HERMÈS - 2019 Universal Registration Document

COMMENTS ON THE FINANCIAL YEAR AND OUTLOOK COMMENTS ON THE SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

COMMENTS ON THE SUMMARY CONSOLIDATED STATEMENT

4.2

OF CASH FLOWS

2019

2018 restated*

In millions of euros

Operating cash flows

2,063.3

1,863.4

Change in working capital requirements Cash flows related to operating activities Cash flows related to investing activities

23.9

76.7

2,087.3 (471.1) (478.0)

1,940.1 (239.3) (312.3)

of which operating investments of which financial investments

(12.8)

(8.4) 69.1

of which proceeds from sale of operating assets cash flows related to financing activities

0.3

(742.8) (486.6) (202.8)

1,200.4 (958.3) (180.7)

of which dividends paid

of which repayment of lease liabilities

of which treasury share buybacks net of disposals

(53.1)

(59.7)

Foreign currency translation adjustment and change in scope

33.1

52.8

CHANGE IN NET CASH POSITION Net cash at the end of the period

906.5

553.3

4,371.6 4,561.6

3,465.1

Restated net cash position 1 3,615.1 Including the impact of IFRS 16 on leases. In accordance with IAS 8, Hermès has applied the new standard on a full retrospective basis, and has restated the financial statements for the * period ended 31 December 2018. Restated net cash includes cash investments that do not meet IFRS cash equivalents criteria, in particular as a result of their original maturity of more than three months. (1)

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BALANCE SHEET 4.2.1 Adjusted free cash flow stands at €1,406 million compared with €1,447 million in 2018. It enabled the Group to finance all operating investments (€478 million), the distribution of an ordinary dividend (€474 million) and the buyback of shares (€53 million). Net cash amounted to €4,372 million at 31 December 2019 compared with €3,465 million at 31 December 2018.

After taking into account short term financial investments exceeding three months at the outset, adjusted net cash stood at €4,562 million versus €3,615 million as at 31 December 2018, up by €946 million. Strong earnings growth drove up shareholders’ equity attributable to owners of the parent to €6,568 million as at 31 December 2019 versus €5,470 million as at 31 December 2018.

The reconciliation of adjusted free cash flow with the Group’s statement of cash flows is as follows:

31/12/2019

31/12/2018 Restated

In millions of euros

Operating cash flows

2,063.3

1,863.4

+ Change in working capital requirements

23.9

76.7

- Operating investments

(478.0) (202.8) 1,406.4

(312.3) (180.7) 1,447.1

- Repayment of lease liabilities ADJUSTED FREE CASH FLOW

INVESTMENTS 4.2.2 In 2019, Hermès pursued the qualitative development of its distribution network and the strengthening of its production capacity, with €478 million in operating investments. This amount results, on the one hand, from the opening, renovation or expansion of some 20 branches, and the purchase of a store property in Sydney, Australia. On the other hand, the Leather Goods-Saddlery métier continued with its plans to set up new production units in Montereau (Seine-et-Marne department) and Guyenne (Gironde). Lastly, the Group is continuing to invest in its information systems as well as in its Hermès.com e-commerce platform in Japan, Singapore and Malaysia during the course of the year.

2019

2018

In millions of euros

Operating investments

478.0

312.3

Investments in financial assets

12.8

8.4

Sub-total − Investments (excluding financial investments)

490.8

320.7

Financial investments 1 TOTAL INVESTMENTS

76.6

80.0

567.4

400.7

Financial investments correspond to the investments for which the sensitivity and maturity requires that they be classified as financial assets in accordance with IFRS. (1)

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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