213800L23DJLALFC4O95-2024-06-30-T01

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STRATEGIC REPORT

The Directors present their strategic report for the year ended 30 June 2024.

Principal activities

Diageo Capital plc (the ”company”) is engaged in the provision of treasury risk and cash management

for Diageo plc and its subsidiary undertakings (the ”group”). Diageo Capital plc's principal activity is to

raise external funds, principally using the London and New York financial markets. The company

finances other companies of the group via intragroup loans and deposits. Foreign exchange translation

hedging, interest rate risk management and cash management are also performed by the company.

Business review

Development and performance of the business of the company during the financial year and position of

the company as at 30 June 2024.

The results of the company and the development of its business are influenced to a considerable extent

by group financing requirements. Further information on the risk management policies of the group is

included in the Annual Report 2024 of Diageo plc (see note 16 of the consolidated financial statements

of Diageo plc).

Net finance income was $211 million in the year ended 30 June 2024, which is a $111 million increase

from net finance income of $100 million in the year ended 30 June 2023.

External borrowings increased by $1,469 million at year ended 30 June 2024 to $9,538 million from

$8,069 million at year ended 30 June 2023, which was mainly driven by the company issuing bonds in

the amount of $1,700 million ($1,690 million - net of discount and fee) and repaying bonds of

$500 million during fiscal 24.

Financial and other key performance indicators

Starting 1 July 2023, the direct parent of the company, Diageo plc has changed its functional currency

from sterling to US dollar which is applied prospectively. Diageo plc has also decided to change its

presentation currency to US dollar with effect from 1 July 2023, applied retrospectively.

The company is a treasury entity of the Diageo group carrying out treasury activities as an extension of

the direct parent. In line with accounting and reporting requirements, the company followed its direct

parent and changed functional currency from sterling to US dollar starting 1 July 2023 which is applied

prospectively. The company also decided to change its presentation currency to US dollar with effect

from 1 July 2023, applied retrospectively.

As a result of the functional and presentation currency change of the company from 1 July 2023, to

manage the changed foreign currency exposures of the company, the sterling denominated

intercompany loans of the entity have been converted from sterling to US dollar on transition date with

no material fair value impact and no cash settlement. The amounts of the intercompany loans

denominated in sterling were £819 million, which has been converted to $1,032 million.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STRATEGIC REPORT (continued)

Business review (continued)

The company closed the existing USD/GBP cross-currency swaps with Diageo Finance plc following a

change in functional currency from sterling to US dollar. As part of this transaction $438 million

intercompany receivable was recognized with Diageo Finance plc.

As the company forms part of the group’s treasury operations, the company’s performance is measured

at the group level.

The company receives management fee income from Diageo plc to reimburse the expenses incurred in

relation to treasury services provided to the group.

Principal and financial risks and uncertainties facing the company as at 30 June 2024

The principal risks identified by the group are disclosed on page 77 to 85 of the Diageo plc Annual

Report 2024. The most relevant of the group risks to this entity are the ones we have selected and

articulated below, together with specific considerations relating to the company’s operations and

environment. If any of these risks occur, the company’s business, financial condition and operational

results could suffer. As the company forms part of the group’s financial operations, the financial risk

management measures used by management to analyse the development, performance and position of

the company’s business are mainly similar to those facing the group as a whole and are managed by the

group’s treasury department.

In addition, given that the company performs treasury functions for the group, as set out in the detailed

description under note 10 ‘Financial instruments and risk management’, it may be exposed to foreign

currency and interest rate risk associated with issuance of foreign currency denominated bonds and

interest rate risk arising on changes in US dollar interest. The company may use derivative financial

instruments to hedge its exposures to fluctuations in interest and exchange rates. Cash flow hedges may

be carried out to hedge the currency risk of highly probable future foreign currency cash flows, as well

as the cash flow risk from changes in interest rates. Fair value hedges may be carried out to manage the

currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed.

The Directors monitor and have assessed the potential risk of future interest rate hikes and resulting

increase in cost of borrowing on the operation and the financial statements of the company. Considering

the company forms part of the group’s financial operations, it will be reimbursed for any potential

increase in the charges of its financial instruments. Consequently any impact potentially materialising

on this risk is considered to be very limited.

Geopolitical and macroeconomic volatility

Geopolitical forces, driven by several vectors globally, coupled with macroeconomic stress, increase

the likelihood of international and domestic tensions, disputes, conflict, unrest, and crime that might

impact the business. Macroeconomic conditions include inflationary pressures, unemployment and

global trade tensions. Financial volatility risk could arise from variability in financial markets, interest

rate fluctuations and currency instability. Failure to react quickly enough to changing economic and/or

political conditions, e.g. inflationary pressures, currency instability, global trade tensions, heightened

political protectionism, changes to customs duties and tariffs, and/or eroded consumer confidence, may

impact on the freedom to operate in a market and could adversely impact financial performance.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STRATEGIC REPORT (continued)

Business review (continued)

The group monitors key business drivers and performance, to prepare for rapid changes in the external

environment and there is an enhanced group-level strategic analysis and scenario planning to strengthen

market strategies and risk management.

The group has continued to improve long-term forecasting and planning capabilities, to better assess

and respond to long-term opportunities and risks. The group has also continued to operate the strategic

planning and performance function with a stronger governance model for financial and non-financial

decision-making. This will enable closer monitoring of external volatility/risk and multi-country

investment strategy with central hedging and currency monitoring to manage volatility.

Cyber and IT resilience

Cyber-attacks are becoming more prevalent, and there is an increased dependency on third-party IT

services and solutions. As geopolitical tensions are growing, there is a rise in more sophisticated cyber

threats affecting all organisations, therefore the risk of a cyber-attack is heightened.

The group has strong enterprise-wide cyber risk management processes and policies and next

generation security technologies to tackle advanced attacks. There is IT and Operations Technology

(“OT”) disaster recovery and business continuity testing across the key systems. The group continues to

enhance and deploy next generation security technologies to tackle advanced attacks and upgrade the

enterprise resource planning system and associated processes to ensure they remain resilient.

Climate Risk

Considering that the company forms part of the group’s treasury operations, the probability of climate

change related risks having a significant and direct impact on the activities and operation of the

company is remote. The Directors believe that the risk mitigation actions taken in relation to climate

risk by the group are appropriate measures in managing direct or indirect risks posed by climate

change. Including the risk to the company of being able to access financing at competitive rates where

borrowings could become sustainability linked. Based on the climate risk assessment performed by the

group, the risk attached to the recoverability of intercompany balances is considered to be remote.

Further information on the group's risk assessment and risk management measures in relation to climate

change is disclosed on pages 61-76 and 78 of Diageo plc's 2024 Annual Report.

Business transformation

There is a group strategic initiative in respect of business transformation through the implementation of

SAP S/4 HANA, where delays or changes in expected benefits may have an adverse impact on business

processes or on the group’s operating and financial performance.

To mitigate this risk, the business transformation project has steering groups in place led by a senior

executive and regular progress updates are provided to the Executive Committee and Board.

The group has hired additional employees fully dedicated to the projects and external consultants and

partners who also bring in new skills, which includes a a focus on process improvement, business

resilience and controls.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STRATEGIC REPORT (continued)

Business review (continued)

Statement on Section 172 of the Companies Act 2006

Section 172 of the Companies Act 2006 requires the Directors to promote the success of the company

for the benefit of the members as a whole, having regard to the interests of stakeholders in their

decision-making. In making decisions, the Directors consider what is most likely to promote the

success of the company for its shareholders in the long term, as well as the interests of the group’s

stakeholders. The Directors understand the importance of taking into account the views of stakeholders

and the impact of the company’s activities on local communities, the environment, including climate

change, and the group’s reputation.

The Company is a member of the group of companies (the “Group”) whose ultimate holding company

is Diageo plc (“Diageo”). In accordance with the requirements of UK company law, Diageo has

included in its 2024 Annual Report and Accounts on page 9 a statement as to how the directors of

Diageo have had regard to the matters set out in Section 172 of the Companies Act 2006.

In order to ensure consistency in how the Group operates with regard to its wider stakeholders, the

Group has adopted an internal Code of Business Conduct alongside a comprehensive framework of

global policies and standards that are designed to ensure, amongst other things, that all companies

throughout the Group, including the Company, have regard to its wider stakeholders in a consistent

manner.

The Company has therefore had regard to the matters set out in Section 172 of the Act in a manner that

is consistent with the approach adopted by Diageo, while at the same time ensuring the directors of the

Company are fulfilling their duties.

Main activities of the Board

The principal activities of the Board during the year include:

• Approval the issuance of a global bond guaranteed by Diageo plc;

• Extension of existing credit facilities; and

• Approval of the financial statements for the year ended 30 June 2023.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STRATEGIC REPORT (continued)

Business review (continued)

Business Relationship Statement

The business of the Company is that of an intermediate holding company and as such it has a more

limited number of third-party business relationships than other companies within the Group. However,

in order to ensure consistency in how the Group operates, the Company has adopted an internal Code of

Business Conduct alongside a comprehensive framework of global policies and standards that are

designed to ensure, amongst other things, that all companies throughout the Group, including the

Company, have regard to its wider stakeholders, including those in a business relationship with the

Company, in a consistent manner. Decisions taken by Directors are informed by the interests of its

wider stakeholders, including those in a business relationship with the Company, as guided by, amongst

other things, the Code of Business Conduct and framework of polices and standards.

On behalf of the Board

J M C Edmunds

Director

11 Lochside Place

Edinburgh

Scotland

EH12 9HA

29 October 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

DIRECTORS' REPORT

The Directors have pleasure in submitting their Directors’ report and audited financial statements for

the year ended 30 June 2024.

The Directors foresee no changes in the company's activities. The company is incorporated and

domiciled as a public company limited by shares in Scotland, United Kingdom. The registered address

is 11 Lochside Place, Edinburgh, Scotland, EH12 9HA.

Going concern

The company’s business activities, together with the factors likely to affect its future development and

position, are set out in the business review section of the strategic report on pages 2-6. The company is

expected to continue to generate profit for its own account and to remain in a positive net asset position

for the foreseeable future. The company is in net current liability position, however the company

participates in the group’s centralised treasury arrangements and the parent will provide financial

support for the foreseeable future. The Directors have no reason to believe that a material uncertainty

exists that may cast significant doubt about the ability of the company to continue as a going concern.

On the basis of their assessment, the company’s Directors have a reasonable expectation that the

company will be able to continue in operational existence for a period of at least 12 months from the

date the financial statements are approved and signed as the ultimate parent undertaking has agreed its

policy is to provide financial support for a period of at least 12 months from the date the financial

statements are approved and signed. Thus they continue to adopt the going concern basis of accounting

in preparing the annual financial statements.

In arriving at this conclusion, the Directors have also considered the potential impact that the principal

risks outlined on the 'Strategic report' may have on the company and believe that any impact would be

minimal.

Financial performance

The result for the year ended 30 June 2024 is shown on page 18.

The profit for the year transferred to reserves was $201 million (2023 - $106 million profit) and the

other comprehensive income for the year is $8 million (2023 - $54 million income).

No dividend was paid during the year (2023 - $nil) and there was no dividend proposed to be

distributed to the shareholders in regard to the financial year (2023 - $nil).

Net financial assets were $544 million at 30 June 2024 (2023 - $353 million), more details on financial

instruments and risk management can be found under note 10.

Directors

The Directors of the company who were in office during the year and up to the date of signing the

financial statements were:

M Pais

J M C Edmunds

K E Major

I Thrustle

C-L Jordan

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

DIRECTORS' REPORT (continued)

Directors’ remuneration

None of the Directors received any remuneration during the year in respect of their services as directors

of the company (2023 - $nil). The Directors were paid by fellow group undertakings, and no cost was

recharged to the company.

Directors’ indemnity

The Articles of Association permit qualifying third-party indemnities for the directors as defined by

Section 234 of the Companies Act 2006. No such indemnity was in force during the last financial year,

nor is any currently in force.

Secretary

The secretary of the company who was in office during the year and up to the date of signing the

financial statements was:

J M C Edmunds

Internal control and risk management over financial reporting

The company operates under the financial reporting processes and controls of the group. Diageo plc’s

internal control and risk management systems including its financial reporting process, which include

those of the company, are discussed in the group's Annual Report 2024 on page 109 at

www.diageo.com, which does not form part of this report.

Independent auditors

Pursuant to Section 487 of the Companies Act 2006, the independent auditors, PricewaterhouseCoopers

LLP, have been reappointed and will continue in office as auditors of the company.

Disclosure of information to the independent auditors

The Directors who held office at the date of approval of this Directors’ report confirm that, so far as

they are each aware, there is no relevant audit information of which the company’s auditors are

unaware; and each director has taken all the steps that they ought to have taken as a director to make

themselves aware of any relevant audit information and to establish that the company’s auditors are

aware of that information.

On behalf of the Board

J M C Edmunds

Director

11 Lochside Place

Edinburgh

Scotland

EH12 9HA

29 October 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE

FINANCIAL STATEMENT

The directors are responsible for preparing the annual report and the financial statements in accordance

with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that

law the directors have prepared the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced

Disclosure Framework”, and applicable law).

Under company law, directors must not approve the financial statements unless they are satisfied that

they give a true and fair view of the state of affairs of the company and of the profit or loss of the

company for that period. In preparing the financial statements, the directors are required to:

•select suitable accounting policies and then apply them consistently;

•state whether applicable United Kingdom Accounting Standards, comprising FRS 101 have

been followed, subject to any material departures disclosed and explained in the financial

statements;

•make judgements and accounting estimates that are reasonable and prudent; and

•prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the company will continue in business.

The directors are responsible for safeguarding the assets of the company and hence for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible for keeping adequate accounting records that are sufficient to show

and explain the company’s transactions and disclose with reasonable accuracy at any time the financial

position of the company and enable them to ensure that the financial statements comply with the

Companies Act 2006.

Directors’ confirmations

Each of the directors, whose names and functions are listed in the Directors' Report confirm that, to the

best of their knowledge:

•the company financial statements, which have been prepared in accordance with United

Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets,

liabilities, financial position and profit of the company; and

•the Strategic Report includes a fair review of the development and performance of the business

and the position of the company, together with a description of the principal risks and

uncertainties that it faces.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Independent auditors’ report to the

directors of Diageo Capital plc

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

INCOME STATEMENT


		Year ended	Year ended
		30 June 2024	30 June 2023
			re-presented1
	Note	$ million	$ million

Other operating (charge)/income	2	(10)	6
Finance income	4	828	634
Finance charges	4	(617)	(534)
Operating profit		201	106

Profit before taxation on ordinary activities		201	106

Tax on profit	5	—	—

Profit for financial year		201	106

1 See page 23 for an explanation under Accounting policies.

The accompanying notes are an integral part of these financial statements.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STATEMENT OF COMPREHENSIVE INCOME


		Year ended	Year ended
		30 June 2024	30 June 2023
			re-presented1
	Note	$ million	$ million

Other comprehensive income/(loss) Items that may be recycled subsequently to the income statement
Effective portion of changes in fair value of cash flow hedges
-gains taken to other comprehensive income	12	—	7
-recycled to income statement	12	(10)	65
Tax credit on effective portion of changes in fair value of cash flow hedge	12	2	(18)
Total other comprehensive income		(8)	54

Profit for the year		201	106

Total comprehensive income for the year		193	160

1 See page 23 for an explanation under Accounting policies.

The accompanying notes are an integral part of these financial statements.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

BALANCE SHEET


		30 June 2024	30 June 2023
			re-presented1
	Note	$ million	$ million
Non-current assets
Other receivables	7	11,083	8,909
Other financial assets	6	—	438
		11,083	9,347
Current assets
Trade and other receivables	7	3	23
Total assets		11,086	9,370

Current liabilities
Trade and other payables	11	(710)	(612)
Other financial liabilities	6	—	(3)
Borrowings and bank overdrafts	9	(1,079)	(747)
		(1,789)	(1,362)
Non-current liabilities
Borrowings	9	(8,459)	(7,322)
Other financial liabilities	6	(294)	(333)
Deferred tax liability	8	(36)	(38)
		(8,789)	(7,693)
Total liabilities		(10,578)	(9,055)

Net assets		508	315

Equity
Share premium		315	315
Cash flow hedging reserves	12	108	116
Other reserves		88	88
Accumulated losses		(3)	(204)
Total equity		508	315

1 See page 23 for an explanation under Accounting policies.

The accounting policies and accompanying notes on pages 21 to 46 are an integral part of these

financial statements.

These financial statements on pages 17 to 46 were approved by the Board of Directors on 29 October

2024 and were signed on its behalf by:

J M C Edmunds

Director

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

STATEMENT OF CHANGES IN EQUITY

ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY


				Subtotal
	Share	Hedging	Other	Other	Accumulated
	premium	reserve	reserves	reserves	losses	Total
	$ million	$ million	$ million	$ million	$ million	$ million

Balance at 30 June 2022 (re-presented1)	302	57	85	142	(303)	141
Other comprehensive income for the year	—	54	—	54	—	54
Profit for the year	—	—	—	—	106	106
Currency translation adjustment	13	5	3	8	(7)	14

Balance at 30 June 2023 (re-presented1)	315	116	88	204	(204)	315
Other comprehensive income for the year	—	(8)	—	(8)	—	(8)
Profit for the year	—	—	—	—	201	201

Balance at 30 June 2024	315	108	88	196	(3)	508

1 See page 23 for an explanation under Accounting policies.

The accompanying notes are an integral part of these financial statements.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

Basis of preparation

These financial statements are prepared in accordance with Financial Reporting Standard 101 Reduced

Disclosure Framework (FRS 101).

In preparing these financial statements, the company applies the recognition, measurement and

disclosure requirements of International Financial Reporting Standards as adopted by the UK (IFRS)

but makes amendments where necessary in order to comply with Companies Act 2006 and sets out

below where the FRS 101 disclosure exemptions have been taken. The accounting policies have been

applied consistently, other than where new policies have been adopted.

These financial statements are prepared on a going concern basis under the historical cost convention,

except that certain financial instruments are stated at their fair value.

The company is a wholly owned subsidiary of Diageo plc and is included in the consolidated financial

statements of Diageo plc which are publicly available.

The company has taken advantage of the following exemptions from the requirements of IFRS in the

preparation of these financial statements, in accordance with FRS 101:

• A cash flow statement and related notes as per IAS 1 and IAS 7

• Disclosures in respect of transactions with wholly owned subsidiaries within the Diageo plc

group;

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

1. ACCOUNTING POLICIES (continued)

New accounting standards and interpretations

The following standard and amendments to the accounting standards, issued by the IASB and endorsed

by the UK, were adopted by the group and therefore by the company from 1 July 2023 with no material

impact on the company’s results, financial position or disclosures:

• IFRS 17 – Insurance Contracts

• Amendments to IAS 12 Income Taxes – Deferred Tax related to Assets and Liabilities arising

from a Single Transaction

• Amendments to IAS 1, 8 – Definition of Accounting Estimates

• Amendments to IAS 1 Disclosure Initiative – Accounting Policies

The following amendments issued by the IASB have been endorsed by the UK and have not been

adopted by the company, which are not expected to have material impact on the company's results or

financial position:

• Amendments to IAS 1 – Classification of Liabilities and Non-current Liabilities with

Covenants (effective from the year ending 30 June 2025)

• Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback (effective from the year

ending 30 June 2025)

• Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements (effective from the year

ending 30 June 2025)

There are a number of other standards, amendments and clarifications to IFRSs, effective in future

years, which are not expected to significantly impact the company’s results or financial position.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

1. ACCOUNTING POLICIES (continued)

Functional and presentation currency

These financial statements are presented in US dollar ($), which is the company’s functional currency.

All financial information presented in US dollar has been rounded to the nearest million unless

otherwise stated.

Starting 1 July 2023, the direct parent of the company, Diageo plc has changed its functional currency

from sterling to US dollar which is applied prospectively. Diageo plc has also decided to change its

presentation currency to US dollar with effect from 1 July 2023, applied retrospectively.

The company is a treasury entity of the Diageo group carrying out treasury activities as an extension of

the direct parent. In line with accounting and reporting requirements, the company followed its direct

parent and changed functional currency from sterling to US dollar starting 1 July 2023 which is applied

prospectively. The company also decided to change its presentation currency to US dollar with effect

from 1 July 2023, applied retrospectively.

Assets and liabilities at 30 June 2023 and 30 June 2022 were translated to US dollars at the relevant

year-end closing rate. Performance items and movements in assets and liabilities in the year ended 30

June 2023 were translated into US dollars at weighted average rates of exchange for the relevant period,

except for substantial transactions that were translated at the rate on the date of the transaction.

Exchange differences arising on the retranslation to closing rates are taken to retained earnings as other

comprehensive income and expense.

The company opted to re-present its share capital, share premium and other capital reserves at closing

rate for the comparative periods therefore exchange differences arising on revaluation to year-end

closing rate at 30 June 2023 are taken to retained earnings. From 1 July 2023, as the company changed

its functional currency, the share capital, share premium, other capital reserves and retained earnings

are recorded in US dollars, hence no such revaluation arises at the year ended 30 June 2024.

At 30 June 2023 the company’s other comprehensive income includes incomes/losses in relation to the

exchange differences arising on the retranslation of the opening balance sheet and the change in net

assets during the period to the year-end closing rate.

The foreign exchange rates used in the translation of financial statements for the comparative years,

expressed in US dollars per £1, were as follows:


	2023	2022

Assets and liabilities (2)	0.79	0.83
Income statement (1)	0.83	0.75

(1) Weighted average rates

(2) Closing rate

Finance costs

Finance costs are recognised in the income statement based on the effective interest method.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

1. ACCOUNTING POLICIES (continued)

Going concern

The financial statements have been prepared on a going concern basis as the ultimate parent

undertaking has agreed its policy is to provide financial support for a period of at least 12 months from

the date the financial statements are approved and signed.

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into US dollar at the

financial year end exchange rates and these foreign exchange differences are recognised in the income

statement.

Financial assets and liabilities

Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9,

any directly attributable transaction costs. For those financial assets that are not subsequently held at

fair value, the company calculates allowance losses by reviewing lifetime expected credit losses using

historic and forward-looking data on credit risk. The company classifies its financial assets and

liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets

and liabilities at fair value through profit and loss and financial assets at fair value through other

comprehensive income. Under IFRS 9, classification and measurement of financial assets depend on

the company’s business model for managing the asset and the cash flow characteristics of the assets.

The business model and cash flow characteristics assessment is carried out on an instrument by

instrument basis. Financial assets measured at amortised cost recognise finance income using effective

interest method.

Trade and other receivables are amounts owed by other group companies are initially measured at fair

value and are subsequently reported at amortised cost. Non-interest bearing trade receivables are stated

at their nominal value as they are due on demand. Allowance for expected credit losses are made based

on the risk of non-payment taking into account ageing, previous experience, economic conditions and

forward-looking data. Such allowances are measured as either 12-months expected credit losses or

lifetime expected credit losses depending on changes in the credit quality of the counterparty.

Borrowings are initially measured at fair value net of transaction costs and are subsequently reported at

amortised cost. Certain bonds are designated as being part of a fair value hedge and/or a cash flow

hedge relationship. In case of FV hedge relationships, the amortised cost is adjusted for the fair value of

the risk being hedged, with changes in value recognised in the income statement. The fair value

adjustment is calculated using a discounted cash flow technique based on unadjusted market data.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

1. ACCOUNTING POLICIES (continued)

Trade and other payables are amounts owed to other group companies are initially measured at fair

value and are subsequently reported at amortised cost.

Derivative financial instruments

Derivative financial instruments are carried at fair value using a discounted cash flow model based on

market data applied consistently for similar type of instruments. Gains and losses on derivatives that do

not qualify for cash flow hedge accounting treatment are taken to the income statement as they arise.

The company designates and documents certain derivatives as hedging instruments against changes in

fair value of recognised assets and liabilities (fair value hedges) and the cash flow risk from a change in

exchange or interest rates (cash flow hedges). The effectiveness of such hedges is assessed at inception

and at least on a quarterly basis, using prospective testing. Methods used for testing effectiveness

include critical terms, regression analysis and hypothetical derivative method. Fair value movements of

foreign exchange derivatives are included other operating income line and fair value movements of

interest instruments and interest payments of interest instruments are included within finance charges.

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 fair value of the derivatives are recognised in the

income statement, along with any changes in the relevant fair value of the underlying hedged asset or

liability.

If such a hedge relationship is de-designated or no longer meets hedge accounting criteria, fair value

movements on the derivative continue to be taken to the income statement while any fair value

adjustments made to the underlying hedged item to that date are amortised through the income

statement over its remaining life using the effective interest rate method.

Cash flow hedges are used to hedge the foreign currency risk of highly probable future foreign

currency cash flows, 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 the other comprehensive income,

while any ineffective part is recognised in the income statement. Amounts recorded in the other

comprehensive income are recycled to the income statement in the same period in which the underlying

foreign currency or interest exposure affects the income statement. When a hedge relationship no

longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity is either

transferred to the income statement or amortised over its remaining life using the effective interest rate

method.

Derivative financial instruments are presented in the financial statements as ‘Intra-group derivative

assets/(liabilities)’ as these transactions are entered into by Diageo Finance plc, a fellow group

undertaking, and subsequently passed to the company.

Taxation

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 a

provision 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. Penalties and

interest on tax liabilities are included in profit before taxation.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

1. ACCOUNTING POLICIES (continued)

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 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. Deferred tax assets are not recognised where it is more

likely than not that the asset will not be realised in the future.

Judgements in applying accounting policies and key sources of estimation uncertainty

The Directors make estimates and judgements concerning the future of the company. The resulting

accounting estimates will, by definition, seldom equate to actual results. The company's Directors are of

the opinion that there are no estimates and assumptions, nor significant judgements that have a

significant risk of casting material adjustment to the carrying value of the assets and liabilities for the

company within the next financial year due to the nature of the business other than those discussed

below.

The critical accounting policy, which the Directors consider is of greater complexity and particularly

subject to estimates, is set out in detail in the accounting policy for derivative financial instruments. A

critical accounting estimate, specific to the company, is the estimation of fair valuation of derivative

assets and liabilities (see detailed description under note 10. Financial instruments and risk management

(f) Fair value measurements).

