Diageo : 2022 Preliminary Results presentation with script

Delivering sustainable long-termgrowth

Preliminary Results Fiscal 22

Ivan Menezes &

Lavanya Chandrashekar

28 July 2022

No script

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D E L I V E R I N G S U S T A I N A B L E L O N G - T E R M G R O W T H

Cautionary statements concerning forward-looking statements and non-GAAP financial measures

The following presentation contains 'forward-looking' statements. These statements can be identified by the fact that they do not relate only to historical or current facts and may generally, but not always, be identified by the use of words such as "'will", "anticipates", "should", "could", "would", "targets", "aims", "may", "expects", "intends" or similar expressions statements. In this presentation, such statements include those that express forecasts, expectations, plans, outlook, objectives and projections with respect to future matters, including information related to Diageo's fiscal 23 outlook, Diageo's medium-term guidance for fiscal 23 to fiscal 25, Diageo's supply chain agility programme, future Total Beverage Alcohol market share ambitions and any other statements relating to Diageo's performance for the year ending 30 June 2023 or thereafter.

Forward-looking statements involve risk and uncertainty. There is a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including factors that are outside Diageo's control, which include (but are not limited to): (i) economic, political, social or other developments in countries and markets in which Diageo operates, including as a result of the Covid-19 pandemic, geopolitical instability and/or inflationary pressures;

1. the impact of the Covid-19 pandemic, or any other global or regional public health threats; (iii) the elevated geopolitical instability as a result of Russia's invasion of Ukraine; (iv) the effects of climate change, or legal, regulatory or market measures intended to address climate change, including on the cost and supply of water; (v) changes in consumer preferences and tastes, including as a result of inflationary pressures, disruptive market forces, changes in demographics, evolving social trends, changes in travel, holiday or leisure activity patterns, weather conditions, health concerns, pandemics and/or a downturn in economic conditions; (vi) changes in the domestic and international tax environment, leading to uncertainty around the application of existing and new tax laws and unexpected tax exposures; (vii) changes in the cost of production, including as a result of increases in the cost of commodities and due to supply chain disruptions, labour and/or energy or as a result of inflationary pressures; (viii) any litigation or other similar proceedings (including with tax, customs, competition, environmental, anti-corruption or other regulatory authorities), including litigation directed at the beverage alcohol industry generally or at Diageo in particular; (ix) legal and regulatory developments, including changes in regulations relating to production, distribution, importation, marketing, advertising, sales, pricing, labelling, packaging, product liability, antitrust, labour, compliance and control systems, environmental issues and/or data privacy; (x) the consequences of any failure of internal controls, including those affecting compliance with existing or new accounting and/or disclosure requirements; (xi) the consequences of any failure by Diageo or its associates to comply with anti- corruption, sanctions, trade restrictions or similar laws and regulations, or any failure of Diageo's related internal policies and procedures to comply with applicable law or regulation; (xii) cyber-attacks or any other disruptions to core business operations including manufacturing and supply, business service centres and/or information systems; (xiii) contamination, counterfeiting or other circumstances which could harm the level of customer support for Diageo's brands and adversely impact its sales; (xiv) Diageo's ability to maintain its brand image and corporate reputation or to adapt to a changing media environment; (xv) increased competitive product and pricing pressures, including as a result of actions by increasingly consolidated competitors or increased competition from regional and local companies, that could negatively impact Diageo's market share, distribution network, costs and/or pricing; (xvi) increased costs for, or shortages of, talent, as well as labour strikes or disputes; (xvii) Diageo's ability to derive the expected benefits from its business strategies, including in relation to expansion in emerging markets, acquisitions and/or disposals, cost savings and productivity initiatives or inventory forecasting; (xviii) fluctuations in exchange rates and/or interest rates, which may impact the value of transactions and assets denominated in other currencies, increase Diageo's financing costs or otherwise adversely affect Diageo's financial results; (xix) a tightening of global financial conditions, including an extended period of constraint in the capital markets which Diageo may access; (xx) movements in the value of the assets and liabilities related to Diageo's pension plans; (xxi) Diageo's ability to renew supply, distribution, manufacturing or licence agreements (or related rights) and licences on favourable terms, or at all, when they expire; or (xxii) any failure by Diageo to protect its intellectual property rights.

All oral and written statements made on or after the date of this presentation and attributable to Diageo are expressly qualified in their entirety by the factors set out under "Our principal risks and risk management" in Diageo's Annual Report and under "Risk Factors" in Diageo's Annual Report on Form 20-F filed with the US Securities and Exchange Commission for the year ended 30 June 2021. The Form 20-F is available from the website maintained by the US Securities and Exchange Commission at www.sec.gov and, together with Diageo's Annual Report, on the investors section of the website maintained by Diageo at www.diageo.com.

