Edgar Filing: DIAGEO PLC

Unassociated Document

List identifying information required to be furnished

by Diageo plc pursuant to Rule 13a-16 or 15d-16 of

The Securities Exchange Act 1934

1 – 31 August 2009

Information	Required by/when

Public Announcements/Press	The Stock Exchange, London

Announcement Company releases shares from treasury to satisfy grants made under employee share plans. (03 August 2009)		Announcement Preliminary results announcement. (27 August 2009)
Announcement Company releases shares from treasury to satisfy grants made under employee share plans. (07 August 2009)		Announcement Company announces directorate change. (27 August 2009)
Announcement Company notified of transactions in respect of the Diageo Share Incentive Plan and Messrs Walsh, Rose and those persons discharging managerial responsibility inform the Company of their interests therein. Dr Humer and Mr Stitzer inform the Company of their beneficial interests. (10 August 2009)		Announcement Company releases shares from treasury to satisfy grants made under employee share plans. (28 August 2009)
Announcement Company releases shares from treasury to satisfy grants made under employee share plans. (26 August 2009)		Announcement Company announces total voting rights. (28 August 2009)

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

Diageo plc

(Translation of registrant's name into English)

8 Henrietta Place, London W1G 0NB

(Address of principal executive offices)

indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F x Form 40-F ¨

indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82 .............

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

Diageo plc

(Registrant)

Date 8 September 2009	By
	Name:	C Kynaston
	Title:	Senior Company Secretarial Assistant

Company	Diageo PLC
TIDM	DGE
Headline	Transaction in Own Shares
Released	10:31 03-Aug-2009
Number	91029-E6B7

TO:	Regulatory Information Service

PR Newswire

RE:	PARAGRAPH 12.6.4 OF THE LISTING RULES

Diageo plc - Transaction in Own Shares

Diageo plc (the 'Company') announces that today, it released from treasury 3,342 ordinary shares of 28 101/108 pence each ('Ordinary Shares'), to satisfy grants made under employee share plans. The average price at which these Ordinary Shares were released from treasury was 976.71 pence per share.

Following this release, the Company holds 254,273,704 Ordinary Shares as treasury shares and the total number of Ordinary Shares in issue (excluding shares held as treasury shares) is 2,499,645,405.

03 August 2009

END

Company	Diageo PLC
TIDM	DGE
Headline	Transaction in Own Shares
Released	14:35 07-Aug-2009
Number	91434-79B6

TO:	Regulatory Information Service

PR Newswire

RE:	PARAGRAPH 12.6.4 OF THE LISTING RULES

Diageo plc - Transaction in Own Shares

Diageo plc (the 'Company') announces that today, it released from treasury 3,200 ordinary shares of 28 101/108 pence each ('Ordinary Shares'), to satisfy grants made under employee share plans. The average price at which these Ordinary Shares were released from treasury was 976.71 pence per share.

Following this release, the Company holds 254,270,504 Ordinary Shares as treasury shares and the total number of Ordinary Shares in issue (excluding shares held as treasury shares) is 2,499,648,605.

07 August 2009

END

Company	Diageo PLC
TIDM	DGE
Headline	Director/PDMR Shareholding
Released	15:47 10-Aug-2009
Number	91542-917C

TO:	Regulatory Information Service

PR Newswire

RE: PARAGRAPH 3.1.4 OF THE DISCLOSURE AND TRANSPARENCY RULES

The notifications listed below were all received under Paragraph 3.1.2 of the Disclosure and Transparency Rules.

Diageo plc (the 'Company') announces that:

1.	it received notification on 10 August 2009 of the following allocations of ordinary shares of 28 101/108 pence each in the Company ('Ordinary Shares') under the Diageo Share Incentive Plan (the 'Plan'), namely:

(i) the following directors of the Company were allocated Ordinary Shares on 10 August 2009 under the Plan, by Diageo Share Ownership Trustees Limited (the 'Trustee'):

Name of Director	Number of Ordinary Shares

N C Rose		19

P S Walsh		19

(ii) the following 'Persons Discharging Managerial Responsibilities' ('PDMR') were allocated Ordinary Shares on 10 August 2009 under the Plan, by the Trustee:

Name of PDMR	Number of Ordinary Shares

N Blazquez		20

S Fletcher		19

D Gosnell		19

J Grover		19

A Morgan		19

G Williams		19

I Wright		19

The number of Ordinary Shares allocated comprises those purchased on behalf of the employee using an amount which the employee has chosen to have deducted from salary ('Sharepurchase') and those awarded to the employee by the Company ('Sharematch') on the basis of one Sharematch Ordinary Share for every two Sharepurchase Ordinary Shares.

The Sharepurchase Ordinary Shares were purchased and the Sharematch Ordinary Shares were awarded at a price per share of £9.27.

The Ordinary Shares are held by the Trustee and in the name of the Trustee. Sharepurchase Ordinary Shares can normally be sold at any time. Sharematch Ordinary Shares cannot normally be disposed of for a period of three years after the award date.

2. it received notification on 10 August 2009 from Dr F B Humer, a director of the Company, that he had purchased 858 Ordinary Shares on 10 August 2009 under an arrangement with the Company, whereby he has agreed to use an amount of £ 8,000 each month, net of tax, from his director's fees to purchase Ordinary Shares. Dr Humer has agreed to retain the Ordinary Shares while he remains a director of the Company.

The Ordinary Shares were purchased at a price per share of £9.27.

3. it received notification on 10 August 2009 from Mr H T Stitzer, a director of the Company, that he had purchased 107 Ordinary Shares on 10 August 2009 under an arrangement with the Company, whereby he has agreed to use an amount of £1,000 each month, net of tax, from his director's fees to purchase Ordinary Shares.

The Ordinary Shares were purchased at a price per share of £9.27.

As a result of the above transactions, interests of directors and PDMRs in the Company's Ordinary Shares (excluding options, awards under the Company's LTIPs and interests as potential beneficiaries of the Company's Employee Benefit Trusts) are as follows:

Name of Director	Number of Ordinary Shares

Dr F B Humer		15,272

N C Rose		453,937

H T Stitzer		6,922

P S Walsh		719,918

Name of PDMR	Number of Ordinary Shares

N Blazquez		43,341

S Fletcher		152,077

D Gosnell		59,531

J Grover		149,679

A Morgan		176,785

G Williams	243,955 (of which 5,992 are held as ADS*)

I Wright		30,152

P D Tunnacliffe

Company Secretary

10 August 2009

*1 ADS is the equivalent of 4 Ordinary Shares.

END

Company	Diageo PLC
TIDM	DGE
Headline	Transaction in Own Shares
Released	11:58 26-Aug-2009
Number	91156-F742

TO: Regulatory Information Service

PR Newswire

RE: PARAGRAPH 12.6.4 OF THE LISTING RULES

Diageo plc - Transaction in Own Shares

Diageo plc (the 'Company') announces that today, it released from treasury 3,198 ordinary shares of 28 101/108 pence each ('Ordinary Shares'), to satisfy grants made under employee share plans. The average price at which these Ordinary Shares were released from treasury was 976.71 pence per share.

Following this release, the Company holds 254,267,306 Ordinary Shares as treasury shares and the total number of Ordinary Shares in issue (excluding shares held as treasury shares) is 2,499,651,803. 26 August 2009

END

Company	Diageo PLC
TIDM	DGE
Headline	Final Results
Released	07:00 27-Aug-2009
Number	0785Y07

RNS Number : 0785Y

Diageo PLC

27 August 2009

Preliminary results for the year ended 30 June 2009

Diageo’s full year results demonstrate the resilience of the business

In a year of global economic downturn Diageo delivered organic net sales in line with the prior year; 4% organic growth in operating profit and 10% growth in reported eps.

Results at a glance

Volume in millions of equivalent	2009		2008		Organic movement			Reported movement
units		141.3		145.0		(4%)			(3%)
£ million
Net sales		9,311		8,090		-			15	%
Operating profit before exceptional items		2,613		2,304		4	%		13	%
Operating profit		2,443		2,226					10	%
Profit attributable to parent company’s equity shareholders		1,621		1,521					7	%

Basic eps		65.2p		59.3p					10	%

Highlights

Exchange rate movements increased net sales by £1,095 million; brand additions, primarily Ketel One vodka, contributed £151 million and there was an organic decline of £25 million.

Operating profit before exceptional items benefited by £167 million from exchange rate movements, £43 million from brand additions and £99 million from organic growth.

Exceptional operating costs were £170 million, in respect of the global restructuring programme and the restructuring of Irish brewing operations.

Associate income was £164 million.

Finance charges were £592 million. Net interest was £516 million, including £14 million impact of IAS 39, and other finance charges were £76 million, including £44 million impact of IAS 21 and 39.

Exchange rate movements increased finance charges by £66 million.

The reported tax rate was 14.5% and the underlying tax rate was 22.2%.

Free cash flow was £1,204 million.

Recommended increase of 5% in final dividend per share to 22.20 pence.

Paul Walsh, Chief Executive Officer of Diageo, said:

“This has been a very challenging year. Overall however our results demonstrate the resilience of our business. Our brand range and our geographic reach enabled us to deliver 4% organic operating profit growth and 10% eps growth. While the economic downturn has affected all markets, the response of customers and consumers has not been uniform and therefore the impact on our business has been varied. By region, International, North America and Asia Pacific have been stronger than Europe. By category, we have delivered growth in categories which account for over 50% of our sales, primarily vodka, rum, tequila and beer. The gin and wine categories have been weaker and scotch and liqueurs have been most impacted by de-stocking.

“Smirnoff, Captain Morgan, Jose Cuervo and Guinness, two of our three largest local priority brands, Buchanan’s and Windsor, and category brands, Cîroc, Cacique and Harp, all grew supported by innovation and effective marketing. We benefited from the addition of Ketel One vodka, Zacapa rum and Rosenblum Cellars wine, all of which have broadened our brand range in important categories. Johnnie Walker faced a tougher market environment being at a relatively higher price point and saw more impact from de-stocking. The consumer downturn in Spain and de-stocking in a number of markets also affected the performance of Baileys.

“We took action quickly to manage these difficult times, reducing our cost base and refocusing marketing spend as consumer trends changed. In fiscal 2010 we will benefit from cost reductions of £120 million as a result of our global restructuring initiative.

“While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery and F10 will be challenging, as we lap a strong first quarter and a reasonable first half performance this year. That being recognised, we expect to deliver low single digit organic operating profit growth in fiscal 2010.”

Notes

Unless otherwise stated in this announcement: percentage movements are organic movements; commentary refers to organic movements and share refers to value share. See page 33 for additional information for shareholders and an explanation of non-GAAP measures including the reconciliation of basic eps to underlying eps.

Marketing spend

Marketing spend in the year was prioritised behind those brands which offered the most attractive growth opportunities. A further reduction in spend on ready to drink brands and lower spend on beer and wine outside of Africa contributed 4 percentage points to the overall organic reduction in marketing spend of 9%. Spend on spirits, which has a higher level of media activity, benefited from savings as a result of media rate deflation. However, in those markets where consumer spend has been particularly constrained by the economic situation, such as in Spain, marketing spend was reduced in line with reductions across the industry. In the United States, the decision was made to increase share of voice on spirits and in Latin America Diageo’s significant leadership in share of voice was maintained.

Restructuring initiatives

Diageo announced two restructuring initiatives in the year. The first programme, which was announced in February, will generate £120 million of cost reductions in the year ending 30 June 2010. An exceptional charge of £166 million was taken in the year ended 30 June 2009 in respect of this global restructuring programme and a further charge of approximately £70 million will be taken in the year ending 30 June 2010. In July 2009 Diageo announced a second restructuring initiative which will generate cost savings of £40 million in the year ending 30 June 2012 and will reduce the cost of production of maturing stocks by £10 million per annum in the year ending 30 June 2011. An exceptional charge of £120 million will be taken in the year ending 30 June 2010 in respect of this restructuring.

Regional summary

North America - Growth in spirits offset weakness in wine and beer sales

·	Volume flat

·	Net sales up 1%

·	Marketing spend down 9%

·	Operating profit flat

Despite the difficult economic climate, the total beverage alcohol market in the United States remained in growth. Growth in spirits offset weakness in wine and beer as Diageo was again the best performing full line spirits company in the United States. Smirnoff vodka, Captain Morgan and Jose Cuervo performed well as the premium spirits segment proved to be the most resilient as consumers traded down from the ultra and super premium segments. Diageo’s innovation capability also contributed to the performance of these brands with successful launches of Captain Morgan 100, Jose Cuervo Silver and a range of ready to serve Smirnoff Cocktails. By the year end, Diageo’s share of US spirits, as measured by IRI, was 30%, an organic decline of 0.2 percentage points in the year and an increase of 1.4 percentage points from brand additions, Ketel One vodka and Zacapa rum. As a result of the planned stock reduction and as consumers traded out of imported beer to domestic beer, beer net sales declined 6%. The wine category was affected by the economic climate as consumers traded down from higher price points and net sales declined 7%. The performance of Ketel One vodka and Zacapa rum was ahead of our expectations despite the more difficult economic environment in the year. Marketing spend decreased by 9% reflecting reduced investment behind ready to drink and as a result of media rate deflation. Marketing spend was re-allocated behind growth opportunities in the premium segment, behind innovation and behind the strong growth of Cîroc vodka and share of voice in spirits grew 4 percentage points.

Europe – Challenging economies, especially in Spain and Ireland, created even tougher trading conditions this year; however in Great Britain Diageo performed strongly

·	Volume down 6%

·	Net sales down 5%

·	Marketing spend down 14%

·	Operating profit down 1%

Performance in Europe was impacted by the worsening economic environment, which led to the overall decline in both volume and net sales. Spirits, beer and ready to drink net sales were down as a result of the decline in the beverage alcohol market across Europe and a further shift to the off-trade; wine net sales increased driven by Blossom Hill in Great Britain. Spain and Ireland, two of the region’s biggest markets, were hit hardest, as their economies went into steep decline, and a significant rise in unemployment impacted consumer confidence and spending power. In Great Britain net sales grew 2% as Diageo continued to out-perform a declining total beverage alcohol market. The market in Russia weakened in the second half although full year net sales growth was achieved following a strong first half performance. Price increases were taken in the majority of markets although at more moderate levels than in previous years. Marketing spend was significantly reduced, mainly in Spain and Ireland where Diageo acted in response to the economic conditions and as a result of media rate deflation.

International - Continued growth in Africa and price increases in Latin America drove net sales growth in the region

·	Volume down 4%

·	Net sales up 7%

·	Marketing spend down 3%

·	Operating profit up 10%

International continued to be the key contributor to Diageo’s performance. In Africa 2% volume growth and strong pricing led to 16% net sales growth led by Guinness and Harp. Growth for the full year was slightly behind the rates seen in the first half because, as expected, the global economic downturn impacted the consumer in Africa in the second half. In Latin America and the Caribbean the performance was mixed. Volume and net sales grew in the three largest markets Venezuela, Mexico and Brazil with good performances by Buchanan’s and Johnnie Walker. This was partially offset by volume and net sales decline elsewhere in the region as price increases were taken to offset major currency devaluations. In the duty free business in Latin America the difficult trading environment, resulting from the slowdown in economic growth, currency devaluations and credit issues, led to a decline in volume and net sales. In Global Travel volume and net sales declined as the travel retail business continued to be impacted by lower passenger numbers. This was partially offset by volume and net sales growth in the Middle East driven by a strong performance in scotch. Marketing spend in International declined by 3%. In Latin America Diageo’s significant leadership in share of voice was maintained and efficiencies were delivered through multi-market campaigns. In Africa the transfer of spend on ready to drink, cider and beer brands in South Africa to the new joint venture there, offset increased spend elsewhere in Africa on beer and ready to drink brands.

Asia Pacific - Trade de-stocking, a modest decline in consumer demand but

mainly the decline in Australian ready to drink sales offset the benefit from

return to in-market distribution in Korea

·	Volume down 11%

·	Net sales down 4%

·	Marketing spend down 5%

·	Operating profit flat

The decline in ready to drink in Australia, following the significant excise duty increase last year, reduced the region’s volume by 3 percentage points and net sales by 4 percentage points. Spirits net sales across the region declined 1%, impacted by reduced sales in the on-trade channel and trade de-stocking throughout the supply chain in particular in South East Asia and China. Guinness remained resilient with net sales growth of 6%. In Korea strong share gains for Windsor more than offset scotch category decline in this important market. Marketing spend in spirits increased 7%, ahead of growth in net sales, although reduced spend behind ready to drink led to an overall 5% reduction for the region.

Key brand performance

	Volume movement %			Organic net sales movement %			Reported net sales movement %

Smirnoff		(2	)		2			17
Johnnie Walker		(11	)		(6	)		4
Captain Morgan		3			7			29
Baileys		(10	)		(9	)		3
JεB		(13	)		(12	)		-
Jose Cuervo		2			3			27
Tanqueray		(10	)		(8	)		12
Crown Royal - North America		(1	)		(1	)		23
Buchanan’s - International		(15	)		2			18
Windsor - Asia Pacific		3			22			17
Guinness		(3	)		4			16
		(5	)		(1	)		13

Volume movement is both reported and organic. Spirits brand performance excludes ready to drink

Smirnoff vodka: strong net sales growth in North America, International and Australia offset weakness in Europe. The performance of Smirnoff Black in all its markets along with price increases which were taken in the majority of markets delivered 4 percentage points of price/mix.

Johnnie Walker: the global economic environment had a significant impact on Johnnie Walker as it is the most global premium drinks brand. De-stocking, the reduction in travel which led to a decline in sales through travel retail outlets and a reduction in business entertaining and consumption in traditional on-trade outlets in Asia Pacific have led to a reduction in net sales.

Captain Morgan: strong performance mainly driven by share gains in North America which accounts for almost 90% of net sales. The successful introduction of the brand into markets in Europe and International has continued. Innovation with the launch of Captain Morgan 100 in North America, together with price increases drove overall price/mix improvement.

Baileys: weakness in Spain and de-stocking in many markets was partially offset by growth in Great Britain.

JεB: the weakness of the Spanish scotch category was the primary driver of the decline in JεB.

Jose Cuervo: share gains on Jose Cuervo Gold plus a successful launch of Jose Cuervo Silver in North America led to volume and net sales growth.

Tanqueray: weakness in North America drove overall performance although the brand grew in Europe and Asia Pacific.

Crown Royal: volume reduction on the higher priced Reserve and Cask 16 variants led to a small decline in volume and net sales despite growth in Crown Royal.

Buchanan’s: growth in the key markets of Venezuela, Mexico and Colombia was offset by the decline in the Caribbean and other Latin American markets. The brand continued to grow in North America and gained share. Price increases drove net sales growth.

Windsor: growth in Korea following the return to Diageo’s normal route to market. The brand’s share grew in Korea benefiting from a bottle re-design and also grew in China following its recent launch.

Guinness: strong growth in Africa with net sales up 18%. Its performance in Asia Pacific continued to improve and sales stabilised in Ireland. Out-performance in the declining Great Britain beer category delivered further share gains in that market.

Category summary

	Organic volume movement %			Organic net sales movement %			Reported volume movement %			Reported net sales movement %

Global priority brands		(5	)		(2	)		(5	)		11
Local priority brands		(1	)		1			5			24
Category brands		(2	)		4			(1	)		17

Spirits		(4	)		-			(3	)		16
Beer		-			5			-			16
Wine		1			(5	)		2			12
Ready to drink		(11	)		(8	)		(11	)		5

Ketel One vodka and Rosenblum Cellars wine are included in local priority brands in North America and in category brands in other regions while Zacapa rum is reported in category brands globally. Spirits brand performance excludes ready to drink.

Spirits: Vodka net sales up 8% and rum net sales up 6% were the strongest categories in spirits. Scotch net sales declined 3% mainly as a result of de-stocking. The liqueurs category was weak as a result of de-stocking and declining consumer demand and net sales declined by 9%.

Beer: The strong performance of Diageo's beer brands in Africa was the key driver of the overall performance of beer. There was continued growth in Asia Pacific and while beer net sales declined in Ireland by 4% and in Great Britain by 1%, this performance was significantly stronger than that of the beer category in both countries.

Wine: The weakness of the higher priced wine segment in the US was the biggest contributor to the 5% overall decline in wine as the US accounts for over half of Diageo's total wine net sales. In contrast wine performed strongly in Great Britain and net sales grew 6%.

Ready to drink: The 2008 excise duty increase on ready to drink products in Australia drove much of the weakness in performance. While in International the segment continued to grow strongly, the planned de-stock of ready to drink brands in the US, together with weakness in the segment there and in Europe, contributed to the overall decline.

Exchange rate movements for year ending 30 June 2010

For the year ending 30 June 2010 at current exchange rates (US$/£1.65, €/£1.15) foreign exchange movements (excluding the exchange impacts of IAS 21 and IAS 39) are estimated to increase operating profit by £80 million and decrease the interest charge by £10 million.

Taxation

For the year ended 30 June 2009 the reported tax rate was 14.5%. The underlying tax rate was 22.2%. In the year ending 30 June 2010 the underlying tax rate is expected to remain at approximately 22% and the cash tax rate is expected to improve to 20%.

Corporate

Diageo undertakes the majority of its currency transaction hedging centrally and therefore £86 million of negative year on year transaction impact was taken to corporate. In addition there was a negative year on year translation impact of £8 million in corporate. The regions are reported using forecast transaction exchange rates with the difference between forecast and achieved rates being included in corporate. This amounted to a benefit of £38 million in the year. There was a £12 million reduction in underlying corporate net costs.

Post employment liabilities

The deficit before taxation in respect of post employment plans increased by £975 million from £408 million at 30 June 2008 to £1,383 million at 30 June 2009. In the year ended 30 June 2009, finance income under IAS 19 in respect of post employment plans was £2 million. In the year ending 30 June 2010, the finance charge under IAS 19 is expected to be £48 million. Since the last actuarial valuation Diageo has made three annual cash payments of £50 million to an escrow account in respect of the deficit on the UK scheme. The transfer of the balance on the escrow account to the UK pension scheme will reduce the deficit. The company will now hold discussions with the Pension Funds’ trustees as to future funding plans, however, annual cash contributions are not expected to increase significantly.

Management reports

The Annual Report for the year ended 30 June 2009, which will be published on 15 September 2009, will comprise the Annual Financial Report which Diageo is required to publish under the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority for the financial year which began on 1 July 2008. Diageo will issue the first interim management statement for the year ending 30 June 2010 at the time of the AGM on 14 October 2009.

BUSINESS REVIEW

For the year ended 30 June 2009

OPERATING REVIEW – analysis by business area

North America

Summary:

·	Despite the difficult economic environment, North America delivered net sales growth.

·	Total spirits volume grew 1% with 3 percentage points of price/mix. Smirnoff vodka, Captain Morgan and Jose Cuervo positioned in the more resilient premium segment contributed most to net sales growth.

·	Vodka remained the largest and most resilient of the major categories in the United States. Diageo out-performed the category as a whole, growing net sales 16% led by Smirnoff in the premium segment and Cîroc and Ketel One at higher price points.

·	Stock levels of beer and malt based ready to drink brands were reduced adversely impacting mix.

·	Stock levels of spirits have reduced across the supply chain.

·	Innovation launches contributed significantly to overall performance as the focus on premium spirits line extensions and pre-mixed cocktails capitalised on consumer shifts.

·	Ketel One vodka performed ahead of expectations.

·	Marketing spend decreased as a result of media efficiencies and a refocus away from beer and ready to drink, however Diageo’s share of voice in spirits improved.

·	Net sales growth of 7% in Canada was led by strong performances of Captain Morgan rum of 19% and Smirnoff vodka of 10%.

Key measures:	2009		2008		Organic movement			Reported movement
	£ million		£ million		%			%

Volume						-			4
Net sales		3,290		2,523		1			30
Marketing spend		429		366		(9	)		17
Operating profit before exceptional items		1,156		907		-			27

Reported performance:

Net sales increased by £767 million in the year ended 30 June 2009 to £3,290 million, from £2,523 million in the prior year. Reported operating profit before exceptional items increased by £249 million in the year ended 30 June 2009 to £1,156 million, from £907 million in the prior year.

Organic performance:

The weighted average exchange rate used to translate US dollar sales and profit moved from £1 = $2.01 in the year ended 30 June 2008 to £1 = $1.60 in the year ended 30 June 2009. Exchange rate impacts increased net sales by £602 million, acquisitions increased net sales by £142 million and there was an organic increase in net sales of £23 million. Exchange rate impacts increased operating profit by £206 million, acquisitions increased operating profit by £45 million and there was an organic decrease in operating profit of £2 million.

Brand performance:	Organic volume movement			Organic net sales movement			Reported volume movement			Reported net sales movement
	%			%			%			%

Global priority brands		(2	)		(2	)		(2	)		22
Local priority brands*		1			-			19			47
Category brands*		6			11			6			36
Total		-			1			4			30

Key spirits brands:**
Smirnoff		1			6			1			30
Johnnie Walker		(6	)		(8	)		(6	)		14
Captain Morgan		3			7			3			32
Baileys		(5	)		(5	)		(5	)		16
Jose Cuervo		3			4			3			30
Tanqueray		(12	)		(12	)		(12	)		10
Crown Royal		(1	)		(1	)		(1	)		23

Guinness		(11	)		(6	)		(11	)		15

Ready to drink		(10	)		(8	)		(10	)		14

*	Brand additions in the year ended 30 June 2008 Ketel One vodka and Rosenblum Cellars wine are included in local priority brands while Zacapa rum is included in category brands.

**	Spirits brands excluding ready to drink.

Despite the economic climate, the total beverage alcohol market in North America grew in both volume and value. Within spirits, there has been a trend for consumers to trade out of the super and ultra premium segments and down to lower price segments; however the premium segment, where Diageo is most represented, has proved the most resilient and has gained share of the overall spirits category. As consumer demand slowed stock levels reduced in aggregate across the whole supply chain. Spirits stocks with distributors at the end of June 2009 were higher when compared to June 2008, although there has been a significant reduction in absolute levels since December. Stock levels held by retailers are down year on year. The planned beer and ready to drink stock reduction was completed successfully resulting in net sales declines of 6% in beer and 8% in ready to drink. The slowdown of the wine category, especially at price points above $25 per bottle has led to a decline in Diageo wine net sales of 7%. Overall price/mix of 1 percentage point was achieved by strong price increases in the first half on premium brands partially offset by negative mix driven by volume declines in the higher net sales per case scotch category and ready to drink segment.

Smirnoff vodka grew as a result of higher marketing spend and price increases on Smirnoff Red. Marketing spend increased 2% behind core growth drivers reinforcing the quality message combined with investment behind innovation launches on the Smirnoff Flavours range.

Johnnie Walker was impacted by the economic climate that led to the total scotch category declining 3% in value with weaker performance in the deluxe segment. Johnnie Walker Red Label net sales declined 2% and Black Label declined 7% but both gained share of their segments while maintaining price premiums. In the super deluxe segment, Johnnie Walker Blue Label experienced double digit declines and marketing spend was re-directed towards Johnnie Walker Black Label. Investment behind the ‘Strides’ marketing campaign and driving loyalty through relationship marketing have led to strong improvements across key brand equity measures.

Captain Morgan had a strong year, delivering volume and net sales growth and share gains. Four percentage points of positive price/mix was delivered through price increases on Original Spiced Rum and the launch of the higher priced Captain Morgan 100. Increased marketing spend behind the ‘Got a little Captain in you’ television campaign led to share gains in the rum category and improved brand equity scores.

The liqueur category has been among the hardest hit in the current economic environment and Baileys net sales declined but share was maintained. The decline of Original Irish Cream was partially offset by the successful launch of Baileys with a hint of Coffee.

Jose Cuervo grew volume 3% and net sales 4%. Share gains on Jose Cuervo Gold driven by an increase in distribution points and the launch of Jose Cuervo Silver more than offset weakness in the on-trade.

Tanqueray net sales declined 12% in line with volumes as price increases on the core London Dry variant were offset by faster declines on the higher priced variants Tanqueray No.10 and Rangpur. Marketing investment was reduced as spend was re-directed to fund proven growth drivers on other brands.

Crown Royal volume and net sales declined 1%. Positive net sales growth on the core variant was more than offset by the poor economic conditions impacting the higher priced Reserve and Cask 16 variants. Crown Royal in Canada under-performed the United States, as price increases were not followed by the competition leading to price gaps at retail that impacted volume.

Guinness net sales declined 6% as a result of three factors: the planned stock reduction, consumers trading out of the higher priced imported beer segment and into domestic beer, and overall weakness in the on-trade which particularly impacted keg volume. Price increases on both keg and packaged Guinness contributed 5 percentage points of price/mix.

Local priority brands grew volume 1% and held net sales flat driven by the organic contribution of Ketel One vodka and sales of Seagram’s 7. This was offset by the decline in US wines, in particular on Chalone wines, as consumers traded down from higher price points. To offset this, Diageo wines increased promotional activity in the second half and launched a number of new products at price-points of $10 and below.

Category brand volume grew 6% and net sales grew 11% reflecting the opportunities presented by Diageo’s broad brand range. Cîroc vodka continued its strong growth trajectory, as a result of the combination of Diageo, Sean Combs and the brand itself, and grew volume 137% and net sales 159%. At the other end of the pricing spectrum and capitalising on the consumer shift towards value brands were Gordon’s gin with net sales up 9%, Gordon’s vodka up 11% and Popov vodka up 14%.

Ready to drink net sales declined 8% as a result of segment decline and the planned stock reduction. Diageo continued to innovate in this segment with the launch of several new Smirnoff Ice flavours and a range of ready to serve Smirnoff Cocktails, reflecting the trend for increased at-home consumption.

Marketing spend for the year decreased 9% due to a reduction of investment behind those brands and segments most impacted by the current economic climate and media rate deflation. While investment behind ready to drink, beer and Tanqueray decreased, proven growth drivers elsewhere in the brand range were fully supported, in particular on Captain Morgan, Cîroc vodka and innovation launches. Overall, Diageo’s share of voice of total spirits advertising spend increased 4 percentage points.

Canada has also been affected by the global economic slowdown but it has not experienced contractions on the scale of the United States. Price increases on core spirits together with increased marketing spend behind Smirnoff and Captain Morgan delivered 7% net sales growth.

Gross margin was adversely affected by input cost increases, the negative mix effect of consumers trading down within brands and the volume decline of higher gross margin segments and categories such as ready to drink, scotch and liqueurs. Price increases on core variants taken in the first half plus reductions in overall marketing spend combined to deliver constant operating profit for the year.

Europe

Summary:

·	The region was severely impacted by the economic downturn, with conditions in Spain and Ireland deteriorating significantly.

·	Great Britain out-performed a declining total beverage alcohol market, growing net sales despite the difficult trading environment.

·	Russia net sales grew 1% following a strong first half although the worsening economic conditions in the second half led to consumers trading down, driving negative mix. In response to this trend, smaller bottle sizes at lower price points were introduced.

·	In a declining beer category, Guinness performed well with flat net sales across the region and grew share in the on-trade in Great Britain and Ireland supported by the 250th Anniversary and ‘Alive Inside’ campaigns.

Key measures:	2009		2008		Organic movement			Reported movement
	£ million		£ million		%			%

Volume						(6	)		(6	)
Net sales		2,750		2,630		(5	)		5
Marketing spend		419		438		(14	)		(4	)
Operating profit before exceptional items		856		798		(1	)		7

Reported performance:

Net sales increased by £120 million in the year ended 30 June 2009 to £2,750 million, from £2,630 million in the prior year. Reported operating profit before exceptional items increased by £58 million in the year ended 30 June 2009 to £856 million, from £798 million in the prior year.

Organic performance:

The weighted average exchange rate used to translate euro sales and profit moved from £1 = €1.36 in the year ended 30 June 2008 to £1 = €1.17 in the year ended 30 June 2009. Exchange rate impacts increased net sales by £260 million, acquisitions increased net sales by £6 million and there was an organic decrease in net sales of £146 million. Exchange rate impacts increased operating profit by £66 million, acquisitions decreased operating profit by £2 million and there was an organic decrease in operating profit of £6 million.

Brand performance:	Organic volume movement			Organic net sales movement			Reported volume movement			Reported net sales movement
	%			%			%			%

Global priority brands		(8	)		(6	)		(8	)		4
Local priority brands		(6	)		(6	)		(6	)		4
Category brands*		(1	)		(2	)		(1	)		8
Total		(6	)		(5	)		(6	)		5

Key spirits brands:**
Smirnoff		(8	)		(6	)		(8	)		-
Johnnie Walker		(5	)		(4	)		(5	)		7
Baileys		(9	)		(10	)		(9	)		-
JεB		(13	)		(13	)		(13	)		-

Guinness		(6	)		-			(6	)		8

Ready to drink		(17	)		(11	)		(17	)		(2	)

* Brand additions in the year ended 30 June 2008 Ketel One vodka, Rosenblum Cellars wine and Zacapa rum are included in category brands.

** Spirits brands excluding ready to drink.

In Great Britain net sales were up 2% driven by strong spirits and wine performance and Diageo gained share of beer in the on-trade and of spirits and wine in the off-trade. Bell’s and Baileys performed strongly with both brands gaining share in the on-trade and off-trade following a robust Christmas. Smirnoff vodka net sales declined 3% as the brand came under increased pressure from heavily promoted competitor brands.

The performance in Ireland was impacted by the continued decline of the total beverage alcohol market where volume declined by 4% and value by 3%. Against this, Guinness net sales were flat as Diageo maintained investment behind the brand with the 250th Anniversary and the ‘Alive inside’ campaigns. For the second consecutive year Guinness grew share in the key Republic of Ireland and Northern Ireland on-trade channels.

In Spain volume was down 21% and net sales were down 20% in line with market trends following the steep decline in the economy from mid-November onwards. Rising unemployment, lower consumer confidence and spending power reduced demand across consumer categories and led to a shift from on-trade to off-trade impacting spirits consumption. Significant de-stocking occurred as limited credit availability in the market led to some wholesalers being unable to fund their stock.

In Russia volume was up 2% and net sales were up 1% following a strong first half performance. Johnnie Walker remained the key brand and accounted for almost 50% of net sales. Price/mix was down 1 percentage point as consumers traded down from deluxe to standard scotch and both Johnnie Walker Red Label and White Horse grew share. In many markets in Eastern Europe Diageo’s key brands gained share.

Smirnoff vodka net sales were down 6% with declines in Great Britain and Spain partially offset by net sales growth in Continental Europe. Smirnoff continued to be the number one premium spirit in Great Britain and grew share in Ireland.

Johnnie Walker net sales decreased by 4% mainly driven by the performance in Spain and Russia. The brand continued to perform well in Greece where Johnnie Walker Black Label grew net sales by 14% following the successful launch of the anniversary pack supported by the ‘Strides’ and ‘Crossroads’ campaigns. The brand benefited from price increases in all markets leading to positive price/mix in the region.

Baileys net sales were down 10%. The overall decline of the brand was mainly due to performance in Iberia, where net sales declined in line with the category. In Great Britain both Baileys Original and the Baileys Flavours variants grew volume and net sales with positive price/mix following the successful launch of Baileys Coffee.

JεB volume and net sales were down 13%, principally due to performance in Iberia where the economic environment has driven a significant decline in consumption and customer stock levels.

In Great Britain Guinness has now delivered 30 consecutive months of volume share growth in the on-trade and therefore despite the difficult on-trade beer segment, net sales of Guinness declined only 1%. In the second half net sales were flat, while the beer market continued to decline driven by the switch from on-trade to off-trade and the increase in beer duty. This share gain was driven by the execution of a new strategy to focus on less frequent purchasers, investment behind the 250th Anniversary and the ‘17:59’ and ‘Alive inside’ campaigns. In Ireland net sales were also flat and Guinness grew share in key on-trade channels.

Local priority brand net sales were down 6% driven by Cacique and Cardhu in Iberia and the agency beer brands in Ireland partially offset by Harp, which benefited from the continued rollout of Harp Ice Cold. Bell’s had good net sales and volume growth in Great Britain, driven by the launch of Bell’s Original supported by a marketing programme called ‘The Spirit of Arthur Bell’ which included television, newspaper and direct mail advertising.

Category brand volume was down 1% and net sales were down 2% with declines in most markets offset by growth in Blossom Hill in Great Britain and growth of White Horse scotch in Russia.

Ready to drink volume was down 17% as the segment continued to decline. Smirnoff Ice volume was down 20% in Great Britain although the brand grew share in the on-trade.

Marketing spend was down 14% across the region particularly driven by Spain and Ireland, countries where the economic conditions were harder and the beverage alcohol consumption declined more significantly.

International

Summary:

·	Volume growth in Africa and price increases in both Africa and Latin America drove net sales growth of 7%.

·	Volume and net sales growth in Venezuela, Mexico and Brazil, the three largest markets in Latin America offset declines in the duty free channel in Latin America and in the Caribbean.

·	Strong growth in beer with volume up 5% and net sales up 17%.

·	Pressure on the Global Travel business due to declining passenger numbers and customer de-stocking.

·	Marketing spend efficiencies in Latin America and the transition of spend on ready to drink, cider and beer brands into the new South Africa joint venture offset increases on beer and ready to drink elsewhere in Africa.

Key measures:	2009		2008		Organic movement			Reported movement
	£ million		£ million		%			%

Volume						(4	)		(4	)
Net sales		2,286		1,971		7			16
Marketing spend		256		244		(3	)		5
Operating profit before exceptional items		645		593		10			9

Reported performance:

Net sales increased by £315 million in the year ended 30 June 2009 to £2,286 million, from £1,971 million in the prior year. Reported operating profit before exceptional items increased by £52 million in the year ended 30 June 2009 to £645 million, from £593 million in the prior year.

Organic performance:

Exchange rate impacts increased net sales by £156 million, acquisitions increased net sales by £2 million and there was an organic increase in net sales of £157 million. Exchange rate impacts decreased operating profit by £5 million and there was an organic increase in operating profit of £57 million.

Brand performance:	Organic volume movement			Organic net sales movement			Reported volume movement			Reported net sales movement
	%			%			%			%

Global priority brands		(5	)		5			(5	)		12
Local priority brands		-			9			-			20
Category brands*		(5	)		11			(5	)		20
Total		(4	)		7			(4	)		16

Key spirits brands:**
Smirnoff		-			9			-			17
Johnnie Walker		(12	)		(3	)		(12	)		2
Baileys		(16	)		(11	)		(16	)		(5	)
Buchanan’s		(15	)		2			(15	)		18

Guinness		2			15			2			28

Ready to drink		6			13			6			23

*	Brand additions in the year ended 30 June 2008 Ketel One vodka, Rosenblum Cellars wine and Zacapa rum are included in category brands.

**	Spirits brands excluding ready to drink.

Continued strong performance in Africa and net sales growth in Latin America drove International performance as Global Travel was impacted by the global economic weakness.

In International 70% of scotch net sales are in Latin America where significant price increases were taken in the first half to offset the impact of major devaluations of local currencies. The strengthening of the US dollar particularly impacted the US dollar priced duty free business in the region. In the second half a number of these currencies have strengthened easing volume pressure, and prices have been moderated in line with the currency movement. In Venezuela, Mexico and Brazil volume and net sales grew with strong performances of Buchanan’s, Johnnie Walker and Smirnoff ready to drink.

Similarly Africa accounts for 90% of beer net sales in the region and performed strongly driven by Guinness, local beer brands and a strong innovation pipeline. Although growth slowed in the second half of the year as the region started to be impacted by the global economic downturn, volume was up 2% and net sales grew 16%.

Global Travel continued to be impacted as global economic weakness led to a decline in passenger numbers and de-stocking in travel retail. Lower volume in the super deluxe segment led to negative mix. In the Middle East, volume grew 3% and net sales grew 6% primarily from the growth in standard scotch.

Smirnoff vodka volume was flat and net sales were up 9%. Volume performance was driven by growth in Brazil and South Africa offset by declines in the Global Travel and Middle East business and the Caribbean. Net sales growth was driven by price increases in Brazil and South Africa.

