PERNOD-RICARD - URD 2020-21

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

Management of interest rate risk At 30 June 2021, the Group’s debt comprised floating-rate debt (mainly commercial paper and other bank loans) and fixed-rate debt (mainly Bonds), in addition to a hedging portfolio including USD swaps.

The Group cannot guarantee that these hedges will prove sufficient, or that it will be able to maintain them on acceptable terms.

Maturity of debt and floating-rate EUR hedges ( notional value )

At 30.06.2021 € million

> 1 year and < 5 years

< 1 year

> 5 years

Total

Total assets (cash)

1,273

-

-

1,273

Total floating-rate liabilities

(35)

3

(0)

(32)

NET FLOATING-RATE DEBT BEFORE HEDGING

1,238

3

(0)

1,241

Derivative instruments

(177)

43

-

(135)

NET FLOATING-RATE DEBT AFTER HEDGING

1,061

46

(0)

1,107

Maturity of the debt and floating-rate USD hedges ( notional value )

At 30.06.2021 € million

> 1 year and < 5 years

< 1 year

> 5 years

Total

Total assets (cash)

36

-

-

36

Total floating-rate liabilities

(49)

(17)

-

(65)

NET FLOATING-RATE DEBT BEFORE HEDGING

(12)

(17)

-

(29)

Derivative instruments

98

(652)

-

(554)

NET FLOATING-RATE DEBT AFTER HEDGING

85

(668)

-

(583)

Counterparty risk in financial transactions The Group could be exposed to counterparty default via its cash investments, hedging instruments or the availability of confirmed but undrawn financing lines. In order to limit this exposure, the Group performs a rigorous selection of counterparties according to several criteria, including credit ratings, and depending on the maturity dates of the transactions. However, no assurance can be given that this rigorous selection will be enough to protect the Group against risks of this type, particularly in the current economic context.

Analysis of the sensitivity of financial instruments to interest rate risk (impact on the income statement) A 50 basis point increase or decrease in interest rates (USD and EUR) would increase or reduce the cost of net financial debt by €5 million. Analysis of the sensitivity of financial instruments to interest rate risk (impact on shareholders’ equity) A relative change of plus or minus 50 basis points in interest rates (USD and EUR) would not generate any gain or loss on shareholders’ equity. Analysis of the sensitivity of financial instruments used to hedge risks related to farm rawmaterials (impact on shareholders’ equity) At 30 June 2021, the sensitivity of the portfolio was not significant.

Interest rate, foreign exchange and commodity derivatives Note 4.10

Pursuant to the amended version of IAS 9 (Financial Instruments), all derivative instruments must be recognised in the balance sheet at fair value, determined on the basis of standard market valuation models or external prices issued by financial institutions. Where the derivative has been designated as a fair value hedge, changes in the value of the derivative and of the hedged item are recognised in profit and loss for the same period. If the derivative has been designated as a cash flow hedge, the change

in value of the “effective” portion of the hedge is recognised in shareholders’ equity. It is recognised in profit and loss when the hedged item is itself recognised in profit and loss. The change in value of the ineffective component of the derivative is however recognised directly in profit and loss. If the derivative is designated as a hedge of a net foreign currency investment, the change in value of the “effective” portion of the hedge is recognised in shareholders’ equity and the change in value of the “ineffective” portion is recognised in profit and loss.

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PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021