PERNOD-RICARD - URD 2020-21

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

Corporate income tax Note 3.3 Analysis of the income tax expense

30.06.2021

30.06.2020

€ million

Current income tax

(364)

(425)

Deferred income tax

106

(242)

TOTAL

(258)

(667)

Analysis of effective tax rate – Net profit from continuing operations before tax

30.06.2021

30.06.2020

€ million

Operating profit

978

2,361

Financial income/(expense)

(366)

(371)

Taxable profit

611

1,990

Theoretical tax charge at the effective income tax rate in France

(210)

(637)

Impact of tax rate differences by jurisdiction

111

218

Tax impact of variation in exchange rates

-

7

Re-estimation of deferred tax assets linked to tax rate changes

(77)

(193)

Impact of tax losses used/not used

(6)

40

Impact of reduced/increased tax rates on taxable results

-

-

Taxes on distributions

(25)

(31)

Other impacts

(52)

(72)

EFFECTIVE TAX EXPENSE

(258)

(667)

EFFECTIVE TAX RATE

42%

34%

The tax reform in the United Kingdom generated a revaluation of tax assets and liabilities following the increase in the corporate tax rate from 19% to 25%. The net impact is a tax charge of €200 million at 30 June 2021.

Deferred tax is recognised on time differences between the tax and book values of assets and liabilities in the consolidated balance sheet and is measured using the balance sheet approach. Deferred taxes relating to right-of-use assets and lease liabilities are recognised on a net basis. The effects of changes in tax rates are recognised in shareholders’ equity or in profit and loss in the year in which the change of tax rates is decided. Deferred tax assets are recognised in the balance sheet when it is more likely than not that they will be recovered in future years. Deferred tax assets and liabilities are not discounted to present value. In order to evaluate the Group’s ability to recover these assets, particular account is taken of forecasts of future taxable profits.

Deferred tax assets relating to tax loss carryforwards are only reported when they are likely to be recovered, based on projections of taxable income calculated by the Group at the end of each financial year. All assumptions used, including, in particular, growth in operating profit and financial income (expenses), taking into account interest rates, are reviewed by the Group at the end of the financial year based on data determined by the relevant senior management.

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PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021