Johnnie Walker volume declined by 12% and net sales by 3%. Johnnie Walker Red Label grew net sales following strong growth in Mexico while Johnnie Walker Black Label net sales were flat. Super deluxe variants net sales declined as growth in Latin America, Africa and the Middle East was offset by declines in Global Travel.

Baileys net sales declined 11% as growth in Venezuela and Africa was offset by the slowdown in the duty free channel.

Buchanan’s net sales grew by 2% with strong volume and net sales growth in Venezuela, the brand’s biggest market with net sales up 24% and in Mexico where net sales were up 28%. Volume and net sales saw declines in the duty free channel in Latin America as a result of de-stocking and credit and currency issues impacted performance.

Guinness volume was up 2% and net sales grew 15% driven by the continued performance of the brand in Africa where volume was up 4% and net sales up 18%. Strong double-digit net sales growth was achieved in Nigeria, Ghana and East Africa supported by on-trade promotion around English Premier League football.

Local priority brands net sales grew 9% with consistent performance across many markets. There was 7% volume and 15% net sales growth in Africa, notably from Malta Guinness in Nigeria, Pilsner and Tusker in East Africa and Bell’s in South Africa. Price increases across the region offset the impact of the volume decline on scotch in Latin America.

Category brand net sales were up 11% primarily as a result of Harp in Nigeria, Cacique in Venezuela, Senator in East Africa and Star in Ghana.

Ready to drink volume increased by 6% and net sales grew 13% on price increases on Smirnoff ready to drink brands in most markets and volume gains in Latin America, especially Brazil, and in Nigeria. Volume growth in Brazil, Nigeria and Cameroon offset a volume decrease in South Africa where the ready to drink segment declined compared to the prior year.

In a tough trading environment East Africa grew net sales 6%. Excise duty increases on non-malted beer led to declining volumes of Allsopps and Citizen though overall beer volumes were up driven by Guinness, Tusker and Senator. Further excise duty increases negatively impacted the spirits category with total spirits net sales declining 8%.

Nigeria had a strong performance with volume up 22% and net sales up 30% driven by Guinness, Malta Guinness and Harp which all took price increases in the period. Smirnoff Ice performed well with volume up over 50% while Malta Guinness continued to benefit from the bottle relaunch in 2008.

South Africa’s global and local priority brands grew whilst category brands declined as a result of the focus on driving value in scotch. Smirnoff vodka drove global priority brand growth while growth in local priority brands was driven by Bell’s, which grew share and maintained its position as the number one scotch in South Africa.

Ghana faced a challenging year as a result of the economic environment and water shortages in the first half which led to constrained production and a full year volume decline of 6%. Strong pricing led to net sales growth of 24% as price increases were taken to cover off the increase in cost of goods arising as a result of the devaluation of the Cedi.

Cameroon performed well with volume up 17% and net sales up 19%. Volume performance was driven by Guinness, Saltzenbrau and the successful launch of Smirnoff Ice in November. Net sales grew two percentage points ahead of volume as price increases on Guinness offset the small price decrease on Malta Quench, which brought it in line with competitor brands.

In Mexico strong volume and net sales growth of Johnnie Walker and Buchanan’s drove overall scotch net sales up 38% and maintained Diageo’s leadership position in the scotch category.

In Paraguay, Uruguay and Brazil volume declines in scotch were partially offset by growth in Smirnoff vodka while net sales grew as price increases, particularly on scotch brands were made in the individual markets. Positive channel mix with stronger volumes from the higher value Brazil domestic channel helped to grow the top line.

Strong performance of deluxe and super deluxe scotch along with Cacique growth ahead of the rum category drove volume and net sales growth in Venezuela. Johnnie Walker, Buchanan’s and Old Parr all grew net sales by double digits as price increases were put through in line with Diageo’s scotch strategy.

Marketing spend in the region declined by 3% as increased spend in Nigeria and Cameroon was offset by efficiencies in Latin America and the transfer of ready to drink, cider and beer brand spend to the new South African joint venture.

Asia Pacific

Summary:

Net sales declines were primarily driven by the impact of the excise duty increase on ready to drink products in Australia.

Declining consumer confidence and supply chain inventory reductions have impacted performance particularly in China and South East Asia.

Top and bottom line growth in Korea and share gains for Windsor following the return to in-market company distribution.

Price/mix benefit of 7 percentage points came from the return to in-market distribution in Korea and strong price increases on scotch brands offset by negative product mix from lower volume in the higher net sales per case ready to drink segment.

Marketing spend decreased 5% although investment behind spirits grew 7% reflecting the importance of this category to future growth of the region.

Key measures:	2009		2008		Organic movement			Reported movement
	£ million		£ million		%			%

Volume						(11	)		(11	)
Net sales		910		877		(4	)		4
Marketing spend		208		191		(5	)		9
Operating profit before exceptional items		164		170		-			(4	)

Reported performance:

Net sales increased by £33 million in the year ended 30 June 2009 to £910 million, from £877 million in the prior year. Reported operating profit before exceptional items decreased by £6 million in the year ended 30 June 2009 to £164 million, from £170 million in the prior year.

Organic performance:

Exchange rate impacts increased net sales by £74 million, acquisitions increased net sales by £1 million and there was an organic decrease in net sales of £42 million. Exchange rate impacts decreased operating profit by £6 million and there was no organic movement in operating profit.

Brand performance:	Organic volume movement			Organic net sales movement			Reported volume movement			Reported net sales movement
	%			%			%			%

Global priority brands		(14	)		(8	)		(14	)		2
Local priority brands		(1	)		8			(1	)		8
Category brands*		(10	)		(8	)		(10	)		3
Total		(11	)		(4	)		(11	)		4

Key spirits brands: **
Smirnoff		1			13			1			24
Johnnie Walker		(20	)		(12	)		(20	)		(1	)
Bundaberg rum		17			29			17			34
Windsor		3			22			3			17

Guinness		5			6			5			20

Ready to drink		(26	)		(22	)		(26	)		(17	)

*	Brand additions in the year ended 30 June 2008 Ketel One vodka, Rosenblum Cellars wine and Zacapa rum are included in category brands.

**	Spirits brands excluding ready to drink.

Smirnoff vodka grew volume 1% and net sales 13% in the region led by a strong performance from Australia, which grew volume 12% and net sales 38%. Strong price/mix was delivered by price increases taken in the first half combined with positive mix from the strong volume growth of the higher priced Smirnoff Black variant due to the successful ‘Bond’ activation.

Johnnie Walker performance across the region was heavily impacted by the economic slowdown, which impacted consumer confidence and led to weakness in the on-trade and supply chain inventory reductions in key markets. Within the variants, Johnnie Walker Red Label performed well in the standard segment with net sales down 6% and grew share in its largest markets of Thailand and Australia. Johnnie Walker Black Label and super deluxe were down 13% as they were disproportionately affected by the weakness of the traditional on-trade in key markets such as China and South East Asia. The successful launch of Johnnie Walker Gold Label Reserve across the region provided a new premium offering for the brand and partially mitigated declines in the super deluxe segment.

Bundaberg rum in Australia benefited from consumers trading out of the ready to drink segment but remaining loyal to the brand, and delivered 17% volume growth. Price increases implemented in the first half taken together with the successful launch of the premium priced Bundaberg Red combined to deliver 12 percentage points of price/mix and share gains.

Windsor continued to grow share in its largest market of Korea, more than offsetting the scotch category decline and also benefited from the return of in-market distribution to deliver net sales growth of 23% in Korea. Price increases on the main 12 and 17 year-old variants plus the introduction of a new bottle design led to Windsor ending the year as the clear number one scotch brand in Korea having gained 5 percentage points of share.

Guinness grew net sales 6% as the brand proved resilient in the turbulent economic environment, growing 11% in its largest market of South East Asia.

Australia remained the key market for Diageo’s ready to drink brands in Asia Pacific. A 70% duty increase on spirit-based ready to drink brands imposed by the Australian government in April 2008 resulted in a decrease of 27% in volume and 23% in net sales in Australia this year. The impact of this duty increase was less severe in the final quarter as sales began to lap higher prices from the last fiscal year.

