PERNOD RICARD - 2018-2019 Universal registration document

6.

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

Foreign currency translation 6. Reporting currency used in the consolidated financial 6.1 statements The Group’s consolidated financial statements are prepared in euros, which is the functional currency and the reporting currency of the Parent Company. Functional currency 6.2 The functional currency of an entity is the currency of the economic environment in which it mainly operates. In most cases, the functional currency is the entity’s local currency. However, in a very limited number of entities, a functional currency that is different from the local currency may be used if it reflects the entity’s economic environment and the currency in which most of the entity’s transactions are denominated. Translation of transactions denominated in foreign 6.3 currencies Transactions denominated in foreign currencies are generally translated into the functional currency using the exchange rate applicable at the transaction date. Non-monetary assets and liabilities denominated in foreign currencies are recognised at the historical exchange rate applicable at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate applying at the closing date. Foreign currency differences are recognised in profit and loss for the period, except for foreign currency differences arising on debts designated as hedges for the net foreign currency assets of consolidated affiliates. The latter are recognised directly in shareholders’ equity, under currency translation adjustments, until the disposal of the net investment. Foreign currency differences related to operating activities are recognised within operating profit for the period; foreign currency differences related to financing activities are recognised within financial income (expense) or in shareholders’ equity. Translation of financial statements of affiliates whose 6.4 functional currency is different from the euro (the reporting currency) The balance sheet is translated into euros at year-end exchange rates. The income statement and cash flows are translated on the basis of average exchange rates. The differences resulting from the translation of the financial statements of these affiliates are recognised in translation differences within shareholders’ equity under other comprehensive income. On disposal of a foreign entity, currency translation adjustments previously recognised in shareholders’ equity are recognised in profit and loss.

Assets held for sale and discontinued operations 7. In accordance with IFRS 5 (Non-current assets held for sale and discontinued operations), where they are significant, assets and liabilities held for sale are no longer subject to depreciation or amortisation. They are shown separately in the balance sheet at the lower of the carrying amount or the fair value less costs to sell. An asset is considered as being held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. In order for this to be the case, the asset must be available for immediate sale and its sale must be highly probable. Items in the balance sheet related to discontinued operations and assets held for sale are presented under specific lines in the consolidated financial statements. Income statement items related to discontinued operations and assets held for sale are presented separately in the financial statements for all periods reported upon if they are significant from a Group perspective. Significant events during the financial Note 1.2 year Employee share ownership plan 1. The Group implemented the first employee share ownership plan in its history in FY19. The details of the plan and its impact on the consolidated financial statements are described in Note 6.2.2 – Employee share ownership plan . Acquisitions and disposals 2. During the year, the Group continued its active portfolio management policy with the acquisition of high-potential brands and the sale of brands deemed non-strategic. None of these various transactions had a material impact on the consolidated financial statements for the financial year under review.

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2018-2019

PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT