Annual Report 2014
Total Page：16
File Type：pdf, Size：1020Kb
Diageo Annual Report Annual 2014 Annual Report 2014 DIAGEO ANNUAL REPORT 2014 DIAGEO IN 2014 About our reporting Over the past year, Diageo has undertaken online at www.diageo.com and outlines Within this Annual Report 2014, we demonstrate a review of its corporate reporting format and further economic, social and environmental the connections between our competitive structure. This has resulted in the separation of disclosures in line with the Global Reporting environment, group strategy, business model, Diageo’s UK and US disclosure requirements Initiative Sustainability G4 Guidelines and the and integrated risk management within a and enables Diageo to progress its alignment United Nations Global Compact advanced stringent corporate governance system. against the International Integrated Reporting reporting criteria. The Sustainability & Council’s Framework. This Annual Report Responsibility Performance Addendum Reflecting our commitment to transparency 2014 is based on UK reporting requirements 2014, as well as the company’s website and best practice reporting, our approach and Diageo separately files an Annual Report and any other website referred to in this will continue to develop over the coming on Form 20-F with the US Securities and report, are not incorporated by reference years to ensure we meet the expectations Exchange Commission. In addition, Diageo and do not form part of either this Annual of our investors and other stakeholders, and has prepared a Sustainability & Responsibility Report 2014 or the Annual Report on provide visibility into how Diageo creates Performance Addendum, which is available Form 20 -F. sustainable value. 2014 Performance 2014 Sustainability & highlights1 Responsibility highlights Volume Operating profit* Alcohol in society EU156.1m £3 ,134m Responsible drinking programmes 2013: 164.2 millions of equivalent units 2013: £3,479m 373 programmes 2013: 315 Net sales Earnings per share* Water efficiency*** £10 ,258m 95.5p 6.9L/L Δ 2013: £11,303m 2013: 103.1p 2013: 7.0L /L Marketing spend Total dividend per share** Employee super-engagement £1 ,620m 51.7p 38% 2013: £1,769m 2013: 47.4p 2013: 41% 1 Where appropriate, comparatives have been restated following the adoption of new accounting standards. * Before exceptional items. **Includes recommended final dividend of 32.0p. *** In accordance with Diageo’s environmental reporting methodologies data for 30 June 2013 has been restated and total water used excludes irrigation water for agricultural purposes on land under the operational control of the company. Δ Within KPMG’s limited assurance scope. Please see page 140 for further details. This is the Annual Report of Diageo plc for the year ended 30 June 2014 and it is dated Unless otherwise stated in this document, percentage movements refer to organic 30 July 2014. The Annual Report is made available to all shareholders on Diageo’s movements. For a definition of organic movement see page 50. Share, unless otherwise website (www.diageo.com). stated, refers to value share. The market data contained in this document is taken from This report includes names of Diageo’s products, which constitute trademarks or trade independent industry sources in the markets in which Diageo operates. Unless otherwise names which Diageo owns or which others own and license to Diageo for use. In this stated in this document, the percentage figures presented are reflective of a year-on-year report, the term ‘company’ refers to Diageo plc and the terms ‘group’ and ‘Diageo’ refer to comparison, namely 2013–2014, only. the company and its consolidated subsidiaries, except as the context otherwise requires. The brand ranking information presented in this report, when comparing volume Diageo’s consolidated financial statements have been prepared in accordance with information with competitors, has been sourced from data published by IWSR, Impact International Financial Reporting Standards (IFRS) as adopted for use in the European Databank, Nielsen, Beverage Information Group or Plato Logic. Market data information Union (EU) and IFRS as issued by the International Accounting Standards Board (IASB). and competitive set classifications are taken from independent industry sources in the References to IFRS hereafter should be construed as references to both IFRS, as adopted markets in which Diageo operates. by the EU, and IFRS, as issued by the IASB. Unless otherwise indicated, all financial © Diageo plc 2014. information contained in this document has been prepared in accordance with IFRS. DIAGEO ANNUAL REPORT 2014 01 DIAGEO IN 2014 Diageo is a global leader in beverage alcohol report Strategic DIAGEO with an outstanding collection of brands IN 2014 across spirits, beer and wine categories. These brands include Johnnie Walker, Crown Royal, JεB, Buchanan’s, Windsor and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness. Diageo is a global company, and our products are sold in more than 180 countries This year we set out our Performance around the world. The management team Governance Ambition to create one of the best continues to invest to build our brands and performing, most trusted and respected routes to consumer, to deliver long term consumer products companies in the world. profitable growth. Diageo is listed on both Our Performance Ambition is supported by six performance drivers the London Stock Exchange (DGE) and and six Sustainability & Responsibility priorities. the New York Stock Exchange (DEO). Read more on pages 14-19 For more information about Diageo, our people and our brands, This year, Diageo delivered 0.4% organic net sales growth reflecting visit www.diageo.com. growth in North America, stability in Western Europe and weakness Visit Diageo’s global responsible drinking resource, www.DRINKiQ.com, in emerging market economies. for information, initiatives, and ways to share best practice. Read more on pages 26-29 More available online Contents statements Financial 06 DIAGEO ANNUAL REPORT 2014 DIAGEO ANNUAL REPORT 2014 07 OUTSTANDING BREADTH AND DEPTH ACROSS PRICE POINTS OUTSTANDING BREADTH AND DEPTH ACROSS PRICE POINTS We have brands at almost every price tier of Strategic report OUTSTANDING every category. The range of our price points means we are able to capture consumption Strategic Report BREADTH AND shifts across the price spectrum. The breadth DEPTH ACROSS and depth of our business provides resilience, and enables us to sustain our performance PRICE POINTS over time. Scotch whisky Other whisk(e)y Vodka Rum Liqueur Tequila Gin Local spirits Beer Governance Ultra Premium* — Our business 02 Super Premium Financial statements — Our structure 03 Premium Standard — Brand performance 04 Additional information for shareholders Value — Outstanding breadth and depth across price points 06 * Ultra premium includes prestige. — Our Performance Ambition 08 — Our business model 09 diageo.com Investor section Diageo Annual Report 2014 online — Chairman’s statement 10 — Chief Executive’s statement 12 — How we will deliver our ambition: Performance drivers 14 — How we will deliver our ambition: Sustainability & Responsibility 16 — How we measure performance: Key performance indicators 20 — How we protect our business: Risk management and principal risks 22 — Market dynamics 24 — Group financial review 26 shareholders for information Additional — Business reviews 30 — Category review 40 — Sustainability & Responsibility review 42 — Definitions and reconciliations of non-GAAP measures 50 Sustainability & Responsibility to GAAP measures Performance Addendum 2014 Diageo IR and Media app Governance — Board of Directors and Company Secretary 54 — Executive Committee 55 Diageo plc is incorporated as a public limited company in England and Wales. Diageo — Corporate governance report 56 was incorporated as Arthur Guinness Son and Company Limited on 21 October 1886. — Report of the Audit Committee 60 The group was formed by the merger of Grand Metropolitan Public Limited Company (GrandMet) and Guinness PLC (the Guinness Group) in December 1997. Diageo plc’s — Directors’ remuneration report 63 principal executive office is located at Lakeside Drive, Park Royal, London NW10 7HQ — Directors’ report 83 and its telephone number is +44 (0) 20 8978 6000. Financial statements 84 Cautionary statement: this document contains ‘forward-looking’ statements. For our full cautionary statement, please see the inside back cover. Additional information for shareholders 139 02 DIAGEO ANNUAL REPORT 2014 OUR BUSINESS Diageo is a global leader in beverage alcohol with iconic OUR brands in spirits, beer and wine. We invest behind our brands BUSINESS to drive growth, providing consumers with choice and quality across categories and price points. Our business is built on foundations laid by the giants of our industry. our brands, our customers and consumers, our communities, and Arthur Guinness, Alexander Walker and all those that followed in society as a whole. Our purpose is to help our consumers celebrate their footsteps, cared deeply about the people and businesses they life, every day, everywhere, and to do so responsibly. fostered. They were driven to create products that would last for We give our people the freedom to do the best work of their careers. generations, the best conditions for their people, and the best financial We take great pride in what we do, and in how we do it. Above all we performance. Today, we act like those entrepreneurs, passionate about value each other’s