HERMÈS - 2018 Registration document

Consolidated financial statements Notes to the consolidated financial statements

1.20 Earnings per share In accordancewith IAS33 Earnings pershare , basic earnings per share is calculated by dividing the net income attributable to owners of the parent by the average number of ordinary shares outstanding during the period. The net earnings per share are calculated on the basis of the weighted average number of shares outstanding during the financial year. The weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the begin- ning of the period, less the treasury shares, adjusted by the number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor. The weighted average number of shares outstanding during the financial year as well as those from previous financial years are adjusted in order to account, if relevant, for operations involving the free distribution of shares and the reduction of the share’s par value occurring during the financial year, as well as of treasury shares. Diluted earnings per share is adjusted for the effects of all potentially dilutive shares. The calculation is based on assumptions regarding the conversion of convertible instruments, exercise of options or equity war- rants and issues of new shares. The diluted earnings per share are restated for the shares that are to be created as part of the share subscription plans decided upon by the Executive Management. 1.21 Option plans and similar Stock subscription or purchase option plans or bonus share allocation plans are recognised as expenses at fair value in the “Other income and expenses” section, with a corresponding increase in equity. This fair value is spread over the vesting period. For the bonus share allocation plans, the estimate of the fair value is calculated on the basis of the share price on the date that the corres- ponding management decision is made and subject to the deduction of the amount of the advance dividends over the vesting period, as well as a non-assignability discount, where relevant.

1.22 Use of estimates The preparation of the consolidated financial statements under IFRS sometimes requires the Group to make estimates in valuing assets and liabilities and income and expenses recognised during the year. The Group bases these estimates on historical experience and on a variety of assumptions, which it deems to be the most reasonable and probable in the current economic environment. The main items that require the use of assessments and estimates are as follows: s s depreciation and amortisation periods for property, plant and equip- ment and intangible assets (see Notes 1.7, 12 and 13); s s impairment of inventories (see Notes 1.10 and 18); s s provisions (see Notes 1.17and 24); s s post-employment and other employee benefit obligations (see Notes 1.18 and 26); s s income taxes (see Notes 1.19 and 9); s s share-based payments (see Notes 1.21 and 31).

1.23 Subsequent events

No significant events have occurred since the closing date at 31 December 2018.

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ANALYSIS OF THE MAIN CHANGES IN THE SCOPE OF CONSOLIDATION

NOTE 2

No significant change in the scope of consolidation occurred during financial year 2018.

2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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