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Segmental information
 12 Months Ended
Jun. 30, 2020
Disclosure of operating segments [abstract]  
Segmental information
Results for the year
Introduction

This section explains the results and performance of the group for the three years ended 30 June 2020. 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. For associates, joint ventures and taxation, balance sheet disclosures are also provided in this section.
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, which is determined considering, among other factors, the delivery terms agreed with customers. For the sale of goods the transfer of control occurs, when the significant risks and rewards of ownership are passed to the customer. Based on the shipping terms agreed with customers, the transfer of control of goods occurs at the time of dispatch for the majority of sales. Where the transfer of control is subsequent to the dispatch of goods, the time between dispatch and receipt by the customer is generally less than 5 days. 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 products 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, Guatemala and Mexico.

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 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 centers in Budapest and Bangalore also perform certain central finance activities, including elements of financial planning and reporting and treasury. The costs of shared service operations are recharged to the regions.

As part of the annual planning process a budget exchange rate is set each year equal to the prior year’s weighted average rate. This rate is used for management reporting purposes and, in order to ensure a consistent basis on which performance is measured through the year, the prior period results are restated to the budget rate as well. Segmental information for net sales and operating profit before exceptionals are reported on a consistent basis with our management reporting. 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 tables below. 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 year.

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
 
 
North America
£ million


Europe
and
Turkey
£ 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

2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales
 
5,222

 
4,697

 
1,911

 
1,184

 
4,645

 
1,343

 
(1,343
)
 
17,659

 
38

 
17,697

Net sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At budgeted exchange rates(i)
 
4,445

 
2,501

 
1,300

 
944

 
2,253

 
1,439

 
(1,341
)
 
11,541

 
38

 
11,579

Acquisitions and disposals
 
32

 
10

 
50

 
—

 
1

 
—

 
—

 
93

 
—

 
93

ISC allocation
 
11

 
60

 
4

 
10

 
12

 
(98
)
 
—

 
(1
)
 
1

 
—

Retranslation to actual exchange rates
 
135

 
(4
)
 
(8
)
 
(46
)
 
4

 
2

 
(2
)
 
81

 
(1
)
 
80

Net sales
 
4,623

 
2,567

 
1,346

 
908

 
2,270

 
1,343

 
(1,343
)
 
11,714

 
38

 
11,752

Operating profit/(loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At budgeted exchange rates(i)
 
2,007

 
730

 
116

 
254

 
498

 
45

 
—

 
3,650

 
(152
)
 
3,498

Acquisitions and disposals
 
(1
)
 
(4
)
 
—

 
—

 
—

 
—

 
—

 
(5
)
 
—

 
(5
)
ISC allocation
 
6

 
26

 
2

 
5

 
6

 
(45
)
 
—

 
—

 
—

 
—

Fair value remeasurement of contingent consideration
 
(10
)
 
(4
)
 
—

 
7

 
—

 
—

 
—

 
(7
)
 
—

 
(7
)
Fair value remeasurement of biological assets
 
—

 
—

 
—

 
9

 
—

 
—

 
—

 
9

 
—

 
9

Retranslation to actual exchange rates
 
32

 
9

 
(17
)
 
(27
)
 
(3
)
 
—

 
—

 
(6
)
 
5

 
(1
)
Operating profit/(loss) before exceptional items
 
2,034

 
757

 
101

 
248

 
501

 
—

 
—

 
3,641

 
(147
)
 
3,494

Exceptional items
 
54

 
(62
)
 
(145
)
 
(6
)
 
(1,198
)
 
—

 
—

 
(1,357
)
 
—

 
(1,357
)
Operating profit/(loss)
 
2,088

 
695

 
(44
)
 
242

 
(697
)
 
—

 
—

 
2,284

 
(147
)
 
2,137

Non-operating items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(23
)
Net finance charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(353
)
Share of after tax results of associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moët Hennessy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
285

Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3
)
Profit before taxation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,043

 
 
North America
£ million

 
Europe
and
Turkey
£ 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

2019
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales
 
5,074

 
5,132

 
2,235

 
1,444

 
5,356

 
1,739

 
(1,739
)
 
19,241

 
53

 
19,294

Net sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At budgeted exchange rates(i)
 
4,034

 
2,951

 
1,529

 
1,095

 
2,656

 
1,843

 
(1,738
)
 
12,370

 
54

 
12,424

Acquisitions and disposals
 
88

 
1

 
1

 
1

 
1

 
—

 
—

 
92

 
—

 
92

ISC allocation
 
11

 
63

 
5

 
15

 
11

 
(105
)
 
—

 
—

 
—

 
—

Retranslation to actual exchange rates
 
327

 
(76
)
 
62

 
19

 
20

 
1

 
(1
)
 
352

 
(1
)
 
351

Net sales
 
4,460

 
2,939

 
1,597

 
1,130

 
2,688

 
1,739

 
(1,739
)
 
12,814

 
53

 
12,867

Operating profit/(loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At budgeted exchange rates(i)
 
1,755

 
972

 
257

 
312

 
671

 
139

 
—

 
4,106

 
(186
)
 
3,920

Acquisitions and disposals
 
29

 
(1
)
 
—

 
—

 
—

 
—

 
—

 
28

 
—

 
28

ISC allocation
 
13

 
72

 
6

 
32

 
16

 
(139
)
 
—

 
—

 
—

 
—

Retranslation to actual exchange rates
 
151

 
(29
)
 
12

 
21

 
16

 
—

 
—

 
171

 
(3
)
 
168

Operating profit/(loss) before exceptional items
 
1,948

 
1,014

 
275

 
365

 
703

 
—

 
—

 
4,305

 
(189
)
 
4,116

Exceptional items
 
—

 
(18
)
 
—

 
—

 
(35
)
 
—

 
—

 
(53
)
 
(21
)
 
(74
)
Operating profit/(loss)
 
1,948

 
996

 
275

 
365

 
668

 
—

 
—

 
4,252

 
(210
)
 
4,042

Non-operating items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
144
Net finance charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(263
)
Share of after tax results of associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moët Hennessy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
310

Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2

Profit before taxation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,235

 
 
North America
£ million

 
Europe
and
Turkey
£ 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

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

(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 45% of annual net sales occurred in the last four months of the calendar year 2019.
(b) Other segmental information
 
 
 North
America
£ million

 
Europe and Turkey
£ million

 
Africa
£ million

 
Latin
America
and
Caribbean
£ million

 
Asia
Pacific
£ million

 
ISC
£ million

 
Corporate
and other
£ million

 
Total
£ million

2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditure
 
145

 
24

 
128

 
48

 
59

 
191

 
105

 
700

Depreciation and intangible asset amortisation
 
(68
)
 
(37
)
 
(103
)
 
(21
)
 
(59
)
 
(119
)
 
(73
)
 
(480
)
Underlying impairment
 
—

 
(7
)
 
—

 
(7
)
 
—

 
—

 
—

 
(14
)
Exceptional impairment of tangible assets
 
—

 
—

 
(139
)
 
—

 
(1
)
 
—

 
—

 
(140
)
Exceptional impairment of intangible assets
 
—

 
—

 
—

 
—

 
(1,205
)
 
—

 
—

 
(1,205
)
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditure
 
150

 
32

 
160

 
48

 
40

 
197

 
44

 
671

Depreciation and intangible asset amortisation
 
(51
)
 
(18
)
 
(81
)
 
(13
)
 
(42
)
 
(110
)
 
(59
)
 
(374
)
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 impairment of tangible assets
 
—

 
—

 
(35
)
 
—

 
—

 
—

 
—

 
(35
)
Exceptional impairment of intangible assets
 
—

 
—

 
(90
)
 
—

 
—

 
—

 
—

 
(90
)
(c) Category and geographical analysis
 
Category analysis
 
 
Geographic analysis
 
 
Spirits
£ million

 
Beer
£ million

 
Ready to
drink
£ million

 
Other
£ million

 
Total
£ million

 
Great
Britain
£ million

 
United
States
£ million

 
Nether-
lands
£ million

 
India
£ million

 
Rest of
World
£ million

 
Total
£ million

2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales(i)
14,158

 
2,342

 
966

 
231

 
17,697

 
1,684

 
4,839

 
62

 
2,783

 
8,329

 
17,697

Non-current assets(ii), (iii)


 


 


 


 


 
1,911

 
5,028

 
2,661

 
2,758

 
7,563

 
19,921

2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales(i)
15,283

 
2,758

 
945

 
308

 
19,294

 
1,706

 
4,724

 
70

 
3,236

 
9,558

 
19,294

Non-current assets(ii), (iii)


 


 


 


 


 
1,637

 
4,662

 
2,525

 
3,829

 
7,668

 
20,321

2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales(i)
14,605

 
2,647

 
854

 
326

 
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

(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.