combined shareholders’ meeting december 9, 2014...haute couture autumn-winter 2014/2015 4 organic...

1

Combined Shareholders’ Meeting

December 9, 2014

This document is a free translation into English of the original French presentation to the Ordinary Shareholders’ Meeting.

In the event of a conflict in interpretation, reference should be made to the French version, which is the authentic text.

2

� Consolidated financial statements as of June 30, 2014

� Review of business groups

� Christian Dior parent company:

- Proposed allocation of net profit

- Exceptional distributions in kind of Hermès shares

CONTENTS

Haute CoutureAutumn-Winter 2014/2015

4

Organic growth+7.2%

06/30/2013(12 months pro forma)

30.1 31.0

06/30/2014(12 months)

+2.2-1.6

+0.3

Change *

Net profit, Group share +2.7%1.4

** Before tax and interest paid

6.05Profit from recurring operations -0.6%

(EUR billions)June 30, 2014

(12 months)

* With respect to the 12-month pro forma figures as of June 30, 2013

7.5Cash from operations

before changes in working capital **+1.8%

31.0 +2.9%Revenue

Impact of changes in scope

+1.1%

Currency impact-5.4%

Change at actual

exchange rates+2.9%

Consolidated revenue (EUR billions)

CONSOLIDATED FINANCIAL HIGHLIGHTS

5

20,377Gross margin

(11,951)Marketing and selling expenses

(2,376)General and administrative expenses

Profit from recurring operations 6,050

(161)Other operating income and expenses

5,889Operating profit

(231)Net financial income (expense)

(1,775)Income taxes

9Income (loss) from investments in associates

3,892Net profit before minority interests

2,467Minority interests

Net profit, Group share 1,425

30,984Revenue

(EUR millions)June 30, 2014

(12 months)

CONSOLIDATED INCOME STATEMENT

6

(EUR millions)

7,539

2,426

FREE CASH FLOW (*)

(2,022)

Income taxes

(972)

Change inworking capital

(1,959)

Operating investments

(160)

Interest

CASH FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL

(*) Before financial investments, transactions relating to equity and financing activities

June 30, 2014 (12 months)

CONSOLIDATED FREE CASH FLOW

7

Liabilities and equityAssets

June 30, 2014

€61.2 bn €61.2 bn

Non-current assets

Inventories

Other current assets

Equity

Non-current liabilities

Current liabilities

73%

50%

16%

11%

29%

21%

CONSOLIDATED FINANCIAL STRUCTURE

8

(EUR billions)

30,3

7,9

28,1

6,3

JUNE 30, 2013

27,9

6,2

22%

APRIL 30, 2013 JUNE 30, 2014

22% 26%

EQUITY NET FINANCIAL DEBT GEARING RATIO

CONSOLIDATED EQUITY AND NET FINANCIAL DEBT

Ready-to-WearSpring-Summer 2015

10

Fashion and Leather Goods33%

Selective Retailing

29%

Christian Dior Couture

5%

Wines and Spirits

13%

Perfumes and Cosmetics

12%

Watches and Jewelry

9%

June 30, 2014 (12 months)as % of total revenue

CONSOLIDATED REVENUE BY BUSINESS GROUP

Note: Eliminations and other activities = -1% of revenue

11

30%

Asia(excluding Japan)

11%France

22%United States

11%Other markets

19%

Europe(excluding France)

7%

Japan


CONSOLIDATED REVENUE BY GEOGRAPHIC REGION OF DELIVERY

12

Othercurrencies

42%

US dollar

27%

Euro24%

Japanese yen7%


CONSOLIDATED REVENUE BY INVOICING CURRENCY

Archi Dior

14

• Remarkable revenue growth: +19% at constant exchange rates (+20% for revenue from retail)

• Strong momentum across all product lines and all geographic areas

• Appreciable boost in profit from recurring operations

• Sustained investment policy

• Prestigious events held throughout the world

192139

Revenue (EUR millions)

Profit from recurring operations(EUR millions)

June 30, 2013 (12 months pro forma)


1,5051,324



CHRISTIAN DIOR COUTURE

15

• Organic growth: +3%, in a mixed market across the world

• Slight decrease in profit from recurring operations (-1%)

• Champagne:

- Revenue growth balanced between volume/price/mix

- Strong performance in Asia and the United States

• Cognac: decrease in volumes

- Continued destocking of higher-quality cognacs by distributors in China

- Strong momentum in the United States

• Continued strategy of value creation and innovation

• Acquisition of Clos des Lambrays

1,2911,306





4,0644,186



WINES AND SPIRITS

16

• Organic growth: +5%

• Louis Vuitton: a strong creative dynamic

- Development of fine leather lines

- Successful launch of new Monogram models

- Nicolas Ghesquière’s first show as new Artistic Director very well received

• Fendi: rapid progress in leather goods

• Loro Piana: business integrated into the Group under optimal conditions

• Berluti: Maisons opened in Milan and New York

3,1333,245





10,2019,981



FASHION AND LEATHER GOODS

17


• Slight increase in profit from recurring operations despite exchange rate impact

• Parfums Christian Dior: positions bolstered in all markets

• Guerlain: worldwide success of the AbeilleRoyale skincare line

• BeneFit Cosmetics: solid growth

• Fresh: rapid progress in the United States and exceptional development in Asia

418411





3,7523,690



PERFUMES AND COSMETICS

18


• Stronger performance in own stores than in multi-brand retailers

• Profit from recurring operations stable

• Good momentum at Bulgari, which celebrated its 130th anniversary

• Continued investment to:- Reinforce Maisons’ brand image

- Optimize manufacturing capacity

- Expand network of exclusive brand boutiques

• Increased selectivity in multi-brand distribution331331





2,7762,803



WATCHES AND JEWELRY

19


• DFS:

- Continuing development of tourism in Asia, but spending by Japanese travelers impacted by a weak yen

- Profitability affected by the expansion and renovation of several airport concessions

• Sephora:

- Excellent momentum in North America, Asia and the Middle East

- Rapid growth in online sales

- Continued renovation of stores and expansion of the network

885888





9,1238,504



SELECTIVE RETAILING

Be Dior handbag

21

� Net profit for the fiscal year (€575m) + Retained earnings (€144m)= Distributable earnings (€719m)

� Proposed dividend (5th resolution):

- gross dividend: €3.10 per share (up 6.9% from the fiscal year endedApril 30, 2013)

- final dividend: €1.90 per share (given the interim dividend of €1.20 per share distributed on April 17, 2014)

- final dividend payment date: December 15, 2014

� Allocation of retained earnings (€159m*) to “Optional Reserves” (6th

resolution), which will then total €240m

* Amount calculated after taking into account the share of the April 17, 2014 interim dividend corresponding to Christian Dior treasury shares (€3m)

APPROPRIATION OF CHRISTIAN DIOR NET PROFIT FOR THE FISCAL YEAR ENDED JUNE 30, 2014

22

Background and context

Settlement agreement entered into by LVMH, Christian Dior and Hermès on September 2, 2014, under the aegis of the President of the Commercial Court of Paris:

� Distribution by LVMH to its shareholders of all 24,473,545 Hermès shares (i.e.23.2% of the share capital) that it holds, with the exception of any fractional shares

� Distribution by Financière Jean Goujon (which holds 40.9% of the share capital ofLVMH) and by Christian Dior (which holds 100% of the share capital of FinancièreJean Goujon) of all the Hermès shares received, with the exception of any fractionalshares

� Deadline for distribution of Hermès shares: December 20, 2014

� Sale on the market by LVMH and Christian Dior of Hermès shares not distributedas a result of the distribution ratios or of any fractional shares, by September 3, 2015at the latest

� Agreement by LVMH, Financière Jean Goujon, Christian Dior and the othercompanies controlled by Bernard Arnault not to acquire any Hermès shares during afive-year period

� Discontinuation of all ongoing legal proceedings

EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES

23

EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Two distinct transactions

� First transaction submitted to today’s Combined Shareholders’ Meeting (see 7th

resolution): Distribution in kind (following amendment of the Company’s

Bylaws, discussed in the 1st resolution)

� Second transaction to be decided on by the Board of Directors at its meeting to

be held on December 11, 2014: Interim dividend in kind

24

EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Distribution in kind� Transaction put to a vote at today’s Combined Shareholders’ Meeting

� Total amount of the distribution in kind = (Number of Hermès shares distributed) x (Hermès

opening share price on the day of payment)

� Distribution in kind limited to €2,169m, which corresponds to the amount of the Company’s

reserves and premiums distributable as of June 30, 2014

� Distribution in kind to be allocated (i) first, from the “Optional Reserves” account in the amount

of €240m, and (ii) then, from the “Share Premium” account for the surplus

� Number of Christian Dior shares qualifying for the distribution: 178,878,639

� Beneficiary in the case of a division of ownership of Christian Dior shares: bare owner

