Hermès // 2021 Universal Registration Document

6

PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

CHANGE IN METHOD

NOTE 1

The Company also decided to change the method for recognising actuarial gains and losses relating to pension commitments, previously recognised under the corridor method, by opting for immediate recognition in the income statement. This voluntary change in method, processed in accordance with the provisions of the PCG, aims to provide more relevant information on Hermès International’s assets and financial position and makes it possible to present a commitment amount similar to that shown in the Group’s consolidated financial statements under IFRS. The impact, amounting to a total of €76 million, was also recognised as retained earnings as at 1 January 2021 as a decrease to equity and offset by the item “provisions for expenses”.

Hermès International has applied the option introduced by the amendment made to recommendation No. 2013-R02 on the rules for measuring and recognising post-employment obligations (published on 17 November 2021 by the French Accounting Standards Authority (ANC)), which results in entitlement to benefits being spread only over the period leading up to the ceiling and preceding the departure date for defined-benefit plans. The first application of this option was treated as a change in accounting policy linked to a change in regulations, in accordance with the provisions of the amendment. As a result, the impact was recognised as retained earnings at 1 January 2021 for a total amount of €7 million as an increase to equity and offset by the item “provisions for expenses”.

OPERATING ITEMS

NOTE 2 Operating income 2.1

Accounting principles Revenue consists of royalties from brands and the provision of services. Royalties are calculated based on the production subsidiaries’ revenue. Services are primarily amounts charged back to subsidiaries for advertising and public relations costs, rent, staff provided on secondment, insurance and professional fees.

Expense transfers correspond mainly to the costs of free share plans allocated and re-invoiced to employees of subsidiaries (see Note 3.4).

2021 396

2020 318

In millions of euros

Revenue

Other products

1 1

4

Reversals of provisions

13 70

Expense transfers

46

OPERATING INCOME

443

405

Operating expenses 2.2

2021

2020

Note

In millions of euros

Other purchases and external expenses

(158)

(142)

Tax and duties

(14)

(19)

Compensation and other personnel costs Depreciation, amortisation and provisions

3.2

(113)

(108)

6/10.1

(77)

(98)

Other expenses

(2)

(4)

OPERATING EXPENSES

(364)

(371)

416 2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL