HERMÈS - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NET FINANCIAL INCOME

NOTE 9

2019 19.0

2018 restated

In millions of euros

Income from cash and cash equivalents

13.6

Cost of gross financial debt

1.8 2.6

5.6 6.5

of which net income/(loss) on interest and exchange rate hedging instruments s

Net borrowing cost

20.8

19.1

Interest expense on lease liabilities Other financial income and expenses

(24.4) (65.1) (66.9) (68.6)

(25.8) (55.1) (55.6) (61.8)

of which ineffective portion of cash flow hedges s

TOTAL

The ineffective portion of cash flow hedges includes -€1.5 million in over-hedging in 2019, compared with +€0.7 million in over-hedging in 2018. The impact of the effective portion of the hedges recorded in equity is shown in Note 23.3.

INCOME TAX NOTE 10 Breakdown of income tax 10.1

2019

2018 restated

In millions of euros

Current tax

(798.7)

(729.5)

Deferred taxes

47.8

57.4

TOTAL

(751.0)

(672.2)

Rationalisation of income tax expense 10.2 The effective tax rate was 33.1% as at 31 December 2019, compared with 32.5% as at 31 December 2018. The difference between the theoretical income tax expense and the net actual tax expense is explained as follows:

5

2019

2018 restated

In millions of euros

Net income attributable to owners of the parent

1,528.2

1,405.5

Net income from associates

15.9 (7.0)

16.6 (5.1)

Net income attributable to non-controlling interests

Tax expense

(751.0) 2,270.3 33.1% 34.4% (781.7)

(672.2) 2,066.2 32.5% 34.4% (711.4)

Net income before tax

Effective tax rate

Current tax rate in France 1 Theoretical tax expense

Reconciliation items: differences relating to foreign taxation (primarily the tax rate) s

128.9 (98.2)

136.5 (97.3)

permanent differences and other 2 s

TOTAL

(751.0)

(672.2)

The tax rate applicable in France is the basic rate of 33.33% increased by the social contribution of 3.3%, i.e. a total of 34.43%. (1) This line includes permanent differences, the effect on the tax expense of income taxed at reduced and increased tax rates, tax loss carry forwards (2) used/non-activated, and prior year adjustments. Last year, the €52.7 million gain realised on the disposal of the Galleria premises (see Note 8) was not taxable, leading to a reduction of 0.8 pt on the 2018 tax rate.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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