Wine Industry Report

Strong sales and profit margin growth | Sales: € 6,443 million (+9.1%*) | Operating profit from ordinary activities: € 1,447 million (+21%*) | Profit from ordinary activities (Group share): € 833 million (+24%**) | Net profit (Group share): € 831 million (+30%)

The Pernod Ricard Board of Directors’ meeting of 19 September 2007, chaired by Patrick Ricard, approved the financial statements for the 2006/07 financial year ended 30 June 2007. The 2006/07 fiscal year was a highly successful year for Pernod Ricard, marked by:

• Dynamic sales in all regions, driven by the strong growth of the wine and spirits market and by the Group’s performance, which took full advantage of the commercial synergies related to the Allied Domecq acquisition;
• A strong 21%* increase in operating profit from ordinary activities, which resulted from increased sales, higher contribution margin from the portfolio, due to the 15 strategic brands representing a greater share of consolidated sales, and from the
achievement of 100% of structure synergies;
• A sharp increase in profit from ordinary activities and improved debt ratios.

* Organic growth measured excluding July for Allied Domecq brands
** Measured on a constant foreign exchange basis

Strong sales growth (+6.2%)
Net sales for the 2006/07 financial year increased by 6.2% to € 6,443 million (excluding duties and taxes). The increase was due to a strong 9.1% organic growth, a 2.8% negative foreign exchange effect and a 0.2% positive Group structure effect.
This strong organic growth was based on the following:
• The good overall performance of our markets, particularly in emerging countries;
• The dynamism of our brand portfolio, in particular our 15 strategic brands, which registered growth of +9%* and +13%* in volume and value, respectively;
• Our powerful global network and commercial synergies related to the Allied Domecq acquisition;
• The relaunch of media and advertising & promotional campaigns for brands acquired as part of the Allied Domecq takeover, which benefited from a substantial increase in advertising expenditure, in particular in the second half-year.

Improved contribution margin from the portfolio
Gross margin increased by +10.2%*, thanks to strong sales growth and the improved gross margin/sales ratio, which rose to 59.8% from 59.0% on a constant foreign exchange basis. The greater proportion represented by the Top 15 brands, the overall
evolution of the mix within the Top 15 and the value strategy applied to the whole portfolio all strongly contributed to the improvement, in spite of the rise in alcohol and energy prices.

This good performance made it possible to significantly increase advertising and promotional expenditure, in line with sales growth. The increase was further enhanced in the second half-year due to the roll-out of the new campaigns of brands acquired as part of the Allied Domecq takeover, in particular Ballantine’s, Beefeater and Stolichnaya.

The 15 strategic brands attracted more than 70% of marketing expenditure and 90% of growth in the 2006/07 financial year.
All in all, the contribution after advertising and promotional expenses generated by the brand portfolio totalled € 2,486 million, (+10.3%*) being 38.6% of sales (+ 60 bp vs 2005/06 on a constant foreign exchange basis).

* Organic growth measured excluding July for Allied Domecq brands

Decrease in the Structure costs / Sales ratio
Structure costs amounted to € 1,039 million over the period, compared to € 1,075 million in the previous financial year. The speed of the Allied Domecq integration indeed allowed, as planned, the achievement of 100% of the € 270 million in synergies in the 2006/07 financial year and to lower the structure costs / sales ratio from 19% before the takeover to 15.6%, excluding the (non cash) impact of the cost of stock options.

Operating profit from ordinary activities
Overall, under the combined effect of growing sales, increased portfolio contribution margin rate and structure synergies, operating profit from ordinary activities grew by 21%* to € 1,447 million. The operating profit margin improved by 230 bp to 22.5% compared to the previous financial year, on a constant foreign exchange basis.

Analysis of performance by region
Asia/Rest of the World and America were again the leading profit growth drivers in the financial year, posting increases of +39%* and +21%* in operating profit from ordinary activities, respectively. The two regions generated total operating profit from
ordinary activities of € 807 million, being 56% of Group profits.

