2019 UNIVERSAL REGISTRATION DOCUMENT INCLUDING THE ANNUAL FINANCIAL REPORT CONTENTS MESSAGE FROM THE EXECUTIVE MANAGEMENT 5 HIGHLIGHTS 2019 6 4.3 Exceptional events 292 4.4 Information on the parent company financial statements, 1 OVERVIEW OF THE GROUP 9 on accounts payable due dates, subsidiaries 1.1 Stages of the Group’s history 11 and associates 292 1.2 Group Governance 15 4.5 Outlook 294 AFR 1.3 Key figures 16 1.4 Strategy 18 AFR AFR 1.5 Activity by métier 20 5 CONSOLIDATED FINANCIAL STATEMENTS 297 AFR 1.6 Activity by geographic area 28 5.1 Consolidated statement of income 298 1.7 Simplified Group organisational chart 35 5.2 Consolidated statement of comprehensive income 298 1.8 Construction 38 5.3 Consolidated balance sheet 299 1.9 Fondation d’Entreprise 38 5.4 Consolidated statement of changes in equity 300 AFR 1.10 Significant event since the last financial year 39 5.5 Consolidated statement of cash flows 301 AFR 1.11 Risk factors 40 5.6 Notes to the consolidated financial statements 302 AFR 1.12 Internal control and risk management procedures 5.7 Statutory Auditors’ report on the consolidated financial relating to the preparation and processing of accounting statements 344 and financial information 64 AFR 6 PARENT COMPANY FINANCIAL STATEMENTS NFPS 2 CORPORATE SOCIAL RESPONSIBILITY 67 351 2.1 Business model 71 6.1 Statement of profit or loss for 2019 352 2.2 People: teams 81 6.2 Balance sheet as at 31 December 2019 353 2.3 People: savoir-faire 100 6.3 Changes in equity in 2019 354 2.4 Planet: raw materials 112 6.4 Statement of cash flows for 2019 354 2.5 planet: environment 122 6.5 Notes to the financial statements 355 2.6 Communities: suppliers & partners 149 6.6 Table of subsidiaries and associates 366 2.7 Communities: stakeholders and local integration 162 6.7 Table of results over the last five financial years 367 2.8 Ethics - Compliance 174 6.8 Information on due dates 368 2.9 Report by one of the Statutory Auditors, appointed as an 6.9 Statutory Auditors’ report on the annual financial independent third party, on the consolidated statements 369 non-financial information statement included in the management report 186 7 INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL 375 7.1 Presentation of Hermès International and Émile 3 CORPORATE GOVERNANCE 191 Hermès SARL 377 SUPERVISORY BOARD'S REPORT ON CORPORATE AFR 7.2 Information on share capital and shareholders 388 GOVERNANCE 194 7.3 Dividend policy 399 3.1 The Company’s Corporate Governance Code 194 7.4 Stock market information 400 3.2 Organisational structure of Hermès International 7.5 Shareholders’ information 404 as of 31 December 2019 196 3.3 Administrative and management bodies 197 3.4 Supervisory Board: composition and conditions 8 COMBINED GENERAL MEETING governing the preparation and organisation of work 209 OF 24 APRIL 2020 407 3.5 Compensation and benefits paid to Corporate Officers 254 8.1 Agenda 408 3.6 Other information 276 8.2 Purpose and draft resolutions 410 3.7 Annexes 279 8.3 Supervisory Board report to the Combined General Other information from the Executive Management’s report 286 Meeting of 24 April 2020 437 8.4 Statutory Auditors’ reports 439 AFR 4 COMMENTS ON THE FINANCIAL YEAR AND OUTLOOK 289 9 ADDITIONAL INFORMATION 447 4.1 Comments on the consolidated statement of profit or AFR 9.1 Persons responsible for the Registration Document 448 loss 290 AFR 9.2 Statutory Auditors 449 4.2 Comments on the summary consolidated statement 9.3 Regulatory information consultation 449 of cash flows 291 9.4 Information incorporated by reference 449 9.5 Cross-reference tables 450 9.6 Glossary 457 The sections of the Annual Financial Report are identified in the contents with the AFR pictogram. Elements constituting the statement of non-financial performance are clearly identified in the contents with the NFPS pictogram. The French language version of this Document d’Enregistrement Universel (Universal Registration Document) was filed on March 25, 2020 with the French Financial Markets Authority (Autorité des Marchés Financiers), as the competent authority under Regulation (EU) 2017/1129, without prior approval in accordance with Article 9 of said Regulation. This Document d’Enregistrement Universel (Universal Registration Document) may be used for the purposes of a public offer of financial securities to trading on a regulated market only if supplemented by a transaction note and, if applicable, a summary and all amendments to the Document d’Enregistrement Universel (Universal Registration Document). The group of documents then formed is approved by the French Financial Markets Authority in accordance with Regulation (EU) 2017/1129 The digital version of this document complies with web content accessibility standards, WCAG 2.0 and is ISO 14289-1 certified. Its easy-to-useinterface enables those with physical disabilities to browse this PDF using keyboard commands. Accessible to the visually impaired, it has been taggedso that the entire document can be voice-transcribed by screen reading tools, on any digital platform. It also includes integrated speech technology,providing a smooth reading experience for all. Finally, it has been thoroughly tested and approved by a non-seeing expert. Please find this version on https://finance.hermes.com/en/Shareholder-s-Guide/General-Meetings This document is a free translation into English of the “Document d’Enregistrement Universel”, originally prepared in French, and has no other value than an informative one. Should there be any difference between the French and the English version, only the French language version shall be deemed authentic and considered as expressing the exact information published by Hermès”. 2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 1 2 2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 2019 UNIVERSAL REGISTRATION DOCUMENT Including the Annual Financial Report 2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 3 4 2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL MESSAGE FROM THE EXECUTIVE MANAGEMENT 2019 bears witness to the solidity of our artisanal model based on balanced development across our métiers and regions. Though the decade has come to an end amid intense uncertainties and a general awakening to environmental and public health concerns, it is clear that Hermès’ offering remains relevant and well-liked. This offering is based on the simple idea of creating objects designed to last. They are the fruit of mastering tried-and-tested know-how that is passed down and enriched through the generations, crafted from exceptional materials that embrace time and are nourished by it, objects whose aesthetics are born of function. This reality is one that we cherish and uphold. In the second half-year of 2019, we laid the foundation stone of our future Montereau manufacture, and we are preparing to open the Guyenne workshop later this year. Our collections have been a great success with our customers both long-standing and new, as confirmed by our results; our commitments have become more visible with the signature of the Fashion Pact; and we continue to extend and embellish our exclusive distribution network with confidence in our own future and that of our markets, which, with the recent addition of Poland, now total forty-five. So we are right to stay confident, while remaining firmly anchored in our reality. Without distracting us from our path, but adjusting to our environment, our dreams – since this was our theme for 2019 – drive us ever onwards and contribute to the desirability and performance of our business model. Axel Dumas Émile Hermès SARL EXECUTIVE CHAIRMAN EXECUTIVE CHAIRMAN REPRESENTED BY HENRI-LOUIS BAUER 2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 5 HIGHLIGHTS 2019 HIGHLIGHTS 2019 Exceptional sales and results growth in 2019 America (+12%) confirmed its momentum throughout the area. After the recent store openings in New York’s Meatpacking district and in Waikiki The Group’s consolidated revenue amounted to €6,883 million in 2019, in Honolulu, the San Francisco store was extended and reopened in up +15% at current exchange rates and +12% at constant exchange rates. November, confirming dynamic growth both in the United States and in The recurring operating income1 increased +13% to €2,339 million the other countries in the area. (34.0% of sales). Net profit reached €1,528 million (22.2% of sales). Europe excluding France (+8%) achieved a sound performance, driven in Axel Dumas, Executive Chairman of Hermès, said: “Hermès achieved particular by the United Kingdom and Italy. In November, Hermès opened outstanding performances this year, based on a balanced growth in its first store in Warsaw, Poland, a new country for the Group. France all the business lines and in all the geographical areas. This sound (+8%) posted growth, despite the negative impact of the events at the momentum is supported by our craftsmanship model, the integration of end of the year. the distribution network and ample creativity, thanks to the talent and incredible commitment displayed by all the women and men of Hermès.” Sales by métier at the end of December All the geographical areas posted strong growth in 2019 (at constant exchange rates unless otherwise indicated) (at constant exchange rates unless otherwise indicated) All the business lines recorded growth, with outstanding performance of the Ready-to-Wear & Accessories and Jewellery divisions. The revenue generated in 2019 in the group’s stores (+13%) was particularly sustained and was driven by growth in all the geographical Leather Goods and Saddlery (+11%) benefited from sustained demand, areas. Hermès continued to improve the quality of its distribution both for the re-invented classics and other models such as the Mosaïque, network, with both store openings, renovation and extension completed 24/24 or Twins bags.