HERMÈS - 2020 Universal registration document

RISKS AND CONTROL INSURANCE POLICY AND RISK HEDGING

CHANGES IN, COMPLEXITY AND INTERPRETATION OF TAX REGULATIONS ●

4.1.5.4

DESCRIPTION OF THE RISK s

RISK MANAGEMENT s

The Group is exposed to financial risks related to changes in tax regulations or their interpretation in the countries where it operates. POTENTIAL IMPACTS ON THE GROUP s Any change in tax regulations involving and increasing taxes and duties, mainly income taxes, custom duties, withholding taxes, particularly concerning goods and financial flows (interests, dividends), could have a negative impact on the Group’s results.

The Group provides regulatory oversight and defines its tax policy by relying on a team of tax experts, assisted by external advisers if necessary. The Group is committed to respecting all applicable laws and regulations in each of the countries where it operates. It relies on transparent and simple organisation. The Group’s tax policy is not based on any tax optimisation or evasion scheme and complies with the principles laid down by the OECD. In the case of a dispute or differences in interpretation, the Group may have to challenge reassessments with the tax authorities and to seek redress using the means available to it for its defence.

INSURANCE POLICY AND RISK HEDGING

4.2

4

In January 2020, the prevention and insurance department joined the audit and risk management department, demonstrating the need to further strengthen synergies between risk and insurance. In line with the Group risk analysis, the Hermès Group’s policy regarding insurance is to transfer any exposure that is liable to produce a material impact on profits to the insurance market. The Group insurance programmes represent most of the insurance coverage for the subsidiaries. They are placed via the intermediary of brokers who are amongst the 10 largest French brokers and with first-rate insurance companies. The main international insurance programmes cover:

Type of insurance

Guarantees and limits of the main policies taken out

Property damage and business interruption

FM Global “All risks except” policy s Coverage of all Group sites: production, logistics, distribution, various premises and goods s in all locations Policy renewed for 2021 with the same coverage limit of €500m and the same insurer s Policies subscribed for a period of two years from 1 January 2019 with AIG and Zurich, s in the amount of €100m Coverage maintained at the same level of guarantee for two years from 1 January 2021 s Covers civil liability for damages to persons, property and intangibles caused to third parties s in the conduct of business operations or by products Policy taken out with Chubb and renewed for 2021 with coverage of €6m per event, s all cover combined This policy was renewed with AIG Europe on 1 January 2019 for a period of 36 months s Coverage limit of €15m per claim and €25m for the period s

General civil liability (operations and products)

Transportation

Liability for environmental damage

security incident, civil liability, and costs, including defence and notification costs. In 2020, we did not suffer any significant loss except for the cancellation of the Saut Hermès, which was fully compensated by a cancellation policy that had been taken out for the event. In addition, in the current context, the prevention visits of our property and casualty insurer, which could not be maintained physically, were carried out remotely for sites where this was possible, or postponed until 2021.

Other contracts have been subscribed to fulfil specific requirements, particularly in the context of building operations (new work or renovation) carried out as project managers. In addition, the Corporate Officer liability policies were taken out for a period of two years from 1 January 2019 with AIG and other well-known insurers. The programme was renewed for one year at 1 January 2021 with current coverage levels maintained. The Cyber Risks policies, placed with Zurich and other well-known insurers, were also renewed for one year at 1 January 2021 with current coverage levels maintained. These policies cover data recovery, business interruption related to a

2020 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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