PERNOD-RICARD - URD 2020-21

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

IFRS 16 (Leases) The Group assesses whether a contract is, or contains, a lease if the contract conveys, at inception, the right to control the use of an identified asset for a set period of time in exchange for consideration. The lease liability is initially calculated at the present value of the future lease payments. The discount rates are based on the Group’s borrowing rate plus a spread to take into account country-specific economic environments. They are estimated in each currency using available market data. They take into account the term of the leases. Lease payments may include fixed or variable payments that depend on a rate or index known at the commencement date of the lease. The period used to calculate the lease liability corresponds to the non-cancellable term of the contract, unless it is reasonably certain that the Group will exercise a renewal option beyond this period. The probability of exercising an option is determined on a lease-by-lease basis, taking into account Management’s intentions. This liability is then calculated at amortised cost using the effective interest rate method.

Leases are recognised in the balance sheet from the commencement date. They are presented in “Lease liabilities” with a corresponding entry in “Property, plant and equipment”, depending on the nature of the underlying asset (see Note 4.1 – Property, plant and equipment ). Lease liabilities comprise a current and non-current portion on the basis of the expected future payments. In the income statement, depreciation expenses are recognised on the basis of the use of the underlying asset and interest expenses are presented in financial income/(expense). In the cash flow statement, repayments of lease liabilities are reported under “Lease repayments” in cash flow from financing activities, while interest payments are reported under “Interest paid” in cash flow from operating activities. The Group has chosen not to apply IFRS 16 to leases corresponding to assets with a low unit replacement value or to short-term leases. These leases are recognised directly in expenses.

Net financial debt, as defined and used by the Group, corresponds to total gross financial debt (translated at the closing rate), including lease liabilities and fair value and net foreign currency asset hedged derivatives (hedging of net investments and similar), less cash and cash equivalents.

Breakdown of net financial debt by nature and maturity 1.

30.06.2020

30.06.2021

Non- current

Non- current

Current

Total

Total

Current

€ million

Bonds

723

8,599

9,322

70 8,787

8,857

Syndicated loan

-

-

-

-

-

-

Commercial paper

299

-

299

7

-

7

Other loans and financial debts

81

192

273

115

108

222

Other financial liabilities

380

192

572

122

108

229

GROSS FINANCIAL DEBT

1,103

8,791

9,894

192

8,894 9,086

Fair value hedge derivatives instruments – assets

(3)

(40)

(44)

-

(22)

(22)

Fair value hedge derivatives instruments – liabilities

-

-

-

-

-

-

Fair value hedge derivatives

(3)

(40)

(44)

-

(22)

(22)

Net investment hedge derivatives – assets

-

(13)

(13)

-

(43)

(43)

Net investment hedge derivatives – liabilities

-

-

-

-

-

-

Net asset hedging derivative instruments

-

(13)

(13)

-

(43)

(43)

FINANCIAL DEBT AFTER HEDGING

1,100 8,737

9,837

192

8,830 9,022

Cash and cash equivalents

(1,935)

-

(1,935)

(2,078)

-

(2,078)

NET FINANCIAL DEBT EXCLUDING LEASE LIABILITIES

(835)

8,737

7,902 (1,886)

8,830 6,944

Lease liability

88

433

522

103

405

508

NET FINANCIAL DEBT

(747)

9,171

8,424 (1,783)

9,235

7,452

217

PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021