Against the background of an improving economic situation, Europe and France also experienced a 2006/07 financial year of strong growth, with increases in operating profit from ordinary activities of +12%* and +10%*, respectively. This renewed dynamism
was generated by stronger sales in numerous markets, such as France, Germany and Italy, and by continuing strong growth in Central and Eastern Europe markets (Russia, Poland). These two regions realised a combined operating profit from ordinary activities of € 640 million.

Profit from ordinary activities
Financial Income/(expense) from ordinary activities was an expense of € 341 million, of which € 332 million corresponded to financial expenses paid in respect of the debt (i.e. an average interest rate of about 5.0%), € 12 million in finance structuring costs, and € 3 million in other financial income.

Income tax on items from ordinary activities resulted in a € 249 million expense (i.e. a rate of 22.5%). Disposed operations did not generate any profits in the 2006/07 financial year, whereas profits of Dunkin Brands and Britvic had contributed € 57 million
in the previous year, until their respective disposals.

Finally, the minority interest share of profit from ordinary activities was € 25 million and originated from Corby (Canada), Jinro Ballantine’s (South Korea) and Havana Club International (Cuba).

* Organic growth measured excluding July for Allied Domecq brands

Overall, profit from ordinary activities (Group share) amounted to € 833 million, a 24% increase on constant foreign exchange basis compared to 2005/06. Our initial guidance of an increase of about 20% was thus exceeded. Diluted earnings per share from ordinary activities grew by 21% to € 7.75, on a constant foreign exchange basis.

Net profit
Other operating income/(expense) was a € 20 million income. The balance of € 31 million in costs relating to the restructuring and integration of Allied Domecq was largely offset by asset disposal capital gains of € 31 million and other income of € 20 million.
The € 10 million expense from other financial items primarily comprised exchange losses.

Finally, other items generated an income tax expense of € 11 million. After taking account of all other items, Net profit (Group share) totalled € 831 million, a 30% increase compared to the 2005/06 financial year.

Debt
Net debt at 30 June 2007 amounted to € 6.5 billion, compared to an opening balance of € 6.9 billion, after payment of capital gains tax upon the disposal of Dunkin Brands. The decrease in debt resulted in improved debt ratios, with in particular a Net
Debt**/EBITDA ratio decrease to 3.9 against 4.3 in 2005/06.

Finally, pension commitment follow-up showed a decrease of nearly € 500 million in the deficit over the financial year, due in particular to payments made to pension funds and the rising value of the assets invested in these funds. This performance was made more secure by the reduction of the share of assets invested in shares, from 50% to 24% at 30 June 2007, within the pension funds taken over following the Allied Domecq acquisition. Payments to UK funds will thus be reduced to about € 70 million in 2008, from € 150 million in 2006.

Dividend: +20%
These excellent results allow the Board of Directors to propose to the Annual General Meeting of 7 November 2007 a cash dividend of € 2.52 per share, stable compared to last year’s. This is an effective increase of 20%, considering the granting of one free
share for every five shares held on 16 January 2007. Such an increase, combined to that of the previous financial year, results in a 41% rise in the dividend since the Allied Domecq acquisition.

* Organic growth measured excluding July for Allied Domecq brands
** After restatement of treasury shares value

Due to the payment of an interim dividend of € 1.26 on 4 July 2007, the balance of € 1.26 will be paid on Wednesday 14 November 2007. In addition, the Board of Directors will submit for approval by the General Meeting a one-for-one share split, to be carried out in January 2008.

Conclusion and Outlook
Commenting on these results, Patrick Ricard declared:

“2006/07 was an excellent year for Pernod Ricard, with in particular the confirmed success of the Allied Domecq takeover and the strong growth in results and profitability. The dynamism of our brands, the strength of our distribution network and the good start
of the new financial year in July and August, in particular for the premium brands (only aniseed-based products suffered from the adverse weather) allow us to begin the 2007/08 financial year with confidence, while keeping a watchful eye on business
environment developments.

Therefore, based on current market conditions and on a like-for-like basis*, our guidance is a further year of strong growth in Pernod Ricard sales and operating profit from ordinary activities in the 2007/08 financial year.”

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