statements as a whole. Accounting policies, critical accounting estimates and judgements specific to a note are included in the note to which they relate. Furthermore,

the section details new accounting standards, amendments and interpretations, that the group has adopted in the current financial year or will adopt in subsequent

The consolidated financial statements are prepared in accordance with IFRS®

Accounting Standards (IFRSs) adopted by the UK (UK-adopted International

Accounting Standards) and IFRSs, as issued by the International Accounting

Standards Board (IASB), including interpretations issued by the IFRS

Interpretations Committee. IFRS as adopted by the UK differs in certain

respects from IFRS as issued by the IASB. The differences have no impact on

the group’s consolidated financial statements for the years presented. The

consolidated financial statements are prepared on a going concern basis under

the historical cost convention, unless stated otherwise in the relevant accounting

The preparation of financial statements in conformity with IFRS requires

management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent 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

Management prepared 18-month cash flow forecasts which reflect severe but

plausible downside scenarios taking into consideration the group's principal

risks. In the base case scenario, management included assumptions to deliver

low-single-digit organic net sales growth and mid-single-digit organic operating

profit growth. In light of the ongoing geopolitical volatility, the base case

outlook and severe but plausible downside scenarios incorporated

considerations for heightened geopolitical tensions, business disruptions and

changes in consumer preferences. Even under these scenarios, the group’s

liquidity is still expected to remain strong. Mitigating actions, should they be

required, are all within management’s control and could include reductions in

discretionary spending such as acquisitions and capital expenditure, lower level

of marketing spend and investment in maturing stock, as well as a temporary

suspension or reduction in dividend to shareholders in the next 12 months, or

drawdowns on committed facilities. Having considered the outcome of these

assessments, the Directors are comfortable that the group (and company) is a

going concern for at least 12 months from the date of signing the group's

The consolidated financial statements include the results of the company and its

subsidiaries together with the group’s attributable share of the results of

associates and joint ventures. A subsidiary is an entity controlled by Diageo plc.

The group controls an investee when it is exposed, or has rights, to variable

returns from its involvement with the investee and has the ability to affect those

returns through its power over the investee. 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 included on the basis of the

group’s rights over those assets and liabilities.

Items included in the financial statements of the group’s subsidiaries, associates

and joint ventures are measured using the currency of the primary economic

environment in which each entity operates (its functional currency). The

consolidated financial statements are presented in US dollar, which is the

functional currency of the parent company, Diageo plc. The functional currency

of Diageo plc is determined by using management judgement that considers the

parent company as an extension of its subsidiaries.

The income statements and cash flows of non-US dollar entities are translated

into US dollar at weighted average rates of exchange, except for subsidiaries in

hyperinflationary economies that are translated with the closing rate at the end

of the year, and for substantial transactions that are translated at the rate on the

date of the transaction. Exchange differences arising on the retranslation to

closing rates are taken to the exchange reserve.

Assets and liabilities are translated at the relevant year end closing rates.

Exchange differences arising on the retranslation at closing rates of the opening

balance sheets of non-US dollar 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 foreign

currencies are recorded at the rate of exchange on the date of the transaction.

The principal foreign exchange rates used in the translation of financial

statements for the three years ended 30 June 2026, expressed in sterling and


	2026	2025	2024
Sterling
Income statement and cash flows(1)	0.75	0.77	0.80
Assets and liabilities(2)	0.76	0.73	0.79
Euro
Income statement and cash flows(1)	0.86	0.92	0.93
Assets and liabilities(2)	0.88	0.85	0.93

The group uses foreign exchange hedges to mitigate the effect of exchange rate

movements. For further information, see note 16.

Details of critical estimates and judgements which the Directors consider could

have a significant impact on the financial statements are set out in the related

•Taxation – management judgement whether a provision is required and

estimate of amount of corporate tax payable or receivable, the recoverability

of deferred tax assets and expectation on manner of recovery of deferred

•Brands, goodwill, other intangibles, investments in associates and contingent

considerations – management judgement whether the assets and liabilities are

to be recognised and synergies resulting from an acquisition. Management

judgement and estimate are required in determining future cash flows and

appropriate applicable assumptions to support the intangible asset, investment

in associate and contingent consideration value – pages 158 and 165.

•Post-employment benefits – management judgement whether a surplus can be

recovered and management estimate in determining the assumptions in

calculating the liabilities of the funds – page 171.

•Contingent liabilities and legal proceedings – management judgement in

assessing the likelihood of whether a liability will arise and an estimate

to quantify the possible range of any settlement; and significant

unprovided tax matters where maximum exposure is provided for each –

The group applied hyperinflationary accounting for its operations in Türkiye

The group’s consolidated financial statements include the results and financial

position of its operations in hyperinflationary economies restated to the

measuring unit current at the end of each period, with hyperinflationary gains

and losses in respect of monetary items being reported in finance income and

charges. Comparative amounts presented in the consolidated financial

statements are not restated. When applying IAS 29 on an ongoing basis,

comparatives in stable currency are not restated and the effect of inflating

opening net assets to the measuring unit current at the end of the reporting

period is presented as part of 'Items that may be recycled subsequently to the

income statement' in other comprehensive income, amounting to a gain of $334

million for the year ended 30 June 2026 (2025 – $264 million; 2024 – $365

million). The movement in the publicly available official price index for the

year ended 30 June 2026 was 32% (2025 – 35%; 2024 - 72%) in Türkiye. The

inflation rate used by the group for Venezuela is based on data of various

independent valuers, as no reliable officially published rate is available.

Movement in the price index for the year ended 30 June 2026 was 574% (2025

(g) New accounting standards and interpretations

The following accounting standards and amendments to standards, issued by the

IASB including those endorsed by the UK, were adopted by the group from 1

July 2025 with no material impact on the group’s consolidated results, financial

•Amendments to IAS 21 – Lack of exchangeability

The following amendments issued by the IASB have been endorsed by the UK

and have not yet been adopted by the group, which are not expected to have

material impact on the group's consolidated results or financial position:

•Amendments to IFRS 9 and IFRS 7 – Amendments to the Classification and

Measurement of Financial Instruments (effective from the year ending 30

•Amendments to IFRS 7 and IFRS 9 – Contracts Referencing Nature-

dependent Electricity (effective from the year ending 30 June 2027)

Preparations for the implementation of IFRS 18 – Presentation and Disclosure

of Financial Statements, which will become effective for the consolidated

financial statements from the year ending 30 June 2028, are in progress.

IFRS 18 supersedes IAS 1 and makes consequential amendments to other

standards. As a result of IFRS 18 adoption, the group expects the following

•The structure of the consolidated income statement will be revised to

incorporate the categories and subtotals required by the standard.

Presentation of income and expenses in this newly defined structure will lead

to a change in operating profit, whilst keeping profit unchanged.

•The new operating profit subtotal will be the starting point of the

consolidated statement of cash flows and – as per IFRS 18 – cash flows from

dividends and interests can no longer be classified as part of operating cash

flow, but will be reported as investing and financing instead.

•Additional disclosure will be provided about management-defined

performance measures and other disclosure changes are expected in the

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

effective in future years, which are not expected to significantly impact the

group’s consolidated results or financial position.

The results of climate change assessment and greenhouse gas emission targets

for Diageo's direct operations (Scope 1 and 2) for 2030 have been considered as

part of the assessment of estimates and judgements in preparing the group's

consolidated financial statements. We integrate climate risk into our enterprise

risk management processes, within our principal risk factors. This is an integral

part of our strategic and business continuity planning.

The climate change scenario analyses performed in 2026 – conducted in line

with TCFD recommendations (a Moderate Warming’ Scenario (RCP 4.5) and a

‘Severe Warming Scenario’ (RCP 8.5)) – identified no material financial impact

The following considerations were made in respect of the financial statements:

•The impact of climate change on factors like residual values, useful lives and

depreciation methods that determine the carrying value of non-current assets.

•The impact of climate change on forecasts of cash flows used (including

forecast depreciation in line with capital expenditure plans) in impairment

assessments for the value-in-use of non-current assets including goodwill (see

•The impact of climate change on post-employment assets.