PERNOD RICARD - 2018-2019 Universal registration document

6.

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

Accounting principles and significant events Note 1

Accounting principles and policies Note 1.1 Principles and accounting standards governing 1. the preparation of the annual consolidated financial statements Because of its listing in a country of the European Union, and in accordance with EC Regulation 1606/02, the Group’s consolidated financial statements for the financial year ended 30 June 2019 have been prepared in accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union. The accounting principles used to prepare the consolidated financial statements to 30 June 2019 are consistent with those used for the consolidated financial statements to 30 June 2018, with the exception of standards and interpretations adopted by the European Union applicable to the Group from 1 July 2018 (see Note 1.1.2 – Changes in accounting standards ). The Group does not adopt early application of standards or interpretations. The Group’s financial year runs from 1 July to 30 June. Changes in accounting standards 2. Standards, amendments and interpretations for which implementation ismandatory for financial years commencing from1 July 2018 The standards, amendments and interpretations applicable to Pernod Ricard with effect from 1 July 2018, relate to: IFRS 15 (Revenue from Contracts with Customers): see Note 1.1.2.1.1 — below; IFRS 9 (Financial Instruments): see Note 1.1.2.1.2 below; — the amendments to IFRS 2 (Classification and Measurement of — Share-based Payment Transactions); IFRIC 22 (Foreign currency transactions and advance consideration); — the amendments to IAS 28 (Investments in associates and joint — ventures); the IFRS improvements cycle 2014-2016. — Other than IFRS 15 and IFRS 9, the impacts of which are described in Notes 1.1.2.1.1 and 1.1.2.1.2 below, none of these amendments and interpretations had an impact on the Group’s financial statements. Standards, amendments and interpretations for which application ismandatory after 1 July 2019 The standards, amendments and interpretations applicable to Pernod Ricard from 1 July 2019 are as follows: IFRS 16 (Leases) The Group will apply the simplified retrospective transition method. The choice of this transition method means that comparative information from previous periods will not be restated. The identification of existing contracts and the collection of the data needed to estimate the impact of IFRS 16 on the Group’s results and financial position have been finalised. The estimated impacts related to the first-time application of the standard, based on leases identified to date, are as follows:

increase of approximately €500 million in the total balance sheet — (assets and liabilities), in line with the amount of lease commitments at 30 June 2019 (see Note 6.3). The bulk of the impacts relates to premises occupied by the Group; immaterial full-year impact of less than €10 million on each of — operating profit, financial income and net income; full-year improvement of between €80 million and €90 million in — cash flows from operating activities and decline in cash flows from financing operations in the same amount. The standard provides for various simplification measures, and the Group has adopted those that allow the exclusion of contracts with a term of less than 12 months and those relating to low-value assets, as well as those enabling application of the new standard to leases that qualified as finance leases under IAS 17. In addition, the value of the right-of-use asset is deemed to be equal to the amount of the lease liability. IFRIC 23 (Uncertainty over Income Tax Treatments) The Group does not expect to see a material impact on its consolidated financial statements following the adoption of this interpretation. standards and amendments Other the amendments to IFRS 9 (Prepayment Features with Negative — Compensation); the IFRS improvements cycle 2015-2017. — Impacts related to the first-time application of IFRS 15 2.1 and IFRS 9 IFRS 15 (Revenue fromContracts with Customers) 2.1.1 Accounting principles amended following the application of IFRS 15 are presented in Note 2 – Segment information . This new standard replaces previously existing provisions, including IAS 11 (Construction Contracts) and IAS 18 (Revenue from Ordinary Activities). The Group has applied the full retrospective method of transition to the new standard, which has been applied in its financial statements since 1 July 2018. The comparative periods have been restated for the impacts of the standard, with the exception of the balance sheet and the cash flow statement, for which the impacts are immaterial. At 30 June 2018, the main impacts of IFRS 15 on the balance sheet were an increase of €16 million in cash and a reduction of net working capital in an equivalent amount. The impact of its application is immaterial as regards revenue recognition. In particular, it has no impact on:

Profit fromRecurring Operations; — revenue recognition standards. — The two main areas of potential impact identified to date are:

services paid to direct or indirect customers for visibility or — promotional arrangements: reclassification from advertising and promotion expenses to a decrease on net sales; third-party bottling contracts for Group products in India: increase in — net sales and cost of sales following the analysis of agent vs. principal considerations. The impacts of the new standard on the comparative financial statements are presented below.

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PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT