Hermès // 2021 Universal Registration Document

5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The main financial statement items that require assessments and estimates are as follows:

Notes

Depreciation period for property, plant and equipment and intangible assets

7.2 7.3 4.5

Leases

Impairment of inventories Financial instruments

10 12

Provisions

Post-employment and other employee benefit obligations

5.3 5.4

Share-based payments

Income tax

6

The financial statements of controlled companies are fully consolidated. This method is used, following elimination of internal transactions and results, in order to fully integrate assets, liabilities, income and expenses. Equity and net income attributable to minority shareholders are identified separately as non-controlling interests in the consolidated balance sheet and the consolidated income statement. The financial statements of other companies, known as associates, over which the Group exercises significant influence, are accounted for using the equity method (see Note 8). Financial statements expressed in foreign currencies are converted in accordance with the following principles: items in the balance sheet are converted at the year-end exchange s rate for each currency; items in the income statement are converted at the average annual s exchange rate for each currency. This results in a translation difference (attributable to owners of the parent), which is shown separately in consolidated equity. The principle is the same for non-controlling interests.

Given its activity and geographical location, the Hermès Group has not, at this stage, identified any major impact from climate change on the assumptions on which its financial statements are based. Hermès climate commitments in terms of reducing greenhouse gases are reflected in particular in the Group’s financial statements through its real estate investments and operating expenses. Scope and methods of consolidation 1.4 The consolidated financial statements include the financial statements of Hermès International and subsidiaries and associates over which the parent company directly or indirectly exerts control or significant influence. They are prepared on the basis of annual financial statements for the period ended 31 December, and are expressed in euros. The list of the main companies included in the scope of consolidation at 31 December 2021 is presented in Note 16.

366 2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL