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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F☒          Form 40-F ☐

9 October 2023

Important Information

This document contains selected unaudited re-presented historical consolidated financial information of Diageo group (Diageo plc and its subsidiaries - Diageo) as of and for the years ended 30 June 2021, 30 June 2022 and 30 June 2023 and the six months ended 31 December 2021 and 31 December 2022 reflecting a change in the presentation currency of Diageo plc from sterling to US dollar. This document is published to help the understanding of Diageo's past performance and financial position on a re-presented basis, in US dollar. Diageo's unaudited interim financial statements as at and for the six months ending 31 December 2023 will use US dollar as the presentation currency.

Further re-presented financial information including re-presented consolidated statement of changes in equity and consolidated statement of cash flows will be published for the years ended 30 June 2021, 30 June 2022 and 30 June 2023 in January 2024.

This document also contains certain non-GAAP measures, including organic movements, calculated and reconciled to the relevant GAAP measure in US dollar. 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. Note that the re-presentation to US dollar did not result in any material change to organic growth movements for any of the periods, geographical segments or key categories. See “Definitions and reconciliation of non-GAAP measures to GAAP measures” for more information.

Change in the functional and presentation currency

Starting 1 July 2023, in line with reporting requirements, the functional currency of Diageo plc has changed from sterling to US dollar which is applied prospectively. This is because the group's share of net sales and expenses in the US and other countries whose currencies correlate closely with the US dollar has been increasing over the years, and that trend is expected to continue in line with the group's strategic focus. Diageo has also decided to change its presentation currency to US dollar with effect from 1 July 2023, applied retrospectively, as it believes that this change will provide better alignment of the reporting of performance with its business exposures.

The selected unaudited re-presented financial information included in this document has been derived from the consolidated financial statements and accounting records of Diageo for each of the years ended 30 June 2021, 30 June 2022 and 30 June 2023 and for each of the six months ended 31 December 2021 and 31 December 2022, prior to retrospectively applying the change in the presentation currency.

The selected historical financial information that was included in the consolidated financial statements of Diageo as at and for the years ended 30 June 2021, 30 June 2022 and 30 June 2023 and as at and for the six months ended 31 December 2021 and 31 December 2022 has been re-presented in US dollar following the translation methodology in IAS 21 - The Effect of Changes in Foreign Exchange Rates:

–assets and liabilities were translated into US dollar at the closing exchange rate prevailing at the relevant balance sheet date;

–the consolidated income statement and the consolidated cash flows of non US dollar entities were translated into US dollar at weighted average rates of exchange for the relevant period, except for subsidiaries in hyperinflationary economies that were translated with the closing rate at the end of the relevant period and for the substantial transactions that are translated at the rate on the date of the transaction (including acquisitions, disposals, impairment write offs, dividends received and paid);

–total equity was translated at the closing exchange rate at the relevant balance sheet date.

In preparing the selected unaudited re-presented financial information in US dollar included in this document, the exchange rates used in respect of sterling and euro per $1 were:

(1)    Weighted average rates

(2)    Closing rates

Future Dividend Payments

Diageo adopted new articles of association (New Articles) at the AGM held on 28 September 2023 which reflect the change in the functional currency of Diageo plc and presentation currency of the group from sterling to US dollar. The New Articles, among other things, empower the Board to declare and/or pay dividends in any currency or currencies and enable the Board to make provisions for shareholders to receive dividends in a different currency to the currency in which dividends were declared. Commencing with the interim dividend for the year ending 30 June 2024 which is expected to be declared in January 2024, Diageo’s future dividends will be declared in US dollar. Holders of ordinary shares will continue to receive their dividends in sterling but will have the option to elect to receive their dividends in US dollar. Holders of ADRs will continue to receive dividends in US dollar.

						30 June 2023						31 December 2022						30 June 2022
						Re-presented $ million			Re-presented $ million			Re-presented $ million			Re-presented $ million			Re-presented $ million			Re-presented $ million
Non-current assets
Intangible assets						14,506						14,556						14,401
Property, plant and equipment						7,738						7,168						7,076
Biological assets						197						143						114
Investments in associates and joint ventures						4,825						4,710						4,418
Other investments						71						50						45
Other receivables						39						33						45
Other financial assets						497						479						418
Deferred tax assets						178						127						138
Post employment benefit assets						1,210						1,272						1,878
									29,261						28,538						28,533
Current assets
Inventories						9,653						9,062						8,584
Trade and other receivables						3,427						4,648						3,549
Assets held for sale						—						220						269
Corporate tax receivables						292						199						180
Other financial assets						437						479						303
Cash and cash equivalents						1,813						3,319						2,765
									15,622						17,927						15,650
Total assets									44,883						46,465						44,183
Current liabilities
Borrowings and bank overdrafts						(2,142)						(2,767)						(1,842)
Other financial liabilities						(453)						(524)						(538)
Share buyback liability						—						(259)						(141)
Trade and other payables						(6,678)						(7,332)						(7,123)
Liabilities held for sale						—						(92)						(74)
Corporate tax payables						(170)						(319)						(305)
Provisions						(150)						(135)						(192)
									(9,593)						(11,428)						(10,215)
Non-current liabilities
Borrowings						(18,649)						(18,365)						(17,543)
Other financial liabilities						(941)						(925)						(850)
Other payables						(463)						(424)						(459)
Provisions						(306)						(319)						(312)
Deferred tax liabilities						(2,751)						(2,708)						(2,807)
Post employment benefit liabilities						(471)						(457)						(486)
									(23,581)						(23,198)						(22,457)
Total liabilities									(33,174)						(34,626)						(32,672)
Net assets									11,709						11,839						11,511
Total equity									11,709						11,839						11,511

    

						31 December 2021									30 June 2021
						Re-presented $ million			Re-presented $ million									Re-presented $ million			Re-presented $ million
Non-current assets
Intangible assets						14,744												14,962
Property, plant and equipment						6,870												6,741
Biological assets						102												93
Investments in associates and joint ventures						4,688												4,597
Other investments						67												56
Other receivables						38												50
Other financial assets						432												454
Deferred tax assets						112												139
Post employment benefit assets						2,084												1,414
									29,137												28,506
Current assets
Inventories						8,418												8,402
Trade and other receivables						4,493												3,315
Assets held for sale						22												—
Corporate tax receivables						204												202
Other financial assets						89												169
Cash and cash equivalents						2,404												3,821
									15,630												15,909
Total assets									44,767												44,415
Current liabilities
Borrowings and bank overdrafts						(1,600)												(2,589)
Other financial liabilities						(524)												(357)
Share buyback liability						(248)												(127)
Trade and other payables						(7,191)												(6,459)
Liabilities held for sale						(41)												—
Corporate tax payables						(513)												(203)
Provisions						(149)												(192)
									(10,266)												(9,927)
Non-current liabilities
Borrowings						(17,135)												(17,883)
Other financial liabilities						(511)												(534)
Other payables						(375)												(470)
Provisions						(376)												(380)
Deferred tax liabilities						(2,851)												(2,704)
Post employment benefit liabilities						(656)												(798)
									(21,904)												(22,769)
Total liabilities									(32,170)												(32,696)
Net assets									12,597												11,719
Total equity									12,597												11,719

    

Unaudited re-presented reconciliations of reported to organic movements for net sales, marketing expenses and operating profit for the years ended 30 June 2023 and 2022 and for the six months ended 31 December 2022 are set out in the tables below.

The re-presentation to US dollar did not result in any material change to organic growth movements for any of the periods, geographical segments or key categories.

In this section, selected historical re-presented non-GAAP measures are published in order to help the understanding of Diageo's past performance and financial position in US dollar.

(1)    For definition of exceptional operating items see page 14,

(2)    See page 15-19 for definition and details of hyperinflationary adjustments,

(3)    Fair value remeasurements. For further details see page 15.

Unless otherwise stated, percentage movements given throughout this document for net sales, marketing spend, operating profit and operating margin are organic movements after retranslating re-presented current period reported numbers at prior period exchange rates and after adjusting for the effect of exceptional operating items and acquisitions and disposals, excluding fair value remeasurements.

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 re-presented historical financial information 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.

Organic movements

Organic information is presented using US dollar amounts on a constant currency basis excluding the impact of exceptional items, certain fair value remeasurement, hyperinflation and acquisitions and disposals. Organic measures enable users to focus on the performance of the business which is common to both years and which represents those measures that local managers are most directly able to influence.

Calculation of organic movements

The organic movement percentage is the amount in the row titled ‘Organic movement’ in the tables below, expressed as a percentage of the relevant absolute amount in the row titled ‘2022, 2021 and six months ended 31 December 2021 adjusted’. Organic operating margin is calculated by dividing operating profit before exceptional items by net sales after excluding the impact of exchange rate movements, certain fair value remeasurements, hyperinflation and acquisitions and disposals.

(a) Exchange rates

Exchange in the organic movement calculation reflects the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average exchange rates.

Exchange impacts in respect of the external hedging of intergroup sales by the markets in a currency other than their functional currency and the intergroup recharging of services are also translated at prior period weighted average exchange rates and are allocated to the geographical segment to which they relate. Residual exchange impacts are reported as part of the Corporate segment. Results from hyperinflationary economies are translated at forward-looking rates.

(b) Acquisitions and disposals

For acquisitions in the current period, the post-acquisition results are excluded from the organic movement calculations. For acquisitions in the prior period, post-acquisition results are included in full in the prior period but are included in the organic movement calculation from the anniversary of the acquisition date in the current period. The acquisition row also eliminates the impact of transaction costs that have been charged to operating profit in the current or prior period in respect of acquisitions that, in management’s judgement, are expected to be completed.

Where a business, brand, brand distribution right or agency agreement was disposed of or terminated in the reporting period, the group, in the organic movement calculations, excludes the results for that business from the current and prior period. In the calculation of operating profit, the overheads included in disposals are only those directly attributable to the businesses disposed of, and do not result from subjective judgements of management.

(c) Exceptional items

Exceptional items are those that in management’s judgement need to be disclosed separately. Such items are included within the income statement caption to which they relate, and are excluded from the organic movement calculations. Management believes that separate disclosure of exceptional items and the classification between operating and non-operating items further helps investors to understand the performance of the group. Changes in estimates and reversals in relation to items previously recognised as exceptional are presented consistently as exceptional in the current year.

Exceptional operating items are those that are considered to be material and unusual or non-recurring in nature and are part of the operating activities of the group, such as one-off global restructuring programmes which can be multi-year, impairment of intangible assets and fixed assets, indirect tax settlements, property disposals and changes in post employment plans.

Gains and losses on the sale or directly attributable to a prospective sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non-recurring items that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as exceptional non-operating items below operating profit in the income statement.

Exceptional current and deferred tax items comprise material and unusual or non-recurring items that impact taxation. Examples include direct tax provisions and settlements in respect of prior years and the remeasurement of deferred tax assets and liabilities following tax rate changes.

(d) Fair value remeasurement

Fair value remeasurement in the organic movement calculation reflects an adjustment to eliminate the impact of fair value changes in biological assets, earn-out arrangements that are accounted for as remuneration and fair value changes relating to contingent consideration liabilities and equity options that arose on acquisitions recognised in the income statement.

Adjustment in respect of hyperinflation

Before 2022, organic results from hyperinflationary economies were translated at respective years’ actual rates which meant that organic movements were broadly in line with reported movements. A review of this methodology was completed in 2022 when Turkey became a hyperinflationary economy.

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.