| Net borrowings |
17. Net borrowings | | | | | | | | | | Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are designated in fair 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 a discounted cash flow technique based on unadjusted market data. Bank overdrafts form an integral part of the group’s cash management and are included as a component 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 lease liabilities plus interest rate hedging instruments, cross currency interest rate swaps and foreign currency forwards and swaps used to manage borrowings) less cash and cash equivalents. | | | | |
| | | | | | | | | | | | $500 million 5.200% bonds due 2025(2) | | | $750 million 1.375% bonds due 2025(2) | | | €850 million 2.375% bonds due 2026 | | | €500 million floating bonds due 2026 | | | £500 million 1.750% bonds due 2026 | | | $800 million 5.375% bonds due 2026(2) | | | €750 million 1.875% bonds due 2027 | | | Fair value adjustment to borrowings | | | Borrowings due within one year | | | £500 million 1.750% bonds due 2026 | | | $800 million 5.375% bonds due 2026(2) | | | €750 million 1.875% bonds due 2027 | | | €500 million 1.500% bonds due 2027 | | | $750 million 5.300% bonds due 2027(2) | | | $500 million 3.875% bonds due 2028(2) | | | £300 million 2.375% bonds due 2028 | | | €700 million 0.125% bonds due 2028 | | | £300 million 2.875% bonds due 2029 | | | €750 million 1.500% bonds due 2029 | | | $1,000 million 2.375% bonds due 2029(2) | | | $1,000 million 2.000% bonds due 2030(2) | | | $750 million 5.125% bonds due 2030(1) | | | €700 million 3.125% bonds due 2031 | | | €300 million 3.125% bonds due 2031 | | | €1,000 million 2.500% bonds due 2032 | | | $750 million 2.125% bonds due 2032(2) | | | €500 million 3.250% bonds due 2032 | | | £400 million 1.250% bonds due 2033 | | | $750 million 5.500% bonds due 2033(2) | | | $900 million 5.625% bonds due 2033(2) | | | €900 million 1.875% bonds due 2034 | | | $400 million 7.450% bonds due 2035(1) | | | €700 million 3.375% bonds due 2035 | | |
| | | | | | $750 million 5.625% bonds due 2035(1) | | | $600 million 5.875% bonds due 2036(2) | | | €500 million 3.750% bonds due 2037 | | | £600 million 2.750% bonds due 2038 | | | $500 million 4.250% bonds due 2042(1) | | | $500 million 3.875% bonds due 2043(2) | | | €500 million 3.750% bonds due 2044 | | | | | | Fair value adjustment to borrowings | | | Borrowings due after one year | | | Total borrowings before leases and derivative financial instruments | | | Fair value of cross currency interest rate swaps | | | Fair value of foreign currency swaps and forwards | | | Fair value of interest rate hedging instruments | | | | | | | | | Less: Cash and cash equivalents | | | | | |
(1)SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, a 100% owned subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other subsidiary of Diageo plc guarantees the security. (2)SEC-registered debt issued on an unsecured basis by Diageo Capital plc, a 100% owned subsidiary of Diageo plc and fully and unconditionally guaranteed by Diageo plc. No other subsidiary of Diageo plc guarantees the security. (i)The interest rates shown are those contracted on the underlying borrowings before taking into account any interest rate hedges (see note 16). (ii)Bonds are stated net of unamortised finance costs of $90 million (2025 – $103 million). (iii)All bonds, medium-term notes and commercial paper issued on an unsecured basis by the group’s 100% owned subsidiaries are fully and unconditionally guaranteed on an unsecured basis by Diageo plc and no other subsidiary of Diageo plc guarantees such securities. Gross borrowings before leases and derivative financial instruments are expected to mature as follows: | | | | | | | | | Between one and three years | | | Between three and five years | | | | | | | | |
During the year, the following bonds were issued or repaid: (a) Reconciliation of movement in net borrowings | | | | | | | | | Net decrease/(increase) in cash and cash equivalents | | | Net (decrease)/increase in bonds and other borrowings | | | Net decrease in net borrowings from cash flows | | | Exchange differences on net borrowings | | | | | | Net borrowings at the end of the year | | |
(1)In the year ended 30 June 2026, other non-cash items are principally in respect of an increase in lease liabilities of $188 million, fair value loss of net borrowings of $9 million and bond finance cost amortisation of $18 million and reclassification to assets held for sale of $18 million. In the year ended 30 June 2025, other non-cash items are principally in respect of fair value losses on borrowings of $182 million and an increase in lease liabilities of $147 million partially offset by gains of cross currency interest rate swaps and interest rate swaps of $183 million and reclassification from assets held for sale of $45 million. (b) Analysis of gross borrowings by currency | | | | | | | | | Cash and cash equivalents $ million | Gross borrowings(1) $ million | Cash and cash equivalents $ million | Gross borrowings(1) $ million | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)Includes foreign currency forwards and swaps and leases. (2)Includes $16 million cash and cash equivalents in cash-pooling arrangements (2025 – $15 million). (3)Mainly net investment hedge in Canadian dollar at 30 June 2026.
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