Any forward-looking statements made on or after the date of this presentation by or on behalf of Diageo speak only as of the date they are made. Diageo does not undertake to update forward-looking statements to reflect any changes in Diageo's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. You should, however, consult and take note of any additional disclosures that Diageo may make in any documents which it publishes and/or files with the US Securities and Exchange Commission. Filings with the US Securities and Exchange Commission are also available to the public from commercial document retrieval services, and from the website maintained by the US Securities and Exchange Commission at www.sec.gov.

This presentation includes financial measures which are not presented in Diageo's financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and are considered "non-GAAP financial measures" under US Securities and Exchange Commission rules. Please refer to the section "Definitions and reconciliations of non-GAAP measures to GAAP measures" set out at the end of this presentation.

2 Preliminary Results Fiscal 22

No script

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D E L I V E R I N G S U S T A I N A B L E L O N G - T E R M G R O W T H

Strong F22 results

across key financial metrics

9%

F22 ORGANIC NSV

3-YEAR CAGR(i)

• Preliminary Results Fiscal 22

Organic

Organic

Organic

volume

net sales value

operating margin

growth

expansion

%

+21.4%

bps

+10.3

+121

Free

Pre-exceptional

Final

cash flow

eps

dividend

£2.8bn

151.9p

76.18p

-£0.3bn

+29.3%

+5%

Source: Diageo internal information

1. F19 to F22 3Y CAGR indicative, and the impact from disposals, acquisitions and re-classifications may not be fully captured For additional information on non-GAAP measures, please see financial/legal appendix

• Good morning everyone. I am pleased to share our excellent results for fiscal 22.
• When we reported our interim results in January, we had delivered strong performance in the first half of the year while navigating a very dynamic environment.
• In the second half, the operating environment was even more challenging, with stronger headwinds from inflation, supply chain disruptions and geopolitical events.
• As Lavanya will discuss in further detail, our strong top‐line growth, gross margin expansion and productivity savings have enabled continued reinvestment in our brands and strategic priorities.
• These results demonstrate that our growth algorithm is working, even as the world around us is changing at pace.

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D E L I V E R I N G S U S T A I N A B L E L O N G - T E R M G R O W T H

Stronger and more resilient

Increased A&P investment	Sustained CAPEX investment	Ongoing productivity savings
	(£bn)		(£bn)		(£bn)
	2.7		1.1		0.5
	2.2			0.4	0.4	0.4	0.4
1.9	2.0
1.8
	0.7	0.7
		0.6	0.6

F18

F19

F20

F21

F22

F18

F19

F20

F21

F22

F18

F19

F20

F21

F22

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Preliminary Results Fiscal 22

Source: Diageo internal information

• Our strong performance is the result of consistent investment in our brands and our business - to build a bigger, stronger and more resilient organisation.
• Over the past five years, we have invested approximately £3.7 billion in capital expenditures including new investments in new sites in China, Mexico and Kenya.
• We are increasing our capacity in key categories like scotch, tequila, baijiu, US whiskey and beer.

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D E L I V E R I N G S U S T A I N A B L E L O N G - T E R M G R O W T H

Continued our strong track record of

creating shareholder value

Dividend per share(i)
pence
5-year full year dividend CAGR
+4.1%	76.18

F22 full year dividend

+5.0%

Final dividend

Interim dividend

29.36

F00 F02 F04 F06 F08 F10 F12 F14 F16 F18 F20 F22

5 Preliminary Results Fiscal 22

Return of capital - cumulative share buybacks(i)	Annualised TSR(ii)
			£bn						%
	RoC programme F20-F23				10-year Annualised TSR
	up to £4.5bn			£7.9bn	+11%
			£5.5bn £5.6bn	F20-F23	1-year		4%
			programme
		£4.3bn
					F18 and F19	5-year		12%
	£1.5bn				programmes
							10-year		11%
	F18	F19	F20	F21	F22

(i) Source: Diageo internal information (ii) Total Shareholder Return (TSR) from FactSet as of 30 June 2022 For additional information, please see financial/legal appendix

• We have continued our strong track record of creating value for shareholders,
• And we are pleased to once again announce a dividend increase of 5%.
• As of the 30th of June 2022, we had completed £3.6 billion of our £4.5 billion return of capital programme through share buybacks.
• We expect to complete the remainder of the programme by the end of June 2023.

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