PERNOD RICARD - Universal Registration Document 2019-2020

6. CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

30.06.2019

30.06.2020

Medical expenses and other employee benefits

Medical expenses and other employee benefits

Actuarial assumptions in respect of the expense for the period

Pension commitments

Pension commitments

Discount rate

2.78%

3.40%

2.35%

2.98%

Average rate of increase in annuities

3.29% Not applicable

3.26% Not applicable

Average salary increase

2.60%

3.16%

2.63%

3.05%

Expected increase in medical expenses Initial rate —

Not applicable

6.22% Not applicable

6.06%

Final rate —

Not applicable

4.61% Not applicable

4.69%

Actuarial assumptions at 30.06.2020 (pension and other commitments) By region

Other non-Eurozone countries

Eurozone countries

United Kingdom United States

Canada

Discount rate

1.53%

2.55%

2.87%

1.08%

3.59%

Average rate of increase in annuities

3.29% Not applicable Not applicable

1.55%

1.85%

Average salary increase

2.19%

2.98%

3.00%

2.37%

2.08%

Expected increase in medical expenses Initial rate —

5.50%

6.18%

5.18%

3.50% Not applicable

Final rate —

5.50%

4.50%

4.50%

3.50% Not applicable

The obligation period-related discount rates used within the Eurozone are as follows: short-term rate (3-5 years): 0.5% to 1%; — medium-term rate (5-10 years): 1% to 1.25%; — long-term rate (more than 10 years): 1.00% to 1,50%. —

Discount rates are determined by reference to the yield at the balance sheet date on premium category corporate bonds (if available), or on government bonds, with maturities similar to the estimated duration of the benefit obligations. The expected rate of return on assets corresponds to the discount rate, in accordance with the IAS 19 standard.

The sensitivity of the debt to changes in the discount rate is shown in the table below:

Medical expenses and other employee benefits

Pension commitments

Total

€ million

Commitments at 30.06.2020

5,440

145

5,584

Commitments at 30.06.2020 with a 0.5% decrease in the discount rate

5,910

154

6,064

Commitments at 30.06.2020 with a 0.5% increase in the discount rate

5,024

136

5,160

The impact of a change in the rate of increase in medical expenses would be as follows:

Impact of a change

In respect of post-employment medical coverage € million

With current rate

1% increase

1% decrease

On the present value of the benefit obligations at 30.06.2020

114

12

(10)

Expense for FY20

5

0

0

195

Pernod Ricard Universal Registration Document 2019-2020

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