Hermès // 2021 Universal Registration Document

RISK FACTORS AND MANAGEMENT RISK MANAGEMENT, INTERNAL CONTROL AND INTERNAL AUDIT

The Managing Director and Chief Financial Officer of each subsidiary jointly undertake to ensure the quality, reliability and comprehensiveness of the accounting and financial information that they have prepared and sent to the Group finance department, by means of a letter of confirmation they sign jointly at the closing of the half-yearly and annual financial statements. The accounts closing process is governed by precise instructions and is based on a detailed timetable, which is circulated to all subsidiaries in order to ensure respect of the deadlines and consistency in the preparation of financial statements. Throughout the year, the consolidation department validates the main accounting estimates used by the subsidiaries and central functions and, where applicable, simulates complex transactions in the consolidation software. The Group has implemented two closings in May and November to better anticipate half-yearly and annual closings and to have shorter closing deadlines. For the preparation of the consolidated financial statements, control procedures apply at each stage of the information reporting and processing process and are intended to ensure: checking of consolidation packages prior to integration (compliance s with Group accounting standards and practices and verification of consistency, etc.); analysis of the financial statements of consolidated subsidiaries; s the proper elimination of internal transactions; s the proper application of IFRS; s verification of consolidation transactions; s analysis and validation of all items in the consolidated financial s statements; the reliability of the financial information. s Lastly, in the context of these audits, the audit and risk management department coordinates its work on internal control with the Statutory Auditors. The role of the audit and risk management department is to provide the Hermès Group’s Management with reasonable assurance regarding the level of control over operations in the various entities. It fulfils this role in particular by carrying out audit missions, the purpose of which is to assess: the compliance of activities and operations with the Group’s internal s control rules and procedures, as well as the regulatory provisions in force; the relevance of the risk control processes implemented by s operational staff; the implementation of the Group’s strategic orientations through the s consistency of the operational actions of the entities and the use of resources in relation to the actions undertaken; more generally, the likelihood, severity and level of control of risks s that could have a significant impact on the Group’s strategy. AN AGILE INTERNAL AUDIT SYSTEM 4.3.5 Duties

the Executive Vice-President Finance, member of the Executive s Committee. He relies on dedicated teams of specialists in the consolidation, tax and management control department, the financial management department, the treasury department and the financial communication department to support the system: consolidation of financial information in accordance with IFRS • accounting standards, monitoring and coordination of activity during regular reviews • (year-end and half-year accounts closure, forecast updates and budgets), accounting and financial internal control within the operational • entities, strict compliance with tax regulations, • hedging foreign exchange risk, • external communication of financial information in accordance with • regulations; the Managing Directors and Chief Financial Officers of the s subsidiaries, who have primary responsibility for the quality of the financial information preparation processes and internal control applied by the entities they oversee. They are also responsible for circulating procedures drawn up and issued by Hermès International and for ensuring that these are properly applied. Group standards The Group has adopted a body of accounting rules and policies, in accordance with IFRS, the framework for consolidated financial statements. The application of these standards is mandatory for all consolidated subsidiaries in order to provide consistent and reliable financial information. The chart of accounts applies to all subsidiaries and the income statement is common to management and accounting. These rules and policies are presented in Group management manuals, which are regularly updated by the consolidation department to take into The management of the information flows of the financial functions is mainly carried out through the SAP integrated information system used in almost all the Group’s subsidiaries. The production of the annual and half-yearly consolidated financial statements, as well as the reporting of all the financial information used to manage and control the activity of the operational units, is carried out through a unified and centrally managed consolidation software package (SAP/Business Objects Financial Consolidation). These systems allow the accounting entries to be traced and a strict separation of duties. Procedures for preparing published accounting and financial information The Group’s organisation, which is based on reporting issued by each subsidiary and sent by the countries directly to the parent company, without any intermediate aggregates, ensures that Hermès International exercises strong control over the financial information produced by the subsidiaries. account changes in regulations and accounting standards. Financial and accounting information production systems

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2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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