20-F/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

(Amendment No. 1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: 30 June 2018

Commission file number 1-10691

DIAGEO plc

(Exact name of Registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organisation)

Lakeside Drive, Park Royal, London NW10 7HQ, England

(Address of principal executive offices)

Siobhan Moriarty, Company Secretary

Tel: +44 20 8978 6000

E-mail: the.cosec@diageo.com

Lakeside Drive, Park Royal, London NW10 7HQ, England

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American Depositary Shares Ordinary shares of 28101/108 pence each 2.875% Guaranteed Notes due 2022 8.000% Guaranteed Notes due 2022 7.450% Guaranteed Notes due 2035 4.250% Guaranteed Notes due 2042	New York Stock Exchange New York Stock Exchange(i) New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange

(i) Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report: 2,695,586,790 ordinary shares of 28¹⁰¹/₁₀₈ pence each.

Indicate by check mark if each registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if each registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ☒             Accelerated Filer ☐             Non-Accelerated Filer ☐            Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards^† provided pursuant to Section 13(a) of the Exchange Act. ☐

^†  The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards
as issued by the International Accounting Standards Board ☒ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 20-F for the fiscal year ended June 30, 2018, originally filed with the Securities and Exchange Commission on August 6, 2018 (the “2018 Form 20-F”), is being filed solely for the purposes of adding Exhibit 101 to Item 19 “Exhibits” and furnishing the Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T. Exhibit 101 was not previously filed.

Other than as expressly set forth above, this Amendment No. 1 to the 2018 Form 20-F does not, and does not purport to, amend, update or restate the information in any other item of the 2018 Form 20-F, or reflect any events that have occurred after the 2018 Form 20-F was originally filed.

EXHIBIT INDEX

Exhibit	Description
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Schema Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Schema Definition Linkbase
101.LAB	XBRL Taxonomy Extension Schema Label Linkbase
101.PRE	XBRL Taxonomy Extension Schema Presentation Linkbase

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing this Amendment No. 1 to Form 20-F and that it has duly caused and authorised the undersigned to sign this Amendment No. 1 to Form 20-F on its behalf.

Date: August 15, 2018	DIAGEO plc
	(Registrant)
	By	/s/ James Edmunds
		James Edmunds (Deputy Company Secretary)

XML

Document and Entity Information	12 Months Ended
	Jun. 30, 2018 shares
Document - Document and Entity Information [Abstract]
Document Type	20-F/A
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	DEO
Entity Registrant Name	DIAGEO PLC
Entity Central Index Key	0000835403
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	2,695,586,790

XML

Consolidated income statement - GBP (£) £ in Millions, shares in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Profit or loss [abstract]
Sales	£ 18,432	£ 18,114	£ 15,641
Excise duties	(6,269)	(6,064)	(5,156)
Net sales	12,163	12,050	10,485
Cost of sales	(4,634)	(4,680)	(4,251)
Gross profit	7,529	7,370	6,234
Marketing	(1,882)	(1,798)	(1,562)
Other operating expenses	(1,956)	(2,013)	(1,831)
Operating profit	3,691	3,559	2,841
Non-operating items		20	123
Finance income	243	235	262
Finance charges	(503)	(564)	(589)
Share of after tax results of associates and joint ventures	309	309	221
Profit before taxation	3,740	3,559	2,858
Taxation	(596)	(732)	(496)
Profit from continuing operations	3,144	2,827	2,362
Discontinued operations		(55)
Profit for the year	3,144	2,772	2,362
Attributable to:
Equity shareholders of the parent company - continuing operations	3,022	2,717	2,244
Equity shareholders of the parent company - discontinued operations		(55)
Non-controlling interests - continuing operations	122	110	118
Profit for the year	£ 3,144	£ 2,772	£ 2,362
Weighted average number of shares
Shares in issue excluding own shares	2,484	2,512	2,508
Dilutive potential ordinary shares	11	11	10
Weighted average number of shares	2,495	2,523	2,518
Basic earnings per share
Continuing operations	£ 1.217	£ 1.082	£ 0.895
Discontinued operations		(0.022)
Basic earnings per share	1.217	1.060	0.895
Diluted earnings per share
Continuing operations	1.211	1.077	0.891
Discontinued operations		(0.022)
Diluted earnings per share	£ 1.211	£ 1.055	£ 0.891

XML

Consolidated statement of comprehensive income - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Net remeasurement of post employment plans
- group	£ 456	£ 649	£ (851)
- associates and joint ventures	2	(8)	(4)
- non-controlling interests	1	3	(1)
Tax on post employment plans	(91)	(122)	166
Other comprehensive income that will not be reclassified to profit or loss, net of tax, Total	368	522	(690)
Exchange differences on translation of foreign operations
- group	(631)	105	1,217
- associates and joint ventures	3	120	325
- non-controlling interests	(72)	35	176
Net investment hedges	91	(224)	(843)
Exchange gain/(loss) recycled to the income statement
- on translation of foreign operations			133
- on net investment hedges			(82)
Tax on exchange differences - group	7	(2)	(8)
Tax on exchange differences - non-controlling interests	2		4
Effective portion of changes in fair value of cash flow hedges
Tax on effective portion of changes in fair value of cash flow hedges	14	(3)	3
Fair value movements on available-for-sale investments
- group			4
- non-controlling interests			4
- recycled to income statement - group			(15)
- recycled to income statement - non-controlling interests			(13)
Tax on available-for-sale fair value movements			4
Hyperinflation adjustment	11	47	6
Tax on hyperinflation adjustment	(11)	(21)	(2)
Other comprehensive income that will be reclassified to profit or loss, net of tax, Total	(644)	129	799
Other comprehensive (loss)/profit, net of tax, for the year	(276)	651	109
Profit for the year	3,144	2,772	2,362
Total comprehensive income for the year	2,868	3,423	2,471
Attributable to:
Equity shareholders of the parent company - continuing operations	2,815	3,330	2,183
Equity shareholders of the parent company - discontinued operations		(55)
Non-controlling interests	53	148	288
Total comprehensive income for the year	2,868	3,423	2,471
Cash flow hedges [member]
Effective portion of changes in fair value of cash flow hedges
Effective portion of changes in fair value of cash flow hedges	57	29	(31)
Cash flow hedges [member] | Associates [member]
Effective portion of changes in fair value of cash flow hedges
Effective portion of changes in fair value of cash flow hedges	(15)	5	3
Cash flow hedges [member] | Foreign currency debt risk [member]
Effective portion of changes in fair value of cash flow hedges
Effective portion of changes in fair value of cash flow hedges	(64)	(8)	249
- recycled to income statement	6	(42)	(211)
Cash flow hedges [member] | Currency exchange risk [member]
Effective portion of changes in fair value of cash flow hedges
Effective portion of changes in fair value of cash flow hedges	22	(26)	(221)
- recycled to income statement	£ (7)	142	68
Cash flow hedges [member] | Commodity price risk [member]
Effective portion of changes in fair value of cash flow hedges
- recycled to income statement		£ 1	£ (2)

XML

Consolidated balance sheet - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Non-current assets
Intangible assets	£ 12,572	£ 12,566
Property, plant and equipment	4,089	4,014
Biological assets	23	21
Investments in associates and joint ventures	3,009	2,824
Other investments	46	31
Other receivables	46	58
Other financial assets	182	267
Deferred tax assets	122	134
Post employment benefit assets	935	281
Non-current assets, Total	21,024	20,196
Current assets
Inventories	5,015	4,788
Trade and other receivables	2,678	2,592
Corporate tax receivable	65
Assets held for sale	24
Other financial assets	35	81
Cash and cash equivalents	874	1,191
Current assets, Total	8,691	8,652
Total assets	29,715	28,848
Current liabilities
Borrowings and bank overdrafts	(1,828)	(2,459)
Other financial liabilities	(230)	(215)
Trade and other payables	(3,950)	(3,563)
Corporate tax payable	(243)	(294)
Provisions	(109)	(129)
Current liabilities	(6,360)	(6,660)
Non-current liabilities
Borrowings	(8,074)	(6,583)
Other financial liabilities	(212)	(383)
Other payables	(209)	(24)
Provisions	(288)	(286)
Deferred tax liabilities	(1,987)	(2,112)
Post employment benefit liabilities	(872)	(772)
Non-current liabilities	(11,642)	(10,160)
Total liabilities	(18,002)	(16,820)
Net assets	11,713	12,028
Equity
Share capital	780	797
Share premium	1,349	1,348
Other reserves	2,133	2,693
Retained earnings	5,686	5,475
Equity attributable to equity shareholders of the parent company	9,948	10,313
Non-controlling interests	1,765	1,715
Total equity	£ 11,713	£ 12,028

XML

Consolidated statement of changes in equity - GBP (£) £ in Millions	Total	Share capital [member]	Share premium [member]	Capital redemption reserve [member]	Hedging and exchange reserve [member]	Own shares [member]	Other retained earnings [member]	Total [member]	Equity attributable to parent company shareholders [member]	Non-controlling interests [member]
Beginning balance at Jun. 30, 2015	£ 9,256	£ 797	£ 1,346	£ 3,146	£ (1,152)	£ (2,228)	£ 5,862	£ 3,634	£ 7,771	£ 1,485
Profit for the year	2,362						2,244	2,244	2,244	118
Other comprehensive income/(loss)	109				631		(692)	(692)	(61)	170
Employee share schemes	1					39	(38)	1	1
Share-based incentive plans	29						29	29	29
Share-based incentive plans in respect of associates	1						1	1	1
Tax on share-based incentive plans	10						10	10	10
Shares issued	1		1						1
Disposal of non-controlling interests	(24)									(24)
Purchase of non-controlling interest	(21)						(18)	(18)	(18)	(3)
Purchase of rights issue of non-controlling interests							(5)	(5)	(5)	5
Dividends paid	(1,544)						(1,443)	(1,443)	(1,443)	(101)
Ending balance at Jun. 30, 2016	10,180	797	1,347	3,146	(521)	(2,189)	5,950	3,761	8,530	1,650
Profit for the year	2,772						2,662	2,662	2,662	110
Other comprehensive income/(loss)	651				68		545	545	613	38
Employee share schemes	(10)					13	(23)	(10)	(10)
Share-based incentive plans	34						34	34	34
Share-based incentive plans in respect of associates	3						3	3	3
Tax on share-based incentive plans	12						12	12	12
Shares issued	1		1						1
Purchase of non-controlling interest by associates	(5)						(5)	(5)	(5)
Change in fair value of put option	(12)						(12)	(12)	(12)
Dividends paid	(1,598)						(1,515)	(1,515)	(1,515)	(83)
Ending balance at Jun. 30, 2017	12,028	797	1,348	3,146	(453)	(2,176)	7,651	5,475	10,313	1,715
Adoption of IFRS 15 (note 1)	(91)						(89)	(89)	(89)	(2)
Adoption of IFRS 9 by associate					(3)		3	3
Profit for the year	3,144						3,022	3,022	3,022	122
Other comprehensive income/(loss)	(276)				(574)		367	367	(207)	(69)
Employee share schemes	25					32	(7)	25	25
Share-based incentive plans	39						39	39	39
Share-based incentive plans in respect of associates	4						4	4	4
Tax on share-based incentive plans	(2)						(2)	(2)	(2)
Shares issued	1		1						1
Disposal of non-controlling interests	(1)									(1)
Purchase of non-controlling interest	(2)						(72)	(72)	(72)	70
Purchase of rights issue of non-controlling interests	26						(5)	(5)	(5)	31
Change in fair value of put option	7						7	7	7
Share buyback programme	(1,507)	(17)		17			(1,507)	(1,507)	(1,507)
Dividends declared	(1,682)						(1,581)	(1,581)	(1,581)	(101)
Ending balance at Jun. 30, 2018	£ 11,713	£ 780	£ 1,349	£ 3,163	£ (1,030)	£ (2,144)	£ 7,830	£ 5,686	£ 9,948	£ 1,765

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Consolidated statement of cash flows - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities
Profit for the year	£ 3,144	£ 2,772	£ 2,362
Discontinued operations		55
Taxation	596	732	496
Share of after tax results of associates and joint ventures	(309)	(309)	(221)
Net finance charges	260	329	327
Non-operating items		(20)	(123)
Operating profit	3,691	3,559	2,841
Increase in inventories	(271)	(159)	(95)
(Increase)/decrease in trade and other receivables	(202)	89	(86)
Increase in trade and other payables and provisions	314	221	128
Net (increase)/decrease in working capital	(159)	151	(53)
Depreciation, amortisation and impairment	493	361	473
Dividends received	159	223	173
Post employment payments less amounts included in operating profit	(108)	(111)	(59)
Other items	10	(6)	(15)
Adjustments to reconcile profit (loss), Total	554	467	572
Cash generated from operations	4,086	4,177	3,360
Interest received	167	180	174
Interest paid	(418)	(493)	(479)
Taxation paid	(751)	(732)	(507)
Net total of interest received, interest paid and taxation paid	(1,002)	(1,045)	(812)
Net cash inflow from operating activities	3,084	3,132	2,548
Cash flows from investing activities
Disposal of property, plant and equipment and computer software	40	46	57
Purchase of property, plant and equipment and computer software	(584)	(518)	(506)
Movements in loans and other investments	(17)	3	(2)
Sale of businesses	4	(52)	1,062
Acquisition of businesses	(594)	(31)	(15)
Net cash (outflow)/inflow from investing activities	(1,151)	(552)	596
Cash flows from financing activities
Share buyback programme	(1,507)
Proceeds from issue of share capital	1	1	1
Net sale/(purchase) of own shares for share schemes	8	(41)	(1)
Dividends paid to non-controlling interests	(80)	(83)	(101)
Purchase of shares of non-controlling interests			(21)
Rights issue proceeds from non-controlling interests	26
Proceeds from bonds	2,612
Repayment of bonds	(1,571)	(1,234)	(1,003)
Net movements in other borrowings	(26)	414	(233)
Equity dividends paid	(1,581)	(1,515)	(1,443)
Net cash outflow from financing activities	(2,118)	(2,458)	(2,801)
Net (decrease)/increase in net cash and cash equivalents	(185)	122	343
Exchange differences	(39)	(14)	84
Net cash and cash equivalents at beginning of the year	917	809	382
Net cash and cash equivalents at end of the year	693	917	809
Net cash and cash equivalents consist of:
Cash and cash equivalents	874	1,191	1,089
Bank overdrafts	(181)	(274)	(280)
Net cash and cash equivalents at end of the year	£ 693	£ 917	£ 809

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Accounting information and policies

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Accounting information and policies

1. Accounting information and policies

(a) Basis of preparation

The consolidated financial statements are prepared in accordance with the Companies Act 2006 and International Financial Reporting Standards (IFRS) and related interpretations as adopted for use in the European Union (EU) and as issued by the International Accounting Standards Board (IASB). IFRS as adopted by the EU 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 policy.

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 estimates.

(b) Going concern

The consolidated financial statements are prepared on a going concern basis.

(c) Consolidation

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.

(d) Foreign currencies

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 sterling, which is the functional currency of the parent company.

The income statements and cash flows of non-sterling entities are translated into sterling at weighted average rates of exchange, other than 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 closing rates. Exchange differences arising on the retranslation at closing rates of the opening balance sheets of overseas entities are taken to the exchange reserve, as are exchange differences arising on foreign currency borrowings and financial instruments designated as net investment hedges, to the extent that they are effective. Tax charges and credits arising on such items are also taken to the exchange reserve. Gains and losses accumulated in the exchange reserve are recycled to the income statement when the foreign operation is sold. Other exchange differences are taken to the income statement. Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.

The principal foreign exchange rates used in the translation of financial statements for the three years ended 30 June 2018, expressed in US dollars and euros per £1, were as follows:

	2018		2017		2016
US dollar
Income statement and cash flows(i)		1.35		1.27		1.48
Assets and liabilities(ii)		1.32		1.30		1.33
Euro
Income statement and cash flows(i)		1.13		1.16		1.34
Assets and liabilities(ii)		1.13		1.14		1.20

(i) Weighted average rates

(ii) Year end rates

The group uses foreign exchange hedges to mitigate the effect of exchange rate movements. For further information see note 15.

(e) Critical accounting estimates and judgements

The critical accounting policies, which the directors consider are of greater complexity and/or particularly subject to the exercise of judgements, are set out in detail in the relevant notes:

• Exceptional items – management judgement whether exceptional or not – page 225

• Taxation – management judgement of whether a provision is required and the recoverability of deferred tax assets and management estimate of amount of corporate tax payable or receivable – page 230

• Brands, goodwill and other intangibles – management judgement of the assets to be recognised and synergies resulting from an acquisition and management estimate in determining future cash flows and appropriate applicable assumptions to support the intangible asset value – page 237

• Post employment benefits – management judgement in determining whether a surplus can be recovered and management estimate in determining the assumptions in calculating the liabilities of the funds – page 245

• Contingent liabilities and legal proceedings – management judgement in assessing the likelihood of whether a liability will arise – page 273

Venezuela is a hyper-inflationary economy where the government maintains a regime of strict currency controls with multiple foreign currency rate systems. Access to US dollars on these exchange systems is very limited. The foreign currency denominated transactions and balances of the group’s Venezuelan operations are translated into the local functional currency (Venezuelan bolivar) at the rate they are expected to be settled, applying the most appropriate official exchange rate (DICOM). For consolidation purposes, the group converts its Venezuelan operations using management’s estimate of the exchange rate considering forecast inflation and the most appropriate official exchange rate. The exchange rate used to translate the results of the group’s the Venezuelan operations was VEF/GBP 3,858,826 for the year ended 30 June 2018 (2017—VEF/GBP 6,110).

The following table presents the contribution of the group’s Venezuelan operations to the consolidated income statement, cash flow statement and net assets for the year ended 30 June 2018 and with the amounts that would have resulted if the official DICOM exchange rate had been applied:

	At estimated exchange  rate 3,858,826 VEF/GBP £ million		At DICOM exchange rate 151,800 VEF/GBP £ million
Net sales		1		27
Operating profit		—		16
Other finance income - hyperinflation adjustment		18		458
Net cash inflow from operating activities		1		12
Net assets		69		1,744

(f) New accounting standards and interpretations

The following amendments to the accounting standards, issued by the IASB which have been endorsed by the EU, have been adopted by the group from 1 July 2017 with no impact on the group’s consolidated results, financial position or disclosures:

• Amendments to IAS 7 – Disclosure initiative

• Amendment to IAS 12 – Recognition of deferred tax assets for unrealised losses

• Amendment to IFRS 12 – Disclosure of interests in other entities

The following standards issued by the IASB and endorsed by the EU have been early adopted by the group from 1 July 2017:

IFRS 9 – Financial instruments replaces IAS 39 (Financial instruments—Recognition and measurement) and addresses the classification and measurement of financial instruments, introduces new principles for hedge accounting and a new forward-looking impairment model for financial assets.

The adoption of IFRS 9 hedge accounting principles did not result in a restatement of the group’s results and the impact on the year ended 30 June 2018 is not material. The adoption of IFRS 9 did not result in any changes in the measurement or classification of financial instruments as at 1 July 2017. All classes of financial assets and financial liabilities had as at 1 July 2017 the same carrying values under IFRS 9 as they had under IAS 39.

Diageo’s principal associate, Moët Hennessy has adopted IFRS 9. This has no impact on Diageo’s share of the net assets of Moët Hennessy but resulted in a decrease in the group’s hedging reserve of £3 million with a corresponding increase in retained earnings. This change has been disclosed as a movement in the year ended 30 June 2018.

IFRS 15 – Revenue from contracts with customers provides enhanced detail on the principle of recognising revenue to reflect the concept that revenue should be recognised when the control of goods or services is transferred to the customer at a value that the company is expected to receive. It replaces the separate models for goods, services and construction contracts under previous IFRS (IAS 11, IAS 18 and related interpretations) which was based on the concept of the transfer of risks and rewards. It also provides further guidance on the initial measurement of sales on contracts which have discounts, rebates and consignment inventories by identifying separate performance obligations that may apply.

During the year ended 30 June 2017 the group carried out a detailed review of the recognition criteria for revenue applying the requirements of IFRS 15 to ensure that the same principles were being applied consistently across the group. This review in particular examined promotional and marketing support payments made to customers post the initial sale of product, the timing of the recognition of sales made where a third party manufactures or modifies a product on behalf of Diageo and consignment inventories. On application of IFRS 15 some changes in accounting policy resulted, principally in respect of variable consideration receivable where the criteria applied for deducting future promotional payments from the initial revenue recognition was more stringent than under the former accounting policy. Management have also ensured that this policy is being adopted consistently across the group. The revised accounting policy establishes that revenue is recognised to the extent that it is highly probable that a reversal in the amount of revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently settled. This means that Diageo, under the revised accounting policy, deducts from the initial revenue recognised any future promotional payments to direct and indirect customers unless it is highly probable that they will not be incurred.

Diageo has adopted the modified retrospective transition method, recognising the cumulative effect of initially applying IFRS15 as an adjustment to the balance of retained earnings as at 1 July 2017.

Retained earnings at 1 July 2017 has been debited by £89 million. The adjustment comprised an increase in creditors of £116 million, a decrease in debtors of £9 million, an increase in inventories of £8 million, a decrease in non-controlling interests of £2 million and an increase in deferred tax assets of £26 million. The changes in accounting policy that resulted in these adjustments are principally in respect of variable consideration where the criteria for deducting future promotional payments from the initial revenue recognition is more stringent than under the former accounting policy. The revised accounting policy establishes that revenue is recognised to the extent that it is highly probable that a reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently settled. This means that Diageo, under the new accounting policy, deducts from the initial revenue recognised any future promotional payments unless it is highly probable that they will not be incurred.

For the year ended 30 June 2018, as a result of applying the new accounting policy, sales increased by £11 million, operating profit increased by £12 million, taxation was £3 million higher and profit for the year increased by £9 million. The operating profit benefit in the year was more than offset by the impact to sales and profit of working capital efficiencies, including inventory reductions, delivered by Diageo’s customers.

Consideration was also given to the disclosure of revenue into different categories. It was determined that all revenue would be disclosed as ‘sale of goods’ as revenue from other sources was immaterial.

IFRIC agenda decision – In October 2017 the IFRIC clarified that interest and penalties in respect of corporate taxes should generally be accounted for under IAS 37 rather than IAS 12 and therefore not be disclosed in the income statement within ’Taxation’. For comparative years Diageo disclosed interest and penalties in respect of corporate taxes as part of ’Taxation’ in the consolidated income statement and consolidated balance sheet. As a result of the clarification by the IFRIC Diageo has changed its accounting policy from 1 July 2017. In addition, for consistency,Diageo has changed its treatment of interest arising on indirect tax. For the year ended 30 June 2018, £10 million of interest and £2 million of penalties in respect of corporate tax and indirect taxes was charged to other finance charges and operating profit, respectively. At 30 June 2017, the cumulative interest and penalties in respect of corporate tax included in ’Corporate tax payable’ in the consolidated balance sheet was £37 million. At 30 June 2018 the cumulative interest in respect of corporate taxes is included in interest payable (£34 million) and penalties within other payables (£2 million). Interest and penalties in respect of indirect taxes in the consolidated balance sheet are immaterial. Comparatives have not been restated as the amounts are immaterial.

The following standard issued by the IASB and endorsed by the EU, has not yet been adopted by the group:

IFRS 16 – Leases (effective in the year ending 30 June 2020) sets out the principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor. It eliminates the classification of leases as either operating leases or finance leases currently required under IAS 17 and introduces a single lessee accounting model where the lessee is required to recognise assets and liabilities for all material leases. All material leases will be recognised on the balance sheet as right of use assets and depreciated on a straight line basis. The liability, recognised as part of net borrowings, will be measured at a discounted value and any interest will be charged to finance charges in the income statement. Therefore, the charge to the income statement for the operating lease payment will be replaced with depreciation on the right of use asset and the interest charge inherent in the lease.

The group will implement IFRS 16 from 1 July 2019 by applying the modified retrospective method, meaning that the comparative figures in the financial statements for the year ending 30 June 2020 will not be restated to show the impact of IFRS 16. The operating leases which will be recorded on the balance sheet following implementation of IFRS 16 are principally in respect of warehouses, office buildings, plant and machinery, cars and distribution vehicles. The group has decided to reduce the complexity of implementation to take advantage of a number of practical expedients on transition on 1 July 2019 namely:

(i) to measure the right of use asset at the same value as the lease liability

(ii) to apply the short term and low value exemptions

(iii) to treat, wherever possible, services provided as an income statement item and only capitalise the lease payment amounts in respect of the asset

The anticipated impact of the standard on the group is not yet known though is not expected to be material on the income statement or net assets though assets and liabilities will be grossed up for the net present value of the outstanding operating lease liabilities as at 1 July 2019. See note 19 for information on gross operating lease commitments.

The following standard, issued by the IASB has not been endorsed by the EU and has not been adopted by the group:

IFRS 17 – Insurance contracts (effective in the year ending 30 June 2022) is ultimately intended to replace IFRS 4.

Based on a preliminary assessment the group believes that the adoption of IFRS 17 will not have a significant impact on its consolidated results or financial position.

There are a number of other amendments and clarifications to IFRS, effective in future years, which are not expected to significantly impact the group’s consolidated results or financial position.

Results for the year

Introduction

This section explains the results and performance of the group for the three years ended 30 June 2018. Disclosures are provided for segmental information, operating costs, exceptional items, finance income and charges, the group’s share of results of associates and joint ventures, taxation and discontinued operations. For associates, joint ventures and taxation, balance sheet disclosures are also provided in this section.

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Segmental information

12 Months Ended

Jun. 30, 2018

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Segmental information

2. Segmental information

Accounting policies

Sales comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the customer. Generally the transfer of control of goods occurs at the time of despatch but in some countries and for some customers may be on delivery. The group includes in sales the net consideration to which it expects to be entitled. Sales are recognised to the extent that it is highly probable that a significant reversal will not occur. Therefore, sales are stated net of expected price discounts, allowances for customer loyalty and certain promotional activities and similar items. Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing.

Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duty are not always passed on to the customer and where a customer fails to pay for product received the group cannot reclaim the excise duty. The group therefore recognises excise duty, unless it regards itself as an agent of the regulatory authorities, as a cost to the group.

Advertising costs, point of sale materials and sponsorship payments are charged to marketing in operating profit when the company has a right of access to the goods or services acquired.

Diageo is an international manufacturer and distributor of premium drinks. Diageo also owns a number of investments in associates and joint ventures as set out in note 6.

The segmental information presented is consistent with management reporting provided to the Executive Committee (the chief operating decision maker).

The Executive Committee considers the business principally from a geographical perspective based on the location of third party sales and the business analysis is presented by geographical segment. In addition to these geographical selling segments, a further segment reviewed by the Executive Committee is the International Supply Centre (ISC), which manufactures products for other group companies and includes the production sites in the United Kingdom, Ireland, Italy and Guatemala.

Continuing operations also include the Corporate function. Corporate revenues and costs are in respect of central costs, including finance, marketing, corporate relations, human resources and legal, as well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the ISC. They also include rents receivable and payable in respect of properties not used by the group in the manufacture, sale or distribution of premium drinks.

Diageo uses shared services operations, including captive and outsourced centres, to deliver transaction processing activities for markets and operational entities. These centres are located in Hungary, Kenya, Colombia, the Philippines and India. The captive business service centre in Budapest also performs certain central finance activities, including elements of financial planning and reporting and treasury. The costs of shared service operations are recharged to the regions.

The segmental information for net sales and operating profit before the impact of acquisitions and disposals, ISC allocation and exceptional items is reported at budgeted exchange rates in line with management reporting. For management reporting purposes the group measures the current year at, and restates the prior year net sales and operating profit to, the current year’s budgeted exchange rates. These exchange rates are set prior to the financial year as part of the financial planning process and provide a consistent exchange rate to measure the performance of the business throughout the year. The adjustments required to retranslate the segmental information to actual exchange rates and to reconcile it to the group’s reported results are shown in the following tables. The comparative segmental information, prior to retranslation, has not been restated at the current year’s budgeted exchange rates but is presented at the budgeted rates for the respective years.

In addition, for management reporting purposes Diageo presents separately the results of acquisitions and disposals completed in the current and prior year from the results of the geographical segments. The impact of acquisitions and disposals on net sales and operating profit is disclosed under the appropriate geographical segments in the following tables at budgeted exchange rates.

(a) Segmental information for the consolidated income statement – continuing operations

	North America £ million			Europe and Turkey(ii) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Eliminate inter- segment sales £ million			Total operating segments £ million			Corporate and other £ million			Total £ million
2018
Sales		4,671			5,232			2,083			1,352			5,042			1,457			(1,457	)		18,380			52			18,432
Net sales
At budgeted exchange rates(i)		4,138			2,821			1,467			1,064			2,555			1,512			(1,425	)		12,132			48			12,180
Acquisitions and disposals		50			—			—			—			—			—			—			50			—			50
ISC allocation		11			53			4			11			8			(87	)		—			—			—			—
Retranslation to actual exchange rates		(83	)		58			20			(6	)		(60	)		32			(32	)		(71	)		4			(67	)
Net sales		4,116			2,932			1,491			1,069			2,503			1,457			(1,457	)		12,111			52			12,163
Operating profit/(loss)
At budgeted exchange rates(i)		1,925			941			180			298			588			112			—			4,044			(160	)		3,884
Acquisitions and disposals		4			—			—			—			—			—			—			4			—			4
ISC allocation		14			67			5			14			12			(112	)		—			—			—			—
Retranslation to actual exchange rates		(61	)		20			6			(4	)		(32	)		—			—			(71	)		2			(69	)
Operating profit/(loss) before exceptional items		1,882			1,028			191			308			568			—			—			3,977			(158	)		3,819
Exceptional items		—			—			(128	)		—			—			—			—			(128	)		—			(128	)
Operating profit/(loss)		1,882			1,028			63			308			568			—			—			3,849			(158	)		3,691
Non-operating items																													—
Net finance charges																													(260	)
Share of after tax results of associates and joint ventures
– Moët Hennessy																													305
– Other																													4
Profit before taxation																													3,740
	North America £ million			Europe and Turkey(ii) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Eliminate inter- segment sales £ million			Total operating segments £ million			Corporate and other £ million			Total £ million
2017
Sales		4,725			4,985			2,132			1,303			4,923			1,390			(1,390	)		18,068			46			18,114
Net sales
At budgeted exchange rates(i)		3,523			2,474			1,240			873			1,977			1,418			(1,324	)		10,181			39			10,220
Acquisitions and disposals		—			2			15			7			41			—			—			65			—			65
ISC allocation		11			60			4			11			8			(94	)		—			—			—			—
Retranslation to actual exchange rates		627			288			297			153			393			66			(66	)		1,758			7			1,765
Net sales		4,161			2,824			1,556			1,044			2,419			1,390			(1,390	)		12,004			46			12,050
Operating profit/(loss)
At budgeted exchange rates(i)		1,648			741			159			195			375			116			—			3,234			(169	)		3,065
Acquisitions and disposals		—			—			(8	)		—			—			—			—			(8	)		(1	)		(9	)
ISC allocation		14			72			5			13			12			(116	)		—			—			—			—
Retranslation to actual exchange rates		237			123			62			42			100			—			—			564			(19	)		545
Operating profit/(loss) before exceptional items		1,899			936			218			250			487			—			—			3,790			(189	)		3,601
Exceptional items		—			(33	)		—			—			(9	)		—			—			(42	)		—			(42	)
Operating profit/(loss)		1,899			903			218			250			478			—			—			3,748			(189	)		3,559
Non-operating items																													20
Net finance charges																													(329	)
Share of after tax results of associates and joint ventures
– Moët Hennessy																													302
– Other																													7
Profit before taxation																													3,559

	North America £ million		Europe and Turkey(ii) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Eliminate inter- segment sales £ million			Total operating segments £ million			Corporate and other £ million			Total £ million
2016
Sales		4,037		4,593			1,875			1,078			4,022			1,355			(1,355	)		15,605			36			15,641
Net sales
At budgeted exchange rates(i)		3,282		2,481			1,286			901			2,114			1,452			(1,373	)		10,143			38			10,181
Acquisitions and disposals		106		75			74			59			9			—			—			323			—			323
ISC allocation		10		50			4			8			7			(79	)		—			—			—			—
Retranslation to actual exchange rates		167		(62	)		37			(105	)		(54	)		(18	)		18			(17	)		(2	)		(19	)
Net sales		3,565		2,544			1,401			863			2,076			1,355			(1,355	)		10,449			36			10,485
Operating profit/(loss)
At budgeted exchange rates(i)		1,459		738			212			221			399			112			—			3,141			(149	)		2,992
Acquisitions and disposals		24		7			(8	)		13			1			—			—			37			—			37
ISC allocation		14		70			6			11			11			(112	)		—			—			—			—
Retranslation to actual exchange rates		54		(14	)		2			(46	)		(16	)		—			—			(20	)		(1	)		(21	)
Operating profit/(loss) before exceptional items		1,551		801			212			199			395			—			—			3,158			(150	)		3,008
Exceptional items		—		—			—			(118	)		(49	)		—			—			(167	)		—			(167	)
Operating profit/(loss)		1,551		801			212			81			346			—			—			2,991			(150	)		2,841
Non-operating items																												123
Net finance charges																												(327	)
Share of after tax results of associates and joint ventures
– Moët Hennessy																												217
– Other																												4
Profit before taxation																												2,858

(i) These items represent the IFRS 8 performance measures for the geographical and ISC segments.

(ii) The Europe and Turkey region was formerly named ‘Europe, Russia and Turkey’. Countries included in the region have not changed.

(1) The net sales figures for ISC reported to the Executive Committee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the ISC segment to the other operating segments, inter-segmental sales are not material.

(2) The group’s net finance charges are managed centrally and are not attributable to individual operating segments.

(3) Approximately 40% of annual net sales occur in the last four months of each calendar year.

(4) In the year ended 30 June 2017 Diageo changed its internal reporting structure to reflect changes made to management responsibilities. As a result of this change, Lebanon, other Middle East countries and North African countries which were formerly reported in the Asia Pacific and Africa regions respectively are now included in the Europe and Turkey region. In addition, the result of the Travel Retail operations have been reallocated to the geographical regions to better reflect the region in which the sale to the customer is made. The information for year ended 30 June 2016 has not been restated as the amounts involved are not material.

(b) Other segmental information

	North America £ million			Europe and Turkey (i) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Corporate and other £ million			Total £ million
2018
Capital expenditure		132			22			163			44			44			131			48			584
Depreciation and intangible asset amortisation		(44	)		(20	)		(77	)		(7	)		(42	)		(110	)		(68	)		(368	)
Exceptional accelerated depreciation and impairment		—			—			(35	)		—			—			—			—			(35	)
Exceptional impairment of intangible assets		—			—			(90	)		—			—			—			—			(90	)
2017
Capital expenditure		112			27			126			34			48			125			46			518
Depreciation and intangible asset amortisation		(41	)		(21	)		(77	)		(7	)		(42	)		(107	)		(66	)		(361	)
2016
Capital expenditure		105			29			107			20			52			150			43			506
Depreciation and intangible asset amortisation		(39	)		(21	)		(83	)		(10	)		(35	)		(106	)		(61	)		(355	)
Exceptional accelerated depreciation and impairment		—			—			—			(14	)		—			(8	)		—			(22	)
Exceptional impairment of intangible assets		—			—			—			(104	)		—			—			—			(104	)

(i) The Europe and Turkey region was formerly named ‘Europe, Russia and Turkey’. Countries included in the region have not changed.

(c) Category and geographical analysis

	Category analysis												Geographic analysis
	Spirits £ million		Beer £ million		Wine £ million		Ready to drink £ million		Other(iv) £ million		Total £ million		Great Britain £ million		United States £ million		Nether- lands £ million		India £ million		Rest of World £ million		Total £ million
2018
Sales(i)		14,605		2,647		81		854		245		18,432		1,630		4,310		63		3,086		9,343		18,432
Non-current assets(ii), (iii)		—		—		—		—		—		—		1,717		4,221		2,367		3,688		7,792		19,785
2017
Sales(i)		14,241		2,635		81		854		303		18,114		1,558		4,366		62		3,070		9,058		18,114
Non-current assets(ii), (iii)		—		—		—		—		—		—		1,678		4,012		2,392		4,009		7,410		19,501
2016
Sales(i)		11,993		2,486		265		726		171		15,641		1,672		3,729		56		2,465		7,719		15,641
Non-current assets(ii), (iii)		—		—		—		—		—		—		1,679		3,859		2,350		3,764		7,224		18,876

(i) The geographical analysis of sales is based on the location of third party customers.

(ii) The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, investments in associates and joint ventures, other investments and non-current other receivables.

(iii) The management information provided to the chief operating decision maker does not include an analysis of assets and liabilities by category and therefore is not disclosed.

(iv) In the two years ended 30 June 2018 and 30 June 2017 ‘Other’ includes the group’s sorghum beer business which in the year ended 30 June 2016 was included in ‘Beer’.

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Operating costs

12 Months Ended

Jun. 30, 2018

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Operating costs

3. Operating costs

	2018         £ million			2017         £ million			2016         £ million
Excise duties		6,269			6,064			5,156
Cost of sales		4,634			4,680			4,251
Marketing		1,882			1,798			1,562
Other operating expenses		1,956			2,013			1,831
		14,741			14,555			12,800
Comprising:
Excise duties – Great Britain		853			774			853
– United States		548			558			468
– India		2,094			2,073			1,588
– Other		2,774			2,659			2,247
Increase in inventories		(296	)		(146	)		(100	)
Raw materials and consumables		3,052			2,813			2,548
Marketing		1,882			1,798			1,562
Other external charges		1,849			2,124			1,767
Staff costs		1,509			1,583			1,475
Depreciation, amortisation and impairment		493			361			473
Gains on disposal of properties		(9	)		(7	)		(39	)
Net foreign exchange losses/(gains)		6			(16	)		1
Other operating income (i)		(14	)		(19	)		(43	)
		14,741			14,555			12,800

(i) In the year ended 30 June 2016 Diageo sold 8.5 million shares in United Breweries Limited resulting in a gain of £28 million.

(a) Other external charges

Other external charges include operating lease rentals for plant and equipment of £21 million (2017 – £20 million; 2016 – £29 million), other operating lease rentals (mainly properties) of £87 million (2017 – £96 million; 2016 – £72 million), research and development expenditure in respect of new drinks products and package design in the year leading up to product launch of £36 million (2017 – £33 million; 2016 – £28 million) and maintenance and repairs of £117 million (2017 – £100 million; 2016 – £91 million).

(b) Auditor fees

Other external charges include the fees of the principal auditor of the group, PricewaterhouseCoopers LLP and its affiliates (PwC) are analysed below.

	2018 £ million		2017 £ million		2016 £ million
Audit of these financial statements		3.3		3.1		3.4
Audit of financial statements of subsidiaries		3.3		3.4		2.3
Audit related assurance services(i)		1.6		1.6		1.4
Total audit fees (Audit fees)		8.2		8.1		7.1
Other services relevant to taxation (Tax fees)(ii)		0.1		0.3		0.5
Other assurance services (Audit related fees)(iii)		0.6		0.5		0.4
All other non-audit fees (All other fees)(iv)		1.0		0.9		0.9
		9.9		9.8		8.9

(i) Audit related assurance services are principally in respect of reporting under section 404 of the US Sarbanes-Oxley Act and the review of the interim financial information.

(ii) Other services relevant to taxation principally comprise tax advice.

(iii) Other assurance services comprise the aggregate fees for assurance and related services that are related to the performance of the audit or review of the financial statements and are not reported under ‘total audit fees’.

(iv) All other non-audit fees are principally in respect of immigration and advisory services.

(1) Disclosure requirements for auditor fees in the United States are different from those required in the United Kingdom. The terminology by category required in the United States is disclosed in brackets in the above table. All figures are the same for the disclosures in the United Kingdom and the United States apart from £0.4 million (2017 – £0.3 million; 2016—£0.3 million) of the cost in respect of the review of the interim financial information which would be included in audit related fees in the United States rather than audit fees.

Audit services provided by firms other than PwC for the year ended 30 June 2018 were £0.1 million (2017 – £0.5 million; 2016—£0.9 million). PwC fees for audit services in respect of employee pension plans were £0.3 million for the year ended 30 June 2018 (2017 – £0.3 million; 2016—£0.2 million).

(c) Staff costs and average number of employees

	2018 £ million		2017 £ million		2016 £ million
Aggregate remuneration
Wages and salaries		1,272		1,330		1,236
Share-based incentive plans		40		34		28
Employer’s social security		95		93		85
Employer’s pension
– defined benefit plans		73		95		99
– defined contribution plans		18		17		16
Other post employment plans		11		14		11
		1,509		1,583		1,475

The average number of employees on a full time equivalent basis (excluding employees of associates and joint ventures) was as follows:

	2018		2017		2016
North America		2,406		2,251		2,477
Europe and Turkey		3,747		4,074		4,164
Africa		4,625		4,898		5,381
Latin America and Caribbean		2,536		2,573		3,013
Asia Pacific		8,008		8,690		9,711
ISC		4,227		4,244		4,188
Corporate and other(i)		4,368		3,703		3,144
		29,917		30,433		32,078

(i) The increase in ‘Corporate and other’ in the years ended 30 June 2018 and 30 June 2017 is primarily due to the creation of a worldwide service centre in India where roles have been transferred from the geographical regions.

At 30 June 2018 the group had, on a full time equivalent basis, 29,362 (2017 – 30,051; 2016 – 31,485) employees. The average number of employees of the group, including part time employees, for the year was 30,761 (2017 – 31,472; 2016 – 32,969).

(d) Exceptional operating items

Included in the table above are exceptional operating items as follows:

	2018 £ million		2017 £ million		2016 £ million
Other external charges		—		42		49
Decrease in inventories		3		—		—
Depreciation, amortisation and impairment
– Brand, goodwill and tangible asset impairment		125		—		118
Total exceptional operating costs (note 4)		128		42		167

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Exceptional items

12 Months Ended

Jun. 30, 2018

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Exceptional items

4. Exceptional items

Accounting policies

Critical accounting judgements

Exceptional items are those that in management’s judgement need to be disclosed by virtue of their size or nature. Such items are included within the income statement caption to which they relate, and are separately disclosed in the notes to the consolidated financial statements.

Operating items

Exceptional operating items are those that are considered to be material and are part of the operating activities of the group such as impairment of intangible assets and fixed assets, duty settlements, property disposals and changes in post employment plans.

Non-operating items

Gains and losses on the sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non recurring items, that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as non-operatingexceptional items below operating profit in the consolidated income statement.

It is believed that separate disclosure of exceptional items and the classification between operating and non-operating further helps investors to understand the performance of the group.

	2018 £ million			2017 £ million			2016 £ million
Items included in operating profit
Brand, goodwill, tangible and other assets impairment (a)		(128	)		—			(118	)
Competition authority investigation in Turkey (b)		—			(33	)		—
Customer claim in India (c)		—			(32	)		—
Disengagement agreements relating to United Spirits Limited (d)		—			23			(49	)
		(128	)		(42	)		(167	)
Non-operating items
Sale of businesses
Wines in the United States and Percy Fox (e)		—			20			(191	)
Argentina (f)		—			—			(38	)
South African associate interests (g)		—			—			(27	)
Jamaica, Singapore and Malaysia beer interests (h)		—			—			457
Kenya—glass business (CGI) (i)		—			—			14
Other
Provision for a receivable related to a loan guarantee (j)		—			—			(92	)
		—			20			123
Exceptional items before taxation		(128	)		(22	)		(44	)
Items included in taxation (note 7 (b))		203			4			56
Exceptional items in continuing operations		75			(18	)		12
Discontinued operations net of taxation (note 8)		—			(55	)		—
Total exceptional items		75			(73	)		12
Attributable to:
Equity shareholders of the parent company		75			(64	)		2
Non-controlling interests		—			(9	)		10
Total exceptional items		75			(73	)		12

(a) In the year ended 30 June 2018, an impairment charge of £128 million in respect of the Meta brand, Ethiopian tangible fixed assets, associated spare parts reported in inventory and goodwill allocated to the Africa Regional Markets cash-generating unit has been recognised in other operating exceptional expenses. Forecast cash flow assumptions were reduced principally due to the devaluation of the Ethiopian birr increasing costs of imported raw materials and products, an increased competitive environment and political unrest in Ethiopia. For further information see note 10 (d).

In the year ended 30 June 2016, an impairment charge in respect of the Ypióca brand and related tangible fixed assets and goodwill allocated to the Paraguay, Uruguay and Brazil (PUB) cash-generating unit of £62 million, £14 million and £42 million, respectively, was charged to other operating expenses. Forecast cash flow assumptions were reduced principally due to a challenging economic environment in Brazil and significant adverse changes in local tax regulation.

(b) In the year ended 30 June 2017, TRY150 million (£33 million) was charged to exceptional items in respect of the Turkish Competition Authority investigation into certain of Mey İçki’s trading practices in Turkey.

(c) During the year ended 30 June 2017 United Spirits Limited received a claim, followed by a debit note, from a customer in India in respect of differential pricing charged over a number of years in respect of products sold to that customer primarily for the period prior to the acquisition of United Spirits Limited by Diageo. The group made a provision of INR2,678 million (£32 million) in exceptional items against the current receivable from the customer.

(d) On 25 February 2016, in relation to an agreement entered into with Dr Vijay Mallya (Dr Mallya) and described further at note 18(c) (25 February Agreement), the group incurred an exceptional operating charge of £49 million. This included provisions for payments to Dr Mallya of, in aggregate, $75 million (£53 million) over a five year period in consideration for (i) his resignation and the termination of his appointment and governance rights and his relinquishing of the rights and benefits attached to his position as Chairman and Non-Executive Director of United Spirits Limited (USL); (ii) his agreement to five-year global non-compete (excluding the United Kingdom), non-interference,non-solicitation and standstill undertakings; and (iii) his agreement that he and his affiliates would not pursue any claims against Diageo, USL and their affiliates. Separately, other arrangements entered into on 25 February 2016 resulted in a net gain of £4 million, comprising the gain upon termination of certain other agreements that were the subject of prior provisions, less legal fees directly attributable to the 25 February Agreement. In the year ended 30 June 2016 a payment of $40 million (£28 million) was made to Dr Mallya as the first instalment due under the 25 February Agreement. Owing to various reasons, including breaches of several provisions of the 25 February 2016 Agreement by Dr Mallya, Diageo believes that it was not liable to pay any further instalments under that agreement and accordingly the outstanding provision of $29 million (£23 million) was credited back to the income statement in the year ended 30 June 2017.

(e) On 1 January 2016, Diageo completed the sale of the majority of its wine interests in the United States and its UK based Percy Fox businesses to Treasury Wine Estates. Together with the sale of the group’s other wine interests in the United States the transactions resulted in a loss before taxation on disposal of £191 million in the year ended 30 June 2016.

In the year ended 30 June 2017 the guarantee in respect of the lease payments to Realty Income Corporation was settled and the working capital on disposal was agreed with Treasury Wine Estates resulting in a net £20 million exceptional gain.

(f) On 29 January 2016, Diageo disposed of its interests in Argentina to Grupo Peñaflor. The transaction resulted in a loss before taxation of £38 million including a cumulative exchange loss of £20 million, in respect of prior years, recycled from other comprehensive income and other directly attributable costs of £7 million.

(g) On 1 December 2015, Diageo disposed of its 42.25% equity interests in DHN Drinks, its 25% equity stake in Sedibeng Breweries Limited and its 15.01% equity stake in Namibia Breweries Limited (South African associate interests) to Heineken. The net cash consideration received was £120 million, which included the repayment of £31 million in respect of loans previously made to DHN Drinks and Sedibeng Breweries Limited. A loss before taxation of £27 million, including a £30 million cumulative exchange loss, in respect of prior years, recycled from other comprehensive income, was accounted for in the income statement.

(h) On 7 October 2015, Diageo disposed of its 57.87% shareholding in D&G (Jamaican Red Stripe business) and its 49.99% stake in GAPL Pte Limited (Singapore and Malaysian beer businesses) to Heineken resulting in a gain before taxation of £457 million.

(i) On 30 September 2015, the group completed the disposal of its shareholding in Central Glass Industries Limited (CGI), a Kenyan glass bottle manufacturer.

(j) During the year ended 30 June 2016 a guarantee provided by Diageo for a loan of $135 million (£92 million) given by Standard Chartered Bank (SCB) to Watson Limited was called and $135 million was paid to SCB. The underlying security package for the loan is currently being contested in court and a provision of $135 million was made in the year ended 30 June 2016.

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Finance income and charges

12 Months Ended

Jun. 30, 2018

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Finance income and charges

5. Finance income and charges

Accounting policies

Net interest includes interest income and charges in respect of financial instruments and the results of hedging transactions used to manage interest rate risk.

Finance charges directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of that asset. Borrowing costs which are not capitalised are recognised in the income statement based on the effective interest method. All other finance charges are recognised primarily in the income statement in the year in which they are incurred.

Net other finance charges include items in respect of post employment plans, the discount unwind of long term obligations and hyperinflation charges. The results of operations in hyperinflationary economies are adjusted to reflect the changes in the purchasing power of the local currency of the entity before being translated to sterling.

The impact of derivatives, excluding cash flow hedges that are in respect of commodity risk management or those that are used to hedge the currency risk of highly probable future currency cash flows, is included in interest income or interest charge.

	2018 £ million			2017 £ million			2016 £ million
Interest income		155			148			153
Fair value gain on financial instruments		61			76			88
Total interest income(i)		216			224			241
Interest charge on bank loans and overdrafts		(53	)		(72	)		(67	)
Interest charge on finance leases		(9	)		(11	)		(13	)
Interest charge on all other borrowings		(333	)		(368	)		(379	)
Fair value loss on financial instruments		(62	)		(67	)		(91	)
Total interest charges(i)		(457	)		(518	)		(550	)
Net interest charges		(241	)		(294	)		(309	)
Net finance income in respect of post employment plans in surplus (note 13)		9			2			18
Hyperinflation adjustment in respect of Venezuela (note 1)		18			9			—
Other finance income		—			—			3
Total other finance income		27			11			21
Net finance charge in respect of post employment plans in deficit (note 13)		(20	)		(27	)		(23	)
Unwinding of discounts		(14	)		(8	)		(11	)
Change in financial liability (Level 3)		—			(8	)		—
Hyperinflation adjustment in respect of Venezuela (note 1)		—			—			(1	)
Other finance charges		(12	)		(3	)		(4	)
Total other finance charges		(46	)		(46	)		(39	)
Net other finance charges		(19	)		(35	)		(18	)

(i) Includes £73 million interest income and £(394) million interest charge in respect of financial assets and liabillities that are not measured at fair value through the income statement (2017—£91 million income and £(467) million charge, 2016—£84 million income and £(451) million charge).

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Investments in associates and joint ventures

12 Months Ended

Jun. 30, 2018

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Investments in associates and joint ventures

6. Investments in associates and joint ventures

Accounting policies

An associate is an undertaking in which the group has a long term equity interest and over which it has the power to exercise significant influence. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The group’s interest in the net assets of associates and joint ventures is reported in investments in the consolidated balance sheet and its interest in their results (net of tax) is included in the consolidated income statement below the group’s operating profit. Associates and joint ventures are initially recorded at cost including transaction costs. Investments in associates and joint ventures are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment review compares the net carrying value with the recoverable amount, where the recoverable amount is the higher of the value in use calculated as the present value of the group’s share of the associate’s future cash flows and its fair value less costs to sell.

Diageo’s principal associate is Moët Hennessy, SAS (Moët Hennessy) of which Diageo owns 34%. Moët Hennessy is the spirits and wine subsidiary of LVMH Moët Hennessy – Louis Vuitton SA (LVMH). LVMH is based in France and is listed on the Paris Stock Exchange. Moët Hennessy is also based in France and is a producer and exporter of champagne and cognac brands.

A number of joint distribution arrangements have been established with LVMH in Asia Pacific and France, principally covering distribution of Diageo’s Scotch whisky and gin premium brands and Moët Hennessy’s champagne and cognac premium brands. Diageo and LVMH have each undertaken not to engage in any champagne or cognac activities competing with those of Moët Hennessy. The arrangements also contain certain provisions for the protection of Diageo as a non-controlling shareholder in Moët Hennessy.

(a) An analysis of the movement in the group’s investments in associates and joint ventures is as follows:

	Moët Hennessy £ million			Others £ million			Total £ million
Cost less provisions
At 30 June 2016		2,445			83			2,528
Exchange differences		117			3			120
Additions		—			10			10
Share of profit after tax		302			7			309
Dividends		(218	)		(5	)		(223	)
Share of tax attributable to shareholders		85			—			85
Other		(5	)		—			(5	)
At 30 June 2017		2,726			98			2,824
Exchange differences		3			—			3
Additions		—			41			41
Share of profit after tax		305			4			309
Dividends		(150	)		(9	)		(159	)
Other		(9	)		—			(9	)
At 30 June 2018		2,875			134			3,009

(1) Investment in associates balance includes loans given to and preference shares invested in associates of £59 million (2017 – £27 million; 2016 – £19 million).

(b) Income statement information for the three years ended 30 June 2018 and balance sheet information as at 30 June 2018 and 30 June 2017 of Moët Hennessy is as follows:

	2018 £ million		2017 £ million		2016 £ million
Sales		4,445		4,356		3,491
Profit for the year		897		888		638
Total comprehensive income		799		838		509

Moët Hennessy prepares its financial statements under IFRS as endorsed by the EU in euros to 31 December each year. The results are adjusted for alignment to Diageo accounting policies and are a major part of the Wines & Spirits division of LVMH. The results are translated at £1 = €1.13 (2017 – £1 = €1.16; 2016 – £1 = €1.34).

	2018 £ million			2017 £ million
Non-current assets		4,251			4,160
Current assets		7,395			6,897
Total assets		11,646			11,057
Non-current liabilities		(972	)		(973	)
Current liabilities		(2,218	)		(2,067	)
Total liabilities		(3,190	)		(3,040	)
Net assets		8,456			8,017

(1) Including acquisition fair value adjustments principally in respect of Moët Hennessy’s brands and translated at £1 = €1.13 (2017 – £1 = €1.14).

(c) Information on transactions between the group and its associates and joint ventures is disclosed in note 20.

(d) Investments in associates and joint ventures comprise the cost of shares less goodwill written off on acquisitions prior to 1 July 1998 of £1,239 million (2017 – £1,196 million), plus the group’s share of post acquisition reserves of £1,770 million (2017 – £1,628 million).

(e) The associates and joint ventures have not reported any material contingent liabilities in their latest financial statements.

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Taxation

12 Months Ended

Jun. 30, 2018

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Taxation

7. Taxation

Accounting policies

Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax benefits are not recognised unless it is probable that the tax positions are sustainable. Once considered to be probable, tax benefits are reviewed each year to assess whether a provision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. Tax provisions are included in current liabilities. Penalties and interest on tax liabilities for the year ended 30 June 2018 are included in operating profit and finance charges, respectively. In prior years penalties and interest on tax liabilities were provided for in the tax charge.

Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax purposes. The amount of deferred tax reflects the expected recoverable amount and is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using the basis of taxation enacted or substantively enacted by the balance sheet date. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where the group is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance.

Critical accounting estimates and judgements

The group is required to estimate the corporate tax in each of the many jurisdictions in which it operates. Manangement is required to estimate the amount that should be recognised as a tax liability or tax asset in many countries which are subject to tax audits which by their nature are often complex and can take several years to resolve. Current tax balances and tax provisions are based on management’s judgement and interpretation of country specific tax law and the likelihood of settlement. However the actual tax liabilities could differ from the provision and in such event the group would be required to make an adjustment in a subsequent period which could have a material impact on the group’s profit for the year.

The evaluation of deferred tax assets recoverability requires judgements to be made regarding the availability of future taxable income.

(a) Analysis of taxation charge for the year

	United Kingdom							Rest of world									Total
	2018 £ million			2017 £ million		2016 £ million		2018 £ million			2017 £ million			2016 £ million			2018 £ million			2017 £ million			2016 £ million
Current tax
Current year		131			50		61		503			541			515			634			591			576
Adjustments in respect of prior years		71			4		—		(2	)		16			63			69			20			63
		202			54		61		501			557			578			703			611			639
Deferred tax
Origination and reversal of temporary differences		40			40		26		127			94			(109	)		167			134			(83	)
Changes in tax rates(i)		(11	)		5		6		(360	)		(14	)		1			(371	)		(9	)		7
Adjustments in respect of prior years		95			13		2		2			(17	)		(69	)		97			(4	)		(67	)
		124			58		34		(231	)		63			(177	)		(107	)		121			(143	)
Taxation on profit from continuing operations		326			112		95		270			620			401			596			732			496

(i) Includes the impact as a consequence of the reduction in the US Federal tax rate (from 35% to 21%) enacted by the Tax Cuts and Jobs Act (TCJA) in the United States.

(b) Exceptional tax (credits)/charges

The taxation charge includes the following exceptional items:

	2018 £ million			2017 £ million			2016 £ million
US tax reform(i)		(354	)		—			—
UK transfer pricing settlement(ii)		143			—			—
UK industrial building allowance(iii)		21			—			—
Brand and tangible asset impairment		(13	)		—			(10	)
Sale of businesses		—			7			(49	)
Customer claim in India		—			(11	)		—
Disengagement agreements relating to United Spirits Limited		—			—			3
		(203	)		(4	)		(56	)

(i) The exceptional tax credit of £354 million ($478 million) resulted from applying the Tax Cuts and Jobs Act (TCJA), enacted on 22 December 2017, in the United States. The credit principally arose on remeasuring the deferred tax liabilities in respect of intangibles and other assets for the change in the US Federal tax rate from 35% to 21%, resulting in an exceptional tax credit of £363 million ($490 million), which is partially offset by £9 million ($12 million) exceptional tax charge in respect of repatriation of untaxed foreign earnings. In addition, there was a one-off charge of £11 million ($15 million) to other comprehensive income and equity, in respect of the remeasurement of the deferred tax assets on post employment liabilities and share-based incentive plans as a result of applying the provisions of the TCJA.

(ii) In its interim announcement for the six months ended 31 December 2017, Diageo reported that discussions were being held with HMRC to seek clarity on Diageo’s transfer pricing and related issues, and that a preliminary assessment for diverted profits tax notice had been issued. Final charging notices were issued in August 2017 and Diageo paid £107 million in respect of the two years ended 30 June 2016. Diageo agreed in June 2018 with HMRC that diverted profits tax does not apply and at the same time has reached resolution on the transfer pricing issues being discussed. The agreement in respect of transfer pricing covers the period from 1 July 2014 to 30 June 2017 and has resulted in an additional UK tax charge of £143 million. In the year ended 30 June 2018 an additional tax charge of £47 million has been recognised in current tax which is based on the approach agreed with HMRC.

(iii) A deferred tax asset of £21 million has been written off in respect of the difference between the book value and tax written value of industrial buildings in the United Kingdom.

(c) Taxation rate reconciliation and factors that may affect future tax charges

	2018 £ million			2017 £ million			2016 £ million
Profit from continuing operations before taxation		3,740			3,559			2,858
Notional charge at UK corporation tax rate of 19% (2017 – 19.75%; 2016 – 20%)		711			703			571
Elimination of notional tax on share of after tax results of associates and joint ventures		(58	)		(60	)		(44	)
Differences in overseas tax rates (i)		134			162			50
Effect of intra-group financing		(61	)		(64	)		(97	)
Non taxable gain on disposals of businesses		—			—			(90	)
Other tax rate and tax base differences		(109	)		(100	)		(87	)
Other items not chargeable		(79	)		(78	)		(66	)
Impairment		16			—			21
Non deductible losses on disposal of businesses		—			(1	)		24
Other non deductible exceptional items		9			7			31
Other items not deductible (ii)		238			156			180
Changes in tax rates		(371	)		(9	)		7
Adjustments in respect of prior years		166			16			(4	)
Taxation on profit from continuing operations		596			732			496

(i) Changes in overseas tax rates are mainly due to the application of the TCJA. Excludes impact of remeasurement of deferred tax liabilities due to US tax reform, which is included in changes in tax rates in the table above.

(ii) Other items not deductible include irrecoverable withholding tax, controlled foreign companies charge and additional state and local taxes.

The table above reconciles the notional taxation charge calculated at the UK tax rate, to the actual total tax charge. As a group operating in multiple countries, the actual tax rates applicable to profits in those countries are different from the UK tax rate. The impact is shown in the table above as differences in overseas tax rates. The group’s worldwide business leads to the consideration of a number of important factors which may affect future tax charges, such as: the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms, acquisitions, disposals, restructuring activities, and settlements or agreements with tax authorities.

Significant ongoing changes in the international tax environment and an increase in global tax audit activity means that tax uncertainties and associated risks have been gradually increasing. In the medium term, these risks could result in an increase in tax liabilities or adjustments to the carrying value of deferred tax assets and liabilities. See note 18 (g).

The principal change in the reported tax rate for the year ended 30 June 2018 is principally driven by the changes enacted by the Tax Cuts and Jobs Act (TCJA) in the United States on 22 December 2017 and effective from 1 January 2018.

The group has a number of ongoing tax audits worldwide for which provisions are recognised based on best estimates and management’s judgments concerning the ultimate outcome of the audit. As at 30 June 2018 the ongoing audits that are provided for individually are not expected to result in a material tax liability. The current tax asset of £65 million (2017 – £ nil) and tax liability of £243 million (2017 – £294 million) includes £231 million (2017 – £287 million) of provisions for tax uncertainties.

(d) Deferred tax assets and liabilities

The amounts of deferred tax accounted for in the consolidated balance sheet comprise the following net deferred tax assets/(liabilities):

	Property, plant and equipment £ million			Intangible assets £ million			Post employment plans £ million			Tax losses £ million			Other temporary differences(i) £ million			Total £ million
At 30 June 2016		(126	)		(2,201	)		240			60			343			(1,684	)
Exchange differences		6			(51	)		5			2			8			(30	)
Recognised in income statement – continuing operations		(60	)		(25	)		(3	)		(25	)		(8	)		(121	)
Recognised in other comprehensive income and equity		—			—			(130	)		6			(21	)		(145	)
Discontinued operations		—			—			—			—			2			2
At 30 June 2017		(180	)		(2,277	)		112			43			324			(1,978	)
Exchange differences		7			89			(2	)		(1	)		(11	)		82
Recognised in income statement – continuing operations		(134	)		(14	)		(9	)		(15	)		(84	)		(256	)
Reclassification		(4	)		—			(1	)		—			5			—
Recognised in other comprehensive income and equity		—			—			(105	)		5			35			(65	)
Tax rate change-recognised in income statement		19			390			(16	)		—			(30	)		363
Tax rate change-recognised in other comprehensive income and equity		—			—			(6	)		—			(5	)		(11	)
At 30 June 2018		(292	)		(1,812	)		(27	)		32			234			(1,865	)

(i) Deferred tax on other temporary differences includes thalidomide provisions, restructuring provisions, share-based payments and intra group sales of products.

After offsetting deferred tax assets and liabilities where appropriate within territories, the net deferred tax liability comprises:

	2018 £ million			2017 £ million
Deferred tax assets		122			134
Deferred tax liabilities		(1,987	)		(2,112	)
		(1,865	)		(1,978	)

The deferred tax assets of £122 million includes £40 million (2017 – £63 million) arising in jurisdictions with prior year taxable losses. The majority of the asset is in respect of Ireland, where the amounts arose from timing differences on pension funding payments. It is considered more likely than not that there will be sufficient future taxable profits to realise these deferred tax assets, the majority of which can be carried forward indefinitely.

(e) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following tax losses:

	2018 £ million		2017 £ million
Capital losses – indefinite		69		67
Trading losses – indefinite		92		80
Trading losses – expiry dates up to 2026		55		60
		216		207

(f) Unrecognised deferred tax liabilities

UK legislation largely exempts overseas dividends remitted from UK tax. A tax liability is more likely to arise in respect of withholding taxes levied by the overseas jurisdiction. Deferred tax is provided where there is an intention to distribute earnings, and a tax liability arises. It is impractical to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings.

The aggregate amount of temporary differences in respect of investments in subsidiaries, branches, interests in associates and joint ventures for which deferred tax liabilities have not been recognised is approximately £12 billion (2017 – £13.7 billion).

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Discontinued operations

12 Months Ended

Jun. 30, 2018

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Discontinued operations

8. Discontinued operations

Accounting policies

Discontinued operations comprise disposal groups where they represent a major line of business or geographical area of operations or business activities that the group no longer participates in or did not form part of the group’s operations.

In the year ended 30 June 2017 discontinued operations comprised £55 million (net of deferred tax of £9 million), of additional amounts payable to the UK Thalidomide Trust, updates to the discount and inflation rates applied to the existing thalidomide provision and legal costs. Cash payments in the year ended 30 June 2017 in respect of the agreement were £31 million.

Operating assets and liabilities

Introduction

This section describes the assets used to generate the group’s performance and the liabilities incurred. Liabilities relating to the group’s financing activities are included in section ‘Risk management and capital structure’ and balance sheet information in respect of associates, joint ventures and taxation are covered in section ‘Results for the year’. This section also provides detailed disclosures on the group’s recent acquisitions and disposals, performance and financial position of its defined benefit post employment plans.

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Acquisition and sale of businesses and purchase of non-controllinginterests

12 Months Ended

Jun. 30, 2018

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Acquisition and sale of businesses and purchase of non-controllinginterests

9. Acquisition and sale of businesses and purchase of non-controlling interests

Accounting policies

The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up to, the date that control passes.

Business combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any contingent consideration.

On the acquisition of a business, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of acquisition, are attributed to the net assets including identifiable intangible assets and contingent liabilities acquired. Directly attributable acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred.

The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholder’s proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition.

Where the group has issued a put option over shares held by a non-controlling interest, the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options. Movements in the estimated liability in respect of put options are recognised in retained earnings.

Transactions with non-controlling interests are recorded directly in retained earnings.

For all entities in which the company, directly or indirectly, owns equity a judgement is made to determine whether the investor controls the investee and therefore should fully consolidate the investee. An assessment is carried out to determine whether the group has the exposure or rights to the variable returns of the investee and has the ability to affect those returns through its power over the investee. To establish control an analysis is carried out of the substantive and protective rights that the group and the other investors hold. This assessment is dependent on the activities and purpose of the investee and the rights of the other shareholders, such as which party controls the board, executive committee and material policies of the investee. Determining whether the rights that the group holds are substantive requires management judgement.

Where less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder or organised group of vote holders this may be an indicator of de facto control. An assessment is needed to determine all the factors relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be consolidated as a subsidiary. Where voting power and returns from an investment are split equally between two entities then the arrangement is accounted for as a joint venture.

On an acquisition fair values are attributed to the assets and liabilities acquired. This may involve material judgement to determine these values.

(a) Acquisition of businesses

Fair value of net assets acquired and cash consideration paid in respect of the acquisition of businesses and the purchase of shares of non-controlling interests in the three years ended 30 June 2018 were as follows:

	Net assets acquired and consideration
	Casamigos £ million			Other £ million			2018 £ million			2017 £ million		2016 £ million
Brands and other intangibles		469			9			478			—		26
Inventories		4			—			4			—		—
Other working capital		5			(3	)		2			—		—
Current tax		—			—			—			—		(1	)
Deferred tax		—			—			—			—		(11	)
Cash		6			—			6			—		—
Fair value of assets and liabilities		484			6			490			—		14
Goodwill arising on acquisition		237			12			249			—		(14	)
Consideration payable		721			18			739			—		—
Satisfied by:
Cash consideration paid		549			6			555			—		—
Contingent consideration payable		172			12			184			—		—
		721			18			739			—		—
Cash consideration paid for Casamigos		549			—			549			—		—
Cash consideration paid for other subsidiaries		—			6			6			—		—
Cash consideration paid for investments in associates		—			12			12			6		10
Cash consideration paid in respect of prior year acquisitions		—			22			22			23		4
Capital injection in associates		—			11			11			2		1
Cash acquired		(6	)		—			(6	)		—		—
Net cash outflow on acquisition of businesses		543			51			594			31		15
Purchase of shares of non-controlling interests		—			—			—			—		21
Total net cash outflow		543			51			594			31		36

Casamigos

On 15 August 2017 Diageo completed the purchase of 100% of the share capital of Casamigos Tequila, LLC (Casamigos), a super premium tequila based in the United States, for $1,000 million (£777 million) of which $300 million (£233 million) was contingent on Casamigos achieving certain performance targets. Casamigos contributed £55 million to sales, £49 million to net sales, £4 million to operating profit (net of transaction costs of £4 million) and £3 million profit after tax in the year ended 30 June 2018.

It is expected that the goodwill will be deductible for tax purposes. The net present value of the contingent consideration payable was $221 million (£172 million) at the date of acquisition and is expected to be paid in tranches over the next ten years. The goodwill arising on the acquisition of Casamigos represents expected revenue and cost synergies and the acquired workforce.

Other

On 14 March 2018 Diageo completed the acquisition of Belsazar GmbH, a premium aperitif from Germany’s Black Forest.

On 2 May 2018 Diageo acquired 100% of the intellectual property of Pierde Almas, an ultra premium mezcal.

Prior year acquisitions

In the two years ended 30 June 2017, Diageo has made a number of small acquisitions of brands, distribution rights and equity interests in various drinks businesses for a consideration of £16 million.

(b) Sale of businesses

In the two years ended 30 June 2018 and 30 June 2017 there were no significant disposals completed by the group. In the year ended 30 June 2016 the group completed the sale of Diageo’s Jamaica, Singapore and Malaysian beer interests to Heineken for a net consideration £510 million. The group also completed the sale of its wine interests in the United States and its UK based Percy Fox businesses for a consideration of £397 million. In addition, the group disposed of its South African associate interests, its shareholding in Central Glass Industries Limited (CGI), the Bouvet wine business in France and the group’s subsidiary in Argentina for aggregate consideration of £159 million.

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Intangible assets

12 Months Ended

Jun. 30, 2018

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Intangible assets

10. Intangible assets

Accounting policies

Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses. Acquired brands and other intangible assets are initially recognised at fair value when they are controlled through contractual or other legal rights, or are separable from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having indefinite useful economic lives, they are not amortised.

Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets acquired. Goodwill arising on acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising subsequent to 1 July 1998 has been capitalised.

Amortisation and impairment of intangible assets is based on their useful economic lives and are amortised on a straight-line basis over those lives and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised and are reviewed for impairment at least annually or when there is an indication that the assets may be impaired. Impairment reviews compare the net carrying value with the recoverable amount (where recoverable amount is the higher of fair value less cost to sell and value in use). Amortisation and any impairment write downs are charged to other operating expenses in the income statement.

Computer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years.

Critical accounting estimates and judgements

Assessment of the recoverable amount of an intangible asset, the useful economic life of an asset, or that an asset has an indefinite life, requires management judgement.

Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts. The tests are dependent on management’s estimates in respect of the forecasting of future cash flows. Judgement is required in determining the cash-generating units, the discount rates applicable to the future cash flows and what expected growth rates are reasonable. Such estimates and judgements are subject to change as a result of changing economic conditions and actual cash flows may differ from forecasts.

	Brands £ million			Goodwill £ million			Other intangibles £ million			Computer software £ million			Total £ million
Cost
At 30 June 2016		8,656			2,767			1,472			568			13,463
Exchange differences		159			24			34			4			221
Additions		—			—			—			47			47
Disposals		—			—			—			(41	)		(41	)
At 30 June 2017		8,815			2,791			1,506			578			13,690
Exchange differences		(347	)		(252	)		(24	)		(7	)		(630	)
Additions		478			249			—			35			762
Disposals		—			—			—			(2	)		(2	)
At 30 June 2018		8,946			2,788			1,482			604			13,820
Amortisation and impairment
At 30 June 2016		577			68			68			380			1,093
Exchange differences		9			—			1			3			13
Amortisation for the year		—			—			3			53			56
Disposals		—			—			—			(38	)		(38	)
At 30 June 2017		586			68			72			398			1,124
Exchange differences		(10	)		(8	)		—			(5	)		(23	)
Amortisation for the year		—			—			3			55			58
Exceptional impairment		40			50			—			—			90
Disposals		—			—			—			(1	)		(1	)
At 30 June 2018		616			110			75			447			1,248
Carrying amount
At 30 June 2018		8,330			2,678			1,407			157			12,572
At 30 June 2017		8,229			2,723			1,434			180			12,566
At 30 June 2016		8,079			2,699			1,404			188			12,370

(a) Brands

At 30 June 2018, the principal acquired brands, all of which are regarded as having indefinite useful economic lives, are as follows:

	Principal markets		2018 £ million		2017 £ million
Crown Royal whisky		United States		1,109		1,126
McDowell’s No.1 whisky, rum and brandy		India		1,077		1,156
Captain Morgan		Global		910		924
Johnnie Walker whisky		Global		625		625
Smirnoff vodka		Global		624		634
Windsor Premier whisky		Korea		591		583
Casamigos tequila		United States		458		—
Yenì Raki		Turkey		280		372
Shui Jing Fang Chinese white spirit		Greater China		259		257
Signature whisky		India		202		218
Don Julio tequila		United States		195		216
Bell’s whisky		United Kingdom		179		179
Black Dog whisky		India		171		184
Seagram’s 7 Crown whiskey		United States		169		171
Antiquity whisky		India		167		180
Zacapa rum		Global		145		147
Seagram’s VO whisky		United States		144		146
Gordon’s gin		Europe		119		119
Bagpiper whisky		India		116		124
Old Parr whisky		Global		101		101
Other brands				689		767
				8,330		8,229

The brands are protected by trademarks, which are renewable indefinitely, in all of the major markets where they are sold. There are not believed to be any legal, regulatory or contractual provisions that limit the useful lives of these brands. The nature of the premium drinks industry is that obsolescence is not a common issue, with indefinite brand lives being commonplace, and Diageo has a number of brands that were originally created more than 100 years ago. Accordingly, the Directors believe that it is appropriate that the brands are treated as having indefinite lives for accounting purposes and are therefore not amortised.

(b) Goodwill

For the purposes of impairment testing, goodwill has been attributed to the following cash-generating units:

	2018 £ million		2017 £ million
North America		390		207
Europe and Turkey
– Europe (excluding Turkey)		170		154
– Turkey		284		377
Africa – Africa Regional Markets		27		93
Latin America and Caribbean – Mexico		133		103
Asia Pacific
– Greater China		131		130
– India		1,462		1,572
Other cash-generating units		81		87
		2,678		2,723

Goodwill has arisen on the acquisition of businesses and includes synergies arising from cost savings, the opportunity to utilise Diageo’s distribution network to leverage marketing of the acquired products and the extension of the group’s portfolio of brands in new markets around the world.

(c) Other intangibles

Other intangibles principally comprise distribution rights. Diageo owns the global distribution rights for Ketel One vodka products in perpetuity, and the Directors believe that it is appropriate to treat these rights as having an indefinite life for accounting purposes. The carrying value at 30 June 2018 was £ 1,363 million (2017 – £1,385 million).

(d) Impairment testing

Impairment tests are performed annually, or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. Recoverable amounts are calculated based on the value in use approach. The value in use calculations are based on discounted forecast cash flows using the assumption that cash flows continue in perpetuity at the terminal growth rate of each country or region. The individual brands and their associated tangible fixed assets are aggregated and tested as separate cash-generating unit. Separate tests are carried out for each cash-generating unit (brand and attributable tangible fixed assets) and for each of the markets. Goodwill is attributed to each of the markets.

Cash flows

Cash flows are forecast for each cash-generating unit for the financial year, which is approved by management and reflects expectations of sales growth, operating costs and margin, based on past experience and external sources of information.

Discount rates

The discount rates used are the weighted average cost of capital which reflects the returns on government bonds and an equity risk premium adjusted for the drinks industry specific to the cash-generating units. Further risk premiums are applied according to management’s assessment of the risks in respect of the cash flows for a particular asset or cash-generating unit. The group applies post-tax discount rates to post-tax cash flows as the valuation calculated using this method closely approximates to applying pre-tax discount rates to pre-tax cash flows.

Long term growth rates, period of growth and terminal growth rates

The terminal growth rates applied at the end of the forecast period are the long term annual inflation rate of the country adjusted to take into account circumstances specific to the asset or cash-generating unit. For some intangible assets, management expects to achieve growth, driven by Diageo’s sales, marketing and distribution expertise, which is significantly in excess of the terminal growth rates for the applicable countries or regions. In these circumstances, the recoverable amount is calculated based on a five-year detailed plan and extended by up to an additional ten years using the annual growth rate of the real gross domestic product (GDP) of the country or region aggregated with its inflation rate, adjusted to take into account circumstances specific to the asset or cash-generating unit. In the calculation of the terminal value, the long term annual inflation rate of the country is used as the terminal growth rate.

For goodwill, these assumptions are based on the cash-generating unit or group of units to which the goodwill is attributed. For brands, they are based on a weighted average taking into account the country or countries where sales are made.

The pre-tax discount rates and terminal growth rates used for impairment testing are as follows:

	2018				2017
	Pre-tax discount  rate %		Terminal growth rate %		Pre-tax discount  rate %		Terminal growth rate %
North America – United States		10		2		10		2
Europe and Turkey
– Europe		7		2		8		2
– Turkey		16		5		16		5
Africa
– Africa Regional Markets		25		5		21		4
– Ethiopia		24		8		24		8
– South Africa		16		5		18		5
Latin America and Caribbean
– Brazil		15		4		15		5
– Mexico		16		3		17		3
Asia Pacific
– Korea		8		2		8		2
– Greater China		9		2		10		3
– India		14		5		14		6

In the year ended 30 June 2018, an impairment charge in respect of the Meta brand, the related tangible fixed assets, associated spare parts included in inventories and goodwill allocated to the Africa Regional Markets cash-generating unit of £40 million, £35 million, £3 million and £50 million, respectively, was charged to operating exceptional expenses. The impairment reduced the deferred tax liability, attributable to the brand and tangible fixed assets by £13 million resulting in a net exceptional loss of £115 million. Forecast cash flow assumptions were reduced principally due to the devaluation of the Ethiopian Birr increasing costs of imported raw materials and products, an increased competitive environment and political unrest in Ethiopia.

(e) Sensitivity to change in key assumptions

Impairment testing for the year ended 30 June 2018 has identified the following cash-generating units as being sensitive to reasonably possible changes in assumptions.

The table below shows the headroom at 30 June 2018 and the impairment charge that would be required if the assumptions in the calculation of their value in use were changed:

	Headroom £ million		1ppt increase in discount rate £ million			10% decrease in annual cash  flow £ million			2ppt decrease in annual growth rate £ million			5ppt decrease in annual growth rate in forecast period 2019-2029 £ million
India(i)		823		—			—			—			(907	)
Windsor Premier brand(ii)		170		—			—			(56	)		—
Africa Regional Markets(iii)		—		(15	)		(29	)		—			—

(i) As India is a developing market, where maturity is not expected for a number of years, a management forecast growth projection was used until 2029. The only change in the key assumptions considered reasonably possible that would result in an impairment of the cash-generating unit would be a 5ppt decrease in the annual growth rates throughout the forecast period. The cumulative effect of such a change is disclosed in the table above.

(ii) The Windsor Premier brand is disclosed as sensitive due to the challenging whisky market in Korea. The only change in the key assumptions considered reasonably possible that would result in an impairment of the brand would be a 2ppt decrease in the annual growth rate in perpetuity. The cumulative effect of such a change is disclosed in the table above.

(iii) Reasonably possible changes in the key assumptions that would result in further impairment of the goodwill allocated to Africa Regional Markets cash-generating unit would be a 1ppt increase in discount rate or a 10% decrease in annual cash flows.

It remains possible that changes in assumptions could arise in excess of those indicated in the table above.

For all intangibles with an indefinite life, other than those disclosed in the table above, management has concluded that no reasonable possible change in the key assumptions on which it has determined the recoverable amounts would cause their carrying values to exceed their recoverable amounts.

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Property, plant and equipment

12 Months Ended

Jun. 30, 2018

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Property, plant and equipment

11. Property, plant and equipment

Accounting policies

Land and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. Leaseholds are generally depreciated over the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual values over their expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives fall within the following ranges: buildings – 10 to 50 years; within plant and equipment casks and containers – 15 to 50 years; other plant and equipment – 5 to 25 years; fixtures and fittings – 5 to 10 years; and returnable bottles and crates – 5 to 10 years.

Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried at above their recoverable amounts.

Government grants

Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions pursuant to which they have been granted and that the grants will be received. Government grants in respect of property, plant and equipment are deducted from the asset that they relate to, reducing the depreciation expense charged to the income statement.

Leases

Where the group has substantially all the risks and rewards of ownership of an asset subject to a lease, the lease is treated as a finance lease. Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the lease. The corresponding liability to the lessor is included in other financial liabilities on the consolidated balance sheet. Lease payments are apportioned between interest expense and a reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Other leases are treated as operating leases, with payments and receipts taken to the income statement on a straight-line basis over the life of the lease.

	Land and buildings £ million			Plant and equipment £ million			Fixtures and fittings £ million			Returnable bottles and crates £ million			Under construction £ million			Total £ million
Cost
At 30 June 2016		1,483			3,783			122			516			310			6,214
Exchange differences		39			(12	)		(1	)		(14	)		—			12
Additions		39			117			14			28			261			459
Disposals		(28	)		(90	)		(10	)		(24	)		(3	)		(155	)
Transfers		95			160			2			17			(274	)		—
At 30 June 2017		1,628			3,958			127			523			294			6,530
Exchange differences		(36	)		(73	)		(6	)		(9	)		(7	)		(131	)
Sale of businesses		(2	)		—			—			—			—			(2	)
Additions		20			138			7			27			372			564
Disposals		(38	)		(84	)		(6	)		(25	)		(4	)		(157	)
Transfers		13			163			4			18			(223	)		(25	)
At 30 June 2018		1,585			4,102			126			534			432			6,779
Depreciation
At 30 June 2016		400			1,513			80			340			—			2,333
Exchange differences		3			(5	)		—			(7	)		—			(9	)
Depreciation charge for the year		57			196			13			39			—			305
Disposals		(12	)		(73	)		(7	)		(21	)		—			(113	)
At 30 June 2017		448			1,631			86			351			—			2,516
Exchange differences		(10	)		(32	)		(4	)		(4	)		—			(50	)
Depreciation charge for the year		48			210			15			37			—			310
Exceptional impairment		—			26			—			9			—			35
Sale of businesses		(1	)		—			—			—			—			(1	)
Disposals		(18	)		(74	)		(6	)		(22	)		—			(120	)
At 30 June 2018		467			1,761			91			371			—			2,690
Carrying amount
At 30 June 2018		1,118			2,341			35			163			432			4,089
At 30 June 2017		1,180			2,327			41			172			294			4,014
At 30 June 2016		1,083			2,270			42			176			310			3,881

(a) The net book value of land and buildings comprises freeholds of £1,073 million (2017 – £1,128 million), long leaseholds of £25 million (2017 – £31 million) and short leaseholds of £20 million (2017 – £21 million). Depreciation was not charged on £147 million (2017 – £196 million) of land.

(b) At 30 June 2018, tangible fixed assets held under finance leases amounted to £231 million (2017 – £250 million), principally in respect of plant and equipment. Depreciation on assets held under finance leases was £16 million (2017 – £15 million).

(c) Property, plant and equipment is net of a government grant of £140 million (2017 – £142 million) received in prior years in respect of the construction of a rum distillery in the United States Virgin Islands.

(d) Transfers in the year ended 30 June 2018 include £25 million transferred to assets held for sale.

(e) In the year ended 30 June 2018, an exceptional accelerated depreciation and impairment of £35 million in respect of Ethiopian tangible fixed assets was charged to other operating exceptional expenses. For further information see note 10(d).

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Other investments

12 Months Ended

Jun. 30, 2018

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Other investments

12. Other investments

Accounting policies

Other investments are such equity investments that are not classified as investments in associates or joint arrangements nor investments in subsidiaries. They are included in non-current assets. Subsequent to initial measurement, other investments are stated at fair value. Gains and losses arising from the changes in fair value are recognised in the income statement or in other comprehensive income on a case by case basis. Accumulated gains and losses included in other comprehensive income are not recycled to the income statement. Dividends from other investments are recognised in the consolidated income statement.

Loans receivable are non-derivative financial assets that are not classified as equity investments. They are subsequently measured either at amortised cost using the effective interest method less allowance for impairment or at fair value with gains and losses arising from changes in fair value recognised in the income statement or in other comprehensive income that are recycled to the income statement on the de-recognition of the asset. Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous experience, economic conditions and forward looking data. Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending on changes in the credit quality of the counterparty.

	Loans         £ million			Others         £ million			Total         £ million
Cost less allowances or fair value
At 30 June 2016		23			8			31
Exchange differences		1			—			1
Additions		2			—			2
Repayments and disposals		(5	)		—			(5	)
Fair value adjustment		—			2			2
At 30 June 2017		21			10			31
Exchange differences		(1	)		2			1
Additions		21			—			21
Repayments and disposals		(2	)		(2	)		(4	)
Fair value adjustment		(4	)		1			(3	)
At 30 June 2018		35			11			46

(a) At 30 June 2018, loans comprise £35 million (2017 – £18 million; 2016 – £21 million) of loans to customers and other third parties, after allowances of £108 million (2017 – £110 million; 2016 – £98 million), and £nil (2017 – £3 million; 2016 – £2 million) of loans to associates.

(b) Loans include a loan of $135 million (£104 million) provided by Standard Chartered Bank (SCB) to Watson Limited and guaranteed by a subsidiary of the group. The loan became due in May 2015 and was paid to SCB by Diageo in January 2016. The amount receivable from Watson Limited in respect of the guarantee has been fully provided for.

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Post employment benefits

12 Months Ended

Jun. 30, 2018

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Post employment benefits

13. Post employment benefits

Accounting policies

The group’s principal pension funds are defined benefit plans. In addition, the group has defined contribution plans, unfunded post employment medical benefit liabilities and other unfunded defined benefit post employment liabilities. For post employment plans, other than defined contribution plans, the amount charged to operating profit is the cost of accruing pension benefits promised to employees over the year, plus any changes arising on benefits granted to members by the group during the year. Net finance charges comprise the net deficit/asset on the plans at the beginning of the year, adjusted for cash flows in the year, multiplied by the discount rate for plan liabilities. The differences between the fair value of the plans’ assets and the present value of the plans’ liabilities are disclosed as an asset or liability on the consolidated balance sheet. Any differences due to changes in assumptions or experience are recognised in other comprehensive income. The amount of any pension fund asset recognised on the balance sheet is limited to any future refunds from the plan or the present value of reductions in future contributions to the plan.

Contributions payable by the group in respect of defined contribution plans are charged to operating profit as incurred.

Critical accounting estimates and judgements

Application of IAS 19 requires the exercise of estimate and judgement in relation to various assumptions.

Diageo determines the assumptions on a country by country basis in conjunction with its actuaries. Estimates are required in respect of uncertain future events including the life expectancy of members of the funds, salary and pension increases, future inflation rates, discount rates and employee and pensioner demographics. The application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and the balance sheet. There may be interdependencies between the assumptions.

Where there is an accounting surplus on a defined benefit plan management judgement is necessary to determine whether the group can obtain a refund of the surplus by reducing future contributions to the plan.

(a) Post employment benefit plans

The group operates a number of pension plans throughout the world, devised in accordance with local conditions and practices. The majority of the plans are defined benefit plans and are funded by payments to separately administered trusts or insurance companies. The group also operates a number of plans that are generally unfunded, primarily in the United States, which provide employees post employment medical benefits.

The principal plans are in the United Kingdom, Ireland and the United States where benefits are based on employees’ length of service and salary at retirement. All valuations were performed by independent actuaries using the projected unit credit method to determine pension costs. The most recent funding valuations of the significant defined benefit plans were carried out as follows:

Principal plans	Date of valuation
United Kingdom(i)		1 April 2015
Ireland(ii)		31 December 2015
United States		1 January 2018

(i) The triennial valuation of the Diageo Pension Scheme (the UK Scheme) as at 1 April 2018 is in progress and the results of this valuation are expected to be agreed by Diageo and the trustee later in calendar year 2018. The Diageo Pension Scheme (the UK Scheme) closed to new members in November 2005. Employees who have joined Diageo in the United Kingdom since the defined benefit scheme closed had been eligible to become members of the Diageo Lifestyle Plan (a cash balance defined benefit pension plan) until 1 January 2018. Since then new employees have been eligible to become members of a Diageo administered defined contribution plan. From 1 April 2018 there were changes to the future benefits earnt by employees in the UK Scheme. The changes impact the ongoing service cost but not the benefits earnt by the members as at 31 March 2018.

(ii) The Guinness Ireland Group Pension Scheme in Ireland (the Irish Scheme) closed to new members in May 2013. Employees who have joined Diageo in Ireland since the defined benefit scheme closed have been eligible to become members of Diageo administered defined contribution plans.

The assets of the UK and Irish pension plans are held in separate trusts administered by trustees who are required to act in the best interests of the plans’ beneficiaries. For the UK Scheme, the trustee is Diageo Pension Trust Limited. As required by legislation, one-third of the directors of the Trust are nominated by the members of the UK Scheme, member nominated directors are appointed from both the pensioner member community and the active member community. For the Irish Scheme Diageo Ireland makes four nominations and appoints three further candidates nominated by representative groupings.

The amounts charged to the consolidated income statement for the group’s defined benefit post employment plans and the consolidated statement of comprehensive income for the three years ended 30 June 2018 are as follows:

	2018 £ million			2017 £ million			2016 £ million
Current service cost and administrative expenses		(123	)		(133	)		(112	)
Past service gains		33			14			1
Gains on curtailments and settlements		6			10			1
Charge to operating profit		(84	)		(109	)		(110	)
Net finance charge in respect of post employment plans		(11	)		(25	)		(5	)
Charge before taxation(i)		(95	)		(134	)		(115	)
Actual returns less amounts included in finance income		312			973			61
Experience (losses) / gains		(30	)		58			91
Changes in financial assumptions		108			(466	)		(1,066	)
Changes in demographic assumptions		69			86			62
Other comprehensive income/(loss)		459			651			(852	)
Changes in the surplus restriction		(2	)		1			—
Total other comprehensive income/(loss)		457			652			(852	)

(i) The charge before taxation in respect of the following countries is:

	2018 £ million			2017 £ million			2016 £ million
United Kingdom		(49	)		(67	)		(50	)
Ireland		1			(15	)		(19	)
United States		(29	)		(34	)		(27	)
Other		(18	)		(18	)		(19	)
		(95	)		(134	)		(115	)

In addition to the charge in respect of defined benefit post employment plans, contributions to the group’s defined contribution plans were £18 million (2017 – £17 million; 2016 – £16 million).

The movement in the net (deficit)/surplus for the two years ended 30 June 2018 is set out below:

	Plan assets £ million			Plan liabilities £ million			Net (deficit)/surplus £ million
At 30 June 2016		8,256			(9,447	)		(1,191	)
Exchange differences		99			(135	)		(36	)
Charge before taxation		173			(307	)		(134	)
Other comprehensive income/(loss)(i)		973			(322	)		651
Contributions by the group		220			—			220
Employee contributions		8			(8	)		—
Benefits paid		(503	)		503			—
At 30 June 2017		9,226			(9,716	)		(490	)
Exchange differences		(1	)		1			—
Charge before taxation		227			(322	)		(95	)
Other comprehensive income(i)		312			147			459
Contributions by the group		192			—			192
Employee contributions		6			(6	)		—
Benefits paid		(652	)		652			—
At 30 June 2018		9,310			(9,244	)		66

(i) Excludes surplus restriction.

The plan assets and liabilities by type of post employment benefit and country is as follows:

	2018					2017
	Plan assets £ million		Plan liabilities £ million			Plan assets £ million		Plan liabilities £ million
Pensions
United Kingdom		6,792		(6,032	)		6,789		(6,680	)
Ireland		1,745		(2,148	)		1,663		(1,952	)
United States		525		(505	)		522		(516	)
Other		180		(215	)		178		(215	)
Post employment medical		1		(259	)		2		(263	)
Other post employment		67		(85	)		72		(90	)
		9,310		(9,244	)		9,226		(9,716	)

The balance sheet analysis of the post employment plans is as follows:

	2018					2017
	Non- current assets(i) £ million		Non- current liabilities £ million			Non- current assets(i) £ million		Non- current liabilities £ million
Funded plans		935		(593	)		281		(492	)
Unfunded plans		—		(279	)		—		(280	)
		935		(872	)		281		(772	)

(i) Includes surplus restriction of £3 million (2017 – £1 million).

(b) Principal risks and assumptions

The material post employment plans are not exposed to any unusual, entity specific or scheme specific risks but there are general risks:

Inflation – the majority of the plans’ obligations are linked to inflation. Higher inflation will lead to increased liabilities which is partially offset by the plans holding inflation linked gilts, swaps and caps against the level of inflationary increases.

Interest rate – The plan liabilities are determined using discount rates derived from yields on AA-rated corporate bonds. A decrease in corporate bond yields will increase plan liabilities though this will be partially offset by an increase in the value of the bonds held by the post employment plans.

Mortality – The majority of the obligations are to provide benefits for the life of the members and their partners, so any increase in life expectancy will result in an increase in the plans’ liabilities.

Asset returns – Assets held by the pension plans are invested in a diversified portfolio of equities, bonds and other assets. Volatility in asset values will lead to movements in the net deficit/surplus reported in the consolidated balance sheet for post employment plans which in addition will also impact the post employment expense in the consolidated income statement.

The following weighted average assumptions were used to determine the group’s deficit/surplus in the main post employment plans at 30 June in the relevant year. The assumptions used to calculate the charge/credit in the consolidated income statement for the year ended 30 June are based on the assumptions disclosed as at the previous 30 June.

	United Kingdom						Ireland						United States(i)
	2018 %		2017 %		2016 %		2018 %		2017 %		2016 %		2018 %		2017 %		2016 %
Rate of general increase in salaries(ii)		4.3		4.4		4.0		3.2		3.0		2.8		—		—		—
Rate of increase to pensions in payment		3.3		3.4		3.1		2.0		1.7		1.6		—		—		—
Rate of increase to deferred pensions		2.1		2.2		1.8		1.8		1.6		1.4		—		—		—
Discount rate for plan liabilities		2.8		2.6		2.9		1.7		2.1		1.4		4.1		3.7		3.5
Inflation - CPI		2.1		2.2		1.8		1.8		1.6		1.4		2.1		1.8		1.4
Inflation - RPI		3.1		3.2		2.8		—		—		—		—		—		—

(i) The salary increase assumption in the United States is not a significant assumption as only a minimal amount of members’ pension entitlement is dependent on a member’s projected final salary.

(ii) The salary increase assumptions include an allowance for age related promotional salary increases.

For the principal UK and Irish pension funds, the table below illustrates the expected age at death of an average worker who retires currently at the age of 65, and one who is currently aged 45 and subsequently retires at the age of 65:

	United Kingdom(i)						Ireland(ii)						United States
	2018 Age		2017 Age		2016 Age		2018 Age		2017 Age		2016 Age		2018 Age		2017 Age		2016 Age
Retiring currently at age 65
Male		86.1		86.3		86.4		86.4		86.3		86.2		86.0		85.9		86.3
Female		88.4		88.1		88.3		89.2		89.0		88.9		88.0		87.9		88.3
Currently aged 45, retiring at age 65
Male		88.2		88.2		88.6		89.4		89.2		89.1		87.6		87.5		88.0
Female		90.5		90.5		91.2		92.1		91.9		91.8		89.6		89.5		89.9

(i) Based on the CMI’s latest SAPS mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements.

(ii) Based on the ‘00’ series of mortality tables with scaling factors based on the experience of the plan and with suitable future improvements.

For the significant assumptions, the following sensitivity analyses estimate the potential impacts on the consolidated income statement for the year ended 30 June 2018 and on the plan liabilities at 30 June 2018:

	United Kingdom									Ireland									United States and other
Benefit/(cost)	Operating profit £ million			Profit after taxation £ million			Plan liabilities(i) £ million			Operating profit £ million			Profit after taxation £ million			Plan liabilities(i) £ million			Operating profit £ million			Profit after taxation £ million			Plan liabilities(i) £ million
Effect of 0.5% increase in discount rate		5			21			512			3			4			190			1			1			32
Effect of 0.5% decrease in discount rate		(6	)		(19	)		(575	)		(4	)		(4	)		(220	)		(1	)		(1	)		(35	)
Effect of 0.5% increase in inflation		(5	)		(15	)		(462	)		(4	)		(6	)		(197	)		—			(1	)		(12	)
Effect of 0.5% decrease in inflation		5			13			408			3			5			169			—			1			11
Effect of one year increase in life expectancy		(1	)		(6	)		(259	)		(1	)		(2	)		(89	)		—			(1	)		(25	)

(i) The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans.

(1) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each sensitivity is calculated on a change in the key assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation linked assumptions (e.g. pension increases and salary increases where appropriate).

Guaranteed minimum pension in the United Kingdom

Prior to 6 April 1997, individuals who contracted out of the UK State Second Pension were entitled to a Guaranteed Minimum Pension (GMP). Men accrued GMP at different rates on different terms to women. There is a current court case, not involving Diageo, challenging the potential unequal treatment of GMP for men and women which may lead to additional liabilities in the DPS. No allowance has been made for any additional provision which may be required in relation to GMP equalisation in the IAS 19 defined benefit obligation as at 30 June 2018 as it not possible to meaningfully quantify any additional provision pending the outcome of the legal proceedings.

(c) Investment and hedging strategy

The investment strategy for the group’s funded post employment plans is determined locally by the trustees of the plan and/or Diageo, as appropriate, and takes account of the relevant statutory requirements. The objective of the investment strategy is to achieve a target rate of return in excess of the movement on the liabilities, whilst taking an acceptable level of investment risk relative to the liabilities. This objective is implemented by using the funds of the plans to invest in a variety of asset classes that are expected over the long term to deliver a target rate of return. The majority of the investment strategies have significant amounts allocated to equities, with the intention that this will result in the ongoing cost to the group of the post employment plans being lower over the long term, within acceptable boundaries of risk. Significant amounts are invested in bonds in order to provide a natural hedge against movements in the liabilities of the plans. At 30 June 2018, approximately 42% and 79% (2017 – 38% and 78%) of the UK Scheme’s liabilities were hedged against future movements in interest rates and inflation, respectively, through the combined effect of bonds and swaps. At 30 June 2018, approximately 45% and 72% (2017 – 36% and 68%) of the Irish Scheme’s liabilities were hedged against future movements in interest rates and inflation, respectively, through the combined effect of bonds and swaps.

The discount rates used are based on the yields of high quality fixed income investments. For the UK plans, which represent approximately 65% of total plan liabilities, the discount rate is determined by reference to the yield curves of AA-rated corporate bonds for which the timing and amount of cash outflows are similar to those of the plans. A similar process is used to determine the discount rates used for the non-UK plans.

An analysis of the fair value of the plan assets is as follows:

	2018										2017
	United Kingdom £ million			Ireland £ million		United States and other £ million		Total £ million			United Kingdom £ million			Ireland £ million		United States and other £ million		Total £ million
Equities
Quoted		758			316		242		1,316			902			367		296		1,565
Unquoted and private equity		399			1		18		418			365			2		19		386
Bonds
Fixed-interest government		133			103		42		278			193			153		50		396
Inflation-linked government		1,063			262		1		1,326			1,036			182		—		1,218
Investment grade corporate		934			344		363		1,641			998			277		337		1,612
Non-investment grade		147			49		16		212			230			51		17		298
Loan securities		1,112			303		—		1,415			956			222		—		1,178
Repurchase agreements		2,799			—		—		2,799			2,812			—		—		2,812
Liability driven investment (LDI)		139			50		—		189			122			69		—		191
Property – unquoted		689			94		1		784			641			121		1		763
Hedge funds		68			138		—		206			—			151		—		151
Interest rate and inflation swaps		(1,415	)		70		—		(1,345	)		(1,440	)		41		—		(1,399	)
Cash and other		(34	)		15		90		71			(26	)		27		54		55
Total bid value of assets		6,792			1,745		773		9,310			6,789			1,663		774		9,226

(1) The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested in the long term.

(2) At 30 June 2017 the Irish Scheme’s plan assets included £0.5 million invested in the ordinary shares of Diageo plc.

Total cash contributions by the group to all post employment plans in the year ending 30 June 2019 are estimated to be approximately £200 million.

(d) Deficit funding arrangements

UK plans

In the year ended 30 June 2011 the group established a Pension Funding Partnership (PFP) in respect of the UK Scheme. Whisky inventory was transferred into the partnership but the group retains control over the partnership which at 30 June 2018 held inventory with a book value of £647 million (2017 – £532 million). The partnership is fully consolidated in the group financial statements. The UK Scheme has a limited interest in the partnership and, as a partner, is entitled to a distribution from the profits of the partnership which for the year ended 30 June 2018 was £25 million (2017 – £25 million) and is expected to be approximately the same amount for the next six years.

In 2024 the group will be required, dependent upon the funding position of the UK Scheme at that time, to pay an amount not greater than the actuarial deficit at that time, up to a maximum of £430 million in cash, to purchase the UK Scheme’s interest in the partnership. If the UK Scheme is in surplus at an actuarial triennial valuation without allowing for the value of the PFP, then Diageo can exit the PFP with the agreement of the trustees. The group has also agreed to make conditional contributions if the deficit at the 2018 actuarial triennial valuation is in excess of £84 million. These additional contributions would be payable to the UK Scheme by 31 March 2019, or within one month of completion of the 2018 valuation if later.

Irish plans

The group has also agreed a deficit funding arrangement with the trustees of the Irish Scheme under which it contributes to the Irish Scheme €23 million (£20 million) per annum until the year ending 30 June 2028. The agreement also provides for additional cash contributions into escrow of up to €135 million (£119 million) if the deficit is not reduced at each triennial valuation to agreed limits up to 2027. As part of this funding plan, Diageo has also granted to the Irish Scheme a contingent asset comprising mortgages over certain land and buildings and fixed and floating charges over certain receivables of the group up to a value of €200 million (£177 million). Following the actuarial triennial valuation as of 31 December 2015, the group made additional cash contributions of €32 million (£28 million) during the year ended 30 June 2017, €9 million (£8 million) in the year ended 30 June 2018 and is expected to pay €9 million (£8 million) in the year ending 30 June 2019. The group has also agreed to make conditional payments up to a maximum of €29 million (£26 million) if the deficit on the plan is greater than €232 million (£205 million) at the 2018 actuarial triennial valuation. Any conditional payments would be made equally over the three years after the 31 December 2018 actuarial triennial valuation has been agreed.

(e) Timing of benefit payments

The following table provides information on the timing of the benefit payments and the average duration of the defined benefit obligations and the distribution of the timing of benefit payments:

	United Kingdom				Ireland				United States
	2018 £ million		2017 £ million		2018 £ million		2017 £ million		2018 £ million		2017 £ million
Maturity analysis of benefits expected to be paid
Within one year		575		347		75		76		49		57
Between 1 to 5 years		1,144		1,079		370		374		187		243
Between 6 to 15 years		2,575		2,800		751		742		380		366
Between 16 to 25 years		2,196		2,511		727		701		242		234
Beyond 25 years		3,325		4,201		1,260		1,170		207		198
Total		9,815		10,938		3,183		3,063		1,065		1,098
	years		years		years		years		years		years
Average duration of the defined benefit obligation		19		19		19		19		10		10

The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including inflation. They are disclosed undiscounted and therefore appear large relative to the discounted value of the plan liabilities recognised in the consolidated balance sheet. They are in respect of benefits that have accrued at the balance sheet date and make no allowance for any benefits accrued subsequently.

(f) Related party disclosures

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

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Working capital

12 Months Ended

Jun. 30, 2018

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Working capital

14. Working capital

Accounting policies

Inventories are stated at the lower of cost and net realisable value. Cost includes raw materials, direct labour and expenses, an appropriate proportion of production and other overheads, but not borrowing costs. Cost is calculated at the weighted average cost incurred in acquiring inventories. Maturing inventories which are retained for more than one year are classified as current assets, as they are expected to be realised in the normal operating cycle.

Trade and other receivables are initially recognised at fair value less transaction costs and subsequently carried at amortised cost less any allowance for discounts and doubtful debts. Trade receivables arise from contracts with customers, and are recognised when performance obligations are satisfied, and the consideration due is unconditional as only the passage of time is required before the payment is received. Allowance losses are calculated by reviewing lifetime expected credit losses using historic and forward-looking data on credit risk.

Trade and other payables are initially recognised at fair value including transaction costs and subsequently carried at amortised costs.

Provisions are liabilities of uncertain timing or amount. A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are calculated on a discounted basis. The carrying amounts of provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

(a) Inventories

	2018 £ million		2017 £ million
Raw materials and consumables		321		327
Work in progress		44		45
Maturing inventories		4,028		3,820
Finished goods and goods for resale		622		596
		5,015		4,788

Maturing inventories include whisk(e)y, rum, tequila and Chinese white spirits. The following amounts of inventories are expected to be utilised after more than one year:

	2018 £ million		2017 £ million
Raw materials and consumables		12		8
Maturing inventories		3,253		3,194
		3,265		3,202

Inventories are disclosed net of provisions for obsolescence, an analysis of which is as follows:

	2018 £ million			2017 £ million			2016 £ million
Balance at beginning of the year		88			73			53
Exchange differences		(2	)		(1	)		5
Income statement charge		—			41			33
Utilised		(15	)		(25	)		(15	)
Sale of businesses		—			—			(3	)
		71			88			73

(b) Trade and other receivables

	2018				2017
	Current assets £ million		Non-current assets  £ million		Current assets £  million		Non-current assets  £ million
Trade receivables		2,152		—		2,130		—
Interest receivable		14		—		19		—
Other receivables		335		38		244		45
Prepayments		157		8		159		13
Accrued income		20		—		40		—
		2,678		46		2,592		58

At 30 June 2018, approximately 13%, 20% and 12% of the group’s trade receivables of £2,152 million are due from counterparties based in the United Kingdom, the United States and India, respectively. Accrued income primarily represents amounts receivable from customers in respect of performance obligations satisfied but not yet invoiced.

The aged analysis of trade receivables, net of allowances, is as follows:

	2018 £ million		2017 £ million
Not overdue		2,067		2,026
Overdue 1 – 30 days		19		28
Overdue 31 – 60 days		19		19
Overdue 61 – 90 days		13		11
Overdue 91 – 180 days		21		21
Overdue more than 180 days		13		25
		2,152		2,130

Trade and other receivables are disclosed net of allowance for doubtful debts, an analysis of which is as follows:

	2018 £ million			2017 £ million			2016 £ million
Balance at beginning of the year		129			83			71
Exchange differences		(4	)		(1	)		5
Income statement charge		18			54			15
Written off		(46	)		(7	)		(8	)
		97			129			83

The write-off for the year ended 30 June 2018 includes £32 million in respect of a claim made by a customer in India which was charged to the income statement in the year ended 30 June 2017. See note 4(c).

(c) Trade and other payables

	2018				2017
	Current liabilities £ million		Non-current liabilities  £ million		Current liabilities £ million		Non-current liabilities  £ million
Trade payables		1,514		—		1,365		—
Interest payable		104		—		75		—
Tax and social security excluding income tax		638		2		543		2
Other payables		471		204		487		16
Accruals		1,165		3		1,064		6
Deferred income		37		—		29		—
Dividend payable to non-controlling interests		21		—		—		—
		3,950		209		3,563		24

Interest payable at 30 June 2018 includes interest on non-derivative financial instruments of £100 million (2017 – £68 million). Deferred income represents amounts paid by customers in respect of performance obligations not yet satisfied. Non-current liabilities includes £175 million in respect of the net present value of contingent consideration in respect of the acquisition of Casamigos.

(d) Provisions

	Thalidomide £ million			Other £ million			Total £ million
At 30 June 2017		223			192			415
Exchange differences		—			(12	)		(12	)
Disposal of businesses		—			(1	)		(1	)
Provisions charged during the year		—			53			53
Provisions utilised during the year		(13	)		(50	)		(63	)
Transfers to other payables		—			(2	)		(2	)
Unwinding of discounts		7			—			7
At 30 June 2018		217			180			397
Current liabilities		14			95			109
Non-current liabilities		203			85			288
		217			180			397

(a) Provisions have been established in respect of the discounted value of the group’s commitment to the UK and Australian Thalidomide Trusts. These provisions will be utilised over the period of the commitments up to 2037.

(b) The largest item in other provisions at 30 June 2018 is £48 million in respect of employee deferred compensation plans which will be utilised when employees leave the group.

Risk management and capital structure

Introduction

This section sets out the policies and procedures applied to manage the group’s capital structure and the financial risks the group is exposed to. Diageo considers the following components of its balance sheet to be capital: borrowings and equity. Diageo manages its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels.

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Financial instruments and risk management

12 Months Ended

Jun. 30, 2018

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Financial instruments and risk management

15. Financial instruments and risk management

Accounting policies

Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction costs. For those financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date.

The group classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets and liabilities at fair value through profit and loss and financial assets at fair value through other comprehensive income.

The accounting policies for other investments and loans are described in note 12, for trade and other receivables and payables in note 14 and for cash and cash equivalents in note 16.

Financial assets and liabilities at fair value through profit or loss include derivative assets and liabilities. Where financial assets or liabilities are eligible to be carried at either amortised cost or fair value through other comprehensive income the group does not apply the fair value option.

Derivative financial instruments are carried at fair value using a discounted cash flow model based on market data applied consistently for similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken to the income statement as they arise.

Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the effective interest rate method.

Hedge accounting

The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges), highly probable forecast transactions or the cash flow risk from a change in exchange or interest rates (cash flow hedges) and hedges of net investments in foreign operations (net investment hedges). The designated portion of the hedging instruments is included in other financial assets and liabilities on the consolidated balance sheet. The effectiveness of such hedges is assessed at inception and at least on a quarterly basis, using prospective testing. Methods used for testing effectiveness include dollar offset, critical terms, regression analysis and hypothetical models.

Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed. Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair value of the underlying hedged asset or liability.

If such a hedge relationship no longer meets hedge accounting criteria, fair value movements on the derivative continue to be taken to the income statement while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement over its remaining life using the effective interest rate method.

Cash flow hedges are used to hedge the foreign currency risk of highly probable future foreign currency cash flows, as well as the cash flow risk from changes in exchange or interest rates. The effective portion of the gain or loss on the hedges is recognised in other comprehensive income, while any ineffective part is recognised in the income statement. Amounts recorded in other comprehensive income are recycled to the income statement in the same period in which the underlying foreign currency or interest exposure affects the income statement.

Net investment hedges take the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on translation of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as hedging instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to the extent that they are effective, with any ineffectiveness taken to the income statement. Foreign exchange contracts hedging net investments are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness taken to the income statement.

The group’s funding, liquidity and exposure to foreign currency and interest rate risks are managed by the group’s treasury department. The treasury department uses a range of financial instruments to manage these underlying risks.

Treasury operations are conducted within a framework of board approved policies and guidelines, which are recommended and monitored by the finance committee, chaired by the Chief Financial Officer. The policies and guidelines include benchmark exposure and/or hedge cover levels for key areas of treasury risk which are periodically reviewed by the Board following, for example, significant business, strategic or accounting changes. The framework provides for limited defined levels of flexibility in execution to allow for the optimal application of the board approved strategies. Transactions arising from the application of this flexibility are carried at fair value, gains or losses are taken to the income statement as they arise and are separately monitored on a daily basis using Value at Risk analysis. In the years ended 30 June 2018 and 30 June 2017 gains and losses on these transactions were not material. The group does not use derivatives for speculative purposes. All transactions in derivative financial instruments are initially undertaken to manage the risks arising from underlying business activities.

The group purchases insurance for commercial or, where required, for legal or contractual reasons. In addition, the group retains insurable risk where external insurance is not considered an economic means of mitigating these risks.

The finance committee receives a monthly report on the key activities of the treasury department, which would identify any exposures which differ from the defined benchmarks, should they arise.

(a) Currency risk

The group presents its consolidated financial statements in sterling and conducts business in many currencies. As a result, it is subject to foreign currency risk due to exchange rate movements, which will affect the group’s transactions and the translation of the results and underlying net assets of its operations. To manage the currency risk the group uses certain financial instruments. Where hedge accounting is applied, hedges are documented and tested for effectiveness on an ongoing basis. Diageo expects hedges entered into to continue to be effective and therefore does not expect the impact of ineffectiveness on the consolidated income statement to be material.

Hedge of net investment in foreign operations

The group hedges a certain portion of its exposure to fluctuations in the sterling value of its foreign operations by designating borrowings held in foreign currencies and using foreign currency spots, forwards, swaps and other financial derivatives. For the year ended 30 June 2018 the group’s policy was to maintain total net investment Value at Risk below £1.5 billion, where Value at Risk is defined as the maximum amount of loss over a one-year period with a 95% probability confidence level.

At 30 June 2018 foreign currency borrowings and financial derivatives designated in net investment hedge relationships amounted to £5,238 million (2017 – £6,746 million).

Hedge of foreign currency debt

The group uses cross currency interest rate swaps to hedge the foreign currency risk associated with certain foreign currency denominated borrowings.

Transaction exposure hedging

The group’s policy is to hedge up to 24 months forecast transactional foreign currency risk on the net US dollar exposure of the group targeting 75% coverage for the current financial year and up to 18 months for other currency pairs. The group’s exposure to foreign currency risk arising principally on forecasted sales transactions is managed using forward agreements.

(b) Interest rate risk

The group has an exposure to interest rate risk, arising principally on changes in US dollar, euro and sterling interest rates. To manage interest rate risk, the group manages its proportion of fixed to floating rate borrowings within limits approved by the Board, primarily through issuing fixed and floating rate borrowings and commercial paper, and by utilising interest rate swaps. These practices aim to minimise the group’s net finance charges with acceptable year on year volatility. To facilitate operational efficiency and effective hedge accounting, the group’s policy is to maintain fixed rate borrowings within a band of 40% to 60% of forecast net borrowings. For these calculations, net borrowings exclude interest rate related fair value adjustments. The majority of the group’s existing interest rate derivatives are designated as hedges and are expected to be effective. Fair value of these derivatives is recognised in the income statement, along with any changes in the relevant fair value of the underlying hedged asset or liability. The group’s net borrowings interest rate profile as at 30 June 2018 and 2017 is as follows:

	2018				2017
	£ million		%		£ million		%
Fixed rate		4,739		52		4,443		57
Floating rate(i)		4,245		47		3,336		42
Impact of financial derivatives and fair value adjustments		107		1		113		1
Net borrowings		9,091		100		7,892		100

(i) The floating rate portion of net borrowings includes cash and cash equivalents, collaterals, floating rate loans and bonds, bank overdrafts and finance lease obligations.

The table below sets out the average monthly net borrowings and effective interest rate:

Average monthly net borrowings						Effective interest rate
2018                          £ million		2017                          £ million		2016                          £ million		2018                                  %		2017                                  %		2016                                  %
	9,063		8,771		9,245		2.6		3.5		3.3

(1) For this calculation, net interest charge excludes fair value adjustments to derivative financial instruments and borrowings and average monthly net borrowings includes the impact of interest rate swaps that are no longer in a hedge relationship but excludes the market value adjustment for cross currency interest rate swaps.

(c) Commodity price risk

Commodity price risk is managed in line with the principles approved by the Board either through long term purchase contracts with suppliers or, where appropriate, derivative contracts. The group policy is to maintain the Value at Risk of commodity price risk arisen from commodity exposures below 75 bps of forecast gross margin in any given financial year. Where derivative contracts are used the commodity price risk exposure is hedged up to 24 months of forecast volume through exchange-traded and over-the-counter contracts (futures, forwards, swaps and options) and cash flow hedge accounting is applied.

(d) Market risk sensitivity analysis

The group uses a sensitivity analysis that estimates the impacts on the consolidated income statement and other comprehensive income of either an instantaneous increase or decrease of 0.5% in market interest rates or a 10% strengthening or weakening in sterling against all other currencies, from the rates applicable at 30 June 2018 and 30 June 2017, for each class of financial instruments with all other variables remaining constant. The sensitivity analysis excludes the impact of market risks on the net post employment benefit liabilities and assets, and corporate tax payable. This analysis is for illustrative purposes only, as in practice interest and foreign exchange rates rarely change in isolation.

The sensitivity analysis estimates the impact of changes in interest and foreign exchange rates. All hedges are expected to be highly effective for this analysis and it considers the impact of all financial instruments including financial derivatives, cash and cash equivalents, borrowings and other financial assets and liabilities. The results of the sensitivity analysis should not be considered as projections of likely future events, gains or losses as actual results in the future may differ materially due to developments in the global financial markets which may cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table below.

	Impact on income statement gain/(loss)						Impact on consolidated comprehensive income gain/(loss)(i) (ii)
	2018 £ million			2017 £ million			2018 £ million			2017 £ million
0.5% decrease in interest rates		(19	)		(20	)		(18	)		(12	)
0.5% increase in interest rates		19			20			19			13
10% weakening of sterling		(15	)		(19	)		(833	)		(835	)
10% strengthening of sterling		11			16			680			684

(i) The impact on foreign currency borrowings and derivatives in net investment hedges is largely offset by the foreign exchange difference arising on the translation of net investments.

(ii) The impact on the consolidated statement of comprehensive income includes the impact on the income statement.

(e) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. Credit risk arises on cash balances (including bank deposits and cash and cash equivalents), derivative financial instruments and credit exposures to customers, including outstanding loans, trade and other receivables, financial guarantees and committed transactions.

The carrying amount of financial assets represents the group’s exposure to credit risk at the balance sheet date as disclosed in section (i), excluding the impact of any collateral held or other credit enhancements. A financial asset is in default when the counterparty fails to pay its contractual obligations. Financial assets are written off when there is no reasonable expectation of recovery.

Credit risk is managed separately for financial and business related credit exposures.

Financial credit risk

Diageo aims to minimise its financial credit risk through the application of risk management policies approved and monitored by the Board. Counterparties are predominantly limited to major banks and financial institutions, primarily with a long term credit rating within the A band or better, and the policy restricts the exposure to any one counterparty by setting credit limits taking into account the credit quality of the counterparty. The group’s policy is designed to ensure that individual counterparty limits are adhered to and that there are no significant concentrations of credit risk. The Board also defines the types of financial instruments which may be transacted. The credit risk arising through the use of financial instruments for currency and interest rate risk management is estimated with reference to the fair value of contracts with a positive value, rather than the notional amount of the instruments themselves. Diageo annually reviews the credit limits applied and regularly monitors the counterparties’ credit quality reflecting market credit conditions.

When derivative transactions are undertaken with bank counterparties, the group may, where appropriate, enter into certain agreements with such bank counterparties whereby the parties agree to post cash collateral for the benefit of the other if the net valuations of the derivatives are above a predetermined threshold. At 30 June 2018, the collateral held under these agreements amounted to $71 million (£54 million) (2017 – $96 million (£74 million)).

Business related credit risk

Loan, trade and other receivables exposures are managed locally in the operating units where they arise and active risk management is applied, focusing on country risk, credit limits, ongoing credit evaluation and monitoring procedures. There is no significant concentration of credit risk with respect to loans, trade and other receivables as the group has a large number of customers which are internationally dispersed.

(f) Liquidity risk

Liquidity risk is the risk that Diageo may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The group uses short term commercial paper to finance its day-to-day operations. The group’s policy with regard to the expected maturity profile of borrowings is to limit the amount of such borrowings maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the level of commercial paper to 30% of gross borrowings less money market demand deposits. In addition, the group’s policy is to maintain backstop facilities with relationship banks to support commercial paper obligations.

The following tables provide an analysis of the anticipated contractual cash flows including interest payable for the group’s financial liabilities and derivative instruments on an undiscounted basis. Where interest payments are calculated at a floating rate, rates of each cash flow until maturity of the instruments are calculated based on the forward yield curve prevailing at the respective year ends. The gross cash flows of cross currency swaps are presented for the purposes of this table. All other derivative contracts are presented on a net basis. Financial assets and liabilities are presented gross in the consolidated balance sheet, although in practice, the group uses netting arrangements to reduce its liquidity requirements on these instruments.

Contractual cash flows

	Due within 1 year £ million			Due between 1 and 3  years £ million			Due between 3 and 5 years £ million			Due after 5 years £ million			Total £ million			Carrying amount at balance sheet date £ million
2018
Borrowings(i)		(1,828	)		(2,055	)		(2,117	)		(3,950	)		(9,950	)		(9,902	)
Interest on borrowings(i), (iii)		(341	)		(472	)		(382	)		(1,385	)		(2,580	)		(100	)
Finance lease capital repayments		(30	)		(66	)		(34	)		(25	)		(155	)		(155	)
Finance lease future interest payments		(7	)		(9	)		(5	)		(1	)		(22	)		—
Trade and other financial liabilities(ii)		(3,117	)		(28	)		(1	)		(230	)		(3,376	)		(3,318	)
Non-derivative financial liabilities		(5,323	)		(2,630	)		(2,539	)		(5,591	)		(16,083	)		(13,475	)
Cross currency swaps (gross)
– Receivable		60			121			840			1,487			2,508			—
– Payable		(41	)		(83	)		(824	)		(1,070	)		(2,018	)		—
Other derivative instruments (net)		(1	)		(30	)		(2	)		5			(28	)		—
Derivative instruments (iii)		18			8			14			422			462			90
2017
Borrowings(i)		(2,458	)		(1,253	)		(1,350	)		(3,998	)		(9,059	)		(9,042	)
Interest on borrowings(i), (iii)		(334	)		(421	)		(366	)		(1,461	)		(2,582	)		(68	)
Finance lease capital repayments		(26	)		(74	)		(41	)		(42	)		(183	)		(183	)
Finance lease future interest payments		(9	)		(12	)		(7	)		(3	)		(31	)		—
Trade and other financial liabilities(ii)		(2,693	)		(34	)		(173	)		(3	)		(2,903	)		(2,889	)
Non-derivative financial liabilities		(5,520	)		(1,794	)		(1,937	)		(5,507	)		(14,758	)		(12,182	)
Cross currency swaps (gross)
– Receivable		61			122			122			2,302			2,607			—
– Payable		(41	)		(82	)		(82	)		(1,853	)		(2,058	)		—
Other derivative instruments (net)		(94	)		13			2			—			(79	)		—
Derivative instruments (iii)		(74	)		53			42			449			470			110

(i) For the purpose of these tables above, borrowings are defined as gross borrowings excluding finance lease liabilities and fair value of derivative instruments as disclosed in note 16.

(ii) Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32.

(iii) Carrying amount of interest on borrowings and interest on derivatives and interest on other payable is included within interest payable in note 14.

The group had available undrawn committed bank facilities as follows:

	2018 £ million		2017 £ million
Expiring within one year		788		481
Expiring between one and two years		—		900
Expiring after two years		1,864		1,219
		2,652		2,600

The facilities can be used for general corporate purposes and, together with cash and cash equivalents, support the group’s commercial paper programmes.

There are no financial covenants on the group’s material short and long term borrowings. Certain of these borrowings contain cross default provisions and negative pledges.

The committed bank facilities are subject to a single financial covenant, being minimum interest cover ratio of two times (defined as the ratio of operating profit before exceptional items, aggregated with share of after tax results of associates and joint ventures, to net interest). They are also subject to pari passu ranking and negative pledge covenants.

Any non-compliance with covenants underlying Diageo’s financing arrangements could, if not waived, constitute an event of default with respect to any such arrangements, and any non-compliance with covenants may, in particular circumstances, lead to an acceleration of maturity on certain borrowings and the inability to access committed facilities. Diageo was in full compliance with its financial, pari passu ranking and negative pledge covenants in respect of its material short and long term borrowings throughout each of the years presented.

$900 million (£682 million) of the $3.5 billion (£2,652 million) available undrawn committed bank facilities have been ring-fenced, as a backstop to Diageo’s normal funding sources, for the cost of acquiring the shares in Sichuan Shuijingfang Company Limited until settlement is completed.

(g) Fair value measurements

Fair value measurements of financial instruments are presented through the use of a three-level fair value hierarchy that prioritises the valuation techniques used in fair value calculations.

The group maintains policies and procedures to value instruments using the most relevant data available. If multiple inputs that fall into different levels of the hierarchy are used in the valuation of an instrument, the instrument is categorised on the basis of the most subjective input.

Foreign currency forwards and swaps, cross currency swaps and interest rate swaps are valued using discounted cash flow models. These models use inputs at levels 1 and 2, such as exchange rates and interest rates. These market inputs are used in the discounted cash flow calculation incorporating the instrument’s term, notional amount and discount rate, and taking credit risk into account. As significant inputs to the valuation are observable in active markets, these instruments are categorised as level 2 in the hierarchy.

Other financial liabilities include a put option, which does not expire, held by Industrias Licoreras de Guatemala (ILG) to sell the remaining 50% equity stake in Rum Creations & Products Inc, the owner of the Zacapa rum brand, to Diageo. The liability is fair valued and as at 30 June 2018 £164 million (30 June 2017—£183 million) was recognised with changes in fair value included in retained earnings. For further information on accounting policies see note 9. As the valuation of this option uses assumptions not observable in the market, it is categorised as level 3 in the hierarchy. As at 30 June 2018 because it is unknown when or if ILG will exercise the option the liability is measured as if the exercise date is on the last day of the next financial year considering forecast future performance (in prior years the potential liability also assumed a possible exercise date).

The option is sensitive to reasonably possible changes in assumptions. If the option were to be exercised two years later, the fair value of the liability would increase by approximately £30 million.

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

	2018 £ million			2017 (restated(i)) £ million
Derivative assets		217			348
Derivative liabilities		(123	)		(232	)
Valuation techniques based on observable market input (Level 2)		94			116
Financial assets – other		89			39
Financial liabilities – other		(164	)		(183	)
Valuation techniques based on unobservable market input (Level 3)		(75	)		(144	)

(i) Restated to include loans and advances to associates and third parties.

The movements in level 3 instruments, measured on a recurring basis, are as follows:

	Financial liabilities - other
	2018 £ million			2017 £ million
At 1 July		(183	)		(165	)
Net losses included in the income statement		—			(8	)
Net gains/(losses) included in exchange in other comprehensive income		3			(4	)
Net gains/(losses) included in retained earnings		7			(12	)
Settlement of liabilities		9			6
At 30 June		(164	)		(183	)

In the year ended 30 June 2018 the £50 million (30 June 2017 – £39 million) movement in financial assets – other instruments is due to additions.

There were no transfers between levels during the two years ended 30 June 2018 and 30 June 2017.

(h) Results of hedge relationships

The group targets a one-to-one hedge ratio. Strengths of the economic relationship between the hedged item and the hedging instrument is analysed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of timing, cash flows or value except when the critical terms of the hedging instrument and hedged item are closely aligned. The change in the credit risk of the hedging instruments or the hedged items is not expected to be the primary factor in the economic relationship.

The notional amounts, contractual maturities and rates of the hedging instruments designated in hedging relationships as of 30 June 2018 by the main risk categories are as follows:

	Notional amounts £ million		Maturity		Range of hedged rates
2018
Net investment hedges
Derivatives in net investment hedges of foreign operations		1,068		July 2018		US dollar 1.32
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)		1,553		April 2023-April 2043		US dollar 1.22-1.88
Derivatives in cash flow hedge (foreign exchange risk)		1,197		September 2018-December 2019		US dollar 1.24-1.47, euro 1.06-1.18
Derivatives in cash flow hedge (commodity price risk)		30		July 2018-March 2020		Corn 152.76 - 164.17 USD/t Aluminium 2058.75-2204 USD/MT
Fair value hedges
Derivatives in fair value hedge (interest rate risk)		3,597		July 2018-May 2028		(0.26)-3.09%
2017
Net investment hedges
Derivatives in net investment hedges of foreign operations		1,919		July 2017		US dollar 1.26-1.30, euro 1.14
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)		1,577		April 2023-April 2043		US dollar 1.22-1.88
Derivatives in cash flow hedge (foreign exchange risk)		893		July 2017-Dec 2018		US dollar 1.23-1.51, euro 1.09-1.31
Derivatives in cash flow hedge (commodity price risk)		8		July 2017-June 2018		Corn 141.73 USD/t Aluminium 1912-1931 USD/ MT
Fair value hedges
Derivatives in fair value hedge (interest rate risk)		3,305		October 2017-April 2023		0.93-2.12%

For hedges of the cash flow risk from a change in forward exchange rates using cross currency interest rate swaps, the retranslation of the related bond principal to closing exchange rates and recognition of interest on the related bonds will affect the income statement in each year until the related bonds mature in 2023, 2036 and 2043. Exchange retranslation and the interest on the hedged bonds in the income statement are expected to offset those on the cross currency swaps in each of the years.

In respect of cash flow hedging instruments, a loss of £57 million (2017 – £29 million loss; 2016 – £31 million gain) has been recognised in other comprehensive income due to changes in fair value. A gain of £7 million has been transferred out of other comprehensive income to other operating expenses and a loss of £6 million to other finance charges, respectively (2017 – a loss of £143 million and a gain of £42 million; 2016—a loss of £66 million and a gain of £211 million) to offset the foreign exchange impact on the underlying transactions.

For cash flow hedges of forecast transactions at 30 June 2018, based on year end interest and exchange rates, there is expected to be a loss to the income statement of £7 million in the year ending 30 June 2019 and a loss of £9 million in the year ending 30 June 2020.

For hedges, that are no longer applicable at 30 June 2018, a loss of £21 million (2017—a loss of £21 million) in respect of hedges of foreign currency borrowings is reported in reserves. There was no significant ineffectiveness on net investment and cash flow hedges during the year ended 30 June 2018.

The loss on fair value hedging instruments for the year was £12 million (2017 – a loss of £36 million) and the gain on the hedged item attributable to the hedged risk was £12 million (2017 – a gain of £43 million). At 30 June 2018 the accumulated fair value changes on the hedged items is £17 million (2017 – £5 million).

(i) Reconciliation of financial instruments

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

	Fair value through income statement £ million			Fair value through other comprehensive income £ million		Assets and liabilities at amortised cost £ million			Not categorised as a financial instrument £ million			Total £ million			Current £ million			Non-current £ million
2018
Other investments and loans(i)		89			—		14			2			105			—			105
Trade and other receivables		—			—		2,429			295			2,724			2,678			46
Cash and cash equivalents		—			—		874			—			874			874			—
Derivatives in fair value hedge (interest rate risk)		7			—		—			—			7			—			7
Derivatives in cash flow hedge (foreign currency debt)		160			—		—			—			160			—			160
Derivatives in cash flow hedge (foreign currency exchange risk)		9			—		—			—			9			9			—
Derivatives in net investment hedge		1			—		—			—			1			1			—
Other instruments at fair value		40			—		—			—			40			25			15
Total other financial assets		217			—		—			—			217			35			182
Total financial assets		306			—		3,317			297			3,920			3,587			333
Borrowings(ii)		—			—		(9,902	)		—			(9,902	)		(1,828	)		(8,074	)
Trade and other payables		—			—		(3,258	)		(901	)		(4,159	)		(3,950	)		(209	)
Derivatives in fair value hedge (interest rate risk)		(22	)		—		—			—			(22	)		—			(22	)
Derivatives in cash flow hedge (foreign currency debt)		(48	)		—		—			—			(48	)		—			(48	)
Derivatives in cash flow hedge (foreign currency exchange risk)		(25	)		—		—			—			(25	)		(9	)		(16	)
Derivatives in net investment hedge		(4	)		—		—			—			(4	)		(4	)		—
Other instruments at fair value		(188	)		—		—			—			(188	)		(186	)		(2	)
Finance leases		—			—		(155	)		—			(155	)		(31	)		(124	)
Total other financial liabilities		(287	)		—		(155	)		—			(442	)		(230	)		(212	)
Total financial liabilities		(287	)		—		(13,315	)		(901	)		(14,503	)		(6,008	)		(8,495	)
Total net financial assets/(liabilities)		19			—		(9,998	)		(604	)		(10,583	)		(2,421	)		(8,162	)
2017
Other investments and loans (iii)		39			—		17			2			58			—			58
Trade and other receivables		—			—		2,406			244			2,650			2,592			58
Cash and cash equivalents		—			—		1,191			—			1,191			1,191			—
Derivatives in cash flow hedge (foreign currency debt)		217			—		—			—			217			—			217
Derivatives in cash flow hedge (foreign currency exchange risk)		17			—		—			—			17			8			9
Derivatives in net investment hedge		49			—		—			—			49			49			—
Other instruments at fair value		65			—		—			—			65			24			41
Total other financial assets		348			—		—			—			348			81			267
Total financial assets		387			—		3,614			246			4,247			3,864			383
Borrowings(ii)		—			—		(9,042	)		—			(9,042	)		(2,459	)		(6,583	)
Trade and other payables		—			—		(2,780	)		(807	)		(3,587	)		(3,563	)		(24	)
Derivatives in fair value hedge (interest rate risk)		(2	)		—		—			—			(2	)		(1	)		(1	)
Derivatives in cash flow hedge (foreign currency debt)		(24	)		—		—			—			(24	)		—			(24	)
Derivatives in cash flow hedge (foreign currency exchange risk)		(48	)		—		—			—			(48	)		(47	)		(1	)
Derivatives in net investment hedge		(6	)		—		—			—			(6	)		(6	)		—
Other instruments at fair value		(335	)		—		—			—			(335	)		(135	)		(200	)
Finance leases		—			—		(183	)		—			(183	)		(26	)		(157	)
Total other financial liabilities		(415	)		—		(183	)		—			(598	)		(215	)		(383	)
Total financial liabilities		(415	)		—		(12,005	)		(807	)		(13,227	)		(6,237	)		(6,990	)
Total net financial assets/(liabilities)		(28	)		—		(8,391	)		(561	)		(8,980	)		(2,373	)		(6,607	)

(i) Other investments and loans are including those in relation to associates.

(ii) Borrowings are defined as gross borrowings excluding finance lease liabilities and the fair value of derivate instruments.

(iii) Restated to include loans and advances to associates and third parties.

At 30 June 2018 and 30 June 2017, the carrying values of cash and cash equivalents, other financial assets and liabilities approximate to fair values. At 30 June 2018 the fair value of borrowings, based on unadjusted quoted market data, was £10,304 million (2017 – £9,641 million).

(j) Capital management

The group’s management is committed to enhancing shareholder value in the long term, both by investing in the businesses and brands so as to deliver continued improvement in the return from those investments and by managing the capital structure. Diageo manages its capital structure to achieve capital efficiency, provide flexibility to invest through the economic cycle and give efficient access to debt markets at attractive cost levels. This is achieved by targeting an adjusted net borrowings (net borrowings aggregated with post employment benefit liabilities) to EBITDA leverage of 2.5 – 3.0 times, this range for Diageo being currently broadly consistent with an A band credit rating. Diageo would consider operating outside of this range in order to effect strategic initiatives within its stated goals, which could have an impact on its rating. If Diageo’s leverage was to be negatively impacted by the financing of an acquisition, it would seek over time to return to the range of 2.5 – 3.0 times. The group regularly assesses its debt and equity capital levels against its stated policy for capital structure. For the year ended 30 June 2018 the adjusted net borrowings to adjusted EBITDA ratio was 2.2 times. For this calculation net borrowings are adjusted by post employment benefit liabilities (as at 30 June 2018 – £872 million) whilst adjusted EBITDA (year ended 30 June 2018 – £4,496 million) comprises operating profit excluding exceptional operating items and depreciation, amortisation and impairment and includes share of after tax results of associates and joint ventures.

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Net borrowings

12 Months Ended

Jun. 30, 2018

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Net borrowings

16. Net borrowings

Accounting policies

Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are designated as being part of a 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 finance lease liabilities plus interest rate hedging instruments, cross currency interest rate swaps and funding foreign currency forwards and swaps used to manage borrowings) less cash and cash equivalents.

	2018 £ million			2017 £ million
Bank overdrafts		181			274
Commercial paper		98			—
Bank and other loans		300			495
Credit support obligations		54			74
US$ 1,250 million 5.75% bonds due 2017		—			962
US$ 650 million 1.125% bonds due 2018		—			499
US$ 200 million 4.85% medium term notes due 2018		—			154
€ 500 million 1.125% bonds due 2019		444			—
€ 850 million 1.125% bonds due 2019		751			—
Fair value adjustment to borrowings		—			1
Borrowings due within one year		1,828			2,459
€ 500 million 1.125% bonds due 2019		—			441
€ 850 million 1.125% bonds due 2019		—			745
US$ 696 million 4.828% bonds due 2020		508			508
US$ 500 million floating bonds due 2020		378			—
US$ 500 million 3% bonds due 2020		378			—
€ 775 million 0% bonds due 2020		685			—
US$ 1,000 million 2.875% bonds due 2022(i)		755			766
US$ 300 million 8% bonds due 2022(i)		226			229
US$ 1,350 million 2.625% bonds due 2023		1,020			1,035
US$ 500 million 3.5% bonds due 2023		377			—
€ 500 million 1.75% bonds due 2024		440			436
€ 500 million 0.5% bonds due 2024		439			—
€ 850 million 2.375% bonds due 2026		747			740
US$ 500 million 3.875% bonds due 2028		376			—
US$ 400 million 7.45% bonds due 2035(i)		303			308
US$ 600 million 5.875% bonds due 2036		450			456
US$ 500 million 4.25% bonds due 2042(i)		374			380
US$ 500 million 3.875% bonds due 2043		372			377
Bank and other loans		234			119
Fair value adjustment to borrowings		12			43
Borrowings due after one year		8,074			6,583
Total borrowings before derivative financial instruments		9,902			9,042
Fair value of foreign currency derivatives		(107	)		(144	)
Fair value of interest rate hedging instruments		15			2
Finance lease liabilities		155			183
Gross borrowings		9,965			9,083
Less: Cash and cash equivalents		(874	)		(1,191	)
Net borrowings		9,091			7,892

(i) SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, a 100% owned finance subsidiary of Diageo plc.

(1) The interest rates shown are those contracted on the underlying borrowings before taking into account any interest rate hedges (see note 15).

(2) Bonds are stated net of unamortised finance costs of £60 million (2017 – £61 million; 2016 – £72 million).

(3) Bonds are reported above at amortised cost with a fair value adjustment shown separately.

(4) 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.

Gross borrowings before derivative financial instruments are expected to mature as follows:

	2018 £ million		2017 £ million		2016 £ million
Within one year		1,828		2,459		2,058
Between one and three years		2,033		1,255		2,896
Between three and five years		2,111		1,324		537
Beyond five years		3,930		4,004		4,638
		9,902		9,042		10,129

During the year the following bonds were issued and repaid:

	2018 £ million			2017 £ million			2016 £ million
Issued
€ denominated		1,136			—			—
US$ denominated		1,476			—			—
Repaid
US$ denominated		(1,571	)		(1,234	)		(1,003	)
		1,041			(1,234	)		(1,003	)

(a) Reconciliation of movement in net borrowings

	2018 £ million			2017 £ million
At beginning of the year		7,892			8,635
Net decrease/(increase) in cash and cash equivalents before exchange		185			(122	)
Net increase/(decrease) in bonds and other borrowings		1,015			(820	)
Change in net borrowings from cash flows		1,200			(942	)
Exchange differences on net borrowings		(80	)		205
Other non-cash items(i)		79			(6	)
Net borrowings at end of the year		9,091			7,892

(i) In the year ended 30 June 2018 other non-cash items are principally in respect of changes in the fair value of borrowings.

(b) Analysis of net borrowings by currency

	2018					2017
	Cash and cash equivalents £ million		Gross borrowings(i) £ million			Cash and cash equivalents £ million		Gross borrowings(i) £ million
US dollar		95		297			576		(2,492	)
Euro		91		(2,505	)		69		(1,965	)
Sterling(ii)		38		(7,383	)		51		(4,214	)
Indian rupee		25		(313	)		16		(405	)
Chinese yuan		293		(160	)		110		(30	)
Kenyan shilling		16		(107	)		15		(115	)
Mexican peso		13		(58	)		6		24
Turkish lira(ii)		105		(9	)		133		(27	)
Other		198		273			215		141
Total		874		(9,965	)		1,191		(9,083	)

(i) Includes foreign currency forwards and swaps and finance leases.

(ii) Includes £13 million (Sterling) and £87 million (Turkish lira) cash and cash equivalents in cash-pooling arrangements (2017 – £29 million (Sterling) and £128 million (Turkish lira)).

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Equity

12 Months Ended

Jun. 30, 2018

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Equity

17. Equity

Accounting policies

Own shares represent shares and share options of Diageo plc that are held in treasury or by employee share trusts for the purpose of fulfilling obligations in respect of various employee share plans or were acquired as part of a share buyback programme. Own shares are treated as a deduction from equity until the shares are cancelled, reissued or disposed of and when vest are transferred from own shares to retained earnings at their weighted average cost.

Share based payments include share awards and options granted to directors and employees. The fair value of equity settled share options and share grants is initially measured at grant date based on the binomial or Monte Carlo models and is charged to the income statement over the vesting period. For equity settled shares the credit is included in retained earnings. Cancellations of share options are treated as an acceleration of the vesting period and any outstanding charge is recognised in operating profit immediately. Any surplus or deficit arising on the sale of the Diageo plc shares held by the group is included as a movement in equity.

Dividends are included in the financial statements in the year in which they are approved.

(a) Allotted and fully paid share capital – ordinary shares of 28¹⁰¹/₁₀₈ pence each

	Number of shares million		Nominal value £ million
At 30 June 2018		2,695		780
At 30 June 2017 and 30 June 2016		2,754		797

(b) Hedging and exchange reserve

	Hedging reserve £ million			Exchange reserve £ million			Total £ million
At 30 June 2015		21			(1,173	)		(1,152	)
Other comprehensive income		(111	)		742			631
At 30 June 2016		(90	)		(431	)		(521	)
Other comprehensive income		69			(1	)		68
At 30 June 2017		(21	)		(432	)		(453	)
Other comprehensive income		(44	)		(530	)		(574	)
Adoption of IFRS 9 by associate		(3	)		—			(3	)
At 30 June 2018		(68	)		(962	)		(1,030	)

(c) Own shares

Movements in own shares

	Number of shares million			Purchase consideration £ million
At 30 June 2015		248			2,228
Share trust arrangements		(1	)		(6	)
Shares purchased employee share plans		2			42
Shares used to satisfy options		(5	)		(75	)
At 30 June 2016		244			2,189
Share trust arrangements		(3	)		(32	)
Shares purchased employee share plans		5			101
Shares used to satisfy options		(5	)		(82	)
At 30 June 2017		241			2,176
Share trust arrangements		(1	)		(9	)
Shares purchased employee share plans		2			66
Shares used to satisfy options		(4	)		(89	)
Shares purchased – share buyback programme		59			1,507
Shares cancelled		(59	)		(1,507	)
At 30 June 2018		238			2,144

Share trust arrangements

At 30 June 2018 the employee share trusts owned 4 million of ordinary shares in Diageo plc at a cost of £72 million and market value of £106 million (2017 – 5 million shares at a cost of £81 million, market value £107 million; 2016 – 7 million shares at a cost of £113 million, market value £155 million). Dividends receivable by the employee share trusts on the shares are waived and the trustee abstains from voting.

Purchase of own shares

Authorisation was given by shareholders on 20 September 2017 to purchase a maximum of 251,773,000 shares at a minimum price of 28¹⁰¹/₁₀₈ pence and a maximum price of the higher of (a) 105% of the average of the middle market quotations for an ordinary share for the five preceding business days and (b) the higher of the price of the last independent trade and the highest current independent bid on the London Stock Exchange at the time the purchase is carried out. The programme expires at the conclusion of the next Annual General Meeting or on 19 December 2018, if earlier.

During the year ended 30 June 2018, as part of the employee share schemes, the company purchased 2.5 million ordinary shares, nominal value of £1 million (2017 – 5 million ordinary shares, nominal value of £1 million; 2016 – 2 million ordinary shares, nominal value of £1 million), representing approximately 0.1% (2017 – 0.2%; 2016 – 0.1%) of the issued ordinary share capital (excluding treasury shares).

Shares were either directly granted to employees as part of employee share schemes or held as treasury shares and used to hedge share scheme grants to employees during the course of the year. The consideration paid for purchase of own shares was £66 million (excluding expenses) in the year ended 30 June 2018.

In addition, in the year ended 30 June 2018 the group purchased 58.9 million ordinary shares (representing approximately 2.1% of the issued ordinary share capital) at an average price of £25.43 per share, and an aggregate cost of £1,507 million, including £9 million of transaction costs, under a share buyback programme. The shares purchased under the share buyback programme were cancelled.

The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) for the year ended 30 June 2018 were as follows:

Calendar month	Number of shares purchased under share buyback programme		Total number of shares purchased		Average price paid pence		Authorised purchases unutilised at  month end
September 2017		5,379,511		7,918,187		2521		243,854,813
October 2017		8,287,168		8,287,168		2535		235,567,645
November 2017		8,168,860		8,168,860		2587		227,398,785
December 2017		6,903,910		6,903,910		2638		220,494,875
January 2018		8,822,763		8,822,763		2628		211,672,112
February 2018		20,146,596		20,146,596		2474		191,525,516
March 2018		1,234,920		1,234,920		2491		190,290,596
Total		58,943,728		61,482,404		2544		190,290,596

(d) Dividends

	2018 £ million		2017 £ million		2016 £ million
Amounts recognised as distributions to equity shareholders in the year
Final dividend for the year ended 30 June 2017
38.5 pence per share (2016 – 36.6 pence; 2015 – 34.9 pence)		968		920		876
Interim dividend for the year ended 30 June 2018
24.9 pence per share (2017 – 23.7 pence; 2016 – 22.6 pence)		613		595		567
		1,581		1,515		1,443

The proposed final dividend of £1,004 million (40.4 pence per share) for the year ended 30 June 2018 was approved by the Board of Directors on 25 July 2018. As this was after the balance sheet date and the dividend is subject to approval by shareholders at the Annual General Meeting, this dividend has not been included as a liability in these consolidated financial statements. There are no corporate tax consequences arising from this treatment.

Dividends are waived on all treasury shares owned by the company and all shares owned by the employee share trusts.

(e) Non-controlling interests

Diageo consolidates USL, a company incorporated in India, with a 43.91% non-controlling interest and has a 50% controlling interest in Ketel One Worldwide B.V. (Ketel One), a company incorporated in the Netherlands. All other consolidated subsidiaries are fully owned or the non-controlling interests are not material.

Summarised financial information for USL, Ketel One and others, after fair value adjustments on acquisition, and the amounts attributable to non-controlling interests are as follows:

	2018									2017			2016
	USL £ million			Ketel One and others £ million			Total £ million			Total £ million			Total £ million
Income statement											1
Sales		3,075			1,851			4,926			4,844			4,023
Net sales		981			1,450			2,431			2,412			2,138
Profit for the year		47			197			244			229			251
Other comprehensive (loss)/income(i)		(130	)		(33	)		(163	)		116			399
Total comprehensive (loss)/income		(83	)		164			81			345			650
Attributable to non-controlling interests		(36	)		89			53			148			290
Balance sheet
Non-current assets(ii)		2,223			2,750			4,973			4,975			4,825
Current assets		653			731			1,384			1,222			1,188
Non-current liabilities		(509	)		(916	)		(1,425	)		(1,327	)		(1,339	)
Current liabilities		(572	)		(611	)		(1,183	)		(1,199	)		(1,193	)
Net assets		1,795			1,954			3,749			3,671			3,481
Attributable to non-controlling interests		788			977			1,765			1,715			1,650
Cash flow
Net cash inflow from operating activities		83			251			334			355			245
Net cash (outflow)/inflow from investing activities		(8	)		(128	)		(136	)		(86	)		17
Net cash outflow from financing activities		(70	)		(94	)		(164	)		(172	)		(212	)
Net increase in cash and cash equivalents		5			29			34			97			50
Exchange differences		(1	)		(1	)		(2	)		(3	)		(1	)
Dividends payable to non-controlling interests		—			(101	)		(101	)		(83	)		(101	)

(i) Other comprehensive income is principally in respect of exchange on translating the subsidiaries to sterling.

(ii) Ketel One includes the global distribution rights to distribute Ketel One vodka products throughout the world. The carrying value of the distribution rights at 30 June 2018 was £1,363 million (2017 – £1,385 million; 2016 – £1,354 million).

(1) In the year ended 30 June 2018 a rights issue was completed by Guinness Nigeria (GN) where Diageo’s controlling equity share in GN increased from 54.32% to 58.02%. The transaction resulted in a credit of £31 million to non-controlling interests and a charge of £5 million to retained earnings.

(2) In the year ended 30 June 2018 an agreement was concluded with the minority shareholders of Serengeti Breweries Limited (SBL), a subsidiary of EABL, where an intercompany liability was forgiven and the non-controlling interest in SBL was reduced from 68.53% to 60.76%. The transaction resulted in a net charge to retained earnings of £72 million.

(f) Employee share compensation

The group uses a number of share award and option plans to grant to its directors and employees.

The annual fair value charge in respect of the equity settled plans for the three years ended 30 June 2018 is as follows:

	2018 £ million		2017 £ million		2016 £ million
Executive share award plans		33		28		24
Executive share option plans		3		3		3
Savings plans		3		3		2
		39		34		29

Executive share awards are made under the Diageo 2014 Long Term Incentive Plan (DLTIP) from September 2014 onwards. Prior to that, awards were made under the Diageo plc 2009 Executive Long Term Incentive Plan (DELTIP), the 2008 Performance Share Plan (PSP), the 2008 Senior Executive Share Option Plan (SESOP) or the 2009 Discretionary Incentive Plan (DIP). Prior to the introduction of the DLTIP, employees in associated companies were granted awards under the Diageo plc 2011 Associated Companies Share Incentive Plan (DACSIP). There was a single grant in September 2016 under the Diageo Performance Incentive plan. Under all of these plans, conditional awards can be delivered in the form of restricted shares or share options at the market value at the time of grant.

Share awards normally vest and are released on the third anniversary of the grant date. Participants do not make a payment to receive the award at grant. Executive Directors are required to hold any vested shares awarded from 2014 for a further two-year period. Share options may normally be exercised between three and ten years after the grant date. Executives in North America and Latin America and Caribbean are granted awards over the company’s ADSs (one ADS is equivalent to four ordinary shares).

Performance shares under the DLTIP (previously PSP) are subject to the achievement of three equally weighted performance tests: 1) compound annual growth in profit before exceptional items over three years; 2) compound annual growth in organic net sales over three years; 3) cumulative free cash flow over a three-year period, measured at constant exchange rates. Shares awarded under the Diageo Performance Incentive plan (DPI) in September 2016 are subject to the achievement of two equally weighted performance tests over the three-year performance period. These were: 1) compound annual growth in organic net sales over three years; and 2) productivity savings over three years, with an assessment of line manager performance as an underpin. Performance share options under the DLTIP (previously SESOP) are subject to the achievement of two equally weighted performance tests: 1) a comparison of Diageo’s three-year TSR with a peer group; 2) compound annual growth in profit before exceptional items over three years. Performance measures and targets are set annually by the Remuneration Committee. The vesting range is 20% or 25% (for Executive Directors and for other participants respectively) for achieving minimum performance targets, up to 100% for achieving the maximum target level. Retesting of the performance condition is not permitted.

For performance shares under the DLTIP (previously PSP) dividends are accrued on awards and are given to participants to the extent that the awards actually vest at the end of the performance period. Dividends are normally paid out in the form of shares.

For the three years ended 30 June 2018, the calculation of the fair value of each share award used the Monte Carlo pricing model and the following assumptions:

	2018		2017		2016
Risk free interest rate		0.3%		0.1%		1.0%
Expected life of the awards		37 months		36 months		37 months
Dividend yield		2.6%		3.0%		3.2%
Weighted average share price		2573 p		2130 p		1737 p
Weighted average fair value of awards granted in the year		1761 p		1427 p		1058 p
Number of awards granted in the year		2.3 million		3.6 million		3.1 million
Fair value of all awards granted in the year		£41 million		£51 million		£33 million

Transactions on schemes

Transactions on the executive share award plans for the three years ended 30 June 2018 were as follows:

	2018 Number of awards million			2017 Number of awards million			2016 Number of awards million
Balance outstanding at 1 July		7.9			7.2			7.6
Granted		2.3			3.6			3.1
Exercised/awarded		(0.7	)		(1.3	)		(1.6	)
Forfeited/expired		(1.7	)		(1.6	)		(1.9	)
Balance outstanding at 30 June		7.8			7.9			7.2

At 30 June 2018, 4.4 million executive share options were exercisable at a weighted average exercise price of 1621 pence.

Other financial information

Introduction

This section includes additional financial information that are either required by the relevant accounting standards or management considers these to be material information for shareholders.

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Contingent liabilities and legal proceedings

12 Months Ended

Jun. 30, 2018

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Contingent liabilities and legal proceedings

18. Contingent liabilities and legal proceedings

Accounting policies

Provision is made for the anticipated settlement costs of legal or other disputes against the group where it is considered to be probable that a liability exists and a reliable estimate can be made of the likely outcome. Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of the estimated financial effect appropriate disclosure is made but no provision created.

Critical accounting judgements

Judgement is necessary in assessing the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any settlement. Due to the inherent uncertainty in this evaluation process, actual losses may be different from the liability originally estimated. The group may be involved in legal proceedings in respect of which it is not possible to make a reliable estimate of any expected settlement, if any. In such cases appropriate disclosure is provided but no provision is made and no contingent liability is quantified.

(a) Guarantees and related matters

As of 30 June 2018, the group has no material unprovided guarantees or indemnities in respect of liabilities of third parties.

(b) Acquisition of USL shares from UBHL, winding-up petitions against UBHL and other proceedings in relation to the USL transaction

On 4 July 2013, Diageo completed its acquisition, under a share purchase agreement with United Breweries (Holdings) Limited (UBHL) and various other sellers (the SPA), of 21,767,749 shares (14.98%) in United Spirits Limited (USL) for a total consideration of INR 31.3 billion (£349 million), including 10,141,437 shares (6.98%) from UBHL. The SPA was signed on 9 November 2012 and was part of the transaction announced by Diageo in relation to USL on that day (the Original USL Transaction). Through a series of further transactions, as of 2 July 2014, Diageo had a 54.78% investment in USL (excluding 2.38% owned by the USL Benefit Trust).

Prior to the acquisition from UBHL on 4 July 2013, the High Court of Karnataka (High Court) had granted leave to UBHL under sections 536 and 537 of the Indian Companies Act 1956 (the Leave Order) to enable the sale by UBHL to Diageo to take place (the UBHL Share Sale) notwithstanding the continued existence of five winding-up petitions that were pending against UBHL on 9 November 2012, being the date of the SPA. Additional winding-up petitions have been brought against UBHL since 9 November 2012, and the Leave Order did not extend to them. At the time of the completion of the UBHL Share Sale, the Leave Order remained subject to review on appeal. However, as stated by Diageo at the time of closing on 4 July 2013, it was considered unlikely that any appeal process in respect of the Leave Order would definitively conclude on a timely basis and, accordingly, Diageo waived the conditionality under the SPA relating to the absence of insolvency proceedings in relation to UBHL and acquired the 10,141,437 USL shares from UBHL at that time.

Following closing of the UBHL Share Sale, appeals were filed by various petitioners in respect of the Leave Order. On 20 December 2013, the division bench of the High Court set aside the Leave Order (the December 2013 Order). Following the December 2013 Order, Diageo filed special leave petitions (SLPs) in the Supreme Court of India against the December 2013 Order.

On 10 February 2014, the Supreme Court of India issued an order giving notice in respect of the SLPs and ordering that the status quo be maintained with regard to the UBHL Share Sale pending a hearing on the matter in the Supreme Court. Following a number of adjournments, the next firm hearing date for the SLPs (in respect of which leave has since been granted and which have been converted to civil appeals) is yet to be fixed.

In separate proceedings, the High Court passed a winding-up order against UBHL on 7 February 2017. On 4 March 2017, UBHL appealed against this order before a division bench of the High Court. This appeal is currently pending.

Diageo continues to believe that the acquisition price of INR 1,440 per share paid to UBHL for the USL shares is fair and reasonable as regards UBHL, UBHL’s shareholders and UBHL’s secured and unsecured creditors. However, adverse results for Diageo in the proceedings referred to above could, absent leave or relief in other proceedings, ultimately result in Diageo losing title to the 10,141,437 USL shares acquired from UBHL. Diageo believes it would remain in control of USL and be able to consolidate USL as a subsidiary regardless of the outcome of this litigation. There can be no certainty as to the outcome of the existing or any further related legal proceedings or the timeframe within which they would be concluded.

Diageo also has the benefit of certain contractual undertakings and commitments from the relevant sellers in relation to potential challenges to its unencumbered title to the USL shares acquired on 4 July 2013, including relating to the winding-up petitions described above and/or certain losses and costs that may be incurred in the event of third party actions relating to the acquisition of the USL shares.

(c) Continuing matters relating to the resignation of Dr Vijay Mallya from USL and USL internal inquiries

On 25 February 2016, Diageo and USL each announced that they had entered into arrangements with Dr Mallya under which he had agreed to resign from his position as a director and as chairman of USL and from his positions in USL’s subsidiaries. As specified by Diageo in its announcement at that time, these arrangements ended its prior agreement with Dr Mallya regarding his position at USL, therefore bringing to an end the uncertainty relating to the governance of USL, and put in place a five-year global non-compete (excluding the United Kingdom), non-interference, non-solicitation and standstill arrangement with Dr Mallya. As part of those arrangements, USL, Diageo and Dr Mallya agreed a mutual release in relation to matters arising out of an inquiry into certain matters referred to in USL’s financial statements and the qualified auditor’s report for the year ended 31 March 2014 (the Initial Inquiry) which had revealed, among other things, certain diversions of USL funds. Dr Mallya also agreed not to pursue any claims against Diageo, USL and their affiliates (including under the prior agreement with Diageo). In evaluating entering into such arrangements, Diageo considered the impact of the arrangements on USL and all of USL’s shareholders, and came to the view that the arrangements were in the best interests of USL and its shareholders.

Diageo’s agreement with Dr Mallya (the February 2016 Agreement) provided for a payment of $75 million (£53 million) to Dr Mallya over a five year period in consideration for the five-year global non-compete, non-interference, non-solicitation and standstill commitments referred to above, his resignation from USL and the termination of his USL-related appointment and governance rights, the relinquishing of rights and benefits attached to his position at USL, and his agreement not to pursue claims against Diageo and USL. The February 2016 Agreement also provided for the release of Dr Mallya’s personal obligations to indemnify (i) Diageo Holdings Netherlands B.V. (DHN) in respect of its earlier liability ($141 million (£96 million)) under a backstop guarantee of certain borrowings of Watson Limited (Watson) (a company affiliated with Dr Mallya), and (ii) Diageo Finance plc in respect of its earlier liability (£30 million) under a guarantee of certain borrowings of United Breweries Overseas Limited. $40 million (£28 million) of the $75 million (£53 million) amount was paid on signing of the February 2016 Agreement with the balance being payable in equal instalments of $7 million (£5 million) a year over five years, subject to and conditional on Dr Mallya’s compliance with certain terms of the agreement. While the first two instalments of $7 million (£5 million) each would have become due on 25 February 2017 and 25 February 2018, respectively, owing to various reasons (including breaches committed by Dr Mallya and certain persons connected with him of several provisions of the February 2016 Agreement and agreements of the same date between Dr Mallya and USL), Diageo believes that it was not liable to pay such amount, and is very unlikely to become liable to pay any future instalments, to Dr Mallya. By notice to Dr Mallya and certain persons connected with him on 24 February 2017, 3 November 2017 and 23 February 2018, Diageo and other group companies have demanded from Dr Mallya the repayment of $40 million (£28 million) which was paid by Diageo on 25 February 2016, and also sought compensation from him for various losses incurred by the relevant members of the Diageo group on account of the breaches committed by him and certain persons connected with him. On 16 November 2017, Diageo and other relevant members of the Diageo group commenced claims in the High Court of Justice in England and Wales (the English High Court) against Dr Mallya in relation to certain of the matters specified in the notices of 24 February 2017 and 3 November 2017. At the same time DHN also commenced claims in the English High Court against Dr Mallya, his son Sidhartha Mallya and two companies affiliated with Dr Mallya (Watson and Continental Administration Services Limited (CASL)) for in excess of $142 million (£105 million) (plus interest) in relation to Watson’s liability to DHN in respect of its borrowings referred to above and the breach of associated security documents. These additional claims are described in paragraph (d) below. Dr Mallya, Sidhartha Mallya and the relevant affiliated companies filed a defence to such claims and the additional claims on 12 March 2018, and Dr Mallya also filed a counterclaim for payment of the two $7 million (£5 million) instalment payments withheld by Diageo as described above. Diageo intends to continue to prosecute its claims and to defend the counterclaims.

As previously announced by USL, the Initial Inquiry identified certain additional parties and matters indicating the possible existence of other improper transactions. These transactions could not be fully analysed during the Initial Inquiry and, accordingly, USL, as previously announced, mandated that its Managing Director and Chief Executive Officer conduct a further inquiry into the transactions involving the additional parties and the additional matters to determine whether they also suffered from improprieties (the Additional Inquiry). USL announced the results of the Additional Inquiry in a notice to the Indian Stock Exchange dated 9 July 2016. The mutual release in relation to the Initial Inquiry agreed by Diageo and USL with Dr Mallya announced on 25 February 2016 does not extend to matters arising out of the Additional Inquiry.

As stated in USL’s previous announcement, the Additional Inquiry revealed further instances of actual or potential fund diversions from USL and its Indian and overseas subsidiaries to, in most cases, Indian and overseas entities in which Dr Mallya appears to have a material direct or indirect interest, as well as other potentially improper transactions involving USL and its Indian and overseas subsidiaries.

In connection with the matters identified by the Additional Inquiry, USL has, pursuant to a detailed review of each case of such fund diversion and after obtaining expert legal advice, where appropriate, filed civil suits for recovery of funds from certain parties, including Dr Mallya, before the relevant courts in India.

The amounts identified in the Additional Inquiry have been previously provided for or expensed in the financial statements of USL or its subsidiaries for prior periods. Further, at this stage, it is not possible for the management of USL to estimate the financial impact on USL, if any, arising out of potential non-compliance with applicable laws in relation to such fund diversions.

(d) Other continuing matters relating to Dr Mallya and affiliates

DHN issued a conditional backstop guarantee on 2 August 2013 to Standard Chartered Bank (Standard Chartered) pursuant to a guarantee commitment agreement (the Guarantee Agreement). The guarantee was in respect of the liabilities of Watson, a company affiliated with Dr Mallya, under a $135 million (£92 million) facility from Standard Chartered (the Facility Agreement). The Guarantee Agreement was entered into as part of the arrangements put in place and announced at the closing of the USL transaction on 4 July 2013.

DHN’s provision of the Guarantee Agreement enabled the refinancing of certain existing borrowings of Watson from a third party bank and facilitated the release by that bank of rights over certain USL shares that were to be acquired by Diageo as part of the USL transaction. The facility matured and entered into default in May 2015. In aggregate DHN paid Standard Chartered $141 million (£96 million) under this guarantee, i.e. including payments of default interest and various fees and expenses.

Watson remains liable for all amounts paid by DHN under the guarantee. Under the guarantee documentation with Standard Chartered, DHN is entitled to the benefit of the underlying security package for the loan, including: (a) certain shares in United Breweries Limited (UBL) held solely by Dr Mallya and certain other shares in UBL held by Dr Mallya jointly with his son Sidhartha Mallya, (b) Watson’s interest in Orange India Holdings S.a.r.l. (Orange), the joint venture that owns the Force India Formula One (F1) team, and (c) the shareholding in Watson.

Aspects of the security package are the subject of various proceedings in India in which third parties are alleging and asserting prior rights to certain assets comprised in the security package or otherwise seeking to restrain enforcement against certain assets by Standard Chartered and/or DHN. These proceedings are ongoing and DHN will continue to vigorously pursue these matters as part of its efforts for enforcement of the underlying security and recovery of outstanding amounts. Diageo believes that the existence of any prior rights or dispute in relation to the security would be in breach of representations and warranties given by Dr Mallya to Standard Chartered at the time the security was granted and further believes that certain actions taken by Dr Mallya in relation to the proceedings described above also breached his obligations to Standard Chartered.

Under the terms of the guarantee and as a matter of law, there are arrangements to pass on to DHN the benefit of the security package upon payment under the guarantee of all amounts owed to Standard Chartered. Payment under the guarantee has now occurred as described above. To the extent possible in the context of the proceedings described above, Standard Chartered has taken certain recovery steps and is working with DHN in relation to these proceedings. DHN is actively monitoring the security package and is discussing with Standard Chartered steps to continue enforcement against the background of the proceedings described above, as well as enforcement steps in relation to elements of the security package that are unaffected by those proceedings. DHN’s ability to assume or enforce security over some elements of the security package is also subject to regulatory consent. It is not at this stage possible to determine whether such consent would be forthcoming.

In addition to the Indian proceedings just described, certain of the assets comprised in the security package may also be affected by a worldwide freezing order of the English High Court granted on 24 November 2017 and continued on 8 December 2017 and 8 May 2018 in respect of the assets of Dr Mallya.The agreement with Dr Mallya referenced in paragraph (c) above does not impact the security package, which, as described above, includes shares in UBL and Watson’s interest in Orange, the joint venture that owns the Force India F1 team. Watson remains liable for all amounts paid pursuant to the guarantee and DHN has the benefit of a counterindemnity from Watson in respect of payments in connection with the guarantee. The various security providers, including Dr Mallya and Watson, acknowledged in the February 2016 Agreement referred to in paragraph (c) above that DHN is entitled to the benefit of the security package underlying the Standard Chartered facility and have also undertaken to take all necessary actions in that regard. Further, Diageo believes that the existence of any prior rights or disputes in relation to the security package would be in breach of certain confirmations given to Diageo and DHN pursuant to that agreement by Dr Mallya, Watson and certain connected persons.

On 16 November 2017, DHN commenced various claims in the English High Court for, in aggregate, in excess of $142 million (£105 million) (plus interest) in relation to these matters, including the following: (i) a claim against Watson for $141 million (£96 million) (plus interest) under Watson’s counter-indemnity to DHN in respect of payments made by DHN to Standard Chartered under the guarantee referred to above; (ii) a claim against Dr Mallya and Sidhartha Mallya under various agreements creating or relating to the security package referred to above for (A) not less than $1.8 million (£1 million), being the costs incurred to date in the various Indian proceedings referred to above (plus interest), and (B) damages of $141 million (£96 million), being DHN’s loss as a result of those Indian proceedings which currently prevent enforcement of the security over shares in UBL (plus interest); and (iii) a claim against CASL, as a co-surety with DHN of Watson’s obligations under the Facility Agreement, for 50% of the difference between the amount claimed under (i) above and the amount (if any) that DHN is in fact able to recover from Watson, Dr Mallya and/or Sidhartha Mallya. As noted in paragraph (c), Dr Mallya, Sidhartha Mallya and the relevant affiliated companies filed a defence to these claims on 12 March 2018. As stated in paragraph (c), DHN and Diageo intends to continue to prosecute these claims.

(e) Regulatory notices in relation to USL

Following USL’s earlier updates concerning the Initial Inquiry as well as in relation to the arrangements with Dr Mallya that were the subject of the 25 February 2016 announcement, USL and Diageo have received various notices from Indian regulatory authorities, including the Ministry of Corporate Affairs, Serious Fraud Investigation Office, National Stock Exchange, Income Tax Department, Enforcement Directorate, Securities and Exchange Board of India (SEBI), Bangalore police, Central Excise Intelligence and the Institute of Chartered Accountants of India. Diageo and USL are cooperating fully with the authorities in relation to these matters.

Diageo and USL have also received notices from SEBI requesting information in relation to, and explanation of the reasons for, the arrangements with Dr Mallya that were the subject of the 25 February 2016 announcement as well as, in the case of USL, in relation to the Initial Inquiry and the Additional Inquiry, and, in the case of Diageo, whether such arrangements with Dr Mallya or the Watson backstop guarantee arrangements referred to in paragraphs (c) and (d) above were part of agreements previously made with Dr Mallya at the time of the Original USL Transaction announced on 9 November 2012 and the open offer made as part of the Original USL Transaction. Diageo and USL have complied with such information requests and Diageo has confirmed that, consistent with prior disclosures, the Watson backstop guarantee arrangements and the matters described in the 25 February 2016 announcement were not the subject of any earlier agreement with Dr Mallya. In respect of the Watson backstop guarantee arrangements, SEBI issued a further notice to Diageo on 16 June 2016 that if there is any net liability incurred by Diageo (after any recovery under relevant security or other arrangements, which matters remain pending) on account of the Watson backstop guarantee, such liability, if any, would be considered to be part of the price paid for the acquisition of USL shares under the SPA which formed part of the Original USL Transaction and that, in that case, additional equivalent payments would be required to be made to those shareholders (representing 0.04% of the shares in USL) who tendered in the open offer made as part of the Original USL Transaction. Diageo is clear that the Watson backstop guarantee arrangements were not part of the price paid or agreed to be paid for any USL shares under the Original USL Transaction and therefore believes the decision in the SEBI notice to be misconceived and wrong in law and appealed against it before the Securities Appellate Tribunal, Mumbai (SAT). On 1 November 2017, SAT issued an order in respect of Diageo’s appeal in which, amongst other things, it observed that the relevant officer at SEBI had neither considered Diageo’s earlier reply nor provided Diageo with an opportunity to be heard, and accordingly directed SEBI to pass a fresh order after giving Diageo an opportunity to be heard. Following SAT’s order, Diageo has made its further submissions in the matter, including at a personal hearing before a Deputy General Manager of SEBI.

Diageo has also responded to a show cause notice dated 12 May 2017 from SEBI arising out of the correspondence in relation to the matters described in the 25 February 2016 announcement and made its further submissions in the matter, including at a personal hearing before a Whole Time Member of SEBI.

Diageo is unable to assess if the notices or enquiries referred to above will result in enforcement action or, if this were to transpire, to quantify meaningfully the possible loss or range of loss, if any, to which any such action might give rise if determined against Diageo or USL.

(f) SEC Inquiry

Diageo has received requests for information from the US Securities and Exchange Commission (SEC) regarding its distribution in and public disclosures regarding the United States and its distribution in certain other Diageo markets as well as additional context about the Diageo group globally. Diageo is currently responding to the SEC’s requests for information in this matter. Diageo is unable to assess if the inquiry will evolve into further information requests or an enforcement action or, if this were to transpire, to quantify meaningfully the possible loss or range of loss, if any, to which any such action might give rise.

(g) Tax

The international tax environment has received increased attention and seen rapid change over recent years, both at a US and European level, and by international bodies such as the Organisation for Economic Cooperation and Development (OECD). Against this backdrop, Diageo has been monitoring developments and continue to engage transparently with the tax authorities in the countries where Diageo operates to ensure that the group manages its arrangements on a sustainable basis.

In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption in the UK controlled foreign company rules. The Group Financing Exemption was introduced in legislation by the British government in 2013. In common with other UK-based international companies whose arrangements are in line with current UK CFC legislation, Diageo may be affected by the outcome of this investigation. Diageo is monitoring developments. If the preliminary findings of the European Commission’s investigation into the UK legislation are upheld, Diageo calculates its maximum potential liability to be approximately £250 million. Based on its current assessment, Diageo believes that no provision is required in respect of this issue.

During the year ended 30 June 2018, Diageo reached agreement with HM Revenue & Customs in the United Kingdom in respect of transfer pricing and related issues. See note 7 (Taxation) for further information.

Diageo has also been in discussions with the French Tax Authorities over the deductibility of certain interest costs. During the year the French Tax Authorities issued assessments denying tax relief for interest costs incurred in the periods ended 30 June 2011 to 30 June 2017. Diageo believes that the interest costs are deductible and accordingly is challenging the assessments from the French Tax Authorities. Including interest and penalties, the exposure for the periods ended 30 June 2011 to 30 June 2018 is approximately €241 million (£214 million). Based on its current assessment, Diageo believes that no provision is required in respect of this issue.

(h) Other

The group has extensive international operations and is a defendant in a number of legal, customs and tax proceedings incidental to these operations, the outcome of which cannot at present be foreseen. In particular, the group is currently a defendant in various customs proceedings that challenge the declared customs value of products imported by certain Diageo companies. Diageo continues to defend its position vigorously in these proceedings.

Save as disclosed above, neither Diageo, nor any member of the Diageo group, is or has been engaged in, nor (so far as Diageo is aware) is there pending or threatened by or against it, any legal or arbitration proceedings which may have a significant effect on the financial position of the Diageo group.

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Commitments

12 Months Ended

Jun. 30, 2018

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Commitments

19. Commitments

(a) Capital commitments

Commitments for expenditure on intangibles and property, plant and equipment not provided for in these consolidated financial statements are estimated at £161 million (2017 – £84 million; 2016 – £87 million).

On 10 July 2018 Diageo launched a partial tender offer to increase its aggregate equity stake in Sichuan Shuijingfang Company Limited (SJF). See note 22 for details of the commitment made for the acquisition of the additional equity shares in SJF.

(b) Operating lease commitments

The minimum lease rentals to be paid under non-cancellable leases, principally in respect of properties, are as follows:

	2018 £ million		2017 £ million
Payments falling due:
Within one year		100		95
Between one and two years		70		72
Between two and three years		48		52
Between three and four years		32		40
Between four and five years		20		28
After five years		42		51
		312		338

There are no significant leases for which contingent rent is payable, nor any that have purchase options, escalation clauses or restrictions. Certain of the operating leases have renewal clauses which are at fair market value.

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Related party transactions

12 Months Ended

Jun. 30, 2018

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Related party transactions

20. Related party transactions

Transactions between the group and its related parties are made on terms equivalent to those that prevail in arm’s length transactions.

(a) Subsidiaries

Transactions between the company and its subsidiaries are eliminated on consolidation and therefore are not disclosed. Details of the principal group companies are given in note 21.

(b) Associates and joint ventures

Sales and purchases to and from associates and joint ventures are principally in respect of premium drinks products but also include the provision of management services.

Transactions and balances with associates and joint ventures are set out in the table below:

	2018 £ million		2017 restated(i) £ million		2016 restated(i) £ million
Income statement items
Sales		10		10		31
Purchases		29		32		36
Balance sheet items
Group payables		3		4		5
Group receivables		2		1		2
Loans payable		6		6		6
Loans receivable		59		31		21
Cash flow items
Loans and equity contributions, net		37		14		—

(i) Comparatives for loans receivable from associates and joint ventures were restated to include advances to associates that are convertible to equity.

Other disclosures in respect of associates and joint ventures are included in note 6.

(c) Key management personnel

The key management of the group comprises the Executive and Non-Executive Directors, the members of the Executive Committee and the Company Secretary. They are listed under ‘Board of Directors and Company Secretary’ and ‘Executive Committee’.

	2018 £ million		2017 £ million		2016 £ million
Salaries and short term employee benefits		10		10		11
Annual incentive plan		10		9		9
Non-Executive Directors’ fees		1		1		1
Share-based payments(i)		15		9		7
Post employment benefits		2		2		2
Termination benefits		—		2		2
		38		33		32

(i) Time-apportioned fair value of unvested options and share awards.

Non-Executive Directors do not receive share-based payments or post employment benefits. Details of the individual Directors’ remuneration are given in ’Single total figure of remuneration for Executive Directors’ and ’Non-Executive Directors’ remuneration’ in the Directors’ remuneration report.

(d) Pension plans

The Diageo pension plans are recharged with the cost of administration services provided by the group to the pension plans and with professional fees paid by the group on behalf of the pension plans. The total amount recharged for the year was £14 million (2017 – £15 million; 2016 – £16 million).

(e) Directors’ remuneration

	2018 £ million		2017 £ million		2016 £ million
Salaries and short term employee benefits		2		2		2
Annual incentive plan		3		3		2
Non-Executive Directors’ fees		1		1		1
Share option exercises(i)		—		2		—
Shares vesting(i)		1		4		5
Post employment benefits(ii)		1		1		1
		8		13		11

(i) Gains on options realised in the year and the benefit from share awards, calculated by using the share price applicable on the date of exercise of the share options and release of the awards.

(ii) Includes a cash allowance in lieu of pension contributions.

Details of the individual Directors’ remuneration are given in ’Single total figure of remuneration for Executive Directors’ and ’Non-Executive Directors’ remuneration’ in the Directors’ remuneration report.

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Principal group companies

12 Months Ended

Jun. 30, 2018

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Principal group companies

21. Principal group companies

The companies listed below include those which principally affect the profits and assets of the group. The operating companies listed below may carry on the business described in the countries listed in conjunction with their subsidiaries and other group companies.

	Country of incorporation	Country of operation		Percentage of equity owned(i)			Business description
Subsidiaries
Diageo Ireland	Republic of Ireland		Worldwide		100	%	Production, marketing and distribution of premium drinks
Diageo Great Britain Limited	England		Great Britain		100	%	Marketing and distribution of premium drinks
Diageo Scotland Limited	Scotland		Worldwide		100	%	Production, marketing and distribution of premium drinks
Diageo Brands B.V.	Netherlands		Worldwide		100	%	Marketing and distribution of premium drinks
Diageo North America, Inc.	United States		Worldwide		100	%	Production, importing, marketing and distribution of premium drinks
United Spirits Limited(ii)	India		India		54.78	%	Production, importing, marketing and distribution of premium drinks
Diageo Capital plc(iii)	Scotland		United Kingdom		100	%	Financing company for the group
Diageo Finance plc(iii)	England		United Kingdom		100	%	Financing company for the group
Diageo Investment Corporation	United States		United States		100	%	Financing company for the US group
Mey İçki Sanayi ve Ticaret A.Ş.	Turkey		Turkey		100	%	Production, marketing and distribution of premium drinks
Associates
Moët Hennessy, SAS(iv)	France		France		34	%	Production, marketing and distribution of premium drinks

(i) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group.

(ii) Percentage ownership excludes 2.38% owned by the USL Benefit Trust.

(iii) Directly owned by Diageo plc.

(iv) French limited liability company.

(1) Diageo Finance B.V. (Netherlands) is a wholly owned finance subsidiary of the group. As at 30 June 2018, there were no outstanding securities issued by Diageo Finance B.V.

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Post balance sheet events

12 Months Ended

Jun. 30, 2018

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Post balance sheet events

22. Post balance sheet events

Offer for shares in Sichuan Shuijingfang Company Limited (SJF)

On 10 July 2018 Diageo launched a partial tender offer to increase its aggregate equity stake in SJF from 39.71% to up to a maximum of 60%. The price per share offered is RMB62.00 per share (adjusted for any dividend distribution by SJF during the tender offer period) and gives all non Diageo shareholders the opportunity to elect to sell their shares in SJF to Diageo up to 11 August 2018. During the tender offer period a dividend of RMB6.2 for every 10 SJF shares held was declared and therefore the offer price was reduced to RMB61.38 per share. The maximum possible consideration to reach 60% of the equity in SJF is RMB6,146 million (£703 million), of which RMB1,229 million (£141 million) was deposited in escrow with the Chinese regulatory authorities on 3 July 2018. $900 million (£682 million) of the $3.5 billion (£2,652 million) available undrawn committed bank facilities have been ring-fenced, as a backstop to Diageo’s normal funding sources, for the cost of acquiring the shares in SJF until settlement is completed.

Share buyback

On 26 July 2018 the Board approved a new share buyback programme to return up to £2.0 billion to shareholders during the year ending 30 June 2019.

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Accounting information and policies (Policies)

12 Months Ended

Jun. 30, 2018

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Description of accounting policy for consolidation financial statements

(c) Consolidation

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.

Description of accounting policy for foreign currency

(d) Foreign currencies

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 sterling, which is the functional currency of the parent company.

The income statements and cash flows of non-sterling entities are translated into sterling at weighted average rates of exchange, other than 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 closing rates. Exchange differences arising on the retranslation at closing rates of the opening balance sheets of overseas entities are taken to the exchange reserve, as are exchange differences arising on foreign currency borrowings and financial instruments designated as net investment hedges, to the extent that they are effective. Tax charges and credits arising on such items are also taken to the exchange reserve. Gains and losses accumulated in the exchange reserve are recycled to the income statement when the foreign operation is sold. Other exchange differences are taken to the income statement. Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.

Description of accounting policy for sales

Sales comprise revenue from contracts with customers from the sale of goods, royalties and rents receivable. Revenue from the sale of goods includes excise and other duties which the group pays as principal but excludes duties and taxes collected on behalf of third parties, such as value added tax. Sales are recognised as or when performance obligations are satisfied by transferring control of a good or service to the customer. Generally the transfer of control of goods occurs at the time of despatch but in some countries and for some customers may be on delivery. The group includes in sales the net consideration to which it expects to be entitled. Sales are recognised to the extent that it is highly probable that a significant reversal will not occur. Therefore, sales are stated net of expected price discounts, allowances for customer loyalty and certain promotional activities and similar items. Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing.

Description of accounting policy for net sales

Net sales are sales less excise duties. Diageo incurs excise duties throughout the world. In the majority of countries excise duties are effectively a production tax which becomes payable when the product is removed from bonded premises and is not directly related to the value of sales. It is generally not included as a separate item on external invoices; increases in excise duty are not always passed on to the customer and where a customer fails to pay for product received the group cannot reclaim the excise duty. The group therefore recognises excise duty, unless it regards itself as an agent of the regulatory authorities, as a cost to the group.

Description of accounting policy for advertising costs

Advertising costs, point of sale materials and sponsorship payments are charged to marketing in operating profit when the company has a right of access to the goods or services acquired.

Description of accounting policy for exceptional items

Accounting policies

Critical accounting judgements

Exceptional items are those that in management’s judgement need to be disclosed by virtue of their size or nature. Such items are included within the income statement caption to which they relate, and are separately disclosed in the notes to the consolidated financial statements.

Operating items

Exceptional operating items are those that are considered to be material and are part of the operating activities of the group such as impairment of intangible assets and fixed assets, duty settlements, property disposals and changes in post employment plans.

Non-operating items

Gains and losses on the sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or an associate becomes a subsidiary and other material, unusual non recurring items, that are not in respect of the production, marketing and distribution of premium drinks, are disclosed as non-operating exceptional items below operating profit in the consolidated income statement.

It is believed that separate disclosure of exceptional items and the classification between operating and non-operating further helps investors to understand the performance of the group.

Description of accounting policy for finance income and costs

Accounting policies

Net interest includes interest income and charges in respect of financial instruments and the results of hedging transactions used to manage interest rate risk.

Finance charges directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of that asset. Borrowing costs which are not capitalised are recognised in the income statement based on the effective interest method. All other finance charges are recognised primarily in the income statement in the year in which they are incurred.

Net other finance charges include items in respect of post employment plans, the discount unwind of long term obligations and hyperinflation charges. The results of operations in hyperinflationary economies are adjusted to reflect the changes in the purchasing power of the local currency of the entity before being translated to sterling.

Description of accounting policy for investment in associates and joint ventures

Accounting policies

An associate is an undertaking in which the group has a long term equity interest and over which it has the power to exercise significant influence. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The group’s interest in the net assets of associates and joint ventures is reported in investments in the consolidated balance sheet and its interest in their results (net of tax) is included in the consolidated income statement below the group’s operating profit. Associates and joint ventures are initially recorded at cost including transaction costs. Investments in associates and joint ventures are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment review compares the net carrying value with the recoverable amount, where the recoverable amount is the higher of the value in use calculated as the present value of the group’s share of the associate’s future cash flows and its fair value less costs to sell.

Description of accounting policy for income tax

Accounting policies

Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax benefits are not recognised unless it is probable that the tax positions are sustainable. Once considered to be probable, tax benefits are reviewed each year to assess whether a provision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. Tax provisions are included in current liabilities. Penalties and interest on tax liabilities for the year ended 30 June 2018 are included in operating profit and finance charges, respectively. In prior years penalties and interest on tax liabilities were provided for in the tax charge.

Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax purposes. The amount of deferred tax reflects the expected recoverable amount and is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using the basis of taxation enacted or substantively enacted by the balance sheet date. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where the group is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance.

Critical accounting estimates and judgements

The group is required to estimate the corporate tax in each of the many jurisdictions in which it operates. Manangement is required to estimate the amount that should be recognised as a tax liability or tax asset in many countries which are subject to tax audits which by their nature are often complex and can take several years to resolve. Current tax balances and tax provisions are based on management’s judgement and interpretation of country specific tax law and the likelihood of settlement. However the actual tax liabilities could differ from the provision and in such event the group would be required to make an adjustment in a subsequent period which could have a material impact on the group’s profit for the year.

The evaluation of deferred tax assets recoverability requires judgements to be made regarding the availability of future taxable income.

Description of accounting policy for discontinued operations

Accounting policies

Discontinued operations comprise disposal groups where they represent a major line of business or geographical area of operations or business activities that the group no longer participates in or did not form part of the group’s operations.

Description of accounting policy for acquisition and sale of businesses and purchase of non controlling interests

Accounting policies

The consolidated financial statements include the results of the company and its subsidiaries together with the group’s attributable share of the results of associates and joint ventures. The results of subsidiaries acquired or sold are included in the income statement from, or up to, the date that control passes.

Business combinations are accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration payable is measured at fair value and includes the fair value of any contingent consideration.

On the acquisition of a business, or of an interest in an associate or joint venture, fair values, reflecting conditions at the date of acquisition, are attributed to the net assets including identifiable intangible assets and contingent liabilities acquired. Directly attributable acquisition costs in respect of subsidiary companies acquired are recognised in other external charges as incurred.

The non-controlling interests on the date of acquisition can be measured either at the fair value or at the non-controlling shareholder’s proportion of the net fair value of the identifiable assets assumed. This choice is made separately for each acquisition.

Where the group has issued a put option over shares held by a non-controlling interest, the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options. Movements in the estimated liability in respect of put options are recognised in retained earnings.

Transactions with non-controlling interests are recorded directly in retained earnings.

For all entities in which the company, directly or indirectly, owns equity a judgement is made to determine whether the investor controls the investee and therefore should fully consolidate the investee. An assessment is carried out to determine whether the group has the exposure or rights to the variable returns of the investee and has the ability to affect those returns through its power over the investee. To establish control an analysis is carried out of the substantive and protective rights that the group and the other investors hold. This assessment is dependent on the activities and purpose of the investee and the rights of the other shareholders, such as which party controls the board, executive committee and material policies of the investee. Determining whether the rights that the group holds are substantive requires management judgement.

Where less than 50% of the equity of an investee is held, and the group holds significantly more voting rights than any other vote holder or organised group of vote holders this may be an indicator of de facto control. An assessment is needed to determine all the factors relevant to the relationship with the investee to ascertain whether control has been established and whether the investee should be consolidated as a subsidiary. Where voting power and returns from an investment are split equally between two entities then the arrangement is accounted for as a joint venture.

On an acquisition fair values are attributed to the assets and liabilities acquired. This may involve material judgement to determine these values.

Description of accounting policy for intangible assets and goodwill

Accounting policies

Acquired intangible assets are held on the consolidated balance sheet at cost less accumulated amortisation and impairment losses. Acquired brands and other intangible assets are initially recognised at fair value when they are controlled through contractual or other legal rights, or are separable from the rest of the business, and the fair value can be reliably measured. Where these assets are regarded as having indefinite useful economic lives, they are not amortised.

Goodwill represents the excess of the aggregate of the consideration transferred, the value of any non-controlling interests and the fair value of any previously held equity interest in the subsidiary acquired over the fair value of the identifiable net assets acquired. Goodwill arising on acquisitions prior to 1 July 1998 was eliminated against reserves, and this goodwill has not been reinstated. Goodwill arising subsequent to 1 July 1998 has been capitalised.

Amortisation and impairment of intangible assets is based on their useful economic lives and are amortised on a straight-line basis over those lives and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised and are reviewed for impairment at least annually or when there is an indication that the assets may be impaired. Impairment reviews compare the net carrying value with the recoverable amount (where recoverable amount is the higher of fair value less cost to sell and value in use). Amortisation and any impairment write downs are charged to other operating expenses in the income statement.

Computer software is amortised on a straight-line basis to estimated residual value over its expected useful life. Residual values and useful lives are reviewed each year. Subject to these reviews, the estimated useful lives are up to eight years.

Critical accounting estimates and judgements

Assessment of the recoverable amount of an intangible asset, the useful economic life of an asset, or that an asset has an indefinite life, requires management judgement.

Impairment reviews are carried out to ensure that intangible assets, including brands, are not carried at above their recoverable amounts. The tests are dependent on management’s estimates in respect of the forecasting of future cash flows. Judgement is required in determining the cash-generating units, the discount rates applicable to the future cash flows and what expected growth rates are reasonable. Such estimates and judgements are subject to change as a result of changing economic conditions and actual cash flows may differ from forecasts.

Description of accounting policy for property, plant and equipment

Accounting policies

Land and buildings are stated at cost less accumulated depreciation. Freehold land is not depreciated. Leaseholds are generally depreciated over the unexpired period of the lease. Other property, plant and equipment are depreciated on a straight-line basis to estimated residual values over their expected useful lives, and these values and lives are reviewed each year. Subject to these reviews, the estimated useful lives fall within the following ranges: buildings – 10 to 50 years; within plant and equipment casks and containers – 15 to 50 years; other plant and equipment – 5 to 25 years; fixtures and fittings – 5 to 10 years; and returnable bottles and crates – 5 to 10 years.

Reviews are carried out if there is an indication that assets may be impaired, to ensure that property, plant and equipment are not carried at above their recoverable amounts.

Description of accounting policy for government grants

Government grants

Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions pursuant to which they have been granted and that the grants will be received. Government grants in respect of property, plant and equipment are deducted from the asset that they relate to, reducing the depreciation expense charged to the income statement.

Description of accounting policy for leases

Leases

Where the group has substantially all the risks and rewards of ownership of an asset subject to a lease, the lease is treated as a finance lease. Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the lease. The corresponding liability to the lessor is included in other financial liabilities on the consolidated balance sheet. Lease payments are apportioned between interest expense and a reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Other leases are treated as operating leases, with payments and receipts taken to the income statement on a straight-line basis over the life of the lease.

Description of accounting policy for other investments

Accounting policies

Other investments are such equity investments that are not classified as investments in associates or joint arrangements nor investments in subsidiaries. They are included in non-current assets. Subsequent to initial measurement, other investments are stated at fair value. Gains and losses arising from the changes in fair value are recognised in the income statement or in other comprehensive income on a case by case basis. Accumulated gains and losses included in other comprehensive income are not recycled to the income statement. Dividends from other investments are recognised in the consolidated income statement.

Loans receivable are non-derivative financial assets that are not classified as equity investments. They are subsequently measured either at amortised cost using the effective interest method less allowance for impairment or at fair value with gains and losses arising from changes in fair value recognised in the income statement or in other comprehensive income that are recycled to the income statement on the de-recognition of the asset. Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous experience, economic conditions and forward looking data. Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending on changes in the credit quality of the counterparty.

Description of accounting policy for employee benefits

Accounting policies

The group’s principal pension funds are defined benefit plans. In addition, the group has defined contribution plans, unfunded post employment medical benefit liabilities and other unfunded defined benefit post employment liabilities. For post employment plans, other than defined contribution plans, the amount charged to operating profit is the cost of accruing pension benefits promised to employees over the year, plus any changes arising on benefits granted to members by the group during the year. Net finance charges comprise the net deficit/asset on the plans at the beginning of the year, adjusted for cash flows in the year, multiplied by the discount rate for plan liabilities. The differences between the fair value of the plans’ assets and the present value of the plans’ liabilities are disclosed as an asset or liability on the consolidated balance sheet. Any differences due to changes in assumptions or experience are recognised in other comprehensive income. The amount of any pension fund asset recognised on the balance sheet is limited to any future refunds from the plan or the present value of reductions in future contributions to the plan.

Contributions payable by the group in respect of defined contribution plans are charged to operating profit as incurred.

Critical accounting estimates and judgements

Application of IAS 19 requires the exercise of estimate and judgement in relation to various assumptions.

Diageo determines the assumptions on a country by country basis in conjunction with its actuaries. Estimates are required in respect of uncertain future events including the life expectancy of members of the funds, salary and pension increases, future inflation rates, discount rates and employee and pensioner demographics. The application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and the balance sheet. There may be interdependencies between the assumptions.

Where there is an accounting surplus on a defined benefit plan management judgement is necessary to determine whether the group can obtain a refund of the surplus by reducing future contributions to the plan.

Description of accounting policy for inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes raw materials, direct labour and expenses, an appropriate proportion of production and other overheads, but not borrowing costs. Cost is calculated at the weighted average cost incurred in acquiring inventories. Maturing inventories which are retained for more than one year are classified as current assets, as they are expected to be realised in the normal operating cycle.

Description of accounting policy for trade and other receivables

Trade and other receivables are initially recognised at fair value less transaction costs and subsequently carried at amortised cost less any allowance for discounts and doubtful debts. Trade receivables arise from contracts with customers, and are recognised when performance obligations are satisfied, and the consideration due is unconditional as only the passage of time is required before the payment is received. Allowance losses are calculated by reviewing lifetime expected credit losses using historic and forward-looking data on credit risk.

Description of accounting policy for trade and other payables

Trade and other payables are initially recognised at fair value including transaction costs and subsequently carried at amortised costs.

Description of accounting policy for provisions

Provisions are liabilities of uncertain timing or amount. A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are calculated on a discounted basis. The carrying amounts of provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

Description of accounting policy for financial instruments and risk management

Accounting policies

Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable transaction costs. For those financial assets that are not subsequently held at fair value, the group assesses whether there is evidence of impairment at each balance sheet date.

The group classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortised cost, financial assets and liabilities at fair value through profit and loss and financial assets at fair value through other comprehensive income.

The accounting policies for other investments and loans are described in note 12, for trade and other receivables and payables in note 14 and for cash and cash equivalents in note 16.

Financial assets and liabilities at fair value through profit or loss include derivative assets and liabilities. Where financial assets or liabilities are eligible to be carried at either amortised cost or fair value through other comprehensive income the group does not apply the fair value option.

Derivative financial instruments are carried at fair value using a discounted cash flow model based on market data applied consistently for similar types of instruments. Gains and losses on derivatives that do not qualify for hedge accounting treatment are taken to the income statement as they arise.

Other financial liabilities are carried at amortised cost unless they are part of a fair value hedge relationship. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the effective interest rate method.

Hedge accounting

The group designates and documents certain derivatives as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges), highly probable forecast transactions or the cash flow risk from a change in exchange or interest rates (cash flow hedges) and hedges of net investments in foreign operations (net investment hedges). The designated portion of the hedging instruments is included in other financial assets and liabilities on the consolidated balance sheet. The effectiveness of such hedges is assessed at inception and at least on a quarterly basis, using prospective testing. Methods used for testing effectiveness include dollar offset, critical terms, regression analysis and hypothetical models.

Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value of certain assets and liabilities are exposed. Changes in the fair value of the derivatives are recognised in the income statement, along with any changes in the relevant fair value of the underlying hedged asset or liability.

If such a hedge relationship no longer meets hedge accounting criteria, fair value movements on the derivative continue to be taken to the income statement while any fair value adjustments made to the underlying hedged item to that date are amortised through the income statement over its remaining life using the effective interest rate method.

Cash flow hedges are used to hedge the foreign currency risk of highly probable future foreign currency cash flows, as well as the cash flow risk from changes in exchange or interest rates. The effective portion of the gain or loss on the hedges is recognised in other comprehensive income, while any ineffective part is recognised in the income statement. Amounts recorded in other comprehensive income are recycled to the income statement in the same period in which the underlying foreign currency or interest exposure affects the income statement.

Net investment hedges take the form of either foreign currency borrowings or derivatives. Foreign exchange differences arising on translation of net investments are recorded in other comprehensive income and included in the exchange reserve. Liabilities used as hedging instruments are revalued at closing exchange rates and the resulting gains or losses are also recognised in other comprehensive income to the extent that they are effective, with any ineffectiveness taken to the income statement. Foreign exchange contracts hedging net investments are carried at fair value. Effective fair value movements are recognised in other comprehensive income, with any ineffectiveness taken to the income statement.

Description of accounting policy for borrowings

Accounting policies

Borrowings are initially recognised at fair value net of transaction costs and are subsequently reported at amortised cost. Certain bonds are designated as being part of a 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 finance lease liabilities plus interest rate hedging instruments, cross currency interest rate swaps and funding foreign currency forwards and swaps used to manage borrowings) less cash and cash equivalents.

Description of accounting policy for own shares

Own shares represent shares and share options of Diageo plc that are held in treasury or by employee share trusts for the purpose of fulfilling obligations in respect of various employee share plans or were acquired as part of a share buyback programme. Own shares are treated as a deduction from equity until the shares are cancelled, reissued or disposed of and when vest are transferred from own shares to retained earnings at their weighted average cost.

Description of accounting policy for share-based payments

Share based payments include share awards and options granted to directors and employees. The fair value of equity settled share options and share grants is initially measured at grant date based on the binomial or Monte Carlo models and is charged to the income statement over the vesting period. For equity settled shares the credit is included in retained earnings. Cancellations of share options are treated as an acceleration of the vesting period and any outstanding charge is recognised in operating profit immediately. Any surplus or deficit arising on the sale of the Diageo plc shares held by the group is included as a movement in equity.

Description of accounting policy for dividends

Dividends are included in the financial statements in the year in which they are approved.

Description of accounting policy for contingent liabilities and legal proceedings

Accounting policies

Provision is made for the anticipated settlement costs of legal or other disputes against the group where it is considered to be probable that a liability exists and a reliable estimate can be made of the likely outcome. Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of the estimated financial effect appropriate disclosure is made but no provision created.

Critical accounting judgements

Judgement is necessary in assessing the likelihood that a claim will succeed, or a liability will arise, and an estimate to quantify the possible range of any settlement. Due to the inherent uncertainty in this evaluation process, actual losses may be different from the liability originally estimated. The group may be involved in legal proceedings in respect of which it is not possible to make a reliable estimate of any expected settlement, if any. In such cases appropriate disclosure is provided but no provision is made and no contingent liability is quantified.

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Accounting information and policies (Tables)

12 Months Ended

Jun. 30, 2018

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Summary of Principal Foreign Exchange Rates Used in the Translation of Financial Statements

The principal foreign exchange rates used in the translation of financial statements for the three years ended 30 June 2018, expressed in US dollars and euros per £1, were as follows:

	2018		2017		2016
US dollar
Income statement and cash flows(i)		1.35		1.27		1.48
Assets and liabilities(ii)		1.32		1.30		1.33
Euro
Income statement and cash flows(i)		1.13		1.16		1.34
Assets and liabilities(ii)		1.13		1.14		1.20

(i) Weighted average rates

(ii) Year end rates

Summary of Geographical Operations

The following table presents the contribution of the group’s Venezuelan operations to the consolidated income statement, cash flow statement and net assets for the year ended 30 June 2018 and with the amounts that would have resulted if the official DICOM exchange rate had been applied:

	At estimated exchange  rate 3,858,826 VEF/GBP £ million		At DICOM exchange rate 151,800 VEF/GBP £ million
Net sales		1		27
Operating profit		—		16
Other finance income - hyperinflation adjustment		18		458
Net cash inflow from operating activities		1		12
Net assets		69		1,744

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Segmental information (Tables)

12 Months Ended

Jun. 30, 2018

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Summary of Segmental Information for the Consolidated Income Statement Continuing Operations

(a) Segmental information for the consolidated income statement – continuing operations

	North America £ million			Europe and Turkey(ii) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Eliminate inter- segment sales £ million			Total operating segments £ million			Corporate and other £ million			Total £ million
2018
Sales		4,671			5,232			2,083			1,352			5,042			1,457			(1,457	)		18,380			52			18,432
Net sales
At budgeted exchange rates(i)		4,138			2,821			1,467			1,064			2,555			1,512			(1,425	)		12,132			48			12,180
Acquisitions and disposals		50			—			—			—			—			—			—			50			—			50
ISC allocation		11			53			4			11			8			(87	)		—			—			—			—
Retranslation to actual exchange rates		(83	)		58			20			(6	)		(60	)		32			(32	)		(71	)		4			(67	)
Net sales		4,116			2,932			1,491			1,069			2,503			1,457			(1,457	)		12,111			52			12,163
Operating profit/(loss)
At budgeted exchange rates(i)		1,925			941			180			298			588			112			—			4,044			(160	)		3,884
Acquisitions and disposals		4			—			—			—			—			—			—			4			—			4
ISC allocation		14			67			5			14			12			(112	)		—			—			—			—
Retranslation to actual exchange rates		(61	)		20			6			(4	)		(32	)		—			—			(71	)		2			(69	)
Operating profit/(loss) before exceptional items		1,882			1,028			191			308			568			—			—			3,977			(158	)		3,819
Exceptional items		—			—			(128	)		—			—			—			—			(128	)		—			(128	)
Operating profit/(loss)		1,882			1,028			63			308			568			—			—			3,849			(158	)		3,691
Non-operating items																													—
Net finance charges																													(260	)
Share of after tax results of associates and joint ventures
– Moët Hennessy																													305
– Other																													4
Profit before taxation																													3,740
	North America £ million			Europe and Turkey(ii) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Eliminate inter- segment sales £ million			Total operating segments £ million			Corporate and other £ million			Total £ million
2017
Sales		4,725			4,985			2,132			1,303			4,923			1,390			(1,390	)		18,068			46			18,114
Net sales
At budgeted exchange rates(i)		3,523			2,474			1,240			873			1,977			1,418			(1,324	)		10,181			39			10,220
Acquisitions and disposals		—			2			15			7			41			—			—			65			—			65
ISC allocation		11			60			4			11			8			(94	)		—			—			—			—
Retranslation to actual exchange rates		627			288			297			153			393			66			(66	)		1,758			7			1,765
Net sales		4,161			2,824			1,556			1,044			2,419			1,390			(1,390	)		12,004			46			12,050
Operating profit/(loss)
At budgeted exchange rates(i)		1,648			741			159			195			375			116			—			3,234			(169	)		3,065
Acquisitions and disposals		—			—			(8	)		—			—			—			—			(8	)		(1	)		(9	)
ISC allocation		14			72			5			13			12			(116	)		—			—			—			—
Retranslation to actual exchange rates		237			123			62			42			100			—			—			564			(19	)		545
Operating profit/(loss) before exceptional items		1,899			936			218			250			487			—			—			3,790			(189	)		3,601
Exceptional items		—			(33	)		—			—			(9	)		—			—			(42	)		—			(42	)
Operating profit/(loss)		1,899			903			218			250			478			—			—			3,748			(189	)		3,559
Non-operating items																													20
Net finance charges																													(329	)
Share of after tax results of associates and joint ventures
– Moët Hennessy																													302
– Other																													7
Profit before taxation																													3,559

	North America £ million		Europe and Turkey(ii) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Eliminate inter- segment sales £ million			Total operating segments £ million			Corporate and other £ million			Total £ million
2016
Sales		4,037		4,593			1,875			1,078			4,022			1,355			(1,355	)		15,605			36			15,641
Net sales
At budgeted exchange rates(i)		3,282		2,481			1,286			901			2,114			1,452			(1,373	)		10,143			38			10,181
Acquisitions and disposals		106		75			74			59			9			—			—			323			—			323
ISC allocation		10		50			4			8			7			(79	)		—			—			—			—
Retranslation to actual exchange rates		167		(62	)		37			(105	)		(54	)		(18	)		18			(17	)		(2	)		(19	)
Net sales		3,565		2,544			1,401			863			2,076			1,355			(1,355	)		10,449			36			10,485
Operating profit/(loss)
At budgeted exchange rates(i)		1,459		738			212			221			399			112			—			3,141			(149	)		2,992
Acquisitions and disposals		24		7			(8	)		13			1			—			—			37			—			37
ISC allocation		14		70			6			11			11			(112	)		—			—			—			—
Retranslation to actual exchange rates		54		(14	)		2			(46	)		(16	)		—			—			(20	)		(1	)		(21	)
Operating profit/(loss) before exceptional items		1,551		801			212			199			395			—			—			3,158			(150	)		3,008
Exceptional items		—		—			—			(118	)		(49	)		—			—			(167	)		—			(167	)
Operating profit/(loss)		1,551		801			212			81			346			—			—			2,991			(150	)		2,841
Non-operating items																												123
Net finance charges																												(327	)
Share of after tax results of associates and joint ventures
– Moët Hennessy																												217
– Other																												4
Profit before taxation																												2,858

(i) These items represent the IFRS 8 performance measures for the geographical and ISC segments.

(ii) The Europe and Turkey region was formerly named ‘Europe, Russia and Turkey’. Countries included in the region have not changed.

(1) The net sales figures for ISC reported to the Executive Committee primarily comprise inter-segment sales and these are eliminated in a separate column in the above segmental analysis. Apart from sales by the ISC segment to the other operating segments, inter-segmental sales are not material.

(2) The group’s net finance charges are managed centrally and are not attributable to individual operating segments.

(3) Approximately 40% of annual net sales occur in the last four months of each calendar year.

(4) In the year ended 30 June 2017 Diageo changed its internal reporting structure to reflect changes made to management responsibilities. As a result of this change, Lebanon, other Middle East countries and North African countries which were formerly reported in the Asia Pacific and Africa regions respectively are now included in the Europe and Turkey region. In addition, the result of the Travel Retail operations have been reallocated to the geographical regions to better reflect the region in which the sale to the customer is made. The information for year ended 30 June 2016 has not been restated as the amounts involved are not material.

Summary of Other Segmental Information

(b) Other segmental information

	North America £ million			Europe and Turkey (i) £ million			Africa £ million			Latin America and Caribbean £ million			Asia Pacific £ million			ISC £ million			Corporate and other £ million			Total £ million
2018
Capital expenditure		132			22			163			44			44			131			48			584
Depreciation and intangible asset amortisation		(44	)		(20	)		(77	)		(7	)		(42	)		(110	)		(68	)		(368	)
Exceptional accelerated depreciation and impairment		—			—			(35	)		—			—			—			—			(35	)
Exceptional impairment of intangible assets		—			—			(90	)		—			—			—			—			(90	)
2017
Capital expenditure		112			27			126			34			48			125			46			518
Depreciation and intangible asset amortisation		(41	)		(21	)		(77	)		(7	)		(42	)		(107	)		(66	)		(361	)
2016
Capital expenditure		105			29			107			20			52			150			43			506
Depreciation and intangible asset amortisation		(39	)		(21	)		(83	)		(10	)		(35	)		(106	)		(61	)		(355	)
Exceptional accelerated depreciation and impairment		—			—			—			(14	)		—			(8	)		—			(22	)
Exceptional impairment of intangible assets		—			—			—			(104	)		—			—			—			(104	)

(i) The Europe and Turkey region was formerly named ‘Europe, Russia and Turkey’. Countries included in the region have not changed.

Schedule of Information about Category and Geographical Analysis

(c) Category and geographical analysis

	Category analysis												Geographic analysis
	Spirits £ million		Beer £ million		Wine £ million		Ready to drink £ million		Other(iv) £ million		Total £ million		Great Britain £ million		United States £ million		Nether- lands £ million		India £ million		Rest of World £ million		Total £ million
2018
Sales(i)		14,605		2,647		81		854		245		18,432		1,630		4,310		63		3,086		9,343		18,432
Non-current assets(ii), (iii)		—		—		—		—		—		—		1,717		4,221		2,367		3,688		7,792		19,785
2017
Sales(i)		14,241		2,635		81		854		303		18,114		1,558		4,366		62		3,070		9,058		18,114
Non-current assets(ii), (iii)		—		—		—		—		—		—		1,678		4,012		2,392		4,009		7,410		19,501
2016
Sales(i)		11,993		2,486		265		726		171		15,641		1,672		3,729		56		2,465		7,719		15,641
Non-current assets(ii), (iii)		—		—		—		—		—		—		1,679		3,859		2,350		3,764		7,224		18,876

(i) The geographical analysis of sales is based on the location of third party customers.

(ii) The geographical analysis of non-current assets is based on the geographical location of the assets and comprises intangible assets, property, plant and equipment, biological assets, investments in associates and joint ventures, other investments and non-current other receivables.

(iii) The management information provided to the chief operating decision maker does not include an analysis of assets and liabilities by category and therefore is not disclosed.

(iv) In the two years ended 30 June 2018 and 30 June 2017 ‘Other’ includes the group’s sorghum beer business which in the year ended 30 June 2016 was included in ‘Beer’.

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Operating costs (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Information About Operating Costs

	2018         £ million			2017         £ million			2016         £ million
Excise duties		6,269			6,064			5,156
Cost of sales		4,634			4,680			4,251
Marketing		1,882			1,798			1,562
Other operating expenses		1,956			2,013			1,831
		14,741			14,555			12,800
Comprising:
Excise duties – Great Britain		853			774			853
– United States		548			558			468
– India		2,094			2,073			1,588
– Other		2,774			2,659			2,247
Increase in inventories		(296	)		(146	)		(100	)
Raw materials and consumables		3,052			2,813			2,548
Marketing		1,882			1,798			1,562
Other external charges		1,849			2,124			1,767
Staff costs		1,509			1,583			1,475
Depreciation, amortisation and impairment		493			361			473
Gains on disposal of properties		(9	)		(7	)		(39	)
Net foreign exchange losses/(gains)		6			(16	)		1
Other operating income (i)		(14	)		(19	)		(43	)
		14,741			14,555			12,800

(i) In the year ended 30 June 2016 Diageo sold 8.5 million shares in United Breweries Limited resulting in a gain of £28 million.

Information About Auditor Fees

(b) Auditor fees

Other external charges include the fees of the principal auditor of the group, PricewaterhouseCoopers LLP and its affiliates (PwC) are analysed below.

	2018 £ million		2017 £ million		2016 £ million
Audit of these financial statements		3.3		3.1		3.4
Audit of financial statements of subsidiaries		3.3		3.4		2.3
Audit related assurance services(i)		1.6		1.6		1.4
Total audit fees (Audit fees)		8.2		8.1		7.1
Other services relevant to taxation (Tax fees)(ii)		0.1		0.3		0.5
Other assurance services (Audit related fees)(iii)		0.6		0.5		0.4
All other non-audit fees (All other fees)(iv)		1.0		0.9		0.9
		9.9		9.8		8.9

(i) Audit related assurance services are principally in respect of reporting under section 404 of the US Sarbanes-Oxley Act and the review of the interim financial information.

(ii) Other services relevant to taxation principally comprise tax advice.

(iii) Other assurance services comprise the aggregate fees for assurance and related services that are related to the performance of the audit or review of the financial statements and are not reported under ‘total audit fees’.

(iv) All other non-audit fees are principally in respect of immigration and advisory services.

(1) Disclosure requirements for auditor fees in the United States are different from those required in the United Kingdom. The terminology by category required in the United States is disclosed in brackets in the above table. All figures are the same for the disclosures in the United Kingdom and the United States apart from £0.4 million (2017 – £0.3 million; 2016—£0.3 million) of the cost in respect of the review of the interim financial information which would be included in audit related fees in the United States rather than audit fees.

Information About Staff Costs

	2018 £ million		2017 £ million		2016 £ million
Aggregate remuneration
Wages and salaries		1,272		1,330		1,236
Share-based incentive plans		40		34		28
Employer’s social security		95		93		85
Employer’s pension
– defined benefit plans		73		95		99
– defined contribution plans		18		17		16
Other post employment plans		11		14		11
		1,509		1,583		1,475

Information About Average Number of Employees

The average number of employees on a full time equivalent basis (excluding employees of associates and joint ventures) was as follows:

	2018		2017		2016
North America		2,406		2,251		2,477
Europe and Turkey		3,747		4,074		4,164
Africa		4,625		4,898		5,381
Latin America and Caribbean		2,536		2,573		3,013
Asia Pacific		8,008		8,690		9,711
ISC		4,227		4,244		4,188
Corporate and other(i)		4,368		3,703		3,144
		29,917		30,433		32,078

(i) The increase in ‘Corporate and other’ in the years ended 30 June 2018 and 30 June 2017 is primarily due to the creation of a worldwide service centre in India where roles have been transferred from the geographical regions.

Information About Exceptional Operating Items

(d) Exceptional operating items

Included in the table above are exceptional operating items as follows:

	2018 £ million		2017 £ million		2016 £ million
Other external charges		—		42		49
Decrease in inventories		3		—		—
Depreciation, amortisation and impairment
– Brand, goodwill and tangible asset impairment		125		—		118
Total exceptional operating costs (note 4)		128		42		167

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Exceptional items (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Information about Exceptional Items

	2018 £ million			2017 £ million			2016 £ million
Items included in operating profit
Brand, goodwill, tangible and other assets impairment (a)		(128	)		—			(118	)
Competition authority investigation in Turkey (b)		—			(33	)		—
Customer claim in India (c)		—			(32	)		—
Disengagement agreements relating to United Spirits Limited (d)		—			23			(49	)
		(128	)		(42	)		(167	)
Non-operating items
Sale of businesses
Wines in the United States and Percy Fox (e)		—			20			(191	)
Argentina (f)		—			—			(38	)
South African associate interests (g)		—			—			(27	)
Jamaica, Singapore and Malaysia beer interests (h)		—			—			457
Kenya—glass business (CGI) (i)		—			—			14
Other
Provision for a receivable related to a loan guarantee (j)		—			—			(92	)
		—			20			123
Exceptional items before taxation		(128	)		(22	)		(44	)
Items included in taxation (note 7 (b))		203			4			56
Exceptional items in continuing operations		75			(18	)		12
Discontinued operations net of taxation (note 8)		—			(55	)		—
Total exceptional items		75			(73	)		12
Attributable to:
Equity shareholders of the parent company		75			(64	)		2
Non-controlling interests		—			(9	)		10
Total exceptional items		75			(73	)		12

(a) In the year ended 30 June 2018, an impairment charge of £128 million in respect of the Meta brand, Ethiopian tangible fixed assets, associated spare parts reported in inventory and goodwill allocated to the Africa Regional Markets cash-generating unit has been recognised in other operating exceptional expenses. Forecast cash flow assumptions were reduced principally due to the devaluation of the Ethiopian birr increasing costs of imported raw materials and products, an increased competitive environment and political unrest in Ethiopia. For further information see note 10 (d).

In the year ended 30 June 2016, an impairment charge in respect of the Ypióca brand and related tangible fixed assets and goodwill allocated to the Paraguay, Uruguay and Brazil (PUB) cash-generating unit of £62 million, £14 million and £42 million, respectively, was charged to other operating expenses. Forecast cash flow assumptions were reduced principally due to a challenging economic environment in Brazil and significant adverse changes in local tax regulation.

(b) In the year ended 30 June 2017, TRY150 million (£33 million) was charged to exceptional items in respect of the Turkish Competition Authority investigation into certain of Mey İçki’s trading practices in Turkey.

(c) During the year ended 30 June 2017 United Spirits Limited received a claim, followed by a debit note, from a customer in India in respect of differential pricing charged over a number of years in respect of products sold to that customer primarily for the period prior to the acquisition of United Spirits Limited by Diageo. The group made a provision of INR2,678 million (£32 million) in exceptional items against the current receivable from the customer.

(d) On 25 February 2016, in relation to an agreement entered into with Dr Vijay Mallya (Dr Mallya) and described further at note 18(c) (25 February Agreement), the group incurred an exceptional operating charge of £49 million. This included provisions for payments to Dr Mallya of, in aggregate, $75 million (£53 million) over a five year period in consideration for (i) his resignation and the termination of his appointment and governance rights and his relinquishing of the rights and benefits attached to his position as Chairman and Non-Executive Director of United Spirits Limited (USL); (ii) his agreement to five-year global non-compete (excluding the United Kingdom), non-interference,non-solicitation and standstill undertakings; and (iii) his agreement that he and his affiliates would not pursue any claims against Diageo, USL and their affiliates. Separately, other arrangements entered into on 25 February 2016 resulted in a net gain of £4 million, comprising the gain upon termination of certain other agreements that were the subject of prior provisions, less legal fees directly attributable to the 25 February Agreement. In the year ended 30 June 2016 a payment of $40 million (£28 million) was made to Dr Mallya as the first instalment due under the 25 February Agreement. Owing to various reasons, including breaches of several provisions of the 25 February 2016 Agreement by Dr Mallya, Diageo believes that it was not liable to pay any further instalments under that agreement and accordingly the outstanding provision of $29 million (£23 million) was credited back to the income statement in the year ended 30 June 2017.

(e) On 1 January 2016, Diageo completed the sale of the majority of its wine interests in the United States and its UK based Percy Fox businesses to Treasury Wine Estates. Together with the sale of the group’s other wine interests in the United States the transactions resulted in a loss before taxation on disposal of £191 million in the year ended 30 June 2016.

In the year ended 30 June 2017 the guarantee in respect of the lease payments to Realty Income Corporation was settled and the working capital on disposal was agreed with Treasury Wine Estates resulting in a net £20 million exceptional gain.

(f) On 29 January 2016, Diageo disposed of its interests in Argentina to Grupo Peñaflor. The transaction resulted in a loss before taxation of £38 million including a cumulative exchange loss of £20 million, in respect of prior years, recycled from other comprehensive income and other directly attributable costs of £7 million.

(g) On 1 December 2015, Diageo disposed of its 42.25% equity interests in DHN Drinks, its 25% equity stake in Sedibeng Breweries Limited and its 15.01% equity stake in Namibia Breweries Limited (South African associate interests) to Heineken. The net cash consideration received was £120 million, which included the repayment of £31 million in respect of loans previously made to DHN Drinks and Sedibeng Breweries Limited. A loss before taxation of £27 million, including a £30 million cumulative exchange loss, in respect of prior years, recycled from other comprehensive income, was accounted for in the income statement.

(h) On 7 October 2015, Diageo disposed of its 57.87% shareholding in D&G (Jamaican Red Stripe business) and its 49.99% stake in GAPL Pte Limited (Singapore and Malaysian beer businesses) to Heineken resulting in a gain before taxation of £457 million.

(i) On 30 September 2015, the group completed the disposal of its shareholding in Central Glass Industries Limited (CGI), a Kenyan glass bottle manufacturer.

(j) During the year ended 30 June 2016 a guarantee provided by Diageo for a loan of $135 million (£92 million) given by Standard Chartered Bank (SCB) to Watson Limited was called and $135 million was paid to SCB. The underlying security package for the loan is currently being contested in court and a provision of $135 million was made in the year ended 30 June 2016.

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Finance income and charges (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Impact from Derivatives Among Interest Income/(Charge)

The impact of derivatives, excluding cash flow hedges that are in respect of commodity risk management or those that are used to hedge the currency risk of highly probable future currency cash flows, is included in interest income or interest charge.

	2018 £ million			2017 £ million			2016 £ million
Interest income		155			148			153
Fair value gain on financial instruments		61			76			88
Total interest income(i)		216			224			241
Interest charge on bank loans and overdrafts		(53	)		(72	)		(67	)
Interest charge on finance leases		(9	)		(11	)		(13	)
Interest charge on all other borrowings		(333	)		(368	)		(379	)
Fair value loss on financial instruments		(62	)		(67	)		(91	)
Total interest charges(i)		(457	)		(518	)		(550	)
Net interest charges		(241	)		(294	)		(309	)
Net finance income in respect of post employment plans in surplus (note 13)		9			2			18
Hyperinflation adjustment in respect of Venezuela (note 1)		18			9			—
Other finance income		—			—			3
Total other finance income		27			11			21
Net finance charge in respect of post employment plans in deficit (note 13)		(20	)		(27	)		(23	)
Unwinding of discounts		(14	)		(8	)		(11	)
Change in financial liability (Level 3)		—			(8	)		—
Hyperinflation adjustment in respect of Venezuela (note 1)		—			—			(1	)
Other finance charges		(12	)		(3	)		(4	)
Total other finance charges		(46	)		(46	)		(39	)
Net other finance charges		(19	)		(35	)		(18	)

(i) Includes £73 million interest income and £(394) million interest charge in respect of financial assets and liabillities that are not measured at fair value through the income statement (2017—£91 million income and £(467) million charge, 2016—£84 million income and £(451) million charge).

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Investments in associates and joint ventures (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Analysis of Movement in the Group's Investments in Associates and Joint Ventures

(a) An analysis of the movement in the group’s investments in associates and joint ventures is as follows:

	Moët Hennessy £ million			Others £ million			Total £ million
Cost less provisions
At 30 June 2016		2,445			83			2,528
Exchange differences		117			3			120
Additions		—			10			10
Share of profit after tax		302			7			309
Dividends		(218	)		(5	)		(223	)
Share of tax attributable to shareholders		85			—			85
Other		(5	)		—			(5	)
At 30 June 2017		2,726			98			2,824
Exchange differences		3			—			3
Additions		—			41			41
Share of profit after tax		305			4			309
Dividends		(150	)		(9	)		(159	)
Other		(9	)		—			(9	)
At 30 June 2018		2,875			134			3,009

(1) Investment in associates balance includes loans given to and preference shares invested in associates of £59 million (2017 – £27 million; 2016 – £19 million).

Schedule of Income Statement of Associates

(b) Income statement information for the three years ended 30 June 2018 and balance sheet information as at 30 June 2018 and 30 June 2017 of Moët Hennessy is as follows:

	2018 £ million		2017 £ million		2016 £ million
Sales		4,445		4,356		3,491
Profit for the year		897		888		638
Total comprehensive income		799		838		509

Schedule of Information about Balance Sheet of Associates

	2018 £ million			2017 £ million
Non-current assets		4,251			4,160
Current assets		7,395			6,897
Total assets		11,646			11,057
Non-current liabilities		(972	)		(973	)
Current liabilities		(2,218	)		(2,067	)
Total liabilities		(3,190	)		(3,040	)
Net assets		8,456			8,017

(1) Including acquisition fair value adjustments principally in respect of Moët Hennessy’s brands and translated at £1 = €1.13 (2017 – £1 = €1.14).

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Taxation (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Analysis of Taxation Charge for the Year

(a) Analysis of taxation charge for the year

	United Kingdom							Rest of world									Total
	2018 £ million			2017 £ million		2016 £ million		2018 £ million			2017 £ million			2016 £ million			2018 £ million			2017 £ million			2016 £ million
Current tax
Current year		131			50		61		503			541			515			634			591			576
Adjustments in respect of prior years		71			4		—		(2	)		16			63			69			20			63
		202			54		61		501			557			578			703			611			639
Deferred tax
Origination and reversal of temporary differences		40			40		26		127			94			(109	)		167			134			(83	)
Changes in tax rates(i)		(11	)		5		6		(360	)		(14	)		1			(371	)		(9	)		7
Adjustments in respect of prior years		95			13		2		2			(17	)		(69	)		97			(4	)		(67	)
		124			58		34		(231	)		63			(177	)		(107	)		121			(143	)
Taxation on profit from continuing operations		326			112		95		270			620			401			596			732			496

(i) Includes the impact as a consequence of the reduction in the US Federal tax rate (from 35% to 21%) enacted by the Tax Cuts and Jobs Act (TCJA) in the United States.

Schedule of Exceptional Tax Credits or Charges

(b) Exceptional tax (credits)/charges

The taxation charge includes the following exceptional items:

	2018 £ million			2017 £ million			2016 £ million
US tax reform(i)		(354	)		—			—
UK transfer pricing settlement(ii)		143			—			—
UK industrial building allowance(iii)		21			—			—
Brand and tangible asset impairment		(13	)		—			(10	)
Sale of businesses		—			7			(49	)
Customer claim in India		—			(11	)		—
Disengagement agreements relating to United Spirits Limited		—			—			3
		(203	)		(4	)		(56	)

(i) The exceptional tax credit of £354 million ($478 million) resulted from applying the Tax Cuts and Jobs Act (TCJA), enacted on 22 December 2017, in the United States. The credit principally arose on remeasuring the deferred tax liabilities in respect of intangibles and other assets for the change in the US Federal tax rate from 35% to 21%, resulting in an exceptional tax credit of £363 million ($490 million), which is partially offset by £9 million ($12 million) exceptional tax charge in respect of repatriation of untaxed foreign earnings. In addition, there was a one-off charge of £11 million ($15 million) to other comprehensive income and equity, in respect of the remeasurement of the deferred tax assets on post employment liabilities and share-based incentive plans as a result of applying the provisions of the TCJA.

(ii) In its interim announcement for the six months ended 31 December 2017, Diageo reported that discussions were being held with HMRC to seek clarity on Diageo’s transfer pricing and related issues, and that a preliminary assessment for diverted profits tax notice had been issued. Final charging notices were issued in August 2017 and Diageo paid £107 million in respect of the two years ended 30 June 2016. Diageo agreed in June 2018 with HMRC that diverted profits tax does not apply and at the same time has reached resolution on the transfer pricing issues being discussed. The agreement in respect of transfer pricing covers the period from 1 July 2014 to 30 June 2017 and has resulted in an additional UK tax charge of £143 million. In the year ended 30 June 2018 an additional tax charge of £47 million has been recognised in current tax which is based on the approach agreed with HMRC.

(iii) A deferred tax asset of £21 million has been written off in respect of the difference between the book value and tax written value of industrial buildings in the United Kingdom.

Schedule of Taxation Rate Reconciliation and Factors that may Affect Future Tax Charges

(c) Taxation rate reconciliation and factors that may affect future tax charges

	2018 £ million			2017 £ million			2016 £ million
Profit from continuing operations before taxation		3,740			3,559			2,858
Notional charge at UK corporation tax rate of 19% (2017 – 19.75%; 2016 – 20%)		711			703			571
Elimination of notional tax on share of after tax results of associates and joint ventures		(58	)		(60	)		(44	)
Differences in overseas tax rates (i)		134			162			50
Effect of intra-group financing		(61	)		(64	)		(97	)
Non taxable gain on disposals of businesses		—			—			(90	)
Other tax rate and tax base differences		(109	)		(100	)		(87	)
Other items not chargeable		(79	)		(78	)		(66	)
Impairment		16			—			21
Non deductible losses on disposal of businesses		—			(1	)		24
Other non deductible exceptional items		9			7			31
Other items not deductible (ii)		238			156			180
Changes in tax rates		(371	)		(9	)		7
Adjustments in respect of prior years		166			16			(4	)
Taxation on profit from continuing operations		596			732			496

(i) Changes in overseas tax rates are mainly due to the application of the TCJA. Excludes impact of remeasurement of deferred tax liabilities due to US tax reform, which is included in changes in tax rates in the table above.

(ii) Other items not deductible include irrecoverable withholding tax, controlled foreign companies charge and additional state and local taxes.

Schedule of Information about Deferred Tax assets and Liabilities

(d) Deferred tax assets and liabilities

The amounts of deferred tax accounted for in the consolidated balance sheet comprise the following net deferred tax assets/(liabilities):

	Property, plant and equipment £ million			Intangible assets £ million			Post employment plans £ million			Tax losses £ million			Other temporary differences(i) £ million			Total £ million
At 30 June 2016		(126	)		(2,201	)		240			60			343			(1,684	)
Exchange differences		6			(51	)		5			2			8			(30	)
Recognised in income statement – continuing operations		(60	)		(25	)		(3	)		(25	)		(8	)		(121	)
Recognised in other comprehensive income and equity		—			—			(130	)		6			(21	)		(145	)
Discontinued operations		—			—			—			—			2			2
At 30 June 2017		(180	)		(2,277	)		112			43			324			(1,978	)
Exchange differences		7			89			(2	)		(1	)		(11	)		82
Recognised in income statement – continuing operations		(134	)		(14	)		(9	)		(15	)		(84	)		(256	)
Reclassification		(4	)		—			(1	)		—			5			—
Recognised in other comprehensive income and equity		—			—			(105	)		5			35			(65	)
Tax rate change-recognised in income statement		19			390			(16	)		—			(30	)		363
Tax rate change-recognised in other comprehensive income and equity		—			—			(6	)		—			(5	)		(11	)
At 30 June 2018		(292	)		(1,812	)		(27	)		32			234			(1,865	)

(i) Deferred tax on other temporary differences includes thalidomide provisions, restructuring provisions, share-based payments and intra group sales of products.

Schedule of Net Deferred Asset and Liability

After offsetting deferred tax assets and liabilities where appropriate within territories, the net deferred tax liability comprises:

	2018 £ million			2017 £ million
Deferred tax assets		122			134
Deferred tax liabilities		(1,987	)		(2,112	)
		(1,865	)		(1,978	)

Schedule of Unrecognized Deferred Tax Assets and Liabilities

(e) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following tax losses:

	2018 £ million		2017 £ million
Capital losses – indefinite		69		67
Trading losses – indefinite		92		80
Trading losses – expiry dates up to 2026		55		60
		216		207

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Acquisition and sale of businesses and purchase of non-controllinginterests (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Fair Value of Net Assets Acquired and Cash Consideration Paid in Business Combination

Fair value of net assets acquired and cash consideration paid in respect of the acquisition of businesses and the purchase of shares of non-controlling interests in the three years ended 30 June 2018 were as follows:

	Net assets acquired and consideration
	Casamigos £ million			Other £ million			2018 £ million			2017 £ million		2016 £ million
Brands and other intangibles		469			9			478			—		26
Inventories		4			—			4			—		—
Other working capital		5			(3	)		2			—		—
Current tax		—			—			—			—		(1	)
Deferred tax		—			—			—			—		(11	)
Cash		6			—			6			—		—
Fair value of assets and liabilities		484			6			490			—		14
Goodwill arising on acquisition		237			12			249			—		(14	)
Consideration payable		721			18			739			—		—
Satisfied by:
Cash consideration paid		549			6			555			—		—
Contingent consideration payable		172			12			184			—		—
		721			18			739			—		—
Cash consideration paid for Casamigos		549			—			549			—		—
Cash consideration paid for other subsidiaries		—			6			6			—		—
Cash consideration paid for investments in associates		—			12			12			6		10
Cash consideration paid in respect of prior year acquisitions		—			22			22			23		4
Capital injection in associates		—			11			11			2		1
Cash acquired		(6	)		—			(6	)		—		—
Net cash outflow on acquisition of businesses		543			51			594			31		15
Purchase of shares of non-controlling interests		—			—			—			—		21
Total net cash outflow		543			51			594			31		36

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Intangible assets (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Impairment of Intangible Assets, Including Brands

	Brands £ million			Goodwill £ million			Other intangibles £ million			Computer software £ million			Total £ million
Cost
At 30 June 2016		8,656			2,767			1,472			568			13,463
Exchange differences		159			24			34			4			221
Additions		—			—			—			47			47
Disposals		—			—			—			(41	)		(41	)
At 30 June 2017		8,815			2,791			1,506			578			13,690
Exchange differences		(347	)		(252	)		(24	)		(7	)		(630	)
Additions		478			249			—			35			762
Disposals		—			—			—			(2	)		(2	)
At 30 June 2018		8,946			2,788			1,482			604			13,820
Amortisation and impairment
At 30 June 2016		577			68			68			380			1,093
Exchange differences		9			—			1			3			13
Amortisation for the year		—			—			3			53			56
Disposals		—			—			—			(38	)		(38	)
At 30 June 2017		586			68			72			398			1,124
Exchange differences		(10	)		(8	)		—			(5	)		(23	)
Amortisation for the year		—			—			3			55			58
Exceptional impairment		40			50			—			—			90
Disposals		—			—			—			(1	)		(1	)
At 30 June 2018		616			110			75			447			1,248
Carrying amount
At 30 June 2018		8,330			2,678			1,407			157			12,572
At 30 June 2017		8,229			2,723			1,434			180			12,566
At 30 June 2016		8,079			2,699			1,404			188			12,370

Schedule of Principal Acquired Brands with Indefinite Useful Life

At 30 June 2018, the principal acquired brands, all of which are regarded as having indefinite useful economic lives, are as follows:

	Principal markets		2018 £ million		2017 £ million
Crown Royal whisky		United States		1,109		1,126
McDowell’s No.1 whisky, rum and brandy		India		1,077		1,156
Captain Morgan		Global		910		924
Johnnie Walker whisky		Global		625		625
Smirnoff vodka		Global		624		634
Windsor Premier whisky		Korea		591		583
Casamigos tequila		United States		458		—
Yenì Raki		Turkey		280		372
Shui Jing Fang Chinese white spirit		Greater China		259		257
Signature whisky		India		202		218
Don Julio tequila		United States		195		216
Bell’s whisky		United Kingdom		179		179
Black Dog whisky		India		171		184
Seagram’s 7 Crown whiskey		United States		169		171
Antiquity whisky		India		167		180
Zacapa rum		Global		145		147
Seagram’s VO whisky		United States		144		146
Gordon’s gin		Europe		119		119
Bagpiper whisky		India		116		124
Old Parr whisky		Global		101		101
Other brands				689		767
				8,330		8,229

Schedule of Goodwill Attributed to Cash-generating Units

For the purposes of impairment testing, goodwill has been attributed to the following cash-generating units:

	2018 £ million		2017 £ million
North America		390		207
Europe and Turkey
– Europe (excluding Turkey)		170		154
– Turkey		284		377
Africa – Africa Regional Markets		27		93
Latin America and Caribbean – Mexico		133		103
Asia Pacific
– Greater China		131		130
– India		1,462		1,572
Other cash-generating units		81		87
		2,678		2,723

Schedule of Pre-tax Discount Rates and Terminal Growth Rates used for Impairment Testing

The pre-tax discount rates and terminal growth rates used for impairment testing are as follows:

	2018				2017
	Pre-tax discount  rate %		Terminal growth rate %		Pre-tax discount  rate %		Terminal growth rate %
North America – United States		10		2		10		2
Europe and Turkey
– Europe		7		2		8		2
– Turkey		16		5		16		5
Africa
– Africa Regional Markets		25		5		21		4
– Ethiopia		24		8		24		8
– South Africa		16		5		18		5
Latin America and Caribbean
– Brazil		15		4		15		5
– Mexico		16		3		17		3
Asia Pacific
– Korea		8		2		8		2
– Greater China		9		2		10		3
– India		14		5		14		6

Schedule of Sensitivity to Change in Key Assumptions

The table below shows the headroom at 30 June 2018 and the impairment charge that would be required if the assumptions in the calculation of their value in use were changed:

	Headroom £ million		1ppt increase in discount rate £ million			10% decrease in annual cash  flow £ million			2ppt decrease in annual growth rate £ million			5ppt decrease in annual growth rate in forecast period 2019-2029 £ million
India(i)		823		—			—			—			(907	)
Windsor Premier brand(ii)		170		—			—			(56	)		—
Africa Regional Markets(iii)		—		(15	)		(29	)		—			—

(i) As India is a developing market, where maturity is not expected for a number of years, a management forecast growth projection was used until 2029. The only change in the key assumptions considered reasonably possible that would result in an impairment of the cash-generating unit would be a 5ppt decrease in the annual growth rates throughout the forecast period. The cumulative effect of such a change is disclosed in the table above.

(ii) The Windsor Premier brand is disclosed as sensitive due to the challenging whisky market in Korea. The only change in the key assumptions considered reasonably possible that would result in an impairment of the brand would be a 2ppt decrease in the annual growth rate in perpetuity. The cumulative effect of such a change is disclosed in the table above.

(iii) Reasonably possible changes in the key assumptions that would result in further impairment of the goodwill allocated to Africa Regional Markets cash-generating unit would be a 1ppt increase in discount rate or a 10% decrease in annual cash flows.

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Property, plant and equipment (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Disclosure of Detailed Information About Property, Plant and Equipment

	Land and buildings £ million			Plant and equipment £ million			Fixtures and fittings £ million			Returnable bottles and crates £ million			Under construction £ million			Total £ million
Cost
At 30 June 2016		1,483			3,783			122			516			310			6,214
Exchange differences		39			(12	)		(1	)		(14	)		—			12
Additions		39			117			14			28			261			459
Disposals		(28	)		(90	)		(10	)		(24	)		(3	)		(155	)
Transfers		95			160			2			17			(274	)		—
At 30 June 2017		1,628			3,958			127			523			294			6,530
Exchange differences		(36	)		(73	)		(6	)		(9	)		(7	)		(131	)
Sale of businesses		(2	)		—			—			—			—			(2	)
Additions		20			138			7			27			372			564
Disposals		(38	)		(84	)		(6	)		(25	)		(4	)		(157	)
Transfers		13			163			4			18			(223	)		(25	)
At 30 June 2018		1,585			4,102			126			534			432			6,779
Depreciation
At 30 June 2016		400			1,513			80			340			—			2,333
Exchange differences		3			(5	)		—			(7	)		—			(9	)
Depreciation charge for the year		57			196			13			39			—			305
Disposals		(12	)		(73	)		(7	)		(21	)		—			(113	)
At 30 June 2017		448			1,631			86			351			—			2,516
Exchange differences		(10	)		(32	)		(4	)		(4	)		—			(50	)
Depreciation charge for the year		48			210			15			37			—			310
Exceptional impairment		—			26			—			9			—			35
Sale of businesses		(1	)		—			—			—			—			(1	)
Disposals		(18	)		(74	)		(6	)		(22	)		—			(120	)
At 30 June 2018		467			1,761			91			371			—			2,690
Carrying amount
At 30 June 2018		1,118			2,341			35			163			432			4,089
At 30 June 2017		1,180			2,327			41			172			294			4,014
At 30 June 2016		1,083			2,270			42			176			310			3,881

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Other investments (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Informations About Cost Less Allowances or Fair Value of Other Investments

	Loans         £ million			Others         £ million			Total         £ million
Cost less allowances or fair value
At 30 June 2016		23			8			31
Exchange differences		1			—			1
Additions		2			—			2
Repayments and disposals		(5	)		—			(5	)
Fair value adjustment		—			2			2
At 30 June 2017		21			10			31
Exchange differences		(1	)		2			1
Additions		21			—			21
Repayments and disposals		(2	)		(2	)		(4	)
Fair value adjustment		(4	)		1			(3	)
At 30 June 2018		35			11			46

(a) At 30 June 2018, loans comprise £35 million (2017 – £18 million; 2016 – £21 million) of loans to customers and other third parties, after allowances of £108 million (2017 – £110 million; 2016 – £98 million), and £nil (2017 – £3 million; 2016 – £2 million) of loans to associates.

(b) Loans include a loan of $135 million (£104 million) provided by Standard Chartered Bank (SCB) to Watson Limited and guaranteed by a subsidiary of the group. The loan became due in May 2015 and was paid to SCB by Diageo in January 2016. The amount receivable from Watson Limited in respect of the guarantee has been fully provided for.

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Post employment benefits (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Funding Valuations of the Significant Defined Benefit Plans

The most recent funding valuations of the significant defined benefit plans were carried out as follows:

Principal plans	Date of valuation
United Kingdom(i)		1 April 2015
Ireland(ii)		31 December 2015
United States		1 January 2018

(i) The triennial valuation of the Diageo Pension Scheme (the UK Scheme) as at 1 April 2018 is in progress and the results of this valuation are expected to be agreed by Diageo and the trustee later in calendar year 2018. The Diageo Pension Scheme (the UK Scheme) closed to new members in November 2005. Employees who have joined Diageo in the United Kingdom since the defined benefit scheme closed had been eligible to become members of the Diageo Lifestyle Plan (a cash balance defined benefit pension plan) until 1 January 2018. Since then new employees have been eligible to become members of a Diageo administered defined contribution plan. From 1 April 2018 there were changes to the future benefits earnt by employees in the UK Scheme. The changes impact the ongoing service cost but not the benefits earnt by the members as at 31 March 2018.

(ii) The Guinness Ireland Group Pension Scheme in Ireland (the Irish Scheme) closed to new members in May 2013. Employees who have joined Diageo in Ireland since the defined benefit scheme closed have been eligible to become members of Diageo administered defined contribution plans.

Schedule of Amounts Charged to Consolidated Income Statement for Group's Defined Benefit Post Employment Plans and Consolidated Statement of Comprehensive Income

The amounts charged to the consolidated income statement for the group’s defined benefit post employment plans and the consolidated statement of comprehensive income for the three years ended 30 June 2018 are as follows:

	2018 £ million			2017 £ million			2016 £ million
Current service cost and administrative expenses		(123	)		(133	)		(112	)
Past service gains		33			14			1
Gains on curtailments and settlements		6			10			1
Charge to operating profit		(84	)		(109	)		(110	)
Net finance charge in respect of post employment plans		(11	)		(25	)		(5	)
Charge before taxation(i)		(95	)		(134	)		(115	)
Actual returns less amounts included in finance income		312			973			61
Experience (losses) / gains		(30	)		58			91
Changes in financial assumptions		108			(466	)		(1,066	)
Changes in demographic assumptions		69			86			62
Other comprehensive income/(loss)		459			651			(852	)
Changes in the surplus restriction		(2	)		1			—
Total other comprehensive income/(loss)		457			652			(852	)

Schedule of Charge Before Taxation

(i) The charge before taxation in respect of the following countries is:

	2018 £ million			2017 £ million			2016 £ million
United Kingdom		(49	)		(67	)		(50	)
Ireland		1			(15	)		(19	)
United States		(29	)		(34	)		(27	)
Other		(18	)		(18	)		(19	)
		(95	)		(134	)		(115	)

Schedule of Movement in Net Deficit

The movement in the net (deficit)/surplus for the two years ended 30 June 2018 is set out below:

	Plan assets £ million			Plan liabilities £ million			Net (deficit)/surplus £ million
At 30 June 2016		8,256			(9,447	)		(1,191	)
Exchange differences		99			(135	)		(36	)
Charge before taxation		173			(307	)		(134	)
Other comprehensive income/(loss)(i)		973			(322	)		651
Contributions by the group		220			—			220
Employee contributions		8			(8	)		—
Benefits paid		(503	)		503			—
At 30 June 2017		9,226			(9,716	)		(490	)
Exchange differences		(1	)		1			—
Charge before taxation		227			(322	)		(95	)
Other comprehensive income(i)		312			147			459
Contributions by the group		192			—			192
Employee contributions		6			(6	)		—
Benefits paid		(652	)		652			—
At 30 June 2018		9,310			(9,244	)		66

(i) Excludes surplus restriction.

Schedule of Plan Assets and Liabilities by Type of Post Employment Benefit and Country

The plan assets and liabilities by type of post employment benefit and country is as follows:

	2018					2017
	Plan assets £ million		Plan liabilities £ million			Plan assets £ million		Plan liabilities £ million
Pensions
United Kingdom		6,792		(6,032	)		6,789		(6,680	)
Ireland		1,745		(2,148	)		1,663		(1,952	)
United States		525		(505	)		522		(516	)
Other		180		(215	)		178		(215	)
Post employment medical		1		(259	)		2		(263	)
Other post employment		67		(85	)		72		(90	)
		9,310		(9,244	)		9,226		(9,716	)

Schedule of Balance Sheet Analysis of Post Employment Plans

The balance sheet analysis of the post employment plans is as follows:

	2018					2017
	Non- current assets(i) £ million		Non- current liabilities £ million			Non- current assets(i) £ million		Non- current liabilities £ million
Funded plans		935		(593	)		281		(492	)
Unfunded plans		—		(279	)		—		(280	)
		935		(872	)		281		(772	)

(i) Includes surplus restriction of £3 million (2017 – £1 million).

Schedule of Weighted Average Assumptions Used to Determine Group's Deficit/Surplus in Main Post Employment Plans

The following weighted average assumptions were used to determine the group’s deficit/surplus in the main post employment plans at 30 June in the relevant year. The assumptions used to calculate the charge/credit in the consolidated income statement for the year ended 30 June are based on the assumptions disclosed as at the previous 30 June.

	United Kingdom						Ireland						United States(i)
	2018 %		2017 %		2016 %		2018 %		2017 %		2016 %		2018 %		2017 %		2016 %
Rate of general increase in salaries(ii)		4.3		4.4		4.0		3.2		3.0		2.8		—		—		—
Rate of increase to pensions in payment		3.3		3.4		3.1		2.0		1.7		1.6		—		—		—
Rate of increase to deferred pensions		2.1		2.2		1.8		1.8		1.6		1.4		—		—		—
Discount rate for plan liabilities		2.8		2.6		2.9		1.7		2.1		1.4		4.1		3.7		3.5
Inflation - CPI		2.1		2.2		1.8		1.8		1.6		1.4		2.1		1.8		1.4
Inflation - RPI		3.1		3.2		2.8		—		—		—		—		—		—

(i) The salary increase assumption in the United States is not a significant assumption as only a minimal amount of members’ pension entitlement is dependent on a member’s projected final salary.

(ii) The salary increase assumptions include an allowance for age related promotional salary increases.

Schedule of Expected Age at Death of an Average Worker Who Retires Currently at Age of 65, and One Who is Currently Aged 45 and Subsequently Retires at the Age of 65

For the principal UK and Irish pension funds, the table below illustrates the expected age at death of an average worker who retires currently at the age of 65, and one who is currently aged 45 and subsequently retires at the age of 65:

	United Kingdom(i)						Ireland(ii)						United States
	2018 Age		2017 Age		2016 Age		2018 Age		2017 Age		2016 Age		2018 Age		2017 Age		2016 Age
Retiring currently at age 65
Male		86.1		86.3		86.4		86.4		86.3		86.2		86.0		85.9		86.3
Female		88.4		88.1		88.3		89.2		89.0		88.9		88.0		87.9		88.3
Currently aged 45, retiring at age 65
Male		88.2		88.2		88.6		89.4		89.2		89.1		87.6		87.5		88.0
Female		90.5		90.5		91.2		92.1		91.9		91.8		89.6		89.5		89.9

(i) Based on the CMI’s latest SAPS mortality tables with scaling factors based on the experience of the plan and where people live, with suitable future improvements.

(ii) Based on the ‘00’ series of mortality tables with scaling factors based on the experience of the plan and with suitable future improvements.

Schedule of Sensitivity Analyses of Potential Impacts on Consolidated Income Statement and on Plan Liabilities

For the significant assumptions, the following sensitivity analyses estimate the potential impacts on the consolidated income statement for the year ended 30 June 2018 and on the plan liabilities at 30 June 2018:

	United Kingdom									Ireland									United States and other
Benefit/(cost)	Operating profit £ million			Profit after taxation £ million			Plan liabilities(i) £ million			Operating profit £ million			Profit after taxation £ million			Plan liabilities(i) £ million			Operating profit £ million			Profit after taxation £ million			Plan liabilities(i) £ million
Effect of 0.5% increase in discount rate		5			21			512			3			4			190			1			1			32
Effect of 0.5% decrease in discount rate		(6	)		(19	)		(575	)		(4	)		(4	)		(220	)		(1	)		(1	)		(35	)
Effect of 0.5% increase in inflation		(5	)		(15	)		(462	)		(4	)		(6	)		(197	)		—			(1	)		(12	)
Effect of 0.5% decrease in inflation		5			13			408			3			5			169			—			1			11
Effect of one year increase in life expectancy		(1	)		(6	)		(259	)		(1	)		(2	)		(89	)		—			(1	)		(25	)

(i) The estimated effect on the liabilities excludes the impact of any interest rate and inflation swaps held by the pension plans.

(1) The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions and may not be representative of the actual change. Each sensitivity is calculated on a change in the key assumption while holding all other assumptions constant. The sensitivity to inflation includes the impact on all inflation linked assumptions (e.g. pension increases and salary increases where appropriate).

Schedule of Analysis of Fair Value of Plan Assets

An analysis of the fair value of the plan assets is as follows:

	2018										2017
	United Kingdom £ million			Ireland £ million		United States and other £ million		Total £ million			United Kingdom £ million			Ireland £ million		United States and other £ million		Total £ million
Equities
Quoted		758			316		242		1,316			902			367		296		1,565
Unquoted and private equity		399			1		18		418			365			2		19		386
Bonds
Fixed-interest government		133			103		42		278			193			153		50		396
Inflation-linked government		1,063			262		1		1,326			1,036			182		—		1,218
Investment grade corporate		934			344		363		1,641			998			277		337		1,612
Non-investment grade		147			49		16		212			230			51		17		298
Loan securities		1,112			303		—		1,415			956			222		—		1,178
Repurchase agreements		2,799			—		—		2,799			2,812			—		—		2,812
Liability driven investment (LDI)		139			50		—		189			122			69		—		191
Property – unquoted		689			94		1		784			641			121		1		763
Hedge funds		68			138		—		206			—			151		—		151
Interest rate and inflation swaps		(1,415	)		70		—		(1,345	)		(1,440	)		41		—		(1,399	)
Cash and other		(34	)		15		90		71			(26	)		27		54		55
Total bid value of assets		6,792			1,745		773		9,310			6,789			1,663		774		9,226

(1) The asset classes include some cash holdings that are temporary. This cash is likely to be invested imminently and so has been included in the asset class where it is anticipated to be invested in the long term.

(2) At 30 June 2017 the Irish Scheme’s plan assets included £0.5 million invested in the ordinary shares of Diageo plc.

Schedule of Timing of Benefit Payments

The following table provides information on the timing of the benefit payments and the average duration of the defined benefit obligations and the distribution of the timing of benefit payments:

	United Kingdom				Ireland				United States
	2018 £ million		2017 £ million		2018 £ million		2017 £ million		2018 £ million		2017 £ million
Maturity analysis of benefits expected to be paid
Within one year		575		347		75		76		49		57
Between 1 to 5 years		1,144		1,079		370		374		187		243
Between 6 to 15 years		2,575		2,800		751		742		380		366
Between 16 to 25 years		2,196		2,511		727		701		242		234
Beyond 25 years		3,325		4,201		1,260		1,170		207		198
Total		9,815		10,938		3,183		3,063		1,065		1,098
	years		years		years		years		years		years
Average duration of the defined benefit obligation		19		19		19		19		10		10

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Working capital (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Summary of Information about Inventories

(a) Inventories

	2018 £ million		2017 £ million
Raw materials and consumables		321		327
Work in progress		44		45
Maturing inventories		4,028		3,820
Finished goods and goods for resale		622		596
		5,015		4,788

Summary of Information about Inventories Expected to be Utilised After More Than One Year

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

	2018 £ million		2017 £ million
Raw materials and consumables		12		8
Maturing inventories		3,253		3,194
		3,265		3,202

Summary of Analysis of Provisions for Obsolescence of Inventories

Inventories are disclosed net of provisions for obsolescence, an analysis of which is as follows:

	2018 £ million			2017 £ million			2016 £ million
Balance at beginning of the year		88			73			53
Exchange differences		(2	)		(1	)		5
Income statement charge		—			41			33
Utilised		(15	)		(25	)		(15	)
Sale of businesses		—			—			(3	)
		71			88			73

Summary of Information About Trade and Other Receivables

(b) Trade and other receivables

	2018				2017
	Current assets £ million		Non-current assets £ million		Current assets £  million		Non-current assets £ million
Trade receivables		2,152		—		2,130		—
Interest receivable		14		—		19		—
Other receivables		335		38		244		45
Prepayments		157		8		159		13
Accrued income		20		—		40		—
		2,678		46		2,592		58

Summary of Aged Analysis of Trade Receivables Net of Allowances

The aged analysis of trade receivables, net of allowances, is as follows:

	2018 £ million		2017 £ million
Not overdue		2,067		2,026
Overdue 1 – 30 days		19		28
Overdue 31 – 60 days		19		19
Overdue 61 – 90 days		13		11
Overdue 91 – 180 days		21		21
Overdue more than 180 days		13		25
		2,152		2,130

Summary Analysis of Trade and Other Receivables are Disclosed Net of Allowance for Doubtful Debts

Trade and other receivables are disclosed net of allowance for doubtful debts, an analysis of which is as follows:

	2018 £ million			2017 £ million			2016 £ million
Balance at beginning of the year		129			83			71
Exchange differences		(4	)		(1	)		5
Income statement charge		18			54			15
Written off		(46	)		(7	)		(8	)
		97			129			83

Summary of Information about Trade and Other Payables

Trade and other payables

	2018				2017
	Current liabilities £ million		Non-current liabilities  £ million		Current liabilities £ million		Non-current liabilities  £ million
Trade payables		1,514		—		1,365		—
Interest payable		104		—		75		—
Tax and social security excluding income tax		638		2		543		2
Other payables		471		204		487		16
Accruals		1,165		3		1,064		6
Deferred income		37		—		29		—
Dividend payable to non-controlling interests		21		—		—		—
		3,950		209		3,563		24

Summary of Information about Provisions

(d) Provisions

	Thalidomide £ million			Other £ million			Total £ million
At 30 June 2017		223			192			415
Exchange differences		—			(12	)		(12	)
Disposal of businesses		—			(1	)		(1	)
Provisions charged during the year		—			53			53
Provisions utilised during the year		(13	)		(50	)		(63	)
Transfers to other payables		—			(2	)		(2	)
Unwinding of discounts		7			—			7
At 30 June 2018		217			180			397
Current liabilities		14			95			109
Non-current liabilities		203			85			288
		217			180			397

(a) Provisions have been established in respect of the discounted value of the group’s commitment to the UK and Australian Thalidomide Trusts. These provisions will be utilised over the period of the commitments up to 2037.

(b) The largest item in other provisions at 30 June 2018 is £48 million in respect of employee deferred compensation plans which will be utilised when employees leave the group.

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Financial instruments and risk management (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Information about Net Borrowings Interest Rate Profile

The group’s net borrowings interest rate profile as at 30 June 2018 and 2017 is as follows:

	2018				2017
	£ million		%		£ million		%
Fixed rate		4,739		52		4,443		57
Floating rate(i)		4,245		47		3,336		42
Impact of financial derivatives and fair value adjustments		107		1		113		1
Net borrowings		9,091		100		7,892		100

(i) The floating rate portion of net borrowings includes cash and cash equivalents, collaterals, floating rate loans and bonds, bank overdrafts and finance lease obligations.

Summary of Information about Average Monthly Net Borrowings and Effective Interest Rate

The table below sets out the average monthly net borrowings and effective interest rate:

Average monthly net borrowings						Effective interest rate
2018                          £ million		2017                          £ million		2016                          £ million		2018                                  %		2017                                  %		2016                                  %
	9,063		8,771		9,245		2.6		3.5		3.3

(1) For this calculation, net interest charge excludes fair value adjustments to derivative financial instruments and borrowings and average monthly net borrowings includes the impact of interest rate swaps that are no longer in a hedge relationship but excludes the market value adjustment for cross currency interest rate swaps.

Summary of Information about Fluctuations in Interest and Exchange Rates to Vary From Hypothetical Amounts

The results of the sensitivity analysis should not be considered as projections of likely future events, gains or losses as actual results in the future may differ materially due to developments in the global financial markets which may cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table below.

	Impact on income statement gain/(loss)						Impact on consolidated comprehensive income gain/(loss)(i) (ii)
	2018 £ million			2017 £ million			2018 £ million			2017 £ million
0.5% decrease in interest rates		(19	)		(20	)		(18	)		(12	)
0.5% increase in interest rates		19			20			19			13
10% weakening of sterling		(15	)		(19	)		(833	)		(835	)
10% strengthening of sterling		11			16			680			684

(i) The impact on foreign currency borrowings and derivatives in net investment hedges is largely offset by the foreign exchange difference arising on the translation of net investments.

(ii) The impact on the consolidated statement of comprehensive income includes the impact on the income statement.

Summary of Information about Contractual Cash Flows

Contractual cash flows

	Due within 1 year £ million			Due between 1 and 3  years £ million			Due between 3 and 5 years £ million			Due after 5 years £ million			Total £ million			Carrying amount at balance sheet date £ million
2018
Borrowings(i)		(1,828	)		(2,055	)		(2,117	)		(3,950	)		(9,950	)		(9,902	)
Interest on borrowings(i), (iii)		(341	)		(472	)		(382	)		(1,385	)		(2,580	)		(100	)
Finance lease capital repayments		(30	)		(66	)		(34	)		(25	)		(155	)		(155	)
Finance lease future interest payments		(7	)		(9	)		(5	)		(1	)		(22	)		—
Trade and other financial liabilities(ii)		(3,117	)		(28	)		(1	)		(230	)		(3,376	)		(3,318	)
Non-derivative financial liabilities		(5,323	)		(2,630	)		(2,539	)		(5,591	)		(16,083	)		(13,475	)
Cross currency swaps (gross)
– Receivable		60			121			840			1,487			2,508			—
– Payable		(41	)		(83	)		(824	)		(1,070	)		(2,018	)		—
Other derivative instruments (net)		(1	)		(30	)		(2	)		5			(28	)		—
Derivative instruments (iii)		18			8			14			422			462			90
2017
Borrowings(i)		(2,458	)		(1,253	)		(1,350	)		(3,998	)		(9,059	)		(9,042	)
Interest on borrowings(i), (iii)		(334	)		(421	)		(366	)		(1,461	)		(2,582	)		(68	)
Finance lease capital repayments		(26	)		(74	)		(41	)		(42	)		(183	)		(183	)
Finance lease future interest payments		(9	)		(12	)		(7	)		(3	)		(31	)		—
Trade and other financial liabilities(ii)		(2,693	)		(34	)		(173	)		(3	)		(2,903	)		(2,889	)
Non-derivative financial liabilities		(5,520	)		(1,794	)		(1,937	)		(5,507	)		(14,758	)		(12,182	)
Cross currency swaps (gross)
– Receivable		61			122			122			2,302			2,607			—
– Payable		(41	)		(82	)		(82	)		(1,853	)		(2,058	)		—
Other derivative instruments (net)		(94	)		13			2			—			(79	)		—
Derivative instruments (iii)		(74	)		53			42			449			470			110

(i) For the purpose of these tables above, borrowings are defined as gross borrowings excluding finance lease liabilities and fair value of derivative instruments as disclosed in note 16.

(ii) Primarily consists of trade and other payables that meet the definition of financial liabilities under IAS 32.

(iii) Carrying amount of interest on borrowings and interest on derivatives and interest on other payable is included within interest payable in note 14.

Schedule of Information about Available Undrawn Committed Bank Facilities

The group had available undrawn committed bank facilities as follows:

	2018 £ million		2017 £ million
Expiring within one year		788		481
Expiring between one and two years		—		900
Expiring after two years		1,864		1,219
		2,652		2,600

Schedule of Information about Finanical Assets and Liabilities Measured at Fair Value

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

	2018 £ million			2017 (restated(i)) £ million
Derivative assets		217			348
Derivative liabilities		(123	)		(232	)
Valuation techniques based on observable market input (Level 2)		94			116
Financial assets – other		89			39
Financial liabilities – other		(164	)		(183	)
Valuation techniques based on unobservable market input (Level 3)		(75	)		(144	)

(i) Restated to include loans and advances to associates and third parties.

Schedule of Information about Movements in Level 3 Measured on Recurring Basis

The movements in level 3 instruments, measured on a recurring basis, are as follows:

	Financial liabilities - other
	2018 £ million			2017 £ million
At 1 July		(183	)		(165	)
Net losses included in the income statement		—			(8	)
Net gains/(losses) included in exchange in other comprehensive income		3			(4	)
Net gains/(losses) included in retained earnings		7			(12	)
Settlement of liabilities		9			6
At 30 June		(164	)		(183	)

Schedule of Notional Amounts, Contractual Maturities and Rates of Hedging Instruments Designated in Hedging Relationships by Main Risk Categories

The notional amounts, contractual maturities and rates of the hedging instruments designated in hedging relationships as of 30 June, 2018 by the main risk categories are as follows:

	Notional amounts £ million		Maturity		Range of hedged rates
2018
Net investment hedges
Derivatives in net investment hedges of foreign operations		1,068		July 2018		US dollar 1.32
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)		1,553		April 2023-April 2043		US dollar 1.22-1.88
Derivatives in cash flow hedge (foreign exchange risk)		1,197		September 2018-December 2019		US dollar 1.24-1.47, euro 1.06-1.18
Derivatives in cash flow hedge (commodity price risk)		30		July 2018-March 2020		Corn 152.76 - 164.17 USD/t Aluminium 2058.75-2204 USD/MT
Fair value hedges
Derivatives in fair value hedge (interest rate risk)		3,597		July 2018-May 2028		(0.26)-3.09%
2017
Net investment hedges
Derivatives in net investment hedges of foreign operations		1,919		July 2017		US dollar 1.26-1.30, euro 1.14
Cash flow hedges
Derivatives in cash flow hedge (foreign currency debt)		1,577		April 2023-April 2043		US dollar 1.22-1.88
Derivatives in cash flow hedge (foreign exchange risk)		893		July 2017-Dec 2018		US dollar 1.23-1.51, euro 1.09-1.31
Derivatives in cash flow hedge (commodity price risk)		8		July 2017-June 2018		Corn 141.73 USD/t Aluminium 1912-1931 USD/ MT
Fair value hedges
Derivatives in fair value hedge (interest rate risk)		3,305		October 2017-April 2023		0.93-2.12%

Schedule of Information about Financial Assets and Liabilities

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

	Fair value through income statement £ million			Fair value through other comprehensive income £ million		Assets and liabilities at amortised cost £ million			Not categorised as a financial instrument £ million			Total £ million			Current £ million			Non-current £ million
2018
Other investments and loans(i)		89			—		14			2			105			—			105
Trade and other receivables		—			—		2,429			295			2,724			2,678			46
Cash and cash equivalents		—			—		874			—			874			874			—
Derivatives in fair value hedge (interest rate risk)		7			—		—			—			7			—			7
Derivatives in cash flow hedge (foreign currency debt)		160			—		—			—			160			—			160
Derivatives in cash flow hedge (foreign currency exchange risk)		9			—		—			—			9			9			—
Derivatives in net investment hedge		1			—		—			—			1			1			—
Other instruments at fair value		40			—		—			—			40			25			15
Total other financial assets		217			—		—			—			217			35			182
Total financial assets		306			—		3,317			297			3,920			3,587			333
Borrowings(ii)		—			—		(9,902	)		—			(9,902	)		(1,828	)		(8,074	)
Trade and other payables		—			—		(3,258	)		(901	)		(4,159	)		(3,950	)		(209	)
Derivatives in fair value hedge (interest rate risk)		(22	)		—		—			—			(22	)		—			(22	)
Derivatives in cash flow hedge (foreign currency debt)		(48	)		—		—			—			(48	)		—			(48	)
Derivatives in cash flow hedge (foreign currency exchange risk)		(25	)		—		—			—			(25	)		(9	)		(16	)
Derivatives in net investment hedge		(4	)		—		—			—			(4	)		(4	)		—
Other instruments at fair value		(188	)		—		—			—			(188	)		(186	)		(2	)
Finance leases		—			—		(155	)		—			(155	)		(31	)		(124	)
Total other financial liabilities		(287	)		—		(155	)		—			(442	)		(230	)		(212	)
Total financial liabilities		(287	)		—		(13,315	)		(901	)		(14,503	)		(6,008	)		(8,495	)
Total net financial assets/(liabilities)		19			—		(9,998	)		(604	)		(10,583	)		(2,421	)		(8,162	)
2017
Other investments and loans (iii)		39			—		17			2			58			—			58
Trade and other receivables		—			—		2,406			244			2,650			2,592			58
Cash and cash equivalents		—			—		1,191			—			1,191			1,191			—
Derivatives in cash flow hedge (foreign currency debt)		217			—		—			—			217			—			217
Derivatives in cash flow hedge (foreign currency exchange risk)		17			—		—			—			17			8			9
Derivatives in net investment hedge		49			—		—			—			49			49			—
Other instruments at fair value		65			—		—			—			65			24			41
Total other financial assets		348			—		—			—			348			81			267
Total financial assets		387			—		3,614			246			4,247			3,864			383
Borrowings(ii)		—			—		(9,042	)		—			(9,042	)		(2,459	)		(6,583	)
Trade and other payables		—			—		(2,780	)		(807	)		(3,587	)		(3,563	)		(24	)
Derivatives in fair value hedge (interest rate risk)		(2	)		—		—			—			(2	)		(1	)		(1	)
Derivatives in cash flow hedge (foreign currency debt)		(24	)		—		—			—			(24	)		—			(24	)
Derivatives in cash flow hedge (foreign currency exchange risk)		(48	)		—		—			—			(48	)		(47	)		(1	)
Derivatives in net investment hedge		(6	)		—		—			—			(6	)		(6	)		—
Other instruments at fair value		(335	)		—		—			—			(335	)		(135	)		(200	)
Finance leases		—			—		(183	)		—			(183	)		(26	)		(157	)
Total other financial liabilities		(415	)		—		(183	)		—			(598	)		(215	)		(383	)
Total financial liabilities		(415	)		—		(12,005	)		(807	)		(13,227	)		(6,237	)		(6,990	)
Total net financial assets/(liabilities)		(28	)		—		(8,391	)		(561	)		(8,980	)		(2,373	)		(6,607	)

(i) Other investments and loans are including those in relation to associates.

(ii) Borrowings are defined as gross borrowings excluding finance lease liabilities and the fair value of derivate instruments.

(iii) Restated to include loans and advances to associates and third parties.

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Net borrowings (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Information about Borrowings

	2018 £ million			2017 £ million
Bank overdrafts		181			274
Commercial paper		98			—
Bank and other loans		300			495
Credit support obligations		54			74
US$ 1,250 million 5.75% bonds due 2017		—			962
US$ 650 million 1.125% bonds due 2018		—			499
US$ 200 million 4.85% medium term notes due 2018		—			154
€ 500 million 1.125% bonds due 2019		444			—
€ 850 million 1.125% bonds due 2019		751			—
Fair value adjustment to borrowings		—			1
Borrowings due within one year		1,828			2,459
€ 500 million 1.125% bonds due 2019		—			441
€ 850 million 1.125% bonds due 2019		—			745
US$ 696 million 4.828% bonds due 2020		508			508
US$ 500 million floating bonds due 2020		378			—
US$ 500 million 3% bonds due 2020		378			—
€ 775 million 0% bonds due 2020		685			—
US$ 1,000 million 2.875% bonds due 2022(i)		755			766
US$ 300 million 8% bonds due 2022(i)		226			229
US$ 1,350 million 2.625% bonds due 2023		1,020			1,035
US$ 500 million 3.5% bonds due 2023		377			—
€ 500 million 1.75% bonds due 2024		440			436
€ 500 million 0.5% bonds due 2024		439			—
€ 850 million 2.375% bonds due 2026		747			740
US$ 500 million 3.875% bonds due 2028		376			—
US$ 400 million 7.45% bonds due 2035(i)		303			308
US$ 600 million 5.875% bonds due 2036		450			456
US$ 500 million 4.25% bonds due 2042(i)		374			380
US$ 500 million 3.875% bonds due 2043		372			377
Bank and other loans		234			119
Fair value adjustment to borrowings		12			43
Borrowings due after one year		8,074			6,583
Total borrowings before derivative financial instruments		9,902			9,042
Fair value of foreign currency derivatives		(107	)		(144	)
Fair value of interest rate hedging instruments		15			2
Finance lease liabilities		155			183
Gross borrowings		9,965			9,083
Less: Cash and cash equivalents		(874	)		(1,191	)
Net borrowings		9,091			7,892

(i) SEC-registered debt issued on an unsecured basis by Diageo Investment Corporation, a 100% owned finance subsidiary of Diageo plc.

(1) The interest rates shown are those contracted on the underlying borrowings before taking into account any interest rate hedges (see note 15).

(2) Bonds are stated net of unamortised finance costs of £60 million (2017 – £61 million; 2016 – £72 million).

(3) Bonds are reported above at amortised cost with a fair value adjustment shown separately.

(4) 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.

Schedule of Information about Maturity of Gross Borrowings Before Derivative Financial Instruments

Gross borrowings before derivative financial instruments are expected to mature as follows:

	2018 £ million		2017 £ million		2016 £ million
Within one year		1,828		2,459		2,058
Between one and three years		2,033		1,255		2,896
Between three and five years		2,111		1,324		537
Beyond five years		3,930		4,004		4,638
		9,902		9,042		10,129

Schedule of Bonds Issued and Repaid

During the year the following bonds were issued and repaid:

	2018 £ million			2017 £ million			2016 £ million
Issued
€ denominated		1,136			—			—
US$ denominated		1,476			—			—
Repaid
US$ denominated		(1,571	)		(1,234	)		(1,003	)
		1,041			(1,234	)		(1,003	)

Schedule of Information about Reconciliation of Movement in Net Borrowings

(a) Reconciliation of movement in net borrowings

	2018 £ million			2017 £ million
At beginning of the year		7,892			8,635
Net decrease/(increase) in cash and cash equivalents before exchange		185			(122	)
Net increase/(decrease) in bonds and other borrowings		1,015			(820	)
Change in net borrowings from cash flows		1,200			(942	)
Exchange differences on net borrowings		(80	)		205
Other non-cash items(i)		79			(6	)
Net borrowings at end of the year		9,091			7,892

(i) In the year ended 30 June 2018 other non-cash items are principally in respect of changes in the fair value of borrowings.

Schedule of Information about Analysis of Net Borrowings by Currency

(b) Analysis of net borrowings by currency

	2018					2017
	Cash and cash equivalents £ million		Gross borrowings(i) £ million			Cash and cash equivalents £ million		Gross borrowings(i) £ million
US dollar		95		297			576		(2,492	)
Euro		91		(2,505	)		69		(1,965	)
Sterling(ii)		38		(7,383	)		51		(4,214	)
Indian rupee		25		(313	)		16		(405	)
Chinese yuan		293		(160	)		110		(30	)
Kenyan shilling		16		(107	)		15		(115	)
Mexican peso		13		(58	)		6		24
Turkish lira(ii)		105		(9	)		133		(27	)
Other		198		273			215		141
Total		874		(9,965	)		1,191		(9,083	)

(i) Includes foreign currency forwards and swaps and finance leases.

(ii) Includes £13 million (Sterling) and £87 million (Turkish lira) cash and cash equivalents in cash-pooling arrangements (2017 – £29 million (Sterling) and £128 million (Turkish lira)).

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Equity (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Summary of Information about Allotted and Fully Paid Share Capital

(a) Allotted and fully paid share capital – ordinary shares of 28¹⁰¹/₁₀₈ pence each

	Number of shares million		Nominal value £ million
At 30 June 2018		2,695		780
At 30 June 2017 and 30 June 2016		2,754		797

Schedule of Information about Hedging and Exchange Reserve

(b) Hedging and exchange reserve

	Hedging reserve £ million			Exchange reserve £ million			Total £ million
At 30 June 2015		21			(1,173	)		(1,152	)
Other comprehensive income		(111	)		742			631
At 30 June 2016		(90	)		(431	)		(521	)
Other comprehensive income		69			(1	)		68
At 30 June 2017		(21	)		(432	)		(453	)
Other comprehensive income		(44	)		(530	)		(574	)
Adoption of IFRS 9 by associate		(3	)		—			(3	)
At 30 June 2018		(68	)		(962	)		(1,030	)

Schedule of Information about Movements in Own Shares

(c) Own shares

Movements in own shares

	Number of shares million			Purchase consideration £ million
At 30 June 2015		248			2,228
Share trust arrangements		(1	)		(6	)
Shares purchased employee share plans		2			42
Shares used to satisfy options		(5	)		(75	)
At 30 June 2016		244			2,189
Share trust arrangements		(3	)		(32	)
Shares purchased employee share plans		5			101
Shares used to satisfy options		(5	)		(82	)
At 30 June 2017		241			2,176
Share trust arrangements		(1	)		(9	)
Shares purchased employee share plans		2			66
Shares used to satisfy options		(4	)		(89	)
Shares purchased – share buyback programme		59			1,507
Shares cancelled		(59	)		(1,507	)
At 30 June 2018		238			2,144

Schedule of Information about the Monthly Breakdown of Shares Purchased and the Average Price Paid Per Share

The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) for the year ended 30 June 2018 were as follows:

Calendar month	Number of shares purchased under share buyback programme		Total number of shares purchased		Average price paid pence		Authorised purchases unutilised at  month end
September 2017		5,379,511		7,918,187		2521		243,854,813
October 2017		8,287,168		8,287,168		2535		235,567,645
November 2017		8,168,860		8,168,860		2587		227,398,785
December 2017		6,903,910		6,903,910		2638		220,494,875
January 2018		8,822,763		8,822,763		2628		211,672,112
February 2018		20,146,596		20,146,596		2474		191,525,516
March 2018		1,234,920		1,234,920		2491		190,290,596
Total		58,943,728		61,482,404		2544		190,290,596

Schedule of Information about Dividends

(d) Dividends

	2018 £ million		2017 £ million		2016 £ million
Amounts recognised as distributions to equity shareholders in the year
Final dividend for the year ended 30 June 2017
38.5 pence per share (2016 – 36.6 pence; 2015 – 34.9 pence)		968		920		876
Interim dividend for the year ended 30 June 2018
24.9 pence per share (2017 – 23.7 pence; 2016 – 22.6 pence)		613		595		567
		1,581		1,515		1,443

Schedule of Information about the Amounts Attributable to Non Controlling Interests

Summarised financial information for USL, Ketel One and others, after fair value adjustments on acquisition, and the amounts attributable to non-controlling interests are as follows:

	2018									2017			2016
	USL £ million			Ketel One and others £ million			Total £ million			Total £ million			Total £ million
Income statement											1
Sales		3,075			1,851			4,926			4,844			4,023
Net sales		981			1,450			2,431			2,412			2,138
Profit for the year		47			197			244			229			251
Other comprehensive (loss)/income(i)		(130	)		(33	)		(163	)		116			399
Total comprehensive (loss)/income		(83	)		164			81			345			650
Attributable to non-controlling interests		(36	)		89			53			148			290
Balance sheet
Non-current assets(ii)		2,223			2,750			4,973			4,975			4,825
Current assets		653			731			1,384			1,222			1,188
Non-current liabilities		(509	)		(916	)		(1,425	)		(1,327	)		(1,339	)
Current liabilities		(572	)		(611	)		(1,183	)		(1,199	)		(1,193	)
Net assets		1,795			1,954			3,749			3,671			3,481
Attributable to non-controlling interests		788			977			1,765			1,715			1,650
Cash flow
Net cash inflow from operating activities		83			251			334			355			245
Net cash (outflow)/inflow from investing activities		(8	)		(128	)		(136	)		(86	)		17
Net cash outflow from financing activities		(70	)		(94	)		(164	)		(172	)		(212	)
Net increase in cash and cash equivalents		5			29			34			97			50
Exchange differences		(1	)		(1	)		(2	)		(3	)		(1	)
Dividends payable to non-controlling interests		—			(101	)		(101	)		(83	)		(101	)

(i) Other comprehensive income is principally in respect of exchange on translating the subsidiaries to sterling.

(ii) Ketel One includes the global distribution rights to distribute Ketel One vodka products throughout the world. The carrying value of the distribution rights at 30 June 2018 was £1,363 million (2017 – £1,385 million; 2016 – £1,354 million).

(1) In the year ended 30 June 2018 a rights issue was completed by Guinness Nigeria (GN) where Diageo’s controlling equity share in GN increased from 54.32% to 58.02%. The transaction resulted in a credit of £31 million to non-controlling interests and a charge of £5 million to retained earnings.

(2) In the year ended 30 June 2018 an agreement was concluded with the minority shareholders of Serengeti Breweries Limited (SBL), a subsidiary of EABL, where an intercompany liability was forgiven and the non-controlling interest in SBL was reduced from 68.53% to 60.76%. The transaction resulted in a net charge to retained earnings of £72 million.

Schedule of Information about Employee Share Compensation

The annual fair value charge in respect of the equity settled plans for the three years ended 30 June 2018 is as follows:

	2018 £ million		2017 £ million		2016 £ million
Executive share award plans		33		28		24
Executive share option plans		3		3		3
Savings plans		3		3		2
		39		34		29

Schedule of Fair Value of Each Share Award Used the Monte Carlo Pricing Model and Weighted Average Assumptions

For the three years ended 30 June 2018, the calculation of the fair value of each share award used the Monte Carlo pricing model and the following assumptions:

	2018		2017		2016
Risk free interest rate		0.3%		0.1%		1.0%
Expected life of the awards		37 months		36 months		37 months
Dividend yield		2.6%		3.0%		3.2%
Weighted average share price		2573 p		2130 p		1737 p
Weighted average fair value of awards granted in the year		1761 p		1427 p		1058 p
Number of awards granted in the year		2.3 million		3.6 million		3.1 million
Fair value of all awards granted in the year		£41 million		£51 million		£33 million

Schedule of Transactions on Executive Share Award Plans

Transactions on the executive share award plans for the three years ended 30 June 2018 were as follows:

	2018 Number of awards million			2017 Number of awards million			2016 Number of awards million
Balance outstanding at 1 July		7.9			7.2			7.6
Granted		2.3			3.6			3.1
Exercised/awarded		(0.7	)		(1.3	)		(1.6	)
Forfeited/expired		(1.7	)		(1.6	)		(1.9	)
Balance outstanding at 30 June		7.8			7.9			7.2

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Commitments (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Schedule of Information about minimum lease rentals to be paid under non-cancellable leases

The minimum lease rentals to be paid under non-cancellable leases, principally in respect of properties, are as follows:

	2018 £ million		2017 £ million
Payments falling due:
Within one year		100		95
Between one and two years		70		72
Between two and three years		48		52
Between three and four years		32		40
Between four and five years		20		28
After five years		42		51
		312		338

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Related party transactions (Tables)

12 Months Ended

Jun. 30, 2018

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Schedule of transactions between associates and joint ventures

Transactions and balances with associates and joint ventures are set out in the table below:

	2018 £ million		2017 restated(i) £ million		2016 restated(i) £ million
Income statement items
Sales		10		10		31
Purchases		29		32		36
Balance sheet items
Group payables		3		4		5
Group receivables		2		1		2
Loans payable		6		6		6
Loans receivable		59		31		21
Cash flow items
Loans and equity contributions, net		37		14		—

(i) Comparatives for loans receivable from associates and joint ventures were restated to include advances to associates that are convertible to equity.

Schedule of amounts incurred by entity for provision of key management personnel services

	2018 £ million		2017 £ million		2016 £ million
Salaries and short term employee benefits		10		10		11
Annual incentive plan		10		9		9
Non-Executive Directors’ fees		1		1		1
Share-based payments(i)		15		9		7
Post employment benefits		2		2		2
Termination benefits		—		2		2
		38		33		32

(i) Time-apportioned fair value of unvested options and share awards.

Schedule of Information about Directors' remuneration

	2018 £ million		2017 £ million		2016 £ million
Salaries and short term employee benefits		2		2		2
Annual incentive plan		3		3		2
Non-Executive Directors’ fees		1		1		1
Share option exercises(i)		—		2		—
Shares vesting(i)		1		4		5
Post employment benefits(ii)		1		1		1
		8		13		11

(i) Gains on options realised in the year and the benefit from share awards, calculated by using the share price applicable on the date of exercise of the share options and release of the awards.

(ii) Includes a cash allowance in lieu of pension contributions.

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Principal group companies (Tables)

12 Months Ended

Jun. 30, 2018

Text block1 [abstract]

Disclosure of Significant Investments in Subsidiaries

	Country of incorporation	Country of operation		Percentage of equity owned(i)			Business description
Subsidiaries
Diageo Ireland	Republic of Ireland		Worldwide		100	%	Production, marketing and distribution of premium drinks
Diageo Great Britain Limited	England		Great Britain		100	%	Marketing and distribution of premium drinks
Diageo Scotland Limited	Scotland		Worldwide		100	%	Production, marketing and distribution of premium drinks
Diageo Brands B.V.	Netherlands		Worldwide		100	%	Marketing and distribution of premium drinks
Diageo North America, Inc.	United States		Worldwide		100	%	Production, importing, marketing and distribution of premium drinks
United Spirits Limited(ii)	India		India		54.78	%	Production, importing, marketing and distribution of premium drinks
Diageo Capital plc(iii)	Scotland		United Kingdom		100	%	Financing company for the group
Diageo Finance plc(iii)	England		United Kingdom		100	%	Financing company for the group
Diageo Investment Corporation	United States		United States		100	%	Financing company for the US group
Mey İçki Sanayi ve Ticaret A.Ş.	Turkey		Turkey		100	%	Production, marketing and distribution of premium drinks

(i) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group.

(ii) Percentage ownership excludes 2.38% owned by the USL Benefit Trust.

(iii) Directly owned by Diageo plc.

(iv) French limited liability company.

(1) Diageo Finance B.V. (Netherlands) is a wholly owned finance subsidiary of the group. As at 30 June 2018, there were no outstanding securities issued by Diageo Finance B.V.

Disclosure of Significant Investments in Associates

Associates
Moët Hennessy, SAS(iv)	France	France	34	%	Production, marketing and distribution of premium drinks

(i) All percentages, unless otherwise stated, are in respect of holdings of ordinary share capital and are equivalent to the percentages of voting rights held by the group.

(ii) Percentage ownership excludes 2.38% owned by the USL Benefit Trust.

(iii) Directly owned by Diageo plc.

(iv) French limited liability company.

(1) Diageo Finance B.V. (Netherlands) is a wholly owned finance subsidiary of the group. As at 30 June 2018, there were no outstanding securities issued by Diageo Finance B.V.

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Accounting Information and Policies - Summary of Principal Foreign Exchange Rates Used in Translation of Financial Statements (Detail) - ExchangeRate	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
US dollar [member]
Foreign exchange rates [abstract]
Income statement and cash flows	1.35	1.27	1.48
Assets and liabilities	1.32	1.30	1.33
Euro [member]
Foreign exchange rates [abstract]
Income statement and cash flows	1.13	1.16	1.34
Assets and liabilities	1.13	1.14	1.20

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Accounting Information and Policies - Additional Information (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)	Jul. 01, 2017 GBP (£)
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Changes in retained earnings	£ 5,686	£ 5,475
Increase in creditors	3,950	3,563
Decrease in debtors	(2,678)	(2,592)
Increase in inventories	5,015	4,788
Increase in deferred tax assets	122	134
Decrease in NCI	(1,765)	(1,715)
Sales	18,432	18,114	£ 15,641
Operating profit	3,691	3,559	2,841
Taxation	596	732	496
Profit	3,144	2,827	£ 2,362
Interest on corporate tax	10
Penalties on corporate tax	2
Cumulative interest and penalties on corporate tax		£ 37
Cumulative interest payable on corporate tax	34
Cumulative penalties within other payables on corporate tax	£ 2
IFRS 15 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Entity's effective period end date to apply new IFRS	Jul. 01, 2017
IFRS 15 [member] | Increase (decrease) due to application of IFRS 15 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Changes in retained earnings				£ (89)
Increase in creditors				116
Decrease in debtors				9
Increase in inventories				8
Increase in deferred tax assets				26
Decrease in NCI				£ 2
IFRS 16 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Entity's effective period end date to apply new IFRS	Jun. 30, 2020
IFRS 17 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Entity's effective period end date to apply new IFRS	Jun. 30, 2022
Increase (decrease) due to application of IFRS 15 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Sales	£ 11
Operating profit	12
Taxation	3
Profit	9
Increase (decrease) due to application of IFRS 9 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Decrease in hedging reserve	3
Changes in retained earnings	£ 3
IFRS 9 [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Entity's effective period end date to apply new IFRS	Jul. 01, 2017
Venezuelan bolivar fuerte [member]
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Exchange rate	3,858,826	6,110

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Accounting Information and Policies - Summary of Geographical operations (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of geographical areas [line items]
Net sales	£ 12,163	£ 12,050	£ 10,485
Operating profit	3,691	3,559	2,841
Other finance income - hyperinflation adjustment	27	11	21
Net cash inflow from operating activities	4,086	4,177	£ 3,360
Net assets	11,713	£ 12,028
Venezuela [member]
Disclosure of geographical areas [line items]
Net sales	1
Other finance income - hyperinflation adjustment	18
Net cash inflow from operating activities	1
Net assets	69
Venezuela [member] | Reported if in compliance with requirement of IFRS [member]
Disclosure of geographical areas [line items]
Net sales	27
Operating profit	16
Other finance income - hyperinflation adjustment	458
Net cash inflow from operating activities	12
Net assets	£ 1,744

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Accounting Information and Policies - Summary of Geographical operations (Parenthetical) (Detail) - Venezuelan bolivar fuerte [member]	Jun. 30, 2018	Jun. 30, 2017
Disclosure of geographical areas [line items]
Exchange rate	3,858,826	6,110
Venezuela [member]
Disclosure of geographical areas [line items]
Exchange rate	3,858,826
Reported if in compliance with requirement of IFRS [member] | Venezuela [member]
Disclosure of geographical areas [line items]
Exchange rate	151,800

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Segmental Information - Summary of Segmental Information for the Consolidated Income Statement Continuing Operations (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of operating segments [line items]
Sales	£ 18,432	£ 18,114	£ 15,641
Net sales
At budgeted exchange rates	12,180	10,220	10,181
Acquisitions and disposals	50	65	323
Retranslation to actual exchange rates	(67)	1,765	(19)
Net sales	12,163	12,050	10,485
Operating profit/(loss)
At budgeted exchange rates	3,884	3,065	2,992
Acquisitions and disposals	4	(9)	37
Retranslation to actual exchange rates	(69)	545	(21)
Operating profit/(loss) before exceptional items	3,819	3,601	3,008
Exceptional items	(128)	(42)	(167)
Operating profit	3,691	3,559	2,841
Non-operating items		20	123
Net finance charges	(260)	(329)	(327)
Share of after tax results of associates and joint ventures
Share of after tax results of associates and joint ventures	309	309	221
Profit before taxation	3,740	3,559	2,858
Total operating segments [member]
Disclosure of operating segments [line items]
Sales	18,380	18,068	15,605
Net sales
At budgeted exchange rates	12,132	10,181	10,143
Acquisitions and disposals	50	65	323
Retranslation to actual exchange rates	(71)	1,758	(17)
Net sales	12,111	12,004	10,449
Operating profit/(loss)
At budgeted exchange rates	4,044	3,234	3,141
Acquisitions and disposals	4	(8)	37
Retranslation to actual exchange rates	(71)	564	(20)
Operating profit/(loss) before exceptional items	3,977	3,790	3,158
Exceptional items	(128)	(42)	(167)
Operating profit	3,849	3,748	2,991
Eliminate inter-segment sales [member]
Disclosure of operating segments [line items]
Sales	(1,457)	(1,390)	(1,355)
Net sales
At budgeted exchange rates	(1,425)	(1,324)	(1,373)
Retranslation to actual exchange rates	(32)	(66)	18
Net sales	(1,457)	(1,390)	(1,355)
Corporate and other [member]
Disclosure of operating segments [line items]
Sales	52	46	36
Net sales
At budgeted exchange rates	48	39	38
Retranslation to actual exchange rates	4	7	(2)
Net sales	52	46	36
Operating profit/(loss)
At budgeted exchange rates	(160)	(169)	(149)
Acquisitions and disposals		(1)
Retranslation to actual exchange rates	2	(19)	(1)
Operating profit/(loss) before exceptional items	(158)	(189)	(150)
Operating profit	(158)	(189)	(150)
North America [member] | Total operating segments [member]
Disclosure of operating segments [line items]
Sales	4,671	4,725	4,037
Net sales
At budgeted exchange rates	4,138	3,523	3,282
Acquisitions and disposals	50		106
ISC allocation	11	11	10
Retranslation to actual exchange rates	(83)	627	167
Net sales	4,116	4,161	3,565
Operating profit/(loss)
At budgeted exchange rates	1,925	1,648	1,459
Acquisitions and disposals	4		24
ISC allocation	14	14	14
Retranslation to actual exchange rates	(61)	237	54
Operating profit/(loss) before exceptional items	1,882	1,899	1,551
Operating profit	1,882	1,899	1,551
Europe and Turkey [member] | Total operating segments [member]
Disclosure of operating segments [line items]
Sales	5,232	4,985	4,593
Net sales
At budgeted exchange rates	2,821	2,474	2,481
Acquisitions and disposals		2	75
ISC allocation	53	60	50
Retranslation to actual exchange rates	58	288	(62)
Net sales	2,932	2,824	2,544
Operating profit/(loss)
At budgeted exchange rates	941	741	738
Acquisitions and disposals			7
ISC allocation	67	72	70
Retranslation to actual exchange rates	20	123	(14)
Operating profit/(loss) before exceptional items	1,028	936	801
Exceptional items		(33)
Operating profit	1,028	903	801
Africa [member] | Total operating segments [member]
Disclosure of operating segments [line items]
Sales	2,083	2,132	1,875
Net sales
At budgeted exchange rates	1,467	1,240	1,286
Acquisitions and disposals		15	74
ISC allocation	4	4	4
Retranslation to actual exchange rates	20	297	37
Net sales	1,491	1,556	1,401
Operating profit/(loss)
At budgeted exchange rates	180	159	212
Acquisitions and disposals		(8)	(8)
ISC allocation	5	5	6
Retranslation to actual exchange rates	6	62	2
Operating profit/(loss) before exceptional items	191	218	212
Exceptional items	(128)
Operating profit	63	218	212
Latin America and Caribbean [member] | Total operating segments [member]
Disclosure of operating segments [line items]
Sales	1,352	1,303	1,078
Net sales
At budgeted exchange rates	1,064	873	901
Acquisitions and disposals		7	59
ISC allocation	11	11	8
Retranslation to actual exchange rates	(6)	153	(105)
Net sales	1,069	1,044	863
Operating profit/(loss)
At budgeted exchange rates	298	195	221
Acquisitions and disposals			13
ISC allocation	14	13	11
Retranslation to actual exchange rates	(4)	42	(46)
Operating profit/(loss) before exceptional items	308	250	199
Exceptional items			(118)
Operating profit	308	250	81
Asia Pacific [member] | Total operating segments [member]
Disclosure of operating segments [line items]
Sales	5,042	4,923	4,022
Net sales
At budgeted exchange rates	2,555	1,977	2,114
Acquisitions and disposals		41	9
ISC allocation	8	8	7
Retranslation to actual exchange rates	(60)	393	(54)
Net sales	2,503	2,419	2,076
Operating profit/(loss)
At budgeted exchange rates	588	375	399
Acquisitions and disposals			1
ISC allocation	12	12	11
Retranslation to actual exchange rates	(32)	100	(16)
Operating profit/(loss) before exceptional items	568	487	395
Exceptional items		(9)	(49)
Operating profit	568	478	346
ISC [member] | Total operating segments [member]
Disclosure of operating segments [line items]
Sales	1,457	1,390	1,355
Net sales
At budgeted exchange rates	1,512	1,418	1,452
ISC allocation	(87)	(94)	(79)
Retranslation to actual exchange rates	32	66	(18)
Net sales	1,457	1,390	1,355
Operating profit/(loss)
At budgeted exchange rates	112	116	112
ISC allocation	(112)	(116)	(112)
Moet Hennessy [member]
Net sales
Net sales	4,445	4,356	3,491
Share of after tax results of associates and joint ventures
Share of after tax results of associates and joint ventures	305	302	217
Other Associates [member]
Share of after tax results of associates and joint ventures
Share of after tax results of associates and joint ventures	£ 4	£ 7	£ 4

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Segmental Information - Summary of Segmental Information for the Consolidated Income Statement Continuing Operations (Parenthetical) (Detail)	4 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of operating segments [abstract]
Annual net sales occur in the last four months	40.00%	40.00%	40.00%

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Segmental Information - Summary of Other Segmental Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of operating segments [line items]
Capital expenditure	£ 584	£ 518	£ 506
Depreciation and intangible asset amortisation	(368)	(361)	(355)
Exceptional accelerated depreciation and impairment	(35)		(22)
Exceptional impairment of intangible assets	(90)		(104)
Total operating segments [member] | North America [member]
Disclosure of operating segments [line items]
Capital expenditure	132	112	105
Depreciation and intangible asset amortisation	(44)	(41)	(39)
Total operating segments [member] | Europe and Turkey [member]
Disclosure of operating segments [line items]
Capital expenditure	22	27	29
Depreciation and intangible asset amortisation	(20)	(21)	(21)
Total operating segments [member] | Africa [member]
Disclosure of operating segments [line items]
Capital expenditure	163	126	107
Depreciation and intangible asset amortisation	(77)	(77)	(83)
Exceptional accelerated depreciation and impairment	(35)
Exceptional impairment of intangible assets	(90)
Total operating segments [member] | Latin America and Caribbean [member]
Disclosure of operating segments [line items]
Capital expenditure	44	34	20
Depreciation and intangible asset amortisation	(7)	(7)	(10)
Exceptional accelerated depreciation and impairment			(14)
Exceptional impairment of intangible assets			(104)
Total operating segments [member] | Asia Pacific [member]
Disclosure of operating segments [line items]
Capital expenditure	44	48	52
Depreciation and intangible asset amortisation	(42)	(42)	(35)
Total operating segments [member] | ISC [member]
Disclosure of operating segments [line items]
Capital expenditure	131	125	150
Depreciation and intangible asset amortisation	(110)	(107)	(106)
Exceptional accelerated depreciation and impairment			(8)
Corporate and other [member]
Disclosure of operating segments [line items]
Capital expenditure	48	46	43
Depreciation and intangible asset amortisation	£ (68)	£ (66)	£ (61)

XML

Segmental Information - Summary of Geographical Analysis (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of geographical areas [line items]
Sales	£ 18,432	£ 18,114	£ 15,641
Non-current assets	19,785	19,501	18,876
United Kingdom [member]
Disclosure of geographical areas [line items]
Sales	1,630	1,558	1,672
Non-current assets	1,717	1,678	1,679
United States [member]
Disclosure of geographical areas [line items]
Sales	4,310	4,366	3,729
Non-current assets	4,221	4,012	3,859
Netherlands [member]
Disclosure of geographical areas [line items]
Sales	63	62	56
Non-current assets	2,367	2,392	2,350
India [member]
Disclosure of geographical areas [line items]
Sales	3,086	3,070	2,465
Non-current assets	3,688	4,009	3,764
Rest of World [member]
Disclosure of geographical areas [line items]
Sales	9,343	9,058	7,719
Non-current assets	£ 7,792	£ 7,410	£ 7,224

XML

Segmental Information - Summary of Category Analysis (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of geographical areas [line items]
Sales	£ 18,432	£ 18,114	£ 15,641
Spirits [member]
Disclosure of geographical areas [line items]
Sales	14,605	14,241	11,993
Beer [member]
Disclosure of geographical areas [line items]
Sales	2,647	2,635	2,486
Wine [member]
Disclosure of geographical areas [line items]
Sales	81	81	265
Ready to drink [member]
Disclosure of geographical areas [line items]
Sales	854	854	726
Other [member]
Disclosure of geographical areas [line items]
Sales	£ 245	£ 303	£ 171

XML

Operating Costs - Information About Operating Costs (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Expense by nature [line items]
Excise duties	£ 6,269	£ 6,064	£ 5,156
Cost of sales	4,634	4,680	4,251
Marketing	1,882	1,798	1,562
Other operating expenses	1,956	2,013	1,831
Operating expenses	14,741	14,555	12,800
Increase in inventories	(296)	(146)	(100)
Raw materials and consumables	3,052	2,813	2,548
Marketing	1,882	1,798	1,562
Other external charges	1,849	2,124	1,767
Staff costs	1,509	1,583	1,475
Depreciation, amortisation and impairment	493	361	473
Gains on disposal of properties	(9)	(7)	(39)
Net foreign exchange losses/(gains)	6	(16)	1
Other operating income	(14)	(19)	(43)
Operating expenses	14,741	14,555	12,800
Great Britain [member]
Expense by nature [line items]
Excise duties	853	774	853
United States [member]
Expense by nature [line items]
Excise duties	548	558	468
India [member]
Expense by nature [line items]
Excise duties	2,094	2,073	1,588
Other [member]
Expense by nature [line items]
Excise duties	£ 2,774	£ 2,659	£ 2,247

XML

Operating Costs - Information About Operating Costs (Parenthetical) (Detail) - United Breweries Limited [Member] £ in Millions, shares in Millions	12 Months Ended
	Jun. 30, 2016 GBP (£) shares
Expense by nature [line items]
Associate company shares sold | shares	8.5
Gain on sale of shares | £	£ 28

XML

Operating Costs - Additional Information (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)
Disclosure of operating costs [line items]
Research and development expenditure	£ 36.0	£ 33.0	£ 28.0
Maintenance and repairs expense	£ 117.0	£ 100.0	£ 91.0
Full time equivalent employees	29,362	30,051	31,485
Average number of employees including part time employees	30,761	31,472	32,969
Principal auditor [member]
Disclosure of operating costs [line items]
Review of interim financial information	£ 0.4	£ 0.3	£ 0.3
Audit services	8.2	8.1	7.1
Audit services in respect of employee pension plans	0.3	0.3	0.2
Previous principal auditor [member]
Disclosure of operating costs [line items]
Audit services	0.1	0.5	0.9
Plant and equipment [member]
Disclosure of operating costs [line items]
Operating lease rentals	21.0	20.0	29.0
Asset classes other than plant and equipments [member]
Disclosure of operating costs [line items]
Operating lease rentals	£ 87.0	£ 96.0	£ 72.0

XML

Operating Costs - Information about auditor fees (Detail) - Principal auditor [member] - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Auditors remuneration [abstract]
Audit of these financial statements	£ 3.3	£ 3.1	£ 3.4
Audit of financial statements of subsidiaries	3.3	3.4	2.3
Audit related assurance services	1.6	1.6	1.4
Total audit fees (Audit fees)	8.2	8.1	7.1
Other services relevant to taxation (Tax fees)	0.1	0.3	0.5
Other assurance services (Audit related fees)	0.6	0.5	0.4
All other non-audit fees (All other fees)	1.0	0.9	0.9
Auditors remuneration, Total	£ 9.9	£ 9.8	£ 8.9

XML

Operating Costs - Information about staff costs (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Aggregate remuneration
Wages and salaries	£ 1,272	£ 1,330	£ 1,236
Share-based incentive plans	40	34	28
Employer's social security	95	93	85
Employer's pension
- defined benefit plans	73	95	99
- defined contribution plans	18	17	16
Other post employment plans	11	14	11
Staff costs	£ 1,509	£ 1,583	£ 1,475

XML

Operating Cost - Information About Average Number of Employees (Detail)	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Number and average number of employees
Average number of employees	29,917	30,433	32,078
Total operating segments [member] | North America [member]
Number and average number of employees
Average number of employees	2,406	2,251	2,477
Total operating segments [member] | Europe and Turkey [member]
Number and average number of employees
Average number of employees	3,747	4,074	4,164
Total operating segments [member] | Africa [member]
Number and average number of employees
Average number of employees	4,625	4,898	5,381
Total operating segments [member] | Latin America and Caribbean [member]
Number and average number of employees
Average number of employees	2,536	2,573	3,013
Total operating segments [member] | Asia Pacific [member]
Number and average number of employees
Average number of employees	8,008	8,690	9,711
Total operating segments [member] | ISC [member]
Number and average number of employees
Average number of employees	4,227	4,244	4,188
Corporate and other [member]
Number and average number of employees
Average number of employees	4,368	3,703	3,144

XML

Operating Costs - Information About Exceptional Operating Items (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Exceptional operating items [abstract]
Other external charges		£ 42	£ 49
Decrease in inventories	£ 3
Depreciation, amortisation and impairment
- Brand, goodwill and tangible asset impairment	125		118
Total exceptional operating costs (note 4)	£ 128	£ 42	£ 167

XML

Exceptional Items - Schedule of Information about Exceptional Items (Detail) £ in Millions, $ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 GBP (£)
Disclosure of exceptional items [line items]
Exceptional items included in operating profit	£ 3,691	£ 3,559		£ 2,841
Sale of businesses, acquisition of investment and exceptional items included in non-operating items		20		123
Profit before taxation	3,740	3,559		2,858
Items included in taxation	(596)	(732)		(496)
Exceptional items in continuing operations	3,144	2,827		2,362
Discontinued operations net of taxation		(55)
Total exceptional items	3,144	2,772		2,362
Attributable to:
Profit for the year	3,144	2,772		2,362
Brand, goodwill and tangible asset impairment [member]
Disclosure of exceptional items [line items]
Exceptional items included in operating profit	(128)			(118)
Competition authority investigation in Turkey [member]
Disclosure of exceptional items [line items]
Exceptional items included in operating profit		(33)
Customer claim in India [member]
Disclosure of exceptional items [line items]
Exceptional items included in operating profit		(32)
Items included in taxation		11
Disengagement agreements relating to United Spirits Limited [member]
Disclosure of exceptional items [line items]
Exceptional items included in operating profit		23	$ 29	(49)
Total exceptional items [member]
Disclosure of exceptional items [line items]
Exceptional items included in operating profit	(128)	(42)		(167)
Sale of businesses, acquisition of investment and exceptional items included in non-operating items		20		123
Profit before taxation	(128)	(22)		(44)
Items included in taxation	203	4		56
Exceptional items in continuing operations	75	(18)		12
Discontinued operations net of taxation		(55)
Total exceptional items	75	(73)		12
Attributable to:
Equity shareholders of the parent company	75	(64)		2
Non-controlling interests		(9)		10
Profit for the year	£ 75	(73)		12
Wines in United States and Percy Fox [member]
Disclosure of exceptional items [line items]
Sale of businesses, acquisition of investment and exceptional items included in non-operating items		£ 20		(191)
Argentina [member]
Disclosure of exceptional items [line items]
Sale of businesses, acquisition of investment and exceptional items included in non-operating items				(38)
South African associate interests [member]
Disclosure of exceptional items [line items]
Sale of businesses, acquisition of investment and exceptional items included in non-operating items				(27)
Jamaica, Singapore and Malaysia beer interests [member]
Disclosure of exceptional items [line items]
Sale of businesses, acquisition of investment and exceptional items included in non-operating items				457
Kenya - glass business (CGI) [member]
Disclosure of exceptional items [line items]
Sale of businesses, acquisition of investment and exceptional items included in non-operating items				14
Watson Limited [member]
Disclosure of exceptional items [line items]
Sale of businesses, acquisition of investment and exceptional items included in non-operating items				£ (92)

XML

Exceptional Items - Schedule of Information about Exceptional Items (Parenthetical) (Detail) ₺ in Millions, ₨ in Millions, £ in Millions, $ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2017 USD ($)	Jun. 30, 2017 INR (₨)	Jun. 30, 2017 TRY (₺)	Jun. 30, 2016 GBP (£)	Jun. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)
Disclosure of exceptional items [line items]
Profit (loss) from operating activities	£ 3,691	£ 3,559				£ 2,841
Exceptional gain		20				123
Proportion of ownership interest in subsidiary	100.00%
Brand, goodwill and tangible asset impairment [member]
Disclosure of exceptional items [line items]
Impairment Charge	£ 128
Profit (loss) from operating activities	£ (128)					(118)
Disengagement agreements relating to United Spirits Limited [member]
Disclosure of exceptional items [line items]
Profit (loss) from operating activities		23	$ 29			(49)
Payment relating to disengagement agreements						53	$ 75
Gain rising from termination of disengagement agreement						£ 4
Agreement date						Feb. 25, 2016	Feb. 25, 2016
Disengagement agreements relating to United Spirits Limited [member] | First installment [member]
Disclosure of exceptional items [line items]
Payment relating to disengagement agreements						£ 28	$ 40
Watson Limited [member]
Disclosure of exceptional items [line items]
Exceptional gain						(92)
Loan guaranteed by subsidiary						£ 92		$ 135
Loan repayment | $							135
Loan refunds provision | $							$ 135
DHN Drinks [member]
Disclosure of exceptional items [line items]
Business disposal date						1 December 2015	1 December 2015
Proportion of ownership interest in associate						42.25%	42.25%
Sedibeng Breweries Limited [member]
Disclosure of exceptional items [line items]
Proportion of ownership interest in associate						25.00%	25.00%
Namibia Breweries Limited [member]
Disclosure of exceptional items [line items]
Proportion of ownership interest in associate						15.01%	15.01%
DHN Drinks and Sedibeng Breweries Limited [member]
Disclosure of exceptional items [line items]
Loss on disposal of investments						£ 27
Net cash consideration received						120
Loan repayment by associates						31
Net foreign exchange loss						£ 30
GAPL Pte Limited [member]
Disclosure of exceptional items [line items]
Proportion of ownership interest in subsidiary						49.99%	49.99%
United Spirits Limited [member]
Disclosure of exceptional items [line items]
Provision in exceptional items against current receivable from customer			$ 32	₨ 2,678
Proportion of ownership interest in subsidiary	54.78%
Wines in United States and Percy Fox [member]
Disclosure of exceptional items [line items]
Loss on disposal of investments						£ 191
Business disposal date						1 January 2016	1 January 2016
Desnoes and Geddes Limited [member]
Disclosure of exceptional items [line items]
Proportion of ownership interest in subsidiary						57.87%	57.87%
Turkey [member]
Disclosure of exceptional items [line items]
Competition authority investigation		33			₺ 150
Argentina [member]
Disclosure of exceptional items [line items]
Loss on disposal of investments						£ 38
Business disposal date						29 January 2016	29 January 2016
Net foreign exchange loss						£ 20
Transaction costs						7
Jamaica, Singapore and Malaysia beer interests [member]
Disclosure of exceptional items [line items]
Gain on disposal of investments						457
Treasury Wine Estates [member]
Disclosure of exceptional items [line items]
Exceptional gain		£ 20
Brands [member] | Brand, goodwill and tangible asset impairment [member]
Disclosure of exceptional items [line items]
Impairment Charge	£ 40					62
Property, plant and equipment [member] | Brand, goodwill and tangible asset impairment [member]
Disclosure of exceptional items [line items]
Impairment Charge	35					14
Goodwill [member] | Brand, goodwill and tangible asset impairment [member]
Disclosure of exceptional items [line items]
Impairment Charge	£ 50					£ 42

XML

Finance Income and Charges - Schedule of Impact from Derivatives Among Interest Income/(Charge) (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Material income and expense [abstract]
Interest income	£ 155	£ 148	£ 153
Fair value gain on financial instruments	61	76	88
Total interest income	216	224	241
Interest charge on bank loans and overdrafts	(53)	(72)	(67)
Interest charge on finance leases	(9)	(11)	(13)
Interest charge on all other borrowings	(333)	(368)	(379)
Fair value loss on financial instruments	(62)	(67)	(91)
Total interest charges	(457)	(518)	(550)
Net interest charges	(241)	(294)	(309)
Net finance income in respect of post employment plans in surplus	9	2	18
Hyperinflation adjustment in respect of Venezuela	18	9
Other finance income			3
Total other finance income	27	11	21
Net finance charge in respect of post employment plans in deficit	(20)	(27)	(23)
Unwinding of discounts	(14)	(8)	(11)
Change in financial liability		(8)
Hyperinflation adjustment in respect of Venezuela			(1)
Other finance charges	(12)	(3)	(4)
Total other finance charges	(46)	(46)	(39)
Net other finance charges	£ (19)	£ (35)	£ (18)

XML

Finance Income and Charges - Schedule of Impact from Derivatives Among Interest Income/(Charge) (Parenthetical) (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Material income and expense [abstract]
Net interest income	£ 73	£ 91	£ 84
Net Interest charge	£ (394)	£ (467)	£ (451)

XML

Investments in Associates and Joint Ventures - Additional Information (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)
Disclosure of associates [line items]
Investment in associates	£ 59	£ 27	£ 19
Cost of shares less goodwill written off on acquisitions	1,239	1,196
Group's share of post acquisition reserves	£ 1,770	£ 1,628
Moet Hennessy [member]
Disclosure of associates [line items]
Ownership interest in associate	34.00%
Country of incorporation of Associate	France
Moet Hennessy [member] | Uk Pound [member] | Fair value [member]
Disclosure of associates [line items]
Average exchange rate	1	1
Moet Hennessy [member] | Euro [member]
Disclosure of associates [line items]
Closing exchange rate	1.13	1.16	1.34
Moet Hennessy [member] | Euro [member] | Fair value [member]
Disclosure of associates [line items]
Closing exchange rate	1.13	1.14
Moet Hennessy [member] | Sterling [member]
Disclosure of associates [line items]
Average exchange rate	1	1	1

XML

Investments in Associates and Joint Ventures - Analysis of Movement in the Group's Investments in Associates and Joint Ventures (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of significant investments in associates and joint ventures [line items]
Cost less provisions, Beginning balance	£ 2,824	£ 2,528
Exchange differences	3	120	£ 325
Additions	41	10
Additions in associates	0
Share of profit after tax	309	309	221
Dividends	(159)	(223)
Share of tax attributable to shareholders		85
Other	(9)	(5)
Cost less provisions, Ending balance	3,009	2,824	2,528
Moet Hennessy [member]
Disclosure of significant investments in associates and joint ventures [line items]
Cost less provisions, Beginning balance	2,726	2,445
Exchange differences	3	117
Additions in associates	0
Share of profit after tax	305	302	217
Dividends	(150)	(218)
Share of tax attributable to shareholders		85
Other	(9)	(5)
Cost less provisions, Ending balance	2,875	2,726	2,445
Others [member]
Disclosure of significant investments in associates and joint ventures [line items]
Cost less provisions, Beginning balance	98	83
Exchange differences		3
Additions	41	10
Additions in associates	0
Share of profit after tax	4	7
Dividends	(9)	(5)
Cost less provisions, Ending balance	£ 134	£ 98	£ 83

XML

Investments in Associates and Joint Ventures - Summary of Income Statement of Associates (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of associates [line items]
Sales	£ 12,163	£ 12,050	£ 10,485
Profit for the year	3,144	2,772	2,362
Total comprehensive income	2,868	3,423	2,471
Moet Hennessy [member]
Disclosure of associates [line items]
Sales	4,445	4,356	3,491
Profit for the year	897	888	638
Total comprehensive income	£ 799	£ 838	£ 509

XML

Investments in Associates and Joint Ventures - Summary of Balance Sheet of Associates (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of associates [line items]
Non-current assets	£ 21,024	£ 20,196
Current assets	8,691	8,652
Total assets	29,715	28,848
Non-current liabilities	(11,642)	(10,160)
Current liabilities	(6,360)	(6,660)
Total liabilities	(18,002)	(16,820)
Net assets	11,713	12,028
Moet Hennessy [member]
Disclosure of associates [line items]
Non-current assets	4,251	4,160
Current assets	7,395	6,897
Total assets	11,646	11,057
Non-current liabilities	(972)	(973)
Current liabilities	(2,218)	(2,067)
Total liabilities	(3,190)	(3,040)
Net assets	£ 8,456	£ 8,017

XML

Taxation - Schedule of Analysis of Taxation Charge for the Year (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Current tax
Current year	£ 634	£ 591	£ 576
Adjustments in respect of prior years	69	20	63
Current tax	703	611	639
Deferred tax
Origination and reversal of temporary differences	167	134	(83)
Changes in tax rates	(371)	(9)	7
Adjustments in respect of prior years	97	(4)	(67)
Deferred Tax	(107)	121	(143)
Taxation on profit from continuing operations	596	732	496
United Kingdom [member]
Current tax
Current year	131	50	61
Adjustments in respect of prior years	71	4
Current tax	202	54	61
Deferred tax
Origination and reversal of temporary differences	40	40	26
Changes in tax rates	(11)	5	6
Adjustments in respect of prior years	95	13	2
Deferred Tax	124	58	34
Taxation on profit from continuing operations	326	112	95
Rest of world [member]
Current tax
Current year	503	541	515
Adjustments in respect of prior years	(2)	16	63
Current tax	501	557	578
Deferred tax
Origination and reversal of temporary differences	127	94	(109)
Changes in tax rates	(360)	(14)	1
Adjustments in respect of prior years	2	(17)	(69)
Deferred Tax	(231)	63	(177)
Taxation on profit from continuing operations	£ 270	£ 620	£ 401

XML

Taxation - Schedule of Analysis of Taxation Charge for the Year (Parenthetical) (Detail)	Jan. 01, 2018	Dec. 22, 2017
United States [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
US Federal tax rate	21.00%	35.00%

XML

Taxation - Schedule of Exceptional Tax Credits or Charges (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges	£ 596	£ 732	£ 496
US tax reform [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges	(354)
UK Transfer Pricing Settlement [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges	143
UK Industrial Building Allowance [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges	21
Brand and Tangible Asset Impairment [Member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges	(13)		(10)
Sale of businesses [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges		7	(49)
Customer claim in India [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges		(11)
Disengagement agreements relating to United Spirits Limited [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges			3
Total exceptional items [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credits)/charges	£ (203)	£ (4)	£ (56)

