HERMÈS - 2018 Registration document

Consolidated financial statements Notes to the consolidated financial statements

B. Financial assets recorded at amortised cost Financial assets representing interest or capital repayments at deter- mined dates, which are managed with the intention of collecting cash flows, are classified in this category. These are fixed-term financial assets that the Group acquired with the intention and the capacity to hold until their maturity (classified as held-to-maturity financial assets under IAS 39) as well as loans and financial receivables. These instruments are recognised at amortised cost less any impair- ment. Interest is calculated at the effective interest rate and recorded in the statement of profit or loss under “Other financial income and expenses”. C. Financial assets at fair value through equity Through recyclable equity Financial assets representing interest or capital repayments at deter- mined dates, which are managed with the intention of collecting cash flows and then reselling these assets before their maturity, are classified in this category. Financial assets at fair value through recyclable equity (classified as available-for-sale assets under IAS 39) include investment securities. A teach closing period, they are stated at fair value. Unrealised gains or losses on these financial assets are recorded in other comprehensive income in “Revaluation adjustments”. The profits and losses linked to the cumulative change in fair value in this item are reclassified in gains or losses on disposal. Only any value impairment losses linked to credit risk are recorded directly in profit or loss and may be reversed in the case of an improvement in this risk component. Interest is calculated at the effective interest rate and recorded in the statement of profit or loss under “Other financial income and expenses”. Through non-recyclable equity Financial assets at fair value through non-recyclable equity (classi- fied as available-for-sale assets under IAS 39) include investments in non-consolidated companies that are not held for trading. This classifi- cation is determined irreversibly at origin for each security in question. They are recognised at the date of closing at their fair value and unrea- lised gains or losses on these financial assets are recorded in other com- prehensive income in “Revaluation adjustments”. Only any dividends received are recognised in the statement of profit or loss. D. Financial debts Financial liabilities are initially accounted for at fair value (excluding any transaction cost), then according to the amortised cost method with separation of any embedded derivatives. Interest is calculated at the effective interest rate and recorded in the statement of profit or loss under “Gross cost of debt” over the duration of the financial debt.

The Hermès Group has defined the following CGUs or groups of CGUs: s s sales units (branches), distribution, which are treated independently from one another; s s separate production activities (Leather production, Silk production); s s activities focused on production/distribution of a single type of pro- duct (including: Perfume, Watches, Hermès Precious leathers, etc.); s s investment property; s s associates. 1.9 Financial assets and liabilities Financial assets include non-consolidated and other investment securi- ties, loans and financial receivables, and the positive fair value of finan- cial derivatives. Financial liabilities include borrowings and debt, bank lines of credit and the negative fair value of financial derivatives. Financial assets and liabilities are presented in the statement of finan- cial position under current or non-current assets or liabilities, depending on whether they come due within one year or more, with the exception of tradingderivatives, whichare recordedunder current assetsor liabilities. Operating payables and receivables and cash and cash equivalents fall within the scope of IFRS 9 Financial Instruments and are presented separately in the statement of financial position. In accordance with IFRS 9, financial assets and liabilities are classified and valued upon their recognition in the statement of financial position according to three categories determined on the basis of the manage- ment model and the characteristics of the contractual cash flows: s s financial assets at fair value through profit or loss; s s financial assets recorded at amortised cost; s s financial assets at fair value through other comprehensive income, among which: • • financial assets at fair value through recyclable equity, • • financial assets at fair value through non-recyclable equity. A. Financial assets and liabilities at fair value through profit or loss These assets are initially recognised at acquisition cost excluding inci- dental acquisition expenses. At each closing date, they are measured at fair value. Changes in fair value are recorded in the statement of profit or loss under “Other financial income and expenses”. Dividends and interest received on these assets are also recognised in the statement of profit or loss under “Other financial income and expenses”. 1.9.1 Classification of financial assets and liabilities and valuation methods

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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