PERNOD RICARD - 2018-2019 Universal registration document

6.

CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

The possibility of exercising options prior to maturity has been taken into account in the valuation model of the stock option plans by reflecting, via an assumption, the behaviour of beneficiaries as regards the anticipated periods (before maturity). In 2017, a new option exercise profile was defined and replaced that established in 2010. It was assumed that 30%, 40% and 30% of the options would be exercised once the share price reached 120%, 150% and 180% of the exercise price respectively. This assumption is based on a recent analysis of behaviour observed on plans awarded before 2017. Options allocated on 21 November 2018 are all conditional on the positioning of the overall performance of the Pernod Ricard share (TSR  (1) ) compared to the overall performance of a panel of 12 peers: the stock options will be pre-vested on 21 November 2021, provided that the overall performance of the Pernod Ricard share (TSR  (1) ) is positioned 7 th out of 13 or better (the number will be determined in increments depending on the level of performance achieved). Vesting will be final if the continuous service condition is met on 21 November 2022. Two performance-based share plans were granted on 21 November 2018. In both cases, their fair value corresponds, amongst other things, to the market price of the shares at the grant date, less the loss of expected dividends during the vesting period ( i.e. four years for all beneficiaries). Lastly, the number of performance-based shares granted will depend on the average level of Group Profit from Recurring Operations for the years ended 30 June 2019, 30 June 2020 and 30 June 2021 compared with budgeted Profit from Recurring Operations for each of those years, at constant exchange rates and scope of consolidation. The accounting expense for the plan under IFRS 2 will be adjusted for this condition no later than the end of the vesting period. The fair value of one of the two plans also takes account of the same market performance condition as applied to the stock options allocated on 21 November 2018, in addition to the internal condition described above: positioning of the overall performance of the Pernod Ricard share (TSR  (1) ) compared to the overall performance of a panel of 12 peers over

the period from 21 November 2018 to 21 November 2021 inclusive (three years). The performance-based shares, the number of which will be determined by applying the internal condition, will be vested, provided that the overall performance of the Pernod Ricard share (TSR  (1) ) is positioned 7 th out of 13 or better (the number will be determined by increments based on the level of performance achieved). Vesting will be final as of 22 November 2022 if the continuous service condition is met on 21 November 2022. 2. In May 2019, employees in 18 countries (approximately 75% of Group employees) were able to participate in Pernod Ricard’s first Share Ownership Plan, as part of a structured offer, including a discount of 20% to the share’s reference price. The purchase price was accordingly set at €127.84, corresponding to 80% of the share’s average opening price over the 20 trading days preceding the decision of the CEO, i.e. from 16 May to 12 June 2019. At 21 June 2019, the end date of the purchase/revocation period, all the securities available under this offer (479,997) were subscribed by employees of 45 subsidiaries in 18 countries. The IFRS 2 expense reflecting the benefit offered to employees is measured by reference to the fair value of a discount offered on non-transferable shares. The IFRS 2 expense recognised in respect of this plan in the FY19 consolidated financial statements amounts to €2.6 million. The plan did not result in a capital increase, the shares in question having been bought back by the Group on the secondary market. As a result, the plan resulted in a cash gap, as the shares were bought back by the Group on the secondary market during FY19 and the employees’ contribution was only paid in July in the FY20 financial year. Employee share ownership plan

Off-balance sheet commitments Note 6.3

> 1 year and < 5 years

Total 2,463

< 1 year

> 5 years

€ million

Commitments given at 30.06.2018

888

1,260

314

Commitments given in relation to companies within the Group Commitments given in relation to the financing of the Company

-

-

- 5

-

18

6

6

Financial guarantees given

18

6

5 -

6

Other items

-

-

-

Commitments relating to the operating activities of the issuer Firm and irrevocable commitments to purchase rawmaterials

2,445

882

1,255

308

1,631

586 172

998

46 69 192

Tax commitments (customs guarantees and others)

253 522

12

Operating lease agreements

94 29

236

Other items

39

9

1

Total shareholder return. (1)

199

2018-2019

PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT