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Financial instruments and risk management (Tables)
 12 Months Ended
Jun. 30, 2020
Disclosure of detailed information about financial instruments [abstract]  
Schedule of net borrowings interest rate profile
The group's net borrowings interest rate profile as at 30 June 2020 and 2019 is as follows:
 
 
2020
 
 
2019
(reclassification)
 
 
 
£ million

 
%

 
£ million

 
%

Fixed rate
 
9,213

 
70

 
6,181

 
55

Floating rate(i)
 
3,746

 
28

 
5,071

 
45

Impact of financial derivatives and fair value adjustments
 
(183
)
 
(1
)
 
(103
)
 
(1
)
Lease liabilities(ii)
 
470

 
3

 
128

 
1

Net borrowings
 
13,246

 
100

 
11,277

 
100

(i)
The floating rate portion of net borrowings includes cash and cash equivalents, collaterals, floating rate loans and bonds and bank overdrafts.
(ii)
At 30 June 2019 the group reported lease liabilities of £128 million in respect of leases that met the criteria of ‘finance leases’ under IAS 17 - Leases,  in the floating rate categorisation. As at 30 June 2020 Lease liabilities are disclosed separately.
Schedule of 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
2020
£ million

 
2019
£ million

 
2018
£ million

 
2020
%
 
2019
%
 
2018
%
12,708

 
10,393

 
9,063

 
2.6
 
2.4
 
2.6
(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.
Schedule of fluctuations in interest and exchange rates to vary from hypothetical amounts
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)
 
 
 
 
 
2019

 
 
 
2019

 
 
2020

 
(restated(iii))

 
2020

 
(restated(iii))

 
 
£ million

 
£ million

 
£ million

 
£ million

0.5% decrease in interest rates
 
19

 
27

 
45

 
40

0.5% increase in interest rates
 
(19
)
 
(27
)
 
(43
)
 
(39
)
10% weakening of sterling
 
(26
)
 
(17
)
 
(1,384
)
 
(1,001
)
10% strengthening of sterling
 
22

 
14

 
1,132

 
805

(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.
(iii)
The year ended 30 June 2019 has been restated to reflect the increase or decrease of 0.5% in market interest rates from the rates applicable at 30 June 2019.
Schedule of 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

2020
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings(i)
 
(1,994
)
 
(2,980
)
 
(3,080
)
 
(8,615
)
 
(16,669
)
 
(16,785
)
Interest on borrowings(i)(iii)
 
(466
)
 
(669
)
 
(541
)
 
(1,741
)
 
(3,417
)
 
(148
)
Lease capital repayments
 
(106
)
 
(135
)
 
(71
)
 
(158
)
 
(470
)
 
(470
)
Lease future interest payments
 
(9
)
 
(13
)
 
(9
)
 
(31
)
 
(62
)
 
—

Trade and other financial liabilities(ii)
 
(2,833
)
 
(127
)
 
(48
)
 
(35
)
 
(3,043
)
 
(3,006
)
Non-derivative financial liabilities
 
(5,408
)
 
(3,924
)
 
(3,749
)
 
(10,580
)
 
(23,661
)
 
(20,409
)
Cross currency swaps (gross)
 
 
 
 
 
 
 
 
 
 
 
 
Receivable
 
65

 
902

 
89

 
1,506

 
2,562

 
—

Payable
 
(41
)
 
(824
)
 
(56
)
 
(1,014
)
 
(1,935
)
 
—

Other derivative instruments (net)
 
21

 
89

 
45

 
19

 
174

 
—

Derivative instruments(iii)
 
45

 
167

 
78

 
511

 
801

 
610

2019
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings(i)
 
(1,957
)
 
(2,942
)
 
(2,845
)
 
(4,748
)
 
(12,492
)
 
(12,555
)
Interest on borrowings(i)(iii)
 
(363
)
 
(489
)
 
(368
)
 
(1,362
)
 
(2,582
)
 
(124
)
Finance lease capital repayments(iv)
 
(43
)
 
(43
)
 
(33
)
 
(9
)
 
(128
)
 
(128
)
Finance lease future interest payments(iv)
 
(5
)
 
(7
)
 
(3
)
 
—

 
(15
)
 
—

Trade and other financial liabilities(ii)
 
(3,305
)
 
(233
)
 
(3
)
 
(11
)
 
(3,552
)
 
(3,524
)
Non-derivative financial liabilities
 
(5,673
)
 
(3,714
)
 
(3,252
)
 
(6,130
)
 
(18,769
)
 
(16,331
)
Cross currency swaps (gross)
 
 
 
 
 
 
 
 
 
 
 
 
Receivable
 
63

 
125

 
854

 
1,503

 
2,545

 
—

Payable
 
(41
)
 
(82
)
 
(811
)
 
(1,042
)
 
(1,976
)
 
—

Other derivative instruments (net)
 
70

 
27

 
30

 
18

 
145

 
—

Derivative instruments(iii)
 
92

 
70

 
73

 
479

 
714

 
400

(i)
For the purpose of these tables above, borrowings are defined as gross borrowings excluding 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, interest on derivatives and interest on other payable is included within interest payable in note 14.
(iv)
For the year ended 30 June 2019 lease liabilities only include liabilities that met the criteria of 'finance leases' under IAS 17 - Leases.
Schedule of available undrawn committed bank facilities
The group had available undrawn committed bank facilities as follows:
 
2020
£ million

 
2019
£ million

Expiring within one year(i)
2,439

 
—

Expiring between one and two years
610

 
—

Expiring after two years
2,236

 
2,756

 
5,285

 
2,756


(i)    Diageo has the rights to extend £813 million of the committed facilities expiring within one year to May 2022.
Schedule of financial assets and liabilities measured at fair value
The group’s financial assets and liabilities measured at fair value are categorised as follows:
 
 
2020
£ million

 
2019
£ million

Derivative assets
 
758

 
531

Derivative liabilities
 
(145
)
 
(129
)
Valuation techniques based on observable market input (Level 2)
 
613

 
402

Financial assets - other
 
116

 
86

Financial liabilities - other
 
(416
)
 
(401
)
Valuation techniques based on unobservable market input (Level 3)
 
(300
)
 
(315
)
Schedule of movements in level 3 measured on recurring basis
The movements in level 3 instruments, measured on a recurring basis, are as follows:
 
Zacapa financial liability

 
Contingent consideration recognised on acquisition of businesses(i)

 
Zacapa financial liability

 
Contingent consideration recognised on acquisition of businesses

 
2020

 
2020

 
2019

 
2019

 
£ million

 
£ million

 
£ million

 
£ million

At the beginning of the year
(174
)
 
(227
)
 
(164
)
 
(188
)
Net losses included in the income statement
(6
)
 
(24
)
 
(8
)
 
(25
)
Net losses included in exchange in other comprehensive income
(5
)
 
(5
)
 
(8
)
 
(8
)
Net gains/(losses) included in retained earnings
9

 
—

 
(3
)
 
—

Additions
—

 
(42
)
 
—

 
(15
)
Settlement of liabilities
9

 
49

 
9

 
9

At the end of the year
(167
)
 
(249
)
 
(174
)
 
(227
)

(i) Included in the balance at 30 June 2020 is £173 million in respect of the acquisition of Casamigos (2019 - £197 million).
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 2020 by the main risk categories are as follows:
 
 
Notional amounts
£ million

 
Maturity

 
Range of hedged rates(i)

2020
 
 
 
 
 
 
Net investment hedges
 
 
 
 
 
 
Derivatives in net investment hedges of foreign operations
 
—

 
—

 
—

Cash flow hedges
 
 
 
 
 
 
Derivatives in cash flow hedge (foreign currency debt)
 
1,667

 
April 2023-April 2043

 
US dollar 1.22-1.88

Derivatives in cash flow hedge (foreign currency exchange risk)
 
1,428

 
September 2020-March 2022

 
US dollar 1.19-1.36, euro 1.06-1.18

Derivatives in cash flow hedge (commodity price risk)
 
133

 
July 2020 - February 2023

 
Corn: 3.45 - 4.04 USD/Bu
Fuel Oil: 1.11 - 1.87 USD/gal

Fair value hedges
 
 
 
 
 
 
Derivatives in fair value hedge (interest rate risk)
 
6,092

 
July 2020-April 2030

 
(0.01)-4.83%

2019
 
 
 
 
 
 
Net investment hedges
 
 
 
 
 
 
Derivatives in net investment hedges of foreign operations
 
68

 
July 2019

 
Turkish lira 7.55

Cash flow hedges
 
 
 
 
 
 
Derivatives in cash flow hedge (foreign currency debt)
 
1,614

 
April 2023-April 2043

 
US dollar 1.22-1.88

Derivatives in cash flow hedge (foreign currency exchange risk)
 
1,599

 
September 2019-February 2021

 
US dollar 1.28-1.47, euro 1.08-1.15

Derivatives in cash flow hedge (commodity price risk)
 
97

 
July 2019-May 2021

 
Wheat 148.75-171 GBP/t,
Aluminium 1971-2204 USD/MT

Fair value hedges
 
 
 
 
 
 
Derivatives in fair value hedge (interest rate risk)
 
4,063

 
May 2020-May 2028

 
(0.01)-3.09%


(i)    In case of derivatives in cash flow hedge (commodity price risk and foreign exchange risk) the range of the most significant contract’s hedged rates are presented.
Schedule of effectiveness and impacts of hedging relationships
The following table sets out information regarding the effectiveness of hedging relationships designated by the Group, as well as the impacts on profit or loss and other comprehensive income:
 
 
At the beginning of the year
£ million

 
Income statement
£ million

 
Consolidated comprehensive income
£ million

 
Other
£ million

 
At the end
of the year
£ million

2020
 
 
 
 
 
 
 
 
 
 
Net investment hedges
 
 
 
 
 
 
 
 
 
 
Derivatives in net investment hedges of foreign operations
 
(1
)
 
—

 
(1
)
 
2

 
—

Cash flow hedges
 
 
 
 
 
 
 
 
 
 
Derivatives in cash flow hedge (foreign currency debt)
 
271

 
75

 
146

 
(23
)
 
469

Derivatives in cash flow hedge (foreign currency exchange risk)
 
(57
)
 
(47
)
 
(1
)
 
47

 
(58
)
Derivatives in cash flow hedge (commodity price risk)
 
(9
)
 
(8
)
 
(3
)
 
11

 
(9
)
Fair value hedges
 
 
 
 
 
 
 
 
 
 
Derivatives in fair value hedge (interest rate risk)
 
104

 
85

 
—

 
—

 
189

Fair value hedge hedged item
 
(103
)
 
(86
)
 
—

 
—

 
(189
)
Instruments in fair value hedge relationship
 
1

 
(1
)
 
—

 
—

 
—

2019
 
 
 
 
 
 
 
 
 
 
Net investment hedges
 
 
 
 
 
 
 
 
 
 
Derivatives in net investment hedges of foreign operations
 
(3
)
 
—

 
(25
)
 
27

 
(1
)
Cash flow hedges
 
 
 
 
 
 
 
 
 
 
Derivatives in cash flow hedge (foreign currency debt)
 
112

 
82

 
98

 
(21
)
 
271

Derivatives in cash flow hedge (foreign currency exchange risk)
 
(16
)
 
(24
)
 
(41
)
 
24

 
(57
)
Derivatives in cash flow hedge (commodity price risk)
 
—

 
—

 
(9
)
 
—

 
(9
)
Fair value hedges
 
 
 
 
 
 
 
 
 
 
Derivatives in fair value hedge (interest rate risk)
 
(15
)
 
119

 
—

 
—

 
104

Fair value hedge hedged item
 
17

 
(120
)
 
—

 
—

 
(103
)
Instruments in fair value hedge relationship
 
2

 
(1
)
 
—

 
—

 
1
Schedule of 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

2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other investments and loans(i)
 
96

 
20

 
5

 
2

 
123

 
—

 
123

Trade and other receivables
 
—

 
—

 
1,784

 
373

 
2,157

 
2,111

 
46

Cash and cash equivalents
 
—

 
—

 
3,323

 
—

 
3,323

 
3,323

 
—

Derivatives in fair value hedge (interest rate risk)
 
189

 
—

 
—

 
—

 
189

 
—

 
189

Derivatives in cash flow hedge (foreign currency debt)
 
469

 
—

 
—

 
—

 
469

 
—

 
469

Derivatives in cash flow hedge (foreign currency exchange risk)
 
8

 
—

 
—

 
—

 
8

 
1

 
7

Derivatives in cash flow hedge (commodity price risk)
 
1

 
—

 
—

 
—

 
1

 
1

 
—

Other instruments
 
91

 
—

 
—

 
—

 
91

 
73

 
18

Leases
 
—

 
—

 
3

 
—

 
3

 
—

 
3

Total other financial assets
 
758

 
—

 
3

 
—

 
761

 
75

 
686

Total financial assets
 
854

 
20

 
5,115

 
375

 
6,364

 
5,509

 
855

Borrowings(ii)
 
—

 
—

 
(16,785
)
 
—

 
(16,785
)
 
(1,995
)
 
(14,790
)
Trade and other payables
 
(249
)
 
—

 
(2,742
)
 
(867
)
 
(3,858
)
 
(3,683
)
 
(175
)
Derivatives in cash flow hedge (foreign currency exchange risk)
 
(66
)
 
—

 
—

 
—

 
(66
)
 
(52
)
 
(14
)
Derivatives in cash flow hedge (commodity price risk)
 
(10
)
 
—

 
—

 
—

 
(10
)
 
(9
)
 
(1
)
Other instruments
 
(236
)
 
—

 
—

 
—

 
(236
)
 
(222
)
 
(14
)
Leases
 
—

 
—

 
(470
)
 
—

 
(470
)
 
(106
)
 
(364
)
Total other financial liabilities
 
(312
)
 
—

 
(470
)
 
—

 
(782
)
 
(389
)
 
(393
)
Total financial liabilities
 
(561
)
 
—

 
(19,997
)
 
(867
)
 
(21,425
)
 
(6,067
)
 
(15,358
)
Total net financial assets/(liabilities)
 
293

 
20

 
(14,882
)
 
(492
)
 
(15,061
)
 
(558
)
 
(14,503
)
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other investments and loans(i)
 
67

 
19

 
16

 
2

 
104

 
—

 
104

Trade and other receivables
 
—

 
—

 
2,385

 
362

 
2,747

 
2,694

 
53

Cash and cash equivalents
 
—

 
—

 
932

 
—

 
932

 
932

 
—

Derivatives in fair value hedge (interest rate risk)
 
104

 
—

 
—

 
—

 
104

 
2

 
102

Derivatives in cash flow hedge (foreign currency debt)
 
283

 
—

 
—

 
—

 
283

 
—

 
283

Derivatives in cash flow hedge (foreign currency exchange risk)
 
1

 
—

 
—

 
—

 
1

 
1

 
—

Other instruments at fair value
 
143

 
—

 
—

 
—

 
143

 
124

 
19

Total other financial assets
 
531

 
—

 
—

 
—

 
531

 
127

 
404

Total financial assets
 
598

 
19

 
3,333

 
364

 
4,314

 
3,753

 
561

Borrowings(ii)
 
—

 
—

 
(12,555
)
 
—

 
(12,555
)
 
(1,959
)
 
(10,596
)
Trade and other payables
 
(227
)
 
—

 
(3,251
)
 
(946
)
 
(4,424
)
 
(4,202
)
 
(222
)
Derivatives in cash flow hedge (foreign currency debt)
 
(12
)
 
—

 
—

 
—

 
(12
)
 
—

 
(12
)
Derivatives in cash flow hedge (foreign currency exchange risk)
 
(58
)
 
—

 
—

 
—

 
(58
)
 
(41
)
 
(17
)
Derivatives in cash flow hedge (commodity price risk)
 
(9
)
 
—

 
—

 
—

 
(9
)
 
(9
)
 
—

Derivatives in net investment hedge
 
(1
)
 
—

 
—

 
—

 
(1
)
 
(1
)
 
—

Other instruments
 
(223
)
 
—

 
(26
)
 
—

 
(249
)
 
(239
)
 
(10
)
Finance leases(iii)
 
—

 
—

 
(128
)
 
—

 
(128
)
 
(43
)
 
(85
)
Total other financial liabilities
 
(303
)
 
—

 
(154
)
 
—

 
(457
)
 
(333
)
 
(124
)
Total financial liabilities
 
(530
)
 
—

 
(15,960
)
 
(946
)
 
(17,436
)
 
(6,494
)
 
(10,942
)
Total net financial liabilities
 
68

 
19

 
(12,627
)
 
(582
)
 
(13,122
)
 
(2,741
)
 
(10,381
)
(i)
Other investments and loans are including those in respect of associates.
(ii)
Borrowings are defined as gross borrowings excluding lease liabilities and the fair value of derivative instruments.
(iii)
In the year ended 30 June 2019 lease liabilities only include liabilities that met the criteria of 'finance leases' under IAS 17 - Leases.