UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

30 January 2024

Commission File Number 1-10691

DIAGEO plc

(Translation of registrant’s name into English)

16 Great Marlborough Street, London W1F 7HS, England

(Address of principal executive offices)

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

Form 20-F x          Form 40-F ¨

This report on Form 6-K shall be deemed to be filed and incorporated by reference in the registration statement on

Form F-3 (File No. 333-269929) and registration statements on Form S-8 (File Nos. 333-223071, 333-206290, 333-169934,

333-162490, 333-153481, and 333-182315) and to be a part thereof from the date on which this report is furnished, to the

extent not superseded by documents or reports subsequently filed or furnished.

INDEX TO FORM 6-K

INTRODUCTION

Diageo plc is a public limited company incorporated under the laws of England and Wales. As used herein, except as the

context otherwise requires, the term ‘company’ refers to Diageo plc and the terms ‘group’ and ‘Diageo’ refer to the company

and its consolidated subsidiaries. References used herein to ‘shares’ and ‘ordinary shares’ are, except where otherwise

specified, to Diageo plc’s ordinary shares.

PRESENTATION OF FINANCIAL INFORMATION

The unaudited condensed consolidated interim financial statements starting on page F-1 have been prepared in accordance with

UK adopted IAS 34 ‘Interim Financial Reporting’, IAS 34 ‘Interim Financial Reporting’ as issued by the International

Accounting Standards Board (‘IASB’) and The Disclosure Guidance and Transparency Rules sourcebook of the UK’s Financial

Conduct Authority. These financial statements should be read in conjunction with the company’s published consolidated

financial statements for the year ended 30 June 2023, which were prepared in accordance with IFRS® Accounting Standards

adopted by the UK and IFRS Accounting Standards issued by IASB, including interpretations issued by the IFRS

Interpretations Committee. IFRS Accounting Standards as adopted by the UK differs in certain respects from IFRS Accounting

Standards as issued by the IASB, but the differences have no impact on the group’s consolidated financial statements for the

periods presented. The consolidated financial statements are prepared on a going concern basis under the historical cost

convention, unless stated otherwise.

The business review and financial information included in this document for the six months ended 31 December 2023 and 31

December 2022 have been derived from the Diageo interim condensed consolidated financial information.

The principal executive office of the company is located at 16 Great Marlborough Street, London W1F 7HS, England and its

telephone number is +44 (0) 20 7947 9100.

MARKET DATA

The market data and competitive set classifications are taken from independent industry sources in the markets in which Diageo

operates.

Cautionary statement concerning forward-looking statements

This document contains ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only

to historical or current facts. In particular, forward-looking statements include all statements that express forecasts,

expectations, plans, outlook, objectives and projections with respect to future matters, including the statements set forth in the

'Fiscal 24 outlook', and any other statements with respect to trends in results of operations, margins, growth rates, overall

market trends, the impact of changes in interest or exchange rates, the availability or cost of financing to Diageo, anticipated

cost savings or synergies, anticipated productivity savings, expected investments, expected inventory levels, the completion of

any strategic transactions or restructuring programmes, anticipated tax rates, changes in the international tax environment,

expected cash payments, outcomes of litigation or regulatory enquiries, anticipated changes in the value of assets and liabilities

related to pension schemes and general economic conditions. By their nature, forward-looking statements involve risk and

uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of

factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-

looking statements, including factors that are outside Diageo's control.

These factors include, but are not limited to: (i) economic, political, social or other developments in countries and markets in

which Diageo operates, including elevated geopolitical instability as a result of conflict in the Middle East and macroeconomic

events that may affect Diageo’s customers, suppliers and/or financial counterparties; (ii) the effects of climate change, or legal,

regulatory or market measures intended to address climate change; (iii) changes in consumer preferences and tastes, including

as a result of disruptive market forces, changes in demographics and evolving social trends (including any shifts in consumer

tastes towards at-home occasions, premiumisation, small-batch craft alcohol, or lower or no alcohol products and/or

developments in e-commerce); (iv) changes in the domestic and international tax environment that could lead to uncertainty

around the application of existing and new tax laws and unexpected tax exposures; (v) changes in the cost of production,

including as a result of increases in the cost of commodities, labour and/or energy due to inflation and/or supply chain

disruptions; (vi) any litigation or other similar proceedings (including with tax, customs, competition, environmental, anti-

corruption or other regulatory authorities); (vii) legal and regulatory developments, including changes in regulations relating to

environmental issues and/or e-commerce; (viii) the consequences of any failure of internal controls; (ix) the consequences of

any failure by Diageo or its associates to comply with anti-corruption, sanctions, trade restrictions or similar laws and

regulations, or any failure of Diageo’s related internal policies and procedures to comply with applicable law or regulation; (x)

Diageo’s ability to make sufficient progress against or achieve its ESG ambitions; (xi) cyber-attacks and IT threats or any other

disruptions to core business operations; (xii) contamination, counterfeiting or other circumstances which could harm the level

of customer support for Diageo’s brands and adversely impact its sales; (xiii) Diageo’s ability to maintain its brand image and

corporate reputation or to adapt to a changing media environment; (xiv) fluctuations in exchange rates and/or interest rates; (xv)

Diageo’s ability to derive the expected benefits from its business strategies, including Diageo’s investments in e-commerce and

its luxury portfolio; (xvi) increased competitive product and pricing pressures, including as a result of introductions of new

products or categories that are competitive with Diageo’s products and consolidations by competitors and retailers; (xvii)

increased costs for, or shortages of, talent, as well as labour strikes or disputes; (xviii) movements in the value of the assets and

liabilities related to Diageo’s pension plans; (xix) Diageo’s ability to renew supply, distribution, manufacturing or licence

agreements (or related rights) and licences on favourable terms, or at all, when they expire; or (xx) any failure by Diageo to

protect its intellectual property rights.

All oral and written forward-looking statements made on or after the date of this document and attributable to Diageo are

expressly qualified in their entirety by the above cautionary factors, by the ‘Risk Factors’ section immediately preceding those

and by the ‘Risk Factors’ included in Diageo’s Annual Report on Form 20-F for the year ended 30 June 2023 filed with the US

Securities and Exchange Commission. Any forward-looking statements made by or on behalf of Diageo speak only as of the

date they are made. Diageo does not undertake to update forward-looking statements to reflect any changes in Diageo's

expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

This document includes names of Diageo’s products, which constitute trademarks or trade names which Diageo owns, or which

others own and license to Diageo for use. All rights reserved. © Diageo plc 2024.

CAPITALISATION AND INDEBTEDNESS

The following table sets out on an IFRS basis the unaudited capitalisation and indebtedness and the unaudited cash and cash

equivalents of Diageo as at 31 December 2023.

Notes

(1)At 31 December 2023, 2,447 million ordinary shares of 28101/108 pence each were issued, all of which were fully paid,

including shares issued, shares issued and held in employee share trusts and those held as treasury shares. Diageo’s

current return of capital programme, approved by the Board on 31 July 2023, seeks to return up to $1.0 billion to

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

capital (announced as up to £0.5 billion on 26 January 2023) was returned to shareholders. In the six months ended 31

December 2023, the company purchased 12.9 million ordinary shares (2022 – 14.8 million) at a cost of $480 million

(including transaction costs of $2 million) (2022 – $655 million including transaction costs of $8 million). All shares

purchased under the share buyback programme were cancelled. The remaining contractual amount of $522 million is

expected to be purchased by 26 June 2024. As the share buyback programme cannot be cancelled during closed periods,

a financial liability of $497 million (including transaction costs) was accrued in line with contractual terms at 31

December 2023 (2022 – $259 million) equivalent to 13.6 million shares (2022 – 5.9 million shares) that represents the

maximum potential purchase value by 31 January 2024.

(2)There have been no material changes to performance guarantees or indemnities in respect of liabilities of third parties

from those reported in Diageo’s Annual Report on Form 20-F for the year ended 30 June 2023.

(3)At 31 December 2023, none of the group’s net borrowings were secured on assets of the group.

(4)An interim dividend of 40.50 cents per share will be paid to holders of ordinary shares and ADRs on the register as of 1

March 2024.

(5)Other than those disclosed above, there has been no material change since 31 December 2023 in the group’s net

borrowings, performance guarantees, indemnities and capitalisation.

BUSINESS REVIEW

INFORMATION PRESENTED

Diageo is one of the world’s leading premium drinks businesses and operates on an international scale selling all types of

beverage alcohol. It is one of a small number of premium drinks companies that operate globally across spirits and beer.

The following discussion is based on Diageo’s results for the six months ended 31 December 2023 compared with the six

This section contains certain non-GAAP measures, including organic movements, growth on a constant basis, organic growth

excluding Travel Retail and Guinness, free cash flow, return on average invested capital, adjusted net borrowings to adjusted

EBITDA and tax rate before exceptional items. These non-GAAP measures should be viewed as complementary to, and not

replacements for, the comparable GAAP measures and reported movements therein. Organic movements and organic operating

profit presented in this section are before exceptional items. Share, unless otherwise stated, refers to value share. See

‘Definitions and reconciliations of non-GAAP measures to GAAP measures’ for an explanation of non-GAAP measures on

pages 36 to 45.

OPERATING RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2023 COMPARED WITH THE SIX

MONTHS ENDED 31 DECEMBER 2022

Financial highlights

◦Reported net sales of $11.0 billion declined 1.4% or $158 million, due to a $167 million unfavourable foreign exchange

impact and an organic net sales decline of $67 million or 0.6%, driven by a $310 million or 23% decline in Latin America

and Caribbean (LAC).

