PERNOD RICARD - Universal Registration Document 2019-2020

6. CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

The table below presents a reconciliation of the provision between 30 June 2019 and 30 June 2020:

30.06.2019

30.06.2020

Medical expenses and other employee benefits

Medical expenses and other employee benefits

Pension commitments

Pension commitments

Total

Total

€ million

Net (asset)/liability at beginning of period

(375)

148

(227)

(671)

147

(524)

Expenses for the period

72

8

80

26

5

30

Actuarial (gains)/losses  (1)

(317)

(1)

(318)

916

3

919

Employer contributions

(51)

-

(51)

(53)

-

(53)

Benefits paid directly by the employer

(15)

(10)

(25)

(10)

(10)

(19)

Changes in scope of consolidation

0

0

0

2

0

2

Translation adjustments

15

2

18

(14)

(1)

(15)

Net (asset)/liability at end of period

(671)

147

(524)

196

145

341

Amount recognised in assets  (2)

(1,083)

-

(1,083)

(265)

-

(265)

AMOUNT RECOGNISED IN LIABILITIES (PROVISION AT END OF PERIOD) Recognised in "Other comprehensive income". (1) See Note 4.3 – "Financial assets". (2)

412

147

559

460

145

605

Actuarial gains and losses correspond: (i) to the effects of what is commonly known as a “buy-in” insurance policy, taken out by the Trustee of the largest pension fund of the Pernod Ricard Group in the United Kingdom, for €(903) million; (ii) to other actuarial gains and losses, following the update of actuarial assumptions and plan asset values, for €(16) million. This policy insures most of the fund’s pension liabilities and reduces the Group’s exposure to a potential shortfall in plan funding that could arise due to fluctuations in market parameters (mainly inflation and interest rates) and changes in longevity.

The buy-in transaction involves the transfer of €4,252 million of pension plan assets to the insurer Rothesay Life, with no impact on the Group’s cash flow. As a result of this transaction, the carrying amount of the insurance policy fully covers the carrying amount of the insured pension liabilities, estimated at €3,350 million at the transaction date. The difference of €903 million was recognised by writing down the value of “Non-current financial assets” with the corresponding recognition of shareholders’ equity in “Other comprehensive income”, with no impact on profit or loss.

The net expense recognised in the income statement in respect of pensions and other long-term employee benefits is broken down as follows:

30.06.2019

30.06.2020

Medical expenses and other employee benefits

Medical expenses and other employee benefits

Expense for the period € million

Pension commitments

Pension commitments

Total

Total

Service cost

40

3

43

42

3

46

Interest on provision o/w interest on the commitment — o/w interest on the assets — o/w interest on the limitation of the assets —

(12) 139 (151) 0

5 5

(7) 144 (151) 0

(17) 118 (136) 0

4 4

(13) 122 (136) 0

- -

- -

Fees/levies/premiums

10

-

10

11

-

11

Impact of plan amendments/reduction of future rights

34

0

33

(11)

(5)

(16)

Impact of liquidation of benefits

-

-

-

0

-

0

Actuarial (gains)/losses

-

1

1

-

3

3

Effect of asset ceiling (including the impact of IFRIC 14)

-

-

-

-

-

-

NET EXPENSE/(INCOME) RECOGNISED IN PROFIT AND LOSS

72

8

80

26

5

30

192

Pernod Ricard Universal Registration Document 2019-2020