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

2. OTHER OPERATING (CHARGE)/INCOME


	Year ended	Year ended
	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
Intercompany management income	8	7
Foreign exchange loss on operations	(18)	(1)
	(10)	6

The auditors’ remuneration of $15,572 (2023 - $14,336) was paid on behalf of the company by a fellow

group undertaking. There were no fees payable to the auditors in respect of non-audit services (2023 -

$nil).

3. EMPLOYEES

The company did not employ any staff during either the current or prior year.

None of the Directors received any remuneration during the financial year in respect of their services as

directors of the company (2023 - $nil) as the directors are paid by fellow group undertakings and no

cost was recharged to the company.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

4. FINANCE INCOME AND CHARGES


	Year ended	Year ended
	30 June 2024	30 June 2023
		re-presented
	$ million	$ million

Finance income from fellow group undertakings	773	560
Amortisation of fair value changes	13	2
Fair value gain on intra-group derivative financial instruments	42	5
Fair value adjustment on borrowings	—	67
Total finance income	828	634

Finance charge to fellow group undertakings	(194)	(170)
Finance charge on all other borrowings	(373)	(286)
Fair value loss on intra-group derivative financial instruments	—	(70)
Fair value adjustment on borrowings	(43)	—
Discount and fee amortisation	(7)	(8)
Total finance charges	(617)	(534)

Net finance income	211	100

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

5. TAXATION


	Year ended	Year ended
	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
(a) Analysis of taxation for the year
Current tax	—	—
Deferred tax	—	—
Taxation on profit on ordinary activities	—	—

	Year ended	Year ended
	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
(b) Tax included in other comprehensive income
Current tax	—	—
Deferred tax - current year	2	(18)
Deferred tax - rate change	—	—
Total tax credit included in other comprehensive income/ (loss)	2	(18)

	Year ended	Year ended
	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
(c) Factors affecting total tax for the year
Profit/(Loss) before tax	201	106
Taxation on profit/(loss) at UK corporation tax rate of 25% (2023 - 20.50%)	(50)	(22)
Group relief received for nil consideration	50	22
Total tax charge for the year	—	—

The UK corporation tax rate is 25%, effective from 1 April 2023, which applies for the year ended 30

June 2024. Legislation increasing the corporation tax rate to 25% was substantively enacted on 24 May

2021.

Deferred taxes at 30 June 2024 have been measured using this increased tax rate and reflected in these

financial statements.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

6. OTHER FINANCIAL ASSETS AND LIABILITIES


	Assets	Assets due	Liabilities	Liabilities
	due after	within one	due within	due after one
	one year	year	one year	year
	$ million	$ million	$ million	$ million
30 June 2024
Intra-group derivative assets/(liabilities)
Designated in fair value hedge	—	—	—	(294)

Total derivative assets/(liabilities)	—	—	—	(294)

Diageo Finance plc, a fellow group undertaking, entered into external interest rate swaps on behalf of

Diageo Capital plc, market value of which amounted to net $294 million liability at the balance sheet

date (2023 - $336 million liability). The external deals are mirrored through Diageo plc to Diageo

Capital plc, the ultimate beneficiary.

Due to the functional currency change of the company, the cross currency swaps previously designated

in cash flow hedge, were de-designated and derecognized in the company.


	Assets	Assets due	Liabilities	Liabilities
	due after	within one	due within	due after one
	one year	year	one year	year
	re-presented	re-presented	re-presented	re-presented
	$ million	$ million	$ million	$ million
30 June 2023
Intra-group derivative assets/ (liabilities)
Designated in cash flow hedge	438	—	—	—
Designated in fair value hedge	—	—	(3)	(333)

Total derivative assets/(liabilities)	438	—	(3)	(333)

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

7. TRADE AND OTHER RECEIVABLES


	30 June 2024		30 June 2023
	Due within one	Due after one	Due within one	Due after one
	year	year	year	year
			re-presented	re-presented
	$ million	$ million	$ million	$ million
Amounts owed by fellow group
undertakings	2	11,083	21	8,909
Prepayments	1	—	2	—
	3	11,083	23	8,909

Amounts owed by fellow group undertakings include accrued and capitalised interest on the underlying

balances at 30 June 2024 and at 30 June 2023. These balances bear interest at fixed and variable rates

from 0.2659% to 7.01% for the year ended 30 June 2024 (2023 - from 0.2659% to 8.11%).

Amounts owed by fellow group undertakings represent transactions with companies in the group with

which the company has a long-term financing relationship. These financing relationships are expected

to continue for the foreseeable future. Certain amounts owed by fellow group undertakings are

repayable on demand, but reclassified to non-current assets as they are not expected to be repaid in the

foreseeable future. Amounts owed by group undertakings are considered to have a fair value which is

not materially different to the book value. Expected credit loss is immaterial for amounts owed by

fellow group undertakings.

8.DEFERRED TAX LIABILITY


	Fair value and hedging reserves	Total
	$ million	$ million
At 30 June 2022 (re-presented)	18	18
Recognised in other comprehensive income/(loss)	18	18
Currency translation adjustment	2	2
At 30 June 2023 (re-presented)	38	38
Recognised in other comprehensive income/(loss)	(2)	(2)
At 30 June 2024	36	36

The deferred tax liability arose from temporary timing differences on cross currency swaps designated

as a cash flow hedge relationship. The amount of deferred tax liability on temporary differences is

$36 million (2023 - $38 million).

Diageo Capital plc has applied the temporary exception under IAS 12 in relation to the accounting for

deferred taxes arising from the implementation of the Pillar Two rules.

In December 2021, the OECD released a framework for Pillar Two Model Rules which will introduce a

global minimum corporate tax rate of 15%, applicable to multinational enterprise groups with global

revenue over €750 million. The legislation implementing the rules in the United Kingdom was

substantively enacted on 20 June 2023 and will apply to Diageo from the financial year ending 30 June

2025 onwards.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

9. BORROWINGS AND BANK OVERDRAFTS


	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
Commercial paper	479	250
US$ 500 million 3.5% bonds due 2023	—	500
US$ 600 million 2.125% bonds due 2024	600	—
Fair value adjustment to borrowings	—	(3)
	(1,079)	(747)
Borrowings due within one year and bank overdrafts	1,079	747

US$ 600 million 2.125% bonds due 2024	—	598
US$ 750 million 1.375% bonds due 2025	749	748
US$ 500 million 3.875% bonds due 2028	498	498
US$ 1,000 million 2.375% bonds due 2029	993	992
US$ 1,000 million 2% bonds due 2030	995	994
US$ 750 million 2.125% bonds due 2032	744	743
US$ 600 million 5.875% bonds due 2036	594	594
US$ 500 million 3.875% bonds due 2043	492	492
US$ 750 million 5.3% bonds due 2027	748	748
US$ 500 million 5.2% bonds due 2025	499	499
US$ 750 million 5.5% bonds due 2033	744	744
US$ 800 million 5.375% bonds due 2026	797	—
US$ 900 million 5.625% bonds due 2033	894	—
Fair value adjustment to borrowings	(288)	(328)
	(8,459)	(7,322)
Borrowings due after one year	8,459	7,322
	(9,538)	(8,069)
Total external borrowings	9,538	8,069

The interest rates of external borrowings shown in the table above are those contracted on the

underlying borrowings before taking into account any interest rate hedges. Bonds are stated net of

unamortised finance costs of $51 million (2023 - $48 million). Bonds are reported at amortised cost

with a fair value adjustment shown separately. These fair value adjustments are determined using

discounted cash flow method based on observable market input (Level 2). All bonds, medium-term

notes and commercial paper issued by the company are fully and unconditionally guaranteed by Diageo

plc.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The company’s funding, liquidity and exposure to foreign currency and interest rate risks are managed

at group level by the group’s treasury department.

The treasury department uses a range of financial instruments to manage these underlying risks.

Treasury operations are conducted within a framework of Board-approved policies and guidelines,

which are recommended and 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 application of the Board-approved strategies.

Transactions arising from the application of this flexibility are carried at fair value, gains or losses are

taken to the income statement as they arise and are separately monitored on a daily basis using Value at

Risk analysis. In the years ended 30 June 2024 and 30 June 2023, gains and losses on these transactions

were not material. The company 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 finance committee receives monthly reports on the key activities of the treasury department,

including any exposures different from the defined benchmarks.

(a) Currency risk

The company presents its financial statements in US dollar (which is the functional currency of the

entity) and historically conducts business in several currencies. As a result, it may be subject to foreign

currency risk due to exchange rate movements, which may affect the company’s transactions. As

necessary the company manages the currency risk, using appropriate financial instruments. Where

hedge accounting is applied, hedges are documented and tested for effectiveness on an ongoing basis.

The company expects hedges entered into to continue to be effective and therefore does not expect the

impact of ineffectiveness on the income statement to be material. Due to the functional and presentation

currency change on 1 of July 2023, the currency exposures of the company changed to a material

extent. This did not impact the overall risk management policy and approach. No material currency

hedges exist currently.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(b) Interest rate risk

The group has an exposure to interest rate risk, arising principally on changes in US dollar, euro and

sterling interest rates. To manage interest rate risk, the group manages its proportion of fixed to floating

rate borrowings within limits approved by the Board, primarily through issuing fixed and floating rate

borrowings, and by utilising interest rate swaps. These practices aim to minimise the group’s net

finance charges with acceptable year-on-year volatility. To facilitate operational efficiency and

effective hedge accounting, for the year ended 30 June 2024, the group’s policy was to maintain fixed

rate borrowings within a band of 40% to 90%. For these calculations, net borrowings exclude interest

rate related fair value adjustments. The majority of the group’s existing interest rate derivatives are

designated as hedges and are expected to be effective. Fair value of these derivatives is recognised in

the income statement, along with any changes in the relevant fair value of the underlying hedged asset

or liability. The potential risk of the increasing interest rates and resulting potential increase in cost of

borrowing is considered to be limited as the company forms part of the group’s financial operations and

as such it will be reimbursed for any potential increase in the charges of its financial instruments.

The company uses a sensitivity analysis that estimates the impacts on the income statement and other

comprehensive income of either an instantaneous increase or decrease of 0.5% in market interest rates

or a 10% strengthening or weakening in US dollar against all other currencies, from the rates applicable

at 30 June 2024 and 30 June 2023, for each class of financial instruments with all other variables

remaining constant. The sensitivity analysis excludes the impact of market risks on the corporate tax

payable. This analysis is for illustrative purposes only, as in practice interest and foreign exchange rates

rarely change in isolation.

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.

No material foreign currency exposure existed at 30 June 2024. Comparative figures to currency risk

sensitivity are not disclosed in fiscal 24. Due to the functional currency change of the company that is

applied prospectively from 1 July 2023 (see note 1), it would not be practicable to compare the re-

presented results of the data prior to the functional currency change with the results of the sensitivity

analysis for fiscal 24.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)


	0.5%	0.5%
	decrease in	increase in
	interest rates	interest rates
	$ million	$ million
30 June 2024

Impact on income statement -
gain/(loss)	67	(67)
Impact on other comprehensive
income - gain/(loss)	—	—

30 June 2023 (re-presented)

Impact on income statement -
gain/(loss)	65	(65)
Impact on other comprehensive
income - gain/(loss)	24	(22)

(1) In the year ended 30 June 2023, the impact of a 10% strengthening or weakening in sterling was £5 million

gain and £6 million loss on the consolidated income statement and £32 million gain and £39 million loss on the

other comprehensive income.

Impact on the statement of comprehensive income includes the impact on the income statement.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(d) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in

financial loss to the company. Credit risk arises on cash balances (including bank deposits and cash and

cash equivalents), derivative financial instruments, trade and other receivables, loans, financial

guarantees and committed transactions. The carrying amount of financial assets represents the

company’s exposure to credit risk at the balance sheet date as disclosed in section (h), excluding the

impact of any collateral held or other credit enhancements. A financial asset is in default when the

counterparty fails to pay its contractual obligations. Financial assets are written-off when there is no

reasonable expectation of recovery. The gross carrying amount of the financial asset has to be reduced

(written-off) in case there is no reasonable expectation of recovering the contractual cash flows on the

asset in its entirety or its portion only. Expected recovery of contractual cash flows is assessed

individually, on instrumental basis. Credit risk is managed separately for financial and business related

credit exposures.

Financial credit risk

The company 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 a long-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 group’s policy is designed to ensure that individual counterparty limits are adhered to

and that there are no significant concentrations of credit risk. The Board also defines the types of

financial instruments which may be transacted. The credit risk arising through the use of financial

instruments for currency and interest rate risk management is estimated with reference to the fair value

of contracts with a positive value, rather than the notional amount of the instruments themselves. The

group annually reviews the credit limits applied and regularly monitors the counterparties’ credit

quality reflecting market credit conditions.