XML

Taxation - Schedule of Exceptional Tax Credits or Charges (Parenthetical) (Detail) £ in Millions, $ in Millions			6 Months Ended	12 Months Ended
	Jan. 01, 2018	Dec. 22, 2017	Dec. 31, 2017 GBP (£)	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credit) charge				£ 596		£ 732	£ 496
Additional tax charge				634		£ 591	£ 576
UK Transfer Pricing Settlement [member]
Disclosure of exceptional tax expense income [line items]
Tax assessment notice payment			£ 107
Exceptional tax (credit) charge				143
Additional tax charge				47
UK Industrial Building Allowance [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credit) charge				21
Tax Cuts and Jobs Act [member]
Disclosure of exceptional tax expense income [line items]
Remeasurement of deferred tax assets on post employment benefits and share-based incentive plans to other comprehensive income				11	$ 15
Exceptional tax (credit) charge				(354)	(478)
US Tax Reform Repatriation Of Untaxed Foreign Earnings [member] | Tax Cuts and Jobs Act [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credit) charge				9	12
US Tax Reform Remeasuring Deferred Tax Liabilities [Member] | Tax Cuts and Jobs Act [member]
Disclosure of exceptional tax expense income [line items]
Exceptional tax (credit) charge				£ (363)	$ (490)
United States [member]
Disclosure of exceptional tax expense income [line items]
US Federal tax rate	21.00%	35.00%
United States [member] | Tax Cuts and Jobs Act [member]
Disclosure of exceptional tax expense income [line items]
US Federal tax rate	21.00%	35.00%

XML

Taxation - Schedule of Taxation Rate Reconciliation and Factors that may Affect Future Tax Charges (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Profit from continuing operations before taxation	£ 3,740	£ 3,559	£ 2,858
Notional charge at UK corporation tax rate of 19% (2017 - 19.75%; 2016 - 20%)	711	703	571
Elimination of notional tax on share of after tax results of associates and joint ventures	(58)	(60)	(44)
Differences in overseas tax rates	134	162	50
Effect of intra-group financing	(61)	(64)	(97)
Non taxable gain on disposals of businesses			(90)
Other tax rate and tax base differences	(109)	(100)	(87)
Other items not chargeable	(79)	(78)	(66)
Impairment	16		21
Non deductible losses on disposal of businesses		(1)	24
Other non deductible exceptional items	9	7	31
Other items not deductible	238	156	180
Changes in tax rates	(371)	(9)	7
Adjustments in respect of prior years	166	16	(4)
Taxation on profit from continuing operations	£ 596	£ 732	£ 496

XML

Taxation - Additional Information (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Major components of tax expense (income) [abstract]
Current tax asset	£ 65
Corporate tax payable	243	294
Current tax provision	231	287
Deferred tax assets	122	134
Deferred tax assets arising in jurisdictions with prior year taxable losses	40	63
Temporary differences in respect of investments in subsidiaries, branches, interests in associates and joint ventures	£ 12,000	£ 13,700

XML

Taxation - Schedule of Deferred Tax Assets and Liabilities (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	£ (1,978)	£ (1,684)
Exchange differences	82	(30)
Recognised in income statement - continuing operations	(256)	(121)
Recognised in other comprehensive income and equity	(65)	(145)
Discontinued operations		2
Tax rate change-recognised in income statement	363
Tax rate change-recognised in other comprehensive income and equity	(11)
Ending balance	(1,865)	(1,978)
Tax losses [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	43	60
Exchange differences	(1)	2
Recognised in income statement - continuing operations	(15)	(25)
Recognised in other comprehensive income and equity	5	6
Ending balance	32	43
Other temporary differences [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	324	343
Exchange differences	(11)	8
Recognised in income statement - continuing operations	(84)	(8)
Reclassification	5
Recognised in other comprehensive income and equity	35	(21)
Discontinued operations		2
Tax rate change-recognised in income statement	(30)
Tax rate change-recognised in other comprehensive income and equity	(5)
Ending balance	234	324
Property, plant and equipment [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	(180)	(126)
Exchange differences	7	6
Recognised in income statement - continuing operations	(134)	(60)
Reclassification	(4)
Tax rate change-recognised in income statement	19
Ending balance	(292)	(180)
Intangible assets [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	(2,277)	(2,201)
Exchange differences	89	(51)
Recognised in income statement - continuing operations	(14)	(25)
Tax rate change-recognised in income statement	390
Ending balance	(1,812)	(2,277)
Post employment plan [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	112	240
Exchange differences	(2)	5
Recognised in income statement - continuing operations	(9)	(3)
Reclassification	(1)
Recognised in other comprehensive income and equity	(105)	(130)
Tax rate change-recognised in income statement	(16)
Tax rate change-recognised in other comprehensive income and equity	(6)
Ending balance	£ (27)	£ 112

XML

Taxation - Schedule of Net Deferred Tax Assets and Liabilities (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax assets	£ 122	£ 134
Deferred tax liabilities	(1,987)	(2,112)
Net deferred tax liability (asset)	£ (1,865)	£ (1,978)	£ (1,684)

XML

Taxation - Schedule of Unrecognised Deferred Tax Assets (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unrecognised deferred tax assets	£ 216	£ 207
Capital losses - indefinite [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unrecognised deferred tax assets	69	67
Trading losses - indefinite [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unrecognised deferred tax assets	92	80
Trading losses [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unrecognised deferred tax assets	£ 55	£ 60

XML

Discontinued Operations - Additional Information (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2017 GBP (£)
Disclosure of discontinued operations [line items]
Discontinued operations	£ 55
Discontinued operations [member]
Disclosure of discontinued operations [line items]
Discontinued operations	55
Deferred tax assets	9
Discontinued operations, cash payment	£ 31

XML

Acquisition and Sale of Businesses and Purchase of Non-Controlling Interests - Schedule of Fair Value of Net Assets Acquired and Cash Consideration Paid in Business Combination (Detail) £ in Millions, $ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)	Aug. 15, 2017 GBP (£)	Aug. 15, 2017 USD ($)
Disclosure of business combinations and purchase of NCI [line items]
Goodwill arising on acquisition	£ 249		£ (14)
Consideration payable	739
Cash consideration paid	555
Contingent consideration payable	184
Consideration payable	739
Capital injection in associates	11	£ 2	1
Cash	(6)
Net cash outflow on acquisition of businesses	594	31	15
Purchase of shares of non-controlling interests			21
Total net cash outflow	594	31	36
Fair value [member]
Disclosure of business combinations and purchase of NCI [line items]
Brands and other intangibles	478		26
Inventories	4
Other working capital	2
Current tax			(1)
Deferred tax			(11)
Cash	6
Fair value of assets and liabilities	490		14
Prior year acquisitions [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	22	23	4
Investments in associates [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	12	£ 6	£ 10
Casamigos Tequila LLC [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	549
Other subsidiaries [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	6
Casamigos Aquisition [member]
Disclosure of business combinations and purchase of NCI [line items]
Goodwill arising on acquisition	237
Consideration payable	721			£ 777	$ 1,000
Cash consideration paid	549
Contingent consideration payable	172			233	300
Consideration payable	721			£ 777	$ 1,000
Cash	(6)
Net cash outflow on acquisition of businesses	543
Total net cash outflow	543
Casamigos Aquisition [member] | Fair value [member]
Disclosure of business combinations and purchase of NCI [line items]
Brands and other intangibles	469
Inventories	4
Other working capital	5
Cash	6
Fair value of assets and liabilities	484
Casamigos Aquisition [member] | Casamigos Tequila LLC [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	549
Other [member]
Disclosure of business combinations and purchase of NCI [line items]
Goodwill arising on acquisition	12
Consideration payable	18
Cash consideration paid	6
Contingent consideration payable	12
Consideration payable	18
Capital injection in associates	11
Net cash outflow on acquisition of businesses	51
Total net cash outflow	51
Other [member] | Fair value [member]
Disclosure of business combinations and purchase of NCI [line items]
Brands and other intangibles	9
Other working capital	(3)
Fair value of assets and liabilities	6
Other [member] | Prior year acquisitions [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	22
Other [member] | Investments in associates [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	12
Other [member] | Other subsidiaries [member]
Disclosure of business combinations and purchase of NCI [line items]
Cash consideration paid	£ 6

XML

Acquisition and Sale of Businesses and Purchase of Non-Controlling Interests - Additional Information (Detail) £ in Millions, $ in Millions		12 Months Ended		24 Months Ended
	May 02, 2018	Jun. 30, 2018 GBP (£)	Jun. 30, 2016 GBP (£)	Jun. 30, 2017 GBP (£)	Aug. 15, 2017 GBP (£)	Aug. 15, 2017 USD ($)
Disclosure of detailed information about business combination [Line Items]
Consideration payable		£ 739
Deferred/contingent consideration payable		184
Other [member]
Disclosure of detailed information about business combination [Line Items]
Consideration payable		18
Deferred/contingent consideration payable		12
Jamaica, Singapore and Malaysia beer interests [member]
Disclosure of detailed information about business combination [Line Items]
Cash paid			£ (510)
Wines in United States and Percy Fox [member]
Disclosure of detailed information about business combination [Line Items]
Cash paid			(397)
Aggregated individually immaterial business disposals [member]
Disclosure of detailed information about business combination [Line Items]
Cash paid			£ (159)
Casamigos Aquisition [member]
Disclosure of detailed information about business combination [Line Items]
Percentage of interest acquired					100.00%	100.00%
Consideration payable		721			£ 777	$ 1,000
Deferred/contingent consideration payable		172			233	300
Net sales contributed		49
Operating profit contributed		4
Profit after tax contributed		3
Transaction cost incurred		4
Gross sales contributed		£ 55
Net present value of deferred consideration					£ 172	$ 221
Expected payment of deferred consideration		Next ten years
Pierde Almas Acquisition [Member]
Disclosure of detailed information about business combination [Line Items]
Percentage of intellectual property	100.00%
Prior year acquisitions [member] | Other [member]
Disclosure of detailed information about business combination [Line Items]
Cash paid				£ 16

XML

Intangible Assets - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Brand, goodwill and tangible asset impairment [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Impairment loss	£ 128
Tax effect of impairment	13
Exceptional loss	115
Brands [member] | Brand, goodwill and tangible asset impairment [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Impairment loss	40		£ 62
Property, plant and equipment [member] | Brand, goodwill and tangible asset impairment [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Impairment loss	35		14
Inventories. | Brand, goodwill and tangible asset impairment [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Impairment loss	3
Goodwill [member] | Brand, goodwill and tangible asset impairment [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Impairment loss	50		£ 42
Ketel One distribution right [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Other intangible assets	£ 1,363	£ 1,385
Computer software [member] | Maximum [member]
Disclosure of information for impairment loss recognised or reversed for individual asset or cash-generating unit [line items]
Estimated useful lives		8

XML

Intangible Assets - Schedule of Impairment of Intangible Assets, Including Brands (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	£ 12,566	£ 12,370
Ending Balance	12,572	12,566
Cost [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	13,690	13,463
Exchange differences	(630)	221
Additions	762	47
Disposals	(2)	(41)
Ending Balance	13,820	13,690
Depreciation [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	1,124	1,093
Exchange differences	(23)	13
Amortisation for the year	58	56
Exceptional impairment	90
Disposals	(1)	(38)
Ending Balance	1,248	1,124
Brands [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	8,229	8,079
Ending Balance	8,330	8,229
Brands [member] | Cost [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	8,815	8,656
Exchange differences	(347)	159
Additions	478
Ending Balance	8,946	8,815
Brands [member] | Depreciation [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	586	577
Exchange differences	(10)	9
Exceptional impairment	40
Ending Balance	616	586
Goodwill [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	2,723	2,699
Ending Balance	2,678	2,723
Goodwill [member] | Cost [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	2,791	2,767
Exchange differences	(252)	24
Additions	249
Ending Balance	2,788	2,791
Goodwill [member] | Depreciation [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	68	68
Exchange differences	(8)
Exceptional impairment	50
Ending Balance	110	68
Other intangibles [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	1,434	1,404
Ending Balance	1,407	1,434
Other intangibles [member] | Cost [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	1,506	1,472
Exchange differences	(24)	34
Ending Balance	1,482	1,506
Other intangibles [member] | Depreciation [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	72	68
Exchange differences		1
Amortisation for the year	3	3
Ending Balance	75	72
Computer software [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	180	188
Ending Balance	157	180
Computer software [member] | Cost [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	578	568
Exchange differences	(7)	4
Additions	35	47
Disposals	(2)	(41)
Ending Balance	604	578
Computer software [member] | Depreciation [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Beginning Balance	398	380
Exchange differences	(5)	3
Amortisation for the year	55	53
Disposals	(1)	(38)
Ending Balance	£ 447	£ 398

XML

Intangible Assets - Schedule of Principal Acquired Brands with Indefinite Useful Life (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of intangible assets with indefinite useful life [line items]
Principal acquired brands with indefinite useful life	£ 12,572	£ 12,566	£ 12,370
Brands [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal acquired brands with indefinite useful life	£ 8,330	8,229	£ 8,079
Brands [member] | Crown Royal whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	United States
Principal acquired brands with indefinite useful life	£ 1,109	1,126
Brands [member] | McDowell's No.1 whisky, rum and brandy [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	India
Principal acquired brands with indefinite useful life	£ 1,077	1,156
Brands [member] | Captain Morgan [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Global
Principal acquired brands with indefinite useful life	£ 910	924
Brands [member] | Johnnie Walker whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Global
Principal acquired brands with indefinite useful life	£ 625	625
Brands [member] | Smirnoff vodka [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Global
Principal acquired brands with indefinite useful life	£ 624	634
Brands [member] | Windsor Premier whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Korea
Principal acquired brands with indefinite useful life	£ 591	583
Brands [member] | Casamigos tequila [Member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	United States
Principal acquired brands with indefinite useful life	£ 458
Brands [member] | Yeni Raki [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Turkey
Principal acquired brands with indefinite useful life	£ 280	372
Brands [member] | Shui Jing Fang Chinese white spirit [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Greater China
Principal acquired brands with indefinite useful life	£ 259	257
Brands [member] | Signature whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	India
Principal acquired brands with indefinite useful life	£ 202	218
Brands [member] | Don Julio tequila [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	United States
Principal acquired brands with indefinite useful life	£ 195	216
Brands [member] | Bells Whisky [Member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	United Kingdom
Principal acquired brands with indefinite useful life	£ 179	179
Brands [member] | Black Dog whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	India
Principal acquired brands with indefinite useful life	£ 171	184
Brands [member] | Seagram's 7 Crown whiskey [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	United States
Principal acquired brands with indefinite useful life	£ 169	171
Brands [member] | Antiquity whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	India
Principal acquired brands with indefinite useful life	£ 167	180
Brands [member] | Zacapa rum [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Global
Principal acquired brands with indefinite useful life	£ 145	147
Brands [member] | Seagrams Vo Whiskey [Member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	United States
Principal acquired brands with indefinite useful life	£ 144	146
Brands [member] | Gordons gin [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Europe
Principal acquired brands with indefinite useful life	£ 119	119
Brands [member] | Bagpiper whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	India
Principal acquired brands with indefinite useful life	£ 116	124
Brands [member] | Old Parr whisky [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal markets	Global
Principal acquired brands with indefinite useful life	£ 101	101
Brands [member] | Other brands [member]
Disclosure of intangible assets with indefinite useful life [line items]
Principal acquired brands with indefinite useful life	£ 689	£ 767

XML

Intangible Assets - Schedule of Goodwill Attributed to Cash-generating Units (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	£ 2,678	£ 2,723
North America [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	390	207
Europe Excluding Turkey [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	170	154
Turkey [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	284	377
Africa Regional Markets
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	27	93
Mexico [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	133	103
Greater China [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	131	130
India [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	1,462	1,572
Other cash-generating units [member]
Disclosure of information for cash-generating units [line items]
Goodwill attributed to cash-generating unit	£ 81	£ 87

XML

Intangible Assets - Schedule of Pre-tax Discount Rates and Terminal Growth Rates used for Impairment Testing (Detail)	Jun. 30, 2018	Jun. 30, 2017
United States [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	10.00%	10.00%
Terminal growth rate	2.00%	2.00%
Europe [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	7.00%	8.00%
Terminal growth rate	2.00%	2.00%
Turkey [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	16.00%	16.00%
Terminal growth rate	5.00%	5.00%
Africa Regional Markets
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	25.00%	21.00%
Terminal growth rate	5.00%	4.00%
Ethiopia [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	24.00%	24.00%
Terminal growth rate	8.00%	8.00%
South Africa [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	16.00%	18.00%
Terminal growth rate	5.00%	5.00%
Brazil [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	15.00%	15.00%
Terminal growth rate	4.00%	5.00%
Mexico [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	16.00%	17.00%
Terminal growth rate	3.00%	3.00%
Korea [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	8.00%	8.00%
Terminal growth rate	2.00%	2.00%
Greater China [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	9.00%	10.00%
Terminal growth rate	2.00%	3.00%
India [member]
Disclosure of information for cash-generating units [line items]
Pre-tax discount rate	14.00%	14.00%
Terminal growth rate	5.00%	6.00%

XML

Intangible Assets - Schedule of Sensitivity to Change in Key Assumptions (Detail) £ in Millions	Jun. 30, 2018 GBP (£)
Headroom [member] | India [member]
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Cash-generating units sensitive to reasonably possible changes in assumptions	£ 823
Headroom [member] | Windsor Premier Brand [Member]
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Cash-generating units sensitive to reasonably possible changes in assumptions	170
1ppt increase in discount rate | Africa Regional Markets
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Cash-generating units sensitive to reasonably possible changes in assumptions	(15)
10% decrease in annual cash flow | Africa Regional Markets
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Cash-generating units sensitive to reasonably possible changes in assumptions	(29)
2ppt decrease in annual growth rate | Windsor Premier Brand [Member]
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Cash-generating units sensitive to reasonably possible changes in assumptions	(56)
5ppt decrease in annual growth rate in forecast period 2019-2029 | India [member]
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Cash-generating units sensitive to reasonably possible changes in assumptions	£ (907)

XML

Intangible Assets - Schedule of Sensitivity to Change in Key Assumptions (Parenthetical) (Detail)	Jun. 30, 2018
Africa Regional Markets | 10% decrease in annual cash flow
Disclosure of intangible assets sensitivity to change in key assumptions [line items]
Annual decrease in cash flow	0.10

XML

Property, Plant and Equipment - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	£ 4,089	£ 4,014	£ 3,881
Government grants	140	142
Exceptional accelerated depreciation and impairment	35		22
Freeholds land and buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	1,073	1,128
Long leasehold land and buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	25	31
Short leasehold land and buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	20	21
Non-current assets held for sale [member]
Disclosure of detailed information about property, plant and equipment [line items]
Transferred to assets held for sale	25
Fixtures and fittings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	35	41	42
Returnable bottles and crates [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	163	172	£ 176
Land [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property, plant and equipment	147	196
Property plant and equipment under finance leases [member]
Disclosure of detailed information about property, plant and equipment [line items]
Property plant and equipment	231	250
Depreciation expense	£ 16	£ 15
Minimum [member] | Buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	10 years
Minimum [member] | Casks and containers [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	15 years
Minimum [member] | Other plant and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	5 years
Minimum [member] | Fixtures and fittings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	5 years
Minimum [member] | Returnable bottles and crates [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	5 years
Maximum [member] | Buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	50 years
Maximum [member] | Casks and containers [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	50 years
Maximum [member] | Other plant and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	25 years
Maximum [member] | Fixtures and fittings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	10 years
Maximum [member] | Returnable bottles and crates [member]
Disclosure of detailed information about property, plant and equipment [line items]
Estimated useful life	10 years

XML

Property Plant and Equipment - Schedule of Detailed Information About Property Plant and Equipment (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	£ 4,014	£ 3,881
Exceptional impairment	35		£ 22
Ending Balance	4,089	4,014	3,881
Cost [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	6,530	6,214
Exchange differences	(131)	12
Sale of businesses	(2)
Additions	564	459
Disposals	(157)	(155)
Transfers	(25)
Ending Balance	6,779	6,530	6,214
Depreciation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	2,516	2,333
Exchange differences	(50)	(9)
Depreciation charge for the year	310	305
Exceptional impairment	35
Sale of businesses	(1)
Disposals	(120)	(113)
Ending Balance	2,690	2,516	2,333
Land and buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	1,180	1,083
Ending Balance	1,118	1,180	1,083
Land and buildings [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	1,628	1,483
Exchange differences	(36)	39
Sale of businesses	(2)
Additions	20	39
Disposals	(38)	(28)
Transfers	13	95
Ending Balance	1,585	1,628	1,483
Land and buildings [member] | Depreciation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	448	400
Exchange differences	(10)	3
Depreciation charge for the year	48	57
Sale of businesses	(1)
Disposals	(18)	(12)
Ending Balance	467	448	400
Plant and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	2,327	2,270
Ending Balance	2,341	2,327	2,270
Plant and equipment [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	3,958	3,783
Exchange differences	(73)	(12)
Additions	138	117
Disposals	(84)	(90)
Transfers	163	160
Ending Balance	4,102	3,958	3,783
Plant and equipment [member] | Depreciation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	1,631	1,513
Exchange differences	(32)	(5)
Depreciation charge for the year	210	196
Exceptional impairment	26
Disposals	(74)	(73)
Ending Balance	1,761	1,631	1,513
Fixtures and fittings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	41	42
Ending Balance	35	41	42
Fixtures and fittings [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	127	122
Exchange differences	(6)	(1)
Additions	7	14
Disposals	(6)	(10)
Transfers	4	2
Ending Balance	126	127	122
Fixtures and fittings [member] | Depreciation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	86	80
Exchange differences	(4)
Depreciation charge for the year	15	13
Disposals	(6)	(7)
Ending Balance	91	86	80
Returnable bottles and crates [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	172	176
Ending Balance	163	172	176
Returnable bottles and crates [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	523	516
Exchange differences	(9)	(14)
Additions	27	28
Disposals	(25)	(24)
Transfers	18	17
Ending Balance	534	523	516
Returnable bottles and crates [member] | Depreciation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	351	340
Exchange differences	(4)	(7)
Depreciation charge for the year	37	39
Exceptional impairment	9
Disposals	(22)	(21)
Ending Balance	371	351	340
Construction in progress [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	294	310
Ending Balance	432	294	310
Construction in progress [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning Balance	294	310
Exchange differences	(7)
Additions	372	261
Disposals	(4)	(3)
Transfers	(223)	(274)
Ending Balance	£ 432	£ 294	£ 310

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Other Investments - Informations About Cost Less Allowances or Fair Value of Other Investments (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of financial assets [line items]
Beginning balance	£ 31	£ 31
Exchange differences	1	1
Additions	21	2
Repayments and disposals	(4)	(5)
Fair value adjustment	(3)	2
Ending balance	46	31
Corporate loans [member]
Disclosure of financial assets [line items]
Beginning balance	21	23
Exchange differences	(1)	1
Additions	21	2
Repayments and disposals	(2)	(5)
Fair value adjustment	(4)
Ending balance	35	21
Investments [member]
Disclosure of financial assets [line items]
Beginning balance	10	8
Exchange differences	2
Repayments and disposals	(2)
Fair value adjustment	1	2
Ending balance	£ 11	£ 10

XML

Other Investments - Additional Information (Detail) £ in Millions, $ in Millions	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)
Disclosure of financial assets [line items]
Loan guaranteed by subsidiary	£ 46		£ 31	£ 31
Customers and third parties [member]
Disclosure of financial assets [line items]
Allowances of loans made to customers and other third parties	108		110	98
Corporate loans [member]
Disclosure of financial assets [line items]
Loan guaranteed by subsidiary	35		21	23
Corporate loans [member] | Customers and third parties [member]
Disclosure of financial assets [line items]
Loan guaranteed by subsidiary	35		18	21
Corporate loans [member] | Associates [member]
Disclosure of financial assets [line items]
Loan guaranteed by subsidiary			£ 3	£ 2
Corporate loans [member] | Watson Limited [member]
Disclosure of financial assets [line items]
Loan guaranteed by subsidiary	£ 104	$ 135

XML

Post Employment Benefit - Schedule of Funding Valuations of the Significant Defined Benefit Plans (Detail)	12 Months Ended
	Jun. 30, 2018
United Kingdom [member] | Domestic defined benefit plans [member]
Disclosure of defined benefit plans [line items]
Date of valuation	Apr. 01, 2015
Ireland [member] | Foreign defined benefit plans [member]
Disclosure of defined benefit plans [line items]
Date of valuation	Dec. 31, 2015
United States [member] | Foreign defined benefit plans [member]
Disclosure of defined benefit plans [line items]
Date of valuation	Jan. 01, 2018

XML

Post Employment Benefits - Schedule of Amounts Charged to Consolidated Income Statement for Group's Defined Benefit Post Employment Plans and Consolidated Statement of Comprehensive Income (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of net defined benefit liability (asset) [line items]
Charge to operating profit	£ (3,691)	£ (3,559)	£ (2,841)
Charge before taxation(i)	(3,740)	(3,559)	(2,858)
Other comprehensive income/(loss)	276	(651)	(109)
Post employment plan [member]
Disclosure of net defined benefit liability (asset) [line items]
Current service cost and administrative expenses	(123)	(133)	(112)
Past service gains	33	14	1
Gains on curtailments and settlements	6	10	1
Charge to operating profit	(84)	(109)	(110)
Net finance charge in respect of post employment plans	(11)	(25)	(5)
Charge before taxation(i)	(95)	(134)	(115)
Actual returns less amounts included in finance income	312	973	61
Experience (losses)/gains	(30)	58	91
Changes in financial assumptions	108	(466)	(1,066)
Changes in demographic assumptions	69	86	62
Other comprehensive income/(loss)	459	651	(852)
Changes in the surplus restriction	(2)	1
Total other comprehensive income/(loss)	£ 457	£ 652	£ (852)

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Post Employment Benefits - Schedule of Charge Before Taxation (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	£ (3,740)	£ (3,559)	£ (2,858)
Domestic defined benefit plans [member] | United Kingdom [member]
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	(49)	(67)	(50)
Foreign defined benefit plans [member] | Ireland [member]
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	1	(15)	(19)
Foreign defined benefit plans [member] | United States [member]
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	(29)	(34)	(27)
Foreign defined benefit plans [member] | Other [member]
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	(18)	(18)	(19)
Defined benefit plan [member]
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	£ (95)	£ (134)	£ (115)

XML

Post Employment Benefits - Additional Information (Detail) € in Millions, £ in Millions	12 Months Ended
	Jun. 30, 2019 GBP (£)	Jun. 30, 2019 EUR (€)	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 EUR (€)	Jun. 30, 2017 GBP (£)	Jun. 30, 2017 EUR (€)	Jun. 30, 2016 GBP (£)	Dec. 31, 2027 GBP (£)	Dec. 31, 2027 EUR (€)	Dec. 31, 2024 GBP (£)	Dec. 31, 2021 GBP (£)	Dec. 31, 2021 EUR (€)	Jun. 30, 2018 EUR (€)
Disclosure of defined benefit plans [line items]
Defined contribution plans			£ 18		£ 17		£ 16
Cash contributions to plans on next year			200
Inventories			£ 5,015		£ 4,788
Domestic defined benefit plans [member] | United Kingdom [member]
Disclosure of defined benefit plans [line items]
Hedging instrument, interest rate			42.00%		38.00%								42.00%
Hedging instrument, Inflation rate			79.00%		78.00%								79.00%
Percentage Of UK Plans of total Plan liabilities			65.00%										65.00%
Inventories			£ 647		£ 532
Distribution from the profits of the partnership			£ 25		£ 25
Number of succeeding years for distribution of profit			6 years	6 years
Domestic defined benefit plans [member] | United Kingdom [member] | Maximum [member]
Disclosure of defined benefit plans [line items]
Deficit reduction achievement period			2018	2018
Domestic defined benefit plans [member] | United Kingdom [member] | Minimum [member]
Disclosure of defined benefit plans [line items]
Actuarial triennial valuation			£ 84
Domestic defined benefit plans [member] | United Kingdom [member] | Entering into significant commitments or contingent liabilities [member] | Contingent liability arising from post-employment benefit obligations [member] | Maximum [member]
Disclosure of defined benefit plans [line items]
Cash contributions to plans on next year										£ 430
Foreign defined benefit plans [member] | Ireland [member]
Disclosure of defined benefit plans [line items]
Hedging instrument, interest rate			45.00%		36.00%								45.00%
Hedging instrument, Inflation rate			72.00%		68.00%								72.00%
Group's contribution to the plan			£ 20	€ 23
Contingent asset granted			£ 177										€ 200
Foreign defined benefit plans [member] | Ireland [member] | Maximum [member]
Disclosure of defined benefit plans [line items]
Deficit reduction achievement period			2027	2027
Foreign defined benefit plans [member] | Ireland [member] | Minimum [member]
Disclosure of defined benefit plans [line items]
Actuarial triennial valuation			£ 205	€ 232
Conditional payments term			Equally over the three years	Equally over the three years
Foreign defined benefit plans [member] | Ireland [member] | Contingent liability arising from post-employment benefit obligations [member] | Maximum [member]
Disclosure of defined benefit plans [line items]
Additional cash contributions	£ 8	€ 9	£ 8	€ 9	£ 28	€ 32
Foreign defined benefit plans [member] | Ireland [member] | Entering into significant commitments or contingent liabilities [member] | Contingent liability arising from post-employment benefit obligations [member] | Maximum [member]
Disclosure of defined benefit plans [line items]
Cash contributions to plans on next year								£ 119	€ 135		£ 26	€ 29

XML

Post Employment Benefits - Schedule of Movement in Net Deficit (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of net defined benefit liability (asset) [line items]
Charge before taxation	£ (3,740)	£ (3,559)	£ (2,858)
Other comprehensive income	(276)	651	109
Plan assets [member]
Disclosure of net defined benefit liability (asset) [line items]
Beginning Balance	9,226	8,256
Exchange differences	(1)	99
Charge before taxation	227	173
Other comprehensive income	312	973
Contributions by the group	192	220
Employee contributions	6	8
Benefits paid	(652)	(503)
Ending Balance	9,310	9,226	8,256
Plan liabilities [member]
Disclosure of net defined benefit liability (asset) [line items]
Beginning Balance	(9,716)	(9,447)
Exchange differences	1	(135)
Charge before taxation	(322)	(307)
Other comprehensive income	147	(322)
Employee contributions	(6)	(8)
Benefits paid	652	503
Ending Balance	(9,244)	(9,716)	(9,447)
Net deficit [member]
Disclosure of net defined benefit liability (asset) [line items]
Beginning Balance	(490)	(1,191)
Exchange differences		(36)
Charge before taxation	(95)	(134)
Other comprehensive income	459	651
Contributions by the group	192	220
Ending Balance	£ 66	£ (490)	£ (1,191)

XML

Post Employment Benefits - Schedule of Plan Assets and Liabilities by Type of Post Employment Benefit and Country (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Plan assets [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	£ 9,310	£ 9,226	£ 8,256
Plan assets [member] | Post employment medical [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	1	2
Plan assets [member] | Other post employment [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	67	72
Plan assets [member] | United Kingdom [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	6,792	6,789
Plan assets [member] | Ireland [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	1,745	1,663
Plan assets [member] | United States [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	525	522
Plan assets [member] | Other [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	180	178
Plan liabilities [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	(9,244)	(9,716)	£ (9,447)
Plan liabilities [member] | Post employment medical [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	(259)	(263)
Plan liabilities [member] | Other post employment [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	(85)	(90)
Plan liabilities [member] | United Kingdom [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	(6,032)	(6,680)
Plan liabilities [member] | Ireland [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	(2,148)	(1,952)
Plan liabilities [member] | United States [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	(505)	(516)
Plan liabilities [member] | Other [member] | Pensions [member]
Disclosure of net defined benefit liability (asset) [line items]
Plan asset and liabilities by type and country	£ (215)	£ (215)

XML

Post Employment Benefits - Schedule of Balance Sheet Analysis of Post Employment Plans (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of defined benefit plans [line items]
Non-current assets	£ 935	£ 281
Non-current liabilities	(872)	(772)
Funded plans [member]
Disclosure of defined benefit plans [line items]
Non-current assets	935	281
Non-current liabilities	(593)	(492)
Unfunded plans [member]
Disclosure of defined benefit plans [line items]
Non-current liabilities	£ (279)	£ (280)

XML

Post Employment Benefits - Schedule of Balance Sheet Analysis of Post Employment Plans (Parenthetical) (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of defined benefit plans [abstract]
Surplus restriction	£ 3	£ 1

XML

Post Employment Benefits - Schedule of Weighted Average Assumptions Used to Determine Group's Deficit/Surplus in Main Post Employment Plans (Detail)	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
United Kingdom [member]
Disclosure of defined benefit plans [line items]
Rate of general increase in salaries	4.30%	4.40%	4.00%
Rate of increase to pensions in payment	3.30%	3.40%	3.10%
Rate of increase to deferred pensions	2.10%	2.20%	1.80%
Discount rate for plan liabilities	2.80%	2.60%	2.90%
United Kingdom [member] | CPI [member]
Disclosure of defined benefit plans [line items]
Inflation - CPI	2.10%	2.20%	1.80%
United Kingdom [member] | RPI [member]
Disclosure of defined benefit plans [line items]
Inflation - CPI	3.10%	3.20%	2.80%
Ireland [member]
Disclosure of defined benefit plans [line items]
Rate of general increase in salaries	3.20%	3.00%	2.80%
Rate of increase to pensions in payment	2.00%	1.70%	1.60%
Rate of increase to deferred pensions	1.80%	1.60%	1.40%
Discount rate for plan liabilities	1.70%	2.10%	1.40%
Ireland [member] | CPI [member]
Disclosure of defined benefit plans [line items]
Inflation - CPI	1.80%	1.60%	1.40%
United States [member]
Disclosure of defined benefit plans [line items]
Discount rate for plan liabilities	4.10%	3.70%	3.50%
United States [member] | CPI [member]
Disclosure of defined benefit plans [line items]
Inflation - CPI	2.10%	1.80%	1.40%

XML

Post Employment Benefits - Schedule of Expected Age at Death of an Average Worker Who Retires Currently at Age of 65, and One Who is Currently Aged 45 and Subsequently Retires at the Age of 65 (Detail) - yr	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
United Kingdom [member] | Retiring currently at age 65 [member] | Male [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	86.1	86.3	86.4
United Kingdom [member] | Retiring currently at age 65 [member] | Female [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	88.4	88.1	88.3
United Kingdom [member] | Currently aged 45, retiring at age 65 [member] | Male [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	88.2	88.2	88.6
United Kingdom [member] | Currently aged 45, retiring at age 65 [member] | Female [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	90.5	90.5	91.2
Ireland [member] | Retiring currently at age 65 [member] | Male [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	86.4	86.3	86.2
Ireland [member] | Retiring currently at age 65 [member] | Female [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	89.2	89.0	88.9
Ireland [member] | Currently aged 45, retiring at age 65 [member] | Male [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	89.4	89.2	89.1
Ireland [member] | Currently aged 45, retiring at age 65 [member] | Female [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	92.1	91.9	91.8
United States [member] | Retiring currently at age 65 [member] | Male [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	86.0	85.9	86.3
United States [member] | Retiring currently at age 65 [member] | Female [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	88.0	87.9	88.3
United States [member] | Currently aged 45, retiring at age 65 [member] | Male [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	87.6	87.5	88.0
United States [member] | Currently aged 45, retiring at age 65 [member] | Female [member]
Disclosure of defined benefit plans [line items]
Expected age at death of an average worker	89.6	89.5	89.9

XML

Post Employment Benefits - Schedule of Sensitivity Analyses of Potential Impacts on Consolidated Income Statement and on Plan Liabilities (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	£ (3,691)	£ (3,559)	£ (2,841)
Profit after taxation	(3,144)	£ (2,772)	£ (2,362)
United Kingdom [member] | Effect of 0.5% increase in discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	5
Profit after taxation	21
Plan liabilities	512
United Kingdom [member] | Effect of 0.5% decrease in discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(6)
Profit after taxation	(19)
Plan liabilities	(575)
United Kingdom [member] | Effect of 0.5% increase in inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(5)
Profit after taxation	(15)
Plan liabilities	(462)
United Kingdom [member] | Effect of 0.5% decrease in inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	5
Profit after taxation	13
Plan liabilities	408
United Kingdom [member] | Effect of one year increase in life expectancy [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(1)
Profit after taxation	(6)
Plan liabilities	(259)
Ireland [member] | Effect of 0.5% increase in discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	3
Profit after taxation	4
Plan liabilities	190
Ireland [member] | Effect of 0.5% decrease in discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(4)
Profit after taxation	(4)
Plan liabilities	(220)
Ireland [member] | Effect of 0.5% increase in inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(4)
Profit after taxation	(6)
Plan liabilities	(197)
Ireland [member] | Effect of 0.5% decrease in inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	3
Profit after taxation	5
Plan liabilities	169
Ireland [member] | Effect of one year increase in life expectancy [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(1)
Profit after taxation	(2)
Plan liabilities	(89)
United States and other [member] | Effect of 0.5% increase in discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	1
Profit after taxation	1
Plan liabilities	32
United States and other [member] | Effect of 0.5% decrease in discount rate [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Operating profit	(1)
Profit after taxation	(1)
Plan liabilities	(35)
United States and other [member] | Effect of 0.5% increase in inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Profit after taxation	(1)
Plan liabilities	(12)
United States and other [member] | Effect of 0.5% decrease in inflation [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Profit after taxation	1
Plan liabilities	11
United States and other [member] | Effect of one year increase in life expectancy [member]
Disclosure of sensitivity analysis for actuarial assumptions [line items]
Profit after taxation	(1)
Plan liabilities	£ (25)

XML

Post Employment Benefits - Schedule of Analysis of Fair Value of Plan Assets (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of fair value of plan assets [line items]
Hedge funds	£ 206	£ 151
Interest rate and inflation swaps	(1,345)	(1,399)
Cash and other	71	55
Total bid value of assets	9,310	9,226
Quoted [member]
Disclosure of fair value of plan assets [line items]
Equities	1,316	1,565
Unquoted and private equity [member]
Disclosure of fair value of plan assets [line items]
Equities	418	386
Property-unquoted	784	763
Fixed-interest government [member]
Disclosure of fair value of plan assets [line items]
Bonds	278	396
Inflation-linked government [member]
Disclosure of fair value of plan assets [line items]
Bonds	1,326	1,218
Investment grade corporate [member]
Disclosure of fair value of plan assets [line items]
Bonds	1,641	1,612
Non-investment grade [member]
Disclosure of fair value of plan assets [line items]
Bonds	212	298
Loan securities [member]
Disclosure of fair value of plan assets [line items]
Bonds	1,415	1,178
Repurchase agreements [member]
Disclosure of fair value of plan assets [line items]
Bonds	2,799	2,812
Liability driven investment (LDI) [member]
Disclosure of fair value of plan assets [line items]
Bonds	189	191
United Kingdom [member]
Disclosure of fair value of plan assets [line items]
Hedge funds	68
Interest rate and inflation swaps	(1,415)	(1,440)
Cash and other	(34)	(26)
Total bid value of assets	6,792	6,789
United Kingdom [member] | Quoted [member]
Disclosure of fair value of plan assets [line items]
Equities	758	902
United Kingdom [member] | Unquoted and private equity [member]
Disclosure of fair value of plan assets [line items]
Equities	399	365
Property-unquoted	689	641
United Kingdom [member] | Fixed-interest government [member]
Disclosure of fair value of plan assets [line items]
Bonds	133	193
United Kingdom [member] | Inflation-linked government [member]
Disclosure of fair value of plan assets [line items]
Bonds	1,063	1,036
United Kingdom [member] | Investment grade corporate [member]
Disclosure of fair value of plan assets [line items]
Bonds	934	998
United Kingdom [member] | Non-investment grade [member]
Disclosure of fair value of plan assets [line items]
Bonds	147	230
United Kingdom [member] | Loan securities [member]
Disclosure of fair value of plan assets [line items]
Bonds	1,112	956
United Kingdom [member] | Repurchase agreements [member]
Disclosure of fair value of plan assets [line items]
Bonds	2,799	2,812
United Kingdom [member] | Liability driven investment (LDI) [member]
Disclosure of fair value of plan assets [line items]
Bonds	139	122
Ireland [member]
Disclosure of fair value of plan assets [line items]
Hedge funds	138	151
Interest rate and inflation swaps	70	41
Cash and other	15	27
Total bid value of assets	1,745	1,663
Ireland [member] | Quoted [member]
Disclosure of fair value of plan assets [line items]
Equities	316	367
Ireland [member] | Unquoted and private equity [member]
Disclosure of fair value of plan assets [line items]
Equities	1	2
Property-unquoted	94	121
Ireland [member] | Fixed-interest government [member]
Disclosure of fair value of plan assets [line items]
Bonds	103	153
Ireland [member] | Inflation-linked government [member]
Disclosure of fair value of plan assets [line items]
Bonds	262	182
Ireland [member] | Investment grade corporate [member]
Disclosure of fair value of plan assets [line items]
Bonds	344	277
Ireland [member] | Non-investment grade [member]
Disclosure of fair value of plan assets [line items]
Bonds	49	51
Ireland [member] | Loan securities [member]
Disclosure of fair value of plan assets [line items]
Bonds	303	222
Ireland [member] | Liability driven investment (LDI) [member]
Disclosure of fair value of plan assets [line items]
Bonds	50	69
United States and other [member]
Disclosure of fair value of plan assets [line items]
Cash and other	90	54
Total bid value of assets	773	774
United States and other [member] | Quoted [member]
Disclosure of fair value of plan assets [line items]
Equities	242	296
United States and other [member] | Unquoted and private equity [member]
Disclosure of fair value of plan assets [line items]
Equities	18	19
Property-unquoted	1	1
United States and other [member] | Fixed-interest government [member]
Disclosure of fair value of plan assets [line items]
Bonds	42	50
United States and other [member] | Inflation-linked government [member]
Disclosure of fair value of plan assets [line items]
Bonds	1
United States and other [member] | Investment grade corporate [member]
Disclosure of fair value of plan assets [line items]
Bonds	363	337
United States and other [member] | Non-investment grade [member]
Disclosure of fair value of plan assets [line items]
Bonds	£ 16	£ 17

XML

Post Employment Benefits - Schedule of Analysis of Fair Value of Plan Assets (Parenthetical) (Detail) £ in Millions	Jun. 30, 2017 GBP (£)
Post employment plans [member] | Ireland [member]
Disclosure of fair value of plan assets [line items]
Plan assets invested in own shares	£ 0.5

XML

Post Employment Benefits - Summary of Information on Timing of Benefit Payments and Average Duration of Defined Benefit Obligations and Distribution of Timing of Benefit Payments (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£) yr	Jun. 30, 2017 GBP (£) yr
United Kingdom [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 9,815	£ 10,938
Average duration of the defined benefit obligation | yr	19	19
United Kingdom [member] | Due within one year [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 575	£ 347
United Kingdom [member] | Between 1 to 5 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	1,144	1,079
United Kingdom [member] | Between 6 to 15 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	2,575	2,800
United Kingdom [member] | Between 16 to 25 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	2,196	2,511
United Kingdom [member] | Beyond 25 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	3,325	4,201
Ireland [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 3,183	£ 3,063
Average duration of the defined benefit obligation | yr	19	19
Ireland [member] | Due within one year [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 75	£ 76
Ireland [member] | Between 1 to 5 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	370	374
Ireland [member] | Between 6 to 15 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	751	742
Ireland [member] | Between 16 to 25 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	727	701
Ireland [member] | Beyond 25 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	1,260	1,170
United States [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 1,065	£ 1,098
Average duration of the defined benefit obligation | yr	10	10
United States [member] | Due within one year [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 49	£ 57
United States [member] | Between 1 to 5 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	187	243
United States [member] | Between 6 to 15 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	380	366
United States [member] | Between 16 to 25 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	242	234
United States [member] | Beyond 25 years [member]
Disclosure of defined benefit plans [line items]
Benefits expected to be paid	£ 207	£ 198

XML

Working Capital - Summary of Information about Inventories (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of inventories [abstract]
Raw materials and consumables	£ 321	£ 327
Work in progress	44	45
Maturing inventories	4,028	3,820
Finished goods and goods for resale	622	596
Inventories	£ 5,015	£ 4,788

XML

Working Capital - Summary of Information about Inventories Expected to be Utilized After More Than One Year (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of inventories [abstract]
Raw materials and consumables	£ 12	£ 8
Maturing inventories	3,253	3,194
Non current inventories	£ 3,265	£ 3,202

XML

Working Capital - Summary of Analysis of Provisions for Obsolescence of Inventories (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Inventory provisions [abstract]
Balance at beginning of the year	£ 88	£ 73	£ 53
Exchange differences	(2)	(1)	5
Income statement charge		41	33
Utilised	(15)	(25)	(15)
Sale of businesses			(3)
Ending balance	£ 71	£ 88	£ 73

XML

Working Capital - Summary of Information about Trade and Other Receivables (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of trade and other receivables [line items]
Trade receivables	£ 2,152	£ 2,130
Current assets [member]
Disclosure of trade and other receivables [line items]
Trade receivables	2,152	2,130
Interest receivable	14	19
Other receivables	335	244
Prepayments	157	159
Accrued income	20	40
Trade and other receivables	2,678	2,592
Non-current assets [member]
Disclosure of trade and other receivables [line items]
Other receivables	38	45
Prepayments	8	13
Trade and other receivables	£ 46	£ 58

XML

Working Capital - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Summary of additional information about working capital [line items]
Trade receivables	£ 2,152	£ 2,130
Interest on non-derivative financial instruments	£ 100	£ 68
Other [member]
Summary of additional information about working capital [line items]
Description of expected timing of outflows commitments to UK Thalidomide Trust	These provisions will be utilised over the period of the commitments up to 2037.
Employee deferred compensation plans	£ 48
United Spirits Limited [member]
Summary of additional information about working capital [line items]
Provision in exceptional items against current receivable from customer	32
Non-current liabilities [member] | Casamigos aquisition [member] | Fair value [member]
Summary of additional information about working capital [line items]
Non-current liabilities	£ 175
United Kingdom [member]
Summary of additional information about working capital [line items]
Tade receivables due from counterparties	13.00%
United States [member]
Summary of additional information about working capital [line items]
Tade receivables due from counterparties	20.00%
India [member]
Summary of additional information about working capital [line items]
Tade receivables due from counterparties	12.00%

XML

Working Capital - Summary of Aged Analysis of Trade Receivables Net of Allowances (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of trade and other receivables [line items]
Trade receivables	£ 2,152	£ 2,130
Not overdue [member]
Disclosure of trade and other receivables [line items]
Trade receivables	2,067	2,026
Overdue 1 - 30 days [member]
Disclosure of trade and other receivables [line items]
Trade receivables	19	28
Overdue 31 - 60 days [member]
Disclosure of trade and other receivables [line items]
Trade receivables	19	19
Overdue 61 - 90 days [member]
Disclosure of trade and other receivables [line items]
Trade receivables	13	11
Overdue 91 - 180 days [member]
Disclosure of trade and other receivables [line items]
Trade receivables	21	21
Overdue more than 180 days [member]
Disclosure of trade and other receivables [line items]
Trade receivables	£ 13	£ 25

XML

Working Capital - Summary Analysis of Trade and Other Receivables are Disclosed Net of Allowance for Doubtful Debts (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Allowance for doubtful debt [abstract]
Balance at beginning of the year	£ 129	£ 83	£ 71
Exchange differences	(4)	(1)	5
Income statement charge	18	54	15
Written off	(46)	(7)	(8)
Ending balance	£ 97	£ 129	£ 83

XML

Working Capital - Summary of Information about Trade and Other Payables (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Current liabilities [member]
Disclosure of trade and other payables [Line Items]
Trade payables	£ 1,514	£ 1,365
Interest payable	104	75
Tax and social security excluding income tax	638	543
Other payables	471	487
Accruals	1,165	1,064
Deferred income	37	29
Dividend payable to non-controlling interests	21
Trade and other payables	3,950	3,563
Non-current liabilities [member]
Disclosure of trade and other payables [Line Items]
Tax and social security excluding income tax	2	2
Other payables	204	16
Accruals	3	6
Trade and other payables	£ 209	£ 24

XML

Working Capital - Summary of Information about Provisions (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)
Disclosure of other provisions [line items]
Beginning balance	£ 415
Exchange differences	(12)
Disposal of businesses	(1)
Provisions charged during the year	53
Provisions utilised during the year	(63)
Transfers to other payables	(2)
Unwinding of discounts	7
Ending balance	397
Current liabilities - Provisions	109
Non-current liabilities - Provisions	288
Thalidomide [member]
Disclosure of other provisions [line items]
Beginning balance	223
Provisions utilised during the year	(13)
Unwinding of discounts	7
Ending balance	217
Current liabilities - Provisions	14
Non-current liabilities - Provisions	203
Other [member]
Disclosure of other provisions [line items]
Beginning balance	192
Exchange differences	(12)
Disposal of businesses	(1)
Provisions charged during the year	53
Provisions utilised during the year	(50)
Transfers to other payables	(2)
Ending balance	180
Current liabilities - Provisions	95
Non-current liabilities - Provisions	£ 85

XML

Financial Instruments and Risk Management - Additional Information (Detail) $ in Millions	12 Months Ended
	Jun. 30, 2020 GBP (£)	Jun. 30, 2019 GBP (£)	Jun. 30, 2018 GBP (£)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Disclosure of detailed information about financial instruments [line items]
Percentage of probability confidence level			95.00%
Value at risk loss defining period			1
Foreign currency borrowings and financial derivatives designated in net investment hedge relationships			£ 14,503,000,000	£ 13,227,000,000
Borrowings percentage			100.00%	100.00%		100.00%	100.00%
Market risk sensitivity analysis, description			The group uses a sensitivity analysis that estimates the impacts on the consolidated income statement and other comprehensive income of either an instantaneous increase or decrease of 0.5% in market interest rates or a 10% strengthening or weakening in sterling against all other currencies, from the rates applicable at 30 June 2018 and 30 June 2017, for each class of financial instruments with all other variables remaining constant.
Expected maturity profile of borrowings, description			Expected maturity profile of borrowings is to limit the amount of such borrowings maturing within 12 months to 50% of gross borrowings less money market demand deposits, and the level of commercial paper to 30% of gross borrowings less money market demand deposits.
Undrawn borrowing facilities ring-fenced			£ 682,000,000			$ 900
Undrawn borrowing facilities			2,652,000,000	£ 2,600,000,000		$ 3,500
Liabilities			18,002,000,000	16,820,000,000
Movement in financial assets - other instruments			50,000,000	39,000,000
Borrowings			9,902,000,000	9,042,000,000	£ 10,129,000,000
Post-employment benefit liabilities			872,000,000	£ 772,000,000
Net borrowings adjusted EBITDA			£ 4,496,000,000
Adjusted EBITDA ratio			2.2
Fixed rate [member]
Disclosure of detailed information about financial instruments [line items]
Borrowings percentage			52.00%	57.00%		52.00%	57.00%
Fair value [member] | Quoted [member]
Disclosure of detailed information about financial instruments [line items]
Borrowings			£ 10,304,000,000	£ 9,641,000,000
Option Exercised Two Years Later [member]
Disclosure of detailed information about financial instruments [line items]
Increase in fair value of liability			30,000,000
US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Collateral held under agreements			£ 54,000,000	74,000,000		$ 71	$ 96
Currency exchange risk [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Target hedge ratio			75.00%
Commodity price risk [member]
Disclosure of detailed information about financial instruments [line items]
Maximum hedging period			24 months
Maximum commodity exposure value at risk			0.75%
Foreign currency debt risk [member]
Disclosure of detailed information about financial instruments [line items]
Reserves from hedge relationships for which hedge accounting is no longer applied			£ (21,000,000)	(21,000,000)
Maximum [member] | Fixed rate [member]
Disclosure of detailed information about financial instruments [line items]
Borrowings percentage			60.00%			60.00%
Maximum [member] | Currency exchange risk [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Maximum hedging period			24 months
Maximum [member] | Currency exchange risk [member] | Other currency [member]
Disclosure of detailed information about financial instruments [line items]
Maximum hedging period			18 months
Minimum [member] | Fixed rate [member]
Disclosure of detailed information about financial instruments [line items]
Borrowings percentage			40.00%			40.00%
Industrias Licoreras De Guatemala [member]
Disclosure of detailed information about financial instruments [line items]
Percentage of ownership interest			50.00%
Liabilities			£ 164,000,000	183,000,000
Hedges of net investment in foreign operations [member]
Disclosure of detailed information about financial instruments [line items]
Foreign currency borrowings and financial derivatives designated in net investment hedge relationships			5,238,000,000	6,746,000,000
Hedges of net investment in foreign operations [member] | Maximum [member]
Disclosure of detailed information about financial instruments [line items]
Maximum total net investment Value at Risk for group policy			1,500,000,000
Cash flow hedges [member]
Disclosure of detailed information about financial instruments [line items]
Gain (loss) on cash flow hedge instruments			(57,000,000)	(29,000,000)	31,000,000
Gain (loss) transferred out of other comprehensive income			(6,000,000)	42,000,000	211,000,000
Gain (loss) transferred out of other comprehensive income			7,000,000	(143,000,000)	(66,000,000)
Cash flow hedges [member] | Currency exchange risk [member]
Disclosure of detailed information about financial instruments [line items]
Gain (loss) on cash flow hedge instruments			(22,000,000)	26,000,000	221,000,000
Cash flow hedges [member] | Foreign currency debt risk [member]
Disclosure of detailed information about financial instruments [line items]
Gain (loss) on cash flow hedge instruments			64,000,000	8,000,000	£ (249,000,000)
Cash flow hedges [member] | Abnormally large changes in asset prices or foreign exchange rates [member]
Disclosure of detailed information about financial instruments [line items]
Loss to income statement	£ (9,000,000)	£ (7,000,000)
Fair value hedging instruments [member]
Disclosure of detailed information about financial instruments [line items]
Gain (loss) on fair value hedging instruments			12,000,000	36,000,000
Gain (Loss) on the hedged items attributable to the hedged risks			12,000,000	43,000,000
Accumulated fair value changes on the hedged item			£ 17,000,000	£ 5,000,000

XML

Financial Instruments and Risk Management - Summary of Net Borrowings Interest Rate Profile (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of financial instruments by type of interest rate [line items]
Net borrowings	£ 9,091	£ 7,892
Net borrowings interest rate	100.00%	100.00%
Fixed rate [member]
Disclosure of financial instruments by type of interest rate [line items]
Net borrowings	£ 4,739	£ 4,443
Net borrowings interest rate	52.00%	57.00%
Floating rate [member]
Disclosure of financial instruments by type of interest rate [line items]
Net borrowings	£ 4,245	£ 3,336
Net borrowings interest rate	47.00%	42.00%
Impact of financial derivatives and fair value adjustments [member]
Disclosure of financial instruments by type of interest rate [line items]
Net borrowings	£ 107	£ 113
Net borrowings interest rate	1.00%	1.00%

XML

Financial Instruments and Risk Management - Summary of Average Monthly Net Borrowings and Effective Interest Rate (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of average monthly borrowings and effective interest rate [line items]
Average monthly net borrowings	£ 9,091	£ 7,892
Effective interest rate	2.60%	3.50%	3.30%
Weighted average [member]
Disclosure of average monthly borrowings and effective interest rate [line items]
Average monthly net borrowings	£ 9,063	£ 8,771	£ 9,245

XML

Financial Instruments and Risk Management - Summary of Fluctuations in Interest and Exchange Rates to Vary From Hypothetical Amounts (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of nature and extent of risks arising from financial instruments [line items]
Impact on income statement gain/(loss)	£ 3,144	£ 2,772	£ 2,362
Impact on consolidated comprehensive income gain/(loss)	2,868	3,423	£ 2,471
Interest rate risk [member] | 0.5% decrease in interest rates [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Impact on income statement gain/(loss)	(19)	(20)
Impact on consolidated comprehensive income gain/(loss)	(18)	(12)
Interest rate risk [member] | 0.5% increase in interest rates [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Impact on income statement gain/(loss)	19	20
Impact on consolidated comprehensive income gain/(loss)	19	13
Currency exchange risk [member] | 10% weakening of sterling [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Impact on income statement gain/(loss)	(15)	(19)
Impact on consolidated comprehensive income gain/(loss)	(833)	(835)
Currency exchange risk [member] | 10% strengthening of sterling [member]
Disclosure of nature and extent of risks arising from financial instruments [line items]
Impact on income statement gain/(loss)	11	16
Impact on consolidated comprehensive income gain/(loss)	£ 680	£ 684

XML

Financial Instruments and Risk Management - Summary of Contractual Cash Flows (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure about contractual cash flows [line items]
Borrowings	£ (9,902)	£ (9,042)	£ (10,129)
Interest on borrowings	(100)	(68)
Finance lease capital repayments	(155)	(183)
Trade and other financial liabilities	(3,318)	(2,889)
Non-derivative financial liabilities	(13,475)	(12,182)
Derivative instruments	90	110
Due within one year [member]
Disclosure about contractual cash flows [line items]
Borrowings	(1,828)	(2,459)	(2,058)
Due between one and three years [member]
Disclosure about contractual cash flows [line items]
Borrowings	(2,033)	(1,255)	(2,896)
Due between three and five years [member]
Disclosure about contractual cash flows [line items]
Borrowings	(2,111)	(1,324)	(537)
Due after five years [member]
Disclosure about contractual cash flows [line items]
Borrowings	(3,930)	(4,004)	£ (4,638)
Undiscounted amount [member]
Disclosure about contractual cash flows [line items]
Borrowings	(9,950)	(9,059)
Interest on borrowings	(2,580)	(2,582)
Finance lease capital repayments	(155)	(183)
Finance lease future interest payments	(22)	(31)
Trade and other financial liabilities	(3,376)	(2,903)
Non-derivative financial liabilities	(16,083)	(14,758)
Other derivative instruments (net)	(28)	(79)
Derivative instruments	462	470
Undiscounted amount [member] | Due within one year [member]
Disclosure about contractual cash flows [line items]
Borrowings	(1,828)	(2,458)
Interest on borrowings	(341)	(334)
Finance lease capital repayments	(30)	(26)
Finance lease future interest payments	(7)	(9)
Trade and other financial liabilities	(3,117)	(2,693)
Non-derivative financial liabilities	(5,323)	(5,520)
Other derivative instruments (net)	(1)	(94)
Derivative instruments	18	(74)
Undiscounted amount [member] | Due between one and three years [member]
Disclosure about contractual cash flows [line items]
Borrowings	(2,055)	(1,253)
Interest on borrowings	(472)	(421)
Finance lease capital repayments	(66)	(74)
Finance lease future interest payments	(9)	(12)
Trade and other financial liabilities	(28)	(34)
Non-derivative financial liabilities	(2,630)	(1,794)
Other derivative instruments (net)	(30)	13
Derivative instruments	8	53
Undiscounted amount [member] | Due between three and five years [member]
Disclosure about contractual cash flows [line items]
Borrowings	(2,117)	(1,350)
Interest on borrowings	(382)	(366)
Finance lease capital repayments	(34)	(41)
Finance lease future interest payments	(5)	(7)
Trade and other financial liabilities	(1)	(173)
Non-derivative financial liabilities	(2,539)	(1,937)
Other derivative instruments (net)	(2)	2
Derivative instruments	14	42
Undiscounted amount [member] | Due after five years [member]
Disclosure about contractual cash flows [line items]
Borrowings	(3,950)	(3,998)
Interest on borrowings	(1,385)	(1,461)
Finance lease capital repayments	(25)	(42)
Finance lease future interest payments	(1)	(3)
Trade and other financial liabilities	(230)	(3)
Non-derivative financial liabilities	(5,591)	(5,507)
Other derivative instruments (net)	5
Derivative instruments	422	449
Undiscounted amount [member] | Cross currency swaps (gross) [member]
Disclosure about contractual cash flows [line items]
Receivable	2,508	2,607
Payable	(2,018)	(2,058)
Undiscounted amount [member] | Cross currency swaps (gross) [member] | Due within one year [member]
Disclosure about contractual cash flows [line items]
Receivable	60	61
Payable	(41)	(41)
Undiscounted amount [member] | Cross currency swaps (gross) [member] | Due between one and three years [member]
Disclosure about contractual cash flows [line items]
Receivable	121	122
Payable	(83)	(82)
Undiscounted amount [member] | Cross currency swaps (gross) [member] | Due between three and five years [member]
Disclosure about contractual cash flows [line items]
Receivable	840	122
Payable	(824)	(82)
Undiscounted amount [member] | Cross currency swaps (gross) [member] | Due after five years [member]
Disclosure about contractual cash flows [line items]
Receivable	1,487	2,302
Payable	£ (1,070)	£ (1,853)

XML

Financial Instruments and Risk Management - Schedule of Available Undrawn Committed Bank Facilities (Detail) £ in Millions, $ in Millions	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 GBP (£)
Disclosure of information about undrawn borrowing facilities [line items]
Undrawm borrowing facilities	£ 2,652	$ 3,500	£ 2,600
Due within one year [member]
Disclosure of information about undrawn borrowing facilities [line items]
Undrawm borrowing facilities	788		481
Expiring between one and two years [member]
Disclosure of information about undrawn borrowing facilities [line items]
Undrawm borrowing facilities			900
Expiring after two years [member]
Disclosure of information about undrawn borrowing facilities [line items]
Undrawm borrowing facilities	£ 1,864		£ 1,219

XML

Financial Instruments and Risk Management - Schedule of Financial Assets and Liabilities Measured at Fair Value (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Valuation techniques based on observable market input (level 2) [member]
Disclosure of detailed information about financial instruments [line items]
Derivative assets	£ 217	£ 348
Derivative liabilities	(123)	(232)
Financial assets/(liabilities) at fair value	94	116
Valuation techniques based on unobservable market input (level 3) [member]
Disclosure of detailed information about financial instruments [line items]
Financial assets - other	89	39
Financial liabilities - other	(164)	(183)	£ (165)
Financial assets/(liabilities) at fair value	£ (75)	£ (144)

XML

Financial Instruments and Risk Management - Schedule of Movements in Level 3 Measured on Recurring Basis (Detail) - Valuation techniques based on unobservable market input (level 3) [member] - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of fair value measurement of liabilities [line items]
Beginning balance	£ (183)	£ (165)
Net losses included in the income statement		(8)
Net gains/(losses) included in exchange in other comprehensive income	3	(4)
Net gains/(losses) included in retained earnings	7	(12)
Settlement of liabilities	9	6
Ending balance	£ (164)	£ (183)

XML

Financial Instruments and Risk Management - Schedule of Notional Amounts, Contractual Maturities and Rates of Hedging Instruments Designated in Hedging Relationships by Main Risk Categories (Detail) £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£) USD_per_Metric_Tonnes $ / Tonne	Jun. 30, 2017 GBP (£) USD_per_Metric_Tonnes $ / Tonne
Hedges of net investment in foreign operations [member]
Disclosure of detailed information about financial instruments [line items]
Notional amounts	£ 1,068	£ 1,919
Maturity	July 2018	July 2017
Hedges of net investment in foreign operations [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.32
Hedges of net investment in foreign operations [member] | Euro [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates		1.14
Hedges of net investment in foreign operations [member] | Minimum [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates		1.26
Hedges of net investment in foreign operations [member] | Maximum [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates		1.30
Cash flow hedges [member] | Foreign currency debt risk [member]
Disclosure of detailed information about financial instruments [line items]
Notional amounts	£ 1,553	£ 1,577
Maturity	April 2023-April 2043	April 2023-April 2043
Cash flow hedges [member] | Foreign exchange risk [member]
Disclosure of detailed information about financial instruments [line items]
Notional amounts	£ 1,197	£ 893
Maturity	September 2018-December 2019	July 2017-Dec 2018
Cash flow hedges [member] | Commodity price risk [member]
Disclosure of detailed information about financial instruments [line items]
Notional amounts	£ 30	£ 8
Maturity	July 2018-March 2020	July 2017-June 2018
Cash flow hedges [member] | Commodity price risk [member] | Corn [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates | $ / Tonne		141.73
Cash flow hedges [member] | Minimum [member] | Foreign currency debt risk [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.22	1.22
Cash flow hedges [member] | Minimum [member] | Foreign exchange risk [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.24	1.23
Cash flow hedges [member] | Minimum [member] | Foreign exchange risk [member] | Euro [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.06	1.09
Cash flow hedges [member] | Minimum [member] | Commodity price risk [member] | Corn [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates | $ / Tonne	152.76
Cash flow hedges [member] | Minimum [member] | Commodity price risk [member] | Aluminium [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates | USD_per_Metric_Tonnes	2,058.75	1,912.00
Cash flow hedges [member] | Maximum [member] | Foreign currency debt risk [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.88	1.88
Cash flow hedges [member] | Maximum [member] | Foreign exchange risk [member] | US dollar [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.47	1.51
Cash flow hedges [member] | Maximum [member] | Foreign exchange risk [member] | Euro [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	1.18	1.31
Cash flow hedges [member] | Maximum [member] | Commodity price risk [member] | Corn [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates | $ / Tonne	164.17
Cash flow hedges [member] | Maximum [member] | Commodity price risk [member] | Aluminium [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates | USD_per_Metric_Tonnes	2,204	1,931
Fair value hedging instruments [member] | Interest rate risk [member]
Disclosure of detailed information about financial instruments [line items]
Notional amounts	£ 3,597	£ 3,305
Maturity	July 2018-May 2028	October 2017-April 2023
Fair value hedging instruments [member] | Minimum [member] | Interest rate risk [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	(0.26%)	0.93%
Fair value hedging instruments [member] | Maximum [member] | Interest rate risk [member]
Disclosure of detailed information about financial instruments [line items]
Range of hedged Rates	3.09%	2.12%

XML

Financial Instruments and Risk Management - Schedule of Financial Assets and Liabilities (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of detailed information about financial instruments [line items]
Total financial assets	£ 3,920	£ 4,247
Current assets	3,587	3,864
Financial liabilities	(14,503)	(13,227)
Non-current assets	333	383
Current liabilities	(6,008)	(6,237)
Non-current liabilities	(8,495)	(6,990)
Total net financial assets/(liabilities)	(10,583)	(8,980)
Total net financial assets/(liabilities) current	(2,421)	(2,373)
Total net financial assets/(liabilities) non-current	(8,162)	(6,607)
Other investments and loans [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	105	58
Non-current assets	105	58
Trade and other receivables [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	2,724	2,650
Current assets	2,678	2,592
Non-current assets	46	58
Cash and cash equivalents [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	874	1,191
Current assets	874	1,191
Other instruments at fair value [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	40	65
Current assets	25	24
Non-current assets	15	41
Other financial asset [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	217	348
Current assets	35	81
Non-current assets	182	267
Borrowings [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(9,902)	(9,042)
Current liabilities	(1,828)	(2,459)
Non-current liabilities	(8,074)	(6,583)
Trade and other payable [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(4,159)	(3,587)
Current liabilities	(3,950)	(3,563)
Non-current liabilities	(209)	(24)
Other instruments at fair value liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(188)	(335)
Current liabilities	(186)	(135)
Non-current liabilities	(2)	(200)
Finance leases liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(155)	(183)
Current liabilities	(31)	(26)
Non-current liabilities	(124)	(157)
Other Financial Liabilities 1 [Member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(442)	(598)
Current liabilities	(230)	(215)
Non-current liabilities	(212)	(383)
Fair value through income statement [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	306	387
Fair value through income statement [member] | Other investments and loans [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	89	39
Fair value through income statement [member] | Other instruments at fair value [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	40	65
Fair value through income statement [member] | Other financial asset [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	217	348
Financial assets at amortised cost, category [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	3,317	3,614
Financial assets at amortised cost, category [member] | Other investments and loans [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	14	17
Financial assets at amortised cost, category [member] | Trade and other receivables [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	2,429	2,406
Financial assets at amortised cost, category [member] | Cash and cash equivalents [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	874	1,191
Not categorised as a financial instrument [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	297	246
Not categorised as a financial instrument [member] | Other investments and loans [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	2	2
Not categorised as a financial instrument [member] | Trade and other receivables [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	295	244
Interest rate risk [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	7
Interest rate risk [member] | Fair value through income statement [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	7
Fair value through income statement [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(287)	(415)
Fair value through income statement [member] | Other instruments at fair value liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(188)	(335)
Fair value through income statement [member] | Other Financial Liabilities 1 [Member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(287)	(415)
Financial Liabilities At Amortised Cost [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(13,315)	(12,005)
Financial Liabilities At Amortised Cost [member] | Borrowings [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(9,902)	(9,042)
Financial Liabilities At Amortised Cost [member] | Trade and other payable [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(3,258)	(2,780)
Financial Liabilities At Amortised Cost [member] | Finance leases liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(155)	(183)
Financial Liabilities At Amortised Cost [member] | Other Financial Liabilities 1 [Member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(155)	(183)
Not categorised as a financial instrument [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(901)	(807)
Not categorised as a financial instrument [member] | Trade and other payable [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(901)	(807)
Fair value hedging instruments [member] | Interest rate risk [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Non-current assets	7
Fair value hedging instruments [member] | Interest rate risk [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(22)	(2)
Current liabilities		(1)
Non-current liabilities	(22)	(1)
Fair value hedging instruments [member] | Fair value through income statement [member] | Interest rate risk [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(22)	(2)
Cash flow hedges [member] | Foreign currency debt risk [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	160	217
Non-current assets	160	217
Cash flow hedges [member] | Foreign currency debt risk [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(48)	(24)
Non-current liabilities	(48)	(24)
Cash flow hedges [member] | Foreign currency debt risk [member] | Fair value through income statement [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	160	217
Cash flow hedges [member] | Currency exchange risk [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	9	17
Current assets	9	8
Non-current assets		9
Cash flow hedges [member] | Currency exchange risk [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(25)	(48)
Current liabilities	(9)	(47)
Non-current liabilities	(16)	(1)
Cash flow hedges [member] | Currency exchange risk [member] | Fair value through income statement [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	9	17
Cash flow hedges [member] | Fair value through income statement [member] | Foreign currency debt risk [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(48)	(24)
Cash flow hedges [member] | Fair value through income statement [member] | Currency exchange risk [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(25)	(48)
Hedges of net investment in foreign operations [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(5,238)	(6,746)
Hedges of net investment in foreign operations [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	1	49
Current assets	1	49
Hedges of net investment in foreign operations [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(4)	(6)
Current liabilities	(4)	(6)
Hedges of net investment in foreign operations [member] | Fair value through income statement [member] | Derivatives assets [member]
Disclosure of detailed information about financial instruments [line items]
Total financial assets	1	49
Hedges of net investment in foreign operations [member] | Fair value through income statement [member] | Derivative liabilities [member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	(4)	(6)
Fair Value Through Profit or Loss Category [Member]
Disclosure of detailed information about financial instruments [line items]
Total net financial assets/(liabilities)	19	(28)
At amortised cost category [member]
Disclosure of detailed information about financial instruments [line items]
Total net financial assets/(liabilities)	(9,998)	(8,391)
Not categorised as a financial instrument [member]
Disclosure of detailed information about financial instruments [line items]
Total net financial assets/(liabilities)	£ (604)	£ (561)

XML

Net Borrowings - Schedule of Borrowings (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of detailed information about borrowings [line items]
Bank overdrafts	£ 181	£ 274	£ 280
Commercial paper	98
Bank and other loans	300	495
Credit support obligations	54	74
Fair value adjustment to borrowings		1
Borrowings due within one year	1,828	2,459
Bank and other loans	234	119
Fair value adjustment to borrowings	12	43
Borrowings due after one year	8,074	6,583
Total borrowings before derivative financial instruments	9,902	9,042	10,129
Fair value of foreign currency derivatives	(107)	(144)
Fair value of interest rate hedging instruments	15	2
Finance lease liabilities	155	183
Gross borrowings	9,965	9,083
Less: Cash and cash equivalents	(874)	(1,191)	£ (1,089)
Net borrowings	9,091	7,892
5.75% bonds due 2017 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued short term		962
1.125% bonds due 2018 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued short term		499
4.85% medium term notes due 2018 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued short term		154
1.125% bonds due 2019 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued short term	444
Bonds issued long term		441
1.125% bonds due 2019 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued short term	751
Bonds issued long term		745
4.828% bonds due 2020 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	508	508
Floating bonds due two thousand twenty [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	378
Three percentage bonds due two thousand twenty [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	378
0.00% bonds due 2020 [Member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	685
2.875% bonds due 2022 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	755	766
8% bonds due 2022 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	226	229
2.625% bonds due 2023 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	1,020	1,035
Three point five percentage bonds due two thousand and twenty three [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	377
1.75% bonds due 2024 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	440	436
0.50% bonds due 2024 [Member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	439
2.375% bonds due 2026 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	747	740
Three point eight seven five percentage bonds due two thousand and twenty eight [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	376
7.45% bonds due 2035 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	303	308
5.875% bonds due 2036 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	450	456
4.25% bonds due 2042 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	374	380
3.875% bonds due 2043 [member]
Disclosure of detailed information about borrowings [line items]
Bonds issued long term	£ 372	£ 377

XML

Net Borrowings - Schedule of Borrowings (Parenthetical) (Detail) € in Millions, £ in Millions, $ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 USD ($)	Jun. 30, 2018 EUR (€)	Jun. 30, 2017 GBP (£)	Jun. 30, 2016 GBP (£)
Disclosure of detailed information about borrowings [line items]
Interest rate	2.60%	2.60%	2.60%	3.50%	3.30%
Percentage of ownership interest in subsidiaries	100.00%
Unamortised finance costs | £	£ 60			£ 61	£ 72
Diageo Investment Corporation [member]
Disclosure of detailed information about borrowings [line items]
Percentage of ownership interest in subsidiaries	100.00%
5.75% bonds due 2017 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 1,250
Interest rate	5.75%	5.75%	5.75%
Maturity	2017
1.125% bonds due 2018 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 650
Interest rate	1.125%	1.125%	1.125%
Maturity	2018
4.85% medium term notes due 2018 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 200
Interest rate	4.85%	4.85%	4.85%
Maturity	2018
1.125% bonds due 2019 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts | €			€ 500
Interest rate	1.125%	1.125%	1.125%
Maturity	2019
1.125% bonds due 2019 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts | €			€ 850
Interest rate	1.125%	1.125%	1.125%
Maturity	2019
4.828% bonds due 2020 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 696
Interest rate	4.828%	4.828%	4.828%
Maturity	2020
Floating bonds due two thousand twenty [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 500
Maturity	2020
Three percentage bonds due two thousand twenty [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 500
Interest rate	3.00%	3.00%	3.00%
Maturity	2020
0.00% bonds due 2020 [Member]
Disclosure of detailed information about borrowings [line items]
Notional amounts | €			€ 775
Interest rate	0.00%	0.00%	0.00%
Maturity	2020
2.875% bonds due 2022 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 1,000
Interest rate	2.875%	2.875%	2.875%
Maturity	2022
8% bonds due 2022 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 300
Interest rate	8.00%	8.00%	8.00%
Maturity	2022
2.625% bonds due 2023 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 1,350
Interest rate	2.625%	2.625%	2.625%
Maturity	2023
Three point five percentage bonds due two thousand and twenty three [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 500
Interest rate	3.50%	3.50%	3.50%
Maturity	2023
1.75% bonds due 2024 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts | €			€ 500
Interest rate	1.75%	1.75%	1.75%
Maturity	2024
0.50% bonds due 2024 [Member]
Disclosure of detailed information about borrowings [line items]
Notional amounts | €			€ 500
Interest rate	0.50%	0.50%	0.50%
Maturity	2024
2.375% bonds due 2026 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts | €			€ 850
Interest rate	2.375%	2.375%	2.375%
Maturity	2026
Three point eight seven five percentage bonds due two thousand and twenty eight [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 500
Interest rate	3.875%	3.875%	3.875%
Maturity	2028
7.45% bonds due 2035 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 400
Interest rate	7.45%	7.45%	7.45%
Maturity	2035
5.875% bonds due 2036 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 600
Interest rate	5.875%	5.875%	5.875%
Maturity	2036
4.25% bonds due 2042 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 500
Interest rate	4.25%	4.25%	4.25%
Maturity	2042
3.875% bonds due 2043 [member]
Disclosure of detailed information about borrowings [line items]
Notional amounts		$ 500
Interest rate	3.875%	3.875%	3.875%
Maturity	2043

XML

Net Borrowings - Schedule of Maturity of Gross borrowings Before Derivative Financial Instruments (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of detailed information about borrowings [line items]
Total borrowings before derivative financial instruments	£ 9,902	£ 9,042	£ 10,129
Due within one year [member]
Disclosure of detailed information about borrowings [line items]
Total borrowings before derivative financial instruments	1,828	2,459	2,058
Due between one and three years [member]
Disclosure of detailed information about borrowings [line items]
Total borrowings before derivative financial instruments	2,033	1,255	2,896
Due between three and five years [member]
Disclosure of detailed information about borrowings [line items]
Total borrowings before derivative financial instruments	2,111	1,324	537
Due after five years [member]
Disclosure of detailed information about borrowings [line items]
Total borrowings before derivative financial instruments	£ 3,930	£ 4,004	£ 4,638

XML

Net Borrowings - Schedule of Bonds Issued and Repaid (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Schedule of bonds issued and repaid [line items]
Repaid	£ (1,571)	£ (1,234)	£ (1,003)
Bonds issued and repaid	1,041	(1,234)	(1,003)
Euro denominated [member]
Schedule of bonds issued and repaid [line items]
Issued	1,136
United States of America dollars denominated [member]
Schedule of bonds issued and repaid [line items]
Issued	1,476
Repaid	£ (1,571)	£ (1,234)	£ (1,003)

XML

Net Borrowings - Schedule of Information about Reconciliation of Movement in Net Borrowings (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Borrowings [abstract]
At beginning of the year	£ 7,892	£ 8,635
Net decrease/(increase) in cash and cash equivalents before exchange	185	(122)	£ (343)
Net increase/(decrease) in bonds and other borrowings	1,015	(820)
Change in net borrowings from cash flows	1,200	(942)
Exchange differences on net borrowings	(80)	205
Other non-cash items	79	(6)
Net borrowings at end of the year	£ 9,091	£ 7,892	£ 8,635

XML

Net Borrowings - Schedule of Information about Net Borrowings Currency (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	£ 874	£ 1,191	£ 1,089
Gross borrowings	(9,965)	(9,083)
US dollar [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	95	576
Gross borrowings	297	(2,492)
Euro [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	91	69
Gross borrowings	(2,505)	(1,965)
Sterling [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	38	51
Gross borrowings	(7,383)	(4,214)
Indian Rupee [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	25	16
Gross borrowings	(313)	(405)
Chinese Yuan [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	293	110
Gross borrowings	(160)	(30)
Kenyan Shilling [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	16	15
Gross borrowings	(107)	(115)
Mexico, Pesos [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	13	6
Gross borrowings	(58)	24
Turkish Lira [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	105	133
Gross borrowings	(9)	(27)
Other [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents	198	215
Gross borrowings	£ 273	£ 141

XML

Net Borrowings - Schedule of Information about Net Borrowings Currency (Parenthetical) (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Sterling [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents in cash-pooling arrangements	£ 13	£ 29
Turkish Lira [member]
Disclosure of reconciliation of liabilities arising from financing activities [line items]
Cash and cash equivalents in cash-pooling arrangements	£ 87	£ 128

XML

Equity - Summary of Information about Allotted and Fully Paid Share Capital (Detail) - GBP (£) £ in Millions, shares in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Number of shares issued [abstract]
Number of shares	2,695	2,754	2,754
Nominal value	£ 780	£ 797	£ 797

XML

Equity - Summary of Information about Hedging and Exchange Reserve (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of reserves within equity [line items]
Beginning balance	£ 12,028	£ 10,180	£ 9,256
Other comprehensive income	(276)	651	109
Ending balance	11,713	12,028	10,180
Hedging reserve [member]
Disclosure of reserves within equity [line items]
Beginning balance	(21)	(90)	21
Other comprehensive income	(44)	69	(111)
Adoption of IFRS 9 by associate	(3)
Ending balance	(68)	(21)	(90)
Exchange reserve [member]
Disclosure of reserves within equity [line items]
Beginning balance	(432)	(431)	(1,173)
Other comprehensive income	(530)	(1)	742
Ending balance	(962)	(432)	(431)
Hedging and exchange reserve [member]
Disclosure of reserves within equity [line items]
Beginning balance	(453)	(521)	(1,152)
Other comprehensive income	(574)	68	631
Adoption of IFRS 9 by associate	(3)
Ending balance	£ (1,030)	£ (453)	£ (521)

XML

Equity - Summary of Information about Own Share (Detail) - GBP (£) £ in Millions, shares in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Number of movements in own shares
Beginning balance	£ 12,028	£ 10,180	£ 9,256
Ending balance	£ 11,713	£ 12,028	£ 10,180
Own shares [member]
Number of movements in own shares
Beginning balance	241	244	248
Beginning balance	£ (2,176)	£ (2,189)	£ (2,228)
Ending balance	238	241	244
Ending balance	£ (2,144)	£ (2,176)	£ (2,189)
Own shares [member] | Share trusts [member]
Number of movements in own shares
Share trust arrangements	(1)	(3)	(1)
Share trust arrangements	£ (9)	£ (32)	£ (6)
Own shares [member] | Share plans [member]
Number of movements in own shares
Shares purchased	2	5	2
Shares purchased	£ 66	£ 101	£ 42
Share trust arrangements	(4)	(5)	(5)
Share trust arrangements	£ (89)	£ (82)	£ (75)
Own shares [member] | Share buy- back program [member]
Number of movements in own shares
Shares purchased	59
Shares purchased	£ 1,507
Shares cancelled	(59)
Shares cancelled	£ (1,507)

XML

Equity - Additional Information (Detail) - GBP (£) £ in Millions, shares in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of reserves within equity [line items]
Issued capital	£ 780	£ 797	£ 797
Employee share trusts [member]
Disclosure of reserves within equity [line items]
Number of shares	4	5	7
Issued capital	£ 72	£ 81	£ 113
Market value of shares outstanding	£ 106	£ 107	£ 155
Diageo Long Term Incentive Plan [member]
Disclosure of reserves within equity [line items]
Maximum target level share options plan	100.00%
Diageo Long Term Incentive Plan [member] | Minimum [member]
Disclosure of reserves within equity [line items]
Vesting range share options plan	20.00%
Diageo Long Term Incentive Plan [member] | Maximum [member]
Disclosure of reserves within equity [line items]
Vesting range share options plan	25.00%

XML

Equity - Purchase of own shares - Additional Information (Detail) - GBP (£)	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016	Sep. 20, 2017
Disclosure of reserves within equity [line items]
Number of shares authorised to be repurchased				251,773,000
Par value of shares authorised to be repurchased				£ 0.28935
Repurchase of shares percentage of market value per share to be paid upon purchase				105.00%
Own shares [member] | Share plans [member]
Disclosure of reserves within equity [line items]
Consideration paid for purchase of own shares	£ 66,000,000	£ 101,000,000	£ 42,000,000
Number of own shares purchased	2,000,000	5,000,000	2,000,000
Own shares [member] | Share buy- back program [member]
Disclosure of reserves within equity [line items]
Consideration paid for purchase of own shares	£ 1,507,000,000
Number of own shares purchased	59,000,000
Diageo Plc [member]
Disclosure of reserves within equity [line items]
Number of own shares purchased	2,500,000	5,000,000	2,000,000
Nominal value of own shares purchased	£ 1,000,000	£ 1,000,000	£ 1,000,000
Purchase of own shares percentage of issued ordinary share capital	0.10%	0.20%	0.10%
Diageo Plc [member] | Share buy- back program [member]
Disclosure of reserves within equity [line items]
Purchase of own shares percentage of issued ordinary share capital	2.10%
Consideration paid for purchase of own shares	£ 1,507,000,000
Number of own shares purchased	58,900,000
Transaction cost	£ 9,000,000
Average price per share of ordinary shares issued ordinary share capital	£ 25.43

XML

Equity - Summary of Information about Monthly Breakdown of Shares Purchased and the Average Price Paid Per Share (Detail) - Treasury shares purchased during the year [member] - GBP (£)	1 Months Ended							12 Months Ended
	Mar. 31, 2018	Feb. 28, 2018	Jan. 31, 2018	Dec. 31, 2017	Nov. 30, 2017	Oct. 31, 2017	Sep. 30, 2017	Jun. 30, 2018
Disclosure of classes of share capital [line items]
Total number of shares purchased	1,234,920	20,146,596	8,822,763	6,903,910	8,168,860	8,287,168	7,918,187	61,482,404
Average price paid pence	£ 24.91	£ 24.74	£ 26.28	£ 26.38	£ 25.87	£ 25.35	£ 25.21	£ 25.44
Authorised purchases unutilised at month end	190,290,596	191,525,516	211,672,112	220,494,875	227,398,785	235,567,645	243,854,813	190,290,596
Share buy- back program [member]
Disclosure of classes of share capital [line items]
Number of shares purchased under share buyback programme	1,234,920	20,146,596	8,822,763	6,903,910	8,168,860	8,287,168	5,379,511	58,943,728

XML

Equity - Summary of Information about Dividends (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure Of Information About Dividends [Abstract]
Final dividend for the year ended 30 June 2017 38.5 pence per share (2016 - 36.6 pence; 2015 - 34.9 pence)	£ 968	£ 920	£ 876
Interim dividend for the year ended 30 June 2018 24.9 pence per share (2017 - 23.7 pence; 2016 - 22.6 pence)	613	595	567
Dividend paid	£ 1,581	£ 1,515	£ 1,443

XML

Equity - Summary of Information about Dividends (Parenthetical) (Detail) - £ / shares	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Disclosure Of Information About Dividends [Abstract]
Final dividend per share		£ 0.385	£ 0.366	£ 0.349
Interim dividend per share	£ 0.249	£ 0.237	£ 0.226

XML

Equity - Dividends - Additional Information (Detail) £ / shares in Units, £ in Millions	12 Months Ended
	Jun. 30, 2018 GBP (£) £ / shares
Disclosure of reserves within equity [abstract]
Proposed final dividend | £	£ 1,004
Proposed final dividend per share | £ / shares	£ 0.404

XML

Equity - Non-controlling interests - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of reserves within equity [line items]
Proportion of ownership interests in Subsidiary	100.00%
Increase/(decrease) through transactions with owners	£ 26
Non-controlling interests [member]
Disclosure of reserves within equity [line items]
Increase/(decrease) through transactions with owners	31
Total [member]
Disclosure of reserves within equity [line items]
Increase/(decrease) through transactions with owners	£ (5)
United Spirits Limited [member]
Disclosure of reserves within equity [line items]
Proportion of ownership interests in Subsidiary	54.78%
Proportion of ownership interests in Subsidiary held by non-controlling interests	43.91%
Country of incorporation	India
Ketel One [member]
Disclosure of reserves within equity [line items]
Proportion of ownership interests in Subsidiary	50.00%
Country of incorporation	Netherlands
Guinness Nigeria [Member]
Disclosure of reserves within equity [line items]
Proportion of ownership interests in Subsidiary	58.02%	54.32%
Guinness Nigeria [Member] | Non-controlling interests [member]
Disclosure of reserves within equity [line items]
Increase/(decrease) through transactions with owners	£ 31
Guinness Nigeria [Member] | Total [member]
Disclosure of reserves within equity [line items]
Increase/(decrease) through transactions with owners	£ (5)
Serengeti breweries limited [member]
Disclosure of reserves within equity [line items]
Proportion of ownership interests in Subsidiary held by non-controlling interests	60.76%	68.53%
Serengeti breweries limited [member] | Total [member]
Disclosure of reserves within equity [line items]
Increase/(decrease) through transactions with owners	£ (72)

XML

Equity - Summary of Financial Information of Non-controlling Interests (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Income statement
Sales	£ 18,432	£ 18,114	£ 15,641
Net sales	12,163	12,050	10,485
Profit for the year	3,144	2,772	2,362
Other comprehensive (loss)/income	(276)	651	109
Total comprehensive (loss)/income	2,868	3,423	2,471
Attributable to non-controlling interests	53	148	288
Balance sheet
Non-current assets	21,024	20,196
Current assets	8,691	8,652
Non-current liabilities	(11,642)	(10,160)
Current liabilities	(6,360)	(6,660)
Net assets	11,713	12,028
Attributable to non-controlling interests	1,765	1,715
Cash flow
Net cash inflow from operating activities	3,084	3,132	2,548
Net cash (outflow)/inflow from investing activities	(1,151)	(552)	596
Net cash outflow from financing activities	(2,118)	(2,458)	(2,801)
Net increase in cash and cash equivalents	(185)	122	343
Exchange differences	(39)	(14)	84
United Spirits Limited [member]
Income statement
Sales	3,075
Net sales	981
Profit for the year	47
Other comprehensive (loss)/income	(130)
Total comprehensive (loss)/income	(83)
Attributable to non-controlling interests	(36)
Balance sheet
Non-current assets	2,223
Current assets	653
Non-current liabilities	(509)
Current liabilities	(572)
Net assets	1,795
Attributable to non-controlling interests	788
Cash flow
Net cash inflow from operating activities	83
Net cash (outflow)/inflow from investing activities	(8)
Net cash outflow from financing activities	(70)
Net increase in cash and cash equivalents	5
Exchange differences	(1)
Ketel One and Others [member]
Income statement
Sales	1,851
Net sales	1,450
Profit for the year	197
Other comprehensive (loss)/income	(33)
Total comprehensive (loss)/income	164
Attributable to non-controlling interests	89
Balance sheet
Non-current assets	2,750
Current assets	731
Non-current liabilities	(916)
Current liabilities	(611)
Net assets	1,954
Attributable to non-controlling interests	977
Cash flow
Net cash inflow from operating activities	251
Net cash (outflow)/inflow from investing activities	(128)
Net cash outflow from financing activities	(94)
Net increase in cash and cash equivalents	29
Exchange differences	(1)
Dividends payable to non-controlling interests	(101)
Entities Value For Subsidiary [member]
Income statement
Sales	4,926	4,844	4,023
Net sales	2,431	2,412	2,138
Profit for the year	244	229	251
Other comprehensive (loss)/income	(163)	116	399
Total comprehensive (loss)/income	81	345	650
Attributable to non-controlling interests	53	148	290
Balance sheet
Non-current assets	4,973	4,975	4,825
Current assets	1,384	1,222	1,188
Non-current liabilities	(1,425)	(1,327)	(1,339)
Current liabilities	(1,183)	(1,199)	(1,193)
Net assets	3,749	3,671	3,481
Attributable to non-controlling interests	1,765	1,715	1,650
Cash flow
Net cash inflow from operating activities	334	355	245
Net cash (outflow)/inflow from investing activities	(136)	(86)	17
Net cash outflow from financing activities	(164)	(172)	(212)
Net increase in cash and cash equivalents	34	97	50
Exchange differences	(2)	(3)	(1)
Dividends payable to non-controlling interests	£ (101)	£ (83)	£ (101)

XML

Equity - Summary of Financial Information of Non-controlling Interests (Parenthetical) (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Ketel One [member]
Carrying value of distribution rights	£ 1,363	£ 1,385	£ 1,354

XML

Equity - Summary of Information of Annual Fair Value Charge in respect of the Equity Settled Plans (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of fair value measurement of equity [line items]
Annual fair value charge of equity settled plans	£ 40	£ 34	£ 28
Executive Share Award Plans [member]
Disclosure of fair value measurement of equity [line items]
Annual fair value charge of equity settled plans	33	28	24
Executive Share Option Plans [member]
Disclosure of fair value measurement of equity [line items]
Annual fair value charge of equity settled plans	3	3	3
Savings Plans [member]
Disclosure of fair value measurement of equity [line items]
Annual fair value charge of equity settled plans	3	3	2
Equity-Settled Plans [member]
Disclosure of fair value measurement of equity [line items]
Annual fair value charge of equity settled plans	£ 39	£ 34	£ 29

XML

Equity - Summary of fair value of share award using Monte Carlo pricing model and weighted average assumptions (Detail)	12 Months Ended
	Jun. 30, 2018 GBP (£) Months	Jun. 30, 2017 GBP (£) Months	Jun. 30, 2016 GBP (£) Months
Disclosure of terms and conditions of share-based payment arrangement [abstract]
Risk free interest rate	0.30%	0.10%	1.00%
Expected life of the awards | Months	37	36	37
Dividend yield	2.60%	3.00%	3.20%
Weighted average share price	£ 2,573	£ 2,130	£ 1,737
Weighted average fair value of awards granted in the year	£ 1,761	£ 1,427	£ 1,058
Number of awards granted in the year	2,300,000	3,600,000	3,100,000
Fair value of all awards granted in the year	£ 41,000,000	£ 51,000,000	£ 33,000,000

XML

Equity - Summary of Transactions on the Executive Share Award Plans (Detail) - Executive Share Award Plans [member] pure in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Beginning balance	7.9	7.2	7.6
Granted	2.3	3.6	3.1
Exercised/awarded	(0.7)	(1.3)	(1.6)
Forfeited/expired	(1.7)	(1.6)	(1.9)
Ending balance	7.8	7.9	7.2

XML

Equity - Transactions on Schemes - Additional Information (Detail) pure in Millions	Jun. 30, 2018 GBP (£)
Disclosure of reserves within equity [abstract]
Number of executive share options exercisable	4.4
Exercise price of executive share options exercisable	£ 16.21

XML

Contingent Liabilities and Legal Proceedings - Additional Information (Detail) ₨ / shares in Units, € in Millions, £ in Millions, $ in Millions, ₨ in Billions	12 Months Ended
	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 Petition	Jun. 30, 2015 GBP (£)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 GBP (£) shares	Jun. 30, 2014 USD ($) shares	Jun. 30, 2014 GBP (£) ₨ / shares	Jun. 30, 2013 shares	Jun. 30, 2018 USD ($)	Dec. 31, 2017 GBP (£)	Dec. 31, 2017 EUR (€)	Oct. 31, 2017 GBP (£)	Jun. 30, 2014 INR (₨)
Disclosure of contingent liabilities [line items]
Total consideration	£ 739.0
Ownership Interest in subsidiary	100.00%	100.00%
United Spirits Limited [member]
Disclosure of contingent liabilities [line items]
Ownership Interest in subsidiary	54.78%	54.78%
Shares percenatge of additional equivalent payments required to be made to shareholders	0.04%	0.04%
UBHL [member] | United Spirits Limited [member]
Disclosure of contingent liabilities [line items]
Acquisition price per share | ₨ / shares								₨ 1,440
SPA [member] | United Spirits Limited [member]
Disclosure of contingent liabilities [line items]
Date of acquisition									Nov. 09, 2012
Business acquisition number of shares acquired | shares									21,767,749
Business acquisition, percentage of interest acquired						14.98%		14.98%						14.98%
Total consideration						£ 349.0		₨ 349.0						₨ 31.3
Ownership Interest in subsidiary				54.78%	54.78%
Ownership Interest in associate				2.38%	2.38%
Completion date of original acquisition						Jul. 04, 2013	Jul. 04, 2013
SPA [member] | UBHL [member]
Disclosure of contingent liabilities [line items]
Number of pending winding-up petitions | Petition			5
SPA [member] | UBHL [member] | United Spirits Limited [member]
Disclosure of contingent liabilities [line items]
Business acquisition number of shares acquired | shares						10,141,437	10,141,437
Business acquisition, percentage of interest acquired						6.98%		6.98%						6.98%
Contingent Liability for Guarantees [member] | Diageo Holdings Netherlands BV [member] | Watson Limited [member] | Standard Chartered Bank (SCB) [member]
Disclosure of contingent liabilities [line items]
Guarantee provided in respect of bank facility						£ 92.0	$ 135.0
Facility payment under guarantee agreement				£ 96.0	$ 141.0
Tax Contingent Liability [member] | France [member]
Disclosure of contingent liabilities [line items]
Interest and penalties											£ 214.0	€ 241
Tax Contingent Liability [member] | Maximum [member]
Disclosure of contingent liabilities [line items]
Interest and penalties													£ 250.0
25 February agreement [member] | Watson Limited [member]
Disclosure of contingent liabilities [line items]
Release of obligations to indemnify under guarantee of certain borrowings	£ 96.0	$ 141.0
Damages related to breach of associated security documents	105.0	142.0
Cost incurred to date in various proceedings	£ 1.0	$ 1.8
Percentgae of damages claimed	50.00%	50.00%
25 February agreement [member] | Dr Mallya [member]
Disclosure of contingent liabilities [line items]
Payment relating to disengagement agreements	£ 53.0	$ 75.0
Global non-compete, non-interference, non-solicitation and standstill commitments term	5 years	5 years
Consideration payment period	5 years	5 years
Agreement date	Feb. 25, 2016	Feb. 25, 2016
Payment relating to disengagement agreements	£ 28.0	$ 40.0
Amount payable in equal installments to Dr Mallya	5.0									$ 7.0
Installment not liable to pay related to breaches of several provisions	5.0	7.0
Demanding the repayment of original amount paid	28.0	$ 40.0
25 February agreement [member] | United Breweries Overseas Limited [member]
Disclosure of contingent liabilities [line items]
Release of obligations to indemnify under guarantee of certain borrowings	£ 30.0

XML

Commitments - Additional Information (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of Commitments [Abstract]
Capital expenditure on intangibles and property, plant and equipment	£ 161	£ 84	£ 87

XML

Commitments - Schedule of Information about minimum lease rentals to be paid under non-cancellable leases (Detail) - GBP (£) £ in Millions	Jun. 30, 2018	Jun. 30, 2017
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	£ 312	£ 338
Due within one year [member]
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	100	95
Expiring between one and two years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	70	72
Between two and three years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	48	52
Between three and four years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	32	40
Between four and five year [member]
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	20	28
Due after five years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Payment of Minimum Lease Rentals	£ 42	£ 51

XML

Related Party Transactions - Summary of Transactions Between Associates and Joint Ventures (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Income statement items
Sales	£ 10	£ 10	£ 31
Purchases	29	32	36
Balance sheet items
Group payables	3	4	5
Group receivables	2	1	2
Loans payable	6	6	6
Loans receivable	59	31	£ 21
Cash flow items
Loans and equity contributions, net	£ 37	£ 14

XML

Related Party Transactions - Summary of Amounts Incurred by Entity for Provision of Key Management Personnel Services (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of transactions between related parties [abstract]
Salaries and short term employee benefits	£ 10	£ 10	£ 11
Annual incentive plan	10	9	9
Non-Executive Directors' fees	1	1	1
Share-based payments	15	9	7
Post employment benefits	2	2	2
Termination benefits		2	2
Key management personnel remuneration	£ 38	£ 33	£ 32

XML

Related Party Transactions - Additional Information (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Pension Plan [member]
Disclosure of transactions between related parties [line items]
Professional fees	£ 14	£ 15	£ 16

XML

Related Party Transactions - Summary of Information about Directors Remuneration (Detail) - GBP (£) £ in Millions	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Disclosure of transactions between related parties [line items]
Salaries and short term employee benefits	£ 10	£ 10	£ 11
Annual incentive plan	10	9	9
Non-ExecutiveDirectors' fees	1	1	1
Post employment benefits	2	2	2
Directors [member]
Disclosure of transactions between related parties [line items]
Salaries and short term employee benefits	2	2	2
Annual incentive plan	3	3	2
Non-ExecutiveDirectors' fees	1	1	1
Share option exercises		2
Shares vesting	1	4	5
Post employment benefits	1	1	1
Directors remuneration	£ 8	£ 13	£ 11

XML

Principal Group Companies - Summary of Information of Subsidiaries (Detail)	12 Months Ended
	Jun. 30, 2018
Disclosure of subsidiaries [line items]
Percentage of equity owned	100.00%
Diageo Ireland [member]
Disclosure of subsidiaries [line items]
Country of incorporation	Republic of Ireland
Country of operation	Worldwide
Percentage of equity owned	100.00%
Business description	Production, marketing and distribution of premium drinks
Diageo Great Britain Limited [member]
Disclosure of subsidiaries [line items]
Country of incorporation	England
Country of operation	Great Britain
Percentage of equity owned	100.00%
Business description	Marketing and distribution of premium drinks
Diageo Scotland Limited [member]
Disclosure of subsidiaries [line items]
Country of incorporation	Scotland
Country of operation	Worldwide
Percentage of equity owned	100.00%
Business description	Production, marketing and distribution of premium drinks
Diageo Brands B.V. [member]
Disclosure of subsidiaries [line items]
Country of incorporation	Netherlands
Country of operation	Worldwide
Percentage of equity owned	100.00%
Business description	Marketing and distribution of premium drinks
Diageo North America, Inc. [member]
Disclosure of subsidiaries [line items]
Country of incorporation	United States
Country of operation	Worldwide
Percentage of equity owned	100.00%
Business description	Production, importing, marketing and distribution of premium drinks
United Spirits Limited [member]
Disclosure of subsidiaries [line items]
Country of incorporation	India
Country of operation	India
Percentage of equity owned	54.78%
Business description	Production, importing, marketing and distribution of premium drinks
Diageo Capital Plc [member]
Disclosure of subsidiaries [line items]
Country of incorporation	Scotland
Country of operation	United Kingdom
Percentage of equity owned	100.00%
Business description	Financing company for the group
Diageo Finance PLC [member]
Disclosure of subsidiaries [line items]
Country of incorporation	England
Country of operation	United Kingdom
Percentage of equity owned	100.00%
Business description	Financing company for the group
Diageo Investment Corporation [member]
Disclosure of subsidiaries [line items]
Country of incorporation	United States
Country of operation	United States
Percentage of equity owned	100.00%
Business description	Financing company for the US group
Mey Icki Sanayi ve Ticaret A.S. [member]
Disclosure of subsidiaries [line items]
Country of incorporation	Turkey
Country of operation	Turkey
Percentage of equity owned	100.00%
Business description	Production, marketing and distribution of premium drinks

XML

Principal Group Companies - Summary of Information of Associates (Detail) - Moet Hennessy SAS [member]	12 Months Ended
	Jun. 30, 2018
Disclosure of associates [line items]
Country of incorporation	France
Country of operation	France
Percentage of equity owned	34.00%
Business description	Production, marketing and distribution of premium drinks

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Principal Group Companies - Summary of Information of Associates (Parenthetical) (Detail)	12 Months Ended
	Jun. 30, 2018
Disclosure of subsidiaries [line items]
Ownership Interest in subsidiary	100.00%
USL Benefit Trust [member]
Disclosure of subsidiaries [line items]
Ownership Interest in subsidiary	2.38%

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Principal Group Companies - Additional Information (Detail)	12 Months Ended
	Jun. 30, 2018
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary	100.00%
Diageo Finance B.V [member]
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary	100.00%

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Post Balance Sheet Event - Additional Information (Detail) ¥ / shares in Units, £ / shares in Units, ¥ in Millions, £ in Millions, $ in Millions				1 Months Ended	12 Months Ended
	Jul. 26, 2018 GBP (£)	Jul. 10, 2018 GBP (£)	Jul. 10, 2018 CNY (¥) ¥ / shares	Aug. 11, 2018 ¥ / shares shares	Jun. 30, 2018 GBP (£) £ / shares	Jul. 10, 2018 USD ($)	Jul. 03, 2018 GBP (£)	Jul. 03, 2018 CNY (¥)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 GBP (£)
Disclosure of non-adjusting events after reporting period [line items]
Proportion of ownership interests in Subsidiary					100.00%
Available undrawn committed bank facilities					£ 2,652				$ 3,500	£ 2,600
Dividend declared, per share | £ / shares					£ 0.404
Sichuan Shuijingfang Company Limited [member]
Disclosure of non-adjusting events after reporting period [line items]
Proportion of ownership interests in Subsidiary					39.71%
Sichuan Shuijingfang Company Limited [member] | Potential ordinary share transactions [member]
Disclosure of non-adjusting events after reporting period [line items]
Offering price per share			¥ 62.00	¥ 61.38
Escrow deposit							£ 141	¥ 1,229
Ring-fenced bank facilities		£ 682				$ 900
Dividend declared, per share				¥ 0.62
Dividend declared, shares held | shares				10
Maximum [member] | Major ordinary share transactions [member]
Disclosure of non-adjusting events after reporting period [line items]
Share buyback program amount | £	£ 2,000
Maximum [member] | Sichuan Shuijingfang Company Limited [member] | Potential ordinary share transactions [member]
Disclosure of non-adjusting events after reporting period [line items]
Proportion of ownership interests in Subsidiary		60.00%	60.00%
Total consideration		£ 703	¥ 6,146