PERNOD-RICARD_REGISTRATION_DOCUMENT_2017-2018

5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Management of interest rate risk

fixed-rate debt (mainly bonds), in addition to a hedging portfolio including swaps in USD. The Group cannot guarantee that these hedges will prove sufficient, or that it will be able to maintain them on acceptable terms.

On 30 June 2018, the Group Pernod Ricard’s debt comprised floating-rate debt (mainly commercial paper and other bank loans) and

SCHEDULE OF FLOATING-RATE DEBT AND HEDGING IN EUR (NOTIONAL VALUE IN € MILLION)

> 1 year and < 5 years

At 30 June 2018 € million

< 1 year

> 5 years

Total

Total assets (cash)

221

-

-

221

Total floating-rate liabilities

(528) (307) (281) (588)

(337) (337)

0 0

(866) (644) (281) (925)

NET FLOATING-RATE DEBT BEFORE HEDGING

Derivative instruments

-

-

NET FLOATING-RATE DEBT AFTER HEDGING

(337)

0

SCHEDULE OF FLOATING-RATE DEBT AND HEDGING IN USD (NOTIONAL VALUE IN € MILLION)

> 1 year and < 5 years

At 30 June 2018 € million

< 1 year

> 5 years

Total

Total assets (cash)

8

-

- - -

8

Total floating-rate liabilities

80 88

(162) (162) (523) (685)

(81) (73)

NET FLOATING-RATE DEBT BEFORE HEDGING

Derivative instruments

123 211

(188) (188)

(589) (662)

NET FLOATING-RATE DEBT AFTER HEDGING

Analysis of the sensitivity of financial instruments to interest rate risk (impact on the income statement) A 50 basis point increase or decrease in (USD and EUR) interest rates would increase or reduce the cost of net financial debt by €12 million. Analysis of the sensitivity of financial instruments to interest rate risk (impact on shareholders’ equity) A relative fluctuation of +/-50 basis point in interest rates (USD and EUR) would generate an equity gain or loss of approximately €2 million as a result of changes in the fair value of the derivatives documented as cash flow hedges (swaps).

Analysis of the sensitivity of financial instruments used to hedge risks related to farm raw materials (impact on shareholders’ equity) On 30 June 2018, the sensitivity of the portfolio was not significant. Counterparty risk in financial transactions The Group could be exposed to counterparty default via its cash investments, hedging instruments or the availability of confirmed but undrawn financing lines. In order to limit this exposure, the Group performs a rigorous selection of counterparties according to several criteria, including credit ratings, and depending on the maturity dates of the transactions. However, no assurance can be given that this rigorous selection will be enough to protect the Group against risks of this type, particularly in the current economic context.

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PERNOD RICARD REGISTRATION DOCUMENT 2017/2018