PERNOD-RICARD - URD 2020-21

____ 6. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes to the income statement Note 3 Other operating income and expenses Note 3.1

Other operating income and expenses include impairment of property, plant and equipment and intangible assets, costs relating to restructuring and integration, capital gains or losses on disposals, as well as other non-recurring operating income and expenses. These other operating income and expenses are excluded from the profit from recurring operations given their unusual, abnormal and infrequent nature, which would distort the reading of the Group’s performance.

Other operating income and expenses are broken down as follows:

30.06.2020

30.06.2021

€ million

Impairment of property, plant and equipment and intangible assets

(1,007)

(78)

Gains or losses on asset disposals and acquisition costs

11

(34)

Net restructuring and reorganisation expenses

(178)

(64)

Disputes and risks

(47)

141

Other non-current operating income and expenses

(63)

(26)

OTHER OPERATING INCOME AND EXPENSES

(1,283)

(62)

At 30 June 2021, other operating income and expenses primarily consisted of: impairment losses on property, plant and equipment and intangible assets for €78 million, mainly comprising immpairment on the Imperial brand for €70 million as a result of impairment testing of the Group's brands and related assets;

restructuring costs of 64 million euros related to various reorganisation projects; net income related to the settlement of disputes and risks for €141 million, including €109 million in respect of the Drawback (see Note 2.3 - Significant events during the financial year ). In addition, the costs generated by the health crisis were recognised in profit from recurring operations.

Financial income/(expense) Note 3.2

30.06.2021

30.06.2020

€ million

Interest expenses on net financial debt

(340)

(261)

Financial expenses on lease liabilities

(14)

(13)

Interest income on net financial debt

36

36

Net financing cost

(319)

(238)

Structuring and placement fees

(2)

(3)

Net financial impact of pensions and other long-term employee benefits

0

(17)

Other net current financial income (expense)

(7)

(3)

Financial income/(expense) from recurring operations

(328)

(262)

Foreign currency gains/(losses)

(19)

(37)

Other non-current financial income/(expenses)

(19)

(73)

TOTAL FINANCIAL INCOME/(EXPENSES)

(366)

(371)

Weighted average cost of debt The Group’s weighted average cost of debt was 2.8% over FY21 compared to 3.6% over FY20. Weighted average cost of debt is defined as net financing costs plus structuring and placement fees as a proportion of average net financial debt outstanding plus the average amount outstanding on factoring and securitisation programmes.

At 30 June 2021, the net cost of financial debt included financial expenses of €211 million on Bonds, €3 million on interest rate hedges, €5 million on factoring and securitisation agreements, €13 million on interest on lease liabilities, and €5 million in other expenses. The financial income/(expense) was also impacted by the early redemption of the Bonds denominated in USD detailed in Note 2.1 – Significant events during the period for €72 million, negative foreign exchange impacts for €37 million, and the net impact of pensions and other long-term employee benefits for €17 million euros.

198

PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021