PERNOD RICARD - 2018-2019 Universal registration document

6.

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

Changes in provisions (other than provisions for pensions and other long-termemployee benefits) 2.

Movements in the year

Foreign currency gains and losses

Reversals (used)

Reversals (not used)

Scope changes

Other movements 30.06.2019

30.06.2018 Allowances

€ million

Provisions for restructuring Other current provisions Other non-current provisions TOTAL PROVISIONS

43

42 14 65

38

3

0

- - - -

- 1 3

44 105

100 448 591

6

6

3

20 65

85

9

420 569

121

94

11

4

Some Group companies are involved in disputes as part of their normal business activities. They are also subject to tax audits, some of which may lead to tax reassessment. The main disputes are described in Note 6.5 – Disputes . At 30 June 2019, the amount of provisions booked by the Group in respect of all disputes or risks in which it is involved amounted to €524 million. The Group does not provide details (with exceptions), as it believes the disclosure of the amount of any provision booked in consideration of each pending dispute would be likely to cause serious harm to the Group. In accordance with applicable national legislation, the Group’s employee benefit obligations are composed of: long-term post-employment benefits (retirement bonuses, — pensions, medical and healthcare expenses, etc.); long-termbenefits payable during the period of employment. — Defined contribution plans Contributions are recognised as expenses as they are incurred. As the Group is not committed beyond the amount of such contributions, no provision is recognised in respect of defined contribution plans. Defined benefit plans For defined benefit plans, the projected unit credit method is used to measure the present value of defined benefit obligations, current service cost and, if applicable, past service cost. The measurement is made at each closing date and the personal data concerning employees is revised at least every three years. The calculation requires the use of economic assumptions (inflation rate and discount rate) and assumptions concerning employees (mainly average salary increase, rate of employee turnover and life expectancy). The assumptions used in FY18 and FY19 and the methods used for their determination are described below. A provision is recorded in the balance sheet for the difference between the actuarial debt of related obligations (actuarial liabilities) and any assets dedicated to funding the plans, measured The Group provides employee benefits such as pensions and retirement bonuses and other post-employment benefits, such as medical care and life insurance: in France, benefit obligations mainly comprise arrangements for — retirement indemnities (non-funded) and supplementary pension benefits (partly funded);

The change in “Other current and non-current provisions” during the period is explained as follows: allowances stem mainly from proceedings brought against the — Company and its affiliates, as part of the normal course of business and the emergence of new risks, including tax risks; reversals are made at the time of corresponding payments or where — the risk is considered to be nil. Unused reversals primarily concern the re-evaluation or the statute of limitation of certain risks, including tax risks. at their fair value, and includes past service costs and actuarial gains and losses. The cost of defined benefit plans has three components, which are accounted for as follows: the cost of services is recognised in operating profit. It includes: — the cost of services rendered during the period, — the cost of past services resulting from the modification or — reduction of a plan, fully recognised in profit and loss for the the financial component, recorded in financial income — (expenses), comprises the impact of discounting the liabilities, net of the expected return on plan assets, measured using the same discount rate as that used tomeasure the liabilities; revaluations of liabilities (assets) are recognised as — non-recyclable items of comprehensive income, and consist mainly of actuarial differences, namely the change in plan obligations and assets due to changes in assumptions and to experience gains or losses, the latter representing the difference between the expected impact of some actuarial assumptions applied to previous valuations and the actual impact. Depending on the nature of the texts governing the plans in certain zones, if the hedging assets exceed the commitments entered into the accounts, any assets generated may be limited to the present value of the future reimbursements and the expected decreases in future contributions. in the United States and Canada, benefit obligations include funded — pension plans guaranteed to employees as well as unfunded post-employment medical plans; in Ireland, the United Kingdom and the Netherlands, benefit — obligations mainly consist of pension plans granted to employees. period in which the services were performed, gains and losses resulting from liquidations; —

Provisions for pensions and other long-termemployee benefits 3.

181

2018-2019

PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT