)		(810)		(984)
(Increase)/decrease in trade and other receivables		(66)		142		(502)
(Decrease)/increase in trade and other payables and provisions		(546)		(746)		1,245
Net increase in working capital			(768)		(1,414)		(241)
Depreciation, amortisation and impairment		493		1,297		1,064
Dividends received		269		271		238
Post-employment payments less amounts included in operating profit		(18)		(31)		(119)
Other items		88		74		70
			832		1,611		1,253
Cash generated from operations			6,065		5,744		6,909
Interest received		156		157		146
Interest paid		(1,017)		(822)		(582)
Taxation paid		(1,099)		(1,443)		(1,260)
			(1,960)		(2,108)		(1,696)
Net cash inflow from operating activities			4,105		3,636		5,213
Cash flows from investing activities
Disposal of property, plant and equipment and computer software		14		16		23
Purchase of property, plant and equipment and computer software		(1,510)		(1,417)		(1,457)
Movements in loans and other investments		(47)		(68)		(96)
Sale of businesses and brands	8	87		559		102
Acquisition of subsidiaries	8	(6)		(404)		(278)
Investments in associates and joint ventures	8	(133)		(112)		(86)
Net cash outflow from investing activities			(1,595)		(1,426)		(1,792)
Cash flows from financing activities
Share buyback programme	18	(987)		(1,673)		(2,985)
Net sale of own shares for share schemes		21		36		24
Purchase of treasury shares in respect of subsidiaries		(10)		—		(20)
Dividends paid to non-controlling interests		(117)		(117)		(108)
Proceeds from bonds	17	2,225		2,537		2,971
Repayment of bonds	17	(1,667)		(1,650)		(2,060)
Purchase of shares of non-controlling interests	8	(223)		(178)		—
Cash inflow from other borrowings		387		521		667
Cash outflow from other borrowings		(493)		(452)		(562)
Equity dividends paid		(2,242)		(2,065)		(2,300)
Net cash outflow from financing activities			(3,106)		(3,041)		(4,373)
Net decrease in net cash and cash equivalents	17		(596)		(831)		(952)
Exchange differences			(33)		(76)		(38)
Reclassification to assets held for sale			(30)		—		—
Net cash and cash equivalents at beginning of the year			1,768		2,675		3,665
Net cash and cash equivalents at end of the year			1,109		1,768		2,675

Net cash and cash equivalents consist of:
Cash and cash equivalents	17		1,130		1,813		2,765
Bank overdrafts	17		(21)		(45)		(90)
			1,109		1,768		2,675

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

(1) See pages 238-240 for an explanation under Accounting information and policies.

Financial statements (continued)

237

Accounting information and policies

Introduction

This section describes the basis of preparation of the consolidated financial statements and the group’s accounting policies that are

applicable to the financial statements as a whole. Accounting policies, critical accounting estimates and judgements specific to a note

are included in the note to which they relate. Furthermore, the section details new accounting standards, amendments and

interpretations, that the group has adopted in the current financial year or will adopt in subsequent years.

1. Accounting information and policies

(a) Basis of preparation

The consolidated financial statements are prepared in accordance with IFRS® Accounting Standards (IFRSs) adopted by the UK (UK-

adopted International Accounting Standards) and IFRSs, as issued by the International Accounting Standards Board (IASB), including

interpretations issued by the IFRS Interpretations Committee. IFRS as adopted by the UK differs in certain respects from IFRS as

issued by the IASB. The differences have no impact on the group’s consolidated financial statements for the years presented. The

consolidated financial statements are prepared on a going concern basis under the historical cost convention, unless stated otherwise in

the relevant accounting policy.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial

statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

(b) Going concern