Pernod Ricard SA (RI) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, dear shareholders, good afternoon to one and all. We welcome you here today in a very unusual circumstances. And I hope that you, your family and people close to you are all well. The health of our employees, partners and shareholders is, of course, our top priority. It's our duty to abide by all the measures implemented by the government. And we have no alternative today, but to hold this AGM behind closed doors. It's the first time in our history that we'll be doing so, and I hope very sincerely that it will be the last. So we have not issued any admittance cards. And it's among a very select committee of people beside me that welcome you. Hélène de Tissot, who is Chief Financial Officer, Head of IT & Operations; Patricia Barbizet, your lead independent Director; and Antoine Brocas, who is Secretary of our Board of Directors. I'm sure you'll understand that this particular exercise, which is imposed upon our -- else by circumstances, is very much the contrary to our culture and notion of conviviality. Unfortunately, I won't be able to talk with you in person directly nor will I get the opportunity to meet you in person as I do every year before we begin our AGM. As you know, we attach a lot of importance to the active participation of our shareholders in the decision-making process. At Pernod Ricard, we have done everything possible to ensure that you, our shareholders, will be able to vote remotely, but also follow this very unusual AGM on our pernod-ricard.com website. Despite the circumstances you've been very numerous in voting via Internet via the Vote Access platform, by mail and using this special Pernod Ricard address that we have set up or by correspondence and thus continuing to take part actively. For that, I'd like to thank you all. We also wanted to give you the opportunity to raise your questions live to be as close as possible or as -- yes, as close as possible to normal circumstances. So you can do so by telephone, dialing the number that will be displayed on the screen. And we will select your questions randomly. But again, more about that later on. I'd also like to thank all the people who have, up to the very end, tried to maintain our AGM in the [indiscernible] and who reacted very, very quickly to put together this very unprecedented event. I hereby declare that this AGM is now underway and will act as present -- as Chairman and CEO of the group. The members of our Board of Directors will be following this AGM, just like you, but following remotely too. I'd also like to remind you that this AGM was convened in compliance with legal and regulatory provisions. No other items have been requested on the agenda. No further resolutions have been requested either subsequent to the publication of Notice of the Meeting and the official announcement in the official gazette. As Chairman of today's AGM, I propose to set up the bureau. As provided by law, the Board of Directors at its meeting of November 27, 2020, appointed as tellers the Pernod Ricard, our company, represented by Paul-Charles Ricard, and the Groupe Bruxelles Lambert, represented by Priscilla Matters. I'd also like to appoint Antoine Brocas as secretary. He is Secretary of the Board of Directors. I would like to appoint him as secretary of today's Annual General Meeting. Also in attendance are Patricia Barbizet, who is the Lead Independent Director; and Hélène de Tissot, who is Chief Financial Officer, Head of IT and -- in charge of IT and operations. Our statutory auditors, Deloitte and KPMG Audit, are represented by Eric Ropert of KPMG Audit, will give us their reports by video. It's also pointed out that their speeches have been pre-recorded. Furthermore, given the current situation and sanitary measures, a number of speeches have been pre-recorded but will be broadcast in the course of today's AGM. Let me now give the floor to the secretary of our AGM, Antoine Brocas.

[Interpreted] Thank you, Alexandre, and good afternoon, everybody. We'd like to inform you that the documents required by law and regulations in force have all been sent out or made available to shareholders as required. This year, given the fact that this AGM is organized behind closed doors, the final quorum and the results of the votes were determined yesterday at 3:00 p.m. So I can, as of now, tell you that the final quorum is 75.27%, representing 196,505,913 shares for a total of 4,724 shareholders. The combined general meeting that's ordinary and extraordinary, therefore, has the quorum required by law. The attendance sheet has been signed by the members of the bureau and has ratified this quorum. The AGM is therefore declared properly constituted and can duly conduct its business on all resolutions on its agenda. I'd like to remind you that this AGM has been convened to vote on the resolutions, a figure on Page 39 of the notice of the meeting, which is available on the company's website. I'm now giving back the floor to our Chairman and CEO, Alexandre Ricard, who will give you his management report.

[Interpreted] Thank you, Antoine. Before giving you this year's management report, I propose to watch a video together. [Presentation]

[Interpreted] Ladies and gentlemen, dear shareholders, I wanted to start this year's management report with this film that pays tribute to all our employees. These are images that will stay in my mind for a long time. They are a testament to the exceptional commitment of the group and its employees in the context of an unprecedented public health crisis. While above all these images are emotionally very moving, they are a perfect illustration of the message that I wanted to share with you today. This terrible crisis has reviewed our strengths and serve to even further accelerate the group's transformation. This crisis has demonstrated both the resilience of our fundamentals and the relevance of the strategic choices that we have made within our Transform & Accelerate roadmap that we launched 2 years ago. Agility, resilience and determination. They are the 3 key words that have guided our action starting with those of our employees. You have no doubt heard about the many initiatives that we have undertaken to help fight against this COVID-19 crisis. For example, donating pure alcohol or recalibrating our production equipment to supply hand sanitizer at the time it was most severely needed. What I have found most moving about all these initiatives of solidarity, be they in France, Ireland, Poland, Romania, India, China, Sweden, the United States or Canada, in fact, from all over the world, what I have found most moving is that they are all the result of a vast spontaneous movement. It was our employees displaying their entrepreneurial spirit who took the initiative on the ground in their communities. They did so because they felt that it was their duty to contribute to the worldwide effort to control this pandemic. It was they who came up with and then put in place these initiatives. Of course, the group has, without hesitation, supported and even amplified this upwelling of solidarity. Through their actions, our 19,000 employees proved their exceptional commitment in unprecedented circumstances. They more than met the challenge, and I want to take this opportunity to once again give them my heartfelt thanks. For those working at our production sites, in our vineyards or in our cellars, to our sales force on the ground, whether it was still possible as well as all our employees required to work from home, everyone reported for duty. Everyone embraced, with extraordinary agility, these new ways of working that we have to set up in record time. Whether this involves implementing health protocols across all our sites or on the ground to protect our salespeople or quite transforming our production lines to make hand sanitizer, all necessitated mitigating, all meeting onlines, all employees show themselves able to radically change their way of working from day 1. One could sense and can still sense an incredible resilience, a desire to do the job well wherever they are. This was why your group has been able to resist and surmount the first wave. Our fundamentals, performance of which as our employees never given. They are determined. Agility, resilience and determination, I said, this is the formula that has enabled us to meet the twofold challenge we are faced with today. Managing the short-term means responding to the urgency of the current situation while simultaneously preparing the long term. That is creating our future with determination without ever deviating from our past in order to come out of this crisis stronger than before and be the first to capitalize on the recovery. More than ever, we remain focused on our mission to create long-term value for all our stakeholders, shareholders, of course, but also employees, partners, consumers and citizens. One thing is certain, when we have beaten this pandemic, our products will be at the center of the celebrations that bring us together again. Your group will be there. Of that, I am sure. That is the crux of what I am about to share with you today. So without further ado, let's get to the heart of the matter. On the very first signs of the pandemic, we were able to demonstrate agility at every level of the business to immediately respond to the crisis, and responding to the crisis meant acting as quickly as possible to preserve and protect all the group's resources, human resources, first and foremost, but also our financial and industrial resources. Our top priority was and continues to be to protect our employees and our partners. The pandemic struck just as we were rolling out our new health and safety policy called taking care of each other. The goal of this policy is to foster up a corporate culture in which we look after one another, true to our spirit of conviviality in a healthy and safe workplace day-in, day-out. As the epidemic spread across the world, our teams reacted straightaway by accelerating this implementation and by integrating new health measures. The group systematically implemented the recommendations of national and international health authorities. Thus, providing easier access to employees and to testing and offering various psychological and medical support in various forms. Remote working, which has already been tested in newest affiliates, was implemented when our offices had to be shut. This was possible because we had previously installed a range of tools that enabled us to make the switch in record time. The jobs in which remote working is not possible, such as at our production sites or in our vineyards, are concerning our sales force. Very strict safety measures were put in place to ensure their safety: physical distancing, free distribution of face mask and hand sanitizer, increased the cleaning and so on. The second priority was to maintain our financial stability in the context of severe global economic crisis with no visibility and with turbulent financial markets. We further tightened our financial discipline with strict cost control and strict control of our resources. We immediately adjusted our advertising and promotional investments, focusing on the most promising opportunities in a context of lockdown, such as digital. I'll come back to this. We also applied strict disciplined structure costs, which have been significantly increased over the period, thanks to the efforts of all our affiliates. We also froze salary increases and hiring with very few exceptions. In addition, we have actively managed our liquidity with the new line of credits or bond issues at very favorable rates. We issued a first tranche in October 2019 for EUR 1.5 billion, and a second tranche in April 2020, at the height of the crisis, for a further EUR 2 billion. We continued in September of the current fiscal year with another bond issue totaling $2 billion this time. That was last September. These operations have reduced. The average cost of financing, while extending our debt maturity. The very high subscription rates clearly indicated the confidence that investors have in our group and its prospects for the future. Our third priority. Throughout the world, Pernod Ricard people have found solutions on a case-by-case basis to keep our distilleries and supply chains running. We have changes in schedules, rotation teams, management of shipments to guarantee steady levels of stock for our partners and so on. All of this has been done with one imperative in mind, to provide a safe and optimal working environment for our frontline employees. Lastly, is the support to our communities and to our sector. I won't revisit the many solidarity initiatives that we saw on the film. But I would like to highlight our endeavors in supporting our sectors, what we call on-trade bars and restaurants, which have been hit hard by the consequences of public health measures. I'd like to clearly reiterate our total support for everyone in this profession, certainly the most severely impacted today. It is truly heartbreaking, an economic social and cultural catastrophe. From the beginning of the crisis, the group has rallied to help the sector. I can't list all the initiatives we've spearheaded, but for example, we have set up a mechanism to alleviate cash flow issues for our partners. As in France, where we both shortened the period of payments of major suppliers and extended the time frame for payments owed by our customers. This is an issue that represented over EUR 30 million during the first lockdown. This agility I've been stressing has only been possible because we have been able to rely on our solid fundamentals. The crisis has shown the resilience of our group. And resilience has become a key factor in advancing with confidence in these troubled times. The first proof of this is our financial performance last year and indeed in the first quarter of our current financial year. Hélène will come at this in greater detail later on. But in short, bear in mind that we did better-than-anticipated in March when the crisis became a global crisis, with organic sales decline of 9.5% and an organic decline in profit in recurring operations of 13.7%. Another important figure, we generated EUR 830 million in free cash flow, and thus demonstrating our ability to tightly manage cash flow, balancing financial discipline and investments in the future. Furthermore, we have succeeded in gaining or maintaining market share in our 10 biggest markets, such as India, Japan, Germany or France. Our positions in the on-trade and off-trade channels and in mass retail as well as in resilient markets such as the U.S. and China, enable us to offset much more complicated context, such as travel and retail sales, which is virtually at a standstill. As a result, our group has more than simply withstood the shock. It's been strengthened by our robust fundamentals, I would briefly like to underline. The first of these I've already mentioned is the exceptional commitment of our employees, which was once again proven at the height of the crisis. Over the last 10 years, our team's level of commitment, pride and support of the group's strategy have never wavered. In the results of our last I Say survey that we do every 2 years with our staff, 88% of our employees described themselves as committed or very committed to the company. 94% said that they are proud to be associated with Pernod Ricard. Second major asset is our global footprint. This allows us to absorb risk by allocating resources where growth is most robust as we saw in the presentation of our first quarter sales with a good start in China and the U.S., driven by large shipments ahead of the holiday period, but also good resilience in Europe. Thanks to the on-trade and a rise in what we call staycations, that is vacations that are spent at home, in ones country or at home. Today, our global presence had allowed us to dynamically manage very different situations between Europe, which is dealing with the second lockdown and China, which seems, for the moment, have avoided the second wave. We've been able to demonstrate resilience beyond our balanced geographical presence. This is because our organization has always been based on an economic model called decentralization. This enables us to make decision-making closer to the consumer and to respond more rapidly to our customers' needs. In an uncertain environment, such as the one created by COVID-19, this model is a real competitive advantage. So far as it brings with its flexibility, agility and quick execution in the way we run the group. Last fundamental, last but not least, is our portfolio of premium brands that encompasses all major categories of wines and spirits. It extends from iconic international brands that you know, most of them over 100 years old, to niche brands, exclusive brands and segments with very high growth. Our portfolio is, in fact, considered to be one of the most comprehensive in the industry. This is why this is yet another real competitive advantage, both in responding to the COVID-19 crisis, but also in that it covers a maximum of consumption occasions. So it is this agility that we have relied on to respond to the crisis and the resilience made possible by our fundamentals that have given us the determination needed to accelerate our long-term transformation plan. In a sense, the crisis has confirmed the relevance of the strategic choices we made over 3 years ago. What is at stake? That's quite simple. I am convinced that once this health crisis is over, our products will be at the center of celebrations. It's basically crucial to be ready to capitalize on this rebound and to transform this into a long-term win. With our Transform & Accelerate roadmap, we are creating, as of today, the conditions that will enable us to be the first to take advantage of tomorrow's sources of growth. You're already familiar with them. The emphasis on proximity, new modes of consumption, such as low alcohol, new consumer profiles with more women, the quest for personalized experiences and more importantly, digitalization with online purchasing, and indeed, online social interaction, which is on the rise. The success of the strategic plan is based on a consumer-centric model that makes digital solutions, innovation and premiumization the main growth drivers. How? You may ask. Well by leveraging our strengths, that is fundamentals I just commented, and by accelerating the development of new tools that will make us even faster and more impactful with the top priority, that is digital acceleration. For several years now, we've been engaged in a major digital transformation. Our vision -- well, our vision is to make Pernod Ricard a conviviality platform. This will involve the development of direct, transparent interaction that will bring together all those in our professional environment: consumers, customers, partners, brands, employees, all using the data generated by our activities to offer products and services that are more relevant than ever before. Our vision is clear. Every occasion, every market, we want to offer the right product, at the right price, at the right time and to the right customer using artificial intelligence to serve conviviality. That is the ambition of our transformation. This will allow us to activate more brands in any market and thus capitalize on more growth opportunities. Our digital transformation will, of course, also enable us to take into account the rise of e-commerce. Of all the changes taking place, this is certainly the most marked. In recent years, consumers have increasingly adopted online ordering because it's practical, with delivery to the home or drive and collect, click and collect. This trend has sharply accelerated with COVID-19 and our online sales figures have surged in certain countries: up 105% in the U.S., up 92% in the U.K., up 56% in France. We have already invested in online platforms such as Jumia in Africa, or more recently, with Glovo, which is an on-demand delivery startup. We have also purchased online marketplaces such as with Uvinum and Bodeboca in Spain. Boosted by these investments, today, we can accelerate the development of our own cloud commerce platform through Drinks&Co, a marketplace that saw an increase of over 50% of its revenue this year. Now alongside these digital initiatives, we are continuing to transform our portfolio, adding new brands to acquisitions, our partnerships in high and potential segments even at the height of the COVID-19 crisis. Let me mention a few highlights, such as the ultra-premium Japanese gin called KI NO BI, the Italian bergamot-infused aperitif called Italicus, or the ultra-premium mezcal called Ojo de Tigre. More recently, we added a new category with a vermu called Petroni in Spain. In the same spirit, we have continued our innovation strategy. For instance, we are seeking to expand our range of alcohol-free, our low alcohol and sugar-free or low-calorie choices. To mention a few recent examples, Absolut Vodka Soda and Malibu Splash in cans, Jacob's Creek Better by Half wines, Jameson [indiscernible] or the partnership signed with the alcohol-free gin called Ceder's. Finally, our transformation would not be complete without mentioning our social responsibility plan, called 2030 Sustainability & Responsibility that we launched 2 years ago. It's actually called Good Times from a Good Place. And not only is this strategy perfectly in line with the concerns of today's customers, concerns that have been exacerbated by the current crisis, but it is the most visible expression of our mission, that is to create long-term value for all our shareholders. It goes hand-in-hand with the culture of sharing that is part and parcel of conviviality. Our roadmap is today at the very heart of everything we do at every level of the company. As you probably know, the Board of Directors has always demonstrated a sincere commitment to social responsibility in the growth. Particularly through the work of the nominations, governance and CSR Committee. However, these issues have become so critical and the discussions within these committees so intense that the Board has decided to set up a committee dedicated solely to social responsibility. This Corporate Social Responsibility Committee, CSR Committee, will be chaired by Patricia Barbizet, who will tell you more about it in a few minutes. And will have as objective to review and assess the group CSR strategy as well as auditing its implementation. This roadmap has 4 key pillars, each of which we have launched a major initiative in recent months. The first pillar is called nurturing terroir. This embodies our goal of promoting sustainable and regenerative agriculture to rich soils, protect biodiversity and minimize the effects of climate change. This is an ambitious transformation. And I think we have every reason to be excited about Martell's initiative, which was consisted in having it joined by the majority of its 1,200 partner winegrowers to commit to environmental improvement and conservation of [indiscernible] without overlooking the total discontinuation of glyphosates on the states managed directly by Martell. Our second pillar is called valuing people. On this particular point, I'd like to highlight the launch of Bar World of Tomorrow. We have a free online training program created in partnership with the bartender-founded, TrashTiki, anti-waste cocktail [indiscernible] This provides our customers with best practices for the sustainable and responsible management of their establishments from the selection of ingredients to the responsible serving of alcohol right up to the recycling of their waste. Our group has also made excellent progress on our third pillar called circular making. In addition to the reductions we've achieved in water use, carbon emissions and waste, last May, 4 years ahead of plan, we eliminated all single-use plastic promotional items at our point of sale. That is the target or was a target for 2021. The final pillar is called responsible hosting. This pillar has taken on even more importance in the context in which the pandemic has heightened concerns about health, well-being and drinking habits. We have not only launched a number of initiatives to promote responsible drinking on social networks during lockdown but in April, we introduced a mandatory online training program for all our 19,000 employees in order to raise awareness about the effects of alcohol abuse and misuse. All of these achievements have allowed us for the third year running to be confirmed as the Global Compact LEAD by the United Nations. This makes us 1 of the 40 multinationals, and the only 1 in the wine and spirits sector, to have demonstrated commitment to continual progress towards the UN sustainable gold developments. To conclude, a few words on this on going transformation, what could be more apps than our new flagship, The Island, our new head office, from which we are hosting this AGM, is already been rewarded as the -- by the profession, as its best office building, ultra connected and ecologically advanced with the unique address of 5, Cours Paul Ricard, linking our routes to the future. The very future that we are creating day after day. I'm also proud to announce the forthcoming opening on this concourse, the Cours Paul Ricard, of our new corporate foundation, the Pernod Ricard Foundation, which will be launched on the 6th of February next. To conclude this management report, I would like to end with a message of optimism. I believe that one of the impacts of this crisis is that never before has the relevance of our processes [Foreign Language] This crisis has put the focus back on what is essential, showing the universal rightness of our vision. More than ever, the pandemic has proven our primal need to be together and to share convivial moments with loved ones. Today, no matter the challenges, we will continue our transformation in order to create new occasions for conviviality. And let's never forget that one day soon, we will be able to meet again in our favorite bars and restaurants to celebrate being together once again. That's our business. That's what we do. That's our very purpose. That's our very nature. Thank you. And before passing the floor to Hélène, I propose that we watch a video together. [Presentation]

[Interpreted] Hello, everyone. Thank you, Alexandre. Now I'm going to present the consolidated accounts for fiscal 2019/2020. Let me begin with some summary slides about our sales, reflecting the resilience and the agility in spite of COVID-19. The first half was solid with diversified growth. The second half was obviously affected by the management of the COVID-19 crisis while pursuing our long-term transformation plan regarding our distribution channels, off-trade proved resilient, but on-trade and Travel Retail, were significantly impacted. We continued the dynamic management of our brand portfolio. And finally, our liquidity position has been fortified. Let's now move on to our market share on our top 10 markets. In spite of the difficulties related to the health crisis, we'd either gained market share. This is the case in India and Japan and Germany, in France or in Travel Retail, either or maintained our market share. This was the case in the United States on our on-trade channel side and off-trade as well, in Canada and China and Spain, and in Russia. This performance reflects the exceptional engagement of our people all over the world. Both as far as our brands and markets are concerned. Now let me come back to the key figures. Our sales amounted to EUR 8.448 billion, with organic growth of minus 9.5% and reported growth of minus 8% with, of course, a significant decline in the second half. [indiscernible] operations amounted to EUR 2.260 billion, down 13.7% organically, above our expectations. Therefore, the net current result is EUR 1.439 billion, down 13%. Net profit is at minus 77% from last year, impacted by asset depreciation of EUR 1 billion triggered by COVID-19. We'll come back to that in a few moments. Finally, free cash flow amounts to EUR 830 million, down 39% from the previous fiscal year. Let's now move on to sales by region. Solid and diversified growth in the first half, but the second half was impacted by the health crisis. I meant the Americas, which account for 29% of our sales, were down 6% over the fiscal year with good resilience in the United States and Canada. Notably, sales growth from wholesalers in the U.S., up 2%, but double-digit decline in our Latin America and in Travel Retail. Asia, Rest of the World, which accounts for 41% of our sales, was down 14%, primarily due to China, India and Travel Retail. Europe, which accounts for 30% of our sales is down 6%, with good overall resilience, notably with growth in Germany, in the U.K. and in Eastern Europe. Travel Retail, Spain and France were down. Now regarding sales by category. Following a solid first half, our main categories dropped in the second half. But our Specialty Brands posted strong performance. Our Strategic International Brands, which account for 62% of our sales, dropped 10% over the fiscal year, following diversified growth in the first half, primarily due to Martell, Chivas, Absolut and Ballantine's. Our Strategic Local Brands, which account for 19% of our sales, were down 9%. There was a strong impact in the fourth quarter as far as our Indian whiskies were concerned. Strategic Local Brands were a modest -- increased modestly in the first 9 months of the year. Specialty Brands experienced buoyant growth, 7% despite the health crisis with strong vitality for Lillet [indiscernible] and Redbreast. They account for 4% of our sales. Our Strategic Wines, which account for 5% of our sales, were down 4%, primarily with Jacob's Creek, but our Spanish wine, Campo Viejo, continued to grow. Finally, innovation was flat despite of the COVID-19 crisis. And the price factor was resilient, plus 1%. Now let's take a look at our profit and loss account. Sales, EUR 8.448 billion was down 9.5% organically and reported growth was minus 8%. Gross margin dropped 12% from the previous fiscal year, with gross margin over sales, down 140 basis points. A&P expenses, advertising and promotion expenses, were down 14% accounting -- well, giving a ratio of 15.7% of sales structure. Costs were down 5%. With strict management of our resources, the drop in profit from recurring operations was 13.7%, i.e., a PRO over sales ratio of 26.8%, down 131 basis points from fiscal '18/'19. The let me briefly come back to the various items in the profit and loss account. Price -- the price factor was resilient, plus 1%. A&P over sales was down 88 basis points, owing to the quick implementation of a far-reaching plan to cut our costs in the second half. The same strict discipline was applied to the management of our structure costs. All these items led to a drop in the recurring operational margin rate of 131 basis points. We restricted it to that from the previous year. Now let's take a look at the net attributable profit. Operating profit after income and nonrecurring items was down 59%, and net attributable profit was down 77%, primarily due to asset depreciation of EUR 1 billion due to Absolut. There was an impairment of EUR 912 million gross and EUR 702 million net of taxes. Let's move on to the evolution of our net debt. EUR 8.424 billion as of the 30th of June 2020, i.e. an increase of EUR 1.804 billion with free cash flow at EUR 830 million. This was offset by the share buyback program. And the acquisitions transactions, which amounted altogether to EUR 1.130 billion, notably for the acquisitions of TX, Castle Brands and Rabbit Hole in the first half; and KI NO BI, Italicus and Monkey 47 in the second half. Dividend payout, EUR 849 million. There were also more technical items, notably with the rollout of IFRS 16, which impacted the rental debt, EUR 603 million, and some ForEx and other items, which amounted to EUR 69 million altogether. Now let me speak about net debt. Our management of debt was very dynamic throughout the year. Our liquidity position was fortified EUR 5.3 billion as at the 30th of June with the EUR 1.5 billion of bond issued in October 2019 and another EUR 2 billion in April at very attractive -- under very attractive circumstances, very good conditions. There was also an increase in cash out for acquisitions, and our share buyback, which amounted to EUR 523 million. And this share buyback program was suspended last April. Now let's take a look at the parent company accounts of Pernod Ricard. Net -- the net profit of Pernod Ricard SA was EUR 1 billion plus, EUR 1.178 billion, up EUR 852 million from the previous fiscal year. This is primarily ascribed to an increase in interest -- due to an increase of dividend received. So now we suggest that we are submitting to your approval, the distribution of a dividend of EUR 2.66 per share for fiscal '19/'20, in line with the payout policy of 50%. This is down 15% from the previous fiscal year, which reflects the decline in profit due to COVID-19. Regarding the share buyback program, EUR 523 million have been bought back in the year. The balance, EUR 500 million, was suspended. Now I suggest we come back to the profit of the first quarter of 2020/2021, which we released a few weeks ago. In the first quarter, our sales amounted to EUR 2.236 billion, down 6% organically and 10% as far as reported growth is concerned. We consider that this performance is encouraging because the quarter is definitely up from Q4 -- the previous Q4. Notably with a partial reopening of on-trade and the sustained resilience of our brands and the off-trade channels, the quarter features the following items: first of all, the confirmation of the strong resilience of off-trade operations in the U.S. and in Europe; the partial reopening of on-trade channels, although these channels are still quite disturbed indeed; good start-up in the U.S. and in China with strong shipments ahead of the holiday season; India with a double digit decline, has nevertheless improved from the previous period; there has been stronger resiliency in Europe, thanks to the off-trade channels and to staycation, the summer people stayed at home for vacation; and there was strong vitality in the U.K. and in Germany. France is almost stable over the period, but Spain and Russia were down. Finally, Travel Retail is still significantly down despite of the resumption of certain national trips. Thank you for your attention. I'll hand it back over to Alexandre, who's going to speak about the outlook for the fiscal year in progress.

[Interpreted] Thank you, Hélène. Let's now move on to the outlook for this fiscal year. We are anticipating the following: uncertainty and volatility should stay with us, especially as far as health conditions and impact of the health conditions are concerned, it will get an impact on our moments of conviviality and travel; the economic environment will remain challenging; the resilience of off-trade in the U.S. and Europe should continue; Travel Retail should remain slow for quite some time; and this headwind on the on-trade channels should continue throughout the fiscal year; China should grow again; and performance in China should gradually improve. The second quarter will still be significantly impacted by COVID-19, but sales should once again grow in the second half as we see it. We are staying the course, the strategic course, and we are accelerating our digital transformation. Finally, we are sticking to strict discipline in managing our resources while remaining agile in order to reinvest and be able to seize new opportunities as they arise. [Presentation]

[Interpreted] Here are the 14 Directors who sit on our Board. We have 2 employee directors. And we have 2 who works council representatives. Today, one of our Board members is stepping down, Mr. Gilles Samyn. On behalf of the group and the Board, I wish to pay him a attribute, and commend him for his contributions over the past 6 years. I would like to thank him for his engagement. His constant involvement and his painstaking care, all that has been very valuable, notably on the Ethics Committee -- on the Audit committee, excuse me, we wish him all the best. And now I'm going to give the floor to Patricia Barbizet, who is our Lead Director; she is going to tell us all about governance.

[Interpreted] Thank you, Alexandre. Dear shareholders, I am speaking to you in my capacity as Lead Director and Chairwoman of the Nominations and Governance Committee. I'd like to remind you that the roles and missions of the Lead Director are set out in the bylaws of the Board, and that is accessible on the pernod-ricard.com website. This year, as a Lead Director, I performed the following tasks. I took part in several roadshows with the investors and shareholders, and we exchange about the governance of the company. I met part of the staff of Pernod Ricard and some of the people in the subsidiaries. I Chaired the executive session, which took place after the Board meeting on September 1. And finally, I conducted the annual evaluation of the dynamics of the Board as I had interviews with each and every director, and I delivered a comprehensive report to the Board meeting that was held last July. As you know, CSR is an integral part of our group's development strategy. This can be seen in the CSR road map that was presented to you last year, and that revolves around 4 pillars, preserving our [indiscernible] of human value, act in a secular way and be responsible with clear and measurable objectives by 2030. This road map is a continuation of the environmental progress that has already been achieved by the group between 2010 and 2020: minus 23%, water consumption; minus 3% CO2 emissions; minus 95% landfilled waste. The objectives set for 2030, in keeping with our good times from a good place road map, are evidence of a deeper and deeper ambition of the group as when it comes to environmental and social matters, the idea is to preserve in order to better share and also to create a more convivial world without any excesses. Since 2015, CSR issues have been tracked by the nominations governance and CSR Committee. As Alexandre suggested, given the growing importance of our CSR strategy and the involvement of the Board as far as those issues are concerned, well, the directors decided to set up a specific committee for these issues. It will be an honor for me to Chair this committee, and the main missions of the committee will be the following: examination, review and evaluation of the group strategy when it comes to CSR and tracking of its implementation. The examination of risks and opportunities when it comes to social environmental performance and the tracking of the reporting system, the production of nonfinancial information and the review of the universal registration document. We are convinced that the creation of this company is part and parcel of the historical, deep and sincere effort that the group has been making over so many years. Okay. Now I suggest, I introduce you to the Board and its 4 committees. At the close of the fiscal year, on the Board, there were 2/3 of independent directors, that is to say, beyond the 50% recommended by the AFEP-MEDEF Code. Furthermore, the Board has 5 female directors, in addition to Maria Jesus Carrasco Lopez, who is an employee Director and is not included in the number in compliance with the AFEP-MEDEF Code once again. Moreover, 6 directors are not French. They are of foreign nationality. On average, the Board meets 8 times a year. This year, given the health crisis, it met 9 times. And attendance rate was 100%. Also, the Board met several times informally during the lockdown in order to help management in managing the crisis. The Board followed the impact of the COVID-19 crisis on the group's operations. It closed the half year and annual accounts and examined the budget. It prepared this AGM and it approved the draft resolutions. It also reviewed and approved the group's strategy. Furthermore, it examined and approved the refinancing projects regarding the group's bond debt. It evaluated the variable portion of the Chairman and CEO's variable compensation for fiscal '19-'20. And it approved its compensation policy for fiscal 2021, and this was done while Mr. Alexandre Ricard was not attending the discussions. The Board took part in an executive session without the Chairman and CEO or the top management directors in order to review the dynamics of the Board and its committees. The Board also examined governance issues and the makeup of the Board and the committees, and the Board carried out the annual evaluation of the dynamics. Today, the Board has 4 committees that are in charge of preparing specific topics that are submitted to the approval of the Board. I will give you a more detailed presentation of the makeup and the missions of each of the committees. And the independence is systematically equal or greater than the recommendations of the AFEP-MEDEF Cod. Upon the closing of the books, the Audit committee, consistent of 4 independent directors, whom you can see on the screen right now. The committee met 4 times, and not a single meeting was missed by any of the directors. Its main missions consisted in examining the half year and annual accounts, examining all the financial topics, notably the complex accounting procedures, significant risks in the judgment of how the risks were managed by the group and the evaluation of the internal control systems and the action plans developed by internal audit. The nominations, governance and CSR committee had 3 directors, whom you can see on the screen, 2 of them are independent. This committee met 5 times. And again, not a single meeting was missed by any of the directors, and it focused on continuous improvement of the group's governance. It reviewed the makeup of the Board and the independence of all the directors. It reviewed the self-assessment of the group's dynamics. It reviewed the group's performance in -- as far as CSR is concerned, it made suggestions for topics that needed to be looked at in greater detail to allow for further improvements of the Board's dynamics. The Compensation Committee is made up of 5 directors, whom you can see on the screen, and there's also a -- including, excuse me, an Employee Director. The directors who sit on the committee, excluding the Employee Director, are independent. During the year, that committee met 5 times. And again, not a single meeting was missed by any director, 100% seriousness. The main missions were the examination of the governance rules and the market practice regarding the compensation of the corporate officers or executive directors in connection with the new regulations and the analysis of the impact of COVID-19 pandemic on the compensation of the Executive Director and on Pernod Ricard's long-term incentive plans. Finally, the committee, the Strategy Committee, which was initiated by Alexandre Ricard, when he was nominated as Chairman and CEO in February 2015. It is made up of 5 directors, whom you can see on the screen of them are independent. The Strategy Committee getting met twice during fiscal '19-'20. And and as you will expect, every single meeting was attended by all the directors. The Strategy Committee reviewed the strategic implications of the group and examined the significant transactions having to do with partnership, mergers, acquisitions and disposals, and it reviewed the development of the group's financial policy. Now that I have presented all the committees, so I'd like to over to Mrs. Kory Sorenson, who Chairs the Compensation Committee, and she will tell you about the compensation policy governing the compensation of the Chairman and Chief Executive Officer.

[Interpreted] Good afternoon, everybody. My name is Kory Sorenson. And I'm a Non-Executive Director, member of the Audit Committee and Chair of the Compensation Committee. And it's in this last capacity, I'm now going to tell you about the compensation policy as regards our Executive Director. First of all, I'm going to tell you about the ex-post votes mentioned in the 18th resolution and followed up by the ex-ante vote as a say-on-pay in resolution 12. You find all this information in the universal registration document, on pages 56 through 71 of the French version. Alexandre Ricard compensation for 2019-2020, this is under resolution #10 include fixed compensation; fixed annual compensation of EUR 1.1 million, which is unchanged by comparison with the previous period; then a variable compensation of EUR 279,000, which is 27% of his fixed compensation; the target was 110% with a maximum of 180%. I'd also like to stress that the criteria for variable compensation was based on criteria defined at the start of the financial year. This is before the health crisis. It takes into account the excellent performance of Alexandre Ricard's excellent management of the crisis that the Board of Directors would like to contribute to. Furthermore, Alexandre Ricard's compensation for 2019-2020, also includes the attribution of 9,359 performance shares and 22,545 stock options. The total attribution, this entire attribution is subject to performance criteria and represents 4.3% in value of the total plan that includes 820 beneficiaries. As for his top hat pension, the allocation of 1,111 performance-based shares and the payment of EUR 142,291 in cash. I also point out that Alexandre Ricard does not receive any compensation as a Chairman of the Board of directors. For your complete information, the performance conditions governing performance-based shares and shares granted to Alexandre Ricard expired in August and November 2021. Given the pretty context of this financial year, all of these performance-based shares have been canceled. That's 10,600 shares, 34% of the stock options. It's over 8,000 shares, which is a total cancellation of 68% of the total allotment under the 2017 compensation plan. Let's move on to the second resolution. The Board of Directors at the recommendation of the Compensation Committee, decided given the exceptional context to report the review of Alexandre Ricard's compensation until next year, independently of the renewal or otherwise of his -- of the office. This is based on pages 56 and thereafter, of the universal registration document. And breaks down as follows: fixed annual component; a variable annual component with the target of 110% of fixed compensation, capped at 180% of this fixed component; the attribution of performance-based shares and stock options, all subject to performance criteria, and not exceeding 150% of his annual fixed compensation. Furthermore, in terms of deferred commitments, the Board of Directors recommends the following arrangements. First of all, a noncompete clause, a forced departure clause with performance criteria. And the combination of the 2 clauses, not exceeding 24 months of compensation, that's a combination of fixed and variable. Finally, the Executive Director will receive a top hat pension which will be funded up to 10% of the combination of fixed and variable compensation. Half of this will be based on performance-based shares. The other half will be paid in cash to be invested in investments dedicated to his pension. This compensation structure is similar to previous years. Given these aforesaid items and information, we propose that you approve the 10th and 12th resolutions. [Presentation]

[Interpreted] Good afternoon, ladies and gentlemen, the shareholders, on behalf of the college of statutory auditors, Deloitte and KPMG, which we report on the period ended June 30, I propose, as is customary in AGMs to sum up the terms of assignment and our reports will be found in the universal registration document. Beginning with our report on the consolidated accounts and on the annual accounts, which are at your disposal -- have been at your disposal for this AGM and can be found respectively on pages 218 to 222 and 246 to 248 of the URD or universal reference document. I'd like to remind you that the purpose of our work was to arrive at a reasonable assurance as regarding the sincerity, regularity and true image of the accounts that they do not represent any problem. The organization of our work and our conclusions has been -- have been presented to the financial department and General Management, the Audit Committee and to the Board of Directors of your company. Our reports on the social accounts and on the consolidated accounts mentioned in the -- our statutory accounts and consolidated accounts mentioned the main items of our audit. These accounts have been approved by the Board of Directors on the September 1, based on the information available at that date in context relating to COVID-19 and difficulties in grasping the actual impact and prospects for the future. Concerning the consolidated accounts, the key points of our audit are first of all the evaluation of the brand's, fiscal risk, the ability to recover deferred tax credits and the commitments as regards to future advantages. The report will be found in detail in our reporting consolidated accounts present all the significant aspect and in reference to IFRS as adopted throughout the European Union, the situation assets -- the financial situation of the company, they represent a true or a fair account of all of these for the period ended. We have issued an opinion for the group's consolidated accounts without reserve and concerning the application of the first application of IFRS 16 on lease contracts and the interpretation of IFRIC 23 concerning uncertainties regarding tax treatment. As for the annual statutory accounts, the key point of the audit was the assessment of [indiscernible]. Detail of our works will be found in the annual accounts of the Pernod Ricard SA. At the end of our work, we certified unreservedly on any reserves, the annual accounts of your company. I also checked the sincereness and the concordance with the financial statements provided in the management report of the Board of Directors as of September 1, 2020, and in other documents concerning the financial situation and annual statutory accounts sent out to the shareholders. We can certify the exactness and sincerity of the information provided as regards compensation and benefits paid or attributed to executive directors and benefits granted to them, but also the true and fair concordance of these accounts at the time of payment. Our special report on related party agreements is found on Page 249 of the universal registration document, which does not mention any new related party agreement that has been put before the AGM. Furthermore, our report mentions the related party agreement concerning a loan agreement entitled EUR 2.5 billion multicurrency revolving facility agreement, which has already been approved by the AGM at the end of last year and this concerns previous periods. Our 2 special reports concerning the Extraordinary General Meeting can be found on pages 265 and 266 of the URD. The first of these concerns, a project presented in the resolution #17 to delegate authority to the Board of Directors for a period of 26 months from this AGM to decide to issue ordinary shares or securities getting access to the company's share capital reserved for employees who are members of a corporate savings scheme up to an upper limit of 2% of the share capital. The second of these concerns the 18th resolution, presenting a project to grant authority to the Board of Directors for a period of 18 months from this AGM to decide to issue ordinary shares or securities granting access to the company's share capital. And issue results to all employees, our executive directors, our third parties, third-party intermediaries and as part of this employee share receipt scheme. None of these require any observation on our part. I'd like to point out that the transactions, the concern are in compliance with law and do not in any way detrimental to other shareholders. All the information required to be able to assess the proposition of withdrawing your preferential subscription right has been brought to your attention. And the final conditions of these issues have not yet been set, so we cannot express an opinion on these final conditions, result of which I cannot express an opinion on the proposal to suppress preferential subscription rights put before you. Finally, we will drop an additional report, if required, if your Board of Directors decides to use these delegations of the authority. Ladies and gentlemen, dear shareholders, thank you for your attention. [Presentation]