Hermès - Registration Document 2016

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NET FINANCIAL INCOME

NOTE 7

2016

2015

In millions of euros

Income from cash and cash equivalents

5.6

7.3

Cost of gross financial debt

(1.5)

(0.7)

s of which: net income/(loss) on hedging instruments

0.6 4.2

0.4 6.6

Cost of net financial debt

Other financial income and expenses

(51.9) (52.7) (47.8)

(52.2) (49.2) (45.6)

s of which: ineffective portion of cash flow hedges

TOTAL

The ineffective portion of cash flow hedges includes -€1.1 million in over-hedging, compared with -€11.5 million in over-hedging in 2015. The impact of the effective portion of the hedges recorded in equity is shown in Note 20.3.

INCOME TAX

NOTE 8

8.1 Breakdown of income tax

2016

2015

In millions of euros

Current tax Deferred tax

(612.5)

(539.6)

57.0

3.9

5

TOTAL

(555.5)

(535.6)

8.2 Rationalisation of income tax expense The effective tax rate was 33.7% as at 31 December 2016, compared with 35.8% as at 31 December 2015. The difference between the theoretical tax expense and the actual tax expense is explained as follows:

2016

2015

In millions of euros

Net income attributable to owners of the parent

1,100.3

972.6

Net income from associates

10.9 (3.9)

17.7 (4.6)

Net income attributable to non-controlling interests

Tax expense

(555.5) 1,648.8 33.7% 34.4% (567.7)

(535.6) 1,495.1 35.8% 38.0% (568.1)

Net income before tax

Effective tax rate

Current tax rate in France 1 Theoretical tax expense

Reconciliation items:

s differences relating to foreign taxation (primarily the tax rate) s permanent differences and transactions taxed at a reduced rate 2

64.6

92.8

(52.4)

(60.2)

TOTAL

(555.5)

(535.6)

(1) As at 31 December 2016, the tax rate applicable in France is the basic rate of 33.33% plus the social contribution of 3.3%, i.e. 34.43%. The exceptional contribution of 10.7% on companies applicable in France from 2011 was removed in 2016. (2) Including the effect of the 3% tax on dividends paid (€10.5 million in 2016 vs €25 million in 2015).

2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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