Document and Entity Information
Document and Entity Information | 6 Months Ended |
Dec. 31, 2021 | |
Document and Entity Information [Abstract] | |
Document Type | 6-K |
Entity Registrant Name | DIAGEO plc |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2021 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q2 |
Entity Central Index Key | 0000835403 |
Current Fiscal Year End Date | --06-30 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Income Statement - GBP (£) £ in Millions, shares in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Profit or loss [abstract] | ||
Sales | £ 11,753 | £ 10,436 |
Excise duties | (3,796) | (3,562) |
Net sales | 7,957 | 6,874 |
Cost of sales | (2,955) | (2,661) |
Gross profit | 5,002 | 4,213 |
Marketing | (1,351) | (1,085) |
Other operating items | (908) | (889) |
Operating profit/(loss) | 2,743 | 2,239 |
Non-operating items | (31) | 5 |
Finance income | 130 | 127 |
Finance charges | (310) | (327) |
Share of after tax results of associates and joint ventures | 190 | 154 |
Profit before taxation | 2,722 | 2,198 |
Taxation | (634) | (537) |
Profit for the period | 2,088 | 1,661 |
Attributable to: | ||
Equity shareholders of the parent company | 1,965 | 1,580 |
Non-controlling interests | 123 | 81 |
Profit for the period | £ 2,088 | £ 1,661 |
Weighted average number of shares | ||
Shares in issue excluding own shares (in shares) | 2,331 | 2,336 |
Dilutive potential ordinary shares (in shares) | 8 | 7 |
Weighted average number of shares (in shares) | 2,339 | 2,343 |
Basic earnings per share (in GBP per share) | £ 0.843 | £ 0.676 |
Diluted earnings per share (in GBP per share) | £ 0.840 | £ 0.674 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statement Of Comprehensive Income - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Net remeasurement of post employment plans | ||
Group | £ 585 | £ (128) |
Associates and joint ventures | 4 | (1) |
Tax on post employment plans | (136) | 14 |
Changes in the fair value of equity investments at fair value through other comprehensive income | 7 | 0 |
Other comprehensive income that will not be reclassified to profit or loss, net of tax, Total | 460 | (115) |
Exchange differences on translation of foreign operations | ||
Group | 74 | (887) |
Associates and joint ventures | (45) | (78) |
Non-controlling interests | 46 | (138) |
Net investment hedges | (46) | 513 |
Tax on exchange differences | (5) | (3) |
Effective portion of changes in fair value of cash flow hedges | ||
Hedges by associates and joint ventures | (10) | 13 |
Tax on effective portion of changes in fair value of cash flow hedges | 12 | (4) |
Hyperinflation adjustment | (3) | (16) |
Tax on hyperinflation adjustment | 1 | 5 |
Other comprehensive income that may be reclassified to profit or loss, net of tax, Total | (30) | (586) |
Other comprehensive income/(loss), net of tax, for the period | 430 | (701) |
Profit for the period | 2,088 | 1,661 |
Total comprehensive (loss)/income | 2,518 | 960 |
Attributable to: | ||
Equity shareholders of the parent company | 2,349 | 1,017 |
Non-controlling interests | 169 | (57) |
Total comprehensive (loss)/income | 2,518 | 960 |
Foreign currency debt risk | ||
Effective portion of changes in fair value of cash flow hedges | ||
Hedges by group | 66 | (280) |
Recycled to income statement | (53) | 150 |
Transaction exposure risk | ||
Effective portion of changes in fair value of cash flow hedges | ||
Hedges by group | (87) | 138 |
Recycled to income statement | 26 | (18) |
Commodity price risk | ||
Effective portion of changes in fair value of cash flow hedges | ||
Hedges by group | 12 | 14 |
Recycled to income statement | £ (18) | £ 5 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Balance Sheet - GBP (£) £ in Millions | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Non-current assets | |||
Intangible assets | £ 10,921 | £ 10,764 | £ 10,877 |
Property, plant and equipment | 5,091 | 4,849 | 4,757 |
Biological assets | 75 | 66 | 63 |
Investments in associates and joint ventures | 3,473 | 3,308 | 3,578 |
Other investments | 50 | 40 | 36 |
Other receivables | 28 | 36 | 41 |
Other financial assets | 319 | 327 | 410 |
Deferred tax assets | 83 | 100 | 114 |
Post employment benefit assets | 1,544 | 1,018 | 1,083 |
Non-current assets, Total | 21,584 | 20,508 | 20,959 |
Current assets | |||
Inventories | 6,235 | 6,045 | 5,750 |
Trade and other receivables | 3,328 | 2,385 | 3,075 |
Assets held for sale | 16 | 0 | 0 |
Corporate tax receivables | 151 | 145 | 173 |
Other financial assets | 66 | 121 | 84 |
Cash and cash equivalents | 1,780 | 2,749 | 2,763 |
Current assets, Total | 11,576 | 11,445 | 11,845 |
Total assets | 33,160 | 31,953 | 32,804 |
Current liabilities | |||
Borrowings and bank overdrafts | (1,184) | (1,862) | (1,214) |
Other financial liabilities | (388) | (257) | (332) |
Share buyback liability | (184) | (91) | 0 |
Trade and other payables | (5,327) | (4,648) | (4,624) |
Liabilities held for sale | (30) | 0 | 0 |
Corporate tax payables | (380) | (146) | (364) |
Provisions | (111) | (138) | (176) |
Current liabilities | (7,604) | (7,142) | (6,710) |
Non-current liabilities | |||
Borrowings | (12,693) | (12,865) | (14,063) |
Other financial liabilities | (378) | (384) | (376) |
Other payables | (278) | (338) | (267) |
Provisions | (278) | (274) | (295) |
Deferred tax liabilities | (2,112) | (1,945) | (1,900) |
Post employment benefit liabilities | (486) | (574) | (815) |
Non-current liabilities | (16,225) | (16,380) | (17,716) |
Total liabilities | (23,829) | (23,522) | (24,426) |
Net assets | 9,331 | 8,431 | 8,378 |
Equity | |||
Share capital | 737 | 741 | 742 |
Share premium | 1,351 | 1,351 | 1,351 |
Other reserves | 1,551 | 1,621 | 1,835 |
Retained earnings | 4,019 | 3,184 | 2,890 |
Equity attributable to equity shareholders of the parent company | 7,658 | 6,897 | 6,818 |
Non-controlling interests | 1,673 | 1,534 | 1,560 |
Total equity | £ 9,331 | £ 8,431 | £ 8,378 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statement of Changes in Equity - GBP (£) £ in Millions | Total | Equity attributable to parent company shareholders | Share capital | Share premium | Other reserves | Total retained earnings | Own shares | Other retained earnings | Non-controlling interests |
Beginning balance at Jun. 30, 2020 | £ 8,440 | £ 6,772 | £ 742 | £ 1,351 | £ 2,272 | £ 2,407 | £ (1,936) | £ 4,343 | £ 1,668 |
Profit for the period | 1,661 | 1,580 | 1,580 | 1,580 | 81 | ||||
Other comprehensive (loss)/income | (701) | (563) | (437) | (126) | (126) | (138) | |||
Total comprehensive (loss)/income | 960 | 1,017 | (437) | 1,454 | 1,454 | (57) | |||
Employee share schemes | 21 | 21 | 21 | 41 | (20) | ||||
Share-based incentive plans | 17 | 17 | 17 | 17 | |||||
Share-based incentive plans in respect of associates | (1) | (1) | (1) | (1) | |||||
Purchase of non-controlling interests | (42) | (15) | (15) | (15) | (27) | ||||
Change in fair value of put option | (1) | (1) | (1) | (1) | |||||
Dividends paid | (1,016) | (992) | (992) | (992) | (24) | ||||
Ending balance at Dec. 31, 2020 | 8,378 | 6,818 | 742 | 1,351 | 1,835 | 2,890 | (1,895) | 4,785 | 1,560 |
Beginning balance at Jun. 30, 2021 | 8,431 | 6,897 | 741 | 1,351 | 1,621 | 3,184 | (1,877) | 5,061 | 1,534 |
Profit for the period | 2,088 | 1,965 | 1,965 | 1,965 | 123 | ||||
Other comprehensive (loss)/income | 430 | 384 | (74) | 458 | 458 | 46 | |||
Total comprehensive (loss)/income | 2,518 | 2,349 | (74) | 2,423 | 2,423 | 169 | |||
Employee share schemes | 66 | 66 | 66 | 30 | 36 | ||||
Share-based incentive plans | 30 | 30 | 30 | 30 | |||||
Share-based incentive plans in respect of associates | 2 | 2 | 2 | 2 | |||||
Change in fair value of put option | (11) | (11) | (11) | (11) | |||||
Dividends paid | (1,066) | (1,040) | (1,040) | (1,040) | (26) | ||||
Purchase of treasury shares in respect of subsidiaries | (13) | (8) | (8) | (8) | (5) | ||||
Associates' transactions with non-controlling interests | 1 | 1 | 1 | 1 | |||||
Unclaimed dividends | 4 | 3 | 3 | 3 | 1 | ||||
Share buyback programme | (631) | (631) | (4) | 4 | (631) | (631) | |||
Ending balance at Dec. 31, 2021 | £ 9,331 | £ 7,658 | £ 737 | £ 1,351 | £ 1,551 | £ 4,019 | £ (1,847) | £ 5,866 | £ 1,673 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statement of Cash Flows - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||
Profit for the period | £ 2,088 | £ 1,661 |
Taxation | 634 | 537 |
Share of after tax results of associates and joint ventures | (190) | (154) |
Net finance charges | 180 | 200 |
Non-operating items | 31 | (5) |
Operating profit | 2,743 | 2,239 |
Increase in inventories | (187) | (112) |
Increase in trade and other receivables | (976) | (1,078) |
Increase in trade and other payables and provisions | 653 | 1,161 |
Net increase in working capital | (510) | (29) |
Depreciation, amortisation and impairment | 224 | 219 |
Dividends received | 1 | 82 |
Post employment payments less amounts included in operating profit | (23) | (14) |
Other items | 34 | (1) |
Adjustments to reconcile profit (loss), Total | 236 | 286 |
Cash generated from operations | 2,469 | 2,496 |
Interest received | 41 | 84 |
Interest paid | (185) | (266) |
Taxation paid | (378) | (316) |
Net total of interest received, interest paid and taxation paid | (522) | (498) |
Net cash inflow from operating activities | 1,947 | 1,998 |
Cash flows from investing activities | ||
Disposal of property, plant and equipment and computer software | 7 | 8 |
Purchase of property, plant and equipment and computer software | (382) | (250) |
Movements in loans and other investments | 3 | (3) |
Sale of businesses and brands | 2 | 5 |
Acquisition of businesses | (134) | (364) |
Net cash outflow from investing activities | (504) | (604) |
Cash flows from financing activities | ||
Share buyback programme | (538) | 0 |
Net sale of own shares for share schemes | 42 | 9 |
Purchase of treasury shares in respect of subsidiaries | (13) | 0 |
Dividends paid to non-controlling interests | (51) | (53) |
Proceeds from bonds | 0 | 1,031 |
Repayment of bonds | (769) | (1,247) |
Purchase of shares of non-controlling interests | 0 | (34) |
Cash inflow from other borrowings | 136 | 0 |
Cash outflow from other borrowings | (98) | (345) |
Equity dividends paid | (1,040) | (992) |
Net cash outflow from financing activities | (2,331) | (1,631) |
Net decrease in net cash and cash equivalents | (888) | (237) |
Exchange differences | 14 | (236) |
Net cash and cash equivalents at beginning of the period | 2,637 | 3,153 |
Net cash and cash equivalents at end of the period | 1,763 | 2,680 |
Net cash and cash equivalents consist of: | ||
Cash and cash equivalents | 1,780 | 2,763 |
Bank overdrafts | (17) | (83) |
Net cash and cash equivalents | £ 1,763 | £ 2,680 |
Basis of preparation
Basis of preparation | 6 Months Ended |
Dec. 31, 2021 | |
Basis Of Preparation [Abstract] | |
Basis of preparation | Basis of preparation On 31 December 2020, International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) at that date were brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Diageo plc transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 July 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework. These unaudited condensed consolidated financial statements have been prepared in accordance with UK adopted IAS 34 ‘Interim Financial Reporting’, IAS 34 ‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (‘IASB’), IAS 34 ‘Interim Financial Reporting’ as adopted by the EU 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 2021, which were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU, and International Financial Reporting Standards as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee. At 31 December 2021, there were no unendorsed standards effective for the six months ended 31 December 2021 affecting these financial statements, and there was no difference between IFRSs adopted by the UK, IFRSs as adopted by the EU and IFRSs issued by the IASB in terms of their application to the group. In preparing these condensed consolidated financial statements, the significant judgements made by management when applying the group’s accounting policies and the significant areas where estimates were required were the same as those that applied to the consolidated financial statements for the year ended 30 June 2021, with the exception of changes in estimates disclosed in note 12 - Contingent liabilities and legal proceedings. The financial statements for Diageo plc for the year ended 30 June 2022 will be prepared in accordance with IFRS as adopted by the UK, IFRSs as adopted by the EU and IFRSs, as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee. Management has prepared cash flow forecasts which have also been sensitised to reflect severe but plausible downside scenarios taking into consideration the group's principal risks. In the base case scenario, net sales momentum is expected to continue, however, near-term volatility is also expected to remain. The potential financial impact of a slower Covid-19 pandemic recovery has been modelled in the plausible downside scenarios. Even with these negative sensitivities for each region taken into account, the group’s cash position is still considered to remain strong, as the group's liquidity has been protected by launching and pricing €700 million of fixed rate Euro and £400 million of fixed rate sterling denominated bonds under Diageo’s European Debt Issuance Programme in the year ended 30 June 2021. Mitigating actions, should they be required, are all within management’s control and could include reductions in discretionary spending as acquisitions and capital expenditure, as well as a temporary suspension of the share buyback programme and dividend payments in the next 12 months or drawdowns on committed facilities. Having considered the outcome of these assessments, the Directors are comfortable that the company is a going concern for at least 12 months from the date of signing the company's condensed consolidated financial statements. Weighted average exchange rates used in the translation of income statements were US dollar – £1 = $1.36 (2020 – £1 = $1.31) and euro – £1 = €1.17 (2020 – £1 = €1.11). Exchange rates used to translate assets and liabilities at the balance sheet date were US dollar – £1 = $1.35 (31 December 2020 – £1 = $1.36) and euro – £1 = €1.19 (31 December 2020 – £1 = €1.11). The group uses foreign exchange transaction hedges to mitigate the effect of exchange rate movements. New accounting standards and interpretations The following amendment to the accounting standards, issued by the IASB and endorsed by the UK and EU, have been adopted by the group from 1 July 2021 with no impact on the group’s consolidated results, financial position or disclosures: – Amendments to IFRS 16 - Covid-19 - related rent concessions beyond 30 June 2021 The following amendment issued by the IASB and endorsed by the UK and EU, has been adopted by the group: – Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform (phase 2). The amendment to IFRS 9 provides relief from applying specific hedge accounting and financial instrument derecognition requirements directly affected by interbank offered rate (IBOR) reform. By applying the practical expedient, Diageo will not be required to discontinue its hedging relationships as a result of changes in reference rates due to IBOR reform. The amendment to IFRS 7 will require additional disclosure explaining the nature and extent of risk related to the reform and the progress of the transition. The following standard issued by the IASB has been endorsed by the EU, but has not yet been endorsed by the UK, and has not been adopted by the group: – IFRS 17 - Insurance contracts (effective in the year ending 30 June 2024) is ultimately intended to replace IFRS 4. Based on a preliminary assessment the group believes that the adoption of IFRS 17 will not have a significant impact on its consolidated results or financial position. |
