PERNOD-RICARD_REGISTRATION_DOCUMENT_2017-2018

5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Commercial disputes Colombia

Moreover, Pernod Ricard India received several notices of tax adjustment for FY07 to FY14 relating to the tax deductibility of advertising and promotional expenses (see Note 6.4 – Contingent liabilities ) with lower reassessment amounts for the last years audited. It should be noted that the above-mentioned disputes are only the subject of provisions, which, where appropriate, are recorded in Other provisions for risks and charges (see Note 4.7 – Provisions ), when it is likely that a current liability stemming from a past event will require the payment of an amount which can be reliably estimated. The amount of the provision is the best estimate of the outflow of resources required to extinguish this liability.

A complaint was filed before the Colombian Competition Agency (the Superintendencia De Industria Y Comercio) on 14 November 2017 by the Department of Cundinamarca (Colombia) and its wholly owned distilling company Empresa de Licores de Cundinamarca against Pernod Ricard SA, Pernod Ricard Colombia SA and a competitor company. The complaint alleges that the defendants have committed violations of the Colombian Unfair Competition Act and, in particular, articles 7 and thereof, through the illegal import of spirits into Colombia. The complaint alleges that the defendant companies have gained an unfair market advantage over local producers through such activity. The plaintiffs seek to reclaim lost profits and taxes for a four year period between 2013 and 2017. Pernod Ricard intends to vigorously defend itself against such allegations. This recent complaint contains allegations that are similar to those made in prior legal proceedings before the New York courts brought by Cundinamarca, the Republic of Colombia and several other Colombian departments in 2004. The New York proceedings were dismissed voluntarily by the parties in 2012.

Related parties Note 6.6 Transactions with associates and joint ventures were immaterial in the year ended 30 June 2018. The compensation paid to corporate officers and Executive Committee (COMEX) members in return for their services to the Group is detailed below:

30.06.2018

30.06.2017

€ million

Board of Directors (1)

1

1

Group Executive Committee Short-term benefits ● Post-employment benefits ● Share-based payments (2) ●

12

14

3

4 5

12 28

TOTAL EXPENSES RECOGNISED FOR THE YEAR

24

Directors’ fees. (1) The cost of share-based payments corresponds to the expenses recognised in profit/loss over the period under stock options and performance-based shares (2) allocated to the members of the Group Executive Committee. Concerning the financial year ended on 30 June 2017, the amount takes into account the exceptional allocation of bonus shares for which the Group recognised the total expense over FY17 (see page 169 of the 2016/17 Registration Document). Moreover, the Executive Director are eligible for the following termination compensation (subject to a regulated agreement approved by the Shareholders’ Meeting of 17 November 2016): one-year non-compete clause, together with a payment corresponding to 12 months’ compensation; ● imposed departure clause subject to performance conditions, together with a maximum payment corresponding to 12 months’ compensation. ● These clauses were not implemented in the course of the past financial year. Subsequent events Note 6.7 There are no post-balance sheet events that could have a material impact on the Group’s financial statements.

195

PERNOD RICARD REGISTRATION DOCUMENT 2017/2018