Diageo Interactive AR2015

Annual Report 2015
2015
PERFORMANCE
HIGHLIGHTS
Volume
EU246.2m
Free cash flow(ii)
equivalent units
1,963m
Net sales
Earnings per share(i)
10,813m
2014:
EU156.1m
2014:
10,258m
Operating profit(i)
3,066m
2014:
1,235m
88.8p
2014:
95.5p
Total dividend per share(iii)
56.4p
2014:
3,134m
Alcohol in society(iv)
2014:
51.7p
Water efficiency(iv), (vi)
298
6.0L/L
2014:
373
Responsible drinking programmes

Health and safety(iv)
1.66
2014:
6.8L/L
(i) Before exceptional items. (ii) Free cash flow is a non-GAAP financial measure.
See definition and reconciliation to net cash from operating activities on page 52.
(iii) Includes recommended final dividend of 34.9p.
(iv) Excludes United Spirits Limited. See further details on pages 38-47.
(v) Per 1,000 employees. (vi) In accordance with Diageos environmental reporting
methodologies, data for 30 June 2014 has been restated and total water used excludes
irrigation water for agricultural purposes on land under the operational control of the
company. Within KPMGs independent limited assurance scope. See further details
on page 143.
2014:
1.66
Lost-time accident frequency(v)
NORTH
AMERICA
EUROPE(i)
AFRICA(i)
LATIN AMERICA
AND CARIBBEAN
ASIA
PACIFIC(ii)
Volume
Volume
Volume
Volume
Volume
EU47.3m
2014: EU49.3m
EU44.
1m
2014: EU44.6m
EU26.2m
2014: EU24.4m
EU21.6m
2014: EU23.0m
EU107.0m
2014: EU14.8m
Net sales(iii)
Net sales(iii)
Net sales(iii)
Net sales(iii)
Net sales(iii)
3,455m
2014: 3,444m
2,617m
2014: 2,814m
1,415m
2014: 1,430m
1,033m
2014: 1,144m
2,213m
2014: 1,347m
Operating profit(iv)
1,448m
2014: 1,460m
Read more on
pages 2627
804m
2014: 853m
Read more on
pages 2829
318m
2014: 340m
263m
2014: 328m
356m
2014: 283m
Read more on
pages 3031
Read more on
pages 3233
Read more on
pages 3435
(i) The figures for the geographical segments for prior periods have been restated. See further details on page 50. (ii) Volume, net sales and operating profit for Asia Pacific
includes EU92.7 million, 921 million and 48 million (net of transaction and integration costs of 5 million) in respect of United Spirits Limited. See further details
on page 50. (iii) Excluding corporate net sales of 80 million. (iv) Excluding exceptional operating charge of 269 million and corporate costs of 123 million.
DIAGEO ANNUAL REPORT 2015 01

DIAGEO IN 2015
Our ambition is to be one of the best

performing, most trusted and respected
consumer products companies in the world.
Our ambition is supported by six performance drivers and three

sustainability and responsibility imperatives.
Read more on pages 1619
This year, organic net sales were flat, operating margin improved
24 basis points and free cash flow was up 728 million.
Read more on pages 2225
We are a global leader in beverage alcohol with an outstanding

collection of brands across spirits, beer and wine. Our products
are sold in more than 180 countries around the world.
Our brands include Johnnie Walker, Crown Royal, JB, Buchanans
and Windsor whiskies, Smirnoff, Croc and Ketel One vodkas, Captain
Morgan, Baileys, Don Julio, Tanqueray and Guinness.
Strategic Report
Our business
Our global reach
Our brands
Outstanding breadth and depth across price points
Our Performance Ambition
Our business model
Chairmans statement
Chief Executives statement
How we measure performance: key performance indicators
Market dynamics
How we will deliver our Performance Ambition
How we protect our business: risk management and principal risks
Group financial review
Business reviews
Category review
Sustainability & Responsibility review
Definitions and reconciliations of non-GAAP measures
to GAAP measures
Governance
Board of Directors and Company Secretary
Executive Committee
Corporate governance report
Report of the Audit Committee
Directors remuneration report
Directors report
Financial statements
For more information about Diageo, our people and our brands,
visit www.diageo.com.
Diageo is listed on both the London Stock Exchange (DGE) and the New York Stock
Exchange (DEO).
Visit Diageos global responsible drinking resource, www.DRINKiQ.com,

for information, initiatives, and ways to share best practice.
In addition, Diageo has prepared a Sustainability & Responsibility
Performance Addendum, which is available on www.diageo.com.
It outlines further economic, social and environmental disclosures in
line with the Global Reporting Initiative Sustainability G4 Guidelines
and the United Nations Global Compact advanced reporting criteria.
Additional information for shareholders
54
55
56
60
63
82
84
142
This is the Annual Report of Diageo plc for the year ended 30 June 2015 and it is dated
29 July 2015. The Annual Report is made available to all shareholders on Diageos
website (www.diageo.com).
This report includes names of Diageos products, which constitute trademarks or trade
names which Diageo owns or which others own and license to Diageo for use. In this
report, the term company refers to Diageo plc and the terms group and Diageo refer to
the company and its consolidated subsidiaries, except as the context otherwise requires.
Diageos consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted for use in the European
Union (EU) and IFRS as issued by the International Accounting Standards Board (IASB).
References to IFRS hereafter should be construed as references to both IFRS, as adopted
by the EU, and IFRS, as issued by the IASB. Unless otherwise indicated, all financial
information contained in this document has been prepared in accordance with IFRS.
The brand ranking information presented in this report, when comparing information
with competitors, reflects data published by sources such as IWSR, Impact Databank,
Nielsen, Beverage Information Group and Plato Logic. Market data information and
competitive set classifications are taken from independent industry sources in the
markets in which Diageo operates.
Diageo plc 2015
Diageo plc is incorporated as a public limited company in England and Wales. Diageo
was incorporated as Arthur Guinness Son and Company Limited on 21October 1886.
The group was formed by the merger of Grand Metropolitan Public Limited Company
(GrandMet) and Guinness PLC (the Guinness Group) in December 1997. Diageo plcs
principal executive office is located at Lakeside Drive, Park Royal, London NW10 7HQ
and its telephone number is +44 (0) 20 8978 6000.
Cautionary statement: this document contains forward-looking statements.
For our full cautionary statement, please see on page 144.
Unless otherwise stated in this document, percentage movements refer to organic

movements. For a definition of organic movement see page 48. Share, unless otherwise
stated, refers to value share. Unless otherwise stated in this document, the percentage
figures presented are reflective of a year-on-year comparison, namely 2014-2015, only.
Cover image
Casks of Scotch whisky maturing at Carsebridge, one of
our warehouses in Scotland.
We continue to invest to build our brands and routes to consumer,

to deliver long term profitable growth.
02
03
04
05
06
07
08
10
12
14
16
20
22
26
36
38
48
Governance
Our purpose is to celebrate life, every day,

everywhere.
Contents
Strategic report
DIAGEO
IN 2015
02 DIAGEO ANNUAL REPORT 2015

OUR BUSINESS
OUR BUSINESS
Diageo is a global leader in
beverage alcohol with iconic
brands in spirits, beer and
wine. We provide consumers
with choice and quality
across categories and
price points.
Diageo has built a strong platform for

growth through investing in our brands and
route to consumer. Over the last five years
we have made acquisitions in brands and
local distribution while doubling the size
of our luxury business. We have also made
changes to our operating model and culture
aligning Diageo behind the need for greater
agility and responsiveness, creating a
business that is closer to the consumer.
Our 21 market model(i) has established strong

local business units, well positioned to win in
increasingly competitive and fast paced
operating environments.
We know that we must earn the trust and
respect of everyone that comes into contact
with our company. We must be transparent
and authentic, demonstrating good
citizenship every day, everywhere.
STRENGTH IN GLOBAL REACH

AND ICONIC BRANDS
DOING BUSINESS
THE RIGHT WAY
We have outstanding breadth and depth in our portfolio, with

brands across price points and categories to meet consumer
demand now and in the future.
For us, standards are everything, from how we produce and market
our brands, to how we innovate and sell, and in governance and
ethics as codified in our Code of Business Conduct.
WE PRODUCE
WE MARKET
WE INNOVATE
WE SELL
We produce our brands from

more than 200 sites in over 30
countries. We are committed
to efficient, sustainable
production to the highest
quality standards. Our
export-led International
Supply Centre (ISC) employs
over 4,000 people across
more than 55 sites in Scotland,
England, Ireland, Italy and the
Netherlands.
We invest in world-class
marketing to build our brands,
focusing on connecting with
existing and new consumers.
For decades our brands have
been at the forefront of
marketing innovation and the
same remains true today. We
take seriously our obligations
to market responsibly and
help consumers make
informed decisions.
Innovation is critical to our

continued growth. We are
committed to finding
breakthrough innovations
to serve customers and
consumers. We identify
emerging trends, and boldly
innovate at scale. Innovation
is a permanent engine of
growth for our business and
we are restless in our search
for new products.
Everyone at Diageo sells or

understands how they can
help sell. This is just one
expression of the sales-led
organisation we are building.
In each of our 21 markets, we
are passionate about ensuring
our products are available
where consumers want them.
We work to deliver amazing
consumer experiences and
to extend our sales reach.
CREATING SHARED VALUE

Our distilleries, breweries and
wineries are at the heart of the
communities where we work.
We have a responsibility to
create shared value for our
shareholders, our people, and
for the societies that enable our
business to grow. Within the
community, we are proud of our
work to address development

challenges, including skills,
social enterprise and access to
clean water, and to encourage
responsible drinking.
Our values underpin our
business and guide us. We are
passionate about our customers
and consumers and want to be
the best. We give our people

the freedom to do the best
work of their careers and value
everyones contribution. We are
proud of what we do, and how
we do it.
Our purpose, celebrating life,
every day, everywhere, is to
make the most of life to be the
(i) Throughout this Annual Report 2015, reference to Diageos 21 geographically based markets will be stated as 21 markets.
best at work, at home, with

friends, in the community,
and for the community. For
our brands to be part of
celebrations big and small.

OUR GLOBAL REACH
One of Diageos key strengths is its geographic reach.

We operate as 21 geographically based markets around
the world and have a presence in over 180 countries.
We employ more than 33,000 talented people across our
global business. 43% of Diageos business is in the emerging
markets in Latin America, Asia, Africa, Eastern Europe
and Turkey. This presence is balanced through our strong
businesses in the worlds most profitable beverage alcohol
market, the United States, and an integrated Western
European business.
Strategic report
OUR
GLOBAL
REACH
% SHARE OF NET SALES BY OUR 21 MARKETS

Governance
EACH OF OUR 21 MARKETS

IS ACCOUNTABLE FOR ITS OWN
PERFORMANCE AND FOR
DRIVING GROWTH
>15%
North America
Europe
Africa
US Spirits and
Wines
Western Europe(i)
Latin America
and Caribbean
610%
Asia Pacific
India
Diageo-Guinness
USA (DGUSA)
23%
Canada
<2%
Turkey
Nigeria
West LAC
Global Travel, Asia

and Middle East
Africa Regional
Markets
Paraguay,
Uruguay
and Brazil
Australia
North Asia
Greater China
South Africa
Mexico
South East Asia
East Africa
Russia and
Eastern Europe(i)
36%
Venezuela
Colombia
Based on reported net sales for the year ended 30 June 2015.
(i) On 1 July 2015, Russia became a standalone market and Eastern Europe was merged with Western Europe to create a Diageo Europe market.
DIAGEO REPORTS
AS FIVE REGIONS
% SHARE BY REGION
Volume (%)
Net sales(ii) (%)
Operating profit(iii) (%)
Number of responsible drinking
programmes(iv) (%)
Water withdrawals(iv) (%)
Carbon emissions(iv) (%)
Number of employees(v) (%)
Europe
Africa
Latin America
and Caribbean
Asia Pacific
19.2
32.2
45.4
17.9
24.4
25.2
10.6
13.2
10.0
8.8
9.6
8.2
43.5
20.6
11.2
21.1
11.1
8.5
9.8
24.5
45.3
51.8
33.0
14.1
37.2
35.0
16.5
19.8
4.5
3.2
8.8
20.5
1.9
1.5
31.9
(ii) Excluding corporate net sales of 80 million. (iii) Excluding exceptional operating charges of 269million and corporate costs of 123million. (iv) Excludes United Spirits Limited.
See further details on pages 3847. (v) Employees have been allocated to the region in which they reside.
North America

OUR BRANDS
OUR BRANDS
Our 21 market model affords each market
the flexibility to select the right portfolio of
brands to capture the unique consumer
opportunities that exist in that market and
place resources directly against our biggest
growth opportunities.
Our 21 market structure means we now

look at our brands through the lens of
global giants and local stars, alongside
our leading reserve brands. Our in-market
local star brands can be individual to any
one market, and provide a platform to
accelerate the growth of our international
premium spirits. A selection of these brands
are included in the table below.
Global giants(i)
JW Odyssey Logo Lock-Up - CMYK
Local stars(ii)
Odyssey Rich Medium Brown

(iii)
Reserve
C=0
M=10
Y=27
K=50
(i) Global giants represent 39% of Diageo net sales. (ii) Local stars represent 16% of Diageo net sales. (iii) Reserve brands represent 13% of Diageo net sales.

OUTSTANDING BREADTH AND DEPTH ACROSS PRICE POINTS
Super premium
Premium
Standard
Value
Scotch whisky
Governance
Ultra premium(i)
In our portfolio we have brands at almost

every price tier of every category. The range
of our price points means we are able to
capture consumption shifts across the price
spectrum. The breadth and depth of our
business provide resilience, and enable us
to sustain our performance over time.
Strategic report
OUTSTANDING
BREADTH AND
DEPTH ACROSS
PRICE POINTS
Other whisk(e)y
Vodka
Liqueur
Rum
Tequila
Local spirits
Beer
(i) Ultra premium includes prestige.
Gin

OUR PERFORMANCE AMBITION
OUR
PERFORMANCE
AMBITION
Diageos Performance Ambition is to create

one of the best performing, most trusted and
respected consumer products companies in
the world.
DIAGEOS STRATEGY AIMS TO DELIVER

OUR PERFORMANCE AMBITION THROUGH:
Prioritised investment in:
Reserve
Premium core spirits(i)

Read more on page 16.
Targeted investment in:
Other spirits(i)
Beer
Wine
(i) Spirits include ready to drink (RTDs).
We measure progress against our Performance Ambition

using the following financial and non-financial indicators:
Efficient growth

Consistent
value creation
Organic net sales
Operating margin
Earnings per share
Free cash flow
Return on average
invested capital

Total shareholder return
See our key performance indicators (KPIs) on pages 1213.

Credibility and trust
Responsible drinking
programmes
Water efficiency
Carbon emissions
Motivated people
Health and safety
Employee engagement

OUR BUSINESS MODEL
Broad portfolio
AGILE OPERATING
MODEL
FOCUSED
INVESTMENT
21 markets
Geographic reach
Participation strategy
Financial strength
Supply management
Efficient supply and procurement
Consumer insights
Leading capabilities
Performance drivers
Values
Geographic reach: we have geographic reach through

the breadth and depth of our global and local brands.
Financial strength: our competitive advantage is
reflected by our strong financial returns and consistent
financial performance.
Efficient supply and procurement: across the world we
have efficiency in supply and procurement, with our
manufacturing operations working to high quality and
environmental standards.
Global functions: Diageos 21 markets are supported by

a global structure and shared services designed to share
best practice, impart knowledge and help build capability
at a local level, as well as apply governance of controls,
compliance and ethics.
Values: at the heart of everything we do are our
company values: passionate about customers and
consumers; be the best; freedom to succeed; proud of
what we do; valuing each other.
Supply management: our 21

markets are designated as import
markets, import and third party
production markets, or import and
local production markets.
Consumer insights: our deep
consumer insights help us to
anticipate and respond to rapidly
changing dynamics across all markets,
and continue to nurture and grow
some of the worlds best-loved brands.
Performance drivers: Diageo has identified

six performance drivers which are key to
achieving our aims. Each market focuses on
the priorities that will drive performance in
that market: premium core brands; reserve;
innovation; route to consumer; cost;
and talent.
Sustainability & Responsibility imperatives:
Alcohol in society we aim to create a positive
role for alcohol in society through partnerships
and programmes that reduce harmful drinking.
Thriving communities we must equip
people in our business, our supply chain and
our communities, particularly women, with the
skills and resources they need to build a better
future for themselves.
Environmental impact we will make our
products and business operations more
environmentally sustainable, targeting water
use, carbon emissions and waste, reducing the
volume of packaging we use and sourcing
paper and board from sustainable forests.
Our performance drivers and Sustainability &
Responsibility imperatives are underpinned by
our commitment to the highest standards of
governance and ethics.
Value creation: shareholder value; investment in the business; customer, employee and social value
Leading capabilities: Diageos focus is on brilliant

execution including breakthrough marketing, scalable
innovation, and winning relationships with our customers
and consumers through distribution and sales.
Participation strategy: our

participation strategy is to invest
behind the biggest growth
opportunities, by category and
channel, for our brands in our
21 markets.
Sustainability &
Responsibility imperatives
Global functions
Broad portfolio: Diageo has world-leading brands across

categories and price points.
Governance
STRONG
PLATFORM
Diageo has grown through investment in

our brands and route to consumer, and by
acquisitions to broaden our geographical
footprint and our category depth and range.
Our business model is designed to drive returns
for shareholders, while creating value for our
customers, employees and the communities
in which we operate.
Strategic report
OUR
BUSINESS
MODEL

CHAIRMANS STATEMENT
CHAIRMANS STATEMENT:
WE ARE CREATING ONE OF THE
BEST PERFORMING, MOST TRUSTED
AND RESPECTED CONSUMER
PRODUCTS COMPANIES.
Over the last two years we have taken
the necessary steps to strengthen
Diageo, to position our company to drive
sustainable growth and value for you, our
shareholders, and to ensure we are a trusted
and respected partner to all our stakeholders
around the world.
Interim dividend per share
21.5p
( 9%)
31December 2013: 19.7p

Final recommended dividend per share
34.9p
( 9%)
30June 2014: 32.0p
Total dividend per share(i)
56.4p
( 9%)
Full year 2014: 51.7p
(i) Includes recommended final dividend.
Diageo is a leader in beverage alcohol, one

of the most attractive growth sectors in
consumer products. With our portfolio
of global and local brands, and the presence
we have built in developed and emerging
markets, we are well positioned to capture
this growth.
Performance and dividend
In a volatile global environment, our
commitment to being one of the best
consumer products companies is as strong
as ever. Ivan and the Executive Committee
have taken actions to strengthen the
business to deliver operational and cultural
change, greater agility and responsiveness.
Performance this year reflects these actions
and continued tough conditions in some
markets. In addition, currency volatility
affected trading, especially in some of our
scotch markets where currency devaluation
impacted the price of imported goods for
local consumers.
We are more focused than ever on
managing cost and delivering cash, and
I am pleased that we achieved strong cash
conversion, over 100%, during the year.
This, together with the actions we are taking
to realise our full potential, has enabled the
Board to recommend a final dividend of
34.9 pence per share. This would bring the
total dividend for the year to 56.4 pence

per share, an increase of 9% over the prior
year. The final dividend will be paid to
shareholders on 8 October 2015. Earnings
per share to dividend cover at 1.6 times is
now outside our cover ratio, and we will
look to rebuild cover over time, maintaining
dividend increases at a mid-single digit rate
until we are back in range.
Strategic progress
Diageos strategy is delivered through a
market focus. In individual markets, we
compete with our iconic global brands
and local stars while building strong routes
to consumer. Our in-market teams are
accountable for delivering holistic
performance and are empowered to act
with speed and agility, supported by the
scale and expertise of our global business.
As a business we have been focused on
organic growth while capturing inorganic
opportunities. For example, we have been
capitalising on North American whisk(e)y
trends with the launch of Crown Royal Regal
Apple and the continuing success of Bulleit
and our other craft bourbons. We have also
been broadening our participation in new
categories and across price points, with the
Orijin brand in Nigeria and Haig Club, a single
grain Scotch whisky.

CHAIRMANS STATEMENT
Our people
Diageos success is in the hands of our 33,000
employees around the world. I would like to
thank them all for their dedication and hard
work during the year. We must create an
environment that stretches and challenges
our people and enables them to do their
best work, living our values each and every
day. I am committed to continuing to build
such an environment, and look forward to
working with my colleagues on the Board
and throughout the business to make sure
that we do.
Looking ahead
Your Board is confident that Diageo will
deliver its Performance Ambition. Over the
last two years we have taken the necessary
steps to strengthen Diageo, to position our
company to drive sustainable growth and
value for you, our shareholders, and to
ensure we are a trusted and respected
partner to all our stakeholders around
the world.
Dr Franz B Humer
Chairman
Diageo share price performance
Diageo share price rebased to 100

FTSE share price rebased to 100
Share price (pence)

300
250
200
17%
6%
6%
Diageo
Pernod Ricard
150
10%
Bacardi
Brown-Forman
Beam Suntory
Others
Source: Impact Databank, February 2015
100
50
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
26%
Board changes
Having been on the Board for nine years,
Laurence Danon will step down at the
upcoming Annual General Meeting. On your
behalf I would like to thank Laurence for
her contribution over a period of progress
and growth for Diageo. In July 2015, we
announced that Emma Walmsley will join
the Board as a Non-Executive Director
effective 1 January 2016. Emma is currently
Chief Executive Officer of GSK Consumer
Healthcare.
35%
Business environment
With our strong portfolio of Scotch whisky
brands, we have a deep commitment to
Scotland built on the heritage of some of the
industrys greatest entrepreneurs. The
current debate over the United Kingdoms
role within the European Union is one in
which Diageo is actively engaged. We want
our Scotch whisky business, which makes a
considerable contribution to the British
economy, to remain competitive in the
global marketplace and believe that the best
interests of the whole industry are served

by the United Kingdom remaining within
a strong, reformed European Union.
Governance
Global volume share of premium spirits

(%)
Sustainability and responsibility

Diageo has a long history of working within
the communities where our products are
enjoyed, and we understand that the role
and impact of alcohol within society must
be our primary focus. Our work to promote
responsible drinking and reduce alcoholrelated harm remains central to our purpose
of celebrating life every day, everywhere, and
we share the goal of the World Health
Organization (WHO) to reduce the harmful
use of alcohol by 10% by 2025. In line with
the industrys commitments, during the year
progress was made on underage drinking,
reducing drink driving and strengthening
marketing codes.
We are proud of the broad contribution
we are making to society, through our
economic contribution and through our
three community programmes: Learning
for Life, Water of Life and Plan W. These
programmes have: provided training and
skills to more than 100,000 people in the
Americas and Britain to help them secure
new jobs; delivered access to clean water
and sanitation to more than 10 million
people in Africa supporting better health;
and empowered around 100,000 women
across Asia. And within Diageo, we continue
to champion diversity and inclusivity.
One example of this is the level of female
representation at Board and Executive
Committee level, at 45% and 40%
respectively.
Strategic report
Diageo acquired a majority stake in United

Spirits Limited (USL) in India in July 2014,
consolidating Diageos position as a local
leader in spirits in this exciting growth
market. We are now moving into the next
phase of integration, prioritising brand
investment, driving efficiencies and
continuing the implementation of Diageos
operational and governance standards
across the business, while putting in place a
route to consumer team to further develop
USLs already impressive market coverage.
In February 2015, we completed the
acquisition of the remaining 50% of tequila
brand, Don Julio. In gaining full global
ownership and management control of the
brand and its supply assets, we enhance our
position in the high growth segments of
super and ultra premium tequila. With this
deal we also repatriated the Smirnoff brand
into our in-market company in Mexico which
will allow us to extend our leading position
in spirits in this attractive market.
We remain committed to reviewing
our portfolio to ensure that we are the
best owners of our assets. We realised full
management control of Don Julio through
the sale of Bushmills. While Bushmills is a
good brand, this was the right strategic
decision for Diageo as we invest behind
the biggest growth opportunities. The sale
of the Gleneagles Hotels Limited is another
example of Diageos decision to focus on key
priorities. Following the success of the Ryder
Cup we felt it was an appropriate time to
realise value through this sale. We are
pleased that the new owner of Gleneagles
has committed to be a significant inward
investor in Scottish tourism and will work
closely with the local community to make
a positive contribution to the visitor industry
and the Scottish economy.

CHIEF EXECUTIVES STATEMENT
CHIEF EXECUTIVES STATEMENT:

WE HAVE DELIVERED CHANGES WHICH
WILL BUILD STRONG, SUSTAINED
PERFORMANCE.
The fundamentals for future growth
remain strong: Diageo will benefit
from the increasing penetration of spirits
in emerging markets, innovation and the
growing appetite for luxury spirits around
the world.
In the next decade one billion new

consumers will be able to afford our brands
and an additional 800 million consumers will
reach levels of income where luxury brands
are affordable. Diageo has the leading
position in the United States, an integrated
Western Europe business, a strong beer
platform in Africa from which to build spirits,
the leading spirits business in India, and a
strong presence in the growth markets of
Latin America and Asia.
This year we improved cash conversion,
strengthened our route to consumer,
delivered industry leading innovation at
scale, extended our leadership in reserve and
accelerated delivery of our programmed cost
savings. We have further sharpened our
marketing to better navigate changing
consumer trends. So, while some markets
have been challenging, we remain confident
in the long term global demographics and
our ability to deliver growth through the
business transformation we are effecting.
Driving operational and cultural change

In the past year we have implemented some
important changes to strengthen our
business. These changes are aimed at
providing greater visibility and will allow
us to react more quickly to changes in
the marketplace, consumer sentiment
and demand.
We have completed our shift to a marketled model, enabling greater speed in the
way we execute and local accountability.
We have shifted our focus to the
consumer, allowing us to make better
decisions on how we use our marketing
spend and run our supply chains.
We have embedded a productivity
discipline, in order to create more
opportunity to invest behind growth in
our brands.
We continue to ensure we have the right
people with the right capabilities to
deliver our plans across our business.
Results
Organic net sales were flat. Volume declined
1% reflecting a destock in South East Asia,
lower shipments in the United States and
improving price/mix led by the growth of
reserve brands.
Organic operating margin was up
24 basis points delivered by cost savings
and efficiencies, which more than offset
the impact of cost inflation and negative
market mix. Our global efficiency
programme identified 200 million of cost
savings to be delivered by the end of fiscal
2017. We delivered 127 million this year,
and as planned reinvested 30 million
of the savings.
Free cash flow was up over 700 million
this year, to almost 2 billion, as I made cash
a clear priority for improvement. To deliver
this, incentive programmes were changed
and we set clear targets for each market.
This focus has led to many examples across
markets where we have improved processes
and ways of working to reduce our working
capital. The sales of the Bushmills brand and
the Gleneagles Hotel also generated cash in
the year.

CHIEF EXECUTIVES STATEMENT
Our people
It is a privilege to work with Diageo teams
across the world. I feel honoured to lead a
company where purpose and values are
deeply ingrained. The commitment of our
people to get behind the decisions taken
during the year is encouraging. This was
demonstrated in the results of our annual
employee Values Survey, with employee
engagement improving through a tough
performance period. This evidence of the
passion and commitment all of us hold for
Diageo is the perfect fuel to drive future
growth, and I look forward to working with
our teams across the business, implementing
the exciting plans we have for the year ahead.
Larry Schwartz, President Diageo North
America, will retire at the end of this calendar
year. Larry has many achievements in a
40-year career in the industry, not least his
commitment to deliver growth for Diageo
and build our strong North American
platform. Deirdre Mahlan, currently Chief
Financial Officer and the incoming leader of
this business, will have this platform to build
on as she drives the next stage of Diageo
North Americas growth.
7%
8%
24%
5%
4%
7%
18%
12%
3%
1%
Scotch
NAM Whisk(e)y
Vodka
Rum
5%
Liqueur
Tequila
Gin
Beer
6%
Wine
Ready to drink
IMFL
Other
Ivan Menezes
Chief Executive
2015 net sales by category (%)
Outlook
The fundamentals for future growth remain
strong: Diageo will benefit from the
increasing penetration of spirits in emerging
markets, innovation and the growing
appetite for luxury spirits around the world.
We have taken some tough decisions
over the last couple of years to set Diageo
up to deliver strong, sustained performance.
Today we are closer to the consumer, more
agile, and focused on productivity, with the
people, skills and capabilities to deliver on
the opportunity. We are at an exciting point
on our journey. In 2016, we believe stronger
volume growth will deliver an improved top
line performance.

In December 2014 we launched our 2020
Sustainability & Responsibility targets.
Stretching and industry leading, our 2020
targets address our most material issues:
leadership in alcohol in society; building
thriving communities; and reducing our
environmental impact. The 2020 targets
draw on our achievements to date and are
aligned with the new, emerging United
Nations Sustainable Development Goals.
With these targets, we are going beyond
the establishment of programmes on
responsible drinking, community
development and environmental
performance, to focus on measuring their
impact, challenging ourselves to strengthen
their value, impact and scale. In doing so, we
will work in partnership with governments,
civil society, individuals, NGOs and other
companies to put in place programmes
with quantifiable outcomes. We continue
to support fully the Global Producers
Commitments, a co-ordinated industry
response to support the World Health
Organizations (WHO) Global Strategy to
Reduce the Harmful Use of Alcohol.
In April this year we announced an
ambitious strategy for water stewardship.
With water a pressing business and global
issue, our Water Blueprint recognises the
responsibilities of operating in water-stressed
areas and explains how we will support the
sustainability of the water resources on
which we and those around us rely.
Productivity
At the end of July 2015, we announced our
intention to deliver productivity gains of a
further 500 million over three years from
fiscal 2017 to invest in growth and improve
margin. As we achieve our productivity gains
we expect to deliver mid-single digit organic
top line growth on a sustained basis and
operating margin expansion of 100 basis
points over the same three year period.
Governance
Our Water Blueprint and our progress

towards all of our targets are essential parts
of our long term plan, not just in enabling
sustainable operations but also in creating
opportunities for growth.
Strategic report
Earnings per share before exceptionals

fell 7% to 88.8 pence largely as a result of
adverse exchange movements and lower
income from associates and joint ventures,
offset by underlying improvements.

HOW WE MEASURE PERFORMANCE: KEY PERFORMANCE INDICATORS
HOW WE MEASURE PERFORMANCE:

KEY PERFORMANCE INDICATORS
FINANCIAL
FINANCIAL
FINANCIAL
ORGANIC NET SALES GROWTH

(%)
ORGANIC OPERATING MARGIN

IMPROVEMENT (BPS)
EARNINGS PER SHARE BEFORE

EXCEPTIONAL ITEMS (PENCE)(i)
0.0%
6
59
0.4
2011
2012
+24bps
2013
2014
78
88.8p
77
81.6
92.6
103.1
95.5
88.8
2011
2012
2013
2014
2015
24
0.0
2015
Definition
Sales growth after deducting excise duties,
excluding the impact of exchange rate
movements, acquisitions and disposals.
Why we measure
This measure reflects our performance as the
result of the choices made in terms of category
and market participation, and Diageos ability
to build brand equity, increase prices and
grow market share.
Performance
Organic net sales were flat, with volume decline
of 1% reflecting a destock in South East Asia and
West LAC, lower shipments in the United States
and improving price/mix led by the growth of
reserve brands.
See page 23 for more detail.
0
2011
2012
2013
2014
2015
Definition
The percentage point movement in operating
profit before exceptional items, divided by net
sales after excluding the impact of exchange rate
movements and acquisitions and disposals.
Why we measure
The movement in operating margin measures the
efficiency of the business. Consistent operating
margin improvement is a business imperative,
driven by investment choices, our focus on
driving out costs across the business and
improving mix.
Performance
Margin improved mainly due to cost savings,
primarily through our global efficiency
programme, partially offset by reinvestment in
route to consumer, cost inflation and negative
market mix.
Definition
Profit before exceptional items attributable to
equity shareholders of the parent company,
divided by the weighted average number of
shares in issue.
Why we measure
Earnings per share reflects the profitability of
the business and how effectively we finance
our balance sheet. It is a key measure for our
shareholders.
Performance
Eps before exceptional was down by
6.7 pence per share driven by adverse
exchange movements and lower income
from associates and joint ventures,
offset by underlying improvements.
NON-FINANCIAL
NON-FINANCIAL
NON-FINANCIAL
ALCOHOL IN SOCIETY(iii)
HEALTH AND SAFETY(iii)
(RESPONSIBLE DRINKING PROGRAMMES)
(LOST-TIME ACCIDENT FREQUENCY PER 1,000 EMPLOYEES)
298 PROGRAMMES
1.66
WATER EFFICIENCY(iii), (v)

(L/L)
250
2011
300
2012
315
2013
373
2014
298
2015
Definition
Programmes supported by Diageo that aim to
reduce harmful drinking.
Why we measure
Alcohol-related harm is our most important social
issue. These programmes address risks such as:
harm to consumers and communities; limitations
to our licence to operate; and the loss of trust and
respect from our stakeholders.
Performance
In shifting our focus towards the Global
Producers Commitments, we supported fewer
programmes this year, and in line with our 2020
target, we are prioritising impact, which involves
supporting fewer but more effective
programmes.
6.0L/L
3.73
2.14
2011
2012
2.97
2013
1.66(iv)
1.66
2014
2015
Definition
Number of accidents per 1,000 employees and
directly supervised contractors resulting in time
lost from work of one calendar day or more.
Why we measure
Safety is a basic human right: everyone has the
right to work in a safe environment, and our Zero
Harm safety philosophy is that everyone should
go home safe, every day, everywhere.
Performance
Our overall lost-time accident frequency rate has
remained static despite improvements in our
operations, our accident rate in offices and sales
functions has increased. Addressing this will be
a key focus for us in 2016.
See pages 4445 for more detail.
7.2
6.9
7.0
6.8
6.0
2011
2012
2013
2014
2015
Definition
Ratio of the amount of water required to produce
one litre of packaged product.
Why we measure
Water is the main ingredient in all of our brands.
To sustain production growth and respond to
the growing global demand for water, we aim
to improve efficiency, minimising our water use,
particularly in water-stressed areas.
Performance
11.8% improvement on 2014, resulting from
process optimisations and improvements related
to equipment, raw material handling, culture and
behaviour towards water stewardship.

HOW WE MEASURE PERFORMANCE: KEY PERFORMANCE INDICATORS
Their relevance to our strategy and our

performance against these measures
are explained below:
Relevance to strategy
Efficient growth
Consistent value creation
Motivated people
FINANCIAL
FINANCIAL
FINANCIAL
FREE CASH FLOW

( MILLION)
RETURN ON AVERAGE INVESTED CAPITAL

(ROIC) (%)(ii)
TOTAL SHAREHOLDER RETURN (%)
1,963m
1,801
2011
12.3%
1,963
1,657
1,452
1,235
2012
2013
2014
2015
2012
16.5
2013
14.1
2014
NON-FINANCIAL
EMPLOYEE ENGAGEMENT INDEX (%)
(1,000 TONNES CO2E)
652
2012
2015
2011
85
701
673
652
2013
2014
2015
17
2012
2013
2014
2015
Definition
Percentage growth in the value of a Diageo share
(assuming all dividends and capital distributions
are re-invested).
Why we measure
As a public limited company, Diageo has a
fiduciary responsibility to maximise long term
value for shareholders. We also monitor our
relative TSR performance against our peers.
Performance
Diageo delivered total shareholder return of
2% as dividends paid increased by 9% and
earnings declined mainly as a result of adverse
exchange movements.
2011
86
2012
See our Directors remuneration report from

page 63 for more detail.
85
2013
73(vii)
2014
75
2015
Definition
Measured through our Values Survey; includes
metrics for employee satisfaction, loyalty,
advocacy and pride.
Why we measure
Employee engagement is a key enabler of our
strategy and performance. The survey allows us to
measure, quantitatively and qualitatively, how far
employees believe we are living our values. The
results inform our ways of working, engagement
strategies and leadership development.
Performance
94% of our people participated in our Annual
Values Survey. Our people confirmed that one
of our core strengths continues to be our
employees pride and strong sense of ownership
of our business and our brands.
See pages 4445 for more detail.
(i) For reward purposes this measure is further adjusted

for the impact of exchange rates and other factors not
controlled by management, to ensure focus on our
underlying performance drivers.
(ii) The group has revised the return on average invested
capital calculation by excluding the profit and net assets
attributable to non-controlling interests. Comparative
figures have been restated.

(iii) Excludes
United Spirits Limited. See pages 38-47
for further details..

(iv) Revised
comparative amount to be consistent with current
year presentation, see more details on page 45.
(v) In accordance with Diageos environmental reporting

methodologies, data for each of the four years in the period
ended 30 June 2014 has been restated and total water used
excludes irrigation water for agricultural purposes on land
under the operational control of the company..
(vi) Data for each of the four years in the period ended
30 June 2014 has been restated in accordance with
the WRI/WBCSD GHG Protocol and Diageos environmental
reporting methodology.
(vii) In 2014, we reviewed our overall approach to measuring
engagement, and adopted a revised index (it is not possible
to restate prior year figures under the new method, so 2011-2013
show highly engaged scores based on the former method).
The new index allows us to compare our results with other
best-in-class organisations, and sets a more challenging
benchmark for employee engagement. As part of this process,
we changed our key performance indicator from super
engagement to engagement.
Within KPMGs independent limited assurance scope.
Please see page 143 for further details.
Definition
Absolute volume of carbon emissions,
in 1,000 tonnes.
Why we measure
Carbon is a key element of our overall
environmental impact and the impact of the
industry. We recognise the importance of
reducing our carbon emissions, not just to create
efficiencies and savings now, but also to mitigate
climate change and position us well for a low
carbon economy in the future.
Performance
Improved performance resulting from cumulative
impacts of multiple energy efficiency initiatives
and switches to renewable fuels, predominately
biogas recovery and reuse.
33
Remuneration
Some KPIs are used as a measure in the incentives
plans for the remuneration of executives. These are
identified with the symbol .
75%
2011
24
CARBON EMISSIONS(iii), (vi)
733
12.3
Definition
Profit before finance charges and exceptional items
attributable to equity shareholders divided by
average invested capital. Invested capital comprises
net assets aggregated with exceptional restructuring
costs and goodwill at the date of transition to IFRS,
excluding post employment liabilities, net
borrowings and non-controlling interests.
Why we measure
ROIC is used by management to assess the return
obtained from the groups asset base. Improving
ROIC builds financial strength to enable Diageo
to attain its financial objectives.
Performance
The additional investment in United Spirits
Limited and its full consolidation reduced ROIC
by 1.1 pps. Adverse exchange and lower income
from associates resulted in a further reduction
offset by organic operating profit growth.
NON-FINANCIAL
779
2%
2011
16.3
Governance
Definition
Free cash flow comprises the net cash flow from
operating activities aggregated with the net
cash received/paid for loans receivable and
other investments, and the net cash cost paid for
property, plant and equipment, and computer
software.
Why we measure
Free cash flow is a key indicator of the financial
management of the business and reflects
the cash generated by the business to fund
payments to our shareholders and acquisitions.
Performance
Improved working capital, primarily due
to lower debtors driven by phasing of sales
in the last quarter, was the biggest driver
of the improvement in free cash flow.
16.0
Strategic report
We use the following 11 key performance

indicators (KPIs) to measure our financial and
non-financial performance.

MARKET DYNAMICS
MARKET
DYNAMICS
A growing global market

Beverage alcohol is a profitable, growing and
attractive market in which to participate.
Margins are significantly higher than for the
overall consumer goods market, while, over
the medium term, the industry is expected
to grow in both volume and value. While the
global market is split almost equally between
emerging and developed markets, emerging
markets are expected to grow at a faster rate.
Within emerging markets and developed
markets, every individual market presents
different consumer dynamics and a different
outlook determined by specific local
conditions. Our 21-market operating model,
coupled with tailored local strategies,
enables us to meet the specific needs of
consumers across different geographies.
Opportunities in developed markets
In developed markets, the population is
ageing, and in aggregate is growing more
slowly than in emerging markets in some
countries it is shrinking. Overall, wealth is
fairly static but is increasingly polarised as
growth is skewed towards the most affluent.
The opportunities in developed markets
are therefore very different from emerging
markets. Given the higher levels of
disposable income and the importance
of branding, in developed markets
consumers are often prepared to pay more
for high quality brands with heritage and
provenance. Our key opportunities are
to offer beer customers other products,
particularly spirits, and, as tastes evolve, to
encourage consumers to trade up within
spirits brands.
Opportunities in emerging markets
Growth of beverage alcohol consumption
in emerging markets is driven by strong,
underlying consumer fundamentals. The
number of people of legal purchasing age
is growing worldwide, and is set to increase
by over 450 million over the next decade.
Wealth is increasing, with the middle class
growing. This means more consumers are
The global beverage alcohol market is large and diverse,

with an estimated six billion equivalent units of alcohol sold
each year, generating 300 billion of net sales. It is also one
of the most regulated in the world, and beverage alcohol
companies operate in the context of a range of stakeholder
expectations and demands. This environment presents
opportunities for a business like Diageo, with our global scale,
our diverse range of leading brands, and our high standards
of governance and ethics.
Split of global total beverage alcohol (TBA)
volume (EU)
Developed markets
Emerging markets
Year ended 31December 2014

Source: Diageo estimates
buying brands and they have more money

to spend on them. There is a good
opportunity for growth for spirits, as
consumer tastes shift and disposable
incomes rise.
Factors affecting consumer choices
While medium-term prospects for beverage
alcohol are robust and positive for the
reasons described above, in the short term
there are particular challenges that face all
consumer goods businesses.
Economic and political instability
Sudden changes to economic variables such
as exchange rates and commodity prices,
or changes in levels of political security, can
reduce consumer confidence and spending
power. Over the last year alone we have
witnessed considerable economic, social
and political upheaval in many places:
huge currency devaluations in Venezuela;
geo-political conflict in Russia and Ukraine;
the Ebola outbreak; and terrorist threats in
Nigeria and Kenya, to name some examples.
The general operating environment
will continue to be a turbulent and
unpredictable one in which to compete.
Our approach is based on broad
participation across geographies, categories
and price tiers, which provides a natural
Split of global total beverage alcohol (TBA)

net sales ()
Developed markets
Emerging markets
Year ended 31December 2014

Source: Diageo estimates
hedge against individual market volatility,

while tailored strategies for each market
allow us to respond quickly to local
dynamics. Operationally, we continue to
focus on improving our risk management
processes, while our 21-market operating
model enables our markets to respond
quickly to local events and trends. Our
renewed focus on managing the business
according to what is actually bought by
consumers rather than what we sell to
our customers will also help to improve
the consistency of our performance
across markets.
Increasing expectations of businesses
and brands
Consumers today particularly millennials
have increasing expectations of the
businesses behind the brands they love. It is
not enough to provide a great product and
brand experience: companies must make a
contribution that goes beyond economic
benefits, to encompass environmental and
social benefits as well.
This is reflected in the developing
regulatory framework for listed companies,
which are expected to be transparent about
their key social and environmental issues,
and, through reporting, to demonstrate
progress. Going beyond what is mandatory

MARKET DYNAMICS
Local communities and supply chains

Alcohol beverage companies contribute
to the economic development of their
communities in a variety of ways, whether
through direct or indirect employment, taxes
or community investment efforts. However,
companies can further contribute by
leveraging the economic impact of their
entire value chain in the way they work with
suppliers and customers and doing so
is an increasing expectation of the private
sector by government and international
development institutions. One powerful
trend in the food and beverage industry is a
focus on local sourcing in markets with an
agricultural economy or the potential for
one, and, in Africa, we have a target of
sourcing 80% of agricultural materials locally
(sourced within Africa and used by our
African markets). This helps build trust with
government and other stakeholders, can
help secure supply, and it delivers wider
benefits to the local community.
Diageo sites located in water-stressed areas
Climate change and water scarcity

Companies particularly those that rely on
agricultural raw materials are increasingly
being affected by a variety of environmental
issues associated with climate change, such
as extreme weather events, water scarcity
and biodiversity loss.
For the alcohol industry, water scarcity
demands particular attention given that
water is the main ingredient in all alcoholic
beverages. The World Bank expects water
scarcity to affect 2.8 billion people directly by
2025, and the increasing importance of water
as a global issue is recognised in our Water
Blueprint, launched in April 2015, which
defines our strategic approach to water
stewardship across the value chain. The map

below shows our sites located in waterstressed areas where our approach to water
stewardship is particularly important.
38
27
35
24
41
25 42
45
30
39
36
43
32
33
23
16
22
17
18
29
26
31
28
Governance
34
44
40
37
21
19 20
15 14
12
11 13
9 10
6
5
Sites
1 Kenya Brewing, Nairobi
2 East Africa Maltings,
Nairobi
3 Central Glass, Nairobi
4 Seybrew, Seychelles
5 SA Cider, South Africa
6 Dar es Salaam
7 Moshi
8 Mwanza
9 UBL, Kampala
10 IDU, Kampala
11 Accra, Achimota
12 Kumasi, Kaasi
13 Ogba, Lagos
14 Paraipaba, Cear
15 Agricultural lands, Cear
16 Blossom Hill Winery,
California
17 Provenance, California
18 Acacia, California
19 Chalone, California
20 Sterling, California
21 Beaulieu, California
22 Sonoma, California
23 Diageo Chateau & Estate
Vineyards, California
24 Alwar, Rajasthan
25 Asansol, West Bengal
26 Aurangabad, Maharashtra
27 Baddi, Himachal Pradesh
28 Baramati, Maharashtra
29 Bhadrakali, West Bengal
30 Bhopal, Madhya Pradesh
31 Four Seasons Winery,
Maharashtra
32 Hospet, Karnataka
33 Kumbalgodu, Karnataka
34 Malkajgiri, Telangana
35 Meerut, Uttar Pradesh
36 Nacharam, Telangana
37 Palakkad, Kerala
38 Pathankot, Punjab
39 Pioneer, Maharashtra
40 Pondy, Kerala
41 Rosa, Uttar Pradesh
42 Serampore, West Bengal
43 Sovereign, Karnataka
44 Tern, Andhra Pradesh
45 Udaipur, Rajasthan
Creating a positive role for alcohol

in society
Diageo has always believed that creating a
positive role for alcohol in society is about
working in partnership with all the relevant
stakeholders, through concerted industry
initiatives. We are one of 13 global producers
of beer, wine and spirits which, in 2013,
launched a set of commitments designed
to support Member States implementation
of the World Health Organizations (WHO)
global strategy to reduce the harmful use
of alcohol. They include a focus on reducing
underage drinking, strengthening and
expanding marketing codes of practice,
providing consumer information and
responsible product innovation, reducing
drink driving, and enlisting the support
of retailers to reduce harmful drinking.
Diageo also believes that the most
effective alcohol policies are evidencebased, account for drinking patterns, target
at-risk groups, treat all forms of alcohol
equally, and involve all stakeholders. Such
policies include mandating a minimum
legal purchasing age of not less than 18;
a maximum blood alcohol concentration
(BAC) level for drivers of no more than
0.08mg; and lower BACs for novice and
commercial drivers. Also effective are
high-visibility enforcement campaigns of
drink-driving laws and alcohol interlock
devices for convicted drink drivers.
Diageo advocates these policies while
opposing measures that are not based on
evidence, and are likely to have unintended
consequences. For example the use of high
taxes to control consumption can in some
cases push consumers to unregulated
alcohol markets. These are potentially
dangerous for consumers what little is
known about this unrecorded alcohol,
which the WHO estimates accounts for 25%
of alcohol consumed, suggests that some
may be contaminated, some toxic, and a risk
to public health.
Factors affecting the operational

environment
The developments in reporting social and
environmental issues noted above are a
reflection of their importance to business
performance. The interdependence of
companies and their local environments,
communities and economies is a growing
phenomenon, which Diageo has long
recognised through our sustainability and
responsibility programmes. In December
2014 we launched our 2020 Sustainability &
Responsibility targets, which focus on three
imperatives: leadership in alcohol in society;
building thriving communities; and reducing
our environmental impact.
Strategic report
has become the norm for global businesses,

which are adopting various voluntary
frameworks. These include the International
Integrated Reporting Framework, published
last year, the Global Reporting Initiative
Guidelines, launched in 2000 and updated
last year, and the United Nations Global
Compact principles, established in 2006,
all of which we follow in our reporting.
This high and growing level of regulation
and scrutiny can be an advantage to
companies with good corporate governance
and the right approach to sustainability
and responsibility.

HOW WE WILL DELIVER OUR PERFORMANCE AMBITION
HOW WE WILL
DELIVER OUR
PERFORMANCE
AMBITION
Diageos performance drivers and

Sustainability & Responsibility imperatives
are key to achieving our Performance
Ambition. Each of our 21 markets focuses
on the priorities that are most relevant
to driving growth and creating shared
value in that market.
OUR SIX PERFORMANCE DRIVERS
Strengthen and accelerate growth of our premium

core brands
Our premium core brands are sold in more than 180 countries
around the world. They are enjoyed by consumers in
developed markets and have wide appeal in emerging
markets. They include iconic brands like Johnnie Walker,
Smirnoff, Captain Morgan and Baileys.
Win in reserve in every market

Our reserve or luxury portfolio accounts for 13% of our total
net sales. Over the last six years we have transformed our luxury
brand building capabilities and are now the industry leader in
the super and ultra premium segments.
Innovate at scale to meet new consumer needs
Our ability to innovate is a competitive advantage. A proven
driver of growth, it is critical to the performance in each of our
markets. Since 2009, innovation has accounted for at least half
of Diageos sales growth, growing double-digit each year.
Build and then constantly extend our advantage in

route to consumer
Our global programme looks at how we can profitably extend
where our brands appear and improve the quality of how they
appear at every appropriate drinking or buying occasion,
achieving higher rates of sale in an efficient way.
Drive out costs to invest in growth

Increasing productivity and efficiency within Diageo
will improve profitability and allow us to invest back into
the business to drive growth.
Ensure we have the talent to deliver our

Performance Ambition
We employ bright, collaborative people at all levels in our
business, and must continue to do so if we are to achieve our
Performance Ambition. Ensuring that we have the best talent
now and in the future is one of our biggest challenges and
one of our greatest opportunities.
OUR THREE SUSTAINABILITY & RESPONSIBILITY IMPERATIVES
Leadership in alcohol in society

Creating a positive role for alcohol in
society is our primary focus, and over
the last decade we have supported
hundreds of programmes to tackle
harmful drinking and encourage
responsibility. We will continue these
efforts with our various stakeholder
partners as well as focus on delivering
the five Global Producers
Commitments(i).
Building thriving communities

Our distilleries, breweries and
wineries are at the heart of our
communities, and we have a
responsibility to create shared value
throughout our supply chain.
Our targets commit us to further
partnerships with local farmers and
agricultural communities to develop
more sustainable supply chains and
secure our raw material supply.
(i) For more information on the Beer, Wine and Spirits Producers commitments, visit www.producerscommitments.org.
Reducing our environmental

impact
Recognising that our impact on the
environment is not limited to our own
sites, our targets reflect the need to
better manage water stewardship and
carbon emissions across our whole
supply chain. We will work increasingly
with suppliers, striving to decouple the
growth of our business from our impact
on the environment.

Responsibility, including our commitment

to governance and ethics, supports
everything we do to deliver our
Performance Ambition.
INNOVATING ON OUR PREMIUM CORE BRANDS

EUROPE WESTERN EUROPE (GREAT BRITAIN)
Overall our business in Mexico grew 13% this year. We have

a strong scotch portfolio and benefit from a range of brands
across price points. We are also winning in reserve in Mexico, an
important growth area for Diageo. We now have a market share
of over 80% in luxury spirits, and we continue to invest. This year
we continued to grow at a high double-digit rate, led by Zacapa
and Johnnie Walker Blue Label, and we further
strengthened our reserve portfolio with the
acquisition of full global ownership and control
of luxury brand Don Julio Tequila.
In a growing market that presents many
opportunities, but also a changing regulatory
landscape, building our business in Mexico
needs to be underpinned by a significant and
important focus on building trust and
respect for Diageo, both nationally and
locally in key cities.
We aim to be trusted and
respected by the authorities who
affect our business through
regulation and taxation through both
our broader approach to promoting
responsible lifestyles and our
Learning for Life training programme, helping people find jobs

in the hospitality industry. Our Actuando Mejor or Model Cities
programme is perhaps one of the most successful responsible
drinking programmes we have ever developed. In the three years
since it was launched, it has moved beyond Diageo to become
a social movement and, as a recent evaluation shows, is shifting
consumer attitudes with regards to drink driving and
consumption patterns, and attitudes of vendors with regards
to selling to minors.
Diageo is well placed to drive financial performance in Mexico,
and is committed to the long term development of the beverage
alcohol industry, which includes building economic and
social value.
WINNING IN RESERVE IN MEXICO

LATIN AMERICA AND CARIBBEAN MEXICO
Governance
Guinness, Gordons, Smirnoff and

Captain Morgan between them,
these iconic premium core brands
share a rich heritage. These are
brands that for years have delighted
consumers, and in 2015, they are
all building on their strengths
and innovating to unleash their
full potential.
In Great Britain there is good
potential to grow the spirits industry
not by getting people to drink more, but by getting them
to drink better. Focus on strengthening and innovating on our
premium core brands with launches this year of Captain Morgan
White Rum, Smirnoff Ice Double Black, the Guinness Dublin and
West Indies Porters, and Gordons pouches is key to unlocking
growth. This year nearly 11% of our net sales in Great Britain
were delivered by innovation. Diageo will continue to innovate
to meet consumer needs, driving growth for our customers and
our business.
Launching market-leading innovations across a variety of price
points is no small undertaking we have around 180 people
working in innovation roles around the world, with 35 people

working in innovation research and development in Great Britain.
Finding and keeping the right people is a real challenge here, with
so many companies fighting for talent. But we have an advantage.
Our reputation for ground-breaking innovation,
our leadership in alcohol in society, and the
opportunities we offer employees to give
something back through working with young
adults on our Learning for Life programme,
are at the heart of Diageos appeal
as the custodian of the
great brands people
enjoy and love to
celebrate with every
day, everywhere.
Strategic report
Here we share a selection of case studies

that demonstrate how we are executing
our performance drivers at a market and
global level. The case studies also show
how our approach to Sustainability &

INNOVATION IN NORTH AMERICAN WHISK(E)Y

NORTH AMERICA SPIRITS AND WINES
The beverage alcohol market in North

America is competitive, and its been a
challenging year. The attractiveness of the
market means it is one that others want to
enter, leading to brand proliferation in most
categories. To address this we have focused
keenly on our innovation performance driver.
This year, we launched our successful Crown
Royal Regal Apple innovation. Crown Royal
Regal Apple responds to the growing trend
for flavour innovations
in whisk(e)y and is an
example of how we
use innovation to
rapidly respond
to changing
consumer
tastes.
We also know that consumers have increasing

expectations of the companies behind their
favourite brands, expecting them to deliver
environmental and social, as well as economic,
benefits. This focus from consumers is aligned
with our commercial interests. Sustainable
manufacturing delivers efficiencies in our
supply chain, while minimising our impact at
a local level. For example, Diageo is building
a new distillery in Shelbyville, Kentucky, due
to be commissioned in 2016, which has been
designed specifically to minimise impacts
on local watersheds.
We have also scored an industry first for
US consumers. After 12 years of advocating
with a coalition of consumer and public health
advocates, the US government recently
allowed alcohol companies to include alcohol
content and nutritional information per
typical serve on packaging. In March
we followed this by announcing our
commitment to provide consumers around
the world with this information a first
for any alcohol company. This is another
example of how Diageo is helping
consumers make more informed
choices. See further details
on page 39.
ROUTE TO CONSUMER ENHANCEMENTS IN

GHANA DRIVE PERFORMANCE
AFRICA AFRICA REGIONAL MARKETS (GHANA)
A depreciating local currency and demand for energy exceeding

supply are examples of the operational issues that require
our business in Ghana to think ever more creatively to drive
performance. The discipline and structure of our six performance
drivers have been essential in helping the team to make the bold
decisions needed to take advantage of the potential the market
offers and gain share.
Our route to consumer performance driver has the ability to
significantly accelerate our performance in our markets. It
multiplies the performance impact from strong execution on
premium core, reserve and innovation, drives efficiencies in the
supply chain and improves cash conversion. It also encourages
productive use of trade and marketing investment and grows our
sales people to be best-in-class.
Focusing on the route to consumer programme in Ghana is
generating results. This year we have seen a strong sales uplift in
Guinness Malta and Star lager driven by expanded coverage, a
change to a more active sales culture and tactical execution.
Moreover, we have made an important contribution to the
underlying costs of the business by increasing local raw material
sourcing from around 11% in 2012 to 45% in 2015. As well as
protecting our business from exchange rate

risk, local sourcing brings benefits to the local
economy and communities.
Our environmental targets are helping us
focus here too. Our aim of equipping local
suppliers to protect water resources in
water-stressed areas has caused us to
invest in our Water of Life programmes
where we source our raw materials,
including, in 2015, 11 projects aiding
close to 60,000 people, while
also benefiting Diageo through
guaranteeing the sustainability of our
supply chain.
This work is not going unnoticed by
the government and regulators, who are
increasingly engaging with us on issues
that matter, such as effective regulation
of our industry. They are also seeking our
input into how other local crops, such as
sugar cane, may be used for beverage
alcohol production. All these speak to
our effectiveness and are mirrored in
Ghanas net sales growth of 32%
this year.

Our business in India is being transformed through the

acquisition of USL. Integrating businesses is always a challenge,
not least when you are introducing a new culture and different
working practices. But, what really makes the difference is the
determination of our teams in Diageo India and USL to make the
transformation a success.
One of the biggest changes for USL has been the introduction
of Diageos operational and governance standards. One example
of the steps that have been taken within USL is the establishment
of a new compliance and ethics team to lead the effort, bringing
USLs Code of Business Conduct in line with Diageos, and an
intense training effort to get USLs nearly 7,000 employees up
to speed on the policies relevant to them.
Meanwhile, employees have also been getting accustomed to
Diageos safety culture and practices, which have made a huge
difference to the lost-time accident rate USL achieved its first
ever accident-free month in March 2015.
We have always believed that our iconic brands, our global
reach and our reputation as a trusted and respected business
are central to our appeal and thats borne out in what USL
employees say about their pride in becoming part of Diageo, and
their eagerness for the opportunities it offers to work alongside
our iconic brands in many parts of the world.
Governance
INTEGRATING UNITED SPIRITS LIMITED (USL)

ASIA PACIFIC INDIA
Global Diageo Business Services (GDBS) provides a broad range

of services from information systems management to general
accounting, purchase and sales order processing, financial
planning and reporting. These services are provided to Diageo
businesses across the world from a network of four regional
service centres. Their global scale and reach deliver significant cost
savings and a strong control environment, while freeing our local
teams to market and sell our great brands to customers and
consumers. GDBS has delivered 49 million in savings since 2013,
achieving an average year-on-year productivity of around 12%
which is above world-class benchmarks for multi-functional
shared services.
GDBS will create a further 50 million in savings by 2018,
through operational efficiencies and extension into new services.
Significantly, GDBS is developing an analytics service to provide
business insights to drive performance, while equipping local
sales teams with best-in-class technical solutions.
In support of our marketing agenda, a market-leading
cloud-based digital infrastructure has been established, providing
a cost effective, scalable and secure platform for our digital assets.
Using external benchmarking, a comprehensive plan has been
developed with our marketing function to accelerate digital
capability building on this core platform.
Strategic report
GLOBAL SERVICES REDUCE COSTS FOR OUR

LOCAL MARKETS

HOW WE PROTECT OUR BUSINESS: RISK MANAGEMENT AND PRINCIPAL RISKS
HOW WE PROTECT
OUR BUSINESS:
RISK MANAGEMENT
AND PRINCIPAL RISKS
Our approach
Our risk management framework is
straightforward. We believe that great
risk management starts with the right
conversations, that drive better business
decisions. We assign clear accountability for
managing our risks in the right way. It is the
responsibility of each market and function to
manage its risks directly, and then to report
on the risks and their management to the
relevant Executive member. The Diageo
Executive reviews the effectiveness of risk
management through the Audit & Risk
Committee, and the Board exercises
independent review through the Audit
Committee, supported by Global Audit &
Risk. The Diageo Executive updates the
groups risk assessment annually, which is
Our Performance Ambition calls on us to be

bold and to act like owners. Well managed
risk taking lies at the heart of this. Great risk
management drives better commercial
decisions, creating a growing, resilient and
sustainable business.
reviewed by the Board. Similarly, all markets

and functions perform annual risk
assessments and, at all levels in the business,
risks are reviewed throughout the year, with
updates to risks and/or mitigation plans
made as necessary.
Further details about the groups risk
management approach are described in the
Report of the Audit Committee on page 60.
Focus in the year

The Diageo Executive and Board considered
the risks described here as the groups key
risks for this financial year. These range from
risks that are wholly internal in interest (focus
on sales and marketing talent) to risks that
involve Diageos place in society and
evolving global threats (for example, cyber

threat, and the risk of politically motivated
violence). A revised Risk Management global
standard, launched in August 2014, places
renewed emphasis on leadership behaviours
and on ensuring risk management is a basic
part of doing business every day.
Beyond the set of key group risks, the
Audit Committee also receives periodic
updates on emerging or otherwise topical
risks. For example, during the year, the Audit
Committee received an update on brand
assurance, which examined the nature of the
risk (e.g. protection of brand intellectual
property) as well as the specific risks faced by
Diageo and how we are managing them.
ECONOMIC AND POLITICAL CHANGE
NON-COMPLIANCE WITH LAWS AND REGULATIONS
RESPONSIBLE ALCOHOL PROMOTION AND CONSUMPTION
Risk
Significant local volatility or upheaval, or failure
to react quickly enough to increasing volatility.
Risk
Non-compliance with local laws or regulations,
or breach of our internal global policies and
standards and/or significant internal control
breakdown.
Risk
Failure to address the concerns of multiple
stakeholders about the promotion and
consumption of alcohol.
Impact
Social unrest, liquidity issues, inflationary
pressures, changes to tax systems and/or
eroded consumer confidence, impacting our
peoples safety, our assets security, business
forecasting and/or performance.
How we mitigate
On the ground market and country
intelligence to build local preparedness for
rapid change in external environment.
Market visits by Chief Executive and other
senior executives to review local strategy.
Market-sensitive multi-country investment and
capacity expansion strategy, and local sourcing
strategy (e.g. to minimise currency risk).
Monitoring and, where appropriate, expressing
views on the formulation of tax laws either
directly or through trade associations or similar
bodies.
Developments in 2015
Enhanced review by Audit & Risk Committee
of market plans to deal with volatility.
Use and development of scenario planning
tools to build responses to future uncertain
conditions.
Impact
Severe damage to our corporate reputation
and/or significant financial penalty.
How we mitigate
Code of Business Conduct (Code) and
periodic refresh training for employees
on our global policies.
Internal control assurance programme,
with local management accountability.
Strong tone from the top, anchored by our
Performance Ambition of most trusted and
respected.
Embedding the control and compliance
frameworks in recent acquisitions.
Enhancing internal processes for managing
allegations of breaches of our Code.
We have implemented an automated tool
to improve the efficiency of aspects of our
anti-bribery and corruption third party due
diligence programme.
Greater emphasis on developing the
capabilities of our control and compliance
global community.
Impact
One or more governments impose restrictions
on access and/or increase tax and/or duty.
Damage to our corporate reputation.
How we mitigate
New Alcohol in Society targets including
implementation of Global Producers
Commitments to Reduce Harmful Drinking
and increased focus on programmes in
markets with measurable outcomes.
Strengthen industry response at global and
local level.
Increase knowledge about alcohol among
stakeholders and consumers through the
provision of information on packaging, online
and via training courses.
There have been no significant new
regulations against alcohol during 2015,
although restrictions on retail sales of beer
in Indonesia impacted our business in
South-East Asia.
The Global Producers Commitments to
Reduce Harmful Drinking have been
incorporated into the business performance
review cycle.

HOW WE PROTECT OUR BUSINESS: RISK MANAGEMENT AND PRINCIPAL RISKS
Efficient growth
Consistent value creation
Motivated people
CRITICAL INDUSTRY DEVELOPMENTS
SUSTAINABILITY & RESPONSIBILITY
TALENT
Risk
Failure to shape or participate in critical industry
developments.
Risk
Failure to meet the expectations of stakeholders
to make a positive contribution to the
sustainability agenda.
Risk
Inability to recruit, retain and develop sufficient
sales and marketing talent particularly in
developing markets.
Impact
Long term damage to our corporate
reputation.
Less influence shaping the citizenship and
sustainability agenda as it relates to beverage
alcohol.
Impact
Failure to achieve our growth plans.
Impact
Consumers move away from our brands.
Less efficient business model compared
to key competitors.
Our mitigation approaches remain
unchanged, and we have continued to deploy
them in response to industry changes.
For example, as the industry has seen
accelerated growth in global primary Scotch,
we have drawn on the breadth of our brand
portfolio to meet this consumer demand
e.g. in Mexico, with Black & White.
How we mitigate
Sustainability & Responsibility Strategy
based on material issues and stakeholder
expectations at global and market level.
Programmed delivery against a clear set of
targets aligned to external stakeholders.
Development of partnerships with external
stakeholders to support delivery and scale
up of strategy.
Global Talent Team established to ensure we
have the talent pipeline to fill critical leadership
roles, supported by a bigger focus on
succession planning and external recruitment.
We completed an in-depth analysis of
commercial capability across our markets and
have agreed a common set of commercial
operating standards and supporting capability
programmes and investment.
CYBER THREAT
POLITICALLY MOTIVATED VIOLENCE
Risk
Theft, loss and misappropriation of Diageos most
important digital assets.
Risk
Impacts from politically motivated violence ,
including terrorism.
Impact
Financial loss, operational disruption and
reputational damage.
Non-compliance with statutory data
protection legislation.
Impact
Diageo employees, sites or supply chain
threatened and/or harmed.
Our ability to operate in key markets is
disrupted.
How we mitigate
Employees trained on information
management and security.
Monitoring, identification and addressing
of cyber threats and suspicious internal
computer activity.
Crisis response exercises to test and build
resilience to cyber attacks.
How we mitigate
Monitoring of local security situation.
In-country security managers oversee people
security, physical security and business
continuity programmes.
Above-market travel security programme for
all Diageo travellers.
Above- and in-market liaison with
government, academia, and industry on
evolving threats and responding to incidents.
Impact
Business case for an acquisition is not delivered
resulting in impairment charges on goodwill
or other intangible assets and failure to meet
financial targets.
Market confidence in Diageos ability to deliver
on its strategy is weakened.
Damage to our corporate reputation.
Prospects for securing regulatory approval for
other potential business combinations are
harmed.
How we mitigate
Board and Executive Committee regularly track
actual performance against the business case.
Global minimum standards for control and
compliance for post-acquisition entities,
subject to internal audit review.
We have continued to monitor the M&A
environment and transact where appropriate
(e.g. acquisition of 50% of Don Julio).
Our focus has been on embedding recent
acquisitions (e.g. USL) and, for acquisitions this
year (Don Julio), making sure we have the right
governance and integration platforms in place.
Continuous evolution of our response against
the increase in the number and sophistication
of cyber incidents.
Increase in, and strengthening of, data
protection laws in jurisdictions worldwide
demanding ever greater focus on safeguarding
data privacy.
Formulating standardised security threat levels
to provide clarity for site response to threats.
Expanding mandatory travel security training
to markets with increasing risk.
Political violence included in cross-functional
risk scanning.
BUSINESS ACQUISITIONS
Risk
Failure to deliver value from acquisitions and/or
integrate them into Diageo effectively, including
failure to embed Diageos standards of compliance
with laws, internal policies and controls.
We have announced new 2020 Sustainability &
Responsibility targets.
The emerging UN Sustainable Development
Goals identify critical areas for activity. There is
also a trend towards greater transparency on
performance and the impact of our activities.
In India, we are integrating and developing our
environmental standards and community
programmes with USL.
How we mitigate
Significant focus and intervention on moving
talent into key local roles in developing
markets.
Strengthened learning and development
strategy across the business.
Governance
How we mitigate
Broad portfolio of brands to ensure coverage
of consumer trends.
Continuous assessment and optimisation of
business efficiencies.
Rigorous processes of strategy development
and governance at corporate and market level.
Focus on building strategic capability at
market level.
Strategic report
Relevance to strategy

GROUP FINANCIAL REVIEW
GROUP
FINANCIAL
REVIEW
Our performance this year reflected both the volatile

global consumer and economic environment and the
actions we took to strengthen the business. Reported net
sales were up with the integration of USL and organic net
sales flat driven by currency related challenges in specific
emerging markets and embedding our sell out discipline.
Our focus on cost delivered savings and drove margin
expansion, prioritising cash resulted in a marked cash flow
improvement and we continued to invest for the future.
Deirdre Mahlan, Chief Financial Officer
Reported net sales up
5%
Volume
Net sales(i)
Operating profit(ii)
with full consolidation of United Spirits

Free cash flow of
2bn
up 0.7 bn
9%
final dividend increase to give

recommended full year dividend
of 56.4 pence
Organic net sales
flat
Organic operating margin up
24bps
Shipment volume down
1%
Depletion volume is estimated to be up
1%
Basic eps
95.0 pence
up 6%
Eps before exceptional items
88.8 pence
due to adverse exchange and associates,

offset by underlying improvements
North America
Europe
Africa
Latin America and Caribbean
Asia Pacific
(i) Excluding corporate net sales. (ii) Before exceptional items and corporate costs.
Key performance indicators
Organic net sales growth

Organic operating margin improvement
Earnings per share before exceptional items
Free cash flow
Return on average invested capital (ROIC)(i)
2015
2014
%
basis points
pence
million
%
24
88.8
1,963
12.3
77
95.5
1,235
14.1
2015
2014
EUm
million
million
million
million
million
million
million
%
%
million
pence
pence
246.2
10,813
1,629
3,066
2,797
175
373
412
15.9
18.3
2,381
95.0
56.4
156.1
10,258
1,620
3,134
2,707
252
140
388
16.5
18.2
2,248
89.7
51.7
Net sales
%
Marketing
spend
%
Operating
profit(ii)
%
Other financial information
Volume
Net sales
Marketing spend
Operating profit before exceptional items
Operating profit
Share of associates and joint ventures profit after tax
Non-operating items
Net finance charges
Reported tax rate
Reported tax rate before exceptional items
Profit attributable to parent companys shareholders
Basic earnings per share
Recommended full year dividend
Organic growth by region
North America
Europe
Africa
Asia Pacific
Diageo(iii)
Volume
%
(3)
7
(7)
(3)
(1)
(1)
6
(1)
(2)
(4)
2
4
6
(8)
(1)
(2)
3
10
(3)
7
1
(i) The group has revised the calculation of ROIC by excluding the net assets and net profit attributable to
non-controlling interests. Before this adjustment, in the year ended 30 June 2014 the ROIC reported was 13.7%.
(ii) Before exceptional items.
(iii) Includes Corporate. In the year ended 30 June 2015 Corporate reported net sales and net operating charges
before exceptional items were 90 million (2014 79 million) and 123 million (2014 130 million), respectively.
The reduction in net operating charges before exceptional items is largely due to cost savings and exchange.

The full consolidation of USL, partly

offset by adverse exchange delivered
reported net sales growth of 5%.
Organic net sales flat
Organic
movement
896
(337)
10,258
2015
Reported
Exchange
Volume
Price/mix
30.55%
36bps
Acquisitions and disposals

Exchange
Gross margin
52bps 28.35%
(64)bps
Organic
movement(i)
2015
Reported
2014
Reported
Tax
Non-controlling interests
Other including USL(i)
(i) The impact of fully consolidating USL results is

included in other. The movements for operating
profit, finance charges, tax and non-controlling
interests, all exclude USL.
Eps before exceptional items fell 6.7 pence

largely as a result of adverse exchange
movements and lower income from
associates and joint ventures. Organic
growth in operating profit had a positive
impact on eps. Net finance charges
excluding acquired debt in USL reduced
due to lower interest rates which benefited
eps. Basic eps was 95.0 pence (year ended
30 June 2014 89.7 pence), with exceptional
items increasing eps by 6.2 pence (year
ended 30 June 2014 5.8 pence
unfavourable).
Movement in net finance charges
Full consolidation of USL rebased

operating margin by c200bps.
Organic margin improved 24bps
2014
Reported
(1.3) (0.4)
2015
Reported
Marketing spend
Other operating
expenses
The full consolidation of USL lowered

reported operating margin for the group.
The organic improvement in margin was
largely as a result of cost savings and
efficiencies, which more than offset
the impact of cost inflation and negative
market mix.
Average monthly net

borrowings ( million)
Effective interest rate(i)
388
(48)
60
12
412
2015
2014
10,459
3.5%
9,174
3.8%
(i) For the calculation of the effective interest rate, the

net interest charge excludes fair value adjustments
to derivative financial instruments and borrowings.
Average monthly net borrowings include the impact
of interest rate swaps that are no longer in a hedge
relationship but excludes the market value
adjustment for cross currency interest rate swaps.
The increase in average net borrowings was

principally the result of the acquisition of the
controlling interest in USL, completed on
2 July 2014, and the consolidation of USLs
net borrowings. The effective interest rate
decreased in the year ended 30 June 2015
as the negative impact of consolidating USLs
net borrowings was more than offset by
lower interest rates on new debt issued and
an increase in the proportion of floating rate
debt through the use of swaps.
2015
Reported
2014
Reported
USL free cash
flow(i)
Operating
profit excluding
exchange(ii)
Exchange
Working
capital
movement
Net capex
movement
Interest and tax
Other operating
items(iii)
(i) USL free cash flow is shown separately and is

excluded from the other line items shown above.
(ii) Operating profit adjusted for non-cash items
including depreciation and amortisation.
(iii) Other operating items includes pension related
payments, dividends received from associates
and joint ventures, movements in loans receivable
and other investments, and payments in respect
of the settlement of Thalidomide.
The increase in free cash flow was primarily

driven by the positive working capital
movement. This was largely due to lower
debtors as a result of phasing of shipments,
with days sales outstanding 6 days lower
than last year. This compares with an increase
in debtors in the prior year.
Return on average invested capital (%)(i)
The investment in USL has rebased ROIC.
Adverse exchange and lower income
from associates reduced ROIC in the year
14.1%
0.2pps
(1.1)pps
(0.4)pps
12.3%
(0.3)pps (0.2)pps
2015
Reported(iii)
2014
Reported(ii)
USL
Operating profit
after tax
Exchange
Associates and
joint ventures
including FX
Other
(i) ROIC calculation excludes exceptional items.

(ii) The group has revised the calculation of ROIC by
excluding the net assets and net profit attributable
to non-controlling interests. Before this adjustment,
in the year ended 30 June 2014 the ROIC was
reported as 13.7%.
(iii) For the years ended 30 June 2014 and 30 June 2015
average net assets were adjusted for the inclusion of
USL as though it was owned throughout the year as
it became an associate on 4 July 2013 and a subsidiary
on 2 July 2014.
The additional investment in USL and full

consolidation of its results reduced ROIC
by 1.1pps. Exchange movements reduced
operating profit, but the impact on ROIC
was partially offset by exchange reducing
invested capital. Lower income from
associates reduced ROIC in the year.
(i) Exchange impacts in respect of profit on intergroup

sales of products and the intergroup recharges
have been re-allocated to the respective profit and
loss lines for the purposes of calculating margin
impacts only.
million
2014 Reported
Net interest charge decrease
Consolidation of net borrowings
acquired in USL
Movement in other finance charges
2015 Reported
(156)
Change in operating margin (%)
(57)
59 1,963
(7)
76
1,235
88.8
79
Governance
Reported net sales were up 5%, largely driven

by the full consolidation of USL, which
contributed 921 million of net sales. Currency
weakness, other than the US dollar, had an
adverse impact on net sales. Organic volume
decline was largely driven by lower shipments
in the United States, reduction in inventory
levels in South East Asia and West LAC, and the
impact of pricing in Venezuela and Brazil. While
these price increases contributed to positive
price, the main driver of organic price/mix was
positive mix, led by growth of reserve and
Crown Royal.
(61)bps
1.5
(6.4) (3.1)
Operating profit excluding FX

Exchange on operating profit
Associates and joint ventures
Finance charges
(i) Impact of acquisitions and disposals on 2014 and

2015. See page 24 for further details.
(183)bps
1.4
Operating
734
profit
Operating
profit (4.8)
2014
Reported
Acquisitions and
disposals(i)
1.6
10,813
(127)
Positive working capital movement

drove improvement in free cash flow
Eps before exceptionals impacted

by adverse exchange and decrease
in associate profit
95.5
123
Free cash flow (million)
Strategic report
Earnings per share before exceptional

items (pence)
Net sales growth (million)

INCOME STATEMENT
2014
million
Sales
Excise duties
Net sales
Cost of sales(i)
Gross profit
Marketing
Other operating expenses(i)
Exceptional operating items (c)
Operating profit
Non-operating items (c)
Net finance charges
Share of after tax results of associates and joint ventures
Profit before taxation
Taxation
Profit from continuing operations
Discontinued operations (c)
Profit for the year
Exchange
(a)
million
(509)
172
(337)
61
(276)
47
68
(161)
13,980
(3,722)
10,258
(4,006)
6,252
(1,620)
(1,498)
3,134
(427)
2,707
140
(388)
252
2,711
(447)
2,264
(83)
2,181
Acquisitions
and disposals
(b)
million
2,321
(1,425)
896
(666)
230
(74)
(85)
71
Organic
movement
million
174
(178)
(4)
26
22
18
(18)
22
2015
million
15,966
(5,153)
10,813
(4,585)
6,228
(1,629)
(1,533)
3,066
(269)
2,797
373
(412)
175
2,933
(466)
2,467
2,467
(i) Before exceptional operating items.
(a) Exchange
The impact of movements in exchange rates
on reported figures is principally in respect of
the Venezuelan bolivar, the euro, the Russian
rouble and the US dollar.
In February 2015, the Central Bank of
Venezuela opened a new mechanism
(known as SIMADI) that allows private and
public companies to trade foreign currency
with fewer restrictions than other
mechanisms in Venezuela. As a result, the
group has used the SIMADI exchange rate to
consolidate its Venezuelan operations for the
year ended 30 June 2015. For the year ended
30 June 2014, the group applied the Sicad II
exchange rate to consolidate its operations
in Venezuela.
Applying the SIMADI consolidation rate
of $1 = VEF197.30 (1 = VEF309.76) compared
to the Sicad II rate of $1 = VEF49.98 (1 =
VEF85.47) would have reduced net assets
and cash and cash equivalents as at 1 July
2014 by 60 million and 52 million,
respectively, and would have reduced the
previously reported net sales and operating
profit for the year ended 30 June 2014 by
57million and 36 million, respectively.
The effect of movements in exchange
rate and other movements on profit before
exceptional items and taxation for the year
ended 30 June 2015 is set out in the
tablebelow.
Exchange rates
Translation 1 =
Transaction 1 =
Translation 1 =
Transaction 1 =
Year
ended
30 June
2015
Year
ended
30 June
2014
$1.57
$1.58
1.31
1.23
$1.63
$1.59
1.20
1.26
Gains/
(losses)
million
Translation impact
Transaction impact
Operating profit before
exceptional items
Net finance charges
translation impact
Mark to market impact of
IAS 39 on interest expense
Impact of IAS 21 and IAS 39
on net other finance charges
Interest and other finance charges
Associates translation impact
Profit before exceptional items
and taxation
(72)
(89)
(161)
(7)
8
1
2
(20)
(179)
(b) Acquisitions and disposals

The impact of acquisitions and disposals
on the reported figures was primarily
attributable to the full consolidation of
United Spirits Limited (USL) from 2 July 2014
and the acquisition of the Mexican
distribution rights of Don Julio, partially
offset by the disposal of The Old Bushmills
Distillery Company Limited on 27 February
2015 and Gleneagles Hotels Limited
on 30 June 2015. See page 50 for
further details.
(c) Exceptional items
Exceptional operating charges of
269 million (2014 427 million) in the
year ended 30 June 2015 comprise:
47 million (2014 98 million) in respect
of the Global efficiency programme
announced in January 2014;
35 million (2014 35 million) in
respect of the Supply excellence
restructuring programme;
41 million in respect of the impairment

of the groups 45.56% equity investment
in Hanoi Liquor Joint Stock Company; and
146 million in respect of settlement of
several related disputes with the Korean
customs authorities regarding the transfer
pricing methodology applicable to
imported products. Total payments to
settle these disputes in the year were
74 million as 87 million was paid to the
customs authorities prior to 30 June 2014,
and was previously accounted for as a
receivable from Korean customs.
In the year ended 30 June 2014 an
exceptional impairment loss of 260 million
in respect of the Shui Jing Fang brand and
4million in respect of tangible fixed assets
was charged to other operating expenses.
Non-operating items in the year ended
30June 2015 include a gain of 103 million
(2014 140 million) following the
acquisition of additional equity shares in USL
which increased the groups investment in
USL from 25.02% to 54.78%, excluding the
2.38% interest owned by the USL Benefit
Trust (2014 10.04% to 25.02%). On 2 July
2014 when USL became a subsidiary of
thegroup a gain was recognised on the
difference between the book value of
the25.02% investment and the fair value.
Thegain is net of a 79 million cumulative
exchange loss recycled from other
comprehensive income and 10 million
transaction costs.
On 27 February 2015, the group
completed the purchase of the 50% equity
interest in Don Julio B.V. that it did not already
own (giving Diageo 100% ownership of the
brand and production facility) and the

Movement in
net borrowings
Net borrowings at the

beginning of the year
Free cash flow (a)
Acquisition and sale
ofbusinesses (b)
Net purchase of own shares
for share schemes (c)
Dividends paid to
noncontrolling interests
Purchase of shares of noncontrolling interests (d)
Net movements in bonds
and other borrowings
Equity dividends paid
Other movements
Net decrease in cash and
cash equivalents
Net decrease in bonds
andother borrowings
Exchange differences (e)
Borrowings on acquisition
ofbusinesses
Other non-cash items
Net borrowings at the
endof the year
2015
million
2014
million
(8,850)
1,963
(8,403)
1,235
(306)
(534)
(8)
(113)
(72)
(88)
(37)
(315)
(1,341)
2
(77)
(157)
(1,228)
1
(921)
315
(7)
157
349
(869)
(39)
(32)
(9,527)
(8,850)
(a) See page 23 for the analysis of free cash flow.
(d) In the year ended 30 June 2014 Diageo

purchased the remaining 7% equity stake in
Sichuan Chengdu Shuijingfang Group Co., Ltd.
Equity at the beginning

of the year
Profit for the year
Exchange adjustments (a)
Net remeasurement of
post employment plans
Exchange recycled to the
income statement (b)
Fair value movements
on available-for-sale
investments (b)
Non-controlling
interests acquired
Purchase of shares of noncontrolling interests
Dividends to noncontrolling interests
Dividends paid
Other reserve movements
Equity at the end
of the year
2015
million
2014
million
7,590
2,467
(225)
8,088
2,181
(1,133)
113
(167)
88
20
(85)
641
(37)
(72)
(1,341)
(25)
(88)
(1,228)
51
9,256
7,590
(a) Movement in the year ended 30 June

2015 primarily arose from the exchange loss
on Turkish lira, Brazilian real and euro
denominated net investments.
(b) Following the acquisition of majority
equity stakes in USL, 50% equity interest
in Don Julio and one of the groups joint
ventures in South Africa that it did not
already own exchange losses of 88 million
were recycled to the income statement.
On the acquisition of USL on 2 July 2014
a 43.91% (641 million) non-controlling
interest was recognised. In the year ended
30 June 2014 a gain of 85 million, in respect
of USL, was recycled to the income
statement reflecting the step up from
available-for-sale investment to associate.
Post employment plans
The deficit in respect of post employment
plans before taxation decreased by 216
million from 475 million at 30 June 2014 to
259 million at 30 June 2015. The reduction
was primarily due to strong asset return and
a reduction in long term inflation rates
partially offset by a decrease in returns from
AA-rated corporate bonds used to calculate
the discount rates on the liabilities of the
post employment plans (United Kingdom
reduced from 4.2% to 3.8% and Ireland from
3.0% to 2.6%). Total cash contributions by the
group to all post employment plans in the
year ending 30 June 2016 are estimated to
be approximately 180 million.
(c) Net purchase of own shares comprised

purchase of treasury shares for the future
settlement of obligations under the employee
share option schemes of 75 million (2014
208 million) less receipts from employees
onthe exercise of share options of 67 million
(2014 95 million).
Movement in equity
(b) On 2 July 2014 the group acquired an

additional 26% investment in USL for INR
114.5 billion (1,118 million). On 31 October
2014 the sale of the Whyte and Mackay
Group by USL resulted in a net cash receipt
of 391 million. On 27 February 2015, Diageo
paid $293 million (192 million) for the 50%
equity interest in Don Julio B.V. that it did
not already own and for the Mexican
distribution rights for Don Julio. As part of
the transaction, Diageo also agreed to sell
the equity share capital in The Old Bushmills
Distillery Company Limited. Thenet cash
consideration received for Bushmills
amounted to $709 million (456 million).
In the year ended 30 June 2014 cash
payments primarily comprised 474 million
inrespect of the acquisition of a 18.74%
investment in USL.
(e) Exchange differences primarily arose on

US dollar and euro denominated borrowings
partially offset by the favourable change on
foreign exchange swaps and forwards.
Governance
(d) Dividend
The directors recommend a final dividend
of34.9 pence per share, an increase of 9%
from the year ended 30 June 2014. The full
dividend will therefore be 56.4 pence per
share, an increase of 9% from the year ended
30 June 2014. Subject to approval by
shareholders, the final dividend will be paid
on 8 October 2015 to shareholders on the
register on 14 August 2015. The ex-dividend
date is 13 August 2015. Payment to US ADR
holders will be made on 14 October 2015.
A dividend reinvestment plan is available to
holders of ordinary shares in respect of the
final dividend and the plan notice date is
17 September 2015.
The recommended final dividend
increase is 9%, in line with the increase in
theinterim dividend. This rate of increase
recognises that while eps has declined, the
decline was mainly driven by the impact of
exchange movements in a year when free
cash flow has improved strongly. Eps to
dividend cover at1.6 times is however now
outside management's coverage ratio, and
the group will look to rebuild cover over
time, maintaining dividend increases at a
mid-single digit rate until it is back in range.
MOVEMENTS IN NET BORROWINGS

AND EQUITY
Strategic report
Mexican distribution business of Don Julio.

Asa result of Don Julio becoming a subsidiary
of the group a gain of 63 million arose, being
the difference between the book value of the
joint venture on the dateof the transaction
and the fair value. Inaddition, the group
reacquired the production and distribution
for Smirnoff and Popov in Mexico. As part
ofthe transaction, Diageo also agreed to
sell100% of the equity share capital in
TheOld Bushmills Distillery Company
Limitedresulting in an exceptional gain
of174million.
On 30 June 2015, Diageo completed the
disposal of Gleneagles Hotels Limited to the
Ennismore group resulting in an exceptional
gain of 73 million.
In the year ended 30 June 2015 a provision
of 30 million was charged to non-operating
items in respect of a guarantee provided to
athird party financial institution.
Discontinued operations in the year
ended 30 June 2014 comprised a charge
after taxation of 83 million (91 million less
tax of 8 million) in respect of the settlement
of thalidomide litigation in Australia and New
Zealand and anticipated future payments to
thalidomide organisations.
Cash payments in the year ended 30 June
2015 for exceptional restructuring items,
the legal settlement in Korea, the guarantee
and thalidomide were 117 million (2014
104 million), 74 million (2014 nil),
30 million (2014 nil) and 19 million
(2014 59 million), respectively.

BUSINESS REVIEWS: NORTH AMERICA
NORTH
AMERICA
Net sales by markets
US Spirits
and Wines
DGUSA
North America accounts for about

athird of our net sales and around
45% of operating profit and is the
largest market for premium drinks
inthe world. Continuing economic
uncertainty has adversely impacted
consumer spending in the region, but
due to our leadership in innovation,
strong route to consumer and solid
marketing investment in key brands,
we continue to be well positioned.
We are promoting responsible
drinking, and this year the US
government approved our request
to include serving fact information
on beverage alcohol products.
Our markets
Our North America business comprises
USSpirits and Wines, Diageo Guinness USA
(DGUSA) and Diageo Canada, headquartered
in Norwalk, Connecticut.
Route to market
Route to market in the United States is
through the three-tier system and we
distribute our products through more than
100 spirits and wines distributors and
brokers, and more than 400 beer distributors.
We have a unique route to market for our
spirits and wine business in the United States,
Net sales by categories
(%)
(%)
Spirits
Beer
Canada
Other
Wine
RTDs
Key financials
Net sales
Marketing spend
exceptional items
Exceptional items
Operating profit
Other
Acquisitions
and
disposals
million
2014
Reported
million
Exchange
million
3,444
540
97
16
(37)
7
1,460
(35)
1,425
27
(2)
with more than 3,000 dedicated distributor

sales people focused only on Diageo and
Mot Hennessy spirits and wine brands.
Diageo consolidates its US Spirits and Wines
business into a single state-wide distributor
in 41 states and the District of Columbia,
representing more than 80% of the
companys US Spirits and Wines volume.
US Spirits and Wines business operates
through five divisions in Open States where
we sell to distributors who then sell to
retailers, and through two divisions in
Control States where mostly we sell to the
state, which in turn sells to state or agency
stores and on premise retailers. US Spirits
and Wines sells the vast majority of the
Californian and imported wines we own and
represent, with the remaining small portion
of sales coming from winery visitor centres
and online sales.
DGUSA sells and markets brands
including Guinness, Smirnoff Ice and Red
Stripe. Beer distribution generally follows the
three-tier open state regulations across the
United States.
Diageo Canada distributes our collection
of spirits, beer and wine brands across all
Canadian provinces, which generally operate
through a provincial control system. Diageo
Canada operates through a single broker
with a dedicated sales force handling our
brands in the country.
National brand strategy, strategic
accounts marketing and corporate functions
are managed at the North America level. In
North America, we market a total beverage
alcohol portfolio.
Net sales by price points

(%)
Value
Standard
Premium
Organic
movement
million
Super premium
Ultra premium
2015
Reported
million
Reported
movement
%
(49)
(21)
3,455
542
(37)
1,448
(28)
1,420
(1)
Supply operations
We have 11 bottling, distilling, blending and
maturation sites including operations in
Plainfield, Illinois; Amherstburg, Ontario;
Valleyfield, Quebec; Relay, Maryland; Gimli,
Manitoba; Tullahoma, Tennessee; Louisville,
Kentucky; and seven wineries and wine
bottling operations in California. Focusing
on continuously improving efficiency across
our supply chain we made significant
investments during the year and announced
plans to cease bottling operations in Relay,
Maryland.
As our largest market, with many millions
of consumers, our focus on responsible
drinking in North America is particularly
important, and we have built a reputation as
a leading voice in the industry. After 12 years
of advocating with a coalition of consumer
and public health advocates, the US
government recently allowed alcohol
companies to include alcohol content and
nutritional information per typical serve on
packaging. In March we followed this by
announcing our commitment to provide
consumers around the world with this
information a first for any alcohol company.
Another key issue for us is operational
sustainability our Californian vineyards and
wineries are in a water-stressed area, and we
have responded by creating Blue Teams to
scale up our focus on reducing water use in
our operations and identifying opportunities
in our wine growers supply chain.

BUSINESS REVIEWS: NORTH AMERICA
Organic net sales

movement
%
Reported net sales

movement
%
(1)
US Spirits and Wines

DGUSA
Canada
(3)
(3)
3
(2)
(1)
2
1
3
(4)
Spirits(ii)
Beer
Wine
Ready to drink
(3)
(2)
(3)
(1)
(1)
(2)
(1)
1
1
2
(14)
(2)
(10)
(8)
2
(5)
(2)
13
4
(2)
32
5
17
(3)
(12)
(15)
2
(5)
(2)
12
4
(2)
36
9
18
(1)
(10)
(12)
4
(3)
1
15
8
1
41
13
23
Global giants and local stars(ii):

Smirnoff
Captain Morgan
Johnnie Walker
Guinness
Baileys
Tanqueray
Crown Royal
Croc
Ketel One vodka
Bulleit
Don Julio
Buchanans
(i) Organic equals reported movement for volume except for North America (4)%, US Spirits and Wines (5)%, spirits
(3)% and ready to drink (25)% reflecting the termination of the transitional arrangements following the disposal
of Jose Cuervo and Bushmills and the acquisition of the outstanding stake in Don Julio.
(ii) Spirits brands excluding ready to drink.
In Canada the new distribution system

helped drive net sales growth of 2%.
Spirits growth of 3% was driven by
Johnnie Walker and vodka. Ready to
drink net sales growth was principally
due to Smirnoff variants, with beer down
and wine down double digit. Tactical
price reductions resulted in share
improvement, with a marginally
negative impact on price/mix.
Marketing investment in North America
reduced 4% driven by US Spirits and
Wines, which delivered significant savings
on media and agency fees and
procurement efficiencies. Advertising
remained focused on Croc, Crown Royal,
Smirnoff, Captain Morgan, and Johnnie
Walker, and increased on Don Julio and
Bulleit to support new programmes.
Marketing investment in DGUSA supported
the launch of Guinness Blonde American
Lager and in Canada, a 1% increase went
behind innovation launches.
(3)
Guinness net sales were up 3% on the

strong performance of Blonde American
Lager. Guinness Draught was weak given
competition in the craft beer segment,
particularly in the on trade. Net sales of
ready to drink declined slightly, bringing
net sales of DGUSA down 1%. Stronger
execution and competitive pricing on
Smirnoff Ice stabilised the core and
flavoured variants but the brands
growth still lags the category.
Organic volume
movement(i)
%
activities for Red, Black, and Blue Label.

Croc net sales growth of 4% was driven
by the notable success of Croc Pineapple,
the latest addition to the flavour range.
Despite an improved performance
trajectory, net sales of Smirnoff declined
4% as the flavour portfolio, confections
in particular, continued to be a drag on
performance. The launch of Captain
Morgan White Flavours partially offset
the effect of lapping the prior years
launch of Captain Morgan White which,
together with weakness on Original
Spiced, drove double digit net sales
decline for the brand. Net sales of tequila
were up double digit, driven by 10%
growth of Don Julio, which was
supported by marketing campaigns
focused on the heritage and
craftsmanship of the brand, and the
launch of new DeLen variants, which
broadened the price range and
contributed to increased distribution
of the brand.
Governance
Markets:
North America
KEY HIGHLIGHTS
Net sales in US Spirits and Wines
declined 2% while the value of distributor
depletions was up 4%. Diageos North
American whisk(e)y performance was
very strong with the portfolio outpacing
category growth and net sales up 13%.
Crown Royal was the primary driver as
Crown Royal Regal Apple, the top selling
innovation according to Nielsen, gained
share as it recruited new consumers to
the brand, driving double digit top line
growth for the trademark. Bulleit, the
fastest growing unflavoured North
American whisk(e)y, drove one third of
that categorys growth with net sales up
35%. Both Bulleit Bourbon and Bulleit Rye
led their respective segments through
increased distribution, consumer
experience marketing, and the
engagement of key trade influencers.
In scotch, Buchanans was the fastest
growing brand in the United States,
with net sales up over 20%. Buchanans
resonates particularly well with the
growing Hispanic population, and this
year added sponsorship of the Latin
Grammy Awards to its full suite of
marketing activities. Johnnie Walker did
not perform well, partly as a result of
lapping the strong launch of Platinum
and Gold Label Reserve last year but
also due to a reduction in promotional
Strategic report
In North America, US Spirits has

delivered improved depletion
performance through the year with the
value of distributor depletions, up 3%
in the first half and up 4% for the full
year. Shipments were broadly in line with
depletions and therefore net sales were
down 2% year on year as last year
shipments were higher than depletions
mainly driven by innovation launches.
Beer net sales were in line with last year,
ready to drink and wine were down
slightly and in Canada net sales grew 2%.
Volume growth of the reserve portfolio
was the main driver of the 1.5pps of
increased price/mix as price premiums
against the competition, for brands such
as Smirnoff and Captain Morgan, were
narrowed. This led to lower achieved
price year on year but did drive improved
share positions. Our innovation agenda
continued to lead the industry in North
America and this year was a key driver of
our net sales. Advertising spend was
down as we drove procurement savings
on media and agency fees in marketing
while maintaining our share of voice.
Adjusting for these savings, marketing
as a percentage of net sales was roughly
flat. Overheads were flat but operating
margin declined 47 basis points driven
by soft volume and lower net sales of
spirits in the United States.

BUSINESS REVIEWS: EUROPE
EUROPE
Western Europe
Russia and
Eastern Europe
Diageo is the largest premium

drinksbusiness in Western Europe.
Consumer marketing programmes
are developed at a market level to
drive consistency, efficiency and scale
across all countries. In Russia and
Eastern Europe we are driving our
premium core, standard and value
brands and reserve portfolio, whilst
in Turkey, we use our local businesses
strong route to consumer to drive
accelerated growth in international
premium spirits. In Europe, where
competition for talent is particularly
strong, our reputation as a trusted
and respected company and for
ground-breaking innovation, is key
to our ability to attract and retain
the people we need to deliver our
Performance Ambition.
Our markets
Europe comprises Western Europe, Russia and
Eastern Europe and Turkey. Western Europe
is managed as a single market with country
teams focusing on sales and customer
marketing execution. It includes Great Britain,
Ireland, Iberia, France, Germany and Diageo
Guinness Continental Europe beer business.
Eastern Europe includes Poland, Bulgaria,
Romania and Israel.
On 1 July 2015, Russia became
astandalone market while Eastern Europe
(%)
(%)
Spirits
Beer
Turkey
Other
Key financials
Net sales
Marketing spend
exceptional items
Exceptional items
Operating profit
2014
Reported
(restated)(i)
million
Wine
RTDs
Exchange
million
Other
Acquisitions
and
disposals
million

(%)
Value
Standard
Premium
Super premium
Ultra premium
Organic
movement
million
2015
Reported
million
Reported
movement
%
2,814
413
(186)
(30)
(13)
(1)
2
6
2,617
388
(7)
(6)
853
(20)
833
(67)
(2)
20
804
(20)
784
(6)
(6)
(i) Restated following the change in the internal reporting structure to reflect changes made to management
responsibilities. See page 50 for further details.
was merged with Western Europe creating

Diageo Europe. Turkey remained unchanged.
Route to market
In Great Britain we sell and market our
products through Diageo GB (spirits, beer
and ready to drink), Percy Fox & Co (wines)
and Justerini & Brooks Retail (wines private
clients). Products are distributed through
independent wholesalers and directly to
retailers. In the on trade, products are sold
through major brewers, multiple retail
groups and smaller regional independent
brewers and wholesalers.
In the Republic of Ireland and Northern
Ireland, Diageo sells and distributes directly
to the on trade and the off trade via a
telesales operation.
Across the remainder of Western Europe,
we distribute our spirits brands primarily
through our own distribution companies,
except for France where products are sold
through a joint venture arrangement with
Mot Hennessy.
Diageo Guinness Continental Europe
distributes our beer brands in mainland
Europe, focusing in Germany, Russia and
France, our largest mainland European
beer markets.
In Russia and Poland we operate through
wholly owned subsidiaries, while in other
Eastern Europe countries we use third
party distributors.
In Turkey, we sell our products via the
distribution network of Mey ki, our wholly
owned subsidiary. Mey ki distributes both
local brands (raki, other spirits and wine)
and Diageos global spirits brands.
Supply operations
The International Supply Centre (ISC)
comprises the supply operations in the
United Kingdom, Ireland and Italy. The group
owns 29 whisky distilleries in Scotland, a
Dublin based beer brewery and maturing
and packaging facilities in Scotland, England,
Ireland and Italy. The ISC ships whisk(e)y,
vodka, gin, rum, beer, wine, cream liqueurs,
and other spirit-based drinks to over 180
countries. Through our 1 billion investment
in Scotch whisky production and inventory,
announced in 2012, distilling capacity has
increased by over 25%.
Raki, vodka and wine are produced in
Turkey at a number of sites and Smirnov
vodka is produced in Russia.
People today increasingly want to work for
companies that they believe make a positive
social and environmental, as well as
economic, contribution. Our leadership in
responsible drinking, through programmes
and partnerships, and our contribution to
the communities in which we operate,
support our reputation and ability to attract
and retain employees. Our responsible
drinking programme, NOFAS, aims to tackle
foetal alcohol syndrome by training
midwives and health professionals to date
we have reached around 300,000 pregnant
women in the UK. In the last few years,
we have launched our Learning for Life
community programme in a number of
European countries, including a major
investment in Scotland, as part of a five-year
effort targeted towards young people.

BUSINESS REVIEWS: EUROPE
Organic volume
movement(i)
%
Organic net sales

movement
%
Reported net sales

movement
%
(7)
Western Europe
Russia and Eastern Europe
Turkey
1
(8)
1
(9)
3
(5)
(26)
(5)
Spirits(ii)
Beer
Wine
Ready to drink
(1)
1
(6)
1
1
(1)
(2)
(8)
(4)
(4)
(5)

Guinness
Smirnoff
Johnnie Walker
Baileys
Captain Morgan
Yen Raki
JB
1
(2)
(5)
(3)
9
(4)
(1)
2
(4)
(7)
(4)
10
4
(3)
(2)
(7)
(15)
(10)
1
(6)
(10)
(i) Organic equals reported movement for volume.

In Turkey net sales grew 3% despite an

excise duty increase in January and the
earlier start to Ramadan. Net sales in
rakiwere up 5% with Yen Raki and the
superpremium variant Tekirda Raki
premiumising the category. Good
underlying performance of international
spirits resulted in share gains for Johnnie
Walker, Smirnoff and Baileys.
Marketing investment in Europe
increased 2% largely driven by Western
Europe where spend was up 3%. The
increased investment was focused on
the biggest growth opportunities such
as reserve and innovation to support
the launches of Haig Club and the
Guinness Brewers project.
Performance in Russia and Eastern

Europe continued to be impacted by the
events in the region. In Russia, net sales
declined 14%, driven by both destocking
amongst distributors and consumers
trading down. This impacted Johnnie
Walker, however Diageo extended its
leadership in whisky and rum, and gained
share with brands such as White Horse,
Black & White and Captain Morgan. In
Poland, net sales of Johnnie Walker Red
Label declined 15% and the brand lost
share, as some competitors did not follow
Diageo price increases to cover last years
excise duty increase.
In Great Britain net sales were up 3%,

with spirits, beer, and ready to drink all in
growth. Reserve net sales were up 43%
driven by Croc and the successful launch
of Haig Club. Captain Morgan net sales
were up 15%, with investment focused
onincreased activation in outlets and
Smirnoff was back in growth with net
sales up 1%, supported by the new Were
Open campaign. Beer net sales were up
2% driven by innovation on Guinness.
Ready to drink net sales were up 7%
supported by strong growth in pre-mix.
The only weakness was in Baileys where
net sales were down 2%, however Baileys
Original was in growth.
In Ireland net sales were down 1%, or flat
after accounting for the transfer of wine
sales to Diageo Wines Europe. Guinness
sustained its positive momentum with
net sales up 2%, supported by successful
innovations launched through The
Brewers Project at St Jamess Gate. Net
sales in spirits were down 2% as the
category continued to be affected by
last years duty increase.
In Southern Europe net sales were
down 1%. Net sales in Iberia were flat,
after accounting for a transfer of sales
of one customer to Africa Regional
Markets, but showing positive
momentum with growth from Tanqueray
and Gordons in a vibrant gin category
and declines in JB and Cacique. Double
digit growth of reserve was the main
driver behind the 1% net sales growth in
Italy, where Zacapa was up 10% and Croc

more than trebled net sales. In Greece,
performance was impacted by the
deterioration of economic environment
in the last quarter, which resulted in a 4%
net sales decline.
Net sales in Germany and Austria
declined 2%. In Germany net sales were
up 5%. Underlying performance was
strong with net sales ofBaileys, Captain
Morgan and Johnnie Walker Red Label all
up double digit. InAustria, net sales were
down 53% against the buy in ahead of
the excise duty increase in January 2014.
Performance in Benelux continued to
be impacted by the decision to realign
prices in the first half on premium core
brands which resulted in a net sales
decline of 10%.
In a challenging trading environment in
France net sales increased 2% largely
driven by growth in scotch, with Scotch
malts up 6%, and the strong performance
of Captain Morgan which, in its third year,
more than doubled net sales.
Net sales in Diageo Wines Europe were
up 3% largely driven by the transfer of
wine net sales from Diageo Ireland and
the strong performance of [yellow tail].
Governance
Markets:
Europe
KEY HIGHLIGHTS
In Western Europe net sales were
up 1%:
Strategic report
Europes performance reflected an

improved momentum in Western
Europe, growth in Turkey and a
challenging environment in Russia. In
Western Europe net sales were up 1%, as
performance improved in more than half
of our markets. Reserve brands delivered
another strong performance with net
sales up 20% and growing double digit
even in the more challenging economies
in Southern Europe. Innovation
remained a key performance driver with
net sales up 30% driven by successes
such as The Brewers Project which
helped put Guinness back in growth in
both Great Britain and Ireland. We
continued to invest in our route to
consumer, increasing the number of
salespeople by 30% and the number of
outlets we cover by 60%. In Russia, which
continued to be impacted by economic
volatility, consumers traded down and
customers reduced inventory levels
while Diageo gained share in scotch and
rum. Turkey net sales were up 3% driving
premiumisation in the raki category
andgained share in scotch and vodka.
Total operating margin for the region
improved 75bps largely driven by gross
margin improvement in Turkey, and
overhead cost reduction in Western
Europe, which was partially reinvested in
marketing spend and route to consumer.

BUSINESS REVIEWS: AFRICA
AFRICA
Nigeria
East Africa
Africa Regional
Markets
In Africa our strategy is to grow

Diageos leadership across beer and
spirits by providing brand choice
across a broad range of consumer
motivations, profiles, and occasions.
We are focused on growing beer
faster than the market and
accelerating the growth of spirits
through continued investment in
infrastructure and brands. Local
sourcing is a key element of our
strategy in Africa: it directly supports
our commercial operations, while
indirectly supporting our position
bybringing wider benefits to society
as a whole.
Our markets
The region comprises Nigeria, East Africa
(Kenya, Tanzania, Uganda, Burundi, Rwanda
and South Sudan), Africa Regional Markets
(including Ghana, Cameroon, Ethiopia,
Angola, Mozambique and a sorghum beer
business in South Africa) and South Africa
(all other products).
Route to market
In Africa our largest businesses are in Nigeria,
where we own 54.3% of a listed company
whose principal brands are Guinness, Harp
and Malta, and in East Africa, where we own
50.03% of East African Breweries Limited
(%)
(%)
Spirits
Beer
South Africa
Other
Key financials
Net sales
Marketing spend
exceptional items
Exceptional items
Operating profit
2014
Reported
(restated)(i)
million
Wine
RTDs
Exchange
million
Other

(%)
Value
Standard
Premium
Super premium
Ultra premium
Acquisitions
and
disposals
million
Organic
movement
million
2015
Reported
million
Reported
movement
%
1,430
152
(100)
(10)
85
5
1,415
147
(1)
(3)
340
(23)
317
(52)
29
318
(7)
311
(6)
(2)
(i) Restated following the change in the internal reporting structure to reflect changes made to management
responsibilities. See page 50 for further details.
(EABL). EABL produces and distributes beer

and spirits brands to a range of consumers
in Kenya and Uganda, and has a 51% equity
interest in Serengeti Breweries Limited,
Tanzania. Within Africa Regional Markets,
we have wholly owned subsidiaries in
Cameroon, Ethiopia, Mozambique and
Runion and majority owned subsidiaries in
Ghana and the Seychelles. Angola is supplied
via a third party distributor. In South Africa
we sell spirits and sorghum beer through
wholly owned subsidiaries and currently sell
our beer, cider and ready to drink products
through our 42.25% stake in DHN Drinks Ltd,
a joint venture with Heineken and Namibia
Breweries Ltd. On 28 July 2015, Diageo
announced the agreement to dispose of its
equity interest in DHN Drinks Ltd. Diageo
has brewing arrangements with the Castel
Group who license, brew and distribute
Guinness in the Democratic Republic of
Congo, Gambia, Gabon, Ivory Coast, Togo,
Benin, Burkina Faso, Chad, Mali and Guinea.
Diageo sells spirits through distributors in the
majority of other sub-Saharan countries.
Supply operations
We have 14 breweries in Africa, including the
brewery owned by Sedibeng in South Africa
in which we own a 25% equity stake.
In addition, our beer and spirits brands
are produced by third parties under licence
in 20 other African countries. We also own
five manufacturing facilities including
blending, malting and cider plants.

In Africa we create wealth both directly
through our operations and indirectly
through our broader network, particularly
of agricultural suppliers. We source 70% of
agricultural and packaging materials locally
and we work with more than 50,000 local
farmers for our agricultural inputs. Thirteen
of our production sites in Africa are in
water-stressed areas, so much of our focus
is on managing water use in our operations
effectively and enhancing access to clean
water to surrounding communities through
our pan-African Water of Life programme.
Since we began the programme in 2006,
wehave brought safe drinking water to
morethan ten million people. The launch
of our Water Blueprint strategy this year will
help us focus further on water use in the
supply chain, with one of our key targets
being to equip our suppliers with the tools to
protect water sources in water-stressed areas.
We also support many responsible drinking
programmes throughout the continent.
We tackle issues like drink driving through
programmes such as Dry Drive in South
Africa, and underage consumption through
the Red Card initiative in Uganda, and
through advocating stronger legal purchase
age laws in Ghana. Our training programmes
have also created close to 40,000 responsible
drinking ambassadors across Africa this year.

BUSINESS REVIEWS: AFRICA
Organic volume
movement(i)
%
Organic net sales

movement
%
Reported net sales

movement
%
(1)
Nigeria
East Africa
Africa Regional Markets
South Africa
13
7
14
(2)
6
9
15
(7)
(3)
6
1
(12)
Spirits(ii)
Beer
Ready to drink
17
4
(34)
13
8
(28)
7
(1)
(33)

Guinness
Johnnie Walker
Smirnoff
Tusker
Malta
Senator
Harp
(5)
3
22
(6)
(8)
(11)
(40)
(7)
7
22
3
(5)
(16)
(46)
(15)
2
16
1
(17)
(20)
(50)

Marketing investment in Africa

increased 4%. In Nigeria spend on beer
was refocused from Harp to support the
growth of Orijin and value beers, while in
East Africa, the decline in Senator volume
also led to a reduction in spend. Spend
increased behind vodka, notably Smirnoff
1818 in South Africa in support of pack
innovations and promotional activity and
investment behind Johnnie Walker grew
in South Africa and East Africa. Ready to
drink investment increased as Smirnoff
Ice Double Black & Guarana launched
in East Africa and Nigeria.
Net sales in South Africa were down 7%

driven by a decline in Smirnoff Ice Double
Black and Guarana, which lapped strong
replenishment sales and high inventories
in the last financial year. Spirits net sales
increased 8% driven by Smirnoff 1818,
with net sales up 27% based on
competitive pricing and following a
packaging upgrade. Net sales of Johnnie
Walker increased 10% with marketing
focused on the brands quality
credentials. Its contribution to total scotch
performance was partially offset by a
weaker performance of JB and Bells.
Reserve brands continued to benefit
from investments in route to consumer.
In East Africa, where net sales grew 9%,

Guinness volume and net sales grew
strong double digits supported by the
Made of More campaign. Innovation in
value beer, in particular, Balozi lager in
Kenya, a no added sugar offering, and in
Tanzania Kibo Gold, positioned to capture
consumers trading down, offset a decline
in Senator due to excise duty changes in
Kenya in the first half last year. In spirits,
growth was led by mainstream spirits
brands and good performances from
Johnnie Walker and Smirnoff. Success
inmainstream spirits was driven by
KaneExtra and Liberty in Kenya, which
benefited from improvements in route to
consumer, including the introduction of
motorcycles to increase sales coverage
of mainstream outlets. Johnnie Walker
netsales grew 60% driven by recruitment
activities, while the launch of Smirnoff
IceDouble Black and Guarana also
contributed to East Africas growth.
In Africa Regional Markets, net sales

grew strongly, up 15%. In Ghana, net
sales grew 32%. Investment in route to
consumer, together with price increases,
led to 28% net sales growth of beer, and
spirits grew strongly driven by the growth
of Johnnie Walker and the introduction of
Orijin Bitters. In Cameroon, net sales grew
10% driven by growth of Guinness, which
benefited from increased awareness
through the Made of Black campaign,
together with outperformance of Harp
and growth of Johnnie Walker and
Baileys. In Angola, spirits net sales
doubled following route to consumer
investments and the appointment of
anew distributor. This led to strong
performances from Johnnie Walker,
White Horse, and Gordons gin. While the
performance of Meta beer in Ethiopia
was impacted by increased competitive
pricing, this was mostly offset by strong
net sales of Malta and the introduction
of Zemen, a lower-price beer innovation,
along with a good performance of spirits.
Governance
Markets:
Africa
KEY HIGHLIGHTS
Nigeria delivered double digit volume
growth driven primarily by the national
rollout of Orijin, while net sales grew 6%.
The weak consumer environment led to
a move to value lager which resulted in
a strong performance of Satzenbrau and
a weak performance of Harp. Similarly net
sales of Guinness declined although the
brands performance improved in the
second half and volume share stabilised.
Spirits net sales were up 19% as inventory
reductions on Johnnie Walker and Baileys
were offset by the strong performance of
local mainstream spirits.
Strategic report
Good performances in both beer and

spirits led to net sales up 6% in Africa.
Investments in route to consumer
together with innovation drove an 8%
increase in beer and led to double digit
growth in spirits. The mainstream beer
market in Nigeria remained challenged
as consumers moved towards more value
products, impacting the performance
ofGuinness and Harp. However the
national rollout of Orijin and renovation
of Satzenbrau drove an increase in beer
net sales of 9%. Investment in Guinness
marketing has stabilised volume share
in the brand. Good progress in route to
consumer led to strong net sales growth
in Ghana, and in Cameroon, strong
marketing campaigns delivered net sales
and share gains in Guinness. In South
Africa, spirits growth was underpinned
by the continued strong performances of
Smirnoff 1818, which is now a two million
case brand, and Johnnie Walker, while
overall growth was impacted by a decline
in ready to drink. Reserve brands grew
26% with double digit increases in South
Africa, East Africa and Nigeria. Increased
sales of mainstream brands, which have
lower costs per case, together with
procurement and supply efficiencies
were partially offset by an increase in
marketing spend and route to consumer
investments leading to organic operating
margin improvement of 75 basis points.

BUSINESS REVIEWS: LATIN AMERICA AND CARIBBEAN
LATIN
AMERICA
AND
CARIBBEAN
Paraguay,
Uruguay and Brazil
Venezuela
Colombia
In Latin America and Caribbean the

strategic priority is continued
leadership in scotch, while
broadening the category range to
include vodka, rum, liqueurs and local
spirits. We are continuing to invest
in routes to market and in the range
and depth of our portfolio of leading
brands. We are also enhancing our
supply structure to enable the
business to provide the emerging
middle class and an increasing
number of wealthy consumers with
the premium brands they aspire to.
In this regions changing regulatory
landscape, our presence is supported
by our reputation as a trusted and
respected business, based on our
stance on responsible drinking,
and community development
programmes like Learning for Life.
Our markets
Our Latin America and Caribbean (LAC)
business comprises Paraguay, Uruguay and
Brazil (PUB), Venezuela, Colombia, Mexico
and West LAC (Central America and
Caribbean, Argentina, Chile, Peru, Ecuador
and Bolivia).
(%)
(%)
Spirits
Beer
Mexico
West LAC
Other
Wine
RTDs
Key financials
2014
Reported
million
Net sales
Marketing spend
exceptional items
Exceptional items
Operating profit
Exchange
million
Other
Acquisitions
and
disposals
million

(%)
Value
Standard
Premium
Organic
movement
million
Super premium
Ultra premium
2015
Reported
million
Reported
movement
%
1,144
203
(123)
(22)
23
3
(11)
10
1,033
194
(10)
(4)
328
(14)
314
(60)
(7)
263
(5)
258
(20)
Route to market
We sell our products through a combination
of our own subsidiary companies and third
party distributors. In Brazil, sales are primarily
made directly to international retailers and
distributors. In addition to Diageo Brazil,
Diageo owns 100% of Ypica,
a leading cachaa producer and distributor.
In Uruguay, Diageo manages distribution
both directly and through distributors.
All products in Venezuela are sold
through dedicated third party distributors.
In Colombia we sell directly to major grocers,
serving all other accounts and channels
through distributors.
In Mexico our brands are sold directly
by Diageo, either through direct sales to
international accounts or through
wholesalers and distributors.
In selected markets in West LAC, we sell
directly to consumers, while in key markets,
such as Costa Rica and the Dominican
Republic, we use exclusive distributors. In
Jamaica, we own a 58% controlling interest
in Desnoes & Geddes Limited, the Jamaican
brewer of Red Stripe lager.
In Argentina, we sell directly to major
grocers, and other businesses are managed
through a combination of wholesalers and
distributors outside of major grocers, to
whom we sell directly.
Supply operations
The majority of brands sold in the region are
manufactured in our International Supply
Centre in Europe. However in recent years
we have acquired a number of local
(18)
manufacturers. This year we acquired the

remaining 50% equity interest in Don Julio,
giving full ownership of the brand and
production facilities. In 2012 we acquired
100% of Ypica in Brazil which produces
cachaa and in 2011 we acquired a
controlling interest in a company in
Guatemala (Aejos de Altura) producing
Zacapa. In addition, we have controlling
interest in a brewery in Jamaica (Red Stripe),
and the Navarro Correas winery in Mendoza,
Argentina. We also partner with more than
12 brewers and over 20 co-pack partners to
manufacture brands and package products
under strict quality assurance protocols.
In this region, we have built a name for
ourselves as a company that is committed to
the long term development of an industry
that can bring economic and social value
to society. Our responsible drinking
programmes, such as Actuando Mejor in
Mexico, and Drink Right in Jamaica, are
making a tangible difference in reducing
alcohol-related harm, and this year
contributed to creating more than 240,000
responsible drinking ambassadors. Our
flagship community re-investment
programme, Learning for Life, is providing
skills and training to over 100,000 people
across the region. Some of our sites in Brazil
are located in water-stressed areas, and we
are developing environmental programmes,
for example through our Ypica business,
which are helping ease the pressure on this
shared resource.

BUSINESS REVIEWS: LATIN AMERICA AND CARIBBEAN
Spirits(ii)
Beer
Wine
Ready to drink
Johnnie Walker
Smirnoff
Baileys
Buchanans
Old Parr
Ypica
Black & White
Organic net sales

movement
%
Reported net sales

movement
%
(7)
(1)
(10)
(8)
(38)
10
14
(5)
(2)
41
10
13
(9)
(12)
(60)
(2)
19
(12)
(8)
5
1
(7)
(3)
17
17
9
(12)
11
(1)
(6)
(6)
(12)
(4)
(17)
(9)
(5)
17
(5)
5
8
(12)
(10)
(3)
27
(11)
(7)
(24)
(22)
(14)
6
In Mexico, the breadth of Diageos scotch

portfolio was the main driver of a 13%
increase in net sales. Selective price
increases along with strong trade
executions delivered growth across all
price segments of scotch other than
value. Johnnie Walker net sales increased
15% with growth across all variants and
aparticularly strong contribution from
Johnnie Walker Red Label. Diageo gained
share in the fast-growing but competitive
standard scotch segment with the
introduction of Black & White, which
increased net sales over 80%. There was
a good contribution to net sales growth
from Smirnoff, since Diageo took direct
control over marketing and distribution
of the brand in December 2014.
In West LAC, net sales were down 9%,
driven by inventory reductions in the
export channels where net sales declined
51%. This impacted the performance of
Johnnie Walker, Old Parr, and Buchanans.
In domestic markets, strong performances
in Peru and Jamaica led to a 3% increase
in net sales. In Peru, net sales increased
26% with scotch driving growth together
with Baileys, while growth in Red Stripe,
pack renovations on Guinness and the
strong consumer appeal of Dragon Stout
helped deliver 15% growth in net sales in
Jamaica. Price realignments in Chile and
Caribbean & Central America led to some
negative price/mix but delivered share
gains in key categories. In Argentina,
restrictions on imports affected overall
performance but a shift to locally bottled
spirits including VAT 69, White Horse, and
Smirnoff drove share gains.
An increase in marketing investment
of 6% supported broader participation
within spirits. Spend on scotch was
focused on increasing brand equity
across price points in Mexico and on
supporting the launch of Old Parr Tribute
in Colombia. In Jamaica, investment also
increased to support the growth of beer
and there was growth in spend on
Smirnoff to maintain its leadership
position in Brazil and in Mexico as Diageo
regained distribution of the brand.
PUB
Venezuela
Colombia
Mexico
West LAC
Organic volume
movement(i)
%
In Colombia, investments in the route

to consumer increased share across key
categories and drove 10% net sales
growth. The launch of Old Parr Tribute
and the introduction of Buchanans
Special Reserve, together with double
digit growth of Johnnie Walker, led to an
11% increase in the net sales of scotch.
Innovations contributed to a 22% increase
in Baileys net sales.
Markets:
In Venezuela, while volume declined,

net sales increased 41% to 32 million.
Access to currency allowed for the
importation of some scotch leading to
strong comparative performances of
Johnnie Walker, Buchanans, and Ye
Monks. Increased focus on developing
local spirits led to strong performances
of Cacique, which doubled net sales,
despite glass supply constraints, and

Gordons vodka net sales increased 185%.
Governance
KEY HIGHLIGHTS
Net sales in Paraguay, Uruguay and
Brazil (PUB) declined 2% as currency
weakness and a slower Brazilian economy
impacted consumer spending. In Brazil,

volume declined mainly as a result of
changes in the route to consumer and
the harmonisation of interstate pricing,
which led to a reduction in inventories
held by distributors. In PUB, price
increases and a reduction in commercial
discounts led to 6pps of positive price/
mix. Scotch net sales declined 2% driven
by Johnnie Walker, which was down 9%
as intense competitor promotional
activity amplified the price premium of
Johnnie Walker Red Label. In premium
scotch, Old Parr and Johnnie Walker
Double Black had strong net sales growth
and share gains, and in standard scotch,
White Horse grew net sales supported
by a new media campaign. Smirnoff
strengthened its leadership position in
vodka, growing net sales 6% driven by
price increases and the launch of Smirnoff
Peach. Net sales of Ypica were affected
by the transfer from net sales to
overheads of tax credits from local
production incentives. On a like for like
basis, net sales of Ypica increased high
single digit driven by price increases and
continued strong performance in the
North East.
Strategic report
Good performances in the domestic

markets in LAC were offset by a significant
net sales decline in export channels due to
currency volatility. The levels of stock held
by these customers has reduced, which
together with lower depletions, impacted
growth in the region by five percentage
points. Net sales in domestic markets
increased 5% as we expanded our leading
positions in scotch and broadened our
business into other categories. In Brazil,
performance has been affected by a
weaker economy and a tougher
competitive environment, but we have
invested in route to consumer and
recruited new consumers into our
portfolio through innovation. In
Venezuela, there was good growth in
local spirits and scotch. Performance in
Colombia benefited from investments
in route to consumer and innovation,
while our strength in scotch drove good
net sales growth in Mexico. In Peru and
Jamaica, we delivered good growth from
our investments in route to consumer and,
while net sales were down in Argentina,
we moved quickly to offset import levies
with local production driving share gains.
While significant cost efficiencies were
achieved, especially in Brazil, negative
market mix and increased marketing
investment led to a decrease of 41 basis
points in organic operating margin.

BUSINESS REVIEWS: ASIA PACIFIC
ASIA
PACIFIC
South East Asia

Greater China
India
Our strategy in Asia Pacific, which

encompasses both developed
and emerging markets, is to
operate acrosscategories in
international spirits, local spirits
and beer. We focus on the highest
growth categories and consumer
opportunities, driving continued
development ofsuper and ultra
premium scotch, and leveraging the
emerging middle class opportunity
through acombination of organic
growth andselective acquisitions.
In the financial year weacquired
acontrolling stake in United Spirits
Limited (USL), positioning us as leaders
in spirits in an attractive market, and
giving us a significantly expanded
operational footprint in India.
Our markets
Asia Pacific comprises South East Asia
(Vietnam, Thailand, Philippines, Indonesia,
Malaysia, Singapore, Cambodia, Laos,
Myanmar, Nepal and Sri Lanka), Greater China
(China, Taiwan, Hong Kong and Macau), India,
Global Travel, Asia and Middle East, Australia
and North Asia (Korea and Japan).
Route to market
In South East Asia, spirits and beer are sold
through a combination of Diageo companies,
(%)
(%)
Spirits
Beer
Global Travel, Asia

and Middle East
Australia
North Asia
Wine
RTDs
Key financials
2014
Reported
million
Net sales
Marketing spend
exceptional items
Exceptional items
Operating profit
Exchange
million
Other
Acquisitions
and
disposals
million

(%)
Value
Standard
Premium
Organic
movement
million
Super premium
Ultra premium
2015
Reported
million
Reported
movement
%
1,347
305
(22)
(1)
920
65
(32)
(25)
2,213
344
64
13
283
(276)
7
(13)
66
20
356
(193)
163
26
joint venture arrangements, and third-party

distributors. In Thailand, Malaysia and
Singapore, we have joint venture
arrangements with Mot Hennessy, sharing
administrative and distribution costs. Diageo
has wholly owned subsidiaries in the
Philippines and Vietnam. In Vietnam we also
have a 45.56% equity stake in Hanoi Liquor
Joint Stock Company. In Malaysia, Diageos
own and third party beers are brewed and
distributed by a listed company, Guinness
Anchor Berhad, in which we have an
effective 25.5% equity interest. In Indonesia,
Guinness is brewed by, and distributed
through, third party arrangements.
In Greater China, part of our spirits
business is conducted through a joint
venture arrangement with Mot Hennessy.
The remainder of our spirits are sold through
a wholly owned subsidiary. In addition, we
are the sole distributor of Shui Jing Fang, a
super premium Chinese white spirit, through
our controlling 39.71% equity stake in a
listed company.
In India, we further extended our route
to market through the integration of USL,
the leading spirits company in India. Diageo
consolidated USL from 2 July 2014 following
the acquisition of an additional 26%
investment in USL, becoming the largest
shareholder with a 54.78% controlling stake.
In Australia, we produce and distribute
the groups products and in New Zealand
we operate through third party distributors.
In North Asia, we have our own
distribution company in South Korea, whilst
in Japan, the majority of sales are through
2,229
joint venture agreements with Mot

Hennessy and Kirin.
Airport shops and airline customers are
serviced through a dedicated Diageo sales
and marketing organisation. In the Middle
East, we sell our products through third
party distributors.
Supply operations
We have distilleries at Chengdu in China
that produce Chinese white spirit and in
Bundaberg, Australia that produce rum.
USL owns 33 manufacturing facilities
in India and Nepal, leases 10 further
manufacturing facilities in India and 46
facilities are licensed to produce USL
products. In addition, we have bottling
plants in Korea and Australia with ready
to drink manufacturing capabilities.
Promoting responsible drinking has always
been a particular focus for us, as it is in many
parts of the world. We run programmes to
address drink driving, to train bartenders and
promotional staff on how to serve alcohol
responsibly, and to raise awareness of alcohol
and its effects. We also focus on empowering
women through our Plan W programme.
With the acquisition of USL, our supply
footprint has increased significantly, almost
doubling the number of sites we operate in
water-stressed areas. We believe that our
approach, set out in the Water Blueprint
strategy, will bring benefits to local water
sources, while our compliance and ethics and
Zero Harm safety programmes are helping
colleagues at USL improve in these areas.

BUSINESS REVIEWS: ASIA PACIFIC
Organic volume
movement(i)
%
Organic net sales

movement
%
Reported net sales

movement
%
(2)
64
South East Asia

Greater China
India
Global Travel, Asia and Middle East
Australia
North Asia
(24)
3
5
5
1
1
(28)
15
3
4
2
1
(28)
17
1,732
3
(5)
(1)
Spirits(ii)
Beer
Ready to drink
(3)
(13)
(2)
(3)
(12)
1
83
(16)
(5)
(10)
(3)
(13)
(4)
(10)
(5)
275
(14)
(7)
(12)
11
(13)
(10)
(7)
239
(14)
(9)
(16)
8
(16)
(8)
(13)
245

Johnnie Walker
Smirnoff
Guinness
Captain Morgan
Baileys
Windsor
Bundaberg
Shui Jing Fang
(i) Organic equals reported movement for volume except for Asia Pacific 622%, India 6347%, and spirits 710%,
reflecting the full consolidation of USL.
(3)
Markets:
Asia Pacific
drove continued premiumisation. The

Smirnoff Black launch helped increase
Smirnoff share by 5pps over the past
three months to 56% of vodka. The
integration of Diageo and USL completed,
and from June, USL started selling
Diageo brands.
Global Travel, Asia and Middle East
net sales were up 4% including 6pps of
benefit from transferring sales from some
Indian travel retail customers from South
East Asia. Middle East performance
slowed in the second half due to
geopolitical tensions and increased
pricing pressure on scotch, with second
half sales down 16%. AcrossGTME,
Diageo brands gained shareparticularly
in whisky, led by Johnnie Walker in
Global Travel Asia, where premium and
above variants drove the brands net
sales growth.
Net sales in Australia improved 2%,
reversing a first half decline. Spirits
were up 2%, driven by super premium
scotch, spiced rum, and North American
whisk(e)y. Captain Morgan net sales grew
nearly 50% and it is now the second
largest rum brand behind Bundaberg.
While pricing pressure impacted
Bundaberg and Smirnoff, depletions
improved in the last quarter. Ready to
drink growth continued in the second
half driven by Captain Morgan variants
and pack format innovations from
several brands.
North Asia net sales were up 1% with
Japan up 10% and Korea down 2%, as
second half performance slowed
following an increase in import duties
after a Customs settlement in January.
InKorea, whisky contraction decelerated,
and the launch of lower ABV offering
W ICE by Windsor stabilised Windsor
share in the fourth quarter. While
Windsor was down, whisky sales in Korea
benefited from strong growth of Johnnie
Walker Blue and Black Label. Guinness
was up 41%, driven by a campaign and
price promotion. In Japan, performance
improved due to scotch growth, with
depletions up high single digit, and
increased distribution and new flavours
of Smirnoff Ice.
Marketing investment decreased 8%,
due to Johnnie Walker reductions,
particularly in Black Label, in China and
South East Asia. In China, investment
declined in the competitive on trade and
was reinvested in testing new at home
and with meal off trade campaigns. In
Thailand and the Philippines, Johnnie
Walker investment focused on recruiting
consumers and maintaining Gold and
Blue Label sponsorships. Many markets
also supported Haig Clubs launch.
Governance
KEY HIGHLIGHTS
In South East Asia, net sales declined
28% given an inventory level reduction in
specific wholesale channels, with Johnnie
Walker Red and Black Label most
impacted. Performance in these channels
was also impacted by transferring sales
from some Indian travel retail customers
to Global Travel Asia. New regulations in

Indonesia caused major disruptions, and
Guinness net sales declined 30%. In
Thailand, price repositioning on Johnnie
Walker Red Label and Smirnoff led to
negative price/mix, however, Johnnie
Walker Red Label volume was up double
digit in the second half, while Smirnoff
gained share.
In Greater China, net sales were up 15%.
Taiwan net sales increased 6%, driven by
continued success of The Singleton,
which was up significantly and has
become the largest malt brand in Taiwan.
Mainland China was up 26% including an
11pps benefit from an additional quarter
of Shuijingfang to align financial year end
timing. Shuijingfang grew significantly
through innovation, strengthened route
to consumer, and a soft prior year
comparable. Shuijingfang also generated
profit and drove margin improvement for
Greater China, due to a significant
reduction in the underlying business loss
and benefiting from provision releases.
While scotch in mainland China was
down 17%, due to increased competition
for on trade contracts and a reduction
in wholesaler inventory levels, The
Singleton and Haig Club drove growth
and share gains.
Despite shipment disruptions due to
new food safety labelling requirements,
Diageo India volume was up 5% and
net sales up 3%, and all key priority
brands grew depletions. Investment in
Johnnie Walker and VAT 69 campaigns,
and a Black & White packaging relaunch
Strategic report
Asia Pacific performance reflects

inventory reductions in South East Asia,
and disruptions in Indonesia due to new
restrictions on the sale of beer and ready
to drink in some channels. All other
markets delivered growth, including
China led by Chinese white spirits.
Reserve sales were up 30%, led by
Scotch malts, with particularly strong
performance from The Singleton.
Innovation responding to changing
trends played an important role, with the
launch of Haig Club, W ICE by Windsor in
Korea, Guinness Zero in Indonesia, and
new ready to drink offerings. We reduced
marketing investment, largely in China
and South East Asia, where the consumer
environment was challenged.
Performance, primarily the reduction in
stock levels, in South East Asia resulted
in a significant operating loss for that
market. Our Chinese white spirits
business regained profitability after a
loss last year. This return to profitability,
along with cost savings, resulted in an
overall margin improvement for Asia
Pacific of two percentage points. The full
consolidation of USL added 921m of net
sales and 53m of operating profit to
reported performance for the region.

CATEGORY REVIEW
CATEGORY
REVIEW
Volume
Scotch
Vodka
Global giants represent 39% of Diageo

net sales
Johnnie Walker, with nearly 70% of its
net sales in the emerging markets, was
impacted by currency weakness and
inventory reductions in South East Asia
and export channels in Latin America.
In the United States, the brand lapped
the shipment of two big innovations,
Gold Label Reserve and Platinum Label
in the prior year; Red and Black Label
were negatively impacted by reduced
promotional activities. In China, the
governments anti extravagance
measures drove continued closure of
traditional on trade outlets, leading to
increased competition in the modern on
trade negatively impacting the whole
scotch category. Many other markets
delivered strong performance, including
Cameroon, Angola, Ghana, and East Africa
with net sales up more than 50% and
Mexico, Venezuela, and Colombia which
all delivered double digit sales growth.
In the developed markets in Asia Pacific,
Johnnie Walker performed strongly and
net sales grew high single digit.
Smirnoff net sales declined 2%, largely
driven by the United States, and the
weakness in flavoured vodka there.
The relaunch of the brand with the
Exclusively for Everybody marketing
campaign, new packaging and targeted
price promotions drove improved
depletions momentum and share gains
on Smirnoff Red. In Western Europe,
a number of countries, notably Great
Britain, delivered growth. Net sales were
up in Latin America, with Brazil growing
8% following the national Cheers to
Real Life campaign launch. Smirnoff
had a very strong year in South Africa
with Smirnoff 1818 sales growing 27%.
Net sales
North
American
whisk(e)y
Rum
Liqueurs
Gin
Tequila
Marketing spend
Beer
Wine
Ready
to drink
Organic volume
movement(i)
%
Spirits(ii)
Scotch
Vodka
North American whisk(e)y
Rum
Liqueurs
Gin
Tequila
Beer
Ready to drink
Wine
Total
(2)
(4)
10
(3)
(1)
4
10
3
(11)
(1)
(1)
Indian Made Foreign

Liquor (IMFL)
Other
Organic net sales

movement
%
Reported net sales

movement
%
(1)
(5)
1
12
(3)
(4)
5
14
4
(4)
(1)
10
(9)
1
15
(6)
(8)
3
38
(2)
(13)
(1)
5
(i) Organic equals reported movement for volume except for total 58%, spirits 72%, ready to drink (18)%, liqueurs (1)%,
and tequila 25%, largely reflecting the full consolidation of USL, the acquisition of Don Julio and the termination of
agency brand distribution agreements, including Jose Cuervo.
Organic volume
movement(i)
%
Global giants
Johnnie Walker
Smirnoff
Captain Morgan
Baileys
Tanqueray
Guinness
Local stars
Crown Royal
Yen Raki
JB
Buchanans
Windsor
Old Parr
Bundaberg
Bells
White Horse
Ypica
Cacique
Shui Jing Fang
Reserve
Scotch malts
Croc
Ketel One vodka
Don Julio
Bulleit
Organic net sales

movement
%
Reported net sales

movement
%
(6)
(1)
(4)
(4)
6
(2)
(9)
(2)
(6)
(4)
5
(12)
(3)
(7)
(8)
5
(5)
13
(4)
(2)
(9)
(10)
(13)
(5)
(3)
(5)
(5)
(37)
268
12
4
(4)
(3)
(10)
(14)
(7)
(5)
(7)
(3)
3
235
15
(6)
(9)
(12)
(8)
(24)
(13)
(14)
(26)
(14)
(32)
241
11
6
(3)
8
34
16
6
(2)
12
38
12
9
1
43
42
(i) Organic equals reported movement for volume, except for Don Julio where reported volume growth is 98%.
(1) Spirits brands excluding ready to drink.

CATEGORY REVIEW
Also within whisk(e)y, North American

whisk(e)y, which represents 7% of
Diageo net sales, grew 12% this year with
over 2pps of positive price/mix. This
strong performance was driven by the
successful launch of Crown Royal Regal
Apple, the continued strong growth of
Bulleit, and the acclaimed range of rare
bourbons in the Orphan Barrel series.
Vodka represents 12% of Diageo net
sales and grew 1%. The growth of Croc
in Europe and North America, as well as
Smirnoff in Africa and Latin America was
partially offset by the decline of Smirnoff
in developed markets.
Beer represents 18% of Diageo net sales,
grew 4% and delivered 1.1pps of positive
price/mix. Beer in Africa grew 8%, led by
double digit growth in Africa Regional
Markets. In Nigeria, the success of Orijin
and Satzenbrau more than offset declines
in Guinness and Harp. East Africa
delivered double digit growth on
Guinness and a good performance with
Tusker. Performance of Guinness in
developed markets was good, driven by
the successful launch of Brewers Project
innovations and Blonde American Lager.
Wine represents 4% of Diageo sales

and declined 1%. In the United States,
a decline of 1% was driven by depletion
softness as the business lapped one off
programming in the prior year on core
brands. In Europe, commercial challenges
on Blossom Hill were offset by the strong
performance of [yellow tail].
Ready to drink represents 5% of Diageo

net sales and declined 4% this year. The
main driver of this decline was in South
Africa with Smirnoff Ice Double Black and
Guarana where the brand lapped a
strong performance in the previous year
and an increase in inventories ahead of its
transition to DHN Drinks. Elsewhere there
was growth in ready to drink, including
East Africa, West LAC, and Australia.
In Great Britain, ready to drink cans
underpinned sales growth of 7% in
the category.
Reserve brands represent 13% of

Diageo net sales, and continued to
perform well with net sales growth of 8%.
During the economic volatility of recent
years, the wealthy consumer base that
underpins reserve has been resilient.
Theslight deceleration in overall reserve
growth was driven by lapping strong
innovation shipments on Johnnie Walker
Gold Label Reserve and Platinum Label in
the United States. Ketel One vodka faced
increased competitive pressure from both
within and outside the category. Across
the wider portfolio, performance was
strong. Scotch malts grew double digit,
led by The Singleton which was the
fastest growing of the top 5 global malt
whisky brands last year. The very strong
performance of Bulleit continued with
sales up 38%, benefiting from high
advocacy amongst the bartender
community. Zacapa rum and tequila Don
Julio also delivered double digit growth
globally, reflecting the quality and
heritage of these products, and the
strength of the reserve business model.
Croc continues to expand its footprint
outside of North America with strong
growth in Western Europe, particularly
Great Britain, where it rapidly gained
share from the market leader and is now
the number two ultra premium vodka.
Other Key Highlights

Within whisk(e)y, scotch represents 24%
of Diageo net sales and declined by 5%.
Approximately 80% of this decline was
due to inventory reductions in South East
Asia and export channels in Latin America
on Johnnie Walker, Buchanans, and Old
Parr. Other brands including Haig Club,
The Singleton, and scotch malts globally,
and Buchanans in the United States
performed well, with many growing
double digit.
Governance
Local stars represent 16% of Diageo net

sales. Overall performance was good with
net sales growth of 4%. In developed
markets, there was double digit growth
on certain premium brands that have
resonance with particular consumer
groups, such as Buchanans in the United
States with the Hispanic community, and
Crown Royal Regal Apple with millennial
consumers in high energy occasions.
In China, Shui Jing Fang showed
significant growth due to innovation, a
strengthened route to consumer, and a
soft prior year comparable. In emerging
markets more broadly, there was good
performance from local and secondary
imported brands as certain consumer
segments traded down, particularly
where local production protected pricing
from currency volatility. The net result is
that whilst premium imported brands
such as Windsor and Old Parr have seen
sales decline, there was strong growth
on brands such as Yen Raki in Turkey,
Cacique in Venezuela and White Horse
in Brazil.
Strategic report
Captain Morgan net sales were down

6% due to the performance of the brand
in the United States, where Captain
Morgan held share in a flat rum category
that is facing heightened competition
from other categories. The decline in
shipments was driven by weakness on
Original Spiced Rum, and Captain Morgan
White Rum which lapped its launch last
year. The launch of Captain Morgan White
Flavours partially offset the shipments
decline on the core variants. Elsewhere,
the brands performance continued to
be strong with double digit growth in
Great Britain, Germany, Southern Europe,
Australia, India, and East Africa.
Baileys net sales declined 4% having
started the year with high inventory
levels. It experienced softer depletions
this year in the United States and Nigeria.
In China, after weakness in the first half,
specific interventions to drive consumer
conversion resulted in stronger second
half depletions, up mid single digit. In
Western Europe performance was
impacted by lapping the launch of
Chocolat Luxe in the prior year, but the
Baileys brand achieved share gains in the
key markets of Great Britain and Germany.
The brand continued to expand its
footprint in emerging markets, with
double digit growth in Colombia,
West LAC, and Africa Regional Markets.
Tanqueray gin benefited from a
strongfocus on increased visibility
anddistribution in the on trade,
supported by the highly effective
Tonight We Tanqueray campaign.
Thisdrove strong double digit growth
inWestern Europe, particularly in Spain
and Great Britain, with accelerating
growth in Germany and Benelux.
Netsales for the gin brand grew 6%,
withTanqueray No. TEN up double
digitinevery region.
Guinness net sales were flat, reflecting
a strong performance in both the United
States and Western Europe, where the
brand grew 3% and 2% respectively.
Thiswas achieved through a combination
of acclaimed innovations such as Blonde
American Lager and Dublin Porter that
built on the Guinness brewing heritage,
a drive to increase presence and
distribution in bars, and a series of award
winning marketing campaigns built
under the Made of More platform. In
Nigeria, sales declined but performance
improved over the course of the year
and volume share stabilised. Sales
declined in Indonesia due to adverse
regulatory changes.

SUSTAINABILITY & RESPONSIBILITY REVIEW
SUSTAINABILITY &
RESPONSIBILITY
REVIEW
2015 has been a year of

significant progress in our
approach to sustainability
and responsibility. With our
2015 targets expiring this
year, and in light of external
factors such as the UNs new
Sustainable Development
Goals, we evaluated the
strengths and weaknesses
of our strategy against our
track record of performance
and the work we have
done over the last few
years in understanding the
expectations and concerns
of our stakeholders.
APPROACH TO UNITED SPIRITS

LIMITED (USL) DATA
Following the acquisition of USL, we are
progressively integrating operating
systems and practice. As a result, we have
only included USL data in the following:
Employee numbers and Values

Survey data
E nvironmental data for water,
carbon and waste.
All other data excludes USL.
As a result, in December 2014, we launched

new, ambitious targets for 2020 for our
most material issues, which build on our
achievements to date, and are aligned with
the emerging UN Sustainable Development
Goals. Our targets, which focus on leadership
in alcohol in society, building thriving
communities and reducing our
environmental impact, are an essential part
of how we will deliver our Performance
Ambition (see page 16 for more information).
Given their increasing importance to the
business as a whole, this year we have added
safety and carbon emissions to our 2014
non-financial key performance indicators,
responsible drinking programmes, water
efficiency and employee engagement.
Looking ahead focusing on impact
During the year, we appointed a new
Sustainable Development Director to lead
the team, embed our strategy, and develop
sound metrics for our targets and a
co-ordinated framework for meeting them
everywhere we do business. This will involve
a more sophisticated approach focused
on impact rather than input. We need
to improve how we measure what our
programmes are delivering both within
and outside our business.
We also need to understand better how
everything we do is connected our impact
as a local employer providing jobs and
paying taxes, with our impact as a company
selling alcoholic drinks in regulated markets;
our impact as a manufacturer using shared
natural resources and purchasing from local
and global suppliers, with our impact as a
marketer of iconic, much loved brands, for
instance. To create one of the best
consumer goods companies in the world,
we need to understand the impact we have

as a company, with the aim of ensuring that
overall, our contribution is a positive one.
We have already begun this work with
our new integrated water strategy, our Water
Blueprint, launched in April 2015, which has
given us a deeper understanding of the total
impact of our water use and in which we
have prioritised what we need to do to
improve our stewardship of water.
Performance against 2015 targets
We will be reporting next year on how we are
developing our approach beyond water and
how we are performing against our new
targets for 2020. In the meantime, in this
report we are focusing on the progress we
have made towards our 2015 targets and the
challenges and opportunities that face us as
we look towards 2020 and beyond. In
recognition of our new targets, we are
structuring this review around the three areas:
Leadership in alcohol in society
which covers our existing target for
responsible drinking programmes
Reducing our environmental impact
which covers our existing targets for
water, carbon emissions, waste and
packaging
Thriving communities which covers
our existing targets for our communities,
and our indicators for our people and our
supply chain.
We also continue to report on governance
and ethics (see page 47), which underpin
how we do business in a responsible and
ethical way and which are essential for
earning the trust and respect of everyone
who comes into contact with Diageo.
Further details in the
S&R Performance Addendum 2015.
Further details at www.diageo.com.

SUSTAINABILITY & RESPONSIBILITY REVIEW: LEADERSHIP IN ALCOHOL IN SOCIETY
PERFORMANCE AGAINST TARGETS

298
(i)
(vs 373 in 2014)
(i) In shifting our focus towards the Global Producers

Commitments, we supported fewer programmes this
year, and in line with our 2020 target, we are prioritising
impact, which involves supporting fewer but more
effective programmes.
(1) reducing underage drinking

(2) strengthening and expanding marketing
codes of practice
(4) reducing drink driving

(5) enlisting the support of retailers.
We believe that efforts to reduce the misuse of
alcohol are most effective when government,
civil society, individuals and families, as well as
Performance against 2015 targets

Industry performance against each of the
five Global Beer, Wine and Spirits Producers
Commitments to Reduce Harmful Drinking is
tracked through key performance indicators.
In year two (2014) of the five-year programme,
the industry has shown progress in key areas
Complaints about advertising upheld by

industry bodies that report publicly (2015)
Australia
Ireland
United Kingdom
United States
Alcohol Beverage Code

Advertising Standards Authority for Ireland (ASAI)
The Portman Group
Advertising Standards Authority (ASA)
Distilled Spirits Council of the United States (DISCUS)
Industry
complaints
upheld
Complaints
upheld about
Diageo brands
5
1
4
35
2
0
0
1
1
0
Increasingly, were using studies to

support, evaluate and report on the
impact of our programmes, so we can
keep learning and keep improving.
This year we studied the efficacy of
our Drink Right programme in Jamaica.
Alongside a range of partnership and
public policy initiatives, Drink Right
reaches consumers with responsible
drinking messages through social media
and television, radio and print. The
campaign also provides training to
retailers, promotes the We ID
programme to deter underage drinking,
and promotes a culture of drinking the
right way.
Our study showed areas of progress
and areas for improvement. In our
sample, 72% said they were aware of the
campaign, and of those, 47% said they
believed their drinking behaviour had
improved as a result. Results like these
help us strengthen and focus our efforts
towards our ultimate goal reducing
harmful drinking.
including underage drinking, reducing drink

driving, and strengthening and expanding
marketing codes of practice to promote
responsible drinking. Digital Guiding Principles
which, building on many existing codes, set
high standards for digital advertising, were
launched in September 2014.
While this unified approach has
undoubtedly increased our reach, there is
still more work to be done. Our aim is to
reduce the harmful use of alcohol through
these programmes and by working closely
with governments and civil society. A detailed
progress report on year two of the Global
Producers Commitments will be published
in autumn 2015 and can be found on
www.producerscommitments.org.
(3) providing consumer information and

responsible product innovation
Developing our approach for 2020

We are proud of the approach we have taken,
over decades, to help tackle harmful drinking.
In setting ourselves new targets for 2020 we
aim to continue to go beyond industry-wide
commitments. From this year, we will work
in partnership to support programmes to
address harmful drinking in our top 20
countries that can be evaluated for efficacy
and impact, and will report on the results.
We also aim to reach one million adults
with training materials that enable them
to champion responsible drinking.
REDUCING ALCOHOL-RELATED
HARM: DRINK RIGHT, JAMAICA
Reducing alcohol-related harm

Diageo shares the goal set by the World Health
Organization (WHO) of reducing alcoholrelated harm by 10% across the world by 2025.
We are also one of the 13 leading alcohol
beverage companies acting on the Global
Beer, Wine and Spirits Producers
Commitments to Reduce Harmful Drinking.
These Commitments are the largest ever
industry initiative to implement effective ways
to address harmful drinking.
These Commitments identified five areas
for action over five years from January 2013:
Providing consumer information

In March 2015, we announced our
commitment to provide consumers with
alcohol content and nutrition information
per typical serve a first for any alcohol
company. We intend to provide this
information through Diageos responsible
drinking website DRINKiQ.com, and/or
on-pack in a majority of Diageos markets,
subject to local regulatory approval.
Furthermore, the Diageo Alcohol
Beverage Information Policy (DABIP) provides
mandatory minimum standards for the
information that must be included on labels
and packaging, including at least one and up
to three responsible drinking symbols, a link
to DRINKiQ.com, alcohol content, a list of
allergens, and recycling symbols. The DABIP
mandatory elements will be in place on all
Diageo-owned brands in all markets (where
legally permitted) by the end of December
2017. Meanwhile, our DRINKiQ.com site,
available in multiple languages, already
includes a wealth of information about
nutrition and responsible drinking.
Governance
Our brands are made with pride, and made

to be enjoyed responsibly. Consumed
moderately and responsibly by adults who
choose to drink, alcohol can be part of a
balanced lifestyle, and play a positive role
in social occasions and celebrations.
The misuse of alcohol, however, can cause
serious problems for individuals, communities
and society. We care passionately about
reducing alcohol-related harm through our
own programmes and through partnership
and collaboration with others and we seek to
provide consumers with the information and
tools they need to make informed choices
about drinking or not drinking.
the industry, work together. Our approach is

built around providing consumers with
information; promoting rigorous company and
industry standards for responsible marketing;
supporting effective programmes and
partnerships to tackle alcohol misuse; and
advocating effective, evidence-based policy.
Strategic report
LEADERSHIP IN ALCOHOL
IN SOCIETY

SUSTAINABILITY & RESPONSIBILITY REVIEW: REDUCING OUR ENVIRONMENTAL IMPACT

Diageo supported 298 responsible drinking
programmes in more than 50 countries,
focused on reducing alcohol misuse by
working with others to seek to raise
awareness and change peoples attitudes
and behaviour.
This is a reduction from the number
of programmes we supported last year;
it is driven by our stronger focus on
implementing programmes in support of
the Global Producers Commitments.
Additionally, as stated in last years report and
in line with our 2020 target to measure the
impact of our programmes in our top 20
countries, we are prioritising programmes
that show impact. This may mean we
support fewer, but more effective
programmes. Evaluation of our initiatives
will help us improve.
Our approach in each country is based
on the needs of local stakeholders, so the
programmes are varied, but last year they
included advertising campaigns that raised
awareness of the risks of excessive drinking,
funding the training of midwives about
foetal alcohol syndrome, supporting the
medical profession in identifying and
helping problem drinkers, and initiatives with
public and private partners to reduce drink
driving, including free rides and enforcement
campaigns. In line with our 2020 targets and
our aim to focus on the impact of our
programmes, we have started to publish
evaluations of our initiatives on our website,
www.diageo.com.
Responsible marketing
The Diageo Marketing Code and Digital
Code are our mandatory minimum standards
for responsible marketing, and we review
them every 12-18 months to ensure they
represent best practice.
Five industry bodies publicly report
breaches of their self-regulatory codes.
This year, Diageo was found to be in breach
by the Advertising Standards Authority in the
United Kingdom for a television commercial
for Parrot Bay frozen pouches on the
grounds of underage appeal, and by the
Portman Group in the United Kingdom for
a pre-filled 20cl counter-top unit because
the phrase mix it up tonight could be seen
as an encouragement of immoderate
consumption. The marketing material
was immediately withdrawn.
REDUCING OUR
ENVIRONMENTAL IMPACT
PERFORMANCE AGAINST 2015 TARGETS(i)
Improve water efficiency by 30%
10.4%
(vs 2014)
30.2%
(vs 2007)
Reduce water wasted in water-stressed

sites by 50%
33.4%
(vs 2014)
45.3%
(vs 2007)
Reduce polluting power of wastewater by 60%
16.3%
(vs 2014)
3.1%
(vs 2007)
Reduce carbon emissions equivalent by 50%
8.7%
(vs 2014)
33.3%
(vs 2007)
Eliminate waste to landfill
48.5%
(vs 2014)
85.4%
(vs 2007)
Reduce average packaging weight by 10%(ii)
1%
(vs 2014)
7%
(vs 2009)
Increase average recycled content across all

packaging to 42%(ii)
1.5%
(vs 2014)
39%
(vs 2009)
Make all packaging 100% recyclable/reusable(ii)
0.01%
(vs 2014)
98.6%
(vs 2009)
(i) Figures include USL, except for packaging-related data.

(ii) Packaging targets are measured against a 2009
baseline, rather than the 2007 baseline for other
environmental metrics.
The success of our business is dependent on

many natural resources, some of which are
becoming increasingly constrained as rising
demand and climate change place them
under pressure. We are committed to
minimising our environmental impact across
our operations, and we are extending our
environmental programmes into the broader
supply chain. This will help ensure the
sustainability and security of our supply
chain, supporting the resilience and growth
of our business.
Our environmental strategy embodies
our aspiration to be a business which does
not materially deplete natural resources,
reduces our impact on climate change,
causes no lasting damage to species,
habitats, or biodiversity and, where
possible, improves the environment we
operate in.
Setting our ambitions for 2020
In 2008, we set ourselves a series of
challenging targets to achieve by 2015 in the
areas of water, carbon emissions, and waste.
These were primarily absolute targets which
acknowledged that our existing impacts
should be reduced in real terms compared

to a 2007 baseline, regardless of the future
size of the business. In 2009, we added
commitments covering packaging.
These targets have catalysed significant
improvements and have been the basis for
sustained programmes of investment that
will have long-lasting benefits for our
business and the environment. We have
made considerable progress and significantly
reduced our environmental impact during
a period when our total production and
operational footprint have increased. The
progress against the individual targets is
detailed to the left. We have not met all of
our stretching targets, but we have made
significant improvements, particularly in
water efficiency, one of our most important
resources, with much of the improvement
delivered in water-stressed locations.
Our new and expanded targets for 2020
reflect our commitment to continuing and
accelerating progress to reduce our
environmental impacts, within our direct
operations and in the wider supply chain,
with a set of goals that genuinely stretch and
challenge our business. These new targets
expand our existing strategy and increase
our focus on environmental impacts in our
broader supply chain. They continue to
prioritise water stewardship, including an
additional target to replenish the amount
of water used in our final product in
water-stressed areas, and address carbon,
waste, and packaging. We have also added
targets on zero net deforestation, paper
and board sourcing, and eliminating
ozone-depleting refrigerants.
The importance of water
We and our stakeholders recognise that
water stewardship is one of the most
material aspects of our environmental
strategy. The Diageo Water Blueprint,
launched in April 2015, defines our
strategic approach to water stewardship.
Incorporating our 2020 targets, it is an
integrated approach based on four core
areas where we will increase our efforts: in
the sourcing of raw materials; in our own
operations; in the communities in which
we operate; and through local and global
advocacy for best practice in water
stewardship.
We have expanded our strategy to
encompass the companys broader global
supply chain, which will enable us to better
understand and manage Diageos total
impact on water, while focusing on
water-stressed areas (see map on page 15).
We will also continue to invest in infrastructure
and sanitation that provides access to safe
water to communities through our Water
of Life programme (see pages 4344).

SAVING WATER WHERE IT IS NEEDED

MOST CEAR, BRAZIL
In the Brazilian state of Cear, water is
precious. The region has been subject to
a serious drought, and businesses need
to do what they can to help save water.
Our Paraipaba distillery in Cear has
invested in making its use of water more
efficient and has reduced the total amount
of water it withdraws by 1.7 million cubic
metres in 2015. Where it previously took
Water efficiency by region,

by year (l/l)(i), (ii), (iii)
Wastewater polluting power by region,

by year (BOD/t)(i)
2013
2014
6.7
7.9
9.6
21.9
7.0
8.6
6.5
6.7
6.4
21.0
6.7
7.1
5.3
7.0
5.9
20.6
5.7
6.7
2007
2013
2014
248
22,927
9,985
565
46
1
33,772
32,947
12
33,842
6,068
11
482
1
40,416
40,161
15
35,851
2,722
10
482
1
39,081
38,848
2015
5.1
6.7
5.5
6.9
5.7
6.0(iv)
2015
13
31,543
639
33
489
1
32,718
32,493
(i) 2007 baseline data and data for each of the intervening years in the period ended 30June 2014 have been restated
in accordance with Diageos environmental reporting methodologies.
(ii) In accordance with Diageos environmental reporting methodologies, total water used excludes irrigation
water for agricultural purposes on land under the operational control of the company.
(iii) Figures include USL.
(iv) As disclosed on page 12, Diageo total water efficiency by region excluding USL is also 6.0l/l.
Within KPMGs independent limited assurance scope. Please see page 143 for further details.
North America
Europe
Africa
Asia Pacific
Corporate
Diageo (total)
Total under direct control
2007
North America
Europe
Africa
Asia Pacific
Diageo (total)
85 litres of water to produce a litre of our

products, it now takes just 13. The savings
are equivalent to the water needs of 10,000
people, making a significant difference
in an area of severe water scarcity.
As well as making changes to the way in
which we grow the sugar cane used at our
distillery, and the way that it is washed and
processed, we have invested in new
measures such as an indirect heating system
which returns distillation condensate to our
boilers, and closed cooling water circuits.
Water stewardship is our highest
environmental priority, and we have set
ourselves the target of reducing water use
in our operations by improving water use
efficiency by 50% worldwide.
Governance
Water stewardship
We recognise that we will only become one
of the best performing, most trusted and
respected companies in the world if we
responsibly manage all our material
environmental impacts, particularly water.
The acquisition of USL reinforces this, given
the increased number of water-stressed
sites we now manage in India (see map
on page 15).
This year we improved water use efficiency
by 10.4% and reduced absolute water
withdrawals by 2,876,000 cubic metres. In
water-stressed locations, we have reduced
water wasted by 33.4%. For example in Brazil,
investing in optimising water use at our
Paraipaba distillery significantly reduced total
water withdrawals in this acutely waterstressed location. At our breweries in Kaasi,
Ghana, and at our two sites in Nigeria, water
use per litre brewed has improved by 29% and
4% respectively, through improving water
management and new ways of working.
Water used for agricultural purposes on
land under Diageos operational control
extends to 622,150 cubic metres and is
reported separately from water used in our
direct operations. The majority of this irrigation
water is in respect of sugar cane.
We also aim to reduce the polluting power
of wastewater, measured in biochemical
oxygen demand (BOD) grams. Overall we
reduced BOD by 16.3% this year. Compared to
our 2007 baseline, BOD load has reduced by
3.1% and, while not meeting our 2015 target,
the multiple investments we have made in
wastewater treatment facilities, including in
Africa where we have reduced BOD by around
90%, are reducing the polluting power of
wastewater discharges. The application of
cutting edge technology at our bioenergy
plant at Cameronbridge Distillery in Scotland,
which accounts for approximately 60% of our
total BOD, has proven challenging, although
compared to the previous year it did reduce
BOD load by 16.6%. We will continue to invest
to develop and refine the technology and
we remain confident that it will deliver the
multiple environmental benefits anticipated.
Strategic report
Environmental performance
This year saw a period of particular growth
through acquiring control of United Spirits
Limited (USL) in India, which significantly
expanded our operational footprint in India
and increased our volume of production
globally. The environmental data reported
in this section includes USL, with the
exception of packaging. The water efficiency
and carbon emissions performance reported
on pages 12 and 13 exclude USL.

Carbon emissions
We use the World Resources Institute/
World Business Council for Sustainable
Development Greenhouse Gas Protocol as a
basis for reporting our carbon emissions, and
we include all facilities over which we have
operational control for the full fiscal year.
This year Diageos carbon emissions (CO2e)
were reduced by 8.7% in absolute terms, or
68,400 tonnes (market/net), compared to the
prior year. Since 2007 we have reduced
absolute tonnes of CO2e by 33%. This falls short
of our 50% target, largely as a result of the
expansion of the business through acquisition
and volume growth, particularly in distilling
which is an energy-intensive process with
consequent increases in carbon emissions.
The reductions we have made represent the
sum of several large investments, many small
improvements, increases in green energy
sourcing, and the application of new
technology. We remain committed to the goal
of a 50% reduction in carbon emissions, while
also extending our ambitions to reduce our
total supply chain emissions by 30%, both of
which are included in our 2020 targets.
Diageos total direct and indirect carbon
emissions (location/gross) for this year were
909,000 tonnes (direct emissions 704,000
tonnes and indirect emissions 205,000 tonnes).
In 2014, total direct and indirect carbon
emissions (location/gross) were 982,000
tonnes (direct emissions 761,000 tonnes
and indirect emissions 221,000 tonnes).
The intensity ratio for this year was 236 grams
per litre packaged (2014 254 grams per litre
packaged).
This year, approximately 58.5% of electricity
at our production sites came from low-carbon
sources such as wind, hydro and nuclear
(2014 56.1%). This includes, at some sites,
generating our own electricity from renewable
sources, including solar, biomass and biogas.
Direct and indirect carbon emissions
by weight (1,000 tonnes CO2e)(i), (ii), (iii)
market/net based
Indirect
887
196
2007
730
110
2013
710
81
2014
Direct
651
71
2015
(i) CO2e figures are calculated using the WRI/WBCSD

GHG Protocol guidance available at the beginning of
our financial year, the kWh/CO2e conversion factor
provided by energy suppliers, the relevant factors to
the country of operation, or the International Energy
Agency, as applicable.
(ii) 2007 baseline data, and data for each of the
intervening years in the period ended 30June 2014,
have been restated in accordance with the WRI/
WBCSD GHG Protocol and Diageos environmental
reporting methodologies.
Carbon emissions by weight by region

(1,000 tonnes CO2e)(i), (ii), (iii)
2007
2013
2014
North America
Europe
Africa
Asia Pacific
Corporate
Diageo (total)
217
405
251
34
151
25
1,083
50
359
244
20
149
18
840
56
355
215
22
129
14
791
2015
54
331
224
20
79
14
722(iv),
(i) CO2e figures (market/net) are calculated using the WRI/WBCSD GHG Protocol guidance available at the beginning
of our financial year, the kWh/CO2e conversion factor provided by energy suppliers, the relevant factors to the
country of operation, or the International Energy Agency, as applicable.
(ii) 2007 baseline data, and data for each of the intervening years in the period ended 30 June 2014, have been
restated in accordance with the WRI/WBCSD GHG Protocol and Diageos environmental reporting methodologies.
(iv) As disclosed on page 13, Diageo total carbon emissions excluding USL are 652,000 tonnes CO2e.
Total waste to landfill by region

(tonnes)(i), (ii)
North America
Europe
Africa
Asia Pacific
Corporate
Diageo (total)
2007
2013
2014
40,828
22,464
33,492
4,930
8,268
1,140
111,122
538
8,322
12,172
919
15,625
847
38,423
246
6,525
9,685
870
13,765
453
31,544
2015
197
7,207
4,474
724
2,978
692
16,272
(i) 2007 baseline data and data for each of the intervening years in the period ended 30 June 2014 have been restated
in accordance with Diageos environmental reporting methodologies.
(ii) Figures include USL.
In the United Kingdom, 99.5% of our electricity

came from low-carbon sources.
For our work on carbon with suppliers,
see page 46.
Waste to landfill
This year, we reduced waste to landfill by
48.5% compared to 2014, and by 85% since
2007, against our challenging goal of
eliminating it altogether. We have made
progress through continuously improving
how we segregate waste to enable recovery
and reuse. We have also reduced the overall
amount of material we use, found alternative
uses for waste including in agriculture,
recycling, and recovering waste for energy.
Eliminating waste to landfill therefore
remains one of our targets for 2020, although
we recognise that it will become more
technologically and economically
challenging the closer we get to eliminating
residual volumes in certain applications.
Sustainable packaging
The packaging that helps protect and
market our brands has environmental
impacts throughout a chain that stretches
from our suppliers, through the retailer, to
the consumer and beyond. Our Sustainable
Packaging Guidelines are used by brands
and support our ongoing programme
to produce packaging with low
environmental impact.
We are satisfied with our performance
against our sustainable packaging targets,
with a 1% reduction in average pack weight

contributing to a cumulative 7% reduction
since 2009; recycled content increasing
by 1.5% to an overall average of 39%; and
98.6% of our packaging being reusable or
recyclable. While we continue to challenge
packaging across the portfolio, some
highlights have included the removal of the
glass handle from Smirnoff 1.75 litre glass
bottles, and the light-weighting of Bells
whisky bottles. Higher cullet contents have
been achieved with our glass suppliers
in Europe, Brazil and North America.
Looking to 2020, we will continue
and accelerate initiatives to maximise the
recycled content in our packaging, optimise
and reduce the weight of packs, and remove
materials that cannot be recycled, or are
difficult to recycle, including PVC, foil, mixed
plastics, ceramics and some laminates.
Where viable alternatives exist, we will
remove materials such as inks and
heavy metals that may pose a risk to
the environment. We have added a new
target for 2020 of zero net deforestation
from paper and board sourcing.
Assurance
Independent limited assurance was provided
for Diageos operational environmental metrics
for greenhouse gas emissions, water usage,
water efficiency, wastewater discharge (BOD)
under direct control, and waste to landfill.
See page 143 for details.

SUSTAINABILITY & RESPONSIBILITY REVIEW: BUILDING THRIVING COMMUNITIES
Improve access to safe drinking water for one

million people in Africa every year until 2015
600,000
(vs 1million in 2014;

total 10 million since 2008)
Train 100,000 people through our

Learning for Life programme by 2016
7,417
(vs 14,000 in 2014)
Empower two million women through

our Plan W programme by 2016
115,091
(vs 40,545 in 2014)
An essential part of our contribution to the

wider communities that enable our business
to flourish and grow is our investment in
long-term, actively managed programmes
that help serve critical local needs, such as
access to clean water and developing skills
and empowerment.
This year Diageo invested 15.5 million or
0.6% of operating profit to charitable
projects that help serve critical local need
(2014 0.6% of operating profit). From this
year we will work towards our 2020 ambition
of further evaluating the outcomes of the
community programmes we engage in, and
strengthening the connections between our
individual initiatives and our overall strategy
of creating shared value.
Access to clean water
We have a long and proud tradition of
investing in local communities through our
Water of Life programme, which often involves
participation by our employees and is
increasingly focused on our supply chain.
When we set our target in 2006, our overall
Community investment by focus area(i)
MAKING A DIFFERENCE: MEASURING

THE IMPACT OF OUR PROGRAMMES
In 2014, we embarked on our largest ever
series of studies to measure and report
on the impact our community projects
are having.
These evaluation studies looked at 49
Water of Life projects in Ghana, exploring
their impact on income, employment,
female empowerment, health, and
economic value. We also evaluated our
Learning for Life training programmes
in the Dominican Republic, Jamaica,
Mexico, Brazil and Colombia.
We have learnt that Water of Life
projects are the main source of water
supply for 79% of beneficiary households
and have helped empower women by
reducing the time spent sourcing water
each day by 33%. They have also helped
reduce the incidence of waterborne
disease, and supported an estimated
34,000 livelihoods.
The studies also show that Learning
for Life has had positive impacts on many
beneficiaries lives and, like all our
evaluation studies, have given us
essential insights into how we can
improve our programmes so they
keep making a difference.
Community investment by region(i)
7%
9%
33%
10%
29%
17%
22%
22%
23%
28%
Community
aspects of
responsible
drinking
projects(ii)
Brand-led, local
community
spend and social
enterprise(iii)
Learning for Life
Plan W
Water of Life
Europe and global functions

Latin America
and Caribbean
North America
Asia Pacific and GTME

Africa
(i) This excludes our legacy commitment to the Thalidomide Trust and the Thalidomide Foundation Ltd of 9.8 million
which in prior years we included as part of our community investment data.
(ii) This is a sub-section of the total responsible drinking budget.
(iii) Category includes cause-related brand campaigns, local market giving and disaster relief.
Developing our approach for 2020

To get a better measure of our progress
in building thriving communities, we will
evaluate and report on the tangible
outcomes of our actions. This will include
our community programmes, which enable
those who live and work in our communities,
particularly women, to have the skills and
resources to build a better future for
themselves, as well as our initiatives
to increase diversity and employee
engagement among our people while
ensuring they are safe at work.
We will also continue to strengthen our
supply chains, through more partnerships
with farmers, further targets for the local
sourcing of agricultural raw materials in
Africa, and continued commitment to
improving labour standards and human
rights in our supply chains, including our
A history of engagement
Contributing to the communities and
societies we are part of is nothing new to
Diageo our history is rich with examples
of community action dating back to Arthur
Guinnesss work with Dublins poor in the
19th century, and we have always valued and
rewarded our people and the agricultural
supply chains that we rely on and support.
In recent years, however, we have
increasingly looked at the potential for
shared value across our entire value chain.
We set targets for ourselves in the fields
of community empowerment, employee
engagement and diversity, and local
sourcing, while looking to develop these
further into an integrated whole.
Community empowerment
Governance
Diageo can only operate successfully if we

work within a broad community of people,
businesses and agencies to create shared
value. We have a responsibility for, and a clear
commercial interest in, ensuring that our
people, our suppliers, the communities
around our operations, and society at large
all thrive as a result of Diageos business.
As a successful business, we create
significant value directly within this broad
community through our daily operations,
providing jobs, sourcing ingredients, services
and materials from suppliers, and paying
local duties. But creating shared value in
a lasting way extends beyond this to
addressing development challenges such
as skills gaps or access to clean water,
advocating high standards of governance,
rewarding our people, and supporting
farmers and other suppliers as they help
us build a sustainable value chain.
ongoing commitment to the UN Guiding

Principles on Business and Human Rights.
Strategic report
BUILDING THRIVING
COMMUNITIES

goal was to reach eight million people, which

suggested we needed to reach one million
people per year. Although this year we
reached only 600,000, overall we have reached
more than 10 million people through more
than 230 projects in 18 countries, surpassing
our initial aspiration by almost 25%. Our
initiatives support boreholes, wells, rainwater
harvesting, and domestic filtration devices.
Learning for Life
Learning for Life supports vocational and
life-skills training which improve the prospects
of individuals, families, communities and
societies while strengthening our value chain
through its emphasis on hospitality, retail, and
entrepreneurship.
This year Diageo ran over 85 Learning for
Life programmes in 32 countries, training 7,417
people, and bringing the total number of
people trained to 109,894, exceeding our 2016
target by 9,894. Our impact studies in five
countries in Latin America show that the
programmes enabled 75% of participants to
get jobs, including 44% with formal contracts,
and to increase earnings four-fold. Overall, the
studies show that the programmes have
benefited over half a million people, when
taking into account the effects on participants
families. The young people involved also talk
about the increased self-esteem and dignity
they gained alongside valuable and
recognised employment skills.
Plan W
Plan W is a sustainable development
programme aiming to empower women
and enable them to play a greater role in the
economy by developing their hospitality and
business enterprise skills. Since December
2012, Plan W has empowered 115,091
women, reaching 575,455 people indirectly
across 15 countries, largely in Asia. While we
continue to develop more projects, our
aspiration to empower two million women
across the world will only be achieved
through broader partnerships and more
global engagement than we have hitherto
achieved. Alongside our internal diversity
programme, we will explore how we can
work with others to increase our reach.
The Diageo Foundation
The Foundation is a registered charity funded
entirely by Diageo. It makes grants in support
of projects or local charitable causes and
disaster relief, particularly in regions where
support from our employees and operations
can be leveraged. This year, it funded 20
programmes in 11 markets including India
and Ghana, and donated disaster relief to
Sierra Leone and Nepal. This year we
undertook a review of the Foundation to
ensure it continues to support Diageos
community development programmes

effectively.
Our people
Engagement score
75%
(vs 73% in 2014)
Gender diversity in senior management
26%
(vs 28% in 2014)
Reduction of actual lost-time accidents (LTAs)
10%
(since 2014)
Our people are at the heart of our success

and we want them to be able to deliver their
best in a safe, welcoming environment.
Health and safety
Everyone has the right to work in a safe,
healthy environment, and our global Zero
Harm programme is designed to ensure that
all our people go home safe, every day. Sadly,
in December 2014, a colleague in South
Africa was killed in a road traffic accident
whilst driving back from a sales event.
Diageo has a Severe and Fatal Incident
Prevention (SFIP) programme specifically
designed to identify and eliminate or control
severe and fatal risks in our operations. SFIP
has significantly reduced the number of
severe accidents, but it is always under
review, and the circumstances of the tragic
accident above have been investigated so
that we can take measures to reduce the risk
to our people further.
Our Zero Harm philosophy is aimed at
eliminating workplace accidents, and we had
ENGINEERING SAFETY INTO
EVERYTHING WE DO
We believe safety is fundamental, and we have
introduced two new ways to embed it into the
core of our business through what we build,
and through the people we work with.
From 2014, as part of our Engineering
Safety initiative, every capital engineering
project we start on is designed to a global
engineering safety standard.
And while safety is being designed into
everything we engineer, we are also building it
into the way we work with contractors,
suppliers and site visitors as well as our own
people.
We are seeing good results from our
work as just one example, in 2015 our Meta
Abo brewery in Ethiopia recorded 1,500,000
hours without a lost-time accident. But we will
keep going until everyone goes home safe,
every day, everywhere.
set a stretching global target to deliver less

than one lost-time accident (LTA) per 1,000
people by 2015. Since 2007 we have seen
significant progress towards this target,
although this year we did not meet our
annual 40% rate reduction target thereby
also missing the original aspiration for 2015.
Our overall LTA rate has remained static
at 1.66 year on year, driven primarily by
accidents in our offices and sales functions.
It is worth noting that the actual number
of accidents has reduced by 10%, however
a reduction in headcount means this
improvement is not reflected in the rate.
Our overall LTA rate compares favourably
with peer organisations, however our
commitment to our safety purpose that
everyone goes home safe, every day,
everywhere means we will always seek
to improve. In March 2015, Diageo recorded
its first ever LTA-free month, something we
will look to build on through the ongoing
application of our Zero Harm strategy.
In addition to continuing to identify and
control risks, we will increase our focus on
the behavioural aspects of safety and grow
a safety culture rooted in prevention. LTAs
now occur more frequently at offices than
at other sites, and we are introducing new
procedures to ensure safety in offices is
addressed through Risk Management
Committees. We are strengthening our
Slips, Trips and Falls Prevention programme
and we continue to strongly promote our
responsible driving programmes.
Employee engagement
We communicate with employees on
matters of importance to them and the
company in a variety of ways, including
through our digital channels. Our principal

2012
2013
5.06
5.29
1.48
3.42
1.41
3.73
4.15
2.41
1.82
1.44
0.0
2.14
1.64
2.12
2.55
10.88
1.26
2.97
2014
2015
0.84
2.08
0.56
4.7
1.62
1.66(ii)
1.83
2.51
1.20
0.66
1.21
1.66
(i) Number of accidents per 1,000 employees and directly supervised contractors resulting in time lost from work
of one calendar day or more.
(ii) Updated to include Gleneagles Hotel and one additional LTA in North America which occurred at the end of the
2014 financial year but was not previously reported.
Number of days lost

to accidents per 1,000
full-time employees
Diageo (total)
Fatalities
Diageo (total)
Average number of employees

by region by gender(i)
North America
Europe
Africa
Asia Pacific
Diageo (total)
Average number of employees

by role by gender
Senior manager(ii)
Line manager(iii)
Supervised employee(iv)
Total
New hires by region by gender(i)

North America
Europe
Africa
Asia Pacific
Diageo (total)
Percentage of total new hires
Leavers by region by gender(i)
2012
2013
2014
2015
106.6
66.0
49.7
89.4
2011
2012
2013
2014
2015
Men
Women
Total
1,958
6,713
4,366
1,834
8,808
23,679
1,303
4,285
1,132
1,115
1,848
9,683
3,261
10,998
5,498
2,949
10,656
33,362
Men
Women
Total
543
3,938
19,198
23,679
191
1,719
7,773
9,683
734
5,657
26,971
33,362
Men
Women
Total
% of regional
headcount
229
846
631
375
597
2,678
62.3
161
683
226
265
283
1,618
37.7
390
1,529
857
640
880
4,296
12.0
13.9
15.6
21.7
8.3
12.9
Men
Women
Total
% of regional
headcount
239
848
409
411
801
2,708
66.3
190
604
109
198
277
1,378
33.7
429
1,452
518
609
1,078
4,086
13.2
13.2
9.4
20.7
10.1
12.2
(i) Employees have been allocated to the region in which they reside.
(ii) Top leadership positions in Diageo, excluding Executive Committee.
(iii) All Diageo employees (non-senior managers), with one or more direct reports.
(iv) All Diageo employees (non-senior managers) who have no direct reports.
North America
Europe
Africa
Asia Pacific
Diageo (total)
Percentage of total leavers
2011
158.8
Human rights
In our workplaces and the communities in
which we operate, we believe a serious
commitment to respecting human rights
is fundamental. We recognise that we are
responsible for the impact of our operations
on our employees, on workers in our supply
chain, on consumers of our products, and on
the communities in which we operate. Our
policies and guidelines, including our Human
Rights Policy, outline our approach to human
rights, and we will continue to demonstrate
our commitment through our actions.
We are a signatory to the UN Global
Compact and the UN Womens
Empowerment Principles and, as part of our
2020 targets, we have committed to acting
in accordance with the UN Guiding Principles
on Business and Human Rights.
2011
North America
Europe
Africa
Asia Pacific
Diageo (total)
Governance
Diversity
Our diversity and inclusion practices are a
key competitive advantage to our business.
We aim to inspire, support and empower
women to take on greater leadership roles
across the world. Currently, five of our
11 Board members are women, representing
45% of the directors.
We are committed to a diverse leadership
and the promotion of local leaders. Currently,
six of the 15 members of the Executive
Committee are women, representing 40%
of the committee; 26% of our senior
management positions are held by women;
and our 21 managing directors represent
16 different nationalities.
Lost-time accident
frequency rate per 1,000
full-time employees(i)
Strategic report
means of gathering employees views is our

annual values-based survey, which helps us
assess how well we are bringing our values
to life, engaging our people and enabling
them to perform. We want our people to be
engaged: passionate about our strategy,
connected to our values, and motivated to
be and perform at their best. We support
our employees through clear policies,
competitive reward programmes, coaching
and development opportunities, and health
and wellbeing initiatives.
This year, 94% (25,022 out of the
26,710 able to participate) of our people
participated in our online Annual Values
Survey, with 75% identified as engaged.
Our people confirmed that one of our core
strengths continues to be our employees
pride and strong sense of ownership in our
business and our brands.
In our strategy for 2020, we have
reinforced our commitment to employee
engagement through new targets, including
our ambition to be a top quartile performer
on measures including employee
satisfaction, pride, and loyalty.

We do not tolerate discrimination,

harassment, bullying or abuse; we comply
with wage and hour laws; we respect our
employees decision to join or not join a
trade union; and we do not tolerate forced
or compulsory labour. We will not work with
anyone, including any supplier, who does
not adopt these values.
We aim to provide opportunities for a
wide range of people including those with
disabilities, fostering a culture that allows
for a variety of lifestyles. Our training and
education programme includes retraining,
if needed, for people who have become
disabled. Where possible, we encourage a
flexible approach to working and emphasise
the importance of treating individuals justly
and in a non-discriminatory manner
throughout the employment relationship,
including recruitment, compensation,
training, promotion, and transfers.
Our robust controls, compliance and
ethics programme is described in the
Governance and Ethics section on page 47.
Sustainable supply chains
Percentage of potential high-risk supplier sites
registered with SEDEX that were audited in 2015
19%
(vs 17% in 2014)
Percentage of agricultural materials sourced

locally across Africa in 2015
70%
(vs 66% in 2014)
Our supply chains create value directly to

local economies, and provide one of the
most important ways in which we support
and build capability among the communities
in which we work. They are also an
important part of our contribution to driving
higher standards in sustainability and
business ethics, bringing shared value to
individuals, businesses and society.
A secure, stable supply chain is also
critical to the long term performance of
our business. We have a clear interest in
mitigating risk, and in supporting suppliers
in strengthening their sustainability in ways
that benefit them as well as us.
We source goods and services from a
wide variety of businesses around the world,
and our procurement systems depend on
relationships with suppliers that are local,
regional, and global. We expect all our
suppliers to follow our Partnering with
Suppliers Standard, which sets out our
minimum social, ethical and environmental
compliance standards, and we invite them
to be our partners more widely in providing
responsibly-sourced materials and services
which have a positive impact on

communities and the environment.
Responsible sourcing
Around 28,000 direct suppliers from more
than 100 countries provide us with the raw
materials, expertise, and other resources
which help us make great brands. We aim
to help them improve their sustainability
performance by optimising due diligence.
We do this principally through SEDEX,
a not-for-profit organisation that enables
suppliers to share assessments and audits
of ethical and responsible practices with
multiple customers, and AIM-PROGRESS, a
forum of over 40 leading consumer goods
companies which promotes responsible
sourcing practices and sustainable supply
chains. We also have an internal Know Your
Business Partner (KYBP) programme, which
assesses third parties against the risk of bribery
and corruption.
To date, 1,298 of Diageos potential
high-risk supplier sites have registered with
SEDEX, up from 1,193 last year. Of these, 1,170
have completed a SEDEX self-assessment
questionnaire. More than 200 of these
supplier sites were independently audited
during the last three years; either
commissioned by Diageo (34), or accessed
through SEDEX and AIM-PROGRESS (219).
We have continued to make progress on
our work with our supply chain on carbon
emissions, in particular through the CDP
(formerly the Carbon Disclosure Project)
Supply Chain programme, a platform for
engaging key suppliers on carbon emissions.
Of the 154 suppliers we engaged last year,
92% responded to the CDP questionnaire,
giving us further insights as we tackle our
new 2020 target of reducing carbon
emissions in our supply chain by 30%.
Our confidential whistleblowing service,
SpeakUp, is open to our suppliers. This year
Diageo received reports from two suppliers
and vendors through SpeakUp.
Partnerships with farmers
Our brands have always had long-standing
and value-sharing relationships with farmers,
on whose raw materials we rely. We continue
to work with local agricultural communities
to support them and the long term supply of
our ingredients, and where appropriate we
help equip them with the knowledge, tools
and specialist support to develop sustainable
agriculture. This year we joined the
Sustainable Agriculture Initiative (SAI)
Platform, the food and beverage industry
initiative that supports the development of
sustainable agriculture around the world.
In Africa, where we see significant potential
for developing more sustainable farming
Global raw materials by volume 2015

6%
1% 1%
4%
1%
36%
6%
Total volume
1.7 million tonnes
11%
12%
Barley
Maize
Wheat
22%
Grapes(i)
Sugar
Molasses
Sorghum
Dairy
Rye
Other (including
raisins, cassava, hops,
aniseed, rice and
sticky rice)
(i) This year we have excluded grapes from bulk wine

purchases to ensure our figures represent only raw
materials we buy directly; grapes therefore represent
11% of raw materials by volume this year, compared
with 14% in 2014.
Global packaging materials by

volume 2015
2%
2%
4%
2% 1% 1%
1%
87%
Total tonnage =
1.1 million tonnes
Glass
Corrugate
Cartons
Cans
PET
Labels and sleeves
Crowns
Closures
DIAGEO CDP SUPPLY CHAIN

PROGRAMME WORKING TOGETHER
TO CUT CO2
We have set ourselves the target of
reducing absolute greenhouse gas
emissions along our total supply chain by
30% and we will only achieve it by
working with suppliers, to help them help
us by reducing their own emissions.
At our May 2015 supplier conference
in Gleneagles, Scotland, we took the
opportunity to engage 59 of our key global
suppliers, raising awareness of our
commitments on carbon.
Central to our work is the CDP, the
worlds largest and most comprehensive
global system for carbon disclosure. In
2014, we invited 154 suppliers, who
between them represent 80% of our spend
in key categories, to disclose their carbon
performance and 92% responded.
Such a high response rate tells us
that suppliers are willing to engage, and
their responses help us gauge overall
performance of the supply chain. They also
help us identify hotspots and opportunities
to reduce our collective emissions.

SUSTAINABILITY & RESPONSIBILITY REVIEW: GOVERNANCE AND ETHICS
GOVERNANCE AND ETHICS

Manager level and above employees
completing Annual Certification of Compliance
100%
(100% in 2014)
109
(vs 146 in 2014)
Global risk and compliance

The global risk and compliance team
provides rigorous oversight of our risk
management, internal control, and
compliance and ethics programme across
Diageo. Our overriding aim is to encourage
integrity in every part of the business: we
want employees to act with exemplary
Training and communications

Each market has its own training plan for our
Code and key policies, which they deliver
through locally organised, risk-based training.
To further embed ownership of this agenda
with employees, some of our businesses
go beyond basic training with annual
engagement events such as the Pathway of
Pride programme in Africa, Ethics Day in Asia
Pacific, and Compliance Day in Great Britain.
When an employee joins Diageo, he or she
must complete training about our Code within
30 days. The 4,296 employees who joined us
this year were taken through a one-hour
induction on compliance and ethics.
Monitoring, auditing, and reporting
We strive to have a culture in which
employees feel comfortable raising concerns
about potential breaches of our Code or
policies. We expect anyone who comes
831(i)
703(ii)
440
324
2014
Reported
Substantiated
2015
(i) Reported through SpeakUp 299.
(ii)Reported through SpeakUp 289.
Enforcement and incentives

We aim to improve our culture through
training, coaching and incentives.
Annual performance appraisals give full
consideration to both performance and
behaviour, with an individuals commitment
to Diageos controls, compliance, and ethics
agenda being considered under behaviour.
Employees overall performance affects
their pay increases, and, where relevant,
their bonuses.
Controls
We have a strong internal control
environment, and we have an annual
programme to assess, test, and report on the
effectiveness of internal controls across our
company. Our controls cover all aspects of
risk, ranging from financial to operational
to reputational risk, and all markets and
functions are required to certify annually
whether their internal controls are operating
effectively, and quickly remediate any
weaknesses identified.
Standards and procedures

This year we refreshed our Code (published
in July 2015), which sets the standard for
what is expected of everyone working at
Diageo, and from which our other policies
and standards flow. Each employee at
manager level and above completes an
Annual Certification of Compliance (ACC)
to confirm their understanding of, and
adherence to, our Code and any applicable
policies, and to identify any areas of possible
non-compliance. In 2015, the ACC was
completed by all eligible managers 9,271
of our employees, or approximately 40%
of our people.
This year we also launched our breach
management global standard, and refreshed
our risk management global standard, as
part of the continuing evolution of our risk
management programme.
Risk management
Our risk management global standard
requires all markets and functions to perform
risk assessments at least annually to consider
risks concerning human rights, bribery and
corruption, anti-money laundering, and all
other relevant laws and regulations, as well as
our own Code, policies and standards, and to
ensure that mitigation plans for their most
significant risks have been established.
Reported and substantiated breaches
People want to trust the company behind

the brands that they love. Our reputation can
only be sustained if every one of us is doing
the right thing, every day, everywhere.
We are committed to conducting our
business responsibly and in accordance
with all laws and regulations to which our
business activities are subject. To help
our employees make the right decisions
at work, we have a sound corporate
governance structure and a robust risk,
controls and compliance programme,
with our Code of Business Conduct (our
Code) at the heart of our business.
Due care in delegating authority

As our business expands, it is important to
ensure that we embed our standards and
procedures in all new business units. We plan
ahead and move quickly to ensure our new
acquisitions are operating to the same
standards as our existing businesses,
and we are consistent in our stance on
noncompliance issues. We are also
committed to establishing good working
relationships with our other business
partners, including our suppliers, and
ensuring that they adhere appropriately
to our principles.
USL, which was integrated this year,
updated their Code of Business Conduct &
Ethics during the year. It sets out USLs
commitment to conducting business in
accordance with our purpose and values,
and 100% of USL executives were trained on
how to apply it in their work. The Code has
clearly defined policies on important areas
such as responsible marketing, quality and
food safety, anti-corruption, gifts and
entertainment, and many more that
are aligned with our values and our
sustainability goals.
across a breach to report it immediately,

either through our confidential
whistleblowing helpline SpeakUp, to their
manager, or to a member of the global risk
and compliance, human resources or legal
teams. SpeakUp is also available to suppliers.
There were 703 suspected breaches
reported this year, of which 324 were
subsequently substantiated. Of the
suspected breaches, 289 were reported
through SpeakUp, compared with 299 in
2014. All identified breaches are taken very
seriously and those that require action
are investigated.
Our response to proven breaches varies
depending on the severity of the matter,
and we monitor breaches to identify trends
or common areas where further action may
be required. This year, 109 people exited the
business as a result of breaches of our Code
or policies.
Governance
Employees leaving Diageo due to a breach of

the Code of Business Conduct or other policies
conduct in all their business interactions and

truly embody our value of being proud of
what we do.
Strategic report
practices, we have met our goal of sourcing

70% of agricultural materials locally by 2015
locally being defined as materials sourced
within Africa and used by our African
markets. We have increased this target to
80% for 2020.

DEFINITIONS AND RECONCILIATIONS OF NON-GAAP MEASURES TO GAAP MEASURES
DEFINITIONS AND
RECONCILIATIONS
OF NON-GAAP
MEASURES TO
GAAP MEASURES
Diageos strategic planning process is based on the following non-GAAP

measures. They are chosen for planning and reporting, and some of them
areused for incentive purposes. The groups management believes these
measures provide valuable additional information for users of the financial
statements in understanding the groups performance. These non-GAAP
measures should be viewed as complementary to, and not replacements
for,the comparable GAAP measures and reported movements therein.
Volume
Volume is a non-GAAP measure that is
measured on an equivalent units basis to
nine-litre cases of spirits. An equivalent unit
represents one nine-litre case of spirits,
which is approximately 272 servings. A
serving comprises 33ml of spirits, 165ml
of wine, or 330ml of ready to drink or beer.
Therefore, to convert volume of products
other than spirits to equivalent units, the
following guide has been used: beer in
hectolitres, divide by 0.9; wine in nine-litre
cases, divide by five; ready to drink in
nine-litre cases, divide by ten; and certain
pre-mixed products that are classified as
ready to drink in nine-litre cases, divide
by five.
Calculation of organic movements

The organic movement percentage is
the amount in the row headed Organic
movement in the tables below, expressed
as a percentage of the amount in the row
headed 2014 adjusted. Organic operating
margin is calculated by dividing operating
profit before exceptional items by net sales
after excluding the impact of exchange rate
movements and acquisitions and disposals.
Organic movements
In the discussion of the performance of the
business, 'organic' information is presented
using pounds sterling amounts on a
constant currency basis, excluding the
impact of exceptional items and acquisitions
and disposals. Organic measures enable
users to focus on the performance of the
business which is common to both years and
which represents those measures that local
managers are most directly able to influence.
.
(a) Exchange rates

Exchange in the organic movement
calculation reflects the adjustment to
recalculate the prior year results as if they
had been generated at the current years
exchange rates.
Exchange impacts in respect of the
external hedging of intergroup sales of
products and the intergroup recharging
of third party services are allocated to the
geographical segment to which they relate.
Residual exchange impacts are reported
in Corporate.
Exchange impacts in respect of profit
on intergroup sales of products and the
intergroup recharges are reported in
other operating expenses.
(b) Acquisitions and disposals
For acquisitions in the current year, the post
acquisition results are excluded from the
organic movement calculations. For
acquisitions in the prior year, post acquisition
North
America
million
Volume (equivalant units)

2014 reported (restated)
Disposals(ii)
2014 adjusted
Acquisitions and disposals(ii)
Organic movement
2015 reported
Organic movement %
49.3
(0.9)
48.4
0.3
(1.4)
47.3
(3)
Europe
million
44.6
(0.7)
43.9
0.4
(0.2)
44.1
Africa
million
24.4
24.4
1.8
26.2
7
results are included in full in the prior year

but are included in the organic movement
calculation from the anniversary of the
acquisition date in the current year. The
acquisition row also eliminates the impact of
transaction costs that have been charged to
operating profit in the current or prior year in
respect of acquisitions that, in managements
judgement, are expected to complete.
Where a business, brand, brand
distribution right or agency agreement was
disposed of, or terminated, in the current or
prior year, the group, in the organic
movement calculations, excludes the results
for that business from the current and prior
year. In the calculation of operating profit,
the overheads included in disposals are only
those directly attributable to the businesses
disposed of, and do not result from
subjective judgements of management.
(c) Exceptional items
Exceptional items are those which, in
managements judgement, need to be
disclosed by virtue of their size or incidence
in order for the user to obtain a proper
understanding of the financial information.
Such items are included within the income
statement caption to which they relate but
are excluded from the organic movement
calculations.
Organic movement calculations for the
year ended 30 June 2015 were as follows:
Latin America
and Caribbean
million
23.0
23.0
0.3
(1.7)
21.6
(7)
Asia Pacific
million
14.8
14.8
92.7
(0.5)
107.0
(3)
Corporate
million
n/a
Total
million
156.1
(1.6)
154.5
93.7
(2.0)
246.2
(1)

Europe
million
Africa
million
Latin America
and Caribbean
million
Asia Pacific
million
Corporate
million
Total
million
4,935
(307)
(63)
4,565
45
73
4,683
2
1,846
(123)
(1)
1,722
146
1,868
8
1,404
(152)
(1)
1,251
29
17
1,297
1
1,801
(39)
(2)
1,760
2,358
11
4,129
1
79
(3)
(45)
31
48
1
80
3
13,980
(509)
(187)
13,284
2,508
174
15,966
1
Net sales
Exchange(i)
Disposals(ii)
2014 adjusted
Organic movement
2015 reported
Organic movement %
3,444
97
(62)
3,479
25
(49)
3,455
(1)
2,814
(186)
(44)
2,584
31
2
2,617
1,430
(100)
(1)
1,329
1
85
1,415
6
1,144
(123)
(1)
1,020
24
(11)
1,033
(1)
1,347
(22)
(2)
1,323
922
(32)
2,213
(2)
79
(3)
(45)
31
48
1
80
3
10,258
(337)
(155)
9,766
1,051
(4)
10,813
Marketing
Exchange(i)
Disposals(ii)
2014 adjusted
Organic movement
2015 reported
Organic movement %
540
16
(4)
552
11
(21)
542
(4)
413
(30)
(5)
378
4
6
388
2
152
(10)
142
5
147
4
203
(22)
181
3
10
194
6
305
(1)
304
65
(25)
344
(8)
(3)
4
3
7
14
175
1,620
(47)
(12)
1,561
86
(18)
1,629
(1)

Exchange(i)
2014 adjusted
Organic movement
2015 reported
Organic movement %
1,460
27
(2)
1,485
(37)
1,448
(2)
853
(67)
(15)
771
13
20
804
3
340
(52)
288
1
29
318
10
328
(60)
(1)
267
3
(7)
263
(3)
283
(13)
18
288
48
20
356
7
(130)
4
2
(124)
4
(3)
(123)
(2)
3,134
(161)
2
2,975
69
22
3,066
1
Organic operating margin %

2015
2014
Margin improvement (bps)
42.2%
42.7%
(47)
30.6%
29.8%
75
22.4%
21.7%
75
25.8%
26.2%
(41)
23.9%
21.8%
209
n/a
n/a
n/a
30.7%
30.5%
24
Notes: Information in respect of the organic movement calculations

(i) The exchange adjustments for sales, net sales, marketing and operating profit are principally in respect of the Venezuelan bolivar, the euro, the Russian rouble and the US dollar.
(ii) In the year ended 30 June 2015 the acquisitions and disposals that affected volume, sales, net sales, marketing and operating profit were as follows:
(1) For the reconciliation of sales to net sales and operating profit before exceptional items to operating profit see pages 24 and 96.
(2) Percentages and margin improvement are calculated on rounded figures.
(3) For the further details of the restatement please see page 50.
3,915
115
(75)
3,955
28
(74)
3,909
(2)
Governance
Sales
Exchange(i)
Disposals(ii)
2014 adjusted
Organic movement
2015 reported
Organic movement %
Strategic report
North
America
million

Year ended 30 June 2014

Acquisitions
Transaction costs
Integration costs
Disposals
Jose Cuervo
Bushmills
Gleneagles
Other disposals

Acquisitions
United Spirits Limited
DeLen
Don Julio
Transaction costs
Integration costs
Disposals
Bushmills
Gleneagles
Other disposals
Volume
equ.unitsmillion
Sales
million
Net sales
million
Marketing
million
Operating
profit
million
12
12
24
(0.7)
(0.8)
(54)
(79)
(45)
(44)
(60)
(45)
(10)
(2)
9
(28)
(2)
(0.1)
(1.6)
(9)
(187)
(6)
(155)
(12)
(1)
(22)
(1.6)
(187)
(155)
(12)
92.7
0.3
93.0
2,356
5
28
2,389
921
5
23
949
65
8
3
76
53
(8)
6
(1)
(7)
43
0.7
0.7
66
48
5
119
50
48
4
102
8
2
10
22
4
26
93.7
2,508
1,051
86
69
Revised segmental information for the year ended 30 June 2014

In the year ended 30 June 2015 Diageo changed its internal reporting structure to reflect changes made to management responsibilities.
As a result of this change, Diageo reports the following geographical segments both for management reporting purposes and in the
external financial statements: North America; Europe; Africa; Latin America and Caribbean; Asia Pacific and Corporate. Thereconciliation
to previously reported figures for volume, sales, net sales, marketing and operating profit before exceptional items forthe year ended
30 June 2014 is as follows:
As reported
million
Volume (equivalent units)

North America
Europe
Western Europe
Africa
Africa, Eastern Europe and Turkey
Asia Pacific
49.3
33.0
36.0
23.0
14.8
156.1
As reported
million
Sales
North America
Europe
Western Europe
Africa
Asia Pacific
Corporate
3,915
3,644
3,137
1,404
1,801
79
13,980
Reclass
million
44.6
(33.0)
24.4
(36.0)
Reclass
million
4,935
(3,644)
1,846
(3,137)
Restated
million
49.3
44.6
24.4
23.0
14.8
156.1
Restated
million
3,915
4,935
1,846
1,404
1,801
79
13,980

Net sales
North America
Europe
Western Europe
Africa
Asia Pacific
Corporate
3,444
2,169
2,075
1,144
1,347
79
10,258
As reported
million
540
323
242
203
305
7
1,620
As reported
million
1,460
639
554
328
283
(130)
3,134
Reclass
million
413
(323)
152
(242)
Reclass
million
853
(639)
340
(554)
3,444
2,814
1,430
1,144
1,347
79
10,258
Restated
million
540
413
152
203
305
7
1,620
Restated
million
1,460
853
340
328
283
(130)
3,134

North America
Europe
Western Europe
Africa
Asia Pacific
Corporate
2,814
(2,169)
1,430
(2,075)
Restated
million
Governance
Marketing
North America
Europe
Western Europe
Africa
Asia Pacific
Corporate
Reclass
million
Strategic report
As reported
million

Earnings per share before

exceptional items
is calculated by dividing profit attributable to
equity shareholders of the parent company
before exceptional items by the weighted
average number of shares in issue.
Earnings per share before exceptional
items for the year ended 30 June 2015 and
30June 2014 are set out in the table below.
Free cash flow

Free cash flow comprises the net cash
flow from operating activities aggregated
with the net cash received/paid for loans
receivable and other investments and the
net cash cost paid for property, plant and
equipment and computer software that
are included in netcash flow from
investing activities.
The remaining components of net cash
flow from investing activities that do not
form part of free cash flow, as defined by the
groups management, are in respect of the
acquisition and sale of businesses.

Profit attributable to equity shareholders of the parent company
Exceptional operating items attributable to equity shareholders of the
parent company
Non-operating items
Tax in respect of exceptional operating and non-operating items
Discontinued operations
Weighted average number of shares in issue (million)

Earnings per share before exceptional items (pence)
Free cash flow

Net cash from operating activities
Disposal of property, plant and equipment and computer software
Purchase of property, plant and equipment and computer software
Movements in loans and other investments
Free cash flow
Return on average total invested capital
2015
million
2014
million
2,381
2,248
268
(373)
(51)
2,225
261
(140)
(58)
83
2,394
2,505
2,506
88.8
95.5
2015
million
2014
million
2,551
52
(638)
1,790
80
(642)
(2)
1,963
7
1,235
2015
million
2014
(restated)(i)
million
Operating profit
Exceptional operating items
Profit for the year attributable to non-controlling interests
Tax at the tax rate before exceptional items of 18.3% (2014 18.2%)
2,797
269
(87)
175
(577)
2,577
2,707
427
(58)
252
(606)
2,722
Average net assets (excluding net post employment liabilities)

Average non-controlling interests
Average net borrowings
Average integration and restructuring costs (net of tax)
Goodwill at 1 July 2004
Adjustment in respect of acquisition of USL(ii)
Average total invested capital
8,910
(1,240)
9,682
1,604
1,562
493
21,011
12.3%
8,300
(924)
8,783
1,498
1,562
114
19,333
14.1%
(i) The group has revised the calculation of ROIC by excluding the net assets and net profit attributable to
non-controlling interests. Before this adjustment, in the year ended 30 June 2014 the ROIC was reported as 13.7%.
(ii) For the years ended 30 June 2014 and 30 June 2015 average net assets were adjusted for the inclusion of USL as
though it was owned throughout the year as it became an associate on 4 July 2013 and a subsidiary on 2 July 2014.
The groups management regards the

purchase and disposal of property, plant
andequipment and computer software as
ultimately non-discretionary since ongoing
investment in plant, machinery and
technology is required to support the
day-to-day operations, whereas acquisitions
and sales of businesses are discretionary.
Where appropriate, separate explanations
are given for the impacts of acquisitions
andsale of businesses, dividends paid and
the purchase of own shares, each of which
arises from decisions that are independent
from the running of the ongoing
underlyingbusiness.
Free cash flow reconciliations for the years
ended 30 June 2015 and 30 June 2014 are set
out in the below table.
Return on average total invested capital is
used by management to assess the return
obtained from the groups asset base and
iscalculated to aid evaluation of the
performance of the business.
The profit used in assessing the return
onaverage total invested capital reflects
operating profit before exceptional items
attributable to the equity shareholders of the
parent company plus share of after tax results
of associates and joint ventures after applying
the tax rate before exceptional items for the
year. Average total invested capital is
calculated using the average derived from
the consolidated balance sheets at the
beginning, middle and end of the year.
Average capital employed comprises average
net assets attributable to equity shareholders
of the parent company for the year, excluding
post employment benefit net liabilities (net
of deferred tax) and average net borrowings.
This average capital employed is then
aggregated with the average restructuring
and integration costs net of tax, and goodwill
written off to reserves at 1 July 2004, the date
of transition to IFRS, to obtain the average
total invested capital.
Calculations for the return on average
total invested capital for the years ended
30June 2015 and 30 June 2014 are set out
inthe table below.

Other definitions
Volume share is a brands retail volume
expressed as a percentage of the retail
volume of all brands in its segment.
Valueshare is a brands retail sales
expressed as a percentage of the retail sales
of all brands in its segment. Unless otherwise
stated, share refers to value share.
Price/mix is the number of percentage
points by which the organic movement in
net sales exceeds the organic movement
involume. The difference arises because
ofchanges in the composition of sales
between higher and lower priced variants/
markets or as price changes are
implemented.
2015
million
2014
million
517
(51)
466
546
(99)
447
Profit from continuing operations before taxation and

exceptional items (c)
Non-operating items
Exceptional operating items
Profit before taxation (d)
2,829
373
(269)
2,933
2,998
140
(427)
2,711
Tax rate before exceptional items (a/c)

Tax rate from continuing operations after exceptional items (b/d)
18.3%
15.9%
18.2%
16.5%
Tax before exceptional items (a)

Tax in respect of exceptional items
Taxation on profit from continuing operations (b)
This Strategic Report was approved

by a duly appointed and authorised
committee of the Board of Directors on
29July 2015 and signed on its behalf by
Paul D Tunnacliffe, Company Secretary.
Governance
Tax rate before exceptional items
References to emerging markets include

Russia, Eastern Europe, Turkey, Africa, Latin
America and Caribbean, and Asia Pacific
(excluding Australia, Korea and Japan).
References to reserve brands include
Johnnie Walker Blue Label, Johnnie Walker
Green Label, Johnnie Walker Gold Label 18
year old, Johnnie Walker Gold Label Reserve,
Johnnie Walker Platinum Label 18 year old,
John Walker & Sons Collection, Johnnie
Walker The Gold Route, Johnnie Walker The
Royal Route, and other Johnnie Walker super
premium brands; The Singleton, Cardhu,
Talisker, Lagavulin and other malt brands;
Buchanans Special Reserve, Buchanans Red
Seal; Bulleit Bourbon, Bulleit Rye; Tanqueray
No. TEN, Tanqueray Malacca; Croc, Ketel One
vodka; Don Julio, Zacapa, Bundaberg SDlx,
Shui Jing Fang, Haig Club whisky and
DeLen Tequila.
References to global giants include the
following brand families: Johnnie Walker,
Smirnoff, Captain Morgan, Baileys, Tanqueray
and Guinness. Local stars spirits excluding
ready to drink include, but are not limited
to,Bells, Buchanans, Bundaberg, Bulleit,
Cacique, Crown Royal, Don Julio, JB, Old
Parr, Yen Raki, Ketel One vodka, scotch malts,
White Horse, Windsor and Ypica.
References to ready to drink also include
ready to serve products, such as pre-mix
cans in some markets, and progressive adult
beverages in the United States and certain
markets supplied by the United States.
References to beer include non-alcoholic
products such as Guinness Malta and Orijin,
aflavoured mixed drink.
Strategic report
Tax rate before exceptional items

Tax rate before exceptional items is
calculated by dividing the total tax charge
oncontinuing operations before tax charges
and credits, classified as or in respect of
exceptional items, by profit before taxation
adjusted to exclude the impact of
exceptional operating and non-operating
items, expressed as a percentage. The
measure is used by management to assess
the rate of tax applied to the groups
continuing operations before tax on
exceptional items.
The tax rates from continuing operations
before exceptional and after exceptional
items for the years ended 30 June 2015 and
30 June 2014 are set out in the table below.

BOARD OF DIRECTORS AND COMPANY SECRETARY
BOARD OF DIRECTORS
AND COMPANY SECRETARY
DR FRANZ B HUMER (69)
Chairman, Non-Executive
Director 3*
Nationality: Swiss/Austrian
Appointed Chairman July
2008 (Appointed NonExecutive Director April 2005)
Current external appointments: Non-Executive
Director, CitiGroup Inc. and Chugai Pharmaceutical
Co., Ltd
Previous relevant experience: Chairman, INSEAD
Board of Directors; Chairman, F. Hoffman-La Roche
Ltd; Chief Operating Director, Glaxo Holdings plc
IVAN MENEZES (56)
Chief Executive, Executive
Director 2*
Nationality: American/British
Appointed Chief Executive
July 2013 (Appointed
Executive Director July 2012)
Current external appointments: Member of the
Council, Scotch Whisky Association; Non-Executive
Director, Coach Inc; Member of the Global Advisory
Board, Kellogg School of Management, Northwestern
University
Previous Diageo roles: Chief Operating Officer;
President, North America; Chairman, Diageo Asia
Pacific; Chairman, Diageo Latin America and
Caribbean; senior management positions, Guinness
and then Diageo
Previous relevant experience: marketing and strategy
roles, Nestl, Booz Allen Hamilton Inc. and Whirlpool
DEIRDRE MAHLAN (53)
Chief Financial Officer,
Executive Director 2
Nationality: American
Appointed Chief Financial
Officer and Executive Director
October 2010. She will
become the next President, Diageo North America
Director, Experian plc; Member, Main Committee of
the 100 Group of Finance Directors
Previous Diageo roles: Deputy Chief Financial
Officer; Head of Tax and Treasury
Previous relevant experience: senior finance
positions, Joseph E. Seagram & Sons, Inc.; Senior
manager, PricewaterhouseCoopers
LORD DAVIES OF ABERSOCH (62)
Senior Non-Executive
Director 1,3,4*
Nationality: British
Appointed Senior NonExecutive Director and
Chairman of the Remuneration
Committee October 2011 (Appointed Non-Executive
Director September 2010)
Current external appointments: Partner and
Chairman, Corsair Capital LLC; Chairman, Jack Wills,
Chime Communications PLC; Chair of Trustees,
RoyalAcademy of Arts; Vice Chairman, LetterOne
HoldingsS.A
Previous relevant experience: Minister for Trade,
Investment and Small Business for the UK
Government; Group Chief Executive, Standard
Chartered PLC
PEGGY B BRUZELIUS (65)

Non-Executive Director1,3,4
Nationality: Swedish
Appointed Non-Executive
Director April 2009
Current external
appointments: Chairman,
Lancelot Asset Management; Non-Executive Director,
Akzo Nobel NV, Axfood AB, Lundin Petroleum AB and
Skandia Liv AB
Previous relevant experience: Non-Executive
Director, Husgvarna AB, Syngenta AG, Scania AB;
Managing Director, ABB Financial Services AB; Vice
Chairman, Electrolux AB; Executive Vice President,
Skandinaviska Enskilda Banken AB
LAURENCE M DANON (59)
Nationality: French
Director January 2006. She will
retire from the Diageo Board
at the 2015 AGM
Current external appointments: Senior Advisor,
Natixis Partners; Non-Executive Director, TF1
Previous relevant experience: Chairman, Leonardo &
Co. SAS; Non-Executive Director, Experian Group
Limited, Groupe BPCE, Lafuma SA, Plastic Omnium SA
and Rhodia SA; served with the French Ministry for
Industry and Energy; senior managements posts,
Total Fina Elf; Chairman and Chief Executive Officer,
France Printemps; Chairman, Executive Board of
Edmond de Rothschild Corporate Finance
HO KWONPING (62)
Non-Executive Director 1,3,4
Nationality: Singaporean
Director October 2012
Current external
appointments: Executive
Chairman and Founder, Banyan Tree Holdings Limited;
Chairman, Laguna Resorts & Hotels Public Company
Limited, Thai Wah Food Products Public Company
Limited and Singapore Management University;
Member, International Council and East Asia Council
of INSEAD and Global Advisory Board of Moelis &
Company; Governor, London Business School;
Chairman of School Advisory Committee, School of
Hotel and Tourism Management of the Hong Kong
Polytechnic University
Previous relevant experience: Chairman, MediaCorp
Pte. Ltd, Non-Executive Director, Singapore Airlines
Limited, Standard Chartered PLC and Singapore
Power Limited
BETSY D HOLDEN (59)
Director September 2009
Current external
appointments: Senior Advisor,
McKinsey & Company; Non-Executive Director, Time
Inc and Western Union Company; Member of the
Board of Trustees, Duke University; Member of the
Executive Committee, Kellogg School of Management
Global Advisory Board

Director, Catamaran Corporation, Tribune Company
and MediaBank LLC; President, Global Marketing and
Category Development and Co-Chief Executive
Officer, Kraft Foods, Inc; Member of the North
American Advisory Board, Schneider Electric
NICOLA S MENDELSOHN (43)
Current external
appointments: Vice president,
Facebook EMEA; Director, Womens Prize for Fiction;
Co-Chair, Creative Industries Council
Previous relevant experience: Executive Chairman,
Karmarama; Deputy Chairman, Grey London; Board
Director, BBH and Fragrance Foundation; President,
Institute of Practitioners in Advertising; Board
Member, CEW; Trustee, White Ribbon Alliance;
Chairof the Corporate Board, Womens Aid
PHILIP G SCOTT (61)
Non-Executive Director1*,3,4
Director and Chairman of
theAudit Committee
October2007
Director, Royal Bank of Scotland Group plc; President,
Institute and Faculty of Actuaries; Chief Financial
Officer, Aviva plc
ALAN JH STEWART (55)
Non-Executive Director 1,3,4
Current external
appointments: Chief Financial
Officer, Tesco plc
Previous relevant experience: Chief Financial Officer,
Marks & Spencer and AWAS; Non-Executive Director,
Games Workshop plc; Group Finance Director,
WH Smith plc; Chief Executive, Thomas Cook UK
PAUL D TUNNACLIFFE (53)
Company Secretary
Appointed Company
Secretary January 2008
Previous relevant
experience: Company
Secretary, Hanson PLC
Emma Walmsley has been appointed as a NonExecutive Director with effect from 1 January 2016.
She will seek election at the 2016 AGM.
Key to committees
1. Audit
2. Executive (comprising senior management)
3. Nomination
4. Remuneration
* Chairman of committee

EXECUTIVE COMMITTEE
NICK BLAZQUEZ (54)
Strategic report
EXECUTIVE
COMMITTEE
JOHN KENNEDY (50)
President, Diageo Europe,
Russia and Turkey
President, Diageo Africa

andAsia Pacific
DAVID CUTTER (47)

President, Global Supply
andProcurement
Nationality: Australian
Appointed President, Global
Supply and Procurement
July2014
Previous Diageo roles: Supply Director, International
Supply Centre; President, Supply Americas; Supply
Director, Asia Pacific
Previous relevant experience: leadership roles,
Frito-Lay and SC Johnson
Current external appointments: Member of the
Council, Scotch Whisky Association
SAM FISCHER (47)
Appointed President, Diageo

Greater China and Asia
September 2014
Previous Diageo roles: Managing Director, Diageo
Greater China; Managing Director of South East Asia,
Diageo Asia Pacific; General Manager, Diageo
IndoChina and Vietnam
Previous relevant experience: Senior management
roles across Central Europe and Indochina,
ColgatePalmolive
ALBERTO GAVAZZI (49)
President, Diageo Latin
America andCaribbean
Nationality: Brazilian/Italian
CEO, United Spirits Limited

Nationality: Indian
Appointed CEO, United Spirits
Limited September 2014
Previous Diageo roles:
CEO-designate, United
SpiritsLimited
Previous relevant experience: various management
roles, Mondelz International, Cadbury and Unilever
Director, Marico
CHARLOTTE LAMBKIN (43)
Corporate Relations Director
Appointed Corporate
Relations Director
January2014
Previous relevant
experience: Group Communications Director, BAE
Systems; Director, Bell Pottinger Corporate & Financial
ANNA MANZ (42)
Group Strategy Director
Appointed Group Strategy
Director July 2013
Regional Finance Director,
Diageo Asia Pacific; Group Treasurer; Finance Director,
Global Marketing, Sales and Innovation; Finance
Director Ireland; Vice President Finance, Diageo
NorthAmerica
Previous relevant experience: Unilever PLC and ICI PLC
SIOBHAN MORIARTY (53)
General Counsel
Nationality: Irish
Appointed General Counsel
July 2013
General Counsel Designate;
Corporate M&A Counsel; Regional Counsel Ireland;
General Counsel Europe
Previous relevant experience: various positions
inlaw firm private practice, Dublin and London
SYL SALLER (58)

Chief Marketing Officer
Nationality: American/British
Appointed Chief Marketing
Officer July 2013
Previous Diageo roles: Global
Innovation Director; Marketing
Director, Diageo Great Britain
Previous relevant experience: brand management
and marketing roles, Allied Domecq PLC, Gillette
Company and Holson Burnes Group, Inc; NonExecutive Director, Dominos Pizza Group plc
LARRY SCHWARTZ (62)
President, Diageo North
America
North America March 2012.
He will retire from Diageo at
the end of the calendar year
Previous Diageo roles: President, Diageo USA;
President, Joseph E. Seagram & Sons
Previous relevant experience: senior management
positions, Joseph E. Seagram & Sons
LEANNE WOOD (42)
Human Resources Director
Appointed Human Resources
Director July 2013
Previous Diageo roles: Global
Talent and Organisational
Effectiveness Director; Human Resources Director,
Africa; Human Resources Director, Ireland; Human
Resources Director, Asia Venture Markets
Previous relevant experience: strategy and finance
positions, Allied Domecq PLC and LEK Consulting
Andy Fennell, formerly President Diageo Africa,
ceased to be an Executive Committee member on
30June 2015. Gilbert Ghostine, formerly President
Diageo India and Greater China and Chief
Development Officer, ceased to be an Executive
Committee member on 30 September 2014.

July2013
Previous Diageo roles: Managing Director, West Latin
America and Caribbean; Global Category Director
Whiskey, Gins and Reserve Brands; General Manager
Brazil, Paraguay and Uruguay; Vice President Consumer
Marketing, Chicago; Marketing Director, Brazil
Previous relevant experience: Colgate-Palmolive;
Unilever PLC
ANAND KRIPALU (56)

Africa July 2015
Previous Diageo roles: CEO
and Managing Director,
Guinness Nigeria; Global Head of Innovation and Beer
and Baileys; various management and marketing
positions, Diageo
President, Diageo Greater

China andAsia
Nationality: Australian

Europe, Russia and Turkey
July 2015
Previous Diageo roles: President, Europe; President,
Western Europe; Chief Operating Officer, Western
Europe; Marketing Director, Australia; General
Manager for Innovation, North America; President
and Chief Executive Officer, Diageo Canada;
Managing Director, Diageo Ireland
Previous relevant experience: brand management
roles, GlaxoSmithKline and Quaker Oats
President, Diageo Africa

Nationality: Irish
Governance

Africa and Asia Pacific
September 2014
Previous Diageo roles: President, Diageo Africa,
Eurasia & Pacific; President, Africa, Turkey, Russia,
Central & Eastern Europe, Global Sales; President,
Africa; Managing Director, Diageo Africa and Diageo
Asia Key Markets
Previous relevant experience: managerial positions,
United Distillers
JOHN OKEEFFE (43)

CORPORATE GOVERNANCE REPORT
CORPORATE
GOVERNANCE
REPORT
Letter from the Chairman of the Board of Directors and the Company Secretary
Dear Shareholder
On behalf of the Board, we are pleased to present the corporate governance report for the year ended 30 June 2015.
The purpose of this report is to explain how Diageo is directed and controlled by your Board and to summarise the corporate governance
activity that has taken place during the year.
In addition to its overall responsibility for corporate governance, the Boards duties include setting the companys strategy and values and
overseeing and supporting management in their day to day running of the business. We continue to believe that your Board demonstrates
the appropriate behaviours and has the diversity, skills, independence and knowledge of the business to enable it to successfully discharge
itsduties.
The principal corporate governance rules applying to Diageo (as aUK company listed on the London Stock Exchange (LSE)) for the year
ended 30 June 2015 are contained in The UK Corporate Governance Code as updated and published by the Financial Reporting Council (FRC)
in September 2012 (the Code) and the UK Financial Conduct Authority (FCA) Listing Rules, which require us to describe, in our Annual Report,
our corporate governance from two points of view: the first dealing generally with our application of the Codes main principles and the
second dealing specifically with non-compliance with any of the Codes provisions. The two descriptions together are designed to give
shareholders apicture of governance arrangements in relation to the Code as acriterion of good practice.
Throughout the year, Diageo has complied with all relevant provisions set out in the Code, which is publicly available under the heading
Corporate Governance at the website of the FRC, www.frc.org.uk.
Diageo must also comply with corporate governance rules contained in the FCA Disclosure and Transparency Rules as well as certain
related provisions in the Companies Act 2006 (the Act).
As well as being subject to UK legislation and practice, as acompany listed on the New York Stock Exchange (NYSE), Diageo is subject to
the listing requirements of the NYSE and the rules of the Securities and Exchange Commission (SEC). Compliance with the provisions of the US
Sarbanes-Oxley Act of 2002 (SOX), as it applies to foreign private issuers, is continually monitored. As Diageo follows UK corporate governance
practice, differences from the NYSE corporate governance standards are summarised in Diageos 20-F filing and on our website at
www.diageo.com/en-row/ourbusiness/aboutus/corporategovernance.
Dr Franz B Humer
Chairman
Paul D Tunnacliffe
Company Secretary

summary of the terms and conditions of appointment of the

A
Non-Executive Directors is available at www.diageo.com/en-row/
ourbusiness/aboutus/corporategovernance.
T he terms of reference of Board Committees are available at

Activities of the Nomination Committee

The principal activities of the Nomination Committee during the year
were: the consideration of potential new Non-Executive Directors, in
light of the review of the structure and composition of the Board; the
review of individual Director performance; areview of the Executive
Committee membership and succession planning for it and for senior
leadership positions, in addition to areview of diversity within the group.
In respect of the appointment of Emma Walmsley the recruitment
process included the development of acandidate profile and the
engagement of aprofessional search agency (which has no other
connection with the Company) specialising in the recruitment of
high calibre Non-Executive Directors. Reports on potential
appointees were provided to the committee, which, after careful
consideration, made arecommendation to the Board.
Induction, training and business engagement

There is aformal induction programme for new Directors, which was
followed during the year for Nicola Mendelsohn and Alan Stewart.
This included meeting with Executive Committee members and
other senior executives individually and visiting the Supply operations
in Scotland and the customer collaboration centre in the UK.
Following the initial induction for Non-Executive Directors,
acontinuing understanding of the business is developed through
appropriate business engagements. Visits to customers, engagements
with employees, and brand events were arranged during the year.
In addition, Executive Committee members and other senior
executives are invited, as appropriate, to Board and strategy meetings
to make presentations on their areas of responsibility.
All Directors are also provided with the opportunity, and
encouraged, to attend regular training to ensure they are kept up to
date on relevant legal developments or changes and best practice
and changing commercial and other risks.
Nomination Committee
Role of the Nomination Committee
The Nomination Committee is responsible for keeping under review
the composition of the Board and succession to it, and succession
planning for senior leadership positions. It makes recommendations
to the Board concerning appointments to the Board.
Any new Directors are appointed by the Board and, in accordance
with the companys articles of association, they must be elected at
the next AGM to continue in office. All existing Directors retire by
rotation every year.
Activities and duties of the Board

The Board manages overall control of the companys affairs with
reference to the formal schedule of matters reserved for the Board for
decision. The schedule was last reviewed in July 2015 and is available at
The Board has agreed an approach and adopted guidelines for
dealing with conflicts of interest and responsibility for authorising
conflicts of interest is included in the schedule of matters reserved for
the Board. The Board confirmed that it was aware of no situations
that may or did give rise to conflicts with the interests of the
company other than those that may arise from Directors other
appointments as disclosed in their biographies.
In order to fulfil their duties, procedures are in place for Directors
to seek both independent advice and the advice and services of the
Company Secretary who is responsible for advising the Board,
through the Chairman, on all governance matters. The Non-Executive
Directors meet without the Chairman present, and also meet with
the Chairman without management present, on aregular basis.
Governance
Membership of the Board and Board Committees

The Chairman, Senior Non-Executive Director and other members
ofthe Board, Audit Committee, Nomination Committee and
Remuneration Committee are as set out in this Annual Report in the
biographies of Directors and members of the Executive Committee.
There is aclear separation of the roles of the Chairman and the
Chief Executive. The Chairman, Dr Franz B Humer, is responsible for
the running of the Board and for ensuring all Directors are fully
informed of matters, sufficient to make informed judgements. As
Chief Executive, Ivan Menezes has responsibility for implementing the
strategy agreed by the Board and for managing the company and
the group. He is supported in this role by the Executive Committee.
The Non-Executive Directors, all of whom the Board has determined
are independent, are experienced and influential individuals from
arange of industries, backgrounds and countries. Noindividual or
group dominates the Boards decision-making processes.
Performance evaluation
As reported last year, an externally facilitated evaluation of the
Boardseffectiveness, including the effectiveness of the Audit, the
Remuneration and the Nomination Committees, continued into the
subsequent financial year. The external facilitator, Wickland Westcott,
has no other connection with the company.
A report was prepared and presented, with the conclusion that
the Board and its Committees continued to operate effectively,
meeting the requirements and spirit of the Code. The climate within
the Board, its capability and the diversity of Board members, were
seen as significant factors which contributed to the Boards
effectiveness during the year.
There were, nevertheless, areas identified as being of aparticular
focus: the relationship between the Board and the new executive
team, with an aim for the Board to continue to support and mentor
the team; ensuring sufficient time was allocated to undertake
scenario planning, to generate insight and advantage; the
understanding of and the deepening of the Boards relationships
with the Companys shareholders; and on emerging market volatility,
particularly the markets where there is the potential of significant
external volatility or risks.
Without being complacent, the Board was considered to be in
good shape to deal with these and support management in its
aspirations to deliver the Performance Ambition.
A similar, internal, exercise building on this evaluation and covering
the evaluation of the Board and its Committees started during the
year and has continued into the subsequent financial year. Areport
will be prepared for the Board for consideration at its next meeting.
The results of the evaluation will be reported in next years report.
The Chairman has confirmed that the Non-Executive Directors
standing for re-election at this years AGM continue to perform
effectively, both individually and collectively as aBoard, and that each
demonstrate commitment to their roles. The senior Non-Executive
Director led aperformance evaluation of the Chairman. Feedback
was discussed in ameeting with the Executive and Non-Executive
Directors and then privately with the Chairman.
It is the Boards intention to continue to review annually its
performance and that of its committees and individual directors.
Strategic report
BOARD OF DIRECTORS

Diversity
Diageo supports diversity within its Board of Directors, including
gender diversity. Further information is given in the section of this
Annual Report on sustainability & responsibility, our people.
Remuneration Committee
Role of the Remuneration Committee
The role of the Remuneration Committee and details of how the
company applies the principles of the Code in respect of Directors
remuneration are set out in the directors remuneration report.
The Chairman and the Chief Executive may, by invitation, attend
Remuneration Committee meetings, except when their own
remuneration is discussed. No Director is involved in determining his
or her own remuneration.
EXECUTIVE DIRECTION
ANDCONTROL
Executive Committee
The Executive Committee, appointed and chaired by the Chief
Executive, supports him in discharging his responsibility for
implementing the strategy agreed by the Board and for managing
the company and the group.
It consists of the individuals responsible for the key components
of the business: North America, Europe, Africa, Latin America and
Caribbean, Asia Pacific, International Supply Centre and the
globalfunctions.
The Executive Committee focuses its time and agenda to align with
the Performance Ambition and how to achieve the performance
imperatives. Performance metrics have been developed to measure
progress and afurther designated focus is on the companys reputation.
In support, monthly performance delivery calls, involving the senior
leadership group, focus on progress against the six performance drivers.
To support the market visits made by the presidents in the ordinary
course of their business, asmall group led by the Chief Executive
makes regular market visits focused on the execution of strategy and
designed to assist in continuing the development of strategy and in
the delivery of performance against the Performance Ambition.
ommittees appointed by the Chief Executive and intended to have an
C
ongoing remit, including the Audit & Risk Committee, Finance Committee
and Filings Assurance Committee are shown (with their remits) at
Additional information
Internal control and risk management
An ongoing process has been established for identifying, evaluating
and managing risks faced by the group. This process, which complies
with the requirements of the Code, has been in place for the full
financial year and up to the date the financial statements were
approved and accords with the guidance issued by the Financial
Reporting Council in October 2005, Internal Control: Revised
Guidance for Directors on the Combined Code, also known as the
Turnbull guidance (as amended by the Flint review).
The Board acknowledges that it is responsible for the companys
systems of internal control and risk management and for reviewing their
effectiveness. The Board confirms that, through the activities of the
Audit Committee described below, it has reviewed the effectiveness
ofthe companys systems of internal control and risk management.
During the year, in line with the Code, the Board considered the
nature and extent of the risks it was willing to take to achieve its
strategic goals and reviewed the existing internal statement of risk
appetite (which was considered and recommended to the Board by
both the Audit & Risk Committee and the Audit Committee).
The company has in place internal control and risk management

systems in relation to the companys financial reporting process and
the groups process for preparation of consolidated accounts. Further,
areview of the consolidated financial statements is completed by
management to ensure that the financial position and results of the
group are appropriately reflected therein.
Compliance and ethics programme
Diageo is committed to conducting its business responsibly and in
accordance with all laws and regulations to which its business
activities are subject. We hold ourselves to the principles in our Code
of Business Conduct, which is embedded through acomprehensive
training and education programme for all employees.
ur Code of Business Conduct, which was reviewed and updated during
O
the year in preparation for launch in the next financial year, and other
Diageo global policies are available at www.diageo.com/en-row/
In accordance with the requirements of SOX (and related SEC rules),

Diageo has adopted acode of ethics covering its Chief Executive,
Chief Financial Officer, presidents and other identifiable persons in
the group, including those performing senior accounting and
controller functions. No amendments to, or waivers in respect of,
thecode of ethics were made during the year.
T he full text of the code of ethics is available at www.diageo.com/en-row/
Both the Audit & Risk Committee and the Audit Committee regularly
review the strategy and operation of the compliance and ethics
programme through the year.
Further information is given in the section of this Annual Report
on sustainability & responsibility, governance & ethics.
Relations with shareholders
The Boards primary contact with institutional shareholders is through
the Chief Executive and Chief Financial Officer. The Chief Executive and
Chief Financial Officer are supported by the investor relations
department, who are in regular contact with institutional shareholders
and sell-side analysts. Amonthly investor relations report, including
coverage of the company by sell-side analysts, iscirculated to the Board.
The Board also ensures that all Directors develop an understanding
of the views of major institutional shareholders through an independent
survey of shareholder opinion. In addition, major shareholders are
invited to raise any company matters of interest to them at meetings
with the chairman and the chairman of the Remuneration Committee.
Reports on any meetings are made to the Board.
Private shareholders are invited to write to the chairman or any
other Director and express their views on any issues of concern at any
time and the AGM provides an opportunity for private shareholders
to put their questions in person.
Political donations
The group has not given any money for political purposes in the
United Kingdom and made no donations to EU political organisations
and incurred no EU political expenditure during the year. The group
made contributions to non-EU political parties totalling 0.5 million
during the year (2014 0.4 million).
These contributions were made, almost exclusively, to federal and
state candidates and committees in North America (consistent with
applicable laws), where it is common practice to make political
contributions. No particular political persuasion was supported and
contributions were made with the aim of promoting abetter
understanding of the group and its views on commercial matters,
aswell as agenerally improved business environment.

Responsibility statement
Each of the Directors, whose names are set out in the Board of
Directors and Executive Committee section of this Annual Report,
confirms that to the best of his or her knowledge:
the Annual Report for the year ended 30 June 2015, taken as
awhole, is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the groups
performance, business model and strategy;
the consolidated financial statements contained in the Annual
Report for the year ended 30 June 2015, which have been
prepared in accordance with IFRS as issued by the IASB and as
adopted for use in the EU, give atrue and fair view of the assets,
liabilities, financial position and profit of the group; and
Governance
Managements report on internal control over financial reporting

Management, under the supervision of the Chief Executive and Chief
Financial Officer, is responsible for establishing and maintaining
adequate control over the groups financial reporting.
Management has assessed the effectiveness of Diageos internal
control over financial reporting (as defined in Rules 13(a)-13(f) and
15(d)-15(f) under the US Securities Exchange Act of 1934) based on
the framework in Internal Control Integrated Framework, issued by
the Committee of Sponsoring Organisations of the Treadway
Commission (COSO) in 2013. Based on this assessment, management
concluded that, as at 30 June 2015, internal control over financial
reporting was effective.
During the period covered by this report, there were no changes
in internal control over financial reporting that have materially
affected or are reasonably likely to materially affect the effectiveness
of internal control over financial reporting.
KPMG LLP, an independent registered public accounting firm,
whoalso audit the groups consolidated financial statements, has
audited the effectiveness of the groups internal control over financial
reporting, and has issued an unqualified report thereon, which will
be included in the companys Form 20-F to be filed with the SEC.
Directors responsibilities in respect of the Annual Report and

financial statements
The Directors are responsible for preparing the Annual Report, the
information filed with the SEC on Form 20-F and the group and
parent company financial statements in accordance with applicable
law and regulations.
Strategic report
Going concern
The Directors confirm that, after making appropriate enquiries, they
have reasonable expectation that the group has adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements. Further information on going
concern is given in this Annual Report under note 1 Accounting
information and policies going concern.
the management report represented by the Directors report

contained in the Annual Report for the year ended 30 June 2015
includes afair review of the development and performance of the
business and the position of the group, together with adescription
of the principal risks and uncertainties that the group faces.
The responsibility statement was approved by the Board of Directors
on 29 July 2015.
Annual
General Meeting
2014
Board
(maximum 6)(iii)
Audit
Committee
(maximum 4)
Nomination
Committee
(maximum 3)
Remuneration
Committee
(maximum 6)
Dr Franz B Humer
6/6
4/4(i)
3/3
6/6(i)
Ivan Menezes
6/6
(ii)
2/2
3/3
6/6(ii)
Deirdre Mahlan
6/6
4/4(i)
n/a
1/1(ii)
Lord Davies
6/6
4/4
3/3
6/6
Peggy Bruzelius
5/6
3/4
3/3
5/6
Laurence Danon
6/6
4/4
3/3
6/6
Betsy Holden
6/6
4/4
3/3
6/6
(i)
6/6
4/4
3/3
5/6
4/5
3/3
1/2
4/5
Philip Scott
6/6
4/4
3/3
6/6
Alan Stewart
4/5
2/3
2/2
4/5
(i) Attended by invitation.

(ii) Attended by invitation, for part only.
(iii) Two non-scheduled Board calls were held during the year, in relation to financial matters.
Where Non-Executive Directors were unable to attend ameeting they gave their views to the Chairman of the respective meetings ahead of the meetings being held.
Nicola Mendelsohn was unable to attend the 2014 AGM as aresult of another engagement which was arranged prior to her appointment.
Sub-Committee meetings of the Audit Committee were also held involving P G Scott, P B Bruzelius and A JH Stewart.
Ho KwonPing
Nicola Mendelsohn
Directors attendance record at the AGM, scheduled Board meetings and Board committee meetings, for the year ended 30 June 2015 was as
set out in the table below. For Board and Board committee meetings, attendance is expressed as the number of meetings attended out of the
number that each Director was eligible to attend.

REPORT OF THE AUDIT COMMITTEE
REPORT OF THE
AUDIT COMMITTEE
Letter from the Chairman of the Audit Committee

Dear Shareholder
On behalf of the Audit Committee, I am pleased to present its report for the year ended 30 June 2015.
The purpose of this report is to describe how the Committee has carried out its responsibilities during the year.
In overview, the role of the Audit Committee is to monitor and review: the integrity of the companys financial statements; internal control
and risk management; audit and risk programmes; business conduct and ethics; whistleblowing; and the appointment of the external auditor.
A key project undertaken by the Committee during the year was the tender for the external audit, as flagged in my report last year.
Thetender has been completed and PricewaterhouseCoopers LLP (PwC) were selected. The appointment of PwC will take effect for Diageos
financial year ending 30 June 2016, subject to approval at the companys September 2015 AGM. KPMG has been the groups auditor since 1997
and, on behalf of the Audit Committee, I take this opportunity to thank KPMG for their unstinting professionalism and for the insight that they
have brought and the value that they have added to the business during their tenure.
The Committee took note of the publication in September 2014 of an updated version of the UK Corporate Governance Code (Code) and
the requirement for aviability statement contained therein. As stipulated, we propose to apply the requirements of the updated Code for
Diageos year ending 30 June 2016 and we have begun the thought process and preparation to enable us to do so. Again in September 2014,
the Financial Reporting Council published its Guidance on Risk management, Internal Control and related Financial and Business Reporting
(replacing the current Turnbull and other guidance). This is also applicable to Diageos financial year ending in 2016 and the Committee will
oversee thenecessary compliance.
In discharging its duties, the Audit Committee seeks to balance independent oversight of the matters within its remit with providing
support and guidance to management. I remain confident that the Committee, supported by members of senior management and the
external auditors, has carried out its duties in the year under review, effectively and to ahigh standard.
Philip G Scott
Chairman of the Audit Committee

Role of the Audit Committee

The formal role of the Audit Committee is set out in its terms of
reference, which are available at www.diageo.com/en-row/
ourbusiness/aboutus/corporategovernance. Key elements of the
roleof the committee and work carried out during the year are set
out as follows.
Review of carrying value of assets in particular intangible assets.

The committee agreed that an impairment charge of 41 million
be made against the groups equity investment in Hanoi Liquor
Joint Stock Company (a Vietnamese spirit company) but that,
otherwise, the fair value of the companys assets was in excess
oftheir carrying value (see notes 6 and 10).
Following the completion of the tender offer on 2 July 2014,

United Spirits Limited (USL) is accounted for as asubsidiary with
a43.91% non-controlling interest. The fair valuation of assets and
liabilities has been finalised during the year ended 30 June 2015.
The committee agreed on the appropriateness of the acquisition
fair values recognised (see note 9).
Internal control and risk management; audit and risk programme;

business conduct and ethics (including whistleblowing)
At each of its meetings, the Audit Committee reviewed detailed
reports from the heads of the Global Risk & Compliance (GRC) and
Global Audit & Risk (GAR) teams (including coverage of the areas
mentioned in the title of this section) and had sight of the minutes of
meetings of managements Audit & Risk Committee. Akey focus for
the work of both GRC and GAR during the year and their reporting
tothe committee, continued to be areview of recent acquisitions.
The Committee in turn were thus able to keep under review the
development of the controls and compliance framework in acquired
companies, bearing in mind the appropriate level for those that were
associates during the year rather than wholly owned subsidiaries.
Thecommittee also received regular updates from the group general
counsel on significant litigation and from the head of tax on the
groups tax profile and key issues.
The GRC reporting included aconsideration of key risks and
related mitigations, including those set out in the section of this
Annual Report dealing with principal risks. Based on this activity
during the year, the Audit Committee made arecommendation to
the Board covering the nature and extent of the risks it was willing
totake to achieve its strategic goals and its internal statement of risk
appetite (this was considered also by the Audit & Risk Committee).
The Board agreed this recommendation.
Through the activities of the Audit Committee described in this
report and its related recommendations to the Board, the Board
confirms that it has reviewed the effectiveness of the companys
systems of internal control and risk management.
External auditor
During the year, the Audit Committee reviewed the external audit
strategy and the findings of the external auditor from its review of the
interim results and its audit of the consolidated financial statements.
The Audit Committee reviews annually the appointment
oftheauditor (taking into account the auditors effectiveness
andindependence and all appropriate guidelines) and makes
arecommendation to the Board accordingly. Any decision to open
the external audit to tender is taken on the recommendation of the
Audit Committee. There are no contractual obligations that restrict
the companys current choice of external auditor.
Exchange rate used to translate operations in Venezuela. The

committee determined that the appropriate rate used for the year
ended 30 June 2015 was the SIMADI rate of $1 = VEF197.3 (1 =
VEF309.76) compared with $1 = VEF49.98 (1 = VEF85.47) for the
year ended 30 June 2014 (see note 1).
As part of its review of the Annual Report, the Committee

considered whether the report is fair, balanced and understandable.
On the basis of this work, the Audit Committee recommended to the
Board that it could make the required statement that the Annual
Report is fair, balanced and understandable.
The committee determined that exceptional items are appropriately

classified considering their size and nature, and sufficient disclosure
is provided in the financial statements (see note 4).
Assumptions used in respect of post employment plans. Having

considered advice from external actuaries and assumptions used
by companies with comparator plans, the committee agreed that
the assumptions used to calculate the income statement and
balance sheet assets and liabilities for post employment plans
were appropriate (see note 13).
Governance
During the year, the Audit Committee met four times (and asubcommittee met twice) and reviewed the annual reports and
associated preliminary year end results announcement, focusing on
key areas of judgement and complexity, critical accounting policies,
provisioning and any changes required in these areas or policies. In
addition, the Audit Committee reviewed the interim results
announcement, which included the interim financial statements and
the companys interim management results and dealt with the
tender for the external audit.
The company has in place internal control and risk management
systems in relation to the companys financial reporting process and
the groups process for preparation of consolidated accounts.
Areview of the consolidated financial statements is completed by
management (through the work of its filings assurance committee
(FAC)) to ensure that the financial position and results of the group are
appropriately reflected therein. The Audit Committee reviewed the
work of the FAC and areport on the conclusions of the FAC process
was provided to the Audit Committee by the Chief Financial Officer.
Significant issues and judgements that were considered in respect
of the 2015 financial statements were as follows. These include the
matters relating to risks disclosed in the UK external auditors report.
Disclosure on the quality of the earnings and one off items
included in cash flow. The committee agreed that sufficient
disclosure was made in the financial statements.
Review of legal cases and contingent liabilities. The committee

agreed that adequate provision and disclosure have been made
for all material litigation and disputes, based on the currently most
likely outcomes, including: litigation in Colombia; acustoms
dispute in Korea; the guarantee agreement with Standard
Chartered in respect of Watson Limited; the USL internal inquiry
and related matters; the SEC inquiry; and other legal, customs and
tax proceedings (see note 18).
Strategic report
REPORT OF THE
AUDITCOMMITTEE

The Audit Committee assessed the ongoing effectiveness and quality

of the external auditor and audit process on the basis of meetings
and aquestionnaire-based internal review with the finance team and
other senior executives. The outcome of the assessment was positive.
The group has apolicy on auditor independence and on the use
of the external auditor for non-audit services, which is reviewed
annually, most recently in July 2015. The review took into
consideration the new regulations on non-audit services. Under this
policy, the provision of any non-audit service must be approved by
the Audit Committee, unless the proposed service is both expected
to cost less than 250,000 and also falls within one of anumber of
service categories which the Audit Committee has pre-approved.
All services relevant to taxation requires Audit Committee approval.
Fees paid to the auditor for audit, audit related and other services are
analysed in the notes to the consolidated financial statements. The
nature and level of all services provided by the external auditor is
afactor taken into account by the Audit Committee when it reviews
annually the independence of the external auditor.
During the year, in light of the requirements of the Code and
other recent changes to the regulatory framework, the Committee
undertook atender for the external audit (KPMG having been the
Groups auditor since 1997). The result of the tender was that, on the
recommendation of the Committee, the Board selected PwC. Subject
to approval at the companys September 2015 AGM, the appointment
of PwC as auditor will take effect for Diageos financial year ending
30 June 2016.
Financial expert and other attendees

For the purposes of the Code and the relevant rule under SOX, section
407, the Board has determined that Philip Scott is independent and
may be regarded as an Audit Committee financial expert.
The Chairman, the Chief Financial Officer, the group general
counsel the group financial controller, the head of GAR, the GRC
director, the group chief accountant and the external auditor
regularly attend meetings of the committee.
The Audit Committee met privately with the external auditor and
with the head of global audit and risk as appropriate.
Training and deep dives
During the year, the Audit Committee had risk review and training
sessions, presented by senior executives, on: brand assurance;
Eurozone risk; catastrophic risk; and an update on cyber risk.
In addition, as part of a Board meeting, committee members
had a training session on the groups new Risk Management
Standard. The Committee concluded at the time that it was
satisfied with the companys position on these matters but
they would be kept under review.

DIRECTORS REMUNERATION REPORT
Dear Shareholder
Governance
Annual statement by the Chairman of the Remuneration Committee
Strategic report
DIRECTORS
REMUNERATION
REPORT
As Chairman of the Remuneration Committee, I am pleased to present the Directors remuneration report for the year ended 30 June 2015.
This report complies with the UK executive remuneration reporting guidelines and contains:
The Directors remuneration policy, as approved by shareholders at the AGM in September 2014;
The annual remuneration report, describing how the remuneration policy has been put into practice over the year ended 30 June 2015;
There have been no changes to the Directors remuneration policy, as approved by shareholders at the 2014 AGM, and it is reproduced in
full for both ease of reference and to provide context to the decisions taken by the Committee during the year. The annual remuneration
report will be put forward for your consideration and approval by advisory vote at the AGM on 23 September 2015.
Consistent performance: The focus is on the delivery of performance in aconsistent and responsible way which also creates long term
value for our shareholders. Alignment between the interests of Executive Directors and shareholders remains akey principle, with
Executive Directors required to acquire and hold Diageo shares over the long term.
Performance-related compensation: Reward components offer abalanced mix of short and long term incentives conditional upon
achieving stretching performance targets. Performance measures such as organic net sales, organic operating margin, cash efficiency,
relative total shareholder return (TSR) and earnings per share (eps) growth are key drivers of growth for the business that are aligned
with the creation of shareholder value.
Diageos remuneration principles

The principles underpinning executive remuneration remain fundamentally unchanged, with sustainable performance and long term
value creation for shareholders at the heart of our remuneration policies and practices:
Delivery of business strategy: Short and long term incentive plans for Executive Directors and senior managers reward the
achievement of Diageos business strategy and performance goals.
Competitive total remuneration: Reward levels are framed in the context of total remuneration packages paid by relevant global
comparators. In competition with similar global companies, the ability to recruit and retain the best talent from all over the world is
critical to Diageos continued business success.
Simplicity and transparency: The Committee seeks to embed simplicity and transparency in the design and delivery of executive
reward programmes. Performance targets clearly align with the companys short and long term goals.
Reviewing and assessing the ongoing appropriateness of the current remuneration policy, executive plan design and target stretch; and
Ensuring that remuneration arrangements continue to attract and retain the highest quality global talent with aclear link between
performance and reward.
The Committee undertook acomprehensive review of total remuneration for Executive Directors and Executive Committee members ahead
of the 2015 annual salary review, and, supported by Kepler Associates (a brand of Mercer), were satisfied that the shape and levels of our
remuneration practice are appropriately positioned against those of comparator companies of similar size and global scope.
During the year, the Committee also reviewed the Chairmans fee and, at the Chairmans request, recommended no increase, as was the
case at the last review in December 2013. As agreed with the Chairman, the next review is scheduled for December 2016, subject to the
Chairmans letter of appointment.
The Committee has also approved the extension of the clawback provisions that currently apply to Executive Directors for their annual
andlong term incentives to the other members of the Executive Committee, in addition to the existing malus provisions that apply to
everyone under the Diageo Long Term Incentive Plan.
Focus and highlights in 2015

The Committee continued its focus on:
Understanding and responding to shareholder feedback and fostering continuous open dialogue;

DIRECTORS
REMUNERATION
REPORT CONTINUED
Reward in 2015 at aglance

As areflection of the companys performance against very stretching performance targets in the context of challenging market conditions (see key
performance indicators on pages 12-13), total variable pay to the Executive Directors in respect of the year ended 30 June 2015 is lower than inrespect
of the year ended 30 June 2014.
Base salary
No increase for the Chief Executive or the Chief Financial Officer in October 2015
Allowances and benefits
Unchanged from last year
Retirement benefits
Unchanged from last year
Annual incentive Pay-out below target, delivering 28% and 29% of maximum opportunity for the Chief Executive and
ChiefFinancial Officer respectively
Long term incentives
33% vesting of performance shares and nil vesting of share options
Over the period 1 July 2012 to 30 June 2015 (the performance period for this years long term incentive plan), Diageos share price grew by 11%,
from 1658 pence to 1841 pence, and the company paid atotal dividend of 147.5 pence per share. Dividend distribution to shareholders in the
year ended 30 June 2015 was increased by 9% compared to the previous year.
Planned for 2016
Looking ahead to the year ending 30 June 2016, we will continue to operate executive remuneration arrangements in line with the approved
remuneration policy and to maintain an active and positive dialogue with shareholders and their advisory bodies. We anticipate putting the
policy to shareholder vote next at the 2017 AGM.
The Committee has refined the design of the Annual Incentive Plan (AIP) to apply for the year ending 30 June 2016. To drive asustained
improvement in the efficient conversion of profits into cash, the weighting on operating cash conversion will be increased from25% to 30%
of the maximum opportunity and there will be asubsequent reduction in the weighting on net sales growth and profit growth from 30%
and 35% respectively to 25% on each. These changes create agreater focus on the generation of cash whilst maintaining asignificant incentive
to increase net sales and profit. The remaining 20% will be based on individual business objectives (IBOs) to ensure focuson the delivery of
defined quantitative measures relating to the individuals key areas of responsibility.
The Committee has also reviewed the performance measures under the Diageo Long Term Incentive Plan (DLTIP) with the result that
theoperating margin measure will be replaced by ameasure based on cumulative free cash flow. The intention is that this will incentivise
management to deliver efficiency in capital expenditure and working capital, which will in turn create greater value for shareholders.
Thischange will take effect for awards made from September 2015 onwards. The weightings will be retained at one third of the performance
share element of the DLTIP based on cumulative free cash flow alongside one third on net sales value (NSV) growth and one third on TSR.
Forshare options, the measure that will continue to apply is adjusted eps growth.
As you read our remuneration policy and report on the following pages, I hope it is clear how the Committees decisions support the
business strategy and the delivery of Diageos performance ambition.
We were very pleased to receive avery strong vote in favour of both our remuneration policy and report last year. I highly value the direct
engagement and feedback from our shareholders and their representative bodies on Diageos remuneration policy and look forward to
welcoming you and receiving your support again at the AGM this year.
Lord Davies of Abersoch

Senior independent Non-Executive Director and
Chairman of the Remuneration Committee

This section of the report sets out the policy for Executive Directors
remuneration, in accordance with section 439A of the Companies Act
2006. The policy was put to shareholders for approval in abinding
vote at the AGM in 2014, and formally came into effect from
18 September 2014, the date of the AGM. The report below is as
disclosed in the 2014 Directors remuneration report, with the
exception of the reference to the number of employees across
Diageo, and aminor addition to the DLTIP section of the policy table
to reflect the clarification note released following publication of the
2014 Directors remuneration report.
Variable with performance: A significant proportion of total

remuneration for the Executive Directors is linked to business
andindividual performance so that remuneration will increase
ordecrease in line with performance.
Share ownership: Full participation in incentives is conditional
uponbuilding up asignificant personal shareholding in Diageo
toensure the companys leaders think and act like owners.
Cost effectiveness: Fixed elements of remuneration are determined
by reference to the median of the market, individual experience
and performance, and other relevant factors to ensure efficiency.
Future policy table
Set out below, is the remuneration policy for Executive Directors
which has been applied from the date of shareholder approval at
theAGM on 18 September 2014.
BASE SALARY
BENEFITS
Purpose and link to strategy

Supports the attraction and retention of the best global talent with
the capability to deliver Diageos strategy and performance goals.

Provides market competitive and cost effective benefits.
Operation
Normally reviewed annually or following achange in
responsibilities with changes usually taking effect from
1October.
Opportunity
The benefits package is set at alevel which the Remuneration
Committee considers:
Provides an appropriate level of benefits depending on the
roleand individual circumstances; and
Is in line with comparable roles in companies of asimilar size
and complexity in the relevant market.
Opportunity
Salary increases will normally be in line with increases awarded to
other employees in relevant markets in which Diageo operates,
typically the United Kingdom and the United States, unless there is
achange in role or responsibility, or the need to align an Executive
Directors salary to market level over time (provided the increase is
merited by the individuals contribution and performance).
The Remuneration Committee has discretion to offer

additional allowances, or benefits, to Executive Directors,
ifconsidered appropriate and reasonable. These may include
relocation expenses, housing allowance and school fees
where aDirectorhas to relocate from his/her home location
aspartoftheirappointment.
The Remuneration Committee considers the following

parameters when reviewing base salary levels:
Pay increases for other employees across the group;
Economic conditions and governance trends;
The individuals performance, skills and responsibilities; and
Base salaries (and total remuneration) at companies of similar
size and international scope to Diageo, with roles typically
benchmarked against the top 30 companies in the FTSE100 by
market capitalisation excluding companies in the financial
services sector, or against similar comparator groups in other
locations dependent on the Executive Directors home market.
Operation
The provision of benefits depends on the country of residence
of the Executive Director and may include acompany car or car
allowance, the provision of acar and contracted car service or
equivalent, product allowance, life insurance, accidental death
& disability insurance, medical cover for the Executive Director
and family and financial counselling.
Governance
Remuneration policy framework

The remuneration structures and performance measures used in
executive incentive plans are designed to support Diageos business
strategy as follows:
Focused on consistent growth drivers: As apublic limited company,
Diageo has afiduciary responsibility to maximise long term value
for shareholders. Thus, variable elements of remuneration are

dependent upon the achievement of performance measures
that are identified as key consistent and responsible growth
drivers for the business and that are aligned with the creation
ofshareholdervalue.
Strategic report
DIRECTORS
REMUNERATIONPOLICY

POST-RETIREMENT PROVISIONS
DIAGEO LONG TERM INCENTIVE PLAN (DLTIP)

Provides cost-effective, competitive post-retirement benefits.

Provides focus on delivering superior long term returns
toshareholders.
Operation
Provision of market competitive pension arrangements or
acash alternative based on apercentage of base salary.
Further detail on current pension provisions for Executive
Directors is disclosed in the annual report on remuneration.
Operation
An annual grant of performance shares and/or market price
share options which vest subject to aperformance test and
continued employment normally over aperiod of three years.
Opportunity
The maximum company pension contribution is 30% of base
salary for any new external appointments to an Executive
Director position.
Measures and stretching targets are reviewed annually by

the Remuneration Committee for each new award. Details
of the measures, weightings and targets applicable for
the financial year under review are provided in the annual
reportonremuneration.
Current legacy company contributions for Ivan Menezes and

Deirdre Mahlan remain 40% and 35% of base salary, respectively.
ANNUAL INCENTIVE PLAN (AIP)
Incentivises year on year delivery of Diageos annual financial and
strategic targets. Provides focus on key financial metrics and the
individuals contribution to the companys performance.
Operation
Performance measures and stretching targets are set annually
by the Remuneration Committee by reference to the annual
operating plan.
The level of award is determined with reference to Diageos
overall financial and strategic performance and individual
performance and is paid out in cash after the end of the
financial year.
The Committee has discretion to amend the level of payment
ifit is not deemed to reflect appropriately the individuals
contribution or the overall business performance. Any
discretionary adjustments will be detailed in the following
years annual report on remuneration.
The Committee has discretion to apply clawback to bonus, i.e.
the company may seek to recover bonus paid, in exceptional
circumstances such as gross misconduct or gross negligence
during the performance period.
Details of the AIP are set out in the annual report on
remuneration on page 72.
Opportunity
For threshold performance, up to 50% of salary may be earned,
withup to 100% of salary earned for on target performance and
amaximum of 200% of salary payable for outstanding performance.
Performance conditions
Annual incentive plan awards are based 70%-90% on financial
measures which may include, but are not limited to, measures
ofrevenue, profit and cash and 10%-30% on broader objectives
based on individual contribution and medium term strategic
goals. Details of the measures and weightings applicable for the
year ending 30 June 2016 are set out on page 72. Details of the
targets will be disclosed retrospectively in next years annual
report on remuneration, when they are no longer deemed
commercially sensitive by the Board.
Following vesting there is afurther retention period of two

years. Executive Directors are able to exercise an option or sell
sufficient shares to cover any tax liability when an award vests,
provided they retain the net shares arising for the two-year
retention period.
Notional dividends accrue on performance share awards to
theextent that the performance conditions have been met,
delivered as shares or cash at the discretion of the
Remuneration Committee at the end of the vesting period.
The Committee has discretion to reduce the number of shares
which vest (subject to HMRC rules regarding approved share
options), for example in the event of amaterial performance
failure, or amaterial restatement of the accounts. There is an
extensive malus clause for awards made from September 2014.
The Committee has discretion to decide that:
the number of shares subject to the award will be reduced;
the award will lapse;
retention shares (i.e. vested shares subject to the additional
two-year retention period) will be forfeited;
vesting of the award or the end of any retention period will
be delayed (e.g. until an investigation is completed);
additional conditions will be imposed on the vesting of the
award or the end of the retention period; and/or
any award, bonus or other benefit which might have been
granted or paid to the participant in any later year will be
reduced or not awarded.
Malus provisions will apply up to delivery of shares at the end
ofthe retention period (as opposed to the vesting date).
Further details of the DLTIP are set out in the annual report
onremuneration on pages 73-75.
Opportunity
The maximum annual grant is 500% of salary in performance
share equivalents (where amarket price option is valued at
one-third of aperformance share). As clarified in the statement
of further information on 15 August 2014, under the DLTIP no
more than 375% of salary will be awarded in face value terms
inoptions to any Executive Director in any year.
Threshold vesting level of 20% of maximum with straight line
vesting up to 100% at maximum for financial metrics and
aranking profile for relative total shareholder return.

The vesting of awards is linked to arange of measures which
may include, but are not limited to:
agrowth measure (e.g. net sales, eps);
ameasure of efficiency (e.g. operating margin, operating
cash conversion, return on invested capital (ROIC)); and
ameasure of Diageos relative performance in relation
toitspeers (e.g. relative total shareholder return).
Measures that apply to performance shares and market price
options may differ, as is the case for current awards. Weightings
may vary year-on-year, subject to aminimum weighting of 25%
ofthe total award. Details of the measures, including targets for
the awards to be made in September 2015 are set out on page 75.
The Remuneration Committee has discretion to amend the
performance conditions in exceptional circumstances if it
considers it appropriate to do so, e.g. in cases of accounting
changes, M&A activities and disposals. Any such amendments
would be fully disclosed and explained in the following years
annual report on remuneration.
Performance measures and targets

Further details of AIP performance measures and DLTIP performance
measures and targets that will apply for awards made in September
2015, and how they are aligned with company strategy and the
creation of shareholder value, are set out in the annual report on
remuneration, on pages 72 and 75.
Performance targets are set to be stretching yet achievable, and
take into account the companys strategic priorities and business
environment. The Committee sets targets based on arange of
reference points including the corporate strategy and broker
forecasts for both Diageo and its peers.
ALL-EMPLOYEE SHARE PLANS

To encourage broader employee share ownership through
locally approved plans.
Operation
The company operates tax-efficient all-employee share savings
plans in various jurisdictions.
Opportunity
Limits for all-employee share plans are set by the tax authorities.
The company may choose to set its own lower limits.
UK Freeshares: based on Diageo plc financial measures which
may include, but are not limited to, measures of revenue, profit
and cash.
Executive Directors eligibility may depend on their country of

residence, tax status and employment company.
Differences in remuneration policy for other employees

The remuneration approach for Executive Directors is consistent
withthe reward package for members of the Executive Committee
and the senior management population.
Generally speaking, amuch higher proportion of total
remuneration for the Executive Directors is linked to business
performance, compared to the rest of the employee population,
sothat remuneration will increase or decrease in line with business
performance and to align the interests of Executive Directors and
shareholders. The structure of the reward package for the wider
employee population is based on the principle that it should be
sufficient to attract and retain the best talent and be competitive
within our broader industry, remunerating employees for their
contribution linked to our holistic performance whilst mindful not to
over-pay. It is driven by local market practice as well as level of seniority
and accountability, reflecting the global nature of Diageos business.
Governance
NOTES TO THE POLICY TABLE
Strategic report
DIAGEO LONG TERM INCENTIVE PLAN (DLTIP)
SHAREHOLDING REQUIREMENT
Ensures alignment between the interests of Executive Directors
and shareholders.
Executive Directors have five years from their appointment to

the Board in which to build up their shareholding.
Full participation in the DLTIP is conditional upon meeting this
requirement beyond the five-year timeframe.
Operation
The minimum shareholding requirement is 300% of base salary
for the Chief Executive and 250% of base salary for any other
Executive Directors.

Illustrations of application of the remuneration policy

The graphs below illustrate scenarios for the projected total
remuneration of Executive Directors at three different levels of
performance: minimum, on-target and maximum. Note that the
projected values exclude the impact of any share price movements.
These charts are unchanged from the 2014 Directors remuneration
report and reflect projected remuneration for the year ended
30 June 2015 as at the date when the policy was first presented.
Ivan Menezes
Minimum
100% Total $2,233 (1,370)
On Target
42% 29% 29% Total $5,273 (3,235)
Maximum
17%
Thousands
2,000
24%
4,000
59% Total $12,873 (7,897)

6,000
8,000
10,000
12,000
14,000
Deirdre Mahlan
Minimum
100% Total 1,029
On Target
42% 30% 28% Total 2,464
Maximum
17%
Thousands
1,000
Salary, benefits and pension

Long term incentives
24%
2,000
59%
3,000
4,000
5,000
Total 6,005
6,000
7,000
Annual incentive
Basis of calculation and assumptions:

The Minimum scenario shows fixed remuneration only, i.e. base salary for the year
ended 30 June 2015, total value of contractually agreed benefits for 2015, and pension.
The pension value is based on company contributions applied to 2015 base salary.
These are the only elements of the Executive Directors remuneration packages which
are not at risk.
The On-target scenario shows fixed remuneration as above, plus atarget pay-out of 50%
of the maximum annual bonus and threshold performance vesting for DLTIPawards.
The Maximum scenario reflects fixed remuneration, plus full pay-out of all incentives.
Approach to recruitment remuneration

The Remuneration Committees overarching principle for recruitment
remuneration is to pay no more than is necessary to attract an
Executive Director of the calibre required to shape and deliver
Diageos business strategy in recognition that Diageo competes for
talent in aglobal marketplace. The Committee will seek to align the
remuneration package with Diageos remuneration policy as laid out
above, but retains the discretion to offer aremuneration package
which is necessary to meet the individual circumstances of the
recruited Executive Director and to enable the hiring of an individual
with the necessary skills and expertise. However, except as described
below, variable pay will follow the policy.
Diageo is aglobal organisation operating in more than
180countries around the world. The ability, therefore, to recruit and
retain the best talent from all over the world is critical to the future
success of the business. People diversity in all its forms is acore
element of Diageos global talent strategy and, managed effectively,
is akey driver that will deliver Diageos performance ambition.
On appointment of an external Executive Director, the Committee
may decide to compensate for variable remuneration elements the
Director forfeits when leaving their current employer. In doing so,
theCommittee will ensure that any such compensation would have
afair value no higher than that of the awards forfeited, and would
generally be determined on acomparable basis taking into account
factors including the form in which the awards were granted,
performance conditions attached, the probability of the awards
vesting (e.g. past, current and likely future performance) as well as the
vesting schedules. Depending on individual circumstances at the
time, the Committee has the discretion to determine the type of
award (i.e. cash, shares or options, holding period and whether or not
performance conditions would apply).
Any such award would be fully disclosed and explained in the
following years annual report on remuneration. When exercising its
discretion in establishing the reward package for anew Executive
Director, the Committee will very carefully consider the balance
between the need to secure an individual in the best interests of the
company against the concerns of investors about the quantum in the
remuneration and, if considered appropriate at the time, will consult
with the companys biggest shareholders. The Remuneration
Committee will provide timely disclosure of the reward package of
any new Executive Director.
In the event that an internal candidate was promoted to the Board,
legacy terms and conditions would normally be honoured, including
pension entitlements and any outstanding incentive awards.

7 May 2013
Deirdre Mahlan
1 July 2010
Notice period
The contracts provide for aperiod of six months notice by the Executive Director or 12 months notice by the
company. Apayment may be made in lieu of notice equivalent to 12 months base salary and the cost to the
company of providing contractual benefits (excluding incentive plans). The service contracts also provide for the
payment of outstanding pay and bonus, if Executive Directors are terminated following atakeover, or other
change of control of Diageo plc.
If, on the termination date, the Executive Director has exceeded his/her accrued holiday entitlement, the value
of such excess may be deducted by the company from any sums due to him/her, except to the extent that such
deduction would subject the Executive Director to additional tax under Section 409A of the Code (in the case of
Ivan Menezes). If the Executive Director on the termination date has accrued but untaken holiday entitlement, the
company will, at its discretion, either require the Executive Director to take such unused holiday during any notice
period or make apayment to him/her in lieu of it, provided always that if the employment is terminated for cause
then the Executive Director will not be entitled to any such payment. For these purposes, salary in respect of one
day of holiday entitlement will be calculated as 1/261 of salary.
Mitigation
The Remuneration Committee may exercise its discretion to require aproportion of the termination payment
tobe paid in instalments and, upon the Executive Director commencing new employment, to be subject to
mitigation except where termination is within 12 months of atakeover, or within such 12 months the Executive
Director leaves due to amaterial diminution in status, or (in the case of Deirdre Mahlan) is located permanently
outside the United Kingdom and Ireland.
Annual incentive plan

(AIP)
Where the Executive Director leaves for reasons including retirement, death in service, disability, ill-health, injury,
redundancy, transfer out of the group and other circumstances at the Remuneration Committees discretion
(Good Leaver Reasons) during the financial year, they are usually entitled to an incentive payment pro-rated
forthe period of service during the performance period, which is typically payable at the usual payment date.
Wherethe Executive Director leaves for any other reason, no payment will be made.
The amount is subject to performance conditions being met and at the discretion of the Committee.
TheCommittee has discretion to determine an earlier payment date, for example on death in service.
Diageo 2014 long term

incentive plan (DLTIP)
When an Executive Director leaves for any reason other than Good Leaver Reasons, all unvested awards generally
lapse immediately. In cases where Good Leaver Reasons apply, awards vest on the original vesting date unless the
Remuneration Committee decides otherwise (for example in the case of death in service). The retention period for
vested awards continues for all leavers other than in cases of disability, ill health or death in service, unless the
Remuneration Committee decides otherwise.
The proportion of the award released depends on the extent to which the performance condition is met.
Thenumber of shares is reduced on apro-rata basis reflecting the length of time the Executive Director was
employed by the company during the performance period, unless the Committee decides otherwise (for example
in the case of death in service).
On atakeover or other corporate event, awards vest subject to the extent to which the performance conditions
are met and, unless the Committee decides otherwise, the awards are time pro-rated. Otherwise the Committee,
in agreement with the new company, may decide that awards should be swapped for awards over shares in the
new company; where awards are granted in the form of options then on vesting they are generally exercisable
for12 months (or six months for approved options).
Awards may be adjusted on avariation of share capital, demerger or other similar event.
The Remuneration Committee may amend the plans, except that any changes to the advantage of participants
require shareholder approval, unless the change relates to the administration, or taxation of the plan or
participants, or is needed to ensure that the plans operate effectively in another jurisdiction.
Details of existing awards are set out in the annual report on remuneration.
Repatriation
In cases where an Executive Director was recruited from outside the United Kingdom and has been relocated to
the United Kingdom as part of their appointment, the company will pay reasonable costs for the repatriation of
Good Leavers.
Ivan Menezes
Date of service contract
Governance
Executive Director
Strategic report
Service contracts and policy on payment for loss of office (including takeover provisions)
Executive Directors have rolling service contracts, details of which are set out below. These are available for inspection at the companys
registered office.

Existing arrangements
The Remuneration Committee reserves the right to make
anyremuneration payments and payments for loss of office
notwithstanding that they are not in line with the policy set out
above where the terms of the payment were agreed (i) before the
policy or the relevant legislation came into effect or (ii) at atime when
the relevant individual was not aDirector of the company and,in the
opinion of the Committee, the payment was not in consideration for
the individual becoming aDirector of the company. For these
purposes payments includes the Committee satisfying awards of
variable remuneration and, in relation to an award over shares, the
terms of the payment which are agreed at the time the award is
granted (including awards under the PSP and SESOP). Details of
outstanding share awards are set out in the annual report on
remuneration. For the purposes of section 226D(6) of the Companies
Act, the effective date is the end of the financial year starting in 2014.
External appointments
Executive Directors may accept external appointments as
NonExecutive Directors of other companies and retain any related fees
paid to them, subject to the specific approval of the Board in each case.
CHAIRMAN OF THE BOARD AND NON-EXECUTIVE
DIRECTORS
Supports the attraction, motivation and retention of world-class
talent and reflects the value of the individual, their skills and
experience, and performance.
Operation
Fees for the Chairman and Non-Executive Directors are
normally reviewed annually.
A proportion of the Chairmans annual fee is used for the
monthly purchase of Diageo ordinary shares, which have to be
retained until the Chairman retires from the company or ceases
to be aDirector.
Fees are reviewed in the light of market practice in the top 30
companies in the FTSE100 by market capitalisation (excluding
companies in the financial services sector) and anticipated
workload, tasks and potential liabilities.
The Chairman and Non-Executive Directors do not participate
in any of the companys incentive plans or receive pension
contributions or benefits.
The Chairman and the Non-Executive Directors are eligible to
receive aproduct allowance or cash equivalent at the same
level as the Executive Directors.
All Non-Executive Directors have letters of appointment.
Asummary of their terms and conditions of appointment is
available at www.diageo.com. The Chairman of the Board,
DrFranz B Humer, commenced his appointment on 1 July 2008.
Dr Humer had aletter of appointment for an initial five year term
from 1 July 2008 which has been extended to 30 June 2016. It is
terminable on six months notice by either party or, if terminated
by the company, by payment of six months fees in lieu of notice.
Opportunity
Fees for Non-Executive Directors are within the limits set by
theshareholders from time to time, currently an aggregate of
1,000,000, as approved by shareholders at the October 2005
AGM. This limit excludes the Chairmans fees.
Current fee levels are disclosed in the annual report
onremuneration.
Consideration of employment conditions elsewhere

inthecompany
When reviewing and determining pay for Executive Directors,
theCommittee takes into account the level and structure of
remuneration as well as salary budgets for other employees in the
group. More specifically, the Committee reviews annual salary
increase budgets for the general employee population in the United
Kingdom and North America as well as the remuneration structure
and policy for the global Senior Management population.
Diageo employs 33,000 employees and operates in more than
180 countries around the world. Given its global scale and
complexity, the Committee has not consulted directly with
employees when designing the remuneration policy for its Executive
Directors. Diageo runs annual employee surveys which give
employees the opportunity to give feedback and express their views
on avariety of topics, including remuneration. Any comments
relating to Executive Directors remuneration are fed back to the
Remuneration Committee.
Consideration of shareholder views
The Committee values the continued dialogue with Diageos
shareholders and engages directly with them and their
representative bodies at the earliest opportunity when setting out
Diageos remuneration policy and approach, proposed base salary
increases for the Executive Directors and targets for the long term
incentive plan award. Last year, feedback from shareholders resulted
in the simplification of the companys long term incentive vehicles
with an enhanced malus provision and an additional retention
period. More recently, the company has engaged with shareholders
about the base salary proposals for 2015, the change in weightings
under the annual incentive plan for the year ending 30 June 2016,
long term incentive plan targets for awards to be made in 2015 and
the introduction of free cash flow in replacement of the operating
margin improvement measure, as well as the vesting of legacy long
term incentive awards to the Chief Executive Officer.

Strategic report
ANNUAL REPORT ON REMUNERATION

Single total figure of remuneration for Executive Directors (audited)
The table below details the Executive Directors remuneration for the year ended 30 June 2015.
Ivan Menezes(i)
Fixed pay
Salary
Deirdre Mahlan
2015
000
2015
000
2014
000
2014
000
2015
000
2014
000
968
$1,520
933
$1,520
727
706
(ii)
Benefits
155
$243
456
$744
34
40
Pension(iii)
458
$720
411
$670
275
258
1,581
$2,483
1,800
$2,934
1,036
1,004
535
$840
170
$277
428
130
1,451
$2,278
1,158
$1,887
872
1,120
$2
1,620
$2,640
35
1,406
1,452
$2,280
2,778
$4,527
907
2,526
3,568
$5,603
4,748
$7,738
2,375
3,664
Total fixed pay

Performance related pay
Long term incentives (iv)
Value delivered through performance
Value delivered through share price growth
Total long term incentives
Other incentives
(v)
Total remuneration for Executive Director appointment
Governance
Annual incentive
Other performance related pay

(Granted prior to appointment as Executive Director)
Long term incentives (vi)
354
$555
2,583
$4,211
TOTAL SINGLE FIGURE
3,922
$6,158
7,331
$11,949
2,375
3,664
Notes
(i) The amounts shown in sterling are converted using the cumulative weighted average exchange rate for the respective financial year. For the year ended 30 June 2015 the
exchange rate was 1 = $1.57 and for the year ended 30 June 2014, the exchange rate was 1 = $1.63.
(ii) Benefits is the gross value of all benefits. Ivan Menezes relocated to the United Kingdom on 1 January 2014 and the taxable benefits include company-paid assistance, fees and
the tax gross-up on the benefit in respect of the sale of his home in the United States (96k), which completed in the year ended 30 June 2015. Other taxable benefits include
financial counselling (16k), medical insurance (16k), company car allowance (16k), contracted car service (4k), product allowance, flexible benefits allowance and life and
long term disability cover. Deirdre Mahlans benefits include company car allowance (16k), contracted car service (5k), financial counselling (7k), product allowance, medical
insurance and life cover.
(iii) Pension benefits earned during the year represent the increase in the pension fund balances over the year in the Diageo North America Inc. pension plans over and above the
increase due to inflation. As Ivan Menezes has been adeferred member of the UK Diageo Pension Scheme (DPS) since 31 January 2012, and receives standard statutory increases
to his deferred pension the UK pension amount that accrued over the two years in excess of inflation is nil.
(iv) Long term incentives represent the estimated gain delivered through options and performance shares where performance conditions have been met in the financial year.
For 2015, Value delivered through performance represents performance shares awarded in 2012 under the PSP due to be released in October 2015, calculated using the share
price at grant after applying the performance condition. This also includes the value of accrued dividend shares. Value delivered through share price growth is the estimated
additional value generated through share price growth for performance shares due to be released in October 2015. Though the outcome of the performance conditions is
known, the share price on the vesting date is estimated, using the average market value of Diageo shares between 1 April and 30 June 2015 (1851 pence for ordinary shares and
$113.74 for ADRs) for the purpose of this calculation. There is no gain on share options awarded in 2012 under the SESOP as the performance condition was not met. Long term
incentives for 2014 have been adjusted for the share price on 22 September 2014 (1817 pence for ordinary shares and $118.58 for ADRs). For further information on the SESOP and
PSP performance conditions and vesting outcomes please refer to the LTIPs awards vesting in the year ended 30 June 2015 section of the report on page 73.
(v) Other incentives include the face value of awards made under all-employee share plans. Awards do not have performance conditions attached.
(vi) Ivan Menezes retains interests in long term incentive awards that were granted to him in 2012, prior to joining the board under below-board plans (Discretionary Incentive Plan),
details of which are shown on page 74. The value of the part of the award based on performance for the year ended 30 June 2015 is shown in the table above and calculated on
the basis of the average market value of Diageo shares between 1 April and 30 June 2015 ($113.74). The value of the part of the award based on continuing employment for the
year ended 30 June 2015 is not included in the table above and amounts to 14,642 ADRs. For 2014, long term incentives refers to an award made in 2011 under the Discretionary
Incentive Plan, prior to joining the Board, and the value has been restated to account for the share price on 22 September 2014 (1817 pence for ordinary shares and $118.58 for
ADRs). Details of the performance conditions that applied to the 2011 award were disclosed in the 2014 Directors remuneration report.

Salary
Salary increases to be applied in the year ending 30 June 2016
In July 2015, the Remuneration Committee reviewed base salaries for senior management and agreed new salaries which will apply from
1October 2015. In determining these salaries, the Remuneration Committee took into consideration anumber of factors including general
employee salary budgets and employment conditions, individual performance and experience, and salary positioning relative to internal
andexternal peers. The overall budgeted salary increase for the year ended 30 June 2016 is 2.5% of base salary for the business in the
UnitedKingdom and 3% inNorth America.
The Committee considered very carefully the total remuneration positioning of the Chief Executive and Chief Financial Officer, the salary
budget for all employees in the United Kingdom and the expectations of shareholders with respect to pay restraint. As aresult, and for the
second consecutive year for the Chief Executive, the Chief Executive and the Chief Financial Officer agreed that their base salaries would
remain unchanged in October 2015.
Ivan Menezes
Salary at 1 October (000)

Base salary
% increase (over previous year)
Deirdre Mahlan
2015
2014
2015
2014
$1,520
$1,520
732
732
0%
0%
0%
2.5%
Annual incentive plan (AIP) (audited)

AIP payout for the year ended 30 June 2015
The Remuneration Committee assessed the performance of Ivan Menezes and Deirdre Mahlan against their specific objectives and concluded
that the objectives were partially met. The overall level of performance achieved resulted in an AIP award equating to 55% of base salary for Ivan
Menezes and 59% of base salary for Deirdre Mahlan. The following table illustrates how the outcomes for the different bonus measures
contribute to the overall bonus payout. The actual awards received by the Executive Directors are shown in the table single total figure of
remuneration on page 71.
AIP outcome
Weight
(% of
maximum)
Target
Actual
Payout
(% of
maximum)
Organic net sales (% growth)
30%
4.0%
0.2%
0.0%
Profit before exceptional items and tax (% growth)
35%
6.0%
0.9%
0.0%
Operating cash conversion(ii)
25%
100.0%
109.3%
25.0%
Individual business objectives (IBOs)
A range of objectives linked to individual

contribution, medium term strategic goals
10% and the delivery of the Performance Ambition.
Measures
(i)
partially met(iii)
100%
3.4%
28.4%
(i) Performance measures under the AIP are calculated using 2015 budget exchange rates in line with management reporting and exclude the impact of of IAS 21 in respect of
short term intercompany funding balances and IAS 39 in respect of market value movements as recognised in net finance charges and any exceptional items. USL has been
excluded from both the AIP targets and actuals for the year ended 30 June 2015.
(ii) Operating cash conversion is calculated by dividing operating profit before depreciation, amortisation, impairment and exceptional items by cash generated from operations
adjusted for cash inflows/outflows in respect of exceptional items, dividends, maturing inventories andpost employment payments in excess of the amount charged to
operating profit. The ratio is stated at the budget exchange rate of the respective year in line with management reporting.
(iii) For Ivan Menezes, the IBO outcome was driven by the successful delivery of key financial measures in USL, strengthening routes to consumer in key markets and building
corporate reputation through critical initiatives such as responsible drinking and employee engagement. For Deirdre Mahlan, the IBO outcome was driven by her contribution
to the delivery of a strong performance in cash conversion, progress against the supply chain and route to customer enhancements, delivery of the USL financial plan and
strengthening the global finance and business services function.
AIP design for the year ending 30 June 2016

The measures and targets used in the AIP are reviewed annually by
the Remuneration Committee and are chosen to drive financial and
individual business performance goals related to the companys short
term strategic operational objectives. The AIP design for the year
ending 30 June 2016 will comprise of afour-measure structure
(weightings in brackets):
Profit before exceptional items and tax (% growth) (25%):
stretching profit targets drive operational efficiency and influence
the level of returns that can be delivered to shareholders through
increases in share price and dividend income;
Net sales (25%): year-on-year net sales growth is akey

performance measure;
Operating cash conversion (30%): ensures focus on efficient
conversion of profits into cash; and
Individual business objectives (20%): are measurable deliverables
that are specific to the individual and are focused on supporting
the delivery of key strategic objectives.
Details of the targets for this performance period will be disclosed
retrospectively in next years annual report on remuneration, as soon
as they are no longer deemed commercially sensitive by the Board.

Vesting of 2012 SESOP awards
Target
For the part of the award subject to the TSR condition to vest, there
must be an improvement in the underlying financial performance of
the company (i.e. growth in organic net sales and total organic
operating margin improvement). In addition, the Remuneration
Committee must be satisfied that aminimum level of performance in
both organic net sales and organic operating margin has been met
before any of the award under either measure can be released.
Governance
SESOP
On 1 October 2012, Ivan Menezes and Deirdre Mahlan received
awards of 46,575 (ADRs) and 146,299 (ordinary shares) market price
options, respectively, under the SESOP. Awards were subject to
aperformance condition based on compound annual growth in
adjusted eps over athree-year period. For the purpose of the SESOP,
an adjusted measure of eps is used to ensure that elements such as
exceptional items and the impact of movements in exchange rates
are excluded from year on year comparisons of performance.
Optionsonly vest when stretching adjusted eps targets are achieved.
Vesting is on apro rata basis ranging from athreshold level of 25%
toamaximum level of 100%.
The adjusted eps growth targets and actual performance for the
2012 SESOP awards are set out below:
PSP
On 1 October 2012, Ivan Menezes and Deirdre Mahlan received
awards of 54,927 (ADRs) and 134,653 (ordinary shares) performance
shares, respectively, under the PSP. Awards vest after athree-year
period subject to the achievement of specified performance tests.
Notional dividends accrue on awards and are paid out either in cash
or shares in accordance with the vesting schedule.
For the 2012 awards, the primary performance test is split
between three equally weighted performance measures:
1) A comparison of Diageos three-year total shareholder return (TSR)
the percentage growth in Diageos share price (assuming all
dividends and capital distributions are re-invested) with the TSR
of apeer group of international drinks and consumer goods
companies. TSR calculations are converted to acommon currency
(US dollar);
2) Growth in organic net sales on acompound annual basis; and
3) Total organic operating margin improvement.
Strategic report
Long term incentive plans (LTIPs) (audited)

LTIP awards vesting in the year ended 30 June 2015
Until 30 June 2014, long term incentives were acombination of share
options under the Senior Executive Share Option Plan 2008 (SESOP)
and share awards under the Performance Share Plan 2008 (PSP).
Awards were designed to incentivise Executive Directors and senior
managers to deliver long term sustainable performance. Awards
made under both sets of plans were subject to performance
conditions normally measured over athree-year period. As approved
by shareholders at the AGM in September 2014, these plans were
replaced by the Diageo Long Term Incentive Plan (DLTIP) for awards
from 2014 onwards.
Vesting
(% maximum)
8%
25%
Maximum
12%
100%
Actual compound annual adjusted eps

growth over 1 July 2012 30 June 2015
4.1%
0.0%
Accordingly, the 2012 award, which is due to vest in October 2015,

hasnot met the performance condition and none of the shares
under the award will vest.
Threshold

The targets and vesting profile for the PSP awards granted in October 2012 are shown in the following table:
Vesting of 2012 PSP awards
Threshold
Mid-point
Maximum
Actual
Vesting
(% maximum)
Organic net sales (CAGR)
5%
6.5%
8.0%
1.8%
0.0%
100bps
100.0%
150bps
175bps
177bps
Medium ranking
(ninth)
Upper quintile
(third or above)
13th
25%
62.5%
100%

Relative total shareholder return
Vesting (% of maximum)
0.0%
33.3%
For operating margin and net sales, there is straight line vesting between threshold and the mid-point, and between the mid-point and the
maximum. The full vesting profile for TSR is shown below:
Vesting profile
for PSP awards
Vesting profile
for DLTIP
performance
share awards
from 2015
100%
100%
4th
95%
5th
75%
6th
65%
TSR ranking (out of 17)
1st, 2nd or 3rd
TSR peer group (16 companies)
AB Inbev
Mondelz International
95%
Brown Forman
Nestl
75%
Carlsberg
PepsiCo
65%
Coca-Cola
Pernod Ricard
7th
55%
55%
Colgate-Palmolive
Procter & Gamble
8th
45%
45%
Groupe Danone
Reckitt Benckiser
9th
25%
20%
Heineken
SABMiller
0%
0%
Kimberly-Clark
Unilever
10th or below
On the basis of this performance, the 2012 PSP award, which is due to vest in October 2015, has partially met the performance conditions and,
consequently, the shares under award will vest at 33.3% of the initial award.
The Committee has taken into consideration all factors regarding the quality of the underlying performance of the business at the end of the
performance period, including the companys underlying level of sell out performance, the holding of market share across total brands in each year
of the performance period and the maintenance of brand investment, and is satisfied that the level of vesting is warranted.
DIP
Ivan Menezes retains interests in awards that were granted to him in 2012 prior to his appointment as Executive Director under the DIP,
totalling 117,142 ADRs. 50% of the 2012 DIP award is subject to meeting performance conditions based on the financial measures under the
long term incentive plan over the three-year periods ending 30 June 2015, 30 June 2016, 30 June 2017 and 30 June 2018 and the remaining
50% is subject to continued satisfactory employment. The financial measures under the performance part of the award are equally weighted.
Actual performance for the first tranche of the 2012 DIP award (i.e. the tranche based on performance over the three years to 30 June 2015)
versus target is set out below:
Vesting of performance-based tranche 1 of March 2012 DIP award
Performance measures (equally weighted)
Organic net sales growth (CAGR)
Target
Vesting
Actual (% of maximum)
6.50%
1.8%
0%
150 bps
177 bps
33.3%
Compound annual adjusted eps growth
10%
4.1%
Vesting (% of maximum)
0%
33.3%
As the table shows, 33.3% of the performance related ADRs under the first tranche of the 2012 DIP award will vest in March 2016, subject to
continuing employment. The total award that will vest to Ivan Menezes in March 2016 will therefore be 66.6% of the first tranche (including the
ADRs that vest on time only), or 19,523 ADRs, provided he remains employed at the time of vesting. The Committee has assessed the
underlying performance of the business at the end of the performance period and is satisfied that this level of vesting is warranted. The value
of the part of the award based on performance and vesting in March 2016 is included in the single total figure of remuneration.
DLTIP awards made during the year ended 30 June 2015 (audited)
On 25 September 2014, Ivan Menezes and Deirdre Mahlan received awards of 45,447 (ADRs) and 140,590 (ordinary shares) performance shares,
respectively, and 45,447 (ADRs) and 140,590 (ordinary shares) market price options, respectively under the DLTIP; details are provided in the
table on the following page. The three-year period over which performance will be measured is 1 July 2014 to 30 June 2017. The performance
measures are the same as for the 2012 awards. 20% of the award will vest at threshold, with straight-line vesting up to 100% if the maximum
level of performance is achieved.

Date of grant
Ivan Menezes
25/09/2014
DLTIP share options
ADR
45,447
Ivan Menezes
25/09/2014
DLTIP performance shares
ADR
45,447
Deirdre Mahlan
25/09/2014
DLTIP share options
Ord
140,590
Deirdre Mahlan
25/09/2014
DLTIP performance shares
Ord
140,590
Award/
exercise price
Face value
000
Face value
(% of salary)
$117.55
$5,342
375%
$125.42
$5,700
375%
1796p
2,525
360%
1874p
2,635
360%
DLTIP awards to be made in the year ending 30 June 2016

The long term incentive plan (DLTIP) was approved by shareholders at the AGM in September 2014.
The long term incentive plan measures are reviewed annually by the Remuneration Committee and are selected to reward long term
consistent performance in line with Diageos business strategy and to create alignment with the delivery of value for shareholders. The DLTIP
measures for awards to be granted in September 2015 are:
Relative total shareholder return: reflects the value of share price growth plus dividends, thus measuring the value returned on
shareholderinvestments;
Governance
The table above specifies the number of performance shares and share options initially awarded under the DLTIP. The proportion of the
awards that will vest is dependent upon the achievement of performance conditions, and the actual value may be nil. The vesting outcomes
will be disclosed in the 2017 report.
The face value of each award has been calculated using the award/exercise price at time of grant. In accordance with the rules, the number
of performance shares granted under the DLTIP was calculated by using the average closing share price for the last six months of the preceding
financial year (1874 pence for ordinary shares and $125.42 for ADRs). In accordance with the plan rules, the exercise price and the number of
options granted under the SESOP was calculated using the average closing share price of the three days preceding the grant date (1796 pence
for ordinary shares and $117.55 for ADRs). The share price on the date of grant was 1779 pence for ordinary shares and $115.80 for ADRs.
Details of the operation of the DLTIP are provided under the section on long term incentive plans.
Strategic report
Plan
Awards made
Share type during the year
Executive Director
Organic net sales: sustained year-on-year organic net sales growth is akey performance measure;
Cumulative free cash flow: measures the efficiency of cash management; and
Adjusted eps growth: reflects profitability and is akey measure for shareholders.
The table below outlines the targets and the vesting profile for these awards. The measures are equally weighted, with performance shares
subject to performance against total shareholder return, net sales and cumulative free cash flow, and share options subject to performance
against adjusted eps growth. Performance will be tested over three financial years, beginning with the year ending 30 June 2016.
Threshold
Median ranking
(ninth)
Performance shares
Share options
Organic net sales

(CAGR) (25%)
Cumulative
free cash flow
(25%)
Adjusted eps growth

(CAGR) (25%)
Vesting
profile
3.0%
5,000m
4.0%
20%
Mid-point
4.5%
6,000m
6.5%
60%
Maximum
Upper quintile
(third or above)
6.0%
7,000m
9.0%
100%
Relative total
shareholder
return (25%)
It is intended that aperformance share award of 375% of base salary and an award of market price share options of 125% of base salary
(inperformance share equivalents; one market price option is valued at one-third of aperformance share) will be made to Ivan Menezes
inSeptember 2015.
It is intended that Deirdre Mahlan will be awarded aperformance share award of 360% of base salary and an award of market price share
options of 120% of base salary (in performance share equivalents) in September 2015.
Benefits
Benefits provisions for the Executive Directors continue to be in line with the information set out in the future policy table.
Pension arrangements (audited)
Ivan Menezes and Deirdre Mahlan are members of the Diageo North America Inc. Supplemental Executive Retirement Plan (SERP) with an
accrual rate of 40% and 35% of base salary, respectively. The SERP is an unfunded, non-qualified supplemental retirement programme. Under
the plan, accrued company contributions are subject to quarterly interest credits. Under the rules of the SERP, they can withdraw the balance
of the plan in the form of five equal annual instalments or alump sum upon reaching age 55 (Deirdre Mahlan) and after having left service
with Diageo (within six months of separation from service).
Ivan Menezes and Deirdre Mahlan participated in the US Cash Balance Plan and the Benefit Supplemental Plan (BSP) until August 2012
andJune 2010, respectively and have accrued benefits under both plans. The Cash Balance Plan is aqualified funded pension arrangement.
Employer contributions are 10% of pay capped at the Internal Revenue Service (IRS) limit. The BSP is anon-qualified unfunded arrangement;
notional employer contributions are 10% of pay above the IRS limit. Interest (notional for the BSP) is credited quarterly on both plans.
Pension and benefits in the year ended 30 June 2015

Ivan Menezes was also amember of the Diageo Pension Scheme (DPS) in the United Kingdom between 1 February 1997 and 30 November
1999. Theaccrual of pensionable service ceased in 1999 but the linkage to salary remained until January 2012. Under the Rules of the Scheme,
thisbenefit is payable unreduced from age 60.
Upon death in service, alife insurance benefit of $3 million is payable to Ivan Menezes and alump sum of four times base salary is payable
to Deirdre Mahlan.
The table below shows the pension benefits accrued by each Director to date. Note that the accrued UK benefits for Ivan Menezes are
annual pension amounts, whereas the accrued US benefits for both Ivan Menezes and Deirdre Mahlan are aone-off cash balance amount.
30 June 2015
UK pension
000 p.a.
Executive Director
30 June 2014
US benefit
000
UK pension
000 p.a.
US benefit
000
Ivan Menezes(i)
69
4,218
68
3,409
Deirdre Mahlan(ii)
nil
1,239
nil
874
(i) Ivan Menezes US benefits are higher at 30 June 2015 than at 30 June 2014 by 809k; 505k of which is due to pension benefits earned over the year (458k of which is over and
above the increase due to inflation, see page 71) and 304k more due to exchange rate movements over the year.
(ii) Deirdre Mahlans US benefits are higher at 30 June 2015 than at 30 June 2014 by 365k; 287k of which is due to pension benefits earned over the year (275k of which is over
and above the increase due to inflation, see page 71) and 78k more due to exchange rate movements over the year.
The Normal Retirement Age applicable to each Directors benefits depends on the pension scheme, as outlined below.
Executive Director
Ivan Menezes
Deirdre Mahlan
UK benefits
(DPS)
US benefits
(Cash balance)
US benefits
(BSP)
US benefits
(SERP)
60
65
6 months after age of

leaving service

leaving service
n/a
65

leaving service
6 months after age of leaving

service, or age 55 if later
Ivan Menezes is able to take his UK pension benefits from age 58 without consent, and his benefits would not be subject to any actuarial
reduction in respect of early payment. However, this is adiscretionary policy Diageo offers that is not set out in the DPS Scheme Rules.
Performance graph and table
The graph below shows the total shareholder return for Diageo and the FTSE 100 Index since 30 June 2009 and demonstrates the relationship
between pay and performance for the Chief Executive, using current and previously published single total remuneration figures. The FTSE 100
Index has been chosen because it is awidely recognised performance benchmark for large companies in the United Kingdom.
Diageo
FTSE 100
Chief Executive total remuneration
Total shareholder return

value of hypothetical
100 holding
Chief Executive
total remuneration
million
300
30
250
25
200
20
150
15
100
10
50
5
0
0
June 2009
Chief Executive total remuneration

(includes legacy LTIP awards)
Annual incentive
(% maximum opportunity)
Long term incentives SESOP
Long term incentives PSP
June 2015
June 2010
June 2011
June 2012
June 2013
June 2014
Paul S Walsh
000
Paul S Walsh
000
Paul S Walsh
000
Paul S Walsh
000
3,231
4,449
11,746
15,557
7,331
3,922
86%
77%
74%
51%
9%
28%
100%
100%
100%
100%
71%
0%
0%
0%
65%
95%
55%
33%
Ivan Menezes(i)
000
Ivan Menezes(i)
000
(i) To enable comparison Ivan Menezes single total figure of remuneration has been converted into sterling using the cumulative average weighted exchange rate for the relevant financial year.

Salary
Benefits
Bonus
Chief Executive percentage change from 2014 to 2015
0%
(67%)
203%
Average % change for the UK and US workforce from 2014 to 2015
2%
0%
60%
Strategic report
Percentage change in remuneration of the Chief Executive

The table below shows acomparison of the percentage change in the Chief Executives remuneration to the average percentage change in
remuneration for the UK and US population from 2014 to 2015. The chosen population represents the most appropriate comparator group for
the Chief Executive, as the Committee considers salary increase budgets in these countries when reviewing Executive Directors base salaries.
Furthermore, the majority of Executive Committee members as well as the Executive Directors are on UK or US reward packages.
The percentage change for the Chief Executive is based on the remuneration of Ivan Menezes from 2014 to 2015. Benefits in both 2014and
2015 included one-off relocation payments.
UK salary, benefits and bonus data have been converted into US dollars using the cumulative weighted average exchange rate for the
respectivefinancial year. For the year ended 30 June 2015 the exchange rate was 1 = $1.57, and for the year ended 30 June 2014 the
exchangerate was 1 = $1.63.
Governance
Directors shareholding requirements and share and other interests (audited)

The beneficial interests of the Directors in office at 30 June 2015 (and their connected persons) in the ordinary shares (or ordinary share
equivalents) of the company are shown in the table below.
Ordinary shares or equivalent(i)
17 July 2015
30 June 2015
30 June 2014
(or date of
appointment,
if later)
60,532
60,097
53,197
Ivan Menezes(ii)
749,518
749,518
634,810
300%
1430%
Yes
Deirdre Mahlan(ii)
281,163
281,153
228,507
250%
710%
Yes
Shareholding
requirement
(%salary)(iv)
Shareholding
at 17 July 2015
(%salary)(iv)
Shareholding
requirement
met
Chairman
Dr Franz B Humer
Executive Directors
Non-Executive Directors
5,000
5,000
5,000
5,000
5,000
5,000

Betsy D Holden(ii)
5,052
5,052
5,052
17,400
17,400
17,400
Ho KwonPing
4,223
4,223
4,103
Philip G Scott
10,000
10,000
10,000
Nicola S Mendelsohn(iii)
5,000
5,000
Alan JH Stewart(iii)
1,500
1,500
Peggy B Bruzelius
Laurence M Danon
Notes
(i) Each person listed beneficially owns less than one percent of Diageos ordinary shares. Ordinary shares held by Directors have the same voting rights as all other ordinary shares.
(ii) Ivan Menezes, Deirdre Mahlan and Betsy D Holden have share interests in ADRs (one ADR is equivalent to four ordinary shares); the share interests in the table are stated as
ordinary share equivalents.
(iii) Nicola S Mendelsohn and Alan JH Stewart were appointed to the Board on 1 September 2014.
(iv) Both the shareholding requirement and shareholding at 17 July 2015 are expressed as apercentage of base salary as at 30 June 2015 and calculated using an average share price
for the year ended 30 June 2015 of 1847 pence.

Outstanding share plan interests (audited)
Plan name
Date of Performance
award
period
Date of
vesting
Number
of shares/
Dividends
Share price
options at
awarded
Share on date of Exercise
30June
Vested/
and
type
grant
price
2014(i) Granted exercised released
Number
Total
of shares/
number
options at of shares/
30June options in
Lapsed
2015
Ords(ii)
Ivan Menezes
SESOP(iii)
Sep 2010
2010-2013
2013
ADR
$67.84
55,512
SESOP(iii)
Sep 2011
2011-2014
2014
ADR
$76.70
51,531
ADR
$112.72
46,575
46,239
55,512
14,944
36,587
Total number of vested but unexercised share options

SESOP(v)
Oct 2012
SESOP(vi)
368,396
2012-2015
2015
Sep 2013
2013-2016
2016
ADR
$123.27
DLTIP share options Sep 2014
2014-2017
2017
ADR
$117.55
46,575
46,239
45,447
45,447
Total number of unvested share options subject to performance

PSP(iii)
Sep 2011
2011-2014
2014
ADR
553,044
$74.11
42,221
23,221
14,206
1,981
19,000
35,515
DIP(iv)
Sep 2011
2011-2014 2014-2015
ADR
$74.11
71,030
DIP(iv)
Mar 2012
2012-2019 2016-2019
ADR
$96.44
58,571
58,571
21,309
PSP(v)
Oct 2012
2012-2015
2015
ADR
$113.62
54,927
54,927
PSP(vi)
Sep 2013
2013-2016
2016
ADR
$123.08
47,484
47,484
DLTIP
performanceshares
Sep 2014
2014-2017
2017
ADR
$115.80
ADR
$96.44
45,447
45,447
Total number of unvested shares subject to performance

DIP(iii),(iv)
Mar 2012
2012-2019 2016-2019
910,952
58,571
58,571
Total number of unvested shares not subject to performance
234,284
Deirdre Mahlan
SESOP(iii)
Sep 2009
2009-2012
2012
ADR
$63.13
20,790
20,790
SESOP
Sep 2010
2010-2013
2013
Ord
1080p
199,652
199,652
SESOP
Sep 2011
2011-2014
2014
Ord
1232p
190,239
Ord
1743p
146,299
135,022
55,170
135,069
Total number of vested but unexercised share options

SESOP(v)
Oct 2012
SESOP(vi)
417,881
2012-2015
2015
Sep 2013
2013-2016
2016
Ord
1983p
DLTIP share options Sep 2014
2014-2017
2017
Ord
1796p
146,299
135,022
140,590
140,590
Total number of unvested share options subject to performance

PSP
Sep 2011
2011-2014
2014
421,911
Ord
1204p
159,574
87,765
7,607
71,809
PSP(v)
Oct 2012
2012-2015
2015
Ord
1772p
134,653
134,653
PSP(vi)
Sep 2013
2013-2016
2016
Ord
1978p
110,241
110,241
DLTIP
performanceshares
Sep 2014
2014-2017
2017
Ord
1779p
140,590
140,590
Total number of unvested shares subject to performance

SAYE(vii)
Sep 2011
2014
385,484
Ord
960p
937
937
(i) For unvested awards this is the number of shares/options initially awarded. For exercisable share options, this is the number of outstanding options. All share options have
anexpiry date of ten years after the date of grant.
(ii) ADRs have been converted to Ords (one ADR is equivalent to four ordinary shares) for the purpose of calculating the total number of vested and unvested shares and options
at 30 June 2015.
(iii) Shares/options granted prior to the Executives appointment to the Board.
(iv) Ivan Menezes retains interests in awards that were granted to him prior to joining the Board under below-board plans (Discretionary Incentive Plan). Atotal of 188,172 ADRs was
granted in 2011 and 2012. 50% of the initial 2011 award of 71,030 ADRs lapsed in September 2014, as disclosed in the 2014 remuneration report. Of the remainder, 40% vested
in September 2014, with the remaining portion due to vest in September 2015. The 2012 award is subject to performance conditions and continuing employment and the first
tranche is due to vest in March 2016, with the remaining tranches vesting in March 2017, March 2018 and March 2019.
(v) Awards made under the PSP and SESOP in October 2012 and due to vest in October 2015 are included here as unvested share awards subject to performance conditions,
although the awards have also been included under long term incentives in the single figure of total remuneration on page 71, since the performance period ended during the
year ended 30 June 2015.
(vi) Details of the performance conditions attached to PSP and SESOP awards granted in 2013 are available in Diageos 2014 Directors remuneration report.
(vii) Options granted under the UK savings-related share options scheme.
Payments to former directors

As set out in the annual remuneration report for 2013, on retirement from the Board on 19 September 2013, Paul S Walsh was retained in arole with
the Scotch whisky industry on behalf of Diageo for aperiod of up to five years. Paul retained interests in both the 2011 and 2012 PSP and SESOP.
The vesting outcome under the 2011 PSP and SESOP, based on performance over the period 1 July 2011 to 30 June 2014, was disclosed
in detail in the 2014 annual remuneration report. In the case of Paul S Walsh, 234,810 shares (including 18,730 shares in respect of accrued
dividend shares) and 267,221 share options vested in September 2014. The share price on the vesting date was 1817p and the total value
of awards on vesting was 5,829,735.
In October 2012, Paul was awarded 304,702 shares under the PSP and 264,845 share options under the SESOP, subject to performance over
the period 1 July 2012 to 30 June 2015. As disclosed elsewhere in this report, the vesting outcome under the 2012 PSP will be 33.3% of the

Non-Executive Directors fees

The Chairmans fee was reviewed in December 2014 and, at the Chairmans request, there was no increase to his fee in January 2015. As agreed
with the Chairman, the next review of his fee is anticipated to take place in December 2016, subject to his letter of appointment, with any
changes taking effect on 1 January 2017.
The last scheduled review of fees for Non-Executive Directors was undertaken in December 2013.
Per annum fees
January
2014
000
000
500
500
84
20
30
25
84
20
30
25
Non-Executive Directors remuneration for the year ended 30 June 2015 (audited)
Fees
000
Total
000
2015
2014
2015
2014
2015
2014
500
500
12
512
505
84
84
129
84
84
114
70
70
82
82
125
82
82
110
13
6
3
35
1
5
1
1
6
9
2
8
1
11
97
90
132
119
85
119
71
71
88
91
127
90
83
121
(i) Benefits include acontracted car service, product allowance and expense reimbursements relating to travel, accommodation and subsistence in connection with the
attendance of Board meetings during the year, which are deemed by HMRC to be taxable in the United Kingdom. The amounts in the single figure of total remuneration table
above include the grossed-up cost of UK tax paid by the company on behalf of the directors. Benefits and total remuneration for the year ended 30 June 2014 have been revised
to include these taxable expenses. Directors who are not resident in the United Kingdom for five years or more have been treated as fully taxable in the United Kingdom on all
of their expense reimbursements and this accounts for the increase in the taxable benefits cost in the year ended 30 June 2015 compared to the year ended
30 June 2014.
(ii) 200,000 of Dr Franz B Humers remuneration in the year ended 30 June 2015 was used for the monthly purchase of Diageo ordinary shares, which must be retained until
heretires from the company or ceases to be aDirector for any other reason.
(iii) Nicola S Mendelsohn and Alan JH Stewart were appointed to the board on 18 September 2014.
distributions to shareholders, and the percentage change from theyear

ended 30 June 2014 to the year ended 30 June 2015. Distributions to
shareholders are total dividends. The Committee considers that there
are no other significant distributions or payments of profit or cash flow.

External appointments held by the Executive Directors
Executive Directors may accept external appointments as NonRelative importance of spend on pay percentage change
Executive Directors of other companies and retain any related fees
paidto them, subject to the specific approval of the Board in each case.
Ivan Menezes During the year ended 30 June 2015, Ivan Menezes
Staff pay
1,242
1,180 (5.0%)
served as aNon-Executive Director of Coach Inc and earned fees of
$75,000, which he retained. In line with the Coach Inc policy for outside Distributions
1,228
1,341 9.2%
to shareholders
directors, Ivan Menezes is eligible to be granted share options and
restricted share units (RSUs). During the year ended 30 June 2015, he
m
0
500
1,000
1,500
2,000
2,500
3,000
was granted 11,321 options at an option price of $33.46 and 2,301 RSUs
(including dividends received) at afair market value of $33.46 per share.
2014
2015
Deirdre Mahlan During the year ended 30 June 2015, Deirdre
Mahlan served as aNon-Executive Director of Experian plc and
earned fees of 118,675, which she retained.
Spend on pay includes exceptional restructuring costs, which were
significantly higher in the year ended 30 June 2014 than in the year
Relative importance of spend on pay
ended 30 June 2015. Spend on pay for the year ended 30 June 2015
The graph below illustrates the relative importance of spend on
includes the cost of USL employees.
pay(total remuneration of all group employees) compared with
Chairman
Dr Franz B Humer(ii)
Peggy B Bruzelius
Laurence M Danon
Betsy D Holden
Ho KwonPing
Philip G Scott
Nicola S Mendelsohn(iii)
Alan JH Stewart(iii)
Benefits(i)
000
Governance
Chairman of the Board

Base fee
Senior Non-Executive Director
Chairman of the Audit Committee
Chairman of the Remuneration Committee
January
2015
Strategic report
original award and under the 2012 SESOP will be 0% of the initial award. As aresult, in the case of Paul Walsh, 101,567 shares will vest and all
of his share options will lapse in October 2015.
Paul Walsh has no other outstanding interests under the long term incentive plan or any other share plan of the company.

Remuneration Committee
The Remuneration Committee consists of the following independent
Non-Executive Directors: Peggy B Bruzelius, Laurence M Danon,
LordDavies of Abersoch, Betsy D Holden, Ho KwonPing,
PhilipGScott, Nicola SMendelsohn and Alan JH Stewart. LordDavies
is the Chairman of the Remuneration Committee. TheChairman of
the Board and the ChiefExecutive may, by invitation, attend
Remuneration Committee meetings except when their own
remuneration is discussed. DiageosGlobal Human Resources
Director and Capability, Performance and Reward Director are also
invited from time to time by the Remuneration Committee to
provide their views and advice. The Global Human Resources Director
is not present when her own remuneration is discussed. The Chief
Financial Officer may also attend to provide performance context
tothe Committee during its discussions about target setting.
Information on meetings held and director attendance is disclosed
inthe corporate governance report.
The Remuneration Committees principal responsibilities are:
Making recommendations to the Board on remuneration policy as
applied to the Executive Directors and the Executive Committee;
During the year, Linklaters provided advice on the AIP and the
Directors remuneration report. Fees paid in relation to this advice
were 26,298. Linklaters also provide other legal advice on certain
corporate matters.
The Committee is satisfied that the Kepler Associates and
Linklaters engagement partners and teams that provide
remuneration advice tothe Committee, do not have connections
with Diageo that may impair their independence. The Committee
reviewed the potential for conflicts of interest and judged that there
were appropriate safeguards against such conflicts.
Additional remuneration survey data published by Aon Hewitt,
Towers Watson, Mercer and PwC were presented to the Remuneration
Committee during the year; Clifford Chance provided advice on the
operation of share plans.
Statement of voting
The following table summarises the details of votes cast in respect of the
resolutions on the directors remuneration policy and annual report on
directors remuneration at the 2014 AGM.
For
Against
Total
votes cast
Abstentions
1,663,866,061
43,275,688
1,707,141,749
18,288,488
97.47%
2.53%
100%
n/a
50,619,135 1,694,585,736
30,844,578
Setting, reviewing and approving individual remuneration

arrangements for the Chairman of the Board, Executive Directors
and Executive Committee members including terms and
conditions of employment;
Directors
remuneration policy
Determining arrangements in relation to termination of

employment of the Executive Directors and other designated
senior executives; and
Percentage
ofvotes cast
Making recommendations to the Board concerning the

introduction of any new share incentive plans which require
approval by shareholders.
Full terms of reference for the Committee are available at
www.diageo.com and on request from the Company Secretary.
External advisors
During the year ended 30 June 2015, the Remuneration
Committeereceived advice from Kepler Associates (a brand of
Mercer), appointed by the Committee in December 2013 following
atendering process, who provided independent advice on
remuneration best practice and senior executive remuneration.
Kepler Associates is asignatory to, and abides by, the
Remuneration Consultants Group Code of Conduct. Further details
can be found at www.remunerationconsultantsgroup.com. Keplers
parent company, Mercer, provides unrelated services to the company
in the areas of all-employee reward and retirement benefits. The
Remuneration Committee is satisfied that the advice it receives from
Kepler is independent. During the year, Kepler supported the
Committee in preparing this Directors remuneration report, provided
advice on the design of the long term incentives, and calculated the
TSR of Diageo and its peer companies for the 2011 and 2012 PSP
awards andprovided periodic updates on all outstanding
performance cycles. The fees paid to Kepler Associates in relation
to advice provided to the Committee were 86,618.
Total number
of votes
Annual report
on remuneration
Total number
of votes
Percentage
ofvotes cast
1,643,966,601
97.01%
2.99%
100%
n/a
The Committee was pleased with the level of support shown for the
remuneration policy and implementation report and appreciated the
active participation of shareholders and their representative advisory
bodies in consulting on executive remuneration matters.

Senior management options over ordinary shares

At 17 July 2015, the senior management had an aggregate beneficial
interest in 1,572,131 ordinary shares in the company and in the
following options over ordinary shares in the company:
Option
period
Ivan Menezes
921,440
1561p
2010 2024
Deirdre Mahlan
839,792
1473p
2009 2024
1,809,328
1782p
2008 2025
Other(i)
Total
3,570,560
(i) Other members of the Executive Committee and the Company Secretary.
Number
of options
Weighted
average
exercise
price
Statutory and audit requirements

This report was approved by aduly authorised Committee of the
Board of Directors, on 29 July 2015 and was signed on its behalf by
Lord Davies of Abersoch who is senior Non-Executive Director and
Chairman of the Remuneration Committee.
The Board has followed the principles of good governance as set
out in the UK Corporate Governance Code and complied with the
regulations contained in the Schedule 8 of the Large and Mediumsized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013, the Listing Rules of the Financial Conduct Authority
and the relevant schedules of the Companies Act 2006.
The Companies Act 2006 and the Listing Rules require the
Companys auditor to report on the audited information in their
report and to state that this section has been properly prepared in
accordance with these regulations.
KPMG LLP has audited the report to the extent required by the
Regulations, being the sections headed Single total figure of
remuneration for Executive Directors (and notes), Annual incentive plan
(AIP), Long term incentive plans (LTIPs), Pension arrangements, Directors
shareholding requirements and share and other interests, Outstanding
share plan interests, Non-Executive Directors remuneration and
Keymanagement personnel related party transactions.
The annual report on remuneration is subject to shareholder
approval at the AGM on 23 September 2015; the directors remuneration
policy was approved by shareholders at the 2014 AGM.
Terms defined in this remuneration report are used solely herein.
Governance
Emoluments and share interests of senior management

The total emoluments for the year ended 30 June 2015 of the Executive
Directors, the Executive Committee members and the Company
Secretary (together, the senior management) of Diageo comprising
base salary, annual incentive plan, share incentive plan, termination
payments and other benefits were 14.0 million (2014 10.4 million).
The aggregate amount of gains made by the senior management
from the exercise of share options and from the vesting of awards
during the year was 16.7 million. In addition, they were granted
917,764 performance-based share options under the Diageo Long
Term Incentive Plan (DLTIP) during the year at aweighted average
share price of 1792 pence, exercisable by 2024 and 25,376 options not
subject to performance under the DLTIP, which will vest in three
years. In addition they were granted 4,677 options over ordinary
shares under the UK savings-related share options scheme (SAYE).
They were also awarded 860,111 performance shares under the DLTIP
in September 2014, which will vest in three years subject to the
performance tests described in the section on DLTIP awards made
during the year ended 30 June 2015, 99,244 shares under the DIP,
which will vest in September 2017, and 6,344 shares not subject to
performance under the DLTIP, which will vest in September 2017.
Key management personnel related party transactions (audited)

Key management personnel of the group comprises the Executive
and Non-Executive Directors, the members of the Executive
Committee and the Company Secretary.
Diageo plc has granted rolling indemnities to the Directors and
the Company Secretary, uncapped in amount, in relation to certain
losses and liabilities which they may incur in the course of acting as
Directors or Company Secretary (as applicable) of Diageo plc or of
one or more of its subsidiaries. These indemnities continue to be in
place at 30 June 2015.
Other than disclosed in this report, no Director had any interest,
beneficial or non-beneficial, in the share capital of the company.
Saveas disclosed above, no Director has or has had any interest
inany transaction which is or was unusual in its nature, or which
isorwas significant to the business of the group and which was
effected by any member of the group during the financial year,
orwhich having been effected during an earlier financial year,
remains in any respect outstanding or unperformed. There have
been no material transactions during the last three years to which
any Director or officer, or 3% or greater shareholder, or any spouse
ordependent thereof, was aparty. There is no significant outstanding
indebtedness to the company from any Directors or officer or 3%
orgreater shareholder.
Strategic report
ADDITIONAL INFORMATION

DIRECTORS REPORT
DIRECTORS REPORT
The Directors have pleasure in submitting their Annual Report for the
year ended 30 June 2015.
Annual General Meeting
The AGM will be held at The Mermaid Conference & Events Centre,
Puddle Dock, Blackfriars, London EC4V 3DB at 2.30 pm on
Wednesday, 23 September 2015.
Directors
The Directors of the company who served during the year are shown
in the section Board of Directors and Company Secretary and
Executive Committee above.
In accordance with the UK Corporate Governance Code, other
than Laurence Danon, who will step down from the Board after the
AGM, all the Directors will retire by rotation at the AGM and offer
themselves for re-election. The Non-Executive Directors proposed
for re-election do not have service contracts. Emma Walmsley has
been appointed, as aNon-Executive Director, with effect from
1 January 2016 and will offer herself for election at the 2016 AGM.
Further details of Directors contracts, remuneration and their
interests in the shares of the company at 30 June 2015 are given in
the Directors remuneration report.
The Directors powers are determined by UK legislation and
Diageos articles of association. The Directors may exercise all the
companys powers provided that Diageos articles of association or
applicable legislation do not stipulate that any powers must be
exercised by the members.
Auditor
As disclosed in the Report of the Audit Committee, following
atender conducted during the year, PricewaterhouseCoopers LLP
were selected as auditor of Diageo. Accordingly, aresolution will be
proposed at the AGM on 23 September 2015 for the appointment
ofPricewaterhouseCoopers LLP as auditors of Diageo. KPMG LLPs
appointment will end at the conclusion of the AGM.
Disclosure of information to the auditor

The Directors who held office at the date of approval of this Directors
report confirm that, so far as they are each aware, there is no relevant
audit information of which the companys auditor is unaware; and
each Director has taken all reasonable steps to ascertain any relevant
audit information and to ensure that the companys auditor is aware
of that information.
Corporate governance statement
The corporate governance statement, prepared in accordance with
rule 7.2 of the Financial Conduct Authoritys Disclosure and
Transparency Rules, comprises the following sections of the Annual
Report: the Corporate governance report, the Report of the Audit
Committee and the Additional information for shareholders.
Significant agreements change of control
The following significant agreements contain certain termination and
other rights for Diageos counterparties upon achange of control of
the company.
Under the agreement governing the companys 34% investment
in Mot Hennessy SNC (MH) and Mot Hennessy International SAS
(MHI), if acompetitor (as defined therein) directly or indirectly takes
control of the company (which, for these purposes, would occur if
such competitor acquired more than 34% of the voting rights or
equity interests in the company), LVMH Mot Hennessy Louis
Vuitton SA (LVMH) may require the company to sell its shares in
MHand MHI to LVMH.
The master agreement governing the operation of the groups
regional joint ventures with LVMH states that upon achange of
control of the company (being, for these purposes, the acquisition by
athird party of 30% or more of the issued share capital having voting
rights in the company), LVMH may either appoint and remove the
chairman of each joint venture entity governed by such master
agreement, who shall be given acasting vote, or require each joint
venture entity to be wound up.

DIRECTORS REPORT
Strategic report
Other information
Other information relevant to the Directors report may be found in the following sections of the Annual Report:
Information (including that required by UK
Listing Authority Listing Rule 9.8.4)
Location in Annual Report
Directors indemnities andcompensation
Directors remuneration report; Financial statements note 20 Related party transactions
Dividends
Strategic report Unaudited financial information and group financial review
Employment Policies
Strategic report Sustainability & responsibility; Strategic report Sustainability & responsibility review
Events since 30 June 2015
Not applicable
Financial risk management
Financial statements note 15 Financial instruments and risk management
Future developments
Chairmans statement; Chief Executives Statement; Market Dynamics
Greenhouse gas emissions
Strategic report Sustainability & responsibility review Environment
Political donations
Corporate governance report
Purchase of own shares
Additional information for shareholders Repurchase of own shares; Financial statements note 17 Equity
Research and development
Financial Statements note 3 Operating costs
Review of the business & principal risks and

uncertainties
Chief Executives statement; Strategic report and Risk Management and principal risks
Share capital structure, voting and other rights
Additional information for shareholders Share capital and Articles of association; Financial statements
note 17 Equity
Share capital employee share plan voting rights
Financial statements note 17 Equity
Shareholdings in thecompany
Additional information for shareholders Sharecapital
Sustainability andresponsibility
Strategic report How we will deliver our ambition: Sustainability & responsibility; Strategic report
Sustainability & responsibility review
Interest capitalised
Not applicable
Publication of unaudited financial information
Unaudited information
Details of long term incentive schemes
Directors remuneration report
Waiver of emoluments by adirector
Not applicable
Waiver of future emoluments by adirector
Not applicable
Non pre-emptive issues of equity for cash

(including in respect of major unlisted subsidiaries)
Not applicable
Parent participation in aplacing by alisted

subsidiary
Not applicable
Contracts of significance
Not applicable
Provision of services by acontrolling shareholder
Not applicable
Shareholder waivers of dividends
Note 17 Equity
Shareholder waivers of future dividends
Note 17 Equity
Agreements with controllingshareholders
Not applicable
The Directors report of Diageo plc for the year ended 30 June 2015 comprises these pages and the sections of the Annual Report referred to
under Directors, Corporate governance statement and Other information above, which are incorporated into the Directors report by reference.
In addition, certain disclosures required to be contained in the Directors report, have been incorporated into the Strategic report as set out in Other
information above.
The Directors report was approved by aduly appointed and authorised committee of the Board of Directors on 29 July 2015 and signed on its
behalf by Paul D Tunnacliffe, the Company Secretary.
Additional information for shareholders Articlesof association
Additional information for shareholders Articlesof association
Directors appointment and powers
Governance
Amendment of articles ofassociation

FINANCIAL STATEMENTS OF THE GROUP: INTRODUCTION AND CONTENTS
FINANCIAL
STATEMENTS:
INTRODUCTION
AND CONTENTS
INTRODUCTION
The financial statements of the group are prepared in accordance

with International Financial Reporting Standards (IFRS) as
adopted for use in the European Union (EU) and as issued
bytheInternational Accounting Standards Board (IASB).
As explained in note 2 to the consolidated financial statements,
in the year ended 30 June 2015 Diageo changed its internal
reporting structure to reflect changes made to management
responsibilities. As a result of this change, Diageo reports the
following geographical segments both for management
reporting purposes and in the external financial statements:
North America; Europe; Africa; Latin America and Caribbean;
AsiaPacific and Corporate. As a consequence of this change,
thefinancial information by geographical segments for
comparative years has been restated.
The notes to the consolidated financial statements are grouped
into five sections. Section starts with an introduction which
explains the purpose and content of that section and each
notestarts with the accounting policies and critical accounting
judgements applied to that note.
The financial statements of Diageo plc (the company) are
prepared in accordance with the Companies Act 2006 and
UKGAAP. In the year ended 30 June 2015, there were no
significant changes to the basis of preparation of the financial
statements of the company.
The financial statements also include Unaudited Financial
Information which is not required by the relevant accounting
standards or other regulations but management believes this
section provides important additional information.
CONTENTS
Independent auditors report to the
members of Diageo plc only
85
Primary statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
88
89
90
91
92
Accounting information and policies

1. Accounting information and policies
93
93
Results for the year

2. Segmental information
3. Operating costs
4. Exceptional items
5. Finance income and charges
6. Investments in associates and joint ventures
7. Taxation
8. Discontinued operations
95
95
99
100
101
102
103
105
Operating assets and liabilities

9. Acquisition and sale of businesses and purchase
of non-controlling interests
10. Intangible assets
11. Property, plant and equipment
12. Other investments
13. Post employment benefits
14. Working capital
106
Risk management and capital structure

15. Financial instruments and risk management
16. Net borrowings
17. Equity
119
119
125
126
Other financial information

18. Contingent liabilities and legal proceedings
19. Commitments
20. Related party transactions
21. Principal group companies
129
129
132
132
133
Financial statements of the company
134
Unaudited financial information
140
106
109
111
113
113
117

FINANCIAL STATEMENTS OF THE GROUP: INDEPENDENT AUDITORS REPORT
OPINION AND CONCLUSIONS ARISING FROM OUR AUDIT

1. Our opinion on the financial statements is unmodified
We have audited the financial statements of Diageo plc for the year
ended 30 June 2015 set out on pages 88 to 139. In our opinion:
the financial statements give atrue and fair view of the state of
the groups and of the parent companys affairs as at 30 June 2015
and of the groups profit for the year then ended;
the group financial statements have been properly prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU);
the parent company financial statements have been properly

prepared in accordance with UK Accounting Standards; and
the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006; and, as regards the
group financial statements, Article 4 of the IAS Regulation.
2. Separate opinion in relation to IFRS as issued by the IASB
As explained in the accounting policies set out in the group financial
statements, the group, in addition to complying with its legal
obligation to apply IFRS as adopted by the EU, has also applied IFRS
as issued by the IASB. In our opinion, the group financial statements
comply with IFRS as issued by the IASB.
Our response: In this area our audit procedures included the

testing of controls designed and operated by the group relating
to the regular update, monitoring, analysis, and appropriate
approval of impairment model assumptions.
Our detailed testing focused particularly on those assets with

ahigher risk of material impairment, most notably, the Ypica
brand and the intangible assets acquired with United Spirits
Limited. For all higher risk assets, we challenged the
appropriateness of the key assumptions, including forecast cash
flows, long term growth rates and the discount rate by reference to
past performance; future plans by performing independent market
analysis; and performed sensitivity analysis on the impairment
models. Our assessment was based on our understanding of the
commercial prospects of the assets, identification and analysis of
changes in assumptions from prior periods, an assessment of the
consistency of assumptions, comparison of assumptions with
publicly available data, and where relevant, the historic accuracy
of the groups forecasting.
We considered the appropriateness of disclosures in relation
toimpairment sensitivities in note 10 to the financial statements.
Governance
3. Our assessment of risks of material misstatement

In arriving at our audit opinion above on the financial statements the
risks of material misstatement that had the greatest effect on our
audit were as follows:
RECOVERABILITY OF GOODWILL, DISTRIBUTION RIGHTS AND BRAND INTANGIBLE ASSETS WITH AN INDEFINITE LIFE
Refer to page 61 (Audit Committee Report) and page 109 (accounting policies and financial disclosures)
The risk: These assets future recoverability is dependent on
achieving sufficient level of future profitability. The assets are
spread across abroad range of markets and consequently forecast
cash flows are judgemental, requiring assumptions to be made
relating to differing and often complex regulatory and economic
environments as well as consumer sentiment.
These assets are most prone to the risk of impairment in the
earlyyears after acquisition as market position and synergies are
established and as distribution networks are extended under the
groups control or when there is asignificant deterioration in
economic conditions or any other external factors.
Strategic report
INDEPENDENT AUDITORS
REPORT TO THE MEMBERS OF
DIAGEO plc ONLY
BUSINESS COMBINATIONS AND THEIR PRESENTATION UNITED SPIRITS LIMITED

Refer to page 61 (Audit Committee Report) and pages 106 (accounting policies and financial disclosures)
Our response: We obtained independent valuations of the
acquired brands and tangible assets as at 2 July 2014, prepared
byexperts engaged by the group. We assessed the competence,
capabilities and objectivity of the independent valuers and assessed
the reasonableness of their conclusions having regard to the key
assumptions including forecast cash flows and discount rates.
We assessed the groups determination of the fair value of the
remaining assets and liabilities having regard to the completeness
of assets and liabilities identified and the reasonableness of
anyunderlying assumptions in their valuation.
We considered the qualifications included in the audit report
ofUSL for the years ended 31 March 2014 and 31 March 2015. We
assessed the impact of these qualifications on the completeness
and accuracy of the balance sheet of USL at 2 July 2014, the balance
sheet of USL at 30 June 2015, and the results and cash flows of USL
for the year then ended included in these financial statements. Our
procedures included a comparison of the third party investigation
report with our audit findings and enquiries with the group general
counsel. We also considered the adequacy of contingent liability
disclosures in relation to the acquisition.
The risk: The group acquired acontrolling stake in United Spirits

Limited (USL) on 2 July 2014, and has consolidated its results since
that date, recognising identifiable assets and liabilities acquired and
goodwill at fair value. The identification of the assets and liabilities
acquired and measurement of them at fair value and consequently,
the measurement of goodwill is inherently judgemental.
USL has anumber of complex historical arrangements, and
the audit reports on the financial statements for the years ended
31 March 2014 and 31 March 2015 were qualified.
The most significant qualification was in respect of loans and
advances made by USL to entities trading with the United Breweries
(Holdings) Limited, agroup of companies controlled by the former
principal shareholder of USL. Provisions have been made against the
recoverability of the relevant loans and advances and therelated
interest claims, however pending conclusion of the Boards
investigation into these transactions, the auditors report on the
financial statements was qualified in respect of the adequacy of the
provisions.
Each of these factors results in ahigher risk that the acquired
assets, liabilities and resulting goodwill may be misidentified or
incorrectly valued.

CONTINGENT LIABILITIES AND LEGAL PROCEEDINGS

Refer to page 61 (Audit Committee Report) and page 129 (accounting policies and financial disclosures)
The risk: The group has extensive international operations and, in
the normal course of business, provisions or contingent liabilities
may arise from general legal proceedings, guarantees,
government investigations, or environmental issues. The group is
adefendant in anumber of legal, customs and tax proceedings
incidental to its operations. In particular, these relate to (i) a
conditional backstop guarantee issued to Standard Chartered Bank
for up to $135 million in respect of a loan facility from Standard
Chartered to Watson Limited, acompany affiliated with Dr Vijay
Mallya and (ii) continuing claims against the group in respect of
the drug thalidomide. The amounts involved are potentially
significant and the application of accounting standards to
determine the amount, if any, to be provided as aliability is
inherently subjective.
Our response: Our audit procedures included challenging the

appropriateness of the groups assumptions having regard to
access to the security package provided in connection with the
conditional backstop guarantee and an assessment of the levels of
provisions, having regard to correspondence between the groups
external counsel and national revenue and customs authorities
and other third parties.
We assessed completeness of provisions through review of legal
expenses, discussion with the groups internal legal counsel, and
monitoring external sources of information such as industry media
to identify actual and potential non-compliance with laws and
regulations relevant to the group. In addition we obtained formal
confirmations of the status of legal cases from the groups external
counsel where appropriate and ensured that the provisions and
disclosures reflected matters covered by those confirmations.
We also assessed whether the groups disclosures detailing
significant legal proceedings adequately disclose the potential
liabilities of the group and considered the appropriateness of
disclosures in respect of other contingent liabilities.
VENEZUELAN FOREIGN EXCHANGE

Refer to page 61 (Audit Committee Report) and page 94 (financial disclosures)
The risk: The Venezuelan Bolivar (VEF) is subject to strict currency
restrictions and is not freely exchangeable. As at 30 June 2015 there
are multiple official rates of exchange of VEF to US dollars ($). The
disparity between the different rates is significant, ranging from
$1=VEF6.3 to VEF197.3. Consequently the determination of the
appropriate rate at which to consolidate the groups Venezuelan
operations has amaterial impact on the group financial statements.
In the year ended 30 June 2014, the group applied The Second
Ancillary Foreign Currency Administration System (SICAD II),
consolidating at arate of $1=VEF49.98.
The Marginal Currency System (SIMADI) was introduced
inFebruary 2015 and the SICAD II rate was withdrawn. The
introduction of the SIMADI allows for greater potential access
toforeign currency and consequently has been assessed by
the group as being the most appropriate rate to use when
consolidating their operations in Venezuela (1$=VEF197.3). This has
resulted in asignificant devaluation of Venezuelan net assets and
results in the year ended 30 June 2015.
4. Our application of materiality and an overview of the scope
of our audit
The materiality for the group financial statements as awhole was set
at 135million determined with reference to abenchmark of group
profit before taxation, of which it represents 4.6%.
We report to the Audit Committee any corrected or uncorrected
identified misstatements exceeding 7million in addition to other
identified misstatements that warranted reporting on qualitative grounds.
Materiality of the Group Financial Statements

Profit before tax
Materiality
2,933m
135m
7m
Whole financial
statements materiality
Misstatements reported
to the Audit Committee
Our response: Our audit procedures included acritical assessment

of the history of the rates at which the group has been able to
convert VEF to $, and the restrictions on the different rates
currently available to the group to determine the appropriateness
of using SIMADI when consolidating the groups Venezuelan
operations.
We also assessed the adequacy of disclosures in relation to the
change in rate and its financial impact on the group.
The group operates through asignificant number of reporting

components. Of these components, we subjected 11 to audits for
group reporting purposes and 1 to an audit of revenue. The latter
was not individually financially significant enough to require an audit
for group reporting purposes, but was included in the scope of our
group reporting work in order to provide further coverage over the
groups revenue.
The group operates four shared service centres in Hungary, the
Philippines, Kenya and Colombia, the outputs of which are included
in the financial information of the reporting components they service
and therefore they are not aseparate reporting component. Each of
the service centres is subject to specified audit procedures,
predominantly the testing of transaction processing and review of
controls. Additional audit procedures are performed at certain
reporting components to address the audit risks not covered by the
work performed over the shared service centres.

Components profits/losses
before taxation
Group net sales
12%
20%
20%
80%
Key components and shared

service centres
Group total assets
80%
Strategic report
The key components & shared service centres within the scope of our work accounted for the following percentages of the Groups results:
88%
Other components
6. We have nothing to report in respect of matters on which we

are required to report by exception
Under ISAs (UK and Ireland) we are required to report to you if, based
on the knowledge we acquired during our audit, we have identified
other information in the annual report that contains amaterial
inconsistency with either that knowledge or the financial statements,
amaterial misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
we have identified material inconsistencies between the
knowledge we acquired during our audit and the directors
statement that they consider that the annual report and financial
statements taken as awhole is fair, balanced and understandable
Under the Companies Act 2006 we are required to report to you if,
inour opinion:
adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements and part of the
Directors remuneration report to be audited are not in agreement
with the accounting records and returns; or
certain disclosures of directors remuneration specified by law
arenot made; or
we have not received all the information and explanations
werequire for our audit.
Under the Listing Rules we are required to review:
the directors statement, set out on page 59, in relation to
goingconcern;
the part of the Corporate Governance Statement on pages 56 to 59
relating to the companys compliance with the ten provisions of the
2012 UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
SCOPE OF REPORT AND RESPONSIBILITIES
As explained more fully in the Directors Responsibilities Statement set
out on page 59, the directors are responsible for the preparation of
the group financial statements and for being satisfied that they give
atrue and fair view. Adescription of the scope of an audit of financial
statements is provided on the Financial Reporting Councils website
atwww.frc.org.uk/auditscopeukprivate. This report is made solely
tothe companys members as abody and is subject to important
explanations and disclaimers regarding our responsibilities, published
on our website at www.kpmg.com/uk/auditscopeukco2014b, which
are incorporated into this report as if set out in full and should be read
to provide an understanding of the purpose of this report, the work
we have undertaken and the basis of our opinions.
Paul Korolkiewicz (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
29 July 2015
the information given in the Strategic Report and the Directors

report for the financial year for which the financial statements are
prepared is consistent with the group financial statements.
the Audit Committee Report does not appropriately address

matters communicated by us to the Audit Committee.
5. Our opinion on other matters prescribed by the Companies

Act 2006 is unmodified
In our opinion:
the part of the Directors remuneration report to be audited has
been properly prepared in accordance with the Companies Act
2006; and
and provides the information necessary for shareholders to assess

the groups performance, business model and strategy; or
Governance
Revenue, group profit before tax and total group assets of other
components not in scope are represented by asignificant number of
other reporting components, none of which individually represent
more than 3% of these measures, and the majority are subject to
local statutory audits, which are not completed at the date of this
report. For these other components, we performed analysis (focusing
specifically on revenue) at the aggregated group level to re-examine
our assessment that there are no significant risks of material
misstatement within these components.
The group audit team instructed component auditors and shared
service centre auditors as to the significant areas to be covered,
including the relevant risks detailed above and the information to be
reported back. The group audit team approved the component
materialities, which ranged from 7million to 75million having regard
to the mix of size and risk profile of the group across the components.
The work on all components was performed by component auditors.
The group audit team performed the work on valuation of indefinite
lived intangible assets and post employment benefits.
The group audit team visited 5 component locations in the United
Kingdom (UK), the United States of America (US), India, China and
Hungary. Telephone and/or online meetings were also held with
these component auditors and the majority of the other key
components that were not physically visited. The findings reported
to the group audit team were discussed in more detail, and any
further work required by the group audit team was then performed
by the component auditor.

FINANCIAL STATEMENTS OF THE GROUP: CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME
STATEMENT
Notes
Year ended
30 June
2015
million
Sales
15,966
13,980
Excise duties
(5,153)
(3,722)
(3,973)
Net sales
10,813
10,258
11,303
Cost of sales
(4,610)
(4,029)
(4,416)
6,203
6,229
6,887
Marketing
(1,629)
(1,620)
(1,769)
Other operating expenses
(1,777)
(1,902)
(1,738)
2,797
2,707
3,380
373
140
(83)
Gross profit
Operating profit
Year ended
30 June
2014
million
Year ended
30 June
2013
million
15,276
Non-operating items
Finance income
244
241
259
Finance charges
(656)
(629)
(716)

Taxation

Profit for the year
175
252
217
2,933
2,711
3,057
(466)
(447)
(507)
2,467
2,264
2,550
(83)
2,467
2,181
2,550
2,381
2,331
2,452
(83)
86
(67)
98
2,467
2,181
2,550
million
million
million
2,505
2,506
2,502
12
11
15
2,517
2,517
2,517
pence
pence
pence
95.0
93.0
98.0
(3.3)
95.0
89.7
98.0
94.6
92.6
97.4
(3.3)
94.6
89.3
97.4
Attributable to:
Equity shareholders of the parent company continuing operations
discontinued operations
Non-controlling interests continuing operations
Weighted average number of shares

Shares in issue excluding own shares
Dilutive potential ordinary shares

Continuing operations
Diluted earnings per share
The accompanying notes are an integral part of these consolidated financial statements.

FINANCIAL STATEMENTS OF THE GROUP: CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 June
2015
million
Year ended
30 June
2014
million
Year ended
30 June
2013
million
group
125
(169)
119
associates and joint ventures
(10)
(19)
(2)
(11)
20
(35)
102
(147)
65
group
(345)
(1,117)
37
(205)
(294)
108
non-controlling interests
56
(120)
36
Exchange loss recycled to the income statement in respect of step acquisitions
88
269
398
(150)
30
12
(40)
59
(48)
(6)
(5)
(58)
34
(33)
18
17
11
55
85
Strategic report
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Other comprehensive income
Items that will not be recycled subsequently to the income statement
Net remeasurement of post employment plans
non-controlling interests
Tax on post employment plans
Exchange differences on translation of foreign operations
Net investment hedges

Tax on exchange differences
Governance
Items that may be recycled subsequently to the income statement
Effective portion of changes in fair value of cash flow hedges

(losses)/gains taken to other comprehensive income group
(losses)/gains taken to other comprehensive income associates and joint ventures
recycled to income statement
Tax on effective portion of changes in fair value of cash flow hedges
gains taken to other comprehensive income group
gains taken to other comprehensive income non-controlling interests
(140)
Tax on available-for-sale fair value movements
(4)
Hyperinflation adjustment
18
11
(2)
(159)
(1,107)
66
recycled to income statement
Tax on hyperinflation adjustment

Other comprehensive (loss)/income, net of tax, for the year
(57)
(1,254)
131
Profit for the year
2,467
2,181
2,550
Total comprehensive income for the year
2,410
927
2,681
2,261
1,114
2,547
149
(187)
134
2,410
927
2,681
Fair value movements on available-for-sale investments
Attributable to:
Total comprehensive income for the year
Equity shareholders of the parent company

FINANCIAL STATEMENTS OF THE GROUP: CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET

30 June 2015
million
30 June 2014
Notes
million
Intangible assets
10
11,231
7,891
Property, plant and equipment
11
3,690
3,433
65
53
2,076
3,201
Other investments
12
109
63
Other receivables
14
46
107
Other financial assets
15
292
250
189
246
13
436
million
million
Non-current assets
Biological assets
Investments in associates and joint ventures
Deferred tax assets

Post employment benefit assets
251
18,134
15,495
Current assets
Inventories
14
4,574
4,222
Trade and other receivables
14
2,435
2,499
Assets held for sale
143
8
118
Other financial assets
15
46
Cash and cash equivalents
16
472
Total assets
622
7,670
7,469
25,804
22,964
Current liabilities
Borrowings and bank overdrafts
16
(1,921)
Other financial liabilities
15
(156)
(146)
Trade and other payables
14
(2,943)
(2,800)
(1,576)
Liabilities held for sale
(3)
Corporate tax payable
(162)
(197)
Provisions
14
(105)
(132)
(5,290)
(4,851)
Non-current liabilities
Borrowings
16
(7,917)
(7,638)
15
(443)
(447)
Other payables
14
(69)
(94)
Provisions
14
(238)
(253)
(1,896)
(1,365)
13
(695)
Deferred tax liabilities

Post employment benefit liabilities
Total liabilities
Net assets
(726)
(11,258)
(10,523)
(16,548)
(15,374)
9,256
7,590
Equity
Share capital
17
Share premium
797
797
1,346
1,345
Other reserves
1,994
2,243
Retained earnings
3,634
2,438
Equity attributable to equity shareholders of the parent company

Total equity
7,771
17
6,823
1,485
767
9,256
7,590
These consolidated financial statements were approved by aduly appointed and authorised committee of the Board of Directors on
29 July 2015 and were signed on its behalf by Ivan Menezes and Deirdre Mahlan, Directors.

FINANCIAL STATEMENTS OF THE GROUP: CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Strategic report
OF CHANGES IN EQUITY
Retained earnings/(deficit)
Share
capital
million
At 30 June 2012
Capital
Share redemption
premium
reserve
million
million
Hedging
and
exchange
reserve
million
Own
shares
million
Other
retained
earnings
million
Equity
attributable
to parent
company
Total shareholders
million
million
Noncontrolling
interests
million
Total
equity
million
797
1,344
3,146
67
(2,257)
2,491
234
5,588
1,204
6,792
Total comprehensive income
(59)
2,606
2,606
2,547
134
2,681
Employee share schemes
25
(34)
(9)
(9)
(9)
Share-based incentive plans
45
45
45
45
Tax on share-based incentive plans
30
30
30
30
Acquisitions
(21)
(21)
Change in fair value of put options
(7)
(7)
(7)
(7)
Purchase of non-controlling
interests
(100)
(100)
(100)
(100)
(200)
Dividends paid
(1,125)
(1,125)
(1,125)
(100)
(1,225)
Transfers
65
65
65
(65)
797
1,344
3,146
(2,232)
3,973
1,741
7,036
1,052
8,088
(911)
2,025
2,025
1,114
(187)
927
(48)
(67)
(115)
(115)
(115)
37
37
37
37
At 30 June 2013
Shares issued
Acquisitions
(7)
(7)
(7)
(7)
Purchase of non-controlling
interests
(19)
(19)
(19)
(18)
(37)
Dividends paid
(1,228)
(1,228)
(1,228)
(88)
(1,316)
797
1,345
3,146
(903)
(2,280)
4,718
2,438
6,823
767
7,590
2,410
At 30 June 2014
(249)
2,510
2,510
2,261
149
52
(58)
(6)
(6)
(6)
35
35
35
35
Share-based incentive plans in

respect of associates
Acquisitions
641
641
(9)
(9)
(9)
(9)
Disposal of non-controlling
interests
Dividends paid
(1,341)
(1,341)
(1,341)
(72)
(1,413)
797
1,346
3,146
(1,152)
(2,228)
5,862
3,634
7,771
1,485
9,256
At 30 June 2015

Shares issued

Governance


FINANCIAL STATEMENTS OF THE GROUP: CONSOLIDATED STATEMENT OF CASH FLOWS
OF CASH FLOWS
Notes
Cash flows from operating activities

Profit for the year
Taxation
Net finance charges
Non-operating items
Operating profit
Increase in inventories
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables and provisions
Net decrease/(increase) in working capital
Depreciation, amortisation and impairment
Dividends received
Post employment payments less amounts included in operating profit
Other items
Net cash and cash equivalents consist of:

Bank overdrafts
million
2,467
466
(175)
412
(373)

million
2,797
581
2,691
(905)
2,551
16
16
16
176
3,004
130
(557)
(544)
(901)
1,790
80
(642)
7
2
(536)
(894)
9
16
16
16
17
(552)
398
220
(487)
45
143
(575)
(469)
1
(8)
(72)
1
791
(1,492)
386
(1,341)
3,380
(597)
542
3,456
million
(268)
(350)
66
629
228
(196)
(80)
52
(638)
(2)
978
(1,284)
million
2,707
117
183
(599)
(489)
2,550
507
(217)
457
83
(229)
(276)
(92)
440
183
(70)
(11)
9
9
million
2,181
83
447
(252)
388
(140)
(204)
274
47
Cash generated from operations

Interest received
Interest paid
Taxation paid
Cash flows from investing activities
Disposal of property, plant and equipment and computer software
Purchase of property, plant and equipment and computer software
Movements in loans and other investments
Sale of businesses
Acquisition of businesses
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Net purchase of own shares for share schemes
Dividends paid to non-controlling interests
Disposal of non-controlling interests
Purchase of shares of non-controlling interests
Proceeds from bonds
Repayment of bonds
Net movements on other borrowings
Equity dividends paid
Net cash outflow from financing activities
Net (decrease)/increase in net cash and cash equivalents
Exchange differences
Net cash and cash equivalents at beginning of the year
Net cash and cash equivalents at end of the year
million
(971)
2,033
39
(636)
16
(16)
(644)
(1,089)
1
(113)
(88)
(37)
1,378
(1,471)
(64)
(1,228)
(1,241)
(11)
(100)
(200)
2,100
(869)
7
(1,125)
(1,734)
(77)
(73)
532
382
(1,622)
(921)
(192)
1,645
532
(198)
594
36
1,015
1,645
472
(90)
382
622
(90)
532
1,750
(105)
1,645

FINANCIAL STATEMENTS OF THE GROUP: ACCOUNTING INFORMATION AND POLICIES
This section describes the basis of preparation of the

consolidated financial statements and the groups accounting
policies that are applicable to the financial statements as
awhole. Accounting policies, critical accounting estimates
and judgements that are specific to anote are included in
the note to which they relate. This section also explains new
accounting standards, amendments and interpretations, that
the group has adopted in the current financial year or will
adopt in subsequent years.
2014
2013
Income statement and cash flows(i)
1.57
1.63
1.57
Assets and liabilities(ii)
1.57
1.71
1.52
US dollar
Euro
Income statement and cash flows(i)
1.31
1.20
1.21
Assets and liabilities(ii)
1.41
1.25
1.17
(i) Weighted average rates

(ii) Year end rates
The group uses foreign exchange hedges to mitigate the effect of

exchange rate movements. For further information see note 15.
(c) Consolidation
The consolidated financial statements include the results of the
company and its subsidiaries together with the groups attributable
share of the results of associates and joint ventures. Asubsidiary is
anentity controlled by Diageo plc. Control is the power to direct
therelevant activities of the subsidiary that significantly affect the
subsidiarys return so as to have rights to the variable return from
itsactivities. Where the group has the ability to exercise joint control
over an entity but has rights to specified assets and obligations for
liabilities of that entity, the entity is consolidated on the basis of the
groups rights over those assets and liabilities.
2015
(b) Going concern

The group has considerable financial resources available.
At30 June 2015 the group has cash and cash equivalents of
472million and undrawn bank facilities of 2,229million, with
borrowings and bank overdrafts due within one year of 1,921million.
The group owns adiverse portfolio of beverage alcohol assets.
Withaglobally diverse customer and supplier base the directors
believe that the group is well positioned to manage its business
andfinancial risks successfully.
The directors have areasonable expectation that the group has
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the consolidated financial statements.
(d) Foreign currencies

Items included in the financial statements of the groups subsidiaries,
associates and joint ventures are measured using the currency of the
primary economic environment in which each entity operates
(itsfunctional currency). The consolidated financial statements are
presented in sterling, which is the functional currency of the
parentcompany.
The income statements and cash flows of non-sterling entities
aretranslated into sterling at weighted average rates of exchange,
other than substantial transactions that are translated at the rate
onthe date of the transaction. Exchange differences arising on the
retranslation to closing rates are taken to the exchange reserve.
Balance sheets are translated at closing rates. Exchange
differences arising on the retranslation at closing rates of the opening
balance sheets of overseas entities are taken to the exchange reserve,
as are exchange differences arising on foreign currency borrowings
and financial instruments designated as net investment hedges, to
the extent that they are effective. Tax charges and credits arising on
such items are also taken to the exchange reserve. Gains and losses
accumulated in the exchange reserve are recycled to the income
statement when the foreign operation is sold. Other exchange
differences are taken to the income statement. Transactions in
foreigncurrencies are recorded at the rate of exchange at the date
ofthetransaction.
The principal foreign exchange rates used in the translation
offinancial statements for the three years ended 30 June 2015,
expressed in US dollars and euros per 1, were as follows:
Governance
1. ACCOUNTING INFORMATION AND POLICIES

(a) Basis of preparation
The consolidated financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
foruse in the European Union (EU) and as issued by the International
Accounting Standards Board (IASB). The consolidated financial
statements are prepared on agoing concern basis under the
historical cost convention, unless stated otherwise in the relevant
accounting policy.
The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions that
affectthe reported amounts of assets and liabilities, the disclosure
ofcontingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the year. Actual results could differ from those estimates.
Strategic report
ACCOUNTING
INFORMATION
AND POLICIES

FINANCIAL STATEMENTS OF THE GROUP: ACCOUNTING INFORMATION AND POLICIES
(e) Critical accounting estimates and judgements

The critical accounting policies, which the directors consider are of
greater complexity and/or particularly subject to the exercise of
judgements, are set out in detail in the relevant notes:
Exceptional items page 100
Taxation page 103
Business combinations page 106
Brands, goodwill and other intangibles page 109
Post employment benefits page 113
Contingent liabilities and legal proceedings page 129
The following standards issued by the IASB (not yet endorsed by the
EU) have not yet been adopted by the group:
IFRS 9 Financial instruments (effective in the year ending
30 June 2019) is ultimately intended to replace IAS 39 and covers
theclassification, measurement and derecognition of financial
instruments together with anew hedge accounting model and
newimpairment methodology.
Based on apreliminary assessment the group believes that the
adoption of IFRS 9 will have no significant impact on its consolidated
results or financial position.
In the year ended 30 June 2015 asignificant judgement was made

inrespect of the exchange rate used to translate the groups
Venezuelan operations.
In February 2015, the Central Bank of Venezuela opened anew
mechanism (known as SIMADI) that allows private and public
companies to trade foreign currency with fewer restrictions than
other mechanisms in Venezuela. As aresult, the group has used the
SIMADI exchange rate to consolidate its Venezuelan operations for
the year ended 30 June 2015. For the year ended 30 June 2014, the
group applied the Sicad II exchange rate to consolidate its operations
in Venezuela.
Applying the SIMADI consolidation rate of $1=VEF197.30
(1=VEF309.76) compared to the Sicad II rate of $1=VEF49.98
(1=VEF85.47) would have reduced net assets and cash and
cashequivalents as at 1 July 2014 by 60million and 52million,
respectively, and would have reduced the previously reported
netsales and operating profit for the year ended 30 June 2014
by57million and 36million, respectively.
IFRS 15 Revenue from contracts with customers (effective in the

yearending 30 June 2019) is based on the principle that revenue
isrecognised when control of goods or services is transferred to the
customer and provides asingle, principles based five-step model to
be applied to all sales contracts. It replaces the separate models for
goods, services and construction contracts under current IFRS.
Based on apreliminary assessment the group believes that the
adoption of IFRS 15 will have no significant impact on its consolidated
results or financial position.
(f) New accounting policies

The following amendments to the accounting standards, issued
bythe IASB or International Financial Reporting Interpretations
Committee (IFRIC) and endorsed by the EU, have been adopted by
the group from 1 July 2014 with no significant impact on the groups
consolidated results, financial position or disclosures:
There are anumber of amendments to IFRS, effective for the year

ending 30 June 2016 and 30 June 2017, which are not expected
tosignificantly impact the groups consolidated results or
financialposition.
IFRIC 21 Levies
Amendment to IAS 19 Defined benefit plans: Employee contributions
Amendment to IAS 32 Offsetting financial assets and financial
liabilities
Amendment to IAS 39 Novation of derivatives and continuation of
hedge accounting
Amendment to IFRS 2 Share based payments Definition of vesting
conditions
Amendment to IFRS 3 Accounting for contingent consideration in
abusiness combination
Amendment to IFRS 3 Scope exceptions for joint ventures
Amendment to IFRS 8 Aggregation of operating segments and
reconciliation of segment assets to entitys assets
Amendment to IFRS 13 Short term receivables and payables
Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

(effective in the year ending 30 June 2017) changes the accounting
requirements for biological assets that meet the definition of bearer
plants. These will be within the scope of IAS 16 and will be subject
toall of the requirements therein. This includes the ability to choose
between the cost model and revaluation model.
The group is currently considering the impact of the amendments
on its consolidated results and financial position.

FINANCIAL STATEMENTS OF THE GROUP: RESULTS FOR THE YEAR
This section explains the results and performance of the

group for the three years ended 30 June 2015. Disclosures
are provided for segmental information, operating costs,
exceptional items, finance income and charges, the groups
share of results of associates and joint ventures, taxation and
discontinued operations. For associates, joint ventures and
taxation, balance sheet disclosures are also provided in
this section.
Diageo is an international manufacturer and distributor of premium

drinks. Diageo also owns anumber of investments in associates and
joint ventures as set out in note 6.
The segmental information presented is consistent with
management reporting provided to the executive committee (the
chief operating decision maker).
The executive committee considers the business principally from
ageographical perspective based on the location of third party sales
and the business analysis is presented by geographical segment.
In the year ended 30 June 2015 Diageo changed its internal
reporting structure to reflect changes made to management
responsibilities. As aresult of this change, Diageo reports the
following geographical segments both for management reporting
purposes and in the external financial statements: North America;
Europe; Africa; Latin America and Caribbean; Asia Pacific and
Corporate. The geographical segments Western Europe and Africa,
Eastern Europe and Turkey are no longer reported. Consequently, the
segmental information (in parts (a) and (b) below) for the two years
ended 30 June 2014 and 2013 has been restated to present the
current internal reporting structure.
From 1 July 2013, the majority of the groups supply operations
(formerly the Global Supply segment) have been integrated into
demand markets while the supply operations in the United Kingdom,
Ireland and Italy, which manufacture products for other group
Accounting policies
Sales comprise revenue from the sale of goods, royalties and rents
receivable. Revenue from the sale of goods includes excise and
other duties which the group pays as principal but excludes
amounts collected on behalf of third parties, such as value added
tax. Sales are recognised depending upon individual customer
terms at the time of despatch, delivery or when the risk of loss
transfers. Provision is made for returns where appropriate. Sales
are stated net of price discounts, allowances for customer loyalty
and certain promotional activities and similar items.
Net sales are sales less excise duties. Diageo incurs excise
duties throughout the world. In some countries excise duties are
based on sales and are separately identified on the face of the
invoice to the external customer. In others it is effectively
aproduction tax which is incurred when the spirit is removed
from bonded warehouses. In these countries excise duties are
part of the cost of goods sold and are not separately identified
onthe sales invoice.
Advertising costs, point of sale materials and sponsorship
payments are charged to marketing in operating profit when the
company has aright of access to the goods or services acquired.
companies, are operated by the International Supply Centre (ISC).

Theresults of the ISC segment are allocated to the geographical
segments for the purpose of explaining the groups performance.
The management reporting, at budget exchange rate, for the year
ended 30 June 2013 was not restated as the integration of the
non-ISC supply operations into the demand markets did not alter the
externally reported net sales and operating profit before exceptional
items of the geographical segments. The other segmental
information in note 2(b) in respect of capital expenditures and
depreciation, intangible asset amortisation and impairment for the
year ended 30 June 2013 has been restated for the change in the
reporting of the ISC.
Continuing operations also include the Corporate function.
Corporate revenues and costs are in respect of central costs,
including finance, 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 ISC. They
also include rents receivable and payable in respect of properties
notused by the group in the manufacture, sale or distribution of
premium drinks and the results of Gleneagles Hotel (disposed
on30 June 2015).
Diageo uses shared services operations, including captive and
outsourced centres, to deliver transaction processing activities for
markets and operational entities. These centres are located in
Hungary, Romania, Kenya, Colombia, the Philippines and India.
Thecaptive business service centre in Budapest also performs certain
central finance activities, including elements of financial planning and
reporting and treasury. The results of shared service operations are
recharged to the regions.
The segmental information for net sales and operating profit
before exceptional items is reported at budgeted exchange rates
inline with management reporting. For management reporting
purposes the group measures the current year at, and restates the
prior year net sales and operating profit to, the current years
budgeted exchange rates. These exchange rates are set prior to the
financial year as part of the financial planning process and provide
aconsistent exchange rate to measure the performance of the
business throughout the year. The adjustments required to retranslate
the segmental information to actual exchange rates and to reconcile
itto the groups reported results are shown in the tables below.
Thecomparative segmental information, prior to retranslation, has
notbeen restated at the current years budgeted exchange rates but
ispresented at the budgeted rates for the respective years.
In addition, for management reporting purposes Diageo presents
separately the results of acquisitions and disposals completed in the
current and prior year 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 following tables at budgeted exchange rates.
Governance
2. SEGMENTAL INFORMATION
Strategic report
RESULTS FOR
THE YEAR

(a) Segmental information for the consolidated income statement continuing operations
2015
Sales
Net sales
At budgeted exchange rates(i)
ISC allocation
Retranslation to actual
exchange rates
Net sales
Operating profit/(loss)
ISC allocation
exchange rates
Operating profit/(loss) before
exceptional items
Exceptional items
Non-operating items
Net finance charges
Share of after tax results of
Mot Hennessy
Other
2014 (restated)
Sales
Net sales
ISC allocation
exchange rates
Net sales
ISC allocation
exchange rates
exceptional items
Exceptional items
Non-operating items
Net finance charges
Mot Hennessy
Other
Africa
million
Latin
America
and
Caribbean
million
Asia
Pacific
million
ISC
million
Eliminate
intersegment
sales
million
Total
operating
segments
million
Corporate
and other
million
Total
million
4,683
1,868
1,297
4,129
1,381
(1,381)
15,886
80
15,966
3,462
25
9
2,666
34
44
1,457
1
4
1,105
26
8
1,291
903
7
1,485
(72)
(1,413)
10,053
989
82
10,135
989
(41)
3,455
(127)
2,617
(47)
1,415
(106)
1,033
12
2,213
(32)
1,381
32
(1,381)
(309)
10,733
(2)
80
(311)
10,813
1,477
(3)
10
779
12
47
329
314
1
8
303
49
7
75
1
(76)
3,277
60
(136)
4
3,141
64
(36)
(34)
(15)
(60)
(3)
(148)
(139)
1,448
(28)
1,420
804
(20)
784
318
(7)
311
263
(5)
258
356
(193)
163
(6)
(6)
3,189
(259)
2,930
(123)
(10)
(133)
3,066
(269)
2,797
373
(412)
North
America
million
Europe
million
3,909
164
11
2,933
North
America
million
Europe
million
Africa
million
Latin
America
and
Caribbean
million
3,915
4,935
1,846
1,404
1,801
1,504
(1,504)
13,901
79
13,980
3,563
44
12
2,824
3
56
1,506
1,311
10
1,446
1,595
(91)
(1,504)
10,741
47
79
10,820
47
(175)
3,444
(69)
2,814
(81)
1,430
(177)
1,144
(107)
1,347
1,504
(1,504)
(609)
10,179
79
(609)
10,258
1,535
(12)
11
838
(3)
52
366
397
333
(19)
8
84
(84)
3,553
(34)
(128)
(2)
3,425
(36)
(74)
(34)
(30)
(78)
(39)
(255)
(255)
1,460
(35)
1,425
853
(20)
833
340
(23)
317
328
(14)
314
283
(276)
7
(47)
(47)
3,264
(415)
2,849
(130)
(12)
(142)
3,134
(427)
2,707
140
(388)
Asia
Pacific
million
ISC
million
Eliminate
intersegment
sales
million
Total
operating
segments
million
Corporate
and other
million
Total
million
246
6
2,711

Global
Supply
million
Eliminate
intersegment
sales
million
Total
operating
segments
million
Corporate
and other
million
Total
million
5,074
2,014
1,741
2,109
2,648
(2,648)
15,200
76
15,276
3,707
36
2,890
49
31
1,566
14
3
1,416
66
11
1,480
119
6
2,754
(87)
(2,667)
11,146
248
76
11,222
248
(20)
3,723
(55)
2,915
(19)
1,564
(40)
1,453
(33)
1,572
(19)
2,648
19
(2,648)
(167)
11,227
76
(167)
11,303
1,445
46
864
15
30
418
2
3
480
369
22
3
82
(82)
3,658
39
(154)
3,504
39
(13)
(6)
(23)
(12)
(13)
(67)
(64)
1,478
1,478
903
(31)
872
400
(5)
395
468
468
381
(1)
380
(62)
(62)
3,630
(99)
3,531
(151)
(151)
3,479
(99)
3,380
(83)
(457)
Europe
million
4,262
Governance
Asia
Pacific
million
Strategic report
2013 (restated)
Sales
Net sales
Global Supply allocation
exchange rates
Net sales
Global Supply allocation
exchange rates
exceptional items
Exceptional items
Non-operating items
Net finance charges
Mot Hennessy
Other
Africa
million
Latin
America
and
Caribbean
million
North
America
million
230
(13)
3,057
(i) These items represent the IFRS 8 performance measures for the geographical and ISC/Global Supply segments.
(1) The net sales figures for ISC/Global Supply reported to the executive committee primarily comprise inter-segment sales and these are eliminated in aseparate column in the above segmental analysis.
Apartfrom sales by the ISC/Global Supply segment to the other operating segments, inter-segmental sales are not material.
(2) The groups net finance charges are managed centrally and are not attributable to individual operating segments.
(3) Approximately 40% of annual net sales occur in the last four months of each calendar year.

(b) Other segmental information

North
America
million
Europe
million
Africa
million
Latin
America
and
Caribbean
million
Asia
Pacific
million
Corporate
and other
million
ISC
million
Total
million
2015
95
34
140
53
42
233
41
638
Depreciation and intangible asset amortisation
(38)
(24)
(93)
(15)
(37)
(102)
(62)
(371)
Exceptional accelerated depreciation and impairment
Capital expenditure
(22)
(1)
(23)
Exceptional impairment of associate
(41)
(41)
Exceptional accelerated amortisation
(5)
(5)
2014 (restated)
Capital expenditure
65
28
154
39
25
280
51
642
Depreciation and intangible asset amortisation
(40)
(24)
(92)
(12)
(19)
(100)
(57)
(344)
(2)
(4)
(18)
(1)
(25)
Exceptional impairment of intangible assets
(260)
(260)
Capital expenditure
76
22
183
20
42
226
67
636
Depreciation, intangible asset amortisation and

impairment
(37)
(25)
(92)
(13)
(20)
(89)
(49)
(325)
2013 (restated)
Exceptional accelerated depreciation
(4)
(19)
(23)
Exceptional impairment of intangible assets
(50)
(50)
(c) Category and geographic analysis

Category analysis
Geographic analysis
Spirits
million
Beer
million
Wine
million
Ready to
drink
million
12,052
2,562
479
703
170
15,966
1,765
3,592
54
2,463
8,092
15,966
1,654
3,340
2,196
3,439
6,588
17,217
9,941
2,581
468
817
173
13,980
1,735
3,568
65
86
8,526
13,980
1,625
3,097
2,100
802
7,124
14,748
10,957
2,776
503
902
138
15,276
1,718
3,939
65
75
9,479
15,276
1,514
3,420
2,255
8,337
15,534
Other
million
Total
million
Great
Britain
million
United
States
million
Netherlands
million
India
million
Rest of
World
million
Total
million
2015
Sales(i)
Non-current assets
(ii), (iii)
2014
Sales(i)
Non-current assets(ii), (iii)
2013
Sales(i)
Non-current assets(ii), (iii)
(i) The geographical analysis of sales is based on the location of third party customers.
(ii) The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, investments
in associates and joint ventures, other investments and non-current other receivables.
(iii) The management information provided to the chief operating decision maker does not include an analysis of assets and liabilities by category and therefore is not disclosed.

Excise duties
Cost of sales
Marketing
2013
million
5,153
4,610
1,629
1,777
13,169
3,722
4,029
1,620
1,902
11,273
3,973
4,416
1,769
1,738
11,896
862
450
1,472
2,369
(200)
2,725
1,629
2,017
1,433
863
467
33
2,359
(291)
2,327
1,620
1,810
1,479
861
534
25
2,553
(228)
2,404
1,769
2,192
1,403
440
(26)
13
(15)
13,169
629
(25)
12
(10)
11,273
398
(1)
(1)
(13)
11,896
(b) Exceptional operating items

Included in the table above are exceptional operating items as follows:
2014
million
2013
million
170
31
10
30
111
36
(20)
2014
million
2013
million
3.6
3.4
3.5
2.7
1.6
7.9
2.3
1.6
7.3
2.4
1.6
7.5
0.8
0.6
1.1
0.6
0.7
0.5
0.7
10.0
0.4
9.0
1.1
10.2
(i) Audit related assurance services are principally in respect of reporting under section 404 of the
USSarbanes-Oxley Act and the review of the interim financial information.
(ii) Other services relevant to taxation principally comprise tax advice in respect of transactions.
(iii) Other assurance services comprise the aggregate fees for assurance and related services that are
related to the performance of the audit or review of the financial statements and are not reported
under total audit fees.
(iv) All other non-audit fees are principally in respect of advisory and other services in respect of
acquisitions and disposals.
(1) Disclosure requirements for auditor fees in the United States are different from those required in
the United Kingdom. The terminology by category required in the United States is disclosed in
brackets in the above table. All figures are the same for the disclosures in the United Kingdom
andthe United States apart from 0.4 million (2014 0.4 million; 2013 0.4 million) of the costs
inrespect of the review of the interim financial information which would be included in audit
related fees in the United States rather than audit fees.
Audit services by firms other than KPMG were not material in any
ofthe years presented. KPMG fees for audit services in respect of
employee pension plans were 0.4million (2014 0.3million;
2013 0.4million).
(d) Staff costs and average number of employees
Aggregate remuneration
Wages and salaries
Employers social security
Employers pension
defined benefit plans
defined contribution plans
Other post employment plans
2015
million
2014
million
2013
million
1,180
36
88
1,242
38
92
1,148
46
92
103
15
11
1,433
91
15
1
1,479
97
13
7
1,403
The average number of employees on afull time equivalent basis

(excluding employees of associates and joint ventures) was as follows:
2015
28
41
21
23
264
50
269
25
244
427
23
404
99
27
72
269
427
99
North America
Europe
Africa
Asia Pacific(ii)
ISC
Corporate and other
2,748
4,073
4,997
3,166
10,520
4,291
3,567
33,362
2014
(restated)(i)
3,120
4,056
5,252
3,002
3,985
4,431
3,509
27,355
2013
(restated)(i)
3,129
3,927
5,648
3,031
4,075
4,878
3,311
27,999
(i) In the year ended 30 June 2015 Diageo changed its internal reporting structure to reflect changes
made to management responsibilities (see note 2). As aresult comparative years have been restated.
(ii) The average number of employees in Asia Pacific in the year ended 30 June 2015 increased
primarily as aresult of consolidating USL from 2 July 2014.
Other external charges

Staff costs
Net charge in respect of
restructuring programmes
Pension changes past
service credits
Depreciation, amortisation
and impairment
Accelerated depreciation
and amortisation
Associate impairment
Brand and tangible asset
impairment
Total exceptional
operating costs (note 4)
Cost of sales
Total exceptional
operating costs (note 4)
2015
million
Audit fees of these

financialstatements
Audit of financial statements
ofsubsidiaries
Audit related assurance services(i)
Total audit fees (Audit fees)
Other services relevant to
taxation (Tax fees)(ii)
Other assurance services
(Audit related fees)(iii)
All other non-audit fees
(All other fees)(iv)
2015
million
(a) Other external charges

Other external charges include operating lease rentals for plant and
equipment of 29million (2014 30million; 2013 27million),
other operating lease rentals (mainly properties) of 87million
(2014 85million; 2013 93million), research and development
expenditure in respect of new drinks products and package design
inthe year leading up to product launch of 26million
(201424million; 2013 21million) and maintenance and
repairsof 95million (2014 72million; 2013 88million).
Thegroup has revised the disclosure of the 2014 comparative
amounts by decreasing other external charges by 523million
withacorresponding increase in raw materials and consumables.
Therevised disclosure is consistent with the current year presentation.
(c) Auditor fees

Other external charges include the fees of the principal auditor of the
group, KPMG LLP and its affiliates (KPMG):
Governance
Comprising:
Excise duties Great Britain
United States
India
Other
Increase in inventories
Raw materials and consumables
Marketing
Other external charges (a)
Staff costs (d)
Depreciation, amortisation
andimpairment
Gains on disposal of properties
Net foreign exchange losses/(gains)
Other operating income
2015
million
2014
(restated)
million
Strategic report
3. OPERATING COSTS

At 30 June 2015 the group had, on afull time equivalent basis, 32,409
(2014 26,588; 2013 28,056) employees. The average number of
employees of the group, including part time employees, for the year
was 34,179 (2014 27,958; 2013 28,545).
4. EXCEPTIONAL ITEMS
Accounting policies
IAS1 (Revised) Presentation of financial statements requires
material items of income and expense to be disclosed separately.
Critical accounting estimates and judgements
Exceptional items are those that in managements judgement
need to be disclosed by virtue of their size or nature. Such items
are included within the income statement caption to which
they relate, and are separately disclosed in the notes to the
consolidated financial statements.
2015
million
2014
million
2013
million
Global efficiency programme (a)
(47)
(98)
Supply excellence review (b)
Items included in operating profit

Restructuring
(35)
(35)
(25)
Irish brewing operations (c)
(30)
(36)
Global Supply operations
(8)
(146)
Associate impairment (e)
(41)
Brand and tangible asset

impairment (f)
(264)
(50)
Other
Korea settlement (d)
Pension changes past

servicecredits
20
(269)
(427)
(99)
Non-operating items
Step ups
103
140
Don Julio (h)
63
South Africa (i)
(10)
United Spirits Limited (g)
Sale of businesses
Bushmills (h)
Gleneagles Hotel (j)
Nuvo (k)
174
73
(83)
Other
Guarantee (l)
Exceptional items
beforetaxation
Items included in taxation (note 7)
Exceptional items in
continuingoperations
Discontinued operations net
oftaxation (note 8)
Total exceptional items
(30)
373
140
(83)
104
(287)
(182)
51
99
55
155
(188)
(127)
(83)
155
(271)
(127)
156
(146)
Attributable to:
Equity shareholders of the
parent company
Total exceptional items
(1)
(125)
155
(271)
(a) On 30 January 2014, Diageo announced its plan to restructure the

organisation and deliver further operating efficiencies. This is in line
with the principles implemented by the operating model review
announced in 2011, and includes the reorganisation of teams in the
markets working with regions and global functions, areconfiguration
of procurement, logistics and shared services and atransformation
ofinformation services. The charge is principally in respect of
redundancies in all regions and the programme was completed
by30 June 2015.
(b) In March 2013, the group announced that its Global Supply and
procurement operation will be refocused to enhance alignment
between supply operations and Diageos markets. This is
acontinuation of the principles implemented by the operating model
review announced in 2011. In addition, anumber of initiatives were
launched to consolidate and streamline the supply operations to create
greater operating efficiencies. The charge over the three years ended
30 June 2015 is principally in respect of redundancies, accelerated
depreciation and project costs in the United Kingdom, North America
and Africa and the programme was completed by 30 June 2015.
(c) The group has centralised its brewing activities in Ireland at one
site. This resulted in the closure of the breweries and associated
activities at Dundalk, Kilkenny and Waterford. In the year ended
30 June 2015 the sites at Dundalk and Kilkenny were sold and the
programme was completed.
(d) In the year ended 30 June 2015 146million was charged in
respect of settlement of several related disputes with the Korean
customs authorities regarding the transfer pricing methodology
applicable to imported products. Total payments to settle these
disputes in 2015 were 74million as 87million was paid to the
customs authorities prior to 30 June 2014, and was previously
accounted for as areceivable from Korean customs.
(e) In the year ended 30 June 2015 an exceptional impairment charge
of 41million was charged to other operating expenses in respect of
the groups 45.56% equity investment in Hanoi Liquor Joint Stock
Company. For further details see note 6.
(f) In the year ended 30 June 2014 an exceptional impairment loss of
260million in respect of the Shui Jing Fang brand and 4million in
respect of fixed assets was charged to other operating expenses
see note 10.
In the year ended 30 June 2013 an impairment loss of 50million was
charged to other operating expenses in respect of the Cacique brand.
(g) On 4 July 2013, the group acquired an additional 14.98%
investment in United Spirits Limited (USL) which increased the
groups investment in USL from 10.04% to 25.02% and triggered
achange in accounting from available-for-sale investments to
associates. As aresult, the difference of 140million between the
original cost of the investment and its fair value of 399million was
included in the income statement in the year ended 30 June 2014.
On 2 July 2014, with the completion of atender offer, the group
acquired an additional 26% investment in USL taking its investment
to 54.78% (excluding 2.38% owned by the USL Benefit Trust). From
2 July 2014 the group accounted for USL as asubsidiary with a43.91%
non-controlling interests. As aresult of USL becoming asubsidiary of
the group again of 103million arose, being the difference between
the book value of the associate prior to the transaction and its fair
value of 982million. The gain is net of a79million cumulative
exchange loss recycled from other comprehensive income and
10million transaction costs.

(j) On 30 June 2015, Diageo completed the disposal of Gleneagles Hotels

Limited to the Ennismore group.
(k) On 5 June 2013, the group disposed of its 71.25% interest in
London Group, the owner of the Nuvo brand and its 20% equity
interest in LNJ Group, LLC, the owner of the 22 Marquis brand at
aloss of $126million (83million).
Accounting policies
Net interest includes interest income and charges in respect of
financial instruments and the results of hedging transactions used
to manage interest rate risk.
Finance charges directly attributable to the acquisition,
construction or production of aqualifying asset, being an asset
that necessarily takes asubstantial period of time to get ready
forits intended use or sale, are added to the cost of that asset.
Borrowing costs which are not capitalised are recognised in
theincome statement based on the effective interest method.
Allother finance charges are recognised primarily in the income
statement in the year in which they are incurred.
Net other finance charges include items in respect of post
employment plans, the discount unwind of long term obligations
and hyperinflation charges. The results of operations in
hyperinflationary economies are adjusted to reflect the changes
in the purchasing power of the local currency of the entity before
being translated to sterling.
Interest income
Fair value gain on interest
rateinstruments
(l) In the year ended 30 June 2015 aprovision of 30million was

charged to the income statement in respect of aguarantee provided
to athird party financial institution.
162
109
99
61
115
155
223
224
254
Interest charge on bank loans

andoverdrafts
(102)
(40)
(28)
(17)
(20)
(20)
(409)
(395)
(454)
Interest charge on finance leases

Interest charge on all other
borrowings
Fair value loss on interest rate
instruments
(55)
(117)
(151)
Total interest charges
(583)
(572)
(653)
Net interest charges
(360)
(348)
(399)
13
17
Total other finance income
21
17
Net finance charge in respect

of post employment plans
indeficit (note 13)
(26)
(29)
(38)
Unwinding of discounts
(14)
(9)
(16)
2014
million
2013
million
(117)
(104)
(61)
Korea settlement
(74)
Guarantee
(30)
Thalidomide
(19)
(59)
(23)
Other finance income
(240)
(163)
(84)
Total cash payments
2013
million
Total interest income
2015
million
Exceptional restructuring
2014
million
Net finance income in respect

insurplus (note 13)
(13)
Hyperinflation adjustment
(17)
(13)
(4)
(3)
(6)
(5)
Total other finance charges
(73)
(57)
(63)
Net other finance charges
(52)
(40)
(58)
Other finance charges
Change in financial liability
Cash payments included in cash generated from operations in respect

of exceptional restructuring items, exceptional legal settlements, the
guarantee settlement and thalidomide were as follows:
2015
million
Governance
(i) On 29 May 2015, Diageo acquired the remaining 50% equity stake of
one of the groups joint ventures in South Africa. The difference between
the fair value and the book value of the 50% that Diageo already owned
is disclosed as an exceptional step up loss.
5. FINANCE INCOME AND CHARGES
Strategic report
(h) On 27 February 2015, the group completed the purchase of the

50% equity interest in Don Julio B.V. that it did not already own
(giving Diageo 100% ownership of the brand and production facility)
and the Mexican distribution business of Don Julio. As aresult of Don
Julio becoming asubsidiary of the group again of 63million (net of
transaction costs of 7 million) arose, being the difference between
the book value of the joint venture prior to the transaction and the
fair value of 115million. In addition, the group reacquired the
production and distribution for Smirnoff and Popov in Mexico.
As part of the transaction, Diageo also agreed to sell the equity
share capital in its wholly owned subsidiary, The Old Bushmills
Distillery Company Limited, resulting in an exceptional gain of
174million.

6. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Accounting policies
An associate is an undertaking in which the group has along term
equity interest and over which it has the power to exercise
significant influence. Ajoint venture is ajoint arrangement whereby
the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. The groups interest in the net
assets of associates and joint ventures is reported in investments in
the consolidated balance sheet and its interest in their results is
included in the consolidated income statement below the groups
operating profit. Investments in associates and joint ventures are
reviewed for impairment whenever events or circumstances
indicate that the carrying amount may not be recoverable. The
impairment review compares the net carrying value with the
recoverable amount, where the recoverable amount is the higher of
the value in use calculated as the present value of the groups share
of the associates future cash flows and its fair value less costs to sell.
Associates and joint ventures are initially recorded at cost
including transaction costs.
Diageos principal associate at 30 June 2015 was Mot Hennessy
(2014 Mot Hennessy and USL).
Diageo owns 34% of Mot Hennessy, the spirits and wine
subsidiary of LVMH Mot Hennessy Louis Vuitton SA (LVMH).
LVMHis based in France and is listed on the Paris Stock Exchange.
Mot Hennessy is also based in France and is aproducer and
exporter of champagne and cognac brands.
A number of joint distribution arrangements have been
established with LVMH in Asia Pacific and France, principally covering
distribution of Diageos premium brands of Scotch whisky and gin
and Mot Hennessys premium champagne and cognac brands.
Diageo and LVMH have each undertaken not to engage in any
champagne or cognac activities competing with those of
MotHennessy. The arrangements also contain certain provisions for
the protection of Diageo as anon-controlling shareholder in Mot
Hennessy. The operations of Mot Hennessy in France are conducted
through apartnership in which Diageo has a34% interest and, as
apartner, Diageo pays any tax due on its share of the results of the
partnership to the tax authorities.
For the year ended 30 June 2014 Diageo equity accounted for
itsinvestment in USL, the leading spirits company in India, as an
associate. On 2 July 2014, with the completion of the tender offer
thegroup acquired an additional 26% investment in USL taking its
investment to 54.78% (excluding 2.38% owned by the USL Benefit
Trust). From 2 July 2014 the carrying value of the associate of
790million was derecognised and the group accounted for USL
asasubsidiary with 43.91% non-controlling interests.
On 27 February 2015, Diageo acquired the 50% of Don Julio B.V. that
it did not already own and the carrying value of the joint venture of
40million was derecognised and the group accounted for Don Julio
B.V. as asubsidiary.
On 29 May 2015, Diageo acquired the remaining 50% equity stake
of one of the groups joint ventures in South Africa that it did not
already own. From that date the carrying value of the joint venture
of 22 million was derecognised and the group accounted for it as
asubsidiary.
(a) An analysis of the movement in the groups investments in
associates and joint ventures is as follows:
Mot
Hennessy
million
USL and
others
million
Total
million
2,204
317
2,521
(169)
(125)
(294)
Additions
483
483
Transfer from other investments
399
399
Share of profit after tax
246
252
Dividends
(197)
(31)
(228)
Cost less provisions

At 30 June 2013
Share of tax attributable to

shareholders
68
68
At 30 June 2014
2,152
1,049
3,201
(205)
(200)
(5)
Capital injection
21
21
Step acquisitions
(852)
(852)
164
11
175
(82)
(82)
(148)
(35)
(183)
Share of profit after tax

Transfer to assets held for sale(i)
Dividends
Share of tax attributable
toshareholders
56
56
(41)
(41)
(14)
(14)
2,010
66
2,076
Impairment charge(ii)
Share of movements in other
comprehensive income and
equity
At 30 June 2015
(i) On 28 July 2015, Diageo has agreed to dispose its equity interests in and loans to DHN Drinks,
Sedibeng Limited and Namibia Breweries Limited. The cashconsideration receivable is in excess
of the aggregate book value. The net balances have been transferred to assets held for sale in the
consolidated balance sheet as at 30 June 2015.
(ii) In the year ended 30 June 2015 an exceptional impairment charge of 41 million was charged
to other operating expenses in respect of the groups 45.56% equity investment in Hanoi Liquor
Joint Stock Company (Halico). Forecast and long term growth assumptions have been reduced
principally due to increased competition in the Vietnamese spirits market and synergies arising
at aslower rate than originally anticipated. Apre-tax discount rate of 18% (2014 17%) has been
used to calculate the net present value of the cash flows generated by Halico.
(b) Income statement information for the three years ended 30 June 2015 and balance sheet information as at 30 June 2015 and 30 June 2014
of all associates and joint ventures aggregating 100% of the results of each investment, is as follows:
2015
Mot
Hennessy(i)
million
Others
million
2014
Mot
Hennessy(i)
million
USL(ii)
million
Others
million
2013
Mot
Hennessy(i)
million
Others
million
3,215
1,147
3,329
1,188
1,164
3,463
Profit for the year
482
34
722
27
677
(12)
588
34
639
27
620
(18)
Net sales
1,058
(i) Mot Hennessy prepares its financial statements under IFRS as endorsed by the EU in euros to 31 December each year. The results are adjusted for alignment to Diageo accounting policies and are not
the same as the Wines & Spirits division of LVMH. They are translated at 1=1.31 (2014 1=1.20; 2013 1=1.21).
(ii) USL prepares its financial statements under Indian GAAP in Indian rupees to 31 March each year. The results are adjusted for alignment to Diageo accounting policies and are not the same as published
by USL. The results for the year ended 30 June 2014 were translated at 1=INR99.96.

Others
million
3,251
Non-current assets
2014
Mot
Hennessy(i)
million
166
USL(ii)
million
3,498
Others
million
2,079
647
Current assets
5,118
162
5,312
867
427
Total assets
8,369
328
8,810
2,946
1,074
(234)
(894)
(71)
(924)
(577)
Current liabilities
(1,562)
(103)
(1,558)
(909)
(302)
Total liabilities
(2,456)
(174)
(2,482)
(1,486)
(536)
5,913
154
6,328
1,460
538
Net assets
Strategic report
2015
Mot
Hennessy(i)
million
(i) Including acquisition fair value adjustments principally in respect of Mot Hennessys brands and translated at 1=1.41 (2014 1=1.25).
(ii) Including acquisition fair value adjustments principally in respect of USLs brands and translated at 1=INR102.93.
(c) Information on transactions between the group and its associates and joint ventures is disclosed in note 20.
Governance
(d) Investments in associates and joint ventures comprise the cost of shares less goodwill written off on acquisitions prior to 1 July 1998
of974million (2014 2,144million), plus the groups share of post acquisition reserves of 1,102million (2014 1,057million).
(e) The associates and joint ventures have not reported in their latest financial statements any material contingent liabilities.
7. TAXATION
Accounting policies
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between
accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax benefits are not recognised unless it is
probable that the tax positions are sustainable. Once considered to be probable, tax benefits are reviewed each year to assess whether
aprovision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or
litigation. Tax provisions are included in current liabilities. Interest and penalties on tax liabilities are provided for in the tax charge.
Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial
reporting purposes and their value for tax purposes. The amount of deferred tax reflects the expected recoverable amount and is based
onthe expected manner of recovery or settlement of the carrying amount of assets and liabilities, using the basis of taxation enacted or
substantively enacted by the balance sheet date. Deferred tax assets are not recognised where it is more likely than not that the assets
will not be realised in the future. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries
where the group is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable
future, or where no liability would arise on the remittance.
The group is required to estimate the corporate tax in each of the many jurisdictions in which it operates. The recognition of tax benefits
and assessment of provisions against tax benefits requires management judgement. In particular the group is routinely subject to tax
audits in many jurisdictions, which by their nature are often complex and can take several years to resolve. Provisions are based on
managements interpretation of country specific tax law and the likelihood of settlement. However the actual tax liabilities could differ from
the provision and in such event the group would be required to make an adjustment in asubsequent period which could have amaterial
impact on the groups profit for the year.
The evaluation of deferred tax assets recoverability requires judgements to be made regarding the availability of future taxable income.
(a) Analysis of taxation charge for the year
Rest of world
Total
2014
million
2013
million
2015
million
2014
million
2013
million
2015
million
2014
million
2013
million
75
102
63
381
361
370
456
463
433
Current tax
Current year
Adjustments in respect of prior years
(4)
(15)
(8)
(15)
(12)
12
75
98
66
366
353
379
441
451
445
(7)
(32)
(46)
11
27
82
(5)
36
10
(1)
(3)
(1)
10
(22)
21
12
19
(2)
22
(3)
19
(50)
(15)
22
46
77
25
(4)
62
78
48
51
388
399
456
466
447
507
Deferred tax
Origination and reversal of temporary differences
Changes in tax rates
Adjustments in respect of prior years
Taxation on profit from continuing operations
United Kingdom
2015
million

(b) Exceptional tax (credits)/charges

The taxation charge includes the following exceptional items:
2015
million
2014
million
2013
million
Restructuring
(21)
(34)
(14)
Korea settlement
(30)
(65)
(16)
(28)
Brand impairment
Sale of businesses
Other
(51)
(99)
(55)
2015
million
2014
million
2013
million
(c) Taxation rate reconciliation and factors that may affect future tax charges
2,933
2,711
3,057
Notional charge at UK corporationtax rate of 20.75% (2014 22.5%; 2013 23.75%)
608
610
726
Elimination of notional tax on share of after tax results of associates and joint ventures
(36)
(56)
(46)
Differences in overseas tax rates
64
33
(5)
Items not chargeable
(358)
(283)
(331)
Items not deductible
125
Profit from continuing operations before taxation
182
154
Changes in tax rates
(1)
Adjustments in respect of prioryears
(15)
31
466
447
507
Tax charge for the year
The table above reconciles the notional taxation charge calculated at the UK tax rate, to the actual total tax charge. As agroup operating in
multiple countries, the actual tax rates applicable to profits in those countries are different from the UK tax rate. The impact is shown in the
table above as differences in overseas tax rates. The groups worldwide business leads to the consideration of anumber of important factors
which may affect future tax charges, such as: the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates
imposed and tax regime reforms, acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities.
The group has anumber of tax audits ongoing worldwide but does not currently expect material additional tax exposures to arise, above
the amounts provided, as and when the audits are concluded.
(d) Deferred tax assets and liabilities
The amounts of deferred tax accounted for in the consolidated balance sheet comprise the following net deferred tax assets/(liabilities):
Property,
plant and
equipment
million
Intangible
assets
million
Post
employment
plans
million
Tax losses
million
Other
temporary
differences
million
Total
million
(164)
(1,526)
109
108
248
(1,225)
29
154
(14)
(7)
(17)
145
Recognised in income statement continuing operations
11
17
12
(45)
Recognised in income statement discontinued operations
Recognised in other comprehensive income and equity
(12)
(39)
(51)
(126)
(1,361)
100
113
155
(1,119)
11
(79)
(1)
(5)
(6)
(80)
Recognised in income statement continuing operations
(55)
14
(30)
45
(25)
Recognised in other comprehensive income and equity
(73)
25
(44)
(16)
(446)
(12)
(472)
At 30 June 2013
At 30 June 2014
Reclassification
14
41
(55)
Sale of businesses
29
(2)
33
(124)
(1,898)
81
103
131
(1,707)
At 30 June 2015
Deferred tax on other temporary differences includes items such as the thalidomide provisions, restructuring provisions, share-based
payments and intra group sales of products.

Deferred tax assets

Deferred tax liabilities
2015
million
2014
million
189
246
(1,896)
(1,365)
(1,707)
(1,119)
Discontinued operations in the year ended 30 June 2014 comprised

acharge after taxation of 83million (91million less tax of
8million) in respect of the settlement of thalidomide litigation
in Australia and New Zealand and anticipated future payments
tothalidomideorganisations.
The deferred tax assets of 189million includes 113million (2014

152million) arising in jurisdictions with prior year taxable losses.
The majority of the asset is in respect of tax losses in the United
Kingdom, which primarily arose following material pension funding
payments. It is considered more likely than not that there will be
sufficient future taxable profits to realise these deferred tax assets,
most of which can be carried forward indefinitely.
Governance
(e) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the
following tax losses:
2015
million
2014
million
Capital losses indefinite
72
73
Trading losses indefinite
74
102
Trading losses expiry dates up to 2025
Accounting policies
Discontinued operations comprise disposal groups where they
represent amajor line of business or geographical area of
operations or business activities that the group no longer
participates in or did not form part of the groups operations.
Strategic report
8. DISCONTINUED OPERATIONS
After offsetting deferred tax assets and liabilities where appropriate

within territories, the net deferred tax liability comprises:
148
176
(f) Unrecognised deferred tax liabilities

UK legislation largely exempts overseas dividends remitted from UK
tax. Atax liability is more likely to arise in respect of withholding taxes
levied by the overseas jurisdiction. Deferred tax is provided where
there is an intention to distribute earnings, and atax liability arises.
Itis impractical to estimate the amount of unrecognised deferred tax
liabilities in respect of these unremitted earnings.
The aggregate amount of temporary differences in respect of
investments in subsidiaries, branches, interests in associates and joint
ventures for which deferred tax liabilities have not been recognised
isapproximately 14.5 billion (2014 13.3 billion).

FINANCIAL STATEMENTS OF THE GROUP: OPERATING ASSETS AND LIABILITIES
OPERATING
ASSETS AND
LIABILITIES
This section describes the assets used to generate the

groups performance and the liabilities incurred. Liabilities
relating to the groups financing activities are included in
section Risk management and capital structure and balance
sheet information in respect of associates, joint ventures
and taxation are covered in section Results for the year.
Thissection also provides detailed disclosures on the groups
recent acquisitions and performance and financial position
ofits defined benefit post-employment plans.
9. ACQUISITION AND SALE OF BUSINESSES AND PURCHASE OF NON-CONTROLLING INTERESTS

Accounting policies
The consolidated financial statements include the results of the company and its subsidiaries together with the groups attributable share
of the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up
to, the date that control passes.
Business combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired
are measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any
contingent consideration.
On the acquisition of abusiness, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of
acquisition, are attributed to the net assets including identifiable intangible assets and contingent liabilities acquired. Directly attributable
acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred.
The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholders
proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition.
Where the group has issued aput option over shares held by anon-controlling interest, the group derecognises the non-controlling
interests and instead recognises acontingent deferred consideration liability for the estimated amount likely to be paid to the noncontrolling interest on the exercise of those options. Movements in the estimated liability in respect of put options are recognised in
retained earnings.
Transactions with non-controlling interests are recorded directly in retained earnings.
For all entities in which the company, directly or indirectly, owns equitya judgement is made to determine whether the investor controls
the investee and therefore should fully consolidate the investee. An assessment is carried out to determinewhether the group has the
rights to the variable returns of the investee and has the ability to affect those returns through its power over the investee. To establish
control an analysis is carried out ofthe substantive and protective rights that the group and the other investors hold. This assessmentis
dependent on the activities and purpose of the investee and the rights of the other shareholders, such as which party controls the board,
executive committee and material policies of the investee. Determining whether the rights that the group holds are substantive requires
managementjudgement.
Where less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder
or organised group of vote holders this may be an indicator of de facto control. An assessment is needed to determine all the factors
relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be
consolidated as asubsidiary. Where voting power and returns from an investment are split equally between two entities then the
arrangement is accounted for as ajoint venture.
On an acquisition fair values are attributed to the assets and liabilities acquired. This may involve material judgement to determine
thesevalues.

Net assets acquired and consideration

Other
million
2015
Total
million
2014
million
2013
million
220
1,941
10
109
10
17
275
43
58
58
Inventories
217
27
247
16
Assets and liabilities held for sale
401
401
61
(5)
62
(5)
Brands and other intangibles

Biological assets
Investments
Other working capital
USL
million
Don Julio
million
1,721
248
(35)
(1)
(35)
(407)
(65)
(472)
10
50
10
64
(847)
(22)
(869)
Cash
Borrowings
(7)
(7)
(1)
Fair value of assets and liabilities
1,460
212
(2)
1,670
13
173
Goodwill arising on acquisition
1,281
105
33
1,419
16
83
21
(641)
(641)
(8)
Step acquisitions
(982)
(115)
(16)
(1,113)
Consideration payable
1,118
202
15
1,335
21
277
1,118
202
14
1,334
28
284
(7)
Governance
Current tax
Deferred tax
Strategic report
(a) Acquisition of businesses

Fair value of net assets acquired and cash consideration paid in respect of acquisition of businesses and purchase of shares of non-controlling
interests in the three years ended 30 June 2015 were as follows:
Satisfied by:
Cash consideration paid
(8)
1,118
202
15
1,335
21
277
Cash consideration paid for investment in USL

Cash consideration paid for investments in other subsidiaries
1,118
1,118
474
274
202
14
216
28
284
25
Cash consideration paid for investments in associates
Purchase consideration paid in respect of prior year acquisitions
14
Capital injection in associates
21
21
52
Cash acquired
(50)
(10)
(4)
(64)
Deposit (refunded)/paid
(11)
(11)
11
1,057
192
35
1,284
536
644
37
200
1,057
192
35
1,284
573
844
Net cash outflow on acquisition of businesses

Purchase of shares of non-controlling interests
Total net cash outflow
Don Julio
On 27 February 2015 Diageo purchased the 50% equity interest in Don Julio that it did not already own from Casa Cuervo. Don Julio is the
brand owner of Don Julio tequila and manufactures the spirit in Mexico. Don Julio has been fully consolidated for the period 27 February
to30 June 2015, and in that period contributed net sales of 23million and 6million of operating profit. In addition, directly attributable
integration and transaction costs of 8million (2014 2million) have been included in other external charges in the year. The fair values
ofthe assets and liabilities acquired are provisional and will be finalised in the year ending 30 June 2016.
United Spirits Limited (USL)

On 2 July 2014, with the completion of atender offer the group acquired an additional 26% investment in USL, the leading spirits company
inIndia, for INR 114.5 billion (1,118million) taking its investment to 54.78% (excluding 2.38% owned by the USL Benefit Trust). From 2 July 2014
the group accounted for USL as asubsidiary with a43.91% non-controlling interests.
USL has been fully consolidated for the period 2 July 2014 to 30 June 2015, and in that period contributed net sales of 921million,
operating profit of 48million and a 15 million loss after tax (both net of transaction costs of 5 million). In addition, directly attributable
integration and transaction costs of 15million (2014 18million) have been included in other external charges in the year.
The goodwill acquired represents synergies arising from the acquisition and the extension of the groups portfolio of brands to
Indianconsumers.
Deferred/contingent consideration payable

Receivables from non-controlling interests

Other
On 29 May 2015 the group also acquired the remaining 50% equity stake of one of the groups joint ventures in South Africa. The fair values of the
assets and liabilities acquired are provisional and will be finalised in the year ending 30 June 2016.
Prior year acquisitions
In previous years, Diageo has made anumber of acquisitions of brands, distribution rights and equity interests in drinks businesses. In the two
years ended 30 June 2014 the following acquisitions have been made:
Fair value of net assets acquired
Brands
million
Goodwill
million
Other
million
Location
Principal brands acquired
768
India
McDowells No.1 whisky,

Acquisition of 28.78% investment
rum and brandy, Black Dog, in United Spirits Limited
Signature, Antiquity and
(seenote6)
Bagpiper whisky and other
Indian whisky, brandy and
rum products
302
502
115
46
China
Shui Jing Fang Chinese

white spirit
Acquisition of a100% equity

stake in SJF Holdco which owns
a39.7% controlling equity interest
in Shuijingfang. The group
controlled Shuijingfang from
29June 2012.
284
145
79
60
Brazil
Ypica cachaa
Acquisition of 100% of the equity

share capital of Ypica Bebidas S.A.
55
10
16
29
Cash paid(i)
million
United Spirits
Limited(ii)
13 May 2013
to31January 2014
SJF Holdco and
Shuijingfang
27 January 2007
to 2 August 2013
Ypica
9 August 2012
Other(iii)
Status
(i) Includes amounts paid in respect of these acquisitions prior to 30 June 2012.
(ii) Excludes 1,118 million paid for additional 26% investment in USL on 2 July 2014 and includes transaction costs of 33 million on the initial acquisition of shares in USL when the investment was accounted
for as an associate.
(iii) Other primarily includes acquisitions in the United States and South Africa.
(b) Sale of businesses

Cash consideration received and net assets disposed of in respect of
sale of businesses in the year ended 30 June 2015 were as follows:
2015
Bushmills
million
Other
million
Total
million
Sale consideration
458
543
1,001
Cash disposed of
(2)
(15)
(17)
Transaction costs paid
(6)
(6)
450
528
978
(1)
(2)
(3)
Cash received in year
Net cash received

Transaction costs payable
Deferred consideration payable
(3)
(3)
446
526
972
Net assets disposed of

(144)
(144)
Goodwill
(44)
(44)
(51)
(67)
(118)
(404)
(404)
(78)
Brands
Assets and liabilities held for sale
(75)
(3)
Other working capital
15
19
10
Inventories
Current tax
Deferred tax
30
33
(272)
(453)
(725)
174
73
247
Gain on disposal before

and after taxation
On 27 February 2015, the group disposed of the entire share capital

ofThe Old Bushmills Distillery Company Limited to Jose Cuervo
Overseas. In the period of 1 July 2014 to 27 February 2015, Bushmills
contributed net sales of 50 million (in the year ended 30 June 2014
60 million; 2013 55 million), operating profit of 22 million
(inthe year ended 30 June 2014 28 million; 2013 23 million)
andprofit after taxation of 17 million (in the year ended 30 June 2014
20 million; 2013 16 million).
Other includes businesses disposed of following the acquisition
ofUSL including the net cash receipt of 391 million on the sale of
the Whyte and Mackay Group on 31 October 2014. It also includes the
proceeds and net assets following the disposal of Gleneagles Hotels
Limited on 30 June 2015. In the year ended 30 June 2015, Gleneagles
Hotel contributed net sales of 48 million (2014 45 million;
201340 million) and operating profit of 4 million
(20142million; 2013 nil).
In the year ended 30 June 2013, the group disposed of its interest
in London Group, the owner of the Nuvo brand (see note 4).

Governance
Accounting policies
Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses.
Acquired brands and other intangible assets are initially recognised at fair value when they are controlled through contractual or other legal
rights, or are separable from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having
indefinite useful economic lives, they are not amortised.
Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair
value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets acquired. Goodwill
arising on acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising
subsequent to 1 July 1998 has been capitalised.
Amortisation and impairment of intangible assets is based on their useful economic lives and are amortised on astraight-line
basis overthose lives and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be
recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised and are
reviewed for impairment at least annually or when there is an indication that the assets may be impaired. Impairment reviews compare
thenet carrying value with the recoverable amount (value in use or fair value less cost to sell). Amortisation and any impairment write
downs are charged toother operating expenses in the income statement.
Computer software is amortised on astraight-line basis to estimated residual value over its expected useful life. Residual values and
useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years.
Strategic report
10. INTANGIBLE ASSETS

Assessment of the recoverable value of an intangible asset, the useful economic life of an asset, or that an asset has an indefinite life,
requires management judgement.
Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable
amounts. The tests are dependent on managements estimates and judgements, in particular in relation to the forecasting of future cash
flows, the discount rates applied to those cash flows and the expected long term growth rates. Such estimates and judgements are subject
to change as aresult of changing economic conditions and actual cash flows may differ from forecasts.
Other
intangibles
million
Computer
software
million
Total
million
6,397
(568)
10
5,839
157
1,903
(144)
7,755
1,395
(197)
16
(1)
1,213
(57)
1,419
(44)
2,531
1,255
(134)
1,121
96
38
1,256
471
(20)
44
(2)
493
(7)
40
(15)
511
9,518
(919)
26
44
(3)
8,666
189
3,360
(188)
41
(15)
12,053
185
(13)
260
432
3
435
18
(6)
12
(2)
10
55
(2)
3
56
60
247
(15)
44
(1)
275
(2)
56
(12)
317
505
(36)
47
260
(1)
775
(1)
60
(12)
822
7,320
5,407
6,212
2,521
1,201
1,377
1,196
1,065
1,200
194
218
224
11,231
7,891
9,013
Goodwill
million
Cost
At 30 June 2013
Other additions
Disposals
At 30 June 2014
Sale of businesses
Other additions
Other disposals
At 30 June 2015
Amortisation and impairment
At 30 June 2013
Amortisation for the year
Exceptional impairment
Disposals
At 30 June 2014
Amortisation for the year
Other disposals
At 30 June 2015
Carrying amount
At 30 June 2015
At 30 June 2014
At 30 June 2013
Brands
million

(a) Brands
At 30 June 2015, the principal acquired brands, all of which are regarded as having indefinite useful economic lives, are as follows:
McDowells No.1 whisky, rum and brandy
Principal markets
2015
million
2014
million
India
972
856
United States
933
Captain Morgan
Global
765
702
Johnnie Walker whisky
Global
625
625
Smirnoff vodka
Global
525
482
Korea
494
501
Crown Royal whisky
Windsor Premier whisky
Turkey
403
469
Shui Jing Fang Chinese white spirit
Greater China
232
214
Don Julio tequila
United States
206
Signature whisky
India
183
South Africa
179
179
Black Dog whisky
India
154
Antiquity whisky
India
151
United States
142
130
Global
122
112
United States
121
111
119
Yen Raki
Bells whisky
Seagrams 7 Crown whiskey

Zacapa rum
Seagrams VO whisky
Western Europe
119
Bagpiper whisky
India
104
Ypica cachaa
Brazil
94
121
Gordons gin
Other brands
The brands are protected by trademarks, which are renewable

indefinitely, in all of the major markets where they are sold. There are
not believed to be any legal, regulatory or contractual provisions that
limit the useful lives of these brands. The nature of the premium
drinks industry is that obsolescence is not acommon issue, with
indefinite brand lives being commonplace, and Diageo has anumber
of brands that were originally created more than 100 years ago.
Accordingly, the Directors believe that it is appropriate that the
brands are treated as having indefinite lives for accounting
purposesand are therefore not amortised.
(b) Goodwill
For the purposes of impairment testing, goodwill has been attributed
to the following cash-generating units:
2015
million
2014
million
217
199
Western Europe
106
165
Turkey
409
476
Africa Africa Regional Markets
86
83
Latin America and Caribbean Mexico
98
117
107
1,320
North America US Spirits and Wines

Europe
Asia Pacific
Greater China
India
Other cash-generating units
168
169
2,521
1,201
796
786
7,320
5,407
Goodwill has arisen on the acquisition of businesses and includes

synergies arising from cost savings, the opportunity to utilise Diageos
distribution network to leverage marketing of the acquired products
and the extension of the groups portfolio of brands in new markets
around the world.
(c) Other intangibles
Other intangibles principally comprise distribution rights. Diageo
ownsthe global distribution rights for Ketel One vodka products in
perpetuity, and the Directors believe that it is appropriate to treat these
rights as having an indefinite life for accounting purposes. The carrying
value at 30 June 2015 was 1,147 million (2014 1,053 million).
(d) Impairment testing
Impairment tests are performed annually, or more frequently if
eventsor circumstances indicate that the carrying amount may not
be recoverable. Recoverable amounts are calculated based on value
in use or fair value less cost to sell approach. The value in use
calculations are based on discounted forecast cash flows using the
assumption that cash flows continue in perpetuity at the terminal
growth rate of each country or region. Where asubsidiary is dominant
within acash-generating unit and its shares are publicly traded, the
value of the cash-generating unit may be supported by calculating
fair value less costs to sell based on quoted market share prices.
Cash flows
Cash flows are forecast for each brand, other intangible and cashgenerating unit for the financial year, which is approved by management
and reflects expectations of sales growth, operating costs and margin,
based on past experience and external sources of information.

North America
UnitedStates
Terminal
growth
rate
%
2014
Pre-tax
discount
rate(i)
%
Terminal
growth
rate
%
Western Europe
10
11
Turkey
15
16
Africa Regional
Markets
21
22
South Africa
19
16
Brazil
13
13
Mexico
20
16
10
Europe
Africa
Latin America
andCaribbean
Asia Pacific
9
11
Greater China
11
12
India
19
18
Korea
(i) Before additional risk premiums.
In the year ended 30 June 2014 there were impairment charges of

260million and 4million in respect of the Shui Jing Fang brand
and tangible assets, respectively.
Government grants
Government grants are not recognised until there is reasonable
assurance that the group will comply with the conditions
pursuant to which they have been granted and that the grants
will be received. Government grants in respect of property,
plant and equipment are deducted from the asset that they
relate to, reducing the depreciation expense charged to the
incomestatement.
Leases
Where the group has substantially all the risks and rewards of
ownership of an asset subject to alease, the lease is treated as
afinance lease. Assets held under finance leases are recognised
as assets of the group at their fair value at the inception of the
lease. The corresponding liability to the lessor is included in
other financial liabilities on the consolidated balance sheet.
Leasepayments are apportioned between interest expense and
areduction of the lease obligation so as to achieve aconstant
rate of interest on the remaining balance of the liability. Other
leases are treated as operating leases, with payments and receipts
taken to the income statement on astraight-line basis over the life
ofthelease.
Accounting policies
Land and buildings are stated at cost less accumulated
depreciation. Freehold land is not depreciated. Leaseholds are
depreciated over the unexpired period of the lease. Other
property, plant and equipment are depreciated on astraight-line
basis to estimated residual values over their expected useful lives,
and these values and lives are reviewed each year. Subject to
these reviews, the estimated useful lives fall within the following
ranges: buildings 10 to 50 years; within plant and equipment
casks and containers 15 to 50 years; other plant and equipment
5 to 25 years; fixtures and fittings 5 to 10 years; and returnable
bottles and crates 5 to 10 years.
Reviews are carried out if there is an indication that assets may
be impaired, to ensure that property, plant and equipment are not
carried at above their recoverable amounts.
2015
Pre-tax
discount
rate(i)
%
11. PROPERTY, PLANT AND EQUIPMENT
Governance
Long term growth rate, period of growth and terminal growth rate
The terminal growth rates applied at the end of the forecast period
are the long term annual inflation rate of the country obtained from
external sources. For some intangible assets, management expects to
achieve growth, driven by Diageos sales, marketing and distribution
expertise, which is significantly in excess of the terminal growth rates
for the applicable countries or regions. In these circumstances, the
recoverable amount is calculated based on afive-year detailed plan
and extended by up to an additional ten years using the annual
growth rate of the real gross domestic product (GDP) of the country
or region aggregated with its inflation rate, adjusted to take into
account circumstances specific to the group. In the calculation of the
terminal value, amaximum of the long term annual inflation rate of
the country is used as the terminal growth rate.
For goodwill, these assumptions are based on the cashgenerating unit or group of units to which the goodwill is attributed.
For brands, they are based on aweighted average taking into
account the country or countries where sales are made.
The pre-tax discount rates and terminal growth rates used for
impairment testing are as follows:
(e) Sensitivity to change in key assumptions

Impairment testing for the year ended 30 June 2015 has identified
the Ypica and Shui Jing Fang brands and goodwill allocated to
Africa Regional Markets as being sensitive to reasonably possible
changes in assumptions due to the challenging market conditions.
Ypica and Shui Jing Fang brands and goodwill allocated to Africa
Regional Markets would be impaired if there is an increase in discount
rates of 1ppt by 16million, 7million and 21million, respectively;
ora decrease in forecast annual cash flows of 10% by 15million,
20million or 29million, respectively.
It remains possible that changes in assumptions used to support
Shui Jing Fang and Ypica brands and goodwill allocated to Africa
Regional Markets could be in excess of those indicated above.
For all intangibles with an indefinite life, other than those
mentioned above, management has concluded that no reasonable
possible change in the key assumptions on which it has determined
the recoverable amounts would cause their carrying values to
exceedtheir recoverable amounts.
Strategic report
Discount rate
The discount rates used are the weighted average cost of capital
which reflects the returns on government bonds specific to the
cash-generating units to which the goodwill is attributed or the
countries where the brands are sold or returns on government
bondsissued by triple A rated countries with amaturity of ten years,
and an equity risk premium adjusted for specific industry. Further risk
premiums are applied according to managements assessment of
therisks in respect of the individual cash flows. The group applies
post-tax discount rates to post-tax cash flows as the valuation
calculated using this method closely approximates to applying
pre-tax discount rates to pre-tax cash flows.

Cost
At 30 June 2013
Other additions
Disposals
Transfers
At 30 June 2014
Sale of businesses
Other additions
Other disposals
Transfers
At 30 June 2015
Depreciation
At 30 June 2013
Depreciation charge for the year
Disposals
At 30 June 2014
Depreciation charge for the year
Sale of businesses
Other disposals
At 30 June 2015
Carrying amount
At 30 June 2015
At 30 June 2014
At 30 June 2013
Land and
buildings
million
Plant and
equipment
million
Fixtures
and
fittings
million
Returnable
bottles and
crates
million
Under
construction
million
Total
million
1,325
(97)
1
68
(49)
85
1,333
(40)
148
(105)
51
(13)
73
1,447
3,301
(270)
204
(221)
205
3,219
(119)
110
(73)
181
(66)
210
3,462
125
(13)
18
(10)
120
(5)
4
(7)
13
(3)
3
125
499
(61)
32
(17)
24
477
(44)
35
(20)
16
464
377
(28)
318
(314)
353
(11)
13
(1)
297
(1)
(302)
348
5,627
(469)
1
640
(297)
5,502
(219)
275
(186)
577
(103)
5,846
386
(31)
75
1
(40)
391
(8)
46
(20)
(6)
403
1,436
(118)
170
19
(209)
1,298
(64)
215
23
(43)
(56)
1,373
89
(10)
11
1
(10)
81
(6)
13
(5)
83
291
(31)
41
(6)
295
(28)
42
(16)
293
2,202
(190)
297
25
(265)
2,069
(106)
316
23
(68)
(78)
2,156
1,044
942
939
2,089
1,921
1,865
42
39
36
171
182
208
344
349
377
3,690
3,433
3,425
(a) The net book value of land and buildings comprises freeholds of 975million (2014 862million), long leaseholds of 20million (2014
36million) and short leaseholds of 49million (2014 44million). Depreciation was not charged on 144million (2014 129million) of land.
(b) At 30 June 2015, tangible fixed assets held under finance leases amounted to 294million (2014 303million), principally in respect of
plant and equipment. Depreciation on these assets was 17million (2014 20million).
(c) Property, plant and equipment is net of agovernment grant of 118million (2014 108million) received in prior years in respect of the
construction of arum distillery in the United States Virgin Islands.

13. POST EMPLOYMENT BENEFITS
Loans (b)
million
Others (c)
million
Total
million
350
(6)
55
(399)
50
(6)
26
(19)
12
1
(6)
412
(11)
26
(25)
55
(399)
5
56
(2)
27
(25)
7
1
58
20
5
63
(1)
58
27
(25)
20
(33)
23
86
(33)
109
(b) Loans comprise 21million (2014 23million; 2013 21million)

of loans to customers and other third parties, after allowances of
7million (2014 9million; 2013 27million), and 2million (2014
33million; 2013 29million) of loans to associates. On the
consolidation of USL on 2 July 2014 Diageo acquired aloan due from
United Breweries (Holdings) Limited, including interest, amounting to
INR14,505million (141million). The loan and interest receivable has
been fully provided for in the consolidated balance sheet.
(c) Others, at 30 June 2015, includes 80million (2014 and 2013 nil)
comprising 8,500,000 shares of INR1 each in United Breweries Limited,
acompany quoted on the Indian stock exchange. These shares were
sold on 7 July 2015.
(a) Post employment benefit plans

The group operates anumber of pension plans throughout the
world, devised in accordance with local conditions and practices.
Themajority of the plans are defined benefit plans and are funded by
payments to separately administered trusts or insurance companies.
The group also operates anumber of plans that are generally
unfunded, primarily in the United States, which provide employees
post employment medical costs.
The principal plans are in the United Kingdom, Ireland and the
United States where benefits are based on employees length of
service and salary at retirement. All valuations were performed by
independent actuaries using the projected unit credit method to
determine pension costs. The most recent valuations of the
significant defined benefit plans were carried out as follows:
Principal plans
United Kingdom(i)
Ireland(ii)
United States
Date of valuation
31 March 2012
30 December 2012
1 January 2015
(i) The triennial valuation of the Diageo Pension Scheme (the UK Scheme) as at 31 March 2015 is
in progress and the results of this valuation are expected to be agreed by Diageo and the trustee
later in calendar year 2015. The UK Scheme closed to new members in November 2005. Employees
who have joined Diageo in the United Kingdom since the defined benefit scheme closed have
been eligible to become members of the Diageo Lifestyle Plan (a cash balance defined benefit
pension plan).
(ii) The Guinness Ireland Group Pension Scheme in Ireland (the Irish Scheme) closed to new members
in May 2013. Employees who have joined Diageo in Ireland since the defined benefit scheme closed
have been eligible to become members of Diageo administered defined contribution plans.
(a) On the acquisition of a10.04% investment in USL in the year

ended 30 June 2013, USL was accounted for as an available-for-sale
investment. On the acquisition of an additional 14.98% investment in
USL on 4 July 2013, USL became an associate and the fair value at that
date was transferred to investments in associates.

Application of IAS 19 requires the exercise of judgement in
relation to various assumptions including future pay rises, inflation
and discount rates and employee and pensioner demographics.
Diageo determines the assumptions on acountry by country
basis in conjunction with its actuaries, and believes these
assumptions to be in line with best practice, but the application
ofdifferent assumptions could have asignificant effect on the
amounts reflected in the income statement, other comprehensive
income and balance sheet. There may be also interdependency
between some of the assumptions.
Cost less allowances or

fair value
At 30 June 2013
Additions
Repayments and disposals
Fair value adjustment
Transfer to associates (a)
Allowances reversed
during the year
At 30 June 2014
Other additions
Repayments and disposals
Fair value adjustment
Transfer to assets held
forsale (note 6 (a))
At 30 June 2015
United
Spirits
Limited
million
Accounting policies
The groups principal pension funds are defined benefit plans.
Inaddition, the group has defined contribution plans, unfunded
post employment medical benefit liabilities and other unfunded
defined benefit post employment liabilities. For post employment
plans, other than defined contribution plans, the amount charged
to operating profit is the cost of accruing pension benefits
promised to employees over the year, plus any changes arising
onbenefits granted to members by the group during the year. Net
finance charges comprise the net deficit/asset on the plans at the
beginning of the financial year, adjusted for cash flows in the year,
multiplied by the discount rate for plan liabilities. The differences
between the fair value of the plans assets and the present value
ofthe plans liabilities are disclosed as an asset or liability on the
consolidated balance sheet. Any differences due to changes in
assumptions or experience are recognised in other comprehensive
income. The amount of any pension fund asset recognised on the
balance sheet is limited to any future refunds from the plan or the
present value of reductions in future contributions to the plan.
Contributions payable by the group in respect of defined
contribution plans are charged to operating profit as incurred.
Governance
Accounting policies
Available-for-sale investments are non-derivative financial
assets that are either designated as such upon initial
recognition or not classified in any of the otherfinancial assets
categories.Theyare included in non-current assets.Subsequent
to initial measurement, available-for-sale investments are stated
at fair value. Gains and losses arising from the changes in fair
value are recognised in other comprehensive income until the
investment is disposed of or impaired, when the accumulated
gains and losses are recycled to the income statement. Interest
and dividends from available-for-sale investments are recognised
inthe consolidated income statement.
Loans receivable are non-derivative financial assets with
fixedor determinable payments that are not quoted on an
activemarket. They are subsequently measured at amortised
costusingthe effective interest method less allowance for
impairment. Allowancesare made where there is evidence
ofariskof nonpayment taking into account ageing, previous
experience andgeneral economicconditions.
Strategic report
12. OTHER INVESTMENTS

The assets of the UK and Irish pension plans are held in separate
trusts administered by trustees who are required to act in the best
interests of the plans beneficiaries. For the UK Scheme, the trustee is
Diageo Pension Trust Limited. As required by legislation, one-third of
the directors of the Trust are nominated by the members of the UK
Scheme, two member nominated directors have been appointed
from the pensioner member community and two from the active
member community. For the Irish Scheme Diageo Ireland makes four
nominations and appoints three further candidates nominated by
representative groupings.
The amounts charged to the consolidated income statement
forthe groups defined benefit post employment plans and the
consolidated statement of comprehensive income for the three
yearsended 30 June 2015 are as follows:
2015
million
Current service cost and

administrative expenses
2014
million
2013
million
(120)
(118)
(115)
Past service gains

Gains on curtailments and
settlements
26
Charge to operating profit
(114)
(92)
(104)
Net finance charge in respect

(note 5)
(12)
(38)
(127)
(104)
(142)
Actual returns less amounts

included in finance income
411
306
349
Experience gains
103
24
71
(400)
(453)
(298)
(49)
123
(172)
123
(4)
Charge before taxation
Changes in financial assumptions

Changes in demographic
assumptions
Other comprehensive income/
(loss)
Plan
assets
million
Plan
liabilities
million
Net
deficit
million
(536)
7,082
(7,618)
(164)
215
51
307
(411)
(104)
Other comprehensive income/(loss)(i)
306
(478)
(172)
Contributions by the group
288
288
(3)
(342)
342
7,480
(7,953)
(473)
(144)
177
33
Employee contributions
Benefits paid
At 30 June 2014
33
(40)
(7)
Sale of businesses
(20)
30
10
(127)
290
(417)
Other comprehensive income/(loss)(i)
411
(288)
123
Contributions by the group
184
184
Employee contributions
Benefits paid
(7)
(358)
358
7,883
(8,140)
(257)
(i) Excludes surplus restriction.
The plan assets and liabilities by type of post employment benefit

and country is analysed below:
2015
Plan
assets
million
2014
Plan
liabilities
million
Plan
assets
million
Plan
liabilities
million
Pensions
Changes in the surplus restriction

Total other comprehensive
income/(loss)
At 30 June 2013
At 30 June 2015
(13)
(i)
The movement in the net deficit for the two years ended 30June 2015
is set out below:
123
(169)
119
5,922
(5,621)
5,496
(5,380)
Ireland
1,295
(1,554)
1,385
(1,695)
United States
401
(420)
369
(399)
Other
212
(242)
218
(235)
(203)
Post employment medical
(i) The charge before taxation comprises:

2015
million
United Kingdom
2014
million
2013
million
United Kingdom
(62)
(39)
(71)
Ireland
(22)
(28)
(26)
United States
(24)
(25)
(28)
Other
(19)
(12)
(17)
(127)
(104)
(142)
In addition to the charge in respect of defined benefit post

employment plans, contributions to the groups defined contribution
plans were 15million (2014 15million; 2013 13million).
Other post employment
(218)
52
(85)
11
(41)
7,883
(8,140)
7,480
(7,953)
The balance sheet analysis of the post employment plans is as follows:

2015
Noncurrent
assets(i)
million
Funded plans
Unfunded plans
Noncurrent
liabilities
million
436
(447)
436
2014
Noncurrent
assets(i)
million
Noncurrent
liabilities
million
251
(488)
(248)
(238)
(695)
251
(726)
(i) Includes surplus restriction of 2 million (2014 2 million).

Strategic report
(b) Principal risks and assumptions

The material post employment plans are not exposed to any unusual, entity specific or scheme specific risks but there are general risks:
Inflation the majority of the plans obligations are linked to inflation. Higher inflation will lead to increased liabilities which is partially offset
byholdings of inflation linked gilts and swaps and the plans provide for caps on the level of inflationary increases.
Interest rate The plan liabilities are determined using discount rates derived from yields on AA-rated corporate bonds. Adecrease in
corporatebond yields will increase plan liabilities though this will be partially offset by an increase in the value of the bonds held by the
postemployment plans.
Mortality The majority of the obligations are to provide benefits for the life of the members and their partners so any increase in life
expectancy will result in an increase in the plans liabilities.
Asset returns Assets held by the pension plans are invested in adiversified portfolio of equities, bonds and other assets. Volatility in asset
values will lead to movements in the net asset/(deficit) reported in the consolidated balance sheet for post employment plans which in
addition will also impact the post employment expense in the consolidated income statement.
Governance
The following weighted average assumptions were used to determine the groups deficit/surplus in the main post employment plans at
30June in the relevant year. The assumptions used to calculate the charge/credit in the consolidated income statement for the year ended
30June are based on the assumptions disclosed as at the previous 30 June.
United Kingdom
2015
%
2014
%
2013
%
Ireland
2015
%
2014
%
United States(i)
2013
%
2015
%
2014
%
2013
%
Rate of general increase in salaries(ii)
4.4
4.4
4.4
3.1
2.5
3.1
Rate of increase to pensions in payment
3.4
3.5
3.6
1.7
1.7
1.8
Rate of increase to deferred pensions
2.2
2.3
2.3
1.6
1.5
1.7
Discount rate for plan liabilities
3.8
4.2
4.6
2.6
3.0
3.6
4.3
4.2
4.5
Inflation CPI
2.2
2.3
2.3
1.6
1.5
1.7
1.7
2.1
1.8
Inflation RPI
3.2
3.3
3.3
For the main UK and Irish pension funds, the table below illustrates the expected age at death of an average worker who retires currently
atthe age of 65, and one who is currently aged 45 and subsequently retires at the age of 65:
United Kingdom(i)
2015
Age
2014
Age
Ireland(ii)
2013
Age
2015
Age
2014
Age
United States
2013
Age
2015
Age
2014
Age
2013
Age
(i) The salary increase assumption in the United States is not asignificant assumption as only aminimal amount of members pension entitlement is dependent on amembers projected final salary.
(ii) The salary increase assumptions include an allowance for age related promotional salary increases.
Retiring currently at age 65

Male
86.6
86.4
86.3
86.0
85.9
85.7
86.7
86.6
84.5
Female
88.5
88.4
88.3
88.7
88.6
88.5
88.9
88.8
86.4
Male
88.8
88.9
88.3
88.9
88.8
88.6
88.4
88.3
86.0
Female
91.4
91.0
90.5
91.6
91.5
91.3
90.6
90.5
87.2
Currently aged 45, retiring at age 65
For the significant assumptions, the following sensitivity analyses give an estimate of the potential impacts on the consolidated income
statement for the year ended 30 June 2015 and on the plan liabilities at 30 June 2015:
United Kingdom
Operating
profit
million
Profit
after
taxation
million
Ireland
Plan Operating
profit
liabilities(i)
million
million
Profit
after
taxation
million
United States and other
Plan Operating
liabilities(i)
profit
million
million
Profit
after
taxation
million
Plan
liabilities(i)
million
Effect of 0.5% increase in discount rate
25
20
433
126
31
Effect of 0.5% decrease in discount rate
(22)
(17)
(484)
(5)
(4)
(145)
(2)
(1)
(32)
(12)
Effect of 0.5% increase in inflation
(20)
(16)
(394)
(6)
(5)
(112)
(1)
(1)
Effect of 0.5% decrease in inflation
19
15
384
82
11
Effect of one year increase in life expectancy
(10)
(8)
(222)
(2)
(2)
(55)
(1)
(1)
(18)
(i) The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps entered into by the pension plans.
(1) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each sensitivity is calculated
on achange in the key assumption while holding all other assumptions constant.
(i) Based on the CMI birth year tables with scaling factors based on the experience of the plan and with suitable future improvements.
(ii) Based on the 00 series of mortality tables with scaling factors based on the experience of the plan and with suitable future improvements.

(c) Investment and hedging strategy

The investment strategy for the groups funded post employment
plans is decided locally by the trustees of the plan and/or Diageo,
asappropriate, and takes account of the relevant statutory
requirements. The objective of the investment strategy is to achieve
atarget rate of return in excess of the movement on the liabilities,
while taking an acceptable level of investment risk relative to the
liabilities. This objective is implemented by using the funds of the
plans to invest in avariety of asset classes that are expected over
the long term to deliver atarget rate of return. The majority of the
investment strategies have significant amounts allocated to equities,
with the intention that this will result in the ongoing cost to the group
of the post employment plans being lower over the long term,within
acceptable boundaries of risk. Significant amounts are invested in
bonds in order to provide anatural hedge against movements in the
liabilities of the plans. At 30 June 2015, approximately 35% and 79%
(2014 37% and 73%) of the UK Schemes liabilities were hedged

against future movements in interest rates and inflation, respectively,
through the combined effect of government bonds, repurchase
agreements and swaps. At30 June 2015, approximately 32% and 59%
(2014 33% and 52%) ofthe Irish Schemes liabilities were hedged
against future movements in interest rates and inflation, respectively,
through thecombined effect of government bonds, repurchase
agreements and swaps.
Thediscount rates used are based on the yields of high quality
fixed income investments. For the UK plans, which represent
approximately 69% of total plan liabilities, the discount rate is
determined by reference to the yield curves of AA-rated corporate
bonds for which the timing and amount of cash outflows are similar
to those of the plans. Asimilar process is used todetermine the
discount rates used for the non-UK plans.
The fair value of plan assets is as follows:
2015
2014
United
Kingdom
million
Ireland
million
United
States and
other
million
Quoted
812
395
254
1,461
1,222
433
249
1,904
Unquoted and private equity
297
18
317
281
22
305
Fixed-interest government
178
117
37
332
319
64
36
419
Total
million
United
Kingdom
million
Ireland
million
United
States and
other
million
Total
million
Equities
Bonds
Inflation-linked government
826
133
968
857
100
961
Investment grade corporate
861
210
251
1,322
835
362
210
1,407
Non-investment grade
265
31
14
310
224
12
11
247
Loan securities
614
123
737
469
143
612
1,980
1,980
710
710
Repurchase agreements
Liability Driven Investment (LDI)
Property unquoted
Hedge funds
Interest rate and inflation swaps
Cash and other
Total bid value of assets
80
20
100
665
83
10
758
525
75
608
122
122
202
127
329
(801)
50
(751)
(295)
60
(235)
145
73
227
147
59
213
5,922
1,295
666
7,883
5,496
1,385
599
7,480
(1) The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested in the long term.
(2) Within the Irish Schemes plan assets above there is 0.6 million invested in the ordinary shares of Diageo plc.
Total cash contributions by the group to all post employment plans

in the year ending 30 June 2016 are estimated to be approximately
180 million.
(d) Deficit funding arrangements
UK plans
In the year ended 30 June 2011 the group established aPension
Funding Partnership (PFP) in respect of the UK Scheme. Whisky
inventory was transferred into the partnership but the group
retains control over the partnership which at 30 June 2015 held
inventory with abook value of 663 million (2014 634 million).
Thepartnership is fully consolidated in the group financial
statements. The UK Scheme has alimited interest in the partnership,
and as apartner, is entitled to adistribution from the profits of the
partnership which for the year ended 30 June 2015 was 25 million
(201425million) and is expected to be approximately the same
amount for the next nine years.
In 2024 the group will be required, dependent upon the funding
position of the UK Scheme at that time, to pay an amount expected
to be no greater than the deficit at that time, up to amaximum of
430 million in cash, to the UK Scheme to buy out the UK Schemes
interest in the partnership. If the UK Scheme is in surplus at an
actuarial triennial valuation without allowing for the value of the PFP,
then Diageo can exit the PFP with the agreement of the trustees.
Thegroup has also agreed to make conditional contributions into
escrow if the deficit at the 2015 or 2018 actuarial triennial valuation
isin excess of 211 million and 84 million, respectively. The escrow
account would be payable to the UK Scheme by 31 March 2019.
Irish plans
The group has also agreed adeficit funding arrangement with the
trustees of the Irish Scheme under which it contributes to the Irish
Scheme 21 million (16 million) per annum until the year ending
30 June 2029. The agreement also provides for additional cash
contributions into escrow of up to 188 million (144 million) if an
equivalent reduction in the deficit is not achieved over the 18 year
period from 2010 to 2028. As part of this funding plan, Diageo has
granted to the Irish Scheme acontingent asset comprising
mortgages over certain land and buildings and fixed and floating
charges over certain receivables of the group up to avalue of
200million (153 million). During the year ended 30 June 2014 the
group made an additional one off cash contribution of 100 million
(85 million) to the Irish plans.

United Kingdom
Ireland
United States
2015
million
2014
million
2015
million
2014
million
2015
million
2014
million
233
217
70
73
42
34
802
804
344
360
149
134
2,501
2,525
696
718
337
307
Strategic report
(e) Timing of benefit payments

The following table provides information on the timing of the benefit payments and the average duration of the defined benefit obligations
and the distribution of the timing of benefit payments:
Maturity analysis of benefits expected to be paid

Within one year
Between 1 to 5 years
2,841
2,925
672
701
237
230
6,360
6,882
1,199
1,297
229
236
12,737
13,353
2,981
3,149
994
941
years
years
years
years
years
years
17
17
18
18
11
12
Total
Average duration of the defined benefit obligation
The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are
disclosed undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised in the consolidated balance
sheet. They are in respect of benefits that have accrued at the balance sheet date and make no allowance for any benefits accrued subsequently.
Governance
Beyond 25 years
(f) Related party disclosures

Information on transactions between the group and its pension plans is given in note 20.
14. WORKING CAPITAL

Work in progress
Maturing inventories
Finished goods and goods for resale
2015
million
2014
million
333
306
66
59
3,586
3,300
589
557
4,574
4,222
Maturing inventories include whisk(e)y, rum, wines and Chinese white

spirits. The following amounts of inventories are expected to be
utilised after more than one year:

Maturing inventories
2015
million
2014
million
55
84
2,988
2,635
3,043
2,719
Inventories are disclosed net of provisions for obsolescence, an

analysis of which is as follows:
2015
million
2014
million
Balance at beginning of the year
52
64
(2)
(6)
Income statement charge

Utilised
Sale of businesses
29
14
(25)
(20)
(1)
53
52
Accounting policies
Inventories are stated at the lower of cost and net realisable
value. Cost includes raw materials, direct labour and expenses, an
appropriate proportion of production and other overheads, but
not borrowing costs. Cost is calculated at the weighted average
cost incurred in acquiring inventories. Maturing inventories which
are retained for more than one year are classified as current assets,
as they are expected to be realised in the normal operating cycle.
Trade and other receivables are initially recognised at fair value
less transaction costs and subsequently carried at amortised
costs less any allowance for discounts and doubtful debts.
Trade and other payables are initially recognised at fair
value including transaction costs and subsequently carried
atamortisedcosts.
Provisions are liabilities of uncertain timing or amount.
Aprovision is recognised if, as aresult of apast event, the group
has apresent legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions
are calculated on adiscounted basis. The carrying amounts of
provisions are reviewed at each balance sheet date and adjusted
to reflect the current best estimate.
(a) Inventories

(b) Trade and other receivables
(c) Trade and other payables

2015
2014
2015
2014
Current
liabilities
million
Non-current
liabilities
million
Current
liabilities
million
Non-current
liabilities
million
Current
assets
million
Noncurrent
assets
million
Current
assets
million
Noncurrent
assets
million
Trade payables
883
903
1,933
2,004
Interest payable
77
101
Interest receivable
23
20
Other receivables
297
38
286
94
Prepayments
146
142
13
Tax and social

security excluding
income tax
546
494
Other payables
524
40
494
81
Accruals
879
785
Trade receivables
Accrued income
36
47
2,435
46
2,499
107
At 30 June 2015, approximately 14%, 19% and 10% of the groups

trade receivables of 1,933 million are due from counterparties based
in the United Kingdom, the United States and India, respectively.
As at 30 June 2014 non-current other receivables included
87 million in respect of the assessment of excise duties made
bytheKorean customs authorities (see note 18(c)).
The aged analysis of trade receivables, net of allowance, is as follows:
2015
million
2014
million
1,806
1,895
Overdue 1 30 days
47
46
Overdue 31 60 days
22
22
Overdue 61 90 days
11
10
Overdue 91 180 days
32
16
Overdue more than 180 days
15
15
1,933
2,004
Not overdue
Deferred income
Balance at beginning of the year
63
65
(6)
(3)
Income statement charge
21
10
Written off
(7)
(9)
71
63
10
94
Thalidomide Restructuring
million
million
Other
million
Total
million
200
88
97
385
(2)
(2)
Provisions charged
during the year
11
118
129
Provisions utilised
during the year
(19)
(46)
(118)
(183)
(2)
At 30 June 2014
Transfers
Unwinding of
discounts
Current liabilities
2014
million
23
2,800
(d) Provisions
2015
million
15
69
Interest payable at 30 June 2015 includes interest on non-derivative

financial instruments of 68 million (2014 91 million).
At 30 June 2015
Trade and other receivables are disclosed net of allowance for

doubtful debts, an analysis of which is as follows:
34
2,943
12
12
191
49
103
343
13
47
45
105
178
58
238
191
49
103
343
(a) Provisions have been established in respect of the discounted

value of the groups commitment to the UK Thalidomide Trust.
Thesewill be utilised over the period of the commitments up to 2037.
(b) The group is engaged in anumber of restructuring programmes,
which involve the rationalisation of certain operations around the
world. Employee charges, incremental costs in respect of service
contract and information systems infrastructure charges in
connection with the programmes are recognised in the restructuring
provision, which is expected to be substantially utilised by 30 June
2016 (see note 4(a)-(c)).
(c) The largest item in other provisions is 44million (2014
42million) in respect of employee deferred compensation plans
which will be utilised when employees leave the group.

FINANCIAL STATEMENTS OF THE GROUP: RISK MANAGEMENT AND CAPITAL STRUCTURE
This section sets out the policies and procedures applied to

manage the groups capital structure and the financial risks
the group is exposed to. Diageo considers the following
components of its balance sheet to be capital: borrowings
and equity. Diageo manages its capital structure to achieve
capital efficiency, provide flexibility to invest through the
economic cycle and give efficient access to debt markets
atattractive cost levels.
The groups funding, liquidity and exposure to foreign currency and interest rate risks are managed by the groups treasury department.
Thetreasury department uses arange of financial instruments to manage these underlying risks.
Treasury operations are conducted within aframework of board-approved policies and guidelines, which are recommended and
monitored by the finance committee, chaired by the chief financial officer. The policies and guidelines include benchmark exposure and/or
hedge cover levels for key areas of treasury risk which are periodically reviewed by the board following, for example, significant business,
strategic or accounting changes. The framework provides for limited defined levels of flexibility in execution to allow for the optimal
Hedge accounting
The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and
liabilities (fair value hedges), highly probable forecast transactions or the cash flow risk from achange in exchange or interest rates (cash
flow hedges) and hedges of net investments in foreign operations (net investment hedges). The effectiveness of such hedges is assessed
atinception and at least on aquarterly basis, using prospective and retrospective testing. Methods used for testing effectiveness include
dollar offset, critical terms, regression analysis and hypothetical derivative method.
Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are
exposed. Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair
value of the underlying hedged asset or liability.
If such ahedge relationship is de-designated, fair value movements on the derivative continue to be taken to the income statement
while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement over its
remaining life using the effective interest rate method.
Cash flow hedges are used to hedge the foreign currency risk of highly probable future foreign currency cash flows, as well as the cash
flow risk from changes in exchange or interest rates. The effective portion of the gain or loss on the hedges is recognised in other
comprehensive income, while any ineffective part is recognised in the income statement. Amounts recorded in other comprehensive
income are recycled to the income statement in the same period in which the underlying foreign currency or interest exposure affects
theincome statement.
Net investment hedges take the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on
translation of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as
hedging instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive
income to the extent that they are effective, with any ineffectiveness taken to the income statement. Foreign exchange contracts hedging
net investments are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any
ineffectiveness taken to the income statement.
Accounting policies
Financial assets and liabilities are initially recorded at fair value including any directly attributable transaction costs. For those financial assets
that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date.
The group classifies its financial assets and liabilities into the following categories: loans and receivables, available-for-sale investments,
financial assets and liabilities at fair value through profit and loss and other financial liabilities at amortised cost.
The accounting policies for available-for-sale investments and loans are described in note 12, for trade and other receivables in note 14
and for cash and cash equivalents in note 16.
Financial assets and liabilities at fair value through profit or loss include derivative assets and liabilities. Where financial assets or liabilities
are eligible to be carried at either amortised cost or fair value the group does not apply the fair value option.
Derivative financial instruments are carried at fair value using adiscounted cash flow technique based on market data applied
consistently for similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken
tothe income statement as they arise.
Other financial liabilities are carried at amortised cost unless they are part of afair value hedge relationship. The difference between
theinitial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual
terms using the effective interest rate method.
Governance
15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Strategic report
RISK
MANAGEMENT
AND CAPITAL
STRUCTURE

application of the board-approved strategies. Transactions arising

from the application of this flexibility may give rise to exposures
different from the defined benchmark levels that are separately
monitored on adaily basis using Value at Risk analysis. These
transactions are carried at fair value and gains or losses are taken to
the income statement as they arise. In the year ended 30 June 2015
and 30 June 2014 gains and losses on these transactions were not
material. The group does not use derivatives for speculative
purposes. All transactions in derivative financial instruments are
initially undertaken to manage the risks arising from underlying
business activities.
The group purchases insurance for commercial or, where required,
for legal or contractual reasons. In addition, the group retains
insurable risk where external insurance is not considered an
economic means of mitigating these risks.
The finance committee receives monthly reports on the activities
of the treasury department, including any exposures different from
the defined benchmarks.
(a) Currency risk
The group presents its consolidated financial statements in sterling
and conducts business in many currencies. As aresult, it is subject to
foreign currency risk due to exchange rate movements, which will
affect the groups transactions and the translation of the results and
underlying net assets of its operations. To manage the currency
risk the group uses certain financial instruments. Where hedge
accounting is applied, hedges are documented and tested for
effectiveness on an ongoing basis. Diageo expects hedges entered
into to continue to be effective and therefore does not expect the
impact of ineffectiveness on the consolidated income statement
tobe material.
Hedge of net investment in foreign operations
The group hedges certain portion of its exposure to fluctuations in
the sterling value of its foreign operations by designating borrowings
held in foreign currencies andusing foreign currency spots, forwards,
swaps and other financial derivatives. The groups policy is to
maintain total net investment Value at Risk below 1.5 billion, where
Value at Risk is defined as the maximum amount of loss not exceeded
over aone year period with a95% probability confidence level.
Borrowings and derivatives designated in net investment hedge
relationships amounted to 3,681 million as at 30 June 2015 (2014
3,749 million; 2013 5,539 million).
Hedge of foreign currency debt
The group uses cross currency interest rate swaps to hedge the
foreign currency risk associated with certain foreign currency
denominated borrowings.
Transaction exposure hedging
The groups policy is to hedge up to 24 months forecast transactional
foreign currency risk on the net US dollar exposure of the group
targeting 75% coverage for the current financial year and up to
18months for other currency pairs.
(b) Interest rate risk
The group has an exposure to interest rate risk, arising principally
onchanges in US dollar, euro and sterling interest rates. To manage
interest rate risk, the group manages its proportion of fixed to
floating rate borrowings within limits approved by the board,
primarily through issuing fixed and floating rate borrowings and

commercial paper, and by utilising interest rate derivatives. These
practices aim to minimise the groups net finance charges with
acceptable year on year volatility. To facilitate operational efficiency
and effective hedge accounting, the groups policy is to maintain
fixed rate borrowings within aband of 40% to 60% of forecast net
borrowings. For these calculations, net borrowings exclude interest
rate related fair value adjustments. The majority of Diageos existing
interest rate derivatives are designated as hedges and are expected
to be effective. Fair value of these derivatives is recognised in the
income statement, along with any changes in the relevant fair value
of the underlying hedged asset or liability. The groups net
borrowings interest rate profile is as follows:
2015
2014
million
million
Fixed rate
(4,564)
48
(4,922)
56
Floating rate(i)
(4,818)
51
(3,757)
42
Impact of financial
derivatives and fair
value adjustments
Net borrowings
(145)
(171)
(9,527)
100
(8,850)
100
(i) The floating rate portion of net borrowings includes cash and cash equivalents,
collaterals, floating rate loans and bonds, bank overdrafts and finance lease
obligations.
(1) The analysis above also includes the impact of interest rate hedging instruments.
The table below sets out the average monthly net borrowings and
effective interest rate:
Average monthly net borrowings
Effective interest rate
2015
million
2014
million
2013
million
2015
%
2014
%
2013
%
10,459
9,174
8,267
3.5
3.8
4.9
(1) For this calculation, net interest charge excludes fair value adjustments to derivative
financial instruments and borrowings and average monthly net borrowings includes
the impact of interest rate swaps that are no longer in ahedge relationship but
excludes the market value adjustment for cross currency interest rate swaps.
(c) Commodity price risk

The group is exposed to commodity price risk. Commodity price risk
is managed in line with the principles approved by the board either
through long term purchase contracts with suppliers or, where
appropriate, derivative contracts. Where derivative contracts are
used the commodity price risk exposure is hedged up to 18 months
forecasted volume usage with up to 80% coverage. Where derivative
contracts are used the group manages exposures principally through
exchange-traded futures, forwards, swaps and options.
(d) Market risk sensitivity analysis
The group uses asensitivity analysis that estimates the impacts on
the consolidated income statement and other comprehensive
income of either an instantaneous increase or decrease of 0.5% in
market interest rates or a10% strengthening or weakening in sterling
against all other currencies, from the rates applicable at 30 June 2015
and 30 June 2014, for each class of financial instruments with all other
variables remaining constant. The sensitivity analysis excludes the
impact of market risks on the net post employment benefit liability
and corporate tax payable. This analysis is for illustrative purposes
only, as in practice interest and foreign exchange rates rarely
changein isolation.

Impact on income
statement
gain/(loss)
Impact on consolidated
comprehensive income
gain/(loss)(i),(ii)
2015
million
2014
million
2015
million
2014
million
0.5% decrease in interest rates
(20)
(8)
(16)
(5)
0.5% increase in interest rates
20
17
(48)
(43)
(624)
(664)
40
35
512
545
10% weakening of sterling

10% strengthening of sterling
(f) Liquidity risk

Liquidity risk is the risk that Diageo may encounter difficulties in
meeting its obligations associated with financial liabilities that are
settled by delivering cash or other financial assets. The group uses
short term commercial paper to finance its day-to-day operations.
The groups policy with regard to the expected maturity profile of
borrowings is to limit the amount of such borrowings maturing
within 12 months to 50% of gross borrowings less money market
demand deposits, and the level of commercial paper to 30% of gross
borrowings less money market demand deposits. In addition, the
groups policy is to maintain backstop facilities with relationship
banks to support commercial paper obligations.
The following tables provide an analysis of the anticipated
contractual cash flows including interest payable for the groups
financial liabilities and derivative instruments on an undiscounted
basis. Where interest payments are on afloating rate basis, rates
of each cash flow until maturity of the instruments are calculated
based on the forward yield curve prevailing at 30 June 2015 and
30 June 2014. The gross cash flows of derivative contracts are
presented for the purposes of this table, although in practice, the
group uses netting arrangements to reduce its liquidity requirements
on these instruments.
Financial credit risk

Diageo aims to minimise its financial credit risk through the
application of risk management policies approved and monitored by
the Board. Counterparties are limited to major banks and financial
institutions, primarily with along term credit rating within the A band
or better, and the policy restricts the exposure to any one
counterparty by setting credit limits taking into account the credit
quality of the counterparty. The groups policy is designed to ensure
that individual counterparty limits are adhered to and that there are
no significant concentrations of credit risk. The Board also defines the
types of financial instruments which may be transacted. The credit
risk arising through the use of financial instruments for currency and
interest rate risk management is estimated with reference to the fair
value of contracts with apositive value, rather than the notional
amount of the instruments themselves.
When derivative transactions are undertaken with bank
counterparties, the group may, where appropriate, enter into certain
agreements with such bank counterparties whereby the parties
agree to post cash collateral for the benefit of the other if the net
valuations of the derivatives are above apredetermined threshold.
At30 June 2015, the collateral held under these agreements
amounted to $82 million (52 million) and 34 million (24 million)
(2014 $65 million (38 million) and 26 million (21 million)).
Diageo annually reviews the credit limits applied and regularly
monitors the counterparties credit quality reflecting market
creditconditions.
Business related credit risk

Loan, trade and other receivables exposures are managed locally
inthe operating units where they arise and credit limits are set as
deemed appropriate for the customer. There is no significant
concentration of credit risk with respect to loans, trade and other
receivables as the group has alarge number of customers which
areinternationally dispersed.
Governance
(i) The groups foreign currency debt is used to hedge the net investments in foreign operations and as such the translation of foreign net investments mainly offsets the foreign
currency gains or losses on financial instruments recognised in other comprehensive income.
(ii) Impact on the consolidated statement of comprehensive income includes the impact on the income statement.
(e) Credit risk

Credit risk refers to the risk that acounterparty will default on its
contractual obligations resulting in financial loss to the group.
Creditrisk arises on cash balances (including bank deposits and cash
and cash equivalents), derivative financial instruments and credit
exposures to customers, including outstanding loans, trade and
otherreceivables, financial guarantees and committed transactions.
The carrying amount of financial assets represents the groups
exposure to credit risk at the balance sheet date as disclosed in
section (i), excluding the impact of any collateral held or other
creditenhancements.
Credit risk is managed separately for financial and business related
credit exposures.
Strategic report
The sensitivity analysis estimates the impact of changes in interest and foreign exchange rates. All hedges are expected to be highly effective
for this analysis and it considers the impact of all financial instruments including financial derivatives, cash and cash equivalents, borrowings
and other financial assets and liabilities. The results of the sensitivity analysis should not be considered as projections of likely future events,
gains or losses as actual results in the future may differ materially due to developments in the global financial markets which may cause
fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table below.

Contractual cash flows

Due within
1year
million
Due between Due between

1 and 3 years 3 and 5 years
million
million
Due after
5 years
million
Total
million
Carrying
amount at
balance
sheet date
million
(9,838)
2015
Borrowings(i)
(1,920)
(2,556)
(968)
(4,365)
(9,809)
(340)
(479)
(334)
(1,434)
(2,587)
(68)
(38)
(50)
(70)
(104)
(262)
(262)
(13)
(19)
(16)
(23)
(71)
Interest on borrowings(i), (iii)

Finance lease capital repayments
Finance lease future interest payments
(ii)
Trade and other financial liabilities
(2,172)
(54)
(143)
(2,369)
(2,353)
Non-derivative financial liabilities
(4,483)
(3,158)
(1,531)
(5,926)
(15,098)
(12,521)
97
478
176
1,360
2,111
(162)
(374)
(110)
(1,154)
(1,800)
(65)
104
66
206
311
131
(1,564)
(1,891)
(1,905)
(3,806)
(9,166)
(9,214)
(349)
(482)
(345)
(1,522)
(2,698)
(91)
(32)
(59)
(48)
(152)
(291)
(291)
(15)
(25)
(19)
(29)
(88)
Gross amount receivable from derivatives

Gross amount payable on derivatives
Derivative instruments
2014 (restated)
Borrowings(i)
Interest on borrowings(i), (iii)
Finance lease capital repayments
Finance lease future interest payments
Trade and other financial liabilities
(2,066)
(185)
(8)
(3)
(2,262)
(2,223)
Non-derivative financial liabilities
(4,026)
(2,642)
(2,325)
(5,512)
(14,505)
(11,819)
(ii), (iv)
Gross amount receivable from derivatives
246
528
60
719
1,553
Gross amount payable on derivatives
(183)
(449)
(75)
(621)
(1,328)
63
79
(15)
98
225
164
Derivative instruments
(i) For the purpose of these tables above, borrowings are defined as gross borrowings excluding finance lease liabilities and fair value of derivative instruments as disclosed in
note16.
(ii) Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32.
(iii) Carrying amount of interest on borrowings is included within interest payable in note 14.
(iv) The group has revised the disclosure of certain comparative amounts. The revised disclosure is consistent with the current year presentation.
The group had available undrawn committed bank facilities as follows:
Expiring within one year(i)

Expiring between one and two years
Expiring after two years
2015
million
2014
million
688
1,535
632
1,541
1,050
2,229
3,217
(i) Of the facilities at 30 June 2014 $2,000 million (1,170 million) was not drawn down
and was cancelled on 2 July 2014.
The facilities can be used for general corporate purposes and,

together with cash and cash equivalents, support the groups
commercial paper programmes.
There are no financial covenants on the groups material short
andlong term borrowings. Certain of these borrowings contain
crossdefault provisions and negative pledges.
The committed bank facilities are subject to asingle financial
covenant, being minimum interest cover ratio of two times (defined
as the ratio of operating profit before exceptional items, aggregated
with share of after tax results of associates and joint ventures, to net
interest). They are also subject to pari passu ranking and negative
pledge covenants.
Any non-compliance with covenants underlying Diageos
financing arrangements could, if not waived, constitute an event
ofdefault with respect to any such arrangements, and any noncompliance with covenants may, in particular circumstances, lead
toan acceleration of maturity on certain borrowings and the inability
to access committed facilities. Diageo was in full compliance with its
financial, pari passu ranking and negative pledge covenants in
respect of its material short and long term borrowings throughout

each of the years presented.
(g) Fair value measurements
Fair value measurements of financial instruments are presented
through the use of athree-level fair value hierarchy that prioritises
thevaluation 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 instruments
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
inthehierarchy.
Available-for-sale investments at 30 June 2015 comprise shares
held in United Breweries Limited categorised as level 1 in hierarchy.
Other financial liabilities include an option held by Industrias Licoreras
de Guatemala to sell the remaining 50% equity stake in Rum
Creations Products Inc, the owner of the Zacapa rum brand, to
Diageo, with changes in fair value of this 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.

Available-for-sale investments (note 12)

Unadjusted quoted prices in active markets
(Level 1)
2015
million
2014
million
80
80
Derivative assets
338
368
Derivative liabilities
(198)
(194)
Valuation techniques based on observable

market input (Level 2)
140
174
(139)
(108)
Valuation techniques based on unobservable

market input (Level 3)
(139)
(108)

2015
million
2014
million
(108)
(115)
Net losses included in the income statement
(14)
(1)
Net (losses)/gains included in exchange in other

comprehensive income
(11)
13
Net losses included in retained earnings
(9)
(7)
Settlement of liabilities
(139)
(108)
At 1 July
At 30 June
There were no transfers between levels during the two years ended
30June 2015 and 30 June 2014.
Governance
The movements in level 3 instruments, measured on arecurring

basis, are as follows:
(h) Results of hedging instruments

In respect of cash flow hedging instruments, aloss of 46 million
(2014 54 million gain; 2013 41 million loss) has been recognised
in other comprehensive income due to changes in fair value. Aloss of
26 million has been transferred out of other comprehensive income
to other operating expenses and again of 84 million to other finance
charges, respectively (2014 again of 54 million and aloss of
88 million; 2013 again of 8 million and 25 million, respectively).
For cash flow hedges of forecast transactions at 30 June 2015,
based on year end interest and foreign exchange rates, there is
expected to be aloss to the income statement of 9 million in 2016
and again of 15 million in 2017. With respect to hedges of the cash
flow risk from achange in forward foreign exchange rates using cross
currency interest rate swaps, the retranslation of the related bond
principal to closing foreign exchange rates and recognition of interest
on the related bonds will affect the income statement in each year
until the related bonds mature in 2016, 2036 and 2043. Foreign
exchange retranslation and the interest on the hedged bonds in the
income statement are expected to offset those on the cross currency
swaps in each of the years.
The gain on fair value hedging instruments for the year was
11 million (2014 8 million gain; 2013 3 million loss) and the loss
on the hedged items attributable to the hedged risks was 11 million
(2014 6 million loss; 2013 3 million gain).
There was no significant ineffectiveness on net investment
hedging during the year ended 30 June 2015.
Strategic report
The groups financial assets and liabilities measured at fair value are
categorised as follows:

(i) Reconciliation of financial instruments

The table below sets out the groups accounting classification of each class of financial assets and liabilities:
Loans and
Fair value
receivables
through income and liabilities at
statement amortised cost
million
million
2015
Other investments and loans
Derivatives in fair value hedge
Derivatives in cash flow hedge
Derivatives in net investment hedge
Other instruments at fair value
Total other financial assets
Total financial assets
Borrowings(i)
Finance leases
Total other financial liabilities
Total financial liabilities
Total net financial assets/(liabilities)
2014
Other investments and loans
Derivatives in fair value hedge
Total other financial assets
Total financial assets
Borrowings(i)
Finance leases
Total other financial liabilities
Total financial liabilities
Total net financial assets/(liabilities)
Availablefor-sale
million
Not categorised
as afinancial
instrument
million
Total
million
Current
million
Non-current
million
19
186
11
122
338
338
(51)
(52)
(234)
(337)
(337)
1
29
2,184
472
2,685
(9,838)
(2,291)
(262)
(262)
(12,391)
(9,706)
80
80
80
297
297
(721)
(721)
(424)
109
2,481
472
19
186
11
122
338
3,400
(9,838)
(3,012)
(51)
(52)
(234)
(262)
(599)
(13,449)
(10,049)
2,435
472
21
8
17
46
2,953
(1,921)
(2,943)
(31)
(52)
(35)
(38)
(156)
(5,020)
(2,067)
109
46
19
165
3
105
292
447
(7,917)
(69)
(20)
(199)
(224)
(443)
(8,429)
(7,982)
8
182
18
160
368
368
(20)
(67)
(215)
(302)
(302)
66
63
2,337
622
3,022
(9,214)
(2,253)
(291)
(291)
(11,758)
(8,736)
269
269
(641)
(641)
(372)
63
2,606
622
8
182
18
160
368
3,659
(9,214)
(2,894)
(20)
(67)
(215)
(291)
(593)
(12,701)
(9,042)
2,499
622
67
16
35
118
3,239
(1,576)
(2,800)
(6)
(67)
(41)
(32)
(146)
(4,522)
(1,283)
63
107
8
115
2
125
250
420
(7,638)
(94)
(14)
(174)
(259)
(447)
(8,179)
(7,759)
(i) Borrowings are defined as gross borrowings excluding finance lease liabilities and the fair value of derivative instruments.
At 30 June 2015 and 30 June 2014, the carrying values of cash and cash equivalents, other financial assets and liabilities approximate to fair
values. At 30 June 2015 the fair value of borrowings, based on unadjusted quoted market data, was 10,115 million (2014 9,662 million).
(j) Capital management
The groups management is committed to enhancing shareholder value in the long term, both by investing in the businesses and brands so
asto deliver continued improvement in the return from those investments and by managing the capital structure. Diageo manages its capital
structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at
attractive cost levels.This is achieved by targeting anet borrowing to EBITDA leverage of 2.5 3.0x, this range for Diageo being currently
broadly consistent with an A band credit rating. Diageo would consider operating outside of this range in order to effect strategic initiatives
within its stated goals, which could have an impact on its rating.If Diageos leverage was to be negatively impacted by the financing of an
acquisition, it would seek over time to return to the range of 2.5 3.0x.The group regularly assesses its debt and equity capital levels against
itsstated policy for capital structure.For this calculation net borrowings are adjusted by the pension deficit whilst EBITDA equals operating
profit excluding exceptional operating items and depreciation, amortisation and impairment and includes share of after tax results of
associatesand joint ventures.

Strategic report
16. NET BORROWINGS

Accounting policies
Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are
designated as being part of afair value hedge relationship. In these cases, the amortised cost is adjusted for the fair value of the risk being
hedged, with changes in value recognised in the income statement. The fair value adjustment is calculated using adiscounted cash flow
technique based on unadjusted market data.
Bank overdrafts form an integral part of the groups cash management and are included as acomponent of net cash and cash
equivalents in the consolidated statement of cash flows.
Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to known amounts of cash and which are
subject to insignificant risk of changes in value and have an original maturity of three months or less, including money market deposits,
commercial paper and investments.
Net borrowings are defined as gross borrowings (short term borrowings and long term borrowings plus finance lease liabilities plus
interest rate hedging instruments, cross currency interest rate swaps and funding foreign currency forwards and swaps used to manage
borrowings) less cash and cash equivalents.
90
129
193
59
800
292
13
1,576
438
437
350
582
729
377
676
355
581
174
784)
674
234
346
289
286
117
80
129
7,638
(25)
(8)
291
9,472
(622)
8,850
(i) Includes cash equivalents of 1 million (2014 18 million).

(1) The interest rates shown in the table above are those contracted on the underlying
borrowings before taking into account any interest rate hedges (see note 15).
(2) Bonds in the table are stated net of unamortised finance costs of 82 million
(2014 94 million; 2013 100 million).
(3) Bonds are reported in the table above at amortised cost with afair value adjustment
shown separately.
(4) All bonds, medium term notes and commercial paper issued by the groups wholly
owned subsidiaries are fully and unconditionally guaranteed by Diageo plc.
2015
million
2014
million
2013
million
Within one year
1,921
1,576
1,852
Between one and three years
2,607
1,894
2,220
970
1,972
2,509
4,340
3,772
3,488
9,838
9,214
10,069
Between three and five years

Beyond five years
During the year the following bonds were issued and repaid:
2015
million
2014
million
791
1,378
2,100
2013
million
Issued
denominated
US$ denominated
Repaid
denominated
(792)
(983)
US$ denominated
(330)
(488)
(869)
denominated(i)
(370)
(701)
(93)
1,231
(i) A bond of 370 million acquired on the purchase of USL was repaid using the
proceeds from the sale of the Whyte and Mackay Group.
(a) Reconciliation of movement in net borrowings
At beginning of the year

Net decrease in cash and cash equivalents
before exchange
2015
million
2014
million
8,850
8,403
77
921
Net decrease in bonds and other borrowings
(315)
(157)
Change in net borrowings from cash flows
(238)
764
Exchange differences on net borrowings
(349)
Borrowings on acquisition of businesses
869
Other non-cash items

Net borrowings at end of the year
39
32
9,527
8,850
90
354
444
76
478
477
2
1,921
382
635
795
412
359
601
399
633
189
855
351
597
255
378
315
312
127
213
109
7,917
(82)
(19)
262
9,999
(472)
9,527
Bank overdrafts
Commercial paper
Bank and other loans
Credit support obligations
1,000 million 6.625% bonds due 2014
US$ 500 million 3.25% bonds due 2015
Fair value adjustment to borrowings
Borrowings due within one year
US$ 1,000 million 1.5% bonds due 2017
500 million 1.125% bonds due 2019
US$ 300 million 8% bonds due 2022
US$ 200 million 4.85% medium term notes due 2018
Bank and other loans
Fair value adjustment to borrowings
Borrowings due after one year
Fair value of foreign currency derivatives
Fair value of interest rate hedging instruments
Finance lease liabilities
Gross borrowings
Less: Cash and cash equivalents(i)
Net borrowings
Gross borrowings (excluding finance lease liabilities and the fair value
ofderivative instruments) will mature as follows:
2014
million
Governance
2015
million

(b) Analysis of net borrowings by currency

2015
2014
Cash and cash

equivalents
million
Gross
borrowings(i)
million
Cash and cash

equivalents
million
Gross
borrowings(i)
million
US dollar
35
(2,759)
(956)
Euro
44
(1,410)
48
(1,725)
Sterling
28
(5,200)
26
(6,148)
Indian rupee
13
(486)
14
(39)
Korean won
80
208
(243)
Nigerian naira
16
(76)
19
(134)
Turkish lira
(67)
(145)
Venezuelan bolivar
72
Other
243
(1)
229
(82)
Total
472
(9,999)
622
(9,472)
(i) The analysis of groups gross borrowings includes foreign currency forwards and swaps and finance leases.
17. EQUITY
Accounting policies
Own shares represent shares and share options of Diageo plc that
are held in treasury or by employee share trusts for the purpose of
fulfilling obligations in respect of various employee share plans or
were acquired as part of ashare buyback programme. Own shares
are treated as adeduction from equity until the shares are
cancelled, reissued or disposed and when vest are transferred from
own shares to retained earnings at their weighted average cost.
Share based payments include share awards and options
granted to directors and employees. The fair value of equity
settled share options and share grants is initially measured at grant
date based on the binomial or Monte Carlo models and is charged
to the income statement over the vesting period. For equity
settled shares the credit is included in retained earnings.
Cancellations of share options are treated as an acceleration of
the vesting period and any outstanding charge is recognised in
operating profit immediately. Any surplus or deficit arising on the
sale of the Diageo plc shares held by the group is included as
amovement in equity.
Dividends are included in the financial statements in the
financial year in which they are approved.
(a) Allotted and fully paid share capital ordinary shares of 28 108
pence each
101
At 30 June 2015, 30 June 2014 and

30June2013
Number
of shares
million
Nominal
value
million
2,754
797
(b) Hedging and exchange reserve

At 30 June 2015 the hedging reserve and exchange reserve
comprised acredit of 21 million and adeficit of 1,173 million,
respectively (2014 acredit of 107 million and adeficit of 1,010
million, respectively; 2013 acredit of 17 million and adeficit of
9million, respectively).
(c) Own shares

Movements in own shares
At 30 June 2012
Number
Purchase
of shares consideration
million
million
259
2,257
Share trust arrangements
(6)
(50)
Shares call options exercised
13
Shares purchased
125
Shares sold to employees
(1)
Shares used to satisfy options
(10)
(112)
At 30 June 2013
251
2,232
(3)
(42)
Shares call options exercised(i)
68
Shares purchased
138
Shares sold to employees
(1)
(9)
(115)
253
2,280
(2)
(18)
70
At 30 June 2014
Shares purchased
At 30 June 2015
(7)
(104)
248
2,228
(i) Includes the fair value of foreign currency denominated call options exercised.

At 30 June 2015 the employee share trusts owned 8 million of ordinary
shares in Diageo plc at acost of 119 million and market value of
149 million (2014 10 million shares at acost of 137 million, market
value 181 million; 2013 7 million shares at acost of 111 million,
market value 126 million). Dividends receivable by the employee share
trusts on the shares are waived and the trustee abstains from voting.
Purchase of own shares
Authorisation was given by shareholders on 18 September2014 to
purchase amaximum of 251,215,000 shares at aminimum price of
28101/108 pence and amaximum price of higher of (a)105% of the
average of the middle market quotations for an ordinary share for
thefive preceding business days and (b)the higher of the price of
thelast independent trade and the highest current independent bid
on the London Stock Exchange at the time the purchase is carried
out. The programme expires at the conclusion of the next Annual
General Meeting or on 17 December 2015, if earlier.

Number
of shares
purchased
Average
price paid
pence
September 2014(i)
1,698,461
1781
249,516,539
636,883
1766
248,879,656
March 2015
October 2014
1,801,230
1864
247,078,426
Total
4,136,574
1815 247,078,426
(i) Including 297,229 shares purchased at an average price of 1819 pence for the
purpose of satisfying share awards made under the companys share incentive plan.
(1) The aggregate consideration paid for purchase of own shares was 75 million
(excluding expenses) in the year ended 30 June 2015.
2015
million
2014
million
2013
million
801
735
673
Amounts recognised as
distributions to equity
shareholders in the year
Final dividend for the year ended
30 June 2014
32.0 pence per share (2013
29.3pence; 2012 26.9 pence)
Interim dividend for the year
ended 30 June 2015
21.5 pence per share (2014
19.7 pence; 2013 18.1 pence)
540
493
452
1,341
1,228
1,125
The proposed final dividend of 875 million (34.9 pence per share)
for the year ended 30 June 2015 was approved by the board of
directors on 29 July 2015. As this was after the balance sheet date
andthe dividend is subject to approval by shareholders at the
AnnualGeneral Meeting, this dividend has not been included as
aliability in these consolidated financial statements. There are
nocorporate tax consequences arising from this treatment.
Dividends are waived on all treasury shares owned by the
company and all shares owned by the employee share trusts.
2014
USL
million
Total
million
Total
million
2,363
926
(10)
50
40
18
1,627
1,324
200
66
266
131
3,990
2,250
190
116
306
149
1,534
1,258
(69)
(239)
(308)
(187)
2,132
527
(579)
(580)
1,500
659
2,264
518
(723)
(462)
1,597
826
4,396
1,045
(1,302)
(1,042)
3,097
1,485
2,206
525
(757)
(485)
1,489
767
(32)
388
(373)
(17)
2
314
(88)
(196)
30
1
(72)
282
300
(569)
13
3
(72)
132
(68)
(18)
46
1
(88)
(i) The loss for the year ended 30 June 2014 included an exceptional impairment loss, net of tax, in respect of the Shui Jing Fang brand and property of 199 million.
(ii) Other comprehensive income/(loss) is principally in respect of exchange on translating the subsidiary to sterling.
(iii) Ketel One includes the global distribution rights to distribute Ketel One vodka products throughout the world. The carrying value of the distribution rights at 30 June 2015
was1,147 million (2014 1,053 million).
Income statement
Sales
Net sales
(Loss)/profit for the period(i)
Other comprehensive income/(loss)(ii)
Total comprehensive income/(loss)
Attributable to non-controlling interests
Balance sheet
Non-current assets(iii)
Current assets
Current liabilities
Net assets
Attributable to non-controlling interests
Cash flow
Net cash inflow/(outflow) from investing activities
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Dividends paid to non-controlling interests
2015
Ketel One
and others
million
(e) Non-controlling interests

Diageo consolidated USL with 43.91% non-controlling interests from 2 July 2014. Diageo owns a50% controlling interest (2014 50%) in Ketel
One Worldwide B.V. (Ketel One), acompany incorporated in the Netherlands. All other consolidated subsidiaries are fully owned or the
non-controlling interests are not material.
Summarised financial information for USL, Ketel One and others, after fair value adjustments on acquisition, and the amounts attributable
to non-controlling interests are as follows:
Governance
Calendar month
Authorised
purchases
unutilised at
month end
(d) Dividends
Strategic report
During the year ended 30 June 2015, the company purchased

4million ordinary shares (including shares acquired through call
option exercises), nominal value of 1 million (2014 14 million
ordinary shares, nominal value of 4 million; 2013 8 million ordinary
shares, nominal value of 2 million), representing approximately 0.1%
(2014 0.5%; 2013 0.3%) of the issued ordinary share capital
(excluding treasury shares).
Shares were either directly granted to employees as part of
employee share schemes or held as treasury shares and used to hedge
share scheme grants to employees during the course of the year.
The monthly breakdown of shares purchased and the average
price paid per share (excluding expenses) for the year ended
30 June 2015 were as follows:

(f) Employee share compensation

The group uses anumber of share award and option plans to grant
toits directors and employees.
The annual fair value charge in respect of the equity settled plans
for the three years ended 30 June 2015 is as follows:
Executive share award plans
2015
million
2014
million
2013
million
27
30
31
For the three years ended 30 June 2015, the calculation of the fair
value of each share award used the Monte Carlo pricing model
andthe following weighted average assumptions:
2015
2014
2013
1.4%
1.0%
0.3%
37 months
36 months
36 months
3.1%
2.7%
2.7%
1832p
1970p
1760p
753p
1147p
916p
Number of awards granted in

the year
2.5 million
2.5 million
3.1 million
Fair value of all awards granted

in the year
19 million
29 million
28 million
Risk free interest rate

Expected life of the awards
Dividend yield
Executive share option plans
Weighted average share price
Savings plans
35
37
45
Weighted average fair value of

awards granted in the year
Executive share awards are made under the Diageo 2014Long Term
Incentive plan (DLTIP) from September 2014 onwards. Prior to that,
awards were made under the Diageo Executive Long Term Incentive
Plan (DELTIP) or the Performance Share Plan (PSP). Under all of these
plans, conditional awards can be delivered in the form of restricted
shares or share options at the market value at the time of grant.
Todate, participants in the Performance shares under the DLTIP
(previous PSP) have been granted only with conditional rights to
receive shares, whilst under DELTIP both share awards and share
options have been made.
Share awards vest and are released on the third anniversary of the
grant date. Participants do not make apayment to receive the award
at grant. Executive Directors are required to hold any vested shares
awarded from 2014 for afurther two-year period. Share options may
normally be exercised between three and ten years after the grant
date. Executives in North America and Latin America and Caribbean
are granted awards over the companys ADSs (one ADS is equivalent
to four ordinary shares).
Performance shares under the DLTIP (previous PSP) are subject
toachievement of three equally weighted performance tests over
the three-year performance period; 1) acomparison of Diageos
three-year TSR with apeer group; 2) compound annual growth in
organic net sales over three years; 3) total organic operating margin
improvement over three years. Performance measures and targets
are set annually by the remuneration committee. The vesting range
is20% or 25% (for Executive Directors and for other participants
respectively) for achieving minimum performance targets, up to
100% for achieving the maximum target level. Retesting of the
performance condition is not permitted.
For performance shares under the DLTIP (previous PSP) dividends
are accrued on awards and are given to participants to the extent
that the awards actually vest at the end of the performance period.
Dividends can be paid in the form of cash or shares.
Transactions on schemes
Transactions on the executive share award plans for the three years
ended 30 June 2015 were as follows:
2015
Number of
awards
million
2014
Number of
awards
million
2013
Number of
awards
million
12.0
Balance outstanding at 1 July
9.4
11.3
Granted
2.5
2.5
3.1
Exercised/awarded
(2.6)
(3.4)
(2.6)
Forfeited/expired
(1.7)
(1.0)
(1.2)
7.6
9.4
11.3
Balance outstanding at 30 June
At 30 June 2015, 7.2 million executive share options were exercisable

at aweighted average exercise price of 1122 pence.

FINANCIAL STATEMENTS OF THE GROUP: OTHER FINANCIAL INFORMATION
This section includes additional financial information that

are either required by the relevant accounting standards
ormanagement considers these to be material information
for shareholders.
Accounting policies
Provision is made for the anticipated settlement costs of legal or
other disputes against the group where it is considered to be
probable that aliability exists and areliable estimate can be made
of the likely outcome. Where it is possible that asettlement may
be reached or it is not possible to make areliable estimate of the
estimated financial effect appropriate disclosure is made but no
provision created.
(a) Guarantees and related matters

As of 30 June 2015, the group has no material guarantees or
indemnities in respect of liabilities of third parties with the exception
of the following:
Diageo Holdings Netherlands B.V. (DHN) has issued a conditional
backstop guarantee to Standard Chartered Bank (Standard Chartered)
pursuant to a guarantee commitment agreement (the guarantee
agreement). The guarantee is in respect of the liabilities of Watson
Limited (Watson), a company affiliated with Dr Vijay Mallya, under
a $135 million (81 million) facility from Standard Chartered. The
guarantee agreement was entered into as part of the arrangements
put in place and announced at closing of the USL transaction on
4 July 2013. DHNs provision of the guarantee agreement enabled
the refinancing of certain existing borrowings of Watson to 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.
Standard Chartered is required to take certain pre-agreed steps
to recover from Watson prior to calling on the DHN guarantee. The
underlying security package held by Standard Chartered includes
shares in United Breweries Limited (UBL) and Watsons interest in
the joint venture that owns the Force India Formula One (F1) team.
In June 2015, a consortium of banks led by State Bank of India (SBI)
obtained an order from the Debt Recovery Tribunal (DRT) in
Bangalore preventing the sale or any other transfer of such UBL
shares as part of the enforcement process pending further orders
from the DRT. DHN intends to vigorously pursue all options to appeal
or lift the DRT order in order to allow for the sale of shares and
recovery of outstanding amounts. This order was passed following

A judgement is necessary in assessing the likelihood that aclaim
will succeed, or aliability will arise, and to quantify the possible
range of any settlement. Due to the inherent uncertainty in this
evaluation process, actual losses may be different from the liability
originally estimated.
the filing of a memo by Dr Mallya with the tribunal that he had no

objection to it issuing the order in respect of the UBL shares. Diageo
believes that the existence of any prior rights or dispute in relation to
the UBL shares would be in breach of representations and warranties
given to Standard Chartered at the time the security was granted and
further believes that Dr Mallyas filing of the memo with the tribunal
and his failure to object to the order for status quo are breaches of his
obligations to Standard Chartered.
Under the terms of the guarantee, there are arrangements to pass
on to DHN the benefit of the security package if it makes a payment
under the guarantee of all amounts owed to Standard Chartered.
However, DHNs ability to assume or enforce security over elements
of the security package is subject to regulatory consent. It is not at
this stage possible to determine whether such consent would be
forthcoming.
In addition, DHN has the benefit of counter-indemnities from
Watson and Dr Mallya in respect of its liabilities under the guarantee.
In the event that DHN makes any payment under the guarantee,
DHN would intend to pursue claims under these indemnities to seek
to recover any outstanding amounts.
In light of the litigation risk associated with the UBL shares and
the potential loss of realisable value of the F1 security during
enforcement, Diageo believes the outstanding amounts may not be
fully recoverable through the security enforcement process and/or
otherwise paid under the counter-indemnities. However, Diageo is
unable to meaningfully quantify the potential outcome from the
recovery of the security package and/or the counter-indemnities and
therefore any possible loss.
Dr Mallya has indicated, both in response to DHN notifying its
intention to bring counter-indemnity claims in respect of any liability
incurred under DHNs guarantee of the Watson facility and as a standalone matter, that he believes he has certain claims against Diageo
arising out of the failure to conclude a joint venture with him in
respect of certain emerging markets in Africa and Asia (excluding
India) and to provide significant financial benefits to him.
The possibility of an emerging markets joint venture was
previously disclosed by Diageo in the announcement of its initial
USL transaction on 9 November 2012, alongside the details of a
non-binding memorandum of understanding for the establishment
of a joint venture to own United National Breweries traditional
sorghum beer business in South Africa (UNB joint venture). That
announcement noted that it was not certain whether the emerging
markets joint venture would be established or, if so, on what basis.
Subsequently, at the time of completion of its initial USL transaction
on 4 July 2013, Diageo announced that, once Diageo and Dr Mallyas
near-term priority of the integration of USL into the Diageo group
was successfully underway, Diageo and Dr Mallya would explore the
opportunity of extending their relationship into other emerging
Governance
18. CONTINGENT LIABILITIES AND LEGAL PROCEEDINGS
Strategic report
OTHER FINANCIAL
INFORMATION

markets in Africa and Asia (excluding India) through a further joint

venture relationship on terms and with a scope yet to be determined.
This announcement also stated that it was not certain whether such
a joint venture would be established and, if so, on what basis, albeit
that it was contemplated that it would absorb the UNB joint venture
(which had since become the subject of definitive agreement as
announced by Diageo on 28 January 2013 and completion of which
took place on 27 June 2013 following receipt of necessary regulatory
and competition clearances). As announced on 2 April 2015, Diageo
agreed to acquire the remaining 50% of the UNB joint venture, and
this acquisition completed on 29 May 2015 at which point UNB
became a wholly owned Diageo group subsidiary.
Diageo believes, consistently with its prior disclosures, that it has
no outstanding obligations to Dr Mallya as regards the establishment
of an emerging markets joint venture or the provision of financial
benefits. Diageo would contend vigorously any such claim that may
be brought by Dr Mallya whether in the context of a counterindemnity claim for DHNs liability under its guarantee of the Watson
facility or otherwise.
(b) Colombian litigation
An action was filed on 8 October 2004 in the United States District
Court for the Eastern District of New York by the Republic of Colombia
and anumber of its local government entities against Diageo and
other spirits companies, alleging several causes of action, including
violations of the Federal RICO Act. This claim was dismissed in
November 2012. The dismissal was without prejudice and as such,
plaintiffs are not barred from bringing asimilar action in future,
although the company currently believes any such future action to be
unlikely. Diageo remains committed to continued dialogue with the
Colombian governmental entities to address the underlying issues.
(c) Korean customs dispute
On 5 January 2015, Diageo Korea accepted the Korean court
recommendation to settle litigation against Korea customs regarding
the transfer pricing methodology applicable to spirits imported
between 2004 and 2010. For the fiscal year ended 30 June 2015,
Diageo has charged 146 million before tax in respect of resolving
this dispute as well as other related matters.
Total payments made to settle this dispute in 2015 were
74 million. 87 million was paid to the customs authorities prior to
30 June 2014, and at 30 June 2014 was accounted for as areceivable
from Korean customs. It is expected that any outstanding items
willbe settled and the customs dispute concluded within the next
18months based on historical case timelines.
(d) Thalidomide litigation
In June 2014, claims forms alleging product liability and negligence
forinjuries arising from the consumption of thalidomide were filed in
the High Court in London against Distillers Company (Biochemicals)
Limited, its parent Diageo Scotland Limited (formerly Distillers
Company Limited), as well as against Grnenthal GmbH, the developer
of the drug (not amember of the group). On 4 December 2014 these
claims forms were served by lawyers acting for the claimants.
Sincethen the proceedings in respect of the 28 individuals that
havenow issued claims in the United Kingdom have been stayed
until31 December 2015.
Diageo is unable to meaningfully quantify the possible loss or
range of loss to which these lawsuits may give rise. Distillers Company
(Biochemicals) Limited distributed thalidomide in the United
Kingdom for aperiod in the late 1950s and early 1960s.
Diageo has worked voluntarily for many years with various
thalidomide organisations and has provided significant
financialsupport.
(e) 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 ashare
purchase agreement with United Breweries (Holdings) Limited (UBHL)
and various other sellers (the SPA), of 21,767,749 shares (14.98%) in USL
for atotal consideration of INR 31.3 billion (342 million), including
10,141,437 shares (6.98%) from UBHL. Through aseries of further
transactions, as of 2 July 2014, Diageo has a54.78% 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 (the High Court) had granted leave to UBHL under
sections 536 and 537 of the Indian Companies Act (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 (the Original 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 atimely 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
filedbyvarious petitioners in respect of the Leave Order.
On20 December 2013, the division bench of the High Court set
asidetheLeave Order (the 20 December Order). Following the
20December Order, Diageo filed special leave petitions (SLPs)
intheSupreme Court of India against the 20 December Order.
On 10 February 2014, the Supreme Court of India issued an order
admitting the SLPs and ordering that the status quo be maintained
with regard to the UBHL Share Sale. The SLPs were last scheduled to
be heard by the Supreme Court on 22 July 2015. The hearing did not,
however, take place on that date. The latest indication from the
Supreme Court website is that the matter is likely to be listed on
26 August 2015.
In separate proceedings, the various winding-up petitions against
UBHL have been progressing through the High Court since closing
ofthe UBHL Share Sale. In separate rulings issued by the High Court
on 22 November 2013 and 13 December 2013, the High Court
admitted two of the winding-up petitions against UBHL. An appeal
filed by UBHL against the first ruling issued on 22 November 2013
was dismissed by adivision bench of the High Court on
16 December 2013. That dismissal is now the subject of afurther
appeal by UBHL before the Supreme Court of India. On 6 February
2014, UBHL filed an appeal with adivision bench of the High Court
against the second ruling issued on 13 December 2013 and that
appeal is still pending. The last hearing date of that appeal was
18 June 2015, and the next hearing date is yet to be fixed. The High
Court admitted afurther six winding-up petitions against UBHL on
2 January 2015. On 22 January 2015 and 27 March 2015, UBHL filed
appeals with adivision bench of the High Court against the latest
admission order. Two of these appeals were last heard on
11 June 2015, and one appeal was last heard on 17 June 2015. The
matters were adjourned following the last hearings and the next
hearing dates for these appeals are yet to be fixed.
Diageo continues to believe that the acquisition price of INR 1440
paid to UBHL for the USL shares is fair and reasonable as regards
UBHL, UBHLs shareholders and UBHLs secured and unsecured

(g) SEC Inquiry

Diageo has received an inquiry from the US Securities and Exchange
Commission (SEC) regarding its distribution in the United States.
Diageo is currently responding to the SECs request for information in
this matter. Diageo is unable to assess if the inquiry will evolve into a
broader information request or an enforcement action or, if this were
to transpire, to quantify meaningfully the possible loss or range of
loss, if any, to which any such action might give rise.
Governance
(f) USL internal inquiry and related matters

In a notice to the Indian stock exchange dated 4 September 2014,
USL announced that its board of directors had directed an inquiry
into certain matters referred to in USLs financial statements and the
qualified auditors report for the financial year ended 31 March 2014
(the Inquiry). The transactions noted in the Inquiry occurred prior to
Diageo gaining significant influence over USL on 4 July 2013 when
it completed the transaction to purchase shares in USL to take its
aggregate shareholding to 25.02%. USL provided an update on
25 April 2015 in relation to the Inquiry which covered various
matters, including certain doubtful receivables, advances and
deposits. An additional update was set out in USLs announcement
on 23 July 2015 of its unaudited financial results for its first quarter
ended 30 June 2015.
As stated by USL in its update, the Inquiry: (a) revealed that funds
involved in many of the commercial transactions covered by the
Inquiry were diverted from USL and/or its subsidiaries to certain
companies in the UBHL group, including in particular Kingfisher
Airlines Limited; (b) prima facie revealed that certain accounting
entries appear to have been made and certain transactions entered
into on behalf of USL appear to have been undertaken in order to
show a lower exposure of USL (and its subsidiaries) to UBHL than that
which actually existed at the relevant time; and (c) also identified
certain additional matters where documents identified raised
concerns as to the propriety of certain underlying commercial
transactions with counterparties referred to in the notes to USLs
audited accounts for the financial year to 31 March 2014. The inquiry
suggests that the manner in which these various transactions were
conducted, prima facie, indicates various improprieties and potential
violations of provisions, inter alia, of the Indian Companies Act 1956
and the listing agreements signed by USL with various stock
exchanges in India on which its securities are listed.
USL has recorded provisions in an aggregate amount of INR 6,712
million (approximately 65 million) with respect to (a) above, and in
an aggregate amount of INR 2,368 million (approximately 23 million)
with respect to (c) above. Diageo believes that these provisions
represent the full amount of funds indicated by the Inquiry as having
been diverted from USL and its subsidiaries to companies in the

UBHL group in respect of such transactions. These amounts were
fully provided for in the fair value balance sheet consolidated by
Diageo on 2 July 2014. Diageo does not expect any further material
financial impact on USL or Diageos financial results in connection
with such transactions.
The USL board stated in its update of 25 April 2015 that it was not
in a position to make any final determinations with regard to the
position of any individuals involved and therefore directed USL to
report the relevant transactions to the authorities as required under
applicable law and to provide the inquiry report to USLs auditors.
The USL board also resolved that USL should take the necessary steps
to pursue all rights and claims against, and expeditiously recover its
dues from, the relevant parties to the extent possible. As announced
by USL on 23 July 2015, it is now in the process of initiating steps for
recovery against the relevant parties.
In light of the above, and without making any determination as to
fault or culpability, the USL directors noted in the update of 25 April
2015 that they had lost confidence in Dr Vijay Mallya continuing in his
role as a director and as chairman of USL and therefore the USL board
called upon Dr Mallya to resign forthwith as a director and as
chairman of the board and step down from his positions in USLs
subsidiaries. The board of USL also resolved that, in the event Dr
Mallya declined to step down, it would recommend to the
shareholders of USL the removal of Dr Mallya as a director and as
the chairman of the board. Dr Mallya has indicated he will not tender
his resignation.
Diageo is the majority shareholder in USL with a 54.78% holding
in USL. As previously announced by Diageo, it has certain
contractual obligations to support Dr Mallya continuing as nonexecutive director and chairman of USL subject to certain conditions
and in the absence of certain defaults. Those matters were agreed
on 9 November 2012 as part of a broader shareholders agreement
and came into effect on 4 July 2013 when Diageo completed the
purchase of shares to take its aggregate shareholding in USL
to 25.02%.
Subsequent to its announcement of 25 April 2015, USL has
provided its inquiry report and all related materials to Diageo.
As announced by Diageo on 27 April 2015, Diageo has noted the
recommendation of the USL board and is considering its position
under its agreements with Dr Mallya and UBHL in light of the inquiry
report and materials provided to it. Diageos consideration of that
matter is ongoing and Diageo will continue to review closely
developments in respect of USL in this context.
USL made provisions in its financial statements for the two years
ended 31 March 2014 and 31 March 2015 in respect of the issues
identified by the Inquiry. The audit report on the financial statements
of USL for the year ended 31 March 2015 was also qualified in respect
of the issues.
Strategic report
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 10,141,437 USL shares
acquired from UBHL. Diageo believes it would remain in control of
USL and be able to consolidate USL as asubsidiary 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
orthe timeframe within which they would be concluded.
Diageo also has the benefit of certain contractual undertakings
andcommitments 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.
Separately, Diageo continues to pursue completion of the
acquisition of an additional 3,459,090 USL shares (representing 2.38%
of the share capital of USL) under the SPA from the USL Benefit Trust.
Currently certain lenders to USL are refusing to release security
that they hold over those shares notwithstanding that they have
been repaid in full. USL is taking steps including proceedings before
the High Court to expedite the release of the security. As previously
disclosed, if it is not ultimately possible to complete the acquisition
inrelation to these shares, they would instead continue to be held
bythe USL Benefit Trust subject to an undertaking that the trustees
would only vote the shares at the direction of USL.

(h) Other
The group has extensive international operations and is defendant in
anumber of legal, customs and tax proceedings incidental to these
operations, the outcome of which cannot at present be foreseen.
In particular, the group is currently the defendant in various customs
proceedings that challenge the declared customs value of products
imported by certain Diageo companies. Diageo continues to defend
its position vigorously in these proceedings.
Save as disclosed above, neither Diageo, nor any member of the
Diageo group, is or has been engaged in, nor (so far as Diageo is
aware) is there pending or threatened by or against it, any legal or
arbitration proceedings which may have asignificant effect on the
financial position of the Diageo group.
19. COMMITMENTS
(a) Capital commitments
Commitments for expenditure on intangibles and property, plant
and equipment not provided for in these consolidated financial
statements are estimated at 114 million (2014 162 million;
2013 159 million).
(b) Operating lease commitments
The minimum lease rentals to be paid under non-cancellable leases,
principally in respect of properties, are as follows:
Payments falling due:

Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
2015
million
2014
million
96
70
61
51
51
217
546
102
80
59
50
43
223
557
There are no significant leases for which contingent rent is payable,

nor any that have purchase options, escalation clauses or restrictions.
Certain of the operating leases have renewal clauses which are at fair
market value. In respect of property not currently utilised, the group
has entered into sub-leases for which the minimum amount
receivable is 28 million (2014 21 million). The amount received
under these leases is included in sales in the income statement.
20. RELATED PARTY TRANSACTIONS

Transactions between the group and its related parties are made on
terms equivalent to those that prevail in arms length transactions.
(a) Subsidiaries
Transactions between the company and its subsidiaries are
eliminated on consolidation and therefore are not disclosed.
Details of the principal group companies are given in note 21.
(b) Associates and joint ventures
Sales and purchases to and from associates and joint ventures are
principally in respect of premium drinks products but also include
the provision of management services.
Transactions and financial position with associates and joint
ventures are set out in the table below:
Income statement items

Sales
Purchases(i)
Balance sheet items
Group payables
Group receivables
Loans payable
Loans receivable
Cash flow items
Loans and equity
contributions, net
2015
million
2014
million
2013
million
117
85
156
89
67
71
3
11
6
2
8
12
7
41
5
12
15
29
26
25
31
(i) In the year ended 30 June 2013 purchases of maturing inventories from Mot
Hennessy were 4million.
Other disclosures in respect of associates and joint ventures are

included in note 6.
(c) Key management personnel
The key management of the group comprises the Executive and
Non-Executive Directors, the members of the Executive Committee
and the Company Secretary. They are listed under Board of Directors
and Company Secretary and Executive Committee.
2015
million
2014
million
2013
million
Salaries and short term employee

benefits
10
Non-executive directors fees
Share-based payments(i)
13
16
Post employment benefits(ii)
Termination benefits
26
27
35
(i) Time-apportioned fair value of unvested options and share awards.

(ii) Includes the value of the cash allowance in lieu of pension contributions.
Non-Executive Directors do not receive share-based payments

orpost employment benefits. Details are given in the Directors
remuneration report of the individual Directors remuneration and
transactions between the group and key management personnel.

(e) Directors remuneration
2015
million
2014
million
Strategic report
(d) Pension plans

The Diageo pension plans are recharged with the cost of administration services provided by the group to the pension plans and with
professional fees paid by the group on behalf of the pension plans. The total amount recharged for the year was 13 million (2014 17 million;
2013 11 million).
2013
million
Salaries and benefits
Non-executive directors fees
Share option exercises(i)
13
Shares vesting(i)
10
Post employment benefits(ii)
10
16
31
Governance
(i) Gains on options realised in the year and the benefit from share awards, calculated by using the share price applicable on the date of exercise of the share options and release of
the awards.
(ii) Includes the value of the cash allowance in lieu of pension contributions.
Details of the individual Directors remuneration are given in the Directors remuneration report.
21. PRINCIPAL GROUP COMPANIES
The companies listed below include those which principally affect the profits and assets of the group. The operating companies listed below
may carry on the business described in the countries listed in conjunction with their subsidiaries and other group companies.
Percentage
of equity
owned(i)
Country of
incorporation
Country of
operation
Republic of Ireland
Worldwide
100%
Production, marketing and distribution of

premium drinks
Diageo Great Britain Limited
England
Worldwide
100%
Marketing and distribution of premium drinks
Diageo Scotland Limited
Scotland
Worldwide
100%

premium drinks
Business description
Subsidiaries
Diageo Ireland
Diageo North America, Inc.

United Spirits Limited(ii)
Netherlands
Worldwide
100%
Marketing and distribution of premium drinks
United States
Worldwide
100%
Production, importing, marketing and

distribution of premium drinks
India
India
54.78%
Production, importing, marketing and

distribution of premium drinks
Diageo Capital plc(iii)
Scotland
United Kingdom
100%
Financing company for the group
Diageo Finance plc(iii)
England
United Kingdom
100%
Financing company for the group
United States
United States
100%
Financing company for the US group
Turkey
Turkey
100%

premium drinks
France
France
34%

premium drinks
Diageo Investment Corporation

Mey ki Sanayi ve Ticaret A..
Diageo Brands B.V.
Associates
(i) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group.
(ii) Excluding 2.38% owned by the USL Benefit Trust.
(iii) Directly owned by Diageo plc.
(iv) French partnership.
Mot Hennessy, SNC(iv)

FINANCIAL STATEMENTS OF THE COMPANY
COMPANY BALANCE SHEET

30 June 2014
(restated)
30 June 2015
Notes
million
million
million
million
Fixed assets
Investments
27,042
27,028
Current assets
Debtors due within one year
945
Amounts owed by group undertakings

Financial assets
Other debtors
26
61
74
347
317
Debtors due after one year

Financial assets
Cash at bank
4
1,359
424
Creditors due within one year

Financial liabilities
Other liabilities
(49)
(3)
(54)
(51)
Net current assets

Total assets less current liabilities
(103)
(54)
1,256
370
28,298
27,398
Creditors due after one year

Amounts owed to group undertakings
Financial liabilities
(8,576)
(7,914)
(347)
(316)
(12)
Other creditors
(17)
(8,935)
Provisions for liabilities and charges
Net assets before post employment liabilities

Post employment liabilities
Net assets
(8,247)
(178)
(185)
19,185
18,966
(4)
(4)
19,181
18,962
Capital and reserves

Called up share capital
Share premium
797
797
1,346
1,345
Merger reserve
9,161
9,161
Other reserves
3,146
3,146
Profit and loss account

Shareholders funds
4,731
4,513
19,181
18,962
Figures as at 30 June 2014 have been restated following achange in the disclosure of certain derivatives with subsidiary undertakings.
For an explanation of the effect of the restatement see basis of preparation.
The accompanying notes are an integral part of these parent company financial statements.
These financial statements were approved by aduly appointed and authorised committee of the board of directors on 29 July 2015
andwere signed on its behalf by Ivan Menezes and Deirdre Mahlan, Directors.
Company registration number No. 23307

Taxation
Current tax is based on taxable profit for the year. This requires an
estimation of the current tax liability together with an assessment
ofthe timing differences which arise as aconsequence of different
accounting and tax treatments. Full provision for deferred tax is made
for timing differences between the recognition of gains and losses in
the financial statements and their recognition in tax computations.
The amount of deferred tax reflects the expected recoverable amount
and is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using the basis of taxation
enacted or substantively enacted by the balance sheet date. The
company does not discount these balances. Tax benefits are not
recognised unless it is probable that the tax positions are sustainable.
Once considered to be probable, management reviews each material
tax benefit to assess whether aprovision should be taken against full
recognition of the benefit on the basis of potential settlement
through negotiation and/or litigation. Any interest and penalties
ontax liabilities are provided for in the tax charge.
Financial instruments
Derivative financial instruments are recognised in the balance sheet
at fair value calculated using discounted cash flow techniques based
on market data applied consistently for similar types of instruments.
Changes in the fair value of derivatives are reported in the
incomestatement.
Investments
Investments in subsidiaries are stated at their historical cost (i.e. the
fair value of the consideration given by the company) less, where
appropriate, impairment provisions for any permanent decrease in
value. The carrying amounts of the companys investments are
reviewed at each reporting date to determine whether there is an
indication of impairment. If such an indication exists, then the assets
recoverable amount is estimated. Losses are recognised in profit or
loss account and reflected in an allowance against the carrying value.
When asubsequent event causes the amount of impairment loss to
decrease, the decrease in impairment loss is reversed through profit
or loss account.
Pensions and other post employment benefits

The Diageo group operates anumber of defined benefit pension
plans. It is not possible to allocate the assets and liabilities of these
pension plans between individual companies and therefore the
company accounts for them as defined contribution plans.
Contributions payable in respect of defined contribution plans in
respect of current and former employees are charged to operating
profit as incurred. The company operates anumber of other post
employment benefit plans which are unfunded. The liability in respect
of these plans is recognised on the balance sheet representing the
present value of the obligations under the plans, net of related
deferred tax.
Future changes to accounting policies

The Financial Reporting Council recently issued FRS 100 Application
of Financial Reporting Requirements, FRS 101 Reduced Disclosure
Framework and FRS 102 The Financial Reporting Standard applicable
inthe UK and Republic of Ireland which will be first effective for the
company for the year ending 30 June 2016. FRS 100 sets out the
overall financial reporting framework whereas FRS 101 applies to the
company financial statements allowing them to apply the same
accounting policies as the IFRS group accounts but with less
disclosure. FRS 102 will replace the current UK GAAP standards with
an IFRS based new standard and include aset of disclosure
exemptions for qualifying entities formerly preparing UK GAAP
financial standards. The company will adopt FRS 101, for its financial
statements, for the year ending 30 June 2016. Based on apreliminary
assessment the company believes the change will have no significant
impact on its results or financial position.
The following paragraphs describe the significant accounting
policies under UK GAAP, which have been consistently applied for
theyear ended 30 June 2015.
Share-based payments employee benefits

The fair value of equity settled share options and share grants is
initially measured at grant date based on the binomial or Monte Carlo
models and is charged to the profit and loss account over the vesting
period. For equity settled shares the credit is included in retained
earnings in equity. Cancellations of share options are treated as an
acceleration of the vesting period and any outstanding charge is
recognised in operating profit immediately. Shares of Diageo plc held
by the company for the purpose of fulfilling obligations in respect of
various employee share plans around the group are deducted from
equity in the balance sheet. Any surplus or deficit arising on the sale
of the Diageo plc shares held by the company is included as
amovement in equity. Where the company grants options over its
own shares to the employees of its subsidiaries, it recharges the
costto the relevant group company.
Governance
Basis of preparation
The financial statements are prepared on agoing concern basis
under the historical cost convention, modified to include revaluations
to fair value of certain financial instruments, in accordance with the
Companies Act 2006 and UK GAAP.
By virtue of section 408 of the Companies Act 2006 the company
isexempt from presenting aprofit and loss account and disclosing
employee numbers and staff costs. The company has taken advantage
of the exemption from preparing acash flow statement under the
provisions of FRS 1 (Revised 1996) and the exemption contained in
FRS 8 and has not separately disclosed transactions with wholly
owned subsidiary undertakings and the exemption in FRS 29 and has
not separately disclosed information about financial instruments.
The group has revised the disclosure of certain comparative
amounts in the company balance sheet. In the year ended
30 June 2014 certain derivatives with subsidiary undertakings with
afair value of 114 million were presented net in the balance sheet
and are now disclosed gross in financial assets and liabilities. This
revised presentation is consistent with the settlement arrangement
for these derivatives. The revision had no impact on net assets nor
net profit.
Dividends paid and received

The interim dividend is included in the financial statements in the
year in which it is approved by the directors, and the final dividend
inthe year in which it is approved by shareholders at the annual
general meeting. Dividends received are included in the financial
statements in the year in which they are receivable.
Strategic report
ACCOUNTING POLICIES OF
THE COMPANY

NOTES TO THE COMPANY

FINANCIAL STATEMENTS
On 30 June 2015 100% of the investment in the Gleneagles Hotels

Limited was sold to the Ennismore Group at fair value.
A list of group companies as at 30 June 2015 is provided in note 7.
1. PROFIT AND LOSS ACCOUNT

Note 3 to the consolidated financial statements of the group provides
details of the remuneration of the companys auditor for the group.
Information on directors emoluments, share and other interests,
transactions and pension entitlements is included in the directors
remuneration report in this Annual Report.
3. FINANCIAL ASSETS AND LIABILITIES

Financial assets and liabilities comprise the fair value of interest rate swaps
and cross currency interest rate swaps with subsidiary undertakings.
2. INVESTMENTS
million
Cost
At 30 June 2014
Addition
Disposal
At 30 June 2015
Impairment losses
At 30 June 2015 and at 30 June 2014
Carrying amount
At 30 June 2015
At 30 June 2014
27,314
250
(236)
27,328
286
27,042
27,028
On 22 June 2015 Tanqueray Gordon and Company Limited, awholly

owned subsidiary undertaking, increased its share capital by issuing
2,500,000 new ordinary shares of 100 each to Diageo plc.
4. PROVISIONS FOR LIABILITIES AND CHARGES

A provision was established in the year ended 30 June 2005 in
respect of the discounted value of the companys commitment to
the UK Thalidomide Trust, and will be utilised over the period of the
commitment up to 2037.
million
5. CONTINGENT LIABILITIES
The company has guaranteed certain borrowings of subsidiaries
which at 30 June 2015 amounted to 8,966 million (2014
8,738million) and certain lease payment obligations until
December2031 of 311 million (2014 302 million).
The company has also provided irrevocable guarantees relating to
the liabilities of certain of its Irish and Dutch subsidiaries. In addition,
the company has provided aguarantee to the Guinness Ireland
Group Pension Scheme.
6. SHAREHOLDERS FUNDS
At 30 June 2013
Profit for the year
Shares issued
Dividends paid
At 30 June 2014
Profit for the year
Shares issued
Dividends paid
At 30 June 2015
Profit and loss account

Share
capital
million
Share
premium
million
Merger
reserve
million
Capital
redemption
reserve
million
797
797
797
1,344
1,345
1,346
9,161
9,161
9,161
3,146
3,146
3,146
(a) Allotted and fully paid share capital ordinary shares of 28101108
pence each
At 30 June 2015, 30 June 2014
and30June2013
185
(17)
10
178
At 30 June 2014
Provision utilised during the year
Unwinding of discounts
At 30 June 2015
Number of shares
million
Nominal value
million
2,754
797
(b) Merger reserve

On the acquisition of abusiness, or of an interest in an associate, fair
values, reflecting conditions at the date of acquisition, are attributed
to the net assets acquired. Where merger relief is applicable under
the UK Companies Acts, the difference between the fair value of the
business acquired and the nominal value of shares issued as purchase
consideration is treated as amerger reserve.
Own
shares
million
Other
million
(2,232)
(48)
(2,280)
52
(2,228)
6,457
1,594
(67)
37
(1,228)
6,793
1,530
(58)
35
(1,341)
6,959
Total
shareholders
Total
funds
million
million
4,225
1,594
(115)
37
(1,228)
4,513
1,530
(6)
35
(1,341)
4,731
18,673
1,594
(115)
37
1
(1,228)
18,962
1,530
(6)
35
1
(1,341)
19,181
(c) Own shares

At 30 June 2015 own shares comprised 8 million ordinary shares
heldby employee share trusts (2014 10 million; 2013 7 million);
223million ordinary shares repurchased and held as treasury shares
(2014 223 million; 2013 223 million); and 17 million ordinary shares
held as treasury shares for hedging share scheme grants (2014
20million; 2013 21 million).
As at 30 June 2015 Guinness Ireland Group Pension Scheme hold
30,369 ordinary shares of Diageo plc (2014 35,696) shares.
Information on movements in own shares isprovided in note 17(c)
to the consolidated financial statements.
(d) Profit and loss account
The net balance on the profit and loss account is available for the
payment of dividends.

Fully owned subsidiaries
Governance
1759 Property Limited (Republic of Ireland)

Agropecuarias Las Marias I, C.A. (Venezuela)
AGS Employee Shares Nominees (Ireland) Limited(ii) (Republic of Ireland)
Alexander & James B.V. (Netherlands)
Allegro GmbH & Co.KG (Germany)
Allegro Verwaltungs GmbH (Germany)
Anyslam Investments (England)
Anyslam Limited(i), (ix) (England)
Arran Tradings, C.A. (Venezuela)
Arthur Bell & Sons Limited(ii) (Scotland)
Arthur Guinness Son & Company (Dublin) (RepublicofIreland)
Atalantaf Limited (Bermuda)
Ballroom Acquisition, Inc. (United States)
Beijing Johnnie Walker House Ltd (China)
Bundaberg Distilling Company Pty. Limited(v) (Australia)
Bundaberg Distilling Investments Pty Ltd(iii) (Australia)
Carillon U.K. Limited(ii) (Scotland)
Cellarers (Wines) Limited (England)
CJSC D Distribution (Russia)
CJSC IDV Selviac(ii) (Russia)
Clyde Trading, C.A.(v) (Venezuela)
Colorado Drinks, S.L.U. (Spain)
Crescendo Australia Pty Ltd(iii) (Australia)
Cupar Trading, C.A.(v) (Venezuela)
D.C.L (Holdings) Australia Proprietary Limited(ii), (iii) (Australia)
Deasy & Co. Limited (Republic of Ireland)
DEF Investments Limited (England)
DIAGEO Guinness USA Inc. (United States)
Diageo (IH) Limited(ii) (England)
Diageo (Shanghai) Limited (China)
Diageo Africa B.V. (Netherlands)
Diageo Americas Supply Quebec Distribution Inc. (Canada)
Diageo Americas Supply, Inc. (United States)
Diageo Americas, Inc. (United States)
Diageo Angola Limitada (Angola)
Diageo Argentina S.A. (Argentina)
Diageo Asia Pacific Shared Services Centre Limited, Inc. (Philippines)
Diageo Atlantic B.V. (Netherlands)
Diageo Australia Limited(iii) (Australia)
Diageo Austria GmbH (Austria)
Diageo Balkans Limited (England)
Diageo Belgium N.V. (Belgium)
Diageo Brands B.V. (Netherlands)
Diageo Brands Holdings B.V. (Netherlands)
Diageo Brands Nigeria Ltd (Nigeria)
Diageo Brasil Ltda (Brazil)
Diageo Bulgaria Ltd (Bulgaria)
DIAGEO Business Services Limited (Hungary)
Diageo Canada Holdings Inc. (Canada)
Diageo Canada Inc. (Canada)
Diageo Capital B.V. (Netherlands)
Diageo Capital plc(i) (Scotland)
Diageo Chateau & Estate Wines Company (United States)
Diageo Chile Limitada (Chile)
Diageo China Limited (China)
Diageo CL1 Limited (England)
Diageo Colombia S.A. (Colombia)
Diageo Costa Rica S.A. (Costa Rica)
Diageo Czech Marketing Services LLC (Czech Republic)
Diageo Datm Sat Ve Pazarlama A..(ii) (Turkey)
Diageo Del Peru S.A. (Peru)
Diageo Denmark AS (Denmark)
Diageo Distilleries Private Limited(viii) (India)
Diageo Distilling Limited(ii) (Scotland)
Diageo Dominicana S.R.L (Dominican Republic)
Diageo DV Limited (England)
Diageo Eire Finance & Co (England)
Diageo Employee Shares Nominees Limited(i), (ii) (England)
Diageo Espana S.A. (Spain)
Diageo Europe Holdings Limited (Republic of Ireland)

Diageo Export SR Inc. (Philippines)
Diageo Finance Australia LLP (England)
Diageo Finance B.V. (Netherlands)
Diageo Finance plc(i) (England)
Diageo Finance US Limited (England)
Diageo Financing Turkey Limited (England)
Diageo France Holdings S.E. (Netherlands)
Diageo France Holdings SAS (France)
Diageo France Investments S.E. (Netherlands)
Diageo France Investments SAS. (France)
Diageo France S.A.S. (France)
Diageo Germany GmbH (Germany)
Diageo Global Supply IBC Limited(i) (Northern Ireland)
Diageo Great Britain Limited (England)
Diageo Greater China Limited(ii) (Hong Kong)
Diageo Group Insurance Company Limited (Guernsey)
Diageo GTME Pte Ltd (Singapore)
Diageo Healthcare Limited(ii) (England)
Diageo Hellas S.A. (Greece)
Diageo Highlands B.V. (Netherlands)
Diageo Highlands Holding B.V. (Netherlands)
Diageo Holdings Limited(i) (England)
Diageo Holdings Netherlands B.V. (Netherlands)
Diageo Holland Investments Limited(ii) (England)
DIAGEO HUNGARY FINANCE Limited Liability Company (Hungary)
DIAGEO Hungary Marketing Services Limited Liability Company (Hungary)
Diageo Inc. (United States)
Diageo India Private Limited(vii) (India)
Diageo Investment Corporation (United States)
Diageo Investment Holdings B.V. (Netherlands)
Diageo Investment Holdings Limited (England)
Diageo Ireland (Republic of Ireland)
Diageo Ireland Finance 1 (Republic of Ireland)
Diageo Ireland Holdings(ii) (Republic of Ireland)
Diageo Ireland Pension Trustee Company Limited (Republic of Ireland)
Diageo Ireland Quebec Distribution Inc. (Canada)
Diageo Italia S.p.A. (Italy)
Diageo Jamaica Limited (Jamaica)
Diageo Japan K.K (Japan)
Diageo Kazakhstan LLP. (Kazakhstan)
Diageo Kenya Limited (Kenya)
Diageo Korea Company Limited (South Korea)
Diageo Latin America & Caribbean LLC (United States)
Diageo Lebanon Holding SAL (Lebanon)
Diageo Mexico Comercializadora S.A. de C.V. (Mexico)
Diageo Mexico II, S.A. de C.V. (Mexico)
Diageo Mexico S.A. de C.V. (Mexico)
Diageo Mozambique Lda. (Mozambique)
Diageo Nederland B.V. (Netherlands)
Diageo New Zealand Limited(iii) (New Zealand)
Diageo North America Foundation, Inc. (United States)
Diageo North America, Inc.(v) (United States)
Diageo Northern Ireland Limited(i) (Northern Ireland)
Diageo Norway AS (Norway)
Diageo Nueva Esparta, C.A. (Venezuela)
Diageo Operations Italy S.p.A. (Italy)
Diageo Overseas B.V. (Netherlands)
Diageo Overseas Holdings Limited(vi) (England)
Diageo Panama S.A. (Panama)
Diageo Paraguay S.R.L. (Paraguay)
Diageo Peru S.A. (Peru)
Diageo Philippines Free Port Inc(ii) (Philippines)
Diageo Philippines, Inc (Philippines)
Diageo Polska LLC (Poland)
Diageo Portugal - Distribuidora de Bebidas, Unipessoal, Lda (Portugal)
Diageo Premier Holdings B.V. (Netherlands)
Diageo Puerto Rico, Inc (Puerto Rico)
Diageo Reunion 2 SAS(ii) (La Reunion)
Diageo Reunion SA (La Reunion)
Diageo RTD Hong Kong Limited (Hong Kong)
Diageo Scotland Investment Limited (England)
Diageo Scotland Limited (Scotland)
Diageo Share Ownership Trustees Limited(i), (ii) (England)
Diageo Singapore Pte Ltd. (Singapore)
Diageo Singapore Supply Pte. Ltd. (Singapore)
Diageo South Africa (Pty) Limited (South Africa)
Diageo Southern Africa Markets (Pty) Ltd (South Africa)
Strategic report
7. GROUP COMPANIES
In accordance with Section 409 of the Companies Act 2006 afull list
of subsidiaries, partnerships, associates, joint ventures and joint
arrangements, the country of incorporation and the effective
percentage of equity owned, as at 30 June 2015 are disclosed below.
Unless otherwise stated the share capital disclosed comprises
ordinary shares which are indirectly heldbyDiageo plc.

Diageo Suisse S.A. (Switzerland)

Diageo Supply Marracuene Lda. (Mozambique)
Diageo Sweden AB (Sweden)
Diageo Taiwan Inc. (Panama)
Diageo Treasury Australia LLP (England)
Diageo Turkey Holdings Limited(ii) (Republic of Ireland)
Diageo UK Turkey Finance Limited (England)
Diageo UK Turkey Holdings Limited(vi) (England)
Diageo UK Turkey Limited (England)
Diageo Ukraine LLC (Ukraine)
Diageo United Kingdom Limited(ii) (England)
Diageo Uruguay SA (Uruguay)
Diageo US Holdings (England)
Diageo US Investments (England)
Diageo US Turkey LLC (United States)
Diageo USVI, Inc. (United States)
Diageo Venezuela C.A (Venezuela)
Diageo Vietnam (Vietnam)
Don Julio Agavera S.A. de C.V. (Mexico)
Don Julio B.V. (Netherlands)
DV Paraguana, C.A. (Venezuela)
DV Release, C.A. (Venezuela)
DV Trading, C.A.(v) (Venezuela)
E. Smithwick & Sons Limited (Republic of Ireland)
Franchise Acceptance Corporation (Republic of Ireland)
Gilbey Canada Investments Limited (Canada)
Gilbeys New Zealand Limited (New Zealand)
Gilbeys of Ireland (R&D) Limited(ii) (Republic of Ireland)
Gilbeys of Ireland Limited (Republic of Ireland)
Global Farming Initiative B.V. (Netherlands)
Grand Metropolitan (Cayman Islands) Limited(ii) (Cayman Islands)
Grand Metropolitan Capital Company Limited (England)
Grand Metropolitan Estates Limited (England)
Grand Metropolitan Holdings Limited(ii) (England)
Grand Metropolitan International Holdings Limited (England)
Grand Metropolitan Limited (England)
Grandmet Foods (UK) Limited(ii) (England)
Guinness Cameroun S A (Cameroon)
Guinness Exports Limited(ii) (England)
Guinness France Holdings S.A.S (France)
Guinness Hopstore Limited (Republic of Ireland)
Guinness Limited(i) (England)
Guinness Overseas Holdings Limited(i) (England)
Guinness Overseas Limited (England)
Guinness Storehouse Ireland Pension Trustees Limited (Republic of Ireland)
Guinness Storehouse Limited(ii) (Republic of Ireland)
Guinness UDV Korea Limited(ii) (South Korea)
Guinness Ventures Limited (Republic of Ireland)
Harp Ireland Limited(ii) (Republic of Ireland)
Horizon Developments Limited(ii) (Cyprus)
International Distillers - Zimbabwe (Private) Limited(ii) (Zimbabwe)
Irish Ale Breweries (Republic of Ireland)
Irish Ale Breweries (Sales) Limited(ii) (Republic of Ireland)
Irish Ale Breweries Holdings(ii), (iii) (Republic of Ireland)
Islay Trading, C.A. (Venezuela)
J & B Scotland Limited(ii) (Scotland)
James Buchanan & Company Limited(ii) (England)
John Haig & Company Limited (Scotland)
John Walker and Sons Limited(ii) (England)
Joseph E. Seagram & Sons Limited(ii), (iii) (Canada)
Jus-Roe Limited(ii) (England)
Justerini & Brooks, Limited (England)
L4L Trading, C.A. (Venezuela)
Lamington Company(ii) (Republic of Ireland)
Lismore Trading, C.A. (Venezuela)
LLC Diageo Brands Distributors (Russia)
LLC Society for Revival of Traditions of P.A.Smirnov (Russia)
Macardle Moore & Company Limited(ii) (Republic of Ireland)
Meta Abo Brewery Share Company (Ethiopia)
Mey Alkoll kiler Sanayi ve Ticaret A.. (Turkey)
Mey ki Sanayi ve Ticaret A.. (Turkey)
Mull Trading, C.A. (Venezuela)
Myers Rum Company (Jamaica) Limited(ii) (Jamaica)
Nangor Holdings(iii) (Republic of Ireland)
National Sorghum Breweries Properties Proprietary Limited (South Africa)
Newshelf 1167 Proprietary Limited(v) (South Africa)
Nicholas Doyle (New Ross) Limited (Republic of Ireland)

North Island United Enterprise Holdings Inc (Philippines)
Otford Estates Limited (England)
Phenix Gabon SARL(ii) (Gabon)
Piat Pre et Fils B.V. (Netherlands)
Powtom 11 Limited (Republic of Ireland)
PSP (Sales and Distribution) Limited(ii) (England)
PT Langgeng Kreasi Jayaprima (Indonesia)
R & A Bailey & Co (Republic of Ireland)
R&A Bailey Pension Trustee Company Limited(i), (ii) (Republic of Ireland)
Relay B.V.(v) (Netherlands)
Reldann Investments No. 12 Proprietary Limited (South Africa)
S & B Production Limited (Northern Ireland)
Seagram Ukraine Limited(ii) (Ukraine)
Selviac Nederland B.V. (Netherlands)
Servicios Agavera, S.A.de C.V. (Mexico)
Sichuan Chengdu Shuijingfang Group Co., Ltd (China)
Skye Trading, C.A. (Venezuela)
St. Jamess Gate Trading Company (Republic of Ireland)
Stirrings, LLC (United States)
Streetcar Investment Holding Pte. Ltd. (Singapore)
Sumagro Limited(ii) (Tanzania)
Tanqueray Gordon and Company, Limited(i) (England)
Tequila Don Julio S.A. de C.V. (Mexico)
Tequila Don Julio Servicios, S.A. de C.V. (Mexico)
The Bulleit Distillery, Inc. (United States)
The Connacht Mineral Water Company Limited (Republic of Ireland)
The Distillers Company (Biochemicals) Limited(ii) (England)
The Pierre Smirnoff Company Limited(ii), (v) (United States)
The Pimms Drinks Company Limited(ii) (England)
Trelawny Estates Limited (Jamaica)
Udiam Holdings AB (Sweden)
UDV (SJ) Holdings Limited(i) (England)
UDV (SJ) Limited (England)
UDV Ireland Group(ii) (Republic of Ireland)
UDV Ireland Group (Trustees) Limited (Republic of Ireland)
UDV Operations Ireland Limited(ii) (Republic of Ireland)
United Beverages Pension Trustees Limited (Republic of Ireland)
United Beverages Sales Limited (Republic of Ireland)
United Distillers & Vintners (SJ) B.V. (Netherlands)
United Distillers & Vintners Philippines Inc (Philippines)
United Distillers (Guernsey) Limited (Guernsey)
United Distillers Canada Inc. (Canada)
United Distillers France Limited(ii) (England)
United Distillers France SAS (France)
United Distillers Investments Limited (England)
United Distillers Southern Africa (Proprietary) Limited (South Africa)
United Distillers UK plc(ii) (Scotland)
United National Breweries (SA) Proprietary Limited (South Africa)
Ursus Vodka Holding N.V. (Netherlands)
Vast Fund Limited (Hong Kong)
Vignobles Internationaux S.A.S. (France)
W. & A. Gilbey Limited(ii) (England)
Wed.A.P.Boonekamp B.V. (Netherlands)
Werneth Mould Engineering Limited(ii) (England)
William Sanderson and Son Limited(ii) (Scotland)
Winchester House Property Company Limited (England)
Ypioca Agricola LTDA (Brazil)
Ypioca industrial de Bebidas S.A. (Brazil)
Zepf Technologies UK Limited (Scotland)
Zeta Importers, C.A.(v) (Venezuela)

Associates
Joint ventures
Celebrations Brand Limited (Jamaica, 50%)

GAPL Pte Limited (Singapore, 49.99%)
Guinness Anchor Berhad (Malaysia, 25.5%)
Guinness Anchor Marketing Sendirian Berhad (Malaysia, 25.5%)
Guinness Sabah Sendirian Berhad(ii) (Malaysia, 25.5%)
Lothian Distillers Limited (Scotland, 50%)
Malayan Breweries (Malaya) Sendirian Berhad(ii) (Malaysia, 25.5%)
North British Distillery Company Limited (Scotland, 50%)
Ramaha Corporation (M) Sendirian Berhad(ii) (Malaysia, 25.5%)
Governance
Ballindalloch Distillery LLP (Scotland, 33.33%)

Ban Poitin Ltd (England, 20%)
Belsazar GmbH (Germany, 20%)
Canbrew B.V.(iv) (Netherlands, 28.16%)
Clarendon Distillers Limited (Jamaica, 27%)
Compania Cervecera De Canarias, S.A. (Spain, 20%)
DHN Drinks (Pty) Ltd (South Africa, 42.25%)
Hanoi Liquor Joint Stock Company (Halico) (Vietnam, 45.56%)
International Brands Developers N.V. (Curacao, 25%)
Mot Hennessy International SAS (France, 34%)
Mot Hennessy, SNC (France, 34%)
Mr Black Spirits Party Ltd.(vii) (Australia, 10.03%)
Namibia Breweries Limited (Namibia, 15.01%)
NBL Investment Holdings (Pty) Limited (Namibia, 22.15%)
Sedibeng Brewery (Pty) Ltd. (South Africa, 25%)
Seedlip Ltd(vii) (England, 20%)
The Rouge Group Limited (Hong Kong, 20%)
The Scotch Whisky Heritage Centre Limited(vi) (Scotland, 22.38%)
The Westbourne Drinks Company Limited(vii) (England, 20%)
Valdomio Premium Spirits, S.L. (Spain, 20%)
Zwack Unicum plc (Hungary, 26%)
Strategic report
Subsidiaries where the effective interest is less than 100%(x)
Joint operations(xi)
Brandhouse Beverages (Pty) Limited (South Africa, 72.26%)

Diageo Heineken Namibia B.V. (Netherlands, 50%)
Diageo Kirin Company Limited (Japan, 51%)
Diageo Mot Hennessy (Thailand) Limited (Thailand, 63.02%)(xiv)
Diageo Mot Hennessy B.V.(iv) (Netherlands, 67%)
Gist Dominicana S.A.(ii) (Dominican Republic, 60.25%)
HA&COM Bebidas del Mundo, SA (Costa Rica, 50%)
Holcom Industrial, SA (Costa Rica, 47.35%)
Industria de Licores Internationales S.A.(ii) (Dominican Republic, 59.71%)
MHD Mot Hennessy Diageo K.K. (Japan, 67%)(xiii)
MHD Mot Hennessy Diageo SAS (France, 0.05%)
Mot Hennessy Diageo (China) Co Ltd (China, 67%)(xiii)
Mot Hennessy Diageo Hong Kong Limited (Hong Kong, 67%)(xiii)
Mot Hennessy Diageo Macau Limited (Macau, 67%)(xiii)
Mot Hennessy Diageo Malaysia Sdn Bhd. (Malaysia, 67%)(xiii)
Mot Hennessy Diageo Singapore Pte. Ltd (Singapore, 67%)(xiii)
Seagram Dominicana S.A.(ii) (Dominican Republic, 60.83%)
Seagram European Customer Services Limited(ii) (England, 60.9%)
Trafalgar Metropolitan Homes Limited (England, 50%)
(i) Directly owned by Diageo plc.

(ii) Dormant company.
(iii) Ownership held in class of A shares.
(iv) Ownership held in class of B shares.
(v) Ownership held in class of A shares and B shares.
(vi) Ownership held in preference shares.
(vii) Ownership held in equity shares.
(viii) Ownership held in equity shares and preference shares.
(ix) 99.11% owned by Diageo plc.
(x) Companies controlled by the group based on managements assessment.
(xi) Diageo shares joint control over the company under ashareholders
agreement, and its rights to the profit, assets and liabilities of the company
are dependent on the performance of the groups brands rather the effective
equity ownership of the company.
(xii) Based on 54.78% equity investment in USL that excludes 2.38% owned by the
USL Benefit Trust.
(xiii) Day-to-day operation is managed by Mot Hennessy.
(xiv) Day-to-day operation is managed by Diageo.
Allsopp (East Africa) Limited(ii) (Kenya, 48.52%)

AEJOS DE ALTURA, SOCIEDAD ANNIMA (Guatemala, 50%)
Asian Opportunities and Investment Limited(xii) (Mauritius, 54.78%)
Bouvet Ladubay S.A(xii) (France, 54.78%)
California Simulcast Inc(ii) (United States, 80%)
Central Glass Industries (Kenya, 50.03%)
Chaplin Landais SAS(xii) (France, 54.78%)
Chengdu Jianghai Trade Development Co. Limited (China, 39.71%)
Chengdu Jiayuan Jiuye Marketing Co. Limited(ii) (China, 39.71%)
Chengdu Rongshangfang Marketing Co. Limited (China, 39.71%)
Chengdu Ruijin Trade Co. Limited (China, 39.71%)
Chengdu Shuijingfang Jiuye Co. Limited (China, 39.71%)
Chengdu Shuijingfang Marketing Co. Limited (China, 39.71%)
Chengdu Tengyuan Jiuye Marketing Co. Limited (China, 39.71%)
D/CE Holdings LLC (United States, 50%)
DC Brands B.V.(iii) (Netherlands, 50%)
Desnoes & Geddes Limited (Jamaica, 57.87%)
Diageo Lebanon SAL (Lebanon, 84.99%)
EABL (Tanzania) Limited(ii) (Tanzania, 50.03%)
EABL International Limited (Kenya, 50.03%)
East African Beverages (Southern Sudan) Limited (Republic of South Sudan, 99%)
East African Breweries Limited (Kenya, 50.03%)
East African Maltings (Uganda) Limited (Uganda, 50.03%)
East African Maltings Limited (Kenya, 50.03%)
Four Seasons Wines Limited(xii) (India, 54.78%)
Gilbeys East Africa Limited(ii) (Kenya, 76.85%)
Guinness Canada Limited (Canada, 51%)
Guinness Ghana Breweries Limited (Ghana, 52.42%)
Guinness Nigeria plc (Nigeria, 54.32%)
Harp Distributors Limited(ii) (Kenya, 76.85%)
Industrias Pampero C.A.(ii) (Venezuela, 96.8%)
International Distillers Kenya Limited(ii) (Kenya, 76.85%)
International Distillers Uganda Limited (Uganda, 50.03%)
Kenya Breweries Limited (Kenya, 50.03%)
Kenya Distillers Limited(ii) (Kenya, 76.85%)
Kenya Liquor Distributors Limited(ii) (Kenya, 76.85%)
Ketel One Worldwide B.V.(iv) (Netherlands, 50%)
Lakeside MWS Limited Liability Partnership (England)
Lochside MWS Limited Partnership (Scotland)
Liquidity Inc. LLC (xii) (United States, 27.94%)
Masterplan (Kenya) Limited(ii) (Kenya, 50.03%)
McDowell & Co (Scotland) Ltd(xii) (England, 54.78%)
Montrose International SA(xii) (Panama, 54.78%)
Palmer Investment Group Limited(xii) (British Virgin Islands, 54.78%)
Pioneer Distilleries Limited(xii) (India, 41.01%)
Royal Challengers Sports Private Limited(xii) (India, 54.78%)
RUM CREATION & PRODUCTS, INC.,(iv) (British Virgin Islands, 50%)
Salopia Limited(ii) (Kenya, 50.03%)
Serengeti Breweries Limited (Tanzania, 32.52%)
Seychelles Breweries Limited (Seychelles, 50.4%)
Shaw Wallace Overseas Limited(xii) (England, 54.78%)
Sichuan Shuijingfang Co. Limited (China, 39.71%)
Sichuan Shuijingfang Company Ltd (China, 39.71%)
Sichuan Shuijingfang Jiuye Co. Limited(ii) (China, 39.71%)
Sierra Leone Brewery Limited(ii) (Sierra Leone, 11.59%)
Sovereign Distilleries Limited(xii) (India, 54.78%)
SW Finance Co. Limited(xii) (India, 54.78%)
Tembo Properties Limited(ii) (Kenya, 50.03%)
Tern Distilleries Private Limited(xii) (India, 54.78%)
Trk Alkoll ki ve arap Endstrisi Ltd.ti. (North Cyprus, 66%)
Tusker Football Club (Kenya, 50.03%)
UB Sports Management Overseas LTD(xii) (Jersey, 54.78%)
UDV Kenya Limited (Kenya, 76.85%)
Uganda Breweries Limited (Uganda, 49.03%)
ULM Holdings Inc.(ii) (Philippines, 40%)
United Spirits (Great Britain) Limited(xii) (England, 54.78%)
United Spirits (Shanghai) Trading Company Ltd(xii) (China, 54.78%)
United Spirits (UK) Limited(xii) (England, 54.78%)
United Spirits Limited(xii) (India, 54.78%)
United Spirits Nepal Pvt. Limited(xii) (Nepal, 45.17%)
United Spirits Singapore Pte. Ltd.(xii) (Singapore, 54.78%)
United Spirits Singapore Trading Pte Ltd(xii) (Singapore, 54.78%)
USL Holdings (UK) Limited (England, 54.78%)
USL Holdings Limited(xii) (British Virgin Islands, 54.78%)
Vietnam Spirits and Wine LTD (Vietnam, 55%)

UNAUDITED FINANCIAL INFORMATION

1. FIVE YEARS FINANCIAL INFORMATION
The following tables present selected consolidated financial data for Diageo for the five years ended 30 June 2015 and as at the respective year
ends. The data presented below has been derived from Diageos audited consolidated financial statements.
Year ended 30 June
Income statement data
Sales
2015
million
2014
million
2013
million
2012
million
2011
million
15,966
13,980
15,276
14,392
13,043
(3,224)
Excise duties
(5,153)
(3,722)
(3,973)
(3,753)
Net sales
10,813
10,258
11,303
10,639
9,819
Cost of sales
(4,610)
(4,029)
(4,416)
(4,208)
(3,958)
Gross profit
6,203
6,229
6,887
6,431
5,861
Marketing
(1,629)
(1,620)
(1,769)
(1,671)
(1,520)
(1,777)
(1,902)
(1,738)
(1,652)
(1,789)
Operating profit
2,797
2,707
3,380
3,108
2,552
Non-operating items
373
140
(83)
147
(14)
Net interest and other finance charges
(412)
(388)
(457)
(441)
(449)
175
252
217
229
192
2,933
2,711
3,057
3,043
2,281
(517)
(546)
(562)
(506)
(441)
51
99
55
(505)
120
2,467
2,264
2,550
2,032
1,960
(83)
(11)
Profit for the year
2,467
2,181
2,550
2,021
1,960
Per share data
pence
pence
pence
pence
pence
56.4
51.7
47.4
43.5
40.4
Continuing operations before exceptional items
88.8
95.5
103.1
92.6
81.6
Continuing operations after exceptional items
95.0
93.0
98.0
76.6
74.3

Tax before exceptional items
Exceptional taxation
Dividend per share

Earnings per share
Basic
(3.3)
(0.4)
95.0
89.7
98.0
76.2
74.3
94.6
92.6
97.4
76.2
74.1
(3.3)
(0.4)
94.6
89.3
97.4
75.8
74.1
million
million
million
million
million
2,505
2,506
2,502
2,495
2,493
Diluted
Diluted earnings per share
Weighted average number of shares

Balance sheet data
Non-current assets
Current assets
Total assets
2014
million
2013
million
2012
million
2011
million
18,134
15,495
16,481
15,098
12,633
7,670
7,469
8,510
7,171
7,087
25,804
22,964
24,991
22,269
19,720
(4,851)
(5,519)
(4,762)
(4,903)
(11,258)
(10,523)
(11,384)
(10,715)
(8,858)
Total liabilities
(16,548)
(15,374)
(16,903)
(15,477)
(13,761)
9,256
7,590
8,088
6,792
5,959
797
797
797
797
797
Share premium
1,346
1,345
1,344
1,344
1,343
Other reserves
1,994
2,243
3,154
3,213
3,300
Retained earnings/(deficit)
3,634
2,438
1,741
234
(195)
Equity attributable to equity shareholders of the parent company
7,771
6,823
7,036
5,588
5,245
Current liabilities
Net assets
Share capital
1,485
767
1,052
1,204
714
Total equity
9,256
7,590
8,088
6,792
5,959
Net borrowings
(9,527)
(8,850)
(8,403)
(7,573)
(6,480)
Governance
(5,290)
Strategic report
As at 30 June
2015
million
2. CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

Payments due by period
Less than
1 year
million
1-3 years
million
3-5 years
million
More than
5 years
million
1,400
2,556
968
4,365
9,289
340
479
334
1,434
2,587
Total
million
As at 30 June 2015
Long term debt obligations
Interest obligations
76
76
Operating leases
96
131
102
217
546
1,037
921
393
217
2,568
51
69
86
127
333
112
114
Purchase obligations
Finance leases
Capital commitments
Deferred consideration payable
10
23
135
168
Post employment benefits(i)
44
88
88
238
458
Provisions and other non-current payables
125
133
51
122
431
3,291
4,402
2,157
6,720
16,570
Credit support obligations
(i) For further information see note 13(d) to the consolidated financial statements.
3. OFF-BALANCE SHEET ARRANGEMENTS

Neither Diageo plc nor any member of the Diageo group has any off-balance sheet financing arrangements that currently have or are
reasonably likely to have amaterial future effect on the groups financial condition, changes in financial condition, results of operations,
liquidity, capital expenditure or capital resources.
Long term debt obligations comprise the principal amount of borrowings (excluding foreign currency swaps) with an original maturity of
greater than one year. Interest obligations comprise interest payable on these borrowings. Credit support obligations represent liabilities to
counterparty banks in respect of cash received as collateral under credit support agreements. Purchase obligations include various long term
purchase contracts entered into for the supply of raw materials, principally bulk whisk(e)y, grapes, cereals, cans and glass bottles. Contracts are
used to guarantee the supply of raw materials over the long term and to enable amore accurate prediction of costs of raw materials in the
future. Provisions and other non-current payables exclude 2 million in respect of vacant properties.
Corporate tax payable of 162 million and deferred tax liabilities are not included in the table above, as the ultimate timing of settlement
cannot be reasonably estimated.
Management believe that it has sufficient funding for its working capital requirements.
Post employment contractual obligations comprise committed deficit contributions but exclude future service cost contributions.

ADDITIONAL INFORMATION FOR SHAREHOLDERS
ADDITIONAL INFORMATION
FOR SHAREHOLDERS
RELATED PARTY TRANSACTIONS
Transactions with other related parties are disclosed in note 20 to the
consolidated financial statements.
SHARE CAPITAL
Major shareholders
At 17 July 2015, the following substantial interests (3% or more) in the
companys ordinary share capital (voting securities) had been notified
to the company.
Shareholder
Percentage
of issued
ordinary share
capital
Number of
(excluding
ordinary
treasury
shares
shares)
Date of
notification
of interest
BlackRock Investment
Management (UK) Limited
(indirect holding)
147,296,928
5.89%
Capital Research and

Management Company
(indirect holding)
124,653,096
4.99% 28 April 2009
3 December
2009
The company has not been notified of any other substantial interests
in its securities. The companys substantial shareholders do not have
different voting rights. Diageo, so far as is known by the company, is
not directly or indirectly owned or controlled by another corporation
or by any government. Diageo knows of no arrangements, the
operation of which may at asubsequent date result in achange of
control of the company.
ARTICLES OF ASSOCIATION
The company is incorporated under the name Diageo plc, and is
registered in England and Wales under registered number 23307.
The following description summarises certain provisions of
Diageos articles of association (as adopted by special resolution at
the Annual General Meeting on 14 October 2009) and applicable
English law concerning companies (the Companies Acts), in each
case as at 17 July 2015. This summary is qualified in its entirety by
reference to the Companies Acts and Diageos articles of association.
Investors can obtain copies of Diageos articles of association by
contacting the Company Secretary at [email protected].
Any amendment to the articles of association of the company
may be made in accordance with the provisions of the Companies
Act 2006, by way of special resolution.
Directors
Diageos articles of association provide for aboard of directors,
consisting (unless otherwise determined by an ordinary resolution
of shareholders) of not fewer than three directors and not more than
25directors, in which all powers to manage the business and affairs
of Diageo are vested. Directors may be elected by the members in
ageneral meeting or appointed by Diageos Board. At each annual
general meeting, the following are required to retire and are then
reconsidered for election/re-election, assuming they wish to stand
for election/re-election: any director who has been appointed by
Diageos Board since the last annual general meeting; any director
who has been in office during the two previous general meetings
and did not retire at either of them; and any director who has been in
office, other than in an executive position, for acontinuous period of
nine years or more at the date of the meeting. There is no age limit
requirement in respect of directors. Directors may also be removed
before the expiration of their term of office in accordance with the
provisions of the Companies Acts.
Voting rights
Voting on any resolution at any general meeting of the company is
by ashow of hands unless apoll is duly demanded. On ashow of
hands, (a) every shareholder who is present in person at ageneral
meeting, and every proxy appointed by any one shareholder and
present at ageneral meeting, has/have one vote regardless of the
number of shares held by the shareholder (or, subject to (b),
represented by the proxy), and (b) every proxy present at ageneral
meeting who has been appointed by more than one shareholder
hasone vote regardless of the number of shareholders who have
appointed him or the number of shares held by those shareholders,
unless he has been instructed to vote for aresolution by one or more
shareholders and to vote against the resolution by one or more
shareholders, in which case he has one vote for and one vote
againstthe resolution.
On apoll, every shareholder who is present in person or by
proxyhas one vote for every share held by that shareholder, but
ashareholder or proxy entitled to more than one vote need not
castall his votes or cast them all in the same way (the deadline for
exercising voting rights by proxy is set out in the form of proxy).
A poll may be demanded by any of the following:
the chairman of the general meeting;
at least three shareholders entitled to vote on the relevant
resolution and present in person or by proxy at the meeting;
any shareholder or shareholders present in person or by proxy
and representing in the aggregate not less than one-tenth of the
total voting rights of all shareholders entitled to vote on the
relevant resolution; or
any shareholder or shareholders present in person or by proxy
and holding shares conferring aright to vote on the relevant
resolution on which there have been paid up sums in the
aggregate equal to not less than one-tenth of the total sum paid
up on all the shares conferring that right.
Diageos articles of association and the Companies Acts provide for
matters to be transacted at general meetings of Diageo by the
proposing and passing of two kinds of resolutions:
ordinary resolutions, which include resolutions for the election,
re-election and removal of directors, the declaration of final
dividends, the appointment and re-appointment of the external
auditor, the remuneration report and remuneration policy, the
increase of authorised share capital and the grant of authority to
allot shares; and
special resolutions, which include resolutions for the amendment
of Diageos articles of association, resolutions relating to the
disapplication of pre-emption rights, and resolutions modifying
the rights of any class of Diageos shares at ameeting of the
holders of such class.
An ordinary resolution requires the affirmative vote of asimple
majority of the votes cast by those entitled to vote at ameeting at
which there is aquorum in order to be passed. Special resolutions
require the affirmative vote of not less than three-quarters of the
votes cast by those entitled to vote at ameeting at which there is
aquorum in order to be passed. The necessary quorum for ameeting
of Diageo is aminimum of two shareholders present in person or by
proxy and entitled to vote.

Repurchase of shares
Subject to authorisation by special resolution, Diageo may purchase
its own shares in accordance with the Companies Acts. Any shares
which have been bought back may be held as treasury shares or,
ifnot so held, must be cancelled immediately upon completion
ofthe purchase, thereby reducing the amount of Diageos issued
sharecapital.
DOCUMENTS ON DISPLAY
The Annual Report on Form 20-F and any other documents filed by
the company with the US Securities Exchange Commission may be
inspected at the Securities and Exchange Commissions public
reference room located at 100 F Street, NE, Washington, DC 20549 or
on the SECs website (www.sec.gov). Information on the operation of
the public reference room can be obtained by calling the Securities
and Exchange Commission at 1 800 SEC 0330.
Restrictions on transfers of shares

The Board may decline to register atransfer of acertificated Diageo
share unless the instrument of transfer (a) is duly stamped or certified
or otherwise shown to the satisfaction of the Board to be exempt
from stamp duty, and is accompanied by the relevant share certificate
and such other evidence of the right to transfer as the Board may
reasonably require, (b) is in respect of only one class of share and (c) if
to joint transferees, is in favour of not more than four such transferees.
Registration of atransfer of an uncertificated share may be refused
in the circumstances set out in the uncertificated securities rules (as
defined in Diageos articles of association) and where, in the case of
atransfer to joint holders, the number of joint holders to whom the
uncertificated share is to be transferred exceeds four.
The Board may decline to register atransfer of any of Diageos
certificated shares by aperson with a0.25% interest (as defined in
Diageos articles of association) if such aperson has been served with
arestriction notice (as defined in Diageos articles of association) after
failure to provide Diageo with information concerning interests in
those shares required to be provided under the Companies Acts,
unless the transfer is shown to the Board to be pursuant to an arms
length sale (as defined in Diageos articles of association).
EXTERNAL LIMITED ASSURANCE OF SELECTED

SUSTAINABILITY & RESPONSIBILITY PERFORMANCE DATA
We engaged KPMG LLP to undertake an independent limited
assurance engagement, reporting to Diageo plc only, over selected
Sustainability & Responsibility (S&R) performance data marked
withthe symbol within the Strategic Report and Performance
Addendum sections of this report. KPMG LLP used the International
Standard on Assurance Engagements (ISAE) 3410: Assurance
Engagements on Greenhouse Gas Statements to assure the selected
Greenhouse Gas performance data and ISAE 3000: Assurance
Engagements Other Than Audits or Reviews of Historical Financial
Information to assure the other selected performance data, which
includes data for water use, wastewater discharge (BOD) under direct
control, waste to landfill and the lost time accident frequency rate,
allmarked with the symbol .
KPMG LLP have issued an unqualified opinion over the selected
S&R performance data and their full assurance opinion is available
inthe Responsibility section of our website at www.diageo.com.
The level of assurance provided for alimited assurance
engagement is substantially lower than areasonable assurance
engagement. In order to reach their opinion, KPMG LLP performed
arange of procedures which included interviews with management,
examination of reporting systems anddocumentation, as well as
selected data testing at various sites aswell as at Head Office.
Asummary of the work they performed isincluded in their
assuranceopinion.
Non-financial performance information, greenhouse gas
quantification in particular, is subject to more inherent limitations
than financial information. It is important to read the selected S&R
performance data contained within this report in the context of
KPMG LLPs full limited assurance opinion and our reporting
methodologies. Our reporting methodologies are included in the
S&R Performance Addendum to the Annual Report, available
atwww.diageo.com.
Governance
Pre-emption rights and new issues of shares

While holders of ordinary shares have no pre-emptive rights under
Diageos articles of association, the ability of the directors to cause
Diageo to issue shares, securities convertible into shares or rights to
shares, otherwise than pursuant to an employee share scheme, is
restricted. Under the Companies Acts, the directors of acompany are,
with certain exceptions, unable to allot any equity securities without
express authorisation, which may be contained in acompanys
articles of association or given by its shareholders in ageneral
meeting, but which in either event cannot last for more than five
years. Under the Companies Acts, Diageo may also not allot shares
forcash (otherwise than pursuant to an employee share scheme)
without first making an offer to existing shareholders to allot such
shares to them on the same or more favourable terms in proportion
to their respective shareholdings, unless this requirement is waived
by aspecial resolution of the shareholders.
WARNING TO SHAREHOLDERS SHARE FRAUD

Please beware of the share fraud of boiler room scams, where
shareholders are called out of the blue by fraudsters (sometimes
claiming to represent Diageo) attempting to obtain money or
property dishonestly. Further information is available in the investor
section of the companys website (www.diageo.com) but in short,
ifin doubt, take proper professional advice before making any
investment decision.
Strategic report
A shareholder is not entitled to vote at any general meeting or class

meeting in respect of any share held by him if he has been served
with arestriction notice (as defined in Diageos articles of association)
after failure to provide Diageo with information concerning interests
in those shares required to be provided under the Companies Acts.

CAUTIONARY STATEMENT
CONCERNING FORWARDLOOKING STATEMENTS
This document contains forward-looking statements. These

statementscan be identified by the fact that they do not relate only
tohistorical or current facts. In particular, forward-looking statements
includeall statements that express forecasts, expectations, plans, outlook
and projections with respect to future matters, including trends in results
ofoperations, margins, growth rates, overall market trends, the impact of
changes in interest or exchange rates, the availability or cost of financing
toDiageo, anticipated cost savings or synergies, expected investments,
thecompletion of Diageos strategic transactions and restructuring
programmes, anticipated tax rates, expected cash payments, outcomes
oflitigation, anticipated deficit reductions in relation to pension schemes
and general economic conditions. By their nature, forward-looking
statements involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There are anumber
of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements, including factors that are outside Diageos control.
These factors include, but are not limited to:
changes in political or economic conditions in countries and markets
inwhich Diageo operates, including changes in levels of consumer
spending, failure of customer, supplier and financial counterparties
orimposition of import, investment or currency restrictions;
changes in consumer preferences and tastes, demographic trends
orperceptions about health related issues, or contamination,
counterfeiting or other circumstances which could harm the integrity
or sales of Diageos brands;
developments in any litigation or other similar proceedings (including
with tax, customs and other regulatory authorities) directed at the drinks
and spirits industry generally or at Diageo in particular, or the impact
of aproduct recall or product liability claim on Diageos profitability
or reputation;
the effects of climate change and regulations and other measures to
address climate change including any resulting impact on the cost
andsupply of water;
changes in the cost or supply of raw materials, labour and/or energy;
legal and regulatory developments, including changes in regulations
regarding production, product liability, distribution, importation, labelling,
packaging, consumption or advertising; changes in tax law, rates or
requirements (including with respect to the impact of excise tax
increases) or accounting standards; and changes in environmental laws,
health regulations and the laws governing labour and pensions;
the costs associated with monitoring and maintaining compliance
withanti-corruption and other laws and regulations, and the costs
associated with investigating alleged breaches of internal policies, laws
or regulations, whether initiated internally or by external regulators,
andany penalties or fines imposed as aresult of any breaches;
ability to maintain Diageos brand image and corporate reputation,
andexposure to adverse publicity, whether or not justified, and any
resulting impacts on Diageos reputation and the likelihood that
consumers choose products offered by Diageos competitors;
increased competitive product and pricing pressures and unanticipated

actions by competitors that could impact Diageos market share, increase
expenses and hinder growth potential;
the effects of Diageos strategic focus on premium drinks, the effects
ofbusiness combinations, partnerships, acquisitions or disposals,
existing or future, and the ability to realise expected synergies and/
orcosts savings;
Diageos ability to complete existing or future business combinations,
restructuring programmes, acquisitions and disposals;
contamination, counterfeiting or other events that could adversely
affect the perception of Diageos brands;
increased costs or shortages of talent;
disruption to production facilities or business service centres, and systems
change programmes, existing or future, and the ability to derive
expected benefits from such programmes;
changes in financial and equity markets, including significant interest rate
and foreign currency exchange rate fluctuations and changes in the cost
of capital, which may reduce or eliminate Diageos access to orincrease
the cost of financing or which may affect Diageos financial results and
movements to the value of Diageos pension funds;
renewal of supply, distribution, manufacturing or licence agreements
(or related rights) and licences on favourable terms when they expire;
technological developments that may affect the distribution of products
or impede Diageos ability to protect its intellectual property rights.
All oral and written forward-looking statements made on or after the
date of this document and attributable to Diageo are expressly qualified
in their entirety by the above factors and by the principal risks set out in
the Strategic Report How we protect our business: Risk management
and principal risks. Any forward-looking statements made by or on
behalf of Diageo speak only as of the date they are made. Diageo does
not undertake to update forward-looking statements to reflect any
changes inDiageos expectations with regard thereto or any changes
in events, conditions or circumstances on which any such statement is
based. Thereader should, however, consult any additional disclosures
that Diageo may make in any documents which it publishes and/or
files with the US Securities and Exchange Commission (SEC). All readers,
wherever located, should take note of these disclosures.
This document includes names of Diageos products, which
constitute trademarks or trade names which Diageo owns, or which
others own and license to Diageo for use. All rights reserved.
Diageo plc 2015.
The information in this document does not constitute an offer to
sell oran invitation to buy shares in Diageo plc or an invitation or
inducement to engage in any other investment activities.
This document includes information about Diageos target debt
rating. Asecurity rating is not arecommendation to buy, sell or hold
securities andmay be subject to revision or withdrawal at any time
by the assigning rating organisation. Each rating should be evaluated
independently of any otherrating.
Past performance cannot be relied upon as aguide to future
performance.
Designed by Salterbaxter MSLGroup.

This report has been printed on Vision Superior an FSC
certified paper containing 100% ECF pulp and manufactured at
a mill accredited with the ISO 14001 and EMAS environmental
standards.
Printed by CPI Colour on behalf of RR Donnelley. CPI Colour are
ISO14001 certified, CarbonNeutral, Alcohol Free and are FSC and
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Diageo plc
Lakeside Drive
Park Royal
London
NW10 7HQ
United Kingdom
T: +44 (0) 20 8978 6000
www.diageo.com
Registered in England
No. 23307
2015 Diageo plc.

All rights reserved.
All brands mentioned
in this Annual Report
are trademarks and are
registered and/or otherwise
protected in accordance
with applicable law.

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Annual Report 2015

Free cash flow(ii)

Earnings per share(i)

Total dividend per share(iii)

Water efficiency(iv), (vi)

Responsible drinking programmes

Lost-time accident frequency(v)

DIAGEO ANNUAL REPORT 2015 01

Our ambition is to be one of the best

Our ambition is supported by six performance drivers and three

We are a global leader in beverage alcohol with an outstanding

Visit Diageos global responsible drinking resource, www.DRINKiQ.com,

Additional information for shareholders

Additional information for shareholders

Unless otherwise stated in this document, percentage movements refer to organic

We continue to invest to build our brands and routes to consumer,

Our purpose is to celebrate life, every day,

02 DIAGEO ANNUAL REPORT 2015

Diageo has built a strong platform for

Our 21 market model(i) has established strong

STRENGTH IN GLOBAL REACH

We have outstanding breadth and depth in our portfolio, with

We produce our brands from

Innovation is critical to our

Everyone at Diageo sells or

CREATING SHARED VALUE

work to address development

the best. We give our people

best at work, at home, with

DIAGEO ANNUAL REPORT 2015 03

One of Diageos key strengths is its geographic reach.

% SHARE OF NET SALES BY OUR 21 MARKETS

EACH OF OUR 21 MARKETS

Global Travel, Asia

South East Asia

Additional information for shareholders

04 DIAGEO ANNUAL REPORT 2015

Our 21 market structure means we now

JW Odyssey Logo Lock-Up - CMYK

Odyssey Rich Medium Brown

DIAGEO ANNUAL REPORT 2015 05

In our portfolio we have brands at almost

(i) Ultra premium includes prestige.

Additional information for shareholders

06 DIAGEO ANNUAL REPORT 2015

Diageos Performance Ambition is to create

DIAGEOS STRATEGY AIMS TO DELIVER

Prioritised investment in:

Premium core spirits(i)

Targeted investment in:

Read more on page 16.

(i) Spirits include ready to drink (RTDs).

We measure progress against our Performance Ambition

Organic net sales

Earnings per share

Free cash flow

Total shareholder return

See our key performance indicators (KPIs) on pages 1213.

DIAGEO ANNUAL REPORT 2015 07

Efficient supply and procurement

Additional information for shareholders

See our Directors remuneration report from