HERMÈS - 2019 Universal Registration Document

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CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.8.1 INTANGIBLE ASSETS Intangible assets, valued at amortised historical cost, consist primarily of: software, ERP and implementation and/or development costs; s patents, models and brands other than internally generated brands. s Other software and ERP, either acquired or developed internally, and the associated implementation costs, are amortised on a straight-line basis over periods ranging from three to eight years maximum and deemed to be fixed assets with a finite life. It is specified that internally generated brands and items that are similar in substance are not recognised under intangible assets, in accordance with IAS 38. All costs incurred in this respect are recognised as expenses. 1.8.2 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is recorded at historical acquisition cost, less accumulated depreciation and recognised impairment losses. They are depreciated, generally using the straight-line method, over the following average estimated useful lives: buildings: 20 to 50 years; s fixtures and furnishings: 10 to 20 years depending on the expected s useful life of the asset considered and the term of the lease (in particular in the case of store fixtures); industrial machinery, plant and equipment: 10 to 20 years; s other: 3 to 10 years maximum. s Total depreciation and amortisation of property, plant and equipment are presented in “Other income and expenses”, except for allocations relative to fixed assets used for production, that are included in “Cost of sales”. The different components of property, plant and equipment are recorded as separate items when their estimated lives differ significantly. Where property, plant and equipment is made up of components with different useful lives, these components are recorded as separate items under “Property, plant & equipment”. Gains or losses on disposals of property, plant and equipment represent the difference between the sale proceeds and the net carrying amount of the divested asset, and are included in “Other income and expenses”.

1.8.3 INVESTMENT PROPERTY Property held by the Group to earn rental income is recognised under “Investment property”. This revenue and the associated expenses are recognised in “Other income and expenses”. For property that is held for use both for the supply of goods and services and as investment property, the two components are identified separately and recognised in accordance with IAS 16 Property, Plant and Equipment, and IAS 40, respectively. As for property, plant and equipment, investment property is recognised at its historical acquisition cost less accumulated depreciation and impairment losses recorded. The depreciation and amortisation periods are identical to those of other property, plant and equipment. Impairment of fixed assets – Impairment 1.9 losses In accordance with IAS 36 Impairment of Assets, when events or changes in the market environment indicate that there is the risk of an impairment loss on: goodwill ; s These assets are required to undergo a detailed review in order to determine whether their net carrying amount is lower than their recoverable amount, which is defined as the higher of fair value (less disposal cost) or value in use. Value in use is the present value of the future cash flows expected to be derived from an asset and from its disposal. If the recoverable amount is lower than the net carrying amount, an impairment loss equal to the difference between these two amounts is recognised. Impairment losses on tangible and intangible assets with a finite life may subsequently be reversed if the recoverable amount rises above the net carrying amount (up to the amount of the impairment loss initially recognised). Impairment of the goodwill of subsidiaries is not reversible. Any impairment charge is included in “Other income and expenses” of operating income. The Group tests for impairment assets with an indefinite life every year during the budget preparation period in order to take the most recent data into account. If internal or external events or circumstances indicate impairment losses, the frequency of impairment testing is revised. intangible assets; s right-of-use assets; s property, plant and equipment; s investment property. s

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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