� Resulting figures assuming (i) a distribution in kind ratio of one (1) Hermès share for every 23

Christian Dior shares, and (ii) a Hermès opening share price of €278 on the day of payment:

− Number of Hermès shares distributed: 7,777,332

− Total amount of the distribution in kind: €2,162m

− Unit amount of the distribution in kind: €12.09 per Christian Dior share, of which:

• €1.34 per share (portion of the dividend allocated from the “Optional Reserves”) is taxed as distributed income

• €10.75 per share (portion of the dividend allocated from “Share Premium”) constitutes a non-taxable return ofcapital. Where applicable, this non-taxable return of capital will reduce the tax basis of the Dior shares qualifying forit, in the event that these Dior shares are subsequently sold

25

Interim dividend in kind� Transaction subject to the approval of the Company’s Board of Directors at its meeting to be

held on December 11, 2014

� Total amount of the interim dividend = (Number of Hermès shares distributed) x (Hermèsopening share price on the day of payment)

� Interim dividend allocated from the Company’s distributable earnings as of December 10, 2014(estimated at €2.9 bn)

� Number of Christian Dior shares qualifying for the distribution: 178,878,639

� Beneficiary in the case of a division of ownership of Christian Dior shares: usufructuary

� Resulting figures assuming (i) an interim dividend distribution ratio of one (1) Hermès share forevery 76 Christian Dior shares, and (ii) a Hermès opening share price of €278 on the day ofpayment:

- Number of Hermès shares distributed: 2,353,666

- Total amount of the interim dividend: €654m

- Unit amount of the interim dividend: €3.66 per Christian Dior share

� Distributed income, fully taxable


26

Common features of the two distribution transactions

� Ex-dividend and payment: December 17, 2014

� Rights forming fractional shares are neither tradable nor assignable

- If the distribution ratio does not result in a whole number of Hermès shares, the shareholdershall receive the number of Hermès shares immediately below this amount, together with acash payment for the balance

� The Hermès opening share price on the day of payment (December 17, 2014) will bethe basis for calculating cash payments for the balance and, where applicable, taxand social charges or withholding tax (for shareholders who are not tax residents ofFrance)


27

Sample calculations of the cash balance payment

For the distribution in kind, assuming (i) a distribution in kind ratio of one (1)

Hermès share for every 23 Christian Dior shares, and (ii) a Hermès opening share

price of €278 on the day of payment:

� A shareholder with 10 Christian Dior shares would not be entitled to any

Hermès shares, but would be entitled to a cash balance payment of a gross

amount of €120.87 (= 10 x (1/23) x €278)

� A shareholder with 30 Christian Dior shares would be entitled to one (1)

Hermès share and to a cash balance payment of a gross amount of €84.61

(= 7 x (1/23) x €278)


28

Impact on the consolidated financial statements

Impact of the distributions of Hermès shares by LVMH, Financière JeanGoujon and Christian Dior (distribution in kind and interim dividend inkind)

� €2.9 bn decrease in the consolidated equity (Group share) of Christian Dior (basedon a Hermès share price of €278)

� Decrease equal to the value of Hermès shares distributed, adjusted for net tax

� Net gain of €1.1 bn recognized in net profit - Group share (based on a Hermès shareprice of €278)

� Gain equal to the value of Hermès shares distributed minus:

(i) the consolidated cost of the Hermès shares and

(ii) taxes payable (on capital gains and dividend distributions)

� No significant impact on consolidated debt


29

Potential change in the distribution ratio

� Two possible causes:

- significant change in the distribution ratio for Hermès shares distributed by LVMH

- level of the Hermès opening share price on the day of payment resulting in the value of thedistribution in kind being higher than the distributable amount (of €2,169m)

� Powers granted to the Board of Directors of Christian Dior including the capacityto sub-delegate to the Chairman and Chief Executive Officer as well as the GroupManaging Director (see powers set out in the 7th resolution submitted to today’sShareholders’ Meeting) to:

- make any necessary arrangements for the execution of the planned distributiontransactions

- make the required calculations and adjustments, notably regarding the distribution ratio

� Given the current level of the Hermès share price, an adjustment will probably bemade to the distribution ratio


30

TIMETABLE OF TRANSACTIONS OF THE DISTRIBUTION IN KIND (1/2)