Segmental information
Segmental information | 6 Months Ended |
Dec. 31, 2021 | |
Disclosure of operating segments [abstract] | |
Segmental information | Segmental information The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating decision maker). The Executive Committee considers the business principally from a geographical perspective based on the location of third-party sales and the business analysis is presented by geographical segment. In addition to these geographical selling segments, a further segment reviewed by the Executive Committee is the Supply Chain and Procurement (SC&P) segment, which manufactures products for other group companies and includes production sites in the United Kingdom, Ireland, Italy, Guatemala and Mexico, as well as comprises the global procurement function. The group's operations also include the Corporate function. Corporate revenues and costs are in respect of central costs, including finance, marketing, corporate relations, human resources and legal, as well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the SC&P. They also include rents receivable and payable in respect of properties not used by the group in the manufacture, sale or distribution of premium drinks. Diageo uses shared services operations to deliver transaction processing activities for markets and operational entities. These centres are located in India, Hungary, Colombia and the Philippines. These captive business service centres also perform certain central finance activities, including elements of financial planning and reporting, treasury and HR services. The costs of shared services operations are recharged to the regions. For planning and management reporting purposes, Diageo uses budgeted exchange rates that are set at the prior year's weighted average exchange rate. In order to ensure a consistent basis on which performance is measured through the year, prior period results are also restated to the budgeted exchange rate. Segmental information for net sales and operating profit before exceptional items are reported on a consistent basis with management reporting. The adjustments required to retranslate the segmental information to actual exchange rates and to reconcile it to the group’s reported results are shown in the tables below. The comparative segmental information, prior to retranslation, has not been restated at the current year’s budgeted exchange rates but is presented at the budgeted rates for the respective year. In addition, for management reporting purposes, Diageo presents the result of acquisitions and disposals completed in the current and prior year separately from the results of the geographical segments. The impact of acquisitions and disposals on net sales and operating profit is disclosed under the appropriate geographical segments in the tables below at budgeted exchange rates. (a) Segmental information for the consolidated income statement North America Europe Asia Africa Latin America and Caribbean SC&P Eliminate Total Corporate Total Six months ended 31 December 2021 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 3,257 3,178 2,999 1,244 1,052 972 (972) 11,730 23 11,753 Net sales At budgeted exchange rates (i) 2,959 1,782 1,544 888 822 1,027 (979) 8,043 23 8,066 Acquisitions and disposals 18 3 — — — — — 21 — 21 SC&P allocation 6 29 5 2 6 (48) — — — — Retranslation to actual exchange rates (19) (62) (18) (22) (9) (7) 7 (130) — (130) Net sales 2,964 1,752 1,531 868 819 972 (972) 7,934 23 7,957 Operating profit/(loss) At budgeted exchange rates (i) 1,288 647 454 192 333 (8) — 2,906 (132) 2,774 Acquisitions and disposals (16) (1) — — — — — (17) — (17) SC&P allocation 10 (23) (3) (1) 9 8 — — — — Fair value remeasurement of contingent considerations, equity option and earn out arrangements 5 21 — — (3) — — 23 — 23 Fair value remeasurement of biological assets — — — — 3 — — 3 — 3 Retranslation to actual exchange rates 8 (31) — (15) (9) — — (47) 7 (40) Operating profit/(loss) 1,295 613 451 176 333 — — 2,868 (125) 2,743 Non-operating items (31) Net finance charges (180) Share of after tax results of associates and joint ventures 190 Profit before taxation 2,722 North America Europe Asia Africa Latin America and Caribbean SC&P Eliminate Total Corporate Total Six months ended 31 December 2020 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 3,022 2,727 2,837 1,064 775 785 (785) 10,425 11 10,436 Net sales At budgeted exchange rates (i) 2,790 1,442 1,418 790 641 824 (786) 7,119 11 7,130 Acquisitions and disposals 7 — — 5 — — — 12 — 12 SC&P allocation 5 21 4 2 6 (38) — — — — Retranslation to actual exchange rates (101) (20) (27) (52) (68) (1) 1 (268) — (268) Net sales 2,701 1,443 1,395 745 579 785 (785) 6,863 11 6,874 Operating profit/(loss) At budgeted exchange rates (i) 1,325 461 391 124 246 (23) — 2,524 (98) 2,426 Acquisitions and disposals (9) — — — — — — (9) — (9) SC&P allocation (13) — — — (10) 23 — — — — Fair value remeasurement of contingent considerations (4) (7) — — — — — (11) — (11) Fair value remeasurement of biological assets — — — — 3 — — 3 — 3 Retranslation to actual exchange rates (73) (8) (5) (29) (42) — — (157) 4 (153) Operating profit/(loss) before exceptional items 1,226 446 386 95 197 — — 2,350 (94) 2,256 Exceptional items — (17) — — — — — (17) — (17) Operating profit/(loss) 1,226 429 386 95 197 — — 2,333 (94) 2,239 Non-operating items 5 Net finance charges (200) Share of after tax results of associates and joint ventures 154 Profit before taxation 2,198 (i) These items represent the IFRS 8 performance measures for the geographical and SC&P segments. (1) The net sales figures for SC&P reported to the Executive Committee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the SC&P segment to the other operating segments, inter-segment sales are not material. (2) The group’s net finance charges are managed centrally and are not attributable to individual operating segments. (3) Approximately 44% of calendar year net sales occurred in the last four months of 2021. (b) Category and geographical analysis Category analysis Geographical analysis Spirits Beer Ready to drink Other Total Great United India Rest of Total Six months ended 31 December 2021 Sales (i) 9,680 1,520 418 135 11,753 1,204 3,072 1,704 5,773 11,753 Six months ended 31 December 2020 Sales (i) 8,648 1,310 363 115 10,436 1,044 2,817 1,650 4,925 10,436 |
Exceptional items
Exceptional items | 6 Months Ended |
Dec. 31, 2021 | |
Exceptional Items [Abstract] | |
Exceptional items | Exceptional items Exceptional items are those that in management’s judgement need to be disclosed separately. See page 40 for the definition of exceptional items and the criteria used to determine whether an exceptional item is accounted for as operating or non-operating. Six months ended 31 December 2021 Six months ended 31 December 2020 £ million £ million Exceptional operating items Ongoing litigation in Turkey — (15) Guaranteed minimum pension equalisation — (5) Reversal of provision for obsolete inventories — 3 — (17) Non-operating items Sale of businesses and brands Loss on the prospective sale of Meta (33) — United National Breweries 2 5 (31) 5 Exceptional items before taxation (31) (12) Items included in taxation Exceptional taxation — (42) — (42) Total exceptional items (31) (54) Attributable to: Equity shareholders of the parent company (31) (54) Non-controlling interests — — Total exceptional items (31) (54) Exceptional operating items are charged to other operating expenses. |
Finance income and charges
Finance income and charges | 6 Months Ended |
Dec. 31, 2021 | |
Analysis of income and expense [abstract] | |
Finance income and charges | Finance income and charges Six months ended 31 December 2021 Six months ended 31 December 2020 £ million £ million Interest income 61 58 Fair value gain on financial instruments 58 56 Total interest income 119 114 Interest charge on bank loans, bonds and overdrafts (181) (203) Interest charge on leases (5) (7) Fair value loss on financial instruments (59) (55) Interest charge on other borrowings (36) (35) Total interest charges (281) (300) Net interest charges (162) (186) Net finance income in respect of post employment plans in surplus 10 9 Hyperinflation adjustment in respect of Venezuela (a) 1 2 Change in financial liability (Level 3) — 2 Total other finance income 11 13 Net finance charge in respect of post employment plans in deficit (5) (7) Foreign exchange revaluation of monetary items in respect of Lebanon (a) (2) (8) Unwinding of discounts (6) (8) Interest charge in respect of direct and indirect tax (8) (2) Change in financial liability (Level 3) (7) — Other finance charges (1) (2) Total other finance charges (29) (27) Net other finance charges (18) (14) (a) Hyperinflation adjustment Venezuela is a hyperinflationary economy where the government maintains a regime of strict currency controls with multiple foreign currency rate systems. Access to US dollars on these exchange systems is very limited. The foreign currency denominated transactions and balances of the group’s Venezuelan operations are translated into the local functional currency (Venezuelan bolivar) at the rate they are expected to be settled, applying the most appropriate official exchange rate (DICOM). For consolidation purposes, the group converts its Venezuelan operations using management’s estimate of the exchange rate considering forecast inflation and the most appropriate official exchange rate. The exchange rate used to translate the results of the group’s Venezuelan operations was VES/£ 593 for the six months ended 31 December 2021 (2020 - VES/£ 64). Movement in the price index for the six months ended 31 December 2021 was 158% (2020 - 479%). The inflation rate used by the group is provided by an independent valuer, because no reliable, official published rate is available that is representative of the situation in Venezuela. The following table presents the contribution of the group’s Venezuelan operations to the consolidated income statement, cash flow statement and net assets for the six months ended 31 December 2021 and 31 December 2020 and with the amounts that would have resulted if the official DICOM exchange rate had been applied: Six months ended 31 December 2021 Six months ended 31 December 2020 At estimated exchange rate At DICOM exchange rate At estimated exchange rate (i) At DICOM exchange rate (i) 593 VES/£ 6 VES/£ 64 VES/£ 2 VES/£ £ million £ million £ million £ million Net sales — 8 — 4 Operating profit — 2 — 11 Other finance income - hyperinflation adjustment 1 120 2 100 Net cash (outflow)/inflow from operating activities — (3) — 9 Net assets 37 3,501 39 1,656 (i) Prior year rates have been restated to reflect the Central Bank of Venezuela's decision to cut six zeros from the bolivar currency from 1 October 2021. |
Taxation
Taxation | 6 Months Ended |
Dec. 31, 2021 | |
Income Taxes [Abstract] | |
Taxation | Taxation For the six months ended 31 December 2021, the £634 million tax charge (2020 – £537 million ) comprises a UK tax charge of £116 million (2020 – £89 million) and a foreign tax charge of £518 million (2020 – £448 million). For the six months ended 31 December 2021, income tax expense has been recognised based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period in line with the relevant accounting standard. The group has a number of ongoing tax audits worldwide for which provisions are recognised in line with the relevant accounting standard taking into account best estimates and management’s judgements concerning the ultimate outcome of the tax audit. For the six months ended 31 December 2021, the ongoing audits that are provided for individually are not expected to result in a material tax liability. The current tax asset of £151 million (30 June 2021 – £145 million) and tax liability of £380 million (30 June 2021 – £146 million) includes £122 million (30 June 2021 – £129 million) of provisions for tax uncertainties. |
Inventories
Inventories | 6 Months Ended |
Dec. 31, 2021 | |
Inventories [Abstract] | |
Inventories | Inventories 31 December 2021 30 June 2021 31 December 2020 £ million £ million £ million Raw materials and consumables 401 348 332 Work in progress 68 60 53 Maturing inventories 4,801 4,668 4,562 Finished goods and goods for resale 965 969 803 6,235 6,045 5,750 |
Net borrowings
Net borrowings | 6 Months Ended |
Dec. 31, 2021 | |
Borrowings [abstract] | |
Net borrowings | Net borrowings 31 December 2021 30 June 2021 31 December 2020 £ million £ million £ million Borrowings due within one year and bank overdrafts (1,184) (1,862) (1,214) Borrowings due after one year (12,693) (12,865) (14,063) Fair value of foreign currency forwards and swaps 122 169 117 Fair value of interest rate hedging instruments 4 63 146 Lease liabilities (360) (363) (410) (14,111) (14,858) (15,424) Cash and cash equivalents 1,780 2,749 2,763 (12,331) (12,109) (12,661) |
Reconciliation of movement in n
Reconciliation of movement in net borrowings | 6 Months Ended |
Dec. 31, 2021 | |
Borrowings [abstract] | |
Reconciliation of movement in net borrowings | Reconciliation of movement in net borrowings Six months ended 31 December 2021 Six months ended 31 December 2020 £ million £ million Net decrease in cash and cash equivalents before exchange (888) (237) Net decrease in bonds and other borrowings (i) 729 561 Net (increase)/decrease in net borrowings from cash flows (159) 324 Exchange differences on net borrowings (31) 420 Other non-cash items (ii) (32) (159) Net borrowings at beginning of the period (12,109) (13,246) Net borrowings at end of the period (12,331) (12,661) (i) In the six months ended 31 December 2021, net decrease in bonds and other borrowings excludes £2 million cash outflow in respect of derivatives designated in forward point hedges (2020 - £nil). (ii) In the six months ended 31 December 2021, other non-cash items are principally in respect of additional leases entered into during the period. In the six months ended 31 December 2020, other non-cash items are principally in respect of fair value changes of cross currency interest rate swaps. In the six months ended 31 December 2021, the group repaid bonds of €900 million (£769 million). I n the six months ended 31 December 2020 , the group issued bonds of €700 million (£636 million - net of discount and fee) and £395 million (including £5 million discount and fee) and repaid bonds of $696 million (£551 million) and €775 million (£696 million). |
Financial instruments
Financial instruments | 6 Months Ended |
Dec. 31, 2021 | |
Disclosure of detailed information about financial instruments [abstract] | |
Financial instruments | Financial instruments Fair value measurements of financial instruments are presented through the use of a three-level fair value hierarchy that prioritises the valuation techniques used in fair value calculations. The group maintains policies and procedures to value instruments using the most relevant data available. If multiple inputs that fall into different levels of the hierarchy are used in the valuation of an instrument, the instrument is categorised on the basis of the most subjective input. Foreign currency forwards and swaps, cross currency swaps and interest rate swaps are valued using discounted cash flow techniques. These techniques incorporate inputs at levels 1 and 2, such as foreign exchange rates and interest rates. These market inputs are used in the discounted cash flow calculation incorporating the instrument’s term, notional amount and discount rate, and taking credit risk into account. As significant inputs to the valuation are observable in active markets, these instruments are categorised as level 2 in the hierarchy. Other financial liabilities include a put option, which does not have an expiry date, held by Industrias Licoreras de Guatemala (ILG) to sell the remaining 50% equity stake in Rum Creation & Products Inc., the owner of the Zacapa rum brand, to Diageo. The liability is fair valued and as at 31 December 2021 an amount of £169 million (30 June 2021 - £149 million) is recognised as a liability with changes in the fair value of the put option included in retained earnings. As the valuation of this option uses assumptions not observable in the market, it is categorised as level 3 in the hierarchy. As at 31 December 2021, because it is unknown when or if ILG will exercise the option, the liability is measured as if the exercise date is on the last day of the current financial year considering forecast future performance. The option is sensitive to reasonably possible changes in assumptions. If the option were to be exercised as at 30 June 2023, the fair value of the liability would increase by approximately £41 million. Included in other financial liabilities, the contingent consideration on acquisition of businesses represents the present value of payments up to £361 million linked to certain performance targets which are expected to be paid over the next 9 years. There were no significant changes in the measurement and valuation techniques, or significant transfers between the levels of the financial assets and liabilities in the six months ended 31 December 2021. The group’s financial assets and liabilities measured at fair value are categorised as follows: 31 December 2021 30 June 2021 31 December 2020 £ million £ million £ million Derivative assets 381 443 489 Derivative liabilities (237) (129) (150) Valuation techniques based on observable market input (Level 2) 144 314 339 Financial assets - other 167 138 122 Financial liabilities - other (483) (578) (481) Valuation techniques based on unobservable market input (Level 3) (316) (440) (359) In the six months ended 31 December 2021 and 31 December 2020, the increase in financial assets - other of £29 million (2020 - £6 million) is principally due to acquisitions. The movements in level 3 instruments, measured on a recurring basis, are as follows: Zacapa Contingent consideration recognised on acquisition of businesses (i) Zacapa Contingent consideration recognised on acquisition of businesses Six months ended 31 December 2021 Six months ended 31 December 2021 Six months ended 31 December 2020 Six months ended 31 December 2020 £ million £ million £ million £ million At the beginning of the period (149) (429) (167) (249) Net (losses)/gains included in the income statement (7) 18 2 (17) Net (losses)/gains included in exchange in other comprehensive income (4) (9) 15 27 Net (losses)/gains included in retained earnings (12) — 1 — Acquisitions — — — (181) Settlement of liabilities 3 106 1 87 At the end of the period (169) (314) (148) (333) (i) Included in the balance at 31 December 2021 is £nil in respect of the acquisition of Casamigos as it was fully repaid on 17 September 2021 (2020 - £80 million), £163 million in respect of the acquisition of Aviation Gin and Davos Brands (2020 - £172 million), and £51 million in respect of the acquisition of Far West Spirits LLC, owner of the Lone River Ranch Water brand (2020 - £nil). |
Dividends and other reserves
Dividends and other reserves | 6 Months Ended |
Dec. 31, 2021 | |
Share Capital, Reserves And Other Equity Interest [Abstract] | |
Dividends and other reserves | Dividends and other reserves Six months ended 31 December 2021 Six months ended 31 December 2020 Amounts recognised as distributions to equity shareholders £ million £ million Final dividend for the year ended 30 June 2021 of 44.59 pence per share (2020 - 42.47 pence) 1,040 992 An interim dividend of 29.36 pence per share (2020 - 27.96 pence) was approved by the Board of Directors on 26 January 2022 . As the approval was after the balance sheet date, it has not been included as a liability. |
Acquisition of businesses
Acquisition of businesses | 6 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Acquisition of businesses | Acquisition of businesses Cash consideration paid in respect of the acquisition of businesses in the six months ended 31 December 2021 were as follows: Consideration £ million Cash consideration paid for Casamigos (83) Cash consideration paid in respect of other prior year acquisitions (27) Cash consideration paid for investments in associates (3) Capital injection in associates (21) Net cash outflow on acquisition of businesses (134) The final earn-out payment of Casamigos amounting to $113 million (£83 million) was made on 17 September 2021. There is no remaining balance on contingent consideration liability. |
Contingent liabilities and lega
Contingent liabilities and legal proceedings | 6 Months Ended |
Dec. 31, 2021 | |
Disclosure of contingent liabilities [abstract] | |
Contingent liabilities and legal proceedings | Contingent liabilities and legal proceedings (a) Guarantees and related matters As of 31 December 2021, the group has no material unprovided guarantees or indemnities in respect of liabilities of third parties. (b) Acquisition of USL shares from UBHL, winding-up petitions against UBHL and other 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 21,767,749 shares (14.98%) in United Spirits Limited (USL) for a total consideration of INR 31.3 billion (£349 million), including 10,141,437 shares (6.98%) from UBHL. The SPA was signed on 9 November 2012 and was part of the transaction announced by Diageo in relation to USL on that day (the Original USL Transaction). Following a series of further transactions, as of 31 December 2021, Diageo has a 55.94% 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 sections 536 and 537 of 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 five winding-up petitions that were pending against UBHL on 9 November 2012, being the date of the SPA. Additional winding-up petitions have been brought against UBHL since 9 November 2012, and the Leave Order did not extend to them. 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 on 4 July 2013, 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 10,141,437 USL shares from UBHL at that time. Following closing of the UBHL Share Sale, appeals were filed by various petitioners in respect of the Leave Order. On 20 December 2013, the division bench of the High Court set aside the Leave Order (the December 2013 Order). Following the December 2013 Order, Diageo filed special leave petitions (SLPs) in the Supreme Court of India against the December 2013 Order. On 10 February 2014, the Supreme Court of India issued an order giving notice in respect of the SLPs and ordering that the status quo be maintained with regard to the UBHL Share Sale pending a hearing on the matter in the Supreme Court. Following a number of adjournments, the next date for a substantive hearing of the SLPs (in respect of which leave has since been granted and which have been converted to civil appeals) is yet to be fixed. In separate proceedings, the High Court passed a winding-up order against UBHL on 7 February 2017. On 4 March 2017, UBHL appealed against this order before a division bench of the High Court. On 6 March 2020, the division bench of the High Court confirmed the winding-up order dated 7 February 2017, and dismissed the appeal filed by UBHL. On 30 June 2020, UBHL filed a special leave petition in the Supreme Court of India against the order of the division bench of the High Court. On 26 October 2020, the Supreme Court of India dismissed the petition filed by UBHL. 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 acquired from UBHL (now represented by 50,707,185 USL shares following a share split). 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 be able to consolidate USL as a subsidiary 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 timeframe within which they would be concluded. Diageo also has the benefit of certain contractual undertakings and commitments from the relevant sellers in relation to potential challenges to its unencumbered title to the USL shares acquired on 4 July 2013, including relating to the winding-up petitions described above and/or certain losses and costs that may be incurred in the event of third-party actions relating to the acquisition of the USL shares. (c) Continuing matters relating to the resignation of Dr Vijay Mallya from USL and USL internal inquiries On 25 February 2016, Diageo and USL each announced that they had entered into arrangements with Dr Mallya under which he had agreed to resign from his position as a director and as chairman of USL and from his positions in USL’s subsidiaries. As specified by Diageo in its announcement at that time, these arrangements ended its prior agreement with Dr Mallya regarding his position at USL, therefore bringing to an end the uncertainty relating to the governance of USL, and put in place a five-year global non-compete (excluding the United Kingdom), non-interference, non-solicitation and standstill arrangement with Dr Mallya. As part of those arrangements, USL, Diageo and Dr Mallya agreed a mutual release in relation to matters arising out of an inquiry into certain matters referred to in USL’s financial statements and the qualified auditor’s report for the year ended 31 March 2014 (the Initial Inquiry) which had revealed, among other things, certain diversions of USL funds. Dr Mallya also agreed not to pursue any claims against Diageo, USL and their affiliates (including under the prior agreement with Diageo). In evaluating entering into such arrangements, Diageo considered the impact of the arrangements on USL and all of USL’s shareholders, and came to the view that the arrangements were in the best interests of USL and its shareholders. Diageo’s agreement with Dr Mallya (the February 2016 Agreement) provided for a payment of $75 million (£53 million) to Dr Mallya over a five-year period in consideration for the five-year global non-compete, non-interference, non-solicitation and standstill commitments referred to above, his resignation from USL and the termination of his USL-related appointment and governance rights, the relinquishing of rights and benefits attached to his position at USL, and his agreement not to pursue claims against Diageo and USL. The February 2016 Agreement also provided for the release of Dr Mallya’s personal obligations to indemnify (i) Diageo Holdings Netherlands B.V. (DHN) in respect of its earlier liability ($141 million (£96 million)) under a backstop guarantee of certain borrowings of Watson Limited (Watson) (a company affiliated with Dr Mallya), and (ii) Diageo Finance plc in respect of its earlier liability (£30 million) under a guarantee of certain borrowings of United Breweries Overseas Limited, a subsidiary of UBHL. $40 million (£28 million) of the $75 million (£53 million) amount was paid on signing of the February 2016 Agreement with the balance being payable in equal instalments of $7 million (£5 million) a year over five years, subject to and conditional on Dr Mallya’s compliance with certain terms of the agreement. While the five instalment payments of $7 million (£5 million) would have become due on 25 February 2017, 25 February 2018, 25 February 2019, 25 February 2020 and 25 February 2021, respectively, owing to various reasons (including breaches committed by Dr Mallya and certain persons connected with him of several provisions of the February 2016 Agreement and agreements of the same date between Dr Mallya and USL), Diageo believes that it was not liable to pay such amounts and did not do so. By notice to Dr Mallya and certain persons connected with him on 24 February 2017, 3 November 2017, 23 February 2018, 22 August 2018, 22 February 2019, 24 February 2020 and 22 February 2021, Diageo and other group companies have demanded from Dr Mallya the repayment of $40 million (£28 million) which was paid by Diageo on 25 February 2016, and also sought compensation from him for various losses incurred by the relevant members of the Diageo group on account of the breaches committed by him and certain persons connected with him. 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 certain of the matters specified in those notices. 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 (£105 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. These additional claims are described in paragraph (d) below. Dr Mallya, Sidhartha Mallya and the relevant affiliated companies filed a defence to such claims and the additional claims on 12 March 2018, and Dr Mallya also filed a counterclaim for payment of the two $7 million (£5 million) instalment payments that had then been withheld by Diageo as described above. Diageo and the other relevant members of its group filed a reply to that defence and a defence to the counterclaim on 5 September 2018. Diageo continues to prosecute its claims and to defend the counterclaim. As part of this, on 18 December 2018, Diageo and the other relevant members of its group filed an application for strike out and/or summary judgment 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. That application was made by DHN on the basis that the defence filed by Dr Mallya and his co-defendants in relation to those matters had no real prospect of success. As described in paragraph (d) below, this application was successful in relation to the predominant part of Watson and CASL’s liability to repay DHN and, since that application, Watson and CASL’s defence in relation to the remaining part of this liability has also been struck out. Accordingly, Diageo and DHN have 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. The remaining elements of the claims originally commenced on 16 November 2017 by Diageo and the relevant members of its group are proceeding to a trial, which is currently scheduled to take place from 21 November 2022 through 5 December 2022. 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 which are creditors of Dr Mallya. The UK Official Receiver was initially appointed as Dr Mallya’s Trustee in Bankruptcy but has now been replaced by an insolvency practitioner, Teneo Restructuring Limited, as Trustee. Diageo and the relevant members of its group have informed the Official Receiver of their position as creditors in the bankruptcy and they will engage with Teneo Restructuring Limited regarding their claims and the status of the current proceedings. Dr Mallya has applied for permission to appeal the bankruptcy order and a prior order of the English High Court related to the bankruptcy. The consortium of Indian banks has also applied for permission to appeal a prior order of the English High Court related to the bankruptcy. The bankruptcy proceedings are ongoing. At this stage, it is not possible to assess the extent to which the various proceedings related to these bankruptcy matters will affect the remaining elements of the claims by Diageo and the relevant members of its group. As previously announced by USL, the Initial Inquiry identified certain additional parties and matters indicating the possible existence of other improper transactions. These transactions could not be fully analysed during the Initial Inquiry and, accordingly, USL, as previously announced, mandated that its Managing Director and Chief Executive Officer conduct a further inquiry into the transactions involving the additional parties and the additional matters to determine whether they also suffered from improprieties (the Additional Inquiry). USL announced the results of the Additional Inquiry in a notice to the Indian Stock Exchange dated 9 July 2016. The mutual release in relation to the Initial Inquiry agreed by Diageo and USL with Dr Mallya announced on 25 February 2016 does not extend to matters arising out of the Additional Inquiry. As stated in USL’s previous announcement, the Additional Inquiry revealed further instances of actual or potential fund diversions from USL and its Indian and overseas subsidiaries to, in most cases, Indian and overseas entities in which Dr Mallya appears to have a material direct or indirect interest, as well as other potentially improper transactions involving USL and its Indian and overseas subsidiaries. In connection with the matters identified by the Additional Inquiry, USL has, pursuant to a detailed review of each case of such fund diversion and after obtaining expert legal advice, where appropriate, filed civil suits for recovery of funds from certain parties, including Dr Mallya, before the relevant courts in India. The amounts identified in the Additional Inquiry have been previously provided for or expensed in the financial statements of USL or its subsidiaries for prior periods. 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 continuing matters relating to Dr Mallya and affiliates DHN issued a conditional backstop guarantee on 2 August 2013 to Standard Chartered Bank (Standard Chartered) pursuant to a guarantee commitment agreement (the Guarantee Agreement). The guarantee was in respect of the liabilities of Watson, a company affiliated with Dr Mallya, under a $135 million (£100 million) facility from Standard Chartered (the Facility Agreement). The Guarantee Agreement was entered into as part of the arrangements put in place and announced at the closing of the USL transaction on 4 July 2013. DHN’s provision of the Guarantee Agreement enabled the refinancing of certain existing borrowings of Watson from a third-party bank and facilitated the release by that bank of rights over certain USL shares that were to be acquired by Diageo as part of the USL transaction. The facility matured and entered into default in May 2015. In aggregate, DHN paid Standard Chartered $141 million (£101 million) under this guarantee, including payments of default interest and various fees and expenses. Watson remains liable for all amounts paid by DHN under the guarantee. Under the guarantee documentation with Standard Chartered, DHN is entitled to the benefit of the underlying security package for the loan, including: (a) certain shares in United Breweries Limited (UBL) held solely by Dr Mallya and certain other shares in UBL held by Dr Mallya jointly with his son Sidhartha Mallya, and (b) the shareholding in Watson. Aspects of the security package are the subject of various proceedings in India in which third parties are alleging and asserting prior rights to certain assets comprised in the security package or otherwise seeking to restrain enforcement against certain assets by Standard Chartered and/or DHN. These proceedings are ongoing and DHN will continue to vigorously pursue these matters as part of its efforts for enforcement of the underlying security and recovery of outstanding amounts. Diageo believes that the existence of any prior rights or dispute in relation to the security would be a breach of representations and warranties given by Dr Mallya and others to Standard Chartered at the time the security was granted and further believes that certain actions taken by Dr Mallya in relation to the proceedings described above also breached his obligations to Standard Chartered. In addition to these third-party proceedings, Dr Mallya is also subject to proceedings in India under the Prevention of Money Laundering Act and the Fugitive Economic Offenders Act in which the relevant Indian authority, the Directorate of Enforcement, is seeking confiscation of the UBL shares which were provided as security for Watson’s liabilities. DHN is participating in these proceedings in order to protect its security interest in respect of the UBL shares. Under the proceedings under the Prevention of Money Laundering Act, the Special Court passed an order on 24 May 2021 directing, among other things, the release of certain assets of Dr Mallya including the UBL shares in favour of third-party banks. DHN has subsequently filed a writ petition before the Bombay High Court challenging this order of the Special Court insofar as it relates to its security interest in respect of the UBL shares. Under the terms of the guarantee and as a matter of law, there are arrangements to pass on to DHN the benefit of the security package upon payment by DHN under the guarantee of all amounts owed to Standard Chartered. Payment under the guarantee has now occurred as described above. To the extent possible in the context of the proceedings described above, DHN continues to work towards enforcement of the security package, including, when appropriate, in conjunction with Standard Chartered. DHN’s ability to assume or enforce security over some elements of the security package is also subject to regulatory consent. It is not at this stage possible to determine whether such consent would be forthcoming. In addition to the Indian proceedings just described, certain of the assets comprised in the security package may also be affected by a worldwide freezing order of the English High Court granted on 24 November 2017 and continued on 8 December 2017 and 8 May 2018 in respect of the assets of Dr Mallya and the bankruptcy order made against Dr Mallya on 26 July 2021. The agreement with Dr Mallya referenced in paragraph (c) above does not impact the security package. Watson remains liable for all amounts paid pursuant to the guarantee and DHN has the benefit of a counter-indemnity from Watson in respect of payments in connection with the guarantee, as well as a claim against CASL as a co-surety with DHN of Watson's obligations. The various security providers, including Dr Mallya and Watson, acknowledged in the February 2016 Agreement referred to in paragraph (c) above that DHN is entitled to the benefit of the security package underlying the Standard Chartered facility and have also undertaken to take all necessary actions in that regard. Further, Diageo believes that the existence of any prior rights or disputes in relation to the security package would be in breach of certain confirmations given to Diageo and DHN pursuant to that agreement by Dr Mallya, Watson and certain connected persons. On 16 November 2017, DHN commenced various claims in the English High Court for, in aggregate, in excess of $142 million (£105 million) (plus interest) in relation to these matters, including the following: (i) a claim against Watson for $141 million (£104 million) (plus interest) under Watson’s counter-indemnity to DHN in respect of payments made by DHN to Standard Chartered under the guarantee referred to above; (ii) a claim against Dr Mallya and Sidhartha Mallya under various agreements creating or relating to the security package referred to above for (a) the costs incurred to date in the various Indian proceedings referred to above (plus interest), and (b) damages of $141 million (£101 million), being DHN’s loss as a result of those Indian proceedings which currently prevent enforcement of the security over shares in UBL (plus interest); and (iii) a claim against CASL, as a co-surety with DHN of Watson’s obligations under the Facility Agreement, for 50% of the difference between the amount claimed under (i) above and the amount (if any) that DHN is in fact able to recover from Watson, Dr Mallya and/or Sidhartha Mallya. As noted in paragraph (c), Dr Mallya, Sidhartha Mallya and the relevant affiliated companies filed a defence to these claims on 12 March 2018. Diageo and the other relevant members of its group filed a reply to that defence on 5 September 2018. DHN and Diageo continue to prosecute these claims. As part of that, on 18 December 2018, Diageo and the other relevant members of its group filed an application for strike out and/or summary judgment in respect of certain aspects of the defence filed by Dr Mallya, Sidhartha Mallya and the relevant affiliated companies, including in respect of Watson and CASL’s liability to repay DHN. This summary judgment and strike out application was heard by the English High Court on 24 May 2019. The court decided in favour of DHN that (i) Watson is liable to pay, and has no defence against paying, $135 million (£100 million) plus interest of $11 million (£8 million) to DHN, and (ii) CASL is liable, as co-surety, to pay, and has no defence against paying, 50% of any such amount unpaid by Watson, i.e. up to $67.5 million (£50 million) plus interest of $5.5 million (£4 million) to DHN. Watson and CASL were ordered to pay such sums, as well as certain amounts in respect of DHN and Diageo’s costs, to DHN by 21 June 2019. Such amounts were not paid on that date by either Watson or CASL. As noted at paragraph (c) above. Diageo and DHN have 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. On 15 October 2020, as a result of applications made by DHN to recover certain outstanding costs owed by Watson and CASL (being approximately £260,000 plus interest, which remained unpaid), Dr Mallya and Sidhartha Mallya were ordered to pay those amounts by 27 November 2020. As Dr Mallya and Sidhartha Mallya, in default of the Court order, failed to make the required payments to DHN: (i) Watson and CASL’s defence to DHN’s remaining claim for payment of approximately $6 million (£4 million) (plus interest) has been struck out, with further judgment in DHN’s favour being entered which will be pursued along with the original judgment as set out above, and (ii) DHN is pursuing enforcement against Dr Mallya and Sidhartha Mallya for the judgment debt of approximately £260,000 plus interest. As noted at paragraph (c) above, Dr Mallya was declared bankrupt by the English High Court on 26 July 2021. The UK Official Receiver was initially appointed as Dr Mallya’s Trustee in Bankruptcy but has now been replaced by an insolvency practitioner, Teneo Restructuring Limited, as Trustee. DHN has informed the Official Receiver of its position as creditor and will engage with Teneo Restructuring Limited to pursue recovery of these costs as part of the bankruptcy process. (e) Other matters in relation to USL Following USL’s earlier updates concerning the Initial Inquiry as well as in relation to the arrangements with Dr Mallya that were the subject of the 25 February 2016 announcement, USL and Diageo have received various notices from Indian regulatory authorities, including the Ministry of Corporate Affairs, Enforcement Directorate and Securities and Exchange Board of India (SEBI). Diageo and USL are co-operating fully with the authorities in relation to these matters. Diageo and USL have also received notices from SEBI requesting information in relation to, and explanation of the reasons for, the arrangements with Dr Mallya that were the subject of the 25 February 2016 announcement as well as, in the case of USL, in relation to the Initial Inquiry and the Additional Inquiry, and, in the case of Diageo, whether such arrangements with Dr Mallya or the Watson backstop guarantee arrangements referred to in paragraphs (c) and (d) above were part of agreements previously made with Dr Mallya at the time of the Original USL Transaction announced on 9 November 2012 and the open offer made as part of the Original USL Transaction. Diageo and USL have complied with such information requests and Diageo has confirmed that, consistent with prior disclosures, the Watson backstop guarantee arrangements and the matters described in the 25 February 2016 announcement were not the subject of any earlier agreement with Dr Mallya. In respect of the Watson backstop guarantee arrangements, SEBI issued a further 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 is clear 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 therefore believes the decision in the SEBI notice to be misconceived and wrong in law and 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 notice, Diageo believes SEBI's latest order to be misconceived and wrong in law and has filed an appeal before SAT against the order. This appeal is currently pending. Diageo is unable to assess if the notices or enquiries referred to above will result in enforcement action or, if this were to transpire, to quantify meaningfully the possible range of loss, if any, to which any such action might give rise to if determined against Diageo or USL. In relation to the matters described in the 25 February 2016 announcement, Diageo had also responded to a show cause notice dated 12 May 2017 from SEBI arising out of the previous correspondence in this regard and made its further submissions in the matter, including at a personal hearing before a Whole Time Member of SEBI. On 6 September 2018, SEBI issued an order holding that Diageo had acquired sole control of USL following its earlier open offers, and that no fresh open offer was triggered by Diageo. (f) USL’s dispute with IDBI Bank Limited Prior to the acquisition by Diageo of a controlling interest in USL, USL had prepaid a term loan of INR 6,280 million (£61 million) taken through IDBI Bank Limited (IDBI), an Indian bank, which was secured on certain fixed assets and brands of USL, as well as by a pledge of certain shares in USL held by the USL Benefit Trust (of which USL is the sole beneficiary). The maturity date of the loan was 31 March 2015. IDBI disputed the prepayment, following which USL filed a writ petition in November 2013 before the High Court of Karnataka (the High Court) challenging the bank’s actions. Following the original maturity date of the loan, USL received notices from IDBI seeking to recall the loan, demanding a further sum of INR 459 million (£5 million) on account of the outstanding principal, accrued interest and other amounts, and also threatening to enforce the security in the event that USL did not make these further payments. Pursuant to an application filed by USL before the High Court in the writ proceedings, the High Court directed that, subject to USL depositing such further amount with the bank (which amount was duly deposited by USL), the bank should hold the amount in a suspense account and not deal with any of the secured assets including the shares until disposal of the original writ petition filed by USL before the High Court. On 27 June 2019, a single judge bench of the High Court issued an order dismissing the writ petition filed by USL, amongst other things, on the basis that the matter involved an issue of breach of contract by USL and was therefore not maintainable in exercise of the court’s writ jurisdiction. USL has since filed an appeal against this order before a division bench of the High Court, which on 30 July 2019 has 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 aforesaid amount of INR 459 million (£5 million) remains recoverable from IDBI. (g) Tax The international tax environment has seen increased scrutiny and rapid change over recent years bringing with it greater uncertainty for multinationals. Against this backdrop, Diageo has been monitoring developments and continues to engage transparently with the tax authorities in the countries where Diageo operates to ensure that the group manages its arrangements on a sustainable basis. The group operates in a large number of markets with complex tax and legislative regimes that are open to subjective interpretation. In the context of these operations, it is possible that tax exposures which have not yet materialised (including those which could arise as a result of tax assessments) may result in losses to the group. In the circumstances where tax authorities have raised assessments, challenging interpretations which may lead to a possible material outflow, these have been included as contingent liabilities. Diageo has a large number of ongoing tax cases in Brazil and India. Since assessing an accurate value of contingent liabilities in these markets requires a high degree of judgement, contingent liabilities are disclosed on the basis of the current known possible exposure from tax assessment values. While not all of these cases are individually significant, the current aggregate known possible exposure from tax assessment values is up to approximately £439 million for Brazil and up to approximately £124 million for India. The group believes that the likelihood that the tax authorities will ultimately prevail is lower than probable but higher than remote. Due to the fiscal environment in Brazil and in India, the possibility of further tax assessments related to the same matters cannot be ruled out and the judicial processes may take extended periods to conclude. Based on its current assessment, Diageo believes that no provision is required in respect of these issues. Payments were made under protest in India in respect of the periods 1 April 2006 to 31 March 2017 in relation to tax assessments where the risk is considered to be remote or possible. These payments have to be made in order to be able to challenge the assessments and as such have been recognised as a receivable in the group's balance sheet. The total amount of payments under protest recognised as a receivable as at 31 December 2021 is £102 million (corporate tax payments of £92 million and indirect tax payments of £10 million). In the United States, a lawsuit was filed on 15 April 2019 by the N |
Related party transactions
Related party transactions | 6 Months Ended |
Dec. 31, 2021 | |
Disclosure of transactions between related parties [abstract] | |
Related party transactions | Related party transactions The group’s significant related parties are its associates, joint ventures, key management personnel and pension plans. There have been no transactions with these related parties during the six months ended 31 December 2021 on terms other than those that prevail in arm’s length transactions. |
Basis of preparation (Policies)
Basis of preparation (Policies) | 6 Months Ended |
Dec. 31, 2021 | |
Basis Of Preparation [Abstract] | |
Basis of preparation | On 31 December 2020, International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) at that date were brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Diageo plc transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 July 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework. These unaudited condensed consolidated financial statements have been prepared in accordance with UK adopted IAS 34 ‘Interim Financial Reporting’, IAS 34 ‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (‘IASB’), IAS 34 ‘Interim Financial Reporting’ as adopted by the EU 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 2021, which were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU, and International Financial Reporting Standards as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee. At 31 December 2021, there were no unendorsed standards effective for the six months ended 31 December 2021 affecting these financial statements, and there was no difference between IFRSs adopted by the UK, IFRSs as adopted by the EU and IFRSs issued by the IASB in terms of their application to the group. In preparing these condensed consolidated financial statements, the significant judgements made by management when applying the group’s accounting policies and the significant areas where estimates were required were the same as those that applied to the consolidated financial statements for the year ended 30 June 2021, with the exception of changes in estimates disclosed in note 12 - Contingent liabilities and legal proceedings. The financial statements for Diageo plc for the year ended 30 June 2022 will be prepared in accordance with IFRS as adopted by the UK, IFRSs as adopted by the EU and IFRSs, as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee. Management has prepared cash flow forecasts which have also been sensitised to reflect severe but plausible downside scenarios taking into consideration the group's principal risks. In the base case scenario, net sales momentum is expected to continue, however, near-term volatility is also expected to remain. The potential financial impact of a slower Covid-19 pandemic recovery has been modelled in the plausible downside scenarios. Even with these negative sensitivities for each region taken into account, the group’s cash position is still considered to remain strong, as the group's liquidity has been protected by launching and pricing €700 million of fixed rate Euro and £400 million of fixed rate sterling denominated bonds under Diageo’s European Debt Issuance Programme in the year ended 30 June 2021. Mitigating actions, should they be required, are all within management’s control and could include reductions in discretionary spending as acquisitions and capital expenditure, as well as a temporary suspension of the share buyback programme and dividend payments in the next 12 months or drawdowns on committed facilities. Having considered the outcome of these assessments, the Directors are comfortable that the company is a going concern for at least 12 months from the date of signing the company's condensed consolidated financial statements. |
New accounting standards and interpretations | New accounting standards and interpretations The following amendment to the accounting standards, issued by the IASB and endorsed by the UK and EU, have been adopted by the group from 1 July 2021 with no impact on the group’s consolidated results, financial position or disclosures: – Amendments to IFRS 16 - Covid-19 - related rent concessions beyond 30 June 2021 The following amendment issued by the IASB and endorsed by the UK and EU, has been adopted by the group: – Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform (phase 2). The amendment to IFRS 9 provides relief from applying specific hedge accounting and financial instrument derecognition requirements directly affected by interbank offered rate (IBOR) reform. By applying the practical expedient, Diageo will not be required to discontinue its hedging relationships as a result of changes in reference rates due to IBOR reform. The amendment to IFRS 7 will require additional disclosure explaining the nature and extent of risk related to the reform and the progress of the transition. |
Expected impact of initial application of new standards or interpretations that have not been adopted by the group | The following standard issued by the IASB has been endorsed by the EU, but has not yet been endorsed by the UK, and has not been adopted by the group: – IFRS 17 - Insurance contracts (effective in the year ending 30 June 2024) is ultimately intended to replace IFRS 4. Based on a preliminary assessment the group believes that the adoption of IFRS 17 will not have a significant impact on its consolidated results or financial position. |
Segmental information (Tables)
Segmental information (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Disclosure of operating segments [abstract] | |
Schedule of segmental information | (a) Segmental information for the consolidated income statement North America Europe Asia Africa Latin America and Caribbean SC&P Eliminate Total Corporate Total Six months ended 31 December 2021 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 3,257 3,178 2,999 1,244 1,052 972 (972) 11,730 23 11,753 Net sales At budgeted exchange rates (i) 2,959 1,782 1,544 888 822 1,027 (979) 8,043 23 8,066 Acquisitions and disposals 18 3 — — — — — 21 — 21 SC&P allocation 6 29 5 2 6 (48) — — — — Retranslation to actual exchange rates (19) (62) (18) (22) (9) (7) 7 (130) — (130) Net sales 2,964 1,752 1,531 868 819 972 (972) 7,934 23 7,957 Operating profit/(loss) At budgeted exchange rates (i) 1,288 647 454 192 333 (8) — 2,906 (132) 2,774 Acquisitions and disposals (16) (1) — — — — — (17) — (17) SC&P allocation 10 (23) (3) (1) 9 8 — — — — Fair value remeasurement of contingent considerations, equity option and earn out arrangements 5 21 — — (3) — — 23 — 23 Fair value remeasurement of biological assets — — — — 3 — — 3 — 3 Retranslation to actual exchange rates 8 (31) — (15) (9) — — (47) 7 (40) Operating profit/(loss) 1,295 613 451 176 333 — — 2,868 (125) 2,743 Non-operating items (31) Net finance charges (180) Share of after tax results of associates and joint ventures 190 Profit before taxation 2,722 North America Europe Asia Africa Latin America and Caribbean SC&P Eliminate Total Corporate Total Six months ended 31 December 2020 £ million £ million £ million £ million £ million £ million £ million £ million £ million £ million Sales 3,022 2,727 2,837 1,064 775 785 (785) 10,425 11 10,436 Net sales At budgeted exchange rates (i) 2,790 1,442 1,418 790 641 824 (786) 7,119 11 7,130 Acquisitions and disposals 7 — — 5 — — — 12 — 12 SC&P allocation 5 21 4 2 6 (38) — — — — Retranslation to actual exchange rates (101) (20) (27) (52) (68) (1) 1 (268) — (268) Net sales 2,701 1,443 1,395 745 579 785 (785) 6,863 11 6,874 Operating profit/(loss) At budgeted exchange rates (i) 1,325 461 391 124 246 (23) — 2,524 (98) 2,426 Acquisitions and disposals (9) — — — — — — (9) — (9) SC&P allocation (13) — — — (10) 23 — — — — Fair value remeasurement of contingent considerations (4) (7) — — — — — (11) — (11) Fair value remeasurement of biological assets — — — — 3 — — 3 — 3 Retranslation to actual exchange rates (73) (8) (5) (29) (42) — — (157) 4 (153) Operating profit/(loss) before exceptional items 1,226 446 386 95 197 — — 2,350 (94) 2,256 Exceptional items — (17) — — — — — (17) — (17) Operating profit/(loss) 1,226 429 386 95 197 — — 2,333 (94) 2,239 Non-operating items 5 Net finance charges (200) Share of after tax results of associates and joint ventures 154 Profit before taxation 2,198 (i) These items represent the IFRS 8 performance measures for the geographical and SC&P segments. (1) The net sales figures for SC&P reported to the Executive Committee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the SC&P segment to the other operating segments, inter-segment sales are not material. (2) The group’s net finance charges are managed centrally and are not attributable to individual operating segments. (3) Approximately 44% of calendar year net sales occurred in the last four months of 2021. |
Schedule Of Category And Geographical Analysis | (b) Category and geographical analysis Category analysis Geographical analysis Spirits Beer Ready to drink Other Total Great United India Rest of Total Six months ended 31 December 2021 Sales (i) 9,680 1,520 418 135 11,753 1,204 3,072 1,704 5,773 11,753 Six months ended 31 December 2020 Sales (i) 8,648 1,310 363 115 10,436 1,044 2,817 1,650 4,925 10,436 |
Exceptional items (Tables)
Exceptional items (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Exceptional Items [Abstract] | |
Schedule of exceptional items | Six months ended 31 December 2021 Six months ended 31 December 2020 £ million £ million Exceptional operating items Ongoing litigation in Turkey — (15) Guaranteed minimum pension equalisation — (5) Reversal of provision for obsolete inventories — 3 — (17) Non-operating items Sale of businesses and brands Loss on the prospective sale of Meta (33) — United National Breweries 2 5 (31) 5 Exceptional items before taxation (31) (12) Items included in taxation Exceptional taxation — (42) — (42) Total exceptional items (31) (54) Attributable to: Equity shareholders of the parent company (31) (54) Non-controlling interests — — Total exceptional items (31) (54) |
Finance income and charges (Tab
Finance income and charges (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Analysis of income and expense [abstract] | |
Schedule of finance income and charges | Six months ended 31 December 2021 Six months ended 31 December 2020 £ million £ million Interest income 61 58 Fair value gain on financial instruments 58 56 Total interest income 119 114 Interest charge on bank loans, bonds and overdrafts (181) (203) Interest charge on leases (5) (7) Fair value loss on financial instruments (59) (55) Interest charge on other borrowings (36) (35) Total interest charges (281) (300) Net interest charges (162) (186) Net finance income in respect of post employment plans in surplus 10 9 Hyperinflation adjustment in respect of Venezuela (a) 1 2 Change in financial liability (Level 3) — 2 Total other finance income 11 13 Net finance charge in respect of post employment plans in deficit (5) (7) Foreign exchange revaluation of monetary items in respect of Lebanon (a) (2) (8) Unwinding of discounts (6) (8) Interest charge in respect of direct and indirect tax (8) (2) Change in financial liability (Level 3) (7) — Other finance charges (1) (2) Total other finance charges (29) (27) Net other finance charges (18) (14) |
Schedule of the contribution of the Group's Venezuelan operations | The following table presents the contribution of the group’s Venezuelan operations to the consolidated income statement, cash flow statement and net assets for the six months ended 31 December 2021 and 31 December 2020 and with the amounts that would have resulted if the official DICOM exchange rate had been applied: Six months ended 31 December 2021 Six months ended 31 December 2020 At estimated exchange rate At DICOM exchange rate At estimated exchange rate (i) At DICOM exchange rate (i) 593 VES/£ 6 VES/£ 64 VES/£ 2 VES/£ £ million £ million £ million £ million Net sales — 8 — 4 Operating profit — 2 — 11 Other finance income - hyperinflation adjustment 1 120 2 100 Net cash (outflow)/inflow from operating activities — (3) — 9 Net assets 37 3,501 39 1,656 (i) Prior year rates have been restated to reflect the Central Bank of Venezuela's decision to cut six zeros from the bolivar currency from 1 October 2021. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Inventories [Abstract] | |
Schedule of inventories | 31 December 2021 30 June 2021 31 December 2020 £ million £ million £ million Raw materials and consumables 401 348 332 Work in progress 68 60 53 Maturing inventories 4,801 4,668 4,562 Finished goods and goods for resale 965 969 803 6,235 6,045 5,750 |
Net borrowings (Tables)
Net borrowings (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Borrowings [abstract] | |
Schedule of net borrowings | 31 December 2021 30 June 2021 31 December 2020 £ million £ million £ million Borrowings due within one year and bank overdrafts (1,184) (1,862) (1,214) Borrowings due after one year (12,693) (12,865) (14,063) Fair value of foreign currency forwards and swaps 122 169 117 Fair value of interest rate hedging instruments 4 63 146 Lease liabilities (360) (363) (410) (14,111) (14,858) (15,424) Cash and cash equivalents 1,780 2,749 2,763 (12,331) (12,109) (12,661) |
Reconciliation of movement in_2
Reconciliation of movement in net borrowings (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Borrowings [abstract] | |
Schedule of movement in net borrowings | Six months ended 31 December 2021 Six months ended 31 December 2020 £ million £ million Net decrease in cash and cash equivalents before exchange (888) (237) Net decrease in bonds and other borrowings (i) 729 561 Net (increase)/decrease in net borrowings from cash flows (159) 324 Exchange differences on net borrowings (31) 420 Other non-cash items (ii) (32) (159) Net borrowings at beginning of the period (12,109) (13,246) Net borrowings at end of the period (12,331) (12,661) |
Financial instruments (Tables)
Financial instruments (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Disclosure of detailed information about financial instruments [abstract] | |
Schedule of financial assets and liabilities measured at fair value | The group’s financial assets and liabilities measured at fair value are categorised as follows: 31 December 2021 30 June 2021 31 December 2020 £ million £ million £ million Derivative assets 381 443 489 Derivative liabilities (237) (129) (150) Valuation techniques based on observable market input (Level 2) 144 314 339 Financial assets - other 167 138 122 Financial liabilities - other (483) (578) (481) Valuation techniques based on unobservable market input (Level 3) (316) (440) (359) |
Schedule of movements in level 3 instruments | The movements in level 3 instruments, measured on a recurring basis, are as follows: Zacapa Contingent consideration recognised on acquisition of businesses (i) Zacapa Contingent consideration recognised on acquisition of businesses Six months ended 31 December 2021 Six months ended 31 December 2021 Six months ended 31 December 2020 Six months ended 31 December 2020 £ million £ million £ million £ million At the beginning of the period (149) (429) (167) (249) Net (losses)/gains included in the income statement (7) 18 2 (17) Net (losses)/gains included in exchange in other comprehensive income (4) (9) 15 27 Net (losses)/gains included in retained earnings (12) — 1 — Acquisitions — — — (181) Settlement of liabilities 3 106 1 87 At the end of the period (169) (314) (148) (333) (i) Included in the balance at 31 December 2021 is £nil in respect of the acquisition of Casamigos as it was fully repaid on 17 September 2021 (2020 - £80 million), £163 million in respect of the acquisition of Aviation Gin and Davos Brands (2020 - £172 million), and £51 million in respect of the acquisition of Far West Spirits LLC, owner of the Lone River Ranch Water brand (2020 - £nil). |
Dividends and other reserves (T
Dividends and other reserves (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Share Capital, Reserves And Other Equity Interest [Abstract] | |
Schedule of dividends | Six months ended 31 December 2021 Six months ended 31 December 2020 Amounts recognised as distributions to equity shareholders £ million £ million Final dividend for the year ended 30 June 2021 of 44.59 pence per share (2020 - 42.47 pence) 1,040 992 |
Acquisition of businesses (Tabl
Acquisition of businesses (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of cash consideration paid in respect of acquisition of businesses and purchase of shares of non-controlling interests | Cash consideration paid in respect of the acquisition of businesses in the six months ended 31 December 2021 were as follows: Consideration £ million Cash consideration paid for Casamigos (83) Cash consideration paid in respect of other prior year acquisitions (27) Cash consideration paid for investments in associates (3) Capital injection in associates (21) Net cash outflow on acquisition of businesses (134) |
Basis of preparation - Narrativ
Basis of preparation - Narrative (Details) € in Millions, £ in Millions | 6 Months Ended | ||
Dec. 31, 2021€ / £$ / £ | Dec. 31, 2020EUR (€)$ / £€ / £ | Dec. 31, 2020GBP (£)$ / £€ / £ | |
Euro | |||
Disclosure of foreign exchange rates [Line Items] | |||
Weighted average exchange rate used in the translation of income statements | € / £ | 1.17 | 1.11 | |
Exchange rates used to translate assets and liabilities | € / £ | 1.19 | 1.11 | 1.11 |
Euro | European Debt Issuance Programme | |||
Disclosure of foreign exchange rates [Line Items] | |||
Notional amount bonds | € | € 700 | ||
Pound Sterling | European Debt Issuance Programme | |||
Disclosure of foreign exchange rates [Line Items] | |||
Notional amount bonds | £ | £ 400 | ||
US Dollar | |||
Disclosure of foreign exchange rates [Line Items] | |||
Weighted average exchange rate used in the translation of income statements | $ / £ | 1.36 | 1.31 | |
Exchange rates used to translate assets and liabilities | $ / £ | 1.35 | 1.36 | 1.36 |
Segmental information - Consoli
Segmental information - Consolidated income statement (Details) - GBP (£) £ in Millions | 4 Months Ended | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of operating segments [line items] | |||
Sales | £ 11,753 | £ 10,436 | |
Net sales | |||
At budgeted exchange rates | 8,066 | 7,130 | |
Acquisitions and disposals | 21 | 12 | |
SC&P allocation | 0 | 0 | |
Retranslation to actual exchange rates | (130) | (268) | |
Net sales | 7,957 | 6,874 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 2,774 | 2,426 | |
Acquisitions and disposals | (17) | (9) | |
SC&P allocation | 0 | 0 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 23 | ||
Fair value remeasurement of contingent considerations | (11) | ||
Fair value remeasurement of biological assets in operating profit | 3 | 3 | |
Retranslation to actual exchange rates | (40) | (153) | |
Operating profit/(loss) before exceptional items | 2,256 | ||
Exceptional items | (17) | ||
Operating profit/(loss) | 2,743 | 2,239 | |
Non-operating items | (31) | 5 | |
Net finance charges | (180) | (200) | |
Share of after tax results of associates and joint ventures | 190 | 154 | |
Profit before taxation | 2,722 | 2,198 | |
Percentage of calendar year net sales that occur in the last four months | 44.00% | ||
Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 11,730 | 10,425 | |
Net sales | |||
At budgeted exchange rates | 8,043 | 7,119 | |
Acquisitions and disposals | 21 | 12 | |
SC&P allocation | 0 | 0 | |
Retranslation to actual exchange rates | (130) | (268) | |
Net sales | 7,934 | 6,863 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 2,906 | 2,524 | |
Acquisitions and disposals | (17) | (9) | |
SC&P allocation | 0 | 0 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 23 | ||
Fair value remeasurement of contingent considerations | (11) | ||
Fair value remeasurement of biological assets in operating profit | 3 | 3 | |
Retranslation to actual exchange rates | (47) | (157) | |
Operating profit/(loss) before exceptional items | 2,350 | ||
Exceptional items | (17) | ||
Operating profit/(loss) | 2,868 | 2,333 | |
Eliminate intersegment sales | |||
Disclosure of operating segments [line items] | |||
Sales | (972) | (785) | |
Net sales | |||
At budgeted exchange rates | (979) | (786) | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 0 | 0 | |
Retranslation to actual exchange rates | 7 | 1 | |
Net sales | (972) | (785) | |
Corporate and other | |||
Disclosure of operating segments [line items] | |||
Sales | 23 | 11 | |
Net sales | |||
At budgeted exchange rates | 23 | 11 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 0 | 0 | |
Retranslation to actual exchange rates | 0 | 0 | |
Net sales | 23 | 11 | |
Operating profit/(loss) | |||
At budgeted exchange rates | (132) | (98) | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 0 | 0 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 0 | ||
Fair value remeasurement of contingent considerations | 0 | ||
Fair value remeasurement of biological assets in operating profit | 0 | 0 | |
Retranslation to actual exchange rates | 7 | 4 | |
Operating profit/(loss) before exceptional items | (94) | ||
Exceptional items | 0 | ||
Operating profit/(loss) | (125) | (94) | |
North America | Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 3,257 | 3,022 | |
Net sales | |||
At budgeted exchange rates | 2,959 | 2,790 | |
Acquisitions and disposals | 18 | 7 | |
SC&P allocation | 6 | 5 | |
Retranslation to actual exchange rates | (19) | (101) | |
Net sales | 2,964 | 2,701 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 1,288 | 1,325 | |
Acquisitions and disposals | (16) | (9) | |
SC&P allocation | 10 | (13) | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 5 | ||
Fair value remeasurement of contingent considerations | (4) | ||
Fair value remeasurement of biological assets in operating profit | 0 | 0 | |
Retranslation to actual exchange rates | 8 | (73) | |
Operating profit/(loss) before exceptional items | 1,226 | ||
Exceptional items | 0 | ||
Operating profit/(loss) | 1,295 | 1,226 | |
Europe | Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 3,178 | 2,727 | |
Net sales | |||
At budgeted exchange rates | 1,782 | 1,442 | |
Acquisitions and disposals | 3 | 0 | |
SC&P allocation | 29 | 21 | |
Retranslation to actual exchange rates | (62) | (20) | |
Net sales | 1,752 | 1,443 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 647 | 461 | |
Acquisitions and disposals | (1) | 0 | |
SC&P allocation | (23) | 0 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 21 | ||
Fair value remeasurement of contingent considerations | (7) | ||
Fair value remeasurement of biological assets in operating profit | 0 | 0 | |
Retranslation to actual exchange rates | (31) | (8) | |
Operating profit/(loss) before exceptional items | 446 | ||
Exceptional items | (17) | ||
Operating profit/(loss) | 613 | 429 | |
Asia Pacific | Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 2,999 | 2,837 | |
Net sales | |||
At budgeted exchange rates | 1,544 | 1,418 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 5 | 4 | |
Retranslation to actual exchange rates | (18) | (27) | |
Net sales | 1,531 | 1,395 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 454 | 391 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | (3) | 0 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 0 | ||
Fair value remeasurement of contingent considerations | 0 | ||
Fair value remeasurement of biological assets in operating profit | 0 | 0 | |
Retranslation to actual exchange rates | 0 | (5) | |
Operating profit/(loss) before exceptional items | 386 | ||
Exceptional items | 0 | ||
Operating profit/(loss) | 451 | 386 | |
Africa | Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 1,244 | 1,064 | |
Net sales | |||
At budgeted exchange rates | 888 | 790 | |
Acquisitions and disposals | 0 | 5 | |
SC&P allocation | 2 | 2 | |
Retranslation to actual exchange rates | (22) | (52) | |
Net sales | 868 | 745 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 192 | 124 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | (1) | 0 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 0 | ||
Fair value remeasurement of contingent considerations | 0 | ||
Fair value remeasurement of biological assets in operating profit | 0 | 0 | |
Retranslation to actual exchange rates | (15) | (29) | |
Operating profit/(loss) before exceptional items | 95 | ||
Exceptional items | 0 | ||
Operating profit/(loss) | 176 | 95 | |
Latin America and Caribbean | Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 1,052 | 775 | |
Net sales | |||
At budgeted exchange rates | 822 | 641 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 6 | 6 | |
Retranslation to actual exchange rates | (9) | (68) | |
Net sales | 819 | 579 | |
Operating profit/(loss) | |||
At budgeted exchange rates | 333 | 246 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 9 | (10) | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | (3) | ||
Fair value remeasurement of contingent considerations | 0 | ||
Fair value remeasurement of biological assets in operating profit | 3 | 3 | |
Retranslation to actual exchange rates | (9) | (42) | |
Operating profit/(loss) before exceptional items | 197 | ||
Exceptional items | 0 | ||
Operating profit/(loss) | 333 | 197 | |
SC&P | Operating segments | |||
Disclosure of operating segments [line items] | |||
Sales | 972 | 785 | |
Net sales | |||
At budgeted exchange rates | 1,027 | 824 | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | (48) | (38) | |
Retranslation to actual exchange rates | (7) | (1) | |
Net sales | 972 | 785 | |
Operating profit/(loss) | |||
At budgeted exchange rates | (8) | (23) | |
Acquisitions and disposals | 0 | 0 | |
SC&P allocation | 8 | 23 | |
Fair value remeasurement of contingent considerations, equity option and earn out arrangements | 0 | ||
Fair value remeasurement of contingent considerations | 0 | ||
Fair value remeasurement of biological assets in operating profit | 0 | 0 | |
Retranslation to actual exchange rates | 0 | 0 | |
Operating profit/(loss) before exceptional items | 0 | ||
Exceptional items | 0 | ||
Operating profit/(loss) | £ 0 | £ 0 |
Segmental information - Categor
Segmental information - Category analysis (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of products and services [line items] | ||
Sales | £ 11,753 | £ 10,436 |
Spirits | ||
Disclosure of products and services [line items] | ||
Sales | 9,680 | 8,648 |
Beer | ||
Disclosure of products and services [line items] | ||
Sales | 1,520 | 1,310 |
Ready To Drink | ||
Disclosure of products and services [line items] | ||
Sales | 418 | 363 |
Other | ||
Disclosure of products and services [line items] | ||
Sales | £ 135 | £ 115 |
Segmental information - Geograp
Segmental information - Geographical analysis (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of geographical areas [line items] | ||
Sales | £ 11,753 | £ 10,436 |
Great Britain | ||
Disclosure of geographical areas [line items] | ||
Sales | 1,204 | 1,044 |
United States | ||
Disclosure of geographical areas [line items] | ||
Sales | 3,072 | 2,817 |
India | ||
Disclosure of geographical areas [line items] | ||
Sales | 1,704 | 1,650 |
Rest of World | ||
Disclosure of geographical areas [line items] | ||
Sales | £ 5,773 | £ 4,925 |
Exceptional items - Schedule of
Exceptional items - Schedule of exceptional items (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure Of Exceptional Items [Line Items] | ||
Exceptional operating items | £ (908) | £ (889) |
Non-operating items | (31) | 5 |
Exceptional items before taxation | 2,722 | 2,198 |
Items included in taxation | (634) | (537) |
Total exceptional items | 2,088 | 1,661 |
Attributable to: | ||
Equity shareholders of the parent company | 1,965 | 1,580 |
Non-controlling interests | 123 | 81 |
Total exceptional items | 2,088 | 1,661 |
Ongoing litigation in Turkey | ||
Disclosure Of Exceptional Items [Line Items] | ||
Exceptional operating items | 0 | (15) |
Guaranteed minimum pension equalisation | ||
Disclosure Of Exceptional Items [Line Items] | ||
Exceptional operating items | 0 | (5) |
Reversal of provision for obsolete inventories | ||
Disclosure Of Exceptional Items [Line Items] | ||
Exceptional operating items | 0 | 3 |
Exceptional items | ||
Disclosure Of Exceptional Items [Line Items] | ||
Exceptional operating items | 0 | (17) |
Non-operating items | (31) | 5 |
Exceptional items before taxation | (31) | (12) |
Items included in taxation | 0 | (42) |
Total exceptional items | (31) | (54) |
Attributable to: | ||
Equity shareholders of the parent company | (31) | (54) |
Non-controlling interests | 0 | 0 |
Total exceptional items | (31) | (54) |
Loss on the prospective sale of Meta | ||
Disclosure Of Exceptional Items [Line Items] | ||
Non-operating items | (33) | 0 |
United National Breweries | ||
Disclosure Of Exceptional Items [Line Items] | ||
Non-operating items | £ 2 | £ 5 |
Finance income and charges - Sc
Finance income and charges - Schedule of finance income and charges (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Analysis of income and expense [abstract] | ||
Interest income | £ 61 | £ 58 |
Fair value gain on financial instruments | 58 | 56 |
Total interest income | 119 | 114 |
Interest charge on bank loans, bonds and overdrafts | (181) | (203) |
Interest charge on leases | (5) | (7) |
Fair value loss on financial instruments | (59) | (55) |
Interest charge on other borrowings | (36) | (35) |
Total interest charges | (281) | (300) |
Net interest charges | (162) | (186) |
Net finance income in respect of post employment plans in surplus | 10 | 9 |
Hyperinflation adjustment in respect of Venezuela | 1 | 2 |
Change in financial liability (Level 3) | 0 | 2 |
Total other finance income | 11 | 13 |
Net finance charge in respect of post employment plans in deficit | (5) | (7) |
Foreign exchange revaluation of monetary items in respect of Lebanon | (2) | (8) |
Unwinding of discounts | (6) | (8) |
Interest charge in respect of direct and indirect tax | (8) | (2) |
Change in financial liability (Level 3) | (7) | 0 |
Other finance charges | (1) | (2) |
Total other finance charges | (29) | (27) |
Net other finance charges | £ (18) | £ (14) |
Finance income and charges - Na
Finance income and charges - Narrative (Details) - Venezuela - Bs. / £ | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of geographical areas [line items] | ||
Movement in Price Index in hyperinflationary economy | 158.00% | 479.00% |
Venezuelan Bolivar Soberano | ||
Disclosure of geographical areas [line items] | ||
Closing foreign exchange rate | 593 | 64 |
Finance income and charges - Co
Finance income and charges - Contribution of the Group's Venezuelan operations (Details) £ in Millions | 6 Months Ended | ||
Dec. 31, 2021GBP (£)Bs. / £ | Dec. 31, 2020GBP (£)Bs. / £ | Jun. 30, 2021GBP (£) | |
Disclosure of geographical areas [line items] | |||
Net sales | £ 7,957 | £ 6,874 | |
Operating profit | 2,743 | 2,239 | |
Other finance income - hyperinflation adjustment | 1 | 2 | |
Net cash (outflow)/inflow from operating activities | 1,947 | 1,998 | |
Net assets | 9,331 | 8,378 | £ 8,431 |
Venezuela | |||
Disclosure of geographical areas [line items] | |||
Net sales | 0 | 0 | |
Operating profit | 0 | 0 | |
Other finance income - hyperinflation adjustment | 1 | 2 | |
Net cash (outflow)/inflow from operating activities | 0 | 0 | |
Net assets | 37 | 39 | |
Venezuela | Reported if in compliance with requirement of IFRS | |||
Disclosure of geographical areas [line items] | |||
Net sales | 8 | 4 | |
Operating profit | 2 | 11 | |
Other finance income - hyperinflation adjustment | 120 | 100 | |
Net cash (outflow)/inflow from operating activities | (3) | 9 | |
Net assets | £ 3,501 | £ 1,656 | |
Venezuelan Bolivar Soberano | Venezuela | |||
Disclosure of geographical areas [line items] | |||
Closing foreign exchange rate | Bs. / £ | 593 | 64 | |
Venezuelan Bolivar Soberano | Venezuela | Reported if in compliance with requirement of IFRS | |||
Disclosure of geographical areas [line items] | |||
Closing foreign exchange rate | Bs. / £ | 6 | 2 |
Taxation (Details)
Taxation (Details) - GBP (£) £ in Millions | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Disclosure of geographical areas [line items] | |||
Tax charge | £ 634 | £ 537 | |
Current tax assets | 151 | 173 | £ 145 |
Current tax liabilities | 380 | £ 364 | 146 |
Provision for tax uncertainties | £ 122 | £ 129 | |
The tax rate before exceptional items | 23.00% | 22.40% | |
Great Britain | |||
Disclosure of geographical areas [line items] | |||
Tax charge | £ 116 | £ 89 | |
Foreign | |||
Disclosure of geographical areas [line items] | |||
Tax charge | £ 518 | £ 448 |
Inventories (Details)
Inventories (Details) - GBP (£) £ in Millions | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Inventories [Abstract] | |||
Raw materials and consumables | £ 401 | £ 348 | £ 332 |
Work in progress | 68 | 60 | 53 |
Maturing inventories | 4,801 | 4,668 | 4,562 |
Finished goods and goods for resale | 965 | 969 | 803 |
Inventories | £ 6,235 | £ 6,045 | £ 5,750 |
Net borrowings - Schedule of ne
Net borrowings - Schedule of net borrowings (Details) - GBP (£) £ in Millions | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Borrowings [abstract] | ||||
Borrowings due within one year and bank overdrafts | £ (1,184) | £ (1,862) | £ (1,214) | |
Borrowings due after one year | (12,693) | (12,865) | (14,063) | |
Fair value of foreign currency forwards and swaps | 122 | 169 | 117 | |
Fair value of interest rate hedging instruments | 4 | 63 | 146 | |
Lease liabilities | (360) | (363) | (410) | |
Gross borrowings | (14,111) | (14,858) | (15,424) | |
Cash and cash equivalents | 1,780 | 2,749 | 2,763 | |
Net borrowings | £ (12,331) | £ (12,109) | £ (12,661) | £ (13,246) |
Reconciliation of movement in_3
Reconciliation of movement in net borrowings - Movement in net borrowings (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Borrowings [abstract] | ||
Net decrease in cash and cash equivalents before exchange | £ (888) | £ (237) |
Net decrease in bonds and other borrowings | 729 | 561 |
Net (increase)/decrease in net borrowings from cash flows | (159) | 324 |
Exchange differences on net borrowings | (31) | 420 |
Other non-cash items | (32) | (159) |
Net borrowings at beginning of the period | (12,109) | (13,246) |
Net borrowings at end of the period | (12,331) | (12,661) |
Payments For Derivatives Designated In Forward Point Hedges | £ (2) | £ 0 |
Reconciliation of movement in_4
Reconciliation of movement in net borrowings - Narrative (Details) € in Millions, £ in Millions, $ in Millions | 6 Months Ended | |||||
Dec. 31, 2021GBP (£) | Dec. 31, 2021EUR (€) | Dec. 31, 2020GBP (£) | Dec. 31, 2020EUR (€) | Dec. 31, 2020USD ($) | Dec. 31, 2020EUR (€) | |
Disclosure of reconciliation of liabilities arising from financing activities [line items] | ||||||
Repayment of bonds | £ 769 | £ 1,247 | ||||
Proceeds from bonds issued | £ 0 | 1,031 | ||||
Proportion of ownership interest in subsidiary | 100.00% | 100.00% | ||||
Euro | ||||||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | ||||||
Repayment of bonds | £ 769 | € 900 | 696 | € 775 | ||
Bonds issued | € | € 700 | |||||
Proceeds from bonds issued | 636 | |||||
US Dollar | ||||||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | ||||||
Repayment of bonds | 551 | $ 696 | ||||
Pound Sterling | ||||||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | ||||||
Bonds issued | 395 | |||||
Discount and fee from bonds issued | £ 5 |
Financial instruments - Narrati
Financial instruments - Narrative (Details) - GBP (£) £ in Millions | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2023 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disclosure of detailed information about financial instruments [line items] | |||||
Financial liability including put option | £ 388 | £ 332 | £ 257 | ||
Fair value of gross borrowings | 13,877 | 14,727 | |||
Level 3 | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Contingent consideration included in other financial liabilities | 483 | 481 | 578 | ||
Increase in financial assets | 29 | 6 | |||
Level 1 | Fair value | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Fair value of gross borrowings | 21,428 | 15,895 | |||
Contingent consideration | Level 3 | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Contingent consideration included in other financial liabilities | £ 314 | £ 333 | 429 | £ 249 | |
Business combinations | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Contingent consideration payment period | 9 years | ||||
Business combinations | Contingent consideration | Undiscounted amount | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Contingent consideration included in other financial liabilities | £ 361 | ||||
Industrias Licoreras de Guatemala | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Equity stake held by external party | 50.00% | ||||
Industrias Licoreras de Guatemala | Level 3 | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Financial liability including put option | £ 169 | £ 149 | |||
Industrias Licoreras de Guatemala | Option exercised two years later | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Increase in fair value of liability | £ 41 |
Financial instruments - Schedul
Financial instruments - Schedule of financial assets and liabilities measured at fair value (Details) - GBP (£) £ in Millions | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Valuation techniques based on observable market input (Level 2) | |||
Disclosure of detailed information about financial instruments [line items] | |||
Derivative assets | £ 381 | £ 443 | £ 489 |
Derivative liabilities | (237) | (129) | (150) |
Financial assets/(liabilities) | 144 | 314 | 339 |
Valuation techniques based on unobservable market input (Level 3) | |||
Disclosure of detailed information about financial instruments [line items] | |||
Financial assets/(liabilities) | (316) | (440) | (359) |
Financial assets - other | 167 | 138 | 122 |
Financial liabilities - other | £ (483) | £ (578) | £ (481) |
Financial instruments - Movemen
Financial instruments - Movements in level 3 instruments measured on a recurring basis (Details) - Level 3 - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of fair value measurement of liabilities [line items] | ||
At the beginning of the period | £ (578) | |
At the end of the period | (483) | £ (481) |
Zacapa financial liability | ||
Disclosure of fair value measurement of liabilities [line items] | ||
At the beginning of the period | (149) | (167) |
Net (losses)/gains included in the income statement | (7) | 2 |
Net (losses)/gains included in exchange in other comprehensive income | (4) | 15 |
Net (losses)/gains included in retained earnings | (12) | 1 |
Acquisitions | 0 | 0 |
Settlement of liabilities | 3 | 1 |
At the end of the period | (169) | (148) |
Contingent consideration recognised on acquisition of businesses | ||
Disclosure of fair value measurement of liabilities [line items] | ||
At the beginning of the period | (429) | (249) |
Net (losses)/gains included in the income statement | 18 | (17) |
Net (losses)/gains included in exchange in other comprehensive income | (9) | 27 |
Net (losses)/gains included in retained earnings | 0 | 0 |
Acquisitions | 0 | (181) |
Settlement of liabilities | 106 | 87 |
At the end of the period | (314) | (333) |
Contingent consideration recognised on acquisition of businesses | Casamigos Acquisition | ||
Disclosure of fair value measurement of liabilities [line items] | ||
At the end of the period | 0 | (80) |
Contingent consideration recognised on acquisition of businesses | Aviation Gin and Davos Brands | ||
Disclosure of fair value measurement of liabilities [line items] | ||
At the end of the period | (163) | (172) |
Contingent consideration recognised on acquisition of businesses | Lone River Ranch Water brand | ||
Disclosure of fair value measurement of liabilities [line items] | ||
At the end of the period | £ (51) | £ 0 |
Dividends and other reserves -
Dividends and other reserves - Schedule of dividends (Details) - GBP (£) £ / shares in Units, £ in Millions | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share Capital, Reserves And Other Equity Interest [Abstract] | ||||
Final dividend for the year ended 30 June 2021 of 44.59 pence per share (2020 - 42.47 pence) | £ 1,040 | £ 992 | ||
Final dividend per share (in GBP per share) | £ 0.4459 | £ 0.4247 |
Dividends and other reserves _2
Dividends and other reserves - Narrative (Details) - GBP (£) £ / shares in Units, £ in Millions | Jan. 26, 2022 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2021 |
Disclosure of reserves within equity [line items] | ||||
Interim dividend per share (in GBP per share) | £ 0.2796 | |||
Other reserves | £ 1,835 | £ 1,551 | £ 1,621 | |
Capital redemption reserve | 3,201 | 3,206 | ||
Hedging reserve surplus | 111 | 61 | ||
Exchange reserve deficit | (1,477) | (1,716) | ||
Reserve of change in value of foreign currency basis spreads | £ 30 | £ 22 | ||
Major ordinary share transactions | ||||
Disclosure of reserves within equity [line items] | ||||
Interim dividend per share (in GBP per share) | £ 0.2936 |
Acquisition of businesses - Sch
Acquisition of businesses - Schedule of cash consideration paid in respect of acquisition of businesses and purchase of shares of non-controlling interests (Details) - GBP (£) £ in Millions | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of detailed information about business combination [line items] | ||
Capital injection in associates | £ (21) | |
Net cash outflow on acquisition of businesses | (134) | £ (364) |
Cash consideration paid for Casamigos | ||
Disclosure of detailed information about business combination [line items] | ||
Contingent consideration arrangement | (83) | |
Cash consideration paid in respect of other prior year acquisitions | ||
Disclosure of detailed information about business combination [line items] | ||
Contingent consideration arrangement | (27) | |
Cash consideration paid for investments in associates | ||
Disclosure of detailed information about business combination [line items] | ||
Cash consideration paid | £ (3) |
Acquisition of businesses - Nar
Acquisition of businesses - Narrative (Details) - Sep. 17, 2021 £ in Millions, $ in Millions | GBP (£) | USD ($) |
Cash consideration paid for Casamigos | ||
Disclosure of detailed information about business combination [line items] | ||
Contingent consideration arrangement, cash transferred | £ 83 | $ 113 |
Contingent liabilities and le_2
Contingent liabilities and legal proceedings - Acquisition of USL shares from UBHL, winding-up petitions against UBHL and other proceedings in relation to the USL transaction (Details) ₨ / shares in Units, £ in Millions, ₨ in Billions | Dec. 31, 2020shares | Jul. 04, 2013INR (₨)₨ / sharesshares | Nov. 09, 2012Petition | Dec. 31, 2021 | Jul. 04, 2013GBP (£) |
Disclosure of contingent liabilities [line items] | |||||
Proportion of ownership interest in subsidiary | 100.00% | ||||
SPA | UBHL | |||||
Disclosure of contingent liabilities [line items] | |||||
Number of pending winding-up petitions | Petition | 5 | ||||
United Spirits Limited | |||||
Disclosure of contingent liabilities [line items] | |||||
Percentage of interest acquired | 14.98% | 14.98% | |||
Proportion of ownership interest in subsidiary | 55.94% | ||||
United Spirits Limited | USL Benefit Trust | |||||
Disclosure of contingent liabilities [line items] | |||||
Ownership interest held by external party | 2.38% | ||||
United Spirits Limited | UBHL | |||||
Disclosure of contingent liabilities [line items] | |||||
Percentage of interest acquired | 6.98% | 6.98% | |||
Acquisition price per share (in INR per share) | ₨ / shares | ₨ 1,440 | ||||
United Spirits Limited | SPA | |||||
Disclosure of contingent liabilities [line items] | |||||
Number of shares acquired (in shares) | 21,767,749 | ||||
Total consideration | ₨ 31.3 | £ 349 | |||
United Spirits Limited | SPA | UBHL | |||||
Disclosure of contingent liabilities [line items] | |||||
Number of shares acquired (in shares) | 50,707,185 | 10,141,437 |
Contingent liabilities and le_3
Contingent liabilities and legal proceedings - Continuing matters relating to the resignation of Dr Vijay Mallya from USL and USL internal inquiries (Details) - 25 February agreement £ in Millions, $ in Millions | Mar. 12, 2018instalment | Nov. 16, 2017USD ($) | Nov. 16, 2017GBP (£) | Feb. 25, 2016USD ($) | Feb. 25, 2016GBP (£) | Feb. 25, 2021instalment | Feb. 25, 2016GBP (£) |
Disclosure of contingent liabilities [line items] | |||||||
Number Of Instalments Due | 5 | ||||||
Dr Mallya | |||||||
Disclosure of contingent liabilities [line items] | |||||||
Global non-compete, non-interference, non-solicitation and standstill commitments term | 5 years | 5 years | |||||
Committed payment relating to disengagement agreements | $ 75 | £ 53 | |||||
Consideration payment period | 5 years | 5 years | |||||
Amount paid relating to disengagement agreements | $ 40 | £ 28 | |||||
Amount payable relating to disengagement agreements in equal installments | 7 | £ 5 | |||||
Installments relating to disengagement agreements, not liable to pay due to breaches of several provisions | 7 | 5 | |||||
Repayment demanded of original amount paid | 40 | 28 | |||||
Number Of Disputed Instalments | 2 | ||||||
Watson Limited | |||||||
Disclosure of contingent liabilities [line items] | |||||||
Release of obligations to indemnify under guarantee of certain borrowings | $ 141 | 96 | |||||
Damages related to breach of associated security documents | $ 142 | £ 105 | |||||
United Breweries Overseas Limited | |||||||
Disclosure of contingent liabilities [line items] | |||||||
Release of obligations to indemnify under guarantee of certain borrowings | £ | £ 30 |
Contingent liabilities and le_4
Contingent liabilities and legal proceedings - Other continuing matters relating to Dr Mallya and affiliates (Details) $ in Millions | Oct. 15, 2020USD ($) | Oct. 15, 2020GBP (£) | May 24, 2019USD ($) | May 24, 2019GBP (£) | May 23, 2019 | Nov. 16, 2017USD ($) | Nov. 16, 2017GBP (£) | Jul. 04, 2013USD ($) | Jul. 04, 2013GBP (£) | Jun. 30, 2016USD ($) | Jun. 30, 2016GBP (£) |
Watson Limited | |||||||||||
Disclosure of contingent liabilities [line items] | |||||||||||
Damages awarded | $ 135 | £ 100,000,000 | |||||||||
Interest on damages awarded | 11 | 8,000,000 | |||||||||
CASL | |||||||||||
Disclosure of contingent liabilities [line items] | |||||||||||
Damages awarded | 67.5 | 50,000,000 | |||||||||
Interest on damages awarded | $ 5.5 | £ 4,000,000 | |||||||||
Damages awarded, co-surety percentage | 50.00% | ||||||||||
Watson Limited And Continental Administration Services Limited (CASL) | |||||||||||
Disclosure of contingent liabilities [line items] | |||||||||||
Damages awarded | £ 260,000 | ||||||||||
Additional damages awarded | $ 6 | £ 4,000,000 | |||||||||
Contingent liability for guarantees | Standard Chartered Bank (SCB) | Watson Limited | Diageo Holdings Netherlands BV | |||||||||||
Disclosure of contingent liabilities [line items] | |||||||||||
Guarantee provided in respect of bank facilities | $ 135 | £ 100,000,000 | |||||||||
Payment under guarantee agreement | $ 141 | £ 104,000,000 | $ 141 | £ 101,000,000 | |||||||
Damages claimed | 141 | 101,000,000 | |||||||||
25 February agreement | Watson Limited | |||||||||||
Disclosure of contingent liabilities [line items] | |||||||||||
Damages claimed | $ 142 | £ 105,000,000 | |||||||||
Percentage of damages claimed | 50.00% | 50.00% |
Contingent liabilities and le_5
Contingent liabilities and legal proceedings - Other matters in relation to USL (Details) | 6 Months Ended |
Dec. 31, 2021 | |
United Spirits Limited | |
Disclosure of contingent liabilities [line items] | |
Shares percentage of additional equivalent payments required to be made to shareholders | 0.04% |
Contingent liabilities and le_6
Contingent liabilities and legal proceedings - USL’s dispute with IDBI Bank Limited (Details) ₨ in Millions, £ in Millions | Apr. 01, 2015GBP (£) | Apr. 01, 2015INR (₨) | Dec. 31, 2021GBP (£) | Dec. 31, 2021INR (₨) | Jun. 30, 2021GBP (£) | Dec. 31, 2020GBP (£) | Jun. 30, 2020GBP (£) | Jul. 03, 2013GBP (£) | Jul. 03, 2013INR (₨) |
Disclosure of contingent liabilities [line items] | |||||||||
Borrowings | £ 12,331 | £ 12,109 | £ 12,661 | £ 13,246 | |||||
IDBI Bank Limited | United Spirits Limited | |||||||||
Disclosure of contingent liabilities [line items] | |||||||||
Damages claimed | £ 5 | ₨ 459 | £ 5 | ₨ 459 | |||||
IDBI Bank Limited | IDBI term loan | United Spirits Limited | |||||||||
Disclosure of contingent liabilities [line items] | |||||||||
Borrowings | £ 61 | ₨ 6,280 |
Contingent liabilities and le_7
Contingent liabilities and legal proceedings - Tax (Details) £ in Millions | Dec. 31, 2021GBP (£) |
India | |
Disclosure of contingent liabilities [line items] | |
Receivable for protest payments | £ 102 |
Receivable for protest payments, corporate taxes | 92 |
Receivable for protest payments, indirect taxes | 10 |
Tax contingent liability | Maximum | Brazil | |
Disclosure of contingent liabilities [line items] | |
Potential liability | 439 |
Tax contingent liability | Maximum | India | |
Disclosure of contingent liabilities [line items] | |
Potential liability | £ 124 |