PERNOD RICARD - 2018-2019 Universal registration document

6.

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

30.06.2019

30.06.2018

Medical expenses and other employee benefits

Medical expenses and other employee benefits

Pension benefits

Actuarial assumptions in respect of the expense for the period

Pension benefits

Discount rate

2.62%

3.50%

2.78%

3.40%

Average rate of increase in annuities

3.34% Not applicable

3.29% Not applicable

Average salary increase

2.81%

3.39%

2.60%

3.16%

Expected increase in medical expenses Initial rate —

Not applicable Not applicable

6.65% Not applicable 4.75% Not applicable

6.22% 4.61%

Final rate —

Other non-eurozone countries

Actuarial assumptions at 30.06.2019 (pensions and other long-term employee benefits) By region

United Kingdom United States

Eurozone countries

Canada

Discount rate

2.30%

3.42%

3.10%

1.33% 1.33% 2.38%

3.31% 1.87% 3.97%

Average rate of increase in annuities

3.44% Not applicable Not applicable

Average salary increase

2.12%

3.50%

3.00%

Expected increase in medical expenses Initial rate —

5.50% 5.50%

6.66% 4.50%

5.28% 4.50%

3.50% Not applicable 3.50% Not applicable

Final rate —

The obligation period-related discount rates used within the Eurozone are as follows: short-term rate (3-5 years): 0.25%; — medium-term rate (5-10 years): 0.50%; — long-term rate (more than 10 years): 1.00% to 1.60%. —

Discount rates are determined by reference to the yield at the balance sheet date on premium category corporate bonds (if available), or on government bonds, with maturities similar to the estimated duration of the benefit obligations. The expected rate of return on assets corresponds to the discount rate, in accordance with the IAS 19 standard.

The sensitivity of the debt to changes in the discount rate is shown in the table below:

Medical expenses and other employee benefits

Pension benefits

Total 5,113 5,529 4,742

€ million

Commitments at 30.06.2019

4,965 5,372 4,603

147 157 138

Commitments at 30.06.2019 with a 0.5% decrease in the discount rate Commitments at 30.06.2019 with a 0.5% increase in the discount rate

The impact of a change in the rate of increase in medical expenses would be as follows:

Effect of a change

In respect of post-employment medical coverage € millions On the present value of the benefit obligations at 30.06.2019

With current rate

1% increase

1%decrease

113

12

(10)

Expense for FY19

5

0

0

185

2018-2019

PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT