PERNOD RICARD - Universal Registration Document 2019-2020

5. MANAGEMENT REPORT Net debt

Net debt 5.3 Reconciliation of Net financial debt – the Group uses net financial debt in the management of its cash and its net debt capacity. A reconciliation of the net financial debt and the main balance sheet items is provided in Note 4.9 – Financial instruments in the Notes to the annual consolidated financial statement. The following table shows the change in Net debt over the year:

30.06.2019

30.06.2020

€ million

Profit from recurring operations

2,581

2,260

Other operating income and expenses

(206)

(1,283)

Depreciation of fixed assets y

226

350

69

1,007

Net change in impairment of goodwill and property, plant and equipment and intangible assets y

Net change in provisions y

7

97

Restatement of contributions to pension funds acquired from Allied Domecq and others y

3

-

Fair value adjustments on commercial derivatives and biological assets y

(7)

(3)

Net (gain)/loss on disposal of assets y

0

(27)

40

23

Share-based payments y

Sub-total of depreciation and amortisation, change in provisions and other SELF-FINANCING CAPACITY BEFORE FINANCING INTEREST AND TAX (1)

339

1,446 2,423

2,714

Decrease/(increase) in Working Capital Requirements

(181)

(433)

Net interest and tax payments

(829)

(809)

Net acquisition of non-financial assets and other

(338)

(352)

FREE CASH FLOW

1,366

830

Of which recurring Free Cash Flow

1,477

1,003

Net disposal of financial assets and activities, contributions to pension plans acquired from Allied Domecq and others

(181)

(587)

Change in the scope of consolidation

-

-

Capital increase and other changes in shareholders’ equity y

-

-

Dividends and interim dividends paid y

(645)

(849)

(Acquisition)/disposal of treasury shares y

(121)

(526)

Sub-total dividends, purchase of treasury shares and other

(766)

(1,374) (1,132)

DECREASE/(INCREASE) IN DEBT (BEFORE FOREIGN EXCHANGE IMPACT)

420

Opening IFRS 15 impact

16

-

Foreign currency translation adjustments

(94)

(69)

Non-cash effect on lease debt

-

(603)

DECREASE/(INCREASE) IN DEBT (AFTER FOREIGN EXCHANGE IMPACT)

342

(1,804)

Net debt at beginning of period

(6,962)

(6,620)

Net debt at end of period

(6,620)

(8,424)

Excluding investments in pension funds acquired from Allied Domecq. (1)

Outlook 5.4 For FY21, Pernod Ricard expects:

continued uncertainty and volatility, in particular relating to sanitary y conditions and their impact on social gatherings, On-trade and travel; challenging economic conditions; y prolonged downturn in Travel Retail but resilience of Off-trade in USA y and Europe and sequential improvement in China, India and On-trade globally;

continued implementation of clear strategy, with solid fundamentals, y rooted in employee engagement and quality of portfolio; continued strict discipline, with clear, purpose-based investment y decisions and agility to adjust fast to capture evolving market opportunities.

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Pernod Ricard Universal Registration Document 2019-2020