HERMÈS - 2019 Universal Registration Document

5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Risks, and uncertain tax positions are subject to appropriate debts, for which the amounts are reviewed by Group management, together with its legal advisors, in accordance with the criteria of IAS 12 and IFRIC 23.

The Group’s companies are regularly audited by the tax authorities of the countries in which they operate. Litigation concerning two Group companies in France was the subject of a group settlement signed at the end of the year. This overall agreement, without any significant impact on the financial statements for the financial year, resolved a dispute relating to income tax for the years 2013 to 2018.

Deferred taxes 10.3 The net change in deferred tax assets and liabilities is broken down as follows:

2019

2018 restated

In millions of euros

Deferred tax assets at 1 January Deferred tax liabilities at 1 January Net deferred tax assets at 1 January Impact on statement of profit or loss Impact of exchange rate movements

462.4

363.5

37.3

45.1

425.1

318.4

47.8

57.4

5.5 7.8

5.6

43.6

Equity impact 1

Net deferred tax assets at the end of the period Balance of deferred tax assets at the end of the period Balance of deferred tax liabilities at the end of the period

486.2 510.8

425.1 462.4

24.6 37.3 The equity impact primarily involves the deferred tax change resulting from revaluations recorded in equity (investments and financial investments and hedging of (1) future cash flows) and from actuarial gains and losses on employee benefit obligations. These changes had no impact on net income for the financial year (see Note 23.4).

Deferred taxes mainly related to the following adjustments:

2019

2018 restated

In millions of euros

Internal margins on inventories and provisions for inventories

308.8

286.5

Employee benefits

74.7

57.8

Derivatives

(19.7)

(31.9)

Impairment losses Regulated provisions

29.5

24.1

(39.3) 132.2 486.2

(43.1) 131.7 425.1

Other TOTAL

Deferred tax assets linked to tax loss carry-forwards were not material as at 31 December 2018 and 2019. As at 31 December 2019, tax loss carry-forwards and other temporary differences that did not lead to the recognition of deferred tax assets represented potential tax savings of €55.1 million (compared with €57.1 million in 2018).

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

318