[20-F] Diageo plc Files Annual Report (Foreign Issuer)
Filing Impact
Filing Sentiment
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20-F
Diageo plc (DEO) reported fiscal 25 reported net sales of $20.2bn, effectively flat year‑on‑year (-0.1%) while organic net sales rose 1.7% driven by 0.9% volume and 0.8% price/mix. Reported operating profit fell 27.8% mainly due to exceptional impairment and restructuring charges, while organic operating profit declined 0.7%. Basic EPS was 105.9c with EPS before exceptionals at 164.2c. Net cash from operating activities totaled $4.30bn and free cash flow was $2.75bn. Net debt stood at $21.85bn and total shareholder return was down 24%.
Management launched the Accelerate programme targeting ~$3bn sustained annual free cash flow from fiscal 26, ~$625m cost savings over three years and a return to 2.5–3.0x net debt/adjusted EBITDA by fiscal 28. Fiscal moves included the Ritual acquisition, strategic Cîroc transaction, selective disposals and impairment charges related to Distill Ventures and Aviation American Gin. Leadership changed with Debra Crew stepping down, Nik Jhangiani appointed Interim CEO and Deirdre Mahlan returning as Interim CFO.
Diageo plc (DEO) ha riportato, nell'esercizio fiscale 25, vendite nette riportate per $20.2bn, sostanzialmente stabili su base annua (-0.1%), mentre le vendite nette organiche sono cresciute del 1.7% grazie a +0.9% di volumi e +0.8% di prezzo/mix. L'utile operativo riportato è sceso del 27.8% principalmente a causa di svalutazioni e oneri di ristrutturazione straordinari; l'utile operativo organico è diminuito dello 0.7%. L'EPS base è stato di 105.9c, con l'EPS prima delle voci straordinarie a 164.2c. Il flusso di cassa netto da attività operative è stato di $4.30bn e il free cash flow di $2.75bn. Il debito netto si è attestato a $21.85bn e il rendimento totale per gli azionisti è calato del 24%.
La direzione ha lanciato il programma Accelerate con l'obiettivo di raggiungere circa $3bn di free cash flow annuo sostenibile a partire dall'esercizio 26, circa $625m di risparmi sui costi in tre anni e il ritorno a un rapporto debito netto/EBITDA rettificato di 2.5–3.0x entro l'esercizio 28. Tra le iniziative dell'esercizio figurano l'acquisizione di Ritual, la transazione strategica su Cîroc, dismissioni selettive e svalutazioni legate a Distill Ventures e Aviation American Gin. Cambi al vertice: Debra Crew si è dimessa, Nik Jhangiani è stato nominato CEO ad interim e Deirdre Mahlan è tornata come CFO ad interim.
Diageo plc (DEO) registró en el ejercicio fiscal 25 ventas netas reportadas de $20.2bn, prácticamente sin variación interanual (-0.1%), mientras que las ventas netas orgánicas aumentaron 1.7%, impulsadas por un 0.9% de volumen y 0.8% de precio/mezcla. El beneficio operativo reportado cayó un 27.8% principalmente por deterioros y cargos por reestructuración excepcionales, y el beneficio operativo orgánico disminuyó un 0.7%. El BPA básico fue de 105.9c, con el BPA antes de elementos excepcionales en 164.2c. El efectivo neto procedente de las operaciones fue de $4.30bn y el flujo de caja libre de $2.75bn. La deuda neta se situó en $21.85bn y el retorno total para los accionistas bajó un 24%.
La dirección lanzó el programa Accelerate con la meta de generar alrededor de $3bn de flujo de caja libre anual sostenido a partir del fiscal 26, aproximadamente $625m de ahorros en costes en tres años y volver a un ratio deuda neta/EBITDA ajustado de 2.5–3.0x para el fiscal 28. Las acciones del periodo incluyeron la adquisición de Ritual, la transacción estratégica sobre Cîroc, desinversiones selectivas y cargos por deterioro relacionados con Distill Ventures y Aviation American Gin. Hubo cambios en la dirección: Debra Crew dimitió, Nik Jhangiani fue nombrado CEO interino y Deirdre Mahlan regresó como CFO interina.
Diageo plc (DEO)는 회계연도 25에 보고 기준 순매출 $20.2bn을 기록했으며 전년 대비 사실상 변동이 없었습니다 (-0.1%). 유기적(organic) 순매출은 0.9%의 물량 증가와 0.8%의 가격/믹스 효과로 1.7% 상승했습니다. 보고 기준 영업이익은 주로 일회성 손상 및 구조조정 비용으로 27.8% 감소했고, 유기적 영업이익은 0.7% 감소했습니다. 기본 주당순이익(Basic EPS)은 105.9c였고, 일회성 항목을 제외한 EPS는 164.2c였습니다. 영업활동으로 인한 순현금은 $4.30bn, 자유현금흐름(Free cash flow)은 $2.75bn이었습니다. 순부채는 $21.85bn, 총주주수익률은 24% 하락했습니다.
경영진은 'Accelerate' 프로그램을 출범하여 회계연도 26부터 연간 약 $3bn의 지속 가능한 자유현금흐름 달성, 3년간 약 $625m의 비용 절감, 그리고 회계연도 28까지 순부채/조정 EBITDA 비율을 2.5–3.0배로 회복하는 것을 목표로 삼았습니다. 연도 내 조치로는 Ritual 인수, Cîroc 관련 전략적 거래, 선별적 자산 매각 및 Distill Ventures와 Aviation American Gin 관련 손상처리가 포함됩니다. 경영진 변화로 Debra Crew가 사임했고 Nik Jhangiani가 임시 CEO로 임명되었으며 Deirdre Mahlan이 임시 CFO로 복귀했습니다.
Diageo plc (DEO) a annoncé pour l'exercice fiscal 25 des ventes nettes déclarées de $20.2bn, essentiellement stables d'une année sur l'autre (-0.1%), tandis que les ventes nettes organiques ont augmenté de 1.7%, portées par +0.9% en volume et +0.8% en prix/mixt. Le résultat d'exploitation déclaré a chuté de 27.8% principalement en raison de dépréciations et de charges de restructuration exceptionnelles, tandis que le résultat d'exploitation organique a diminué de 0.7%. Le BPA de base (Basic EPS) était de 105.9c, le BPA avant éléments exceptionnels de 164.2c. Les flux de trésorerie nets issus des activités opérationnelles se sont élevés à $4.30bn et le free cash flow à $2.75bn. La dette nette s'établissait à $21.85bn et le rendement total pour les actionnaires a reculé de 24%.
La direction a lancé le programme Accelerate visant à générer environ $3bn de free cash flow annuel soutenu à partir de l'exercice 26, environ $625m d'économies de coûts sur trois ans et un retour à un ratio dette nette/EBITDA ajusté de 2.5–3.0x d'ici l'exercice 28. Les opérations de l'exercice incluent l'acquisition de Ritual, la transaction stratégique sur Cîroc, des cessions sélectives et des dépréciations liées à Distill Ventures et Aviation American Gin. Des changements à la direction ont eu lieu: Debra Crew a démissionné, Nik Jhangiani a été nommé CEO par intérim et Deirdre Mahlan est revenue en tant que CFO par intérim.
Diageo plc (DEO) meldete für das Geschäftsjahr 25 berichtete Nettoumsätze von $20.2bn, damit praktisch unverändert gegenüber dem Vorjahr (-0.1%), während die organischen Nettoumsätze um 1.7% zunahmen, getragen von 0.9% Volumen und 0.8% Preis/Mix. Das berichtete Betriebsergebnis fiel um 27.8% hauptsächlich aufgrund außerordentlicher Wertminderungen und Restrukturierungskosten; das organische Betriebsergebnis ging um 0.7% zurück. Das Basic EPS lag bei 105.9c, das EPS vor Sondereinflüssen bei 164.2c. Der Netto-Cashflow aus laufender Geschäftstätigkeit betrug $4.30bn, der Free Cashflow $2.75bn. Die Nettoverschuldung belief sich auf $21.85bn und die Gesamtrendite für Aktionäre ging um 24% zurück.
Das Management hat das Programm 'Accelerate' gestartet mit dem Ziel, ab Geschäftsjahr 26 einen dauerhaft jährlichen Free Cashflow von rund $3bn zu erzielen, etwa $625m Kosteneinsparungen über drei Jahre und bis Geschäftsjahr 28 eine Rückkehr zu einem Verhältnis Nettoverschuldung/adjustiertes EBITDA von 2.5–3.0x. Zu den Maßnahmen des Jahres zählen die Übernahme von Ritual, die strategische Cîroc-Transaktion, selektive Veräußerungen sowie Abschreibungen im Zusammenhang mit Distill Ventures und Aviation American Gin. In der Führungsetage gab es Veränderungen: Debra Crew trat zurück, Nik Jhangiani wurde zum Interim-CEO ernannt und Deirdre Mahlan kehrte als Interim-CFO zurück.
Positive
- Organic net sales growth of 1.7% driven by 0.9% volume and 0.8% price/mix
- Free cash flow of $2.75bn and net cash from operations of $4.30bn, underpinning liquidity
- Accelerate programme with targets to deliver c.$3bn annual FCF from fiscal 26 and c.$625m cost savings over three years
- Tequila momentum: tequila organic net sales up 18% with share gains in measured markets
- Guinness growth and expansion (new markets, strong campaign traction)
- Maintained dividend at 103.48 cents per share
- Environmental improvements: water efficiency improved 15.8% vs 2020 baseline and Scope 1&2 GHG emissions down 18.8% vs 2022 baseline
Negative
- Reported operating profit declined 27.8% driven by substantial exceptional impairment and restructuring charges (including Distill Ventures and Aviation American Gin)
- Basic EPS fell to 105.9c from 173.2c; EPS before exceptionals declined to 164.2c
- Net debt increased to $21.85bn, partly driven by FX movements
- Total shareholder return down 24% over 12 months, reflecting share price weakness
- Significant exceptional non-operating losses including losses related to the sale/prospective sale of Guinness Nigeria and Guinness Ghana
Insights
TL;DR: Mixed operational resilience but near-term earnings hit by exceptionals; cash generation and cost targets aim to stabilise leverage.
Diageo delivered modest organic top-line growth (1.7%) and solid cash generation with $2.75bn free cash flow, supporting the company's goal to sustainably deliver ~ $3bn FCF from fiscal 26. However, reported operating profit contracted sharply (-27.8%) due to significant impairment and restructuring charges, which materially reduced EPS and pressured TSR. The Accelerate programme sets clear financial targets (c.$625m savings; leverage 2.5–3.0x by fiscal 28) that, if executed, should materially improve margins and balance sheet flexibility. Close monitoring of disposal execution, cost delivery and underlying organic margin recovery will determine the credibility of these targets.
TL;DR: Leadership transitions and strategic resets increase near-term governance focus; board actions aim to restore performance and credibility.
Board-level changes are material: the CEO departure, appointment of an interim CEO and return of a former CFO increase emphasis on continuity and rapid strategy execution. The Chair highlights governance priorities including ESG, water stewardship and moderation initiatives, signalling board alignment on long-term risk and reputation management. The combination of strategic disposals, impairment recognition and a company-wide Accelerate programme indicates active board oversight, but execution risk and clear communication on succession and recovery milestones will be critical to investor confidence.
Diageo plc (DEO) ha riportato, nell'esercizio fiscale 25, vendite nette riportate per $20.2bn, sostanzialmente stabili su base annua (-0.1%), mentre le vendite nette organiche sono cresciute del 1.7% grazie a +0.9% di volumi e +0.8% di prezzo/mix. L'utile operativo riportato è sceso del 27.8% principalmente a causa di svalutazioni e oneri di ristrutturazione straordinari; l'utile operativo organico è diminuito dello 0.7%. L'EPS base è stato di 105.9c, con l'EPS prima delle voci straordinarie a 164.2c. Il flusso di cassa netto da attività operative è stato di $4.30bn e il free cash flow di $2.75bn. Il debito netto si è attestato a $21.85bn e il rendimento totale per gli azionisti è calato del 24%.
La direzione ha lanciato il programma Accelerate con l'obiettivo di raggiungere circa $3bn di free cash flow annuo sostenibile a partire dall'esercizio 26, circa $625m di risparmi sui costi in tre anni e il ritorno a un rapporto debito netto/EBITDA rettificato di 2.5–3.0x entro l'esercizio 28. Tra le iniziative dell'esercizio figurano l'acquisizione di Ritual, la transazione strategica su Cîroc, dismissioni selettive e svalutazioni legate a Distill Ventures e Aviation American Gin. Cambi al vertice: Debra Crew si è dimessa, Nik Jhangiani è stato nominato CEO ad interim e Deirdre Mahlan è tornata come CFO ad interim.
Diageo plc (DEO) registró en el ejercicio fiscal 25 ventas netas reportadas de $20.2bn, prácticamente sin variación interanual (-0.1%), mientras que las ventas netas orgánicas aumentaron 1.7%, impulsadas por un 0.9% de volumen y 0.8% de precio/mezcla. El beneficio operativo reportado cayó un 27.8% principalmente por deterioros y cargos por reestructuración excepcionales, y el beneficio operativo orgánico disminuyó un 0.7%. El BPA básico fue de 105.9c, con el BPA antes de elementos excepcionales en 164.2c. El efectivo neto procedente de las operaciones fue de $4.30bn y el flujo de caja libre de $2.75bn. La deuda neta se situó en $21.85bn y el retorno total para los accionistas bajó un 24%.
La dirección lanzó el programa Accelerate con la meta de generar alrededor de $3bn de flujo de caja libre anual sostenido a partir del fiscal 26, aproximadamente $625m de ahorros en costes en tres años y volver a un ratio deuda neta/EBITDA ajustado de 2.5–3.0x para el fiscal 28. Las acciones del periodo incluyeron la adquisición de Ritual, la transacción estratégica sobre Cîroc, desinversiones selectivas y cargos por deterioro relacionados con Distill Ventures y Aviation American Gin. Hubo cambios en la dirección: Debra Crew dimitió, Nik Jhangiani fue nombrado CEO interino y Deirdre Mahlan regresó como CFO interina.
Diageo plc (DEO)는 회계연도 25에 보고 기준 순매출 $20.2bn을 기록했으며 전년 대비 사실상 변동이 없었습니다 (-0.1%). 유기적(organic) 순매출은 0.9%의 물량 증가와 0.8%의 가격/믹스 효과로 1.7% 상승했습니다. 보고 기준 영업이익은 주로 일회성 손상 및 구조조정 비용으로 27.8% 감소했고, 유기적 영업이익은 0.7% 감소했습니다. 기본 주당순이익(Basic EPS)은 105.9c였고, 일회성 항목을 제외한 EPS는 164.2c였습니다. 영업활동으로 인한 순현금은 $4.30bn, 자유현금흐름(Free cash flow)은 $2.75bn이었습니다. 순부채는 $21.85bn, 총주주수익률은 24% 하락했습니다.
경영진은 'Accelerate' 프로그램을 출범하여 회계연도 26부터 연간 약 $3bn의 지속 가능한 자유현금흐름 달성, 3년간 약 $625m의 비용 절감, 그리고 회계연도 28까지 순부채/조정 EBITDA 비율을 2.5–3.0배로 회복하는 것을 목표로 삼았습니다. 연도 내 조치로는 Ritual 인수, Cîroc 관련 전략적 거래, 선별적 자산 매각 및 Distill Ventures와 Aviation American Gin 관련 손상처리가 포함됩니다. 경영진 변화로 Debra Crew가 사임했고 Nik Jhangiani가 임시 CEO로 임명되었으며 Deirdre Mahlan이 임시 CFO로 복귀했습니다.
Diageo plc (DEO) a annoncé pour l'exercice fiscal 25 des ventes nettes déclarées de $20.2bn, essentiellement stables d'une année sur l'autre (-0.1%), tandis que les ventes nettes organiques ont augmenté de 1.7%, portées par +0.9% en volume et +0.8% en prix/mixt. Le résultat d'exploitation déclaré a chuté de 27.8% principalement en raison de dépréciations et de charges de restructuration exceptionnelles, tandis que le résultat d'exploitation organique a diminué de 0.7%. Le BPA de base (Basic EPS) était de 105.9c, le BPA avant éléments exceptionnels de 164.2c. Les flux de trésorerie nets issus des activités opérationnelles se sont élevés à $4.30bn et le free cash flow à $2.75bn. La dette nette s'établissait à $21.85bn et le rendement total pour les actionnaires a reculé de 24%.
La direction a lancé le programme Accelerate visant à générer environ $3bn de free cash flow annuel soutenu à partir de l'exercice 26, environ $625m d'économies de coûts sur trois ans et un retour à un ratio dette nette/EBITDA ajusté de 2.5–3.0x d'ici l'exercice 28. Les opérations de l'exercice incluent l'acquisition de Ritual, la transaction stratégique sur Cîroc, des cessions sélectives et des dépréciations liées à Distill Ventures et Aviation American Gin. Des changements à la direction ont eu lieu: Debra Crew a démissionné, Nik Jhangiani a été nommé CEO par intérim et Deirdre Mahlan est revenue en tant que CFO par intérim.
Diageo plc (DEO) meldete für das Geschäftsjahr 25 berichtete Nettoumsätze von $20.2bn, damit praktisch unverändert gegenüber dem Vorjahr (-0.1%), während die organischen Nettoumsätze um 1.7% zunahmen, getragen von 0.9% Volumen und 0.8% Preis/Mix. Das berichtete Betriebsergebnis fiel um 27.8% hauptsächlich aufgrund außerordentlicher Wertminderungen und Restrukturierungskosten; das organische Betriebsergebnis ging um 0.7% zurück. Das Basic EPS lag bei 105.9c, das EPS vor Sondereinflüssen bei 164.2c. Der Netto-Cashflow aus laufender Geschäftstätigkeit betrug $4.30bn, der Free Cashflow $2.75bn. Die Nettoverschuldung belief sich auf $21.85bn und die Gesamtrendite für Aktionäre ging um 24% zurück.
Das Management hat das Programm 'Accelerate' gestartet mit dem Ziel, ab Geschäftsjahr 26 einen dauerhaft jährlichen Free Cashflow von rund $3bn zu erzielen, etwa $625m Kosteneinsparungen über drei Jahre und bis Geschäftsjahr 28 eine Rückkehr zu einem Verhältnis Nettoverschuldung/adjustiertes EBITDA von 2.5–3.0x. Zu den Maßnahmen des Jahres zählen die Übernahme von Ritual, die strategische Cîroc-Transaktion, selektive Veräußerungen sowie Abschreibungen im Zusammenhang mit Distill Ventures und Aviation American Gin. In der Führungsetage gab es Veränderungen: Debra Crew trat zurück, Nik Jhangiani wurde zum Interim-CEO ernannt und Deirdre Mahlan kehrte als Interim-CFO zurück.
F-1 | Diageo Form 20-F 2025 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
EXCHANGE ACT OF 1934
OR
ACT OF 1934
For the fiscal year ended: 30 June 2025
OR
EXCHANGE ACT OF 1934
OR
EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from __ to __
Commission file number 1-10691
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organisation)
(Address of principal executive offices)
Tel: +44 20 7947 9100
E-mail: the.cosec@diageo.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
New York Stock Exchange(i) | ||
(i)Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements of the
Securities and Exchange Commission.
F-2 | Diageo Form 20-F 2025 |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the Annual Report: 2,432,425,127 ordinary shares of 28101/108 pence each.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No þ
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes þ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an
emerging growth company. See the definitions of 'large accelerated filer,' 'accelerated filer,' and 'emerging growth company' in Rule
12b-2 of the Exchange Act :
þ | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by checkmark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
† | The term 'new or revised financial accounting standard' refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. þ
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
U.S. GAAP ¨ | Other ¨ | |||
as issued by the International Accounting Standards Board | ☑ |
If 'Other' has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow. Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ☐ No þ
F-3 | Diageo Form 20-F 2025 |
Contents | ||
F-5 | Cross reference to Form 20-F | |
F-7 | Introduction | |
1 | Strategic report: Our business | |
1 | Diageo at a glance | |
2 | Chair’s statement | |
4 | Chief Executive’s statement | |
6 | Performance highlights | |
8 | Investment case | |
9 | Market dynamics | |
10 | Our Growth Ambition | |
11 | Our strategy | |
16 | Strategic report: Our performance | |
16 | Our performance | |
20 | Summary financial review | |
24 | Business review | |
F-9 | Business review - Corporate | |
33 | Group financial review | |
F-10 | Operating results 2024 compared with 2023 | |
36 | 'Spirit of Progress' | |
38 | Business integrity and human rights | |
40 | Our people and culture | |
42 | Health and safety | |
44 | Promote positive drinking | |
46 | Pioneering grain to glass sustainability | |
58 | Champion inclusion and diversity | |
60 | Our ESG reporting approach | |
63 | Risk factors | |
74 | Governance report | |
75 | Chair's introduction to Governance | |
76 | Corporate governance structure and division of responsibilities | |
78 | Board of Directors | |
80 | Executive Committee | |
82 | Corporate governance report | |
97 | Audit Committee report | |
F-11 | Management’s report on internal control over financial reporting | |
104 | Nomination Committee report | |
108 | Directors’ Remuneration report | |
135 | Directors’ report | |
139 | Financial statements | |
140 | Report of Independent Registered Public Accounting Firm - PCAOB ID | |
F-4 | Diageo Form 20-F 2025 |
Contents (continued) | ||
213 | Additional information | |
213 | Unaudited financial information | |
222 | Cautionary statement concerning forward-looking statements | |
226 | Other additional information | |
233 | Liquidity and capital resources | |
238 | Exhibits | |
240 | Signature | |
241 | Glossary of terms and US equivalents | |
F-5 | Diageo Form 20-F 2025 |
Cross reference to Form 20-F | ||
Item | Required item in Form 20-F | Page(s) |
Part I | ||
1. | Identity of directors, senior management and advisers | Not applicable |
2. | Offer statistics and expected timetable | Not applicable |
3. | Key information | |
A. [Reserved] | — | |
B. Capitalisation and indebtedness | Not applicable | |
C. Reason for the offer and use of proceeds | Not applicable | |
D. Risk factors | 63-73 | |
4. | Information on the company | |
A. History and development of the company | F-7-F-8, 2-5, 22-32, 37-38, 45, 47-50, 64-70, 73, 82, 155-157, 170-176, 226-232 | |
B. Business overview | F-7-F-8, 2-5, 22-32, 37-38, 45, 47-50, 64-70, 73, 82, 155-157, 170-176, 226-232 | |
C. Organisational structure | 200 | |
D. Property, plant and equipment | 25, 174-176, 226-227 | |
4A. | Unresolved staff comments | Not applicable |
5. | Operating and financial review and prospects | |
A. Operating results | 2-5, 16-17, 20-22, 24-35, F-9, F-10, 63-64, 67, 71, 153-159, 161, 184-193, 213-215, 222 | |
B. Liquidity and capital resources | 6, 16-17, 20, 22, 184-192, 217-218, 232-236 | |
C. Research and development, patents and licenses, etc. | 160, 227 | |
D. Trend information | 2-5, 8-19, 24-32, F-9, 222 | |
E. Critical Accounting Estimates | 102, 153-154 | |
6. | Directors, senior management and employees | |
A. Directors and senior management | 76-83 | |
B. Compensation | 35, 78-81, 108-134, 176-180, 199-200 | |
C. Board practices | 3, 75-85, 95-98, 100-101, F-11, 104-106, 108-110, 118 | |
D. Employees | 24, 41, 160, 227 | |
E. Share ownership | 112-132, 196 | |
F. Disclosure of a registrant’s action to recover erroneously awarded compensation | Not applicable | |
7. | Major shareholders and related party transactions | |
A. Major shareholders | 135 | |
B. Related party transactions | 134, 199-200 | |
C. Interests of experts and counsel | Not applicable | |
8. | Financial information | |
A. Consolidated statements and other financial information | 34, 148-200 | |
B. Significant changes | 102, 153-154, 216 | |
9. | The offer and listing | |
A. Offer and listing details | 82-83, 136, 228-229 | |
B. Plan of distribution | Not applicable | |
C. Markets | 82-83, 136 | |
D. Selling shareholders | Not applicable | |
E. Dilution | Not applicable | |
F. Expenses of the issue | Not applicable | |
F-6 | Diageo Form 20-F 2025 |
Cross reference to Form 20-F (continued) | ||
Item | Required item in Form 20-F | Page(s) |
10. | Additional information | |
A. Share capital | Not applicable | |
B. Memorandum and articles of association | 82-83, 135-137 | |
C. Material contracts | 135, 227, 237 | |
D. Exchange controls | 232 | |
E. Taxation | 228-230 | |
F. Dividends and paying agents | Not applicable | |
G. Statement by experts | Not applicable | |
H. Documents on display | 232 | |
I. Subsidiary information | Not applicable | |
J. Annual report to security holders | Exhibit 15.2 | |
11. | Quantitative and qualitative disclosures about market risk | 184-192 |
12. | Description of securities other than equity securities | |
A. Debt securities | Not applicable | |
B. Warrants and rights | Not applicable | |
C. Other securities | Not applicable | |
D. American depositary shares | 136-137, 228-230 | |
Part II | ||
13. | Defaults, dividend arrearages and delinquencies | Not applicable |
14. | Material modifications to the rights of security holders and use of proceeds | Not applicable |
15. | Controls and procedures | |
A. Disclosure controls and procedures | 98 | |
B. Management’s report on internal control over financial reporting | 101, F-11 | |
C. Attestation report of the registered public accounting firm | 140-142 | |
D. Changes in internal control over financial reporting | 101, F-11 | |
16A. | Audit committee financial expert | 101 |
16B. | Code of ethics | 82-83, 101 |
16C. | Principal accountant fees and services | 98-99, 160 |
16D. | Exemptions from the listing standards for audit committees | Not applicable |
16E. | Purchases of equity securities by the issuer and affiliated purchasers | 194 |
16F. | Change in registrant’s certifying accountant | Not applicable |
16G. | Corporate governance | 75-85, 95-106 |
16H. | Mine safety disclosure | Not applicable |
16I. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | Not applicable |
16J. | Insider trading policies | 101 |
16K. | Cybersecurity | 103 |
Part III | ||
17. | Financial statements | Not applicable |
18. | Financial statements | 148-200 |
19. | Exhibits | 238-239 |
Additional information | ||
Glossary of terms and US equivalents | 241-242 | |
F-7 | Diageo Form 20-F 2025 |
Introduction
Diageo is a global leader in the beverage alcohol industry with an outstanding collection of brands across spirits and beer. Its
products are sold in nearly 180 countries around the world and its brands include Johnnie Walker, Crown Royal, JεB and Buchanan’s
whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Casamigos, Tanqueray and Guinness.
Diageo’s Performance Ambition is to be one of the best performing, most trusted and respected, consumer products companies in the
world.
Diageo plc is incorporated as a public limited company in England and Wales. The company which is now Diageo plc was
incorporated as Arthur Guinness Son and Company Limited on 21 October 1886. The Diageo group was formed by the merger of the
Grand Metropolitan Public Limited Company and Guinness plc groups in December 1997. Diageo plc’s principal executive office is
located at 16 Great Marlborough Street, London W1F 7HS, England and its telephone number is +44 (0) 20 7947 9100. Diageo plc’s
agent for service in the United States for the purposes of Diageo’s registration statement on Form F-3 (333-269929) is General
Counsel, Diageo North America, Inc., 175 Greenwich Street, 3 World Trade Center, New York, NY 10007.
This is the Annual Report on Form 20-F of Diageo plc for the year ended 30 June 2025. The information set out in this Form 20-F
does not constitute Diageo plc’s statutory accounts under the UK Companies Act for the years ended 30 June 2025, 30 June 2024
and/or 30 June 2023. The accounts for the years ended 30 June 2024 and 30 June 2023 have been delivered to the registrar of
companies for England and Wales and those for the year ended 30 June 2025 will be delivered to the registrar of companies for
England and Wales in due course.
This document contains forward-looking statements that involve risk and uncertainty because they relate to, and are dependent upon,
events and circumstances that will occur in the future. There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking statements, including factors beyond Diageo’s control.
For more details, please refer to the Cautionary statement concerning forward-looking statements on pages 222.
This document may contain inactive textual addresses to websites operated by Diageo (including www.diageo.com) and third parties.
Reference to such websites is made for information purposes only, and any information found at such websites does not form a part
of this document and is not incorporated by reference into this document. Diageo does not make any representation or warranty with
respect to the accuracy or completeness of, or take any responsibility for, any information found at any websites operated by third
parties. This report includes names of Diageo’s products, which constitute trademarks or trade names which Diageo owns or which
others own and license to Diageo for use. In this report, the term ‘company’ refers to Diageo plc and terms ‘group’ and ‘Diageo’ refer
to the company and its consolidated subsidiaries, except as the context otherwise requires. A glossary of terms used in this report is
included at the end of the report.
The consolidated financial statements are prepared in accordance with IFRS® Accounting Standards (IFRSs) adopted by the UK
(UK-adopted International Accounting Standards) and IFRSs, as issued by the International Accounting Standards Board (IASB),
including interpretations issued by the IFRS Interpretations Committee. IFRS as adopted by the UK differs in certain respects from
IFRS as issued by the IASB. The differences have no impact on the group’s consolidated financial statements for the years presented.
The consolidated financial statements are prepared on a going concern basis under the historical cost convention, unless stated
otherwise in the relevant accounting policy.
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.
The financial performance expectations related to Diageo’s Accelerate programme, Diageo’s fiscal 26 outlook, Diageo’s medium-
term guidance and any other statements related to Diageo’s performance expectations for the year ending 30 June 2026 or thereafter
included in this document have been prepared by and are the responsibility of Diageo’s management. PricewaterhouseCoopers LLP
has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the financial performance
expectations and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect
thereto. The PricewaterhouseCoopers LLP report included in this document relates to Diageo’s historical financial statements. It does
not extend to the financial performance expectations and should not be read to do so. The financial performance expectations were
not prepared with a view toward compliance with published guidelines of the Securities and Exchange Commission or the guidelines
established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial
information.
F-8 | Diageo Form 20-F 2025 |
Introduction (continued)
Information presented
Organic movements and organic operating margins are before exceptional items. Commentary, unless otherwise stated, refers to
organic movements. Share, unless otherwise stated, refers to value share. See page 213 for explanation and reconciliation of non-
GAAP measures, including organic net sales, organic operating profit, free cash flow, eps before exceptionals, ROIC, adjusted net
debt, adjusted EBITDA and tax rate before exceptional items.
The brand ranking information presented in this report, when comparing information with competitors, reflects data published by
sources such as Global Data, Nielsen, NABCA and IWSR. Market data information and competitive set classifications are taken from
independent industry sources in the markets in which Diageo operates. In addition, Diageo’s financial year end is 30 June, and such
data may relate to dates other than 30 June or periods other than the financial year ended 30 June, such as calendar year end.
Disclosures not included in Annual Report on Form 20-F
The following pages and sections of this document do not form part of the Annual Report on Form 20-F and are furnished to the SEC
for information only:
•Disclosures under the heading ‘Statement on Section 172 of the Companies Act 2006’ on page 2.
•Disclosures under the headings ‘Spirit of Progress’ and ‘Looking ahead to fiscal 26 and beyond’ in the Chair’s statement on page 3.
•Disclosures under the headings ‘Accelerate: Strengthening Diageo for the future’, ‘Leadership: Executive Committee changes this
fiscal’ and ‘Looking ahead’ in the Chief Executive’s statement on page 5.
•Disclosures under the heading ‘Fiscal 25 non-financial performance’ on page 6.
•Disclosures under the heading ‘A strong investment case’ on page 8.
•Disclosures under the heading ‘Progressing our Growth Ambition’ on page 10.
•Disclosures under the heading ‘Our Strategy’ on page 11.
•Disclosures under the headings ‘Don Julio Presents 194GOU’ and ‘The Sweeter Side of Johnnie Walker Black Label’ on page 12.
•Disclosures under the heading ‘Guinness' Lovely Day in the United States’ on page 13.
•Disclosures under the heading ‘Non-financial performance’ on pages 18 to 19.
•Disclosures under the heading 'Health and safety' on pages 42 to 43.
•Disclosures under the headings ‘Stakeholder engagement’, ‘Wider stakeholder engagement’ and ‘Workforce Engagement
statement’ on pages 86 to 93.
•Disclosures under the headings ‘Internal control and risk management’, ‘Viability statement’, ‘Going concern’, and ‘Political
donations’ on page 95.
•Disclosures under the headings ‘Disclosure of information to the auditor’ and ‘Corporate governance statement’ on page 135.
1 | Diageo Annual Report 2025 |
A broad portfolio of iconic brands
OUR PURPOSE | OUR STRATEGY | |
 | Unleash the power of our brands and portfolio to lead and shape consumer trends executed with operational excellence |
OUR PERFORMANCE | ||||||
$20.2bn fiscal 25 reported net sales | 13 billion dollar brands(1) | #1 in international spirits by retail sales value(1) | 1.4x larger than nearest international spirits competitor(1) | |||
OUR GLOBAL FOOTPRINT | ||||||
∼180 countries and territories | 200+ brands | 29,000+ employees | 110+ manufacturing sites | |||
OUR CATEGORIES AND PRICE POINTS |
#1 in
whisk(e)y
tequila
vodka
gin
liqueurs
non-alc spirits
by retail sales value(1)
(1) IWSR, 2024 (USD value)
Fiscal 25 reported net sales by price tier
Value
Standard
Premium
Super-premium
Ultra-
premium
Luxury
25%
62%
2 | Diageo Form 20-F 2025 |
CHAIR’S STATEMENT
Sir John Manzoni
Chair
Reflections on my first six months
In February 2025, I was appointed as Chair of the Diageo Board after
three and a half years as a Non-Executive Director, succeeding Javier
Ferrán. I would first like to extend my sincere thanks to Javier, who
led the Board with great dedication and stewardship.
Having been a member of the Board since 2020, I have a deep
appreciation for the legacy of the company and its iconic brands, and I
am committed to ensuring we do more to unlock the full potential of
Diageo.
Over these last six months, I have spent extensive time with our
leadership, colleagues, customers and stakeholders in almost every
corner of the organisation around the globe. I have listened to their
views and insights into Diageo, our industry and the broader
consumer environment.
From our breweries in Ireland and our tequila operations in Mexico, to
sales teams across Europe and the United States, and of course our
historic scotch distilleries – what has stood out consistently is our
unrivalled portfolio of brands, our truly global footprint, our fantastic
brand-building capabilities and our dedicated workforce.
These distinctive qualities give me confidence in our abilities over the
long-term. There is no question that current industry conditions are
challenging, but we are taking steps with urgency to ensure Diageo is
positioned to win in the short-term, and emerge stronger and more
agile when conditions improve.
STATEMENT ON SECTION 172 OF THE COMPANIES ACT 2006 | |||
Section 172 of the Companies Act 2006 requires the Directors to promote the success of the company for the benefit of the members as a whole, having regard to the interests of stakeholders in their decision-making. In making decisions, the Directors consider what is most likely to promote the success of the company for its shareholders in the long term, as well as the interests of the group’s stakeholders. The Directors understand the importance of taking into account the views of stakeholders and the impact of the company’s activities on local communities, the environment, including climate change, and the group’s reputation. | |||
 | Read more about how stakeholders were taken into account in decision-making on pages 86-90. | ||
Fiscal 25 performance
The macroeconomic and geopolitical environment continues to be
challenging for the Total Beverage Alcohol (TBA) industry, as well as
broader consumer goods, particularly in the United States and China.
Over the past two years, consumer wallets and confidence have been
under sustained pressure.
Despite this, Diageo delivered organic net sales growth in fiscal 25 of
1.7%, driven by organic volume growth of 0.9% and positive price/mix
of 0.8%. Don Julio, Guinness and Crown Royal were the standout
performers, seeing good growth in the year. Whilst there is clearly
more to do, I am pleased that we are showing organic growth ahead of
competition.
In a challenging year we kept the dividend flat, which we feel is
prudent. This brings our full year dividend to 103.48 cents per share.
This decision has been made with reference to performance trends and
short-term macroeconomic and geopolitical pressures, and does not
reflect reduced confidence in the long-term strength and growth
potential of the business. Going forward, we remain committed to a
progressive dividend policy.
This year, we launched and have made good progress on the initial
phase of Accelerate, our company-wide programme to strengthen the
business.
Accelerate is helping to drive a disciplined focus on cost management
and consistent cash delivery, as well as strengthening our operating
model, and improving commercial and digital capabilities. It is clear
that we must do more to rebuild confidence and grow quality
market share.
Whilst this is only the first phase of the programme, these changes are
a vital opportunity to make Diageo a more efficient and agile company,
delivering both more consistent growth and cash flow, as well as
stronger shareholder returns.
Consumer trends and industry fundamentals
Looking more broadly at the industry, there has been considerable
discussion on emerging new consumer trends, which our Board and
management team continue to monitor. Moderation is a theme we are
monitoring particularly closely, as well as many sub-factors, including
the impact of GLP-1s (weight-loss drugs), cannabis and Gen Z
consumption patterns.
We see moderation as a significant opportunity for Diageo, with the
inherent versatility of spirits making moderation more accessible and
appealing. Diageo’s long-term conviction that consumers want to
‘drink better, not more’ remains one of the key building blocks of our
strategy.
Our position in the non-alcoholic space is already strong. We are now
the world’s largest non-alcoholic spirits player, more than four times
bigger than any of our competitors in this space(1). This fiscal, we
expanded our portfolio with the acquisition of Ritual Beverage
Company LLC and rolled out Captain Morgan 0.0 to more markets,
complementing our existing non-alcoholic options: Guinness 0.0,
Tanqueray 0.0, Gordon's 0.0 and Seedlip.
As well as moderation, other long-standing consumer dynamics remain
significant for Diageo, including premiumisation, where we are
positioned to win across different categories and occasions. Over the
last 10 years, premium and above international spirits grew from 26%
of category value to almost 35%. The super-premium plus price-tier has
grown in value more than 50% faster than other price tiers in the
category.(1)
(1) IWSR, 2024 (by retail sales value)
3 | Diageo Form 20-F 2025 |
Whilst macroeconomic uncertainty is impacting both the timing and
pace of recovery, we continue to believe in the attractive long-term
fundamentals of our industry and in our ability to outperform the
market, underpinned by our portfolio of 13 billion-dollar brands.
Changing consumer tastes are not new for a business like Diageo and
they present us with opportunities to leverage our scale in our leading
positions, across more categories than anyone else.
Board changes for a new chapter
In July, we announced that Debra Crew had stepped down as Diageo
Chief Executive and as a Board Director. On behalf of Diageo and the
Board, I would like to thank Debra for her many contributions to
Diageo, including steering the company through the challenging
aftermath of the global pandemic and the ensuing volatility.
The Board is engaged in a comprehensive search process for Debra’s
successor, which includes consideration of internal and external
candidates, to secure the best individual to lead Diageo and to take
the company forward. Nik Jhangiani, Chief Financial Officer, has been
appointed Interim Chief Executive until a permanent appointment is
made. We are pleased that our former Chief Financial Officer, Deirdre
Mahlan, has agreed to rejoin Diageo as Interim Chief Financial Officer.
Nik joined us as Chief Financial Officer in September 2024, bringing
with him more than 30 years of finance experience gained in roles in
the United Kingdom, Europe, India, Africa and the United States. This
includes 20 years as a Chief Financial Officer, spending most of his
career in consumer and beverage industries, including within the Coca-
Cola system.
In addition, we were delighted to welcome Julie Brown in August 2024
as a Non-Executive Director and Chair of the Audit Committee,
succeeding Alan Stewart. Julie currently serves as Chief Financial Officer
of GSK plc and was previously Chief Operating and Financial Officer
and Executive Director at Burberry Group plc. She has decades of
experience in financial, commercial and strategic roles in complex
multi-national organisations within highly regulated and consumer
industries.
These additions to our Board and leadership team bring invaluable
breadth and depth of experience. Looking ahead, we will continue
to keep the composition of the Board under regular review and will add
skills and expertise as necessary and where it enhances our overall
capabilities.
Spirit of Progress
Hand-in-hand with our ambition for Diageo to be one of the best-
performing consumer products companies is our ambition to remain
highly trusted and respected across everything we do.
This is why we remain strongly committed to our 'Spirit of Progress' ESG
action plan. Over the past 12 months, the Board has been particularly
focused on the aspects where we believe we can have the most
substantial impact – positive drinking and water stewardship.
I am proud that Diageo has promoted responsible drinking since its
formation in 1997. We continue that commitment today by investing in
education programmes to discourage the harmful use of alcohol and
encouraging moderate drinking.
This includes DRINKiQ, established in 2008, to provide people with
world class information so they can make informed choices around
alcohol consumption, which is now communicated on our brand
packaging.
We also ensure our marketeers put their creative talents towards
moderation advertising. For example, during this fiscal we launched
our bold new ‘Take a Minute. Make a Plan. Never Drive Impaired’
campaign in the United States, in partnership with Mothers Against
Drunk Driving, the National Football League and Uber, to tackle
impaired driving. This campaign reached millions of consumers.
Our focus on water-stressed areas has continued to deliver strong
water-use efficiency performance with a 2.6% improvement in the
water efficiency index versus last year and a 20.6% improvement since
our 2020 baseline. We continued to replenish water in our priority
water basins, this year delivering over 3 million cubic metres of
additional capacity, collaborating with key partners to support the
communities in which we operate.
After careful review of our carbon reduction goals, we proposed new
science-based targets, reflecting both the opportunities and challenges
associated with reducing emissions, which were approved by the
Science Based Targets initiative (SBTi). These include new interim
targets for direct and value chain emissions and longer-term net zero
targets. We remain committed to a science-based approach and
delivering against stretching ambitions.
Looking ahead to fiscal 26 and beyond
In the immediate term, my focus, and that of the Board, is to appoint
the right Chief Executive, and support our leadership team to get
Diageo back to delivering consistent growth, maximising the
opportunities to strengthen the business and deliver stronger
shareholder returns.
We will continue to prioritise a culture with our customers and
consumers at the core, encouraging accountability, agility and
adaptability.
Finally, I want to thank our employees around the world. Their energy,
ideas, work ethic, passion for our brands, and commitment to our
business in what has been a particularly difficult operating
environment is deeply appreciated. I was delighted to hear that our
employee engagement levels have remained high this year, with 90% of
our employees stating they are proud to work for Diageo.
The Board and I are committed to working closely with the Executive
Committee to ensure the decisions we make today position Diageo to
thrive and deliver for shareholders. More resilient, more responsive,
and more relevant to consumers than ever before.
Sir John Manzoni
Chair
4 | Diageo Form 20-F 2025 |
CHIEF EXECUTIVE’S STATEMENT
Nik Jhangiani
Interim Chief Executive
Introduction
Having been appointed Interim Chief Executive in July 2025, I am pleased
to be sharing Diageo’s Annual Report for the 2025 fiscal year with our
shareholders and wider stakeholders. I would like to thank Debra Crew for
her significant contribution to Diageo. I know I speak for everyone at the
company in thanking her for her work over the last six years and wishing
her the very best for the future.
I joined Diageo as Chief Financial Officer in September 2024. Since then,
I have fully immersed myself into the company and have seen first-
hand that this is a business full of passionate people who want to win.
The purpose Diageo was founded with in 1997 remains the same today:
to help consumers around the world to celebrate life, every day,
everywhere. With a broad portfolio of iconic brands in many of the
largest categories in Total Beverage Alcohol (TBA), 13 billion-dollar
brands, several of which are leading in their respective categories, and
sales in nearly 180 countries, we are fortunate to have a number of
competitive advantages. However, we must do more to continue to
lead the way in premium drinks and drive growth in an evolving TBA
landscape, and deliver stronger shareholder returns.
I look forward to working in my new capacity alongside the Board of
Directors, the Executive Committee and our broader workforce in doing
this.
Delivering on guidance despite a challenging
market
Our industry backdrop has remained highly challenging in fiscal 25 –
arguably tougher than in many previous cycles.
We have continued to undertake considerable contingency planning in
recent months in relation to tariffs, and have taken action to help
mitigate their potential impact including inventory management,
supply chain optimisation and re-allocation of investments. Looking
ahead, we will continue to work on mitigating measures, and our long
track record of managing international tariffs gives us confidence in
our ability to navigate this successfully.
We continue to believe in the attractive long-term fundamentals of our
industry and in our ability to continue to outperform the market as the
TBA landscape evolves. This is consistent with the consumer data that
we have collated and continue to track across our markets, including
early findings from our recent proprietary survey of 21 markets. We
will continue to track the evolving landscape closely to understand
nuances and changes.
In fiscal 25, organic net sales grew 1.7%, including the impact of the
Cîroc transaction. Excluding this impact, Diageo's organic net sales
growth was 1.5% and organic operating profit declined by 1.0%,
consistent with our guidance.
Organic operating profit declined by 0.7% including the impact of the
Cîroc transaction, mainly due to continued investment in overheads and
partly offset by slight gross margin expansion. Net cash flow from
operating activities increased by $0.2 billion to $4.3 billion. Free cash
flow increased by $0.1 billion to $2.7 billion.
Despite the tough consumer landscape, many of our markets and
brands have delivered positive performance this year.
Tequila organic net sales were up 18% in the fiscal, with share gains
across our business. Diageo is the #1 tequila player globally and our
portfolio gained share in 94% of reported net sales in measured
markets, with strong performance particularly from Don Julio
Reposado. Building on this, Don Julio was activated at scale with Día
de los Muertos across 24 countries. Don Julio 1942 also saw its first
ever global product collaboration with DJ Peggy Gou.
Diageo remains the global leader in international whisk(e)y,(1) with
nearly 25% value share.(2) In fiscal 25, our Canadian whisky Crown Royal
grew by 3%. Johnnie Walker, while gaining share of international
whisk(e)y and scotch and recruiting consumers including through the
launch of Johnnie Walker Black Ruby, saw an organic net sales decline,
largely driven by the United States, Asia Pacific Travel Retail and
Greater China. When the consumer wallet is under pressure, scotch is
typically one of the most adversely impacted categories. In fiscal 26,
we are focused on accelerating Johnnie Walker recruitment through
both premiumisation and scaling innovation.
Guinness has continued its remarkable growth journey, with over 3.8
million new LPA+ drinkers since 2019. It became the number one beer
in football occasions in Great Britain(3) thanks to our English Premier
League partnership. It has expanded to 88 markets, and continues to
make strides in the United States, which we believe is a major long-
term opportunity. Guinness has also recruited a significant number of
new consumers in new occasions. For instance, in Ireland, Guinness is
now more popular in the summer than at Christmas; and Guinness 0.0
is playing a key role in addressing moderation, becoming Great
Britain’s number one non-alcoholic beer.(4)
We have made a number of selective disposals consistent with
our long-term strategy of deleveraging and improving balance sheet
flexibility. This includes the sale of non-core brands Pampero, Safari
and Cacique, as well as a shift to an asset-light model in many parts
of Africa, with the disposal of shareholdings in Guinness Nigeria,
Guinness Ghana and Seychelles Breweries. We also made the strategic
decision to move forward with a reduced number of investments within
Distill Ventures and to no longer bring in any new brands through the
programme. Going forward, we remain committed to actively pursuing
disposals of appropriate, non-core assets.
We have made progress this fiscal, but there is clearly more work to
do. I am focused on driving accelerated growth, sharpening our
strategy and improving the performance of our broader portfolio and
brands.
Addressing the moderation opportunity
Our strategy has long been centred on consumers drinking better, not
more, and moderation is one of the most significant long-term trends
we track. I am proud that Diageo has advocated for responsible
drinking since our formation, funding and championing consumer
education through our brands as well as specific programmes that
target underage drinking and drink-driving.
(1) Includes Scotch, Irish, US, Canadian and Japanese whiskeys
(2) IWSR, 2024 (by retail sales value)
(3) Alcovision data to March 2025
(4) IWSR, 2024 (by retail sales value)
5 | Diageo Form 20-F 2025 |
In fiscal 25, we have seen increased attention on the moderation
agenda. We view moderation as one of our greatest opportunities. The
inherent versatility of spirits makes moderation more accessible and
appealing, and we are leaders in the fast-growing non-alcoholic spirits
category.
In addition, this segment not only clearly supports moderation but
enables us to recruit consumers from beyond spirits. To extend our
leadership, in fiscal 25, we acquired Ritual Beverage Company LLC, the
#1 non-alcoholic spirits brand in the United States.
Our broader non-alcoholic portfolio also delivered strong performance
in fiscal 25, growing c.40%, with particularly strong momentum in
Guinness 0.0 which delivered double-digit net sales growth, with
standout performance in Great Britain, Ireland and the United States.
Accelerate: Strengthening Diageo for the future
This year marked the launch of Accelerate, our company-wide
initiative to build a stronger, more efficient and agile business, setting
out clear cash delivery targets and a disciplined approach to
operational excellence and cost efficiency.
The first phase of the Accelerate programme is progressing well.
Underpinning delivery of our guidance are the following targets:
1.Consistent cash delivery: Guidance remains to sustainably deliver c.
$3 billion free cash flow per annum from fiscal 26, increasing as
business performance improves. A renewed focus on cash has been
implemented across the organisation, including delivering a positive
operating leverage and reduced capex from fiscal 26.
2.Cost savings: We now expect to deliver c.$625 million cost savings
over the next three years. This includes savings from A&P
efficiencies, overheads, supply chain efficiencies and trade
investment.
3Commitment to deleveraging: We continue to expect to be well
within the leverage target range of 2.5-3.0x net debt to adjusted
EBITDA no later than fiscal 28. This will be delivered through a
combination of organic growth and positive operating leverage,
combined with tighter capital discipline, and appropriate and
selective disposals over the coming years.
As part of Accelerate, we are also evolving our operating model to give
us a competitive advantage. For example, in Europe, we have
undertaken work to unlock the region’s full potential. This includes
targeted investments and the creation of more standalone markets,
such as Iberia and Italy, to bring us closer to customers and consumers,
while driving better performance.
Leadership: Executive Committee changes this
fiscal
In March 2025, Praveen Someshwar joined Diageo as Managing Director
of Diageo India and CEO of USL, taking over from Hina Nagarajan. Prior
to this, Praveen was MD and CEO of HT Media, one of India’s largest
and best-known media groups.
After four years as Diageo India Managing Director and CEO of USL, in
March 2025, Hina Nagarajan took on the role of President of our Africa
business. Prior to her successful period leading Diageo India, Hina’s
first role in Diageo from 2018 onwards was Managing Director of Africa
Emerging Markets.
Dayalan Nayager, previously President of Diageo Africa since July 2022,
became President of Diageo Europe, taking over from John Kennedy,
retaining his role of Chief Commercial Officer. Over the last 12 years,
Dayalan has led several Diageo businesses in Europe, including Great
Britain, Ireland and France. I want to thank John for leading the
Europe business on an interim basis since January 2024 and completing
his 30-year tenure at Diageo in 2023.
Randall Ingber re-joined Diageo in June 2025, succeeding Tom Shropshire
as General Counsel, and taking over as Company Secretary from the
start of fiscal 26. Randall had a successful 19-year career within our
Legal function before serving as General Counsel and Company
Secretary at Lion Group, a leading Australasian beverage alcohol
business and one of the largest craft brewers in the United States.
I would like to thank Tom for his significant impact during his time with
Diageo. Since 2021, he has been instrumental to shaping our agenda,
advising our Board and Executive Committee on a range of topics.
Lastly, we are looking forward to Deirdre Mahlan rejoining Diageo as
our interim Chief Financial Officer later in August. Deirdre’s deep
spirits industry experience and financial expertise includes a 27-year
career with Diageo and predecessor companies, culminating in five
years as CFO and five more leading our North American business.
I am looking forward to working with the Executive Committee and the
Board as we work to deliver our commitments to shareholders for fiscal
26.
Looking ahead
We look ahead to fiscal 26 with a strong sense of purpose and resolve.
Alongside the Board and the Executive Committee, I am committed
to driving sustainable net sales growth, leveraging the strength of our
portfolio and brand-building capabilities whilst strengthening Diageo’s
commercial execution.
Our Accelerate programme is progressing at pace and is central to
creating a more agile and performance-focused organisation. All of the
actions currently underway will position us well to drive increased
growth as the market recovers and the TBA landscape evolves.
We look forward to continuing to bring our brands to life in fiscal 26,
both through superior commercial execution and via high profile
partnerships and events, such as the FIFA 2026 World Cup, for which
we are the official spirits partner in the Americas.
Lastly and most importantly, I want to thank my Diageo colleagues
around the world, whose commitment, agility, and passion for our
brands is our greatest asset and a deep source of pride.
Diageo’s ambition remains clear: to be one of the best performing,
most trusted and respected consumer products companies in the
world. With world-class brands and talent, highly effective global
consumer insights and an ongoing focus on efficiency and
effectiveness, we are confident in our ability to outperform the
market, restore Diageo to a top quartile TSR consumer company, and
provide stronger returns to shareholders.
Nik Jhangiani
Interim Chief Executive
6 | Diageo Form 20-F 2025 |
PERFORMANCE HIGHLIGHTS
Fiscal 25 financial performance
Volume (equivalent units) | Reported net sales(2) | |||||
EU230.1m | $20,245m | |||||
(2024: EU230.5m) | (2024: $20,269m) | |||||
Reported movement | —% | Reported movement | —% | |||
Organic movement(1) | 1% | Organic movement(1) | 2% | |||
Reported operating profit | Net cash from operating activities | |||||
$4,335m | $4,297m | |||||
(2024: $6,001m) | (2024: $4,105m) | |||||
Reported movement | (28)% | 2025 free cash flow(1) | $2,748m | |||
Organic movement(1) | (1)% | 2024 free cash flow(1) | $2,609m | |||
Earnings per share (eps) | Total recommended dividend per share(3) | |||||
105.9c | 103.48c | |||||
(2024: 173.2c) | (2024: 103.48c) | |||||
Reported movement | (39)% | |||||
Eps before exceptional items movement(1) | (9)% | |||||
| Visit diageo.com for more information. |
Fiscal 25 non-financial performance
Positive drinking | Inclusion and diversity | |||
2.0m | 43% | 46% | ||
(2024: 2.2m) | (2024: 44%) | (2024: 46%) | ||
Number of people educated on the dangers of underage drinking through a Diageo supported education programme | Percentage of female leaders globally | Percentage of ethnically diverse leaders globally | ||
Water efficiency – across the company | Greenhouse gas emissions | |||
(15.8)% | (18.8)% | |||
(2024:(12.9)%) | (2024: (14.4)%) | |||
Percentage change in water efficiency across the company compared to fiscal 20 baseline | Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 22 baseline | |||
GROUP | ||||
The Accelerate programme In May, we launched the first phase of Accelerate, a company-wide initiative to help us deliver consistent, sustainable performance including $3 billion in free cash flow per year, starting in fiscal 26. To achieve this we aim to: | ||||
 | ||||
Build a more simplified, integrated operating model to optimise investment and allocate resources effectively towards long- term sustainable growth. | ||||
 | ||||
Achieve c.$625 million in cost savings over three years, to enable reinvestment in future growth and improved operating leverage. | ||||
 | ||||
Return to well within our leverage ratio target of 2.5x–3.0x net debt to adjusted EBITDA no later than fiscal 28 providing a lot more flexibility, and supported by selective disposals of non-core assets. | ||||
 | Read more on page 23. | |||
(1)See definitions and reconciliation of non-GAAP measures to GAAP measures on pages 213-220.
(2)Net sales are sales less excise duties.
(3)Includes recommended final dividend of 62.98c.
Unless otherwise stated in this document, percentage movements refer to organic movements. For a definition of organic movement and reconciliation of all non-GAAP measures to GAAP measures,
see pages 213-220. Leverage ratio calculated using adjusted net debt which is the equivalent to adjusted net borrowings (net borrowings plus post-employment benefit liabilities before tax). Share
refers to value share. Percentage figures presented are reflective of a year-on-year comparison, namely 2024-2025, unless otherwise specified.
7 | Diageo Form 20-F 2025 |
Regional
performance
Our regional presidents share
their fiscal 25 perspectives.
Latin America & Caribbean | ||||
Alvaro Cardenas President, Latin America and Caribbean |  | |||
Fiscal 25 was a year of significant progress for us, during which we became stronger and more resilient, accelerating growth in the second half. We harnessed the experience of a challenging fiscal 24 and grew wiser, making a conscious decision to focus on operational excellence, enabling our leaders to identify and pursue opportunities across the region and gain market share in key battlegrounds. | ||||
$1.8bn Reported net sales | ||||
| Read more on page 30. | |||
North America | ||||
Sally Grimes Chief Executive Officer, Diageo North America |  | |||
As Diageo’s largest region, I am proud we have delivered growth this fiscal, particularly in a challenging environment. This growth has been driven by areas including tequila, in particular the strong performance of Don Julio Reposado, and our world- class brand building, including joining the 2026 FIFA World Cup as Official Spirits Supporter. We have also made significant progress in our journey towards increased marketing effectiveness and efficiency, improved commercial execution through our route-to-market transformation and supply chain resiliency. | ||||
$8.0bn Reported net sales | ||||
| Read more on pages 26-27. | |||
Africa | ||||
Hina Nagarajan President, Africa |  | |||
In Africa, we have worked hard over the last few years to put this business on a bigger growth trajectory. This is evident from our results this fiscal year, delivering reported net sales growth with double-digit growth in Ghana, South Africa and Tanzania. As one of the fastest growing regions, we believe the fundamentals are now in place for us to be a steady growth engine for Diageo, fully leveraging the investments we are making to take advantage of our outstanding portfolio. | ||||
$1.8bn Reported net sales | ||||
| Read more on page 31. | |||
Europe | ||||
Dayalan Nayager President, Europe and Chief Commercial Officer |  | |||
In fiscal 25, we have demonstrated resilience delivering positive net sales growth and expanding Diageo's market share in both spirits and total beverage alcohol. This success was significantly bolstered by Guinness which saw double-digit growth, reflecting the enduring strength of the brand. Guinness' strategic alignment with major sporting events, including the English Premier League and the Six Nations, has been key to driving these positive results, reaching new and diverse audiences. | ||||
$4.8bn Reported net sales | ||||
| Read more on page 28. | |||
Asia pacific | ||||
John O’Keeffe President, Asia Pacific, Global Travel and India |  | |||
This year has been challenging but we've been able to execute amplified strategic innovations with the launches of Johnnie Walker Blonde, Johnnie Walker Black Ruby and Smirnoff Crush RTD whilst also making structural interventions across the business, setting up the region for sustainable success moving forward. | ||||
$3.6bn Reported net sales | ||||
| Read more on page 29. | |||
8 | Diageo Form 20-F 2025 |
Investment case
A strong investment case
Attractive,
long-term
industry
fundamentals
VERSATILITY OF SPIRITS |
The versatility of spirits positions
the category well for the future
across occasions, premiumisation
and the evolution of consumer
trends including moderation and
sourcing growth from beer and
wine. Continued category
momentum comes from spirit's
cultural relevance, innovation and
consumers' desire to explore new
categories and experiences.
People are drinking better, not more |
Spirits' long-term value growth is
also driven by premiumisation as
consumers want to drink better,
not more. In the last 10 years,
premium and above spirits grew
from 26% of category value to
almost 35%. The super-premium-
plus price tier has grown in value
more than 50% faster than other
price tiers in the category. This
price tier gained c.600 basis points
of share of international spirits
retail sales value (RSV) since 2014.
(1)
Long runway for growth |
Diageo sees a substantial runway
for sustainable growth. With a
global TBA share of 4.5%,(1) we
have significant headroom for
future growth. In the United
States, our largest market, we
remain underpenetrated in key
categories with our leading
brands, presenting a strong
opportunity to recruit consumers
and drive growth.
...aligned to
our
competitive
advantages
A BROAD portfolio of iconic brands |
We are #1 in international
spirits, the #3 player in TBA
and have 13 billion-dollar
brands.(1) We have a diverse
portfolio of brands, providing a
broad range of choices for
consumers across occasions.
A diversified geographical footprint |
Our geographic footprint gives us
access to consumers in the
world's largest markets, such as
the United States, as well as the
vibrant markets of India and
China. Our regional breadth
allows us to flex prioritisation,
investment and activation,
increasing our ability to capture
growth and reduces dependency
on any single region or market.
A leading portfolio across price points |
Our portfolio is spread broadly
across the pricing ladder – across
and within categories, providing
choice in most
economic environments.
Diverse and engaged talent |
Diageo has an entrepreneurial,
talented and diverse workforce of
more than 29,000 people globally
and are led by a highly
experienced Executive
Committee. Our Executive
Committee combines home-grown
talent with externally recruited
leaders who bring invaluable
market experience and fresh
perspectives.
...as we
execute with
focus
RESHAPED PRIORITIES SUPPORTED BY ACCELERATE |
In fiscal 25, we introduced our
reshaped priorities to drive
improved performance:
delivering sustainable top-line
growth, increasing operating
leverage, maximising cash flow
and optimising returns. These
strategic outcomes are being
embedded across the business,
with further opportunity. We are
moving at pace and this is
underpinned by the work
underway on our Accelerate
programme.
We launched the first phase of
Accelerate in May 2025 to build
a more agile operating model,
with clear cash delivery targets
and a disciplined focus on
operational excellence and cost
efficiency. These changes are
creating a stronger platform for
optimising investment and
enabling more effective
resource allocation towards
long-term growth. While the
programme has defined financial
targets, it is equally focused on
enabling better, faster growth.
It is supported by operating
model changes designed to
enhance Diageo’s global agility
— leveraging scale more
effectively, sharpening
investment priorities, and
accelerating decision-making.
...to position
Diageo for
long-term
growth.
Attractive financial foundations |
Driving long-term sustainable
growth is a strategic priority for
Diageo. We are committed to
gaining quality market share in a
disciplined and sustainable
manner. Diageo maintains an
attractive margin profile, with
further room for expansion. Our
business is highly cash generative,
enabling us to reinvest behind our
brands to fuel future growth. As
Accelerate progresses, this will be
further enhanced through
consistency of cash delivery and
the ability to reinvest and allocate
resources behind growth
opportunities. This disciplined
approach strengthens our
resilience and agility in a dynamic
global environment.
Focused strategy |
Diageo’s focused strategy is
centred on delivering growth by
maximising the potential of our
advantaged portfolio. We are
making meaningful progress in
an evolving consumer landscape
and challenging macroeconomic
environment, by concentrating
on what we can manage and
control. While our strategic
outcomes remain consistent, we
are sharpening their application
and pace of execution. This is
enabling us to prioritise
resources toward the most
attractive growth opportunities,
refine our portfolio choices and
position the business to emerge
stronger.
(1) IWSR, 2024 (by retail sales value)
9 | Diageo Form 20-F 2025 |
Market dynamics
Market dynamics
Established
tailwinds
Growing LPA+ population |
Rising middle class |
Premiumisation |
Spirits gaining share of TBA |
Spirits household penetration |
Potential
headwinds
Pressured consumer wallet |
Cannabis |
Weight-loss drugs (GLP-1s) |
Gen Z(1)
US household penetration
F20 | F24 | ||
TBA | 83% |  | 88% |
Spirits | 49% | | 55% |
(1) Numerator
(2) Oxford Economics
(3) NielsenIQ
(4) Numerator
(5) US Bureau of Labor Statistics
(6) IWSR, Bevtrac 2025
(7) IWSR, Oxford Economics
Gen z behaviours |
Moderation |
We believe that
near-term industry
pressures are largely
cyclical and
macroeconomic driven.
We continue
to believe in the
attractive long-term
fundamentals of
our industry in an
evolving TBA landscape.
Long-term fundamentals
remain compelling. By 2035,
600 million new legal-
purchase-age consumers will
enter the market,(2) with Gen Z
becoming the first 2-billion-
strong generation.(3)
Gen Z penetration in spirits is
increasing in the United States,
primarily driven by spirits-
based ready-to-drink products
and tequila.(4) Across our key
markets, their engagement
with spirits is higher than the
average for the total drinking
population, indicating they are
entering the category earlier.(4)
They also allocate a similar
proportion of their annual
expenditure on alcohol as
other generations.(5) Recent
data shows an increase in LPA+
Gen Z consumption compared
to the levels in 2023.(6)
Our recent US research
indicates that cannabis and
GLP-1s have not yet shown
significant disruption to spirits
consumption, and we continue
to monitor them closely.
Moderation is a long-term
consumer trend, where we see
consumers choosing to drink
better not more. Between
2009-2024, international spirits
(excluding baijiu and RTDs) per
capita consumption has
remained broadly stable
(2009-2024 CAGR -0.4%), even
as total beverage alcohol
declined by 1.2%.(7) This
highlights the strength of the
spirits category and the
category's resilience in a
moderating environment;
gaining share from beer
and wine.
Moderation presents a
significant opportunity for
Diageo, the inherent versatility
of spirits makes moderation
more accessible and appealing.
We have a broad portfolio and
leadership in non-alcoholic
innovation, including Seedlip,
Ritual Zero Proof, Tanqueray
0.0, Gordon's 0.0 and Guinness
0.0. These offerings
complement our core
portfolio, support responsible
choices and position Diageo
to help shape the future
of moderation.
10 | Diageo Form 20-F 2025 |
OUR GROWTH AMBITION
Progressing our
Growth Ambition
11 | Diageo Form 20-F 2025 |
OUR STRATEGY
OUR STRATEGY |
Unleash the power
of our brands and
portfolio…
Whisk(e)y and tequila
Our focus is to maintain our undisputed
number one value position in both the
whisk(e)y and tequila categories. To achieve
this, we are sharpening our focus on a clear
and distinctive portfolio participation
strategy across price tiers and consumption
occasions. For example, we are accelerating
recruitment into Johnnie Walker by scaling
innovation and extending the brand into new
occasions through Johnnie Walker Blonde and
Johnnie Walker Black Ruby.
Winning local portfolio
Developing a winning local portfolio enables
us to serve culturally relevant tastes and
consumption moments with authenticity.
Scaling Buchanan's Pineapple in Mexico
exemplifies this approach, infusing
Buchanan's with local flavour preferences
inspired by the popular 'Buchanita' serve. This
has successfully expanded the brand's appeal,
attracting new customers and deepening
engagement with existing ones.
Guinness growth
Guinness remains a key strategic growth
priority for us, underpinned by consistent
double-digit net sales growth and strong
brand equity in core markets such as Great
Britain and Ireland. The brand continues to
broaden its consumer base, with innovations
such as Guinness 0.0 enhancing relevance
among more audiences. Strategic
partnerships with major global sporting
platforms and an efficient asset-light
production model enable scalable and
sustainable growth.
…to lead and
shape consumer
trends…
 | Cocktail culture We are shaping global cocktail culture, leveraging our premium portfolio and platforms like World Class, our bartending competition. |
 | Moderation We are well placed to serve many moderation strategies including no- and lower-alcohol offerings. Many consumers prefer to drink better, not more, which we actively champion. |
 | Exploration We are enabling greater discovery and personalisation through digital tools like 'What's Your Whisky', using AI to recommend serves. |
 | Convenience To meet demand for accessible, high- quality offerings, we have expanded our ready-to-drink portfolio with exciting innovations including Casamigos Margarita. |
 | With food We continue to unlock opportunities in food-led occasions by suggesting ideal pairings through digital tools like 'What's Your Cocktail'. |
 | Luxury Diageo Luxury Group (read more on page 15) focuses on accelerating growth in the super-premium segment through exceptional brands such as Johnnie Walker Blue Label and Don Julio 1942. |
…executed
with operational
excellence
Our strategic priorities are underpinned by:
1.Evolving brand building muscle: to
optimise effectiveness of our A&P by
prioritising resource allocation into the
right brands, in the right markets, through
the most impactful channels.
2.Enhancing commercial excellence: by
strengthening execution partnerships,
enhancing end-to-end brand experiences
and embedding digital innovation across
our merchandising and sales processes.
3.Accelerated productivity: by enhancing
Revenue Growth Management capabilities
and supply chain excellence.
To improve our operational efficiency, we
have introduced the first phase of our
Accelerate programme. This includes the
following goals:
1.Consistent cash delivery: we expect to
sustainably deliver c.$3bn free cash flow
per annum from fiscal 26, increasing as
business performance improves.
2.Cost savings: c.$625m cost savings
programme over three years which will
enable both reinvestment in future growth
and improved operating leverage.
3.Commitment to deleveraging: we expect
to be well within the leverage target range
of 2.5-3.0x net debt to adjusted EBITDA no
later than fiscal 28, providing us with a lot
more flexibility. This will be delivered
through a combination of organic growth
and positive operating leverage, combined
with tighter capital discipline, and
appropriate and selective disposals over
the coming years.
12 | Diageo Form 20-F 2025 |
Our strategy continued
Our strategy in action
WHISK(E)Y and tequila |
Don Julio Presents 194GOU
This year, Don Julio 1942 teamed up with renowned DJ, producer and cultural
powerhouse Peggy Gou to release its first ever collaborative limited-time
product – a special edition bottle called 194구 ('194Gou'). The new bottle is a
striking take on the luxury Don Julio 1942 bottle, fusing heritage with nightlife
and music culture.
The launch was an example of executing on our commitment to take tequila
around the world. We hosted exclusive pop ups, after parties, and retail
takeovers in cities including New York City, London, Milan and Seoul.
Events featured bespoke Don Julio 1942 cocktails, surprise DJ sets, Don Julio
194구 merchandise and bottle signings. This went hand-in-hand with a
culture-first social campaign, which has received more than 52 million views,(1)
and allowed fans to follow the launch in real time.
This first of its kind collaboration has been successful with global consumers.
Don Julio 194구 sold out at events in the United States, Asia Pacific and
Europe, whilst dedicated retail builds inside airports in Europe and the United
Arab Emirates are experiencing a significant sales increase versus Don Julio
1942 sales for the same period last year.
The success of this partnership has ensured the brand is culturally relevant
with consumers, whilst also driving halo demand for Don Julio across the
globe.
(1) GALE (the campaign PR agency)
WINNING LOCAL PORTFOLIO |
The Sweeter Side of Johnnie Walker
Black Label
Johnnie Walker has reimagined the whisky scene in Latin America and
Caribbean (LAC) with the launch of Johnnie Walker Black Ruby – a sweeter
take on Johnnie Walker Black Label, created to elevate classic cocktails.
Countering preconceptions about the ‘typical scotch drinker’, the team saw
this as opportunity to evolve the flavour of the product, opening it up to a
new generation.
Given the target market, the launch strategy was focused on local events
popular with younger LPA+ consumers including Mexico Fashion Week and
Puerto Rico Cocktail Week. Bartenders were briefed to use Johnnie Walker
Black Ruby to put a twist on classic cocktails.
Across the board, Johnnie Walker Black Ruby has successfully recruited
consumers in LAC back into scotch through exploration, sourcing 72% of volume
from outside of scotch (2) 73% of Mexican consumers who have tried Black Ruby
have repeated purchase.(2) This expansion of the Johnnie Walker family has
overturned whisky stereotypes in LAC, demonstrating the part the brand can
play in contemporary nightlife. And, given the success of the launch, we are
starting the global roll out of Johnnie Walker Black Ruby, bringing this new take
on our classic scotch worldwide.
(2) Kantar IDD Mexico 2024 (claimed data)
13 | Diageo Form 20-F 2025 |
The Chicago Plumbers Union Local 130, with ongoing support from Guinness, has been responsible
for dyeing the Chicago River green for the city's St. Patrick's Day since 1962. They use an eco-friendly
vegetable-based dye, turning the river into a shimmering emerald tribute. This ritual has become
more than a tradition—it’s the heartbeat of the city’s celebration. And when the work is done, they
gather with a pint of Guinness, reflecting on the legacy they keep alive, one green wave at a time.
guinness GROWTH |
Guinness' Lovely Day
in the United States
It is an exciting time for Guinness in the United
States. In the second half of fiscal 25, it was the
fastest growing major beer brand in the on-
trade by volume,(1) and the number one draft
beer in major metropolitan areas like Boston
and New York.(1)
We have worked strategically to reach this level
of success, but there is still a significant runway
for growth – a cornerstone of building on the
momentum this fiscal is the 'A Lovely Day' US
Campaign, launched in April 2025.
The campaign, which has received 474 million(2)
impressions and counting, merges the success of
the iconic 'Lovely Day for a Guinness' tag line,
with a uniquely American perspective, sharing
50 real stories illustrating the role of Guinness
and Guinness 0.0 in celebrations.
From Michigan ice fishermen to a Louisiana brass
band, to the roller-skating dads of Pennsylvania,
these stories capture both the American spirit
and the communion of Guinness.
Hand-in-hand with the campaign, we created a
limited-edition Guinness Draught Stout can,
tapping into the consumer trend of
convenience. The design reimagines the classic
Lovely Day toucan art with a modern, American
twist.
Market testing has found that this campaign has
resonated strongest with younger LPA+ beer
drinkers, our target audience for expansion,
with one-third expressing intent to purchase
Guinness after viewing the campaign.
Whilst this is just the foundation of our plans to
capture further growth, the campaign is
meaningfully building brand equity and driving
household penetration with key consumers.
(1) Nielsen CGA L12Wks ending 17 May 2025
(2) Taylor (the campaign PR agency)
| Find out more at www.diageo.com |
Consumer trends key | |||||
| Cocktail culture | | Exploration | | With food |
| Moderation | | Convenience | | Luxury |
14 | Diageo Form 20-F 2025 |
our strategy continued
OUR BUSINESS MODEL |
Operational excellence runs through our business model
What we do | 1. We source | 2. We innovate | 3. We make | ||
From smallholder farmers in Africa and Mexico, to multinational companies, we work with our suppliers to procure high-quality raw materials and services, with sustainability in mind. Where it is right for our business, we grow and source locally. | Using our deep understanding of consumer trends and socialising occasions, we focus on driving sustainable innovation that provides new products and experiences for consumers; be that a non- alcoholic option, an offering that suits convenience or improving the on-trade experience. | We distil, brew and bottle our spirits and beer brands through a globally co- ordinated supply operation, working to the highest quality and manufacturing standards. We prioritise using local production where it is right for our business. |
Fiscal 25 progress
This fiscal, we have developed,
established and executed
substantial projects as we strive to
continually improve on our track
record of operational excellence.
Commercial excellence: Stepping up our route-to-market and commercial execution in the United States | |||
This fiscal, our spirits organisation in the United States has undergone its biggest transformation in over a decade, evolving how we work with our distributors to achieve sustainable growth. Over the past year, we have collaborated with our partners to add new brand building and sales roles in key geographies. These roles are dedicated to our key categories, whisk(e)y and tequila, and the outlets with the greatest potential for growth. Our teams are equipped with training, tools and insights to grow these categories for the retailer, while increasing Diageo’s share. We also launched the Academy for Beverage Leadership (ABL) to provide foundational training for business development managers at Diageo and our distributors. Upon completion, sales leaders have practical skills to help customers grow their whisk(e)y and tequila businesses. | |||
15 | Diageo Form 20-F 2025 |
Creating value
Our business model allows us to create
value across three main areas:
Financial – for our investors
Human – for our people, suppliers,
customers and consumers
Social – for our communities
Our stakeholders | |||||||
 | Our people |  | Customers |  | Communities |  | Government and regulators |
 | Consumers |  | Suppliers |  | Investors | ||
| Read more on pages 86-89. | ||||||
4. We transport | 5. We sell to customers | 6. We market to consumers | 7. We help consumers celebrate | |||
We move our products to where they need to be in the world; be that from a local distillery in market or shipping scotch. | We grow by working closely with our customers. Our global and local sales teams use our data, digital tools and insights to extend our sales reach, improve our execution and help generate value for us and for our customers. When our customers grow, we grow too. | We invest in world-class marketing to build vibrant brands that resonate with our consumers. To do this responsibly, we have our rigorous Diageo Marketing Code which guides everything we do. | We continually evolve our data tools to understand consumers’ attitudes and motivations. We convert this information into insights which enable us to respond with agility to our consumers’ interests and preferences. |
Accelerated productivity: Digitising our supply chain through SIP | |||
This fiscal, we have made significant progress digitising our supply chain from grain to glass with the deployment of our Scotch Intelligence Platform (SIP). This includes: •Optimising pre-bottling allocations – maximising the value of our premium whiskies through a digital marketplace. •Maturation performance – using data and AI to target the ‘angels' share’ and improve maturation yield. •Liquid logistics – synchronising our cask-to-bottle flows of wood and whisky. This platform has measurable benefits for Diageo, augmenting the craft of our scotch category and improving our productivity and performance. | |||
Evolve brand building muscle: Creating the Diageo Luxury Group | |||
In November, we established the Diageo Luxury Group, bringing together our most premium offerings within spirits, brand homes and private client experiences. The Diageo Luxury Group unites a premium brand portfolio, as we aim to become the number one luxury spirits company in the world. It is responsible for Diageo's luxury strategy and accelerating the growth of brands that retail at $100 and above, as well as leading luxury experiences and an extensive network of expert craftspeople. Since its creation, product launches have included Johnnie Walker Ice Chalet, The Twelve by Casks of Distinction, Talisker 45-Year-Old and Johnnie Walker Vault x Olivier Rousteing. | |||
16 | Diageo Form 20-F 2025 |
OUR PERFORMANCE
Monitoring performance and progress
Reported measures |
Net sales growth (%) | Operating profit growth (%) | Basic earnings per share (cents) |
Definition | ||||
Sales growth after deducting excise duties. | Operating profit growth, including exceptional operating items. | Profit attributable to equity shareholders of the parent company, divided by the weighted average number of shares in issue. |
Non-GAAP measures |
Organic net sales growth (%)(1) | Organic operating profit growth (%)(1) | Earnings per share before exceptional items (cents)(1) | ||||||||
1.7% |  |  | (0.7)% | | | 164.2 | | | ||
Definition | |||||
Sales growth after deducting excise duties, excluding the impact of exchange rate movements, hyperinflation adjustment and acquisitions and disposals. | Organic operating profit growth is calculated on a constant currency basis, excluding the impact of exceptional items, certain fair value remeasurement, hyperinflation adjustment and acquisitions and disposals. | Profit before exceptional items attributable to equity shareholders of the parent company, divided by the weighted average number of shares in issue. | |||
Why we measure | |||||
This measure reflects our delivery of sustainable top-line growth. Organic net sales growth is the result of the choices we make between categories and market participation, and reflects Diageo's ability to build brand equity, increase prices and grow market share. | The movement in operating profit measures our delivery of increasing operating leverage and optimising returns. Consistent operating profit growth is a business imperative, driven by investment choices, our focus on driving out costs across the business and improving mix. | Earnings per share reflects the profitability of the business and how effectively we finance our balance sheet. Eps measures our delivery of optimised returns over time. | |||
Performance | |||||
Reported net sales of $20.2 billion declined 0.1% due to unfavourable foreign exchange of (0.6)% and acquisition and disposal adjustments of (1.1)%, partially offset by hyperinflation adjustments and organic net sales growth. Organic net sales growth of 1.7% was driven by organic volume growth of 0.9% and positive price/mix of 0.8%. Excluding the impact of the Cîroc transaction, organic net sales growth was 1.5%, with 0.8% volume growth and 0.7% price/mix.(1) | Reported operating profit declined 27.8% and reported operating profit margin declined 819bps, primarily due to exceptional impairment and restructuring costs, unfavourable foreign exchange and a decline in organic operating margin. Organic operating profit declined by 0.7%; organic operating profit margin declined 68bps, mainly due to continued investment in overheads, partly offset by slight gross margin expansion. Excluding the impact of the Cîroc transaction,(1) organic operating profit declined 1.0%, in line with prior guidance, and organic operating margin declined 70bps. | Basic EPS decreased 67.3 cents, mainly driven by higher impairment charge in fiscal 25, a significantly lower Moët Hennessy contribution and unfavourable foreign exchange. Basic EPS before exceptional items declined 8.6% from 179.6 cents to 164.2 cents, primarily driven by a significantly lower associate income from Moët Hennessy and unfavourable foreign exchange. |
| Read more on page 21. | | Read more on page 21. | | Read more on page 21. |
(1) On 7 April 2025, Diageo entered into a strategic partnership with Main Street Advisors. As part of the transaction, Diageo transferred its majority ownership interest in Cîroc in North America in
exchange for interest in Lobos 1707 Tequila globally. The transaction was completed in June 2025. As a result, Cîroc in North America is no longer consolidated in the group’s financial statements
and is now accounted for as an investment in associate.
17 | Diageo Form 20-F 2025 |
Reported measures |
Net cash from operating activities ($ million) | Return on closing net assets (%) | | Remuneration | ||||||
Key Performance Indicators, which are
included within incentive plans to assess
performance for Directors' remuneration
purposes. More details can be found from
page 108.
| KPI: Key Performance Indicator |
Definition | |||
Net cash from operating activities comprises the net cash flow from operating activities as disclosed on the face of the consolidated statement of cash flows. | Profit for the year divided by net assets at the end of the financial year. |
Non-GAAP measures |
Free cash flow ($ million)(1),(2) | Return on average invested capital (ROIC) (%) | Total shareholder return (TSR) (%) | ||||||||
2,748 | | | 13.7% | | (24)% | | | |||
Definition | |||||
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash expenditure paid for property, plant and equipment, and computer software. | Profit before finance charges and exceptional items attributable to equity shareholders divided by average invested capital. Invested capital comprises net assets excluding net post-employment benefit assets/liabilities, net borrowings and non-controlling interests. | Percentage growth in the value of a Diageo share (assuming all dividends and capital distributions are re-invested). | |||
Why we measure | |||||
Free cash flow is a key indicator of the financial management of the business. Free cash flow reflects the delivery of cash generated by the business to fund payments to our shareholders and future growth. | ROIC is used by management to assess the return obtained from the group’s asset base. Over time, ROIC reflects optimised returns, as the returns Diageo generates from its asset base are both reinvested in the business and used to generate returns for investors through dividends and return of capital programmes. | Diageo’s directors have a fiduciary responsibility to maximise long-term value for shareholders. TSR measures reflects the returns Diageo has delivered to investors in the year and over time. We also monitor our relative TSR performance against our peers. | |||
Performance | |||||
Net cash from operating activities was $4,297 million, an increase of $192 million compared to fiscal 24. Free cash flow increased by $139 million to $2,748 million. Free cash flow growth was driven by solid working capital management including higher creditors and lower maturing stock movement year on year. Net capital expenditure in fiscal 25 was $1,549 million (fiscal 24: $1,496 million) to support supply capacity expansion projects, North America supply chain transformation and furthering digital capability. | ROIC was 13.7% (fiscal 24: 15.8%) with the decrease driven mainly by lower associate income from Moët Hennessy and unfavourable exchange. | TSR was down 24% over the past 12 months driven by the lower year-on-year share price. |
| Read more on page 22. | | Read more on page 22. |
(1)Organic net sales growth, organic operating profit growth, earnings per share before exceptional items, free cash flow and return on average invested capital are non-GAAP measures. See
definitions and reconciliation of non-GAAP measures to GAAP measures on pages 213-220.
(2)For reward purposes this measure is further adjusted for the impact of exchange rates, hyperinflation adjustment and other factors not controlled by management, to ensure focus on our
underlying performance drivers.
18 | Diageo Form 20-F 2025 |
OUR PERFORMANCE continued
Non-financial performance |
Positive drinking | Employee engagement index | Inclusion and diversity | ||||||||
| | 83% | | | | |||||
Number of people educated on the dangers of underage drinking through a Diageo supported education programme | 2.0m |
(2024: 2.2m) | |
Total to date: | |
8.2m |
Percentage of female leaders globally | 43% |
(2024: 44%) | |
Percentage of ethnically diverse leaders globally | 46% |
(2024: 46%) |
Target | Ambition | ||||
10 million people educated on the dangers of underage drinking by 2030, starting from fiscal 18. | 50% female and 45% ethnically diverse global leader representation by 2030 | ||||
Definition | |||||
Number of people educated on the dangers of underage drinking through a Diageo supported education programme. | Measured through our Your Voice survey; includes metrics for employee satisfaction, advocacy and pride. | The percentage of women and the percentage of ethnically diverse individuals who are in Diageo leadership roles globally. | |||
Why we measure | |||||
We want to change the way the world drinks for the better by promoting moderation and addressing the harmful use of alcohol. We build credibility and trust by transparently reporting the total number of people educated on the dangers of underage drinking. This figure also demonstrates our commitment to engaging people on the dangers of harmful alcohol use. | Employee engagement releases the full potential of our people and our business, and it’s a key enabler to our performance. The survey allows us to measure the extent to which employees believe we are living our values and is one of the measures of our culture. Reflecting on the results of our employee engagement level and taking action on important areas where needed each year helps us build credibility and trust with our people. | Building an inclusive and diverse culture helps drive commercial performance and ensures we access the best talent. Transparently reporting the gender and ethnic diversity of our leadership cohort reflects our commitment to consistent value creation through our diverse workforce. | |||
Performance | |||||
Globally, we educated 2.0m young people about the dangers of underage drinking, with strong performance again in Latin America and Caribbean (LAC). | This year 86% of our people completed our Your Voice survey. 83% were identified as highly engaged. 90% declared themselves proud to work for Diageo, 83% would recommend Diageo as a great place to work and 76% were extremely satisfied with Diageo as a place to work. | This year, 43% of our leadership roles were held by women and 46% of our leaders were ethnically diverse. |
| Read more on pages 44-45. | | Read more on pages 40-41. | | Read more on pages 58-59. |
19 | Diageo Form 20-F 2025 |
Non-financial performance |
Water efficiency(1) | Scope 1 and 2 greenhouse gas emissions(1) | ||||||
Change vs baseline year | Change vs baseline year | ||||||
(15.8)% | | | (18.8)% | | | ||
Target | Target | ||
30% reduction versus 2020 baseline year by 2030 | 50% reduction versus 2022 baseline year by 2030 | ||
Definition | |||
Percentage change in the water efficiency index across the company compared to fiscal 20 baseline. | Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 22 baseline. | ||
Why we measure | |||
Our water efficiency programme is critical to addressing water security, particularly in water-stressed areas. In addition to preserving our licence to operate, minimising water use within our own operations underpins our commitment to delivering long-term value by future-proofing our business against the impacts of a changing climate. It also helps to ensure this precious resource can continue to be shared with the communities we live and work amongst. | Mitigating our impact on climate change is a business imperative. Reporting on our efforts to reduce Scope 1 and 2 greenhouse gas emissions demonstrates our commitment to reducing our contribution to global warming and helps build credibility and trust. This is an important area for our business and external stakeholders, supporting our commitment to consistent value creation by future-proofing our business. | ||
Performance | |||
This year, our water efficiency across the company improved in total by 15.8% since our fiscal 20 baseline. The most significant drivers of the strong performance in fiscal 25 were the continuous improvement initiatives delivered in our East Africa beer sites, Scotland distilleries and our Runcorn and St. James's Gate beer sites. | Our Scope 1 and 2 greenhouse gas emissions reduced in total by 18.8% from our fiscal 22 baseline. The main drivers contributing to the lower emissions this year are the increased use of liquid biofuel at our Scotland distilleries and energy efficiency improvements at our distilleries, breweries and packaging sites in our biggest energy consuming markets. |
| Read more on pages 52-53. | | Read more on pages 53-55. |
(1)In accordance with Diageo’s environmental reporting methodologies and, where relevant, WRI/WBCSD GHG Protocol; data for the baseline year and for the intervening period up to the end of
last financial year has been restated where relevant.
20 | Diageo Form 20-F 2025 |
SUMMARY FINANCIAL REVIEW
Summary Financial
Review
Reported net
sales growth
(0.1)%
Reported operating
profit growth
(27.8)%
Reported operating
profit margin
21.4%
Net cash from
operating activities
$4,297m
Return on closing
net assets
19.3%
Basic earnings
per share
105.9c
Total shareholder
return
(24)%
Organic net
sales growth(1)
1.7%
Organic operating
profit growth(1)
(0.7)%
Organic operating
profit margin(1)
28.0%
Free cash
flow(1)
$2,748m
Return on average
invested capital(1)
13.7%
Earnings per share before
exceptional items(1)
164.2c
(1)Organic net sales growth, organic operating profit growth, organic operating profit
margin, earnings per share before exceptional items, free cash flow and return on
average invested capital are non-GAAP measures. See definitions and reconciliation of
non-GAAP measures to GAAP measures on pages 213-220.
21 | Diageo Form 20-F 2025 |
Net sales
Reported net sales for the full year were down 0.1% to $20,245 million
(fiscal 24: $20,269 million) and were impacted by unfavourable foreign
exchange of $119 million (-0.6%) and acquisition and disposal
adjustments reduced this by $229 million (-1.1%), partially offset by
hyperinflation adjustments of $53 million.
Organic net sales grew $338 million or 1.7% with organic growth in four
of the five regions, including in North America, where Don Julio,
Guinness and Crown Royal were the standout performers. Growth was
supported by positive price/mix of 0.8% and 0.9% volume growth.
Volume increased in three of the five regions, with continued pressure
in North America and Europe. There was positive price/mix in four of
the five regions, but negative price/mix in Asia Pacific driven by
consumer downtrading in South East Asia and China and unfavourable
market mix with strong volume performance in India. The four
percentage points of phasing which favourably benefitted Q3 organic
net sales growth rate mostly reversed in Q4 fiscal 25.
Excluding the impact of the Cîroc transaction organic net sales growth
was 1.5%, with 0.8% volume and 0.7% price/mix.(1)
Cost of sales
Cost of sales broadly flat on a reported basis at $7,997 million (fiscal
24: $8,014 million), the positive impact of productivity savings offset
moderating inflationary pressure.
Marketing
Marketing investment declined by 0.8% on a reported basis to $3,662
million (fiscal 2024: $3,691 million), reflecting a reinvestment rate of
18.1% (fiscal 2024: 18.2%). On an organic basis, investment was flat as
we strategically reshaped our A&P spend across regions, prioritising
high-growth opportunities and demonstrating agility in resource
allocation with a focus on reducing development spend. Development
costs were reduced to 14% in fiscal 25 (fiscal 24: 21%), this reduction
was driven by the accelerated adoption of AI-enabled content creation
(Virtual Content Studios) and operational model changes, including the
launch of Agile Brand Communities and Conscious Create teams, which
encourage improved co-creation and collaboration.
Other operating items
Other operating items before exceptional items increased by 10% to
$2,882 million (fiscal 24: $2,619 million), largely driven by higher staff
costs, including incentives and wage cost inflation, as well as strategic
investments in RTM changes in the United States.
Exceptional operating items increased to $1,369 million (fiscal 24: $56
million (exceptional operating income)) largely driven by impairment,
including $458 million in respect of Diageo's investment in various
Distill Ventures business, as a result of the strategic decision to exit
Distill Ventures, and $231 million in respect of Aviation American Gin.
Exceptional operating items also included restructuring costs of $225
million relating to charges for the Accelerate programme and supply
chain agility programme. The distribution model change in France
resulted in an exceptional operating charge of $145 million.
Operating profit
Organic operating profit declined by 0.7%, with operating margin down
68bps organically, mainly due to higher overheads partly offset by a
slight improvement in gross margin. Reported operating profit declined
27.8% and reported operating profit margin declined 819bps, primarily
due to exceptional costs including impairment and restructuring costs,
unfavourable foreign exchange and a lower operating margin.
Excluding the impact of the Cîroc transaction, organic operating profit
and operating margin declined 1.0% and 70bps respectively.(1)
Non-operating exceptional items
In the year ended 30 June 2025, exceptional non-operating items were
a loss of $220 million, mainly driven by the loss on the sale of Guinness
Nigeria PLC ($125 million) and loss on the prospective sale of Guinness
Ghana Breweries PLC ($114 million).
Net finance charges
Net finance costs were $771 million (fiscal 24: $885 million), with the
decrease driven by the capitalisation of borrowing costs on capital
expenditure and the reduced costs of cash management swaps.
Taxation
The income tax charge of $999 million (fiscal 24: $1,294 million)
represented an effective tax rate of 29.9% (fiscal 24: 25.6%). The
effective tax rate before exceptional items was 24.9% (fiscal 24:
25.1%).
Share of after tax results of associates and joint
ventures
Share of after tax results of associates and joint ventures declined by
53.4% to $193 million (fiscal 24: $414 million), largely due to a
significantly lower Moët Hennessy contribution.
Profit attributable to non-controlling interest
Profit attributable to non-controlling interests was $184 million (fiscal
24: $296 million), driven mainly by the lapping of exceptional items in
Shui Jing Fang in the prior year.
Basic earnings per share (EPS)
Basic EPS before exceptional items declined 8.6% from 179.6 cents to
164.2 cents, primarily driven by a significantly lower associate income
from Moët Hennessy and unfavourable foreign exchange. This was
calculated using a weighted average number of shares in issue
excluding own shares of 2,222 million (fiscal 24: 2,234 million).
(1) On 7 April 2025, Diageo entered into a strategic partnership with Main Street Advisors. As part of the
transaction, Diageo transferred its majority ownership interest in Cîroc in North America in exchange for
interest in Lobos 1707 Tequila globally. The transaction was completed in June 2025. As a result, Cîroc in
North America is no longer consolidated in the group’s financial statements and is now accounted for as an
investment in associate.
22 | Diageo Form 20-F 2025 |
SUMMARY FINANCIAL REVIEW continued
Net cash flow from operating activities and free
cash flow
Net cash from operating activities was $4,297 million, an increase of
$192 million compared to fiscal 24. Free cash flow increased by $139
million to $2,748 million.
Free cash flow growth was driven by solid working capital management
including higher creditors and lower maturing stock movement year on
year.
Net capital expenditure in fiscal 25 was $1,549 million (fiscal 24:
$1,496 million) to support supply capacity expansion projects, North
America supply chain transformation and furthering digital capability.
Return on average invested capital (ROIC)
ROIC was 13.7% (fiscal 24: 15.8%) with the decrease driven mainly by
lower associate income from Moët Hennessy and unfavourable exchange.
Net debt
As at 30 June 2025, the group's net debt was $21,854 million (fiscal 24:
$21,017 million), the increase was mainly due to foreign exchange
movement on non-US dollar debt.
Tariff update Update on implications of tariff implementation and developments We have continued to undertake considerable contingency planning in recent months and are focused on what we can control in relation to tariffs. Assuming the current 10% tariff remains on UK and 15% European imports into the US, that Mexican and Canadian spirits imports into the US remain exempt under the United States - Mexico - Canada Agreement (USMCA), and that there are no other changes to tariffs, the unmitigated impact of these tariffs is estimated to be c.$200 million on an annualised basis. As a result of our extensive supply chain and broad and advantaged portfolio, we have undertaken a number of actions to help mitigate the potential impact including inventory management, supply chain optimisation and re-allocation of investments. Given the actions to date and before any pricing, we expect to be able to mitigate around half of this impact on operating profit on an ongoing basis. Looking ahead, we will continue to work on measures to mitigate this impact further. Our long track record of managing international tariffs gives us confidence in our ability to navigate this successfully. The expected impact of tariffs on the above basis for fiscal 26 is included in our guidance. | ||
23 | Diageo Form 20-F 2025 |
Reshaped priorities for sustainable growth |
Reshaped priorities to
Deliver sustainable top-line growth |
Increase operating leverage |
deliver sustainable
long-term performance
| Read more from page 10. |
Optimise returns |
Maximise cash flow |
Accelerate programme |
Accelerate: to deliver
sustainable
consistent
performance, first
phase underway
$3bn
Consistent cash delivery c.$3bn
free cash flow per annum from
fiscal 26, increasing as
performance improves
Operating model
More agile global
operating model to
optimise investment and
allocate resources
effectively towards
long-term sustainable
growth
Cost savings target
c.$625m
in cost savings
programme, evenly over
3 years, to enable
reinvestment in future
growth and improved
operating leverage
Deleveraging
To be well within
leverage target range of
2.5–3.0x net debt to
adjusted EBITDA no later
than fiscal 28 providing a
lot more financial
flexibility, and supported
by selective disposals
We aim to strengthen
Diageo for the future by
increasing agility,
driving sustainable
outperformance and
increasing operating
leverage
A&P
Trade spend optimisation
Overheads
Supply
c.50% dropping
through to bottom
line
c.50% re-invested
for future growth
Accelerate - strengthening Diageo for the future
In May 2025, we launched the first phase of our Accelerate programme to create a more agile operating model, with clear cash delivery targets and
a disciplined focus on operational excellence and cost efficiency. This change in how we do business is creating a stronger platform to optimise
investment and is helping us allocate resources effectively towards long-term sustainable growth. The programme has been rolled out globally and
is progressing well.
From fiscal 26, we aim to sustainably deliver c.$3 billion in free cash flow per annum, with further increases expected as business performance
improves. We expect this to be supported by positive operating leverage from fiscal 26, reduced capital expenditure (down from around 7.7% of net
sales in fiscal 25 to a mid-single-digit percentage over three years), and improvements in working capital, particularly in receivables and stock,
including opportunities on maturing stock without compromising long-term growth.
This transformation is not just about cost efficiency, it is about enabling better, faster growth. Our operating model changes are designed to
enhance Diageo’s global agility by leveraging our scale more effectively, sharpening investment priorities, and accelerating decision-making. These
efforts are closely linked to our internal drive to embed a mindset of everyday productivity across the organisation.
We expect to deliver approximately c.$625 million in cost savings over the next three years through efficiencies in A&P, overheads, supply chain,
and trade investment. Around c.50% of these savings are expected to contribute to operating profit, with the remaining c.50% reinvested in growth
areas such as digital and commercial capabilities.
We expect to be well within the leverage target range of 2.5-3.0x net debt to adjusted EBITDA no later than fiscal 28, which will provide much
more financial flexibility. We intend to deliver this through a combination of organic growth and positive operating leverage, combined with tighter
capital discipline, and appropriate and selective disposals over the coming years.
24 | Diageo Form 20-F 2025 |
BUSINESS REVIEW
Our global reach
Our regional profile maximises the opportunity for growth in our sector. Where our products are sold each market is
accountable for its own performance and driving growth.
% share of reported net sales by region(1)(2) |
Europe
24%
North America
40%
Latin America and Caribbean
9%
Asia Pacific
18%
US Spirits |
Diageo Beer Company (DBC) USA |
Canada |
Other (principally Travel
Retail)
Brazil |
Mexico |
CCA (Central America and Caribbean) |
Andean |
South LAC |
Other (principally Travel Retail) |
East Africa | |
South-West-Central Africa | |
Other | |
Africa
9%
India |
Greater China |
Australia |
South East Asia |
North Asia |
Travel Retail Asia |
Great Britain | |
Southern Europe | |
Northern Europe | |
Ireland | |
Türkiye | |
Eastern Europe | |
Other (principally Travel Retail) | |
MENA
(1) The above map is intended to illustrate general geographic regions where Diageo has a presence and/or in which its products are sold. It is not intended to imply that Diageo has a presence in
and/or that its products are sold in every country or territory within a geographic region.
(2) Based on reported net sales for the year ended 30 June 2025. Does not include corporate net sales of $135 million (2024 – $123 million).
Fiscal 25 | North America | Europe | Asia Pacific | Latin America and Caribbean | Africa |
Volume (EU million) | 49.5 | 48.9 | 77.7 | 22.9 | 31.1 |
Reported net sales(1) ($ million) | 7,973 | 4,821 | 3,635 | 1,847 | 1,834 |
Reported operating profit(2) ($ million) | 2,222 | 823 | 890 | 509 | 283 |
Operating profit before exceptional items(3) ($ million) | 3,053 | 1,302 | 930 | 528 | 283 |
Water efficiency index, percentage change compared to fiscal 20 baseline | 5% | (17)% | (45)% | (18)% | (20)% |
Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 22 baseline | (23)% | 13% | (38)% | (62)% | (45)% |
Average number of employees(4) | 3,243 | 10,608 | 8,634 | 4,408 | 2,967 |
(1)Excluding corporate net sales of $135 million (2024 – $123 million).
(2)Excluding net corporate operating costs of $392 million (2024 – $366 million).
(3)Excluding exceptional operating charges of $1,369 million (2024 – $56 million) and net corporate operating costs of $392 million (2024 – $366 million).
(4)Employees have been allocated to the region where they live.
25 | Diageo Form 20-F 2025 |
Production facilities
The company owns manufacturing production facilities across the globe, including distilleries, breweries, packaging plants, maturation warehouses,
cooperages, and distribution warehouses. Diageo’s brands are also produced at plants owned and operated by third parties and joint ventures at
several locations around the world. We believe that our facilities are in good condition and working order. We have adequate capacity to meet our
current needs, and, in the beer and spirit categories, we have undertaken activities to increase our production capacity to address our anticipated
future demand.
The major facilities owned by Diageo with locations, principal activities, and products are presented in the table below as of 30 June 2025.
Location | Principal activities | Products |
United Kingdom | distilling, bottling, warehousing, coopering | beer, scotch, gin, vodka, rum, ready-to-drink, non-alcoholic |
Ireland | distilling, brewing, bottling, warehousing | beer, liqueur, Irish whiskey, non-alcoholic |
Southern Europe | distilling, bottling, warehousing | vodka, rum, ready-to-drink, non-alcoholic |
Türkiye | distilling, bottling, warehousing | raki, vodka, gin, liqueur, wine |
North America | distilling, bottling, warehousing | vodka, gin, rum, Canadian whisky, US whiskey, ready-to-drink |
Brazil | distilling, bottling, warehousing | cachaça, vodka, ready-to-drink |
Mexico | distilling, bottling, warehousing | tequila |
East Africa | distilling, brewing, bottling, warehousing | beer, rum, vodka, gin, whisky, brandy, liqueur, ready-to-drink, bottled in East Africa (scotch) |
South-West- Central Africa | distilling, brewing, bottling, warehousing | beer, rum, vodka, gin, ready-to-drink |
India | distilling, bottling, warehousing | rum, vodka, Indian whisky, gin, brandy, bottled in India (scotch) |
Australia | distilling, bottling, warehousing | rum, vodka, gin, ready-to-drink |
Greater China | distilling, warehousing | Chinese whisky, Chinese white spirits |
| For more details about our capital investments please see page 226. |
Our route to consumer
We have five different routes to consumer models across our business.
Most of the regions employ four of the five high-level models defined
below; however, how each model operates in certain countries will
vary, as will the percentage of net sales delivered through the
respective models in each market.
Wholesalers and Distributors
Diageo sells to a wholesaler or distributor who also sells a range of
other brands and categories directly to end outlets where consumers
can purchase our brands. Where required, this model may include a
government control board (or similar), such as in certain states in the
US and provinces and territories in Canada.
Modern Trade
Diageo sells directly to a customer who owns and manages retail
outlets, who then in turn sells to consumers via their outlets.
eMarketplace
Diageo sells to a third-party digital marketplace customer where that
customer sells to B2B customers and consumers.
Direct to Consumer
Diageo sells directly to consumers, predominantly through portals such
as Thebar.com, which is a growing route to consumer model for our
business. It allows for direct interface with our consumers rather than
through third-party sites as in the eMarketplace model above.
Direct to Store
Diageo sells and delivers directly to end outlets rather than via a
central purchasing customer as in the Modern Trade model. This model
is less common than the other models. For example, it is used in
Ireland for beer distribution.
26 | Diageo Form 20-F 2025 |
BUSINESS REVIEW continued
North America
North America is the largest market for Diageo and represents over one-third of our net sales. We have a well-positioned
portfolio of brands that leans into premiumisation and high-growth categories such as tequila. Our strategy is focused on
accelerating sustainable growth through data-led insights, targeted investment and excellence in innovation and our
route to market.
Key financials | 2024 | Exchange | Acquisitions and disposals | Organic movement | Other(1) | 2025 | Reported movement |
$ million | $ million | $ million | $ million | $ million | $ million | % | |
Net sales | 7,908 | (10) | (41) | 116 | — | 7,973 | 1 |
Marketing | 1,627 | — | (1) | (10) | — | 1,616 | (1) |
Operating profit before exceptional items | 3,236 | (149) | (40) | 9 | (3) | 3,053 | (6) |
Exceptional operating items(2) | (197) | (831) | |||||
Operating profit | 3,039 | 2,222 | (27) |
Markets | Organic volume movement | Organic net sales movement | Reported volume movement | Reported net sales movement |
% | % | % | % | |
North America(3) | (0.8) | 1.5 | (1.2) | 0.8 |
US Spirits(3) | (1.3) | 1.6 | (1.8) | 1.0 |
DBC USA(4) | 2.6 | 4.8 | 2.7 | 4.9 |
Canada(3) | (3.2) | (0.9) | (3.3) | (3.7) |
(1) Fair value remeasurements. For further details see page 33.
(2)For further details on exceptional operating items see pages 33 and 158-160.
(3)Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.
(4) Certain spirits-based ready to drink products in certain states are distributed through DBC USA and those net sales are captured within DBC USA.
Key financials:
Reported net sales grew 0.8%, mainly driven by organic growth which
was partly offset by the impact of the Cîroc transaction.(5) Organic net
sales grew 1.5%, with growth in US Spirits and Diageo Beer Company
(DBC USA) offset by a slight decline in Canada. Volume declined 0.8%,
with a slight decline in US Spirits and Canada offsetting positive growth
in DBC USA, which was offset by positive price/mix of 2.3%.
Organic operating profit grew 0.3%, with marketing and supply
efficiencies and productivity savings partially offset by increased
overheads cost. Marketing spend which was targeted behind growth
drivers, Don Julio and Crown Royal Blackberry, reduced by 0.7% through
efficiencies. Operating margin of 38.3%, decreased 42bps organically.
Excluding the impact of the Cîroc transaction,(5) organic net sales grew
0.8% and organic operating profit declined 0.4%.
US Spirits highlights(6):
Overall US Spirits net sales grew 1.6%, with positive price/mix of 2.9%
offset by slight volume decline. Overall shipment growth was 1.6
percentage points ahead of depletions growth, with some variations
across brands. US Spirits shipments grew ahead of depletions growth as
distributors replenished inventory in particular of Don Julio and Crown
Royal. We believe overall distributor inventory levels at the end of
fiscal 25 remain appropriate for the current consumer environment and
in line with historical levels.
Tequila net sales grew 16.9%, driven by Don Julio, in particular strong
growth in Don Julio Reposado, partially offset by a decline in
Casamigos. Don Julio net sales grew 41.9%, growing both spirits
industry and tequila category share, driven by the brand's cultural
relevance and successful activation. Don Julio shipments grew ahead of
depletions growth of 36% as distributors replenished inventory to levels
we believe appropriate to accommodate strong consumer demand.
Casamigos net sales declined 18% as a result of increased category
competition driving lower demand.
Crown Royal whisky net sales grew 3.8%, primarily driven by continued
strong consumer demand for Crown Royal Blackberry, launched in the
second half of fiscal 24. The innovation supported recruitment of
consumers into spirits, the category and the Crown Royal trademark.
Buchanan's net sales declined 26.0%, as the trademark lapped
innovation inventory build on Buchanan’s Pineapple in the prior year.
Depletions declined 13%. Buchanan’s scotch variants held share of the
overall scotch category.
Johnnie Walker net sales declined 10.6%, due to overall scotch
category weakness. The Johnnie Walker trademark gained share of the
scotch category and held share of total spirits, led by Johnnie Walker
Black Label and Johnnie Walker Red Label.
Vodka net sales declined 4.5%, due to increased competition in the
category from RTD formats and overall category weakness. While
Smirnoff lost category share, Ketel One gained share.
Captain Morgan net sales declined 9.3%, due to rum category
weakness. The primary Captain Morgan variant, Captain Morgan
Original Spiced, gained share of the category.
Bulleit whiskey net sales declined 7.3%. Bulleit held its share of US
spirits but lost category share due to increased competition in the US
whiskey category.
(5) On 7 April 2025, Diageo entered into a strategic partnership with Main Street Advisors. As part of the transaction, Diageo transferred its majority ownership interest in Cîroc in North America in exchange for interest in
Lobos 1707 Tequila globally. The transaction was completed in June 2025. As a result, Cîroc in North America is no longer consolidated in the group’s financial statements and is now accounted for as an investment in
associate.
(6) Spirits brands and categories excluding cocktails, which includes ready to drink, ready-to-serve and non-alcoholic variants, except where noted.
27 | Diageo Form 20-F 2025 |
Rest of North America
DBC USA net sales grew 4.8%, driven by strong growth in Guinness
variants including Guinness Draught, Guinness Extra Stout, and
Guinness 0.0. Growth in innovations including Captain Morgan Sliced,
Smirnoff Sunny Days, and Smirnoff Shorties was partially offset by
softer Smirnoff Ice performance.
Canada net sales declined 0.9%, reflecting a weaker spirits category
amid a challenging regulatory and operational backdrop which was
partially offset by strong growth in Guinness.
28 | Diageo Form 20-F 2025 |
BUSINESS REVIEW continued
Europe
Europe is a diverse region with a trend-leading on-trade channel and tourism hotspots, all of which offer a strong
platform for the development of our premium brands. It is also home to Diageo's biggest beer business and a
stronghold for Guinness. We hold a leadership position across major categories and markets.
Key financials | 2024 | Exchange | Acquisitions and disposals | Organic movement | Other(1) | Hyperinflation (2) | 2025 | Reported movement |
$ million | $ million | $ million | $ million | $ million | $ million | $ million | % | |
Net sales | 4,804 | (12) | (24) | 15 | — | 38 | 4,821 | — |
Marketing | 873 | 11 | (5) | 16 | — | 3 | 898 | 3 |
Operating profit before exceptional items | 1,379 | (34) | (10) | (32) | (14) | 13 | 1,302 | (6) |
Exceptional operating items(3) | (122) | (479) | ||||||
Operating profit | 1,257 | 823 | (35) |
Markets | Organic volume movement | Organic net sales movement | Reported volume movement | Reported net sales movement |
% | % | % | % | |
Europe(4) | (4.3) | 0.3 | (4.7) | 0.4 |
Great Britain(4) | (0.9) | 3.5 | (0.8) | 6.7 |
Southern Europe(4) | (6.3) | (6.0) | (8.2) | (7.0) |
Ireland(4) | 0.1 | 5.5 | 0.3 | 7.0 |
Northern Europe(4) | (14.0) | (13.9) | (14.4) | (13.2) |
Türkiye(4) | (3.7) | 20.9 | (3.8) | 4.6 |
Eastern Europe(4) | 1.5 | 1.1 | 1.7 | 2.9 |
MENA | 1.8 | 2.3 | 1.9 | 2.5 |
(1) Fair value remeasurements. For further details see page 33.
(2) See pages 154 and 214-215 for details on hyperinflation adjustments.
(3) For further details on exceptional items see pages 33 and 158-160.
(4) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see page 213-220.
Key financials:
Reported net sales grew 0.4% broadly in line with organic net sales,
which increased 0.3%. Volume decline of 4.3% was offset by price/mix
up 4.5%. Growth in Türkiye, Great Britain and Ireland was mostly offset
by Northern Europe and Southern Europe. Favourable price/mix in
Guinness in Great Britain and Ireland, coupled with Türkiye pricing
adjustments in response to inflation helped overall price/mix.
Organic operating profit declined 2.5%, driven by the global Premier
League partnership and increased investment in technology, this was
partially offset by positive price, largely driven by Türkiye. Marketing
investment grew 1.9%, ahead of organic sales growth, supporting
strong Guinness growth in Great Britain, Ireland and Eastern Europe.
Operating margin of 27.0%, decreased 80bps organically.
Market highlights:
Great Britain net sales grew 3.5%, driven by double-digit organic net
sales growth in Guinness despite temporary supply constraints. This
was partially offset by a mid-single-digit decline in spirits net sales due
to overall category weakness. In spirits, a continued focus on tequila
delivered strong growth, particularly in Casamigos. Guinness gained
category share in both the on-trade and off-trade channels, supported
by effective brand building, the Premier League partnership and very
strong momentum in Guinness 0.0. Notably, Guinness 0.0 is now the #1
non-alc beer in Great Britain and is the fastest growing non-alc beer.(5)
Following a period of decline, RTD net sales were broadly flat,
resulting from a number of initiatives implemented to stabilise
demand.
Southern Europe net sales declined 6.0%, due to performance in France
which was adversely impacted by the transition to a new distribution
model, and a broader decline in the spirits category. Diageo transitioned
distribution of its malts and luxury brands in March 2024 from its joint
venture with Moët Hennessy to direct distribution by Diageo France with
the remaining brands moved in January 2025. Despite category challenges
in the wider market, our market share of spirits grew, led by Johnnie
Walker and Don Julio and supported by strong activation.
Ireland net sales grew 5.5%, driven by the continued growth of Guinness.
Strong share gain in the on-trade in Guinness was supported by effective
brand building and the continued roll-out of Guinness 0.0 Draught which
is now in more than 2,300 on-trade outlets. The market also delivered
market share gain in spirits and TBA in a declining environment,
supported by strong in-market execution.
Northern Europe net sales declined 13.9%, primarily driven by strategic
scotch pricing in Germany which negatively impacted performance.
While the overall spirits category remained challenging, share gains
were delivered across key categories including gin, rum, tequila and
liqueurs.
Türkiye net sales grew 20.9%, primarily driven by pricing adjustments
in response to inflation. This resulted in a 3.7% volume decline, mainly
in raki, as tight monetary policy and stagnant minimum wages slowed
consumption. Despite the challenging environment, Johnnie Walker,
Gordon's and Baileys delivered strong double-digit volume and organic
net sales growth, supported by focused investment and targeted
pricing actions.
Rest of Europe net sales declined 0.4%, growth was impacted by the
volatile environment influenced by political conflicts in the region
which has impacted consumers; this was largely offset by strong
Guinness performance in Eastern Europe and tequila in MENA. A
dedicated MENA market was established at the end of fiscal 24 to
capture long-term growth opportunities across the region.
(5) RSV R12M Nielsen (14/06/2025)/CGA (17/05/2025).
29 | Diageo Form 20-F 2025 |
Asia Pacific
In Asia Pacific, our focus is to grow in both developed and emerging markets across our entire portfolio. We
manage our portfolio to meet the demands of the growing middle class, and aim to inspire our consumers to drink
better, not more.
Key financials | 2024 | Exchange | Acquisitions and disposals | Organic movement | 2025 | Reported movement |
$ million | $ million | $ million | $ million | $ million | % | |
Net sales | 3,817 | (41) | (21) | (120) | 3,635 | (5) |
Marketing | 651 | — | (5) | (16) | 630 | (3) |
Operating profit before exceptional items | 1,063 | (11) | (7) | (115) | 930 | (13) |
Exceptional operating items(1) | 375 | (40) | ||||
Operating profit | 1,438 | 890 | (38) |
Markets | Organic volume movement | Organic net sales movement | Reported volume movement | Reported net sales movement |
% | % | % | % | |
Asia Pacific(2) | 3.9 | (3.2) | 3.7 | (4.8) |
India | 5.1 | 7.1 | 5.1 | 4.6 |
Greater China(2) | 8.4 | (9.0) | 8.5 | (8.9) |
Australia(2) | (2.4) | (6.9) | (2.4) | (7.8) |
South East Asia(2) | (3.7) | (7.0) | (3.6) | (6.0) |
Travel Retail Asia(2) | (8.7) | (24.3) | (8.5) | (23.3) |
North Asia(2) | (7.3) | 0.9 | (13.2) | (10.4) |
(1) For further details on exceptional items see pages 33 and 158-160.
(2) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.
Key financials:
Reported net sales declined 4.8%, due to organic net sales decline, the
disposal of Windsor and unfavourable foreign exchange. Organic net
sales declined by 3.2%, due to continued macroeconomic challenges,
notably in China and South East Asia, category pressure in Travel Retail
Asia and the transition to a licence brewing model for Guinness in
Australia and New Zealand. This was partially offset by India where
performance was strong, supported by good volume growth.
Organic operating profit declined 11.0%, driven by adverse market and
category mix, particularly the decline in Travel Retail Asia. Marketing
investment declined 2.5%, largely driven by reduced investment in
China, which was partially offset by increased spend in India.
Operating margin of 25.6%, decreased 223bps organically.
Market highlights:
India net sales grew 7.1%, driven by strong volume growth in the
Prestige & Above segment supported by positive price/mix, and
business re‑commencing in the state of Andhra Pradesh after a five-
year hiatus. Double-digit growth in Black & White, Signature and Royal
Challenge stood out along with positive growth in McDowell's.
Greater China net sales declined 9.0%, resulting from challenging
macroeconomic conditions. In response to the consumer environment
there was a deliberate strategic portfolio shift towards white spirits
and lower aged malts, which supported strong volume growth and
market share gain in international spirits, but resulted in negative
price/mix. Chinese white spirits was adversely impacted by lapping
strong double-digit growth due to last year's inventory restocking and
reduced consumption occasions across the baijiu category.
Australia net sales declined 6.9%, reflecting softness in Johnnie Walker
and in RTDs. This was partially offset by strong Guinness performance
in the first half. In the second half, Diageo transitioned its beer route-
to-market to a licence brewing model, a strategic shift to support the
long-term growth of Guinness in the market.
South East Asia net sales declined 7.0%, mainly due to a double-digit
decline in Vietnam where performance was adversely impacted by
a route‑to‑market transformation implemented in response to evolving
local market dynamics.
North Asia net sales grew 0.9%, driven by strong performance in Japan
offset by a decline in Korea given overall market weakness. Growth in
Japan was underpinned by the launch of Johnnie Walker Black Ruby
and the stabilisation of Johnnie Walker Black Label in the on and off-
trade.
Travel Retail Asia net sales declined 24.3%, due to softer consumption
and continued retail inventory destocking. Despite this, the business
gained share, driven by the Johnnie Walker portfolio and Don Julio.
30 | Diageo Form 20-F 2025 |
BUSINESS REVIEW continued
Latin America and Caribbean
In Latin America and Caribbean (LAC), we are aiming to increase our market share through focused consumer-
centric delivery across core categories including whiskey, gin, tequila and vodka. We do this through targeted
marketing investment in consumer-focused occasions where traditionally non-spirit TBA products have had a
strong presence.
Key financials | 2024 | Exchange | Acquisitions and disposals | Organic movement | Hyperinflation (1) | Other(2) | 2025 | Reported movement |
$ million | $ million | $ million | $ million | $ million | $ million | $ million | % | |
Net sales | 1,839 | (179) | 3 | 167 | 17 | — | 1,847 | — |
Marketing | 306 | (35) | — | 26 | 7 | — | 304 | (1) |
Operating profit before exceptional items | 502 | (61) | (7) | 63 | 1 | 30 | 528 | 5 |
Exceptional operating items(3) | — | (19) | ||||||
Operating profit | 502 | 509 | 1 |
Markets | Organic volume movement | Organic net sales movement | Reported volume movement | Reported net sales movement |
% | % | % | % | |
Latin America and Caribbean | 3.2 | 9.2 | 3.6 | 0.4 |
Brazil | 3.8 | 18.0 | 3.8 | 4.1 |
Mexico | (4.3) | 5.4 | (4.3) | (7.3) |
CCA | 7.3 | 6.4 | 7.5 | 6.9 |
Andean(4) | 23.2 | 21.5 | 32.9 | 12.9 |
South LAC(4) | (2.9) | (6.3) | (2.9) | (14.1) |
(1) See pages 154 and 214-215 for details on hyperinflation adjustments.
(2)Fair value remeasurements. For further details see page 33.
(3) For further details on exceptional items see pages 33 and 158-160.
(4) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.
Key financials:
Reported net sales grew 0.4%, with unfavourable foreign exchange
almost fully offsetting strong organic growth. Organic net sales grew
9.2%, with volume up 3.2% and price/mix growth of 6.0%. Price/mix
benefitted from favourable comparatives given lapping prior year
promotion activity and effective pricing in Brazil due to
premiumisation. We believe that inventory levels at the end of fiscal
25 remain at an appropriate level for the current consumer
environment.
Organic operating profit increased 11.7%, driven by productivity
savings, pricing in Brazil, positive mix and reduced levels of
promotional spend. Marketing investment increased 8.7% and was
focused on core brands. Operating margin of 28.6%, increased 68bps
organically.
Market highlights:
Brazil net sales grew 18.0%, driven by volume growth and positive
price/mix. This strong performance reflects premiumisation and
strategic pricing actions, supported by a more stable consumer
environment and targeted investment. Growth was led by scotch,
particularly Johnnie Walker and Old Parr, supported by both positive
volume and price/mix. Brazil is a key strategic market for RTDs, with
Smirnoff driving strong growth through targeted investment and strong
in-market execution.
Mexico net sales grew 5.4%, as the consumer environment began to
stabilise over the year, though momentum remained subdued. Growth
was largely driven by Don Julio, primarily reflecting the lapping of
significant promotional activity in the prior year and suppressed
volume. This was partially offset by a decline in whisky, mainly
Buchanan's.
CCA net sales grew 6.4%, given favourable scotch and tequila
performance.
Andean (Colombia and Venezuela) net sales increased 21.5%, mainly
due to Buchanan's and Old Parr, as a result of market stabilisation.
South LAC (Argentina, Bolivia, Chile, Ecuador, Paraguay, Peru and
Uruguay) net sales declined 6.3%, driven by the volatile
macroeconomic and the weakening consumer environment adversely
impacting consumption. Despite the challenging environment, the
market delivered market share gain.
31 | Diageo Form 20-F 2025 |
Africa
In Africa, we manage an exciting TBA portfolio. With a growing emphasis on premiumisation, we're focusing on
Scotch, vodka, gin, and tequila alongside a vibrant local spirits portfolio. We hold a leading position in premium beer
in many countries with Guinness and are expanding our footprint in the ready-to-drink category.
Key financials | 2024 | Exchange | Reclassification (1) | Acquisitions and disposals | Organic movement | Hyperinflation (2) | 2025 | Reported movement |
$ million | $ million | $ million | $ million | $ million | $ million | $ million | % | |
Net sales | 1,778 | 121 | (67) | (146) | 150 | (2) | 1,834 | 3 |
Marketing | 205 | 8 | — | (13) | (8) | — | 192 | (6) |
Operating profit before exceptional items | 131 | 59 | — | 37 | 59 | (3) | 283 | 116 |
Exceptional operating items(3) | — | — | ||||||
Operating profit | 131 | 283 | 116 |
Markets | Organic volume movement | Organic net sales movement | Reported volume movement | Reported net sales movement |
% | % | % | % | |
Africa(4) | 3.7 | 10.5 | (3.1) | 3.1 |
East Africa | 2.0 | 0.1 | 0.0 | 0.1 |
SWC Africa(4)(5) | 6.1 | 15.8 | 25.8 | 26.6 |
(1) Reclassification between net sales and cost of goods sold to accurately reflect the impact of a route-to-market change in Africa.
(2) See pages 154 and 214-215 for details on hyperinflation adjustments.
(3) For further details on exceptional items see pages 33 and 158-160.
(4) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.
(5) Reported volume and reported net sales movements do not include the Guinness Nigeria PLC disposal.
Key financials:
Reported net sales grew 3.1%, with strong organic net sales growth
partly offset by a reclassification as a result of route-to-market
change. Organic net sales grew 10.5%, with growth across all markets,
most notably, double-digit growth in Ghana, South Africa and
Tanzania. Volume grew 3.7% and price/mix grew 6.9%, with the latter
mainly due to pricing and premiumisation through East Africa.
Organic operating profit grew 27.7% driven by the positive impact of
pricing. Marketing investment declined by 4.4% due to efficiencies and
change in portfolio and marketing mix. Operating margin of 15.4%,
increased 232bps organically.
Market highlights:
East Africa net sales grew 7.0%, with growth delivered across Kenya,
Uganda and Tanzania. Performance was driven by strong growth in
beer, rum, and scotch, partially offset by declines in gin and vodka.
Beer delivered strong single-digit growth, led by local brands,
Serengeti and White Cap, as well as Guinness. Performance in rum was
driven by local flavour innovation on Kenya Cane. The transition to an
independent route-to-market for premium-plus-spirits supported
double-digit growth in Johnnie Walker.
SWC Africa (South, West and Central Africa) net sales grew 15.8%,
driven by double-digit organic volume and net sales growth in Ghana
supported by an improving macroeconomic environment. Double-digit
growth in Malta Guinness and Guinness was the result of increased
distribution and favourable pricing. Strong growth in Gordon's led to
share gains in the gin category in South Africa, following the change in
the route-to-market. This was partially offset by softness in Johnnie
Walker, attributed to increased competition. In the second half of the
fiscal year, a route-to-market change was implemented on Smirnoff
RTDs in South Africa, to unlock growth in one of the fastest growing
TBA categories.
32 | Diageo Form 20-F 2025 |
Business review continued
Category and brand review
For the year ended 30 June 2025
Key categories
Organic volume movement(1) % | Organic net sales movement % | Reported net sales movement % | Reported net sales by category % | |
Spirits(2) | — | — | (2) | 76 |
Scotch | (2) | (4) | (7) | 22 |
Tequila | 15 | 18 | 17 | 13 |
Vodka(3)(4) | (4) | (5) | (9) | 8 |
Canadian whisky | 5 | 3 | 3 | 7 |
Rum(4) | (3) | (5) | (7) | 5 |
Liqueurs | (7) | (4) | (4) | 5 |
Gin(4) | (1) | (4) | (11) | 4 |
IMFL whisky | 7 | 10 | 8 | 4 |
Chinese white spirits | 5 | (8) | (8) | 3 |
US whiskey | (8) | (9) | (9) | 2 |
Beer | 6 | 10 | 10 | 18 |
Ready to drink | 4 | 2 | — | 4 |
Key brands(5)
Organic volume movement(6) % | Organic net sales movement % | Reported net sales movement % | |
Johnnie Walker | (3) | (5) | (7) |
Don Julio | 41 | 38 | 37 |
Guinness | 14 | 13 | 12 |
Crown Royal | 4 | 3 | 3 |
Smirnoff | (3) | (5) | (6) |
Baileys | (1) | (4) | (3) |
Captain Morgan | (3) | (6) | (6) |
Casamigos(7) | (16) | (16) | (16) |
Shui Jing Fang(8) | 5 | (8) | (8) |
McDowell's | 2 | 7 | 4 |
(1)Organic equals reported volume movement except for spirits (1)%, vodka (5)%, liqueurs (8)%, gin (2)%, beer 3%, and ready to drink (2)%.
(2)Spirits brands excluding ready to drink and non-alcoholic variants.
(3)Vodka includes Ketel One Botanical.
(4)Vodka, rum and gin include IMFL variants.
(5)Brands excluding ready to drink, non-alcoholic variants and beer except Guinness.
(6)Organic equals reported volume movement, except for Guinness 11%, Baileys (2)% and Captain Morgan (4)%.
(7)Casamigos trademark includes both tequila and mezcal.
(8)Growth figures represent total Chinese white spirits of which Shui Jing Fang is the principal brand.
F-9 | Diageo Form 20-F 2025 |
Group financial review
Business review (continued)
Corporate
Performance 2025
Sales and net sales
Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net
sales were $135 million in the year ended 30 June 2025, an increase of $12 million. Net sales were favorably impacted by an organic
increase of $10 million as well as by $2 million exchange rate movement gain.
Operating costs
Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as
well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply
Chain and Procurement. Operating costs were $392 million in the year ended 30 June 2025 increased by $26 million compared to
operating costs of $366 million in the year ended 30 June 2024. The $22 million increase in costs in the year ended 30 June 2025 was
principally a result of D&T Voyager cost increase, as well as unfavorable exchange rate movement of $4 million.
Performance 2024
Sales and net sales
Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net
sales were $123 million in the year ended 30 June 2024, an increase of $19 million. Net sales were favorably impacted by an organic
increase of $13 million partially offset by $6 million exchange rate movement gain.
Operating costs
Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as
well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply
Chain and Procurement. Operating costs were $366 million in the year ended 30 June 2024 an decrease of $31 million compared to
operating costs of $397 million in the year ended 30 June 2023. The $31 million decrease in costs in the year ended 30 June 2024 was
principally a result of favorable exchange rate movements of $22 million.
33 | Diageo Form 20-F 2025 |
Group financial review
Group financial review
Key financials - certain line items
30 June 2024 | Exceptional operating items (c) | Exchange (a) | Acquisitions and disposals (b) | Organic movement(1) | Fair value remeasurement (d) | Reclassification(2) | Hyperinflation(1) | 30 June 2025 | |
Reported | Reported | ||||||||
Year ended 30 June 2025 | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Sales | 27,891 | — | (283) | (264) | 570 | — | — | 50 | 27,964 |
Excise duties | (7,622) | — | 164 | 35 | (232) | — | (67) | 3 | (7,719) |
Net sales | 20,269 | — | (119) | (229) | 338 | — | (67) | 53 | 20,245 |
Cost of sales | (8,071) | (18) | (88) | 180 | (114) | 30 | 67 | (58) | (8,072) |
Gross profit | 12,198 | (18) | (207) | (49) | 224 | 30 | — | (5) | 12,173 |
Marketing | (3,691) | — | 17 | 24 | (2) | — | — | (10) | (3,662) |
Other operating items | (2,506) | (1,407) | (10) | (2) | (260) | (17) | — | 26 | (4,176) |
Operating profit | 6,001 | (1,425) | (200) | (27) | (38) | 13 | — | 11 | 4,335 |
Other line items: | |||||||||
Non-operating items | (70) | (220) | |||||||
Taxation (e) | (1,294) | (999) |
(1) For the definition of organic movement and hyperinflation, see pages 213-220.
(2) Reclassification between net sales and cost of goods sold to accurately reflect the impact of a route-to-market change in Africa.
(i) Reported figures in the table above have been extracted from the condensed consolidated income statement for the years ended 30 June 2024 and 30 June 2025.
(ii)Acquisitions and disposals, organic movement, fair value remeasurement, reclassification and hyperinflation figures have been calculated at the prior period weighted average exchange rates.
(a) Exchange
The impact of movements in exchange rates on reported figures for
operating profit was principally due to the weakening of the Mexican
peso, the Turkish lira and the Brazilian real, partially offset by the
strengthening of the sterling against the US dollar.
The effect of movements in exchange rates and other movements on
profit before exceptional items and taxation for the year ended 30
June 2025 is set out in the table below.
Gains/(losses) $ million | |
Translation impact | 4 |
Transaction impact | (204) |
Operating profit before exceptional items | (200) |
Net finance charges – translation impact | (69) |
Net finance charges – transaction impact | 70 |
Net finance charges(1) | 1 |
Associates – translation impact | 2 |
Profit before exceptional items and taxation | (197) |
(1) For more information about Finance income and charges please see page 161.
Year ended | Year ended | |
30 June 2025 | 30 June 2024 | |
Exchange rates | ||
Translation $1 = | £0.77 | £0.80 |
Transaction $1 = | £0.80 | £0.82 |
Translation $1 = | €0.92 | €0.93 |
(b) Acquisitions and disposals
The acquisitions and disposals movement in the year ended 30 June
2025 was primarily attributable to the acquisition of Ritual Beverage
Company LLC, the disposals of the Pampero brand and the Cacique
brand, the new Cîroc contractual arrangement in North America and
the disposal of Guinness Nigeria PLC.
| See pages 166-169 for further details. |
(c) Exceptional items
In the year ended 30 June 2025, exceptional operating items were a
charge of $1,369 million due to impairment of investments in
associates and other investments, brands, tangible fixed assets,
other assets and other related charges ($910 million), charges for the
Accelerate programme, that includes supply chain agility programme
($225 million), the distribution model change in France ($145 million),
various dispute and litigation matters ($51 million) and the reversal of
rum cover-over income ($38 million). In the year ended 30 June 2024,
exceptional operating items were a gain of $56 million, mainly driven
by a net gain of $224 million due to impairment reversal, various
dispute and litigation matters (a charge of $107 million) and the supply
chain agility programme (a charge of $61 million).
In the year ended 30 June 2025, exceptional non-operating items were
a loss of $220 million, mainly driven by the loss on the sale of Guinness
Nigeria PLC ($125 million) and loss on the prospective sale of Guinness
Ghana Breweries PLC ($114 million). In the year ended 30 June 2024,
exceptional non-operating items were a loss of $70 million, mainly
driven by the loss on the sale of the Windsor business in Korea ($58
million).
In the year ended 30 June 2025, exceptional finance income was in
relation to borrowing costs capitalised of $58 million in respect of
purchases of property, plant, equipment and computer software in the
prior years.
| See pages 158-160 for further details. |
(d) Fair value remeasurement
In the year ended 30 June 2025, the adjustment to cost of sales of a
gain of $13 million reflects the elimination of fair value changes for
biological assets in respect of growing agave plants for the production
of tequila (2024 – $17 million loss). The adjustments to marketing and
other operating expenses of a gain of $139 million were the elimination
of fair value changes to contingent consideration liabilities and earn-out
arrangements in respect of prior year acquisitions (2024 – $156 million
gain).
34 | Diageo Form 20-F 2025 |
GROUP FINANCIAL REVIEW continued
(e) Taxation
In the year ended 30 June 2025, Diageo changed the definition of the
reported tax rate and the tax rate before exceptional items to exclude
the share of after-tax results of associates and joint ventures from
profit before tax, as this represents post-tax profit, hence is
considered as a non-essential factor of the calculation. The
presentation of the tax rate after exceptional items and the tax rate
before exceptional items for the year ended 30 June 2024 has been
aligned to this new definition.
On this new basis, the reported tax rate for the year ended 30 June 2025
was 29.9% compared with 25.6% for the year ended 30 June 2024.
Included in the tax charge of $999 million in the year ended 30 June
2025 is a net exceptional tax credit of $214 million, including an
exceptional tax credit of $138 million in relation to brand impairments
and tangible fixed assets, a tax credit of $46 million in respect of
restructuring programmes, a tax credit of $36 million in respect of
Diageo's agreement with LVMH on the termination of their joint
operation in France, and a tax credit of $12 million in respect of
various dispute and litigation matters in North America, partially offset
by $15 million tax charge in respect of capitalised borrowing costs and
$3 million tax charge in respect of sale of businesses and brands.
Included in the tax charge of $1,294 million in the year ended 30 June
2024 is a net exceptional tax charge of $24 million, including an
exceptional tax charge of $95 million in relation to the reversal of the
Shui Jing Fang brand impairment charge, partly offset by a tax credit of
$19 million in respect of the Chase brand impairment and the related
tangible fixed assets, a tax credit of $13 million comprised of brand
impairments in the US ready-to-drink portfolio, a tax credit of $23 million
in relation to various dispute and litigation matters in North America and
a tax credit of $15 million in respect of the supply chain agility
programme.
The tax rate before exceptional items for the year ended 30 June 2025
was 24.9% compared with 25.1% for the year ended 30 June 2024.
We expect the tax rate before exceptional items for the year ending 30
June 2026 to be in the region of 25%.
(f) Dividend
The group aims to maximise its return of capital to shareholders each
year. The decision in respect of the dividend is made with reference to
the dividend policy for the respective period that includes current
performance trends, including sales, profit after tax and cash
generation. Diageo aims for 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 2025, dividend
cover was 1.6 times (2024 – 1.7 times). The group will keep future
returns of capital, including dividends, under review to ensure Diageo’s
capital is allocated in the best way to maximise value for the business
and its stakeholders.
Subject to approval by shareholders, the final dividend of 62.98 cents
per share (2024 – 62.98 cents per share) will be paid to holders of
ordinary shares and US ADRs on register as of 17 October 2025. The ex-
dividend date is 16 October 2025 for holders of ordinary shares and
17 October 2025 for holders of US ADRs. Holders of ordinary shares will
receive their dividends in sterling unless they elect to receive their
dividends in US dollars by 7 November 2025. The dividend per share in
pence to be paid to ordinary shareholders will be announced on
20 November 2025 and will be determined by the actual foreign
exchange rates achieved by Diageo buying forward contracts for
sterling currency, entered into during the three trading days preceding
the sterling equivalent announcement of the final dividend. The final
dividend, once approved by shareholders, will be paid to both holders
of ordinary shares and US ADRs on 4 December 2025. A dividend
reinvestment plan is available to holders of ordinary shares in respect
of the final dividend and the plan notice date is 7 November 2025.
Movements in net borrowings and equity
Movements in net borrowings
2025 | 2024 | |
$ million | $ million | |
Net borrowings at the beginning of the year | (21,017) | (19,582) |
Free cash flow (1) | 2,748 | 2,609 |
Movements in loans, other investments and other financial assets | (195) | (47) |
Acquisitions (2) | (35) | (6) |
Investment in associates (2) | (84) | (133) |
Sale of businesses and brands (3) | 143 | 87 |
Share buyback programme | — | (987) |
Net sale of own shares for share schemes | 15 | 21 |
Net sale/(purchase) of treasury shares in respect of subsidiaries | 8 | (10) |
Dividend paid to non-controlling interests | (138) | (117) |
Net movements in bonds (4) | 1,527 | 558 |
Purchase of shares of non-controlling interests (5) | (9) | (223) |
Net movements in other borrowings (6) | (629) | (106) |
Equity dividend paid | (2,298) | (2,242) |
Unclaimed dividends and share forfeiture | 30 | — |
Net increase/(decrease) in cash and cash equivalents | 1,083 | (596) |
Net increase in bonds and other borrowings | (898) | (453) |
Exchange differences (7) | (921) | (199) |
Other non-cash items | (101) | (187) |
Net borrowings at the end of the year | (21,854) | (21,017) |
(1) See page 217 for the analysis of free cash flow.
(2) On 24 September 2024, Diageo completed the acquisition of, and
paid $23 million, net of cash acquired, for the remaining issued share
capital of Ritual Beverage Company LLC (owner of Ritual Zero Proof
non-alcoholic spirits brand), that it did not already own. On 19 June
2025, Diageo announced that it acquired a controlling stake in Nao
Spirits & Beverages Private Limited. In the year ended 30 June 2024,
Diageo paid $6 million in respect of prior year acquisitions. In the years
ended 30 June 2025 and 30 June 2024, investment in associates
included additional investments in a number of Distill Ventures
associates.
(3) In the year ended 30 June 2025, sale of businesses and brands
included the disposal of the Cacique brand for a net cash
consideration, net of disposal costs, of $67 million, the disposal of
Guinness Nigeria PLC for a net cash consideration, net of disposal
costs, of $53 million and the disposal of the Pampero brand for a net
cash consideration, net of disposal costs, of $55 million. In the year
ended 30 June 2024, sale of businesses and brands included a net cash
consideration, net of disposal costs, of $88 million for the disposal of
Windsor Global Co., Ltd.
35 | Diageo Form 20-F 2025 |
(4) In the year ended 30 June 2025, the group issued bonds of
€2,200 million ($2,452 million – net of discount and fee) consisting of
€700 million ($780 million – net of discount and fee) 3.125% fixed rate
notes due 2031, €300 million ($346 million – including issuance premium)
3.125% fixed rate notes due 2031, €700 million ($776 million – net of
discount and fee) 3.375% fixed rate notes due 2035, €500 million
($550 million – net of discount and fee) 3.75% fixed rate notes due
2044, $750 million ($748 million – net of discount and fee) 5.125% fixed
rate notes due 2030, $750 million ($743 million – net of discount and fee)
5.625% fixed rate notes due 2035 and repaid bonds of $600 million and
€1,600 million ($1,816 million). In the year ended 30 June 2024, the
group issued bonds of $1,700 million ($1,690 million – net of discount
and fee) consisting of$800 million 5.375% fixed rate notes due 2026,
$900 million 5.625% fixed rate notes due 2033, €500 million ($535
million – net of discount and fee) floating rate notes due 2026) and
repaid bonds of $500 million and €1,100 million ($1,167 million).
(5) In the year ended 30 June 2024, Diageo agreed with Combs Wine
and Spirits LLC to purchase the remaining 50% of the share capital of
DeLeon Holdco LLC that Diageo did not already own for a total
consideration of $223 million, including transaction costs.
(6) In the year ended 30 June 2025, the net movements in other
borrowings principally arose from the $479 million repayment of
commercial paper and $114 million repayment of lease liabilities. In
the year ended 30 June 2024, the net movements in other borrowings
principally arose from the increase in commercial paper, collateral and
bank loan balances, cash outflows of foreign currency swaps and
forwards, and repayment of lease liabilities.
(7) In the year ended 30 June 2025, exchange losses arising on net
borrowings of $921 million were primarily driven by unfavourable
exchange movements on sterling and euro denominated borrowings and
on foreign currency swaps and forwards. In the year ended 30 June
2024, exchange losses arising on net borrowings of $199 million were
primarily driven by adverse exchange movements on sterling and euro
denominated borrowings and unfavourable movements on cash and
cash equivalents, partially offset by favourable movements on foreign
currency swaps and forwards.
Movements in equity
2025 | 2024 | |
$ million | $ million | |
Equity at the beginning of the year | 12,070 | 11,709 |
Adjustment to 2023 closing equity in respect of hyperinflation in Ghana (1) | — | 51 |
Adjusted equity at the beginning of the year | 12,070 | 11,760 |
Profit for the year | 2,538 | 4,166 |
Exchange adjustments (2) | 452 | (645) |
Remeasurement of post-employment benefit plans net of taxation | (2) | (61) |
Purchase of shares of non-controlling interests (3) | (7) | (223) |
Change in non-controlling interests from sale of business | 9 | — |
Hyperinflation adjustments net of taxation (1) | 264 | 365 |
Dividend declared to non-controlling interests | (140) | (121) |
Equity dividend declared | (2,298) | (2,243) |
Share buyback programme | — | (997) |
Other reserve movements | 292 | 69 |
Equity at the end of the year | 13,178 | 12,070 |
(1) See pages 154 and 214-215 for details on hyperinflation
adjustments.
(2) Exchange movements in the year ended 30 June 2025 primarily
arose from exchange gains driven by sterling. Exchange movements in
the year ended 30 June 2024 primarily arose from exchange losses
driven by the Turkish lira, the Mexican peso, sterling and the euro.
(3) In the year ended 30 June 2024, the purchase of shares of non-
controlling interests of $223 million represented the acquisition of 50%
of DeLeon Holdco LLC's share capital.
Post-employment benefit plans
The net surplus of the group’s post-employment benefit plans
increased by $35 million from $717 million at 30 June 2024 to $752
million at 30 June 2025. The increase in net surplus was predominantly
attributable to the favourable changes in the discount and inflation
rates in the UK and Ireland that was partially offset by the adverse
change in the market value of assets held by the post-employment
benefit plans in the UK and the experience loss arising from the
triennial valuation of the UK post-employment schemes.
Total cash contributions by the group to all post-employment benefit
plans in the year ending 30 June 2026 are estimated to be
approximately $45 million.
F-10 | Diageo Form 20-F 2025 |
GROUP FINANCIAL REVIEW continued
Operating results 2024 compared with 2023
For the discussion on our operating results for the year ended 30 June 2023, including certain comparative discussion on our
operating results for the years ended 30 June 2023 and 2024, please refer to 'Operating results 2024 compared with 2023' from page
43 in our Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 1 August 2024.
36 | Diageo Form 20-F 2025 |
Spirit of progress
Doing business the right way,
from grain to glass
We manage our business for the long-term, and have always believed that doing business the right way, from grain to
glass, builds trust and credibility with our stakeholders. 'Spirit of Progress’ is our action plan to deliver on this
commitment. We identify and monitor the most material risks and opportunities for our business, using these insights
to shape our strategy and drive change where we can have impact at scale. The plan evolves over time to ensure we
focus our resources on the most critical issues aligned with our footprint and areas of influence.
Embed integrity in everything we do
Stand up for human rights
| Read more on pages 38-39. |
Build and monitor our distinct culture
Protect our people through a robust
health and safety strategy
| Read more on pages 40-43. |
Doing Business the Right Way is core to our three ‘Spirit of Progress’ priorities |
Change the way the world drinks for the
better
Address the harmful use of alcohol and
promote moderation
Responsibly market our products
| Read more on pages 44-45. |
Preserve the natural resources we all
depend on, building the resilience of our
business and protecting our licence to
operate
| Read more on pages 46-57. |
Create an environment where everyone
contributes to a better business
| Read more on pages 58-59. |
37 | Diageo Form 20-F 2025 |
As our stakeholders' expectations and business evolve, so does our
assessment of material impacts, risks and opportunities and our
strategy to address them. To update our strategy, we regularly assess
stakeholder feedback, performance against targets and business needs.
While we focus on factors we can influence, external uncertainties
remain, making our roadmaps subject to change.
Each year, we conduct a review of our targets. This year, we further
considered the results of an updated ESG issues assessment(1) ahead of
compliance with the European Union’s (EU) Corporate Sustainability
Reporting Directive (CSRD) in 2028, as well as updated Science Based
Targets initiative (SBTi) emission reduction targets.
Our updated emissions reductions, regenerative agriculture and
packaging ambitions were adjusted in fiscal 25 to reflect the updated
ESG issues assessment and our new SBTi targets. The target review was
led by the Executive Committee members and approved by the Board.
How we take action and measure our performance
This section of the Annual Report sets out our progress against our
priority ‘Spirit of Progress' ambitions. In our ESG Reporting Index, we
include reporting on other goals and other actions which support
our strategy.
Doing business the right way | ||||
Key policies Code of Business Conduct Global Human Rights Policy Dignity at Work Policy Global Health, Safety and Wellbeing Policy | ||||
Promote positive drinking | Pioneer grain to glass sustainability | Champion inclusion and diversity | ||
Key policies Global Employee Alcohol Policy Diageo Marketing Code | Key policy Global Environment Policy | Key policy Code of Business Conduct | ||
Targets  | Targets | Ambitions | ||
Education on the dangers of alcohol misuse Underage drinking*,^ Drink driving^ | Water stewardship Using water efficiently* Replenishing water for communities^ Advocating for water stewardship | Increasing the diversity of our leadership team Gender diversity* Ethnic diversity* | ||
Responsible sourcing Launching regenerative agriculture programmes | Promoting inclusivity through hospitality and skills education Learning for Life and other hospitality and skills programmes | |||
Emission reductions Reducing emissions from our operations*,^ Reducing emissions from our value chain Increasing the recycled content of our packaging | ||||
*Targets and ambitions which are included in our long-term incentive plans (through fiscal 27).
^ Targets and ambitions which are included in our long-term incentive plans (from fiscal 26). For more details refer to page 133.
Governance
Both the Board and the Executive Committee oversee ‘Spirit of Progress‘.
The Board reviews our most material topics through our ESG issues
assessment, our ESG strategy and our targets used to measure our
strategy in action. The Chief Executive is ultimately accountable for the
performance against ‘Spirit of Progress' ambitions. Each target has an
Executive Committee member accountable for the delivery with
regular performance reviews conducted by the Executive Working
Group (EWG).
New regulatory frameworks
We continue to voluntarily report against the Global Reporting
Initiative (GRI) and Sustainability Accounting Standards Board (SASB)
frameworks in our ESG Reporting Index.
We are monitoring regulation developments in both the United Kingdom
and the EU. In February 2025, the EU proposed changes to CSRD through
an Omnibus package, including a two-year delay for companies with
significant operations in the EU. We are also monitoring the 'UK
Sustainability Reporting Standards', which are aligned to International
Sustainability Standards Board (ISSB) requirements. We intend to apply
both CSRD and the UK standards as soon as required under EU and UK law.
Given the interconnectivity of climate and nature, we have
incorporated some of the Task Force for Nature-related Financial
Disclosures (TNFD) into our Task Force on Climate-related Financial
Disclosures (TCFD) reporting.
In the United States, California has enacted the Voluntary Carbon Market
Disclosures Act, California Assembly Bill No. 1305 (AB-1305) requiring
companies operating in California to make certain disclosures regarding
carbon emissions reduction claims, and voluntary carbon offsets. We
provide disclosures pursuant to AB-1305 in this section of the Annual
Report, our ESG Reporting Index and our responses to CDP (formerly
known as the Carbon Disclosure Project) climate change questionnaire,
available through CDP's website.
Reporting transparently
We define our performance measures carefully, along with clear
reporting boundaries and methodologies. For more details, see
the website.
(1) Refer to our ESG Reporting Index, page 3, for information on our updated ESG issues
assessment, conducted with reference to the EU’s Corporate Sustainability
Reporting Directive, in advance of compliance with the directive in fiscal 28.
38 | Diageo Form 20-F 2025 |
DOING BUSINESS THE RIGHT WAY
| Business integrity and Human rights |
We want to do business the right way every day,
everywhere. We expect all stakeholders, including our
people and suppliers, to demonstrate integrity, live our
values
and behave in an ethical way as set out in
our Code of Business Conduct.
| For more details, see the website www.diageo.com. |
Business Integrity
A culture of business integrity is foundational to our identity and delivery
of our Growth Ambition. Each of us has a responsibility for doing
business the right way. By valuing not only what we do, but how we
conduct business, we generate success worth celebrating.
Code of Business Conduct (Our Code)
Our Code sets out the basis for how we work and conduct business.
It lists key principles which guide our day-to-day operations, decisions
and interactions with colleagues and other stakeholders. Our Code
forms what we stand for as a business and how we demonstrate our
high standards of integrity and ethical behaviour.
All Diageo employees are required to complete our Code of Business
Conduct training annually, via either routine annual training or as part
of new-joiner onboarding.
Additionally, all eligible(1) employees are required to certify that they
have read, understood and complied with our Code of Business Conduct
and supporting global policies during the previous financial year
through an annual compliance certification declaration.
The training is delivered through an interactive e-learning module,
with classroom sessions provided for those without regular
computer access.
In fiscal 25, employees engaged with our Code through local Business
Integrity Day activations. Markets shaped integrity conversations
around their local priorities, supported by global resources and
guidance. This flexibility led to more relevant, resonant sessions that
strengthened understanding, sparked meaningful dialogue, and
reinforced the everyday role of integrity in how we work.
Encouraging people to speak up
We encourage our employees to report potential breaches of our Code
or policies through our global confidential grievance and
whistleblowing service, SpeakUp. The service, which is available
through various channels (email, telephone and internet) in 20
languages, is monitored by the business integrity team to ensure that
all allegations are handled appropriately, confidentially and fairly.
Managing third-party risks
Maintaining business integrity is crucial in our interactions with third
parties. Our Know Your Business Partner (KYBP) programme is designed
to identify potential risks before entering into contractual agreements.
In fiscal 25, we enhanced our KYBP governance process and tools by
leveraging our KYBP centres of practice, which has led to greater
standardisation of our procedures.
Standing up for human rights
At Diageo, we strive to create an environment where all our people
feel they are treated fairly and with respect. We remain committed to
acting with integrity in our roles, to ensure we are doing business in
the right way. We act in line with the UN Guiding Principles on Business
and Human Rights (UNGPs) and are committed to embedding respect
for human rights into everyone’s working day, in every country
throughout our business and supply chain. Our policies cover our
responsibilities to protect the human rights of everyone working in our
direct operations, value chain and communities.
Our human rights governance
Our Code and Global Human Rights Policy play an integral part
of ensuring that Diageo’s culture is aligned with our purpose and
values. Our Code has been approved by our Board of Directors and our
Global Human Rights Policy has been approved by our Chief Executive.
Our human rights strategy is reviewed on a periodic basis by the Audit
Committee of the Board and by the Executive’s Audit and Risk
Committee (ARC) as part of our mitigation of our principal risk on
business ethics and integrity. Responsibility for delivery is shared
between the members of Diageo’s Executive Committee that are
responsible for the human rights of our employees, suppliers and
communities. Our Executives, senior business leaders and functional
specialists lead the agenda via our Human Rights Steering Group (group
and market level), and assess risks, emerging issues, compliance and
remediation within our enterprise risk management processes.
Providing access to grievance mechanisms
We encourage everyone, including any affected stakeholders, to
report potential breaches of our Code or policies, including human
rights, through our global confidential grievance and whistleblowing
service, SpeakUp.
Focusing on salient human rights risks
In fiscal 24, we refreshed our assessment of salient risks that are most
relevant to our business as specified in the Declaration on Fundamental
Principles and Rights at Work and the UNGPs. We looked at human
rights benchmarks for our industry, priority commodities in our supply
chain and the increasing interdependence between human rights and
climate impacts.
The assessment identified the following salient risks: health and
safety, wages and benefits, working time, harassment and bullying,
discrimination, freedom of association and collective bargaining, child
labour, forced labour, water sanitation and hygiene and land rights.
Whilst we conduct ongoing due diligence in all areas, we have
prioritised health and safety, wages and benefits, working time,
harassment and bullying, and discrimination based on severity,
likelihood, attribution, leverage and breach data.
Vulnerable groups
We recognise that some groups of people are more vulnerable to
human rights breaches and pay particular attention to these groups
within our risk assessments. Determined by human rights frameworks,
our value chain and human rights impact assessments, our vulnerable
groups are women, ethnic minorities, persons with disabilities, the
LGBTQIA+ community, indigenous peoples, migrant workers, contract
and temporary workers, and children.
(1) For more details, see the Non-Financial Reporting Boundaries and Methodologies, available on
our website.
39 | Diageo Form 20-F 2025 |
Assessing risk in our direct operations
We use a variety of risk assessment tools in our direct operations to
identify risk.
This includes self-assessment questionnaires for all direct operations,
third-party human rights assessments for high-risk direct operations
and deep dive assessments for groups that we consider more
vulnerable to our salient risks. In fiscal 25, all direct operations
completed an annual self-assessment questionnaire and four high-risk
direct operations undertook a third-party assessment, keeping us on
track to assess all high-risk direct operations by the end of fiscal 27.
We use the insights from the assessments to develop action plans to
resolve material human rights concerns and strengthen our approach.
Where needed, we involve external experts to ensure our plans are
robust.
Assessing risk and compliance in our supply chain
Our Responsible Sourcing programme, led by our Supplier Excellence
team, follows a risk-based approach to assessing adherence to our
Partnering with Suppliers standard. Suppliers are risk-assessed against
the following three criteria: location of supplier site, category of
product or service and amount of spend. Suppliers who are assessed as
high risk are required to undertake an independent third-party Sedex
Members Ethical Trade Audit (SMETA) or an equivalent four-pillar
ethical audit. This year we strengthened our approach by increasing
our supplier compliance target from 65% to 85%. We began screening
for human rights with higher-risk potential suppliers before
onboarding. This helps us make more informed decisions on human
rights risks and gives us the chance to assess and mitigate the salient
issues before we contract with a supplier.
We have also mapped our salient risks within our priority supply chains
allowing us to prioritise our actions and drive positive social impact
where it is needed most. Part of this assessment includes identifying
the scale, scope, remediability and likelihood of our salient risks
through different parts of our supply chain. These findings are helping
us to focus our interventions on specific human rights issues in the
supply chain for greater impact. For more information, please refer to
the ESG Reporting Index and Modern Slavery Statement.
Taking action to mitigate human rights risks
Where we identify human rights risks, we take actions to mitigate
them. Some examples of these mitigations are:
Building the capability of our Risk Management Committees and
conducting a mandatory risk deep dive to ensure we are effectively
managing the risk.
Our Global Brand Promoter standard and training establishes principles
and guidelines to protect brand promoters from the risk of sexual
harassment. This training is now available in 17 languages globally. To
date we have trained over 200 agencies and over 18,000 brand
promoters.
Our Child Labour Prevention programme provides training for
smallholder farmers in Africa. This year we trained 282 farmers
in Uganda, who will go on to train up to 10,000 people in
their communities.
Our collaboration with AIM-Progress has resulted in targeted training
on child and forced labour in the United States. This free, open-access
training is available to all our suppliers, labour and service providers.
Our partnership with external parties assesses and addresses the health
impacts of heat stress in sugarcane farming for our rum supply chain
through improved access to sunshades, drinking water, personal
protective equipment and adequate rest schedules.
Our collaboration with AIM-Progress and Oxfam aims to strengthen
supplier grievance mechanisms, improve access to remediation for
workers and build supplier capability to support long-term
improvement.
Assessing the effectiveness of our approach
We measure the effectiveness of our human rights governance through
our internal assurance framework and third-party human rights
assessments. We continue to enhance our risk mitigation plans based
on lessons learned.
We also externally benchmark our progress against best practice
through rankings such as the World Benchmarking Alliance (WBA) Social
Transformation Benchmark. In July 2024, Diageo was ranked joint fifth
out of 2,000 companies assessed.
Engaging our stakeholders
We recognise the importance of listening to and consulting
stakeholders, especially the most vulnerable ones, on issues that affect
them. We do this on an ongoing basis through different mechanisms
including worker interviews, reviewing grievance data and holding
community dialogues within our community investment programmes.
This year we took steps to improve our processes for responding to investor
and customer requests and piloted new ways to collect worker data to
better understand suppliers’ practices and identify potential issues.
This focus on due diligence and disclosure is crucial to us doing
business the right way. It enables us to have transparency in our
engagements with all stakeholders and drive continuous improvements
in our approach. We will continue to focus on this important area,
embedding respect for human rights into everyone’s working day, in
every country and throughout our supply chain.
 | ||||
Randall Ingber General Counsel and Company Secretary |  | |||
Business integrity is at the heart of who we are as a company – it is a competitive advantage and integral to maintain the trust we need to achieve our Growth Ambition.' | ||||
40 | Diageo Form 20-F 2025 |
DOING BUSINESS THE RIGHT WAY
continued
| Our people and culture |
Our talented and diverse workforce, together with our people’s passion for our brands and inclusive culture continues to be a competitive advantage for our business, enabling our people to perform at their best. |
| For more details, see the website www.diageo.com. |
Highly engaged talent
At Diageo, we are proud to have strong employee engagement levels
across our organisation. Despite macroeconomic uncertainty, our
people continue to express pride and passion for our consumers,
business and brands. In our most recent Your Voice survey, a high
proportion of our people (90%) are proud to work for Diageo, exceeding
the external benchmark(1) by 12 percentage points which is consistent
with our previous survey. Our overall engagement score also remains
high at 83%, which is 7 percentage points higher than the external
benchmark and 2 percentage points higher than fiscal 24.
Benchmarking in the top quartile positions us advantageously as an
employer of choice and supports efforts to attract and retain quality,
diverse talent. There were increasing levels of engagement from
external talent with 23% more career site visits since fiscal 24. To
sustain this position, we recently refreshed our employee value
proposition to strengthen the connection to our purpose, values,
behaviours and culture. Understanding where we can be better is also
important to maintain employee engagement, so this year we have
introduced several new questions to our Your Voice survey in relation
to reward packages and opportunities for growth.
Growing our talent
Growth is a core part of who we are at Diageo; we encourage all
employees to continue to develop through stretching career
opportunities and experiences. Career growth is also critical to
sustaining high employee engagement levels and future-proofing
business performance. In fiscal 25, 79% of our leadership appointments
were internal talent and of this, 21% were international moves and 16%
were cross-functional moves. In the broader workforce, over 5,000
people made career moves. In addition, in our most recent Your Voice
survey, 77% said they feel empowered to seek opportunities to learn
and develop new skills.
We believe that coaching and feedback are critical to unlock career
growth, development and performance. 78% of employees say
their line manager provides feedback and coaching to support their
growth. Our performance enablement programme (‘My Performance
for Growth’) encourages continuous feedback with managers having
regular conversations with their teams, coaching them to define bold
goals, unlock opportunities for growth and build the right skills and
capabilities to drive competitive advantage. In fiscal 25, we also
invested in a new people manager development programme,
‘Impact’, which equips people managers across the globe with the
skills and knowledge needed to inspire, develop and grow high-
performing teams.
To fuel business and individual growth, we prioritise building skills and
capabilities required to win now and in the future. Our groundbreaking
development programme for emerging general managers (GMs),
'Horizons', helps leaders elevate their entrepreneurship, strategic
framing and enterprise-wide thinking. The programme runs for 12
months, combining in-person training, live simulations, project
assignments, coaching and mentoring and is complemented by a tailored
onboarding experience for first-time GMs. Since its launch in October
2023, six participants have been appointed into GM roles and a further
three have been promoted into more senior roles.
Our externally recognised marketing programme Diageo Way of Brand
Building (DWBB) has been updated in fiscal 25 to integrate the very
latest in consumer trends, marketing science and technology including
AI. We piloted a five-day training programme in North America and
South, West and Central Africa, and launched an online DWBB training
hub for all employees with 14 brand-building skills modules. ‘How we
Build Brands’ has also been integrated into all employee onboarding
with over 900 completions since December 2024. Within commercial,
we launched the 'Igniting Commercial Excellence' programme which
provides specialised training to our market teams. Finally, we offer a
series of trainings to build capability in digital skills including data and
digital transformation and omnichannel best practices for marketing.
Continuing to evolve our culture
n our recent Your Voice survey, Diageo employees characterised our
culture as engaging, ambitious and collaborative. Our purpose, along
with the pride and passion for our brands, forms a fundamental part of
this vibrant culture. Embedding a culture of speed and agility remains
pivotal to our ability to achieve our Growth Ambition and ensure long-
term success. In fiscal 25, we have kept up the momentum, by
reinforcing our dial-up behaviours ‘Be Externally Curious’, ‘Collaborate
Efficiently’, ‘Experiment and Learn’ and ‘Act Decisively’. Our over 550
culture change champions represent all levels and parts of the business
and play a pivotal role in reinforcing behaviours, sharing and
embracing best practice across Diageo.
In fiscal 25, we concluded the expansion of ‘Celebrate’, our global
recognition platform. Across the business, employees have delighted in the
opportunity to spot behaviours in real time and recognise colleagues. This
fiscal the ‘Celebrate’ platform has received more than 140,000
nominations of colleagues demonstrating our values and ‘dial-up
behaviours’; this amounts to one recognition being received every four
minutes. We also launched the inaugural CEO Celebrate Awards to
recognise the remarkable impact teams had on driving growth and
performance through our cultural shifts. In July 2025, Diageo Ireland won
‘Market of the Year’ award for exceptional performance in fiscal 24,
demonstrating strong growth, whilst also driving high levels of employee
engagement and fostering a culture of speed and agility.
In the first half of the fiscal, we ran a Pulse Check to measure progress
against the dial-up behaviours. Results showed that 84% of employees felt
encouraged to practise the dial-up behaviours and 75% felt supported in
applying them.
We are already seeing the impact of our cultural transformation on
business performance with our dial-up behaviours enabling us to disrupt
our innovation-to-launch process times, enter white spaces in Brazil by
adapting our route to consumer approach and establish and grow a new
standalone market in the Middle East and North Africa (MENA) with the
strategic vision and operating model established in under three months.
(1) Based on a blend of Ipsos Karian and Box, Qualtrics benchmark data. The Global
Manufacturing benchmark includes organisations with global coverage that
operate within FMCG and other industry sectors.
41 | Diageo Form 20-F 2025 |
Barry O'Sullivan (MD Diageo Ireland in July 2024) winning 'Market of the Year'
award as part of our CEO Celebrate Awards
Culture change is a multi-year journey and there is more to do. Leaders’
role-modelling the dial-up behaviours consistently is key to success and
driving sustainable change. This is a key focus of our culture change
plan, and we are working closely with our leaders to reinforce this.
Alongside our dial-up behaviours, we continue to cultivate a culture of
integrity, accountability and operational excellence, ensuring we
continue to strengthen our focus on execution.
Enabling our people to thrive
Employee wellbeing is a key driver of sustainable performance. We
believe that people are at their best, both at work and at home, when
they are physically and mentally thriving, emotionally balanced,
financially secure and socially connected. Our Global Health, Safety
and Wellbeing Policy integrates these four dimensions into our daily
culture, by providing tools and resources on topics like healthy habits,
menopause and sleep. We also help employees connect to our purpose
as a source of energy, with leaders sharing examples of how our
consumers, brands, people, sustainability and society fuel their
motivation and drive.
We recognise the role line managers play in creating an environment
where people can prioritise their wellbeing. Through our new 'Impact'
people manager development programme, our line managers are now
trained on how to build inclusive teams and create an environment to
perform by enhancing their own and their team's energy and resilience.
Our wellbeing champions are key to embedding wellbeing into our
culture. Our headquarters 'Wellbeing Day' is an example of how
employees take ownership of our four wellbeing dimensions in their
local communities. Many markets have also led employee physical
wellness challenges, such as Türkiye's partnership with Heltia and
Ireland’s Wellbeing Warriors, an employee-led resource group,
establishing bespoke physical and social wellbeing initiatives whilst
also creating awareness of global events.
In fiscal 25, we were pleased to launch the One World all-employee
global share plan across over 50 countries and during the year all
17,000 eligible employees were awarded £500 of Free Shares, creating
15,000 new Diageo employee shareholders.
In February 2025, we launched 'nudge' in the United Kingdom, South
Africa and India to support financial wellbeing through improved
literacy, security and confidence. The interactive platform offers
clear, personal financial guidance for all life stages. So far, 72% of
eligible employees have used it and shared positive feedback. In terms
of mental wellbeing, our Mental Health Awareness eLearning helps to
normalise mental health discussions, complemented by our celebration
of World Mental Health Day across the organisation. Our Employee
Assistance Programme offers employees free, confidential advice and
counselling around the clock on personal, emotional and work-life
issues. Lastly, Diageo’s Flex philosophy continues to offer employees
opportunities to balance their work and life activities.
Average number of employees by region and gender(1)
Region(2) | Men | % | Women | % | Not declared( 3) | % | Total |
North America | 1,924 | 60% | 1,307 | 40% | 12 | — | 3,243 |
Europe | 5,979 | 56% | 4,613 | 44% | 16 | — | 10,608 |
Asia Pacific | 5,638 | 65% | 2,995 | 35% | 1 | — | 8,634 |
Latin America and Caribbean | 2,689 | 61% | 1,719 | 39% | — | — | 4,408 |
Africa | 1,823 | 61% | 1,143 | 39% | 1 | — | 2,967 |
Diageo (total) | 18,053 | 61% | 11,777 | 39% | 30 | — | 29,860 |
Average number of employees by role and gender(1)
Role | Men | % | Women | % | Not declared(3 ) | % | Total |
Executive(4) | 8 | 62% | 5 | 38% | — | — | 13 |
Senior manager(5) | 335 | 57% | 253 | 43% | — | — | 588 |
Line manager(6) | 2,797 | 64% | 1,602 | 36% | 6 | — | 4,405 |
Supervised employee(7) | 14,913 | 60% | 9,917 | 40% | 24 | — | 24,854 |
Diageo (total) | 18,053 | 61% | 11,777 | 39% | 30 | — | 29,860 |
(1)This data has been compiled as a monthly average based on the proportion of employees who
have identified their gender as male, female or undisclosed. In some cases assumptions have
been applied where data is not available.
(2)Employees have been allocated to the region where they live.
(3)This data represents the proportion of employees who have chosen not to disclose their
gender as male or female.
(4)The number of executive positions have been calculated based on data at 30 June 2025.
(5)Top leadership positions in Diageo, excluding Executive Committee.
(6)All Diageo employees (excluding senior managers and Executive Committee) with one or
more direct reports.
(7)All Diageo employees (excluding senior managers and Executive Committee) who have no
direct reports.
 | ||||
Louise Prashad Chief HR Officer |  | |||
I am thankful to our 29,000+ employees who collectively foster a culture of pride in our brands and our purpose of celebrating life every day, everywhere. Their ownership for business performance working together with customers, partners and colleagues helps us to attract and retain the very best talent for Diageo.' | ||||
42 | Diageo Form 20-F 2025 |
DOING BUSINESS THE RIGHT WAY
continued
| Health and safety |
We prioritise the health and safety of our people throughout our value chain to ensure everyone is safe when working, every day, everywhere. |
3-year trend: Lost Time Accident Frequency Rate (LTAFR) |
| For more details, see the Non-Financial Reporting Boundaries and Methodologies found on our website www.diageo.com. |
Embedding a culture of health and safety
Safety is a collective responsibility and an essential aspect of every role.
By empowering and engaging our employees in safety practices, we
reinforce our commitment to the principle that no level of accidents is
acceptable.
Our approach to health and safety is built upon our Global Health,
Safety and Wellbeing Policy and our Global Risk Management
Standards. We perform risk assessments, leveraging compliance
systems, technology, and training to develop and implement innovative
working methods that strive for continuous safety improvement.
We actively promote employee engagement in accident investigations
and improvement initiatives, ensuring they receive the latest health
and safety training to perform their daily tasks safely. Additionally, we
run company-wide communication campaigns and in fiscal 25 we used
data to inform our monthly safety campaigns highlighting specific
hazards, such as fire safety, working at heights and safe driving.
The 'Safer Together' strategy incorporates both a strong safety culture
and a comprehensive technology roadmap. Designed to prevent severe,
fatal and process safety incidents, the overall approach also aims to
enhance health and safety standards across the organisation.
Roadmaps support the integration of an improved safety culture at all
locations. The technology roadmap features digital solutions,
automation, forklift truck advancements including camera technology,
manual handling wearable kits and artificial intelligence, each
contributing to better health and safety performance. During fiscal 25,
over $40 million was invested in shuttle warehousing, where casks are
put away on pallets by an automatic shuttle rather than manual
handling. An additional investment is expected next year to complete
the shuttle warehouse complex, helping improve safety and boost
productivity. These strategies and roadmaps are also extended to
contractors and third-party providers.
We recognise that process safety events (1) pose significant risks to the
health and safety of employees, communities and the environment, as
well as potential damage to property, reputation and business
continuity. To manage these risks, our comprehensive process safety
strategy has been reviewed with the objective to ensure regulatory
compliance. We drive continuous improvement through incident
analysis and performance monitoring to foster a strong safety culture
across the organisation. Integral to this strategy is Diageo’s risk-based
process safety framework, consisting of 20 elements designed to
proactively identify, assess and mitigate hazards that could cause
major incidents such as fires, explosions or toxic releases. In fiscal 26,
the focus will be monitoring early warning signs such as equipment
anomalies, procedural deviations and near misses to enable proactive
risk management. Efforts will also continue to build process safety
capabilities. Targeted audits will be performed at key sites to verify
compliance, address gaps and enhance overall safety performance.
Empowering responsibility:
Fostering a safe work environment
Leaders across the organisation are responsible for cascading and
implementing health and safety policies and procedures among their
direct reports and third parties. We expect all employees to take
responsibility for their health and safety and those around them, by
acting in accordance with our Code of Business Conduct. We utilise a
variety of tools to identify health and safety risks as per our Global
Health, Safety and Wellbeing Policy. Each location performs hazard
identification and risk assessments which identify and address unsafe
conditions. We also have a safe observation programme across all
locations to identify unsafe behaviours, recognise best practices and to
report work-related hazards. All employees and third parties are
encouraged to remove themselves from work situations they believe
could cause injury or ill health. Hazards are logged on local action
planning systems and tracked for closure.
To track the effectiveness of our approach, all our locations regularly
monitor and review health and safety performance. We report the
results monthly to the Global Supply Chain and Procurement leadership
team, to the Executive Committee at quarterly meetings and to the
Board twice yearly.
Our performance
We report on lost time accident frequency rate (LTAFR). This year, our
rate was 0.82 (fiscal 24: 1.06) lost time accidents (LTAs) per 1,000 full-
time employees (including directly supervised contractors). Over the
last three fiscal years LTAFR has shown year-to-year variability with a
decrease in fiscal 25 following an increase in fiscal 24 reflecting the
dynamic nature of our risk environment and ongoing efforts to enhance
workplace safety. Our LTAFR decreased against last fiscal, driven by
reductions in accidents across a number of markets but most
significantly in the scotch category and North America.
Our total recordable accident frequency rate (TRAFR) which records
work-related injuries that need more than first aid treatment increased
during this fiscal. In absolute numbers, our total accidents reduced (fiscal
25: 89 accidents, fiscal 24: 90 accidents) however the average total
headcount used as the denominator in the calculation reduced therefore
impacting the rate. We investigate each recordable accident to establish
the root cause, contributing factors and insights. We share the key
learnings across the organisation aiming to prevent recurrences. For more
information, please refer to our ESG Reporting Index.
(1) Industrial incidents involving an unintended release or loss of control of hazardous
materials or energy from a process system.
43 | Diageo Form 20-F 2025 |
Continuous improvement initiatives
Our workplaces are constantly evolving with new technologies,
processes and equipment. Continuous improvement ensures that health
and safety measures keep pace with these changes, addressing
emerging hazards effectively. In fiscal 25, we introduced and
continued several important programmes, as included below. We will
continue to advance these programmes as part of our culture and
technology roadmaps in fiscal 26.
Culture assessment
During fiscal 25, we launched our first ever global governance
baseline culture survey to our supply organisation. We used an
independent provider to complete a culture assessment across our
most material areas, including health and safety, food safety and
quality. With more than 5,000 responses, the overall health and safety
maturity values were 86% for supply sites and 84% for technical
centres. The culture assessment focused on four key themes: people,
process, purpose and proactivity. The assessment demonstrated a
strong level of maturity across all key themes as well as a favourable
comparison against industry benchmarking.
Behavioural Standard
Since fiscal 24, the Behaviour Standard workshops, aimed at enhancing
safety culture, have been implemented across 19 individual sites. In
the current fiscal year, the programme has been further expanded to
include manufacturing facilities in Mexico, Türkiye and Australia. Each
workshop produced a comprehensive action plan. All participating sites
have demonstrated substantial progress in executing and closing out
the action plans, thereby contributing to the development of a more
robust and sustainable safety culture.
Monthly health and safety campaigns
Based on insights from fiscal 24 as well as performance through fiscal
25, our communication campaigns focused on the themes of 'Strive for
Zero', 'Life Saving Rules', 'Fire Safety' and 'Process Safety'. These
campaigns were introduced to raise awareness of increasing incident
trends and areas where there may be the potential for a life-
threatening or life-altering injury.
Over and above the monthly campaigns, we launched a refocused
safety campaign to highlight the need for locations to remind their
employees on the basic principles of ‘eyes and mind on task’.
Safer Driver Programme
Diageo's commitment to improving workplace safety standards includes
a driver training programme implemented to promote safe driving
behaviours across five key pillars (risk, speed, distraction, fatigue, eco)
among commercial employees who drive for business purposes. It also
features short, customised e-learning modules that are tailored to
individual driving behaviours, helping to educate drivers on safe driving
practices. During fiscal 25, the programme has been rolled out to 1,700
drivers across multiple markets. This brings the total rollout across
fiscal 24 and 25 to approximately 3,500 drivers. The aim of the
programme is to reduce accidents and enhance the overall safety of
company drivers. The programme is expected to lower insurance and
maintenance costs, but also boost driver morale and improve
operational efficiency.
World Health and Safety Day
We celebrated World Health and Safety Day as part of a wider global
health and safety awareness week. The topics included in the campaign
focused on revolutionising health and safety through AI and digital
technologies, launch of a process safety senior leadership observation
tour and a high-level overview of the recent culture assessment.
Beyond our own operations we also extend our health and safety
standards to strategic suppliers, working closely with them to improve
safety practices that promote safer working within their workforces.
 | ||||
Ewan Andrew President, Global Supply and Procurement & Chief Sustainability Officer |  | |||
Our health and safety results for this year demonstrate a well-embedded strategy to prevent injury, but we are never complacent. Our continuous improvement programmes and introduction of technology solutions continue to be top priorities to ensure the health and safety of all.' | ||||
44 | Diageo Form 20-F 2025 |
PROMOTE POSITIVE DRINKING
| Promote positive drinking |
We want to change the way people drink – for the better, by engaging, educating and empowering consumers to make informed choices about drinking. |
| Key Targets |
Tackling underage drinking through SMASHED(1) | |||
Year | People educate d | ||
Target by 2030 Scale up our SMASHED partnership and educate 10 million young people, parents and teachers on the dangers of underage drinking | 10m | ||
2025 cumulative progress | 8.2m | ||
2024 cumulative progress(2) | 6.2m | ||
2025 Performance Number of people educated on the dangers of underage drinking through a Diageo-supported education programme in fiscal 25 | 2.0m | ||
Changing attitudes to drink driving(3) | |||
Year | People educate d | ||
Target by 2030 Through our programmes, deliver five million educational experiences that promote changes in attitude to drink driving. | 5m | ||
2025 cumulative progress | 3.8m | ||
2024 cumulative progress | 2.2m | ||
2025 Performance Number of educational experiences delivered for people to change their attitude to drink driving in fiscal 25 | 1.6m | ||
(1) Baseline year fiscal 18.
(2) Prior year cumulative figures have been restated due to a change in rounding methodology.
(3) Baseline year fiscal 20.
| For more details, see the website www.diageo.com. |
Our brands have been part of people’s celebrations for generations; we
make them with pride, and they are made to be enjoyed responsibly.
Our Positive Drinking approach includes three pillars addressing
different types of harmful use and promotes responsible use of alcohol:
Education to tackle harmful drinking with a focus on underage
drinking, drink driving and binge drinking.
Promoting moderation through aspiration and choice by
encouraging moderation through our brands.
Advocating for alcohol policies that support consumer choice,
deepen understanding of alcohol and tackle illicit production
and consumption.
We apply creative, innovative solutions to tackle the harmful use of alcohol
globally. Our markets use global assets but also use local partnerships and
innovation to ensure cultural relevance.
Our people are champions for promoting positive drinking. This year,
we launched ‘The Measure’, a campaign designed to provide more
information on how our employees can advocate for moderation.
Through activations with brand ambassadors including Gary Neville,
English football pundit, and Ben Branson, founder of Seedlip, we are
empowering our people to speak candidly with family and friends
about the importance of moderation. 93% of our employees stated in
our employee engagement survey that they feel confident to talk about
positive drinking in both professional and personal situations.
Education to tackle harmful drinking
Underage drinking
We believe it is never acceptable for anyone underage to consume
alcohol. That is why we have run campaigns and education programmes
to combat underage drinking for many years.
SMASHED is a programme that educates young people aged 10-17 on the
dangers of underage drinking. It was developed by Collingwood Learning,
and we have been proud to sponsor it for the past 16 years. This year,
the programme was recognised as the gold winner in the Good Awards
for Educational Excellence (large organisations category).
SMASHED began in 2005 as a live theatre production and has since been
enhanced to enable online learning. To make the programme as
successful as possible, the performance can be tailored to specific
countries using local actors and cultural references.
We continued to deliver a very strong performance on the programme
this year, with delivery partner collaborations across Latin America and
Africa, driving participation. In fiscal 25, a projected 1.6m people have
confirmed changed attitudes to the dangers of underage drinking based
on our sampling of participant surveys.
Drink driving
We have long championed awareness on the risks of drink driving,
including collaborating with law enforcement and local authorities. In
2021, we launched Wrong Side of the Road (WSOTR) digital learning
resource with the United Nations Institute for Training and Research
(UNITAR), aimed at raising awareness about the consequences of drink
driving. WSOTR is available in digital and classroom formats and is now
in 26 different modules, each with distinct video content.
This year we scaled WSOTR in China, delivering increased participation
in tier one cities, through digital news, graphics, podcast, Weibo and
on-site activations.
In addition, we continue to innovate to raise awareness and drive
meaningful behaviour change. In partnership with Mothers Against
Drunk Driving (MADD), the National Football League (NFL) and Uber, we
launched a comprehensive campaign in the United States 'Take a
minute. Make a plan. Never Drive Impaired'. Running from December 2024
through February 2025, the campaign spanned TV, streaming, radio, out-of-
home, in-game integrations, in-bar messaging, digital and social media.
Results show that the campaign reached over 100 million people with
more than one million Uber rides redeemed using discount codes in
December alone.
45 | Diageo Form 20-F 2025 |
Informed choices about drinking
Our DRINKiQ web-based platform gives everyone the facts, tools and
support to help make informed choices about their relationship with
alcohol. DRINKiQ is available in all our strategic markets, with regular
campaigns to promote usage of the site. This year, we invested in
improving the user interface and functionality of the website and
updating content. We also launched DRINKiQ China linked directly from
the WeChat app, including new and improved educational content
reflecting local moderation trends.
Promoting moderation through aspiration and
choice
We know that making moderation feel aspirational and therefore a
popular choice is critical in driving positive drinking attitudes and
behaviours. We also know that we must couple aspiration with choice,
delivering a wide range of products and strategies that empower
consumers to moderate effectively. Alongside this, we invest each year
in training which helps our marketers understand how to best promote
moderation through our brands and innovations.
We launched several new campaigns this year which leveraged strong
consumer insights and delivered against our goal of making moderation
more aspirational including:
-Johnnie Walker in Brazil 'Strong are the women': A powerful and
engaging campaign designed to encourage moderation through
education and empowering women. The campaign reached 38 million
consumers, with 91% of consumers agreeing that the campaign made
them 'feel good about drinking moderately'.
-DRINKiQ and Men's Shed, Great Britain: Through our newly formed
partnership with Men’s Shed UK, we targeted older men with a
campaign to foster social connection, improve wellbeing and promote
moderation, highlighting DRINKiQ as a resource. Supported by former
boxer Tony Bellew, the campaign reached over 27 million consumers
and provoked a positive response amongst consumers, with 84%
agreeing that it made them 'feel good about drinking moderately'.
We also continue to expand delivery of choice to consumers through our
non-alcoholic portfolio, with the total number of non-alcoholic options
increasing from three in fiscal 20 to 20 in fiscal 25. We now have a non-
alcoholic choice available in 15 markets (63% of our strategic markets).
Advocating improved laws and industry standards
We believe that industry-wide standards and sensible regulation create
an important framework to encourage responsible drinking. We support
policies that are evidence-based, account for drinking patterns, target
at-risk groups, treat all forms of alcohol equally and involve all
stakeholders. We publicly advocate that governments adopt effective
new regulation based on evidence including blood-alcohol volume
driving limits, responsible digital marketing and legal purchase age
laws. In addition, we advocate for effective industry-wide standards in
responsible marketing and consumer information. We support effective
programmes to tackle alcohol misuse.
The last 10 years have seen declines in binge drinking, drinking and
driving and underage drinking in many countries. As members of IARD
(International Alliance for Responsible Drinking) we are committed to
building on these positive trends and actively support international
goals to reduce harmful drinking. This includes delivering on the
recommendations presented to the sector in the United Nations 2018
Political Declaration on non-communicable diseases, in particular by
taking concrete steps towards eliminating the marketing, advertising,
and sale of alcohol products to minors.
Marketing in a responsible way
The Diageo Marketing Code (DMC) sets our principles for responsible
marketing, and it represents a cornerstone of the way we do business.
The DMC includes our commitment to encouraging only responsible and
moderate drinking and never targeting underage audiences. We are
proud to have a proven track record of compliance, which is
underpinned by appropriate checks in every market we operate in.
This year we have tested and deployed an AI-based assistant to support
human DMC reviews, which has reduced the time needed to review
content, whilst keeping the highest standard of compliance. Now
deployed to a large group of our marketers, the tool can review imagery,
video and text against DMC requirements. We continue to train and test
the system with new creative assets, and as the accuracy improves,
more users will be adopting the technology for AI assisted reviews.
We regularly review reporting from advertising monitoring and industry
bodies across key markets, for breaches of self-regulatory alcohol
marketing codes. No complaints relating to Diageo marketing were
upheld by key industry bodies this fiscal year.
Complaints upheld by key industry bodies that report publicly are
presented below.
Incidents of non-compliance concerning marketing communications – fiscal 25(1) | |||
Country | Body | Complaints upheld against alcohol advertisers | Complaints about Diageo brands upheld |
United States | Distilled Spirits Council of the United States | — | — |
Australia | ABAC Scheme | 42 | — |
United Kingdom | Advertising Standards Authority | 5 | — |
Portman Group | 6 | — | |
Republic of Ireland | Advertising Standards Authority for Ireland | 2 | — |
(1) From 1 July 2024 to 5 May 2025.
 | ||||
Daniel Mobley Global Corporate Relations Director |  | |||
We have a long and proud record of promoting positive drinking. Every year we educate millions of consumers to drink in moderation through our global brands and DRINKiQ platform. Our programmes and partnerships that tackle underage drinking, drink driving and binge drinking reach millions of people each year, changing attitudes towards harmful drinking for the better.' | ||||
46 | Diageo Form 20-F 2025 |
pioneering grain to glass
sustainability
Pioneering grain to glass sustainability |
Our business depends on natural resources. We are directly affected by changes in climate and the related challenges of nature loss, particularly freshwater. We continue to address the risks and opportunities climate change and nature loss pose to our business through focused actions to mitigate our most material risks. |
| For more details, see the website www.diageo.com. |
Introduction
Our exposure to climate risk is intensifying, due to extreme weather
events and rising temperatures. Although our analysis indicates that
our business is resilient in the short- and medium-term, we continue to
monitor what is needed to sustain this resilience, both for our
operations and our communities in which we operate. We are
committed to acting responsibly to mitigate our contribution to global
warming and adapt to changing conditions, to support our licence to
operate. We respond to climate change and biodiversity, mitigating the
risks associated with changing environmental and biodiversity factors
through our grain-to-glass sustainability strategy.
Our ‘Spirit of Progress’ targets reflect our most material ESG issues
and align to the UN Sustainable Development Goals. We are signatories
to the UN's 'Race to Zero' and 'Race to Resilience' campaigns reflecting
our commitment to tackle climate change. We are focusing our work in
the areas most at risk in our business across water, agriculture and
communities.
We are proud of our accomplishments to date, including reaching
several of our goals earlier than planned. However, we have identified
several critical external factors beyond our control that influence the
timing and pace of our efforts. Some of these challenges include wider
energy infrastructure availability, appropriate policy frameworks,
consumer acceptance, financing solutions and cost burdens which need
to be shared. We have also faced challenges reaching our packaging
goals. For example, increasing recycled content in our packaging is
hindered by external factors such as cullet availability.
To tackle these challenges, we are increasing the number and depth of
our partnerships to leverage shared resources and aligned interests,
while advocating for transformative change. As we meet goals and
experience challenges, we learn and adapt. We have revised our
aspirations across several targets this year, accelerating our ambition
across water and regenerative agriculture while reconsidering the scale
and pace of decarbonisation and packaging optimisation.
Our updated decarbonisation targets reinforce our commitment to
tackling climate change. These science-based targets, validated
against the Paris-aligned 1.5°C reduction pathway, encompass both
near- and long-term objectives across our value chain. Our revised
targets are shown on page 51 and 53-55. Performance against
supporting targets, including some of our packaging and electricity
targets, have been separately reported in the ESG Reporting Index.
Reporting
We have used the guidance of the Task Force on Climate-related Financial
Disclosures (TCFD) framework for reporting. Increasingly we are
incorporating nature risks and dependencies into our strategic planning. We
continue to identify and quantify our material impacts and dependencies,
following the guidance of the Taskforce on Nature-related Financial
Disclosures (TNFD)'s LEAP (Locate, Evaluate, Assess, Prepare) framework.
Governance
Given the importance of climate and nature risks, we have governance
processes in place to ensure that we factor the risks into our business
operations and planning processes. To supplement our ‘Spirit of
Progress‘ governance (summarised on page 37), our sustainability
performance is integrated into our operational and strategic review
processes. We track water efficiency and greenhouse gas reduction
projects and hold quarterly strategic business reviews focusing on
multi-year plans. Significant risks identified are escalated to enterprise
risk management forums at group level. We oversee climate and nature
risk through these governance structures and processes:
Executive sponsorship is shared jointly between the President, Global
Supply & Procurement and Chief Sustainability Officer and the Global
Corporate Relations Director.
They are supported by our cross-functional Climate, Water and Nature
Risk Steering Group.
The Climate, Water and Nature Risk Steering Group provides regular
updates to the executive sponsors and the Board.
The Board retains ultimate responsibility for the oversight of climate
related risks and opportunities, including monitoring progress against
climate-related targets.
Any impacts, including actual and potential, on our consolidated
financial statements from climate and nature risks and
performance against non-financial metrics are shared with the
Audit Committee annually.
Board oversight
Executive Committee ownership
President of Global Supply
& Procurement and Chief
Sustainability Officer
Global Corporate
Relations Director
Audit Committee
Executive sponsors
Cross-functional Climate, Water and Nature Risk Steering Group
Finance
Corporate
Relations
Marketing
Working groups assigned to address key risks
and opportunities identified
Supply &
Procurement
Legal
Risk
Strategy
47 | Diageo Form 20-F 2025 |
Risk Management
Identifying climate risks and opportunities
We divide climate risk into physical and transition risks. Physical risks
include chronic changes, like sea level rises, temperature changes and
acute events like floods, droughts and heatwaves. Transition risks arise
from actions to mitigate climate change, such as policy and regulatory
shifts; technology evolution or consumer behaviour fluctuations. Both
categories of risk are already occurring and are likely to increase. As
temperatures continue to rise globally, we continue to assess and prepare
for emerging physical and transition risks.
We partner with climate resilience and nature experts to identify and
assess how generally recognised climate and nature risks apply to
our business.
Climate change resilience
Our experience in managing the impact of normal variations in climatic
conditions, water availability and agricultural yields has made us more
resilient and adaptable. We have embedded careful planning in our
supply chain and procurement organisation over many years. We
manage water in a way that makes our operations more resilient and
helps our local communities and agricultural sourcing areas to adapt,
with a specific focus on water-stressed areas. We work with peers to
drive enhanced technological practices at scale, which optimise crop
management and seed quality. We also collaborate on the
development of novel high-yielding, drought and temperature-resilient
crop varieties. We recognise that thriving natural ecosystems are
essential for long-term agricultural productivity and climate resilience,
and we aim to protect and restore nature across our sourcing regions.
Since first referencing it in 2010, we have integrated climate risk into our
enterprise risk management processes, within our principal risk factors.
This is now an integral part of our strategic and business continuity
planning. As we continue to build and strengthen our adaptation plans,
we see our work on water, agriculture and communities as particularly
important in increasing our climate resilience.
 | Identifying and assessing our physical risks |
For the last four years, we have worked with climate resilience experts
to analyse all of our direct operations sites and key third-party
suppliers' sites to assess the physical risks that we are exposed to and
how they may develop under various scenarios. The analysis included
some sites that are planned or under construction, to ensure we
understand their exposure and prepare their resilience before
commissioning the site. The scenario analysis and phasing of the risk
assessments are outlined in the Non-Financial Reporting Boundaries
and Methodologies, available on our website.
Following each successive year's analysis, the total global physical risk
footprint was refreshed.
The physical risk assessments measured the exposure and vulnerability
of the activities at the sites in scope to 19 climate-related hazards. In
addition, we reviewed the vulnerability of the main agricultural
materials and our key distribution routes to climate change. We then
considered how the climate-related hazards and our site vulnerabilities
would materialise under two different future warming scenarios and
over two timeframes:
Intergovernmental Panel on Climate Change (IPCC) scenario RCP
(Representative Concentration Pathway) 4.5 – medium warming of 2-3°C;
IPCC scenario RCP8.5 – severe warming of 4-5°C; and
•with both scenarios evaluated for the periods up to 2030 and up
to 2050.
These scenarios were chosen to represent a 'worst case' (RCP8.5) and a
'medium case' (RCP4.5) under which we assess our resilience.
For our own sites and many of our third-party operators producing
beverages on our behalf, we analysed climate-related risks which are
more likely to materialise. For those that are most strategically
important or at greatest risk, we carried out more detailed
assessments. At each location, we considered a combination of the
different production activities (e.g. distilling and packaging) as well as
parts of the supportive processes that might be affected (e.g.
infrastructure, water supply and energy sources) and the 19 physical
climate-related risks that might occur.
We also analysed our key suppliers' factories and warehouses; for example
those handling our most critical or specialised ingredients and components,
key agricultural commodities and our most critical distribution routes, to
identify which might be exposed to physical risks in the future.
Water is vital to our operations and the raw materials we use when
creating our products. We give great focus to understanding water-
related risks to inform our mitigation strategy. In addition to our
physical climate risk assessments to analyse the risks from water
availability, water temperature, water quality and flooding, we also
conduct water stress analyses at our sites every two years.
We undertake this work using site surveys and World Resources
Institute (WRI) Aqueduct data. We also complete water source
vulnerability assessments (SVAs) at our sites located in water-stressed
areas to further our understanding of the risks and how to address
them. This work provides comprehensive insights into how our risk
profile may vary with climate change, such as the degree of
vulnerability to water stress within our operations and supply chain.
We can then use these insights to help us act where we believe it is
most needed, whether that is improving our water efficiency,
increasing our replenishment commitments or prioritising climate
adaptation planning. In fiscal 25, we updated our water risk
assessments for the purposes of informing our future water strategy,
and carried out SVAs with our external partner on an
additional six sites. For more information, please see page 31 of our
ESG Reporting Index.
Risk assessment results – our most important
physical risks
Our assessment confirmed three key points:
1.Water stress, including drought, is our most significant climate-
related physical risk in terms of prevalence, trajectory and potential
financial impact. It affects our ability to produce our products,
access to agricultural ingredients that we need and, ultimately, our
licence to operate.
2.Agricultural raw materials are at risk from climate change, and we
see that risk increasing under the scenarios and timeframes we
analysed. Our models suggest that the costs of most commodities are
likely to increase because of climate change, although estimates of
the precise impact vary significantly depending on the model used,
underscoring the difficulty of such projections. These factors
potentially affect our own operations and those of some of our
suppliers.
3.Acute weather events, including floods, winds, hurricanes, storms,
heatwaves and wildfires are projected to increase and to cause
interruption to operations, although their impact is unlikely to be as
significant as that of the risks related to water and agricultural
materials.
| For more details on our scenario analysis approach, see the Non- Financial Reporting Boundaries and Methodologies on our website www.diageo.com. |
48 | Diageo Form 20-F 2025 |
PIONEERING GRAIN TO GLASS SUSTAINABILITY continued
Quantitative impact of physical risk determined by
scenario analysis
In fiscal 24, we collaborated with climate resilience experts to develop
and implement an automated scenario analysis tool to inform our
climate adaptation strategy. The tool allows us to perform further
scenario analyses and test numerous sensitivities to defined variables.
For example, we can analyse the sensitivity to climate risks of certain
categories or markets and estimate the impact of the adaptation
measures that we have implemented. This marked a pivotal
advancement in integrating climate risk into our strategic planning
processes. This year, we updated our modelling data to reflect our
latest volumes and growth estimates, and remodelled the chronic risk
of water availability, the acute risk of drought, commodity price
increases due to climate change and one-off climate-related events.
The precise risks and opportunities that were modelled in our scenario
analysis are outlined in the Non-Financial Reporting Boundaries and
Methodologies, pages 4-7.
Water stress, including drought
Under the warming scenarios we modelled, nearly a quarter of our
sales will be exposed to increased water stress in both scenarios and
timeframes. Under these warming scenarios, the absolute number of
sites may not increase significantly, but under both timeframes, those
sites affected may suffer even greater shortages of water, which may
impact our operations and the health and wellbeing of employees at
those sites, as well as local communities.
Analysing the financial impact of drought presents particular challenges
due to numerous factors, such as the probability of occurrence, duration
of operational suspension and effectiveness of adaptation or contingency
measures. We have modelled what we are currently able to through
scenario analysis, considered our own assessment of vulnerability and
applied highly conservative assumptions (e.g. downtime in all sites due to
drought). We have concluded that, by 2030, we do not anticipate drought
to have a significant impact on our operations (including key third-party
operations) or on our financial position. Beyond 2030, it is more difficult
to analyse, given the increased uncertainties inherent in modelling over
an extended timeframe. Our models show that adaptation actions are
needed, particularly in the period between 2030 and 2050, in order to
prevent significant interruption to our operations and supply chain. If no
action is taken, it may potentially result in lost sales. In our strategy
section below, we outline the interventions we are currently
implementing to future-proof our business against drought.
Agricultural raw materials
Agricultural commodity price increases due to climate change are more
difficult to estimate, with our models producing highly varied
estimates. Climate risk is likely to result in a projected price increase
for the majority of our commodities. Our scenario analysis helps us
build commodity price risk into our raw material procurement
strategies, particularly for crops with unique provenance (e.g. agave
and vanilla) or high sensitivity to growing conditions (e.g. hops). Our
modelling suggests the biggest risks of price variability in 2030 and
again in 2050 are likely to impact agave, sorghum, rice, wheat, dairy
and hops. There are considerable differences between models, but the
impacts in both 2030 and 2050 may be significant.
Acute weather events
Acute weather events, such as flooding and storms, are the next most
likely physical risks to affect our financial performance, given the risk
of damage to our sites and disruption to our supply of agricultural
ingredients. Although the direct risk to our sites from acute physical
events will increase, our scale, global supply footprint and capabilities
in resilience management mean we are well-positioned to ensure
flooding and storms do not interrupt our overall ability to serve our
customers or have a significant financial impact on a global scale.
Heatwaves, wildfires and landslides are also identified as acute
physical risks. Their potential financial impact is not modelled in our
scenario analysis but adaptations to these risks are planned where they
are projected to increase.
 | Identifying and assessing our transition risks and opportunities |
We have performed additional scenario analysis to estimate the financial
impact of transition risks and opportunities under a Paris-aligned
emissions scenario (RCP2.6). The analysis provided us with a better
understanding of our risks and opportunities associated with
transitioning to a low-carbon economy. Through this analysis, we have
refined our financial estimate and gained further clarity on how to
respond.
We identified the risks with the most potential impact by looking at
our agricultural inputs, production and packaging, distribution and
sales channels. We were able to determine the most important
transition risks and opportunities to monitor, including:
•Decarbonisation costs: Changes to our supply chain and production
costs, including carbon taxes and related changes to input costs (risk
and opportunity).
•Consumer behaviour: Changes in consumer behaviour to favour more
sustainable options, e.g. choosing circular products or locally
produced brands (risk and opportunity).
•Regulatory changes: Shifts in public policies, e.g. restrictions on
packaging, water use, agricultural materials or land that affect our
ability to make our products (risk).
•Technology changes: Adopting low-carbon production of our products
and packaging, and the associated risk of not doing this fast enough
(risk and opportunity).
Of the risks and opportunities outlined above, the greatest impacts are
likely to arise from consumer behaviour and decarbonisation costs. The
table on page 49 summarises the physical and transition risks and
opportunities we consider the most important.
Quantitative impact of transition risks and
opportunities
Transitioning to a low-carbon economy presents both risks to and
opportunities for our business. Through our scenario analysis, we have
been able to estimate the impact on our operations and financial
condition to 2030, concluding that it is unlikely to be significant over
that period, even assuming that we bear changes in production costs.
Packaging is the key transition risk and opportunity
We identified that the key driver of transition risk to 2050 is our use of
glass which could contribute to an overall production cost increase.
We noted that lower transport and energy costs would partially
mitigate this impact. Extending the analysis to 2050 is subject to many
variables and ambiguities and, therefore, substantial uncertainty.
However, it allows us to estimate what a 'worst-case scenario' may look
like, based on our best available modelling of cost trajectories.
Our modelling has allowed us to estimate the impact on our operations
and the financial condition, after considering some of the possible
mitigating actions we plan to take, which can include pricing,
improvement in energy use, sourcing and using lighter weight
packaging, reducing the carbon intensity of glass production and using
returnable or reusable packaging.
The results of the scenario analysis of both physical and transition risks
are reflected in our assessment of viability and impairment of tangible
and intangible assets (see pages 72-73 and 154).
49 | Diageo Form 20-F 2025 |
Summary of our most important climate risks and opportunities
Risks | ||
Risk description | Water scarcity Increasing water scarcity and water stress affects our ability to continue to source from and produce in water- stressed areas. | Agricultural raw material availability Climate-related impacts on agricultural material availability cause scarcity or price increases. |
Category | Physical – chronic | Physical – chronic |
Timeframe(1) | Short-term (one to five years), medium-term (five to 10 years) and long-term (10 to 30 years) | Medium-, long-term |
Impact (if not mitigated) | Moderate(2) | Moderate(2) |
Response examples | •Improvements in water-use efficiency in our operations, with more ambitious targets at water-stressed sites. •Water replenishment plans in 100% of water-stressed areas. •Collective action activities to improve water security in Diageo's ‘priority water basins’. •Nature-based solutions that support climate mitigation, adaptation and water replenishment. •Exploring alternative formats and ingredients with potential to reduce water use. •Rainwater harvesting, aquifer recharge, dam de-silting. | •Regenerative agriculture adaptations. •Smallholder farmer support. •Development of drought-resistant ingredients (e.g. sorghum, anise and barley varieties). •Alternative sourcing locations. •Substitution with alternative crops. •Increased use of cover cropping. •Improved water management in agricultural practices. |
Risk description | Input costs Policy changes (carbon taxation, shift to renewables) cause increases in input costs. | Consumer behaviour Consumers prioritise purchasing more sustainable products, rejecting those perceived to have a negative environmental impact. |
Category | Transition – policy/legal | Transition – market |
Timeframe(1) | Short-, medium-term | Short-, medium- and long-term |
Impact (if not mitigated) | Moderate(2) | Moderate(2) |
Response examples | •Supply chain decarbonisation. •Engaging suppliers in low-carbon technology options for their operations. •Reduced packaging weight. | Increased recycled content in packaging. Developing circular product offerings. Purchasing more sustainably-grown raw materials. Communicating these changes to consumers. Reduced packaging weight. |
Opportunities | ||
Opportunity description | Supply chain decarbonisation Reducing our Scope 1, 2 and 3 emissions lowers our exposure to carbon taxes and related costs, and improves our reputation with customers and consumers. | Innovation in sustainable products and packaging Developing more sustainable products meets consumers increasing demands. |
Category | Transition – policy/legal | Transition – market |
Timeframe(1) | Short-, medium-term | Short-, medium-term |
Impact (if not realised) | Moderate(2) | Moderate(2) |
Response examples | •Decarbonisation programme and capital investment in our operations. •Renewable energy investments. •Regenerative agriculture programme. •Collaboration, partnerships and capability building within our supply chain. | •Innovation to deliver more sustainable products (e.g. refillable and reusable packaging, alternative packaging materials). •Everpour, an innovative new circular keg and integrated bottle dispense system. |
(1)Timeframes chosen align to those used in our scenario analyses, where short-term (one to five years) reflects the typical strategic planning timeframe, medium-term (five to 10 years) includes
the timeframe to 2030 and long-term (10 to 30 years) includes the timeframe to 2050.
(2)'Low' impact is defined as having a negligible impact on customer service, or an absorbable disruptive impact on one or more brands. 'Moderate' impact is defined as disruption to production/
supply chain creating an inability to service a small portion of our customer base, the impact of which is manageable; or a significant short-term impact on one or more of our core or local
priority brands that is absorbable by the business. 'High' impact is defined as inability to service a significant portion of our customer base, or major reputational damage.
Results of our nature risk assessment
The greatest risk to our agricultural raw material sourcing arises from
water scarcity, as much of our agricultural materials are grown in water-
stressed regions. These results aligned with the observations from our
climate scenario analysis. The raw materials with the highest relative
nature impact
were assessed as agave, broken rice, sugarcane, sorghum and barley.
We are making continuous progress in understanding our nature-related
dependencies, impacts, risks and opportunities, while integrating these
insights into our broader strategy. Our integrated approach aims to
recognise the ways in which taking holistic action on climate change,
water stewardship and regenerative agriculture can build resilience.
50 | Diageo Form 20-F 2025 |
PIONEERING GRAIN TO GLASS SUSTAINABILITY continued
Our strategy for grain-to-glass sustainability
Our sustainability strategy acknowledges the breadth of the environmental
and social consequences of a changing climate and our dependencies on
nature and people. It recognises the interlinkages between climate,
nature, agriculture and people, and the connections to our value chain.
Our strategy, underpinned by targets, addresses our most material
impacts, risks and opportunities, primarily related to water use and
greenhouse gas emissions. The strategy reflects the complexity of the
challenges faced by society and the environment and is reviewed regularly
as regulations evolve or we gain more information on the timeframe
required to address systemic issues, like greenhouse gas emissions. By
acting on, delivering and regularly reviewing our commitments, we are
enhancing our business resilience while safeguarding our licence to operate
and grow.
Whilst the fundamentals of our strategy to preserve water and take a
focused approach to greenhouse gas emission reductions have not
changed, we undertook a review of the targets we use to measure
progress. This review, conducted as part of our regular update of
Science Based Targets initiative (SBTi) targets, resulted in changes to
greenhouse gas emission reduction percentages and timeframes to
achieve those reductions (summarised on page 53). We also reframed
our packaging targets due to both external factors and our growth
ambitions, shifting our focus to recycled content of our packaging,
with lightweight packaging reporting focused on examples, rather than
a formal target.
Our greenhouse gas and water roadmaps outline the projects needed
to deliver our targets. These plans are backed by capital investment
and are regularly reviewed to build confidence in our ability to deliver
our targets. Enhancing and digitising our data has and will continue to
provide more insight into what is required to deliver our strategy.
In 2020, we announced the intention to invest $1.2 billion between
2020 and 2030 to accelerate our ambition to preserve water and
reduce greenhouse gas emissions, with $358 million invested so far.
After updating our greenhouse gas emission reduction targets, we will
be further phasing our investment beyond 2030 and reconsidering the
total amount funded by Diageo. The timing and level of future
investment are dependent on infrastructure changes and regulation,
which we are monitoring. We are committed to optimising scale and
returns through partnerships and our own funding.
Integrating nature risk into our climate risk strategy
In alignment with the recommendations of the Taskforce on Nature-
related Financial Disclosures (TNFD), we have commenced assessing
our nature-related dependencies, impacts, risks and opportunities and
we are building this into our strategic approach on nature. We
conducted a nature baseline during fiscal 24, that encompassed our
agricultural upstream supply chains, our direct operations and an
initial assessment of parts of our packaging supply chain. We identified
material pressures across the value chain and estimated our
contribution to environmental impacts. We identified the geographic
areas where these could be harmful to nature, using datasets covering
four dimensions of nature: land, water, biodiversity and ecosystem
services. In fiscal 25, we continued this work to further our
understanding of our nature-related dependencies, impacts, risks
and opportunities.
 | |||||||
Ewan Andrew President Global Supply and Procurement & Chief Sustainability Officer | | Daniel Mobley Global Corporate Relations Director | | ||||
We are proud of the real world impact of our progress so far and have taken forward significant learnings to help us refine our ambition for the future.' | Doing business the right way is at the core of our Growth Ambition. We are accelerating our action on water, delivering impactful change to address our most material environmental risks.' | ||||||
51 | Diageo Form 20-F 2025 |
| Key Sustainability Targets |
Water efficiency(1) | ||||
Improvement in water use efficiency in water-stressed areas | ||||
Year | % | |||
Target by 2030 Reduce water use in our operations with a 40% improvement in water use efficiency | (40)% | |||
2025 cumulative progress | (20.6)% | |||
2024 cumulative progress | (18.5)% | |||
2025 performance Percentage change in water efficiency index from the prior year | (2.6)% | |||
Improvement in water use efficiency across the company | ||||
Year | % | |||
Target by 2030 Reduce water use in our operations with a 30% improvement in water use efficiency | (30)% | |||
2025 cumulative progress | (15.8)% | |||
2024 cumulative progress | (12.9)% | |||
2025 performance Percentage change in water efficiency index from the prior year | (3.3)% | |||
Water replenishment(3) | |||
Year | % | ||
Target by 2026 Replenish more water than we use for operations in water-stressed areas | 100% | ||
2025 cumulative progress | 84% | ||
2024 cumulative progress | 70% | ||
Water collective action(1) | |||
Year | |||
Target by 2030 Engage in collective action in all priority water basins to improve water accessibility, availability and quality and contribute to net positive water impact | 12 | ||
2025 cumulative progress | 9 | ||
2024 cumulative progress | 8 | ||
Emissions from our direct operations(2) | ||||
Year | % | |||
Target by 2030 Reduce our direct operations greenhouse gas emissions by 50% (Scope 1 and 2) | (50)% | |||
2025 cumulative progress | (18.8)% | |||
2024 cumulative progress | (14.4)% | |||
2025 performance Percentage change in absolute greenhouse gas emissions (direct and indirect greenhouse gas emissions by weight (market/net based) from the prior year | (5.2)% | |||
Emissions from our value chain(2) | ||||
Year | % | |||
Target by 2030 Reduce our value chain (Scope 3) greenhouse gas emissions by 26% | (26)% | |||
2025 cumulative progress | (10.2)% | |||
2024 cumulative progress | (11.5)% | |||
2025 performance Percentage change in absolute greenhouse gas emissions (ktCO2e) from the prior year | 1.5% | |||
Regenerative agriculture programmes(1) | |||
Year | |||
Target by 2030 Develop regenerative agriculture programmes in five key sourcing landscapes | 5 | ||
2025 cumulative progress | 5 | ||
2024 cumulative progress | 4 | ||
increasing recycled content | |||
Year | % | ||
Target by 2030 Continue our work to increase recycled content in our total packaging (increasing the percentage of recycled content in our packaging to 50%) | 50% | ||
2025 cumulative progress | 46% | ||
2024 cumulative progress | 42% | ||
2025 performance Change in percentage of recycled content in fiscal 25 | 4% | ||
(1) Baseline year fiscal 20
(2) Baseline year fiscal 22
(3) Baseline year fiscal 16
52 | Diageo Form 20-F 2025 |
PIONEERING GRAIN TO GLASS SUSTAINABILITY continued
Preserve Water for Life
Water is the most important ingredient in our products. It is also a
precious shared resource that is facing increasing pressure in many
parts of the world due to the impacts of climate change and the
competing demands for freshwater resources. As outlined in our
physical risk assessment, water stress is our most important climate
risk.
Water stewardship forms a key pillar of our 'Spirit of Progress' strategy,
contributing to our climate resilience.
Our water strategy, which aims to build resilience and enable growth,
has four interdependent pillars that are integrated with other actions
to address impacts on climate, nature and people:
Operations: delivering industry-leading water management across our
own sites, including improving water-use efficiency in our operations
and replenishing the water we use in water-stressed areas.
Supply chain: amplifying water stewardship across our supply chain,
focusing on agriculture and partnering with suppliers in priority basins
on water replenishment and collective action.
Communities: building resilience in our communities, including
providing access to water, sanitation and hygiene (WASH).
Advocacy: driving systemic change, including leading and/or
participating in collective action in our priority water basins to drive
positive change.
More information on our refreshed water strategy can be found on our
website at www.diageo.com.
In fiscal 25, we advanced our ongoing efforts to extend our water
replenishment and collective action programmes to include indirect
water use by key third-party operators in our priority water basins. We
are increasing the number of these priority water basins to accelerate
action, and will incorporate extended collective action and
replenishment targets in fiscal 27.
We also aim to leverage our brands to deliver our goals, such as Don
Julio's support for water replenishment in Jalisco, and increase our
engagement with governments to encourage investments and
progressive climate and water policy. Our ambitious actions on water
will help to ensure our sites, supply chain and communities build
resiliency in a changing climate.
| Water efficiency |
Our focus on water-stressed areas has continued to deliver strong water-
use efficiency performance with a 2.6% improvement in the water
efficiency index versus fiscal 24 and 20.6% improvement since our fiscal 20
baseline.(1) This was primarily driven by efficiency improvement initiatives
at our sites in East Africa. In fiscal 25, the volume of water recovered and
recycled in water-stressed areas reached approximately 816,000 m3 –
equivalent to 16.4% of the total water used in these areas.
Our performance across the company on water-use efficiency has improved
by 3.3% in comparison to the previous fiscal and by 15.8% since our fiscal 20
baseline.(1) This was mainly driven by a range of improvement initiatives
delivered in our Scotland distilleries and our Runcorn and St. James' Gate
beer sites in addition to the efficiency improvements initiatives from our
East Africa sites.(2)
Innovation and new technologies continue to be essential for achieving
our water-use efficiency targets and improving water management.
Through Diageo Sustainable Solutions (DSS) we are continuously looking
to identify, test and integrate new technologies into our plans. Last
year, we launched a DSS innovation round focused on five water
challenges, including efficiency and maximising wastewater value. We
have now selected three partners to demonstrate their technologies,
one of which has been piloted at one of our sites to test their
alternative to reverse osmosis. This complements our ongoing pilot
partnership with Aquacycl in our La Primavera site, where we have
demonstrated the capability of this technology to be integrated as
pretreatment within existing wastewater treatment systems, achieving
over 80% removal in biological oxygen demand (BOD).
Previous water efficiency methodology | Fiscal 25 | Percentage change compared to fiscal 24 | Improvement compared to fiscal 20 baseline |
Water use efficiency per litre of product packaged (litres/litre) - across the company | 3.98 | 6.4% improvement | 14.5% improvement |
Water use efficiency per litre of product packaged (litres/litre) - water-stressed areas | 3.25 | 1.1% improvement | 19.6% improvement |
| Water replenishment |
Our water replenishment programme continues to deliver beneficial
impact, with another strong year of delivering local water projects. We are
on track to reach our fiscal 26 target of replenishing more water than we
use for our operations in water-stressed areas. In fiscal 25, we
implemented projects that have the annual volumetric replenishment
capacity of 3,084,000 m3 of water. Cumulatively we have replenished 84%
of our estimated fiscal 26 volume with projects such as reforestation,
wetland restoration, agricultural water supply improvements, leak repair
and rainwater harvesting.
In fiscal 25, we completed 30 replenishment projects in 10 countries,
cumulatively implementing over 150 projects between fiscal 21 and
fiscal 25. In Jalisco, Mexico, we were proud to partner with the local
authorities in Atotonilco, where we have two tequila distilleries, to
repair local infrastructure which was leaking water. The project will
reduce water loss for the community by over 1.73 million m3 of water per
year. In Türkiye, we continued to progress agricultural water supply
projects, this year providing more water for farming communities in
Mersin’s Gülnar district.
An important part of our approach on water is that it remains people-
centric. We have committed to providing access to clean water,
sanitation and hygiene (WASH) in water-stressed communities near our
sites and in water-stressed areas that supply our raw materials. In
fiscal 23, we reached our 2030 target, meaning all nine of the markets
included in our target invested in WASH projects since 2020. We
maintain this commitment, investing every year to 2030. For more
information, please refer to our ESG Reporting Index.
(1) The water efficiency index across the company and in water-stressed areas was materially impacted by the disposal of Guinness Nigeria PLC. The impacts of Guinness Nigeria PLC on water use
efficiency were removed from both the baseline and the performance in the intervening years.
(2) Under the previous water efficiency methodology, water efficiency was measured in litres of water per litre of product packaged (litres/litre). Performance under the previous methodology
continues to be measured for long-term incentive programmes (refer to page 123). Under the new methodology, the water efficiency index – across the company was 84.2 and the water efficiency
index – water-stressed areas was 79.4 in fiscal 25.
53 | Diageo Form 20-F 2025 |
| Water Collective Action |
We recognise that businesses need to partner with other water users,
non-governmental organisations (NGOs) and governments to build
climate resilience and ensure water security. Our collective action
programme embraces a collaborative approach towards water
stewardship in our priority water basins across 10 countries.
The collective action programme involves multi-stakeholder
partnerships including other companies, NGOs, public sector
organisations and communities. Together these partnership initiatives
aim to pool knowledge, expertise and resources to identify and
implement solutions to address shared water challenges.
In fiscal 25, we joined the White Volta Basin Watershed Fund, which
aims to enhance water security in the Greater Tamale area in Ghana,
where we source raw materials. We also continued to participate in
collective action groups in Scotland, Uganda and India, with multiple
aims including implementation of nature-based solutions and
advocating for equitable access to water. The percentage of our
priority water basins with collective action participation was 75% at
the end of fiscal 25 (9 out of 12 basins).
We continue to act as water basin champion in the Santiago Lerma
River Basin in Mexico, where we have driven the transition of Charco
Bendito collective action; the Upper Godavari River Basin in India; and
Kenya’s Upper Tana Basin where our increased investment will extend
the Upper Tana-Nairobi Water Fund’s work into new counties.
As basin champion, Diageo commits to providing overall leadership on
efforts to rejuvenate selected basins. For example, we have
established a project management office to co-ordinate activities for
The Godavari Initiative in India and played a leading role in
transforming the governance and ambition of Charco Bendito in
Mexico, increasing corporate funding and participation from 10 to 12
companies. In Kenya, our cumulative contribution to the Upper Tana-
Nairobi Water Fund from fiscal 24 to date has resulted in over 580,000
trees planted, over 600 water pans constructed to promote rainwater
harvesting, 27 drip irrigation kits provided to enhance water-use
efficiency and increase yields, 52,500 metres of terraces, 52,500
metres of grass strips and 17,500 metres of permanent river bank
buffer strips to promote sustainable land management.
Advocacy
At COP29 in Baku, we were among businesses continuing to call for
more action on water and climate resilience. We also attended the UN
SDG Summit in New York and World Water Week in Stockholm to share
our ambition and learnings, and advocate for more companies and
partners to scale up collaboration. We are members of leading
international organisations such as the Water Resilience Coalition and
Alliance for Water Stewardship, and we have strategic partnerships with
WaterAid and The Nature Conservancy that support this call to action.
Our carbon strategy
We are committed to a low-carbon future and following a science-
based approach to drive the pace and scale of change required. In
fiscal 25, we continued to reflect on learnings from our first five years
tracking against our ‘Spirit of Progress‘ greenhouse gas emissions
reductions targets.
Based on those learnings, new targets were approved by the Board and
the Science Based Targets initiative (SBTi). They include interim, near-
term targets for direct operations and value chain emissions, as well as
long-term net zero(1) targets. Our targets resulted from analysis of all
categories of material emissions in our own operations and value chain
to reflect the changes in our business since our first submission of SBTi
targets in 2021. We also updated our baseline year to fiscal 22 to align
to normalised production levels, which were not impacted by the
Covid-19 pandemic and adjusted packaging targets in alignment with
our revised value chain emissions reductions targets.
As required by SBTi, we further disaggregated our targets between
those which are Forest, Land and Agriculture (FLAG) emissions and
other (Non-FLAG) emissions, which we will report on separately in our
ESG Reporting Index.
Target reduction from baseline fiscal 22(2) | Date to achieve | Metric |
Reduce our direct operations greenhouse gas emissions by 50% (Scope 1 and 2) | 2030 | Percentage change in absolute greenhouse gas emissions (direct and indirect greenhouse gas emissions by weight (market/net based)) |
Become net zero(1) in our direct operations (Scope 1 and 2) | 2040 | |
Reduce our value chain (Scope 3) greenhouse gas emissions by 26% | 2030 | Percentage change in absolute greenhouse gas emissions (ktCO2e) |
Become net zero(1) in our full value chain | 2050 |
(1) Net zero emissions are reached when anthropogenic (i.e. human-caused) emissions of
greenhouse gases into the atmosphere are balanced by anthropogenic removals over a
specified period. A science-based approach to net zero covers emission Scope 1, 2 and 3
with direct abatement of approximately 90% from our emissions baseline and up to 10% of
high-quality certified carbon offsets to neutralise hard-to-abate residual emissions to
close the gap to zero. Targets are based on our SBTi target boundary.
(2) Fiscal 25 is the first year that we measure progress against our 2022 baseline. Fiscal 24
progress reported has been restated to reflect this new baseline year.
54 | Diageo Form 20-F 2025 |
PIONEERING GRAIN TO GLASS SUSTAINABILITY continued
We refined our decarbonisation roadmaps detailing the measures we will take to reduce greenhouse gas emissions and ensuring that new sites are
developed with low emission technologies embedded from the outset. Across our supply chain we are clear on the decarbonisation levers that we
control and the solutions that require collaboration with others to progress. In due course, we will be publishing our Climate Transition Plan, which will
detail the pathway to achieve our targets, with more detail on the actions we intend to take to meet our ambitions. Our approach to deliver will
include:
Scope 1 (5.5%)(1) | Scope 2 (0.1%)(1) | Scope 3 (94.4%)(1) |
•Embedding energy efficiency into our processes. •Switching to renewable electricity, fuel and heat across our sites. •Utilising renewable energy certificates, innovations, partnerships and carbon removals to close the gap.(1) | •Continuing to switch to renewable electricity. •Creating additional renewable energy capacity to power our sites, exporting surplus energy to the local grid, through on-site developments and using power purchase agreements. | •For Scope 3 emissions, our strategy includes three areas: •Diageo enabled projects: projects where we have the greatest control and confidence in delivery. •Selective engagement: projects that engage and influence external stakeholders. •Strategic innovation: projects that bring disruptive new products and approaches. |
We acknowledge that realising this scale of transformation will require partnering for systemic change and delivering decarbonisation solutions in
areas outside our direct control. Not all our suppliers and partners are at the same stage, nor is the necessary external infrastructure always
available at scale.
We recognise that policy frameworks and market signals are not always incentivising the necessary pace of change across all markets in which we operate.
We are focusing on the areas where we can affect the biggest positive impacts across our value chain, partnering with others and advocating for change to
unlock solutions to some of the external challenges we face.
Streamlined Energy and Carbon Reporting (SECR) | |||||
2021 | 2022 | 2023 | 2024 | 2025 | |
Total Global energy consumption (MWh) | 3,123,048 | 3,299,189 | 3,267,486 | 3,296,096 | 3,289,237 |
Total UK energy consumption (MWh) | 1,050,459 | 1,078,943 | 1,223,347 | 1,259,921 | 1,244,702 |
Direct (MWh) | 913,581 | 939,092 | 1,076,462 | 1,105,054 | 1,087,704 |
Indirect (MWh) | 136,878 | 139,851 | 146,885 | 154,867 | 156,998 |
Total UK direct and indirect greenhouse gas emissions (kt CO2e) | 71 | 83 | 134 | 118 | 101 |
Scope 1 | 71 | 83 | 134 | 118 | 101 |
Scope 2 | — | — | — | — | — |
Market-based (net) intensity ratio of greenhouse gas emissions (g CO2e per litre of packaged product) | 119 | 104 | 105 | 94 | 85 |
Total direct and indirect greenhouse gas emissions by region by year(2) | ||||
Total direct and indirect greenhouse gas emissions by weight (market/net based) (1,000 tonnes CO2e) | ||||
Region | 2022 | 2023 | 2024 | 2025 |
North America | 100 | 83 | 86 | 77 |
Europe | 144 | 193 | 176 | 162 |
Asia Pacific | 8 | 6 | 5 | 5 |
Latin America and Caribbean | 37 | 27 | 9 | 15 |
Africa | 93 | 55 | 51 | 51 |
Diageo (total) | 382 | 364 | 327 | 310 |
of which | ||||
direct greenhouse gas emissions | 376 | 359 | 323 | 306 |
indirect greenhouse gas emissions | 6 | 5 | 4 | 4 |
(1) This information reflects current management estimates and expectations. It is based on assumptions available at the time of reporting, and both underlying data and future developments may
evolve. As a result, our projections and interpretations may change. See pages 47–49 for further details on how climate change may affect Diageo and the actions we are taking to manage and
mitigate related risks.
(2) The table covers our market-based direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions.
55 | Diageo Form 20-F 2025 |
| Direct operations |
In fiscal 25, we decreased greenhouse gas emissions from our direct
operations by a further 5.2% versus fiscal 24. Investing in renewable
energy and improved energy performance across our global footprint
have enabled us to reduce our emissions this year.
We have benefitted from the continued use, and optimised output,
from our on-site bioenergy facilities across multiple markets.
Additional purchased liquid biofuel across a number of scotch distillery
and malting sites has helped to drive our emission reduction across our
direct operations greenhouse gas emissions (Scope 1) this year. The
percentage of renewable energy used as a proportion of total energy
across our direct operations footprint increased in fiscal 25.
Our energy performance has improved across our largest markets, driving
emission savings and enabling decoupling of emissions from production.
Several incremental and continuous improvement projects have delivered
positive energy efficiency outcomes, particularly across our brewing and
distilling sites. In our scotch footprint, we have successfully implemented
a number of heat recovery, process optimisation and insulation projects,
improving our energy efficiency. Our breweries in East Africa have
continued to optimise their processes and use of bioenergy, resulting in
an overall energy efficiency improvement. At our packaging sites in the
United Kingdom, Europe and Australia, electrification of heat, pasteuriser
process optimisation and replacement of old equipment has also led to
energy efficiency gains.
Our continued reduction of greenhouse gas emissions has driven a
cumulative saving of 18.8% in greenhouse gas emissions versus our
fiscal 22 baseline. We have delivered these savings through investment
in bioenergy plants in East Africa, Scotland and Mexico, with additional
savings being delivered through electrification of heat, fuel switching
to lower emission alternatives like biofuel or renewable gas and
optimising our energy use. We source renewable electricity widely
across our portfolio, investing in on-site solutions as well, particularly
across sites in Africa and, Latin America and Caribbean which has
helped us reduce our indirect greenhouse gas emissions (Scope 2) from
our fiscal 22 baseline.
| Value chain emissions |
In fiscal 25, we continued to review our greenhouse gas emissions
inventory and calculation methodologies, adjusting our assumptions to
further refine our full greenhouse gas emissions profile. We enhanced
our value chain emissions (Scope 3) reporting, ensuring that any
material updates, including to emissions factors, were applied across
all prior years back to our revised fiscal 22 baseline, in line with our
Non-Financial Reporting Boundaries and Methodologies.
Our updated Scope 3 emissions target represents the weighted average
of our targets to reduce Forest, Land and Agriculture (FLAG) and non-
FLAG (energy and industry) emissions. This separation of the emissions
target supports prioritisation, and focuses our efforts on where we can
make the most impact.
When compared to the prior year, our fiscal 25 Scope 3 emissions
increased by 1.5%, which was mainly driven by increased volumes of
finished products. This included increases in purchased packaging
materials (glass bottles, closures and kegs). Packaging improvements
from lightweighting programmes and switching to lower emission
formats reduced some of the impact from these increased emissions.
Our logistics and distribution emissions increased between fiscal 24 and
25, corresponding to increased volumes but also impacts from
increased distances and emission factor updates.
Our emissions associated with raw material and ingredient purchases
also increased slightly.
Our Scope 3 greenhouse gas emissions have decreased by 10.2%
compared to our fiscal 22 baseline. Coupled with volume decreases,
progress to our 2030 target has been enabled through packaging
sustainability initiatives like lightweighting, format changes and
increased recycled content. We have partnered with a number of
suppliers to optimise our raw material sourcing and better understand
our value chain emissions.
In fiscal 26, we will continue to improve our supplier engagement and
our Scope 3 decarbonisation roadmaps, particularly focusing on
mapping our FLAG initiatives, targeting areas that deliver emission
reductions and value for the business. We recognise that external
factors are the driver of Scope 3 emissions, which is why we continue
to engage with our key suppliers to enhance our Scope 3 data and to
find solutions together.
| Moving towards regenerative agricultural sourcing |
Businesses have a shared interest in helping to restore the natural
resources on which we all depend. We are committed to supporting the
economic, social and environmental sustainability of our agricultural supply
chains.
In fiscal 25, we reached our target of launching five regenerative
agriculture programmes across key sourcing geographies. Our
programmes, which ran through the fiscal, covered agave in Mexico,
broken rice in India, barley in Ireland and separately, wheat and barley
in the United Kingdom.
We continue to learn from the regenerative agricultural programmes in
place, with critical data being gathered to inform an updated strategy
to address the dependencies, impacts, risks and opportunities from our
agricultural sourcing activities. Sustainable sourcing is a critical lever
to reducing carbon emissions, water usage and biodiversity loss. In
fiscal 26, we will extend the target to deliver a total of 10
collaborative regenerative agriculture programmes between 2020 and
2030, aiming to address key climate, nature and water risks.
| Reducing emissions through packaging improvements |
Greenhouse gas emissions from packaging represent 33% of our total
Scope 3 value chain emissions. We are committed to reducing our value
chain carbon footprint by increasing our recycled content, reducing
single-use packaging, reducing packaging weight and deploying and
scaling circular business models.
Given that reducing the absolute weight of our packaging competes
with volume growth, we will no longer be reporting against a specific
packaging weight reduction target. However, we will continue pursuing
lightweighting projects which are good for both the business and
emissions reduction, reporting on examples each year. We have also
revised our 2030 ambition for recycled content in our packaging to 50%
(previously 60%), based on our latest forecasts for cullet availability.
This year, we further integrated our technical supply, marketing and
innovation teams to deliver the triple win: increased value for our
consumers, reduced greenhouse gas emissions and improved bottom
line performance through cost efficiency or top line growth.
56 | Diageo Form 20-F 2025 |
PIONEERING GRAIN TO GLASS SUSTAINABILITY continued
In fiscal 25, we delivered a number of key projects including:
•Reducing the glass bottle weight of our core size Johnnie Walker
Gold, Green and Double Black Label as well as Baileys and Cîroc
brands. This programme delivered an average 15% weight reduction
and a total of 5,100 tonnes CO2e savings per annum across all brands
in scope.
•Expanding the availability of Smirnoff Ice and Gordon's Space in cans
for select markets, providing the opportunity to move away from
glass and resulting in 530 tonnes CO2e savings.
•Launching a pilot programme for Johnnie Walker Black Label in a
paper bottle, building on previous work for Baileys and employing a
different solution as we continue to test and learn from consumer
reaction to new packaging formats for spirits.
•Removing excess packaging including gift cartons from Zacapa 23
and optimising the carton design for scotch brands including Johnnie
Walker Gold and Green Label.
We continue to trial and test circular solutions for packaging with
Everpour, our first in-house led bespoke spirits keg and dispense system for
the on-trade, with each keg replacing 500 single use 70cl glass bottles.
Increasing recycled content in our packaging
In fiscal 25, we surpassed our recycled content in plastic bottles
target.
Our recycled content in plastic bottles was 43% versus a target of 35%
which we had reset in fiscal 24 from 40% due to supply constraints,
technical barriers and legislation changes. We overcame these
challenges to drive a 21% increase within the year and will continue to
plan for incremental improvements in future years.
Our total packaging recycled content inclusion increased to 46% versus
our 2030 target of 50%. We continue to see year-on-year improvement
across our packaging categories, primarily driven by recycled content
in glass bottles.
Increasing glass cullet availability through improved collection and
sorting schemes in partnership with our glass vendors continues to be a
focus area for the business and we are engaging our key packaging
suppliers across a comprehensive range of business objectives.
Sustainability initiatives and the ability to help unlock industry-wide
challenges are central to our joint business planning.
57 | Diageo Form 20-F 2025 |
How we have reported consistently with the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD)
In this year's disclosures, we have complied with the FCA's UK LR6.6.6R (8). Our climate-related financial disclosures are considered to be consistent
with the TCFD's recommendations and recommended disclosures, as illustrated in the index below.
TCFD recommendation | Consistency |
GOVERNANCE See page 46 | |
a.Describe the board’s oversight of climate-related risks and opportunities. | Yes. See page 46. |
b.Describe management’s role in assessing and managing climate-related risks and opportunities. | |
RISK MANAGEMENT See pages 47-49 | |
a.Describe the organisation’s processes for identifying and assessing climate- related risks. | Yes. See pages 47-49. Having completed comprehensive risk assessments, our focus is now on ensuring appropriate adaptation plans are in place for all risks identified. |
b.Describe the organisation’s processes for managing climate-related risks. | |
c.Describe how processes for identifying, assessing and managing climate- related risks are integrated into the organisation’s overall risk management. | |
STRATEGY See pages 47-50 | |
a.Describe the climate-related risks and opportunities the organisation has identified over the short-, medium-, and long-term. | We have described risks and opportunities for our business, in all of our owned operating locations and our most important third-party operations, as well as the impact of those risks and opportunities on our strategy. We have modelled the resilience of our strategy under different climate-related scenarios. We have co-developed a scenario analysis tool with climate experts to enable regular updates to our scenario analyses. The precise risks and opportunities that were modelled in our scenario analysis are outlined in the Non-Financial Reporting Boundaries and Methodologies, pages 4-7. |
b.Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning. | |
c.Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. | |
METRICS & TARGETS See pages 50-56 | |
a.Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. | Yes. See pages 50-56. |
b.Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. | Yes, for Scope 1 and 2 see page 51 and 53-55. For Scope 3 see our ESG Reporting Index on page 41. We are continually enhancing our Scope 3 GHG emissions footprint through supplier engagement and refining our data granularity in line with GHG accounting standards. |
c.Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. | Yes. See pages 50-56. |
58 | Diageo Form 20-F 2025 |
CHAMPION INCLUSION AND DIVERSITY
| Champion inclusion and diversity |
Championing inclusion and diversity helps us drive performance, and is crucial to our purpose of ‘celebrating life, every day, everywhere’. |
Key Ambitions(1, 2, 3)
Gender representation of our leadership | |||||||
2030 Ambition Champion gender diversity, with an ambition to achieve 50% representation of women in leadership roles by 2030 | 50% | ||||||
Role | Men | % | Women | % | Total | ||
Leadership population (3) | 335 | 57% | 256 | 43% | 591 | ||
Ethnic representation of our leadership(4) | ||||||||||
2030 Ambition Champion ethnic diversity, with an ambition to increase representation of leaders from ethnically diverse backgrounds to 45% by 2030 | 45% | |||||||||
Ethnically diverse | % | Non- ethnically diverse | % | Decline to self identify | % | Not disclosed | % | Total | ||
265 | 46% | 272 | 48% | 17 | 3% | 17 | 3% | 571 | ||
(1) Statements on representation should be considered an ambition for Diageo, not a target.
(2) This data is calculated as an average across the four quarters of fiscal 25.
(3) Leadership population encompasses the Executive Committee and senior managers.
(4) 20 leaders are based in countries that do not collect ethnicity data. As such, these leaders are not in
scope.
For more details, see the Non-Financial Reporting Boundaries and Methodologies on our website.
Building a thriving and inclusive hospitality industry | |||
Year | Number of people reached | ||
2030 Ambition Provide business and hospitality skills to 200,000 people, increasing employability and improving livelihoods through Learning for Life and our other skills programmes | 200k | ||
2025 cumulative progress | 133k | ||
2024 cumulative progress | 98k | ||
| For more details, see the website www.diageo.com. |
At Diageo, our purpose is to ‘celebrate life, every day, everywhere’ –
we want everyone to feel invited and included. We believe that
inclusivity is not just the right thing to do, it makes good business
sense. We remain committed to our ‘Spirit of Progress‘ ambitions,
recognising the need to continually evolve, whilst reinforcing our
commitment to advancing inclusion and cultural transformation, so
every employee can thrive.
As a global business with stretching growth ambitions, it is imperative
we employ the most talented and diverse teams and create a truly
inclusive culture to help us reach and appeal to the broadest range of
consumers who enjoy our brands. We look to champion inclusion and
diversity across our entire business – with our people, through our
value chain, across our brands and within the communities in which we
operate.
A culture that supports all
We believe everyone should work in an environment where they are
empowered, respected and their contributions are valued. In our most
recent survey, 83% (fiscal 24: 81%) of employees would recommend
Diageo as a great place to work, and 85% (fiscal 24: 83%) agreed that
people from different backgrounds can be themselves and thrive.
Building an inclusive culture through policies and
practices
In recent years, we have developed policies and practices to support
employees at various life stages, partnering with employee resource
groups (ERGs) and external experts. In fiscal 25, we expanded our
'Carers Leave' policy to 30 countries across Asia Pacific, Latin America
and Caribbean, and North America, offering 10 days of paid leave for
dependent care. Over 470 employees utilised more than 1,500 days in
fiscal 25. Our long-standing Family Leave Policy remains well-adopted,
with over 1,400 parents using it in fiscal 25. We are proud to have
received external recognition in Hungary, North America, and the
United Kingdom as a top employer for parental benefits. In partnership
with our employees and the Spirited Women Network, we continue to
strengthen our approach to ensure a smooth and inclusive return-to-
work experience for all.
This fiscal, the 'Fertility Support Guidelines’ providing paid leave to
assist all employees undergoing fertility treatment, were extended to
Australia, Caribbean and Central America (CCA), and Middle East and
North Africa (MENA) markets. We also refreshed and revised our
‘Global Disability Inclusion’ guidelines to include broader emphasis on
Universal Design Principles to improve accessibility, usability and
inclusivity in our digital and physical spaces.
We remain committed to creating an age-positive environment where
all employees can feel valued at each life stage. In fiscal 25, we
piloted an age inclusion initiative within our Scotland Supply Chain and
Procurement business, engaging employees through surveys and focus
groups. Additionally, 60 employees participated in a 12-week self-paced
life coaching programme, delivered in partnership with our external
partner, 55/Redefined, providing valuable insights to better support
colleagues in later career stages.
Supporting female talent for the future
Since setting our 2030 ambition in 2020 to reach 50% women in
leadership, we have increased representation from 39% to 43%. This
reflects our long-term commitment to building a more inclusive
leadership team. We are investing in the next generation of female
leaders, with a focus on underrepresented functions such as
commercial, digital, general management and supply, particularly
across countries in Africa and Asia Pacific, where local cultural norms
have created disadvantages.
Our commitment to sustainable progress is underpinned by focused
talent development and succession planning. Our ‘Horizons’
programme accelerates emerging general managers, with a goal of at
least 50% female participation. In Latin America and Caribbean,
‘Striding Women’ provides coaching and leadership training, and in
Africa, 23 women graduated from the ‘BLOOM’ programme, delivered
in partnership with Strathmore University to prepare women for future
senior roles.
In the 2025 FTSE Women Leader Review, Diageo ranked fourth overall
in the FTSE 100 for combined executive and executive direct report
roles held by women, up from eighth in 2024. This progress highlights
our continued commitment to advancing gender equality in leadership.
Supporting our ethnically diverse talent for the future
We are proud for a second consecutive year to have maintained 46%
ethnically diverse leadership representation, surpassing our 2030 goal.
We achieved this through 46% of internal promotions and 54% of external
appointments into the leadership cohort being ethnically diverse in fiscal
25. We are proud to continue participating in the Parker Review Report
59 | Diageo Form 20-F 2025 |
STRATEGIC REPORT | GOVERNANCE report | FINANCIAL STATEMENTS | ADDITIONAL INFORMATI ON |
2025, where Diageo stands out for its strong ethnic diversity at both
Board and senior leadership levels, significantly surpassing the FTSE 100
average. Our people continue to demonstrate their commitment to our
inclusion journey by voluntarily sharing information about how they self-
identify their ethnic background. We are proud that 97% of our
leadership population and 72% of all employees, in the markets where
data collection is live, have completed the ethnicity field. We continue
to drive local initiatives to cultivate leadership pipelines. In Brazil, more
than 120 Diageo employees took part in the cross-industry MOVER
programme benefiting from leadership capability build, mentoring and
postgraduate scholarships. Of the cohort, 62% identified as Pardo, 38% as
Black and 6% as disabled. In Ireland, fiscal 25 marked the third annual
World Culture Day, led by the REACH (Race, Ethnicity and Cultural
Heritage) Network, celebrating the market’s rich diversity with
representation of more than 15 nationalities.
Leveraging the power of our Resource Groups locally
We empower our people to drive inclusion and diversity through over
60 global Employee Resource Groups (ERGs). These ERGs continue to
grow in influence, shaping strategy, policy and brand campaigns.
Sponsored by senior leaders and open to all, ERGs spark meaningful
conversations and engagement across our business. With more than 20
ERGs focused on advancing gender equality, including three dedicated
specifically to engaging men across Africa, we continue to drive
inclusive dialogue and meaningful action. Our 2025 International
Women’s Day celebrations embraced the theme ‘Rights. Equality.
Empowerment. For ALL,’ with three global sessions attracting nearly
2,000 live participants and over 30 local activations across the month
of March. This year, our South East Asia chapter hosted conversations
on masculinity and breaking gender stereotypes; and in Tanzania’s
B.R.E.W. (Brotherhood, Responsibility, Equality and Wellness) Network
expanded its reach, deepening its focus on men’s holistic growth and
inclusive leadership.
Promoting inclusivity through our value chain
We strive to have a positive impact on society and promote sustainable
growth by providing resources, learning and livelihood opportunities for
communities where we source, make and sell our brands. All our
programmes are ‘inclusive by design’ aiming for 50% of beneficiaries to
be women, whilst also adopting inclusive recruitment practices,
providing training content and accessibility, as well as dedicated
modules on inclusion and diversity.
In fiscal 25, Learning for Life (L4L), our business and hospitality skills
programme for people from under-represented groups, reached 35,000
people in 34 countries and over 50% of them were women. In the
fiscal, we assessed and enhanced our programme controls to improve
programme quality, impact and reporting globally and fostered new
partnerships to increase employment rates upon graduation.
Where we provided Water Sanitation and Hygiene (WASH) to
communities in water-stressed markets, we partnered with leading
NGOs to ensure equal representation on WASH committees. These
committees facilitate community dialogues to tackle social norms that
prevent women’s equal access to and agency over WASH. This year
more than 50% of WASH committee members were women.
We continued to expand our inclusive approach to supporting
smallholder farmers in Kenya, Tanzania and Ghana, providing equal
access to agricultural training and resources for women, youth and
people with disabilities, building their economic and environmental
resilience and strengthening our supply chain.
Championing a diverse supply chain
In fiscal 25, we have grown our diverse supplier base across 28
countries, actively engaging with over 930 diverse suppliers, more than
60% of them being women-owned. We continue to champion inclusion
across our value chain, working with organisations like WEConnect
International and OutBritain, to identify, connect with and grow
diverse suppliers. This year, we also partnered with the World
Federation of Advertising to launch a supplier diversity playbook,
offering guidance for marketing leaders on inclusive procurement
strategies. More information can be found in our ESG Reporting Index.
Creating an inclusive and thriving hospitality industry
Through Diageo Bar Academy, we aim to foster a thriving and inclusive
hospitality sector that works for all. In fiscal 25, we continued to
provide highly accessible educational resources and training. Our
resources are designed to help hospitality workers meet guests'
expectations, upskill new hires and support their career progression
and wellbeing. We led dedicated training and mentoring sessions in
areas where we see opportunities to support women's advancement
within the hospitality sector.
Inclusive marketing: Good for society and good for business
We craft and market our products for everyone (Legal Drinking Age+)
and, through our advertising, we want our brands to reflect all
consumers around the world. As one of the world’s largest advertisers,
we’re committed to ensuring that everyone, from script to screen,
sees themselves represented, and we continue to play our role to make
mainstream media more inclusive. In fiscal 25, we made significant
advancements to improve the accessibility of our content, and
developed and scaled training for our marketing teams and agency
partners. We further embedded inclusion into our Guinness Six Nations
campaigns with expanded live audio description, sign language
commentary and additional in-stadium accessibility. This includes the
use of the ‘Field of Vision’ devices to enhance the live experience for
blind and visually impaired fans. With Guinness, we announced a
collaboration with IDA Sports to create the first-ever soft ground boot
engineered for female athletes. We also partnered with 'She Said So', a
non-profit organisation committed to gender equality within the music
industry. Johnnie Walker worked on the campaign 'Pass the Mic' with
WE ARE Pi, which celebrates female game changers in hip-hop.
 | ||||
Louise Prashad Chief HR Officer | | |||
We are proud of our progress over many decades in championing inclusion and diversity with our brands, communities and workforce, and we want to continue to build on our strong foundations.' | ||||
60 | Diageo Form 20-F 2025 |
OUR ESG REPORTING APPROACH
Our ESG reporting approach
Reporting transparently on the ESG issues that affect our business, and that our business contributes to, plays a vital role in delivering our strategy.
It helps us to manage ESG risks, take opportunities and promote sustainable development everywhere we live, work, source and sell.
Our ESG reporting suite aims to provide comprehensive and comparable disclosures for a broad range of stakeholders. As well as publishing our
integrated Annual Report and ESG Reporting Index each year, we also submit non-financial information to benchmarking and index organisations,
including those listed on the Awards and ranking page of our website.
The non-financial reporting space is evolving quickly. We are committed to continually evaluating and improving our approach and to actively
tracking emerging ESG reporting regulations, frameworks and good practice. Since launching our ‘Spirit of Progress’ ESG action plan, we have set
out to help create a more inclusive and sustainable world, creating a positive impact in our company, and for our society.
How we report to our stakeholders – our reporting suite
 |  |  |  | ||||||
Annual Report Where we present our most material disclosures and describe how our strategy delivers value for our business and other stakeholders. Performance against our most material targets is integrated into the relevant focus area sections. | ESG Reporting Index Where we provide additional disclosures in line with the GRI (Global Reporting Initiative) Standards, our materiality assessment and our response to the Sustainability Accounting Standards Board (SASB). We also consider the UNGC requirements in our ESG reporting. | Non-Financial Reporting Boundaries and Methodologies Where we provide information on the boundaries and calculations applied to derive information set out in the Annual Report and the ESG Reporting Index. | Diageo.com Where, through the ‘Spirit of Progress‘ section, we give more details of our approach and performance, with examples of our strategy in action. |
Who are our stakeholders? Everyone who is affected by our business, and everyone who affects it, is a stakeholder. A detailed description of our
stakeholder engagement process is on pages 86-93 of this Annual Report.
This non-financial and sustainability information statement provided on pages 61-62 provides an overview of topics and related reporting references
in our external reporting as required by sections 414CA and 414CB of the Companies Act 2006.
61 | Diageo Form 20-F 2025 |
Non-financial and sustainability information statement
Reporting requirement as per Companies Act 2006 414CA and 414CB | Focus area | Read more in Diageo's reports | Relevant policies, standards or documents | Page reference | |
Environmental matters | |||||
1(a) environmental matters (including the impact of the company’s business on the environment) | Pioneering grain to glass sustainability | •Doing business the right way, from grain to glass •Risk Management – Identifying climate risks and opportunities •Climate change resilience •Identifying and assessing our physical risks •Identifying and assessing our transition risks and opportunities •Summary of our most important climate risks and opportunities •Our strategy for grain-to-glass sustainability •How we have reported consistently with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) | •Global Environment Policy(1) •Sustainable Agriculture Guidelines(1) •Sustainable Packaging Commitments(1) •Partnering with Suppliers Standard(1) •Deforestation Guidelines(4) •Water Stewardship Strategy(4) •Reinventing Packaging Strategy(4) | p.36-37 p.46-57 | |
Our people | |||||
1(b) the company’s employees | Our people and culture | •Highly engaged talent Growing our talent Continuing to evolve our culture Enabling our people to thrive Champion inclusion and diversity •Gender and ethnic representation of our leadership •Promoting inclusivity through our value chain •Championing a diverse supply chain •Inclusive marketing: Good for society and good for business | Code of Business Conduct(2) Great Britain/Scotland and Republic of Ireland Gender Pay Gap Report 2024(4) Global Human Rights Policy(1) Directors' Remuneration Policy(4) Board Diversity Policy(4) | p.40-41 | |
Champion inclusion and diversity | p.58-59 | ||||
Health and safety | •Embedding a culture of health and safety •Empowering responsibility: Fostering a safe work environment •Continuous improvement initiatives | •Global Health, Safety and Wellbeing Policy(1) | p.42-43 | ||
1(c) social matters | Promote positive drinking | •Education to tackle harmful drinking •Promoting moderation through aspiration and choice •Advocating improved laws and industry standards •Marketing in a responsible way | Global Marketing and Digital Marketing Policy(1) Global Employee Alcohol Policy(1) | p.44-45 | |
Human rights | |||||
1(d) respect for human rights | Business integrity and Human rights | Standing up for human rights | •Global Human Rights Policy(1) •Modern Slavery Statement(3) •Global Brand Promoter Standard(1) •Privacy Policy(1) | p.38-39 | |
Anti-bribery and corruption | |||||
1(e) anti-corruption and anti-bribery matters | Business integrity and Human rights, Doing business the right way | •Business integrity •Code of Business Conduct (Our Code) •Encouraging people to speak up •Managing third-party risks | •Code of Business Conduct(2) •Data Privacy Policy(4) •Global Information Management and Security Policy(4) •Countering Corruption Policy(1) •Competition and Antitrust Policy(1) | p.38-39 | |
62 | Diageo Form 20-F 2025 |
OUR ESG REPORTING APPROACH continued
Reporting requirement as per Companies Act 2006 414CA and 414CB | Focus area | Read more in Diageo's reports | Relevant policies, standards or documents | Page reference | |
Business model | |||||
2(a) a brief description of the company’s business model | Diageo's business model | •Strategic Report •Our principal risks and risk management •Stakeholder engagement | p1-15 p.63-71 p.86-93 | ||
Risk management | |||||
2(d) a description of the principal risks relating to the matters mentioned in subsection | Our principal risks and risk management | Effective risk management Our principal risks and risk management | •Risk Management Standard(4) Business Continuity Management Standard(4) | p.63-71 | |
Viability statement | Viability statement | p.72-73 | |||
Non-financial performance | |||||
2(e) a description of the non-financial key performance indicators relevant to the company’s business | Monitoring performance and progress | Non-financial performance ‘Spirit of Progress’ Key Sustainability Targets | p.18-19 p.36-60 p.51 | ||
Climate-related financial disclosures as required by sections 414CA and 414CB of the Companies Act 2006 | |||||
(a) description of the company’s governance arrangements in relation to assessing and managing climate-related risks and opportunities; | Pioneering grain to glass sustainability | •Governance (Pioneering grain to glass sustainability) | See above, under Environmental matters | p.46 | |
(b) a description of how the company identifies, assesses, and manages climate-related risks and opportunities; | •Risk Management – Identifying climate risks and opportunities | p.47-49 | |||
(c) a description of how processes for identifying, assessing, and managing climate-related risks are integrated into the company’s overall risk management process; | •Effective risk management •Risk Management – Identifying climate risks and opportunities | p.63-71 p.47-49 | |||
(d) a description of — (i) the principal climate-related risks and opportunities arising in connection with the company’s operations, and | •Effective risk management: •Risk Management – Identifying climate risks and opportunities | p.63-71 p.47-49 | |||
(d) a description of — (ii) the time periods by reference to which those risks and opportunities are assessed; | •Risk Management – Identifying climate risks and opportunities •Quantitative impact of transition risks and opportunities | p.47-49 | |||
(e) a description of the actual and potential impacts of the principal climate-related risks and opportunities on the company’s business model and strategy; | •Risk Management – Identifying climate risks and opportunities •Identifying and assessing our transitions risks and opportunities | p.47-49 | |||
(f) an analysis of the resilience of the company’s business model and strategy, taking into consideration different climate-related scenarios; | •Climate change resilience •Viability statement •Scenario analysis of physical and transition risks (in the Non- Financial Reporting Boundaries and Methodologies) | p.47-49 p.72-73 p.4-7 | |||
(g) a description of the targets used by the company to manage climate- related risks and to realise climate- related opportunities and of performance against those targets; and | •Our strategy for grain-to-glass sustainability •Key Sustainability Targets | p.50-56 p.51 | |||
(h) a description of the key performance indicators used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and of the calculations on which those key performance indicators are based | •Our strategy for grain-to-glass sustainability •Key Sustainability Targets | p.50-56 p.51 | |||
(1)https://www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct/policies-and-standards
(2)https://www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct
(3)https://www.diageo.com/en/esg/doing-business-the-right-way/modern-slavery-statement
(4)Externally published documents on different subsites
63 | Diageo Form 20-F 2025 |
Risk factors
Investing in the securities of Diageo involves risk. Diageo believes the following to be the principal risks and uncertainties that are
most likely to have a material adverse impact on the Diageo group. These risks should be carefully considered together with other
information included elsewhere within this annual report. If any of these risks occur, either alone or in combination with other risks,
Diageo’s business, financial condition and performance could suffer and the trading price and liquidity of its securities could decline.
The order of presentation of the risk factors below does not necessarily indicate the likelihood of a particular risk’s occurrence or the
potential magnitude of its financial consequences.
In addition, because any global business of the kind Diageo is engaged in is inherently exposed to risks that become apparent only
with the benefit of hindsight, risks which Diageo does not currently deem to be material or of which it is not presently aware could
also materially and adversely impact Diageo’s business, financial condition and performance in future periods.
Risks related to the global economy
Diageo’s business has been and may, in the future, be adversely impacted by unfavourable economic, political, social or other
developments and risks (including those resulting from a public health threat, increases in geopolitical instability, including in
relation to Russia’s invasion of Ukraine and conflicts in the Middle East, tariffs and/or inflationary pressures) in the
countries in which it operates
Diageo’s products are sold in nearly 180 countries worldwide, and Diageo may be adversely affected by global economic volatility or
unfavourable economic developments in any of the countries or regions where it has distribution networks, marketing companies or
production facilities. In particular, Diageo’s business is dependent on general economic conditions in its major markets, which
include the United States, the United Kingdom, the countries that form the European Union, and certain countries within the Latin
American region, India and China, and failure to react quickly enough to changes in those economies could have an adverse effect on
financial performance.
The markets in which Diageo operates have been significantly impacted, and could be impacted in the future, by public health threats,
such as the Covid-19 pandemic. Similarly, Russia’s invasion of Ukraine and the ongoing conflicts in the Middle East have, among
other things, resulted in elevated geopolitical instability and economic volatility. The economic volatility attributable to these
conflicts is part of, and contributing to, a larger trend of rising costs of living, which has had and may continue to have a significant
adverse effect on economic activity that could have a material adverse impact on Diageo’s business, financial condition, results of
operations and/or the price of Diageo’s securities.
Any future significant deterioration in economic conditions globally or in any of Diageo’s key markets, including economic
slowdowns, global, regional or local recessions or depressions, currency instability, increased unemployment levels, new or increased
custom duties, tariffs and/or other tax rates, increased inflationary pressures and/or disruptions to credit and capital markets, could
lead to eroded consumer confidence and decreased consumer spending more generally, which in turn could reduce consumer demand
for Diageo’s products. Unfavourable economic conditions could also negatively impact Diageo’s customers, distributors, suppliers,
and financial counterparties, who may experience cash flow problems, increased credit defaults, decreases in disposable income or
other financial issues, which could lead to changes to ordinary customer stocking patterns, including destocking or stocking ahead of
potential price increases as well as an increase in Diageo’s bad debt expense. In addition, volatility in the capital and credit markets
caused by unfavourable economic developments and uncertainties, including the heightened geopolitical instability caused by
Russia’s invasion of Ukraine, the conflict in the Middle East, and/or inflationary pressures, could result in a reduction in the
availability of, or a further increase in the cost of, financing to Diageo.
64 | Diageo Form 20-F 2025 |
Diageo’s business could also be affected by other economic developments such as fluctuations in currency exchange rates, the
imposition of any import, investment or currency restrictions (including the potential impact of any global, regional or local trade
wars or any tariffs, customs duties or other restrictions or barriers imposed on the import or export of goods between territories,
including but not limited to, imports into and exports from the United States, China, the United Kingdom and/or the European
Union), the imposition of economic or trade sanctions, or any restrictions on the repatriation of earnings and capital. For example, the
United States has announced and/or implemented significant new tariffs on imports into the United States, including a baseline 10%
tariff on most goods imported from most countries, which has prompted retaliatory tariffs by a number of countries (e.g. in March
2025, several Canadian provinces removed all American beverage alcohol from store shelves, in response to the United States
announcing a 25% tariff on goods imported from Canada). If maintained, the recently announced tariffs, and any tariffs to be
announced in the future by the United States, could result in further retaliatory measures and an escalation of trade disputes which
could pose a significant risk to Diageo’s business, including an increase to the cost of Diageo’s products and, to the extent Diageo
absorbs the costs of tariffs and does not pass them through to customers, higher cost of goods sold and decreased profit and margins.
The extent and duration of the tariffs and the resulting impact on general economic conditions and on Diageo’s business are uncertain
and depend on various factors, including negotiations between the United States and affected countries, the responses of other
countries or regions, deferments, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply,
and demand for Diageo’s product in affected markets. Further, actions Diageo takes to adapt to new tariffs or trade restrictions may
cause Diageo to modify operations or forgo business opportunities. Tariffs and import and export regulations could also limit the
availability of Diageo’s products, prompt consumers to seek alternative products and provide an opportunity for competitors not
subject to such tariffs to establish a presence in markets where Diageo conducts business. Any of these developments may have a
material adverse effect on Diageo’s financial performance.
Diageo’s operations are also subject to a variety of other risks and uncertainties related to its global operations, including adverse
political, social or other developments. Political and/or social unrest or uncertainties, natural disasters, public health threats (including
the Covid-19 pandemic and any future epidemics or pandemics, and government responses thereto), politically- motivated violence
and terrorist threats and/or acts, including those which are specifically directed at the alcohol industry, may also occur in countries
where Diageo has operations.
Many of the above risks are heightened, or occur more frequently, in emerging markets, such as Colombia, Kenya and Mexico. In
general, emerging markets are also exposed to relatively higher risks attributable to unstable governments, corruption, crime and lack
of law enforcement, undeveloped or biased legal systems, expropriation of assets, sovereign default, military conflicts, liquidity
constraints, inflation, devaluation, price volatility and currency convertibility issues, as well as other legal and regulatory risks and
uncertainties. Developments in emerging markets can affect Diageo’s ability to import or export products and to repatriate funds, as
well as impact levels of consumer demand (for example, in duty-free outlets at airports or in on-trade premises in affected regions)
and therefore Diageo’s levels of sales or profitability. Any of these factors may affect Diageo disproportionately or in a different
manner from its competitors, depending on Diageo’s specific exposure to any particular emerging market, and could have a material
adverse effect on Diageo’s business and financial results.
Climate change, or legal, regulatory or market measures to address climate change or other environmental concerns, may
negatively affect Diageo’s business or operations, and water scarcity or water quality issues could negatively impact Diageo’s
production costs and capacity
Climate change is occurring around the world as a result of carbon dioxide and other greenhouse gases in the atmosphere having an
adverse effect on global temperatures, weather patterns and the frequency and severity of extreme weather-related events and
disasters. To the extent that weather patterns and climate change, or legal, regulatory or market measures enacted to address such
climate change or other environmental concerns, have a negative effect on agricultural productivity in the various regions from which
Diageo procures its raw materials, Diageo may be subject to decreased availability of, or increased prices for, a number of raw
materials that are necessary in the production of Diageo’s products, including wheat, maize, barley, sugar cane/molasses, vanilla,
agave, rice, grapes, sorghum, and aniseed. Severe weather events or changes in the frequency or intensity of weather events could
also pose physical risks to Diageo’s production facilities, impair Diageo’s production operations or disrupt Diageo’s supply chain,
which may affect production operations, delivery of its products to customers and insurance costs and coverage. For example, a
number of Diageo’s distilleries in Scotland are in lower coastal areas and, as a result, may suffer disruption due to coastal flooding
and/or storms, such as Storm Eowyn which caused minor disruptions. Climate change and geographic limitations related to the
production may also expose Diageo to water scarcity and quality risks due to the water required to produce its products, including
water consumed in the agricultural supply chain. If climate change leads to droughts or water over-exploitation or has a negative
effect on water availability or quality in areas that are part of Diageo’s supply chain, the price of water may increase in certain areas
and certain jurisdictions may adopt regulations restricting the use of water or enact other unfavourable changes.
65 | Diageo Form 20-F 2025 |
Water, which is the main ingredient in virtually all of Diageo’s products and a major component within its agricultural supply chain,
is also a limited resource in many parts of the world. As demand for water continues to increase, and as water becomes scarcer and
the quality of available water deteriorates, including as a result of climate change, Diageo may be affected by increased production
costs (including as a result of increases in certain water-related taxes or related regulations), capacity constraints, or requests to cease
production entirely in water-stressed areas, which in turn could adversely affect Diageo’s business, financial results and reputation. A
number of Diageo’s production sites are in water-stressed areas and may be exposed to potential disruption if demand for water
exceeds the available amount during a certain period or if the poor quality of available water restricts its use.
In addition, a failure by Diageo to respond appropriately to increased governmental or public pressure for further reductions in
greenhouse gas emissions, water usage and/or to address any other perceived environmental issues could damage Diageo's reputation.
Increased governmental or public pressure for further reductions in greenhouse gas emissions or water usage may also cause Diageo
to incur increased costs for energy, transportation and raw materials, as well as potentially require Diageo to make additional
investments in facilities and equipment, thus adversely impacting Diageo’s business and financial results. As governments and
business take action to reduce or mitigate the effects of climate change, Diageo and its supply chain are expected to incur increased
costs, including those associated with required improvements to energy usage in agriculture and glass manufacturing, water
efficiency and usage, land practices and competition for land from food crops, the rising cost of natural gas and rising worldwide
carbon prices. It is possible these costs increase beyond what is currently expected or that other categories of costs increase
unexpectedly, either or both of which could have an adverse impact on Diageo’s financial results.
Diageo is also required to report greenhouse gas emissions, energy usage data and related environmental information to a variety of
entities, and comply with the European Union Emissions Trading Scheme. Regulators in various jurisdictions, including Europe, the
United States and the United Kingdom, have focused efforts on increased disclosures related to ESG matters, including climate
change and mitigation efforts. These regulations, in particular the Corporate Sustainability Reporting Directive and the Corporate
Sustainability Due Diligence Directive, have expanded the nature, scope and complexity of matters that companies are required to
control, assess and report. This will require Diageo to make additional investments and implement new practices and reporting
processes, and will entail additional compliance risk. Disparate and evolving standards for identifying, measuring and reporting ESG
metrics, including ESG-related disclosures that may be required by the UK Financial Conduct Authority, US and European regulators
and other regulatory bodies, will likely increase compliance burdens and associated regulatory and reporting costs and complexity
significantly. Furthermore, while ESG reporting has improved, data remains of limited quality and consistency and is more uncertain
than historical financial information. ESG data, methodologies and standards may evolve over time in line with market practice,
regulation, or owing to scientific developments. The use of inconsistent or incomplete data and models could result in sub-optimal
decision making. If Diageo is unable to accurately measure and disclose required data in a timely manner, it could be subject to
penalties in certain jurisdictions.
Diageo’s operations are also subject to environmental regulations by national, regional and local agencies, including, in certain cases,
regulations that impose liability without regard to fault. These regulations can result in liability that might adversely affect Diageo’s
operations and financial condition. As regulators in Diageo’s markets continue to respond to rising concerns about the impact of
climate change and other environmental threats, regulation and enforcement is becoming stricter. There can be no assurance that
Diageo will not incur a substantial liability or that applicable laws and regulations will not change or become more stringent in the
future.
Risks related to Diageo’s industry
Demand for Diageo’s products may be adversely affected by many factors, including disruptive market forces, changes in
consumer preferences and tastes and the adverse impacts of declining economies
Diageo’s portfolio of brands includes some of the world’s leading beverage alcohol brands, as well as a number of brands that are
prominent in certain regional and/or country-specific markets. Any inability by Diageo to respond and adapt either its products or its
processes to disruptive market forces, including e-commerce, artificial intelligence, digital, and new formats, could impact Diageo’s
ability to effectively service its customers and consumers with the required agility, thereby threatening market share, revenue,
profitability and growth ambitions. While Diageo is focused on expanding its digital platforms and effectively using technology in its
supply chains, there is no guarantee that these efforts will help Diageo gain and/or maintain a competitive advantage over its peers.
66 | Diageo Form 20-F 2025 |
Consumer preferences on a global, regional and/or local scale may shift due to a variety of factors, including changes in
demographics, evolving social trends (including any shifts in consumer tastes towards at-home consumption occasions,
premiumisation, small-batch craft alcohol, lower or no alcohol beverages, THC and hemp-based THC beverages or other alternative
products), increased use of GLP-1 medications (which may have the effect of reducing alcohol consumption in certain customers),
changes in travel, holiday or leisure activity patterns, weather conditions, public health regulations and/or health and wellness
concerns, any or all of which may reduce consumers’ willingness to purchase beverage alcohol products from large producers such as
Diageo or at all. There is also a risk to Diageo’s brands emerging from consumers making brand choices that reflect their increasingly
polarised socio- political views, including with respect to ESG matters. The market share, profitability and growth ambitions of
Diageo’s brands, as well as Diageo’s reputation more generally, could also be adversely affected by any failure by Diageo to service
its customers and consumers with the required agility or to provide consistent, reliable quality in its products or in its service levels to
customers.
Economic pressures in the markets Diageo serves may also reduce consumer demand for Diageo’s products. In particular, rising costs
of living have negatively impacted the spending habits of consumers in various markets which Diageo serves and have caused some
consumers to choose products which have lower price points, including those of Diageo’s competitors. Changes in consumers’
spending habits due to rising costs of living have had and may continue to have an adverse effect on Diageo’s business and financial
results.
In addition, the social acceptability of Diageo’s products may decline due to regulatory action, negative publicity surrounding, and/
or public concerns about, alcohol consumption. For example, a number of jurisdictions, such as Canada and the United States, are
updating their guidance around alcohol. Such anti-alcohol publicity or sentiment could also result in regulatory action, litigation or
customer complaints against companies in the beverage alcohol industry and have an adverse effect on Diageo’s business and
financial results.
Diageo’s business has historically benefitted from the launch of new-to-world products or variants of existing brands (with recent
examples including premium ready-to-serve cocktails, such as The Cocktail Collection, and Johnnie Walker Black Ruby), and
continuing product innovation and the creation of extensions to existing brands remain significant elements of Diageo’s growth plans.
The launch and ongoing success of new-to-world products or global brand extensions is inherently uncertain, especially with respect
to such products’ initial and continuing appeal to consumers. Similarly, brands or ventures that Diageo acquires may not deliver the
expected benefits and/or may not scale as expected. The failure to successfully launch a new product or an extension of an existing
brand, or to maintain the product’s initial popularity, can give rise to inventory write-offs and other costs, as well as negatively
impact the consumer perception of and thus the growth of an existing brand. There can be no assurance of Diageo’s continuing ability
to develop and launch successful new products or variants of existing products, or to ensure or extend the profitable lifespan of its
existing products.
Diageo is subject to tax uncertainties, including changes in tax obligations, tax laws, regulations and interpretations, as well
as enforcement actions by tax authorities
Changes in the political and economic climate have resulted in an increased focus on tax collection in recent years, leading to greater
uncertainty for multinational companies such as Diageo. In recent years, tax authorities have shown an increased appetite to
challenge the methodology used by multinational enterprises, even where a company complies with international best practice
guidelines. Changes in tax law (including tax rates), tax treaties, accounting policies and accounting standards, including as a result of
the Organisation for Economic Co-operation and Development’s review of base erosion and profit shifting and the European Union’s
anti-tax abuse measures, combined with increased investments by governments in the digitisation of tax administration, could also
result in increased levels of audit activity, investigations, litigation or other actions by relevant tax authorities and increased
complexity of data requirements and compliance processes. Diageo also operates in a large number of jurisdictions with complex tax
and legislative regimes and whose related laws and regulations are open to subjective interpretation. These countries include Brazil,
India and countries in East Africa, where Diageo is currently involved in a large number of tax cases, including some cases that could
potentially create significant exposures or liability for Diageo. Diageo may be subject to further future tax assessments in these
jurisdictions based on the same or similar matters.
Assessing the potential financial exposure arising from these and other cases is particularly challenging due to the uncertain fiscal and
political environment in these jurisdictions. Any such investigations, litigation or other actions may result in damages, penalties or
fines as well as reputational damage to Diageo or its brands, and as a result, adversely impact Diageo’s business and financial results.
For additional information with respect to legal proceedings, including potential tax liabilities in Brazil and India, see note 19 to the
consolidated financial statements.
Beverage alcohol products are also subject to national excise taxes, import duties, sales or value-added taxes and other types of direct
and indirect taxes in most countries around the world, most of which are specific to individual jurisdictions. Increases in any such
taxes, or the imposition of new taxes, have had and could continue to have a material adverse impact on Diageo’s revenue from sales
or its margin, either through reducing the overall level of beverage alcohol consumption, having a disproportionate impact on certain
categories and/or by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
67 | Diageo Form 20-F 2025 |
In addition to the above, other significant changes in tax law, tax treaties, related accounting policies and accounting standards could
also increase Diageo’s cost of doing business and lead to a rise in Diageo’s effective tax rate and/or unexpected tax exposures, thus
adversely affecting Diageo’s business and financial results.
Any increases in the cost of production could affect Diageo’s profitability, including increases in the cost of commodities,
labour and/or energy due to inflation
The components that Diageo uses for the production of its beverage alcohol products are largely commodities purchased from
suppliers which are subject to price volatility caused by factors outside of Diageo’s control, including, inflation, changes in global
and regional supply and demand, weather and/or agricultural conditions, fluctuations in relevant exchange rates and/or governmental
controls. Fluctuations in the prices of various commodities, including energy prices, may result in unexpected increases in the cost of
the raw materials Diageo uses in the production of its products, including the prices of the agricultural commodities, flavourings and
other raw materials necessary for Diageo to produce its various beverages, as well as glass bottles and other packaging materials, thus
increasing Diageo’s production costs.
Diageo may also be adversely affected by shortages of any such materials, by increases in energy costs resulting in higher
transportation, freight or other related operating costs, or by inflation in any of the jurisdictions in which it produces its products.
Diageo may not be able to increase its prices or create sufficient efficiencies to offset these increased costs without suffering reduced
volumes of products sold and/or decreased operating profit.
While Diageo continues to closely monitor its operating environment, it is possible that the ongoing volatility related to significant
cost inflation along with a potential weakening of consumer spending power may have an adverse effect on Diageo’s business
financial condition and results of operations.
Diageo is subject to litigation specifically directed at the beverage alcohol industry, as well as to other litigation
Diageo and other companies operating in the beverage alcohol industry are, from time to time, exposed to class action or other private
or governmental litigation and claims relating to product liability, alcohol marketing, advertising or distribution practices, alcohol
abuse problems or other health consequences arising from the consumption or misuse of alcohol, including underage drinking.
Diageo may also be subject to litigation arising from legacy and discontinued activities, as well as other litigation in the ordinary
course of its operations, including in connection with commercial disputes and the acquisition or disposal of businesses or other
assets. Diageo is further subject to the risk of litigation, enforcement or other regulatory actions by tax, customs, competition,
environmental, anti-corruption and other relevant regulatory authorities, including with respect to the methodology for assessing
importation value, transfer pricing or compliance matters. Diageo’s listing in the United States may also expose it to a higher risk of
securities-related class action suits, particularly following any significant decline in the price of Diageo’s securities. Any such
litigation or other actions may be expensive to defend and result in damages, penalties or fines as well as reputational damage to
Diageo or its brands, and/or impact the ability of management to focus on other business matters, and may adversely affect Diageo’s
business and financial results. For additional information with respect to legal proceedings, see note 19 to the consolidated financial
statements.
Risks related to regulation
Regulatory decisions and changes in the legal, and regulatory environment could increase Diageo’s costs and liabilities or
limit its business activities
Diageo’s operations are subject to extensive regulatory requirements relating to production, distribution, importation, marketing,
advertising, sales, pricing, labelling, packaging, product liability, antitrust, labour, pensions, compliance and control systems, and
environmental issues. Changes in any such applicable laws, regulations or governmental or regulatory policies and/or practices could
cause Diageo to incur material additional costs or liabilities that could adversely affect its business. In particular, governmental
bodies in jurisdictions where Diageo operates may impose new product, production or labelling requirements, limitations on the
marketing, advertising and/or promotion activities used to market beverage alcohol, restrictions on retail outlets, restrictions on
importation and distribution or other restrictions on the locations or occasions where beverage alcohol is sold which directly or
indirectly limit the sales of Diageo products. For example, in January 2025, the United States’ outgoing Surgeon General issued an
advisory recommending that labels on beverage alcohol products include increased and more prominent warnings regarding the
health risks of alcohol consumption. Additionally, Ireland passed a law requiring new health warning labels on alcohol beverage
products. Regulatory authorities under whose laws Diageo operates may also have enforcement power that can subject the group to
actions such as product recalls, product seizures or other sanctions which could have an adverse effect on Diageo’s sales or damage
its reputation.
Diageo is also subject to antitrust and competition laws in many of the jurisdictions in which it operates. In a number of these
jurisdictions, there has been an increase in the enforcement of these laws during recent years. For example, heightened regulatory
scrutiny due to macroeconomic volatility is impacting competition within consumer goods sectors, leading to increased dawn raids
and investigations in Europe, Africa and India, with structured collaborations posing additional risks. Should this trend continue, this
may, among other things, result in increased regulatory scrutiny of Diageo, potential reputational damage and/or increased costs
related to compliance.
68 | Diageo Form 20-F 2025 |
Diageo is required to comply with data privacy laws and regulations in many of the markets in which it operates. For example,
Diageo is subject to the General Data Protection Regulation (“GDPR”) in the European Union, the United Kingdom General Data
Protection Regulation (“UK GDPR”), data privacy legislation in the United States and the Personal Information Protection Law
(“PIPL”) in China. Breach of any of these laws or regulations could lead to significant penalties (including, under the GDPR and the
UK GDPR, a fine of up to 4% of annual global turnover), other types of government enforcement actions, private litigation and/or
damage to Diageo’s reputation, as well as impact Diageo’s ability to deliver on its digital productivity and growth plans.
In many of the markets in which Diageo operates, the overall legal and regulatory landscape has become more complex in recent
years and changes to the regulatory environment in which Diageo operates could also cause Diageo to incur material additional costs
or liabilities, which could adversely affect Diageo’s business and financial performance. For additional information on the increased
complexity of the legal and regulatory landscape please see "— Climate change, or legal, regulatory or market measures to address
climate change or other environmental concerns, may negatively affect Diageo’s business or operations, and water scarcity or water
quality issues could negatively impact Diageo’s production costs and capacity" above.
Defective internal controls could adversely affect Diageo’s financial reporting and management processes, as well as the
accuracy of public disclosures
Diageo has in place internal control and risk management systems in relation to its financial reporting process and its process for the
preparation of consolidated financial statements. In addition, management undertakes a review of the consolidated financial
statements in order to ensure that the financial position and results of the group are appropriately reflected therein. Diageo is required
by the laws of various jurisdictions to publicly disclose its financial results, as well as developments that could materially affect its
financial results. Accurate disclosures provide investors and other market professionals with information to understand Diageo’s
business. In addition, the reliability of financial reporting is important in ensuring that the business’ management and its results are
based on reliable data.
Regulators routinely review the financial statements of listed companies such as Diageo for compliance with existing, new or revised
accounting and regulatory requirements. Should Diageo be subject to an investigation into potential non-compliance with accounting
and disclosure requirements or be found to have breached any such requirements, this may, among other things, lead to restatements
of previously reported results, significant penalties, public censure and/or litigation. Any such regulatory action could adversely
affect Diageo’s business and financial results, reputation and the price of Diageo’s securities. In addition, defective internal controls
could result in inaccuracies or lack of clarity in public disclosures and could result in a material misstatement of financial reporting.
This could create market uncertainty regarding the reliability of the data presented and have an adverse impact on Diageo’s reputation
and the price of Diageo’s securities.
Any failure by Diageo to comply with anti-corruption laws, anti-money laundering laws, economic sanctions laws, trade
restrictions or similar laws or regulations, or any failure of Diageo’s related internal policies and procedures designed to
comply with applicable law, may have a material adverse effect on Diageo’s business and financial results, Diageo's
reputation and the price of Diageo' securities
Diageo produces and markets its products on a global scale, including in certain countries that, as a result of political and economic
instability, a lack of well-developed legal systems and/or potentially corrupt business environments, have a higher level of corruption
risk than other countries. There is enhanced scrutiny and enforcement by regulators in many jurisdictions of anti- corruption laws,
including pursuant to the US Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and certain jurisdictions’ equivalent
local laws. Such enforcement has been enhanced by applicable regulations in the United States, which offer substantial financial
rewards to whistleblowers for reporting information that leads to monetary fines, and the United Kingdom, which has enacted the
Economic Crime and Corporate Transparency Act 2023 introducing a new corporate criminal offence of failure to prevent fraud
which will come into effect in September 2025.
If Diageo or any of its associates fails to comply with anti-corruption laws (including anti-bribery laws), anti-money laundering laws
or with existing or new economic sanctions or trade restrictions imposed by the United States, the European Union or other national
or international authorities that are applicable to Diageo or its associates, including any sanctions introduced in response to Russia's
invasion of Ukraine or other conflicts, Diageo may be exposed to the costs associated with investigating potential misconduct as well
as significant financial penalties and/or reputational damage.
While Diageo has implemented and maintains internal practices, procedures and controls designed to ensure compliance with anti-
corruption laws, sanctions, trade restrictions or similar laws and regulations, and routinely conducts investigations, either at its own
initiative or in response to requests from regulators in connection with compliance with such internal controls, there is no guarantee
that such procedures will be effective in preventing compliance failures at Diageo or at third parties with whom Diageo maintains
business relationships. In addition, any lack of an embedded business integrity culture and associated control framework in any
market could increase the risk of non-compliance with relevant laws and regulations.
69 | Diageo Form 20-F 2025 |
Any investigations and lawsuits, regardless of the ultimate outcome of the proceeding, are time consuming and expensive and can
divert the time and effort of Diageo’s personnel, including senior management, from its business. Adverse publicity, legal and
enforcement proceedings, and enhanced government scrutiny can also have a negative impact on Diageo’s reputation. To the extent
that violations of anti-corruption, sanctions and/or trade restriction laws and regulations, and/or Diageo’s internal policies and
procedures, are found, or if Diageo’s internal policies and procedures are found not to comply with applicable law, possible
regulatory sanctions, fines and other penalties or consequences, including reputational damage, may also be material. For additional
information with respect to legal proceedings, see note 19 to the consolidated financial statements.
Risks related to Diageo’s business
Diageo may incur significant cost in connection with attempting to achieve its ESG ambitions, and may be subject to
increased scrutiny and reputational risk if it is unable to make sufficient progress against or achieve its objectives
Diageo has articulated certain ESG ambitions as part of its ‘Spirit of Progress’ targets and is undertaking a number of strategic and
operational initiatives in order to achieve those ambitions. In addition, from time to time, Diageo may introduce new initiatives in the
future to make progress against those targets, as well as to address other ESG-related issues that arise. Diageo expects to incur
significant costs and investments in connection with any such initiatives (including those related to human resources, technology,
capital projects and operations), and as a result of compliance with new laws, regulations, reporting frameworks and industry
practices. Consistent with many companies across the alcohol beverage industry, Diageo expects that future innovations and
technological improvement, and increased collaboration with governments and other businesses, including those within the alcohol
beverage industry which may compete with Diageo, will be required in order to achieve and sustain its ESG-related ambitions. In
addition, the data, methodologies and standards that Diageo has used to develop its targets will likely evolve over time. Any changes
could result in revisions to Diageo’s internal frameworks and reported data, and could mean that reported figures are not reconcilable
or comparable year on year.
Furthermore, Diageo’s own current expectations with respect to its expected pathway to achieve its Spirit of Progress ambitions
(including achieving “net zero”) are subject to change as underlying assumptions and its own operations change over time, including
as a result of new information, changed expectations and innovation. In the event that Diageo is unable to make sufficient progress in
a timely manner or achieve its ESG-related ambitions, it may be subject to additional scrutiny and criticism, and may face regulatory
censure and/or fine. In addition, stakeholders and others who disagree with Diageo’s approach may speak negatively or advocate
against Diageo or its products, with the potential to harm Diageo’s reputation or business through negative publicity, adverse
government treatment, product boycotts or other means. Diageo could suffer reputation damage and a loss of trust from consumers,
investors and other stakeholders, and/or the price of Diageo’s securities could be adversely affected, if it fails to achieve any of these
goals for any reason or is otherwise perceived to be failing to act responsibly with respect to the environment or to effectively
respond to regulatory requirements concerning climate change.
Diageo may be adversely affected by cyber-attacks and IT threats or other disruptions to core business operations including
manufacturing and supply, business service centres and/or information systems
Diageo relies on information technology (IT) systems, networks and services, including internet sites, data hosting and processing
tools, hardware (including laptops and mobile devices), software, and technical platforms and applications, to process, store and
transmit large amounts of data and to help it manage its business. Diageo uses its IT systems, networks and services for, among other
key business functions, the hosting of its primary and brand-specific websites and its internal network and communications systems;
supply and production planning, execution and shipping; the collection and storage of customer, consumer, investor relations and
employee data; processing various types of transactions, including summarising and reporting its results of operations; the
development and storage of strategic corporate plans; and ensuring compliance with various legal, regulatory and
tax requirements. As with all large systems, Diageo’s IT systems, including those managed or hosted by third parties, could be
subject to sophisticated cyber-attacks (including phishing and ransomware attacks), IT threats by external or internal parties intent on
disrupting production or other business processes or otherwise extracting or corrupting information, or other cyber incidents such as
the CrowdStrike incident in July 2024 where computers were affected on a global basis (including at Diageo). The sophistication of
cybersecurity threat actors also continues to grow and evolve, including the risks associated with emerging technologies, such as
artificial intelligence used for nefarious purposes and deepfake deception and impersonation attacks through platforms like
WhatsApp aimed at gaining access to internal information. In recent years, ransomware attacks against some of Diageo’s peers have
become more frequent, which has increased the likelihood of Diageo being targeted for a similar cyber-attack. Diageo’s vulnerability
to such cyber-attacks could also be increased due to a significant proportion of its employees working remotely. Unauthorised access
to Diageo’s IT systems could disrupt Diageo’s business, including its beverage alcohol and other production capabilities, and/or lead
to theft, loss or misappropriation of critical assets or to outside parties having access to confidential or even highly confidential
information, including privileged data, personal data or strategic information of Diageo and its current or former employees,
customers and consumers. Such information could also be made public in a manner that harms Diageo’s reputation and financial
results and, particularly in the case of personal data, could lead to regulators imposing significant
fines on Diageo.
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Diageo’s use of shared business services centres, located in Hungary, Colombia, the Philippines and India, to deliver transaction
processing activities for markets and operational entities also means that any sustained disruption to a centre or issue impacting the
reliability of the information systems used could impact a large portion of Diageo’s business operations. The captive shared business
services centres in Hungary and India also perform certain central finance activities, including elements of financial planning and
reporting, treasury and HR services. Any transitions of transaction processes to, from or within shared business
services centres, as well as other projects which impact Diageo’s IT systems, could lead to business disruption. In addition, if Diageo
does not allocate and properly manage the resources necessary to build, sustain and protect these centres or its wider IT systems, it
could be subject to losses attributable to processing inefficiencies, the unexpected failure of computer systems, devices and software
used by its IT platforms, production or supply chain disruptions, the unintended disclosure of sensitive business or personal data and
the corruption or loss of accounting data necessary for it to produce accurate and timely financial reports. In certain circumstances,
such disruptions or failures could also result in property damage, breaches of regulations, litigation, legal liabilities and reparation
costs, thereby having a material adverse effect on Diageo’s business and financial results.
Loss, operational disruptions to or closure of a production site, office or other key facility due to unforeseen or catastrophic
events or otherwise, could have a material adverse effect on Diageo's business and financial results
International and domestic security risks including terrorism and military conflicts, as well as natural hazards, also pose a threat to the
safety of Diageo’s employees and third parties at its offices, sites and events, as well as its property and products. Diageo operates
production facilities around the world. If there was a technical failure, or a fire, explosion, flood or other significant event, at one or
more of Diageo’s production facilities, this could result in significant damage to the facilities, plant or equipment, their surroundings
and/or the local environment and/or injury or loss of life. Such an event could also lead to a loss of production capacity, result in
regulatory action or legal liability, and/or damage Diageo’s reputation.
Diageo has a substantial inventory of aged product categories, including Scotch whisky, which may mature over periods of up to 30
years or more. A substantial portion of this maturing inventory is stored in Scotland, and the loss through contamination, fire or other
natural disaster of all or a portion of the stock of any one of those aged product categories, including as a result of climate change-
related severe weather events, could result in a significant reduction in supply of those products, and consequently, Diageo would not
be able to meet consumer demand for those products as such demand arises. There can be no assurance that insurance proceeds
would cover the replacement value of Diageo’s maturing inventory or other assets in the event that such assets were lost due to
contamination, fire or natural disasters, destruction resulting from negligence or the acts of third parties, or any failure of information
systems or data infrastructure.
Contamination, counterfeiting or other events could harm the integrity of customer support for Diageo’s brands and
adversely affect the sales of those brands
The success of Diageo’s brands depends upon the positive image that consumers have of those brands, and contamination, whether
arising accidentally, or through deliberate third party action, or other events that harm the integrity of consumer support for those
brands, could adversely affect their sales and Diageo’s corporate and brand reputation. Diageo purchases most of the raw materials
for the production and packaging of its products from third party producers or on the open market. Diageo may be subject to liability
if contaminants in those raw materials or defects in the distillation, fermentation or bottling process lead to reduced beverage quality
or illness among, or injury to Diageo’s consumers, or if the products do not otherwise comply with applicable food safety regulations.
Diageo has had to recall products in the past due to contamination or damage and may have to do so again in the future. A significant
product liability judgement or a widespread product recall may cause harm to consumers and negatively impact sales and profitability
of the affected brand or all of Diageo’s brands for a period of time depending on product availability, competitive reaction and
consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, any resulting negative publicity could
adversely affect Diageo’s reputation with existing and potential customers as well as its corporate and individual brand image.
Additionally, third parties sell products which are either counterfeit versions of Diageo brands or inferior brands that look like Diageo
brands, and consumers of Diageo brands could confuse Diageo products with such counterfeit products. A rise in methanol poisoning
in South East Asia, Türkiye and India poses an increased risk to consumer safety from counterfeit spirits. A negative consumer
experience with such a product could cause them to refrain from purchasing Diageo brands in the future and impair Diageo’s brand
equity, thus adversely affecting Diageo’s business. There is also a risk of physical threats to Diageo’s people due to the illicit nature
of the type of organisations or individuals involved in counterfeit activities.
The value of Diageo’s brands and its net sales may be negatively affected by its failure to maintain its brand image and
corporate reputation or adapt to a changing media environment
The value of Diageo’s brands and its profitability depends heavily on its ability to maintain its brand image and corporate reputation.
Adverse publicity, whether or not justified, may tarnish Diageo’s reputation and cause consumers to purchase products offered by its
competitors instead of by Diageo. Such adverse publicity could arise as a result of a perceived failure by Diageo to make adequate
positive social contributions, including in relation to the level of taxes paid by Diageo, or ESG-related performance, or by any failure
of internal controls or compliance breaches leading to violations of Diageo’s Code of Business Conduct, Code of Ethics, its other key
policies or the laws or regulations of the jurisdictions in which it operates. Diageo has also established and may continue to establish
relationships with brand founders and/or other public figures to develop and promote its brands, and to establish brand equity, history
and authenticity with consumers. If certain such individuals were to stop promoting a Diageo brand
71 | Diageo Form 20-F 2025 |
or brands contrary to their agreements, Diageo’s business could be adversely affected. In addition, certain such individuals could
engage in behaviour, make statements or use their platforms in a manner that reflects poorly on Diageo’s brand image and corporate
reputation or otherwise adversely affects Diageo. Diageo may be unable to prevent such actions, and the actions Diageo takes to
address them may not be effective in all cases. Negative claims or publicity involving Diageo, its culture and values, brands, or any
of its key employees or brand endorsers could damage Diageo’s brands and/or reputation, regardless of whether such claims are
accurate, causing Diageo to lose existing customers or fail to attract new customers, and may have a material adverse effect on
Diageo’s business and financial results.
In addition, Diageo’s ability to maintain, extend, and expand its brand image depends on its ability to adapt to a rapidly changing
media environment. Diageo maintains an online presence as part of its business operations, and increasingly relies on social media
and online dissemination of advertising campaigns. Diageo’s reputation may suffer if it is perceived to fail to appropriately restrict
access to its online content or if it breaches any marketing regulation, code or policy. In addition, the growing use of social and
digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or
comments about Diageo, its brands or its products on social or digital media, whether or not valid, could seriously damage
Diageo’s brands and reputation. Any failure to maintain, extend, and expand Diageo’s brand image or adapt to a changing media
environment may have a material adverse effect on Diageo’s business and financial results and reputation, as well as the price of
Diageo’s securities.
Diageo’s operations and financial results may be adversely affected by fluctuations in exchange rates and fluctuations in
interest rates
Diageo is engaged in an international business that operates in, and makes sales into, countries with different currencies, while its
financial results are presented in US dollars. As a result, Diageo is subject to foreign currency risk due to exchange rate movements,
which affect the US dollar value of its transactions, as well as the translation of the results and underlying net assets of its operations
to the US dollar. Movements in exchange rates used to translate foreign currencies into US dollars have had and may continue to
have a significant impact on Diageo’s reported results of operations from year to year. Exchange rate fluctuations may also expose
Diageo to increased interest expense on borrowings denominated in currencies which appreciate against the US dollar. As a result,
Diageo’s business and financial results may be adversely affected by fluctuations in exchange rates.
In addition, Diageo may be adversely impacted by fluctuations in interest rates, mainly through increased interest expense.
Accommodative monetary policy had generally made borrowings less expensive in the markets in which Diageo operates until recent
years. However, the global economy has experienced persistently high levels of inflation, while benchmark interest rates, such as the
US federal funds rate, have risen. Such inflationary pressures stem from and are compounded by ongoing disruptions in the global
supply chain due to geopolitical tensions, including the conflicts in Ukraine and the Middle East and rising energy prices (particularly
for oil and gas). As a result, the availability and prices of inputs available to Diageo from its first- and second-tier suppliers are
expected to be volatile and inflationary pressures more broadly are expected to persist. As a result, market expectations are currently
that benchmark interests rates could continue to rise and may be accompanied by other measures to reverse accommodative policy,
such as quantitative tightening. Sharp increases and/or unexpected moves in interest rates due to any of the foregoing factors could
have macroeconomic effects that materially adversely affect Diageo’s business and its financial results. In particular, rising interest
rates could lead to a material increase in Diageo’s funding costs. In addition, if there is an extended period of constraint in the capital
markets and, at the same time, cash flows from Diageo’s business are under pressure, Diageo’s ability to fund its long-term strategies
may be materially adversely impacted.
Any failure by Diageo to execute its strategic business transformation projects could adversely affect Diageo’s business and
operating processes, or its business and financial results
Failure to execute strategic business transformation projects effectively, namely the implementation of SAP S/4 Hana, the Accelerate
programme, the Supply Chain Agility programme and Diageo’s portfolio of digital capability builds, has resulted in delays and could
result in further delays or changes to their expected benefits or negatively affect Diageo’s ability to continuously improve its internal
control and reporting environment. Any delay or disruption in Diageo’s strategic business transformation projects may have a
negative impact on Diageo’s critical business and operating processes and/or impact the ability of management to focus on other
business matters, and may adversely affect its business and operating processes, and its business and financial results.
As the external environment continues to change, including those changes driven by evolving stakeholder expectations, consumer
behaviours and preferences, and heightened regulatory requirements, the ambition and objectives of Diageo’s strategic transformation
initiatives may need to adapt, which may require new and different capabilities and skills within Diageo’s workforce and may
negatively impact Diageo’s ability to deliver the anticipated benefits in the time period expected, or at all.
Given the state of volatility and disruption in the external environment in recent years and the increased pace of change being
experienced in Diageo’s business and industry, failure to have the right strategic partnerships and talent in key positions to deliver
and sustain our strategic business transformation initiatives going forward may result in delays, unforeseen costs and other
disruptions to Diageo’s business, competitive positioning and financial performance.
72 | Diageo Form 20-F 2025 |
Diageo may not be able to derive the expected benefits from its business strategies, including in relation to expansion in
emerging markets, acquisitions, investments in joint ventures, productivity initiatives or inventory forecasting
There can be no assurance that Diageo’s business strategies will result in opportunities for growth and improved margins. Part of
Diageo’s growth strategy includes expanding its business, including in whisk(e)y and tequila, in markets where Diageo believes there
are strong prospects for growth. There is no guarantee that this strategy will be successful, and some of these markets may represent a
higher risk in terms of their changing regulatory environments and higher degrees of uncertainty over levels of consumer spending.
In the future, Diageo’s business strategies will, almost certainly, give rise to further business combinations, acquisitions, disposals,
joint ventures and/or partnerships (including any associated financing or the assumption of actual or potential liabilities, depending
on the transaction contemplated). However, there can be no assurance that any such transaction would be completed and/or that it
would deliver the anticipated benefits, cost savings or synergies. The success of any transaction also depends in part on Diageo’s
ability to successfully integrate new businesses with its existing operations. Acquisitions may also expose Diageo to liabilities it may
not be aware of at the time of the acquisition, for example if acquired companies and business do not act, or have not acted, in
compliance with applicable laws and regulations. For additional information on the challenges of integration please see note 19 to the
consolidated financial statements.
Diageo may from time to time hold interests and investments in joint ventures and associated companies in which it has a non-
controlling interest and may continue to do so. In these cases, Diageo may have limited influence over, and limited or no control of,
the governance, performance and cost of operations of the joint ventures and associated companies. Some of these joint ventures and
associated companies may represent significant investments, and these investee entities or other joint venture partners or equity
holders may make business, financial or investment decisions contrary to Diageo's interests (including with respect to the distribution
of profits and dividends) or may make decisions different from those that Diageo itself may have made.
Certain of Diageo’s aged product categories may mature over decades, and forecasts of demand for such products in future periods
are subject to significant uncertainty. There is an inherent risk of forecasting error in determining the quantity of maturing stock to
lay down in a given year for future consumption as a result of changes in business strategy, market demand and unplanned shifts in
consumer preferences, introductions of competing products and other changes in market conditions. Any forecasting error could lead
to Diageo being unable to meet the objectives of its business strategy, future demand or lead to a surplus of inventory and consequent
write-down in value of maturing stocks. If Diageo is unable to accurately forecast demand for its products or efficiently manage its
inventory, this may have a material adverse effect on Diageo’s business and financial results.
Diageo faces competition that may reduce its market share and margins
Diageo faces substantial competition from several international companies as well as regional and local companies (including craft
breweries and micro distilleries) in the countries in which it operates and competes with other drinks companies across a wide range
of consumer drinking occasions. Within a number of categories, the beverage alcohol industry has experienced consolidation among
major global producers, as evidenced by business combinations of substantial value carried out by significant competitors in recent
years. Consolidation is also taking place among Diageo’s customers in many countries. In addition, there has been a recent increase
in competition for distribution channels, notably e-commerce channels. These trends may lead to stronger competitors, increased
competitive pressure from customers, negative impacts on Diageo’s distribution network (including sub- optimal routes to customers
and consumers), downward pressure on prices, predatory marketing tactics by Diageo’s competitors and/or a decline in Diageo’s
market share in any of these categories. For example, expansion in the seltzer and ready to drink categories has increased competitive
pressures across product categories and in certain markets (such as in the United States).
Adverse developments in economic conditions or declines in demand or consumer spending may also result in intensified
competition for market share, with potentially adverse effects on sales volumes and prices. Any of these factors may adversely affect
Diageo’s results and potential for growth.
Diageo’s business may be adversely affected by increased costs for, or shortages of, talent, or by labour strikes or disputes
Diageo’s business could be adversely affected by labour or skill shortages or increased labour costs due to increased competition for
employees, higher employee turnover or increased employee benefit costs. There is no guarantee that Diageo will continue to be able
to recruit, retain and develop personnel possessing the skill sets that it requires to deliver its strategy, for example in relation to sales,
marketing and innovation capability within markets, or in its senior management. The loss of senior management or other key
personnel or the inability to identify, attract and retain qualified personnel in the future could make it difficult to manage Diageo’s
operations and adversely affect Diageo’s business and financial results. In addition, labour strikes, transport strikes, work stoppages
or slowdowns within Diageo’s operations or those of Diageo’s suppliers could adversely impact Diageo.
73 | Diageo Form 20-F 2025 |
Diageo’s operations and financial results may be adversely affected by movements in the value of assets and liabilities related
to its pension plans
Diageo operates a number of pension plans throughout the world, which vary in accordance with local conditions and practices. The
majority of these pension plans are defined benefit plans and are funded by payments to separately administered trusts or insurance
companies. The ability of these pension plans to meet their pension obligations may be affected by, among other things, the
performance of assets owned by these pension plans, the liabilities in connection with the pension plans, the underlying actuarial
assumptions used to calculate the surplus or deficit in the plans, in particular the discount rate and long-term inflation rates used to
calculate the liabilities of the pension funds, and any changes in applicable laws and regulations. If there are significant declines in
financial markets and/or deterioration in the value of fund assets or changes in discount rates or inflation rates, Diageo may need to
make substantial contributions to these pension funds in the future.
Furthermore, if the market values of the assets held by Diageo’s pension funds decline, the valuations of assets by the pension
trustees decline or the valuation of liabilities in connection with pension plans increase, pension expenses may increase which, as a
result, could materially adversely affect Diageo’s financial position. There is no assurance that interest rates or inflation rates will
remain constant, that pension fund assets can earn the assumed rate of return annually or that the value of liabilities will not fluctuate
significantly. Diageo’s actual experience may also be significantly more negative than the assumptions used.
Diageo’s operations may be adversely affected by failure to maintain or renegotiate distribution, supply, manufacturing or
licence agreements on favourable terms
Diageo’s business has a number of distribution, supply, manufacturing or licence agreements for brands owned by it or by other
companies. These agreements vary depending on the particular brand, but tend to be for a fixed number of years. There can be no
assurance that Diageo will be able to renegotiate its rights on favourable terms when these agreements expire or that they will not
be terminated. Failure to renew these agreements on favourable terms, or any disputes with distributors of Diageo’s products or
suppliers of raw materials, could have an adverse impact on Diageo’s business and financial results.
Diageo may not be able to protect its intellectual property rights
Given the importance of brand recognition to its business, Diageo has invested considerable effort in protecting its intellectual
property rights, including trademark registration and domain names. Diageo’s patents cover some of its process technology, including
some aspects of its bottle marking technology. Diageo also uses security measures and agreements to protect its confidential
information and trade secrets. However, Diageo cannot be certain that the steps it has taken will be sufficient or that third parties will
not infringe on or misappropriate its intellectual property rights in its brands or products or, indeed, that Diageo will not inadvertently
infringe a third party’s intellectual property rights. Moreover, some of the countries in which Diageo operates offer less intellectual
property protection than Europe or North America. Given the attractiveness of Diageo’s brands to consumers, it is not uncommon for
counterfeit products to be manufactured and traded in certain jurisdictions. Diageo cannot be certain that the steps it takes to assist the
authorities to prevent, detect and eliminate counterfeit products will be effective in preventing material loss of profits or erosion of
brand equity resulting from lower quality or even dangerous counterfeit product
reaching the market. If Diageo is unable to protect its intellectual property rights against infringement or misappropriation, this
could materially harm its future financial results and ability to develop its business.
Risks related to Diageo’s securities
It may be difficult to effect service of US process and enforce US legal process against Diageo and its directors
Diageo is a public limited company incorporated under the laws of England and Wales. The majority of Diageo’s directors and
officers, and some of the experts named in this document, reside outside of the United States. A substantial portion of Diageo’s
assets, and all or a substantial portion of the assets of such persons, are located outside of the United States. Therefore, it may not be
possible to effect service of process within the United States upon Diageo or these persons in order to enforce judgments of US courts
against Diageo or these persons based on the civil liability provisions of US federal securities laws. There is also doubt as to the
enforceability in England and Wales, in original actions or in actions for enforcement of judgments of US courts, of civil liabilities
solely based on the US federal securities laws. In addition, punitive damages in actions brought in the United States or elsewhere may
be unenforceable in England and Wales.
74 | Diageo Form 20-F 2025 |
Governance report
Contents | |
Chair's introduction to Governance | 75 |
Corporate Governance Structure and Division of Responsibilities | 76 |
Board of Directors | 78 |
Executive Committee | 80 |
Corporate governance report | 82 |
Audit Committee report | 97 |
Nomination Committee report | 104 |
Directors’ remuneration report | 108 |
Directors’ report | 135 |
75 | Diageo Form 20-F 2025 |
CHAIR’S INTRODUCTION TO GOVERNANCE
Sir John Manzoni
Chair
Resilient Leadership
and long-term Strategy
'I am confident in our clear long-term strategy to achieve Diageo's Growth
Ambition, despite market uncertainties, through resilient leadership, strong culture
and values.'
Dear Shareholder On behalf of the Board, I am delighted to present Diageo's corporate governance report for the year ended 30 June 2025 highlighting the role of Diageo's Board and governance structures over the course of the year in seeking to achieve long- term sustainable success of the company. Your Board is responsible for maintaining the health of the company, providing leadership and strategic direction which enable management to deliver growth and shareholder value over the long term. It is also responsible for ensuring the company has a clearly defined and articulated purpose and strategy, underpinned by values and behaviours which shape the company's culture and how it goes about its business. During the year, your Board has worked closely with management shaping Diageo's strategy to be more agile, focused and adaptable to current macroeconomic uncertainties, consumer sentiment and opportunities. We have continued our focus on more effective and regular stakeholder engagement, especially in relation to our shareholders, investors and market participants, but also with our employees and broader workforce, including through our workforce engagement activities. I thank you for continuing to invest in Diageo.  Sir John Manzoni Chair |
Principal Board decisions | |||
•Adapting Board ways of working, including committee structure and composition. •Reshaping strategic priorities in light of the external environment to help deliver Diageo's long-term, sustainable Growth Ambition. •Active portfolio management and disposals in line with our strategy. | |||
| Read more about our principal decisions on page 90. | ||
Highlights of fiscal 25 | |||
•Deep dive into our African business including engaging with customers and workforce in South Africa. •Engaging directly with a panel of sell-side analysts to understand their perspective of our business. •Welcoming new directors, Nik Jhangiani and Julie Brown, and Sir John Manzoni becoming Chair. | |||
| Read more about our highlights on pages 84-85. | ||
Board evaluation ACTIONS | |||
•Improved focus on consistency and regularity of investor and shareholder engagement. •Increased use of reporting tools to enable efficient communication of strategy implementation. •Maintain focus on talent pipeline for candidates for non-executive roles. | |||
| Read more about our actions on pages 91-92. | ||
Board composition(1) | |||
ò | Chair | ||
ò | Executive director | ||
ò | Non-executive director | ||
Non-Executive Director tenure(1) | |||
ò | 0 – 3 years | ||
ò | 3 – 6 years | ||
ò | 6 – 9 years | ||
Board gender diversity(1) | |||
ò | Male | ||
ò | Female | ||
Board ethnic diversity(1) | |||
ò | Director of colour | ||
ò | White European | ||
(1) Data as at 30 June 2025.
76 | Diageo Form 20-F 2025 |
Corporate governance structure and division of responsibilities
The role
of the Board
The Board is committed to the highest standards
of corporate governance and risk management,
which is demonstrated in its established
corporate governance framework.
This includes the three Board Committees
(Audit Committee, Nomination Committee
and Remuneration Committee) as well as
management committees which report to
the Chief Executive or Chief Financial Officer
(Executive Committee, Finance Committee,
Audit & Risk Committee and Filings
Assurance Committee).
| Read more about our committees on pages 97-134. |
Reporting |  | Board of Directors |  |  | Informing | ||||
Chair, Non-Executive Directors, Senior Independent Director | |||||||||
 | |||||||||
Board Committees | |||||||||
Audit Committee, Nomination Committee, Remuneration Committee | |||||||||
Executive Leadership | |||||||||
Chief Executive, Chief Financial Officer, Executive Committee, Finance Committee, Audit & Risk Committee, Filings Assurance Committee | |||||||||
| | ||||||||
Business unit risk management | Risk & Controls Steering Committee | ||||||||
Company Secretary | |||||||||
Roles and division of responsibilities – Board positions | ||||||||||
CHAIR | NON-EXECUTIVE DIRECTORS | Senior Independent Director | ||||||||
•Responsible for the operation, leadership and governance of the Board. •Ensures all Directors are fully informed of matters and receive precise, timely and clear information sufficient to make informed judgements. •Sets Board agendas and ensures sufficient time is allocated to ensure effective debate to support sound decision-making. •Ensures the effectiveness of the Board. •Engages in discussions with shareholders. •Meets with the Non-Executive Directors independently of the Executive Directors. | •Independent, experienced and influential individuals from diverse range of industries, backgrounds and countries. •Constructively challenge the Executive Directors, develop strategy and scrutinise performance. •Satisfy themselves on the integrity of the financial information, controls and systems of risk management. •Set the levels of remuneration for Executive Directors and senior management. •Make recommendations to the Board concerning appointments to the Board. | •Acts as a sounding board for the Chair and serves as an intermediary for the other Directors when necessary. •Responsible for managing an orderly succession process for the Chair. •Together with the other Non- Executive Directors, leads the review of the performance of the Chair, taking into account the views of the Executive Directors. •Available to shareholders if they have concerns where contact through the normal channels has failed. | ||||||||
Roles and division of responsibilities – Executive leadership positions | ||||||||||
chief Executive | Chief financial officer | COMPANY SECRETARY | ||||||||
•Develops the group’s strategic direction for consideration and approval by the Board. •Implements the strategy agreed by the Board. •Leads and is supported by the Executive Committee. •Manages the company and the group. •Along with the Chief Financial Officer, leads discussions with investors. •Is supported by the Finance Committee and Filings Assurance Committee in the management of financial reporting of the company. | •Manages all aspects of the group’s financial affairs. •Responsible for the management of the capital structure of the company. •Contributes to the management of the group’s operations. •Along with the Chief Executive, leads discussions with investors. •Is supported by the Finance Committee and Filings Assurance Committee in the management of the financial affairs and reporting of the company. •Is a member of the Executive Committee. | •The Board is supported by the Company Secretary who ensures information is made available to Board members in a timely fashion. •Supports the Chair in setting Board agendas, designing and delivering Board inductions and Board evaluations, and co-ordinates post- evaluation action plans, including risk review and training requirements for the Board. •Advises on corporate governance matters. •Is a member of the Executive Committee as General Counsel. | ||||||||
77 | Diageo Form 20-F 2025 |
Compliance with the UK Corporate Governance Code
The Board considers that, for the year ended 30 June 2025, Diageo has fully applied the Principles and complied with the Provisions
of the UK Corporate Governance Code 2018 (the Code).
The table below details where content complying with the Code's requirements can be found.
| Visit diageo.com for more information. | |
1 | Board Leadership & Company Purpose | ||
A. | Board of Directors | Board of Directors | 78 |
Board Committee Composition | 105 | ||
Performance Evaluation | 91 | ||
B. | Purpose, Values and Culture | Our Growth Ambition | 10 |
’Spirit of Progress’ | 36 | ||
C. | Resources and Control Framework | Our Strategy | 11 |
Our Principal Risks and Risk Management | 63 | ||
Corporate Governance Structure and Division of Responsibilities | 76 | ||
D. | Stakeholder Engagement | Stakeholder Engagement | 86 |
Section 172 Statement | 2 | ||
E. | Workforce Policies and Practices | Our Growth Ambition | 10 |
’Spirit of Progress’ | 36 | ||
Business integrity and Human Rights | 38 | ||
Business Integrity Programmes | 100 | ||
2 | Division of Responsibilities | ||
F. | Role of the Chair | Chair's Introduction to Governance | 75 |
Corporate Governance Structure and Division of Responsibilities | 76 | ||
Performance Evaluation | 91 | ||
G. | Division of Responsibilities | Corporate Governance Structure and Division of Responsibilities | 76 |
Composition of the Board | 82 | ||
H. | Role of the Non- Executive Director | Corporate Governance Structure and Division of Responsibilities | 76 |
Board of Directors | 78 | ||
I. | Board Policies, Process, Information, Time and Resources | How the Board Monitors Culture | 94 |
Duties of the Board | 82 | ||
Board Activities | 84 | ||
3 | Composition, Succession and Evaluation | ||
J. | Appointments to the Board | Diversity Succession Planning | 106 |
105 | |||
Recruitment and election procedures | 105 | ||
K. | Board Skills, Experience and Knowledge | Composition of the Board | 82 |
L. | Board Evaluation | Performance Evaluation | 91 |
4 | Audit, Risk and Internal Controls | ||
M. | Independence, and Effectiveness of Internal and External Auditors | Audit Committee Report | 97 |
N. | Fair, Balanced, and Understandable Assessment | Directors' Confirmations | 96 |
O. | Risk and Internal Controls | Corporate Governance Structure and Division of Responsibilities | 76 |
Our Principal Risks and Risk Management | 63 | ||
5 | Remuneration | ||
P. | Alignment to Purpose, Values and Long-Term Success | Remuneration Committee Chair's letter | 108 |
Remuneration at a Glance | 111 | ||
Director's Remuneration Policy | 114 | ||
Q. | Remuneration Policy | Remuneration Committee Chair’s letter | 108 |
Director’s Remuneration Policy | 114 | ||
R. | Independent Judgement and Discretion | Remuneration Committee Chair’s letter | 108 |
Consideration of wider workforce remuneration | 119 | ||
Fiscal 25 Board Attendance | Annual General Meeting 2024 | Board (maximum 8) | Audit Committee (maximum 5) | Nomination Committee (maximum 6) | Remuneration Committee (maximum 4) |
Sir John Manzoni, KCB | ü | 8/8 | 5/5 | 6/6 | 4/4 |
Debra Crew(1) | ü | 7/8 | — | — | — |
Nik Jhangiani(2) | ü | 6/7 | — | — | — |
Susan Kilsby | ü | 8/8 | 5/5 | 6/6 | 4/4 |
Melissa Bethell | ü | 8/8 | 5/5 | 6/6 | 4/4 |
Karen Blackett, CBE | ü | 8/8 | 5/5 | 6/6 | 4/4 |
Julie Brown | ü | 8/8 | 5/5 | — | — |
Valérie Chapoulaud-Floquet | ü | 8/8 | 5/5 | 6/6 | 4/4 |
Ireena Vittal | ü | 8/8 | 5/5 | 6/6 | 4/4 |
Former Directors | |||||
Javier Ferrán(3) | ü | 5/5 | 4/4 | 5/5 | 3/3 |
Lavanya Chandrashekar(4) | n/a | 1/1 | — | — | — |
Alan Stewart(5) | ü | 2/2 | 1/1 | 1/1 | 1/1 |
(1)Debra Crew retired from the Board on 16 July 2025.
(2)Nik Jhangiani was appointed to the Board on 1 September 2024.
(3)Javier Ferrán retired from the Board on 5 February 2025.
(4)Lavanya Chandrashekar retired from the Board on 1 September 2024.
(5)Alan Stewart retired from the Board on 26 September 2024.
78 | Diageo Form 20-F 2025 |
BOARD OF DIRECTORS
Board skills and competencies | Key external appointments | ||||
SIR JOHN MANZONI, KCB | |||||
 |  | Has strong commercial executive experience as a former CEO in the energy sector and non-executive board level experience, including in the alcoholic beverage industry, as well as more recent expertise in public policy and government affairs | Current: Chair, SSE plc; Non-Executive Director, KBR Inc. Previous relevant experience: Chair, Atomic Weapons Establishment; Chief Executive of the Civil Service and Permanent Secretary of the Cabinet Office, HM Government; President and Chief Executive Officer, Talisman Energy Inc; Chief Executive, Refining & Marketing, BP p.l.c.; Chief Executive, Gas & Power, BP p.l.c.; Non-Executive Director, SABMiller plc | ||
Chair | |||||
Nationality: British | |||||
Appointed: Chair and Chair of the Nomination Committee: February 2025 (Appointed Non- Executive Director: October 2020) | |||||
Nik Jhangiani | |||||
 |  | Has many years' finance experience in roles in the United Kingdom, Europe, India, Africa and the United States, including 20 years in various chief financial officer roles, having spent most of his career in consumer and beverage industries | Previous relevant experience: Chief Financial Officer, Coca-Cola Europacific Partners; Chief Financial Officer and SVP, Coca-Cola Enterprises; Chief Financial Officer, Europe, Coca-Cola European Partners; Group Chief Financial Officer, Bharti Enterprises; Chief Financial Officer, Coca-Cola Hellenic Bottling Company; Group Financial Director for Nigeria, Colgate Palmolive | ||
Interim Chief Executive and Chief Financial Officer | |||||
Nationality: American/ British | |||||
Appointed: Interim Chief Executive: July 2025, Chief Financial Officer and Executive Director: September 2024 | |||||
Susan Kilsby | |||||
 |    | Brings wide-ranging corporate governance and board-level experience across a number of industries, including a consumer goods sector focus, with particular expertise in mergers and acquisitions, corporate finance and transaction advisory work | Current external appointments: Non-Executive Chair, Fortune Brands Innovations, Inc.; Vice Chair and Senior Independent Director, Unilever PLC; Non-Executive Director and Chair of Talent and Remuneration Committee, COFRA Holding AG; Member and Chair of Remuneration Committee, the Takeover Panel Previous relevant experience: Senior Independent Director and Chair of Remuneration Committee, BHP Group Plc, BHP Group Limited; Senior Independent Director, BBA Aviation plc; Chair, Shire plc; Chair, Mergers and Acquisitions EMEA, Credit Suisse; Non- Executive Director, Goldman Sachs International, Keurig Green Mountain, L’Occitane International, Coca-Cola HBC, NHS England | ||
Senior Independent Director | |||||
Nationality: American/ British | |||||
Appointed: Senior Independent Director: October 2019 (Appointed Non-Executive Director: April 2018 and Chair of the Remuneration Committee: January 2019) | |||||
Melissa Bethell | |||||
 |  | Has extensive international corporate and financial experience, including in relation to private equity, financial sectors, strategic consultancy and advisory services, as well as having strong non-executive experience at board level across a range of industries, including retail, consumer goods and financial services | Current external appointments: Non-Executive Director, Tesco PLC, Exor N.V.; Senior Independent Director, Ocean Outdoor plc; Senior Advisor, Atairos Europe Previous relevant experience: Managing Director and Senior Advisor, Private Equity, Bain Capital; Non-Executive Director, Atento S.A., Worldpay plc, Samsonite S.A. | ||
Non-Executive Director | |||||
Nationality: American/ British | |||||
Appointed: Non- Executive Director: June 2020 | |||||
79 | Diageo Form 20-F 2025 |
Board skills and competencies | Key external appointments | ||||
Karen Blackett, CBE | |||||
 | | Brings expertise in marketing, media and the creative industries, as well as broad experience in public policy and strategic initiatives through a number of different government, industry and public bodies | Current external appointments: Chancellor, University of Portsmouth; Founding Trustee, BEO (Black Equity Organisation); Non-Executive Director, British Fashion Council, HM UK Government Foreign Commonwealth and Development Office Previous relevant experience: UK President, WPP plc; UK Race Equality Business Champion, HM UK Government; Business Ambassador, Department for International Trade, Chairwoman; MediaCom UK & Ireland; Chief Executive Officer, GroupM UK, MediaCom UK; Chief Operations Officer, MediaCom EMEA; Marketing Director, MediaCom; UK Country Manager, WPP plc; Non- Executive Director, The Pipeline, Creative UK | ||
Non-Executive Director | |||||
Nationality: British | |||||
Appointed: Non- Executive Director: June 2022 | |||||
Julie brown | |||||
 |  | Has extensive experience in financial, commercial and strategic roles in international companies operating in highly regulated industries, in both executive and non-executive capacities, including in her current role as Chief Financial Officer of a pharmaceuticals company | Current external appointments: Chief Financial Officer and Executive Director, GSK plc; Patron, Oxford University Women in Business; Member, Business Advisory Board to the Mayor of London; Member, CFO Leadership Network, Accounting for Sustainability (part of the King Charles III Charitable Fund Group of Companies) Previous relevant experience: Chief Operating and Financial Officer and Executive Director, Burberry Group plc; Non-Executive Director and Chair of the Audit Committee, Roche Holding AG; Group Chief Financial Officer and Executive Director, Smith & Nephew plc; Various senior commercial, strategy and finance roles including Interim Group Chief Financial Officer, AstraZeneca PLC | ||
Non-Executive Director | |||||
Nationality: British | |||||
Appointed: Non- Executive Director and Chair of the Audit Committee: August 2024 | |||||
Valérie Chapoulaud-Floquet | |||||
 | | Brings strong experience and expertise in the luxury consumer goods sector, having spent her career in the industry working in a number of international markets, including developed and emerging markets, and as a former chief executive in the premium drinks industry | Current external appointments: Non-Executive Director, Lead Independent Director and Chair of Governance Committee, Danone S.A.; Non- Executive Director, Acné Studios A.B., Agrolimen S.A., Nextstage S.C.A.; Vice Chair, Sofisport Previous relevant experience: Chief Executive Officer, Rémy Cointreau S.A.; President and CEO for the Americas, President and CEO for North America; President South Europe, Luis Vuitton, LVMH Group; President and CEO, Louis Vuitton Taiwan, LVMH Group; President, Luxury Product Division USA, L’Oréal Group; Non-Executive Director, Jacobs Holding AG | ||
Non-Executive Director | |||||
Nationality: French | |||||
Appointed: Non- Executive Director: January 2021 | |||||
Ireena Vittal | |||||
 | | Brings a wealth of FMCG experience from a career in executive consulting with a focus on consumer goods and emerging markets, including India, as well as broad experience in non- executive board roles in the United Kingdom and India | Current external appointments: Non-Executive Director, Maruti Suzuki India Limited, Asian Paints Limited; Director and Advisory Board member, UrbanClap Technologies India Private Limited; Advisory Board member, Russell Reynolds Associates Previous relevant experience: Head of Marketing and Sales, Hutchinson Max Telecom; Partner, McKinsey and Company; Non-Executive Director, Wipro Limited, Housing Development Finance Corporation Limited, Titan Company Limited, Tata Global Beverages Limited, GlaxoSmithKline Consumer Healthcare, Godrej Consumer Products Limited, Compass Group PLC | ||
Non-Executive Director | |||||
Nationality: Indian | |||||
Appointed: Non- Executive Director: October 2020 | |||||
Board committees | |||
| Audit Committee | | Remuneration Committee |
 | Executive Committee |  | Chair of the committee |
| Nomination Committee | ||
80 | Diageo Form 20-F 2025 |
EXECUTIVE COMMITTEE
Ewan Andrew | ||
 | ||
President, Global Supply and Procurement & Chief Sustainability Officer | ||
Nationality: British | ||
Appointed: September 2019 | ||
Current external appointments: Member, Scotch Whisky Association Council, Scottish Business Climate Collaboration Board, One Planet Business for Biodiversity Board, Gartner Executive Advisory Board Previous Diageo roles: Supply Director, International Supply Centre; Senior Vice President, Supply Chain & Procurement, Latin America and Caribbean; Senior Vice President Manufacturing & Distilling, North America; various supply chain, operational management and procurement roles | ||
Sally Grimes | ||
 | ||
Chief Executive, North America | ||
Nationality: American | ||
Appointed: October 2023 | ||
Current external appointments: Director, Continental Grains Company Previous relevant experience: Chief Executive Officer, Clif Bar & Company; Group President, Prepared Foods, President, International & Chief Global Growth Officer, Tyson Foods; President, Chief Innovation Officer, Hillshire Brands Company; Vice President, Global Business Leader, Writing and Creative Expression, Newell Brands; various Kraft Foods roles | ||
Alvaro Cardenas | ||
 | ||
President, Latin America and Caribbean | ||
Nationality: Colombian | ||
Appointed: January 2021 | ||
Previous Diageo roles: Managing Director, Andean Region; Director, End-to-End Global Commercial Processes; Finance Director, South East Asia Region, PUB (Paraguay, Uruguay and Brazil) Region, Andean Region, Colombia | ||
RANDALL INGBER | ||
 | ||
General Counsel and Company Secretary | ||
Nationality: Australian / American | ||
Appointed: June 2025 | ||
Previous Diageo roles: Global Counsel, Asia Pacific, Brands, Innovation & Commerce; General Counsel, Asia Pacific, Supply & Procurement, Global Litigation and Africa; Deputy General Counsel, Corporate; Senior Counsel, Global Corporate Relations and Antitrust; Regional Counsel, Southeast Asia and India, Australasia and Japan Previous relevant experience: General Counsel and Company Secretary, Lion Group | ||
Cristina Diezhandino | ||
 | ||
Chief Marketing Officer | ||
Nationality: Spanish | ||
Appointed: July 2020 | ||
Current external appointments: Non- Executive Director, Mandarin Oriental Previous Diageo roles: Global Category Director, Scotch & Managing Director, Reserve Brands; Managing Director, Caribbean and Central America; Marketing & Innovation Director, Diageo Africa; Category Director, Scotch Portfolio & Gins; Global Brand Director, Johnnie Walker Previous relevant experience: Various marketing roles, Allied Domecq Spain, Unilever HPC US, United Kingdom and Spain | ||
Daniel Mobley | ||
 | ||
Global Corporate Relations Director | ||
Nationality: British | ||
Appointed: June 2017 | ||
Previous Diageo roles: Corporate Relations Director, Europe Previous relevant experience: Regional Head of Corporate Affairs, India & South Asia, Regional Head of Corporate Affairs, Africa, Group Head of Government Relations, Standard Chartered; extensive government experience including in HM Treasury and Foreign & Commonwealth Office | ||
81 | Diageo Form 20-F 2025 |
Hina Nagarajan | ||
 | ||
President, Africa | ||
Nationality: Indian | ||
Appointed: July 2021 | ||
Current external appointments: Non-Executive Director, BP p.l.c. Previous Diageo roles: Managing Director and CEO, Diageo India; Managing Director, Africa Regional Markets Previous relevant experience: Managing Director, China & SVP North Asia, Reckitt Benckiser; General Manager, Malaysia & Singapore, Reckitt Benckiser; MD & CEO Mary Kay India; senior marketing and general management roles, ICI Paints India and Nestlé India | ||
Louise Prashad | ||
 | ||
Chief HR Officer | ||
Nationality: British | ||
Appointed: January 2022 | ||
Previous Diageo roles: Global Talent Director; Talent & OE Director, Africa; HR Director, Europe, West Latin America and Caribbean, Global Functions; Talent and Learning Director UK, Ireland and North America; HR Director Great Britain; Global Supply; Global Commercial Previous relevant experience: Various HR roles, Stakis Group and Hilton Hotels | ||
Dayalan Nayager | ||
 | ||
President, Europe and Chief Commercial Officer | ||
Nationality: South African/British | ||
Appointed: July 2022 | ||
Previous Diageo roles: President, Africa; Managing Director, Great Britain and Justerini & Brooks, Ireland and France, Global Travel; Regional Director, Global Travel Europe; Commercial Director, South Africa; Customer Marketing Director, South Africa; Key Account Director, South Africa Previous relevant experience: Various positions, Heinz, Mars | ||
Praveen Someshwar | ||
 | ||
Managing Director and CEO of Diageo India | ||
Nationality: Indian | ||
Appointed: April 2025 | ||
Previous relevant experience: Managing Director and CEO, HT Media Group; Senior Vice President & General Manager, CEO India Foods, CEO South Asia Beverages, PepsiCo | ||
John O’Keeffe | ||
 | ||
President, Asia Pacific, Global Travel and India | ||
Nationality: Irish | ||
Appointed: July 2015 | ||
Previous Diageo roles: President, Asia Pacific & Global Travel; President, Africa & Beer; CEO and Managing Director, Guinness Nigeria; Global Head, Innovation; Global Head, Beer and Baileys; Managing Director, Russia and Eastern Europe; various management and marketing positions | ||
| Nik Jhangiani is also a member of the Executive Committee. His biography can be found on page 78. |
82 | Diageo Form 20-F 2025 |
Corporate governance report
Board of Directors
Composition of the Board
The Board currently comprises the Non-Executive Chair, one Executive
Director, the Senior Independent Director, and six independent Non-
Executive Directors. The biographies of all directors are set out in this
Annual Report on pages 78 and 79.
Diverse range of skills and backgrounds
The Board believes that having directors from a diverse range and
combination of skills, experience and knowledge is a critical enabler
supporting achievement of our Growth Ambition. Engaging talent
and enabling an inclusive working environment are also core principles
of the company’s ethical framework which incorporates our Code
of Business Conduct as well as our Global Human Rights Policy,
which applies to all employees, subsidiaries and third-party
contractors. Our objective is to maintain and sustain an inclusive and
diverse business, across all levels, functions and geographies, in order
to create a better working environment and a better performing
business. As part of this, and in accordance with the UK Corporate
Governance Code, the Board has adopted a Board Diversity Policy
alongside Diageo’s Code of Business Conduct and associated global
policies. Consistent with the rest of the organisation, Diageo aims to
recruit and engage inclusive and diverse talent to form its Board of
Directors. The Board is comprised of individuals from a diverse range of
skills, industries, backgrounds, genders, ages, nationalities and
ethnicities, which enables a broader evaluation of all matters
considered by the Board and contributes to a culture of collaborative
and constructive discussion. The Board’s objective, as set out in its
Diversity Policy, is that it shall include no less than 40% female
representation, with the ultimate goal being parity between males and
females on the Board, and at least one director from a minority ethnic
group. As at 4 August 2025, women make up 75% of the Board and
there are four directors 50% who self-disclose as being from minority
ethnic groups. The Board's Diversity Policy is available at https://
www.diageo.com/en/our-business/corporate-governance/board-
diversity.
Outside interests and conflicts
The Board has adopted guidelines for dealing with conflicts of interest,
with directors' outside interests being regularly reviewed and
responsibility for authorising conflicts of interest reserved for the
Board. In the case of a potential conflict, the Nomination Committee
considers the circumstances, appropriate controls and protocols, and
makes a recommendation to the Board. The Board confirmed that it
was not aware of any situations that may or did give rise to conflicts
with the interests of the company, other than those that may arise
from directors’ other appointments as disclosed in their biographies.
Duties of the Board
The Board manages overall control of the company’s affairs with
reference to the formal schedule of matters reserved for the Board for
decision. The schedule was last reviewed in July 2025 and is available
at https://www.diageo.com/en/our-business/corporate-governance/
committees. In order to fulfil their duties, procedures are in place for
directors to seek both independent advice and the advice and services
of the Company Secretary, who is responsible for advising the Board on
all governance matters. The Board considers a number of factors when
making decisions, including the potential impact of those decisions on
various stakeholder groups and on the company's ‘Spirit of Progress‘ and
other non-financial targets, including in respect of environmental
sustainability. Further information on the Board and the Audit
Committee's roles in climate risk governance can be found on page 46.
The terms of reference of Board Committees are reviewed regularly,
most recently in July 2025, and are available at https://
www.diageo.com/en/our-business/corporate-governance.
Corporate governance requirements
In January 2024, the Financial Reporting Council (FRC) published a new
version of the UK Corporate Governance Code, which applies to Diageo
for financial periods starting on or after 1 January 2025, as a company
listed on the equity shares (commercial companies) sector on the London
Stock Exchange. Accordingly, the principal corporate governance rules
applying to Diageo for the year ended 30 June 2025 are contained in
the 2018 UK Corporate Governance Code (the Code) and the UK
Financial Conduct Authority (FCA) Listing Rules, which require us to
describe, in our Annual Report, our corporate governance from two
points of view: the first dealing generally with our application of the
Code’s main principles and the second dealing specifically with non-
compliance with any of the Code’s provisions. The two descriptions
together are designed to give shareholders a picture of governance
arrangements in relation to the Code as a criterion of good practice.
A copy of the Code is publicly available on the website of the FRC,
www.frc.org.uk. Diageo’s statement as to compliance with the Code
during the year ended 30 June 2025 can be found on page 77. Diageo
must also comply with corporate governance rules contained in the FCA
Disclosure Guidance and Transparency Rules and certain related
provisions in the Companies Act 2006 (the Act). Diageo is also listed on
the New York Stock Exchange (NYSE), and as such is subject to the
applicable rules of this exchange and jurisdiction. For example, Diageo
is subject to the listing requirements of the NYSE and the rules of the
US Securities and Exchange Commission (SEC), as they apply to foreign
private issuers. Compliance with the provisions of the US Sarbanes-
Oxley Act of 2002 (SOx), as it applies to foreign private issuers, is
continually monitored.
Compliance with US corporate governance rules
Under applicable SEC rules and the NYSE’s corporate governance rules
for listed companies, Diageo must disclose any significant ways
in which its corporate governance practices differ from those followed
by US companies under NYSE listing standards. Diageo believes the
following to be the significant areas in which there are differences
between its corporate governance practices and NYSE corporate
governance rules applicable to US companies. This information is
also provided on the company’s website at www.diageo.com/en/
our-business/corporate-governance..
Basis of regulation: UK listed companies are required to include in their
annual report a narrative statement of (i) how they have applied the
principles of the Code and (ii) whether or not they have complied with
the best practice provisions of the Code. NYSE listed companies must
adopt and disclose their corporate governance guidelines. Certain UK
companies are required to include in their annual report statements as to
(i) how directors have complied with Section 172 of the Act, which
requires directors to promote the success of the company for the benefit
of the members as a whole, having regard to the interests of stakeholders
and (ii) how directors have engaged with and taken account of the views
of the company’s workforce and other stakeholder groups. Diageo
complied throughout the year with the best practice provisions of the
Code and the disclosure requirements noted above.
Director independence: The Code requires at least half the Board
(excluding the Chair) to be independent non-executive directors, as
determined by affirmatively concluding that a director is independent
in character and judgement and determining whether there are
relationships and circumstances which are likely to affect, or could
appear to affect, the director’s judgement. The Code requires the
Board to state its reasons if it determines that a director is independent
notwithstanding the existence of relationships or circumstances which
may appear relevant to its determination. NYSE rules require a majority
of independent directors, according to the NYSE’s own 'brightline' tests
and an affirmative determination by the Board that the director has no
material relationship with the listed company. Diageo’s Board has
determined that, in its judgement and without taking into account the
NYSE brightline tests, all of the Non-Executive Directors are
independent. As such, currently seven of Diageo’s directors are
independent. Further details of this determination are set out below.
Chair and Chief Executive: The Code requires these roles to be
separate. There is no corresponding requirement for US companies.
Diageo has a separate Chair and Chief Executive.
Non-Executive Director meetings: NYSE rules require non-management
directors to meet regularly without management present and
independent directors to meet separately at least once a year.
The Code requires non-executive directors to meet without the
Chair present at least annually to appraise the Chair’s performance.
During the year, Diageo has complied with these requirements with
independent Non-Executive Directors, including the Chair, meeting
83 | Diageo Form 20-F 2025 |
without the Executive Directors present seven times and independent
Non-Executive Directors meeting without the Chair or Executive
Directors present once.
Board committees: Diageo has a number of Board committees that are
similar in purpose and constitution to those required by NYSE rules.
Diageo’s Audit, Remuneration and Nomination Committees consist
entirely of independent non-executive directors. Under NYSE
standards, companies are required to have a nominating/corporate
governance committee, which develops and recommends a set
of corporate governance principles and is composed entirely of
independent directors. The terms of reference for Diageo’s Nomination
Committee, which comply with the Code, do not contain such a
requirement. In accordance with the requirements of the Code, Diageo
has disclosed on pages 91-92 the results and means of its annual
evaluation of the Board, its Committees and the directors, and it
provides extensive information regarding the Directors’ compensation
in the Directors’ remuneration report on pages 108-134.
Code of ethics: NYSE rules require a code of business conduct and code
of ethics to be adopted for directors, executive officers and employees
and disclosure of any waivers for executive directors or officers.
Diageo has adopted a Code of Business Conduct for all directors,
officers and employees, as well as a Code of Ethics for Senior Financial
Officers in accordance with the requirements of SOx. See page 101 for
further details.
Compliance certification: NYSE rules require chief executives to certify
to the NYSE their awareness of any NYSE corporate governance
violations. Diageo is exempt from this as a foreign private issuer but is
required to notify the NYSE if any executive officer becomes aware of
any non-compliance with NYSE corporate governance standards. No
such notification was necessary during the period covered by this
report.
Structure and division of responsibilities
The Board is committed to the highest standards of corporate governance
and risk management, which is demonstrated in its established corporate
governance framework, illustrated on page 76. This includes the three
Board Committees (Audit Committee, Nomination Committee and
Remuneration Committee), as well as management committees
which report to the Chief Executive or Chief Financial Officer
(Executive Committee, Finance Committee, Audit & Risk Committee
and Filings Assurance Committee). There is a clear separation of the
roles of the Chair, the Senior Independent Director and the Chief
Executive which has been clearly established and is set out in writing,
which was last approved by the Board in May 2025. A copy of this
is available at https://www.diageo.com/en/our-business/corporate-
governance. No individual or group dominates the Board’s decision-
making processes.
| Further details on the Board Committees can be found in the separate reports from each committee on pages 97-134, and details of the Executive Committee can be found on pages 80-81. |
Board skills and experience
Having an appropriate mix of experience, expertise, diversity and
independence is essential for Diageo's Board. Such diverse attributes
enable the Board as a whole to provide informed opinions and advice
on strategy and relevant topics, thereby discharging its duty of
oversight. The Board skills matrix helps to identify the experience and
expertise of existing directors, required skill sets or competencies, and
the strategic requirements of the company. The key strengths and
relevant experience of each director are set out on pages 78 and 79,
and a matrix of the Board’s current skills and experience for the year
ended 30 June 2025 is set out below.
Independence
The Code requires the Board to state its reasons for concluding that
a director is independent notwithstanding the existence of certain
relationships or circumstances which are likely to impair or appear
to impair a director's independence. A non-exhaustive list of such
circumstances is set out in provision 10 of the Code. The Board has
considered the individual circumstances of each Non-Executive
Director, in light of provision 10 and other relevant factors, and
concluded that all of the Non-Executive Directors are independent. The
Board noted that, during the year, an additional fee of £20,000 had
been agreed to be paid to Karen Blackett CBE in respect of her role as
designated Non-Executive Director with responsibility for leading the
Board's workforce engagement programme, effective 1 July 2024,
reflecting the increased time commitment required and contribution
made by her on behalf of the Board. The Board concluded that,
notwithstanding this fee, Karen continues to provide constructive
contributions and challenge to management during Board discussions,
demonstrating her continued objective judgement and independence.
Board and Committee attendance
Directors’ attendance record at the last Annual General Meeting (AGM),
scheduled Board meetings and Board Committee meetings, for the year
ended 30 June 2025 is set out in the table shown on page 77. Directors
are expected to attend all meetings of the Board and its Committees
and the AGM, but if unable to do so they are encouraged to give their
views to the Chair of the meeting in advance. The 2024 AGM was held
as a combined physical and electronic meeting via a live webcast with
all directors attending either physically or by video link. For Board and
Board Committee meetings, attendance is expressed as the number of
meetings attended of the number that each director was eligible to
attend. The 2025 AGM is scheduled to be held on 6 November 2025.
84 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
Board and Committees' activities timeline
July | ||||||||
LONDON, UK | ||||||||
Discussion: Full year performance, external reporting, competitive intelligence review, workforce engagement activities and marketing transformation programme. Approvals: Fiscal 24 preliminary results and annual report, final dividend, funding plan, and business development. | ||||||||
Strategy |  |  |  | |||||
Meeting type | ò | ò | ò | ò | ||||
October | ||||||||
Cape town, south africa | ||||||||
Discussion: Focus on Africa region, including strategic review, digital marketing and values, behaviours and culture. Engagement events: Discussions with customers, visits to on- and off-trade customers and townhall sessions with employees. | ||||||||
Strategy | | | | |||||
Meeting type | ò | ò | ò | |||||
January & February | ||||||||
London, UK | ||||||||
Discussion: Half year performance, global tequila strategy, return of capital and corporate culture review. Approvals: Interim results and dividend and business development. | ||||||||
Strategy | | | ||||||
Meeting type | ò | ò | ò | ò | ||||
May | ||||||||
Scotland, UK | ||||||||
Discussion: Annual Strategy Conference, including category review, digital capabilities and marketing efficiency. Approval: Launch of Accelerate. | ||||||||
Strategy | | | | |||||
Meeting type | ò | ò | ò | ò | ò | |||
2024 | |||||||
September | |||||||
LONDON, UK | |||||||
Engagement events: Annual General Meeting, presentation and Q&A with investors and voting on resolutions. Discussion: Reputation management review and supply chain contract approvals. | |||||||
Strategy | | | |||||
Meeting type | ò | ò | ò | ||||
December | |||||||
LONDON, UK | |||||||
Discussion: Public health policy and measures, India strategic review and digital supply chain review. Engagement events: Discussion with analyst panel | |||||||
2025 | Strategy | | | ||||
Meeting type | ò | ò | ò | ò | |||
March | |||||||
Virtual | |||||||
Discussion: Business development update, review of board ways of working and board evaluation feedback. | |||||||
Strategy | | ||||||
Meeting type | ò | ò | |||||
June | |||||||
London, UK | |||||||
Discussion: Review audit status and year- end reporting and reward processes. | |||||||
Strategy | | ||||||
Meeting type | ò | ò | ò | ||||
Link to strategy | |
| Brands and portfolio |
| Consumer trends |
| Operational excellence |
Meeting type | |
ò | Board Meeting |
ò | Audit Committee |
ò | Remuneration Committee |
ò | Nomination Committee |
ò | Annual General Meeting |
ò | Annual Strategy Conference |
85 | Diageo Form 20-F 2025 |
Board activities
Details of the main areas of focus of the Board and its Committees during the year include those summarised below:
Focus area | Strategic priority | Stakeholders | |
Strategic matters | |||
•Held a two-day Annual Strategy Conference (ASC) focusing on analysis of consumer dynamics and moderation trends, strategic role of convenience and ready-to-drink products, and other key strategic topics. •Received reports on the financial performance of the group as against the annual plan. •Reviewed the group’s governance frameworks for reputation management, tax strategy and policy. | •Received reports on the macroeconomic environment, socio-political matters and emerging trends. •Carried out deep dives into key strategic topics including the group's supply chain footprint and efficiency, its digital marketing strategy, health and positive drinking strategy. | | |
Operational matters | |||
•Reviewed and approved the group's three-year plan and annual funding plan, insurance, banking and capital expenditure requirements. •Regularly reviewed and approved the group’s business development activities, reorganisations and various other projects. •Reviewed the group's internal culture and values, including in respect of inclusion and diversity, values and behaviours. •Approved capital expenditure investments, and various significant procurement, systems and other contracts, having taken into consideration financial, operational, sustainability and other ESG related factors. | •Reviewed the company’s capital allocation, funding and liquidity positions, and those of its pension schemes. •Reviewed and approved the company’s return of capital proposals, including interim and final dividends. •Acting through the Nomination Committee, reviewed the company’s executive and non- executive succession planning and talent strategy. •Reviewed the group's operating model, maturing stock inventory positions, marketing and trade spend effectiveness, and its capital expenditure programme. | | |
ESG matters | |||
•Supervised update to double materiality assessment, reviewed progress in relation to the group's ’Spirit of Progress’ ESG action plan and reviewed the programme in light of the updated double materiality assessment results. •Reviewed updated emissions reductions targets prior to submission to SBTi for approval. •Received reports on workforce engagement over the year. •Received regular investor reports. | •Received regular updates on ESG matters and progress towards ‘Spirit of Progress‘ targets. •Carried out an internal evaluation of the Board’s performance, reviewed results and agreed action points. •Reviewed and updated split of responsibilities summary, schedule of matters reserved for the Board and terms of reference of its Committees. | | |
Assurance and risk management | |||
•Received reports in relation to material legal matters, including disputes, regulatory and governance developments, and areas of legal or regulatory risk. •On the recommendation of the Audit Committee, approved the company’s risk footprint, including reviewing and updating the principal risks. | •On the recommendation of the Audit Committee, approved the company’s filings, financial and non- financial reporting including quarterly trading updates, interim and preliminary results announcements, US filings and Annual Report. | | |
Link to strategy | |
| Brands and portfolio |
| Consumer trends |
| Operational excellence |
Stakeholders | |||||
 | Our people |  | Suppliers |  | Government and regulators |
 | Consumers |  | Communities | ||
 | Customers |  | Investors | ||
86 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
Stakeholder engagement
We aim to maintain open and positive dialogue with
our stakeholders, considering their key interests in our
decision-making and maintaining communications with
them in different ways. This helps build trust, respect
and informs our decisions and the role we play in society.
The development of strong relationships between Diageo and its
external stakeholders is an intrinsic part of our purpose and culture.
Our stakeholders include not only business partners such as suppliers
and customers, our people and workforce, but also government,
consumers and the wider communities in which we operate. As noted
in the company’s statement on Section 172 of the Companies Act 2006
set out on page 2, in making their decisions and in discharging their
duties to promote the success of the company, the directors must have
regard to the interests of its stakeholders. We have summarised below
why our stakeholders are important to us, what we believe their
principal interests are and how the Board and company seeks to engage
and respond.
The stakeholders listed below are not set out in order of priority.
Stakeholder and why we engage | ||||
Our people | ||||
•People are at the core of our business. •We aim to build a trusting, respectful and inclusive culture where people feel engaged and fulfilled. •We want our people to be treated with dignity at work and their human rights respected. | What we believe matters most to them •Prioritisation of health, safety and wellbeing. •Learning and development opportunities. •Purpose, culture and benefits. •Contributing to the growth of our brands and performance. •Inclusion and diversity. Sustainability and societal credentials. How the Board seeks to engage •Active dialogue maintained throughout the year as part of the Board's ongoing workforce engagement programme. •Direct engagement through visits to offices, production and supply chain sites during the year. •Indirect engagement through feedback from works councils, employee and workforce forums, community groups, employee surveys and townhall meetings. | Reporting to the Board •Regular reports from workforce engagement activities. •Feedback through employee surveys, including annual group-wide Your Voice survey. Sessions on different aspects of culture, values and behaviours at Board meetings led by Chief HR Officer. Upcoming priorities •Maintaining focus on simplifying internal processes, including upgrading and transforming business operations and systems, including as part of the Accelerate programme. •Continuing workforce engagement activities including as part of business transformation implementation and change management. | ||
Consumers | ||||
•Understanding our consumers is critical for our business’s long- term growth. •Consumer motivations, attitudes and behaviours form the basis of our business strategy, brand marketing and innovation. •We want consumers to enjoy our products responsibly and for them to ‘drink better, not more’. | What we believe matters most to them •Choice of brands for different occasions, including no- and lower-alcohol. •Innovation in heritage brands and creation and nurturing of new brands. •Responsible marketing. •Great experiences. •Product quality. •Sustainability and societal credentials. •Price. How the Board seeks to engage •Monitoring consumer behaviours, motivations and insights. •Responding to and anticipating emerging consumer trends as part of strategic sessions, including the Annual Strategy Conference. •Regular review of business development opportunities, including active brand portfolio management. •Review of innovation pipeline as part of the Annual Strategy Conference. | Reporting to the Board •Regular performance updates by the Chief Executive, including on key consumer trends. •Papers on evolving consumer behaviours globally and in key regions. Regular updates from business development and innovation teams on organic and inorganic opportunities and portfolio choices. Upcoming priorities •Ongoing review of portfolio and category participation opportunities. •Developing pipeline of innovation informed by consumer insights. •Enhancing marketing effectiveness through detailed understanding of consumer motivation, globally and by region or market. | ||
87 | Diageo Form 20-F 2025 |
Stakeholder and why we engage | ||||
Customers | ||||
•Our customers are a broad range of businesses, large and small, on-trade and off-trade, retailers, wholesalers and distributors, digital and e-commerce. •We want to nurture mutually beneficial relationships to deliver joint value and great consumer experiences. | What we believe matters most to them •A portfolio of leading brands that meets evolving consumer preferences. •Identification of opportunities that offer profitable growth. •Insights into consumer behaviour and shopper trends. •Trusted product quality. •Innovation, promotional support and merchandising. •Availability and reliable supply of stock. •Technical expertise. •Joint risk assessment and mitigation. Sustainability and societal credentials. How the Board seeks to engage •Regular review of innovation pipeline and inorganic opportunities to ensure a broad portfolio at multiple price points. •Review of supply chain footprint to ensure efficient delivery of products to customers. •Direct engagement with key customers during market visits. | Reporting to the Board •Regular performance updates by the Chief Executive, including customer and route to consumer concerns. Deep dive reviews on key regions or markets, such as North America and Great Britain, including consideration of key customer relationships and ways of working. Upcoming priorities •Scheduling face-to-face meetings for Directors to meet representatives of key customers during market visits and throughout Board calendar. •Enhancing relationships between the company and its customers through engagement opportunities. | ||
Suppliers | ||||
•Our suppliers, service providers and agencies are experts in their fields. •We rely on them to deliver high-quality products and market responsibly. •We collaborate with them to improve our collective impact, ensure sustainable and resilient supply chains, and make positive contributions to society. | What we believe matters most to them •Strong, mutually beneficial partnerships. •Strategic alignment and growth opportunities. •Fair contract and payment terms. •Collaboration through the innovation lifecycle. •Consistent performance measures. •Joint risk assessment and mitigation. Sustainability and societal credentials. How the Board seeks to engage •Periodic review of our supply chain footprint in key markets to ensure resilience and flexibility, monitoring environmental impacts and efficiencies. •Review and approval of material supply and procurement contracts including for critical raw materials. •Supporting management in improving supplier relationships through fair contract and payment terms, compliance with our 'Partnering with Suppliers Standard' and working collaboratively to mitigate environmental impacts and achieve ESG goals. | Reporting to the Board •Terms of material contracts with suppliers are reviewed by the Board. •Periodic updates provided to the Board in relation to the supply chain agility programme rollout. Proposals put to the Board include summaries of potential implications for suppliers as a key stakeholder group. Upcoming priorities •Focus on roll-out of the Accelerate programme. •Monitoring impact of supply chain disruption on operations. •Supervision of initiatives to improve efficiency, sustainability and supply chain resilience. | ||
Communities | ||||
•We aim to create long-term value for the communities in which we live, work, source and sell. •We can help build thriving communities and strengthen our business through empowering people, increasing access to opportunities and championing inclusion and diversity. | What we believe matters most to them •Impact of our operations on the local economy. •Access to skills development, employment and supplier opportunities. •Inclusion, diversity and tackling inequality in all forms. •Responsible use of natural resources, biodiversity and sustainability. Transparency and engagement. How the Board seeks to engage •Setting targets and monitoring progress on broader societal matters, including promoting positive drinking and championing inclusion and diversity. •Considering the environmental and social consequences for communities of its key decisions, including encouraging inclusion and diversity, equal employment opportunities, skills development and support for communities and through wider value chains. | Reporting to the Board •Reports provided to Board on progress made in relation to 'Spirit of Progress' targets. •Proposals put to the Board include summaries of potential implications for local communities. Reports on macroeconomic and socio- political events provided to Board by management. Upcoming priorities •Continued focus on key aspects of 'Spirit of Progress' targets, including in respect of carbon reduction, positive drinking and water stewardship. •Ensuring continued consideration of impact of our business decisions and operations on local communities and economies. | ||
88 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
Stakeholder and why we engage | ||||
Governments and regulators | ||||
•The regulatory environment is critical to the success of our business. •We share information and perspectives with those who influence policy and regulation to enable them to understand our views on areas that can impact public health and our business. | What we believe matters most to them •Compliance with applicable laws and regulations. •Contribution to national and local economic development and public health priorities. •International trade, excise, regulation and tackling illicit trade. •Tackling harmful drinking and the impact of responsible drinking initiatives. Climate change and water sustainability agendas, including greenhouse gas emissions reduction, human rights, environmental impacts, sustainable agriculture, biodiversity and support for communities. How the Board seeks to engage •Indirect engagement through periodic updates from the Chief Executive and corporate relations executives. •Review of macroeconomic and geopolitical developments as part of strategy sessions. •Updates on regulatory developments, including in relation to non-financial reporting, corporate governance and public policy. | Reporting to the Board •Reports on socio-political events and issues periodically provided to the Board. Developments in regulatory matters, including governance and reporting obligations, are included in biannual reports to the Board prepared by management. Upcoming priorities •Monitoring developments in regulation and best practice in respect of non- financial reporting requirements, corporate governance and audit regime. •Supporting management's advocacy in relation to key public policy matters including water stewardship, positive drinking and inclusion and diversity. | ||
Investors | ||||
•We want to enable equity and debt investors to have an in-depth understanding of our strategy, our operational, financial and holistic performance, so that they can more accurately assess the value of our business and the opportunities and risks of investing in it. | What we believe matters most to them •Strategic priorities, opportunities and risks. •Financial performance. •Corporate governance. •Leadership credentials, experience and succession. •Executive remuneration policy. •Shareholder returns. Environmental, inclusion and diversity and social commitments and progress. How the Board seeks to engage •Regular engagement between key investors and Chief Executive and Chief Financial Officer through a programme of events, expanded during the year to include quarterly trading updates. •Participation in investor conferences such as the Consumer Analyst Group of New York meeting (CAGNY). •Hosting investor events such as the Guinness Investor and Analyst Event held in Dublin in May 2025. •Attendance at the Annual General Meeting in September 2024, including responding to questions from shareholders. | Reporting to the Board •Monthly reports provided to the Board, providing details on engagement sessions with investors and key trends. Chief Executive reporting investor sentiment to the Board as part of regular updates at Board meetings, including feedback following participation at analyst and investor conferences. Upcoming priorities •Continued proactive engagement with investors through structured programme of engagement activities over the year. •Preparing for the Annual General Meeting to be held in November 2025. •Engaging directly with investors through post-results announcement roadshows. | ||
89 | Diageo Form 20-F 2025 |
 | Regular reports, including feedback from investors, are provided to the Board. Examples of engagement activities include attendance at key events such as the Consumer Analysts Group of New York (CAGNY) conference, attending key investor conferences and hosting many meetings and calls with analysts, investors and potential investors. During the year, Diageo has also launched and completed an asset reunification programme with the aim of re-establishing contact with inactive shareholders, both institutional and retail, and reuniting them with unclaimed dividends. A highlight of the year was the Guinness Investor and Analyst Event in May 2025 when we hosted a group of 48 investor representatives, including many of the company's largest investors, and 22 analysts at the Guinness Storehouse in Dublin, Ireland. The event focused primarily on the Guinness brand, including its recent performance, marketing strategy and how it was recruiting new consumers, as well as the opportunities for future growth, while also covering the group's overall performance, outlook and actions being taken to drive growth. Speakers at the event included not only the Chief Executive and Chief Financial Officer but also other members of the Executive Committee and senior leaders, including the general managers of Ireland, Great Britain and the beer business in the United States. From May 2025, we commenced providing trading updates on a quarterly basis in addition to our previous half and full year reporting. By updating the market more frequently in this way on performance, Diageo aims to provide investors, analysts, shareholders and other market participants with a better understanding of performance and the drivers of this, including business seasonality through the year. | |||
Increasing engagement with investors and shareholders | ||||
During fiscal 25, we have maintained our focus on ensuring active and regular engagement with our shareholders and investors, especially over the period from January to June 2025 during which we have carried out extensive investor engagement consistent with our commitment to increase visibility with the financial markets. These engagement sessions enable investors to get a more detailed understanding of our Growth Ambition and strategy, opportunities for growth of our business, our industry and market dynamics while also enabling our senior management to understand the perspectives, investment criteria and strategy of our investors. Our Investor Relations (IR) team takes the lead in organising an annual programme of engagement events, reviewing analyst research notes and recommendations, monitoring share price and trading patterns, peer group and sector news. | ||||
Fiscal 25 investor activity timeline | ||||
JULY AND AUGUST 2024 | AUGUST 2024 | SEPTEMBER 2024 | OCTOBER AND NOVEMBER 2024 | DECEMBER 2024 |
Announcement of Preliminary Results for fiscal 24 on 30 July 2024. Post-results announcement meetings with investors, media and analysts carried out by the IR team, Chief Executive and Chief Financial Officer. | Roadshow by the Chief Executive and the Chief Financial Officer in the United Kingdom and the United States. Publication of the Annual Report and Accounts for fiscal 24 on 1 August 2024. | Annual General Meeting held on 26 September 2024 in London, including presentation by the Chief Executive, followed by Q&A with shareholders and investors. IR team held various one-to- one meetings and conference calls with investors. | IR had one-to-one meetings and conference calls with various investors. | Sell-side analysts joined the Head of IR for a panel discussion with the Board, highlighting investor perceptions of the company. The Chief Executive, Chief Financial Officer and other Executive Committee members had various meetings and calls with investors. |
FEBRUARY 2025 | MARCH 2025 | APRIL 2025 | MAY 2025 | JUNE 2025 |
Announcement of Interim Results for fiscal 25 on 4 February 2025. Post-results announcement meetings with investors, media and analysts. The Chief Executive and the Chief Financial Officer presented at the CAGNY conference in Orlando. | Various meetings between the Chief Executive, the Chief Financial Officer and the IR team with investors, individually and in groups. | The Chief Executive, the Chief Financial Officer and the IR team met with several investors, individually and in groups. | Released trading update for Q3 fiscal 25. Hosted Guinness Investor and Analyst Event in the Guinness Storehouse, Dublin, showcasing the Guinness brand, its growth strategy including the potential of Guinness 0.0. | The Chief Executive and the Chief Financial Officer participated in BNP Paribas Exane conference in Paris, discussing strategy, performance and outlook. The Chief Financial Officer hosted a fireside chat at Deutsche Bank's Global Consumer Conference in Paris. |
90 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
Principal Board decisions
Below are some examples of the principal decisions taken by the Board during fiscal 25 as well as summaries of some of the matters referred
to in Section 172 of the Companies Act 2006 which were taken into consideration by the Board.
Decision made | Stakeholder considerations |
REVISING BOARD PROCESSES TO IMPROVE EFFECTIVE DECISION-MAKING | |
The Board has adapted its processes, annual cycle and schedule of events, committee composition and ways of working in order to improve its effectiveness and ability to support management in responding to the external macroeconomic environment. | The Board is conscious of the need to continually review, monitor and adapt its practices in order to maintain its efficiency and enhance its responsiveness to external factors and stakeholders' needs. This is particularly important during periods of macroeconomic uncertainty impacting consumer behaviour and the market's perception of the spirits sector, and of the company, as an investment opportunity. As part of the transition in Chair in February 2025, the Board took the opportunity to conduct a thorough review of its decision-making processes, schedule of events and meeting cycle, means of stakeholder engagement, composition and committee structure. The purpose of the review was to ensure that the Board was able to respond appropriately to continued disruption in the external consumer environment and was informed by observations and feedback received as part of the recent board evaluation exercise, by discussions between the incoming Chair, the Senior Independent Director and the Executive Directors, and by feedback received from external stakeholders, including the investor community, on market perceptions of the company. An important consideration was to enhance how the Board could support management in communications with its shareholders, investors, analysts and other market participants. This had been a topic discussed by the Board in December 2024, during which a panel of leading sell-side and buy-side analysts had been invited to give their views directly to directors. Certain changes in ways of working were agreed by the Board in March 2025, including moving to a more conventional model for board committee membership enabling more depth in committee deliberations, more regular engagement between Board members and investors on governance matters, and adjusting the annual cycle of board meetings to enable more frequent interaction between directors, Executive Committee members and senior management. |
ENHANCING OUR OPERATING MODEL AND MANAGING OUR PORTFOLIO THROUGH DISPOSALS | |
The Board continued its strategy of using disposals to actively manage the portfolio and enhance the asset-light beer operating model. | We have taken an active approach to managing our portfolio of brands and investments for a number of years, with the aim of ensuring that the portfolio remains sufficiently broad to respond to consumer demand in different categories and across price points, whilst also being sufficiently focused to enable effective advertising, marketing and investment support. During fiscal 25, several brands were disposed including Safari liqueur, Pampero rum and Cacique rum. These selective disposals enable management to improve their focus on the core portfolio, enhancing the offering to customers and consumers. The Board also continued the implementation of an asset-light operating model for the beer portfolio, supporting management to select the most appropriate structure and route to consumer in each impacted market. During the year, the Board approved the disposals of the company's shareholdings in Guinness Ghana Breweries Plc and Seychelles Breweries Limited. In reaching its decision, the Board considered the views and impact of these transactions on multiple stakeholders. For example, it was critically important that our brands remain available for its customers and consumers with minimal disruption. The negotiating team was instructed to focus on ensuring long-term partnerships were maintained through beer production and distribution licensing arrangements in those markets. The interests of impacted employees, both in the markets concerned and in the broader organisation, were also considered as part of the Board’s decision-making process. Lastly, there was active engagement with local government and regulatory authorities in order to address any local concerns with these transactions. |
RESHAPING OUR STRATEGIC PRIORITIES FOR SUSTAINABLE GROWTH | |
The Board approved the launch of the Accelerate programme to reshape our priorities to deliver sustainable long- term performance. | In May 2025, the Board approved the introduction of the first phase of the Accelerate programme to help deliver the Growth Ambition. This programme had been developed to ensure that the company is well-positioned to deliver sustainable, consistent performance despite the continued uncertainties in the external consumer market. Key components of the Accelerate programme include increasing agility and refocusing resources on delivering sustainable top-line growth, increasing operating leverage, maximising free cash flow and optimising shareholder returns. As part of the programme, the Board approved clear cash delivery targets for the business, further details of which are set out on page 23. In creating and implementing the Accelerate programme, consideration was given to a wide variety of external and internal stakeholders. A core principle was to maintain focus on the consumer, how it was responding to macroeconomic pressures, and to strengthen Diageo's operational excellence and ability to respond accordingly. Implications on the company's workforce and suppliers were also considered as part of the programme, with changes to the group's operating model implemented, including roles and accountabilities, simplified ways of working and increased use of technology. Ensuring that the programme was rolled out in a swift and efficient manner, consistent with our purpose and values, was of critical importance. |
91 | Diageo Form 20-F 2025 |
Wider stakeholder engagement
We have ambitious goals across a variety of social and environmental
targets and a long track record of working with stakeholders to achieve
these goals. Our ambition to be one of the best performing, most
trusted and respected, consumer products companies in the world
can only be achieved through engagement and partnership with
our stakeholders. The Board and its members have engaged directly
and indirectly with a variety of its key stakeholders during fiscal 25 in
order to respond to stakeholder considerations in making its decisions
and determining the company's strategy and goals. These include
the following activities:
The Board met and engaged with customers and retailers in
South Africa during October 2024, touring a range of on-trade and off-
trade outlets, shops and stores. Directors discussed with retail staff
and owners the latest consumer trends and buying patterns. The Board
also invited the owner of one of Diageo's largest customers in South
Africa to give feedback on his experience of working with the company
over many years. Market views and customer feedback is frequently
reported to the Board by the Chief Executive as part of regular
performance summaries. We partner with our customers to analyse the
performance of the portfolio and marketing investment as well as
market trends and consumer activity, in order to enhance the
company's consumer insights tools which enhance innovation, product
development and marketing initiatives.
The Chair, Chief Executive and Chief Financial Officer travel regularly
to different Diageo offices, production facilities and sites around the
world. Non-executive directors also have opportunities to visit sites
over the course of the year, including with the Chair or executive
directors. Whilst most meetings of the Board are held at the company's
headquarters in London, ordinarily once a year meetings are held in an
overseas market in order to enable the Board to get a deeper
understanding and insight as to that market or region. This will usually
involve visits to offices and production facilities, enabling directors to
familiarise themselves with the consumer landscape in that market and
its production processes and facilities. Directors also engage directly
with the local workforce and employees during these visits,
supplementing the regular workforce engagement sessions conducted
during the year.
The Board has a well-established workforce engagement programme, in
which each non-executive director is involved in regular engagement
sessions with different parts of the global workforce over the course of
the year, both virtual and in person. Through these sessions, non-
executive directors gain insights into the company’s culture which are
then fed back to the company’s engagement teams and used to shape
our approach to people. See pages 92-93 for this year’s workforce
engagement statement which includes further details of how the
programme has operated during the year.
Board members, and in particular the Chief Executive and Chief
Financial Officer, participate in an extensive programme of regular
meetings, calls and other engagement activities with investors and
analysts, co-ordinated by the Investor Relations team. Increasing
investor engagement has been a particular priority for the Board this
year, with a small group of sell-side and buy-side analysts meeting with
the Board during December 2024 to provide their perspectives on how
effectively the company engages with the market. See page 89 for a
timeline summarising other investor events during fiscal 25 including
the company's Guinness Investor and Analyst Event hosted in the
Guinness Storehouse in Dublin in May 2025 and the company's
participation at the annual conference of the Consumer Analyst Group
of New York held in Florida in February 2025. Materials from these
sessions are available on www.diageo.com.
Further information on our stakeholders, what we think is important to
them and how the Board engages and responds to them can be found
on pages 86-88. Case studies summarising how stakeholder
considerations were taken into account by the Board during fiscal 25,
as required by Section 172 of the Companies Act 2006, in respect of
three of its principal decisions are set out on page 90.
Executive direction and control
Executive Committee
The Executive Committee, appointed and chaired by the Chief
Executive, supports the Chief Executive in discharging the
responsibility for implementing the strategy agreed by the Board and
for managing the company and the group. It consists of the individuals
responsible for the key operational and functional components of the
business: North America, Europe, Africa, Latin America and Caribbean,
Asia Pacific, India, Supply Chain and Procurement and Corporate.
The Executive Committee aligns its agenda to the Growth Ambition and
how to achieve financial and non-financial performance objectives.
Performance metrics have been developed to measure progress.
There is also focus on the company’s reputation. In support, monthly
performance delivery calls, involving the managing directors of each
market, focus on current performance. Committees appointed by the
Chief Executive and intended to have an ongoing remit, including the
Audit & Risk Committee, Finance Committee and Filings Assurance
Committee, are shown (with their remits) at www.diageo.com.
Performance evaluation
With the support of the Company Secretary, an evaluation of the
Board's effectiveness, including that of its Committees and Directors,
was conducted from December 2024 to January 2025. This evaluation
aimed to assess how the Board and its Committees function against
current best practice corporate governance principles, specifically
referencing Principle L and Provisions 21, 22, and 23 of the Code.
This year's evaluation was internally managed through an online
questionnaire completed by all directors. The questionnaire was
designed to assess satisfaction levels with specific areas and allow
directors to express their views. The evaluation focused on directors'
views on three areas, being (i) Board composition, balance and
performance, (ii) Board and Committee topics, support and provision of
information and (iii) Committees' effectiveness and performance.
Responses were submitted to the Chair of the Board, while feedback
on Committee effectiveness was also provided to respective
Committee Chairs. The Senior Independent Director also held a
meeting with directors, excluding the Chair, in line with Code
requirements. The Chair, Senior Independent Director and the
Company Secretary discussed the feedback and, together with other
input including a general review of the ways of working and
composition of the Board and its Committees, drew up a proposed plan
and next steps or actions for further consideration by the Board.
The Board reviewed the results at its March 2025 meeting and agreed
on various actions for implementation. The Board remains committed
to annually reviewing its performance as well as that of its committees
and individual directors, with such evaluation being carried out by an
external facilitator every three years. The evaluation in fiscal 26 is
expected to be managed and facilitated internally.
The Chair has confirmed that the non-executive directors standing for
re-election at this year’s AGM continue to perform effectively, both
individually and collectively as a Board, and that each demonstrates
commitment to their roles.
The general feedback and actions for focus in the following year as
identified during the December 2024 evaluation are detailed in the
following table.
92 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
Key recommendations | Actions for focus in 2025/26 |
General feedback | |
Continue engagement between Board members and the workforce. | Ensure timely finalisation and circulation of board papers ahead of meetings. |
Continued recognition for an experienced and effective Company Secretarial function. | Ensure adequate time is allocated for presentations, deep dives and discussion during meetings. |
Board composition and succession | |
Recent appointments of directors have ensured appropriate quality, experience, background and diversity of the Board. | Continue to review the succession planning and pipeline at executive and senior management level. |
Ensure continuation of board-level knowledge while considering technical areas such as AI, digital and public policy amongst others. | Review alternative models for the current composition for Board committee membership. |
Continue to focus on recruitment and talent pipeline on key areas for additional expertise. | |
People and culture | |
Continue to promote and protect the company's corporate culture, values and focus on talent development. | Maintain ongoing function in talent development and workforce engagement. |
Continue to ensure a clear and structured approach to leadership development. | Increase focus on Executive talent succession planning and tenure. |
•Review and track the success of Executive development programmes. | Deeper analysis and insight of employee survey results to Board members. |
Strategy and risk | |
Improved clarity in strategic focus and visibility of external stakeholder sentiment and significant improvement in stakeholder communication. | Enhance strategic focus and horizon scanning while encouraging discussion and dialogue concerning key issues across different time scales. |
Improved clarity and consistency in use of dashboard updates for the company's key priorities, issues and imperatives. | Allow for more opportunities for third-party input and insights into how Diageo is perceived and recognised externally. |
Strong feedback in relation to deep-dive sessions with regional team management. | Continue to build strong and collaborative approach between management and Board members. |
Progress made against prior year's actions
Good progress has been made against the actions identified following
last year’s externally facilitated performance evaluation:
The Board has continued to promote and protect the company's culture
and values.
There has been a continued focus on Board and management
succession planning and ensuring a pipeline of high-quality,
diverse talent.
The Board has continued to maintain strategic focus, monitor the
changing business landscape and align the company's approach to
strategic matters.
Workforce Engagement statement
At Diageo, our people are our most important asset and are critical to
our company’s success. We know that creating an inclusive and diverse
culture where colleagues can freely express their views and feel
listened to is not only core to our purpose of ‘celebrating life, every
day, everywhere’ but is also key to sustaining high levels of
engagement and performance, as well as ensuring Diageo remains a
great place to work.
To understand our colleagues’ experiences, we gather their feedback
through both formal and informal channels. Diageo’s Workforce
Engagement programme is an important way for the Diageo plc Board
to hear colleagues’ insights on key topics, including culture, strategy,
and ways of working. It is also a valued opportunity for teams to have
direct access to Board members.
In F25, Karen Blackett CBE, our designated Non-Executive Director for
workforce engagement, alongside all Non-Executive Directors, held 14
virtual and in-person sessions across the year, formally engaging with
654 colleagues from all regions, functions, and organisational levels
below senior leadership. Diageo Chair, Sir John Manzoni, also visited
several markets in the year, engaging a further 1705 colleagues in
informal townhall conversations, and Karen Blackett joined two
inclusion and diversity events with 956 colleagues. Sessions have been
highly engaging and Board members have valued the openness of
conversations and the opportunity to gather insights on many positive
aspects of working at Diageo, as well as clear areas for improvement.
The key themes emerging from these workforce engagement
discussions are:
Diageo’s culture is often described as engaging, ambitious and
collaborative, and this continues to be a source of pride
amongst our employees, alongside their passion for our
brands. Progress is being made with our dial up behaviours,
with scope to further embed these in our culture for greater
speed and agility. Diageo’s formal recognition platform,
Celebrate, is widely used and praised, as a way of reinforcing
the dial up behaviours being demonstrated by colleagues.
Diageo’s approach and sustained commitment to inclusion and
diversity, progressive employment policies, and its broader
Spirit of Progress commitments are highlighted frequently as
reasons colleagues join and remain at Diageo. Pride in the
company’s approach to doing business the right way and
acting with integrity were also consistently shared in
conversations.
We must continue to simplify our business, addressing day-to-day
barriers people face in their jobs, which can hold us back
from performing at our best and can at times impact
motivation.
There are also opportunities to communicate with increased
transparency and provide greater clarity on priorities,
accountabilities and decision rights.
Whilst there has been progress in building core capabilities in
Digital, Data and Analytics, employees are keen to see these
further embedded.
These improvement areas are points of focus within our Accelerate
programme in F26 and beyond.
The key themes were also reflected in this year’s engagement results
seen in the global employee survey, Your Voice, which remains top
quartile and above external benchmarks with 83% engagement levels
(+2 vs 2024) and 90% proud to work for Diageo (+1 vs 2024).
Insights gathered from workforce engagement sessions held by the
Board, alongside broader listening tools such as the Your Voice annual
employee engagement and pulse surveys, have helped the company to
listen and respond to the perspectives of our employees, as well as
identify specific areas to further enhance our employee experience.
93 | Diageo Form 20-F 2025 |
Purpose, values and culture
The Board is responsible for establishing the company’s purpose, values
and culture and for monitoring the level of culture embedment within
our business. We have a long-established purpose and set of values
which resonate strongly with our employees, as indicated by the
Board's engagement sessions with our workforce and employee surveys.
We are very conscious that we must operate with the highest standards
of governance, doing business the right way, from grain to glass. This
principle is embedded in our Code of Business Conduct and global
policies, aligned with our 'Spirit of Progress' goals and reflected in our
ways of working. We are pleased that we have a strong reputation for
inclusion and diversity which reflects our values, attracts the best
talent and enables our people to succeed.
There are a number of ways in which the Board monitors and assesses
culture, including:
Site visits
Directors are encouraged to visit the group’s offices, production
facilities and sites in different markets and regions to further their
understanding of the business and increase interactions with
employees and the wider workforce. During fiscal 25, the majority of
Board meetings have been held in the company's headquarters in
London, enabling Directors to meet and interact with employees, while
the Board also met with the company's regional management team for
Africa in October 2024. As part of the Board's workforce engagement
programme, non-executive directors regularly hold in-person and
virtual meetings, townhalls, focus groups and question and answer
sessions with employees in different locations over the course of the
year.
Employee surveys
The Board receives reports from the Chief HR Officer on the results of
the company’s global annual ‘Your Voice’ survey, including levels of
employee engagement, employee perceptions of the company's
purpose and of their people managers (including net promoter scores)
and any themes raised. The survey results also give visibility of areas
on which management must continue to focus. Results of this year's
Your Voice survey are described on page 40.
SpeakUp allegation reporting
Regular reports are provided by the business integrity team to the
Audit Committee with information and data on reported allegations of
breaches of the Code of Business Conduct and other group policies,
including those received through our confidential and independent
whistleblowing service SpeakUp. These reports also include analyses of
emerging trends, investigation status reports and closure rates, and
summaries of actions taken. These reports enable the Directors to gain
an understanding of common issues and action planning, as well as
providing insights into the purpose, values and culture embedment
across its markets and functions.
| For more details of the SpeakUp service, see page 100. |
Workforce engagement programme
Insights drawn from the Board’s annual programme of workforce
engagement are used by the Board to monitor and assess the culture of
the company. Recommendations are fed back to management regularly
with workforce engagement being discussed at Board meeting sessions
twice a year. The engagement programme, which is led by Karen
Blackett CBE, has enabled all non-executive directors to participate by
directly engaging with employees from a variety of regions, functions
and levels in the business. For more information on workforce
engagement, see page 92.
94 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
How the Board monitors culture
How the Board
assesses
Diageo's culture
Site visits | ||
Directors regularly visit Diageo's offices and production sites as part of the Board's annual cycle of meetings. In addition to the head office in London, Directors visit other Diageo locations, offices and sites during the course of the year for meetings and for familiarisation visits. During fiscal 25, the Board met leaders of the Africa region during board meetings held in Cape Town, South Africa, at which the Board also met representatives of key customers in that market. | ||
Town hall and focus group meetings | ||
Non-executive directors participate in both virtual and physical town hall sessions and smaller focus group sessions during the year, as part of the Board's workforce engagement programme. Attendees are invited from particular markets and functions, including contractors, temporary and remote workers, often in non-leadership roles. The scope of topics discussed is relatively broad, covering culture and aspects of working at the company. | ||
Remuneration engagement | ||
The Chair of the Remuneration Committee meets with a focus group of employees to discuss the approach to executive pay annually. The focus group is comprised of cross-market and functional employee representatives. Through this engagement, we aim to both deepen employees' understanding of the ways in which executive pay decisions are made and receive feedback and views from employees on the company's approach to executive remuneration in the context of broader reward and pay policy within the group. | ||
Employee Resource Groups | ||
We have a network of employee resource groups (ERGs) which create connections and community within our employee and workforce population, both in regions and globally. For example, the Spirited Women Network and our Rainbow Network operate several markets internationally. The ERGs provide communities of support and enable management to better understand concerns of diverse groups within our workforce. Feedback from the ERGs is used to assist the Board in monitoring the culture. | ||
Your Voice surveys | ||
Our annual global employee engagement survey, Your Voice, provides employees with an opportunity to feedback their experience of working at the company, including areas which are working well and those that could be improved. The survey, which takes the form of a questionnaire with the ability to provide commentary, is conducted and managed by a third-party provider in multiple languages. All responses are treated confidentially with the results being reported back to management, enabling them to create action plans per team. Key themes and feedback is also reported to the Board. | ||
Workforce engagement sessions | ||
All non-executive directors participate in the Board's workforce engagement programme, meeting and engaging directly with groups of employees. We aim to provide the Board with a greater understanding of the views of colleagues on the company's strategy, performance, values, governance, culture, working environment or any other topic of importance to workers, and to inform the Board on related decision-making. For further information on the workforce engagement programme, see page 93. | ||
95 | Diageo Form 20-F 2025 |
Additional information
Appointment and re-appointment at the AGM
The Chair has confirmed that the non-executive directors standing for
re-appointment at this year’s Annual General Meeting (AGM) continue
to perform effectively, both individually and collectively as a Board,
and that each non-executive director demonstrates commitment to
their roles and continues to provide constructive challenge, strategic
guidance and offer specialist advice, as well as holding management to
account. As can be seen from the attendance records set out on page
77, Directors’ attendance levels have been consistently high
throughout the year ended 30 June 2025. Further details, including
biographies, are set out in the Notice of Meeting for this year's AGM.
Internal control and risk management
An ongoing process has been established for identifying, evaluating and
managing risks faced by the group. This process, which complies with the
requirements of the Code, has been in place for the full financial year and
up to the date the consolidated financial statements were approved and
accords with the guidance issued by the Financial Reporting Council (FRC)
in September 2014, entitled ‘Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting’. The Board confirms
that, through the activities of the Audit Committee described below, it has
completed a robust assessment of the principal and emerging risks facing
the company, including those that would threaten its business model,
future performance, solvency or liquidity. These risks and their mitigations
are set out above in the section of this Annual Report dealing with principal
and emerging risks on pages 63-71.
The Board acknowledges that it is responsible for the company’s
systems of internal control and risk management and for reviewing
their effectiveness. The Board confirms that, through the activities of
the Audit Committee described in its report, it has reviewed the
effectiveness of the company’s systems of internal control and risk
management. During the year, the Audit Committee considered the
nature and extent of the risks that the Board was willing to take to
achieve its strategic goals and reviewed the existing internal statement
of risk appetite, which had been updated this year by the Executive
Audit & Risk Committee, following which the Audit Committee made a
recommendation to the Board which was then approved. The Audit
Committee reviews the company's principal risks regularly throughout
the year in accordance with a schedule proposed by management with
each such risk being reviewed by management in the Audit & Risk
Committee or other management steering groups prior to it being
considered by the Audit Committee. The Board also regularly reviews
emerging and disruptive risks as part of its Annual Strategy
Conference, held this year in May in Scotland, from which a number of
topics are identified for more detailed review by either the Board or
the Audit Committee over the following 12 months. The company has
in place internal control and risk management systems in relation to
the company’s financial reporting process and the group’s process for
the preparation of consolidated accounts. Further, a review of the
contents of the company's public filings and disclosures, including its
consolidated financial statements and non-financial disclosures, is
completed by management through the Filings Assurance Committee to
ensure that the contents of the company's interim and preliminary
results announcements, Annual Report and Form 20-F appropriately
reflect the non-financial and financial position and results of the
group. Further details of this are set out in the Audit Committee report
on page 97.
Viability statement
In accordance with the Code, the Board has also considered the
company’s longer-term viability, based on a robust assessment of its
principal and emerging risks. This was done through the work of the
Audit Committee which recommended the Viability statement to the
Board. For further information about how the Board has reviewed the
long-term prospects of the group, see pages 72-73.
Going concern
Management prepared 18-month cash flow forecasts which reflect
severe but plausible downside scenarios taking into consideration the
group's principal risks. In the base case scenario, management included
assumptions to deliver positive operating leverage, with organic profit
growth ahead of organic net sales 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, lower level of marketing spend and investment in
maturing stock, as well as a temporary suspension or reduction in
dividend to shareholders in the next 12 months, or drawdowns on
committed facilities. Having considered the outcome of these
assessments, the Directors are comfortable that the group (and
company) is a going concern for at least 12 months from the date of
signing the group's consolidated financial statements.
Political donations
The group has not given any money for political purposes in the
United Kingdom during the year. Diageo North America, Inc. made
contributions solely at its own discretion to non-UK political candidates
and committees in the United States, where it is common practice to
do so. Contributions of approximately $1.36 million (2024: $1.1 million)
were made by Diageo North America, Inc. during the financial year to
state and local candidates and committees, consistent with applicable
laws. Additionally, our Australian based subsidiary made contributions,
solely at its own discretion, totalling approximately $0.09 million
(2024: $0.01 million).
The contributions in the United States reflect no endorsement of a
particular political party, and contributions were made with the
aim of promoting a better understanding of our business and our
views on commercial matters, as well as a generally improved
business environment.
96 | Diageo Form 20-F 2025 |
CORPORATE GOVERNANCE REPORT continued
Directors' responsibilities in respect of the Annual
Report, Form 20-F and financial statements
The Directors are responsible for preparing the Annual Report, the
information filed with the SEC on Form 20-F and the group and parent
company financial statements in accordance with applicable law and
regulation. Company law requires the Directors to prepare financial
statements for each financial year. Under company law, the Directors
have prepared the group consolidated financial statements in
accordance with UK-adopted international accounting standards and
the parent company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 ‘Reduced Disclosure
Framework’, and applicable law). In preparing the group consolidated
financial statements, the Directors have also elected to comply with
International Financial Reporting Standards issued by the International
Accounting Standards Board (IFRS as issued by IASB).
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the group and parent company and of the
profit or loss of the group and parent company for that period. In
preparing the financial statements, the Directors are required to:
•select suitable accounting policies and then apply them consistently;
•state whether applicable UK-adopted international accounting
standards, IFRS issued by IASB have been followed for the group
financial statements and United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure Framework’ and applicable
law have been followed for the parent company financial
statements, subject to any material departures disclosed and
explained in the financial statements;
•make judgements and accounting estimates that are reasonable and
prudent; and
•prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the group and company will
continue in business.
The Directors are responsible for safeguarding the assets of the group
and parent company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the group’s and parent
company’s transactions and disclose with reasonable accuracy at any
time the financial position of the group and parent company and
enable them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006. The
Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in
other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and financial
statements, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
group’s and parent company’s position and performance, business
model and strategy. Each of the Directors, whose names and functions
are listed on pages 78-79 confirm that, to the best of their knowledge:
•the group consolidated financial statements, which have been
prepared in accordance with UK-adopted international accounting
standards, IFRSs issued by IASB, give a true and fair view of the
assets, liabilities, financial position and profit of the group;
•the parent company financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure Framework’ and applicable
law, give a true and fair view of the assets, liabilities, financial
position and profit of the parent company; and
•the Strategic Report includes a fair review of the development and
performance of the business and the position of the group and
parent company, together with a description of the principal risks
and uncertainties that it faces.
In accordance with section 418 of the Companies Act 2006, each of the
Directors who held office at the date of the approval of the Directors’
report confirm that, so far as the Director is aware, there is no
relevant audit information of which the group’s and parent company’s
auditors are unaware, and each Director has taken all the steps that
they ought to have taken as a Director in order to make themselves
aware of any relevant audit information and to establish that the
group's and parent company’s auditors are aware of that information.
The responsibility statement was approved by a duly appointed and
authorised committee of the Board of Directors on 13 August 2025.
97 | Diageo Form 20-F 2025 |
AUDIT COMMITTEE REPORT
Ensuring integrity
across the business
Dear Shareholder
I am pleased to present the Audit
Committee’s report for the year ended
30 June 2025, which describes how
the Committee has carried out its
responsibilities over the year.
The role of the Audit Committee is to monitor
and review the integrity of financial information
and external reporting, and to provide
assurance to the Board that the company's
internal controls and risk management
processes, including its internal audit, controls,
business integrity and compliance processes, are
appropriate and regularly reviewed. The Audit
Committee oversees the work of the external
auditor, monitors its independence, approves its
remuneration and recommends its appointment.
The Committee is also responsible for reviewing
the company's principal and emerging risks,
which it carried out over the course of the year
through a series of risk reviews and deep dives.
During the year, the Committee has maintained
its focus on areas of significant and particular
importance. The Committee closely monitors
the company’s processes and functions with
respect to internal audit, controls assurance,
risk and business integrity with reports being
issued at regular intervals over the year. The
Committee reviews progress against annual
plans and targets, including compliance and
breach allegation investigation rates, internal
audit findings, and work on controls
assessment. Each principal risk is reviewed by
the Committee on a regular basis over the
year including, for example, Diageo's cyber
security risk management processes,
governance systems and capabilities, which
are of key importance in light of continuously
evolving risks in respect of cyber threats.
Further information is provided on pages
98-101.
Having taken over as Chair of the Committee in
August 2024, I have been pleased to find that
the relationship between the Committee,
management and the external auditors is
transparent, open and constructive. I am sure
that the Committee will continue to discharge
its duties in an effective and diligent manner
during fiscal 26.
Julie Brown
Chair of the Audit Committee
role of the committee | committee members | Principal areas of focus | |||||||||||
Monitors the integrity of the company's financial statements and formal statements relating to the company's financial performance. Considers whether the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides information necessary to assess the company's position and performance. Reviews the company's risk management and internal control framework, including effectiveness of internal audit. | Julie Brown (Committee Chair) Melissa Bethell Karen Blackett CBE Valérie Chapoulaud-Floquet Susan Kilsby Ireena Vittal As at the end of fiscal 25, the above directors were members of the Committee. As set out on page 105, the Board has moved to a more focused Committee structure in fiscal 26, which includes a reduced number of members on the Audit Committee. | Review of financial and non-financial reporting. Supervising the group's internal audit, risk and controls functions and processes including in respect of viability. Selection and oversight of external auditors, and review of audit quality. Review of the group's systems of financial reporting and accounting issues. Oversight of the group's regulatory compliance, business integrity and whistleblowing mechanisms. | |||||||||||
| Read more on pages 98-101. | | Read more on page 98. | | Read more on page 101. | ||||||||
98 | Diageo Form 20-F 2025 |
AUDIT COMMITTEE REPORT continued
Role and composition of the Audit Committee
The role of the Audit Committee is fully described in its terms of
reference, which are available at https://www.diageo.com/en/our-
business/corporate-governance. During fiscal 25, there were a number
of changes in committee membership with Sir John Manzoni stepping
down as a member on 5 February 2025, on his appointment as Chair of
the Board, and Karen Blackett CBE and Valérie Chapoulaud-Floquet
stepping down from the end of fiscal 25. The Audit Committee is now
comprised of four independent non-executive directors, being Julie
Brown (Committee Chair), Melissa Bethell, Susan Kilsby and Ireena
Vittal. The Chair of the Board, the Chief Financial Officer, the General
Counsel and Company Secretary, the Group Controller, the Head of
Controls, Assurance and Risk Excellence (CARE), the Chief Business
Integrity Officer, the General Counsel Corporate and Deputy Company
Secretary, the Group Chief Accountant and the external auditor
regularly attend meetings of the Committee. The Audit Committee met
privately with the external auditor, the Chief Business Integrity Officer
and the Head of CARE regularly during the year. During the course of
the year, the Committee met five times and constituted a
subcommittee to review progress of the year end audit and reporting
processes. Details of attendance of all Board and Committee meetings
by Directors are set out on page 77.
Reporting and financial statements
During the year, the Audit Committee reviewed the quarterly trading
updates, the interim results announcement, including the interim
financial statements, the Annual Report and associated preliminary
results announcement and Form 20-F, focusing on key areas of
judgement and complexity, critical accounting policies, disclosures
(including those relating to contingent liabilities, climate change and
principal risks), viability and going concern assessments, provisioning
and any changes required in these areas or policies. The Audit
Committee has also focused in particular on the company’s approach
to assurance and internal approvals processes. Under the supervision of
the Audit Committee, management has again sought to refine non-
financial reporting in order to emphasise the most material goals and
actions taken against our 'Spirit of Progress' action plan, while also
complying with the recommendations of the Task Force on Climate-
related Financial Disclosures.
This year the Committee has continued to regularly review progress of
the company's transformation project to improve Diageo’s internal
processes and upgrading its financial systems and technology,
monitoring progress against the project's targets and timeline,
including its controls framework and reporting capabilities.
The company has in place internal control and risk management
systems in relation to the company’s financial and non-financial
reporting process including the group’s process for the preparation of
consolidated financial statements. A review of the consolidated
financial statements and the draft Annual Report is completed by the
Filings Assurance Committee (FAC) to ensure that the financial position
and results of the group are appropriately reflected therein. In
addition to reviewing draft financial statements for publication at the
half and full year, the FAC is responsible for examining the company’s
financial and non-financial information and disclosures, the
effectiveness of internal controls relating to financial and non-financial
reporting and disclosures, legal and compliance issues and determining
whether the company’s disclosures are accurate and adequate. This
year the FAC has continued to focus on the adequacy of the group's
inventory monitoring processes across all regions. The FAC comprises
senior executives such as the Chief Executive, the Chief Financial
Officer, the General Counsel and Company Secretary, the General
Counsel Corporate and Deputy Company Secretary, the Group
Controller, the Group Chief Accountant, the Head of Investor
Relations, the Head of CARE and the Chief Business Integrity Officer.
The company’s external auditor also attends meetings of the FAC.
Presidents of each region and their finance directors attend the FAC on
request. The Audit Committee reviewed the work of the FAC and a
report on the conclusions of the FAC process was provided to the Audit
Committee by the Chief Financial Officer.
Diageo has carried out an evaluation, under the supervision and with the
participation of management, including the Interim Chief Executive and
Chief Financial Officer, of the effectiveness of the design and operation of
Diageo's disclosure controls and procedures (as defined in the US Securities
Exchange Act Rule 13a-15(e)) as of the end of the period covered by this
Annual Report. Based upon that evaluation, Diageo's Interim Chief
Executive and Chief Financial Officer concluded that, as of 30 June 2025,
Diageo's disclosure controls and procedures were effective.
As part of its review of the company's Annual Report and associated
disclosures, the Audit Committee has considered whether the report is 'fair,
balanced and understandable' and provides the information necessary for
shareholders to assess the company's position, performance, business model
and strategy, as required by Principle N of the Code. In doing so, the
Committee has noted the guidance issued by the Financial Reporting Council
(FRC) on this subject as well as best practice recommendations from
external advisors. The Committee has considered factors such as whether
the report includes descriptions of the business model, strategy and
principal risks which are sufficiently clear and detailed to enable users to
understand their importance to the company, whether the report is
consistent throughout with the narrative reflecting the financial statements
and understanding of directors during the year, that information is
presented fairly, without omission of material information and not in a
manner which might mislead users.
The Committee has also considered the presentation of GAAP and non-
GAAP measures to ensure appropriate prominence is given to GAAP
measures and that non-GAAP measures are presented consistently and
can be clearly reconciled. The Audit Committee has also considered
the governance and processes undertaken by management in drafting,
developing and reviewing the contents of the Annual Report, which
have been designed to ensure the robustness and adequacy of the
information contained in it, including review by and input from senior
executives, the company's advisors and through the work of the FAC.
On this basis, the Audit Committee recommended to the Board that it
could make the required statement that the Annual Report is 'fair,
balanced and understandable'.
FRC correspondence
The Committee reviewed a comment letter addressed to the company
which had been received from the FRC in March 2025 relating to its
review of the company's annual report and accounts for the year ended
30 June 2024. The Committee was pleased to note that the letter
confirmed that the FRC had no questions or queries to raise, although
it did note some matters which the FRC believed could be improved for
the benefit of users. The company responded by confirming that it
would consider those matters in the context of future reporting.
Updates have been made in the fiscal 25 Annual Report to reflect the
FRC's observations. The Committee notes that the FRC's review does not
provide assurance that the annual report and accounts were correct in
all material respects as the FRC's role is not to verify information but
to consider compliance with reporting requirements.
External auditor
During the year, the Audit Committee reviewed the external audit
strategy and the findings of the external auditor from its review of the
interim results and its audit of the consolidated financial statements.
The Audit Committee reviews annually the appointment of the auditor
(taking into account the auditor’s effectiveness and independence and
all appropriate guidelines) and makes a recommendation to the Board
accordingly. Any decision to open the external audit to tender is taken
on the recommendation of the Audit Committee. There are no
contractual obligations that restrict the company’s current choice of
external auditor. Following the last tender carried out during fiscal 24,
PwC was re-appointed as Diageo’s external auditor, having first been
appointed as such in fiscal 16. PwC's re-appointment for fiscal 25 was
approved by shareholders at the 2024 AGM. The company is required to
have a mandatory audit tender after 10 years by the Statutory Auditors
and Third Country Auditors Regulations 2016, and, as the Audit
Committee considers the relationship with the auditors to be working
well and remains satisfied with their effectiveness and the quality of
their audit work, the Audit Committee does not currently anticipate
that it will conduct an audit tender before it is required to do so. The
Audit Committee considers this to be in the best interests of the
company's shareholders for the reasons outlined above and will
continue to monitor this annually to ensure the timing for the audit
tender remains appropriate, taking into account the effectiveness and
independence of the auditor. The company has complied with the
provisions of The Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes and
99 | Diageo Form 20-F 2025 |
Audit Committee Responsibilities) Order 2014 for the year ended
30 June 2025.
Since the conclusion of the audit for the year ended 30 June 2023,
Scott Berryman has been lead audit partner with responsibility for
signing the Diageo plc audit opinion on behalf of PwC. Scott will
remain as such for the year ending 30 June 2026. The Board will
propose the reappointment of PwC at the AGM to be held in November
2025.
External auditor effectiveness and quality
The Audit Committee assesses the ongoing effectiveness and quality of
the external auditor and audit process through a number of methods,
commencing with identification of appropriate risks by the external
auditor as part of its detailed audit plan presented to the Audit
Committee at the start of the audit cycle. These risks were reviewed
by the Committee and the work performed by the auditor was used to
test management’s assumptions and estimates relating to such risks.
The effectiveness of the audit process in addressing these matters was
assessed through reports presented by the auditor to the Audit
Committee which were discussed by the Committee at both interim
results in January, and year end, in July. Following completion of the
audit process, feedback on its effectiveness was provided during
review meetings with management, who also completed questionnaires
on their experience with the audit. Both management and the auditor
provided their assessments of auditor effectiveness and quality to the
Audit Committee for consideration at its meeting in December. The
auditor assessment is undertaken based on the requirements of the
Code as well as guidance issued to audit committees by the FRC in
April 2016 and Audit Committees and the External Audit: Minimum
Standard published by the FRC in May 2023, as well as the NYSE listing
rule 303A.07. It includes consideration of the findings of the FRC's
Audit Quality Review team which published its 2023/24 Audit Quality
Inspection and Supervision report on PwC in July 2024, periodic
regulatory review carried out by the US Public Company Accounting
Oversight Board (PCAOB) and the Quality Assurance Department of the
Institute of Chartered Accountants in England and Wales, as well as
benchmarking of the auditor as against its peers. The assessment also
takes into consideration PwC's annually published Transparency Report
which sets out how the firm upholds its professional responsibilities
and seeks to ensure delivery of quality in its services. The results of
the survey conducted in October 2024 indicated that overall
satisfaction with PwC's performance had slightly improved compared to
the previous year's survey, with the consensus view being that overall
performance is solid. Consistent strong feedback was received in
relation to professional expertise, business knowledge, auditor
independence, quality control processes, challenges and
communication between PwC and management. Feedback from
management suggested that areas where continued focus was required
included timing of planning, timely review and feedback on audit
matters, improvement in internal communications and co-ordination,
continuity of resources, more efficient and proactive query resolution,
use of best practice examples of processes and controls, and
transparency on audit activities throughout the year. It was concluded
that the relationship between the auditor and management continued
to be strong and open. The external audit team communicated openly
and clearly those areas which they considered significant and their
views on such matters. Senior members of the PwC team had been very
visible throughout the business and strengthened relationships with
management.
During the external audit, the auditor challenged management on its
approach taken as to brand and asset impairment testing, including
reviewing management's updated trigger assessment. The auditors also
reviewed underlying contractual documentation relating to Distill
Ventures investments, considering past performance in order to assess
whether the impairment recognised by management was reasonable. In
relation to brand impairment testing, the auditors discussed with
management their plans and strategies for future growth of the brands
as against recent performance and forecasts. The auditor also
challenged management as to other judgemental matters such as the
potential impact of US tariffs on goodwill and carrying value of certain
brands. The auditor also challenged management while preparing the
Annual Report as to disclosures of critical accounting policies and
practices, including those relating to uncertain tax positions, valuation
of pension obligations and the treatment of certain capitalised costs.
The Audit Committee assessed these challenges, discussing them with
management and the auditor, and seeking additional information and
evidence from management in support of these assessments.
FRC quality review
The FRC’s quality review team routinely monitors the quality of the
audit work of certain UK audit firms through inspections of sample
audits and related quality processes. PwC was reviewed on the audit of
our financial reporting for the year ended 30 June 2023. A copy of the
FRC team's report was provided to the Audit Committee.
External auditor independence
The group has a policy on auditor independence and on the use of the
external auditor for non-audit services, which is reviewed annually,
most recently in July 2025. Under the auditor independence policy, any
member of the PwC global network shall provide to the company, its
subsidiaries or any related entity only permissible services, subject to
the approval of the Audit Committee after it has properly assessed
through its governance process the threats to independence and the
safeguards applied in accordance with the FRC Ethical Standard, SEC
auditor independence rules and US Public Company Accounting
Oversight Board rules. These services are set out in full in the policy
and are generally those which the external auditor is best placed to
provide, which may include reporting required by law or regulation to
be performed by the auditor and services which are closely linked to
audit work and where the auditor's understanding of the group is
relevant to the services. Any FRC permissible service to be provided by
the auditor, regardless of the size of the engagement, must be
specifically approved by the Audit Committee or its nominated
delegate (being the Chair of the Audit Committee) based on a defined
scope of pre-approved services. The policy explicitly specifies the
auditor independence review and approval mechanism process by the
Committee for permissible engagements above the specified threshold
of £125,000. Fees paid to the auditor for audit, audit-related and other
services are analysed in note 4(b) to the consolidated financial
statements. The nature and level of all services provided by the
external auditor are factors taken into account by the Audit
Committee when it reviews annually the independence of the external
auditor. During the year, no non-assurance related services were
provided by the external auditor to the company, its subsidiaries or
any related entity other than personal tax services provided to two
Non-Executive Directors and the provision of services in connection
with the issuance of senior notes by a group company.
100 | Diageo Form 20-F 2025 |
AUDIT COMMITTEE REPORT continued
Internal audit, controls assurance and risk
The company’s internal audit team undertakes an annual audit and risk
plan by delivering a series of internal assurance and audit assignments
across a variety of markets, processes, business units and functions. On
the conclusion of each assignment, the internal audit team issues a
report on its findings which may also include an overall rating as to the
status of the market, process or function being audited, detailed
reasons for the rating and actions to be taken within a specific
timetable. The Audit Committee receives regular reports from the
Head of CARE on the latest reports issued.
This year a number of internal audits have been undertaken including
both market and functional audits as well as of certain of the group's
end-to-end processes and procedures. The Audit Committee assesses
the effectiveness of the company's internal audit processes by
reviewing its annual audit plan at the start of the financial year,
monitoring its ongoing quality throughout the year, and assessing
completion rates and feedback provided following completion of the
annual audit plan. Having carried out this assessment, the Audit
Committee is of the view that the quality, experience and expertise of
the internal audit team is appropriate for the business. The company
operates a global controls assurance programme for financial reporting
controls in each market and function, which monitors compliance with
and effective operation of the company’s controls framework. The
Audit Committee receives regular reports on the status of the controls
assurance plan, actions taken to enhance controls design and
effectiveness, awareness training provided to employees, testing
results and trends analysis derived from the company’s integrated risk
management system. The Committee also reviewed and approved
changes to the principal risk descriptions and risk footprint, as well as
receiving regular presentations and reviews of the status of its
principal and emerging risks. This year, these reviews have covered areas
including business ethics and integrity, anti-counterfeit and product
quality, geopolitical volatility and business interruption, business
transformation, stock in trade, cyber security and IT resilience,
climate change and sustainability, strategic business transformation and
international taxation.
Business Integrity programmes
Diageo is committed to conducting its business responsibly and in
accordance with all laws and regulations to which its business activities are
subject. We hold ourselves to the principles in our Code of Business
Conduct, which is embedded through a training and education programme
for all employees. Our employees are expected to act in accordance with
our values, the Code of Business Conduct, our policies and in compliance
with applicable laws and regulations. The Audit Committee monitors
compliance with the company’s ethical standards through the Business
Integrity framework. The Chief Business Integrity Officer provides
regular updates to the Audit Committee on the business integrity
programme, including the annual Code of Business Conduct training
and completion rates, the launch and roll-out of new programmes and
policies, and the SpeakUp hotline and investigations process.
Our Code of Business Conduct, available in 18 languages, sets out what
Diageo stands for as a company and our expectations for our
employees. The Code of Business Conduct annual training is mandatory
for eligible(1) employees which, for fiscal 25, comprised over 23,800
employees globally. Training is delivered in an easily accessible e-
learning format, with classroom training delivered to those employees
who do not have regular access to a computer. The Code of Business
Conduct is available at https://www.diageo.com/en/our-business/
corporate-governance/code-of-business-conduct.
Third-party risk is also managed through our Know Your Business
Partner programme, which is designed to help the company evaluate
the risk of doing business with a third party before entering and during
a contractual relationship. Business partners are assessed for potential
risks including economic sanctions, bribery and corruption, money
laundering, facilitation of tax evasion, data privacy, human rights and
other reputational issues.
Employees are encouraged to raise concerns about potential breaches
of the Code of Business Conduct or policies to line managers, Legal or
HR colleagues, the global Business Integrity team or via SpeakUp, a
confidential whistleblowing mechanism. SpeakUp is a global service
administered by an independent provider, accessible via online or by
telephone. Where legally permitted, it can be used anonymously and
reports kept confidential. Allegations are investigated and, if
substantiated, appropriate disciplinary and corrective actions are
taken. The Audit Committee receives and reviews reports on
allegations, including root cause analysis and investigation closure
rates. During fiscal 25, all of Diageo's Non-Executive Directors attended
the Audit Committee and therefore all Non-Executive Directors who
make up the Board routinely reviewed the findings of the company's
whistleblowing processes in accordance with the UK Corporate
Governance Code.
During fiscal 25, 891 allegations of breaches were reported, which is a
17% increase on the prior fiscal year. Of those reported allegations,
32% were substantiated with 94 people leaving the business as a result
of breaches of our Code of Business Conduct, compared with 101 Code
of Business Conduct-related leavers(1) in fiscal 24. Below is a summary
of reported and substantiated breaches over the past three fiscal
years.
(1) For more details, see Non-Financial Reporting Boundaries and
Methodologies, available on our website.
Reported and substantiated breaches
Fiscal 23
Fiscal 24
Fiscal 25
ò | Reported breaches |
ò | Substantiated breaches |
ò | Code-related leavers |
101 | Diageo Form 20-F 2025 |
Senior financial officers’ code of ethics and dealing
code
In accordance with the requirements of SOx and related SEC rules,
Diageo has adopted a code of ethics covering its Chief Executive, Chief
Financial Officer, and other senior financial officers. During the year,
no waivers were granted in respect of this code of ethics. The full text
of the code of ethics is available at https://www.diageo.com/en/our-
business/corporate-governance/compliance. Both the Audit & Risk
Committee and the Audit Committee regularly review the strategy and
operation of the Business Integrity programme through the year.
The company has also adopted a dealing code setting out requirements
in relation to dealings in Diageo securities by Directors, Executive
Committee members and certain other employees, which is designed
to ensure compliance with applicable insider trading and market abuse
regulations, in particular the UK Market Abuse Regulation.
Management’s report on internal control over financial
reporting
Management, under the supervision of the Interim Chief Executive and
Chief Financial Officer, is responsible for establishing and maintaining
adequate control over the group’s financial reporting. The Filings
Assurance Committee supports the Interim Chief Executive and Chief
Financial Officer in ensuring the accuracy of the company’s financial
reporting, filings and disclosures. As summarised on page 98, prior to
interim reporting and preliminary reporting each year, the Filings
Assurance Committee examines the company’s financial information
and processes, the effectiveness of its controls in respect of financial
reporting and the contents of its disclosures.
Management has assessed the effectiveness of Diageo’s internal control
over financial reporting (as defined in Rules 13(a)-13(f) and 15(d)-15(f)
under the United States Securities Exchange Act of 1934) based on the
framework in the document ‘Internal Control – Integrated Framework’,
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in 2013. Based on this assessment, management
concluded that, as at 30 June 2025, internal control over financial
reporting was effective. During the period covered by this report,
there were no changes in internal control over financial reporting that
have materially affected or are reasonably likely to materially affect
the effectiveness of internal control over financial reporting. The same
independent registered public accounting firm which audits the group’s
consolidated financial statements has audited the effectiveness of the
group’s internal control over financial reporting, and has issued an
unqualified report thereon, which is included in the integrated audit
report which is included in the company’s Form 20-F to be filed with
the SEC.
'Financial expert', recent and relevant financial
experience
The Board has satisfied itself that the membership of the Audit
Committee includes at least one Director with recent and relevant
financial experience and has competence in accounting and/or auditing
and in the sector which the company operates, and that all members
are financially literate and have experience of corporate financial
matters. For the purposes of the Code and the relevant rule under SOx,
Section 407, the Board has determined that Julie Brown is independent
and may be regarded as an Audit Committee financial expert, having
recent and relevant financial experience, and that all members of the
Audit Committee are independent non-executive directors with
relevant financial and sectoral competence. See pages 78-79 for details
of relevant experience of Directors.
Committee activities
Details of the main areas of focus of the Audit Committee during the year include those summarised below:
Areas of focus | |
Corporate reporting | •Half and full year external reporting updates •Interim and preliminary results review and approval •Annual Report and consolidated financial statements, Form 20-F review and approval •Quarterly trading updates |
Internal controls | •Internal audit updates •Business Integrity updates including breach and reporting update •Controls testing update and Section 404 assessment •Implications on controls environment of systems and process changes •Business transformation projects monitoring •Inventory and stock in trade monitoring controls review and enhancements |
External audit and assurance | •Report on external audit at half and full year periods •Insights and observations on reporting review •Auditor independence and non-audit work reviews •Auditor independence policy review •Review of management representation letters •Appointment of auditor and review of terms of engagement and fees •Auditor performance and effectiveness review and assessment |
Risk management | •Principal and emerging risk reviews and tracking •Risk updates, including group risk footprint and risk appetite review and approvals •Business ethics and integrity, human rights, anti-counterfeit and quality, geopolitical volatility and business interruption, business transformation, stock in trade, cyber security and IT resilience, climate change and sustainability, and international taxation risk reviews |
F-11 | Diageo Form 20-F 2025 |
Management’s report on internal control over financial reporting
Management, under the supervision of the Chief Executive and Chief Financial Officer, is responsible for establishing and
maintaining adequate internal control over the group’s financial reporting.
Diageo’s internal control over financial reporting includes policies and procedures that: pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions
are recorded as necessary to permit the preparation of financial statements in accordance with IFRS as issued by the International
Accounting Standards Board (IASB), IFRS Accounting Standards adopted by the UK; provide reasonable assurance that receipts and
expenditures are made only in accordance with authorisation of management and the directors of the company; and provide
reasonable assurance regarding prevention or timely detection of any unauthorised acquisition, use or disposition of assets that could
have a material effect on the consolidated financial statements.
Management has assessed the effectiveness of Diageo’s internal control over financial reporting (as defined in Rules 13(a)-13(f) and
15(d)-15(f) under the United States Securities Exchange Act of 1934) based on the framework in the document ‘Internal Control –
Integrated Framework’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based
on this assessment, management concluded that, as at 30 June 2025, internal control over financial reporting was effective.
Any internal control framework, no matter how well designed, has inherent limitations, including the possibility of human error and
the circumvention or overriding of controls and procedures and may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions or because the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, who also audit the group’s consolidated financial
statements, has audited the effectiveness of the group’s internal control over financial reporting as of June 30, 2025, and has issued an
unqualified report thereon, which is included on pages 140 to 142 of this document.
Changes in internal control over financial reporting
During the period covered by this report, there were no changes in internal control over financial reporting that have materially
affected or are reasonably likely to materially affect the effectiveness of internal control over financial reporting.
Directors’ responsibilities in respect of the Annual Report and financial statements
The Directors are responsible for preparing the Annual Report, the information filed with the SEC on Form 20-F and the group and
parent company financial statements in accordance with applicable law and regulations.
102 | Diageo Form 20-F 2025 |
AUDIT COMMITTEE REPORT continued
Significant issues and judgements
Significant issues and judgements that were considered in respect of the fiscal 25 financial statements are set out below. Our consideration of
issues included discussion of the critical audit matters as outlined in the appendix to the independent auditors’ report.
Matter considered | How the Audit Committee addressed the matter |
The nature and size of any one-off items impacting the quality of the earnings and cash flows. | The Audit Committee assessed whether the related presentation and disclosure of those items in the financial statements were appropriate based on management’s analysis, and concluded that they were. |
Items that were to be presented as exceptional. Refer to note 3 of the Financial Statements. | The Audit Committee assessed whether the reporting of those items as exceptional, was in line with the group’s accounting policy, and that sufficient disclosure was provided in the financial statements, and concluded that they were. |
Whether the carrying value of assets, in particular intangible assets and investment in associates, was supportable. Refer to notes 6, 9, 10 and 13 of the Financial Statements. | The Audit Committee reviewed the methodology applied in conducting impairment reviews and the result of management's impairment assessments that were performed during the year. The Committee was provided with information about the carrying amounts and the key assumptions incorporated in management’s estimate of discounted cash flows of significant assets that are sensitive to key assumptions. The Committee reviewed the key assumptions used in the impairment testing, including management’s cash flow forecasts, growth rates and the discount rate used in value in use calculations and agreed they were appropriate. The Committee agreed with management’s judgements and conclusions, whereby investment in Distill Ventures companies, Aviation American Gin and other various brands and related tangible fixed assets and inventory have been impaired. The intangible asset impairment charge and accelerated depreciation related to the fixed assets are included in the total exceptional operating charge of $970 million. The Committee agreed that the recoverable amount of the company’s other assets was in excess of their carrying value and that appropriate disclosure was provided with respect to assets impaired, and whose value is more sensitive to changes in assumptions. |
The group’s more significant tax exposures and the appropriateness of any related provisions and financial statement disclosures. Refer to page 67 of 'Our principal risks and risk management' and note 7 of the Financial Statements. | The Audit Committee agreed that the disclosure of tax risk appropriately addresses the significant change in the international tax environment, and that appropriate provisions and other disclosure with respect to uncertain tax positions were reflected in the financial statements. |
The appropriateness of the valuation of post- employment liabilities, and the recognition of any surplus. Refer to note 14 of the Financial Statements. | The measurement of post-employment liabilities is sensitive to changes in long-term interest rates, inflation and mortality assumptions. Having reviewed management’s papers setting out key changes to actuarial assumptions, the Audit Committee agreed that the assumptions used in the valuation are appropriate. The Committee reviewed management’s assessment of the economic benefit available as a refund of the surplus or as a reduction of contribution and the key judgements made in respect of the surplus restriction and concluded that those judgements were appropriate. The Committee reviewed and concluded that sufficient disclosures were provided in the financial statements. |
Significant legal matters impacting the group. Refer to note 19 of the Financial Statements. | The Committee agreed that adequate provision and/or disclosure have been made for all material litigation and disputes, based on the current most likely outcomes, including the litigation summarised in note 19 of the Financial Statements. |
Whether the Annual Report is fair, balanced and understandable. | The Audit Committee concluded that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy and that there is an appropriate balance between statutory (GAAP) and adjusted (non-GAAP) measures. |
The impact of climate change on the group’s financial reporting and financial statements. Refer to pages 46-57 and note 1 and note 9 of the Financial Statements. | The Audit Committee agreed that the disclosures on pages 46-57 made in response to the recommendations of the Task Force on Climate-related Financial Disclosures are appropriate and that the assumptions used in the financial statements are consistent with these disclosures. |
103 | Diageo Form 20-F 2025 |
Cyber Security Risk Management |
recognise the growing risks from increasingly sophisticated cyber
threats. Cyber security is aligned to our group risk framework and is
central to our principal risk area of ‘Cyber and IT resilience’.
We continue to strengthen how we protect our systems, data and
brands through governance, employee awareness and regular
assessments. Our approach includes working to keep pace with
global regulatory changes, such as the EU’s Network and Information
Security Directive 2 (NIS2), where we are enhancing our incident
response, supplier oversight and risk reporting processes to meet
evolving expectations.
Cyber security remains key to safeguarding our most valuable assets
and ensuring trust in our products, services and operations worldwide.
We align our cyber security practices with recognised industry
standards to help us respond effectively to threats and incidents across
our global operations. In today’s environment, we are seeing increased
risks from social engineering attacks and vulnerabilities in cloud
infrastructure. A key area of focus is strengthening third-party risk
suppliers to ensure they meet our security expectations, including
safeguards for systems, data and recovery capabilities, helping to build
greater resilience across our end-to-end supply chain.
and functions, enabling us to assess risks, respond quickly to threats
and implement appropriate countermeasures. We are enhancing and
clarifying existing protocols for escalating material cyber incidents to
In line with evolving regulatory requirements, we are progressing a
structured programme to align with NIS2, focusing on governance,
incident response and third-party risk obligations across our operations
in Europe and globally.
We regularly engage independent cyber security experts to benchmark
our capabilities and test the resilience of our systems. Alongside this,
all employees and certain contractors are required to complete cyber
training, with additional targeted education to address specific roles,
cyber security, with oversight delegated to the Audit Committee. The
Audit Committee reviews management's actions with the aim of
ensuring that robust processes are in place to identify, assess and
manage cyber risks, and that appropriate measures are taken to
emerging cyber trends and vulnerabilities, actions taken to prevent,
regular updates to the Audit Committee, including formal reporting
assessments, risk trends and mitigation strategies aligned to our
system is immune, and undetected incidents remain a possibility. For
more information, please see the section on ‘Our Principal Risks and
Risk Management’ on pages 63-71.
104 | Diageo Form 20-F 2025 |
NOMINATION COMMITTEE REPORT
Championing our
talent strategy
Dear Shareholder
Having taken over as its Chair earlier
in the year, I am pleased to provide
the report of the Nomination
Committee for the year ended 30
June 2025.
The Nomination Committee plays a key role
in ensuring adequate succession planning for
Board appointments, maintenance of a
pipeline of high-quality candidates for
potential nomination to the Board, and
supervising transitions for new appointments.
We aim to ensure that the Board is comprised
of independent, experienced and influential
individuals from a broad range of
Sir John Manzoni
Chair of the Nomination Committee
backgrounds, with appropriate skills and
capabilities to contribute to discussions on
multiple complex topics.
Following the announcement on 16 July 2025
that Debra Crew had stepped down from the
Board and as Chief Executive, the Committee
is supervising a comprehensive formal search
process for her successor. Until a permanent
appointment is made, Nik Jhangiani has
assumed the role of Chief Executive on an
interim basis. We have also recently
announced that Deirdre Mahlan will rejoin
Diageo as Interim Chief Financial Officer.
Earlier in the year, we welcomed Nik and
Julie Brown to the Board in the roles of Chief
Financial Officer and Chair of the Audit
Committee respectively.
Both Nik and Julie have many years'
experience in different consumer products
sectors which add to the Board's ability to
navigate the external consumer market.
Over the year, the Committee has continued
to carry out its role in overseeing the
company's talent planning and succession for
Executive Committee members. With John
Kennedy's retirement from the company, in
April 2025 Dayalan Nayager succeeded him as
President, Europe with Hina Nagarajan
stepping into the role of President, Africa.
Praveen Someshwar joined the company as
Managing Director and CEO, Diageo India. In
June 2025, Randall Ingber succeeded Tom
Shropshire as General Counsel and Company
Secretary.
This year the Nomination Committee has
overseen a change in board committee
composition moving from a model where all
independent Non-Executive Directors were
members of all board committees to a more
conventional model effective 1 July 2025.
The Nomination Committee has also managed
the annual evaluation process, this year
conducted as an internal exercise assessing
the performance, composition, diversity and
effectiveness of the Board and its
committees.
The Committee's focus is now on securing
the best candidate to lead the company as
Chief Executive, supported by a strong and
experienced Board and an agile and
ambitious Executive Committee. We
strongly believe that Diageo is well placed
to deliver long-term, sustainable value for
its shareholders and other stakeholders.
Sir John Manzoni
Chair of the Nomination Committee
role of the committee | committee members | Principal areas of focus | |||||||||||
Leads process for appointments to the Board. Ensures adequate succession plans in place for Board and senior management positions. Oversees development of a diverse pipeline for succession. Comprised of independent non- executive directors. | Sir John Manzoni (Committee Chair) Melissa Bethell Karen Blackett CBE Julie Brown Susan Kilsby Valérie Chapoulaud-Floquet Ireena Vittal | Succession planning and ensuring a strong pipeline of talent for non- executive and executive roles. Adapting ways of working at Board and board committee levels to support the new Board Chair. Ensuring smooth transitions and inductions for new members of the Board, including this year the Audit Committee Chair and CFO. Supervising Executive Committee membership changes. | |||||||||||
| Read more on pages 105-106. | | Read more on page 105. | | Read more on pages 105-106. | ||||||||
105 | Diageo Form 20-F 2025 |
STRATEGIC REPORT | GOVERNANCE Report | FINANCIAL STATEMENTS | ADDITIONAL INFORMATI ON |
Role and composition of the Nomination Committee
The Nomination Committee is responsible for keeping under review the
composition of the Board and succession to it, reviewing succession
planning for key Executive Committee roles, and succession planning
and overall talent strategy for senior leadership positions, including in
relation to encouraging diversity in leadership positions. It makes
recommendations to the Board concerning appointments to the Board.
More details on the role of the Nomination Committee are set out in its
terms of reference which are available at
https://www.diageo.com/en/our-business/corporate-governance.
The Nomination Committee comprises Sir John Manzoni (Committee
Chair), Melissa Bethell, Karen Blackett CBE, Julie Brown, Valérie
Chapoulaud-Floquet, Susan Kilsby and Ireena Vittal.
Succession planning
The Committee reviews the effectiveness and adequacy of succession
planning processes and the succession plans for both the Board and
Executive Committee. Succession plans are tailored for key roles,
based on merit and objective criteria, and designed to encourage
inclusion and diversity. Consideration is given to the length of tenure
of each incumbent with the aim to anticipate potential changes to the
Board or Executive Committee prospectively and address vacancies
proactively enabling smooth succession. The Board should comprise a
majority of independent non-executive directors, free of conflicts of
interest, and with sufficient time to discharge their duties as Board
members. The Board has a long-standing belief that it benefits from
having a broad and diverse range of views expressed amongst its
members, which enhances decision-making for the benefit of the long-
term interests of the company and its stakeholders. The composition
and capabilities of the Board should be appropriate and reflective of
Diageo’s global scale, business and operations, its strategy, portfolio,
consumer base, culture and status as a listed company. Directors
should have sufficient understanding of the company and its
operations, the markets and industry in which it participates, to
understand the key trends and developments which are relevant
for Diageo.
Recruitment and election procedures
The recruitment process for non-executive directors includes the
development of a candidate profile and the engagement of a
professional search agency specialising in the recruitment of high-
calibre candidates. We have engaged executive search company Egon
Zehnder to assist with our current recruitment and pipelining
requirements. Egon Zehnder has no connection with the company aside
from providing executive search consultancy services to it.
In the case of Executive Director or Executive Committee
appointments, an executive leadership assessment may be carried out
by an external professional agency. Reports on potential appointees
are provided to the Committee, which, after careful consideration,
makes a recommendation to the Board. In determining its
recommendations, the Committee has regard to a broad range of
factors including the candidate's background, skill set and experience,
their ability to express independent judgement and participate across
a broad range of topics, including on sustainability and societal
matters, their ability to devote sufficient time to the company and
whether their appointment would contribute towards the Board’s
diversity objectives which are set out in the Board Diversity Policy.
This policy, which applies to the Board and its Committees, reflects
the Board's belief that it is critical that Board membership includes a
diverse range of skills, professional and industry backgrounds,
geographical experience and expertise, gender, tenure, ethnicity and
diversity of thought.
Any new directors are appointed by the Board and, in accordance with
the company’s articles of association, they must be elected at the next
Annual General Meeting (AGM) to continue in office. All existing
directors retire by rotation and stand for re-election every year.
The company’s policy is for all directors to attend the AGM, either
physically or by video conference as permitted by the company's
articles of association. Details of attendance of all Board and
Committee meetings by Directors are set out on page 77.
The 2025 AGM is scheduled to be held on 6 November 2025.
External appointments
While the Board does not have a written policy with regards to the
maximum number of other appointments that Directors should have,
before recommending new appointments to the Board, the Nomination
Committee considers other demands on candidates’ time. As a general
principle, the Committee takes the view that non-executive directors
should have no more than four, and executive directors no more than
one, listed mandates in addition to their role as a director of the
company. However, each director's situation is considered individually.
Once appointed, any proposed additional external appointments are
also reviewed by the Nomination Committee to ensure that the
additional demands on a director’s time will not impact on the
director’s ability to perform his or her role as a director of the
company before the additional appointment is recommended for
approval by the Board. Directors’ interests are reviewed and updated
at each Board meeting. The Board has concluded that each non-
executive director has sufficient time to discharge their duties as a
director of the company, taking into consideration their external
appointments and commitments.
Board committee composition
As part of the review of Board ways of working carried out following
the transition in Board Chair in February 2025, the Nomination
Committee reviewed Diageo's practice of having all its non-executive
directors as members of all Board committees. It was concluded that,
while this practice had positive benefits, on balance it would be
preferable to refresh membership of the Board committees by changing
to a more conventional structure whereby each Board committee was
comprised of a smaller group of non-executive directors. The
Nomination Committee then considered relevant requirements of the
Code, including that consideration should be given to ensure that the
membership of each Board committee includes a range of skills,
experience, knowledge, and professional qualifications to meet its
requirements. Each Board committee, as a whole, should have
competence relevant to the sector in which the company operates, and
where possible the matters for which that committee is responsible. In
light of these requirements and informed by broader considerations
including the frequency of Board and committee meetings, the range
and depth of topics being discussed and considering feedback received
as part of the Board evaluation exercise, the Nomination Committee
recommended to the Board that with effect from fiscal 26 the Audit
Committee be comprised of Julie Brown (Chair), Melissa Bethell, Susan
Kilsby and Ireena Vittal and that the Remuneration Committee be
comprised of Susan Kilsby (Chair), Melissa Bethell, Karen Blackett CBE
and Valérie Chapoulaud-Floquet. It was proposed that the Nomination
Committee would continue to be comprised of all non-executive
directors and chaired by Sir John Manzoni, given the importance of
Board succession and talent pipeline to the Board as a whole. The
Board approved this recommendation in May 2025.
106 | Diageo Form 20-F 2025 |
NOMINATION COMMITTEE REPORT continued
Activities of the Nomination Committee
The principal activities of the Nomination Committee during the year
were:
•the consideration of the talent pipeline for potential new executive
and non-executive directors and other appointments to the Board;
•the design and conduct of the annual review of Board, Committee
and individual director effectiveness and performance, review of the
findings of the review and recommended actions;
•consideration and approval of the report of the Committee in the
company’s Annual Report and consolidated financial statements for
the year ended 30 June 2025;
•consideration and recommendation to the Board of proposed changes
in directors’ outside interests, status as to independence and any
potential conflicts of interest;
•the approval of the adoption of guidelines in relation to Diageo's
procedures for appointing employees to boards of its listed
subsidiaries;
•consideration and recommendation to the Board of proposed changes
in Board committee composition and membership, taking effect from
the start of fiscal 26; and
•a review of the succession plans for Executive Committee roles,
including potential candidates for such roles, their backgrounds and
experience.
Board evaluation
As part of the annual Board evaluation, all members of the Nomination
Committee participated in an internal evaluation of the Committee.
Feedback indicated that the Committee was effective and that
directors were satisfied with its performance, and that it had been
efficient in managing key executive and non-executive role succession
during the year. Further details of the evaluation can be found on
pages 91-92.
Induction and training
Our customary induction processes for newly appointed directors
include individual meetings with Executive Committee members and
other senior executives, visits to the company’s production facilities
and offices including the company's head office in London and the
group's spirits production facilities, scotch brand homes, visitor centres
and archives in Scotland. This is supplemented by documents,
materials and information, including corporate governance guidance
materials, the Code of Business Conduct and other relevant policy
documents, historical Board and Committee papers, recent results
announcements and materials, investor relations reports, performance
data and a wide range of other internal and external reports,
presentations and analyses.
Induction programmes for new directors are tailored to suit the
particular background and experience of the individual director, with
the Committee advising on priorities for that individual and tracking
induction activity. These induction processes supplement existing
practices whereby a continuing understanding of the business is
developed through appropriate business engagements for non-
executive directors such as visits to customers, engagements with
employees and brand events worked into the annual cycle of Board
meetings. Training on specific areas of risk and detailed reviews of
strategic matters are provided by Executive Committee members,
other internal senior leaders and external guest speakers and
specialists through presentations, roundtable discussions and other
sessions as part of the Board’s Annual Strategy Conference and during
the year as part of Board and committee meetings. In addition,
Executive Committee members and other senior executives are invited,
as appropriate, to Board and strategy meetings to give presentations
on their areas of responsibility. All directors are also provided with
regular briefings to ensure they are kept up to date on relevant legal
and governance developments or changes, best practice developments
and changing commercial and other risks.
Diversity
The Board has a long-standing view that it benefits from having an
independent, broad and diverse membership. The Board supports the
recommendations of the FTSE Women Leaders Review (previously the
Hampton-Alexander Review) on gender diversity and the Parker Review
on ethnic diversity. The Board's approach to inclusion and diversity
includes objectively considering candidates for Board and Executive
Committee roles from multiple perspectives, including on the basis of
their skill set, experience, expertise, knowledge, gender, cultural and
geographical backgrounds, ethnicity and age. The Board Diversity
Policy sets out specific objectives with parity between male and
female members of the Board being the ultimate goal in terms of
gender diversity, with a commitment to have no less than 40% female
representation on the Board, and having at least one director
reflecting ethnic diversity as defined in accordance with the Parker
Review. The Committee is pleased to confirm that the diversity targets
set out in the Board Diversity Policy and by the FCA in the UK Listing
Rules have been met. The Board Diversity Policy also sets out the
Board’s support for management’s actions to increase the proportion
of senior leadership roles held by women and by people from ethnic
minority backgrounds and other under-represented groups. As at 30
June 2025, the percentage of women on the Executive Committee and
their direct reports is 47%.
107 | Diageo Form 20-F 2025 |
Board and Executive Committee reporting on gender identity or sex
Number of Board members | Percentage of the Board | Number of senior positions on the Board (CEO, CFO, SID and Chair) | Number in executive management | Percentage of executive management | |
Men | 2 | 22.2% | 2 | 8 | 61.5% |
Women | 7 | 77.8% | 2 | 5 | 38.5% |
Not specified/prefer not to say | — | — | — | — | — |
Board and Executive Committee reporting on ethnic background
Number of Board members | Percentage of the Board | Number of senior positions on the Board (CEO, CFO, SID and Chair) | Number in executive management | Percentage of executive management | |
White British or other White (including minority-white groups) | 5 | 55.6% | 3 | 7 | 53.8% |
Mixed/Multiple Ethnic Groups | — | — | — | 1 | 7.7% |
Asian/Asian British | 3 | 33.3% | 1 | 3 | 23.1% |
Black/African/Caribbean/Black British | 1 | 11.1% | — | — | — |
Other ethnic group, including Arab | — | — | — | 2 | 15.4% |
Not specified/prefer not to say | — | — | — | — | — |
Board composition(1) | Non-Executive Director tenure(1) | Board gender diversity(1) | Board ethnic diversity(1) |
ò | Chair | ò | 0 – 3 years | ò | Male | ò | Directors of colour | |||
ò | Executive Director | ò | 3 – 6 years | ò | Female | ò | White European | |||
ò | Non-Executive Director | ò | 6 – 9 years |
Executive committee nationality(1) |
ò | British | ò | Spanish | |
ò | American | ò | Colombian | |
ò | Indian | ò | South African | |
ò | Irish | ò | Australian/American |
Board diversity data
•Directors are defined as all non-executive and executive directors
appointed to the Board. Board diversity related data are collated
directly from each director annually using a questionnaire and are
given on a self-identifying basis.
•Directors of colour are defined in accordance with the Parker
Review definitions as those 'who identify as or have evident heritage
from African, Asian, Middle Eastern, Central and South American
regions'.(1)
(1) Graphs and data above are as at 30 June 2025
108 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT
Annual statement
by the Chair of the
Remuneration Committee
Dear Shareholder
I am pleased to present the Directors'
Remuneration Report for the year ended 30
June 2025, which contains:
•The current Directors' Remuneration
Policy, which was approved at the AGM
on 28 September 2023; and
•The annual report on remuneration,
describing how the Directors'
Remuneration Policy has been put into
practice in 2025 and will be
implemented in 2026.
Susan Kilsby
Senior Independent Director and Chair of the
Remuneration Committee
Strategic context
Our industry has remained highly challenging
in fiscal 25 with significant short-term
headwinds impacting consumer confidence
and spending in many of our key markets.
Despite this backdrop Diageo delivered
positive organic net sales growth of 1.7%
during the year.
Notwithstanding the challenges facing our
business, the Board believes Diageo remains
well positioned to capture future growth
opportunities. This includes leading and
shaping consumer trends through our strong
and balanced portfolio of brands across both
geographies and price tiers.
The Board is committed to ensuring Diageo
emerges from this period stronger and more
competitive, with the Remuneration
Committee clear on its role in attracting,
retaining and motivating the global talent
required to deliver on our strategy.
Executive Director changes
Debra Crew stepped down as Chief Executive,
and from the Board, by mutual agreement
shortly after the end of fiscal 25. Details of
Debra's leaving arrangements, which were in
line with her contractual entitlement and the
Directors' Remuneration Policy, are set out
on page 131. Nik Jhangiani was subsequently
appointed as Interim Chief Executive on 16
July 2025 and will fulfil this role whilst the
Board carries out a comprehensive formal
search process, and until a permanent
appointment is made. Details of Nik's
arrangements during this interim period are
set out on page 133.
Nik joined Diageo early in fiscal 25 with his
appointment to the Board as Chief Financial
Officer on 1 September 2024. Nik’s
remuneration package was designed in line
with our approved Directors’ Remuneration
Policy, and in consideration of the
Committee’s remuneration principles which
are set out at the end of this letter.
role of the committee | committee members | Principal areas of focus | |||||||||||
Responsible for the design and implementation of the Directors’ Remuneration Policy (the Policy), ensuring our approach to remuneration attracts and retains talented executives, and incentivises the delivery of our strategy. Sets remuneration for Executive Directors, the Chair of the Board and the Executive Committee in line with the principles of the UK Corporate Governance Code. | Susan Kilsby (Committee Chair) Melissa Bethell Karen Blackett CBE Valérie Chapoulaud-Floquet Ireena Vittal As at the end of fiscal 25 the above directors were members of the Committee. As set out on page 105, the Board has moved to a more focused Committee structure in fiscal 26 which includes a reduced number of members on the Remuneration Committee. | Ensures the Policy supports delivery of our strategy, and considers the views of our shareholders, employees, and other stakeholders. Sets the level of fixed, short- and long- term pay opportunity for Executive Directors. Reviews the design and operation of the Annual Incentive Plan and Diageo Long- Term Incentive Plan. Reviews wider workforce remuneration, considering the alignment between executive pay and our employees. | |||||||||||
| Read more on page 113. | | Read more on page 113. | | Read more on pages 113-119. | ||||||||
109 | Diageo Form 20-F 2025 |
When developing a competitive offer for Nik, the Committee carefully
considered his existing package, his in-flight short- and long-term
incentive opportunity, and the need to attract and retain high-calibre
talent to drive delivery of our Growth Ambition. Details of Nik’s
package as Chief Financial Officer, and his joining arrangements, are
set out on pages 120 and 125.
Incentive outcomes
Achieving our ambition to create one of the best performing, most
trusted and respected consumer products companies in the world
requires the appropriate balance of annual and long-term incentive
measures and a process to ensure the targets we set are challenging
and aligned to shareholders' interests. When determining performance
metric outcomes, the Committee also considers Diageo's wider business
performance including market share performance, financial
performance relative to our TSR peer group and other financial and
non-financial measures. The Committee also considers the impact on
Diageo's stakeholders more broadly including our employees.
Annual incentive
The annual incentive plan (AIP) outcomes for 2025 in relation to net
sales growth, operating profit growth and operating cash conversion
resulted in a payment of 40% of maximum on financials. Further detail
is provided on page 121. This outcome was considered by the
Committee in the context of wider business performance, and it
concluded that the AIP worked effectively to deliver a fair outcome
aligning reward and performance.
The AIP also includes Individual Business Objectives (IBOs) comprising
20% of the overall opportunity. Details on the performance and
outcomes for the Executive Directors who served during the year are
set out in more detail on page 121. As a result of the financial and
individual performance for fiscal 25, overall AIP outcomes against
maximum opportunity were 42.0% for Debra Crew, 44.4% for Nik
Jhangiani and 42.0% for Lavanya Chandrashekar.
Long-term incentives
Our Diageo Long Term Incentive Plan (DLTIP) consists of both a
performance shares element and a share options element. For the
three-year performance period ending 30 June 2025, performance
outcomes against all financial measures under both elements of the
DLTIP were below threshold performance resulting in no vesting under
these measures. Further details can be found on page 123.
The performance shares element also included metrics supporting our
’Spirit of Progress’ ESG action plan, worth 20% of the overall award.
The four metrics measure reduction in carbon emissions, improvement
in water efficiency, education on positive drinking and the building of
diverse representation in leadership. Demanding three-year targets
were established for our goals in this area and the achievement across
all ESG metrics resulted in 62.5% of maximum vesting under these
metrics (equivalent to 12.5% of the overall performance shares
awarded). Further detail of performance against these metrics is set
out on page 123 and more information on the 'Spirit of Progress' ESG
action plan can be found on pages 36-37.
Following the Committee’s consideration of the outcome in the
context of wider performance, the performance share element of the
DLTIP will vest at 12.5% of maximum opportunity whilst the share
option award will lapse in full. Both outcomes are applicable to the
awards granted to Debra Crew and Lavanya Chandrashekar.
Implementation for 2026
Incentivising the delivery of our financial priorities
Diageo's reshaped financial priorities are focused on delivering
sustainable top-line growth, increasing operating leverage, maintaining
free cash flow and optimising returns. To ensure executive
remuneration is aligned with these priorities, the Committee reviewed
the performance measures used within both the AIP and DLTIP.
As a result, and following constructive engagement with shareholders,
we will introduce changes to the performance measures within our
short- and long-term incentive plans for fiscal 26. Further detail
including all measures and weightings is set out on page 134. In
summary:
▪A new cash measure of adjusted operating cash flow will
replace operating cash conversion within the AIP, ensuring
we elevate the focus on absolute free cash flow delivery
across the business.
▪To ensure our total shareholder return peer group used
within the share options element of the DLTIP remains
appropriately balanced across sectors and geographies, we
will add Campari Group, Rémy Cointreau and Constellation
Brands to the group, and remove Kimberly-Clark.
▪We will introduce a return on invested capital measure
within the performance shares element of the DLTIP further
driving disciplined investment.
▪We will reshape our approach to incentivising Diageo’s ‘Spirit
of Progress’ ESG goals within the performance shares
element of the DLTIP, focusing on positive drinking, carbon
and water measures.
As we reach the midpoint of our 'Spirit of Progress' ESG action plan,
and with the progress made to date against our two leadership
representation goals, it was an appropriate time to review and evolve
our approach to how these ambitions are incentivised. Inclusion has
been core to Diageo and many of our brands for decades, and whilst
our gender and diversity leadership representation metrics will be
retired from the DLTIP, we will continue to focus on and monitor
leadership representation as part of our ‘Spirit of Progress’ambitions.
In fiscal 26, we will be including an annual talent goal in our wider
leadership population plans, to enable leaders to focus on localised
and tailored actions.
Salary review for fiscal 26
The Committee conducted an annual salary review in respect of the
Executive Committee, taking into account both internal factors,
including wider employee pay decisions, and external considerations
including the current challenging conditions in the wider industry.
Following the review, the Committee agreed to a salary freeze for the
majority of the Executive Committee members for fiscal 26. Globally
Diageo maintained lower than typical salary increase budgets for the
wider workforce with spend focused on ensuring pay levels remain
locally competitive.
110 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION
REPORT continued
Looking ahead to our new Directors’ Remuneration Policy
Our Policy is due for renewal at our 2026 AGM. We look forward to
engaging with shareholders over the course of next year to ensure that
the Policy continues to align executive pay with our strategic
priorities, balanced as always with the interests of our stakeholders.
Diageo is a global business with over 200 brands and sales in nearly 180
countries and territories (including a large presence in North America
where the remuneration context is materially different compared to
the United Kingdom), and therefore, we compete for talent in a global
marketplace. The Committee remains mindful that a key enabler of
our strategy is the company’s ability to attract and retain high-calibre
talent, and to achieve this we must ensure that remuneration
structures remain competitive at all levels. This enabler will be of
particular importance during the Board's current comprehensive search
process for the next Chief Executive.
As a Committee we have closely followed the debate in recent years on
the UK executive pay landscape, its attractiveness to globally mobile
talent and the evolving responses in policy design across the UK listed
company environment. As we undertake the review of our Policy to be
put for approval at next year’s AGM, the Committee will be open-
minded in its approach to ensure we remain globally competitive and
attractive to the best talent from all over the world.
The Committee will also review any opportunities to simplify the
current policy and is conscious that clarity in a remuneration policy is
critical in driving business performance. We will be engaging openly
and constructively with investors and stakeholders across the year, and
very much look forward to hearing their views and perspectives.
In summary
In fiscal 25 our remuneration outcomes demonstrated strong alignment
between pay and performance, with the context of a challenging
consumer environment reflected in incentive outcomes and the
decisions made by the Committee during the year.
On behalf of the Committee I would like to thank all of our investors,
employees and stakeholders for their continued support and
engagement and I ask that shareholders vote to approve this Directors’
Remuneration Report at the AGM on 6 November 2025.
Susan Kilsby
Senior Independent Director and Chair of the Remuneration Committee
Remuneration principles
The approach to setting executive remuneration continues to be
guided by the remuneration principles set out below. The Committee
considers these principles carefully when making decisions on
executive remuneration in order to strike the right balance between
risk and reward, cost and sustainability, and competitiveness and
fairness.
The company has a strategy to grow and leverage its leaders globally given
the international nature of the business. We also need to have the right
tools in place to source talent globally and the increasingly restrictive
corporate governance environment in the United Kingdom presents some
challenges when considered against the significantly higher pay norms in
the United States and other parts of the world, particularly given the
increasing international mobility of the senior talent pool.
Long-term value creation for shareholders and pay for performance
remains at the heart of our remuneration policy and practices.
Attracting and nurturing a vibrant mix of international talent with a
range of backgrounds, skills and capabilities enables Diageo to grow
and thrive, and ultimately to deliver our Growth Ambition.
Remuneration remains a key part of attracting and retaining the best
people to lead our global business, balanced against the need to ensure
our packages are appropriate and fair in the business and wider
employee context, delivering market-competitive pay in return for
high performance against the company’s strategic objectives.
 | Delivery of business strategy |
Short- and long-term incentive plans reward the delivery of our business strategy and Growth Ambition. Performance measures are reviewed regularly and stretching targets are set relative to the company’s growth plans and peer group forecasted performance. The Committee seeks to embed simplicity and transparency in the design and delivery of executive reward. | |
 | Creating sustainable, long-term performance |
A significant proportion of remuneration is delivered in variable pay linked to business and individual performance, focused on consistent and responsible drivers of long-term growth. Performance against targets is assessed in the context of underlying business performance and the ‘quality of earnings’. | |
 | Winning best talent |
Well designed and market-competitive total remuneration, with an appropriate balance of fixed reward and upside opportunity, allows us to attract and retain the best talent from all over the world in a competitive talent market, which is critical to our continued business success. | |
 | Consideration of stakeholder interests |
Executives are focused on creating sustainable share price growth. The requirement to build significant personal shareholdings in Diageo, and to hold shares acquired from long-term incentive awards for two years post-vesting aligns executives and shareholders. Decisions on executive remuneration are made with consideration of the interests of the wider workforce and other stakeholders, as well as the external climate. |
111 | Diageo Form 20-F 2025 |
Remuneration at a glance | ||||
Salary | Allowances and benefits | Annual incentive | Long-term incentives | Shareholding requirement |
Purpose | ||||
•Supports the attraction and retention of the best global talent with the capability to deliver Diageo’s strategy. | •Provision of market- competitive and cost- effective benefits supports attraction and retention of talent. | •Incentivises delivery of Diageo’s financial and strategic targets. •Provides focus on key financial metrics and the individual’s contribution to the company’s performance. | •Rewards consistent long-term performance in line with Diageo’s business strategy. •Provides focus on delivering superior long-term returns to shareholders. | •Ensures alignment between the interests of Executive Directors and shareholders. |
Key features of current policy | ||||
•Normally reviewed annually on 1 October. •Salaries take account of external market and internal employee context. | •Provision of competitive benefits linked to local market practice. •Maximum company pension contribution is 14% of salary, which is aligned to the offering for the wider workforce in the United Kingdom. | •Target opportunity is 100% of salary and maximum is 200% of salary. •Performance measures, weightings and stretching targets are set by the Remuneration Committee. •Subject to malus and clawback provisions. •Executive Directors defer a minimum of one- third of earned bonus payment into Diageo shares held for three years. •Remainder paid out in cash after the end of the financial year. | •Annual grant of performance shares and share options: •Chief Executive award up to 500% of salary. •Chief Financial Officer award up to 480% of salary. (% of salary for both Executive Directors described in performance share equivalents). •Performance measures, weightings and stretching targets are set annually. •Three-year performance period plus two-year retention period •Subject to malus and clawback provisions. •Number of awards granted is based on a six-month average share price to 30 June preceding grant date. | •Minimum shareholding requirement within five years of appointment: •Chief Executive: 500% of salary. •Chief Financial Officer: 400% of salary. •Post-employment shareholding requirement for Executive Directors of 100% of the in-employment requirement (or, if lower, their actual shareholding on cessation) to be retained in full for two years after leaving the company. |
Planned for year ending 30 June 2026 | ||||
•No salary increase will apply for Nik Jhangiani in fiscal 26. | Allowances and benefits unchanged from prior year, other than the annual Salary Supplement Allowance of £300,000 introduced for Nik Jhangiani, pro-rata for the period as Interim Chief Executive. Company pension contributions 14% of salary. | •Size of annual incentive award opportunity is unchanged from prior year. For fiscal 26, measures are net sales growth, operating profit growth and adjusted operating cash flow, 80% in total weighted equally, with remaining 20% on individual business objectives. | •Performance measures are net sales growth, relative TSR, cumulative free cash flow, profit before exceptional items and tax, adjusted return on invested capital and ‘Spirit of Progress‘ measures. •Size of long-term incentive award opportunity is in line with the policy. | •No change to in-employment shareholding requirement. •Post-employment shareholding in line with the policy. |
Implementation in year ended 30 June 2025 | ||||
•4.25% salary increase for Debra Crew, slightly below the annual salary budgets for the wider workforce in the United Kingdom. •No increase for Nik Jhangiani in fiscal 25 following appointment on 1 September 2024. | •Debra Crew's allowances changed in fiscal 25, with an increased tax advice allowance introduced in line with the level of the previous Chief Executive, alongside a housing allowance connected to her relocation to the UK. •Company pension contribution of 14% for both Executive Directors. Aligned to the UK workforce. | Payout of 40% of maximum for the financial elements of the plan. Total payout of 42.0% of maximum for Debra Crew and 44.4% for Nik Jhangiani. | •Vesting of 2022 performance shares at 12.5% of maximum for Debra Crew. •The 2022 share options lapsed for Debra Crew. | •As at 30 June 2025, Debra Crew's shareholding was 239% of salary. •As at 30 June 2025, Nik Jhangiani's shareholding was 166% of salary (he has until December 2029 to meet his requirement). |
112 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Pay for performance at a glance
The charts below show performance outcomes against targets for the long-term and annual incentive plans. Targets under both incentive plans are
set with reference to Diageo’s strategic plan and the historical and forecasted performance of Diageo and its peers. Further details on performance
outcomes can be found on pages 121 and 123.
Long-term incentives (for the period 1 July 2022 to 30 June 2025)
Organic net sales growth | Cumulative free cash flow | ||||||||||||
CAGR | Threshold | Midpoint | Maximum | Threshold | Midpoint | Maximum | |||||||
4.5% | 6.5% | 8.5% | $10,175m | $11,372m | $12,569m | ||||||||
l | l | ||||||||||||
Actual 2.5% | Actual $8,875m | ||||||||||||
Organic profit before exceptional items and tax growth | Relative TSR ranking vs peer group | ||||||||||||
CAGR | Threshold | Midpoint | Maximum | Threshold | Midpoint | Maximum | |||||||
5.0% | 8.5% | 12.0% | 9th (median) | – | 3rd (upper quintile) | ||||||||
l | l | ||||||||||||
Actual -3.5% | Actual 15th | ||||||||||||
ESG measure | Unit of measurement | Threshold | Midpoint | Maximum | Actual |
Carbon reduction | Reduction in greenhouse gas emissions (cum%) | 10.7% | 14.2% | 17.6% | 18.8% |
Water efficiency | Improvement in water efficiency (cum%) | 6.3% | 9.2% | 12.1% | 6.0% |
Positive drinking | Number of people who confirmed changed attitudes on the dangers of underage drinking following participation in a Diageo supported education programme | 2.6m | 3.3m | 4.0m | 5.0m |
Inclusion & diversity | % female leaders globally | 45% | 46% | 47% | 43% |
% ethnically diverse leaders globally | 42% | 43% | 44% | 46% |
Annual incentive (for the period 1 July 2024 to 30 June 2025)
Net sales growth | Operating profit growth | |||||||||||
Threshold | Target | Maximum | Threshold | Midpoint | Maximum | |||||||
0.3% | 2.9% | 5.7% | 0.3% | 3.3% | 6.3% | |||||||
l | l | |||||||||||
Actual 1.5% | Actual -1.0% | |||||||||||
Operating cash conversion | ||||||
Threshold | Target | Maximum | ||||
93.0% | 98.1% | 103.0% | ||||
l | ||||||
Actual 101.4% | ||||||
Diageo's share price growth over the period 30 June 2022 to 30 June 2025 | Growth in dividend distribution to shareholders in year ended to 30 June 2025 (cents) | |
(48.2)% | —% | |
Historic reward outcomes under the annual and long-term incentive plans over the past five years are shown below. Vesting outcomes under the
long-term incentive plan are shown against total shareholder return for the three-year performance period ended in the year of vesting (i.e. TSR for
the three years ended 30 June 2025 is shown against the vesting outcome for the 2022 DLTIP award vesting in 2025). Outcomes against AIP financial
measures are shown against organic operating profit growth for each respective financial year, as disclosed in prior year annual reports.
5-year vesting outcomes of long-term incentives (DLTIP) | 5-year history of annual incentive (AIP) payouts | |||
Executive Director vesting outcome (% of maximum) | Annualised TSR % | Payout (% of maximum) | Operating profit growth % | |
ò | Performance shares |
ò | Share options |
ò | Total shareholder return over three-year long-term incentive performance period |
ò | Annual incentive payout (financial measures excluding individual business objectives) |
ò | Organic operating profit growth (% on prior year) |
113 | Diageo Form 20-F 2025 |
Remuneration Committee Governance
Remuneration Committee
The Remuneration Committee consisted of the following independent
Non-Executive Directors in fiscal 25: Susan Kilsby, Melissa Bethell,
Karen Blackett CBE, Valérie Chapoulaud-Floquet, and Ireena Vittal.
Susan Kilsby is the Chair of the Remuneration Committee and also the
Senior Independent Director. The Chair of the Board and the Chief
Executive are invited to attend Remuneration Committee meetings,
except when their own remuneration is being discussed. The Chief
Human Resources Officer and Global Performance and Reward Director
are also invited by the Remuneration Committee to provide their views
and advice. The Chief Financial Officer may also attend to provide
performance context to the Committee during its discussions about
target setting and incentive outcomes. The Remuneration Committee's
terms of reference are available in the corporate governance section
of the company's website and on request from the Company Secretary.
The Remuneration Committee is responsible for all executive
remuneration decisions throughout the year, which includes setting
financial targets for the annual and long-term incentive plans and the
outcomes under these plans. The Committee considered the
remuneration policy and practices in the context of the principles of
the Corporate Governance Code, as follows:
Clarity – the Committee engages regularly with executives,
shareholders and their representative bodies in order to explain the
approach to executive pay;
Simplicity – the purpose, structure and strategic alignment of each
element of pay has been laid out in the remuneration policy;
Risk – there is an appropriate mix of fixed and variable pay, and
financial and non-financial objectives. There are robust measures in
place to ensure alignment with long-term shareholder interests,
including the DLTIP post-vesting retention period, shareholding
requirement, bonus deferral into shares and malus and clawback
provisions updated for prevailing legal and regulatory requirements.
The Committee also considers the impact on behaviour of both the
measures and targets set;
Predictability – the pay opportunity under different performance
scenarios is set out in the Directors' Remuneration Policy (page 136 of
the 2023 annual report);
Proportionality – executives are incentivised to achieve stretching
targets over annual and three-year performance periods, and the
Committee assesses performance holistically at the end of each period,
taking into account underlying business performance and the internal
and external context. The Committee may exercise discretion to
ensure that payouts are appropriate; and
Alignment with culture – non-financial objectives may be incentivised
under the individual business objective element of the annual
incentive plan and ‘Spirit of Progress‘ (ESG) priorities are incentivised
under the long-term incentive plan, which reinforces the company’s
purpose and values. The design of remuneration, and the measures
used, reflect Diageo's culture.
External advisors
During the year ended 30 June 2025, the Remuneration Committee
received advice on Directors' remuneration from both FIT
Remuneration Consultants (FIT) and WTW. WTW were appointed by the
Committee in April 2025 as its new external advisor, following a
comprehensive tendering process led by the Chair with several leading
advisors.
The fees paid to FIT in fiscal 25 (until the end of their appointment)
for advice provided to the Committee were £20,607. The fees paid to
WTW in fiscal 25 following the date of their appointment were
£39,000. All fees were determined on a time and expenses basis.
The Committee is satisfied that WTW's (and previously FIT's)
engagement partners, and the teams that provide remuneration advice
to the Committee, have no connections with Diageo that may impair
their independence. The Committee reviewed the potential for
conflicts of interest and judged that there were appropriate safeguards
against such conflicts. FIT did not provide Diageo with any other
services, and WTW provided consultancy and advice to management
including market pay data to assist in the annual employee pay review
and global employee benefits support. WTW and FIT are members of
the Remuneration Consultants Group (RCG) which is responsible for
developing and maintaining the Code of Conduct for Consultants to
Remuneration Committees of UK listed companies. WTW (and FIT
previously) attended Remuneration Committee meetings during the
year following their appointment and the Committee is satisfied that
the advice it has received has been objective and independent.
Statement of voting
The following table summarises the details of votes cast in respect of
the resolutions on the Directors’ Remuneration Policy at the AGM on 28
September 2023, and the Directors' Remuneration Report at the AGM
on 26 September 2024.
For | Against | Total votes cast | Abstentions | ||
Directors’ Remuneration Policy As shown on pages 132–138 of the 2023 Annual Report | Total number of votes | 1,663,080,546 | 80,098,370 | 1,743,178,916 | 1,023,145 |
Percentage of votes cast | 95.41% | 4.59% | 100% | n/a | |
Directors' Remuneration Report for 2024 | Total number of votes | 1,652,770,668 | 66,983,213 | 1,719,753,881 | 19,727,804 |
Percentage of votes cast | 96.11% | 3.89% | 100% | n/a |
114 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Directors' Remuneration Policy
This section of the report sets out the details of the 2023 Directors'
Remuneration Policy which was approved by shareholders at the AGM on 28
September 2023 and which applied from that date. The 'Chair of the Board
and Non-Executive Directors' fees' section of the policy table has been
updated to reflect the appointment of Sir John Manzoni as Chair, effective
5 February 2025. The Policy Considerations section has been updated to
reflect updated NED terms of appointment and our approach to employee
engagement.
The current approved policy can be found in full on the company’s
website at https://www.diageo.com/en/our-business/corporate-
governance/remuneration-at-diageo.
The Committee reserves the right to make minor changes to the policy,
where required for regulatory, tax or administrative reasons.
Base salary |
Purpose and link to strategy |
Supports the attraction and retention of the best global talent with the capability to deliver Diageo’s strategy and performance goals. |
Operation |
Normally reviewed annually or following a change in responsibilities with any increases usually taking effect from 1 October. The Remuneration Committee considers the following parameters when reviewing base salary levels: Pay increases for other employees across the group. Economic conditions and governance trends. The individual’s performance, skills and responsibilities. Base salaries (and total remuneration) at companies of similar size and international scope to Diageo, with roles typically benchmarked against the FTSE 30 excluding financial services companies, or against similar comparator groups in other locations dependent on the Executive Director’s home market as well as global consumer goods companies. |
Opportunity |
Salary increases will be made in the context of the broader employee pay environment, and will normally be in line with those made to other employees in the relevant markets in which Diageo operates, typically the United Kingdom and the United States, unless there is a change in role or responsibility or other exceptional circumstances. |
Benefits |
Purpose and link to strategy |
Provides market-competitive and cost-effective benefits as part of remuneration packages designed to attract and retain the best global talent. |
Operation |
•The provision of benefits typically depends on the country of residence of the Executive Director and may include but is not limited to a company car or travel allowance, the provision of a contracted car service or equivalent, product allowance, life insurance, accidental death and disability insurance, medical and dental cover, tax support and tax return preparation costs. •The Remuneration Committee has discretion to offer additional allowances, or benefits, to Executive Directors, if considered appropriate and reasonable. These may include, but are not limited to, relocation expenses, housing allowance and school fees where a Director is asked to relocate from his/her home location as part of their appointment. Where appropriate, for example in relation to relocation benefits, the company may also meet the tax costs associated with the benefit provision. |
Opportunity |
The benefits package is set at a level which the Remuneration Committee considers: provides an appropriate level of benefits depending on the role and individual circumstances; is appropriate in the context of the benefits offered to the wider workforce in the relevant market; and is in line with comparable roles in companies of a similar size and complexity in the relevant market. |
Post-retirement provision |
Purpose and link to strategy |
Provides competitive post-retirement benefits which are part of remuneration packages designed to attract and retain the best global talent. |
Operation |
Provision of market-competitive pension arrangements or a cash alternative based on a percentage of base salary. |
Opportunity |
The maximum pension contribution, or cash alternative allowance, for Executive Directors is 14% of salary. The Chief Executive and Chief Financial Officer receive a pension contribution of 14% of salary, in line with the UK workforce. |
115 | Diageo Form 20-F 2025 |
Annual Incentive Plan (AIP) |
Purpose and link to strategy |
Incentivises delivery of Diageo’s annual financial targets and the achievement of key individual objectives which are chosen to align with the business strategy and create a platform for sustainable longer-term performance. Compulsory deferral of a minimum of one-third of any annual incentive earned into shares for three years promotes longer-term alignment of Executive Directors' interests with shareholders’ interests. |
Operation |
•Performance measures, weightings and targets are set by the Remuneration Committee. Appropriately stretching targets are set by reference to the operating plan and historical and projected performance for the company and its peer group. •The level of award is determined with reference to Diageo’s overall financial and strategic performance and individual performance. •A minimum of one-third of the actual earned bonus payment is normally deferred into a share award (pre-tax deferral) or owned shares (post- tax deferral) under the Deferred Bonus Share Plan, to be held for a minimum period of three years, other than in exceptional circumstances. The remainder of the bonus payment is paid out in cash after the end of the financial year. •The Remuneration Committee has discretion to adjust the level of payment if it is not deemed to reflect appropriately the individual’s contribution or the overall business performance. Any discretionary adjustments will be detailed in the following year’s annual report on remuneration. •The Remuneration Committee has discretion to apply malus or clawback to bonus as detailed in the 'Malus and Clawback' section below. •In the case of pre-tax deferral, notional dividends accrue on deferred bonus share awards, delivered as shares or cash at the discretion of the Remuneration Committee at the end of the vesting period (on post-tax deferral into owned shares, actual dividends are payable). |
Opportunity |
For threshold performance, up to 50% of salary may be earned, with up to 100% of salary earned for on-target performance and a maximum of 200% of salary payable for outstanding performance. The maximum includes the deferred share element but excludes dividend equivalents payable in respect of deferred share awards. |
Performance conditions |
Annual incentive plan awards are normally based 70-100% on financial measures which may include, but are not limited to, measures of sales, profit and cash, and 0-30% on broader objectives based on strategic goals and/or individual contribution. The Remuneration Committee has discretion to amend the performance measures in exceptional circumstances if it considers it appropriate to do so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and explained in the following year’s annual report on remuneration. |
Diageo Long-Term Incentive Plan (DLTIP) |
Purpose and link to strategy |
Provides a long-term incentive to achieve key performance measures which support the company’s strategy, and to align interests with shareholders. |
Operation |
•An annual grant of performance shares and/or market-price share options which vest subject to a performance test and continued employment, normally over a period of three years. •Measures and stretching targets are reviewed annually by the Remuneration Committee for each new award. •The Remuneration Committee has the authority to exercise discretion to adjust the vesting outcome based on its assessment of the overall business performance over the performance period. This may include the consideration of factors such as holistic performance relative to peers, stakeholder outcomes and significant investment projects, for example. •Following vesting, there is normally a further retention period of two years. Executive Directors are able to exercise an option or sell sufficient shares to cover any tax liability when an award vests, provided they retain the net shares arising for the two-year retention period. •Notional dividends accrue on performance share awards to the extent that the performance conditions have been met, delivered as shares or cash at the discretion of the Remuneration Committee at the end of the vesting period. •The Remuneration Committee has discretion to apply malus or clawback to bonus as detailed in the 'Malus and Clawback' section below. |
Opportunity |
The maximum annual grants for the Chief Executive and Chief Financial Officer are 500% and 480% of salary in performance share equivalents, respectively (where a market-price option is valued at one-third of a performance share). Included within that maximum, no more than 375% of salary will be awarded in face-value terms in options, with the balance awarded in performance shares, to any Executive Director in any year. Awards vest at 20% of maximum for threshold performance and 100% of maximum if the performance conditions are met in full. The vesting schedule related to the levels of performance between threshold and maximum, including whether or not this will include an interim stretch performance level, will be determined by the Remuneration Committee on an annual basis and disclosed in the relevant remuneration report for that year. There is a ranking profile for the vesting of the part of the award based on relative total shareholder return, starting at 20% of maximum for achieving the threshold. |
116 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Diageo Long-Term Incentive Plan (DLTIP) continued |
Performance conditions |
The vesting of awards is linked to a range of measures which may include, but are not limited to: •a growth measure (e.g. net sales growth, operating profit growth); •a measure of efficiency (e.g. operating margin, cumulative free cash flow, return on invested capital); •a measure of Diageo’s performance in relation to its peers (e.g. relative total shareholder return); and •a measure relating to our ‘Spirit of Progress‘ (environmental, social or governance) priorities. Measures that apply to performance shares and market-price options may differ, as is the case for current awards. Weightings of these measures may also vary year-on-year. The Remuneration Committee has discretion to amend the performance conditions in exceptional circumstances if it considers it appropriate to do so, e.g. in cases of accounting policy changes, merger and acquisition activities or disposals. Any such amendments would be fully disclosed and explained in the following year’s annual report on remuneration. |
Malus and Clawback |
Under the AIP and DLTIP, the Remuneration Committee has discretion to apply malus and clawback in the circumstances specified in the applicable malus and clawback policy from time to time in place, for example: •Material misstatement of results or an error resulting in overpayment. •Risk failure resulting in material financial loss or any business area being the subject of a regulatory investigation or in breach of regulation. •Employee misconduct/disciplinary action. •Employee accountability for material reputational damage to the group which could have been avoided. •In respect of the application of malus, deterioration in the financial situation of the group which limits the ability to fund incentive awards. •Any other matter which, in the reasonable opinion of the Remuneration Committee, is required to be considered to comply with prevailing legal and/or regulatory requirements. The malus and clawback provisions may be invoked for one year following an AIP cash payment and two years following a DLTIP vesting. Where the Remuneration Committee determines that malus and/or clawback will apply, the Remuneration Committee has discretion to determine the basis of application and the means by which malus and/or clawback will be implemented. The malus and clawback policy will be reviewed from time to time to ensure that the policy is compliant with any regulatory requirements, such as the NYSE listing rules. |
All-employee share plans |
Purpose and link to strategy |
To encourage broader employee share ownership through locally approved plans. |
Operation |
•The company operates tax-efficient all-employee share acquisition plans in various jurisdictions. •Executive Directors’ eligibility may depend on their country of residence, tax status and employment company. |
Opportunity |
Limits for all-employee share plans are set by the tax authorities. The company may choose to set its own lower limits. |
Performance conditions |
Under the UK Share Incentive Plan, the annual award of Freeshares may be based on Diageo plc financial measures which may include, but are not limited to, measures of sales, profit and cash. |
Shareholding requirement |
Purpose and link to strategy |
Ensures alignment between the interests of Executive Directors and shareholders. |
Operation |
•The minimum in-employment shareholding requirement is 500% of base salary for the Chief Executive and 400% of base salary for any other Executive Directors. •Executive Directors are normally expected to build up their in-employment shareholding within five years of their appointment to the Board. •Shares that count towards these minimum shareholding requirements are shares beneficially held by the Executive Director and their connected persons, including Deferred Bonus Share Plan (DBSP) shares within the three-year deferral period, on a net (if post-tax deferral)/notional net (if pre-tax deferral) of tax basis. •Executive Directors are restricted from selling more than 50% of shares which vest under the long-term incentive plan or deferred bonus share plan (excluding the sale of shares to cover tax on vesting and other exceptional circumstances to be specifically approved by the Chief Executive and/or Chair), until the shareholding requirement is met. •In order to provide further long-term alignment with shareholders, Executive Directors will normally be expected to maintain a Diageo shareholding of 100% of the in-employment shareholding requirement (or, if lower, their actual shareholding on cessation) for two years after leaving the company. •The Executive Directors enter into a deed undertaking to comply with the requirement and committing to hold the required number of shares in a specified nominee account. |
117 | Diageo Form 20-F 2025 |
Chair of the Board and Non-Executive Directors' fees |
Purpose and link to strategy |
Supports the attraction and retention of world-class talent and reflects the value of the individual, their skills and experience. |
Operation |
Fees for the Chair and Non-Executive Directors are normally reviewed every year. A proportion of the Chair’s annual fee may be used for the monthly purchase of Diageo ordinary shares, which have to be retained until the Chair retires from the company or ceases to be a Director. Fees are reviewed in light of market practice in the FTSE 30, excluding financial services companies, and anticipated workload, tasks and potential liabilities. The Chair and Non-Executive Directors do not participate in any of the company’s incentive plans nor do they receive pension contributions or benefits. Their travel and accommodation expenses in connection with attendance at Board meetings (and any tax thereon) are paid by the company. The Chair and the Non-Executive Directors are eligible to receive a product allowance or cash equivalent at the same level as the Executive Directors. All Non-Executive Directors have letters of appointment. A summary of their terms and conditions of appointment is available at www.diageo.com. Sir John Manzoni was appointed as Chair of the Board on 5 February 2025 (having been a Non-Executive Director since 1 October 2020), terminable on three months’ notice by either party or, if terminated by the company, by payment of three months’ fees in lieu of notice. |
Opportunity |
Fees for Non-Executive Directors are within the limits set by the shareholders from time to time, with an aggregate limit of £1,750,000, excluding the Chair’s fees. |
Policy considerations
Performance measures
Further details of the performance measures under the fiscal 26 annual incentive plan and measures and targets for DLTIP awards to be made in
September 2025 are set out on page 133. Annual incentive targets will be disclosed retrospectively in next year’s annual report on remuneration as
they are deemed by the Board to be commercially sensitive until after the end of the fiscal year.
Performance targets are set to be stretching yet achievable, and take into account the company’s strategic priorities and business environment.
The Remuneration Committee sets targets based on a range of reference points, including the corporate strategy and broker forecasts for both
Diageo and its peers.
Approach to recruitment remuneration
Diageo is a global organisation selling its products in nearly 180 countries and territories around the world. The ability to recruit and retain the best
talent from all over the world is critical to the future success of the business. People diversity in all its forms is a core element of Diageo’s global
talent strategy and, managed effectively, is a key driver in delivering Diageo’s Growth Ambition.
The Remuneration Committee’s overarching principle for recruitment remuneration is to pay no more than is necessary to attract an Executive
Director of the calibre required to shape and deliver Diageo’s business strategy, recognising that Diageo competes for talent in a global
marketplace. The Committee will seek to align any remuneration package with Diageo’s remuneration policy, but retains the discretion to offer a
remuneration package which is necessary to meet the individual circumstances of the recruited Executive Director and to enable the hiring of an
individual with the necessary skills and expertise. However, the maximum short-term and long-term incentive opportunity will follow the policy,
although awards may be granted with different performance measures and targets in the first year. On appointment of an external Executive
Director, the Committee may decide to compensate for variable remuneration elements the individual forfeits when leaving their current employer.
In doing so, the Committee will ensure that any such compensation would have a fair value no higher than that of the awards forfeited, and would
generally be determined on a comparable basis taking into account factors including the form in which the awards were granted, performance
conditions attached, the probability of the awards vesting (e.g. past, current and likely future performance), as well as the vesting schedules.
Depending on individual circumstances at the time, the Committee has the discretion to determine the type of award (i.e. cash, shares or options),
holding period and whether or not performance conditions would apply.
Any such award would be fully disclosed and explained in the following year’s annual report on remuneration. When exercising its discretion in
establishing the reward package for a new Executive Director, the Committee will carefully consider the balance between the need to secure an
individual in the best interests of the company against the concerns of investors about the quantum of remuneration and, if considered appropriate
at the time, will consult with the company’s biggest shareholders. The Remuneration Committee will provide timely disclosure of the reward
package of any new Executive Director.
118 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Service contracts and policy on payment for loss of office (including takeover provisions)
Executive Directors have rolling service contracts, details of which are set out below. These are available for inspection at the company’s registered
office.
Executive Director | Date of service contract |
Debra Crew | 28 March 2023 |
Nik Jhangiani | 3 May 2024 |
Notice period | The contracts provide for a period of six months’ notice by the Executive Director or 12 months’ notice by the company, the same as would apply for any newly-appointed Executive Director. A payment may be made in lieu of notice consisting of a sum equivalent to the base salary which the Executive Director would have received for any notice period outstanding on the date employment ends and the cost to the company of providing contractual benefits for this period (including pension contributions but excluding incentive plans). If, on the termination date, the Executive Director has exceeded their accrued holiday entitlement, the value of such excess may be deducted by the company from any sums due to them. If the Executive Director, on the termination date, has accrued but untaken holiday entitlement, the company will, at its discretion, either require the Executive Director to take such unused holiday during any notice period or make a payment to them in lieu of it, provided that if the employment is terminated for cause then the Executive Director will not be entitled to any such payment. |
Mitigation | The Remuneration Committee requires (or may exercise its discretion to require) a proportion of the termination payment to be paid in instalments and, upon the Executive Director commencing new employment, to be subject to mitigation. |
Annual Incentive Plan (AIP) | Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, the Executive Director is usually entitled to an incentive payment pro-rated for the period of service during the performance period, which is typically payable at the usual payment date unless the Committee decides otherwise. Where the Executive Director leaves for any other reason, no payment or bonus deferral will be made. The amount is subject to performance measures being met and is at the discretion of the Committee. The Committee has discretion to determine an earlier payment date, for example, on death in service. The bonus may, if the Committee decides, be paid wholly in cash. |
2020 Deferred Bonus Share Plan (DBSP) | Where the Executive Director leaves for any reason other than dismissal, they are entitled to retain any deferred bonus shares, which vest in full on departure, subject to any holding requirements under the post-employment shareholding policy. It is not considered necessary for the bonus deferral to continue to apply after leaving, since the bonus is already earned based on performance, and there is a post-employment shareholding requirement that ensures the Executive Director continues to be invested in the company’s longer-term interests. On a takeover, awards vest in full. On other corporate events, the Remuneration Committee may allow awards to vest in full. |
Diageo Long-Term Incentive Plan (DLTIP) | Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury, redundancy, transfer out of the group and other circumstances at the Remuneration Committee’s discretion during the financial year, awards continue in effect. Awards will vest on the original vesting date with the exception of death in service, when awards will vest on the date of death, in each case unless the Remuneration Committee decides otherwise. When an Executive Director leaves for any other reason, all unvested awards generally lapse immediately. The applicable retention period for vested awards continues for all leavers (other than in cases of disability, ill-health or death in service, where the retention period will end on the date of death or leaving employment), unless the Remuneration Committee decides otherwise. Where awards were granted in the form of options, on vesting they are generally exercisable for 12 months (or six months for approved options). The proportion of the award released depends on the extent to which the performance condition is met. The number of shares is reduced on a pro-rata basis reflecting the length of time the Executive Director was employed by the company during the performance period, unless the Remuneration Committee decides otherwise (for example, in the case of death in service). Where an Executive Director leaves within one month of the normal vesting date of the award, awards are not time pro-rated, unless the Remuneration Committee decides otherwise. On a takeover or other corporate event, awards vest subject to the extent to which the performance conditions are met and, unless the Remuneration Committee decides otherwise, the awards are time pro-rated. Otherwise the Committee, in agreement with the new company, may decide that awards should be swapped for awards over shares in the new company. |
Repatriation/other | In cases where an Executive Director was recruited from outside the United Kingdom and has been relocated to the United Kingdom as part of their appointment, the company may pay reasonable repatriation costs for leavers at the Remuneration Committee’s discretion. The company may also pay for reasonable costs in relation to the termination, for example, tax, legal and outplacement support, where appropriate. |
119 | Diageo Form 20-F 2025 |
Non-Executive Directors’ unexpired terms of
appointment
All Non-Executive Directors are on three-year terms which are
expected to be extended up to a total of nine years. The date of initial
appointment to the Board and the point at which the current letter of
appointment expires for Non-Executive Directors are shown in the
table below.
Non-Executive Directors | Date of appointment to the Board | Current letter of appointment expires |
Sir John Manzoni | 1 October 2020 | AGM 2026 |
Susan Kilsby | 4 April 2018 | AGM 2027 |
Melissa Bethell | 30 June 2020 | AGM 2026 |
Karen Blackett CBE | 1 June 2022 | AGM 2025 |
Valérie Chapoulaud-Floquet | 1 January 2021 | AGM 2027 |
Ireena Vittal | 2 October 2020 | AGM 2026 |
Julie Brown | 5 August 2024 | AGM 2027 |
Payments under previous policies
The Committee reserves the right to make any remuneration payments
and payments for loss of office, notwithstanding that they are not in
line with the policy set out above, where the terms of the payment
were agreed (i) under a previous policy, in which case the provision of
that policy shall continue to apply until such payments have been
made; (ii) before the policy or the relevant legislation came into
effect; or (iii) at a time when the relevant individual was not a
director of the company and, in the opinion of the Committee, the
payment was not in consideration for the individual becoming a
director of the company.
Approach to stakeholder engagement
Shareholder engagement
The Committee values the views of investors and maintains an ongoing
dialogue with a broad group of shareholders and institutional advisors
on remuneration matters. In advance of finalising our proposed policy
that was approved at the 2023 AGM, the Chair of the Remuneration
Committee consulted with the company's largest shareholders and their
representatives about the policy. The responses received from
shareholders were supportive of the proposed change to enhance the
post-cessation shareholding requirement.
Employee engagement on executive remuneration
Karen Blackett took over accountability for global workforce
engagement sessions in fiscal 24 and continued as the designated Non-
Executive Director for workforce engagement through fiscal 25 with
focus group sessions led by her and other Non-Executive Directors. In
fiscal 25, there were two sessions where the Remuneration Committee
Chair shared information with employees about executive
remuneration, including the Directors' Remuneration Policy, the role of
the Remuneration Committee, executive remuneration principles and
structure and how executive pay aligns with pay for the wider
workforce. Fiscal 25 was the second year of undertaking the
engagement on remuneration in this format and it was, again, found
to be productive and informative by the Committee Chair and the
participating employees.
Diageo also runs annual employee engagement surveys, which
gives employees the opportunity to provide feedback and express their
views on a variety of topics, including remuneration. Any comments
relating to Executive Directors' remuneration are fed back to the
Remuneration Committee.
These activities ensure that shareholder views and interests, as well
as the all-employee reward context at Diageo, are considered when
making executive remuneration decisions.
Consideration of wider workforce remuneration
When reviewing Executive Directors’ salaries, the Committee takes
into account the company’s salary budgets for key geographies and,
each year, the Committee has a session reviewing various aspects of
workforce remuneration to deepen its understanding of employee pay
arrangements. There is clear alignment in the approach to pay for
executives and the wider workforce in the way that remuneration
principles are followed, as well as the mechanics of the salary review
process and incentive plan design, which are broadly consistent
throughout the organisation. The performance measures under the
annual incentive plan and long-term incentive plan are the same
for executives and other eligible employees. The key differences are
that a larger percentage of Executive Directors' remuneration is
performance related than that of other employees and salary, benefits
and incentive participation levels vary according to role, seniority and
business priorities.
When reviewing the Directors’ Remuneration Policy, the Committee
considered the remuneration arrangements for the workforce globally,
as well as market practice in the FTSE 30 (excluding financial services)
and Diageo’s global consumer peer group. Given the minimal changes
proposed for the 2023 Directors’ Remuneration Policy, employees were
not specifically consulted on this.
120 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Annual report on remuneration
The following section provides details of how the company’s 2023 Directors' Remuneration Policy was implemented during the year ended 30 June
2025, and how the Remuneration Committee intends to implement the Policy in the year ending 30 June 2026.
Single total figure of remuneration for Executive Directors
The table below details the Executive Directors’ remuneration for the year ended 30 June 2025.
Debra Crew(1) | Nik Jhangiani(1),(9) | Lavanya Chandrashekar(1),(10) | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
$ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | |
Fixed pay | ||||||
Salary | $1,806 | $1,750 | $972 | — | $174 | $1,034 |
Benefits(2) | $317 | $140 | $90 | — | $8 | $47 |
Pension(3) | $269 | $242 | $136 | — | $20 | $140 |
Total fixed pay(7) | $2,392 | $2,132 | $1,198 | — | $202 | $1,221 |
Performance related pay | ||||||
Annual incentive(4) | $1,532 | $868 | $863 | — | $146 | $476 |
Long-term incentives(5) | $931 | $800 | — | — | $198 | $1,593 |
Other incentives(6) | $4 | $4 | — | — | — | $5 |
Total variable pay(7) | $2,467 | $1,672 | $863 | — | $344 | $2,075 |
Other(8) | — | — | $10,224 | — | — | — |
Total single figure of remuneration(7) | $4,859 | $3,804 | $12,285 | — | $546 | $3,296 |
Notes
(1) | Exchange rate | Nik Jhangiani is paid in GBP (annual base salary of £900,000) and shown here in USD for consistency, converted using the cumulative weighted average exchange rate for the 2025 fiscal year. For the year ended 30 June 2025, the exchange rate was £1 = $1.30. Debra Crew and Lavanya Chandrashekar were paid in US dollars. | |
(2) | Benefits | Includes the gross value of all taxable benefits. For Debra Crew, these include a flexible benefits allowance ($22k), tax return preparation ($39k), a housing allowance ($150k), contracted car service ($62k), medical and dental ($24k), product allowance and life and long-term disability cover. Nik Jhangiani's include a flexible benefits allowance ($19k), travel allowance ($11k), tax advice ($26k) and medical, life and long-term disability cover. Lavanya Chandrashekar's benefits included a flexible benefits allowance ($4k), travel allowance ($2k), product allowance and life and long-term disability cover (pro-rata for the period she was an Executive Director). | |
(3) | Pension | For Debra Crew and Lavanya Chandrashekar, pension benefits reflect the increase in the pension fund balances over the year in the Diageo North America Inc. pension plans which are over and above the increase due to inflation. Nik Jhangiani received a pension allowance of 14% of salary, and can opt to take all or part as cash or as a contribution to the Diageo UK Pension Plan. The company pension contribution has been 14% of salary from 1 January 2023 for all Executive Directors, aligned to the rate for the UK workforce. | Page 124 |
(4) | Annual incentive | In accordance with their elections to defer post-tax, one-third of the annual incentive for fiscal 25 shown in the table above for Debra Crew and Lavanya Chandrashekar will be deferred into owned shares. For Debra Crew, these will be released on her termination date of 30 September 2025, and for Lavanya Chandrashekar they will be released immediately, with both required to hold these shares if needed in line with their post-employment shareholding requirement. Nik Jhangiani opted to defer one-third of the annual incentive for fiscal 25 pre-tax into conditional RSUs that will vest after three years. | Page 121 |
(5) | Long- term incentives | Long-term incentives represent the estimated gain (based on the average three-month ADR price to 30 June 2025 of $108.49 for Debra Crew and Lavanya Chandrashekar) delivered through share options and performance shares (including a DESAP award for Debra Crew with a performance period across F23-F25, due to be released on 3 September 2026 subject to the treatment set out on page 131) where performance conditions have been met in the respective financial year. Performance outcomes are shown on page 123. It also includes the value of additional shares earned in lieu of dividends on vested DLTIP performance shares. For Debra Crew, the total reflects the proportion of the performance period since her appointment as interim Chief Executive on 5 June 2023 (appointed as Chief Executive and Executive Director on 8 June 2023). For Lavanya Chandrashekar, the total reflects the proportion of the performance period up to her resignation from the Board and as Chief Financial Officer on 1 September 2024. Of the 2025 long-term incentive amounts shown in the table above, none are related to share price appreciation over the fiscal 23 to fiscal 25 performance period. For fiscal 24, long-term incentives comprise performance shares and share options awarded in 2021 that vested in September 2024 at 58.9% and 56.5% of maximum respectively for Debra Crew and Lavanya Chandrashekar, including dividend equivalents on performance shares. These 2021 long-term incentive amounts have been restated to reflect the ADR share price on the vesting date of $129.11 instead of the average three-month ADR share price used in last year’s report of $137.77. | Page 122 |
(6) | Other incentives | Other incentives include the grant face value of awards made under the all-employee share plans (no performance conditions attached). | |
(7) | Totals | Some figures and sub-totals add up to slightly different amounts than the totals due to rounding. | |
(8) | Other | The ‘Other’ total for Nik Jhangiani notes the joining arrangements awarded to him to compensate for the loss of (1) in-flight share awards and (2) 2024 bonus eligibility, when he joined Diageo from his former employer, Coca-Cola Europacific Partners. (1) Details of the shares granted are detailed on page 125, totals shown here note the Restricted Share Units granted on 3 September 2024 at the value on grant, an award of 260,898 ordinary shares at a grant price of £27.98. (2) Nik was awarded a cash payment of £593,120 in April 2025 to compensate him for loss of 2024 pro-rata bonus eligibility. This was calculated based on the financial multiplier as disclosed in the Coca-Cola Europacific Partners 2024 Annual Report, Nik’s former base salary and target opportunity, and a personal multiplier of 1.1x. GBP figures are converted using the cumulative weighted average exchange rate for fiscal 25 of £1 = $1.30. | |
(9) | Other | Nik Jhangiani was appointed Chief Financial Officer on 1 September 2024. Figures are therefore pro-rata where applicable. | |
(10) | Other | Lavanya Chandrashekar stepped down from the Board on 1 September 2024. Figures are therefore pro-rata where applicable. |
121 | Diageo Form 20-F 2025 |
Looking back on 2025
Annual incentive plan (AIP) payouts for 2025 |
AIP payout for the year ended 30 June 2025
AIP payouts for the Executive Directors serving during the year are based 80% on performance against the group financial measures and 20% on performance
against Individual Business Objectives (IBOs), as assessed by the Remuneration Committee and summarised in the table below.
Group financial measures(1) | ||||||
Measure | Weighting | Threshold | Target | Maximum | Actual | Payout (% of total AIP opportunity) |
Payout opportunity (% maximum) | 25% | 50% | 100% | |||
Net sales value (% growth)(2) | 26.67% | 0.3% | 2.9% | 5.7% | 1.5% | 10.0% |
Operating profit (% growth)(2) | 26.67% | 0.3% | 3.3% | 6.3% | (1.0)% | —% |
Operating cash conversion(3) | 26.67% | 93.0% | 98.1% | 103.0% | 101.4% | 22.0% |
Full year performance for 1 July 2024 - 30 June 2025 | 80.00% | 32.0% | ||||
Individual business objectives | |||
Measure and target | Weighting | Result | Payout (% of total AIP opportunity) |
Debra Crew Chief Executive | 20.0% | 10.0% | |
Global market share performance •Grow or hold total trade market share in 2/3rds of total net sales in measured markets. | 7.5% | We gained or held total trade market share in markets that total 65% of our net sales in fiscal 25.(6) | 3.4% |
Productivity improvement •Deliver an overall productivity improvement in fiscal 25 of $482m across all cost categories. | 7.5% | The productivity target for fiscal 25 has been exceeded: by the end of fiscal 25, we delivered $568m in productivity savings across all cost categories including supply, A&P and indirect overheads. | 4.1% |
Positive Drinking •Deliver an improvement in our promotion of positive drinking in fiscal 25. | 5.0% | In fiscal 25 we delivered strong progress against our Positive Drinking ambition: 2.0m people were educated via an underage drinking programme, with 1.6m educational experiences delivered to promote changes in attitudes to drink driving. | 2.5% |
Nik Jhangiani Chief Financial Officer (from 1 September 2024) | 20.0% | 12.4% | |
Accelerating our Growth Ambition •Design and communication of a new integrated framework to further support the delivery of our Growth Ambition. | 7.5% | Reshaped financial priorities communicated, internally and externally. Fiscal 25 saw the design and launch of the Accelerate programme, with the foundations set to deliver $3 billion in free cash flow per year starting in fiscal 26, with a targeted 3-year cost savings programme identified (as set out on page 23), enabling both reinvestment in future growth and improved operating leverage. | 5.6% |
Finance function strategy review •Development of the Finance functional strategy, reviewing the operating model to ensure the capability and talent pipeline delivers a high-performing function which enables the Growth Ambition. | 7.5% | Defined and embedded new Finance strategic pillars, leadership purpose, and functional priorities to support our Growth Ambition. Detailed review conducted of the talent landscape, with clear and actionable goals set, and significant progress on internal leadership promotions in fiscal 25. Development of best-in-class Senior Finance Leadership development programme, facilitating succession to critical roles and strengthening our Finance talent pipeline. | 4.7% |
Technology transformation •Design of an assured plan with key milestones agreed to ensure the successful delivery of enterprise-wide Finance and technology transformation within budget. | 5.0% | New SAP S/4 HANA upgrade plan designed and launched, which is intended to deliver a derisked technical solution in fiscal 26 for significantly less cost than previous run rate. | 2.1% |
Lavanya Chandrashekar Chief Financial Officer (to 1 September 2024) | 20.0% | 10.0% | |
Fiscal 2024 close •Ensure the timely and efficient closure to the F24 financial year including delivery of preliminary results and final accounts. | 10.0% | Fiscal 24 closed efficiently and in line with expectations. | 5.0% |
CFO transition •Ensure a smooth transition is provided to the new CFO in order to enable a successful transfer of responsibilities for the function. | 10.0% | The Committee judged that an effective and smooth transition to Nik Jhangiani was achieved in fiscal 25. | 5.0% |
122 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Payout | |||||
Group (weighted 80%) | IBO (weighted 20%) | Total (% max) | Total (% annual salary) | Total (’000) USD | |
Debra Crew(4),(5) | 32.0% | 10.0% | 42.0% | 84.0% | $1,532 |
Nik Jhangiani(4),(5) | 32.0% | 12.4% | 44.4% | 88.8% | $863 |
Lavanya Chandrashekar(4),(5) | 32.0% | 10.0% | 42.0% | 84.0% | $146 |
(1) Performance against the AIP measures is calculated using fiscal 25 budgeted exchange rates and is measured on a currency-neutral basis. Performance across net sales value growth, operating
profit growth, and operating cash conversion for fiscal 25 has been assessed including the performance of Cîroc which was disposed of prior to year end.
(2) For AIP purposes, net sales value growth and operating profit growth are calculated on budgeted currency exchange rates, after adjustments for acquisitions and disposals and incorporates the
organic treatment of hyperinflationary economies.
(3) For AIP purposes, operating cash conversion is calculated by dividing cash generated from operations excluding cash inflows/outflows in respect of exceptional items, dividends, maturing
inventories and post-employment payments in excess of the amount charged to operating profit by operating profit before depreciation, amortisation, impairment and exceptional items. The
measure incorporates the organic treatment of hyperinflationary economies. The ratio is stated at the budgeted exchange rate for the year.
(4) AIP payments are calculated using base salary as at 30 June 2025 (or, in the case of Lavanya Chandrashekar, 1 September 2024), in line with the global policy that applies to other employees
across the company.
(5) In accordance with the 2023 Directors' Remuneration Policy and their individual elections to defer post-tax, one-third of Debra Crew and Lavanya Chandrashekar's after-tax AIP payout disclosed in
the table above will be deferred into Diageo shares. For Debra Crew, these will be released on her termination date of 30 September 2025, and for Lavanya Chandrashekar they will be released
immediately, with both required to hold these shares if needed in line with their post-employment shareholding requirement. Nik Jhangiani opted to defer one-third of the AIP award pre-tax into
conditional RSUs that will vest after three years. The number of shares will be disclosed in the fiscal 26 Directors' Remuneration Report.
(6) Market share reflects internal estimates incorporating Nielsen, Association of Canadian Distillers, CGA, Dichter and Neira, Frontline, Intage, IRI, ISCAM, NABCA, State Monopolies, TRAC, Ipsos and
other third-party providers.
(i) No discretion was exercised by the Remuneration Committee in determining the AIP outcome.
Long-term incentive plans (LTIP) vesting in 2025 |
Long-term incentive awards up to and including September 2023 were made under the Diageo 2014 Long Term Incentive Plan (DLTIP), which was
approved by shareholders at the AGM in September 2014. Awards are designed to incentivise Executive Directors and senior managers to deliver
long-term sustainable performance and are subject to performance conditions measured over a three-year period. Awards are granted on an annual
basis in both performance shares and share options. Awards granted to Executive Directors vest at 20% of maximum for threshold performance, and
100% of the award will vest if the performance conditions are met in full, with a straight-line payout between threshold and maximum.
Share options – granted in September 2022, vesting in September 2025
In September 2022, Debra Crew (although not an Executive Director at the time of grant) received share option awards over ADRs under the DLTIP,
with an exercise price of $176.95. Nik Jhangiani was appointed to the Board in September 2024, and therefore does not have a 2022 DLTIP share
option award. The award was subject to a performance condition assessed over a three-year period based on the achievement of the following
equally weighted performance measures:
•Relative total shareholder return (TSR) ranked against the TSR of a peer group of international drinks and consumer goods companies; and
•Cumulative free cash flow (FCF).
The vesting profile for grants to Executive Directors for relative TSR is shown below:
TSR ranking (out of 17) | Vesting (% max) | TSR ranking (out of 17) | Vesting (% max) | TSR peer group (16 companies) | ||||
1st, 2nd or 3rd | 100 | 7th | 55 | AB InBev | Heineken | Pernod Ricard | ||
4th | 95 | 8th | 45 | Brown-Forman | Kimberly-Clark | Procter & Gamble | ||
5th | 75 | 9th | 20 | Carlsberg | L'Oréal | Reckitt Benckiser | ||
6th | 65 | 10th or below | 0 | The Coca-Cola Company | Mondelēz International | Unilever | ||
Colgate-Palmolive | Nestlé | |||||||
Groupe Danone | PepsiCo | |||||||
Performance shares – awarded in September 2022, vesting in September 2025
In September 2022, Debra Crew (although not Executive Director at the time of grant) received a performance share award under the DLTIP. Nik
Jhangiani was appointed to the Board in September 2024, and therefore does not have a 2022 DLTIP performance share award. Awards vest after a
three-year period subject to the achievement of three performance conditions outlined below:
Organic net sales value growth (weighted 40%);
Profit before exceptional items and tax (PBET) growth (weighted 40%); and
ESG measures (water efficiency, carbon reduction, positive drinking, and inclusion and diversity metrics) weighted 20%.
Notional dividends accrue on awards and are paid out either in cash or shares on the number of shares which vest.
123 | Diageo Form 20-F 2025 |
Vesting outcome for 2022 DLTIP performance share and share option awards in September 2025
The 2022 DLTIP performance share award vested at 12.5% of maximum for Debra Crew. Vesting and treatment for Lavanya Chandrashekar's 2022
DLTIP award can be found in the 'Payments to former Directors' section on page 131. The 2022 DLTIP share options lapsed having not met the
threshold performance level for either performance measure as detailed below:
Vesting of 2022 DLTIP(5) | Weighting | Threshold | Midpoint | Maximum | Actual | Debra Crew vesting (% maximum)(5)(6) | Lavanya Chandrashekar vesting (% maximum)(5)(6) |
Vesting if performance achieved (% maximum)(6) | 20%/25% | 60%/62.5% | 100% | ||||
Organic net sales value growth(1) | 40.0% | 4.5% | 6.5% | 8.5% | 2.5% | — | — |
Profit before exceptional items and tax (PBET) growth(2) | 40.0% | 5% | 8.5% | 12% | (3.5%) | — | — |
Carbon reduction (ESG) | 5.0% | 10.7% | 14.2% | 17.6% | 18.8% | 5.0% | 5.0% |
Water efficiency (ESG) | 5.0% | 6.3% | 9.2% | 12.1% | 6.0% | — | — |
Positive drinking (ESG) | 5.0% | 2.6m | 3.3m | 4.0m | 5.0m | 5.0% | 5.0% |
Inclusion & diversity - % female leaders globally (ESG) | 2.5% | 45% | 46% | 47% | 43.0% | — | — |
Inclusion & diversity - % ethnically diverse leaders globally (ESG) | 2.5% | 42.0% | 43.0% | 44.0% | 46.0% | 2.5% | 2.5% |
Vesting of performance shares (% maximum) | 12.5% | 12.5% | |||||
Cumulative free cash flow (FCF)(3) | 50.0% | $10,175m | $11,372m | $12,569m | $8,875m | — | — |
Relative total shareholder return(4) | 50.0% | 9th | — | 3rd | 15th | — | — |
Vesting of share options (% maximum) | — | — |
(1) Organic net sales growth is calculated at budgeted currency exchange rates, after adjustments for acquisitions and disposals and incorporates the organic treatment of
hyperinflationary economies.
(2) PBET growth is presented on a constant currency basis and it excludes the impact of acquisitions and disposals. The impact of hyperinflation on operating profit is considered under the same
organic methodology as for net sales while the impact on other lines (primarily on finance charges) is excluded. This metric also includes adjustment to exclude the fair value remeasurement of
contingent considerations, earn out arrangements and biological assets and to exclude post-employment credits. Furthermore, the metric excluded the interest on current year’s share
repurchase programme (SRP) and excludes the year-over-year change of M&A related interest.
(3) Cumulative FCF is based on the outcome for each of the three years within the performance period, measured before exceptional items and on an FX neutral basis by adjusting actual outcomes
back to the base year exchange rates, and incorporates the organic treatment of hyperinflationary economies. Furthermore, the cash flow impact of any material business development
activities such as share repurchase programmes, acquisitions and disposals, which were not known and planned at the beginning of the vesting period, are excluded from the three-year
performance. Note that FCF has been restated in USD following the change in functional currency.
(4) Relative total shareholder return (TSR) is measured as the percentage growth in Diageo’s share price (assuming all dividends and capital distributions are re-invested) compared to the TSR of a
peer group of 16 international drinks and consumer goods companies. TSR calculations are based on an averaging period of six months and converted to a common currency (US dollars).
Calculation is performed and provided by WTW.
(5) No discretion was exercised by the Remuneration Committee in determining the long-term incentive outcomes.
(6) At the time of grant of the 2022 awards, Debra Crew was not an Executive Director. The vesting schedule for awards granted to executives below the Board has a threshold vesting of 25% of
maximum (62.5% at midpoint). Vesting at threshold for awards granted to Executive Directors is 20% of maximum (60% at midpoint).
Vesting outcome for 2022 DESAP performance share award for Debra Crew
In March 2022 Debra Crew was granted an award of performance shares under the Diageo Exceptional Stock Award Plan (DESAP). Vesting of the first
tranche of shares under this award was subject to the achievement of a performance hurdle based on winning or holding Diageo global market share
in at least 2/3rds of total net sales value in measured markets in fiscal 23, 24 and 25 (average across the three years, with each year measured
separately). The performance condition has been met with an average over the three financial years of 70%. Diageo achieved 70% in fiscal 23, 75% in
fiscal 24, and 65% in fiscal 25. 8,796 shares in total were awarded, of which 6,075 applied during the performance period in relation to time as
Chief Executive and therefore disclosed with the single figure of remuneration on page 120. Shares will be released on the original vesting date in
September 2026, as per the loss of office details set out in page 131.
Summary of DESAP, DLTIP performance share awards and DLTIP options vesting
Award | Award Date | Awarded (ADRs) | Vesting (% Max) | Vesting (ADRs) | Option price | ADR grant price | Dividend equivalent share | Estimated value ($'000)(1) | |
Debra Crew(2) | DESAP | 03/03/2022 | 6,075 | 100% | 6,075 | — | $197.06 | — | $659 |
Performance Shares | 02/09/2022 | 18,392 | 12.5% | 2,299 | — | $195.29 | 203 | $272 | |
Share Options | 02/09/2022 | 18,392 | — | — | $176.95 | $195.29 | — | — |
(1) The total long-term incentives value shown in the single figure of remuneration on page 120 is the total of performance shares and share options in the table above and is based on an average
ADR price for the last three months of the fiscal year ($108.49).
(2) The number of ADRs and the resulting value of DESAP, DLTIP performance shares and DLTIP options relating to Debra Crew in the table above are pro-rata figures that reflect the proportion of
the three-year performance period in which she was appointed as Chief Executive (pro-rata from 5 June 2023). The original number of DESAP, DLTIP performance shares and DLTIP share options
awarded is shown on page 126. The total number of DESAP shares awarded was 8,796 of which 6,075 is shown above. The total number of DLTIP performance shares awarded was 26,629 and
3,328 vested in total of which 2,299 is shown above. The total value of the vested awards including dividend equivalent shares (203 ADRs) is $930,609. No DLTIP share options vested.
The Committee considered Diageo’s overall business performance and value created for shareholders over the period and determined that the
outcomes were fair and appropriate; consequently no adjustment to the vesting outcomes were made. It also considered the level of difficulty of
the targets and determined that the vesting outcome was consistent with Diageo's long-term performance and returns to shareholders. No share
options were exercised by any Director during the year ended 30 June 2025.
124 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Pensions and benefits in the year ended 30 June 2025 |
Benefits provisions for the Executive Directors are in accordance with the information set out in the Directors’ Remuneration Policy.
Pension arrangements
Debra Crew and Lavanya Chandrashekar are members of the Diageo North America Inc. Supplemental Executive Retirement Plan (SERP) with an
accrual rate of 14% of base salary during the year ended 30 June 2025. The SERP is an unfunded, non-qualified supplemental retirement
programme. Under the plan, accrued company contributions are subject to quarterly interest credits. Under the rules of the SERP, they can
withdraw the balance of the plan six months after leaving service or age 55, if later and the balance may be withdrawn in either a lump sum or five
equal annual instalments, depending on the size of the balance.
Debra Crew and Lavanya Chandrashekar participated in the US Cash Balance Plan and the Benefit Supplemental Plan (BSP), until 30 September 2022
and June 2021 respectively, and have accrued benefits under both plans. The Cash Balance Plan is a qualified funded pension arrangement.
Employer contributions were 10% of pay capped at the Internal Revenue Service (IRS) limit. The BSP is a non-qualified unfunded arrangement;
notional employer contributions were 10% of pay above the IRS limit. Interest (notional for the BSP) is credited quarterly on both plans.
Nik Jhangiani receives a 14% of base salary pension allowance and can opt to use this in full or in part and contribute to the UK Diageo Pension Plan.
In fiscal 25, Nik contributed £8,333 to the UK plan (£833.33 per month), with the balance of the pension allowance paid in cash.
In the event of death in service, a lump sum of six times base salary is payable for Debra Crew and Nik Jhangiani.
The table below shows the pension benefits accrued by each current and former Executive Director as at year end. The accrued US benefits for
Debra Crew and Lavanya Chandrashekar are one-off cash balance amounts.
30 June 2025 | 30 June 2025(2) | 30 June 2024 | |
Executive Director | UK benefit value £'000 | US benefit value $'000 | US benefit value $'000 |
Debra Crew(1) | n/a | 1,558 | 1,245 |
Nik Jhangiani | 105 | n/a | n/a |
Lavanya Chandrashekar(2) | n/a | 719 | 689 |
(1) Debra Crew's US benefits reflect an increase of $313,000 over the year to 30 June 2025. This increase reflects $275,000 which is due to additional pension benefits earned over the year (of which
$269,000 is over and above the increase due to inflation, and is reported in the total single figure of remuneration table on page 120); and, $38,000 which is due to interest earned over the
year on her deferred US benefits.
(2) Lavanya Chandrashekar's US benefits reflect an increase of $30,000 over the year pro-rated to 1 September 2024. This increase reflects $28,000 which is due to additional pension benefits earned
over the year (of which $20,000 is over and above the increase due to inflation, and is reported in the total single figure of remuneration table on page 120); and $2,000 of which is due to
interest earned on her deferred US benefits.
The Normal Retirement Age applicable to each Director’s US benefits depends on the pension scheme, as outlined below.
Executive Director | US benefits (Cash Balance Plan) | US benefits (BSP) | US benefits (SERP) | |
Debra Crew | 65 | 6 months after leaving service, or age 55 if later | 6 months after leaving service, or age 55 if later | |
Lavanya Chandrashekar | 65 | 6 months after leaving service, or age 55 if later | 6 months after leaving service, or age 55 if later |
125 | Diageo Form 20-F 2025 |
Long-term incentive awards made during the year ended 30 June 2025 |
On 3 September 2024, Debra Crew and Nik Jhangiani received awards of performance shares and market-priced share options under the DLTIP based
on a percentage of base salary as outlined below. The three-year period over which performance will be measured is 1 July 2024 to 30 June 2027.
The performance measures and targets for awards granted in September 2024 are outlined below. Net sales and profit before exceptional items and
tax are key levers for driving top and bottom line growth. The free cash flow measure was selected because it represents a robust indicator of cash
performance consistent with typical external practice and is a key strategic priority. Total shareholder return, the only relative performance
measure under the plan, provides good alignment with shareholder interests and increases the leverage based on share price growth. Finally, the
environmental, social and governance (ESG) measure (20% of total performance share award), which was introduced in 2020, reinforces the
stretching and strategically important goals under Diageo's ‘Spirit of Progress’ ESG action plan to help create an inclusive and sustainable world. The
definitions for the ESG measures were set out on page 146 of the annual remuneration report for fiscal 24.
Performance shares | Share options | |||||||||
2024 DLTIP | Organic net sales value (CAGR) | Organic profit before exceptional items and tax (CAGR) | Greenhouse gas reduction | Water efficiency index | Positive drinking | % Female leaders | % Ethnically diverse leaders | Cumulative free cash flow | Relative TSR | |
Weighting | 40% | 40% | 5% | 5% | 5% | 2.5% | 2.5% | 50% | 50% | |
Target range | 3.0% - 6.0% | 3.1% - 9.1% | 16.3% - 29.9% | 6.2% - 11.2% | 2.5m - 3.7m | 46% - 50% | 45% - 49% | $7,150m - $9,950m | 9th - 3rd and above | |
20% of DLTIP awards will vest at threshold, with vesting in a straight line up to 100% if the maximum level of performance is achieved. As explained
in the remuneration policy, one performance share is deemed equal in value at grant to three share options.
Executive Director | Date of grant | Plan | Share type | Awards made during the year | Exercise price | Face value '000 | Face value (% of salary) |
Debra Crew | 03/09/2024 | DLTIP - share options | ADR | 48,182 | $132.46 | $6,841 | 375% |
Debra Crew | 03/09/2024 | DLTIP - performance shares | ADR | 48,182 | $6,841 | 375% | |
Nik Jhangiani | 03/09/2024 | DLTIP - share options | ORD | 115,796 | £24.79 | £3,240 | 360% |
Nik Jhangiani | 03/09/2024 | DLTIP - performance shares | ORD | 115,796 | £3,240 | 360% |
The proportion of the awards outlined above that will vest is dependent on the achievement of performance conditions and continued employment,
and the actual value received may be nil. The vesting outcomes will be disclosed in the 2027 Directors' Remuneration Report.
In accordance with the plan rules, the number of performance shares and share options granted under the DLTIP was calculated by using the
average closing Ordinary Share (ORD) and ADR price for the last six months of the preceding financial year (£27.98 and $141.99, respectively). This
price is used to determine the face value in the table above. In accordance with the plan rules, the exercise price was calculated using the average
closing ORD and ADR price of the three days preceding the grant date (£24.79 and $132.46, respectively).
Grant of share awards
The Directors' Remuneration Policy specifically permits the company to introduce a one-off share award as part of recruitment arrangements for
Executive Directors. The Committee was satisfied that the circumstances of Nik Jhangiani's recruitment and, in particular, the forfeiture of
incentives that he would have otherwise been entitled with his previous employer, Coca-Cola Europacific Partners, were sufficiently unusual such
that a one-off share award fully met the requirements of LR9.3.2.
The terms of these awards are materially in the same form as awards granted under the Diageo 2023 Long-Term Incentive Plan which was approved
by shareholders in September 2023, as set out in the 2023 AGM notice available on the company’s website, except the plan terms relating to the
timing of awards and shareholder approval of amendments to the terms do not apply. In the event Nik resigns or is dismissed by the company within
a year of his start date he will pay back to the company 100% of the net of tax value of his vested awards, reducing to 50% of the net of tax value of
his vested awards if this happens between one and two years of his start date.
Details of the awards are as follows:
Name | Plan | Grant date | Ordinary shares granted | Award calculation share price(2) | Face value on grant '000 | Vesting date |
Nik Jhangiani | Special Recruitment Award - Restricted Stock Unit | 03/09/2024 | 139,385 | £27.98 | £3,900 | 03/03/2025 |
Nik Jhangiani | Special Recruitment Award - Performance Shares(1) | 03/09/2024 | 42,172 | £27.98 | £1,180 | 09/03/2026 |
Nik Jhangiani | Special Recruitment Award - Restricted Stock Unit | 03/09/2024 | 58,970 | £27.98 | £1,650 | 09/03/2026 |
Nik Jhangiani | Special Recruitment Award - Restricted Stock Unit | 03/09/2024 | 8,934 | £27.98 | £250 | 07/03/2027 |
Nik Jhangiani | Special Recruitment Award - Restricted Stock Unit | 03/09/2024 | 53,609 | £27.98 | £1,500 | 07/03/2027 |
(1) Vesting of this tranche is subject to a performance underpin. The performance underpin is based on the achievement of a productivity savings target across fiscal 25 and H1 in fiscal 26. The
relevant target and level of performance achievement will be disclosed in the fiscal 26 Directors' Remuneration Report. All other tranches are released subject only to continued employment.
(2) Based on the average six-month ordinary share price between 1 January 2024 - 30 June 2024.
126 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Outstanding share plan interests |
Plan name | Date of award | Performance period | Year of vesting | Award calculatio n share price | Exercise price | Number of shares/ options at 30 June 2024(1) | Granted | Vested/ exercised | Dividend equivalen t shares released | Lapsed | Number of shares/ options at 30 June 2025(1) | |
Debra Crew | ||||||||||||
DLTIP - Share Options | Sep 2022 | 2022-2025 | 2025 | $176.95 | 26,629 | 26,629 | ADR | |||||
DLTIP - Share Options | Sep 2023 | 2023-2026 | 2026 | $166.67 | 36,971 | 36,971 | ADR | |||||
DLTIP - Share Options | Sep 2024 | 2024-2027 | 2027 | $132.46 | 48,182 | 48,182 | ADR | |||||
Total unvested share options subject to performance in ordinary shares(2) | 447,128 | ORD | ||||||||||
DLTIP - Share Options(3) | Sep 2020 | 2020-2023 | 2023 | $133.88 | 23,308 | 23,308 | ADR | |||||
DLTIP - Share Options(3) | Sep 2021 | 2021-2024 | 2024 | $194.75 | 27,019 | 27,019 | — | ADR | ||||
Total vested but unexercised share options in ordinary shares(2) | 93,232 | ORD | ||||||||||
DLTIP - Performance Shares | Sep 2021 | 2021-2024 | 2024 | $174.97 | 27,019 | 17,331 | 1,417 | 11,105 | — | ADR | ||
Total vested shares subject to performance in ordinary shares(2) | — | ORD | ||||||||||
DLTIP - Performance Shares(4) | Sep 2022 | 2022-2025 | 2025 | $195.29 | 26,629 | 26,629 | ADR | |||||
DLTIP - Performance Shares | Sep 2023 | 2023-2026 | 2026 | $177.50 | 36,971 | 36,971 | ADR | |||||
DLTIP - Performance Shares | Sep 2024 | 2024-2027 | 2027 | $141.99 | 48,182 | 48,182 | ADR | |||||
DESAP - Performance Shares(5) | Mar 2022 | 2023-2025 | 2026 | $197.06 | 8,796 | 8,796 | ADR | |||||
DESAP - Performance Shares(5) | Mar 2022 | 2024-2026 | 2027 | $197.06 | 8,930 | 8,930 | ADR | |||||
DESAP - Performance Shares(5) | Mar 2022 | 2025-2027 | 2028 | $197.06 | 8,930 | 8,930 | ADR | |||||
Total unvested shares subject to performance in ordinary shares(2) | 553,752 | ORD | ||||||||||
DESAP - Restricted Stock Unit(5) | Mar 2022 | 2027 | $197.06 | 8,796 | 8,796 | ADR | ||||||
DESAP - Restricted Stock Unit(5) | Mar 2022 | 2028 | $197.06 | 8,930 | 8,930 | ADR | ||||||
DESAP - Restricted Stock Unit(5) | Mar 2022 | 2029 | $197.06 | 8,930 | 8,930 | ADR | ||||||
Total unvested shares not subject to performance in ordinary shares(2) | 106,624 | ORD | ||||||||||
Lavanya Chandrashekar(6) | ||||||||||||
DLTIP - Share Options(3) | Sep 2018 | 2018-2021 | 2021 | $140.89 | 3,832 | 3,832 | ADR | |||||
DLTIP - Share Options(3) | Sep 2018 | 2018-2021 | 2021 | $140.89 | 1,064 | 1,064 | ADR | |||||
DLTIP - Share Options(3) | Sep 2021 | 2021-2024 | 2024 | $194.75 | 20,060 | 20,060 | — | ADR | ||||
Total vested but unexercised share options in ordinary shares(2) | 19,584 | ORD | ||||||||||
DLTIP - Share Options | Sep 2022 | 2022-2025 | 2025 | $176.95 | 18,512 | 3,058 | 15,454 | ADR | ||||
DLTIP - Share Options | Sep 2023 | 2023-2026 | 2026 | $166.67 | 21,182 | 10,553 | 10,629 | ADR | ||||
Total unvested share options subject to performance in ordinary shares(2) | 104,332 | ORD | ||||||||||
DLTIP - Performance Shares | Sep 2021 | 2021-2024 | 2024 | $174.97 | 20,060 | 12,342 | 1,009 | 8,727 | — | ADR | ||
Total vested shares subject to performance in ordinary shares(2) | — | ORD | ||||||||||
DLTIP - Performance Shares(4) | Sep 2022 | 2022-2025 | 2025 | $195.29 | 18,512 | 3,058 | 15,454 | ADR | ||||
DLTIP - Performance Shares | Sep 2023 | 2023-2026 | 2026 | $177.50 | 21,182 | 10,553 | 10,629 | ADR | ||||
Total unvested shares subject to performance in ordinary shares(2) | 104,332 | ORD | ||||||||||
Nik Jhangiani | ||||||||||||
DLTIP - Share Options | Sep 2024 | 2024-2027 | 2027 | £24.79 | 115,796 | 115,796 | ORD | |||||
Total unvested share options subject to performance in ordinary shares | 115,796 | ORD | ||||||||||
DLTIP - Performance Shares | Sep 2024 | 2024-2027 | 2027 | £27.98 | 115,796 | 115,796 | ORD | |||||
SRA - Performance Shares(7) | Sep 2024 | 2024-2026 | 2026 | £27.98 | 42,172 | 42,172 | ORD | |||||
Total unvested shares subject to performance in ordinary shares | 157,968 | ORD | ||||||||||
SRA - Restricted Stock Unit(7) | Sep 2024 | 2024-2025 | 2025 | £27.98 | 139,385 | 139,385 | — | ORD | ||||
SRA - Restricted Stock Unit(7) | Sep 2024 | 2024-2026 | 2026 | £27.98 | 58,970 | 58,970 | ORD | |||||
SRA - Restricted Stock Unit(7) | Sep 2024 | 2024-2027 | 2027 | £27.98 | 8,934 | 8,934 | ORD | |||||
SRA - Restricted Stock Unit(7) | Sep 2024 | 2024-2027 | 2027 | £27.98 | 53,609 | 53,609 | ORD | |||||
Total unvested shares not subject to performance in ordinary shares | 121,513 | ORD | ||||||||||
127 | Diageo Form 20-F 2025 |
(1) For unvested awards, this is the number of shares/options initially awarded. For exercisable share options, this is the number of outstanding options. All share options have an expiry date of 10
years after the date of grant.
(2) ADRs have been converted to ORDs (one ADR is equivalent to four ordinary shares) for the purpose of calculating the total number of vested and unvested shares and options.
(3) The total number of share options granted under the DLTIP in 2018, 2020 and 2021 showing as outstanding as at 30 June 2025 are vested but unexercised share options.
(4) Performance shares and share options granted under the DLTIP in September 2022 and due to vest in September 2025 are included here as unvested share awards subject to performance
conditions, although the awards have also been included in the single figure of remuneration table on page 120, since the performance period ended during the year ended 30 June 2025.
(5) The performance shares awarded to Debra Crew in 2020 and vested in 2023 under the Diageo Exceptional Stock Award Plan (DESAP) were granted in recognition of equity which was forfeited on
joining Diageo in 2020 and had the same performance measures and targets as the 2020 DLTIP performance shares. Debra Crew was granted a number of performance shares and restricted
stock units under the DESAP in March 2022 for incentive and retention purposes. The DESAP performance shares will vest based on a performance hurdle of winning or holding market share in at
least 2/3rds of total NSV in measured markets over the respective three-year performance periods (F23-F25 for awards due to vest in September 2026, F24-F26 for awards due to vest in
September 2027 and F25-F27 for awards due to vest in September 2028). The DESAP restricted stock units vest subject to continued employment up to the vesting date.
(6) The shareholding information for Lavanya Chandrashekar is stated as at her resignation date from the Board on 1 September 2024.
(7) These awards were granted to Nik Jhangiani on joining Diageo as compensation for loss of in-flight long-term incentives from his former employer. Details are set out on page 125.
Directors’ shareholding requirement and share interests |
The beneficial interests of the Directors who held office during the year ended 30 June 2025 (and their connected persons) in the ordinary shares
(or ordinary share equivalents) of the company are shown in the table below.
Ordinary shares or equivalent(1),(2) | ||||||
4 August 2025 | 30 June 2025 (or date of cessation, if earlier) | 30 June 2024 (or date of appointment if later) | Shareholding requirement (% salary)(3) | Shareholding at 30 June 2025 (% salary)(3) | Shareholding requirement met | |
Chair | ||||||
Sir John Manzoni | 4,683 | 4,348 | 3,007 | |||
Javier Ferrán(4)(8) | n/a | 317,717 | 314,498 | |||
Executive Directors | ||||||
Debra Crew(4)(5)(8) | n/a | 166,100 | 122,736 | 500% | 239% | No - see 'Loss of office' section on page 131 |
Lavanya Chandrashekar (4)(5)(6) | n/a | 59,402 | 30,406 | 400% | 149% | Shareholding at time of cessation shown |
Nik Jhangiani(7) | 73,758 | 73,750 | n/a | 400% | 166% | No - to be met by December 2029 |
Non-Executive Directors | ||||||
Susan Kilsby(4) | 2,600 | 2,600 | 2,600 | |||
Melissa Bethell | 2,668 | 2,668 | 2,668 | |||
Valérie Chapoulaud-Floquet | 2,224 | 2,224 | 2,154 | |||
Alan Stewart(8) | n/a | 7,550 | 7,550 | |||
Ireena Vittal | — | — | — | |||
Karen Blackett CBE | 702 | 702 | 702 | |||
Julie Brown(9) | 2,700 | 2,700 | n/a | |||
Notes
(1) Each person listed beneficially owns less than 1% of Diageo’s ordinary shares. Ordinary shares held by Directors have the same voting rights as all other ordinary shares.
(2) Any change in shareholding between the end of the financial year on 30 June 2025 and the last practicable date before publication of this report, being 4 August 2025, is outlined in the table
above.
(3) Both the shareholding requirement and shareholding at 30 June 2025 are expressed as a percentage of base salary on 30 June 2025 and calculated using a three-month average share price for period
ending 30 June 2025 of £20.26. For the purposes of the shareholding requirement, any vested but unexercised share options are reflected on an estimated net of tax basis.
(4) Javier Ferrán, Debra Crew, Lavanya Chandrashekar and Susan Kilsby have share interests in ADRs (one ADR is equivalent to four ordinary shares). The share interests in the table are stated as
ordinary share equivalents.
(5) The total share interests shown above include Deferred Bonus Plan Shares for Debra Crew (1,309 ADRs) and Lavanya Chandrashekar (3,087 ADRs).
(6) Lavanya Chandrashekar resigned from the Board on 1 September 2024. Under the post-employment shareholding requirement policy, Lavanya Chandrashekar is required to continue to hold
Diageo shares equal in value to 400% of her salary, or actual shareholding if lower, for two years post-cessation of employment.
(7) Nik Jhangiani joined the Board on 1 September 2024.
(8) Debra Crew, Javier Ferrán and Alan Stewart resigned from the Board on 16 July 2025, 5 February 2025 and 26 September 2024 respectively, and therefore no details are included for their
shareholdings after their dates of cessation.
(9) Julie Brown joined the Board on 5 August 2024.
Relative importance of spend on pay
The graphs below illustrate the relative importance of spend on pay (total remuneration of all group employees) compared with distributions to
shareholders (total dividends plus, for fiscal 24 only, the share buyback programme but excluding transaction costs), and the percentage change
from the year ended 30 June 2024 to the year ended 30 June 2025. There are no other significant distributions or payments of profit or cash flow.
Distributions to shareholders (29.1)% | Staff pay 7.5% |
128 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
CEO total remuneration and TSR performance |
The graph below shows the total shareholder return for Diageo plc and the FTSE 100 Index since 30 June 2015 and demonstrates the relationship
between pay and performance for the Chief Executive, using current and previously published single total remuneration figures. The FTSE 100 Index
has been chosen because it is a widely recognised performance benchmark for large companies in the United Kingdom.
Total shareholder return - value of hypothetical £100 holding | Chief Executive total remuneration (includes legacy LTIP awards) (£'000) |
ò | Diageo |
ò | FTSE 100 |
ò | Chief Executive total remuneration |
Ivan Menezes(1) £'000 F16 | Ivan Menezes(1) £'000 F17 | Ivan Menezes(1) £'000 F18 | Ivan Menezes(1) £'000 F19 | Ivan Menezes(1) £'000 F20 | Ivan Menezes(1) £'000 F21 | Ivan Menezes(1) £'000 F22 | Ivan Menezes(1) £'000 F23 | Debra Crew(1)(2) £'000 F23 | Debra Crew(1)(2) £'000 F24 | Debra Crew(1)(2) £'000 F25 | |
Chief Executive total remuneration(2) | 4,156 | 3,399 | 8,995 | 11,776 | 2,273 | 6,019 | 7,343 | 10,582 | 403 | 3,026 | 3,750 |
Annual incentive(3) | 65.0% | 68.0% | 70.0% | 61.0% | 0.0% | 93.8% | 93.8% | 37.3% | 35.4% | 24.8% | 42.0% |
Share options(3) | 0.0% | 0.0% | 60.0% | 73.1% | 27.5% | 10.0% | 61.5% | 77.5% | 77.5% | 0.0% | 0.0% |
Performance shares(3) | 31.0% | 0.0% | 70.0% | 89.3% | 10.0% | 29.3% | 59.3% | 98.7% | 98.8% | 58.9% | 12.5% |
(1) To enable comparison, Ivan Menezes’ and Debra Crew's single total figure of remuneration has been converted into sterling using the average weighted exchange rate for the relevant financial
year. The figure represented in the graph for fiscal 23 is the combined single figure total for Ivan Menezes and Debra Crew.
(2) The single total figure of remuneration for Debra Crew in fiscal 23, fiscal 24 and fiscal 25 includes pro-rata long-term incentive plan awards proportionate from the duration of her appointment
as Chief Executive.
(3) % of total maximum opportunity. F25 total also includes a DESAP award which will vest at 100% of maximum opportunity, granted prior to Debra Crew's appointment as Chief Executive. 12.5%
shown above reflects the 2022 DLTIP performance share element only for consistency year-on-year.
Remuneration for the wider workforce and CEO pay ratio |
Alignment of Executive pay with the wider workforce
There is clear alignment in the approach to pay for executives and the wider workforce in the way that remuneration principles are followed, as
well as the mechanics of the salary review process and incentive plan design, which are broadly consistent throughout the organisation. There is a
strong focus on performance-related pay, and the performance measures under the annual incentive plan and long-term incentive plan are the
same for executives and other eligible employees. The reward package for Executive Directors is consistent with that of the senior management
population, however, a much higher proportion of total remuneration for the Executive Directors is linked to business performance, compared to
the rest of the employee population.
The structure of our reward packages is based on the principle that it should enable Diageo to attract and retain the best talent globally within our
broader industry. It is driven by local market practice, as well as the level of seniority and accountability, reflecting the global nature of our
business. Diageo is committed to fostering an inclusive and diverse workplace, and creating a culture where every individual can thrive. Reflective
of this, pay parity and consistency of treatment for all employees are critical to the reward practices across the organisation. The reward
framework is regularly reviewed to ensure employees are rewarded fairly and appropriately, in line with the business strategy, performance
outcomes, competitive market practice and our inclusion agenda.
During the year, and following the introduction of this format in 2024, the Remuneration Committee Chair explained to employees the Directors'
Remuneration Policy, the role of the Committee, executive remuneration principles and structure and sought their feedback on wider reward
matters as part of the workforce engagement sessions.
129 | Diageo Form 20-F 2025 |
Remuneration Committee review of wider workforce pay
Each year, the Remuneration Committee has a detailed session reviewing wider workforce remuneration. In fiscal 25, the review focused on:
•the prior year’s annual reward cycle outcomes;
•retaining talent in a global market including a spotlight on key talent segments within Diageo;
•the level of differentiation across our reward programmes and alignment with performance;
•an update on new global programmes such as 'One World' (Diageo's global all employee share plan);
•the progress of the 'Celebrate' recognition platform following its launch in fiscal 24;
•the global roll out of the market-leading Carers Leave policy; and
•an update on pay transparency and pay fairness given the increased emphasis in this area globally.
The Committee also considered the challenges of attracting and retaining critical talent in a global marketplace at all levels as well as the all-
employee reward priorities for the coming year. Information on wider workforce reward is also provided as required throughout the year to enable
the Committee to consider the broader employee context when making executive remuneration decisions, for example the annual salary increase
budgets by country.
Supporting our employees
We continue to focus on all aspects of the wellbeing of our employees. Our global group of wellbeing champions work with regional and market
teams to drive wellbeing initiatives locally, coming together each quarter for a global connect.
We monitor the cost-of-living in all our geographies using a formal monitoring process and have implemented actions, typically by awarding off-
cycle salary increases in high-inflation geographies. In fiscal 25, we rolled out our new One World all employee global share plan across over 50
countries and during the year all 17,000 eligible employees were awarded £500 of Free Shares, creating 15,000 new Diageo shareholders.
Across the year we also embedded Celebrate, our global recognition platform. This platform helps support a culture of speed and agility and
enables leaders and peers to recognise actions in the moment. This year we saw 140,000 recognition moments, equivalent to one every four
minutes. We continually look to enhance our employee offering, innovating with our market leading benefit policies that support and demonstrate
our commitment to supporting all our employees. As an example, following its introduction in the UK, this year saw a global roll out of our Carers
Leave policy providing all employees with two weeks paid leave per year to care, or arrange care, for dependents. We believe that our market
leading benefits support the attraction and, crucially, retention of the best talent.
CEO pay ratio
In accordance with The Companies (Miscellaneous Reporting) Regulations 2018, the table below sets out Diageo’s CEO pay ratios for the year ended
30 June 2025. These CEO pay ratios provide a comparison of the Chief Executive’s total remuneration based on Debra Crew's total single figure of
remuneration, converted into sterling, with the equivalent remuneration for the employees paid at the 25th (P25), 50th (P50) and 75th (P75)
percentile of Diageo’s workforce in the United Kingdom. Also shown are the salary and total remuneration for each quartile employee.
Year | Method | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio |
2025(1) | Option A(4) | 74:1 | 55:1 | 44:1 |
2025 | Total pay and benefits | £50,683 | £67,767 | £86,061 |
2025 | Salary | £39,907 | £48,877 | £66,160 |
2024(2) | Option A(4) | 68:1 | 50:1 | 39:1 |
2023(2)(3) | Option A(4) | 231:1 | 177:1 | 137:1 |
2022(3) | Option A(4) | 146:1 | 114:1 | 90:1 |
2021 | Option A(4) | 127:1 | 100:1 | 79:1 |
2020 | Option A(4) | 50:1 | 38:1 | 31:1 |
2019 | Option A(4) | 265:1 | 208:1 | 166:1 |
(1) Debra Crew's total single figure of remuneration figure (see page 120 for details) in fiscal 25 used in the calculation of the CEO pay ratio includes pro-rata long-
term incentive plan awards proportionate to the duration of her appointment as Chief Executive.
(2) 2024, 2023 and 2022 CEO pay ratios have been updated to reflect the value of the updated prior year single figure of remuneration which incorporates long-term
incentives based on the actual share price at vesting, rather than the average share price in the last three months of the financial year which had been used for the
original disclosure.
(3) 2023 CEO pay ratios comprise the sum of both Sir Ivan Menezes' and Debra Crew's total single figure of remuneration converted to sterling.
(4) Only people employed in the United Kingdom and with the same number of contractual working hours throughout the full 12-month period have been included in
the calculation. Inclusion of employees outside of this group would require a complex simulation of full-time annual remuneration based on a number of assumptions
and would not have a meaningful impact on the ratio.
130 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Methodology
Consistent with the approach for Diageo’s disclosure in previous years, the methodology used to identify the employees at each quartile for 2025 is
Option A, as defined in the regulations. We believe this is the most robust and accurate approach, and is in line with shareholder expectations.
Total full-time equivalent remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant year and
has, other than where noted below, been calculated in line with the methodology for the ‘single total figure of remuneration’ for the Chief
Executive (shown on page 120 of this report). The total remuneration calculations were based on data as at 30 June 2025. Actual remuneration was
converted into the full-time equivalent for the role and location by pro-rating earnings to reflect full-time contractual working hours and these
figures were then ranked to identify the employees sitting at the percentiles. To ensure that the total remuneration for the selected median, 25th
and 75th percentile employee is sufficiently representative of those positions, we calculated the total remuneration for a number of employees
above and below each of the selected median, 25th and 75th percentile UK employees and used the median value. In light of financial performance
outcomes being signed off close to the publication of the Annual Report, the Diageo Group business multiple, which is applicable to the majority of
UK employees, has been used to calculate all payments under the annual incentive, although some employees may receive a variation on this
multiple in practice. Pension values for each employee are not calculated on an actuarial basis as for the Chief Executive, but rather as the notional
cost of the company’s pension contribution during the financial year, according to the relevant section of the pension scheme for each individual.
This approach allows meaningful data for a large group of people to be obtained in a more efficient way.
Points to note for the year ended 30 June 2025
The median level of remuneration and resulting pay ratio for 2025 is consistent with the pay and progression policies for Diageo’s UK employees as a
whole and reflect the impact of performance-related pay on total remuneration for the year. As the Chief Executive has a larger proportion of her
total remuneration linked to business performance than other employees in the UK workforce, the ratio has increased at each quartile in fiscal 25
for the Chief Executive, driven by higher annual incentive and LTI totals when compared to fiscal 24.
Change in pay for Directors compared to wider workforce
The table below shows the percentage change in Directors’ remuneration and average remuneration of employees on an annual basis. Given the
small size of Diageo plc’s workforce, data for all employees of the group has also been included.
2025 | 2024 | 2023 | 2022 | 2021 | |||||||||||
Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | |
Plc employee average(1) | 3.4% | 74.4% | 6.5% | 6.2% | (44.8)% | 10.0% | 9.0% | (61.3)% | (7.2)% | 11.1% | 25.8% | 10.5% | 5.1% | n/a(5) | 38.8% |
Average global employee(2) | 5.6% | 26.9% | 4.3% | 11.1% | (17.6)% | 3.1% | 12.9% | (41.6)% | 17.0% | 6.4% | 38.4% | 11.7% | — | 278.8% | 12.6% |
Executive Directors(3) | |||||||||||||||
Debra Crew | 3.2% | 76.6% | 125.9% | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) |
Nik Jhangiani | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) |
Lavanya Chandrashekar(6) | (83.2%) | (69.3%) | (69.3)% | 3.8% | (34.1%) | (22.1%) | 2.3% | (58.8%) | (89.4%) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) | n/a(5) |
Non-Executive Directors(4) | |||||||||||||||
Sir John Manzoni (Chair)(7) | 228.3% | — | (37.8%) | 3.6% | — | 241.5% | 3.0% | — | 20.0% | — | — | — | — | — | — |
Melissa Bethell | 4.1% | — | (13.3%) | 3.6% | — | 218.4% | 3.0% | — | 10.1% | 2.3% | — | 16.0% | n/a(5) | — | — |
Karen Blackett CBE | 22.8% | — | (31.6%) | 3.6% | — | 4231.3% | n/a(5) | — | n/a(5) | n/a(5) | — | n/a(5) | — | — | — |
Valérie Chapoulaud- Floquet | 4.1% | — | 76.4% | 3.6% | — | 159.0% | 3.0% | — | 108.5% | — | — | — | n/a(5) | — | — |
Javier Ferrán(8) | (39.9%) | — | (56.2%) | 4.1% | — | 132.9% | 2.3% | — | (22.4%) | 8.3% | — | 28.8% | — | — | — |
Susan Kilsby | 5.3% | — | 31.2% | 4.5% | — | 182.7% | 2.6% | — | 125.7% | 3.8% | — | 300.0% | 9.6% | — | (87.7%) |
Alan Stewart(9) | (74.8%) | — | (47.7%) | 2.7% | — | 252.8% | 3.2% | — | — | 4.7% | — | — | 2.4% | — | — |
Ireena Vittal | 4.1% | — | 31.9% | 3.6% | — | 689.2% | 3.0% | — | 734.0% | — | — | — | — | — | — |
(1)Around 20 UK-based employees are employed by Diageo plc. Their remuneration has been calculated in line with the approach used for the CEO pay-ratio calculation and the average year-on-
year change has been reported. Only those employed during the full financial year have been included in calculations.
(2)Calculated by dividing staff cost related to salaries, bonus and benefits by the average number of employees on a full-time equivalent basis, as disclosed in note 4c to the financial statements
under staff costs and average number of employees on page 160, but reduced to account for the inclusion of Executive Directors in reported figures. The salary, bonus and benefits cost data
used for calculation are subsets of the Wages and salaries figure disclosed in this note. The salary data used for this calculation has been adjusted to exclude costs related to severance
payments which are included in staff costs, and last year’s disclosure has been updated in line with this for consistency. In line with the approach for Directors, the bonus values used for the
calculation reflect the bonus earned in relation to performance during the relevant financial year.
(3)Calculated using the data from the single total figure of remuneration table on page 120.
(4)Calculated using the fees and taxable benefits disclosed under Non-Executive Directors’ remuneration in the table on page 132. Taxable benefits for Non-Executive Directors comprise a product
allowance as well as expense reimbursements relating to attendance at Board meetings, which may vary year-on-year.
(5)N/a refers to a nil value in the previous year or an incomplete prior year, meaning that the year-on-year change cannot be calculated.
(6)Lavanya Chandrashekar resigned from the Board on 1 September 2024.
(7)Sir John Manzoni was appointed as Chair of the Board on 5 February 2025, having served as a Non-Executive Director since 1 October 2020.
(8)Javier Ferrán retired from the Board on 5 February 2025.
(9)Alan Stewart retired from the Board on 26 September 2024.
131 | Diageo Form 20-F 2025 |
Payments to former Directors
Lavanya Chandrashekar was granted a DLTIP award in 2022, whilst Chief Financial Officer and Executive Director, subsequently stepping down and
resigning from the Board on 1 September 2024 part way through the 2022 DLTIP performance period. Consistent with the performance outcomes on
page 123, 12.5% of the performance share element of the award will vest and be released on completion of a further two-year holding period. The
share options lapse, having not met the performance conditions. As set out in last year's Directors' Remuneration Report, DLTIP awards were
retained on a pro-rated basis, subject to performance conditions, on leaving Diageo. The original number of DLTIP shares granted, and the pro-rated
number retained on the termination date of 31 December 2024, can be found in the Share Interest table on page 126.
Award | Award Date | Awarded (ADRs) | Vesting (% Max) | Vesting (ADRs) | Option price | ADR grant price | Dividend equivalent share | Estimated value ($'000)(1) | |
Lavanya Chandrashekar(1) | Performance Shares | 02/09/2022 | 13,394 | 12.5% | 1,674 | — | $195.29 | 148 | $198 |
Share Options | 02/09/2022 | 13,394 | — | — | $176.95 | $195.29 | — | — |
(1) The number of ADRs and the resulting value of DLTP performance share awards and options relating to Lavanya Chandrashekar in the table above are pro-rata figures that reflect the proportion
of the three-year performance period in which she was in role as Chief Financial Officer before stepping down from the Board on 1 September 2024. The original number of performance shares and
share options awarded is shown on page 126. The total number of Performance Shares originally awarded was 18,512, which was reduced and pro-rated for time employed to 15,454 on leaving
Diageo. 1,931 shares vested in total of which 1,674 is shown above in relation to the proportion of time as Chief Financial Officer and Executive Director. The total value of the vested award
including dividend equivalent shares (148 ADRs) is $197,721, based on an average ADR price for the last three months of the fiscal year ($108.49). No DLTIP share options vested.
Payments for loss of office
Lavanya Chandrashekar
Lavanya Chandrashekar stepped down as Chief Financial Officer and as a director of Diageo on 1 September 2024, with the relevant details and
values (if applicable) on the Committee’s determination of terms set out in the 2024 Directors’ Remuneration Report (pages 144-145). Lavanya's
employment with Diageo terminated on 31 December 2024.
The Remuneration Committee exercised its discretion to treat Lavanya as a good leaver under the incentive arrangements in accordance with the
Directors’ Remuneration Policy. The award under Diageo’s annual incentive plan (AIP) for fiscal 25, set out on page 121, is calculated on a time pro-
rated basis reflecting the period as Chief Financial Officer and a director of Diageo. Lavanya’s unvested Diageo Long-Term Incentive Plan (DLTIP)
awards (granted in 2022 and 2023) will continue and vest (subject to the extent that the relevant performance conditions, assessed at the time of
vesting, are satisfied and subject to time pro-rating to reflect the period employed during the performance period) on the original vesting dates.
With 2022 options lapsed, to the extent they vest, options granted in 2023 will be exercisable until 4 September 2027. The company’s malus and
clawback Policy will continue to apply.
Payments incurred in fiscal 25 were in relation to Lavanya's repatriation from the UK to the US, and salary and benefits payable over the period of
garden leave between 1 September and 31 December 2024. Flights and shipping of possessions were provided in accordance with the company’s
Global Mobility Policy at a cost of £59,438. Salary and benefits over the garden leave period were $371,526.
Debra Crew
It was announced on 16 July 2025 that Debra Crew would be stepping down as Chief Executive and as a director of Diageo by mutual agreement with
immediate effect. Details of the remuneration arrangements for Debra, which were approved by the Remuneration Committee and are in
accordance with the Directors’ Remuneration Policy, are set out below. Full details of the values of any amounts paid will be reported in the
Directors' Remuneration Report next year. Debra's service contract provides for a twelve-month notice period which commenced on 16 July 2025.
Debra will remain an employee until 30 September 2025, during which period she will receive her normal contractual remuneration and normal
benefits and allowances. On ceasing employment and subject to mitigation, Debra will receive a payment in lieu of notice in respect of salary and
benefits for the remainder of her notice period.
Incentive awards for fiscal 25 arising prior to her termination of employment will be treated in accordance with their normal terms. As disclosed in
this report, Debra remains eligible for a payment under the F25 Annual Incentive Plan (AIP) for the year completed, with one third of the payment
being deferred in to Deferred Bonus Shares. Debra also remains eligible for the vesting of Performance Shares and Share Options granted under the
2022 Diageo Long-Term Incentive Plan (DLTIP) award, subject to a two-year post-vesting holding period. Options which vest, along with the already
vested options which Debra holds, will be exercisable for 18 months following the date of termination.
Following her termination, Debra will have no entitlement for a payment under the F26 AIP and will forfeit DLTIP awards granted in 2023 and 2024
which are unvested on departure. No further LTIP awards will be granted to Debra.
Debra also holds awards granted in 2022 under the DESAP relating to her role prior to her appointment as Chief Executive. In accordance with the
Remuneration Policy, the Remuneration Committee exercised its discretion to treat Debra as a 'good leaver' in respect of these awards which will be
retained, subject to proration for time and performance, and vest on their normal terms between September 2026 and September 2029.
Debra is subject to a post-employment shareholding requirement for two years following her termination date. She is required to retain the lower of
the level of her actual shareholding as at the leave date (including any net shares released over the two-year period until the 500% of salary
requirement is met), or shares to the value of 500% of salary. The company’s malus and clawback policy will also continue to apply.
In line with internal policies and the Directors’ Remuneration Policy, the company has supported Debra with the cost of her repatriation back to the
United States. This support amounts to $182,438 net of tax in addition to the provision of shipping and flights. Debra is also entitled to receive
funding in respect of COBRA medical continuation coverage and access to an annual medical corresponding to the period of her notice period.
As permitted under the Directors’ Remuneration Policy, Debra will receive a contribution of up to £15,000 plus VAT for legal fees incurred in
connection with agreeing her departure terms. She will also receive tax return preparation support for a period of up to five years, corresponding to
the periods over which she may receive deferred vesting of the incentive plan awards referred to above (up to a maximum cost of £40,000 plus VAT
per annum).
Non-Executive Directors |
Fee policy
Sir John Manzoni’s fee as non-executive Chair was set at £700,000 on appointment in February 2025, unchanged from the fee for the former non-
executive Chair, Javier Ferrán. The Chair’s fee is appropriately positioned against our comparator group of FTSE 30 companies excluding financial
services. The Executive Directors and the Chair approved an increase in the base fee for Non-Executive Directors of 4.2% (from £108,000 to
£112,500), effective 1 October 2024, below the level of salary increase seen across the wider UK workforce. Additionally, fees for the Chair of the
Audit Committee and Chair of the Remuneration Committee were increased from £35,000 to £37,500 to reflect the increased contribution of these
Committees and the positioning against our comparator group (previously at the lower quartile of FTSE 30 companies excluding financial services).
132 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
This represents the first increase to fees for Committee Chairs since October 2021. The fee for the Senior Independent Director was also increased
from £35,000 to £37,500.
The Executive Directors and the Chair also approved the introduction of a fee for the designated Non-Executive Director accountable for workforce
engagement. The fee of £20,000 for the Workforce Engagement Lead, effective 1 July 2024, reflects the increased time commitment required and
contribution made on behalf of the Board, and was set supported by external benchmarking.
2025 | 2024 | |
Per annum fees | £'000 | £'000 |
Chair of the Board | 700 | 700 |
Non-Executive Directors | ||
Base fee | 113 | 108 |
Senior Independent Director | 38 | 35 |
Chair of the Audit Committee | 38 | 35 |
Chair of the Remuneration Committee | 38 | 35 |
Workforce Engagement Lead | 20 | n/a |
Single total figure of remuneration for Non-Executive Directors
Fees £'000 | Taxable benefits £'000(1) | Total £'000(2) | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
Chair | ||||||
Sir John Manzoni - appointed as Chair 5 February 2025(3) | 351 | 107 | 2 | 4 | 354 | 111 |
Javier Ferrán - retired 5 February 2025 | 416 | 692 | 2 | 4 | 418 | 696 |
Non-Executive Directors | ||||||
Melissa Bethell | 111 | 107 | 4 | 5 | 115 | 112 |
Karen Blackett, CBE | 131 | 107 | 3 | 5 | 134 | 112 |
Valérie Chapoulaud-Floquet | 111 | 107 | 23 | 13 | 134 | 120 |
Susan Kilsby | 185 | 176 | 19 | 14 | 204 | 190 |
Alan Stewart(4) | 36 | 142 | 2 | 4 | 38 | 146 |
Ireena Vittal | 111 | 107 | 13 | 10 | 124 | 117 |
Julie Brown(5) | 135 | n/a | 2 | n/a | 138 | n/a |
(1) Taxable benefits include a product allowance and expense reimbursements relating to travel, accommodation and subsistence in connection with attendance at Board meetings during the
year, which are deemed by HMRC to be taxable in the United Kingdom. The amounts in the single total figure of remuneration table above include any tax gross-ups on the benefits provided by
the company on behalf of the Directors. Non-taxable expense reimbursements have not been included in the single figure of remuneration table above.
(2) Total may not sum to fees and taxable benefits columns due to rounding.
(3) Sir John Manzoni was appointed as Chair of the Board on 5 February 2025, having served as a Non-Executive Director since 1 October 2020.
(4) Alan Stewart retired from the Board at the 2024 AGM on 26 September 2024.
(5) Julie Brown was appointed to the Board on 5 August 2024.
133 | Diageo Form 20-F 2025 |
Looking ahead to 2026
Salary increases for the year ending 30 June 2026 |
The Remuneration Committee reviewed base salaries and agreed to
maintain Nik Jhangiani's salary at the current level for fiscal 26. Nik
will receive a Salary Supplement Allowance of £300,000 per annum
which will be pro-rated to reflect the duration of his period served as
Interim Chief Executive. The Salary Supplement Allowance is
pensionable and forms part of the salary for the fiscal 26 AIP
calculation.
Nik Jhangiani | ||
Salary at 1 October ('000) | 2025 | 2024 |
Base salary | £900 | £900 |
% increase (over previous year) | 0% | n/a |
Annual incentive design for the year ending 30 June 2026 |
The measures and targets for the annual incentive plan are reviewed
annually by the Remuneration Committee and are carefully chosen to
drive financial and individual business performance goals related to the
company’s short-term strategic operational objectives. As set out in
the Chair's statement on page 109, we have introduced a new measure
for fiscal 26 within the annual incentive plan. Operating Cash
Conversion has been replaced with Adjusted Operating Cash Flow. The
plan design for Executive Directors for the year ending 30 June 2026
will comprise the following performance measures and weightings with
targets set for the full financial year:
•net sales value (% growth) (26.67% weighting): a key performance
measure of year-on-year top line growth;
•operating profit (% growth) (26.67% weighting): stretching profit
targets drive operational efficiency and influence the level of
returns that can be delivered to shareholders through increases in
share price and dividend income not including exceptional items or
exchange;
•adjusted operating cash flow (26.67% weighting): ensures focus on
efficient cash flow management through the fiscal year; and
•individual business objectives (20% weighting): measurable
deliverables that are specific to the individual and are focused on
supporting the delivery of key strategic objectives.
The Committee has discretion to adjust the payout to reflect
appropriately an individual's contribution or the overall business
context.
Details of the targets for the year ending 30 June 2026 will be
disclosed retrospectively in next year’s annual report, by which time
they will no longer be deemed commercially sensitive by the Board.
The annual incentive opportunity for Executive Directors will remain
consistent with prior years, equal to 100% of base salary at target, with
a maximum opportunity of 200% of base salary.
Long-term incentive awards to be made in the year ending 30 June 2026 |
The long-term incentive plan measures are reviewed annually by the
Remuneration Committee and are selected to reward long-term
consistent performance in line with Diageo’s business strategy and to
create alignment with the delivery of value for shareholders. The
Committee has ensured that the incentive structure for senior
management does not raise environmental, social and governance risks
by inadvertently motivating irresponsible behaviour.
As per last year, DLTIP awards to be made in September 2025 will
comprise awards of both performance shares and share options, based
on stretching targets against the key performance measures as outlined
in the table on page 134, assessed over a three-year performance
period. As noted in the Chair's statement on page 109, we will
introduce a return on invested capital measure within the performance
share element of the DLTIP, and the relative total shareholder return
measure within the share option element will be based on a refreshed
constituent group for the awards to be made in September 2025:
TSR peer group (18 companies) | ||
AB InBev | Constellation Brands | PepsiCo |
Brown-Forman | Groupe Danone | Pernod Ricard |
Campari Group | Heineken | Procter & Gamble |
Carlsberg | L'Oréal | Reckitt Benckiser |
The Coca-Cola Company | Mondelēz International | Rémy Cointreau |
Colgate-Palmolive | Nestlé | Unilever |
The Committee set fiscal 26 financial targets by considering a number
of factors including historical performance, consumer trends amid
ongoing macroeconomic challenges, market conditions and the
competitive landscape.
The ESG measures in the DLTIP for fiscal 26 have been reshaped to
ensure they remain focused on the key parts of our ‘Spirit of Progress‘
action plan, ensuring Diageo continues to make a positive impact on
the environment and society. Each goal is weighted equally:
reduction in greenhouse gas emissions in our direct operations (Scope 1
& 2);
% of owned and TPO sites replenishing more water than they use (in
water stressed areas); and
reach of Diageo positive drinking education programmes and
partnerships (measured in millions of people).
In setting ESG targets, the Committee took account of the material
progress made to date across the various measures versus the 'Spirit of
Progress' action plan. The Committee considered the opportunity to
continuously improve against high levels of achievement and has set
targets in this context.
The performance share element of the DLTIP applies to the Executive
Committee and the top level of senior leaders across the organisation
worldwide, whilst the share option element is applicable to a much
smaller population comprising only members of the Executive
Committee. One market price performance-based option is valued at
one-third of a performance share.
Awards are calculated on the basis of a six-month average share price
for the period ending 30 June 2025. This averaging period, which is in
line with Diageo's standard practice, helps to smooth out volatility in
share price.
It is intended that a DLTIP award to the equivalent of 480% of base
salary will be made to Nik Jhangiani in 2025, comprising 360% of salary
in performance shares and the equivalent of 120% of salary in market
price share options. In performance share equivalents, one market
price option is valued at one-third of a performance share.
The table below summarises the annual DLTIP award for Nik Jhangiani
to be made in 2025.
Grant value (% salary) | Interim Chief Executive |
Performance share equivalents (1 share: 3 options) | |
Performance shares | 360% |
Share options | 120% |
Total | 480% |
134 | Diageo Form 20-F 2025 |
DIRECTORS' REMUNERATION REPORT continued
Performance conditions for long-term incentive awards to be made in the year ending 30 June 2026(1)
Performance shares | Share options | |||||||||
Environmental, social & governance (ESG) | ||||||||||
Organic net sales (CAGR) | Organic profit before exceptional items and tax (CAGR) | Adjusted return on invested capital (ROIC) (2) | Greenhouse gas reduction | Water replenishme nt | Positive drinking | Vesting schedule | Relative Total Shareholder Return | Cumulative free cash flow ($m) | Vesting schedule | |
Weighting (% total) | 28.3% | 28.3% | 28.3% | 5% | 5% | 5% | 50.0% | 50.0% | ||
Maximum | 4.5% | 9.1% | 130bps | 15.8% | 85% | 10.0m | 100% | 4th and above | $10,400 | 100% |
Midpoint | 3.0% | 6.1% | 80bps | 12.2% | 80% | 8.1m | 60% | – | $9,000 | 60% |
Threshold | 1.5% | 3.1% | 30bps | 8.6% | 76% | 6.3m | 20% | 10th | $7,600 | 20% |
(1) Details of the considerations taken in to account when setting the targets for the DLTIP by the Committee are set out on page 133.
(2) New for fiscal 26, adjusted return on invested capital is calculated based on the cumulative basis points improvement over the F26-F28 performance period, measured each fiscal year.
Additional information
Key management personnel related party
transactions
Key management personnel of the group comprises the Executive and
Non-Executive Directors, the members of the Executive Committee and
the Company Secretary.
Diageo plc has granted rolling indemnities to the Directors and the
Company Secretary, uncapped in amount, in relation to certain losses
and liabilities which they may incur in the course of acting as Directors
or Company Secretary (as applicable) of Diageo plc or of one or more
of its subsidiaries. These indemnities are categorised as a 'qualifying
third-party indemnity' for the purposes of the Companies Act 2006 and
continue to be in place at 30 June 2025 on an ongoing basis.
Other than disclosed in this report, no Director had any interest,
beneficial or non-beneficial, in the share capital of the company. Save
as disclosed above, no Director has or has had any interest in any
transaction which is or was unusual in its nature, or which is or was
significant to the business of the group and which was effected by any
member of the group during the financial year, or which having been
effected during an earlier financial year, remains in any respect
outstanding or unperformed. There have been no material transactions
during the last three years to which any Director or officer, or 3% or
greater shareholder, or any spouse or dependent thereof, was a party.
There is no significant outstanding indebtedness to the company from
any Directors or officer or 3% or greater shareholder.
Statutory and audit requirements
This report was approved by a duly authorised Committee of the Board
of Directors and was signed on its behalf on 13 August 2025 by Susan
Kilsby who is Chair of the Remuneration Committee.
The Board has followed the principles of good governance as set out in
the UK Corporate Governance Code and complied with the regulations
contained in the Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008, the Listing Rules
of the Financial Conduct Authority and the relevant schedules of the
Companies Act 2006.
The Companies Act 2006 and the Listing Rules require the company’s
auditor to report on the audited information in their report and to
state that this section has been properly prepared in accordance with
these regulations.
The annual remuneration report is subject to an advisory vote by
shareholders at the AGM on 6 November 2025. Terms defined in this
Directors' Remuneration Report are used solely herein.
135 | Diageo Form 20-F 2025 |
DIRECTORS' REPORT
Directors’ report
The Directors present the Directors’ report and audited consolidated
financial statements for the year ended 30 June 2025.
Company status
Diageo plc is a public limited liability company incorporated and
domiciled in England and Wales with registered number 23307 and
registered office and principal place of business at 16 Great
Marlborough Street, London W1F 7HS, United Kingdom. The company's
telephone number is +44 (0) 20 7947 9100. The company's agent in the
United States is General Counsel, Diageo North America, Inc., 175
Greenwich Street, 3 World Trade Center, New York, NY 10007, United
States. The company was incorporated on 21 October 1886. It is the
ultimate holding company of the group, a full list of whose
subsidiaries, partnerships, associates, joint ventures and joint
arrangements is set out in note 10 to the financial statements set out
on pages 206-211.
Directors
The Directors of the company who currently serve are shown in the
section ‘Board of Directors’ on pages 78 and 79, and the names of
additional and former Directors who served during the year are listed
on page 77. In accordance with the UK Corporate Governance Code, all
Directors will retire by rotation at the AGM and offer themselves for
re-election. Further details of Directors’ contracts, remuneration and
their interests in the shares of the company at 30 June 2025 are given
in the Directors’ Remuneration Report. The Directors’ powers are
determined by UK legislation and Diageo’s articles of association. The
Directors may exercise all the company’s powers provided that
Diageo’s articles of association or applicable legislation do not
stipulate that any powers must be exercised by the members.
Auditor
The auditor, PricewaterhouseCoopers LLP, is willing to continue in
office and a resolution for its re-appointment as auditor of the
company will be submitted to the AGM.
Disclosure of information to the auditor
In accordance with Section 418 of the Companies Act 2006, the
Directors who held office at the date of approval of this Directors’
report confirm that, so far as they are each aware, there is no relevant
audit information of which the company’s auditor is unaware; and each
Director has taken all reasonable steps to ascertain any relevant audit
information and to ensure that the company’s auditor is aware of
that information.
Corporate governance statement
The corporate governance statement, prepared in accordance with
rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance and
Transparency Rules, comprises the following sections of the Annual
Report: the ‘Corporate governance report’, the ‘Audit Committee
report’ and the ‘Additional information for shareholders’.
Significant agreements – change of control
The following significant agreements contain certain termination and
other rights for Diageo’s counterparties upon a change of control of the
company. Under the partners agreement governing the company’s 34%
investment in Moët Hennessy SAS (MH) and Moët Hennessy
International SAS (MHI), if a Competitor (as defined therein) directly or
indirectly takes control of the company (which, for these purposes,
would occur if such Competitor acquired more than 34% of the voting
rights or equity interests in the company), LVMH Moët Hennessy – Louis
Vuitton SA (LVMH) may require the company to sell its interests in MH
and MHI to LVMH.
The master agreement governing the operation of the group’s market-
level distribution joint ventures with LVMH states that if any person
acquires interests and rights in the company resulting in a Control
Event (as defined) occurring in respect of the company, LVMH may
within 12 months of the Control Event either appoint and remove the
chair of each joint venture entity governed by such master agreement,
who shall be given a casting vote, or require each distribution joint
venture entity to be wound up. Control Event for these purposes is
defined as the acquisition by any person of more than 30% of the
outstanding voting rights or equity interests in the company, provided
that no other person or entity (or group of affiliated persons or
entities) holds directly or indirectly more than 30% of the voting rights
in the company.
Related party transactions
Transactions with related parties are disclosed in note 21 to the
consolidated financial statements.
Major shareholders
At 30 June 2025, the following substantial interests (3% or more) in the
company’s ordinary share capital (voting securities) had been notified
to the company:
Shareholder | Number of ordinary shares | Percentage of issued ordinary share (excluding treasury shares) | Date of notification of interest |
BlackRock Investment Management (UK) Limited (indirect holding)(1) | 147,296,928 | 5.89% | 3 December 2009 |
Capital Research and Management Company (indirect holding) | 124,653,096 | 4.99% | 28 April 2009 |
Massachusetts Financial Services Company (indirect holding)(2) | 111,560,606 | 4.99% | 29 February 2024 |
(1)On 25 January 2024, BlackRock Inc. filed an Amendment to Schedule 13G with the SEC,
reporting that as of 25 January 2024, 192,713,107 ordinary shares representing 8.62% of
the issued ordinary share capital were beneficially owned by BlackRock Inc. and its
subsidiaries (including BlackRock Investment Management (UK) Limited).
(2)On 31 March 2025, Massachusetts Financial Services Company filed an Amendment to
Schedule 13G with the SEC, reporting that as of 31 March 2025, 110,110,419 ordinary
shares representing 4.95% of the issued ordinary share capital were beneficially owned by
Massachusetts Financial Services Company and its subsidiaries.
The company has not been notified of any other substantial interests in
its securities since 30 June 2025. The company’s substantial
shareholders do not have different voting rights. Diageo, so far as is
known by the company, is not directly or indirectly owned or
controlled by another corporation or by any government. Diageo knows
of no arrangements, the operation of which may at a subsequent date
result in a change of control of the company.
As at the close of business on 4 August 2025, 311,655,585 ordinary
shares, including those held through American Depositary Shares
(ADSs), were held by approximately 2,360 holders (including American
Depositary Receipt (ADR) holders) with registered addresses in the
United States, representing approximately 14.01% of the outstanding
ordinary shares (excluding treasury shares). At such date, 77,830,083
ADSs were held by 2,023 registered ADR holders. Since certain of such
ordinary shares and ADSs are held by nominees or former Grand
Metropolitan PLC or Guinness plc ADR holders who have not re-registered
their ADSs, the number of holders may not be representative of the
number of beneficial owners in the United States or the ordinary
shares held by them.
Employment policies
A key strategic imperative of the company is to attract, retain and
grow a pool of diverse, talented employees. Diageo recognises that a
diversity of skills and experiences in its workplace and communities
will provide a competitive advantage. To enable this, the company has
various global employment policies and standards, covering such issues
as resourcing, data protection, human rights, dignity at work, health,
safety and wellbeing. These policies and standards seek to ensure that
the company treats current or prospective employees justly, solely
according to their abilities to meet the requirements and standards of
their role and in a fair and consistent way. This includes giving full and
fair consideration to applications from prospective employees who are
disabled, having regard to their aptitudes and abilities, and not
discriminating against employees under any circumstances (including in
relation to applications, training, career development and promotion)
on the grounds of any disability. In the event that an employee, worker
or contractor becomes disabled in the course of their employment or
engagement, Diageo aims to ensure that reasonable steps are taken to
136 | Diageo Form 20-F 2025 |
STRATEGIC REPORT | GOVERNANCE Report | FINANCIAL STATEMENTS | ADDITIONAL INFORMATI ON |
DIRECTORS' REPORT continued
accommodate their disability by making reasonable adjustments to
their existing employment or engagement.
Trading market for shares
Diageo plc ordinary shares are listed on the London Stock Exchange
(LSE). Diageo ADSs, representing four Diageo ordinary shares each, are
listed on the New York Stock Exchange (NYSE). The principal trading
market for the ordinary shares is the LSE. Diageo shares are traded on
the LSE’s electronic order book. Orders placed on the order book are
displayed on-screen through a central electronic system and trades are
automatically executed, in price and then time priority, when orders
match with corresponding buy or sell orders. Only member firms of the
LSE, or the LSE itself if requested by the member firm, can enter or
delete orders on behalf of clients or on their own account. All orders
are anonymous. Although use of the order book is not mandatory, all
trades, whether or not executed through the order book and regardless
of size, must be reported within three minutes of execution, but may
be eligible for deferred publication.
The Markets in Financial Instruments Directive (MiFID) allows for
delayed publication of large trades with a sliding scale requirement
based on qualifying minimum thresholds for the amount of
consideration to be paid/the proportion of average daily turnover
(ADT) of a stock represented by a trade. Provided that a trade/
consideration equals or exceeds the qualifying minimum size, it will be
eligible for deferred publication ranging from 60 minutes from time of
trade to three trading days after time of trade.
American depositary shares
Fees and charges payable by ADR holders
Citibank N.A. serves as the depositary (Depositary) for Diageo’s ADS
programme. Pursuant to the deposit agreement dated 14 February
2013 between Diageo, the Depositary and owners and holders of ADSs
(the Deposit Agreement), ADR holders may be required to pay various
fees to the Depositary, and the Depositary may refuse to provide any
service for which a fee is assessed until the applicable fee has been
paid. In particular, the Depositary, under the terms of the Deposit
Agreement, shall charge a fee of up to $5.00 per 100 ADSs (or fraction
thereof) relating to the issuance of ADSs; delivery of deposited
securities against surrender of ADSs; distribution of cash dividends or
other cash distributions (i.e. sale of rights and other entitlements);
distribution of ADSs pursuant to stock dividends or other free stock
distributions, or exercise of rights to purchase additional ADSs;
distribution of securities other than ADSs or rights to purchase
additional ADSs (i.e. spin-off shares); and depositary services. Citibank
N.A. is located at 388 Greenwich Street, New York, New York, 10013,
United States. In addition, ADR holders may be required under the
Deposit Agreement to pay the Depositary (a) taxes (including
applicable interest and penalties) and other governmental charges;
(b) registration fees; (c) certain cable, telex, and facsimile
transmission and delivery expenses; (d) the expenses and charges
incurred by the Depositary in the conversion of foreign currency;
(e) such fees and expenses as are incurred by the Depositary in
connection with compliance with exchange control regulations and
other regulatory requirements; and (f) the fees and expenses incurred
by the Depositary, the custodian, or any nominee in connection with
the servicing or delivery of ADSs. The Depositary may (a) withhold
dividends or other distributions or sell any or all of the shares
underlying the ADSs in order to satisfy any tax or governmental charge
and (b) deduct from any cash distribution the applicable fees and
charges of, and expenses incurred by, the Depositary and any taxes,
duties or other governmental charges on account.
Direct and indirect payments by the Depositary
The Depositary reimburses Diageo for certain expenses it incurs in
connection with the ADR programme, subject to a ceiling set out in the
Deposit Agreement pursuant to which the Depositary provides services
to Diageo. The Depositary has also agreed to waive certain standard
fees associated with the administration of the programme. Under the
contractual arrangements with the Depositary, Diageo has received
approximately $3.36 million arising out of fees charged in respect of
dividends paid during the year and issuance and cancellation fees to
cover the Company's ADR programme costs. These payments are
received for expenses associated with non-deal road shows, third-party
investor relations consultant fees and expenses, Diageo’s cost for
administration of the ADR programme not absorbed by the Depositary
and related activities (e.g. expenses associated with the AGM), travel
expenses to attend training and seminars, exchange listing fees, legal
fees, auditing fees and expenses, the SEC filing fees, expenses related
to Diageo’s compliance with US securities law and regulations
(including, without limitation, the Sarbanes-Oxley Act) and other
expenses incurred by Diageo in relation to the ADR programme.
Articles of association
The company is incorporated under the name Diageo plc, and is
registered in England and Wales under registered number 23307.
The following description summarises certain provisions of Diageo’s
articles of association (as adopted by special resolution at the Annual
General Meeting on 28 September 2023) and applicable English law
concerning companies (the Companies Acts), in each case as at
4 August 2025. This summary is qualified in its entirety by reference
to the Companies Acts and Diageo’s articles of association. Investors
can obtain copies of Diageo’s articles of association by contacting
the Company Secretary at: the cosec@diageo.com. Any amendment to
the articles of association of the company may be made in accordance
with the provisions of the Companies Act 2006, by way of special
resolution.
Directors
Diageo’s articles of association provide for a board of directors,
consisting (unless otherwise determined by an ordinary resolution of
shareholders) of not fewer than three directors and not more than 25
directors, in which all powers to manage the business and affairs of
Diageo are vested.
A director must not vote on, or count towards the quorum in relation
to, any resolution of the Board in respect of any contract in which they
have an interest and, if they do so, their vote will not be counted. This
prohibition does not apply to any resolution where that interest cannot
reasonably be regarded as likely to give rise to a conflict of interest or
where that interest arises only from certain specified matters,
including: (a) indemnifying the director in respect of obligations
incurred at the request of or for the benefit of the company or any of
its subsidiary undertakings; (b) indemnifying a third party in respect of
obligations of the company or any of its subsidiary undertakings for
which the director has assumed responsibility in whole or in part under
an indemnity or guarantee or by the giving of security; (c) offers of
securities by the company or any of its subsidiary undertakings in which
the director will or may be entitled to participate as a holder of
securities; (d) contracts concerning another company in which the
director is the holder of or beneficially interested in less than 1% of
any class of the equity share capital of such company; (e) employee
benefits in relation to the company or any of its subsidiary
undertakings in which the director will share in a similar manner to
other employees; and (f) the purchase or maintenance of insurance
against any liability for, or for the benefit of, any director or directors
or for, or for the benefit of, persons who include directors.
Directors may be elected by the members in a general meeting or
appointed by the Board.
The directors are empowered to exercise all the powers of the
company to borrow money, subject to any limitation in Diageo’s
articles of association (currently two times the adjusted capital and
reserves of the company as defined in the articles of association),
unless previously sanctioned by an ordinary resolution of the company.
At each annual general meeting, all the directors at the date on which
the notice convening the annual general meeting is approved by the
Board shall retire from office and may offer themselves for re-election
by members. There is no age limit requirement in respect of directors.
Directors may also be removed before the expiration of their term of
office in accordance with the provisions of the Companies Acts.
Directors are not required to hold any shares of the company by way
of qualification.
Voting rights
Voting on any resolution at any general meeting of the company is by a
show of hands unless a poll is duly demanded. On a show of hands,
137 | Diageo Form 20-F 2025 |
(a) every shareholder who is present in person at a general meeting,
and every proxy appointed by any one shareholder and present at a
general meeting, has/have one vote regardless of the number of shares
held by the shareholder (or, subject to (b), represented by the proxy);
and
(b) every proxy present at a general meeting who has been appointed
by more than one shareholder has one vote regardless of the number of
shareholders who have appointed him/her or the number of shares
held by those shareholders, unless he/she has been instructed to vote
for a resolution by one or more shareholders and to vote against the
resolution by one or more shareholders, in which case he/she has one
vote for and one vote against the resolution.
On a poll, every shareholder who is present in person or by proxy has
one vote for every share held by that shareholder, but a shareholder or
proxy entitled to more than one vote need not cast all his/her votes or
cast them all in the same way (the deadline for exercising voting rights
by proxy is set out in the form of proxy).
A poll may be demanded by any of the following:
•the chair of the general meeting;
•at least three shareholders entitled to vote on the relevant
resolution and present in person or by proxy at the meeting;
•any shareholder or shareholders present in person or by proxy and
representing in the aggregate not less than one-tenth of the total
voting rights of all shareholders entitled to vote on the relevant
resolution; or
•any shareholder or shareholders present in person or by proxy and
holding shares conferring a right to vote on the relevant resolution
on which there have been paid up sums in the aggregate equal to not
less than one-tenth of the total sum paid up on all the shares
conferring that right.
Diageo’s articles of association and the Companies Acts provide for
matters to be transacted at general meetings of Diageo by the
proposing and passing of two kinds of resolutions:
•ordinary resolutions, which include resolutions for the election, re-
election and removal of directors, the declaration of final dividends,
the appointment and re-appointment of the external auditor,
the remuneration report and remuneration policy, the increase of
authorised share capital and the grant of authority to allot shares; and
•special resolutions, which include resolutions for the amendment of
Diageo’s articles of association, resolutions relating to the
disapplication of pre-emption rights, and resolutions modifying the
rights of any class of Diageo’s shares at a meeting of the holders of
such class.
An ordinary resolution requires the affirmative vote of a simple
majority of the votes cast by those entitled to vote at a meeting at
which there is a quorum in order to be passed. Special resolutions
require the affirmative vote of not less than three-quarters of the
votes cast by those entitled to vote at a meeting at which there is a
quorum in order to be passed. The necessary quorum for a meeting of
Diageo is a minimum of two shareholders present in person or by proxy
and entitled to vote.
A shareholder is not entitled to vote at any general meeting or class
meeting in respect of any share held by them if they have been served
with a restriction notice (as defined in Diageo's articles of association)
after failure to provide Diageo with information concerning interests in
those shares required to be provided under the Companies Acts.
Pre-emption rights and new issues of shares
While holders of ordinary shares have no pre-emptive rights under
Diageo’s articles of association, the ability of the Directors to cause
Diageo to issue shares, securities convertible into shares or rights to
shares, otherwise than pursuant to an employee share scheme, is
restricted. Under the Companies Acts, the directors of a company are,
with certain exceptions, unable to allot any equity securities without
express authorisation, which may be contained in a company’s articles of
association or given by its shareholders in a general meeting, but which in
either event cannot last for more than five years. Under the Companies
Acts, Diageo may also not allot shares for cash (otherwise than pursuant
to an employee share scheme) without first making an offer to existing
shareholders to allot such shares to them on the same or more favourable
terms in proportion to their respective shareholdings, unless this
requirement is waived by a special resolution of the shareholders.
Repurchase of shares
Subject to authorisation by special resolution, Diageo may purchase its
own shares in accordance with the Companies Acts. Any shares which
have been bought back may be held as treasury shares or, if not so
held, must be cancelled immediately upon completion of the purchase,
thereby reducing the amount of Diageo’s issued share capital.
Restrictions on transfers of shares
The Board may decline to register a transfer of a certificated Diageo
share unless the instrument of transfer (a) is duly stamped or certified
or otherwise shown to the satisfaction of the Board to be exempt from
stamp duty, and is accompanied by the relevant share certificate and
such other evidence of the right to transfer as the Board may
reasonably require, (b) is in respect of only one class of share and (c)
if to joint transferees, is in favour of not more than four such
transferees. Registration of a transfer of an uncertificated share may
be refused in the circumstances set out in the uncertificated securities
rules (as defined in Diageo’s articles of association) and where, in the
case of a transfer to joint holders, the number of joint holders to
whom the uncertificated share is to be transferred exceeds four.
The Board may decline to register a transfer of any of Diageo’s
certificated shares by a person with a 0.25% interest (as defined in
Diageo’s articles of association) if such a person has been served with a
restriction notice (as defined in Diageo’s articles of association) after
failure to provide Diageo with information concerning interests in those
shares required to be provided under the Companies Acts, unless the
transfer is shown to the Board to be pursuant to an arm’s-length sale
(as defined in Diageo’s articles of association).
138 | Diageo Form 20-F 2025 |
STRATEGIC REPORT | GOVERNANCE Report | FINANCIAL STATEMENTS | ADDITIONAL INFORMATI ON |
DIRECTORS' REPORT continued
Other information
Other information relevant to the Directors’ report may be found in the following sections of the Annual Report:
Information (including that required by UK Listing Authority Listing Rule 6.6.1) | Location in Annual Report |
Agreements with controlling shareholders | Not applicable |
Contracts of significance | Not applicable |
Details of long-term incentive schemes | Directors’ remuneration report |
Directors’ indemnities and compensation | Directors’ remuneration report - Additional information; Consolidated financial statements - note 21 Related party transactions |
Dividends | Group financial review; Consolidated financial statements - Other additional information |
Engagement with employees | Corporate governance report - Workforce engagement statement; Our people and culture |
Engagement with suppliers, customers and others | Corporate governance report - Stakeholder engagement |
Financial risk management | Consolidated financial statements - note 16 Financial instruments and risk management |
Future developments | Chair’s statement; Chief Executive’s statement; Investment case; Market dynamics; Our Growth Ambition; Our strategy |
Greenhouse gas emissions | Pioneer grain-to-glass sustainability |
Interest capitalised | Not applicable |
Non-pre-emptive issues of equity for cash (including in respect of major unlisted subsidiaries) | Not applicable |
Parent participation in a placing by a listed subsidiary | Not applicable |
Political donations | Corporate governance report |
Provision of services by a controlling shareholder | Not applicable |
Publication of unaudited financial information | Unaudited financial information |
Purchase of own shares | Repurchase of shares; Consolidated financial statements - note 18 Equity |
Research and development | Other additional information - Research and development; Consolidated financial statements - note 4 Operating costs |
Review of the business and principal risks and uncertainties | Chief Executive’s statement; Our principal risks and risk management; Pioneer grain-to-glass sustainability; Business review |
Share capital - structure, voting and other rights | Consolidated financial statements - note 18 Equity |
Share capital - employee share plan voting rights | Consolidated financial statements - note 18 Equity |
Shareholder waivers of dividends | Consolidated financial statements - note 18 Equity |
Shareholder waivers of future dividends | Consolidated financial statements - note 18 Equity |
Streamlined Energy and Carbon Reporting (SECR) disclosures | Pioneer grain-to-glass sustainability |
Sustainability and responsibility | Pioneer grain-to-glass sustainability |
Waiver of emoluments by a director | Not applicable |
Waiver of future emoluments by a director | Not applicable |
The Directors’ report of Diageo plc for the year ended 30 June 2025 comprises these pages and the sections of the Annual Report referred to under
‘Directors’, ‘Corporate governance statement’ and ‘Other information’ above, which are incorporated into the Directors’ report by reference.
In addition, certain disclosures required to be contained in the Directors’ report have been incorporated into the ‘Strategic report’ as set out in
‘Other information’ above.
The Directors’ report, which has been approved by a duly appointed and authorised committee of the Board of Directors, was signed by its order by
Randall Ingber, the Company Secretary, on 13 August 2025.
139 | Diageo Form 20-F 2025 |
Financial statements
Contents | |
Report of Independent Registered Public Accounting Firm | 140 |
Primary statements | |
Consolidated income statement | 148 |
Consolidated statement of comprehensive income | 149 |
Consolidated balance sheet | 150 |
Consolidated statement of changes in equity | 151 |
Consolidated statement of cash flows | 152 |
Accounting information and policies | |
1. Accounting information and policies | 153 |
Results for the year | |
2. Segmental information | 155 |
3. Exceptional items | 158 |
4. Operating cost | 160 |
5. Finance income and charges | 161 |
6. Investments in associates and joint ventures | 162 |
7. Taxation | 163 |
Operating assets and liabilities | |
8. Acquisition and sale of businesses and brands and purchase of non-controlling interests | 166 |
9. Intangible assets | 170 |
10. Property, plant and equipment | 174 |
11. Biological assets | 175 |
12. Leases | 175 |
13. Other investments | 176 |
14. Post-employment benefits | 176 |
15. Working capital | 181 |
Risk management and capital structure | |
16. Financial instruments and risk management | 184 |
17. Net borrowings | 192 |
18. Equity | 193 |
Other financial statement disclosures | |
19. Contingent liabilities and legal proceedings | 197 |
20. Commitments | 199 |
21. Related party transactions | 199 |
22. Principal group companies | 200 |
140 | Diageo Form 20-F 2025 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Diageo plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Diageo plc and its subsidiaries (the “Company”) as of 30 June
2025 and 30 June 2024, and the related consolidated income statements and consolidated statements of comprehensive income, of
changes in equity and of cash flows for each of the three years in the period ended 30 June 2025, including the related notes
(collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over
financial reporting as of 30 June 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of 30 June 2025 and 30 June 2024, and the results of its operations and its cash flows for each of the three years in
the period ended 30 June 2025 in conformity with UK-adopted International Accounting Standards and IFRS Accounting Standards
as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of 30 June 2025, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s
Report on Internal Control over Financial Reporting appearing under Part II. 15.B. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
141 | Diageo Form 20-F 2025 |
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Contingent liabilities associated with Brazil taxes
As described in Note 19 to the consolidated financial statements, the Company’s current aggregate known possible exposure from tax
assessment values in Brazil is up to approximately $906 million with no provision in respect to these issues. As disclosed by
management, the Company has a large number of ongoing tax cases in Brazil and may be subject to further future tax assessments in
this jurisdiction based on the same or similar matters. Where it is possible that a settlement may be reached or it is not possible to
make a reliable estimate of the estimated financial effect, appropriate disclosure is made. Management judgement is necessary in
assessing the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any
settlement.
The principal considerations for our determination that performing procedures related to contingent liabilities associated with Brazil
taxes is a critical audit matter are (i) the significant judgements made by management in determining the likelihood and amount of a
settlement outcome; (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit
evidence related to the assessment of the probability and amount of an expected settlement; and (iii) the audit effort involved the use
of professionals with specialised skill and knowledge.
142 | Diageo Form 20-F 2025 |
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the likelihood and
amount of settlement outcomes of the contingent liabilities associated with taxes. These procedures also included, among others: (i)
assessing the reasonableness of information used in determining the likelihood that tax authorities will ultimately prevail; (ii) testing
the calculation of the possible exposure; (iii) evaluating management’s assessment of the ongoing tax cases in Brazil and probability
of settlement including inspecting opinions from external counsel; (iv) evaluating the status and results of tax audits with the relevant
tax authorities; and (v) evaluating the sufficiency of the Company’s related disclosures. Professionals with specialised skill and
knowledge were used to assist in the evaluation of the recognition and measurement of the Company’s contingent liabilities
associated with Brazil taxes.
/s/ PricewaterhouseCoopers LLP
14 August 2025
We have served as the Company's auditor since 2015.
143 | Diageo Form 20-F 2025 |
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FINANCIAL STATEMENTS
Consolidated income statement
Year ended 30 June 2025 | Year ended 30 June 2024 | Year ended 30 June 2023 | ||
Notes | $ million | $ million | $ million | |
Sales | 2 | |||
Excise duties | 4 | ( | ( | ( |
Net sales | 2 | |||
Cost of sales | 4 | ( | ( | ( |
Gross profit | ||||
Marketing | 4 | ( | ( | ( |
Other operating items | 4 | ( | ( | ( |
Operating profit | ||||
Non-operating items | 3 | ( | ( | |
Finance income | 5 | |||
Finance charges | 5 | ( | ( | ( |
Share of after tax results of associates and joint ventures | 6 | |||
Profit before taxation | ||||
Taxation | 7 | ( | ( | ( |
Profit for the year | ||||
Attributable to: | ||||
Equity shareholders of the parent company | ||||
Non-controlling interests | ||||
Weighted average number of shares | million | million | million | |
Shares in issue excluding own shares | ||||
Dilutive potential ordinary shares | ||||
cents | cents | cents | ||
Basic earnings per share | ||||
Diluted earnings per share |
The accompanying notes are an integral part of these consolidated financial statements.
149 | Diageo Form 20-F 2025 |
Consolidated statement of comprehensive income
Year ended 30 June 2025 | Year ended 30 June 2024 | Year ended 30 June 2023 | ||
Notes | $ million | $ million | $ million | |
Other comprehensive income | ||||
Items that will not be recycled subsequently to the income statement | ||||
Net remeasurement of post-employment benefit plans | ||||
Group | 14 | ( | ( | ( |
Associates and joint ventures | ||||
Tax on post-employment benefit plans | ||||
Changes in the fair value of equity investments | ( | ( | ||
( | ( | ( | ||
Items that may be recycled subsequently to the income statement | ||||
Exchange differences on translation of foreign operations | ||||
Group | ( | ( | ||
Associates and joint ventures | 6 | ( | ||
Non-controlling interests | ( | ( | ( | |
Net investment hedges | ( | ( | ||
Exchange loss recycled to the income statement | ||||
On disposal of foreign operations | 8 | |||
On step acquisitions | ||||
Tax on exchange differences – group | ||||
Effective portion of changes in fair value of cash flow hedges | ||||
Hedge of foreign currency debt of the group | ( | |||
Transaction exposure hedging of the group | ||||
Hedges by associates and joint ventures | ( | |||
Commodity price risk hedging of the group | ( | ( | ||
Recycled to income statement – hedge of foreign currency debt of the group | ( | |||
Recycled to income statement – transaction exposure hedging of the group | ( | ( | ( | |
Recycled to income statement – commodity price risk hedging of the group | ( | |||
Cost of hedging | ( | |||
Recycled to income statement – cost of hedging | ( | ( | ||
Tax on effective portion of changes in fair value of cash flow hedges | ( | ( | ||
Hyperinflation adjustments | ||||
Tax on hyperinflation adjustments | ( | ( | ( | |
( | ||||
Other comprehensive income/(loss) net of tax for the year | ( | ( | ||
Profit for the year | ||||
Total comprehensive income for the year | ||||
Attributable to: | ||||
Equity shareholders of the parent company | ||||
Non-controlling interests | 18 | ( | ||
Total comprehensive income for the year |
The accompanying notes are an integral part of these consolidated financial statements.
150 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Consolidated balance sheet
30 June 2025 | 30 June 2024 | ||||
Notes | $ million | $ million | $ million | $ million | |
Non-current assets | |||||
Intangible assets | 9 | ||||
Property, plant and equipment | 10 | ||||
Biological assets | 11 | ||||
Investments in associates and joint ventures | 6 | ||||
Other investments | 13 | ||||
Other receivables | 15 | ||||
Other financial assets | 16 | ||||
Deferred tax assets | 7 | ||||
Post-employment benefit assets | 14 | ||||
Current assets | |||||
Inventories | 15 | ||||
Trade and other receivables | 15 | ||||
Corporate tax receivables | 7 | ||||
Assets held for sale | 8 | ||||
Other financial assets | 16 | ||||
Cash and cash equivalents | 17 | ||||
Total assets | |||||
Current liabilities | |||||
Borrowings and bank overdrafts | 17 | ( | ( | ||
Other financial liabilities | 16 | ( | ( | ||
Trade and other payables | 15 | ( | ( | ||
Liabilities held for sale | 8 | ( | ( | ||
Corporate tax payables | 7 | ( | ( | ||
Provisions | 15 | ( | ( | ||
( | ( | ||||
Non-current liabilities | |||||
Borrowings | 17 | ( | ( | ||
Other financial liabilities | 16 | ( | ( | ||
Other payables | 15 | ( | ( | ||
Provisions | 15 | ( | ( | ||
Deferred tax liabilities | 7 | ( | ( | ||
Post-employment benefit liabilities | 14 | ( | ( | ||
( | ( | ||||
Total liabilities | ( | ( | |||
Net assets | |||||
Equity | |||||
Share capital | 18 | ||||
Share premium | |||||
Other reserves | ( | ||||
Retained earnings | |||||
Equity attributable to equity shareholders of the parent company | |||||
Non-controlling interests | 18 | ||||
Total equity | |||||
The accompanying notes are an integral part of these consolidated financial statements.
These consolidated financial statements have been approved by a duly appointed and authorised committee of the Board of Directors on
13 August 2025 and were signed on its behalf by Nik Jhangiani, Executive Director.
151 | Diageo Form 20-F 2025 |
Consolidated statement of changes in equity
Other reserves | Retained earnings/(deficit) | |||||||||||
Notes | Share capital $ million | Share premium $ million | Capital redemption reserve $ million | Hedging and exchange reserve $ million | Own shares $ million | Other retained earnings $ million | Total $ million | Equity attributable to parent company shareholders $ million | Non- controlling interests $ million | Total equity $ million | ||
At 30 June 2022 | ( | ( | ||||||||||
Retranslation impact of opening balances(1) | ( | ( | ( | |||||||||
Profit for the year | — | — | — | — | — | |||||||
Other comprehensive income/(loss) | — | — | — | — | ( | ( | ( | ( | ( | |||
Total comprehensive income/(loss) for the year | — | — | — | — | ( | |||||||
Employee share schemes | — | — | — | — | — | |||||||
Share-based incentive plans | 18 | — | — | — | — | — | — | |||||
Share-based incentive plans in respect of associates | — | — | — | — | — | — | ||||||
Tax on share-based incentive plans | — | — | — | — | — | — | ||||||
Share-based payments and purchase of own shares in respect of subsidiaries | — | — | — | — | — | |||||||
Purchase of non-controlling interests | 8 | — | — | — | — | — | ( | ( | ( | ( | ( | |
Associates' transactions with non-controlling interests | — | — | — | — | — | ( | ( | ( | — | ( | ||
Unclaimed dividend | — | — | — | — | — | |||||||
Change in fair value of put option | — | — | — | — | — | ( | ( | ( | — | ( | ||
Share buyback programme | ( | — | — | — | ( | ( | ( | — | ( | |||
Dividends | 18 | — | — | — | — | — | ( | ( | ( | ( | ( | |
At 30 June 2023 | ( | ( | ||||||||||
Adjustment to 2023 closing equity in respect of hyperinflation in Ghana | — | — | — | — | — | |||||||
Adjusted opening balance | ( | ( | ||||||||||
Profit for the year | — | — | — | — | — | |||||||
Other comprehensive (loss)/income | — | — | — | ( | — | ( | ( | ( | ||||
Total comprehensive (loss)/income for the year | — | — | — | ( | — | |||||||
Employee share schemes | — | — | — | — | — | |||||||
Share-based incentive plans | 18 | — | — | — | — | — | — | |||||
Share-based incentive plans in respect of associates | — | — | — | — | — | — | ||||||
Share-based payments and purchase of own shares in respect of subsidiaries | — | — | — | — | — | ( | ( | ( | ( | ( | ||
Purchase of non-controlling interests | 8 | — | — | — | — | — | ( | ( | ( | ( | ||
Tax on purchase of non-controlling interests | — | — | — | — | — | |||||||
Unclaimed dividend | — | — | — | — | — | — | ||||||
Change in fair value of put option | — | — | — | — | — | — | ||||||
Share buyback programme | ( | — | — | — | ( | ( | ( | — | ( | |||
Dividends | 18 | — | — | — | — | — | ( | ( | ( | ( | ( | |
At 30 June 2024 | ( | ( | ||||||||||
Profit for the year | — | — | — | — | ||||||||
Other comprehensive income/(loss) | — | — | — | — | ( | |||||||
Total comprehensive income for the year | — | — | — | — | ||||||||
Employee share schemes | — | — | — | — | — | |||||||
Share-based incentive plans | 18 | — | — | — | — | — | — | |||||
Share-based incentive plans in respect of associates | — | — | — | — | — | — | ||||||
Tax on share-based incentive plans | — | — | — | — | — | — | ||||||
Share-based payments and purchase of own shares in respect of subsidiaries | — | — | — | — | — | ( | ( | ( | ( | ( | ||
Change in non-controlling interests from sale of business | 8 | — | — | — | — | — | — | — | — | — | ||
Purchase of non-controlling interests | — | — | — | — | — | ( | ( | ( | — | ( | ||
Change in fair value of put option | — | — | — | — | — | — | ||||||
Reversal of share buyback transaction cost | — | — | — | — | — | — | ||||||
Dividends | 18 | — | — | — | — | — | ( | ( | ( | ( | ( | |
At 30 June 2025 | ( | ( | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
(1) Includes foreign translation differences arising from the retranslation of reserves due to the change in the group’s presentation currency.
152 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Consolidated statement of cash flows
Year ended 30 June 2025 | Year ended 30 June 2024 | Year ended 30 June 2023 | |||||
Notes | $ million | $ million | $ million | $ million | $ million | $ million | |
Cash flows from operating activities | |||||||
Profit for the year | |||||||
Taxation | |||||||
Share of after tax results of associates and joint ventures | ( | ( | ( | ||||
Net finance charges | |||||||
Non-operating items | ( | ||||||
Operating profit | |||||||
Increase in inventories | ( | ( | ( | ||||
(Increase)/decrease in trade and other receivables | ( | ( | |||||
Increase/(decrease) in trade and other payables and provisions | ( | ( | |||||
Net increase in working capital | ( | ( | ( | ||||
Depreciation, amortisation and impairment | |||||||
Dividends received | |||||||
Post-employment payments less amounts included in operating profit | ( | ( | |||||
Other items | |||||||
Cash generated from operations | |||||||
Interest received | |||||||
Interest paid | ( | ( | ( | ||||
Taxation paid | ( | ( | ( | ||||
( | ( | ( | |||||
Net cash inflow from operating activities | |||||||
Cash flows from investing activities | |||||||
Disposal of property, plant and equipment and computer software | |||||||
Purchase of property, plant and equipment and computer software | ( | ( | ( | ||||
Movements in loans, other investments and other financial assets | ( | ( | ( | ||||
Sale of businesses and brands | 8 | ||||||
Acquisition of subsidiaries | 8 | ( | ( | ( | |||
Investments in associates and joint ventures | 8 | ( | ( | ( | |||
Net cash outflow from investing activities | ( | ( | ( | ||||
Cash flows from financing activities | |||||||
Share buyback programme | 18 | ( | ( | ||||
Net sale of own shares for share schemes | |||||||
Net sale/(purchase) of treasury shares in respect of subsidiaries | ( | ||||||
Dividends paid to non-controlling interests | ( | ( | ( | ||||
Proceeds from bonds | 17 | ||||||
Repayment of bonds | 17 | ( | ( | ( | |||
Purchase of shares of non-controlling interests | 8 | ( | ( | ( | |||
Cash inflow from other borrowings | |||||||
Cash outflow from other borrowings | ( | ( | ( | ||||
Equity dividends paid | ( | ( | ( | ||||
Unclaimed dividends and share forfeiture | |||||||
Net cash outflow from financing activities | ( | ( | ( | ||||
Net increase/(decrease) in net cash and cash equivalents | 17 | ( | ( | ||||
Exchange differences | ( | ( | ( | ||||
Reclassification to assets and liabilities held for sale | ( | ||||||
Net cash and cash equivalents at beginning of the year | |||||||
Net cash and cash equivalents at end of the year | |||||||
Net cash and cash equivalents consist of: | |||||||
Cash and cash equivalents | 17 | ||||||
Bank overdrafts | 17 | ( | ( | ( | |||
The accompanying notes are an integral part of these consolidated financial statements.
153 | Diageo Form 20-F 2025 |
Accounting information and policies
the financial statements as a whole. Accounting policies, critical accounting estimates and judgements specific to a note are included in the note to
which they relate. Furthermore, the section details new accounting standards, amendments and interpretations, that the group has adopted in the
The consolidated financial statements are prepared in accordance
with IFRS® Accounting Standards (IFRSs) adopted by the UK (UK-
adopted International Accounting Standards) and IFRSs, as issued by
the International Accounting Standards Board (IASB), including
interpretations issued by the IFRS Interpretations Committee. IFRS
as adopted by the UK differs in certain respects from IFRS as issued
by the IASB. The differences have no impact on the group’s
consolidated financial statements for the years presented. The
consolidated financial statements are prepared on a going concern
basis under the historical cost convention, unless stated otherwise in
the relevant accounting policy.
The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
Management prepared 18-month cash flow forecasts which reflect
severe but plausible downside scenarios taking into consideration the
group's principal risks. In the base case scenario, management included
assumptions to deliver positive operating leverage, with organic profit
growth ahead of organic net sales 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, lower level of marketing spend and investment in
maturing stock, as well as a temporary suspension or reduction in
dividend to shareholders in the next 12 months, or drawdowns on
committed facilities. Having considered the outcome of these
assessments, the Directors are comfortable that the group (and
company) is a going concern for at least 12 months from the date of
signing the group's consolidated financial statements.
The consolidated financial statements include the results of the
company and its subsidiaries together with the group’s attributable
share of the results of associates and joint ventures. A subsidiary is an
entity controlled by Diageo plc. The group controls an investee when it
is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its
power over the investee. Where the group has the ability to exercise
joint control over an entity but has rights to specified assets and
obligations for liabilities of that entity, the entity is included on the
Items included in the financial statements of the group’s subsidiaries,
associates and joint ventures are measured using the currency of the
primary economic environment in which each entity operates (its
functional currency). The consolidated financial statements are
presented in US dollar, which is the functional currency of the parent
company, Diageo plc. The functional currency of Diageo plc is
determined by using management judgement that considers the parent
company as an extension of its subsidiaries.
The income statements and cash flows of non-US dollar entities are
translated into US dollar at weighted average rates of exchange,
except for subsidiaries in hyperinflationary economies that are
translated with the closing rate at the end of the year and for
substantial transactions that are translated at the rate on the date of
the transaction. Exchange differences arising on the retranslation to
closing rates are taken to the exchange reserve.
Assets and liabilities are translated at the relevant year end closing
rates. Exchange differences arising on the retranslation at closing rates
of the opening balance sheets of non-US dollar entities are taken to
the exchange reserve, as are exchange differences arising on foreign
currency borrowings and financial instruments designated as net
investment hedges, to the extent that they are effective. Tax charges
and credits arising on such items are also taken to the exchange
reserve. Gains and losses accumulated in the exchange reserve are
recycled to the income statement when the foreign operation is sold.
Other exchange differences are taken to the income statement.
Transactions in foreign currencies are recorded at the rate of exchange
on the date of the transaction.
statements for the three years ended 30 June 2025, expressed in
sterling and euros per $1, were as follows:
2025 | 2024 | 2023 | |
Sterling | |||
Income statement and cash flows(1) | |||
Assets and liabilities(2) | |||
Euro | |||
Income statement and cash flows(1) | |||
Assets and liabilities(2) |
(1)Weighted average rates
The group uses foreign exchange hedges to mitigate the effect of
exchange rate movements. For further information, see note 16.
154 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Details of critical estimates and judgements which the Directors
consider could have a significant impact on the financial statements
are set out in the related notes as follows:
•Taxation – management judgement whether a provision is required
and estimate of amount of corporate tax payable or receivable, the
recoverability of deferred tax assets and expectation on manner of
recovery of deferred taxes – pages 163 and 197.
•Brands, goodwill, other intangibles and contingent considerations –
management judgement whether the assets and liabilities are to be
recognised and synergies resulting from an acquisition. Management
judgement and estimate are required in determining future cash
flows and appropriate applicable assumptions to support the
intangible asset and contingent consideration value – pages 163 and
170.
•Post-employment benefits – management judgement whether a
surplus can be recovered and management estimate in determining
the assumptions in calculating the liabilities of the funds – page 176.
•Contingent liabilities and legal proceedings – management
judgement in assessing the likelihood of whether a liability will arise
and an estimate to quantify the possible range of any settlement;
and significant unprovided tax matters where maximum exposure is
provided for each – page 197.
The group applied hyperinflationary accounting for its operations in
Türkiye, 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 are 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
publicly available official price index for the year ended 30 June 2025
was 35 % (2024 – 72 %; 2023 – 38 %) in Türkiye and 16 % (2024 – 23 %) in
Ghana. The inflation rate used by the group for Venezuela is provided
by an independent valuer because no reliable, officially published rate
is available. Movement in the price index for the year ended 30 June
2025 was 171 % (2024 – 77 %; 2023 – 382 %) in Venezuela.
During the year ended 30 June 2024, 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
year ended 30 June 2024 and 30 June 2025 show the results of the
Venezuelan operation consolidated at the official closing exchange rate
of the period.
The following accounting standards and amendments to standards,
issued by the IASB including those endorsed by the UK, were adopted
by the group from 1 July 2024 with no material impact on the group’s
consolidated results, financial position or disclosures:
•Amendments to IAS 1 – Classification of Liabilities and Non-current
Liabilities with Covenants
•Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
The group has adopted amendments to IAS 7 and IFRS 7 –
Supplier Finance Arrangements and presents the relevant
the UK and have not yet been adopted by the group, which are not
expected to have material impact on the group's consolidated results
or financial position:
•Amendments to IAS 21 – Lack of exchangeability (effective from the
year ending 30 June 2026)
•Amendments to IFRS 9 and IFRS 7 – Amendments to the Classification
and Measurement of Financial Instruments (effective from the year
ending 30 June 2027)
The impact assessment of IFRS 18 – Presentation and disclosure of
financial statements, which will become effective in the consolidated
group financial statements from the year ending 30 June 2028 – subject
to UK endorsement – is in progress.
There are a number of other standards, amendments and
clarifications to IFRSs, effective in future years, which are not
expected to significantly impact the group’s consolidated results or
The impact of climate change assessment and greenhouse gas emission
targets for Diageo's direct operations (Scope 1 and 2) for 2030 have
been considered as part of the assessment of estimates and
judgements in preparing the group's consolidated financial statements.
We integrate climate risk into our enterprise risk management
processes, within our principal risk factors. This is an integral part of
our strategic and business continuity planning.
The climate change scenario analyses performed in 2025 – conducted in
line with TCFD recommendations (a Moderate Warming’ Scenario (RCP
4.5) and a ‘Severe Warming Scenario’ (RCP 8.5)) – identified no
material financial impact to these financial statements.
The following considerations were made in respect of the financial
statements:
•The impact of climate change on factors like residual values, useful
lives and depreciation methods that determine the carrying value of
non-current assets.
•The impact of climate change on forecasts of cash flows used
(including forecast depreciation in line with capital expenditure
plans) in impairment assessments for the value-in-use of non-current
assets including goodwill (see note 9).
•The impact of climate change on post-employment assets.
155 | Diageo Form 20-F 2025 |
This section explains the results and performance of the group for the three years ended 30 June 2025. Disclosures are provided for segmental
information, operating costs, exceptional items, finance income and charges, the group's share of results of associates and joint ventures, taxation.
For associates, joint ventures and taxation, balance sheet disclosures are also provided in this section.
Accounting policies | ||
Sales comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the customer, which is determined by considering, among other factors, the delivery terms agreed with customers. For the sale of goods, the transfer of control occurs when the significant risks and rewards of ownership are passed to the customer. Based on the shipping terms agreed with customers, the transfer of control of goods occurs at the time of dispatch for the majority of sales. Where the transfer of control is subsequent to the dispatch of goods, the time between dispatch and receipt by the customer is generally less than five days. The group includes in sales the net consideration to which it expects to be entitled. Sales are recognised to the extent that it is highly probable that a significant reversal will not occur. Therefore, sales are stated net of expected price discounts, allowances for customer loyalty and certain promotional activities and similar items. Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing. | ||
Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries, excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duty are not always passed on to the customer and where a customer fails to pay for products received the group cannot reclaim the excise duty. The group therefore recognises excise duty, unless it regards itself as an agent of the regulatory authorities, as a cost to the group. | ||
Advertising costs, point of sale materials and sponsorship payments are charged to marketing in operating profit when the company has a right of access to the goods or services acquired. | ||
Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included in the income statement caption to which they relate, and form part of the segmental reporting. Management believes that separate disclosure of exceptional items and the classification between operating and non-operating 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. | ||
Diageo is an international manufacturer and distributor of premium drinks. Diageo also owns a number of investments in associates and joint
ventures, as set out in note 6.
The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating decision-maker).
The Executive Committee considers the business principally from a geographical perspective based on the location of third-party sales and the
business analysis is presented by geographical segment. 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.
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.
Executive Committee makes decisions based on the analysis of several financial data sets including organic and IFRS reported data. There has been
a change in how the Executive Committee looks at performance given the foreign exchange volatility experienced, using actual foreign exchange
rates for current and comparative periods which is consistent with IFRS reported results. Accordingly, the segmental analysis below is presented
based on IFRS reported figures. Supply Chain and Procurement (SC&P), which manufactures products for other group companies and includes the
production sites in the United Kingdom, Ireland, Italy, Guatemala and Mexico, as well as comprises the global procurement function, is considered a
key intersegmental operation instead of a separate operating segment.
156 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | Corporate and other | Total | |
2025 | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Sales | |||||||
Net sales | |||||||
Cost of sales | ( | ( | ( | ( | ( | ( | ( |
Gross profit | |||||||
Marketing | ( | ( | ( | ( | ( | ( | ( |
Other operating items | ( | ( | ( | ( | ( | ( | ( |
Operating profit/(loss) before exceptional items | ( | ||||||
Exceptional operating items(1) | ( | ||||||
Operating profit/(loss) | |||||||
Non-operating items | ( | ||||||
Net finance charges | ( | ||||||
Share of after tax results of associates and joint ventures | |||||||
Profit before taxation |
North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | Corporate and other | Total | |
2024 | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Sales | |||||||
Net sales | |||||||
Cost of sales | ( | ( | ( | ( | ( | ( | ( |
Gross profit | |||||||
Marketing | ( | ( | ( | ( | ( | ( | ( |
Other operating items | ( | ( | ( | ( | ( | ( | ( |
Operating profit/(loss) before exceptional items | ( | ||||||
Exceptional operating items(1) | |||||||
Operating profit/(loss) | |||||||
Non-operating items | ( | ||||||
Net finance charges | ( | ||||||
Share of after tax results of associates and joint ventures | |||||||
Profit before taxation |
North America | Europe | Asia Pacific | Latin America and Caribbean | Africa | Corporate and other | Total | |
2023 | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Sales | |||||||
Net sales | |||||||
Cost of sales | ( | ( | ( | ( | ( | ( | ( |
Gross profit | |||||||
Marketing | ( | ( | ( | ( | ( | ( | ( |
Other operating items | ( | ( | ( | ( | ( | ( | ( |
Operating profit/(loss) before exceptional items | ( | ||||||
Exceptional operating items(1) | ( | ||||||
Operating profit/(loss) | |||||||
Non-operating items | |||||||
Net finance charges | ( | ||||||
Share of after tax results of associates and joint ventures | |||||||
Profit before taxation |
(1) For definition and details of exceptional items, see pages 158-160.
(i) The group’s net finance charges are managed centrally and are not attributable to individual operating segments.
(ii) Approximately 38 % of annual net sales occurred in the last four months of calendar year 2024.
157 | Diageo Form 20-F 2025 |
North America $ million | Europe $ million | Asia Pacific $ million | Latin America and Caribbean $ million | Africa $ million | Corporate and other(1) $ million | Total operating segments $ million | |
2025 | |||||||
Purchase of property, plant and equipment and computer software | |||||||
Depreciation and intangible asset amortisation | ( | ( | ( | ( | ( | ( | ( |
Exceptional accelerated depreciation and impairment of tangible assets | ( | ( | ( | ( | ( | ||
Exceptional impairment of intangible assets | ( | ( | ( | ||||
Exceptional impairment of associates and joint ventures | ( | ( | ( | ( | |||
2024 | |||||||
Purchase of property, plant and equipment and computer software | |||||||
Depreciation and intangible asset amortisation | ( | ( | ( | ( | ( | ( | ( |
Underlying impairment | ( | ( | |||||
Exceptional accelerated depreciation and impairment of tangible assets | ( | ( | ( | ( | |||
Exceptional impairment of intangible assets | ( | ( | |||||
2023 | |||||||
Purchase of property, plant and equipment and computer software | |||||||
Depreciation and intangible asset amortisation | ( | ( | ( | ( | ( | ( | ( |
Exceptional accelerated depreciation and impairment of tangible assets | ( | ( | ( | ||||
Exceptional impairment of intangible assets | ( | ( | ( | ( |
(1) Purchase of property, plant and equipment and computer software in respect of SC&P are included in the Corporate and other operating segment.
Category analysis | Geographic analysis | |||||||||
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 | |
2025 | ||||||||||
Sales(1) | ||||||||||
Non-current assets(2), (3) | ||||||||||
2024 | ||||||||||
Sales(1) | ||||||||||
Non-current assets(2), (3) | ||||||||||
2023 | ||||||||||
Sales(1) | ||||||||||
Non-current assets(2), (3) | ||||||||||
(1)The geographical analysis of sales is based on the location of third-party customers.
(2)The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets,
investments in associates and joint ventures, other investments and non-current other receivables.
158 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Accounting policies | ||
Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included in the income statement caption to which they relate, and form part of the segmental reporting included in note 2. Management believes that separate disclosure of exceptional items and the classification between operating and non-operating 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. | ||
Operating items | ||
Exceptional operating items are those that are unusual or non- recurring in nature, considered to be of a size that could distort the performance 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. | ||
Non-operating items | ||
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 unusual non- recurring items, that are considered to be of a size that could distort performance and 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 finance income/charge | ||
Exceptional finance incomes/charges are those that are unusual or non-recurring in nature, considered to be of a size that could distort the performance and are part of the financing activity of the group. | ||
Taxation items | ||
Exceptional current and deferred tax items comprise unusual or non-recurring items, that are considered to be of a size that could distort performance. Examples include direct tax provisions and settlements in respect of prior years and the remeasurement of deferred tax assets and liabilities following | ||
2025 $ million | 2024 $ million | 2023 $ million | |
Exceptional operating items | |||
Impairment (charge)/income and other related charges (1) | ( | ( | |
Restructuring programme (2) | ( | ( | ( |
Distribution model change in France (3) | ( | ||
Various dispute and litigation matters (4) | ( | ( | |
USVI cover-over (5) | ( | ||
Distribution termination fee (6) | ( | ||
Winding down Russian operations (7) | |||
( | ( | ||
Non-operating items | |||
Sale of businesses and brands | |||
Guinness Nigeria PLC (8) | ( | ( | |
Guinness Ghana Breweries PLC prospective sale (9) | ( | ||
Pampero brand (10) | |||
Santa Vittoria prospective sale (11) | ( | ||
Cacique brand (12) | ( | ||
Safari brand (13) | |||
Cîroc LLC (14) | ( | ||
Guinness Cameroun S.A. (15) | ( | ( | |
MHD France joint operation (16) | ( | ||
Windsor business (17) | ( | ||
Seychelles Breweries Limited prospective sale (18) | ( | ||
Step acquisitions | |||
Ritual (19) | |||
Nao Spirits (20) | ( | ||
Other (21) | |||
( | ( | ||
Exceptional finance income | |||
Borrowing costs capitalised (22) | |||
Exceptional items before taxation | ( | ( | ( |
Tax on exceptional items (note 7(b)) | ( | ||
Total exceptional items | ( | ( | ( |
Attributable to: | |||
Equity shareholders of the parent company | ( | ( | ( |
Non-controlling interests | ( | ( | |
Total exceptional items | ( | ( | ( |
(1) In the year ended 30 June 2025, an impairment charge and other
related charges of $458 million in respect of Diageo's investment in
various Distill Ventures businesses, an impairment charge of
$231 million in respect of the Aviation American Gin brand and tangible
fixed assets, $170 million in respect of various other US brands,
tangible fixed assets and inventory and $51 million in respect of the
Bell’s whisky brand were recognised in exceptional operating items.
For further information, see note 9(d), note 6 and note 13.
In the year ended 30 June 2024, a net gain of $224 million was
recognised in exceptional operating items, driven by the reversal of
Shui Jing Fang brand impairment of $379 million, partially offset by an
impairment charge of $101 million in respect of the Chase brand and
the related goodwill and tangible fixed assets, and an impairment
charge of $54 million in respect of certain brands in the US ready-to-
drink portfolio.
159 | Diageo Form 20-F 2025 |
In the year ended 30 June 2023, an impairment charge of $613 million
was recognised in exceptional operating items in respect of the
McDowell's brand ($517 million), the SIA brand ($36 million), the
Copper Dog brand ($31 million) and the Director's Special brand
($29 million).
(2) In the year ended 30 June 2025, an exceptional charge of $225
million was accounted for in respect of the Accelerate programme,
that includes the supply chain agility programme (2024 – $61 million).
The Accelerate programme was announced in May 2025 and is a three-
with cash delivery, cost savings and deleveraging targets. The
implementation costs of the programme 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 in
respect of the restructuring programmes for the year ended 30 June
2025 was primarily in respect of impairment of property, plant and
equipment, severance costs and accelerated depreciation, being
incremental depreciation of assets in the period directly attributable
to the programme in North America and Europe. In the year ended 30
June 2025, cash expenditure in respect of restructuring was $38 million
(2024 – $26 million), partially offset by $35 million proceeds from
selling a plant in North America.
(3) On 23 July 2024, Diageo announced the completion of the
transformation of its distribution model in France as the company
agreed with LVMH to exit from their joint operation and to terminate
the existing distribution agreements for Diageo brands. In the year
ended 30 June 2025, an exceptional operating charge of $145 million
was accounted for in respect of the transformation, mainly in relation
to termination fee paid to LVMH.
(4) In the year ended 30 June 2025, $51 million (2024 – $107 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.
(5) Diageo receives cover-over income in relation to its rum production
in the US Virgin Islands. The cover-over is based on a permanent
standard rate and an additional extender rate. A recent law made the
extender rate permanent from January 2026 but no retrospective
approval was granted for the period after 31 December 2021. As a
result, Diageo reversed accrued income of $38 million in respect of
prior years as exceptional operating item in the year ended 30 June
2025.
(6) In the year ended 30 June 2023, Diageo agreed with one of its
distributors in Africa to terminate the distribution licence of Gordon's,
in respect of which a provision of $55 million was recognised as an
operating exceptional charge. In the year ended 30 June 2024,
$55 million in respect of the aforementioned termination was paid.
(7) In the year ended 30 June 2023, Diageo released unutilised
provisions of $23 million in respect of winding down its operations
in Russia.
(8) On 30 September 2024, Diageo completed the sale of its
shareholding in Guinness Nigeria PLC to Tolaram. The transaction
resulted in a loss of $125 million, including cumulative translation
losses of $175 million recycled to the income statement in the year
ended 30 June 2025. In the year ended 30 June 2024, a charge of
$6 million was recognised as a non-operating item, in respect of
transaction and other costs directly attributable to the prospective
sale of the business.
(9) On 28 January 2025, Diageo announced the agreement to sell
Guinness Ghana Breweries PLC, its brewery in Ghana to the Castel
Group and a non-operating charge of $114 million attributable to the
prospective sale was recognised in the year ended 30 June 2025.
(10) In the year ended 30 June 2025, an exceptional gain of $53 million
was accounted for in relation to the disposal of the Pampero brand to
Gruppo Montenegro.
(11) On 24 June 2025, Diageo announced the sale of Diageo Operations
Italy S.p.A., inclusive of the Santa Vittoria production facility, to
NewPrinces S.p.A. and a non-operating charge of $29 million
attributable to the prospective sale was recognised in the year ended
30 June 2025.
(12) On 23 January 2025, Diageo announced the sale of the Cacique
brand to Bardinet S.A. The transaction resulted in a loss of $20 million.
(13) In the year ended 30 June 2025, an exceptional gain of $15 million
was recorded in relation to the disposal of the Safari brand to
Casa Redondo.
(14) In the year ended 30 June 2025, Diageo and Main Street Advisors,
Inc. (MSA) announced that they entered into a strategic contractual
arrangement, where Diageo contributed its ownership in Cîroc LLC,
owner of the Cîroc IP and distribution right for North America, while
MSA contributed Lobos LLC, owner of the Lobos 1707 premium tequila
brand, into the newly formed structure. As a result, Diageo lost the
control over Cîroc LLC and accounted for its investment in Cîroc LLC
and Lobos LLC as associates. The transaction resulted in $11 million
non-operating exceptional loss.
(15) On 26 May 2023, Diageo completed the sale of its wholly owned
subsidiary in Cameroon, Guinness Cameroun S.A., to the Castel Group
for an aggregate consideration of $475 million resulting in an
exceptional gain of $343 million, including cumulative translation gain
in the amount of $19 million recycled to the income statement. In the
year ended 30 June 2025, $8 million (2024 – $10 million) charges
directly attributable to the disposal have been accounted for.
(16) In the year ended 30 June 2025, an exceptional loss of $5 million
was recorded in relation to the disposal of Diageo's share in the France
joint operation.
(17) 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
$58 million in the year ended 30 June 2024, which was recognised as a
non-operating item attributable to the sale, including cumulative
translation losses of $26 million recycled to the income statement. In
the year ended 30 June 2025, $4 million gain was accounted for driven
by the reversal of accrued charges.
(18) In the year ended 30 June 2025, $4 million transaction costs
were incurred in respect of the prospective disposal of Seychelles
Breweries Limited.
(19) On 24 September 2024, Diageo acquired the part of the entire
issued share capital of Ritual Beverage Company LLC (owner of the
Ritual Zero Proof non-alcoholic spirits brand), that it did not already
own. As a result of Ritual Zero Proof becoming a subsidiary of the
group in the year ended 30 June 2025, a gain of $25 million arose,
being the difference between the book value of the associate prior to
the transaction and its fair value.
(20) On 19 June 2025, United Spirits Limited acquired a controlling
shareholding in Nao Spirits. Step up loss of $1 million was accounted
for as non-operating exceptional item. The fair values of assets and
liabilities acquired are provisional and will be finalised in the year
ending 30 June 2026.
(21) Other exceptional non-operating items include subsequent gains
and charges of items that were originally recognised as exceptional at
inception. In the year ended 30 June 2023, other exceptional non-
operating items resulted in a net gain of $21 million, mainly driven by
the sale of its Archers brand.
(22) In the year ended 30 June 2025, the group capitalised borrowing
costs of $58 million in respect of purchases of property, plant,
equipment and computer software in the prior years.
For further information on acquisition and sale of businesses and
brands, see notes 8(a) and 8(b).
Cash payments and receipts included in net cash inflow from operating
activities in respect of exceptional items were as follows:
160 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
2025 $ million | 2024 $ million | 2023 $ million | |
Distribution termination fee | ( | ( | |
Litigation | ( | ( | |
Restructuring programme | ( | ( | ( |
Thalidomide (note 15(d)) | ( | ( | ( |
Distill Ventures exits | ( | ||
Winding down Russian operations | ( | ( | |
Total cash payments | ( | ( | ( |
2025 $ million | 2024 $ million | 2023 $ million | |
Excise duties | |||
Cost of sales | |||
Marketing | |||
Other operating items | |||
Comprising: | |||
Excise duties | |||
India | |||
Great Britain | |||
United States | |||
Other | |||
Increase in inventories | ( | ( | ( |
Raw materials and consumables | |||
Marketing | |||
Other external charges(1) | |||
Staff costs | |||
Depreciation, amortisation and impairment | |||
Gains on disposal of properties | ( | ( | |
Net foreign exchange losses | |||
Other operating income | ( | ( | ( |
(1)Other external charges mainly include distribution and warehousing cost, utilities, other
personnel costs not included in staff costs, other professional costs, system/IT costs,
Other external charges include research and development expenditure
in respect of new drinks products and package design of $74 million
(2024 – $69 million; 2023 – $63 million) and maintenance and repairs of
$179 million (2024 – $171 million; 2023 – $171 million).
Other external charges include the fees of the principal auditor of the
group, PricewaterhouseCoopers LLP, and its affiliates (PwC) and are
analysed below:
2025 $ million | 2024 $ million | 2023 $ million | |
Audit of these financial statements(1) | |||
Audit of financial statements of subsidiaries | |||
Total audit fees | |||
Audit related assurance services(2) | |||
Other assurance services(3) | |||
(1)For the year ended 30 June 2025, in respect of reporting under section 404 of the US
Sarbanes-Oxley Act is reported on the line of ‘Audit of these financial statements'. The
presentation of 'Audit of these financial statements' line for the years ended 30 June 2024
and 2023 has been aligned to 'Audit of these financial statements' line for the year ended
30 June 2025.
(2)Audit related assurance services are in respect of the interim review and other audit-
related services over financial information.
(3)Other assurance services comprise the aggregate fees for assurance and related services
that are not reported under ‘total audit fees’.
(i) Under SEC regulations, the auditors' fees of $18.8 million (2024 - $18.0 million, 2023 -
$17.7 million) is required to be presented as follows: audit fee of $18.0 million (2024 -
$17.0 million, 2023 - $16.8 million) and other audit related fee of $0.8 million (2024 - $1.0
Audit services provided by firms other than PwC for the year ended 30
June 2025 were$0.5 million (2024 – $0.1 million; 2023 – $0.1 million).
Further PwC fees for audit services in respect of post-employment
plans were $0.6 million for the year ended 30 June 2025 (2024 – $0.4
million; 2023 – $0.3 million).
2025 $ million | 2024 $ million | 2023 $ million | |
Aggregate remuneration | |||
Wages and salaries | |||
Share-based incentive plans | |||
Employer’s social security | |||
Employer’s pension | |||
Defined benefit plans | |||
Defined contribution plans | |||
Other post-employment plans | |||
(excluding employees of associates and joint ventures) was as follows:
2025 | 2024 | 2023 | |
North America | |||
Europe | |||
Asia Pacific | |||
Latin America and Caribbean | |||
Africa | |||
SC&P | |||
Corporate and other | |||
At 30 June 2025, on a full-time equivalent basis, the group had 29,632
(2024 – 30,092 ; 2023 – 30,269 ) employees. The average number of
employees of the group, including part-time employees, for the year
was 30,232 (2024 – 30,839 ; 2023 – 30,419 ).
161 | Diageo Form 20-F 2025 |
Included in the table above are exceptional operating items as follows:
2025 $ million | 2024 $ million | 2023 $ million | |
Depreciation, amortisation and impairment | |||
Brand, goodwill, investments in associates and other investments impairment charges/(income) | ( | ||
Tangible asset impairment and accelerated depreciation | |||
Staff costs | |||
Other external charges | |||
Other operating income | ( | ( | |
Total exceptional operating items (note 3) | ( | ||
Cost of sales | |||
Other operating expenses/(income) | ( |
Accounting policies | ||
Net interest includes interest income and charges in respect of financial instruments and the results of hedging transactions used to manage interest rate risk. Finance charges directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of that asset. Borrowing costs which are not capitalised are recognised in the income statement using the effective interest method. All other finance charges are recognised primarily in the income statement in the year in which they are incurred. Net other finance charges include items in respect of post- employment plans, the discount unwind of long-term obligations and hyperinflation charges. The results of operations in hyperinflationary economies are adjusted to reflect the changes in the purchasing power of the local currency of the entity before being translated to US dollar. The impact of derivatives, excluding cash flow hedges that are in respect of commodity price risk management or those that are used to hedge the currency risk of highly probable future currency cash flows, is included in interest income or | ||
2025 $ million | 2024 $ million | 2023 $ million | |
Interest income | |||
Fair value gain on financial instruments | |||
Total interest income(1) | |||
Interest charge on bonds, commercial paper, bank loans and overdrafts | ( | ( | ( |
Interest charge on finance leases | ( | ( | ( |
Borrowing costs capitalised | |||
Borrowing costs capitalised - exceptional item(2) | |||
Other interest charges | ( | ( | ( |
Fair value loss on financial instruments | ( | ( | ( |
Total interest charges(1) | ( | ( | ( |
Net interest charges | ( | ( | ( |
Net finance income in respect of post-employment plans in surplus (note 14) | |||
Monetary gain on hyperinflation in various economies (note 1(f)) | |||
Interest income in respect of direct and indirect tax | |||
Change in financial liability — Zacapa (Level 3) | |||
Total other finance income | |||
Net finance charge in respect of post- employment plans in deficit (note 14) | ( | ( | ( |
Monetary loss on hyperinflation in various economies (note 1(f)) | ( | ( | |
Interest charge in respect of direct and indirect tax | ( | ( | ( |
Unwinding of discounts | ( | ( | ( |
Change in financial liability — Zacapa (Level 3) | ( | ||
Other finance charges | ( | ( | ( |
Total other finance charges | ( | ( | ( |
Net other finance charges |
(1)Includes $101 million interest income and $854 million interest charge in respect of
financial assets and liabilities that are not measured at fair value through income
statement (2024 – $59 million income and $765 million charge; 2023 – $98 million income
and $628 million charge).
(2)Cumulative impact of prior years' unrecognised borrowing costs reclassified to qualifying
assets.
162 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Accounting policies | ||
An associate is an undertaking in which the group has a long-term equity interest and over which it has the power to exercise significant influence. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The group’s interest in the net assets of associates and joint ventures is reported in investments in the consolidated balance sheet and its interest in their results (net of tax) is included in the consolidated income statement below the group’s operating profit. Associates and joint ventures are initially recorded at cost including transaction costs, and the group's share of post acquisition changes in the investee's reserves are recognised under the equity method. Investments in associates and joint ventures acquired prior to 1 July 1998 comprise the cost of shares less goodwill written off to reserves that has not been reinstated, plus the group’s share of post acquisition reserves. Investments in associates and joint ventures are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment review compares the net carrying value with the recoverable amount, where the recoverable amount is the higher of the value in use calculated as the present value of the group’s share of the associate’s future cash flows and its fair value less costs of disposal. | ||
Diageo’s principal associate is Moët Hennessy of which Diageo owns
International. Moët Hennessy is the wines and spirits division of LVMH
Moët Hennessy Louis Vuitton SA (LVMH). LVMH is based in France and is
listed on the Paris Stock Exchange. Moët Hennessy is also based in
France and is a producer and exporter of champagne and cognac
brands.
A number of joint distribution arrangements have been established
with LVMH in Asia Pacific, principally covering distribution of Diageo’s
Scotch whisky and gin premium brands and Moët Hennessy’s
champagne and cognac premium brands. Diageo has undertaken not to
engage in any champagne or cognac activities competing with those of
Moët Hennessy. The arrangements also contain certain provisions for
the protection of Diageo as a non-controlling shareholder in Moët
Hennessy.
Joint distribution agreements had also been established in France, but
Diageo terminated the existing distribution agreements in place for
France of all remaining Diageo brands effective from 1 January 2025.
associates and joint ventures is as follows:
Moët Hennessy $ million | Others $ million | Total $ million | |
Cost less provisions | |||
At 30 June 2023 | |||
Exchange differences | ( | ( | ( |
Additions | |||
Share of profit/(loss) after tax | ( | ||
Dividends | ( | ( | ( |
Share of movements in other comprehensive income and equity | |||
Impairment charged during the year | ( | ( | |
At 30 June 2024 | |||
Exchange differences | |||
Additions | |||
Share of profit/(loss) after tax | ( | ||
Step acquisition | ( | ( | |
Dividends | ( | ( | ( |
Share of movements in other comprehensive income and equity | |||
Impairment charged during the year | ( | ( | |
Transfer from other investments | |||
At 30 June 2025 |
(i)Investment in associates includes loans given to and preference shares invested in associates of $37
Following a strategic review in March 2025, Diageo decided it would no
longer be bringing any new brands into the Distill Ventures programme
and exit several businesses, resulting in an impairment charge of $308
million in exceptional operating items in the year ended 30 June 2025.
(b) Moët Hennessy prepares its financial statements under IFRS as
endorsed by the EU in euros to 31 December each year. The results
were adjusted for alignment with Diageo accounting policies and were
translated at $1 = €0.92 (2024 – $1 = €0.93 ; 2023 – $1 = €0.96 ).
and balance sheet information as at 30 June 2025 and 30 June 2024 of
Moët Hennessy are as follows:
2025 $ million | 2024 $ million | 2023 $ million | |
Sales | |||
Profit for the year | |||
Total comprehensive income |
2025 $ million | 2024 $ million | |
Non-current assets | ||
Current assets | ||
Total assets | ||
Non-current liabilities | ( | ( |
Current liabilities | ( | ( |
Total liabilities | ( | ( |
Net assets |
(i) Including acquisition fair value adjustments principally in respect of
Moët Hennessy’s brands and translated at $1 = €0.85 (2024 – $1 =
(c) Information on transactions between the group and its associates
and joint ventures is disclosed in note 21.
(d) The associates and joint ventures have not reported any material
163 | Diageo Form 20-F 2025 |
Accounting policies | ||
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax treatments are not recognised unless it is probable that a tax authority will accept the treatment. Once considered to be probable, tax treatments are reviewed each year to assess whether a provision should be taken against full recognition of the treatment on the basis of potential settlement through negotiation and/or litigation with the relevant tax authorities. Tax provisions are included in current liabilities. Penalties and interest on tax liabilities are included in operating profit and finance charges, respectively. Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax purposes, except for deferred tax provision arising on goodwill from business combinations. The amount of deferred tax reflects the expected recoverable amount and is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using the basis of taxation enacted or substantively enacted by the balance sheet date. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where the group is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance. | ||
Critical accounting estimates and judgements | ||
The group is required to estimate the corporate tax in each of the jurisdictions in which it operates. Management is required to estimate the amount that should be recognised as a tax liability or tax asset in many countries which are subject to tax audits which by their nature are often complex and can take several years to resolve; current tax balances are based on such estimations. Tax provisions are based on management’s judgement and interpretation of country specific tax law and the likelihood of settlement. However, the actual tax liabilities could differ from the provision and in such event the group would be required to make an adjustment in a subsequent period which could have a material impact on the group’s profit for the year. The evaluation of deferred tax asset recoverability requires estimates to be made regarding the availability of future taxable income. For brands with an indefinite life, management’s intention is to recover the book value through a potential sale in the future, and therefore the deferred tax on the brand value is generally recognised using the appropriate country capital gains tax rate. To the extent brands with an indefinite life have been impaired, management considers this to be an indication of recovery through use and in such a case deferred tax on the brand value is recognised using the appropriate country corporate income tax rate. | ||
United Kingdom | Rest of world | Total | |||||||
2025 $ million | 2024 $ million | 2023 $ million | 2025 $ million | 2024 $ million | 2023 $ million | 2025 $ million | 2024 $ million | 2023 $ million | |
Current tax | |||||||||
Current year | |||||||||
Adjustments in respect of prior years | ( | ( | ( | ( | ( | ( | ( | ( | |
Deferred tax | |||||||||
Origination and reversal of temporary differences | ( | ( | ( | ( | |||||
Changes in tax rates | ( | ( | |||||||
Adjustments in respect of prior years | ( | ( | |||||||
( | ( | ( | ( | ||||||
Taxation on profit | |||||||||
The taxation charge includes the following exceptional items:
2025 $ million | 2024 $ million | 2023 $ million | |
Brand, goodwill and other assets impairment(1) | ( | ( | |
Restructuring programme(2) | ( | ( | ( |
Distribution model change in France(3) | ( | ||
Various dispute and litigation matters(4) | ( | ( | |
Disposal of businesses and brands(5) | ( | ||
Borrowing costs capitalised(6) | |||
US guarantee fee claim(7) | ( | ||
Distribution termination fee | ( | ||
( | ( |
164 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
(1) In the year ended 30 June 2025, impairment charges recognised within exceptional operating items resulted in exceptional tax credits of $30 million in respect of Distill Ventures, $55 million in
respect of the Aviation American Gin brand and tangible fixed assets, $40 million in respect of various US brands, tangible fixed assets and inventory and $13 million in respect of the Bell’s whisky
brand. In the year ended 30 June 2024, an exceptional tax charge of $95 million was recognised in relation to the reversal of the Shui Jing Fang brand impairment charge, partially offset by an
exceptional tax credit of $19 million in respect of the impairment of the Chase brand and the related tangible fixed assets and an exceptional tax credit of $13 million on brand impairments in the
US ready-to-drink portfolio. In the year ended 30 June 2023, an exceptional tax credit of $154 million was recognised mainly in respect of the impairment of the McDowell's brand.
(2) In the year ended 30 June 2025, an exceptional tax credit of $46 million was recognised in respect of restructuring programmes.
(3)In the year ended 30 June 2025, an exceptional tax credit of $36 million was recognised in respect of the transformation of the distribution model in France as the company agreed with LVMH to
exit from their joint operation and to terminate the existing distribution agreements for Diageo brands.
(4)In the year ended 30 June 2025, an exceptional tax credit of $12 million was recognised in respect of various dispute and litigation matters in North America and Europe, including certain costs
and expenses associated therewith. In the year ended 30 June 2024, an exceptional tax credit of $23 million was recorded in relation to various dispute and litigation matters in North America,
including certain costs and expenses associated therewith.
(5)In the year ended 30 June 2023, the exceptional net tax charge of $37 million mainly comprised a tax charge of $52 million in respect of the sale of Guinness Cameroun S.A., partially offset by a
tax credit of $11 million in respect of the sale of certain USL businesses.
(6)In the year ended 30 June 2025, an exceptional tax charge of $15 million was recognised in relation to the capitalisation of borrowing costs on the purchase of property, plant, equipment and
computer software in the prior year.
(7)In the year ended 30 June 2023, an exceptional tax credit of $68 million was recognised in respect of the deductibility of fees paid to Diageo plc for guaranteeing externally issued debt of US
group entities. Following engagement with the tax authorities, guarantee fees for the periods ended 30 June 2012 to 30 June 2022 are fully deductible.
2025 $ million | 2025 % | 2024 $ million | 2024 % | 2023 $ million | 2023 % | |
Profit before taxation | ||||||
Share of after tax results of associates and joint ventures | ||||||
Profit before taxation excluding share of after tax results of associates and joint ventures | ||||||
Notional charge at UK corporation tax rate | ||||||
Differences in overseas tax rates | ( | ( | ( | ( | ||
Non-taxable gain on disposals of businesses | ( | ( | ||||
Disposal of businesses and brands | ( | ( | ||||
Other items not chargeable | ( | ( | ( | ( | ( | ( |
Impairment | ( | ( | ||||
Other items not deductible | ||||||
Irrecoverable withholding taxes | ||||||
Movement in provision in respect of uncertain tax positions(1) | ||||||
Changes in tax rates | ( | ( | ||||
Adjustments in respect of prior years(2) | ( | ( | ( | ( | ||
Taxation on profit / Reported tax rate(3) | ||||||
Tax rate before exceptional items(3) | — | — | — |
(1) Movement in provision in respect of uncertain tax positions includes both current and prior year uncertain tax position movements.
(2) Excludes prior year movement in provisions. Included in the year ended 30 June 2023 was an exceptional tax credit of $68 million in respect of the deductibility of fees paid to Diageo plc for
guaranteeing externally issued debt of its US group entities.
(3) Definitions of reported tax rate and tax rate before exceptional items have been revised to exclude the share of after tax results of associates and joint ventures from profit before taxation, as
this represents post-tax profit, hence is considered as a non-essential factor of the calculation. The presentation of the reported tax rate and the tax rate before exceptional items for the
years ended 30 June 2023 and 30 June 2024 has been aligned to the new definition.
The table above reconciles the notional taxation charge calculated at the UK tax rate, to the actual total tax charge. As a group operating in
multiple countries, the actual tax rates applicable to profits in those countries are different from the UK tax rate. The impact is shown in the table
above as differences in overseas tax rates. The group’s worldwide business leads to the consideration of a number of important factors which may
affect future tax charges, such as the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax
regime reforms, acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities.
Significant ongoing changes in the international tax environment and an increase in global tax audit activity mean that tax uncertainties and
associated risks have been gradually increasing. In the medium-term, these risks could result in an increase in tax liabilities or adjustments to the
carrying value of deferred tax assets and liabilities. See note 19(f).
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 year ended
30 June 2025, ongoing audits that are provided for individually are not expected to result in a material tax liability. The current tax asset of $354
million (30 June 2024 – $304 million) and tax liability of $138 million (30 June 2024 – $136 million) include $217 million (30 June 2024 – $209 million)
of provisions for tax uncertainties.
The cash tax paid in the year ended 30 June 2025 amounts to $1,114 million (30 June 2024 – $1,099 million) and is $11 million higher than the
current tax charge (30 June 2024 – $7 million lower). This arises as a result of timing differences between the accrual of income taxes, the
movement in the provision for uncertain tax positions, the actual payment of cash and refund of the deposit payments.
In December 2021, the OECD released a framework for Pillar Two Model Rules which introduced 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 United Kingdom
applies to Diageo from the financial year ended 30 June 2025. Diageo is continuously reviewing the amendments to the legislation and also
monitoring the status of implementation of the model rules outside of the United Kingdom. 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 Model Rules. A current tax expense of
$7 million as a result of the Pillar Two Model Rules has been included in the total tax charge for the year ended 30 June 2025.
Deferred tax recognised in the consolidated balance sheet comprise the following net deferred tax (liabilities)/assets:
165 | Diageo Form 20-F 2025 |
Property, plant and equipment $ million | Intangible assets $ million | Post- employment plans $ million | Tax losses $ million | Other temporary differences(1) $ million | Total $ million | |
At 30 June 2023 | ( | ( | ( | ( | ||
Exchange differences | ( | ( | ||||
Recognised in income statement | ( | ( | ( | ( | ( | |
Recognised in other comprehensive income and equity | ( | ( | ( | ( | ||
Tax rate change – recognised in income statement | ( | |||||
Tax rate change – recognised in other comprehensive income and equity | ( | ( | ( | ( | ||
Acquisition(2) | ||||||
Transfer from assets held for sale | ( | ( | ( | |||
Sale of businesses | ( | |||||
At 30 June 2024 | ( | ( | ( | ( | ||
Exchange differences | ( | ( | ( | ( | ||
Recognised in income statement | ( | ( | ||||
Recognised in other comprehensive income and equity | ( | ( | ( | ( | ||
Tax rate change – recognised in income statement | ( | ( | ( | |||
Transfer to assets held for sale | ( | ( | ||||
At 30 June 2025 | ( | ( | ( | ( |
(1)Deferred tax on other temporary differences includes hyperinflation, fair value movement on cross-currency swaps, interest and finance costs, share-based payments and intra-group sales of
products.
(2)In the year ended 30 June 2024 a deferred tax asset of $53 million was recognised in relation to the purchase of shares of DeLeon Holdco LLC.
levied by the same taxation authority on the same taxable fiscal unit,
the net deferred tax liability comprises:
2025 $ million | 2024 $ million | |
Deferred tax assets | ||
Deferred tax liabilities | ( | ( |
( | ( |
Deferred tax assets of $150 million include $76 million (2024 – $98
million) arising in jurisdictions with prior year taxable losses. The
majority of the asset is in respect of Brazil, Germany and Colombia. It
is considered more likely than not that there will be sufficient future
taxable profits to realise these deferred tax assets, which for the most
part arose on losses from a historic one-off transaction. The majority
of deferred tax assets can be carried forward indefinitely. From the
total recognised tax losses of $57 million, it is expected that $8 million
will be utilised in the year ending 30 June 2026.
The following table shows the tax value of tax losses which has
not been recognised due to uncertainty over their utilisation in
future periods. The gross value of those losses is $741 million (2024 –
$724 million).
2025 $ million | 2024 $ million | |
Capital losses – indefinite | ||
Trading losses – indefinite | ||
Trading and capital losses – expiry dates up to 2035 | ||
Additionally, no deferred tax asset has been recognised in respect of
certain temporary differences arising from brand valuations, as the
group is not planning to sell those brands, thus the benefit from the
temporary differences is unlikely to be realised.
(f) Unrecognised deferred tax liabilities
Relevant legislation largely exempts overseas dividends remitted from
tax. A tax liability is more likely to arise in respect of withholding
taxes levied by the overseas jurisdiction. Deferred tax is provided
where there is an intention to distribute earnings, and a tax liability
arises. It is impractical to estimate the amount of unrecognised
deferred tax liabilities in respect of these unremitted earnings.
The aggregate amount of temporary differences in respect of
investments in subsidiaries, branches, interests in associates and joint
ventures for which deferred tax liabilities have not been recognised is
166 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Introduction
This section describes the assets used in the group’s operations and the liabilities incurred. Liabilities relating to the group’s financing activities are
included in section ‘Risk management and capital structure’ and balance sheet information in respect of associates, joint ventures and taxation are
covered in section ‘Results for the year’. This section also provides detailed disclosures on the group’s recent acquisitions and disposals,
performance and financial position of its defined benefit post-employment plans.
Accounting policies | ||
The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up to, the date that control passes. Business combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any contingent consideration. Among other factors, the group considers the nature of, and compensation for the selling shareholders' continuing employment to determine if any contingent payments are for post-combination employee services, which are excluded from consideration. On the acquisition of a business, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of acquisition, are attributed to the net assets, including identifiable intangible assets and contingent liabilities acquired. Directly attributable acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred. The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholder’s proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition. Where the group has issued a put option over shares held by a non-controlling interest, the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options. Movements in the estimated liability in respect of put options are recognised in retained earnings. Transactions with non-controlling interests are recorded directly in retained earnings. For all entities in which the company directly or indirectly owns equity, a judgement is made to determine whether it controls and therefore should fully consolidate the investee. An assessment is carried out to determine whether the group has the exposure or rights to the variable returns of the investee and has the ability to affect those returns through its power over the investee. To establish control, an analysis is carried out of the substantive and protective rights that the group and the other investors hold. This assessment is dependent on the activities and purpose of the investee and the rights of the other shareholders, such as which party controls the board, executive committee and material policies of the investee. Determining whether the rights that the group holds are substantive, requires management judgement. Where less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder or organised group of vote holders, this may be an indicator of de facto control. An assessment is needed to determine all the factors relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be consolidated as a subsidiary. Where voting power and returns from an investment are split equally between two entities then the arrangement is accounted for as a joint venture. | ||
167 | Diageo Form 20-F 2025 |
(a) Acquisition of businesses
were as follows:
Net assets acquired and consideration | |||
2025 $ million | 2024 $ million | 2023 $ million | |
Brands and other intangibles | |||
Property, plant and equipment | |||
Inventories | |||
Other working capital | ( | ||
Deferred tax | ( | ||
Borrowings | ( | ||
Cash | |||
Fair value of assets and liabilities | |||
Goodwill arising on acquisition | |||
Step acquisitions | ( | ( | |
Consideration payable | |||
Satisfied by: | |||
Cash consideration paid | ( | ( | |
Contingent consideration payable | ( | ( | |
Deferred consideration payable | ( | ( | |
( | ( | ||
purchase of shares of non-controlling interests in the three years ended
30 June 2025 were as follows:
Consideration | |||
2025 $ million | 2024 $ million | 2023 $ million | |
Acquisitions in the year - subsidiaries | |||
Cash consideration paid | ( | ( | |
Cash acquired | |||
Prior year acquisitions - subsidiaries | |||
Other consideration | ( | ( | ( |
Investments in associates | |||
Cash consideration paid - increase in ownership interest | ( | ( | ( |
Capital injection(1) | ( | ( | ( |
Net cash outflow on acquisition of businesses | ( | ( | ( |
Purchase of shares of non-controlling interests | ( | ( | ( |
Total net cash outflow | ( | ( | ( |
(1) Additional investments in a number of Distill Ventures associates
Acquisitions in the year
On 24 September 2024, Diageo acquired the part of the entire issued
share capital of Ritual Beverage Company LLC (owner of Ritual Zero
Proof non-alcoholic spirits brand), that it did not already own.
On 19 June 2025, Diageo announced that it acquired a controlling stake
in Nao Spirits & Beverages Private Limited.
Prior year acquisitions
On 10 March 2023, Diageo completed the acquisition of Kanlaon
Limited and Chat Noir Co. Inc., (the owner of Don Papa Rum) to
support Diageo’s participation in the super-premium dark rum segment
for upfront cash consideration of €246 million ($261 million), deferred
consideration of €4 million ($4 million) and contingent consideration of
up to €178 million ($189 million) through to 2028 subject to certain
financial performance targets, reflecting the brand’s expected
growth potential. The fair value of the contingent consideration of
€82 million ($87 million) was estimated by calculating the present
value of the future expected cash flows which is dependent on
management’s estimates in respect of the forecasting of future cash
flows and the discount rates applicable to the future cash flows.
The goodwill arising on the acquisition of Don Papa Rum represents
expected revenue synergies and the acquired workforce.
Diageo completed further acquisitions in the year ended 30 June 2023:
(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. The aggregate up-front cash consideration paid on completion
of these transactions in the year ended 30 June 2023 was $112 million.
Purchase of shares of non-controlling interests
On 16 January 2024, Diageo agreed with Combs Wine and Spirits LLC to
purchase the 50 % of the share capital of DeLeon Holdco LLC that
Diageo did not already own for a total consideration of $223 million,
including transaction costs. The transaction was completed and Diageo
is now the 100% owner of the DeLeón brand.
On 24 March 2023, Diageo completed the purchase of 14.97 % of the
share capital of EABL for an aggregate consideration of KES 22,732
million ($173 million) in cash and transaction costs of $5 million. This
took Diageo’s shareholding in EABL from 50.03 % to 65 %. EABL was
already controlled and therefore consolidated prior to this transaction.
Transactions were recognised in retained earnings.
168 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
follows:
Guinness Nigeria PLC $ million | Other $ million | 2025 $ million | 2024 $ million | 2023 $ million | |
Sale consideration | |||||
Cash received | |||||
Cash disposed of | ( | ( | ( | ( | |
Transaction and other directly attributable costs paid | ( | ( | ( | ( | ( |
Net cash received | |||||
Deferred consideration receivable | |||||
Investment in associates received | |||||
Transaction costs payable and other directly attributable items | ( | ( | ( | ( | ( |
Net (assets)/liabilities disposed of | |||||
Brands | ( | ( | ( | ||
Other non-current assets | ( | ( | |||
Assets and liabilities held for sale | ( | ||||
Inventories | ( | ( | ( | ( | |
Other working capital | ( | ( | |||
Other borrowings | |||||
Corporate tax | ( | ||||
Deferred tax | |||||
Post-employment benefit liabilities | |||||
( | ( | ( | ( | ||
Less non-controlling interest | ( | ( | |||
Impairment charge recognised for prospective sale of Guinness Ghana | ( | ( | ( | ||
Exchange recycled from other comprehensive income | ( | ( | ( | ( | ( |
(Loss)/gain on disposal before taxation | ( | ( | ( | ( | |
Taxation | ( | ( | ( | ( | |
(Loss)/gain on disposal after taxation | ( | ( | ( | ( |
On 30 September 2024, Diageo completed the sale of its shareholding in Guinness Nigeria PLC to N-Seven Nigeria Ltd., part of the Tolaram group.
The aggregate consideration for the disposal was $64 million, the disposed net liabilities of $20 million mainly included trade and other payables
and property, plant and equipment. The transaction resulted in a non-operating exceptional loss before tax of $125 million, including cumulative
translation losses in the amount of $175 million recycled to the income statement. The disposed Nigeria operations contributed net sales of
$65 million (2024 – $296 million; 2023 – $504 million), operating loss of $10 million (2024– $60 million; 2023– $14 million) in the year ended 30 June
2025.
On 24 June 2025, Diageo announced the sale of Diageo Operations Italy S.p.A., inclusive of the Santa Vittoria production facility, to NewPrinces
S.p.A. and a non-operating charge of $29 million attributable to the prospective sale was recognised in the year ended 30 June 2025.
On 28 January 2025, Diageo announced the agreement to sell Guinness Ghana Breweries PLC, its brewery in Ghana to the Castel Group and a non-
operating charge of $114 million attributable to the prospective sale was recognised in the year ended 30 June 2025.
On 23 January 2025, Diageo sold the Cacique brand and related inventory to Bardinet S.A., a Spanish spirits company for a consideration of
$68 million which resulted in a non-operating exceptional charge before tax of $20 million.
On 15 October 2024, Diageo sold the Pampero brand and related inventory to Gruppo Montenegro, a leading Italian company in the premium spirits
and food sectors, for a consideration of $57 million which resulted in a non-operating exceptional gain before tax of $53 million.
On 19 September 2024, Diageo sold the Safari brand to Casa Redondo, a Portuguese beverage-alcohol company for a consideration of $16 million
which resulted in a non-operating exceptional gain before tax of $15 million.
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 $58 million in
the year ended 30 June 2024, 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.
169 | Diageo Form 20-F 2025 |
On 26 May 2023, Diageo completed the sale of Guinness Cameroun S.A., its brewery in Cameroon. The aggregate consideration for the disposal was
$475 million, the disposed net assets of $79 million mainly included property, plant and equipment and trade and other payables. The transaction
resulted in a non-operating exceptional gain of $343 million. The disposed Cameroon operations contributed net sales of $128 million, and operating
profit of $33 million in the year ended 30 June 2023.
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 net working capital of $34 million and brands of $23 million, and $19 million goodwill was
derecognised. The transaction resulted in a non-operating exceptional gain of $5 million. Popular brands contributed net sales of $43 million, and
operating profit of $6 million in the year ended 30 June 2023.
Breweries. The disposal was completed on 1 April 2020 for an aggregate consideration of ZAR 600 million ($34 million) from which ZAR 378 million
($22 million) was deferred.
2025 $ million | 2024 $ million | |
Intangible assets | ||
Property, plant and equipment | ||
Deferred tax assets | ||
Inventories | ||
Trade and other receivables | ||
Corporate tax receivables | ||
Cash | ||
Assets held for sale | ||
Trade and other payables | ( | ( |
Corporate tax payables | ( | |
Provisions | ( | |
Deferred tax liabilities | ( | |
Bank overdrafts | ( | |
Loans and leases | ( | |
Post-employment benefit liabilities | ( | |
Liabilities held for sale | ( | ( |
Total |
On 24 June 2025, Diageo announced the sale of Diageo Operations Italy S.p.A., inclusive of the Santa Vittoria production facility, to NewPrinces
S.p.A., a leading Italian company in the food and drink industry. The sale was considered to be highly probable on 30 June 2025 and it is expected
to be completed in the six months ending 31 December 2025. The impacted assets and liabilities were classified as held for sale on 30 June 2025.
On 1 July 2025, Diageo completed the sale of its shareholding in Seychelles Breweries Limited, its brewery in Seychelles to Phoenix Beverages for
approximately $80 million. The sale was considered to be highly probable on 30 June 2025 and accordingly the impacted assets and liabilities were
classified as held for sale.
On 3 July 2025, Diageo completed the sale of its shareholding in Guinness Ghana Breweries PLC, its brewery in Ghana to Castel Group for
approximately $81 million. The impacted assets and liabilities were classified as held for sale on 30 June 2025, measured at fair value less cost
of disposal as the lower of cost and fair value less cost of disposal, resulting in an impairment charge of $97 million. On 30 June 2025, cumulative
translation losses and hyperinflationary adjustments recognised in reserves were a loss of $70 million, which will be recycled to the income
statement at the completion of the transaction.
Assets and liabilities held for sale at 30 June 2024 included Guinness Nigeria PLC. On 11 June 2024, Diageo announced the agreement to sell its
170 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Accounting policies | ||
Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses. Acquired brands and other intangible assets are initially recognised at fair value if they are controlled through contractual or other legal rights, or are separable from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having indefinite useful economic lives, they are not amortised. Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets. Goodwill arising on acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising subsequent to 1 July 1998 has been capitalised. A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. That is the base of the impairment review. Amortisation and impairment of intangible assets is based on their useful economic lives and they are amortised on a straight-line basis and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised and are reviewed for impairment at least annually or when there is an indication that the assets may be impaired. Impairment reviews compare the net carrying value with the recoverable amount (where recoverable amount is the higher of fair value less costs of disposal and value in use) and in case the net carrying value exceeds the recoverable amount, an impairment charge is recognised. Amortisation and any impairment write downs are charged to other operating expenses in the income statement. It is reviewed at each reporting date whether there is any indication that an impairment loss recognised in prior periods for an asset other than goodwill either no longer exists or has decreased. Reversal of impairment loss is considered if the recoverable amount of the assets is constantly and significantly above the carrying value over an extended period. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation) had no impairment loss been recognised for the asset in prior years. Any reversal of impairment loss is charged against the same income statement line on which the initial impairment was recorded. Computer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to | ||
Critical accounting estimates and judgements | ||
Assessment of the recoverable amount of an intangible asset and the useful economic life of an asset are based on management's estimates. Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts. Value in use and fair value less costs of disposal are both considered for these reviews and any impairment charge is based on these. The tests are dependent on management’s estimates in respect of the forecasting of future cash flows, the discount rates applicable to the future cash flows and what expected growth rates are reasonable. Judgement is required in determining the cash-generating units. Such estimates and judgements are subject to change as a result of changing economic conditions and actual cash flows may differ from forecasts. | ||
Consideration of climate risk impact | ||
The impact of climate risk on the future cash flows has also been considered for scenarios analysed in line with the climate change risk assessment. The climate change scenario analyses performed in 2025 – conducted in line with TCFD recommendations (‘Transition Scenario’ (RCP 2.6), a ‘Moderate Warming’ Scenario (RCP 4.5) and a ‘Severe Warming Scenario (RCP 8.5)) – identified no material financial impact to the current year impairment assessments. | ||
171 | Diageo Form 20-F 2025 |
Brands $ million | Goodwill $ million | Other intangibles $ million | Computer software $ million | Total $ million | |
Cost | |||||
At 30 June 2023 | |||||
Hyperinflation adjustment | |||||
Exchange differences | ( | ( | ( | ( | |
Additions | |||||
Disposals | ( | ( | ( | ( | |
At 30 June 2024 | |||||
Hyperinflation adjustment | |||||
Exchange differences | ( | ||||
Additions | |||||
Disposals | ( | ( | ( | ( | |
Reclassification to assets held for sale | ( | ( | ( | ||
At 30 June 2025 | |||||
Amortisation and impairment | |||||
At 30 June 2023 | |||||
Exchange differences | ( | ( | ( | ( | |
Amortisation for the year | — | — | |||
Impairment | |||||
Reversal of impairment | ( | ( | |||
Disposals | ( | ( | ( | ( | |
At 30 June 2024 | |||||
Exchange differences | ( | ||||
Amortisation for the year | — | — | |||
Impairment | |||||
Disposals | ( | ( | ( | ( | |
At 30 June 2025 | |||||
Carrying amount | |||||
At 30 June 2025 | |||||
At 30 June 2024 | |||||
At 30 June 2023 |
172 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
(a) Brands
indefinite useful economic lives, are as follows:
Principal markets | 2025 $ million | 2024 $ million | |
Crown Royal whisky | |||
Captain Morgan rum | |||
Johnnie Walker whisky | |||
Smirnoff vodka | |||
Shui Jing Fang Chinese white spirit | Greater China | ||
Casamigos tequila | |||
Yenì raki | |||
Don Papa rum | |||
McDowell's No.1 whisky, rum and brandy | |||
Don Julio tequila | |||
Seagram's 7 Crown whiskey | |||
Signature whisky | |||
Zacapa rum | |||
Black Dog whisky | |||
Antiquity whisky | |||
Gordon's gin | |||
Other brands | |||
The brands are protected by trademarks which are renewable
indefinitely in all of the major markets where they are sold. There are
not believed to be any legal, regulatory or contractual provisions that
limit the useful lives of these brands. The nature of the premium
drinks industry is that obsolescence is not a common issue, with
indefinite brand lives being commonplace, and Diageo has a number of
brands that were originally created more than 100 years ago.
Accordingly, the Directors believe that it is appropriate that the brands
are treated as having indefinite lives for accounting purposes and are
therefore not amortised.
For the purposes of impairment testing, goodwill has been attributed
to the following cash-generating units:
2025 $ million | 2024 $ million | |
North America | ||
Europe | ||
Türkiye | ||
Asia Pacific | ||
Greater China | ||
India | ||
Latin America and Caribbean | ||
Mexico | ||
Other cash-generating units | ||
Goodwill has arisen on the acquisition of businesses and includes
synergies arising from cost savings, the opportunity to utilise Diageo’s
distribution network to leverage marketing of the acquired products
and the extension of the group’s portfolio of brands in new markets
around the world.
(c) Other intangibles
Other intangibles principally comprise distribution rights. Diageo owns
the global distribution rights for Ketel One vodka products in
perpetuity, and the Directors believe that it is appropriate to treat
these rights as having an indefinite life for accounting purposes. The
net book value at 30 June 2025 was $1,800 million (2024 – $1,800
million).
(d) Impairment testing
Impairment tests are performed annually, or more frequently if events
or circumstances indicate that the carrying amount may not be
recoverable. Recoverable amounts are calculated based on the value in
use approach, also considering fair value less costs of disposal. The
value in use calculations are based on discounted forecast cash flows
using the assumption that cash flows continue in perpetuity at the
terminal growth rate of each country or region. The individual brands,
other intangibles with indefinite useful lives and the associated
property, plant and equipment are aggregated as separate cash-
generating units. Separate tests are carried out for each cash-
generating unit and for each of the markets. Goodwill is attributed to
each of the markets.
The key assumptions used for the value in use calculations are
as follows:
Cash flows
Cash flows are forecasted for each cash-generating unit for the
financial years based on management's approved plans and reflect the
following assumptions:
Cash flows are projected based on the actual operating results and a
extrapolated up to five years using expected growth rates in line with
management’s best estimates. Growth rates reflect expectations of
sales growth, operating costs and margin, based on past experience
and external sources of information;
The five years forecast period is extended by up to an additional ten
management believes that this period is justified by the maturity of
the market and expects to achieve growth in excess of the terminal
growth rate driven by Diageo’s sales, marketing and distribution
expertise. These cash flows beyond the five years period are projected
using steady or progressively declining growth rates;
Cash flows for the subsequent years after the forecast period are
extrapolated based on a terminal growth rate which does not exceed
the long-term annual inflation rate of the country or region.
173 | Diageo Form 20-F 2025 |
Discount rates
The discount rates used are the weighted average cost of capital which
reflect the returns on government bonds and an equity risk premium
adjusted for the drinks industry specific to the cash-generating units.
The group applies post-tax discount rates to post-tax cash flows as the
valuation calculated using this method closely approximates to
applying pre-tax discount rates to pre-tax cash flows.
For goodwill, these assumptions are based on the cash-generating unit
or group of units to which the goodwill is attributed. For brands, they
are based on a weighted average taking into account the country or
countries where sales are made.
impairment testing are as follows:
2025 | 2024 | |||
Pre-tax discount rate % | Terminal growth rate % | Pre-tax discount rate % | Terminal growth rate % | |
North America | ||||
United States | ||||
Europe | ||||
United Kingdom | ||||
Türkiye | ||||
Asia Pacific | ||||
India | ||||
Greater China | ||||
Latin America and Caribbean | ||||
Mexico | ||||
In the year ended 30 June 2025, an impairment charge of $231 million
in respect of the Aviation American Gin brand and tangible fixed assets
was recognised in exceptional operating items. The charge is mainly
driven by the moderation in forecasted cash flow assumptions due to
softening category outlook and challenging macroeconomic
environment. Value in use and fair value less costs of disposal
methodologies were both considered to assess the recoverable amount.
The value in use that was calculated exceeded the fair value less costs
of disposal. The impairment reduced the deferred tax liability by
$55 million. The recoverable amount is $51 million.
In the year ended 30 June 2025, an impairment charge of $170 million
in respect of various US brands, tangible fixed assets and inventory was
recognised in exceptional operating items. The charge is mainly driven
by the reduction in forecasted cash flow assumptions due to softening
category outlook and challenging macroeconomic environment. Value
in use and fair value less costs of disposal methodologies were both
considered to assess the recoverable amount. The value in use that
was calculated exceeded the fair value less costs of disposal. The
impairment reduced the deferred tax liability by $40 million. The
recoverable amount is $47 million.
In the year ended 30 June 2025, an impairment charge of $51 million in
respect of the Bell’s whisky brand was recognised in exceptional
operating items. The charge is mainly driven by changes in portfolio
prioritisation across Bell’s key markets. Value in use and fair value less
costs of disposal methodologies were both considered to assess the
recoverable amount. The value in use that was calculated exceeded
the fair value less costs of disposal. The brand impairment reduced the
deferred tax liability by $13 million. The recoverable amount is
$141 million.
In the year ended 30 June 2024, a reversal of an impairment charge of
$379 million was recognised in exceptional operating items in respect
of the Shui Jing Fang brand. The reversal increased the deferred tax
liability by $95 million resulting in a net exceptional gain of
$284 million of which $104 million was attributable to the non-
controlling interest.
In the year ended 30 June 2024, an impairment charge of $101 million
in respect of the Chase brand, the related goodwill and tangible fixed
assets was charged to operating exceptional items based on their value
in use. The impairment reduced the tax liability by $19 million
resulting in a net exceptional loss of $82 million.
In the year ended 30 June 2024, an impairment charge of $54 million in
respect of certain brands in the US ready to drink portfolio was
recognised in exceptional operating items, based on their value in use.
The brand impairment reduced the deferred tax liability by
$13 million.
(e) Sensitivity to change in key assumptions
Impairment testing for the year ended 30 June 2025 has identified the following cash-generating units as being sensitive to reasonably possible
changes in assumptions.
their value in use were changed:
Increase in discount rate | Decrease in terminal growth rate | Decrease in cash flows | ||||||
Carrying value of CGU $ million | Headroom $ million | Reasonably possible change | Potential impairment charge $ million | Reasonably possible change | Potential impairment charge $ million | Reasonably possible change | Potential impairment charge $ million | |
Aviation American Gin | ( | ( | ( | |||||
In the year ended 30 June 2024, Aviation American Gin was disclosed as sensitive to a reasonably possible change of 8 ppt decrease in annual growth
rate in the five years forecast period of 2025-2030.
174 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Accounting policies | ||
Land and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. Leaseholds are generally depreciated over the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual values over their expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives fall within the following ranges: buildings – and equipment – Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried at above their recoverable amounts. |
Government grants | ||
Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions pursuant to which they have been granted and that the grants will be received. Government grants in respect of property, plant and equipment are deducted from the asset that they relate to, reducing the depreciation expense charged to the income statement. | ||
Land and buildings $ million | Plant and equipment $ million | Fixtures and fittings $ million | Returnable bottles, kegs and crates $ million | Under construction $ million | Total $ million | |
Cost | ||||||
At 30 June 2023 | ||||||
Hyperinflation adjustment | ||||||
Exchange differences | ( | ( | ( | ( | ( | ( |
Sale of businesses | ( | ( | ( | ( | ||
Additions | ||||||
Disposals | ( | ( | ( | ( | ( | ( |
Transfers | ( | |||||
Reclassification to assets held for sale | ( | ( | ( | ( | ( | |
At 30 June 2024 | ||||||
Hyperinflation adjustment | ||||||
Exchange differences | ||||||
Acquisitions | ||||||
Additions | ||||||
Borrowing costs capitalised | ||||||
Disposals | ( | ( | ( | ( | ( | ( |
Transfers | ( | ( | ||||
Reclassification to assets held for sale | ( | ( | ( | ( | ( | ( |
At 30 June 2025 | ||||||
Accumulated depreciation | ||||||
At 30 June 2023 | — | |||||
Exchange differences | ( | ( | ( | ( | — | ( |
Depreciation charge for the year | — | |||||
Exceptional accelerated depreciation and impairment | — | |||||
Sale of businesses | ( | ( | ( | — | ( | |
Disposals | ( | ( | ( | ( | — | ( |
Reclassification to assets held for sale | ( | ( | ( | — | ( | |
At 30 June 2024 | — | |||||
Exchange differences | — | |||||
Depreciation charge for the year | — | |||||
Exceptional accelerated depreciation and impairment | — | |||||
Disposals | ( | ( | ( | ( | — | ( |
Reclassification to assets held for sale | ( | ( | ( | ( | — | ( |
At 30 June 2025 | — | |||||
Carrying amount | ||||||
At 30 June 2025 | ||||||
At 30 June 2024 | ||||||
At 30 June 2023 |
The net book value of land and buildings comprises freeholds of $2,340 million (2024 – $1,970 million), long leaseholds of $2 million (2024 –
$3 million) and short leaseholds of $559 million (2024 – $546 million). Depreciation was not charged on $216 million (2024 – $182 million) of land.
Property, plant and equipment is net of a government grant of $185 million (2024 – $185 million) received in prior years in respect of the
175 | Diageo Form 20-F 2025 |
Accounting policies | ||
Biological assets held by the group consist of agave (Agave Azul Tequilana Weber) plants. The harvested plants are used during the production of tequila. The maturity cycle of agave ranges between six and eight years; based on this, biological assets are classified as mature and immature. Mature biological assets are measured at fair value less costs to sell on initial recognition and at the end of each reporting period based on the present value of future cash flows discounted at an appropriate rate for Mexico (income approach as per IFRS 13). Immature biological assets are plants that have not reached the point of maturity because their sugar content yield and weight is not enough to be harvested and there is no active market for such plants; consequently the company accounts for these assets by applying fair valuation | ||
Biological assets $ million | |
Fair value | |
At 30 June 2023 | |
Exchange differences | ( |
Transferred to inventories | ( |
Fair value change | ( |
Farming cost capitalised | |
At 30 June 2024 | |
Exchange differences | ( |
Transferred to inventories | ( |
Fair value change | |
Farming cost capitalised | |
At 30 June 2025 |
At 30 June 2025, the number of agave plants was approximately
Accounting policies | ||
Where the group is the lessee, all leases are recognised on the balance sheet as right-of-use assets as part of property, plant and equipment, and depreciated on a straight-line basis with the charge recognised in cost of sales or in other operating items depending on the nature of the costs. The liability, recognised as part of net borrowings, is measured at a discounted value and any interest is charged to finance charges. The group recognises services associated with a lease as other operating expenses. Payments associated with leases where the value of the asset when it is new is lower than $5,000 (leases of low value assets) and leases with a lease term of 12 months or less (short-term leases) are recognised as other operating expenses. A judgement in calculating the lease liability at initial recognition includes determining the lease term where extension or termination options exist. In such instances, any economic incentive to retain or end a lease are considered and extension periods are only included when it is considered reasonably certain that an option to extend a lease will be exercised. | ||
The company principally leases warehouses, office buildings, plant
and machinery, cars and distribution vehicles in the ordinary course
of business.
Land and buildings $ million | Plant and equipment $ million | Total $ million | |
At 30 June 2023 | |||
Exchange differences | ( | ( | ( |
Additions | |||
Disposals | ( | ( | ( |
Depreciation | ( | ( | ( |
At 30 June 2024 | |||
Exchange differences | |||
Additions | |||
Reclassification within property, plant and equipment | ( | ( | |
Reclassification to assets held for sale | ( | ( | ( |
Depreciation | ( | ( | ( |
At 30 June 2025 |
2025 $ million | 2024 $ million | |
Current lease liabilities | ( | ( |
Non-current lease liabilities | ( | ( |
( | ( |
The future cash outflows, which are not included in lease liabilities on
the balance sheet, in respect of extension and termination options
which are not reasonably expected to be exercised are estimated at
$211 million (2024 – $262 million).
176 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
(c) Amounts recognised in the consolidated income
statement
In the year ended 30 June 2025, other external charges (within other
operating items) included $43 million (2024 – $70 million) in respect
of leases of low value assets and short-term leases and $23 million
(2024 – $8 million) in respect of variable lease payments. See note 5
for further information relating to the interest expense on lease
liabilities.
The total cash outflow for leases in the year ended 30 June 2025 was
$212 million (2024 – $209 million).
Accounting policies | ||
Other investments are equity investments that are not classified as investments in associates or joint arrangements nor investments in subsidiaries. They are included in non-current assets. Subsequent to initial measurement, other investments are stated at fair value. Gains and losses arising from the changes in fair value are recognised in the income statement or in other comprehensive income. Accumulated gains and losses included in other comprehensive income are not recycled to the income statement. Dividends from other investments are recognised in the consolidated income statement. Loans receivable are non-derivative financial assets that are not classified as equity investments. They are subsequently measured either at amortised cost using the effective interest method less allowance for impairment or at fair value with gains and losses arising from changes in fair value recognised in the income statement or in other comprehensive income that are recycled to the income statement on the de-recognition of the asset. Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous experience, economic conditions and forward-looking data. Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending on changes in the credit quality of the counterparty. | ||
Loans $ million | Other investment s $ million | Total $ million | |
Cost less allowances or fair value | |||
At 30 June 2023 | |||
Additions | |||
Repayments and disposals | ( | — | ( |
Fair value adjustment | — | ( | ( |
Capitalised interest | — | ||
Impairment reversed/(charged) during the year | ( | ||
At 30 June 2024 | |||
Exchange differences | |||
Additions | |||
Repayments and disposals | ( | — | ( |
Capitalised interest | — | ||
Impairment charged during the year | ( | ( | ( |
Provision movement | |||
Transfer to associates/fair value adjustment | ( | ( | ( |
At 30 June 2025 |
Following a strategic review in March 2025, Diageo decided it would no
longer be bringing any new brands into the Distill Ventures programme
and exit several businesses, resulting in an impairment charge of
$72 million in exceptional operating expenses for the year ended
30 June 2025. At 30 June 2025, loans comprise $11 million (2024 – $6
million; 2023 – $7 million) of loans to customers and other third parties,
after allowances of $137 million (2024 – $138 million; 2023 – $152
million), and $nil (2024 – $57 million; 2023 – $36 million) of loans to
Accounting policies | ||
The group’s principal post-employment funds are defined benefit plans. In addition, the group has defined contribution plans, unfunded post-employment medical benefit liabilities and other unfunded defined benefit post-employment liabilities. For post-employment plans other than defined contribution plans, the amount charged to operating profit is the cost of accruing pension benefits promised to employees over the year, plus any changes arising on benefits granted to members by the group during the year. Net finance charges comprise the net deficit/ surplus on the plans at the beginning of the year, adjusted for cash flows in the year, multiplied by the discount rate for plan liabilities. The differences between the fair value of the plans’ assets and the present value of the plans’ liabilities are disclosed as an asset or liability on the consolidated balance sheet. Any differences due to changes in assumptions or experience are recognised in other comprehensive income. The amount of any pension fund asset recognised on the balance sheet is limited to any future refunds from the plan or the present value of reductions in future contributions to the plan. Contributions payable by the group in respect of defined contribution plans are charged to operating profit as incurred. | ||
Critical accounting estimates and judgements | ||
Application of IAS 19 requires the exercise of estimates and judgement in relation to various assumptions. Diageo determines the assumptions on a country-by-country basis in conjunction with its actuaries. Estimates are required in respect of uncertain future events, including the life expectancy of members of the plans, salary and pension increases, future inflation rates, discount rates and employee and pensioner demographics. The application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and the balance sheet. There may be interdependencies between the assumptions. Where there is an accounting surplus on a defined benefit plan, management judgement is necessary to determine whether the group can obtain economic benefits through a refund of the surplus or by reducing future contributions to the plan. | ||
(a) Post-employment benefit plans
The group operates a number of pension plans throughout the world,
devised in accordance with local conditions and practices. Diageo's
most significant plans are defined benefit plans and are funded by
payments to separately administered trusts or insurance companies.
The group also operates a number of plans that are generally
unfunded, primarily in the United States, which provide to employees
post-employment medical benefits.
The principal plans are in the United Kingdom, Ireland and the United
States where benefits are based on employees’ length of service and
salary. All valuations were performed by independent actuaries using
the projected unit credit method to determine pension costs.
177 | Diageo Form 20-F 2025 |
plans were carried out as follows:
Principal plans | Date of valuation |
United Kingdom(1) | 1 April 2024 |
Ireland(2) | 31 December 2021 |
United States | 1 January 2024 |
(1)The Diageo Pension Scheme (DPS, the UK Scheme) closed to new members in November
2005. Employees who joined Diageo in the United Kingdom between November 2005 and
January 2018, were eligible to become members of the Diageo Lifestyle Plan (a cash
balance defined benefit plan) which was merged into the DPS in July 2023. Since January
2018, new employees have been eligible to become members of a master trust defined
contribution plan.
(2)The Guinness Ireland Group Pension Scheme (GIGPS, the Irish Scheme) closed to new
members in May 2013. Employees who have joined Diageo in Ireland since the defined
benefit scheme closed have been eligible to become members of a master trust defined
contribution plan. The latest valuation as at 31 December 2024 is currently underway and
The assets of the UK and Irish pension plans are held in separate trusts
administered by trustees who are required to act in the best interests
of the plans’ beneficiaries. For DPS, the trustee is Diageo Pension Trust
Limited. As required by legislation, one-third of the directors of the
Trust are nominated by the members of the DPS, member nominated
directors are appointed from both the pensioner member community
and the active member community. For the Irish Scheme, Diageo
Ireland makes three nominations and appoints three further candidates
nominated by representative groupings.
statement of comprehensive income for the group’s defined benefit
plans for the three years ended 30 June 2025 are as follows:
2025 $ million | 2024 $ million | 2023 $ million | |
Current service cost and administrative expenses | ( | ( | ( |
Past service gains/(losses) – ordinary activities | ( | ||
Gains on curtailments and settlements | |||
Charge to operating profit | ( | ( | ( |
Net finance income in respect of post- employment plans | |||
Charge before taxation(1) | ( | ( | ( |
Actual returns less amounts included in finance income | ( | ( | ( |
Experience (losses)/gains | ( | ( | |
Changes in financial assumptions | |||
Changes in demographic assumptions | |||
Other comprehensive loss | ( | ( | ( |
Changes in the surplus restriction | ( | ||
Total other comprehensive loss | ( | ( | ( |
(1)The income/(charge) before taxation is in respect of the following countries:
2025 $ million | 2024 $ million | 2023 $ million | |
United Kingdom | |||
Ireland | |||
United States | ( | ( | ( |
Other | ( | ( | ( |
( | ( | ( |
In addition to the charge in respect of defined benefit post-
employment plans, contributions to the group’s defined contribution
plans were $70 million (2024 – $62 million; 2023 – $53 million).
ended 30 June 2025 are set out below:
Plan assets $ million | Plan liabilities $ million | Net surplus $ million | |
At 30 June 2023 | ( | ||
Exchange differences | ( | ( | |
Income/(charge) before taxation | ( | ( | |
Other comprehensive (loss)/income(1) | ( | ( | |
Contributions by the group | |||
Settlements | ( | ||
Employee contributions | ( | ||
Benefits paid | ( | ||
At 30 June 2024 | ( | ||
Exchange differences | ( | ||
Disposal of businesses | |||
Reclassification to liabilities held for sale | |||
Income/(charge) before taxation | ( | ( | |
Other comprehensive loss(1) | ( | ( | |
Contributions by the group | |||
Employee contributions | ( | ||
Benefits paid | ( | ||
At 30 June 2025 | ( |
(1)Excludes surplus restriction.
country are as follows:
2025 | 2024 | |||
Plan assets $ million | Plan liabilities $ million | Plan assets $ million | Plan liabilities $ million | |
Pensions | ||||
United Kingdom | ( | ( | ||
Ireland | ( | ( | ||
United States | ( | ( | ||
Other | ( | ( | ||
Post-employment medical | ( | ( | ||
Other post-employment | ( | ( | ||
( | ( | |||
2025 | 2024 | |||
Non- current assets(1) $ million | Non- current liabilities $ million | Non- current assets(1) $ million | Non- current liabilities $ million | |
Funded plans | ( | ( | ||
Unfunded plans | — | ( | — | ( |
( | ( | |||
178 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
The disclosures have been prepared in accordance with IFRIC 14 IAS 19.
In particular, where the calculation for a plan results in a surplus, the
recognised asset is limited to the present value of any available future
refunds from the plan or reductions in future contributions to the plan,
and any additional liabilities are recognised as required. At 30 June
2025, the DPS had a net surplus of $608 million (2024 – $689 million;
2023 – $742 million) and the GIGPS had a net surplus of $417 million
(2024 – $332 million; 2023 – $328 million) and other schemes in a
surplus totalled $136 million (2024 – $125 million; 2023 – $140 million).
The DPS and GIGPS surpluses have been recognised with no provision
made against them as they are expected to be recoverable through a
combination of a reduction in future cash contributions or ultimately
via a cash refund when the last member’s obligations have been met.
(b) Principal risks and assumptions
The material post-employment plans are not exposed to any unusual,
entity-specific or scheme-specific risks but there are general risks:
Inflation – The majority of the plans’ obligations are linked to
inflation. Higher inflation will lead to increased liabilities which is
partially offset by the plans holding inflation linked gilts, swaps and
caps against the level of inflationary increases.
Interest rate – The plan liabilities are determined using discount rates
derived from yields on AA-rated corporate bonds. A decrease in
corporate bond yields will increase plan liabilities though this will be
partially offset by an increase in the value of the bonds held by the
post-employment plans.
Mortality – The majority of the obligations are to provide benefits for
the life of the members and their partners, so any increase in life
expectancy will result in an increase in the plans’ liabilities.
Asset returns – Assets held by the pension plans are invested in a
diversified portfolio including equities, bonds and other assets.
Volatility in asset values will lead to movements in the net deficit/
surplus reported in the consolidated balance sheet for post-
employment plans which in addition will also impact the post-
employment expense in the consolidated income statement.
the group’s deficit/surplus in the main post-employment plans at
30 June in the relevant year. The assumptions used to calculate the
charge/credit in the consolidated income statement for the year
ending 30 June are based on the assumptions disclosed as at the
previous 30 June.
United Kingdom | Ireland | United States(1) | |||||||
2025 % | 2024 % | 2023 % | 2025 % | 2024 % | 2023 % | 2025 % | 2024 % | 2023 % | |
Rate of general increase in salaries(2) | |||||||||
Rate of increase to pensions in payment | |||||||||
Rate of increase to deferred pensions | |||||||||
Discount rate for plan liabilities | |||||||||
Inflation – CPI | |||||||||
Inflation – RPI | — | — | — | — | — | — | |||
(1)The salary increase assumption in the United States is not a significant assumption as only a minimal amount of members’ pension entitlement is dependent on the member’s projected final
salary.
age of 65, and one who is currently aged 45 and subsequently retires at the age of 65:
United Kingdom(1) | Ireland(2) | United States | |||||||
2025 Age | 2024 Age | 2023 Age | 2025 Age | 2024 Age | 2023 Age | 2025 Age | 2024 Age | 2023 Age | |
Retiring currently at age 65 | |||||||||
Male | |||||||||
Female | |||||||||
Currently aged 45, retiring at age 65 | |||||||||
Male | |||||||||
Female | |||||||||
(1)Based on the CMI’s S4 mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements.
ending 30 June 2026 and on the plan liabilities at 30 June 2025:
United Kingdom | Ireland | United States | |||||||
Benefit/(cost) | Operating profit $ million | Profit after taxation $ million | Plan liabilities(1) $ million | Operating profit $ million | Profit after taxation $ million | Plan liabilities(1) $ million | Operating profit $ million | Profit after taxation $ million | Plan liabilities(1) $ million |
Effect of | |||||||||
Effect of | ( | ( | ( | ( | ( | ( | ( | ( | ( |
Effect of | ( | ( | ( | ( | ( | ( | ( | ( | |
Effect of | |||||||||
Effect of | ( | ( | ( | ( | ( | ( | |||
(1)The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans.
(i) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each sensitivity is
calculated on a change in the key assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation-linked assumptions (e.g. pension increases
179 | Diageo Form 20-F 2025 |
(c) Investment and hedging strategy
The investment strategy for the group’s funded post-employment plans is determined locally by the trustees of the plan and/or Diageo, as
appropriate, and it takes account of the relevant statutory requirements. The objective of the investment strategy is to achieve a target rate of
return in excess of the movement on the liabilities, whilst taking an acceptable level of investment risk relative to the liabilities. This objective is
implemented by using the funds of the plans to invest in a variety of asset classes that are expected over the long-term to deliver a target rate of
return. The majority of the investment strategies have significant amounts allocated to bonds in order to provide protection against adverse
movements in the liabilities of the plans. This includes corporate bonds and bonds held under sale and repurchase agreements (repos) whereby the
bond is provided as security for bank funding to enable the acquisition of additional bonds to increase the level of protection provided. Repos are
fully collateralised short-term agreements (typically up to 12 months in duration) and are a well-recognised investment practice as part of a risk
management programme against interest rate or inflation risks. Under the UK Scheme, a significant amount of the repos are less than three months
in duration. At 30 June 2025, approximately 96 % and 100 % (2024 – 95 % and 100 %) of the UK Scheme’s liabilities measured on the Trustee's funding
basis (gilts+50bp) were protected against future adverse movements in interest rates and inflation respectively through the combined effect of
bonds and swaps. At 30 June 2025, approximately 93 % and 109 % (2024 – 90 % and 112 %) of the Irish plans’ liabilities measured on the Trustee's
funding basis (euro-swaps+50bp) were protected against future adverse movements in interest rates and inflation respectively through the
combined effect of bonds and swaps.
The discount rates used are based on the yields of high-quality fixed income investments. For the UK plans, which represent approximately 65 % of
total plan liabilities, the discount rate is determined by reference to the yield curves of AA-rated corporate bonds for which the timing and amount
of cash outflows are similar to those of the plans. A similar process is used to determine the discount rates used for the non-UK plans.
2025 | |||||||||
United Kingdom $ million | Ireland $ million | United States and other $ million | Total $ million | ||||||
Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Total | |
Equities(1) | |||||||||
Bonds | |||||||||
Fixed-interest government | |||||||||
Inflation-linked government | |||||||||
Investment grade corporate | |||||||||
Non-investment grade | |||||||||
Loan securities | |||||||||
Liability Driven Investment (LDI) | |||||||||
Property - unquoted | |||||||||
Hedge funds | |||||||||
Interest rate and inflation swaps | ( | ( | ( | ||||||
Cash and other | |||||||||
Total bid value of assets | |||||||||
2024 | |||||||||
United Kingdom $ million | Ireland $ million | United States and other $ million | Total $ million | ||||||
Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Quoted | Unquoted | Total | |
Equities(1) | |||||||||
Bonds | |||||||||
Fixed-interest government | |||||||||
Inflation-linked government | |||||||||
Investment grade corporate | |||||||||
Non-investment grade | |||||||||
Loan securities | |||||||||
Liability Driven Investment (LDI) | |||||||||
Property - unquoted | |||||||||
Hedge funds | |||||||||
Interest rate and inflation swaps | ( | ( | ( | ||||||
Cash and other | |||||||||
Total bid value of assets | |||||||||
(1) In Equities limited partnerships are included which invest primarily in loan securities.
(i) The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested in
the long-term.
(ii) For the year ended 30 June 2025 the analyses of asset categories above includes $1,431 million (2024 - $1,626 million) in the United Kingdom, $1,147 million (2024 - $1,060 million) in Ireland and
$598 million (2024 - $572 million) in the United States held in unquoted pooled investment vehicles.
Total cash contributions by the group to all post-employment plans in the year ending 30 June 2026 are estimated to be approximately
$45 million.
180 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
(d) Deficit funding arrangements
UK plans
In the year ended 30 June 2011, the group established a Pension Funding Partnership (PFP) in respect of the UK Scheme. Whisky inventory was
transferred into the partnership but the group retains control over the partnership which at 30 June 2025 held inventory with a book value of $926
million (2024 – $819 million). The partnership is fully consolidated in the group financial statements. The UK Scheme has a limited interest in the
partnership and, as a partner, is entitled to a distribution from the profits of the partnership. The arrangement is expected to cease in 2030, and
contributions to the UK scheme in any year will be dependent on the funding position of the UK scheme at the previous 31 March. Given the surplus
funding position in the DPS, there were no contributions to the DPS in the years ended 30 June 2025 and 30 June 2024.
In 2030, the group will be required, dependent upon the funding position of the UK Scheme at that time, to pay an amount not greater than the
actuarial deficit at that time, up to a maximum of £430 million ($589 million) in cash, to purchase the UK Scheme’s interest in the partnership. If
the UK Scheme is in surplus at an actuarial triennial valuation excluding the value of the PFP, then the group can exit the PFP with the agreement
of the trustees.
Irish plans
The triennial actuarial valuation as at 31 December 2024 is currently underway and will be finalised during the year ending 30 June 2026. The last
valuation of the Guinness Ireland Group Pension Scheme at 31 December 2021 showed that the Scheme is fully funded on the Trustee’s ongoing
funding basis and the statutory minimum funding standard basis. Given the fully funded position, no deficit contributions were payable in the years
ended 30 June 2025 and 30 June 2024. The company has agreed with the Trustee on conditional contributions if there is a deficit in the Scheme on
any of the next three valuation dates. These conditional contributions shall be payable over the three years following the valuation and the
aggregate payment will be equal to the ongoing deficit disclosed, subject to the caps set out below:
Valuation date | ||||||
31 December 2024 | 31 December 2027 | 31 December 2030 | ||||
€ million | $ million | € million | $ million | € million | $ million | |
Maximum conditional contribution | ||||||
(e) Timing of benefit payments
distribution of the timing of benefit payments:
United Kingdom | Ireland | United States | ||||
2025 $ million | 2024 $ million | 2025 $ million | 2024 $ million | 2025 $ million | 2024 $ million | |
Maturity analysis of benefits expected to be paid | ||||||
Within one year | ||||||
Between 1 to 5 years | ||||||
Between 6 to 15 years | ||||||
Between 16 to 25 years | ||||||
Beyond 25 years | ||||||
Total | ||||||
years | years | years | years | years | years | |
Average duration of the defined benefit obligation | ||||||
The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are disclosed
undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised on the consolidated balance sheet.
They are in respect of benefits that have accrued at the balance sheet date and make no allowance for any benefits to be accrued subsequently.
(f) Related party disclosures
181 | Diageo Form 20-F 2025 |
Accounting policies | ||
Inventories are stated at the lower of cost and net realisable value. Cost includes raw materials, direct labour and expenses, an appropriate proportion of production and other overheads, but not borrowing costs. All maturing inventories and raw materials are classified as current assets, as they are expected to be realised in the normal operating cycle which can be a period of several years. | ||
Trade and other receivables are initially recognised at fair value less transaction costs and subsequently carried at amortised cost less any allowance for discounts and doubtful debts. Trade receivables arise from contracts with customers, and are recognised when performance obligations are satisfied, and the consideration due is unconditional as only the passage of time is required before the payment is received. Allowance losses are calculated by reviewing lifetime expected credit losses using historic and forward-looking data on credit risk. | ||
Trade and other payables are initially recognised at fair value including transaction costs and subsequently carried at amortised costs. Contingent considerations recognised in business combinations are subsequently measured at fair value through income statement. The group evaluates supplier arrangements against a number of indicators to assess if the liability has the characteristics of a trade payable or should be classified as borrowings. This assessment considers the commercial purpose of the facility, whether payment terms are similar to customary payment terms, whether the group is legally discharged from its obligation towards suppliers before the end of the original payment term, and the group’s involvement in agreeing terms between banks and suppliers. | ||
Provisions are liabilities of uncertain timing or amount. A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are calculated on a discounted basis. The carrying amounts of provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. | ||
2025 $ million | 2024 $ million | |
Raw materials and consumables | ||
Work in progress | ||
Maturing inventories | ||
Finished goods and goods for resale | ||
spirits. The following amounts of inventories can be utilised only after
more than one year:
2025 $ million | 2024 $ million | |
Raw materials and consumables | ||
Maturing inventories | ||
of which is as follows:
2025 $ million | 2024 $ million | 2023 $ million | |
Balance at beginning of the year | |||
Exchange differences | ( | ( | ( |
Income statement charge | |||
Utilised | ( | ( | ( |
Sale of businesses | ( | ( | |
Balance at the end of the year |
2025 | 2024 | |||
Current assets $ million | Non- current assets $ million | Current assets $ million | Non-current assets $ million | |
Trade receivables | ||||
Interest receivable | ||||
VAT recoverable and other prepaid taxes | ||||
Other receivables | ||||
Prepayments | ||||
Accrued income | ||||
At 30 June 2025, approximately 19 %, 14 % and 16 % of the group’s trade
receivables of $2,789 million are due from counterparties based in the
United States, India and United Kingdom, respectively. Accrued income
primarily represents amounts receivable from customers in respect of
performance obligations satisfied but not yet invoiced.
allowance, is as follows:
2025 $ million | 2024 $ million | |
Not overdue | ||
Overdue 1 – 30 days | ||
Overdue 31 – 60 days | ||
Overdue 61 – 90 days | ||
Overdue 91 – 180 days | ||
Overdue more than 180 days | ||
Balances overdue more than 180 days on 30 June 2025 are primarily
due from institutional customers in certain countries with low credit
risk.
allowance for doubtful debts, an analysis of which is as follows:
2025 $ million | 2024 $ million | 2023 $ million | |
Balance at beginning of the year | |||
Exchange differences | ( | ( | |
Income statement charge/(release) | ( | ||
Utilised | ( | ( | ( |
Balance at the end of the year |
182 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
2025 | 2024 | |||
Current liabilities $ million | Non-current liabilities $ million | Current liabilities $ million | Non-current liabilities $ million | |
Trade payables | ||||
Interest payable | ||||
Tax and social security excluding income tax | ||||
Other payables | ||||
Accruals | ||||
Deferred income | ||||
Dividend payable | ||||
Dividend payable to non-controlling interests | ||||
Interest payable at 30 June 2025 includes interest on non-derivative financial instruments of $352 million (2024 – $291 million). Accruals at 30 June
2025 include $839 million (2024 – $764 million) accrued discounts attributed to sales recognised. Deferred income represents amounts paid by
customers in respect of performance obligations not yet satisfied. The amount of contract liabilities recognised as revenue in the current year is
$84 million (2024 – $92 million). Non-current liabilities include the net present value of contingent consideration in respect of prior acquisitions of
$107 million (2024 – $231 million). For further information on contingent consideration, see note 16(g).
Together with the group’s partner banks, supply chain financing (SCF) facilities are provided to suppliers in certain countries. These arrangements
enable suppliers to receive funding earlier than the invoice due date at their discretion and at their own cost. Payment terms continue to be agreed
directly between the group and suppliers, independently from the availability of SCF facilities. Liabilities are settled in accordance with the original
due date of invoices. The group does not incur any fees or receive any rebates where the suppliers choose to utilise these facilities. The group has
determined that it is appropriate to present amounts outstanding subject to SCF arrangements as trade payables. Consistent with this classification,
cash flows are presented either as operating cash flows or cash flows from investing activities, when related to the acquisition of non-current
assets.
2025 | 2024 | |
Current liabilities $ million | Current liabilities $ million | |
Carrying amount that has been subject to SCF and presented in trade and other payables | ||
— of which suppliers have received payment from finance provider(1) |
(1)The group applied transitional relief available under Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7 and has not provided comparative information in the first year of adoption.
Range of payment due dates were as follows:
2025 | ||
Minimum Days after invoice date(1) | Maximum Days after invoice date(1) | |
Trade and other payables subject to SCF arrangements | ||
Comparable trade and other payables that are not part of the arrangements(2) | ||
(1)Suppliers are subject to various payment due dates depending on the jurisdiction and standard practices. The group's payment terms commence from the invoice date. However, for certain
categories of external suppliers and in alignment with industry standards, payment terms begin from the date a valid invoice is received. In Greater China, the range of payment due dates are
between 0 -240 days, which is in line with local market practice.
183 | Diageo Form 20-F 2025 |
Thalidomide $ million | Other $ million | Total $ million | |
At 30 June 2023 | |||
Exchange differences | ( | ( | |
Income statement charge | |||
Utilised | ( | ( | ( |
Transfers from other payables | ( | ( | |
Unwinding of discounts | |||
At 30 June 2024 | |||
Exchange differences | ( | ||
Income statement charge | |||
Utilised | ( | ( | ( |
Transfers from other payables | |||
Unwinding of discounts | |||
At 30 June 2025 | |||
Current liabilities | |||
Non-current liabilities | |||
Provisions have been established in respect of the discounted value of the group’s commitment to the UK and Australian Thalidomide Trusts. These
provisions will be utilised over the period of the commitments up to 2037.
The largest items in other provisions at 30 June 2025 is $53 million (2024 – $54 million) in respect of deferred employee compensation plans which
will be utilised when employees leave the group and $55 million (2024 – $nil ) in respect of the Accelerate programme.
184 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Risk management and capital structure
This section sets out the policies and procedures applied to manage the group’s capital structure and the financial risks the group is exposed to.
Diageo considers the following components of its balance sheet to be capital: borrowings and equity. Diageo manages its capital structure to
achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost
levels.
Accounting policies | ||
Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction costs. For those financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date. The group classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets and liabilities at fair value through income statement and financial assets at fair value through other comprehensive income. The accounting policies for other investments and loans are described in note 13, for trade and other receivables and payables in note 15 and for cash and cash equivalents in note 17. Financial assets and liabilities at fair value through income statement include derivative assets and liabilities. Where financial assets or liabilities are eligible to be carried at either amortised cost or fair value through other comprehensive income, the group does not apply the fair value option. Derivative financial instruments are carried at fair value using a discounted cash flow model based on market data applied consistently for similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken to the income statement as they arise. Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship when the amortised cost of the financial liabilities is adjusted with the fair value change attributable to the risk being hedged from the inception of the hedge relationship. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the effective interest rate method. Financial liabilities in respect of the Zacapa acquisition are recognised at fair value. | ||
Hedge accounting | ||
The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges), commodity price risk of highly probable forecast transactions, as well as the cash flow risk from changes in exchange or interest rates (cash flow hedges) and hedges of net investments in foreign operations (net investment hedges). Derivative instruments designated in hedge relationship are included in other financial assets and liabilities on the consolidated balance sheet. The effectiveness of such hedges is assessed at inception and at least on a quarterly basis, using prospective testing. Methods used for testing effectiveness include critical terms, regression analysis and hypothetical derivative models. Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed. Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair value of the underlying hedged asset or liability. If such a hedge relationship no longer meets hedge accounting criteria, fair value movements on the derivative continue to be taken to the income statement while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement over its remaining life using the effective interest rate method. Cash flow hedges are used to hedge the foreign currency risk of highly probable future foreign currency cash flows, the commodity price risk of highly probable future transactions, as well as the cash flow risk from changes in exchange or interest rates. The effective portion of the gain or loss on the hedges is recognised in other comprehensive income, while any ineffective part is recognised in the income statement. Amounts recorded in other comprehensive income are recycled to the income statement in the same period in which the underlying foreign currency, commodity or interest exposure affects the income statement. When a hedge relationship no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity is either transferred to the income statement or amortised over its remaining life using the effective interest rate method. Net investment hedges utilise either foreign currency borrowings or derivatives as hedging instruments. Foreign exchange differences arising on translation of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as hedging instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to the extent that they are effective, with any ineffectiveness taken to the income statement. Foreign currency derivative contracts hedging net investments are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness taken to the income statement. Cost of hedging model is applied in case of cross-currency interest rate swaps in net investment hedges. The fair value changes attributable to the spot component of the hedging instruments are designated to offset foreign exchange differences of net investments and therefore taken to net investment hedge reserve. The fair value changes attributable to the forward component of the hedging instruments (including currency basis) are taken to the cost of hedging reserve and amortised to the consolidated income statement. | ||
185 | Diageo Form 20-F 2025 |
The group’s funding, liquidity and exposure to foreign currency,
interest rate and commodity price risk are managed by the group’s
treasury department. The treasury department uses a range of financial
instruments to manage these underlying risks.
Treasury operations are conducted within a framework of Board-
approved policies and guidelines, which are recommended and
reviewed by the Finance Committee, chaired by the Chief Financial
Officer. The policies and guidelines include benchmark exposure and/or
hedge cover levels for key areas of treasury risk which are periodically
reviewed by the Board following, for example, significant business,
strategic or accounting changes. The framework provides for limited
defined levels of flexibility in execution to allow for the optimal
application of the Board-approved strategies. Transactions arising from
the application of this flexibility are carried at fair value, gains or
losses are taken to the income statement as they arise and are
separately monitored on a daily basis using Value at Risk analysis. In the
years ended 30 June 2025 and 30 June 2024, gains and losses on these
transactions were not material. The group does not use derivatives for
speculative purposes. All transactions in derivative financial
instruments are initially undertaken to manage the risks arising from
underlying business activities.
The group purchases insurance for commercial or, where required, for
legal or contractual reasons. In addition, the group retains insurable
risk where external insurance is not considered an economic means of
mitigating these risks.
The Finance Committee receives a quarterly report on the key activities
of the treasury department, however any exposures which differ from
the defined benchmarks are reported as they arise.
The group presents its consolidated financial statements in US dollar
and conducts business in many currencies. As a result, it is subject to
foreign currency risk due to exchange rate movements, which affects
the group’s transactions and the translation of the results and
underlying net assets of its operations. To manage the currency risk,
the group uses certain financial instruments. Where hedge accounting is
applied, hedges are documented and tested for effectiveness on an
ongoing basis.
Hedge of net investment in foreign operations
The group hedges a certain portion of its exposure to fluctuations in the
US dollar value of its foreign operations by designating borrowings held
in foreign currencies and using foreign currency spots, forwards, swaps
and other financial derivatives. For the year ended 30 June 2025, the
group maintained the total net investment Value at Risk to total net
asset value below 20 %, where Value at Risk is defined as the maximum
amount of loss over a one-year period with a 95 % probability confidence
level.
At 30 June 2025, foreign currency borrowings (euro, sterling) and
financial derivatives (Chinese yuan, euro, Canadian Dollar) designated
in net investment hedge relationships amounted to $9,561 million bonds
and $2,255 million derivatives (2024 – $8,109 million bonds and $3,198
million derivatives).
Hedge of foreign currency debt
The group uses cross currency interest rate swaps to hedge the
foreign currency risk associated with certain foreign currency
denominated borrowings.
Transaction exposure hedging
The group’s policy is to hedge forecast transactional net of translational
foreign currency risk on major currency pair exposures up to 36 months,
targeting 75 % operating profit level net exposure coverage for the
current financial year, and on other currency exposures up to 18
months. The group’s exposure to foreign currency risk arising principally
on forecasted sales transactions is managed using forward agreements
and options.
The group has an exposure to interest rate risk, arising principally on
changes in US dollar, euro and sterling interest rates. To manage
interest rate risk, the group manages its proportion of fixed to floating
rate borrowings within limits approved by the Board, primarily through
issuing fixed and floating rate borrowings, and by utilising interest rate
swaps. These practices aim to minimise the group’s net finance charges
with acceptable year-on-year volatility. To facilitate operational
efficiency and effective hedge accounting, the current group’s policy is
to maintain fixed rate borrowings within a band of 70 % to 90 % of
forecast net borrowings. For these calculations, net borrowings exclude
interest rate related fair value adjustments. The majority of the
group’s existing interest rate derivatives are designated as hedges and
are expected to be effective. Fair value of these derivatives is
recognised in the income statement, along with any changes in the
relevant fair value of the underlying hedged asset or liability.
2025 | 2024 | |||
$ million | % | $ million | % | |
Fixed rate | ||||
Floating rate(1) | ||||
Impact of financial derivatives and fair value adjustments | ( | ( | ( | ( |
Lease liabilities | ||||
Net borrowings | ||||
(1)The floating rate portion of net borrowings includes cash and cash equivalents, collaterals,
effective interest rate:
Average monthly net borrowings | Effective interest rate | ||||
2025 $ million | 2024 $ million | 2023 $ million | 2025 % | 2024 % | 2023 % |
(i)For this calculation, net interest charge includes interest capitalised
and excludes fair value adjustments to derivative financial instruments
and average monthly net borrowings include the impact of interest rate
swaps that are no longer in a hedge relationship but exclude the market
Commodity price risk is managed in line with the principles approved by
the Board either through long-term purchase contracts with suppliers
or, where appropriate, derivative contracts. The group policy is to
maintain the Value at Risk of commodity price risk arising from
commodity exposures below 75 bps of forecast gross profit in any given
financial year. Where derivative contracts are used, the commodity
price risk exposure is hedged up to 36 months of forecast volume
through exchange-traded and over-the-counter contracts (futures,
forwards and swaps) and cash flow hedge accounting is applied.
The group uses a sensitivity analysis that estimates the impacts on the
consolidated income statement and other comprehensive income of
either an instantaneous increase or decrease of 0.5 % in market interest
rates or a 10 % strengthening or weakening in US dollar against all other
currencies, from the rates applicable for each class of financial
instruments on the consolidated balance sheet at these dates with all
other variables remaining constant. The sensitivity analysis excludes the
impact of market risk on the net post-employment benefit liabilities
and assets, and corporate tax payable. This analysis is for illustrative
purposes only, as in practice interest and foreign exchange rates rarely
change in isolation.
foreign exchange rates. All hedges are expected to be highly effective
for this analysis and it considers the impact of all financial instruments
including financial derivatives, cash and cash equivalents, borrowings
and other financial assets and liabilities. The results of the sensitivity
analysis should not be considered as projections of likely future events
as actual gains or losses in the future may differ materially due to
developments in the global financial markets which may cause
fluctuations in interest and exchange rates to vary from the
hypothetical amounts disclosed in the table below.
186 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Impact on income statement gain/(loss) | Impact on consolidated comprehensive income gain/(loss)(1) (2) | |||
2025 $ million | 2024 $ million | 2025 $ million | 2024 $ million | |
rates | ||||
rates | ( | ( | ( | ( |
( | ( | ( | ( | |
dollar | ||||
(1)The impact on foreign currency borrowings and derivatives in net investment hedges is
largely offset by the foreign exchange difference arising on the translation of net
investments.
(2)The impact on the consolidated statement of comprehensive income includes the impact
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the group. Credit
risk arises on cash balances (including bank deposits and cash and cash
equivalents), derivative financial instruments and credit exposures to
customers, including outstanding loans, trade and other receivables,
financial guarantees and committed transactions.
The carrying amount of financial assets of $6,543 million (2024 – $5,221
million) represents the group’s exposure to credit risk at the balance
sheet date as disclosed in section (i), excluding the impact of any
collateral held or other credit enhancements. A financial asset is in
default when the counterparty fails to pay its contractual obligations.
Financial assets are written off when there is no reasonable expectation
of recovery.
Credit risk is managed separately for financial and business related
credit exposures.
According to the enforceable master netting agreements with
counterparties, in the event of default, derivative financial instruments
with the same counterparty can be settled net. The table below shows
the group’s financial assets and liabilities that could be subject to
offset in the balance sheet and the impact of a trigger for the
enforcement of the master netting agreement after applying any
existing collaterals.
Gross amount $ million | Right of asset offset $ million | Right of liability offset $ million | Net amount $ million | |
2025 | ||||
Derivative financial assets | ( | ( | ||
Derivative financial liabilities | ( | ( | ||
2024 | ||||
Derivative financial assets | ( | ( | ||
Derivative financial liabilities | ( | ( |
Financial credit risk
Diageo aims to minimise its financial credit risk through the application
of risk management policies approved and monitored by the Board.
Counterparties are predominantly limited to investment grade banks
and financial institutions, and policy restricts the exposure to any one
counterparty by setting credit limits taking into account the credit
quality of the counterparty. The group’s policy is designed to ensure
that individual counterparty limits are adhered to and that there are no
significant concentrations of credit risk. The Board also defines the
types of financial instruments which may be transacted. The credit risk
arising through the use of financial instruments for currency, interest
rate and commodity price risk management is estimated with reference
to the fair value of contracts with a positive value, rather than the
notional amount of the instruments themselves. Diageo annually
reviews the credit limits applied and regularly monitors the
counterparties’ credit quality reflecting market credit conditions.
When derivative transactions are undertaken with bank counterparties,
the group may, where appropriate, enter into certain agreements with
such bank counterparties whereby the parties agree to post cash
collateral for the benefit of the other if the net valuations of the
derivatives are above a predetermined threshold. At 30 June 2025, the
collateral held under these agreements amounted to $nil (2024 – $14
million liability).
Business related credit risk
Exposures from loans, trade and other receivables are managed
locally in the operating units where they arise and active risk
management is applied, focusing on country risk, credit limits, ongoing
credit evaluation and monitoring procedures. There is no significant
concentration of credit risk with respect to loans, trade and other
receivables as the group has a large number of customers that are
internationally dispersed.
Liquidity risk is the risk of Diageo encountering difficulties in meeting
its obligations associated with financial liabilities that are settled by
delivering cash or other financial assets. The group uses short-term
commercial paper to finance its day-to-day operations. The group’s
policy with regard to the expected maturity profile of borrowings is to
limit the amount of such borrowings maturing within 12 months to 50 %
of gross borrowings less money market demand deposits, and the level
of commercial paper to 30 % of gross borrowings less money market
demand deposits. In addition, the group’s policy is to maintain backstop
facilities with relationship banks to support commercial
paper obligations.
The following tables provide an analysis of the anticipated contractual
cash flows including interest payable for the group’s financial liabilities
and derivative instruments on an undiscounted basis. Where interest
payments are calculated at a floating rate, rates of each cash flow until
maturity of the instruments are calculated based on the forward yield
curve prevailing at the respective year ends. The gross cash flows of
cross currency swaps are presented for the purposes of this table. All
other derivative contracts are presented on a net basis. Financial assets
and liabilities are presented gross in the consolidated balance sheet
although, in practice, the group uses netting arrangements to reduce its
liquidity requirements on these instruments.
187 | Diageo Form 20-F 2025 |
Due within 1 year $ million | Due between 1 and 3 years $ million | Due between 3 and 5 years $ million | Due after 5 years $ million | Total $ million | Carrying amount at balance sheet date $ million | |
2025 | ||||||
Borrowings(1) | ( | ( | ( | ( | ( | ( |
Interest on borrowings(1)(2) | ( | ( | ( | ( | ( | ( |
Lease capital repayments | ( | ( | ( | ( | ( | ( |
Lease future interest payments | ( | ( | ( | ( | ( | |
Trade and other financial liabilities(3) | ( | ( | ( | ( | ( | ( |
Non-derivative financial liabilities | ( | ( | ( | ( | ( | ( |
Cross currency swaps (gross) | ||||||
Receivable | ||||||
Payable | ( | ( | ( | ( | ( | |
FX forwards (gross) | ||||||
Receivable | ||||||
Payable | ( | ( | ( | |||
Other derivative instruments (net) | ( | ( | ( | ( | ( | |
Derivative instruments(2) | ( | ( | ||||
2024 | ||||||
Borrowings(1) | ( | ( | ( | ( | ( | ( |
Interest on borrowings(1)(2) | ( | ( | ( | ( | ( | ( |
Lease capital repayments | ( | ( | ( | ( | ( | ( |
Lease future interest payments | ( | ( | ( | ( | ( | |
Trade and other financial liabilities(3) | ( | ( | ( | ( | ( | ( |
Non-derivative financial liabilities | ( | ( | ( | ( | ( | ( |
Cross currency swaps (gross) | ||||||
Receivable | ||||||
Payable | ( | ( | ( | ( | ( | |
FX forwards (gross) | ||||||
Receivable | ||||||
Payable | ( | ( | ( | |||
Other derivative instruments (net) | ( | ( | ( | ( | ( | |
Derivative instruments(2) | ( | ( | ( | ( | ( |
(1)For the purposes of these tables, borrowings are defined as gross borrowings excluding lease liabilities and fair value of derivative instruments as disclosed in note 17.
(2)Carrying amount of interest on borrowings, interest on derivatives and interest on other payables is included within interest payable in note 15.
2025 $ million | 2024 $ million | |
Expiring within one year | ||
Expiring between one and two years | ||
Expiring after two years | ||
The facilities can be used for general corporate purposes and, together
with cash and cash equivalents, support the group’s commercial
paper programmes.
There are no financial covenants on the group’s material short- and
long-term borrowings. Certain of these borrowings contain cross default
provisions and negative pledges.
The committed bank facilities are subject to a single financial
covenant, being minimum interest cover ratio of two times (defined as
the ratio of operating profit before exceptional items, aggregated with
share of after tax results of associates and joint ventures, to net
interest charges). They are also subject to pari passu ranking and
negative pledge covenants.
Any non-compliance with covenants underlying Diageo’s financing
arrangements could, if not waived, constitute an event of default with
respect to any such arrangements, and any non-compliance with
covenants may, in particular circumstances, lead to an acceleration of
maturity on certain borrowings and the inability to access committed
facilities. Diageo was in full compliance with its financial, pari passu
ranking and negative pledge covenants in respect of its material short-
and long-term borrowings throughout the years presented.
188 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
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 least
observable 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 30 June 2025, an amount of
$101 million (30 June 2024 – $198 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 30 June 2025, because it is unknown when or if ILG will exercise
the option, the liability is measured as if the exercise date is the last
day of the next financial year considering forecast future performance.
The put option is not sensitive to reasonably possible changes in
assumptions. If the option was to be exercised as at 30 June 2027, the
fair value of the liability would increase by approximately $5 million.
Included in other financial liabilities, contingent considerations on
acquisition of businesses represent the present value of payments up to
$137 million (2024 – $273 million) which are expected to be paid over
the next three years .
Contingent considerations linked to certain volume targets at 30 June
2025 were $35 million (2024 – $153 million), mainly in respect of the
Ritual Zero Proof and Meczal Unión acquisitions. Contingent
considerations linked to certain financial performance targets at 30
June 2025 were $90 million (2024 – $92 million), mainly in respect of
the acquisition of Don Papa Rum. 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
flows would increase or decrease the fair value of contingent
considerations linked to certain financial performance targets by
approximately $30
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 year ended 30 June 2025.
categorised as follows:
2025 $ million | 2024 $ million | |
Derivative assets | ||
Derivative liabilities | ( | ( |
Valuation techniques based on observable market input (Level 2) | ||
Financial assets - other | ||
Financial liabilities - other | ( | ( |
Valuation techniques based on unobservable market input (Level 3) | ( | ( |
In the year ended 30 June 2025, the decrease in financial assets - other of $258 million is mainly attributable to the impairment of investments.
The balance of financial assets - other is primarily made up of individually immaterial convertible loans and share options in associates.
Zacapa financial liability | Contingent consideration recognised on acquisition of businesses | Zacapa financial liability | Contingent consideration recognised on acquisition of businesses | |
2025 $ million | 2025 $ million | 2024 $ million | 2024 $ million | |
At the beginning of the year | ( | ( | ( | ( |
Net gains included in the income statement | ||||
Net losses included in exchange in other comprehensive income | ( | |||
Net gains included in retained earnings | ||||
Acquisitions | ( | |||
Settlement of liabilities | ||||
At the end of the year | ( | ( | ( | ( |
189 | Diageo Form 20-F 2025 |
The group targets a one-to-one hedge ratio. The strength of the economic relationship between the hedged items and the hedging instruments is
analysed on an ongoing basis. Ineffectiveness can arise from changes in hedged balance sheet positions, group net investment positions, or
subsequent changes in the forecast transactions as a result of differences in timing, cash flows or values except when the critical terms of the
hedging instrument and hedged item are closely aligned. Where applicable, the change in the credit risk of the hedging instruments or the hedged
items is not expected to be the primary factor in the economic relationship.
maturities and rates of the hedging instruments designated in hedging relationships by the main risk categories are as follows:
Notional amounts $ million | Maturity | Range of hedged rates | |
2025 | |||
Net investment hedges | |||
Derivatives in net investment hedges of foreign operations | August 2025 - October 2027 | euro Canadian dollar Chinese yuan | |
Foreign currency borrowings in net investment hedges | May 2026 - August 2044 | sterling euro | |
Cash flow hedges | |||
Derivatives in cash flow hedge (foreign currency debt) | September 2028 - June 2034 | euro | |
Derivatives in cash flow hedge (foreign currency risk)(1) | September 2025 - January 2028 | sterling Mexican peso | |
Derivatives in cash flow hedge (commodity price risk)(1) | July 2025 - June 2027 | Aluminium: Mt Natural Gas: | |
Fair value hedges | |||
Derivatives in fair value hedge (interest rate risk)(2) | September 2025 - April 2035 | EURIBOR SOFR | |
2024 | |||
Net investment hedges | |||
Derivatives in net investment hedges of foreign operations | September 2024 - April 2043 | sterling euro Chinese yuan | |
Foreign currency borrowings in net investment hedges | September 2024 - June 2038 | sterling euro | |
Cash flow hedges | |||
Derivatives in cash flow hedge (foreign currency debt) | September 2028 - June 2034 | euro | |
Derivatives in cash flow hedge (foreign currency risk)(1) | September 2024 - December 2025 | sterling euro Mexican peso | |
Derivatives in cash flow hedge (commodity price risk)(1) | July 2024 - September 2025 | Feed Wheat: Natural Gas: | |
Fair value hedges | |||
Derivatives in fair value hedge (interest rate risk)(2) | April 2025 - April 2030 | EURIBOR SOFR |
(1) In case of derivatives in cash flow hedges (commodity price risk and foreign currency risk), the range of the most significant contract’s hedged rates are presented.
For cross currency swaps used in cash flow hedges to manage currency risk, the retranslation of the related bond principal to closing exchange rates
and recognition of interest on the related bonds will affect the income statement in each year until the related bonds mature in 2028, 2032 and
2034. Exchange retranslation and the interest on the hedged bonds are expected to offset those on the cross currency swaps in the income
statement in each of the years.
In respect of cash flow hedging instruments, a gain of $298 million (2024 – $13 million gain; 2023 – $297 million gain) was recognised in other
comprehensive income due to changes in fair value. A gain of $68 million was transferred out of other comprehensive income to other operating
expenses and a gain of $230 million to other finance charges, respectively, (2024 – a gain of $266 million and a loss of $152 million; 2023 – a gain of
$16 million and a loss of $65 million) to offset the foreign exchange impact on the underlying transactions. A loss of $19 million (2024 – $9 million
loss, 2023 – $39 million gain) was transferred out of other comprehensive income to operating profit in relation to commodity hedges. For cash flow
hedges in respect of foreign currency debt, the notional amount of hedged items recognised in the consolidated balance sheet equals the notional
value of the hedging instruments at 30 June 2025 and are included within borrowings. The notional amount for cash flow hedges of foreign currency
debt at 30 June 2025 was $2,873 million (2024 – $2,747 million).
190 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
The total cost of hedging during the year ended 30 June 2025 was $101 million, a gain of $26 million was transferred out of other comprehensive
income to other finance charges.
For cash flow hedges of forecast transactions at 30 June 2025, based on year end interest and exchange rates, a gain to the income statement of
$67 million in the year ending 30 June 2026 and a gain of $29 million in the year ending 30 June 2027 is expected to be recognised.
The amount relating to the hedges of foreign currency borrowings that are no longer applicable at 30 June 2025 is $114 million (2024 – $24 million).
The amortisation of fair value of financial derivatives at 30 June 2025 was $5 million gain (2024 – $3 million) in the income statement. There was no
significant ineffectiveness on net investment and cash flow hedges during the years ended 30 June 2025 and 2024.
From the total exchange reserve of $3,333 million (2024 – $2,488 million), $2,665 million (2024 – $2,470 million) is attributable to net investment
hedges for which hedge accounting no longer applies.
The $4,229 million (2024 – $4,044 million) notional value of hedged items in fair value hedges equals to the notional value of hedging instruments
designated in these relationships at 30 June 2025 and the carrying amount of hedged items is included within borrowings in the consolidated
balance sheet.
income statement and other comprehensive income:
At the beginning of the year $ million | Consolidated income statement $ million | Consolidated statement of comprehensive income $ million | Other(2) $ million | At the end of the year $ million | |
2025 | |||||
Net investment hedges(1) | |||||
Derivatives in net investment hedges of foreign operations | ( | ( | ( | ||
Foreign currency borrowings in net investment hedges | ( | ( | ( | ( | |
Cash flow hedges(1) | |||||
Derivatives in cash flow hedge (foreign currency debt) | ( | ( | |||
Derivatives in cash flow hedge (foreign currency risk) | ( | ||||
Derivatives in cash flow hedge (commodity price risk) | ( | ( | ( | ( | |
Fair value hedges(1) | |||||
Derivatives in fair value hedge (interest rate risk) | ( | — | — | ( | |
Fair value hedge hedged item | ( | — | — | ||
Instruments in fair value hedge relationship | ( | — | — | ( | |
2024 | |||||
Net investment hedges(1) | |||||
Derivatives in net investment hedges of foreign operations | ( | ||||
Foreign currency borrowings in net investment hedges | ( | — | ( | ( | |
Cash flow hedges(1) | |||||
Derivatives in cash flow hedge (foreign currency debt) | ( | ( | ( | ||
Derivatives in cash flow hedge (foreign currency risk) | ( | ( | |||
Derivatives in cash flow hedge (commodity price risk) | ( | ( | ( | ||
Fair value hedges(1) | |||||
Derivatives in fair value hedge (interest rate risk) | ( | — | — | ( | |
Fair value hedge hedged item | ( | — | — | ||
Instruments in fair value hedge relationship | ( | ( | — | — | ( |
(1)There was no significant ineffectiveness on net investment, cash flow and fair value hedges during the years ended 30 June 2025 and 2024, accordingly the fair value movement of the hedged
items was materially similar and offsetting the movement of the hedges.
(2)Other movements include cash flows on result of matured derivatives, notional of bonds designated in or de-designated from net investment hedges and reclassification of hedging instruments
between hedge portfolios and de-designation of hedging instruments.
191 | Diageo Form 20-F 2025 |
Fair value through income statement $ million | Assets and liabilities at amortised cost $ million | Not categorised as a financial instrument $ million | Total $ million | Current $ million | Non-current $ million | |
2025 | ||||||
Other investments and loans(1) | — | |||||
Trade and other receivables | — | |||||
Cash and cash equivalents | — | — | — | |||
Derivatives in cash flow hedge (foreign currency debt) | — | — | ||||
Derivatives in cash flow hedge (foreign currency risk) | — | — | ||||
Derivatives in cash flow hedge (commodity price risk) | — | — | ||||
Derivatives in net investment hedge | — | — | ||||
Trading derivatives (cross currency swaps) | — | — | — | |||
Other instruments | — | — | ||||
Leases | — | — | — | |||
Total other financial assets | — | |||||
Total financial assets | ||||||
Borrowings(2) | — | ( | — | ( | ( | ( |
Trade and other payables | ( | ( | ( | ( | ( | ( |
Derivatives in fair value hedge (interest rate risk) | ( | — | — | ( | ( | ( |
Derivatives in cash flow hedge (foreign currency risk) | ( | — | — | ( | ( | |
Derivatives in cash flow hedge (commodity price risk) | ( | — | — | ( | ( | |
Derivatives in net investment hedge | ( | — | — | ( | ( | ( |
Other instruments | ( | — | ( | ( | ||
Leases | — | ( | — | ( | ( | ( |
Total other financial liabilities | ( | ( | — | ( | ( | ( |
Total financial liabilities | ( | ( | ( | ( | ( | ( |
Total net financial assets/(liabilities) | ( | ( | ( | ( | ( | |
2024 | ||||||
Other investments and loans(1) | — | |||||
Trade and other receivables | — | |||||
Cash and cash equivalents | — | — | — | |||
Derivatives in cash flow hedge (foreign currency risk) | — | — | ||||
Derivatives in cash flow hedge (commodity price risk) | — | — | ||||
Derivatives in net investment hedge | — | — | ||||
Other instruments | — | — | ||||
Total other financial assets | — | |||||
Total financial assets | ||||||
Borrowings(2) | — | ( | — | ( | ( | ( |
Trade and other payables | ( | ( | ( | ( | ( | ( |
Derivatives in fair value hedge (interest rate risk) | ( | — | — | ( | ( | ( |
Derivatives in cash flow hedge (foreign currency debt) | ( | — | — | ( | — | ( |
Derivatives in cash flow hedge (foreign currency risk) | ( | — | — | ( | ( | ( |
Derivatives in cash flow hedge (commodity price risk) | ( | — | — | ( | ( | |
Derivatives in net investment hedge | ( | — | — | ( | ( | ( |
Other instruments | ( | — | ( | ( | ||
Leases | — | ( | — | ( | ( | ( |
Total other financial liabilities | ( | ( | — | ( | ( | ( |
Total financial liabilities | ( | ( | ( | ( | ( | ( |
Total net financial assets/(liabilities) | ( | ( | ( | ( | ( |
(1)Other investments and loans include those in respect of associates.
At 30 June 2025 and 30 June 2024, the carrying values of cash and cash equivalents, other financial assets and liabilities approximate fair values. At
30 June 2025, the fair value of borrowings, based on unadjusted quoted market data, was $23,197 million (2024 – $20,663 million).
192 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
The group’s management is committed to enhancing shareholder value
in the long-term, both by investing in the business and brands so as to
deliver continued improvement in the return from those investments
and by managing the capital structure. Diageo manages its capital
structure to achieve capital efficiency, provide flexibility to invest
through the economic cycle and give efficient access to debt markets at
attractive cost levels. This is achieved by targeting an adjusted net
borrowings (net borrowings aggregated with post-employment benefit
liabilities) to adjusted EBITDA leverage of 2.5 –3.0 times, this range for
Diageo being currently broadly consistent with an A-band credit rating.
Diageo would consider operating outside of this range in order to effect
strategic initiatives within its stated goals, which could have an impact
on its rating. If Diageo’s leverage was to be negatively impacted by the
financing of an acquisition, it would seek over time to return to the
range of 2.5 –3.0 times. The group regularly assesses its debt and equity
capital levels against its stated policy for capital structure. As at 30
June 2025, the adjusted net borrowings of $22,263 million (2024 –
$21,446 million) to adjusted EBITDA ratio was 3.4 (2024 – 3.0 ) times.
For this calculation, net borrowings are adjusted by post-employment
benefit liabilities before tax of $409 million (2024 – $429 million) whilst
adjusted EBITDA of $6,645 million (2024 – $7,037 million) comprises
operating profit excluding exceptional operating items and
depreciation, amortisation and impairment and includes share of after
tax results of associates and joint ventures.
The group aims to maximise its return of capital to shareholders each
year. The decision in respect of the dividend is made with reference to
the dividend policy for the respective period that includes current
performance trends, including sales, profit after tax and cash
generation. Diageo aims for 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 2025, dividend cover
was 1.6 times (2024 - 1.7 times). The group will keep future returns of
capital, including dividends, under review to ensure Diageo’s capital is
allocated in the best way to maximise value for the business and its
stakeholders.
Subject to approval by shareholders, the final dividend of 62.98 cents
per share (2024 – 62.98 cents per share) will be paid to holders of
ordinary shares and US ADRs on register as of 17 October 2025. The ex-
dividend date is 16 October 2025 for holders of ordinary shares and
17 October 2025 for holders of US ADRs. Holders of ordinary shares will
receive their dividends in sterling unless they elect to receive their
dividends in US dollars by 7 November 2025. The dividend per share in
pence to be paid to ordinary shareholders will be announced on
20 November 2025 and will be determined by the actual foreign
exchange rates achieved by Diageo buying forward contracts for sterling
currency, entered into during the three trading days preceding the
sterling equivalent announcement of the final dividend. The final
dividend, once approved by shareholders, will be paid to both holders
of ordinary shares and US ADRs on 4 December 2025. A dividend
reinvestment plan is available to holders of ordinary shares in respect of
the final dividend and the plan notice date is 7 November 2025.
Accounting policies | ||
Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are designated in fair value hedge relationship. In these cases, the amortised cost is adjusted for the fair value of the risk being hedged, with changes in value recognised in the income statement. The fair value adjustment is calculated using a discounted cash flow technique based on unadjusted market data. Bank overdrafts form an integral part of the group’s cash management and are included as a component of net cash and cash equivalents in the consolidated statement of cash flows. Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and have an original maturity of three months or less, including money market deposits, commercial paper and investments. Net borrowings are defined as gross borrowings (short-term borrowings and long-term borrowings plus lease liabilities plus interest rate hedging instruments, cross currency interest rate swaps and foreign currency forwards and swaps used to manage | ||
2025 $ million | 2024 $ million | |
Bank overdrafts | ||
Commercial paper | ||
Bank and other loans | ||
Credit support obligations | ||
$ | ||
€ | ||
€ | ||
€ | ||
$ | ||
$ | ||
€ | ||
€ | ||
Fair value adjustment to borrowings | ( | ( |
Borrowings due within one year | ||
$ | ||
$ | ||
€ | ||
€ | ||
£ | ||
$ | ||
€ | ||
€ | ||
$ | ||
$ | ||
£ | ||
€ | ||
£ | ||
€ | ||
$ | ||
$ | ||
$ | ||
€ | ||
€ |
193 | Diageo Form 20-F 2025 |
2025 $ million | 2024 $ million | |
€ | ||
$ | ||
£ | ||
$ | ||
$ | ||
€ | ||
$ | ||
€ | ||
$ | ||
$ | ||
£ | ||
$ | ||
$ | ||
€ | ||
Bank and other loans | ||
Fair value adjustment to borrowings | ( | ( |
Borrowings due after one year | ||
Total borrowings before leases and derivative financial instruments | ||
Fair value of cross currency interest rate swaps | ( | ( |
Fair value of foreign currency swaps and forwards | ( | |
Fair value of interest rate hedging instruments | ||
Lease liabilities | ||
Gross borrowings | ||
Less: Cash and cash equivalents | ( | ( |
Net borrowings |
(1)SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, a
plc. No other subsidiary of Diageo plc guarantees the security.
(2)SEC-registered debt issued on an unsecured basis by Diageo Capital plc, a 100 % owned
subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other
subsidiary of Diageo plc guarantees the security.
(i)The interest rates shown are those contracted on the underlying borrowings before taking
into account any interest rate hedges (see note 16).
(ii)Bonds are stated net of unamortised finance costs of $103 million (2024 – $95 million).
(iii)All bonds, medium-term notes and commercial paper issued on an unsecured basis by the
group’s 100 % owned subsidiaries are fully and unconditionally guaranteed on an unsecured
expected to mature as follows:
2025 $ million | 2024 $ million | |
Within one year | ||
Between one and three years | ||
Between three and five years | ||
Beyond five years | ||
2025 $ million | 2024 $ million | 2023 $ million | |
Issued | |||
€ denominated | |||
$ denominated | |||
Repaid | |||
€ denominated | ( | ( | |
$ denominated | ( | ( | ( |
2025 $ million | 2024 $ million | |
At beginning of the year | ||
Net (increase)/decrease in cash and cash equivalents before exchange | ( | |
Net increase in bonds and other borrowings | ||
Net (decrease)/increase in net borrowings from cash flows | ( | |
Exchange differences on net borrowings | ||
Other non-cash items(1) | ||
Net borrowings at the end of the year |
(1) In the year ended 30 June 2025, other non-cash items are principally in respect of fair
value losses on borrowings of $182 million and an increase in lease liabilities of
$147 million partially offset by gains on cross currency interest rate swaps and interest
rate swaps of $183 million and reclassification from assets held for sale of $45 million.
In the year ended 30 June 2024, other non-cash items are principally in respect of fair
value losses on borrowings of $116 million and an increase in lease liabilities of
$152 million partially offset by gains of cross currency interest rate swaps and interest rate
swaps of $111 million and reclassification of cash to assets held for sale of
$30 million.
2025 | 2024 | |||
Cash and cash equivalents $ million | Gross borrowings(1 ) $ million | Cash and cash equivalents $ million | Gross borrowings(1 ) $ million | |
US dollar | ( | ( | ||
Euro(2) | ( | ( | ||
Sterling | ( | ( | ||
Canadian dollar(3) | ( | ( | ||
Kenyan shilling | ( | ( | ||
Indian rupee | ( | ( | ||
Mexican peso | ( | |||
Chinese yuan | ( | ( | ||
Other | ( | ( | ||
Total | ( | ( | ||
(1)Includes foreign currency forwards and swaps and leases.
(2)Includes $15 million (euro) cash and cash equivalents in cash-pooling arrangements (2024 –
$11 million (euro).
(3)Net investment hedge in Canadian dollar at 30 June 2025.
194 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
Accounting policies | ||
Own shares represent shares and share options of Diageo plc that are held in treasury or by employee share trusts for the purpose of fulfilling obligations in respect of various employee share plans or were acquired as part of a share buyback programme. Own shares are treated as a deduction from equity until the shares are cancelled, reissued or disposed of and when vest are transferred from own shares to retained earnings at their weighted average cost. | ||
Share-based payments include share awards and options granted to directors and employees. The fair value of equity settled share options and share grants is initially measured at grant date based on Monte Carlo and Black Scholes models and is charged to the income statement over the vesting period. For equity settled shares, the credit is included in retained earnings. | ||
Dividends are recognised in the financial statements in the year | ||
of 28101⁄108 pence each
Number of shares million | Nominal value $ million | |
At 30 June 2023 | ||
Shares cancelled | ( | ( |
At 30 June 2024 | ||
Shares cancelled | ||
At 30 June 2025 |
Hedging reserve $ million | Exchange reserve $ million | Total $ million | |
At 30 June 2022 | ( | ( | |
Retranslation impact of opening balances(1) | ( | ( | |
Other comprehensive income/(loss) | ( | ||
At 30 June 2023 | ( | ( | |
Other comprehensive loss | ( | ( | ( |
At 30 June 2024 | ( | ( | |
Other comprehensive income | |||
At 30 June 2025 | ( | ( |
(1)Includes foreign translation differences arising on the retranslation of reserves due to the
change in the group’s presentation currency.
Out of the total hedging reserve, a deficit of $3 million (2024 – $78
million) represents the cost of hedging arising from cross currency
interest rate swaps in net investment hedges.
Movements in own shares
Number of shares million | Purchase considerati on $ million | |
At 30 June 2022 | ||
Retranslation impact of opening balances(1) | ||
Share trust arrangements | ( | ( |
Shares used to satisfy options | ( | ( |
Shares purchased – share buyback programme | ||
Shares cancelled | ( | ( |
At 30 June 2023 | ||
Share trust arrangements | ( | ( |
Shares used to satisfy options | ( | ( |
Shares purchased – share buyback programme | ||
Shares cancelled | ( | ( |
At 30 June 2024 | ||
Share trust arrangements | ( | ( |
Shares used to satisfy options | ( | ( |
At 30 June 2025 |
(1) Includes foreign translation differences arising on the retranslation of reserves due to the
change in the group’s presentation currency.
Share trust arrangements
At 30 June 2025, the employee share trusts owned 3 million of ordinary
shares in Diageo plc at a cost of $62 million and market value of
$73 million (2024 – 3 million shares at a cost of $66 million, market
value $97 million; 2023 – 3 million shares at a cost of $66 million,
market value $127 million). Dividends receivable by the employee
share trusts on the shares are waived and the trustee abstains
from voting.
Purchase of own shares
Authorisation was given by shareholders on 26 September 2024 to
purchase a maximum of 222,316,603 ordinary shares at a minimum
price of 28101/108 pence and a maximum price of the higher of (a) 105 %
of the average market value of the company's ordinary shares for the
five business days prior to the day the purchase is made and (b) the
higher of the price of the last independent trade and the highest
current independent bid on the trading venue where the purchase is
carried out. The programme expires at the conclusion of the next
Annual General Meeting or 15 months from the passing of this
resolution, if earlier.
During the year ended 30 June 2024, the group purchased 28 million
ordinary shares (2023 – 38 million), representing approximately 1.1 % of
the issued ordinary share capital (2023 – 1.5 %) at an average price of
million, including transaction costs (2023 – 3616 pence (4382 cents) per
share, and an aggregate cost of $1,673 million, including $16 million of
transaction costs) under the share buyback programme. The shares
purchased under the share buyback programmes were cancelled.
195 | Diageo Form 20-F 2025 |
2025 $ million | 2024 $ million | 2023 $ million | |
Amounts recognised as distributions to equity shareholders in the year | |||
Final dividend for the year ended 30 June 2024 (2023 – cents) | |||
Interim dividend for the year ended 30 June 2025 (2024 – cents) | |||
A final dividend of $1,399 million (62.98 cents per share; 2024 – 62.98
cents per share) was recommended by the Board of Directors on
4 August 2025 for approval by shareholders at the Annual General
Meeting scheduled to be held on 6 November 2025 bringing the
recommended full year dividend to 103.48 cents per share for the year
ended 30 June 2025. As this was after the balance sheet date and the
dividend is subject to approval by shareholders at the Annual General
Meeting, this dividend has not been included as a liability in these
consolidated financial statements. There are no corporate tax
consequences arising from this treatment.
Dividends are waived on all treasury shares owned by the company and
all shares owned by the employee share trusts.
Diageo consolidates USL, a company incorporated in India, with a 42.79 %
non-controlling interest, Sichuan Shuijingfang Company Limited, a
company incorporated in China, with a 36.35 % non-controlling interest
and has a 50 % controlling interest in Ketel One Worldwide B.V. (Ketel
One), a company incorporated in the Netherlands.
controlling interests are as follows:
2025 | 2024 | 2023 | |||
USL $ million | Other $ million | Total $ million | Total $ million | Total $ million | |
Income statement | |||||
Sales | |||||
Net sales | |||||
Profit for the year(1) | |||||
Other comprehensive loss(2) | ( | ( | ( | ( | ( |
Total comprehensive income/(loss) | ( | ||||
Attributable to non-controlling interests | ( | ||||
Balance sheet | |||||
Non-current assets(3) | |||||
Current assets | |||||
Non-current liabilities | ( | ( | ( | ( | ( |
Current liabilities | ( | ( | ( | ( | ( |
Net assets | |||||
Attributable to non-controlling interests | |||||
Cash flow | |||||
Net cash inflow from operating activities | |||||
Net cash outflow from investing activities | ( | ( | ( | ( | ( |
Net cash outflow from financing activities | ( | ( | ( | ( | ( |
Net increase/(decrease) in cash and cash equivalents | ( | ( | |||
Exchange differences | ( | ( | ( | ||
Dividends payable to non-controlling interests | ( | ( | ( | ( | ( |
(1) Profit for the year includes exceptional operating items attributable to non-controlling interests.
(2) Other comprehensive loss is principally in respect of exchange on translating the subsidiaries to US dollar.
(3) Non-current assets include the global distribution rights for Ketel One vodka products worldwide. The carrying value of the distribution right at 30 June 2025 was $1,800 million (2024 – $1,800
million; 2023 – $1,800 million).
(i) On 30 September 2024, Diageo completed the sale of its 58.02 % shareholding in Guinness Nigeria PLC to N-Seven Nigeria Ltd., part of the Tolaram group.
(ii) On 28 January 2025, Diageo announced the sale of its 80.4 % shareholding in Guinness Ghana Breweries PLC to Castel Group.
(iii) On 02 April 2025, Diageo announced the sale of its 54.4 % shareholding in Seychelles Breweries Limited to Phoenix Beverages.
196 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
The group uses a number of share award and option plans to grant to
its directors and employees.
the three years ended 30 June 2025 is as follows:
2025 $ million | 2024 $ million | 2023 $ million | |
Executive share award plans | |||
Executive share option plans | |||
Savings plans | |||
Executive share awards have been granted under the Diageo 2014
Long-Term Incentive Plan (DLTIP) from September 2014 until
September 2023 and are granted under the replacement plan, the
Diageo 2023 Long-Term Incentive Plan from March 2024 onwards to
some employees below the Board and from September 2024 to
Executive Directors. Awards are granted as conditional awards in the
form of performance shares, performance share options, time-vesting
restricted stock units (RSUs) and/or time-vesting share options (or
cash-based equivalents in certain locations for regulatory reasons).
Share options are granted at the market value at the time of grant. In
the case of Executive Directors, conditional awards of time-vesting
RSUs or forfeitable shares may be awarded under the 2020 Deferred
Bonus Share Plan (DBSP), with vesting not subject to any performance
conditions and not subject to a post-vesting retention period.
Share awards normally vest on the third anniversary of the grant date.
Participants do not make a payment to receive the award at grant.
Executive Directors are required to hold any vested shares awarded
under DLTIP for a further two-year post-vesting holding period. Share
options may normally be exercised between three and ten years after
the grant date. Executives in North America and Latin America and
Caribbean are granted awards over the company’s ADRs (one ADR is
equivalent to four ordinary shares).
For Executive Directors, performance shares under the DLTIP (for
awards granted in 2023 and 2024) are subject to the achievement of
three performance measures: 1) compound annual growth in profit
before exceptional items over three years; 2) compound annual growth
in organic net sales over three years; and 3) environmental, social and
governance (ESG) priorities, weighted 40 %, 40 % and 20 % of the
maximum respectively. Performance share options under the DLTIP are
subject to the achievement of two equally weighted performance
measures: 1) a comparison of Diageo’s three-year TSR against a
relevant peer group; 2) cumulative free cash flow over a three-year
period, measured at constant exchange rates. Performance measures
and targets are set annually by the Remuneration Committee and
disclosed within the relevant Directors' Remuneration Report. The
vesting range is 20 % for Executive Directors, and 25 % for other
participants, for achieving minimum performance targets, up to 100 %
for achieving the maximum target level. Retesting of the performance
measures is not permitted.
For performance shares under the DLTIP, dividends are accrued on
awards and are released to participants to the extent that the awards
vest at the end of the performance period. Dividend equivalents are
normally paid out in the form of shares.
Savings plans are provided in the form of a savings-related share option
plan in the UK and Republic of Ireland (ROI) and in the form of savings-
related share purchase plan in the US. Employees participating in these
plans agree to make regular monthly savings to buy options over Diageo
shares or American Depositary Receipts (ADRs) at a discounted price.
There are other share incentive plans available for all employees
within the group, including the UK Share Incentive Plan, the ROI
Profitshare Plan and the One World Share Incentive Plan introduced in
the year ended 30 June 2025.
value of executive share awards used the Monte Carlo and Black
Scholes pricing model and the following assumptions:
2025 | 2024 | 2023 | |
Risk free interest rate | |||
Expected life of the awards | |||
Dividend yield | |||
Weighted average share price | |||
Weighted average fair value of awards granted in the year(1) | |||
Number of awards granted in the year | |||
Fair value of all awards granted in the year | $ | $ | $ |
(1) Based on transaction rate at grant date of the awards.
Transactions on schemes
ended 30 June 2025 were as follows:
2025 million | 2024 million | 2023 million | |
Number of awards outstanding at 1 July | |||
Granted | |||
Awarded | ( | ( | ( |
Forfeited | ( | ( | ( |
Number of awards outstanding at 30 June |
The exercise price of share options outstanding at 30 June 2025 was in
the range of 1709 pence – 3763 pence (2024 – 1709 pence – 3854 pence;
2023 – 1709 pence – 3864 pence).
At 30 June 2025, 4.6 million (2024 – 3.3 million, 2023 – 2.5 million share
options were exercisable at a weighted average exercise price of 2512
pence (2024 – 2639 pence, 2023 – 2443 pence. Weighted average
remaining contractual life of share options was 6 years at 30 June 2025
(2024 – 6 years, 2023 – 5 years).
197 | Diageo Form 20-F 2025 |
Other financial statements disclosures
Introduction
This section includes additional financial information that are either required by the relevant accounting standards or management considers these
to be material information for shareholders.
Accounting policies | ||
Provision is made for the anticipated settlement costs of legal or other disputes against the group where it is considered to be probable that a liability exists and a reliable estimate can be made of the likely outcome. Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of the estimated financial effect, appropriate disclosure is made but no provision created. | ||
Critical accounting judgements and estimates | ||
Judgement is necessary in assessing the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any settlement. Due to the inherent uncertainty in this evaluation process, actual losses may be different from the liability originally estimated. The group may be involved in legal proceedings in respect of which it is not possible to make a reliable estimate of any expected settlement. In such cases, appropriate disclosure is provided but | ||
(a) Guarantees and related matters
As of 30 June 2025, 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 2012as part of the transaction announced by
Diageo in relation to USL on that day (the Original USL Transaction).
Following a series of further transactions, as of 30 June 2025, 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 chair 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 the 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
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.
198 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
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, including actively taking steps to retain the right to
enforcement against Watson in Mauritius.
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) was heard in February 2025, and on 9 April
2025 the English High Court issued a judgement denying Dr Mallya’s
appeal and granting the appeal of the bank consortium. Dr Mallya is
currently pursuing an application for annulment of the bankruptcy
orders, which is scheduled to be heard on 13 October 2025. In light of
ongoing proceedings in relation to the bankruptcy orders, the trial of
Diageo’s claim, which was scheduled to take place in March 2025, has
been deferred and is currently awaiting rescheduling.
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 at present.
While SEBI has filed an appeal against SAT’s order before the Supreme
Court of India, the next date for a substantive hearing is yet to be fixed.
There can be no certainty as to the outcome or the timeframe within
which such appeal will 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 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
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 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 it 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
199 | Diageo Form 20-F 2025 |
context of these operations, it is possible that tax exposures which
have not yet materialised (including those which could arise as part of
tax assessments) may result in losses to the group. Where the potential
tax exposures are known to us and may lead to a possible material
outflow, the group assesses the disclosure of such matters as
contingent liabilities, taking into account both assessed and unassessed
amounts (if any), 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, for
which 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
$906 million for Brazil and up to approximately $90 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 January 2025 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 at30 June 2025 is $120 million (corporate tax payments of
$108 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.
(a) Capital commitments
Commitments for expenditure on intangibles and property, plant and
equipment not provided for in these consolidated financial statements
are estimated at $550 million (2024 – $783 million; 2023 – $755 million).
(b) Other commitments
The future minimum lease rentals payable in the year ended 30 June
2025 for short-term leases and leases of low-value assets are estimated
at $19 million (2024 – $23 million; 2023 – $45 million). The total future
cash outflows for leases that had not yet commenced, and not
recognised as lease liabilities at 30 June 2025, are estimated at
$1 million (2024 – $3 million; 2023 – $14 million).
Transactions between the group and its related parties are made on
terms equivalent to those that prevail in arm’s length transactions.
(a) Subsidiaries
Transactions between the company and its subsidiaries are eliminated
on consolidation and therefore are not disclosed. Details of the
principal group companies are given in note 22.
(b) Associates and joint ventures
Sales and purchases to and from associates and joint ventures are
principally in respect of premium drink products but also include the
provision of management services.
out in the table below:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Income statement items | |||
Sales | |||
Purchases | |||
Balance sheet items | |||
Group payables | |||
Group receivables | |||
Loans receivable | |||
Cash flow items | |||
Loans and equity contributions, net |
Reduction in loans receivable in the year ended 30 June 2025 was
primarily due to Diageo's decision to exit several Distill Ventures
businesses.
Other disclosures in respect of associates and joint ventures are
The key management of the group comprises the Executive and Non-
Executive Directors, the members of the Executive Committee and the
Company Secretary. They are listed under ‘Board of Directors’ and
‘Executive Committee’.
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Salaries and short-term employee benefits | |||
Annual incentive plan | |||
Non-Executive Directors’ fees | |||
Share-based payments(1) | |||
Post-employment benefits | |||
(1) Time-apportioned fair value of unvested options and share awards.
Non-Executive Directors do not receive share-based payments or post-
employment benefits.
There were no transactions with these related parties during the year
ended 30 June 2025 on terms other than those that prevail in arm’s
length transactions.
200 | Diageo Form 20-F 2025 |
FINANCIAL STATEMENTS continued
(d) Pension plans
The Diageo pension plans are recharged with the cost of administration
services provided by the group to the pension plans and with
professional fees paid by the group on behalf of the pension plans. The
total amount recharged for the year was $0.2 million (2024 – $0.1
million; 2023 – $0.2 million).
(e) Directors’ remuneration
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Salaries and short-term employee benefits | |||
Annual incentive plan | |||
Non-Executive Directors' fees | |||
Shares vesting(1) | |||
Post-employment benefits | |||
(1) Gains on options realised in the year and the benefit from share awards, calculated by
using the share price applicable on the date of exercise of the share options and release
carry on the business described in the countries listed in conjunction with their subsidiaries and other group companies.
Country of incorporation | Country of operation | Percentage of equity owned(1) | Business description | |
Subsidiaries | ||||
Diageo Ireland Unlimited Company | ||||
Diageo Great Britain Limited | ||||
Diageo Scotland Limited | ||||
Diageo Brands B.V. | ||||
Diageo North America, Inc. | United States | Production, importing, marketing and distribution of premium drinks | ||
United Spirits Limited(2) | Production, importing, marketing and distribution of premium drinks | |||
Diageo Capital plc(3) | ||||
Diageo Capital B.V.(3) | ||||
Diageo Finance plc(3) | ||||
Diageo Investment Corporation | United States | |||
Mey İçki Sanayi ve Ticaret A.Ş. | ||||
Associates | ||||
Moët Hennessy(4) |
(1) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group.
(2) Percentage ownership excludes 2.38 % owned by the USL Benefit Trust.
(3) Directly owned by Diageo plc.
(4) Diageo’s principal associate is Moët Hennessy of which Diageo owns 34 % through two legal entities; Moët Hennessy, SAS and Moët Hennessy International.
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UNAUDITED FINANCIAL INFORMATION
Unaudited financial information
1. 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 free cash flow, forecast effective interest rate,
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 remeasurements, 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 ‘Year ended 30 June
2024 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 in the income statement
caption to which they relate, and form part of the segmental reporting,
and are excluded from the organic movement calculations. Management
believes that separate disclosure of exceptional items and the
classification between operating and non-operating 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 unusual or non-
recurring in nature, considered to be of a size that could distort
performance 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 unusual non-recurring items,
that are considered to be of a size that could distort performance and
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 finance incomes/charges are those that are unusual or
non-recurring in nature, considered to be of a size that could distort
the performance and are part of the financing activity of the group.
Exceptional current and deferred tax items comprise unusual or non-
recurring items, that are considered to be of a size that could distort
performance. 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 remeasurements in the organic movement calculation
reflect 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.
214 | Diageo Form 20-F 2025 |
UNAUDITED FINANCIAL INFORMATION continued
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 year ended 30 June 2025 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) | |||||||
Year ended 30 June 2024 reported | 50.1 | 51.3 | 74.9 | 22.1 | 32.1 | — | 230.5 |
Disposals(2) | (0.8) | (0.5) | (0.2) | (0.1) | (5.4) | — | (7.0) |
Year ended 30 June 2024 adjusted | 49.3 | 50.8 | 74.7 | 22.0 | 26.7 | — | 223.5 |
Organic movement | (0.4) | (2.2) | 2.9 | 0.7 | 1.0 | — | 2.0 |
Acquisitions and disposals(2) | 0.6 | 0.3 | 0.1 | 0.2 | 3.4 | — | 4.6 |
Year ended 30 June 2025 reported | 49.5 | 48.9 | 77.7 | 22.9 | 31.1 | — | 230.1 |
Organic movement % | (1) | (4) | 4 | 3 | 4 | — | 1 |
North America $ million | Europe $ million | Asia Pacific $ million | Latin America and Caribbean $ million | Africa $ million | Corporate $ million | Total $ million | |
Sales | |||||||
Year ended 30 June 2024 reported | 8,514 | 8,024 | 6,320 | 2,432 | 2,478 | 123 | 27,891 |
Exchange | — | (284) | (17) | — | 2 | — | (299) |
Disposals(2) | (162) | (62) | (31) | (6) | (290) | — | (551) |
Hyperinflation | — | (255) | — | (30) | (19) | — | (304) |
Year ended 30 June 2024 adjusted | 8,352 | 7,423 | 6,272 | 2,396 | 2,171 | 123 | 26,737 |
Organic movement | 180 | 135 | (125) | 183 | 187 | 10 | 570 |
Acquisitions and disposals(2) | 116 | 25 | 4 | 8 | 134 | — | 287 |
Exchange | (12) | 189 | (69) | (269) | 175 | 2 | 16 |
Hyperinflation | — | 265 | — | 72 | 17 | — | 354 |
Year ended 30 June 2025 reported | 8,636 | 8,037 | 6,082 | 2,390 | 2,684 | 135 | 27,964 |
Organic movement % | 2 | 2 | (2) | 8 | 9 | 8 | 2 |
North America $ million | Europe $ million | Asia Pacific $ million | Latin America and Caribbean $ million | Africa $ million | Corporate $ million | Total $ million | |
Net sales | |||||||
Year ended 30 June 2024 reported | 7,908 | 4,804 | 3,817 | 1,839 | 1,778 | 123 | 20,269 |
Exchange | — | (112) | (17) | 4 | 4 | — | (121) |
Reclassification(1) | — | — | — | — | (67) | — | (67) |
Disposals(2) | (146) | (41) | (25) | (6) | (276) | — | (494) |
Hyperinflation | — | (105) | — | (27) | (17) | — | (149) |
Year ended 30 June 2024 adjusted | 7,762 | 4,546 | 3,775 | 1,810 | 1,422 | 123 | 19,438 |
Organic movement | 116 | 15 | (120) | 167 | 150 | 10 | 338 |
Acquisitions and disposals(2) | 105 | 17 | 4 | 9 | 130 | — | 265 |
Exchange | (10) | 100 | (24) | (183) | 117 | 2 | 2 |
Hyperinflation | — | 143 | — | 44 | 15 | — | 202 |
Year ended 30 June 2025 reported | 7,973 | 4,821 | 3,635 | 1,847 | 1,834 | 135 | 20,245 |
Organic movement % | 1 | — | (3) | 9 | 11 | 8 | 2 |
215 | Diageo Form 20-F 2025 |
North America $ million | Europe $ million | Asia Pacific $ million | Latin America and Caribbean $ million | Africa $ million | Corporate $ million | Total $ million | |
Marketing | |||||||
Year ended 30 June 2024 reported | 1,627 | 873 | 651 | 306 | 205 | 29 | 3,691 |
Exchange | 1 | (5) | 2 | (5) | (2) | (1) | (10) |
Disposals(2) | (56) | (5) | (5) | — | (22) | — | (88) |
Hyperinflation | — | (13) | — | (1) | (1) | — | (15) |
Year ended 30 June 2024 adjusted | 1,572 | 850 | 648 | 300 | 180 | 28 | 3,578 |
Organic movement | (10) | 16 | (16) | 26 | (8) | (6) | 2 |
Acquisitions and disposals(2) | 55 | — | — | — | 9 | — | 64 |
Exchange | (1) | 16 | (2) | (30) | 10 | — | (7) |
Hyperinflation | — | 16 | — | 8 | 1 | — | 25 |
Year ended 30 June 2025 reported | 1,616 | 898 | 630 | 304 | 192 | 22 | 3,662 |
Organic movement % | (1) | 2 | (2) | 9 | (4) | (21) | — |
North America $ million | Europe $ million | Asia Pacific $ million | Latin America and Caribbean $ million | Africa $ million | Corporate $ million | Total $ million | |
Operating profit before exceptional items | |||||||
Year ended 30 June 2024 reported | 3,236 | 1,379 | 1,063 | 502 | 131 | (366) | 5,945 |
Exchange(3) | (244) | (74) | (7) | 10 | 70 | 13 | (232) |
Fair value remeasurement of contingent considerations, equity option and earn-out arrangements | (128) | (28) | — | — | — | — | (156) |
Fair value remeasurement of biological assets | — | — | — | 17 | — | — | 17 |
Disposals(2) | (30) | (17) | (8) | (6) | 3 | — | (58) |
Hyperinflation | — | 44 | — | 14 | 9 | — | 67 |
Year ended 30 June 2024 adjusted | 2,834 | 1,304 | 1,048 | 537 | 213 | (353) | 5,583 |
Organic movement | 9 | (32) | (115) | 63 | 59 | (22) | (38) |
Acquisitions and disposals(2) | (10) | 7 | 1 | (1) | 34 | — | 31 |
Fair value remeasurement of contingent considerations, equity option and earn-out arrangements | 125 | 14 | — | — | — | — | 139 |
Fair value remeasurement of biological assets | — | — | — | 13 | — | — | 13 |
Exchange(3) | 95 | 40 | (4) | (71) | (11) | (17) | 32 |
Hyperinflation | — | (31) | — | (13) | (12) | — | (56) |
Year ended 30 June 2025 reported | 3,053 | 1,302 | 930 | 528 | 283 | (392) | 5,704 |
Organic movement % | — | (2) | (11) | 12 | 28 | (6) | (1) |
Organic operating margin %(4) | |||||||
Year ended 30 June 2025 | 36.1 | 27.9 | 25.5 | 30.3 | 17.3 | n/a | 28.0 |
Year ended 30 June 2024 | 36.5 | 28.7 | 27.8 | 29.7 | 15.0 | n/a | 28.7 |
Organic operating margin movement (bps) | (42) | (80) | (223) | 68 | 232 | n/a | (68) |
(1) $67 million reclassification between net sales and cost of goods sold to accurately reflect the impact of a route-to-market change in Africa.
(2) Acquisitions and disposals that had an effect on organic volume, sales, net sales, marketing and operating profit growth in the year ended 30 June 2025, are detailed on page 216.
(3) The impact of movements in exchange rates on reported figures for operating profit was principally due to the weakening of the Mexican peso, the Turkish lira and the Brazilian real, partially
offset by the strengthening of the sterling against the US dollar.
(4) 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 33.
(ii) Percentages and margin movements are calculated on rounded figures.
216 | Diageo Form 20-F 2025 |
UNAUDITED FINANCIAL INFORMATION continued
In the year ended 30 June 2025, 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 EU million | Sales $ million | Net sales $ million | Marketing $ million | Operating profit $ million | |
Year ended 30 June 2024 | |||||
Disposals | |||||
Guinness Nigeria PLC | (5.4) | (290) | (276) | (22) | 3 |
Cîroc | (0.8) | (161) | (145) | (56) | (29) |
Cacique | (0.3) | (32) | (23) | (2) | (12) |
Pampero brand | (0.3) | (35) | (23) | (3) | (11) |
Windsor business | (0.1) | (28) | (23) | (5) | (7) |
Safari brand | (0.1) | (5) | (4) | — | (2) |
(7.0) | (551) | (494) | (88) | (58) | |
Acquisitions and disposals | (7.0) | (551) | (494) | (88) | (58) |
Year ended 30 June 2025 | |||||
Acquisitions | |||||
Ritual Beverage Company LLC | 0.1 | 15 | 15 | 12 | (19) |
0.1 | 15 | 15 | 12 | (19) | |
Disposals | |||||
Guinness Nigeria PLC | 3.4 | 134 | 130 | 9 | 34 |
Cîroc | 0.5 | 101 | 90 | 43 | 9 |
Cacique | 0.1 | 18 | 13 | — | 5 |
Pampero brand | 0.4 | 14 | 12 | — | 1 |
Windsor business | 0.1 | 4 | 4 | — | 1 |
Safari brand | — | 1 | 1 | — | — |
4.5 | 272 | 250 | 52 | 50 | |
Acquisitions and disposals | 4.6 | 287 | 265 | 64 | 31 |
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 years ended 30 June 2025 and 30 June 2024 are set out in the table below:
2025 | 2024 | |
$ million | $ million | |
Profit attributable to equity shareholders of the parent company | 2,354 | 3,870 |
Exceptional operating and non-operating items | 1,589 | 14 |
Exceptional finance income | (58) | — |
Exceptional tax items and tax in respect of exceptional operating and non-operating items and finance income | (214) | 24 |
Exceptional items attributable to non-controlling interests | (23) | 104 |
Profit attributable to equity shareholders of the parent company before exceptional items | 3,648 | 4,012 |
Weighted average number of shares | million | million |
Shares in issue excluding own shares | 2,222 | 2,234 |
Dilutive potential ordinary shares | 6 | 5 |
Diluted shares in issue excluding own shares | 2,228 | 2,239 |
cents | cents | |
Basic earnings per share before exceptional items | 164.2 | 179.6 |
Diluted earnings per share before exceptional items | 163.7 | 179.2 |
217 | Diageo Form 20-F 2025 |
Free cash flow
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash expenditure paid for property,
plant and equipment and computer software 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 loans to associates and other investments that do not meet the definition
of cash and cash equivalents.
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 years ended 30 June 2025 and 30 June 2024 are set out in the table below:
2025 | 2024 | |
$ million | $ million | |
Net cash inflow from operating activities | 4,297 | 4,105 |
Disposal of property, plant and equipment and computer software | 63 | 14 |
Purchase of property, plant and equipment and computer software | (1,612) | (1,510) |
Free cash flow | 2,748 | 2,609 |
218 | Diageo Form 20-F 2025 |
UNAUDITED FINANCIAL INFORMATION continued
Operating cash conversion
Operating cash conversion is calculated by dividing cash generated from operations excluding cash inflows and outflows in respect of exceptional
items, dividends received from associates, maturing inventories, provisions, other items and post-employment payments in excess of the amount
charged to operating profit by operating profit before depreciation, amortisation, impairment and exceptional operating items.
The measure is excluding any IAS 29 hyperinflation adjustment. The ratio is stated at the budgeted exchange rates for the respective year and is expressed
as a percentage.
Operating cash conversion for the years ended 30 June 2025 and 30 June 2024 were as follows:
2025 | 2024 | |
$ million | $ million | |
Profit for the year | 2,538 | 4,166 |
Taxation | 999 | 1,294 |
Share of after tax results of associates and joint ventures | (193) | (414) |
Net finance charges | 771 | 885 |
Non-operating items | 220 | 70 |
Operating profit | 4,335 | 6,001 |
Exceptional operating items | 1,369 | (56) |
Fair value remeasurements | (150) | (141) |
Depreciation, amortisation and impairment(1) | 748 | 678 |
Hyperinflation adjustment | 35 | 6 |
Retranslation to budgeted exchange rates | (40) | 248 |
6,297 | 6,736 | |
Cash generated from operations | 6,210 | 6,065 |
Net exceptional cash paid(2) | 107 | 185 |
Post-employment payments less amounts included in operating profit(1) | (22) | 18 |
Net movement in maturing inventories(3) | 368 | 577 |
Provision movement | (25) | 29 |
Dividends received | (175) | (269) |
Other items(1) | (45) | (88) |
Hyperinflation adjustment | 22 | (23) |
Retranslation to budgeted exchange rates | (17) | 216 |
6,423 | 6,710 | |
Operating cash conversion | 102.0% | 99.6% |
(1)Excluding exceptional items.
(2)Exceptional cash payments in cash flow for distribution model change in France was $48 million (2024 – $nil), for various litigation matters were $44 million
(2024 – $102 million), and for restructuring programmes were $15 million (2024 – $26 million). For the year ended 30 June 2024 exceptional cash payments for distribution termination fee was
$55 million and for winding down our Russian operations was $2 million.
(3)Excluding non-cash movements such as exchange and the impact of acquisitions and disposals
Return on average invested capital
Return on average invested capital is used by management to assess the return obtained from the group’s asset base and is calculated to aid
evaluation of the performance of the business.
The profit used in assessing the return on average invested capital reflects operating profit before exceptional items attributable to equity
shareholders of the parent company after applying the tax rate before exceptional items, plus share of tax results of associates and joint ventures
for the fiscal year. Average invested capital is calculated using the average derived from the consolidated balance sheets at the beginning, middle
and end of the year. Average capital employed comprises average net assets attributable to equity shareholders of the parent company for the
year, excluding net post-employment benefit assets/liabilities (net of deferred tax) and average net borrowings.
219 | Diageo Form 20-F 2025 |
Calculations for the return on average invested capital for the years ended 30 June 2025 and 30 June 2024 are set out in the table below:
2025 | 2024 | |
$ million | $ million | |
Operating profit | 4,335 | 6,001 |
Exceptional operating items | 1,369 | (56) |
Profit before exceptional operating items attributable to non-controlling interests | (207) | (192) |
Tax at the tax rate before exceptional items of 24.9% (2024 – 23.2%)(1) | (1,420) | (1,475) |
Share of after tax results of associates and joint ventures | 193 | 414 |
4,270 | 4,692 | |
Average net assets (excluding net post-employment benefit assets/liabilities) | 12,006 | 11,270 |
Average non-controlling interests | (2,082) | (1,941) |
Average net borrowings | 21,182 | 20,361 |
Average invested capital | 31,106 | 29,690 |
Return on average invested capital | 13.7% | 15.8% |
(1)Definition of tax rate before exceptional items has been aligned to ETR definition change to exclude share of after tax results of associates and joint ventures from profit before taxation. The
presentation of return on average invested capital for the year 30 June 2024 has not been amended as the impact is not material.
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 plus 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 years ended 30 June 2025 and 30 June 2024 are set out in the table
below:
2025 | 2024 | |
$ million | $ million | |
Borrowings due within one year | 2,928 | 2,885 |
Borrowings due after one year | 20,820 | 18,616 |
Fair value of foreign currency derivatives and interest rate hedging instruments | (347) | 42 |
Lease liabilities | 653 | 604 |
Less: Cash and cash equivalents | (2,200) | (1,130) |
Net borrowings | 21,854 | 21,017 |
Post-employment benefit liabilities before tax | 409 | 429 |
Adjusted net borrowings | 22,263 | 21,446 |
Profit for the year | 2,538 | 4,166 |
Taxation | 999 | 1,294 |
Net finance charges | 771 | 885 |
Depreciation, amortisation and impairment (excluding exceptional accelerated depreciation and impairment) | 748 | 678 |
Exceptional accelerated depreciation and impairment | 970 | (185) |
EBITDA | 6,026 | 6,838 |
Exceptional operating items (excluding accelerated depreciation and impairment) | 399 | 129 |
Non-operating items | 220 | 70 |
Adjusted EBITDA | 6,645 | 7,037 |
Adjusted net borrowings to adjusted EBITDA | 3.4 | 3.0 |
220 | Diageo Form 20-F 2025 |
UNAUDITED FINANCIAL INFORMATION continued
Tax rate before exceptional items
In the year ended 30 June 2025, Diageo changed the definition of the reported tax rate and the tax rate before exceptional items to exclude the
share of after-tax results of associates and joint ventures from profit before tax, as this represents post-tax profit, hence is considered as a non-
essential factor of the calculation. The presentation of the tax rate after exceptional items and the tax rate before exceptional items for the year
ended 30 June 2024 has been aligned to this new definition.
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 share of after-tax results of associates and joint ventures and 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 years ended 30 June 2025 and 30 June 2024 are set out
in the table below:
2025 | 2024 | |
$ million | $ million | |
Taxation on profit (a) | 999 | 1,294 |
Tax in respect of exceptional items | 214 | (24) |
Tax before exceptional items (b) | 1,213 | 1,270 |
Profit before taxation (c) | 3,537 | 5,460 |
Share of after tax results of associates and joint ventures | 193 | 414 |
Profit excluding share of after tax results of associates and joint ventures (d) | 3,344 | 5,046 |
Exceptional finance income | (58) | — |
Exceptional non-operating items | 220 | 70 |
Exceptional operating items | 1,369 | (56) |
Profit before taxation and exceptional items excluding share of after tax results of associates and joint ventures (e) | 4,875 | 5,060 |
Tax rate after exceptional items (a/d) | 29.9% | 25.6% |
Tax rate before exceptional items (b/e) | 24.9% | 25.1% |
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,
Türkiye, Latin America and Caribbean, Africa and Asia Pacific
(excluding Australia, Korea and Japan).
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 Guinness 0.0 and 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.
221 | Diageo Form 20-F 2025 |
THIS PAGE IS INTENTIONALLY LEFT BLANK
222 | Diageo Form 20-F 2025 |
UNAUDITED FINANCIAL INFORMATION continued
Cautionary statement concerning forward-looking statements
This document contains 'forward-looking' statements. These statements
can be identified by the fact that they do not relate only to historical or
current facts and may generally, but not always, be identified by the use
of words such as 'will', 'anticipates', 'should', 'could', 'would', 'targets',
'aims', 'may', 'expects', 'intends' or similar expressions statements. In this
document, such statements include those that express forecasts,
expectations, plans, outlook, objectives and projections with respect to
future matters, including information related to Diageo’s fiscal 26
outlook, Diageo’s medium-term guidance, Diageo’s Accelerate
programme, future Total Beverage Alcohol market share ambitions, the
impact of tariffs and any other statements relating to Diageo’s
performance for the year ending 30 June 2026 or thereafter.
Forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the
future. There 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, which include (but are not limited to): (i) economic,
political, social or other developments in countries and markets in
which Diageo operates, including geopolitical instability as a result of
Russia's invasion of Ukraine and the conflicts 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, lower or
non-alcoholic products or THC and hemp-based THC beverages,
increased use of GLP-1 medications, and/or developments in e-
commerce); (iv) changes in the domestic and international tax
environment that could lead to uncertainty around the application of
existing and new tax laws and unexpected tax exposures; (v) changes
in the cost of production, including as a result of increases in the cost
of commodities, labour and/or energy due to inflation and/or supply
chain disruptions; (vi) any litigation or other similar proceedings
(including with tax, customs, competition, environmental, anti-
corruption or other regulatory authorities); (vii) legal and regulatory
developments, including changes in regulations relating to
environmental issues and/or e-commerce; (viii) the consequences of
any failure of internal controls; (ix) the consequences of any failure by
Diageo or its associates to comply with anti-corruption, sanctions,
trade restrictions or similar laws and regulations, or any failure of
Diageo’s related internal policies and procedures to comply with
applicable law or regulation; (x) Diageo’s ability to make sufficient
progress against or achieve its ESG ambitions; (xi) cyber-attacks and IT
threats or any other disruptions to core business operations; (xii)
contamination, counterfeiting or other circumstances which could
harm the level of customer support for Diageo’s brands and adversely
impact its sales; (xiii) Diageo’s ability to maintain its brand image and
corporate reputation or to adapt to a changing media environment;
(xiv) fluctuations in exchange rates and/or interest rates; (xv) Diageo’s
ability to successfully execute its strategic business transformation
projects; (xvi) Diageo’s ability to derive the expected benefits from its
business strategies, including in relation to expansion in emerging
markets, acquisitions, investments in joint ventures, productivity
initiatives or inventory forecasting; (xvii) increased competitive
product and pricing pressures, including as a result of introductions of
new products or categories that compete with Diageo’s products and
consolidations by competitors and retailers; (xviii) increased costs for,
or shortages of, talent, as well as labour strikes or disputes; (xix)
movements in the value of the assets and liabilities related to Diageo’s
pension plans; (xx) Diageo’s ability to renew supply, distribution,
manufacturing or licence agreements (or related rights) and licences
on favourable terms, or at all, when they expire; or (xxi) any failure by
Diageo to protect its intellectual property rights.
In preparing the ESG-related information contained in this document,
Diageo has made a number of key judgements, estimations and
assumptions and the processes and issues involved are complex. The
ESG-related forward looking statements should be treated with special
caution, as ESG and climate data, models and methodologies are often
relatively new, are rapidly evolving and are not of the same standard as
those available in the context of other financial information, nor are
they subject to the same or equivalent disclosure standards, historical
reference points, benchmarks, market consensus or globally accepted
accounting principles. In particular, it is not possible to rely on
historical data as a strong indicator of future trajectories in the case of
climate change and its evolution. Outputs of models, processed data and
methodologies are also likely to be affected by underlying data quality,
which can be hard to assess and we expect industry guidance, market
practice, and regulations in this field to continue to change. There are
also challenges faced in relation to the ability to access data on a
timely basis and the lack of consistency and comparability between data
that is available. This means the ESG-related forward-looking statements
and ESG metrics discussed in this document carry an additional degree of
inherent risk and uncertainty, and therefore, our actual results and
developments could differ materially from those expressed or implied by
the ESG-related forward-looking statements in this document.
In light of the uncertainty as to the nature of future policy and market
responses to climate change, including between regions, and the
effectiveness of any such responses, Diageo may have to re-evaluate its
progress and adapt its approach towards its ESG ambitions,
commitments and targets in the future, update the methodologies it
uses or alter its approach to ESG and climate analysis and may be
required to amend, update and recalculate its ESG disclosures and
assessments in the future, as market practice and data quality and
availability develop rapidly.
All oral and written forward-looking statements made on or after the
date of this document and attributable to Diageo are expressly qualified
in their entirety by the cautionary statements contained or referred to
in this section. Further details of potential risks and uncertainties
affecting Diageo are described in our filings with the London Stock
Exchange and the US Securities and Exchange Commission (SEC),
including in our Annual Report on Form 20-F for the year ended 30 June
2025.
Any forward-looking statements made by or on behalf of Diageo speak
only as of the date they are made. Diageo expressly disclaims any
obligation or undertaking to publicly update or revise these forward-
looking statements other than as required by applicable law. The reader
should, however, consult any additional disclosures that Diageo may
make in any documents which it publishes and/or files with the SEC.
All readers, wherever located, should take note of these disclosures.
This document includes names of Diageo’s products, which constitute
trademarks or trade names which Diageo owns, or which others own
and license to Diageo for use. All rights reserved. © Diageo plc 2025.
The information in this document does not constitute an offer to sell or
an invitation to buy shares in Diageo plc or an invitation or inducement
to engage in any other investment activities.
This document may include information about Diageo’s target debt
rating. A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by
the assigning rating organisation. Each rating should be evaluated
independently of any other rating.
Past performance cannot be relied upon as a guide to future performance.
References in this document to information on websites are included as
an aid to their location and such information is not incorporated in,
and does not form part of, this document unless otherwise noted.
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Spirits and investments
Spirits are produced in distilleries located worldwide. The group owns
31 Scotch whisky distilleries in Scotland, two whisky distilleries in
Canada, five in the United States and one in China. Diageo produces
Smirnoff internationally. Ketel One vodka is a Joint Venture product,
distributed by Diageo from the manufacturing base of the Nolet Group
in the Netherlands. Cîroc grape-based vodka liquids are purchased from
Maison Villevert in France and packed both at Diageo Operations Italy
S.p.A. and Maison Villevert. On 24 June 2025, Diageo announced the
sale of Diageo Operations Italy S.p.A., inclusive of the Santa Vittoria
production facility, to NewPrinces S.p.A., a leading Italian company in
the food and drink industry. Gin distilleries are in Scotland
(Cameronbridge) and in Canada (Valleyfield). Baileys is produced in the
Republic of Ireland and Northern Ireland. Irish whiskey is distilled at
the Roe & Co distillery in Dublin. Rum is distilled in the US Virgin
Islands, Australia and Guatemala and is blended and bottled in the
United States, Canada, Italy, United Kingdom and Guatemala. Tequila
is produced in Mexico, raki in Türkiye, Chinese white spirits are
produced in Chengdu, in the Sichuan province of China and cachaça in
Ceará State in Brazil.
The breakdown of the group's maturing inventory is as follows:
2025 | 2024 | |
Category | $ million | $ million |
Whisk(e)y | 7,232 | 6,290 |
– From this attributable to scotch | 5,659 | 4,862 |
Other | 1,445 | 1,542 |
Total maturing inventory | 8,677 | 7,832 |
Diageo’s maturing Scotch whisky is stored in warehouses in Scotland
(Clackmannanshire area between Blackgrange, Cambus West and
Menstrie, where we are holding approximately 43% of the group’s
maturing Scotch whisky), its maturing Canadian whisky in Valleyfield
and Gimli in Canada, its maturing American whiskey in Kentucky and
Tennessee in the United States and maturing Chinese white spirits in
Chengdu, China.
Work continues to expand our warehousing facilities at Midtown in
Clackmannanshire. Additional land has also been secured at the nearby
Garvel Farm site, which will allow warehouse capacity expansion to
continue once Midtown is complete. Alongside the new warehouses
being built, there is also investment in state-of-the-art automation of
warehousing.
In North America, plans were announced to open a new manufacturing and
warehousing facility in Montgomery, Alabama. The 360,000 square foot
facility will have a multi-million case annual production capacity for
Diageo’s leading beverage alcohol brands. This site will enhance the
company’s North America supply chain operations and support future
growth for the company’s export business.
Diageo’s end-to-end tequila production is in Mexico, with more than
$500 million being invested to expand our manufacturing footprint
through new facilities in the state of Jalisco to support growth. As part
of our expansion and our investments in the tequila category, we have
different digital transformation projects at our facilities to meet the
growing demand in tequila. Furthermore, during fiscal 25, we
commissioned operations at one of two new distilleries as part of the
capacity expansion plan. Additionally, in fiscal 25 we continued to
build the second new distillery at La Barca, which is planned to
become operational in fiscal 26.
Diageo owns a controlling equity stake in United Spirits Limited (USL)
which is one of the leading alcoholic beverage companies in India,
selling close to 64 million equivalent units (LE) in fiscal 25 of Indian-
Made Foreign Liquor (IMFL) and imported liquors. USL has a significant
market presence across India and operates nine owned sites, as well as
a network of leased and third-party manufacturing facilities. USL owns
several Indian brands, such as McDowell’s (Indian whisky, rum, and
brandy), Black Dog (Scotch), Signature (Indian whisky), Royal Challenge
(Indian whisky), Godawan (Indian Single Malt) and Antiquity (Indian
whisky).
In China, the Eryuan malt whisky distillery fully opened in 2024. It will
develop the highest quality China single origin whisky, placing China
firmly on the global whisky producer’s map.
Beer and investments
Diageo’s principal brewing facility is at the St James’s Gate brewery in
Dublin, Ireland. Additionally, at the end of fiscal 25, Diageo owned
breweries in several African countries: Kenya, Ghana, Tanzania, Uganda
and the Seychelles. On 1 July 2025, Diageo completed the sale of its 54.4%
shareholding in Seychelles Breweries Limited to Phoenix Beverages, a
subsidiary of Mauritius-based IBL Group. The transaction builds on Diageo’s
partnership with Phoenix Beverages as a partner in the Indian Ocean
region. On 3 July 2025, Diageo completed the sale of its 80.4%
shareholding in Guinness Ghana Breweries PLC to Castel Group, building
on its relationship with Castel as a partner in Africa. For more information
see note 8 to the consolidated financial statements.
Guinness flavour extract is shipped from Ireland to all overseas
Guinness brewing operations which use the flavour extract to brew
beer locally. Guinness is transported from Ireland in bulk to the Belfast
facility in Northern Ireland for canning and in bulk to the Runcorn
facility in Great Britain where the kegging, bottling and canning of
Guinness Draught takes place.
Projects are underway to support future beer growth. In July 2022,
Diageo announced plans to invest €200 million ($214 million) in
Littleconnell, Newbridge, Co. Kildare. Construction began in summer
2024 and the plan is for brewing to start in 2026. Furthermore, in the
second half of 2023, Diageo completed the €25 million ($27 million)
investment in a new production area at St. James’s Gate increasing the
brewing capacity of Guinness 0.0. In October 2024, Diageo announced
plans to invest an additional €30 million to cater for continued demand
for Guinness 0.0. This new investment will double the fiscal 23
capacity.
The £41 million ($52 million) investment to expand and optimise
capacity at our beer packaging facilities in Belfast and Runcorn is
progressing well. The new canning line in Belfast and upgraded bottling
capability in Runcorn are now completed. The final upgrade of canning
in Runcorn will be completed in 2025.
The Diageo Beer Category Third-Party Operations Team provide
technical services to facilitate the delivery of over 7 million hectolitres
of beer and ready-to-drink products supplied through over 50 partner
breweries and beverage packaging facilities worldwide. A shift towards
an asset-light strategy in Africa and the associated divestments,
including the sales of Seychelles Breweries Limited and Guinness Ghana
Breweries plc, has driven a significant pivot to third-party production
and distribution.
227 | Diageo Form 20-F 2025 |
The Beer Category Third-Party Operations team's focus is on
maintaining secure supply solutions through partners while assuring the
consistent quality of Diageo brands produced at third-party facilities
and enhancing Diageo value through supporting the start-up of new
partnerships and delivery of innovation projects. In addition to
supporting Guinness and beer, the team has an expanding role in
supporting the third-party manufacturing of ready-to-drink and spirits
in Asia Pacific and Africa.
Flavoured malt beverages (FMB) are made from an original base
containing malt, but then stripped of malt character, and flavoured.
This product segment is implemented mainly in the United States,
Canada and the Caribbean.
Ready-to-drink (RTD)
Diageo produces a range of ready-to-drink products mainly in the United
Kingdom, Italy, across Africa, Australia, the United States and Canada.
Raw materials and supply agreements
The group has several long-term contracts for purchasing raw
materials, including glass, other packaging, spirits, cream, rum and
grapes. Forward contracts are in place for the purchase of cereals and
packaging materials to minimise the effects of short-term price
fluctuations. Despite macroeconomic uncertainty and volatility, price
pressure is easing and some key commodities are now starting to
become deflationary. Our long-term hedging means there is a lag in
cost of sales benefit generated from a commodity price decrease. The
continued geopolitical tensions, weather patterns with volatile but
strong consumer demand, are the key drivers of constraints we are
managing.
Cereals, including barley, wheat, corn, and sorghum, are used in our
scotch and beer production and in our spirits brands through purchased
neutral spirit. Agave, a key raw material for our tequila brands, is
sourced from Mexico. Cream, the principal raw material for Irish cream
liqueur, is sourced from Ireland. Grapes and aniseed are used in the
production of raki and are sourced from suppliers in Türkiye. Other raw
materials purchased in significant quantities to produce spirits and
beer are molasses, sugar and several flavours (such as juniper berries,
agave, chocolate and herbs). These are sourced from suppliers across
the globe.
Many products are supplied to customers in glass bottles. Glass is
purchased from a variety of multinational and local suppliers. The
largest suppliers are Ardagh Packaging in the United Kingdom and
Owens-Illinois in the United States.
Like other consumer goods companies, we maintain stocks in markets
to compensate for extended lead times and demand volatility. Diageo
is managing well through the current levels of uncertainty and
constraints in our supply chain by expanding our supplier base and
maintaining agility in our logistics networks.
Competition
Diageo’s brands compete primarily on the basis of quality and price. Its
business is built on getting the right product to the right consumer for
the right occasion, and at the right price, including through taking into
account ever evolving shopper landscapes, technologies and consumer
preferences. Diageo also seeks to recruit and re-recruit consumers to
its portfolio of brands, including through meaningful consumer
engagement, sustainable innovation and investment in its brands.
In spirits, Diageo’s major global competitors are Pernod Ricard, Beam
Suntory, Bacardi and Brown-Forman, each of which has several brands
that compete directly with Diageo’s brands. In addition, Diageo faces
competition from regional and local companies in the countries in
which it operates.
In beer, Diageo also competes globally, as well as on a regional and
local basis (with the profile varying between regions) with several
competitors, including AB InBev, Molson Coors, Heineken, Constellation
Brands and Carlsberg.
Research and development
Innovation forms an important part of Diageo’s growth strategy,
playing a key role in positioning its brands for continued growth in both
developed and emerging markets. The strength and depth of Diageo’s
brand range also provides a solid platform from which to drive
sustainable innovation that leads to new products and experiences for
consumers, whether or not they choose to drink alcohol. Diageo
focuses its innovation on its strategic priorities and the most significant
consumer opportunities, including the development of global brand
extensions and new-to-world products, and continuously invests to
deepen its understanding of evolving trends and consumer socialising
occasions to inform product and packaging development, ranging from
global brand redesigns to cutting edge innovations. Supporting this, the
Diageo group has ongoing programmes to develop new beverage
products which are managed internally by the innovation and research
and development function.
Trademarks and other intellectual property
Diageo produces, sells and distributes branded goods, and is therefore
substantially dependent on the maintenance and protection of its
trademarks. All brand names mentioned in this document are
protected by trademarks. The Diageo group also holds trade secrets, as
well as has substantial trade knowledge related to its products. The
group believes that its significant trademarks are registered and/or
otherwise protected (insofar as legal protection is available) in all
material respects in its most important markets. Diageo also owns
valuable patents and trade secrets for technology and takes all
reasonable steps to protect these rights.
Seasonality
The beverage alcohol industry is subject to seasonality in each major
category. Our spirits sales are typically highest during the second
quarter of our fiscal year, primarily due to seasonal holiday buying in
our largest markets.
228 | Diageo Form 20-F 2025 |
OTHER ADDITIONAL INFORMATION continued
Employees
Many of our employees are represented by unions, with a variety of
collective bargaining agreements in place. We believe our relationships
with the unions that represent our employees are satisfactory in all
material respects.
Regulations and taxes
Diageo’s worldwide operations are subject to extensive regulatory
requirements relating to production, product liability, distribution,
importation, marketing, promotion, sales, pricing, labelling,
packaging, advertising, antitrust, labour, pensions, compliance and
control systems and environmental issues.
In the United States, the beverage alcohol industry is subject to strict
federal and state government regulations. At the federal level, the
Alcohol and Tobacco Tax and Trade Bureau, or TTB, of the US Treasury
Department oversees the US beverage alcohol industry, including
through regulating and collecting taxes on the production of alcohol
within the United States and regulating trade practices. In addition,
individual US states, as well as some local authorities in US
jurisdictions in which Diageo sells or produces its products, administer
and enforce industry-specific regulations and may apply additional
excise taxes and, in many states, sales taxes. Federal, state and local
regulations cover virtually every aspect of Diageo's US operations,
including production, importation, distribution, marketing, promotion,
sales, pricing, labelling, packaging and advertising.
Spirits and beer are subject to national import and excise duties in
many markets around the world. Most countries impose excise duties
on beverage alcohol products, although the form of such taxation
varies significantly from a simple application to units of alcohol by
volume, to advanced systems based on the imported or wholesale
value of the product. Several countries impose additional import duty
on distilled spirits, often discriminating between categories (such as
Scotch whisky or bourbon) in the rate of such tariffs. Within the
European Union, such products are subject to different rates of excise
duty in each country, but within the overall European Union framework
there are minimum rates of excise duties that must first be applied to
each relevant category of beverage alcohol. The UK introduced a new
alcohol duty system in August 2023 which charges duty based on
alcohol by volume (rather than by product type). Administrative
changes to support this system became effective from 1 February 2025.
Rates of UK alcohol duty were increased in line with inflation, also
effective from 1 February 2025. This remains a new regime which
could impact Diageo’s business activities.
Import and excise duties can have a significant impact on the final
pricing of Diageo’s products to consumers. These duties can affect a
product’s revenue or margin, both by reducing consumption and/or by
encouraging consumers to switch to lower-taxed categories of
beverages. The group devotes resources to encouraging the equitable
taxation treatment of all beverage alcohol categories and to reducing
government imposed barriers to fair trading.
The advertising, marketing and sale of alcohol are subject to various
restrictions in markets around the world. These range from a complete
prohibition of alcohol in certain cultures and jurisdictions, such as in
certain states in India, to the prohibition of the import into a certain
jurisdiction of spirits and beer, and to restrictions on the advertising
style, media and content. In a number of countries, television is a
prohibited medium for the marketing of spirits brands, while in other
countries, television advertising, while permitted, is carefully
regulated. Many countries also strictly regulate the use of internet-
based advertising and social media in connection with alcohol sales.
Any further prohibitions imposed on advertising or marketing,
particularly within Diageo’s most significant markets, could have an
adverse impact on beverage alcohol sales.
Labelling of beverage alcohol products is also regulated in many
markets, varying from the required inclusion of health warning labels
to manufacturer or importer identification, alcohol strength and other
consumer information. As well as producer, importer or bottler
identification, specific warning statements related to the risks of
drinking beverage alcohol products are required to be included on all
beverage alcohol products sold in the US, in certain countries within
the EU, and in a number of other jurisdictions in which Diageo operates.
Spirits and beer are also regulated in distribution. In many countries,
alcohol may only be sold through licensed outlets, both on- and off-
trade, varying from government- or state-operated monopoly outlets
(for example, in the off-trade channel in Norway, certain Canadian
provinces, and certain US states) to the system of licensed on-trade
outlets (for example, licensed bars and restaurants) which prevails in
much of the Western world, including in the majority of US states, in
the UK and in much of the EU. In a number of states in the US,
wholesalers of alcoholic beverages must publish price lists periodically
and/or must file price changes in some instances up to three months
before they become effective. In a response to public health concerns,
some governments have imposed or are considering imposing minimum
pricing on beverage alcohol products and may consider raising the legal
drinking age, further limiting the number, type or opening hours of
retail outlets and/or expanding retail licensing requirements.
Regulatory decisions and changes in the legal and regulatory
environment could also increase Diageo’s costs and liabilities and/or
impact on its business activities.
Taxation
This section provides a descriptive summary of certain US federal income
tax and UK tax consequences that are likely to be material to the holders
of the ordinary shares or ADSs, but only those who hold their ordinary
shares or ADSs as capital assets for tax purposes. It does not purport to be
a complete technical analysis or a listing of all potential tax effects
relevant to the ownership of the ordinary shares or ADSs, and does not
address the potential application of the provisions of the Internal
Revenue Code of 1986, as amended, known as the Medicare contribution
tax. This section does not apply to any holder who is subject to special
rules, including:
certain financial institutions;
a dealer in securities or foreign currency;
a trader in securities that elects to use a mark-to-market method of
tax accounting for securities holdings;
a tax-exempt organisation;
an insurance company;
a person liable for alternative minimum tax;
a person that actually or constructively owns 10% or more of the
combined voting power of voting stock of Diageo or of the total value
of stock of Diageo;
a person that holds ordinary shares or ADSs as part of a straddle or a
hedging or conversion transaction;
a person that holds ordinary shares or ADSs as part of a wash sale for
tax purposes; or
a US holder (as defined below) whose functional currency is not US
dollar.
If an entity or arrangement treated as a partnership for US federal
income tax purposes holds ordinary shares or ADSs, the US federal
income tax treatment of a partner will generally depend on the status
of the partner and the tax treatment of the partnership. A partner in a
partnership holding ordinary shares or ADSs should consult its tax
advisor with regard to the US federal income tax treatment of an
investment in ordinary shares or ADSs.
229 | Diageo Form 20-F 2025 |
For UK tax purposes, this section applies only to persons who are the
absolute beneficial owners of ordinary shares or ADSs and who hold
their ordinary shares or ADSs as investments. It assumes that holders of
ADSs will be treated as holders of the underlying ordinary shares. In
addition to those persons mentioned above, this section does not apply
to holders that are banks, regulated investment companies, other
financial institutions, or to persons who have or are deemed to have
acquired their ordinary shares or ADSs in the course of an employment
or trade. This summary applies to persons who are treated as resident
in the United Kingdom for the purposes of UK tax law but not those to
whom special rules relating to residence apply (including qualifying
new residents, temporary non-residents or those to whom 'split year'
treatment applies).
This section is based on the Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations,
published rulings and court decisions, the laws of the United Kingdom
and the practice of His Majesty’s Revenue and Customs (HMRC), all as
currently in effect, as well as on the Convention Between the
Government of the United Kingdom of Great Britain and Northern
Ireland and the Government of the United States of America for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
Respect to Taxes on Income and Capital Gains (the Treaty). These laws
are subject to change, possibly on a retroactive basis.
In addition, this section is based in part upon the representations of
the Depositary and the assumption that each obligation in the Deposit
Agreement and any related agreement will be performed in accordance
with its terms. In general, and taking into account this assumption, for
US federal income tax purposes and for the purposes of the Treaty,
holders of ADRs evidencing ADSs should be treated as the owner of the
shares represented by those ADSs. Exchanges of shares for ADRs, and
ADRs for shares, generally will not be subject to US federal income tax
or to UK tax on profits or gains.
A US holder is a beneficial owner of ordinary shares or ADSs that is for
US federal income tax purposes:
•a citizen or resident for tax purposes of the United States and who is
not and has at no point been resident in the United Kingdom;
•a US domestic corporation, or other US entity taxable as a corporation;
•an estate whose income is subject to US federal income tax
regardless of its source; or
•a trust if a US court can exercise primary supervision over the trust’s
administration and one or more US persons are authorised to control
all substantial decisions of the trust.
This section is not intended to provide specific advice and no action
should be taken or omitted in reliance upon it. This section addresses only
certain aspects of US federal income tax and UK income tax, corporation
tax, capital gains tax, inheritance tax and stamp taxes. Holders of the
ordinary shares or ADSs are urged to consult their own tax advisors
regarding the US federal, state and local, and UK and other tax
consequences of owning and disposing of the shares or ADSs in their
respective circumstances. In particular, holders are encouraged to confirm
with their advisor whether they are US holders eligible for the benefits of
the Treaty.
Dividends
UK taxation
The company will not be required to withhold tax at source when
paying a dividend.
All dividends received by an individual shareholder or ADS holder who
is resident in the UK for tax purposes will, except to the extent that
they are earned through an ISA or other regime which exempts the
dividends from tax, form part of that individual’s total income for
income tax purposes and will represent the highest part of that
income.
A nil rate of income tax will apply to the first £500 of taxable dividend
income received by an individual shareholder in the 2025/2026 tax
year (the Nil Rate Amount), regardless of what tax rate would
otherwise apply to that dividend income.
Any taxable dividend income in excess of the Nil Rate Amount will be
subject to income tax at the following special rates (as at the
2024/2025 tax year):
at the rate of 8.75%, to the extent that the relevant dividend income
falls below the threshold for the higher rate of income tax;
at the rate of 33.75%, to the extent that the relevant dividend income
falls above the threshold for the higher rate of income tax but below
the threshold for the additional rate of income tax; and
at the rate of 39.35%, to the extent that the relevant dividend income
falls above the threshold for the additional rate of income tax.
In determining whether and, if so, to what extent the relevant
dividend income falls above or below the threshold for the higher rate
of income tax or, as the case may be, the additional rate of income
tax, the individual’s total taxable dividend income for the tax year in
question (including the part within the Nil Rate Amount) will, as noted
above, be treated as the highest part of that individual’s total income
for income tax purposes.
Shareholders within the charge to UK corporation tax which are small
companies (for the purposes of the UK taxation of dividends) will not
generally be subject to tax on dividends from the company. Other
shareholders within the charge to UK corporation tax will not be subject
to tax on dividends from the company so long as the dividends fall within
an exempt class and certain conditions are met. In general, dividends
paid on shares that are ordinary share capital for UK tax purposes and
are not redeemable and dividends paid to a person holding less than 10%
of the issued share capital of the payer (or any class of that share
capital) are examples of dividends that fall within an exempt class.
230 | Diageo Form 20-F 2025 |
OTHER ADDITIONAL INFORMATION continued
US taxation
Under the US federal income tax laws, and subject to the passive
foreign investment company (PFIC) rules discussed below, the gross
amount of any distribution (other than certain pro rata distribution of
ordinary shares) paid to a US holder by Diageo in respect of its ordinary
shares or ADSs out of its current or accumulated earnings and profits
(as determined for US federal income tax purposes) will be treated as a
dividend that is subject to US federal income taxation.
Dividends paid to certain non-corporate US holders that constitute
qualified dividend income will be taxed at the preferential rates
applicable to long-term capital gains, provided that the ordinary shares
or ADSs are held for more than 60 days during the 121-day period
beginning 60 days before the ex-dividend date and the holder meets
other holding period requirements. Dividends paid by Diageo with
respect to its ordinary shares or ADSs generally will be qualified
dividend income to US holders that meet the holding period
requirement, provided that, in the year that they receive the dividend,
we are eligible for the benefits of the Treaty. We believe that we are
currently eligible for the benefits of the Treaty and we therefore
expect that dividends on the ordinary shares or ADSs will be qualified
dividend income, but there can be no assurance that we will continue
to be eligible for the benefits of the Treaty. Under UK law, dividends
paid by the company are not subject to UK withholding tax. Therefore,
the US holder will include in income for US federal income tax
purposes the amount of the dividend received, and the receipt of a
dividend will not entitle the US holder to a foreign tax credit.
The dividend must be included in income when the US holder, in the
case of ordinary shares, or the Depositary, in the case of ADSs, receives
the dividend, actually or constructively. The dividend will not be
eligible for the dividends-received deduction generally allowed to US
corporations in respect of dividends received from other US corporations.
Dividends will generally be income from sources outside the United
States and will generally be ‘passive’ income for purposes of computing
the foreign tax credit allowable to a US holder. Distributions in excess
of current and accumulated earnings and profits, as determined for US
federal income tax purposes, will be treated as a non-taxable return of
capital to the extent of the holder’s basis in the ordinary shares or
ADSs and thereafter as capital gain. However, Diageo does not expect
to calculate earnings and profits in accordance with US federal income
tax principles. Accordingly, a US holder should expect to generally
treat distributions Diageo makes as dividends.
Taxation of capital gains
UK taxation
A citizen or resident (for tax purposes) of the United States who has at
no time been resident in the United Kingdom will not be liable for UK
tax on capital gains realised or accrued on the sale or other disposal of
ordinary shares or ADSs, unless the ordinary shares or ADSs are held in
connection with a trade or business carried on by the holder in the
United Kingdom through a UK branch, agency or a permanent
establishment. A disposal (or deemed disposal) of shares or ADSs by a
holder who is resident in the United Kingdom may, depending on the
holder’s particular circumstances, and subject to any available
exemption or relief, give rise to a chargeable gain or an allowable loss
for the purposes of UK tax on capital gains.
US taxation
Subject to the PFIC rules discussed below, a US holder who sells or
otherwise disposes of ordinary shares or ADSs will recognise capital
gain or loss for US federal income tax purposes equal to the difference
between the US dollar value of the amount that is realised and the tax
basis, determined in US dollars, in the ordinary shares or ADSs. Capital
gain of a non-corporate US holder is generally taxed at preferential
rates where the property is held for more than one year. The gain or
loss will generally be income or loss from sources within the United
States for foreign tax credit limitation purposes. The deductibility of
capital losses is subject to limitations.
PFIC rules
Diageo believes that ordinary shares and ADSs should not currently be
treated as stock of a PFIC for US federal income tax purposes, and we
do not expect to become a PFIC in the foreseeable future. However
this conclusion is a factual determination that is made annually and
thus may be subject to change. It is therefore possible that we could
become a PFIC in a future taxable year.
If treated as a PFIC, gain realised on the sale or other disposition of
ordinary shares or ADSs would in general not be treated as capital gain.
Instead, unless a US holder elects to be taxed annually on a mark-to-
market basis with respect to the ordinary shares or ADSs, US holders
would be treated as if the holder had realised such gain and certain
‘excess distributions’ pro-rated over the holder’s holding period for the
ordinary shares or ADSs. To the extent gain is allocated to the taxable
year of the sale or other disposition of ordinary shares or ADSs and to
any year before Diageo became a PFIC, it would be taxed as ordinary
income. The amount allocated to each other taxable year would be taxed
at the highest tax rate in effect (for individuals or corporations, as
applicable) for each such year to which the gain was allocated,
together with an interest charge in respect of the tax attributable to
each such year. With certain exceptions, a holder’s ordinary shares or
ADSs will be treated as stock in a PFIC if Diageo were a PFIC at any
time during the holding period in a holder’s ordinary shares or ADSs. In
addition, dividends received from Diageo will not be eligible for the
special tax rates applicable to qualified dividend income if Diageo is a
PFIC (or is treated as a PFIC with respect to the holder) either in the
taxable year of the distribution or the preceding taxable year, but
instead will be taxable at rates applicable to ordinary income. If any
investor owns our shares or ADSs during any year that we are a PFIC
with respect to them, they may be required to file IRS Form 8621.
231 | Diageo Form 20-F 2025 |
UK inheritance tax
Subject to certain provisions relating to trusts or settlements, an
ordinary share or ADS held by an individual shareholder who is domiciled
in the United States for the purposes of the Convention between the
United States and the United Kingdom relating to estate and gift taxes
(the Convention) and who is neither domiciled in the United Kingdom nor
(where certain conditions are met) a UK national (as defined in the
Convention), will generally not be subject to UK inheritance tax on the
individual’s death (whether held on the date of death or gifted during
the individual’s lifetime) except where the ordinary share or ADS is part
of the business property of a UK permanent establishment of the
individual or pertains to a UK fixed base of an individual who performs
independent personal services. In a case where an ordinary share or ADS
is subject both to UK inheritance tax and to US federal gift or estate tax,
the Convention generally provides for inheritance tax paid in the United
Kingdom to be credited against federal gift or estate tax payable in the
United States, or for federal gift or estate tax paid in the United States
to be credited against any inheritance tax payable in the United
Kingdom, based on priority rules set forth in the Convention.
Effective from 6 April 2025, UK inheritance tax is charged based on long-
term residence (and not domicile). Particularly in view of this reform,
UK inheritance tax and its interaction with the Convention is complex.
Any person who is in doubt about the application of UK inheritance tax
in relation to their ordinary shares or ADSs, or the effect of the
Convention, should consult appropriately qualified tax advisers.
UK stamp duty and stamp duty reserve tax
No stamp duty or stamp duty reserve tax (SDRT) will arise upon the
deposit of an underlying ordinary share with the Depositary if that
deposit is effected by (a) the issue of that share or (b) a transfer of
that share in the course of (i) capital-raising arrangements or (ii)
qualifying listing arrangements. Otherwise, stamp duty or SDRT applies
at the higher rate of 1.5% of the amount or value of the consideration
payable or, in certain circumstances, the value of the ordinary shares
(rounded up to the nearest multiple of £5 in the case of stamp duty).
The Depositary will pay the stamp duty or SDRT but will recover an
amount in respect of such tax from the initial holders of ADSs.
No UK stamp duty will be payable on the acquisition or transfer of
ADRs. Furthermore, an agreement to transfer ADSs in the form of ADRs
will not give rise to a liability to SDRT.
Purchases of ordinary shares (as opposed to ADRs) will be subject to UK
stamp duty, and/or SDRT as the case may be, at the rate of 0.5% of the
price payable for the ordinary shares at the time of the transfer.
Stamp duty applies where a physical instrument of transfer is used to
effect the transfer. SDRT applies to any agreement to transfer ordinary
shares (regardless of whether or not the transfer is effected
electronically or by way of an instrument of transfer). However, where
the ordinary shares being acquired are transferred direct to the
Depositary’s nominee, the only charge will generally be the higher
charge of 1.5%, subject to the applicability of any exemptions to the
1.5% charge discussed above.
Any stamp duty payable (as opposed to SDRT) is rounded up to the
nearest £5. No stamp duty (as opposed to SDRT) will be payable if the
amount or value of the consideration is (and is certified to be) £1,000
or less. Stamp duty and SDRT are usually paid or borne by the purchaser.
Whilst stamp duty and SDRT may in certain circumstances both apply
to the same transaction, in practice usually only one or other will need
to be paid.
US backup withholding and information reporting
Payments of dividends and sales proceeds with respect to ordinary
shares and ADSs may be reported to the IRS and to the US holder.
Backup withholding may apply to these reportable payments if the US
holder fails to provide an accurate taxpayer identification number or
certification of exempt status or fails to report all interest and
dividends required to be shown on its US federal income tax returns.
Certain US holders (including, among others, corporations) are not
subject to information reporting and backup withholding. The amount
of any backup withholding from a payment to a US holder will be
allowed as a credit against the holder’s US federal income tax liability
and may entitle the holder to a refund, provided that the required
information is timely furnished to the IRS. US holders should consult
their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining an exemption. Certain US
holders who are individuals (and certain specified entities), may be
required to report information relating to their ownership of non-US
securities unless the securities are held in accounts at financial
institutions (in which case the accounts may be reportable if maintained
by non-US financial institutions). US holders should consult their tax
advisors regarding any reporting obligations they may have with
respect to the ordinary shares or ADSs.
232 | Diageo Form 20-F 2025 |
Additional information for shareholders | ||
Annual General Meeting (AGM)
The AGM will be held at Convene 133 Houndsditch, London, EC3A 7DB
on 6 November 2025 at 2.30 pm.
Documents on display
The Annual Report on Form 20-F and any other documents filed by the
company with the US Securities Exchange Commission (SEC) may be
inspected at the SEC’s office of Investor Education and Advocacy
located at 100 F Street, NE, Washington, DC 20549-0213, USA. Please
call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms and their copy charges. Filings with the SEC are also
available to the public from commercial document retrieval services,
and from the website maintained by the US Securities and Exchange
Commission at https://www.sec.gov.
Warning to shareholders – share fraud
Please beware of the share fraud of ‘boiler room’ scams, where
shareholders are called ‘out of the blue’ by fraudsters (sometimes claiming
to represent Diageo) attempting to obtain money or property dishonestly.
Further information on boiler room scams can be found on the Financial
Conduct Authority’s website (https://www.fca.org.uk/consumers/share-
bond-and-boiler-room-scams) but in short, if in doubt, take proper
professional advice before making any investment decision.
Electronic communications
Shareholders can register for an account to manage their shareholding
online, including being able to check the number of shares they own
and the value of their shareholding; register for electronic
communications; update their personal details; provide a dividend
mandate instruction; access dividend confirmations; and use the online
share dealing service. To register for an account, shareholders should
visit https://www.diageoregistrars.com/welcome.
Dividend payments
Direct payment into bank account
UK shareholders: The Company normally pays dividends twice each
year and have taken the decision that these will only be made directly
to shareholder's bank or building society. This is a more secure method
of payment and avoids delays or cheques being lost. Shareholders can
register for an online account at https://www.diageoregistrars.com/
welcome or call the Registrar on +44 (0)371 277 1010* to request the
relevant application form. For shareholders outside the UK, MUFG
Corporate Markets (a trading name of MUFG Pension & Market Services
and a member of MUFG, a global financial group) may be able to
provide you with a range of services relating to your shareholding. To
learn more about the services available to you please visit the Share
Portal at https://www.diageoregistrars.com/welcome or call +44
(0)371 277 1010.*
Dividend Reinvestment Plan
A Dividend Reinvestment Plan is offered by the Registrar, MUFG
Corporate Markets to give shareholders the opportunity to build up
their shareholding in Diageo by using their cash dividends to purchase
additional Diageo shares. To join the Dividend Reinvestment Plan,
shareholders can call the Registrar, MUFG Corporate Markets on +44
(0)371 277 1010* to request the relevant application form.
Dividend currency election
Holders of ordinary shares will receive their dividends in sterling unless
they wish to elect to receive their dividends in US dollars. To elect to
receive their dividends in US dollars, shareholders can download the
relevant election form on the shareholder portal at
https://www.diageoregistrars.com or call +44 (0)371 277 1010.*
Exchange controls
Other than certain economic sanctions which may be in effect from
time to time, there are currently no UK foreign exchange control
restrictions on the payment of dividends, interest or other payments to
holders of Diageo’s securities who are non-residents of the UK or on
the conduct of Diageo’s operations.
There are no restrictions under the company’s articles of association or
under English law that limit the right of non-resident or foreign owners
to hold or vote the company’s ordinary shares.
Please refer to the ‘Taxation’ section on pages 228-231 for details
relating to the taxation of dividend payments.
Useful contacts
The Registrar/Shareholder queries
MUFG Corporate Markets acts as the company’s registrar and can be
contacted as follows:
By email: Diageo@cm.mpms.mufg.com
By telephone: +44 (0) 371 277 1010*
In writing: Registrars – MUFG Corporate Markets, Central Square, 29
Wellington Street, Leeds, LS1 1DL.
* Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged at
the applicable international rate. Lines are open 08:00 to 17:30 UK
time, Monday to Friday, excluding public holidays in England and
Wales.
ADR administration
Citibank Shareholder Services acts as the company’s ADR administrator
and can be contacted as follows:
By email: citibank@shareholders-online.com
By telephone: +1 866 253 0933/ (International) +1 781 575 4555**
In writing: Citibank Shareholder Services. PO Box 43077,
Providence, RI 02940-3077
** Lines are open Monday to Friday 8:30 to 18:00 EST
General Counsel and Company Secretary
Randall Ingber
The.cosec@diageo.com
Investor Relations
investor.relations@diageo.com
233 | Diageo Form 20-F 2025 |
Liquidity and capital resources
1. Sources and uses of liquidity
The primary source of the group’s liquidity over the last three financial years has been cash generated from operations. These funds
have generally been used to pay interest, taxes and dividends, and to fund capital expenditure and acquisitions, and, together with the
group’s current strong cash position, are expected to continue to fund future operating and capital needs. The group also issues short-
term commercial paper regularly in order to finance its day-to-day operations, and accesses the term debt capital markets regularly to
refinance maturing bonds each year and to manage liquidity.
The table below sets forth the group’s available undrawn committed bank facilities as at 30 June 2025 and 30 June 2024.
30 June 2025 | 30 June 2024 | |
$ million | $ million | |
Expiring within one year | 1,040 | 625 |
Expiring between one and two years | — | 1,040 |
Expiring after two years | 2,460 | 1,585 |
3,500 | 3,250 |
The facilities can be used for general corporate purposes and, together with cash and cash equivalents, support the group’s
commercial paper programmes.
There are no financial covenants on the group’s material short- and long-term borrowings. Certain of these borrowings contain cross
default provisions and negative pledges.
The committed bank facilities are subject to a single financial covenant, being minimum interest cover ratio of two times (defined as
the ratio of operating profit before exceptional items, aggregated with share of after tax results of associates and joint ventures, to net
interest charges). They are also subject to pari passu ranking and negative pledge covenants.
Any non-compliance with covenants underlying Diageo’s financing arrangements could, if not waived, constitute an event of default
with respect to any such arrangements, and any non-compliance with covenants may, in particular circumstances, lead to an
acceleration of maturity on certain borrowings and the inability to access committed facilities. Diageo was in full compliance with its
financial, pari passu ranking and negative pledge covenants in respect of its material short- and long-term borrowings throughout the
years presented.
234 | Diageo Form 20-F 2025 |
2. Analysis of cash flows
The table below sets forth the group’s cash flows for the year ended 30 June 2025 and 30 June 2024.
30 June 2025 | 30 June 2024 | |
$ million | $ million | |
Net cash inflow from operating activities | 4,297 | 4,105 |
Net cash outflow from investing activities | (1,720) | (1,595) |
Net cash outflow from financing activities | (1,494) | (3,106) |
Net increase/(decrease) in net cash and cash equivalents | 1,083 | (596) |
Exchange difference | (35) | (33) |
Reclassification to assets and liabilities held for sale | 21 | (30) |
Net cash and cash equivalents at beginning of the year | 1,109 | 1,768 |
Net cash and cash equivalents at end of the year | 2,178 | 1,109 |
Net cash inflow from operating activities in fiscal 25 was $4,297 million (2024 – $4,105 million), an increase of $192 million
compared to fiscal 24, primarily driven by a favourable $691 million year-on-year movement in working capital outflows, partially
offset by a $1,666 million decline in operating profit including an increase in depreciation, amortisation and impairment of $1,225
million.
Net cash outflow from investing activities in fiscal 25 was $1,720 million (2024 – $1,595 million), a net increase in outflow of $125
million compared to fiscal 24, primarily driven by an unfavourable movement of $148 million in loans, other investments and other
financial assets and an increase of $53 million in net cash expenditure for property, plant and equipment and computer software,
partially offset by an increase of $56 million in net consideration received in respect of sale of businesses.
Net cash outflow from financing activities in fiscal 25 was $1,494 million (2024 –$3,106 million), a net decrease in outflow of
$1,612 million compared to fiscal 24. This change was driven by an increase in net inflow in relation to bond issuances and
repayments from $558 million to $1,527 million and the decreased level of share buyback programme related cash outflows from
$987 million to $nil, offset by net increase in outflow in respect of other borrowings from $106 million to $629 million.
The operating, investing and financing activities described above resulted in an increase in net cash and cash equivalents of $1,069
million, from $1,109 million at 30 June 2024 to $2,178 million at 30 June 2025 (2024 – decrease of $659 million).
3. Analysis of borrowings
The group policy with regard to the expected maturity profile of borrowings of group finance companies is to limit the proportion of
such borrowings maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the level of
commercial paper to 30% of gross borrowings less money market demand deposits. In addition, it is group policy to maintain
backstop facility terms from relationship banks to support commercial paper obligations.
The group’s gross borrowings and net borrowings are measured at amortised cost with the exception of borrowings designated in fair
value hedge relationships, interest rate hedging instruments and foreign currency swaps and forwards. For borrowings designated in
fair value hedge relationships, Diageo recognises a fair value adjustment for the risk being hedged in the balance sheet, whereas
interest rate hedging instruments and foreign currency swaps and forwards are measured at fair value.
The table below sets forth the group’s gross borrowings and net borrowings as at 30 June 2025 and 30 June 2024.
235 | Diageo Form 20-F 2025 |
30 June 2025 | 30 June 2024 | |
$ million | $ million | |
Overdrafts | (22) | (21) |
Other borrowings due within one year | (2,906) | (2,864) |
Borrowings due within one year | (2,928) | (2,885) |
Borrowings due between one and three years | (4,662) | (4,873) |
Borrowings due between three and five years | (4,159) | (4,222) |
Borrowings due after five years | (11,999) | (9,521) |
Fair value of foreign currency forwards and swaps | 557 | 334 |
Fair value of interest rate hedging instruments | (210) | (376) |
Lease liabilities | (653) | (604) |
Gross borrowings | (24,054) | (22,147) |
Offset by: | ||
Cash and cash equivalents | 2,200 | 1,130 |
Net borrowings | (21,854) | (21,017) |
The table below sets forth the percentage of the group’s gross borrowings and cash and cash equivalents by currency as at 30 June
2025.
Total | US dollar | Sterling | Euro | Indian rupee | Chinese yuan | Other | |
$ million | % | % | % | % | % | % | |
Gross borrowings | (24,054) | 47% | 18% | 26% | —% | 4% | 5% |
Cash and cash equivalents | 2,200 | 65% | 2% | 1% | 8% | 7% | 17% |
Based on average monthly net borrowings and net interest charge, the effective interest rate for the year ended 30 June 2025 was
4.1%. For this calculation, net interest charge excludes fair value adjustments to derivative financial instruments and borrowings and
average monthly net borrowings include the impact of interest rate swaps that are no longer in a hedge relationship but exclude the
market value adjustment for cross currency interest rate swaps.
In the year ended 30 June 2025, the group issued bonds of €2,200 million ($2,452 million – net of discount and fee) consisting of
€700 million ($780 million – net of discount and fee) 3.125% fixed rate notes due 2031, €300 million ($346 million - including
issuance premium) 3.125% fixed rate notes due 2031, €700 million ($776 million – net of discount and fee) 3.375% fixed rate notes
due 2035, €500 million ($550 million – net of discount and fee) 3.75% fixed rate notes due 2044, $750 million ($748 million – net of
discount and fee) 5.125% fixed rate notes due 2030, $750 million ($743 million – net of discount and fee) 5.625% fixed rate notes
due 2035 and repaid bonds of $600 million and €1,600 million ($1,816 million). In the year ended 30 June 2024, the group issued
bonds of $1,700 million ($1,690 million – net of discount and fee) consisting of $800 million 5.375% fixed rate notes due 2026,
$900 million 5.625% fixed rate notes due 2033, €500 million ($535 million - net of discount and fee) floating rate notes due 2026 and
repaid bonds of $500 million and €1,100 million ($1,167 million).
The principal components of the $837 million increase in net borrowings from 30 June 2024 to 30 June 2025 were mainly the $2,748
million of free cash flow, partially offset by $2,298 million equity dividends and $479 million repayment of commercial papers.
For information on the maturity profile of net borrowings and a further description of net borrowings, please see 'Note 17 – Net
borrowings' in the consolidated financial statements.
For information on the use of financial instruments including for hedging purposes, please see 'Note 16 – Financial instruments and
risk management' in the consolidated financial statements.
236 | Diageo Form 20-F 2025 |
The group’s management is committed to enhancing shareholder value in the long-term, both by investing in the business and brands
so as to deliver continued improvement in the return from those investments and by managing the capital structure. Diageo manages
its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to
debt markets at attractive cost levels. This is achieved by targeting an adjusted net borrowings (net borrowings aggregated with post-
employment benefit liabilities) to adjusted EBITDA leverage of 2.5–3.0 times, this range for Diageo being currently broadly
consistent with an A-band credit rating. Diageo would consider operating outside of this range in order to effect strategic initiatives
within its stated goals, which could have an impact on its rating. If Diageo’s leverage was to be negatively impacted by the financing
of an acquisition, it would seek over time to return to the range of 2.5–3.0 times. The group regularly assesses its debt and equity
capital levels against its stated policy for capital structure. As at 30 June 2025 the adjusted net borrowings of $22,263 million (2024 –
$21,446 million) to adjusted EBITDA ratio was 3.4 (2024 – 3.0 times). For this calculation, net borrowings are adjusted by post-
employment benefit liabilities before tax of $409 million (2024 – $429 million) whilst adjusted EBITDA of $6,645 million (2024 –
$7,037 million) comprises operating profit excluding exceptional operating items and depreciation, amortisation and impairment and
includes share of after tax results of associates and joint ventures. See page 219 for the reconciliation and calculation of the adjusted
net borrowing to adjusted EBITDA ratio.
The group’s funding, liquidity and exposure to foreign currency, interest rate risks, financial credit risk and commodity price risk are
conducted within a framework of board approved policies and guidelines. The group purchases insurance for commercial or, where
required, for legal or contractual reasons. In addition, the group retains some insurable risk where external insurance is not considered
to be an economic means of mitigating this risk. Loan, trade and other receivables exposures are managed locally in the operating
units where they arise and credit limits are established as deemed appropriate for the customer.
b) The following bonds were issued and repaid:
30 June 2025 | 30 June 2024 | |
$ million | $ million | |
Issued | ||
€ denominated | 2,452 | 535 |
$ denominated | 1,491 | 1,690 |
Repaid | ||
€ denominated | (1,816) | (1,167) |
$ denominated | (600) | (500) |
1,527 | 558 |
237 | Diageo Form 20-F 2025 |
4. Contractual obligations and other commitments
Payments due by period | |||||
As at 30 June 2025 | Less than 1 year $ million | 1-3 years $ million | 3-5 years $ million | More than 5 years $ million | Total $ million |
Long-term debt obligations | 2,916 | 4,709 | 4,331 | 12,078 | 24,034 |
Interest obligations | 935 | 1,261 | 1,061 | 2,320 | 5,577 |
Purchase obligations | 2,736 | 975 | 427 | 30 | 4,168 |
Commitments for short-term leases and leases of low-value assets | 13 | 5 | 1 | — | 19 |
Provisions and other non-current payables | 233 | 266 | 68 | 175 | 742 |
Lease obligations | 137 | 198 | 136 | 306 | 777 |
Capital commitments | 544 | 3 | 3 | — | 550 |
Other financial liabilities | 101 | — | — | — | 101 |
Total | 7,615 | 7,417 | 6,027 | 14,909 | 35,968 |
Long-term debt obligations comprise the principal amount of borrowings (excluding foreign currency swaps) with an original
maturity of greater than one year. Interest obligations comprise interest payable on these borrowings and are calculated based on the
fixed amounts payable and where the interest rate is variable, on an estimate of what the variable rates will be in the future. Purchase
obligations include various long-term purchase contracts entered into for the supply of raw materials, principally bulk whisk(e)y,
cereals, cans and glass bottles. Contracts are used to guarantee the supply of raw materials over the long-term and to enable a more
accurate prediction of costs of raw materials in the future. For certain provisions, discounted numbers are disclosed.
Corporate tax payable of $138 million and deferred tax liabilities of $2,944 million are not included in the table above, as the ultimate
timing of settlement cannot be reasonably estimated.
Management believes that it has sufficient funding for its working capital requirements.
Neither Diageo plc nor any member of the Diageo group has any off-balance sheet financing arrangements that currently have or are
reasonably likely to have a material future effect on the group’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditure or capital resources.
For more information on commitments and contingencies, please see note 19 – Contingent liabilities and legal proceedings in the
consolidated financial statements.
5. Capital repayments
Authorisation was given by shareholders on 26 September 2024 to purchase a maximum of 222,316,603 ordinary shares at a
minimum price of 28101/108 pence and a maximum price of the higher of (a) 105% of the average market value of the company's
ordinary shares for the five business days prior to the day the purchase is made and (b) the higher of the price of the last independent
trade and the highest current independent bid on the trading venue where the purchase is carried out. The programme expires at the
conclusion of the next Annual General Meeting or 15 months from the passing of this resolution, if earlier.
During the year ended 30 June 2024, the group purchased 28 million ordinary shares (2023 – 38 million), representing approximately
1.1% of the issued ordinary share capital (2023 – 1.5%) at an average price of 2918 pence (3644 cents) per share, and an aggregate
cost of $987 million, including transaction costs (2023 – 3616 pence (4382 cents) per share, and an aggregate cost of $1,673 million,
including $16 million of transaction costs) under the share buyback programme. The shares purchased under the share buyback
programmes were cancelled.
For further details about the shares purchased and the average price paid per share please refer to note 18 in the consolidated financial
statements.
238 | Diageo Form 20-F 2025 |
Exhibits
1.1 | Articles of Association of Diageo plc (incorporated by reference to Exhibit 1.1 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 1 August 2024). |
2.1 | Indenture, dated as of 3 August 1998, among Diageo Capital plc, Diageo plc and The Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form F-1 (File No. 333-8874) filed with the Securities and Exchange Commission on 24 July 1998 (pages 365 to 504 of paper filing)).(i) |
2.2 | Indenture, dated as of 1 June 1999, among Diageo Investment Corporation, Diageo plc and The Bank of New York Mellon (incorporated by reference to Exhibit 2.2 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 15 November 2001 (pages 241 to 317 of paper filing)).(i) |
2.3 | Indenture, dated as of 8 December 2003, among Diageo Finance B.V., Diageo plc and The Bank of New York Mellon (incorporated by reference to Exhibit 1 to the Report on Form 6-K (File No. 001-10691) filed with the Securities and Exchange Commission on 9 December 2003).(i) |
2.4 | Description of Securities registered under Section 12 of the Exchange Act |
4.1 | Service Agreement, dated 3 May 2024, between Diageo plc and Nik Jhangiani. |
4.2 | Service Agreement, dated 18 July 2025, between Diageo plc and Nik Jhangiani. |
4.3 | Form of Service Agreement for Diageo plc’s executives in the United Kingdom, dated as of 1 July 2006 (incorporated by reference to Exhibit 4.7 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 17 September 2007). |
4.4 | Form of Service Agreement for Diageo plc’s executives in the United States, dated as of 1 July 2006 (incorporated by reference to Exhibit 4.8 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 17 September 2007). |
4.5 | Form of Service Agreement for Diageo plc’s executives in the United Kingdom, in use as of July 2015 (incorporated by reference to Exhibit 4.6 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 11 August 2015). |
4.6 | Form of Service Agreement for Diageo plc’s executives in the United States, in use as of July 2015 (incorporated by reference to Exhibit 4.7 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 11 August 2015). |
4.7 | Diageo 2010 Sharesave Plan, dated 14 October 2010 (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 (File No. 333-169934) filed with the Securities and Exchange Commission on 14 October 2010). |
4.8 | Diageo 2001 Share Incentive Plan, dated 14 October 2010 (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-8 (File No. 333-169934) filed with the Securities and Exchange Commission on 14 October 2010). |
4.9 | Diageo plc 2009 Executive Long Term Incentive Plan, dated 14 October 2009 (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 (File No. 333-162490) filed with the Securities and Exchange Commission on 15 September 2009). |
4.10 | Diageo plc Associated Companies Share Option Plan, dated as of 26 August 2008 (incorporated by reference to Exhibit 4.9 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 15 September 2008). |
4.11 | Addendum to Form of Service Agreement for Diageo plc’s executives in the United States (incorporated by reference to Exhibit 4.16 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 15 September 2008). |
4.12 | Diageo plc Associated Companies Share Incentive Plan, dated as of 23 August 2011 (incorporated by reference to Exhibit 4.22 to the Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 5 September 2012). |
4.13 | Diageo plc Long Term Incentive Plan, dated as of 18 September 2014 (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 (File No. 333-206290) filed with the Securities and Exchange Commission on 11 August 2015). |
4.14 | Letter of Agreement, dated 24 January 2025, between Diageo plc and Sir John Manzoni. |
239 | Diageo Form 20-F 2025 |
4.15 | Diageo plc Share Value Plan, dated as of 20 September 2017 (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 (File No. 333-223071) filed with the Securities and Exchange Commission on 16 February 2018). |
4.16 | Diageo One World Share Incentive Plan, dated 16 December 2024 (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-8 (File No. 333-286502) filed with the Securities and Exchange Commission on 11 April 2025). |
6.1 | Description of earnings per share (included in the section 'Reported measures' on page [38] of this Annual Report on Form 20-F). |
8.1 | Principal group companies (included in note 22 to the consolidated financial statements on page [309] of this Annual Report on Form 20-F). |
11.1 | Diageo plc Dealing in Securities Code |
12.1 | Certification of Nik Jhangiani filed pursuant to 17 CFR 240.13a-14(a). |
12.2 | Certification of Nik Jhangiani filed pursuant to 17 CFR 240.13a-14(a). |
13.1 | Certification of Nik Jhangiani furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C. 1350(a) and (b). |
13.2 | Certification of Nik Jhangiani furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C. 1350(a) and (b). |
15.1 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. |
15.2 | Diageo plc Annual Report 2025 (incorporated by reference to Exhibit 99 to the report on Form 6-K (File No. 001-10691) filed with the Securities and Exchange Commission on 14 August 2025). |
97.1 | Diageo Group NYSE Compensation Recovery Policy |
101.INS | Inline XBRL Instance Document |
101.SCH | Inline XBRL Taxonomy Extension Schema |
101.CAL | Inline XBRL Taxonomy Extension Schema Calculation Linkbase |
101.DEF | Inline XBRL Taxonomy Extension Schema Definition Linkbase |
101.LAB | Inline XBRL Taxonomy Extension Schema Label Linkbase |
101.PRE | Inline XBRL Taxonomy Extension Schema Presentation Linkbase |
(i) Pursuant to an Agreement of Resignation, Appointment and Acceptance dated 16 October 2007 by and among Diageo plc, Diageo Capital plc, Diageo Finance BV,
Diageo Investment Corporation, The Bank of New York and Citibank NA, The Bank of New York Mellon has become the successor trustee to Citibank NA under
Diageo’s indentures dated 3 August 1998, 8 December 2003 and 1 June 1999.
240 | Diageo Form 20-F 2025 |
Signature
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorised.
DIAGEO plc |
(REGISTRANT) |
/s/ Nik Jhangiani |
Name: Nik Jhangiani |
Title: Chief Financial Officer |
14 August 2025 |
241 | Diageo Form 20-F 2025 |
Glossary of terms and US equivalents
In this document the following words and expressions shall, unless the context otherwise requires, have the following meanings:
Term used in UK annual report | US equivalent or definition |
Associates | Entities accounted for under the equity method |
American Depositary Receipt (ADR) | Receipt evidencing ownership of an ADS |
American Depositary Share (ADS) | Registered negotiable security, listed on the New York Stock Exchange, representing four Diageo plc ordinary shares of 28101/108 pence each |
Called up share capital | Common stock |
Capital redemption reserve | Other additional capital |
Company | Diageo plc |
CPI | Consumer price index |
Creditors | Accounts payable and accrued liabilities |
Debtors | Accounts receivable |
Employee share schemes | Employee stock benefit plans |
Employment or staff costs | Payroll costs |
Equivalent units | 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. To convert volume of products other than spirits to equivalent units: beer in hectolitres divide by 0.9, wine in nine-litre cases divide by five, ready to drink in nine-litre cases divide by 10, and certain pre-mixed products classified as ready to drink in nine-litre cases divide by five. |
Euro, €, ¢ | Euro currency |
Exceptional items | Items that, in management’s judgement, need to be disclosed separately by virtue of their size or nature |
Excise duty | Tax charged by a sovereign territory on the production, manufacture, sale or distribution of selected goods (including imported goods) within that territory. It is generally based on the quantity or alcohol content of goods, rather than their value, and is typically applied to alcohol products and fuels. |
Finance lease | Capital lease |
Financial year | Fiscal year |
Free cash flow | Net cash flow from operating activities aggregated with net purchase and disposal of property, plant and equipment and computer software and with movements in loans |
Freehold | Ownership with absolute rights in perpetuity |
GAAP | Generally accepted accounting principles |
Group and Diageo | Diageo plc and its consolidated subsidiaries |
IFRS | International Financial Reporting Standards (IFRS) Accounting Standards adopted by the UK (UK-adopted International Accounting Standards) and IFRSs, as issued by the International Accounting Standards Board (IASB), including interpretations issued by the IFRS Interpretations Committee |
Impact Databank, IWSR, IRI, Beverage Information Group and Plato Logic | Information source companies that research the beverage alcohol industry and are independent from industry participants |
Net sales | Sales after deducting excise duties |
Noon buying rate | Buying rate at noon in New York City for cable transfers in sterling as certified for customs purposes by the Federal Reserve Bank of New York |
Operating profit | Net operating income |
Organic movement | At level foreign exchange rates and after adjusting for exceptional items, acquisitions and disposals for continuing operations |
Own shares | Treasury stock |
Pound sterling, sterling, £, pence, p | UK currency |
242 | Diageo Form 20-F 2025 |
Glossary of terms and US equivalents (continued) | |
Term used in UK annual report | US equivalent or definition |
Price/mix | Price/mix is the number of percentage points by which the organic movement in net sales exceeds 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. |
Profit | Earnings |
Profit for the year | Net income |
Provisions | Accruals for losses/contingencies |
Reserves | Accumulated earnings, other comprehensive income and additional paid in capital |
RPI | Retail price index |
Ready to drink | Ready to drink products. Ready to drink also include ready to serve products, such as pre- mix cans in some markets, and progressive adult beverages in the United States and certain markets supplied by the United States. |
SEC | US Securities and Exchange Commission |
Share premium | Additional paid in capital or paid in surplus |
Shareholders’ funds | Shareholders’ equity |
Shareholders | Stockholders |
Shares | Common stock |
Shares and ordinary shares | Diageo plc’s ordinary shares |
Shares in issue | Shares issued and outstanding |
Trade and other payables | Accounts payable and accrued liabilities |
Trade and other receivables | Accounts receivable |
US dollar, US$, $, ¢ | US currency |
243 | Diageo Form 20-F 2025 |
Exhibit 2.4
DESCRIPTION OF SECURITIES
REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
As of 30 June 2025 Diageo plc. ('Diageo,' the 'Company,' 'we,' 'us,' and 'our') had the following series of securities registered pursuant
to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
American Depositary Shares | DEO | New York Stock Exchange |
Ordinary shares of 28101/108 pence each | New York Stock Exchange(i) |
(i) Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements of the
Securities and Exchange Commission.
Capitalized terms used but not defined herein have the meanings given to them in Diageo’s annual report on Form 20-F for the fiscal
year ended 30 June 2025.
ORDINARY SHARES
The following description of our ordinary shares is a summary and does not purport to be complete. It is subject to and qualified in its
entirety by Diageo’s articles of association (as adopted by special resolution at the Annual General Meeting on 28 September 2023)
and by the Companies Act 1985 and the Companies Act 2006 and any other applicable English law concerning companies, as
amended from time to time.
A copy of Diageo’s articles of association is filed as an exhibit to Diageo’s annual report on Form 20-F for the fiscal year ended 30
June 2025, as Exhibit 1.1.
General
As at 30 June 2025 there were 2,432,425,127 ordinary shares of 28101/108 pence each in issue with a nominal value of $886,821,858.
On 25 July 2019 the Board of Diageo approved a return of capital program to return up to £4.5 billion to shareholders over the three-
year period ending 30 June 2022. During the first phase, which completed on 31 January 2020, the group purchased 36.1 million
ordinary shares.
On 9 April 2020 Diageo announced that it had not initiated the next phase of the return of capital programme and that it would not do
so during the remainder of the year ended 30 June 2020. On 12 May 2021 it was announced that Diageo was recommencing the up to
£4.5 billion programme, extending the original completion date by two years to 30 June 2024.
The final three phases of the £4.5 billion programme completed on 11 February 2022, 5 October 2022 and 1 February 2023
respectively, having announced in July 2022 that it would bring forward the final completion date to during the year ending 30 June
2023. Under these three additional phases Diageo purchased a further 88.1 million shares in total.
On 25 January 2023 the Board of Diageo approved an additional share buyback programme to return up to £0.5 billion to
shareholders by the end of the year ending 30 June 2023. This programme commenced on 16 February 2023 and completed on 2 June
2023 with Diageo having purchased 14 million shares.
On 31 July 2023 the Board of Diageo approved an additional return of capital programme to return up to $1.0 billion to shareholders
by 30 June 2024. This programme commenced on 12 October 2023 and completed on 29 May 2024 with Diageo having purchased
27.4 million shares.
All shares repurchased have been cancelled.
Our ordinary shares are listed on the London Stock Exchange (LSE). Diageo ADSs (as further described below), representing four
Diageo ordinary shares each, are listed on the New York Stock Exchange (NYSE) under the symbol 'DEO'.
All of Diageo’s ordinary shares are fully paid. Accordingly, no further contribution of capital may be required by Diageo from the
holders of such shares. Diageo’s ordinary shares are represented in certificated form and also in uncertificated form under 'CREST'.
CREST is an electronic settlement system in the United Kingdom which enables Diageo’s ordinary shares to be evidenced other than
by a physical certificate and transferred electronically rather than by delivery of a written stock transfer form. Diageo’s ordinary
shares:
•may be represented by certificates in registered form issued (subject to the terms of issue of the shares) following issuance of the
shares by Diageo or receipt of a form of transfer (bearing evidence of payment of the appropriate stamp duty) by Diageo Registrar,
PO Box 521, Darlington, DL1 9XS; or
244 | Diageo Form 20-F 2025 |
•may be in uncertificated form with the relevant CREST member account being credited with the ordinary shares issued or
transferred.
Under English law, persons who are neither residents nor nationals of the United Kingdom may freely hold, vote and transfer Diageo
ordinary shares in the same manner and under the same terms as UK residents or nationals.
Dividend rights
Holders of Diageo’s ordinary shares may, by ordinary resolution, declare dividends but may not declare dividends in excess of the
amount recommended by the directors. The directors may also pay interim dividends or fixed rate dividends. No dividend may be
paid other than out of profits available for distribution. All of Diageo’s ordinary shares rank equally for dividends, but the Board may
withhold payment of all or any part of any dividends or other monies payable in respect of Diageo’s shares from a person with a
0.25% interest (as defined in Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in
Diageo’s articles of association) after failure to provide Diageo with information concerning interests in those shares required to be
provided under the Companies Acts. Dividends may be paid in currencies other than sterling and such dividends will be calculated
using an appropriate market exchange rate as determined by the directors in accordance with Diageo’s articles of association.
If a dividend has not been claimed, the directors may invest the dividend or use it in some other way for the benefit of Diageo until
the dividend is claimed. If the dividend remains unclaimed for 12 years after the date such dividend was declared or became due for
payment, it will be forfeited and will revert to Diageo (unless the directors decide otherwise). Diageo may stop sending cheques,
warrants or similar financial instruments in payment of dividends by post in respect of any shares or may cease to employ any other
means for payment of dividends if either (a) at least two consecutive payments have remained uncashed or are returned undelivered
or that means of payment has failed, or (b) one payment remains uncashed or is returned undelivered or that means of payment has
failed and reasonable enquiries have failed to establish any new postal address or account of the holder. Diageo must resume sending
dividend cheques, warrants or similar financial instruments or employing that means of payment if the holder requests such
resumption in writing.
Diageo’s articles of association permit payment or satisfaction of a dividend wholly or partly by distribution of specific assets,
including fully paid shares or debentures of any other company. Such action is only permitted upon the recommendation of the board
and must be approved by ordinary resolution by the general meeting which declared the dividend.
Voting rights
Voting on any resolution at any general meeting of the company is by a show of hands unless a poll is duly demanded. On a show of
hands, (a) every shareholder who is present in person at a general meeting, and every proxy appointed by any one shareholder and
present at a general meeting, has/have one vote regardless of the number of shares held by the shareholder (or, subject to (b),
represented by the proxy), and (b) every proxy present at a general meeting who has been appointed by more than one shareholder
has one vote regardless of the number of shareholders who have appointed him or the number of shares held by those shareholders,
unless he has been instructed to vote for a resolution by one or more shareholders and to vote against the resolution by one or more
shareholders, in which case he has one vote for and one vote against the resolution. On a poll, every shareholder who is present in
person or by proxy has one vote for every share held by that shareholder, but a shareholder or proxy entitled to more than one vote
need not cast all his votes or cast them all in the same way (the deadline for exercising voting rights by proxy is set out in the form of
proxy).
A poll may be demanded by any of the following:
•the chairman of the general meeting;
•at least three shareholders entitled to vote on the relevant resolution and present in person or by proxy at the meeting;
•any shareholder or shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total
voting rights of all shareholders entitled to vote on the relevant resolution; or
•any shareholder or shareholders present in person or by proxy and holding shares conferring a right to vote on the relevant
resolution on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all
the shares conferring that right.
Diageo’s articles of association and the Companies Acts provide for matters to be transacted at general meetings of Diageo by the
proposing and passing of two kinds of resolutions:
•ordinary resolutions, which include resolutions for the election, re-election and removal of directors, the declaration of final
dividends, the appointment and re-appointment of the external auditor, the approval of the remuneration report and remuneration
policy and the grant of authority to allot shares; and
•special resolutions, which include resolutions for the amendment of Diageo’s articles of association, resolutions relating to the
disapplication of pre-emption rights, and resolutions modifying the rights of any class of Diageo’s shares at a meeting of the
holders of such class.
An ordinary resolution requires the affirmative vote of a simple majority of the votes cast at a validly constituted shareholders’
meeting. Special resolutions require the affirmative vote of not less than three-quarters of the votes cast at a validly constituted
shareholders’ meeting. The necessary quorum for a shareholders’ meeting of Diageo is a minimum of two shareholders present in
person or by proxy and entitled to vote.
245 | Diageo Form 20-F 2025 |
A shareholder is not entitled to vote at any general meeting or class meeting in respect of any share held by him if he has been served
with a restriction notice (as defined in Diageo’s articles of association) after failure to provide Diageo with information concerning
interests in those shares required to be provided under the Companies Acts.
Directors
Diageo’s articles of association provide for a Board of Directors, consisting (unless otherwise determined by an ordinary resolution
of shareholders) of not fewer than three directors and not more than 25 directors, in which all powers to manage the business and
affairs of Diageo are vested. Directors may be elected by the members in a general meeting or appointed by Diageo’s Board. At each
annual general meeting, every director is required to retire and is then reconsidered for election/re-election by shareholders, assuming
they wish to stand for election/re-election. There is no age limit requirement in respect of directors. Directors may also be removed
before the expiration of their term of office in accordance with the provisions of the Companies Acts.
Liquidation rights
In the event of the liquidation of Diageo, after payment of all liabilities and deductions taking priority in accordance with English
law, the balance of assets available for distribution will be distributed among the holders of ordinary shares according to the amounts
paid up on the shares held by them.
Pre-emption rights and new issues of shares
While holders of ordinary shares have no pre-emptive rights under Diageo’s articles of association, the ability of the directors to
cause Diageo to issue shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share
scheme, is restricted. Under the Companies Acts, the directors of a company are, with certain exceptions, unable to allot any equity
securities without express authorisation, which may be contained in a company’s articles of association or given by its shareholders
in a general meeting by way of an ordinary resolution, but which in either event cannot last for more than five years. Under the
Companies Acts, Diageo may also not allot shares for cash (otherwise than pursuant to an employee share scheme) without first
making an offer to existing shareholders to allot such shares to them on the same or more favourable terms in proportion to their
respective shareholdings, unless this requirement is disapplied by a special resolution of the shareholders. However, Diageo has in
the past sought authority from its shareholders to allot shares and disapply pre-emptive rights (in each case subject to certain
limitations).
Disclosure of interests in Diageo’s shares
There are no provisions in Diageo’s articles of association whereby persons acquiring, holding or disposing of a certain percentage of
Diageo’s shares are required to make disclosure of their ownership percentage, although there are such requirements under the
Companies Acts. The basic disclosure requirement under Part 6 of the Financial Services and Markets Act 2000 and Rule 5 of the
Disclosure Guidance and Transparency Rules made by the Financial Conduct Authority (successor to the UK Financial Services
Authority) imposes a statutory obligation on a person to notify Diageo and the Financial Conduct Authority of the percentage of the
voting rights in Diageo he directly or indirectly holds or controls, or has rights over, through his direct or indirect holding of certain
financial instruments, if the percentage of those voting rights:
•reaches, exceeds or falls below 3% and/or any subsequent whole percentage figure as a result of an acquisition or disposal of shares
or financial instruments; or
•reaches, exceeds or falls below any such threshold as a result of any change in the breakdown or number of voting rights attached
to shares in Diageo.
The Disclosure Guidance and Transparency Rules set out in detail the circumstances in which an obligation of disclosure will arise,
as well as certain exemptions from those obligations for specified persons.
Under section 793 of the Companies Act 2006, Diageo may, by notice in writing, require a person that Diageo knows or has
reasonable cause to believe is or was during the three years preceding the date of notice interested in Diageo’s shares to indicate
whether or not that is the case and, if that person does or did hold an interest in Diageo’s shares, to provide certain information as set
out in that Act.
Article 19 of the EU Market Abuse Regulation (2014/596) (as it is incorporated into UK domestic law by virtue of the European
Union (Withdrawal) Act 2018 and amended by The Market Abuse (Amendment) (EU Exit) Regulation 2019) further requires
persons discharging managerial responsibilities within Diageo (and their persons closely associated) to notify Diageo of transactions
conducted on their own account in Diageo shares or derivatives or certain financial instruments relating to Diageo shares.
The City Code on Takeovers and Mergers also imposes strict disclosure requirements with regard to dealings in the securities of an
offeror or offeree company on all parties to a takeover and also on their respective associates during the course of an offer period.
Variation of rights
If, at any time, Diageo’s share capital is divided into different classes of shares, the rights attached to any class of shares may be
varied, subject to the provisions of the Companies Acts, either with the consent in writing of the holders of not less than three-
quarters in nominal value of the issued shares of that class or upon the adoption of a special resolution passed at a separate meeting of
the holders of the shares of that class.
246 | Diageo Form 20-F 2025 |
At every such separate meeting, all of the provisions of Diageo’s articles of association relating to proceedings at a general meeting
apply, except that (a) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less
than one-third in nominal value of the issued shares of the class (excluding any shares of that class held as treasury shares) or, if such
quorum is not present on an adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds,
(b) any holder of shares of the class who is present in person or by proxy may demand a poll, and (c) each shareholder present in
person or by proxy and entitled to vote will have one vote per share held in that particular class in the event a poll is taken.
Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that
class of shares in all respects or by the reduction of the capital paid up on such shares or by the purchase or redemption by Diageo of
its own shares, in each case in accordance with the Companies Acts and Diageo’s articles of association.
Repurchase of shares
Subject to authorisation by shareholder resolution, Diageo may purchase its own shares in accordance with the Companies Acts. Any
shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon
completion of the purchase, thereby reducing the amount of Diageo’s issued share capital. At the Annual General Meeting held on
September 26, 2024, Diageo’s shareholders gave it authority to repurchase up to 222,316,603 of its ordinary shares subject to
additional conditions. The minimum price which must be paid for such shares is 28101/108 pence and the maximum price of the higher
of (a) 105% of the average market value of the company's ordinary shares for the five business days prior to the day the purchase is
made and (b) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where
the purchase is carried out.
Restrictions on transfers of shares
The Board may decline to register a transfer of a certificated Diageo share unless the instrument of transfer (a) is duly stamped or
certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share
certificate and such other evidence of the right to transfer as the Board may reasonably require, (b) is in respect of only one class of
share and (c) if to joint transferees, is in favour of not more than four such transferees.
Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules
(as defined in Diageo’s articles of association) and where, in the case of a transfer to joint holders, the number of joint holders to
whom the uncertificated share is to be transferred exceeds four.
The Board may decline to register a transfer of any of Diageo’s certificated shares by a person with a 0.25% interest (as defined in
Diageo’s articles of association) if such a person has been served with a restriction notice (as defined in Diageo’s articles of
association) after failure to provide Diageo with information concerning interests in those shares required to be provided under the
Companies Acts, unless the transfer is shown to the Board to be pursuant to an arm’s length sale (as defined in Diageo’s articles of
association).
Substantive shareholder voting rights
The company’s substantial shareholders do not have different voting rights.
AMERICAN DEPOSITARY SHARES
General
The ordinary shares of Diageo may be issued in the form of American depositary shares, or ADSs. Each Diageo ADS represents four
ordinary shares of Diageo.
Citibank, N.A. is the depositary with respect to Diageo’s ADSs, which are evidenced by American depositary receipts, or ADRs.
Each ADS represents an ownership interest in four ordinary shares deposited with the custodian, as agent of the depositary, under the
Deposit Agreement dated 14 February 2013 between Diageo, the Depositary and owners and beneficiaries of the ADRs (the 'Deposit
Agreement'). Each ADS also represents any other securities, cash or other property which may be held by Citibank, N.A. as
depositary.
The principal executive office of Citibank, N.A. and the office at which the ADRs will be administered is currently located at 388
Greenwich Street, New York, New York 10013, United States. Citibank, N.A. is a national banking association organized under the
laws of the United States. The custodian will be Citibank, N.A. (London Branch) and its duties will be administered from its principal
London office, currently located at 25 Molesworth Street, Lewisham, London SE13 7EX, United Kingdom.
You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by
having an ADS registered in your name on the books of the depositary, you are an ADR holder. If you hold the ADSs through your
broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of
an ADR holder described in this section. You should consult with your broker or financial institution to find out what those
procedures are.
247 | Diageo Form 20-F 2025 |
Diageo will not treat ADR holders as shareholders and ADR holders will not have shareholder rights. English law governs
shareholder rights. The depositary will be the holder of the ordinary shares underlying your ADSs. As a holder of ADRs, you will
have ADR holder rights, which are set out in the Deposit Agreement. The Deposit Agreement also sets out the rights and obligations
of the depositary.
The following is a summary of the material terms of the Deposit Agreement. Because it is a summary, it does not contain all the
information that may be important to you. For more complete information, you should read the entire form of Deposit Agreement and
the form of ADR, which contain the terms of the ADSs. Please refer to Exhibit 99.A on Form F-6 (File No. 333-186400) filed with
the Securities and Exchange Commission on 1 February 2013). Copies of the Deposit Agreement are also available for inspection at
the offices of the depositary.
Share Dividends and Other Distributions
Diageo may make various types of distributions with respect to its securities. The depositary has agreed to pay to you the cash
dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after deducting its fees
and expenses. You will receive these distributions in proportion to the number of underlying ordinary shares that your ADSs
represent.
Except as stated below, to the extent the depositary is legally permitted it will deliver such distributions to ADR holders in proportion
to their interests in the following manner:
•Cash. Upon receiving notice from Diageo that Diageo intends to distribute a cash dividend or other cash distribution, the depositary
will establish a record date for such distribution. As promptly as practicable following the receipt of a cash dividend or other cash
distribution from Diageo, the depositary will: (i) if at the time of receipt thereof any amounts received in a foreign currency can, in
the judgment of the depositary, be converted on a practicable basis into U.S. dollars transferable into the United States, promptly
convert or cause to be converted such cash dividend or cash distributions into U.S. dollars, (ii) if applicable, establish a record date
for the distribution and (iii) distribute promptly such U.S. dollar amount, net of applicable fees, charges and expenses of the
depositary and taxes withheld. The depositary shall distribute only such amount as can be distributed without attributing to any
ADR holder a fraction of one cent. Any such fractional amounts shall be rounded to the nearest whole cent and so distributed to
ADR holders entitled thereto. If the depositary cannot reasonably make such conversion or obtain any governmental approval or
license necessary for the conversion, the depositary will hold any unconvertible foreign currency for your account without liability
for any interest or, upon request, will distribute the foreign currency to you. If exchange rates fluctuate during a time when the
depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.
•Shares. Upon receiving notice from Diageo that Diageo intends to distribute a share dividend or free distribution of ordinary
shares, the depositary will establish a record date for such distribution. The depositary will then either (i) deliver additional ADSs
representing such ordinary shares, or (ii) if additional ADSs are not so distributed, take all actions necessary so that each ADS
issued and outstanding after the ADS record date shall, to the extent permissible by law, thenceforth also represent rights and
interests in the additional ordinary shares distributed, in each case net of applicable fees, charges and expenses of the depositary
and taxes withheld. Only whole ADSs will be issued. Any ordinary shares which would result in fractional ADSs will be sold and
the net proceeds will be distributed to the ADR holders entitled to them.
•Rights to receive additional shares. Upon receiving notice from Diageo that Diageo intends to distribute rights to subscribe for
additional ordinary shares or other rights and that Diageo wishes such rights to be made available to holders of ADSs, the
depositary shall, after consultation with Diageo, have discretion as to the procedure for making such rights available to any ADR
holders or in disposing of such rights on behalf of any ADR holders and making, as promptly as practicable, the net proceeds
available to such ADR holders. If, by the terms of the offering of rights or for any other reason, the depositary may not either make
such rights available to any ADR holders or dispose of such rights on behalf of any ADR holders and make the net proceeds
available to such ADR holders, then the depositary shall allow such rights to lapse. If the depositary determines in its reasonable
discretion that it is not lawful or practicable to make such rights available to all or certain ADR holders, if Diageo does not furnish
such evidence or if the depositary determines it is not lawful or practicable to distribute such rights to all or some of the registered
holders, the depositary may:
•distribute such rights only to the holders to whom the depositary has determined such distribution is lawful and practicable;
•if practicable, sell rights in proportion to the number of ADSs held by registered holders to whom the depositary has determined it
may not lawfully or practicably make such rights available and distribute the net proceeds as cash; or
•allow rights in proportion to the number of ADSs held by registered holders to whom the depositary has determined it may not
lawfully or practicably make such rights available to lapse, in which case such registered holders will receive nothing.
Diageo has no obligation to file a registration statement under the Securities Act of 1933, as amended, in order to make any rights
available to ADR holders.
•Other Distributions. Upon receiving notice from Diageo that Diageo intends to distribute securities or property other than those
described above and that Diageo wishes such rights to be made available to holders of ADSs, the depositary may distribute such
securities or property in any manner it deems equitable and practicable. To the extent the depositary deems distribution of such
securities or property not to be practicable, the depositary may, after consultation with Diageo, adopt any method that it reasonably
deems to be equitable and practical, including but not limited to the sale of such securities or property and distribution of any net
proceeds in the same way that cash is distributed.
248 | Diageo Form 20-F 2025 |
The depositary may choose any practical method of distribution for any specific ADR holder, including the distribution of securities
or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited
property.
There can be no assurances that the depositary will be able to convert any currency at a specified exchange rate or sell any property,
rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time
period.
Deposit, Withdrawal and Cancellation
The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with
the custodian. In the case of the ADSs to be issued under a prospectus supplement, Diageo may arrange with the underwriters named
therein to deposit such ordinary shares if and as provided in the prospectus supplement.
Ordinary shares deposited with the custodian must also be accompanied by certain documents, including (a) in the case of certificated
shares, instruments showing that such ordinary shares have been properly transferred or endorsed and (b) in the case of book-entry
shares, confirmation of book-entry transfer and recordation, in each case to the person on whose behalf the deposit is being made.
The custodian will hold all deposited ordinary shares for the account of the depositary. ADR holders thus have no direct ownership
interest in the ordinary shares and have only such rights as are contained in the Deposit Agreement. The deposited shares and any
other securities, property or cash received by the depositary or the custodian and held under the Deposit Agreement are referred to as
deposited property.
Upon each deposit of ordinary shares, receipt of related delivery documentation and compliance with the other provisions of the
Deposit Agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the
depositary will issue and deliver ADSs in the name of the person entitled thereto and, if applicable, issue ADRs evidencing the
number of ADSs to which such person is entitled. ADRs will be delivered at the depositary’s principal office.
The depositary will make arrangements for the acceptance of ADSs for book-entry settlement through The Depository Trust
Company, or DTC. All ADSs held through DTC will be registered in the name of Cede & Co., the nominee for DTC. Unless issued
as uncertificated ADSs, the ADSs registered in the name of Cede & Co. will be evidenced by one or more receipt(s) in the form of a
'Balance Certificate,' which will provide that it represents the aggregate number of ADSs from time to time indicated in the records of
the depositary as being issued to DTC hereunder and that the aggregate number of ADSs represented thereby may from time to time
be increased or decreased by making adjustments on such records of the depositary and of DTC or Cede & Co.
When you turn in your ADSs (and, if applicable, the ADRs evidencing the ADSs) at the depositary’s office, the depositary will, upon
payment of certain applicable fees, charges and taxes, and upon receipt of proper instructions, deliver the underlying ordinary shares
to you. At your risk, expense and request, the depositary will deliver (to the extent permitted by law) deposited property at the
depositary’s principal office.
The depositary may restrict the withdrawal of deposited securities only in connection with:
•temporary delays caused by closing Diageo’s transfer books or those of the depositary or the deposit of ordinary shares in
connection with voting at a shareholders’ meeting, or the payment of dividends;
•the payment of fees, taxes and similar charges; or
•compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or to the withdrawal of deposited
securities.
This right of withdrawal may not be limited by any other provision of the Deposit Agreement.
Voting Rights
If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to
exercise the voting rights for the ordinary shares which underlie your ADRs. After receiving voting materials from Diageo, the
depositary will, if Diageo asks it to, notify the ADR holders of any shareholder meeting or solicitation of consents for proxies. This
notice will describe how you may, subject to English law and the provisions of Diageo’s articles of association, instruct the
depositary to exercise the voting rights for the ordinary shares which underlie your ADSs. For instructions to be valid, the depositary
must receive them on or before the date specified. The depositary will try, as far as practical, subject to English law and the
provisions of Diageo’s articles of association, to vote or to have its agents vote the shares or other deposited securities as you instruct.
The depositary will not vote or attempt to exercise the right to vote that attaches to the shares or other deposited securities, other than
in accordance with your instructions or deemed instructions. If the depositary does not receive instructions from you on or before the
specified date and voting is by poll, the depositary will deem you to have instructed it to give a discretionary proxy to a person
designated by Diageo to vote such deposited securities.
However, we cannot assure you that you will receive our voting materials in time for you to give the depositary instructions to vote
any deposited securities. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions to
vote the deposited securities, if, for example, the instructions are not received in time to vote the amount of the deposited securities or
if English or other applicable laws prohibit such voting.
249 | Diageo Form 20-F 2025 |
Notwithstanding anything contained in the Deposit Agreement or any ADR, the depositary may, to the extent not prohibited by law
or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials
provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited
securities, distribute to ADR holders a notice that provides ADR holders with, or otherwise publicizes to ADR holders, instructions
on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for
retrieval or a contact for requesting copies of the materials).
Notwithstanding anything else contained in the Deposit Agreement or any ADR, the depositary shall not have any obligation to take
any action with respect to any meeting, or solicitation of consents or proxies, of holders of deposited securities if the taking of such
action would violate applicable U.S. laws. Diageo has agreed to take any and all actions reasonably necessary and as permitted by
English law to enable ADR holders and beneficial owners to exercise the voting rights accruing to the deposited securities.
Reports and Other Communications
The depositary will make available for inspection by ADR holders any reports and communications from Diageo that are both
received by the depositary as holder of deposited property and made generally available by Diageo to the holders of deposited
property. Upon the request of Diageo, the depositary will send to you copies of reports furnished by Diageo pursuant to the Deposit
Agreement.
Reclassifications, Recapitalizations and Mergers
If Diageo takes actions that affect the deposited securities, including any change in par value, split-up, consolidation or other
reclassification of deposited securities or any recapitalization, reorganization, merger, consolidation, sale of assets or other similar
action, then the depositary may, and will if Diageo asks it to:
•distribute additional or amended ADRs;
•distribute cash, securities or other property it has received in connection with such actions; or
•sell any securities or property received and distribute the proceeds as cash.
If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part
of the deposited property and each ADS will then represent a proportionate interest in such property.
Amendment and Termination
Diageo may agree with the depositary to amend the Deposit Agreement and the ADSs without your consent for any reason. ADR
holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (except for taxes and
other charges specifically payable by ADR holders under the Deposit Agreement), or affects any substantial existing right of ADR
holders. If an ADR holder continues to hold ADRs when an amendment has become effective such ADR holder is deemed to agree to
such amendment.
No amendment will impair your right to surrender your ADSs and receive the underlying securities except to comply with mandatory
provisions of applicable law.
The depositary will terminate the Deposit Agreement if Diageo asks it to do so. The depositary may also terminate the Deposit
Agreement if the depositary has told Diageo that it would like to resign and Diageo has not appointed a new depositary bank within
180 days. In either case, the depositary must notify you at least 90 days before termination. After termination, the depositary’s only
responsibility will be (i) to advise you that the Deposit Agreement is terminated, (ii) to collect distributions on the deposited
securities (iii) to sell rights and other property, and (iv) to deliver ordinary shares and other deposited securities upon cancellation of
the ADRs. At any time from the termination date, the depositary may sell the deposited property which remains and hold the net
proceeds of such sales and any other cash it is holding under the Deposit Agreement, without liability for interest, for the pro rata
benefit of ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary shall have no obligations
except to account for such proceeds and other cash. The depositary will not be required to invest such proceeds or pay interest on
them.
Limitations on Obligations and Liability to ADR Holders
The Deposit Agreement expressly limits the obligations and liability of the depositary, Diageo and their respective agents. Neither
Diageo nor the depositary assumes any obligation nor shall either of them be subject to any liability under the Deposit Agreement to
any ADR holder, except that they each agree to perform their respective obligations specifically set forth in the Deposit Agreement
without negligence or bad faith. Neither Diageo nor the depositary will be liable if:
•law, regulation, the provisions of or governing any deposited securities, act of God, war or other circumstance beyond its control
shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit Agreement or the ADRs provide shall be
done or performed by it;
•it exercises or fails to exercise discretion permitted under the Deposit Agreement or the ADR;
•it performs its obligations specifically set forth in the Deposit Agreement without negligence or bad faith; or
•it takes any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person
presenting ordinary shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give
such advice or information.
250 | Diageo Form 20-F 2025 |
In the Deposit Agreement, Diageo agrees to indemnify Citibank, N.A. for acting as depositary, except for losses caused by Citibank,
N.A.’s own negligence or bad faith, and Citibank, N.A. agrees to indemnify Diageo for losses resulting from its negligence or bad
faith.
The depositary will not be responsible for failing to carry out instructions to vote the deposited securities or for the manner in which
the deposited securities are voted or the effect of the vote.
The depositary may own and deal in deposited securities and in ADSs.
Neither Diageo nor the depositary nor any of their respective directors, employees, agents or affiliates shall incur any liability for any
consequential or punitive damages for any breach of the terms of the Deposit Agreement.
Books of Depositary
The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADSs and,
if applicable, ADRs evidencing such ADSs. You may inspect such records at such office during regular business hours, but solely for
the purpose of communicating with other holders in the interest of business matters relating to the Deposit Agreement.
The depositary will maintain facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADSs.
These facilities may be closed from time to time when the depositary considers it expedient to do so.
251 | Diageo Form 20-F 2025 |
Exhibit 12.1
I, Nik Jhangiani, certify that:
1.I have reviewed this annual report on Form 20-F of Diageo plc;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented
in this report;
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control
over financial reporting; and
5.I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the
audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s
internal control over financial reporting.
Date: 14 August 2025
/s/ Nik Jhangiani
Name: Nik Jhangiani
Title: Interim Chief Executive
(Principal Executive Officer)
252 | Diageo Form 20-F 2025 |
Exhibit 12.2
I, Nik Jhangiani, certify that:
1.I have reviewed this annual report on Form 20-F of Diageo plc;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented
in this report;
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control
over financial reporting; and
5.I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the
audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s
internal control over financial reporting.
Date: 14 August 2025
/s/ Nik Jhangiani
Name: Nik Jhangiani
Title: Chief Financial Officer
(Principal Financial Officer)
253 | Diageo Form 20-F 2025 |
Exhibit 13.1
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code), the undersigned officer of Diageo plc, a public limited company incorporated under the laws of England and Wales (the
‘Company’), hereby certifies, to such officer’s knowledge, that:
The Annual Report on Form 20-F for the year ended 30 June 2025 (the ‘Report’) of the Company fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Date: 14 August 2025
/s/ Nik Jhangiani
Name: Nik Jhangiani
Title: Interim Chief Executive
(Principal Executive Officer)
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure
document.
254 | Diageo Form 20-F 2025 |
Exhibit 13.2
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code), the undersigned officer of Diageo plc, a public limited company incorporated under the laws of England and Wales (the
‘Company’), hereby certifies, to such officer’s knowledge, that:
The Annual Report on Form 20-F for the year ended 30 June 2025 (the ‘Report’) of the Company fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Date: 14 August 2025
/s/ Nik Jhangiani
Name: Nik Jhangiani
Title: Chief Financial Officer
(Principal Financial Officer)
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure
document.
255 | Diageo Form 20-F 2025 |
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 of Diageo plc (No. 333-269929),
Diageo Capital plc (No. 333-269929-01) and Diageo Investment Corporation (No. 333-269929-02), and Form S-8 (No. 333-286502,
333-153481, 333-162490, 333-169934, 333-182315, 333-206290 and 333-223071) of our report dated 14 August 2025 relating to the
financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers LLP
London, United Kingdom
14 August 2025
FAQ
What were Diageo's (DEO) fiscal 25 reported and organic net sales?
Reported net sales were $20.2bn (down 0.1% year‑on‑year); organic net sales grew 1.7% driven by 0.9% volume and 0.8% price/mix.
How much free cash flow did DEO generate in fiscal 25 and what is the target from Accelerate?
Diageo generated $2.75bn free cash flow in fiscal 25 and is targeting sustainably c.$3bn of annual free cash flow from fiscal 26 under Accelerate.
Why did Diageo's reported operating profit fall in fiscal 25?
Reported operating profit declined 27.8% mainly due to exceptional impairment and restructuring charges, unfavourable foreign exchange and lower organic operating margin.
What leadership changes did Diageo announce in the 20‑F?
Debra Crew stepped down as CEO; Nik Jhangiani was appointed Interim Chief Executive and Deirdre Mahlan is returning as Interim CFO.
What material transactions and portfolio actions occurred in fiscal 25?
Diageo acquired Ritual Beverage Company LLC, completed a strategic transaction on Cîroc, disposed of non‑core brands (Pampero, Safari, Cacique) and pursued share disposals in some African breweries.
What cost and leverage targets did Diageo set under Accelerate?
Accelerate targets c.$625m of cost savings over three years and a leverage target of 2.5–3.0x net debt to adjusted EBITDA by no later than fiscal 28.
Diageo
NYSE:DEO
DEO Rankings
DEO Latest News
DEO Latest SEC Filings
Aug 14, 2025
[6-K] Diageo plc Current Report (Foreign Issuer)
Aug 14, 2025
[6-K] Diageo plc Current Report (Foreign Issuer)
Aug 5, 2025
[6-K] Diageo plc Current Report (Foreign Issuer)
Aug 1, 2025
[6-K] Diageo plc Current Report (Foreign Issuer)
Jul 30, 2025
[6-K] Diageo plc Current Report (Foreign Issuer)
DEO Stock Data
61.91B
555.79M
0.1%
9.98%
0.13%
Beverages - Wineries & Distilleries
Consumer Defensive
United Kingdom
London