UNITED STATES
ECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
30 January 2024
Commission File Number: 001-10691
DIAGEO plc
(Translation
of registrant’s name into English)
16 Great Marlborough Street, London, United Kingdom, W1F 7HS
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F X
Form
40-F
Diageo
PLC – Interim Results
Dated
30 January 2024
Diageo delivers strong cash generation and is well positioned for
future growth despite challenging first half
environment
●
Reported
net sales of $11.0 billion declined 1.4% or $158 million, due to a
$167 million unfavourable foreign exchange impact and an organic
net sales decline of $67 million or 0.6%, driven by a $310 million
or 23% decline in Latin America and Caribbean (LAC).
●
Excluding
the impact of LAC, reported net sales grew $72 million or 0.7%, and
organic net sales grew $243 million or 2.5%, driven by Asia
Pacific, Africa and Europe, partially offset by a $64 million or
1.5% decline in North America which improved sequentially from the
second half of fiscal 23.
●
The
decline in LAC was driven by a strong double-digit net sales growth
comparator as well as lower consumption and consumer downtrading
due to macroeconomic pressures in the region.
●
Reported
operating profit declined 11.1% to $3.3 billion, and reported
operating profit margin contracted 329bps due to lower organic
operating margin and a negative impact from exceptional operating
items.
●
Organic
operating profit declined by $205 million or 5.4%, of which $234
million was attributable to LAC; organic operating margin
contracted 167bps.
●
Excluding
the impact of LAC, organic operating profit grew by $29 million or
0.9%, and organic operating margin contracted 53bps, driven by
increased marketing investment.
●
Net
cash flow from operating activities increased by $0.7 billion to
$2.1 billion. Free cash flow increased by $0.5 billion to $1.5
billion, driven by disciplined working capital management and the
positive impact of lapping one-off cash tax payments from the prior
year.
●
Declared
interim dividend increased by 5% to 40.50 cents per share.
Completed $0.5 billion of share buybacks as part of the return of
capital programme announced on 1 August 2023.
Debra Crew, Chief Executive, said:
The first half of fiscal 24 was challenging for Diageo and our
sector, particularly as we lapped strong growth in the prior year
and faced an uneven global consumer environment. Excluding LAC, our
group organic net sales grew 2.5%, driven by good growth in Europe,
Asia Pacific and Africa. While North America delivered sequential
improvement in line with our expectations, we are focused on
returning to high-quality share growth as consumer behaviour
continues to normalise in our largest region.
As previously announced in November 2023, materially weaker
performance in LAC, driven by fast-changing consumer sentiment and
high inventory levels, significantly impacted total business
performance. Having conducted a review of inventory levels and
monitored performance in the critical holiday season, we have taken
action and have further plans to reduce inventory to more
appropriate levels for the current consumer environment in the
region by the end of fiscal 24. This is a key
priority.
With a strong focus on execution, we delivered an improved free
cash flow of $1.5 billion, and our pipeline of productivity
initiatives in the first half of fiscal 24 drove $335 million of
savings, helping us to sustain investment in brand building. During
the half, we returned $0.5 billion to shareholders via share
buybacks as part of our commitment to return up to $1.0 billion of
capital to shareholders in fiscal 24. We declared an interim
dividend increase to 40.50 cents per share, reflecting our
commitment to a progressive dividend policy.
Looking ahead to the second half of fiscal 24, despite continued
global economic volatility, we expect to deliver improvement in
organic net sales and organic operating profit growth at the group
level, compared to the first half. While the macro environment will
continue to present challenges, I am confident that we remain
well-positioned and resilient for the long term. We are diversified
by category, price point and region and will continue to invest
behind our iconic brands to maintain our position as an industry
leader in total beverage alcohol, an attractive sector with a long
runway for growth.
Financial performance
|
|
Volume (equivalent units)
|
|
Operating profit
|
|
Earnings per share (eps)
|
|
EU124.6m
|
|
|
|
$3,317m
|
|
|
|
98.6c
|
|
|
|
(F23 H1: EU136.8m)
|
|
|
|
(F23 H1(2):
$3,731m)
|
|
|
|
(F23 H1(2):
119.1c)
|
|
|
|
Reported movement
|
(9)%
|
i
|
|
Reported movement
|
(11)%
|
i
|
|
Reported movement
|
(17)%
|
i
|
|
Organic movement(1)
|
(5)%
|
i
|
|
Organic movement(1)
|
(5)%
|
i
|
|
Eps before exceptional items(1)
|
(7)%
|
i
|
|
Net sales
|
|
Net cash from operating activities
|
|
Interim dividend per share
|
$10,962m
|
|
|
|
$2,146m
|
|
|
|
40.50c
|
|
|
|
(F23 H1(2):
$11,120m)
|
|
|
|
(F23 H1(2):
$1,472m)
|
|
|
|
(F23 H1(2):
38.57c)
|
|
|
|
Reported movement
|
(1)%
|
i
|
|
F24 H1 free cash flow(1) $1,462m
|
|
|
|
Increase
|
5%
|
h
|
|
Organic movement(1)
|
(1)%
|
i
|
|
F23 H1 free cash flow(1),(2) $964m
|
|
|
|
|
|
|
|
(1)See page 44 for an explanation and
reconciliation of non-GAAP measures.
(2)See page 29 for an explanation under Basis of
preparation.
See page 44 for an explanation and reconciliation of non-GAAP
measures, including organic net sales, organic marketing
investment, organic operating profit, free cash flow, eps before
exceptionals, adjusted net debt, adjusted EBITDA and tax rate
before exceptional items.
Unless otherwise stated, movements in results are for the six
months ended 31 December 2023 compared to the six months ended 31
December 2022.
Key financial information
Six months ended 31 December 2023
Summary financial information
|
|
F24 H1
|
F23 H1
Re-presented(1)
|
Organic growth
%
|
Reported growth
%
|
Volume
|
EUm
|
124.6
|
136.8
|
(5)
|
(9)
|
Net sales
|
$ million
|
10,962
|
11,120
|
(1)
|
(1)
|
Marketing
|
$ million
|
1,952
|
1,861
|
4
|
5
|
Operating profit before exceptional items
|
$ million
|
3,510
|
3,770
|
(5)
|
(7)
|
Exceptional operating items(2)
|
$ million
|
(193)
|
(39)
|
|
|
Operating profit
|
$ million
|
3,317
|
3,731
|
|
(11)
|
Share of associate and joint venture profit after tax
|
$ million
|
253
|
202
|
|
25
|
Non-operating exceptional items(2)
|
$ million
|
(60)
|
19
|
|
|
Net finance charges
|
$ million
|
(431)
|
(345)
|
|
|
Exceptional taxation credit(2)
|
$ million
|
42
|
84
|
|
|
Tax rate including exceptional items
|
%
|
23.9
|
21.2
|
|
13
|
Tax rate before exceptional items
|
%
|
23.4
|
23.4
|
|
-
|
Profit attributable to parent company's shareholders
|
$ million
|
2,210
|
2,709
|
|
(18)
|
Basic earnings per share
|
cents
|
98.6
|
119.1
|
|
(17)
|
Basic earnings per share before exceptional items
|
cents
|
108.1
|
116.4
|
|
(7)
|
Interim dividend
|
cents
|
40.50
|
38.57
|
|
5
|
(1)See
page 29 for an explanation under Basis of preparation.
(2)For further details on exceptional items see pages 21 and
33-34.
Reported growth by region
|
Volume
|
Net sales
|
Marketing
|
Operating profit before exceptional items
|
Operating profit
|
|
%
|
EUm
|
%
|
$ million
|
%
|
$ million
|
%
|
$ million
|
%
|
$ million
|
North America
|
(3)
|
(0.7)
|
(2)
|
(65)
|
2
|
15
|
2
|
35
|
(7)
|
(116)
|
Europe
|
(3)
|
(0.9)
|
10
|
226
|
19
|
72
|
(3)
|
(23)
|
(6)
|
(51)
|
Asia Pacific
|
(15)
|
(6.9)
|
2
|
37
|
14
|
50
|
(2)
|
(15)
|
1
|
10
|
Latin America and Caribbean
|
(19)
|
(3.0)
|
(18)
|
(230)
|
(12)
|
(25)
|
(41)
|
(222)
|
(41)
|
(222)
|
Africa
|
(4)
|
(0.7)
|
(12)
|
(138)
|
(20)
|
(27)
|
(40)
|
(85)
|
(40)
|
(85)
|
Corporate
|
-
|
-
|
24
|
12
|
67
|
6
|
25
|
50
|
25
|
50
|
Diageo
|
(9)
|
(12.2)
|
(1)
|
(158)
|
5
|
91
|
(7)
|
(260)
|
(11)
|
(414)
|
Organic growth by region
|
Volume
|
Net sales
|
Marketing
|
Operating profit before exceptional items
|
|
%
|
EUm
|
%
|
$ million
|
%
|
$ million
|
%
|
$ million
|
North America
|
(3)
|
(0.8)
|
(2)
|
(64)
|
2
|
12
|
(1)
|
(21)
|
Europe
|
(4)
|
(1.1)
|
3
|
78
|
9
|
35
|
(4)
|
(34)
|
Asia Pacific
|
(2)
|
(0.8)
|
6
|
125
|
15
|
53
|
3
|
23
|
Latin America and Caribbean
|
(19)
|
(3.0)
|
(23)
|
(310)
|
(19)
|
(40)
|
(41)
|
(234)
|
Africa
|
(6)
|
(1.1)
|
9
|
95
|
6
|
7
|
9
|
21
|
Corporate
|
-
|
-
|
17
|
9
|
27
|
3
|
22
|
40
|
Diageo
|
(5)
|
(6.8)
|
(1)
|
(67)
|
4
|
70
|
(5)
|
(205)
|
See
page 44 for an explanation and reconciliation of non-GAAP
measures.
Net sales ($ million)
Reported net sales declined 1.4%
Organic net sales declined 0.6%
Reported net sales declined 1.4%, driven by unfavourable
foreign exchange impacts, organic net sales decline and a negative
impact from acquisitions and disposals, partially offset by
hyperinflation adjustments.
Organic net sales decline of 0.6% was primarily
attributable to weak performance in LAC driven by a strong
double-digit net sales growth comparator, as well as lower
consumption and consumer downtrading due to macroeconomic pressures
in the region. These impacts materially contributed to the group's
organic volume decline of 5.2%, which was partially offset by
positive price/mix of 4.6% delivered across all other regions, and
mainly driven by positive pricing. Excluding LAC, organic net sales
grew 2.5%.
Net sales
|
$ million
|
F23 H1 Re-presented(1)
|
11,120
|
Exchange(2)
|
(167)
|
Acquisitions and disposals
|
(51)
|
Hyperinflation(3)
|
127
|
Volume
|
(573)
|
Price/mix
|
506
|
F24 H1
|
10,962
|
(1)See
page 29 for an explanation under Basis of preparation.
(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 35 and 45-47 for details of
hyperinflation adjustment.
Operating profit ($ million)
Reported operating profit declined 11.1%
Organic operating profit declined 5.4%
Reported operating profit declined 11.1%, primarily driven by a
decrease in organic operating profit and negative exceptional
operating items.
Organic operating profit declined 5.4%, ahead of the organic
net sales decline, primarily driven by a $234 million operating
profit decline in LAC.
Operating profit
|
$ million
|
F23 H1 Re-presented(1)
|
3,731
|
Exceptional operating items(2)
|
(154)
|
Exchange
|
4
|
Acquisitions and disposals
|
(37)
|
FVR(3)
|
(19)
|
Hyperinflation(4)
|
(3)
|
Organic movement
|
(205)
|
F24 H1
|
3,317
|
(1)See
page 29 for an explanation under Basis of preparation.
(2)For further details on exceptional operating items see pages 21
and 33-34.
(3)Fair
value remeasurements. For further details see page 21.
(4)See pages 35 and 45-47 for details on
hyperinflation adjustments.
Operating margin (%)
Reported operating margin declined by 329bps
Organic operating margin declined by 167bps
Reported operating margin declined by 329bps, primarily driven by a
decrease in organic operating margin and the negative impact of
exceptional operating items.
Organic operating margin declined by 167bps predominantly due to weak
performance in LAC. Excluding LAC, organic operating margin
declined 53bps. The decline was driven by an increase in marketing,
partially offset by the favourable impact from other operating
items and a positive gross margin. At the group level, including
LAC, the impact on gross margin from price increases and
productivity initiatives more than offset cost inflation in
absolute terms.
Operating margin
|
ppt
|
F23 H1
Re-presented(1)
|
33.6
|
Exceptional operating items(2)
|
(1.41)
|
Exchange
|
0.51
|
Acquisitions and disposals
|
(0.16)
|
Other(3)
|
(0.56)
|
Gross margin
|
(0.56)
|
Marketing
|
(0.75)
|
Other operating items
|
(0.36)
|
F24 H1
|
30.3
|
(1)See
page 29 for explanation under basis of preparation.
(2)For
further details on exceptional operating items see pages 21 and
33-34.
(3)Fair value remeasurements and
hyperinflation adjustments. For further details on fair value
remeasurements see page 22. See pages 36 and
49-52 for details on hyperinflation
adjustments.
Basic earnings per share (cents)
Basic eps decreased 17.2% from 119.1 cents to 98.6
cents
Basic eps before exceptional items(1) decreased
7.1% from 116.4 cents to 108.1 cents
Basic eps decreased 20.5 cents, mainly driven by
exceptional items, lower organic operating profit and higher
finance charges, partially offset by lower tax, higher income from
associates and joint ventures, and the impact of share
buybacks.
Basic eps before exceptional items decreased 8.3 cents.
(
Basic earnings per share
|
cents
|
F23 H1 Re-presented(2)
|
119.1
|
Exceptional items after tax(3)
|
(12.2)
|
Exchange on operating profit
|
0.2
|
Acquisitions and disposals(4)
|
(1.2)
|
Organic operating profit
|
(9.0)
|
Associates and joint ventures
|
2.2
|
Finance charges(5)
|
(4.1)
|
Tax(6)
|
2.7
|
Share buyback(4)
|
1.8
|
Non-controlling interests
|
0.1
|
FVR(7)
|
(0.8)
|
Hyperinflation (operating profit)(8)
|
(0.2)
|
F24 H1
|
98.6
|
(1)See page 44 for an explanation of the
calculation and use of non-GAAP measures.
(2)See
page 29 for an explanation under Basis of preparation.
(3)For further details on
exceptional items see pages 21 and 33-34.
(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 21.
(8)Operating
profit hyperinflation adjustments movement was $(3) million
compared to the first half of fiscal 23 (F24 H1 - $(12) million;
F23 H1 - $(9) million).
Net cash from operating activities and free cash flow ($
million)
Generated $2,146 million net cash from operating
activities(1) and
$1,462 million free cash flow
Net cash from operating activities was $2,146 million, an increase
of $674 million compared to the first half of fiscal 23.
Free cash flow grew by $498 million
to $1,462 million.
Free cash flow growth was driven by strong working capital
management interventions and the positive impact of lapping one-off
cash tax payments from 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 investments for long-term
sustainable growth.
Free cash flow
|
$ million
|
F23 H1 Net cash from operating activities
re-presented(2)
|
1,472
|
F23 H1 Capex and movements in loans and other investments
re-presented(2)
|
(508)
|
F23 H1 Free cash flow re-presented(2)
|
964
|
Exchange(3)
|
4
|
Operating profit(4)
|
(299)
|
Working capital(5)
|
893
|
Capex
|
(69)
|
Tax
|
200
|
Interest
|
(137)
|
Other(6)
|
(94)
|
F24 H1 Free cash flow
|
1,462
|
F24 H1 Capex and movements in loans and other
investments
|
684
|
F24 H1 Net cash from operating activities
|
2,146
|
(1)Net
cash from operating activities excludes net capex (F24 H1 -
$(575) million; F23 H1 - $(506) million) and movements in
loans and other investments.
(2) See page 29 for an explanation under Basis of
preparation.
(3)Exchange
on operating profit before exceptional items.
(4)Operating profit excludes exchange, depreciation and
amortisation, post employment charges of $(10) million and other
non-cash items.
(5)Working capital movement includes maturing
inventory.
(6)Other
items include dividends received from associates and joint
ventures, movements in loans and other investments and post
employment payments.
Fiscal 24 outlook
Organic net sales growth
Overall, for the group, we expect our organic net sales growth rate
in the second half to gradually improve compared to the growth rate
in the first half.
In North America, in the second half of fiscal 24, we expect to
drive gradual improvement in organic net sales performance, despite
uncertainty in the consumer environment. We will continue to invest
in our brands and innovations as we work towards the delivery of
high-quality market share improvement as the consumer environment
continues to normalise.
In the second half of fiscal 24, we expect macroeconomic pressures
will persist in LAC and impact progress in reducing inventory
levels. As a result, we expect organic net sales in LAC to decline
between the range of -10% to -20% in the second half of fiscal 24,
compared to the second half of fiscal 23. However, we expect to
close fiscal 24 with a more appropriate level of inventory for the
current consumer environment.
In Europe, Asia Pacific and Africa, we expect continued growth in
the second half recognising that macroeconomic volatility and
consumer uncertainty will likely persist.
Organic operating profit growth
In the second half of fiscal 24, we expect an organic operating
profit decline compared to the prior year, but we expect the rate
of decline to improve compared to the first half of fiscal 24.
While we expect headwinds to persist from continued inflation and
relatively low operating leverage as we reduce inventory in LAC, we
will continue to focus on delivering strong productivity and
leveraging revenue growth management capabilities, while remaining
invested in marketing.
Taxation
We expect the tax rate before exceptional items for fiscal 24 to be
in the region of 23% mainly as a result of profit mix.
Effective interest rate
We expect the effective interest rate to reduce slightly for the
full year from the first half of fiscal 24 which was reported at
4.4%, given current market conditions.
Productivity
At the end of fiscal 24, we will complete a three-year period over
which we committed to deliver $1.5 billion of productivity benefits
and we expect to exceed this target.
At our Capital Markets Event in November 2023, we announced a new
productivity commitment to deliver $2.0 billion of productivity
savings over the three years, from fiscal 25 to fiscal 27. We plan
to deliver this accelerated productivity commitment across cost of
goods, marketing spend and overheads. This acceleration will be
supported by investments, including our supply chain agility
programme, which was announced in July 2022. We expect benefits
from our supply chain agility programme to increase from fiscal 25
and accelerate in the following years.
Capital expenditure and free cash flow
In fiscal 24, we continue to expect capital expenditure for the
full year to be in the range of $1.3-1.5 billion. We expect broadly
this level of spend to continue in the coming years, but then
normalise to historical levels as a percentage of net sales
starting in fiscal 27. We expect cash flow to grow organically
through the second half of fiscal 24, while we continue to invest
in capital expenditure and maturing stock.
Foreign exchange guidance
We are not providing specific guidance in relation to foreign
exchange for fiscal 24. However, using the first half experienced
foreign exchange impact and spot exchange rates of $1=£0.79
and $1=€0.90 as at 31 December 2023 for the second half and
applying them to a representative income statement profile, for
operating profit we would see a positive exchange impact of
approximately $210 million and a negative impact on net sales of
approximately $90 million.
Fiscal 25 outlook
As we move into fiscal 25 and the consumer environment improves, we
expect to progress towards the delivery of our medium-term guidance
with our organic net sales growth trajectory improving in full year
fiscal 25 compared to fiscal 24. We expect organic operating profit
growth in full year fiscal 25 to be broadly in line with organic
net sales growth.
Medium-term guidance
Organic net sales growth and organic operating profit
growth
We believe in the fundamental strength of our business and expect
our advantaged portfolio to benefit from international spirits
continuing to gain share of Total Beverage Alcohol and
premiumisation trends, combined with continued investment in
marketing and innovation. Our portfolio is well-positioned across
categories, price points and regions. We will use our deep
understanding of consumers to quickly adapt to changes in trends
and behaviours, while investing in marketing and innovation and
leveraging our revenue growth management capabilities, including
balancing strategic pricing actions with individual market share
growth objectives.
As discussed at our recent Capital Markets Event, over the medium
term, we expect to deliver organic net sales growth in the range of
5% to 7%. We expect to deliver sustainable organic operating profit
growth broadly in line with organic net sales growth as we increase
marketing investment and navigate continued cost inflation in the
near term. In the long term, we expect to deliver organic operating
profit growth ahead of organic net sales growth.
Functional and presentation currency
Commencing with the interim dividend declared in January 2024,
Diageo's dividends will be declared in US dollars and remain in
line with the group's existing progressive dividend policy. Holders
of ordinary shares will continue to receive their dividends in
sterling, but will have the option to elect to receive their
dividends in US dollars instead. Holders of American Depositary
Receipts (ADRs) will continue to receive dividends in US
dollars.
Unaudited recast full primary financial information and selected
financial information as of and for the years ended 30 June 2021,
30 June 2022 and 30 June 2023 will be re-presented in US dollars
and made available later today to reflect the change in the
presentation currency of Diageo from sterling to US
dollars.
Notes to the business and financial review
Unless otherwise stated:
-
movements in results are for the six months ended 31 December 2023
compared to the six months ended 31 December 2022;
-
commentary below refers to organic movements unless stated as
reported;
-
volume is in millions of equivalent units (EUm);
-
net sales are sales after deducting excise duties;
-
percentage movements are organic movements unless stated as
reported;
-
growth is organic net sales movement; and
-
market share refers to value share, except for India which is
volume share.
Following a review of our interim performance metrics, we have made
the decision to report return on average invested capital only on a
full-year basis at year end going forward.
See page 44 for an explanation of the
calculation and use of non-GAAP measures.
Business review
North America
●
Reported net
sales declined 2%, due to weaker
organic performance.
●
Organic net
sales declined 2%, due to weaker
performance in US Spirits and Canada, partially offset by growth
from Diageo Beer Company (DBC USA).
●
Price/mix grew
1% and was more than offset by a 3% decline in volume, mainly in
vodka and rum.
●
US Spirits net
sales declined 2%, lapping strong
double-digit growth in tequila, US whiskey and spirits-based ready
to drink products. Depletion growth was approximately one
percentage point ahead of shipment growth in the first half of
fiscal 24, with some variation across brands. Overall inventory
levels at distributors at the end of the first half of fiscal 24
remained in line with historical levels.
●
DBC USA net
sales grew 5%, reflecting strong growth
in Guinness and Smirnoff flavoured malt
beverages.
●
Organic
operating margin increased by 12bps, driven by
gross margin expansion, partially offset by increased marketing
investment. Gross margin improvement was driven by productivity
savings, supply efficiencies and pricing actions which more than
offset adverse mix and inflation.
●
Marketing
investment grew 2% as we invested in key
categories and brands.
US Spirits
highlights(1):
●
Tequila net
sales declined 5%, primarily due to a 14% decline in Casamigos
lapping double-digit growth as distributors replenished inventory
in the prior year. Don Julio net sales increased 2%, driven by aged
liquid variants including Reposado, partially offset by some
destocking of Don Julio 1942. Both Casamigos and Don Julio
depletions were significantly ahead of shipments. Diageo's tequila
portfolio continues to grow share of the total US spirits industry,
primarily driven by Don Julio.
●
Crown
Royal whisky net sales decreased 2%,
primarily due to Crown Royal Deluxe and Crown Royal Peach,
partially offset by the strength of broader flavours, led by Crown
Royal Salted Caramel and Crown Royal Regal Apple, as well as
premium variants.
●
Vodka net
sales declined 4%, primarily due to Cîroc, which declined 21%
as consumers shifted into other spirits categories, partially
offset by 2% growth in Smirnoff, driven by flavoured variants.
Ketel One net sales declined 4% driven by Ketel One Botanicals.
Ketel One held share of spirits and grew share of the vodka
category supported by our 'Made to Cocktail' media
campaign.
●
Johnnie
Walker net sales declined 13%, due to
continued normalisation of demand for luxury variant Johnnie Walker
Blue Label. Johnnie Walker gained share of the scotch category in
the first half of fiscal 24.
●
Captain
Morgan net sales declined 2%, primarily
due to Captain Morgan Original Spiced.
●
Bulleit
whiskey net
sales increased 19%, significantly ahead of depletions growth as
inventory levels continue to normalise. Bulleit held share of the
spirits industry.
●
Buchanan's net
sales increased 36%, primarily driven by the continued success of
Buchanan's Pineapple. Buchanan's trademark also gained share of the
spirits industry.
●
Single
Malts net sales declined 27%, due to
the lapping of the launch of luxury innovation Lagavulin 11YO
Charred Oak Cask.
●
Spirits-based
cocktails net sales increased 33%, driven
by the expansion of our cocktail collection Ketel One Espresso
Martini, Ketel One Cosmopolitan, and Tanqueray
Negroni.
Key financials ($ million): North America
|
|
F23 H1
Re-presented(2)
|
Exchange
|
Acquisitions
and
disposals
|
Organic movement
|
Other(3)
|
F24 H1
|
Reported movement%
|
Net sales
|
4,149
|
(3)
|
2
|
(64)
|
-
|
4,084
|
(2)
|
Marketing
|
767
|
(1)
|
4
|
12
|
-
|
782
|
2
|
Operating profit before exceptional items
|
1,690
|
62
|
(11)
|
(21)
|
5
|
1,725
|
2
|
Exceptional operating items(4)
|
(31)
|
|
|
|
|
(182)
|
|
Operating profit
|
1,659
|
|
|
|
|
1,543
|
(7)
|
(1)Spirits brands excluding
cocktails, which includes ready to drink, ready-to-serve and
non-alcoholic variants.
(2) See page 29 for an explanation under Basis of
preparation.
(3)Fair value remeasurements. For further details
see page 21.
(4)For further details on
exceptional operating items see pages 21 and 33-34.
Markets and categories:
|
|
|
|
|
Key brands(3):
|
|
Organic
volume
movement
|
Reported
volume
movement
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
|
Organic
volume
movement(4)
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
%
|
%
|
%
|
%
|
|
|
%
|
%
|
%
|
North America(1)
|
(3)
|
(3)
|
(2)
|
(2)
|
|
Crown Royal
|
(3)
|
(2)
|
(2)
|
|
|
|
|
|
|
Don Julio
|
19
|
2
|
2
|
US Spirits(1)
|
(3)
|
(2)
|
(2)
|
(2)
|
|
Smirnoff
|
(5)
|
2
|
1
|
DBC USA(2)
|
2
|
2
|
5
|
5
|
|
Casamigos(5)
|
(9)
|
(14)
|
(14)
|
Canada
|
(7)
|
(7)
|
(5)
|
(7)
|
|
Johnnie Walker
|
(6)
|
(13)
|
(13)
|
|
|
|
|
|
|
Captain Morgan
|
(7)
|
(1)
|
(1)
|
Spirits(1)
|
(4)
|
(3)
|
(3)
|
(3)
|
|
Baileys
|
-
|
5
|
4
|
Beer
|
3
|
3
|
6
|
6
|
|
Ketel One(6)
|
(5)
|
(5)
|
(5)
|
Ready to drink
|
(6)
|
(6)
|
7
|
6
|
|
Bulleit whiskey(7)
|
13
|
19
|
19
|
|
|
|
|
|
|
Guinness
|
2
|
5
|
5
|
|
|
|
|
|
|
Buchanan's
|
50
|
35
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America contributed
|
|
North America organic net sales declined
|
37% of Diageo reported net sales in
first half of fiscal 24
|
|
2% in first half of fiscal
24
|
(1)Reported volume movement
includes impacts from acquisitions and/or disposals. For further
details see pages 46-48.
(2)Certain
spirits-based ready to drink products in certain states are
distributed through DBC USA and those net sales are captured within
DBC USA.
(3)Spirits
brands excluding cocktails, which includes ready to drink, ready-
to-serve and non-alcoholic variants.
(4)Organic
equals reported volume movement.
(5)Casamigos
trademark includes both tequila and mezcal.
(6)Ketel
One includes Ketel One vodka and Ketel One Botanicals.
(7)Bulleit
whiskey excludes Bulleit Crafted Cocktails.
Europe
●
Reported net
sales grew 10%, primarily driven by a
hyperinflation adjustment(1) related
to Turkey and organic growth.
●
Organic net
sales grew 3%, primarily driven by
double-digit growth in Turkey and high single-digit growth in Great
Britain and Ireland. This was significantly offset by declines in
Eastern Europe, primarily due to lapping final sales of inventories
in Russia following the previously announced winding down of
operations in fiscal 23. Excluding the impact of lapping the final
sales of inventories in Russia, organic net sales grew
6%.
●
Price/mix grew 7%, driven by price increases across
all markets, with Guinness growth driving particularly strong
price/mix in Great Britain and Ireland. Volume declined by 4%,
primarily in the standard price tier.
●
Spirits net
sales were flat, with high double-digit
growth in tequila, primarily Don Julio, offset by declines in other
categories, mainly rum and gin. Excluding the effect of lapping
final sales of inventories in Russia, spirits net sales grew
3%.
●
Beer net
sales grew 20%, driven by both positive
volume and price/mix. Guinness net sales grew 24%, gaining share in
the on-trade in both Ireland and Great Britain.
●
Organic
operating margin declined by 257bps. Strong
strategic price increases were more than offset by cost inflation
and increased marketing investment.
●
Marketing
investment increased 9%, driven primarily by
investment in Johnnie Walker, Don Julio and Tanqueray
0.0.
Market highlights:
●
Great
Britain net
sales grew 9%, primarily driven by strong performance in Guinness,
which gained share in both the on-trade and
off-trade.
●
Southern
Europe net sales were 1% lower, due to
declines in rum and J&B more than offsetting strong growth in
Johnnie Walker Red Label and Johnnie Walker Black Label. Southern
Europe delivered double-digit basis point market share gains in the
whisky category.
●
Northern
Europe net sales were 4% lower, due to
declines in Talisker, Lagavulin and ready to drink (RTD) cocktails
more than offsetting double digit-growth in Johnnie Walker Red
Label.
●
Ireland net
sales grew 10%, primarily driven by double-digit growth in Guinness
and strong share gains in the on-trade.
●
Eastern
Europe net sales declined 16%, primarily
driven by lapping the final sales of inventories in Russia in the
first half of the prior year. Excluding Russia, net sales grew 5%
driven by Guinness and Don Julio.
●
Turkey net
sales grew 30%, with volume growth of 3%, primarily reflecting the
impact of price increases in response to inflation and increased
excise duties. Growth was mostly driven by strong performance in
Johnnie Walker Red Label and Johnnie Walker Black Label, with share
gains in whisky.
Key financials ($ million): Europe
|
|
F23 H1
Re-presented(2)
|
Exchange
|
Acquisitions
and
disposals
|
Organic movement
|
Hyperinflation(1)
|
F24 H1
|
Reported movement
%
|
Net sales
|
2,339
|
5
|
20
|
78
|
123
|
2,565
|
10
|
Marketing
|
387
|
7
|
16
|
35
|
14
|
459
|
19
|
Operating profit before exceptional items
|
820
|
13
|
(9)
|
(34)
|
7
|
797
|
(3)
|
Exceptional operating items(3)
|
17
|
|
|
|
|
(11)
|
|
Operating profit
|
837
|
|
|
|
|
786
|
(6)
|
(1)See
pages 35 and 45-47 for details on hyperinflation
adjustments..
(2)See page 29 for an explanation under Basis of
preparation.
(3)For further details on
exceptional operating items see pages 21 and 33-34.
Markets and categories:
|
|
|
|
|
Key brands(2):
|
|
Organic
volume
movement
|
Reported
volume
movement
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
|
Organic
volume
movement(3)
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
%
|
%
|
%
|
%
|
|
|
%
|
%
|
%
|
Europe(1)
|
(4)
|
(3)
|
3
|
10
|
|
Guinness
|
9
|
24
|
32
|
|
|
|
|
|
|
Johnnie Walker
|
8
|
12
|
17
|
Great Britain(1)
|
(1)
|
(2)
|
9
|
15
|
|
Baileys
|
-
|
2
|
8
|
Southern Europe(1)
|
(5)
|
(5)
|
(1)
|
5
|
|
Smirnoff
|
(3)
|
3
|
9
|
Northern Europe(1)
|
(7)
|
(7)
|
(4)
|
2
|
|
Captain Morgan
|
(10)
|
(7)
|
(3)
|
Ireland(1)
|
(1)
|
(2)
|
10
|
17
|
|
Gordon's
|
(11)
|
(5)
|
-
|
Eastern Europe(1)
|
(15)
|
(15)
|
(16)
|
(15)
|
|
Tanqueray
|
(10)
|
(6)
|
(1)
|
Turkey(1)
|
3
|
3
|
30
|
25
|
|
JeB
|
(7)
|
(11)
|
(6)
|
|
|
|
|
|
|
|
|
|
|
Spirits(1)
|
(4)
|
(4)
|
-
|
6
|
|
|
|
|
|
Beer
|
7
|
7
|
20
|
28
|
|
|
|
|
|
Ready to drink(1)
|
(14)
|
(15)
|
(8)
|
(4)
|
|
|
|
|
|
|
|
|
Europe contributed
|
|
Europe organic net sales grew
|
23% of Diageo reported net sales in
first half of fiscal 24
|
|
3% in first half of fiscal
24
|
(1)Reported
volume movement includes impacts from acquisitions and/or
disposals. For further details see pages 46-48.
(2)Spirits
brands excluding ready to drink and non-alcoholic
variants.
(3)Organic
equals reported volume movement.
Asia Pacific
●
Reported net
sales grew 2%, driven by organic
growth, partially offset by the disposal of Windsor and the
negative impact of foreign exchange.
●
Organic net
sales grew 6%, driven by double-digit
growth in Greater China, lapping low single-digit growth in the
prior year, and high single-digit growth in India. This was
partially offset by declines in markets lapping on-trade recovery,
mainly North Asia and South East Asia, as well as a decline in
Australia.
●
Price/mix of
8% was driven by price increases and the growth of ultra-premium
and super-premium price tiers, led by Chinese white spirits, scotch
and tequila.
●
Spirits net
sales grew 8%, primarily driven by
strong double-digit growth in Chinese white spirits; IMFL
whisky(1) and
The Singleton also grew double-digits. Tequila delivered
triple-digit growth, primarily in South East Asia and Travel
Retail, albeit on a smaller base.
●
Organic
operating margin declined by 84bps. Positive mix,
attributable to growth in Chinese white spirits in Greater China,
as well as favourable product mix in India driving positive gross
margin, was more than offset by marketing
investment.
●
Marketing
investment grew 15%, mainly driven by
incremental investment in Chinese white spirits, as well as Don
Julio 1942 and single malts across almost all
markets.
Market highlights:
●
India net
sales grew 9%, driven by double-digit growth in IMFL whisky and
scotch. Scotch growth was driven by Johnnie Walker and Black &
White.
●
Greater
China net sales grew 18%, primarily
driven by strong growth in Chinese white spirits, reflecting the
recovery of the on-trade following the easing of Covid-19
restrictions.
●
Australia net
sales declined 6%, primarily driven by RTD
cocktails.
●
South East
Asia net sales declined 5%, lapping
strong double-digit growth in the prior period. Growth across the
region, mainly in Don Julio and The Singleton, was more than offset
by double-digit declines in Vietnam, particularly impacting Johnnie
Walker.
●
North
Asia (Korea and Japan) net sales
declined 6%, lapping strong growth in the prior period driven by
the recovery of the on-trade. The decline was attributable to
scotch, primarily Johnnie Walker Black Label and White
Horse.
●
Travel Retail
Asia and Middle East net sales grew 4%, primarily
driven by Don Julio 1942.
Key financials ($ million): Asia Pacific
|
|
F23 H1
Re-presented(2)
|
Exchange
|
Acquisitions
and
disposals
|
Organic movement
|
F24 H1
|
Reported movement
%
|
Net sales
|
2,169
|
(23)
|
(65)
|
125
|
2,206
|
2
|
Marketing
|
356
|
-
|
(3)
|
53
|
406
|
14
|
Operating profit before exceptional items
|
704
|
(24)
|
(14)
|
23
|
689
|
(2)
|
Exceptional operating items(3)
|
(25)
|
|
|
|
-
|
|
Operating profit
|
679
|
|
|
|
689
|
1
|
(1)Indian-Made Foreign Liquor (IMFL) whisky.
(2)See page 29 for an explanation under Basis of
preparation.
(3)For further details on exceptional operating items see
pages 21 and 33-34.
Markets and categories:
|
|
|
|
|
Key brands(2):
|
|
Organic
volume
movement
|
Reported
volume
movement
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
|
Organic
volume
movement(3)
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
%
|
%
|
%
|
%
|
|
|
%
|
%
|
%
|
Asia Pacific(1)
|
(2)
|
(15)
|
6
|
2
|
|
Johnnie Walker
|
(11)
|
1
|
5
|
|
|
|
|
|
|
Shui Jing Fang(4)
|
44
|
32
|
27
|
India(1)
|
-
|
(16)
|
9
|
(1)
|
|
McDowell's
|
(5)
|
3
|
(1)
|
Greater China
|
20
|
20
|
18
|
14
|
|
The Singleton
|
28
|
22
|
20
|
Australia
|
(10)
|
(10)
|
(6)
|
(8)
|
|
Smirnoff
|
(2)
|
(1)
|
(5)
|
South East Asia(1)
|
(15)
|
(15)
|
(5)
|
-
|
|
Royal Challenge
|
13
|
20
|
17
|
North Asia
|
(27)
|
(27)
|
(6)
|
(18)
|
|
Guinness
|
(11)
|
(9)
|
(7)
|
Travel Retail Asia and Middle East
|
(18)
|
(18)
|
4
|
12
|
|
Black & White
|
17
|
22
|
19
|
|
|
|
|
|
|
|
|
|
|
Spirits(1)(2)
|
(2)
|
(14)
|
8
|
3
|
|
|
|
|
|
Beer
|
(11)
|
(11)
|
(8)
|
(6)
|
|
|
|
|
|
Ready to drink
|
(17)
|
(17)
|
(12)
|
(14)
|
|
|
|
|
|
|
|
|
Asia Pacific contributed
|
|
Asia Pacific organic net sales grew
|
20% of Diageo reported net sales in
first half of fiscal 24
|
|
6% in first half of fiscal
24
|
(1)Reported
volume movement includes impacts from acquisitions and/or
disposals. For further details see pages 46-48.
(2)Spirits
brands excluding ready to drink and non-alcoholic
variants.
(3)Organic equals reported volume movement.
(4)Growth
figures represent total Chinese white spirits of which Shui Jing
Fang is the principal brand.
Latin America and Caribbean
●
Reported net
sales declined 18%, reflecting weaker
organic performance partially offset by a favourable impact from
foreign exchange, mainly due to a strengthening of various major
regional currencies.
●
Organic net
sales declined 23%, driven by softening
consumer demand across LAC markets and lapping strong double-digit
growth. Despite depletions running ahead of shipments during the
period, inventory levels in the channel remained elevated at the
end of the first half of fiscal 24.
●
Price/mix declined
4%, reflecting higher trade investment to manage inventory towards
appropriate levels for the current macroeconomic environment, and
consumer downtrading.
●
Spirits net
sales declined 25%, primarily led by a
double-digit decline in scotch, particularly Buchanan's, Johnnie
Walker Black Label and Old Parr, as well as a strong double-digit
decline in Don Julio.
●
Organic
operating margin declined by 994bps, driven by
lower operating leverage, increased trade investment and cost
inflation.
●
Marketing
investment declined 19%, slightly behind the
organic net sales decline, in response to the softening consumer
environment.
Market highlights:
●
Brazil net
sales declined 27%, primarily driven by a strong double-digit
decline in scotch across all brands, while winning market share in
the scotch, vodka and gin categories.
●
Mexico net
sales declined 28%, primarily driven by strong double-digit
declines in tequila, led by Don Julio, and
scotch.
●
Central
America and Caribbean (CCA) net sales declined 29%,
primarily due to strong double-digit declines in scotch and
tequila, which more than offset strong triple-digit growth in
Smirnoff Ice flavoured malt beverages.
●
Andean (Colombia
and Venezuela) net sales declined 22%, with positive price/mix more
than offset by lower volume. Scotch contracted 25%, primarily
driven by strong double-digit declines in Buchanan's and Johnnie
Walker, and a double-digit decline in Old Parr.
●
South
LAC (Argentina, Bolivia, Chile,
Ecuador, Paraguay, Peru and Uruguay) net sales grew 4%, driven by
strong price/mix, partially offset by a decline in
volume.
Key financials ($ million): Latin America and
Caribbean
|
|
F23 H1
Re-presented(1)
|
Exchange
|
Organic movement
|
Other (2)
|
F24 H1
|
Reported movement
%
|
Net sales
|
1,299
|
80
|
(310)
|
-
|
1,069
|
(18)
|
Marketing
|
209
|
15
|
(40)
|
-
|
184
|
(12)
|
Operating profit
|
538
|
36
|
(234)
|
(24)
|
316
|
(41)
|
(1)See
page 29 for an explanation under Basis of preparation.
(2)Fair value remeasurements. For further details see
page 21.
Markets and categories:
|
|
|
|
|
Key brands(1):
|
|
Organic
volume
movement
|
Reported
volume
movement
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
|
Organic
volume
movement(2)
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
%
|
%
|
%
|
%
|
|
|
%
|
%
|
%
|
Latin America and Caribbean
|
|
|
|
|
|
Johnnie Walker
|
(14)
|
(18)
|
(16)
|
(19)
|
(19)
|
(23)
|
(18)
|
|
Buchanan's
|
(24)
|
(32)
|
(20)
|
|
|
|
|
|
|
Don Julio
|
(28)
|
(36)
|
(29)
|
Brazil
|
(15)
|
(15)
|
(27)
|
(23)
|
|
Old Parr
|
(20)
|
(30)
|
(20)
|
Mexico
|
(21)
|
(21)
|
(28)
|
(18)
|
|
Smirnoff
|
(17)
|
(16)
|
(16)
|
CCA
|
(22)
|
(22)
|
(29)
|
(26)
|
|
Black & White
|
(25)
|
(32)
|
(24)
|
Andean
|
(27)
|
(27)
|
(22)
|
6
|
|
Baileys
|
(25)
|
(18)
|
(14)
|
South LAC
|
(19)
|
(19)
|
4
|
(13)
|
|
White Horse
|
(17)
|
(31)
|
(26)
|
|
|
|
|
|
|
|
|
|
|
Spirits
|
(19)
|
(19)
|
(25)
|
(19)
|
|
|
|
|
|
Beer
|
12
|
12
|
45
|
51
|
|
|
|
|
|
Ready to drink
|
(13)
|
(13)
|
(13)
|
(10)
|
|
|
|
|
|
|
|
|
Latin America and Caribbean contributed
|
|
Latin America and Caribbean organic net sales declined
|
10% of Diageo reported net sales in
first half of fiscal 24
|
|
23% in first half of fiscal
24
|
(1)Spirits
brands excluding ready to drink and non-alcoholic
variants.
(2)Organic
equals reported volume movement.
Africa
●
Reported net
sales declined 12%, reflecting an
unfavourable impact from foreign exchange, mainly due to a
weakening Nigerian naira and Kenyan shilling, partially offset by
organic growth.
●
Organic net
sales grew 9%, with growth across all
markets except South Africa. Growth was driven by price increases,
partially offset by a 6% decline in volume.
●
Price/mix grew
16%, mainly due to broad-based price increases in Nigeria, Africa
Regional Markets and East Africa. Volume declines were driven by
spirits, mainly vodka and scotch, primarily in the value and
standard price tiers.
●
Spirits net
sales declined 4%, driven by a 14%
volume decrease, mainly in international spirits led by Smirnoff
1818 and Johnnie Walker Red Label. Chrome and Orijin also
contributed to the volume decline.
●
Beer net
sales grew 17%, with strong growth in
all main beer markets, Nigeria, East Africa and Africa Regional
Markets. The increase was primarily driven by Malta Guinness,
Senator and Guinness, each delivering double digit growth. Net
sales benefitted from price increases and volume growth of
3%.
●
Organic
operating margin increased by 2bps, as price
increases and productivity savings more than offset cost
inflation.
●
Marketing
investment grew 6%, focused on supporting
spirits premiumisation, Guinness and tequila
penetration.
Market highlights:
●
East
Africa net sales increased 9%, lapping a
softer comparator and driven by price increases and 2% volume
growth. The increase was primarily driven by beer, mainly Senator.
Spirits also contributed to the improvement led by gin, rum and
scotch, followed by RTD, particularly Smirnoff
Ice.
●
Nigeria net
sales grew 20%, driven by strong price/mix supported by price
increases across all categories. Growth was partially offset by a
decline in volume.
●
Africa
Regional Markets net sales grew 11%, led by growth
in beer, primarily driven by Malta Guinness and Guinness, supported
by price increases. The growth was partially offset by a decline in
spirits particularly in Johnnie Walker. Strong price/mix more than
offset a volume decline of 10%.
●
South
Africa net sales declined 15%, primarily
driven by lower volume of 21%, reflecting declines in Johnnie
Walker Black Label and Smirnoff 1818.
Key financials ($ million): Africa
|
|
F23 H1
Re-presented(1)
|
Exchange
|
Reclassification
|
Acquisitions
and
disposals
|
Organic movement
|
Hyperinflation(2)
|
F24 H1
|
Reported movement
%
|
Net sales
|
1,113
|
(229)
|
-
|
(8)
|
95
|
4
|
975
|
(12)
|
Marketing
|
133
|
(25)
|
(7)
|
(2)
|
7
|
-
|
106
|
(20)
|
Operating profit
|
215
|
(93)
|
-
|
(3)
|
21
|
(10)
|
130
|
(40)
|
(1)See page 29 for an explanation under Basis of
preparation.
(2)See pages 35 and 45-47 for details on hyperinflation
adjustments.
Markets and categories:
|
|
|
|
|
Key brands(2):
|
|
|
Organic
volume
movement
|
Reported
volume
movement
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
|
Organic
volume
movement(3)
|
Organic
net sales
movement
|
Reported
net sales
movement
|
|
|
%
|
%
|
%
|
%
|
|
|
%
|
%
|
%
|
|
Africa(1)
|
(6)
|
(4)
|
9
|
(12)
|
|
Guinness
|
(12)
|
11
|
(32)
|
|
|
|
|
|
|
|
Malta Guinness
|
4
|
47
|
(4)
|
|
East Africa
|
2
|
2
|
9
|
(5)
|
|
Senator
|
31
|
34
|
11
|
|
Nigeria
|
(15)
|
(15)
|
20
|
(35)
|
|
Johnnie Walker
|
(22)
|
(11)
|
(18)
|
|
Africa Regional Markets(1)
|
(10)
|
(13)
|
11
|
(17)
|
|
Smirnoff
|
(19)
|
(11)
|
(25)
|
|
South Africa
|
(21)
|
5
|
(15)
|
17
|
|
Tusker
|
(3)
|
3
|
(9)
|
|
|
|
|
|
|
|
Serengeti
|
(12)
|
(3)
|
(9)
|
|
Spirits(1)
|
(14)
|
(8)
|
(4)
|
(8)
|
|
|
|
|
|
|
Beer(1)
|
3
|
3
|
17
|
(14)
|
|
|
|
|
|
|
Ready to drink(1)
|
(2)
|
(28)
|
28
|
(24)
|
|
|
|
|
|
|
|
|
|
Africa contributed
|
|
Africa organic net sales grew
|
9% of Diageo reported net sales in
first half of fiscal 24
|
|
9% in first half of fiscal
24
|
(1)Reported
volume movement includes impacts from acquisitions and/or
disposals. For further details see pages 46-48.
(2)Spirits
brands excluding ready to drink and non-alcoholic
variants.
(3)Organic equals reported volume movement, except for Guinness
which had reported volume movement of (10)%.
Category and brand review
Scotch net sales declined 10%, primarily due to
LAC. Excluding LAC scotch net sales declined
5%.
o
Johnnie
Walker declined 5%, led by LAC, followed by North America,
partially offset by growth in Europe.
o
Buchanan's, excluding Buchanan's
Pineapple(1),
declined 29% due to lower volume of 21% mainly led by LAC. North
America also contributed to the decline.
o
Scotch
malts declined 12%, led by Europe and North America lapping the
launch of innovations including Lagavulin 11YO Charred Oak
Cask.
●
Tequila net
sales declined 6%, attributable to
declines in North America and LAC, partially offset by strong
growth in Europe, APAC, and Africa, reflecting the global expansion
of Don Julio.
●
Vodka net
sales declined 5%, primarily due to
lower volume, mainly driven by Cîroc in North America and
Europe.
●
Rum net
sales declined 5%, led by Europe, with
volumes declining across all regions.
●
Liqueurs net
sales declined 1%, primarily driven by
Baileys in LAC, APAC and Africa, largely offset by growth in North
America.
●
Beer net
sales grew 14%, with strong growth in
all regions except APAC. Growth was led by strong performance of
Guinness in Europe, Africa, and North America as well as Malta and
Senator in Africa. Beer volume grew 3%.
●
Ready to drink
net sales declined 3%, driven by APAC,
Europe and LAC, partially offset by growth in Africa and North
America.
●
Total trade
market share grew or held in 30%(2) of
total net sales value in measured markets. This compares to 75% in
the first half of fiscal 23. The decline was primarily driven by a
17bps share loss in North America, which represents 39% of the
total net sales value in measured markets in the first half of
fiscal 24.
Key categories
|
Organic
volume
movement(3)
%
|
Organic
net sales
movement
%
|
Reported
net sales
movement
%
|
Reported
net sales
by category
%
|
Spirits(4)
|
(6)
|
(3)
|
(2)
|
80
|
Scotch
|
(10)
|
(10)
|
(8)
|
26
|
Tequila
|
-
|
(6)
|
(5)
|
11
|
Vodka(5)(6)
|
(9)
|
(5)
|
(5)
|
9
|
Canadian whisky(7)
|
(4)
|
(2)
|
(2)
|
6
|
Rum(6)
|
(16)
|
(5)
|
-
|
5
|
Liqueurs
|
(6)
|
(1)
|
2
|
6
|
Gin(6)
|
(10)
|
(6)
|
3
|
5
|
IMFL whisky(7)
|
4
|
10
|
(4)
|
4
|
Chinese white spirits(7)
|
44
|
32
|
27
|
4
|
US whiskey(7)
|
(1)
|
6
|
6
|
2
|
Beer
|
3
|
14
|
4
|
15
|
Ready to drink
|
(11)
|
(3)
|
(10)
|
4
|
(1)Buchanan's Pineapple is not classified as a scotch.
(2)Internal
estimates incorporating Nielsen, Association of Canadian
Distillers, Dichter & Neira, Frontline, INTAGE, IRI, ISCAM,
NABCA, State Monopolies, TRAC, IPSOS and other third-party
providers. All analysis of data has been applied with a tolerance
of +/- 3 bps. Percentages represent percent of markets by total
Diageo net sales contribution that have held or gained total trade
share fiscal year to date. Measured markets indicate a market where
we have purchased any market share data. Market share data may
include beer, wine, spirits or other elements. Measured market net
sales value sums to 89% of total Diageo net sales value in the
first half of fiscal 24.
(3)Organic equals reported volume movement except for spirits
(10)%, vodka (10)%, liqueurs (5)%, gin (3)%, IMFL whisky (15)%,and
ready to drink (18)%.
(4)Spirits
brands excluding ready to drink and non-alcoholic
variants.
(5)Vodka
includes Ketel One Botanical.
(6)Vodka,
rum and gin include IMFL variants.
(7)See pages 8-9 for details of Canadian whisky, US whiskey and
pages 12-13 for details of IMFL whisky and Chinese white
spirits.
Key brands(1):
|
|
Organic
volume
movement(2)
%
|
Organic
net sales
movement
%
|
Reported
net sales
movement
%
|
Johnnie
Walker
|
(7)
|
(5)
|
(3)
|
Guinness
|
(1)
|
14
|
6
|
Smirnoff
|
(8)
|
(1)
|
(1)
|
Don
Julio
|
7
|
(1)
|
1
|
Crown
Royal
|
(3)
|
(2)
|
(2)
|
Baileys
|
(5)
|
-
|
2
|
Casamigos(3)
|
(8)
|
(13)
|
(13)
|
Shui Jing Fang(4)
|
44
|
32
|
27
|
Captain
Morgan
|
(9)
|
(3)
|
(2)
|
Scotch
malts
|
(6)
|
(12)
|
(11)
|
Buchanan's
|
(6)
|
(11)
|
(2)
|
McDowell's
|
(5)
|
2
|
(1)
|
Gordon's
|
(13)
|
(4)
|
19
|
Tanqueray
|
(12)
|
(10)
|
(10)
|
Bulleit whiskey(5)
|
13
|
19
|
19
|
Ketel One(6)
|
(6)
|
(5)
|
(5)
|
Cîroc
vodka
|
(22)
|
(23)
|
(22)
|
Old
Parr
|
(18)
|
(25)
|
(17)
|
Black
& White
|
(13)
|
(12)
|
(9)
|
Yenì
Raki
|
(4)
|
(6)
|
11
|
JeB
|
(12)
|
(17)
|
(13)
|
Bundaberg
|
(5)
|
(1)
|
(4)
|
(1)Brands
excluding ready to drink, non-alcoholic variants and beer except
Guinness.
(2)Organic equals reported volume movement, except for Gordon's
which had reported volume movement of 1%.
(3)Casamigos trademark includes both tequila and
mezcal.
(4)Growth
figures represent total Chinese white spirits of which Shui Jing
Fang is the principal brand.
(5)Bulleit whiskey excludes Bulleit Crafted Cocktails.
(6)Ketel
One includes Ketel One vodka and Ketel One Botanical.
Additional financial information
Six months ended 31 December 2023
|
31 December 2022
|
Exchange
(a)
|
Acquisitions and disposals
(b)
|
Organic movement(2)
|
Fair value remeasurement
(d)
|
Reclassification
|
Hyperinflation(2)
|
31 December 2023
|
|
Re-presented(1)
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
Sales
|
15,611
|
(353)
|
(328)
|
152
|
-
|
-
|
99
|
15,181
|
Excise duties
|
(4,491)
|
186
|
277
|
(219)
|
-
|
-
|
28
|
(4,219)
|
Net sales
|
11,120
|
(167)
|
(51)
|
(67)
|
-
|
-
|
127
|
10,962
|
Cost of sales
|
(4,248)
|
156
|
25
|
(36)
|
(24)
|
-
|
(86)
|
(4,213)
|
Gross profit
|
6,872
|
(11)
|
(26)
|
(103)
|
(24)
|
-
|
41
|
6,749
|
Marketing
|
(1,861)
|
1
|
(15)
|
(70)
|
-
|
7
|
(14)
|
(1,952)
|
Other operating items
|
(1,241)
|
14
|
4
|
(32)
|
5
|
(7)
|
(30)
|
(1,287)
|
Operating profit before exceptional items
|
3,770
|
4
|
(37)
|
(205)
|
(19)
|
-
|
(3)
|
3,510
|
Exceptional operating items (c)
|
(39)
|
|
|
|
|
|
|
(193)
|
Operating profit
|
3,731
|
|
|
|
|
|
|
3,317
|
Non-operating items (c)
|
19
|
|
|
|
|
|
|
(60)
|
Net finance charges
|
(345)
|
|
|
|
|
|
|
(431)
|
Share of after tax results of associates and joint
ventures
|
202
|
|
|
|
|
|
|
253
|
Profit before taxation
|
3,607
|
|
|
|
|
|
|
3,079
|
Taxation (e)
|
(766)
|
|
|
|
|
|
|
(737)
|
Profit for the period
|
2,841
|
|
|
|
|
|
|
2,342
|
(1)See page 29 for an explanation under
Basis of preparation.
(2)For the definition of organic movement and hyperinflation see
pages 44-45.
(a) Exchange
The impact of movements in exchange rates on reported figures for
operating profit was principally in respect of the favourable
exchange impact of the strengthening of the
Mexican peso and sterling against the US dollar, partially offset
by the weakening of the Nigerian naira, Kenyan shilling and the
Turkish lira.
The effect of movements in exchange rates and other movements on
profit before exceptional items and taxation for
the six months ended 31 December
2023 is set out in the table below.
|
Gains/(losses)
|
|
$ million
|
Translation impact
|
(9)
|
Transaction impact
|
13
|
Operating profit before exceptional items
|
4
|
Net
finance charges - translation impact
|
(7)
|
Net
finance charges - transaction impact
|
(6)
|
Net finance charges
|
(13)
|
Associates - translation impact
|
14
|
Profit before exceptional items and taxation
|
5
|
|
Six months ended 31 December 2023
|
Six months ended 31 December 2022
|
Exchange rates
|
|
|
Translation
$1 =
|
£0.80
|
£0.85
|
Transaction
$1 =
|
£0.79
|
£0.78
|
Translation
$1 =
|
€0.92
|
€0.98
|
(b) Acquisitions and disposals
The acquisitions and disposals movement in the six months ended 31
December 2023 was primarily attributable to the disposal of the
United Spirits Limited (USL) Popular brands and Guinness Cameroun
S.A. See pages 22, 38 and
44-48 for further details.
(c) Exceptional items
In the six months ended 31 December 2023, exceptional operating items
were a loss of $193 million (2022 - a loss of $39
million), mainly
due to various dispute and litigation matters ($108 million) and
charges in respect of brand impairment ($54 million) and the supply
chain agility programme ($31 million).
In the six months ended 31 December 2023, exceptional non-operating
items were a loss of $60 million (2022 - a gain
of $19 million), mainly driven by the loss on the
sale of the Windsor business in Korea ($53
million).
See pages 33-34 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 $24 million loss for the six months ended 31 December
2023 and $nil for the six months ended 31 December 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 $23 million gain for the six months ended 31
December 2023 and $18 million gain for the six months ended 31
December 2022.
(e) Taxation
The reported tax rate for the six months ended 31 December
2023 was 23.9% compared with 21.2% for
the six months ended 31 December 2022.
For the six
months ended 31 December 2023, income tax expense was recognised
based on management's best estimate of the weighted average annual
income tax rate expected for the full financial year applied to the
pre-tax income of the interim period in line with the relevant
accounting standard.
Included in the tax charge of $737 million in the six
months ended 31 December 2023 is a net exceptional tax credit
of $42 million, including an exceptional tax credit of
$23 million in respect of various dispute and litigation
matters in North America and Europe and $13 million in respect
of brand impairments in the US ready to drink
portfolio.
The tax rate before exceptional items for the six months ended 31 December
2023 was 23.4% compared with 23.4% for
the six months ended 31 December 2022.
We expect the tax rate before exceptional items for the year ending
30 June 2024 to be in the region of 23%.
(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 2023, dividend cover
was 2.0 times on a re-presented basis. The group will
keep future returns of capital, including dividends, under review
through the year ending 30 June 2024 to ensure Diageo's capital is
allocated in the best way to maximise value for the business and
its stakeholders.
An interim dividend of 40.50
cents per share will be paid to holders of ordinary shares and US
ADRs on register as of 1 March 2024. The ex-dividend date is 29
February 2024. This represents an increase of 5% on last year's
interim dividend. The interim dividend will be paid to holders of
ordinary shares and US ADRs on 17 April 2024. Holders of ordinary
shares will receive their dividends in sterling unless they elect
to receive their dividends in US dollars by 15 March 2024. The
dividend per share in pence to be paid to ordinary shareholders
will be announced approximately two weeks prior to the payment date
and will be determined by the actual foreign exchange rates
achieved by Diageo buying forward contracts, entered into during
the three days preceding the announcement. A dividend reinvestment
plan is available to holders of ordinary shares in respect of the
interim dividend and the plan notice date is 15 March
2024.
(g) Return of capital
Diageo's current return of capital programme, approved by the Board
on 31 July 2023, seeks to return up to $1.0 billion to shareholders
and is expected to be completed no later than 26 June 2024. The
current programme follows the successful completion of Diageo's
additional 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 six months ended 31 December 2023, the company
purchased 12.9 million ordinary shares
(2022 - 14.8 million) at a cost of $480
million (including transaction costs of $2 million) (2022
- $655 million including transaction costs of $8 million). All
shares purchased under the share buyback programme were cancelled.
The remaining contractual amount of $522 million is
expected to be purchased by 26 June 2024. As the share buyback
programme cannot be cancelled during closed periods, a financial
liability of $497 million (including transaction costs)
was accrued in line with contractual terms at 31 December 2023
(2022 - $259 million) equivalent
to 13.6 million shares (2022 - 5.9 million shares)
that represents the maximum potential purchase value by 31 January
2024.
Movements in net borrowings and equity
Movements in net borrowings
|
2023
|
2022
|
|
$ million
|
Re-presented(1)
$ million
|
Net borrowings at 30 June
|
(19,582)
|
(17,107)
|
Free cash flow (2)
|
1,462
|
964
|
Acquisitions (3)
|
(3)
|
(129)
|
Investment in associates
|
(51)
|
(38)
|
Sale of businesses and brands (4)
|
18
|
111
|
Share buyback programme (5)
|
(480)
|
(655)
|
Net sale of own shares for share schemes (6)
|
5
|
12
|
Dividends paid to non-controlling interests
|
(71)
|
(94)
|
Net movements in bonds (7)
|
558
|
1,689
|
Net movements in other borrowings (8)
|
(331)
|
(33)
|
Equity dividend paid
|
(1,348)
|
(1,194)
|
Net (decrease)/increase in cash and cash
equivalents
|
(241)
|
633
|
Net increase in bonds and other borrowings
|
(227)
|
(1,658)
|
Exchange differences (9)
|
(399)
|
4
|
Other non-cash items (10)
|
(34)
|
(75)
|
Net borrowings at 31 December
|
(20,483)
|
(18,203)
|
(1)See page 29 for an explanation under
Basis of preparation.
(2) See page 49 for the analysis of free
cash flow.
(3) In the six months ended 31 December 2023, Diageo
paid $3
million in respect of
prior year acquisitions. Diageo completed two acquisitions in the
six months ended 31 December 2022: (i) on 29 September 2022, the
acquisition of the remaining issued share capital of Mr Black
Spirits Pty Ltd, owner of Mr Black, the Australian premium cold
brew coffee liqueur, that it did not already own; and (ii) on 2
November 2022, the acquisition of the entire issued share capital
of Balcones Distilling, a Texas craft distiller and one of the
leading producers of American single malt whiskey in the United
States. In the six months ended 31 December 2022, Diageo also paid
$22 million in respect of prior year
acquisitions.
(4) In the six months ended 31 December 2023, sale of businesses
and brands included a net cash consideration of $17 million for the
disposal of Windsor Global Co., Ltd. In the six months ended 31
December 2022, sale of businesses and brands represents the
disposal of the USL Popular brands and the Archers brand net of
transaction costs.
(5) See page 21 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 $21 million
(2022 - $34 million) less purchase of own shares for the
future settlement of obligations under the employee share option
schemes of $16 million (2022 - $22
million).
(7) In the six months ended 31 December
2023, the group issued bonds of $1,700 million ($1,690 million -
net of discount and fee) and repaid bonds of $500 million and
€600 million ($632 million). In the six months ended 31
December 2022, the group issued bonds of $2,000 million (cash
flow includes related discount and fee) and repaid bonds of $300
million.
(8) In the six months ended 31 December
2023, the net movements in other borrowings principally arose from
the decrease in commercial paper, collateral and bank loan
balances, cash outflows of foreign currency swaps and forwards, and
repayment of lease liabilities. In the six months ended 31 December
2022, the net movements in other borrowings principally arose from
cash movement of foreign currency swaps and forwards and repayment
of lease liabilities offset by the increase in bank
loans.
(9) In the six months ended 31 December 2023, exchange losses
arising on net borrowings of $399 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 and interest rate
instruments. In the six months ended 31 December 2022, exchange
gains arising on net borrowings of $4 million were primarily driven
by favourable exchange movements on euro and sterling denominated
borrowings and unfavourable exchange movements on cash and cash
equivalents partially offset by favourable movements on foreign
currency swaps and forwards.
(10) In the six months ended 31 December 2023, other non-cash items
were principally in respect of additional leases entered into
during the period partially offset by fair value movements of
interest rate hedging instruments. In the six months ended 31
December 2022, other non-cash items were principally in respect of
the reclassification of cash and cash equivalents in Guinness
Cameroun S.A. to assets and liabilities held for sale.
Movements in equity
|
2023
|
2022
|
|
$ million
|
Re-presented(1)
$ million
|
Equity at 30 June
|
11,709
|
11,511
|
Adjustment to 2023 closing equity in respect of hyperinflation in
Ghana (2)
|
51
|
-
|
Adjusted equity at the beginning of the period
|
11,760
|
11,511
|
Profit for the period
|
2,342
|
2,841
|
Exchange adjustments (3)
|
(189)
|
(249)
|
Remeasurement of post employment benefit plans net of
taxation
|
(109)
|
(451)
|
Hyperinflation adjustments net of taxation (2)
|
192
|
103
|
Associates' transactions with non-controlling
interests
|
-
|
(14)
|
Dividend declared to non-controlling interests
|
(53)
|
(75)
|
Equity dividend declared
|
(1,349)
|
(1,200)
|
Share buyback programme (4)
|
(977)
|
(775)
|
Other reserve movements
|
107
|
148
|
Equity at 31 December
|
11,724
|
11,839
|
(1)See page 29 for an explanation under
Basis of preparation.
(2) See pages 35 and 45-47 for details on
hyperinflation adjustments.
(3) Exchange movements in the six months ended 31 December
2023 primarily arose from exchange loss driven by the Turkish
lira, sterling and Indian rupee. Exchange movements in the six
months ended 31 December 2022 primarily arose from exchange loss
driven by Indian rupee and Turkish lira, partially offset by the
gain in euro.
(4) See page 21 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 $92 million from $739
million at 30 June 2023 to $647 million at 31
December 2023. The decrease in net surplus was predominantly
attributable to the unfavourable change in the discount rate
assumptions in the United Kingdom due to the decrease in returns
from 'AA' rated corporate bonds used to calculate the discount
rates on the liabilities of the post employment plans
(from 5.2% to 4.5%) that was partially offset by the
favourable actual change in the market value of assets held by the
post employment benefit plans in the United Kingdom, and the change
in inflation rate assumptions in the United Kingdom
(from 3.2% to 2.9%).
Total cash contributions by the group to all post employment
benefit plans in the year ending 30 June 2024 are estimated
to be approximately $90 million.
Condensed consolidated income statement
|
|
Six months ended 31 December 2023
|
Six months ended 31 December 2022
|
|
Notes
|
$ million
|
Re-presented(1)
$ million
|
Sales
|
2
|
15,181
|
15,611
|
Excise duties
|
|
(4,219)
|
(4,491)
|
Net sales
|
2
|
10,962
|
11,120
|
Cost of sales
|
|
(4,241)
|
(4,279)
|
Gross profit
|
|
6,721
|
6,841
|
Marketing
|
|
(1,952)
|
(1,861)
|
Other operating items
|
|
(1,452)
|
(1,249)
|
Operating profit
|
2
|
3,317
|
3,731
|
Non-operating items
|
3
|
(60)
|
19
|
Finance income
|
4
|
287
|
303
|
Finance charges
|
4
|
(718)
|
(648)
|
Share of after tax results of associates and joint
ventures
|
|
253
|
202
|
Profit before taxation
|
|
3,079
|
3,607
|
Taxation
|
5
|
(737)
|
(766)
|
Profit for the period
|
|
2,342
|
2,841
|
|
|
|
|
Attributable to:
|
|
|
|
Equity shareholders of the parent company
|
|
2,210
|
2,709
|
Non-controlling interests
|
|
132
|
132
|
|
|
2,342
|
2,841
|
|
|
|
|
Weighted average number of shares
|
|
million
|
million
|
Shares in issue excluding own shares
|
|
2,242
|
2,274
|
Dilutive potential ordinary shares
|
|
5
|
7
|
|
|
2,247
|
2,281
|
|
|
|
|
|
|
cents
|
cents
|
Basic earnings per share
|
|
98.6
|
119.1
|
Diluted earnings per share
|
|
98.4
|
118.8
|
|
|
|
|
(1)See page 29 for an explanation under
Basis of preparation.
Condensed consolidated statement of comprehensive
income
|
Six months ended 31 December 2023
|
Six months ended 31 December 2022
|
|
$ million
|
Re-presented(2)
$ million
|
Other comprehensive income
|
|
|
Items that will not be recycled subsequently to the income
statement
|
|
|
Net remeasurement of post employment benefit plans
|
|
|
Group
|
(138)
|
(622)
|
Associates
and joint ventures
|
(2)
|
12
|
Non-controlling
interests
|
(1)
|
-
|
Tax on post employment benefit plans
|
32
|
159
|
Changes in the fair value of equity investments at fair value
through other comprehensive income
|
-
|
(4)
|
|
(109)
|
(455)
|
Items that may be recycled subsequently to the income
statement
|
|
|
Exchange differences on translation of foreign
operations
|
|
|
Group
|
(18)
|
(244)
|
Associates
and joint ventures
|
106
|
75
|
Non-controlling
interests
|
(8)
|
(61)
|
Net investment hedges
|
(295)
|
(21)
|
Exchange loss recycled to the income statement
|
|
|
On
disposal of foreign operations
|
26
|
-
|
On
step acquisitions
|
-
|
2
|
Tax on exchange differences - group
|
36
|
(2)
|
Effective portion of changes in fair value of cash flow
hedges
|
|
|
Hedge
of foreign currency debt of the group
|
39
|
72
|
Transaction
exposure hedging of the group
|
90
|
176
|
Hedges
by associates and joint ventures
|
1
|
16
|
Commodity
price risk hedging of the group
|
(11)
|
(8)
|
Recycled
to income statement - hedge of foreign currency debt of the
group
|
52
|
(35)
|
Recycled
to income statement - transaction exposure hedging of the
group
|
(125)
|
(77)
|
Recycled
to income statement - commodity price risk hedging of the
group
|
20
|
(41)
|
Cost of hedging
|
(48)
|
-
|
Recycled to income statement - cost of hedging
|
(12)
|
-
|
Tax on effective portion of changes in fair value of cash flow
hedges
|
(29)
|
(20)
|
Hyperinflation adjustments
|
290
|
129
|
Tax on hyperinflation adjustments(1)
|
(98)
|
(26)
|
|
16
|
(65)
|
Other comprehensive (loss) net of tax, for the period
|
(93)
|
(520)
|
Profit for the period
|
2,342
|
2,841
|
Total comprehensive income for the period
|
2,249
|
2,321
|
|
|
|
Attributable to:
|
|
|
Equity shareholders of the parent company
|
2,126
|
2,250
|
Non-controlling interests
|
123
|
71
|
Total comprehensive income for the period
|
2,249
|
2,321
|
(1)Tax on hyperinflation adjustments $(64) million and tax
rate change on hyperinflation
adjustments $(34) million.
(2)See page 29 for an explanation under
Basis of preparation.
Condensed consolidated balance sheet
|
|
31 December 2023
|
30 June 2023
|
31 December 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
|
|
14,496
|
|
14,506
|
|
14,556
|
|
Property, plant and equipment
|
|
8,212
|
|
7,738
|
|
7,168
|
|
Biological assets
|
|
194
|
|
197
|
|
143
|
|
Investments in associates and joint ventures
|
|
5,229
|
|
4,825
|
|
4,710
|
|
Other investments
|
|
96
|
|
71
|
|
50
|
|
Other receivables
|
|
32
|
|
39
|
|
33
|
|
Other financial assets
|
|
430
|
|
497
|
|
479
|
|
Deferred tax assets
|
|
171
|
|
178
|
|
127
|
|
Post employment benefit assets
|
|
1,118
|
|
1,210
|
|
1,272
|
|
|
|
|
29,978
|
|
29,261
|
|
28,538
|
Current assets
|
|
|
|
|
|
|
|
Inventories
|
6
|
9,840
|
|
9,653
|
|
9,062
|
|
Trade and other receivables
|
|
4,580
|
|
3,427
|
|
4,648
|
|
Assets held for sale
|
|
-
|
|
-
|
|
220
|
|
Corporate tax receivables
|
5
|
274
|
|
292
|
|
199
|
|
Other financial assets
|
|
564
|
|
437
|
|
479
|
|
Cash and cash equivalents
|
7
|
1,529
|
|
1,813
|
|
3,319
|
|
|
|
|
16,787
|
|
15,622
|
|
17,927
|
Total assets
|
|
|
46,765
|
|
44,883
|
|
46,465
|
Current liabilities
|
|
|
|
|
|
|
|
Borrowings and bank overdrafts
|
7
|
(2,004)
|
|
(2,142)
|
|
(2,767)
|
|
Other financial liabilities
|
|
(371)
|
|
(453)
|
|
(524)
|
|
Share buyback liability
|
|
(497)
|
|
-
|
|
(259)
|
|
Trade and other payables
|
|
(7,292)
|
|
(6,678)
|
|
(7,332)
|
|
Liabilities held for sale
|
|
-
|
|
-
|
|
(92)
|
|
Corporate tax payables
|
5
|
(253)
|
|
(170)
|
|
(319)
|
|
Provisions
|
|
(213)
|
|
(150)
|
|
(135)
|
|
|
|
|
(10,630)
|
|
(9,593)
|
|
(11,428)
|
Non-current liabilities
|
|
|
|
|
|
|
|
Borrowings
|
7
|
(19,476)
|
|
(18,649)
|
|
(18,365)
|
|
Other financial liabilities
|
|
(865)
|
|
(941)
|
|
(925)
|
|
Other payables
|
|
(447)
|
|
(463)
|
|
(424)
|
|
Provisions
|
|
(313)
|
|
(306)
|
|
(319)
|
|
Deferred tax liabilities
|
|
(2,839)
|
|
(2,751)
|
|
(2,708)
|
|
Post employment benefit liabilities
|
|
(471)
|
|
(471)
|
|
(457)
|
|
|
|
|
(24,411)
|
|
(23,581)
|
|
(23,198)
|
Total liabilities
|
|
|
(35,041)
|
|
(33,174)
|
|
(34,626)
|
Net assets
|
|
|
11,724
|
|
11,709
|
|
11,839
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share capital
|
|
893
|
|
898
|
|
863
|
|
Share premium
|
|
1,703
|
|
1,703
|
|
1,621
|
|
Other reserves
|
|
502
|
|
665
|
|
560
|
|
Retained earnings
|
|
6,693
|
|
6,590
|
|
6,722
|
|
Equity attributable to equity shareholders of the parent
company
|
|
|
9,791
|
|
9,856
|
|
9,766
|
Non-controlling interests
|
|
|
1,933
|
|
1,853
|
|
2,073
|
Total equity
|
|
|
11,724
|
|
11,709
|
|
11,839
|
|
|
|
|
|
|
|
|
(1)See page 29 for an explanation under Basis of
preparation.
Condensed
consolidated statement of changes in equity
|
|
|
|
Retained earnings/(deficit)
|
|
|
|
|
|
|
Share
capital
|
Share
premium
|
Other reserves
|
Own shares
|
Other retained earnings
|
Total
|
Equity attributable to parent company shareholders
|
Non-controlling interests
|
Total equity
|
|
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
|
|
At 30 June 2022 (re-presented1)
|
875
|
1,635
|
658
|
(2,223)
|
8,490
|
6,267
|
9,435
|
2,076
|
11,511
|
|
|
Other(2)
|
(7)
|
(14)
|
4
|
17
|
-
|
17
|
-
|
-
|
-
|
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
2,709
|
2,709
|
2,709
|
132
|
2,841
|
|
|
Other comprehensive loss
|
-
|
-
|
(107)
|
-
|
(352)
|
(352)
|
(459)
|
(61)
|
(520)
|
|
|
Total comprehensive (loss)/income for the period
|
-
|
-
|
(107)
|
-
|
2,357
|
2,357
|
2,250
|
71
|
2,321
|
|
|
Employee share schemes
|
-
|
-
|
-
|
22
|
17
|
39
|
39
|
-
|
39
|
|
|
Share-based incentive plans
|
-
|
-
|
-
|
-
|
31
|
31
|
31
|
-
|
31
|
|
|
Share-based incentive plans in respect of associates
|
-
|
-
|
-
|
-
|
3
|
3
|
3
|
-
|
3
|
|
|
Share-based payments and purchase of own shares in respect of
subsidiaries
|
-
|
-
|
-
|
-
|
1
|
1
|
1
|
1
|
2
|
|
|
Associates' transactions with non-controlling
interests
|
-
|
-
|
-
|
-
|
(14)
|
(14)
|
(14)
|
-
|
(14)
|
|
|
Unclaimed dividend
|
-
|
-
|
-
|
-
|
1
|
1
|
1
|
-
|
1
|
|
|
Change in fair value of put option
|
-
|
-
|
-
|
-
|
(5)
|
(5)
|
(5)
|
-
|
(5)
|
|
|
Share buyback programme
|
(5)
|
-
|
5
|
-
|
(775)
|
(775)
|
(775)
|
-
|
(775)
|
|
|
Dividend declared in the period
|
-
|
-
|
-
|
-
|
(1,200)
|
(1,200)
|
(1,200)
|
(75)
|
(1,275)
|
|
|
At 31 December 2022 (re-presented1)
|
863
|
1,621
|
560
|
(2,184)
|
8,906
|
6,722
|
9,766
|
2,073
|
11,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2023 (re-presented1)
|
898
|
1,703
|
665
|
(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
|
665
|
(2,286)
|
8,917
|
6,631
|
9,897
|
1,863
|
11,760
|
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
2,210
|
2,210
|
2,210
|
132
|
2,342
|
|
|
Other comprehensive (loss)/income
|
-
|
-
|
(168)
|
-
|
84
|
84
|
(84)
|
(9)
|
(93)
|
|
|
Total comprehensive (loss)/income for the period
|
-
|
-
|
(168)
|
-
|
2,294
|
2,294
|
2,126
|
123
|
2,249
|
|
|
Employee share schemes
|
-
|
-
|
-
|
30
|
4
|
34
|
34
|
-
|
34
|
|
|
Share-based incentive plans
|
-
|
-
|
-
|
-
|
24
|
24
|
24
|
-
|
24
|
|
|
Share-based incentive plans in respect of associates
|
-
|
-
|
-
|
-
|
2
|
2
|
2
|
-
|
2
|
|
|
Tax on share-based incentive plans
|
-
|
-
|
-
|
-
|
(7)
|
(7)
|
(7)
|
-
|
(7)
|
|
|
Unclaimed dividend
|
-
|
-
|
-
|
-
|
1
|
1
|
1
|
-
|
1
|
|
|
Change in fair value of put option
|
-
|
-
|
-
|
-
|
40
|
40
|
40
|
-
|
40
|
|
|
Share buyback programme
|
(5)
|
-
|
5
|
-
|
(977)
|
(977)
|
(977)
|
-
|
(977)
|
|
|
Dividend declared in the period
|
-
|
-
|
-
|
-
|
(1,349)
|
(1,349)
|
(1,349)
|
(53)
|
(1,402)
|
|
|
At 31 December 2023
|
893
|
1,703
|
502
|
(2,256)
|
8,949
|
6,693
|
9,791
|
1,933
|
11,724
|
|
|
(1)See page 29 for an explanation under
Basis of preparation.
(2)Includes amounts relating to foreign translation differences
arising from the retranslation of reserves due to the change in the
group's presentation currency.
Condensed consolidated statement of cash flows
|
Six months ended 31 December 2023
|
Six months ended 31 December 2022
|
|
$ million
|
$ million
|
Re-presented(1)
$ million
|
Re-presented(1)
$ million
|
Cash flows from operating activities
|
|
|
|
|
Profit for the period
|
2,342
|
|
2,841
|
|
Taxation
|
737
|
|
766
|
|
Share of after tax results of associates and joint
ventures
|
(253)
|
|
(202)
|
|
Net finance charges
|
431
|
|
345
|
|
Non-operating items
|
60
|
|
(19)
|
|
Operating profit
|
|
3,317
|
|
3,731
|
Increase in inventories
|
(82)
|
|
(552)
|
|
Increase in trade and other receivables
|
(1,106)
|
|
(1,191)
|
|
Increase in trade and other payables and provisions
|
469
|
|
131
|
|
Net increase in working capital
|
|
(719)
|
|
(1,612)
|
Depreciation, amortisation and impairment
|
411
|
|
332
|
|
Dividends received
|
5
|
|
5
|
|
Post employment payments less amounts included in operating
profit
|
(24)
|
|
(27)
|
|
Other items
|
59
|
|
9
|
|
|
|
451
|
|
319
|
Cash generated from operations
|
|
3,049
|
|
2,438
|
Interest received
|
91
|
|
78
|
|
Interest paid
|
(443)
|
|
(293)
|
|
Taxation paid
|
(551)
|
|
(751)
|
|
|
|
(903)
|
|
(966)
|
Net cash inflow from operating activities
|
|
2,146
|
|
1,472
|
Cash flows from investing activities
|
|
|
|
|
Disposal of property, plant and equipment and computer
software
|
7
|
|
8
|
|
Purchase of property, plant and equipment and computer
software
|
(582)
|
|
(514)
|
|
Movements in loans and other investments
|
(109)
|
|
(2)
|
|
Sale of businesses and brands
|
18
|
|
111
|
|
Acquisition of subsidiaries
|
(3)
|
|
(129)
|
|
Investment in associates and joint ventures
|
(51)
|
|
(38)
|
|
Net cash outflow from investing activities
|
|
(720)
|
|
(564)
|
Cash flows from financing activities
|
|
|
|
|
Share buyback programme
|
(480)
|
|
(655)
|
|
Net sale of own shares for share schemes
|
5
|
|
12
|
|
Dividends paid to non-controlling interests
|
(71)
|
|
(94)
|
|
Proceeds from bonds
|
1,690
|
|
1,989
|
|
Repayment of bonds
|
(1,132)
|
|
(300)
|
|
Cash inflow from other borrowings
|
470
|
|
173
|
|
Cash outflow from other borrowings
|
(801)
|
|
(206)
|
|
Equity dividend paid
|
(1,348)
|
|
(1,194)
|
|
Net cash outflow from financing activities
|
|
(1,667)
|
|
(275)
|
Net (decrease)/increase in net cash and cash
equivalents
|
|
(241)
|
|
633
|
Exchange differences
|
|
(45)
|
|
(25)
|
Reclassification to assets held for sale
|
|
-
|
|
(57)
|
Net cash and cash equivalents at beginning of the
period
|
|
1,768
|
|
2,675
|
Net cash and cash equivalents at end of the period
|
|
1,482
|
|
3,226
|
|
|
|
|
|
Net cash and cash equivalents consist of:
|
|
|
|
|
Cash and cash equivalents
|
|
1,529
|
|
3,319
|
Bank overdrafts
|
|
(47)
|
|
(93)
|
|
|
1,482
|
|
3,226
|
(1)See page 29 for an explanation under
Basis of preparation.
Notes
1. Basis of preparation
These unaudited condensed consolidated interim financial statements
have been prepared in accordance with UK adopted IAS 34 'Interim
Financial Reporting', IAS 34 'Interim Financial Reporting' as
issued by the International Accounting Standards Board ('IASB') and
The Disclosure Guidance and Transparency Rules sourcebook of the
UK's Financial Conduct Authority. These financial statements should
be read in conjunction with the company's published consolidated
financial statements for the year ended 30 June 2023, which were
prepared in accordance with IFRS® Accounting
Standards adopted by the UK and IFRS Accounting Standards issued by
IASB, including interpretations issued by the IFRS Interpretations
Committee. IFRS Accounting Standards as adopted by the UK differs
in certain respects from IFRS Accounting Standards as issued by the
IASB, but the differences have no impact on the group's
consolidated financial statements for the periods presented. The
consolidated financial statements are prepared on a going concern
basis under the historical cost convention, unless stated
otherwise.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management when
applying the group's accounting policies and the significant areas
where estimates were required were the same as those that applied
to the consolidated financial statements for the year ended 30 June
2023, with the exception of changes in estimates disclosed in note
3 Exceptional items and note 12 Contingent liabilities and legal
proceedings. These condensed consolidated interim financial
statements were approved for issue on 29 January 2024.
The financial statements for Diageo plc for the year ending 30 June
2024 will be prepared in accordance with IFRS Accounting Standards
as adopted by the UK and IFRS Accounting Standards as issued by the
IASB, including interpretations issued by the IFRS Interpretations
Committee.
The comparative figures for the financial year ended 30 June 2023
are not the company's statutory accounts (within the meaning of
section 434 of the Companies Act 2006) for that financial year.
Those statutory accounts have been reported on by the company's
auditor, PricewaterhouseCoopers LLP, and delivered to the Registrar
of Companies. The report of the auditor (i) was unqualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
Going concern
Management prepared 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, flat operating margin and global TBA market share
growth. In light of the ongoing geopolitical 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 geopolitical
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, as well as a temporary suspension of the
share buyback programme and dividend payments 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 condensed consolidated interim financial
statements.
Foreign currencies
Starting 1 July 2023, in line with reporting requirements, the
functional currency of Diageo plc changed from sterling to US
dollars which is applied prospectively. 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 also decided to change its
presentation currency to US dollars 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.
The comparative financial information included in these condensed
consolidated interim financial statements of Diageo as of and for
the six months ended 31 December 2023 was re-presented in US
dollars following the translation methodology in IAS 21 - The
Effects of Changes in Foreign Exchange Rates:
●
assets
and liabilities were translated into US dollars at the closing
exchange rate prevailing at the relevant balance sheet
date;
●
the
consolidated income statement and the consolidated statement of
cash flows of non US dollar entities were translated into US
dollars at weighted average exchange rates for the relevant period,
which is consistent with the requirements of IAS21; except for
subsidiaries in hyperinflationary economies that were translated
with the closing rate at the end of the relevant period and for
substantial transactions that are translated at the rate on the
date of the transaction (including acquisitions, disposals,
impairment write off, dividends received and paid);
●
share
capital, share premium, capital redemption reserve included in
other reserves and own shares in the statement of changes in equity
were translated into US dollars at the closing exchange rate at the
relevant balance sheet date; exchange differences arising on the
retranslation to closing rates were taken to the exchange reserve;
and
●
the
cumulative foreign exchange translation reserve was set to zero on
1 July 2004, the date of transition to IFRS and this reserve was
re-presented as if the group reported in US dollars since that
date.
As results of the functional and presentation currency change, the
group has rebalanced its net investment hedging portfolio in line
with the shifted currency exposure. Diageo has re-designated its
buy US dollar sell sterling cross currency interest swaps in net
investment hedge relationships previously used in cash flow hedging
foreign currency debt of the group.
Weighted average exchange rates used in the translation of income
statements were sterling - $1
= £0.80 (2022
- $1
= £0.85) and euro - $1
= €0.92 (2022 - $1
= €0.98). Exchange rates used to translate assets and
liabilities at the balance sheet date were sterling
- $1
= £0.79 (31 December
2022 - $1
= £0.83; 30 June 2023 - $1 = £0.79)
and euro - $1
= €0.90 (31 December
2022 - $1
= €0.94; 30 June 2023 - $1
= €0.93). The group uses foreign exchange transaction
hedges to mitigate the effect of exchange rate
movements.
New accounting standards and interpretations
The following standard amendments to the Accounting Standards,
issued by the IASB and endorsed by the UK, were adopted by the
group from 1 July 2023 with no material impact
on the group's consolidated results, financial position or
disclosures:
●
IFRS
17 - Insurance Contracts
●
Amendments
to IAS 12 Income Taxes - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
●
Amendments
to IAS 1, 8 - Definition of Accounting Estimates
●
Amendments
to IAS 1 Disclosure Initiative - Accounting Policies.
The following amendments issued by the IASB have been endorsed by
the UK and have not been adopted by the group:
●
Amendments
to IAS 1 - Classification of Liabilities and Non-current
Liabilities with Covenants (effective from the year ending 30 June
2025)
●
Amendments
to IFRS 16 - Lease Liability in a Sale and Leaseback (effective
from the year ending 30 June 2025)
●
Amendments
to IAS 7 and IFRS 7 - Supplier Finance Arrangements (effective from
the year ending 30 June 2025).
There are a number of other amendments and clarifications to IFRS
Accounting Standards effective in future years, which are not
expected to significantly impact the group's consolidated results
or financial position.
2. Segmental information
The segmental information presented is consistent with management
reporting provided to the Executive Committee (the chief operating
decision maker).
The Executive Committee considers the business principally from a
geographical perspective based on the location of third-party sales
and the business analysis is presented by geographical segment. In
addition to these geographical selling segments, a further segment
reviewed by the Executive Committee is the Supply Chain and
Procurement (SC&P) segment, which manufactures products for
other group companies and includes production sites in the United
Kingdom, Ireland, Italy, Guatemala and Mexico, and comprises the
global procurement function.
The group's operations also include the Corporate segment.
Corporate costs are in respect of central costs, including finance,
marketing, corporate relations, human resources and legal, as well
as certain information systems, facilities and employee costs that
are not allocable to the geographical segments or to the
SC&P.
Diageo uses shared services operations to deliver transaction
processing activities for markets and operational entities. These
centres are located in India, Hungary, Colombia and the
Philippines. These captive business service centres also perform
certain central finance activities, including elements of financial
planning and reporting, treasury and HR services. The costs of
shared services operations are recharged to the
regions.
For planning and management reporting purposes, Diageo uses
budgeted exchange rates that are set at the prior year's weighted
average exchange rate. In order to ensure a consistent basis on
which performance is measured through the year, prior period
results are also restated to the budgeted exchange rate. Segmental
information for net sales and operating profit before exceptional
items are reported on a consistent basis with management reporting.
The adjustments required to retranslate the segmental information
to actual exchange rates and to reconcile it to the group's
reported results are shown in the tables below. The comparative
segmental information, prior to retranslation, has not been
restated at the current year's budgeted exchange rates but is
presented at the budgeted rates for the respective
year.
In addition, for management reporting purposes, Diageo presents the
result of acquisitions and disposals completed in the current and
prior year separately from the results of the geographical
segments. The impact of acquisitions and disposals on net sales and
operating profit is disclosed under the appropriate geographical
segments in the tables below at budgeted exchange
rates.
(a) Segmental information for the consolidated income
statement
|
North America
|
Europe
|
Asia
Pacific
|
Latin America and Caribbean
|
Africa
|
SC&P
|
Eliminate
inter-
segment
sales
|
Total
operating
segments
|
Corporate
and other
|
Total
|
Six months ended 31 December 2023
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
$ million
|
Sales
|
4,411
|
4,349
|
3,564
|
1,442
|
1,352
|
1,842
|
(1,842)
|
15,118
|
63
|
15,181
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
At budgeted exchange rates(1)
|
4,077
|
2,356
|
2,226
|
1,004
|
1,115
|
1,797
|
(1,742)
|
10,833
|
61
|
10,894
|
Acquisitions and disposals
|
2
|
25
|
24
|
-
|
65
|
-
|
-
|
116
|
-
|
116
|
SC&P allocation
|
7
|
34
|
6
|
6
|
2
|
(55)
|
-
|
-
|
-
|
-
|
Retranslation to actual exchange rates
|
(2)
|
11
|
(50)
|
59
|
(211)
|
100
|
(100)
|
(193)
|
2
|
(191)
|
Hyperinflation
|
-
|
139
|
-
|
-
|
4
|
-
|
-
|
143
|
-
|
143
|
Net sales
|
4,084
|
2,565
|
2,206
|
1,069
|
975
|
1,842
|
(1,842)
|
10,899
|
63
|
10,962
|
Operating profit/(loss)
|
|
|
|
|
|
|
|
|
|
|
At budgeted exchange rates(1)
|
1,672
|
784
|
729
|
337
|
245
|
(14)
|
-
|
3,753
|
(144)
|
3,609
|
Acquisitions and disposals
|
(12)
|
(6)
|
7
|
-
|
15
|
-
|
-
|
4
|
-
|
4
|
SC&P allocation
|
(7)
|
(4)
|
(1)
|
(2)
|
-
|
14
|
-
|
-
|
-
|
-
|
Fair value remeasurements
|
23
|
-
|
-
|
(24)
|
-
|
-
|
-
|
(1)
|
-
|
(1)
|
Retranslation to actual exchange rates
|
49
|
25
|
(46)
|
5
|
(120)
|
-
|
-
|
(87)
|
(3)
|
(90)
|
Hyperinflation
|
-
|
(2)
|
-
|
-
|
(10)
|
-
|
-
|
(12)
|
-
|
(12)
|
Operating profit/(loss) before exceptional items
|
1,725
|
797
|
689
|
316
|
130
|
-
|
-
|
3,657
|
(147)
|
3,510
|
Exceptional operating items
|
(182)
|
(11)
|
-
|
-
|
-
|
-
|
-
|
(193)
|
-
|
(193)
|
Operating profit/(loss)
|
1,543
|
786
|
689
|
316
|
130
|
-
|
-
|
3,464
|
(147)
|
3,317
|
Non-operating items
|
|
|
|
|
|
|
|
|
|
(60)
|
Net finance charges
|
|
|
|
|
|
|
|
|
|
(431)
|
Share of after tax results of associates and joint
ventures
|
|
|
|
|
|
|
|
|
|
253
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
3,079
|
|
North America
|
Europe
|
Asia
Pacific
|
Latin America and Caribbean
|
Africa
|
SC&P
|
Eliminate
inter-
segment
sales
|
Total
operating
segments
|
Corporate
and other
|
Total
|
Six months ended 31 December 2022
|
Re-presented
$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Re-presented$ million
|
Sales
|
4,540
|
4,055
|
3,741
|
1,646
|
1,578
|
1,939
|
(1,939)
|
15,560
|
51
|
15,611
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
At budgeted exchange rates(1)
|
4,144
|
2,432
|
2,310
|
1,332
|
1,228
|
2,125
|
(2,086)
|
11,485
|
58
|
11,543
|
Acquisitions and disposals
|
17
|
9
|
47
|
4
|
-
|
-
|
-
|
77
|
-
|
77
|
SC&P allocation
|
4
|
25
|
4
|
5
|
1
|
(39)
|
-
|
-
|
-
|
-
|
Retranslation to actual exchange rates
|
(16)
|
(241)
|
(192)
|
(42)
|
(116)
|
(147)
|
147
|
(607)
|
(7)
|
(614)
|
Hyperinflation
|
-
|
114
|
-
|
-
|
-
|
-
|
-
|
114
|
-
|
114
|
Net sales
|
4,149
|
2,339
|
2,169
|
1,299
|
1,113
|
1,939
|
(1,939)
|
11,069
|
51
|
11,120
|
Operating profit/(loss)
|
|
|
|
|
|
|
|
|
|
|
At budgeted exchange rates(1)
|
1,687
|
845
|
747
|
545
|
284
|
52
|
-
|
4,160
|
(211)
|
3,949
|
Acquisitions and disposals
|
(9)
|
3
|
7
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
SC&P allocation
|
12
|
29
|
3
|
7
|
1
|
(52)
|
-
|
-
|
-
|
-
|
Fair value remeasurements
|
18
|
(1)
|
-
|
-
|
-
|
-
|
-
|
17
|
-
|
17
|
Retranslation to actual exchange rates
|
(18)
|
(83)
|
(53)
|
(14)
|
(70)
|
-
|
-
|
(238)
|
14
|
(224)
|
Hyperinflation
|
-
|
27
|
-
|
-
|
-
|
-
|
-
|
27
|
-
|
27
|
Operating profit/(loss) before exceptional items
|
1,690
|
820
|
704
|
538
|
215
|
-
|
-
|
3,967
|
(197)
|
3,770
|
Exceptional operating items
|
(31)
|
17
|
(25)
|
-
|
-
|
-
|
-
|
(39)
|
-
|
(39)
|
Operating profit/(loss)
|
1,659
|
837
|
679
|
538
|
215
|
-
|
-
|
3,928
|
(197)
|
3,731
|
Non-operating items
|
|
|
|
|
|
|
|
|
|
19
|
Net finance charges
|
|
|
|
|
|
|
|
|
|
(345)
|
Share of after tax results of associates and joint
ventures
|
|
|
|
|
|
|
|
|
|
202
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
3,607
|
(1)These items represent the IFRS 8 performance measures for the
geographical and SC&P segments.
(i)The net sales figures for SC&P reported to the Executive
Committee primarily comprise inter-segment sales and these are
eliminated in a separate column in the above segmental analysis.
Apart from sales by the SC&P segment to the geographical
segments, inter-segment sales are not material.
(ii)Approximately 36% of calendar year net sales occurred in the
last four months of 2023.
(b) Category and geographical analysis
|
Category analysis
|
Geographical analysis
|
Six months ended 31 December 2023
|
Spirits
$ million
|
Beer
$ million
|
Ready to drink
$ million
|
Other
$ million
|
Total
$ million
|
United
States
$ million
|
India
$ million
|
Great
Britain
$ million
|
Rest of
world
$ million
|
Total
$ million
|
Sales(1)
|
12,409
|
2,063
|
496
|
213
|
15,181
|
4,158
|
1,687
|
1,571
|
7,765
|
15,181
|
Six months ended 31 December 2022
|
|
|
|
|
|
|
|
|
|
|
Sales(1) (re-presented)
|
12,904
|
2,008
|
564
|
135
|
15,611
|
4,268
|
1,886
|
1,373
|
8,084
|
15,611
|
(1)The
geographical analysis of sales is based on the location of
third-party sales.
3. Exceptional items
Exceptional items are those that in management's judgement need to
be disclosed separately. See page 44-45 for the definition of
exceptional items and the criteria used to determine whether an
exceptional item is accounted for as operating or
non-operating.
|
Six months ended 31 December 2023
|
Six months ended 31 December 2022
|
|
$ million
|
Re-presented
$ million
|
Exceptional operating items
|
|
|
Brand impairment (1)
|
(54)
|
-
|
Supply chain agility programme (2)
|
(31)
|
(56)
|
Various dispute and litigation matters (3)
|
(108)
|
-
|
Winding down Russian operations (4)
|
-
|
17
|
|
(193)
|
(39)
|
Non-operating items
|
|
|
Sale of businesses and brands
|
|
|
Windsor
business (5)
|
(53)
|
-
|
Guinness
Cameroun S.A. (6)
|
(11)
|
(2)
|
USL
Popular brands (7)
|
4
|
5
|
Archers
brand (8)
|
-
|
23
|
United
National Breweries (9)
|
-
|
3
|
Step acquisition - Mr Black (10)
|
-
|
(10)
|
|
(60)
|
19
|
|
|
|
Exceptional items before taxation
|
(253)
|
(20)
|
|
|
|
Items included in taxation
|
|
|
Tax on exceptional operating items
|
43
|
14
|
Tax on exceptional non-operating items
|
(1)
|
2
|
Exceptional taxation (11)
|
-
|
68
|
|
42
|
84
|
|
|
|
Total exceptional items
|
(211)
|
64
|
|
|
|
Attributable to:
|
|
|
Equity shareholders of the parent company
|
(213)
|
63
|
Non-controlling interests
|
2
|
1
|
Total exceptional items
|
(211)
|
64
|
(1) In the six months ended 31 December 2023, an impairment charge
of $54 million in respect of certain brands in
the US ready to drink portfolio was recognised in exceptional
operating items. The charge is mainly driven by the reduction in
forecast cash flow assumptions due to the reprioritisation of the
portfolio and the more challenging macroeconomic environment. A
pre-tax discount rate of 10% (2022 - 9%) for North America has
been used to calculate the net present value of the future cash
flows expected to be generated by these brands. The brand
impairment reduced the deferred tax liability by $13 million
resulting in a net exceptional loss of $41
million.
(2) In the six months ended 31 December 2023, an exceptional charge
of $31 million was
accounted for in respect of the supply chain agility programme
(2022 - $56 million). With this five-year spanning
programme launched in July 2022, Diageo expects to strengthen its
supply chain, improve its resilience and agility, drive
efficiencies, deliver additional productivity savings and make its
supply operations more sustainable. Total implementation cost of
the programme is expected to be up to $600 million over
the five-year period, which will comprise non‐cash items and
one‐off expenses, the majority of which are expected to be
recognised as exceptional operating items. The exceptional charge
for the six months ended 31 December 2023 was primarily in respect
of accelerated depreciation in North America, being additional
depreciation of assets in the period directly attributable to the
programme. Restructuring cash expenditure was
$11 million in the six months ended 31 December 2023
(2022 - $nil).
(3) In the six months ended 31 December 2023,
$108 million was recorded as an exceptional
operating item in respect of various dispute and litigation matters
in North America and Europe, including certain costs and expenses
associated therewith.
(4) In the six months ended 31 December 2022, Diageo released
unutilised provisions of $17 million from the
$64 million exceptional charge taken in the year ended 30
June 2022 in respect of winding down its operations in
Russia.
(5) On 27 October 2023, Diageo completed the sale of Windsor Global
Co., Ltd. to PT W Co., Ltd., a Korean company sponsored by Pine
Tree Investment & Management Co., Ltd. for a total
consideration of KRW 206 billion ($152 million). The
transaction resulted in a loss of $53 million in the six
months ended 31 December 2023, which was recognised as a
non-operating item attributable to the sale, including cumulative
translation losses of $26 million recycled to the income
statement.
(6) On 26 May 2023, Diageo completed the sale of its wholly
owned subsidiary, Guinness Cameroun S.A., its brewery in Cameroon,
to Castel Group. In the six months ended 31 December 2023,
$11 million charges directly attributable to the disposal have
been accounted for. Transaction costs relating to the prospective
sale in the six months ended 31 December 2022 amounted to
$2 million.
(7) On 30 September 2022, Diageo completed the sale of the
Popular brands of its USL business. The aggregate consideration for
the disposal was $97 million, the disposed net assets included
$34 million net working capital and
$23 million brand, and $19 million goodwill was
derecognised. In the six months ended 31 December 2022, the
transaction resulted in an exceptional gain of
$5 million. $4 million of the purchase price, that
was subject to administrative actions within 12 months and
considered uncertain at the time of the transaction, was paid to
Diageo in the six months ended 31 December 2023 and recognised as
exceptional gain.
(8) On 8 September 2022, Diageo announced the sale of its
Archers brand. The transaction resulted in an exceptional gain
of $23 million.
(9) In the six months ended 31 December 2022,
ZAR 46 million ($3 million) of deferred
consideration was paid to Diageo in respect of the sale of United
National Breweries, the full amount of which represented a
non-operating gain.
(10) On 29 September 2022, the group acquired the part of the
entire issued share capital of Mr Black Spirits Pty Ltd, owner of
the Mr Black Australian premium cold brew coffee liqueur, that it
did not already own. As a result of Mr Black becoming a subsidiary
of the group, in the six months ended 31 December 2022, a loss
of $10 million arose, being the difference between the
book value of the associate prior to the transaction and its fair
value plus transaction costs.
(11) Exceptional tax credits of $84 million in the six
months ended 31 December 2022 include tax credits of
$68 million in respect of the deductibility of fees paid to
Diageo plc for guaranteeing externally issued debt of US group
entities.
4. Finance income and charges
|
Six months ended
31 December 2023
|
Six months ended
31 December 2022
|
|
$ million
|
Re-presented
$ million
|
Interest income
|
106
|
101
|
Fair value gain on financial instruments
|
110
|
167
|
Total interest income
|
216
|
268
|
Interest charge on bonds, commercial paper, bank loans and
overdrafts
|
(324)
|
(277)
|
Interest charge on finance leases
|
(10)
|
(9)
|
Other interest charges
|
(223)
|
(148)
|
Fair value loss on financial instruments
|
(113)
|
(167)
|
Total interest charges
|
(670)
|
(601)
|
Net interest charges
|
(454)
|
(333)
|
|
|
|
Net finance income in respect of post employment plans in
surplus
|
28
|
35
|
Hyperinflation adjustment in respect of Turkey (1)
|
22
|
-
|
Hyperinflation adjustment in respect of Ghana (1)
|
6
|
-
|
Hyperinflation adjustment in respect of Venezuela (1)
|
4
|
-
|
Interest income in respect of direct and indirect tax
|
3
|
-
|
Change in financial liability (Level 3)
|
8
|
-
|
Total other finance income
|
71
|
35
|
Net finance charge in respect of post employment plans in
deficit
|
(10)
|
(9)
|
Hyperinflation adjustment in respect of Turkey (1)
|
-
|
(7)
|
Interest charge in respect of direct and indirect tax
|
(17)
|
(20)
|
Unwinding of discounts
|
(11)
|
(7)
|
Other finance charges
|
(10)
|
(4)
|
Total other finance charges
|
(48)
|
(47)
|
Net other finance income/(charges)
|
23
|
(12)
|
(1) Hyperinflationary adjustments
The group applied hyperinflationary accounting for its operations
in Turkey, Ghana and Venezuela.
The group applies hyperinflationary accounting for its operations
in Ghana starting from 1 July 2023. Hyperinflationary accounting
needs to be applied as if Ghana had always been a hyperinflationary
economy, hence, as per Diageo's accounting policy choice, the
differences between equity at 30 June 2023 as reported and the
equity after the restatement of the non-monetary items to the
measuring unit current at 30 June 2023 were recognised in retained
earnings.
The group's consolidated financial statements include the results
and financial position of its operations in hyperinflationary
economies restated to the measuring unit current at the end of each
period, with hyperinflationary gains and losses in respect of
monetary items being reported in finance income and charges.
Comparative amounts presented in the consolidated financial
statements were not restated. When applying IAS 29 on an ongoing
basis, comparatives in stable currency are not restated and the
effect of inflating opening net assets to the measuring unit
current at the end of the reporting period is presented in other
comprehensive income. The movement in the publicly available
official price index for the six months ended 31 December
2023 was 38% (2022 - 15%) in Turkey
and 9% in Ghana. The inflation rate used by the group in
the case of Venezuela is provided by an independent valuer because
no reliable, officially published rate is available. Movement in
the price index for the six months ended 31 December 2023
was 54% (2022 - 105%) in
Venezuela.
Recent developments in Venezuela led management to change its
estimate for the exchange rate of VES/$ to be the official exchange
rate published by Bloomberg. Figures for the six months ended 31
December 2023 show the results of the Venezuelan operation
consolidated at the official closing exchange rate.
5. Taxation
For the six
months ended 31 December 2023, the tax charge
of $737 million (2022 - $766 million)
comprises a UK tax charge
of $116 million (2022 - $144 million) and
a foreign tax charge of $621
million (2022 - $622 million).
For the six
months ended 31 December 2023, income tax expense was recognised
based on management's best estimate of the weighted average annual
income tax rate expected for the full financial year applied to the
pre-tax income of the interim period in line with the relevant
accounting standard.
Included in the tax charge of $737 million in the six
months ended 31 December 2023 is a net exceptional tax credit
of $42 million, including an exceptional tax credit of
$23 million in respect of various dispute and litigation
matters in North America and Europe and $13 million in respect
of brand impairments in the US ready to drink
portfolio.
The group has a number of ongoing tax audits worldwide for which
provisions are recognised in line with the relevant international
accounting standard, taking into account best estimates and
management's judgements concerning the ultimate outcome of the tax
audits. For the six months ended 31 December 2023,
ongoing audits that are provided for individually are not expected
to result in a material tax liability. The current tax asset of
$274 million (30 June 2023 - $292 million) and tax
liability of $253 million (30 June 2023 - $170 million)
include $213 million (30 June 2023 - $218 million) of
provisions for tax uncertainties.
In December 2021, the OECD released a framework for Pillar Two
Model Rules which will introduce a global minimum corporate tax
rate of 15% applicable to multinational enterprise groups with
global revenue over €750 million. The legislation
implementing the rules in the UK was substantively enacted on 20
June 2023 and will apply to Diageo from the financial year ending
30 June 2025 onwards. Diageo is reviewing this legislation and also
monitoring the status of implementation of the model rules outside
of the UK to understand the potential impact on the group. Diageo
has applied the temporary exception under IAS 12 in relation to the
accounting for deferred taxes arising from the implementation of
the Pillar Two rules.
The tax rate before exceptional items for the six months ended 31 December
2023 was 23.4% compared with 23.4% for
the six months ended 31 December 2022.
6. Inventories
|
31 December 2023
|
30 June 2023
|
31 December 2022
|
|
$ million
|
Re-presented
$ million
|
Re-presented
$
million
|
Raw materials and consumables
|
730
|
684
|
718
|
Work in progress
|
156
|
166
|
200
|
Maturing inventories
|
7,697
|
7,300
|
6,572
|
Finished goods and goods for resale
|
1,257
|
1,503
|
1,572
|
|
9,840
|
9,653
|
9,062
|
7. Net borrowings
|
31 December 2023
|
30 June 2023
|
31 December 2022
|
|
$ million
|
Re-presented
$ million
|
Re-presented
$ million
|
Borrowings due within one year and bank overdrafts
|
(2,004)
|
(2,142)
|
(2,767)
|
Borrowings due after one year
|
(19,476)
|
(18,649)
|
(18,365)
|
Fair value of foreign currency forwards and swaps
|
406
|
436
|
643
|
Fair value of interest rate hedging instruments
|
(366)
|
(476)
|
(507)
|
Lease liabilities
|
(572)
|
(564)
|
(526)
|
|
(22,012)
|
(21,395)
|
(21,522)
|
Cash and cash equivalents
|
1,529
|
1,813
|
3,319
|
|
(20,483)
|
(19,582)
|
(18,203)
|
8. Reconciliation of movement in net borrowings
|
Six months ended 31 December 2023
|
Six months ended 31 December 2022
|
|
$ million
|
Re-presented
$ million
|
Net (decrease)/increase in cash and cash equivalents
before exchange
|
(241)
|
633
|
Net increase in bonds and other
borrowings(1)
|
(227)
|
(1,658)
|
Net increase in net borrowings from cash
flows
|
(468)
|
(1,025)
|
Exchange differences on net borrowings
|
(399)
|
4
|
Other non-cash items(2)
|
(34)
|
(75)
|
Net borrowings at beginning of the period
|
(19,582)
|
(17,107)
|
Net borrowings at end of the period
|
(20,483)
|
(18,203)
|
(1)In the six months ended 31
December 2023, net increase in bonds and other borrowings
excludes $nil cash outflow in respect
of derivatives designated in forward point hedges (2022
- $(2) million).
(2)In the six months ended 31
December 2023, other non-cash items were principally in respect of
additional leases entered into during the period partially offset
by fair value movements of interest rate hedging
instruments. In the six months ended 31
December 2022, other non-cash items were principally in respect of
the reclassification of cash and cash equivalents in Guinness
Cameroun S.A. to assets and liabilities held for
sale.
In the six months ended 31 December
2023, 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 and $900 million 5.625% fixed rate
notes due 2033, and repaid bonds
of $500 million and €600 million ($632 million). In
the six months ended 31 December 2022, 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 and $750 million 5.5% fixed rate notes due
2033, and repaid bonds
of $300 million.
All bonds and commercial paper issued by Diageo plc's wholly owned
subsidiaries are fully and unconditionally guaranteed by Diageo
plc.
9. Financial instruments
Fair value measurements of financial instruments are presented
through the use of a three-level fair value hierarchy that
prioritises the valuation techniques used in fair value
calculations.
The group maintains policies and procedures to value instruments
using the most relevant data available. If multiple inputs that
fall into different levels of the hierarchy are used in the
valuation of an instrument, the instrument is categorised on the
basis of the most subjective input.
Foreign currency forwards and swaps, cross currency swaps and
interest rate swaps are valued using discounted cash flow
techniques. These techniques incorporate inputs at levels 1 and 2,
such as foreign exchange rates and interest rates. These market
inputs are used in the discounted cash flow calculation
incorporating the instrument's term, notional amount and discount
rate, and taking credit risk into account. As significant inputs to
the valuation are observable in active markets, these instruments
are categorised as level 2 in the hierarchy.
Other financial liabilities include a put option, which does not
have an expiry date, held by Industrias Licoreras de Guatemala
(ILG) to sell the remaining 50% equity stake in Rum Creation &
Products Inc., the owner of the Zacapa rum brand, to Diageo. The
liability is fair valued using the discounted cash flow
method and as at 31 December 2023, an amount
of $224 million (30 June
2023 - $274 million)
is recognised as a liability with changes in the fair value of the
put option included in retained earnings. As the valuation of this
option uses assumptions not observable in the market, it is
categorised as level 3 in the hierarchy. As at 31 December
2023, because it is unknown when or if ILG will exercise the
option, the liability is measured as if the exercise date is on the
last day of the current financial year considering forecast future
performance. The option is sensitive to reasonably possible changes
in assumptions; if the option were to be exercised as at 30
June 2025, the fair value of the liability would decrease by
approximately $37 million.
Included in other financial liabilities, the contingent
consideration on acquisition of businesses represents the present
value of payments up to $507 million, which are
expected to be paid over the next eight years. Contingent
considerations linked to certain volume targets at 31 December
2023 included $144 million in respect of the
acquisition of Aviation American Gin and Davos Brands (30 June
2023 - $142 million) and $76 million in respect
of the acquisition of 21Seeds (30 June 2023 - $75
million). Contingent consideration of $93 million in
respect of the acquisition of Don Papa Rum (30 June
2023 - $89 million) is linked to certain financial
performance targets. Contingent considerations are fair valued
based on a discounted cash flow method using assumptions not
observable in the market. Contingent considerations are sensitive
to possible changes in assumptions; a 10% increase or
decrease in volume would increase or decrease the fair value of
contingent considerations linked to certain volume targets by
approximately $40 million, and a 10% increase
or decrease in cash flows would increase or decrease the fair value
of contingent considerations linked to certain financial
performance targets by
approximately $30 million.
There were no significant changes in the measurement and valuation
techniques, or significant transfers between the levels of the
financial assets and liabilities in the six months
ended 31 December
2023.
The group's financial assets and liabilities measured at fair value
are categorised as follows:
|
31 December 2023
|
30 June 2023
|
31 December 2022
|
|
$ million
|
Re-presented
$ million
|
Re-presented
$ million
|
Derivative assets
|
703
|
748
|
820
|
Derivative liabilities
|
(440)
|
(556)
|
(663)
|
Valuation techniques based on observable market input (Level
2)
|
263
|
192
|
157
|
Financial assets - other
|
281
|
249
|
208
|
Financial liabilities - other
|
(599)
|
(665)
|
(690)
|
Valuation techniques based on unobservable market input (Level
3)
|
(318)
|
(416)
|
(482)
|
In the six months ended 31 December 2023 and 31
December 2022, the increase in financial assets - other
of$32 million (2022 - the decrease in financial
asset - other of $17 million) is principally in respect
of acquisitions.
The movements in level 3 instruments, measured on a recurring
basis, are as follows:
|
Zacapa
financial
liability
|
Contingent consideration recognised on acquisition of
businesses
|
Zacapa
financial
liability
|
Contingent consideration recognised on acquisition of
businesses
|
|
Six months ended
31 December 2023
|
Six months ended
31 December 2023
|
Six months ended
31 December 2022
|
Six months ended
31 December 2022
|
|
$ million
|
$ million
|
Re-presented
$ million
|
Re-presented
$ million
|
At the beginning of the period
|
(274)
|
(391)
|
(261)
|
(449)
|
Net gains included in the income statement
|
8
|
15
|
-
|
15
|
Net losses included in exchange in other comprehensive
income
|
-
|
-
|
(1)
|
-
|
Net gains/(losses) included in retained earnings
Market highlights
|
40
|
-
|
(5)
|
-
|
Acquisitions
|
-
|
-
|
-
|
(5)
|
Settlement of liabilities
|
2
|
1
|
7
|
9
|
At the end of the period
|
(224)
|
(375)
|
(260)
|
(430)
|
The carrying amount of the group's financial assets and liabilities
is generally the same as their fair value apart from borrowings.
At 31 December 2023, the fair value of gross borrowings
(excluding lease liabilities and the fair value of derivative
instruments) was $21,001 million and the carrying
value was $21,480 million (30 June
2023 - $19,707 million and $20,791 million,
respectively).
10. Dividends and other reserves
|
Six months ended
31 December 2023
|
Six
months ended
31
December 2022
|
|
$ million
|
Re-presented
$ million
|
Amounts recognised as distributions to equity
shareholders
|
|
|
Final dividend for the year ended 30 June 2023 of 59.98 cents per
share (2022 - 52.71 cents)(1)
|
1,349
|
1,200
|
(1)Re-presented
at declaration date's rate.
An interim dividend of 40.50 cents per share (2022
- 38.57 cents) was approved by a duly authorised
committee of the Board of Directors on 29 January
2024. As the approval was after the balance sheet date, it was
not included as a liability. The change in functional currency from
sterling to US dollars does not significantly impact Diageo plc's
retained earnings that are available for the payment of dividends
or purchases of own shares.
Other reserves of
$502 million at 31 December 2023 (2022 - $560 million)
include a capital redemption reserve of $4,076 million (2022 -
$3,869 million), a hedging reserve surplus of
$270 million (2022- $115 million surplus) and an exchange
reserve deficit of $3,844 million (2022 - $3,424 million
deficit). Out of the total hedging reserves $60
million represents
the cost of hedging arising from cross currency interest rate swaps
in net investment hedges.
11. Sale of businesses and brands
Cash consideration received and net assets disposed of in respect
of sale of businesses and brands in the six months ended 31 December
2023 were as follows:
|
Windsor business
|
Other
|
Total
|
|
$ million
|
$ million
|
$ million
|
Sale consideration
|
|
|
|
Cash received in the period
|
37
|
4
|
41
|
Cash disposed of
|
(20)
|
-
|
(20)
|
Transaction and other directly attributable costs paid
|
-
|
(3)
|
(3)
|
Net cash received
|
17
|
1
|
18
|
Deferred consideration receivable
|
107
|
-
|
107
|
Transaction and other directly attributable costs
payable
|
(12)
|
(8)
|
(20)
|
|
112
|
(7)
|
105
|
Net assets disposed of
|
|
|
|
Brands
|
(167)
|
-
|
(167)
|
Other non-current assets
|
(3)
|
-
|
(3)
|
Inventories
|
(11)
|
-
|
(11)
|
Other working capital
|
3
|
-
|
3
|
Corporate tax
|
2
|
-
|
2
|
Deferred tax
|
37
|
-
|
37
|
|
(139)
|
-
|
(139)
|
Exchange recycled from other comprehensive income
|
(26)
|
-
|
(26)
|
Loss on disposal before taxation
|
(53)
|
(7)
|
(60)
|
Taxation
|
(1)
|
-
|
(1)
|
Loss on disposal after taxation
|
(54)
|
(7)
|
(61)
|
On 30 September 2022, Diageo announced the completion of the sale
of Popular brands of its USL business. Payment
of $4 million of the
purchase price that was subject to administrative actions within 12
months and considered uncertain at the time of the transaction, was
made to Diageo in the six months ended 31 December
2023.
On 26 May 2023, Diageo completed the sale of Guinness Cameroun
S.A., its brewery in Cameroon, to Castel Group. In the six months
ended 31 December 2023, $11 million costs
directly attributable to the disposal have been accounted
for.
On 27 October 2023, Diageo completed the sale of Windsor Global
Co., Ltd. to PT W Co., Ltd., a Korean company sponsored by Pine
Tree Investment & Management Co., Ltd. for a total
consideration of KRW 206 billion ($152 million). The
transaction resulted in a loss of $53 million in the six
months ended 31 December 2023, which was recognised as a
non-operating item attributable to the sale, including cumulative
translation losses in the amount
of $26 million recycled to the income statement.
Deferred consideration of KRW 102 billion
($75 million) was received after balance sheet closing date,
on 25 January 2024.
12. Contingent liabilities and legal proceedings
(a) Guarantees and related matters
As of 31 December 2023, the group has no material unprovided
guarantees or indemnities in respect of liabilities of third
parties.
(b) Acquisition of USL shares from UBHL and related proceedings in
relation to the USL transaction
On 4 July 2013, Diageo completed its acquisition, under a share
purchase agreement with United Breweries (Holdings) Limited (UBHL)
and various other sellers (the SPA), of shares representing 14.98%
in USL, including shares representing 6.98% from UBHL. The SPA was
signed on 9 November 2012 as part of the transaction announced by
Diageo in relation to USL on that day (the Original USL
Transaction). Following a series of further transactions, as of 31
December 2023, Diageo has a 55.88% investment in USL (excluding
2.38% owned by the USL Benefit Trust).
Prior to the acquisition from UBHL on 4 July 2013, the High Court
of Karnataka (High Court) had granted leave to UBHL under the
Indian Companies Act 1956 (the Leave Order) to enable the sale by
UBHL to Diageo to take place (the UBHL Share Sale) notwithstanding
the continued existence of certain winding-up petitions that were
pending against UBHL on the date of the SPA. At the time of the
completion of the UBHL Share Sale, the Leave Order remained subject
to review on appeal. However, as stated by Diageo at the time of
closing, it was considered unlikely that any appeal process in
respect of the Leave Order would definitively conclude on a timely
basis and, accordingly, Diageo waived the conditionality under the
SPA relating to the absence of insolvency proceedings in relation
to UBHL and acquired the 6.98% stake in USL from UBHL at that
time.
Following appeal and counter-appeal in respect of the Leave Order,
this matter is now before the Supreme Court of India which has
issued an order that the status quo be maintained with regard to
the UBHL Share Sale pending a hearing on the matter before it.
Following a number of adjournments, the next date for a substantive
hearing is yet to be fixed.
In separate proceedings, the High Court passed a winding-up order
against UBHL on 7 February 2017, and appeals filed by UBHL against
that order have since been dismissed, initially by a division bench
of the High Court and subsequently by the Supreme Court of
India.
Diageo continues to believe that the acquisition price of INR 1,440
per share paid to UBHL for the USL shares is fair and reasonable as
regards UBHL, UBHL's shareholders and UBHL's secured and unsecured
creditors. However, adverse results for Diageo in the proceedings
referred to above could, absent leave or relief in other
proceedings, ultimately result in Diageo losing title to the 6.98%
stake in USL acquired from UBHL. Diageo believes, including
by reason of its rights under USL's articles of association to
nominate USL's CEO and CFO and the right to appoint, through USL, a
majority of the directors on the boards of USL's subsidiaries as
well as its ability as promoter to nominate for appointment up to
two-thirds of USL's directors for so long as the chairperson of USL
is an independent director, that
it would remain in control of USL and would continue to be able to
consolidate USL as a subsidiary for accounting purposes regardless
of the outcome of this litigation.
There can be no certainty as to the outcome of the existing or any
further related legal proceedings or the time frame within which
they would be concluded.
(c) Continuing matters relating to Dr Vijay Mallya and
affiliates
On 25 February 2016, Diageo and USL each announced that they had
entered into arrangements with Dr Mallya under which he had agreed
to resign from his position as a director and as chairman of USL
and from his positions in USL's
subsidiaries.
Diageo's agreement with Dr Mallya (the February 2016 Agreement)
provided for a payment of $75 million to Dr Mallya over a five-year
period of which $40 million was paid on signing of the
February 2016 Agreement with the balance being payable in equal
instalments of $7 million a year over five years (2017-2021).
All payments were subject to and conditional on Dr Mallya's
compliance with the agreement. The February 2016 Agreement also
provided for the release of Dr Mallya's personal obligations to
indemnify Diageo Holdings Netherlands B.V. (DHN) in respect of its
earlier liability ($141 million) under a backstop guarantee of
certain borrowings of Watson Limited (Watson) (a company affiliated
with Dr Mallya).
On account of various breaches and other provisions of agreements
between Dr Mallya and persons connected with him and Diageo and/or
USL, Diageo did not make the five instalment payments due during
the five-year period between 2017 and 2021. In addition, Diageo has
also demanded that Dr Mallya repay the $40 million paid by Diageo
in February 2016 and sought compensation for various losses
incurred by the relevant members of the Diageo group.
On 16 November 2017, Diageo and other relevant members of the
Diageo group commenced claims in the High Court of Justice in
England and Wales (the English High Court) against Dr Mallya in
relation to these matters. At the same time DHN also commenced
claims in the English High Court against Dr Mallya, his son
Sidhartha Mallya, Watson and Continental Administration Services
Limited (CASL) (a company affiliated with Dr Mallya and understood
to hold assets on trust for him and certain persons affiliated with
him) for in excess of $142 million (plus interest) in relation to
Watson's liability to DHN in respect of its borrowings referred to
above and the breach of associated security documents. Dr Mallya,
Sidhartha Mallya and the relevant affiliated companies filed a
defence to these claims, and Dr Mallya also filed a counterclaim
for payment of the two instalment payments that had by that time
been withheld as described above.
Diageo continues to prosecute its claims and to defend the
counterclaim. As part of these proceedings, Diageo and the other
relevant members of its group filed an application for strike out
and/or summary judgement in respect of certain aspects of the
defence filed by Dr Mallya and the other defendants, including
their defence in relation to Watson and CASL's liability to repay
DHN. The application was successful resulting in Watson being
ordered to pay approximately $135 million plus various amounts in
respect of interest to DHN, with CASL being held liable as
co-surety for 50% of any such amount unpaid by Watson. These
amounts were, contrary to the relevant orders, not paid by the
relevant deadlines and Watson and CASL's remaining defences in the
proceedings were struck out. Diageo and DHN have accordingly sought
asset disclosure and are considering further enforcement steps
against Watson and CASL, both in the United Kingdom and in other
jurisdictions where they are present or hold assets.
A trial of the remaining elements of these claims was due to
commence on 21 November 2022. However, on 26 July 2021 Dr Mallya
was declared bankrupt by the English High Court pursuant to a
bankruptcy petition presented by a consortium of Indian banks.
Diageo and the relevant members of its group have informed the
Trustee in Bankruptcy of their position as creditors in the
bankruptcy and have engaged with the Trustee regarding their claims
and the status of the current proceedings. An appeal by Dr Mallya
against his bankruptcy (and an appeal by the bank consortium
against orders made in the course of the bankruptcy proceedings)
are pending. In light of the uncertainty posed by the ongoing
bankruptcy proceedings, the trial of Diageo's claim was initially
relisted to take place in February 2024. However, Dr Mallya's appeal against his
bankruptcy and the banks' cross appeal is not expected to be heard
until April 2024. Accordingly, the Court has rescheduled the trial
of Diageo's claim for March 2025.
At this stage, it is not possible to assess the extent to which the
various ongoing proceedings related to the bankruptcy will affect
the remaining elements of the claims by Diageo and the relevant
members of its group.
Upon completion of an initial inquiry in April 2015 into past
improper transactions which identified references to certain
additional parties and matters, USL carried out an additional
inquiry into these transactions (Additional Inquiry) which was
completed in July 2016. The Additional Inquiry, prima facie,
identified transactions indicating actual and potential diversion
of funds from USL and its Indian and overseas subsidiaries to, in
most cases, entities that appeared to be affiliated or associated
with Dr Mallya. All amounts identified in the Additional Inquiry
have been provided for or expensed in the financial statements of
USL or its subsidiaries in the respective prior periods. USL has
filed recovery suits against relevant parties identified pursuant
to the Additional Inquiry. Further, at this stage, it is not
possible for the management of USL to estimate the financial impact
on USL, if any, arising out of potential non-compliance with
applicable laws in relation to such fund diversions.
(d) Other matters in relation to USL
In respect of the Watson backstop guarantee arrangements, the
Securities and Exchange Board of India (SEBI) issued a notice to
Diageo on 16 June 2016 that if there is any net liability incurred
by Diageo (after any recovery under relevant security or other
arrangements, which matters remain pending) on account of the
Watson backstop guarantee, such liability, if any, would be
considered to be part of the price paid for the acquisition of USL
shares under the SPA which formed part of the Original USL
Transaction and that, in that case, additional equivalent payments
would be required to be made to those shareholders (representing
0.04% of the shares in USL) who tendered in the open offer made as
part of the Original USL Transaction. Diageo believes that the
Watson backstop guarantee arrangements were not part of the price
paid or agreed to be paid for any USL shares under the Original USL
Transaction and that therefore SEBI's decision was not consistent
with applicable law, and Diageo appealed against it before the
Securities Appellate Tribunal, Mumbai (SAT). On 1 November 2017,
SAT issued an order in respect of Diageo's appeal in which, amongst
other things, it observed that the relevant officer at SEBI had
neither considered Diageo's earlier reply nor provided Diageo with
an opportunity to be heard, and accordingly directed SEBI to pass a
fresh order after giving Diageo an opportunity to be heard.
Following SAT's order, Diageo made its further submissions in the
matter, including at a personal hearing before a Deputy General
Manager of SEBI. On 26 June 2019, SEBI issued an order reiterating
the directions contained in its previous notice dated 16 June 2016.
As with the previous SEBI
notice, Diageo believes that SEBI's latest order is not consistent
with applicable law. Diageo appealed against this order before SAT
and, after a hearing in March 2023, SAT allowed Diageo's appeal on
26 July 2023. Accordingly, SEBI's order dated 26 June 2019 stands
quashed. Under applicable law, SEBI has filed an appeal against
SAT's order before the Supreme Court of India. However, there can
be no certainty as to its outcome or the timeframe within which any
such appeal would be concluded.
(e) USL's dispute with IDBI Bank Limited
Prior to the acquisition by Diageo of a controlling interest in
USL, USL had prepaid a term loan of INR 6,280 million
($76 million) taken through IDBI
Bank Limited (IDBI), an Indian bank, which was secured on certain
fixed assets and brands of USL, as well as by a pledge of certain
shares in USL held by the USL Benefit Trust (of which USL is the
sole beneficiary). The maturity date of the loan was 31 March 2015.
IDBI disputed the prepayment, following which USL filed a writ
petition in November 2013 before the High Court of Karnataka (the
High Court) challenging the bank's actions.
Following the original maturity date of the loan, USL received
notices from IDBI seeking to recall the loan, demanding a further
sum of INR 459 million ($6
million) on account of the
outstanding principal, accrued interest and other amounts, and also
threatening to enforce the security in the event that USL did not
make these further payments. Pursuant to an application filed by
USL before the High Court in the writ proceedings, the High Court
directed that, subject to USL depositing such further amount with
the bank (which amount was duly deposited by USL), the bank should
hold the amount in a suspense account and not deal with any of the
secured assets including the shares until disposal of the original
writ petition filed by USL before the High
Court.
On 27 June 2019, a single judge bench of the High Court issued an
order dismissing the writ petition filed by USL, amongst other
things, on the basis that the matter involved an issue of breach of
contract by USL and was therefore not maintainable in exercise of
the court's writ jurisdiction. USL filed an appeal against this
order before a division bench of the High Court, which on 30 July
2019 issued an interim order directing the bank to not deal with
any of the secured assets until the next date of hearing. On 13
January 2020, the division bench of the High Court admitted the
writ appeal and extended the interim stay. This appeal is currently
pending. Based on the assessment of USL's management supported by
external legal opinions, USL continues to believe that it has a
strong case on the merits and therefore continues to believe that
the secured assets will be released to USL and the aforesaid amount
of INR 459 million ($6
million) remains recoverable
from IDBI.
(f) Tax
The international tax environment has seen increased scrutiny and
rapid change over recent years bringing with it greater uncertainty
for multinationals. Against this backdrop, Diageo has been
monitoring developments and continues to engage transparently with
the tax authorities in the countries where Diageo operates to
ensure that the group manages its arrangements on a sustainable
basis.
The group operates in a large number of markets with complex tax
and legislative regimes that are open to subjective
interpretation. In
the
context of these operations, it is possible that tax exposures
which have not yet materialised (including those which could arise
as a result of tax assessments) may result in losses to the group.
In the circumstances where tax authorities have raised assessments,
challenging interpretations which may lead to a possible material
outflow, these have been included as contingent liabilities. Where
the potential tax exposures are known to us and have not been
assessed, the group considers disclosure of such matters taking
into account their size and nature, relevant regulatory
requirements and potential prejudice of the future resolution or
assessment thereof.
Diageo has a large number of ongoing tax cases in Brazil and India.
Since assessing an accurate value of contingent liabilities in
these markets requires a high degree of judgement, contingent
liabilities are disclosed on the basis of the current known
possible exposure from tax assessment values. While not all of
these cases are individually significant, the current aggregate
known possible exposure from tax assessment values is up to
approximately $934 million for
Brazil and up to approximately $115 million for
India. The group believes that the likelihood that the tax
authorities will ultimately prevail is lower than probable but
higher than remote. Due to the fiscal environment in Brazil and in
India, the possibility of further tax assessments related to the
same matters cannot be ruled out and the judicial processes may
take extended periods to conclude. Based on its current assessment,
Diageo believes that no provision is required in respect of these
issues.
Payments were made under protest in India in respect of the periods 1 April
2006 to 31 March 2019 in relation to tax assessments where the risk
is considered to be remote or possible. These payments have to be
made in order to be able to challenge the assessments and as such
have been recognised as a receivable in the group's balance sheet.
The total amount of payments under protest recognised as a
receivable as at 31 December 2023 is $149 million (corporate
tax payments of $137 million and indirect tax payments of
$12 million).
(g) Other
The group has extensive international operations and routinely
makes judgements on a range of legal, customs and tax matters which
are incidental to the group's operations. Some of these judgements
are or may become the subject of challenges and involve
proceedings, the outcome of which cannot be foreseen. In
particular, the group is currently a defendant in various customs
proceedings that challenge the declared customs value of products
imported by certain Diageo companies. Diageo continues to defend
its position vigorously in these proceedings.
Save as disclosed above, neither Diageo, nor any member of the
Diageo group, is or has been engaged in, nor (so far as Diageo is
aware) is there pending or threatened by or against it, any legal
or arbitration proceedings which may have a significant effect on
the financial position of the Diageo group.
13. Related party transactions
The group's significant related parties are its associates, joint
ventures, key management personnel and post employment benefit
plans.
There were no transactions with these related parties during the
six months
ended 31 December 2023 on terms other than
those that prevail in arm's length transactions.
14. Post balance sheet events
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 North America, Inc did not already own, for a total
consideration of approximately $200 million. In connection
with this acquisition, the previously outstanding disputes between
the shareholders were resolved and Diageo is now the 100% owner of
the DeLeón brand.
Independent review report to Diageo plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Diageo plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
interim results of Diageo plc for the six months ended 31 December
2023 (the "period").
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 'Interim Financial Reporting',
IAS 34 'Interim Financial Reporting' as issued by the International
Accounting Standards Board ('IASB'), and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim financial statements comprise:
●
the
Condensed consolidated balance sheet as at 31 December
2023;
●
the
Condensed consolidated income statement and condensed consolidated
statement of comprehensive income for the period then
ended;
●
the
Condensed consolidated statement of cash flows for the period then
ended;
●
the
Condensed consolidated statement of changes in equity for the
period then ended; and
●
the
explanatory notes to the interim financial statements.
The interim financial statements included in the interim results of
Diageo plc have been prepared in accordance with UK adopted
International Accounting Standard 34 'Interim Financial Reporting',
IAS 34 'Interim Financial Reporting' as issued by the International
Accounting Standards Board ('IASB'), and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the Financial Reporting Council for use in the United
Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim results
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the interim
financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis for conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However,
future events or conditions may cause the group to cease to
continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is
the responsibility of, and has been approved by the directors. The
directors are responsible for preparing the interim results in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the interim results, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
29 January 2024
a.
The
maintenance and integrity of the Diageo plc website is the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
b.
Legislation
in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Additional information
Explanatory notes
Comparisons are to the six months ended 31 December 2022 (2022)
unless otherwise stated. Unless otherwise stated, percentage
movements given throughout this document for volume, sales, net
sales, marketing spend, operating profit and operating margin are
organic movements after retranslating current period reported
numbers at prior period exchange rates and after adjusting for the
effect of exceptional operating items and acquisitions and
disposals, excluding fair value remeasurements.
This document includes names of Diageo's products which constitute
trademarks or trade names which Diageo owns or which others own and
license to Diageo for use.
Definitions and reconciliation of non-GAAP measures to GAAP
measures
Diageo's strategic planning process is based on certain non-GAAP
measures, including organic movements. These non-GAAP measures are
chosen for planning and reporting, and some of them are used for
incentive purposes. The group's management believes that these
measures provide valuable additional information for users of the
financial statements in understanding the group's performance.
These non-GAAP measures should be viewed as complementary to, and
not replacements for, the comparable GAAP measures and reported
movements therein.
It is not possible to reconcile the forecast tax rate before
exceptional items, forecast organic net sales growth and forecast
organic operating profit growth to the most comparable GAAP measure
as it is not possible to predict, without unreasonable effort, with
reasonable certainty, the future impact of changes in exchange
rates, acquisitions and disposals and potential exceptional
items.
Volume
Volume is a performance indicator that is measured on an equivalent
units basis to nine-litre cases of spirits. An equivalent unit
represents one nine-litre case of spirits, which is approximately
272 servings. A serving comprises 33ml of spirits, 165ml of wine,
or 330ml of ready to drink or beer. Therefore, to convert volume of
products other than spirits to equivalent units, the following
guide has been used: beer in hectolitres, divide by 0.9; wine in
nine-litre cases, divide by five; ready to drink and certain
pre-mixed products that are classified as ready to drink in
nine-litre cases, divide by ten.
Organic movements
Organic information is presented using US dollar amounts on a
constant currency basis excluding the impact of exceptional items,
certain fair value remeasurement, hyperinflation and acquisitions
and disposals. Organic measures enable users to focus on the
performance of the business which is common to both years and which
represents those measures that local managers are most directly
able to influence.
Calculation of organic movements
The organic movement percentage is the amount in the row titled
'Organic movement' in the tables below, expressed as a percentage
of the relevant absolute amount in the row titled 'Six months ended
31 December 2022 adjusted'. Organic operating margin is calculated
by dividing operating profit before exceptional items by net sales
after excluding the impact of exchange rate movements, certain fair
value remeasurements, hyperinflation and acquisitions and
disposals.
(a) Exchange rates
Exchange in the organic movement calculation reflects the
adjustment to recalculate the reported results as if they had been
generated at the prior period weighted average exchange
rates.
Exchange impacts in respect of the external hedging of intergroup
sales by the markets in a currency other than their functional
currency and the intergroup recharging of services are also
translated at prior period weighted average exchange rates and are
allocated to the geographical segment to which they relate.
Residual exchange impacts are reported as part of the Corporate
segment. Results from hyperinflationary economies are translated at
forward-looking rates.
(b) Acquisitions and disposals
For acquisitions in the current period, the post-acquisition
results are excluded from the organic movement calculations. For
acquisitions in the prior period, post-acquisition results are
included in full in the prior period but are included in the
organic movement calculation from the anniversary of the
acquisition date in the current period. The acquisition row also
eliminates the impact of transaction costs that have been charged
to operating profit in the current or prior period in respect of
acquisitions that, in management's judgement, are expected to be
completed.
Where a business, brand, brand distribution right or agency
agreement was disposed of or terminated in the reporting period,
the group, in the organic movement calculations, excludes the
results for that business from the current and prior period. In the
calculation of operating profit, the overheads included in
disposals are only those directly attributable to the businesses
disposed of, and do not result from subjective judgements of
management.
(c) Exceptional items
Exceptional items are those that in management's judgement need to
be disclosed separately. Such items are included within the income
statement caption to which they relate, and are excluded from the
organic movement calculations. Management believes that
separate disclosure of exceptional items and the classification
between operating and non-operating
items further helps investors to understand the performance of the group.
Changes in estimates and reversals in relation to items previously
recognised as exceptional are presented consistently as exceptional
in the current year.
Exceptional operating items are those that are considered to be
material and unusual or non-recurring in nature and are part of the
operating activities of the group, such as one-off global
restructuring programmes which can be multi-year, impairment of
intangible assets and fixed assets, indirect tax settlements,
property disposals and changes in post employment
plans.
Gains and losses on the sale or directly attributable to a
prospective sale of businesses, brands or distribution rights, step
up gains and losses that arise when an investment becomes an
associate or an associate becomes a subsidiary and other material,
unusual non-recurring items that are not in respect of the
production, marketing and distribution of premium drinks, are
disclosed as exceptional non-operating items below operating profit
in the income statement.
Exceptional current and deferred tax items comprise material and
unusual or non-recurring items that impact taxation. Examples
include direct tax provisions and settlements in respect of prior
years and the remeasurement of
deferred tax assets and liabilities following tax rate
changes.
(d) Fair value remeasurement
Fair value remeasurement in the organic movement calculation
reflects an adjustment to eliminate the impact of fair value
changes in biological assets, earn-out arrangements that are
accounted for as remuneration and fair value changes relating to
contingent consideration liabilities and equity options that arose
on acquisitions recognised in the income statement.
Adjustment in respect of hyperinflation
The group's experience is that hyperinflationary conditions result
in price increases that include both normal pricing actions
reflecting changes in demand, commodity and other input costs or
considerations to drive commercial competitiveness, as well as
hyperinflationary elements and that for the calculation of organic
movements, the distortion from hyperinflationary elements should be
excluded.
Cumulative inflation over 100% (2% per month compounded) over three
years is one of the key indicators within IAS 29 to assess whether
an economy is deemed to be hyperinflationary. As a result, the
definition of 'Organic movements' includes price growth in markets
deemed to be hyperinflationary economies, up to a maximum of 2% per
month while also being on a constant currency basis. Corresponding
adjustments have been made to all income statement related lines in
the organic movement calculations.
In the tables presenting the calculation of organic movements,
'hyperinflation' is included as a reconciling item between reported
and organic movements and that also includes the relevant IAS 29
adjustments.
Organic movement calculations for the six months ended 31 December
2023 were as follows:
|
North America
million
|
Europe
million
|
Asia
Pacific
million
|
Latin America
and Caribbean
million
|
Africa
million
|
Corporate
million
|
Total
million
|
Volume (equivalent units)
|
|
|
|
|
|
|
|
Six months ended 31 December 2022 reported
|
27.0
|
29.2
|
47.1
|
15.8
|
17.7
|
-
|
136.8
|
Disposals(2)
|
-
|
-
|
(6.1)
|
-
|
(0.7)
|
-
|
(6.8)
|
Six months ended 31 December 2022 adjusted
|
27.0
|
29.2
|
41.0
|
15.8
|
17.0
|
-
|
130.0
|
Organic movement
|
(0.8)
|
(1.1)
|
(0.8)
|
(3.0)
|
(1.1)
|
-
|
(6.8)
|
Acquisitions and disposals(2)
|
0.1
|
0.2
|
-
|
-
|
1.1
|
-
|
1.4
|
Six months ended 31 December 2023 reported
|
26.3
|
28.3
|
40.2
|
12.8
|
17.0
|
-
|
124.6
|
Organic movement %
|
(3)
|
(4)
|
(2)
|
(19)
|
(6)
|
-
|
(5)
|
|
North America
$ million
|
Europe
$ million
|
Asia
Pacific
$ million
|
Latin America
and Caribbean
$ million
|
Africa
$ million
|
Corporate
$ million
|
Total
$ million
|
Sales
|
|
|
|
|
|
|
|
Six months ended 31 December 2022 reported
(re-presented)
|
4,540
|
4,055
|
3,741
|
1,646
|
1,578
|
51
|
15,611
|
Exchange
|
(2)
|
(80)
|
17
|
26
|
(26)
|
1
|
(64)
|
Disposals(2)
|
-
|
(7)
|
(333)
|
-
|
(110)
|
-
|
(450)
|
Hyperinflation
|
-
|
(45)
|
-
|
-
|
-
|
-
|
(45)
|
Six months ended 31 December 2022 adjusted
|
4,538
|
3,923
|
3,425
|
1,672
|
1,442
|
52
|
15,052
|
Organic movement
|
(128)
|
311
|
188
|
(328)
|
100
|
9
|
152
|
Acquisitions and disposals(2)
|
3
|
25
|
29
|
-
|
65
|
-
|
122
|
Exchange
|
(2)
|
(50)
|
(78)
|
98
|
(259)
|
2
|
(289)
|
Hyperinflation
|
-
|
140
|
-
|
-
|
4
|
-
|
144
|
Six months ended 31 December 2023 reported
|
4,411
|
4,349
|
3,564
|
1,442
|
1,352
|
63
|
15,181
|
Organic movement %
|
(3)
|
8
|
5
|
(20)
|
7
|
17
|
1
|
|
North America
$ million
|
Europe
$ million
|
Asia
Pacific
$ million
|
Latin America
and Caribbean
$ million
|
Africa
$ million
|
Corporate
$ million
|
Total
$ million
|
Net sales
|
|
|
|
|
|
|
|
Six months ended 31 December 2022 reported
(re-presented)
|
4,149
|
2,339
|
2,169
|
1,299
|
1,113
|
51
|
11,120
|
Exchange
|
(1)
|
(6)
|
27
|
21
|
(18)
|
1
|
24
|
Disposals(2)
|
-
|
(5)
|
(89)
|
-
|
(73)
|
-
|
(167)
|
Hyperinflation
|
-
|
(16)
|
-
|
-
|
-
|
-
|
(16)
|
Six months ended 31 December 2022 adjusted
|
4,148
|
2,312
|
2,107
|
1,320
|
1,022
|
52
|
10,961
|
Organic movement
|
(64)
|
78
|
125
|
(310)
|
95
|
9
|
(67)
|
Acquisitions and disposals(2)
|
2
|
25
|
24
|
-
|
65
|
-
|
116
|
Exchange
|
(2)
|
11
|
(50)
|
59
|
(211)
|
2
|
(191)
|
Hyperinflation
|
-
|
139
|
-
|
-
|
4
|
-
|
143
|
Six months ended 31 December 2023 reported
|
4,084
|
2,565
|
2,206
|
1,069
|
975
|
63
|
10,962
|
Organic movement %
|
(2)
|
3
|
6
|
(23)
|
9
|
17
|
(1)
|
|
North America
$ million
|
Europe
$ million
|
Asia
Pacific
$ million
|
Latin America
and Caribbean
$ million
|
Africa
$ million
|
Corporate
$ million
|
Total
$ million
|
Marketing
|
|
|
|
|
|
|
|
Six months ended 31 December 2022 reported
(re-presented)
|
767
|
387
|
356
|
209
|
133
|
9
|
1,861
|
Exchange
|
(2)
|
3
|
3
|
2
|
(5)
|
2
|
3
|
Reclassification
|
-
|
-
|
-
|
-
|
(7)
|
-
|
(7)
|
Disposals(2)
|
-
|
-
|
(8)
|
-
|
(3)
|
-
|
(11)
|
Hyperinflation
|
-
|
(2)
|
-
|
-
|
-
|
-
|
(2)
|
Six months ended 31 December 2022 adjusted
|
765
|
388
|
351
|
211
|
118
|
11
|
1,844
|
Organic movement
|
12
|
35
|
53
|
(40)
|
7
|
3
|
70
|
Acquisitions and disposals(2)
|
4
|
16
|
5
|
-
|
1
|
-
|
26
|
Exchange
|
1
|
4
|
(3)
|
13
|
(20)
|
1
|
(4)
|
Hyperinflation
|
-
|
16
|
-
|
-
|
-
|
-
|
16
|
Six months ended 31 December 2023 reported
|
782
|
459
|
406
|
184
|
106
|
15
|
1,952
|
Organic movement %
|
2
|
9
|
15
|
(19)
|
6
|
27
|
4
|
|
North America
$ million
|
Europe
$ million
|
Asia
Pacific
$ million
|
Latin America
and Caribbean
$ million
|
Africa
$ million
|
Corporate
$ million
|
Total
$ million
|
Operating profit before exceptional items
|
|
|
|
|
|
|
|
Six months ended 31 December 2022 reported
(re-presented)
|
1,690
|
820
|
704
|
538
|
215
|
(197)
|
3,770
|
Exchange(1)
|
13
|
(12)
|
22
|
31
|
27
|
13
|
94
|
Fair value remeasurement of contingent considerations, equity
option and earn-out arrangements
|
(18)
|
-
|
-
|
-
|
-
|
-
|
(18)
|
Acquisitions and disposals(2)
|
1
|
(3)
|
(21)
|
-
|
(18)
|
-
|
(41)
|
Hyperinflation
|
-
|
9
|
-
|
-
|
-
|
-
|
9
|
Six months ended 31 December 2022 adjusted
|
1,686
|
814
|
705
|
569
|
224
|
(184)
|
3,814
|
Organic movement
|
(21)
|
(34)
|
23
|
(234)
|
21
|
40
|
(205)
|
Acquisitions and disposals(2)
|
(12)
|
(6)
|
7
|
-
|
15
|
-
|
4
|
Fair value remeasurement of contingent considerations, equity
option and earn-out arrangements
|
23
|
-
|
-
|
-
|
-
|
-
|
23
|
Fair value remeasurement of biological assets
|
-
|
-
|
-
|
(24)
|
-
|
-
|
(24)
|
Exchange(1)
|
49
|
25
|
(46)
|
5
|
(120)
|
(3)
|
(90)
|
Hyperinflation
|
-
|
(2)
|
-
|
-
|
(10)
|
-
|
(12)
|
Six months ended 31 December 2023 reported
|
1,725
|
797
|
689
|
316
|
130
|
(147)
|
3,510
|
Organic movement %
|
(1)
|
(4)
|
3
|
(41)
|
9
|
22
|
(5)
|
|
|
|
|
|
|
|
|
Organic operating margin % (3)
|
|
|
|
|
|
|
|
Six months ended 31 December 2023
|
40.8
|
32.6
|
32.6
|
33.2
|
21.9
|
n/a
|
33.1
|
Six months ended 31 December 2022
|
40.6
|
35.2
|
33.5
|
43.1
|
21.9
|
n/a
|
34.8
|
Organic operating margin movement (bps)
|
12
|
(257)
|
(84)
|
(994)
|
2
|
n/a
|
(167)
|
1)
The
impact of movements
in exchange rates on reported figures for operating profit was
principally in respect of the favourable exchange impact of the
strengthening of the Mexican peso
and sterling against the US dollar, partially offset by the
weakening of the Nigerian naira, Kenyan shilling and the Turkish
lira.