Shareholders with shares in bearer form (au porteur) or in administered registered form (au nominatif administré)

December 16, 2014 Equity positions of Christian Dior shares taken into account after close of

trading

December 17, 2014 Detachment of non-tradable and non-transferable distribution rights for

Hermès shares, automatically allocated by Euroclear to the account

custodians (one right per Christian Dior share for each of the two

distribution transactions)

Starting from

December 17, 2014

Distribution rights for each of the two distribution transactions presented

by the account custodians to the centralizing bank (BNP Paribas Securities

Services)

- The centralizing bank will credit each financial institution for the number ofHermès shares and the amount of the cash balance payment corresponding to therights presented

- The account custodians will then credit the Hermès shares and/or the cash balancepayment to the account of each beneficiary of the distributions in kind

- The beneficiaries of the distributions in kind must pay to their financialintermediary the tax and social charges due under the distributions

TIMETABLE OF THE DISTRIBUTION IN KIND TRANSACTIONS (1/2)

31

Shareholders with shares in pure registered form (au nominatif pur)

Before

December 15,

2014

• Shareholders must communicate to Christian Dior the details of the

securities account and the cash account to which the Hermès shares and

the cash balance payment from each of the two distribution transactions

should be credited, with the understanding that they have the option of

transferring the Hermès shares received to a pure registered account

• Prior to the delivery of the shares, each shareholder must pay Christian

Dior the amount of tax and social charges due for each of the two

distribution transactions

• Alternatively, the shareholder has the possibility of instructing Christian

Dior to sell all of his or her Hermès shares, for one or both of the two

distribution transactions, so that Christian Dior can pay the tax and

social charges on the shareholder’s behalf

TIMETABLE OF THE DISTRIBUTION IN KIND TRANSACTIONS (2/2)

32

FREQUENTLY ASKED QUESTIONS (1/3)

� I’m a shareholder with shares in bearer form (au porteur) or in a registeredaccount (au nominatif administré). What steps do I need to take with my bank toreceive the distribution in kind?

- No action is necessary

- However, the shareholder is required to pay his or her bank the tax and social charges due inrespect of each of the two distribution transactions

� I’m a shareholder with shares registered directly with Christian Dior (aunominatif pur). What steps do I need to take?

- A letter explaining these steps was sent to you last week

- Before December 15, 2014, communicate to Christian Dior the details of the securities account(if you do not wish to register your Hermès shares directly with Hermès) and the cash accountto which Christian Dior should credit the Hermès shares from each of the two distributiontransactions and, where applicable, any cash balance payments

- Before December 15, pay Christian Dior the tax and social charges due in respect of the twodistribution transactions

33

� My tax residence is in France. What kind of tax treatment will apply to thetransactions?

- Concerning (i) the share of the dividend in kind allocated from the Optional Reserves and (ii)the interim dividend in kind, the tax treatment will be the same as for distributions of cashdividends

� 21% non-final withholding, where applicable

� Social charges at an overall rate of 15.5% on the gross amount of the distribution, of which 5.1% is

deductible from taxable income

� Subject to income tax (after 40% deduction)

� My cash account does not hold sufficient funds to pay the tax and socialcharges due in respect of the two distributions. What should I do?

- If your shares are registered directly with Christian Dior, you can instruct Christian Dior to sellall of your Hermès shares related to one or both of the distribution transactions and to provideyou with the proceeds of the sale (and cash balance payments, where applicable), net of sellingexpenses, tax and social charges

- If your shares are in bearer form or in a registered account, you can contact your account holderto request that some or all of the Hermès shares to which you are entitled be sold to finance thetax and social charges due


34

� What share price will be used to calculate the cash balance payment for each distribution transaction?

- Cash balance payments will be calculated in proportion to the Hermès opening share price on December 17, 2014

� I hold fewer than 23 or 76 shares. How will the cash balance payments I am entitled to be calculated?

- In this case, you will be entitled to a cash balance payment (before tax and social charges) calculated as follows:

� (Number of Christian Dior shares) x (Distribution ratio of 1/23 [or 1/76]) x (Hermès opening share

price on December 17, 2014)

� If I buy Christian Dior shares today, will I be entitled to receive Hermès shares?

- All orders to purchase Christian Dior shares executed up to or on December 16 will entitle holders to Hermès shares


35

Combined Shareholders’ Meeting

December 9, 2014

combined shareholders’ meeting december 9, 2014...haute couture autumn-winter 2014/2015 4 organic...

Documents