Hermès // CSR Extract 2023

5

CONSOLIDATED FINANCIAL STATEMENTS AFR NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 ITEMS RELATING TO OPERATING ACTIVITIES

Accounting principles Revenue Revenue consists essentially of sales of goods and services produced by the Group’s main operating activities. Revenues mainly include retail sales in the Group’s stores, which are recognised at the time of purchase by customers; s Wholesale distribution to store concessionaires, distributors in the Perfume and Beauty activity and sales to producers (textile printing, tanning, metal parts, etc.) are recorded when control of the goods is transferred, which generally occurs at the time of shipping. Distributors and concessionaires therefore take control of products until sale to the final customer and thus act as the principal under the provisions of IFRS 15. s Any contractual or implicit inventory returns are recorded as a deduction from revenue. Cost of sales The cost of sales mainly comprises purchases of raw materials, the cost of production labour, indirect production costs, variable selling expenses, as well as impairment of inventories.

Other sales and administrative expenses Other sales and administrative expenses include costs usually borne by the Company in the course of its operations and which are not related to production. These mainly include expenses for sales staff and support functions, variable rent expenses and other administrative expenses (fees, insurance, travel, etc.).

Other income and expenses Other income and expenses mainly include:

depreciation and amortisation of fixed assets and right‑of‑use assets, with the exception of charges relating to items allocated to production, which are classified as “Cost of sales” (see note 7); s the cost of pension plans and other long‑term benefits (see note 5.3); s expenses related to free share allocation plans (see note 5.4); s

changes in provisions (see note 12); s impairment losses (see note 7.4); s donations and sponsorship expenses. s

Sales and administrative expenses Communication

Other non‑recurring income and expenses This item enables the separate presentation of major non‑recurring events that occurred during the financial year, whose financial impact was material and whose presentation under recurring operating income could affect the understanding of the Group’s economic performance.

Communication expenses include expenses designed to promote brands and products to customers. These expenses are recognised as expenses in the financial year in which they are incurred.

4.1 Revenue by métier

2023 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL EXTRACT FROM 2023 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

426