Local priority brands, mainly comprised of Windsor in Korea and Bundaberg in Australia, grew net sales 8%.

Category brands net sales declined 8% primarily as a result of volume decline in value scotch brands such as Haig in India and Spey Royal in Thailand in line with Diageo’s scotch value strategy.

In Australia net sales declined 10% as the weakness in the ready to drink segment was partially offset by a 13% net sales increase on spirits. This was driven by share gains on Bundaberg and Johnnie Walker and a successful innovation programme on the Bundaberg and Smirnoff trademarks. Excluding ready to drink, Australia grew net sales 11%.

A full year of sales through the normal route to market in Korea had a positive effect on price/mix as volume was down 3% but net sales were up 16% reflecting higher net sales per case rates than in the comparable period. The two main brands in Korea, Windsor and Johnnie Walker, both grew volume and net sales, more than offsetting scotch category declines.

In China, low consumer confidence levels severely impacted consumption occasions as consumers reduced purchase frequency, especially in the traditional on-trade channel which accounts for almost half of the sales of international spirits in the market. In addition, trade de-stocking at the secondary and tertiary tiers reduced volumes to wholesalers in the South and East of the country where Johnnie Walker is strongest. Net sales of brands through the Diageo China organisation grew strongly albeit from a low base as they derived the majority of sales through the modern on-trade channel which has been less impacted by the financial crisis.

In India net sales declined 3%. Inappropriately high stock levels across many brands at 31 December 2008 were de-stocked in the second half. For the full year the volume decline in Smirnoff and Haig was only partially offset by growth in Johnnie Walker, Shark Tooth and VAT 69.

Taiwan grew net sales 7%. Price increases on Johnnie Walker and the continued success of The Singleton roll out combined to outperform the 11% volume decline in the scotch category.

Thailand saw net sales decline 3% but recorded share gains on Johnnie Walker Red and Black Labels, Benmore and Smirnoff.

Marketing spend declined 5% overall as a result of the reduction in spend behind ready to drink in Australia. However, investment behind spirits increased 7% reflecting the benefit of the transfer of advertising spend back to the in-market company in Korea and the importance of this category to future growth.

Corporate revenue and costs

Net sales decreased by £14 million in the year ended 30 June 2009 to £75 million, from £89 million in the prior year. Net operating costs before exceptional items increased by £44 million in the year ended 30 June 2009 to £208 million, from £164 million in the prior year.

FINANCIAL REVIEW

Summary consolidated income statement

	Year ended 30 June 2009			Year ended 30 June 2008
	£ million			£ million

Sales		12,283			10,643
Excise duties		(2,972	)		(2,553	)
Net sales		9,311			8,090
Operating costs		(6,698	)		(5,786	)
Operating profit before exceptional items		2,613			2,304
Exceptional items		(170	)		(78	)
Operating profit		2,443			2,226
Sale of businesses		-			9
Net finance charges		(592	)		(319	)
Share of associates’ profits after tax		164			177
Profit before taxation		2,015			2,093
Taxation		(292	)		(522	)
Profit from continuing operations		1,723			1,571
Discontinued operations		2			26

Profit for the year		1,725			1,597

Attributable to:
Equity shareholders of the parent company		1,621			1,521
Minority interests		104			76
		1,725			1,597

Sales and net sales

On a reported basis, sales increased by £1,640 million from £10,643 million in the year ended 30 June 2008 to £12,283 million in the year ended 30 June 2009. On a reported basis net sales increased by £1,221 million from £8,090 million in the year ended 30 June 2008 to £9,311 million in the year ended 30 June 2009. Exchange rate movements increased reported sales by £1,362 million and reported net sales by £1,095 million. Acquisitions increased reported sales by £160 million and reported net sales by £151 million.

Operating costs before exceptional items

On a reported basis, operating costs before exceptional items increased by £912 million in the year ended 30 June 2009 due to an increase in cost of sales of £623 million, from £3,245 million to £3,868 million, an increase in marketing expenses of £73 million, from £1,239 million to £1,312 million, and an increase in other operating expenses of £216 million, from £1,302 million to £1,518 million. The impact of exchange rate movements increased total operating costs before exceptional items by £928 million.

Exceptional items

Exceptional costs totalling £170 million, being £166 million in respect of the global restructuring programme and £4 million in respect of the restructuring of Irish brewing operations are included within operating costs for the year ended 30 June 2009. Exceptional costs of £78 million in respect of the restructuring of Irish brewing operations were included within operating costs in the year ended 30 June 2008.

Post employment plans

Post employment costs for the year ended 30 June 2009 were £63 million (2008 - £53 million) of which £65 million (2008 - £99 million) was included in operating costs and income of £2 million (2008 - £46 million) was included in net finance charges. Exceptional pension curtailment gains were £32 million for the year ended 30 June 2009.

The deficit before taxation in respect of post employment plans increased by £975 million from £408 million at 30 June 2008 to £1,383 million at 30 June 2009. The increase in the deficit is primarily a result of a reduction in the value of the assets held by the plans, and a lower discount rate, partly offset by a lower inflation rate.

Operating profit

Reported operating profit for the year ended 30 June 2009 increased by £217 million to £2,443 million from £2,226 million in the prior year. Exchange rate movements increased operating profit for the year ended 30 June 2009 by £154 million. Excluding exceptional costs, operating profit for the year ended 30 June 2009 increased by £309 million to £2,613 million from £2,304 million in the prior year. Exchange rate movements increased operating profit before exceptional items by £167 million.

Acquisitions

Brand additions made in the year ended 30 June 2008, principally Ketel One vodka, Rosenblum Cellars wine and the distribution rights for Zacapa rum, contributed £151 million to net sales and £43 million to operating profit in the year ended 30 June 2009 in addition to the organic element.

Sale of businesses

In the year ended 30 June 2008, a gain of £9 million arose from the sale of businesses.

Net finance charges

Net finance charges increased from £319 million in the year ended 30 June 2008 to £592 million in the year ended 30 June 2009.

The net interest charge for the year ended 30 June 2009 increased by £175 million to £516 million from £341 million in the prior year. This increase resulted principally from the increase in net borrowings in the year, adverse exchange rate movements of £64 million and an increase in the adverse impact of the revaluation to year end market rates of interest rate swaps under IAS 39 of £8 million.

The income statement interest cover was 5.4 times and cash interest cover was 7.3 times.

Net other finance charges for the year ended 30 June 2009 were £76 million (2008 - net other finance income of £22 million). There was a reduction of £44 million in income in respect of the group’s post employment plans from £46 million in the year ended 30 June 2008 to £2 million in the year ended 30 June 2009. Other finance charges also include £33 million (2008 - £5 million income) in respect of exchange rate translation differences on inter-company funding arrangements that do not meet the accounting criteria for recognition in equity, £11 million (2008 - £6 million) in respect of exchange movements on net borrowings not in a hedge relationship and therefore recognised in the income statement, £21 million (2008 - £17 million) on unwinding of discounts on liabilities and £13 million (2008 – £6 million) in respect of other finance charges.

Associates

The group’s share of associates’ profits after interest and tax was £164 million for the year ended 30 June 2009 compared to £177 million in the prior year. Diageo’s 34% equity interest in Moët Hennessy contributed £151 million (2008 - £161 million) to share of associates’ profits after interest and tax.

Profit before taxation

Profit before taxation decreased by £78 million from £2,093 million to £2,015 million in the year ended 30 June 2009.

Taxation

The reported tax rate for the year ended 30 June 2009 is 14.5% compared with 24.9% for the year ended 30 June 2008. Factors that reduced the reported tax rate in the year included settlements agreed with tax authorities that gave rise to changes in the value of deferred tax assets and tax provisions. The underlying tax rate for continuing operations for the year ended 30 June 2009 was 22.2% compared with 24.5% for the year ended 30 June 2008. The underlying tax rate for the year ending 30 June 2010 is expected to be 22%.

Discontinued operations

In connection with the past disposal of the Pillsbury business, Diageo guaranteed debt of a third party until November 2009 and profit after tax from discontinued operations in the year ended 30 June 2009 of £2 million (2008 - £2 million) represents a provision release in respect of this. In the year ended 30 June 2008 there was a £24 million tax credit relating to the disposal of the Pillsbury business.

Exchange rate movements

Exchange rate movements are calculated by retranslating the prior year results as if they had been generated at the current year exchange rates and are excluded from organic growth.

The estimated effect of exchange rate movements on the results for the year ended 30 June 2009 was as follows:

	Gains/(losses) £ million
Operating profit before exceptional items
Translation impact		274
Transaction impact		(107	)
		167
Translation impact – operating exceptional items		(13	)
Total operating profit impact		154
Associates
Translation impact		30
Interest and other finance charges
Net finance charges – translation impact		(66	)
Exchange – in respect of IAS 21 and IAS 39		(43	)
Mark to market impact of IAS 39 on interest expense		(8	)
Total exchange effect on profit before taxation		67

	Year ended 30 June 2009		Year ended 30 June 2008
Exchange rates
Translation US$/£ rate		1.60		2.01
Transaction US$/£ rate		2.29		1.90
Translation €/£ rate		1.17		1.36
Transaction €/£ rate		1.40		1.39

Outlook for the impact of exchange rate movements:

Dividend

The directors recommend a final dividend of 22.20 pence per share, an increase of 5% on last year’s final dividend. The full dividend would therefore be 36.10 pence per share, an increase of 5.1% from the year ended 30 June 2008. Subject to approval by shareholders, the final dividend will be paid on 19 October 2009 to shareholders on the register on 11 September 2009. Payment to US ADR holders will be made on 23 October 2009. A dividend reinvestment plan is available in respect of the final dividend and the plan notice date is 28 September 2009.

Cash flow	Year ended 30 June 2009			Year ended 30 June 2008
	£ million			£ million

Cash generated from operations before exceptional costs		2,679			2,305
Exceptional restructuring costs paid		(53	)		-
Cash generated from operations		2,626			2,305
Interest paid (net)		(415	)		(320	)
Dividends paid to equity minority interests		(98	)		(56	)
Taxation		(522	)		(369	)
Net capital expenditure		(313	)		(262	)
Net (purchase)/sale of other investments		(24	)		4
Payment into escrow in respect of UK pension fund		(50	)		(50	)
Free cash flow		1,204			1,252

Free cash flow decreased by £48 million to £1,204 million in the year ended 30 June 2009. Cash generated from operations increased from £2,305 million to £2,626 million principally as a result of increased operating profit. Cash paid in respect of restructuring was £53 million. Working capital increased by £282 million principally in respect of increased maturing stock levels. Taxation paid increased by £153 million primarily as a result of settlements agreed with tax authorities. Net capital expenditure on property, plant and equipment increased £51 million to £313 million in the period, being decreased capital expenditure of £1 million and lower disposal proceeds of £52 million.

Balance sheet

At 30 June 2009, total equity was £3,936 million compared with £4,175 million at 30 June 2008. This decrease was mainly due to the increase in the pension deficit of £975 million, the dividend paid out of shareholders’ equity of £870 million and the shares repurchased for cancellation of £354 million partly offset by profit for the period of £1,725 million.

Net borrowings were £7,419 million at 30 June 2009, an increase of £972 million from net borrowings at 30 June 2008 of £6,447 million. The principal components of this increase were: £354 million (2008 - £1,008 million) including costs, to repurchase 38.0 million shares as part of the share buyback programme (2008 – 96.7 million shares); £38 million net repurchase of own shares for share schemes (2008 - £78 million); £102 million in respect of acquisitions (2008 – £575 million), principally the purchase of the remaining minority interest in the Russian joint venture and an increase in the shareholding in Sichuan Quanxing Group; adverse exchange rate movements of £784 million (2008 - £372 million) and £870 million equity dividend paid (2008 - £857 million). This was partly offset by free cash flow of £1,204 million (2008 - £1,252 million).

The share buyback programme has not been activated since December 2008 and it is not envisaged that the buyback programme will be reopened in current market conditions. Diageo targets a range of ratios which are currently broadly consistent with an A band credit rating. Diageo would consider modifying these ratios in order to effect strategic initiatives within its stated goals and which could have an impact on its rating.

Economic profit

Economic profit increased by £86 million from £739 million in the year ended 30 June 2008 to £825 million in the year ended 30 June 2009. See page 39 for the calculation and definition of economic profit.

DIAGEO CONDENSED CONSOLIDATED INCOME STATEMENT

		Year ended 30 June 2009			Year ended 30 June 2008
	Notes	£ million			£ million

Sales	2		12,283			10,643
Excise duties			(2,972	)		(2,553	)
Net sales			9,311			8,090
Cost of sales			(3,883	)		(3,245	)
Gross profit			5,428			4,845
Marketing expenses			(1,312	)		(1,239	)
Other operating expenses			(1,673	)		(1,380	)
Operating profit	2/3		2,443			2,226
Sale of businesses	3		-			9
Net interest payable	4		(516	)		(341	)
Net other finance (charges)/income	4		(76	)		22
Share of associates' profits after tax			164			177
Profit before taxation			2,015			2,093
Taxation	5		(292	)		(522	)
Profit from continuing operations			1,723			1,571
Discontinued operations	6		2			26
Profit for the year			1,725			1,597

Attributable to:
Equity shareholders of the parent company			1,621			1,521
Minority interests			104			76
			1,725			1,597

Pence per share
Basic earnings			65.2	p		59.3	p
Diluted earnings			65.0	p		58.9	p
Average shares			2,485	m		2,566	m

DIAGEO CONDENSED CONSOLIDATED STATEMENT OF

RECOGNISED INCOME AND EXPENSE

	Year ended 30 June 2009			Year ended 30 June 2008
	£ million			£ million

Exchange differences on translation of foreign operations excluding borrowings		931			336
Exchange differences on borrowings and derivative net investment hedges		(773	)		(366	)
Effective portion of changes in fair value of cash flow hedges
- gains taken to equity		90			26
- transferred to income statement		(71	)		(69	)
Net actuarial losses on post employment plans		(1,007	)		(15	)
Fair value movement on available for sale investments		4			-
Tax on items taken directly to equity		254			15
Net expense recognised directly in equity		(572	)		(73	)
Profit for the year		1,725			1,597
Total recognised income and expense for the year		1,153			1,524

Attributable to:
Equity shareholders of the parent company		957			1,445
Minority interests		196			79
		1,153			1,524

DIAGEO CONDENSED CONSOLIDATED BALANCE SHEET

		30 June 2009						30 June 2008
	Notes	£ million			£ million			£ million			£ million

Non-current assets
Intangible assets			6,215						5,530
Property, plant and equipment			2,268						2,122
Biological assets			37						31
Investments in associates			2,045						1,809
Other investments			231						168
Other receivables			18						11
Other financial assets			364						111
Deferred tax assets			672						590
Post employment benefit assets			41						47
						11,891						10,419
Current assets
Inventories	7		3,162						2,739
Trade and other receivables			2,031						2,051
Other financial assets			98						104
Cash and cash equivalents	8		914						714
						6,205						5,608
Total assets						18,096						16,027
Current liabilities
Borrowings and bank overdrafts	8		(890	)					(1,663	)
Other financial liabilities			(220	)					(126	)
Trade and other payables			(2,173	)					(2,143	)
Corporate tax payable			(532	)					(685	)
Provisions			(172	)					(72	)
						(3,987	)					(4,689	)
Non-current liabilities
Borrowings	8		(7,685	)					(5,545	)
Other financial liabilities			(99	)					(124	)
Other payables			(30	)					(34	)
Provisions			(314	)					(329	)
Deferred tax liabilities			(621	)					(676	)
Post employment benefit liabilities			(1,424	)					(455	)
						(10,173	)					(7,163	)
Total liabilities						(14,160	)					(11,852	)
Net assets						3,936						4,175

Equity
Called up share capital			797						816
Share premium			1,342						1,342
Other reserves			3,282						3,163
Retained deficit			(2,200	)					(1,823	)
Equity attributable to equity shareholders of the parent company						3,221						3,498
Minority interests						715						677
Total equity	10					3,936						4,175

DIAGEO CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Year ended

30 June 2009

Year ended

30 June 2008

£ million