2)
Acquisitions and disposals that
had an effect on organic volume, sales, net sales, marketing and
operating profit growth in the six months ended 31 December 2023,
are detailed on page 48.
3)
Organic operating margin
calculated by dividing Operating
profit before exceptional items by net
sales.
i.
For the reconciliation of sales
to net sales, see page 20.
ii.
Percentages and margin movements
are calculated on rounded figures.
In the six months ended 31 December
2023, the acquisitions and disposals that affected volume,
sales, net sales, marketing and operating profit were as follows,
as per footnote (2) on the previous page:
|
Volume
|
Sales
|
Net sales
|
Marketing
|
Operating
profit
|
|
EUm
|
$ million
|
$ million
|
$ million
|
$ million
|
Six months ended 31 December 2022 (re-presented)
|
|
|
|
|
|
Acquisitions
|
|
|
|
|
|
Lone
River Ranch Water
|
-
|
-
|
-
|
-
|
1
|
|
-
|
-
|
-
|
-
|
1
|
Disposals
|
|
|
|
|
|
USL
Popular brands
|
(5.9)
|
(276)
|
(43)
|
-
|
(6)
|
Archers
brand
|
-
|
(7)
|
(5)
|
-
|
(3)
|
Windsor
|
(0.2)
|
(57)
|
(46)
|
(8)
|
(15)
|
Guinness
Cameroun S.A.
|
(0.7)
|
(110)
|
(73)
|
(3)
|
(18)
|
|
(6.8)
|
(450)
|
(167)
|
(11)
|
(42)
|
|
|
|
|
|
|
Acquisitions and disposals
|
(6.8)
|
(450)
|
(167)
|
(11)
|
(41)
|
|
|
|
|
|
|
Six months ended 31 December 2023
|
|
|
|
|
|
Acquisitions
|
|
|
|
|
|
Mr
Black
|
0.1
|
3
|
2
|
1
|
(4)
|
Balcones
Distilling
|
-
|
-
|
-
|
3
|
(8)
|
Gordon's
|
0.5
|
52
|
52
|
1
|
5
|
Don
Papa Rum
|
0.2
|
25
|
25
|
16
|
(6)
|
|
0.8
|
80
|
79
|
21
|
(13)
|
Disposals
|
|
|
|
|
|
Windsor
|
-
|
29
|
24
|
5
|
7
|
Guinness
Cameroun S.A.
|
0.6
|
13
|
13
|
-
|
10
|
|
0.6
|
42
|
37
|
5
|
17
|
|
|
|
|
|
|
Acquisitions and disposals
|
1.4
|
122
|
116
|
26
|
4
|
Earnings per share before exceptional
items
Earnings per share before exceptional items is calculated by
dividing profit attributable to equity shareholders of the parent
company before exceptional items by the weighted average number of
shares in issue.
Earnings per share before exceptional items for the six months
ended 31 December 2023 and 31 December 2022 are set out in the
table below:
|
2023
|
2022
|
|
$ million
|
Re-presented
$ million
|
Profit attributable to equity shareholders of the parent
company
|
2,210
|
2,709
|
Exceptional operating and non-operating items
|
253
|
20
|
Exceptional tax items and tax in respect of exceptional operating
and non-operating items
|
(42)
|
(84)
|
Exceptional items attributable to non-controlling
interests
|
2
|
1
|
Profit attributable to equity shareholders of the parent company
before exceptional items
|
2,423
|
2,646
|
|
|
|
Weighted average number of shares
|
million
|
million
|
Shares in issue excluding own shares
|
2,242
|
2,274
|
Dilutive potential ordinary shares
|
5
|
7
|
Diluted shares in issue excluding own shares
|
2,247
|
2,281
|
|
|
|
|
cents
|
Re-presented
cents
|
Basic earnings per share before exceptional items
|
108.1
|
116.4
|
Diluted earnings per share before exceptional items
|
107.8
|
116.0
|
Free cash flow
Free cash flow comprises the net cash flow from operating
activities aggregated with the net cash received/paid for working
capital loans receivable, cash paid or received for investments and
the net cash expenditure paid for property, plant and equipment and
computer software that are included in net cash flow from investing
activities.
The remaining components of net cash flow from investing activities
that do not form part of free cash flow, as defined by the group's
management, are in respect of the acquisition and sale of
businesses and non-working capital loans to and from
associates.
The group's management regards a portion of the purchase and
disposal of property, plant and equipment and computer software as
ultimately non-discretionary since ongoing investment in plant,
machinery and technology is required to support the day-to-day
operations, whereas acquisition and sale of businesses are
discretionary.
Where appropriate, separate explanations are given for the impacts
of acquisition and sale of businesses, dividends paid and the
purchase of own shares, each of which arises from decisions that
are independent from the running of the ongoing underlying
business.
Free cash flow reconciliations for the six months ended 31 December
2023 and 31 December 2022 are set out in the table
below:
|
2023
|
2022
|
|
$ million
|
Re-presented
$ million
|
Net cash inflow from operating activities
|
2,146
|
1,472
|
Disposal of property, plant and equipment and computer
software
|
7
|
8
|
Purchase of property, plant and equipment and computer
software
|
(582)
|
(514)
|
Movements in loans and other investments
|
(109)
|
(2)
|
Free cash flow
|
1,462
|
964
|
Adjusted net borrowings to adjusted EBITDA
Diageo manages its capital structure with the aim of achieving
capital efficiency, providing flexibility to invest through the
economic cycle and giving efficient access to debt markets at
attractive cost levels. The group regularly assesses its debt and
equity capital levels to enhance its capital structure by reviewing
the ratio of adjusted net borrowings (net borrowings aggregated
with post employment benefit liabilities before tax) to adjusted
EBITDA (earnings before exceptional operating items, non-operating
items, interest, tax, depreciation, amortisation and
impairment).
Calculations for the ratio of adjusted net borrowings to adjusted
EBITDA for the six months ended 31 December 2023 and 31
December 2022 are set out in the table
below:
|
2023
|
2022
|
|
$ million
|
Re-presented
$ million
|
Borrowings due within one year
|
2,004
|
2,767
|
Borrowings due after one year
|
19,476
|
18,365
|
Fair value of foreign currency derivatives and interest rate
hedging instruments
|
(40)
|
(136)
|
Lease liabilities
|
572
|
526
|
Less: Cash and cash equivalents
|
(1,529)
|
(3,319)
|
Net borrowings
|
20,483
|
18,203
|
Post employment benefit liabilities before tax
|
471
|
457
|
Adjusted net borrowings
|
20,954
|
18,660
|
|
|
|
Profit for the year
|
3,980
|
4,412
|
Taxation
|
1,134
|
1,302
|
Net finance charges
|
798
|
656
|
Depreciation, amortisation and impairment (excluding exceptional
impairment)
|
648
|
631
|
Exceptional impairment
|
728
|
409
|
EBITDA(1)
|
7,288
|
7,410
|
Exceptional operating items (excluding impairment)
|
192
|
107
|
Non-operating items
|
(285)
|
27
|
Adjusted EBITDA(1)
|
7,195
|
7,544
|
Adjusted net borrowings to adjusted EBITDA
|
2.9
|
2.5
|
(1) EBITDA and adjusted EBITDA are calculated based on the last 12
months.
Tax rate before exceptional items
Tax rate before exceptional items is calculated by dividing the
total tax charge before tax charges and credits in respect of
exceptional items, by profit before taxation adjusted to exclude
the impact of exceptional operating and non-operating items,
expressed as a percentage. The measure is used by management to
assess the rate of tax applied to the group's operations before tax
on exceptional items.
The tax rates from operations before exceptional and after
exceptional items for the six months ended 31 December
2023 and 31 December 2022 are set out in the table
below:
|
2023
|
2022
|
|
$ million
|
Re-presented
$ million
|
|
|
|
Taxation on profit (a)
|
737
|
766
|
Tax in respect of exceptional items
|
42
|
16
|
Exceptional tax credit
|
-
|
68
|
Tax before exceptional items (b)
|
779
|
850
|
|
|
|
Profit before taxation (c)
|
3,079
|
3,607
|
Non-operating items
|
60
|
(19)
|
Exceptional operating items
|
193
|
39
|
Profit before taxation and exceptional items (d)
|
3,332
|
3,627
|
|
|
|
Tax rate after exceptional items (a/c)
|
23.9%
|
21.2%
|
Tax rate before exceptional items (b/d)
|
23.4%
|
23.4%
|
Other definitions
Volume share is a brand's retail volume expressed as a percentage
of the retail volume of all brands in its segment. Value share is a
brand's retail sales value expressed as a percentage of the retail
sales value of all brands in its segment. Unless otherwise stated,
share refers to value share.
Net sales are sales less excise duties. Diageo incurs excise duties
throughout the world. In the majority of countries, excise duties
are effectively a production tax which becomes payable when the
product is removed from bonded premises and is not directly related
to the value of sales. It is generally not included as a separate
item on external invoices; increases in excise duties are not
always passed on to the customer and where a customer fails to pay
for a product received, the group cannot reclaim the excise duty.
The group therefore recognises excise duty as a cost to the
group.
Price/mix is the number of percentage points difference between the
organic movement in net sales and the organic movement in volume.
The difference arises because of changes in the composition of
sales between higher and lower priced variants/markets or as price
changes are implemented.
Shipments comprise the volume of products sold to Diageo's
immediate (first tier) customers. Depletions are the estimated
volume of the onward sales made by Diageo's immediate customers.
Both shipments and depletions are measured on an equivalent units
basis.
References to emerging markets include Poland, Eastern Europe,
Turkey, Latin America and Caribbean, Africa and Asia Pacific
(excluding Australia, Korea and Japan).
References to reserve brands include, but are not limited to,
Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie
Walker Gold Label Reserve, Johnnie Walker Aged 18 Years, John
Walker & Sons Collection and other Johnnie Walker super and
ultra-premium brands; The Singleton, Talisker, Lagavulin, Mortlach,
Oban and other malt brands; Buchanan's Special Reserve, Buchanan's
Red Seal; Crown Royal Special Reserve, Crown Royal XR and Haig Club
whisky; Bulleit 10 Years Bourbon; Orphan Barrel whiskey;
Balcones whisky and rum; Tanqueray No. TEN; Aviation, Jinzu and
Villa Ascenti gin; Cîroc vodka; Don Julio, Casamigos and
DeLeón tequila; Mezcal Unión and Pierde Almas mezcal;
Zacapa, Bundaberg Master Distillers' Collection, Pampero
Aniversario and Don Papa rum; Shui Jing Fang and
Seedlip.
References to ready to drink also include ready to serve products,
such as pre-mixed cans in some markets.
References to beer include cider, flavoured malt beverages and some
non-alcoholic products such as Malta Guinness. The results of Hop
House 13 Lager are included in the Guinness
figures.
There is no industry-agreed definition for price tiers and for data
providers such as IWSR, definitions can vary by market. Diageo
bases price tier definitions on a methodology that uses external
metrics (including market pricing data from Nielsen, IRI etc., as
well as the IWSR segmentation) for benchmarking and internal
pricing metrics for a consistent segmentation.
References to the disposal of the USL Popular brands include
non-exhaustively the Haywards, Old Tavern, White Mischief, Honey
Bee, Green Label and Romanov brands.
References to the group include Diageo plc and its consolidated
subsidiaries.
Risk factors
The principal risks and uncertainties facing Diageo are set out on
pages 88 to 93 of the Annual Report for the year ended 30 June 2023
and pages 113 to 123 of Diageo's Annual Report on Form 20-F for the
year ended 30 June 2023. These principal risks and uncertainties
include: climate change and sustainability; regulation, trade
barriers and indirect tax; geopolitical volatility and business
interruption; macro-economic and financial volatility;
international direct tax; supply chain disruption; cyber and IT
resilience; business ethics and integrity; consumer demand
disruption; and product quality and counterfeit.
Having carried out a robust assessment, we have concluded that the
nature and potential impact of the principal risks and
uncertainties facing Diageo did not change in the six months ended
31 December 2023, and are not expected to change in respect of the
second six months of the financial year.
Cautionary statement concerning forward-looking
statements
This document contains 'forward-looking' statements. These
statements can be identified by the fact that they do not relate
only to historical or current facts. In particular, forward-looking
statements include all statements that express forecasts,
expectations, plans, outlook, objectives and projections with
respect to future matters, including the statements set forth in
the 'Fiscal 24 outlook', 'Fiscal 25 outlook' and 'Medium-term
guidance' sections and any other statements with respect to trends
in results of operations, margins, growth rates, overall market
trends, the impact of changes in interest or exchange rates, the
availability or cost of financing to Diageo, anticipated cost
savings or synergies, anticipated productivity savings, expected
investments, expected inventory levels, the completion of any
strategic transactions or restructuring programmes, anticipated tax
rates, changes in the international tax environment, expected cash
payments, outcomes of litigation or regulatory enquiries,
anticipated changes in the value of assets and liabilities related
to pension schemes and general economic conditions. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements, including
factors that are outside Diageo's control.
These factors include, but are not limited to: (i) economic,
political, social or other developments in countries and markets in
which Diageo operates, including elevated geopolitical instability
as a result of 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 no alcohol 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
derive the expected benefits from its business strategies,
including Diageo's investments in e-commerce and its luxury
portfolio; (xvi) increased competitive product and pricing
pressures, including as a result of introductions of new products
or categories that are competitive with Diageo's products and
consolidations by competitors and retailers; (xvii) increased costs
for, or shortages of, talent, as well as labour strikes or
disputes; (xviii) movements in the value of the assets and
liabilities related to Diageo's pension plans; (xix) 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 (xx) any failure by Diageo to protect
its intellectual property rights.
All oral and written forward-looking statements made on or after
the date of this document and attributable to Diageo are expressly
qualified in their entirety by the above cautionary factors, by the
'Risk Factors' section immediately preceding those and by the 'Risk
Factors' included in Diageo's Annual Report on Form 20-F for the
year ended 30 June 2023 filed with the US Securities and Exchange
Commission. Any forward-looking statements made by or on behalf of
Diageo speak only as of the date they are made. Diageo does not
undertake to update forward-looking statements to reflect any
changes in Diageo's expectations with regard thereto or any changes
in events, conditions or circumstances on which any such statement
is based.
This document includes names of Diageo's products, which constitute
trademarks or trade names which Diageo owns, or which others own
and license to Diageo for use. All rights reserved. © Diageo
plc 2024.
Statement of directors' responsibilities
Each of the Directors of Diageo plc confirms that, to the best of
his or her knowledge:
-
the condensed interim financial statements have been prepared in
accordance with UK adopted IAS 34, 'Interim Financial Reporting',
IAS 34 'Interim Financial Reporting' as issued by the International
Accounting Standards Board ('IASB') and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority;
-
the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8,
namely:
●
an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
●
material related-party transactions in the first six months and any
material changes in the related-party transactions described in the
last annual report.
The Directors of Diageo plc are as follows: Javier Ferrán
(Chairman), Debra Crew (Chief Executive), Lavanya Chandrashekar
(Chief Financial Officer), Susan Kilsby (Senior Independent
Director and Chairman of the Remuneration Committee), Alan Stewart
(Non-Executive Director and Chairman of the Audit Committee) and
Non-Executive Directors: Melissa Bethell, Karen Blackett,
Valérie Chapoulaud-Floquet, Sir John Manzoni, and Ireena
Vittal.
Webcast and presentation slides
At 07:15 (UK time) on Tuesday 30 January 2024, Debra Crew, Chief
Executive and Lavanya Chandrashekar, Chief Financial Officer will
present Diageo's interim results as a webcast. This will be
available to view at www.diageo.com. The presentation slides and
script will also be available to download at this
time.
Live Q&A conference call
Debra Crew and Lavanya Chandrashekar will be hosting a Q&A
conference call on Tuesday 30 January 2024 at 09:30
(UK time). If
you would like to listen to the call or ask a question, please use
the dial in details below.
From the UK:
|
+44 (0)20 3936 2999
|
From the UK (free call):
|
0800 358 1035
|
From the USA:
|
+1 646 787 9445
|
From the USA (free call):
|
+1 855 979 6654
|
The conference call is for analysts and investors only. To join the
call please use the conference ID code already sent to you or
email investor.relations@diageo.com.
Transcript
Following the Q&A conference call, a transcript will be
available from the link below:
https://www.diageo.com/en/investors/results-reports-and-presentations
Investor enquiries to:
|
Durga Doraisamy
|
+44 (0)7902 126906
|
|
Andy Ryan
|
+44 (0)7803 854842
|
|
Brian Shipman
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+1 917 710 3007
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|
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investor.relations@diageo.com
|
|
|
|
Media enquiries to:
|
Brendan O'Grady
|
+44 (0)7812 183750
|
|
Clare Cavana
|
+44 (0)7751 742072
|
|
Isabel Batchelor
|
+44 (0)7731 988857
|
|
|
press@diageo.com
|
Diageo plc LEI:
213800ZVIELEA55JMJ32
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
Diageo plc
|
|
(Registrant)
|
|
|
Date:
30 January 2024
|
|
|
|
|
By:___/s/
James Edmunds
|
|
|
|
James Edmunds
|
|
Deputy Company Secretary
|
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