◦Excluding the impact of LAC, reported net sales grew $72 million or 0.7%, and organic net sales grew $243 million or

2.5%, driven by Asia Pacific, Africa and Europe, partially offset by a $64 million or 1.5% decline in North America which

improved sequentially from the second half of fiscal 23.

◦The decline in LAC was driven by a strong double-digit net sales growth comparator as well as lower consumption and

consumer downtrading due to macroeconomic pressures in the region.

◦Reported operating profit declined 11.1% to $3.3 billion, and reported operating profit margin contracted 329bps due to

lower organic operating margin and a negative impact from exceptional operating items.

◦Organic operating profit declined by $205 million or 5.4%, of which $234 million was attributable to LAC, organic

operating margin contracted 167bps.

◦Excluding the impact of LAC, organic operating profit grew by $29 million or 0.9%, and organic operating margin

contracted 53bps, driven by increased marketing investment.

◦Net cash flow from operating activities increased by $0.7 billion to $2.1 billion. Free cash flow increased by $0.5 billion to

$1.5 billion, driven by disciplined working capital management and the positive impact of lapping one-off cash tax

payments from the prior year.

◦Declared interim dividend increased by 5% to 40.50 cents per share. Completed $0.5 billion of share buybacks as part of the

return of capital programme announced on 1 August 2023.

RECENT TRENDS

Debra Crew, Chief Executive of Diageo, commenting on the six months ended 31 December 2023 said:

The first half of fiscal 24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year

and faced an uneven global consumer environment. Excluding LAC, our group organic net sales grew 2.5%, driven by good

growth in Europe, Asia Pacific and Africa. While North America delivered sequential improvement in line with our

expectations, we are focused on returning to high-quality share growth as consumer behaviour continues to normalise in our

largest region.

As previously announced in November 2023, materially weaker performance in LAC, driven by fast-changing consumer

sentiment and high inventory levels, significantly impacted total business performance. Having conducted a review of inventory

levels and monitored performance in the critical holiday season, we have taken action and have further plans to reduce

inventory to more appropriate levels  for the current consumer environment in the region by the end of fiscal 24. This is a key

priority.

With a strong focus on execution, we delivered an improved free cash flow of $1.5 billion, and our pipeline of productivity

initiatives in the first half of fiscal 24 drove $335 million of savings, helping us to sustain investment in brand building. During

the half, we returned $0.5 billion to shareholders via share buybacks as part of our commitment to return up to $1.0 billion of

capital to shareholders in fiscal 24. We declared an interim dividend increase to 40.50 cents per share, reflecting our

commitment to a progressive dividend policy.

Looking ahead to the second half of fiscal 24, despite continued global economic volatility, we expect to deliver improvement

in organic net sales and organic operating profit growth at the group level, compared to the first half. While the macro

environment will continue to present challenges, I am confident that we remain well-positioned and resilient for the long term.

We are diversified by category, price point and region and will continue to invest behind our iconic brands to maintain our

position as an industry leader in total beverage alcohol, an attractive sector with a long runway for growth.

See page 36 for an explanation and reconciliation of non-GAAP measures, including organic net sales, organic marketing investment, organic operating profit,

free cash flow, eps before exceptionals, adjusted net debt, adjusted EBITDA and tax rate before exceptional items.

Unless otherwise stated, movements in results are for the six months ended 31 December 2023 compared to the six months ended 31 December 2022.

(2)  For further details on exceptional items see pages 15 and F-11-F-13.

Fiscal 24 outlook

Organic net sales growth

Overall, for the group, we expect our organic net sales growth rate in the second half to gradually improve compared to the

growth rate in the first half.

In North America, in the second half of fiscal 24, we expect to drive gradual improvement in organic net sales performance,

despite uncertainty in the consumer environment. We will continue to invest in our brands and innovations as we work towards

the delivery of high-quality market share improvement as the consumer environment continues to normalise.

In the second half of fiscal 24, we expect macroeconomic pressures will persist in LAC and impact progress in reducing

inventory levels. As a result, we expect organic net sales in LAC to decline between the range of -10% to -20% in the second

half of fiscal 24, compared to the second half of fiscal 23. However, we expect to close fiscal 24 with a more appropriate level

of inventory for the current consumer environment.

In Europe, Asia Pacific and Africa, we expect continued growth in the second half recognising that macroeconomic volatility

and consumer uncertainty will likely persist.

Organic operating profit growth

In the second half of fiscal 24, we expect an organic operating profit decline compared to the prior year, but we expect the rate

of decline to improve compared to the first half of fiscal 24. While we expect headwinds to persist from continued inflation and

relatively low operating leverage as we reduce inventory in LAC, we will continue to focus on delivering strong productivity

and leveraging revenue growth management capabilities, while remaining invested in marketing.

Taxation  

We expect the tax rate before exceptional items for fiscal 24 to be in the region of 23% mainly as a result of profit mix.

Effective interest rate

We expect the effective interest rate to reduce slightly for the full year from the first half of fiscal 24 which was reported at

4.4%, given current market conditions.

Productivity

At the end of fiscal 24, we will complete a three-year period over which we committed to deliver $1.5 billion of productivity

benefits and we expect to exceed this target.

At our Capital Markets Event in November 2023, we announced a new productivity commitment to deliver $2.0 billion of

productivity savings over the three years, from fiscal 25 to fiscal 27. We plan to deliver this accelerated productivity

commitment across cost of goods, marketing spend and overheads. This acceleration will be supported by investments,

including our supply chain agility programme, which was announced in July 2022. We expect benefits from our supply chain

agility programme to increase from fiscal 25 and accelerate in the following years.

Capital expenditure and free cash flow

In fiscal 24, we continue to expect capital expenditure for the full year to be in the range of $1.3-1.5 billion. We expect broadly

this level of spend to continue in the coming years, but then normalise to historical levels as a percentage of net sales starting in

fiscal 27. We expect cash flow to grow organically through the second half of fiscal 24, while we continue to invest in capital

expenditure and maturing stock.

Foreign exchange guidance

We are not providing specific guidance in relation to foreign exchange for fiscal 24. However, using the first half experienced

foreign exchange impact and spot exchange rates of $1=£0.79 and $1=€0.90 as at 31 December 2023 for the second half and

applying them to a representative income statement profile, for operating profit we would see a positive exchange impact of

approximately $210 million and a negative impact on net sales of approximately $90 million.

Functional and presentation currency

Commencing with the interim dividend declared in January 2024, Diageo's dividends will be declared in US dollars and remain

in line with the group's existing progressive dividend policy. Holders of ordinary shares will continue to receive their dividends

in sterling, but will have the option to elect to receive their dividends in US dollars instead. Holders of American Depositary

Receipts (ADRs) will continue to receive dividends in US dollars.

Unaudited recast full primary financial information and selected financial information as of and for the years ended 30 June

2021, 30 June 2022 and 30 June 2023 will be re-presented in US dollars and made available later today to reflect the change in

the presentation currency of Diageo from sterling to US dollars.

Notes to the business and financial review

Unless otherwise stated: 

–movements in results are for the six months ended 31 December 2023 compared to the six months ended 31 December

2022;

–commentary below refers to organic movements unless stated as reported;

–volume is in millions of equivalent units (EUm);

–net sales are sales after deducting excise duties;

–percentage movements are organic movements unless stated as reported;

–growth is organic net sales movement; and

–market share refers to value share, except for India which is volume share.

Following a review of our interim performance metrics, we have made the decision to report return on average invested capital

only on a full-year basis at year end going forward.

See page 36 for an explanation of the calculation and use of non-GAAP measures.

Key performance indicators

Net sales ($ million)

Reported net sales declined 1.4%

Organic net sales declined 0.6%

Reported net sales declined 1.4%, driven by unfavourable foreign exchange impacts, organic net sales decline and a

negative impact from acquisitions and disposals, partially offset by hyperinflation adjustments.

Organic net sales decline of 0.6% was primarily attributable to weak performance in LAC driven by a strong double-digit net

sales growth comparator, as well as lower consumption and consumer downtrading due to macroeconomic pressures in the

region. These impacts materially contributed to the group’s organic volume decline of 5.2% which was partially offset by

positive price/mix of 4.6% delivered across all other regions, and mainly driven by positive pricing. Excluding LAC, organic

net sales grew 2.5%.

                                         

                        (i

                        (i

(2)Exchange rate movements reflect the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average

exchange rates.

(3)See pages F-15 and 37-40 for details on hyperinflation adjustments. 

Operating profit ($ million)

Reported operating profit declined 11.1%

Organic operating profit declined 5.4%

Reported operating profit declined 11.1%, primarily driven by a decrease in organic operating profit and negative exceptional

operating items.

Organic operating profit declined 5.4%, ahead of the organic net sales decline, primarily driven by a $234 million operating

profit decline in LAC.

(1)See page F-7 for explanation under Basis of preparation.

(4)See pages F-15 and 37-40 for details on hyperinflation adjustments.

Operating margin (%)

Reported operating margin declined by 329bps

Organic operating margin declined by 167bps

Reported operating margin declined by 329bps, primarily driven by a decrease in organic operating margin and the negative

impact of exceptional operating items.

Organic operating margin declined by 167bps, predominantly due to weak performance in LAC. Excluding LAC, organic

operating margin declined 53bps. The decline was driven by an increase in marketing, partially offset by the favourable impact

from other operating items and a positive gross margin.

At the group level, including LAC, the impact on gross margin from price increases and productivity initiatives more than

offset cost inflation in absolute terms.

                                                  (167)bps

                                                                                                     

(3)Fair value remeasurements and hyperinflation adjustments. For further details on fair value remeasurements see page 15. See pages F-15 and 37-40 for

details on hyperinflation adjustments. 

Basic earnings per share (cents)

Basic eps decreased 17.2% from 119.1 cents to 98.6 cents

Basic eps before exceptional items(1) decreased 7.1% from 116.4 cents to 108.1 cents

Basic eps decreased 20.5 cents, mainly driven by exceptional items, lower organic operating profit and higher finance charges,

partially offset by lower tax, higher income from associates and joint ventures, and the impact of share buybacks.

Basic eps before exceptional items decreased 8.3 cents.(i(i

(1)See page 36 for an explanation of the calculation and use of non-GAAP measures.

(3)For further details on exceptional items see pages 15 and F-11-F-13.

(4)  Includes finance charges net of tax.

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

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

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

(8)Operating profit hyperinflation adjustments movement was $(3) million compared to the first half of fiscal 23 (F24 H1 – $(12) million; F23 H1 – $(9)

million).

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

Generated $2,146 million net cash from operating activities(1) and $1,462 million free cash flow

Net cash from operating activities was $2,146 million, an increase of $674 million compared to the first half of fiscal 23. Free

cash flow grew by $498 million to $1,462 million.

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

off cash tax payments from the prior year. These favourable factors more than offset the negative impacts of lower operating

profit and increased interest payments, attributable to the current higher interest rate environment. The increase in capital

expenditure (capex) demonstrates our commitment to investments for long-term sustainable growth.

(1)Net cash from operating activities excludes net capex (F24 H1 – $(575) million; F23 H1 – $(506) million) and movements in loans and other investments.

(3)Exchange on operating profit before exceptional items.

(4)Operating profit excludes exchange, depreciation and amortisation, post employment charges of $(10) million and other non-cash items.

(5)Working capital movement includes maturing inventory.

(6)Other items include dividends received from associates and joint ventures, movements in loans and other investments and post employment payments.

Additional financial information

Summary income statement

(2)For the definition of organic movement and hyperinflation see pages 37-40.

(a) Exchange

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

exchange impact of the strengthening of the Mexican peso and sterling against the US dollar, partially offset by the weakening of

the Nigerian naira, Kenyan shilling and the Turkish lira.

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

months ended 31 December 2023 is set out in the table below.

The acquisitions and disposals movement in the six months ended 31 December 2023 was primarily attributable to the disposal of

the United Spirits Limited (USL) Popular brands and Guinness Cameroun S.A.

See pages 17, 36-41 and F-19 for further details.

In the six months ended 31 December 2023, exceptional operating items were a loss of $193 million (2022 – a loss of $39

million), mainly due to various dispute and litigation matters ($108 million) and charges in respect of brand impairment ($54

million) and the supply chain agility programme ($31 million).

In the six months ended 31 December 2023, exceptional non-operating items were a loss of $60 million (2022 – a gain of $19

million), mainly driven by the loss on the sale of the Windsor business in Korea ($53 million).

See pages F-11-F-13 for further details.

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

plants of $24 million loss for the six months ended 31 December 2023 and $nil for the six months ended 31 December 2022. The

adjustments to marketing and other operating expenses were the elimination of fair value changes to contingent consideration

liabilities and earn-out arrangements in respect of prior year acquisitions of $23 million gain for the six months ended 31

December 2023 and $18 million gain for the six months ended 31 December 2022.

(e) Taxation

The reported tax rate for the six months ended 31 December 2023 was 23.9% compared with 21.2% for the six months ended 31

December 2022.

weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period in

line with the relevant accounting standard.

We expect the tax rate before exceptional items for the year ending 30 June 2024 to be in the region of 23%.

A reconciliation of the forward-looking non-GAAP financial measure ‘tax rate before exceptional items’ to its most directly

comparable GAAP financial measure, ‘tax rate after exceptional items’, is not provided because it is not possible to predict,

without unreasonable effort, with reasonable certainty, exceptional items which by their nature are material or not in the normal

course of business. These exceptional items are uncertain, depend on various factors, and could be material to our consolidated

results.

(f) Dividend

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

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

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

times. For the year ended 30 June 2023, dividend cover was 2.0 times on a re-presented basis. The group will keep future returns

of capital, including dividends, under review through the year ending 30 June 2024 to ensure Diageo’s capital is allocated in the

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

An interim dividend of 40.50 cents per share will be paid to holders of ordinary shares and US ADRs on register as of 1 March

2024. The ex-dividend date is 29 February 2024. This represents an increase of 5% on last year’s interim dividend. The interim

dividend will be paid to holders of ordinary shares and US ADRs on 17 April 2024. Holders of ordinary shares will receive their

dividends in sterling unless they elect to receive their dividends in US dollars by 15 March 2024. The dividend per share in pence

to be paid to ordinary shareholders will be announced approximately two weeks prior to the payment date and will be determined

by the actual foreign exchange rates achieved by Diageo buying forward contracts, entered into during the three days preceding

the announcement. A dividend reinvestment plan is available to holders of ordinary shares in respect of the interim dividend and

the plan notice date is 15 March 2024.

(g) Return of capital

Diageo’s current return of capital programme, approved by the Board on 31 July 2023, seeks to return up to $1.0 billion to

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

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

In the six months ended 31 December 2023, the company purchased 12.9 million ordinary shares (2022 – 14.8 million) at a cost

of $480 million (including transaction costs of $2 million) (2022 – $655 million including transaction costs of $8 million). All

shares purchased under the share buyback programme were cancelled. The remaining contractual amount of $522 million is

expected to be purchased by 26 June 2024. As the share buyback programme cannot be cancelled during closed periods, a

financial liability of $497 million (including transaction costs) was accrued in line with contractual terms at 31 December 2023

(2022 – $259 million) equivalent to 13.6 million shares (2022 – 5.9 million shares) that represents the maximum potential

purchase value by 31 January 2024.

Movements in net borrowings

(2) See page 42-43 for the analysis of free cash flow.

(3) In the six months ended 31 December 2023, Diageo paid $3 million in respect of prior year acquisitions. Diageo completed

two acquisitions in the six months ended 31 December 2022: (i) on 29 September 2022, the acquisition of the remaining issued

share capital of Mr Black Spirits Pty Ltd, owner of Mr Black, the Australian premium cold brew coffee liqueur, that it did not

already own; and (ii) on 2 November 2022, the acquisition of the entire issued share capital of Balcones Distilling, a Texas craft

distiller and one of the leading producers of American single malt whiskey in the United States. In the six months ended 31

December 2022, Diageo also paid $22 million in respect of prior year acquisitions.

(4) In the six months ended 31 December 2023, sale of businesses and brands included a net cash consideration of $17 million

for the disposal of Windsor Global Co., Ltd. In the six months ended 31 December 2022, sale of businesses and brands

represents the disposal of the USL Popular brands and the Archers brand net of transaction costs.

(5) See page 16 for details of Diageo's return of capital programmes.

(6) Net sale of own shares comprised receipts from employees on the exercise of share options of $21 million (2022 – $34

million) less purchase of own shares for the future settlement of obligations under the employee share option schemes of

$16 million (2022 – $22 million).

(7) In the six months ended 31 December 2023, the group issued bonds of $1,700 million ($1,690 million - net of discount and

(8) In the six months ended 31 December 2023, the net movements in other borrowings principally arose from the decrease in

(9) In the six months ended 31 December 2023, exchange losses arising on net borrowings of $399 million were primarily

driven by unfavourable exchange movements on sterling and euro denominated borrowings and unfavourable exchange

movements on cash and cash equivalents, foreign currency swaps and forwards and interest rate instruments. In the six months

ended 31 December 2022, exchange gains arising on net borrowings of $4 million were primarily driven by favourable

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

equivalents partially offset by favourable movements on foreign currency swaps and forwards.

(10) In the six months ended 31 December 2023, other non-cash items were principally in respect of additional leases entered

into during the period partially offset by fair value movements of interest rate hedging instruments. In the six months ended 31

December 2022, other non-cash items were principally in respect of the reclassification of cash and cash equivalents in

Guinness Cameroun S.A. to assets and liabilities held for sale.

Movements in equity

(2) See pages F-15 and 37-40 for details on hyperinflation adjustments.

(3) Exchange movements in the six months ended 31 December 2023 primarily arose from exchange loss driven by the Turkish

lira, sterling and Indian rupee. Exchange movements in the six months ended 31 December 2022 primarily arose from exchange

loss driven by Indian rupee and Turkish lira, partially offset by the gain in euro.

(4) See page 16 for details of Diageo's return of capital programmes.

Post employment benefit plans

The net surplus of the group’s post employment benefit plans decreased by $92 million from $739 million at 30 June 2023 to

$647 million at 31 December 2023. The decrease in net surplus was predominantly attributable to the unfavourable change in

the discount rate assumptions in the United Kingdom due to the decrease in returns from ‘AA’ rated corporate bonds used to

calculate the discount rates on the liabilities of the post employment plans (from 5.2% to 4.5%) that was partially offset by the

favourable actual change in the market value of assets held by the post employment benefit plans in the United Kingdom, and

the change in inflation rate assumptions in the United Kingdom (from 3.2% to 2.9%).

Total cash contributions by the group to all post employment benefit plans in the year ending 30 June 2024 are estimated to be

approximately $90 million.

Analysis by reporting segments

The reported and organic movements for volume, net sales, marketing spend, operating profit and operating profit before

exceptional items by reporting segments for the six months ended 31 December 2023 were as follows:

See page 36 for an explanation and reconciliation of non-GAAP measures.

North America

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

•Organic net sales declined 2%, due to weaker performance in US Spirits and Canada, partially offset by growth from Diageo

Beer Company (DBC USA).

•Price/mix grew 1% and was more than offset by a 3% decline in volume, mainly in vodka and rum. 

•US Spirits net sales declined 2%, lapping strong double-digit growth in tequila, US whiskey and spirits-based ready to drink

products. Depletion growth was approximately one percentage point ahead of shipment growth in the first half of fiscal 24,

with some variation across brands. Overall inventory levels at distributors at the end of the first half of fiscal 24 remained in

line with historical levels.

•DBC USA net sales grew 5%, reflecting strong growth in Guinness and Smirnoff flavoured malt beverages.

•Organic operating margin increased by 12bps, driven by gross margin expansion, partially offset by increased marketing

investment. Gross margin improvement was driven by productivity savings, supply efficiencies and pricing actions which

more than offset adverse mix and inflation.

•Marketing investment grew 2% as we invested in key categories and brands.

US Spirits highlights(1):

•Tequila net sales declined 5%, primarily due to a 14% decline in Casamigos lapping double-digit growth as distributors

replenished inventory in the prior year. Don Julio net sales increased 2%, driven by aged liquid variants including

Reposado, partially offset by some destocking of Don Julio 1942. Both Casamigos and Don Julio depletions were

significantly ahead of shipments. Diageo's tequila portfolio continues to grow share of the total US spirits industry,

primarily driven by Don Julio.

•Crown Royal whisky net sales decreased 2%, primarily due to Crown Royal Deluxe and Crown Royal Peach, partially

offset by the strength of broader flavours, led by Crown Royal Salted Caramel and Crown Royal Regal Apple, as well as

premium variants.

•Vodka net sales declined 4%, primarily due to Cîroc, which declined 21% as consumers shifted into other spirits categories,

partially offset by 2% growth in Smirnoff, driven by flavoured variants. Ketel One net sales declined 4% driven by Ketel

One Botanicals. Ketel One held share of spirits and grew share of the vodka category supported by our 'Made to Cocktail'

media campaign.

•Johnnie Walker net sales declined 13%, due to continued normalisation of demand for luxury variant Johnnie Walker Blue

Label. Johnnie Walker gained share of the scotch category in the first half of fiscal 24.

•Captain Morgan net sales declined 2%, primarily due to Captain Morgan Original Spiced.

•Bulleit whiskey net sales increased 19%, significantly ahead of depletions growth as inventory levels continue to normalise.

Bulleit held share of the spirits industry.

•Buchanan's net sales increased 36%, primarily driven by the continued success of Buchanan’s Pineapple. Buchanan's

trademark also gained share of the spirits industry.

•Single Malts net sales declined 27%, due to the lapping of the launch of luxury innovation Lagavulin 11YO Charred Oak

Cask.

•Spirits-based cocktails net sales increased 33%, driven by the expansion of our cocktail collection Ketel One Espresso

Martini, Ketel One Cosmopolitan, and Tanqueray Negroni.

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

(4)For further details on exceptional operating items see pages 15 and F-11-F-13.

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

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

(4)Organic equals reported volume movement.

(5)Casamigos trademark includes both tequila and mezcal.

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

(7)Bulleit whiskey excludes Bulleit Crafted Cocktails.

               

Europe

•Reported net sales grew 10%, primarily driven by a hyperinflation adjustment(1) related to Turkey and organic growth.

•Organic net sales grew 3%, primarily driven by double-digit growth in Turkey and high single-digit growth in Great Britain

and Ireland. This was significantly offset by declines in Eastern Europe, primarily due to lapping final sales of inventories in

Russia following the previously announced winding down of operations in fiscal 23. Excluding the impact of lapping the

final sales of inventories in Russia, organic net sales grew 6%.

•Price/mix grew 7%, driven by price increases across all markets, with Guinness growth driving particularly strong price/mix

in Great Britain and Ireland. Volume declined by 4%, primarily in the standard price tier.

•Spirits net sales were flat, with high double-digit growth in tequila, primarily Don Julio, offset by declines in other

categories, mainly rum and gin. Excluding the effect of lapping final sales of inventories in Russia, spirits net sales grew

3%.

•Beer net sales grew 20%, driven by both positive volume and price/mix. Guinness net sales grew 24%, gaining share in the

on-trade in both Ireland and Great Britain.

•Organic operating margin declined by 257bps. Strong strategic price increases were more than offset by cost inflation and

increased marketing investment.

•Marketing investment increased 9%, driven primarily by investment in Johnnie Walker, Don Julio and Tanqueray 0.0.

•Great Britain net sales grew 9%, primarily driven by strong performance in Guinness, which gained share in both the on-

trade and off-trade.

•Southern Europe net sales were 1% lower, due to declines in rum and J&B more than offsetting strong growth in Johnnie

Walker Red Label and Johnnie Walker Black Label. Southern Europe delivered double-digit basis point market share gains

in the whisky category.

•Northern Europe net sales were 4% lower, due to declines in Talisker, Lagavulin and ready to drink (RTD) cocktails more

than offsetting double digit-growth in Johnnie Walker Red Label.

•Ireland net sales grew 10%, primarily driven by double-digit growth in Guinness and strong share gains in the on-trade.

•Eastern Europe net sales declined 16%, primarily driven by lapping the final sales of inventories in Russia in the first half of

the prior year. Excluding Russia, net sales grew 5% driven by Guinness and Don Julio.

•Turkey net sales grew 30%, with volume growth of 3%, primarily reflecting the impact of price increases in response to

inflation and increased excise duties. Growth was mostly driven by strong performance in Johnnie Walker Red Label and

Johnnie Walker Black Label, with share gains in whisky.

(1)  See pages F-15 and 37-40 for details on hyperinflation adjustments.

(3)  For further details on exceptional operating items see pages 15 and F-11-F-13. 

(3)Organic equals reported volume movement.

                     

Asia Pacific

•Reported net sales grew 2%, driven by organic growth, partially offset by the disposal of Windsor and the negative impact

of foreign exchange.

•Organic net sales grew 6%, driven by double-digit growth in Greater China, lapping low single-digit growth in the prior

year, and high single-digit growth in India. This was partially offset by declines in markets lapping on-trade recovery,

mainly North Asia and South East Asia, as well as a decline in Australia.

•Price/mix of 8% was driven by price increases and the growth of ultra-premium and super-premium price tiers, led by

Chinese white spirits, scotch and tequila.

•Spirits net sales grew 8%, primarily driven by strong double-digit growth in Chinese white spirits; IMFL whisky(1) and The

Singleton also grew double-digits. Tequila delivered triple-digit growth, primarily in South East Asia and Travel Retail,

albeit on a smaller base.

•Organic operating margin declined by 84bps. Positive mix, attributable to growth in Chinese white spirits in Greater China,

as well as favourable product mix in India driving positive gross margin, was more than offset by marketing investment.

•Marketing investment grew 15%, mainly driven by incremental investment in Chinese white spirits, as well as Don Julio

1942 and single malts across almost all markets.

•India net sales grew 9%, driven by double-digit growth in IMFL whisky and scotch. Scotch growth was driven by Johnnie

Walker and Black & White.

•Greater China net sales grew 18%, primarily driven by strong growth in Chinese white spirits, reflecting the recovery of the

on-trade following the easing of Covid-19 restrictions.

•Australia net sales declined 6%, primarily driven by RTD cocktails.

•South East Asia net sales declined 5%, lapping strong double-digit growth in the prior period. Growth across the region,

mainly in Don Julio and The Singleton, was more than offset by double-digit declines in Vietnam, particularly impacting

Johnnie Walker.

•North Asia (Korea and Japan) net sales declined 6%, lapping strong growth in the prior period driven by the recovery of the

on-trade. The decline was attributable to scotch, primarily Johnnie Walker Black Label and White Horse.

•Travel Retail Asia and Middle East net sales grew 4%, primarily driven by Don Julio 1942.

(1)  Indian-Made Foreign Liquor (IMFL) whisky.

(3)For further details on exceptional operating items see pages 15 and F-11-F-13.

(3)  Organic equals reported volume movement.

                 

Latin America and Caribbean

•Reported net sales declined 18%, reflecting weaker organic performance partially offset by a favourable impact from

foreign exchange, mainly due to a strengthening of various major regional currencies.

•Organic net sales declined 23%, driven by softening consumer demand across LAC markets and lapping strong double-digit

growth. Despite depletions running ahead of shipments during the period, inventory levels in the channel remained elevated

at the end of the first half of fiscal 24.

•Price/mix declined 4%, reflecting higher trade investment to manage inventory towards appropriate levels for the current

macroeconomic environment, and consumer downtrading.

•Spirits net sales declined 25%, primarily led by a double-digit decline in scotch, particularly Buchanan's, Johnnie Walker

Black Label and Old Parr, as well as a strong double-digit decline in Don Julio.

•Organic operating margin declined by 994bps, driven by lower operating leverage, increased trade investment and cost

inflation.

•Marketing investment declined 19%, slightly behind the organic net sales decline, in response to the softening consumer

environment.

•Brazil net sales declined 27%, primarily driven by a strong double-digit decline in scotch across all brands, while winning

market share in the scotch, vodka and gin categories.

•Mexico net sales declined 28%, primarily driven by strong double-digit declines in tequila, led by Don Julio, and scotch.

•Central America and Caribbean (CCA) net sales declined 29%, primarily due to strong double-digit declines in scotch and

tequila, which more than offset strong triple-digit growth in Smirnoff Ice flavoured malt beverages.

•Andean (Colombia and Venezuela) net sales declined 22%, with positive price/mix more than offset by lower volume.

Scotch contracted 25%, primarily driven by strong double-digit declines in Buchanan’s and Johnnie Walker, and a double-

digit decline in Old Parr.

•South LAC (Argentina, Bolivia, Chile, Ecuador, Paraguay, Peru and Uruguay) net sales grew 4%, driven by strong price/

mix, partially offset by a decline in volume.

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