Business related credit risk

Since trade and other receivables principally include balances with fellow group undertakings, the risk

of non-performance is considered remote. Under IFRS 9, the significant increase in credit risk of

financing relationships with fellow group undertakings is determined based on the group’s internal

credit rating assessment. The assessment practice takes into account as inputs the historical default of

the financial instruments, currently available information about fellow group undertakings’ financial

performance and forward-looking information. The total balance of trade and other receivables is

qualified as performing in accordance with internal credit rating assessment. As a result of low risk

credit risk these financial assets have a very low risk of default (probability of default (PD)) and the 12-

months expected credit loss is considered to be immaterial.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(e) Liquidity risk

Liquidity risk is the risk that the company may encounter difficulties in meeting its obligations

associated with financial liabilities that are settled by delivering cash or other financial assets. The

company uses short term commercial paper to finance its day-to-day operations. The group’s policy

with regard to the expected maturity profile of borrowings is to limit the amount of such borrowings

maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the

level of commercial paper to 30% of gross borrowings less money market demand deposits. In addition,

the group’s policy is to maintain backstop facilities with relationship banks to support commercial

paper obligations. The following tables provide an analysis of the anticipated contractual cash flows

including interest payable for the company financial liabilities and derivative instruments on an

undiscounted basis. Where interest payments are on a floating rate basis, rates of each cash flow until

maturity of the instruments are calculated based on the forward yield curve prevailing at 30 June 2024

and 30 June 2023. The gross cash flows of cross currency swaps are presented for the purposes of this

table. All other derivative contracts are presented on a net basis.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Contractual cash flows


						Carrying
		Due	Due			amount
	Due	between	between	Due		at balance
	within 1	1 and 3	3 and 5	after 5		sheet
	year	years	years	years	Total	date^
	$ million	$ million	$ million	$ million	$ million	$ million
2024
Borrowings	(1,079)	(2,050)	(1,250)	(5,500)	(9,879)	(9,538)
Interest on borrowings	(351)	(613)	(452)	(1,008)	(2,424)	(84)
Trade and other financial
liabilities	(626)	—	—	—	(626)	(626)
Non-derivative financial
liabilities	(2,056)	(2,663)	(1,702)	(6,508)	(12,929)	(10,248)

Other derivative instruments (net)	(108)	(106)	(85)	(35)	(334)

Derivative instruments	(108)	(106)	(85)	(35)	(334)	(294)

2023 (re-presented)
Borrowings	(750)	(1,850)	(1,250)	(4,600)	(8,450)	(8,069)
Interest on borrowings	(273)	(490)	(410)	(936)	(2,109)	(75)
Trade and other financial
liabilities	(537)	—	—	—	(537)	(537)
Non-derivative financial
liabilities	(1,560)	(2,340)	(1,660)	(5,536)	(11,096)	(8,681)

Cross currency swaps (gross)
- Receivable	54	109	109	1,690	1,962
- Payable	(35)	(70)	(70)	(1,172)	(1,347)
Other derivative instruments (net)	(120)	(128)	(70)	(61)	(379)

Derivative instruments	(101)	(89)	(31)	457	236	102

^ Difference between total contractual cash flow amount and carrying amount at balance sheet date is due to the

unamortized discount and fee balances and fair value adjustments of bonds in fair value hedge relationships.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

On 30 June 2024 the group had available undrawn committed bank facilities of $3,250 million (2023 -

$3,375 million).

The facilities can be used for general corporate purposes and, together with cash and cash equivalents,

support the group’s commercial paper programmes. There are no financial covenants on either of the

group’s or the company's material short- and long-term borrowings. Certain of these borrowings

contain cross default provisions and negative pledges. The committed bank facilities are subject to a

single financial covenant, being minimum interest cover ratio of two times (defined as the ratio of

operating profit before exceptional items, aggregated with share of after tax results of associates and

joint ventures, to net interest). They are also subject to pari passu ranking and negative pledge

covenants. Any non-compliance with covenants underlying group’s financing arrangements could, if

not waived, constitute an event of default with respect to any such arrangements, and any non-

compliance with covenants may, in particular circumstances, lead to an acceleration of maturity on

certain borrowings and the inability to access committed facilities. Both the group and the company

were 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.

(f) Fair value measurements

Fair value measurements of financial instruments are presented through the use of a three-level fair

value hierarchy that prioritises the valuation techniques used in fair value calculations.

The group and the company maintains policies and procedures to value instruments using the most

relevant data available. If multiple inputs that fall into different levels of the hierarchy are used in the

valuation of an instrument, the instrument is categorised on the basis of the most subjective input.

Foreign currency forwards and swaps, cross currency swaps and interest rate swaps are valued using

discounted cash flow techniques. These techniques incorporate inputs at levels 1 and 2, such as foreign

exchange rates and interest rates. These market inputs are used in the discounted cash flow calculation

incorporating the instrument’s term, notional amount and discount rate, and taking credit risk into

account. As significant inputs to the valuation are observable in active markets, these instruments are

categorised as level 2 in the hierarchy. There were no significant changes in the measurement and

valuation techniques, or significant transfers between the levels of the financial assets and liabilities in

the year ended 30 June 2024.

The company’s financial assets and liabilities measured at fair value are categorised as follows:


	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
Derivative assets	—	438
Derivative liabilities	(294)	(336)

Valuation techniques based on observable market input	(294)	102
(Level 2)

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(g) Results of hedge relationships

The company targets a one-to-one hedge ratio. Strengths of the economic relationship between the

hedged item and the hedging instrument is analysed on an ongoing basis. Ineffectiveness can arise from

subsequent change in the forecast transactions as a result of timing, cash flows or value except when the

critical terms of the hedging instrument and hedged item are closely aligned. The change in the credit

risk of the hedging instruments or the hedged items is not expected to be the primary factor in the

economic relationship.

The notional amounts, contractual maturities and rates of the hedging instruments designated in

hedging relationship as of 30 June 2024 and 30 June 2023 by the main risk categories are as follows:


	Notional		Range of
	amounts	Maturity	hedged
	$ million		rates
2024
Fair value hedges
Derivatives in fair value hedge	2,600	September 2023 - April 2030	1.375 - 3.093%
(interest rate risk)

The below re-presented disclosures of the fiscal 23 sterling reporting currency company and the quoted

rates are applicable to the risk exposures observed by the company at the date of 30 June 2023.

Accordingly, nominal amounts have been re-presented in US dollar, without adjustments to rates

achieved on hedges of exposures observed at the time. The change in functional currency at 1 July 2023

has fundamentally changed the company's foreign currency exposures. This exposure set change

resulted in a realignment of the company's financial risk management hedge portfolio, but no change in

overall risk management strategy.


	Notional		Range of
	amounts	Maturity	hedged
	$ million		rates
2023 (re-presented)
Cash flow hedges
Derivatives in cash flow hedge	1,100	September 2036 - April 2043	US dollar 1.6 - 1.88
(foreign currency debt)

Fair value hedges
Derivatives in fair value hedge	3,100	September 2023 - April 2030	1.375 - 3.093%
(interest rate risk)

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(g) Results of hedge relationships (continued)

In respect of cash flow hedging instruments, a gain of $nil (2023 - $7 million) has been recognised in

other comprehensive income due to changes in fair value driven by movements in foreign exchange and

interest rates.

The previous USD/GBP cross currency interest rate swaps were de-designated from cash flow hedge

due to the functional currency change of the company. The cumulative fair value gains and losses

existing in cash flow hedge reserve amortised to the income statement over its remaining life using

effective interest rate method. A gain of $4 million has been transferred out of comprehensive income

to total finance charges (2023 - a loss of $65 million).


	At the
	beginning	Income	Comprehensive	Cash	At the end
	of the year	statement	income	movement s	of the year
	$ million	$ million	$ million	$ million	$ million
2024

Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)	438	—	—	(438)	—

Fair value hedges
Derivatives in fair value hedge (interest rate risk)	(336)	42	—	—	(294)
Fair value hedge hedged item	331	(43)	—	—	288
Instruments in fair value hedge relationship	(5)	(1)	—	—	(6)

2023 (re-presented)

Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)	444	(65)	89	(30)	438

Fair value hedges
Derivatives in fair value hedge (interest rate risk)	(256)	(65)	(15)	—	(336)
Fair value hedge hedged item	250	67	14	—	331
Instruments in fair value hedge relationship	(6)	2	(1)	—	(5)

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(h) Reconciliation of financial instruments

The table below sets out the company’s accounting classification of each class of financial assets and

liabilities.


	Fair		Not
	value	Assets and	categorised
	through	liabilities at	as a
	income	amortised	financial			Non-
	statement	cost	instrument	Total	Current	current
	$ million	$ million	$ million	$ million	$ million	$ million
2024
Trade and other	—	11,085	1	11,086	3	11,083
receivables
Total financial assets	—	11,085	1	11,086	3	11,083

Borrowings	—	(9,538)	—	(9,538)	(1,079)	(8,459)
Trade and other	—	(710)	—	(710)	(710)	—
payables
Intra-group derivatives	(294)	—	—	(294)	—	(294)
in fair value hedge
Total financial
liabilities	(294)	(10,248)	—	(10,542)	(1,789)	(8,753)

Total net financial
(liabilities)/assets	(294)	837	1	544	(1,786)	2,330

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(h) Reconciliation of financial instruments (continued)


	Fair		Not
	value	Assets and	categorised
	through	liabilities at	as a
	income	amortised	financial			Non-
	statement	cost	instrument	Total	Current	current
	$ million	$ million	$ million	$ million	$ million	$ million
2023 (re-presented)
Trade and other	—	8,930	2	8,932	23	8,909
receivables
Intra-group derivatives	438	—	—	438	—	438
in cash flow hedge

Total financial assets	438	8,930	2	9,370	23	9,347

Borrowings	—	(8,069)	—	(8,069)	(747)	(7,322)
Trade and other	—	(612)	—	(612)	(612)	—
payables
Intra-group derivatives	(336)	—	—	(336)	(3)	(333)
in fair value hedge
Total financial
liabilities	(336)	(8,681)	—	(9,017)	(1,362)	(7,655)

Total net financial
assets/(liabilities)	102	249	2	353	(1,339)	1,692

At 30 June 2024 and 30 June 2023, the carrying values of cash and cash equivalents, other financial

assets and liabilities approximate to fair values. At 30 June 2024, the fair value of borrowings, based on

unadjusted quoted market data (Level 1 sources as categorised by IFRS 13), was $9,417 million (2023 -

$7,934 million).

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(i) Capital management

The group’s management is committed to enhancing shareholder value in the long term, both by

investing in the businesses and brands so as to deliver continued improvement in the return from those

investments and by managing the capital structure. The group 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.

11. TRADE AND OTHER PAYABLES


	30 June 2024	30 June 2023
		re-presented
	$ million	$ million
Amounts owed to fellow group undertakings	626	537
Interest payable	84	75
	710	612

Amounts owed to fellow group undertakings include accrued and capitalised interest on the underlying

balances at 30 June 2024 and at 30 June 2023. These balances are repayable on demand and bear

interest at fixed and variable rates from 0% to 5.4803% for the year ended 30 June 2024 (2023 - from

0% to 4.2013%).

Amounts owed to fellow group undertakings represent transactions with companies in the group with

which the company has a long-term financing relationship. These financing relationships are expected

to continue for the foreseeable future. Amounts owed to group undertakings are considered to have a

fair value which is not materially different to the book value.

As a result of the functional and presentation currency change of the company from 1 July 2023, to

manage the changed foreign currency exposures of the company, the sterling denominated

intercompany loans of the entity have been converted from sterling to US dollar on transition date with

no material fair value impact and no cash settlement. The amounts of the intercompany loans

denominated in sterling were £819 million, which has been converted to $1,032 million.

Diageo Capital plc

Registered number: SC040795

Year ended 30 June 2024

NOTES TO THE FINANCIAL STATEMENTS (continued)

12. CALLED UP SHARE CAPITAL AND RESERVES

(a) Share capital


	30 June 2024	30 June 2023
		re-presented
	$	$
Authorised allotted, called up and fully paid:
200,000 ordinary shares of £1 each (2023: 200,000)	252,000	252,000

(b) Hedging reserve


		Hedging reserve
		$ million

At 30 June 2022 (re-presented)		57
Effective portion of changes in fair value of cash flow hedges
- gains taken to other comprehensive income		7
- recycled to income statement		65
Tax credit on effective portion of changes in fair value of cash flow hedge		(18)
Currency translation adjustment		5

At 30 June 2023 (re-presented)		116
Effective portion of changes in fair value of cash flow hedges
- gains taken to other comprehensive income		—
- recycled to income statement		(10)
Tax charge on effective portion of changes in fair value of cash flow hedge		2
		-8
At 30 June 2024		108

Other reserves represent capital contribution from the immediate parent company.

On 30 June 2010 Diageo plc invested further equity of $88 million into the company as capital

contribution. No new shares were issued, the ownership level did not change.

13. IMMEDIATE AND ULTIMATE PARENT UNDERTAKING

The immediate and ultimate parent undertaking of the company is Diageo plc which is the ultimate

controlling party of the group. The ultimate parent undertaking and the smallest and largest group to

consolidate these financial statements is Diageo plc. Diageo plc is incorporated and registered in

England, United Kingdom. The consolidated financial statements of Diageo plc can be obtained from

the registered office at Diageo, 16 Great Marlborough Street, London, W1F 7HS, United Kingdom.