PERNOD-RICARD - URD 2020-21

____ 7. PERNOD RICARD SA FINANCIAL STATEMENTS NOTES TO THE PERNOD RICARD SA PARENT COMPANY FINANCIAL STATEMENTS

Note 1

Accounting policies

The annual financial statements for the period are prepared in accordance with French GAAP, which apply under Regulation 2014-03 of the French accounting standards body (ANC) of 5 June 2014 and the rules subsequently amended. The general accounting conventions have been applied, in compliance with the principle of prudence, in accordance with the following base assumptions: going concern; consistency of accounting policies from one financial year to the next; accruals basis of accounting; and in accordance with the general rules of drawing up and presenting the annual financial statements. The basic method used to measure items recorded in the balance sheet is based on historical cost. Intangible assets 1. The brands acquired from the merger of Pernod and Ricard in 1975 and from subsequent mergers are the Company’s main intangible assets. Intangible assets are initially measured at cost; depreciation has been calculated on a straight-line basis over their expected useful life. As part of its digital transformation, Pernod Ricard has developed tools to use data generated by the Group’s various activities. This production of algorithms falls within the scope of the accounting regulations for internally generated intangible assets. Development costs are recognised as intangible assets from the date on which the technical feasibility has been demonstrated and the human and material resources are sufficient to produce these tools. The amount recognised as intangible assets relating to these projects was €5.7 million for FY21. The amortisation period is five years. Property, plant and equipment 2. Property, plant and equipment is initially measured at cost (purchase price plus ancillary costs but not including fees incurred in connection with asset purchases). Impairment is calculated using the straight-line or declining-balance methods, on the basis of the estimated useful lives of the assets: buildings: between 20 and 50 years (straight line); fixtures and fittings: 10 years (straight line); machinery and equipment: 5 years (straight line); office furniture and equipment: 10 years (straight line) or 4 years (reducing balance). Financial assets 3. The gross value of investments is composed of their acquisition cost, excluding ancillary costs. If the value in use of investments is lower than their acquisition cost, a provision for impairment is recognised in financial income/(expense) for the amount of the difference. Pernod Ricard mainly uses two methods to estimate the value in use of its equity investments: the enterprise value of the main securities is estimated on the basis of the most recent estimate of the revalued net asset value, by identifying in particular the unrealised capital gains on assets held by the affiliates, such as the brands. The revalued net assets of these entities are estimated using

methods such as discounted future cash flows. The term of the cash flow projections reflects the characteristics of the Group’s brands and their production assets. Discounted projected cash flows are established based on annual budgets and multi-year strategies, extrapolated into subsequent years by gradually converging the figure for the last year of the plan for each brand and market towards a perpetual growth rate. The calculation includes a terminal value derived by capitalising the cash flows generated in the last forecast year; for other equity investments, the value in use is estimated based on the share of equity of the affiliate that these securities represent. Receivables 4. Receivables are recognised at their nominal value. A provision is recognised in the event that their value falls below the net carrying amount at the balance sheet date. Marketable securities 5. This item includes the treasury shares acquired for the allocation of stock option and performance share plans from the time of acquisition. A liability is recognised when it becomes probable that the rights to receive the marketable securities concerned under the plans will be exercised. For other marketable securities, an impairment provision is recognised when the cost price is higher than the market price. Bonds 6. Redemption premiums are amortised over the life of the loans. Provisions for risks and charges 7. Provisions for risks and charges are recognised in accordance with French Accounting Regulation 2000-06 on liabilities, issued on 7 December 2000 by the French Accounting Regulatory Committee (CRC). This accounting regulation provides that a liability be recognised when an entity has an obligation towards a third party and that it is probable or certain that this obligation will cause an outflow of resources to the third party without equivalent consideration being received. A present obligation must exist at the balance sheet date for a provision to be recognised. Pensions and other long-term employee 8. benefits Since the year ended on 30 June 2014, the Company has opted to recognise the full liability for pensions and other long-term employee benefits in the balance sheet, as provided by recommendation 2013-02. At 30 June 2021, the provision for pensions and other long-term employee benefits was €63 million. Translation of foreign 9. currency-denominated items Payables, receivables and cash balances denominated in foreign currencies are translated into euros as follows: translation of all payables, receivables and cash balances denominated in foreign currencies at year-end rates; recognition of a provision for currency risk for any unrealised currency losses, after taking into account the effect of any offsetting foreign exchange hedging transactions.

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PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021