Hermès // 2021 Universal Registration Document

PRESENTATION OF THE GROUP AND ITS RESULTS COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

hedges, represented a net expense of €96 million, compared with €86 million in 2020. The income tax rate was 29.5%, i.e. a decrease of 1.4 points compared to 2020, mainly due to the decrease in the tax rate in France. After taking into account the net income from associates (income of €34 million) and non-controlling interests, the consolidated net income attributable to owners of the parent amounted to €2,445 million compared with €1,385 million in 2020, i.e. an increase of 77%.

Thanks to remarkable collection flow rates and an exceptional leverage effect, annual recurring operating profitability reached an all-time high of 39%, up 8 points compared to 2020 and 5 points compared to 2019. After taking into account in 2020 a non-recurring profit of €91 million related to the deconsolidation of Shang Xia, the operating income for 2021 increased by 70%. Over two years, the increase was 51%. Net financial income, which includes interests on lease liabilities, financial income from cash investments and the cost of foreign exchange

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CASH FLOWS AND INVESTMENTS

1.8.2

2021

2020

2019

In millions of euros

Operating cash flows

3,060

1,993 (350) 1,642 (448) (199)

2,063

Change in working capital requirements

346

24

Change in net cash position related to operating activities

3,405 (532) (212) 2,661

2,087 (478) (203) 1,406

Operating investments

Repayment of lease liabilities Adjusted free cash flow 1 Investments in financial assets

995 (93)

(13)

(13)

Dividends paid

(490) (162)

(490) (122)

(487)

Treasury share buybacks net of disposals (excluding liquidity contract)

(53)

Other movements

170

51

93

CHANGE IN RESTATED NET CASH POSITION 1 Restated net cash position at the end of the period Restated net cash position at the beginning of the period

2,166 7,070 4,904

342

947

4,904 4,562

4,562 3,615

Alternative performance indicators defined and reconciled in Note 2 to the consolidated financial statements. (1)

After taking into account the above-mentioned operating investments and the repayments of fixed lease liabilities recognised in accordance with IFRS 16, which are considered by the Group as items affecting operating activities, adjusted free cash flow amounted to €2.7 billion, i.e. 2.7 times that of 2020 or 1.9 times that of 2019. After payment of an ordinary dividend of the same amount as in 2020 (€4.55 per share) and share buybacks for €162 million, the Group’s restated net cash position increased by €2.2 billion and crossed the threshold of €7 billion at the end of 2021. 1.8.3 The Hermès Group’s consolidated balance sheet at the end of 2021 totalled €13.8 billion compared with €11.1 billion at the end of 2020. Cash accounted for nearly 50% of assets and the increase in inventories was limited. On the liabilities side, current debts reflect the strong recovery in activity in 2021 and equity, which amounted to €9.4 billion at 31 December 2021, represented nearly 70% of the balance sheet total. The Group has strengthened a solid financial structure that allows it to approach the year 2022 with confidence. FINANCIAL POSITION

Cash flows related to operating activities amounted to €3.4 billion thanks to the strong increase in operating cash flows and a significant decrease in working capital requirements. The Group, which had maintained its strategic investments in 2020, accelerated its projects in 2021. Operating investments amounted to €532 million: €220 million was devoted to the renovation and expansion of its s exclusive distribution network. This amount includes the construction of the future Madison 706 flagship in New York, the expansion of the Milan store in Italy, the opening of the Omotesando store in Japan and the relocation of the Beijing China World store or the expansion of Plaza 66 in Shanghai, China; €169 million was dedicated to production and métiers , mainly in s Leather Goods but also in Tanneries, Textiles as well as Perfume and Beauty; €143 million was invested in information systems and digital but also s in real estate projects to support the Group’s growth.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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