PERNOD RICARD - 2018-2019 Universal registration document

6.

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

In impairment tests applied to goodwill and brands, the long-term growth assumptions used were determined by taking into account growth rates measured in recent financial years and growth perspectives taken from the budget and the Group’s strategic plans. The amount of any impairment of indefinite-life intangible assets at 30 June 2019 is described below, resulting in: a 50 basis point reduction in the growth rate of the contribution after — advertising and promotional expenditure;

a 50 basis point increase in the after-tax discount rate; — a 100 basis point increase in the after-tax discount rate; or — a 50 basis point reduction in the perpetual rate growth over the — duration of the multi-year plans.

50 bp decrease in the growth rate of the contribution after advertising and

50 basis point increase in the after-tax discount rate

100 basis point increase in the after-tax discount rate

50 basis point decrease in the perpetual growth rate

promotional expenditure

€ million

Europe America

(24) (14) (43) (81)

(65)

(308) (503) (145)

(26)

(129) (67)

(15)

Asia/Rest of the World

(48)

TOTAL

(260)

(956)

(89)

Moreover, the various levels of sensitivity set out above would not result in any risk of goodwill impairment.

Property, plant and equipment Note 4.2 Property, plant and equipment are recognised at acquisition cost and broken down by component. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. Useful life is reviewed on a regular basis. Items of property, plant and equipment are written down when their recoverable amount falls below their net carrying amount. The average depreciable lives for the major categories of property, plant and equipment are as follows:

In accordance with IAS 17, assets acquired under finance lease contracts are capitalised, and a corresponding lease debt is recognised, when the lease contract transfers substantially all the risks and rewards related to ownership of the asset to the Group. Buildings which have been subject to sale and lease-back contracts are treated in a similar manner. Depreciation of property, plant and equipment is recognised within operating profit in the income statement. In accordance with the amendments to standards IAS 41 and IAS 16, vines are, since 1 July 2016, valued at acquisition cost and depreciated over their useful life. In accordance with IAS 41, agricultural produce (harvests) continues to be recognised at fair value on the balance sheet, after deducting estimated selling costs, as from the date at which it is possible to obtain a reliable assessment of price, for example by referring to an active market. Changes in fair value are recognised in profit and loss. Land on which biological assets are planted is measured in accordance with IAS 16.

Buildings

15 to 50 years 5 to 15 years 3 to 5 years 25 to 33 years

Machinery and equipment

Other property, plant and equipment

Vines

175

2018-2019

PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT