HERMÈS - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Impact on consolidated net income

Accounts as reported FY 2018

Financial statements restated FY 2018

IFRS 16 impacts

In millions of euros

Revenue

5,966.1 (1,791.0) 4,175.1 (1,771.2) (358.9) 2,045.0

-

5,966.1 (1,791.8) 4,174.3 (1,562.3) (536.7) 2,075.3

Cost of sales Gross margin

(0.8) (0.8)

Selling, marketing and administrative expenses

208.9

Other income and expenses Recurring operating income

(177.8)

30.3

Other non-recurring income and expenses

52.7

-

52.7

Operating income Net financial income Net income before tax

2,097.7

30.3

2,128.0

(34.6)

(27.1)

(61.8)

2,063.1 (670.0)

3.1

2,066.2 (672.2)

Income tax

(2.1)

Net income from associates CONSOLIDATED NET INCOME

16.6

-

16.6

1,409.6

1.0

1,410.6

Net income attributable to non-controlling interests

(5.0)

(0.1)

(5.1)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

1,404.6

0.9

1,405.5

Earnings per share in euros

13.48 13.39

0.01 0.01

13.48 13.40

Diluted earnings per share in euros

As part of the benchmark interest rate reform, in September 2019 the IASB published amendments to IFRS 9 and IFRS 7 relating to financial instruments. These amendments authorise temporary derogations during periods of uncertainty regarding changes to these rates, in particular for entities with hedging relationships affected by this reform, and are applicable early to the financial statements as of 31 December 2019. Interest rate risk is not subject to the implementation of hedging instruments by the Group as of 31 December 2019, and as such, the early application of these amendments has no impact on the Group’s financial statements. Scope and methods of consolidation 1.2 The consolidated financial statements include the financial statements of Hermès International and material subsidiaries and associates over which Hermès International directly or indirectly exerts control, joint control or significant influence. 1.2.1 CONTROL Control is presumed to exist when the Group holds more than 50% of the voting rights. Nevertheless, it can be considered that a company is under exclusive control when less than 50% is held, provided that the Group holds the power to govern a company’s financial and operational policies in order to derive benefits from its business activities. The financial statements of companies under control are fully consolidated. Under the full consolidation method, assets, liabilities, income and expenses are combined in full on a line by-line basis. Equity and net profit attributable to non-controlling interests are identified separately under “Non-controlling interests” in the consolidated statement of balance sheet and the consolidated statement of profit or loss.

In the income statement, the rents recognised previously in cost of sales or in selling, marketing and administrative expenses are replaced by the amortisation of the right-of-use asset in recurring operating income and the interest on the lease liability in net financial income. The impact of the application of IFRS 16 on operating income for financial year 2018 was +€30.3 million. The impact of the application of IFRS 16 on 2018 net income is negligible. Although IFRS 16 was applied retrospectively in full, and in order to facilitate the comprehension of financial information in respect of the year of first-time application, the Group estimated the impacts of the application of the standard on the consolidated financial statements for 2019 compared to the previous accounting standards: increase in total assets of €954 million (compared with €984 million s in 2018) corresponding mainly to right-of-use assets; in return, lease liabilities are entered as liabilities in respect of discounted future contractual payments; increase in operating cash flows (see Note 3) presented in the s statement of cash flows of +€203 million (compared with +€181 million in 2018), corresponding to the amortisation of right-of-use assets; effect on recurring operating profitability for the financial year of s +0.4 points (compared to +0.5 points in 2018); negligible impact on 2019 net income (as in 2018). s 1.1.2 OTHER STANDARDS APPLICABLE IN 2019 IFRIC 23 Uncertainty over Income Tax Treatments , applicable no later than 1 January 2019, was applied early as of 31 December 2018.

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2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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