Hermès International Société en commandite par actions (RMS) Earnings Call Transcript & Summary

[Interpreted] Good morning, ladies and gentlemen. We will be preferred to have the pleasure to meet with you in-person for Annual General Meeting at [ Licee de Playa ]. But in this highly unusual context of the COVID-19 epidemic and in compliance with governmental regulations, executive management decided to hold this AGM in a closed session. In compliance with the regulations, companies exceptionally are authorized to hold their general meetings without the physical presence of their shareholders. Therefore, the shareholders have been encouraged to vote remotely or give their proxy to the Chairman. An e-mail address and a special communication have been established so that shareholders can easily send in their written questions before this session. Lastly, and as recommended, the Annual General Meeting is being live webcast in totality and will also be available on replay on the website. I would very much like to thank all shareholders. Many of whom have voted by correspondence and many of whom are listening in this morning to the live webcast. I'd also like to specify the Supervisory Board members just as the representative of the Economic and Social Committee are also taking part in this AGM remotely. We will be now establishing the Bureau. I would appoint, as tellers, H51, represented by Ms. Julie Guerrand; and H2, represented by Mr. Renaud Momméja, the 2 shareholders representing the largest number of votes. Ms. Nathalie Besombes, Chief of Stock Market and Company Law and Secretary of the Board, will be acting as Secretary of this meeting. Lastly, the statutory auditors, represented by Mr. Olivier Auberty from PricewaterhouseCoopers; [ Ms. Stephanie Jean Paul ] Officer of the Court, will be here to duly note that the entire meeting transpires correctly. The folder in front of me contains all of the documents provided for under legislation. Documents and information covered by rules and regulations were sent out to shareholders and the statutory auditors and also made available to them in the conditions and during the timelines laid out by these provisions under the law. I'd remind you that the number of shareholders and the attendance sheet have been established by centralizing entity to which BNP Paribas Security Services. The final count of the attendance sheet was established on the eve of this meeting yesterday at 3 p.m. We see 2,853 shareholders have given proxy to the Chairman. 3,333 shareholders have voted by correspondence. Therefore, we note that the required quorums as per legislation for both ordinary and extraordinary general meeting sessions are established, which means the quorum of 87.04%, both for the ordinary combined meeting and the extraordinary session of the meeting. Therefore, the meeting, henceforth, has been properly constituted. Therefore, before hearing from Axel Dumas, who will be giving us the highlights of last year, I'd like to ask Mr. Henri-Louis Bauer, Chairman of the company's Management Counsel of Émile Hermès, to talk to us briefly.

[Interpreted] Good morning, everyone. Dear shareholders, welcome. We're very pleased to welcome you for this Hermès International AGM, in spite of the fact we're having to hold this remotely. Over a year now, we've been in the throes of a brutal, grueling health crisis, much has been an upheaval. Many people dear to us, have been lost to this disease. Many people today are still encountering many difficulties and are disquieted. During this lengthy crisis, however, the company has been supported by its courageous employees who show solidarity, who've been remarkably dynamic. Thanks to their efforts, Hermès has gone its unique path during this time of crisis, demonstrated by the truly impressive results of 2020. The quality of these results didn't happen all by accident. I see 3 factors that explain our resilience during these tough times: First of all, and this is essential, it's thanks to the people, the men and women, who in this company have unique expertise and have acted with talent and great determination. I'm thinking of artisans, our tanners, our leather workers, our saddle makers. I'm also thinking of our printers, our watchmakers, our master crystal workers, all of them have a perfect mastery of their sophisticated area of expertise. They pay exacting attention to every detail they're demanding at every moment of their work. Therefore, every one of our objects is unique and carries the identity of an artisan. It's an exceptional talent we're talking about and an incredible source of pride and motivation during these tough times. I'm also thinking of our creative teams, our designers, our color artists, our directors, our artistic directors, who cultivate the elegance of our customers. I'm also thinking of our faithful sales staff and all of our employees. Together and individual, they create the wealth of this group day after day, month after month, during normal times and during times of crisis, during this year, that's been so difficult. The employees' commitment has been decisive. That's the #1 factor of Hermès' success, and in front of all of you, I would like to thank all of them for their tremendous agility that they've demonstrated since the very beginning of this crisis. The second factor for Hermès' success is our company's vision. It's not some magic formula that we apply every year successfully. We're talking about expertise, know-how, creation, innovation. These are fundamental values, which go back to the very origins of Hermès that have been handed down decade after decade. Amongst these values, there is the demand of quality. It's a fundamental value, quality of our products, quality of the raw materials we use, quality of the expertise of our artisans, quality of the creations, quality of the service by our sales associates. Quality is very much one of Hermès' key values, explaining the appeal of our products, giving meaning to our employees and placing this in the long-term, and not just in some sort of fragile immediateness. This vision also helps us weather times of crisis, boosting Hermès and its sustainability, putting it in the long-term through the team's commitments. The third factor of our success has been continuity. Continuity in our strategy, continuity in our corporate vision throughout all of our periods. Throughout time, this continuity has been supported by the shareholder family. They establish the link from one generation to the next. They ensure the transmission of this vision to the next generation, and they commit to ensure strong and sustainable governance. It's our duty, our mission statement and our source of pride, we attach great importance to this. For many years, the family has been getting bigger, more and more generations, more and more numbers of family members. This is why this year, we decided to change the Émile Hermès SARL company into an SAS, a simplified joint stock company. The change in this company is only designed to welcome the young family members. They're in greater number now. Now there are over 100 family members goes from the next year. But the role in operating of Émile Hermès as general partnership of Hermès International, these remain unchanged. You can see the family is faithful in its spirit of commitment and continuity. This spirit is at the core of our discussions with the Management Board that I have been fortunate to Chair for the past 10 years over these years. Members of the Management Board have continued to reaffirm the importance of these values, our values, the strong values that are shared by us all. On that point, we can be proud of the decisions your group has made since the beginning of the first lockdown. I'm thinking, for instance, of maintaining compensation of all 16,600 employees worldwide. I'm thinking of substantial donations we gave to Paris hospitals that were extended as well as bonuses given to people who continued activities at our business sites and produce things such as hand sanitizers. It's in choices of solidarity, which are the result of values, which are very dear to us. On behalf of the family and family members, I would thank Axel Dumas and all of his teams for having supported so successfully, the values of this company during such a year of trial. After the trials of the crisis, I see we're looking toward a better world with greater solidarity, more attentive to environmental considerations, more just, and I hope, happier, this is what I'm seeing around us. And I suggest we look at this video now, which I think is a great illustration of the spirit of our communication. Thank you. [Presentation]

[Interpreted] Ladies and gentlemen, dear shareholders, although the circumstances remain exceptional, I'm delighted to be with you for the 2021 AGM that we wish to be similar to a classic AGM. Thank you for your loyalty to Hermès. Let us together look at 2020. Above all, I wish to thank all the employees of the group who have shown a lot of courage, solidarity, agility and creativity all along 2020. I'm thinking especially of all those who were and are still affected by the disease. Crisis of such a magnitude remind us of the necessity to remain focused and humble in the face of what we're able to master, in particular [ Hermès métier ]. It is the opportunity also to test the choices and the decisions of the past, and I can say that this world crisis reveals the relevance of our artisanal production model which puts the human first and then creation at the center. Indeed, the confidence and intelligence and sensitivity of each and everyone, but also the sense of commitment and the responsibility have counted a lot in the management of this crisis. In the face of this health crisis that we wished that Hermès act as a responsible actor with solidarity. Responsible, first of all, for its employees, protecting their health both by putting in place all the measures necessary, but also through a close local management. We have maintained the jobs and basic salaries everywhere in the world, and this without having recourse to government aid and subsidy. What is more exceptional, bonus was paid to all the employees of the group in 2021 to thank them for their commitment. Solidarity towards the community. Hermès made a donation of EUR 20 million to Paris Public Hospitals. Worldwide teams, I'd like to thank -- produced by 45,000 liters of sanitizing gel, and the house that gave 145,000 masks and personal and equipment to health care workers. I'd also like to welcome actions that were carried out locally with 80 actions of help. Committed close to with our partners and suppliers, namely the maintaining and adapting of orders, payment, lead times and sharing of good practices, Hermès has used the solidity and the agility of its artisanal model. This period has also shown the acceleration of some major general trends with the positive dynamic of the Asian market, digitalization of uses and challenges of social and environmental responsibility. Everywhere in the world, our local clientele, very loyal, has compensated in part of the reduction in the flows of tourism. Hermès was able to face up to these challenges, thanks to the demandingness of its quality, ambition in terms of creativity, spirit of innovation and permanent reinvention. The creation is the best response to the crisis. With its unique and durable objects. Integrated production, as I said, let me remind you, more than 60% integrated in the group anchored in France. 80% of the objects are manufactured in France and founded on the mastery and the excellence of know-how, the practice of métier rather than that of a task. A distribution network also, which is omnichannel and exclusive, which has shown its full efficiency in the course of this crisis. We were able to adapt our tools to the rapid evolution of the demand and thus, maintain a privilege link with our clients. Economic independence and a rigorous financial management have allowed us not only to maintain the salaries without state aid, but also to pursue operational investments that were planned. Despite the difficulties, we have affirmed the uniqueness of our style by proposing rich and innovative collections. I would like to thank all the teams of the artistic direction and that of the sectors, the [ métiers ]. I would like to mention the successful lot of makeup, enrichment of leather collection with models such as Chaîne d’ancre, Birkin Cargo, Sac à Malice Space and beautiful reception of the women's Ready-to-Wear and the men's Ready-to-Wear collections. Successful launch of the high jewelry collection as well as a new dinner set, Passifolia. And to -- and very recently, the launch of the Apple Watch Hermès Series 6. I'm also thinking of the success of the carré double face major technical innovation in this métier with the strong know-how content, allowing us to print the 2 sides of the carré. Let us look with pictures, the images, the launch of the 16th métier: Beauty. [Presentation]

[Interpreted] COVID-19 has strengthened the importance of e-commerce, which was already at the heart of our omnichannel strategy. Indeed, we have, for the last 5 years, made a strong strategic choice with the growth of our e-commerce platform everywhere in the world. In Asia, with the creation of the Hermès site in China in 2018, and the rollout of its new platform in Japan, Singapore and Malaysia as of 2019. And the first semester of 2020 in Korea and in Hong Kong. What is more? 2020 was also witnessed the opening of first e-commerce Hermès site in the Middle East. With the acceleration of traffic, conversion rate and 75% new customers, the success of our platforms is being confirmed. The group has thus been prepared for the evolutions in use an acceleration of online sales. Hermès has pursued the strengthening of its distribution network. Operational investments have been continued in stores, allowing for our collections to be shown at the heart of the cities closest to the local clientele. In 2020, the network of the stores grew and became more beautiful in Osaka, Moscow and Madrid. On the whole, the group has 306 stores at the end of 2020, of which over 2/3 are wholly owned. I propose that we look now at a in-store animation that took place last December at the Faubourg store and which testified to the renewed pleasure of getting together for the end of year celebrations. [Presentation]

[Interpreted] Let us now move over to the communication of Hermès. Here again, we needed to adapt and invent new formats in order to maintain our presence, to remain a safe investment and optimistic in a difficult context, while nourishing a link at a distance with our customers. Teams have shown agility, creativity, the development of the communication strategies in order to respond to an ever-changing environment. Let us together look at an excerpt of the film of the men's Ready-to-Wear show performance filmed by -- with the complicity of the directors Cyril Teste and broadcast live on digital platforms. This was last July. [Presentation]

[Interpreted] In the course of this very particular, peculiar year, we have reasserted the importance of our values and our commitments. First of all, by support of employment. Hermès is today 16,600 employees worldwide, amongst which 10,383 are in France. That is to say, a progression of 1,200 persons, of which half from our historical supplier J3L that was integrated. 2020 marks the pursual of a dynamic year for job creation, namely in link with the employment agency and a voluntary remuneration policy. We want to continue to play the role of a corporate citizen where we are set up by acting in the long term with economic actors, social, educational and cultural actors directly all through our Corporate Foundation. And as far as training is concerned, our in-house leather school has 80 trainers and collaborates with 12 leather-making schools all over France. We are particularly proud in the start of the project on Hermès Apprentice Training Center in partnership with the National Education who convey leather-making know-how, learning a profession, requiring expertise and count with a state diploma. In 2020, the number of partner schools, of the program Manufacto of our Corporate Foundation was extended with 1,400 students in 55 schools. This testifies to our commitment in the field of education. Maintaining diversity of the persons and talents is the cornerstone of the richness and the creativity of Hermès. We are striving to develop an inclusive culture. 2020 has seen the pursual of our efforts in terms of professional equality between men and women. Women representing 54% of the management and 50% of the Supervisory Board members. The gender quality index is 92 for 100. We have renewed, in 2020, our commitment and our efforts to continue to recruit people with disabilities, the employment rate of which has doubled in 4 years. Concerning our purchases namely, our objective is to increase by 20% per year, the recourse to the assisted and protected network in France. Hermès ranks 5th worldwide in Diversity Leaders -- amongst Diversity Leaders published by Financial Times, a first of its sector. Hermès at the head of the ranking amongst the 500 Best Employers in France. These positive results are very dear to us and testified to the experience of the employees and the perception of the group. In 5 years' time, we have created over 4,400 jobs with more than 2/3 in France. And this, for us, is a source of pride. It is a pleasure for us to present now the last -- latest film made by Frédéric Laffont on the training of artisans. [Presentation]

[Interpreted] The group has preserved the balance of its growth by maintaining a stable breakdown per sector balance between production and sale. Our artisans, or more widely the headcount of the production sector, represent nearly half of the headcount in 2020. The geographical distribution of the headcount reflects the setup of our production tool, which is highly -- very integrated with 63% of our headcount in France. The employees in the subsidiaries occupy commercial functions mainly. In 2020, the headcount has progressed in production sector, namely with the integration with J3L in France. With 51 production sites situated in 9 regions of France, Hermès is a committed local actor. 2020 has seen the pursual of investments in new leather workshops within the textile sector, but also in the du Puy tannery or the glove-making [ concern ] of Saint-Junien. We thus pursue securing suppliers with the aim of preserving unique know-how. With our suppliers and partners, we are committed in continuous progress approach over the long time in order to have our sectors progress around challenges of climate and biodiversity. In this approach, we collaborate with number of stakeholders, such as, for example, World Wildlife Fund or University of Cambridge. We have just mentioned, our 51 production sites in France are spread out over 9 regions. Each new leather workshop allows us to create 250 jobs in an environment which are harmonies at a human scale. 13 other production sites are also spread out in 6 countries: Switzerland for watchmaking; Italy, United Kingdom with the bootmaker John Lobb and Portugal, U.S.A. and Australia. The Hermès growth model is inspired by values of craftsmanship, naturally close to the challenge of preservations of natural ecosystems. For always, the house has offered repair service for all its objects. This year, over 220,000 operations of maintenance and repair were carried out by our crafts people, producing durable objects is producing objects that you do not throw. It is better produced by optimizing the raw material. Vertical integration of our model allows us to have a better control of the production process from design to the delivery of products. In this framework, within each of the métiers with Petit h in particular we are looking at how we can go further in the recycling of our materials. This concerns also our packaging. We are also pursuing our strategy of donation to associations. We produce our artisanally objects of high-quality, design to last, with transparent sectors respectable of biodiversity. And this goes to reasserting the requirements of responsible suppliers with our suppliers accompanying our partners as well as a strict audit policy. As far as our carbon emissions are concerned, 2020 was an important year. In a structural way, the group is a low emitter of CO2 and offset it -- and has offset the 2019, more than 100% of the emissions linked to its own activities. In -- Hermès has set as an objective, the reduction by 50% of these emissions in absolute values by 2030 and reduction by 50% of the intensity of other indirect emissions. In 2020, Hermès has committed itself once again alongside the carbon fund livelihood (sic) [ Livelihoods Carbon Funds ] with projects with the strong impact on the biodiversity such as the reforestation project. In 2020, we have strengthened our commitment in terms of diversity. Hermès accompanied by WWF and CDC Climat, and for example, doing a mapping of the impact with global biodiversity score. Our commitments are also materialized through participation in collective initiatives with enhanced transparency, such as with our commitment with TCFD. These efforts are reflected in the progression of several extra financial ratings by Sustainalytics and the CDP agency. We remind you that the variable compensation of Executive Chairman is based on attaining the CSR criteria. We are convinced of the importance of collective intelligence of sharing a good practice and common endeavor to face up to common challenges for us as a company, our societies and the planet. Let's have a look at the vision at fill the program -- science program that the Hermès Corporate Foundation accompanies. [Presentation]

Let's now come to the activity. Despite the health crisis, the activity of the group was resilient with a very strong dynamic of sales in the fourth quarter. The revenue at end of EUR 6.4 billion in 2020, that is to say, a drop limited to 6% at constant exchange rates. The store of the group have shown great resistance with sales down only by minus 2% over the year after our Q4 growth of 21%. For this, of course, we'd like to thank our clients all over the world who have shown their attachment to Hermès and the involvement of our teams in the stores. Let us now move over to activity by geographical areas. First of all, France, minus 29%, and Europe, excluding France, minus 20% will be realized through the closure of part of our stores. The reduction of tourism flows was in part offset by local customers. Japan then, minus 4%, has shown a particularly dynamic recovery since the month of June, thanks to the loyalty of its local customers and the progression of online sales. Asia, excluding Japan, plus 14%, has pursued its strong growth carried forward by an excellent Q4 at plus 47%, namely thanks of the beautiful dynamic of China and Korea. The new digital platform was rolled out in Hong Kong and Macau and in Korea in the first semester. Americas, finally, minus 21%, recovered progressively in the second half of the year to grow slightly in the fourth quarter. The store at Wynn in Las Vegas was enlarged and renovated in October and that of Short Hills in New Jersey in November. The geographical breakdown reflects strong growth of Asia and the greater impact of closure of stores in Europe and America. Let us now move on to the activity for métier. Leather, minus 5%, renewed with growth in the second half of the year with an acceleration in Q4 plus 18%, which reflects the sustained demand and progressive recovery of deliveries. The development projects are being pursued. We have seen Hermès thus reassert its strong territory anchoring in France. Total accessories métier minus 9% pursued its growth in the fourth quarter with plus 12%. The silk and textiles métier, minus 23% and perfumes, minus 19% were marked by the strong contraction of tourism flows. After the very successful launch of the first collection of lipsticks beginning February, Beauty métier pursued its good performance. Watches, plus 2%, confirmed this progression with an excellent performance in Q4, up by plus 28%. Finally, other métiers of Hermès, plus 24% over the year, grouping jewelry, art of living and tableware have strongly grown. The breakdown of the mid-year is relatively stable with regard to 2019. The slight drop in métier that are more exposed to travel, retail travelers, silk, textile and perfumes, leather goods, just like in 2019, represents half of the activity. Let us now have a look at Passifolia around the know-how of tableware before Eric du Halgouët, our CFO, presents the consolidated accounts for 2020. [Presentation]

Good morning, ladies and gentlemen. Hermès achieved strong results in 2020 at time of health and economic crisis. This strength is to be seen both in our results and in cash flow generation, in spite of substantial disturbances in some production facilities in France and in distribution subsidiaries worldwide. Gross margin which remains at a high level, 68.5%, losing 0.6 points. This slight decline is due to an underabsorption of production costs in the first half, in spite of the positive impact of currency hedges. I'd remind you, price increases in 2020 were very limited, 1% group-wide. Communication spending reached EUR 279 million. This represents 4.4% of sales versus 5.2% of sales in 2019. Yes, many events were canceled such as the Saut Hermès in Paris or postponed, such as the launch of a new men's fragrance. Overheads, excluding fixed lease payments and guaranteed minimums, remained almost stable 2019, 2020 at EUR 1.4 billion. The group maintained jobs and base wages for employees worldwide. Other income and expenses reaching EUR 696 million, EUR 470 million of which are amortizations, half of which have to do with tangible and intangible fixed assets. The other half is rights of use amortized over the duration of leases. The increase versus 2019 is the reflection of continued investment projects in the distribution networks in digital and information systems. Recurring operating income, almost EUR 2 billion, representing 31% of sales versus 34% of sales in 2019, after taking into account the nonrecurring profit of EUR 91 million relating to the deconsolidation of Shang Xia. Operating income reaches EUR 2.073 billion, which is 32.4% of sales. Net financial income is a loss of EUR 86 million, which mainly contains interest on lease liabilities and the expense pertaining to currency hedge transactions. Proceeds from investments down, in spite of increased cash on hand. This is due to reduction in interest rates. Profit tax rate is 30.9%, down 2.2 points compared to 2019, mainly due to the fact that there was no tax on proceeds from the deconsolidation of Shang Xia, which is 1.5 points, and the drop in tax rates in France. After taking into account income from associate companies and minority interest, net income is EUR 1.385 billion versus EUR 1.528 billion in 2019, which is a drop limited to 9%. Recurring operating profitability for the group over the 10-year period is above 31%. In 2020, recurring operating profitability, 21% in the first half, improved strongly in the second half of the year, thanks to recovery in sales reaching 31% for the full year period. The group continued its operating investments, reaching EUR 448 million in 2020 versus EUR 478 million in 2019. Investments are up, excluding the acquisition of the real estate premises for the Sydney store in 2019. [ EUR 195 million ] were spent on the distribution network, specifically renovation projects with enlargements of stores in Sèvres in Paris, Harbour City in Hong Kong, Beijing China World in China, Tokyo Marunouchi in Japan, Wynn Plaza in Las Vegas in the United States. EUR 124 million spent on production investments, mainly in leather production sites and also the Silicon textile sector. Lastly, EUR 129 million were invested in real estate and IT and digital projects, inter alia, a continuation of our rollout of the digital platform to Asia, Hong Kong, Macau and Korea. Operational investments should continue a pace in 2021. In spite of the health and economic crisis, operating cash flow reaching almost EUR 2 billion, which is very near the level reached in 2019, which was a record year. Changes in working capital requirements are a result mainly of the replenishment of inventory in the distribution network, which was especially low toward the end of 2019. After taking into account operational investments we mentioned previously, available cash on hand, cash flow reaching almost EUR 1 billion for the full year period. Financial investments were mainly designed to continue vertical integration projects, inter alia, the acquisition of our long-standing supplier J3L, which we were a minority stakeholder of already. After paying EUR 498 million in dividends, which is EUR 4.55 per share, the same amount is paid out in 2019. And taking into account EUR 122 million of share buybacks, 169,000 shares, restated cash position for the group up EUR 342 million, reaching almost EUR 4.9 billion. Changes in noncurrent assets. This is mainly the increase in use rights pertaining to rental leases. Yes, the group continued, in 2020, its projects to further develop its distribution network. Cash and cash equivalents just -- at December 31, 2019, represent just under half of the total of the balance sheet. Shareholders' equity boosted in 2020, going up EUR 800 million, reaching EUR 7.4 billion. Shareholders' equity represents 2/3 of the total of balance sheet. Increase in other liabilities, this is a result mainly of increased lease liabilities in line with rights of use, which are on the asset side of the balance sheet. The Hermès Group in 2020 consolidated a very strong financial structure with EUR 7.4 billion in shareholders' equity and net restated cash position, including financial investments of over 3 months, reaching EUR 4.9 billion. The high level of cash on hand and the economic financial strength of this group mean that we are confident moving toward 2021, proposing an ordinary dividend of EUR 4.55 per share, the same amount as paid out in 2020. All the while maintaining our strategic investments, protecting our employees and creating around 700 jobs, the group further strengthened its sound financial structure. Thank you for your attention. I would like to give the floor to Axel Dumas to talk to us about Q1 revenue as well as our outlook.

Thank you very much, Eric. The sales of first quarter are in strong progression with a revenue which reached to EUR 2.1 billion, growing by plus 44% at constant rates and plus 33% as compared to the first quarter 2019, thanks to the remarkable performance of Asia and Japan and the recovery of America and the good resistance of Europe. This growth is sustained by the strong activity in the stores of the group at plus 51%. The success of online sales was confirmed in all the regions with a very strong progression of traffic and conversion rate. And by the end of March 2021, all the métiers have renewed with growth, with a remarkable progression of the division clothes and accessories, watches and the other métiers of Hermès. I now come to the outlook of the group unchanged. For 2021, the impact of the COVID-19 epidemic remains difficult to assess as a result of the changes and evolutions occurring in the different geographical areas. In the medium term, despite economic geopolitical and monetary uncertainties in the world, the group confirms a objective of -- progression of revenue as ambitious one at constant rates. Thanks to its unique enterprise model, Hermès pursues a strategy, the development in the long-term of its artisanal model and sustainable growth responsibility founded on creativity, mastery and trends and transformational know-how and demandingness of quality. Each year, a theme defined by Pierre-Alexis Dumas, the Artisan Director of Hermès, is the guiding thread as it were for our creation and our communication actions. 2021 is based under the sign of the Odyssey. Therefore, we must continue our travel with confidence, confronting uncertainties of the world without losing identity. We remain confident in the solidarity of our model, agile and dynamic in the face of a changing reality. We are pursuing our strategic investments in new production capacity in France with the creation of new jobs and special emphasis on training and transmission. We continue to develop our omnichannel strategy in order to stay in sync with new users, which are ever-changing. This year, we are opening and enlargening several stores such as the Hermès store of the rue de Sèvres in Paris, that of Omotesando in Japan, but also a store in Beijing in China and Detroit in the U.S.A. And we're pursuing the deployment, the rollout of the e-commerce platform all over the world. Strategic investments are also planned in R&D for new exceptional materials in order to enrich our offering in a responsible approach. This year, faithful to our métiers' creator, we once again will have the pleasure of unveiling our collections. H08, a watch for men. It's ready for -- [ H24 ] a new men's fragrance signed by Christine Nagel were presented in the first quarter. Finally, we have the pleasure of receiving Steve Guerdat, #1 worldwide for showjumping as a horse rider, partner horse rider. Anticipating in-depth and lasting changes that we are experiencing allows us today in an uncertain future to remain confident. I would like to thank each of the employees of Hermès who endeavors, who strives every day for the growth of our house. After the film Hermès presenting a new Hermès event, we will see Éric de Seynes, who will present to you the main resolutions submitted to the Board of our assembly. I'd like to thank you for your attention. [Presentation]

Before are presented to you the main resolutions. Very sincerely, I would very much like to warmly thank Axel Dumas and Eric du Halgouët for the quality of their presentations this morning. And even more so, I would like to thank the employees, artisans, sales assistants, managers, who are all able to shoulder the responsibilities in this very unusual year of pandemic. Everyone has been able to support, contribute to the company, maintain the positive momentum and achieve these strong results, which yet again, it's been our privilege to share with you this morning. The resilience of our company is extremely substantial and is supported by values which are strengthening ever more and have shown even stronger when tough times happen, such as was the case in 2020. After this first quarter very strong and promising, I would like to convey a message of support and encouragement to all employees and managers of the company who are enabling Hermès International to stay its course, in spite of highly unusual circumstances and environments. Lastly, I'd like to thank our customers and you, our shareholders, for your strong, unwavering support. Regardless of the circumstances, your support and your nearness grows greater every year. We're aware of this, and we'd like to thank you, once again, from the bottom of our hearts. Now I would like to come to the presentation of the main resolutions, which are presented to you today. Resolution 4. We're submitting for your approval, allocation of profits, which as you saw, are [ 1,343,159,153.10 ]. The supervisory Board proposes setting at EUR 4.55, the amount of ordinary -- dividend per ordinary share. The dividend, therefore, would be identical to the previous year's dividend. An interim dividend of EUR 1.50 per share was already paid on March 4, and the remainder of the ordinary dividend, which is EUR 3.05 per share, will be detached from the share on May 6, 2021, paid in cash, 10 May 2021, based on positions closed May 7 in the evening. Resolutions 7 to 10. We're proposing for your approval, total compensation and benefits paid or awarded during the period closed December 31, 2020, to the corporate officers as outlined on Pages 46 and 67 of the invitation to the meeting. In the context of the COVID-19 epidemic, the Executive Chairman decided to forgo the increase that had been slated for their compensation -- fixed and variable compensation 2020. Therefore, in 2020, they received the total amount of compensation, which was identical to the amount they received in 2019. Resolution 11. We're proposing for your approval, compensation policy for the Executive Chairman as described on Page 35 of the invitation to this meeting. The policy contains the principles for determining compensation, which have been enforced for many years, and the compensation policy approved by the shareholders meeting of April 24, 2020. Therefore, each Executive Chairman is entitled to a fixed compensation indexed on increase in consolidated revenues achieved during the previous financial period, at constant scope and exchange rates. Variable compensation, set in strict compliance with changes in consolidated profits before taxes for the previous financial period. Since 2019, Executive Chairman variable compensation has also partially been subject to a CSR criterion, which shows the ongoing commitments the group has to sustainable development. The indexes for the CSR component, 10% of which are for variable compensation and pertaining to the following points: First of all, decoupling growth in business at constant exchange rate and scope and changes in industrial energy consumption; secondly, actions undertaken for territorial anchoring of the group in France and worldwide outside of major cities; lastly, group initiatives to foster a gender equality. Resolution 12. We're proposing for your approval compensation policy for Supervisory Board members as described on Page 35 of the invitation to this meeting. This policy contains the principles, which have been applied for many years, and the compensation policy approved by the shareholders' meeting April 24, 2020. The shareholders meeting of '16, 2017, set at EUR 600,000, the annual maximum amount of compensation allocated to Supervisory Board members. Principles for distribution decided by the Board of '16, 2017, described on Page 45 of the invitation to the meeting, take account of the functions of each of the Supervisory Board members, whether they're Chairman of the Supervisory Board, Chairman of the Committee or a simple committee member, and of course, Member of the Supervisory Board and also just takes account of meeting attendance. This is the major component. Now resolutions 13 to 16. We're proposing to reelect for the 3-year period of terms in office for Supervisory Boards, whose terms are expiring: Mr. Matthieu Dumas; Mr. Blaise Guerrand; Madam Olympia Guerrand; and Mr. Alexandre Viros. The 4 of them actively contribute, and thanks to their prospective experience and their attendance to the quality of debates at the Supervisor Board in all of its areas of action. These 4 terms of office will end at the end of the shareholders' meeting in 2024, which will vote on the financial statements for the fiscal period ending December 31, 2023. Resolutions 6 and 17. We ask you to renew authorizations given to executive management every year to trade in company shares capped at 10% of capital with the possibility of canceling these. Maximum amount -- of amounts that can be committed would be set at EUR 2.5 billion. The maximum purchase price, excluding fees, would be EUR 1,200 per share. Now we're going to move on to the resolutions under the extraordinary session (sic) [ business ]. Resolutions 18 to 23. We're asking for you to renew, as we do every 2 years, financial delegations of authority to give executive management requisite flexibility to act in the best interests of the company under the control of the Supervisory Board and the Management Board of the Émile Hermès SARL general partnership. Resolutions 24 and 25. We are asking for you to delegate new authorities to the executive management to decide on one or more mergers through absorptions, spin-offs or partial asset contributions, subject to the spin-off regime as well as the ability to decide on capital increase by issuing shares, if use were made of the delegation authority previously mentioned. Resolution 26 is proposed to you to amend the bylaws, to take into account, which has already been presented by Mr. Bauer. Taking into account the transformation of Émile Hermès SARL into a simplified joint stock company. You will find in universal registration document, which is also available on the Hermès [ vint ] Finance website, a report by the Supervisory Board on Corporate Governance. Here, I'm alluding to Page 219. In the invitation to this meeting, you will also find the report by the Supervisory Board to the AGM. It is on Page 57. Now we'd like to give the floor to our statutory auditors for them to report to you on their various findings.

Thank you, sir. Ladies and gentlemen, shareholders on behalf of the joint statutory auditors, Didier Kling & Partners (sic) [ Didier Kling & Associes ] and PricewaterhouseCoopers' audit, I would like to report to you on our assignment for the period ending December 31, 2020. I suggest, in compliance with the custom of this AGM, that we will summarize the points in our report, which are contained in the universal registration document. Our reports on the consolidated financial statements and the annual financial statements are to be found on Pages 398 to 402 and 424 to 427 in the universal registration document. The objective of our assignment is to ensure a reasonable assurance that the financial statements have no material misstatements. To this end, we organize our diligence as per organization of this group and locations, the various sectors, both in France and abroad. We intervene in 40 different subsidiaries located in 20-some countries. Just in spite of the health crisis, we were able to conduct all of our assignments satisfactorily in all these countries. Our audit approach and our conclusions were discussed with the group's financial management during regular meetings. We also reported on our work to senior management, also to the Audit and Risk Committee as well as to the Supervisory Board as a whole. The key audit points pertaining to risks of material misstatements which we identify, taking account of the relative weight in the financials, and the complexity of evaluation and importance of judgment to be conducted to evaluate these have to do with -- for consolidated financial statements. The valuation of inventory and work in progress and recognition of currency hedging transactions. For the annual financial statements having to do with evaluation of security equity investments, you'll find a description of these as well as the assignments we carried out in our reports. After our work, we expressed an opinion with no reservation and no observations on consolidated financial statements and the financial statements of your company. Now pertaining to our report on related-party agreements. This can be found on Pages 499 to 500 of the universal registration document. We communicate to you in this report the features, ways and means of the related party agreements, which we were apprised of, without taking any stance on their usefulness or appropriateness. With that in mind, we inform that we were told of no related-party agreements entered into during the period, which will be submitted for your approval. Our report also includes a description of all the related-party agreements approved during previous shareholders' meetings. Lastly, we issued 3 reports for the extraordinary session of your shareholders' meeting. These reports are on Pages 501 to 504 of the universal registration document, and they cover various authorizations having to deal with the capital of your company. We have no observation on the information given in Executive Management's report on authorizations and operations that are envisaged. Final conditions for the issuing of shares or financial securities haven't yet been set. Therefore, we give no view, no opinion on these, and therefore, we see nothing about the possibility of limiting preferential voting rights. We would establish an additional report, if need be, if these authorizations were used by your Executive Management. Ladies and gentlemen shareholders, Mr. Chairman, thank you for your attention.

Thank you very much. In the configuration of this closed session of the AGM, we have widely encouraged written questions. May I specify the response to written questions addressed to the company during the general assembly is of the competence of the Executive Management. These questions are on the actions of Hermès in favor of the environment, concerning our commitments on the reduction of greenhouse gas emissions, preservation of biodiversity and natural resources as well as the solidarity, vis-à-vis our suppliers and the social impact during the pandemic. Finally, other questions were also on themes of governance, equality ratio and gender equality. All these written questions were received as well as the answers brought to them are published on the Hermès Finance website, and you can, of course, consult them as of now. I would now like to inform you of the results of the vote of the resolutions, be it in the Ordinary General Meeting or Extraordinary General Meeting. First resolution on the approval of parent company financial statements has been adopted by a majority of 99.9% votes. Second resolution on the approval of consolidated financial statements is also adopted by a majority of 99.98% of the votes. Third resolution on the Executive Management discharge adopted by a majority of 99.5% of the votes. Fourth resolution on the allocation of the income distribution of an ordinary dividend adopted by a majority of 99.91% of the votes. Fifth resolution, approval of related-party agreements, adopted by a majority of 93.29% of the votes. Sixth resolution, authorization granted to the Executive Management to trade-in company's shares, adopted by majority of 94.5% of the vote. Seventh resolution, approval of the information with regard to compensation for the financial year ended 31st of December for all corporate officers adopted, 95.1% of the votes. Eighth resolution, approval of total compensation 2020 benefits of -- for Mr. Axel Dumas, Executive Chairman, this is an individual exposed vote adopted by a majority of 94.42% of the votes. Ninth resolution on approval of total compensation benefits of Émile Hermès SARL Company Executive Chairman, again individual exposed vote is adopted with a majority of 94.41% of the votes. Tenth Resolution on the approval of Compensation 2020 of Mr. Éric de Seynes, Chairman of the Supervisory Board. Here, again, an individual exposed vote adopted by a majority of 99.99% of the vote. 11th resolution, approval of the compensation policy of the -- for the Executive Chairman. It's an ex ante vote adopted with a majority of 94.12% of the vote. 12th resolution, approval of the compensation policy for the Supervisory Board members, ex-ante vote, adopted with a majority of 99.99% of the vote. 13th resolution, reelection of Mr. -- Supervisory Board members, Mr. Matthieu Dumas, adopted with a majority of 95.77% of the votes. 14th resolution, on the reelection of Mr. Blaise Guerrand, Supervisory Board member with a term of 3 years, adopted majority of 96.91% of the votes. 15th resolution, reelection of Miss Olympia Guerrand as our Supervisory Board member, adopted with a majority of 96.95% of the votes. 16th resolution, on the reelection of Mr. Alexandre Viros as Supervisory Board member, adopted by a majority of 99.96% of the vote. With regard to financial dedication, convert to the management, 17th resolution on the reduction of capital held, adopted with 99.88% of the votes. 18th resolution, the increased share capital by incorporation of reserves, adopted by a majority of 99.89% of the votes. 19th resolution, on the issue of shares, giving access to share capital and maintenance of preemptive subscription rights, is adopted with the majority of 93.62% of the vote. 20th resolution on the issue of shares giving access to the capital with the preemptive subscription rights cancelled but with the ability to establish -- et cetera, 90.80% of the votes for the adoption. 21st resolution, securities, giving access to share capital reserved for members of the company or group savings plan with preemptive subscription rate canceled, adopted by 99.56% of the votes. 22nd resolution on the issue of shares, giving access to shares through public offering, restricted circle of investors or qualified investors, adopted with majority of 90.29% of the votes. 23rd resolution on issue of shares, giving access to share capital, preemptive subscription rights canceled in order to compensate contributions in kind granted to company related to equity shares, adopted by majority of 92.09% of the votes. 24th resolution on the possibility of deciding on one or more operations in view of merger by absorption is adopted by a majority of 90.95% of the votes. 25th resolution on the increase in capital share by issuing shares in the event of use of the delegation of authority granted to the executive management, that is adopted by the majority of 90.44% of the votes. 26th resolution, amendment of the Articles of Association, taking into account the transformation of the company in Émile Hermès SARL into a société par actions simplifiée, adopted with the majority of 99.96% of the shares. 27th resolution, delegation of authority to carry out the formalities related to general meeting, adopted with a majority of 100% of the votes. We now come to the end of general meeting. I sincerely hope that we were all able to enjoy this retransmission and also in the way in which we held our general meeting, despite the current conditions. I would also like to wish that we very quickly come back to a more freer conditions of life and have that self fulfillment and be able to read together in one single place altogether in a year's time for the AGM of Hermès International, which is planned for the 3rd of May 2022. We've completed our agenda. I declare adjourned this meeting. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]