History

Diageo is still a relatively young company we have only exisited in our current form since 1997- but our brands and our business have a rich heritage. For example our earliest ancestor company formed in 1749, is Justerini & Brooks - wine merchants, and blenders of the famous J&B whisky range. 10 years after that, in 1759 Arthur Guinness signed the lease on the now world famous St James's Gate brewery in Dublin, going on to create a globally iconic brand. Many of our distilleries were also fired-up in the late eighteenth century. Through the nineteenth and twentieth centuries our range of brands and our business continued to innovate and expand under various parent companies, and in 1997 Diageo was created through the merger of Grand Metropolitan Public Limited Company and Guinness PLC, creating a food and drinks conglomerate which included the world's greatest collection of premium drinks. Between 2000 and 2002 we made the strategic decision to exit our food interests with Burger King and Pillsbury being the two main divestments - and to focus exclusively on premium beverage alcohol. It was during this period, in 2001, that we acquired additional spirits and wine brands from Seagram, and we have subsequently expanded our range through both selective long term value acquisitions, strategic partnerships and innovation. While we look always to the next step in the Diageo journey, we are grateful for the strength which the long and rich heritage of our brands brings to our company.

Corporate Governance
The year has seen various reviews and commentaries on corporate governance in the UK, mostly in response to the recent severe economic downturn. Among the most notable are the review of the Combined Code on Corporate Governance (as defined below) by the Financial Reporting Council (FRC) and Sir David Walkers review of the governance of banks and other financial institutions. In addition to the detailed observations and recommendations produced by these reviews, we have discerned several key themes that we believe already characterise Diageos corporate governance and give us some comfort (but not a sense of complacency) that we are aligned with the current thinking on best practice in this area. Indeed some of the phrasing used here is borrowed from the FRC and Walker reviews. In particular, we share the belief that good governance is not merely a compliance exercise but something that supports the long term success of the company and further, we recognise that the quality of corporate governance ultimately depends on behaviours not process, with the result that there is a limit to the extent to which any regulatory framework can deliver good governance. It follows that the role of the chairman in leading the board, the commitment of all members of the board and the mix of skills, experience and independence that they bring, is paramount. We believe that Diageo has a board which: is up to the challenge of meeting these standards, understanding and helping to meet the challenges facing the company; has sufficient independence to allow an objective approach; and which provides leadership and constructive challenge in the boardroom. The description in the Corporate Governance Report for the year ended 30 June 2010 of Diageos corporate governance structures and procedures and of the work of the board and executive committee is intended to give a sense of how Diageo seeks to achieve the aspirations described above.

The principal corporate governance rules applying to UK companies listed on the London Stock Exchange (LSE) for the year ended 30 June 2010 are contained in The Combined Code on Corporate Governance as updated and published by the FRC in June 2008 (the Code) and the UK Financial Services Authority (FSA) Listing Rules, which require companies listed on the Main Market of the LSE to describe, in their annual report, their corporate governance from two points of view: the first dealing generally with their adherence to the Codes main principles and the second dealing specifically with non-compliance with any of the Codes provisions. The two descriptions together are designed to give shareholders a picture of governance arrangements in relation to the Code as a criterion of good practice. Diageo has complied with both the main principles set out in section 1 of the Code and the provisions set out in section 1 of the Code throughout the year. The Code is publicly available under the heading Corporate Governance at the website of the Financial Reporting Council, www.frc.org.uk. Following its review of the Code in 2009, the FRC published the revised Code (renamed the UK Corporate Governance Code) in May 2010. The revised Code will apply to reporting periods beginning on or after 29 June 2010 (for Diageo, the year ending 30 June 2011). Diageo must also comply with corporate governance rules contained in the FSA Disclosure and Transparency Rules as well as certain related provisions in the Companies Act 2006 (the Act). As well as being subject to UK legislation and practice, as a company listed on the New York Stock Exchange (NYSE), Diageo is subject to the listing requirements of the NYSE and the rules of the Securities and Exchange Commission (SEC). Compliance with the provisions of the US Sarbanes-Oxley Act of 2002 (SOX), as it applies to foreign issuers, is continually monitored. Whilst the directors believe that the groups corporate governance policies continue to be robust, changes have been and will continue to be made in light of the rules that are in place at any point in time. Diageo follows UK corporate governance practice; differences from the NYSE corporate governance standards are summarised in the Corporate Governance Report for the year ended 30 June 2010 and on the companys website at www.diageo.com under the compliance section. The way in which the Codes principles of good governance and relevant provisions of SOX are applied is described within this Corporate Governance Report for the year ended 30 June 2010.

Our Values
At the heart of everything we do are our company values. We stand by them being the set of behaviours that we expect all our people to embrace to further our ambitions for our business, our people and our communities. Our values are:

1. We're passionate about customers and consumers - our curiosity and customer and
consumer insights drive growth. We care for our brands. We're courageous in pursuing their full potential. We're innovative, constantly searching for new ideas that drive growth and spinning them across our business.

2. We give ourselves and each other the freedom to succeed because this fosters an
entrepreneurial spirit. We trust each other, we're open and challenging. We always behave as a team - when we're together and when we're apart.

3. We're proud of what we do - we act sensitively with the highest standards of integrity
and social responsibility. We enjoy and benefit from diversity.

4. We will strive to be the best - we are restless, always learning, always improving. We
constantly set high standards and then try hard to exceed them. We deliver results, win where we compete and celebrate our success.

5. We value each other - we seek and benefit from diverse people and perspectives. We
strive to create mutually fulfilling relationships and partnerships. To demonstrate how serious we are about our values we carry out an annual employee values survey. We ask every one of our people how they believe we are demonstrating our values - as an organisation, as leaders and as teams.

Our Strategy
At Diageo, our business strategy is to deliver sustainable organic growth through the stewardship of our outstanding range of premium drink brands. This is supported by strong financial discipline and cash management, and where appropriate will be supplemented by selective acquisitions.

We manage our business in terms of global priority brands, local priority brands and category brands, however the main focus for organic growth is our global priority brands which contributed 57% of total volume (81.9 million equivalent units) in the year ended 30 June 2010. They are: Johnnie Walker, Smirnoff, Baileys, Captain Morgan, Jos Cuervo, J&B, Tanqueray and Guinness. This collection of outstanding brands offers us diversity and strength, and our consumers' high quality brand experiences. Over the years, we have built a great mix of strengths and resources which we manage to target growth in both the good times and more challenging times. This range of capabilities enables us to be agile in response to global and local market conditions, and supports our scale and diversity, which in turn provides the company with resilience and growth opportunities. A core theme is our passion towards consumers and customers. It should come as no surprise then that we continually seek to understand what our consumers and shoppers want. This insight informs our customer relationships and helps people celebrate with our brands every day, everywhere. Our brands have broad consumer appeal across geographies and we look to reach an everincreasing number of consumers by focusing on effective and efficient routes to market. We use world-class marketing capabilities to combine the benefits of global scale with local insight, and we act with flair and agility to delight consumers with both our trusted brand favourites and the introduction of new and exciting innovations. We strive to execute everything we do to the highest possible standard, and continue to invest in the skills of our leaders - developing leaders today, for tomorrow.

We understand that our leadership as a company is benchmarked by more than just financial success. How we treat our people, the culture we promote internally, how we live our values, and the way in which we positively impact those communities where we operate are also important measures. We seek to be at the forefront of industry efforts to promote responsible drinking and work with other stakeholders to combat alcohol misuse. Our approach is based on three principles: combating alcohol misuse; setting world-class standards for responsible marketing and innovation; and promoting a shared understanding of what responsible drinking means in order to reduce alcohol-related harm.

Codes & Policy

Diageo seeks to conduct business in accordance with the laws and regulations to which our activities are subject. In 2002, Diageo became the first global drinks company to sign up to the nine principles of the United Nations Global Compact as a public commitment to leadership in social and environmental responsibility. A part of this commitment is to assess the impacts of our business on our communities, on society and the environment more widely. In addition, we set out our own codes and policies, which often go further than local or national legislation. These are regularly reviewed to ensure that they continue to address the concerns of stakeholders.

Code of business conduct Code of ethics Consumer information policy Diageo marketing code Environment policy Human rights policy Occupational health and safety Privacy policies Quality policy Supplier standards

Code of business conduct The code of business conduct sets out the way we work, our commitments and what is expected of each of us - it is our code of ethical behaviour, built around our values and our aspirations. The code provides guidance on key areas of compliance and outlines our responsibilities - our new code, launched in January 2009, does all this with improved clarity, in a more engaging format, with a focus on key risk areas for our business. The code applies to everyone working for Diageo worldwide and anyone working on behalf of Diageo- all agents and representatives, consultants, contractors and temporary employees. As employees or representatives of Diageo we are all expected to comply with the code and Diageo policies in addition to all laws, regulations and industry standards. back to top

Code of ethics In addition to the CoBC (Diageo's code of conduct and ethics applicable to all directors and employees) and pursuant to US regulatory requirements, the Diageo board of directors has adopted this supplemental Code of Ethics, specifically for its Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Senior Financial Officers, which is intended to promote honest and ethical conduct including the ethical handling of actual or apparent conflicts of interest; full, fair accurate timely and understandable disclosure, and compliance with applicable governmental rules and regulations. back to top Consumer information policy Diageo puts the consumer at the heart of everything we do. We are committed to ensuring that our customers have the best possible information from which to make informed choices about our products. We will always adhere to regulatory requirements. Click here to view the consumer information policy. Diageo marketing code As the worlds leading premium drinks company, Diageo is aware of the positive, and sometimes negative role alcohol can play in the lives of individuals and in society. For us, world class marketing means not just responsible marketing, but also marketing responsible drinking. We understand our responsibility to develop, produce, market and sell our brands responsibly. We also believe that there is a shared responsibility with individuals, families, governments, law enforcers and educators to address alcohol misuse with respect to diverse cultures around the world. In aspiring to change consumer attitudes and behaviour, we recognise that we cannot achieve behavioural or cultural change by ourselves, and we will continue to find opportunities to work in partnership with others to bring about change. The updated and revised Diageo Marketing Code (July 2009) builds on earlier versions of the code, and incorporates feedback from a wide range of external stakeholders as well as a range of current and new guidance and enhanced compliance requirements, reflecting our ongoing commitment to remain at the forefront of responsible marketing and effective self-regulation. While it is more detailed in this respect, responsibility is all about principles, and the principles and the spirit underpinning the code remain the same. We consider the code as an enabler to great creativity and leading-edge marketing and we hope it inspires all our stakeholders to continue to work together with us, to deliver responsible alcohol marketing and effective self-regulation across the industry and the globe. For further information regarding Diageo's commitment to responsible marketing and innovation, and to download a copy of the Diageo Marketing Code, please visit our global responsible drinking resource www.DRINKiQ.com. back to top

Environment policy As the world's leading premium drinks business, Diageo will manage its global operations in a way that supports environmental sustainability and bio-diversity. Each of our businesses is committed to meeting the following standards of performance on those key aspects of our operations that have environmental impacts and/or implications. Business partners, suppliers and contractors are encouraged to have similar approaches. Click here to read more about our environmental policy. back to top Human rights policy Diageo recognises its responsibility for the impact of our activities on our employees, on consumers of our products and on the communities within which we operate. We recognise our broad responsibility embodied in the expectations of civilised society and in the Universal Declaration of Human Rights to use our influence to promote and protect human rights and freedoms by establishing clear ethical standards for ourselves and foster similar standards in all third parties who act with us or on our behalf. Occupational health and safety Diageo is firmly committed to ensuring the occupational health, safety and well being of its employees. Each employee plays a critical role in ensuring the quality and safety of the working conditions in each Diageo facility. In this regard our goal is for all aspects of Diageos businesses to be conducted in compliance with applicable health and safety laws and regulations, company policies and best practices pertaining to work place health and safety. Privacy policies Diageo's global privacy policy can be found at the bottom of each page of Diageo.com. Diageo is committed to maintaining the accuracy, security and privacy of personal information in accordance with applicable laws. This Privacy Statement for Customers, Suppliers and Service Providers is a statement of principles and guidelines for the protection of the personal information of our individual customers, suppliers, service providers and other individual people conducting business with Diageo (individuals or you). The objective of this Diageo Privacy Statementis to ensure responsible practices in the collection, use and disclosure of personal information, in accordance with applicable legislation Quality policy Diageo is firmly committed to leading Quality and providing brands, which our consumers adore. We will define, protect and grow our brands through the rigorous application of quality standards and principles to provide customers and consumers with consistently excellent service and value. These standards cover all aspects of the supply chain from vendors to consumers. Click here to view our quality policy.

Supplier standards Diageo aims to achieve superior performance in our supply chains through developing mutually rewarding relationships with suppliers who deliver excellent service, consistently achieve our quality standards, manage business risks, drive out cost and innovate to increase value. We also encourage and will actively work with our suppliers to meet our standards of corporate citizenship. As a global company we recognise that achieving these standards presents unique challenges in different parts of the world. Going forward together with our suppliers, our intention is to drive towards the adoption of these, or comparable standards by our suppliers for their own operations, and those of their suppliers in turn.